Linde Malaysia Sdn Bhd v Perwaja Steel Sdn Bhd (WA-28NCC-331-06/2017)

The petitioner had through this petition, sought to wind-up the respondent for a debt of RM31,654,978.00. The respondent had during the course of the court’s proceedings, undertook not to oppose the petition.

There were however a myriad of interlocutory proceedings before the petition came to a conclusion. This judgment sets out the background leading to the winding-up order. 2

The facts pertaining to the petitioner’s petition are not complex. The sum of claimed was for the supply of Oxygen and Nitrogen to the respondent, who was in the business of operating a steel mill.

The petitioner issued a statutory notice of demand dated 9 May 2017 to the respondent, pursuant to s. 466(1)(a) of the newly minted Companies Act 2016 (‘CA 2016’). There was no response, which led to this petition being filed on the 2 Jun 2017.

The petition was first fixed for hearing on the 27 July 2017 after the usual case managements. There was no hint of any opposition from the respondent then.

On the day of the hearing, learned counsel for the petitioner informed the court that he had been recently informed that the respondent had managed to obtain a order to restrain any proceedings against it under s. 368 CA 2016. This order was granted by the Shah Alam High Court in suit OS. No. BA-24NCC-50-06/2017 on the 4 July 2017 (‘the Shah Alam suit’). Learned counsel then sought for an adjournment to obtain further instructions. There was no counsel appearing for the respondent. The hearing was then adjourned to the 10 August 2017. 3

Come the 10 August 2017, learned counsel for the petitioner sought for another adjournment, as he has not been able to receive instructions. On this day however, there were two counsel that appeared for the respondent, but they made no representations. The hearing was then adjourned to the 12 September 2017.

On the 12 September 2017, the respondent’s learned counsel was surprised to learn that the petition had been scheduled for hearing, as he was under the impression that it was only fixed for mention. I then showed him the minutes of the previous hearing, where it clearly stated otherwise. Learned counsel nevertheless sought for an adjournment, as he claimed to have been focusing on the Shah Alam suit, and had not been able to take the respondent’s instructions. I then stood down the proceedings, to enable the counsel for both parties to confer.

When proceedings resumed, learned counsel for the petitioner informed the court that he was amenable for the hearing to be adjourned, to enable his client and the respondent to resolve some matters. This agreement however, was subject to the respondent’s undertaking not to oppose the petition, and not to file any application to oppose it. The respondent’s learned counsel confirmed the undertaking. The hearing was then adjourned to the 18 September 2017. 4 [10] By then, the petitioner was faced with two applications, namely:-

Napfim Enterprise Sdn Bhd’s (‘Napfim’) application for leave to intervene, and to oppose the petition; and

Kinsteel Bhd’s (‘Kinsteel’) application for a validation order pursuant to s. 472(1) CA 2016, and an interim stay of the proceedings. [11] Napfim’s application was disposed of on the same day, as the petitioner had no objections to it. The petition and Kinsteel’s application were then adjourned to the 21 September 2017 for hearing. [12] By the 21 September 2017, another application had already been filed. This time it was by Beijing Tieforce Co. Ltd (‘Beijing’) for an application to nominate a private liquidator. It was also fixed for hearing on the same day. [13] Nevertheless, unknown to the petitioner, Napfim had apparently managed to obtain another restraining order for the benefit of the respondent, pursuant to s. 368 CA 2016 at the Alor Setar High Court on the 20 September 2017. The restraining order was for a period of ninety days. [14] Learned counsel for the petitioner took the view that Kinsteel’s application for validation would not be affected by the restraining order, and moved for it to be heard. However, 5 the learned counsel for the respondent, Kinsteel and Napfim then informed the court, that the respective solicitors for all three companies were in the process of discharging themselves. [15] I then decided to adjourn all applications and the petition for mention on the afternoon of 26 September 2017, to enable all parties to sort out their affairs. [16] On the 26 September 2017, another party participated. This time it was Tenaga Nasional Berhad (‘TNB’), who had came in as a supporting creditor. The petitioner’s learned counsel informed the court, that the petitioner would take steps to set aside the restraining order in the Alor Setar High Court, and requested that all the interlocutory applications and the petition be fixed for hearing at a future date, in the event that the petitioner succeeds in setting aside the restraining order. I agreed and scheduled the 3 November 2017 for hearing. [17] Prior to that, Napfim’s solicitors’ application to discharge themselves as solicitors was heard on the 16 October 2017, where an order in terms of the application was granted. [18] Four other applications were filed prior the 3 November 2017:-

Another application for leave to intervene by Affluent Oasis Sdn Bhd (‘Affluent’). Affluent sought to be added 6 as a joint applicant with Kinsteel in the latter’s application for the validation order;

TNB’s application for the appointment of a private liquidator; and

The respondent and Kinsteel’s solicitors’ application to discharge themselves as solicitors. These applications were also scheduled to be heard on the 3 November 2017. [19] On the 3 November 2017, the following were scheduled for hearing:-

Winding-up petition;

Kinsteel’s application for a validation order;

Beijing’s application to nominate a private liquidator;

TNB’s application for the appointment of a private liquidator;

Affluent’s application for leave to intervene; and

The respondent and Kinsteel’s solicitors’ application to discharge. 7 [20] Learned counsel for the petitioner started off by informing the court that the restraining order had been set aside by the Alor Setar High Court on the 19 October 2017. He then proposed to proceed with the hearing of all applications and the petition. [21] The respondent and Kinsteel’s learned counsel then informed the court that they do not wish to proceed with their respective applications for discharge and sought to withdraw them. These applications were then struck out with no order as to costs. [22] Learned counsel for Beijing however sought for an adjournment, to enable his client to file an affidavit in support, as they had only filed the application sans an affidavit. The learned counsel for the petitioner objected to it. He pointed out that they had much time to do so, and should not be allowed to cause any further delay. I concurred and struck out the application with no order as to costs, as the learned counsel for Beijing was not prepared to proceed. [23] Learned counsel for the petitioner also informed the court, that he had no objections to Affluent’s application for leave to intervene, subject to costs of RM3,000 awarded to the petitioner. Affluent’s learned counsel had no objections. I therefore granted an order in terms of the application with costs of RM3,000 subject to allocatur. 8 [24] Kinsteel’s counsel then informed the court, that his client has filed another application under s. 368 CA 2016 at the Kuala Lumpur High Court, and that it was scheduled to be heard by Justice Mohd Nazlan on the 8 December 2017. I then adjourned all applications and the petition for hearing on the 8 November 2017. [25] Having dealt with most of the interlocutory applications, only the following were fixed for hearing on the 8 November 2017:-

Winding-up petition;

Kinsteel’s application for a validation order; and

TNB’s application for the appointment of a private liquidator, The petition [26] I had dealt with Kinsteel and TNB’s application on the same day. This judgment however will only concern the winding-up petition, as a separate judgment in respect of Kinsteel’s application is prepared. [27] The respondent had not filed any affidavit in opposition to the petition. The learned counsel for the respondent also did not make any oral submissions to oppose the petition. This was not odd, as the respondent’s learned counsel had on the 12 9 September 2017, represented to the court that the respondent undertook not to oppose the petition, nor file any application to oppose the petition. [28] Admittedly, I was mindful of the possibility that the respondent’s counsel may not have been authorised to give the respondent’s undertaking on the 12 September 2017. However, the respondent’s solicitors had remained the same. There were no indications that the respondent may have changed its position. Furthermore, some two months have passed since the day that the undertaking was given. That was the main reason for me to set out the proceedings that had occurred in this court in this judgment, as the respondent’s counsel was present in all of them. [29] In any event, a counsel is deemed to be clothed with his client’s authorisation to act and enter into a compromise. The judgment of Brightman LJ, in Waugh v H B Clifford & Sons Ltd and others [1982] 1 All ER 1095 (CA), is most instructive:- I think it would be regrettable if this court were to place too restrictive a limitation on the ostensible authority of solicitors and counsel to bind their clients to a compromise. I do not think we should decide that matter is 'collateral' to the action unless it really involves extraneous subject matter, as in Aspin v Wilkinson (1879) 23 SJ 388 and Re a debtor (No 1 of 1914) [1914] 2 KB 758. So many compromises are made in court, or in counsel's chambers, the solicitor but not the 10 client being present. This is inevitably so where a corporation is involved. It is highly undesirable that the court should place any unnecessary impediments in the way of that convenient procedure. A party on one side of the record and his solicitor ought usually to be able to rely without question on the existence of the authority of the solicitor on the other side of the record, without demanding that the seal of the corporation be affixed; or that a director should sign who can show that the articles confer the requisite power on him; or that the solicitor's correspondence with his client be produced to prove the authority of the solicitor. Only in the exceptional case, where the compromise introduces extraneous subject matter, should the solicitor or counsel retained in the action be put to proof of his authority. Of course it is incumbent on the solicitor to make certain that he is in fact authorised by his corporate or individual client to bind his client to a compromise. In a proper case he can agree without specific reference to his client. But in the great majority of cases, and certainly in all cases of magnitude, he will in practice take great care to consult his client, and I think that his client would be much aggrieved if in an important case involving large sums of money he relied on his implied authority. But that does not affect his ostensible authority vis- à-vis the opposing litigant. (a-d, 1106) [30] If at all the learned counsel for the respondent was not duly authorised nor instructed to provide the undertaking, it would purely be an issue between the respondent and its counsel. It is not for the court to question it. 11 [31] The petitioner’s counsel moved the court to grant an order in terms of the petition. All the cause papers were in order and the necessary prerequisites under the CA 2016 had been adhered. The respondent had obviously failed to raise any bona fide dispute and rebut the presumption of insolvency. I had therefore granted an order in terms of the petition to wind-up the respondent, with costs of RM5,000 subject to allocatur. Dated: 10 January 2018. -sgd- (Mohamed Zaini Mazlan) Judge Kuala Lumpur High Court (Commercial Division) Counsel for the plaintiff Peter Douglas Ling and Lovery Leong [Messrs Peter Ling & Co] Counsel for the respondent Wong Rhen Yen, Eric Tan, S. Ravenesan and Siti Nur Amirah Aqilah binti Adzman [Messrs S. Ravenesan]