LIM Heng Sean @ Eddie LIM v 1. ) Cemerlang Utara Sdn Bhd (WA-28NCC-162-02/2022)

The Petitioner filed this petition on 24.02.2022 under sections 464 and 465(1)(h) of the Companies Act 2016 (“CA 2016”) to wind-up the First Respondent (“the Company”) on just and equitable grounds.

There are only two (2) directors of the Company, namely the Petitioner and the Second Respondent (“R2”). Both hold equal shares of 50% each in the Company. The main ground in support of the petition is the alleged acrimonious relationship and irretrievable breakdown of mutual trust between the Petitioner and R2.

On 21.11.2022, R2 filed this application in Enclosure 191 to stay the hearing of this petition and all proceedings in respect of this petition.

From the date of the filing of this petition on 24.02.2022 until the filing of Enclosure 191 for a stay of proceedings, there were numerous interlocutory applications filed by the parties, including appeals to the Court of Appeal (“COA”) against the decision of the previous learned judge. Due to the numerous applications filed before the hearing of Enclosure 191, regretfully, the hearing of this petition could not even begin.

The Petitioner had issued a notice to wind-up the First Respondent (“R1”) on 02.12.2019.

Following the Petitioner’s notice, R2 filed an application for a Fortuna Injunction to restrain the Petitioner from presenting a winding-up petition against the Company in WA-24NCC-632- 11/2019 (“OS 632”).

R2 obtained the Fortuna Injunction on 26.12.2019, after the inter-parties hearing. Thereafter, the Petitioner filed an appeal vide Appeal No: W-02-(IM)(NCC)-4-01/2020 against the order granting an injunction to the COA. Prior to the hearing of the appeal on 28.04.2021 the Petitioner had on 01.04.2021 filed an application to the COA to adduce further evidence, which was a Financial Due Diligence Report (“FDDR”) dated 16.03.2021 and 29.03.2021 and prepared by an accounting firm by the name of PS Yap & Co.

R2 filed an affidavit in reply (“AIR”) dated 12.04.2021 to challenge the Petitioner’s application to adduce further evidence.

In support of the Petitioner’s application to adduce further evidence, one Dato’ Yap Pian Seen (“Dato’ Yap”) affirmed an affidavit on 21.04.2021. In his affidavit, Dato’ Yap avers that he was with the firm PS Yap & Co, at the time he signed the FDDR dated 16.03.2021.

R2, in his affidavit in support of this application to stay proceedings avers that Dato’ Yap was suspended from practising as an accountant for a period of one (1) year from 03.06.2021, which was thereafter, varied to a period of six (6) months from 23.03.2021, R2 also avers that during the period of suspension, Dato’ Yap was no longer allowed to work with the firm of PS Yap & Co. Based on this averment, R2 alleged that there was material non-disclosure on the part of the Petitioner concerning Dato’ Yap’s suspension. Thus, the FDDR report is of questionable value and weight.

The Petitioner avers, however, that this application by R2 in Enclosure 191 is similar to an earlier application made by R2 for an order to strike out and/or stay the winding-up petition filed on 28.04.2022 in Enclosure 43, which was dismissed by this Court on 02.09.2022.

This Court dismissed R2’s application to strike out the petition and also dismissed R2’s alternative prayer to stay proceedings under this petition on 02.09.2022. Both applications were filed on 28.04.2022 in Enclosure 43. An appeal by R2 against the dismissal was withdrawn by R2 on the grounds that post-amendment of the Courts of Judicature Act 1964 (“CJA 1964”), all dismissals of applications to strike out any suit are no longer appealable. However, the Petitioner submits that the decision to dismiss a stay application is not affected by amendments to the CJA 1964 and thus is appealable.

The Petitioner avers that this application for a stay of proceedings in this petition is an abuse of court process since R2 had already filed an application to stay the proceedings pending appeal and the stay had been dismissed by the learned judge YA Nadzarin bin Wok Nordin on 02.09.2022. Thereafter, this application, which is also for a stay of proceedings, was filed just three (3) months after the dismissal of the earlier stay application in Enclosure 43.

In his grounds for dismissing Enclosure 43, the learned judge held, inter-alia, as follows: “I further hold that based on the grounds of the application in Enclosure 43 and the affidavit in support thereto, there are no special circumstances before this Court for the petition to be stayed as prayed for in prayer 3 of Enclosure 43.”

Therefore, the Petitioner submits that this application filed by R2 to stay the hearing of the petition is barred by the doctrine of Res Judicata and amounts to a multiplicity of proceedings, as R2 had sought similar prayers in his application for a stay in Enclosure 43, which was dismissed. R2 did not appeal against the said decision by Justice Nadzarin. The Petitioner further submits that this application is a blatant abuse of the court process with the objective of unduly delaying the hearing and disposal of this petition.

I am in agreement with the submission by the Petitioner that the affidavit filed by R2 in support of this application for a stay of proceedings does not disclose any special circumstance to justify a stay. Additionally this application is barred by the doctrine of Res Judicata.

In the case of Government of Malaysia v Dato’ Chong Kok Lim [1973] 2 MLJ 74, his Lordship Sharma J (as he then was) held at p.76: “In Satyadhyan Ghosel and others v Sint Deorajin Dobi and Another AIR 1960 SC 941, the statement of the law on the subject is given thus: The principle of res judicata is based on the need of giving a finality to judicial decisions. What it says is that once a res is judicata, it shall be not adjudged again. Primarily, it applies as between past litigation and future litigation. When a matter – whether on a question of fact or a question of law – has been decided between two parties in one suit or proceeding and the decision is final, either because no appeal was taken to a higher court or because the appeal was dismissed, or no appeal lies, neither party will be allowed in a future suit or proceeding between the same parties to canvass the matter again. The principle of res judicata applies also as between two stages in the same litigation to the extent that a court, whether the trial court or a higher court having at an earlier stage decided a matter in one way will not allow the parties to re-litigate the matter again at a subsequent stage of the same proceedings. A decision given by a court at one stage on a particular matter or issue is binding on it at a later stage in the same suit or in a subsequent suit … Parties cannot raise a second time in the same suit an issue that has already been determined either expressly or by necessary implication…”

The above principle was approved by Gopal Sri Ram JCA in Hartecon JV Sdn Bhd & Anor v Hartela Contractors Ltd [1996] 2 MLJ 57.

On the facts in this case, it is apparent that this stay application by R2 was filed just three (3) months after the earlier stay application in Enclosure 43 was dismissed by this Court.

In this application, the special circumstances alleged by R2 is that Dato’ Yap Pian Seen had on 21.04.2021 affirmed an affidavit which referred to the FDDR report that had been signed by another person from PS Yap & Co despite there being no difference in its contents with the contents of the FDDR report dated 16.03.2021 that had been signed by Dato’ Yap.

(a) The Petitioner submits (see paragraph 23 of the Petitioner’s submission in Enclosure 238) that despite objections from R2 to the Petitioner’s application to adduce the FDDR report dated 29.03.2021, the COA had on 28.04.2021, allowed the FDDR report to be adduced as fresh evidence at the Petitioners appeal against the Fortuna Injunction. Thus, the alleged special circumstances had been rendered academic by the decision of the COA to allow the FDDR report to be adduced as additional evidence.

Further, the admissibility of Dato’ Yap’s affidavit can be challenged by R2 at the hearing of this petition without the need to stay proceedings herein. [22] With respects to R2’s relentless filing of applications with the objective of delaying the hearing of this petition, I can do no better than to quote Abdul Hamid Muhammad JCA (as he then was) in the case of Maril Rionebel (M) Sdn Bhd & Anor v Perdana Merchant Banker Bhd & Other Appeals, where the learned JCA held: “As pointed out by my learned brother Gopal Sri Ram JCA, the unhealthy trend is, upon being served with a petition, instead of defending the petition proper at the hearing of the petition, the respondent makes all kinds of interlocutory applications. That would invariably stall the hearing of the petition proper. If the application is dismissed, the respondent would appeal to the Court of Appeal or may even try to go further, further delaying the hearing of the petition. I have come across cases where even an order made by the senior assistant registrar under r.32 of the Companies (Winding-Up) Rules 1972 was appealed against and when the appeal was dismissed, the respondent further appealed to the Supreme Court – see Asia Commercial Finance (M) Berhad v Lum Choon Realty Sdn Bhd (Penang High Court Companies Winding-Up No: 28-60-92). Of course, having filed the notice of appeal, the respondent then filed a notice of motion to stay all proceedings pending the disposal of the appeal by the then Supreme Court. When the notice of motion was dismissed, another appeal was filed. The effect is that hearing and disposal of the petition is delayed. In Sun Microsystems Malaysia Sdn Bhd [200] 4 CLJ 72, I stressed the difference between the procedure in respect of a writ action under the RHC 1980 and a winding-up petition under the Companies (Winding-Up) Rules 1972. It is important to note that the procedure in a winding-up proceeding as provided by the Companies (Winding-Up) Rules 1972 is different from the procedure in a writ action as provided by the Rules of the High Court 1980 (RHC 1980). In a winding-up proceeding, the procedure is simple and brief. That is what it is meant to be. When a petition is filed, the senior assistant registrar gives a hearing date straightaway before the petition is issued. The petitioner is expected to do everything he or it has to do in terms of complying with the procedural requirements e.g., serving, gazetting and advertising, before the hearing date. The petition is to be heard on the date fixed for hearing. Having written on it four times and in two languages, it is timely that my learned brother Gopal Sri Ram JCA and this court come out strongly against such practice, which, at the very least is delaying the hearing and disposal of winding-up petitions, which is unfair to the petitioners and clogging the court docket.” [23] I find the conduct of R2 in making numerous applications and appeals to stall the hearing of this petition is precisely the same conduct described by Abdul Hamid JCA in the case cited above. I find this application to be without merit and an abuse of the court process. [24] For the aforesaid reasons, I dismiss this application with costs of RM3,000.00. Dated: 24th October 2023 …………t.t…………….. Ahmad Murad Bin Abdul Aziz Judge High Court of Malaya Kuala Lumpur COUNSEL FOR THE PETITIONER: WONG FOOK MENG WITH CHONG CHUI MAY SOLICITORS FOR THE PETITIONER: TETUAN CHEE SIAH LE KEE & PARTNERS COUNSEL FOR RESPONDENT: YONG CHEE KONG WITH RAVIN WOODHULL AND MARCUS YONG SOLICITORS FOR RESPONDENT: TETUAN AZHAR YONG & CO Cases Referred to: ➢ Government of Malaysia v Dato’ Chong Kok Lim [1973] 2 MLJ 74 ➢ Hartecon JV Sdn Bhd & Anor v Hartela Contractors Ltd [1996] 2 MLJ

➢ Maril Rionebel (M) Sdn Bhd & Anor v Perdana Merchant Banker Bhd & Other Appeals Legislation Referred to: ➢ Section 464 of the Companies Act 2016 ➢ Section 465(h) of the Companies Act 2016 Decision date: 13.01.2023