By
Ranjan N.Chandran (Partner, Commercial & Construction Department)
Harneshpal Karamjit Singh (Associate, Commercial & Construction Department)
August 18, 2020
The recent High Court decision of Goldpage Assets Sdn Bhd v Unique Mix Sdn Bhd [2020] MLJU 723 (“Goldpage Assets”) stems out of four applications to intervene by Gam Kam Sheng and twenty-seven (27) others; Tee Ah Kiat and two (2) others; Plusbury Sdn Bhd; and Unique Mix Sdn Bhd. The contention was that neither of the Proposed Interveners had the locus standi to appear at a hearing of an application to oppose a Judicial Management order (“JMO”) based on the following reasons:-
The grounds for the application relied by the 4 parties were as follows:
In essence, the issue for consideration was whether unsecured creditors may intervene, and oppose an Ex Parte JMO Application.
The Learned High Court Judge was of the considered view that reading Part
III Division 8 Subdivision 2 of the Companies Act 2016 specifically Sections
404, 405 and particularly 409, there was nothing preventing any party from
attempting to oppose a JMO.
The Court relied on Hansard where there was no mention of any restrictions to
an unsecured creditors opposing a JMO. It was not the intention of Parliament
to restrict the same to only secured creditors.
The Court was further guided by the Federal Court decision of Pengusaha
Tempat Tahanan Perlindungan Kamunting Taiping & Ors v. Badrul Zaman bin
PS Md Zakariah [2018] 12 MLJ 49 whereby it was held:-
“In interpreting the provisions of an Act of Parliament, the trend now is to
adopt such a construction as will promote the legislative intent or purpose
underlying the provisions. This purposive approach has been given statutory
recognition for the courts to adopt by virtue of s. 17A on the Interpretation
Acts 1948 and 1967”.
It is on this basis that the Court took a purposive approach in interpreting the
relevant sections of the Companies Act 2016 and the Companies (Corporate
Rescue Mechanism) Rules 2018.
Accordingly, the Learned Judge was of the view that unsecured creditors
were not shut out from a JM Hearing and that it was not Parliament’s
intention to restrict the opposition of a JMO to only secured creditors.
The Court held that the discretion on whether any creditor could oppose a
JMO was vested with the Court. The basic considerations set out by the High
Court Judge was that the Court will decide on whether to grant a JMO based
upon the criteria in Sections 404 and 405 of the Companies Act 2016 and
whether they have been satisfied and proven by an Applicant. The views and
objections of an unsecured creditors may be considered.
With regards to Rule 13 of the Companies (Corporate Rescue Mechanism)
Rules 2018 where it states that an unsecured creditor cannot oppose a JM,
the High Court judge stated that such rules had to read in conjunction with
the parent act, Companies Act 2016.
The Companies Act 2016 does not prohibit any creditor from being heard at
the JM and / or to oppose the JM. As such, any subsidiary legislation that is
inconsistent with an Act (including the Act under which the subsidiary
legislation was made) shall be void to the extent of the inconsistency as
stated by the Federal Court in United Malayan Banking Corporation Bhd v
Ernest Cheong Yong Yin [2002] 2 CLJ 413.
As the Companies (Corporate Rescue Mechanism) Rules 2018 does not have
a procedure for intervention proceedings in a JM Application, the Court is
guided by Rule 2 of the Companies (Corporate Rescue Mechanism) Rules
2018 as follows:-
“Where there is no specific procedure provided in these rules in respect of a
voluntary arrangement or judicial management, the procedure provided in
the rules of Courts 2012 [P.U.(A) 205/2012] shall apply.”
Thus, Order 15 rule 6(2)(b)(ii) applies. It is trite that the Court will allow an
interested party to intervene if his legal rights and interest in relation to the
subject matter of the action would be directly affected by any order which
may be made in the action.
It is interesting to note that the decision of the High Court in Goldpage Assets
has been followed recently by the Court of Appeal in Civil Appeal No. B-
02(IM)-1590-08/2019 involving a company known as Million Westlink Sdn Bhd.
There are no Grounds of Judgment as yet from the Court of Appeal.
Be that as it may, the decision of the Court of Appeal undoubtedly settles the
law in this area, that an Unsecured Creditor may have the voice to speak in
making the rightful representation in Court in opposing a JMO.