1. ) Michael Kinsuan 2. ) Lok Yee Hsun 3. ) Yunos Bin Malai Amit Likas Bay Precinct Sdn Bhd

S-02(IM)-1885-12/2020 Kand. 16 IN THE COURT OF APPEAL OF MALAYSIA30/12/2022 15:43:26 (APPELLATE JURISDICTION) CIVIL APPEAL NO. S-02(IM)-1353-09/2020 BETWEEN LOK YEE HSUN (NRIC NO. 760503-12-6177) …1ST APPELLANT YUNOS BIN MALAI AMIT (NRIC NO. 561225-12-5059) … 2ND APPELLANT MICHAEL KINSUAN (NRIC NO. 630323-12-5227) …3RD APPELLANT AND BINA PURI SDN BHD (CO. NO. 23296-X) … RESPONDENT [In the matter of Post Company Winding-Up No. BKI-28PW-2/2-2020 in the High Court of Sabah and Sarawak at Kota Kinabalu] Between Lok Yee Hsun (NRIC No. 760503-12-6177) 1st Applicant Yunos bin Malai Amit (NRIC No. 561225-12-5059) 2nd Applicant Michael Kinsuan (NRIC No. 630323-12-5227) 3rd Applicant And Bina Puri Sdn Bhd (Co. No. 23296-X) Respondent HEARD TOGETHER WITH 2 S/N yQb3xQ1C9UquOLQgcsW1g **Note : Serial number will be used to verify the originality of this document via eFILING portal IN THE COURT OF APPEAL OF MALAYSIA (APPELLATE JURISDICTION) CIVIL APPEAL NO. S-02(IM)-1885-12/2020 BETWEEN LOK YEE HSUN (NRIC NO. 760503-12-6177) … 1ST APPELLANT YUNOS BIN MALAI AMIT (NRIC NO. 561225-12-5059) … 2ND APPELLANT MICHAEL KINSUAN (NRIC NO. 630323-12-5227) …3RD APPELLANT AND LIKAS BAY PRECINCT SDN BHD (IN LIQUIDATION) (CO. NO. 484327-D) ... RESPONDENT [In the matter of Post Company Winding Up No. BKl-28PW-6/5-2020 in the High Court of Sabah & Sarawak at Kata Kinabalu Between Likas Bay Precinct Sdn Bhd (Co. No. 484327-D) ... Applicant And Lok Yee Hsun (NRIC No. 760503-12-6177) ...1st Respondent Yunos bin Malai Amit (NRIC No. 561225-12-5059) ...2nd Respondent Michael Kinsuan (NRIC No. 630323-12-5227) …3rdResponden 3 S/N yQb3xQ1C9UquOLQgcsW1g **Note : Serial number will be used to verify the originality of this document via eFILING portal Decided by Tuan Wong Siong Tung, Judicial Commissioner at the High Court of Sabah and Sarawak at Kata Kinabalu on 10th November 2020] HEARD TOGETHER WITH IN THE COURT OF APPEAL OF MALAYSIA (APPELLATE JURISDICTION) CIVIL APPEAL NO. S-02(1M)-1558-08/2021 BETWEEN MICHAEL KINSUAN (NRIC NO. 630323-12-5227) ... 1ST APPELLANT LOK YEE HSUN (NRIC NO. 760503-12-6177) ... 2ND APPELLANT YUNOS BIN MALAI AMIT (NRIC NO. 561225-12-5059) ... 3RD APPELLANT AND LIKAS BAY PRECINCT SDN BHD (IN LIQUIDATION) (CO. NO. 484327-D) ... RESPONDENT [In the matter of Post Company Winding-Up No. BKl-28PW-6/5- 2020 in the High Court of Sabah & Sarawak at Kata Kinabalu In the matter of Section 465 of the Companies Act 2016 And In the matter of LIKAS BAY PRECINCT SDN BHD (Co.No.484327-D) (ln Liquidation) (Receiver and Manager Appointed) 4 S/N yQb3xQ1C9UquOLQgcsW1g **Note : Serial number will be used to verify the originality of this document via eFILING portal And In the matter of Section 483 and/or Section 511 of the Companies Act 2016 And In the matter of Rule 66 of the Companies (Winding-Up) Rules 1972 Between Likas Bay Precinct Sdn Bhd (In Liquidation) (Co. No. 484327-0) ... Applicant And Michael Kinsuan (NRIC No. 630323-12-5227) ... 1st Respondent Lok Yee Hsun (NRIC No. 760503-12-6177) ... 2nd Respondent Yunos bin Malai Amit (NRIC No. 561225-12-5059)... 3rd Respondent Decided by Tuan Wong Siong Tung, Judicial Commissioner at the High Court of Sabah and Sarawak at Kata Kinabalu on 15th July 2021] CORAM HAS ZANAH BINTI MEHAT, JCA LEE HENG CHEONG, JCA CHE MOHD. RUZIMA BIN GHAZALI, JCA GROUNDS OF DECISION 5 S/N yQb3xQ1C9UquOLQgcsW1g **Note : Serial number will be used to verify the originality of this document via eFILING portal INTRODUCTION 1. The above 3 Appeals namely, Civil Appeal No. S-02(IM)-1353- 09/2020 (“1st Appeal”), Civil Appeal No. S-02(IM)-1885-12/2020 (2nd Appeal”) and Civil Appeal No. S-02(1M)-1558-08/2021 (3rd Appeal”) were heard together. 2. We heard all the 3 appeals on 25.5.2022 and we unanimously allowed the 1st Appeal. Upon our allowing the 1st Appeal, the Appellants in the 2nd and 3rd Appeals applied to withdraw the 2nd and 3rd Appeals. We then struck out the 2nd and 3rd Appeals with no order as to costs. BACKGROUND 3. Bina Puri Sdn. Bhd., the Respondent in the 1st Appeal (“Respondent”) had on 07.03.2017 filed Companies (Winding- up) Petition No. BKl-28NCC-11/3-2017 ("said Petition") against Likas Bay Precinct Sdn Bhd (in liquidation) (the “said Company”) to enforce a Construction Industry Payment and Adjudication Act 2012 ("CIPAA") award ("said CIPAA Award") dated 31.12.2017 for RM16,439,628.24 based on unpaid interim claims in Block B1 & B2 of the project described as "Cadangan Penyatuan, Pembahagian Tanah dan Pembinaan KOUMS Asrama UMS di atas Lot NT010745, NT0107440 di Kg. Numbok, Kuala Menggatal, Sabah (with subsidiary titles to be applied for)" ("said Project"). 6 S/N yQb3xQ1C9UquOLQgcsW1g **Note : Serial number will be used to verify the originality of this document via eFILING portal 4. The Respondent was the main contractor for Block A and Block B1, B2 of the P roject. The Block A contract was mutually terminated on 15.12.2015 subject to preparation of the final account. The Respondent on 30.03.2016 suspended the said Project with 1.40% uncompleted works based on alleged unpaid claims of RM20,244,864.15. 5. The said Company lodged an appeal against the Winding-Up Order dated 26.05.2017 ("said WU Order'') to the Court of Appeal which was dismissed on 17.11.2017. The said Company further appealed to the Federal Court (refer to Civil Appeal No. 02(f)-81-09/2018(S) ("said FC Appeal") which was also dismissed on 25.06.2019. 6. The Appellants had earlier filed a Notice of Motion (Enclosure 109) on 08.08.2019 (“said Enclosure 109”), praying for a stay of the said WU Order pending disposal of Suit No. BKl-22C-2/7- 2019 ("said Previous Fresh Suit") which was filed on 22.07.2019 after t h e grant of sanction by the DGI on 19.06.2019. As the said Enclosure 109 was defective, it was withdrawn on 21.01.2020 with liberty to file afresh because the said Previous Fresh Suit was filed during the validity of the said WU Order. 7. In the 1st Appeal, the Appellants are at all material times the shareholders/contributories of the said Company (“Appellants”). 7 S/N yQb3xQ1C9UquOLQgcsW1g **Note : Serial number will be used to verify the originality of this document via eFILING portal 8. The 1st Appeal is filed by the Appellants against the decision of the Learned High Court Judge (“LHCJ”), dismissing the Appellants' Summons In Chambers dated 25.02.2020 (Enclosure 1) (the “said Enclosure 1”) made under O. 88, O. 92 r4 Rules of Court 2012, sections 471, 492 and 494 of Companies Act 2016 ( “ C A 2 0 1 6 ” ) for leave to commence a fresh suit against the Respondent (“said Proposed Fresh Suit”), inter alia to stay all proceedings in relation to the Winding Up Order dated 26.05.2017 and that the appointed liquidator, Wong Ching Yong (“Liquidator”), to cease further action against the said Company until disposal of the said Proposed Fresh Suit including any appeals therefrom. 9. The LHCJ dismissed the Appellants’ said Enclosure 1. Dissatisfied with the decision of the LHCJ, the Appellants filed the 1st Appeal herein. FINDINGS OF THE HIGH COURT JUDGE 10. The LHCJ held inter alia as follows:- (a) That the said Enclosure 1 is caught by the doctrine of Res Judicata; and (b) that the Appellants’ application for leave to commence a fresh suit is a non-starter as the Appellants have failed to seek leave from the Liquidator first. 8 S/N yQb3xQ1C9UquOLQgcsW1g **Note : Serial number will be used to verify the originality of this document via eFILING portal THE APPELLANTS’ CONTENTIONS 11. Before us, the Appellants contended inter alia as follows:- (a) That the LHCJ erred in fact and law when he held that the application for leave "... first be addressed to the Liquidator for sanction ... "; (b) That the LHCJ Judge misdirected himself in law and fact when he held that "... the issues have been adjudicated and it is clearly caught by the principle of res judicata..."; (c) That the LHCJ failed to adequately consider that there was an application by a proposed intervener to intervene in another application by the liquidator for sanction in the Form of Summons No. BKl-28PW-5/5- 2020 ("said Sanction") in the same High Court to exercise his powers against the said Company’ assets, properties and income. The LHCJ had earlier directed that the said Sanction application be heard together with the said Leave application in his Court. However. the learned judge later changed his direction and proceeded to hear the said Leave Application first. Thus, the LHCJ failed to consider all the relevant circumstances and misdirected himself in law; and (d) That the Learned Judge erred in law and fact when he failed to consider all the relevant circumstances of the said Leave application for stay of all proceedings by 9 S/N yQb3xQ1C9UquOLQgcsW1g **Note : Serial number will be used to verify the originality of this document via eFILING portal the Liquidator pending disposal of the said Leave to file a fresh suit to set aside the Winding Up Order dated 26.05.2017 and which in turn will affect the appointment of the same liquidator. THE LIQUIDATOR’S CONTENTIONS 12. Before us, the Liquidator contended as follows:- (a) The said Enclosure 109 which included an application for stay, was dismissed by the High Court. The Appellants did not appeal against the dismissal of the said Enclosure 109; (b) The Appellants in the said Enclosure 109 and in the said Enclosure 1 prayed for the following orders: (i) For a stay of the Winding-Up Order dated 26.5.2017 granted by the Court until the disposal of a fresh High Court Suit which the Appellants is seeking leave to file; and (ii) For cessation of the Liquidator’s power granted by the High Court on 6.3.2019 until the disposal of a pending High Court Suit. (c) In respect of the application for leave to file the proposed Fresh suit, the Appellants should have sought the requisite sanction from the Liquidator pursuant to the CA 10 S/N yQb3xQ1C9UquOLQgcsW1g **Note : Serial number will be used to verify the originality of this document via eFILING portal Act 2016, to file the proposed Fresh Suit. Since the Appellants failed to do so, the application ought to be dismissed; (d) That the Appellants have usurped the function of the Liquidator to exercise his discretion whether or not to grant sanction pursuant to section 486(1)(a) CA Act 2016; and (e) That the Appellants’ application under the said Enclosure 1 in relation to the application for stay and cessation of the Liquidator’s power, is caught by the doctrine of Res Judicata. THE RESPONDENT’S CONTENTIONS 13. The Respondent contended since the Appellants failed to file any application to set aside the CIPAA Award which has been registered as a valid and subsisting High Court Judgment, it is now too late to challenge the CIPAA Award, in the form of the Fresh Suit. OUR ANALYSIS 14. We were mindful of the limited role of the appellate court in relation to findings of facts made by the court of first instance. In the case of Lee Ing Chin v. Gan Yook Chin & Anor [2003] 2 CLJ 19; [2003] 2 MLJ 97 where the Court of Appeal held as follows: 11 S/N yQb3xQ1C9UquOLQgcsW1g **Note : Serial number will be used to verify the originality of this document via eFILING portal “ ….. an appellate court will not, generally speaking, intervene unless the trial court is shown to be plainly wrong in arriving at its decision. But appellate interference will take place in cases where there has been no or insufficient judicial appreciation of the evidence.” (Emphasis Added) 15. Reference is also made to the decision of the Federal Court in Gan Yook Chin & Anor v. Lee Ing Chin & Ors [2004] 4 CLJ 309 where the Federal Court held that the test of "insufficient judicial appreciation of evidence" adopted by the Court of Appeal was in relation to the process of determining whether or not the trial court had arrived at its decision or findings correctly on the basis of the relevant law and the established evidence. 16. Bearing in mind the above principles distilled from the above cases, we will now deal with the Appellants’ 1st Appeal. WHETHER SANCTION IS REQUIRED FROM THE LIQUIDATOR 17. On the issue, that the LHCJ erred in fact and law when he held that the application for leave "... first be addressed to the Liquidator for sanction ... ", we are of the considered view that there is no necessity for the Appellants to first, apply to the Liquidator for leave before commencing the Proposed Fresh Suit as under Section 486(2) CA 2016, any contributory may apply to court to do so. 12 S/N yQb3xQ1C9UquOLQgcsW1g **Note : Serial number will be used to verify the originality of this document via eFILING portal 18. Section 486(2) CA 2016, reads as follows:- “486 Powers of liquidator in winding up by Court “(1)… (2) The exercise by the liquidator in a winding up by the Court of the powers conferred by this section is subject to the control of the Court and any creditor or contributory may apply to the Court with respect to any exercise or proposed exercise of any of those powers.” (Emphasis Added) 19. Further, we are in agreement with the Appellants’ contention that the LHCJ failed to consider that in the circumstances of this case, it will be pointless for the Appellants to seek such sanction from the Liquidator since the overall effect of the leave application will stay all powers of the same Liquidator. RES JUDICATA ISSUE 20. On the issue that the LHCJ misdirected himself in law and fact when he held that "... the issues have been adjudicated and it is clearly caught by the principle of res judicata...", we are of the considered opinion that this particular finding of the LHCJ is erroneous and without basis for reasons which will be discussed later. 21. In the Appellants' earlier application in the form of the said Enclosure 109 for stay which was not appealed, the LHCJ erred in law when he held at line 107 page 5 of his Grounds of 13 S/N yQb3xQ1C9UquOLQgcsW1g **Note : Serial number will be used to verify the originality of this document via eFILING portal Judgment that "... If the Applicants are not satisfied with the outcome of Enclosure 109, the proper recourse would be for the Applicants to appeal the matter to the COA ..." 22. We are of the considered view that the LHCJ failed to consider that the said Enclosure 109 was only an application for stay of the said WU Order and that there was no challenge mounted against the basis and validity of the judgment in the said CIPAA Award. Thus, further an appeal to the Court of Appeal against the dismissal of the said Enclosure 109 will serve no purpose. 23. We find that the LHCJ also erred in law when he held, at line 112 page 5 to line 116 page 6 of his Grounds of Judgment that "... the cause of action in the Fresh suit is similar to the new suit that was withdrawn... it is also to be noted that the new suit was struck (out) with liberty to file afresh...". It is pertinent to note that the withdrawal of the said Previous Fresh Suit was with an express provision that the withdrawal was with liberty to file afresh. This meant that the merits of the same were never considered by the court. Thus, the doctrine of Res Judicata could not operate against the filing of the said Proposed Fresh Suit. NATURE OF PROPOSED FRESH SUIT 24. The basis for the said Pr op osed Fresh Suit is stated at paragraph 49(c) and 49(d) of the draft s t a t e m e n t o f claim annexed to the said Enclosure 1 and it is based on 14 S/N yQb3xQ1C9UquOLQgcsW1g **Note : Serial number will be used to verify the originality of this document via eFILING portal the incentives for early completion a m o u n t i n g t o t h e s u m o f RM8,799,263.00. Th e A p p e l l a n t s c o n t e n d e d t h a t t h i s sum should be excluded from the said CIPAA A ward obtained by the Respondent as the Respondent failed to complete the Project within 24 months from 01.11.2013 which is 30.10.2015, thus the Respondent is not entitled to this sum. 25. The Appellants is claiming the sum of RM52,563,838.68 from the Respondent as damages which is computed as follows. The sum of RM38,130,049.72 for Block B1, B2 and RM14,433,788.96 for Block A which the Appellants intended to s et off against the said CIPAA Award. Thus, the said Proposed Fresh Suit will impeach the said CIPAA Award and this in turn will directly affect the basis and validity of the said WU Order. 26. The Appellants contended that the said CIPAA award can be only impeached by the said Proposed Fresh Suit and relied on the Federal Court case of Seruan Gemilang Makmur Sdn Bhd v Keraiaan Negeri Pahang Darul Makmur & Anor (201613 MLJ 1. 27. We are in agreement with this contention of the Appellants and support can be found in the judgment of Ramly Ali FCJ in Seruan Gemilang Makmur Sdn Bhd v Keraiaan Negeri Pahang Darul Makmur & Anor supra where he held as follows:- "(1) It is trite that the impeachment action should be by way a fresh action and not in the same action where 15 S/N yQb3xQ1C9UquOLQgcsW1g **Note : Serial number will be used to verify the originality of this document via eFILING portal the impugned earlier judgment was made. The respondents' claim in the present case was by way of a fresh action based on fresh evidence which could not have been obtained at the earlier trial..." 28. Having perused said Enclosure 109 and the said Enclosure 1 which is the subject matter of this appeal, we find that the said Enclosure 1 is not caught by the doctrine of Res Judicata as we are of the considered view that the Proposed Fresh Suit is based on new and fresh facts and claims in the final account which could not be set up in the CIPAA Award and that the Appellant intends to amongst others, claim for damages arising from the unlawful suspension of works by the Respondent in Block B which were not also considered in the CIPAA Award. STAY 29. Section 492 CA 2016 states as follows:- (1) At any time after an order for winding up has been made, the Court may, on the application of the liquidator or of any creditor or contributory and on proof to the satisfaction of the Court that all proceedings in relation to the winding up of the company ought to be stayed, make an order staying the winding up of the company for a specified time on such terms and conditions as the Court thinks fit”. 16 S/N yQb3xQ1C9UquOLQgcsW1g **Note : Serial number will be used to verify the originality of this document via eFILING portal (2) Where the Court makes an order under subsection (1), the liquidator shall cease to conduct any further action on behalf of the company from the date of such order." (Emphasis Added) 30. Section 492 CA 2016 is in pari materia with Section 243 Companies Act 1965 (“CA 1965”) which governs both temporary and permanent stay of the winding up order. Section 243 CA 1965 states as follows:- "Power to stay winding up 243. (1) At any time after an order for winding up has been made the Court may, on the application of the liquidator or of any creditor or contributory and on proof to the satisfaction of the Court that all proceedings in relation to the winding up ought to be stayed, make an order staying the proceedings either altogether or for a limited time on such terms and conditions as the Court thinks fit. (2) On any such application the Court may, before making an order, require the liquidator to furnish a report with respect to any facts or matters which are in his opinion relevant." (Emphasis Added) 17 S/N yQb3xQ1C9UquOLQgcsW1g **Note : Serial number will be used to verify the originality of this document via eFILING portal 31. It would be useful and pertinent to note the distinction between the Section 492 of the CA 2016 and S e c t i o n 2 4 3 o f t h e CA 1965 namely:- (a) Under the S e c t i o n 2 4 3 o f t h e CA 1965, the Court has the discretion to require the liquidator to furnish a report before making the stay of the winding up order. No such discretionary requirement existed under Section 492 of the CA 2016; and (b) Section 243 CA 1965 allows for either permanent or temporary stay of the winding up order. In contrast, Section 492 CA 2016 only allows for temporary stay whereas Section 493 CA 2016 only allows for permanent stay. 32. The distinction between a permanent stay application under Section 243 CA 1965 and an interim stay under Section 492 CA 2016 was further illustrated in Taman Rimba (Mentakab) Sdn Bhd v Warrior Rubber Products (M) Sdn Bhd & Ors [20171 MLJU 2178, where Mohd Nazlan Mohd Ghazali J (as he then was) held as follows:- "........ [33] Thus, it is unnecessary for instance for the court to insist on, in every stay application, for the liquidator's report to be produced to show evidence of likelihood of commercial solvency, ... In my view, the discretion of the court in evaluating the merits of a stay application otherwise than for a permanent basis ought to be 18 S/N yQb3xQ1C9UquOLQgcsW1g **Note : Serial number will be used to verify the originality of this document via eFILING portal guided by the test of the applicant for stay showing the existence of special circumstances ...” (Emphasis Added) 33. Section 492(1) CA 2016 provided for 3 separate situations of application for stay by the liquidator, by the creditor and by the contributory. We adopt the view that there is no express requirement for prior application for leave to the liquidator before the contributory such as the Appellants herein, can approach the Court. Thus, we find that the LHCJ had erred in law by reading such requirement into Section 492(1) CA 2016. SPECIAL CIRCUMSTANCES 34. The Liquidator contended that there were no special circumstances justifying stay and that the Appellants had not complied with the Court Order dated 10.11.2020 for t h e surrender of documents. 35. We are of the considered view that there existed special circumstances for stay in that the proposed Fresh Suit will refer and rely on new and fresh facts based on the completion of Block B works on 13.10.2016, the availability of the final accounts and the discovery of tenancy agreement which benefited the Respondent's associate company. 19 S/N yQb3xQ1C9UquOLQgcsW1g **Note : Serial number will be used to verify the originality of this document via eFILING portal CONCLUSION 36. In the light of our above findings, we are of the considered opinion that the LHCJ made errors in material findings of facts in the Appellants’ application which warranted appellate intervention. We are of the respectful view that there are merits in the Appellants’ appeal and we unanimously allow the appeal. The Order of the High Court dated 10.09.2020 is set aside. Cost of RM10,000.00 to the Appellants against the Respondent subject to allocator fee; and no cost is ordered against the Liquidator. 37. In the premises, we grant an order in terms of the said Enclosure 1 as follows: (a) that leave be granted to Likas Bay Precinct Sdn Bhd (in liquidation) (“said Company”) to file and serve the fresh suit against the Respondent as per the proposed statement of claim in the Affidavit in Support of the Appellants and can be found in Enclosure 4 at pages 152 until 166 (“said Fresh Suit”) within fourteen (14) days from the date of this order; (b) that all proceedings be stayed in relation to the winding up order dated 26.05.2017 granted to the Respondent until after disposal of the said Fresh Suit in (a) above including any appeals there from, or until such other time as this Court shall deem fit; and 20 S/N yQb3xQ1C9UquOLQgcsW1g **Note : Serial number will be used to verify the originality of this document via eFILING portal (c) that all actions by the private liquidator, Wong Ching Yong, appointed on 06.03.2019 under Originating Summons No. BKI-24NCvC-102/10-2018 at the request of the Respondent be stayed until after disposal of the said Fresh Suit in (a) above including any appeals there from, or until such other time as this Court shall deem fit. Dated this 30th day of December, 2022. -Sgd- ………………………………. LEE HENG CHEONG JUDGE COURT OF APPEAL Appellants’ counsels : Mr. Cheng Ho Wah @ Roland Messrs Roland Cheng & Co Respondent’s counsel : Mr. Norbert Yapp Messrs Norbert Yapp & Associates Liquidator’s Counsel : Ms. Tiong Jia Yi Messrs Szetu & Co 21 S/N yQb3xQ1C9UquOLQgcsW1g **Note : Serial number will be used to verify the originality of this document via eFILING portal