Professional Documents
Culture Documents
ANTARA
(1) The principle upon which the Court acts in exercising its power under
any of the four limbs of Order 18 r. 19(1) of the RHC, 1980 are well
settled. It is only in plain and obvious cases that recourse should be
had to the summary process under this rule and the summary procedure
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can only be adopted when it can clearly be seen that a claim or answer
is on the face of it ‘obviously unsustainable.’ It cannot be exercised by
a minute examination of the documents and the facts of the case in
order to see whether the party has a cause of action or a defence.
Bandar Builders Sdn Bhd v. UMBC Bhd (refd).
(2) In the instant case, the Court is of the considered view that perusing
the voluminous affidavits, pleadings and bundle of authorities filed by
both the parties, there are many disputes as to facts and points of law
which have to be adjudicated at the trial of the action.
(3) The other point which is to be noted is that the first defendant had also
filed an action against the plaintiff claiming for the sum of
RM170,912.43 which the plaintiff had disputed. The legal issue for
consideration is whether it is permissible for the first defendant to file
an action claiming the said sum outstanding and which is disputed by
the plaintiff and at the same time before the conclusion of the trial,
file a winding-up proceeding against the plaintiff.
JUDGMENT
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directed both parties to put in their respectively written submissions
which were duly complied.
On the 15 t h A u g u s t 2 0 0 6 , t h e C o u r t a f t e r r e a d i n g b o t h
Enclosures and also the Affidavits filed herein and after perusing the
written submissions and hearing oral submissions by the parties, the
Court allowed the Plaintiff’ s appeal with costs (Enclosure 29) in
respect of the decisions made the learned Deputy Registrar.
At all material time it was also alleged that the Plaintiff has an
outstanding sum due and owing to the First Defendant in the sum of
RM170,912.00 as at the 30t h May 1998 but the Plaintiff strongly
denied. On the 23 r d June 1998, the First Defendant filed a Winding-
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up Petition against the Plaintiff at the Johor Bahru High Court vide
Winding-up Petition No: 28-102-1998 (hereinafter called ‘the
Petition’), on the ground that the Plaintiff’s owed money to the First
Defendant. The Second Defendant then sent a letter dated the 25 t h
June 1998 t o t h e T h i r d D e f e n d a n t t o f r e e z e t h e P l a i n t i f f’ s current
account with the Third Defendant.
The Third Defendant upon receipt of the said letter from the
Second Defendant had frozen the Plaintiff’s current account on the
13t h July 1998.
Upon knowing that the said current account had been frozen,
the Plaintiff instructed his Solicitors to file an application on the 5t h
August 1998 to set aside the Petition. On the 7t h September 1998 the
Court after hearing the Plaintiff’s application had set aside the Petition
and also made a consequential order that the freezing of the
Plaintiff’s current account be lifted within 7 days from the date of the
said order.
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was also tainted with malice and in bad faith and an abuse of the
process of the Court.
5
pursuant to Sections 218, 219, 221, 222, 223, 224, 225 and 226(4) of
the Companies Act, 1965. It was further stated that the filing of the
Petition was made bone fide and without any malice or bad faith.
Not long after the Second Defendant had filed Enclosure 8, the
First Defendant also followed suit by filing a Summons -in-Chambers
(Enclosure 12) dated the 31 s t October 2004 pursuant to Order 18 rule
19(1)(b) of the RHC, 1980. The Affidavit -in-Support (Enclosure 13)
was affirmed on the 25t h October 2004. In the said Affidavit -in-
Support, the First Defendant stated inter-alia :-
ii) that prior to the filing of the Petition at the Johor Bahru
High Court on the 23r d June 1998, the following had taken
place namely:-
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when presented for payment were dishonoured
with remarked ‘ Payment Stopped.’
7
the First Defendant had filed a Summons and Statement of Claim at
the Sessions Court Alor Setar vid e SCCS No: 52- 324-2001 against
the Plaintiff and the guarantors claiming the said sum.
The Plaintiff also stated that the Plaintiff was solvent which
featured the Plaintiff Profit and Loss Account as at 30 t h June 1997
and 30 t h June 1996 respectively showing that for the two (2) years
the Plaintiff was making profit after tax of RM257,058.00 and
RM3,776,407.00 respectively.
8
The Plaintiff further stated that the amount of RM170,912.43 as
claimed by the First Defendant was disputed by the Plaintiff in its
c a s e at the Sessions Court, Alor Setar vide SCCS No: 52 -324-2001.
The Plaintiff also stated that the Johor Bahru High Court had on
the 7t h September 1998 struck-out the Petition filed by the First
Defendant with costs.
9
Thus the Second Defendant may inform the Banker as per
Sections 223, 225 and 226(4). See R e G r a y’s Inn ’s case (see B.A.
p g . 3 - 16). The Court held that the Bank was not entitled to claim
priority over the advance on Overdraft to the Respondent Company
based on its encumbrances once the Banker had knowledge of the
Petition per section 219 of the Companies Act.
The Plaintiff should only sue the Banker who froze the account;
Banker should answer why they froze on any legal ground. The Bank
will eventually get to know of the position because the Petitioner must
lodge it with the Registra r of Companies and that by Rule 24 of the
Companies Winding-Up Rules it must be advertised.
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against the Second Defendant and it is an abuse of process by the
Plaintiff.
“the tort of abuse of the process of the Court would lie against a
plaintiff where it could be shown that he had set proceedings on
foot to effect an object or purpose which was not within the
scope of the process. The tort was distinct from malicious
prosecution and unlike malicious prosecution did not depend on
the plaintiff ’s proceedings being completed before an action
could be brought. ”
11
The learned counsel for First Defendant also stated the legal
principles relating to malicious prosecution namely, malicious
prosecution the necessary elements to prove such action are:-
b) there is malice.
I n t h e c a s e o f B u s i n e s s C o m p u t e r s I n t e r n a t i o n a l L t d v.
Registrar of Companies and Others [1987] 3 WLR 1134, the Court
h e l d t h a t :-
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(a) the process complained must have been initiated ;
The learned counsel for the First Defendant further argued that
the Plaintiff has failed to show the presence of malic e in the winding
up proceeding. The First Defendant has every right to proceed with
the winding up proceeding against the Plaintiff for the following
reasons namely:-
(i) the winding up petition was bone fide filed because the
Plaintiff has failed to make payment to the First Defendant
after the expiry of the stipulated time as mentioned in the
Statutory Notice.
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(iii) that the Petition was struck-out by the Court because the
First Defendant agreed to withdraw the Petition.
(iv) that the First Defendant agreed that the disputed amount
be tried at the Sessions Court Alor Setar after being
advised by the Second Defendant.
(v) that the First Defendant did not write any letter to the 3r d
Defendant to freeze the Plaintiff’s current account with the
Third Defendant’ s branch in Alor Setar. The freezing of
the account was done by the third Defendant and the First
Defendant should not be held liable.
The learned counsel for the First Defendant also averred that
the Plaintiff had not particularized the loss incurred as a result of the
freezing of the current account at the Third Defendant’ s branch in
Alor Setar.
The learned counsel for the First Defendant further alleged that
the Plaintiff had failed to show that the winding-up proceeding was
initiated for a collateral purpose.
The learned counsel for the Plaintiff submitted that the alleged
debt was disputed by the Plaintiff and the First and Second
Defendants kne w before the Petition was filed that the debt was
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disputed by the Plaintiff. The Plaintiff’s contention is supported by
documentary evidence by exhibiting two (2) letters collectively
marked as ‘KPK-2’. The said letters dispute the alleged debt and
notify the Defendants that if the dispute was not resolved, the Plaintiff
would have no alternative but to ‘stop payment’ of the post-dated
cheques issued in favour of the First Defendant.
(a) filing the Petition with knowledge that the debt was
disputed;
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(b) filing the Petition for an ulterior motive and not to obtain
genuine redress against the Plaintiff;
16
‘The principle governing the striking out of pleadings is clear in
that it is only in plain and obvious cases that recourse should
be had to the summary process under Order 18 r. 19 of the
Rules of the High Court 1980; the summary procedure under
this rule can only be adopted when it can clearly be seen that a
claim or answer is on the face of it ‘obviously unsustainable. ’
Under Order 18 r. 19(1)(b), (c) and (d) of the RHC, the Court
may at any stage of he proceeding order to be struck out any Writ
and Statement of Claim in the action on the ground that (b) it is
scandalous, frivolous or vexatious; (c) it may prejudice, embarrass or
delay the fair trial of the action or (d) it is otherwise an abuse of the
process of the Court.
17
From the plethora of authorities pertaining to the question of
what amounts to ‘scandalous ,’ it is taken to mean ‘ wholly
unnecessary and irrelevant’ and not merely unpleasant allegations.
The cases which discussed the meaning of ‘scandalous ’ are
Technointan Holding Sdn Bhd v. Tetuan Tan Kim Siong @ Teh
Hong Jet [2006] 7 CLJ 541 and Boey Oi Ten g t/a Indah Reka
Construction & Trading v. Trans Resources Corporation Sdn Bhd
[2002 ] 1 CLJ 405.
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Courts. It includes considerations of public policy and the
interests of justice. This term signifies that the process of the
Court must be used bona fide and properly and must not be
abused. The Court will preven t the improper use of its
machinery. It will prevent the judicial process from being used
as a means of vexation and oppression in the process of
litigation. The categories of conduct rendering a claim
frivolous, vexatious or an abuse of process are not closed and
will depend on all relevant circumstances of the case. A type of
conduct which has been judicially acknowledged as an abuse
of process is the bringing of an action for a collateral purpose
... if an action was not brought bona fide for the purpose of
obtaining relief but for some other ulterior or collateral purpose,
it might be struck out as an abuse of the process of the Court.”
The principle upon which the Court acts in exercising its power
under any of the four limbs of Order 18 r. 19( 1) of the RHC, 1980 are
well settled. It is only in plain and obvious cases that recourse should
be had to the summary process under this rule and the summary
procedure can only be adopted when it can clearly be seen that a
claim or answer is on the face of it ‘obviously unsustainable. ’ It
c a n n o t b e e x e r c ised by a minute examination of the documents and
the facts of the case in order to see whether the party has a cause of
action or a defence (see Bandar Builders Sdn Bhd v. UMBC Bhd
(supra)).
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In the instant case, the Court is of the considered view that
perusing the voluminous affidavits, pleadings and bundle of
authorities filed by both the parties, there are many disputes as to
facts and points of law which have to be adjudicated at the trial of the
action. The other point which is to be noted is that the First
Defendant had also filed an action in the Alor Setar Sessions Court
vide SCCS No: 52-324-2001 against the Plaintiff claiming for the sum
of RM170,912.43 which the Plaintiff (Defendant) had disputed. The
legal issue for consideration is whether it is permissible for the First
Defendant to file an action claiming the said sum outstanding and
which is disputed by the Plaintiff (Defendant) and at the same time
before the conclusion of the trial, filed a winding -up proceeding
against the Plaintiff (Defendant).
20
For the plaintiff - M/s Chuah, Halim & Co
Abu Bakar bin Jaafer & Anor v. Malayan Banking Berhad [1991] 2 MLJ
487 (refd)
Boey Oi Teng t/a Indah Reka Construction & Trading v. Trans Resources
Corporation Sdn Bhd [2002] 1 CLJ 405 (refd)
British & Colonial Land Association v. Foster and Robins [1888] 4 TLR 574
(refd)
Gabriel Peter & Partners (suing as a firm) v. Wee Chang Jin [1998] 1 SLR
374 (refd)
Quartz Hill Gold ’s case at pg 1 - 2 and pg 33 - 54 of BA (refd)
Sim Kie Chon v. Superintendent of Pudu Prison & Order [1985] 2 MLJ 385
at page 386 (refd)
Technointan Holding Sdn Bhd v. Tetuan Tan Kim Siong @ Teh Hong Jet
[2006] 7 CLJ 541 (refd)
21
Legislation referred to:
Bankruptcy Act, ss. 47(1)(2), 54(1)(b)
Companies Act, 1965 ss. 218, 219, 221, 222, 223, 224, 225, 226(4), 293
Company Winding-up Rules, rr. 24, 32
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