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SMEB ASSET MANAGEMENT SDN BHD (Company No. 199901002270 (477170-A))
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WA-22NCC-633-08/2023
High Court of Malaysia12 Dec 2023
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“eal accepted that the grant of ad interim injunction pending the disposal of an application for interlocutory injunction is consistent with the powers of the High Court under s. 25(2) of the Court of Judicature Act 1964 and the additional powers under para 6 of the Schedule to the same Act which include the power to gr”
“parties in respect of which the injunction is granted; otherwise the state of affairs before the last change would be the relevant status quo.” (ii) by Sir John Pennycuick in Fellowes & Son v Fisher [1976] QB 122, p 141: “By the expression ‘status quo’ I understand to be meant the position prevailing when the defendant”
“ic Bank Bhd [1995] 1 MLJ 281; [1995] 1 CLJ 609 RIH Services (M) Sdn Bhd v Tanjung Tuan Hotel Sdn Bhd [2002] 3 MLJ 1; [2002] 3 CLJ 83 Garden Cottage Food Ltd v Milk Marketing Board [1983] 3 WLR 143; [1984] AC 130 Fellowes & Son v Fisher [1976] QB 122 LEGISLATION/STATUTE REFERED: s. 25 of the Court of Judicature Act 1964”
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SMEB ASSET MANAGEMENT SDN BHD (Company No. 199901002270 (477170-A))
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ANDREW HENG (NRIC No. 750225-71-5051)
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KUMARAKURU A/L JAI PRAKASH KRISHNAN (NRIC No. 820815-01-5371)
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AZAHARIE SIMAN (NRIC No. 760724-04-5127) … DEFENDANTS GROUNDS OF JUDGMENT Introduction [1] In Enclosure (“Enc.”) 3, the Plaintiff sought an ex parte injunction against the Defendants as follows:
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that the 2nd and 3rd Defendants be and is hereby restrained from exercising any power as the Receivers and Managers of the Plaintiff pending disposal of this proceeding herein;
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(ii) that the 2nd and 3rd Defendants do forthwith return possession and control of the assets and properties of the Plaintiff pending disposal of this proceeding herein;
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(iii) that the 1st to 3rd Defendant shall perform all acts, incidental to and/or necessary to give effect to paragraph 1 and 2 above. [2] I had directed that Enc. 3 to be served and fixed the same to be heard inter partes on 14.9.2023. [3] On 14.9.2023 Upon the Plaintiff’s undertaking to the court given through learned counsel, to pay damages if the court is subsequently of the view that the ad interim orders ought not to be made, I had granted the ad interim orders sought on terms as in Enc. 3 with additional conditions that the Plaintiff inform the Receivers and Managers (“R&Ms”) of the operations of the company including the acquisition of assets and raw materials, disposal of any inventory/trading stocks; with liberty to apply pending inter partes hearing of Enc. 3. [4] The Defendants have appealed against the grant of the ad interim orders. This judgment contains the reasons for my decision. Background [5] By a Facility Agreement dated 30.8.2006 between SME Bank Berhad (“Bank”) and the Plaintiff, Bank agreed to provide various facilities totalling RM7,000,000.00 to the Plaintiff on the terms and conditions stated therein. The facilities were secured by a Memorandum of Deposit dated 30.8.2006 on a fixed deposit for a sum of RM 500,000.00; a Debenture dated 30.8.2006 on a First Party Fixed and Floating Charge on all existing and future assets of the Plaintiff and a Deed of Assignment dated 30.8.2006 of a project account of the Plaintiff. The Facility Agreement was varied over the years culminating in 3 Debentures dated 30.8.2006, 29.5.2009 and 14.10.2009 (“Debentures”) being created in favour of the Bank by the Plaintiff. [6] By a Vesting Order dated 26.1.2015, Bank sold and transferred the rights and interest over the Plaintiff’s accounts to the 1st Defendant, SMEB Asset Management Sdn Bhd (“D1”). [7] On 3.11.2016 and 24.11.2016 respectively, SMEB Asset obtained a judgement in default (“JID”) against Plaintiff in two separate suits in the Sessions Court and the High Court at Kuala Lumpur in respect of amount outstanding under the facility agreement. [8] On 27.6.2023, D1 filed a separate application in the Sessions Court and at the High Court respectively seeking leave of the Court to enforce the JIDs. [9] Whilst the leave applications were pending, D1 on 23.8.2023 appointed the 2nd and 3rd Defendants as the Receivers and Managers (R&Ms) of the Plaintiff. [10] In support of the injunction application, amongst others, the Plaintiff asserted that:
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10.1 the appointment of R&M without any prior notice given to the Plaintiff was invalid, null and void - prior notice to the Plaintiff is a pre-requisite condition before D1 can exercise its power to appoint the R&Ms;
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10.2 the debt under the facility agreement has merged into the JIDs in which case D1 ceased to have any enforcement rights upon expiry of 6 years from the date the JIDs are obtained i.e. after 2.11.2022 and 23.11.2022 respectively.
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10.3 The R&Ms have stationed security guards at and trespassed the business address of the Plaintiff, frozen the Plaintiff’s bank accounts rendering it unable to: (i) pay salaries, (ii) order raw materials for the production of manufacture pharmaceutical products to be supplied to the Ministry of Health for eventual distribution to the hospitals, and (iii) causing the Plaintiff to be unable to fulfil outstanding orders. The issuance of the Ad interim Orders [11] At the inter partes hearing on 14.9.2023, the Defendants sought time to file their affidavits to respond to Enc. 3. That to me was logical and time should be given for such a purpose as any submission on disputed facts from the Bar will not be entertained by this court - Ng Hee Thoong & Anor v Public Bank Bhd [1995] 1 MLJ 281; [1995] 1 CLJ 609 (CA). [12] The Court of Appeal in RIH Services (M) Sdn Bhd v Tanjung Tuan Hotel Sdn Bhd [2002] 3 MLJ 1; [2002] 3 CLJ 83 held that the court has the jurisdiction to grant an ad interim injunction in order to preserve the status quo where the hearing and disposal of application for injunction is pending. The Court of Appeal accepted that the grant of ad interim injunction pending the disposal of an application for interlocutory injunction is consistent with the powers of the High Court under s. 25(2) of the Court of Judicature Act 1964 and the additional powers under para 6 of the Schedule to the same Act which include the power to grant an injunction in any manner whatsoever. The provisions read: “25 Powers of the High Court
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Without prejudice to the generality of subsection (1) the High Court shall have the additional powers set out in the Schedule: Provided that all such powers shall be exercised in accordance with any written law or rules of court relating to the same.
Schedule
Schedule Paragraph 6 Preservation of property Power to provide for the interim preservation of property the subject matter of any cause or matter by sale or by injunction or the appointment of a receiver or the registration of a caveat or a lis pendens or in any other manner whatsoever” [13] Although the Defendants’ respective counsel had objected to the Plaintiff’s counsel’s oral application for ad interim orders, RIH Services made it plain that even if the Defendants do not agree to the ad interim order being made, the court has the jurisdiction to make such an order. In the circumstances of the instant case, I can, and I should exercise my discretion to allow the ad interim orders sought by the Plaintiff. [14] Firstly, in my view, the alleged steps taken by the R&Ms as asserted by the Plaintiff whose appointments were disputed by the Plaintiff, made the Plaintiff vulnerable and could cause it to suffer irreparable commercial prejudice, damage and embarrassment to the Plaintiff’s business and reputation if the ad interim orders were not granted. It is the considered opinion of this court that it is equitable and just for this court to make the ad interim orders to preserve the status quo to ensure the Plaintiff’s business is not doomed pending the hearing and disposal inter partes of Enc. 3 and so that parties can ventilate all issues, and their respective contentions fully. [15] ‘Status quo’ is defined: (i) by Lord Diplock in Garden Cottage Foods Ltd v Milk Marketing Board 1984] AC 130; [1983] 3 WLR 143 at p. 148: “…The status quo is the existing state of affairs; but since states of affairs do not remain static this raises the query: existing when? In my opinion, the relevant status quo to which reference was made in American Cyanamid is the state of affairs existing during the period immediately preceding the issue of the writ claiming the permanent injunction or, if there be unreasonable delay between the issue of the writ and the motion for an interlocutory injunction, the period immediately preceding the motion. The duration of that period since the state of affairs last changed must be more than minimal, having regard to the total length of the relationship between the parties in respect of which the injunction is granted; otherwise the state of affairs before the last change would be the relevant status quo.” (ii) by Sir John Pennycuick in Fellowes & Son v Fisher [1976] QB 122, p 141: “By the expression ‘status quo’ I understand to be meant the position prevailing when the defendant embarked upon the activity sought to be restrained. Different considerations might apply if the Plaintiff delays unduly his application for relief.” [16] Here, the status quo in my view is the state of affairs existing during the period immediately preceding the issuance of the writ claiming the injunction bearing on the impugned appointment of the R&Ms. That is the status quo to be maintained, as provided for in the Ad Interim Injunction Order until the disposal of Enc. 3 inter partes. [17] Secondly, the Plaintiff had also given an undertaking for damages so that in the event there are losses suffered by the Defendants, such losses may be made good by the Plaintiff if determined ultimately when Enc. 3 is heard on the merits, that the Plaintiff was not entitled to the ad interim orders. [18] Thirdly, glaringly, it cannot be ignored that when the sudden concerted push to apply for leave to enforce the JIDS and to appoint R&Ms, D1 had already waited more than 6 years to enforce the JIDs, and much longer still from date of default of the facility agreement, to appoint R&Ms. Hence I do not see how they could be irreparably harmed or severely prejudiced by the grant of the ad interim orders whilst waiting for Enc. 3 to be heard inter partes on its merits. [19] For reasons given, this court exercised its discretion to allow the Plaintiff’s oral application for the ad interim orders with additional conditions as alluded to in paragraph 3 above for accountability and transparency in the Plaintiff’s dealing with its assets and to ameliorate any risk of prejudice to the Defendants. Dated this: 20th day of October 2023 - sgd - …………………………. Liza Chan Sow Keng Judge High Court of Malaya at Kuala Lumpur COUNSEL: For the Plaintiff : Mak Lin Kum (together with him, Sandra Tan) Messrs Syed Ibrahim & Co. For the 1st and 4th Defendants : Syafinaz Vani (together with her, Elani Mazlan and Rakkshanaa Samasundaram) Messrs Rosli Dahlan Saravana Partnership For the 2nd and 3rd Defendants : Sitti Salehah (together with her, Abu Haziq and Nik Mahyiddin (Pdk)) Messrs Amelda Fuad Abi & Aidil CASES REFERRED: Ng Hee Thoong & Anor v Public Bank Bhd [1995] 1 MLJ 281; [1995] 1 CLJ 609 RIH Services (M) Sdn Bhd v Tanjung Tuan Hotel Sdn Bhd [2002] 3 MLJ 1; [2002] 3 CLJ 83 Garden Cottage Food Ltd v Milk Marketing Board [1983] 3 WLR 143; [1984] AC 130 Fellowes & Son v Fisher [1976] QB 122 LEGISLATION/STATUTE REFERED: s. 25 of the Court of Judicature Act 1964 and schedule 6
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