PENS HOLDINGS SDN. BHD. v HAMZAH JAAFAR (P) SDN. BHD.

Case Significance

Illustrates that a Fortuna injunction will not restrain a winding-up petition under the Companies Act 2016 where the underlying construction debt is established by an undisputed final account rather than genuinely disputed, and the debtor cannot show the creditor's petition has no prospect of success.

This High Court decision concerns an application for a Fortuna injunction to restrain a creditor from presenting a winding-up petition based on a disputed construction debt. The plaintiff, a developer, had engaged the defendant as contractor to build the main buildings of a state government administrative complex in Perlis under a letter of acceptance, and the contract had been revised several times by agreement. The defendant prepared a final account statement showing a sum due of RM854,170.28, which the plaintiff received, and after the plaintiff failed to comply with a subsequent letter of demand the defendant issued a statutory notice under sections 465(1)(e) and 466(1)(a) of the Companies Act 2016. The plaintiff sought an injunction to restrain any winding-up petition, together with declarations that the debt was bona fide disputed and that the demand was an abuse of process. The court restated that a Fortuna injunction restrains a winding-up petition where the proposed petition has no chance of success, in particular where the debt is genuinely and substantially disputed. Examining the material, it found that the sum in the final account statement was accurate and consistent with the letter of acceptance and the subsequent revision letters, none of which was disputed, and that the plaintiff had failed to show that the defendant would have no prospect of success in the petition. It rejected as an unsupported afterthought the plaintiff's assertion that a petition would cause its bank accounts to be frozen and damage its business relationships, finding it unsupported by any documentary evidence and evidently manufactured on receipt of the statutory notice. The court accordingly dismissed the originating summons with costs of RM5,000, noting that the contract had been performed and the account revised by agreement on several occasions, none of which the plaintiff had challenged at the time. The judgment illustrates that a Fortuna injunction will not restrain a winding-up petition where the underlying debt is established rather than genuinely disputed, and that a debtor cannot manufacture a dispute merely by asserting, without evidence, that a petition would harm its business.