Case Citation : Carimin Engineering Services Sdn Bhd v. Dynamic Navigation Sdn Bhd [2025] CLJU 77
Prepared by : Kel Wong
The Facts
The Plaintiff and Defendant had entered into two vessel charterparty agreements containing arbitration clauses. Following a demand for outstanding charter fee, the Plaintiff paid partially, which it regarded as the undisputed portion, and disputed the balance through its solicitors.
The Defendant subsequently commenced proceedings in the Sessions Court claiming for balance outstanding charter fee under the same agreements.
The Plaintiff then applied under s 10 of the Arbitration Act 2005 for a stay of the civil proceedings pending arbitration.
While the civil proceedings and the stay application remained pending, the Defendant issued a statutory notice of demand under s 466(1) of the Companies Act 2016 for the same debt.
The Plaintiff consequently applied for a Fortuna injunction to restrain the Defendant from presenting a winding-up petition.
Arguments posed to the High Court
The Defendant argued that the Plaintiff’s part-payment amounted to an admission of indebtedness.
The Defendant argued that winding-up proceedings are sui generis, meaning that they are different in nature from ordinary civil proceedings and can therefore proceed independently.
Findings by the High Court
The Court accepted that winding-up proceedings are sui generis and have a distinct purpose. However, this did not mean that a creditor could freely pursue parallel proceedings concerning the same debt without regard to existing court proceedings.
The Court found the timing of the statutory notice significant. Having already chosen to pursue the debt through the Sessions Court, the Defendant subsequently sought to invoke the winding-up process in respect of the same debt, tantamount to a “backdoor attempt to bypass the court process” and an abuse of process.
The Court relied on Supreme Court case Lai Kim Loi v Datuk Lai Fook Kim & Co [1989] 1 CLJ Rep 61, where substantial duplication between a civil action and a winding-up petition was found to amount to multiplicity of proceedings and an abuse of process.
The Court emphasised that although a creditor may have a statutory right to issue a winding-up notice, that right must be exercised bona fide and not for a collateral purpose.
In this case, the Court found that the statutory notice was not simply an exercise of the Defendant’s legitimate rights. Instead, the surrounding circumstances indicated that it was being used to exert pressure on the Plaintiff and to circumvent the pending court and arbitration process.
The High Court allowed the Fortuna Injunction sought by the Plaintiff against the Defendant.
Key takeways:
- Winding-up proceedings cannot be invoked where there is pre-existing civil proceedings concern the same facts and debts.
- Separate civil proceedings and winding-up proceedings concerning the same debts tantamount to multiplicity of proceedings and abuse of court process.
The High Court’s decision was affirmed by the Court of Appeal on 29.10.2025 in Appeal No. W-02(NCC)(A)-2080-11/2024.
