Where the Court of Appeal in Westech Went Wrong

Where the Court of Appeal in Westech Went Wrong

by | Feb 10, 2021 | Law

The Court of Appeal in Westech Sdn Bhd (in voluntary liquidation) v Thong Weng Lock (as surviving partner of Thong Kee Trading Co) [2014] 3 MLJ 427 [“Westech”] was confronted with the question of whether the leave of Court is required for a party to commence/proceed with any action/proceeding against a company after the commencement of a members voluntary winding up.[1]

The Court of Appeal answered the question in the affirmative and its decision was premised upon the following:

“[34] In our view the language in s 263(2) of the Companies Act 1965 is patently clear that no action or proceeding is to be commenced or proceeded with against a company after the commencement of a winding up is made except with leave of the court. The section makes no distinction between a voluntary winding up by members of the company or winding up by a creditor on the ground of the company’s insolvency.”[2] (underline mine)

Section 263(2) of the Companies Act 1965 (“CA 1965”) provides that:

“Property and proceedings

…

263 (2) After the commencement of the winding up no action or proceeding shall be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes.”

At first glance, the Court of Appeal in Westech appears to have gotten it right. After all, as Abdul Aziz Abd Rahim JCA points out, Section 263(2) of the CA 1965 does not make any distinction between members’ voluntary winding up and creditors’ voluntary winding up.

Even the marginal note[3] for Section 263 merely states “Property and proceedings,” which appears to leave room for the section to be applicable to both members’ voluntary winding up and creditors’ voluntary winding up.

However, the Court of Appeal in Westech went wrong when it failed to take into account the relevant sub-divisions and relevant sub-section of the CA 1965.

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