1

DALAM MAHKAMAH RAYUAN MALAYSIA

RAYUAN SIVIL NO:

ANTARA

ALLIED CAPITAL SENDIRIAN BERHAD ..……….. PERAYU

DAN

1. MOHD LATIFF BIN SHAH MOHD

2. MOHD ALI BIN MOHD DEWAL

3. DAVID SlEW WAI KEONG [Menuntut atas pihak sendiri dan

Semua ahli Kelab Raintree Kuala Lumpur

Melainkan Defendan ] ……… RESPONDEN

(Dalam Mahkamah Tinggi Malaya di Kuala Lumpur (Bahagian Dagang)

Guaman Sivil C-22-204-86

ANTARA

1. MOHD LATIFF BIN SHAH MOHD

2. MOHD ALI BIN MOHD DEWAL

3. DAVID SlEW WAI KEONG [Menuntut atas pihak sendiri dan

Semua ahli Kelab Raintree Kuala Lumpur

Melainkan Defendan ] ……… PLAINTIF-PLAINTIF

DAN

2

1. TENGKU ABDULLAH IBNI SULTAN ABU BAKAR

2. YUSOFF BIN ABU BAKAR

3. JOHN LOW NYAP HENG

4. YEOH CHONG SWEE

5. LEANORD THAM

6. TENGKU AZLAN

7. ABDUL KADIR KASSIM

8. CLIFFORD TAN

9. LT. COL. ZARAZILLAH …..… DEFENDAN-DEFENDAN

DIGABUNGKAN DENGAN

Dalam Mahkamah Tinggi Malaya di Kuala Lumpur (Bahagian Keluarga Dan Harta)

Guaman Sivil F23-96-86

ANTARA

ALLIED CAPITAL SENDIRIAN BERHAD ..……….. PLAINTIF

DAN

RAINTREE DEVELOPMENT BERHAD ……… DEFENDAN

(Melalui Tindakan Asal)

DAN DI ANTARA

RAINTREE DEVELOPMENT BERHAD ……… PLAINTIF

3

DAN

1. ALLIED CAPITAL SENDIRIAN BERHAD

2. TENGKU ABDULLAH IBNI SULTAN ABU BAKAR

3. YUSOFF BIN ABU BAKAR

4. JOSE R. REYES

5. RAMON G. MADRID ….. DEFENDAN-DEFENDAN

(Melalui Tuntutanbalas)

DAN JUGA DIGABUNGKAN DENGAN

Dalam Mahkamah Tinggi Malaya di Kuala Lumpur

(Bahagian Dagang) Guaman Sivil C22-1084-86

ANTARA

ALLIED CAPITAL SENDIRIAN BERHAD ..……….. PLAINTIF

DAN

MOHD LATIFF BIN SHAH MOHD SETIAUSAHA KEPADA RAINTREE CLUB KUALA LUMPUR

(DI SAMAN SEBAGAI PEGAWAI BERDAFTAR KELAB) …. DEFENDAN

-----------------------------------------------------------------------------------------------------------------

4

GROUNDS OF JUDGMENT

Enclosure 92 is the plaintiff’s (Allied Capital Sdn Bhd) application for an injunction to

restrain the defendant (Raintree Club) from presenting a winding up petition against

the plaintiff pursuant to a judgment dated 6.2.1995 in Suit 23-1084-1986.

Enclosure 106 is the plaintiff’s (Allied Capital Sdn Bhd) application to stay the

execution of the said judgment dated 6.2.1995.

After submissions by both parties, I dismissed both enclosures with costs. The

plaintiff appeal on the said decision. Below are my grounds.

BACKGROUND FACTS

Before I proceed to the reasons as to why I dismissed the 2 applications herein, it is

best that the chronology be set out to enable a better understanding of the event that

leads to the 2 applications in enclosure 92 and 106 respectively.

For these 2 applications herein there are 3 suits which are relevant:

a) Kuala Lumpur Civil Suit No : C23-1084-86

b) Kuala Lumpur Civil Suit No: C22-204-86

c) Kuala Lumpur Civil Suit No: C23-96-86

5

Subject matter of Suit No. C23-1084-86 (“Suit 1084’)

Allied Capital Sdn Bhd (“Allied’) filed a suit against the Raintree Club (‘the club’) for a

sum of RM8,409,997 and interest at the rate of 2% per month on daily rest on the

principal sum of RM 5,831,104 from 1/4/86 to the date of realization.

In its Statement of Claim, Allied alleged that by a written agreement dated 24/8/82

(the sale agreement), it had agreed to sell and the Club had agreed to acquire all the

issued and paid up capital of Allied in Raintree Development Bhd (RDB) for a sum of

RM 47 million. The Club paid RM 41,168,896 and did not pay the balance of the

purchase price, hence the suit.

The Club filed a Defence and Counterclaim stating, amongst other things, that the

sale agreement was obtained by undue influence and that the actual price of the

shares is RM 24,597,162 and counterclaimed for the difference between the amount

paid and the actual purchase price in the sum of RM 16,571,734 together with

interest already paid of RM 556,752.

Allied filed a Reply and Defence to counterclaim and further counterclaimed against

the Club for a declaration that the sale agreement is void and unenforceable and

asked for restitution to reinstate to their original position.

Subject Matter of Suit No. C22-204-86 (“Suit 204”)

The Club filed a suit against the Promoters of the Club for breach of fiduciary duty to

exercise due care, skill and diligence and claimed damages for such breaches.

The Promoters denied breach and challenged the Club’s locus to commence action

in representative capacity.

6

Subject Matter of Suit No. F23-96-86(“Suit 96”)

Allied filed a suit against Raintree Development Berhad (“RDB”) and claimed or the

sum of RM16,283,411-58 together with interest for variations and/or additional works

pursuant to a contract for building works dated 9/5/81 (“the Contract”) under which

Allied was appointed by RDB to construct the club building for a sum of RM19 million.

The amount was paid immediately upon execution of the contract.

RDB filed an Amended Defence and Counterclaim to say that the contract was

obtained by undue influence and that the directors had acted in excess of authority

and further that the contract was entered through being the difference between the

amount paid and the amount of RM16,816,614-20 (the amount Allied had

subcontracted the works out to Syarikat Yeoh Tiong Lay Sdn. Bhd.) with interest.

Allied then filed a Reply and Defence to Counterclaim and further counterclaim

against RDB and prayed for a declaration that the contract was void and

unenforceable and sought, amongst others, that RDB make compensation for the

sum claimed as the value of the advantage received by RDB for works done under

the contract. Alternatively, Allied prayed for a declaration that upon Allied prayed for a

declaration that upon Allied refunding the entrance fees to all members of the club,

the members are to transfer their respective memberships to Allied.

Consolidation Order dated 6/12/1988

By a High Court Order dated 6/12/1988, all three suits were consolidated.

7

Decision of the High Court

a) Suit 1084

The High Court delivered its decision on 6/2/1995 dismissing the action and

entered judgment in favour of the Club on the Club’s counterclaim for RM

15,450,876 and RM 556,752 with interest at the rate of 8% per annum form

date of judgment to date of realization with costs.

Allied’s counterclaim was also dismissed.

b) Suit 204

The High Court also delivered its judgment on 6/2/1995 wherein the Promoters

were found to be in breach of their fiduciary duties and also the duties to

exercise due care, skill and diligence and it was ordered that the Club be at

liberty to enter judgment against the Promoters of the Club and damages for

the breaches to be assessed.

c) Suit 96

On 6/2/1995, the Court directed that a date be fixed for trial.

Decision of the Court of Appeal

a) Suit 1084

The decision of the High Court was the subject matter of the appeal vide Court

Appeal Civil Appeal No. W-02-107-1995.

8

The Club also crossed appealed against the non awarding of cost and that

interest was only awarded from the date of judgment.

On 21/5/96, the Court of Appeal dismissed Allied’s appeal and affirmed the

decision of the High Court and allowed the Club’s cross appeal in part as

regards costs.

b) Suit 204

The decision of the High Court was the subject matter of an appeal vide Court

of Appeal Civil Appeal No. W-02-109-1995.

On 21/5/96, the Court of Appeal dismissed the Promoters appeal and

affirmed the decision of the High Court.

The Court of Appeal also dissolved the stay it had granted to Allied.

Decision of the Federal Court

a) Suit 1084

Allied further appealed to the Federal Court for leave to appeal under Federal

Court Civil Application No. 08-32-96.

The same was dismissed by the Federal Court on 12/4/2001.

b) Suit 204

The Promoters appealed further to the Federal Court vide Federal Court Civil

Application No. 08-34-96 and the same was also dismissed by the Federal

Court on 12/4/2001.

9

APPLICATION IN ENCLOSURE 92:

On 18.5.2001, the Club issued a Section 218 Notice against Allied to enforce its

judgment in Suit 1084 for the sum of RM 15,450,876 and RM 556,752.

Allied responded by filing Enclosure 92 on 7.6.2001 i.e. for an an ex parte application

interlocutory injunction to restrain the Club from filing a Winding Up petition against

Allied. The application has come before me as inter parte hearing.

Whether there are serious issues to be tried

It is well established in law that before granting an interlocutory injunction there must

be a pre existing cause of action i.e. there must be a main suit. Interlocutory

injunction is ancillary to a cause of action. Refer to the cases of :

• Kanagi Seperumaniam v Penang Port Commission [2001] 5 MLJ 433

• American Cyanamid Co v Ethicon Ltd [1975]AC 396

Allied has not specified that the application in Enclosure 92 is in relation to which

suit, bearing in mind that there are 3 suits on record i.e. Suit 204, Suit 1084 and Suit

96.

The case of American Cyanamid established the principle that an interlocutory

injunction which is a discretionary relief granted by the court is to safeguard the

interests of one of the parties until his rights can be finally determined at the main trial

of the action. So long as there’s serious issues to be tried and the plaintiff’s claim is

not frivolous and vexatious, the court should consider whether on the balance of

convenience it tilts in favour of granting or refusing the interlocutory relief.

10

This principle in American Cyanamid in granting interlocutory injunction has been

followed in the case of Lim Chong Construction Sdn Bhd v Silam Quarry Sdn

Bhd [1990] 2 MLJ 423 at page 424 where Zakaria Yatim J said :

“…. One of the essential requirements for granting an interlocutory

injunction, as laid down in American Cyanamid Co v Ethicon Ltd

at p 510, is that the court must be satisfied that there is a serious

question to be tried. Lord Diplock in his speech in the American

Cyanamid case envisaged a trial of the action. In Cayne v Global

Natural Resources, May LJ said at page 237:

‘ In the American Cyanamid case [1975] 1 AER 504, there

was a serious question to be tried between the parties,

which could only be resolved by a trial. It was clearly

contemplated that there would be a trial. The

application for the interlocutory injunction was merely a

holding operation pending that trial.’

Since a trial is envisaged the plaintiff must show that he has a

cause of action. The grant or refusal of an interlocutory injunction

therefore depends on whether there is a cause of action.

………………………………………..In the present case, since there

is no cause of action, there is no serious question to be tried.

(emphasis is mine)”

11

Lord Diplock also has stressed the requirement of a pre existing cause of action

before the relief of interlocutory injunction may be granted, in the case of Siskina v

Distos Compania Naviera SA [1979] AC 210, at page 256 in his judgment in which

he said:

“ A right to obtain an interlocutory injunction is not a cause of

action. It cannot stand on its own. It is dependant upon there

being a pre existing cause of action against the defendant arising

out of an invasion, actual or threatened by him, of a legal or

equitable right of the plaintiff for the enforcement of which the

defendant is amenable to the jurisdiction of the court. The right to

obtain an interlocutory injunction is merely ancillary and incidental

to the pre existing cause of action. It is granted to preserve the

status quo pending the ascertainment by the court of the rights of

the parties and the grant to the plaintiff of the relief to which his

cause of action entitles, which may or may not include a final

injunction.”

Therefore, applying the above principles to Allied’s application herein, Allied has not

shown any pre existing cause of action so as to satisfy the first test in the American

Cyanamid case, that it has a serious question to be tried, which could only be

resolved by a full trial.

For Suit 1084 where Allied was the plaintiff and Raintree Club was the defendant, the

said suit has been disposed off up to the highest apex court and therefore there is

nothing that requires an interlocutory injunction that needs to be preserved pending

trial. There is no longer any trial waiting to be disposed off in that suit. The only

matter that is left is for the judgment sum to be paid by Allied to Raintree Club, and

this does not entitled Allied for an interlocutory injunction as prayed for under

enclosure 92. For Suit 204, it has also been disposed off, completed and judgment

entered. Allied was never a party to Suit 204 and as for Suit 96, the Club is not a

party.

12

I find that the application in enclosure 92 by Allied thus failed to prove there are

serious questions that need possibly to be tried in the pending action, if any.

Thus, on this issue of the non existent of a pre existing cause of action alone, I

dismissed the application by in Enclosure with costs.

However for completeness, there are other issues that needs to be addressed as it

was raised in the course of arguments by both parties for the application in enclosure

92. I shall address those issues raised in the following paragraphs. Issues raised are:

a) Abuse of the process of court

It is to be observed that the action of Allied in this present application to restrain the

Club from presenting a winding up petition against Allied, has the effect of preventing

the execution of final judgment which has been granted to the Club in the other two

suits i.e. Suit 204 and Suite 1084. This tantamounts to Allied depriving Raintree Club

from enjoying the fruits of litigation which it had obtained from High Court, affirmed by

the Court of Appeal and the Federal Court.

This conduct of Allied is clearly abusing the process of court in preventing the club

from enforcing a lawful judgment which it had obtained, and hence cannot be

entertained. This proposition is supported by the case of Perwira Habib Bank

Malaysia v Hong Huat Holdings Sdn Bhd [1991] 2 MLJ 160 where the Supreme

Court then had refused an application for an injunction filed in a separate action to

prevent the enforcement of a summary judgment granted in an earlier action. The

Supreme Court held that:

13

“ ..………..the discretion of the court ought not to be exercised in

favour of the respondents by granting them a stay at this late

stage by means of an interlocutory injunction. To allow them to

do so would be tantamount to permitting the respondents to

abuse the process of the court and would unreasonably

prejudice the appellant from enjoying the fruits of their final

judgment…..the interlocutory injunction could not be sustained

in view of the failure of the learned judge to consider the

relevant statutory provisions governing stay of execution of a

summary judgment where a counterclaim had been made or

raised, quite apart from this failure to consider critically not only

the issue of balance of convenience but also to consider what

serious questions need possibly be tried in the pending action

particularly when all that was left for determination was the

assessment of damages.”

Since Allied has failed to enlightened this court as to which suit is this application in

Enclosure 92 is grounded upon, the only logical conclusion would be the application

is based on suit 96 as that is the only cause of action which has yet to be disposed

off and still existing. However, if that is the case, that would amount to this court

granting an interlocutory injunction to prohibit the enforcement of the judgment of

another High Court, which according to the case of Kanagi Sepermaniam v

Penang Port Commission [2001] 5 MLJ 433 cannot be done. The case succinctly

ruled that:

“ … a court cannot grant an injunction to prevent the enforcement

of a judgment of a court of competent jurisdiction….”

14

The case of Low Yin Kow @ Loo Ah Bah v Tor Len Hua & Ors [2001] 7 CLJ 234

further illustrate this same point, where the High Court has refused an application for

an interlocutory injunction to restrain the execution of a valid and lawful judgment and

holding such application to be an abuse of the process of the court. The relevant

passage of the judgement states as follows :

“ an injunction cannot be granted to restrain execution upon a

conclusive judgment obtained in another action.

…………..An injunction is an instrument of protection …. against

unlawful acts. Execution of a judgment is a lawful act. The court

cannot restrain a lawful act…”

Following the cases cited above, the act of Allied in making the application in

enclosure 92, if grounded on Suit 96 is clearly an abuse of the process of court and is

therefore unlawful. The principle derived from the cases cited prohibits the injunction

of the judgment of another High Court which has been obtained lawfully and one

which has been affirmed by the highest apex court in the country.

b) Issue of Lifting the Corporate veil

In the course of argument by Allied for the application under Enclosure 92, Allied

submits that Raintree Club and Raintree Development Berhad (hereinafter referred to

as “RDB”) are in fact part and parcel of a group enterprise and a single commercial

unit. Hence Allied concludes that this is a fit and proper case where justice demands

that the “veil of incorporation” be lifted.

15

The reasons as to why Allied treats both companies as one entity is simply for the

purpose of enabling Allied to use the fact that Suit 96 (where parties are Allied and

RDB) has not been tried as an excuse to prevent the Club by way of injunction from

executing the judgment in Suit 1084 ( where parties were Allied and the club) against

Allied.

Allied states 3 grounds in para 7 (1) to 7(x) in its supporting affidavit in enclosure 93

that established that the Club and RDB are operating as a single commercial unit

and a group enterprise that is:

(i) the Club wholly owns RDB, beneficially at the very least. In this regard

Allied emphasized that the Club is a proprietory members club whereby

members of the Club are not only entitled to membership in the Club but

also ownership of RDB. This is achieved by members of the Club taking up

shares in RDB upon full payment of the purchase price for membership;

(ii) consolidated accounts are prepared for the Club and RDB;

(iii) RDB is merely an asset holding vehicle for the Club.

Allied quoted the case of Hotel Jaya Puri Berhad v National Union of Hotel, Bar &

Restaurant Workers & Anor [1980] 1 MLJ 109, where the Supreme Court, as it then

was, observed that inroads had been made into the separate legal entity principle

and the veil of incorporation lifted when” the justice of the case demands…” The

Court recognized that this is especially so where there is a group enterprise. Allied

argues that our present case is no different. It states that while the Club and RDB

may appear to be separate legal entities, they are in fact part and parcel of the same

group enterprise whose activity is confined to the provision of amenities to members

and the preservation of its assets in the form of the land and building on which the

Club stands.

16

The argument of group enterprises is normally applied in situations where companies that act as a corporate group, may operate to hide behind the advantages of limited liability to the disadvantage of their creditors. They may operate in a way that the parent entity is not clearly distinguishable from the subsidiaries. The argument in favor of piercing the corporate veil in these circumstances is to ensure that a corporate group which seeks the advantages of limited liability must also be ready to accept the corresponding responsibilities. The piercing of the corporate veil may be done on the ground of group enterprises is where there exists a sufficient degree of common ownership and common enterprise. However, Walter Woon in his book on “Company Law” Second Edition at page 69 commented on this concept of group enterprise as follows:

“ ….this ‘group entity’ concept should not be taken too far. The

courts are far from deciding that a group of companies is one super entity encompassing all the companies within the group. Nevertheless, there have been some occasions on which courts in England and Malaysia have treated companies in the same group as part of a larger entity, ignoring their separate legal existence”

One such example where the courts in Malaysia is prepared to ignore the separate identities concept in a group enterprise is the case of Hotel Jayapuri Bhd v National Union of Hotel, Bar & Restaurant Workers [1980] 1 MLJ 109.

Similarly the Court of Appeal in England has treated a whole group enterprise as one single entity in the case of DHN Food Distributors Ltd v Tower Hamlets London Borough Council [1976] 3 AER 462 where there was a group of three companies running a grocery business. The business was owned by DHN. The premises on which the business was conducted was owned by Bronze Investments Ltd, a subsidiary of DHN, while the vehicles were owned by the third company in the group, DHN Food Transport Ltd. The Council acquired the land. Under the provisions of the legislation in question, compensation could be obtained both for the land and for disruption of business. But the Council refused to pay compensation to DHN or its transport subsidiary on the basis that they did not have any interest in the land. The English Court of Appeal refused to accept this and treated the whole group as one commercial entity.

17

The courts have considered certain factors in deciding to pierce the corporate veil to

find out whether it is functioning as group enterprise. Factors like the inter-

relationship of the corporate entities, the obvious influence of the control extending

from the top of the corporate structure and the extent to which the companies were

thought to be participating in a common enterprise with mutual advantages perceived

in the various steps taken and plans implemented, all influence the overall picture.

This is the situation as can be found in the case of Hotel Jayapuri Berhad that was

cited by Allied, where the Federal Court found that the management of the Hotel and

the Restaurant was actually by the same person.

The case of Adams v Cape Industries Plc [1990] 2 WLR 657,752 Slade LJ

explained that the decision in the DHN Food Distributors Ltd was an example of

giving effect to the legislative intent behind the compensation statute. It has been

held that “save in cases which turn on the wording of particular statutes or contracts,

the court is not free to disregard the principle of Salomon v Salomon merely

because it considers that justice requires”. This can be compared to the judgment of

the Supreme court expressed by Azmi SCJ in Aspatra Sdn Bhd v Lorrain Esme

Osman [1988] 1 MLJ 97, 103 which states:

“ …..the court would generally lift the corporate veil in order to do

justice particularly when an element of fraud is involved although

the consequences of lifting the veil would vary according to the

circumstances of each case.”

It was held that the court could lift the veil to determine whether the assets of the

appellant companies were really owned by them or whether there was an abuse of

the principle that a company is a separate legal entity.

18

Similarly, the decision to lift the corporate veil in the Hotel Jayapuri Berhad’s case

was to prevent an injustice to the workers and that it dealt with the provisions of the

Industrial Relations Act and the Industrial Relations Rules whereby merits of the case

and public interest were the factors to which the said court has taken into

consideration. Salleh Abas FJ states thus in his judgment:

“…………… the President did not cause any violence to the

sanctity of the principle of separate entity established in Solomon

v Solomon & Co but rather gave effect to the reality of the Hotel

and the Restaurant as being in one enterprise I find nothing

unreasonable in the finding of the President by by-passing this

principle. He did no more than to comply with the wishes of the

Legislature that in the making of an award substantial merits of

the case, the public interest and any matters which are

necessary or expedient for the purpose of settling the dispute

among the factors which should be taken into consideration by

the court…… (emphasis is mine).’

The case of People’s Insurance Co (M) Sdn Bhd v People’s Insurance Co Ltd

[1986] 1 MLJ 68,69 is worth mentioning as per Zakaria Yatim J:

“ There is often temptation in the case of a group of companies to

run the group as if it was one super entity encompassing all the

companies. This temptation is especially strong where the group

consists of wholly-owned subsidiaries of a holding company. The

temptation should be stoutly resisted. Although a group of

companies may be run as one business in an operational sense,

in law each company within the group has a distinct personality.”

19

What is important to bear in mind from the decisions and judgment of cases cited

above which involves group enterprises is that generally there should be strict

compliance with the separate entity principle as enunciated in Salomon v Salomon

unless justice warrants the piercing of the corporate veil e.g in cases where

companies are being used as instrument of fraud, or companies hiding behind the

advantages of limited liability to the detriment of their creditors. To borrow the phrase

from Russell J in Jones v Lipman [1962] 1 WLR 832, 834 where it was said that “

the eye of equity will not be blinded by any corporate mask that a person may hold

before his face to shield himself “.

In our case, the Club consists of several members and it is actually the grouping of

many individuals. The shareholders of RDB are the numerous members of the Club.

Therefore RDB is not owned by a single entity as alleged by Allied. Thus, the Club as

a shareholder is not responsible for the liabilities of RDB. In any event, in the present

case there is nothing to suggest that the circumstances falls under any of the

exceptions as mentioned in the cases cited above. Allied has not proven any fraud or

any injustice that may be caused or caused by the Club and RDB that can

substantiate for the exception to be invoked. Hence, there is no basis for the lifting of

the corporate veil.

The fact that consolidated accounts are filed does not necessarily mean that the

piercing of the corporate personality status of the Club and RDB would be invoked.

This is explained in the case of Industrial Equity Ltd v Blackburn [1977] 17 ALR

575 where Mason J states as follows:

20

“ It has been said that the rigours of the doctrine enunciated by

Salomon v Salomon…. have been alleviated by the modern

requirements as to consolidated or group accounts introduced in

the United Kingdom by the Companies Act 1948 and in New

South Wales by the Companies 1961… But the purpose of these

requirements is to ensure that the members of, and for that

matter persons dealing with, a holding company are provided

with accurate information as to the profit or loss and the state of

affairs of that company and its subsidiary companies within the

group… It is for this purpose that the Companies Act treats the

business group as one entity and requires that its financial

results be incorporated consolidated accounts… However, it can

scarcely be contended that the provisions of the Act operate to

deny the separate legal personality of each company in a

group…”

Therefore the argument of consolidated accounts as indication of one entity between

the club and RDB is devoid of merits.

c) Grounds to prevent the Club from petitioning

The right to present a petition to wind up a company is a statutory right and cannot be

taken away simply, unless the company can seriously challenge that the petition is

bound to fail in its claim. (Refer to Sri Binaraya Sdn Bhd v Golden Approach Sdn

Bhd [2003] 3 MLJ 465.)

21

The club was entitled as of right to present a winding up petition against Allied. This

right is a substantive right conferred by section 217 (1) (b) of the Companies Act

1965 and neither a substantive law/procedural law nor the inherent jurisdiction of the

court could deprive the club of that right or reduce the extent of that right. (Refer to

case SBSK Plantations Sdn Bhd v Dynasty Rangers (M) Sdn Bhd [2002] 1 MLJ

326)

Allied has not provided prima facie proof or ground to say that the said petition is an

abuse of courts process. Refer to Natseven TV Sdn Bhd v Televison New Zealand

[2001] 4 CLJ 737. As creditor, the club is entitled to wind up Allied when the latter is

unable to pay its debts. This act of the club in enforcing its statutory right cannot be

cited as abuse of courts process. Allied has not shown how is it that the petition is an

abuse of courts process.

In cases like Sri Binaraya Sdn Bhd v Golden Approach Sdn Bhd [2000] 3 MLJ

465, JB Kulim Development Sdn Bhd v Great Purpose Sdn Bhd [2002] 2 MLJ

298 are examples of cases where the petition of winding up was objected on grounds

that there is a bona fide dispute on the debt. The petitions filed in those cases cited

were not based on final judgment. Nevertheless the courts in the said cases

dismissed the objection and dismissed the application for the injunction, as was said

by the court that by granting the injunction it would in effect be refusing to give effect

to the statutory right conferred to creditors.

Applying this to our case, the debt by Allied is no longer disputed and the judgment in

Suit 1084 is final. Therefore the petition stands on a stronger footing as compared to

the cases cited above.

22

The case of Fortuna Holdings Pty Ltd v The Deputy Commissioner of Taxation

of the Commonwealth of Australia [1978] VR 83 which was cited by Allied is

premised upon different set of facts and hence cannot be cited as authority to support

Allied’s arguement. The so called ‘genuine cross claim” in that case arises from the

same suit. In Allied’s situation, the cross claim is in Suit 96 (yet to be disposed) which

is an entirely different cause of action from Suit 1084 (already disposed) and forms

the basis of the wonding up petition. Allied’s submission of equating its case as akin

to a situation involving a plaintiff and a counterclaiming defendant is thus, far fetched.

The club is the defendant in Suit 1084 and Allied is the plaintiff. In Suit 1084 the club

is the counterclaiming defendant. In Suit 96, Allied is the plaintiff and the club is not a

party at all. RDB is the defendant in Suit 96 which, as mentioned in the previous

paragraphs, is a different entity from the club. Allied is not a counter claiming

defendant in Suit 96. In Suit 96, Allied ‘s main claim is RM 16 283 411.00 and it is not

a counterclaim against the club.

d) Whether the Consolidation order resulted in the 3 suits be merged as one

Allied submits that the Consolidation Order by the Court of Suits 1084, 204 and 96

means that it is to be treated as one Suit. Allied argued, following that premise,

judgment of Suit 1084 judgment cannot be executed until the final disposal of the Suit

96. Allied further submits that any attempt to proceed with executionary proceedings

is thus premature.

23

The court disagree with this proposition by Allied. The consolidation order by the

court merely states that the 3 suits were consolidated and to proceed in one trial.

Nowhere in the Order does it states that the 3 suits be merged as one. The

respective 3 suits still maintain its separate entity with the exception that the hearing

of it all is to proceed in one hearing. The court refers to the case of Forbes Smith v

Forbes Smith and Chadwick [1901] P 528 is the authority that states that

consolidation does not merge 2 suits into one. The court’s order does not state that

the 3 suits must be tried to conclusion and neither did the court make an order that

the judgment in Suit 1084 and 204 be stayed pending disposal of Suit 96. The Judge

at that time merely ordered that Suit 96 is to be heard on a date to be fixed.

Thus, this issue of consolidation raised by Allied does not in any way affect the

petition of winding up against Allied, and neither is it premature for the Club to

proceed with execution proceedings against Allied for Suit 1084.

Conclusion on Enclosure 92:

Allied’s contention that the petition of winding up against it as an abuse of process of

court does not hold. Stifling the statutory right of the club in exercising its right under

section 218 of the companies Act 1965 on grounds that Suit 96 has not been

disposed off is an abuse of court’s process by Allied themselves. The court cannot

use its inherent jurisdiction to prevent such lawful right from being exercised as that

would amount to preventing the club from reaping its fruits of litigation which in this

case has been affirmed by the highest apex court.

Therefore, I dismiss the application of Allied in enclosure 92 with costs.

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ENCLOSURE 106 - APPLICATION FOR STAY The application by Allied to stay all forms of execution of the said judgment from Suit

1084 is premised on the same grounds as advanced for the application for injunction

in Enclosure 92.

For an application of stay, special circumstances must be proven. This has been

elaborated in the case of Kosma Palm Oil Mill Sdn Bhd& Ors v Koperasi

Serbausaha Makmur Berhad [2003] 4 CLJ 1, Re Kong Thai Sawmill (Miri) Sdn

Bhd [1976] 1 MLJ 131.

Allied premised his ground for the application for stay on the existence of Suit 96

which have yet to be disposed. This, with respect is not special circumstances as

envisaged in the principles for a stay. Often, a stay of execution of judgment is

applied for the sole reason that an appeal on the said judgment is pending in a higher

court. However that is not the case in Allied’s case. There is no more appeal on the

judgment of Suit 1084.The fact that Suit 96 is pending does not amount to a ‘special

circumstance’ as Suit 96 and Suit 1084 are separate and each suit’s existence does

not relate to each other.

The cases cited by Allied to support its contention for stay has no similarity with

Allied’s situation. The case of Hong Leong Finance Berhad v Hon Hoi Weng & Ors

[1987] 2 MLJ 377 is a case where the application for stay was pending appeal of

order of summary judgment by the learned Senior Assistant Registrar to the Judge in

Chambers. Moreover, the application for stay in that case relates to the same cause

of action. Allied here is applying for stay on grounds of another action.

Therefore Allied has failed to show to this court that there are special circumstances

to warrant this court granting a stay on all forms of proceedings as in Enclosure 106.

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I therefore dismiss the application in enclosure 106 with costs.

t.t Y.A Datin Zabariah bt. Mohd Yusof Tarikh : 31.03.09