Trusts and assignments in liquidation law uphold the rights of beneficiaries even when a company is in liquidation.

[1] The Liquidator by way of Form of Summons dated 10 November 2017 (encl 1) applied for directions pursuant to s 237(3) and/or 487 (3) of the Companies Act 1965 and/or the inherent jurisdiction of the court that:-

(a) the sum of RM1,142,075.27 ("Deposit Sum") that has been deposited into court on 27 July 2017 be released to the Respondent and that the Deposit Sum form part of the assets of the Respondent to be dealt with under liquidation law;

(b) the instruction given by the directors of the Respondent prior to liquidation vide letters dated 7 April 2016 to release the Deposit Sum to Aston Star Sdn Bhd is void pursuant to s 293 of the Companies Act 1965 and/or s 528 of the Companies Act 2016 read together with s 52 and/or 53 of the Bankruptcy Act 1965 ;

(c) parties be at liberty to apply for other directions; and

(d) cost of the application be borne by Aston Star Sdn Bhd.

[2] The Liquidator's grounds for making the application is as follows:

(a) the Deposit Sum is at material times the asset of the Respondent and as such the Liquidator should have custody and/or control of the Deposit Sum upon the liquidation of the Respondent;

(b) the purported arrangement entered into between the directors of the Respondent and Aston Star Sdn Bhd was made only 3 months prior to the presentation of the Winding-Up Petition, and as such the Deposit Sum cannot be released as the transaction is caught as the undue preference rule;

(c) the purported arrangement made by the directors of the Respondent in directing its solicitors Messrs Yap Siew Yee & Co to release the Deposit Sum to Aston Star Sdn Bhd was made to confer Aston Star Sdn Bhd a preference, priority or advantage over other unsecured creditors of the Respondent.

[3] The Intervener applied vide encl 4 to intervene in the proceedings in connection with encl 1 on grounds inter alia that:

(a) the Intervener had clear and direct interest in the subject matter of the Form of Summons, that is, the Deposit Sum;

(b) the Intervener contended, amongst others, that the Deposit Sum is subject to a trust created either expressly or by implication in favour of the Intervener, and as such the Deposit Sum does not form part of the estate of the Respondent to be distributed among the Respondent's creditors.

Order in terms of encl 4 was granted and Aston Star Sdn Bhd was allowed to intervene in the proceedings.

Background Facts

[4] The Intervener was the developer of a commercial and residential project known as Project MK20 comprising:

(i) Block A-1 Block 37th Floor Hotels (275 rooms) and SOHO (628 units); and

(ii) Block B-1 Block 19 Service Apartment (331 units)

with 5 underground floor and 1 basement floor at Lot 1881 and 1882, Jalan Mont Kiara, Kuala Lumpur ("Project MK20").

[5] By way of a Letter of Award dated 8 April 2014 ("Letter of Award"), the Respondent was appointed as a sub-contractor by the Intervener to amongst others, supply, deliver and install Facade Curtain Wall, Glazing and Aluminum Works for Project MK20 ("Sub-contract Works").

[6] In or around January 2016, the Respondent experienced cash flow problems and informed the Intervener that the Respondent's bank accounts for the purpose of Project MK20 would be frozen and its business operations severely affected if the Respondent did not remit the sum of RM5.6 million into the Respondent's Maybank Islamic Berhad account ("Maybank Account") as repayment of an outstanding loan facility.

[7] Having an interest to ensure that Project MK20's progress is not affected, and upon request of the Respondent, the Intervener agreed to advance the sum of RM5.6 million and paid it into the Maybank Account upon terms agreed to by parties as contained in several contemporaneous letters, which will be referred to shortly.

[8] The Intervener asserts that the advance payment of RM5.6 million was made in good faith