JUDGMENT
Introduction
[1] This appeal relates to the law applicable to the grant of leave for the commencement of proceedings against a liquidator in his personal capacity. Although the law in this area is settled, this judgment is necessary to restate the principles of law in this area of insolvency, in view of the decisions of the Court of Appeal and the High Court, which run contrary to the established position under company and insolvency law.
[2] One Machang Indah Development Sdn Bhd (in liquidation) ("Machang") filed an application in the High Court seeking leave to proceed against the liquidator of another company, one Merger Acceptance Sdn Bhd (in liquidation) ("Merger") in his personal capacity. The basis for the application was that the applicant Machang had allegedly suffered losses by reason of a claimed breach of a joint venture agreement and/or power of attorney entered into between itself and Merger. In short, the proposed claim was for damages against the liquidator personally, by reason of an alleged breach of contract between the two companies in liquidation.
[3] The primary issue therefore was whether the liquidator of Merger, Tee Siew Kai who was the appellant before us ("the liquidator"), was personally liable in damages to Machang for an alleged breach of contract by Merger.
[4] The High Court granted leave for Machang to proceed against the liquidator in his personal capacity. The Court of Appeal upheld the decision of the High Court. Leave was granted by this court in respect of the following sole question of law:
"Whether a party (such as the respondent/Machang in the instant case) who is neither a creditor nor a contributory of a wound-up company (such as Merger in the instant case ("the Wound-Up Company") is entitled to obtain leave to sue the liquidator of the Wound-Up Company, in his personal capacity, for losses allegedly suffered by the said party arising from an alleged breach of the joint venture agreement and/or power of attorney entered into between the said party (Machang) and the Wound-Up Company ("Merger")."