City Properties Sdn Bhd & Anor v Jalex Sdn Bhd

Appellant(s): City Properties Sdn Bhd

Respondent(s): Jalex Sdn Bhd

• YA Datuk Wong Kian Kheong
• YA Dato Alwi Bin Abdul Wahab
• YA Dato' Ong Chee Kwan

• The respondent, a construction contractor, was engaged by KL Landmark Development Sdn Bhd (KLL) for refurbishment works at Avenue K under two contracts.
• KLL was a wholly-owned subsidiary of the first appellant (CPSB), and its directors were the second and third appellants (Yap and Ashak).
• KLL incurred substantial debts to the respondent, and subsequently, a winding-up order was made against KLL.
• The respondent initiated proceedings under section 540(1) of the Companies Act 2016 (CA 2016) against the appellants, alleging fraudulent trading.

• Whether a corporate entity can be held liable under section 540(1) of the CA 2016 for fraudulent trading.
• Whether dishonest intent could be inferred from the circumstances, particularly the continuation of business and incurring of liabilities despite cost overruns and exhaustion of loan facilities.
• How the rules of attribution apply to impute knowledge and dishonesty to a corporate entity for the purposes of section 540(1) CA 2016.

• The Court of Appeal held that a corporate entity can be considered a "person" under section 540(1) CA 2016, overturning the decision in *Zamzam Arabic Food Holding Sdn Bhd v. Johanjana Corporation Sdn Bhd*.
• The Court found that the appellants, including CPSB, Yap, and Ashak, were knowingly parties to the carrying on of KLL's business with intent to defraud creditors.
• Both appeals were dismissed, upholding the High Court's finding that the elements of section 540(1) CA 2016 were established against the appellants.