DALAM MAHKAMAH RAYUAN, MALAYSIA (APPEAL JURISDICTION)
RAYUAN SIVILNO. N-02-2069-2011
SIME DARBY HOLDINGS BHD …. PERAYU
SHAHUL HAMID BIN MOIDEEN …. RESPONDEN
(In The Civil Appeal No: S2-22-244-2007 at Seremban
High Court of Malaya)
SHAHUL HAMID BIN MOIDEEN ….PLAINTIF
SIME DARBY HOLDINGS BHD ….DEFENDAN
BEFORE THE HONOURABLE
LIM YEE LAN, HMR DAVID WONG DAK WAH, HMR ROHANA BINTI YUSUF, HMR
DAVID WONG DAK WAH JCA
1. This is an appeal against the learned Judge’s decision in allowing the Respondent’s claimof damages to be assessed, being his alleged entitlement in a Share Option Scheme despite
his retirement from his employment and the refusal of the ESOS committee to allow him to participate in the scheme.
2. We heard the appeal on 20.3.2013 and after due consideration of respective submissions and perusal of the record of appeal, we allowed the appeal. The Respondent has since obtained leave to appeal to the Federal Court and to facilitate that appeal we now give our grounds.
3. The Respondent was in the employment of Golden Hope Plantations Berhad (“Golden Hope”)from 1.11.1991 until his retirement as its Deputy General Manager on 10.11.2006.
4. Golden Hope for the benefit and welfare of its employees had a Share Option Schemes (ESOS) where its employees were given the option to subscribe for shares in it.
5. Golden Hope offered the Respondent to participate in an ESOS dated 26.6. 2006 (ESOS 3), whereby the Respondent as Deputy General Manager,was granted an option to subscribe150,000 shares over a period of five (5) years which commenced on 8.12.2005 and ended on 7.12.2010.
6. The first of the five year period was between 8.12.2005 and 7.12.2006. The Respondent within the first period exercised his option and was allotted 30,000 shares, being the maximum
allocation of 20% of the 150,000 shares allowed in By-Law 8.2(b) of ESOS-3.
7. On 24.1.2007, the 2nd Defendant in the High Court suit (which was struck out prior to trial) entered into an agreement with Golden Hope to acquire the entire business and undertaking, including all assets and liabilitiesof Golden Hope. This resulted in a merger between the 2nd Defendant and Golden Hope.
8. On 6.6.2011, the Appellant by an order of the Court substituted Golden Hope as the Defendant at the High Court.
9. The Respondent by a letter dated 30.4.2007 wrote to Golden Hope’s Option Committee (Option Committee) to request them to permit him to exercise the remaining options granted to him under the ESOS-3 in full, i.e. the remaining 120,000 shares for Year 2 to Year 5.
10. The Respondent’s request was rejected through an Option Committee Circular Resolution dated 5.4.2007 premised on By-Law 15.2.
11. Not satisfied with the decision of the Option Committee, the Respondent by a letter dated 8.5.2007 wrote to both the BOD and Option Committee to appeal against the decision of rejection of the Option Committee.
12. The Option Committee on 11.6.2007 wrote to the Respondent that his appeal to the BOD had been rejected as that appeal
was made out of time. Further he was informed that he had already exercised his first year entitlement in full and in view of his retirement, he was no longer eligible to participate in the ESOS.
13. It was this refusal that caused the Respondent to take this suit in which the learned High Court Judge found in favour of the Respondent and ordered that damages be assessed. This appeal stems from that decision.
Our grounds of decision:
14. From our reading of the submission of the learned counsel for the Appellant, his main complaint was that the learned Judge though found that the Respondent was bound by the relevant By- Laws ignored the meanings of the same.
15. The By-Laws referred to by learned counsel are 8.2(b) and 15.2 which respectively reads as follows;
“Save as provided otherwise in these By-Laws, the maximum number of Option Shares which a Grantee can subscribe for in a particular year shall be limited to twenty percent (20%) of their respective Maximum Allowable Allocation.”
“In the event of the…cessation of employment of a Grantee…for whatever reasons prior to the full
exercise of an Option, such Option or the balance thereof, as the case may be, shall forthwith cease to be valid without any claim against the Company.
…the Grantee may, subject to the written approval of the Option Committee in its discretion, exercise his unexercised or partially exercised Options which he is entitled to up to that year subject to By-Law 8.2(b), within one (1) year from the date of his cessation, unless otherwise prescribed by the Option Committee, subject to such terms and conditions as may be determined or imposed by the Option Committee and subject to the written approval of the Option Committee in its discretion.”
16. Giving the words contained in the two above By-Laws their plain and natural meanings as required by law, we find that the Respondent by virtue of his retirement and having exercised his full entitlement of the first year of the five year scheme has no further right to participate in ESOS 3. His right may only be exercised with the consent of the Option Committee whose discretion is unfettered. It is also undisputed that the Respondent had retired prior to the commencement of the 2nd year of the five year ESOS.
17. Another complaint of the Appellant was that the learned Judge had stepped into the shoes of the BOD when he held that the Respondent had suffered a ‘loss of opportunity’ when he was refused to participate in the ESOS 3 and that he may have
succeeded in his appeal to the BOD.
It is conceded by the Appellant that the Respondent had appealed to the BOD within the 14 days period and the failure by the BOD to consider his appeal had prejudiced him as the BOD may have allowed his appeal. Learned counsel for the Appellant had referred us to several cases on claims of losing an opportunity to pursue claim. Suffice for us to refer to the case of Mount v Baker Austin (a firm)  PNLR 493 (CA) where Simon Brown LJ states as follows:
“The legal burden lies on the plaintiff to prove that in losing the opportunity to pursue his claim…, he has lost something of value ie. that his claim…had a real and substantial rather than merely a negligible prospect of success.”
The learned Judge with respect did not consider this principle of law correctly and if he had done so we are of the considered view that his decision would have been different. The burden is not a mere possibility of success as was found by the learned Judge.
We now consider the question of whether the Respondent had a real and substantial chance of success in his appeal. To recap, we have pointed out earlier in our judgment that the Respondent under the relevant By-Laws had ceased to have any more right to participate in the ESOS 3 by virtue of his retirement within the first year period of 8.12.2005 and 7.12.2006.
21. Further any application to participate as was done by the Respondent is subject to the absolute discretion of the Option Committee. It is trite law that such discretion cannot be challenged, more so when it is of a private nature as opposed to a statutory discretion which is of a public nature. Hence even if the BOD hears the appeal of the Respondent, they must consider and be bound by the plain words of the ByLaws. For the BOD to differ with the decision of the Option Committee, the Respondent must show to the Court that there are strong grounds to do so. Unfortunately except for bare allegation of discrimination, the Respondent had failed to discharge this burden of proving that he had a real and substantial chance of success in his appeal to the BOD.
22. For reasons stated above, we allowed the appeal with costs of RM10,000.00to the Appellant, ordered that the deposit to be refunded to the Appellant and set aside the judgment of the High Court.
Dated : 3 September 2013 (DAVID WONG DAK WAH)
Court of Appeal Malaysia
For the Appellant : G.L. Ambrose with Jaclyn Chong and Adriana Leu MessrsChooi& Company Advocates & Solicitors Level 23, Menara Dion 27 Jalan Sultan Ismail Kuala Lumpur
For the Respondent : Datuk Jagjit Singh – Counsel, Akberdin bin Hj. AbdKadir with him Siti Natasha MessrsAkberdin& Co Advocates & Solicitors No AAG/6, Block D, Tingkat Bawah JalanPlumbum AA7/AA PusatKomersialSeksyen 7 Shah Alam, Selangor.
Notice: This copy of the Court’s Reasons for Judgment is subject to formal revision.