GCCP Gridland Sdn Bhd v Gasing Potensi Construction Sdn Bhd (WA-24NCC-51-01/2023)

The Defendant has obtained summary judgment from the Court of Appeal against the Plaintiff on 27.7.2021 in the sum of RM1,889,850.95 for work done.

by the Court of Appeal on 2.11.2022.

The Plaintiff has filed an application for leave to appeal to the Federal Court against the striking out of its Counterclaim by the Court of Appeal and the leave application is currently pending to be heard on 11.7.2023.

The parties informed this Court of a court order dated 27.6.2019 summary judgment is allowed, the execution on the summary judgment order would be stayed pending the determination of the High Court.

Notwithstanding the aforesaid, on 25.1.2023, the Defendant sent a notice intending to wind up the Plaintiff based on the summary judgment.

The Plaintiff now seeks a Fortuna Injunction to restrain the Defendant from presenting a winding up petition.

The Plaintiff contended that an injunction ought to be granted on the following grounds:

on 11.7.2023;

there are various other methods to execute their summary judgment order; and

the Defendant knows of the existence of the court order dated 27.6.019. [8] The Plaintiff also contended that it is a solvent company and has assets of more than RM17 million. More specifically, the Plaintiff is fully owned by one GCCP Resources Limited. The Plaintiff has sold some of their assets for a sum of RM25,620,300.00 and the agreement for sale is due for completion. Once the Plaintiff received their money, the money will be given to GCCP Resources Limited wherein the money will be used for the Plaintiff. [9] The Plaintiff claimed that the winding up notice is issued for a collateral purpose and to bring pressure on the Plaintiff. [10] The Plaintiff submitted that if an injunction is not granted, the damage to the Plaintiff resulting from a winding up is greater as compared to the Defendant not being able to present their winding up petition. The damage of a winding up petition on the Plaintiff is irreparable as the winding up petition would inevitably cause loss of business reputation. [11] Further the Plaintiff submitted that it cannot be said that the Counterclaim has been disposed off by the High Court in the light of the leave application before the Federal Court. The court order for stay was agreed by both parties and accordingly should be honoured. [12] The hearing of the application for leave to appeal is now fixed on 11.7.2023 and it is merely a 2 months period for the injunction to be in place. In the interest of justice, this is a fit and proper case for the Court to exercise its discretion and grant an injunction to preserve the integrity of the Plaintiff company and its business. If the Plaintiff is wound up, it may not be able to or have difficulty in pursuing the leave application fixed on 11.7.2023. [13] In the present case, the judgement sum owed by the Plaintiff to the Defendant which is relied upon as the basis for the winding up notice, being a judgment of the Court cannot be said to be bona fide disputed. [14] The Defendant has obtained a valid judgment against the Plaintiff vide the order of the Court of Appeal dated 27.7.2021. The Plaintiff did not file any appeal against the said order. [15] In Sulomas Sdn Bhd v Excel Metal Industries Sdn Bhd [2022] MLJU 2864, this Court has discussed the principles of Fortuna Injunction in the following manner: of Fortuna Holdings Pty Ltd v. The Deputy Commissioner of Taxation [1978] VR 8 in which McGarvie J discussed the basis on which a court acts to restrain the presentation of a winding-up petition. [11] These principles were further filtered by Ramly Ali JCA in Pacific & Orient Insurance Co Bhd v. Muniammah Muniandy [2011] 1 CLJ 947, where the Lordship explained as follows: [25] An application for an injunction to restrain an intended winding-up petition against a company is the case of Fortuna Holdings Pty Ltd v. The Deputy 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 [2007] 3 CLJ 295 (Court of Appeals). [26] 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. (see: Re A Company [1894] 1 Ch 349; Charles Forte Investment Ltd v. Amanda [1964] 1 Ch 240 ; [1963] 2 All ER 940 and Bryanston Finance Ltd v. De Vries (No 2) [1976] 2 WLR 41 ; [1976] 1 All ER 25) [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 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) [16] The Plaintiff has not shown that the intended winding up petition, if filed, has no chance of success. [17] The order of 27.6.2019 provides for a stay of execution of the summary judgment only until the striking out application by the High Court. The striking out application was determined by the Court of Appeal on 2.11.2022. [18] What is before the Federal Court is only a leave application which has not been heard. The Plaintiff has not applied for a stay of execution of the summary judgment before the Court of Appeal or the Federal Court pending the hearing of the leave application. There is therefore no stay order before this Court. [19] Finally, as to the solvency of the Plaintiff and the irreparable damage that may result arising from the winding up, these considerations are relevant only if the Plaintiff is able to satisfy this Court that the proposed winding up is bound to fail or has no chance of success. This is not the case. Conclusion [20] costs. Dated the 25th day of May 2023 ONG CHEE KWAN Judge of the High Court of Malaya High Court of Kuala Lumpur, NCC2 COUNSEL:

Chin Yin Choi for Plaintiff

Mohamad Nizam Bin Mohamed Salleh for Defendant Messrs. Maxwell Kenion Cowdy & Jones (Kuala Lumpur)

Sulomas Sdn Bhd v Excel Metal Industries Sdn Bhd [2022] MLJU 2864