DALAM MAHKAMAH RAYUAN MALAYSIA ANTARA 1. ONG … · dalam mahkamah rayuan malaysia (bidang kuasa rayuan) rayuan sivil no.: b-02(im)-2325-11/2017 antara yew fooi … perayu dan 1

[2018] 1 LNS 2247 Legal Network Series

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DALAM MAHKAMAH RAYUAN MALAYSIA

(BIDANG KUASA RAYUAN)

[RAYUAN SIVIL NO: B-02(IM)-2135-10/2017]

ANTARA

1. ONG KWONG YEW

2. ONG KONG LIM

3. ONG KONG SEONG

4. ONG KONG BENG

5. ONG BEE LEE

6. TAN SOH HOON

7. LIM ENG GUAT … PERAYU-PERAYU

DAN

1. ONG CHING CHEE

2. CHONG CHIT ENG

3. ONG KONG KUAN

4. ONG KONG YEE

5. ELEGANT PALMS SDN BHD

(DALAM LIKUIDASI) … RESPONDEN

- RESPONDEN


2

Dalam Negeri Selangor Darul Ehsan

Petition No.: 28-432-09/2013

Antara

1. Ong Ching Chee

2. Chong Chit Eng

3. Ong Kong Kuan

4. Ong Kong Yee … Pempetisyen

-pempetisyen

Dan

Elegant Palms Sdn Bhd

(Company No.: 544854-M) … Responden

DIDENGAR BERSAMA



[RAYUAN SIVIL NO.: B-02(IM)-2259-11/2017]

ANTARA

1. ONG CHING CHEE

(NO. K/P: 270622-10-5035)

2. CHONG CHIT ENG


3

(NO. K/P: 440622-04-5078)

3. ONG KONG KUAN

(NO. K/P: 710406-04-5193)

4. ONG KONG YEE

(NO. K/P: 740118-10-5515) … PERAYU-PERAYU

DAN


(NO. SYARIKAT: 544854-K) … RESPONDEN

Dalam Mahkamah Tinggi Malaya di Shah Alam

Dalam Negeri Selangor Darul Ehsan

Petition No.: 28-432-09/2013

Antara

1. Ong Ching Chee

(No. K/P: 270622-10-5035)

2. Chong Chit Eng

(No. K/P: 440622-04-5078)

3. Ong Kong Kuan

(No. K/P: 710406-04-5193)

4. Ong Kong Yee

(No. K/P: 740118-10-5515) … Pempetisyen

- pempetisyen

Dan


4



DIDENGAR BERSAMA



RAYUAN SIVIL NO.: B-02(IM)-2325-11/2017

ANTARA

YEW FOOI … PERAYU

DAN

1. ONG CHING CHEE

2. CHONG CHIT ENG

3. ONG KONG KUAN

4. ONG KONG YEE

5. ONG KWONG YEW

6. ONG KONG LIM

7. ONG KONG SEONG

8. ONG BEE LEE

9. TAN SOH HOON

10. LIM ENG GUAT


5

11. ONG KONG BENG



- RESPONDEN


(Bahagian Dagang)

Petisyen Penggulungan Syarikat No..: 28-432-09/2013

Antara

1. Ong Ching Chee

(No. K/P: 270622-10-5035)

2. Chong Chit Eng

(No. K/P: 440622-04-5078)

3. Ong Kong Kuan

(No. K/P: 710406-04-5193)

4. Ong Kong Yee


- pempetisyen

Dan



DIDENGAR BERSAMA



6



ANTARA

YEW FOOI … PERAYU

DAN

1. ONG KONG KUAN

2. ONG KWONG YEW

3. ONG KONG LIM

4. ONG KONG SEONG

5. ONG KONG BENG

6. HELEN BINTI MATURUN

7. PENGANGKUTAN JASA SDN BHD


- RESPONDEN


(Bahagian Dagang)


Antara

Ong Kong Kuan


7


Dan

Pengangkutan Jasa Sdn Bhd … Responden

DIDENGAR BERSAMA




ANTARA

1. ONG KWONG YEW

2. ONG KONG LIM

3. ONG KONG SEONG

4. ONG KONG BENG

5. HELEN BINTI MATURUN … PERAYU-PERAYU

DAN

1. ONG KONG KUAN



- RESPONDEN


8


(Bahagian Dagang)


Antara

Ong Kong Kuan


Dan

Pengangkutan Jasa Sdn Bhd

(Company No.: 141826-A) … Responden

DIDENGAR BERSAMA




ANTARA

ONG KONG KUAN

(NO. K/P: 710406-04-5193) … PERAYU

DAN


(NO. SYARIKAT: 141826-A) … RESPONDEN


9


(Bahagian Dagang)


Antara

Ong Kong Kuan


Dan

Pengangkutan Jasa Sdn Bhd

(Company No.: 141826-A) … Responden

DIDENGAR BERSAMA




ANTARA

1. ONG CHING CHEE

(NO. K/P: 270622-10-5035)

2. CHONG CHIT ENG

(NO. K/P: 440622-04-5078)

3. ONG KONG KUAN

(NO. K/P: 710406-04-5193)


10

4. ONG KONG YEE


DAN

ONG CHING CHEE REALTY SDN BHD

(NO. SYARIKAT: 53014-K) … RESPONDEN


No. Petisyen: 28-434-09/2013

Antara

1. Ong Ching Chee

(No. K/P: 270622-10-5035)

2. Chong Chit Eng

(No. K/P: 440622-04-5078)

3. Ong Kong Kuan

(No. K/P: 710406-04-5193)

4. Ong Kong Yee

(No. K/P: 740118-10-5515) … Pempetisyen- Pempetisyen

Dan

Ong Ching Chee Realty Sdn Bhd

(No. Syarikat: 53014-K) … Responden

DIDENGAR BERSAMA


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ANTARA

YEW FOOI

(NO. K/P: 570206-06-5585) … PERAYU

DAN

1. ONG CHING CHEE

2. CHONG CHIT ENG

3. ONG KONG KUAN

4. ONG KWONG YEW

5. ONG KONG LIM

6. ONG KONG SEONG

7. ONG KONG BENG

8. ONG CHING CHEE LORRY TRANSPORT SDN BHD

(DALAM LIKUDASI] … RESPONDEN

- RESPONDEN


(Bahagian Dagang)

Petisyen Penggulungan Syarikat No. 28-435-09/2013


12

Antara

1. Ong Ching Chee

(No. K/P: 270622-10-5035)

2. Chong Chit Eng

(No. K/P: 440622-04-5078)

3. Ong Kong Kuan


Pempetisyen

Dan

Ong Ching Chee Lorry Transport Sdn Bhd … Responden

DIDENGAR BERSAMA




ANTARA

YEW FOOI … PERAYU

DAN

1. ONG CHING CHEE

2. CHONG CHIT ENG


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3. ONG KONG KUAN

4. ONG KWONG YEW

5. ONG KONG LIM

6. ONG KONG SEONG

7. ONG KONG BENG



-RESPONDEN


(Bahagian Dagang)


Antara

1. Ong Ching Chee

(No. K/P: 270622-10-5035)

2. Chong Chit Eng

(No. K/P: 440622-04-5078)

3. Ong Kong Kuan


- Pempetisyen

Dan



14

DIDENGAR BERSAMA




ANTARA

YEW FOOI … PERAYU

DAN

1. ONG CHING CHEE

2. CHONG CHIT ENG

3. ONG KONG KUAN

4. ONG KONG YEE

5. ONG KONG SENG

6. ONG KWONG YEW

7. ONG KONG HIN

8. ONGN KONG LIM

9. ONG KONG SEONG

10. ONG KONG BENG




15

-RESPONDEN


(Bahagian Dagang)


Antara

1. Ong Ching Chee

(No. K/P: 270622-10-5035)

2. Chong Chit Eng

(No. K/P: 440622-04-5078)

3. Ong Kong Kuan

(No. K/P: 710406-04-5193)

4. Ong Kong Yee


- Pempetisyen

Dan

Ong Ching Chee Reality Sdn Bhd … Responden

DIDENGAR BERSAMA





16

ANTARA

YEW FOOI … PERAYU

DAN

1. ONG CHING CHEE

2. CHONG CHIT ENG

3. ONG KONG KUAN

4. ONG KONG YEE

5. ONG KWONG YEW

6. ONGN KONG LIM

7. ONG KONG SEONG

8. ONG BEEE LEE

9. TAN SOH HOON

10. LIM ENG GUAT

11. ONG KONG BENG



- RESPONDEN


(Bahagian Dagang)

Petisyen Penggulungan Syarikat No. BA-28PW-07-07/2017


17

Antara

1. Ong Ching Chee

(No. K/P: 270622-10-5035)

2. Chong Chit Eng

(No. K/P: 440622-04-5078)

3. Ong Kong Kuan

(No. K/P: 710406-04-5193)

4. Ong Kong Yee


- Pempetisyen

Dan

Elegant Palms Sdn Bhd … Responden

DIDENGAR BERSAMA




ANTARA

YEW FOOI … PERAYU

DAN


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1. ONG CHING CHEE

2. CHONG CHIT ENG

3. ONG KONG KUAN

4. ONG KWONG YEW

5. ONG KONG LIM

6. ONG KONG SEONG

7. ONG KONG BENG



-RESPONDEN


(Bahagian Dagang)


Antara

1. Ong Ching Chee

(No. K/P: 270622-10-5035)

2. Chong Chit Eng

(No. K/P: 440622-04-5078)

3. Ong Kong Kuan


- Pempetisyen


19

Dan


DIDENGAR BERSAMA




ANTARA

YEW FOOI … PERAYU

DAN

1. ONG KONG KUAN

2. ONG KWONG YEW

3. ONGN KONG LIM

4. ONG KONG SEONG

5. ONG KONG BENG

6. HELEN BINTI MATURUN



- RESPONDEN



20

(Bahagian Dagang)


Antara

Ong Kong Kuan


Dan

Pengangkutan Jasa Sdn Bhd … Responden

DIDENGAR BERSAMA




ANTARA

YEW FOOI … PERAYU

DAN

1. ONG CHING CHEE

2. CHONG CHIT ENG

3. ONG KONG KUAN

4. ONG KONG YEE


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5. ONG KONG SENG

6. ONG KWONG YEW

7. ONG KONG HIN

8. ONG KONG LIM

9. ONG KONG SEONG

10. ONG KONG BENG

11. ONG CHING CHEE REALITY SDN BHD


- RESPONDEN


(Bahagian Dagang)


Antara

1. Ong Kong Kuan

(No. K/P: 710406-04-5193)

2. Chong Chit Eng

(No. K/P: 440622-04-5078)

3. Ong Kong Kuan

(No.K/P: 710406-04-5193)

4. Ong Kong Yee


- Pempetisyen


22

Dan

Ong Ching Chee Reality Sdn Bhd … Responden

DIDENGAR BERSAMA




ANTARA

YEW FOOI … PERAYU

DAN

1. ONG CHING CHEE

2. CHONG CHIT ENG

3. ONG KWONG YEW

4. ONG KONG LIM

5. ONG KONG SEONG

6. ONG KONG BENG

7. ONG CHING CHEE CAPITAL (M) SDN BHD


- RESPONDEN



23

(Bahagian Dagang)


Antara

1. Ong Ching Chee

(No. K/P: 270622-10-5035)

2. Chong Chit Eng


Pempetisyen

Dan

Ong Ching Chee Capital Sdn Bhd … Responden

DIDENGAR BERSAMA



RAYUAN SIVIL NO.: B-02(IM)(NCC)-2133-10/2017

ANTARA

1. ONG CHING CHEE

(NO. K/P: 270622-10-5035)

2. CHONG CHIT ENG

(NO.K/P: 440622-04-5078) … PERAYU-PERAYU


24

DAN

ONG CHING CHEE CAPITAL (M) SDN BHD

(COMPANY NO.: 450824-V) … RESPONDEN


No. Petisyen: 28NCC-53-11/2013

Antara

1. Ong Ching Chee

(No. K/P: 270622-10-5035)

2. Chong Chit Eng


- Pempetisyen

Dan

Ong Ching Chee Capital (M) Sdn Bhd

(Company NO.: 450824-V) … Responden

DIDENGAR BERSAMA



RAYUAN SIVIL NO.: B-02(IM)(NCC)-2134-10/2017

ANTARA


25

ONG CHING CHEE CAPITAL (M) SDN BHD

(COMPANY NO.: 450824-V) … PERAYU

Dan

YEW FOOI

(NO. K/P: 570206-06-5585) … RESPONDEN

DAN

1. ONG CHING CHEE

(NO. K/P: 270622-10-5035)

2. CHONG CHIT ENG

(NO.K/P: 440622-04-5078) … PEMOHON

- PEMOHON


No. Petisyen: 28NCC-53-11/2013

Antara

1. Ong Ching Chee

(No. K/P: 270622-10-5035)

2. Chong Chit Eng


- Pempetisyen

Dan


26


(Company No.: 450824-V) … Responden

DIDENGAR BERSAMA



RAYUAN SIVIL NO.: B-02(A)-907-04/2018

ANTARA

1. ONG CHING CHEE

(NO. K/P: 270622-10-5035)

2. CHONG CHIT ENG

(NO.K/P: 440622-04-5078) … PERAYU-PERAYU

DAN

1. YEW FOOI

(NO. K/P: 570206-06-5585)

2. ONG CHING CHEE CAPITAL (M) SDN BHD

(COMPANY NO.: 450824-V)

3. ONG KWONG YEW

(NO. K/P: 581026-10-5475)

4. ONG KONG LIM

(NO. K/P: 691204-10-5273)

5. ONG KONG SEONG

(NO. K/P: 570404-10-5461)


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6. ONG KONG BENG

(NO. K/P: 550110-10-5265) … RESPONDEN

- RESPONDEN


Petisyen No.: BA-28PW-11-07/2017

Antara

1. Ong Ching Chee

(No. K/P: 270622-10-5035)

2. Chong Chit Eng


- Pempetisyen

Dan


(Company No.: 54050-W) … Responden

DIDENGAR BERSAMA



RAYUAN SIVIL NO.: B-02(A)-908-04/2018

ANTARA

1. ONG CHING CHEE

(NO. K/P: 270622-10-5035)


28

2. CHONG CHIT ENG

(NO.K/P: 440622-04-5078)

3. ONG KONG KUAN


DAN

1. YEW FOOI

(NO. K/P: 570206-06-5585)


(COMPANY NO.: 54050-W)

3. ONG KWONG YEW

(NO. K/P: 581026-10-5475)

4. ONG KONG LIM

(NO. K/P: 691204-10-5273)

5. ONG KONG SEONG

(NO. K/P: 570404-10-5461)

6. ONG KONG BENG

(NO. K/P: 550110-10-5265) … RESPONDEN

- RESPONDEN


Petisyen No.: BA-28PW-08-07/2017

Antara

1. Ong Ching Chee


29

(No. K/P: 270622-10-5035)

3. Chong Chit Eng

(No. K/P: 440622-04-5078)

4. Ong Kong Kuan

(No. K/P: 710406-04-5193) … Pempetisyen - Pempetisyen

Dan

Ong Ching Chee Lorry Transport Sdn Bhd

(Company No.: 54050-W) … Responden

CORUM:

NALLINI PATHMANATHAN, JCA

YEOH WEE SIAM, JCA

HANIPAH FARIKULLAH, JCA

GROUNDS OF JUDGMENT

Introduction

[1] There are nineteen (19) appeals before this Court. The subject

matter of the majority of these appeals relate to the remuneration as

well as the discharge and release of a liquidator, one Yew Fooi,

arising subsequent to his removal as the liquidator of five companies.

The application for his removal was allowed by the High Court and

upheld by the Court of Appeal.

[2] As such, these appeals relate to orders made by the High Court

in relation to interim payments drawn and retained by the liquidator


30

himself as fees for work done during the tenure of his appointment, as

well as his subsequent release and discharge. Two of the appeals

relate to an examination of the sale of businesses of the relevant

companies by the liquidator.

Salient Background Facts

[3] These appeals arise as a consequence of a family shareholders’

dispute between the majority contributories of the five companies

(‘majority’) and the minority contributories of these companies

(‘minority’). They are all related through the founder of this group of

companies, one Ong Ching Chee, after whom a number of the

companies are named. Essentially the two groups of disputing

contributories are from different arms of the same family.

[4] A shareholders’ dispute arose between the majority and minority

contributories resulting in the minority contributories filing winding

up petitions in respect of the five companies premised inter alia, on

the ground that it is just and equitable that the companies be wound

up. It is significant that all five companies are solvent.

[5] On 9 April 2014, Lim Chong Fong J, ordered that the five

related companies be wound up pursuant to s. 218(1)(i) of the

Companies Act 1965. His Lordship further ordered that Yew Fooi be

appointed as the liquidator. (The choice of liquidator was at the

behest of the minority contributories who presented the petitions for

winding up.)

[6] The five companies in question are:

(i) Elegant Palms Sdn Bhd (‘Elegant Palms’);

(ii) Pengangkutan Jasa Sdn Bhd (‘Jasa’);


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(iii) Ong Ching Chee Realty Sdn Bhd (‘OCC Realty’);

(iv) Ong Ching Chee Capital(M) Sdn Bhd (‘OCC Capital’); and

(v) Ong Ching Chee Lorry Transport Sdn Bhd (‘OCC Lorry

Transport’).

[7] The judgment of the High Court sets out the basis for the

judge’s finding that there was “a fundamental breakdown in the

common understanding underlying the companies”.

Events Post-Winding Up of the five Companies On 9 April 2014

and the subsequent period

[8] The function of the liquidator here as in other cases, was to

liquidate the assets. He was appointed, it will be recalled on 9 April

2014. The primary assets of these companies are their businesses. It

was contended for the liquidator that it was imperative that these

solvent businesses were maintained at optimum levels so as to ensure

that the best realisable value could be obtained.

[9] Finally it was the majority contributories who purchased the

businesses of Elegant Palms, Jasa and OCC Lorry Transport. The

minority contributories had numerous objections about the entire

tender process, contending that it was conducted unfairly, particularly

in relation to the invitation and acceptance of bids. They further

contended that the exercise had not been conducted in the interests of

the company or the minority contributories. They further alleged that

the tender exercise in relation to the properties of OCC Lorry

Transport and OCC Realty were designed to favour the majority

contributories.

[10] These issues were in fact the subject matter of the removal

application.


32

[11] The purpose of referring to these matters here, is only in so far

as they are relevant the appeals relating to the remuneration claimed

by the liquidator as:

(i) justifying the interim payments he had drawn while still a

liquidator, and

(ii) justifying further payment for work done which remains

unpaid.

[12] To that end, it is necessary to comprehend the work undertaken

by the liquidator.

Sale of Business vide a Tender Exercise commencing on 6 May

2014

[13] On 6 May 2014, the liquidator, Yew Fooi invited competitive

tender bids from both the majority and minority groups in their

respective capacities as contributories for the sale of the businesses of

Elegant Palms, Jasa and OCC Lorry Transport. In the interim the

liquidator sought to keep the business running.

[14] The minority contributories took the stance that the liquidator

ought to proceed with realisation and had no power to keep the

businesses running beyond four weeks. This was countered by the

liquidator who relied on the winding up order, which empowered him

to keep the businesses running until their disposal.

[15] The minority contributories then sought an extension of time to

put in a bid, which was opposed by the majority contributories, and

the liquidator allowed the extra time, in the best interests of the

liquidation.


33

[16] Eventually the liquidator accepted the highest bid from the

majority contributories.

June 2014

[17] In June 2014, the sale of business of these three companies was

entered into with a company related to the majority group.

[18] The sale price at which each of these businesses was sold is as

follows:

a) RM5,300,000-00 for the sale of the business of Jasa; and

b) RM8,000,000-00 for the sale of the business of Elegant

Palms;

c) RM1,200,000-00 for the sale of the business of OCC Lorry

Transport.

August 2014

[19] Apart from the sale of these businesses, in August 2014 the

liquidator distributed the sole asset of OCC Capital, namely shares in

one Jugra Palm Oil Sdn Bhd to all the contributories equally. A debt

in the sum of RM2,880,000-00 due from OCC Realty to OCC Capital

was assigned to the contributories equally to facilitate the liquidation

of Capital. A cash sum of RM200,000-00 was returned to the

contributories.

September 2014

[20] On 8 September 2014, the liquidator sought competitive tender

bids from the two groups of contributories for the purposes of

disposing of:


34

a) the two (2) landed properties of OCC Lorry Transport; and

b) the eight (8) landed properties of OCC Realty; and

c) the shares in Seri Jenjarom Sd Bhd belonging to OCC

Realty.

[21] However the minority contributories objected to this invitation

on the grounds that the information memorandum was irregular and

was along the same lines as the sale of businesses earlier effected.

The minority contributories had misgivings about the manner in which

those sales had been conducted and sought to defer this exercise. The

liquidator pointed out that deferment should be avoided as the

liquidation exercise would then become unduly protracted.

The Applications Filed in Court by the contributories and the

liquidator

[22] On 24 September 2014, some five months after his appointment

as liquidator, the minority contributories filed applications in the

winding up court in respect of each of the wound up companies,

seeking the removal of the liquidator.

[23] The liquidator sought an expeditious disposal of the sale of the

remaining assets of OCC Capital and OCC Realty, including the

shares in Sri Jenjarom (as set out above in the preceding paragraph).

However, in the light of the removal applications which were pending,

the liquidator gave an undertaking to defer his decision on the

expression of interest received in respect of the sale of those assets

pending the disposal of the removal applications, provided the

same were disposed of on or by October 2014.

[24] In July 2015, the liquidator filed an application for release as a

liquidator and for the dissolution of OCC Capital.


35

[25] This was followed in October 2015 by the minority

contributories’ applications for injunctions to refund monies he

had drawn from the companies’ accounts for work done and to restrain

him from making further withdrawals without the consent and

approval of the court. This was made by the minority contributories.

[26] The liquidator then sought sanction for the interim

remuneration he had procured as liquidator as well as to seek

delivery of records and books of the five companies from the minority

contributories.

[27] In 2015 settlement agreements were entered into between

Elegant Palms, Realty, Jasa and Lorry Transport vide the liquidator,

with the respective companies related to the majority contributories,

to deal with the non-payment of the balance purchase price for the

sale of these three businesses. The solution apparently reached

between the liquidator and the majority contributories for the balance

purchase price, was to set the same off against the monies due and

owing to the majority contributories as returns to the contributories.

[28] On 21 October 2015, almost a year after the removal

applications had been filed and remained pending, the minority

contributories filed further applications for injunctions in each of

the winding up proceedings. They sought an order that the liquidator

be ordered to refund to the respective companies, the monies that

had been drawn by the liquidator from these companies, as

remuneration for work done. The basis for these further applications

was that such drawings were made without the knowledge and

approval of the minority contributories and without obtaining the

leave of the winding up court.

[29] On 11 November 2015, about a month later, the liquidator then

filed applications to counter the applications by the minority


36

contributories, seeking the sanction of the winding up court to allow

him to retain:

a) the sums comprising the subject matter of the

injunction applications; and

b) the sums that had been unilaterally drawn as interim

remuneration.

Decision on the Removal Application

[30] On 12 February 2016 the removal applications were heard and

allowed on 23 March 2016. This meant that the liquidator was

removed from each of the five companies. A new liquidator was

appointed for the five companies.

[31] The decision by the High Court to remove Yew Fooi as

liquidator was premised on the following grounds:

(i) There was evidence of bias in his handling of the sale of

the business of two of the companies. In this context, the

majority contributories had purchased the businesses of

Jasa and Elegant. However the balance of the purchase

price was not paid. The complaint of the minority

contributories was that the liquidator did not take steps to

enforce or recover the balance purchase price, which

affected them adversely, at the expense of the majority.

The liquidator’s position was that he and the majority

contributories had agreed to deal with the balance purchase

price by way of set-off against the surplus from the

liquidation to be paid to the majority contributories;

(ii) The liquidator had breached various provisions of the

Companies Act 1965.


37

[32] On 12 July 2017, one year and four months after his removal,

the liquidator filed applications in each of the winding up courts for

further remuneration.

Appeals in relation to the order of removal of the liquidator

[33] Appeals were filed by both the majority group and the liquidator

against the removal order, as were orders for a stay of the same. As

stated at the outset, this Court affirmed the decision of the High

Court. Accordingly the decision of the High Court remains on record

and is binding.

[34] Insofar as the present appeals on remuneration are concerned,

they do not subsist in vacuo but have to be considered in the context

of the removal of the liquidator and the reasons accorded by the court

for allowing the same.

The Current Appeals

[35] In relation to the current appeals, the learned Judge delivered

his decision in relation to the injunction appeals, the sanction of

remuneration appeals, the liquidator’s injunction appeals and the

majority contributories examination of sale of business appeals on 13

September 2017.

[36] On 16 November 2017 the learned Judge delivered further

decisions relating to the interim remuneration appeals as well as the

further remuneration appeals.

[37] (In view of the decision of the Court of Appeal in A Santamil

Selvi Alau Malay & Ors v. Dato’ Seri Mohd Najib Tun Abdul Razak &

Ors [2015] 4 CLJ 1016 it became necessary for the parties to file no

less than 19 notices of appeal, in respect of each decision/application


38

that had been made.)The nineteen appeals are best considered under

the following categories of description:

a) Appeals numbered 907 and 908 are appeals by the

minority contributories against the decision of the High

Court in allowing interim remuneration to be drawn and

retained by the liquidator. These two appeals by the

minority contributories are usefully described as the

Interim Remuneration appeals;

b) Appeals numbered 2133, 2259, 2328 and 2329 are

appeals by the minority contributories against the

decision of the High Court in refusing to order the former

liquidator to refund monies drawn from the respective

companies by way of interim remuneration. These four

appeals by the minority contributories are usefully

described as the Injunction appeals;

c) Appeal numbered 2134 is an appeal by the minority

contributories allowing the release and discharge of Yew

Fooi as liquidator of one of the companies namely OCC

Capital. It is usefully described as the Release Appeal;

d) Appeals numbered 2325, 2326, 2330 and 2422 are

appeals by the liquidator against the decision of the High

Court refusing to sanction sums drawn by the liquidator as

interim remuneration. These four appeals by the liquidator

are usefully described as the Refusal to Sanction

Remuneration Appeals;

e) Appeals numbered 2562, 2563, 2564, 2565 and 2566 are

appeals by the liquidator against the decision of the High

Court refusing to allow further remuneration sought by

him post-removal. These four appeals brought by the


39

liquidator are usefully described as the Further

Remuneration Appeals;

f) Appeal numbered 2331 is another appeal by the liquidator

against the decision of the High Court restraining him

from drawing any payments from OCC Lorry Transport

without procuring the prior consent of the court. This

appeal by the liquidator is usefully described as the

Liquidator’s Appeal against the Injunction;

g) Appeals numbered 2135 and 2327 are appeals by the

majority contributories against the decision of the High

Court seeking orders to examine the sale of business of

Elegant Palms and Jasa. These appeals by the majority

contributories may usefully be described as the

Examination of Sale of Business Appeals.

[38] To summarise there are in total:

(i) seven (7) appeals by the minority contributories;

(ii) ten (10) appeals by the liquidator; and

(iii) two (2) appeals by the majority contributories.

The Appeals

[39] We propose to deal with the appeals according to the categories

set out above. Prior to that however, it is pertinent that the learned

Judge had occasion to deal generally with the issue of remuneration in

the course of his judgment in the removal application.

[40] In this context, we concur with learned counsel for the minority

contributories’ submission that the core reasoning of the High Court


40

in the removal application is wholly relevant in the consideration of

the present appeals in relation to remuneration:

“ On the issue of the remuneration of the liquidator, Section

232(3) provided that the liquidator is entitled to remuneration

by way of percentage or as otherwise determined by agreement

between the liquidator and committee of inspection, or by

resolution passed at a meeting of creditors with a majority of

three-fourths in value and one half in number of the creditors,

and failing either of these circumstances, at the behest of the

Court. (I do not find any solid justification for the petitioner

[sic] to be paid the remuneration of RM659,000-00 within eight

month [sic] of the appointment. The payment of this large

amount will seriously prejudice the petitioners. Notwithstanding

the interim remuneration can only be taken by the liquidator

without the sanction of the Court, the Court find that the amount

taken unreasonable).”

Appeals pertaining to the Remuneration of the Liquidator

[41] This encompasses:

Categories (a) and (b), namely the Interim Remuneration

appeals and the Injunction appeals filed by the minority

contributories;

as well as

Categories (d), (e) and (f), namely the Refusal to Sanction

Remuneration Appeals, the Further Remuneration Appeals

and the Liquidator’s Appeal against the Injunction


41

[42] All these appeals relate solely to claims for, and objections to,

remuneration either already drawn or further claimed by the

liquidator.

The Interim Remuneration appeals and the Injunction appeals

filed by the minority contributories

[43] With respect to the appeals relating to monies that had already

been withdrawn and retained by the liquidator as compensation,

namely the Remuneration appeals and the Injunction Appeals brought

by the minority contributories, it appears to us that the first issue that

falls for consideration is whether the liquidator was entitled to

withdraw and retain such monies by way of remuneration given the

objections of the minority contributories and the absence of the

sanction of the winding up court.

Can the Liquidator withdraw remuneration without the consent of

all the contributories and without the sanction of the Court?

[44] The order of Court granted on the winding up of the five

companies allowed or empowered the liquidator to claim remuneration

for work undertaken by him. Clause (xiii) of the order of Court dated

9 April 2014 provides:

“.. to make any payment which is necessary or incidental to the

performance of the liquidator’s duties or functions and to pay

the expenses and remuneration of the liquidator out of the

assets of the Company” (emphasis ours)

[45] Does it follow from that express provision in the order of court

relating to remuneration, that the liquidator was entitled to withdraw

monies from the five related companies in such sums (or quantum) as

he deemed commensurate with the work he had or claimed to have


42

undertaken? In other words, is a liquidator granted carte blanche to

withdraw such quantum of monies as he deems fit, as remuneration

for work done?

[46] We are of the considered view that while the order of the Court

envisages that the liquidator must be paid remuneration for the work

undertaken, that sum is not to be determined or removed from the

account of the company unilaterally by the liquidator. The law

envisages that the liquidator receives compensation in accordance

with the provisions of the Companies Act 1965 (‘CA ‘65’) (which

was in force at the material time). Any removal of funds by way of

remuneration which is not in compliance with the Act would amount

to a contravention of the same.

Remuneration of the liquidator

[47] Section 232(3) of the CA ‘65 deals with the remuneration of the

liquidator and provides that he is entitled to remuneration by way of

percentage or as otherwise determined by agreement between the

liquidator and committee of inspection, or by resolution passed at a

meeting of creditors with a majority of three-fourths in value and one

half in number of the creditors, and failing either of these

circumstances, at the behest of the Court. When a liquidator is paid

professionally, he or she is expected to observe a high standard of

care and skill commensurate with his or her professional standing.

(See Vasudevan v. ICAB Pte. Ltd. [1987] 2MLJ 563. Instructive cases

in this regard include Wong Sin Fan & Ors v. Ng Peak Yam @ Ng Pak

Yeow & Anor. [2014] 2 MLJ 629, Dato’ Robert Teo Keng Tuan v.

Metroplex Bhd. [2014] 1 MLJ 39 (FC), and Perumahan NCK Sdn.

Bhd. v. Mega Sakti Sdn. Bhd. [2005] 7 MLJ 389.)

[48] This last mentioned case of Perumahan NCK Sdn. Bhd. v. Mega

Sakti Sdn. Bhd. (above) sets out comprehensively the law in relation


43

to section 232(3) and Rule 142(3) of the Companies (Winding Up)

Rules 1972. It examines when and how a liquidator is to be paid

particularly where the liquidation is protracted and considers the

parties who can be heard at the liquidators’ application for

remuneration, and the principles to be applied when determining the

remuneration of liquidators.

[49] What is apparent from a consideration of the law is that the

legislation does not conceive of a situation where a liquidator simply

“helps himself” to compensation without the consent of all the

relevant creditors, or contributories in the instant case. Although the

majority contributories took no issue with the quantum claimed, the

minority contributories took strong objection. Moreover the

fundamental basis for the removal application was that of bias on the

part of the liquidator in favour of the majority contributories. Given

the foregoing, the consent of the majority contributories did not, of

itself, entitle the liquidator to contend that the payments he made to

himself were approved.

[50] A prudent liquidator, appreciating that he occupies a position of

trust in relation to the company in liquidation, and that he is directly

answerable to the court, would have taken the precaution of obtaining

the sanction of the court.

[51] The timing of the withdrawals of the monies by the liquidator is

also questionable, given that the monies were drawn out after the

application for his removal had been filed and during the pendency of

the same.

[52] In all these circumstances it appears to this Court that the

liquidator was obliged to obtain the sanction of the court prior to

withdrawing monies which he felt, subjectively, was due to him for

work he had undertaken. It is the lack of sanction either from the

Court or the consent of all the contributories that taints his unilateral


44

withdrawal of the funds. Given that a liquidator is in a fiduciary

position in relation to the funds of the company which he holds on

trust for both the contributories and creditors, it is untenable if not

bordering on unethical conduct for him to pay himself out of those

funds. This is particularly pronounced in the instant case where

applications for his removal were before the Court. The withdrawals

appear to be an imprudent attempt to collect his fees prior to any

potential removal from office.

[53] The liquidator was not entitled to act as he did in relation to his

own remuneration. The unilateral and periodic withdrawal of monies

of the company in liquidation (which he held on trust for creditors and

the contributories) without the requisite consent of the contributories

or the Court in the instant case, amounts to a contravention of section

232 (3) of the CA ’65.

[54] It would therefore follow that any monies taken in contravention

of the law ought to be reimbursed to the Companies in question, and a

proper claim be made for remuneration in accordance with section

232(3) of the CA ’65, namely by way of application to Court to

obtain sanction.

Work Undertaken by the Liquidator during his Tenure

[55] One of the issues raised by the minority contributories is that as

the liquidator was removed for ‘biased’ conduct of the affairs of the

companies in favour of the majority contributories, this amounts to

misconduct and he is therefore not entitled to any remuneration

whatsoever. This issue will be dealt with further on in the judgment.

[56] In general, a liquidator is entitled to reasonable remuneration for

work done. And, as we have set out above, such remuneration is paid


45

out in accordance with the provisions of section 232 (3) of the CA

’65.

[57] In the chronology of relevant events, we have set out a summary

of the work undertaken by the liquidator during his tenure. In support

of his claim for remuneration for work done (both already drawn and

claimed), the liquidator provided the following justification:

(a) Work done in dealing with the business operations of these

three companies pending disposal of the business;

(b) Work done in negotiating the sale of the business by way

of tender; and

(c) Work done in performing administrative tasks with two

other employees.

(d) Remuneration for work done in relation to Ong Ching

Chee Realty, although the sale did not go through.

[58] Learned counsel for the present liquidator has usefully tabulated

the liquidator’s claim for remuneration:

Compa

ny

Period of

Claim

Amount of

Claim

Time Fee

Was Paid

Based

on

Ong Ching

Chee Realty

April 2014

to

March 2015

RM173,687-50

9-12-2014

To

22-5-2015

Time Cost

Ong Ching

Chee Capital

April 2014

to

RM89,837-50

9-12-2014

To

Time Cost


46

March 2015 27-4-2015

Ong Ching

Chee Lorry

Transport

April 2014

to

March 2015

RM189,325-00 11-5-2015 Time Cost

And

Realisable of

RM3,862,76

7

Pengangkuta

n Jasa

April 2014

to

March 2015

RM306,214-00 6-8-2014

To

27-7-2015

Time Cost

And

Realisable of

RM14,709,3

26

Elegant

Palms

April 2014

to

March 2015

RM274,862-25 15-8-2014

To

7.4.2015

Time Cost

And

Realisable of

RM16,788,2

61

[59] However as submitted for learned counsel for the current

liquidator, a closer scrutiny and analysis of the liquidator’s claim

does not prima facie justify the quantum claimed, nor the quantum

withdrawn.

[60] We are persuaded by the analysis submitted by learned counsel

for the current liquidator.

(i) With respect to OCC Realty for example, a sum of

RM173,687-50 has been claimed on a time cost basis. It

has been paid out to, and retained the liquidator. However

the planned sale of OCC Realty’s assets did not take place

as the liquidator was removed. Therefore to allow the


47

liquidator’s claim for remuneration for a sale that has not

gone through and to subsequently allow remuneration for

any sale that now transpires through the current liquidator,

will effectively mean that a double charge is incurred. To

that extent, the claim requires review.

(ii) With respect to OCC Lorry Transport, the liquidator

represented an estimated quantum of assets realised at

RM3.8 million. That quantum is inclusive of RM2.04

million owing by the purchaser from the sale of the

business, namely the majority contributories. The claim for

receipt and payment comprises a part of managing the

business for the period from April to May 2014.

With respect to the actual realised assets as at 23 March

2016, the payment received by the company from the

contributories stood at only RM400,000-00 leaving an

unpaid balance sum of RM800,000-00 under the Sale of

Business Agreement. Therefore the RM1.2 million claimed

as realised is not made out as the bulk of the monies due

have yet to be received. The overstatement by the

liquidator, it is submitted, arises from the estimated sum of

RM2.04 million from the disposal of an asset which had

not been realised.

In this context, Rule 142(1)(i) of the Companies

(Winding Up) Rules 1972 provides that the remuneration

of a liquidator is premised on the amount realised. This

refers to actual monies received and not potential or

possible amounts to be recovered in the future.

(iii) With regards to Jasa, again a sum of RM14.7 million was

quoted by the liquidator as the estimated amount of assets

realised. However the actual amount received by the


48

company from the sale of business is only RM1.8 million

and the balance of RM6.2 remains unpaid. Further the

stated sales/collections of RM4.7 million comprise monies

due to the purchaser under the sale of business to Jasa

Kroporat Sdn Bhd and are not available for distribution to

the contributories. In these circumstances the statement of

RM14.7 million being assets realised is incorrect. Any

payment made by way of remuneration in favour of the

liquidator based on the estimated amount of RM14.7

million therefore amounts to an overcompensation and

requires review. Rule 142(1) of the Rules has not been

followed.

[61] Similarly with Elegant Palms a sum of RM16.7 million was

quoted by the liquidator as the estimated amount of assets realised.

However the payment actually received by the company is only

RM1.5 million with an unpaid balance of RM3.8 under the Sale of

Business Agreement, owing by the purchaser.

[62] It appears that there is a clear overstatement, as a sum of RM9.8

million, in actuality, belongs to the purchaser under the sale of

business. A claimed surplus of RM4.2 million is not supported by any

evidence as the RM9.8 million was returned to the purchaser under

the sale of business. Again Rule 142(1) does not appear to have been

complied with.

[63] But as the monies in the three instances stated above were

withdrawn without recourse to the Court nor with the consent of the

contributories as a whole, there was no opportunity for review. It is

not possible for this Court to conclude that the sums claimed and then

withdrawn were reasonable. On the contrary there is suggestion that it

is far in excess of the quantum prescribed under Rule 142(1) of the

Rules.


49

[64] It may well be contended that the charges were based on time

costs. Even then it becomes clear that any such claim ought to be

reviewed and sanctioned by the Court, or that consent be obtained

from the contributories, both majority and minority. The nub of these

appeals is therefore not so much the basis and standard of

reviewing or sanctioning of these monies taken by the liquidator

as fees, but the failure of the liquidator to comply with the

provisions of section 232(3) of the CA ’65.

[65] In other words, the liquidator was not entitled to unilaterally

withdraw monies he claimed were due to him for work done in the

absence of the concurrence of the contributories as a whole, and

more significantly, in the absence of the sanction of the Court. We

have earlier explained that the order of the court of 9 April 2014

handed down during the winding up of the five companies does not

give the liquidator unbridled powers to bill and draw fees as he

deems fit. The power so granted is circumscribed (as it necessarily

must be) by the provisions of the CA ’65. Therefore the power so

granted to the liquidator is to be exercised in accordance with that

provision. As such we are of the view that the Interim

Remuneration appeals brought by the minority contributories

ought to be, and are allowed.

[66] Any attempts by the liquidator to obtain sanction ex post

facto should be viewed with considerable caution.

[67] The learned Judge erred in failing to recognise that the

liquidator was not entitled to bill and draw monies as he saw fit.

Other Reasons Why the Interim Remuneration and Injunction

Appeals are allowed


50

[68] First of all, as submitted by learned counsel for the minority

contributories, the learned Judge had determined in the course of the

removal decision that there was no justification for the sum of

RM659,000-00 which the liquidator had taken by way of remuneration

within an eight month period. He further determined that such

payment would seriously prejudice the minority contributories. The

learned Judge’s decision was upheld by the Court of Appeal.

[69] To that extent the learned Judge was bound by his own initial

finding that the sum sought by way of fees was excessive. It could

hardly then be reasonable. However the learned Judge then went on to

allow the liquidator to retain these very sums, which he had found to

be excessive. These monies were also paid out in contravention of

section 232(3) of the CA ‘65. Given these circumstances, it is

apparent that the Judge, in concluding that the interim remuneration

could be retained by the liquidator, was making a completely

contradictory decision. He was bound by his own finding in the

removal decision (see Hartecon JV Sdn Bhd v. Hartela Contractors

Limited [1997] 2 CLJ 104).

[70] A second similar reason is that at the time when the Interim

Remuneration Appeals were heard, the learned Judge had dismissed

the liquidator’s appeals seeking the sanction of the court ex post facto

for the monies that he had already taken by way of remuneration. The

learned Judge’s reasoning in dismissing these applications was that as

the liquidator had been removed on grounds of misconduct, the Court

had exercised its discretion to refuse any payment of remuneration to

the liquidator.

[71] Therefore in dismissing the Interim Remuneration application

filed by the minority contributories, the learned Judge was once again,

with respect, taking a contradictory position/decision in relation to his

earlier decision to refuse to sanction the monies taken and retained by


51

the liquidator by way of remuneration. The decisions were

inconsistent, and with respect, the learned Judge ought to have

similarly refused to sanction the liquidator’s unilateral taking of

monies by way of remuneration. His Lordship did not, with the result

that his decision comprises the subject matter of the Interim

Remuneration Appeals. It therefore follows that these appeals ought

to be allowed.

[72] The Injunction appeals are allowed because they comprise

the natural consequence of the finding that the liquidator was not

entitled to draw monies by way of remuneration as he deemed fit.

Those bills require review and /or taxation by the Court. As such

it is only correct that any monies wrongfully retained by the

liquidator are paid back to the companies, and if allowed, bills

tendered to the Court for a full taxation exercise. Therefore the

Injunction Appeals should similarly be allowed.

[73] With respect to OCC Lorry Transport, the learned Judge had

also refused the sanction sought for remuneration taken for the period

April 2014 until March 2015 yet allowed in part some of that

remuneration in one of the Interim Remuneration appeals, namely

Appeal 2330, which is again contradictory. This too comprises a

reason for allowing the Interim Remuneration and Injunction appeals

filed by the minority contributories.

Conclusion in relation to the Interim Remuneration Appeals and

the Injunction appeals filed by the minority contributories

[74] For the many reasons we have elucidated above, we order

that the appeals in categories (a) and (b), namely the Interim

Remuneration appeals and the Injunction appeals filed by the

minority contributories ought to be, and are allowed with costs.


52

[75] By reason of our decision in allowing the Injunction Appeals

it follows, and we order that:

The liquidator is to return all monies drawn and retained by

him as remuneration for work claimed to have been done

during his tenure as liquidator of the five related companies.

The monies so drawn and retained by him are to be returned

to the relevant companies through the current liquidator

within thirty days of the service of the sealed order on the

liquidator, Yew Fooi.

The Refusal to Sanction Remuneration Appeals, the Further

Remuneration Appeals and the Liquidator’s Appeal against the

Injunction brought by the liquidator comprising categories (d),(e)

and (f) filed by the liquidator

[76] These are the remaining appeals relating to remuneration

brought by the liquidator and they number 10 in total.

The Refusal to Sanction Remuneration Appeals

[77] The Refusal to Sanction Remuneration Appeals (namely appeals

numbered 2325, 2326, 2330 and 2422) relate to the ex post facto

applications by the liquidator to seek the sanction of the Court for

monies which he had drawn from the companies’ accounts and

retained by way of fees.

[78] The principles applicable in relation to this series of appeals are

similar to those already examined at some length when we were

dealing with the Interim Remuneration and Injunction appeals. It

suffices for us to therefore reiterate those principles without repeating

them here again.


53

[79] These applications for sanction were made during the pendency

of the removal proceedings and after the interim remuneration

applications had been filed. They were clearly made with a view to

justifying the amounts already drawn and retained contrary to section

232(3) CA 1965.

[80] The very fact that these applications were made after the monies

had been drawn and retained, taints these applications. The reasonable

inference to be drawn from the timing of these applications is that

they were only made because the interim remuneration was being

challenged. Secondly they were calculated to justify bills and payment

of monies by the liquidator to himself, after the event. As such the

bona fides of these applications is seriously in question.

[81] Given the nature of the office of a liquidator, it is untenable that

sanction be given ex post facto to payments that were made out in

contravention of the CA 1965 in favour of the liquidator himself. We

have alluded to this in our earlier consideration of the subject. The

learned Judge cannot be faulted for arriving at the decision he did. He

is not plainly wrong. Therefore we are of the view that there are no

merits in this series of appeals, which stand dismissed.

[82] For clarity we specify that the Refusal to Sanction Remuneration

Appeals in category (d) (namely appeals numbered 2325, 2326, 2330

and 2422) are dismissed with costs.

The Liquidator’s Appeal against the Injunction

[83] The liquidator’s injunction appeal numbered 2331 relates to the

decision of the High Court restraining the liquidator from drawing any

payments from OCC Lorry Transport without the prior consent of the

Court.


54

[84] This appeal too is doomed to failure, as it is premised once

again on the fundamentally flawed basis that the liquidator is entitled

to draw monies and retain them as he deems fit. We reiterate the point

that any powers give to the liquidator by order of the court do not

comprise unchecked or intemperate powers to take out monies by way

of payment of remuneration. In view of the liquidator’s conduct in

having done so, the Court cannot be faulted for granting the

injunction. It was to prevent any further contravention of the law.

There is no basis for this Court to interfere with that finding and

decision of the High Court. It cannot be said that the learned Judge

was plainly wrong.

[85] Accordingly this appeal number 2331 falling within category

(f) also stands dismissed with costs.

The Further Remuneration Appeals

[86] The Further Remuneration Appeals (namely appeals numbered

2562, 2563, 2564, 2565 and 2566) brought by the liquidator and

comprising category (e) were all filed after the liquidator’s removal

for fees claimed to be due to him for work done.

[87] These appeals do not stand on the same footing as the Interim

Appeals, the Injunction Appeals or the Refusal to Sanction

Remuneration Appeals as they do not relate to any attempt to draw

and retain monies in contravention of section 232(3) of the

Companies Act ‘65. These appeals seek further remuneration for

work done after the liquidator’s removal from office.

[88] Learned counsel for the minority contributories contends that

there ought to be no interference with the decision of the High Court

in relation to these appeals because the learned Judge was not wrong

in determining that the liquidator having been removed for


55

misconduct was not entitled to any remuneration. However the learned

Judge took contradictory stances when he allowed remuneration in

some instances, finding that work had in fact been undertaken which

deserved recompense, and on other occasions holding that no monies

whatsoever were payable.

[89] We are of the view that the primary issue (as stated earlier) is

when and how a liquidator may be paid. The grounds of his removal

have been canvassed and upheld by this Court. In his decision the

learned High Court Judge held, inter alia, that “…..I do not find any

solid justification for the petitioner [sic] to be paid the remuneration

of RM659,000-00 within eight month [sic] of the appointment. The

payment of this large amount will seriously prejudice the petitioners.

Notwithstanding the interim remuneration can only be taken by the

liquidator without the sanction of the Court, the Court find that the

amount taken unreasonable.” (emphasis ours).

[90] Does this mean that the liquidator is not entitled to any

remuneration at all? His removal was effected because he was found

to be “biased” in his dealings with the contributories. This in turn

affected the minority contributories adversely. He was therefore

removed and the current liquidator replaced him.

[91] It is relevant to note that the learned Judge did not stipulate that

the liquidator was not entitled to any remuneration whatsoever for

work done. He stated that the quantum claimed was unreasonable.

Therefore the difficult question before us is this:

[92] The liquidator in the instant case:

(a) contravened section 232(3) CA’65 by unilaterally drawing

monies by way of fees without the consent of the entirety

of the contributories; and


56

(b) was found by the High Court to have charged excessively

for work done during an eight month tenure.

[93] This Court upheld finding (b) in the removal application.

However that determination in relation to billing was only in respect

of work done for an eight month tenure from inception. Moreover the

finding was that it was excessive, rather than not due in its entirety.

[94] Should this Court allow for any remuneration whatsoever in

respect of the work undertaken by the liquidator, or should it simply

refuse all remuneration?

[95] In dismissing the application in respect of the Further

Remuneration Appeals, the learned Judge took the position that as

the liquidator was removed for misconduct he was not entitled to any

remuneration. Authority for this was premised on the case of Re

Campall Industries Sdn Bhd; Perdana Merchant Bankers Bhd

(Applicant) [1997] 3 CLJ Supp 142 @ 173 where Abdul Malik Ishak J

(later JCA) set out the circumstances where a liquidator might lose his

remuneration. The first instance His Lordship described is when a

liquidator is deprived of his remuneration on the ground of

misconduct.

[96] A perusal of the chronology of events will show that it is

indisputable that the liquidator in the instant case did carry out work

in the course of his appointment as liquidator. This is further

evidenced by the sale of business agreements that were executed,

other sales as well as the management of the business of the five

companies. It would follow therefore that the liquidator ought to be

accorded some degree of remuneration for work done.

[97] With regards to the liquidator’s conduct in drawing funds

unilaterally without the consent of the entirety of the contributories

and without the sanction of the Court, the issue that arises is whether


57

it precludes the recovery of any remuneration whatsoever. Having

given this issue careful consideration, we are of the view that while

this may well amount to a contravention of section 232(3) of the CA

‘65, the injunction appeals which have been allowed, require the

liquidator to return to the companies all monies which he had

wrongfully drawn and retained. This will ensure that the companies do

not suffer any loss in terms of unauthorised or excessive fees retained

by the liquidator.

[98] The liquidator ought to be sanctioned separately by the relevant

authorities, namely the Malaysian Institute of Accountants or the

Director General of Insolvency who has oversight of liquidators, in

respect of his conduct in unilaterally drawing fees in contravention of

section 232(3) of the CA ’65. Such conduct is not to be condoned or

treated lightly, given the position of trust of a liquidator.

[99] Having considered the totality of the circumstances, we are of

the view that upon the return of all monies unilaterally withdrawn and

returned, the liquidator is entitled to some degree of remuneration, but

only provided he is able to establish the same on well- founded

principles.

[100] As such, in relation to the Further Remuneration Appeals, we

are of the view that the learned Judge erred in denying the liquidator

entirely of remuneration. It is not in dispute that the liquidator did

undertake some work that resulted in the resolution, to a restricted

degree, of the dispute between the two sets of contributories.

[101] While this has not been resolved, it is equally relevant that the

minority contributories do not seek to set aside the sale of business

agreements, which were concluded by the liquidator. In short, it

cannot be said that the liquidator did no work whatsoever towards

bringing the liquidation exercise to a close.


58

[102] However that does not mean that the Further Remuneration

Appeals are allowed in full or reversed.

[103] The net effect therefore, of our decision is that the liquidator

may be entitled to some remuneration provided he is able to prove the

same. It does not mean that he is entitled to the fees sought to be

claimed under Further Remuneration Appeals.

[104] This in turn is because the overriding principle is that any such

compensation must be reasonable. It therefore does not follow that the

liquidator is entitled to the sum claimed as of right. The Court is

bound to cast an objective eye on the bill tendered in terms of the

quantum claimed and be satisfied that the sum is justified

The Law on the Basis and Standards to be utilised in the

assessment of reasonable remuneration due to a liquidator

[105] The case of Perumahan NCK Sdn. Bhd. v. Mega Sakti Sdn. Bhd.

[2005] 7 MLJ 389 sets out comprehensively the law in relation to

section 232(3) CA ‘65 and Rule 142(3) of the Rules. It examines

inter alia, the principles to be applied when determining the

remuneration of liquidators. The Court is entitled to proceed on the

basis that reasonable remuneration is to be paid out. The benchmark

in determining the quantum to be paid out is ‘fairness and

reasonableness’, which are fairly discretionary terms. A blind or

unquestioning attitude is not advocated.

[106] The liquidators in that case, as is common, sought to have their

fees justified and paid out on a time scale basis. Ramly J (now FCJ)

held that the time expended by liquidators was only one of several

criteria that the court would taken into consideration. It was pointed

out that the importance of this criteria could well vary from case to

case, assuming greater significance in some cases as compared to


59

others. The Court was bound to balance various considerations based

on the reasonableness and scope of the work performed. The Court

had to be satisfied that there was no ‘over servicing’ or ‘over

manning’ in the matter.

[107] In Woodsville Sdn Bhd v. Tien Eik Enterprise Sdn Bhd Hasnah J

(now JCA) expressed skepticism on the time-cost basis and relied on

Re Carton where it was concluded that the proper method to adopt

whenever it is practicable is to assess the remuneration according to

the results attained.

[108] Further guidance on this issue of remuneration in respect of time

costs is to be found in the decision of the Singapore High Court in Re

Econ Corp Ltd (In Provisional Liquidation) (No 2) [2004] SGHC 49.

In that case, Justice V K Rajah (as he then was) held, inter alia, that:-

(i) Liquidators have a right to be fairly and reasonably

remunerated. However they have no legitimate expectation

to be remunerated on a time costing basis as a matter of

right. This is only one of several factors to be taken into

account. The reason afforded was that considerable time

might be expended on unproductive work, particularly less

efficient staff. Secondly it would be difficult to check

charges based on such a system and accurately gauge the

time said to have been spent on the company’s affairs.

There should also be no question of the company paying

for a learning exercise by subordinate staff on the job.

There is no room for ‘overmanning’ or

‘overservicing’.Time is therefore one of many creiteria

that a court will take into account;

(ii) An important aspect of time estimation in relation to costs

will be the rate levied by the liquidator. In this context, the

test is what would be the adequate remuneration for a


60

similarly experienced and qualified insolvency

professional. As there was no benchmark available from

any relevant body or association the Court applied the

parameters equivalent to solicitors. Industry practice might

provide a guide.

(iii) The value contributed by the liquidator is highly relevant.

The Court will want to ascertain what difference the

liquidator has made to the entire matter.

(iv) Scope of work – a straightforward liquidation will

necessarily involve less work and effort than a convoluted

matter where, accordingly, different rates will be reflected.

[109] The Court concluded by stating that it remains open for the

court in any matter to decide on the optimum mode of assessing fair

remuneration, albeit on a time basis, a realisation basis or an all

encompassing basis where all of the said criteria are considered.

However, whatever the basis adopted, it must be characterised by

fairness and reasonableness. It was also emphasised that

determination by the court ought to be a matter of last resort, invoked

only when no agreement with the creditors can be reached. The

decision appears, with respect, to set out comprehensively the

approach to be adopted in relation to the assessment of the quantum of

remuneration for them.

[110] A recent decision from New South Wales, Australia namely

Sanderson as Liquidator of Sakr Nominees Pty Ltd (in liquidation) v.

Sakr [2017] NSWCA 38 is also persuasive. There the Court set out the

general principles and test to be adopted when assessing remuneration

to be accorded to a liquidator:

“It is well settled that the onus is on the liquidator to establish

that the remuneration claimed is reasonable and that it is the


61

function of the Court to determine the remuneration by

considering the material provided and bringing an independent

mind to bear on the relevant issues: Venetian Nominees Pty Ltd

v. Conlan [1998] 20 WAR 96; [1998] 16 ACLC 1653; Conlan

(as liquidator of Rowena Nominees Pty Ltd) v. Adams [2008] 65

ACSR 521; [2008] WASCA 61 at [28]-[29]. Although these two

cases related to the legislation as it stood prior to the 2007

amendments, the principles referred to in them remain

applicable. Further it will be expected that the liquidator in

supplying material to enable the Court to assess whether a

remuneration claim was reasonable, would supply material by

reference to the matters referred to in s. 473(10).”

[111] Although the legislative provisions differ, the principles

applicable namely that:

(a) the onus remains on the liquidator to establish that the sum

claimed is reasonable;

(b) the liquidator is bound to provide material on which the

Court can undertake a reasonable analysis; and

(c) the Court is to approach its task by determining the

remuneration due on the established materials with an

independent mind .

are all equally applicable to the assessment of remuneration in this

jurisdiction.

[112] The single unique difference between the instant appeals and the

other cited decisions is this: In all these cases the liquidators did not

attempt to draw monies without the consent of the Committee of

Inspection, creditors or contributories. If no consent was forthcoming

they sought the sanction of the Court.


62

The Material Afforded by the Liquidator in Support of his claim

for Further Remuneration

[113] In the instant case the materials afforded by the liquidator in

support of his claim do not appear to be contemporaneous records of

the work undertaken. Rather they are summaries of work done or

simply contain time expended with the rates specified but with no

specification of what work was undertaken during that time, far less

why such an amount of time was necessary. There is no explanation as

to the specific time rates charged, the identity of the varying levels of

personnel involved, nor the reason why each of them was necessary.

In short the material was woefully inadequate to meet the standards

necessary to enable the Court to make a realistic assessment of the

remuneration due, if any, by way of additional fees.

[114] The situation is well described by way of analogy in the

Australian case of Venetian Nominees Pty Ltd & Ors v. Conlan [1998]

16 ACLC 1653. In that case too, the liquidator provided a statement

of work done in very general terms. The description of the statement

bears a close resemblance to the summaries provided ex post facto in

the instant case:

“ The respondent’s claims for remuneration as regards the fees

of his firm were based on hourly rates. The respondent produced

to the learned Master for example, an invoice showing that as

regards Plant for the period from 2 October 1997 to 31 January

1998, he and employees of his firm had spent between 50 and 60

hours working on tasks relating to his duties as provisional

liquidator. Thus for instance a manager was said to have

worked for 16.10 hours and 11.50 hours, a secretary or word

processor operator was said to have spent 14.30 hours and 2.50

hours, a computer 1.20 hours and a supervisor 7.60 hours.

Various rates were then accorded to the hours spent and the


63

aggregate of the fees charged for all persons specified was

calculated…………………

Attached to this invoice was a document which purported to set

out: “details of work performed for the periods 2 October 1997

to 31 January 1996”. This document was in very general terms.

It identified in an all embracing fashion certain tasks that were

performed but did not specify who performed them and how long

each task took. Furthermore, many of the tasks were described

in such a way that it was impossible to discern whey they were

necessary, what precisely was involved in performing them, and

what level of complexity or responsibility attached to them. The

descriptions tended more to conceal this kind of detail rather

than reveal information essential to the court’s function of

determining whether the remuneration charged was fair and

reasonable. Typical examples of the descriptions were the

following:

“Discussions and correspondence to Smith Broughton and Sons

regarding retention for plant and equipment pursuant to lien to

satisfy outstanding fees and disbursements.

……………………………………………..”

[115] The liquidator’s summary of work done and the time costing

summaries bore a close resemblance to that described above. These

documents certainly did not constitute material that could possibly

assist the court to arrive at a fair and reasonable determination of

remuneration due for work done.

[116] The time costing method is of no utility to the court when it is

expressed on terms as in the present case. It simply does not afford

any usable information for the court to ascertain the remuneration that

is fair and reasonable for work done. When such meagre and shoddy


64

material is handed in as the basis for a claim, it is not possible for the

court to undertake any useful analysis with a view to arriving at a

reasonable quantum by way of remuneration. The court cannot then be

faulted for turning to the assets realised method as in the case of

Woodville (above). And as specified in the Singapore decision of Re

Econ (above), the liquidator is not entitled as of right to demand that

his remuneration be evaluated on the basis of time costs. In the instant

case therefore the time cost method is not a suitable mode of

assessing remuneration due to the liquidator.

[117] We conclude that in order to give effect to our decision that the

liquidator is entitled to some degree of remuneration for work

undertaken. The Further Remuneration Appeals are remitted to the

High Court for a full exercise of taxation to be undertaken in respect

of the sums claimed for work done during his tenure as liquidator. The

liquidator is required to present full particulars to substantiate his

claims for remuneration, such that the Court is able to make an

accurate assessment of reasonable compensation. Such an exercise is

to be applied for within 4 weeks from the date of full payment of all

monies drawn and retained by the liquidator. This means that

repayment is to be made within 30 days of the date of service of the

sealed order on the liquidator, Yew Fooi, and the application for

taxation of his bills may be made after that.

Conclusion on the Further Remuneration Appeals

[118] We allow the appeals by the liquidator in respect of the

further remuneration appeals to the extent only that the

applications for further remuneration are remitted to the High

Court to be taxed in full ONLY AFTER and provided that full

repayment by the liquidator of the monies drawn and retained by

him, to the respective companies that are owed such monies,


65

through the current liquidator is made within 30 days of the

service of the sealed order on the liquidator, Yew Fooi.

[119] TO THIS END the liquidator is at liberty to furnish further

particulars of work done for the five related companies during his

tenure as liquidator, such documents to be utilised in the review

and taxation to be undertaken and sanctioned by the High Court

as provided under the Companies Act 1965 and the Companies

(Winding Up) Rules 1972.

The Release Appeal

[120] The learned Judge to our minds erred in allowing the release and

effective discharge of the liquidator in respect of OCC Capital. In

law, such release would effectively release him from liability in

respect of any act done or default made by him in the course of

carrying out his duties while managing OCC Capital as a liquidator,

save in the event of fraud or some other serious misdemeanour. It

effectively has the effect of absolving the liquidator for acts of

negligence etc., during the tenure of his term as liquidator.

[121] A second point to note is that such release was granted

notwithstanding the pendency of an application for his removal. No

such discharge ought to have been allowed at that juncture as the

allegations made against him had not even been heard. The discharge

was, to that extent, premature.

[122] It would further appear that the application for discharge was

defective as the minority contributories were not notified by the

liquidator of his intention to apply for release until the unsealed copy

of the application for release and dissolution together with his

affidavit in support affirmed on 7 July 2015 were served on the

minority contributories on 7 July 2015. This contravenes Rule 149 of


66

the Winding-Up Rules. The rule requires a liquidator seeking release

to give notice of his intention to do so to all contributories, and to be

given a summary of all receipts and payments in the winding up. No

such report was given to the minority contributories until the service

of the application itself. As such they was deprived of an opportunity

to query and verify the substance of the repot, in breach of the

principles of natural justice.

[123] In all these circumstances we are of the unanimous view that the

learned Judge erred in allowing the liquidator’s release. We therefore

allow the appeal of the minority contributories in respect of the

Release Appeal with costs.

The Examination of Sale of Business Appeals in appeals numbered

2325 and 2327 brought by the majority contributories

[124] This leaves us with the two appeals brought by the majority

contributories. We had, on the date of the hearing of these appeals,

collectively dismissed these appeals and provided short grounds for

the same. We reiterate those grounds and reproduce them below:

(a) It was contended before us that the minority contributories

had no locus standi to file these applications as they did

not comprise a party to the sale of business agreements.

We determined that the minority contributories did indeed

have the necessary locus standi to file these applications to

examine the sale of business of Elegant Palms and Jasa.

This is because they are directly affected in a pecuniary

capacity by the agreement between the majority

contributories and the liquidator. Their entitlement as

contributories to their share of the assets in the two subject

companies, namely Elegant Palms and Jasa is at best,


67

varied by the set-off agreement. However, they were never

informed of the same and had never consented to it;

(b) The liquidator was not in a position to enter into this set-

off agreement without the knowledge and consent of the

minority contributories, particularly given the adverse

effect it would have on their share of the assets;

(c) In any event, the set-off agreement envisages as a pre-

condition the consent of the liquidators of another family

company called Cendawan. Such consent is not

forthcoming, as evidenced in writing by the liquidators of

Cendawan. The liquidators of Cendawan are not agreeable

to the set-off. Therefore the set-off agreement cannot

materialise;

(d) It is therefore essential that the primary agreements should

continue to enable the liquidation process to be completed.

(e) For these reasons, we concur with the learned Judge that

the primary agreements between Elegant Palms and Jasa

should continue.

[125] We therefore dismiss these two appeals by the majority

contributories, namely 2325 and 2327, with costs. In summary we

determine and hold as follows in respect of the 19 appeals:-

(i) Appeals numbered 907 and 908 relating to interim

remuneration filed by the minority contributories are

allowed.

(ii) Appeals numbered 2133, 2259, 2328 and 2329 relating to

the refusal to grant injunctions ordering the liquidator to

refund monies drawn and retained by him filed by the

minority contributories are allowed.


68

(iii) The costs in respect of both these categories of appeals,

namely appeals numbered 907, 908 and 2133, 2259,

2328 and 2329 is RM10,000-00 to the appellants, i.e. the

minority contributories, such costs to be borne by the

liquidator personally;

(iv) Appeal number 2134 granting the release and discharge of

the liquidator of OCC Capital, lodged by the minority

contributories is allowed with costs of RM7,500-00 to the

appellants, i.e. the minority contributories, such costs

to be borne by the liquidator personally;

(v) Appeals number 2325, 2326, 2330 and 2422 relating to

the refusal of the High Court to sanction the sums drawn

by the liquidator as interim remuneration lodged by the

liquidator are dismissed with costs of RM5,000-00 to the

appellants, namely the minority contributories, such

costs to be borne by the liquidator personally;

(vi) Appeals numbered 2562, 2563, 2564, 2565 and 2566

relating to the refusal to allow the liquidator to seek

further remuneration post-removal are allowed in part

only in so far as the orders of the High Court are set

aside. These matters are remitted to the High Court to

be taxed in full only after and provided that full

repayment is made by the liquidator of the monies

drawn and retained by him to the respective companies

that are owed such monies, through the current

liquidator within 30 days of the service of the sealed

order on the liquidator, Yew Fooi. TO THIS END the

liquidator is at liberty to furnish further particulars of

work done for the five related companies during his

tenure as liquidator, such documents to be utilised in


69

the review and taxation to be undertaken and

sanctioned by the High Court as provided under the

Companies Act 1965 and the Companies (Winding Up)

Rules 1972.

(vii) Appeal numbered 2331 relating to the High Court’s grant

of an injunction to restrain the liquidator from drawing

monies from OCC Lorry Transport without procuring the

consent of the Court is dismissed with no order as to

costs;

(viii) Appeals numbered 2135 and 2327 relating to the refusal

of the High Court to examine the business sales

agreements are dismissed with costs of RM7,500-00 each

to the respondents, i.e. the minority contributories;

All costs awarded are subject to allocatur and the deposits in

respect of all appeals are refunded.

(NALLINI PATHMANATHAN)

Judge

Court of Appeal

Malaysia

Dated: 11 DECEMBER 2018

KAUNSEL:

For the previous liquidator - S Bhuvanes & Chan Wai Shi; M/s

Bhuvanes

Peguamcara & Peguamcara

27-6 Oval Damansara

685 Jalan Damansara


70

60000 Kuala Lumpur

For the liquidator - Faizal Khalid & Afifah Azman; M/s Sabri Ahmad

& Co


UOA Centre, Suite 19A-16-01

16 th Floor No. 19 Jalan Pinang

50450 Kuala Lumpur

For the minority contributors - Michael Chow & Wendy Yeong; M/s

Michael Chow


No. 58A Jalan Bukit Raja

Off Jalan Taman Seputeh

Taman Seputeh

58000 Kuala Lumpur

For the majority contributors - A Kanesrau; M/s Seah Balan & Co


Unit A, Tingkat 3 Wisma 1Alliance

No. 1 Lorong Kasawari 4B

Taman Eng Ann

41150 Klang

Selangor Darul Ehsan

Case(s) referred to:

A Santamil Selvi Alau Malay & Ors v. Dato’ Seri Mohd Najib Tun

Abdul Razak & Ors [2015] 4 CLJ 1016

Vasudevan v. ICAB Pte. Ltd. [1987] 2 MLJ 563

Wong Sin Fan & Ors v. Ng Peak Yam @ Ng Pak Yeow & Anor. [2014]

2 MLJ 629


71

Dato’ Robert Teo Keng Tuan v. Metroplex Bhd. [2014] 1 MLJ 39 (FC)

Perumahan NCK Sdn. Bhd. v. Mega Sakti Sdn. Bhd. [2005] 7 MLJ 389

Hartecon JV Sdn Bhd v. Hartela Contractors Limited [1997] 2 CLJ

104

Re Campall Industries Sdn Bhd; Perdana Merchant Bankers Bhd

(Applicant) [1997] 3 CLJ Supp 142

Econ Corp Ltd (In Provisional Liquidation) (No 2) [2004] SGHC 49

Sanderson as Liquidator of Sakr Nominees Pty Ltd (in liquidation) v.

Sakr [2017] NSWCA 38

Venetian Nominees Pty Ltd & Ors v. Conlan [1998] 16 ACLC 1653

Legislation referred to:

Companies Act 1965, ss. 218(1)(i), 232(3)

Companies (Winding Up) Rules 1972, rr. 142(1), (3), 149

Documents

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