Uni Construction & Realty Sdn Bhd v Kumpulan Bumiklas Sdn Bhd (dalam Likuidasi) (WA-28PW-111-02/2025)

Before we deal with the respondent's submission we wish to state what the legal position is as far as what is the threshold test envisaged in s. 226(3) of the Companies Act 1965 before leave is granted.

In Bruno Phillipe Fehrenbach v. Pegawai Penerima Malaysia [1999] 6 CLJ 177 Abdul Malik Ishak J held as follows: In the context of our s. 226(3) of the Companies Act 1965, leave would readily be given by the court if all the requirements are fulfilled. It is a correct statement of the law to say and | 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 (supra); Re Stuart Bros Pty Ltd [1995] 16 ACSR 451; and Speiser v. Locums Financial Management Pty Ltd [1997] 22 ACSR 478 [15 ACLC 278] (SC NSW)). Thus, in a situation where it is unlikely that the plaintiff will obtain any advantage over the creditors and that no prejudice will be caused either to the creditors or to the orderly winding up of the company, leave will be granted as a matter of course (Re Gordon Grant & Grant Pty Ltd (supra); and Ex p. Walker [1982] 6 ACLR 423). The court in Re Coastal Constructions Pty Ltd (In Liquidation) [1994] 13 ACSR 329 in determining whether leave to proceed should be granted was of the view that there was a necessity to examine the amount and seriousness of the claim, the degree of complexity of the legal and factual issues involved and, lastly, the stage which the proceedings have reached. It must not be forgotten that the applicant too must establish that he or she has a prima facie case meaning that the applicant must show that there is a real dispute between the parties (Zempilas v. JN Taylor Holdings Ltd (In Prov Liq) [1991] 3 ACSR 755 (SC SA): and Vagrand Pty Ltd (In Liq) v. Fielding [1993] 41 FCR 550 [113 ALR 128]). All these are factual situations where the courts are willing to grant leave to the applicants.

In Shencourt Sdn Bhd v. Perumahan NCK Sdn Bhd [2008] 3 CLJ 582 the Court of Appeal opined as follows:

On the guiding principle for the court to grant leave with a view to commencing action against a company that has been wound up, we would like to refer to the case of Mosbert Berhad (In Liquidation) v. Stella D'Cruz [1985] CLJU 47; [1985] 1 LNS 47; [1985] 2 MLJ 446 wherein Seah SCJ, in delivering the judgment of the Supreme Court at p. 447 had this to say: 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 application for 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.

It is clear, based on the above cited case authority, leave to proceed would only be granted when the plaintiffs claim cannot be adequately dealt with in winding up of the defendant's company or when the plaintiff is seeking a remedy which cannot be given in the winding up of the defendant's company.

The approach of the Australia jurisdiction can be seen in the following two cases which dealt with the Australia equivalent of s. 226(3) of the Companies Act 1965. In Vagrand Pty Ltd (in liq) v. Fielding & Ors

11 ACLC 411 where the Federal Court of Australia held as follows: The second matter raised by Mr Coles, in his challenge to the order of Morling J, is the standard applied by his Honour in considering the merits of the case demonstrated by the applicants for leave. After referring to a number of authorities on the point, Morling J said at ACLC 175; ALR 317: In summary, in the exercise of its discretion under s. 371(2) the Court should only grant leave to proceed where it is satisfied that a real dispute exists between the parties and that in light of all the circumstances it is more convenient (or otherwise appropriate) to allow the matter to proceed to judgment. Mr Coles submits that the test, "real dispute", imposes too small a burden upon an applicant for leave. The true position, he says, is that an applicant must demonstrate a prima facie case; that is, the applicant must provide evidence of each element of its claim. There are authorities in which the term "prima facie case" has been used to describe the case required to be demonstrated by an applicant for leave. But we are not aware of any case in which it has been held that an applicant must adduce evidence of every element of its claim. To impose that burden would be to shut out many meritorious claims. It is commonplace for actions against companies to depend upon documentary evidence. Until there is discovery of relevant documents, it may be impossible for an applicant to prove each element in its case. On occasions, it may also be necessary for the applicant to interrogate the respondent or subpoena other parties. These steps cannot be taken until the action is commenced. The reason for imposing a requirement of leave, in the case of litigation against companies in liquidation, was explained a century ago by Manning J, of the New South Wales Supreme Court, in Thomson v. Mulgoa Irrigation Co Ltd (1893) 4 BC (NSW)33: All that s. 140 means is that a company in liquidation is not to be harassed and its assets wasted by unnecessary litigation, and the leave of the Court is therefore required as a safeguard. Before any action can be brought or continued against a company, the Court must investigate the intended litigation. Manning J did not suggest that it was necessary to prove all the elements of an applicant's claim. In the case before him, he was content that the applicant for leave "pledge his oath that he has a valid and unimpeachable document". By the word "document", he was referring to 10 the mortgage relied on in a foreclosure suit, the validity of which was under challenge. It was sufficient that "an affidavit of merits" was provided, covering the basic issue in the case. In Re Sydney Formworks Pty Ltd (in liquidation) [1965] NSWR 646 at 649-650 McLelland CJ in Eq expressed the reason for the requirement of leave in this way: This view is in Keeping with what | consider to be the obvious intention of the section, namely, to ensure that the assets of the company in liquidation will be administered in accordance with the provisions of the Companies Act and that no person will get an advantage to which, under those provisions, he is not properly entitled, and to enable the Court effectively to supervise all claims brought against the company which is being wound up. 11

In Capita Financial Group Ltd v. Rothwells Ltd (No 2) [1989] 7 ACLC 634 where Rogers CJ in Comm D said as follows: It is necessary to understand the rationale which buttresses the requirement for showing the existence of a prima facie case. The provisional liquidators and liquidator, respectively, are entitled to be protected from involvement in court proceedings which may be perhaps only of a nuisance nature, or which may be thought to be totally devoid of any substance. The resources of the company in liquidation should not be frittered away in defending baseless claims. It seems to be that it is considerations of this nature which have led the courts uniformly over the years to demand that there be evidence showing a prima facie case. As Mr Reeves, for the provisional liquidators, pointed out, the requirement goes back to a decision of Manning J in 12 Thomson v. The Mulgoa Irrigation Co. Ltd [1894] 4 N.S.W. Bankruptcy Company and Probate Cases 33. As His Honour pointed out: The Court will strain a point to avoid the absurdity of merely requiring the same pleadings to be put on the file again so as to make the matter merely one of costs; but grounds must be shewn on the merits, which would justify the court in granting leave in the first instance. The plaintiff should pledge his oath that he has a valid an unimpeachable document. All that s. 140 means is that a company in liquidation is not to be harassed and its assets wasted by unnecessary liquidation and the leave of the court is therefore required as a safeguard. Before any action can be brought or continued against a company, the court must investigate intended litigation. 13 This approach has been maintained thereafter in successive decisions of courts. (See Re Sydney Formworks Pty Ltd (in liq) (1965) N.S.W.R. 646 at p. 650; Re A.J. Benjamin Ltd (in liq) (1969) 90 W.N. (N.S. W.) 107 at p. 109; Re Harry B Harvey Pty Ltd (in liq) (1971-1973) CLC 40-051; Ex Parte Walker (1982) 6 A.C.L.R. 423 at p. 426; Ogilvie-Grant & Anor v. East (1983) 1 ACLC 742 at p. 744; and Maclean v. Burns Philp Trustee Co Pty Ltd & Ors (1985) 2 N.S.W.L.R. 623 at p. 646). It seems to be that in this Division of the Court, whilst paying due regard to requirements which have been so well established, they should not be carried to the point of absurdity. It is quite clear from the evidence that there is a real dispute between the parties. It seems to be that both the pleadings which have been filed and the conversation between Messrs Still and Singleton, representing the plaintiff and the provisional liquidators, respectively, which has been deposed to, certify that there is a genuine dispute thrown up for decision by the court. In Re AJ Benjamin Ltd (in liq) (supra at p. 109), Street J, as he then was, took the view that the absence of evidence could be overcome by imposing a requirement that the applicant file a further affidavit. His Honour did say that he did not wish the action that he there took to be taken as a precedent "recognizing that applicants for leave need not disclose in a prima facie sense the case that they seek leave to bring". In this case also, the course that | am intending to follow should not be taken as a precedent; indeed, | deplore that in a situation where the motion had been before the court on a number of occasions, the opportunity had not been taken to attend to what is a long-standing requirement in applications of this nature. However, | would be giving effect to form rather than substance if | dismissed the motion by reason of the defect which Mr Reeves has identified. What | propose to do in relation to this aspect of the matter is to direct that the statements which will be filed by the plaintiff pursuant to the usual order for hearing should be verified on oath, and which will then stand, no doubt, as adequate evidence of a prima facie case. | reserve to the defendant leave to apply to the court for dissolution of the order | propose to make if, contrary to expectation, the evidence filed does not disclose a prima facie case.

From the above authorities, the appellant has the burden of satisfying the court of two criteria: (a) The appellant's claim cannot be adequately dealt with by the winding up court. (b) The appellant has a prima facie case against the respondent. It is our view that there is little doubt that the appellant's claim of specific performance cannot be dealt with by the winding up court in that its claim is unlike say a proof of debt. In short it is not a monetary claim. In any event, the respondent's submission had not seriously challenged this contention and in our view rightly so.” 5. Therefore, the applicant must show to this Court that it has a valid prima facie case against the company in liquidation. Just because it says that it wishes to add the said company as part of the proceedings for completeness is not sufficient. There must exist a cause of action against the company to be adjudicated and remedies claimed against the company in liquidation. Otherwise, the costs and time of the liquidators will be unnecessarily spent, and the addition of the said party in the suit would be an abuse of process. 6. When | peruse the Statement of Claim filed in the said suit referred earlier, it is apparent that not a single cause of action has been pleaded against the Respondent, and more 17 importantly, the applicant did not seek any remedy against the Respondent. | reproduce the remedies prayed for by the Applicant in the said suit:- 53. Hence, Uni Construction’s claims against Sunny Junction are as follows: - (a) A declaration that the Defendant (Sunny Junction) has been unjustly enriched at the cost and expense of the Plaintiff (Uni Construction) by the rehabilitation and completion of property held under title H.S.(D) No. 111036, PT 32946, Pekan Baru Subang, Daerah Petaling, Negeri Selangor; (b) Restitution in the sum of RM800,000.00 (RM1,000,000.00 being the market value of the Property less RM200,000.00) or such value of benefit as assessed by this Honourable Court; And/or alternatively, Such other sum as deemed fit by this Honourable Court; 18 S/N fwNwtsrKNkirgaMNDqilUqQ ; (c) Pre-Judgment Interest at the rate of 5% per annum on the aforesaid sum (b) allowed by this Honourable Court from 27.5.2021 until the date of this Order; (d) Post-Judgment Interest at the rate of 5% per annum on the aforesaid sum (b) and (c) allowed by this Honourable Court from the date of this Order until the date of full and final settlement by the Defendant (Sunny Junction); (e) Costs; and (f) | Such further and other reliefs as deemed fit and proper by this Honourable Court. 7. This is further confirmed by the Applicant’s own affidavit in support that states:- 16. Saya selanjutnya menyatakan bahawa Pemohon tidak menuntut sebarang remedi yang ketara terhadap KBSB dalam tuntutan di sini. 8. Therefore, despite the position taken by the liquidator, as this Court is bound by the decision of the Court of Appeal, | am not in a position to allow this application. There is no cause of action pleaded against the company, and as such, there is no prima 19 facie case that has been pleaded. As such, | cannot and should not exercise my powers to add the said company as a co- defendant in the suit. Allowing this application would cause unnecessary expenses to be incurred by the liquidator to the detriment of other creditors in the company. There is no prima facie case that must be answered by the company, and as such, leave should not be allowed. The test as laid down by the Court of Appeal has not been fulfilled. 9. | also find that the remedy claimed by the applicant in the suit concerns the construction costs for the abandoned project. This will be claimed against the land owner, the 1% Defendant. Rightfully, this was undertaken by the applicant in the suit. However, the company in liquidation is not a landowner and as seen in the pleaded case, the applicant has chosen not to make any claims against the company or even seek any orders against the company. Therefore, this is not a suitable case for leave to be granted under section 417 of the Companies Act. 20 10. For the said reason, | dismiss the application with no order as to costs. Dated 11 September 2025 (DATO: ERA MOHD ARIEF EMRAN BIN ARIFIN) JUDGE HIGH COURT OF MALAYA KUALA LUMPUR NCC 5 FEDERAL TERRITORY OF KUALA LUMPUR 21 Counsel: For the Applicant > Nur Qamarina Agilah Messrs. Malis & Khoo For the Respondent : Lee Xin Yi Messrs. S. Mathews & Associates 22