Can you set aside a winding up order obtained in default?

The bold Federal Court decision that decided whether you can set aside a winding up order obtained in the absence of the Respondent company. Oh wait, they didn’t do that.

What happens when you are insolvent | Source personalinjurybureau.co.uk

What happens when you are insolvent | Source personalinjurybureau.co.uk

I recently conducted a case where after several years my clients finally obtained leave to appeal to the Federal Court on the question of law of: Whether a winding up order can be set aside when obtained in the absence of the Respondent company? The appeal was dismissed on 13 October 2010. The judgment is here. It is worth a read not for the law but to see the novel and scintillating way in which the Federal Court decided this matter.

The Federal Court did not answer the question of law for the following reason:

“Counsel for the Appellant has put in a lot of effort in preparing his written submission which according to him covered argument for and against him. We do not doubt this. However we do not consider it proper for us to decide on the question of law posed to us in an appeal such as this when only one party was represented. One of he reasons for granting leave to appeal pursuant to section 96 of the Courts of Judicature Act 1964 is that it involves a question of importance and the decision of the Federal Court would be to public advantage. The decision would be a precedent to be followed in future cases. In this case however we consider it rather dangerous to answer the question without having heard both parties, bearing in mind that our system is the adversarial system. On the other hand we are obligated to hear this appeal since leave has been granted.”

Thereafter they proceeded to decide the case as you can see in the judgment.

This judgment fails to point this out: whilst it is true there was nobody for the Respondent – their solicitors had discharged themselves and the Respondent did not bother to turn up, there was another party to the proceeding – the Insolvency Department of Malaysia, or the Official Receiver. They should have turned up and given their view on such an important and practical point of law.

However, on 1 October 2010, they wrote to the Federal Court for leave to not attend the hearing. On 4 October 2010, the Federal Court allows their application not to turn up for the hearing.

This decision raises at least 3 questions:

  • Will the Federal Court as a matter of course decline to answer a question of law when the other side does not turn up through no fault of the Appellant?
  • Can the Federal Court decide a case on an ‘assumed test’ ‘for the purpose of this appeal only’?
  • Is the Insolvency Department of Malaysia bothered about any significant development in insolvency law?

Fahri Azzat was the counsel for the Appellant from the High Court level up until the Federal Court and hopes somebody else can get that question of law answered properly because he strongly feels that the decision of Vijayalakshmi Devi d/o Nadchatiram v Jegadevan s/o Nadchatiram & Ors [1995] 1 MLJ 830 should not apply where a winding up order was obtained in default, and be confined to the facts of that particular case.


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Fahri Azzat practices the dark arts of the law. Although he enjoys writing and reading, he doesn't enjoy writing his own little biographies of himself. Like this one. He wished somebody else would do it for him. He has little taste in writing about himself in third person. He feels weird doing it. But the part he finds most tedious is having to pad up the lack of his accomplishments, or share some interesting facts about his rather uneventful life, as if there were some who found that oh-so-interesting; as if he were some famous person, like Michael Jackson. When he writes these biographies, the thought, 'Wei, Jangan Perasaan- ah!' lights up in his head. So he usually just lists what he got involved with, positions he held and blah, blah. But this time. Right here. Right this very moment. Uhuh. This one. This one right here. He's finally telling it like it is.

Posted on 25 February 2011. You can follow any responses to this entry through the RSS 2.0.

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6 Responses to Can you set aside a winding up order obtained in default?

  1. very nice post, thanks for sharing. I really enjoyed reading.

  2. Jimmy K

    Seems like a very vague judgment. Im not sure whether the FC dismissed the appeal because there was no merit or whether because the respondent was not present. If it was the latter, FC appears to have set a bizarre precedent saying that the absence of a respondent can be ground to dismiss an appellant's appeal. Surely more appeals would be dismissed on the basis of this decision. The FC claims that they decided the case on the merits but they only discussed the facts in 1 paragraph.

  3. Chen Mian Kuang

    On the basis of that decision, the most cost-effective way for a respondent to win a Federal Court civil appeal is to just not turn up!

    Apart from failing to consider the injustice to the appellant, the FC also did not take into account the far-reaching implications of its refusal to decide on the merits.

  4. zizong

    salam Fahri

    very interesting article – what about bankruptcy judgement in default and setting aside of such where the notice also sent to wrong address

  5. Dear Maniam,

    Thank you for response. You ask pertinent questions. I too wonder the same thing as you. It looks as if neither the Insolvency Department or the Court were at all interested in the issues. But that should come as little surprise to any practitioner.

  6. maniam

    that was so convenient for the ever missing DGInsolvency and the Federal Court. i wonder on what basis the DGI was given leave to be absent.

    there is now a new insolvency act being pushed thro its draft stages where a new DG is going to be all powerful- almost like a phoenix being resurrected.

    Yes, i am an insolvency practitioner.

    I follow your posts regularly and am impressed you continue in this m'sian 'wilderness'.Keep it up.