Mohd Nazri Bin Ab Aziz v 1. ) Zulkafli Bin MD Arus (BA-36-25-11/2022)

ZULKAFLI BIN MD ARUS (No. K/P: 570107-10-5529) …DEFENDAN PERTAMA

RAJA MARIAM BINTI RAJA SALLEH (No. K/P: 631110-10-7310) …DEFENDAN K KEDUA

RAJA NOOR AZLIN BINTI RAJA FADZIRLAH (No. K/P: 881210-43-5356) …DEFENDAN KETIGA DAN JOHALOS SDN BHD (No. Syarikat: 745088-T) …RESPONDEN/PENCELAH JUDGMENT Introduction [1] The Plaintiff’s application before this Court is in Enclosure 15, for an Order for Sale of the Defendants’ land. [2] The Defendants are not opposing the Plaintiff’s application in Enclosure 15. As a matter of fact, the Defendants have filed written submissions (in Enclosure 78) in support of the Plaintiff’s application. The reasons are obvious when one considers the background facts. That should have paved the way for the Plaintiff to obtain an order in terms. [3] However, vide a Notice of Application in Enclosure 22, the present Intervener/Third Party in this action applied to intervene and this application was allowed. The Pivotal Issues [4] Before this Court is to consider the application in Enclosure 15, it is required to consider two threshold questions, namely:

The legal effect of the Sale and Purchase Agreement (entered into between the Defendants and the Intervener); and

The legal effect of the “reinstatement” of the Intervener under section 555 the Companies Act 2016. The Parties and the Pertinent Background Facts [5] The Plaintiff has filed this application in Enclosure 15 in his capacity as a Judgment Creditor resulting from a Judgment in Default which he has entered against the three Defendants for a sum of RM395,000. [6] The First Defendant, Zulkafli bin Md Arus, is the registered owner of ½ share of the land in question. The other ½ share is registered in the name of Raja Fadzirlah bin Raja Bazian (deceased). [7] The Second and Third Defendants are the Administrators of the Estate of Raja Fadzirlah bin Raja Bazian. [8] The Intervener, Johalas Sdn Bhd, claims to have a beneficial interest in the land which is the subject matter of this application. A point of considerable importance is the fact that the Intervener is a company registered under the Companies Act 2016. [9] The First Defendant and Raja Fadzirlah bin Raja Bazian had entered into a Sale and Purchase Agreement to sell the land which forms the subject matter in this application to one Azlan bin Johar on 24 December, 2004 at an agreed price of RM380,000. A deposit of RM10,000 was paid by Azlan bin Johar to the First Defendant and Raja Fadzirlah bin Raja Bazian. A further deposit was paid on 7 January, 2005. Azlan bin Johar is a director and shareholder in the Intervener company. [10] A Registrar’s Caveat was registered on that said land on 23 March,

[11] On 19 March, 2007, another Sale and Purchase Agreement was entered into between the First Defendant and Raja Fadzirlah bin Raja Bazian (as the vendor) and the present Intervener. By this time, the Intervener had paid a deposit of RM68,000. [12] The transfer of the land could not be completed until the present date because of the existence of the Registrar’s caveat. [13] Equally significant are the following three additional incidences. The first is that as of 11 June, 2021, the Intervener had been struck off the records of the Suruhanjaya Syarikat Malaysia (“SSM”) by the SSM. The second is when the Second and Third Defendants obtained an order from the Shah Alam High Court on 14 September, 2020 to dispose of the ½ share of the land belonging to the estate of Raja Fadzirlah bin Raja Bazian to the Plaintiff. The third crucial event is when the Defendants also entered into a Sale and Purchase Agreement with the Plaintiff, which ultimately led to the suit filed by the Plaintiff against the Defendants that culminated with the present judgment in default. The Parties’ Contentions [14] As noted in paragraph [2] above, the Defendants did not oppose the Plaintiff’s application in Enclosure 15. In fact, they supported the Plaintiff’s application in Enclosure 15. The Defendants’ main argument was premised on the fact that when the Intervener was dissolved and struck off by the SSM, the Intervener ceased to exist (as an entity) and that the Sale and Purchase Agreement that it had entered into with the Defendants had been frustrated by virtue of section 57 of the Contracts Act 1950. [15] In addition to the above, the Defendants also relied on sections 20 and 21 of the Companies Act 2016 and cases such as Khaled Abdullah Lafi Nasser & Anor v Sentuhan Budiman Sdn Bhd & Anor [2024] 4 AMR 644; [2024] CLJU 637; [2024] MLJU 691 and Ramanesh Ramoo a/l Ramoo v 23 Motors Sdn Bhd & Ors [2021] AMEJ 1774; [2021] MLJU 2254; [2021] MLRHU 1786. [16] In short, the Defendants’ submissions were that:

The Sale and Purchase Agreement between the Defendants and the Intervener became void the moment the intervener was dissolved by the SSM;

The Intervener ceased to have any interest in the said property arising from the void Sale and Purchase Agreement;

There was no specific order obtained from any court since the Intervener was dissolved that specifically suggest the void Sale and Purchase Agreement dated 19 March, 2007 is still valid; and

Limitation under section 9 of the Limitation Act 1953 has set in on 19 March 2019 upon expiry of twelve years from 19 March,

[17] The Plaintiff underscored the following facts, which he averred as vital, namely, first, that the Intervener had not made the full payment to the Defendants and second, the Intervener had been dissolved since 3 August, 2020. Hence it was the Plaintiff’s submission that the Intervener is not the beneficial owner of the property that forms the subject matter in Enclosure 15. [18] On the beneficial ownership point, the Plaintiff referred this Court to cases such as IB Capital Sdn Bhd v Ivory Indah Sdn Bhd & Anor [2021] AMEJ 1159; [2021] CLJU 2348; [2021] MLJ 860; [2021] MLRAU 148 (“IB Capital”) and Tan Ong Ban v Teoh Kim Heng [2016] 2 AMR 813; [2016] 3 CLJ 193; [2016] 3 MLJ 23; [2016] 2 MLRA 433 (“Tan Ong Ban”), decisions of the Court of Appeal and Federal Court respectively. [19] The Plaintiff also relied on the limitation ground. [20] In opposing the present application in Enclosure 15, the Intervener relied on Order 47 rule 6 of the Rules of Court 2012 and sections 334 and 337 of the National Land Code 2020 for the proposition that an order for sale can only be made if the Defendants were the registered owners of the land, which in this matter it argued as not being the case. [21] On the issue of whether the Sale and Purchase Agreement between the Defendants and the Intervener had been rendered void pursuant to the striking off of the Intervener under the provisions in Division 4 subdivision 1 of the Companies Act 2016 on 3 August, 2020, the Intervener explained that the power of the Registrar was exercised on the ground in section 549(a) of the Companies Act 2016, that is, “the company is not carrying on business or is not in operation”. [22] More importantly, the Intervener alluded to the fact that on 26 May, 2022, the Intervener was reinstated pursuant to a court order under section 555 of the Companies Act 2016. The reinstatement of the Intervener on the register of the SSM meant that, to quote the Intervener, “maka status syarikat tersebut akan menjadi seperti sedia kala as if the name of the Company had not been struck off dan Syarikat adalah dianggap masih lagi berterusan in existence as if its name had not been struck off”. [23] On the limitation point, the Intervener contended that the cause of action against the Defendants only arose in August 2023 when it discovered that the Defendants had entered into a Sale and Purchase Agreement with the Plaintiff on 3 March, 2023. The Applicable Law and Principles [24] It is apposite that the key statutory provisions relied and invoked by the parties are examined. [25] In terms of the Contracts Act 1950, the pertinent provision is section 57(2). For completeness the entire section reads as follows: Agreement to do impossible act

(1) An agreement to do an act impossible in itself is void. Contract to do act afterwards becoming impossible or unlawful

A contract to do an act which, after the contract is made, becomes impossible, or by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. Compensation for loss through non-performance of act known to be impossible or unlawful

Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know, to be impossible or unlawful, the promisor must make compensation to the promisee for any loss which the promisee sustains through the non-performance of the promise. [26] The applicable provisions of the Companies Act 2016 that the parties have invoked or relied on include the following: Power of Registrar to strike off company

Notwithstanding any provision in this Act, the Registrar may strike a company off the register, if—

the company is not carrying on business or is not in operation; … Power of Court to reinstate struck off company into register

(1) Any person who is aggrieved by the decision of the Registrar to strike off the company may, within seven years after the name of the company has been struck off, apply to the Court to reinstate the name of the company into the register.

If the Court is satisfied that the company was at the time of the striking off, carrying on business or in operation or otherwise that it is just that the name of the company be reinstated in the register, the Court may order that—

the name of the company be reinstated; and

give such directions and make such provisions as seem just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off.

Upon an office copy of the order is lodged with the Registrar, the company shall be deemed to have continued in existence as if its name had not been struck off. [27] In addition to the above provisions, the Defendants had also referred this Court to sections 20 and 21 of the Companies Act 2016. These provisions underscore the separate legal entity doctrine and the principle that companies have unlimited capacity respectively. Separate legal entity

A company incorporated under this Act is a body corporate and shall—

have legal personality separate from that of its members; and

continue in existence until it is removed from the register. Companies have unlimited capacity

(1) A company shall be capable of exercising all the functions of a body corporate and have the full capacity to carry on or undertake any business or activity including—

to sue and be sued;

to acquire, own, hold, develop or dispose of any property; and

to do any act which it may do or to enter into transactions.

A company shall have the full rights, powers and privileges for the purposes mentioned in subsection (1). [28] The provisions of the National Land Code that were referred to by the Intervener are sections 334 and 337. These provisions provide as follows: Meaning of “prohibitory order”

In this Chapter, “prohibitory order” means, where land or an interest in land held by a judgment debtor is to be sold in execution proceedings, an order made pursuant to rules of court by a court of competent jurisdiction prohibiting the judgment debtor from effecting any dealing therewith or from effecting such dealing therewith as may be specified in the order. Sale of land or interest subject to prohibitory order

(1) No sale of any land or interest for the purpose of satisfying any judgment debt shall become absolute until it has been confirmed by an order made pursuant to rules of court; and any such order shall be sufficient authority for an officer of a court of competent jurisdiction to execute in favour of the purchaser at the sale the appropriate instrument of transfer under this Act in the name, and on the behalf, of the judgment debtor.

The prohibition imposed by any prohibitory order shall not apply to any such instrument of transfer. [29] The Intervener had made reference to the above provisions in tandem with Order 47 rule 6 of the Rules of Court 2012 which states as follows: Immovable property (O. 47, r. 6)

Where the property to be seized consists of immovable property or any registered interest therein, the following provisions shall apply:

a seizure shall be made by an order by the Court or a Judge prohibiting the judgment debtor from transferring, charging or leasing such property or interest; and for the purpose of this rule, “charging” includes the creation of a lien by deposit of a document of title;

an application for an order under this rule may be made ex parte by a notice of application;

the application shall be supported by an affidavit—

identifying the judgment or order to be enforced;

(ii) stating the name of the judgment debtor in respect of whose immovable property or interest an order is sought;

(iii) stating the amount remaining unpaid under the judgment or order at the time of application;

(iv) specifying the immovable property or the interest therein in respect of which an order is sought; and

stating that to the best of the information or belief of the deponent, the immovable property or interest in question is the judgment debtor’s and stating the sources of the deponent’s information or the grounds for his belief;

a copy of the order shall be served on the judgment debtor and as many copies as the case may require shall be issued to the judgment creditor in order that he may present the same, in compliance with the provision of any written law relating to such land, for registration at the Registry of Titles or Land Office whereat the land or interest in land specified in such order is registered;

a prohibitory order issued under this rule shall not affect any immovable property or registered interest therein and any immovable property or registered interest therein shall not be deemed to have been seized until such prohibitory order has been registered as provided by any written law relating to such land;

subject to subparagraph (g), any prohibitory order shall, upon the expiration of six months from the date thereof, cease to affect the immovable property or registered interest therein specified in such order;

upon the application of any judgment creditor on whose application a prohibitory order has been issued, the Court or a Judge, if it or he considers that special circumstances render an extension just, may from time to time by order extend the period of six months referred to in subparagraph (f), for any period not exceeding six months, provided that an order made under this rule shall not have any force or effect unless it is presented for registration at the Land Office or Registry of Titles before the expiration of the prohibitory order which such order purports to extend;

subparagraph (d) shall apply to orders made under subparagraph (g);

when a judgment creditor has obtained in any suit or proceedings a prohibitory order, in execution of an order or judgment in such suit or proceedings, affecting any immovable property or registered interest therein, a further prohibitory order affecting the same property or interest shall not be made in the same suit or proceedings in execution of the same order or judgment on the application of such judgment creditor or of any other person unless the Court or a Judge by order otherwise directs, on the ground of the existence of special circumstances;

a copy of every order made under this rule shall be sent by the Court making the order to the Registrar of Titles of the State or to the Land Administrator of the District wherein the land affected is situated or to both as may be necessary; and

the Court may at any time, on sufficient cause being shown, order that property seized under this rule shall be released. [30] The authorities cited and relied by the parties that have an important bearing on the present application are IB Capital and Tan Ong Ban, where the concept of beneficial ownership was explicated by the Court of Appeal and Federal Court respectively. [31] The other authority that warrants close scrutiny is Lee Kwee Foh Sdn Bhd v Pentadbir Tanah Daerah Batang Padang [2018] 7 AMR 733; [2019] 1 CLJ 141; [2018] MJLU 158; [2018] MLRHU 1300 (“Lee Kwee Foh”). In this case, the High Court had made reference to section 308(5) of the Companies Act 1965, the equivalent section of which is section 555(2) of the Companies Act 2016. The Decision of this Court [32] It is not disputed that the Plaintiff has a valid judgment (albeit one that was obtained in default) against the Defendants. [33] The fact that the Plaintiff is entitled to enforce that judgment against the Defendants is not challenged by the Defendants nor the Intervener. [34] As a judgment creditor, the Plaintiff has a plethora of options to choose from in realising the judgment sum owed to him by the Defendants. If the Plaintiff were to proceed against any of the assets belonging to the Defendants, it must be proven that the assets actually belong to the Defendants. As noted by the Privy Council in Chung Khiaw Bank v United Overseas Bank Ltd [1970] 2 W.L.R. 858; [1970] 1 MLJ 185, 186; [1970] 1 MLRA 86 and followed by the Federal Court in Karuppiah Chettiar v Subramaniam [1971] CLJU 43; [1971] 2 MLJ 116; [1971] 1 MLRA 663, a “judgment creditor can only take whatever interest the debtor has”. [35] The root of the problem in the present application is the fact that the Plaintiff/Judgment Creditor has opted to go after a piece of property in which the Intervener claims to have beneficial ownership. The case for the Intervener is that the Defendants/Judgment Debtors are merely holding the land as bare trustees for the Intervener. [36] The principle that can be extracted from IB Capital and Tan Ong Ban is that in order for one to be entitled to claim beneficial ownership, full settlement of the purchase price is a necessary pre-condition. Based on the facts in the present matter, the claim of beneficial ownership by the Intervener cannot be supported. [37] As for the threshold question pertaining to the legal effect of the Sale and Purchase Agreement between the Defendants and the Intervener, it was not, at least at the time of the signing of the agreement, “an agreement to do an act impossible in itself”. Hence the agreement cannot be regarded as void pursuant to section 57(1) of the Contracts Act 1950. [38] However, the question remains as to whether the agreement had “afterwards becoming impossible” due to the Intervener having been struck off the register pursuant to section 549(a) of the Companies Act 2016 and consequentially becoming void under section 57(2) of the Contracts Act 1950. This Court is of the considered view that the answer is in the affirmative. [39] The case has considered the cases cited by the Intervener, namely, Asal Anggun Development Sdn Bhd v Amiruddin bin Abdul Rahman [2018] CLJU 2234; [2019] 10 MLJ 190; [2018] MLRHU 1816 and BIG Industrial Gas Sdn Bhd v Pan Wijaya Property Sdn Bhd and Another Appeal [2018] AMEJ 0048; [2018] 9 CLJ 1; [2018] 3 MLJ 326; [2018] 2 MLRA 577 where the courts refused to hold that the contracts had been frustrated. What is obvious is that these cases that the Intervener had relied on are distinguishable from our present case. [40] The ensuing question is whether the said agreement that had been rendered as void pursuant to section 57(2) of the Contracts Act 1950 is resuscitated or brought back to life after the Intervener was reinstated under section 555 of the Companies Act 2016. [41] This Court is of the view that the provision in section 555(2) of the Companies Act 2016 and the case relied by the Intervener, namely, Lee Kwee Foh, do not support the Intervener’s case in opposing the Plaintiff’s application in Enclosure 15. When the Court exercises its powers under section 555(2) of the Companies Act 2016, it may order the name of the company to be reinstated. This has been done in the present case involving the Intervener. While the court is empowered to “give such directions and make such provisions as seem just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off” under section 555(2)(b) of the Companies Act 2016, no such directions have been obtained from the court. In addition, a void contract or one that has been rendered void cannot be revived. [42] The Intervener is at liberty to pursue alternative remedies against the Defendants as permitted by law. However, objecting to the Plaintiff’s current application in Enclosure 15 is not one of those options. [43] The Plaintiff’s application in Enclosure 15 is allowed. [44] The Intervener to pay costs of RM10,000 to the Plaintiff, subject to allocatur. [45] The Defendants to bear their own costs. Dated: 19 September, 2024 sgd [CHOONG YEOW CHOY] Judicial Commissioner High Court of Malaya Shah Alam Counsel: Rozeka Md Kamdari for the Plaintiff (Messrs. Rozeka Kamdari & Normala Mat Som) Thangadurai a/l Govindarajoo for the Defendants (Messrs. Govin T. Durai & Co.) Siti Maspuah binti Maulan for the Intervener (Messrs. Maulan & Co.)