VSSK (As joint liquidator of London Biscuits Bhd) (In liquidation)) v WWF & Co & Anor and other appeals [2025] MLJU 3886

Federal Court (Putrajaya)

Companies — Winding up — Joint liquidators — Powers of non-conflicted joint liquidator

1. London Biscuits Berhad (“LBB”) was ordered to be wound up by the High Court on 13 January 2020, and LSP was appointed as liquidator. During the liquidation, LSP continued the business of LBB, retained employees, and subsequently paid termination benefits and indemnity in lieu of notice to those employees, prioritising such payments over unsecured creditors, including WWF, an admitted unsecured creditor.
2. LSP later applied for his release and discharge and for VSSK to be appointed as his successor. WWF opposed the application and separately sought declaratory relief alleging breach of duty by LSP, his removal, and the appointment of an alternative.
3. Following directions by the High Court, a creditors’ meeting was held on 24 February 2022, at which an overwhelming majority of creditors voted for VSSK as the sole liquidator. The High Court discharged LSP, appointed VSSK and dismissed WWF’s application.
4. On appeal, the Court of Appeal held that termination benefits and indemnity in lieu of notice were not entitled to priority under section 527 of the Companies Act 2016 (“CA 2016”), set aside LSP’s release, and ordered the appointment of GT as joint liquidator alongside VSSK.
5. Subsequently, VSSK attempted to act unilaterally in pursuing leave to appeal and related applications. The Court of Appeal ruled that joint liquidators must act collectively and dismissed his application, leading to the present appeals before the Federal Court.

1. Whether, pursuant to section 478(2) of the CA 2016, a non-conflicted joint liquidator may act without reference to or concurrence of a conflicted joint liquidator?

(1)  Whether, pursuant to section 478(2) of the CA 2016, a non-conflicted joint liquidator may act without reference to or concurrence of a conflicted joint liquidator?

(a) The Federal Court answered this issue in the affirmative.

(b) The Federal Court began by examining the statutory framework governing joint liquidators. Section 478(2) of the CA 2016 expressly provides that where two or more liquidators are appointed by the Court, their functions and powers may be exercised by any one of them, unless the court expressly provides otherwise. The Court emphasised that the provision operates according to its plain wording and that any departure from it requires an express direction by the appointing Court. On the facts, the Court of Appeal’s order appointing an additional joint liquidator did not contain any express ruling or restriction requiring joint or collective action. In the absence of such direction, the statutory position under section 478(2) remained operative (paras 12–13, 20, 29).

(c)  The Federal Court then considered the relevance of conflict of interest. It noted that the subject matter of the applications pursued by VSSK directly concerned the Court of Appeal’s order appointing GT as joint liquidator. In those circumstances, GT was personally conflicted in participating in decisions relating to that subject matter. The Court applied the principle that a decision-maker must not act in his own cause, observing that a conflicted liquidator ought not to participate in decisions where his personal interest is engaged. This reinforced, rather than displaced, the operation of section 478(2), as it would be legally inappropriate to require concurrence from a conflicted joint liquidator (paras 23, 26, 29).

(d) The Federal Court further observed that the courts below had erred in treating the mere fact of a joint appointment as sufficient to override section 478(2). The appointment of a joint liquidator, without more, does not imply a requirement of collective action, nor does it suspend the statutory power of a single liquidator to act independently. Such a limitation must be expressly stated or necessarily implied, neither of which was present in the Court of Appeal’s order (paras 20, 29).

(e)  Accordingly, the Federal Court concluded that VSSK, as the non-conflicted joint liquidator, was entitled to exercise the powers of the liquidator without reference to or concurrence of the conflicted joint liquidator, and the question of law was answered in the affirmative (para 30).

1. The Federal Court allowed the appeal, set aside the decision of the Court of Appeal, and restored the order of the High Court. The Bills of Demand issued by the Director General of Customs were held to be lawful. No order as to costs was made.

1. Tax exemption provisions are construed strictly, and the burden lies on the taxpayer to prove entitlement.
2. Under Act 806, Item 1, Schedule C of P.U.(A) 210 applies only to the manufacture of finished taxable goods.
3. Courts must interpret exemption provisions within the broader statutory and fiscal framework, not in isolation.