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provision use the phrase „if it appears‟ signifies a lower degree of proof, and
hence a civil standard balance of probabilities is sufficient. 276 The court‟s
decision suggests that judges are aware of the criticism that the application of the
criminal standard deters cases from being brought to the court. 277 Hence, the uses
of the standard of proof depend on the standard of liability sought by the
applicant; the balance of probability for civil cases, and beyond reasonable doubt
in criminal cases. Nevertheless, in all cases brought before the court in Malaysia,
it was found that the evidence of fraud was apparent, and that it could be proven
by using either standard.
Section 304(1) can be used when the company is in „the course of winding up or
in any proceedings against the company.‟ In Tang Eng Iron Works Co Ltd v Ting
Ling Kiew & Anor, 278 the court concluded that an application under section
304(1) is also applicable prior to winding up. In this case, the plaintiff decided to
commence an action under section 304(1) when facts unearthed during an
examination of the defendant indicated that there was intention to defraud
creditors. This differs slightly from the UK fraudulent trading laws because
section 213 does not have the phrase „in any proceedings against the company.‟
Therefore in the UK, the section can only be employed when the company is in
the process of being wound up.
Despite the word „creditors‟ in section 304(1), liability under section 304(1) does
not depend on the numbers of creditors or transactions involved. The court can
still find liability even if only one creditor was defrauded by one transaction as
long as the transaction could be described as a fraudulent one committed in the
course of carrying on of the business. 279 An example can be seen from the case of
276 The same civil standard was applied in Kawin Industrial Sdn Bhd (in liquidation) v Tay Tiong
Soong [2009] 1 MLJ 723 and in LMW Electronics Pte Ltd v Ang Chuang Juay & Ors [2010] 1
MLJ 185.
277 The case of Siow Yoon Keong v H Rosen Engineering BV [2003] 4 MLJ 569, 579 was the first
case under section 304(1).
278 [1990] 2 MLJ 440.
279 LMW Electronics Pte Ltd v Ang Chuang Juay & Ors [2010] 1 MLJ 185 at 200-201.
296