1. ) MAJIDEE PARK AUTO SPARES & SERVICES SDN BHD 2. ) JAYAPALASINGAM A/L KANDIAH v 1. ) N THANAVATHY A/P RAJAH 2. ) KETUA PENGARAH JABATAN INSOLVENSI MALAYSIA

Case Significance

Illustrates the appellate correction of a plainly wrong finding against a liquidator: where delay is attributable to a creditor's non-cooperation rather than the office-holder's dereliction, and removal is sought solely on a licence point, the removal order will be set aside.

This decision of the Court of Appeal at Putrajaya concerns an appeal arising from post-winding-up proceedings in which a liquidator's conduct and continued appointment were challenged. The first appellant was a company in liquidation and the second appellant was its appointed liquidator; the first respondent, a person interested in the winding up, had sought, among other things, the removal of the liquidator, and the Director General of Insolvency was joined as the second respondent. In the High Court the Judicial Commissioner had made findings adverse to the liquidator, including that he had failed to discharge his duties with sufficient promptitude and questioning the validity of his licence to act, and the liquidator and the company appealed.

The Court of Appeal reviewed the contemporaneous documents bearing on the liquidator's conduct of the liquidation — including his dealings with an uncooperative creditor over the list of contributories and creditors, his complaint to the Insolvency Department seeking action against that creditor, and his eventual filing of an originating summons for pre-action discovery on the Insolvency Department's advice. Measured against that contemporaneous record, the court held that the finding that the liquidator had failed to act with sufficient promptitude was plainly wrong, the delay being attributable to the creditor's non-cooperation rather than to any dereliction on the liquidator's part. It also held that removing the liquidator solely on the ground that he lacked a valid licence was not justified in the circumstances. Concluding that the High Court's order could not stand, the court allowed the appeal, set aside the order of the Judicial Commissioner, and awarded costs of RM10,000 to the appellants. The court's approach reflects the recognition that a liquidator conducting a winding up is dependent on the cooperation of creditors and contributories to compile the list of those entitled and to progress the dissolution, and that an office-holder should not be penalised for delay genuinely caused by others' obstruction while he takes the proper statutory steps to overcome it. The judgment illustrates the appellate correction of a plainly wrong finding against an office-holder and the exacting standard for removing a liquidator from office.