Biaxis (M) Sdn. Bhd. (in Liquidation) v Sonata Resources Sdn. Bhd. (WA-22C-10-03/2023)

2.1 the Plaintiff has been wound up on 20.4.2022 2.2 there is sufficient ground that the Plaintiff will be unable to pay the costs of the Defendant should the Defendant succeed in the substantive case before this Court 2.3 the Defendant has a good prospect of success in defending the Plaintiff’s claim Brief Background [3] The crux of the Defendant’s defence and counterclaim is that, prior to the winding-up of the Plaintiff, the Plaintiff actually owes the Defendant an amount which is far in excess of the Plaintiff’s claim, and which the Defendant is entitled to set-off against the Plaintiff’s claim and which is made up as follows: -

3.1 the sum of RM17,854,800.00 (RM1,760,000.00 (Section 1) + RM12,744,800 (Section 2) + RM3,350,000.00 (Section 4) being agreed liquidated and ascertained damages (“LAD”) for late completion and/or non-completion of the Works as at 21.5.2019;

3.2 the sum of RM7,174,114.24 being the total sums certified by the Architect on 21.5.2021 to one Yon Sang Builders Sdn Bhd (“the Third-party Contractor”) who had been engaged by the Defendant vide a Letter of Award dated 27.2.2020 to complete and carry out the Works and/or to rectify the defective works which the Plaintiff had failed to do;

3.3 alternatively to the LAD claim the sum of RM26,299,600.00 being LAD for late completion and/or non-completion of the Works as at 16.12.2019 (being the commencement date of the works carried out by the Third-Party Contractor); and

3.4 general damages to be assessed by this Honourable Court. Court’s Findings [4] I have taken note of the Plaintiff’s submissions that the Court should exercise its discretion in its favour especially when it is alleged that the Defendant’s defence is mala fide and an afterthought and that Enclosure 10 is an attempt to impede the liquidation process. [5] I have further perused Order 23 rule 1 of the Rules of Court 2012 and section 580A of the Companies Act 2016 and find that the contention of the Plaintiff that the Defendant is hereby attempting to impede the liquidation process by virtue of Enclosure 10 is in my view misconceived. My reason for saying so is that both Order 23 rule 1 of the Rules of Court 2012 and section 580A of the Companies Act 2016 gives inter alia the right to the Defendant to make an application for security for costs where it has reason to believe that the Plaintiff is unable to pay the costs of the Defendant if it succeeds in the case. [6] The fact that the Plaintiff has been wound up, is without doubt a material and salient issue in my decision herein, as the Plaintiff would in my view, not be in a position to pay the costs of the Defendant should the Defendant succeed in the main action in this case. [7] I have also not found anything in any of the Plaintiff’s affidavits which have shown to this Court that they are able to satisfy the issue of costs if such an order is made against them. The fact that the Liquidator is trying to recover the debts owed to the Plaintiff is insufficient evidence that such recovery will be either successful or sufficient to cover the costs of the Defendant if the Plaintiff is so ordered to do so. [8] I have also in coming to my decision taken note of the massive debts of the Plaintiff amounting to RM152,516,227.93 which further supports my finding that the Plaintiff would not be in a position to pay the costs of the Defendant as aforementioned. [9] On the issue of whether the Defendant has a good prospect of success in defending the Plaintiff’s claim, I agree with Mohd Nazlan J as held in Customer Loyalty Solutions Sdn Bhd v Advance Information Marketing Berhad & Anor [2017] MLJU 1919 that the merits of the Defendants case cannot be determined at this stage of the matter as Enclosure 10 is only an interlocutory application where the Court should not delve into detail of the merits of either party’s claim. I will therefore decline to go into the merits of the Defendant’s case at this stage.

[10] Thus, after considering the facts and evidence before me, with particular regard to the right to each side of being given a fair chance to be heard and the access to justice to all; I had decided to allow the Defendant’s application in Enclosure 10 by granting an order for such security for costs in the sum of RM100,000.00 to be paid within 21 days of this Order with the said sum to be deposited with the Plaintiff’s solicitors as stakeholders in an interest bearing account together with Order in Terms for prayers 2, 3 and 4 thereto and with no order as to costs. Dated: 09th day of January 2024 sgd. NADZARIN WOK NORDIN HIGH COURT JUDGE CONSTRUCTION COURT 1 COUNSEL FOR THE PLAINTIFF: Tang Swee Ying [Messrs Prem & Associates] COUNSEL FOR THE DEFENDANT: Simon Hue Fook Chuan (Messrs Simon Hue & Associates]