Yew Huoi, How & Associates | Leading Malaysia Law Firm

FRAUD, KNOWING ASSIST, KNOWING DECEIT – DIRECTORS AND SIGNATORIES PERSONALLY LIABLE FOR DEBTS

Q: I own a timber supply company. We were engaged by a manufacturing company (“Company A”) to supply timber since 2011. Starting 2 years ago, Company A had got behind payments of our bills. Thus, we have brought the matter to court. The court ordered Company A to pay us the amount due. One month after the decision of the court in November 2020, Company A went into liquidation. I came to know that Company A did receive payments amounting to millions in October 2020. The company however transferred millions out and allow Company A to be wound up. What can I do?

A: You may file an application to the court to hold the directors or signatories of the bank account personally responsible for knowingly transferring the monies to defraud its creditors under Section 540 of the Companies Act 2016 (“CA 2016”).

Q: What happened if the directors or signatories of the bank account claimed they have no knowledge where the monies go?

A: Although the burden of proving fraudulent intent in s.540 CA 2016 is on the Plaintiff i.e. you and your company, however, you may ask the court to draw adverse inference against the directors and signatories of the bank account of the company. The directors and signatories of the bank account of the company must explain how the monies received before winding up are dealt with. Failure to do so would attract adverse inference to be drawn against them.

Q: What happened if the directors claimed he was under the instruction of other directors to transfer out the monies and has no knowledge to any fraud.

A: Anyone who knowingly be a party to fraud is liable to the fraud. It is sufficient if he turned a “blind-eye” i.e. deliberately shutting his eyes to the obvious and remains liable for fraud.

Q: Can my company and I applied for the directors to personally pay my company the debt due instead of the liquidator as there are other creditors who had filed proof of debt when Company A was wound up?

A: Section 540 of the CA 2016 is wide enough to allow the court to order payment directly to the applicant/creditors who file in the application under s.540 of the CA 2016 OR the liquidator of the company. However, the court is likely to order payment to the liquidator so that the monies can be shared in pari passu with the other general unsecured creditors.

Case in point : Tetuan Sulaiman & Taye v Wong Poh Kun & Anor. KL High Court no. WA-22NCC-364-08/2018

Recent Post

FAMILY LAW – CHILDREN’S CUSTODY – CUSTODY DISPUTES IN MALAYSIA: ESSENTIAL INSIGHTS ON CHILD WELFARE AND PARENTAL ROLES

In a recent custody dispute, the court emphasized the importance of child welfare, reaffirming the maternal custody presumption for young children unless strong evidence suggests otherwise. In high-conflict situations, the court favored sole custody over joint arrangements to minimize stress on the children. This case underscores that Malaysian parents should provide credible evidence for their claims and focus on practical, child-centered solutions.

Read More »

BREACH OF CONTRACT – DAMAGES – FORESEEABILITY AND FAIRNESS IN FREIGHT LIABILITY CLAIMS

In JSD Corporation v Tri-Line Express [2024] 1 Lloyd’s Rep. 285, the court set a clear precedent on damages for property claims, ruling that only foreseeable and proportionate losses are recoverable. Applying principles akin to Hadley v Baxendale, the court allowed for repair costs if intent to remedy was evident but rejected double recovery, underscoring that damages must reflect actual loss without overcompensation. This decision serves as a guide for Malaysian courts, emphasizing fair and balanced recovery in line with foreseeable damages.

Read More »

ADMIRALTY IN REM – SHIPPING — FUEL OR FREIGHT? COURT CLEARS THE AIR ON GLOBAL FALCON BUNKER DISPUTE

In a decisive ruling on the Global Falcon bunker dispute, the court dismissed Meck Petroleum’s admiralty claim for unpaid high-sulphur fuel, finding that the fuel was supplied not for operational purposes but as cargo. With the vessel lacking necessary equipment to use high-sulphur fuel and evidence pointing to its transfer to another vessel, the court determined that Meck’s claim fell outside admiralty jurisdiction, leading to the release of the vessel and potential damages for wrongful arrest.

Read More »

COLLISION COURSE – COURT WEIGHS ANCHOR DRAGGING AND LIABILITY AT SEA

In a collision that underscores the high stakes of maritime vigilance, the court ruled that Belpareil bore the brunt of the blame for failing to control its dragging anchor and delaying critical warnings. Yet, Kiran Australia wasn’t off the hook entirely—apportioned 30% fault for its limited evasive action, the case serves as a stark reminder: in maritime law, all vessels share responsibility in averting disaster, even when one party’s errors loom large.

Read More »

GENERAL AVERAGE – PIRATE RANSOM DISPUTE: SUPREME COURT RULES CARGO OWNERS LIABLE IN THE POLAR CASE

In the landmark case Herculito Maritime Ltd v Gunvor International BV (The Polar) [2024] 1 Lloyd’s Rep. 85, the English Supreme Court upheld the shipowner’s right to recover a USD 7.7 million ransom paid to Somali pirates under general average. The Court ruled that cargo interests, despite their arguments regarding charterparty terms and insurance obligations, were liable to contribute to the ransom payment. This decision reinforces the importance of clear contractual provisions when seeking to limit or exclude liability in maritime contracts particularly matter relating to general average.

Read More »
zh_TWZH
× 联系我们