Yew Huoi, How & Associates | Leading Malaysia Law Firm

Menu

COMPANIES LAW- FRAUD AND LIFTING OF CORPORATE VEIL

My company (A Sdn Bhd) have entered into a contract with B Sdn Bhd company to construct a building. The directors of B Sdn Bhd told me that piling works will be paid in full. However, the written contract has missing pages purportedly stating that the piling work will not be paid. I am not aware of the missing pages. We were cheated. The piling works was completed and there was no payment from B Sdn Bhd. Later, I discovered that the directors of B Sdn Bhd has resigned. Can I sue the directors of B Sdn Bhd for cheating?

Yes.

  • When fraud (commonly known as cheating) is perpetrated, the court can pierce the corporate veil to make the fraudster personally liable for cheating. This is also known as fraudulent misrepresentation in law.
  • In this case, the directors can be made personally liable for fraud.

Q: What do I have to prove?

  • The standard of proof for fraud in a civil proceeding is prove on the balance of probability.
  • You have to give evidence that the directors of B Sdn Bhd told to you that the piling works will be paid in full. Alternatively, you can show the missing pages were deliberately omitted and concealed from your knowledge.
  • This misrepresentation has induced or caused you and your company to complete the piling works.

Q: Can I claim for the full amount of losses suffered from the unpaid piling work?

Yes.

  • The Court can allocate liability to the perpetrators of fraud, independently of the doctrine of piercing the corporate veil upon the finding of fraud caused by the directors.
Back to Latest Legal Updates

Recent Post

STRATA TITLES ACT – DEVELOPER MUST ACCOUNT FOR COMMON PROPERTY COMPENSATION: HIGH COURT IMPOSES CONSTRUCTIVE TRUST

In JMB Kelana Square v Perantara Properties Sdn Bhd & Ors [2025] 12 MLJ 51, the High Court held that a developer who received compensation for land compulsorily acquired for the LRT 3 project could not retain sums attributable to common property. Although the compensation was paid entirely to the developer as registered proprietor, the Court found that part of the acquired land constituted common property, and the developer therefore held RM6.05 million on constructive trust for the Joint Management Body. The decision affirms that JMBs have proprietary standing to recover compensation for common property and that courts will intervene to prevent unjust enrichment in strata developments.

Read More »
1 February ,2026 No Comments

UNFAIR DISMISSAL – MEDICAL LEAVE IS NOT MISCONDUCT: HIGH COURT UPHOLDS INDUSTRIAL COURT’S PROTECTION OF SICK EMPLOYEE

In Aerodarat Services Sdn Bhd v Lawerance Raj a/l Arrulsamy & Anor [2025] 11 MLJ 26, the High Court dismissed an employer’s judicial review and affirmed that prolonged medical leave does not, by itself, amount to misconduct justifying dismissal. The Court held that the employer failed to prove the critical element of intention not to return to work or unwillingness to perform contractual duties, despite high absenteeism caused by serious illness and surgery. The ruling reinforces that employers must distinguish between genuine illness and misconduct, and cannot rely on medical absence alone to terminate employment.

Read More »
1 February ,2026 No Comments

WILL AND PROBATE – COURT OF APPEAL INVALIDATES WILL OF 97-YEAR-OLD TESTATOR: CAPACITY, SUSPICION AND UNDUE INFLUENCE PROVED

In Kong Kin Lay & Ors v Kong Kin Siong & Ors [2025] 5 MLJ 891, the Court of Appeal set aside a will executed by a 97-year-old testator, holding that there was real doubt as to testamentary capacity, compounded by serious suspicious circumstances and undue influence by certain beneficiaries. The Court emphasised that while the “golden rule” is not a rule of law, failure to obtain medical confirmation of capacity where doubt exists is a grave omission. Credibility issues with the drafting solicitor, beneficiary involvement in the will’s preparation, and suppression of evidence led the Court to declare the will invalid and order intestacy.

Read More »
1 February ,2026 No Comments

NOT AN ‘AGREEMENT TO AGREE’: ENGLISH COURT OF APPEAL SAVES LONG-TERM SUPPLY CONTRACT DESPITE OPEN PRICE CLAUSE

In KSY Juice Blends UK Ltd v Citrosuco GmbH [2025] 2 Lloyd’s Rep 581, the UK Court of Appeal held that a long-term supply contract was not unenforceable merely because part of the price was stated as “open price to be fixed”. The Court implied a term that, in the absence of agreement, the price would be a reasonable or market price, noting that the product’s value could be objectively benchmarked against the market price of frozen concentrated orange juice. Emphasising that courts should preserve commercial bargains rather than destroy them, the decision confirms that section 8(2) of the Sale of Goods Act 1979 operates as a saving provision, not a bar to enforceability.

Read More »
1 February ,2026 No Comments

DISCOVERY APPLICATION – HIGH COURT ORDERS JPN TO DISCLOSE FAMILY TREE — STATUTORY RIGHT OVERRIDES ADMINISTRATIVE SECRECY

In V Kalanathan a/l Veeran v Ketua Pengarah Jabatan Pendaftaran Negara (JPN) & Ors [2025] 12 MLJ 529, the High Court directed JPN to disclose the family tree details of a deceased co-proprietor to assist in probate proceedings. The Court held that such information, recorded in JPN’s digital registers, constitutes a “document” under Order 24 rule 7A ROC 2012 and is not an official secret in the absence of a valid OSA certification. JPN’s reliance on internal circulars was rejected, as statutory rights under the Births and Deaths Registration Act 1957 cannot be curtailed by administrative policy. The ruling reinforces that discovery against government agencies is permissible where necessary to ensure the fair disposal of proceedings.

Read More »
1 February ,2026 No Comments

PROFESSIONAL NEGLIGENCE – SOLICITOR – PANEL SOLICITORS LIABLE: LITIGATION BRIEF DOES NOT EXCUSE FAILURE TO PROTECT BANK’S SECURITY

In Malayan Banking Bhd v Russell Lua Kok Hiyong & Ors [2025] 12 MLJ 599, the High Court held the bank’s former panel solicitors professionally negligent for failing to safeguard the bank’s proprietary interest in a charged property during litigation. The Court ruled that a solicitor’s duty to protect a client’s interests extends beyond the confines of a ‘litigation-only’ brief, particularly where the risk of loss is obvious and foreseeable. Limitation was held to run only when actual loss crystallised, and all partners were found jointly and severally liable under the Partnership Act 1961. The decision is a clear warning that solicitors must act proactively to protect client interests, even outside their immediate scope of instruction.

Read More »
1 February ,2026 No Comments
en_USEN
zh_TWZH ms_MYMY en_USEN
× Contact Us