Annou Xavier together with Tristan Ng Kien Han for the Applicants in Motion 702 [Messrs Azri, Lee Swee Seng & Co.]

Annou Xavier together with Tristan Ng Kien Han for the Applicants in Motion 702 [Messrs Azri, Lee Swee Seng & Co.]

The court held that multiple payments made after presentation of the winding up petition were void under s.472 CA 2016 where the payees and payor parties failed to prove the transactions were bona fide and in the ordinary course of business; certain payments were validated only to the extent supported by contemporaneous bank evidence (Mimosa payments limited to car-loan servicing shown in Mimosa bank statements; payments to Lai for property loan and workers' wages validated), misappropriation of rental collections (less deposit) was found, and the directors and alleged shadow director were liable for misfeasance; the validation application (Motion 702) was dismissed for lack of good faith.

Citation
POST WINDING-UP NO.: WA-28PW-702-12/2019 (in Motion 702) (Mahkamah Tinggi)
Parties
Respondent (company in Liquidation): Puncak Seputih Sdn Bhd (In Liquidation); Applicant (liquidator): Dato Heng Ji Keng; Applicant (liquidator): Andrew Heng; Applicant in Motion 702; Alleged Shadow Director and Respondent: Tan Ee Aun (Dato Tan); Applicant in Motion 702; Respondent: Lai Kim Foh; Applicant (company) / Party to Transactions: Mimosa Travel & Tour Sdn Bhd; Applicant (motion 702): Astana Consolidated Sdn Bhd; Respondent (past/present Director): Shahrull bin Abdul; Respondent (past/present Director): Noraini binti Nanyan
Court
in Motion 702
Jurisdiction
Malaysia
Judgment Date
23 November 2020
Case Number
POST WINDING-UP NO.: WA-28PW-702-12/2019 (in Motion 702) (Mahkamah Tinggi)
Procedural Posture
Winding Up (post Petition) / Judgment on Motions (validation and Recovery)
Outcome
Motion 184 granted in part: specified post-petition transactions declared void and directors/other persons held liable for misfeasance and wrongful retention; Motion 702 (validation application) dismissed with costs.
Legal Topics
Void Disposition After Presentation of Winding Up Petition, Validation Order for Post Petition Dispositions, Misfeasance and Breach of Fiduciary Duty, Wrongful Retention and Misappropriation, Shadow Director Liability, Director Remuneration Requirements
Source Language
Malay/English
Companies Law Insolvency Equity and Trusts Civil Procedure Void Disposition After Presentation of Winding Up Petition Validation Order for Post Petition Dispositions Misfeasance and Breach of Fiduciary Duty Wrongful Retention and Misappropriation +2 more

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Parties

Puncak Seputih Sdn Bhd (In Liquidation)

Respondent (company in Liquidation)

Dato Heng Ji Keng

Applicant (liquidator)

Andrew Heng

Applicant (liquidator)

Tan Ee Aun (Dato Tan)

Applicant in Motion 702; Alleged Shadow Director and Respondent

Lai Kim Foh

Applicant in Motion 702; Respondent

Mimosa Travel & Tour Sdn Bhd

Applicant (company) / Party to Transactions

Astana Consolidated Sdn Bhd

Applicant (motion 702)

Shahrull bin Abdul

Respondent (past/present Director)

Noraini binti Nanyan

Respondent (past/present Director)

Procedural Posture

Winding Up (post Petition) / Judgment on Motions (validation and Recovery)

Legal Issues

  1. 1 Whether dispositions of company property after presentation of winding up petition are void under s.472 Companies Act 2016
  2. 2 Whether the court should validate post-petition transactions and the applicable tests for validation
  3. 3 Whether directors and alleged shadow director are liable for misfeasance, breach of trust and wrongful retention under ss.541 and 536 Companies Act 2016

Ratio Decidendi

The court held that multiple payments made after presentation of the winding up petition were void under s.472 CA 2016 where the payees and payor parties failed to prove the transactions were bona fide and in the ordinary course of business; certain payments were validated only to the extent supported by contemporaneous bank evidence (Mimosa payments limited to car-loan servicing shown in Mimosa bank statements; payments to Lai for property loan and workers' wages validated), misappropriation of rental collections (less deposit) was found, and the directors and alleged shadow director were liable for misfeasance; the validation application (Motion 702) was dismissed for lack of good faith.

Court Disposition

Motion 184 granted in part: specified post-petition transactions declared void and directors/other persons held liable for misfeasance and wrongful retention; Motion 702 (validation application) dismissed with costs.

Orders

  • Declare void payments identified in Motion 184: RM30,000 to Tan Ee Aun on 30.1.2018 (void)
  • Declare void payment of RM17,600 to Aman Melia Sdn Bhd on 23.1.2018 (void)