The application for leave under subsection (1) shall be made in the Court granting the winding-up order and shall be served on the liquidator.” [11] In Mesuntung Property Sdn Bhd v Kimlin Housing Development Sdn Bhd CLJ 582, the COA enunciated the legal principles for leave of court under the above provisions of the CA 2016. The COA held that the tests to be satisfied are: a) The Appellant’s claim cannot be adequately dealt with in the winding-up court: b) the Appellant has established a prima facie case against the Respondent. [12] With respect to the test of a prima facie case, the COA in Ganda Setia Cemerlang Sdn Bhd v Maika Holdings Bhd (2018) 2 CLJ 401 held: “(43) Again, here, we are reminded of what is required in establishing a prima facie case. In Mesuntung Properties, it was clearly explained that in the context of s. 226(3), what needs to be shown is that there is a serious dispute between the parties that warrants a trial to determine the truth. The court does not delve into the merits of the dispute but examines the complaints, to see if these complaints are genuine or are baseless and devoid of any substance. If the answer is in the affirmative, resources of the respondent ought not to be wasted defending a baseless or frivolous claim.” [13] It can be seen from the above dicta that all the Applicant is required to show, in order to establish that it has a prima facie case against the Respondent, is that there is a serious dispute and that the claims are not baseless, frivolous or devoid of any substance. THE MAIN ISSUE [14] The main issue to be determined by this Court in the Proposed OS is whether the monies from the wrongful call on the Performance Bond is a debt owing by the Respondent to the Applicant or trust monies belonging to the Applicant. If it is trust monies then it is not to be shared pari passu with the other unsecured creditors and ought to be refunded to the Applicant. [15] The Respondent submits as follows: i) There are no trust obligations that have been created in favour of the Applicant with regard to the Performance Bond, as contained in the Construction Agreement. ii) The Performance Bond deposited by the Applicant was an “On-Demand” Bond. The Applicant had applied to court to restrain the Respondent from making a call on its Performance Bond, but failed. iii) In the First Arbitration, the arbitral panel had dismissed the Applicant’s application for injunctive relief. iv) If the Applicant was serious about pursuing this claim for a purported trust, it would have done so when the cause of action arose (i.e. when the call on the Performance Bond was made). v) In the Statement of Affairs prepared by the Directors of the Respondent, together with the Statement of Affairs of the Receiver and Manager and the Audited Accounts for 2017, the sum was never listed as being trust monies. vi) In fact, the Applicant has been listed as an Unsecured Creditor by both the Directors and the Receiver and Manager. vii) The Applicant has lodged its proof of debt (“POD”) with the Liquidator for the monies from the Performance Bond. viii) Premised upon this submission of the POD, the sum is already the subject matter of the liquidation process. It can be dealt with adequately in the winding-up process. [16] The Respondent submits that having lodged its POD, the Applicant is estopped from thereafter, claiming the monies as trust monies. [17] In reply, the Applicant avers that the lodgment of the POD was clearly subject to a reservations of its rights to claim the monies as trust monies (see Enclosure 7, page 119 paragraphs 4 and 5). FINDINGS BY THIS COURT [18] The Proposed OS is not a straightforward claim for repayment of a loan or for liquidated damages, in which case it would clearly be a claim for a debt. This is a claim for refund of monies wrongfully obtained and which clearly does not belong to the Respondent. Thus, there is a reasonable probability for the monies to be held as trust monies. [19] Applying the principles enunciated in the case of Ganda Cemerlang, cited earlier, I find that the issues raised by the Respondent are strictly issues of law and fact. As such, the court where the Proposed OS will be filed is the proper forum to decide whether the monies are trust monies. It is not for this Court to decide on the merits of the Applicant’s claim on the monies. I find that the claim is not totally frivolous or baseless, as there are grounds for the Court to find in favour of the Applicant. This is not a claim which is bound to fail at the outset. [20] Therefore, I find the Applicant has succeeded in establishing that it has both a prima facie case and that the Applicant’s claim cannot be easily decided in the winding up proceedings without going into a full-blown consideration on the issues of law and facts raised by the Respondent. [20] For the reasons aforesaid, I allow this application with costs in the cause. Dated 19 March 2024 ……………..t.t……………... Ahmad Murad Bin Abdul Aziz Judge High Court of Malaya Kuala Lumpur COUNSEL FOR THE APPLICANT: SIVA SANKARAN WITH NORVINDRAN SIVARAJAH SOLICITORS FOR THE APPLICANT: TETUAN TAN SWEE IM, SIVA & PARTNERS COUNSEL FOR THE RESPONDENT: GAVIN JAYAPAL SOLICITORS FOR THE RESPONDENT: TETUAN GAVIN JAYAPAL Cases Referred to: ➢ Mesuntung Property Sdn Bhd v Kimlin Housing Development Sdn Bhd CLJ 582 ➢ Ganda Setia Cemerlang Sdn Bhd v Maika Holdings Bhd (2018) 2 CLJ 401 Legislation Referred to: ➢ Section 471 of the Companies Act 2016 ➢ Companies (Winding-Up) Rules 1972 Decision Date : 31.10.2023