Malaysia Case Law: Decisions & Judgments

Topic

Directors’ personal liability

Legal area

Court

22 Aug 2024

PK JUITA SDN BHD 1. ) AF CENTRIC SOLUTIONS SDN. BHD. 2. ) ALBERT CHIA KET SHIN 3. ) Jiang, Zhou

Citation

JA-A52NCC-19-01/2024 (Mahkamah Sesyen)
Court

Sessions Court
Case number

JA-A52NCC-19-01/2024 (Mahkamah Sesyen)

The court found the plaintiff's pleadings did not disclose a reasonable cause of action against Defendant 2, contained no particularised allegations of fraud or other equitable wrongdoing necessary to lift the corporate veil, and were speculative; accordingly the claim against Defendant 2 was "obviously unsustainable" and a misuse of court process, justifying dismissal under Order 18 r19(a),(b) and (d); costs of RM2,000 were awarded to Defendant 2.
30 Jul 2024

YISHUN CONSTRUCTION SDN BHD 1. ) TAN SHEW KONG 2. ) CHONG SEE HEONG 3. ) CHUAH CHONG NGEE

Citation

JA-22NCvC-13-02/2024 (Mahkamah Tinggi)
Court

High Court
Case number

JA-22NCvC-13-02/2024 (Mahkamah Tinggi)

The court found the plaintiff's fraud allegations were bare, lacked necessary particulars and were on their face unsustainable; the October 2020 dividend distribution occurred before any judgment and therefore was not a fraudulent device to defeat a later judgment; accordingly the Statement of Claim against the directors was struck out under Order 18 r.19 with costs. The plaintiff's Order 14A application was dismissed because it failed to establish fraud or facts sufficient to pierce the corporate veil and impose personal liability under s.540(1).
12 Dec 2023

HANDSKAR (M) SDN BHD 1. ) QUBE MEDICAL PRODUCTS SDN BHD 2. ) TEO SIONG YAM

Citation

WA-22NCC-44-02/2023 (Mahkamah Tinggi)
Court

High Court
Case number

WA-22NCC-44-02/2023 (Mahkamah Tinggi)

The claim against the 2nd Defendant was struck out because the plaintiff did not plead any facts that the director acted outside his duties or authority, or breached any personal fiduciary or other legal duties; therefore the Said v Butt immunity applied and the tort claim against the director was plainly unsustainable.
25 Oct 2023

Hamdan Bin Mohamed 1. ) PXCG Capital Sdn Bhd 2. ) Abdul Qayyum Bin Sahimi 3. ) Aminuddin Bin Haji Ahmad Zain

Citation

WA-22NCC-266-06/2020 (Mahkamah Tinggi)
Court

High Court
Case number

WA-22NCC-266-06/2020 (Mahkamah Tinggi)

The 3rd Defendant signed Directors' Guarantees and Indemnities which by their clear terms made him jointly and severally liable and a principal debtor/indemnifier; his admissions, part payments, communications and the conduct of the company amounted to ratification under s.65 Companies Act 2016 and estopped him from denying receipt or liability; therefore plaintiff entitled to recover RM2,507,000 under the Consent Judgment.
13 Oct 2022

SIXTY FIVE DEGREE SDN BHD 1. ) TAN KAM MENG 2. ) TAN HON PENG 3. ) TAN SUNG LING

Citation

WA-22NCC-158-04/2021 (Mahkamah Tinggi)
Court

High Court
Case number

WA-22NCC-158-04/2021 (Mahkamah Tinggi)

On the balance of probabilities the Company carried on business with intent to defraud creditors and the defendants, as directors, were knowingly parties to that carrying on; therefore under s.540(1) CA 2016 the court may and did declare the defendants personally liable for the Company's liabilities and awarded judgment against them jointly and severally.
4 Oct 2022

LAI FEE AND ANOTHER WONG YU VEE AND OTHERS

Citation

02(f)-35-04/2022(B) (Mahkamah Persekutuan)
Court

f
Case number

02(f)-35-04/2022(B) (Mahkamah Persekutuan)

On the uncontroverted facts the defendants incorporated and used dormant companies and a third party vehicle, procured immediate transfer of the asset to themselves while leaving contractual liability with an undercapitalised company, and therefore carried on business with intent to defraud within s540 CA2016; the lower courts failed to appreciate the totality of evidence; the defendants are barred by res judicata from relitigating misrepresentation already rejected in Suit 128; the principle that law does not expect people to arrange affairs on basis others may commit fraud is consistent wit…
4 Oct 2022

02(f)-35-04/2022(B) (Mahkamah Persekutuan)

Citation

02(f)-35-04/2022(B) (Mahkamah Persekutuan)
Court

f
Case number

02(f)-35-04/2022(B) (Mahkamah Persekutuan)

On the uncontroverted facts the defendants incorporated and used dormant companies (Centennial and Westhill), procured immediate transfer of vendor asset to themselves while leaving contractual payment obligations with a company that had no funds, and thereby created corporate layers to insulate themselves; those circumstances established dishonesty by ordinary standards and subjective knowledge such that s540 CA 2016 applied and directors are personally liable; the defendants are estopped by res judicata from re‑raising the misrepresentation defence previously rejected; the principle that la…
10 Aug 2022

ZAIDAH BINTI MOHD ZANUDDEN Kerajaan Malaysia

Citation

WA-11ANCvC-29-02/2022 (Mahkamah Tinggi)
Court

High Court
Case number

WA-11ANCvC-29-02/2022 (Mahkamah Tinggi)

The presumption of service by registered post under section 12 of the Interpretation Acts and section 120 of the GST Act was rebutted by cogent evidence of unsuccessful delivery; therefore service was not perfected, the affidavit of service and default judgment were irregular, and the default judgment must be set aside to allow the defendant her right to be heard.
5 Jul 2022

Tetuan Sulaiman & Taye 1. ) Wong Poh Kun 2. ) Wong Poh Lum

Citation

W-02(NCC)(W)-980-08/2020 (Mahkamah Rayuan)
Court

NCC
Case number

W-02(NCC)(W)-980-08/2020 (Mahkamah Rayuan)

The Court of Appeal upheld the High Court's factual finding that the directors (Wong Poh Kun and Wong Poh Lum) were knowingly parties to dissipating company funds and carried on the company's business with intent to defraud creditors, satisfying s.304(1) CA 1965/s.540(1) CA 2016; however the High Court erred in ordering payment of the plaintiff's claimed legal fees into the liquidator's pool (thereby treating the plaintiff as a contributory creditor); the proper order is for the delinquent directors to pay the plaintiff directly RM5,907,500 plus interest jointly and severally, and the part of…
5 Jul 2022

Wong Poh Lum Tetuan Sulaiman & Taye

Citation

W-02(NCC)(W)-982-08/2020 (Mahkamah Rayuan)
Court

NCC
Case number

W-02(NCC)(W)-982-08/2020 (Mahkamah Rayuan)

Directors who were mandatory signatories and could not explain the dissipation of substantial company funds were knowingly parties to carrying on business with intent to defraud creditors; a creditor may recover directly from such directors under s.304 CA 1965 / s.540 CA 2016; ordering payment to the liquidator in this plaintiff-initiated action was erroneous and the plaintiff was entitled to direct payment of RM5,907,500 (plus interest); High Court erred in adjudicating IRD debt as IRD was not a party.