AUGUSTINE A/L T.K. JAMES NO. K/P: 570902-10-6061 GROUNDS OF JUDGMENT A. Introduction [1] The applicant filed an application for leave to commence proceedings against the respondents (“Leave Application”). [2] After considering the evidence before the court and the submissions of learned counsel, the court dismissed the Leave Application. The reasons for this decision are set out below. B. Background Facts [3] The 1st respondent is a company that carried on the business of property development, and was the developer of the “Taman Subang Perdana Seksyen 3” project (“Project”). [4] The 1st respondent was wound up on 21 August 2007, by way of a winding up order issued by the Kuala Lumpur High Court in Winding Up Petition No. D5-28-334-2006. The 2nd respondent was appointed as the liquidator of the 1st respondent on 15 July 2010. [5] The applicant claimed that: a. On 12 May 2003, the applicant was appointed as a sub-contractor for the Project by the main contractor, Poly Effort Sdn Bhd (“Poly Effort”); b. Poly Effort failed to pay for works completed by the applicant, resulting in the sum of RM1,454,700 being due and owing by Poly Effort to the applicant; and c. Poly Effort therefore issued a letter dated 4 February 2005 to the applicant (“Poly Effort Letter”), to effect a contra arrangement involving three properties belonging to the 1st respondent, to settle the debt. [6] The applicant filed the Leave Application, to seek leave to commence proceedings against the respondents. In its proposed claim, the applicant sought to obtain a confirmation letter from the 1st respondent, through the 2nd respondent, in the 1st respondent’s capacity as the developer of the Project, on the ownership of the following two (out of the three) properties: a. A 4th storey shop office, Lot 57-1, 1st Floor, held under PN 46566, Lot 98, Pekan Baru Subang, Daerah Petaling, Negeri Selangor (“1st Property”); and b. A 4th storey shop office, Taman Subang Perdana, held under PN 46534, Lot 66, Pekan Baru Subang, Daerah Petaling, Negeri Selangor (“2nd Property”). The 1st Property and the 2nd Property shall collectively be referred to as the “Properties”. C. Considerations and Findings [7] The Leave Application is made under section 471(1) of the Companies Act 2016 (“CA 2016”), which provides that: “(1) When a winding up order has been made or an interim liquidator has been appointed, no action or proceeding shall be proceeded with or commenced against the company except by leave of the Court and in accordance with such terms as the Court imposes.” (emphasis added) [8] It is therefore a statutory prerequisite that leave of court be obtained before any action or proceedings may be commenced against a company that has been wound up. [9] The test in seeking leave is trite. In Ooi Woon Chee & Anor v Dato' See Teow Chuan & Ors [2012] 2 MLJ 713, the Federal Court held that: “[15] In order to succeed for the granting of leave the majority contributories must also make out a prima facie case, a standard to protect the court's officer and the winding up process (see the cases of Abric Project Management Sdn Bhd v Palmshine Plaza Sdn Bhd [2007] 3 MLJ 571; [2007] 7 CLJ 516; TN Metal Industries Sdn Bhd v Ng Pyak Yeow [1996] 4 MLJ 567; [1995] 1 LNS 320 and Sarawak Timber Industry Development Corporation v Borneo Pulp Plantation Sdn Bhd [2005] 2 MLJ 74; [2004] 8 CLJ 584. These cases show that in applying the test the court is compelled to evaluate the evidence led to determine whether the test is met. In Mamone and another v Pantzer (2001) 36 ACSR 743, it was held that prospective litigant must, to obtain leave, demonstrate its claim has sufficient merit.” (emphasis added) [10] In essence, the applicant must demonstrate a prima facie case of sufficient merit – namely that the proposed claim discloses a bona fide and arguable cause of action – that would justify the court permitting proceedings to be commenced, notwithstanding the winding up of the 1st respondent. [11] Guided by this principle, the court evaluated the totality of the evidence before the court, to determine whether the applicant had established a prima facie case warranting the grant of leave for the applicant to commence proceedings against the respondents. [12] From the totality of the evidence before the court, the court finds the applicant’s proposed claim to be fundamentally misconceived. The main dispute arises between the applicant and Poly Effort in respect of the alleged outstanding sum. There is no credible nexus linking the respondents to the applicant’s claim. [13] The court made four findings, which are as set out below. [14] First, the court finds that the 1st respondent had no knowledge of the alleged debt owed by Poly Effort to the applicant. The debt is a third party debt which does not involve the 1st respondent, and no cogent evidence was adduced by the applicant to show that the 1st respondent was aware of the debt. [15] Second, the court finds that Poly Effort had neither legal nor beneficial interest in the Properties, that would have enabled it to effect the purported contra arrangement. Crucially, there is no evidence of any payment, consideration, or agreement between Poly Effort and the 1st respondent in respect of the Properties. [16] In the absence of any such interest, Poly Effort could not have validly dealt with or disposed of the Properties. The alleged contra arrangement is therefore legally unsustainable. [17] Third, the court finds that the authenticity of the Poly Effort Letter, which allegedly effected the contra arrangements, is highly questionable. On 21 June 2017, at the request of the 1st respondent, the applicant provided a version of the Poly Effort Letter, which: a. Was not signed by Poly Effort; and b. Appeared to bear the signature of the authorised signatory of the applicant, but did not identify the signatory by name, and contained an incomplete national registration identity card number. [18] However, in response to queries raised by the 2nd respondent, a different version of the Poly Effort Letter was subsequently provided on 30 July 2017. This version was signed by Poly Effort. The court observed that this later version appears identical to the earlier version, save for the addition of a signature of Poly Effort’s representative. [19] The existence of two materially inconsistent versions of the same document – one unsigned by Poly Effort and a later version bearing a signature – seriously undermines the authenticity of the document. The court therefore accorded no evidential weight to the Poly Effort Letter. [20] Finally, the court finds that the 2nd respondent had discharged his duties as a liquidator diligently and in accordance with the law, in verifying the applicant’s claim to the Properties. The 2nd respondent had requested relevant documents to verify the status of the Properties, and specifically the legal and beneficial interest of the applicant in the Properties. These documents include the Poly Effort Letter, a sale and purchase agreement alleged to have been signed by the applicant and the 1st respondent, and credit notes issued by the 1st respondent. Upon examination of the documents, the 2nd respondent found these documents to be dubious and questionable, and accordingly rejected them. [21] Ultimately, the duty of the 2nd respondent as a liquidator and as an officer of the court is to preserve the assets of the 1st respondent for the benefit of its creditors and contributories. It is material to note that neither Poly Effort nor the applicant has been established to be a creditor of the 1st respondent. [22] In Kemacahaya Development Sdn Bhd v Pywatec (M) Sdn Bhd [2022] 5 MLJ 433, it was held that the courts should be slow to interfere with any act or decision of a liquidator in the discharge of his duties. [23] In the present case, the court finds that the 2nd respondent had taken sufficient steps to conduct a verification of the claim by the applicant. There is no evidence of bad faith, misdirection, or failure to consider relevant material on the part of the 2nd respondent. There is therefore no basis for the court to interfere with the decision of the 2nd respondent. [24] In light of the foregoing, the court finds that the applicant has failed to establish any credible legal or factual basis, linking the respondents to the applicant’s alleged claim of beneficial and legal ownership of the Properties. The main issue is in substance, a dispute between the applicant and Poly Effort. [25] Further, the applicant has failed to identify any legal basis upon which the 1st respondent is obliged to provide the confirmation sought. The proposed claim is therefore speculative and not grounded on any recognised cause of action. [26] Accordingly, the applicant has not demonstrated a prima facie case of sufficient merit to justify the grant of leave under section 471(1) of the CA 2016, for proceedings to be commenced against the respondents.