COA allows admission of RM525m property sale evidence in Crest winding-up termination appeal

• A three-member bench, led by COA judge Datuk Supang Lian, said it was unanimous in its decision to allow the application, while also giving the nod to parties to file a supplemental record of appeal containing measures subsequent to the High Court’s decision dated Oct 9, 2023.

PUTRAJAYA (Nov 25): The Court of Appeal (COA) here on Monday allowed the liquidator of Crest Worldwide Resources Sdn Bhd to adduce fresh evidence in SKN Land & Development Sdn Bhd’s (SKN L&D) appeal against the High Court’s decision to dismiss an application to terminate Crest’s winding-up.

The fresh evidence, which includes a letter and emails from the Inland Revenue Board (IRB), pertains to the tax collector imposing a RM186.8 million income tax and penalty against Crest in July this year relating to unpaid taxes on Crest’s alleged RM525.2 million sale of units of its residential development project The Crest Towers in Jalan Sultan Ismail to cash trust UBB Amanah Bhd in 2015.

Crest, a special purpose vehicle for the development of The Crest Towers, is 70%-owned by SKN L&D, while Ideal Towerwin Sdn Bhd owns the other 30%. Ideal Towerwin is wholly-owned by Datuk Seri Dr Shamir Kumar Nandy, while SKN L&D is effectively 51.3% owned by Shamir.

A three-member bench, led by COA judge Datuk Supang Lian, said it was unanimous in its decision to allow the application, while also giving the nod to parties to file a supplemental record of appeal containing measures subsequent to the High Court’s decision dated Oct 9, 2023.

The court set case management on Dec 2 to fix the next hearing date.

Mong Chung Seng, counsel for Crest’s liquidator, argued under Section 69(2) of the Courts of Judicature Act 1964 further evidence may be admitted if the “matter” occurred after the date of decision, saying the letter concerns a matter that occurred after the High Court decision was delivered in October last year.

The letter from the IRB concerns the taxman’s post-investigation findings issued in July this year, which found underreported income and back taxes against Crest for the 2015 assessment year.

The IRB probe identified Crest’s sale of 261 units of The Crest Towers to UBB Amanah for RM525.2 million in 2015, with Crest only filing tax returns for the 2007 and 2008 assessment years. It also withdrew stock-in-trade.

The new evidence also included a proof of debt form completed by an officer of the IRB declaring Crest is indebted to the government for RM218.37 million in unpaid income tax and penalty.

SKN L&D counsel Datuk Lim Chee Wee argued the “matter” referred to in Section 69(2) — referring to the alleged sale of The Crest Tower units to UBB Amanah — occurred in 2015, not after the High Court’s decision in October 2023.

He also said that Crest’s liquidator should have engaged with the IRB earlier to confirm the property sold to UBB, and that it failed to demonstrate how the new evidence would assist in determining the appeal.

Lim added that in the event the liquidator’s fresh evidence is allowed to be adduced, SKN L&D should also be allowed to add its own fresh evidence to the appeal as well.

Besides SKN L&D as the appellant and Crest’s liquidator as the respondent, the appeal also involves 49 interveners, including Mudajaya Corp Bhd, contractor for The Crest Towers project, Tenaga Nasional Bhd (KL:TENAGA), CIMB Bank Bhd and RHB Bank Bhd (KL:RHBBANK).

Mudajaya has a separate ongoing suit against Crest for an order of specific performance for the company to deliver vacant possession of various parcels of The Crest Towers.

High Court’s decision for Crest to remain wound up

SKN L&D applied to terminate the winding-up of Crest on the grounds that the company is now able to satisfy all its debts.

It argued to have pledged a loan sum of RM40 million with UBB Amanah for Crest’s benefit, which it argued to be sufficient to satisfy the RM35.68 million in pledged approved debt.

However, the High Court on Oct 9 last year dismissed the application on the grounds that Crest’s directors failed to comply with provisions of the Companies Act 2016, failed to satisfy Section 493(2) of the Companies Act — satisfaction of debt — and agreed with Mudajaya’s submission that a pledge to discharge falls short of actual satisfaction of all debts.

According to the grounds of judgement, the liquidator submitted that Crest’s total estimated liabilities stood at RM172.8 million — based on proof of debts amounting to RM159.87 million, and RM4.33 million claimed by the Joint Management Body of Crest, and RM8.6 million being the liquidator’s estimated remuneration and legal expenses incurred since her appointment in June 2020.

Crest was wound up back in September 2019 with an official receiver appointed as the provisional liquidator on a winding-up petition filed by Shamir in November 2018. The grounds of Shamir’s petition were that Crest was unable to pay its RM1.72 million debt as of August 2018.

Mudajaya later in June 2020 filed an application to appoint Chan Siew Mei of KPMG Malaysia as Crest’s liquidator, which was allowed by the court.

SKN L&D filed an application to terminate Crest’s winding-up in October 2022, which was followed by various intervention motions.

The High Court dismissed the application to terminate the winding-up in October 2023. SKN L&D filed to appeal the decision the following month.

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