Lim Aik @ Lim Yeok v Goh Siew Koon @ Eng Sing Kuan (M-02(IM)-1476-08/2022)

GOH SIEW KOON @ ENG SING KUAN

TEY BOON GIOW & SONS SDN. BHD. ...RESPONDENTS (HEARD TOGETHER WITH) IN THE COURT OF APPEAL OF MALAYSIA (APPELLATE JURISDICTION) CIVIL APPEAL NO: M-02(IM)-1622-08/2022 LIM AIK @ LIM YEOK

GOH SIEW KOON @ ENG SING KUAN

TEY BOON GIOW & SONS SDN. BHD. ...RESPONDENTS (HEARD TOGETHER WITH)

LIM AIK @ LIM YEOK

LIM JIT KIM @ LIM TIAN JEE

DATIN FAKHRIAH BINTI HJ. MOHD. NOAH ... RESPONDENTS [In the Matter of High Court of Malaya at Malacca Companies (Winding Up) Petition No.: MT2-28-32-2004 Between

Lim Jit Kim @ Lim Tian Jee

Tan Yian Ping

Lim Ah Sang

Tan Seng Lee

Tan Seng Thai

Tan Seng Huat

Tan Guan Chong

Tan Peng Hin

Lee Kim Li

Tan Soon Hin Holdings Sdn. Bhd.

Ng Aw Say

Tan Seng Chye

Tan Seng Kee

Tan Chin Peng

Lim Siew Hwa

Chan Ah Bee

Lim Jit Teng

Pang Chin Tong

Datin Fakhriah Binti Hj. Mohd. Noah ... Petitioners And

Goh Siew Koon @ Eng Sing Kuan

Tey Liong Seng

Tey Sui Kiat

Sin Hai Estate Bhd. ... Respondents] CORAM: WONG KIAN KHEONG, JCA LIM HOCK LENG, JCA LATIFAH BINTI HAJI MOHD TAHAR, JCA GROUNDS OF JUDGMENT A Bird's Eye View: The Appeals and Parties

There are three related appeals before us which were heard together.

Unless otherwise expressed, the parties will be referred to by their names, in full or in abbreviated form.

Two appeals are by Lim Aik, the previous liquidator of Sin Hai Estate Sdn Bhd (in liquidation).

Lim Aik was aggrieved by the High Court's decision on his application vide Enclosure 349 for retrospective ratification of his fees, goods and services tax ("GST"), and out of pocket expenses ("OPE") which had been paid out of the assets of the wound-up company by himself.

He had applied for retrospective ratification in the total sum of RM12,076,599.96.

The High Court disallowed ratification for RM9,176,586.02 which Lim Aik had drawn out of the assets of the wound-up company to pay PricewaterhouseCoopers Advisory Services Sdn Bhd ("PWC") without the consent of the court and the contributories as a whole, which was viewed as a breach of section 236(2)(i) of the Companies Act 1965 and Rule 171 of the Companies (Winding-up) Rules 1972.

The High Court only allowed ratification in the sum of RM1,179,172.31 for Lim Aik in respect of liquidation work said to have been done during the period 21 February 2012 to 7 September 2012. The sum of RM1,720,841.63 was disallowed for that period.

21 February 2012 is the date on which Lim Aik paid the security which is a pre-requisite to the commencement of his work as a liquidator. By Section 228(a) of the Companies Act 1965, a liquidator cannot start work until he has provided the security deposit.

7 September 2012 is the date on which he appointed PWC to assist him in all aspects of the liquidation work.

Hence, partial ratification was allowed for the period 21 February 2012 to 7 September 2012.

Appeal 1476 was filed by Lim Aik when the High Court initially only ratified the sum of RM85,775.00 as his professional fees and out-of-pocket expenses ("OPE"). He appealed against the whole of the initial decision, seeking full ratification of RM12,076,599.96.

Appeal 1622 was filed by Lim Aik after the High Court increased the ratified fees and OPE to RM1,179,172.31 - covering the period from 21 February 2012 to 07 September 2012, following clarification on the date of commencement of Lim Aik's work and ordered Lim Aik to refund the unratified portion of approximately RM10.8 million to Sin Hai.

Opposing these appeals by Lim Aik are the present liquidators of Sin Hai, and Sing Lian Sdn Bhd (in liquidation) which is its largest contributory holding 43.08% of the shares. Also opposing these appeals are Tey Sui Kiat and Tey Boon Giow & Sons Sdn Bhd, who are contributories holding 38.21% of the shares in Sin Hai.

That brings us to the third appeal (Appeal 1665). It was filed by the contributories Tey Sui Kiat and Tey Boon Giow & Sons Sdn Bhd. They take the position that Lim Aik is wholly disentitled from any fees out of Sin Hai, because of his gross misconduct in the wholesale delegation of his liquidation duties to PWC, and his defiance of court orders - on which more will be said later.

Broadly, these appeals concern an application (Enclosure 349) for retrospective ratification of fees by the liquidator Lim Aik which are opposed on grounds of misconduct, illegality and defiance of court orders in relation to the wholesale delegation of his liquidation work to PWC without the prior sanction of the court and the contributories as a whole.

It was also highlighted by those opposing Enclosure 349 that Lim Aik's application was brought in the absence of good faith as it was only filed in response to the application to remove him as Sin Hai's liquidator.

On the other hand, Lim Aik contended that he was entitled to fees on a percentage or time-cost basis. He contended that he had done his part as liquidator, and PWC was appointed as an agent to assist him in the process. Motions to Adduce Further Evidence for the Appeals

Equitable principles such as restitution, unjust enrichment and quantum meruit were thrown into the mix.

In each of the 3 appeals, Lim Aik filed a motion to adduce further evidence. He asserted that the motions satisfied the Rules of the Court of Appeal 1994, specifically Rule 7, read together with the Courts of Judicature Act 1964.

The further evidence sought to be adduced comprised the following:

(i) slides from a presentation at the contributories meeting of Sing Lian on 19 December 2024; and

It was submitted that the further evidence is credible, could not have been obtained with reasonable diligence, and no prejudice would accrue to the Respondents.

It was also submitted that the further evidence would have an determining influence on the outcome of the appeals, a matter on which my learned brother Justice Wong Kian Kheong will separately express his views. My learned sister Justice Latifah and I have since had sight of our learned brother's views, in addition to other aspects of the appeals before us. We concur with these views.

Suffice to say for now that - although the Respondents took no objection to Lim Aik's motions while reserving their rights to submit on the further evidence - we were driven to dismiss the proposed adduction of further evidence on account of irrelevance.

Learned counsel for Lim Aik had submitted that the Respondents were applying arbitrary and inconsistent standards, because the liquidator for Sing Lian was allowed remuneration based on Table C for comparable work in the realisation of assets and the ensuing distribution of proceeds.

We are not persuaded. Sing Lian is a different company. There was no opposition to the liquidator's claims. The material facts were markedly different. There was no wholesale delegation of the liquidation work to a third party, or a failed prior attempt to seek approval and ratification of the liquidator's remuneration, or continued payment to the third party notwithstanding the dismissal of the ratification application, or credibility issues with the claims. In short, the proposed further evidence was irrelevant and the motions had to be dismissed. The Law on Appellate Intervention

A court sitting in an appellate capacity can only set aside an exercise of discretion by the court of first instance on limited grounds. See the decision of the Federal Court in Vijayalakshmi Devi a/p Nadchatiram v Dr Mahadevan a/l Nadchatiram & Ors [1995] 2 MLJ 709, 722.

Our function is to review the decision of the learned High Court Judge ("the learned HCJ"). We can only set aside the decision where, as held by the Federal Court, "the discretion has not been exercised judicially...e.g. when he has committed an error of law or misconceived the facts or that he has not given sufficient weight to relevant considerations or that the decision would result in injustice being done..."

It all started with the winding-up of Sin Hai, an asset-rich company, and the appointment of Lim Aik as its liquidator, on 27 September 2011.

About 1 year later, on 7 September 2012, Lim Aik appointed PricewaterhouseCoopers Advisory Services Sdn Bhd ("PWC") to assist him in all aspects of the liquidation of the company.

Lim Aik then made payments to PWC which were drawn from the assets of Sin Hai.

On 25 September 2012, Lim Aik filed Enclosure 114 to:

(i) validate the appointment of PWC;

In response, Goh Siew Koon, Tey Liong Seng and Tey Sui Ket the contributories in Sin Hai - filed Enclosure 120 to remove Lim Aik as liquidator.

Both Enclosures 114 and 120 were dismissed by the High Court.

Lim Aik did not appeal the dismissal of Enclosure 114.

However, the said contributories appealed against the dismissal of their application to remove Lim Aik as the liquidator vide Enclosure 120. The appeal was allowed, and Lim Aik was removed as liquidator by the Court of Appeal on 14 December 2015. See Goh Siew Koon @ Eng Sing Kuan & Ors v Lim Jit Kim @ Lim Tian Jee & Ors [2015] CLJU 1222.

Leave to appeal to the Federal Court was not granted. The removal of Lim Aik was thus cast in stone. It ceased to be a live issue.

After Lim Aik was removed as the liquidator of Sin Hai on 14 December 2015, the same contributories filed Enclosure 334 on 14 January 2016 to recover all fees and expenses that had been paid out of the company's assets to him and PWC during his time as liquidator.

In response, on 28 March 2016, Lim Aik filed Enclosure 349 for retrospective court approval and ratification for payments amounting to RM12,818,093.21 for the period 23 October 2012 29 May 2015 which had already been paid out of the assets of Sin Hai. Enclosure 349: Issues Raised and Findings of the High Court

Lim Aik's primary position was that, in the absence of a committee of inspection, his remuneration was to be determined and calculated on a percentage basis. He described it as the default position.

He relied on section 232(3) of the Companies Act 1965 which provides: "A liquidator other than the Official Receiver shall be entitled to receive such salary or remuneration by way of percentage or otherwise as is determined-

(a) by agreement between the liquidator and the committee of inspection, if any;

(b) failing such agreement or where there is no committee of inspection by a resolution passed at a meeting of creditors by a majority of not less than three-fourths in value and one-half in number of the creditors present in person or by proxy and voting at the meeting and whose debts have been admitted to vote, which meeting shall be convened by the liquidator by a notice to each creditor to which notice shall be attached a statement of all receipts and expenditure by the liquidator and the amount of remuneration sought by him; or

(c) failing a determination in a manner referred to in paragraph (a) or (b), by the Court."

He also relied on Rule 142(3) of the Companies (Winding-up) Rules 1972 which provides: "If there is no committee of inspection the remuneration of the liquidator shall, unless the Court shall otherwise order, be fixed by the scale of fees and percentages for the time being payable on realizations and distributions by the Official Receiver as liquidator."

As a fallback position, Lim Aik contended that he would alternatively be entitled to his remuneration on a time-costs basis.

The High Court took the view that the Court is vested with full discretion to determine whether Lim Aik's remuneration should be based on a percentage grounded on Table C "or otherwise" in line with the wording of section 232(3) as well as Rule 142(3).

In referring to Perumahan NCK Sdn Bhd v Mega Sakti Sdn Bhd [2005] 7 MLJ 389, the High Court appreciated that whichever method was used, the remuneration had to be fair and reasonable.

Whether or not the liquidator was disentitled from claiming remuneration is a separate issue, which we will deal with in due course.

Moving on, there is no requirement for prior approval to be obtained from the winding-up court for all fees, expenses and disbursements in all instances, else that may entail unnecessary delay or additional work and expense. See Goh Swee Oh & Ors v Heng Ji Keng & Anor [2011] 6 CLJ 812 Practicalities and exigencies may require the work to done first.

Although a liquidator can obtain approval and ratification ex post facto, it would be prudent to seek prior sanction where the fees, expenses or disbursements are large in quantum or their justification is uncertain, more so where opposition is apparent.

As was observed by the Court of Appeal in from Ong Kwong Yew & Ors v Ong Ching Chee & Ors and other appeals [2018] MLJU 2189, any attempt by a liquidator to obtain sanction ex post facto will be viewed with "considerable caution".

While the opposing contributories do not dispute that there is no blanket ban on retrospective ratification of a liquidator's remuneration, they take issue with Lim Aik's application for retrospective ratification. They say the matter is res judicata, and Lim Aik's misconduct bars payment of at least the sum of RM9,176,586.02 paid to PWC.

The contributories who are appellants in Appeal 1665 go further, and say that Lim Aik is not entitled to any fees at all including the RM1,179,172.31 which was ratified by the High Court for Lim Aik during the period 21 February 2012 (when he was taken to have started liquidation work) to 7 September 2012 (when he delegated the work wholesale to PWC) - on account of his gross misconduct.

In any event, the opposing contributories contend that the onus of proof is on Lim Aik who has failed to show that the fees he is claiming are fair and reasonable.

We will now proceed to examine each of these grounds, as well as the opposing views of Lim Aik, in relation to the High Court's findings. Res Judicata

The learned HCJ found that Lim Aik's application by Enclosure 349 to ratify payments to PWC totalling RM9,176,586.02 which he had made from Sin Hai's assets was defeated by the plea of res judicata raised by the opposing Respondents, since Enclosure 114 had been dismissed and there was no appeal.

In so holding, the learned HCJ took note of prayer 4 of the dismissed Enclosure 114. He recognised that the prayers in Enclosure 349 were similar in consequences to the said prayer 4 which reads: "Pursuant to Section 236(2)(i) and/or (j) of the Companies Act 1965, that the appointment of Pricewaterhouse Coopers Advisory Services Sdn Bhd to assist Lim Aik @ Lim Ye ok in his duties prior to the date hereof and the payment of fees to Pricewaterhouse Coopers Advisory Services Sdn Bhd out of the assets of the Company for services rendered, be approved and validated;

While Lim Aik argued that full grounds were not provided for the dismissal of Enclosure 114 and the reasoning could not be discerned with precision for the plea of res judicata to bite, we take the view that the liquidator had by conduct accepted the correctness of the decision and is bound by the doctrine of issue estoppel.

In Syed Omar bin Syed Mohamed v Perbadanan Nasional Bhd [2012] 9 CLJ 557, Zulkefli Makinudin CJM (as His Lordship then was) held: "We also find that the plaintiff did not appeal against the decision of the learned judge striking out the first suit. The failure to appeal meant that the plaintiff accepted the correctness of the decision to dismiss its suit."

Lim Aik's reliance on Syarikat Kemajuan Timbermine Sdn Bhd v Kerajaan Negeri Kelantan Darul Naim [2015] MLJU 70 is unmeritorious.

There, the Plaintiff argued that the Defendant's failure to appeal against the Registrar's dismissal of the Defendant's striking out application based on the defence of limitation - meant that the issue was res judicata.

The Federal Court held that the Defendant could still rely on the defence of limitation at the trial despite its omission to appeal against the dismissal of its striking out application.

As may be readily distinguished and understood, the dismissal of the Defendant's interlocutory application simply meant that the defence of limitation was a live issue at trial. Had the Defendant succeeded, the outcome would have been final and binding as against the Plaintiff in the absence of an appeal.

Here, the issue of PWC's remuneration was a final determination of the parties' rights in the absence of an appeal. Whether expressly or by implication, the issue could no longer be considered a live issue, or reopened for further argument. See Hartecon JV Sdn Bhd & Anor v Hartela Contractors Ltd [1997] 2 CLJ 104 and Residence Hotels and Resorts Sdn Bhd v Seri Pacific Sdn Bhd [2016] 2 MLJ 640.

The Federal Court in Serac Asia Sdn Bhd v Sepakat Brokers Sdn Bhd [2013] 6 CLJ 673 made it clear that once an issue has been determined with finality and encapsulated in a sealed order, the court becomes functus officio, and the issue cannot be revisited "under any guise in a subsequent proceeding."

Enclosure 349, in our view, falls into the category of applications barred by the doctrine of res judicata as envisaged by the apex court.

The doctrine of res judicata is broad and goes beyond what has been decided. The Federal Court in Asia Commercial Finance (M) Bhd v. Kawal Teliti Sdn. Bhd [1995] 3 CLJ 783 held: "It covers also causes of action or issues of facts, which, though not already decided as a result of the same not being brought forward due to negligence, inadvertence or deliberately, are so clearly part of the subject matter of the litigation and so clearly could have been raised, that it would be an abuse of Court process to allow a new proceeding to be started in respect of them..."

We are not persuaded by the argument that res judicata was not applicable because Enclosure 114 was in relation to ratification of payments made directly to PWC from Sin Hai, while Enclosure 349 was for ratification of his own remuneration from which he then paid PWC.

We have to say that the distinction drawn is artificial. The learned HCJ was right to hold that "whether the sum to be ratified comes from SH's account or LA's account does not matter" since the payment would ultimately have come out of Sin Hai's assets.

Next, Lim Aik's submission, distilled from the Federal Court's decision in Datuk Syed Kechik Syed Mohamed & Anor v The Board of Trustees of the Sabah Foundation & Ors [1999] 1 CLJ 325, that a judgment of the Court of Appeal which has been the subject of an unsuccessful application for leave to appeal carries no greater authority than one which has gone unchallenged.

We find that the authority has to be understood in the context in which it was made. A leave to appeal application has to go through a sieve of different legal considerations, such as whether it concerns a novel point of law, or satisfies the requirement that it is desirable for the apex court to provide certainty where there are conflicting authorities. Additionally, the decision in Syed Kechik (supra) did not deal with an issue of res judicata or issue estoppel.

By contrast, the specific issue here is whether a final High Court decision in an earlier application (Enclosure 114) which was not appealed against bars the re-litigation of the same issue through a different application (Enclosure 349). Misconduct, Unjust Enrichment, Restitution, and Quantum Meruit

As for the ground of appeal touching on misconduct, learned counsel for Lim Aik forged a two-tier argument against the High Court's finding that Lim Aik had abrogated his duty as a liquidator by the wholesale delegation of his liquidation work to PWC without prior sanction from the winding-up court.

Learned counsel assailed the foundation of the misconduct finding by the High Court, by asserting that the Court of Appeal did not use the term "misconduct," but had instead referred to the liquidator's "missteps" and failing health as the reasons for his removal.

He argued, in the alternative, that even if there were misconduct on the part of Lim Aik, that did not bar the previous liquidator from claiming fees as a whole.

It was submitted that there was no specific finding of "misconduct" by the liquidator in outsourcing the work to PWC whose network and vast resources were useful, and PWC was an agent of Lim Aik.

It was further submitted the work carried out was legal and beneficial to Sin Hai, with realisation of assets amounting to RM330,243,798.56 out of which there was distribution of RM294,885,449.29 to creditors and contributories.

From our perusal of the record, the learned HCJ was conscious that the Court of Appeal did not expressly find the Lim Aik guilty of "misconduct," and in fact made the point in his judgment.

Drawing upon the facts and adverse comments made by the Court of Appeal, the learned HCJ had no difficulty in attributing misconduct to the previous liquidator who was ordered by the Court of Appeal to bear substantial costs of RM100,000.00 personally.

In the absence of a statutory definition of "misconduct" in the Companies Act 1965, we may look to illustrative examples of misconduct which can be found in Ong Kwong Yew (supra) (bias against minority contributories) and Re Timberland Ltd and Equitable Forestry Services Pty Ltd: Commissioner for Corporate Affairs v Peter William Harvey [1979] 4 ACLR 259 (self-dealing and wholesale delegation of liquidation duties).

In Allied Ever Holdings Ltd v Li Shu Chung and Others [2017] HKCU 3040, the Hong Kong High Court held that the category of a liquidator's misconduct is not closed, and held that a liquidator's refusal to acknowledge or respect a court's orders is inconsistent with the fiduciary duty owed by an officer of the court. It added that such conduct will "forfeit the confidence of the court."

Among the litany of adverse comments made by the Court of Appeal were those relating to the unauthorised appointment of Lim San Peen of PWC as joint liquidator, and the fact that there was no validation of all payments made to PWC and the legal firm of Messrs Wong & Partners.

The Court of Appeal held that Lim Aik had "wholly delegated" his work to PWC, and the appointment was not one envisaged by section 236(2)(i) of the Companies Act 1965 which provides that a liquidator may appoint an agent to do any business which the liquidator is unable to do himself. It was observed: "With due respect to Mr LA, the interest of the liquidation would be best served if he could just retire and be replaced by another liquidator."

Flowing from that, the learned HCJ was of the view that where a liquidator is unable to perform the liquidation work entrusted to him personally, the proper course is for the liquidator to seek leave to vacate his position rather than delegate the entire work or engage in wholesale outsourcing.

The purpose of section 236(2)(i) can only be taken to allow for the delegation of specific tasks which a liquidator cannot carry out for legitimate reasons, not the wholesale delegation of the liquidation work.

In light of the facts as well as the adverse comments made by the Court of Appeal, we cannot say the High Court was plainly wrong in finding that there was misconduct on the part of Lim Aik as he had abdicated his personal responsibilities by giving PWC carte blanche powers to essentially carry out the liquidation work.

The personal nature of a liquidator's position requires that he is personally accountable to the court which appoints him, as well as the contributories and creditors.

By the abdication of the work entrusted to him personally as an officer of the court which entailed a breach of the duty of confidentiality, Lim Aik rendered his position superfluous and his removal inevitable.

Having expressed our agreement with the learned HCJ that there was misconduct on the part of Lim Aik, we come to the issue whether a liquidator can be deprived of remuneration where he is guilty of misconduct.

We bear in mind that a brace of Australian authorities was cited by the parties upon which there was much debate. One was a decision of the Federal Court, the other a decision of the Supreme Court of Victoria. Both are courts of coordinate jurisdiction, with different subject-matter jurisdiction.

In Ah Toy v Registrar of Companies (NT) (1986) 72 ALR 107 a major complaint was that the Appellant Laurence Cheong Ah Toy had improperly delegated his duties as provisional liquidator and as liquidator to Price Waterhouse. The Australian Federal Court severely criticised Ah Toy, and the Court of Appeal in Lim Aik's case, relied on the case to remove Lim Aik as the liquidator. Nonetheless, the Australian Federal Court did not hold that Ah Toy was barred from claiming fees and could submit bills to be taxed, and in fact allowed for the submission of bills in spite of its finding of Ah Toy's wholesale delegation of work. In Re Timberland Ltd and Equitable Forestry Services Pty Ltd (supra), there was misconduct on the part of the liquidator who appointed his own firm, Price Waterhouse and Co, as his "agents for the purposes of the liquidation and all ancillary matters," and he had delegated virtually all the liquidation work at an early stage. The liquidator tried to justify the delegation under a provision similar to our section 236(2)(i) on the basis that he was unable to carry out the entire liquidation, but the excuse was found to be untenable. He had also failed to provide proper supporting vouchers, and relied on computer printouts which likely did not reflect actual expenditure.

The Supreme Court of Victoria held that the liquidator's misconduct disentitled him from claiming fees.

With that authority in mind, learned counsel for the contributories Tey Sui Kiat and Tey Boon Giow & Sons Sdn Bhd argued that there are aggravating factors to strip Lim Aik of any entitlement to fees whatsoever.

They characterised Lim Aik's defiance of the dismissal of Enclosure 114 (by continuing to pay PWC) as gross misconduct.

They supported Sin Hai's present liquidator's argument that bids for Sin Hai's landed properties lost their confidentiality, as there was evidence of a sealed envelope marked "c/o PricewaterhouseCoopers" which the Court of Appeal identified as a cause for concern.

Lim Aik denied any loss of confidentiality. He asserted that he kept the confidential bids and offers in his private safe. He argued that, in any case, the Court of Appeal only recognised a cause of concern and did not make a formal finding of breach of confidentiality.

Lim Aik contended that as a result of his work, the contributories had benefitted from the sale of assets and the distribution of proceeds. In other words, they would be unjustly enriched at his expense if he were to be deprived of any remuneration. He stressed that under his watch, assets were realised to the tune of RM330,243,798.56, and RM294,885,449.29 was consequently distributed to creditors and contributories.

Relying on the decision of the Court of Appeal in Simcity-ETE Venture Sdn Bhd v Koperasi Pembangunan Kampung Tradisional Tasek Pulau Pinang Bhd [2021] MLJU 2225, it was submitted that the concept of unjust enrichment caters for the grant of restitution to Lim Aik to make good the deprivation of full remuneration to him.

Otherwise, the contributories would enjoy a windfall, and reap the benefit of the time, effort and expertise which he and PWC did not intend to provide for free.

Reference was made to section 17 of the Contracts Act 1950 which provides for compensation when a person lawfully does something for another, not intending it to be gratuitous, and the other person enjoys the benefit. That puts on a statutory footing the common law position laid down by the Privy Council in Siow Wong Fatt v Susur Rotan Mining Ltd & Anor [1967] 2 MLJ 118.

Reference was also made to Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441 where the Federal Court held that a right to restitution arises when (i) a party has been enriched, (ii) at the expense of the claimant, and (iii) the retention of the benefit by the person enriched would be unjust. Notably, it was also held that a court also has to consider whether there is any special defence to the claim.

Lim Aik contended that he would at the very least be entitled to remuneration based on quantum meruit, representing a fair and reasonable amount for the liquidation work carried out.

The learned HCJ had, it was submitted, erred by mixing up what it perceived as a breach of section 236(2)(i) of the Companies Act 1965 with the legality of the services provided.

On the other hand, the opposing contributories aggregated Lim Aik's arguments based on unjust enrichment, restitution and quantum meruit as equitable remedies which cannot override statute, namely, section 236(2)(i) of the Companies Act 1965 and Rule 171 of the Companies (Winding-up) Rules 1972.

The learned HCJ was of the view that since the payments made to PWC breached the Companies Act 1965 as there was wholesale delegation of the liquidation work by Lim Aik to PWC without prior sanction by the court, the remuneration paid out to them was unlawful - save for the period when Lim Aik could be shown to be discharging his responsibilities as Sin Hai's liquidator prior to the unlawful abdication of his duties.

The learned HCJ emphasised the point that an act must be lawful for the claimant to be entitled to compensation. He accordingly declined to order retrospective ratification of the impugned remuneration on the basis of restitution, quantum meruit, and unjust enrichment. Lim Aik did not come to court with clean hands, and he could not be granted restitution.

We find that the learned HCJ cannot be faulted for coming to these findings. While the liquidation work was not unlawful per se, the act of wholesale delegation and the unsanctioned appointment of PWC was certainly unlawful.

The previous liquidator's invocation of equitable principles is no more than a backdoor attempt to circumvent the consequences of the wholesale delegation in breach of express statutory provisions. In Silver Corridor Sdn Bhd v Gallant Acres Sdn Bhd [2016] 5 MLJ 1, the Federal Court made it clear that equity cannot operate to defeat clear provisions of the law.

We find Patel v Mirza [2017] 1 All ER 191 to be of no assistance to Lim Aik. In that case, the Supreme Court of the United Kingdom held that in deciding whether to deny a claim based on illegality, the underlying purpose of the law or prohibition is to be viewed with regard to the preservation of the legal system and public interest, as well as proportionality. There, the court was dealing with common law illegality. Here, there are breaches of the Companies Act 1965, as well as Rule 171 of the Winding-Up Rules.

Also, the material facts are markedly different, as may be seen what Lord Toulson had to say: "After examining the policy underlying the statutory provisions about insider dealing, (Gloster LJ) concluded that there was no logical basis why considerations of public policy should require Mr Patel to forfeit the moneys which he paid into Mr Mirza's account, and which were never used for the purpose for which they were paid. She said that such a result would not be a just and proportionate response to the illegality (emphasis added)."

We agree with the submission of learned counsel for the Appellants in Appeal 1665 that "Patel v Mirza is not a case where a party is seeking to benefit from an illegal arrangement but to recover the benefit conferred upon the other party from the illegal arrangement."

Notably, the contributories are not implicated or involved in any wrongdoing on their part.

In Detik Ria Sdn Bhd v Prudential Corp Holdings Ltd & Anor [2025] 3 MLJ 22, the Federal Court cautioned against adopting the Patel v Mirza framework wholesale into Malaysian law without considering its compatibility with statutory provisions.

To allow restitution would render purposeless the statutory prohibition against liquidators abdicating their personal responsibilities. In such instances, illegality ought not to be allowed to stultify the prohibition. See the Singapore Court of Appeal's decision in Ochroid Trading Limited (formerly known as Orion Trading Limited) & Anor v Chua Siok Lui & Anor [2018] 1 SLR 363.

We find no merit in Lim Aik's argument that the High Court's decision to disallow more than RM10.8 million in unratified fees was an overkill or disproportionate.

As was expressed by Azimah Omar JCA (now FCJ) in Worldwide Platinum Records Sdn. Bhd. v Tan Sew Cheng [2025] 1 MLJ 487 in her majority judgment, to allow any form of restitution or compensation to an impugned agreement "would only breathe a semblance of legitimacy" to the illegality.

Ratification would open the floodgates to allow errant liquidators to collect fees for work which they had outsourced completely, and which they did not personally carry out pursuant to their appointment and duties owed to various parties including the court, while imperilling the duty of confidentiality. Partial Ratification (21 February - 7 September 2012) and the Onus of Proof

To recapitulate, the contributories who are appellants in Appeal 1665 argued that Lim Aik is not entitled to any fees at all including the RM1,179,172.31 which was ratified by the High Court for the period prior to the wholesale delegation by Lim Aik to PWC on 7 September 2012.

We are of the view that Lim Aik's misconduct or gross misconduct in outsourcing his work to PWC and subsequent defiance of the court order or dismissal of Enclosure 114 by continuing to pay PWC would not disentitle him to fees prior to the impugned acts.

There is a clear demarcation between the period when Lim Aik was appointed and had paid the requisite deposit to commence his liquidation work, and the period during which he had abdicated his statutory duties.

It was only from 7 September 2012 onwards that the wholesale delegation of work to PWC and the unsanctioned payments were unlawful but prior to that date, whatever work that was actually done by Lim Aik was lawful.

He bears the onus of proving that he carried out the work for which he can be remunerated on a fair and reasonable basis. See Perumahan NCK (supra).

The learned HCJ granted partial ratification of Lim Aik's fees in the sum of RM1,179,172.31 for the period 21 February to 7 September 2012 on a time-cost basis. He rejected the primary claim under Table C on a percentage basis, because that would include ratification of fees for work that had been outsourced to PWC which the Court of Appeal had described as an unauthorised and unlawful delegation of work.

In support of his application for ratification of remuneration, Lim Aik provided time sheets which were, however, described as suspicious and highly incredible given the 11,050.40 total hours claimed by the previous liquidator and his assistants. Of those hours, 3,359.55 hours were attributed to Lim Aik although he had deposed to affidavits on his failing health, and bearing in mind that he was 70 years old at the time of his appointment.

There is then the matter of the billing hours clocked by Lim Aik's assistant, Ms Leong, totalling 7,523.60 hours which is considerably more than the 6,370 hours charged by the PWC team comprising 7 personnel to whom the work had been "wholly delegated."

Lim Aik's charge-out rate was RM1,750 per hour while the charge-out rate for his 2 assistants was RM1,330.00. The rates were, Lim Aik said, based on seniority, expertise, and the nature of the work, and were in conformity with industry standards. They matched the PWC rates, so that there would be consistency across the board.

Lim Aik cited Emiprima Sdn Bhd v Wonderful Castle Sdn Bhd (in liquidation) [2023] 5 MLJ 695 to argue that the assistance provided by the liquidator's staff can be considered in determining fair and reasonable remuneration, and Re Econ Corp Ltd (in provisional liquidation) (No. 2) [2004] 2 SLR 264 to argue that instead of looking at a fixed benchmark, the court has to consider a whole host of factors such as the industry standard or market rates, the time spent, complexity, value of work done, and so on.

In Emiprima (supra), we note that the Court of Appeal also spoke of strict proof in the same breath. In Re Econ Corp Ltd (supra) it bears noting that VK Rajah JC (as he then was) further held that the court will not approve excessive manning levels, and will check whether there is billing of unnecessary or excessive work.

On a related note, there were generalised details or "templates". The work described as "read emails/reports/documents" were frequently repeated, virtually on a monthly basis, without sufficient particulars to check overservicing or overclaiming or the necessity for such work.

The learned HCJ accepted as trite law that hours for administrative or secretarial work cannot form part of a liquidator's fees. See Liquidators of Dovechem Holdings Pte Ltd v. Dovechem Holdings Pte Ltd (in compulsory liquidation) [2015] SGHC 167 [2015] 4 SLR 9555.

The learned HCJ held that, "for the period from 21.2.2012 until 7.9.2012 (six months and two weeks) the calculation of LA's and Ms. Leong Pui Ling's ratified remuneration amounted to RM1,179,172.31 computed on a time cost hourly basis."

In arriving at that figure, the learned HCJ made a deduction of 25% since Lim Aik ran a much smaller outfit with limited capacity, as compared to PWC.

In deliberating on the appeals touching on the partial ratification for 21 February - 7 September 2012, we find the decision of this Court in Ong Kwong Yew (supra) to be useful.

In that case, the liquidator had carried out business operations and administrative work as well as negotiated sales for 5 solvent companies during their liquidation.

There were a great number of appeals in that case. So far as the liquidator's remuneration was concerned, in the present context, there were 2 categories of appeals. One where he unilaterally drew fees, without prior court sanction and full contributory consent, and paid himself. Those appeals touched on retrospective ratification. The other category of appeals concerned the liquidator's applications to be paid fees. These appeals did not involve retrospective ratification.

In so far as the first category of appeals, the issue was whether the liquidator was entitled to retrospective ratification for his unilateral withdrawals of monies for remuneration in the absence of sanction from the Winding-up court, and in the face of objections from the minority contributories against whom he was found to be biased.

The Court of Appeal held that it was untenable for the liquidator, as a fiduciary to the contributories and creditors, to make unilateral, periodic withdrawals from the companies' funds to pay himself.

In delivering the judgment, Nallini Pathmanathan JCA (as Her Ladyship then was) held: "The very fact that these applications were made after the monies had been drawn and retained, taints these applications. The reasonable inference to be drawn from the timing of these applications is that they were only made because the interim remuneration was being challenged. Secondly they were calculated to justify bills and payment of monies by the liquidator to himself, after the event. As such the bona fides of these applications is seriously in question."

Aside from finding that these unauthorised payments were tainted, the Court of Appeal also found that these prior payments contravened section 232(3) of the Companies Act 1965.

Similarly, the learned HCJ observed that Lim Aik's Enclosure 349 for retrospective ratification of monies previously drawn to pay himself and PWC was filed after the contributories sought to recover the same by filing Enclosure 334. Likewise, the learned HCJ found that section 232(3) of the Companies Act 1965 was contravened. We find no reason to hold otherwise.

As for the second category of appeals which the Court of Appeal described as "Further Remuneration Appeals," they arose out of the liquidator's unsuccessful applications to be paid for work carried out. He applied to be paid, after he had been removed. However, the court at first instance held that since the liquidator was removed for misconduct, he was not entitled to any remuneration at all. Its decision was premised on Re Perdana Merchant Bankers Bhd [1997] 3 MLJ 435 where the High Court laid down the instances when a liquidator can be deprived of his remuneration, including misconduct.

The Court of Appeal was of the view that these appeals arising out of applications for prospective approval of fees stood on a different footing, especially since it was clear that the liquidator had done substantive work. It concluded that once the unauthorised withdrawn funds were returned to the companies as required by the injunctions obtained by the minority contributories, the liquidator was entitled to some degree of remuneration for work done. It held that the High Court had erred by denying the liquidator entirely of remuneration.

However, the onus was on the liquidator to prove his claims were reasonable (in an established manner, be it on a percentage or time-cost basis), more so as the materials presented by the liquidator "do not appear to be contemporaneous records of the work undertaken. Rather they are summaries of work done or simply contain time expended with the rates specified but with no specification of what work was undertaken during that time, far less why such an amount of time was necessary. There is no explanation as to the specific time rates charged, the identity of the varying levels of personnel involved, nor the reason why each of them was necessary. In short the material was woefully inadequate to meet the standards necessary to enable the Court to make a realistic assessment of the remuneration due, if any, by way of additional fees."

In the upshot, the Court of Appeal remitted the "Further Remuneration Appeals" to the High Court to be taxed "for work done during his tenure as liquidator."

Here, we find no reason to disturb the order made by the High Court for the unratified sum of RM10,897,427.65 to be returned by Lim Aik to Sin Hai. There is no indication that Lim Aik has returned the said sum. In fact, he argued that he ought not to have been ordered to refund the unratified sum to Sin Hai because Enclosure 349 concerned his application for retrospective ratification of fees, and there was no formal application or motion in Enclosure 349 by the Respondents for a refund. Lim Aik's argument overlooks section 277(2) of the Companies Act 1965 which provides: "The Court shall take cognizance of the conduct of liquidators, and if a liquidator does not faithfully perform his duties and observe the prescribed requirements or the requirements of the Court or if any complaint is made to the Court by any creditor or contributory or by the Official Receiver in regard thereto, the Court shall inquire into the matter and take such action as it thinks fit." In view of the fact that Lim Aik had no right to retain the unratified sum of RM10,897,427.65, the High Court could take such action as it thinks fit," viz, order the refund of the said sum to Sin Hai.

We also find no reason to disagree with the learned HCJ's reasoning that Lim Aik's remuneration ought not to be based on Table C, else it would result in the ratification of fees for the work done by PWC, whose appointment and wholesale delegation is unlawful; and awarding fees on a percentage of "net assets realized" would effectively condone the very misconduct for which Lim Aik was removed. Rule 171 of the Winding-Up Rules 1972 does not allow remuneration for ordinary duties which the liquidator has to perform personally. To allow fees under Table C would effectively circumvent the High Court's dismissal of Enclosure 114 in respect of which there was no appeal.

We find it necessary to set aside the High Court order ratifying payment of the sum of RM1,179,172.

We find it inexplicable that the learned HCJ had allowed partial ratification of the sum of RM1,179,172.31 for the period 21 February 2012 to 7 September 2012, when His Lordship had accepted the finding of the Court of Appeal that Lim Aik had hardly done any work in the liquidation of Sin Hai for 1 year after he was appointed as the liquidator on 27 September 2011.

The learned HCJ had in fact referred to the following paragraph of the Court of Appeal judgment: "Over the next one year, there was relatively no progress in the liquidation of Sin Hai as can be seen from the following non-event:

(i) payment of the liquidator's security deposit, which was a pre-requisite to the performance of Mr LA's duties as liquidator was only made 5 months after his appointment;

Further, the inflationary or excessive manner of billing stands in the way of Lim Aik discharging his burden of proving that the remuneration sought is fair and reasonable. Quite apart from the template or generalised manner of charging, Lim Aik had at one point or the other included "interim fees" in his invoices when Table C makes no provision for such charges, calculated fees based on offer prices which had yet to be realised, doublecharged, and raised the matter of his failing health which brings into question the amount of work he had actually performed himself.

Furthermore, an arbitrary deduction of 25% on the work purportedly done would not satisfy the court's role as a vigilant gatekeeper.

As such, the learned HCJ fell into error when he ratified payment for work purportedly carried out by Lim Aik and Ms Leong for the period 21 February 2012 to 7 September 2012 in the sum of RM1,179,172.

Lim Aik's claim is to be remitted to the High Court to be taxed. Taxation of the billing for the period 21 February to 7 September 2012 would ensure a rigorous review and check of the work done. The Court of Appeal's findings as set out in the learned HCJ's judgment does not bar Lim Aik from claiming remuneration for other forms of work which he may have carried out before 7 September 2012. Conclusion

In concluding, we uphold the High Court's decision that Lim Aik's wholesale delegation of his liquidation work to PWC from 7 September 2012 onwards was unauthorised and unlawful under section 236(2)(i) of the Companies Act 1965, and Rule 171 of the Winding-Up Rules 1972. As a result, all professional fees and expenses attributed to PWC would be disallowed.

We also uphold the High Court's order for Lim Aik to return the unratified sum of RM10,897,427.65 to Sin Hai.

Appeals 1476 and 1622 by Lim Aik are accordingly dismissed with total costs of RM150,000.00 (taking into consideration, among other matters, the motions to adduce further evidence). That is, Lim Aik is to pay costs of RM50,000 to:

(i) the $ 1^{\mathrm{st}} $ $ 2^{\mathrm{nd}} $ $ 3^{\mathrm{rd}} $ and $ 5^{\mathrm{th}} $ Respondents collectively;

Appeal 1655 is allowed in part, with costs of RM30,000.00 to be paid by Lim Aik (the 1 $ ^{st}$ Respondent) to the Appellants collectively, subject to payment of the allocatur fee. We make no order as to costs in relation to Sin Hai (which maintained a neutral position in Appeal 1665), and in relation to Sin Lian (which did not take an active part, and only formally prayed for the Appeal 1665 to be dismissed).

The High Court order ratifying the sum of RM1,179,172.31 for the period 21 February 2012 to 7 September 2012 is hereby set aside.

For the reasons given in this judgment, and those set out in the judgment by my learned brother Wong Kian Kheong JCA, we order that Lim Aik's claim for liquidation work is to be taxed by the High Court with due regard to the previous decision of the Court of Appeal.

In closing, we invited all learned counsel to submit on the appropriate consequential orders to be made by this Court, within 4 weeks from today. Dated the $ 8^{th} $ day of May 2026 (Lim Hock Leng) Judge Court of Appeal Putrajaya, Malaysia Appeal No.: M-02(IM)-1476-08/2022 Counsel for the Appellant: Rabindra S. Nathan, Saresh Mahendaren & Chew Mingyih (Messrs Shearn Delamore & Co.) Counsel for the 1st,2nd,3rd & 6th Respondents: Mohd. Izral Khairy, Owee Chia Ming, Leanne Chua, Lim Jun Ni & Thum Shi Ying (Messrs Owee & Co.) Counsel for the 4th Respondent's liquidator: Ambiga Sreenevasan, Shireen Selvaratnam & Tan Yoong Chang (Messrs Sreenevasan) Counsel for theRanjit Singh a/l Harbinder Singh5th Respondent'sDaniel Albert, Nicholas Yap &liquidator:Amanda Yap (Messrs Daniel & Wong) Appeal No.: M-02(IM)-1622-08/2022 Counsel for Rabindra S. Nathan, the Appellant: Saresh Mahendaren & Chew Mingyih (Messrs Shearn Delamore & Co.) Counsel for the Mohd. Izral Khairy, Owee Chia Ming, 1st, 2nd, 3rd & 6th Leanne Chua, Lim Jun Ni & Respondents: Thum Shi Ying (Messrs Owee & Co.) Counsel for the Ambiga Sreenevasan, 4th Respondent's Shireen Selvaratnam & Tan Yoong Chang liquidator: (Messrs Sreenevasan) Counsel for the Ranjit Singh a/l Harbinder Singh, 5th Respondent's Daniel Albert, Nicholas Yap & liquidator: Amanda Yap (Messrs Daniel & Wong) Counsel for the Mohd Izral Khairy, Owee Chia Ming, Appeal No.: M-02(IM)-1665-09/2022 the Appellants: Leanne Chua, Lim Jun Ni & Thum Shi Yhing (Messrs Owee & Co.) Counsel for the Rabindra S Nathan, Saresh Mahendaren 1st Respondent: (Messrs Shearn Delamore & Co) Counsel for the Ambiga Sreenevasan, 2nd Respondent: Shireen Selvaratnam & Tan Yoong Chang (Messrs Sreenevasan) Counsel for the Ranjit Singh a/l Harbinder Singh, 3rd Respondent: Daniel Albert, Nicholas Yap & Amanda Yap (Messrs Daniel & Wong)