Announcement

Zul Rafique & Partners successfully obtained a Fortuna Injunction in the High Court to restrain Defendants from acting upon a Statutory Notice issued under the Companies Act 2016 for a claim exceeding MYR6 Million

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20 September 2021

Please click HERE for the Mandarin version of the case update.

Idza Hajar Ahmad Idzam, Bailey Leong Pui Yee, Lee Sheen Yee and Yap Jia Cheng from Zul Rafique & Partners’ Litigation Practice Group representing PRPC Utilities and Facilities Sdn Bhd (“Plaintiff”) successfully obtained a Fortuna Injunction in the High Court of Kuala Lumpur to restrain the PBJV Group Sdn Bhd and Macfeam Sdn Bhd (“Defendants”) from acting upon a Statutory Notice issued under the Companies Act 2016 for a claim exceeding RM6 million (“Statutory Notice”).

Brief Facts
The Defendants were appointed as contractors to perform procurement, construction and commissioning of certain works by the Plaintiff. Disputes then arose between the parties where the Defendants commenced court proceedings (“Court Proceedings”) against the Plaintiff. The Court Proceedings was later stayed pending reference to arbitration.

The Defendants thereafter issued the Statutory Notice to claim for a purported amount exceeding RM6 million on inter-alia grounds that it is an undisputed debt. In addition to the Statutory Notice, the Defendants also issued a Payment Claim pursuant to Section 5 of the Construction Industry Payment and Adjudication Act 2012 (“Payment Claim”). The Defendants’ claim in the Court Proceedings and Payment Claim was inclusive of the alleged undisputed debt contained in the Statutory Notice.  

Arguments Raised
The Plaintiff submitted amongst others that:-
a. The Defendants have chosen to pursue the disputed debt by way of a procedure which might produce irreparable damage to the Plaintiff rather than by a suitable alternative procedure i.e. being arbitration which was the agreed dispute resolution mechanism between the parties;
b. The Defendants themselves have opted to also pursue the same by way of the Court Proceedings and Payment Claim rendering the argument of an undisputed debt untenable;
c. The Defendant failed to establish a debt at the outset and there is a genuine cross-claim exceeding the ‘debt’ claimed; and
d. As such, there is clearly bona fide dispute on the sum claimed in the Statutory Notice.

The Defendants on the other hand submitted that the cause in a winding up proceeding is insolvency and hence not arbitrable. Further, the Defendants also submitted that there is no bona fide dispute raised and the justice of the case rests with the Defendants as the aggrieved party where monetary compensation is adequate remedy.
 
Findings of the Court
The Court in allowing the Plaintiff’s application for Fortuna Injunction with costs held as follows:-
  • The Court finds that there is a genuine dispute on the debt claimed in the Statutory Notice;
  • The Defendants had in addition to issuing a Statutory Notice, also referred the same dispute through other mechanisms, i.e. adjudication by way of the Payment Claim and Court Proceedings;
  • The Court Proceedings was stayed pending arbitration;
  • The ‘debt’ claimed in the Statutory Notice forms part of the dispute to be resolved by way of arbitration;
  • As parties had already agreed to a dispute resolution mechanism, i.e. arbitration, there should not be concurrent proceedings on the same subject matter in the civil courts. The Court was not in agreement that it is not arbitrable;
  • Winding up proceedings being a draconian measure ought not to be used as means of exerting pressure in cases of a genuine dispute; and
  • If the Fortuna Injunction application were to be dismissed, the Plaintiff may likely suffer irreparable damage.
For more insight into this area of law, please contact our Partners in the Litigation Practice Group:
P Jayasingam
Wong Keat Ching
Thavaselvi Pararajasingam
Idza Hajar Ahmad Idzam
Farah Shuhadah Razali
Bailey Leong Pui Yee

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