Energy Equipment Tech Sdn Bhd v Strike Marine (M) Sdn Bhd (WA-24NCC-611-12/2024)

This is the Plaintiff’s application seeking a Fortuna injunction to restrain the Defendant from commencing or proceeding with winding up proceedings based on a statutory notice dated 2.12.2024 under sections 465(1)(e) and 466(1)(a) and (b) of the Companies Act 2016, demanding payment of RM9,497,114.76 (“this Application”). A]

The Plaintiff is a company engaged in construction business and entered into a contract with Vestigo Petroleum Sdn Bhd (“Vestigo”) as the main contractor for a project known as “Provision of Offshore Transportation and Installation (T&I) Campaign for Mampu-1 Relocation from Bentara Field to KMSE Field”.

On 17.4.2024 and 10.5.2024, the Plaintiff entered into Time Charter Party Agreements (“CPA”) with the Defendant whereby the Defendant was engaged as subcontractor to S/N ab12VhTc0GCI6rhYkfmig Page 3 of 17 provide anchor handling tug supply services for the vessels ENA Samurai and ENA Endeavour.

In July 2024, following concerns raised by the Defendant regarding outstanding payments, a tripartite meeting was held on 23.7.2024 between representatives of the Plaintiff, Defendant and Vestigo.

Subsequently, Vestigo issued a Letter of Assurance dated 24.7.2024 (“Letter of Assurance”) which was acknowledged and signed by the Defendant on 25.7.2024, stating, inter alia, that it would make direct payment to the Defendant should the Plaintiff fail to pay for the subcontractor’s work.

On 2.12.2024, the Defendant issued a statutory winding up notice claiming RM9,497,114.76 being the outstanding amount under invoices for services rendered by the Defendant. B]

The principles governing Fortuna injunctions are well-established in Pacific & Orient Insurance Co Bhd v. Muniammah Muniandy [2011] 1 CLJ 947, where Ramly Ali JCA (later FCJ) held that to succeed in obtaining such an injunction, the applicant must satisfy both limbs: i) the intended petition has no chance of success, as a matter of law and fact; and S/N ab12VhTc0GCI6rhYkfmig Page 4 of 17 ii) the presentation of such petition might produce irreparable damage to the company.

Both limbs are cumulative and must be satisfied for the injunction to be granted.

A creditor is not required to obtain judgment before serving a statutory demand (Lafarge Concrete (Malaysia) Sdn Bhd v. Gold Trend Builders Sdn Bhd [2011] 1 LNS 1763; [2012] 6 MLJ 817; Maril-Rionebel (M) Sdn Bhd & Anor v. Perdana Merchant Bankers Bhd & Other Appeals [2001] 3 CLJ 248).

A debtor must primarily satisfy the Court that “the debt is bona fide disputed on substantial grounds” (Tan Kok Tong v. Hoe Hong Trading Co Sdn Bhd [2007] 4 MLJ 355) C] FIRST LIMB: WHETHER THE INTENDED PETITION HAS

The Plaintiff contends that the debt is bona fide disputed on substantial grounds, relying principally on the Letter of Assurance whereby Vestigo allegedly undertook to pay the Defendant directly, thereby shifting the payment obligation from the Plaintiff to Vestigo.

However, a careful examination of the evidence reveals fatal weaknesses in the Plaintiff’s position. S/N ab12VhTc0GCI6rhYkfmig

The relevant portions of the Letter of Assurance central to the determination of this Application are reproduced below: “After careful consideration and most importantly to ensure continuation and completion of the CONTRACT in a timely manner, COMPANY hereby assures SUBCONTRACTOR that as a result of CONTRACTOR'S failure to pay for SUBCONTRACTOR’S WORK, COMPANY will make payment directly to SUBCONTRACTOR within thirty (30) days upon submission of all relevant invoices together with the supporting documents from SUBCONTRACTOR. COMPANY will make direct payment to SUBCONTRACTOR based on the following premise/conditions: a) Prior to receiving the Notice of Direct Payment from COMPANY to SUBCONTRACTOR, CONTRACTOR shall send a formal request letter to COMPANY titled “Notice of Assignment of Payment from COMPANY to SUBCONTRACTOR” along with the corresponding invoices; b) Performance and progress of SUBCONTRACTOR'S WORK shall continue unhindered and unaffected on the premise of the assurance provided by the COMPANY; c) COMPANY shall not make the same payment which has been remitted to CONTRACTOR and no "double payment" for the same scope of work is allowed; S/N ab12VhTc0GCI6rhYkfmig Page 6 of 17 d) COMPANY shall not be liable and obligated to make any payment should the payment request exceeds the total CONTRACT PRICE under the CONTRACT; e) Once the direct payment is made by COMPANY, any corresponding liability as well as any commitment by COMPANY in respect to such payment shall be deemed fully discharged and released; f) Any direct payments shall not create a separate contractual relationship between COMPANY and SUBCONTRACTOR nor shall it relieve CONTRACTOR of its responsibilities in respect of the SUBCONTRACTOR. In addition, this arrangement shall be on condition that the obligations, liabilities, risk and other expenses in respect of the SUBCONTRACTOR shall still remain with CONTRACTOR at all time. Please be reminded that payment made to SUBCONTRACTOR shall not constitute an admission by COMPANY as to the performance of CONTRACTOR and/or SUBCONTRACTOR'S obligations and all other terms and conditions, CONTRACTOR and/or SUBCONTRACTOR'S WORK and responsibilities under the CONTRACT shall remain unchanged.” (own emphasis added)

These express terms (namely Clause (f) and the portions highlighted above) are determinative. The Letter of Assurance, S/N ab12VhTc0GCI6rhYkfmig Page 7 of 17 by its own unambiguous language, preserved the Plaintiff’s primary contractual obligations to the Defendant. It did not transfer, novate, or extinguish the Plaintiff’s liability. At most, it created a conditional secondary obligation on Vestigo’s part, subject to specified conditions, without relieving the Plaintiff of its primary responsibility.

The Plaintiff’s reliance on the Letter of Assurance as creating a separate payment obligation binding on Vestigo is fundamentally flawed. The express disclaimer in Clause (f), together with the paragraphs immediately following it, makes clear that the Letter does not create a contractual relationship between Vestigo and the Defendant, and crucially, does not relieve or release the Plaintiff of its responsibilities toward the Defendant.

The principle of contractual interpretation requires giving effect to the clear and unambiguous language used by the parties. Where parties have expressly disclaimed any intention to create particular legal consequences, the Court will give effect to that intention. Here, the parties explicitly agreed that the Plaintiff’s obligations would remain unaffected.

In addition, the CPA prohibits any variation of its terms except by a written amendment signed by both parties. The Entire Agreement clause confirms that the Plaintiff’s obligations S/N ab12VhTc0GCI6rhYkfmig Page 8 of 17 remain unchanged, and cannot be affected by the Letter of Assurance.

Clause 38 of the CPA provides: “Entire Agreement This Charter Party, including all Annexes referenced herein and attached hereto, is the entire agreement of the parties, which supersedes all previous written or oral understandings and which may not be modified except by a written amendment signed by both parties.” (own emphasis added)

The principle of an “entire agreement” applies in that the CPA terms cannot be varied except by a written amendment signed by both parties. No such amendment exists. Accordingly, the obligations under the CPA, including the payment obligations, remain with the Plaintiff as the named “Charterer”.

Throughout the entire performance of the CPA, the Plaintiff never disputed the amounts invoiced by the Defendant. The invoices were issued, services were rendered, and no objection was raised. The allegation that the Defendant should pursue Vestigo for payment only emerged after the statutory notice was issued on 2.12.2024. S/N ab12VhTc0GCI6rhYkfmig

Under Clause 12(e) of the CPA, if the Plaintiff disputed any invoice, it was obligated to notify the Defendant before the due date and to pay the undisputed portion. No such notification was ever made.

On 2.9.2024, the Defendant wrote to the Plaintiff stating, inter alia: “2. All relevant invoices, calculations, details and Statement of Accounts have long been provided to you, and we enclose the same again for your reference. There had been no dispute for the Outstanding Sum due and payable, but yet, you have failed and/or refused to settle the aforesaid Invoices and the Outstanding Sum therefore remain unpaid and outstanding.

In view of the foregoing, we HEREBY DEMAND the immediate payment of the Outstanding Sum of RM9,497,114.76 from you.” (own emphasis added)

The Plaintiff did not respond to this letter. The Plaintiff did not dispute the debt, did not assert that Vestigo bore liability, and did not raise any objection to the quantum claimed. This silence is telling.

In commercial matters, a failure to respond to a letter of demand is significant. In Small Medium Enterprise Development Bank Malaysia v. Lim Woon Katt [2016] 9 S/N ab12VhTc0GCI6rhYkfmig Page 10 of 17 CLJ 73, the Court of Appeal held that in the ordinary course of business, when one commercial party states a claim to another, the recipient must respond if they wish to dispute it. Failure to do so undermines any subsequently raised defence.

The Court of Appeal held as follows: "It must also be noted that in commercial cases (not civil), courts have taken notice that, in the ordinary course of business, if one man of business states in a letter to another that he has agreed to do certain things, the person who receives that letter must answer it if he means to dispute the fact that he did so agree. (See PECD Construction Sdn Bhd v. Freehold Point Sdn Bhd [2008] 3 CLJ 215)." (own emphasis added)

Similarly, the Plaintiff did not respond to the statutory notice dated 2.12.2024. Furthermore, under Clause 12(e) of the CPA, if the Plaintiff disputed any invoice, it was obligated to notify the Defendant before the due date and to pay the undisputed portion. No such notification was ever made.

The only dispute raised by the Plaintiff emerged after the statutory notice was served, a clear afterthought designed to avoid legitimate liability. This pattern of conduct demonstrates the absence of any genuine bona fide dispute.

The fact that the Defendant sought payment from Vestigo pursuant to the Letter of Assurance does not mean the S/N ab12VhTc0GCI6rhYkfmig Page 11 of 17 Plaintiff’s primary obligation was extinguished. The Plaintiff remained the principal debtor under the CPA at all material times.

In Best Re (L) Ltd v. Hanwha General Insurance Co Ltd [2014] 9 MLJ 125, the High Court held that allegations raised to stifle genuine statutory rights that are “inconsistent with undisputed contemporary documents” constitute abuse of process. The Court stated: "[24] Therefore, I find that the allegation of the plaintiff is plainly and simply an afterthought calculated to stifle genuine statutory right to present a winding up petition against it and the allegation is inconsistent with undisputed contemporary documents where the plaintiff has admitted in all these contemporary documents that the September installment is due and payable to the defendant. It is settled law, when considering affidavit evidence, the court must reject any assertions of fact, denial or dispute by a party that is equivocal or lacking in precision or is inconsistent with undisputed contemporary documents." (own emphasis added)

Applying these principles, I find that the Plaintiff has failed to establish any bona fide dispute on substantial grounds (Tan Kok Tong (supra). The Letter of Assurance, properly construed, does not relieve the Plaintiff of its obligations, and the Plaintiff’s conduct demonstrates the absence of any genuine dispute. S/N ab12VhTc0GCI6rhYkfmig Page 12 of 17 D]

As I have found that the Plaintiff has not established a genuine dispute as to the debt, the issue of irreparable damage is no longer entirely relevant (see Bakti Dinamik Sdn Bhd v. Bauer (Malaysia) Sdn Bhd [2016] 10 CLJ 247). It was similarly held in Karisma Synergy Sdn Bhd v. Gates Pcm Construction (M) Sdn Bhd [2018] MLHRU 555 as follows: "[62] For completeness, I must add that even if the Defendant could show that it was not insolvent (which it fails to here), there is no justification whatsoever for its refusal to pay the debt claimed by the petitioner." (own emphasis added)

However, for the sake of completeness, I will nonetheless address this issue.

The Plaintiff produced unverified documents regarding a purported contract in the Philippines worth RM90 million. These documents provide no meaningful evidence of the Plaintiff’s ability to pay current debts in Malaysia. There are no bank statements, no proof of actual cash flow, and no demonstration of liquid assets available to satisfy the debt.

In Karisma Synergy (supra), the Court emphasised the concept of commercial solvency - the actual ability to pay debts S/N ab12VhTc0GCI6rhYkfmig Page 13 of 17 when they fall due, not merely theoretical assets or future projects. The Court held as follows: "It is settled law that the issue on the inability to pay debt is to be considered in commercial context, which is the neglect to pay current demands regardless of whether the debtor is in possession of assets which, if realized would permit it to discharge its liabilities. The test of commercial insolvency simply means that the respondent company is not able to meet current debts when they fall due (see System Communication Engineering Sdn Bhd v. Zabidin Sdn Bhd [1999] 5 MLRH 826;[1999] 1 AMR 1187). [59] This is why it has been said that a company could be both insolvent but wealthy at the same time (see, for example, the Privy Council decision in Malayan Plant (Pte) Ltd v. Moscow Narodny Bank Ltd [1980] 1 MLRA 488; [1978] 2 MLJ 81 and the Supreme Court decision in Sri Hartamas Development Sdn Bhd v. MBF Finance Bhd [1992] 1 MLRA 492). It is wholly insufficient that the assets might be realizable at some future date after the debts have become due and payable (see the Supreme Court decision in Lian Keow Sdn Bhd (in Liquidation) & Anor v. Overseas Credit Finance (M) Sdn Bhd [1987] 1 MLRA 672; [1988] 2 MLJ 449). [60] In essence, the test of commercial solvency requires immediate availability of assets to pay current liabilities whenever they fall due. And I emphasise that it is cash flow solvency that really matters, not balance sheet solvency. S/N ab12VhTc0GCI6rhYkfmig Page 14 of 17 [61] In the instant case, the respondent has not satisfactorily shown that it is not insolvent based on its cash flow position. In any event, it has also not furnished any evidence of its more recent financial position, not even any unaudited management accounts. This does little to assist the case of the respondent." (own emphasis added)

The Plaintiff has received substantial funds from Vestigo but has chosen not to pay the Defendant. This is not a question of inability but unwillingness.

As stated in Karisma Synergy (supra), even if a company has sufficient cash flow but refuses or is unwilling to make payment available to the creditor for any reason other than that the debt is bona fide disputed on substantial grounds, the company fails to rebut the presumption of insolvency (see also WWTAI Finance Ltd v. IES Energy Holdings Sdn Bhd [2016]

The Plaintiff has failed to show solvency or irreparable harm. E]

In summary, after careful consideration of all the evidence and submissions, I conclude as follows: S/N ab12VhTc0GCI6rhYkfmig Page 15 of 17 i) The Plaintiff has wholly failed to establish a bona fide dispute on substantial grounds. The Letter of Assurance, properly construed in accordance with its express terms, does not relieve the Plaintiff of its contractual obligations to the Defendant; ii) It cannot be said that the intended winding up petition has no chance of success; and iii) The Plaintiff has not demonstrated genuine solvency or irreparable damage that cannot be avoided by simply paying the admitted debt.

For all these reasons, this Application is dismissed with costs. Dated this 7th day of November, 2025 -SGD- (WAN MUHAMMAD AMIN BIN WAN YAHYA) JUDGE HIGH COURT OF MALAYA, (COMMERCIAL DIVISION (NCC 3)) HIGH COURT OF KUALA LUMPUR IN THE FEDERAL TERRITORY, MALAYSIA S/N ab12VhTc0GCI6rhYkfmig Page 16 of 17 COUNSEL FOR THE PLAINTIFF : Lee Chia Yee Messrs Ong, Ric & Partners Level 1, Tower 11, Avenue 5, The Horizon, No. 8, Jalan Kerinchi, Bangsar South, 59200 Kuala Lumpur Tel: 03-62113830 Email: general@orplegal.com.my COUNSEL FOR THE DEFENDANT : Mahmud Bin Abdul Jumaat (Ahmad Sobir Bin Ahmad Zakir together with him) Messrs Emir Mahmud & Co. No. B2-09-2, Precint Alami, Worldwide Business Centre 2, Seksyen 13, 40100 Shah Alam, Selangor Tel: 03-55241410 Email: info@emcolawkl.com LEGISLATION CITED Companies Act 2016 ▪ Section 465(1)(e) ▪ Section 466(1)(a) and (b)

Best Re (L) Ltd v. Hanwha General Insurance Co Ltd [2014] 9 MLJ 125 S/N ab12VhTc0GCI6rhYkfmig

Bakti Dinamik Sdn Bhd v. Bauer (Malaysia) Sdn Bhd [2016] 10

Karisma Synergy Sdn Bhd v. Gates Pcm Construction (M) Sdn

Lafarge Concrete (Malaysia) Sdn Bhd v. Gold Trend Builders

Maril-Rionebel (M) Sdn Bhd & Anor v. Perdana Merchant

Pacific & Orient Insurance Co Bhd v. Muniammah Muniandy [2011] 1 CLJ 947

Small Medium Enterprise Development Bank Malaysia v. Lim

Tan Kok Tong v. Hoe Hong Trading Co Sdn Bhd [2007] 4 MLJ 355

WWTAI Finance Ltd v. IES Energy Holdings Sdn Bhd [2016] MLRHU 1564 S/N ab12VhTc0GCI6rhYkfmig