The effective date for assessing undue preference under s 528 of the Companies Act 2016 is the date of the contra arrangement, not the execution of related agreements.

JUDGMENT

Choong Yeow Choy JC:

Introduction

[1] The Plaintiff is seeking to protect its interests as a creditor of the Defendant company.

[2] The Defendant, which has been placed in creditors' voluntary liquidation and acting through its liquidator, is seeking to protect the interests of all creditors.

[3] The Plaintiff, through its Originating Summons, is seeking to validate 5 sale and purchase agreements it had entered into with the Defendant as a result of a contra arrangement for a purported debt of over RM11,000,000.00 due and owing to the Plaintiff.

[4] The Defendant opposes the Originating Summons on the sole ground that the sale and purchase agreements were executed within the 6-month "twilight period" of the company being wound up - as provided in s 528 of the Companies Act 2016 - thus rendering the sale and purchase agreements to be deemed as fraudulent and void and as running afoul of the rule against undue preference.

The Vital Issue

[5] The single poser for determination in this Originating Summons concerns the effective date for calculating of the "twilight period" as provided in s 528(1) of the Companies Act 2016, that is, whether the effective or material date of the contra arrangement was within or outside the six-month twilight period.

The Parties And Their Contentions

[6] The Plaintiff, Jaks Sdn Bhd, is a private limited company.

[7] The Defendant, Jaks Island Circle Sdn Bhd, is a property developer. As noted, the Defendant is now in liquidation.

[8] The Plaintiff was appointed by the Defendant to conduct superstructure works for a proposed mixed development project in which the Defendant was the developer.

[9] The Plaintiff's case, in support of its Originating Summons, is premised on the ground that it is a creditor of the Defendant by virtue of the fact that it had carried out the works for the Defendant, claims had been made for outstanding amounts owed to it by the Defendant and a contra arrangement was reached between the parties whereby it was agreed that 5 units of service apartments belonging to the Defendant be used to contra one of the claims made by the Plaintiff against the Defendant. Based on the above background facts, the Plaintiff argued that it was entitled to the reliefs sought in the said Originating Summons.

[10] The prayers sought by the Plaintiff in its Originating Summons are for:

First, leave pursuant to s 451(2) of the Companies Act 2016 to commence this action;

Second, declarations that 5 sale and purchase agreements entered into between the Plaintiff and the Defendant in respect of 5 units of service apartments developed by the Defendant in a project known as Pacific Star @ Section 13 in Petaling Jaya, Selangor are valid and effective;

Third, a consequential order that the Liquidator of the Defendant do all that is necessary including but not limited to executing a Memorandum of Transfer for all 5 parcels of land described as Unit E-22-11, Unit E-22-03, Unit E-22-03A, Unit E-27-01 and Unit E-28- 01 and/or any other documentation required to effect the transfer of ownership of the said parcels of land from the Defendant to the Plaintiff and/or its nominees;

Fourth, that costs to be paid out of the Defendant's Company Liquidation Account; and

Fifth, any further, or other, or ancillary relief or directions for the Plaintiff, as this Court deems fit and proper.

[11] Crucially, it is the Plaintiff's contention that since the Defendant was placed into Creditors' Voluntary Liquidation on 18 April, 2022, six months preceding the Creditor's Voluntary Winding Up would be 18 October, 2021.

[12] It is not disputed that when the Plaintiff and the Defendant entered into a contra arrangement on 15 September, 2021, that was outside the six- month twilight period. However, it is also undisputed that at the time the Sale and Purchase Agreements between the parties were executed, that is, on 14 December, 2021, it was well within the six-month twilight period.

[13] The Plaintiff's submission is that the sale and purchase a