Chapter 18 - Opposing Winding Up Petition

Question 1

FIGHTING WINDING UP PETITION

Overview

Answer 1

1) Opposing by Fortuna Injunction
2) Opposing at hearing
3) Grounds to oppose at hearing
4) Powers of court at hearing

Question 2

OPPOSING BY FORTUNA INJUNCTION

Overview

Answer 2

1) What & effect of Fortuna Injunction
2) Grounds of Fortuna injunction
3) When will Fortuna injunction be granted
4) Application

Question 3

OPPOSING BY FORTUNA INJUNCTION

What is Fortuna injunction & effect of Fortuna injunction

Answer 3

• A Fortuna Injunction is a specific order by the Court directing that the creditor be restrained from presenting a winding-up petition against the company.
• If successful, the company would be able to prevent the creditor from commencing winding-up proceedings against it

Question 4

OPPOSING BY FORTUNA INJUNCTION

Grounds for Fortuna injunction

Answer 4

Fortuna Holdings Pty Ltd v Deputy Federal Commissioner of Taxation:

• there are two grounds in which a company can be granted a Fortuna Injunction:

1) 1st ground: where the winding-up petition, if presented, has no chance of success or is bound to fail; or
2) 2nd ground: the creditor is intending to present a winding-up petition on a disputed claim, which will produce irreparable damage to the Company, rather than by a suitable alternative procedure.

Question 5

OPPOSING BY FORTUNA INJUNCTION

When will Fortuna injunction be granted

Answer 5

Fortuna Holdings Pty Ltd v Deputy Federal Commissioner of Taxation:

• a Fortuna Injunction will be granted when the Notice is based on a clearly disputed debt.
• This is because the proper alternative in such cases would be for the creditor to commence a civil suit and obtain a judgment before attempting to wind-up the company.
• Therefore, a Notice based on a disputed debt may be seen as an attempt to coerce a company into paying the amount which may be an abuse of process of the Court.

Question 6

OPPOSING BY FORTUNA INJUNCTION

Application - bona fide dispute of the debt

CA, 2007

Answer 6

Mobikom Sdn Bhd v. Inmiss Communications Sdn Bhd:

• a party may be restrained from presenting a winding-up petition if it is found, for example that there is a bona fide dispute about the debt on which the notice of demand issued under [section 466] of the Companies Act is based.

Question 7

OPPOSING BY FORTUNA INJUNCTION

Application - what must be shown by applicant

2007

Answer 7

Tan Kok Tong v. Hoe Hong Trading Co Sdn Bhd:

• when deciding whether to grant an injunction to restrain a petition that is based on a statutory demand for a debt, the court must be satisfied that the debt is bona fide disputed on substantial grounds

Question 8

OPPOSING AT HEARING

Overview

Answer 8

1) General opposing at hearing

2) Grounds to oppose at hearing

Question 9

OPPOSING AT HEARING

General oppossing

Answer 9

• where the company opposes the winding-up petition during the hearing, they must establish that the debt is “bona fide” disputed.
• The company would need to file affidavits in reply and written submissions in opposing a winding-up petition through a hearing.
• The Company would also need to exhibit proper evidence and documents to prove that there is a substantial dispute over the debt which should have been properly litigated first instead of going through the winding-up route.

Question 10

GROUNDS TO OPPOSE AT HEARING

Overview

Answer 10

1) Amount claimed exceeded amount actually due
2) Failure to specify limb at intitulement
3) Bad service
4) Failure to quantify interest
5) Defective affidavit
6) Defective advertisement

Question 11

GROUNDS TO OPPOSE AT HEARING

Amount claimed exceeded amount actually due

Answer 11

Wangsini Sdn Bhd v Grand United Holdings Bhd

cf.

YPJE Consultancy Service Sdn Bhd v Heller Factoring (M) SB

See: STATUTORY NOTICE

Question 12

GROUNDS TO OPPOSE AT HEARING

Failure to specify limb at intitulement

Answer 12

Wong Thai Kuai & Anor v. Kansas Corporation Sdn Bhd

cf.

RHB Bank Bhd v Wembley Industries Holdings Bhd

See: STATUTORY NOTICE

Question 13

GROUNDS TO OPPOSE AT HEARING

Bad service

Answer 13

S.466(1)(a)

r.18 Companies WUR

See: STATUTORY NOTICE

Question 14

GROUNDS TO OPPOSE AT HEARING

Failure to quantify interest

Answer 14

Malaysia Air Charter Co SB v Petronas

cf.

Wangsini Sdn Bhd v Grand United Holdings Bhd

See: STATUTORY NOTICE

Question 15

GROUNDS TO OPPOSE AT HEARING

Defective affidavit

Answer 15

YPJE Consultancy Service Sdn Bhd v Heller Factoring (M) Sdn Bhd;

cf.

Pontian United Theatre Sdn Bhd v Southern Finance Berhad

See: WINDING UP PETITION

Question 16

GROUNDS TO OPPOSE AT HEARING

Defective advertisement

Answer 16

• r.24 CWUR
• Savant-Asia Sdn Bhd v Sunway PMI-Pile Construction Sdn Bhd

See: WINDING UP PETITION

Question 17

POWERS OF COURT AT HEARING

The law

Answer 17

S.469(1) - Court may:

• (a) dismiss the petition with or without costs;
• (b) adjourn the hearing conditionally or unconditionally; or
• (c) make any interim or any other order that the Court thinks fit.