Dato' Chang Jong Yu v Dato' Seri Yong Tu Sang (WA-24NCC-65-02/2020)

DATO’ SERI YONG TU SANG [NRIC NO: 461125-10-5829]

YONG HIN SIONG [NRIC NO: 800704-11-5837]

YONG EMMY [NRIC NO: 750414-10-5498]

KUALA IBAI DEVELOPMENT SDN BHD [COMPANY NO: 282366-H]

IBAI LEISURE SDN BHD [COMPANY NO: 253614-T]

IBAI RIA SDN BHD [COMPANY NO: 203452-A]

IBAIMAS SDN BHD [COMPANY NO: 230300-P]

IBAI GOLF & COUNTRY CLUB BHD [COMPANY NO: 227542-A] …DEFENDAN-DEFENDAN AND DATO' RAVEENDRA KUMAR A/L NATHAN [NRIC NO: 621117-10-7357] …PROPOSED CONTEMNOR GROUNDS OF JUDGMENT (Enclosures 134 and 138)

The Originating Summons in this action concluded on 14-7-2020 with the recording of a Consent Order (“Consent Order”). In Enclosure 134, the Plaintiff initiated committal proceedings against the Court-appointed liquidator of the 7th Defendant, Ibaimas Sdn Bhd (in liquidation) (“D7”) and proposed contemnor (“Liquidator”) for alleged disobedience of the Consent Order. The Liquidator applied in Enclosure 138 to set aside the ex-parte Order for leave to commence committal proceedings. Background facts

The Originating Summons was filed amidst a litany of suits between the 2 main protagonists, the Plaintiff (“Chang”) and 1st Defendant (“Yong”). Chang and Yong are substantial shareholders in Kuala Ibai Development Sdn Bhd, the 4th Defendant (“D4”). The various litigation spanned a period before the Liquidator was appointed and involved D4, subsidiaries of D4 and others mixed up in their disputes.

The 5th to 8th Defendants are wholly owned subsidiaries of D4. One of these subsidiaries is D7 which owns 82 lots of land in Kuala Terengganu (“Land”). The Originating Summons here was filed solely to restrain the implementation of a resolution of D4 in the general meeting on 3-1-2020, authorizing its directors to sell any or all of the assets of D4 and its subsidiaries, including D7. The Consent Order that the parties recorded reads as follows:

D7 was wound up in an unopposed winding up on 5-4-2021. The Petitioning creditor was one Kuala Ibai Property Sdn Bhd (“KIP”). KIP is unrelated to D4 but is said to be associated to Yong. D7 was originally supposed to have developed the Land under a Joint Venture Development Agreement with KIP dated 19-7-2019 (“JVDA”). About 2 years after the winding up Order, the Liquidator terminated the JVDA on 28-3-2023.

In conjunction with the termination of the JVDA, the Liquidator re-appointed KIP as a turnkey contractor under a new Turnkey Construction Agreement dated 28-3-2023 (“TCA”). According to the TCA, D7’s rights and interests in 33 lots of the Land were assigned and/or transferred to KIP as payment in kind for a contract sum of RM16,280,918.00 payable to KIP under the TCA.

The Land was previously subject to a third-party charge to OSK Capital Sdn Bhd for a RM9 million loan taken out by KIP. Part of that loan was used to redeem the land from Malayan Banking Berhad for RM1,764,715.74. In consideration of the 33 lots of Land, it was agreed under the TCA that KIP would pay RM5.4 million to redeem the Land from OSK Capital Sdn Bhd.

As the “beneficial owner” of the 33 lots of the Land, KIP then entered into 8 sale and purchase agreements dated 25-10-2023 (“SPAs”) to sell 8 lots of the Land to Modern Mode Sdn Bhd and Saham Terbilang Sdn Bhd, also companies said to be connected to Yong. As the legal owner of the 33 lots, the Liquidator signed the 8 SPAs.

It is not disputed that the Liquidator signed the TCA and the 8 SPAs on behalf of D7 without consent of Chang or the approval of any Court, and no answer was provided by the Liquidator to contradict the charge that he did so while fully aware of the Consent Order and its terms. The Consent Order is duly endorsed with a penal notice addressed to D7. Analysis and findings

In light of the events described above, the questions for this Court to decide are: a) whether the Liquidator was bound to obey the Consent Order; b) whether the Liquidator’s actions amounted to a disposition of Lands belonging to D7 in breach of the Consent Order; and c) whether the Liquidator did so willfully with notice of the terms of the Consent Order.

At the heart of the committal application and the application to set aside the ex-parte Order for leave to commence it, is the position taken by the Liquidator in respect of the first question above, i.e. that the Consent Order is not valid and binding against him, because its terms are legally inoperative against the Liquidator post-winding up. Effect of winding up on court orders

As a starting point, the Consent Order, while akin to a contract, is unmistakably given the force of a Court Order by the seal of the Court and the endorsement of a penal notice. It is settled law that a court order recorded by consent is no less a valid and binding court order that must be obeyed (Mega Palm Sdn Bhd & Anor v. Hun Tee Siang (Menyaman Atas Kapasitinya Sebagai Pemegang Jawatan Di Persatuan Penduduk Country Heights Damansara, Kuala Lumpur) & Ors [2022] 4

This proposition is not contentious. In fact, the 1st to 3rd Defendants here were committed for contempt of Court on 20-9- 2022, and fined RM100,000.00 each or 6-months imprisonment in default of payment, for breach of the Consent Order.

It is also a fundamental principle that requires no restatement that a court order is valid and must be obeyed until and unless it is varied or set aside. This Court can do no better than to reproduce the following passage from Wee Choo Keong v MBf Holdings Bhd & Anor And Another Appeal [1993] 2 MLJ 217: “Obedience to court order It is established law that a person against whom an order of court has been issued is duty bound to obey that order until it is set aside. It is not open for him to decide for himself whether the order was wrongly issued and therefore does not require obedience. His duty is one of obedience until such time as the order may be set aside or varied. Any person who fails to obey an order of court runs the risk of being held in contempt with all its attendant consequences.”

In this case, it is not disputed that without varying or setting it aside, the Liquidator decided for himself that the Consent Order is not binding on him or is not otherwise applicable to him because he is a liquidator governed by a statutory winding up framework, and that empowers him to enter into the TCA and execute the 8 SPAs without the need for Chang’s permission or the Court’s approval. This is the proposition that this Court is called upon to consider.

Generally, a liquidator may disclaim onerous or unprofitable contracts under the regime set out in section 531 of the Companies Act 2016 (“CA”). This court also notes that Sime Diamond Leasing (M) Sdn Bhd v JB Precision Moulding Industries Sdn Bhd (In Liquidation) [1998] 4 MLJ 469 is authority for the proposition that the statutory framework for set-off replaces the contractual right of set-off upon winding up to preserve the sanctity of the pari passu principle. However, it is the respectful view of this Court that the case does not stand for the general proposition that pre-winding up contracts do not bind a liquidator.

More crucially, there is no provision of the CA or any case law cited by counsel for the Liquidator that supports the proposition that a valid and binding court order that is otherwise enforceable against a company and its directors may be disclaimed or cease to be valid and binding against the liquidator after the company is wound up. There is at least one reported case where the liquidator was held to be bound by a pre-winding up court order (Eadie Voon Architect v Stylish Houz Development Sdn Bhd (In Liquidation) (Koperasi Kemas Negeri Sembilan Bhd & Ors, Interveners [2023] 7 MLJ 367).

This Court takes the view that first principles dictate that the Liquidator is bound to obey the Consent Order if he has notice of it, in the same way that a property that is subject to a Court-ordered interlocutory injunction pre-winding up because of a pending claim over the property, could not be sold by the Liquidator in disregard of the injunction. The Liquidator’s proposition that pre-winding up court orders are not applicable to him is not only unsupported, but stand contrary to established principles.

In any case, the Liquidator’s rationale is that the Consent Order is incompatible with the statutory framework for winding up that overrides it. The words used by the Liquidator is that he is “incapable of breaching the terms of the Consent Order” because sections 472(2) and 486(1)(a) of the CA, read with Part I of the Twelfth Schedule, expressly state that he does not need Court approval to undertake the impugned transactions.

In this Court’s view, however, there appears to be no principled reason why the Liquidator can ignore the Consent Order, even if it presents a restraint to his power of sale. There is no support for the proposition that complying with the Consent Order would be in any way incompatible with the law. No legal or practical impediment prevented the Liquidator from complying with the Consent Order. Contrary to the Liquidator’s submission, the Consent Order does not give Chang an unseemly veto power or a fetter on the Liquidator’s duties, as the Liquidator has recourse to the Court under the same Consent Order.

In respect of section 472 of the CA, it is not true that the provision has no application post winding up as contended by the Liquidator. This is evident from the fact that the section expressly refers to exempt dispositions by liquidators: “(1) Any disposition of the property of the company, other than an exempt disposition, including any transfer of shares or alteration in the status of the members of the company made after the presentation of the winding up petition shall, unless the Court otherwise orders, be void.

In subsection (1), “exempt disposition” means a disposition made by a liquidator, or by an interim liquidator of the company in exercise of the power conferred on him under Part I of Twelfth Schedule or the rules that appointed him or an order of the Court.”

Thus, all dispositions of company property after the presentation of a winding up petition is void under section 472 of the CA, even those purportedly transacted after the company is wound up. Otherwise, it would be redundant to mention exempt dispositions in the provision. The Liquidator could certainly have made an application to the winding up Court under section 472 of the CA, to approve the TCA and the 8 SPAs.

As noted of course, the underlying premise of the Liquidator’s stance is found in section 486(1)(a) of the CA and Part I (c) and

of the Twelfth Schedule, which empowers the Liquidator to do the following without court sanction: “(c) sell the immovable and movable property and things in action of the company by public auction, public tender or private contract with power to transfer the whole immovable and movable property and things to any person or company or to sell the same in parcels ..

do all such things as are necessary for winding up the affairs of the company and distributing its assets.”

According to the Liquidator, the transfer or assignment of the 33 lots of the Land as payment in kind of RM16,280,918.00 to KIP under the TCA, had the effect of freeing the Land from the charge to OSK Capital Sdn Bhd, terminating the JVDA without penalty, refunding purchasers from the HDA account and completing certain infrastructure works. The Liquidator therefore asserted that the TCA and 8 SPAs were transacted for the beneficial winding up of D7-Ibaimas.

This Court considered that the Liquidator was blowing hot and cold in his attempt to prevent this Court from reviewing the TCA, all while the main plank of his argument is that the TCA falls within the ambit of his unfettered powers under Part I of the Twelfth Schedule of the CA to deal with the Land. It was on this basis that he considers the Consent Order incompatible with statute and him “incapable” of complying with its terms.

Even on a cursory review of the TCA, this Court found that there is force in the argument that what the Liquidator did under the TCA and the 8 SPAs, was not a sale of the 33 lots of the Land in return for distributable proceeds at all, but the carrying on of business of D7 involving a preferential payment to KIP as an unsecured creditor:

The approximately RM5.4 million in proceeds of the 8 SPAs were to be used principally to discharge KIP’s liability to OSK Capital Sdn Bhd, and incidentally, to redeem the Land of the third-party charge that existed in the first place for KIP’s benefit.

The remaining RM10,880,918 that the Liquidator undertook to pay in kind to KIP using the rest of the 33 lots of the Land, was payment for the completion of certain infrastructure works by KIP.

The contract sum is also expressed to be payment for all costs and expenses for works previously carried out by KIP without any valuation of what portion of the consideration relates to antecedent debt. This Court is unable to construe the provisions of the TCA any other way. That it was transacted without any Court approval only served to further call into question the propriety of the transaction.

According to Part II of the Twelfth Schedule of the CA, the Liquidator may only carry on the business of the company after 180-days from the winding up order, or make any compromise or arrangement with creditors, with the authority of either the Court or a committee of inspection (if there is one). The relevant provisions of Part II of the Twelfth Schedule refer to those powers in these terms: “(a) carry on the business of the company so far as is necessary for the beneficial winding up of the company, but the authority shall not be necessary to so carry on the business during the one hundred and eighty days after the date of the winding up order; …

make any compromise or arrangement with creditors or persons claiming to be creditors or having or alleging themselves to have any claim, present or future, certain or contingent, ascertained or sounding only in damages against the company, or where the company may be rendered liable”

This Court therefore finds that the TCA and 8 SPAs were not exempt dispositions under section 472 of the CA at all, and would have required Court approval regardless of whether the Consent Order was in place. Incidentally, the winding up Court in Shah Alam High Court Post Winding Up Case No: BA-28PW-15- 01/2024 had on 7-7-2025 (“PWU 15”), also declared that the TCA is null, void and unenforceable for breach of section 486 of the CA.

In other words, this Court does not view the terms of the Consent Order as incompatible with the powers of the Liquidator to seek sanction before the above transactions were undertaken, as his conduct remains under the supervision of the Court at all times.

Even if the Liquidator were to take the view that section 472 of the CA was not the appropriate provision of the law under which he should apply for sanction, the express terms and spirit of the Consent Order were clear that he was not free to unilaterally enter into the impugned transactions. The appropriate alternative course of action, which would have excused the Liquidator for disregarding the Consent Order, would have been to seek Court approval under section 486(1)(b) of the CA or directions under section 487 of the CA. (See North Plaza Sdn Bhd v Equiticorp Holdings Ltd and other appeals [2013] 3 MLJ 617 on a post-winding up restriction of the liquidator’s power of sale). Liquidator is bound by Consent Order

For the reasons already set out, this Court found that it was not open for a Liquidator to decide for himself that a pre-winding up Order of Court is not applicable to him. For completeness, the Liquidator also argued that he was not a party to the proceedings in which the Consent Order was recorded and is therefore also not bound for that reason.

This argument is a non-starter. As the Liquidator of D7, he is an agent of the company (Dato' See Teow Chuan & Ors v Ooi Woon Chee & Ors (including Can-One International Sdn Bhd as 15th respondent) and other appeals [2010] 6 MLJ 459). Even if the Consent Order was recorded before his involvement in D7 and was not directed at him, a stranger who aids and abets the breach would also be liable for contempt of Court (TO Thomas v Asia Fishing Industry Pte Ltd [1976] 1 MLJ 151). Other grounds

The Liquidator also argued various other grounds such as the pendency of other litigation and appeals, that committal should be a remedy of last resort and that as a form of execution, the dismissal of committal proceedings against the director of the counterparty in the TCA and the 8 SPAs, and that committal proceedings can never lie against a liquidator because of section 472(3) of the CA. None of these arguments were persuasive.

Pending litigation

The Liquidator appeared to be arguing that he cannot be found in contempt of Court until all other pending proceedings between the parties conclude because questions about whether the Liquidator needed to comply with the Consent Order and the validity of his reasons for not complying are live issues that will be fully ventilated in those proceedings.

The ongoing litigation identified by the Liquidator are as follows: a) KLHC Suit No: WA-22NCC-133-02/2024 (“Suit 133”), where the Liquidator has been joined as a co-defendant. Suit 133 seeks, inter alia, a determination that the TCA is unlawful, void and part of a fraudulent scheme to strip D7 of its assets through sham agreements, engineering liquidation and improper land transfers, to defeat creditors’ rights; b) Court of Appeal in Civil Appeal No: W-02(IM)(NCC)-1912- 11/2024 (“Appeal 1912”) in respect of the Plaintiff’s application for an interim injunction in Suit 133; and c) PWU 15 (mentioned above) and SAHC Post Winding Up Suit No: BA-28PW-16-01/2024 (“PWU-16”) calling for the Liquidator’s removal from office.

This Court disagrees with the proposition that it must await the outcome of these other pending proceedings before deciding the committal application before it. Suit 133, Appeal 1912, PWU-15 and PWU-16 are all separate actions and proceedings. Each is of a different character and is governed by different considerations.

Committal for breach of the Consent Order is a matter wholly within the jurisdiction of this Court to decide, as the Consent Order was recorded and given force here. As detailed in this Judgment, the questions raised needed to be answered in determining whether the Liquidator acted in breach of the Consent Order, and so they were answered as set out above.

In any case, no application was filed for a stay of proceedings to give priority to relevant findings either by the High Court in those proceedings or by any imminent decision of an appellate Court. In fact, the other proceedings are moving concurrently and independently. As far as this Court had been made aware, Appeal 1912 and PWU 15 have been decided. Alternative remedies

On a related point, the Liquidator further submitted that contempt is a punitive remedy that ought only to be invoked where no adequate alternative remedy exists. Referring to the fact that the Plaintiff has obtained an injunction from the Court of Appeal in Appeal 1912 to prevent the completion of the 8 SPAs and is actively seeking damages and his removal from office, he argued that the present application to commit the Liquidator is a tactical weapon of litigation to obtain leverage and not a genuine vindication of the Court’s authority.

This Court is of the view that the injunction and the steps to remove him from office and recover damages are not alternative remedies to committal for contempt of court, but different remedies arising from different causes. The purpose of these committal proceedings is to punish for disobedience of the Consent Order, and not as a means of enforcement, because the act restrained by the Consent Order had already been committed by the Liquidator. Incidentally, the Liquidator is still vigorously resisting all of the so-called alternative remedies.

As a matter of principle, it was usefully explained in Mok Kah Hong v Zheng Zhuan Yao [2016] 3 SLR 1 that even in the context of committal as a tool of enforcement, there is no necessity for a party to prove that all alternative remedies have been exhausted before resorting to committal only as a last resort: “96. Returning to the first ground relied upon by the court in Khoo Wai Keong, we should make it clear that there is a distinction between committal proceedings being a remedy of last resort and the requirement of having to exhaust all other alternative remedies before committal proceedings can be resorted to. The doctrine of exhaustion of remedies exists in areas of law such as conflicts of law and administrative law. It should not, however, be extended to the law of committal, especially where there is clear evidence that such alternative enforcement mechanisms may not be successful… Secondly, the observations in the English authorities on the court’s reluctance to resort to committal proceedings in cases involving matrimonial matters were generally driven by the need to maintain and foster the relationship between the contemnor and his family.”

In other words, that there are other pending actions against the Liquidator for different remedies relating to his actions does not preclude a finding of contempt of court if the high burden of proving his deliberate and willful disobedience of the Consent Order is established. There are no relevant policy considerations why committal proceedings should be the remedy of last resort in the circumstances of this case.

Dismissal of committal against KIP’s director

In the contempt application against Woo Thin Choy (sole director of KIP), Woo Thin Choy was alleged to have aided and abetted the breach of the Consent Order when he entered into the 8 SPAs. The knowledge and culpability of Woo for aiding and abetting in the disposal of the 8 lots of Land are not directly comparable to that of the Liquidator. In fact, it was an argument made there that it was premature to commit him, as the Liquidator had not been found guilty of contempt of court.

Immunity from committal

The Liquidator also argued that section 472(3) of the CA protects him from committal action because committal is a form of execution under Order 45 of the Rules of Court 2012, and section 472(3) of the CA reads: “(3) Any attachment, sequestration, distress or execution put in force against the estate or effects of the company after the presentation of the winding up petition shall be void.”

This argument is misconceived because the committal action here is not being “put in force against the estate or effects of the company” but against the Liquidator personally. It was further highlighted that this argument was not raised when leave was sought from the winding up Court to commence committal proceedings against the Liquidator.

This Court found that there is no ambiguity in the terms of the Consent Order or its applicability. Unlike a third party dealing with the Liquidator, the Liquidator himself is an officer of the Court and held to a higher standard of conduct. As noted, he is a fiduciary, trustee, agent and officer of the Court. The Liquidator had actual notice of the Consent Order and the limitations on his powers.

This Court therefore viewed the Liquidator’s conduct with concern as he had no genuine basis to harbour any doubt as to the applicability of the Consent Order. As a matter of law, the Liquidator was bound to comply with the clear and express terms of the Consent Order, yet wilfully disobeyed it by entering into the TCA and the eight SPAs with notice of the terms of the Consent Order. The contempt is in the obstruction of justice, precisely because of the ongoing disputes between the contributories of the holding company, affecting assets of the subsidiaries.

This Court accordingly allowed Enclosure 134 and dismissed Enclosure 138 with costs. As the Liquidator’s contempt of Court was unmitigated, the Liquidator was similarly sentenced with a RM100,000.00 or 6-months imprisonment in default of payment, for breach of the Consent Order. Bertarikh : 15 December 2025 ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA KUALA LUMPUR Peguam Untuk Plaintif: Yap Boon Hau, bersamanya Yeap Chi Cheng dan Tiew Kelly Tetuan Mah-Kamariyah & Philip Koh Untuk Pihak Penghina Yang Dicadangkan: Ravichandaran Selliah, bersamanya Dheenish a/l Thevandran dan Chua Zhuo