Metroworld Resources Sdn Bhd v 1. ) Doo Chang Wei 2. ) Doo Thi Chung @Too Dai Soo 3. ) Tee Huat 4. ) Law Mong Wey (Di Sman Selaku Pentadbir Bersama Harta Pusaka Mendiang Law Yeong Chow) 5. ) Sua Lai Kim (Di Sman Selaku Pentadbir Bersama Harta Pusaka Mendiang Law Yeong Chow) 6. ) Tan Soh Bee 7. ) Billion Star (HK) Industrial Investment Limited

Case Significance

Illustrates the evidential burden on a liquidator seeking to set aside completed dispositions of company property: where, after a full trial, the liquidator fails to prove the grounds for unwinding the sale of the units or voiding the related agreements, the transactions stand, the claim is dismissed, and defendants' counterclaims may be allowed with costs against the plaintiff.

This High Court decision at Kuala Lumpur, delivered by Judge Hayatul Akmal Abdul Aziz after a full trial, concerns a suit brought by a liquidator to unwind property transactions entered into by a company now in liquidation. The plaintiff, Metroworld Resources Sdn Bhd (in liquidation), acting through its liquidator, sought to set aside the concluded and completed sale and transfer of fourteen high-end condominium units, which had been sold by the company as a set-off for financial considerations arising under a series of agreements including a joint-venture agreement, and sought a declaration voiding four further sale and purchase agreements involving the seventh defendant, Billion Star (HK) Industrial Investment Limited. The defendants included individuals, two of them sued as joint administrators of a deceased person's estate, and the corporate seventh defendant.

The court dismissed the plaintiff's claim. Having tried the matter fully, it found that the plaintiff had failed to prove its case for setting aside the concluded transactions or for the declarations sought, so that the sales and transfers stood. It allowed the counterclaims of the third, fourth, fifth and seventh defendants, with costs against the plaintiff, and dismissed the claims against the first, second and sixth defendants, making no order as to costs in their favour. It fixed the costs payable by the plaintiff and directed that they be paid within ninety days of the order. The outcome is a reminder that the office of liquidator carries no evidential advantage in adversarial litigation: to unwind a concluded and completed disposition of company property, a liquidator must plead and prove a recognised ground of avoidance on the evidence, and the mere suspicion that a sale was disadvantageous to the company or its creditors is not enough to displace a transaction that has been carried through. The judgment illustrates the evidential burden that a liquidator bears when seeking to set aside completed dispositions of company property, and the consequence where the liquidator, having put the transactions in issue after a full trial, is unable to establish the grounds relied on to impugn them.