Asian Kitchen (M) Sdn Bhd v Menara Kuala Lumpur Sdn Bhd (WA-24NCC-38-01/2025)

The plaintiff filed an Originating Summons dated 21-01-2025 [“OS”] for a Fortuna injunction to restrain the defendant from commencing winding up proceedings based on a summary judgment obtained by the defendant on 04-09-2023 in Kuala Lumpur High Court Suit No. WA- 22NCC-399-06/2023 (“Suit 399”).

The basis for the Fortuna is that the plaintiff had appealed to the Court of Appeal on 20-09-2023 against the summary judgment. The appeal has not been heard when this OS was heard before me.

The plaintiff meanwhile had applied for a stay of execution of the summary judgment at both the High Court and Court of Appeal but both applications were dismissed. [See supporting affidavit Enclosure 2 at paragraph 18].

Premised on the above facts, I dismissed the OS on 24-01-2025 as it is trite law that a summary judgment is enforceable as a judgment unless it is stayed pending appeal or set aside on appeal.

The fact that there is a pending appeal does not preclude the judgment creditor i.e. the defendant here from presenting a winding-up petition. No court will grant a Fortuna injunction to restrain the judgment creditor from commencing winding up proceedings based on a summary judgment that has not been stayed. In fact, it is an abuse of process S/N 5ybvgnm1jkiNPPNgrOuJ/Q **Note : Serial number will be used to verify the originality of this document via eFILING portal 3 and an utter waste of the court’s precious time for the judgment debtor, i.e. the plaintiff here, to file proceedings for a Fortuna injunction.

The plaintiff has appealed to the Court of Appeal on 28-01-2025 against my decision.

These are my Grounds of Judgment containing my reasons to dismiss the plaintiff’s application for a Fortuna injunction.

The OS identifies the parties as applicant and respondent. The correct designations are plaintiff and defendant as this is an OS and not an ex parte OS. If it is an ex parte OS then the party filing it is described as the applicant. [See Order 7 rule 2 of the Rules of Court 2012]. For good order, I shall identify the parties as plaintiff and defendant.

The key facts are limited in number and can be summarised as follows.

Pursuant to various agreements, the plaintiff was appointed by the defendant since 15-08-2011 as the Food and Beverage operator and manager for, inter alia, the Revolving Restaurant (Atmosphere 360) in the Kuala Lumpur Tower. [See supporting affidavit at paragraph 4].

Pursuant to a change in management of the Kuala Lumpur Tower, the new management issued a letter dated 10-11-2022 terminating the S/N 5ybvgnm1jkiNPPNgrOuJ/Q **Note : Serial number will be used to verify the originality of this document via eFILING portal 4 plaintiff as the Food and Beverage operator and manager of the Kuala Lumpur Tower.

The plaintiff and defendant subsequently agreed to extend the tenancy until 30-06-2023 due to advanced bookings to dine at the Revolving Restaurant (Atmosphere 360) already made by members of the public. [See supporting affidavit at paragraph 10 and Exhibit “KFC-6” at page 218].

Twenty-one days before the expiry of the tenancy, the plaintiff commenced Suit 399 against the defendant and a company called Hydroshoppe Sdn Bhd along with an application for interim injunction to prevent the “eviction” of the plaintiff.

The defendant filed its Defence and Counterclaim for, inter alia, the plaintiff to surrender vacant possession of the demised premises as the tenancy would expire on 30-06-2023.

The defendant filed an application for Summary Judgment of its Counterclaim which was granted with the following orders: i. The tenancy has expired on 30-06-2023; ii. The plaintiff has been unlawfully holding over the Demised Premises since 01-07-2023; iii. The plaintiff is liable to pay double rental from 01-07-2023 until the date the plaintiff surrenders vacant possession; S/N 5ybvgnm1jkiNPPNgrOuJ/Q **Note : Serial number will be used to verify the originality of this document via eFILING portal 5 iv. The plaintiff shall pay the sum of RM 421,950.00 being the amount outstanding for rental and charges for June 2023; and v. Costs of RM 5,000 subject to allocatur. [For the Order see the supporting affidavit at pages 34 - 39].

The plaintiff has appealed to the Court of Appeal on 20-09-2023 against the summary judgment. The appeal has not been heard when this OS was heard before me.

The plaintiff meanwhile had applied for a stay of execution of the summary judgment at both the High Court and Court of Appeal but both applications were dismissed. [See Enclosure 2 at paragraph 18].

The defendant then served a section 466 Notice dated 07-01-2025 on the plaintiff on 08-01-2025. [See Enclosure 2 Exhibit “KFC-1” at page 28].

The plaintiff in response filed this OS for a Fortuna injunction to restrain the defendant from commencing winding up proceedings pending its appeal to the Court of Appeal against the summary judgment.

A Fortuna injunction is the name given to a type of injunction applied by a plaintiff to restrain the filing of an intended winding up petition or if filed, its further prosecution. This is because the presentation of the S/N 5ybvgnm1jkiNPPNgrOuJ/Q **Note : Serial number will be used to verify the originality of this document via eFILING portal 6 petition will produce irreparable damage to the plaintiff company. A Fortuna injunction takes its name from the Australian case of Fortuna Holdings Pty Ltd v The Deputy Federal Commissioner of Taxation [1978] VR 83 Supreme Court of Victoria where the juridical basis for the relief was explained.

The principles in respect of a Fortuna injunction have been accepted by our courts. [See Mobikom Sdn Bhd v Inmiss Communications Sdn Bhd [2006] 2 MLRA 1 CA, Pacific & Orient Insurance Co Bhd v Muniammah Muniandy [2010] 3 MLRA 267 CA, Sime Darby Energy Solution Sdn Bhd v RZH Setia Jaya Sdn Bhd [2021] 6 MLRA 485 CA and Swissray Asia Healthcare Co Ltd v V Medical Services M Sdn Bhd [2024] 6 MLJ 135 CA].

The following principles in respect of a Fortuna injunction can be distilled from decided cases-i. The presentation of a winding up petition may be restrained by injunction where its presentation, or if presented its further continuation, would amount to an abuse of the process of the court. The application of this principle has two branches. ii. The first branch applies in cases where the presentation or continuation of the petition might produce irreparable damage to the plaintiff company and where the petition has no chance of success. This branch will apply if the defendant has no locus standi to file a petition or does not satisfy the statutory requirements under the Companies Act 2016 to file a winding - up petition. [“No chance of Success limb”]. S/N 5ybvgnm1jkiNPPNgrOuJ/Q **Note : Serial number will be used to verify the originality of this document via eFILING portal 7 iii. The second branch applies in cases where a defendant proposing to present a petition has chosen to assert a disputed claim, by a procedure which might produce irreparable damage to the plaintiff company, rather than by a suitable alternative procedure. [“Disputed Claim limb”]. iv. In some cases, both the first and the second branches of the principle can apply. v. A party who has a court Judgment which has not been stayed is entitled to present a winding-up petition based on the Judgment. The filing of an appeal against the said judgment does not make it a disputed debt. The court will not grant a Fortuna injunction to restrain the presentation of a winding-up petition based on a judgment. [See Pacific & Orient Insurance Co Bhd v Muniammah Muniandy [2010] 3 MLRA 267 CA at [22 and 39], per Ramly Ali JCA]. vi. A summary judgment remains regular and enforceable until it is set aside on appeal. The fact that there is a pending appeal does not make it a disputed debt. A judgment creditor is entitled to present a winding-up petition based on the summary judgment. [See Sri Jeluda Sdn Bhd v Pentalink Sdn Bhd [2008] 3 MLJ 692, CA, paragraphs [25] – [26]]. The court will not grant a Fortuna injunction to restrain the presentation of a winding-up petition based on a summary judgment. S/N 5ybvgnm1jkiNPPNgrOuJ/Q **Note : Serial number will be used to verify the originality of this document via eFILING portal 8 vii. A party who has an Adjudication Decision made under the CIPAA in its favour is entitled to present a winding-up petition based on the Adjudication Decision. There is no requirement to register the Adjudication Decision in court prior to presenting the petition. [See Likas Bay Precinct Sdn Bhd v Bina Puri Sdn Bhd [2019] 3 CLJ 499 CA per Abang Iskandar JCA, followed in Sime Darby Energy Solution Sdn Bhd v RZH Setia Jaya Sdn Bhd [2021] 6 MLRA 485 CA per Gunalan JCA and in Bludream City Development Sdn Bhd v Pembinaan Bina Bumi Sdn Bhd [2024] 3 MLRA 909 CA per Lim Chong Fong JCA]. viii. A party who has an Adjudication Decision made under the CIPAA in its favour is entitled to present a winding-up petition based on the Adjudication Decision. The court will not grant a Fortuna injunction to restrain the presentation of the winding-up petition. [See Sime Darby Energy Solution Sdn Bhd v RZH Setia Jaya Sdn Bhd [2021] 6 MLRA 485 CA]. ix. The High Court decisions in ASM Development (KL) Sdn Bhd v Econpile (M) Sdn Bhd [2020] MLRHU 1417 HC and Setia Fontaines Sdn Bhd v Pro Tech Enterprise Sdn Bhd [2023] MLRHU 495 HC which held that a party is not entitled to present a winding-up petition based on an Adjudication Decision are no longer good law. [See Sime Darby Energy Solution Sdn Bhd v RZH Setia Jaya Sdn Bhd [2021] 6 MLRA 485 CA at [48 - 50] per Gunalan JCA S/N 5ybvgnm1jkiNPPNgrOuJ/Q **Note : Serial number will be used to verify the originality of this document via eFILING portal 9 and Bludream City Development Sdn Bhd v Pembinaan Bina Bumi Sdn Bhd [2024] 3 MLRA 909 CA at [45] per Lim Chong Fong JCA].

In Pacific & Orient Insurance Co Bhd v Muniammah Muniandy [2010] 3 MLRA 267 CA, Ramly Ali JCA made the following observations concerning Fortuna injunctions-

An application for an injunction to restrain an intended winding-up petition against a company is known as a “Fortuna Injunction”, taking its name from the case of Fortuna Holdings Pty Ltd v. The Deputy Federal Commissioner of Taxation [1978] VR 83. In that case the court laid down the basis on which a court acts to restrain the presentation of a winding-up petition and the two principles that guide courts in the grant of an injunction to that effect. (see also: Mobikom Sdn Bhd v. Inmiss Communications Sdn Bhd [2006] 2 MLRA 700; [2007] 3 MLJ 316; [2007] 3 CLJ 295 (Court of Appeals).

The first principle laid down in that case in that an injunction of that nature may be granted by court where the presentation of the petition might produce irreparable damage to the company and where the proposed petition has no chance of success. In order to succeed in getting injunction under this principle, the applicant must satisfy both limbs of the principle ie: -

the intended petition has no chance of success, as a matter of law as well as a matter of fact; and

(ii) the presentation of such petition (which has no chance of success) might produce irreparable damage to the company. … [27] This principle is not applicable to the present case. The respondent herein had obtained a valid and enforceable judgment against the insured as well as the insurer (appellant). The intended petition if filed is not bound to fail. He has S/N 5ybvgnm1jkiNPPNgrOuJ/Q a good chance to succeed. Therefore, whether or not it causes irreparable damage is of no consequence. Thus, the injunction applied for by the appellant in the present case, cannot be granted by court under this principle. [28] The second principle established in the Fortuna case is that an injunction of that nature may be granted in cases where a petitioner proposing to present a petition has chosen to assert a disputed claim, by a procedure which might produce irreparable damage to the company, rather than by a suitable alternative procedure. [29] This principle applies only to disputed debt. It does not apply to cases where the debt in question is undisputed. As long as the debt cannot be disputed, it is not consequence whether or not it will cause irreparable damage to the company, if presented. A valid and enforceable judgment of court as in the present case, (unless set aside or stayed) cannot be considered a disputed debt. The law is settled on this point. Therefore, an order for injunction as prayed for by the appellant in the present case, also cannot be granted under this principle. [Emphasis added] [24] In Sri Jeluda Sdn Bhd v Pentalink Sdn Bhd [2008] 3 MLJ 692 CA, the Court of Appeal held that until a summary judgment is set aside, the claim by a petitioner based on the said judgment cannot be regarded as a bona fide disputed debt. Ahmad Maarop JCA said: [25] Regarding the first ground advanced by the appellant [that the judgment debt was summary judgment], the learned judge in the court below held: The fact that petition for winding up (encl 2) was taken based on a summary judgment which is on appeal is not a good ground to justify dismissing the petition for winding up. The judgment dated 7 July 2005 in Civil Suit No 22–48 of 2005 (exh AA) was regularly obtained. S/N 5ybvgnm1jkiNPPNgrOuJ/Q A judgment remains a regular and enforceable until it is set aside by the court. Although the respondent had filed an appeal against the judgment, the judgment remains a good judgment until it is set aside on appeal. Until the judgment is set aside, the claim by petitioner based on the said judgment cannot be regarded as a bona fide disputed debt. The fact that respondent had lodged an appeal against the judgment merely means that he still disputed the debt but does not establish that the debt is bona fide disputed. The judgment has already established the contrary (see decision of Wan Adnan Ismail J (as he then was) in Patel Holding Sdn Bhd v Estet Pekebun Kecil Sdn Bhd & Anor [1990] 2 CLJ 280 and Bank Utama Malaysia Bhd v GKM Amal Bhd [2000] 5 MLJ 657). [26] We agree with him. [Emphasis added] [25] In Seri Stamford College Sdn Bhd & Anor v Stamford College Berhad [2019] MLJU 967 HC the court held that a cross-claim or counterclaim by a respondent cannot be used to defeat a winding-up petition filed based on a summary judgment obtained by the petitioner. Abu Bakar Jais J said-Summary of the Respondent’s Arguments [4] The Respondent’s contended that it is solvent as the Petitioners owe the former more than RM 54 million including more than RM 10 million in management and royalty fee. As such the Respondent’s money in the hands of the Petitioners is said to be much more than the judgment sum. Thus, the Petitioners are not creditors and therefore cannot file the winding up petition against the Respondent. The Respondent main contention is that it has filed a suit against the Petitioners for the recovery of RM 10,999,923.29 and this cross-claim is for the management and royalty S/N 5ybvgnm1jkiNPPNgrOuJ/Q fee. Since the amount of the Respondent’s cross-claim is much more than the judgment sum obtained by the Petitioners, the winding up of the Respondent is without basis and would cause irreparable damage. The Petitioners’ petition is an abuse of court and oppressive having regard to the factual matrix of the case. Court’s Findings [5] There is no dispute there is a court order for the Petitioners against the Respondent for a judgment sum of RM 2,375,187.26. The court order stands as it has not been set aside. Bearing in mind these facts, it is appropriate to consider s.s. 465 and 466 of the CA, the statutory provisions relied by the Petitioners in support of its petition to wind up the Respondent. … [11] As explained earlier, the main contention of the Respondent is that it should not be wound up as it has a cross-claim which is much more than the judgment sum already obtained by the Petitioners. Analyzing this argument, first it must be pointed out this cross-claim is not supported by any court judgment. There is still no pronouncement by any courts that this cross-claim has been proven by the Respondent against the Petitioners. This is certainly different from the judgment sum obtained by the Petitioners against the Respondent where the dispute between the parties had been decided by the court. And the decision thereafter resulted in the judgment sum for the Petitioners. The judgment sum obtained by the Petitioners indeed made them creditors of the Respondent, contrary to the contention of the latter. … [16] Further, the Court of Appeal’s case of Zalam Corporation Sdn Bhd v Dolomite Ready Mixed Concrete Sdn Bhd [2011] 9 CLJ 705 is most instructive considering the facts of the present case as it is said as follows: The statutory notice which was presented to the plaintiff was based on a final judgment and the application for stay of execution was dismissed. Moreover, there existed a judgment debt which was supposed to be paid S/N 5ybvgnm1jkiNPPNgrOuJ/Q by the plaintiff to the first defendant. The existence of any counter claim which was in dispute and yet to be decided could not be accepted as an excuse for the plaintiff’s refusal to comply with the said statutory claim. … Conclusion [20] Having considered the facts of the present case, as explained the Respondent’s cross-claim cannot defeat the court judgment already obtained by the Petitioners. The judgment sum as a result of that court judgment for the Petitioners against the Respondent, validly allows the former to petition for the winding up of the latter. [21] Based on all the reasons highlighted and since the statutory demand had not been met, it is only apposite for this court to order a winding up of the Respondent. [Emphasis added] Application to the facts [26] The summary judgment has not been stayed. The intended petition if filed is not bound to fail. In fact, the defendant has a good chance to succeed. Therefore, whether or not the filing of the intended petition will cause irreparable damage to the plaintiff is of no consequence. The first branch of the principle i.e. the No chance of Success limb is not satisfied by the plaintiff. [27] The second branch of the principle i.e. the Disputed Claim limb applies only to disputed debt. It does not apply to cases where the debt in question is undisputed. In the case before me the debt is an undisputed S/N 5ybvgnm1jkiNPPNgrOuJ/Q debt as the defendant has obtained a summary judgment in its favour which has not been stayed or set aside. As long as the debt cannot be disputed, it is irrelevant whether or not the petition, if filed, will cause irreparable damage to the plaintiff company. Decision [28] For the reasons above, the Originating Summons is dismissed with costs of RM 5,000 subject to allocatur. ………(signed)……… Leong Wai Hong Judge High Court of Malaya Kuala Lumpur (NCC 6) Dated: 12th February 2025. COUNSEL: 1) Dhanaraj Vasudevan, Malar Loganathan, Arun Ganesh Boopalan and Andrew Naxin (Pupil in Chamber) for applicant. (Kamil Hashim Raj & Lim (Petaling Jaya)) 2) Daryl Lee Yen Nan for respondent. (Rosli Dahlan Saravana Partnership (Kuala Lumpur)) S/N 5ybvgnm1jkiNPPNgrOuJ/Q CASES REFERRED TO: 1) ASM Development (KL) Sdn Bhd v Econpile (M) Sdn Bhd [2020] MLRHU 1417 HC. 2) Bank Utama Malaysia Bhd v GKM Amal Bhd [2000] 5 MLJ 657. 3) Bludream City Development Sdn Bhd v Pembinaan Bina Bumi Sdn Bhd [2024] 3 MLRA 909 CA. 4) Fortuna Holdings Pty Ltd v The Deputy Federal Commissioner of Taxation [1978] VR 83 Supreme Court of Victoria. 5) Likas Bay Precinct Sdn Bhd v Bina Puri Sdn Bhd [2019] 3 CLJ 499 CA. 6) Mobikom Sdn Bhd v Inmiss Communications Sdn Bhd [2006] 2 MLRA 1 CA. 7) Pacific & Orient Insurance Co Bhd v Muniammah Muniandy [2010] 3 MLRA 267 CA. 8) Patel Holding Sdn Bhd v Estet Pekebun Kecil Sdn Bhd & Anor [1990] 2 CLJ 280. 9) Setia Fontaines Sdn Bhd v Pro Tech Enterprise Sdn Bhd [2023] MLRHU 495 HC. 10) Sime Darby Energy Solution Sdn Bhd v RZH Setia Jaya Sdn Bhd [2021] 6 MLRA 485 CA. 11) Sri Jeluda Sdn Bhd v Pentalink Sdn Bhd [2008] 3 MLJ 692, CA. 12) Seri Stamford College Sdn Bhd & Anor v Stamford College Berhad [2019] MLJU 967, HC. 13) Swissray Asia Healthcare Co Ltd v V Medical Services M Sdn Bhd [2024] 6 MLJ 135 CA. 14) Zalam Corporation Sdn Bhd v Dolomite Ready Mixed Concrete Sdn Bhd [2011] 9 CLJ 705. S/N 5ybvgnm1jkiNPPNgrOuJ/Q LEGISLATION REFERRED TO: 1) Rules of Court 2012, Order 7 rule 2. S/N 5ybvgnm1jkiNPPNgrOuJ/Q