JUDGMENT

Elaine Yap Chin Gaik JC:

Introduction

[1] Plaintiff is a contractor in the construction industry and a creditor of MYG Construction Sdn Bhd (in liquidation) ("MYG"). The Plaintiff seeks to recover a debt of RM1,815,924.20 ("Alleged Debt") owed to it by MYG, from the director of MYG personally, MYG's alleged preferred creditors and his alleged co-conspirators. The pleaded causes of action are fraudulent trading under s 540 of the Companies Act 2016 ("CA") and conspiracy.

Background Facts

[2] In 2021, MYG appointed the plaintiff as a subcontractor for two (2) construction projects, namely upgrading works along the Cheras-Kajang Expressway ("CKE Project") and the construction of a bridge from Youcity to the Grand Saga Highway ("Youcity Project"). The Alleged Debt is said to comprise unpaid progress claims (certified and uncertified) under these projects.

[3] On 17 August 2022, the plaintiff filed Companies (Winding Up) Petition No.: BA-28NCC-460-08/2022 after MYG failed to pay the Alleged Debt ("Winding Up Petition"). It was heavily opposed by MYG. It unsuccessfully applied for a Fortuna injunction to stay the Winding Up Petition pending an application to strike it out at the Winding-up Court . Both applications failed.

[4] On 16 February 2023, MYG was wound up ("Winding Up Order") and a private liquidator, Wong Cham Mew, was appointed. Upon taking office, the liquidator discovered the disposal of 23 vehicles and construction machines belonging to MYG to the 3rd Defendant ("Disposal of Vehicles"), and fund transfers out of MYG ("Transfer of Funds") effected within six (6) months of presentation of the Winding Up Petition.

[5] There is a pending action filed by the liquidator of MYG against the 3rd Defendant in Shah Alam High Court Suit No.: BA-22NCC-83-05/2025 in relation to the Disposal of Vehicles.

Analysis And Findings

[6] There is no doubt that the plaintiff is a creditor of MYG. MYG was wound up on the plaintiff's petition in a contested winding up proceeding. However, neither the liquidator nor any Court has previously adjudicated on the quantum of the Alleged Debt. As there is no adjudicated Proof of Debt in the winding up, this is dealt with at the end of this judgment on remedies.

[7] The first order of business is to establish the defendants' liability to pay the Alleged Debt at all. In this context, the pleaded acts of wrongdoing against the Defendants are essentially the Disposal of Vehicles and the Transfer of Funds. The question in this action is whether these transactions amount to fraudulent trading within the meaning of s 540 of the CA and/or a conspiracy to defraud by the defendants.

Fraudulent Trading

[8] > Section 540(1) of the CA provides as follows:

"If in the course of the winding up of a company or in any proceedings against a company it appears that any business of the company has been carried on with intent to defraud the creditors of the company or creditors of any other person or for any fraudulent purpose, the Court on the application of the liquidator or any creditor or contributory of the company, may, if the Court thinks proper so to do, declare that any person who was knowingly a party to the carrying on of the business in that manner shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the Court directs. "

[9] Recently, in Tay Keong Kok & Ors v. Eastmont Sdn Bhd & ANOTHER APPEAL; [2024] 5 MLJ 683; [2025] 1 CLJ 583 ("Tay Keong Kok"), the Court of Appeal confirmed the position made clear in Chin Chee Keong v. Toling Corporation (M) Sdn Bhd; [2016] 3 MLJ 479; [2016] 6 CLJ 666 ("Chin Chee Keong") that a s 540 CA fraudulent trading action may be taken against the alleged wrongdoers as a separate in personam claim like the present.

[10] The applicable principles when invoking s 540 of the CA have been set out by the Federal Court in Lai Fee & Anor v. Wong Yu Vee & Ors; [2023] 3 MLJ 503; [2023] 4 CLJ 1 ("Lai Fee"