Company Law : Fraudulent trading - Creditor's claim - Director appealed against decision that he had run business with intention to defraud employees - Whether an employee who made a claim of statutory emoluments and contribution was entitled to make a claim as a creditor for purpose of s 304(1) Companies Act 1965 - Whether creditor in said section included contingent or prospective creditor - Whether necessary to establish a scheme to defraud to trigger invocation of s 304 of Act - Companies Act 1965, s 217(1)(b)

Statutory Interpretation : Definitions - Meaning of "creditor" in s 304 Companies Act 1965 - Whether creditor in said section included contingent or prospective creditor

This was an appeal against the decision of the Court of Appeal which had dismissed the appellant's appeal against the decision of the High Court which had held that the business of a public listed company, CNLT, in which the appellant was the Executive Managing Director, was carried on by the appellant with the intention to defraud the creditors of CNLT including the 1st to 83rd respondents ('the employees') pursuant to s 304 of the Companies Act 1965 ('the Act'). In this appeal, leave was granted to decide the following question of law: whether an employee who made a claim of statutory emoluments and contribution was entitled to make a claim as a creditor for the purpose of s 304(1) of the Act.

Held (dismissing the appeal with costs):

(1) In the instant case, the trial judge had rightly held that CNLT held the monies deducted from the employees' salary on trust for onward transmission to the relevant bodies. Therefore, when CNLT failed to remit the monies to the relevant bodies, CNLT became a trustee on the basis of constructive trust or quistclose trust of the monies with the employees as the beneficiaries. As such, the employees were also entitled to claim the monies back from CNLT as they were part of the employees' salary and belonged to the employees. Consequently, the employees were necessarily the creditors of CNLT and thus, were entitled to bring an action under s 304 of the Act. (para 72)