Introduction
 
In Lim Aik @ Lim Yeok v Goh Siew Koon @ Eng Sing Kuan & 5 Ors and 2 Other Appeals [2026] 5 AMR 828¹, the Court of Appeal dismissed two appeals brought by Lim Aik, a former liquidator of Sin Hai Estate Sdn Bhd (In Liquidation) (“Sin Hai”), who sought retrospective ratification of fees, GST, and out-of-pocket expenses in excess of RM12 million paid out of the company's assets, and allowed in part a related appeal brought by two of the company's contributories. This decision confirms that a liquidator who wholesale delegates his statutory duties to a third-party, without the prior sanction of the winding up court and the contributories as a whole, cannot later obtain ratification of remuneration attributable to that delegated work, however competently or beneficially the work may have been carried out.
 
This decision further confirms that equitable doctrines such as restitution, unjust enrichment and quantum meruit cannot be invoked to circumvent an express statutory prohibition and that even for periods in which the liquidator acted lawfully, a claim for fees will not be allowed unless it is properly supported by evidence and strictly justified. Ratification ex post facto is not a matter of right and the court will act as a vigilant gatekeeper of the company's assets.
 
Relevant Facts
 
Sin Hai, an asset-rich company, was wound up with Lim Aik appointed as its liquidator on 27 September 2011. On 7 September 2012, approximately a year into his appointment, Lim Aik appointed PricewaterhouseCoopers Advisory Services Sdn Bhd (“PWC”) to assist him in all aspects of the liquidation of Sin Hai and thereafter paid PWC from Sin Hai's assets.
 
On 25 September 2012, Lim Aik filed Enclosure 114 to validate the appointment of PWC, validate the payments made to it and appoint a one Lim San Peen of PWC as joint liquidator. In response, two contributories of Sin Hai filed Enclosure 120 to remove Lim Aik as liquidator. The applications under both enclosures were dismissed by the High Court. Lim Aik did not appeal against the dismissal of Enclosure 114, but the contributories appealed against the dismissal of Enclosure 120. On appeal, the Court of Appeal allowed the contributories’ appeal and removed Lim Aik as liquidator on 14 December 2015.² Leave to appeal to the Federal Court was not granted, so the removal became final.
 
Following Lim Aik’s removal, the contributories filed Enclosure 334 on 14 January 2016 to recover the fees and expenses paid out of Sin Hai's assets to Lim Aik and PWC. In response, Lim Aik filed Enclosure 349 on 28 March 2016, seeking retrospective court approval and ratification for payments totalling RM9,176,586.02 already paid out of the assets of Sin Hai.
 
The High Court's Decisions
 
The High Court delivered two decisions. In the first (4 July 2022) it ratified only RM85,775, following clarification of the date Lim Aik commenced work. In the second (12 August 2022), the Court ratified RM1,179,172.31 for the period from 21 February 2012 (when he furnished the security deposit required by section 228(a) of the Companies Act 1965 (“CA 1965”)) to 7 September 2012 (when he delegated the liquidation to PWC), disallowed the balance, and ordered Lim Aik to refund the unratified portion of approximately RM10.8 million to Sin Hai.
 
The High Court held that Lim Aik’s application by Enclosure 349 to ratify payments to PWC totalling RM9,176,586.02 was defeated by res judicata, since Enclosure 114 which sought substantially the same relief, had been dismissed and not appealed. On the merits, the High Court was of the view that where a liquidator is unable to perform the liquidation work entrusted to him personally, the proper course is for the liquidator to seek leave to vacate his position rather than delegate the entire work or engage in wholesale outsourcing. The High Court found that there was misconduct on the part of Lim Aik as he had abdicated his personal responsibilities by giving PWC carte blanche powers to essentially carry out the liquidation work.
 
Regarding Lim Aik’s remuneration, the High Court took the view that since the payments made to PWC breached the CA 1965 as there was wholesale delegation of the liquidation work by Lim Aik to PWC without prior sanction by the court, the remuneration paid out to them was unlawful – save for the period when Lim Aik could be shown to be discharging his responsibilities as Sin Hai's liquidator prior to the unlawful abdication of his duties. The High Court accordingly declined to order retrospective ratification of the impugned remuneration on the basis of restitution, quantum meruit and unjust enrichment.
 
Three appeals were file to the Court of Appeal, two by Lim Aik and one by the contributories.
 
The Court of Appeal's Decision
 
The Court of Appeal, comprising Wong Kian Kheong, Lim Hock Leng and Latifah Mohd Tahar JJCA, heard the three appeals together.
 
On res judicata, the Court of Appeal agreed with the High Court that the dismissal of Enclosure 114, which was not appealed, barred the re-litigation through Enclosure 349 of substantially the same issue, namely the validation of PWC's appointment and the payments made to it. The Court held that Lim Aik's failure to appeal against the dismissal of Enclosure 114 meant he had, by conduct, accepted the correctness of that decision and was bound by issue estoppel.
 
The Court of Appeal next considered whether Lim Aik’s conduct amounted to misconduct. It agreed with the High Court that it did. The Court examined the earlier findings concerning Lim Aik, including the unauthorised appointment of Lim San Peen of PWC as joint liquidator and the absence of validation for payments made to PWC and to a law firm. Most importantly, the earlier Court of Appeal had found that Lim Aik had wholly delegated his work to PWC.
 
The Court of Appeal held that section 236(2)(i) of the CA 1965 could only reasonably be understood as permitting the delegation of specific tasks which a liquidator could not personally perform for legitimate reasons. It did not permit wholesale delegation of the liquidation itself. The position of a liquidator is personal because the liquidator is an officer of the court and owes responsibilities directly to the court, creditors and contributories. By handing over the liquidation to PWC, Lim Aik had effectively abdicated the responsibilities for which he had personally been appointed. The Court of Appeal therefore found that Lim Aik’s conduct constituted misconduct.
 
The Court of Appeal then considered Lim Aik’s argument that he should nevertheless be compensated because the liquidation had benefited Sin Hai. Lim Aik relied on unjust enrichment, restitution and quantum meruit. He argued that the company had been enriched by the realisation and distribution of its assets and that refusing him any remuneration would result in a windfall for the company and its contributories.
 
The Court of Appeal rejected this argument. It agreed with the High Court that while the liquidation work itself was not unlawful, the wholesale delegation of that work and the unsanctioned appointment of PWC were unlawful. The Court therefore regarded the reliance on equitable principles as an attempt to circumvent the consequences of the statutory breach. The Court referred to the principle that equity cannot operate to defeat clear provisions of law (Silver Corridor Sdn Bhd v Gallant Acres Sdn Bhd [2016] 5 MLJ 1 (FC)), and concluded that allowing restitution in the circumstances would undermine the statutory prohibition against liquidators abdicating their personal responsibilities.
 
On the period before the unlawful delegation, the Court of Appeal agreed that Lim Aik's misconduct from 7 September 2012 onwards did not automatically disentitle him to fees for the earlier period, since there was a clear demarcation between when he was lawfully discharging his duties and when he abdicated them to PWC. However, the Court found that the High Court ought not to have ratified the sum of RM1,179,172.31 for that earlier period without more rigorous scrutiny. The Court of Appeal noted two things. First, that the Court of Appeal in the appeal involving Enclosure 120 had observed that the evidence produced by Lim Aik in the High Court to support his claim for fees was “woefully inadequate”. Further, the evidence suggested that there had been inflationary or excessive billing. The latter, said the Court, stood in the way of Lim Aik discharging his burden of proving that the remuneration sought is fair and reasonable. Accordingly, the Court set aside the High Court's order ratifying RM1,179,172.31 and remitted Lim Aik's claim for that period to the High Court to be taxed.
 
On the refund order, the Court of Appeal upheld the High Court's order requiring Lim Aik to refund the unratified sum of RM10,897,427.65 to Sin Hai, and relied on its general supervisory power over the conduct of liquidators under section 277(2) of the CA 1965 to reject Lim Aik’s argument that no such order could be made in the absence of a formal application for a refund.
 
Key Takeaways
 
Although this decision does not break new legal ground, it is nevertheless an appropriate reminder that the office of a liquidator is personal and non-delegable. Save for the well-settled doctrine of res judicata, three points deserve emphasis from this decision.
 
First, whilst section 236(2)(i) of the CA 1965 (now substantially reproduced as sub-paragraph (j) of Part I of the Twelfth Schedule of the Companies Act 2016 (“CA 2016”)) allows an agent to be engaged to do any business which the liquidator is unable to do, it is however not a licence for the liquidator to outsource the liquidation in its entirety. If the liquidator is genuinely unable to perform his duties or functions, the proper course is to seek leave to vacate office rather than outsource the liquidation in its entirety.
 
Second, equitable claims for restitution, unjust enrichment or quantum meruit cannot repair a breach of the statutory scheme. The company's receipt of a substantial benefit from the delegated work is irrelevant to the liquidator's entitlement.
 
Third, a liquidator bears the onus to show that his remuneration is fair and reasonable. Generalised templates, inflated hours and arbitrary percentage deductions will be viewed with caution. Most significantly, the Court affirmed that under section 277(2) of the CA 1965 (now substantially reproduced as section 510 of the CA 2016), judges act as "vigilant gatekeepers" and possess the broad authority to inquire into a liquidator's conduct and order the refund of unratified fees to the company's assets without the need for a separate formal motion. This is a practical lesson for liquidators to seek prior sanction for any engagement or remuneration that is significant and to keep proper records that will withstand taxation.
 
 
Case Note by Claudia Cheah (Partner) and Calvin Tee (Senior Associate) of the Restructuring and Insolvency Practice of Skrine.
 
 

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