Syarikat Perumahan Negara Berhad v Khazanah Jaya Sdn. Bhd (WA-28NCC-651-09/2021)

In the Winding Up Petition (“Petition”) herein, the Petitioner has prayed that the Respondent be wound up pursuant to sections 465(1) (e) and 466 (1) (a) of the Companies Act 2016 as the Respondent had failed to pay the amount claimed in the Statutory Notice dated 5.3.2021 (“Statutory Notice”).

It is alleged in the Petition that:- a) Through the Project Management Collaboration Agreement dated 27.6.2012, the Respondent has been appointed as a nominee by by Supermesa Sdn Bhd and has been given the absolute rights, responsibilities and liabilities by Supernesa Sdn Bhd to build and complete a housing project at Bandar Seri Gemilang, Lahad Datu, Sabah pursuant to the Project Business Collaboration Agreement entered between Supernesa Sdn Bhd and the Petitioner. (See paragraph 6, page 2 of enclosure 16). b) Subsequently, the Respondent has entered into a Supplementary Project Business Collaboration Agreement dated 15.9.2014 with the Petitioner, to reschedule the payment of RM59,783,645.00 (see page 21, Enclosure 3). c) However, the Petitioner have failed to fulfill their responsibilities under the Project Business Collaboration Agreement. (See paragraph 8, page 3 of Enclosure 16). d) Subsequently on 11.3.2021, the Petitioner through his solicitor, Messrs. Mimirahayu Haniff Heng & partners, served a Statutory Notice under Section 466(1)(a) of the Companies Acceptance 2016 (Acceptance 777) dated 5.3.2021 (“Statutory Notice”) to the Respondent to claim the amount of RM130,606,524.90 (see page 54, Enclosure 3). e) In replying to the Statutory Notice, the Respondent had via letter dated 25.3.3021 disputed the claim amount stated instruction he Statutory Notice. (See page 60, Enclosure 3). f) Without prejudice to the position taken by the Respondent, on 31.3.2021, the Respondent commenced settlement negotiations with the Petitioner to settle the dispute amicably. (See paragraph 11, page 3 of Enclosure 16 and page 62, Enclosure 3). g) Pursuant to the settlement negotiations, the Respondent submitted a settlement offer to the Petitioner through a letter dated 14.4/2021 (see page 62, Enclosure 3). However, the Petitioner did not agree to the settlement offer and therefore the Respondent had via its letter dated 22.4.2021, submitted another settlement offer to the Petitioner (see page 64, Enclosure 3). h) On 5.5.2021, the petitioner sent a letter informing the Respondent that the proposed settlement in the letter dated 22.4.2021 could not be accepted and had asked the Respondent to submit a new proposed settlement. (See page 69, Enclosure 3). i) As both parties could not agree on the terms of the settlement, the Respondent sent its representative for the second time to consult with the Petitioner on 20.5/2021 in the hope of reaching a settlement. (See paragraph 14, page 4 of Enclosure 16 and page 70, Enclosure 3). j) Following settlement negotiations on 20.5.2021, the Respondent on 27.5.2021 had once again submitted a settlement offer to the Petitioner. To date, the Petitioner has not yet responded to the settlement offer letter. (See page 70, Enclosure 3).

The Respondent has opposed the Petition and has submitted that there is

a serious dispute on the amount claimed by the Petitioner which has not been adjudged or determined via court process

the Petitioner is not allowed to rely on the settlement negotiations, meetings, correspondence and letters between the parties as these were carried out and/or issued during the course of settlement negotiations with the intention to resolve the matter amicably

I have since viewed the letters which the Respondent claims should not be allowed to rely on by the Petitioner as they were made during the course of settlement negotiations with the intention to resolve the matter amicably. In this respect I have examined the following documents

in enclosure 16 and referred to as exhibit A-1 which is the Respondent’s letter dated 25.3.2021 disputing the amount claimed in the Statutory Notice and stating inter alia that that the Petitioner has (a) failed to discharge their responsibilities under the Project Collaboration Agreement (“PCA”) and as such the amounts claimed are grossly inflated , incorrect and does not represent the true factual scenario of the matter, and

representations made in arriving at the terms of the PCA that are not consistent with the actual situation and the inconsistencies come with financial implications on the

(ii) the Respondent’s letter dated 14 4.2021 found in Lampiran E of the Petition with a proposal for settlement and which refers to a meeting dated 31.3.2021 between the parties

(iii) the Respondent’s letter dated 22.4.2021 in Lampiran E of the Petition referring to another meeting on 31.3.2021 wherein the said letter also contains a repayment plan

(iv) the Petitioner’s letter dated 5.5.2021 as seen in Lampiran F of the Petition wherein the Petitioner informs the Respondent that the settlement in their letter of 22.4.2021 could not be accepted and asking the Respondent to submit a new proposal within 7 days form the date of the said Petitioner’s letter

the Respondent’s letter dated 27.5.2021 in Lampiran F of the Petition where the Respondent once again submits a settlement offer to the Petitioner

(vi) the Petitioner’s letter dated 2.6.2021 to Messrs Jayasuria Kah & Co (JKC) as seen in Lampiran F of the Petition which inter alia seeks confirmation on the loan facilities granted by Sabah Development Bank (“SDB”) to the Respondent was still valid and JKC’s letter of 12.12.2012 confirming the terms of the SDSB loan.

After viewing the above said documents I find that the documents relied on by the Petitioner in the Petition were indeed made in the course of negotiating a settlement between the parties as can be seen from the sequence and contents of the letters but these said letters, and in particular the Respondent’s first letter dated 14.4.2021, were never marked ‘without prejudice” and thus the same are not protected by the ‘without prejudice’ label and is to be admitted and considered in the matter before me based on the authority of Dusun Desaru Sdn Bhd & Anor v Wang Ah Yu & Ors [1999] 2 CLJ 749 where Abdul Malik Ishak J (as he then was) held: “Negotiations to settle disputes may be conducted in many ways: by oral means (face to face), by correspondences, by facsimile communications, by exchanges of telex messages, by courier services or the combination of any one of them. In Rush & Tompkins Ltd v. Greater London Council[1989] 1 AC 1280, the House of Lords ruled that genuine negotiations with the sole object of settlement are protected from disclosure whether or not the "without prejudice" label has been expressly employed in the negotiations. As I said exhs. A15, A16 and A17 of encl. 4 do not carry the "without prejudice" labels, yet the shield of privilege would apply to them. Lord Griffiths in Rush & Tompkins Ltd v. Greater London Council (supra) aptly put it as follows (see p. 1299 of the report): The 'without prejudice' rule applies to exclude all negotiations genuinely aimed at settlement whether oral or in writing from being given in evidence. A competent solicitor will always head any negotiating correspondence 'without prejudice' to make clear beyond doubt that in the event of the negotiations being unsuccessful they are not to be referred to at the subsequent trial. However, the application of the rule is not dependent upon the use of the phrase 'without prejudice' and if it is clear from the surrounding circumstances that the parties were seeking to compromise the action, evidence of the content of those negotiations will, as a general rule, not be admissible at the trial and cannot be used to establish an admission or partial admission. and the impression one gets from a letter bearing the "without prejudice" mark would show that the parties are genuinely seeking to compromise their dispute and giving it a stamp of confidentiality which would not be referred to at the trial in the event the negotiations fell through ….In my reading of the materials available in the library and my understanding of the same, it seems to me, and I said this earlier, that when the first letter of correspondence is entitled "without prejudice", then everyone must be on guard as it affects the whole correspondence thereafter unless there is a clear break in the chain of evidence to show that the ensuing letters are open (Re Turf Enterprises Pty Ltd [1975] Qd R 266 at 268).(emphasis mine)”

6.

I further hold that the said Respondent’s letters dated 14.4.2021,

4.2021, 20.5.2021, and 27.5.2021 are a clear and unequivocal admission of the debt owed by the Respondent to the Petitioner as per my decision in Jackdex Interlogistics Sdn Bhd v Action Apparel Sdn Bhd [2021] 1 LNS 577.

I further find that the Respondent’s letter dated 25.3.2021 disputing the amount claimed in the Statutory Notice and inter alia contending therein that that the Petitioner had (a) failed to discharge their responsibilities under the PCA and as such the amounts claimed were grossly inflated, incorrect and does not represent the true factual scenario of the matter, and (b) representations made in arriving at the terms of the PCA that are not consistent with the actual situation and the inconsistencies come with financial implications on the Respondent, were mere bare averments in the form of contentions which were not particularized and therefore do not tantamount to evidence of a disputed debt. Authority for this can be found in Kumpulan Luziz Sdn Bhd v Pembinaan Azam Jaya Sdn Bhd [2021] 1 LNS 2043 where the Court of Appeal held: “[46] Merely saying that the debt is being disputed would not be sufficient to resist a winding up order for after the petitioner has filed its affidavit verifying the various averments as to how the debt had arisen and become due and owing, the respondent would need to rebut those allegations or show that the debt is seriously and substantially being disputed and the evidence and reasons in support of the dispute.”

It is settled law that a winding up petition need not be based on a judgement and the Respondent’s submission on this is thus wholly misconceived. I refer to the same case referred to earlier i.e Lafarge Concrete (M) Sdn Bhd v Gold Trend Builders Sdn Bhd [2012] 6 MLJ 817 where the Court of Appeal held: “a creditor is not required to obtain a judgment before serving a statutory demand …' (The Law of Company Liquidation (4th Ed), by Andrew R Keay at p 83) and 'whether or not judgment had been obtained, an unpaid creditor is, as a general rule, entitled to a winding-up order against a company which is insolvent' (The Law of Company Liquidation (4th Ed), by Andrew R Keay at p 91). Where there is no judgment, it is not uncommon for companies to argue that the debt is disputed. But 'in order to oppose a winding up petition, the respondent must raise a bona fide dispute in both a subjective and objective sense.”

I further hold that non payment of the Statutory Notice under section 466 (1)(a) of the Companies Act 2016 by the Respondent has consequently triggered the presumption of the Respondent being unable to pay its debt (see Eastool Industries Sdn Bhd v Getfirms Electronics Sdn Bhd [2001] 6 CLJ 151).

In the circumstances, as there is no evidence of the Respondent’s solvency before this Court, I hold that the Respondent is unable to rebut the presumption that it is ‘commercially solvent’. See the Supreme Court in Sri Hartamas Development Sdn Bhd v MBf Finance Bhd [1992] 1 CLJ (Rep) 303 which held that:- “In dealing with "commercial insolvency", that is, of a company being unable to meet current demands upon it, we would respectfully follow the Privy Council in the Malayan Plant case and cite the following observations from Buckley on the Companies Act (13th Edn.) at p. 460: In such a case it is useless to say that if its assets are realized there will be ample to pay twenty shillings in the pound: this is not the test. A company may be at the same time insolvent and wealthy. It may have wealth locked up in investments not presently realizable; but although this be so, yet if it have not assets available to meet its current liabilities it is commercially insolvent and may be wound up.”

As a result of my said findings above, I hold that the Petitioner has satisfied this Court that the Petitioner is a creditor of the Respondent and that there is no disputed debt before this Court. I hereby grant order in terms of paragraph 18 a, b and c of enclosure 1. Dated: 20th day of May 2022 sgd. NADZARIN WOK NORDIN HIGH COURT JUDGE KUALA LUMPUR HIGH COURT Parties: Zunnasri for the Petitioner [Messrs Mimirhayu Haniff Heng & Partners] Neoh Jin Keat for the Respondent [Messrs Rahmat Lim & Partners]