Nimalam Devaraja and Lam Rui Rong for the Applicants v Mark Ho and Eldarious Yong for the Respondent Company (POST WINDING-UP NO. WA-28PW-358-10/2020 COMPANIES WINDING-UP NO. WA-28NCC-459-06/2020)

Before this Court is a Notice of Motion (Application) filed by the applicants, Dart Industries Inc & Tupperware Brands Malaysia Sdn Bhd (Applicants), for inter alia 2

leave to proceed with legal proceedings including but not limited to any hearing for assessment of account for profits and /or interlocutory applications, commenced against CMN International Sdn Bhd (Company) in the following High Court suits:- a) Suit No. WA-22IP-16-04/2017 (Suit 16) b) Suit No. WA-22IP-17-04/2017 (Suit 17) c) Suit No. WA-22IP-18-04/2017 (Suit 18) and d) Suit No. WA-22IP-19-04/2017 (Suit 19) (collectively “Moorlife Suits") where the applicant is the Plaintiff and the Company is the Defendant in all of the above Moorlife Suits

(ii) that leave be granted to proceed with their appeal against the Company in Civil Appeal No. W-02(IPCV)(W)-1868-09/2018 (1868 Appeal)

The Application is founded on the following grounds: a) On 20.4.2017 the applicant commenced the Moorlife Suits at the Kuala Lumpur High Court for inter alia an infringement of the Applicants industrial design registrations in Malaysia; b) Suits 16 & 17 were heard together wherein the Learned Judge had amongst others made an order on 10.8.2019 (10.8.2019 3 Order) for assessment of account of profits made by the defendants as a result of the infringement of Dart Industries Inc (Dart) Malaysian Industrial Design Registration no MY09-00167- 0101 (the 167 Design) and Malaysian Indistrial Design Registration no MY13-01172-0404 (the 1172 Design) in each suit respectively and payment of the amount as a result of the assessment to the Applicant (the Suits 16 & 17 AOP Proceedings) as well as the costs of RM365,471.60 by the Defendants in Suit 16 & 17 to the First Applicant; c) As a result of the 10.8.2019 Order, various appeals have been filed by both the Plaintiffs and the defendants in Suit 16 & 17 including Dart’s 1868 Appeal against the findings of the High Court that there had been no fraudulent infringement; d) All the documents for the 1868 Appeal have been filed and are pending the hearing of a date by the Court of Appeal; e) On 19.4.2019 following the 10.8.2019 Order, directions were made by another High Court Judge for a hearing of assessment of account of profits made by the Defendants as a result of the infringement of the 167 Design and the 1172 Designs in Suits 16 & 17 respectively and for payments of amongst others the amount as a result of the assessments to be made to the Applicants i.e in the Suits 16 & 17 AOP Proceedings; f) thereafter Suits 17 & 18 were heard by the High Court and judgment was given on 30.9.2019 (30.9.2019 Judgment) wherein the Court had ordered an assessment of account of 4 profits made by the defendants as a result of the infringement of Dart’s Malaysian Industrial Design Registration nos MY12- 01413-0101 MY12-01417-0102, MY12-01418-0202, MY12- 01420-0202,MY12-01421-0102, MY12-01422-0202 and MY12- 01424-0202 (collectively the “Blossom Designs”) in Suit 18 and Malaysian Industrial Design Registration nos MY07-00392-0101, MY07-00394-0101, MY01-00176 UK(E) 01/0428 and UK(E)03/0299 and the payment of the amount as a result of the assessment to the Applicants (Suits 18 & 19 AOP Proceedings) and costs of RM600,000 by the Defendants in Suits 18 & 19 to the Applicants; g) as a result of the 30.98.2019 Judgment the defendants in Suits 18 & 19 filed Court of Appeal Civil Appeal Nos W-02(IPCv)(W) - 1930-10/2019 (1930 Appeal) and W-02(IPCv)(W)-1931-10/2019 (1931 Appeal) respectively; h) on 20.7.2020 another High Court i.e the Intellectual Property Court (IP Court), had then given directions for Suits 17 & 18 to be consolidated with Suits 16 & 17 AOP Proceedings; i) prior to being informed that the Company had been wound up on 9.9.2020, the last directions from the IP Court for the consolidated Suits 16, 17,18 & 19 AOP Proceedings during case management were for the Applicants to reply to the Defendants affidavit; j) on 18.9.2020 Messrs Skrine , the Applicants solicitors received a letter from, Messrs Bustaman, the solicitors for the Company in 5 the Suits 16, 17,18 & 19 and related appeals stating that the Company had been wound up by a third party on 9.9.2020; k) the Applicants have also commenced committal proceedings against the Company (Committal Proceedings) for failure to comply with amongst others the terms of the 30.9.20109 Judgment, of which a case management has been fixed in respect of the same;

The Moorlife Suits were commenced at the same time arising out of investigations carried out by the Applicant on the Company where it was discovered that the Company had among others sold products which infringed the Applicants intellectual property rights.

However due to amendments in the defence by the defendants in Suits 18 & 19 which resulted in the Applicants having to add a new cause of action in Suits 18 & 19, the trial for Suits 16 & 17 proceeded first.

All 4 Suits had been heard by the High Court through 2 full trials and judgments were rendered either wholly or partially in favour of the Applicants where the respective Court’s in all 4 Suits had also made an order inter alia for the assessment of damages and/or account of profits.

I had for the record proposed to the parties respective counsels whether there were willing to agree to the Liquidator assessing the 6 account of profits by way of an affidavit without the need for the AOP Proceedings based on an undertaking by the Liquidator to do so but the same was rejected by the counsels after reverting to the respective parties.

The Applicants submit that leave should be granted given the nature of the proceedings, balance of convenience, justice of the case and stage at which the proceedings have reached.

It is further submitted by the Applicants that their claim cannot be adequately dealt with by the winding up court. With regards the AOP Proceedings the Applicants state that the same is not a new claim and were commenced pursuant to the respective High Court Orders i.e the 10.8.2019 Order and the 30.9.2019 Judgment and have been ongoing for over a year before it was halted by the winding up of the Company.

The Applicants also submit that the AOP Proceedings involves exchange of documentary evidence, which have been ongoing since 2019, along with a full hearing which can only be conducted within the jurisdiction of the courts.

It is also argued by the Applicants that there is a clear conflict of interest and breach of natural justice for the Liquidator to adjudicate on matters filed against the Company and on the other hand act on behalf of the Company to assess the Company’s profits. 7

The Applicant contends that leave of the winding up court is not required pursuant to section 471 of the Companies Act 2016 as committal proceedings are taken against the Company’s directors personally.

It is further contended by the Applicants that the Liquidator herein should be ordered to pay the costs of the Application herein as they have unnecessarily objected to the Application.

It is submitted by the company that the Application is vague, misconceived and does not particularise which legal proceedings that leave is sought for and thus the court cannot apply the appropriate legal tests to determine if leave of court is warranted and the Application be dismissed ex debitio justitiae.

The Company submits that the Committal Proceedings are a form of execution and quotes Order 45 rule 1 of the Rules of Court 2012 thereto in support of the same. The Company then goes on to submit that all forms of execution after the presentation of a winding up are void and relies on section 472 (3) of the Companies Act 2016.

The Company had also informed this court at the commencement of the hearing of the Application that they were not objecting to prayer 2 of the Application. 8

It is also contended by the Company that the Applicants have filed a proof of debt with the Company and should be precluded from obtaining leave herein to continue with legal proceedings against the Company as a result thereof.

The Company submits that the Liquidator has the power and is in the best position to ascertain the profits of the Company without further litigation by the Applicants and that the power of the directors of the Company have ceased upon the winding up of the Company and there would be no benefit for the Applicants for the directors to depose any further affidavits in the AOP Proceedings. Any further litigation would thus, according to the Company, be wasteful and fruitless.

It is also submitted by the Company that it is insolvent as it only has around RM10,000 in stocks in trade and RM60,000 in terms of moveable assets with no cash in hand and that any further litigation against the Company will thus be in futility.

This Court has after perusing the Application, find that the applicants had made reference to the Moorlife Suits, the 1930 & 1931 Appeals, the AOP claims and the Committal Proceedings in the said Application together with some background facts and information thereto with sufficient details for this Court’s consideration. I therefore hold that the Application is not vague as 9 claimed by the Respondent and that there are enough substantive grounds and/or reasons as contained therein for this court to determine the Application and will therefore proceed with the decision on the main issues before this Court i.e leave to proceed with legal proceedings in the Moorlife Suits, the 1930 & 1931 Appeals and the Committal Proceedings.

I will now address the issue of the Committal Proceedings wherein reference was made by the Company to Order 45 rule 1 of the Rules of Court 2012 which provides that:- “(1) Subject to the provisions of these rules, a judgment or order for the payment of money, not being a judgment or order for the payment of money into court, may be enforced by one or more of the following means:

a writ of seizure and sale;

garnishee proceedings;

in a case in which rule 5 applies, an order of committal.” Rule 1 (c) which refers to Order 45 rule 5 which in turn reads: “(1) Where:

a person required by a judgment or order to do an act within a time specified in the judgment or order refuses or neglects to do it within that time or, as the case may be, within that time as extended or abridged under Order 3, rule 5; or 10

a person disobeys a judgment or order requiring him to abstain from doing an act, then, subject to these rules, the judgment or order may be enforced by one or more of the following means:

(A) with the leave of the court, an order of committal;

(B) where that person is a body corporate, with the leave of the court, an order of committal against any director or other officer of the body;

(C)subject to the provision of the Debtors Act 1957, an order of committal against that person or, where that person is a body corporate, against any such officer.”

I have also taken into account section 472 (3) of the Companies Act 2016 which states as follows: “(3) Any attachment, sequestration, distress or execution put in force against the estate or effects of the company after the presentation of the winding up petition shall be void.”

After a careful reading and consideration of the said Order 45 rules 1 and 5 of the Rules of Court 2012 read together with section 472 (3) of the Companies Act 2016, I find that section 472 (3) of the Companies Act 2016 is limited only to any execution put in force against the estate or effects of the Company which shall be void, being the operative words therein. Committal proceedings in a matter involving a body corporate can in essence only be taken out against the directors of the Company per se, see Order 45 rule 5

(1)(c) of the Rules of Court 2012, and not the Company itself, and thus I hold that section 472 (3) of the Companies Act 2016 is not 11 applicable in the circumstances as committal proceedings are not a form of execution against the estate or effects of the Company but an action taken personally against the directors of the Company.

In any event, from the facts before me, the alleged act of contempt of failing to comply with the relevant Court Orders were purportedly committed by the Company prior to the Winding Up of the Company and that the Judge hearing the contempt proceedings had on 4.8.2020 already made a prima facie finding and granted leave for the committal proceedings to be pursued. I would also add that in the event the Court finds that there is any contempt committed by the Company, it would be the directors and not the company who would be penalised and face the consequences of the Committal Proceedings. This in my view is another factor which supports my finding that the Committal Proceedings are taken out against the directors of the Company and not the Company itself and section 472(3) of the Companies Act 2016 would therefore not be applicable in the circumstances to Committal Proceedings taken out as a result of any alleged act of non compliance with a Court Order by a company.

As to the proof of debt filed by the Applicants which the Company contends should preclude the Applicants from obtaining leave herein to continue with legal proceedings against the Company, I have viewed the said Proof of Debt for the sum of RM374,814.75 in total for Suits 16,18 & 19 as seen at exhibit B-8 of the Company’s Affidavit in Reply at enclosure 7, and find that the same is, as per 12 paragraph 8 of the Applicants Affidavit in Support at enclosure 2, in effect only a claim lodged in respect of the costs awarded in the said Suits.

The AOP Proceedings on the other hand concerns the assessment of account of profits made by the defendants as a result of the infringement of the Applicants industrial design registrations in Malaysia which is a different matter or issue altogether. I thus find that the filing of the Proof of Debt by the Applicants do not preclude the Applicants from filing this Application before me.

I therefore further hold that Watta Battery Industries Sdn Bhd v Uni-Batt Manufacturing Sdn Bhd and Chow Siew Hon & 4 Ors (Interveners) [1993] 1 CLJ 555 as relied on by the Company is inapplicable before me as based on the facts of the matter before this Court, the Proof of Debt filed by the Applicants was purely for the issue of costs per se and not the assessment of account of profits made by the defendants. Thus, the matter before this Court can be distinguished from that in Watta Battery Industries Sdn Bhd (supra) as it is not a matter where “The petitioner had already filed the civil suit against the company when it proceeded to submit its proof of debt to the liquidators pertaining to the same subject matter as in the civil suit and upon which the petition was also based.” as was in Watta Battery Industries Sdn Bhd (supra). Leave to Continue with proceedings

As to the AOP Proceedings, I find that the assessment of the profits is not a power which the Liquidator can perform, as the Twelfth 13 Schedule of the Companies Act 2016 which contains the powers of a Liquidator in a winding up, does not provide the Liquidator with such a power. I am also of the view that the assessment of the profits cannot thus be fairly estimated without the necessity of going through the hearing of the AOP Proceedings.

I further agree with the Applicants counsel that the ‘debt’ vis a vis the AOP Proceedings is not something which is provable under section 523 of the Companies Act 2016 i.e description of debts provable in a winding up, as it involves unliquidated damages arising out of infringements of the Applicants intellectual property rights wherein section 523 (1) of the Companies Act 2016 has expressly stated: “(1) Demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust shall not be provable in winding up” and that this is therefore another reason why the hearing of the AOP Proceedings should be proceeded with.

This Court also agrees with the Applicants counsel that a possible conflict of interest may arise where the Liquidator on the one hand adjudicates on matters filed against the Company and on the other hand assesses and determines the Company’s profits on behalf of the Company for the purposes of the AOP proceedings. It would thus be prudent in the view of this Court for the Liquidator to not only steer clear of this potential conflict but also appear to be seen to be totally independent in assessing any claims whether for and/or 14 against the Company to ensure that justice is not only done but seen to be done

The law on a section 471 of the Companies Act 2016 application is settled and is based on Mosbert Berhad (in liquidation) v Stella D’Cruz [1985] 2 MLJ 446 where the Supreme Court has held that: “in re Cuthbert Lead Smelting Co Ltd (1886) WN 84 it was held that if the applicant could obtain all the relief in the winding up leave would be refused. In short, the Court will always give an applicant leave if his claim cannot be dealt with adequately in the winding up or if the remedy he seeks cannot be given to him in a winding up proceedings.”

This principle was followed at the Court of Appeal in cases such as Mesuntung Property Sdn Bhd v Kimlin Housing Development Sdn Bhd [2014] 7 CLJ 202 and Ganda Setia Cemerlang Sdn Bhd v Maika Holdings [2018] 2 CLJ 401 where in Ganda Setia Cemerlang Sdn Bhd (supra) it was held that: “For the purpose of s. 263(2)( which is the former provision in the CA 1965 and is now governed by sec 471 CA 2016), the appellant needed to show that their dispute was real, genuine and serious and that they had a prima facie case.”

From the facts before me, I find that the AOP Proceedings are matters which cannot be dealt with adequately in the winding up as it involves the necessity of a full hearing before the Intellectual Property Court (IP Court) which would also inevitably involve an 15 exchange of documents and assessing other witnesses and Defendants in the said Suits 16, 17, 18 & 19 respectively which the IP Court has to consider and determine. It is not purely an examination of the accounts, books, vouchers and records of the Company which the Liquidator/Company states the Liquidator is in a position to do so.

I have also noted and considered that the said AOP Proceedings are now at the advance stage of assessing the profits of the Company only as a full trial of the said Suits 16, 17, 18 & 19 has already been undertaken and completed which have rendered Judgments against the Company and the Applicants have proven to the satisfaction of this Court that they have a prima facie case against the Company. It is therefore this Court’s finding that the AOP Proceedings are bona fide.

This court has further taken into account the alleged contention that the Company is insolvent and that it would be futile to allow further litigation against the Company. On this point I have noted the Applicants contention and agree with the same that there were no documents exhibited to support the Company’s averments as to its financial position and that a perusal of the Companies Commission of Malaysia (CCM) search report at exhibit B-5 of the Company’s Affidavit in Reply shows the Company as having assets in the sum of RM4,733,065. Be that as it may, this Court is unable to rule on the financial position of the Company at this stage purely on the available evidence before it and with respect I find that based on the Application before me, the Company’s financial position is not a crucial factor in determining the Application. 16

It is not for a winding up court to delve into the merits of the dispute or matter in the IP Court but only to examine if the complaints are genuine or they are baseless and devoid of substance, see Ganda Setia Cemerlang Sdn Bhd (supra). I accordingly hold that on a balance of convenience and based on the justice of the case that leave ought to be given in the circumstances and apply the principle in Bruno Phillipe Fehrenbach v Pegawai Penerima Malaysia (selaku Pelikuidasi Han Pacific Sdn Bhd) [1999] 5 MLJ 321 where His Lordship Abdul Malik Ishak J (as he then was) held: “It is a correct statement of the law to say and I so say that the court considers whether leave to proceed should be granted by looking at the nature of the plaintiff's claim, the balance of convenience and the justice of the case ( Re Gordon Grant & Grant Pty Ltd; Re Stuart Bros Pty Ltd (1995) 16 ACSR 451; and Speiser v Locums Financial Management Pty Ltd (1996) 22 ACSR 478; 15 ACLC 278 (SC (NSW)).”

In their oral submissions, the Company had attempted to persuade this Court that there was no necessity for the Application to be made herein as Suits 16, 17, 18 & 19 all falls upon the Liquidator to assess the same and relied on sections 523(3) to (5) of the Companies Act 2016 which reads: “(3) Save as provided in subsections (1) and (2), all debts and liabilities present or future, certain or contingent, to which the company is subject at the date of the winding up order or the resolution, or to which the company may become subject before 17 dissolution by reason of any obligation incurred before the date of the winding up order shall be deemed to be debts provable in winding up.

An estimation shall be made by the liquidator of the value of any debt or liability provable under subsection (3) which, by reason of its being subject to any contingency or for any other reason, does not bear a certain value.

Any person aggrieved by the estimate made under subsection (4) may appeal to the Court.” as well as section 501 of the Act which states that ‘The Court may make such order for inspection of the books and papers of the company by creditors and contributories as the Court thinks just, and any books and papers in the possession of the company may be inspected by creditors or contributories accordingly.”

After reading the said sections 523 (3) to (5) of the Companies Act 2016, I am of the view that ‘debts and liabilities’ mentioned therein do not include the assessment of profits which involves unliquidated damages arising out of infringements of the Applicants intellectual property rights, being unforeseen losses which only a court of law would be in the best position to determine. I therefore hold that subject matter of the Application is thus not a matter which falls within the said sections.

Alternatively, I hold that, even if I am wrong in my above finding, the procedure in section 523(5) thereto which dictates that any person 18 aggrieved by the estimate made by the liquidator of the value of any debt or liability provable may appeal to the Court would be a round about way of approaching the matter which is now before the Courts in the form of the Suits 16, 17, 18 & 19 and that for the Applicants to proceed with filing a proof of debt for unliquidated damages, which I have found is inapplicable, would be an unnecessary waste of time and costs.

As to the Applicant’s contention that the Liquidator herein should be ordered to pay the costs of the Application herein as they have unnecessarily objected to the Application, this Court has weighed the same and the case of Markcon Sdn Bhd (In Liquidation) v Resilient Construction Sdn Bhd (Labtec Sdn Bhd & Anor :Opposing Creditors) [1993] 3 MLJ 429.

A perusal of the Markcon Sdn Bhd (In Liquidation)(supra) case shows that the learned judge therein did not order that costs be imposed on the Liquidator therein and that the learned Judge had observed that in the Supreme Court decision in Zainal Abidin Putih & Anor v Che Wan Development Sdn Bhd [1992] 2 MLJ 233, Gunn Chit Tuan J (as he then was) had ruled that the High Court has a discretionary power to grant costs.

I have in my decision herein, not found any evidence before this Court that the liquidator had unnecessarily objected to the Application or had incurred unnecessary litigious expenses or whose action needed to be sanctioned as there has not in my view 19 been any misconduct or fault in defending or objecting to the Application which the Liquidator has, based on the facts before me, every right to exercise its legal right to object to the Application as there were genuine issues raised by the Liquidator for the Court to determine.

I therefore grant order in terms for the Application in Enclosure 1 prayers 1, 2 and 3. Dated: 23rd December 2020 sgd. NADZARIN WOK NORDIN JUDICIAL COMMISSIONER KUALA LUMPUR HIGH COURT Parties: Nimalam Devaraja and Lam Rui Rong for the Applicants [Messrs Skrine] Mark Ho and Eldarious Yong for the Respondent Company [Messrs Chellam & Wong]