ENERGY EQUIPMENT TECH SDN BHD v ARUS JAYA OIL & GAS SDN BHD

Case Significance

Illustrates the stringent requirements for a Fortuna injunction to restrain a winding-up petition, and the weight given to contemporaneous admissions of a debt — such as undisputed invoices and an auditor's confirmation — in defeating a claim that the debt is bona fide disputed.

This decision of the High Court's Commercial Division in Kuala Lumpur concerns an application for a Fortuna injunction to restrain a creditor from presenting or proceeding with a winding-up petition. The plaintiff, a construction company engaged on an offshore oil-and-gas project, had engaged the defendant as a subcontractor to provide marine services under a time charter agreement. The defendant served a statutory notice of demand under sections 465(1)(e) and 466(1)(a) of the Companies Act 2016 for a substantial sum, and the plaintiff sought a Fortuna injunction to head off a winding up, contending that the debt was bona fide disputed on substantial grounds and, in the alternative, that it was solvent. A Fortuna injunction may be granted where the presentation of a winding-up petition would be an abuse of process — in particular where the debt is genuinely disputed on substantial grounds, or where a petition could not succeed and would only damage the company. The court found neither limb made out. On construction of the parties' documents, including a Letter of Assurance relied on by the plaintiff, it held that the assurance did not relieve the plaintiff of its primary contractual obligations to the defendant and that, in any event, a condition precedent in that document — the issue of a Notice of Assignment — had not been fulfilled. It noted that the invoices had not been disputed at the time, and that an auditor's confirmation amounted to a contemporaneous admission of the debt, so that the plaintiff's later allegations bore the character of an afterthought inconsistent with the contemporary documents. Concluding that the plaintiff had wholly failed to establish a bona fide dispute on substantial grounds, that the intended petition was not bound to fail, and that solvency had not been shown, the court dismissed the application. The judgment illustrates the stringent requirements for a Fortuna injunction and the weight given to contemporaneous admissions of a debt.