This was the first of four consolidated petitions in which four companies were sought to be wound up under s 218(1)(i) of the Companies Act 1965 ('the CA'). The petitioner, Woodsville Sdn Bhd, is a nominee company of one Peter Kuok ('Peter'), the eldest brother of the second, third and fourth respondents. The first respondent, Tien Ik Enterprises Sdn Bhd, was the company sought to be wound up in the instant petition. Both Peter and the respondents are shareholders of the first respondent. When Peter took over the management of the first respondent from the second respondent, he began to probe into the financial dealings of the first respondent which led him to believe that the second respondent had mismanaged the first respondent's funds. Subsequently, the second to fifth respondents, as the majority shareholders and directors of the first respondent, passed a number of resolutions, all aimed at removing Peter as the chairman and executive director of the first respondent and to exclude him from the management of the said company. Numerous civil suits were instituted by both the respondents and by Peter. Finally, the instant petition was filed by Peter through his nominee company, the petitioner, for the winding up of the first respondent under s 218(1)(i) of the CA. On behalf of the petitioner, it was contended that the first respondent is a domestic company that was formed on the basis of personal relationships involving personal trust and mutual confidence amongst brothers and sisters, and that the association was in the nature of a quasi-partnership. It was further argued that the underlying trust and mutual confidence had deteriorated over the years, and had now ceased to exist, due primarily to the conduct of the second respondent. For these reasons, the petitioner submitted that it was just and equitable that the first respondent be wound up. The respondents were not opposed to the idea of winding up the first respondent, but preferred a voluntary winding up as opposed to a compulsory one.

Held, allowing the winding-up petition and refusing to stay the execution of the winding-up order: (1) the case of Ebrahimi v Westbourne Galleries [1973] AC 360 ('the said case') enunciates the principle that the 'just and equitable rule' enables the court to subject the exercise of legal rights to equitable considerations - considerations, that is, of a personal character arising between one individual and another, which may make it unjust, or inequitable, to insist on legal rights, or to exercise them in a particular way; (2) however, the said case does not lay down any exhaustive test as to when the 'just and equitable rule' may be applied. On the contrary, Lord Wilberforce had warned against limiting the meaning of the 'just and equitable rule', viz 'that it will be impossible, and wholly undesirable, to define the circumstances in which these considerations may arise'. It is, thus, wrong to create categories or headings under which cases must be brought in order for the 'just and equitable rule' to apply; (3) the judgment of Lord Wilberforce in the said case merely sets out the circumstances under which equitable considerations may be adopted, and, by way of illustration, three elements were stated as examples of circumstances in which the 'just and equitable rule' may apply; (4) the first respondent was intended to be a vehicle by which the fortune of the Kuok family was to be further enhanced. It was definitely a domestic company and a family association made up by Peter and the respondents, and it was their personalities as such that single out the first respon-dent as a company where the members' relationship was akin to that of partners; (5) although both Peter and the respondents had subscribed to the memorandum and articles of association of the first respondent, it could be inferred from the nature of the formation and set-up of the company, that their obligations as members went beyond those that were laid down in the said memorandum and articles of association; (6) the mutual trust and underlying confidence which formed the basis of the association had ceased to exist altogether. This was evidenced by the numerous family disputes and civil suits that had been filed; (7) all the shareholders, without exception, had declared their intention to have the first respondent wound up; (8) there was no justification in ordering a voluntary winding-up as the family dispute would not reach any finality if it was left in the hands of the shareholders. In all probability, the respondents would exercise their majority votes and control the liquidator to the exclusion of Peter if the first respondent was voluntarily wound up; (9) it was only just and equitable that a court appointed liquidator be directed to take over the affairs of the first respondent.

Woodsville Sdn Bhd v Tien Ik Enterprises Sdn Bhd & Ors and other applications [1994] 3 MLJ 89; CSLR XX[1672] High Court, Kuala Lumpur (Siti Norma Yaakob J).

[Annotation: Affirmed on appeal. See [1995] 1 MLJ 769.]

Re Senson Auto Supplies Sdn Bhd [1988] 1 MLJ 326 High Court, Malaysia (Edgar Joseph Jr J).

P petitioned for the winding up of D on the grounds set out in s 218(1)(f) and (i) of the Companies Act 1965. P alleged that the directors of D had acted in the affairs of the company in their own interests rather than in the interests of members as a whole and that it was just and equitable that the company be wound up. P complained that the directors had, among others, bought expensive cars and drawn large remunerations. Most of the complaints were not substantiated.

Held, dismissing the application: (1) the phrase 'interests of members as a whole' in s 218(1)(f) means a situation where directors are shown to have preferred their own interests to the interests of one or more members so that the action of directors may be open to challenge notwithstanding that it coincides with the interests of the majority shareholders. The words 'unjust or unfair' in the second limb of para (f) should have reference to some commercial morality or integrity which the law ought to uphold or sustain having regard to all the surrounding circumstances. It is not necessary that the conduct complained of must be unfair or unjust to members as a whole and it is sufficient if it is unfair or unjust to any significant body of other members and perhaps to any member; (2) as for winding up on the 'just and equitable' rule in s 218(1)(i), there must lie a justifiable lack of confidence rested on a lack of probity in the conduct and management of the company's affairs; (3) in the instant case, none of the complaints had been proved so as to bring in the operation of s 218(1)(f) or (i). Assuming that they were proved, none of such complaints could be sufficient to amount to any infringement of the rights of P under the two grounds. Assuming further that the transactions set out by P were such infringements, the extent of their unfairness or unjustness was not such as to induce the court to exercise its discretion to order a winding-up of D. D, though not a dynamic one, was, nonetheless, having regard to undisputed allegations, a prosperous and successful company.

Foo Yin Shung & Ors v Foo Nyit Tse & Brothers Sdn Bhd [1989] 2 MLJ 369 High Court, Ipoh (Peh Swee Chin J).

This was a petition for the winding up of the respondent company under s 218(1)(f) and/or (1)(i) of the Companies Act 1965 (the Act). The petitioners were two of the shareholders of the respondent company. The petitioners contended that: (i) they were not kept informed of the business of the respondent company; (ii) the accounts furnished by one of the directors of the respondent company were incomplete, untrue and false; (iii) there was unlawful transfer of shares to the son of one of the directors without prior approval of the respondent company's board of directors and contrary to the articles of association; (iv) the appointment of the secretary of the respondent was improper; (v) the minutes of the meetings of the board of directors were improper; (vi) there was a breach of s 132(1)(a) of the Act; (vii) there was a breach of natural justice in removing the petitioner's directorship. The respondent argued that (i) the petitioners had not made out under which section of the Act they were proceeding and since they had referred to both ss 181 and 218 of the Act, they should have presented two petitions; (ii) the petition to wind-up had been presented after inordinate delay and that the petitioners had acquiesced in the conduct complained of; (iii) the real purpose of the petitioners in presenting the said petition was so that they could obtain payment of money from the respondent company and that a further purpose was to teach the past and present directors of the respondent company a lesson; (iv) that the petitioners are estopped from raising all the allegations in the petition which allegations had already been raised in an earlier civil suit through the doctrine of res judicata.

Held, allowing the petition: (1) although the petition does not specify under which section of the Act it is presented, the procedure which has been followed from the very beginning is strictly under the Companies (Winding-Up) Rules 1972 and there was no doubt that the petiton was grounded on s 218 and not s 181 of the Act. In any event, it is not a mandatory requirement to spell out the specific section on which the petition is presented; (2) the various complaints directed against the opposing parties show that the said parties in the capacity as directors of the respondent have acted in their own interests rather than in the interest of the members as a whole or in a manner which is unfair or unjust to the petitioners and such conduct itself is conduct oppressive to the petitioners; (3) the issue of inordinate delay in presenting the petition is a question of fact. Time itself is not the sole criterion to determine whether the delay is ordinate or not. Having regard to the circumstances relating to the petition, there could not have been any inordinate delay and that the conduct of the petitioners was in no way to be construed as acquiescence; (4) there was no evidence to show that the petitioners had any collateral motives behind the presentation of the petition; (5) the claim of res judicata was totally misconceived and devoid of merit. This is because there was no adjudication of the matter in question at all since the order of the court in the earlier suit was for the suit to be discontinued. Moreover, the issues are dissimilar.

Wong Ah Lan & Anor v Emas-Jaya Enterprise Sdn Bhd (1996) CSLR XX[1680] High Court, Kuala Lumpur (Kamalanathan Ratnam JC).

The company was incorporated on 7 November 1977 as a private company limited by shares. The memorandum and articles were subscribed by four subscribers who were appointed by the articles to be the first directors of the company. The nominal capital of the company was 400,000 shares of $1 each; 25,000 shares were issued to each of the four directors and were paid up. One of the shareholders, Tee Ah Kew, was a relation of the petitioner. In February 1980, possibly at the instigation of Tee but in any event with the approval of the directors, 25,000 shares then held by Chew Kew Hui were transferred to the petitioner for $18,750. In the course of the negotiations for the transfer of shares to the petitioner and for the approval of the directors it was agreed between the directors and the petitioner that the petitioner would be appointed a director and chairman of the board of directors. The petitioner was subsequently so appointed and, in addition, his son, Tay Hock Yam, was appointed to be a fifth director. In March 1980 a finance company Balfour Williamson (S) Pte Ltd introduced by the petitioner agreed to finance the company if the paid-up capital was increased from $100,000 to $200,000 and if each of the four shareholders guaranteed the liabilities of the company to Williamson. Accordingly 25,000 shares were issued to each of the four shareholders for cash paid to the company. The petitioner lent $25,000 to Tee and $16,000 to another shareholder Mak Boon Seng. All the four shareholders entered into guarantees with Williamson. On 23 September 1981 the board, against the opposition of the petitioner and his son Tay, terminated all the executive powers of the directors and conferred them on Mak alone as managing director. On 27 November 1981 the petitioner was removed as director and as chairman of the board and his son Tay was removed as director. On 8 April 1982 the petitioner presented his petition to wind up the company. The petitioner applied to have the respondent company wound up and the learned trial judge had made a winding-up order on just and equitable grounds under s 218(1)(i) of the Companies Act 1965 (Act 125). He held that the petitioner had joined the company as a shareholder on the basis that he would be given a share in the management of the business and that he would remain a director so long as he held one quarter of the shares of the company and that the other shareholders would allow the petitioner to participate in the conduct of the affairs of the company - see [1984] 1 MLJ 204. On appeal to the Federal Court the decision of the trial judge was reversed - see [1985] 1 MLJ 58. The petitioner appealed to the Privy Council.

Held, allowing the appeal: (1) viewing the facts as a whole their Lordships are satisfied, as the trial judge was satisfied, that the petitioner was led to believe, even in the absence of any express assurance, that he would participate in the management of the company and that he would in any event be entitled to a seat on the board so long as he held one quarter of the issued share capital of the company; (2) in this case the board is satisfied that the judge confined his consideration of the petition to the undisputed facts and rightly concluded that the petitioner had made out his case that it was just and equitable to wind up the company.

Tay Bok Choon v Tahansan Sdn Bhd [1987] 1 MLJ 433 Privy Council Appeal from Malaysia (Lord Bridge of Harwich, Lord Fraser of Tullybelton, Lord Templeman, Lord Griffiths and Lord Ackner).

[Annotation: Reported sub nom Re Tahansan Sdn Bhd [1984] 1 MLJ 204 (High Court), Tahansan Sdn Bhd v Tay Bok Choon [1985] 1 MLJ 58 (Federal Court).]

Tien Ik Enterprises Sdn Bhd & Ors v Woodsville Sdn Bhd [1995] 1 MLJ 769; (1995) CSLR XX[1675] Supreme Court, Kuala Lumpur (Jemuri Serjan CJ (Sabah & Sarawak).

The defendant was at all material times the director and shareholder of the first plaintiff. The second and third plaintiffs were the defendant's brothers and were also shareholders and directors of the first plaintiff, which was the family company. The defendant had applied to discharge an interim injunction obtained ex parte by the plaintiffs restraining him until judgment from presenting any petition for the winding-up of the first plaintiff. The defendant had intended to present two petitions, one under s 216 of the Companies Act (Cap 50) ('the Act') and the other under s 254 of the Act. The defendant had suffered a stroke on 19 March 1984. He alleged that since his stroke, the second and third plaintiffs had exercised their powers as directors in a manner oppressive to him, and to Dynasty Hotel Pte Ltd, another family company of which the defendant was a director. The plaintiffs claimed that whilst the granting of an injunction would not in any way be detrimental to the defendant, it would go a long way to avoiding the irreparable damage that would be caused to the first plaintiff if the petitions were filed. The plaintiffs alleged that the defendant's object in filing the petition was plainly to pressurize the plaintiffs to sell the hotel premises to him, and that was an abuse of process.

Held, allowing the application and discharging the injunction: (1) the right to petition the court for a winding-up order in appropriate circumstances is a right conferred by statute. The court's jurisdiction to grant an injunction to restrain a shareholder from filing such a petition was a facet of its inherent jurisdiction to prevent an abuse of process; (2) the court, however, was not required to and should not inquire into the merits of the petitions as if it were holding a trial; (3) the plaintiffs had not established a prima facie case that the oppression petition was bound to fail. The defendant had made several complaints in the petition. The gravamen of the general complaint was that the second and third plaintiffs' actions and decisions as directors/shareholders of the first plaintiff demonstrated a course of conduct which was oppressive, or burdensome, harsh and wrongful, or in disregard of the interests of the defendant as a member of the first plaintiff. The allegations and complaints cumulatively were capable of being construed as a departure from the standards of fair dealing amongst brothers in relation to their relative expectations of their entitlement to their inheritance of the family assets. The court cannot decide these issues of law and facts without an oral hearing; (4) the relationship between members of a family company was even more personal, even if the level of mutual confidence that was necessary may not be more than in a relationship between partners. Whether there were equitable considerations which may justify the same or different treatment of family members of a company who have lost mutual trust and confidence in each other was also an argument which was best left to a more mature consideration when all the facts were before the court. There was no basis for finding that the winding-up petition was bound to fail on the affidavit evidence before the court. The merits of the defendant's petition should not and could not be tried in an interlocutory application; (5) a member's right to present a winding-up petition against the company could not be restrained even if his complaint was sufficient to found another action for which another remedy was available, so long as the complaint, if substantiated, was also sufficient ground to wind up the company. The position was a fortiori in a case of s 216 of the Act. Such a petition was not a winding-up petition and, for that reason, did not subject the company to the statutory disabilities as in a winding-up petition and which was likely to cause damage to the company; (6) if it can be shown that the member does not really seek the remedy that was available under the law but was using the process of the court for a collateral object, then the court may exercise its discretion to grant an injunction to restrain the presentation of, or stay, a winding-up petition or an oppression petition. But the burden of proving that this was the sole or predominant object of the petitioner was on the company and the burden was a heavy one to discharge in such an application at the interlocutory stage, whether ex parte or inter partes; (7) if a petitioner had sufficient grounds for petitioning, the fact that his motive for presenting a petition, or one of his motives, may be antagonism to some person cannot render the ground any less sufficient. However, if the petitioner had sufficient grounds to found the oppression petition and/or winding-up petition, there was an abuse of the process of the court if he did not really want any remedies that may be granted to him; (9) there was nothing in the evidence to suggest that the defendant had any ulterior motives in presenting the petitions; (10) a petitioner who proved his case in a winding-up petition was entitled to a winding-up order ex debito justitiae, whereas adiscretion not to grant such a remedy. It followed that even if the defendant was able to prove facts justifying a winding-up order in a winding-up petition, he may not necessarily be granted such an order in an oppression petition; (11) the court's discretion under s 216 was unfettered. The discretion should be exercised with a view to bringing to an end or remedying the matters complained of. If the matters complained of can be remedied by an order other than a winding-up order, there was no reason for the court to wind up the company simply because its discretion was unfettered.

Tang Choon Keng Realty (Pte) Ltd & Ors v Tang Wee Cheng [1992] 2 SLR 1114 High Court, Singapore (Chan Sek Keong J).

A number of shareholders, who held minority shares in a private company, presented a petition for winding up on the ground that it was just and equitable that the company should be wound up. It was alleged that the minority shareholders were being excluded from the management of the company. It was argued that the case came within the rule by which certain private companies were treated as partnerships for the purpose of winding up and winding-up orders were made in circumstances in which dissolution would be ordered in the case of partnerships.

Held: there was nothing to show that the majority had exceeded their legal rights in this case, and even if this was a case where the partnership rule applied, the circumstances did not justify a winding-up order.

Re Kwong On Co Ltd [1949] MLJ 120 High Court, Singapore (Murray-Aynsley CJ).

Kumagai Gumi Co Ltd v Zenecon-Kumagai Sdn Bhd & Ors and another application [1994] 2 MLJ 789; CSLR X[651] High Court, Kuala Lumpur (Anuar J).

The petitioner was a shareholder and a member of the board of directors of the company. He was also employed by the company as its marketing director until his employment was terminated and he was removed as director. As a consequence, he was excluded from the management of the company. The petitioner petitioned for the company to be wound up on the grounds that it would be just and equitable to do so, under s 254(1)(i) of the Companies Act (Cap 50). He claimed that the company was essentially a quasi-partnership as it was incorporated to take over the business of GA, a sole proprietorship of one of the respondents, and that there was an agreement between all the shareholders that they each had a right to participate in the management of the company. He contended that this agreement had been breached by his being dismissed as an employee and removed as a director and thereby excluded from the company's management. The respondents, the company's two other shareholders and directors, argued that the the company was not a quasi-partnership and that there was no such agreement that all shareholders had a right to participate in the management of the company. They submitted that even if the petitioner had a right, the petitioner had so misconducted himself as an employee and a director that the company was entitled to terminate his employment and remove him as a director. The allegations of misconduct pertained, inter alia, to the petitioner having not properly accounted to the company for moneys received by him on behalf of the company, expenses incurred by him and paid by the company and advances given to him by the company.

Held, allowing the petition: (1) having listened and observed both the petitioner and the respondent S during their testimony to the court, the court formed a favourable impression of the petitioner. The court found no deficiencies and discrepancies of a material nature in his evidence and find him to be a truthful witness. The same could not be said of the respondent S. The court did not find him a forthright witness and found his evidence on several material issues unconvincing and often incredible; (2) it was not necessary for all the three elements of personal relationship involving mutual confidence, management participation agreement and restriction on the transfer of a member's interest to be present for the just and equitable ground for winding-up a company to be satisfied. As in all matters where equitable considerations applied, the court would look at the facts and issues in their totality when deciding whether the circumstances warranted a company being wound up on the ground that it was just and equitable to do so; (3) the court found that there was a management participation agreement between the petitioner and the respondents when the company was incorporated. It was on the basis of such an agreement that the petitioner agreed to throw in his lot with the respondent S in GA and to pay the respondent S for his 45% share in GA and to employ his time, effort and business contacts, particularly with regard to China, to build up first GA and then the company's business. For such a management participation agreement to be workable, there had to be mutual confidence between the shareholders. It was clear from the evidence that there was now no such mutual confidence; (4) the petitioner had by his testimony and the documentary and other evidence herein, satisfied the court that the circumstances in which these moneys were paid to him or on his behalf show no improper conduct on his behalf. The respondents had failed to establish misconduct on the petitioner's part sufficient to warrant their dismissing him as an employee and removing him as a director. In so doing, they breached the management participation agreement.

In the Matter of Garamont Agencies Pte Ltd Companies Winding Up No 90 of 1995—High Court, Singapore (CR Rajah JC).

The petitioner bought a shelf company in 1984 for the purpose of carrying on the business of a restaurant at Shaw House, Orchard Road, Singapore. The business commenced in December 1984. In August 1985, the company was in arrears of rent and the landlords issued a writ of distress. The other shareholders wanted to terminate the business and wind up the company, but the petitioner, who was the managing director, was keen to carry on the business. He invited his friend, the appellant, to continue the business with him. The appellant became a shareholder in 1987 and sorted out the problem with the landlords. The appellant became a co-director with the petitioner and also the chairman of the board of directors. The appellant and the petitioner ran the business jointly. In March 1987 the appellant began to initiate steps to take over control of the company. A dispute arose, and the appellant and the petitioner did not communicate with each other in the management of the company except through a mutual friend. The company continued its business on a day-to-day basis, but no corporate decision could be made. Hence the company was served a summons for failing to submit its tax returns and for failing to hold an annual general meeting and lodge its returns with the Registrar of Companies. In early April 1989, the landlords served the company with six months' notice to determine the tenancy of the restaurant premises as they wished to redevelop the site. The petitioner and the appellant agreed to wind up the company. Notice was given to the Hong Kong chefs. On 31 October 1989 the the restaurant closed its doors and all its furniture, fixtures and fittings were sold by public auction. On 15 November 1989 the petitioner commenced the winding-up action on the grounds that the substratum of the company was gone and that there was a deadlock between the two directors in the management of the company. An order winding up the company on the ground that it was just an equitable to do so was made by the High Court. The appellant appealed against the order.

Held, dismissing the appeal: (1) if the only two directors of a company cannot agree with each other, and neither can overrule the other, there was a deadlock which, if it occurs in a partnership justified the court in winding up the partnership. The petitioner was able to frustrate every move of the appellant to either exercise his casting vote or his majority shareholding. There was, in effect, a deadlock in so far as it depended on control of the majority shareholding; (2) the 'just and equitable' provision does not entitle one party to disregard the obligation he assumed by entering a company, nor the court to dispense him from it. It does, as equity always does, enable the court to subject the exercise of legal rights to equitable considerations. These would be considerations of a personal character arising between one individual and another, which may make it unjust, or inequitable, to insist on legal rights, or to exercise them in a particular way. The superimposition of equitable considerations required either (a) an association formed or continued on the basis of a personal relationship, involving mutual confidence, or (b) an agreement, or understanding, that all, or some of the shareholders shall participate in the conduct of the business, or (c) a restriction upon the transfer of the member's interest in the company - so that if confidence is lost, or one member is removed from management, he cannot take out his stake and go elsewhere. All three elements existed in the instant case; (3) the objects clause in a memorandum of association sets out all the objects that the company was authorized to carry on for the time being. The objects clause was subject to amendment at any time. Within the limits of the objects clause, the business of a company may change from time to time. What was originally intended to be the main object of a company on its incorporation may have ceased to be so over the years if the company embarks on a different type of business authorized by its memorandum of association; (4) in the instant case the memorandum of association lent no assistance whatever to the task of ascertaining the main object or substratum of the company, the reason being that it was formed as a shelf company with no particular object in mind. Given the circumstances in which the petitioner bought the company and the appellant became a shareholder and the intentions of the original shareholders when they set up the business, it was safe to conclude that there was only one object in mind, ie to operate a restaurant; (5) the company's substratum therefore disappeared with the termination of the lease of the premises. There was sufficient evidence to base a finding that the appellant had in fact agreed to cease and abandon the business of restaurantuers. He had caused the Hong Kong cooks to be dismissed and all the furniture and kitchen equipment to be sold. He made no attempt to relocate the restaurant.

Chua Kien How v Goodwealth Trading Pte Ltd & Anor [1992] 2 SLR 296 Court of Appeal, Singapore (Chan Sek Keong, Chao Hick Tin and Warren LH Khoo JJ).

Yai Yen Hon & Ors v Lim Mong Sam @ Lim Ah Tee [1997] 2 MLJ 190 Court of Appeal, Kuala Lumpur (Shaik Daud, Ahmad Fairuz and Mokhtar Sidin JJCA).

The petitioner, a shareholder and director in River View Properties Sdn Bhd (the company) sought a winding-up order against the company under s 218(1)(i) of the Companies Act 1965 on just and equitable grounds.

Held, allowing the petition: the petitioner had established that the company was based on a quasi-partnership relationship and that there had been a breach of trust and mutual confidence between the parties as well as a breach of the agreement or understanding that the petitioner was entitled to participate in the management of the company. The shareholding structure and the fact that the petitioner had been involved with the other major personalities in the company in other companies in which they had been essential owners and directors reflected the personal relationship and mutual trust between them. The respondents had failed to credibly deny that the petitioner was involved in the making of policy decisions until recently, when their relationship fell out and the respondents had tried to remove the petitioner as a director. It was shown that there were special circumstances and an underlying obligation of the other main directors that the petitioner should be entitled to management participation. The petitioner had also been unable to withdraw his stake from the company without great loss to himself as the articles of association of the company imposed restrictions on the sale of the shares and a fair price could not be worked out between him and the other main directors. The evidence showed that the relationship of trust and confidence between the petitioner and the other main directors had broken down as the first respondent had ceased to visit the petitioner's office to discuss the affairs of the company and copies of circular resolutions for approval were not given to the petitioner. The attempt to remove the petitioner as a director only failed due to the injunctive order obtained by the petitioner against the company.

Lim Mong Sam @ Lim Ah Tee v Yai Yen Hon @ Chua Yen Hon & Ors (1994) CSLR XX[1674] High Court, Johor Bahru (Haidar J).

This was a petition by a shareholder for the winding up of Mejoh Hotel Sdn Bhd, the respondent ('the company'), on the grounds that one of its directors, Lim Boon Kwee ('Lim'), had acted in the affairs of the company in his own interest rather than in the interests of the members as a whole and had acted unfairly and unjustly to the members, in particular, to the petitioner and it was therefore just and equitable to wind up the company. The petition was opposed by the company. The company had been given a loan of RM250,000 by Syarikat Mejoh Sdn Bhd, a company in which both the petitioner and Lim were directors. In 1992, there was a resolution in an extraordinary general meeting giving the directors a mandate to increase the paid up capital of the company by RM250,000 to meet the sum owed to Syarikat Mejoh. However, the minutes of the meeting also showed that a shareholder had informed the meeting that a call for new capital may not be fair to existing shareholders and that the company's debts could be settled by offering its quoted price to any outsiders or to the well-off shareholders who were interested in taking up the shares and that those shareholders who were not willing to take up the new shares could request for the disposal of their shares in the company. The petitioner was one of the shareholders who agreed to the suggestion. It was alleged that there was later a unanimous agreement to dispose of the company to any interested party at a value of RM500,000. However, the petitioner subsequently received a letter offering him a portion of the new shares but this was not taken up. The petitioner then filed his petition claiming that there was no resolution made to increase the paid up capital. He stated that the resolution was never passed and that what was decided unanimously was that the company was to be disposed off to any interested shareholder for RM500,000. He alleged that the attempt to increase the paid up capital was unlawful and was designed to benefit certain shareholders, particularly, Lim and his wife who had intentions of controlling the company. The attempted call of shares was calculated to swallow up his shares as there were disputes going on in Syarikat Mejoh.

Held, dismissing the petition: (1) although Lim had supported the proposal to increase the shareholding, it could not be shown that he was acting in his own interest and not in the interests of the members as a whole. There was nothing to suggest that he was unjust and unfair and the minutes of the EGM showed that he was receptive to the suggestion that anybody who was willing to dispose their shares or purchase the shares of members could do so; (2) the petitioner's claim that no resolution was passed to increase the paid up capital was at odds with what the minutes of the EGM showed. He also had not shown that he at least attempted to request that the minutes be corrected or lodge a protest with the company or with the Registrar of Companies in accordance with the Companies Act. Where the minutes had been so entered and signed, until the contrary was proved, the meeting was deemed to have been duly held and convened and all proceedings thereat were deemed to have been duly held. The petitioner did not show any proof to the contrary; (3) although the minutes did show that all the shareholders did agree to dispose off the company to any interested party for RM500,000, this unanimous resolution did not overrule the resolution to increase the paid up capital. The company was faced with a debt and there was, therefore, a need to raise capital to pay it off. Both the said resolutions were made with the consent of the shareholders and there was nothing to suggest that Lim had taken advantage of the situation to increase his shareholding; (4) from the evidence, it was shown that only two other shareholders had agreed to buy the shares of the remaining shareholders which included the petitioner. The petitioner was not being truthful in claiming that no offer was made to purchase his shares. He could not at all blame Lim as the latter was not even named in the said sale and purchase agreement; (5) the company's contention that the petitioner had no legal right and therefore no locus standi to petition for winding up was correct as the petitioner had failed to show that he had a tangible interest in the relief sought.

Chua Chwee Chiok v Mejoh Hotel Sdn Bhd (1994) CSLR XX[1670] High Court, Johor Bahru (Mohd Ghazali JC).

The appellants appealed against the decision of the High Court in ordering that the first appellant and three other companies owned by the Kuok family be wound up under the 'just and equitable' provision of s 218(1)(i) of the Companies Act 1965 ('the Act'). (See [1994] 3 MLJ 89.) The appellants contended that: (i) before the court could import equitable considerations to govern the relationship between shareholders, at least one of the three elements identified by Lord Wilberforce in Ebrahimi v Westbourne Galleries [1973] AC 360; [1972] 2 All ER 492; [1972] 2 WLR 1289 had to be present; and (ii) the court had first to consider the availability of alternative remedies because the phrase 'just and equitable' would import that requirement although there was no statutory requirement to do so as in the United Kingdom and Australia. They further argued that there had been inordinate delay in the presentation of the petition which would disentitle the respondent from obtaining the equitable relief.

Held, dismissing the appeal: (1) it is not essential and therefore not a condition that before the Ebrahimi principles can be applied, the elements or at least one of the three elements mentioned by Lord Wilberforce must be present. To interpret it in the way contended by the appellants would be putting something in the judgment which is not there; (2) there are no provisions in the Act which require the court to consider the availability of alternative remedies. Therefore, such provisions should not be written into the Act. It was not obligatory for the court to consider the availability of alternative remedies before making a winding-up order under s 218(1)(i) of the Act; (3) it is clear that the parties had agreed in March 1987 to wind up the companies voluntarily and that was clear evidence that they no longer enjoyed the confidence of each other and the voluntary winding up was their solution to their problems. While that was not a reason for winding up the companies, it provided convincing evidence of the breakdown of mutual confidence among the parties to justify the winding up on the just and equitable ground; (4) the judge had rightly exercised her discretion in excusing the delay in bringing the petition by taking into account, inter alia, the fact that the parties are related to one another by blood and their natural tendency to try and settle family matters amicably through discussions.

Tien Ik Enterprises Sdn Bhd & Ors v Woodsville Sdn Bhd [1995] 1 MLJ 769; (1995) CSLR XX[1675] Supreme Court, Kuala Lumpur (Jemuri Serjan CJ (Sabah & Sarawak).

YTL Hotel and Properties Sdn Bhd v Trans-Pacific Hotels Sdn Bhd (1996) CSLR XX[4656] High Court, Kuala Lumpur (Abu Samah JC).

Watta Battery Industries Sdn Bhd v Uni-Batt Manufacturing Sdn Bhd (Chow Siew Hon & Ors Interveners) [1993] 1 MLJ 149 High Court, Kuala Lumpur (Selventhiranathan JC).

The respondent company (`the company') had its registered office and sole asset (`Lot 202') in Penang. At an extraordinary general meeting on 8 October 1994, the company decided to increase its authorized capital from RM25,000 to RM1.5m and also for another RM900,000 by way of redeemable convertible unsecured loan stock to raise the required finance to get the company operational. The petitioner, a director of the company, together with two others, filed a winding-up petition against the company and prayed that the company be restrained from increasing its capital, that a provisional liquidator be appointed to take custody of its assets, evaluate and sell Lot 202 and use the proceeds to pay up the loan of the company, and that eventually the company be wound up. The trial judge made an order granting the petitioner all the relief claimed for, short of the company being wound up. Subsequently, the company applied for an order that the powers and duties of the provisional liquidators be stayed until final disposal of its appeal on the ground was that the appeal would be nugatory if the provisional liquidator was allowed to sell off the only asset which justified the company's existence as a housing developer. The petitioner's counsel raised a preliminary objection that the company ceased to have any capacity to instruct solicitors to make this application once the provisional liquidators were appointed following s 226(3) of the Companies Act 1965 (`the Act').

Held, granting the application for stay of execution pending appeal: (1) s 226(3) of the Act only applied to proceedings against the company. The crucial distinction in this case was that the company was making the application to appeal against the order appointing the provisional liquidators. Therefore, s 226(3) of the Act was not applicable in this case; (2) in this case, the winding-up order had not yet been made. Authorities cited to the court showed that notwithstanding the appointment of a provisional liquidator, the directors retained the power to have the company represented in winding-up proceedings. Further, it was common ground that notwithstanding the appointment of a provisional liquidator, the board still had residuary powers, for example, it could instruct solicitors and counsel to oppose the current petition and, if a winding-up order was made, to appeal against that order. Therefore, the preliminary objection was devoid of merit.

Taman Sungai Dua Development Sdn Bhd (previously known as Supershine (M) Sdn Bhd) v Goh Boon Kim [1997] 2 MLJ 526 Court of Appeal, Kuala Lumpur (Mahadev Shankar, Abu Mansor JJCA and Abdul Malek Ahmad J).

P1-P4 are the personal representatives of A, deceased, who owned shares in YB Sdn Bhd. YB Sdn Bhd went into voluntary liquidation whereby D1-D3 were apppointed joint liquidators. P alleged that D caused YB Sdn Bhd to lend M$800,000 with interest to YHH Sdn Bhd without security. P further alleged that D had made other unauthorized advances. As a result, P averred that D had breached their fiduciary duties as liquidators under ss 264 and 285(1) of the Companies Act 1965.

Held, dismissing the claim: (1) on the placing of M$800,000 with YHH Sdn Bhd, D had acted in accordance with the wishes of the majority share-holders of YB Sdn Bhd. This was corroborated by the resolution passed by the majority of the shareholders which was later ratified at the annual contributories meeting; (2) the M$800,000 deposited by D with YHH Sdn Bhd was not a loan but was placed temporarily with YHH Sdn Bhd to earn interest. In fact the interest charged on the M$800,000 was higher than the prevailing bank interest rate; (3) P1 had admitted that he did not move any resolution regarding his dissatisfaction with D's performance at the two annual contributories meetings which he attended. P1 could not now come to court and complained about D's performance; (4) D1's explanation of the delay in distributing the assets is accepted and s 264 of the 1965 Act is not breached; (5) D had not breached s 285(1) of the 1965 Act because in exercising their discretion as liquidators, they are duty-bound to follow the wishes of the majority shareholders to deposit the M$800,000 with YHH Sdn Bhd.

Yeap Leong Min & Ors v Herbert J Ho Jr & Ors (1991) CSLR XX[2831] High Court, Penang (Mohamed Dzaiddin J).

Chi Liung Holdings Sdn Bhd v Ng Pyak Yeow Originating Motion No 25-35-1993 High Court, Johor Bahru (Haidar J).

Re Sin Teck Hong Oil Mills Ltd [1950] MLJ 232 High Court, Federation of Malaya (Taylor J).

The plaintiffs were the liquidators of a company ('WHR') in a members' liquidation. The defendants were the shareholders of WHR. The sole asset of WHR was a piece of land on which bungalows were being built for the shareholders. The plaintiffs brought this action seeking the court's approval of the accounts drawn up by them as the second defendant had challenged the accounts on several grounds. The liquidation was commenced pursuant to an agreement dated 4 September 1986 ('the shareholders' agreement'). This agreement provided, inter alia, that the defendants were to subscribe for additional shares in WHR in order to raise sufficient moneys for the company to pay off the financial institution which had loaned it moneys for the construction of the bungalows. The agreement also provided for particular bungalows to be distributed in specie at the end of the liquidation to each shareholder. The agreement further provided that prior to the distribution, rent received from the letting of each bungalow should be credited to the account of the shareholder to whom the particular bungalow had been designated. The defendants failed to subscribe for the additional shares and they each, subsequently, entered into a sale and purchase agreement to buy one of the bungalows originally designated for distribution to them from the company. The sale and purchase agreement provided for the payment of the purchase price in three stages and it was expressly provided that if payment of the last stage was not made, the company could set off the amount due against any credit in the particular defendant's account with the company. The sale and purchase agreement further provided that, upon payment of the second instalment, the purchasing shareholder was entitled to possession of the bungalow in question and to all rent from it. Prior to that, the purchasing shareholder was not entitled to any rent from the bungalow.

Held, ordering the liquidators to prepare a new set of accounts: (1) the plaintiffs had incorrectly credited rental deposits paid by tenants of the bungalows to the accounts of the defendants with the company as the rental deposits were to be refunded to the tenants at the expiry of the leases and could not, therefore, be treated in the same way as the rents received; (2) the plaintiffs had incorrectly credited rent received after signing of the sale and purchase agreements to the defendants' accounts with the company. The shareholders' agreement had provided that the rents received from the letting of each of the houses shall be credited to the respective current account of the defendants until the houses were distributed in specie to the defendants, but when the plan to distribute the houses in specie could not be carried out and the defendants executed the sale and purchase agreements with the liquidators, that arrangement was rescinded and the sale and purchase agreement which took effect expressly provided that the defendants would only be entitled to the rent after payment of the second instalment; (3) the plaintiffs did not have the power to use the defendants' credit balance with the company to off-set the payment of the second instalment of the purchase price as the company had neither sufficient funds to meet all liabilities and expenses nor an indemnity from the shareholders at that time. Furthermore, the sale and purchase agreement had, by expressly referring to the power to set off with regard to the third instalment, excluded such power with respect to the second instalment: expressio unius personae vel rei, est exclusio alterius; (4) the first and third defendants should pay interest on their respective shortfalls of the second instalment of 80% of the purchase price at the rate of 15% pa until the respective dates of completion of the sale and purchase of the houses; (5) the second defendant could not be charged with interest on the moneys returned to her by the plaintiffs on 19 November 1987 at the rate set out in the sale and purchase agreement for failure to make full payment as she had not failed to pay her instalments of the purchase price; (6) the second defendant was not liable to pay rent on her possession of the bungalow assigned to her as she had not taken possession prior to paying the second instalment in full; (7) the plaintiffs were entitled to the fees claimed by them for the work done as there was no evidence to suggest that they had acted fraudulently or in a manner that disentitled them to charge in accordance with the special resolution to wind up the company.

Chan Ket Teck & Ors (liquidators of Wing Hon Realty Pte Ltd) v Seet & Ors [1994] 1 SLR 567; CSLR XX[2840] High Court, Singapore (Goh Phai Cheng JC).

Bensa Sdn Bhd (in liquidation) v Malayan Banking Bhd (Damansara Utama Branch) & Anor [1993] 1 MLJ 119 High Court, Johore Bahru (James Foong J).

The applicant had rented certain premises to Rich's Supercentre Sdn Bhd ('the company'). Upon the winding up of the company, the applicant applied by way of originating motion for arrears of rent from the liquidator. However, the trial judge found that the originating motion was filed after the winding up order was made by the court. Therefore, by virtue of s 226(3) of the Companies Act 1965 ('the Act'), leave of the court was required before commencing the action. As no leave had been obtained, the action was struck out. The applicant appealed on the issue whether leave of court was indeed necessary before commencing the action since the motion was against the liquidator personally.

Held, dismissing the appeal on different grounds: according to s 236(3) of the Act, a liquidator appointed by the court is considered an officer of the court and leave of court is needed before an action can be commenced against him. However, in this case, the application should have been made under s 305 of the Act as a claim against the liquidator in the course of winding up comes under s 305 and not s 226(3) of the Act. In any event, the applicant should have first obtained authority from the winding up judge before proceeding against the liquidator.

Chi Liung Holdings Sdn Bhd v Ng Pyak Yeow [1995] 3 MLJ 204; (1995) CSLR XX[2842] Court of Appeal, Kuala Lumpur (Abu Mansor JCA, Abdul Malek and Mohd Noor JJ).

This matter arose from a petition brought by the petitioner to wind up the respondent. At the material time, the petitioners themselves were in liquidation and therefore their actions were carried out by the liquidator. The winding-up petition was dismissed and costs were awarded to be paid by the liquidator of the petitioners to the respondent and the opposing creditors. The opposing creditors then made this application for an order that costs awarded in the judgment be costs due and payable by the liquidator personally.

Held, dismissing the application: (1) the law as it stood was that when a liquidator did not sue or defend in his own name but did so in the name of a company, any costs awarded should be that of the company; (2) the court, however, was given a discretion by way of awarding costs personally against the liquidator or persons of such likes as a sanction for instituting unnecessary proceedings or incurring unnecessary litigious expenses. This sanction should equally apply to cases where there was misconduct or fault or error on the part of the liquidator in bringing such proceedings; (3) in the instant case, there was no evidence that the liquidator had brought the petition unnecessarily or had incurred unnecessary litigious expenses or that there was misconduct, fault or error on the part of the liquidator which had to be sanctioned.

Markcon Sdn Bhd (in liquidation) v Resilient Construction Sdn Bhd (Labtec Sdn Bhd & Anor, opposing creditors) [1993] 3 MLJ 429; CSLR XX[2839] High Court, Johore Bahru (James Foong J).

This was an application by the liquidator of Bunga Raya Chemical Co Sdn Bhd for an order that the execution proceedings to recover the taxed costs, be set aside and that the sum of $711 paid by the applicant to the bailiff to prevent the seizure of his car, be refunded. The question to be determined was whether, in the circumstances of this case, the applicant liquidator was personally liable for the taxed costs.

Held, dismissing the application: all the indications showed that it was the applicant, who, acting on his own, was responsible for staying a sale which the court had ordered. From his own affidavits, the applicant could not be said to have been acting in good faith and with a sense of responsibility to his duties. His action caused the respondent to apply to the court for his rights to be set aside. When the court made the order, he was the one who was ordered to pay the costs. He was, therefore, personally responsible.

Kumarasamy v Haji Daud [1972] 2 MLJ 16 High Court, Johore Bahru (Syed Othman J).

On 8 November 1982. the plaintiff sued the defendants claiming damages for injuries suffered. The action was set down for trial on 2 October 1983. Sometime in November 1985, the solicitors for the defendants informed the solicitors for the plaintiff that the defendants had been wound up. On 5 August 1986, the plaintiff filed this originating summons for an order that he be granted leave to continue proceedings against the company. On 1 September 1986, the plaintiff made an application by way of summons-in-chambers in this originating summons for an order under s 308(6) of the Companies Act (Cap 185, 1970 Ed, Reprint) that the dissolution of the defendants be deferred until after determination of the action in Suit No 4851/82. Thereafter on 1 October 1986, the plaintiff made another application by way of summons-in-chambers under s 307 of the Companies Act to have the dissolution declared void. All three applications came before the present court which declared, inter alia, the dissolution void and allowed the plaintiff to continue proceedings against the company. The plaintiff's case was that he was entitled to the costs of the application to declare the dissolution void. The liquidator's case was that he had performed his statutory duty and that in any case all the assets of the company had been distributed to the shareholders and that he no longer had any funds to meet an order for costs against the company or himself. The present issue before the court was who should bear the costs of the application to declare the dissolution void.

Held: (1) s 264 of the Companies Act provides that the property of a company shall, on its winding up, be applied pari passu in satisfaction of its liabilities (subject to the prescribed preferential payments). This is a statutory obligation which falls on the liquidator. It is not an absolute duty. On the other hand, where is he paid professionally to wind up a company, he must exercise a high standard of care and diligence commensurate with his professionalism; (2) in the present case all the liabilities of the company had not been met prior to dissolution. Prima facie, the liquidator has failed to discharge his statutory obligation; (3) since the liquidator has not discharged his statutory duty he should pay the costs of the application to declare the dissolution void.

Vasudevan v Icab Pte Ltd [1987] SLR 201 High Court, Singapore (Chan Sek Keong JC).

CU was a Hong Kong company which went into liquidation in Hong Kong. It was registered in Singapore, but no liquidation order was made in Singapore. A was the liquidator of the company. A sought an order from the Singapore court for examination in Singapore of certain persons whom it was thought could give information regarding the company's affairs. The application was refused by the High Court (see Re China Underwriters Life & General Insurance Co Ltd [1988] 1 MLJ 409). A appealed to the High Court.

Held, dismissing the appeal: (1) the jurisdiction to summon persons to give information concerning the affairs of a company only exists in relation to a Singapore company; (2) s 377(2)(b) of the Companies Act (Cap 50) gives to a foreign liquidator the powers and functions of a local liquidator only in so far as is necessary to enable him to collect and recover the assets of the foreign company in Singapore. It does not confer on the foreign liquidator all the powers and functions of a liquidator appointed by the High Court pursuant to a winding-up petition; (3) accordingly, s 377(2)(b) did not enlarge the jurisdiction of the High Court so as to allow it to make orders investigating the affairs of foreign corporations not wound up by the Singapore High Court. The appeal was therefore dismissed.

Official Receiver of Hong Kong v Kao Wei Tseng & Ors [1990] 2 MLJ 321 Court of Appeal, Singapore (Wee Chong Jin CJ, Lai Kew Chai and Rajah JJ).

R were the liquidators of the company. A was an unsecured creditor of the company which was owed a small sum. Both A and the company were within a group controlled by HKC, who was made bankrupt. HKC had originally applied for the removal of R as liquidators of the company, but this application was not proceeded with after his bankruptcy. A made a similar application, relying on the affidavits filed by HKC. The grounds on which A sought the removal of R were, inter alia, that they had erred in appointing D&N, a firm of solicitors, to advise them in the liquidation when D&N had acted for the petitioning creditor in a previous proceedings against the company and were acting for a secured creditor, BP. D&N had represented the petitioning creditor in an action brought against them by the company for an injunction to restrain the presentation of a winding-up petition. the injunction was discharged and the company ordered to pay costs. D&N had presented a bill for taxation. The bill was not challenged by the liquidators, who took the view that it would have been too costly to engage other solicitors to do so. As a result, the entire sum claimed was allowed. The liquidators assumed that the registrar when taxing the bill would on his own motion disallow costs, charges and expenses not necessarily incurred. They also assumed that the taxed costs would only rank as an unsecured debt. D&N were also solicitors for BP, which held a security over substantially all of the company's assets.

Held, dismissing the application: (1) the court rejected R's application to cross-examine the deponents on their affidavits as the facts were not in dispute; (2) even though A was only a small creditor, it was entitled to make the application and be heard. There was no need to have the papers served on the other creditors. However, the Official Receiver should have been served so that he could be heard if he so wished. Nevertheless, the court decided to proceed with the hearing notwithstanding the absence of the Official Receiver; (3) the liquidators had made an error of judgment in appointing D&N as solicitors to assist them in the liquidation. D&N was in a position of conflict of interest. Firstly, it had presented a bill for taxation. No objection had been taken to the bill by the liquidators, who mistakenly assumed that the registrar would on his own motion scrutinize the bill and disallow costs, charges and expenses not properly or necessarily incurred. It is not the duty of the registrar to do so. As a result, the company was unrepresented on the taxation and the whole sum claimed was allowed; (4) the liquidators were also mistaken in assuming that the taxed costs of the petitioning creditors were only unsecured debts. Under s 328(1)(a) of the Companies Act (Cap 50) the taxed costs of the petitioning creditor rank prior to all other unsecured debts of the company and equally with the remuneration of the liquidators; (5) secondly, the liquidators had a duty to consider the validity of the security given to BP and if necessary to take advice on the matter. D&N could not act for both BP and the company; (6) the question of whether the liquidators should be removed must be considered in the light of the interest of the creditors as body. Although the liquidators had made errors, the errors were made in good faith and had not seriously prejudiced the liquidation of the company. The company had insufficient assets to afford the replacement of the liquidators at this late stage, when most of the matters in the liquidation had been completed. An order for the removal of the liquidators would involve incurring further costs and expenses. The application was therefore refused.

Procam (Pte) Ltd v Nangle Charles & Anor [1990] SLR 624 High Court, Singapore (LP Thean J).

The appellant, the second respondent and the third respondent were directors and shareholders of a construction company, Juta Vila (M) Sdn Bhd ('the company'). There were differences between the directors, and on 21 September 1995, the appellant filed a petition to the court, praying inter alia, for an order that the second and third respondents purchase his shares at RM2.82m, and that an interim receiver be appointed 'to prevent mismanagement of the assets of the company'. A winding-up order was sought by way of an alternative on the grounds that the parties had operated the company as though it was a partnership, under s 218(1) of the Companies Act 1965 ('the Act'). The judicial commissioner rejected the appellant's application. the appellant appealed. Meanwhile, on 22 September 1995, the appellant was removed as a director in an extraordinary general meeting of the company. Before the hearing of the appeal proper, the appellant applied to the court to admit fresh evidence which arose from the discovery proceedings embarked by his solicitors, as a matter of right pursuant to r 7 of the Rules of the Court of Appeal 1994 ('the 1994 Rules'), to support his contention that the judicial commissioner had made a wrong decision. The evidence that the appellant sought to adduce were the company's cheques said to be for payment to a contractor of the company, which were signed by the second and third respondents. The appellant alleged that the reverse of the cheque showed that the money was paid either into the second respondent's creditor's or the second respondent's personal account. The appellant's counsel invited the court to infer from these circumstances that the second respondent had embezzled the money, and that unless an interim receiver was appointed, the embezzling would continue.

Held, dismissing the appeal: (1) it was not possible for the court to appoint a receiver in winding-up proceedings. In the case of a winding-up proceeding by the court, s 231 of the Act provides for a provisional liquidator to be appointed; (2) however, a court will not appoint a provisional liquidator consequent upon the presentation of a winding-up petition unless there is good prima facie evidence that the company will be wound up because the company is obviously insolvent, or the company's assets are in jeopardy, or there are other circumstances which makes it imperative for the court to intervene; (3) in determining whether a winding-up order will be made, the court should first look at the sufficiency of the allegations in the petition. The primary facts set out in the petition if assumed to be true and the uncontested evidence taken as a whole must add up to the conclusion that it is imperative that the winding-up order be made; (4) where a company is in substance an incorporated partnership, a winding-up order may be made under the just and equitable rule, in situations where a partnership may be dissolved by the court. In the instant case, the appellant asked for the company to be wound up merely because it was in substance an incorporated partnership. That was not enough. For a winding-up order under the just and equitable rule to be made, in the case of a partnership- like company, there must be shown situations where a partnership may be dissolved by the court. None was shown in the petition; (5) further, it appeared that the appellant's objective was not the winding up of the company at all but a mandatory direction to compel the other shareholders to buy him out at RM2.82m and carry on with the company as a going concern. No legal or factual basis was shown as to how or why this court would ever make such an order. Mere apprehensions of mismanagement are not enough. On the evidence, the judicial commissioner came to the correct decision when he dismissed the application with costs; (6) there was absolutely no evidence before the court that the contractor was not a genuine creditor, and that the receipts given by the contractor were good discharge to the company to the extent of these payments; (7) rule 7 of the 1994 Rules was identical to s 69(2) of the Courts of Judicature Act 1964. This court did not agree that s 69(2) applied to this case because the court was not concerned here with an interlocutory application. Nor does the second limb of s 69(2) apply because the new evidence sought to be adduced related to matters which occurred in 1992; (8) in any event, the admission of the new evidence was a matter of discretion only, and the court would exercise it against the appellant.

Kok Fook Sang v Juta Vila (M) Sdn Bhd & Ors [1996] 2 MLJ 666; (1996) CSLR XX[4178] Court of Appeal, Kuala Lumpur (NH Chan, Mahadev Shankar and Shaik Daud JJCA).

The petitioners held 70% of the shares in the respondent company. They sought to wind up the company under s 218 of the Companies Act 1965 on the ground that the company was unable to pay its debts. The first petitioner applied for a provisional liquidator to be appointed under s 231 of the Act, to prevent the company's assets from dissipating and scrambling amongst the creditors.

Held, allowing the application: (1) the court may exercise its power under s 231 of the Companies Act 1965 to appoint a provisional liquidator between the time the winding-up petition is presented and the winding-up order is made; (2) s 231 confers unfettered discretionary power on the court to appoint a provisional liquidator, but this power must be exercised in a proper judicial manner.

Teo Ming Cheng & Ors v Fineco Confectionery Industries (M) Sdn Bhd (1995) CSLR XX[2843] High Court, Johor Bahru (Abdul Malik Ishak J).

The three applicants were appointed by an order of court as provisional liquidators of a certain company which was the subject of a winding-up petition. The appointment of the applicants was made after an ex parte application was made by the petitioning creditor. The company thereafter sought to discharge the appointment of the applicants as provisional liquidators. The application was refused but on appeal to the Court of Appeal, the order was discharged. In view of the discharge of order, the questions arose as to whether the applicants should be paid their remuneration and expenses and if so by whom.

Held: (1) a provisional liquidator appointed by the court stands in precisely the same position as a court-appointed receiver. Such a provisional liquidator is an officer of the court. He is also in every sense a receiver; (2) the provisional liquidators in the present case were entitled to be paid their just remuneration and be reimbursed of the expenses properly incurred out of the assets of the company that were administered by the provisional liquidators and were held by them. Accordingly, until determined by the court, they also have a lien over these assets up to an amount equivalent to their total claims.

Re Pac-Asian Services Pte Ltd [1988] SLR 542 High Court, Singapore (Chao Hick Tin JC).

The respondent company undertook a housing development project which was financed by loan facilities from the petitioner bank. The respondent company subsequently abandoned the project and was indebted to the petitioner. The petitioner served on the respondent company a letter of demand under s 218(2)(a) of the Companies Act 1965, requiring the latter to pay the sum due to the former ('letter of demand'). Upon the respondent company's failure to comply with the letter of demand, the petitioner petitioned to wind up the respondent company. The government subsequently established a fund to be managed by TPPT Sdn Bhd ('TPPT') in order to revive abandoned housing projects with a view to complete them. TPPT accepted the respondent company's project as one which qualified for financial assistance but it was not prepared to entrust the required funds to the respondent company's directors. To avoid the impasse and to revive the respondent company's project, the petitioner applied to court to appoint provisional liquidators for the respondent company pending the disposal of the petition. The letter of demand did not state that the respondent company had the right to secure or compound for the debt to the petitioner's reasonable satisfaction. It was therefore argued that the letter of demand was ineffective for such an omission. It was also contended that the court should be slow to appoint a provisional liquidator except where there was urgency and danger of dissipation of the company's assets.

Held, allowing the application: (1) s 218(2)(a) of the 1965 Act has two limbs. The first limb prescribes what the creditor has to do to invoke the presumption that a company is unable to pay its debts. The creditor has to serve on the company a demand requiring the company to pay the sum due; (2) the second limb of s 218(2)(a) of the 1965 Act prescribes that the company has three weeks to pay the sum due or to secure or compound for it. Since what the company can do is statutorily prescribed, there is no call for the creditor to spell out what the law prescribes. It was therefore sufficient that it was clear from the letter of demand that it was a notice under s 218(2)(a) of the 1965 Act; (3) the court has a wide discretion to appoint a provisional liquidator under s 231 of the 1965 Act. The court must however be satisfied that ultimately it is likely to make the winding up order sought in the petition. Factors like urgency and danger of dissipation of assets, are relevant but are not necessarily decisive; (4) if the intention of applying to court to appoint a provisional liquidator is not to proceed with the winding-up procedure to its ultimate end, then such an application amounts to an abuse of the process because it is made for a collateral purpose; (5) there was no evidence in this case to suggest that the application was an abuse of the process. Instead the court was satisfied that this was a bona fide application. Accordingly this was a proper case for the court to exercise its discretion under s 231 of the 1965 Act.

Hongkong and Shanghai Banking Corp Ltd v Kemajuan Bersatu Enterprise Sdn Bhd [1992] 2 MLJ 370 High Court, Kuala Lumpur (VC George J).

The petitioners filed a petition to wind up the respondent company under ss 218 and/or 143 of the Companies Act 1965 ('the Act'). Prior to the winding-up order being made, a provisional liquidator ('the provisional liquidator') of the respondent company was appointed by an order of the High Court on 6 April 1995. The provisional liquidator obtained an order for the bailiff to take possession and control of Lot 1, Lorong 10B, Telok Panglima Garang, Banting, 42500 Kuala Langat ('the Telok Panglima address') and to deliver possession of the said property to the provisional liquidator. In support of the application, the provisional liquidator affirmed that he had been informed by a representative of the respondent company that its documents, books and other effects of business were to be found at the Telok Panglima address. He then proceeded to the Telok Panglima address and met a director of the respondent company, who refused to vacate the premises and hand him the keys to the property even after being shown the sealed copy of the order of the court appointing him the provisional liquidator. Therefore, he made a police report against that director and obtained an ex parte order for a warrant of arrest from the High Court which was later successfully set aside by the respondent company. Having set aside the order, the four applicants filed this application for leave to commence proceedings in tort against the provisional liquidator and to claim special damages. The applicants alleged that (a) the proposed defendants unlawfully conspired to injure them by abuse of legal process, malicious enforcement of order and trespass; (b) there were certain crucial facts missing from the police report; (c) the provisional liquidator took directions from the petitioners; and (d) the proposed defendants wanted to paralyse the four applicants' business to apply pressure on the directors of the respondent company to settle the unjust demands of the petitioners. The applicants' claim was supported by an affidavit affirmed by Tay Yew Keng, the managing director of the first applicant. The provisional liquidator averred that the applicants and the respondent company were all related companies and shared some directors and shareholders. He also questioned the propriety of the affidavit of Tay who affirmed the affidavit on behalf of all the other three individual legal entities. The provisional liquidator argued that (a) if the applicants had any bona fide complaints against him they should first take their complaint to the Official Receiver as provided for under s 229(1) of the Act; and (b) by virtue of r 63 of the Companies (Winding-Up) Rules 1972 ('the Rules') and s 14 of the Courts of Judicature Act 1964, he was an officer of the court and was therefore conferred judicial protection in the lawful discharge of his duties.

Held, dismissing the application: (1) the fact that the three independent legal entities have entrusted their case into the hands of the managing director of the first applicant lent weight to the suggestion that the applicants and the respondent company shared the same directors and shareholders and that their relationships were closely intertwined and interrelated. There was no specific denial of the interrelationship between the applicants and the respondent company as alleged by the provisional liquidator. Therefore, the principle that where one party made a positive assertion upon a material issue, the failure of his opponent to contradict it was usually treated as an admission by him of the fact so asserted applied; (2) there was no requirement that the maker of a police report had to state every allegation in his police report. Once a report stating basic facts necessary to commence an investigation was made then a statement was recorded and details would be given in that statement. Also, the provisional liquidator had to take directions from the petitioners and he had to be accompanied by the petitioners' solicitors. This did not amount to collusion or conspiracy. As opposed to such bare allegations, was the untarnished record of the provisional liquidator whose credentials and work had been laid bare and no impropriety or abuse of power or process had been shown in respect of any of the 160 companies he had so far wound up by order of the High Court of Malaya; (3) on the facts as they stood on the affidavits, there was no substance in the applicants' allegations. Taking into consideration the facts of the present case, as averred by the applicants in the various affidavits, the attitudes, beliefs and objectives of the petitioners and the provisional liquidator were nothing more than to execute the due process of the law. In any event, the absence of reasonable and probable cause was not shown by the applicants. Therefore, the applicants had failed to show a case for malicious prosecution, because throughout the alleged trespass and/or act of malicious prosecution, the provisional liquidator had proceeded on the guidance and advice of solicitors including the petitioners' solicitors; (4) where a legal process had been perverted to satisfy some other motive such as extortion or oppression, an action would lie at the feet of a party that suffered the wrong. This was the tort of abuse of process which depended on the misuse of the process however correctly it was obtained. The abuse of process must be used mainly for a purpose outside the scope of the legal process or an action which the court was asked to adjudicate upon. In the present case, the applicants had not satisfied the court that the facts supported a case for abuse of process against the provisional liquidator. This was because there would be no abuse involved if a plaintiff genuinely sought to achieve what he was entitled to by way of a suit and thus filed the suit for the purpose of achieving that objective; (5) the applicants herein were third parties affected by the conduct of the provisional liquidator and they did not fall within the ambit of s 229(1) of the Act or r 277(2) of the Rules; (6) to bring a case against officers of the court, leave of court should be obtained. As this was a case where the applicants intended to file proceedings in tort against a court appointed provisional liquidator, leave must be sought. This was because the mischief complained of by the applicants was done whilst the provisional liquidator was in office which meant that he was an officer of the court; (7) clearly, the present application was based on ss 218 and 143 of the Act. As the applicants had taken out a summons in chambers under the same case number dealing with the companies winding-up action and specifically raised in the intitulement that they would rely on the provisions of the sections of the Act which the applicants felt were relevant to their purpose, they were bound by their own course of action. Fair warning had been given to the provisional liquidator that the applicants would confine themselves to the Act and, therefore, they must find their remedies within the strict walls of the Act. This meant that it was wrong for the applicants to seek leave under the suit already filed which related to company matters. The claim in tort was under common law and the applicants should have applied by way of originating summons instead. Further, the application for leave to issue a writ under common law for damages ought to have been by way of originating summons too. Therefore, the application must fail; (8) a stong prima facie case on the facts must be established before leave would be given to sue a liqudator. However, on the facts and the law relating to this case, the applicants had failed to show that there was sufficient evidence to warrant the granting of leave to file an action for the tort of conspiracy, abuse of legal process, malicious prosecution and trespass.

TN Metal Industries Sdn Bhd & Ors v Ng Pyak Yeow [1996] 4 MLJ 567 High Court, Kuala Lumpur (Kamalanathan Ratnam JC).

The respondent petitioned to have the appellant wound up on the ground of the appellant's inability to pay its debts. The respondent also applied ex parte for the appointment of a provisional liquidator. There was the usual undertaking as to damages. The ex parte order was granted and the appellant appealed to a judge, who dismissed the appeal and confirmed the order. The petition was based upon a statutory demand for payment served not at the company's registered office but at some other address. The respondent sought leave to amend the petition, which was granted by the judge. The appellant appealed to the Court of Appeal. The appellant alleged that the petition was incurably defective in that: (a) the statutory demand had not been served at its registered office and, accordingly, the presumption in s 254(2)(a) of the Companies Act (Cap 185, 1970 Ed) did not arise; (b) without the benefit of the presumption in s 254(2)(a), there was nothing in the petition to support the allegation that the appellant was unable to pay its debts; and (c) the petition had not been served on the appellant before the ex parte application for appointment of provisional liquidators. The appellant asked that the provisional liquidators be discharged and that damages be awarded for the wrongful appointment thereof. The appellant also contended that the respondent should not have been given leave to amend their petition.

Held, allowing the appellant's appeal in part and ordering that the provisional liquidators be discharged: (1) r 25 of the Companies (Winding-Up) Rules 1969 required service of the petition on the appellant before the hearing of the petition, not before the hearing of the ex parte application for the appointment of provisional liquidators; (2) if a petitioning creditor wishes to rely upon the 'deeming' provision in s 254(2)(a) of the Companies Act, strict compliance with the conditions set out therein is necessary. This was because the presumption that a company was unable to pay its debts did not appear to be rebuttable. As the statutory demand was not served at the appellant's registered address, service was irregular and defective and the defect could not be cured by either s 392 of the Act or r 191 of the Rules; (3) every petition for the winding up of a company must set out the facts on which the petitioner relies to support his propositions. The statutory demand was ineffective in that no demand had been pleaded in the petition; (4) however, an application to amend the petition was permissible under s 257(2)(e). The High Court gave leave to amend although no supporting affidavit had been filed. This was unobjectionable as the need to amend was plain to all parties. The Court of Appeal saw no need to interfere with the judge's discretion, but the court was not deciding if the petition was or was not in order now; (5) before the court will appoint a provisional liquidator, the petitioning creditor must show that there is a good prima facie case for winding up and must also adduce evidence to show that it is right in the circumstances of the case that provisional liquidators be appointed; (6) this principle applies to an ex parte application to appoint provisional liquidators; (7) on the facts, the affidavit in support of the application to appoint provisional liquidators was inaccurate and contained material non-disclosure; (8) however, further evidence may be introduced during inter partes proceedings even if the evidence was available at the time of the ex parte application but was not presented to the judge then. In the appropriate case, the judge hearing the inter partes appeal from the ex parte application could find that further evidence had rectified the earlier deficiency and refuse to discharge the ex parte order; (9) but in this case, the affidavit was so hopelessly inaccurate and misleading that the only logical order was to discharge the provisional liquidators; (10) a new order appointing provisional liquidators could not have been made because, based on the provisional liquidators' report, there was no evidence that there was a real danger that the company's assets might be dissipated to the detriment of all the creditors before the hearing of the petition; (11) when an ex parte application for a Mareva injunction is made, the applicant should make full and frank disclosure of all material facts;it was not premature to order an inquiry as to damages; such an inquiry could be ordered even before the trial of the matter if it is established that the ex parte order should not have been made in the first place, as was the case here.

Pac Asian Services Pte Ltd v European Asian Bank AG [1987] SLR 1 Court of Appeal, Singapore (Wee Chong Jin CJ, Sinnathuray and Rajah JJ).

The plaintiff in this case applied for the removal of the defendants as the liquidators of Cycle & Carriage Co (Realty) Ltd (hereinafter called 'the company') and that they be replaced by Messrs Beaton and Repton. The company had eight directors of whom the first defendant McCormack was one. The other two defendants, Pollett and one Tan were accountants practising in partnership with the first defendant. The company was voluntarily wound up and the defendants were appointed liquidators on 26 March 1975. The company's investment included 9,064,664 shares of $1 each fully paid up in Cycle & Carriage Ltd (hereinafter referred to as 'the listed company'). Of this amount, 6,043,110 shares were in CCR Holdings. The listed company was a public company listed on the Stock Exchange of Singapore. The company's share holdings amounted to 32.2% of the capital of the listed company. The plaintiff held 134,508 fully paid up shares of $1 each of the paid up capital of the company. The plaintiff claimed that unknown to him, on 27 November 1974 the directors of the company had transferred 6,043,110 shares of the 9,064,664 shares the company held in the listed company in exchange for an equivalent number of shares in CCR Holdings. The plaintiff contended, inter alia, that on 16 August 1976 he offered to sell his 92,000 shares in CCR Holdings at $3.05 per share which was the value of the listed shares. However, he was only offered $1.60 per share as the shares of Holdings were not listed in the Stock Exchange of Singapore. In the three years that CCR Holdings were in existence, the shareholders suffered a 3.25% loss of dividend income.

Held: (1) if the court is satisfied on the evidence before it that it is against the interest of the liquidation (all those interested in the company being liquidated), that a particular person should be made liquidator, then the court has power to remove the present liquidator and then to appoint some other person in his place; (2) directors stand in a fiduciary position vis-a-vis a company. Their duty is to exercise their powers for the benefit of the company as a whole and not to put themselves in a position where their duties and their personal interest conflict; (3) the plaintiff in this case had made out a prima facie case of misfeasance against the directors of the company.

Chua Boon Chin v JM McCormack & Ors 1978 High Court, Singapore (D'Cotta J).

Procam (Pte) Ltd v Nangle Charles & Anor [1990] SLR 624 High Court, Singapore (LP Thean J).

In this case, the company was being voluntarily wound up by liquidators appointed by the company. Subsequently it was ordered that the winding up of the company be continued but subject to the supervision of the court and liquidators were appointed by the court. The applicants applied to remove the liquidators appointed by the court on a number of grounds. They also applied for an additional liquidator.

Held: (1) the court had no power to remove the liquidators under any provision of the Companies Ordinance; (2) the court had power to appoint an additional liquidator but in the circumstances and as no useful purpose could be served by the appointment, the court would not exercise its discretion to do so.

Re Fair Insurance Co Ltd [1969] 2 MLJ 114 High Court, Kuala Lumpur (Raja Azlan Shah J).

Certain assets of the company were held on trust for investors who paid money to the company for investment. The expenses of the liquidator were likely to exceed the free assets of the company. As part of the liquidation, the liquidator would manage the investments. The liquidator sought an order for the payment to him as remuneration, fees, expenses, costs, disbursements and liabilities of such sums as the court deemed just out of the assets held on trust for the investors.

Held, making the order: the authorities establish a general principle that where a person seeks to enforce a claim to an equitable interest in property, the court has a discretion to require that an allowance be made for costs incurred and for skill and labour expended in connection with the administration of the property. It is a discretion that will be sparingly exercised. Factors which will operate in favour of it being exercised include the fact that if the work had not been done by the person to whom the allowance is sought to be made, it would have had to be done either by the person entitled to the equitable interest or by a receiver appointed by the court. Another factor is that the work has been of substantial benefit to the trust property and to the persons interested in it in equity. This was a case in which the discretion should be exercised. The necessary declaration that the liquidator was entitled to be paid out of trust assets was made.

Re Berkeley Applegate (Investment Consultants) Ltd [1988] 3 All ER 71 High Court, England (Edward Nugee QC).

[Annotation: English cases on company law have always been persuasive in Singapore and Malaysia. Section 115 of the Insolvency Act 1986 [UK] is equivalent to s 328(1)(a) of the Companies Act (Cap 50) [Sing] and s 292(1)(a) of the Companies Act 1965 [Mal].]

Khong Kit Seng & Anor v Niblock [1963] MLJ 237 Court of Appeal, Federation of Malaya (Thomson CJ, Hill and Barakbah JJA).

The plaintiffs had shipped iron ore concentrate ('the goods') on board the defendants' vessel, Protektor ('the vessel') from Quebec, Canada to Sweden. The vessel sank with a total loss of the cargo off the Grand Banks of Newfoundland in severe weather conditions. The plaintiffs contended that weather and sea conditions were not abnormal nor unforeseeable for a winter voyage across the North Atlantic Ocean and that the sinking was due to unseaworthiness of the vessel. The plaintiffs claimed, inter alia, for the value of the goods from the defendants. The plaintiffs successfully applied by way of an ex parte application for a worldwide Mareva injunction prohibiting the defendants, their servants or agents, including their insurance brokers and mortgagees, from, inter alia, disposing of any of the defendants' assets, in particular the proceeds of the insurance policy of the vessel. The defendants applied to discharge the injunction and contended that they were themselves not entitled to any of the insurance proceeds for the following reasons. The vessel was chartered to a Swedish company, Cador. The charterparty provided, inter alia, for Cador to have an option to purchase the vessel at the end of the charterparty. The defendants, their parent company (Wallem), the mortgagees and the charterers entered into a four-party agreement ('the four-party agreement') providing for the payment of charter and the distribution of the proceeds of insurance if the vessel was ever lost. The insurance proceeds were to be paid towards the outstanding mortgage sum, a loan to Wallem from the mortgagees, operating cost and expenses of the vessel, the mortgagees' costs, and management fees for the vessel. Any balance was to be paid to Cador. Counsel for the defendants argued, inter alia, that: (a) As the balance of the insurance proceeds had been assigned to Cador, there were no assets for the injunction to act on. (b) Alternatively, payment to Cador of the insurance surplus was a payment in the ordinary course of business so as to come within the principle of Iraqi Ministry of Defence v Arcepey Shipping Co SA ('The Angel Bell') [1981] QB 65 (c) The granting of the worldwide Mareva injunction went against the grain of recent cases as: (i) the application was made pre-judgment; (ii) the vessel had been entered with a reputable P & I Club in respect of all cargo claims; and (iii) there was no evidence of any risk of dissipation of assets by the defendants. Counsel for the plaintiffs argued, inter alia, that: (a) The circumstances of the case, in particular the four-party agreement, were very suspicious as: (i) no consideration had been provided by Cador for the benefit of the insurance surplus; (ii) none of the parties to the four-party agreement had intervened in the proceedings; and (iii) there was no time frame stipulated for the repayment of the loan by Wallem nor for the payment of the managers' fees. (b) The purported assignment was a charge that was registrable under ss 131(3)(d) or 131(3)(f) of the Companies Act (Cap 50), and not having been so registered it was void. (c) Even if the assignment was valid, it could not give the other parties any priority over the defendants' assets. (d) Notwithstanding the fact that the vessel was entered with a reputable P & I Club, the Club could still refuse to pay. (e) The defendants, mortgagees and Wallem were all companies within the same group and the corporate veil should be lifted. (f) The four-party agreement had the effect of making the defendants judgment-proof.

Held, discharging the injunction: (1) the facts of this case were not such that it 'cried out' as a matter of justice for the plaintiffs to be granted a worldwide Mareva injunction. The granting of such an injunction was a draconian measure to be ordered only in exceptional circumstances; (2) the arrangement between the various companies was a purely commercial arrangement and was not such as to constitute an arrangement to render nugatory any judgment in favour of the plaintiffs; (3) the fact that Cador had been granted an option to purchase the vessel showed that it had more than the usual charterer's interest in the vessel justifying its special rights; (4) the defendants should not be prevented from discharging its contractual obligations to Cador, made in the ordinary course of business; (5) as the plaintiffs have not as yet obtained judgment against the defendants, they do not come within the definition of 'creditor' under s 254(2)(a) of the Companies Act for purposes of presenting a winding-up petition; (6) the performance of an existing duty by Cador constituted good consideration for the purposes of the four-party agreement; (7) there was no evidence that the defendants had assets outside jurisdiction or that there was a real risk that they would dispose of the same to defeat the plaintiffs' claim; (8) there was no reason to believe that the vessel's P & I Club would not meet any claims if the plaintiffs succeeded despite the existence of a 'pay and be paid' clause.

SSAB Oxelosund AB v Xendral Trading Pte Ltd [1992] 1 SLR 600 High Court, Singapore (Lai Siu Chiu JC).

P petitioned for the winding up of D pursuant to s 181 of the Companies Act 1965. P complained that the affairs of D had been conducted in a manner oppressive to him. Subsequent to this, Bank Negara assumed control of the business of D under s 33(iii) of the Finance Companies Act 1969 so as to facilitate the capital restructuring of D. For this purpose, Bank Negara filed an originating petition almost two months after the winding-up petition was filed. Bank Negara applied to intervene in the winding-up petition and for the winding-up petition to be stayed or heard together with its petition. The court granted Bank Negara leave to intervene and ordered that the winding-up petition and the restructuring petition be heard together. Bank Negara subsequently filed another application to have the order granting it leave to intervene varied to the extent that its restructuring petition be heard and determined notwithstanding P's winding-up petition on the ground that there was unreasonable delay on the part of P to get his petition ready for hearing together with the restructuring petition. P objected to the application of Bank Negara to vary the said order on the ground that the court in granting the order had already become functus officio. The court, accordingly, lacked the jurisdiction to consider the application to vary the order as sought by Bank Negara. Another issue for the consideration of the court was whether P had the locus standi to proceed on his petition once the order to restructure had been ordered.

Held, allowing Bank Negara's application: (1) it is well settled law that once an order or judgment pronounced by a court has been drawn up and perfected, it cannot be altered or modified except as to correct errors in expressing the intention of the court under O 20 r 11 of the Rules of the High Court 1980. It is also well settled that a court becomes functus officio when it has already made a final pronouncement on the rights of the parties appearing before it. This must, however, be distinguished from orders which are in the nature of directions as to how the future proceedings on the cause of action that is before the court are to be conducted. These orders which are in the nature of directions can be varied by the same court that granted the original order as the court is not functus officio; (2) in the instant case, the order sought to be varied is only a directional order as it lays down the future conduct as to the mode of trial of the two petitions. The rights and obligations of the parties to the two petitions have not yet been determined by the order and to that end, it is not a final order that renders the court that makes the order functus officio. Accordingly, P's objection as to jurisdiction must fail as the court had the jurisdiction to entertain the motion; (3) the capital restructuring of D, if ordered, does not affect the status of P as a registered shareholder. P's name is not removed from the register and as the registered shareholder, P still has the locus standi to proceed with his petition; (4) bearing in mind the financial standing of D and the interests of the depositors, the court was of the view that the hearing of the restructuring petition should be proceeded with without any undue delay. The court, accordingly, allowed Bank Negara's motion to have the order varied so as to allow the restructuring petition to be heard before the winding-up petition.

Datuk Hussain bin Mohamed v First Malaysia Finance Bhd (Bank Negara Malaysia, Intervener [1990] 1 MLJ 369 High Court, Kuala Lumpur (Siti Norma Yaakob J).

See companies and corporations, Vol 3, para xxx.

Re Ah Yee Contractors (Pte) Ltd [1978] SLR 383 High Court, Singapore (LP Thean J).

This is an application by the respondent company for an order of the court that the petition filed by the petitioner to wind up the respondent company be struck off under O 18 r 19 of the Rules of the High Court 1980. The respondent contended that the alleged debt arose from breaches of contract on the part of the respondent company and that in fact, the petitioner had a debit balance.

Held, allowing the respondent's application: (1) it is common ground that there is no judgment debt in the present case. The question for the court to consider is whether the petitioner is a creditor and the respondent company is a debtor; (2) from the evidence, it is clear that the respondent company disputed the alleged debt claimed by the petitioner. Indeed, the respondent company claimed that the petitioner is in a debit balance. In the circumstances, the petitioner is not a creditor as envisaged in s 217 of the Companies Act 1965 (Act 125); (3) the petitioner is not entitled to file the petition as it has no locus standi. The action of the petitioner in filing the petition is an abuse of the process of the court.

Jurupakat Sdn Bhd v Kumpulan Good Earth (1973) Sdn Bhd [1988] 3 MLJ 49 High Court, Johore Bahru (Zakaria Yatim J).

Kumagai Gumi Co Ltd v Zenecon-Kumagai Sdn Bhd & Ors and another application [1994] 2 MLJ 789; CSLR X[651] High Court, Kuala Lumpur (Anuar J).

D had earlier obtained a court order which provided, inter alia, that a sale and purchase agreement entered into between P and D be specifically enforced by P completing the purchase of 1,108,000 shares of S Sdn Bhd from D and paying D M$845,970.91, being the purchase price of the shares, within 14 days of the date of the order. P failed to do so and D sent a notice to P under s 218(1)(e) of the Companies Act 1965 demanding payment of the said sum under the judgment within 21 days, failing which D would proceed to present a winding-up petition against P. P filed the present originating summons seeking, inter alia, a declaratory relief that under the court order which D obtained earlier, D was not a creditor but only a vendor and as such had no locus standi to present a winding-up petition against P.

Held, dismissing the application: (1) under the court order obtained earlier, D was entitled to be paid damages by P in the event P failed to tender the amount required to be paid to D within the stipulated time, such damages to be assessed by the senior assistant registrar. By reason of this, the judgment had been converted into a money judgment and although the amount of damages had not yet been assessed, the fact that D was now entitled to damages had changed the status of D to that of a creditor and under s 217(1)(b) of the Act, a contingent and prospective creditor of a company may petition to court for a winding-up order; (2) the learned judge, accordingly, held that as D was a prospective creditor of P, it was entitled under s 217(1)(b) of the Act to present a winding-up petition against P based on the court order obtained by D earlier. On that finding, the learned judge dismissed P's application with costs.

Ganda Holdings Bhd v Pamaron Holdings Sdn Bhd [1989] 2 MLJ 346 High Court, Kuala Lumpur (Siti Norma Yaakob J).

X Co had petitioned for the winding up of D on 10 Decmber 1989. P gave notice of intention to support X Co's petition on 15 April 1988. D applied to strike out P as a supporting creditor on the ground that it had no locus standi to support the petition. P claimed its rights to be a supporting creditor based on a default judgment obtained by it on 31 March 1987 against D. The High Court allowed D's application and P appealed to the Supreme Court. The issue for the consideration of the court was whether the default judgment in question is a sufficient basis for P's application to support the petition.

Held, allowing the appeal: (1) in the instant case, the default judgment until set aside was a good and enforceable judgment. The application to set aside the default judgment although made on 4 April 1987 was only served on P on 19 May 1990. It was exhibited for the first time in D's application in the proceeding; (2) in the circumstances, P was perfectly entitled to rely on the default judgment as the basis for its rights to be a supporting creditor and should be recognized in the petition as a supporting creditor.

Pembinaan KSY Sdn Bhd v Lian Seng Properties Sdn Bhd [1991] 1 MLJ 100 Supreme Court, Malaysia (Hashim Yeop A Sani CJ (Malaya).

A winding-up petition was presented against Lian Seng Properties Sdn Bhd ('Lian Seng') by the petitioner on 10 December 1987. When the petition came up for hearing, the petitioner informed the court that it had no further interest in the petition. Two supporting creditors then applied for substitution but before the application for substitution was heard, Lian Seng applied to strike off Pembinaan KSY Sdn Bhd ('KSY') as supporting creditor. At the outset of the proceedings for striking off, KSY argued that the application to strike off was premature and that it should only be determined after substitution. KSY initially relied on the two judgments it had obtained against Lian Seng. Lian Seng challenged both the judgments. The first judgment was attacked as being a nullity and that the judgment could be impugned in collateral proceedings in which it is being relied. It was contended that by O 3 r 5(3) of the Rules of the High Court 1980, when time is computed it must exclude the weekly holidays. But KSY contended that computation ought to be by the Interpretation Act 1981, and not by the Rules of the High Court. The second judgment was an O 14 judgment, and Lian Seng contended that it was not provable in liquidation as it was obtained after the commencement of winding up. When KSY sought to rely on the lump sum agreement, it was contended that the payment under the agreement was not due before the date of commencement of winding up and accordingly, did not enable KSY to qualify to be a substitute petitioner. It was also argued that a genuine counterclaim is a bar to the proceeding in winding up by KSY.

Held, allowing the application to strike off KSY as a supporting creditor: (1) the status of the applicant for substitution ought to be determined at the outset of the application for substitution as a petitioner; (2) the computation of time for court proceedings is governed by the Rules of the High Court and not the general provisions of the Interpretation Act; (3) the judgment entered independently of any of the Rules of the High Court ought to be regarded as a nullity; (4) a judgment which is a nullity can be ignored or be attacked in collateral proceedings where it is sought to be relied upon; (5) KSY has no locus standi as the right to support the petition is founded on a judgment which is a nullity; (6) the second judgment obtained in a contested O 14 application does not give the petitioner the right to support the petition as it was obtained after the commencement of winding up; (7) KSY's right to rank as a creditor by virtue of the lump sum agreement cannot be considered here as the crystallization of the debt was well after the date of presentation of the winding-up petition; (8) Lian Seng is entitled to make a cross-claim as the lump sum agreement only excluded a counterclaim or a set-off in proceedings filed by KSY; (9) s 41 of the Bankruptcy Act 1967 (Act 55/1967) applies to winding up and as there is a right of set-off, KSY's debt is only the remainder of the set-off pleaded by way of Lian Seng's cross-claim; (10) Lian Seng's cross-claim is a genuine and substantial one and accordingly, KSY cannot be recognized in this petition as a supporting creditor.

Morgan Guaranty Trust Co of New York v Lian Seng Properties Sdn Bhd [1989] 3 MLJ 172 High Court, Kuala Lumpur (VC George J).

[Annotation: Reversed on appeal. See [1991] 1 MLJ 100.]

The petitioner filed a petition to wind up the respondent company under s 218 of the Companies Act 1965 ('the Act') on the ground that the substratum of the company had disappeared. It was only in his affidavit after having been served with the respondent's affidavit in opposition that the petitioner made it clear that he was holding 88,800 shares in the respondent and was therefore a contributory under of s 217(1)(c) of the Act. At the hearing of the petition, the respondent raised a preliminary point which it had raised in its affidavit in opposition that the petitioner did not have the locus standi to petition as neither in his petition nor the verifying affidavit did he state his locus standi. Although the petitioner stated in his affidavit that he was one of the directors of the respondent, counsel for the respondent submitted that a director had no locus standi to petition. Counsel also argued that it was not open to the petitioner to cure this defect by simply filing a supplementary affidavit. Counsel contended that the petition was an abuse of the process of the court and ought to be struck off.

Held, striking off the petition: (1) the persons who may petition for the winding up of a company are stated in s 217(1) of the Act. A director is clearly not included in the list of persons in s 217(1). The list is exhaustive and thus the petitioner as a director has no locus standi to present the petition to wind up the respondent; (2) it is trite that sufficient particulars of the allegation relied on by a petitioner must be so stated in the petition in order to enable a respondent to be informed of the nature of the case which he has to meet. The standing of a petitioner to present a petition must surely be a necessary primary fact which must be stated in his petition not only because the respondent must be informed, but also because his standing constitutes the very foundation of his right to petition; (3) in the present case, the petitioner's statement in his second affidavit of his holding of shares in the respondent was insufficient. Under r 26 of the Companies (Winding-Up) Rules 1972, a verifying affidavit serves as prima facie evidence of the statements in the petition. It thus follows that an affidavit purporting to verify a particular fact in the petition could only verify evidence that exists in the petition and there could not be any such verification in the second affidavit in the present case on the petitioner's standing as that statement did not exist in the petition itself; (4) the court could not exercise its discretion under O 2 r 1(1) of the Rules of the High Court 1980 to condone the defect as it could only allow the condoning of minor procedural defects, not substantive defects. The failure in this case was a substantive defect as it undermined the petitioner's right to present his petition.

Tan Yar Joo v Sin Yee Estate Sdn Bhd (1995) CSLR XX[3029] High Court, Ipoh (Kang Hwee Gee JC).

The applicant sought an order to set aside a winding-up order against the respondent company ('the company') and/or an order under s 243 of the Companies Act 1965 to suspend all proceedings relating to the winding-up order. The procedural issue before the court was whether the applicant had locus standi to make the application, and the issue on the merits was whether there was proper service of the winding-up petition on the company as it was argued that the company was not represented at the hearing of the winding-up petition to oppose it and only came to know of the winding-up order recently.

Held, dismissing the application: (1) a company incorporated under the Companies Act 1965 was a legal entity separate from its members. The applicant was an individual who was separate from the company that was sought to be wound up. Thus it was the company itself that had locus standi, and not the applicant, to take part in or proceed with the matter. The applicant should have followed the proper procedure in accordance with O 15 r 6(2)(a) of the Rules of the High Court 1980 which allowed for interested persons to intervene in and become party to the proceedings instead of proceeding as an outsider or stranger. There was no application for leave to intervene in these proceedings; (2) even if the interpretation of the procedural law was incorrect, the applicant would still not have succeeded on the merits of the case. The affidavit verifying service of the petition stated that a sealed copy of the petition together with a copy of the affidavit verifying petition was served at the registered address of the company by leaving the same at the said address. The applicant's submission that the petitioner's affidavit should also have stated that the server had inquired as to whether there were any shareholders, officers or servants of the company there, purportedly to comply with rule 25(1) of the Companies Winding-Up Rules 1972, was without merit. There was no dispute that the petition was served on the company at its registered address. The present facts were different from the case of Mui Bank Bhd v Golden Hornbill Hotel Sdn Bhd [1993] 1 MLJ 290 which the applicant had referred to the court as, unlike in that case where the affidavit failed to verify that there were no members, officers or servants of the company present at the registered office, the facts of the present case showed that a clerk was present at the registered office but had refused to accept or sign the acknowledgment of service. Further in MUI Bank's case it was the company that made the application and not an individual; (3) the application to suspend the proceedings in relation to the winding-up order would also have to be rejected. There were no extraordinary or special circumstances found in the affidavit in support of application to justify the court exercising its discretion to suspend the order.

Amin Holdings Sdn Bhd v Weng Hock Ann Auto Parts Sdn Bhd & Anor Malacca Companies Winding-Up No 28-31-1992 High Court, Malacca (Low Hop Bing JC).

AIA had lent D M$30,000, the repayment of which, together with interest and costs, was guaranteed by P. The agreement between P and D provided that if P was called upon to pay the amount guaranteed to AIA, then D should forthwith on demand pay such an amount to P. In due course, AIA demanded from P the amount guaranteed and P in turn demanded payment of the amount from D. Upon D's failure to make payment, P served a statutory demand on D for the amount alleged to be owing by D. P then filed the present petition to wind up D on the ground that D was unable to pay its debts. D opposed the petition, contending that P was not a creditor of the company on the ground that the alleged debt claimed by P was disputed. The High Court found in favour of D and P appealed to the Supreme Court.

Held, allowing the appeal: (1) prima facie an unpaid creditor, whatever may be his other motives, is entitled to petition for a winding-up order against a company which fails to pay its debts. It is not good law that only a creditor who feels goodwill towards his debtor is entitled to a winding-up order; (2) in the instant case, P had, on the date of filing of the petition, a prima facie right of an unpaid creditor to file the petition. There was no evidence that the payment was stage managed; (3) in the circumstances, the petition should not have been struck out in limine and should have been heard on its merits so that the court would be able to determine whether it should exercise its discretion to order winding-up or not.

Morgan Guaranty Trust Co of New York v Lian Seng Properties Sdn Bhd [1991] 1 MLJ 95 Supreme Court, Malaysia (Hashim Yeop A Sani CJ (Malaya).

The petitioner applied that the respondent be wound up by a petition dated 30 September 1988. The petitioner says the respondent company is indebted to the petitioner for the sum of $54,115.75 together with interest at 8% pa from 6 May 1985 to the date of realization. On 8 September 1988, the respondent company was served a copy of the statutory notice dated 6 September 1988 at the respondent's registered office. The respondent was required to pay the said sum within 21 days but no payment was received. The petitioner says that the respondent company was therefore unable to pay its debts and asked the court for the orders sought for. The respondent company opposed the petition. On 7 December 1988, the respondent applied unsuccessfully to strike out the petition because the respondent's application to have the default judgment in the Kuala Lumpur High Court ('the KL judgment') set aside had not been heard. The respondent was ordered to pursue the application in Johore Bahru only after the KL judgment had been set aside. On 23 February 1989, the KL judgment was set aside. The respondent company also had a counterclaim against the petitioner in the Kuala Lumpur suit for the sum of S$123,703.20 and it was pending in the High Court.

Held, dismissing the petition: (1) applying Re Lympne Investments Ltd [1972] 2 All ER 385, when a debt was disputed on substantial ground, the petitioner was not a 'creditor' clothed with locus standi to present a petition even if the company is insolvent; (2) the petitioner's oral application to substitute the first judgment creditor was refused because it was unjust to do so. By granting that application, the first judgment creditor would be able to short circuit the whole of the procedures incumbent on a petitioner to adhere to and comply before a winding-up order could be made and had. The procedure culminating in the ending of that corporate person must have been designed to achieve an orderly mode of winding up with sufficient checks and balances. Any short cuts would only work in injustice.

Mark Jaya Engineering Sdn Bhd v LFY Construction Sdn Bhd [1990] 1 MLJ 372 High Court, Johore Bahru (Abu Mansor J).

AIA had lent D M$30,000, the repayment of which, together with interest and costs, was guaranteed by P. The agreement between P and D provided that if P was called upon to pay the amount guaranteed to AIA, then D should forthwith on demand pay such an amount to P. In due course, AIA demanded from P the amount guaranteed and P in turn demanded payment of the amount from D. Upon the failure of D to make payment, P served a statutory demand on D for the amount alleged to be owing by D. P then filed the present petition to wind up D on the ground that D was unable to pay its debts. D opposed the petition, contending that P was not a creditor of the company on the ground that the alleged debt claimed by P was disputed.

Held, dismissing the petition: (1) the word 'creditor' in s 217(1) of the Companies Act 1965 includes a contingent or prospective creditor. Accordingly, a creditor's petition may be presented by not only a person who at the time of presenting the petition has an unconditional right to immediate payment of the debt upon which the petition is formed, but also by a contingent or prospective creditor; (2) in the instant case, there was evidence to show that the demand was made because P had required AIA to make the demand. As D had challenged the validity of the demand made by P on it, there was a dispute on substantial ground in respect of P's contention that it was a creditor of D qualified to present the petition. Whether P could be said to be a contingent or prospective creditor was also debatable; (3) there was also evidence to show that the issue of the liability of D to P was the subject of a contested action in the High Court in Singapore brought by P against D some time before the presentation of the instant petition. In view of this, the instant petition ought to be set aside or stayed pending the disposal of the contested action; (4) in the circumstances, the court set aside the petition as it was far from satisfied that P was at the material time qualified to present the petition.

Morgan Guaranty Trust Co v Lian Seng Properties Sdn Bhd (Pembinaan KSY Sdn Bhd, Supporting Creditor) [1990] 1 MLJ 282 High Court, Kuala Lumpur (VC George J).

[Annotation: Reversed on appeal. See [1991] 1 MLJ 95.]

P petitioned for the winding up of D on the ground that D was unable to pay its debt and that in the circumstances it was just and equitable that D be wound up. D opposed P's petition for winding-up on the ground that P was not a creditor and accordingly had no locus standi to present the petition. D had also contended that the court could not look at the letters marked 'without prejudice' to determine whether the parties had come to a settlement on the ground that they were privileged documents.

Held, allowing P's petition: (1) in the instant case, the 'without prejudice' letters were admissible to see if there was a bona fide dispute between the parties or if a settlement had been arrived at between them. Having regard to the affidavits of the parties together with the 'without prejudice' letters, the court ruled that D did owe P the sum in question. The court also found that P had withdrawn an earlier action filed against D to recover the said sum as the result of a settlement arrived at between the parties. P, accordingly, had the locus standi to present the petition; (2) in the instant case, D had no intention of honouring the settlement arriving at between the parties. As D was unable to pay its debts and as it was just and equitable that D be wound up, P's application was allowed by the court.

Aluminium Industries Sdn Bhd v Cookermate (M) Sdn Bhd (1990) CSLR XX[1650] High Court, Johore Bahru (Abu Mansor J).

A petition was filed in respect of an alleged sum of RM293,000 owed by the respondents to the petitioners. The petitioners sought, inter alia, the winding up of the respondents and the appointment of receivers. Three main issues were canvassed: (1) whether the petitioners had locus standi; (2) whether the respondents understood the contents of a letter which they had signed at the request of the petitioners; and (3) whether the re- spondents had a good defence to the petition.

Held, allowing the petition: (1) there was no evidence to support the contention that since both petitioners were subsidiaries of a government body, they did not have locus standi to present the petition; (2) even if the respondents' representative did not understand the contents of the letter in question, such a contention ought to have been taken at the first available opportunity and not three and a half months later when the respondents wrote to the petitioners through their solicitors. The respondents could not now resile from their own agreement which they had taken time to deliberate upon; (3) when documents containing contractual terms are signed, in the absence of fraud or misrepresentation the party signing it is bound, and it is wholly immaterial whether he has read the document or not (Serangoon Garden Estate v Marian Chye [1959] MLJ 113 followed); (4) despite the fact that the respondents' representative was ignorant of the English language he was bound by the written contract entered into by him in the absence of fraud or misrepresentation (Subramaniam v Retnam [1966] 1 MLJ 172 followed); (5) in this case, no plea of fraud or misrepresentation has been raised and the respondents are bound by their own admission; (6) a petition for winding up cannot be used to settle a disputed debt. The proper course was for a petitioner to file a civil suit for determining the disputed claims (Ng Ah Kway v Tai Kit Enterprisee [1986] 1 MLJ 58 referred to). Here, there was no dispute as to the debt or the amount due and the petitioners had resorted to the proper course to settle their claim.

Smallholders Corp Sdn Bhd & Anor v Utusan Transport Sdn Bhd [1995] 4 MLJ 587; (1995) CSLR XX[1676] High Court, Kuala Lumpur (Kamalanathan Ratnam JC).

In 1980 and 1982, the respondent company ('Lemo') executed two debentures in favour of the debenture holder, a bank ('the receiver') as security for a loan. On 21 October 1988, the receiver placed Lemo under receivership and was appointed the receiver of Lemo. In 1981, the petitioner obtained a judgment against Lemo which was not satisfied. The petitioner later caused this winding-up petition to be filed. An unsecured creditor ('Associated Tractors') who had a sum owing became the sole supporting creditor to the petition. The receiver filed an affidavit opposing the petition. The issue was whether the receiver had locus standi to oppose the petition and whether all the unsecured creditors want it to be wound up. The receiver submitted that it was desirous of selling a piece of land belonging to Lemo but had been prevented from doing so by certain shareholders of Lemo who had obtained an interim order which required leave of court before dealing with the land. The receiver argued that if the winding-up order were to be made, the price of the estate on the open market would fall as the sale would become known as a forced sale and also there would be prejudice to the guarantor of the loan whose liability was for the full amount of the debt and the short fall which would be greater upon realisation in a forced sale. The receiver further submitted that an adjournment of the petition would enable the receiver to await disposal of the appeal and if the appeal was dismissed, to effect a sale in open market. It was further alleged that the petitioner was guilty of delay having taken more than two years from the time he obtained judgment against Lemo to commence this petition.

Held, allowing the petition: (1) the receiver had no legal authority to apply to stay the petition being an agent of the persons who appointed him, not the agent of Lemo. There was not a shred of evidence before the court that he was a competent person to oppose the petition. Based on this point alone, the receiver's petition to oppose the winding up ought to be dismissed; (2) prima facie, the petitioning creditor was entitled to an order of winding up of the respondent and the onus was on the receiver to satisfy the court that the injury which winding up would bring to the debenture holder was out of all proportion to the benefit it would bestow on the petitioner. In this case, there was no injury to the debenture holder who stood protected of its rights as a secured creditor. It was not accepted as probable that a smaller sum would be realised upon sale of the estate simply because of the naming of a winding-up order. The rights of the receiver under the terms of the debenture to sell the estate by private contract remained intact and as a final measure of protection in this regard, they could also sell the estate by private contract (s 236(2)(c) of the Companies Act); (3) if there was delay on the part of the petitioner in bringing this petition or having it adjourned on a number of occasions, his delay is outweighed by that brought about by the receiver.

Wong See Nyam v Lemo Sdn Bhd (1995) CSLR XX[3856] High Court, Muar (Richard Talalla J).

Kie Hock Shipping (1971) Pte Ltd ('the company') was compulsorily wound up on 27 May 1978. The appellant, Tay Beng Chuan, was one of five directors of the company. Tay Hock Gwan was the permanent managing director. On 29 September 1981, the appellant was convicted of 'failing to recover debts owed to (the company) by twelve companies incorporated in the Republic of Panama ... which on December 30, 1977 amounted to $10,291,000 and which were allowed to accumulate to $11,551,000 by May 26, 1978 and thereby commit a breach of duty under s 132(1) of the Act to at all times use reasonable diligence in the discharge of the appellant's duty as a director of the Company'. On 15 October 1981, the respondent as liquidator of the company took out a misfeasance summons against Tay Hock Gwan and the appellant seeking to make them liable for the unrecovered debts of the company. Both Tay Hock Gwan and the appellant were held liable summarily. Tay Hock Gwan did not contest the said application. The appellant opposed the application.

Held, (allowing the appeal): (1) it is well settled that, although it would only be in extraordinary circumstances that the Court of Appeal would interfere with the discretion of the trial judge in the conduct of the business in his own court, the Court of Appeal would interfere if clearly satisfied that the decision was wrong so as to defeat the rights of the parties altogether and would be an injustice to one or other of the parties; (2) the learned judge's conclusion that 'there is irrefutable evidence that after 1976 it was (the appellant) who as executive director of the company was mainly responsible for the management of the company' was plainly wrong and could not be supported on any view of all the material before the court below; (3) there was no evidence to support the learned judge's finding that the appellant had as executive director of the company full and effective control of the company's business; (4) the summary procedure invoked had led to the appellant being ordered to pay a substantial sum to the company. Justice required that an opportunity must be given to the appellant at a full trial to put forward his defence and the failure to afford him that opportunity had resulted in an injustice to the appellant or a miscarriage of justice; (5) the only remedy was to order that pursuant to Rules of Supreme Court O 28 r 8(1) these proceedings continue as if they had been begun by a writ of summons and the parties hereto deliver pleadings in accordance with O 18 and that the order made by the learned judge should be set aside.

Tay Beng Chuan v Official Receiver and Liquidator, Kie Hock Shipping (1971) Pte Ltd [1987] SLR 50 Court of Appeal, Singapore (Wee Chong Jin CJ, Lai Kew Chai and Thean JJ).

[Annotation: Re Kie Hock Shipping (1971) Pte Ltd [1984-1985] SLR 544; [1985] 1 MLJ 411 reversed.]

Re Peace Insurance Co Ltd [1965] 1 MLJ 208 Federal Court, Kuala Lumpur (Barakbah Ag LP, Wee Chong Jin CJ (Singapore).

On 17 September 1935, an order for the compulsory winding up of John Reid & Co Ltd (a company incorporated in the Straits Settlements) was made in the Supreme Court. In the course of the liquidation one Mrs More claimed that by virtue of a debenture issued by the company in her favour in May 1935, she was entitled to receive all moneys due to her under the debenture in priority to all other creditors, notwithstanding that the debenture was not registered in Sarawak.

Held: the debenture was invalid as far as it concerns the property in Sarawak as it was not registered as required under Order No R-2 (Registration of Deeds) 1934.

Re John Reid & Co Ltd; Lowick v Official Assignee 1928 Supreme Court, Sarawak, North Borneo and Brunei

This was a petition to wind up the respondent for being unable to pay its debts, namely, a judgment debt for RM73,019 with interest and costs, to the petitioner. The respondent, in opposing the petition, raised the following objections: (1) that the words 'further interest at the rate of 8% pa from 11th December, 1992 to the date of realisation', appearing in the notice of demand, meant that the petitioner is claiming more than the judgment sum due; (2) that interest accruing after the six-year limitation period set by s 6(3) of the Limitation Act had been claimed.

Held, allowing the petition: (1) as the notice in this case was based on a judgment 'with interest thereon at the rate of ... until full settlement', it was quite in order to include the interest and its arrears. Nor was the amount claimed in the notice grossly in error with the amount in the judgment. Re Perusahaan Jenwatt [1990] 2 MLJ 178 distinguished; (2) the proper interpretation of s 6(3) is that one cannot take action to recover the arrears of interest after six years had lapsed from the time they became due. The Limitation Act certainly does not prohibit the payment of the arrears of interest due on the judgment debt beyond the six years after they become due as long as the act of recovery is made before the expiry of the prescribed six years.

Malaysian Soil Investigation Sdn Bhd v Emko Holdings Sdn Bhd (1993) CSLR XX[6088] High Court, Kuala Lumpur (Abdul Malek J).

The petitioner petitioned to wind up the respondent for failing to satisfy the judgment debt of RM2,284,627.94 together with interest thereon owed by the respondent to the petitioner. In their affidavit, the petitioner stated that it was abundantly clear that the liabilities of the respondent had exceeded their assets. The respondent proposed to pay the sum of RM30,000 a month but this was not accepted by the petitioner on the ground that it could not even cover the interest accrued and, furthermore, the respondent's total profits for 1993 only amounted to three monthly payments. Counsel for the respondent raised two preliminary objections that: (i) as the petitioner was solely and wholly relying on s 218(2)(a ) of the Companies Act 1965 ('the Act'), service of the notice of demand could only be effected by leaving it at the respondent's registered office and not by sending it by registered post, and because of the non-compliance with the statutory mode of service, there was no statutory presumption of insolvency; and (ii) the petitioner had wandered beyond s 218(2)(a) of the Act by digressing into s 218(2)(c) as well.

Held, allowing the petition: (1) following the New Zealand case of South Seas Development Ltd v Commercial Advances Nominees Ltd [1976] 1 NZLR 679 proof of actual physical delivery by a postal officer of a registered letter containing a notice of demand at the registered office of the company could be effective service within the terms of s 218(2)(a) of the Act as what is important is the adequate proof of physical delivery by the creditor. The obvious underlying requirement is that there must be adequate proof of physical delivery to the respondent which has been fulfilled in the present case as the notice of demand by registered post was in fact actually delivered to the respondent's registered office. The first preliminary objection as to service was therefore overruled; (2) the disjunctive use of the word 'or' for the three paragraphs in s 218(2) of the Act clearly means that the petitioner is at liberty to proceed under any or all of them, especially so when they had not specifically stated any particular paragraph in the recital of the petition. The second preliminary objection was therefore lacking in merit as the winding-up order could be given on the basis of para (a) alone; (3) the respondent's profits for 1993 were a modest RM97,557 which would cover only three monthly payments at the rate of RM30,000 a month as proposed by them. As any possibility of a better margin in their future profits was highly speculative, the court was of the view that the respondent had no assets to meet its current liabilities and were therefore commercially insolvent. It was more than obvious that they are unable to pay their debts, especially considering that the judgment against them was granted almost eight years ago. Although winding up is to be regarded as a remedy of last resort and one which ought not to be granted if some other less drastic form of relief is available and appropriate, there were none here. Accordingly, the petition was granted.

Weng Wah Construction Co Sdn Bhd v Yik Foong Development Sdn Bhd [1994] 2 MLJ 266; CSLR XX[6090] High Court, Kuala Lumpur (Abdul Malek J).

This was a petition to wind up the respondent company. Counsel for the petitioner and the officer representing the Receiving Officer confirmed that the petition was in order. Counsel for the respondent was present on the date of the hearing of the petition but his presence was objected to by counsel for the petitioner on the ground that the respondent had failed to file a notice of intention to appear under r 28 of the Companies (Winding-Up) Rules 1972 ('the Rules').

Held, allowing the petition: (1) the respondent is not exempted from filing the notice of intention to appear. According to r 28 of the Rules, 'every person' must file a notice of intention to appear and this includes the respondent himself. The notice must state whether the respondent intends to support or oppose the petition; (2) although Form 8, First Schedule to the Rules refer to creditor or contributory, and does not mention debtor or respondent, the words 'such variations as circumstances may require' in rr 3(1) and 28(2) allows Form 8 to be modified, where applicable. To ensure compliance with r 28, the respondent can make the necessary modifications to show that it was filed by the respondent.

Mitsuo Nagamura lwn Aero Works (Melaka) Sdn Bhd [1996] 4 MLJ 209 High Court, Kuala Lumpur (Abu Samah JC).

[Annotation: This judgment was delivered in Bahasa Malaysia.]

This was a petition to wind up the respondent company ('the company') on the just and equitable ground under s 218(1)(i) of the Companies Act 1965 ('the Act'). The company was a joint venture between the petitioner and HIH, a company incorporated in Singapore. As the substratum of the company had been lost, the petitioner and HIH agreed to terminate the joint venture. The petitioner also agreed to purchase the shares of HIH. However, the parties failed to agree on the method of computing the price of the shares of HIH. The petitioner presented this petition, submitting that it was just and equitable that the company be wound up. The company did not oppose this petition and in fact supported it. HIH (a contributory) filed a notice of intention to appear to oppose the petition on 15 January 1996. On 17 January 1996, HIH filed an affidavit in opposition to the petition. At the hearing of the petition on 19 January 1996, counsel for HIH applied for an adjournment on the ground that he was only served with a copy of the affidavit verifying the petition on 18 January 1996. Counsel for the petitioner objected to the adjournment on the ground that the affidavit in opposition was filed out of time and did not comply with r 30(1) of the Companies (Winding-Up) Rules 1972 ('the Rules'). It was also submitted that the affidavit in opposition, even if admitted, did not disclose any ground to oppose the petition and that no explanation was given why the affidavit in opposition was filed out of time. In reply, counsel for HIH submitted that r 30(1) did not apply to a contributory.

Held, allowing the petition: (1) r 30(1) applied to a contributory. On the facts of this case, the affidavit in opposition was filed out of time; (2) there was no obligation to serve the petition on a contributory per se under r 25(1) albeit it was entitled to a copy of it under r 27 upon request. There was no such request by HIH even though the petition was advertised in the newspapers. No explanation was given as to why the affidavit in opposition was filed out of time. Thus no adjournment should be allowed; (3) on the facts as disclosed in the petition and in the affidavit verifying the petition and in view of the fact that the company itself supported the petition and there being no affidavit in opposition duly filed in accordance with r 30(1) of the Rules, the petitioner's contention that the substratum of the company no longer existed remained unchallenged. It was just and equitable that the company be wound up.

YTL Hotel and Properties Sdn Bhd v Trans-Pacific Hotels Sdn Bhd (1996) CSLR XX[4656] High Court, Kuala Lumpur (Abu Samah JC).

Co-operative Central Bank Ltd v Escalation Enterprise Sdn Bhd Suit No D4-28-164-1993 High Court, Kuala Lumpur (Abu Samah JC).

The respondent, Dayasitis Sdn Bhd ('Dayasitis') in this case are applying to strike out a petition to wind up Dayasitis. The petition was brought by the petitioner, Toyoma Aluminium Foil Packaging Sdn Bhd ('Toyoma') who is a creditor of Dayasitis. The respondent contended that the statutory demand was bad in that firstly, the amount claimed was not accurate; and that secondly the petitioners claimed for payment of interest which they were not entitled to in law.

Held , dismissing the respondent's application: (1) the main question to consider is whether the company neglected for the statutory period to pay a debt which is now shown to be due. ON the facts Dayasitis did fail to pay the debt during the statutory period; (2) it is acceptable for interest to be charged in business transactions. By O 42 r 12, interest at the rate of 8% per annum can be calculated from the date of judgment until the satisfaction of the judgment; (3) the overriding principle is said to be that interest is payable when the party is being kept out of the money which ought to have been paid to him; (4) while courts do not always like petitions under s 218, the law allows it and it is up to the court to see if there is any ground or reason to reject in which case courts can exercise their discretion in appropriate and deserving cases; (5) under s 218(2)(a) of the Act, once a notice to pay a debt has been served on a company, the company has to meet the presumptive challenge of the section by disputing the existence of the debt which can be done by either showing that the debt is non-existent or that the petitioner is not its creditor. On its facts, the respondent's affidavits are mere denials not backed by facts or evidence, therefore the notice of motion cannot be sustained.

Toyoma Aluminium Foil Sdn Bhd v Dayasitis Sdn Bhd (1996) CSLR XX[3858] High Court, Kuala Lumpur (Syed Ahmad Idid J).

Morel Fruits & Vegetables Trading (a firm) v Silver Touch Sdn Bhd Company Winding-Up No 28-63 of 1996 High Court Johore Bahru (Haidar J).

Wong See Nyam v Lemo Sdn Bhd (1995) CSLR XX[3856] High Court, Muar (Richard Talalla J).

P petitioned for the winding up of D Sdn Bhd under s 218(2)(a) and (c) of the Companies Act 1965. Before the presentation of the petition, D Sdn Bhd was placed under receivership by its debenture holder. X who was appointed by the debenture holder to be receiver and manager of D Sdn Bhd, applied to the High Court to dismiss or stay the petition. P argued that X was incompetent to oppose the petition.

Held, allowing the petition: (1) a debenture holder receiver is only empowered to act as authorized by the debenture and trust deeds which provide for his appointment. In the absence of express or implied terms to the contrary in the debenture and trust deeds, receivers appointed out of court are not agents of the company. A debenture holder receiver's primary duty is to realize the company's assets, to distribute the proceeds to the debenture holders in satisfaction of their claims and to return any surplus assets to the company; (2) X did not produce any documents to show that he was acting as agent of D Sdn Bhd. X accordingly was not competent to object to P's petition; (3) the appointment of a debenture holder receiver, even with authority to act as agent of the company, does not divest the directors of their power to institute proceedings on behalf of the company provided that the proceedings do not interfere with the receiver's functions; (4) the appointment of a receiver by a debenture holder does not necessarily imply that the company is insolvent; (5) P had not made out positively that D Sdn Bhd was insolvent under s 218(2)(c) of the 1965 Act; (6) under s 218(2)(a) of the 1965 Act, once a notice to pay a debt has been served on the company, it may show that the debt is non-existent or that the petitioner is not its creditor; (7) in this case X was not a competent party to establish that there was a bona fide dispute of the debt claimed by P.

Tan Ah Teck t/a Plumcon Plumbing & Construction Co v Coffral (M) Sdn Bhd [1992] 1 MLJ 553 High Court, Shah Alam (Wan Yahya J).

Pilecon Engineering Bhd v Remaja Jaya Sdn Bhd [1997] 1 MLJ 808 High Court, Kuala Lumpur (Kamalanathan Ratnam JC).

This winding up petition under s 218(i) of the Companies Act 1965 ('the Act') was presented by the petitioner for the winding up of one Federal Paint Factory Sdn Bhd ('the company') on the ground that in justice and equity it should be so wound up. The petitioner had earlier obtained an ex parte order placing the company in the hands of a provisional liquidator. On the other hand, the company applied to have the said order appointing the provisional liquidator set aside and for a permanent injunction to restrain the petitioner from further acting on or prosecuting the instant petition. The petitioner was the managing director of the company since 1980 but was removed as a director at a general meeting of the company in 1993. The linchpin of the petitioner's case was that although the memorandum and articles of the company did not so provide, it was always understood by the shareholders of the company that the management of the company would be in the hands of the Lo family (of which the petitioner is a member) and that a Lo would always be its managing director.

Held, dismissing the petition, setting aside the order appointing a provisional liquidator and granting the permanent injunction: (1) when the company first commenced business in 1958, it might have in effect been a quasi-partnership with the Lo family holding the majority of its shares and the head of the Lo family the only active 'partner' and managing director; (2) however, it is the relationship between the parties that results in what is really a partnership taking the form of an incorporated company. And, it cannot be denied that alterations in that relationship can happen that may have the effect of transcending the equitable obligations that have been allowed to override the rights and duties imposed by the memorandum and articles of association of the company and the laws pertaining to companies; (3) it is always competent for the parties to alter their relationship; (4) in the instant case, there was no question that that relationship had been altered beyond recognition and that the quasi-partnership had remetamorphosed into an incorporated company not only in form but in fact as well. This had destroyed the linchpin of the petitioner's case; (5) the petitioner's reliance on a legitimate expectation to manage the company was clearly misplaced. The company was entitled to have the instant petition nipped in the bud, and, to the permanent injunction restraining the petitioner from further acting on or prosecuting the instant petition; (6) the purpose of appointing a provisional liquidator is primarily to preserve the assets and otherwise maintain the status quo pending the determination of a petition to wind up a company. Thus as there was no hope of the instant petition succeeding, there was also no justification to allow the appointment of the provisional liquidator to stand; (7) (per curiam) by virtue of O 2 r 2(2) of the Rules of the High Court 1980 ('the RHC'), O 18 r 19 of the RHC, which provides the court with specific jurisdiction to strike out proceedings that are frivolous or an abuse of the process, has no application to a winding up petition under s 218 of the Act. The relevant rules are the Companies (Winding Up) Rules 1972. Those rules do not per se empower the court to strike out a petition that is an abuse of the process. However, the court has the inherent jurisdiction to strike out any abuse of its process.

Re Lo Siong Fong [1994] 2 MLJ 72; CSLR XX[1667] High Court, Kuala Lumpur (VC George J).

On 15 June 1993, the respondent had obtained a judgment in default against the appellant. Consequent to this, the respondent had served a notice under s 218 of the Companies Act 1965 on the appellant. The payment as required in the notice was not made by the appellant. As such, the appellant was deemed unable to pay the debt, and the respondent presented a winding up petition against the appellant in the High Court. The appellant's counsel opposed the petition on the grounds that: (i) the presumption that the appellant was unable to pay off the debt did not arise as the interest on the principal amount had not been quantified in the notice; and (ii) that the respondent's petition contravened r 26 of the Companies (Winding-up) Rules 1972, and was thus defective as the verifying affidavit and the petition contained similar dates. The High Court dismissed the appellant's preliminary objection and ordered that the appellant's company be wound up. The appellant appealed.

Held, dismissing the appeal: (1) the provisions of the bankruptcy laws are clearly different from the provisions of the Companies Act referred to. Section 3(1)(i) of the Bankruptcy Act 1967 contained, among other things, the requirements of the interest to be quantified as of the date of the issue of the bankruptcy notice. Hence, the authorities from the bankruptcy cases are not applicable to the issue in this appeal; (2) even if the notice over-stated the amount owing, it is legitimate to look at the circumstances in order to determine the critical issue upon which the application depends, namely whether or not the company is unable to pay its debts. In this appeal, the notice of demand showed that the total principal amount owing far exceeded the quantum of RM500. The court was therefore of the view that the points raised could not be sustained; (3) affidavit which is sworn before the presentation of the petition would cause the petition to be void. In the appeal, both the affidavits and the petitions contained the date of 10 July 1995. The trial judge was correct for holding that the affidavit was made after the petition was presented, as the affidavit referred to the petition which was attached to the affidavit. The trial judge was also correct in stating that r 26 had not been infringed because the affidavit that verified the petition had been filed on 11 July 1995. Furthermore, there was no evidence to show that the affidavit had been sworn before the petition was presented.

YPJE Consultancy Service Sdn Bhd v Heller Factoring (M) Sdn Bhd (formerly known as Matang Factoring Sdn Bhd) [1996] 2 MLJ 482; (1996) CSLR XX[3859] Court of Appeal, Kuala Lumpur (Gopal Sri Ram, Mahadev Shankar and Ahmad Fairuz JJCA).

The respondent obtained summary judgment on 28 October 1993 against the appellant in the High Court at Kuala Lumpur for the sum of 'RM203,780.87 together with interest thereon at the rate of 8% per annum from 28 October 1993 till the date of realization and costs'. The judgment arose from a debt due from the appellant to the respondent for goods sold and delivered. The appellant's subsequent appeal to the (then) Supreme Court was dismissed on 1 March 1994. Thereafter, the respondent commenced execution by sending a notice of demand pursuant to s 218(2)(a) of the Companies Act 1965 ('the notice of demand') to the appellant, demanding the sums due under the judgment. The appellant did not respond to the notice of demand within the time prescribed, and the respondent took out a winding-up petition against the appellant on 30 August 1994. At the hearing, counsel for the appellant contended that: (a) the notice of demand was defective as the sum of RM203,780.87 in the body of the notice included an element of continuing interest which was not stipulated, and this, together with interest thereon at the rate of 8% per annum from 28 October 1993 to the date of final payment, rendered the notice of demand invalid; and (b) in the absence of a valid notice, there was no evidence of insolvency. In reply, counsel for the respondent argued that the the judgment sum was stated as RM203,780.87 in the summary judgment, and this was also affirmed by the Supreme Court in the subsequent appeal. He further submitted that the same amount in the summary judgment in the High Court had been demanded in the notice of demand and that the appellant was in no way misled as to the amount. The trial judge ordered a winding up. The appellant appealed.

Held, dismissing the appeal with costs: (1) the respondent's contention that the demand was valid was upheld, since the sum and interest could easily be ascertained. The amount of the costs was not mentioned since it could not be ascertained at that stage because of the appeal; (2) the appellant's appeal was dismissed by the Supreme Court on 1 March 1994, and for nearly two years, the appellant never did anything to settle its debt. Such conduct could, therefore, be interpreted as the appellant's inability to pay its debt, having held that the demand was a valid demand; (3) in view of the decision that the notice of demand was valid, it was further held that the appellant's second ground was devoid of any merit. The trial judge was correct in his finding that the appellant was unable to pay its debt and that the appellant should be wound up.

Sungei Rinching Sdn Bhd v Sri Keluarga Sdn Bhd [1996] 2 MLJ 199; (1996) CSLR XX[3860] Court of Appeal, Kuala Lumpur (NH Chan, Abu Mansor and Abdul Malek JJCA).

The petitioners presented a petition for the winding up of the respondent company on the ground that it was unable to pay its debts on account of a default judgment obtained by the petitioners against the respon-dent company which was not complied with. The petition was made pursuant to s 218(1)(e) of the Companies Act 1965 ('the Act') which empowers the court to wind up a company which is unable to pay its debts. According to the petition, the respondent company was served with a notice pursuant to the section demanding for the payment but it failed or neglected to comply with the notice. The petitioners therefore relied on the presumption of the inability to pay pursuant to s 218(2)(a) of the Act. The issue here was whether the notice of demand had complied with the requirements of s 218(2)(a) for the presumption to arise.

Held, striking off the petition: (1) s 218(2)(a) requires the notice of demand to state the sum due as owing and if after three weeks the sum due was not paid, a presumption would arise that the company was unable to pay its debt. In this case, the amount of interest on the principal sum was not quantified in the demand notice. Therefore, the respondent company could not be presumed to be unable to pay the debts and the petition based on such a notice of demand was defective, and for that reason alone the petition must be struck out; (2) the general principle governing an affidavit is that it must be made in some cause or matter which is actually pending in the court. It cannot serve the purpose of verifying to something which was non-existent at the time it was sworn. If a formal application was to be made for the extension of time for filing a subsequent affidavit to verify the petition, it ought to be made under r 7(1) of the Companies (Winding-Up) Rules 1972. In this case, the affidavit verifying the petition was sworn before the presentation of the petition. The court would not exercise its discretion to allow the petitioners to reswear a second affidavit to verify the petition as this would amount to condoning the flouting of r 26 to the prejudice of the respondent company. The petition presented in this case was therefore bad and the notice of demand issued upon the respondent company did not help the petitioners to ask the court to presume that the respondent company is unable to pay its debts. The petition was accordingly struck off.

Lim Tok Chiow & Anor v Dian Tong Credit & Development Sdn Bhd [1994] 2 MLJ 345; CSLR XX[6091] High Court, Kuching (Abdul Kadir Sulaiman J).

P obtained judgment against D Sdn Bhd. P then delivered a notice of demand to D Sdn Bhd pursuant to s 218 of the Companies Act 1965. D Sdn Bhd failed to pay the sum demanded and P presented a petition in the High Court to wind up D Sdn Bhd. D Sdn Bhd firstly applied for leave to adduce oral evidence at the hearing of the petition so as to show that D Sdn Bhd had available assets. D Sdn Bhd then argued that the notice of demand was issued by P's solicitors who were not the agents of P lawfully authorized to issue the notice. D Sdn Bhd further contended that the affidavit verifying P's petition was affirmed by X who was P's senior manager. It was argued that r 26 of the Companies (Winding-up) Rules 1972 requires, inter alia, a principal officer of P to affirm such an affidavit. D Sdn Bhd also alleged that it had assets but all its assets were 'locked up' in landed properties. D Sdn Bhd finally applied for a stay of the winding-up order pending appeal. D Sdn Bhd made the application under the court's inherent jurisdiction.

Held, allowing the petition: (1) the court has jurisdiction under s 221(2)(c) of the 1965 Act to order oral evidence be adduced at the hearing of a winding-up petition. In this case there were no disputed facts and the petition could thus be decided on affidavit evidence. D Sdn Bhd's application to adduce oral evidence was therefore refused; (2) P's solicitors who issued the notice of demand were also the solicitors in P's civil suit against D Sdn Bhd where judgment was obtained against D Sdn Bhd. The notice was made pursuant to the judgment and it was copied to P. P's solicitors were accordingly the agents of P lawfully authorized to issue the notice of demand; (3) X as P's employee was an 'officer' of P within the meaning of s 2 of 1965 Act. X as P's senior manager could therefore be regarded as its 'principal officer' as envisaged in r 26 of the 1972 Rules. Even if assuming X was not P's 'principal officer' when he affirmed the affidavit verifying the petition, it does not necessarily mean that the affidavit must be rejected or that the petition must fail; (4) P's notice of demand was thus properly issued in strict compliance with s 218(2)(a) of the 1965 Act; (5) the onus was on D Sdn Bhd to show that it was able to pay its debt or that it was solvent. D Sdn Bhd had failed to show that it was not insolvent and it was therefore ordered to be wound up; (6) D Sdn Bhd's application for a stay of the winding-up order was refused because firstly only its liquidator, creditor or contributory could apply for a stay under s 243(1) of the 1965 Act. Accordingly it would not be proper for the court to invoke its inherent jurisdiction. Furthermore in practice once a winding-up order is made, a stay is never granted because it interferes with the liquidator's duty and power.

MBF Finance Bhd v Sri-Hartamas Development Sdn Bhd (1991) CSLR XX[6080] (High Court, Kuala Lumpur (Zakaria Yatim J).

Re Ritecast (S) Pte Ltd [1996] 2 SLR 65; (1996) CSLR XX[3837] High Court, SIngapore (GP Selvam J).

Tan Ah Teck t/a Plumcon Plumbing & Construction Co v Coffral (M) Sdn Bhd [1992] 1 MLJ 553 High Court, Shah Alam (Wan Yahya J).

The petitioners petitioned for the winding up of the company on the ground that the company was indebted to the petitioner in the sum of S$20,189.12. Five other creditors of the company supported the motion. One creditor claiming HK$21,212,412.62 opposed the petition.

Held, ordering the winding up: (1) the primary principle on which the bankruptcy court acts is that if a company is hopelessly insolvent the interests and desires of the creditors and in particular unsecured creditors should be given paramount consideration; (2) a hopelessly insolvent and assetless company should not be left encumbering the ground unless those opposed to the company being wound up give cogent reasons for opposing the petition. In this case neither the company nor the opposing creditor offered any valid reason why the company should not be wound up; (3) if the creditors declare that they desire to remove the assets of the company from the directors and place them in the hands of liquidators the court should ordinarily grant their wishes. They regard the position from a commercial point of view and they know what would best serve their interests.

Re Lingo Technology Pte Ltd Companies (1992) CSLR XX[3854] High Court, Singapore (GP Selvam JC).

The appellants in the interlocutory appeal were minority shareholders in a company styled Kim Heng Glass (Pte) Ltd. They filed a petition to wind up the company by way of winding-up petition seeking a winding-up order as the majority shareholders had denied them equal participation in business and further, that the directors who were nominated by the majority shareholders had acted in an oppressive manner. The majority shareholders applied to strike out the application for winding up. The trial judge heard the summons and considered that the appellants were seeking remedies under s 216 of the Companies Act (Cap 50) ('the Act') relating to oppression and hence the mode of procedure was wrong. The trial judge ruled that the manner of procedure should be by way of originating petition under O 88 r 5(h) of the Rules of the Supreme Court 1970 as the appellants had indicated that the directors and majority shareholders had acted in an oppressive manner. The appellants appealed to the Court of Appeal which considered the procedure in such cases and the scope of s 254(1) of the Act.

Held, allowing the appeal : (1) the appellants brought an action for a winding-up petition under s 254(1) of the Companies Act and the proper procedure is to apply by way of a winding-up petition; (2) this is the proper procedure even though oppression was claimed by the appellants as it was clear that the appellants were seeking a winding-up order under s 254(1) of the Act; (3) the allegations against the majority shareholders in the petition indicate that the affairs of the company were being conducted in their interest rather than in the interest of the members as a whole; (4) though the word 'oppression' had been used in the allegations, it could equally amount to unfair and unjust conduct as they are all terms of art and have not been statutorily defined; (5) the acts of the majority can equally be considered to be oppressive as well as being unfair and unjust as required under s 254(1) of the Act; (6) the acts of the directors in the instant case if proved would indicate want of probity on their part and be a sufficient ground for a winding-up order under s 254(1); (7) exclusion of a shareholder from business when he had been invited initially to join on that promise would be a sufficient ground for a winding-up order under s 254(1) of the Act; (8) the just and equitable provision under s 254(1)(i) is capable of application under diverse circumstances and it would not be proper to demarcate categories under various heads; (9) the availability of the remedies under s 216 would not be a good ground for striking out an application under s 254(1).

Chong Choon Chai & Anor v Tan Gee Cheng & Anor [1993] 3 SLR 1 Court of Appeal, Singapore (Yong Pung How CJ, LP Thean and Karthigesu JJA).

The respondent, Tropical Veneer Co Bhd, was a company that owed UMBC (the applicant in the present proceedings) a large amount of money. UMBC was a secured creditor. The respondent, however, also owed other unsecured creditors about $6 million. The unsecured creditors, including the petitioner Cetico Sdn Bhd, presented a petition to the court to wind up the company. UMBC applied to dismiss or stay the petition.

Held, dismissing the application: (1) in the circumstances of this case, the unanimous wish of the unsecured creditors must prevail over the applicant bank; (2) had the applicant bank and the receivers and managers acted in good time so as to put the unsecured creditors in a position in which they could have made an informal appraisal of their chances of recovery of some portion of their losses, and if some acceptable profit-sharing arrangement had been broached so that the unsecured creditors were not made to feel that they were being pressured into sacrificing their remedy in exchange for the eligibility of standing in the queue four years from now, the court may have been disposed to look at the matter differently.

Cetico Sdn Bhd v The Tropical Veneer Co Bhd [1988] 2 MLJ 665 High Court, Johore Bahru (Shankar J).

The respondent bank (`the bank') approved an overdraft facility for RM5.5m to the borrower for a period of one year and repayable on demand. The overdraft facility was secured by a first legal charge created on the charged land of which the appellant company (`the company') was the registered proprietor at the material time. Owing to a default by the company, the charged land was subsequently auctioned on 19 September 1988. Since the proceeds of the sale were insufficient to settle the borrower's indebtedness in full, the bank filed a civil suit against the company, claiming the balance of the sum owing with interests. Summary judgment was obtained by consent and thereafter the bank took steps to enforce the judgment sum by way of a statutory notice dated 30 November 1991 under s 218 of the Companies Act 1965 (`the Act') and served on the company. The company failed to comply with the notice and the bank issued a winding-up petition. On 21 September 1992, three days before the hearing, the company filed a notice of intention to oppose the petition on the ground that they dispute the debt due to the bank. The petition was adjourned several times and was finally heard on 24 November 1995. On each adjournment, an affidavit in opposition was served on the bank; however, the affidavits were not served in compliance with r 30(1) of the Companies (Winding-up) Rules 1972 (`the 1972 Rules') which stated that such affidavits should be served on the petitioner or his solicitor at least seven days before the time appointed for hearing of the petition. The bank raised the preliminary objection that the court should not admit the four affidavits on the ground that they had failed to comply with r 30(1) of the 1972 Rules. The learned judge agreed with the bank and ordered that the company be wound up, the official receiver be appointed as provisional liquidator and the bank's costs be paid out by the provisional liquidator from the company's assets. The company appealed, arguing that the judge's refusal to grant an adjournment of the hearing to the petition on 24 November 1995 had prejudiced the company and that since the trial judge had never heard the petition on its merit, the winding-up order made by him could not be upheld.

Held, dismissing the appeal: (1) s 221 of the Act empowered the court with the discretion to grant an adjournment, but in this case, the judge had refused to exercise his discretion and he had rightly done so for the following reason, namely, that the four affidavits supporting the company's notice of intention to oppose the petition did not comply with r 30(1) of the 1972 Rules which stated that such affidavits should be served on the petitioner or his solicitor at least seven days before the time appointed for hearing of the petition. Moreover, r 30(1) of the 1972 Rules was mandatory in nature and therefore the judge was correct when he refused to admit all four affidavits in opposition for non-compliance of r 30. The fact that the four affidavits were only relied upon on 24 November 1995 did not alter the position as such affidavits were intended for use in the earlier hearings which never took place as all the earlier hearings were adjourned for some reason or other; (2) it was unjust and inequitable to stay the winding up proceedings and deny the bank the right to have the company wound up for their inability to pay the debt. This was because the cross-claim by the company could still be proceeded by the liquidator on behalf of the company under s 236(2) of the Act. Also, the petition was presented five years ago and the company's indebtedness had been established as long ago as 1984. Proceedings in the form of execution of judgment should never be allowed to drag and more so where proceedings concerned the compulsory winding up of a company.

Crocuses & Daffodils (M) Sdn Bhd v Development & Commercial Bank Bhd [1997] 2 MLJ 756 Court of Appeal, Kuala Lumpur (Siti Norma Yaakob, Abu Mansor and Abdul Malek JJCA).

YPJE Consultancy Service Sdn Bhd v Heller Factoring (M) Sdn Bhd (formerly known as Matang Factoring Sdn Bhd) [1996] 2 MLJ 482; (1996) CSLR XX[3859] Court of Appeal, Kuala Lumpur (Gopal Sri Ram, Mahadev Shankar and Ahmad Fairuz JJCA).

The respondent, a developer, had an agreement with the petitioner ('the agreement') to build and deliver a unit of dwelling house on a piece of land ('the land') to the petitioner. The agreement stipulated an interest of 8%pa on the total purchase price upon failure to complete the building of the house. The respondent failed to complete the house by the stipulated date. Subsequently, the petitioner was informed that the land belonged to Oakfield Enterprise Sdn Bhd ('Oakfield') and not the respondent, hence leaving nothing to the petitioner. The petitioner then filed a petition to wind up the respondent company and a liquidator be appointed. The respondent company through its director supported the winding up on the ground that the respondent was insolvent. The judgment creditor, however, opposed the petition. An order for account of the respondent company was filed and still pending. An order for examination of the officers and former officers of the respondent was obtained and it would appear that there could be a possibility of fraudulent trading by the sale of the land to Oakfield which would attract the application of s 304 of the Companies Act 1965 ('the Act'). Further, there were pending proceedings against one of the directors of the respondent company for contempt of court for failure to obey a court order. Two issues were considered: (1) whether the petitioner was a creditor entitled to present the petition; (2) if yes, whether it was just and equitable to make a winding-up order.

Held, dismissing the petition: (1) as the word 'creditor' is not defined in the Act, the facts of each case have to be examined to appreciate whether the relationship of creditor and debtor exists; (2) even though there has been no action filed by the petitioner, it would seem clear that the petitioner is entitled to damages though yet to be quantified, and that the respondent did not dispute the claim. Therefore, there exists the creditor-debtor relationship. The petitioner could be considered a prospective creditor of the respondent and accordingly may petition the court for a winding-up order; (3) in view of the various orders to be executed by the respondent, it is not just and equitable for a winding-up order to be made as the effects of a winding-up order would put a stop to all enforcement proceedings. In any event the petitioner has been unable to show any special circumstances rendering a winding-up order desirable. If no winding-up order is made, the petitioner is not totally without remedy. No evidence was deposed that the respondent was insolvent other than a mere bare statement. Also the respondent has yet to account for the money in respect of the sale of the land to Oakfield in view of the fraudulent trading of the respondent as alleged by the opposing creditors; (4) a winding-up order would have the undesirable effect of negating the several court orders which work towards the detriment of the opposing creditors.

Chew Siew Lie v Jet Age Construction Sdn Bhd (formerly known as Jet Age Freighters Sdn Bhd (1994) CSLR XX[3855] High Court, Johor Bahru (Haidar J).

A winding-up petition had been presented against Alonioners Trading Corporation Berhad (`the respondent') on 22 October 1992 by M Karuppanan (`the petitioner') under s 217(1)(b) of the Companies Act 1965 (`the Act') on the ground founded under s 218(1)(e) of the Act which empowered the court to make a winding-up order if the court was satisfied that the respondent was unable to pay its debts. It was not disputed that: (a) there was a final judgment debt against the respondent; (b) a proper statutory demand had been made; (c) the respondent had failed and/or neglected to comply with the said demand and; (d) the petition as presented was found to be in order. In addition to the petitioner, there were a number of supporting creditors with no creditors opposing the petition save and except for one Lim Tian Huat, the receiver and manager of the respondent (`the receiver') who was appointed on 28 August 1992 by Nederlandse Financierings-Maatsch-appij Voor Ontwikkelingslanden NV (`FMO') and Bank of Commerce (M) Berhad (`BOC') pursuant to debentures created by the respondent in favour of FMO and BOC. The Receiver, in his affidavit in opposition to the petition deposed that by a lease dated 14 November 1977, the Perbadanan Kemajuan Negeri Sembilan (`PKNNS') had leased three pieces of land (`the Land') for a period of 66 years effective from January 1977 and expiring in the year 2043 (`the said lease') to the respondent. The terms and conditions governing the said lease were inter alia: (a) the said lease shall be used by the respondent exclusively for the cultivation of sugar cane and the produce to be sold to Syarikat Gula NS Sdn Bhd only (`the Scheme'); (b) the respondent should be entitled to sub-lease not more than 15 acres of the Land to a person participating in the Scheme subject to the prior written consent of the State Government first had and obtained; (c) the respondent should be entitled to charge the said lease provided the interest of the participants in the Scheme shall not be prejudiced and all antecedent liabilities arising from the charge should be borne by the respondent. The Receiver further deposed that the Land was alienated to the respondent at a purchase price of RM987,300 and for the specific purpose of planting sugar cane as a source of supply to Syarikat Gula NS Sdn Bhd. The respondent subsequently abandoned the planting of sugar cane for Syarikat Gula NS Sdn Bhd as originally envisaged under the Scheme and the majority of the settlers originally involved in the Scheme were now unaccountable with their whereabouts unknown. The amount due and owing to FMO and BOC by the respondent was RM29m against the value of the security of RM20m. Counsel for the respondent admitted that the respondent was insolvent and its only asset was the Land which was charged to FMO and BOC. Counsel for the respondent further submitted that as the assets of the respondent were insufficient to even satisfy the debts of FMO and BOC, the petitioner and the supporting creditors would gain nothing from this exercise of winding-up the respondent.

Held, allowing the petition: (1) the question for the court to decide was whether or not it was the inherent right of the creditors, upon their satisfying the legal requirements of the Act, to a right ex debito justitiae to a winding-up order or whether the court should invoke s 221 of the Act to dismiss the petition if no useful purpose would result out of it; (2) the qualification which was required of the petitioner under s 218(1)(e) of the Act was that the petitioner be a creditor, the debt was not in dispute and the respondent failed and/or neglected to pay the debt; (3) considering the facts of the case and if the qualification which was required of the petitioner was satisfied, the court was not prepared to exercise its discretion as it was a right ex debito justitiae in the petitioner for a winding-up order; (4) where the total liabilities of a company far exceeded the net value of its assets as in the case of the respondent, the court would usually as a matter of course make the order to wind up the company unless its other creditors, majority in number, opposed the petition; (5) based on s 222 of the Act, the court may exercise its discretion after having weighed all the relevant matters to come to a decision as to whether a prima facie right of the petitioning creditor had been made out; (6) the reasons for arriving at the decision to grant the winding-up petition were as follows: first, there was a reasonable possibility that upon the Land being reverted to the State Authorities upon a forfeiture on the winding-up order, the official liquidator should be in a position to prevail the interest of the settlers instead of leaving the Land charged to FMO and BOC without any use or benefit to the intended purposes; secondly, upon a winding-up order being made, the official liquidator should be in a better position to investigate the affairs of the respondent; thirdly, the petition had been on record for the last four years with no prospective hope of settlement; fourthly, there were no opposing creditors or contributories who could show any good reason against a winding-up order being made except the secured creditors namely, FMO and BOC; lastly, the secured creditors had conveniently chosen not to compound the debts of the unsecured creditors.

Re Great Alonioners Trading Corporation Bhd Companies Winding-Up No D6-28-372-92—High Court, Kuala Lumpur (KL Rekhraj J).

In this case the plaintiff had advanced the sum of $10,000 to a company of which the defendant was the managing director in consideration of which the defendant agreed to pay him 20 cents on every ton of timber and other produce extracted from certain forest lands, of which the company were sub-licensees. Subsequently, a petition was presented for the winding up of the company. Thereupon an agreement was entered into whereby in consideration of the plaintiff's undertaking not to support the creditors' petition for winding up, the defendant undertook to pay the plaintiff the sum of $10,000 which had been loaned to the company. When the petition came up for hearing, counsel who appeared for the plaintiff opposed the petition. The defendant then gave the plaintiff a cheque for $5,000 as part payment of the sum of $10,000. This was dishonoured and the plaintiff then sued the defendant for breach of contract. The defendant alleged, inter alia, (a) that the original agreement between the company and the plaintiff was a moneylending transaction and as the plaintiff had not complied with the provisions of the Moneylenders Ordinance, the agreement was unenforceable; (b) that the agreement between the plaintiff and the defendant was illegal and immoral on the ground of interfering with the course of justice. It was also argued on behalf of the plaintiff that the agreement by the defendant was a contract of indemnity.

Held: as the agreement between the plaintiff and the defendant in this case was an attempt to defraud the other creditors in the winding-up petition, it was void, as the consideration for it was unlawful. The agreement was therefore unenforceable at the instance of the plaintiff.

Amman Singh v Vasudevan [1973] 1 MLJ 210 High Court, Kuala Lumpur (Mohamed Azmi J).

The petition for the winding up of Pentasia (Pte) Ltd was presented at the registry on 30 August 1978. The petition was fixed for hearing on 29 September 1978. Since then it was adjourned thrice. On 12 January 1979 the petitioner applied for another adjournment stating that the proceedings had been withheld at the request of the said company. He said that the company had paid $7,000 and that another cheque for $3,000 was awaiting to be cleared. Counsel for the plaintiff said that he was mentioning on behalf of counsel for the company who was absent. The facts showed that $10,000 of $86,576.65 had been paid nearly five months after the presentation of the petition.

Held: (1) to put into motion the machinery for winding up, not to obtain an order for winding up, but to exert pressure on the company to settle its debt, is an abuse of the procedure; (2) except for a short adjournment to remedy technical matters relating to a petition, any other adjournment must be an exception rather than the rule as it will be prejudicial to the company. It is therefore imperative that the winding up of a company which cannot pay its debts must be seriously weighed, and once proceedings are commenced they must be prosecuted expeditiously.

Re Pentasia (Pte) Ltd 1978 High Court, Singapore (Sinnathuray J).

MBF Finance Bhd v Sri-Hartamas Development Sdn Bhd (1991) CSLR XX[6080] High Court, Kuala Lumpur (Zakaria Yatim J).

In this case, a winding-up petition was filed in court on 24 March 1983 but the affidavit verifying the petition was affirmed on 8 March 1983, before the presentation of the petition itself, which was a clear failure to comply with r 26 of the Companies (Winding-Up) Rules 1972. The issue which arose for the court's decision was whether the premature affirmation of an affidavit before the presentation of the winding-up petition was a mere irregularity.

Held: the premature swearing or affirming of such an affidavit is a mere irregularity curable by granting an extension of time under r 193 and compensating the victim of the irregularity with costs, because the company could not have been misled in any way, neither was there any real prejudice caused to the company. There was nothing that could even remotely resemble any form of injustice to the company.

Re Perusahaan Seri Duyong Sdn Bhd Companies Winding-Up No 2 of 1983 High Court, Malaysia (Peh Swee Chin J).

On 3 August 1993, the petitioner filed a winding-up petition against the respondent on the ground that the respondent was unable to pay its debts. On 8 November 1993, the respondent filed a notice of motion to strike out the petition (encl 6). The respondent later filed another notice of motion on 21 December 1993 (encl 17). At the hearing of encl 17, counsel for the respondent withdrew encl 6 and subsequently informed the court that both parties had agreed on certain terms in respect of encl 17. A consent order was then drawn up which, inter alia, provided 'that the petition (and or the amended petition as the case may be) to be heard on 22 April 1994 - and all parties be at liberty to adduce evidence by calling witnesses with liberty to cross-examine'. On 4 March 1994, on the application of the petitioner, the petition was amended by an order of the deputy registrar and the amended petition was filed on 17 March 1994. At the hearing of the amended petition on 22 April 1994, counsel for the respondent raised a preliminary objection that the amended petition was not properly before the court as the affidavit verifying the petition was only affirmed on 18 March 1994 and filed on that same day. It was contended that under r 26 of the Companies (Winding-Up) Rules 1972 ('the Rules'), the amended petition had to be verified within four days after it was presented, allegedly on 4 March 1994. Counsel for the petitioner, however, submitted that the act of presentation was when the amended petition was filed on 17 March 1994. As to the amended petition itself, counsel for the petitioner submitted that the respondent had not filed any notice of intention to appear as required by r 28 of the Rules. He also said that the respondent had not filed any affidavit in opposition to the petition. Counsel for the respondent conceded but relied on the above-mentioned provision of the consent or-der.

Held, dismissing the preliminary objection and allowing the petitioner's application: (1) in the context of rr 23 and 26 of the Rules, the amended petition was presented when it was filed on 17 March 1994. The affidavit verifying the amended petition was thus filed within time; (2) r 28(1) of the Rules requires every person who intends to appear on the hearing of a petition to serve on the petitioner or his solicitor notice of his intention, while r 28(3) provides that a person who has failed to give such notice shall not, without special leave of the court, be allowed to appear on the hearing of the petition. The respondent's counsel had appeared in court a number of times for the hearing of the various enclosures, but such appearances did not entitle the respondent to appear on the hearing of the petition in the absence of a notice of intention to appear. As the respondent had not applied for special leave of the court to appear, it was not properly before the court on the hearing of the amended petition; (3) the respondent had not filed an affidavit in opposition as required under r 30(1) of the Rules. That being so, the court considered that the respondent was not opposing the petition. The allegations contained in the amended petition became evidence because they were verified by affidavit. In the absence of an affidavit in opposition by the respondent, the allegations contained in the amended petition were deemed to be admitted; (4) the respondent could not substitute the affidavit in opposition by calling witnesses. In any case, since the respondent had not filed its notice of intention to appear, it was not entitled to call its witnesses to oppose the petition, neither could it cross-examine the deponent of the petitioner's affidavit.

CH Construction and Trading v Langkah Cergas Sdn Bhd (1994) CSLR XX[4646] High Court, Kuala Lumpur (Zakaria Yatim J).

The petitioner, Dynopor Pte Ltd ('Dynopor') in this case filed a petition for the winding up of the respondent company, Styropak (M) Sdn Bhd ('Styropak') for failing to settle an outstanding debt owed to Dynopor. A provisional liquidator was appointed on behalf of the petitioner by an order of court dated 22 July 1994. Sometime in August 1994, the respondent sought to have Dynopor's petition dismissed. They argued that the claims made by the petitioner against them were bona fide disputed and hence not due and payable. Furthermore, debenture holders of Styropak, Aseanbankers Malaysia Bhd ('Asean') has obtained an order from the High Court in Muar to restrain the dissipation of assets from Styropak. Subsequently, the parties agreed by consent to vary the order of court to allow receivers and managers appointed by Asean to exercise all powers under the debentures. The receivers and managers, however, reserved the right to proceed with the dismissal of Dynopor's petition. Meanwhile, the respondent was wound up in the Shah Alam High court on 11 November 1994. At the hearing for the dismissal of Dynopor's petition on 15 September 1995, counsel for the petitioner sought to obtain costs for the withdrawal of their petition.

Held, dismissing the petitioner's application: (1) they should hence not be allowed to resile from their part of the bargain and attempt to seek priority over the charged assets; (2) the petitioner like any other creditors would be entitled to claim its debt including any costs properly incurred by it, ie costs of this petition and the appointment of the liquidator in the event of a surplus; (3) by virtue of s 226(3) of the Act, the winding-up order of Shah Alam High Court would in effect have stayed all other proceedings including the present petition except by leave of court; (4) since by virtue of s 219(2), the winding-up order is deemed to have commenced at the time of the presentation of the winding-up petition which was in April 1994, the petitioner should withdraw the present petition and join other creditors in the Shah Alam High Court; (5) the fact that the petitioner agreed to the variation of the order of court dated 22 July 1994 implied that the petitioner conceded that their appointment of a provisional liquidator was not appropriate;although the issue of a formal application for costs under r 7(1) of the Companies (Winding-Up) Rules did not arise as the application for costs was listed as one of the prayers in their petition and an oral application would suffice, the proper course should be for the petitioner to file its application for costs in Shah Alam High Court.

Dynopor Pte Ltd v Styropak (M) Sdn Bhd (1995) CSLR XX[4652] High Court, Johor Bahru (Haidar J).

The petitioner and the second respondent were the directors and substantial shareholders in the first respondent company. The second respondent on 23 January 1992 initially sued the petitioner for breach of fiduciary duties owed to the first respondent company and to the second respondent ('the suit'). On 29 January 1992 the petitioner presented a petition to wind up the first respondent company on the ground that it was just and equitable to do so under s 218(1)(i) of the Companies Act 1965. The petition alleged that the first respondent company was in effect a partnership between the petitioner and the second respondent in the guise of a corporation. The petitioner further claimed that there was a state of deadlock in the management of the first respondent company. The second respondent applied to court to strike out the petition on the ground that it was not bona fide and was an abuse of the process of the court. The second respondent contended that the petition had been filed as a manoeuvre to subvert the suit filed as a result of the petitioner's wrongdoing. The second respondent also alleged that the petitioner could have counterclaimed in the suit instead of filing the petition.

Held, dismissing the application: (1) in this case a quasi-partnership had come to a standstill because of a dead-lock situation. It could not therefore be said that the petitioner had not founded his petition on a reasonable cause of action. The petition was therefore not an abuse of the process of the court; (2) in all probability the balance of convenience between staying the petition or the suit, was in favour of staying the suit. If the petition was stayed, the petitioner would be deprived of a statutory right and he could not wind up the first respondent company in a counterclaim in the suit. If the suit was stayed all the second respondent's allegations concerning the petitioner's misconduct which resulted in the deadlock situation, could be brought in as issues to be tried in the petition.

Lim Heng Hood v Metromix Sdn Bhd & Anor (1992) CSLR XX[1663] High Court, Kuala Lumpur (VC George J).

This was a petition by A to wind up M Ltd on the ground that it was unable to pay its debts. The petition was based on M Ltd's failure to comply with a statutory letter of demand. M Ltd's indebtedness to A arose from a judgment in November 1986 against M Ltd and one X. Following the judgment, an agreement in writing was entered into between A on one part and M Ltd and X on the other in July 1987. The agreement provided that payment of M Ltd's indebtedness to A would be deferred if certain conditions were complied with. The conditions were not complied with and A commenced with the winding-up proceedings. At the hearing of the petition, M Ltd: (1) applied to adjourn the hearing on the grounds that an application for the registration of the November 1986 judgment in Malaysia had not been finally disposed of and that X would pay off the indebtedness if he successfully opposed pending bankruptcy proceedings against him in Malaysia; (2) applied for an order for oral evidence to be taken on whether there was a collateral oral agreement related to the July 1987 settlement agreement; and (3) opposed the petition on the grounds that there was a bona fide dispute as to the indebtedness, that the amount stated in the statutory letter of demand exceeded the amount due, that the indebtedness was time-barred, and that the petition was a means to enforce payment of a disputed debt and thus an abuse of process.

Held, allowing the petition: (1) the Malaysian proceedings were irrelevant to the winding-up proceeding and no adjournment would be allowed; (2) and (b) the affidavit evidence opposing the petition did not allege any oral collateral agreement not to petition for M Ltd to be wound up; (3) if there was a bona fide claim by M Ltd against A which equals or exceeds the indebtedness of M Ltd to A and such claim is based on substantial grounds, then it cannot be said that M Ltd has neglected to pay to A the sum due to it within the meaning of that expression in s 254(2) of the Companies Act (Cap 50). On the facts, M Ltd did not have a bona fide claim based on substantial grounds against A; (4) the fact that a statutory letter of demand included an amount not in fact due did not vitiate the petition so long as the amount in fact due exceeded S$2,000; (5) the settlement agreement only operated as a stay of execution on the judgment as long as it was being observed and the judgment had not been subsumed under it; (6) no evidence of the collateral agreement may be admitted as: (a) oral evidence to prove an oral agreement not to proceed against M Ltd after the signing of the July 1987 settlement agreement would contradict the written settlement agreement and was therefore inadmissible by virtue of s 94 of the Evidence Act (Cap 97, 1990 Ed);A's claim was not time-barred as, on the facts, it was a claim to enforce the November 1986 judgment and not for breach of the July 1987 settlement agreement;the petition was brought to enforce a final judgment on which there was no valid dispute. Further, there was no evidence that the petition would thwart or stifle any cross-claim by M Ltd against A. In the circumstances, the petition could not be said to be abuse of process.

Re Makin Nominees Pte Ltd [1994] 3 SLR 429; CSLR XX[6092] High Court, Singapore (Lim Teong Qwee JC

The respondent was indebted to the petitioner and failed to pay. Hence, the petitioner filed a petition under s 218 of the Companies Act 1965 praying that the respondent be wound up and a liquidator be appointed. The respondent's registered office was at Tawau, Sabah and its assets were also in Sabah. A preliminary question which faced the court was in respect of its jurisdiction to hear the petition and even if the court had the jurisdiction, whether the forum conveniens was Johor Bahru or Sabah.

Held, striking out the petition: (1) the High Court in Malaya and the High Court in Sabah and Sarawak have separate and distinct jurisdictions; (2) the High Court, Johor Bahru had no jurisdiction to hear petitions in respect of companies registered and situated in Sabah and Sarawak; (3) even if the court had jurisdiction. in this case, the forum conveniens was Sabah.

Re Bukit Tajam Estates (Sabah) Sdn Bhd; Bank Pertanian Malaysia v Bukit Tajam Estates (Sabah) Sdn Bhd (1995) CSLR XX[4647] High Court, Johor Bahru (Haidar J).

P filed a winding up petition against D. The petition which was served on D was advertised before due clearance had been obtained from the Registrar of the High Court in accordance with the Companies (Winding-Up) Rules 1972. Thereafter P filed a notice of discontinuance of the action against D. The notice was served on D. D nevertheless filed an affidavit apposing the petition. D claimed that substantial damage had been caused to them by P filing the petition and by having newspaper coverage on baseless and speculative allegations. D asked that the petition be struck out and that damages be paid by P.

Held, dismissing the petition: (1) once a petition for winding up is filed, it has to be dealt with under s 221 of the Companies Act 1965 or under r 33 of the Companies (Winding Up) Rules 1972. There is no provision whatsoever in the Companies (Winding Up) Rules 1972 or in the Rules of the High Court 1980 for a petition to be discontinued once it is filed in court; (2) in the circumstances, the learned judge dismissed the petition of P. The learned judge was of the view that D's claim for damages against P could not be entertained in the present winding up proceedings as damages do not come within the purview of these proceedings. To recover any damages from P, D would have to proceed against P by way of a separate action in court.

Peer Mohamed bin Abdul Aleez v Pahang Investments Public Ltd Co Companies (Winding-Up) Petition No 42-67-86 High Court, Kuala Lumpur (Ajaib Singh J).

Malayan Plant (Pte) Ltd v Moscow Narodny Bank Ltd 1980 Privy Council Appeal from Singapore (Lord Wilberforce, Lord Edmund-Davies, Lord Fraser of Tulleybelton, Lord Scarman and Sir William Douglas).

The petitioner brought a winding-up petition against the respondent pursuant to s 218 of the Companies Act 1965 (`the Act') on the ground that the respondent was unable to pay its judgment debt. The respondent was a housing developer and was placed under receivership. On the date of appointment of the receivers and managers, the respondent was involved in a housing project. The petitioner argued that they had the statutory right for winding up under s 218 of the Act to enforce the judgment and that till that date the respondent had failed to rebut the presumption under s 218(1)(e) of the Act that it was unable to pay its debts. The winding-up order was opposed by other creditors. The petitioner also argued that the receivers and managers had failed to complete the project within a 21-month period as promised. It was also pointed out they had also previously undertaken and yet failed to complete the project by June 1995 during a hearing of a petition of winding up, which the judge stayed on merit.

Held, staying the petition for a year: (1) the use of the permissive `may' in ss 218 and 221 of the Act, rather than the mandatory `must', gave the court a discretion whether or not to wind up a company; (2) although the petitioner had a prima facie right to an order to wind up, the court should consider both the interest of the creditors and the public at large in deciding whether to wind up the company. The court, being invested with a wide discretion, would also look into all aspects including the commercial viability of allowing the company to continue to function. In the present case, other creditors including the house buyers had opposed the petition. The company had no other assets. Nothing could be gained by granting the order, whereas one final chance ought to be given to the receivers and managers to fulfill their; (3) even if there were in fact three breaches of undertaking by the receivers and managers as suggested by the petitioner, these lent weight to the former's attempt to try and complete the project in spite of delays. In any event, as the project was nearing completion and was in its final stage, the receivers and managers should be given one final attempt to complete the project, failing which the company ought to be wound up; (4) the petititoner had not suggested that if the respondent were wound up, it would make some recovery. However, it was apparent that if an order to wind up were made, both the debenture holder and the house buyers would be prejudiced. The court had to accede to the wishes of the majority.

Pilecon Engineering Bhd v Remaja Jaya Sdn Bhd [1997] 1 MLJ 808 High Court, Kuala Lumpur (Kamalanathan Ratnam JC).

A factoring company sought the winding-up of Ritecast (S) Pte Ltd (the company) on the basis of a substantial debt allegedly owed under a factoring agreement. The company admitted the full debt and had been given an opportunity to pay the debt in instalments after it had responded to a statutory demand. The company then paid one instalment and continued to default in payment of the remaining debt. The factoring company issued a second statutory demand and then petitioned for the winding-up of the company. The company opposed the petition denying the basis of the debt arising from the factoring agreement. The company further argued that when it paid the first instalment of the debt, that precluded the petitioners from proceeding with the petition. It was also argued that the company had sufficient assets to pay all creditors and that steps had been taken to dispose of a property owned by the company for a substantial amount but that the sale was thwarted by the winding-up petition. An adjournment was granted for the sale to be arranged, but the sale did not materialize.

Held, granting the petition: (1) on the facts, the petitioners had not assumed the credit risk of the customer under the factoring agreement. In respect of such a debt, therefore, the company unconditionally guaranteed the due and punctual payment by the customer of the debt and agreed to indemnify the petitioners in full against any loss, damage, costs and expenses which the petitioners suffered or sustained as a result of any default in payment of the debt by the customer. The guarantee and indemnity given by the company was not affected, prejudiced or discharged by any time, indulgence or concession granted to the customer. The petitioners, therefore, were entitled to proceed against the company if the customer failed to pay the invoice in full; (2) the facts of the case showed clearly that the company was unable to pay an admitted debt as and when it fell due. The full debt was admitted by the company, and the company had failed to settle the debt. There was sufficient basis to make an order to wind up the company; (3) the payment of a single instalment of the debt could not preclude the petition to wind up the company. There was no logic, merit or convenience in allowing part payment in response to a statutory demand to preclude a winding-up petition. If a company could stall winding up proceedings by making token payments, it would mean that a debtor could stall winding up proceedings indefinitely. The payment, therefore, did not stand in the way of an order being made; (4) a realization of the assets of the company by its officers might be more beneficial than a realization by the liquidator. Accordingly adjournments were granted to enable the company to take steps to dispose of a property owned by the company for a substantial amount. This did not materialize. In any event the company was not in a position to make out a case under s 210 of the Companies Act (Cap 50, 1994 Ed) for judicial management for a better realization of assets.

Re Ritecast (S) Pte Ltd [1996] 2 SLR 65; (1996) CSLR XX[3837] High Court, Singapore (GP Selvam J).

Ng Tai Tuan & Anor v Chng Gim Huat Pte Ltd [1990] SLR 903 High Court, Singapore (Chao Hick Tin JC).

CH Construction and Trading v Langkah Cergas Sdn Bhd (1994) CSLR XX[4646] High Court, Kuala Lumpur (Zakaria Yatim J).

D claimed to be entitled to a commission for introducing a buyer to P. P denied the claim. D served a statutory demand for payment of the sum alleged to be owing. P applied for an injunction to restrain the presentation of a winding-up petition based on their non-compliance with the statutory demand. P did not dispute that they had agreed to pay D a commission; however, their contention was that the debt was not due yet and there was a dispute regarding the amount payable

Held, dismissing the application: (1) it was only later that P denied liability; (2) it is well settled law that a winding-up petition is not to be used as machinery to try a common law action and the presentation of a winding-up petition with a view to enforcing payment of a disputed debt is an abuse of the process of the court; (3) the correspondence from P showed that they did not deny that there was any commission due and payable to the defendant;however, D's claim was bona fide and the presentation of a winding-up petition would not be an abuse of the process of court; the application was therefore dismissed.

Mageleine Investments Pte Ltd v Swiss Levingston (Property Consultants) Pte Ltd [1990] 1 MLJ 470 High Court, Singapore (Chua J).

The petitioners applied for the respondent to be wound up under s 218(1)(i) of the Companies Act 1965 on that the grounds that there was: (i) a total loss of substratum of the respondent as the purpose for which the respondent was incorporated, which was to handle the sole distribution and agency rights for HIMA equipment and products in ASEAN, was no longer existing as HIMA had stopped deliveries to the respondent until all outstanding amounts had been settled in full; (ii) a loss of legitimate expectation as the petitioners have been sacked as directors and thus deprived of the right to be part of the management of the respondent; and (iii) a deadlock in the respondent as the shareholders of the respondent are split into two camps with the petitioners filing the petition to wind up and the rest of the shareholders opposing it. Each of the two petitioners had 16.59% of the total shares of the respondent whilst L held 53.82 %. From the time of L's participation onwards, there had been consistent delays in the respondent's disbursement and payments of debts with the effect that the business relationship of the respondent with its creditors deteriorated which resulted in deadlock and loss of confidence between the petitioners and L.

Held, dismissing the petition: (1) looking at the memorandum and articles of association of the respondent, it was abundantly clear that it had been set up not only to deal with HIMA goods although it was not disputed that the primary purpose of its establishment was to act as sole distributor and agent for HIM. The petitioners had also set up other agencies to run the business as enumerated in the memorandum and articles of association and was now in the midst of entering into a joint venture with another German company. Since the nature of the business could continue, it was not correct to say that the respondent had lost its substratum; (2) there were material facts not disclosed by the petitioners, such as the price of the shares sold to L, the debt to Perwira Habib Bank which had been settled by L, the debt to Standard Chartered Bank which had been paid by another shareholder and the fact that L had obtained a loan facility in favour of the respondent. It was the court's view that with the petitioners not disclosing several material facts, they had not come with clean hands. On these considerations, the second ground was also rejected; (3) the respondent was the verge of collapse when the petitioners invited L to come in as a shareholder to save the ship. At that juncture, L and the other two contributories had 66.82 % whereas the petitioners had 33.18%. In effect, the old quasi-partnership had literally ended and the respondent was being run on corporate principles in view of the commercial relationship between the directors and the shareholders, the majority shareholder L being a private limited company and not an individual; (4) it was the court's finding that the question of deadlock in on flimsy ground as the majority shareholders had more than 66% and there was no allegation that they were acting oppressively towards the minority shareholders except for the fact that the petitioners had been dismissed as directors which was for a good reason, namely, the mismanagement of the respondent's financial affairs; (5) just because the original shareholders were not happy with the way things were now run, it did not mean that they would have an automatic right to wind up the company especially in the light of the fact that the issues of total loss of substratum and legitimate expectation had been rejected.

Walter KLJ Mink & Anor v WME (M) Sdn Bhd Penggulungan Syarikat-Syarikat No D5-28-45-1994—High Court, Kuala Lumpur (Abdul Malek J).

P petitioned for D to be wound up on the ground that D was unable to pay its debts. D had guaranteed the repayment of certain credit facilities granted by P to X Sdn Bhd, the principal borrower. P had earlier obtained judgment in default against D and X Sdn Bhd. Following the judgment, X Sdn Bhd had been making monthly instalment payments to P. This was not disclosed in the winding-up petition presented by P. At the hearing of the petition, D objected to the non-disclosure and submitted that no winding-up order could be entered against it.

Held, allowing the petition: (1) in the instant case, the monthly instalments made by X Sdn Bhd had not reduced the amount due from D and accordingly, the non-disclosure of such payments in the statutory notice and petition had not prejudiced D in any way. The total instalments paid had not even reduced the recurring monthly interests due much less the principal; (2) in the result, the court dismissed D's objection and made a winding-up order against it.

D & C Nomura Merchant Bankers Ltd v Futura Engineering Sdn Bhd (1989) CSLR XX[6078] High Court, Kuala Lumpur (Siti Norma Yaakob J).

This was an application by the petitioner for orders, inter alia, that: (a) the respondent had no right to be heard in this company winding-up petition; and (b) the respondent's affidavits in opposition sworn in November 1994 and February 1995 ('the affidavits') be struck out. The petition had been filed against the respondent on 1 June 1993 and served on the respondent on 21 June 1993. Hearing was fixed for 8 November 1993 but was subsequently postponed. On 8 November 1994, the respondent filed its notice of intention to appear ('the notice') and later filed the affidavits. Two issues for the decision of the court were: (a) whether the respondent had a right to be heard since it had failed to serve the notice in accordance with r 28(1) of the Companies (Winding-Up) Rules 1972 ('the Rules'); and (b) whether the affidavits had been filed in accordance with r 30(1) of the Rules.

Held, allowing the petitioner's application: (1) under r 28(1) of the Rules, every person who intended to appear on the hearing of a petition should serve on the petitioner or his solicitor notice of his intention to appear. The notice should be sent so as to reach the petitioner or his solicitor by 12 noon on the day before the day appointed for the hearing of the petition. The words 'every person' in r 28(1) included the respondent. Every person who intended to attend the hearing of the petition should file a notice and the respondent was not exempted. Rule 28(2) (and even r 3(1)) provided that a notice of intention to appear might be in Form 8 of the First Schedule to the Rules with such variations as circumstances might require. Thus, even though Form 8 only referred to creditors and contributories (and not the company sought to be wound up), the respondent could use the form with the necessary variations. On the facts of this case, it was undeniable that the respondent did not serve the notice in the time fixed by r 28(1) and therefore did not have the right to be heard. The respondent had also not applied for leave to serve the notice out of time or for special leave under r 28(3) of the Rules; (2) under r 30(1) of the Rules, affidavits in opposition to a winding-up petition should be filed and a copy served on the petitioner or his solicitor at least seven days before the time appointed for the hearing of the petition. It did not matter that on the appointed date, the hearing was adjourned to a later date because by failing to comply with r 30(1) by the date originally appointed, the party intending to oppose the petition was already in breach of r 30(1). In this case, hearing of the petition was fixed for 8 November 1993 while the affidavits were only filed on 8 November 1994 and 7 February 1995. Clearly the affidavits did not comply with r 30(1) of the Rules.

Co-operative Central Bank Ltd v Escalation Enterprise Sdn Bhd Suit No D4-28-164-1993 High Court, Kuala Lumpur (Abu Samah JC).

MBF Finance Bhd v Sri Hartamas Development Sdn Bhd (1991) CSLR X[6080] High Court, Kuala Lumpur (Zakaria Yatim J).

In this case, the winding-up petition had not been duly advertised in the Government Gazette not less than seven clear days prior to the date of the hearing, contrary to the requirements of r 24(a) of the Companies (Winding-Up) Rules 1972. The Director of Works of the National Printing Department testified that the printing of the Gazette of 24 November 1983 was only completed in December 1983.

Held: (1) despite the statutory presumption and the statutory prima facie position established by the Companies (Winding-Up) Rules 1972, in the face of the evidence of the Director of Works of the National Printing Department, the court had no choice but to conclude that in fact there was no publication of the Federal Gazette of 24 November 1983 until 12 December 1983; (2) it follows that as far as the amended petition was concerned, the requirement of r 24(a) for publication in the gazette for seven clear days prior to 12 December 1983 had not been met; (3) the need to gazette has indeed deteriorated into a mere formality and in the face of the existence of widely circulated daily newspapers has perhaps become an anachronism. The whole point of advertisement and gazetting of the petition is to give notice of it to the creditors. The newspaper advertisements of the petition have had that effect; (4) The court invoked s 221(2) of the Companies Act 1965 and allotted a new date of hearing for the petition. The need to advertise the new hearing date was dispensed with.

Re NKM Holdings Sdn Bhd Companies Winding-Up No 108 of 1982 High Court, Malaysia (VC George J).

The first respondent was a private company ('the company') limited by shares. It had an authorized capital of 25,000 shares of which 10,000 shares had been issued and paid up. Until 3 August 1991, the appellant was a registered shareholder of the company where he held 1,500 shares. On 9 July 1991, the company wrote to the appellant alleging that he owed it a sum of RM111,734.60. The appellant denied owing the sum to the company. On 25 July 1991, the company's board resolved that the appellant's shares should be sold to satisfy the alleged debt owed by the appellant to the company. On 26 July 1991, the company informed the appellant of the board's resolution and gave him notice that if the alleged sum owing was not paid within seven days then the appellant's shares would be sold. The appellant did not pay the sum within the stipulated period and his shares were subsequently sold. The company then demanded from the appellant the sum outstanding after deduction of the price obtained on the sale of his shares. On 29 January 1992, the appellant presented a petition under s 181 of the Companies Act 1965 ('the Act') accompanied by an affidavit wherein he deposed that the acts of the company were On 17 August 1992, the company took out a notice of motion to strike out the petition under O 18 r 19 of the obtained on the sale of his shares. On 29 January 1992, the appellant presented a petition under s 181 of the Companies Act 1965 ('the Act') accompanied by an affidavit wherein he deposed that the acts of the company were oppressive or unfairly discriminatory or otherwise prejudicial to him. On 17 August 1992, the company took out a notice of motion to strike out the petition under O 18 r 19 of the Rules of the High Court 1980 ('the RHC') that it disclosed no reasonable cause of action or was an abuse of the process of the court, and further under O 92 r 4 of the RHC, invoking the inherent jurisdiction of the court to deal with an abuse of its process. The company also applied by way of summons to set aside the service of the petition. On 29 January 1994, the judge considered the company's motion and decided to confine himself only to the petition and disregarded the affidavit evidence that had been tendered before him. The judge then held that the petition did not disclose a reasonable cause of action and was to be struck out based on three grounds: (i) that the petition did not allege any mismanagement in the company or unfairness of its directors; (ii) there had been no continuing oppression on the appellant up until the date of the presentation of the petition; and (iii) s 181(l)(b) may only be invoked by a member of a company and not by a shareholder. The judge also made an order in terms in respect of the summons to set aside the service of the petition. The appellant appealed.

Held, allowing the appeal: (1) in deciding to exclude from his consideration the affidavit evidence, it was plain that the judge overlooked the fact that the company was moving the court not only under para (a) of O 18 r 19(1) of the RHC, but was also relying on the other paragraphs of that rule and upon the court's inherent jurisdiction pursuant to O 92 r 4. Sub-rule 2 of O18 r 19 prohibits the use of affidavit evidence only in applications made under paragraph (a). It is settled beyond doubt that affidavit evidence is always admissible upon an application made under the other paragraphs of the first sub-rule or under the inherent jurisdiction of the court; (2) the question whether there is oppression, disregard, unfair discrimination or whether the act complained of is prejudicial is one that must be determined according to the facts of each particular case; (3) s 181(1)(a) of the Act looks to the effect and consequences of the wrong done in determining whether there is oppressive conduct in any other given case. Any other construction upon the section would denude it of its beneficial effect and frustrate the intention of Parliament. Therefore, it is inaccurate to state as a proposition of law that because of the present tense of the language appearing in s 181(1)(a) the oppression complained of must in every case continue up to the date of the presentation of the petition. Where attention is called to particular acts or omissions, it is sufficient that the effects of a single act or omission are such that they persist at the date of presentation of the petition; (4) mismanagement is not an essential element in the concept of oppression. Consequently, an allegation of mismanagement does not have to be pleaded in every case of alleged oppression to make the petition an acceptable pleading; (5) it is not only a minority shareholder who may have resort to relief under s 181 but also majority shareholders in circumstances where they are unable for any reason to exert their will at a general meeting of their company; (6) the category of persons within a company who may present a petition under s 181 of the Act would be as a general rule, only one who comes within the terms of s 16(6). This would mean that a petitioner who applies under the section must be able to demonstrate that his name appears on a company's register of members at the date of presentation of the petition. However, what has been expressed is the general, and not a universal, rule; (7) there may be cases where an application of the general rule would be unfair. If it is unjust or inequitable to permit a respondent to a petition under s 181 to assert that a petitioner has no locus standi to move the court, then, he will be estopped from so asserting. A respondent who is guilty of unconscionable or inequitable conduct will not be permitted to rely upon the requirement of membership in order to defeat a petitioner's standing as this would amount to his using statute as an engine of fraud. In this case, as the company had deprived the appellant of his membership, the company was not entitled to assert that the appellant lacked standing to present the petition; (8) the power to summarily strike out a pleading must be sparingly exercised; (9) the facts as pleaded in the petition clearly disclosed an arguable case under s 181(1)(a) and (b) of the Act. The matters alleged in the petition, if true, may in law amount to oppression or unfairness. Whether there was oppression or unfair discrimination was a matter for the judge who would hear the petition on its merits to decide. The trial judge's decision was, therefore, reversed.

Owen Sim Liang Khui v Piasau Jaya Sdn Bhd & Anor [1996] 1 MLJ 113; (1995) CSLR X[659] Federal Court, Kuala Lumpur (Edgar Joseph Jr, Mohamed Dzaiddin FCJJ and Gopal Sri Ram JCA).

Owen Sim Liang Khui v Piasau Jaya Sdn Bhd & Anor [1996] 1 MLJ 113; (1995) CSLR X[659] Federal Court, Kuala Lumpur (Edgar Joseph Jr, Mohamed Dzaiddin FCJJ and Gopal Sri Ram JCA).

Owen Sim Liang Khui v Piasau Jaya Sdn Bhd & Anor [1996] 1 MLJ 113; (1995) CSLR X[659] Federal Court, Kuala Lumpur (Edgar Joseph Jr, Mohamed Dzaiddin FCJJ and Gopal Sri Ram JCA).

On 28 July 1978, the Secretary General of the Ministry of Education directed the Registrar of Schools, Selangor/Wilayah Persekutuan to issue temporary certificates of registration to Fairview Schools Association (`the schools'). The schools were to be operated on a non-profit basis and any profits obtained from operating the schools would be applied to augment the facilities and to upgrade the quality of education. The founder members of the schools later decided that a company (`the respondent') was to be formed to provide an opportunity for parents with children in the schools to have a say in the management of the schools. The members were confined to parents only and each family was limited to one unit of RM50 share. The current paid-up capital of the respondent was RM23,150 and there were about 460 shareholders altogether. Physical space limitation prompted the then board of directors of the respondent to secure a three-acre piece of land in Wangsa Maju (`the land') for expansion. On 11 November 1992, an extraordinary general meeting was held to decide on an increase of school fees by 30%, inter alia, for the purpose of the servicing of a loan for the purchase of the land. At the said meeting, one KB Thuraisingham and several others interrupted the meeting and the said KB Thuraisingham was appointed to chair the meeting despite the presence of other directors. Thereafter, on 17 November 1992, a new board of directors was appointed and it proposed at two extraordinary general meetings on 28 August 1994, inter alia, that the paid-up capital of the respondent be increased by an additional RM4m with provision that in the event that fewer than three million shares were applied for, the board was authorized to approach an educational institution to take up the 3m shares. The petitioners applied to the court to wind up the respondent by virtue of the provisions of s 218(1)(e) (inability to pay debts), (1)(f) (directors having acted in the own interests) and (1)(i) (just and equitable) of the Companies Act 1965 (`the Act'). In reaching its decision, the court had to consider the status of the respondent in relation to the founder members of the schools.

Held, allowing the petitioners' application: (1) the respondent was in effect a domestic company comprising many families who had become associated as members which enabled them to participate in the overseeing and managing of the affairs of the schools. The respondent stood in law in the position of trustee vis-a-vis the founder members. Neither the certificates of registration nor the assets of the schools were ever transferred by the founder members to the respondent for any consideration whatsoever. The respondent as a legal entity was to be regarded as a trustee by reason of a presumed resulting trust arising when the ongoing schools were placed in its charge without any consideration moving from the respondent to the founders; (2) the attempt to turn the petition into a creditor's petition ought not to be entertained. There were no statements in the petition to suggest that `inability to pay debts' was one of the grounds of the petition. In his petition, a petitioner had to allege and prove the facts entitling him to present it, showing that one or more of the grounds specified in the Act for making a compulsory order existed. Unless these allegations were contained in the petition, the court would dismiss it. Furthermore, the petitioners had filed the petition as shareholders or contributories and not as creditors. The application to wind up the respondent under s 218(1)(e) of the Act was refused; (3) with the complete control of the respondent's board from 17 November 1992, the current board set into motion their ultimate goal of disposing the assets and to operate the schools. At the meeting on 28 August 1994, this board achieved passage of substantially amended resolutions after emphasizing the financial crisis situation and by further stating that non-support of the resolutions would result in the closure of the schools in September 1994. The manipulative conduct of the board in failing to at least adjourn the meetings on 28 August 1994 led to the only conclusion that the denial of proxy votes was an overall plan to pass the resolutions. The respondent should thus be wound up under s 218(1)(f) of the Act; (4) the respondent was in substance an association of families whose interest was necessarily focused on the provision of quality education at the lowest possible costs. The respondent was formed on the basis of personal relationship involving mutual confidence and the understanding which saw at least one founder member serving on the board of the schools. Further, the restriction on transfer of the shares, and at par, to parents, ensured parity among members. The conduct of the board culminating in the resolution of 28 August 1994 in effect destroyed the aforesaid family relationship. In such circumstances, the principle in Ebrahimi v Westbourne Galleries Ltd & Ors [1972] 2 All ER 492 applied as the situation which had arisen was outside what the members of the respondent contemplated by the arrangement they had entered into when they became members. The conduct of the board constituted unconscionable acts and in the circumstances the respondent should be wound up under s 218(1)(i) of the Act; (5) it was not proper that the respondent per se paid the costs of this petition which was precipitated by the wanton and calculated and scheming minds of the recalcitrant directors of the board who intermeddled in the affairs of the respondent by taking over the board as of 17 November 1992. The directors who took over the board on 17 November 1992 ought to pay the costs of this petition and the petitioners were to file an action against them for the recovery of these costs.

Indrani a/p C Rajaratnam & Ors v Fairview Schools Bhd [1997] 5 MLJ 267 High Court, Kuala Lumpur (Kamalanathan Ratnam JC).

P presented a petition for the winding-up of D2. P alleged oppressive conduct on the part of D1. Both P and P1 were founder directors of D2. P had also subsequently filed a writ of summons and a statement of claim against D1. D1 applied to strike out P's petition on the grounds that it was frivolous, vexatious and an abuse of the process of the court. D1 contended, inter alia, that the petition as presented was bad in law because it was presented under the wrong provision of the Companies Act 1965, was not in proper form and was not in compliance with the relevant rules of the High Court. The learned judge held that the petition had not been properly presented and was defective in form and that a wrong procedure had been adopted in its presentation. The petition was ordered to be struck out as the learned judge was of the opinion that it was frivolous, vexatious and an abuse of the process of the court. Hence, the present appeal by P against the decision of the learned judge.

Held, dismissing the appeal: (1) the petition presented in the instant case was not in accordance with the provisions of the Companies Act 1965 . This had resulted in a petition which was imprecise and which appeared to be a hybrid petition purporting to have been presented under two different sections of the Companies Act 1965, namely, ss 181 and 218. It could not be said to be a case of mere non-compliance with the rules of the court which required only an amendment of the pleadings; (2) their Lordships were also of the view that the substantial duplication of issues and relief sought in both the actions by P amounted to multiplicity of actions and in all the circumstances of the case, the petition presented was vexatious and an abuse of the process of the court. Their Lordships were of the opinion that the learned judge had exercised his discretion correctly in striking out the petition; (3) however, P was given the liberty to file a proper petition under s 181 of the Companies Act 1965 after disposal of the civil suit filed by him against D1 if he still requires to seek remedies for acts which he alleged to be oppressive to him.

Lai Kim Loi v Datuk Lai Fook Kim & Anor [1989] 2 MLJ 290 Supreme Court, Malaysia (Lee Hun Hoe CJ (Borneo).

Wong Ah Lan & Anor v Emas-Jaya Enterprise Sdn Bhd (1996) CSLR XX[1680] High Court, Kuala Lumpur (Kamalanathan Ratnam JC).

P filed a petition for the winding up of D on the ground that D was indebted to it in the sum of M$100,003.97 with interest. D had failed to heed the statutory notice given by P pursuant to s 218 of the Companies Act 1965. Hearing of the petition had been postponed on numerous occasions. When counsel for D applied again for the hearing of the petition to be postponed, counsel for P objected to the application. Counsel for P contended that the hearing of the petition had earlier been postponed as the parties wanted to settle the matter. As no settlement could be reached, the hearing of the petition should not be further postponed.

Held, dismissing D's application: (1) in the instant case, counsel for D did not clearly indicate the reasons why he sought a postponement. If he was indisposed, there was no medical evidence as such and if he was engaged, he did not explain whether he was bearing in mind that cases in the High Court have priority over cases in the lower court. On the evidence, the court found that the application for postponement was without merit; (2) when the matter finally came up for hearing, counsel for D was absent. The court decided that it should proceed with the hearing of the petition in the absence of counsel for D as it was satisfied that the debt on which the petition was based was large and that the evidence was overwhelming that D was unable to pay its debt and should rightly be wound up. The court, accordingly, made an order in terms of the petition.

Ansa Teknik (M) Sdn Bhd v Kendalian Bina Sdn Bhd Companies (Winding-Up) No 42-48 of 1988 High Court, Johore Bahru (Abu Mansor J).

The petitioner presented a petition to wind up the respondent company on 17 May 1977. The affidavit verifying the petition was sworn before the presentation of the petition. The respondent objected to the petition and the court allowed an adjournment. Thereafter, the petitioner filed another affidavit verifying the petition.

Held: (1) the principle governing an affidavit is that it must be made in some cause or matter which is actually pending in the court; (2) in this case, there had been a disregard of the rules and therefore the petition should be struck out and a fresh petition should be filed.

Chin Yoon Timber Co v Overseas Lumber Bhd [1978] 2 MLJ 173 High Court, Johore Bahru (Syed Othman J).

Lim Tok Chiow & Anor v Dian Tong Credit & Development Sdn Bhd [1994] 2 MLJ 345; CSLR XX[6091] High Court, Kuching (Abdul Kadir Sulaiman J).

A petition was presented to the court to wind up the respondent company. However, the affidavit verifying the petition was affirmed about four days before the presentation of the petition itself, which was a clear failure to comply with r 26 of the Companies (Winding-up) Rules 1972. At the hearing of the petition, the respondent company contended that the non-compliance was a fatal defect and that the petition must be rejected as this court had no power to cure such a defect.

Held: (1) in this case, non-compliance with r 26 does not render the petition a nullity and is curable by the court; (2) s 221(2) of the Companies Act 1965 (Act 125) allows the court to cure a technical error which does no injustice to the respondents.

Sari Atlantic Sdn Bhd v Aik Kim Enterprise [1988] 1 MLJ 201 High Court, Alor Setar (Lim Beng Choon J).

The petitioner, Bernt Olof Andreas Forsell ('Bernt') sought an order to wing up the respondent's company, Ohm Pacific Sdn Bhd ('Ohm'). The respondents filed affidavits relating to the question of security of costs and interlocutory applications but failed to file an affidavit to oppose the winding-up petition. At the hearing of the petition, the respondents sought to oppose the petition. Counsel for Ohm relied on para 2 in the respondent's affidavit in support of its application for security of costs in an attempt to oppose the petition. Paragraphs 2 states the respondent's wish to oppose the winding up of Ohm.

Held, allowing the petition: (1) para 2 of the respondent's affidavit in support of its application for security of costs cannot be regarded as an affidavit in opposition of the winding-up petition. Neither can a company's affidavit in support of an application for injunction nor its affidavit in reply be regarded as affidavits in opposition; (2) affidavits in opposition to a winding-up petition must be filed in accordance with r 30(1); (3) while the court has the discretion to enlarge time, there has to be a formal application for the hearing of the petition to be adjourned; (4) the question of adjournment to enable the company to formally file an affidavit in compliance with r 30 did not arise since the company was out of time in filing the affidavit in opposition.

Bernt Olof Andreas Forsell v Ohm Pacific Sdn Bhd (1995) CSLR XX[4651] High Court, Kuala Lumpur (Zakaria Yatim J).

Re Chong Lee Leong Seng Co (Pte) Ltd [1989] SLR 685 High Court, Singapore (Chan Sek Keong J).

P, an unsecured creditor, had petitioned for the compulsory winding up of D. The opposing creditors sought a stay of the petition for a period of ten months to enable D to complete certain phases of a housing project so that D could fulfil its obligations to the purchasers of the uncompleted flats who were the opposing creditors and in the process settle all outstanding sums due to all their creditors including P.

Held, adjourning hearing of the petition: (1) the law on the functions of the court when dealing with a petition for the compulsory winding up of a company is that once the debt has been proved to be unpaid and that the company is insolvent, the petitioner is entitled to a winding-up order ex debito justitiae. However, there are instances where the right to a winding up order is subject to the discretion provided by the language of s 221(1) of the Companies Act 1965 in that the court may decide not to do so. One of such instances is where the petition is opposed by a majority of the creditors; (2) in the instant case, the first matter to be determined is whether the wishes of the majority creditors are reasonable. Having regard to the circumstances of the case, the opposing creditors, particularly the majority purchasers of the flats, had made out a reasonable request to stay the petition for just ten months as D had given its undertaking to have phase IV of the housing project completed by then. In any event, P had not shown any special circumstances which would render the winding up desirable.

Kim Wah Theatre Sdn Bhd v Fah Lum Development Sdn Bhd [1990] 2 MLJ 511 High Court, Kuala Lumpur (Siti Norma Yaakob J).

Ansa Teknik (M) Sdn Bhd v Cygal Sdn Bhd [1989] 2 MLJ 423 High Court, Johore Bahru (LC Vohrah J).

The present companies winding-up petition was presented by K, a company which was in liquidation, against another company ('the company'). The hearing of the petition was suspended pending the determination of related issues by the Court of Appeal. The applicant, the Attorney General, applied to be substituted as the petitioning creditor in place of K. The applicant initiated the application on behalf of the government of Singapore as a creditor of the company. It was claimed by the applicant that the company was indebted to the government arising from the failure of the company to make full payment for the purchase of a piece of land.

Held, granting the application: (1) r 33 applied where the petitioner could not proceed with the petition by reason of any impediment. Here, because of the pending appeals, the petitioner could not proceed; (2) there was no dispute that the government of Singapore was a creditor of the company at the date of the petition notwithstanding a dispute over the exact amount owed. The government therefore had a right to present the petition; (3) a 'contingent or prospective creditor' denotes a person towards whom, under an existing obligation, the company is subject to a liability to pay a sum of money on the happening of some future event or at some future date. As, in this case, there was and still remains an obligation on the part of the company to pay to the government the instalments for the purchase of the land, the government was a contingent or prospective creditor of the company and the applicant on behalf of the government would be entitled to present the petition at the date it was filed; (4) the hearing of the petition had been delayed too long. The company was also hopelessly insolvent. In the circumstances, the court would exercise its discretion to grant the application.

Re People's Parkway Development Pte Ltd [1992] 1 SLR 413 High Court, Singapore (Thean J).

The petitioners had petitioned for the winding-up order against Sin Lee Sang Sawmill Sdn Bhd on the grounds that its accounts had not been lodged with the Registrar of Companies; that there were serious irregularities in the accounts; that the respondents had manipulated the accounts; that the company was in serious financial difficulties; and that the respondents were trying to remove the petitioners as directors of the company. The petitioners were minority shareholders but they had been the managing director and executive director since 1985 and signed the company's cheques. However, they maintained that two of the respondents, as chairman and director and also related to each other, had full management and control of the company. Further, the first petitioner as managing director was not involved in the daily affairs of the company as he had to attend to personal matters. It was also alleged that the respondents, who were offering to sell the company for M$600,000, had also refused the petitioners an opportunity to purchase the company for that price. Two of the respondents had called for an extraordinary general meeting ('the EGM') to pass a resolution to remove the petitioners as directors but that was called off as the petitioners pointed out that it was not called in compliance with the Companies Act 1965 (Act 125) ('the Act'). It was submitted that the respondents, in their attempts to remove the petitioners, were intending to sanction all backdated transactions, conceal all misappropriations and falsify accounts to lower the value of the shares. The respondents argued that by granting the petition, it would mean that the court accepted that the petitioners were in control since 1985 and would not have to answer for misdeeds after the grant. Affidavits exhibiting the agenda and minutes of a meeting in April 1985 stated that both petitioners were authorized to manage and administer the company. The accounts could not be manipulated as other directors did not sign the cheques, vouchers and receipts. The EGM called was to get an explanation from the petitioners who could not satisfactorily explain to the auditors. The respondents would be left in the lurch in answering the auditors if the petition were granted.

Held, dismissing the petition with costs: (1) the petitioners were in control of the management of the company. As such, the court fails to see how they can even suggest that the affairs of the company and the powers of the directors had been exercised in a manner oppressive to shareholders under s 181 of the Act; (2) the court is also in no position to hold that the circumstances come within the ambit of any of the provisions laid out in s 218(1) of the Act. This is not a case where the court could form the opinion that it would be just and equitable for the company to be wound up. The real purpose of the petitioners was just to teach the respondents a lesson.

Re Sin Lee Sang Sawmill Sdn Bhd; Leong Thong & Anor v Chong Thim & Ors [1990] 1 MLJ 250 High Court, Ipoh (Abdul Malek J).

A instituted proceedings under s 216 of the Companies Act (Cap 50) alleging oppression and disregard of their interests. The petition was filed as a winding-up petition. R filed an application to strike out the petition. This was granted on the ground that the proceedings should have been brought under the RSC instead (see Re Chong Lee Leong Seng Co (Pte) Ltd [1989] 3 MLJ 343). A appealed to the Court of Appeal.

Held, allowing the appeal: (1) proceedings under s 216 of the Companies Act are not winding-up proceedings. Winding up need not be one of the reliefs sought. Accordingly, the Companies (Winding-Up) Rules do not apply to such proceedings, which should be commenced by originating petition as provided in RSC O 88 r 5; (2) it is not correct to say that a court in Singapore will only grant a winding up under s 216 if other reliefs will not cure the oppression complained of. The section confers on the court an unfettered discretion. There may be circumstances in which relief other than winding up would end the oppression complained of but the court considers that winding up is a more appropriate remedy; (3) although the present proceedings were commenced by the wrong mode, this was not fatal. RSC O 2 r 1 gives the court power to rectify irregularities. The only defect in the instant case was the heading. Apart from that there was nothing wrong with the petition as a matter of form. Accordingly, it was ordered that the petition be amended so as to make it an originating petition under the RSC. The appeal was accordingly allowed.

Kuah Kok Kim & Ors v Chong Lee Leong Seng Co (Pte) Ltd [1992] SLR 122 Court of Appeal, Singapore (Yong Pung How CJ, Thean and Chao Hick Tin JJ).

Re Gee Hoe Chan Trading Co Pte Ltd [1991] SLR 837 High Court, Singapore (Chao Hick Tin J).

Miharja Development Sdn Bhd & Ors v Tan Sri Datuk Loy Hean Heong & Ors and another application [1995] 1 MLJ 101; (1994) CSLR XX[3028] High Court, Kuala Lumpur (VC George J).

The petitioners had an agreement to develop certain land and entrusted the project to MBf Property Services Sdn Bhd ('MBf Property') (the seventh respondent) with financing to be provided by MBf Finance Bhd (the third respondent). A loan agreement was entered into with MBf Finance Bhd and security for the loan included a debenture and deposit of shares. The shares were registered in the name of a nominee company of MBf Finance Bhd, ie MBf Nominees Sdn Bhd, and were held as security. The project was substantially completed when the petitioners' directors realized that it had suffered losses of RM51m and was projected to lose RM21m upon completion. As the project was the only business of the two petitioners and it was apparently impossible for them to carry on business profitably based on information given by MBf Property, the directors decided to petition for winding up under s 217 of the Companies Act 1965 ('the Act'). The petitioners alleged that as the shares were registered in the name of MBf Nominees, the members in whose names the shares were registered prior to that ('the alleged real shareholders') could not hold a general meeting to sanction the petitions for winding up. The petitioners' directors contended that: (i) the agreements with MBf Property and the powers of attorney granted to it had the effect of MBf Property's directors replacing the petitioners' directors; and (ii) MBf Property and its directors were deemed to be the petitioners' directors but had acted in the interests of the MBf Group of Companies to the detriment of the petitioners and their members. The respondents, however, contended that the petitioners could not petition the court to wind themselves up without the consent of the registered shareholder, ie MBf Nominees. The respondents applied to strike out the petitions on the grounds that: (i) the alleged real shareholders had lost the right to petition as contributories by virtue of MBf Nominees being the registered shareholder of all the petitioners' issued shares; and (ii) they were an abuse of the process of court.

Held, dismissing the respondents' applications to strike out the petitions: (1) there is no provision in s 217 of the Act requiring an ordinary resolution as a condition precedent to a company taking out a s 217 petition, unlike s 254. The omission must have been a deliberate one and the effect of and practice in respect of s 217(1)(a) is and should be that the directors of a company may petition the court to wind up the company without first having to obtain the sanction of the shareholders, particularly where it is not possible to obtain the views of the real shareholders at an EGM because the shares are held as security by a financial institution in whose name they are registered; (2) the persons entitled to bring a petition under s 217(1)(c) include contributories and to the list should be added shareholders whose shares are pledged or held as security, upon which the charge has not been foreclosed, even though they have been registered in the name of the pledgee or its nominee. It was the technicality of the shares being registered in the name of MBf Nominees that prevented the alleged real shareholders from exercising their rights as shareholders. Thus, they should be deemed to be the shareholders and were prima facie entitled to petition to wind up under s 217(1)(c) read with the definition of 'contributory'. Under s 221(1) of the Act, the court shall not refuse to make a winding-up order on the ground only, in the case of a petition by a contributory, that there will be no assets; (3) the petitions were not an abuse of process as the evidence showed that the complaints of the petitioners were not baseless or obviously unsustainable. On the contrary, there should be an independent full and critical investigation of the petitioners' affairs and of the project. Leave for a stay of the orders pending appeal was refused.

Miharja Development Sdn Bhd & Ors v Tan Sri Datuk Loy Hean Heong & Ors and another application [1995] 1 MLJ 101; (1994) CSLR XX[3028] High Court, Kuala Lumpur (VC George J).

Kok Fook Sang v Juta Vila (M) Sdn Bhd & Ors [1996] 2 MLJ 666; (1996) CSLR XX [4178] Court of Appeal, Kuala Lumpur (NH Chan, Mahadev Shankar and Shaik Daud JJCA).

Kok Fook Sang v Juta Vila (M) Sdn Bhd & Ors [1996] 2 MLJ 666; (1996) CSLR XX[4178] Court of Appeal, Kuala Lumpur (NH Chan, Mahadev Shankar and Shaik Daud JJCA).

Cymun Development Sdn Bhd v Supermax Sdn Bhd [1995] 2 MLJ 233 High Court, Shah Alam (Faiza Tamby Chik J).

Lyn Country Sdn Bhd v EIC Clothing Sdn Bhd & Anor [1997] 1 MLJ 198 High Court, Kuala Lumpur (Kamalanathan Ratnam JC).

The petitioner filed an oppression petition under s 181 of the Companies Act 1965 (`the Act'). He also filed a winding-up petition under s 218 of the Act. The first prayer in the oppression petition was for the winding-up of the first respondent company. The second prayer in the oppression petition was an alternative prayer for the purchase of the petitioner's shares by the respondents. The respondents applied for an order that the oppression petition be permanently stayed or alternatively that the petitioner be put to election as to whether to proceed with the oppression petition or the winding-up petition. The respondents contended that the concurrent maintenance of the two petitions, being proceedings between the same parties based on identical facts and grounds of complaint was prima facie an abuse of the process of the court. In submitting that the application should be dismissed, the petitioner relied on the general proposition that where a statute provided for two or more remedies to a person, he was entitled to seek all the remedies and ought not to be required to elect between them.

Held, allowing the application: (1) the presentation by the petitioner of the two petitions was prima facie a multiplicity of proceedings amounting to an abuse of the process of the court. The abuse lay in fact that one or other of the petitions was unnecessary and the unecessary petition was an abuse of the process of the court. Moreover no reasons had been advanced as to why the petitioner needed to present two petitions; (2) the proposition that where the statute provided two or more courses of action for obtaining remedies, a person qualified to take either of the courses had the right to take both courses and could not be deprived of it was too sweeping a statement. A right was to be pursued with bona fide reasons and for a bona fide purpose.

Eddie Lee Kim Tak v JK Development Sdn Bhd & Ors Originating Petition No D2-26-42-95—High Court, Kuala Lumpur (Abdul Aziz J).

The appellants, on 10 September 1994, presented a petition before the commercial division of the Kuala Lumpur High Court to wind up the first respondent company, Kian Joo Holdings Sdn Bhd ('the company'), of which they were shareholders. The other respondents were also the shareholders of the company. On 11 November 1994, the second, third and fourth respondents took out a motion in the petition to strike out prayer 4(a) of the winding-up petition, which was that there be a distribution in specie of shares and investments, on the ground that it was obvious that the relief claimed therein could not be granted by the court at the hearing of a winding-up petition. The judicial commissioner who heard the motion, acceded to it and struck out the prayer. Against this, the appellants have appealed, on the ground that they were entitled to apply for an order that the assets of the company be distributed in specie among the shareholders under s 221 of the Companies Act 1965 ('the Act'). In the meantime, the judicial commissioner proceeded to fix the petition for hearing. The appellants took the view that if the petition was proceeded with before their appeal was heard and determined, they would suffer prejudice. They accordingly moved the Court of Appeal for a stay of all proceedings on the petition pending the hearing and disposal of their appeal. That application came on for hearing before the Court of Appeal on 20 November 1995.

Held, dismissing the application: (1) the power of a companies court when hearing a winding-up petition is found in s 221 of the Act. Despite the rather wide words appearing in s 221(1), the only final order a companies court may make is either to direct a winding-up or to dismiss the petition. It may make interim orders, eg by appointing a provisional liquidator or a receiver and manager pending the final disposal of the petition, but it may not make an order as to the distribution or disposal of the assets of a company; (2) the power of the Court of Appeal to grant a stay of proceedings or stay of execution is found in s 44 of the Courts of Judicature Act 1964 ('the CJA'). This provision confers ample jurisdiction upon the court to grant any order that will have the effect of preserving the integrity of any appeal pending before it. However, whether such an order ought to be granted is entirely within the discretion of the court. However, there is no need for the applicant to demonstrate special circumstances to warrant a stay of proceedings or of execution; (3) the paramount consideration governing an application for a stay of execution or proceedings or an application for some other interim preservation order of an appeal under s 44(1) of the CJA, is that the appeal, if successful, should not be rendered nugatory. If upon balancing all the relevant factors, it is clear that an appeal would be rendered nugatory without the grant of a stay or the interim preservation order, a stay or other appropriate interim relief should normally be directed. However, in a case where the pending appeal is obviously unarguable, it will not be a proper exercise of discretion for the court to grant a stay. In this case, a stay should not be granted as the substantive appeal lacked merit and was doomed for failure; (4) further, the appellants in this case would not suffer any prejudice if the stay was not granted. The appellants would get their primary relief in any event, as there was no objection from the respondents to wind up the company. To permit the stay would bring an unwarranted delay of the hearing of the case which would cause manifest injustice to the parties. Also, a winding-up petition ought to be prosecuted to a conclusion with all due speed; (5) upon the winding up of the company, it is open to the appellants to apply to the liquidator to distribute the assets of the company in specie among the contributories. The liquidator may or may not accede to it. However, if the appellants are dissatisfied with his decision, they may approach the court to review it.

See Teow Guan & Ors v Kian Joo Holdings Sdn Bhd & Ors [1995] 3 MLJ 598; (1995) CSLR XX[4177] Court of Appeal, Kuala Lumpur (Gopal Sri Ram, Siti Norma Yaakob JJCA and Mokhtar Singh J).

Re Pan-Malaysia Industries Ltd; Tay Ah Kee & Anor v Central Provident Fund Board 1978 High Court, Singapore (Choor Singh J).

Abdul Samad bin Hj Alias v The Government of Malaysia & Ors [1996] 3 MLJ 581; (1996) CSLR XX[4309] Federal Court, Kota Bharu (Mohd Azmi, Wan Adnan FCJJ and Shaik Daud JCA).

When a judgment creditor has applied for execution against the assets of a company before the presentation of a winding-up petition he is a secured creditor and entitled to be put in the same position as if the property had been sold on his application. The liquidator will be ordered to give him a charge on the assets. A similar order in favour of another creditor may be set aside under s 20, Courts Enactment 1905, on application by the first creditor if wrongly made, although the first creditor has no right of appeal as a person aggrieved under s 167 of the Companies Enactment 1897.

Federated Engineering Co v Salak South Ltd [1911] 2 FMSLR 63 Court of Appeal, Federated Malay States (Sercombe-Smith Ag CJC and Woodward JC).

[Annotation: This case was not followed in Official Receiver and Liquidator v Grigg (1929) 7 FMSLR 48.]

A creditor having recovered judgment against a company, attached its movable and immovable property and obtained an order for the sale thereof. Subsequently, and before the sale took place, a winding-up petition was presented and a winding-up order made. The creditor applied to the court for a declaration that he was entitled to rank as a secured creditor by reason of his attachment or, in the alternative, for leave to proceed to sell the attached property.

Held: (1) attachment proceedings give no security to a judgment creditor as against a liquidator in the winding up of a company unless such proceedings are completed by sale (quaere and distribution of the proceeds); (2) the provisions regarding rateable distribution in the Civil Procedure Code render the English law on this subject inapplicable.

Official Receiver and Liquidator v Grigg [1929] 7 FMSLR 48 Court of Appeal, Federated Malay States (Thorne, Prichard and Burton JJ).

The applicants were debenture holders of a company and had applied to court for the appointment of a receiver and manager of the company. The company was the tenant of premises belonging to the respondents. There were machinery and other movable property on the premises. The respondents applied to distrain the movable property for arrears of rent. The applicant subsequently applied to have the writ of distress discharged or suspended and for the release of the property distrained. The question was who had priority, the debenture holders or the landlords.

Held: (1) as between an execution creditor and a debenture holder who possesses a floating charge, the execution creditor takes subject to the equity of the debenture holder. There is no authority to support the view that the rights of a landlord are greater than those of an execution creditor vis-a-vis a debenture holder. A landlord is an unsecured creditor as any other unsecured creditor and he cannot have against a debenture holder any better rights than an unsecured execution creditor; (2) on the facts of this case, the debenture holders have a prior right to the property distrained to the respondents.

Haw Par Brothers International Ltd v Overseas Textiles Co Ltd 1978 High Court, Singapore (Choor Singh J).

A kepala (foreman) claiming in a liquidation who has paid off the wages of coolies from his own pocket unpaid at the date of the liquidation is entitled to stand in their shoes and be a preferred creditor.

Re Tan Kah Kee & Co Ltd [1935] MLJ 243 High Court, Straits Settlements (Huggard CJ).

Yip Hock Chye & Ors v Santan Engineering Pte Ltd & Anor [1987] SLR 277 High Court, Singapore (Lai Kew Chai J).

Castwell Sdn Bhd ('Castwell') went into voluntary liquidation on 14 July 1986, and the plaintiff was appointed as its liquidator. The amount of Castwell's assets was insufficient to meet the general and preferential debts of the company, and the plaintiff found himself in a predicament as to whether the sales tax due to the Director of Customs, Federal Territory ('the Customs') was to be settled in priority to the claim by MIDF debenture holders under a floating charge created by Castwell ('the debenture holders'). The liquidator took the view that the sales tax, which is a federal tax within the meaning of s 292(1)(f) of the Companies Act 1965 ('the CA'), had a lower priority than the debenture holders' claim. However, the Customs argued that s 69(1) of the Sales Tax 1972 ('the STA') conferred the right on the Custom to be ranked before other claims and prevailed over s 292 of the CA, following the maxim lex posterior derogat priori and generalia specialibus non derogant. It was also argued that s 10(1) and (2) of the Government Proceedings Act 1956 ('the GPA') would in any event confer priority of the payment of the sales tax. The High Court held that s 69 of the STA was an administrative direction, hence, the Customs were not entitled to any priority. The Customs have appealed. The issue before the court was whether the sales tax had priority of payment over preferential payments and the claims of the debentures holders, pursuant to the relevant provisions in the CA, the STA and the GPA.

Held, dismissing the appeal: (1) in terms of its construction, s 69 of the STA is directive in nature and merely directs the setting aside of moneys sufficient for taxation, but does not provide that Government debts shall rank in priority to all other secured debts. If the Legislature had intended otherwise, it would have conferred that privilege in clear and unequivocal words. The proper provisions to apply in deciding the priority of payments in respect of the sales tax debt are ss 291 and 292 of the CA.; (2) s10(1) of the GPA provides in general terms that all debts due to the Government shall enjoy preferential payments over other competing debts which arise subsequently. In contrast, ss 291 and 292 of the CA are special provisions dealing with the respective rights of secured and unsecured creditors in an insolvent company, and they expressly rank federal tax sixth in priority amongst other unsecured debts. When the floating charge crystallized, the debenture holders became secured creditors, whereas the sales tax claim by the Customs remained an unsecured civil debt; (3) discernibly, there is a conflict between s 292(1) and s 10(1). In this situation, the general rule of construction that applies is specialia generalibus derogant - special provisions derogate from general provisions. Hence, if a special provision is in conflict with an earlier general provision, the special provision will be treated as an exception to the general provision, and it follows that s 292(1) of the CA must be read as an exception to the general provision of s 10(1) of the GPA; (4) in the present appeal, this intention was made even clearer by s 213 of the CA, which expressly binds the Government to the priority of debts as provided in the CA. Also, if the Government debts are to be paid in preference of the cost and expense of winding up, and if the funds available are limited, no winding up can be proceeded with, as there will be no funds to pay even for the filing fees of the petition and the liquidator's fees.

Director of Customs, Federal Territory v Ler Cheng Chye (Liquidator of Castwell Sdn Bhd, in liquidation) [1995] 2 MLJ 600; (1995) CSLR XX[4308] Supreme Court, Kuala Lumpur (Peh Swee Chin, Wan Yahya and Mohamed Dzaiddin FCJJ).

Procam (Pte) Ltd v Nangle Charles & Anor [1990] SLR 624 High Court, Singapore (LP Thean J).

The appellant was appointed by United Asian Bank Bhd ('the bank') as the receiver and manager of Rajiv Enterprises Sdn Bhd ('Rajiv') pursuant to the terms of a debenture. The assets of Rajiv was eventually sold resulting in sum of RM138,343.57 after deduction of the costs of receivership. There were three creditors of Rajiv that compete for the aforesaid sum now in the hands of the appellant. They were: (i) the bank for the sum due and owing under the terms of the debenture; (ii) the Government of Malaysia for the sum due by way of sales tax for the years 1984-1986; and (iii) the employees of Rajiv ('the employees') who claimed the sums due by way of termination benefits, etc pursuant to an award under s 69 of the Employment Act 1955. There were insufficient assets to meet the claims of all the three creditors. The appellant applied to the High Court for directions under s 183(3) of the Companies Act 1965 ('the 1965 Act'). The appellant maintained that the bank was entitled to the sums that were held by the appellant as the sums that were so held were the realizations of assets charged to the bank by virtue of the debenture. The government maintained that they were entitled to priority by reason of s 70 of the Sales Tax Act ('the 1972 Act') or s 10 of the Government Proceedings Act 1956 ('the 1956 Act'). The employees claimed they had priority by reason that their claim fell within the definition of 'worker's compensation' in s 191 when read together with s 292(c) of the 1965 Act. However, in his written submission, counsel for the employees conceded that the employees were entitled to and they now claimed only the sum RM21,000 under s 292(1)(b) of the 1965 Act. This claim was agreed to by the appellant. The High Court directed that the claims of the government in respect of sales tax assessed pursuant to the 1972 Act be paid in priority to the claims of the bank as the debenture holder. The appellant appealed. The government maintained that in order to determine the issue of the conflicting claims, the court should only look at the provisions of the 1972 Act and that the provisions of ss 191 and 292 of the 1965 Act and s 10 of the 1956 Act were entirely irrelevant. It was argued that all monies collected by a taxable person as sales tax from the purchasers were collected on behalf of the government and thus, the monies collected belonged to the government and the question of priority did not arise.

Held, allowing the appeal: (1) it must now be regarded as settled that ss 69 and 70 of the 1972 Act do not operate to confer any priority for sales tax over other debts and that s 292(1) of the 1965 Act must be read as an exception to the general provisions of s 10(1) of the 1956 Act; (2) it is erroneous to say that the provisions of ss 191 and 292 of the 1965 Act do not apply. Once a receiver has been appointed, ss 191 and 292 will come into play. Whilst it is true that a taxable persons collects the sales tax for the government, the government cannot claim priority over such monies once a receiver has been appointed. The argument will be tenable only if the monies collected by Rajiv as sales tax were put into a separate special account. But, there is no evidence that monies collected as sales tax were put into such an account. They must have been put into the mixed account of Rajiv; (3) therefore, the trial judge was wrong in directing that sales tax due to the government be paid in priority to the claim of the debenture holder; (4) since the claim by the employees for the sum of RM21,000 was agreed to by the appellant, there was therefore no dispute between the appellant and the employees that the employees were entitled to be paid that sum in priority to the claim of the debenture holder. But, the employees are only entitled to be paid out of floating charge realizations and not out of fixed charge realizations; (5) the sum of RM20,000 which was the forfeiture of a deposit for the sale of fixed assets should be considered as a fixed charge realization and thus not available for distribution to the employees; (6) not all of the floating charge was available for distribution to the employees. A portion of that sum must first be used to satisfy a portion of the costs and expenses of the receivership; (7) by the terms of the debenture, the receivership costs are given first priority over all other claims including that of the debenture holder. The said costs also have priority over the claim of the bank to be paid out of the assets subject to the fixed charge. Accordingly, the receivership costs can be paid out of either the fixed charge realizations or floting charge realizations as the debenture was silent on this matter; (8) the amount that the bank and the employees would actually receive in satisfaction of their claims would depend on which fund the receivership costs were paid out; (9) the proper way was to apportion the receivership costs between the floating charge realizations fund and the fixed charge realizations fund. In order to do that, there must first be an assessment as to the costs of realizing the fixed charge assets and the floating charge assets and the costs of carrying on of the business of the company to obtain the floating charge realizations fund. Then, the costs of realizing the fixed charge assets should be deducted from the fixed charge realizations and the costs of realizing the floating charge realizations should be deducted from the floating charge realizations fund. In relation to costs that cannot be attributed towards the realizations of either the fixed or floating charge realizations, the costs should be borne by the funds pro rata.

Abdul Samad bin Hj Alias v The Government of Malaysia & Ors [1996] 3 MLJ 581; (1996) CSLR XX[4309] Federal Court, Kota Bharu (Mohd Azmi, Wan Adnan FCJJ and Shaik Daud JCA).

X Sdn Bhd created debentures as security for loan facilities granted to it. X Sdn Bhd was subsequently wound up voluntarily and A was appointed as its liquidator. X Sdn Bhd owed sales tax to D. D claimed that under s 69(1) of the Sales Tax Act 1972, the sales tax due from X Sdn Bhd should be paid first before the claims of its debenture holders. D further contended that since there was a conflict between s 69(1) of the 1972 Act and s 292 of the Companies Act 1965, the maxim 'lex posterior derogat priori' should apply whereby sales tax should be given priority over the claims of the debenture holders. A applied to the High Court for directions as to whether the sales tax due from X Sdn Bhd has priority over the claims of its debenture holders.

Held: (1) there is no conflict between s 69(1) of the 1972 Act and s 292 of the 1965 Act. Section 69(1) of the 1972 Act merely requires the liquidator to set aside a sum of money out of the assets of the company so as to provide for the sales tax. This is only an administrative function which does not confer priority. Section 292 of the 1965 Act, however, speaks in terms of priority of payment; (2) accordingly the maxim 'lex posterior derogat priori' does not apply in this case and s 69(1) of the 1972 Act does not confer priority on sales tax over the claims of the debenture holders.

Ler Cheng Chye, Liquidator of Castwell Sdn Bhd (in Liquidation) v Director of Customs, Federal Territory (1992) CSLR XX[4305] High Court, Kuala Lumpur (Zakaria Yatim J).

The petitioner presented a petition for the winding up of Prismatic Sdn Bhd ('the company') on the grounds that it was 'just and equitable' to do so. The petitioner was a 50% shareholder of the company with the other 50% of the shares being held by a Dr Ramachandran. The petitioner contended that she was systematically excluded from involvement in the affairs of the company, that the company was mismanaged and that no annual general meetings were held from the financial year 1987. She complained that her attempts to obtain the records and accounts of the company had been rebuffed and her requests to hold an extraordinary general meeting of the company were also refused. Further, she alleged that shares and other assets of the company had been sold without approval by shareholders' meeting and were not accounted for. Therefore, the petitioner prayed for a winding up order of the company, an interlocutory injunction to restrain the company and/or its directors from dealing in the assets or funds of the company and an order to make available all records and documents of the company. On 11 January 1992, the petitioner made an ex parte application and obtained an order for an interlocutory injunction restraining the company and/or its directors, agents or servants from making any decision pertaining to the company or dealing with any asset or funds without the petitioner's approval. On 29 January 1992, Dr Ramachandran filed a notice of motion to set aside and dissolve the petitioner's ex parte order. He argued that the petition was incompetent because it was not in proper form, the prayers sought in the petition fell outside the ambit of s 218 of the Companies Act 1965 as the only order that the court could grant under the section was for winding up the company and that there was an inordinate delay in presenting the petition.

Held, dismissing the application: (1) the affidavit complied substantially with r 26 and Form 7 of the Companies (Winding-Up) Rules 1972 ('the Rules'). The deviation in form, if any, was necessitated by tailoring the form to accommodate the facts of the case and the deviation had no substantial effect and was not calculated to mislead; (2) this was not a hybrid petition purporting to be presented under s 218 and s 181 of the Companies Act 1965 ('the Act'). This was not a case of two actions seeking the same relief. Lai Kim Loi v Dato Lai Fook Kim & Anor [1989] 2 MLJ 290 distinguished; (3) a petition for winding up a company cannot be presented under s 181 of the Act where there are only two shareholders, as in the present case, with each of them holding 50% of the shares of the company. Such a petition must of necessity in law be presented under s 218 of the Act. It would not be open to the petitioner in the present case to amend the averments in the petition to reflect that position in law; (4) Form 2 of the Rules does not require the petitioner to state categorically under which specific provision of the Act the winding up of the company is sought; (5) the main prayer, for the winding-up order, sought by the petition was not defective. The other prayers need not have been included in the petition itself but such inclusion was not fatal; (6) in the circumstances, there was no inordinate delay on the part of the petitioner in bringing these proceedings; (7) the contention of the petitioner that she was a 50% shareholder of the company and had been shut out from involvement in the affairs of the company and its management was not refuted in any way.

Re Prismatic Sdn Bhd (Ganeswary d/o Ponnudurai, Petitioner) (1993) CSLR XX[4642] High Court, Kuala Lumpur (Selventhiranathan JC).

The plaintiff's claim is based on a sale and purchase agreement ('the agreement') entered into by the plaintiff and the first defendants on 4 May 1981 whereby the latter agreed to sell one lot of land ('PT 4042') together with the double-storey terrace shophouse building to be constructed thereon ('the property') to the plaintiff for RM163,910. The plaintiff alleged that he had paid a total of RM74,410 as deposit and part payment of the purchase price. He further alleged that cl 16 of the agreement prohibited the property from being subjected to any further incumbrances other than those already subsisting as at the date of the agreement, save with the consent of the plaintiff. The plaintiff alleged that on or about 11 February 1982, the first defendants dishonestly and fraudulently created a third party cheque over, inter alia, lot PT 4042 in favour of the second defendants. The charge was registered on 11 February 1982 even though the plaintiff had never given his approval to subject the property to the charge. The plaintiff's complaints concerning the second defendants are that they had knowledge of the existence of the agreement and also of the plaintiff's beneficial interest in the property. He alleged fraud on the part of the second defendants, and that the first defendants were in breach of cll 16 and 17 of the agreement in charging lot PT 4042 to the second defendants and in failing to transfer the property to the plaintiff as the construction of the building was eventually abandoned. The second defendants instituted proceedings for a court order to sell, inter alia, lot PT 4042 by public auction pursuant to s 256(2) of the National Land Code 1965. The order was granted, and upon reading the advertisement of the public auction in the local papers, the plaintiff instituted this action. With respect to the first defendants, he sought specific performance of the agreement, an injunction to restrain them from selling or otherwise dealing with lot PT 4042, and damages. As against the second defendants, he prayed, inter alia, for an injunction to restrain them from proceeding with the sale of lot PT 4042. The second defendants averred that the various lots of land were lawfully charged to them as the plaintiff had not registered his interest in respect of lot PT 4042 nor lodged a caveat thereon at the material time. They had no knowledge of the agreement and had not committed fraud. The first defendants did not enter any appearance.

Held, dismissing the plaintiff's claim: (1) the first defendant company was under liquidation pursuant to an order of court of 22 January 1988. The plaintiff was therefore prohibited from proceeding with this action against the first defendant pursuant to s 226(3) of the Companies Act 1965. There was also no evidence that the plaintiff had obtained leave of the court to proceed with this action against them; (2) in the circumstances of the case, the plaintiff had acquired only a right in personam to the property against the first defendants, as vendor personally. But his right in personam was not good against the second defendants. On the other hand, the second defendants had acquired a right in rem to the property under the charge which had been duly registered; (3) there is no law which provides that before a chargee can accept a charge on lands which are to be developed by a developer as a housing project wherein the sub-divided lots with buildings to be constructed thereon are to be sold to members of the public, the said chargee must ensure that no sale of the sub-divided lots has yet been carried out, or that no sale and purchase agreement has been executed by the chargor; (4) as a matter of prudence, a financier would no doubt check or cause to be checked whether there is any prohibition in the sale and purchase agreements executed by the developer with purchasers of such lands against the creation of a charge of the said lands. The manner in which such check should be carried out is left entirely to the financier; (5) it was idle to suggest that the second defendants were privy to the fraud committed by the first defendants against the plaintiff. The most that could be said against the second defendants was that they had been negligent in not carrying out further inquiries. But negligence per se does not amount to fraud; (6) there was no evidence to show that the designed object of the charge created over the lots was to cheat the respective purchasers including the plaintiff. The plaintiff has failed to prove fraud against the second defendants, even if such proof were based on the balance of probabilities, let alone when it is based on the standard of proving beyond reasonable doubt; (7) there was nothing to suggest that the second defendants had failed to act in good faith and for valuable consideration in executing the said charge.

Lai Soon Cheong v Kien Loong Housing Development Sdn Bhd & Anor [1993] 2 CLJ 199 High Court, Kuala Lumpur (Lim Beng Choon J).

The plaintiff claimed that in September and October 1985, he had at the request of the defendants supplied bunkers at US$125,052.78 to the vessels known as 'Selco Air Manis', 'Salvirile' and 'Salviscount'. The plaintiff submitted when he supplied the bunkers to the above-named three vessels these vessels were chartered to or in the possession or control of the defendants. The plaintiff had filed and issued the writs in admiralty in rem before the commencement of the winding up of the defendants, although none of the said writs had been served before such liquidation. The plaintiff sought leave to continue with the proceedings in rem.

Held, allowing the plaintiff's application: (1) the issue of a writ in rem has crucial consequences which enure to the benefit of such plaintiffs. Their claims are not affected by any subsequent changes of ownership; (2) if the court was right that the plaintiff was in this sense a 'secured creditor' this fact was also a substantial consideration in the exercise of the court's discretion. The court would grant leave to the plaintiff to continue the relevant actions in rem.

Lim Bock Lai v Selco (Singapore) Pte Ltd [1987] SLR 423 High Court, Singapore (Lai Kew Chai J).

This was an appeal against the decision of the judge of the High Court who gave leave to the respondent to prosecute her claim against the appellant, a company in liquidation on an ex parte application pursuant to s 226(3) of the Companies Act 1965 (Act 125).

Held: (1) the application under s 226(3) of the Companies Act should be made inter partes so that the summons could be served on the Official Receiver who should be heard before the discretion of the court is exercised; (2) in this case although leave was given on an ex parte application, the Official Receiver was represented and heard on the application to set aside the order. No substantial injustice had therefore been caused to the appellant; (3) the court will give the applicant leave if his claim cannot be dealt with adequately in the winding up or if satisfied that the remedy he seeks cannot be given to him in a winding-up proceedings. The learned judge in this case had applied the correct test in giving the respondent leave to commence proceedings in respect of her claim to the private lot of land.

Mosbert Bhd v Stella d'Cruz [1985] 2 MLJ 446 Supreme Court, Johore Bahru (Abdul Hamid CJ (Malaya).

In this application, two creditors of the Chiang Meng Oil Mills Ltd sought for an order that the decision of the Official Receiver and Liquidator of the company admitting proof of one Lim Boon Eng for $585,603 should be reversed or varied. Lim Boon Eng was not proving as an ordinary creditor but as the assignee of 17 creditors pursuant to an order of the court giving him liberty to do so. These 17 creditors were ordinary trade creditors and if any one of them had filed a proof and claimed a dividend instead of assigning his debt to Lim Boon Eng, the Official Receiver would have admitted the proof.

Held: there is no reason why the Official Receiver should adopt a different attitude towards these debts because the proof were submitted by a different person, particularly when that person had obtained the authority of the court to prove in substitution the assigning creditors. If in the future, evidence becomes available to the official receiver which will enable him to prove that the transaction was in fact a fraudulent trick on other creditors, he could apply to the court to have his proof expunged.

Re Chiang Meng Oil Mills Ltd, ex parte the Official Receiver [1957] MLJ 193 High Court, Singapore (Whyatt CJ).

T, a private company was wound up on 22 July 1988. The applicants filed a proof of debt for, inter alia, US$6,367,802.51 and £1,686,786.82 as debts assigned to them by another company ('QRS'). The respondents are the liquidators of T and they admitted most of the applicants' claim except for the items of interest and expenses included in it as the applicants were unable to provide sufficient information to support their claim that the interest and expenses claimed should be borne by T. The applicants filed a notice of motion challenging the respondents' decision. The question before the court was whether there was sufficient evidence to substantiate the specific sums claimed. The applicants' proof of debt was based on the figures given by one S, a former director of QRS in his statutory declaration made on 31 December 1988.

Held, allowing the applicants' claim: (1) having regard to the circumstances of this case, the applicants' proof should be admitted. The court was of the opinion that the statutory declaration made by the former director of QRS was sufficient to establish the sums claimed by the applicants as interest and expenses under the assignment of debt; (2) for the purpose of calculating the dividend payable, the applicants were entitled to claim interest limited to a rate of 4% from the commencement of the winding up (ie 24 January 1987) by virtue of s 43(8) of the Bankruptcy Act (Cap 20) read with s 327 of the Companies Act (Cap 50), since T was insolvent; (3) the applicants were not entitled to claim for 6% as statutory interest under r 87 of the Companies (Winding-up) Rules as this provision only applied to debts where interest had not been reserved or agreed. Considering the size of the sums involved, it was unlikely that the applicants would have entered upon the transaction without an agreed interest rate.

Re Teck Hock & Co (Pte) Ltd; Morgan Guaranty Trust Co of New York v Wong Tui San & Anor (1992) CSLR XX[5132] High Court, Singapore (Punch Coomaraswamy J).

The petition to wind up City Securities Pte (the company) was filed on 3 July 1986 and the winding-up order was made on 30 October 1986. The creditors submitted their proofs of debt all of which, except for one, were accepted by the liquidators subject to adjustments made on the interest element. The liquidators applied to court for directions on the proper basis to calculate interest due on capital sums owed to creditors of the company. The following issues arose for determination: (1) whether interest on capital sums owed to creditors should be calculated up to the date of the presentation of petition or the date of the winding-up order or some other date; (2) for the purposes of dividend payment, whether creditors were entitled to claim interest at the contractual rate or at 4% as provided for in s 43(8) Bankruptcy Act (Cap 20), with the excess thereof being deferred; (3) if the creditors were entitled to claim at 4% only, then the extent of recalculation. The liquidator submitted: (i) on issue 1 that interest should be calculated only up to the date of the presentation of the petition; (ii) on issue 2 that interest for dividend payment should be limited to 4% pa with the excess being deferred; (iii) on issue 3 that the recalculation of interest at 4% was to commence from the date three years immediately preceding the date of the presentation of the petition or the date when the account was last in credit, whichever was later.

Held, directing as follows: (1) with respect to the first issue, in submitting a proof of debt, a creditor was entitled to compute interest up to the date of the winding-up order: the combined effect of s 327(2) of the Companies Act (Cap 50, 1994 Ed) and s 40(3) of the Bankruptcy Act was that the cut-off date up to which proof of debt could be calculated was the date of the order and not the date of presentation. This was also consistent with r 87 of the Companies (Winding Up) Rules; (2) it was only to the extent of such inconsistency that the former should prevail. Since there was nothing in s 328 that touched on the matter dealt with in s 43(8), s 328 did not override the latter section; (3) in the light of the provisions in s 43(8), for the purposes of dividend, the extent to which interest formed a part of the proof of debt, interest should be calculated at 4% pa, with the balance in excess thereof being deferred. The liquidators were therefore correct in their submissions regarding issue 2; (4) the fact that the creditor-banks in the present case imposed interest upon interest on a periodic basis did not change the essential character of the sums as interest. The absence of a provision similar to s 66(2)(a) of the UK Bankruptcy Act 1914 in Singapore did not mean that no recalculation should be made for the purposes of dividend: effect had to be given to s 43(8); (5) interest on dividend payments at 4% pa should be recalculated backwards for three years from the date of the winding up order, or the date the account was last in credit, whichever was later. To determine whether the account was in credit on any particular day, only the balance at the end of each business day was to be taken into account; (6) the opening words in s 327(2) - that the provision was 'subject to s 328' - did not have the effect of rendering s 43(8) inapplicable. All that qualification meant was that there was a need to examine s 328 and determine the extent to which s 328 was inconsistent with s 43(8) of the Bankruptcy Act;(per curiam) recalculation of a current account of a stockbroker would be a tedious exercise requiring considerable time even with the help of modern technology. However, until the law in Singapore was changed, effect had to be given to s 43(8) of the Bankruptcy Act. [England repealed s 66 of Bankruptcy Act 1914 in 1986. Australia repealed s 112 of its Bankruptcy Act in 1988.]

Re City Securities Pte [1995] 3 SLR 617; (1995) CSLR XX[5133] High Court, Singapore (Chao Hick Tin J).

This is an application made under reg 78 of the Companies Regulations 1987 by the Official Receiver ('OR') who was appointed as the liquidator for H Ltd, a company under judicial management. In the statement of affairs of H Ltd filed by a former director, it was disclosed that a sum of S$61,044 was owing by J Ltd to the company. On 20 January 1982 the OR wrote to J Ltd informing them that a winding-up order was made in respect of H Ltd and of his appointment as provisional liquidator. J Ltd disputed the claim for S$61,044. H Ltd alleged that this sum was due to them for work done by them, as subcontractors of J Ltd who were the main contractors for a building project. However by a letter dated 4 May 1987 to the OR, the then solicitors for J Ltd had admitted that a sum of $41,124.70 was due and owing to H Ltd but payment of the said sum was not due to be paid to H Ltd until the owner of the building project had released the moneys due to J Ltd which were being held back as retention moneys. On 12 April 1991 the OR wrote direct to J Ltd to inquire about the payment due to H Ltd and received a reply from one of the judicial managers of J Ltd, requesting them to file their proof of debt. By a letter dated 17 May the judicial manager forwarded to the OR a notice of rejection of proof of debt on the basis that 'the claim was submitted after the expiry of the last day set for receiving proofs'. The judicial managers of J Ltd had sent the notice to its old address, even though a change of address had been filed by H Ltd with the Registrar of Companies. The OR submitted that the judicial manager has not discharged his duty to ascertain to the best of his knowledge and effort all outstanding claims against J Ltd. It was submitted on behalf of the judicial manager that the duties of the judicial manager and of a liquidator are different.

Held: (1) liquidators are appointed by the court for the purpose of winding up a company. The liquidator in a compulsory winding up is appointed by the court to act primarily in the interests of unsecured creditors and shareholders. His powers and duties are obviously not the same as those of a judicial manager; (2) the purpose of judicial management is to prevent viable companies in financial difficulties from being liquidated; (3) prior to J Ltd being placed under judicial management, the OR had on 20 January 1987 informed J Ltd that H Ltd was placed in liquidation and that he was appointed as the liquidator of H Ltd. This ought to have been recorded by the officers and employees of J Ltd in their books; (4) the judicial managers of J Ltd cannot rely on the omission of the company to record those facts to say that they have complied with their duty to send notices to H Ltd, a creditor of the company, which they are required to do by the provisions of the Companies Act (Cap 50) and the Companies Regulations 1987.

Re Job Associates (Pte) Ltd (Under Judicial Management) [1992] 2 SLR 430 High Court, Singapore (Goh Phai Cheng JC).

In this case, a company incorporated under the Companies Act 1965 (Act 125) was ordered to be wound up and the respondent was appointed provisional liquidator thereof by an order of court made on 22 July 1976 in a petition presented by a creditor on 14 November 1975. The respondent was subsequently appointed liquidator of the company by order made on 7 March 1977. By virtue of the provisions of s 219(2) of the Companies Act, the winding up was deemed to have commenced at the time of the presentation of the petition, ie 14 November 1975. The appellant in response to the notice issued by the respondent lodged a proof of debt for a sum of over two million dollars allegedly incurred as a result of an agreement it had entered with the company and two other parties on 19 November 1975 and a supplemental agreement of the same date and the execution of letters of guarantee and performance bonds by it between 10 June 1975 and 19 November 1975. The respondent rejected the appellant's claim on the basis that the debt had been incurred after the commencement of the winding up on 14 November 1975 and that there was no evidence to substantiate the fact that the agreement of 19 November 1975 had taken effect. The appellant appealed to the High Court. Annuar J held that the debts were incurred after the commencement of the winding up of the company as the moneys claimed were in fact paid on 14 February and 20 December 1977 and he dismissed the appeal. The appellant appealed to the Federal Court.

Held: the effective date for the purposes of proof of debt against an insolvent company which is being wound up is the date of the order of winding up, ie in this case, 22 July 1976, and therefore the appellant's proof of debt was wrongly rejected by the respondent. An order should be made that the appellant's proof of debt be admitted.

Majlis Amanah Ra'ayat v Official Receiver, Malaysia [1984] 1 MLJ 173 Federal Court, Ipoh (Salleh Abas CJ (Malaya).

The company was being wound up by the court. V filed a proof of debt for S$2.4m. V and the company were 'associated' in that Y was the controller of both. The liquidator rejected the proof since it was not supported by any documentary evidence except some pages from V's own ledger books. Y, in his capacity as manager and director of V, affirmed several affidavits in which it was alleged that V had made loans and payments on behalf of the company. It was also stated in the affidavits that the amount due from the company was 'transferred' to Y, and that he had agreed to accept the debit. In support of the proof, the third affidavit exhibited an audit confirmation from the company purporting to confirm that there was a balance of S$2.4m due to V. V appealed to the court against the liquidator's rejection of their proof of debt.

Held, rejecting the proof: (1) given the close relationship between the two associated companies, the dominant position in them of Y and his family, the fact that Y who was filing the affidavits on V's behalf was also the person who controlled and managed the company before it was wound up, and the great ease with which inter-company transactions between the two companies were devised and implemented, it was necessary to put V to strict proof of all its assertions; (2) the evidence of the debt put forward by V was a miscellany of pages extracted from its own ledgers, its own audited accounts, an isolated certificate from its own accountants and an audit confirmation signed for the company by Y just before the company was wound up. The relationship between the companies and the manner in which the persons who had exercised control over them presented their claim depreciated the value which would normally be given to audited accounts; (3) it may well be that in a straightforward case, documents such as those produced by V might be accepted as sufficient evidence to prove a debt obligation. But in the present case, once the validity of the claim was challenged, V had to produce proper evidence of the debt, eg by producing credit and debit notes, the vouchers and receipts and other documentary evidence. This evidence had been asked for repeatedly by the liquidator but was not forthcoming; (4) the court therefore concluded that V had failed to prove that there had been a debt owed by the company to them as at the date of the winding-up order; (5) however, on the assumption that the debt did exist, the purported transfer of the obligation to Y was effective. Y had purportedly settled the company's debt and therefore that debt would have been extinguished.

Re Ice Mack Pte Ltd; AA Valibhoy & Sons (1907) Pte Ltd v Official Receiver [1989] SLR 876 High Court, Singapore (Yong Pung How J).

Re City Securities Pte [1995] 3 SLR 617; (1995) CSLR XX[5133] High Court, Singapore (Chao Hick Tin J).

The issue was how foreign currency debts were to be valued. The company ceased operations on 31 December 1940.

Held: (1) proofs of debts submitted in sterling should not be accepted: they must be accepted in yen currency; (2) the rate of conversion from yen into sterling should be that prevailing on date of presentation of winding-up petition and not rate of exchange on 31 December 1940.

Attorney General v Creditors of Tenganipah Estate [1956] SCR 90 Court of Appeal, Sarawak, North Borneo and Brunei (Rogers, Lascelles and Bodley JJ).

A bank obtained a judgment against a company in Selangor after notice of a winding-up order made by the court in Singapore. It levied execution in Selangor under an order of the court there made on an arrangement between the parties and received a large sum of money thereon: but had to make payments out of that sum as ordered by the Selangor court. After making these payments the moneys remaining in the hands of the bank left a balance outstanding on its judgment. It sought to prove for this balance in the winding up in Singapore.

Held: the bank was bound to refund to the liquidator the whole amount which it had received.

Re Rawang Tin Mining Co Ltd and the Chartered Bank of India, Australia and China [1890] 4 Ky 570 High Court, Straits Settlements (O'Malley CJ).

[Annotation: Affirmed on appeal in (1890) 4 Ky 578.]

On 27 October 1952, the Collector of Stamp Duties for and on behalf of the Government of the Federation of Malaya filed a winding-up petition against the Malay National Banking Corp Ltd. On an application by the petitioner, by way of summons, the Official Receiver was appointed provisional liquidator by the court on 3 November 1952. On the same day, that is to say, 3 November 1952, in a civil suit, Mohamed Store, the applicant in these proceedings, obtained a judgment in default of appearance against the corporation for $35,321.62. There was evidence that the said Mohamed Store had knowledge of the petition to wind up the corporation. On 16 January 1953, the winding-up order was accordingly made and the Official Receiver was appointed liquidator thereof. Subsequently, the said Mohamed Store lodged with the liquidator a proof for $35,592.05 in respect of cheques drawn by them and not paid by the corporation and for damage to their reputation and credit and costs in the aforesaid suit, which proof was rejected to the extent of $30,000. The applicant applied, by way of motion, that the proof for the sum of $35,592.05 should be admitted in full. Section 254 of the Companies Ordinance 1940, provides, inter alia, that 'in the winding up of an insolvent company the same rules shall prevail and be observed in regard to the respective rights of secured and unsecured creditors and the debts provable as are in force for the time being under the law of bankruptcy with respect to the estates of persons adjudged bankrupt'. Section 173(2) of the Companies Ordinance 1940 provides that the winding up of a company by the court shall be deemed to commence at the time of the presentation of the petition for the winding up. Section 41 of the Bankruptcy Enactment provides in effect that a bankruptcy when declared relates back to the first act of bankruptcy during the 12 months prior to the making of an adjudication order.

Held: as the only evidence of the debt was a judgment and the judgment was obtained after the commencement of the winding up, the judgment debt cannot be proved. Per curiam: In these circumstances, it is doubtful whether any part of the proof of Mohamed Store in the winding up should have been allowed.

Re Malay National Banking Corp Ltd [1957] MLJ 33 High Court, Federation of Malaya (Wilson J).

In November 1988, Joseph Wong and Stephen Leong set up a group practice primarily to provide clients with management and tax consultancy, audit and accounting and corporate secretarial services. The group practice comprised a number of companies, one of which was Bright Future Pte Ltd ('the company'). The petitioner , the wife of Joseph Wong, was a director of the company. The petitioner also held 40% of the shareholding of the company for Joseph Wong. Stephen Leong held 60% of the shareholding. The company owned three properties at 11, 13 and 15 Cantonment Road. Considerable differences had arisen between Joseph Wong and Stephen Leong almost from the beginning of their association. Matters came to head in January 1992 when Stephen Leong attempted to appoint a new director to one of the companies in the group. The appointment was opposed by the petitioner and Joseph Wong. There was a confrontation and Joseph Wong was dismissed as management consultant with one of the companies. The petitioner was removed as a director of the company. The petitioner presented a petition to wind up the company, praying that it would be just and equitable to do so. Pending the hearing of the petition, the petitioner applied to appoint a provisional liquidator. She claimed that Joseph Wong was 'strongarmed' out of his right of participation in the management of the company and he therefore required someone neutral to be appointed to preserve his stake of 40% in the company. It was emphasized that the preservation of assets was the dominant theme of the application.

Held, dismissing the application: (1) the court will be slow to appoint a provisional liquidator unless there is at least a good prima facie case for saying that a winding-up order will be made. A provisional liquidator may also be appointed if the assets of the company are in some way in serious jeopardy. The balance of convenience must be weighed; (2) there was no urgency or any real danger of the company's assets being dissipated by Stephen Leong, nor was there any serious jeopardy to the assets of the company.

Re Bright Future Pte Ltd (1992) CSLR XX[2837] High Court, Singapore (Rubin JC).

United Malayan Banking Corp Bhd v Official Receiver and Liquidator of Soon Hup Seng Sdn Bhd & Anor [1986] 1 MLJ 75 High Court, Johore Bahru (Shankar J).

Kok Fook Sang v Juta Vila (M) Sdn Bhd & Ors [1996] 2 MLJ 666; (1996) CSLR XX[4178] Court of Appeal, Kuala Lumpur (NH Chan, Mahadev Shankar and Shaik Daud JJCA).

The applicant, the liquidator of Rich's Supercentre ('the company'), filed a notice of originating motion for an order that the respondent do refund to the applicant the sum of RM126,395.35 being money belonging to the estate of the company and that costs was to be paid by the respondent to the applicant. A petition for the winding up of the company had been filed on 15 May 1989 and a winding-up order made on 7 December 1989. According to the applicant, in the course of winding up, he discovered that the company had paid a sum of money to Hongkong Bank ('the bank') as deposit for the bank to hold as stakeholder which in turn gave a guarantee to pay to the respondent in the event the company should fail to pay the respondent for the electricity supplied to the company's premises. The company failed to settle the electricity bill and the respondent invoked the guarantee given by the bank and issued a notice of demand dated 15 December 1989 demanding the sum of RM126,395.35, which sum was paid by the bank to the respondent on 16 January 1990. The issue was whether the payment by the bank pursuant to the guarantee and the receipt thereof by the respondent was void absolutely against the liquidator of the company under s 293 of the Companies Act 1965 ('the Act'). Counsel for the applicant argued that the respondent was not a secured creditor. It was contended that the memorandum of deposit must be registered pursuant to s 108 of the Act.

Held, dismissing the originating motion: (1) on the facts before the court, the issue of secured creditor did not arise at all. The respondent was merely exercising their rights under the guarantee given by the bank as such a guarantee was an independent contract. Likewise, the bank was merely complying with the terms of the guarantee when it made the payment to the respondent; (2) it was not for the respondent to register the memorandum of deposit as it was deposited with the bank and not with the respondent. It was a matter for the bank to do the registration if the bank wanted protection as a secured creditor and not the respondent which was merely relying on the guarantee given by the bank; (3) there would appear to be no question of the bank having paid out the property of the company to the respondent in contravention of ss 219, 223 and 293 of the Act read with s 53 of the Bankruptcy Act 1967.

Rich's Supercentre Sdn Bhd (in liquidation) v Tenaga Nasional Bhd (1995) CSLR XX[5756] High Court, Johor Bahru (Haidar J).

This was an application by the liquidator of the applicant company for an order for the refund of a sum of RM26,691 from the respondent. The applicant company had in 1988 entered into an equipment leasing agreement with the respondent, a finance company, for a plastic moulding machine. As part of the leasing agreement, the applicant company had to deposit RM26,691 ('the deposit') with the respondent as security for its due performance of the terms and conditions of the leasing agreement. The deposit was evidenced by a memorandum of security deposit ('the memorandum'). In 1990, the applicant company was wound up, and its liquidator then demanded for the return of the deposit from the respondent. The respondent refused on the ground that the applicant company had breached the terms and conditions of the leasing agreement, as a result of which, the deposit had been utilised to set off an outstanding sum due and owing by the applicant company to it. Counsel for the liquidator contended that the respondent, not being a secured creditor, has to return the deposit for distribution purposes under s 292 of the Companies Act 1965 ('the Act'). In this connection, it was further contended that the respondent's use of the deposit to set off the outstanding sum due and owing by the applicant company to it amounted to an undue preferential treatment of creditors, and was therefore void under s 293 of the Act. Counsel for the liquidator also submitted that the memorandum, not being registered as a charge under s 108 of the Act, was void against the liquidator. Counsel for the respondent argued that the respondent was a secured creditor, and as such, the winding-up order against the applicant company did not affect its right to realise or deal with the deposit under the memorandum. It was also argued that under the pre-amendment to s 108 of the Act, there was no statutory requirement to register a memorandum of security deposit as a charge, and thus, the memorandum was good against the liquidator.

Held, allowing the liquidator's application: (1) the court agreed with the respondent that the memorandum, albeit unregistered, was good against the liquidator. This was because before 25 September 1993, a memorandum of security deposit did not fall within any of the categories of charges that require registration with the Registrar of Companies in order not to be void against a liquidator. The new statutory amendment to s 108 of the Act, via s 108(3)(k), which now requires a memorandum of security deposit to be registered as a charge in order not to be void against a liquidator, clearly does not take effect retrospectively. Therefore, s 108(3)(k) of the Act which came into effect on 25 September 1993, is not applicable in the instant case as the memorandum was executed well before its effective date; (2) however, the court found that the respondent was not a secured creditor. The term 'secured creditor' although not defined in the Act, is defined in s 2 of the Bankruptcy Act 1967 as a person holding a mortgage, charge or lien on the property of the debtor as a security for a debt due to him from the debtor but does not include a plaintiff in any action who has attached the property of the debtor before judgment. The aforesaid definition is applicable to the winding up of companies by virtue of s 4(1) of the Civil Law Act 1956, and, the principles laid down by the Supreme Court in Lian Keow (in liquidation) v Overseas Credit Finance (M) [1988] 2 MLJ 449; (3) in view of the aforesaid definition, the court disagreed with the respondent's argument that it was a secured creditor since it was in possession of the memorandum and thus had a lien on the property of the applicant company. The term 'lien' as used in the definition of the term 'secured creditor' under s 2 of the Bankruptcy Act 1967, has a restricted meaning because it involves the added element of an existing debt. In other words, to qualify as a secured creditor under s 2 of the Bankruptcy Act 1967, the creditor must have been holding the lien on the property of the debtor as a security for an existing debt due to him by the debtor, and not merely as a security for the performance of an obligation; (4) in the instant case, the court found no elements of an existing debt due and owing by the applicant company to the respondent at the time the memorandum was executed. It follows therefore that the respondent could not have been holding the memorandum as a security for an existing debt due to him from the applicant company. Consequently, the respondent could not be considered as holding a lien on the property of the applicant company as a security for an existing debt, and therefore it was not a secured creditor; (5) the court also rejected the respondent's argument that it became a secured creditor because a debt subsequently existed when the applicant company defaulted in their rental payments under the leasing agreement, which then turned the memorandum into a lien with the element of a debt. This argument was rejected because when the debt came into existence, the petition for the winding up of the applicant company had already been presented and a winding-up order had then been made; (6) consequently, as the respondent was not a secured creditor, the set-off that it made was void under s 223 of the Act because it was made three years after the winding up of the applicant company. The set-off was also void under s 293 of the Act for being an undue preferential treatment of creditors; (7) the deposit of RM26,691 was thus ordered to be returned to the liquidator for distribution purposes.

JB Precision Moulding Industries Sdn Bhd (in liquidation) v Asia Commercial Finance (M) Sdn Bhd [1994] 1 MLJ 734; CSLR XX[5753] High Court, Johor Bahru (James Foong J).

Re Choong Khiaw Realty Co Sdn Bhd; Tan Swee Lian v Chia Chung Mee & Anor [1976] 2 MLJ 73 Federal Court, Kuala Lumpur (Gill CJ (Malaya).

The applicants ('the company') had an account with the first respondents and on 30 September 1988 deposited RM290,000 as fixed deposit ('FD') with them. The company executed a letter of set-off on 2 October 1988 in favour of the first respondents for facilities granted to the company. The company subsequently applied to the first respondents for a banker's guarantee to be issued to the second respondents and payable on demand. One of the terms under which the first respondents agreed to issue a guarantee was that their guarantee was to be secured against the company's FD as a lien and also by way of a letter of set-off. On 28 November 1989 the first respondents issued a banker's guarantee to the second respondents for RM290,000 valid from 30 December 1989 to 31 December 1990. On 21 September 1990 the second respondents issued a notice of demand for RM290,000 by telex which was received by the first respondents on 26 September 1990. The latter then notified the company by letter dated 26 September 1990 of this, stating that if no reply were received within ten days, the first respondents would pay as demanded by the second respondents. As no reply was received, the first respondents forwarded payment of the said sum to the second respondents on 9 October 1990. On the same day, the first respondents utilized the company's FD to combine and set off against the sum of RM290,000 paid to the second respondents under the guarantee. The company was notified of this by letter. On 27 October 1990 the respondent bank received a letter from the provisional liquidator of the company dated 26 October stating that he had been so appointed by order of court on 23 September 1990. The company was ordered to be wound up on 5 February 1991. The applicants applied by originating motion for an order that the first respondents do refund the sum of RM290,000 to the applicants with interest from the date of the deposit until its release to the second respondents; or alternatively, for an order that the second respondents do pay the said sum to the applicants with interest from 9 October 1990 until payment. The applicants' counsel submitted that: (1) both respondents were not secured creditors as the FD was not duly registered in accordance with s 108(1) of the Companies Act 1965 ('the Act') as the FD was a charge. The effect of this was that it was void as against the liquidator and any creditor of the company; (2) the said sum belonged to the company and could not be set off by the first respondents, based on s 292(4) of the Act.

Held, dismissing the application: (1) under s 4(1) of the Civil Law Act 1956, bankruptcy rules apply to a winding up of any company under any law from time to time in force relating to companies as to the respective rights of secured and unsecured creditors with respect to the estates of the persons adjudged bankrupt; (2) under s 2 of the Bankruptcy Act 1967, 'secured creditor' means 'a person holding a mortgage, charge or lien on the property of the debtor ... as a security for a debt due to him from the debtor ...'. 'Property' in that section 'includes money ...'. In the court's view, therefore, an FD would come within the definition of 'property' under the Bankruptcy Act as 'property' is not defined in the Act; (3) as the sum of RM290,000 by way of FD was to be a lien for the first respondents' guarantee to the second respondents at the company's request, the first respondents would properly come within the meaning of 'secured creditor', and as such, a receiving order does not affect the right of a secured creditor to realize or deal with his security as in this case (3 Halsbury's Laws of England (4th Ed) para 792); (4) a secured creditor need not prove at all but may rely on his security. He may pursue the remedies he possessed before the winding up (7 Halsbury's Laws of England (4th Ed) para 1299); (5) as the lien on the FD is a form of security as much as a charge is according to the definition of 'secured creditor', the first respondents were entitled to utilize it to pay to themselves the payment of RM290,000 paid under the guarantee; (6) the contention that the FD was a charge and should have been registered under s 108 of the Act could not be accepted as the FD was a lien and was not registrable under s 108(3) of the Act; (7) 'the liability of a principal debtor to reimburse a guarantor incurred under a pre-notice transaction should not be excluded from set-off on the ground that it accrued post-notice by virtue of a post-notice calling of the guarantee' (Phillip R Wood, English and International Set-off, para 7-252). The first respondents had the right of set-off in this case; (8) in view of the court's judgment in respect of the first respondents, the applicants also have no claim against the second respondents.

Agrimal Industries Sdn Bhd (in liquidation) v United Malayan Banking Corp Bhd & Anor [1993] 4 CLJ 43; (1993) CSLR XX[5754] High Court, Johore Bahru (Haidar J).

Interdagang Merchant Bankers (M) Bhd v Campall Industries Sdn Bhd & Anor (1994) CSLR XX[4] High Court, Johor Bahru (James Foong J).

P and D were the only directors and shareholders of T Sdn Bhd. P petitioned under s 218(1)(ii) of the Companies Act 1965 to have T Sdn Bhd wound up on the ground that the relationship between P and D had deteriorated to a situation of deadlock and a complete lack of trust and confidence in each other as business partners. D opposed the petition and raised two preliminary points to be decided by the court. D firstly applied to the court to order P to sell all his shares in T Sdn Bhd to D. D also applied to the court to allow cross-examination of the deponent of the affidavits in support of the petition and to allow D to adduce oral evidence.

Held, dismissing D's applications: (1) on a true construction of s 221(1) of the 1965 Act, the court has no jurisdiction to order one member to sell his shares in the company or purchase the shares of another when deciding on a petition urder s 218 of the 1965 Act; (2) the court has a discretion to allow applications for oral testimony to be adduced and for cross-examination of deponents of affidavits. In this case if there was a deadlock situation, who was at fault was not relevant. If P could not satisfy the court with affidavits that there was a deadlock situation, the petition would be dismissed. Accordingly D's applications to adduce oral testimony and to cross-examine deponents of affidavits in support of the petition were dismissed.

Tan Sooi Shin v Kow Kek Hing [1991] 3 MLJ 390 High Court, Kuala Lumpur (VC George J).

On 16 August 1988, the appellant ('the lessor') entered into an equipment lease agreement ('the agreement') with the respondent ('the lessee') whereby the lessor leased a plastic moulding machine to the lessee for 25 months from 16 August 1988 to 15 September 1990, at a monthly rental of RM1,605. As security, the lessee provided a sum of RM26,691 ('the security sum'), being the aggregate of security deposit RM25,086 and prepaid rental of RM1,605, to the lessor. The deposit sum was evinced by a memorandum of security deposit dated 16 August 1988 ('the memorandum'). Clause 11.3 of the agreement also provided, inter alia, that if the lessee was in default under any of the provisions of the agreement, the lessor would be entitled to apply the deposit and/or prepaid rent against any arrears of rent. However, the lessor did not register the memorandum under s 108(1) of the Companies Act 1965 ('the Companies Act'). The lessee later defaulted in its payment. Meanwhile, on 2 December 1989, a winding-up petition was presented against the lessee. On 4 April 1990, a winding-up order was made, and a liquidator was appointed. On 26 April 1993, the liquidator applied by an originating motion in the name of the lessee for the return of the security sum. However, the lessor alleged that it was a secured creditor within the meaning of the term under the Bankruptcy Act 1967 ('the Bankruptcy Act') and the Companies Act, and that it had set-off the security deposit against the sum due and owing by the lessee amounting to RM33,518.28 as at 4 August 1993. The lessee, on the other hand, alleged that the lessor was not a secured creditor, and thus had to return the security sum for distribution under s 292 of the Companies Act. It was further argued that the lessor's act of setting off the security sum amounted to an undue preferential treatment of creditor, and was therefore void under s 293 of the Companies Act. The High Court judge decided in favour of the lessee, holding that: (i) the memorandum was not void against the liquidator of the lessee; (ii) the lessor did not qualify as a secured creditor as defined in s 2 of the Bankruptcy Act (which definition was applicable to the winding up of companies) because it did not hold a lien on the property or any part thereof as security for a debt due to it from the lessee; and (iii) the set-off effected by the lessor on 4 August 1993 was void under ss 223 and 293 of the Companies Act. The judge accordingly ordered the return of the security sum to the liquidator of the lessee. The lessor appealed.

Held, allowing the appeal with costs: (1) the memorandum need not be registered under s 108 of the Companies Act 1965 since sub-para (k) of s 108(3) that applied to documents of such nature did not come into effect until 25 September 1993 while the other sub-paras of the said s 108(3) in force at the material time on 16 August 1988 had no application. Hence, the judge was right in holding that the memorandum was not void by reason of non-registration under s 108(1) of the Companies Act; (2) by virtue of s 219(2) of the Companies Act, the winding up shall be deemed to have commenced on the date of the presentation of the winding-up petition. Thus, whether there was an existing debt to constitute a lien to come within the term 'secured creditor' as defined in s 2 of the Bankruptcy Act in this case, depended on whether there was any debt due to the lessor from the lessee at the time of the presentation of the winding-up petition, provided a winding-up order was made by the court. It was also essential that the debt was due from the debtor (lessee) to the creditor (lessor); (3) in this case, pursuant to s 219(2), the winding up was deemed to have commenced on the date of the presentation of the winding-up petition, ie 2 December 1989. From the evidence, it was obvious that the lessee was owing the lessor at least two instalments of rentals on that day. Therefore, there existed a debt owing by the lessee to the lessor on 2 December 1989. It followed that there was a lien within the term of 'secured creditor' under s 2 of the Bankruptcy Act, and the lessor was a secured creditor on 2 December 1989; (4) independent of the definition of secured creditor contained in s 2 of the Bankruptcy Act, the lessee was nonetheless entitled to hold the memorandum as security for payment of the arrears of instalment rentals owing. The deposit was placed as security for the performance of the terms and conditions of the agreement and was refundable at the expiry of the agreement but only upon full satisfaction of the terms and conditions therein contained. As the lessee had breached the terms of the lease agreement through its acts, the lessor was entitled to hold the deposit of RM25,086 paid under the memorandum of security deposit and the prepaid rental of RM1,605 as security and that the lessor was a secured creditor to the extent of the deposit and the prepaid rental which amounted to RM26,691; (5) in light of the validity of the set-off by the lessor, there was no substance in the contention of the lessee that there had been undue preference in favour of the lessor under s 293 of the Companies Act rendering the set-off liable to be avoided.

Asia Commercial Finance (M) Bhd v JB Precision Moulding Industries Sdn Bhd (In liquidation) [1996] 2 MLJ 1; (1996) CSLR XX[5879] Federal Court, Kuala Lumpur, (Chong Siew Fai CJ (Sabah & Sarawak).

The petitioner presented the petition for the winding-up of the respondent company on the ground of the indebtedness to the former in the sum of RM329,435.52 pursuant to an order of the court. A notice pursuant to s 218 Companies Act 1965 ('the Act') was posted on the respondent company by registered post at the latter's registered office in Trengganu requiring it to pay the debt within 21 days of the receipt of the notice but the respondent company had failed and neglected to pay the sum. The petitioner alleged that the respondent company was therefore unable to pay its debts and in the circumstances it was just and equitable that it be wound up under the provisions of the Act. The respondent alleged that there had been no leaving of the demand at the registered office as required by s 218(2)(a) of the Act. Counsel referred to s 350 of the Act and emphasized that sending the demand by registered post was insufficient compliance with the mandatory requirement of s 218(2)(a). The petitioner argued that the postman who delivered the notice of demand by registered post was the agent of the petitioner and there was therefore sufficient compliance with the requirement of s 218(2)(a) as to service to the respondent company. He referred to the receipt issued at the post office in respect of the registered letter addressed to the respondent company and two fresh affidavits which had been filed by the petitioner after the last hearing date. The respondent objected to the admission of these two affidavits as the petitioner was out of time in filing them by virtue of rr 26 and 30(2) of the Companies (Winding-up) Rules 1972 ('the Rules'). The respondent also objected to two other fresh affidavits which were affirmed by the postman and the postmaster on behalf of the post office and not on behalf of the petitioners. The petitioner relied on s 221(2) of the Act as giving the court wide powers to give directions as to the proceedings as it thought fit. Also, he argued that there would be no injustice to the respondent as the events had not changed.

Held, dismissing the petition: (1) the four fresh affidavits which were filed after the commencement of the hearing of the petition were not to be admitted as evidence. This was not a fit case in which the court should exercise its discretion under r 193 of the Rules to extend the time within which to allow the petitioner to file the four fresh affidavits. The proper course for the petitioner to have adopted in the circumstances was to have first made an application by motion under r 7 of the Rules to file these four fresh affidavits out of time and then to have proceeded with the continued hearing of the petition; (2) the requirements of s 218(2)(a) of the Act are mandatory in nature requiring strict compliance therewith as winding-up proceedings have penal consequences for the company concerned. In the present case, the notice of demand was sent by registered post. In the absence of the four affidavits which were not admitted, there was no evidence that the demand was left at the registered office of the respondent company; (3) the Act envisages a distinction to be made between the serving of a document on a company by leaving it at the registered office of the company or by sending it by registered post thereto. The juxtaposition of the two modes of serving a document provided under s 350 of the Act and the absence of any reference to the serving of the demand by registered post in s 218(2)(a) of the Act can only mean that the express requirement of the mode of service in s 218(2)(a) by leaving the demand at the registered office of the compny must operate to the exclusion of all other modes of service; (4) it would therefore be clear application of wrong principles of interpretation to read the two modes of serving documents set out in s 350 into s 218(2)(a) of the Act to justify service by registered post to comply with the requirement of the latter section which specifically spells out a different mode of service, ie by leaving the demand at the registered office of the company: generalia specialibus non derogant; (5) it is therefore clear that there must be strict compliance with the pre-condition specified in s 218(2)(a) of the Act as to the mode of serving the demand before the presumption under that section that a company shall be deemed to be unable to pay its debts can arise. As the pre-conditon relating to the serving of the demand had not been satisfied, the presumption did not arise that the respondent company was unable to pay its debt, and the petition was therefore dismissed with costs.

Re Ken Bina Sdn Bhd; Evergrip Prestressing Sdn Bhd v Ken Bina Sdn Bhd (1993) CSLR XX[6089] High Court, Kuala Lumpur (Selventhiranathan J).

The respondent filed a petition to wind up the applicant company. The respondent served the winding-up petition by leaving a copy of the petition at the registered office of the applicant company in Kuala Lumpur as shown in the record kept in the Registry of Companies. The affidavit of service of the petition did not state that no member, officer or servant of the applicant company could be found at the time of leaving a copy of the petition at the applicant company's registered office. The winding-up petition was heard in the absence of the applicant company and the court ordered the applicant company to be wound up. The applicant company applied to court to set aside the winding-up order, firstly, on the ground that its registered office had changed at the time of service of the petition. The applicant company then submitted that the respondent knew that the principal place of the applicant company's business was in Kuching and should have served the petition there.

Held, allowing the application: (1) a company which has changed its registered office without notifying the Registry of Companies ('the ROC') as required by s 120(1) of the Companies Act 1965, cannot rely upon cancellation or change to defeat a service that is properly effected at its former registered office. There is no change of the registered office until notice has been given; (2) there was no evidence in this case that the notice of the cancellation or change of the applicant company's registered office had been lodged with the ROC. Accordingly, it was not open to the applicant company to rely on the cancellation or change of its registered office, particularly so when it was not shown that the respondent had knowledge of such a cancellation or change at the material time; (3) even if the respondent knew of the applicant company's principal place of business, this did not preclude the respondent from employing an alternative equally authorized method of service at the applicant company's registered office, provided service was duly carried out; (4) the object of service of process is to give notice to the party who will or may be affected by the court's judgment or order so that he may be aware of and may, if he so wishes, to resist that which is sought against him. The courts are always cautious to see that a defendant or respondent is fully apprised of the proceedings, if possible, before making any order against him. Accordingly, r 25(1) of the Companies (Winding-up) Rules 1972 which provides for the service of winding-up petitions, although directory in nature, ought to be properly and carefully adhered to; (5) since the respondent chose to effect service of the petition at the applicant company's registered office, it must be clearly established by evidence in the affidavit of service or otherwise that at the time of leaving a copy of the petition at the applicant company's registered office, no member, officer or servant of the applicant company could be found at its registered office. Such evidence, however, was singularly lacking in this case. Accordingly, the respondent's service of the petition did not comply with r 25(1) of the 1972 Rules.

MUI Bank Bhd v Golden Hornbill Hotel Sdn Bhd [1993] 1 MLJ 290 High Court, Kuching (Chong Siew Fai J).

In 1982, Good Property Land Development (GPLD) embarked on a development of two plots of land (the property). It applied for a syndicated loan of US$40m from the respondents, who acted as the lead manager and agent. The loan was secured, inter alia, by a mortgage over the property. However, before the grant of the syndicated loan from the various banks, bridging loans in different currencies amounting to US$4.5m, DM1.7m and Swiss francs CHF25,213,029.36 were extended by the banks to GPLD between March 1982 and March 1983. Upon the grant of the syndicated loan, GPLD made a first drawdown of CHF31,785,000 and applied it in the reduction of the outstanding bridging loans leaving a balance of CHF6,326,689.24. The respondents did not insist upon the bridging loans being completely repaid because, had that been insisted upon, what remained of the syndicated loan would have been insufficient to fund the completion of the development. Subsequently, eight further drawdowns were made from the syndicated loan and they were utilized by GPLD for the development. In total, the nine drawdowns amounted to US$39m. In or about March 1988, GPLD was unable to honour its loan repayment obligations to the syndicate of banks. On 12 November 1988, the respondents in exercise of their power of sale as mortgagees sold the property for S$180.2m. Completion of the transaction took place on 24 February 1989. The subject of this appeal concerned six instances of set-off, in the total amount of S$1,706,343.33, effected by the respondents on 13 June 1989, 5 September 1989 and 26 September 1989. These amounts were the balance mortgagee sale surplus proceeds and were part of deposits earmarked for various payments, as reflected under items 17, 20 and 21 of the schedule of funds. On 22 April 1989, pursuant to a compromise reached, GPLD wrote to the respondents acknowledging the latter's right of set-off. On 26 April 1989, GPLD and the respondents executed a settlement agreement whereby GPLD acknowledged that it owed the respondents, inter alia, CHF4,761,173.64 in respect of the bridging loan account and S$236,169.12 on the overdraft account. Subsequently, on 29 June 1989, the respondents filed a petition to wind-up GPLD. Pursuant thereto, GPLD was wound up under an order of court dated 28 July 1989. The High Court judge concluded that there was clearly mutuality within the meaning of s 41 Bankruptcy Act (Cap 20). The surplus proceeds were held by the respondents for GPLD before the intervention of the winding-up. The total sum of $1,706,343.33 was excess money held by the respondents for GPLD and to be paid over to GPLD. At the same time, GPLD owed the respondents moneys in the overdraft account and the bridging loan account. Thus, as at the date of the winding-up of GPLD, there were mutual credits or mutual debts between them. Even if there were no mutuality, there was the set-off agreement which permitted the respondents to set-off the surplus sale proceeds against unsecured debts of GPLD. Accordingly, he held that the set-offs were valid. (See [1996] 1 SLR 457.) The appellants appealed.

Held, allowing the appeal: (1) to effect a set-off, there had to be mutual debts or mutual credits. For mutuality to exist, two conditions must generally be satisfied. Firstly, each claimant must be personally liable for the debt he owed to the other claimant. Secondly, each claimant must beneficially own the claim which was owed to him by the other claimant and his ownership interest in that claim must be clear and ascertained without inquiry. Under the latter, the surplus from the proceeds of sale were held on trust but the right of GPLD to any residue would only crystallize or, to phrase it in another way, the beneficial interest would only become clear and ascertained after all prior encumbrancers were paid. On the facts presented, the residue could only be ascertained, at the earliest, after the commencement of the winding-up; (2) as regards sums that were set-off after the commencement of winding-up, assuming that there was another creditor in line under s 68 Land Titles Act (Cap 157), then such sums could not be subject to set-off because GPLD's right to any residue had yet to crystallize. There would clearly be no mutuality since a debtor and creditor relationship did not even exist. However, assuming that there were no subsequent encumbrancers, the surplus funds being held on trust by the respondents would then belong to GPLD. But since such trust moneys which represented the residue only became clear and ascertainable after the commencement of the winding-up, the same would vest in the liquidators and not GPLD. Any set-off was invalid because no mutuality existed. The debt, namely, the residue, owed by the respondents was to the liquidator whereas the unsecured debt of the respondents was against GPLD; (3) as regards the set-off before the commencement of winding-up, it was invalid. Since the sum was not unquestionably GPLD's as the residue had yet to be ascertained, there was no mutuality.

Good Property Land Development Pte Ltd (in liquidation) v Societe-Generale [1996] 2 SLR 239; (1996) CSLR XX[6963] Court of Appeal, Singapore (Yong Pung How CJ, Lai Kew Chai J And Goh Joon Seng J).

The plaintiffs, who were a company in liquidation, were proprietors of certain property. They applied for a syndicated loan of US$40m from the defendants who were lead managers and agents. The loan was secured by a mortgage over the property. After a total of nine draw-downs amounting to US$39m, the plaintiffs were unable to honour their loan repayment obligations. The defendants, in exercise of their power of sale as mortgagee, sold the property for S$180,200,000. Part of the mortgagee sale surplus funds comprising S$2,939,006.13 was, on 10 March 1989, credited into the plaintiffs' bridging loan account and set off against the outstanding bridging loan. On 22 April 1989, the plaintiffs wrote to the defendants acknowledging that the defendants were entitled to all bankers' rights with regard to their funds in their accounts with the defendants. This acknowledgement was given in consideration of a settlement agreement (the settlement agreement) being reached between the plaintiffs and the defendants. The issue was whether the defendants were entitled to a further six instances of set-off, which related to the balance mortgagee sale surplus proceeds and were part of deposits earmarked for various payments. The plaintiffs argued that the defendants could not set off the surplus proceeds of sale against their accounts with the defendants since s 74(1) of the Land Titles Act (Cap 157, 1994 Ed) created a trust in favour of the defendants for the moneys to be applied in a certain manner. The defendants argued that they were entitled to the set-offs on the basis of the application of s 41 of the Bankruptcy Act (Cap 20) and the plaintiffs' acknowledgement of 22 April 1989.

Held, dismissing the plaintiffs' application: (1) there could be a set-off if, before the intervention of any bankruptcy, there were mutual dealings between the parties and these dealings resulted in credit being due from one party to the other and vice versa. In the present case, there was mutuality since, at the date of winding-up of the plaintiff, there were mutual credits or mutual debts between the plaintiffs and defendants. Consequently, the defendants were entitled to the set-offs claimed; (2) in any case, it could be adduced from the acknowledgment of the plaintiffs of 22 April 1989 and settlement agreement between the parties that consent was given by the plaintiffs for subsequent set-offs since the two documents empowered the defendants to set off the money held by the defendants against debts owing by the plaintiffs.

Good Property Land Development Pte Ltd (in liquidation) v Societe-Generale [1996] 1 SLR 457; (1995) CSLR XX[6960] High Court, Singapore (Chao Hick Tin J).

[Annotation: Reversed on appeal. See [1996] 2 SLR 239.]

The petitioner had petitioned for the winding up of the respondent company ('the respondent') on the ground that the respondent was unable to settle its debt to the petitioner in respect of 'damages for loss of goods' which had been granted to the petitioner pursuant to a civil suit brought by the petitioner against the respondent. In this connection, the petitioner had also filed for, and had been granted, an order to the effect that all the requirements of r 32(1) of the Companies Winding Up Rules 1972 had been complied with. Subsequently, the court made an order for the winding up of the respondent. This order for the winding up of the respondent was made in default of the respondent's counsel's appearance. The respondent's new solicitors then filed for, and was granted, inter alia, an order setting aside the winding-up order. The petitioner appealed against the order setting aside the earlier winding-up order. The crux of the petitioner's argument was that the court has no power to set aside a winding-up order after it has been drawn up or has been perfected, and any proceedings to discharge or vary such an order must be made by way of appeal or through an application to stay.

Held, dismissing the appeal: (1) the principle that the court has no power to set aside a winding-up order which has been perfected appears to have no application in a case in which the winding-up order was made in default of appearance; (2) s 243 of the Companies Act 1965 ('the Act') which provides the court with the power to stay a winding-up order does not appear to prohibit an application to set aside a winding-up order; (3) if a company against which a winding-up order has been made can appeal against it under s 253(2) of the Act, then it appears that the company should also be able to apply to set aside a winding-up order that has been made against it in the absence of its solicitors or representatives; (4) the respondent's failure to make its application to set aside the winding-up order within seven days after the trial, as required by O 35 r 2(2) of the Rules of the High Court 1980, was not fatal. The delay was merely an irregularity for which the petitioner may be, and indeed was by an order of the court, compensated with costs; (5) it appears that the sum in which the respondent was indebted to the petitioner was less than the sum stated in the petitioner's notice of demand and petition. In this connection, the failure of the respondent to pay the sum as stated in the petitioner's notice of demand and petition did not mean that the respondent was unable to settle its debts.

City Audio Sdn Bhd v Pengangkutan Kargo Udara MAS Sdn Bhd (1993) CSLR XX[4644] High Court, Penang (Abdul Hamid Mohamed J).

MUI Bank Bhd v Golden Hornbill Hotel Sdn Bhd [1993] 1 MLJ 290 High Court, Kuching (Chong Siew Fai J).

A society registered under the Societies Act (Cap 262, 1970 Ed) can be wound up as an unregistered company under ss 314 and 315 of the Companies Act (Cap 185, 1970 Ed).

Public Prosecutor v Wong Hong Toy & Anor; Wong Hong Toy & Anor v Public Prosecutor 1984 High Court, Singapore (Wee Chong Jin CJ).

The petitioner applied to wind up the respondent under s 218(2)(a) of the Companies Act 1965 ('the Act'). The respondent was alleged to have owed a sum of RM8,286 for goods sold and delivered to the respondent. A letter of demand dated 7 June 1993 which demanded payment 'forthwith' was sent by way of AR-registered post to the respondent at its registered office and allegedly served on the respondent on 14 June 1993. Up to the time of the filing of the petition, no payment had been made. A list of supporting creditors who intended to appear on the petition was produced by the petitioner's counsel. The respondent filed a notice of motion under O 18 r 19 of the Rules of the High Court 1980 praying, inter alia, that the winding-up petition be struck out and that the petitioner pay the respondent damages to be assessed. The respondent contended (a) that the petition disclosed no reasonable cause of action in that the petitioner had failed to comply with the strict statutory provisions of s 218(2)(a) of the Act by failing to issue and send a s 218(2)(a) notice to the respondent; and (b) that the petition was an abuse of the process of the court.

Held, striking out the petition: (1) the letter of demand was contrary to s 218(2)(a) of the Act as it demanded payment forthwith whereas s 218(2)(a) provided that the respondent was to be given three weeks to pay the alleged debt. As such the letter of demand was bad and the respondent could not be presumed to be unable to pay its debts; (2) the amount claimed was disputed by the respondent and no judgment had been obtained by the petitioner against the respondent. In the circumstances the omission of the respondent to settle the sum demanded could not constitute a 'neglect' within the meaning of s 218(2)(a) of the Act; (3) the service of the letter of demand by way of AR-registered post was not in compliance with r 25(1) of the Companies (Winding-Up) Rules 1972 ('the Rules'). Section 350 of the Act relied on by the petitioner's counsel was not applicable as it related to service of a document and not a petition. Neither could the petitioner rely on r 194 of the Rules as the defect or irregularity was not formal and had caused substantial injustice; (4) there was no evidence to support the petition. None of the notices of intention to appear filed by the supporting creditors exhibited any judgment or order of the court to support the debts allegedly owed by the respondent to them. Even a copy of a consent judgment produced by counsel from the Bar table, which was clearly not according to proper procedure, did not relate to the petitioner. In the circumstances, there was an abuse of the process of the court by the petitioner as the facts seemed to show that the presentation of the petition was calculated to harass the respondent; (5) as no winding-up order has been made, the respondent need only to file an affidavit in opposition to the petition as provided by r 30 of the Rules and need not have proceeded with a notice of motion. The application for an order as to damages should be by way of a separate action.

Re Beauty World Enterprise Sdn Bhd; Syarikat UD Trading Sdn Bhd v Beauty World Enterprise Sdn Bhd (1995) CSLR XX[6094] High Court, Johor Bahru (Haidar J).

This was a petition for the winding up of the respondent company ('the company') by the petitioner on the grounds that the company was unable to pay its debts and that it was just and equitable that the company be wound up. In the petition it was disclosed that the petitioner had obtained a final judgment against the company and that the petitioner had demanded for payment of the said judgment from the company by serving the necessary statutory notice of demand pursuant to s 218 of the Companies Act 1965 ('the Act'). However, the company failed to effect payment of the said sum. In the notice of demand, the petitioner had demanded the judgment sum together with interest thereon and costs. The only issue to be decided in this petition was whether the amount demanded was a sum due in that the amount should have been specified and quantified in the notice of demand. The company's objection was that the costs were not ascertained and the interest not calculated.

Held, allowing the petition: (1) the objection was devoid of merit. Interest would run from the date of judgment to the date of final payment. The failure to calculate the amount of interest and costs could not by taken as non-compliance with s 218 of the Act. They could be easily worked out and the company would not in any way be misled or prejudiced, In the court's view, the notice of demand was in strict compliance with the requirements of s 218(2)(a) of the Act and was thus valid. The presumption that the company was unable to pay its debts thus arose; (2) further, the company had failed to establish that it was solvent and able to pay its debts. The affidavit in opposition was short and simple and failed to disclose the company's solvency. The reality in this case was that the company remained indebted to the petitioner and the fact that the interest and costs were not quantified in the notice of demand was not a factor which would justify the court in refusing to grant the order for the winding up of the company.

Re Sungei Rinching Sdn Bhd; Sri Keluarga Sdn Bhd v Sungei Rinching Sdn Bhd (1995) CSLR XX[6093] High Court, Kuala Lumpur (Arifin Jaka J).

MBF Finance Bhd v Sri Hartamas Development Sdn Bhd (1991) CSLR XX[6080] High Court, Kuala Lumpur (Zakaria Yatim J).

River View Properties Sdn Bhd ('River View') maintained two fixed deposits (FD/93/0009311/11 and FD/93/0011018/01) with BSN Commercial Bank (Malaysia) Bhd ('the bank'). On 14 February 1995, the bank received a written notice from the Official Receiver ('the OR') that River View had been wound up on 28 November 1994. On or about 27 February 1995, River View wrote to the bank seeking the release of the accrued interest for FD/93/0009311/11 and to roll over the principal sum on a three-month basis. By letter dated 8 May 1995, the OR informed the bank that the winding-up order of River View had been stayed by a consent order dated 21 December 1994. On 25 July 1995, River View wrote to the bank and sought the release of the money in FD/93/0009311/11 for the purpose of the 'day-to-day running and management of the company and payment of dividends'. River View's solicitors wrote to the bank stating that the transfer of its fixed deposit to its current account did not constitute a disposal of assets within s 223 of the Companies Act 1965 ('the Act'). The bank, being wary, sought legal advice and wrote to River View's solicitors and the OR seeking clarification on the situation. The bank then wrote to both River View's and the petitioner's solicitors and requested their consent to an application to the court to validate the release of the fixed deposits, but was unable to get the consent from all parties concerned. The bank filed an originating summons seeking: (i) the determination as to whether River View was entitled to the money held in the account of the bank for the fixed deposit; and (ii) in the event the determination was in the affirmative, for an order that the bank be authorized to make payment of all money held by the bank in the two fixed deposits to River View. River View had also filed an originating summons seeking: (i) a determination whether the bank had contravened the law by holding on to money which were due to River View; and if the answer was in the affirmative, whether the bank had committed contempt of court by going against the consent order for the stay of the winding-up order; and (ii) an order that the bank forthwith released the money owing together with interest to River View. The two originating summonses were heard together. The court was asked to construe the consent order, especially the words 'and it is also ordered that the directors do undertake not to dispose of the assets of the company by any means whatsoever except for the payment of expenditure for the day-to-day running and management of the company and payment of dividends', in favour of River View.

Held, granting a validation order for the release of the fixed deposits: (1) the effect of the consent order for the stay of the winding-up order was to make inoperative or suspended the winding up of River View. The bank had acted cautiously and were justified in taking that stand. It was only obeying strictly the consent order for the stay of the winding up and could not be held in contempt for so acting. The order of a stay of the winding-up order, if expressed in unlimited terms, would put an end to the winding-up process and the company could thereupon resume the conduct of its business and affairs as if no winding up existed at all; (2) the judge's commonsense opinion of what is just and fair prevails. In deciding the existence of good faith and honest intention, the absence of knowledge by the transferee of the winding-up petition is a very powerful factor in favour of validation. The court would always have regard as to whether the disposition was made bona fide in the course of the company's current trade and, if not, whether the company's trade would be paralysed without any advantage. In the instant case, River View needed the money to pay dividends and to run its daily affairs, without which River View would be paralysed. Accordingly, the dispositions should be validated in River View's favour; (3) payments in and out of River View's account constituted dispositions of River View's property within the meaning of s 223 of the Act. Under s 223, any disposition of a company's property after the commencement of the winding up by the court shall, unless the court otherwise orders, be void. Thus, each case has to be looked at on its own facts and circumstances;dividends need not be paid in cash and there is no necessity that there be available profits when the dividend is actually paid. What is important is that there were available profits when the dividend was declared. In the instant case, once River View validly declared a dividend, it is considered a debt owed by River View to its members which is immediately payable. Thus, the crucial words in the consent order, namely, 'except for the payment of expenditure for the day-to-day running and management of the company and payment of dividends', should be read in favour of the bank and for River View in their respective originating summonses. Both the bank and River View were right in seeking validation orders from the court prior to the release of the two fixed deposits belonging to River View which was the subject of a winding-up order.

BSN Commercial Bank (M) Bhd v River View Properties Sdn Bhd and another action [1996] 1 MLJ 872 High Court, Johor Bahru (Abdul Malik Ishak J).

The defendant applied for the plaintiff's originating summons to be struck out on the ground that the plaintiff's solicitors (the solicitors) had no authority to institute the proceedings on behalf of the plaintiff as the plaintiff had been ordered to be wound up in 1987 and the official receiver (OR) had been appointed as liquidator. It was undisputed that the court had in 1995, inter alia, suspended the order in order to allow the sale of the plaintiff's lands to a new purchaser and that the official assignee (OA) had not objected to the solicitors acting on behalf of the plaintiffs with respect to certain caveat proceedings.

Held, allowing the defendants' application: (1) s 243(1) of the Companies Act 1965 (the Act) gave the discretionary power to the court to make an order staying the proceedings either altogether or for a limited time on such terms and conditions as the court thought fit. The order of stay granted by the court was not an absolute stay until the OR notified the court that all the distribution of the dividends to the unsecured creditors was completed and thereafter the contributories/applicants could apply for an order to that effect; (2) although perhaps the designation of the OR should have been used when stating that there was no objection by the OR to the solicitors' representation of the plaintiffs, there was no question of the wrong legal personality giving the go ahead to the solicitors; (3) the orders of stay were expressed in limited terms. Only if they had been in unlimited terms could the winding-up process come to an end and the plaintiff be able to resume the conduct of its business as if no winding up existed. In this case, the power to run the plaintiff continued to vest in the OR as liquidator; (4) by s 236 of the Act, the OR had no authority to permit the solicitors to act in these proceedings. The authority was vested in either the court or the committee of inspection once the plaintiff was wound up. The orders of stay which had not been made absolute did not make any difference.

Sykt Perumahan Lanchang Sdn Bhd v Pembangunan Akad Maju Sdn Bhd Originating Summons No 24-10-1996 High Court, Johore Bahru (Haidar J).

The plaintiff was the contributory of the respondent company ('the company'). The plaintiff applied for an order that the winding-up order and the release of the sum of RM662,000 to the provisional liquidators be stayed under s 243 of the Companies Act 1965 ('the Act'). The facts showed that there were substantial irregularities in the company's conduct of its business and affairs which were very detrimental to commercial morality and to the interest of the public at large. The petitioner in the application for winding up alleged that since its incorporation in 1991, the company failed to lodge its annual accounts and balance sheet and that no annual general meeting was held by the company. He further alleged that no statement of affairs had been submitted to the Official Receiver within 14 days after the date of the winding-up order as required under s 234 of the Act and that the sum of RM662,000 deposited in a bank had not been forwarded to the Official Receiver as required by the court order.

Held, dismissing the application with costs: (1) the grant of a stay is a discretionary matter and there is a clear onus on the applicant to make out a positive case for a stay. Among others, if there has been non-compliance by directors with their statutory duties as to giving of information or furnishing a statement of affairs, a full explanation of the reasons and circumstances should be given. Also, the nature of the business carried out by the company should be demonstrated, and whether or not the conduct of the company was in any way contrary to 'commercial morality' or the 'public interest'; (2) the applicant had failed to prove that the trading operations of the company had been 'fair and above board'. There had been misconduct in the affairs of the company which required investigation. The company also failed to file the statement of affairs as required by the Act. Any stay of the winding-up order would be detrimental to commercial morality and the public interest.

CH Construction and Trading v Langkah Cergas Sdn Bhd (1994) CSLR XX[6582] High Court, Kuala Lumpur (Zakaria Yatim J).

A, a company, was ordered by the High Court to be wound up for inability to pay its debts. An application for stay of the winding-up order was also refused by the High Court and the Official Receiver was appointed as A's provisional liquidator. A appealed against the winding-up order and pending the disposal of the appeal, A applied to the Supreme Court for a stay of the winding-up order. D raised a prelim-inary objection that A was not entitled to apply for stay. D further argued that A's application was not properly before the court because the affidavit in support of A's application was affirmed merely by its solicitors.

Held, dismissing A's application for stay: (1) under s 243(1) of the Companies Act 1965, an application for stay of a winding-up order may only be made by the liquidator, creditor or contributory of the company. The company, however, can appeal against a winding-up order under s 253(2) of the 1965 Act. Implicit in this right of appeal is also the company's right to make any incidental application as provided by s 44(1) of the Courts of Judicature Act 1964. The company can therefore apply for a stay of the winding-up order; (2) despite the appointment of a liquidator, the company's directors still retain certain residuary powers which include power to appeal against the winding-up order; (3) A's application for stay, supported by only one affidavit affirmed by its solicitors, was not properly before the court.

Sri Hartamas Development Sdn Bhd v MBf Finance Bhd [1991] 3 MLJ 325 Supreme Court, Malaysia (Hashim Yeop A Sani CJ (Malaya).

Lim Heng Hood v Metromix Sdn Bhd & Anor (1992) CSLR XX[1663] High Court, Kuala Lumpur (VC George J).

The appellant was a shareholder of Nadchatiram Realities (1960) Sdn Bhd ('the company') of which the first to fourth respondents were the other shareholders. As a result of non-payment of income tax, a winding-up order was made against the company on the application of the Inland Revenue Department on 5 September 1989. The company's liabilities were estimated at RM1.03m, although its assets were worth more than RM20m. After the company was wound up by the court, several actions were commenced in the High Court by family members of the company against one another pertaining to the company's assets. The appellant had also brought an action against the fourth respondent under s 305 of the Companies Act 1965 ('the Act') for, inter alia, misfeasance and breach of trust, which was pending hearing. On 9 March 1994, the first to fourth respondents filed a notice of motion seeking, inter alia, that the winding-up order be discharged and all proceedings in relation to the winding-up be stayed altogether under s 243 of the Act. The application was supported by the liquidator who confirmed that the company was solvent and that the creditors could be paid in full. The judge allowed the application. The appellant appealed on the grounds, inter alia, that: (i) the judge had misdirected himself by failing to consider and apply the correct principles governing a stay under s 243 of the Act; and (ii) the judge ought to have found that there was inordinate delay of 5[1/2] years in making the application.

Held, allowing the appeal: (1) it is clear from s 243(1) that the court has a discretion to stay proceedings under a winding-up order. The onus is on the party seeking a stay to make out a positive or sufficient case. The court in exercising its discretion must take into consideration, inter alia, the attitude of the creditors, contributories and liquidator, the interests of the creditors, and whether it is conducive or detrimental to commercial morality and the interests of the public at large. A stay will be refused if there is evidence of misfeasance or irregularities demanding investigation; (2) and (iii) he had failed to consider the effect of the misfeasance suit since a stay would have put an end to the suit which could only continue in the course of winding up; (3) there had been a delay of 5[1/2] years between the time the order for compulsory winding up was granted and the filing of the notice of motion for stay with no explanation offered as to why the application was not made within a reasonable time; (4) the discretion whether to grant or refuse an order for stay of the winding-up proceedings is vested in the judge. The function of an appellate court is one of review only. However, where the discretion has not been exercised judicially, eg when the judge has committed an error of law or misconceived the facts or has not given sufficient weight to relevant considerations or the decision would result in injustice, the court can interfere. In this case, there was ample ground to justify interfering with the exercise of the judge's discretion and in particular the pending misfeasance suit ought not to be stifled by an application for stay; (5) in the instant case, the judge had completely misdirected himself as: (i) he had relied on the liquidator and the liquidator seemed to have sided with the respondents; (ii) he had failed to consider the appellant's rights, eg her right to a share in the company's surplus assets;(obiter) the court has no jurisdiction to grant a partial stay of winding-up proceedings.

Vijayalakshmi Devi d/o Nadchatiram v Dr Mahadevan s/o Nadchatiram & Ors [1995] 2 MLJ 709; (1995) CSLR XX[6581] Federal Court, Kuala Lumpur (Anuar CJ (Malaya).

This was an application by the applicant company ('the applicant') for a stay of proceedings in respect of the winding up of a company ('YKK') which it wholly owns. YKK was allegedly indebted to another company ('TS') in the sum of RM232,000, and TS managed to obtain a judgment for the recovery of RM145,000 against YKK. TS's action against YKK for the balance of its claim amounting to RM87,000 was ordered to be heard in the sessions court. YKK, however, failed to settle the judgment debt of RM145,000, in consequence of which, an order was made for it to be wound up. YKK then settled the said judgment debt. Subsequently, the applicant applied for a stay of the winding-up proceedings against YKK, contending that TS was no longer its creditor as it had already settled the said judgment debt. TS objected to the applicant's application primarily on the ground that the liquidator for the winding up of YKK had not yet decided on TS's remaining claims against YKK, mainly, its said claim that was still pending in the sessions court. Alternatively, TS contended that the application for a stay of proceedings did not satisfy the three requirements as set out in the case of Re Warbler (1982) 6 ACLR 526.

Held, allowing the applicant's application for a stay of proceedings: (1) TS may still be regarded as a creditor of YKK because its claim against YKK that is pending in the sessions court may be proven against YKK in the winding up by virtue of s 291(1) of the Companies Act 1965, which provides that, in the winding up of a company, all claims against the company, present or future, certain or contingent, ascertained or sounding only in damages, shall be admissible to proof against the company; (2) however, TS's claim against YKK is one that is still being disputed. In this context, it is clear that just as a disputed debt should not be the basis for winding up a company, similarly, a disputed debt or claim, such as the one which TS has against YKK, should not be the basis for rejecting an application to stay the winding-up proceedings of a company. It appears that the court will only dismiss an application to stay the winding-up proceedings of a company if, in allowing the application, the creditors of the company will be deprived of their rights that have already been judicially determined and are no longer being disputed. Furthermore, the court did not think that the applicant's application for a stay of proceedings should be rejected solely on the ground that the liquidator for the winding up has not yet determined TS's disputed claims against YKK. For these reasons, TS's objection to the applicant's application for a stay of proceedings in respect of the winding up of YKK must fail; (3) in regard to TS's contention that the applicant had not satisfied the requirement of proving the current general solvency of YKK (one of the requirements in Re Warbler), the court was not prepared to conclude that there is a general rule that strictly requires a company which is applying for a stay of its winding-up proceedings, to prove its current general solvency by way of tendering its financial statement; (4) as regards the second requirement as set out in Re Warbler which requires that the creditors of the company (applying for a stay of proceedings) be notified of the application, the court was, in the circumstances of the instant case, prepared to accept the applicant's statement that YKK has no other creditors other than those who have emerged in the course of the proceedings; (5) the third requirement as outlined in Re Warbler is based on the case of Re Telescriptor Syndicate [1903] 2 Ch 174, and it supposedly requires the company that is applying for a stay of its winding-up proceedings to file a statement of its affairs, or, to explain why such a statement of its affairs was not filed; (6) (7) requiring a statement of affairs or an explanation on the failure to tender a statement of affairs is only one part of the overall investigation into the broader issue of whether allowing an application to stay the winding-up proceedings of a company will be detrimental to commercial morality and to the interests of the public at large; (8) in the instant case, the court did not find it necessary, as part of its investigation, to require from the applicant a statement of YKK's affairs, or, an explanation for the applicant's failure to tender a statement of YKK's affairs; (9) in relation to this third requirement, the court was of the opinion that there is no convincing authority for the proposition that a company which is applying for a stay of its winding-up proceedings must necessarily tender a statement of its affairs, or, explain its failure to so tender a statement of its affairs;lastly, the court found that there was impropriety on the part of the directors of YKK, but came to the conclusion that an application for a stay of proceedings in respect of the winding up of a company should not be dismissed as a punishment for the impropriety of its directors.

Yap Kim Kee & Sons Holdings Sdn Bhd lwn Goh Joon Hai (sebagai penyelesai bagi Yap Kim Kee & Sons Sdn Bhd) [1994] 1 MLJ 642 High Court, Kuala Lumpur (Abdul Aziz Mohamad J).

The judgment was delivered in Bahasa Malaysia.

Mookapillai & Anor v Liquidator, Sri Saringgit Sdn Bhd & Ors [1981] 2 MLJ 114 Federal Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

A winding-up petition against Mawar Biru Sdn Bhd ('the company'), a limited company incorporated under the Companies Act 1965 ('the Act'), was filed by a creditor of the company ('the petitioner'). The petition was duly served on the company, and at the hearing, it was ordered that the company be wound up. The company was unrepresented at the hearing. However, four months later, one of the directors and a contributory of the company ('the applicant') made an application for stay of all further proceedings in relation to the winding up of the company, under s 243(1) of the Act. The application was supported by the applicant's affidavit ('the affidavit') which stated that all the company's directors had given their consent to proceed with the application. The absence of representation by the company at the hearing was also explained as being due to miscommunication between the company's staff at its registered office and the directors of the company. The affidavit further disclosed that the company had two pending civil suits against the petitioner and another creditor. The provisional liquidator of the company, who had submitted a report to the court under s 243(2) of the Act ('the report'), recommended that the company was solvent, on the grounds that it still had RM120,000 of cash in hand, and that his fees, the sum due to the petitioner and the other creditor, had already been provided. The question for the court to consider was whether the applicant had made out a case for a stay of the winding up.

Held, dismissing the application: (1) under the law, the granting of a stay of further proceedings of winding up is a discretionary matter for the court, and the onus is on the applicant to make out a positive case for a stay. In exercising its discretion, the court has to consider the factors and principles which have been established by decided cases; (2) in order to obtain a stay of the winding-up proceedings, the applicant must convince the court that each member of the company had consented or would otherwise be bound not to object to it. In the present application, although all the directors of the company had given their consent to the application, both the affidavit and the report were silent regarding the members' consent; (3) the court was not convinced that the company was solvent. The affidavit did not disclose sufficient information about the current trading activities and general solvency of the company. Further, it appeared that the provisional liquidator did not carry out a proper investigation into the affairs of the company before coming to the conclusion that the company was solvent, as his opinion appeared to be based on the fact that the company had paid the liquidator and its two creditors, and that the company had RM120,000 cash in hand, which did not in any way reflect the solvency of the company. In the report, no reference was made to the company's audited accounts and the principle officers of the company; (4) in the present case, the fundamental principle that applied was that an insolvent company should be wound up. The state of affairs of the company prompted the court to believe that the company had no assets at the hearing of the petition, and in those circumstances, the court had to make the winding-up order.

Ting Yuk Kiong v Mawar Biru Sdn Bhd (Harry Lee Yew Tong, Applicant) [1995] 2 MLJ 700; (1995) CSLR XX[6583] High Court, Johor Bahru (Arifin J).

On 5 September 1989, Nadchatiram Realities (1960) Sdn Bhd was ordered to be compulsorily wound up by the High Court on a creditor's petition by the Inland Revenue Department. On 22 March 1994, the High Court allowed an application by four contributories of the company (which included the first and second respondents) to discharge the winding-up order and stay all proceedings in relation to the winding up ('the 22 March order'). The appellant's application to the then Supreme Court for an interim stay of the 22 March order was allowed and her appeal to the Federal Court is pending. Meanwhile, on 29 June 1994, the judge allowed an application by the first, second and third respondents to set aside an earlier order dated 24 January 1994 which had been obtained by the appellant and for other reliefs. Against this order of 29 June 1994, the appellant has now appealed to the Court of Appeal. The issue before the court was what the effect of a stay of proceedings on a winding-up order was.

Held, allowing the appeal and setting aside the order of 29 June 1994: (1) a winding-up order cannot be discharged or rescinded after it had been made and the only remedy is to apply for a stay of proceedings under s 342(1) of the Companies Act 1965. The effect of an order to stay proceedings under the winding-up order is a total discontinuance or termination of the winding-up proceedings; (2) even though the 22 March order had itself been stayed by the then Supreme Court, it was still in existence although it was for the time being inoperative until the appeal was heard by the Federal Court. Because the 22 March order still existed, the judge ought not to have heard the application or made any order after that date in proceedings under the winding-up order. An affirmation of the order dated 22 March 1994 by the Federal Court would render the winding-up order and all proceedings under it totally discontinued, and that would have made it impossible for the order dated 29 June 1994 to have been made under the discontinued proceedings.

Vijayalakshmi Devi d/o Nadchatiram v Jegadevan s/o Nadchatiram & Ors [1995] 1 MLJ 830; (1995) CSLR XX [6580] Court of Appeal, Kuala Lumpur (Zakaria Yatim, NH Chan and Mahadev Shankar JJCA).

The defendant company was incorporated on 31 December 1971 and on 19 July 1972, the members resolved that the company should be voluntarily wound up. A notice of the winding up of the company and calling for creditors to submit particulars of their claim by 22 August 1972 was published in the newspapers on 22 July 1972. No proof of debt had been lodged by the plaintiff in respect of the present claim. The plaintiff assessed the company to tax for the year of assessment in the sum of S$11,602,014. The company's application to the plaintiff for the said assessment to be reviewed and revised was rejected. The company then filed with the Income Tax Board of Review (hereinafter called 'the Board') a Notice of Appeal. On 3 March 1978 the plaintiff issued a writ claiming S$11,602,014 arrears of tax and penalty for non-payment of tax amounting to S$580,100.70 making a total claim of S$12,182,114.70. The plaintiff then applied on 11 March 1978 for judgment under O 14. The company prayed for an order that the writ be stayed until the appeal had been heard by the Board.

Held: (1) the court had power to stay proceedings against a company after a voluntary winding up had commenced. The onus lay on the liquidator to show that an action against the company should be stayed. In an application of this kind the court has a discretion and the court would not normally order a stay of action unless the liquidator could show some sufficient reason to justify such interference; (2) in a voluntary winding up, after the winding up had begun, a creditor of a company had an option as to his remedy for the purpose of enforcing a claim which he had against the company; (3) in this case to allow a stay would defeat the clear intention of Parliament and every unwilling taxpayer could circumvent s 86 of the Income Tax Act by just lodging an objection and could thereby cause considerable delay in the collection of the tax. The proper course for every aggrieved taxpayer was to pay his tax and present his arguments against the assessment made upon him before the Board.

Comptroller of Income Tax v BS Pte Ltd 1978 High Court, Singapore (Chua J).

The applicant petitioned to wind up the respondent company. Pending the winding-up proceedings, the applicant commenced a civil suit against the respondent company ('the suit'). The respondent company was then ordered by the court to be wound up. In June 1991 the applicant applied to the High Court for leave to proceed with the suit against the respondent company under s 226(3) of the Companies Act 1965 ('the first application'). The applicant filed a proof of debt with the liquidators of the respondent company. The applicant was, however, informed by letter that its proof of debt had been rejected by the liquidators of the respondent company ('the letter'). The letter was only signed by one of the two liquidators of the respondent company. The applicant did not appeal to court against the rejection of its proof of debt by the respondent company's liquidators. In March 1992, the respondent company's liquidators applied to court and obtained an order empowering them, inter alia, to settle debts due to the respondent company's creditors and to distribute the respondent company's assets among its shareholders ('the order'). No notice of the application by the respondent company's liquidators was given to the applicant. The applicant applied to the court to set aside the order and to stay the distribution of the respondent company's assets until the outcome of the suit ('the second application'). The applicant also made an oral application for an extension of time to appeal against the rejection of its proof of debt under rr 93 and 193 of the Companies (Winding-up) Rules 1972 ('the third application'). The respondent company's liquidators raised a preliminary objection that the applicant had no locus standi to make the second application because it had no more interest after the winding-up order had been made. The applicant replied that it was a creditor of the respondent company by virtue of the suit and it therefore made the second application as a creditor of the respondent company. In respect of the second application, the applicant argued that since the respondent company's liquidators had proceeded ex parte in obtaining the order, the applicant was thus entitled to set aside the order. The applicant alleged that if it had had notice of the application by the respondent company's liquidators, it would have appeared and objected to the making of the order. The applicant also claimed that since the letter was only signed by one of the two liquidators of the respondent company, the rejection of the applicant's proof of debt was not lawful because it was not a joint act of the respondent company's liquidators. In respect of the first application, the applicant contended that leave should be granted to proceed with the suit as the applicant had deliberately not wanted to pursue the remedy available to it under r 93 of the 1972 Rules when its proof of debt had been rejected. The applicant further argued that it had instead opted to proceed with the suit.

Held, upholding the preliminary objection and dismissing the first, second and third applications: (1) s 243(1) of the 1965 Act makes it clear that the only persons who can apply for a stay of all winding-up proceedings after a winding-up order has been made, are the liquidator, creditor or contributory of the company; (2) the applicant was not a creditor of the respondent company within the meaning of s 243(1) of the 1965 Act because it had not proved its debt before the respondent company's liquidators, nor had the applicant obtained judgment against the respondent company in the suit. Accordingly, the second application was made by the applicant qua petitioner and not as a creditor of the respondent company. The applicant therefore lacked the necessary locus standi to make the second application; (3) the order was made pursuant to ss 236 and 237 of the 1965 Act. In these circumstances the application by the respondent company's liquidators which resulted in the order, was not made ex parte the applicant as there was no requirement under the law for the applicant to be notified of such an application before the order was made; (4) r 64 of the 1972 Rules makes it clear that a company's contributories and creditors are generally not required to attend or participate in winding-up proceedings unless required to do so by the court. The intention is to prevent further dissipation of the company's assets through the incurring of additional expenses. The applicant's contention that it was entitled as of right to have notice of the application by the respondent company's liquidators, was therefore contrary to r 64 of the 1972 Rules; (5) in this case the letter was couched in clear terms that it was conveying the decision of the respondent company's liquidators made jointly; (6) the applicant's argument in support of the first application was not consistent with its third application and this was sufficient reason for the court to dismiss the third application; (7) the philosophy behind ss 222 and 226(3) of the 1965 Act and r 163 of the 1972 Rules is to bring into one forum all actions and proceedings against the company so that they can conveniently and expeditiously be dealt with, while minimizing costs and preventing multiplicity of actions which may result in the dissipation of the company's assets; (8) the very arguments of convenience and the saving of time and expense put forward by the applicant, militated against the decision to allow the first application; (9) having set the winding-up machinery in motion, the applicant had to face the consequences of its action. If the applicant had indeed wanted to proceed with the suit, it could have withdrawn the winding-up petition before the winding-up order was made. Upon the rejection of the applicant's proof of debt, it was open to the applicant to apply to the court under r 93 of the 1972 Rules to reverse the decision of the respondent company's liquidators. The nature of the suit vis-a-vis the nature of the debt sought to be proved in the winding-up proceedings, pointed to the balance of convenience and the demands of justice being with the applicant pursuing its remedy in the winding-up court; (10) as the applicant could obtain the relief it sought in the suit in the winding-up proceedings and as the applicant chose to seek relief in the winding-up proceedings by submitting its proof of debt to the liquidators, leave to proceed with the suit should be refused;(11) the court would, however, grant a stay of the order for the distribution of the respondent company's assets pending the applicant's appeal because the respondent company's assets in the form of money had been deposited into an interest-bearing account by the respondent company's liquidators. In these circumstances, should the applicant's appeal not succeed, the oror stay would not be detrimental to the respondent company's shareholders because they would be compensated for the delay in the distribution of the respondent company's assets through the interest that such assets would earn in the interim.

Watta Battery Industries Sdn Bhd v Uni-Batt Manufacturing Sdn Bhd (Chow Siew Hon & Ors Interveners) [1993] 1 MLJ 149 High Court, Kuala Lumpur (Selventhiranathan JC).

The plaintiffs had supplied certain equipment and engines to the defendants for the construction of, inter alia, a ship or vessel called 'Hull 308'. Later, the receivers and managers of the defendants were appointed on application by Standard Chartered Bank. When a petition to wind up the defendants was presented by one of the defendants' creditors, the receivers and managers were discharged by order of court and provisional liquidators were appointed. The plaintiffs then took out a writ in rem against the Hull 308. After hearing the application, the High Court made an order giving the plaintiffs leave to serve the writ on the Hull 308 and to arrest her. Later, the court granted the defendants' application to set aside the plaintiffs' writ. Against this order, the plaintiffs appealed. The plaintiffs' first ground of appeal was that the court's decision in favour of the defendants amounted to a rehearing of the plaintiffs' application and was therefore ineffective once the order in favour of the plaintiffs had been granted by the judge. Secondly, the plaintiffs claimed that the judge incorrectly allowed the defendants' application.

Held, dismissing the appeal: (1) the hearing of the defendants' application to set aside the plaintiffs' writ was not a rehearing of the plaintiffs' application for leave to serve the writ. In the latter case, the main issue before the judge was whether the ship was a 'vessel', whereas, the issue in the former case was whether the writ in rem was properly issued. The defendants' application was entirely a different application altogether and was not in any way affected by the outcome of the plaintiffs' application; (2) the plaintiffs took out their writ in rem against the ship after the commencement of the winding up of the defendants. They could not therefore be considered as secured creditors for the purpose of deciding whether or not the discretion under s 262(3) of the Companies Act (Cap 50, 1985 Ed) should be exercised in their favour; (3) if the plaintiffs had applied at the time the writ was issued for leave to commence the action under s 262(3) of the Act, such leave would not have been granted. It would not be right and fair in the circumstances to exercise the court's discretion under s 262(3) in favour of the plaintiffs as to do so would confer upon the plaintiffs a security on an asset of the defendants which the plaintiffs otherwise did not have and could not have.

The 'Hull 308'; Deutz MWM Far East (Pte) Ltd v Owners of and Other Persons Interested in the Ship or Vessel 'Hull No 308'; Standard Chartered Bank (Interveners) [1991] SLR 304 Court of Appeal, Singapore (Yong Pung How CJ, Thean and Chan Sek Keong JJ).

The plaintiffs in this case entered into an agreement with the vendors to buy some 6,000 sq ft of land (the property). The said property was a small part of a large parcel of land, Johore Grant No 72 and No 2587 for lots 83 and 1880 in the district of Johore and the Mukim of Plentong respectively (the land). The vendors traded as a firm, Sharikat Mosbert. They represented to Chatib that they would develop on the said land a building estate known as Taman Chendrakaseh (the estate). The plaintiff entered into possession of the said land and after execution of the said agreement he proceeded to pay his monthly instalments until 27 March 1971 when the last payment was made by way of final settlement of the purchase price. Meanwhile, the said land passed from the vendors to Mosbert Enterprises Sdn Bhd which in turn sold it to Mosbert Bhd. Under cl 4 of the said agreement, the plaintiff was entitled to a transfer of the said property when the new document of title was issued by the Land Office. In this case, sub-division was not completed and the plaintiff had upon completion of the purchase price an option to require a deed of assignment and an irrevocable power of attorney to be executed by the vendors in his favour. The plaintiff preferred to wait for sub-division. On 12 January 1977, an order was made that Mosbert Bhd be wound up. On 21 June 1977, the Official Receiver was appointed liquidator of Mosbert Bhd. On 1 April 1981, the Jet Age Construction Sdn Bhd (Jet Age) entered into an agreement with the said liquidator to buy Johore Grant No 72 lot 83 (the grant). After the purchase price of the land was fully paid by Jet Age, the liquidator handed over the grant to the latter. On 22 September 1982, the plaintiff caveated the said grant to protect his interest in the said property. On 17 April 1983, the liquidator caused a notice to be issued to the plaintiff requiring him to remove his caveat. On 28 August 1983, the plaintiff applied by originating summons for further extension upon expiry of the validity of the said caveat. He submitted, inter alia, that approximately 300 subdivided lots had been sold and the liquidator had embarked upon an exercise for removal of the caveats, the effect of which would be to deprive him and the other purchasers of all their rights. Subsequently, a consent order was made that the plaintiff's private caveat be extended until the final disposal of the originating summons. On 29 October 1983, the liquidator filed for an order that the consent order be set aside. The court was posed with two issues: (i) whether in all the circumstances the plaintiff should be given leave of the court to institute the necessary proceedings against the company to establish his claim to the said property; (ii) whether in all the circumstances the life of the private caveat filed by the plaintiff should be extended until the final disposition of the proceedings he was permitted to initiate.

Held: (1) where a person is asserting that property which he owns has been taken into the custody of the liquidator, leave will readily be granted to enabled the property to be retrieved. In this case, both the balance of convenience and the demands of justice make it imperative that leave be granted; (2) the fact that the legal title to the property was in Jet Age's hands was enough to entitle the plaintiff to an unconditional extension of the caveat subject to the disposal of the action.

Chatib bin Kari v Mosbert Sdn Bhd [1984] 2 MLJ 67 High Court, Johore Bahru (Shankar J).

P sued D, a company, in respect of goods sold and delivered. D was given conditional leave to defend upon provision of security in the form a bankers' guarantee. D was ordered to be wound up before the action came for trial. P applied for leave to continue the pending action against D. The Official Receiver objected, contending that P should prove in the liquidation.

Held, granting the application: (1) money paid into court by a defendant as a condition for leave to defend is treated as being held to abide the event and thus constitutes security for the plaintiff. The object of ordering such security is to put the plaintiff in as good a position as if he got immediate judgment in the event of a bankruptcy; (2) the same principle applies where the defendant is a company in liquidation; (3) if P were required to prove in the liquidation, they would be unsecured creditors and would lose the security of the bankers' guarantee. This was therefore an appropriate case to grant leave to continue the pending action.

Re Maritime Square Fast Food Centre Pte Ltd (1991) CSLR XX[2628] High Court, Singapore (Chan Sek Keong J).

P was employed by DM Ltd in its cotton mill until 1970. In 1970 it was found that she was suffering from byssinosis caused by the inhalation of cotton dust. P claimed that her injury was caused by the negligence and breach of duty of DM Ltd. DM Ltd were insured against such liability by D. DM Ltd was voluntarily wound up in 1975 and dissolved in 1976. P brought the action against D under s 1(1) of the Third Parties (Rights against Insurers) Act 1930. The High Court and Court of Appeal held that she had no right to sue D under that Act. P appealed to the House of Lords.

Held, dismissing the appeal: (1) the law before the passing of the Act was that even where an injured person obtained judgment for damages against a wrongdoer, if the wrongdoer went into liquidation or became bankrupt and the judgment had not been enforced by execution, the moneys payable by way of indemnity under any policy of insurance did not go solely to the benefit of the injured person but were payable to the liquidator or trustee in bankruptcy for distribution among the unsecured creditors. This was the mischief at which the Act was aimed. The legislature did not have in mind the present case of a company being dissolved before its liability was established by action; (2) an insured person cannot sue for an indemnity from their insurers unless and until the existence and amount of his liability to a third party has been established by an action, arbitration or agreement. Until such liability is established the insured has no rights against the insurer; (3) where the defendant is a company which is in liquidation, the injured party can sue the company to establish its liability to him. But where, as here, the company has already been dissolved and can no longer be resurrected, there is no way for the injured party to establish the company's liability; (4) accordingly, the company would have no rights against the insurer capable of passing under the Act to the injured party. This being so, P could not have any rights against D under the Act.

Bradley v Eagle Star Insurance Co Ltd [1989] 1 All ER 961 House of Lords, England (Lords Keith, Brandon, Templeman, Oliver and Jauncey).

[Annotation: The Third Parties (Rights against Insurers) Act 1930 has been applied in Singapore and in Malaysia on at least one reported occasion (King Lee Tee v Norwich Union Fire Insurance Society Ltd [1933] MLJ 187) by virtue of s 5 of the Civil Law Act (Cap 43) and the equivalent to s 5 of the Civil Law Act 1956 respectively.]

Chin Kok Kwong Construction Sdn Bhd v Sunrise Towers Sdn Bhd [1986] 2 MLJ 41 High Court, Penang (Edgar Joseph Jr J).

The liquidator of the company commenced proceedings against the appellant solicitors asking for a detailed bill of costs. The appellants applied to have the action struck out, inter alia, on the ground that it should not have been commenced in the liquidator's name but in the name of the company.

Held: the commencement of proceedings by the liquidator in his own name was not a nullity. It was not an irregularity; it was a right.

Khong Kit Seng & Anor v Niblock [1963] MLJ 237 Court of Appeal, Federation of Malaya (Thomson CJ, Hill and Barakbah JJA).

The applicant company initially obtained an ex parte injunction against the respondent ('the first injunction'). The respondent successfully applied to court to set aside the first injunction and it was ordered that an inquiry be held to assess damages suffered by the respondent as a consequence of the first injunction ('the order'). The respondent claimed RM47m as damages by virtue of the order. The assessment of damages had not been carried out. In December 1990, United Malayan Banking Corp Bhd petitioned to wind up the applicant company ('the petition'). The respondent was one of the supporting creditors of the petition. The respondent then obtained an ex parte injunction against the applicant company ('the second injunction'). The applicant company applied to court to set aside the second injunction. The respondent firstly contended that it had become a contingent creditor of the applicant company by virtue of the order. The respondent then argued that the issue of its standing as a creditor of the applicant company could only be decided at the hearing of the petition.

Held, allowing the application: (1) in applying for the first injunction, the undertaking given by the applicant company regarding damages was no more than a solemn promise or pact to abide by any court order regarding damages in the event that the respondent had suffered damage as a consequence of the fact that the first injunction was wrongly obtained. The applicant company's undertaking was only enforceable after the court had decided that the first injunction was wrongly obtained; (2) one could only say that the first injunction had been wrongly obtained after the trial in respect of the first injunction; (3) the respondent's right of assessment of the quantum of damages crystallized only on the date when the court ruled that the first injunction was wrongly obtained; (4) accordingly when the petition was presented, the respondent was not a creditor of the applicant company under s 217(1) of the Companies Act 1965. The respondent therefore had no standing to file in a 'notice of intention to appear as a supporting creditor' in respect of the petition; (5) if the respondent had no standing as a supporting creditor in the petition, it could not have a cause of action, let alone a serious question to be tried. Accordingly the respondent's action in applying and obtaining the second injunction was frivolous, vexatious and an abuse of the process of court. On this ground alone, the second injunction should be set aside; (6) the questions as to whether the applicant company had the right to object to the respondent's entitlement to damages and whether the applicant company could reduce the quantum of damages should be left to be resolved at the hearing of the assessment proceedings; (7) if the second injunction was allowed to remain until the hearing of the assessment and winding-up proceedings, the applicant company would suffer immeasurable damage which would not be sufficiently covered by the respondent's undertaking. The applicant company might cease to exist as a company. The balance of convenience therefore lay in favour of the applicant company in this case; (8) to allow the second injunction was akin to granting the respondent an attachment before judgment when its right to the sum of RM47m was yet to be ascertained.

United Malayan Banking Corp Bhd v Pembinaan KSY Sdn Bhd; Noble Circle (M) Sdn Bhd (Supporting Creditor) Companies Winding-up No D1-28-446-1990 High Court, Kuala Lumpur (Lim Beng Choon J).

P applied for an order that the taxed costs relating to the winding-up proceedings be paid by the liquidator or the receiver and manager of D out of the proceeds of sale of the assets of D. The application was opposed by the receiver and manager. Counsel for P contended that since the assets of D were taken by the receiver and manager and the liquidator was left with nothing, the taxed costs should therefore be paid by the receiver and manager who held the assets of D. An earlier court order, made after hearing the objection by the receiver and manager, provided for the taxed costs to be paid by the appointed liquidator out of the assets of the company.

Held, dismissing the application: (1) the instant application should be dismissed on the ground that it would be contrary to the terms of the earlier order made by the court which provided for the taxed costs to be paid by the liquidator. This order had long been perfected and the court is functus officio; (2) the earlier order was made by a competent court which had considered the matter of cost and duly made an order as to who is to pay the taxed costs and how it is to be settled; (3) for the above reasons, P's application was misconceived and was dismissed by the court.

Kin Moh Sdn Bhd v Mahashukor Palmoil Industries Sdn Bhd [1991] 1 MLJ 116 High Court, Johore Bahru (Abu Mansor J).

Ban Heng Hong Sdn Bhd v The Provisional Liquidator, Choong Shin Cheong & Anor (1992) CSLR XX[6952] High Court, Johore Bahru (James Foong J).

On 23 April 1985, the movable property of Peter Chew's Pte Ltd was seized by the Sheriff pursuant to two writs of seizure and sale taken out by two creditors. The landlord/applicants on 25 April 1983 then applied for and obtained a writ of distress against their tenants Peter Chew's Pte Ltd, for recovery of arrears of rent and service charge due from the tenants for six months. On 27 April 1985, another creditor Hin Seng Pte Ltd petitioned for the winding up of the tenants. On 26 July 1985, a winding-up order was made against the tenants, and the Official Receiver was appointed the liquidator of the tenants. The movable property which was seized under the writs of seizure and sale was sold on 8 May 1985 and the net proceeds amounting to $72,890.50 were in the hands of the Sheriff. The applicants as the landlords claimed that under s 20(1) of the Distress Act (Cap 20, 1970 Ed), the Sheriff is obliged to pay the proceeds to them in priority to any other payment. In opposition, the Official Receiver and Liquidator of the tenants claimed, on the other hand, that s 335(2) of the Companies Act (Cap 185, 1970 Ed) applies to the proceeds and the Sheriff is obliged to pay the whole thereof to the liquidator.

Held, allowing the application: (1) the obligation of the Sheriff under s 20(1) of the Distress Act is not affected by the winding-up proceedings of the tenants. The proceeds from the sale of the movable property of the tenants in his hands are not 'free' from the right of the Sheriff 'for his own indemnity'; (2) but the section is limited to ordinary cases of execution'; (3) the effect the court would give to s 20(1) of the Distress Act is consistent with a situation where movable property of a tenant is not under seizure by the Sheriff in execution and his landlord has put in force a distress thereon for arrears of rent due from his tenant prior to the presentation of the winding-up petition against the tenant - in such an event the landlord would be entitled to the proceeds of sale from the movable property distrained up to an amount due for the past 12 months' rent, unaffected by the operation of s 334 or s 335 of the Companies Act; (4) s 335(2) of the Companies Act 'deals with the rights of the execution creditor, the execution debtor and the Sheriff when he has no legal duties to third parties;the application should therefore be allowed and the applicants were entitled to the net proceeds of sale of the movable property of the tenants in the hands of the Sheriff.

Supreme Holdings Ltd v The Sheriff, Supreme Court of Singapore & Anor [1986] SLR 202 High Court, Singapore (Thean J).

Watta Battery Industries Sdn Bhd v Uni-Batt Manufacturing Sdn Bhd (Chow Siew Hon & Ors Interveners) [1993] 1 MLJ 149 High Court, Kuala Lumpur (Selventhiranathan JC).

Pek Chuan Development Pte Ltd ('the company') applied to set aside a winding-up petition for want of prosecution. At the date of the petition, about 30% of the company's issued capital was owned by Tai Hua Food Industries, 15% by Kuah Hong Kheng ('the petitioner') and about 55% by Pek Seng Co Pte Ltd. In or about early 1982, the minority shareholders began to be dissatisfied with the way in which the managing director conducted the affairs of the company. On 24 July 1985, the petitioner filed a petition to wind up the company on the ground that it was just and equitable to do so under s 254(1)(i) of the Companies Act. This petition was repeatedly adjourned. The company's motion to set aside the petition for winding up the company was heard on 28 and 29 March 1988. Both the company and the petitioners blamed each other for the delay.

Held, dismissing the application: (1) as a general rule, winding-up proceedings should be heard expeditiously even where a company is solvent; (2) on the evidence, both parties had wittingly or unwittingly contributed to the delay in the hearing of the petition and any injury caused to the company was caused by both of them, although not necessarily in the same proportion; (3) the proper and just order to make was to dismiss the motion, each party paying its own costs; (4) an early hearing of the petition was ordered.

Re Pek Chuan Development Pte Ltd [1988] SLR 1029 High Court, Singapore (Chan Sek Keong JC).

The plaintiff as the administrator of the estate of a deceased German national sued the defendant for damages for loss of expectation of life as a result of fatal injuries received by the deceased in a collision between the deceased's car and the defendant's motor lorry. The suit was commenced in March 1939, placed in the fixing list of 15 July, and fixed for hearing on 19 September 1939. On 11 September 1939, after the outbreak of war, the defence was amended by the addition of a paragraph alleging that the plaintiff was an enemy alien and/or sued on behalf of enemy aliens.

Held: the Federated Malay States were at war with Germany and therefore the general rule of law that an enemy alien cannot sue as a plaintiff in English courts applied but that as the action was properly and validly instituted and proceeded so to the commencement of the war it should be stayed during the continuance of hostilities, and not dismissed.

Hendrik Christiaan van Hoogstraten v Low Lum Seng [1940] MLJ 138 High Court, Federated Malay States (Cussen J).

Pertamina are an Indonesian state enterprise whose principal business was and is the exploration, processing and marketing of oil and natural gas. In 1970 Pertamina undertook, at the behest of the Indonesian government, a project for the construction of infrastructure facilities for the steel works called Krakatau Steel at Cilegon, West Java. In furtherance thereof, another state enterprise, 'PTKS' was incorporated. However, Pertamina remained financially responsible for the project and in or about June 1973, took over effective management and control of it. General Thahir was general assistant to the president director of Pertamina from 14 October 1968 until his death on 23 July 1976. During that period, General Thahir also held various other influential offices in Pertamina. From sometime in 1972, he was authorized to sign vouchers and cash demands for all contracts signed by the president director. At no time did General Thahir's salary from the plaintiffs exceed Rupiahs 3,782,500 pa, the equivalent of S$22,250, or US$9,000 pa. In 1973 and 1974, Pertamina and PTKS entered into several contracts for the construction of the facilities. Two of the contractors were Klockner Industrie Analagen GMBH ('Klockner') and Siemens AG ('Siemens'). Pertamina alleged that the two German contractors paid General Thahir bribes to ensure better contractual terms than they would have obtained if they had had to tender for the work and preferential treatment where payments were concerned, in view of the reducing resources of Pertamina in 1974 and 1975. It was also alleged that General Thahir deposited the proceeds into 19 ACU accounts at the Sumitomo Bank ('Sumitomo') in Singapore in the name of 'Mr HA Thahir and/or Mrs KR Thahir'. DM53,972,374.12 was held in 17 accounts; the remaining two accounts were denominated in US dollars in the sums of US$593,249.31 and US$608,959.42. All accounts have been earning interest. Following the death of General Thahir, three different parties claimed to be entitled to the proceeds of the 19 ACU deposits and Sumitomo applied for interpleader relief under O 17 r 1(1)(a) of the Rules of the Supreme Court. The first party is Mrs Kartika Thahir (Mrs KR Thahir), who claims to be the lawful widow of General Thahir and beneficially entitled to the 19 ACU deposit accounts; the second is the estate of the deceased which is represented by sons of an earlier marriage; and the third is Pertamina, who claim the deposits on the ground that the moneys were bribes received by General Thahir whilst in their employ from contractors of or who were paid by Pertamina for projects of which Pertamina were in charge. Pertamina were ordered by the court to be the plaintiffs in these proceedings. Mrs Kartika Thahir and the sons of the deceased, representing his estate, were ordered to be the first and second defendants respectively. All three parties agreed to the terms of the issues between them, which were approved by the High Court. It was further agreed that only the first of the two issues would be tried in the present proceedings. The amended first issue read as follows: 'Whether as the plaintiffs affirm and the first and second defendants deny, the plaintiffs are entitled to the moneys being the ACU deposits and interest or proceeds in the Sumitomo Bank Ltd ('the said moneys') in the names of HA Thahir and/or Kartika Ratna Thahir and whether such entitlement arises either under the law of the Republic of Singapore as the governing law and/or under the law of Indonesia as the law of the place having most connection with the rights, obligations and duties of the persons hereinafter referred to on one or more of the grounds following: (a) belong to the plaintiffs absolutely; (b) are held subject to a trust in favour of the plaintiffs and not otherwise; (c) as being money held and received to the plaintiffs' use; (d) being the proceeds of crime or otherwise obtained unlawfully and/or in breach of contract by the said HA Thahir should not be disposed of otherwise than to the plaintiffs; (e) that the first defendants having assisted the said HA Thahir in his dishonest and fraudulent design and/or having participated therein is in any event liable to the plaintiffs as a constructive trustee thereto.' The crucial question of law discussed was whether Lister v Stubbs (1890) 45 Ch D 1 is good law in Singapore. The case of Lister v Stubbs established that there is no proprietary or 'tracing' claim against a bribed agent where the bribe is in the form of money.

Held, allowing a substantial part of Pertamina's claim: (1) the first defendant had admitted that the moneys in Sumitomo Bank came from Siemens as to DM15m and Klockner as to DM35m; (2) the circumstantial evidence must be so compelling and convincing that bearing in mind the high standard of proof the inference is nevertheless justified; (3) on the evidence presented, Pertamina had paid Siemens and Klockner sums of money in respect of the Krakatau steel project and the infrastructure facilities. Pertamina had proven that they had paid Siemens and Klockner the sums set out in Annexure B and that there were linkages between those payments and General Thahir's ACU deposits denominated in Deutschmarks; (4) all 17 ACU deposits denominated in Deutschmarks were bribes which Siemens and Klockner had paid General Thahir; (5) to taint them as bribes simply because they were placed in the same bank was unwarranted. Accordingly, Pertamina had no claim on those two US dollar deposits; (6) in respect of Pertamina's claim in equity to trace funds in a Singapore bank account or for the imposition of a constructive trust based on an alleged breach of fiduciary duty by General Thahir, Singapore law necessarily governs. The forum will apply its own rules in deciding whether it has equitable jurisdiction and will similarly apply its own law to determine the kind of equitable obligations that arise from the unconscionability of the defendant's acts; (7) at common law the cause of action for money had and received arises in the place of receipt which, in this case, is the place where the money was deposited. Therefore in so far as the claim is for money had and received, the matter is wholly governed by Singapore law; (8) under Singapore law, a claim for money had and received lies against the person bribed notwithstanding that the bribe cannot be traced directly to the plaintiff or shown to be Pertamina's money. It also lies against a volunteer to whom the immediate recipient had paid the money. Thus Pertamina had the right to recover the 17 ACU DM deposits as money had and received by the first defendant to their use. Since Pertamina would have been entitled to recover the moneys from General Thahir, they were also entitled to recover from his estate; (9) Lister v Stubbs is wrong and its undesirable and unjust consequences should not be imported and perpetuated as part of Singapore law. A court in Singapore, when exercising its equitable jurisdiction, must reflect the mores and sense of justice of the society which it serves; (10) alternatively, the authority of Lister v Stubbs is so extensively undermined and questioned that it should be confined to its special facts. This was a case of corruption on a grand scale and involved the public interest of the Republic of Indonesia. General Thahir was a public servant and a public official and the fiduciary duties which he owed to Pertamina were far more responsible and extensive than those of every fiduciary who had been declared a constructive trustee in the cases examined. A fiduciary relationship must exist before a constructive trust is imposed and it matters not that such a relationship was not mentioned in terms; (11) accordingly, General Thahir held the bribes and all the interests earned in Sumitomo Bank as constructive trustee for Pertamina. The first and second defendants, not being bona fide purchasers for value without notice, had no claim to the 17 ACU DM deposits; (12) the first defendant was hand in glove with General Thahir in his dishonest schemes to receive the bribes and she participated in and/or was privy to the receipt of the bribes which funded the 17 ACU DM deposits. By reason of her own complicity and conduct the first defendant also became a constructive trustee when she became a joint account holder and when legal title in the choses in action (the deposits) vested solely in her upon the death of General Thahir; (13) under Indonesian law, General Thahir was in breach of his contractual obligations to Pertamina and that his death was no bar to a claim in contract. General Thahir's receipt of the bribes and his violations of the Indonesian laws and regulations also constituted an act of tort against Pertamina and the Indonesian courts would have the power to order and would have ordered the payment to Pertamina of the bribes as the proper remedy for his tort; (14) under Indonesian law, General Thahir was a mandatory of Pertamina and as such the Indonesian courts would have ordered him as the mandatory to pay the bribes over to Pertamina and would have declared that Pertamina had a proprietary claim to the bribes; (15) due to reservations expressed by an expert on the existence of the doctrine of unjust enrichment in Indonesia, no action for unjust enrichment would lie against General Thahir and the first defendant; (16) in respect of Pertamina's claims against the first defendant, the transfer of the ACU deposits in the joint names of the first defendant and General Thahir was null and void under Indonesian law because it violated the Indonesian Civil Code. As such, the first defendant had never and could never have obtained legal title to any of the 17 ACU deposits; (17) so far as Sumitomo Bank is concerned, an Indonesian court would have ordered it to pay the bribes over to Pertamina; (18) the legal and evidential burden of proof that Pertamina had paid Siemens and Klockner rests with Pertamina. Whilst it is necessary for Pertamina to prove their case to a higher standard than that required in a non-fraud case (there being allegations of a fraudulent or criminal nature), it is not the law of evidence that every step in the allegation of fraud has to be proved by calling live and admissible evidence nor is it the law that fraud cannot be inferred in the appropriate case. The inference, however, should not be made lightly;in respect of the two ACU deposits denominated in US dollars, Pertamina had failed to discharge their legal and evidential burden of proof. The first defendant's admissions did not refer to those US dollar deposits, which were separate and discrete;as for the first defendant's contention that Pertamina had suffered no damages because they had not incurred any loss, having been fully reimbursed by the government of Indonesia in respect of all their expenses in connection with the project, it is established that under Indonesian law, as under Singapore law, the fact that some of the payments were made by Pertamina as agents on behalf of others, did not deprive Pertamina of their rights to sue General Thahir; nor did it mean that they had suffered no loss; nor that they were deprived of their proprietary remedy. Further, the reimbursement made by the government of Indonesia to Pertamina was strictly a matter between them both and had nothing to do with the first or second defendants.

Sumitomo Bank Ltd v Kartika Ratna Thahir [1993] 1 SLR 735 High Court, Singapore (Lai Kew Chai J).

The Hooghly Mills Co Ltd v Seltron Pte Ltd [1995] 1 SLR 773 High Court, Singapore (Judith Prakash JC).

A promissory note was executed in that part of the town of Tampin, situated within the border of the Straits Settlements. The place of payment was not stated in the note. The provisions of the Moneylenders Ordinance of the Straits Settlements did not appear to have been complied with. The trial magistrate being in doubt as to the law to be applied, referred the matter to the court of a judge.

Held: (1) if the promissory note was made in the Federated Malay States, then the suit would lie and the plaintiff would succeed unless the defendant proved either payment of the amount or lack of consideration; (2) if the promissory note was made in the Straits Settlements and was payable in the Federated Malay States, the plaintiff could sue in the courts of the Federated Malay States on the promissory note and recover. Bills of Exchange Enactment (Cap 56), s 72 was no bar as the promissory note (as a promissory note) was valid as regards form by the law of the place of issue (it was also valid in form by the law of the Federated Malay States); (3) if the promissory note was made in the Straits Settlements and was also payable in the Straits Settlements, then the proper law of the contract was the Straits Settlements law and the plaintiff could not recover unless it was recoverable under the Straits Settlements law.

Otamchand Kanji v Yassin [1940] MLJ 42 High Court, Federated Malay States (Cussen J).

Goh Chok Tong v Tang Liang Hong [1997] 2 SLR 641 High Court, Singapore (Lai Kew Chai J).

Schmidt & Ors v Spahn [1863] SLR Leic 229 Supreme Court, Straits Settlements

Koh Seang Thye v Chung Ah Quee [1886] 4 Ky 136 High Court, Straits Settlements (Wood J).

The defendant, a resident of Bangkok, made a contract in Singapore with the plaintiff, a resident of Singapore, for the supply at Bangkok of certain number of cattle and that payment should be made there. The plaintiff began an action on the contract in Singapore, and on an affidavit that the contract was made in Singapore obtained an order under s 66 of the Civil Procedure Ordinance 1878, to serve the writ of summons at Bangkok. Service was thereupon effected at Bangkok, whereupon the defendant moved to set aside the order.

Held: the contract was one to be performed in Bangkok, and as the witnesses would necessarily be there, leave to serve the writ of summons should not have been granted and the order was accordingly discharged.

Mana Nondu & Co v Poonasamy Naiku & Co [1889] 4 Ky 511 High Court, Straits Settlements (Wood Ag CJ).

The plaintiff and defendants entered into an agreement on 9 May 1930, in respect of a tin mine known as the Ayer Itam property, cl 4 of which reads as follows: 'The certificate of the auditors of the company as to the amount of the sum payable to Mr Corbett and ascertainable as aforesaid shall be final and binding on both parties.' Subsequently the parties mutually varied this clause by the defendants undertaking to furnish, in addition to the certificate of the auditors, a statement of account showing the basis of the certificate. By cl 3 of the agreement the accounts of the defendants were to be made up a year from when the dredge started work. The dredge did not begin to win tin until some weeks after it started to work, and the defendants contended that the words starts to work meant starts to win tin. By cl 2(c) of the agreement the defendants agreed to pay to the plaintiff at Ipoh 15% of the net profits and by cl 5 they also agreed to pay to the plaintiff £2,000 a year, payable quarterly. Clause 5 did not specify where the £2,000 a year was to be paid, but in fact, with one exception, such payments were made in Ipoh. The defendants in making the payments under these clauses deducted amounts on account of British income tax inspite of protests by the plaintiff. The defendants, without obtaining permission from the plaintiff, grouped the Ayer Itam property with other mines under the Tin and Tin-ore (Restriction) Enactment 1931, and the plaintiff alleged that in so doing the defendants committed a breach of the agreement.

Held: (1) cl 4 had been varied by the defendants' undertaking to furnish the statements of accounts and the plaintiff could reopen such accounts or falsify and surcharge the same upon proof of errors, or that the auditors had acted on a wrong principle; (2) a dredge starts to work when it begins to carry out the purpose for which it is intended, namely, to dredge, whether the material dredged contains tin or not; (3) the law of the Federated Malay States governed the agreement and consequently the defendants were not entitled to deduct income tax payable in England; (4) the defendants in grouping this property with other mines availed themselves of a lawful right given to them under the Tin and Tin-ore (Restriction) Enactment 1931, and that in so doing they did not commit any breach of the agreement.

MC Corbett v Ipoh Tin Dredging Ltd [1935] FMSLR 154 High Court, Federated Malay States (Howes J).

In this case, the plaintiff, a Singapore company had supplied petroleum products to the defendants. On that account the defendants owed a large sum of money to the plaintiffs. When the plaintiffs demanded payment, the defendants agreed to clear the debt within five years. This was not acceptable to the plaintiffs who brought an action against the defendants. The defendants then applied to the court for an order that the writ of summons be struck off because of cl XIII of the agreement under which it was alleged Malaysian courts have no jurisdiction and because of arbitration clause (cl XIV) in the agreement.

Held: (1) parties had agreed that Singapore law would govern any dispute. This did not oust the jurisdiction of the Malaysian courts to try an action arising out of the agreement; (2) where a claim is admitted it does not call for a settlement by arbitration.

Elf Petroleum SE Asia Pte Ltd v Winelf Petroleum Sdn Bhd [1986] 1 MLJ 177 High Court, Kuala Lumpur (George J).

D accepted P's tender for the construction of a building in Colombo, Sri Lanka. The contract between the parties was the standard JCT form, save an arbitration clause was inserted in place of the usual cl 35 in the JCT form. The arbitration clause contained neither a choice of the proper law, the law of the arbitration nor the seat of the arbitration. In 1986, disputes between the parties arose in connection with the project. In 1987, P gave notice to the architects of the project, who were resident in Singapore, requiring them to settle, in accordance with the arbitration clause, the matters in dispute. The architects replied that they had no power to decide on the said disputes as D had determined the building agreement on 3 February 1987. They suggested that the matters be raised before an arbitrator. P then formally appointed an arbitrator and thereafter, the arbitration proceeded in accordance with the terms of the agreement. In 1988, the arbitrator published the award in which he awarded and directed D to pay P damages for wrongful repudiation. P brought the present action to enforce the arbitration ward.

Held, allowing the application: (1) the arbitrator had complied with all procedural requirements under Singapore law in holding the arbitration and D had been notified of every step taken or direction given by the arbitrator; (2) D had submitted to the jurisdiction of the court by not entering conditional appearance with a view to setting aside the service of the originating summons on the ground of lack of jurisdiction; (3) the relevant factors showed that the parties had comtemplated Singapore law as the proper law or, alternatively, it was the proper law by necessary implication; (4) consequently the law of the arbitration agreement (as a general rule) and the curial law (in the absence of express choice) would be Singapore law as well; (5) as the proper law was Singapore law and it would be more practical, convenient and sensible to hold the arbitration in Singapore without having to prove Singapore law, the seat of arbitration was Singapore; (6) the architect, to whom disputes and differences had first been referred, was resident in Singapore and accordingly an arbitration consequent upon the architect's decision or non-decision would take place in Singapore. The curial law was thus Singapore law and the arbitrator had fully complied with its requirements in holding the arbitration.

Woh Hup (Pte) Ltd v Property Development Ltd [1991] SLR 652 High Court, Singapore (Chan Sek Keong J).

In this action, the plaintiffs (who are the Singapore branch of an Indian State bank) claimed against the first defendants US$3,226,000.13, being the total amount due to them under trust receipts and an overdraft facility, and interest. The first defendants did not deny the amount of principal or interest claimed by the plaintiffs. Their defence was that there was a contract between the plaintiffs and the first defendants which was concluded in India for the banking facilities to be given in Singapore, that this contract was subject to the laws of India, that it was illegal under such laws and therefore not enforceable in Singapore. On the basis of affidavits filed by both the plaintiffs and defendants, the plaintiffs' claim for summary judgment was dismissed and the first defendants were given unconditional leave to defend. The plaintiffs appealed. They also filed another affidavit in which two of their assistant managers deposed, inter alia, that there was no concluded contract regarding the banking facilities between the plaintiffs and the first defendants in India, that the first defendants accepted in Singapore the plaintiffs' offer of facilities which was also made in Singapore. The only issue raised in this appeal was whether or not the grant of banking facilities by the plaintiffs to the first defendants was illegal. The question of illegality turned on whether there was a concluded contract in India between the plaintiffs and the first defendants for the grant of the said banking facilities to the first defendants in Singapore. The plaintiffs alleged that the contract was concluded in Singapore. The first defendants claimed that it was concluded in India.

Held, allowing the appeal: (1) the second defendant has not alleged that all the terms relating to the banking facilities that were granted to the first defendants had been agreed with the New Delhi Branch. There is no evidence to such effect; (2) the only documentary evidence to such effect were the offer of banking facilities from the Singapore branch which contained all the terms and conditions of each facility granted to the first defendants; (3) there is documentary evidence that after the first defendants had provided the requisite documentation in respect of the loan of US$3m, the deputy manager of the Singapore branch sent an urgent telefax to the chairman and the managing director of the plaintiffs at Madras seeking urgent approval for the said loan. This is conclusive evidence that prior to this date, there was no concluded contract in India for the grant of the overdraft facility of US$3m between the plaintiffs and the first defendants; (4) as regards the grant of the letter of credit/trust receipt facility of up to US$10m in January 1990, the documentary evidence also shows that the second defendant had discussions with the plaintiffs' branch in Singapore, resulting in the first defendants accepting the plaintiffs' offer as set out in their letter dated 6 January 1990. This contract was also concluded in Singapore; (5) if the contracts for the grant of the banking facilities by the plaintiffs to the defendants were concluded in Singapore, the proper law governing the contracts must be Singapore law, that being the law having the closest connection with the said transactions; (6) it was not illegal under Singapore law for the plaintiffs to lend money to the first defendants in Singapore.

Indian Bank v Renam Trading Pte Ltd & Ors Suit No 361 of 1991 High Court, Singapore (Chan Sek Keong J).

American Express Bank Ltd v Mohamed Toufic Al-Ozeir & Anor [1995] 1 MLJ 160 Supreme Court, Kuala Lumpur (Peh Swee Chin, Wan Yahya and Mohamed Dzaiddin FCJJ).

The plaintiffs arrested the vessel in respect of a claim for damage to cargo which occurred while the cargo was being discharged by stevedores in Singapore. The cargo was carried under a bill of lading which provided that '[d]isputes arising under the bill of lading shall be determined at the place where the carrier has his principal place of business. No proceedings may be brought before other courts unless the parties both expressly agree on the choice of another court or arbitration.' The defendants contended that their principal place of business was Odessa in the Ukraine. The writ was issued on 4 November 1992 but the defendants only entered appearance on 23 February 1994 as parties were attempting an amicable settlement. On 5 April 1994, the defendants applied to stay the proceedings on the basis of the jurisdiction clause and have the security released. The assistant registrar granted the stay. The plaintiffs appealed.

Held, allowing the plaintiffs' appeal: (1) (e) whether the plaintiffs would be prejudiced by having to sue in the foreign court; (2) the claim should not be tried in the Ukrainian courts because it was an undisputed fact that damage to the cargo occurred after the contract of carriage on the vessel had ended, when the cargo was in the course of being discharged from the vessel. That being the case, the bill of lading and, accordingly, the jurisdiction clause had no relevance to the plaintiffs' claim; (3) the defendants' connection with the Ukraine and Ukrainian law were irrelevant. All the material evidence relating to the plaintiffs' claim was in Singapore. The party for whose acts the plaintiffs held the defendants liable (ie the stevedores) was also a Singapore company; (4) in exercising its discretion whether to grant a stay on the proceedings because of the jurisdiction clause, the court should take into account all the circumstances of the case and, in particular, (a) the country where the evidence was most readily available; (b) whether the foreign law applied and whether it was different from the local law in any material aspects; (c) which country the parties were connected with, and how closely; (d) whether the defendants genuinely desired trial in the foreign country or were only seeking procedural advantages;whilst it was not a deciding factor, the defendants' inordinate delay in filing of their application was also relevant. There was no reason for the defendants to spend 11/2 years corresponding with the plaintiffs' solicitors as to the merits of the case if they intended to insist on strict compliance with the jurisdiction clause. There appeared to be some basis for the plaintiffs' surmise that the defendants realized that there was no valid defence of the claim and the only way out was to stifle it by insisting on proceedings being commenced in Odessa. The defendants' conduct smacked of seeking a procedural advantage to the plaintiffs' prejudice.

The 'Kapitan Mezentsev'; Owners of Cargo Lately Laden on Board the Ship or Vessel 'Kapitan Mezentsev' v Owners of the Ship or Vessel 'Kapitan Mezentsev' [1995] 3 SLR 55 High Court, Singapore (Lai Siu Chiu J).

By a specially indorsed writ, issued in Singapore, the plaintiffs claimed '$26,519.83, being the amount due under a charterparty dated 16 October 1968, made between the parties, disputes arising under which were referred to the arbitration of Ralph E Kingsley in the City of London, whose award was dated 9 December 1969 and has been served on the defendants'. Then followed particulars of the claim. Clause 50 of the charterparty provided: 'Any dispute arising out of this contract shall, unless the parties agree forthwith on a single arbitrator, be referred to the final arbitrament of two arbitrators carrying on business in London who shall be members of the Baltic, one to be appointed by each of the parties, with power to such arbitrators to appoint an umpire who shall be a member of the Baltic.' Certain disputes arose between the plaintiffs and the defendants under the said charterparty, whereupon the plaintiffs, pursuant to cl 50, nominated the arbitrator in London, advised the defendants of such nomination and called upon them to nominate an arbitrator. The defendant failed to nominate an arbitrator. Under the provisions of s 7(b) of the English Arbitration Act 1950 which is in pari materia with s 9(1)(b) of the Singapore Arbitration Act (Cap 16, 1970 Ed), the plaintiffs then called upon their arbitrator to assume the function of the sole arbitrator in the reference. After due notice to both parties, the sole arbitrator proceeded to make his award. The defendants did not attend the arbitration. The award was that the defendants should pay the equivalent of S$26,519.83 with interest and costs. The plaintiffs applied to the Singapore court for leave to sign final judgment against the defendants under the Rules of the Supreme Court 1970, O 14, and the defendants opposed this application on the grounds: (1) the arbitration award was bad because the defendants not having nominated an arbitrator, they had not submitted to arbitration in London; (2) though they had agreed that any arbitration under the charterparty should take place in London, they had not agreed that the law of England would apply to such arbitration. Therefore the appointment of a sole arbitrator under the provisions of s 7(b) of the English Arbitration Act 1950 was not in accordance with the terms of the charterparty and the arbitration award was bad.

Held: (1) cl 50 of the charterparty itself constituted a submission to arbitration in London, (2) since the arbitration clause was silent as to what law should govern such arbitration proceedings and was also silent on what should take place in the event of one of the parties failing to nominate an arbitrator when called upon to do so, the law of English should apply as the law where the arbitration was to be held. The law of England had been followed, and there should be judgment for the plaintiffs.

Minoutsi Shipping Corp v Trans Continental Shipping Services (Pte) Ltd 1969 High Court, Singapore (Kulasekaram J).

[Annotation: On appeal, it was again contended, inter alia, that the respondent/plaintiffs should have followed the procedure provided by the Reciprocal Enforcement of Commonwealth Judgments Act (Cap 24, 1970 Ed). The Court of Appeal (Civil Appeal No 37 of 1970, Wee Chong Jin CJ, Tan Ah Tah and Choor Singh JJ) dismissing the appeal on 17 May 1971, held, in a short oral judgment, that the Reciprocal Enforcement of Commonwealth Judgments Act (Cap 24, 1970 Ed) did not apply, since the award, not having been made an order of the English court, was not within the definition of 'judgment' in s 2 of Cap 24. The plaintiff was accordingly correct in suing on the award at common law.]

Per Salleh Abas FJ: 'It is a general principle of law that any transaction taking place outside the jurisdiction can only be enforced in the local courts if they are not contrary to the local law and regulations. Under the continental system the propriety of lex loci over lex fori is based on the doctrine of odre public or jus cogens under which any domestic law designed to protect public welfare and morals must prevail over an inconsistent foreign rule. In English legal system, foreign law is recognized only if it is not repugnant to the distinctive policy of English law, be it statute or common law. This principle as regards Malaysian law of contracts can be found embodied in s 24 of the Contracts Act 1950 (Act 136). (See also Cheshire's Private International Law: 9th Ed, pp 134-139).'

Ngui Mui Khin & Anor v Gillespie Bros & Co Ltd [1980] 2 MLJ 9 Federal Court, Johore Bahru (Raja Azlan Shah CJ (Malaya).

YK Fung Securities Sdn Bhd v James Capel (Far East) Ltd [1997] 2 MLJ 621 Court of Appeal, Kuala Lumpur (Shaik Daud, NH Chan and Mahadev Shankar JJCA).

Perwira Habib Bank Malaysia Bhd v Soon Peng Yam & Ors [1995] 1 SLR 783 High Court, Lai Siu Chiu J)

The plaintiffs agreed to advance S$700,000 to the defendants on the security of property purchased by the defendants and on a personal guarantee of the third defendant. There was default in the payment of instalments and the property was realized by the plaintiffs by forced sale. The plaintiffs brought an action to recover the substantial amount still due and payable to the plaintiffs. It was contended for the defendants that the second defendant was at all material times a Malaysian resident in Malaysia who failed to obtain permission to take the loan. It was argued that the loan made by the plaintiffs was made illegal by the Exchange Control Act 1953 of Malaysia and illegal under the Bretton Woods Agreement Act (Cap 27) of Singapore.

Held: (1) in deciding the question of enforcement of an agreement involving breach of foreign law a two-fold test should be applied: first, whether it would be unlawful under the law of the place of performance, and secondly, whether the person seeking the enforcement had at the time of making the contract knowledge that foreign law would be breached by performance of the contract; (2) in this case there was no allegation in the pleading that the performance of the loan contract was illegal by the law of Singapore. In any event even if its performance involved Malaysia it was not pleaded or proved that the plaintiff had knowledge of Malaysian law; (3) the difference between the illegality point and the Bretton Woods point is that the former depends on knowledge whereas Bretton Woods does not; (4) the term 'exchange contracts' in art VIII s 2(b) of the Bretton Woods Agreement is 'confined to contracts to exchange the currency of one country for the currency of another'; (5) the transaction between the plaintiffs and the defendants was not an exchange contract. It was a loan connected with purchase of land. It was not a monetary transaction.

Singapore Finance Ltd v Soetanto Robert & Ors [1992] 2 SLR 407 High Court, Singapore (GP Selvam JC).

P was a Hong Kong company registered there as a deposit taking company. They had a moneylenders licence which was in effect during the material time, except for a short period between June and November 1979. D guaranteed the repayment to P of sums outstanding on account of credit facilities granted to G Co. On 21 June 1979 K Bank issued an irrevocable letter of credit in favour of N, an Indonesian company, to pay for timber to be delivered to W, a company in Taiwan. The LC was opened on the application of P at the request of G Co. In July 1979 P invoiced G Co with the amount incurred in payment of the LC. G Co did not pay. On 9 June 1980 D agreed to guarantee payment of the outstanding sum to P in consideration for them discontinuing proceedings against W in Taiwan. When no payment was forthcoming, P sued D on their guarantee and under the agreement of July 1980.

Held, dismissing the claim: (1) P were carrying on banking business in Hong Kong without a banking licence, in contravention of the Hong Kong Banking Ordinance. Not being bankers, P could not sue on the guarantee; (2) as there was no liability under the guarantee, the claim under the compromise agreement of July 1980 was misconceived. The action was dismissed.

K-Rex Finance Ltd v Yap Swee Hong & Anor [1990] SLR 937 High Court, Singapore (Rajah J).

[Annotation: Reversed on appeal. See [1993] 1 SLR 46.]

The appellants in this case sought to claim a sum of $143,358.28 from the respondents for professional services rendered to the respondents pursuant to an agreement between the parties dated 19 August 1971. The parties had agreed that the proper law of the said agreement was the law of the state of Washington. The lower court dismissed the claim on the ground that the said agreement was void and unenforceable. The appellants were partners in a firm of consultant engineers practising in the United States. They were, however, not registered as required under ss 18 and 19 of the Professional Engineers' Act (Cap 225, 1970 Ed).

Held, dismissing the appeal: (1) the said agreement was illegal as it infringed the provisions of ss 18 and 19 of the Professional Engineers' Act; (2) a court will not enforce a contract which by its own lex fori it would not enforce because it was tainted with illegality. In this connection the foreign law factor is irrelevant.

John B Skilling & Ors v Consolidated Hotels Ltd 1978 Court of Appeal, Singapore (Chua, Kulasekaram and D'Cotta JJ).

A contract made in this colony between residents here, for the sale of tickets in a lottery in a foreign state where the lottery is lawful is lawful, is not an illegal contract as contravening public policy, and will be enforced by the courts of this colony Ð Aliter where the lottery is illegal in the foreign state. There is no difference in principle between such a contract and the case of money lent for the purpose of gambling in the foreign state where gambling is legal.

D'Almeida v D'Menzies [1886] 4 Ky 126 High Court, Straits Settlements (Ford CJ).

Howard v Shirlstar Container Transport Ltd [1990] 3 All ER 366 Court of Appeal, England (Lord Donaldson MR, Taylor and Staughton LJJ).

This was an action for money had and received by the defendant to the use of the plaintiff. The plaintiff alleged that he gave the defendant $61,000 on 8 January 1960 shortly before he left for India on the defendant's promise to send the whole of the money to him in India. The plaintiff received only $21,466.56 from the defendant. He claimed the balance, namely, $39,533.44. The allegations in the defence were that on or about the beginning of January 1960, the plaintiff handed $25,000 to the defendant, and later $6,000, upon a verbal agreement that the defendant should remit the said sums to India illegally in a manner contrary to Indian exchange control laws. The sum of $28,500 was remitted by the defendant to the plaintiff in India. A further sum of $1,500 was paid by the defendant to one M at the request of or with the sanction of the plaintiff. Finally a further sum of $1,000 was retained by the defendant with the knowledge of the plaintiff, in repayment of a debt due from the plaintiff to the defendant. It was agreed between the parties that if the defendant should make a profit on the illegal transaction, the defendant should be entitled to retain it. The defendant made a profit of $4,135. The court had to consider the following questions: (1) whether the plaintiff handed the defendant $61,000 on 8 January 1960; (2) did the plaintiff ask the defendant to send the money, which he handed to the defendant, to him in India at the black market rate of exchange: (3) how much of the money received by the defendant from the plaintiff remained in the defendant's hand; (4) whether the contract entered into by the plaintiff and the defendant was illegal by the law of India; (5) whether the contract being illegal by the law of India was enforceable in Singapore, and (6) whether an action could be maintained by the plaintiff for money had and received by the defendant under an illegal contract.

Held: (1) the sum of money handed by the plaintiff to the defendant on 8 January 1960, was only $31,000; (2) the plaintiff asked the defendant to send the money, which he handed to the defendant, to the plaintiff in India at the black market rate of exchange; (3) the balance remaining in the hands of the defendants was $7,941.41; (4) the contract entered into by the plaintiff and the defendant was contrary to s 4(2) of the Indian Foreign Exchange Regulations Act 1947; (5) in the present case the lex loci solutionis was the law of India as the contract was to be performed in India. The contract was not enforceable in Singapore as it was illegal by the lex loci solutionis; (6) the parties entered into, and the money which the plaintiff sought to recover was paid in pursuance of an illegal contract. An action for money had and received lay for the recovery of money paid in pursuance of an illegal contract, provided it was brought while the contract was still executory or before the illegal purpose had been substantially performed. In the present case the illegal purpose had been substantially performed before the action for money had and received was brought. It was brought too late for the plaintiff to have the assistance of the court. There was a further reason why the court could not assist the plaintiff because the weight of judicial authority has been strongly in favour of the theory that the action for money had and received depends on an imputed promise to pay.

Abdul Shukor v Hood Mohamed 1965 High Court, Singapore (Ambrose J).

P, a bank, obtained summary judgment against D for sums owing on an overdraft account. P appealed, asking for unconditional leave to defend on the ground that the loan was unenforceable due to a breach of Malaysian foreign exchange regulations.

Held, dismissing the appeal: (1) although D was a Malaysian resident in Malaysia, the loan had been advanced in Singapore by a Singapore bank. The mandate was signed in Singapore, the account was operated here and denominated in Singapore dollars. It was clear that the proper law of the contract was Singapore law; (2) if a contract is lawful by its proper law and the law of the place of performanace, it is immaterial that the party laible would violate the laws of the country in which he is resident. The fact that D was a Malaysian citizen residing in Malaysia was irrelevant to his liabiltiy to P. The appeal was therefore dismissed.

Four Seas Communications Bank Ltd v Sim See Kee [1989] SLR 372 High Court, Singapore ( Rajah J).

The plaintiffs signed a charterparty or Contract of Affreightment ('COA') with the defendants on 21 September 1990 to lift iron ore from Brazil and Norway. The defendants claimed that two shipments were outstanding under the COA. The plaintiffs then denied this and alleged that the COA was now void for uncertainty and fraught with misrepresentation and illegality. On 21 April 1992, the defendants gave notice of commencement of arbitration. They also appointed their own arbitrator on 18 May 1992. On 22 May 1992, the plaintiffs refused to submit to arbitration in England and claimed that the dispute should be decided in Malaysia. On 8 July 1992, the defendants requested the arbitrator to make an award to which the arbitrator agreed only if the plaintiffs failed to deliver a reply to the defendants' claim by 17 July 1992. On 17 July 1992, the plaintiffs informed the defendants that papers had been filed in the High Court in Malaysia to stay the arbitration proceedings. In the meantime, a further extension until 28 July 1992 had been given to the plaintiffs to submit a reply. On that date, the plaintiffs obtained an ex parte order staying the arbitration proceedings and informed the defendants so. On 6 August 1992, the arbitrator handed down his final award. On 10 August 1992, a copy of the order granting the stay of arbitration proceedings was served on the defendants. The defendants now applied to set aside the injunction and to set aside the writ of summons on the grounds that (a) the parties had agreed to refer the matters in issue to arbitration in London according to English law; (b) the plaintiffs' claim therefore did not give rise to a cause of action to be adjudicated by the Malaysian court or the Regional Centre for Arbitration (UN) Kuala Lumpur; and (c) the plaintiffs' claim was res judicata.

Held, granting the defendants' application: (1) and (e) whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would be deprived of security for their claim, be unable to enforce any judgments obtained, be faced with a time-bar not applicable locally, or for political, racial, religious or other reasons be unlikely to get a fair trial; (2) and (e) the plaintiffs had not advanced any iota of testimony to prove that they would be prejudiced by having to sue in the foreign court; (3) (e) although s 25(2) of the Arbitration Act 1952 gives the court the power to grant relief when the dispute involves fraud, the plaintiffs had not adduced evidence of fraud; (4) the Malaysian court can intervene but will do so and will assume jurisdiction only in rare cases. Such power will be resorted to with great care and on ample evidence produced that the action abroad was really vexatious and useless; (5) the burden is on the party seeking the court's intervention to prove by evidence that the facts and circumstances are so exceptional and in breach of the foreign arbitration/jurisdiction clause. There was no such evidence in the present case; (6) where a party makes an ex parte application for an injunction, that party must make full and frank disclosure of all material facts. Here, there was no real attempt to reveal the relevant provisions of the arbitration clause. There was also a reference to the appointment of the arbitrator but no full disclosure of the communications between the parties and the arbitrator in relation to that appointment. Material facts were also not disclosed; (7) the Kota Kinabalu High Court order was only served on the defendants after the final award had been made in London. By O 45 r 7(2) of the Rules of the High Court 1980, an order shall not be enforced under r 5 unless a copy of the order has been served personally on the person required to do or abstain from doing the act in question. The plaintiffs therefore did not comply with the rules which was now detrimental to their interests. The injunction was also directed at the defendants' arbitrator but he was nowhere named as a party; (8) a clause in the charterparty provides that the charterparty shall be governed by English law and that disputes shall be referred to arbitration in England. As the plaintiffs had entered into such a contract, he had to accept the regime of the proper law of the contract; (9) the parties' expression of intention was only a prima facie evidence as to the proper law applicable. Whether the proper law was the lex contractus or lex solutionis is a matter of presumption and where the parties have expressed themselves, the intention so expressed overrides the presumption; (10) even though parties have decided to refer disputes to a foreign court, the Malaysian court, where the cause of action in relation to the contract arises and is properly within its jurisdiction, has a discretion whether or not to adjudicate. In exercising this discretion, the court should consider (a) in what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the local and foreign courts; (b) whether the law of the foreign court applies, and if so, whether it differs from the local law in any material respects; (c) with what country either party is connected, and how closely; (d) whether the defendants genuinely desire trial in the foreign country, or are only seeking procedural advantages;applying the above considerations to the present facts, (a) the defendants had the choice of country as the plaintiffs did not honour their part of the bargain; (b) the laws of England and Malaysia are similar; (c) the parties were not only closely connected with Malaysia, but also London in that if there had been any failure by the defendants to convey the goods from Brazil to Norway, the parties could easily arbitrate in London, calling witnesses from either country to attend and attest; (d) the plaintiffs appeared to be seeking a way out and not honour their agreement;the basis of the plaintiffs' claim failed as there was no proof of a cause of action or substance: (a) the plaintiffs signed the contract in September 1990 but only alleged illegality and misrepresentation by the defendants now; (b) the arguments that the defendants were not 'deponent owners' was invalid as the plaintiffs seemed to be at odds with what exists in practice; (c) the plaintiffs only wrote to the defendants on 22 May 1992 after the former failed to comply with their contract terms; (d) that the shipment was covered by another ship was not fatal as substitution was allowed under the charterparty;a court will not enforce a contract which is illegal by its own lex fori but no illegality has been proved here.

Sabah Gas Industries Sdn Bhd v Trans Samudera Lines (S) Sdn Bhd [1993] 2 MLJ 396 High Court, Kota Kinabalu (Syed Ahmad Idid J).

The appellant bank granted facilities to Cornwall Investments Pte Ltd ('Cornwall') which were secured by a guarantee given by two persons including the respondent ('the guarantee'). Upon Cornwall's default of its repayment obligations, the appellant caused a letter of demand to be addressed to the respondent. The appellant then filed a claim against the defendant, describing itself as the American Express International Banking Corp. The appellant subsequently obtained a court order amending its name in the title to the action to American Express Bank Ltd ('the order'). The appellant applied for summary judgment and this was allowed by the senior assistant registrar. The respondent's appeal to the High Court was allowed on the ground that there were three triable issues. The judge firstly held that there was no evidence that the letter of demand had been served on the respondent. Secondly it was decided that the guarantee was not stamped and was therefore not admissible. The judge lastly held that there was uncertainty as to the appellant's status. The appellant appealed to the Supreme Court. On appeal the respondent raised two preliminary objections. The respondent firstly alleged that the appellant's solicitors had no authority to act on the appellant's behalf and he had applied to the High Court to strike out the appellant's statement of claim on this ground ('the application'). The respondent's second preliminary objection was that the Malaysian courts had no jurisdiction because the loan and collateral agreement between the appellant and Cornwall stated, inter alia, that the agreement and the parties' rights were to be governed by Singapore law.

Held, allowing the appeal: (1) since the High Court had not heard the application, the first preliminary objection should be overruled; (2) after the service of the writ of summons and the statement of claim, the respondent took no steps to apply for leave to enter conditional appearance with a view to strike out the claim on the ground that the Malaysian courts had no jurisdiction. Instead the respondent, having entered appearance, filed his defence which was subsequently amended and re-amended. The respondent had therefore submitted to the jurisdiction of the Malaysian courts; (3) in any case there was no reason why a court in this country where the respondent resided was not the forum conveniens. The second preliminary objection was therefore also overruled; (4) the guarantee provided that any notice of demand shall be deemed to have been duly given to the guarantor by sending the same by post addressed to him at the address provided in the guarantee. The guarantee also provided that the respondent had waived any notice of any kind. There was no evidence of any denial of receipt of the letter of demand in the respondent's affidavit in reply. There was therefore no triable issue as to whether the letter of demand had been served on the respondent; (5) under s 52(1) of the Stamp Ordinance 1949 prohibition against admissibility of an instrument on account of it not being duly stamped, is not an absolute prohibition but conditional on payment of a duty or a penalty under ss 43 and 47 of the 1949 Ordinance. It is the court's responsibility under s 51 of the 1949 Ordinance to impound unstamped documents, if produced, and to admit them under proviso (a) to s 52(1) of the 1949 Ordinance on payment of stamp duty or penalty. The non-stamping of the guarantee did not therefore provide a triable issue; (6) the issue as to the appellant's name was only raised for the first time in the appeal to the High Court. The respondent had also not appealed against the order and time for appeal had lapsed. Accordingly the appellant's status was not a triable issue; (7) final judgment was to be signed against the respondent but the order of the Supreme Court was not to be extracted until the guarantee had been stamped.

American Express International Banking Corp v Tan Loon Swan [1992] 1 MLJ 727 Supreme Court, Malaysia (Hashim Yeop A Sani CJ (Malaya).

This was an application to set aside the writ of summons and all subsequent proceedings on the ground in effect that the courts in Malaysia have no jurisdiction to deal with the matter. In this case the contract was made outside the jurisdiction, the defendant was resident outside Malaysia and had no place of business within the jurisdiction and the breach of contract also occurred outside the jurisdiction.

Held: the court had no jurisdiction to deal with the matter and therefore the application must be allowed.

Lam Kok Trading Co (Pte) Ltd & Anor v Yorkshire Switchgear & Engineering Co Ltd [1976] 1 MLJ 239 High Court, Kuala Lumpur (Abdul Hamid J).

D carried on business of a merchant banker in Singapore. D executed a loan agreement whereby D lent money to P1-P4 ('the agreement'). P1-P4 had also paid D for advice rendered by D in respect of 'the agreement'. P1-P4 were Malaysian citizens residing in Malaysia. P1-P4 filed a writ and statement of claim against D in the Malaysian High Court alleging that D was negligent in failing to give proper advice to P1-P4 and also that D had breached 'the agreement' ('the Malaysian suit'). 'The agreement' stipulated that P1-P4 had agreed to submit to the jurisdiction of, inter alia, the courts of Singapore or Malaysia as D might elect. After the filing of P1-P4's action, D instituted a suit against P1-P4 in Singapore seeking principally the return of the loan under 'the agreement' ('the Singapore suit'). D had entered summary judgment against P1-P4 in 'the Singapore suit'. In 'the Malaysian suit' P1-P4 obtained leave from the senior assistant registrar to serve their writ on D in Singapore ('the order'). D applied to set aside 'the order'. The senior assistant registrar allowed D's application and P1-P4 appealed to the High Court.

Held, dismissing the appeal: (1) D conducted its merchant banking business in Singapore and had not appointed any agent in Malaysia concerning 'the agreement'. Accordingly the alleged tort of negligence could only be allegedly committed by D in Singapore. It was only right that D should answer for the wrong doing in the country where it was alleged to have committed the wrong; (2) the fact that P1-P4 resided in Malaysia was immaterial as jurisdiction does not follow the plaintiff but the defendant, the tortfeasor; (3) 'the agreement' was executed by P1-P4 in Malaysia and then brought to Singapore where it was executed by D. As such 'the agreement' was completed in Singapore; (4) the foreign jurisdiction clause in 'the agreement' gave D the right to elect the court where disputes should be heard and determined. By filing 'the Singapore suit', D had clearly indicated that Singapore courts should have jurisdiction to try all disputes arising from 'the agreement'; (5) P1-P4 had by their conduct submitted to the jurisdiction of the Singapore courts. P1-P4 had entered unconditional appearance to 'the Singapore suit' and were heard in the subsequent summary judgment proceedings. P1-P4 could have filed a counterclaim against D in 'the Singapore suit' instead of filing 'the Malaysian suit'; (6) on the facts and on the law, the cause of P1-P4's action, namely the tort of negligence and breach of contract, occurred out of the jurisdiction of the Malaysian courts. Accordingly 'the order' granting P1-P4 leave to serve their writ out of jurisdiction, was not a proper exercise of the senior assistant registrar's discretion and should be set aside.

Tengku Aishah bte Sultan Haji Ahmad Shah & Ors v Wardley Ltd Suit D2-22-1914-89 High Court, Kuala Lumpur (Siti Norma Yaakob J).

This is an action by an agent for the recovery of commission. The plaintiff was operating in the United Arab Emirates ('UAE') as an agent for overseas contractors and suppliers. The defendants, Vosper QAF Pte Ltd, a Singapore company, were and are engaged in the business of, inter alia, naval shipbuilding. The plaintiff and the defendant reached an agency agreement some time in late June or early July 1986 as evidenced by two letters dated 20 June and 8 July 1986 from the defen-dants to the plaintiff. The plaintiff was appointed as agent in respect of the proposed sale of two landing craft by the defendants to the UAE Armed Forces General Headquarters ('GHQ'). The defendants had successfully secured the contract to supply the aircraft to GHQ on 17 November 1987. On 3 December 1986, however, a confidential memorandum was issued by His Highness Sheikh Khalifa bin Zayed Al Nahyam, the Deputy Supreme Commander ('DSC') of the UAE Armed Forces, to the Under-Secretary of the Ministry of Foreign Affairs prohibiting foreign suppliers from appointing local agents in relation to armament contracts. The existence of this memorandum was not known to the parties until well after the defendants had secured the contract with GHQ. The plaintiff was aware of article 24.1 in GHQ's standard contract, which precluded an arms supplier from using agents in securing tenders. Nevertheless, the plaintiff's managing director, Shaikh Khalid ('PW1') testified that the article had been in use for sometime but had not been strictly enforced. In a meeting in August 1987 with the Commander of the UAE Navy, the defendants were requested to give a letter of assurance stating that they did not have a local agent. The defendants and the plaintiff discussed the matter and an agreement was reached whereby the defendants would, as a matter of form, terminate the agency agreement but would, nevertheless, pay the plaintiff the agreed commission indirectly through another company of the plaintiff, the Berry Group Ltd. On 3 November 1987, pursuant to the understanding to make the commission payment to the Berry Group Ltd, the defendants drew up two draft agreements ('the Berry drafts') to be entered into between the defendants and the Berry Group Ltd. In March 1988, the plaintiff signed both drafts and returned them to the defendants. There was a change of mind on the defendants' part and they never signed the drafts. The main issues in contention were, firstly, whether it was agreed between the parties that the commission payable was to be reduced from 8% to 7[1/2]% after an initial reduction; secondly, the proper law governing the contract; and thirdly, whether the agency agreement between the plaintiff and the defendants was void and unenforceable under UAE law as being against public policy.

Held, allowing the plaintiff's claim for the commission: (1) on the evidence, there was a further agreement to reduce the commission payable to 7[1/2] % of the original contract price. After two payments had been made by the defendants to the plaintiff (based on a computation of 7[1/2] %) there was no protest by the plaintiff. Furthermore, in one of two Berry drafts, the amount stated to be due from the defendants to the Berry Group Ltd was consistent with 7[1/2] % commission of the original contract price of S$11.5m; (2) as regards the proper law of the agency agreement, if it were possible to infer what the parties had intended should be the proper law, that should be done. If not, the proper law would have to be the system of law with which the contract has its closest and most real connection; (3) where principal and agent live in different countries, the law of the place where the principal carries on business is likely to be given some, if not considerable, weight. On the facts of the case, it seems that the agency contract was made in Singapore. The defendants are a Singapore company and the two crucial letters which evidenced the contract were written in Singapore. They were written in the English language, an official language of Singapore. The price of the contract with GHQ to supply the two landing craft were expressed to be in Singapore dollars, the commission to be paid, being a percentage of the supply contract price. The two landing craft, the subject of the tender, were to be constructed in Singapore. The only matter that was linked to UAE was that the services to be rendered by the plaintiff were to be carried out in UAE. The contract thus had real and closest connection with Singapore and the proper law for the contract is Singapore law; (4) from expert evidence, there is no doubt that the prohibition (in the directive and art 24.1) is not written law, in the sense that it is not a provision laid down in any Federal law or decree. Neither is it a regulation having the force of law, as it is not prescribed by an authority under any federal law or decree. It is truly and effectively a purchasing policy of GHQ in so far as arms procurements are concerned; (5) it is not in dispute that the provisions in art 24.1 of the supply contract entered into between GHQ and the defendants have been in use for some years. From the evidence, however, up to the date of issue of the directive by DSC, the prohibition in that article was not enforced; (6) it cannot be said that just because a matter is stated in a contract that that must necessarily constitute a matter of public policy. For a contract or an act to infringe public order or morals, it must be a contract or an act which is obviously wrong or improper. It must tend to be injurious to the public or against public good. Public policy must be distinguished from the policy of the government of the day or its department. Such governmental or departmental policies do not necessarily represent public policy which would vitiate contracts; (7) a breach of art 24.1 would not render the agency agreement between the plaintiff and the defendant void and unenforceable. It is essentially a contractual term, a breach of which would give GHQ certain recourse as specified in art 24.2 The prohibition in art 24.2 is not of such a nature as to constitute rules of public order or morals, a breach of which would render a contract void and unenforceable; (8) it would be against public policy of Singapore if a person should be hired for consideration so that he could use his position to exercise undue influence on persons in authority to procure a benefit from the government or obtain a title from the State. Such a kind of contract must be struck down and would not be enforced as they tend to be injurious to the public interest. But such was not the case here; (9) with respect to the plaintiff's application to amend the Statement of Claim, although it was applied at a rather late stage, lateness per se is not an absolute bar to amendments being allowed, provided there is no unfairness or prejudice to the other side. The amendments were essentially to amplify and clarify certain factual aspects of the Statement of Claim. All the evidence was before the court. The defendants were not in any way prejudiced by the amendments, and if there was indeed any prejudice, the same could be compensated by an appropriate order as to costs. Injustice would, however, be caused if the amendments were not to be allowed.

Shaikh Faisal t/a Gibca v Swan Hunter Singapore Pte Ltd [1995] 1 SLR 394 High Court, Singapore (Chao Hick Tin J).

In September 1981, the defendant borrowed HK$20 million from Banco Do Pacifico ARL of Macau ('Pacific Bank Ltd'). In November 1983, when the loan and accrued interest were outstanding and unpaid, Pacific Bank Ltd, by a deed of assignment, assigned all 'rights, title and interest to and in' the loan and interest due thereunder to the plaintiffs, a bank in Hong Kong. By cl 7 of the deed of assignment, it was provided, as between the assignors and assignees, that the assignment shall be governed by and construed in accordance with the laws of Hong Kong. Notice of the assignment was duly given to the defendant. The defendant failed to pay the loan and interest outstanding in spite of repeated demands by the plaintiffs who commenced proceedings in the High Court and successfully obtained summary judgment against the defendant. They signed final judgment against the defendant for HK$20 million together with interest thereon at the rate of 19% per annum from 8 September 1981 until judgment and costs. The defendant appealed against the final judgment. He contended that he had an arguable defence and that there was plainly a question of law and fact to be tried which touched on the assignability of the debt under the law of Macau. The plaintiffs submitted that the proper law of the debt was plainly the law of Hong Kong under which neither the assignability of the debt nor the intrinsic validity of the assignment could be questioned. The plaintiffs further contended that the defendant had agreed in writing not to appeal against the order for leave to sign final judgment granted in this case and that, at any rate, the defendant must in all circumstances be estopped from asserting and acting otherwise.

Held: (1) in the law of conflict of Singapore as in England, and where, as in this case, the parties had not expressly provided for the proper law to apply to their contract, their intention is to be inferred or presumed by the court from the terms of contract and the relevant surrounding circumstances; (2) on a question of what is the proper law in the absence of an express agreement between the parties, the intention of the parties may be inferred in one of two ways: (i) by looking at the terms of the contract to see if taken as a whole they by necessary implication led to the inevitable conclusion that it was the parties' intention that their mutual rights and obligations under it should be governed by a particular system of law or (ii) by objectively determining whether a contract had its closest and most real connection with a particular system of law; (3) the proper law of the assignment must be clearly distinguished from questions of assignability of the debt which is governed by the proper law of the debt; (4) in the present case, the proper law of the assignment as between Pacific Bank Ltd and the plaintiffs was not in dispute. Clause 7 of the deed of assignment applied and the proper law was Hong Kong law; (5) however, the defendant had succeeded in raising an arguable defence, ie the question of whether or not Macau law, as supplemented by Portuguese law, is in fact and/or in law the proper law of the debt which ought to be tried; (6) with regard to the estoppel issue, the court was unable to say whether a compromise agreement was finally concluded. In the circumstances, there were issues which had to be tried as to whether the representation, if there was one, was sufficiently unequivocal to find an estoppel and whether the plaintiffs had relied on such representation to their detriment; (7) the defendant was granted unconditional leave to defend.

Hang Lung Bank Ltd v Datuk Tan Kim Chua [1986] SLR 441 High Court, Singapore (Lai Kew Chai J).

The defendants, a stockbroker firm in Ipoh, had directed the plaintiffs, a stockbroker firm in Singapore, to purchase shares in two companies listed on the Singapore Stock Exchange amounting to S$26,433,600 of which the Ipoh brokers had paid to account S$1,721,616.44. The plaintiffs claimed that the defendants did not accept delivery of the shares and sought payment of the balance of the purchase price. The defendants admitted that the S$1,721,616.44 had been paid to the account of the purchase price but contended that the agreements to purchase the shares had not been concluded or, if they had been concluded, the agreements were unlawful or unenforceable as the plaintiffs did not have a dealer's licence or, even if they had one, they had infringed its conditions. Consequently, it was argued, the plaintiffs had infringed s 9 of the Singapore Securities Industry Act 1973. The defendants counterclaimed for the amount paid to the plaintiffs. The issue before the court was the proper law of contract governing the share transactions in question. The defendants contended that the proper law was Singapore law, whilst the plaintiffs contended that it was Malaysian law.

Held, allowing the plaintiffs' claim and dismissing the defendants' counterclaim: (1) every international contract has a governing law, known as the proper law of contract, which determines the validity, interpretation, rights and obligations etc of such a contract. Where the parties to a contract have not made an express choice of the proper law to be applied, the court would have to find an implied choice to be inferred from the terms or form of contract or its surrounding circumstances, eg the presence of a choice of forum clause, the use of terminology peculiar to a system of law, and the currency in which money under the contract is expressed. If an implied choice is not found, the court would then adopt the system of law with which the transaction had the closest and most real connection, eg the place of performance of the contract, the place where the contract was made. In that regard the best test is the 'localization' or 'centre of gravity' approach, ie the law of the country where there is a clear preponderance of the above-mentioned factors. Where there is no clear preponderance of such factors, the weight of each factor would have to be assessed, and in that respect the factor which carries the most weight is the locus solutionis of the contract, ie the place where the contract is to be performed; (2) in the instant case, there was no express choice of any particular system of law, and from the evidence, there was no implied choice. There was, however, a preponderance of elements pointing to Malaysian law Ð the place where the contracts were made was Malaysia, and the place where they were to be performed, being the element which carried most weight, was also Malaysia. Thus, the proper law of contract governing the two contracts in question was Malaysian law; (3) the essential validity of a contract involving foreign elements is determined by the proper law of contract. Accordingly, in the present case, since the proper law was Malaysian law, the court need not deal with the allegations of breach of conditions of the plaintiffs' dealer's licence. In any event, for the same reason, even if there had been such breaches the court would ignore them.

James Capel (Far East) Ltd v YK Fung Securities Sdn Bhd (Tan Koon Swan, Third Party) [1996] 2 MLJ 97 High Court, Ipoh (Peh Swee Chin FCJ).

The Hooghly Mills Co Ltd v Seltron Pte Ltd [1995] 1 SLR 773 High Court, Singapore (Judith Prakash JC).

In this case, the judge of the High Court had dismissed the appellant's application to set aside the order of the senior assistant registrar granting the respondent leave to issue a writ of summons and to serve notice thereof in Canada, outside the jurisdiction of the court. The contract between the parties expressly declared that the contract was to be deemed to be made in British Columbia, Canada. It was conceded that the breach of contract took place in Canada. The respondent admitted that the appellant was a limited company incorporated and resident in Canada with no registered place of business in Malaysia. He, however, based his claim on O 11 r 1(j) of the rules of the Supreme Court 1957 alleging that the appellants had property within the jurisdiction and that the respondent's claim could not be satisfied save by means of a judgment or order of the High Court of the Federation. The appellant appealed to the Federal Court.

Held: (1) there was non-disclosure of material facts sufficient for the court to set aside the order of the learned judge dismissing the application by the appellant; (2) the respondent had not shown that the appellant had property within the jurisdiction which could be made to satisfy the claim and the appeal must be allowed and the order granting leave to serve out of jurisdiction be set aside.

Cantrans Services (1965) Ltd v Clifford [1974] 1 MLJ 141 Federal Court, Kuala Lumpur (Azmi LP, Ali and Ong Hock Sim FJJ).

This was a petition for dissolution of marriage. The petitioner-husband was born and educated in England and his domicile of origin is therefore English. It was necessary for him to show that he had acquired a domicile of choice in Singapore. It was argued that where a man has resolved not to reside again in his country of origin, the mere facts or residence in any other place, though for the purpose of employment, will show the acquisition of a new domicile.

Held: there was no evidence in this case to show that the petitioner had chosen Singapore as the place in which he will reside indefinitely and therefore on the facts the petitioner had failed to show that he had acquired a domicile here.

Rayner v Rayner [1956] MLJ 179 High Court, Singapore (Taylor J).

Where a change of domicile is alleged, it must be proved with perfect clearness that the deceased had at the time of his death, formed a 'fixed and settled purpose', 'a determination', 'a final and deliberate intention' to abandon his existing domicile. There is a presumption in favour of the continuance of an existing domicile and, therefore, the burden of proving a change lies in the plaintiffs. This presumption may have a decisive effect for if the evidence is so conflicting or indeterminate that it is impossible to ascertain with certainty what the resident's intention was, the court will decide in favour of the existing domicile. The intention to abandon a domicile of choice must be unequivocal though the evidence necessary to establish it is less strong than that required to establish the acquisition of such a domicile. Very little reliance can be placed upon declarations of intention, especially if they are oral. Declarations as to intention are rightly regarded in determining the question of a change of domicile, but they must be examined by considering the person to whom, the purpose for which, and the circumstances in which they are made, and they must further be fortified and carried into effect by conduct and action consistent with the declared intention.

Re Eu Keng Chee, deceased; Chan Pek Yuk & Anor v Commissioner of Estate Duties [1961] MLJ 210 High Court, Singapore (Buttrose J).

P, a judgment creditor, served a bankruptcy notice on D, the judgment debtor, upon D's failure to pay the judgment debt. P subsequently filed a bankruptcy petition against D. Paragraph 2 of this petition stated that D had for the greater part of six months preceding the presentation of the petition resided in Singapore, within the jurisdiction of the court. The bankruptcy notice and petition were both served on D by way of substituted service through advertisement in the newspapers. LCB, D's brother, filed an affidavit in which he deposed that he had personal knowledge that D had not resided in Singapore since late 1985, that he had married a Taiwanese lady and since 1985 had been domiciled and resident in Taiwan. CKK, an accountant who said that he had handled D's financial affairs since D had left Singapore, also filed an affidavit confirming the affidavit of LCB.

Held, granting the petition: (1) the burden was on the petitioning creditor to satisfy the court that the judgment debtor was a debtor for the purposes of s 3 of the Bankruptcy Act. P had discharged this burden by reference to D's passport and to another exhibit (a certificate issued by the Trade Mission of the Republic of China in Singapore) produced by D which showed that he was born in Singapore and that he was a Singapore citizen; (2) the affidavits of LCB and CKK were rejected on the ground that they were hearsay. Whether D had changed his domicile was a matter within the personal knowledge of himself, so the witnesses could not say that they had personal knowledge of this matter; (3) as regards the statements that D had married a Taiwanese lady, had a son and purchased a house in Taiwan with the intention of residing there permanently, no documentary evidence was produced to show any of these facts; (4) D's passport showed that he had travelled extensively to many countries from 1985 to 1988. However, frequency of travel does not prove a change of domicile nor did D himself so allege; (5) as the judgment debt was not denied, P had discharged the burden of proving that D was a debtor at the time the bankruptcy notice was served on him. D had failed to adduce evidence that he had changed his domicile at the relevant time. A receiving order and an adjudication order were therefore made against D.

Algemene Bank Nederland NV v Loo Choon Yow Bankruptcy No 396 of 1988 High Court, Singapore (Chan Sek Keong J).

This was an appeal by way of case stated from the decisions of the Special Commissioners. The Comptroller-General had assessed income tax on the basis of a Hindu joint family and the Special Commissioners had confirmed the assessments. It was argued on behalf of the appellant that: (a) s 72 of the Income Tax Act 1967, which deals with Hindu joint families, does not apply to Hindus whose domicile is Malaya and can only apply to Hindus who are domiciled in India; (b) if s 72 is held to apply to the appellant it is in violation of art 8 of the Constitution of Malaysia and therefore void.

Held, dismissing the appeal: (1) where a Hindu has shown the deliberate preservation of his personal law, as here in the case of joint families, he is bound by such personal law, despite the fact that he has now emigrated to another country and has acquired a domicile of choice in the country of his origin; (2) s 72 of the Income Tax Act 1967 merely reenacts what is the personal law by deliberate election of citizens of Hindu custom and religion; (3) the Special Commissioners were correct in their findings of fact and the inferences they drew from such findings.

B v Comptroller-General of Inland Revenue [1973] 1 MLJ 123 High Court, Ipoh (Chang Min Tat J).

[Annotation: See also the Court of Appeal's decision in [1974] 2 MLJ 110.]

This was an appeal from the decision of the High Court ([1973] 1 MLJ 123). The questions of law submitted before the High Court were formulated as follows: (1) s 72 of the Income Tax Act 1967 (s 57 of the Income Tax Ordinance) which deals with Hindu joint families does not apply to Hindus whose domicile is Malaya and can only apply to Hindus who are domiciled in India; (2) if s 72 of the Income Tax Act is held to apply to the appellants it is in violation of art 8 of the Constitution of Malaysia and therefore void. The learned judge declined to consider the second question as he considered that this question was a matter exclusively within the jurisdiction of the Federal Court. He rejected the appellant's contention on the first question. The appellant appealed to the Federal Court.

Held, dismissing the appeal: (1) Hindu law is the personal law of the appellants and by reason of cl (5) thereof art 8 of the Federal Constitution does not invalidate the provision relating to Hindu joint families in s 72 of the Income Tax Act (or s 57 of the Income Tax Ordinance 1947); (2) the two Hindu families in this case have by personal choice regarded their property as that of a joint Hindu property. The basis of their liability to pay income tax was not solely based on the fact that they were of the Hindu religion but also on the fact that they have always regarded their joint property as belonging to one unit and the income of that property as the income of one person.

B v Comptroller-General of Inland Revenue [1974] 2 MLJ 110 Federal Court, Ipoh (Azmi LP, Gill and Ong Hock Sim FJJ).

Where a domicile of origin is proved, the onus of establishing that there has been a change of domicile lies upon the person who asserts it, and he must be able to shew such a change of domicile with perfect clearness and satisfaction. Where, therefore, a petitioner seeks to establish such a change, the court must treat with great reserve the statements of the petitioner and the respondent. It is safer to establish the respondent's intention from all the surrounding circumstances and particularly from events which occurred ante litem motam.

Kanmani v Sundarampillai [1957] MLJ 172 High Court, Kuala Lumpur (Smith J).

The testator was born in Hong Kong but his father was born in the Punjab, now a part of Pakistan. The testator came to Singapore sometime in 1941 and after that lived and worked in Singapore. He held various jobs during the war years and after the war he commenced to do business of a transport agency in Singapore and subsequently established various companies here. He bought a house in Singapore in 1949 where he lived with his wife. He registered as a Singapore citizen in 1958 and voted at elections. One of the issues for the determination of the court was, whether at the date of his death he was domiciled in Hong Kong, Singapore or Pakistan?

Held: the domicile of origin of the testator was Pakistan but on the facts he had acquired a domicile of choice in Singapore which had not been abandoned by him. The declaration of the testator in his will as to domicile was incorrect and inconsistent with the fact and no importance could be attached to it.

Re Mohamed Said Nabi, deceased [1965] 1 MLJ 121 High Court, Singapore (Chua J).

A native of Madras, born a Hindoo, the petitioner in 1924 adopted the Christian religion and as a consequence he became estranged from his family. In 1926 he left India and came to Penang where he was employed for about two years. He then came to Singapore where he had remained ever since. He had never returned to India and swore that it was his intention to remain in Singapore, that he did not want to go back to India and that he wished to spend the rest of his life in Singapore.

Held: (1) in cases where the domicile of origin has been changed to a domicile of choice evidence is given of valuable business interests and of landed property as factors anchoring the person to his new home. No such evidence existed in this case. Since 1935 the petitioner appeared to have been far from prosperous, yet he had remained here, when he might, had he so desired, have returned to the land of his birth. This circumstance added weight to his testimony that he intended to remain here for the rest of his life; (2) his abandonment of the religion of his birth and his residence here for more than 14 years are evidence that he had the animus manendi and that he had acquired a domicile of choice. 'If the court sees no reason to doubt a man's words, why should it not believe him?'

Saminathan v Saminathan [1941] MLJ 79 High Court, Straits Settlements (McElwaine CJ).

To establish a domicile of choice it is necessary to adduce clear proof of two separate and independent facts, one concrete or physical and the other abstract or psychological. There must be actual residence for an indefinite period and there must also be an intention to remain so firm and positive as to exclude any intention to make an ultimate home in another jurisdiction.

Marshall v Marshall [1956] MLJ 122 High Court, Singapore (Taylor J).

The deceased was born in Kuala Lumpur on 15 May 1915 and was the son of one Prem Singh who was a British subject born in India. Prem Singh traded in Kuala Lumpur but died in India. The deceased had his business in Malaya and Singapore and had a fixed place of abode in Kuala Lumpur which was owned by the deceased and the applicant jointly. The deceased spent most of his lifetime in Malaya except for making short visits to India once in about six or seven years. The applicant commenced these proceedings by way of originating summons as the administrator of the estate of the deceased for the determination of the question whether the deceased at the time of his death was domiciled in Malaya or India. Affidavits were filed by the applicant and the second respondent (a son of the deceased) in which they exhibited copies of letters and telegrams sent by the deceased after the last war which according to them showed that it was the deceased's intention to retire and settle down in India.

Held: (1) all the circumstances of the deceased's life indicated that he intended permanently to live in Malaya and that he acquired a domicile of choice in Malaya before the last war; (2) although the affidavits filed in the proceedings contained some evidence of the deceased's declaration of intention on the question of a further change of his domicile, these did not amount to an abandonment of the domicile of choice.

Re Bhagwan Singh, deceased [1964] MLJ 360 High Court, Kuala Lumpur (Gill J).

An immigrant husband was said to have expressed an intention to settle in Malaya.

Held: these words did not show an intention to settle in the state in which he then resided.

Bates v Bates [1951] MLJ 95 High Court, Selangor (Taylor J).

Re Mohamed Said Nabi, deceased [1965] 1 MLJ 121 High Court, Singapore (Chua J).

The petitioner's sworn testimony that he has formed the intention not to live in Ireland is a purely negative intention and it is not sufficient to support the acquisition of a domicile of choice since it only discloses the existence of the animus without establishing the necessary factum.

Copinger-Symes v Copinger-Symes & Anor [1959] MLJ 196 High Court, Ipoh (Good J).

The petitioner sought for divorce praying that his marriage to the respondent be dissolved under s 82(1)(e) of the Women's Charter (Cap 47, 1970 Ed) (hereinafter called the Charter) on the ground of seven years' separation. The parties were married in 1952 at Selangor under the provisions of the Civil Marriage Ordinance 1952. They were born in Kuala Lumpur and there are six children of the marriage. The petitioner came to live in Singapore leaving his wife and family in Kuala Lumpur in 1967, to set up a partnership firm. He continued to be a partner of a firm in Kuala Lumpur and returned to Kuala Lumpur weekly and stayed at the matrimonial home. In March 1968, after a quarrel with his wife (over his affair with one P) he stopped staying at the matrimonial home whenever he came to Kuala Lumpur. In 1969 he decided to live with P in Singapore. In 1970, the petitioner became a permanent resident of Singapore. In mid 1968 he resigned from two clubs in Kuala Lumpur and sold his interest in the Kuala Lumpur firm. He became a member of two clubs in Singapore in 1968. The petition was defended on two grounds: (i) the court had no authority to make a decree as the domicile of the parties at the time when the petition was presented was not in Singapore (s 80(1)(c) of the Charter) and (ii) on the merits and upon a true interpretation of s 82(1)(e) of the Charter, a decree should not be granted.

Held: (1) clear evidence is required to establish a change of domicile. In particular, to displace a domicile of origin in favour of the domicile of choice, the standard of proof goes beyond a mere balance of probabilities; (2) the oath of the person whose domicile is in question as to his intention to change his domicile is not conclusive. The question for the court is whether upon a review of all the circumstances it gives credit to his evidence; (3) it is always material, in determining what is a man's domicile to consider where his wife and children live and have their permanent place of residence or where his establishment is kept. But where the marriage has broken down, as in this case, the residence of the wife loses its significance; (4) the domicile of the parties to this marriage was in Singapore at the time when the petition was presented; (5) when a petition is based on the ground of seven years' separation, 'no question of fault on the part of the petitioner enters into the picture at all' and the amendments contained in s 82(1)(e) and s 82(2)(g) are designed to put an end to marriages where the parties have been separated for at least seven years and are unlikely to be reconciled; (6) when a petition is presented under s 82(1)(e) or s 82(2)(g), the fact that the respondent wishes to continue with the marriage is not a valid ground for refusing to grant a dissolution of the marriage. Moses v Moses [1968] 1 MLJ 96 followed.

Joseph Wong Phui Lun v Yeoh Loon Goit 1978 High Court, Singapore (Chua J).

[Annotation: See note to Ramasamy v Ramasamy [1975-1977] SLR 638; [1978] 1 MLJ 99.]

The petitioner/appellant, a rubber planter in Selangor, was born in Ireland in 1887 and his domicile of origin was the Irish Free State. He went abroad in 1906, returned to Ireland for four months in 1913, again for five weeks in 1919 and since then had never been back to Ireland. He gave evidence that he had abandoned all intention of returning to the Irish Free State and his intentions were to spend the rest of his life as a planter in Selangor and on retirement, although he had made no plans as to that, to settle in this country. This evidence was not controverted by the respondent or co-respondent, neither of whom appeared at the hearing of the petition. In the court below the judge accepted the evidence of the petitioner/appellant but did not consider that such evidence established the acquisition of a domicile of choice.

Held: (1) cases of domicile must be decided with regard to their own special facts; (2) since there was no act done or other evidence given by the petitioner/appellant which conflicted with his evidence of intention, and such evidence, which was believed by the trial judge, not having been controverted by the respondent or co-respondent, it was sufficient to establish a domicile of choice in Selangor.

Hickson v Hickson [1935] MLJ 265 Court of Appeal, Federated Malay States (Thomas CJ, Whitley and Howes JJ).

The plaintiff claimed that he was a natural and lawful son of the deceased, Yap Swee and therefore entitled to a share in the estate of the deceased. Evidence, however, showed that the plaintiff was an adopted son. The issue was what were the rights of the plaintiff as an adopted child.

Held: (1) an adopted son of a Chinese intestate can only have any rights if the intestate retained a Chinese domicile and such rights are confined to movable property only; (2) even if the intestate had a Chinese domicile, the adoption in this case which took place in Perak was invalid by local law as it was of a kind prohibited by the Perak Order in Council No 23/93, the adoptee being of a 'Seh' not that of the adopter, and there being nothing to show that the case came within any of the exceptions; (3) the Distribution Enactment has taken away all rights of succession of adopted children;on the evidence, the intestate had acquired a domicile in Perak and therefore the plaintiff's claim failed.

Yap Tow On v Woon Ngee Yew [1940] MLJ 96 High Court, Federated Malay States (Murray-Aynsley J).

The deceased, whose domicile or origin was China, died intestate leaving a share in a partnership business. The deceased came to Malaya in 1913 and became a partner in a trading business in Seremban. In 1916, the deceased returned to his family house in China where his wife and children lived. He came back to Seremban a few months later with his eldest son. In 1917, the deceased fell ill and returned to China where he died in 1918. In 1924, the partners in the trading business equally divided the deceased's share in the partnership property between his two sons. The plaintiff, a daughter of the deceased, commenced proceedings in 1966, as administratrix of the estate of the deceased for the administration of the estate. She claimed, inter alia, for a declaration that the share in the partnership property which she alleged had fallen into the hands of her two brothers as a result of their intermeddling with the deceased's estate, were held in trust for the estate, and for the recovery of her due share in the estate of the deceased. The defendants (the second son of the deceased, and the executors of the first son) alleged that the partnership property was given to them by the deceased during his lifetime as a gift inter vivos and denied that they had intermeddled with the deceased's estate and pleaded the defence of limitation, or alternatively, laches and acquiescence.

Held, dismissing the claim: (1) the onus was on the plaintiff to prove that the deceased had abandoned his domicile of origin in China and acquired a domicile of choice in Malaya. In the absence of any evidence that the deceased had intended to remove his entire family to Malaya, the presumption against a domicile of choice had not been rebutted and the domicile of the deceased at the time of his death was in China; (2) by virtue of the promulgation of the Perak Order in Council No 23 of 1893, and its extension to the other three states of the Federated Malay States, the law governing succession on an intestacy at the relevant time, was the same in China, Perak and Negri Sembilan; (3) under such law, the entire state of the deceased would devolve on his two sons. The plaintiff, a daughter, was not a beneficiary entitled to a distributive share in her father's estate; (4) on the evidence, neither the first nor the second son of the deceased was an executor de son tort, and neither was chargeable with fraud; (5) the defence of limitation failed as it was not possible to ascertain definitely the date the plaintiff first knew of the deceased's share in the partnership; (6) in the circumstances of the case the plaintiff was guilty of laches and acquiescence; (7) as the estate of the deceased was already in the hands of the deceased's two sons who were the sole beneficiaries, there was no justification for granting the order for administration.

Ong Ah Goh v Kuan Keh Lan & Ors [1968] 2 MLJ 57 High Court, Ipoh (Chang Min Tat J).