Clinton Tan Kian Seng for the Petitioner [Messrs Clinton Tan] v Zulkepli Omar for the Respondent [Messrs Lainah Yaacob & Zulkepli] (WA-28NCC-895-12/2021)

In the Winding Up Petition filed on 6.12.2021 (Petition) in enclosure 1, the Petitioner had sought to wind up the Respondent pursuant to sections 465(1)(e), 466(1) (a) and 466(1) (c) of the Companies Act 2016 on the grounds that the Respondent is indebted to the Petitioner in the sum of RM413,202.42 of which a Statutory Notice of demand dated 18.10.21 (Statutory Notice) was issued by the Petitioner to the Respondent under pursuant to sections 465(1)(e) and 466 of the Companies Act 2016.

It is alleged in the Petition that:-

2.1 Sometime in or around February 2021, the Petitioner was awarded a contract by the Respondent Company to carry out construction works in respect of a project known as “CADANGAN MEMBINA 2 BLOK PANGSAPURI 20 TING KAT M ENGANDUNGI JENIS A 118 UNIT, JENIS B 118 UNIT, JENIS C 58 UNIT, JENIS D 56 UNIT, 1 TINGKAT KEMUDAHAN AWAM DAN 5 TINGKAT TEMPAT LETAK KERETA DI ATAS LOT PT 14450 & 1295, BATU 8M MUKIM SETAPAK, DAERAH GOMBAK, SEL ANGOR DARUL EHSAN - PAKEJ UNTUK KERJA-KERJ A STRUKTUR (MPDT/SCR/ P1/01/2021)” (the “Project”)

2.2 The Petitioner carried out works in the said Project, but the Respondent Company neglected, failed and/or refused to pay the Petitioner for the same.

2.3 In the upshot, the Respondent Company and the Petitioner executed a settlement agreement (the “Settlement 3 Agreement”) in July 2021. Pursuant to the said Settlement Agreement:

2.3.1 The Respondent Company agreed to pay in full the sum of RM 86,257.42 to the Petitioner on or before 30.07.2021 (see Clause 4 of the Settlement Agreement).

2.3.2 The Respondent Company agreed that the Petitioner is entitled to retrieve its equipment and materials listed therein at any time after the execution of the Settlement Agreement (see Clause 6 of the Settlement Agreement). A copy of the said Settlement Agreement dated 3.07.2021 is annexed hereto and marked as “Annexure 4”.

2.4 However, despite repeated demand s from the Petitioner, the Respondent Company has to date failed to comply with the Settlement Agreement. In this regard:

2.4.1 The Respondent Company has to date neglected, refused and/or failed to pay the sum of RM 86,257.42 to the Petitioner pursuant to Clause 4 of the Settlement Agreement.

2.4.2 The Respondent Company has directly or indirectly impeded the retrieval exercise of the equipment and materials belonging to the Petitioner as listed under Clause 6 of the Settlement Agreement. Consequently, the Petitioner has been wrongly deprived of its said equipment and materials.

2.5 From 16.08.2021 to 21.08.2021, the Petitioner has through its solicitors, issued numerous letters to the Respondent Company to 4 demand for its outstanding sum of RM 86,257.42 to be repaid, and for arrangements to be made for the Petitioner to retrieve its said equipment and materials from the Project site. A copy of the letters dated 16.08.2021, 20.08.2021 and 21.08.2021 issued by the Petitioner’s solicitors is annexed hereto and collectively marked as “Annexure 5”.

2.6 However, the Respondent Company has to date, failed, refused and/or neglected to respond to the Petitioner’s numerous demands. Further, sometime on or around 26.08.2021, pursuant to Clause 6 of the Settlement Agreement, three of the Petitioner’s employees went to the Project site to retrieve the Petitioner’s said equipment and materials as listed in Clause 6 of the Settlement Agreement. However, the Petitioner’s employees discovered that the Petitioner’s equipment and materials h ad been removed and were no longer at the Project site.

2.7 On 23.09.2021, the Petitioner’s solicitors again is sued a letter of demand to the Respondent Company f or the sum of RM 86,257.42 to be repaid a s well a s the retrieval of its equipment and materials pursuant to Clause 6 of the Settlement Agreement. The Respondent Company did not reply to the same. A copy of the letter of demand dated 23.09.2021 issued by the Petitioner’s solicitors to the Respondent Company is annexed hereto and marked as “Annexure 6”.

2.8 Based on the matters set out above, it is evident that the Petitioner’s said equipment and materials have been wrongfully removed and can no longer be retrieved by the Petitioner. The Petitioner has accordingly suffered losses 5 being, among others, the value of the said equipment and materials.

2.9 To determine the value of the said equipment and materials, the Petitioner has obtained a quotation dated 15.10.2021 in respect of the same from “DMC Builder Sdn Bhd”. The said quotation values the Petitioner’s equipment and materials as RM 326,945.00. A copy of the quotation dated 15.10.2021 issued by the DMC Builder Sdn Bhd to the Petitioner is annexed hereto and marked as “Annexure 7”. Respondent’s Opposition

The Respondent had filed an Affidavit In Opposition (AIO) in enclosure 11 on 25.1.2022 in opposition to the Petition where the Respondent claims a) that it was the white knight who came to rescue the developer of a condominium project known as Residensi Sungai Chinchin Gombak located at Mukim Setapak, Daerah Gombak, Selangor (Project) b) the Respondent had on 4.2.2021 appointed the Petitioner as the main contractor to carry out the remaining construction work at the Project c) The Respondent’s contention that without carrying out substantial work at the Project, the Petitioner had decided to withdraw from the Project on 9/6/2021 and proposed Mahsyar Kasih Sdn Bhd to take over as the main contractor. 6 d) The Respondent then appointed Mahsyar Kasih Sdn Bhd to be the main contractor of the Project pursuant to a letter dated 11/6/2021 at Exhibit NZ-4 in order to replace the Petitioner. e) The developer of the Project, Ganda Selat Sdn Bhd (in liquidation) had obtained Court Order dated 9/6/2021 in Exhibit NZ-5 which had set aside the Court Order dated 19/8/2020 which had allowed the Respondent to continue working on the Project f) Due this Court dated 9/6/2021 at Exhibit NZ-5, Respondent had issued a termination letter to Mahsyar Kasih Sdn Bhd pursuant to a letter dated 30/8//2021 as shown in Exhibit NZ-6 g) The Respondent contended that the Respondent had not taken over the site of the Project when the Petitioner decided to withdraw from being the main contractor but the site was instead handed over directly to Mahsyar Kasih Sdn Bhd by the Petitioner h) The Petitioner is also claiming for equipment and materials sent to the site of the Project for which the Respondent had agreed for the Petitioner to retrieve. However, the Respondent denied any knowledge of the value and quantity involved. There was no acknowledgement of receipt of the equipment and materials not only by the Respondent but by Mahsyar Kasih Sdn Bhd who was holding custody of the site of the Project. It was also not confirmed by the Architect who is the Supretending Officer of the Project of the equipment and materials as claimed by the Petitioner i) There was no amount of money stated in the Settlement Agreement see Annexure 4 to confirm the value of the equipment and materials allegedly belonging to the Petitioners left at site. The amount of RM326,945.00 was only determined by a quotation dated 15/10/2021 7 j) This quotation was prepared dated 15/10/2021 after the date of the Settlement Agreement which was dated as 3/7//2021. However, the Respondent’s directors had only signed the Settlement Agreement on 13/7/2021. The amount claimed of RM326,945.00 as shown in the quotation date 15/10/2021 in Annexure 7

It is submitted by the Respondent inter alia that the Settlement Agreement is unstamped. Court’s Findings

At the outset, I hold that the Further Affidavit in enclosure 15 which was filed on 22.3.2022 was done without this Court’s consent and contrary to the directions given at the case management on 11.1.2022. It is in my view an attempt to introduce further evidence before this Court when all directions had already been given in respect of filing of affidavits and written submissions on the same and no reasons have been mentioned in the said Further Affidavit in enclosure 15 why the contents therein could not have been adduced earlier in the Respondent’s Affidavit In Opposition in enclosure 11. This Court therefore will not accept the said Respondent’s Further Affidavit in enclosure 15 for the purpose of this proceedings for the reasons aforementioned.

In deciding on the Settlement Agreement which is dated 3.7.2021, and which is not disputed by the parties as being unstamped, I have taken into consideration Section 52 of the Stamp Act 1949 which provides: 8

(a) any such instrument shall, subject to all just exceptions, be admitted in evidence on payment of the duty and the penalty, if any, chargeable in respect thereof under section 43 or section 47A;

(b) nothing herein contained shall prevent the admission of any instrument in evidence in any criminal Court;

(c) nothing herein contained shall prevent the admission of any instrument in evidence in any Court when such instrument has been executed by or on behalf of the Government of Malaysia or of any State or of the Government of any other country or where it bears the certificate of the Collector as provided by this act.

I have also had the opportunity to read the Federal Court case of Liputan Simfoni Sdn Bhd v Pembangunan Orkid Desa Sdn Bhd [2019] 4 MLJ 141 which had held: “[112] The Stamp Act 1949 concerns only the instruments and not the transactions. In UMBC, at p 560 (MLJ); p 478 (CLJ) of the report the Supreme Court, inter alia, observed: We ought to bear in mind the above-quoted rules and that the object of the Act relating to stamp duties is to raise revenue by 9 requiring documents of certain kinds to be stamped. In other words, the Stamp Act tax documents and not transactions. And thereafter at paragraph 17 of the said decision: “…We agree with the view that the courts should be slow in striking down commercial contracts on the ground of illegality. The compliance with the Stamp Act 1949 and the Real Property Gains Tax 1976 are not the prerequisite for the second SPA to be enforceable. There is no prohibition under the two Acts to preclude the first defendant from acquiring rights to the subject land. The Stamp Act 1949 provides a penalty for breach of its provisions. Similarly, under the Real Property Gains Tax Act 1976 there are penalties for breach of its provision. In addition, it is provided that tax due and payable may be recovered by the government by civil proceeding as a debt to the government. The object of the two Acts is to raise revenue. There is therefore no sufficient nexus such as would satisfy the test laid down in Curragh Investment Ltd. The first defendant’s infringement of the two Acts therefore did not prevent it from suing on the contract which is legal.”

On the authority of the above Federal Court case of which this High Court is bound, the Settlement Agreement is clearly not void or voidable as a result of the failure to stamp the said agreement and that the rights and obligations therein are clearly subsists as between the parties. It is therefore improper for the Respondent to evade any of its obligations pursuant to the said Settlement Agreement by raising the issue of the same not being stamped when the Stamp Act was clearly, and with respect I quote the Federal Court in Liputan Simfoni Sdn Bhd (supra) “is to raise revenue by requiring 10 documents of certain kinds to be stamped. In other words, the Stamp Act tax documents and not transactions.

I now turn to the Respondent’s contention that date of the Settlement Agreement is defective as the directors of the Petitioner has signed the same on 16.7.2021 and another director had signed it on 17.7.2021. I find no evidence before this Court of the Respondent disputing the date of the Settlement Agreement being 3.7.2021 prior to the Petition being filed. I see no reason to declare that the Settlement Agreement is invalid merely due to the alleged dating of the same when it clearly appears to this Court that the parties had agreed to date Settlement Agreement on 3.7.2021 and there is nothing in law to prevent the same when the parties had agreed to it. I thus find the Respondent’s contention in this issue as being untenable and is in my view purely an afterthought.

In reading the Settlement Agreement, which can be found in Annexure 4 of the Petition in enclosure 1, I see that clause 4 therein, expressly states: “MPDT further agrees to pay in full the sum of RM86,257.42 to Ava Kuasa (being payment in respect of the relevant insurance costs incurred by Ava Kuasa for the said Project) on or before 30.7.2021”

A reading of the above clause 4 therein is clear that it is therefore not subject to the Respondent first receiving payments from any third party and thus the Respondent’s contention that is was agreed to be paid by Mahsyar Kasih Sdn Bhd (Mahsyar Kasih) pursuant to the said 11 clause is misconceived and totally unacceptable. The reference to exhibit NS-4 in enclosure 11 being the Letter of Award dated 11.6.2021 from the Respondent to Mahsyar Kasih is by no means evidence that the Petitioner had agreed to accept or collect the insurance proceeds from Mahsyar Kasih or that the Respondent was first to collect the said sums from Mahsyar Kasih before the same is to be refunded to the Petitioner as the Petitioner is not from the evidence, privy to the said Letter of Award dated 11.6.2021.

The Petitioner had also made a claim for RM326,945 in respect of equipment and materials which the Respondent states the figure is not contained in Annexure 4 of the Settlement Agreement. In this respect, the pertinent clauses in the Settlement Agreement is clause 6 which states: Please copy clause 6 of annexure 4 of the Petition MPDT further agrees that Ava Kuasa is entitled to retrieve the following list of equipment and materials belonging to Ava Kuasa anytime after execution of this Settlement Agreement.:

6.1. Steel formwork (Column) Corner form: a. 1x1x2 = 4pcs b. 1x1x3 = 4pcs Straight form: a. 1x3 =2p 12 b. 1x2 =2pcs c. 0.5 x 2 = 2 pcs d. 0.5 x 3 = 2 pcs

6.2 Sheet Pile a. 6m = 5 nos b. 3m = 4 nos c. 2.8m = 9 nos d. 2.6m = 2 nos e. 2m = 10 nos f. 1.8m = 2 nos g. 1.6m = 2 nos

6.3 Steel bar scrap = 1 full container (as shown in the Settlement Agreement in para 6.3 of Annexure 4)

6.4 Hollow Section a. 2” x 2” x 6m = 320 nos b. 2” x 2” x 5m = 120 nos c. 2” x 2” x 3.5m = 670 nos d. 2" x2" x 3m = 820 nos e. 2" x 2" x 2.7m = 49 nos t. 2" x 2" x 2.5m = 220 nos g. 2" x 3" x 6m = 110 nos h. 2" x 3" x 3.5m = 145 nos i. 2" x 3" x 2.7m = 70 nos t. 2" x3" x 2.6m = 7 nos k.3"x3"x6m = 220 nos 13 l. 3" x 3" x 3.5m = 70 nos m.3"x3"x3m = 45 nos

6.5 600mm U head = 1600 pcs

6.6 900mm U head = 500 pcs

6.7 600mmjackbase = 500 pcs

6.8 900mmjackbase = 1600 pc

From the said clause 6 I hold that there is no dispute that the equipment and materials referred to therein belong to the Petitioner or to the accuracy of the said equipment and materials and that the Petitioner is entitled to retrieve the same at any time. Following from this this Court has found that the Petitioner had sought to retrieve the same from the Respondent’s Project site as can be seen from annexure 5 of the Petition being various letters dated 20.8.2021 and 21.8.2021 respectively from the Petitioner’s solicitors, Messrs Clinton Tan, to the Respondent.

There is also an assertion by the Petitioner that the said equipment and materials had been removed from the Project site which the Respondent has denied but which I find has been unsupported with any specific details or evidence from the Respondent and which I thus hold to be a mere denial.

I further note from the documents before this Court that the Respondent had never denied the Petitioner’s right to retrieve the 14 equipment and materials referred to. Further to this, I accordingly accept the Petitioner’s quotation dated 15.10.2021 obtained from one DMC Builder Sdn Bhd on the said equipment and materials at Annexure 7 of enclosure 1, which estimates the sum of RM326,945 for the same. As there is no contemporaneous document produced by the Respondent to challenge the said sum, this Court has on a balance pf probabilities found that the Petitioner has duly proven the said sum as being due and wing and that there is no valid dispute shown by the Respondent to this Court on the said sums. In the circumstances, the fact that the sum is not mentioned in Annexure 4 of the Settlement Agreement is irrelevant.

I further hold that section 26 of the Contracts Act 1950 is inapplicable in the circumstances and that the Settlement Agreement herein does not come within the said section 26 as there is clearly a valid legal consideration in place when reading the recitals in the said Settlement Agreement and the agreement as a whole i.e the mutual termination and settlement of all matters in the Project.

As to the Respondent’s assertions that it is not in possession of the Project site, I have viewed the Court Order dated 9.6.2021 in exhibit NZ-6 of enclosure 11 and find that although paragraph 3 had made an order that the Respondent stop all works at the Project site and return possession of the same to Ganda Selat Sdn Bhd, there is no evidence before me that this was done nor do I find any evidence of the Respondent raising this issue at the date of the Settlement Agreement i.e 3.7.2021 or at any time prior to the filing of the Petition. 15

I also hold that non payment of the Statutory Notice under section 466 (1)(a) of the Companies Act 2016 by the Respondent has consequently triggered the presumption of the Respondent being unable to pay its debt (see Eastool Industries Sdn Bhd v Getfirms Electronics Sdn Bhd [2001] 6 CLJ 151).

For the sake of completeness, the Respondent’s assertions that there is no judgment obtained by the petitioner in the case before me is, with due respect, irrelevant. It is trite that a judgment is not required to commence a winding up petition as held by the Court of Appeal in Lafarge Concrete (M) Sdn Bhd v Gold Tremd Builders Sdn Bhd [2011] 1 LNS 1763 where it was held: “[6] Before we proceed to answer those questions, we should perhaps say that "a creditor is not required to obtain a judgment before serving a statutory demand... " (The Law of Company Liquidation 4th edn. by Andrew R Keay at p. 83) and "whether or not judgment had been obtained, an unpaid creditor is, as a general rule, entitled to a winding-up order against a company which is insolvent" (The Law of Company Liquidation 4th edn. by Andrew R Keay at p. 91). Where there is no judgment, it is not uncommon for companies to argue that the debt is disputed. But "in order to oppose a winding-up petition, the respondent must raise a bona fide dispute in both a subjective and objective sense. It must be honestly believed to exist and must be based on substantial or reasonable grounds. BMC Construction Sdn Bhd v. Dataran Rentas Sdn Bhd [2001] 1 CLJ 591; [2001] 1 MLJ 356" (Chan & Koh on Malaysian Company Law 2nd edn. at para.

22.145).” 16

It is also this Court’s decision that the Respondent has consequently failed to raise any evidence as to its financial position and therefore its solvency for the consideration of this Court in accordance with Section 466 (1) CA 2016 and to rebut the presumption that it is ‘commercially insolvent’ in that a Company must prove that its able to pay its debts as per the judgment of the Supreme Court in Sri Hartamas Development Sdn Bhd v MBf Finance Bhd [1992] 1 CLJ (Rep) 303 which held that: “In dealing with "commercial insolvency", that is, of a company being unable to meet current demands upon it, we would respectfully follow the Privy Council in the Malayan Plant case and cite the following observations from Buckley on the Companies Act (13th Edn.) at p. 460: In such a case it is useless to say that if its assets are realized there will be ample to pay twenty shillings in the pound: this is not the test. A company may be at the same time insolvent and wealthy. It may have wealth locked up in investments not presently realizable; but although this be so, yet if it have not assets available to meet its current liabilities it is commercially insolvent and may be wound up.”

This Court therefore holds that there has been no bona fide substantial disputes raised by the Respondent based on the evidence before me and that the Respondent is liable to be wound up.

This Court therefore grants order in terms of prayers 23.1, 23.2 and 23.3 with costs of RM10,000 in paragraph 23 of the Petition in enclosure 1. Dated: 8th day of June 2022 17 sgd. NADZARIN WOK NORDIN HIGH COURT JUDGE KUALA LUMPUR HIGH COURT Parties: Clinton Tan Kian Seng for the Petitioner [Messrs Clinton Tan] Zulkepli Omar for the Respondent [Messrs Lainah Yaacob & Zulkepli]