KUALA LUMPUR (Oct 26): The former managing director and former chief executive officer of WRP Asia Pacific Sdn Bhd, Datuk Lee Son Hong, has been barred from filing any winding-up petition against the manufacturer and glove exporter company that he previously led, effective from April 12 this year.

This follows High Court judge Atan Mustaffa Yussof Ahmad granting WRP Asia’s application to impose a Fortuna injunction against Lee, to prevent him from issuing a notice of demand against the company for RM10 million.

A Fortuna injunction is a court order that prohibits a creditor from filing a winding-up petition against a company.

In his written judgement released on Thursday, Atan Mustaffa ruled that the debt claimed by Lee is disputed, and the balance of convenience in this case tilts in WRP Asia’s favour.

“The potential damages and losses that WRP Asia may incur as a result of the presentation of a winding-up petition are substantial and, more significantly, irremediable. The mere initiation of a winding-up petition can inflict irreparable harm to a company's reputation and its ongoing business operations.

“In this particular case, the adverse effects on WRP Asia’s business relationships with suppliers, access to banking facilities, and customer confidence are highly probable, given that the winding-up petition is based on an unverified 'alleged debt' that raises suspicions of its authenticity. Thus, the balance of convenience unequivocally tilts in favour of the company,” he said in the judgement.

It is essential, Atan Mustaffa said, that the court intervenes prior to the commencement of the winding-up petition, to preserve the status quo of the parties, as this measure is crucial in maintaining fairness and justice, particularly in light of the genuine disputes raised concerning the “alleged debt”.

The court ruled that the alleged debt of RM10 million sought by Lee, who claimed that he advanced the sum to the company in 2019, was suspicious, owing to lack of internal records pertaining to the alleged debt, and the inability of the company’s auditor in its reports and financial statements for the financial year ended June 30, 2019, to verify its existence or validity.

“Lee merely relied on a 'confirmation of balance' dated June 17, 2019, purportedly issued by him to the company, which was acknowledged by unknown individuals whose identities were not disclosed by Lee or Datuk Seri Tan Shie Khai (Lee’s appointed representative in the company),” said the judge.

Atan Mustaffa in his judgement also noted that Lee had a history and pattern of fraudulent behaviour or conduct against WRP Asia, taking into account the findings of fellow High Court judge Adlin Abdul Majid, in a civil suit filed by the company against Lee and his wife Datin Too Sooi Keng for breaching their fiduciary obligations.

“The company proved that Lee and Too were in breach of their fiduciary duties, had misappropriated funds, and created a fictitious transaction by transferring RM32.6 million from the company to themselves and a company associated with them. Adlin granted the reliefs sought by WRP Asia, including a declaration of breach of fiduciary obligations,” Atan Mustaffa said.

The judge noted that Lee also did not bring up the RM10 million debt issue in the case presided by Adlin, even though the parties have been in extensive litigation since 2019.

“I find Lee’s action and alleged demand are merely an afterthought, given that he had not once raised and/or demanded the alleged debt since he was terminated as a company director in 2019, but only did so after the judgements against his favour were delivered and other trials against him were approaching,” Atan Mustaffa added.

In allowing WRP Asia’s application, Atan Mustaffa noted that Lee has the option to pursue his “alleged debt” claim through a civil action, as the alternative legal procedure offers a more suitable avenue for Lee to seek redress and to address his concerns.

Furthermore, the judge said, the intervention of the court serves to safeguard WRP Asia from any perceived injustice, potential oppression, and the significant damages that could arise from the presentation of the winding-up petition.

“This preventive action is taken to avoid abuse of the court process. In this context, granting a Fortuna injunction is not only legitimate, but also essential to protect the rights and interests of the company,” the judge said, adding that the most reasonable course of action is to grant an injunction to prevent Lee from initiating winding-up proceedings against the plaintiff (WRP Asia)."

WRP Asia was represented by Sean Tan and Seaw Ja Hui from Messrs Thomas Philip, while Lee Lin Jun from Messrs Tee Tai Tzian & Sim appeared for Lee.

It is understood that Lee is appealing against Atan Mustaffa’s decision at the Court of Appeal.

Prior to this, Lee and his wife were charged at the Sessions Court here in 2020, with eight counts of criminal breach of trust involving RM131.85 million and three counts of false claims of RM8.4 million.

The criminal case is ongoing.

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