Maju Holdings Sdn Bhd v Spring Energy Sdn Bhd (WA-24NCC-144-03/2022)

Pty Ltd v Deputy Federal Commissioner of Taxation [1976] 2 ACLR The Supreme Court of Victoria held that a Fortuna injunction may be granted: a. Where the presentation of the petition might produce irreparable damage to the company and where the proposed petition has no chance of success; and b. Where a petitioner has chosen to assert a disputed claim by a procedure which might produce irreparable damage to the company rather than by a suitable alternative procedure. [14] The principles set out in Fortuna Holdings have been recognised by the Malaysian courts (see Mobikom Sdn Bhd v lnmiss Communications Sdn Bhd [2007] 3 MLJ 316 and Pacific & Orient Insurance Co Bhd v Muniammah Muniandy [2011] 1 CLJ 947). [15] The applicant’s arguments in support of its application for a Fortuna injunction centre on the elements of a Fortuna injunction as enumerated in Fortuna Holdings. The applicant claimed that it had met S/N ag1ufi1n00mOjxE7UQIvw the elements of a Fortuna injunction, as the intended winding-up petition has no likelihood of success and will produce irreparable damage to the applicant. What the applicant appeared to have ignored is that its debt to the respondent is not in dispute. [16] The approach of the courts in considering the grant of a Fortuna Injunction has been clear, in that the injunction will only be granted when there is a debt that is bona fide disputed on substantial grounds. [17] In cases where judgments have been obtained, the courts have dismissed applications for Fortuna injunctions on the basis that there is no bona fide disputed debt. The reasoning is explained by the Court of Appeal in Pacific & Orient Insurance Co: “[25] An application for an injunction to restrain an intended winding-up petition against a company is known as a "Fortuna Injunction", taking its name from the case of Fortuna Holdings

Pty Ltd v. The Deputy Commissioner of Taxation [1978] VR In that case the court laid down the basis on which a court acts to restrain the presentation of a winding-up petition and the two principles that guide courts in the grant of an injunction to that effect. (see also: Mobikom Sdn Bhd v. Inmiss Communications Sdn Bhd [2007] 3 CLJ 295 (Court of Appeals). [26] The first principle laid down in that case in that an injunction of that nature may be granted by court where the presentation of the petition might produce irreparable damage to the company and where the proposed petition has no chance of S/N ag1ufi1n00mOjxE7UQIvw success. In order to succeed in getting injunction under this principle, the applicant must satisfy both limbs of the principle ie,:

the intended petition has no chance of success, as a matter of law as well as a matter of fact; and

(ii) the presentation of such petition (which has no chance of success) might produce irreparable damage to the company. (see: Re A Company [1894] 1 Ch 349; Charles Forte Investment Ltd v. Amanda [1964] 1 Ch 240, [1963] 2 All ER 940; and Bryanston Finance Ltd v. De Vries (No 2)[1976] 2 WLR 41, [1976] 1 All ER 25) [27] This principle is not applicable to the present case. The respondent herein had obtained a valid and enforceable judgment against the insured as well as the insurer (appellant). The intended petition if filed is not bound to fail. He has a good chance to succeed. Therefore whether or not it causes irreparable damage is of no consequence. Thus the injunction applied for by the appellant in the present case, cannot be granted by court under this principle. [28] The second principle established in the Fortuna case is that an injunction of that nature may be granted in cases where a petitioner proposing to present a petition has chosen to assert a disputed claim, by a procedure which might produce irreparable S/N ag1ufi1n00mOjxE7UQIvw damage to the company, rather than by a suitable alternative procedure. [29] This principle applies only to disputed debt. It does not apply to cases where the debt in question is undisputed. As long as the debt cannot be disputed, it is not consequence whether or not it will cause irreparable damage to the company, if presented. A valid and enforceable judgment of court as in the present case, (unless set aside or stayed) cannot be considered a disputed debt. The law is settled on this point. Therefore, an order for injunction as prayed for by the appellant in the present case, also cannot be granted under this principle.” (emphasis added) [18] In the present case, I find there to be no bona fide dispute on the sum due. The Consent Order and the Settlement Agreement contain an obligation for payment of RM48,000,000 by the applicant to the respondent. This outstanding amount is therefore not disputed. [19] It is also undisputed that an amount of RM17,200,000 remains unpaid by the applicant. This outstanding amount is admitted by the applicant in its affidavit in support of the application for a Fortuna injunction. [20] In Lafarge Concrete (Malaysia) Sdn Bhd v Gold Trend Builders Sdn Bhd [2011] 1 LNS 1763, the debt was agreed to have been settled by eight instalments, but only three instalments had been paid. The S/N ag1ufi1n00mOjxE7UQIvw respondent also admitted to the debt. The Court of Appeal held that there was no bona fide dispute as to the debt, and that in the circumstance of the case, “… winding-up should have been a foregone conclusion”. [21] Similarly in this case, there is a Consent Order and a Settlement Agreement that clearly set out an amount outstanding from the applicant to the respondent. The applicant, by its own admission, had not satisfied this outstanding amount in full. There is therefore no bona fide disputed debt, and as such, the application for a Fortuna injunction in this case cannot be allowed. D. Decision [22] With the above considerations and findings, I dismissed the applicant’s application, with costs. Dated 17 November 2022 - sgd - Adlin binti Abdul Majid Judicial Commissioner High Court of Malaya Commercial Division (NCC6) Kuala Lumpur Counsel: Applicant : Ganesh Magenthiran (together with Suronmani Krishnan) of Messrs. Hakem Arabi & Associates S/N ag1ufi1n00mOjxE7UQIvw Respondent : Marcus Tan (together with Eunice Kwong) of Messrs. Ricky Tan & Co Legislation referred to: Companies Act 2016, Section 466(1)(a) Cases referred to: Fortuna Holdings Pty Ltd v Deputy Federal Commissioner of Taxation [1976] 2 ACLR 349 Lafarge Concrete (Malaysia) Sdn Bhd v Gold Trend Builders Sdn Bhd [2011] 1 LNS 1763 Mobikom Sdn Bhd v lnmiss Communications Sdn Bhd [2007] 3 MLJ 316 Pacific & Orient Insurance Co Bhd v Muniammah Muniandy [2011] 1 CLJ 947 S/N ag1ufi1n00mOjxE7UQIvw