The court confirmed that directors of a company can be held independently liable for unpaid EPF contributions, even if the company is not a party to the action, as per Section 46 of the EPF Act.

Introduction

[1] The Applicants sought leave to appeal under s 96(a) of the Courts of Judicature Act 1964 ("CJA") against the decision of the Court of Appeal which ruled, that following Ong Kim Chuan & Anor v. Lembaga Kumpulan Wang Simpanan Pekerja 2009 MarsdenLR 2908 ; ; 2009 MarsdenLR 4196 (" Ong Kim Chuan "), "the directors may be sued independent of the company...and that s 46 of the Employees Provident Fund Act 1991 ('EPF Act') does not bar the EPF to name only director in their claim".

[2] The Court of Appeal, in so ruling, had thus affirmed the granting of summary judgment by the High Court under O 14 of the Rules of Court 2012 (" ROC "), upon finding that there are no issues to be tried.

[3] In this application for leave to appeal, the Applicants proposed seven questions of law ("QOL") revolving around the meaning and application of s 46 of the EPF Act relating to:

(i) the naming of a company who is an employer (and/or in the case of a company in liquidation, by involving the company and the liquidator) as a party to the suit together with its registered directors (QOL 1, 2 & 6);

(ii) the liability of the directors when the company is not made a party and its liability not being established in the first place, and in the case of a company in liquidation, the liability of the directors to pay when the statutory debt becomes a preferential debt claimable against the company and/or its appointed liquidator (QOL 3, 5 & 6);

(iii) the question of whether Ong Kim Chuan is good law (QOL 4); and

(iv) the correct interpretational approach (QOL 7).

[4] Having perused the cause papers in support of and in opposition to the leave application, and having read the judgment of the High Court and the broad grounds of the Court of Appeal, and having heard the submissions by both learned counsel, we are of the considered view that the Applicants have failed to fulfil the threshold requirement under s 96(a) of the CJA, for reasons that will be stated below.

Background Facts And The Antecedent Proceedings

[5] The Employees Provident Fund Board ("Respondent") filed the writ in December 2022 against the Applicants, who were registered directors of Serba Dinamik Group Berhad ("the Company") for the failure to pay the outstanding Employees Provident Fund ("EPF") contributions liable to be paid for the period commencing September 2021 until July 2022 ("period of default"), together with dividend and late payment charges. The Company was however not named or made a party in this suit.

[6] The total sum claimed was RM2,951,000.00 against the 1st to 3rd Applicants; and RM330,776.00 against the 4th Applicant which sum was calculated based on the liability period. In this case, the Respondent had filed for a summary judgment under O 14 of the Rules of Court 2012 (" ROC ").

[7] It was brought to our attention, that prior to the filing of the Respondent's claim, there was a petition jointly filed earlier, in April 2022, by HSBC Amanah Malaysia Berhad, AmBank Islamic Berhad, Bank Islam Malaysia Berhad, MIDF Amanah Investment Bank Berhad, Standard Chartered Saadiq Berhad, and United Overseas Bank (Malaysia) Bhd ("the Banks"), for the winding up of the Company on the ground of its inability to pay its debt under s 465(1) (e) of the Companies Act 2016 (" CA 2016"). In the interim, the Banks filed a