Yhl Property Sdn Bhd v Silveron Builders Sdn Bhd (JA-28NCC-15-01/2025)

There are two interlocutory applications filed by the Respondent, namely –

Enclosure 6 - an application to stay the winding-up proceedings pending the determination of the Respondent’s appeal processes (Civil Appeal No. J-02(IM)(NCVC)-194-02/2024) and

Enclosure 27 - an application to cross-examine the Petitioner’s deponent, Chay Wee Hwang, on the affidavits filed herein.

Both applications were heard together. The parties filed written submissions and bundles of authorities and orally submitted on 2 October 2025. The Court reserved its decision for 27 October 2025.

The Petitioner filed a winding-up petition pursuant to subparagraphs 465(1)(e) and 466(1) of the Companies Act 2016 [Act 777]. It is based on a final judgment of this Court dated 9 January 2024 in Originating Summons No. JA-24NCvC-156-03/2020 (“OS 156”) against the Respondent. S/N 0xfckbS4RkipjtMXotiJgQ

The Respondent appealed to the Court of Appeal (Civil Appeal No. J-02(IM)(NCVC)-194-02/2024), but the appeal was dismissed on 8 August 2025 with costs of RM 10,000.00. The Respondent has since filed a Notice of Motion in the Federal Court seeking leave to appeal against that decision.

Following non-payment of the judgment debt, the Petitioner served a statutory notice under subsection 466(1) of Act 777 on 26 November

No payment was made within twenty-one days, triggering the statutory presumption of insolvency. The Respondent thereafter filed Enclosure 6 (Stay) and later Enclosure 27 (Cross-Examination).

Enclosure 6 - Respondent’s Stay Application

The Respondent contends that –

the petition should be stayed pending the Federal Court leave application and Writ No. JA-22NCvC-71-06/2020 (“Writ 71”) proceedings;

the debt is bona fide disputed, as the quantum of damages remains under appellate scrutiny; S/N 0xfckbS4RkipjtMXotiJgQ

continuation of the petition would cause irreparable prejudice and commercial embarrassment, thereby damaging the Respondent’s reputation and business operations; and

the petition was filed prematurely and oppressively, amounting to an abuse of process.

The Petitioner explained that –

the judgment dated 9 January 2024 remains valid and enforceable as no stay of execution was ever obtained by the

as a matter of law subsection 470(1) Act 777 does not empower this Court to stay the petition itself;

the debt arises from a final judgment and a pending/ intended appeal does not suspend enforceability; and

even if the Federal Court were ultimately to reverse the judgment, section 493 Act 777 allows the Respondent to apply to stay or set aside the winding-up order, hence no injustice arises.

Based on the parties' submissions as summarised above and course papers, the issue before this Court is whether the Respondent has demonstrated any bona fide dispute or special circumstance justifying a stay of the winding-up petition pending its Federal Court leave motion and the determination of Writ 71. S/N 0xfckbS4RkipjtMXotiJgQ

This Court finds that subsection 470(1) of Act 777 empowers the Court, after a winding-up order has been made, to stay other actions or proceedings against the company. It does not authorise the Court to suspend the winding-up petition itself.

In Shing Hup Hin Construction Sdn Bhd v General Soil Engineering Sdn Bhd [1999] 1 MLJ 167, the High Court held that the proper remedy, if any, is a Fortuna injunction commenced by separate originating summons to restrain advertisement or hearing, and not a stay under section 470 of Act 777.

Further, the root of this petition lies in a final judgment which has been affirmed by the Court of Appeal. The Respondent never sought nor obtained any stay pending that appeal. Indeed, it was only shortly before the hearing of this petition that the Respondent apply for a stay.

In Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi Serbausaha Makmur Bhd [2004] 1 MLJ 257, the Federal Court reaffirmed that an appeal does not of itself operate as a stay of execution; a stay will only be granted where special circumstances are shown. The Court stressed that the onus lies on the applicant to establish such special circumstances, that the reasons must relate to the enforcement of the judgment and that they must be properly deposed to in the supporting affidavit.

In the present case, the Respondent has failed to set out in its affidavits any special circumstances relating to the enforcement of S/N 0xfckbS4RkipjtMXotiJgQ the judgment. Its complaints are directed instead to the merits of the appeal and to alleged reputational prejudice, which, on the authority of Kosma Palm Oil Mill are insufficient to justify a stay.

This Court also finds that the pending leave application before the Federal Court does not alter the enforceability of the judgment. The filing of a motion for leave does not operate as an automatic stay and the statutory presumption of insolvency under subsection 466(1) of Act 777 therefore continues to apply. This approach is consistent with Sri Jeluda Sdn Bhd v Pentalink Sdn Bhd [2008] 3 MLJ 692, where the Court of Appeal held that a regular judgment remains a valid and enforceable basis for a winding-up petition notwithstanding a pending appeal, in the absence of a stay.

The alleged reputational or operational prejudice does not amount to a “special circumstance”. As explained by Raja Azlan Shah J (as His Majesty then was) in Leong Poh Shee v Ng Kat Chong [1966] 1 MLJ 86, special circumstances must be exceptional in character and not merely the ordinary incidents of the enforcement of a judgment. The Respondent’s complaints of commercial embarrassment and reputational impact are of a kind commonly associated with insolvency proceedings and do not rise to the level of special circumstances that would justify a stay.

The Respondent also relies on its pending Writ 71 and an alleged set-off to contend that the petition is abusive and that its reputation will be irreparably harmed if the petition proceeds. In Josu Engineering Construction Sdn Bhd v TSR Bina Sdn Bhd [2014] 11 MLJ 916 and Kumpulan Liziz Sdn Bhd (in liquidation) v S/N 0xfckbS4RkipjtMXotiJgQ Pembinaan Azam Jaya Sdn Bhd [2022] 1 MLJ 570, the courts accepted that, in an appropriate case, a winding-up petition may be restrained where there is a genuine and substantial cross-claim, the company is otherwise commercially solvent and the presentation of the petition would cause disproportionate prejudice.

On the facts of the present case, however, the Respondent has not demonstrated any genuine cross-claim of such a nature as would neutralise the judgment debt in OS 156, nor has it established that it is commercially solvent. Writ 71 remains at a preliminary stage and at best, reflects a contingent claim in separate proceedings. Measured against the principles in Josu Engineering Construction Sdn Bhd and Kumpulan Liziz Sdn Bhd (in liquidation), the Respondent’s reliance on reputational impact and a speculative set-off falls short of the exceptional circumstances required to justify restraining or staying a winding-up petition founded on an unsatisfied judgment debt.

In any event, the Respondent has adduced no cogent evidence of solvency. On the contrary, its own judicial management application discloses substantial current liabilities, minimal current assets and a material uncertainty relating to going concern.

Moreover, even if the Federal Court were later to reverse the judgment, the Respondent would be entitled under section 493 of Act 777, to apply for a stay or terminate the winding-up order. Accordingly, no irremediable prejudice arises. S/N 0xfckbS4RkipjtMXotiJgQ

In conclusion, this Court finds that the Respondent has failed to establish any bona fide dispute or any special circumstance warranting the stay sought.

Enclosure 27 - Respondent’s Cross-Examination Application

The Respondent’s application in Enclosure 27 is premised under subparagraph 469(1)(c) of Act 777 and Order 38 rule 2(2) Rules of Court 2012, seeking this Court’s leave to cross-examine the Petitioner’s deponent, Chay Wee Hwang. The Respondent asserts that –

a cross-examination is necessary to determine whether the petition was brought bona fide or for a collateral purpose, namely to stifle ongoing litigation; and

the truth of the deponent’s averments concerning on motive and abuse of process must be tested by oral examination.

For this application. the Respondent relies on the case of Tetuan Kumar Jaspal Quah & Aishah (suing as a firm) v The Co-Operative Central Bank Ltd [2007] 4 MLJ 638, which sets out the three-limb test for the Court to allow the cross-examination, namely-

the truth of the affidavit must be challenged;

the issue must be material; and S/N 0xfckbS4RkipjtMXotiJgQ

cross-examination must advance the cause of justice.

The Respondent also cited Malaysia Building Society Bhd v Tan Sri General Ungku Nazaruddin Bin Ungku Mohamed [1998] 2 MLJ 425 and Re Bellador Silk Ltd [1965] 1 All ER 667 to argue that where proceedings are initiated for a collateral or improper purpose, they amount to an abuse of the Court’s process.

Conversely, the Petitioner avers that –

there is no factual dispute requiring cross-examination, as the debt arises from a final judgment and is supported by documentary evidence;

allegations of bad faith are unsubstantiated and immaterial to the statutory question of insolvency under subparagraph 465(1)(e) of Act 777; and

the application, filed only on 28 August 2025, several months after the exchange of affidavits, is belated and tactical in nature.

Based on the above, the issue for this Court determination is therefore “whether cross-examination of the Petitioner’s deponent is necessary to resolve a material factual conflict or whether it constitutes an abuse of process”.

Cross-examination under Order 38 rule 2(2) ROC 2012 is discretionary remedy that must be exercise sparingly and only when S/N 0xfckbS4RkipjtMXotiJgQ justice so requires. The Court of Appeal in Indrani A/P Rajaratnam & Ors v Fairview Schools Bhd [2001] 4 MLJ 56, affirmed that cross-examination should not be ordered where the affidavit and documentary evidence are sufficient for determination. The test in Kumar Jaspal Quah further requires that the factual issue be both material and genuinely disputed.

In this case, this Court finds that the existence and quantum of the debt are undisputed, being founded upon a final judgment affirmed by the Court of Appeal. The Respondent’s challenge concerns only the motive behind the filing of the petition, which is collateral and immaterial to the statutory test of insolvency. As held in Malaysia Building Society Bhd, an allegation of abuse of process must be supported by objective evidence, not speculative assertion. Unfortunately, no such evidence has been demonstrated here.

Further, this Court also observed that the timing of the application, which the Respondent only filed only shortly before the hearing (barely ten days prior), which suggests that it was tactically motivated to delay proceedings rather than to advance justice. This Court holds that the affidavits and documentary record before the Court are sufficient for determination without oral evidence. Hence, permitting cross-examination in these circumstances would serve no useful purpose and would only prolong the winding-up proceedings. To the extent the Respondent relies on Writ 71 and a purported set-off, these matters go to a potential cross-claim in separate proceedings and do not create any genuine dispute as to the existence or quantum of the judgment debt in OS 156. S/N 0xfckbS4RkipjtMXotiJgQ

Based on the foregoing reasons,

Enclosure 6 – Stay Application: The Respondent has failed to demonstrate any bona fide dispute or special circumstance warranting a stay of these winding-up proceedings. The judgment debt remains valid, enforceable, and unsatisfied. The pendency of the Federal Court leave application does not operate as an automatic stay and the Respondent is not without remedy, as section 493 of Act 777 provides a mechanism to stay or terminate the winding-up order should the appeal later succeed. Accordingly, Enclosure 6 is dismissed with costs of RM7,000.00 subject to the allocator; and

Enclosure 27 – Cross-Examination Application: The Respondent has not identified any genuine or material factual dispute requiring cross-examination. The issues raised relate only to the alleged motive, which is collateral and immaterial to the question of insolvency. The application, filed belatedly on the eve of the hearing, appears tactical and would only delay the fair disposal of the petition. Accordingly, S/N 0xfckbS4RkipjtMXotiJgQ Enclosure 27 is also dismissed with costs of RM7,000.00, subject to the allocator. Dated : 27 October 2025 Dr. Noradura binti Hamzah Judicial Commissioner High Court Civil 2 Johor Bahru Solicitor for the Petitioner : Wong Wan Ting together with Sin Jia Jing Messrs. Gan & Lim Solicitor for the Respondent : Mohammad Danial Bin Hazizan together with Dhrrithi Kiren Patel Messrs. S Ravenesan S/N 0xfckbS4RkipjtMXotiJgQ