Allan Lee Mason(Australian Passport No.: E4082824)2. Palm Power Biomass Supply Sdn Bhd(Company No.: 10432196) … PlaintiffsAnd1. Jeremy Keith Smeeton(United Kingdom Passport No.: 510883194)2. Carl Peter Tremayne Butler(United Kingdom Passport No.: 761262183)3. Gaa Palm Power Solutions Sdn Bhd(Company No.: 1059492-A)4. Global Asset Allocation Ltd5. Gaa Investment Funds Spc Ltd …Defendants

  

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IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR (COMMERCIAL DIVISION)

 

SUIT NO: 22NCC-355-09/2014

 

BETWEEN

 

1. ALLAN LEE MASON

 

(Australian Passport No.: E4082824)

 

2. PALM POWER BIOMASS SUPPLY SDN BHD

 

(Company No.: 10432196)

 

AND

 

1. JEREMY KEITH SMEETON

 

(United Kingdom Passport No.: 510883194)

 

2. CARL PETER TREMAYNE BUTLER (United Kingdom Passport No.: 761262183)

 

3. GAA PALM POWER SOLUTIONS SDN BHD (Company No.: 1059492-A)

 

4. GLOBAL ASSET ALLOCATION LTD

 

5. GAA INVESTMENT FUNDS SPC LTD

 

JUDGMENT

 

(After trial)

 

… PLAINTIFFS

 

…DEFENDANTS

 

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A. Introduction

 

1. This case illustrates the risk, if not the folly, of entering into a business arrangement without a clear and comprehensive written agreement.

 

2. The parties in this matter are as follows:

 

(1) the first plaintiff (1st Plaintiff) is an Australian citizen with a residential address in Kuala Lumpur;

 

(2) the second plaintiff company (2nd Plaintiff) is a company incorporated in Malaysia on 19.4.2013. The 1st Plaintiff is a director and the majority shareholder of the 2nd Plaintiff. This judgment will refer to the 1st and 2nd Plaintiffs collectively as “Plaintiffs”;

 

(3) the first and second defendants (1st and 2nd Defendants) are British citizens;

 

(4) the third defendant company (3rd Defendant) is a Malaysian company incorporated on 28.8.2013. The 1st and 2nd Defendants are directors and shareholders of the 3rd Defendant. The 1st Plaintiff is a director of the 3rd Defendant;

 

(5) the fourth defendant company (4th Defendant) is incorporated in Bermuda; and

 

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(6) the fifth defendant company (5th Defendant) is a company incorporated in the Cayman Islands. The 1st to 5th Defendants will be collectively referred in this judgment as the “Defendants”.

 

B. Issues

 

3. The following issues arise in this case:

 

(1) whether the 1st Plaintiff had the authority from the 2nd Plaintiff to –

 

(a) file this suit; and

 

(b) testify in this case

 

– on behalf of the 2nd Plaintiff;

 

(2) whether there was a joint venture agreement concluded between the Plaintiffs and the 1st to 4th Defendants on or around 13.8.2013 (Alleged Agreement);

 

(3) if the Alleged Agreement had been concluded, was the 3rd Defendant bound by a pre-incorporation contract under s 35(1) of the Companies Act 1965 [CA (1965)];

 

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(4) whether the 1st, 2nd and/or 3rd Defendants had been negligent and/or reckless in making representations and/or warranties to the Plaintiffs (Alleged Representations) which had caused loss and damage to the Plaintiffs;

 

(5) whether the 1st to 3rd Defendants had conspired to cause loss to the Plaintiffs by unlawful means;

 

(6) whether the Plaintiffs could claim damages for the use by the 1st to 3rd Defendants of the Plaintiffs’ alleged confidential information (Alleged Confidential Information);

 

(7) whether the 1st Plaintiff could claim salaries and/or benefit from the 3rd Defendant on the ground that the 1st Plaintiff had been appointed as –

 

(a) an employee of the 3rd Defendant with the post of Chief Operating Officer (COO); and

 

(b) a director of the 3rd Defendant;

 

(8) whether the 1st to 3rd Defendants could counterclaim for the 3rd Defendant’s loss of net revenue based on the 1st Plaintiff’s projection figures;

 

(9) whether the 1st Plaintiff had breached his statutory, fiduciary and Common Law duties to the 3rd Defendant which had caused loss to the 3rd Defendant; and

 

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(10) whether the 1st to 3rd Defendants could claim “getting up” costs on an “hourly rate” basis.

 

C. Legal proceedings

 

4. In the Plaintiffs’ Amended Statement of Claim (ASOC), the Plaintiffs prayed for, among others, the following relief (Plaintiffs’ Claim):

 

(1) an order that the Defendants, jointly and severally, issue or cause to be issued to the Plaintiffs, 30% of the entire shareholding in the 3rd Defendant;

 

(2) an order that the 1st Plaintiff be reinstated as the 3rd Defendant’s director and COO;

 

(3) a sum of RM65,571.39 is due and owing from the 3rd Defendant as the 1st Plaintiff’s salary or consultancy fee from November 2013 to the middle of February 2014;

 

(4) a sum of RM1,017,857.14 is due and owing from the 3rd Defendant as the 1st Plaintiff’s salary or consultancy fee from the middle of February 2014 to October 2015;

 

(5) a sum of RM9,000.00 is due and owing from the 3rd Defendant as the 1st Plaintiff’s director’s stipend from September 2013 to May 2014;

 

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(6) an order that the Defendants, their directors, employees and agents forthwith cease and desist from using the equity, goodwill and intellectual property of the 2nd Plaintiff in any form or manner in the business of any of the Defendants; and

 

(7) as an alternative to the above prayers –

 

(a) an order for the Defendants to account for 30% of the funds received or pledged from third party investors by the 3rd to 5th Defendants (Alleged Investments) and an order for the Defendants to pay 30% of the Alleged Investments to the Plaintiffs;

 

(b) a sum of RM685,418.91 is due and owing from the Defendants to the 2nd Plaintiff as expenses and disbursements incurred by the 2nd Plaintiff for the development of the joint venture and business model which had been utilized and exploited by the Defendants;

 

(c) a sum of RM350,000.00 is due and owing from the Defendants to the 1st Plaintiff for the time and effort of the 1st Plaintiff in the development of the joint venture and business model which had been utilized and exploited by the Defendants; and

 

(d) an order for damages to be assessed.

 

5. The Defendants’ counterclaimed for, among others, an astronomical sum of RM97,075,000.00 (Defendants’ Counterclaim).

 

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6. The Plaintiffs’ Claim and the Defendants’ Counterclaim had been ordered

 

on 1.6.2015 to be tried together.

 

7. Before the commencement of the trial of this case, the Defendants had applied to strike out the 5th Defendant as a party in this matter. On 13.2.2015, this court had allowed such an application. The Plaintiffs did not appeal to the Court of Appeal against this decision.

 

C(1). Plaintiffs’ case

 

8. The 1st Plaintiff testified as follows in his witness statement, among others:

 

(1) the 1st Plaintiff gave evidence on behalf of the 2nd Plaintiff;

 

(2) as early as 2012, before the 1st Plaintiff “founded’ the 2nd Plaintiff, the 1st Plaintiff had undertaken and explored the viability of oil palm trunks (OPT) as a biomass raw material to produce “green” and sustainable fuel in the form of fibre and pellets through a company “co-founded’ by the 1st Plaintiff, namely Green Giant Energy Sdn. Bhd. (GGE);

 

(3) after the 1st Plaintiff left GGE, the 1st Plaintiff set up the 2nd Plaintiff to undertake commercial trials (Commercial Trials) to test the operational and financial feasibility of biomass fuel as a business model (Business Model) which involved, among others –

 

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(a) the collection and processing of unwanted OPT across Malaysia caused by the replanting of oil palm plantations;

 

(b) the production of biomass fuel by converting OPT into biomass fibre and pellets (OPT Pellets); and

 

(c) the OPT Pellets would be used to fuel power stations as a cleaner and “green” alternative to fossil fuel;

 

(4) the Commercial Trials had proven successful and financially viable in April 2013. At about this time, Mr. Patrick Francis Brett (SP2) invested as a shareholder of the 2nd Plaintiff;

 

(5) as the Business Model had great potential, both SP2 and the 1st Plaintiff were open for the 2nd Plaintiff to “join forces” with other investors. In April 2013, SP2 introduced the 1st Plaintiff to the 1st Defendant;

 

(6) at all material times, the 1st Plaintiff alleged that the 1st Defendant had liaised with the 1st Plaintiff in the following dual capacity (Dual Capacity) –

 

(a) the 1st Defendant’s personal capacity; and

 

(b) the 1st Defendant had acted as a representative of the 4th Defendant and the 4th Defendant group of companies (4th

 

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Defendant’s Group). The 3rd and 5th Defendants are companies within the 4th Defendant’s Group;

 

(7) in the initial meeting in April 2013 (Meeting in April 2013), the 1st Defendant in the Dual Capacity, had informed the 1st Plaintiff, among others –

 

(a) the 4th Defendant was an independent fund management company and was the “leading company” in the 4th Defendant’s Group which had provided investment services to the 4th Defendant’s “affiliated companies”;

 

(b) the 4th Defendant’s affiliated companies prepared, issued and made their funds available to investors via an international network of independent financial investors; and

 

(c) the 1st Defendant was interested in the Business Model and was eager to explore opportunities to invest/venture into the biomass market together with the 2nd Plaintiff and/or the 1st Plaintiff, either privately as an individual and/or through the 4th Defendant or the 4th Defendant’s affiliated companies;

 

(8) after the Meeting in April 2013, the 1st Plaintiff prepared a business proposal premised on the Business Model and matters which had been discussed at the Meeting in April 2013 (1st Plaintiff’s Business Proposal). The 1st Plaintiff’s Business Proposal was forwarded to the 1st Defendant by way of the 1st Plaintiff’s email dated 22.5.2013 (1st Plaintiff’s Email dated 22.5.2013) and concerned, among others, an integration or joining

 

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of forces between the 2nd Plaintiff and 4th Defendant in a joint venture company (JV Company). The 3rd Defendant was set up to be the JV Company as envisaged in the 1st Plaintiff’s Business Proposal;

 

(9) the 1st Plaintiff’s Business Proposal was “well accepted” by the 1st Defendant and/or the 4th Defendant. On or around 29.5.2013, the 1st Defendant further proposed that a joint venture be undertaken between the 2nd Plaintiff and the 4th Defendant with an investment fund to be created by the 4th Defendant with terms to be negotiated between the parties. The 1st Defendant had requested from the 1st Plaintiff for further information on the technical and financial side of the proposed business to demonstrate that such a business was workable. The 1st Plaintiff then forwarded to the 1st Defendant the Alleged Confidential Information which the 1st Plaintiff had gathered through the 2nd Plaintiff from the Commercial Trials. The Alleged Confidential Information had been given to the 1st Defendant in the following emails –

 

(a) the 1st Plaintiff’s 2 emails dated 27.5.2013 to the 1st Defendant;

 

(b) 1st Plaintiff’s 2 emails to the 1st Defendant dated 2.6.2013 and 8.6.2013; and

 

(c) 1st Plaintiff’s email dated 4.7.2013 to the 1st Defendant.

 

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The 1st Plaintiff alleged that the Alleged Confidential Information was confidential and had been generated and owned by the Plaintiffs;

 

(10) after several discussions between –

 

(a) the 1st Plaintiff acting in his individual capacity and on behalf of the 2nd Plaintiff; and

 

(b) the 1st Defendant, acting in his individual capacity and on behalf of the 2nd, 4th and 5th Defendants

 

– the Alleged Agreement had been reached on or around 13.8.2013;

 

(11) the Alleged Agreement provided, among others –

 

(a) the Plaintiffs and SP2 would collectively have 30% shareholding in the JV Company;

 

(b) the 1st Defendant and/or 4th Defendant would collectively have 20% shareholding in the JV Company;

 

(c) the investors would be accorded with 50% of the shares in the JV Company (Fund Shareholders) through a fund to be

 

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set up. The fund which was subsequently set up for the JV Company was the “Series 2 Fund’ (Series 2 Fund);

 

(d) the 1st Defendant would “as quickly as possible” prepare a shareholders’ agreement which would clearly define the roles and responsibilities of each of the “non-fund shareholders”;

 

(e) the shareholding of the Plaintiffs and SP2 in the JV Company, would remain at 30% and any shareholding in the JV Company granted or pledged to the investors in the Series 2 Fund, would not affect the shareholding of the Plaintiffs and SP2 in the JV Company;

 

(f) the 1st Plaintiff would be accorded 1 seat in the Board of Directors (BOD) of the JV Company with an entitlement to a monthly stipend;

 

(g) all shareholders of the JV Company would be entitled to an equal distribution of dividends based on their respective equity in the JV Company; and

 

(h) the 1st Plaintiff would be granted a minimum of 2 years of employment with the JV Company to provide the necessary expertise to the JV Company;

 

(12) in support of the Alleged Agreement, the 1st Plaintiff relied on the following emails –

 

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(a) the 1st Plaintiff’s email dated 11.8.2013 to the 1st Defendant (1st Plaintiff Email dated 11.8.2013);

 

(b) the 1st Defendant’s emails to the 1st Plaintiff dated 12.8.2013 and 13.8.2013 (1st Defendant’s Emails dated 12.8.2013 and 13.8.2013); and

 

(c) the 1st Plaintiff’s emails to the 1st Defendant dated 15.8.2013 and 16.8.2013 (1st Plaintiff’s Emails dated 15.8.2013 and 16.8.2013);

 

(13) after the conclusion of the Alleged Agreement, the 3rd Defendant was set up on or around 26.8.2013 with the 1st and 2nd Defendants as the 3rd Defendant’s only 2 shareholders. The 1st Plaintiff had been assured by the 1st Defendant that this shareholding arrangement of the 3rd Defendant was temporary in nature and was merely to simplify and speed up the incorporation of the JV Company, namely the 3rd Defendant. The 1st Defendant had further assured the 1st Plaintiff that the shares in the 3rd Defendant would be issued to the Plaintiffs and SP2 in the proportions captured in the Alleged Agreement. The name “Palm Power’ in the 3rd Defendant’s name was derived from the 2nd Plaintiff’s name for “synergistic” and “credibility’ purposes;

 

(14) the 3rd Defendant, as a new company, required the technical know-how of the Plaintiffs with regard to biomass fuel of OPT. The Plaintiffs would provide the technical knowledge and know-how of sourcing and production of OPT biomass fuel on a commercial scale while the Defendants would source and manage the funds for the 3rd Defendant;

 

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(15) the 2nd Plaintiff successfully sold approximately 2,000 metric tonnes (MT) of OPT Fibre and this transaction was subsequently included as part of the presentation to investors in the JV Company and the Series 2 Fund;

 

(16) in May 2013, the 1st Plaintiff had been informed by the 1st and 2nd Defendants that there would be US$5 million (to be sourced by the 1st Defendant) which would be injected into the joint venture in this case within 3 months from May 2013 (US$5 Million Injection). The US$5 Million Injection did not materialize. At all material times, the 1st and 2nd Defendants did not inform the 1st Plaintiff that there were no funds for the 3rd Defendant to operate. Every time the 1st Plaintiff proposed payment to be made for the 3rd Defendant’s operation cost, the 1st and 2nd Defendants would have a reason to disagree and effectively, the 3rd Defendant had no business operations;

 

(17) on or around 14.6.2013, the 1st Defendant had been appointed a director of the 2nd Plaintiff;

 

(18) on or around July 2013, presentations on the JV Company and the Series 2 Fund as provided by the 5th Defendant, begun to attract potential investors. To this end, the Alleged Confidential Information had been used for the purposes of presentation and marketing for potential investors;

 

(19) by September 2013, the 2nd Plaintiff had completely halted its own trading and activities and was “effectively subsumed” into the 3rd Defendant;

 

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(20) from April 2013 to February 2014, the 1st Plaintiff had “fully” dedicated substantial time, expertise and experience in setting up the operation of the 3rd Defendant and the marketing of the 3rd Defendant and the Series 2 Fund;

 

(21) despite the fact that the 1st Plaintiff was recognized as a director of the 3rd Defendant since the 3rd Defendant’s incorporation on 26.8.2013, the 1st Plaintiff’s position as the 3rd Defendant’s COO was only confirmed to take effect from 1.11.2013. The 1st Plaintiff claimed that –

 

(a) as the 3rd Defendant’s COO, the 1st Plaintiff was remunerated with an “initial salary package” of RM50,000.00 per month; and

 

(b) as a director of the 3rd Defendant, the 1st Plaintiff would be entitled to a monthly director’s fee of US$1,000.00.

 

The 1st Plaintiff admitted he had no written employment contract with the 3rd Defendant. Upon the 1st Defendant’s request, the 1st Plaintiff had agreed to accept part payment of his monthly salary in the sum of RM30,000.00 with the understanding that the remaining RM20,000.00 would be paid to the 1st Plaintiff as deferred payment in “due course”. Thereafter, whenever the 1st Plaintiff broached this subject, it would be “invariably’ be postponed by the 1st and/or 2nd Defendant for further consideration;

 

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(22) the Plaintiffs and SP2 had kept their end of the bargain wherein the Alleged Confidential Information had been used for the purposes of presentation and marketing for potential investors for the 3rd and/or 4th Defendants. The 1st Plaintiff had also “fully dedicated substantial time, expertise and experience in setting up the operation of the 3rd Defendant and the marketing of the 3rd Defendant and the Series 2 Fund. On the other hand, the Defendants, collectively or individually, had failed, neglected and/or omitted to effect or cause to be effected the following –

 

(a) the preparation and execution of a shareholders’ agreement to reflect the terms of the Alleged Agreement;

 

(b) to issue and transfer 30% of the shares in the 3rd Defendant to the Plaintiffs; and

 

(c) to make full payment of RM50,000.00 as the 1st Plaintiff’s monthly salary for the 1st Plaintiff’s services to the 3rd Defendant and the 1st Plaintiff’s stipend as the 3rd Defendant’s director;

 

(23) the 1st Plaintiff alleged that the 1st Plaintiff was constantly sidelined from the 3rd Defendant’s management despite the fact that the 1st Plaintiff was the one who prepared the business concept which was the premise of the joint venture and the business of the 3rd Defendant;

 

(24) on 18.2.2014, the 1st Defendant had verbally informed the 1st Plaintiff that the 1st Defendant saw no role for the 1st Plaintiff in the

 

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3rd Defendant’s management team. Thereafter, the 1st Defendant had unilaterally informed third parties working with the 3rd Defendant that the 1st Plaintiff was no longer employed with the 3rd Defendant;

 

(25) the 1st Plaintiff claimed that the 1st Plaintiff did not receive any formal notice and/or grounds regarding the unilateral termination of the 1st Plaintiff’s employment by the 3rd Defendant. The 1st Plaintiff alleged that such a termination was wrongful;

 

(26) the 1st Plaintiff believed that the 1st, 2nd and/or 3rd Defendants had at all material times intended to make use of the Alleged Confidential Information and the efforts, expertise and experience of the Plaintiffs for the benefit of the 1st to 3rd Defendants or for the benefit of the venture of the 1st to 3rd Defendants. After having had access, benefit and possession of the Alleged Confidential Information and the efforts, expertise and experience of the Plaintiffs, the 1st to 3rd Defendants then “cut’ the Plaintiffs off completely; and

 

(27) the 1st Plaintiff denied causing any loss or damage to the Defendants.

 

9. During the 1st Plaintiff’s cross-examination, the 1st Plaintiff gave the following evidence, among others:

 

(1) the 1st Plaintiff was aware that the notice of the writ in this case was not served on the 4th Defendant in Bermuda;

 

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(2)

 

concerning the 2nd Plaintiff –

 

(a) the 1st Plaintiff was not aware that there was no resolution from the 2nd Plaintiff’s BOD which had authorized this suit to be filed by the 2nd Plaintiff against the Defendants. Nor was the 1st Plaintiff aware of any document from the 2nd Plaintiff which had authorized the 1st Plaintiff to give evidence in this case on behalf of the 2nd Plaintiff. The 1st Plaintiff disagreed with the Defendants’ learned counsel that the 1st Plaintiff as a director of the 2nd Plaintiff would have known of the 2nd Plaintiff’s BOD resolutions;

 

(b) the 1st Plaintiff disagreed with the Defendants’ learned counsel that the 1st Plaintiff and SP2 incorporated the 2nd Plaintiff on 19.4.2013;

 

(c) the 1st Plaintiff confirmed that as at 31.12.2014, the 2nd Plaintiff’s financial report showed that the 2nd Plaintiff was running at a loss;

 

(d) the 1st Plaintiff initially alleged that the 3rd Defendant had acquired the shares in the 2nd Plaintiff but subsequently, the 1st Plaintiff agreed with the Defendants’ learned counsel that the 3rd Defendant did not acquire any shares in the 2nd Plaintiff; and

 

(e) the 1st Defendant was appointed a director of the 2nd Plaintiff because the 1st Plaintiff needed a Malaysian resident director for the 2nd Plaintiff;

 

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(3) the 1st Plaintiff disagreed with the Defendants’ learned counsel that the 4th Defendant’s Group did not exist. When the 1st Plaintiff liaised with the 1st Defendant, the 1st Plaintiff did not ask the 1st Defendant for the 1st Defendant’s authorization to act for the 4th Defendant and the 4th Defendant’s Group. The 1st Plaintiff assumed that the 1st Defendant was acting for the 4th Defendant and the 4th Defendant’s Group;

 

(4) in respect of GGE –

 

(a) the 1st Plaintiff “co-founded” GGE in 2012 with one Mr. Paul Fraser (Mr. Fraser). The 1st Plaintiff agreed with the Defendants’ learned counsel that Mr. Fraser was not one of the 3 directors of GGE;

 

(b) the 1st Plaintiff agreed with the Defendants’ learned counsel that from May 2013, the directors and shareholders of GGE were not happy with the 1st Plaintiff; and

 

(c) the 1st Plaintiff agreed with the Defendants’ learned counsel that the 1st Plaintiff agreed with the Defendants’ learned counsel that there was an email dated 22.3.2013 from Mr. Happy Minwalla (SD2) to the 1st Plaintiff (SD2’s Email dated 22.3.2013) which stated that 1st Plaintiff’s services with GGE had been terminated immediately;

 

(5) at the Meeting in April 2013 –

 

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(a) the 2nd Plaintiff had only been incorporated for 2 weeks; and

 

(b) the 1st Plaintiff informed the 1st Defendant that –

 

(i) the 1st Plaintiff was looking for investors for the 2nd Plaintiff; and

 

(ii) the 1st Plaintiff was an expert in green energy;

 

(6) regarding the Series 2 Fund –

 

(a) the 1st Plaintiff was aware that the Series 2 Fund was not a legal entity;

 

(b) the 1st Plaintiff disagreed with the Defendants’ learned counsel that the Series 2 Fund would invest in various ventures and not only in the 3rd Defendant;

 

(c) the 2nd Plaintiff was not an investor in the Series 2 Fund; and

 

(d) the 1st Plaintiff agreed that the Series 2 Fund was issued by the 5th Defendant and managed by GAA RT1 Ltd. (GAA Ltd). The 1st, 2nd and 4th Defendants did not issue the Series 2 Fund. The 1st Plaintiff further agreed that the 1st Plaintiff had nothing to do with the 5th Defendant as the 1st Plaintiff was

 

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not a director or shareholder in the 5th Defendant. As such, the 1st Plaintiff had no right to the Series 2 Fund;

 

(7) the 1st Plaintiff agreed with the Defendants’ learned counsel that the Alleged Representations were made after the Alleged Agreement was concluded on 13.8.2013;

 

(8) regarding the Alleged Confidential Information –

 

(a) the 1st Plaintiff was aware that the 1st Defendant was involved in GAA Green Energy Solutions Ltd. (GAAGES) which was in the biomass green energy business before the incorporation of the 2nd Plaintiff;

 

(b) the 1st Plaintiff disagreed with the Defendants’ learned counsel that the information and all rights to such information obtained by the 1st Plaintiff when the 1st Plaintiff was with GGE, belonged to GGE. The 1st Plaintiff was paid a remuneration when the 1st Plaintiff was with GGE;

 

(c) the 1st Plaintiff agreed with the Defendants’ learned counsel that the grinding of OPT to make fine chips has been done by FELDA since April 2009. The 1st Plaintiff however disagreed with the Defendants’ learned counsel that that the 1st Plaintiff was not a pioneer in the use of OPT for biomass production;

 

(d) the 1st Plaintiff agreed with the Defendants’ learned counsel that the 1st Plaintiff did not invent the biomass green energy.

 

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The 1st Plaintiff however insisted that the 1st Plaintiff invented the conversion of OPT to biomass energy through 5 steps, namely –

 

(i) harvesting of OPT;

 

(ii) grinding the OPT;

 

(iii) fine grinding (hammer milling) the OPT;

 

(iv) drying the OPT; and

 

(v) pelletizing OPT

 

(Five-Step Process).

 

Subsequently in the 1st Plaintiff’s cross-examination, the 1st Plaintiff testified that although the 1st Plaintiff “invented” the terms “ship and chip” and “chip and ship”, the 1st Plaintiff agreed that the 1st Plaintiff did not invent such processes;

 

(e) the 1st Plaintiff did not inform the 1st Defendant that the information provided by the 1st Plaintiff was confidential and the 1st Defendant was not allowed to use such information. Nor did the 1st Plaintiff ask the 1st Defendant to sign a “NonDisclosure Agreement’ (NDA);

 

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(f) the 1st Plaintiff voluntarily gave the Alleged Confidential Information to the 1st Defendant;

 

(g) the 1st Plaintiff agreed with the Defendants’ learned counsel that the Alleged Confidential Information had not been registered for protection of Intellectual Property rights in Malaysia or any other country;

 

(h) the ASOC did not set out the particulars of the Alleged Confidential Information; and

 

(i) the 1st Plaintiff did not agree with the Defendants’ learned counsel that the Alleged Confidential Information was general information which was freely available in the public domain in the internet;

 

(9) the 1st Plaintiff claimed that he had carried out laboratory tests on OPT Pellets (Laboratory Tests) on behalf of the 3rd Defendant. The 1st Plaintiff however agreed that the 2nd Plaintiff paid for the Laboratory Tests and the 1st Plaintiff did not request the 3rd Defendant to pay for the Laboratory Tests. The 2 reports of the Laboratory Tests were addressed to the 2nd Plaintiff. The 1st Plaintiff did not know whether he was authorized by the 3rd Defendant to carry out the Laboratory Tests;

 

(10) the 1st Plaintiff did not ask the 1st Defendant whether the 1st Defendant was authorized to make representations for the 2nd Defendant. The 1st Plaintiff agreed with the Defendants’ learned

 

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counsel that there was no document to show that the 1st Defendant was authorized to make representations for the 2nd Defendant;

 

(11 ) regarding the Alleged Agreement –

 

(a) the 1st Plaintiff disagreed with the Defendants’ learned counsel that the 1st Plaintiff had to invest RM450,000 in the 3rd Defendant to be entitled to 30% shares in the 3rd Defendant. The 1st Plaintiff also disagreed with the Defendants’ learned counsel that a shareholders’ agreement was an outstanding issue but agreed that such an agreement needed to be prepared; and

 

(b) the 1st Plaintiff agreed with the Defendants’ learned counsel that there was no agreement concerning the following matters –

 

(i) a minimum investment capital of RM1,500,000.00 would be made available to the JV Company on 1.9.2013; and

 

(ii) the 1st Plaintiff would be offered a minimum two-year employment contract as “Global Head of Sales and Marketing” of the JV Company;

 

(12) the 1st Plaintiff was aware that both the 2nd Plaintiff and the 4th Defendant were not shareholders in the 3rd Defendant. However, the 1st Plaintiff disagreed with the Defendants’ learned counsel that the 3rd Defendant was not the JV Company of the 2nd Plaintiff

 

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and the 4th Defendant. The 1st Plaintiff agreed with the Defendants’ learned counsel that the 1st Plaintiff did not record the 1st Plaintiff’s objection in the meetings of the 3rd Defendant’s management (3rd Defendant’s Management Meetings) that the 1st Plaintiff had not been issued any share in the 3rd Defendant;

 

(13) concerning the 3rd Defendant –

 

(a) the 1st Plaintiff agreed with the Defendants’ learned counsel that the 1st Plaintiff started as the 3rd Defendant’s COO in November 2013 while the 1st and 2nd Defendants were the 3rd Defendant’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO) respectively. As the 3rd Defendant’s COO, the 1st Plaintiff reported to the CEO;

 

(b) the 1st Plaintiff, the 1st and 2nd Defendants comprised the 3rd Defendant’s management team. The 1st Plaintiff however disagreed that a member of the 3rd Defendant’s management team could not act on his own accord without consulting the other members of the 3rd Defendant’s management team; and

 

(c) the 1st Plaintiff initially testified that he had a work permit to work for the 3rd Defendant which had been issued by the Immigration Department. Subsequently, the 1st Plaintiff admitted that he had no work permit to work for the 3rd Defendant. The 1st Plaintiff however disagreed with the Defendants’ learned counsel that the 1st Plaintiff was not an employee of the 3rd Defendant;

 

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(14) in respect of the 1st Plaintiff’s duties and responsibilities in the 3rd Defendant –

 

(a) the 1st Plaintiff agreed that the 1st Plaintiff had various duties and responsibilities to oversee the operations, production, sales and marketing of the 3rd Defendant. Such duties included the sourcing for a factory for the 3rd Defendant and to ensure that the factory was set up;

 

(b) after setting up the 3rd Defendant’s factory, the 1st Plaintiff had the duty to source the necessary machinery and equipment for the 3rd Defendant and thereafter to ensure there was production and sales by the 3rd Defendant;

 

(c) the 1st Plaintiff agreed that the 1st Plaintiff had to first prepare the papers for the operation cost and business plan of the 3rd Defendant’s factory. However, according to the 1st Plaintiff, the finalization of the operation cost of the 3rd Defendant’s factory was a shared responsibility of the 3rd Defendant’s management team;

 

(d) the 2nd Defendant prepared 27 financial models for the 3rd Defendant based on the 1st Plaintiff’s profit forecast for the 3rd Defendant but the 1st Plaintiff did not go through the 11 final version” of the 27 financial models. When the 1st Plaintiff left the 3rd Defendant in March 2013, there was no finalized copy of the financial model for the 3rd Defendant;

 

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(e) the 1st Plaintiff sent an email dated 18.9.2013 to the 1st Defendant to propose for the 3rd Defendant to retain Regalis Asia Sdn. Bhd. (Regalis) as the 3rd Defendant’s “exclusive sales agent’11 at least for the first 12 months”. The 1st Plaintiff disagreed with the Defendants’ learned counsel that sourcing Regalis was a wasted effort as the 3rd Defendant had no factory in the first place. The 1st Plaintiff claimed that the 1st Plaintiff was sourcing a factory and a sales agent for the 3rd Defendant at the same time;

 

(f) the 1st Plaintiff testified that the 1st Plaintiff had visited 2 potential factory sites in Semenyih and Seremban. The 1st Plaintiff however agreed that when the 1st Plaintiff left the 3rd Defendant, the 3rd Defendant did not manage to secure a factory site in Semenyih or Seremban. The 1st Plaintiff agreed with the Defendants’ learned counsel that the time and efforts expended by the 1st Plaintiff in sourcing a factory in Nilai for the 3rd Defendant, was wasted;

 

(g) the 1st Plaintiff agreed that if the 3rd Defendant had no factory, the pallet lines could not be installed. In fact, the 1st Plaintiff agreed that securing a factory for the 3rd Defendant was an “urgent priority’;

 

(h) in respect of a grinder machine (Grinder), which the 1st Plaintiff proposed to rent for the 3rd Defendant from Vermeer South East Asia (M) Sdn. Bhd. (VSEA), the 1st Plaintiff agreed that the 1st Plaintiff did not advise the 3rd Defendant on the need for the 3rd Defendant to get insurance coverage for the Grinder. The 1st Plaintiff also agreed that the 1st Plaintiff did not arrange or pay for the insurance of the Grinder. As the 3rd Defendant’s COO, the 1st Plaintiff agreed

 

27

 

that the 1st Plaintiff was responsible for identifying all potential overhead cost of the 3rd Defendant, including the insurance coverage for the Grinder. The following emails concerned the Grinder –

 

(i) in the 2nd Defendant’s email dated 20.12.2013 to the 1st Defendant, the 2nd Defendant raised the following matters, among others –

 

(ia) the rental of the Grinder was RM138,000.00 and its mobilization cost amounted to RM7,000; and

 

(ib) the 2nd Defendant questioned the 1st Plaintiff on why the 1st Plaintiff did not make provision on the 3rd Defendant’s behalf for the insurance and security of the Grinder;

 

(ii) the 2nd Defendant sent an email dated 22.12.2013 (2nd Defendant’s Email dated 22.12.2013) which stated –

 

“/ find it staggering that after more than five months of discussing the basics of this project we are only now discussing the fact that [3rd Defendant] may have to pay for the insurance of the [Grinder].

 

/f you rented one before as / have been led to understand

 

• Why were you not aware of this?

 

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• How much did you pay for insurance?

 

• With which company did you insure the machine?’;

 

(iii) the 1st Plaintiff replied to the 2nd Defendant’s Email dated

 

22.12.2013 by way of an email dated 22.12.2013 (1st Plaintiff’s Email dated 22.12.2013) which stated –

 

“[2nd Defendant], you are easily “staggered” it seems. As I have tried to indicate before (apparently unsuccessfully) you should temper your attitude and your way of dealing with issues as they arise. Frankly, I am already fed up with your aggressive approach and innuendos. A real “team” discusses issues. It doesn’t throw in hand grenades at every opportunity, as seems to be your approach.

 

For the record I did not arrange or pay for insurance when I rented the [Grinder].’

 

(emphasis added);

 

(iv) the 1st Plaintiff sent an email dated 22.12.2013 to the 1st Defendant which stated –

 

“Let me make it quite clear to you [1st Defendant], before we go any further, that I will not tolerate the continued barrage of destructive, aggressive behavior and innuendos from [2nd Defendant].

 

29

 

In the future as we build this business, there are going to be many issues and challenges that I have never encountered or considered before and I am not prepared to deal with [2nd Defendant’s] very personal attacks each time this happens.

 

Either you [1st Defendant] find a way for him [2nd Defendant] to raise issues in a more constructive, “team based” manner or we need to find another structure that may or may not include his [2nd Defendant] involvement in [3rd Defendant]

 

(emphasis added); and

 

(v) the 1st Plaintiff sent an email dated 4.11.2013 to VSEA which had proposed that the 3rd Defendant would pay a 10% deposit for the Grinder (10% Deposit) upon signing the agreement to acquire the Grinder. The 1st Plaintiff agreed that the 1st Plaintiff did not get the approval of the 3rd Defendant’s management team to pay the 10% Deposit;

 

(i) the 1st Plaintiff agreed with the Defendants’ learned counsel that until the time the 1st Plaintiff left the 3rd Defendant, the 3rd Defendant had not purchased the Grinder;

 

(j) the 1st Plaintiff recommended to the 3rd Defendant to appoint the following companies –

 

30

 

(i) Global Green Synergy Sdn. Bhd. (GGS) to supply pellet lines to the 3rd Defendant; and

 

(ii) BSW Biotech Sdn. Bhd. (BSW), a replanting company, to provide OPT to the 3rd Defendant. The 1st Plaintiff insisted that the 3rd Defendant should pay BSW despite the fact that there was no contract between the 3rd Defendant and BSW. The 1st Plaintiff dealt with one Mr. Bee Chee Seem (SP3) who had been removed as a director of BSW;

 

(k) the 1st Plaintiff gave evidence that the 3rd Defendant had committed itself to sell OPT pellets to Korean buyers (Sale of OPT Pellets) after the 3rd Defendant’s management team had consented to the Sale of OPT Pellets. The 1st Plaintiff however was unsure whether the bundles of documents adduced in this case showed that the 3rd Defendant’s management team had consented to the Sale of OPT Pellets;

 

(l) the 1st Defendant sent an email dated 7.2.2014 to the 1st Plaintiff which stated –

 

“Unfortunately your [1st Plaintiff] performance to date leaves me no option BUT to micro manage your daily activities due to your apparent inability to manage even the simplest tasks without complication.

 

I will discuss what, if any, authority you will be given with my co directors on my return to Kuala Lumpur.

 

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(emphasis added); and

 

(m) the 1st Plaintiff agreed that there was a payment of RM209,409.00 paid by Malaysian News Print (MNP) to the 2nd Plaintiff which was not paid to the 3rd Defendant;

 

(15) the 3rd Defendant issued a letter dated 17.12.2013 to “Whom It May Concern” (3rd Defendant’s 1st Letter dated 17.12.2013). The 3rd Defendant’s 1st Letter dated 17.12.2013 was signed by the 1st Defendant as the 3rd Defendant’s COO and stated –

 

“[1st Plaintiff]: Employment Confirmation

 

Please take this letter as confirmation of the fact that [1st Plaintiff] is employed by [3rd Defendant] in the position of [COO]. This position took effect on 1 November 2013.

 

[1st Plaintiff’s] gross salary before deduction for tax, SOCSO and EPF contribution is US$25,000 per month. …”

 

(emphasis added).

 

On the 3rd Defendant’s 1st Letter dated 17.12.2013, there was hand writing that the 1st Plaintiff confirmed the 3rd Defendant’s 1st Letter dated 17.12.2013 had been provided to the 1st Plaintiff for the purpose of the 1st Plaintiff’s loan application only. The 1st Plaintiff testified that the hand writing was not the 1st Plaintiff but the 1st Plaintiff signed on the 3rd Defendant’s 1st Letter dated

 

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17.12.2013. Regarding the 3rd Defendant’s 1st Letter dated

 

17.12.2013, the 1st Plaintiff used the 3rd Defendant’s 1st Letter dated 17.12.2013 to obtain a loan to acquire property.

 

There was another letter dated 17.12.2013 to “Whom It May Concern” issued by the 3rd Defendant (3rd Defendant’s 2nd Letter dated 17.12.2013). The 3rd Defendant’s 2nd Letter dated

 

17.12.2013 was identical to the 3rd Defendant’s 1st Letter dated

 

17.12.2013 except that the 3rd Defendant’s 2nd Letter dated

 

17.12.2013 stated that the 1st Plaintiff’s gross salary was US$30,000 per month. The 1st Plaintiff agreed that the 3rd Defendant’s 2nd Letter dated 17.12.2013 was issued upon the 1st Plaintiff’s request.

 

I have not overlooked the 1st Defendant’s witness statement which claimed that the 3rd Defendant’s 2nd Letter dated 17.12.2013 was issued before the 3rd Defendant’s 1st Letter dated 17.12.2013. I will discuss subsequently in this judgment the effect of the 3rd Defendant’s 1st and 2nd Letters dated 17.12.2013;

 

(16) on 18.2.2014, the 1st Defendant met the 1st Plaintiff and informed the 1st Plaintiff that the 1st Plaintiff’s services were no longer required by the 3rd Defendant (Meeting on 18.2.2014). Subsequent to the Meeting on 18.2.2014, the 1st Plaintiff sent an email dated 24.2.2014 to the 1st Defendant (1st Plaintiff’s Email dated 24.2.2014). The 1st Plaintiff’s Email dated 24.2.2014 is significant (which will be explained later in this judgment) and states, among others (with grammatical errors) –

 

“[1st Defendant]

 

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I am writing to you on behalf of the shareholders of [2nd Plaintiff].

 

To recap, the basic terms of an agreement between [2nd Plaintiff] and [4th Defendant] were struck around mid-2013 to form a JV under the name [3rd Defendant]. In forming this JV, the roles of the two partner companies were quite clear.

 

[2nd Plaintiff] would make its’ [sic] property (created over a period of 2+ years) exclusively available to the new entity and would further enhance that intellectual property as the business developed. [2nd Plaintiff] would manage business operations.

 

[4th Defendant] would arrange and manage essential funding through its’ [sic] investor and banking network and connect the JV to potential strategic partners. [4th Defendant] would also provide administration and accounting support.

 

At [Meeting on 18.2.2014] you [1st Defendant] made the statement that you see no role for a COO (and therefore no role for me) within the Management Team of [3rd Defendant] going forward. In order to be clear, we request that you confirm in writing so that we collectively understand the reasoning behind your thinking.

 

Pending receipt of your written confirmation, we [2nd Plaintiff] find your reasoning difficult to understand.

 

Also, you will recall that my involvement as a core member of the management team was one of the two cornerstones of the deal between [2nd Plaintiff] and [4th Defendant]. In fact at your

 

34

 

insistence I agreed to sign a 7 year employment contract mirroring the intended duration of the fund, although no contract has ever been presented to me for signature.

 

The other cornerstone of the deal was that [2nd Plaintiff] (or its’ shareholders as individuals) would 30% of [3rd Defendant], with the balance to be owned by a newly established fund (50%) and GAA Direct Ltd. (20%) and we presume that this division of ownership is not under dispute at this point in time.

 

(emphasis added);

 

(17) the 1st Defendant sent an email dated 6.3.2014 attaching the 3rd Defendant’s letter dated 6.3.2014 to the 1st Plaintiff (3rd Defendant’s Letter dated 6.3.2014). The 2nd Plaintiff responded to the 3rd Defendant’s Letter dated 6.3.2014 by way of a letter dated 14.3.2014 (2nd Plaintiff’s Letter dated 14.3.2014). The 2nd Plaintiff’s Letter dated 14.3.2014, stated, among others –

 

… we wish to state that [2nd Plaintiff] and [4th Defendant] (or an affiliated company (“the Parties”), have for the past 6-8 months, been actively and collaboratively promoting a Joint Venture Company, aptly named [3rd Defendant], to the investment community in Malaysia, Singapore and elsewhere.

 

(emphasis added); and

 

35

 

(18) in respect of the Defendants’ Counterclaim –

 

(a) the 1st Plaintiff “completely disagreed” with the Defendants’ learned counsel that the 1st Plaintiff had misrepresented the projection numbers to the 1st Defendant;

 

(b) the 1st Plaintiff agreed with the Defendants’ learned counsel that if the 3rd Defendant was provided with funds, the 3rd Defendant’s profit forecast for 2014 would materialize;

 

(c) the 1st Plaintiff denied causing the Defendants to suffer loss and damage in the sum of RM97,075,000.00;

 

(d) the 1st Plaintiff denied that the 1st Plaintiff had failed to act in the best interest of the 3rd Defendant as the 3rd Defendant’s COO.

 

10. In re-examination, the 1st Plaintiff clarified, among others, as follows:

 

(1) regarding GGE –

 

(a) in about 2010, Mr. Fraser and the 1st Plaintiff teamed up regarding the biomass business regarding the OPT. Mr. Fraser and the 1st Plaintiff received a commitment of US$600,000.00 from SD2 and set up a business based on OPT and “empty fruit brunches” (EFB); and

 

36

 

(b) the 1st Plaintiff worked with GGE until January, 2013 when there were a lot of differences between the 3 partners, namely Mr. Fraser, 1st Plaintiff and SD2. SD2 was very inconsistent in delivering the funds to GGE. The 1st Plaintiff repeatedly asked for funds from SD2 but SD2 refused such requests. Consequently, the 1st Plaintiff suggested to Mr. Fraser and SD2 that the 1st Plaintiff would take over GGE’s business and the 1st Plaintiff would issue a promissory note to repay the investment to Mr. Fraser and SD2 once GGE’s business was “up and running”. As there was no reply by Mr. Fraser and SD2 to this proposal, the 1st Plaintiff wrote an email to say that the 1st Plaintiff was resigning from GGE. On the same day of this email, SD2 sent an email to inform the 1st Plaintiff that the 1st Plaintiff’s services with GGE had been terminated;

 

(2) the 1st Plaintiff testified that the 1st Plaintiff had the authority to file this suit on behalf of the 2nd Plaintiff because –

 

(a) the 2nd Plaintiff had 2 directors, namely the 1st Plaintiff and Mr. Michael Raj (Mr. Raj); and

 

(b) Mr. Raj had no objection to this suit filed by the 2nd Plaintiff;

 

(3) regarding the Alleged Agreement –

 

(a) after the Alleged Agreement had been concluded, the 1st to 3rd Defendants wanted more shareholding. In the 1st Plaintiff’s

 

37

 

own testimony, “the numbers moved around a lot’ with the 1st to 3rd Defendants;

 

(b) the 1st Defendant became a director of the 2nd Plaintiff because the parties had agreed to work together. When the 1st Defendant became the 2nd Plaintiff’s director, the 1st Defendant was “automatically” allocated 1 share in the 2nd Plaintiff;

 

(c) the 2nd Plaintiff had an agreement with the 3rd Defendant. That was why the 1st Plaintiff took the view that “we were one company”, namely the 2nd Plaintiff and 3rd Defendant were considered to be one single entity. Based on this view –

 

(i) in April 2013, the 2nd Plaintiff conducted the Commercial Trials “ahead of the competition” and produced about 3,500 MT of OPT fibre which were then sold to MNP. The proceeds of the sale of OPT fibre to MNP, was not paid to the 3rd Defendant because the 2nd Plaintiff and 3rd Defendant were considered to be one single entity;

 

(ii) the 2nd Plaintiff did not ask the 3rd Defendant to pay for the Laboratory Tests. According to the 1st Plaintiff, the 1st Plaintiff did not need the 3rd Defendant’s authorization to carry out the Laboratory Tests because without the Laboratory Tests, there would be no product for the 3rd Defendant to sell; and

 

38

 

(iii) the Plaintiffs did not ask the Defendants to execute a NDA; and

 

(d) in respect of the Series 2 Fund –

 

(i) the Series 2 Fund was a close ended fund for 7 years; and

 

(ii) the 1st Plaintiff was not aware of the status of the Series 2 Fund and whether the investors in the Series 2 Fund had suffered any loss in this case; and

 

(e) the 1st Plaintiff had requested on many occasions in the 3rd Defendant’s BOD meetings and management meetings for 30% shares in the 3rd Defendant to be given to the Plaintiffs. The 1st Plaintiff denied that the Plaintiffs’ entitlement to 30% shares in the 3rd Defendant was conditional upon the 3rd Defendant becoming profitable and viable;

 

(4) the 1st Plaintiff explained that the 1st Plaintiff had made a mistake during cross-examination regarding the Alleged Representations. The 1st Plaintiff clarified that the Alleged Representations had been made “much earlier’ before the conclusion of the Alleged Agreement;

 

(5) concerning the Alleged Confidential Information –

 

39

 

(a) the 1st Plaintiff had almost 2 years of experience working with OPT when the 1st Plaintiff joined up with the 1st to 3rd Defendants. During about 2 years with GGE, the 1st Plaintiff learnt a lot about the market place, the buyers and alternative materials. The 1st Plaintiff described such knowledge as “market knowledge” and “product knowledge”. According to the 1st Plaintiff, the “supply chain business for OPT’ was a totally new concept;

 

(b) in April 2013, the 2nd Plaintiff conducted Commercial Trials which gave the 1st Plaintiff the expertise in the Five-Step Process. The 1st Plaintiff claimed to have invented the Five-Step Process. Before the 1st Plaintiff’s involvement in the business of processing OPT, nobody had processed OPT to be a saleable product;

 

(c) the information gleaned from the Commercial Trials, namely, the moisture content, the calorific value and the ash content of OPT as compared to sawdust, wood chip, palm kernel shell (PKS) and EFB, could only be found in the Plaintiffs’ documents and no one else had ever tested them before; and

 

(d) the 1st Plaintiff admitted that there was a lot of literature available in the public domain (in the internet) regarding the potential of biomass waste in Malaysia but the Plaintiffs had developed expertise in OPT. The 1st Plaintiff agreed that the 1st Plaintiff was not an expert in biomass which encompassed many things but the 1st Plaintiff claimed to be an expert in OPT;

 

40

 

(6) the 4th Defendant’s Group existed because the 1st Defendant signed emails on behalf of the 3rd Defendant and GAA Ltd. Furthermore, the 1st and 2nd Defendants had portrayed themselves as directors and executives of a number of companies in the 4th Defendant’s Group. Hence, the 1st Plaintiff’s assumption of the existence of the 4th Defendant’s Group;

 

(7) the 1st Plaintiff had done the following “very successfully” for the 3rd Defendant –

 

(a) identification of a factory for the 3rd Defendant;

 

(b) negotiations on the purchase of the 3rd Defendant’s equipment; and

 

(c) making available OPT for the 3rd Defendant

 

– but there were however no funds for the 3rd Defendant and the 1st Plaintiff was kept in the dark from about June, 2013 until 18.2.2014 (when the 1st Plaintiff left the 3rd Defendant);

 

(8) the 1st Plaintiff disagreed that it was the 1st Plaintiff’s responsibility as the 3rd Defendant’s COO to ensure the profitability and viability of the 3rd Defendant because such a responsibility was the shared responsibility of the entire management team of the 3rd Defendant;

 

41

 

(9) the 1st Plaintiff denied having any ulterior motive to appoint Regalis because Regalis had been in the biomass industry for about 7 years. Regalis is a trading company which deals primarily with wood pallets, EFB and PKS;

 

(10) on whether the 1st Plaintiff had a work permit –

 

(a) when the 1st Plaintiff met the 1st and 2nd Defendants, the 1st Plaintiff had capitalized the 2nd Plaintiff to RM500,000.00 so that the 1st Plaintiff could procure a work permit as the 2nd Plaintiff’s CEO. The 1st and 2nd Defendants however told the 1st Plaintiff not to do so as the 1st and 2nd Defendants would obtain a work permit for the 1st Plaintiff;

 

(b) the 1st and 2nd Defendants did not obtain a work permit for the 1st Plaintiff despite the fact that the 1st Plaintiff had introduced an “employment pass agent to the 1st and 2nd Defendants;

 

(c) at all material times, the 1st Plaintiff had assumed that the 1st Plaintiff had a work permit; and

 

(d) the 3rd Defendant had paid the 1st Plaintiff as a consultant. The 3rd Defendant had also paid withholding tax for the 1st Plaintiff; and

 

(11) in respect of the Defendants’ Counterclaim –

 

42

 

(a) the 1st Plaintiff’s profit forecast of US$1,110 per hectare was given after the conclusion of the Alleged Agreement and could not have induced the Defendants to enter into the Alleged Agreement;

 

(b) the 1st Plaintiff’s projection figures were largely based on the results of the Commercial Trials. Such figures were also premised on the Alleged Confidential Information, the 1st Plaintiff’s experience and the 3rd Defendant’s early receipt of funds for the joint venture. The 1st Plaintiff claimed that the 1st Plaintiff was promised there would be a US$5 Million Injection into the 3rd Defendant to secure a factory, equipment and raw materials for the 3rd Defendant. Any new business, especially a manufacturing business, is dependent on a very large initial capital expenditure;

 

(c) the 1st Plaintiff’s projection figures were the “best projections” and were subject to the fluctuations of the prices of commodities; and

 

(d) the 1st Plaintiff’s projection figures did “move around” but the 1st Plaintiff denied that such figures were inaccurate.

 

11. SP2’s witness statement stated, among others, as follows:

 

(1) SP2 has dual citizenship in the United Kingdom and Ireland. SP2 was the former CEO of “Saatchi & Saatchi” for South East Asia. SP2 is now a retiree who lives in Bangkok, Thailand;

 

43

 

(2) in March 2013, the 1st Plaintiff asked SP2 whether SP2 was willing to –

 

(a) provide a loan of RM250,000.00 to the 1st or 2nd Plaintiff; or

 

(b) become a shareholder in the 2nd Plaintiff.

 

SP2 agreed to be a shareholder in the 2nd Plaintiff and provided the funds to the 2nd Plaintiff after the 1st Plaintiff had convinced SP2 that biomass fuel could be obtained from processing OPT into fibre and pellets to generate energy. This was confirmed by the Commercial Trials which proved that such a venture was commercially viable;

 

(3) SP2 is a close family friend of the 1st Defendant. SP2 was the 1st Defendant’s best man when the 1st Defendant got married in 1991 and was the Godfather of one of the 1st Defendant’s children;

 

(4) SP2 is an investor in some of the funds managed by the 1st Defendant. Since 2007, SP2 had invested in the “Q Fund”, one of the 1st Defendant’s funds. Between late 2012 and early 2013, the 1st Defendant asked SP2 to consider transferring SP2’s investment in the Q Fund to a fund intended for fast growing green grass to be cultivated and harvested in Cambodia for biomass fuel (Cambodian Grass Project). The 1st Defendant informed SP2 that the 1st Defendant would be personally involved in the Cambodian Grass Project. SP2 was not confident regarding the Cambodian Grass Project because –

 

(a) Cambodia might not be economically and politically stable;

 

44

 

(b) the Cambodian Grass Project would involve huge tracts of land in Cambodia and this could be complicated; and

 

(c) the 1st Defendant had never run any manufacturing business. Nor had the 1st Defendant any experience in producing commercially viable and green biomass fuel;

 

(5) in 2013, the 1st Defendant told SP2 that the 1st Defendant had set up GAAES to explore and eventually run the grass biomass fuel business. For reasons stated above, SP2 did not transfer his investment in the Q Fund to GAAGES;

 

(6) SP2 thought it would be a good idea if both the 1st Plaintiff and the 1st Defendant could have a joint venture in the OPT biomass fuel production and sales in Malaysia. SP2 knew that the 1st Defendant had experience in funding and managing funds and the 1st Plaintiff had the technical know-how to generate OPT biomass fuel on a commercial basis. It would be a great business marriage between the 1st Plaintiff and the 1st Defendant as both of them had separate and distinct skill sets and knowledge. In April 2013, SP2 introduced the 1st Plaintiff to the 1st Defendant. SP2 also wanted value for SP2’s investment in the 2nd Plaintiff through the joint venture;

 

(7) SP2 left it to both the 1st Plaintiff and the 1st Defendant to carry on their discussions. The 1st Plaintiff informed SP2 that –

 

(a) the parties had discussed their respective shareholding and that US$5 million funds would be secured by the 1st Defendant for this venture; and

 

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(b) the above structure was subsequently changed and it was agreed that the shareholding of the Plaintiffs would be 30% in the company to be formed, namely the 3rd Defendant;

 

(8) the Series 2 Fund was set up by the Defendants which would be the source of continuous funding for the 3rd Defendant. SP2 understood that the 1st and 2nd Defendants ran the Series 2 Fund and at all times, the capitalization of the 3rd Defendant was always the purview and responsibility of the 1st and 2nd Defendants. On 1.11.2013, the 1st and 2nd Defendants helped SP2 to transfer some of SP2’s investments in the Q Fund to the Series 2 Fund; and

 

(9) as an investor/shareholder in the 2nd Plaintiff, SP2 knew that the 30% shareholding in the 3rd Defendant was never issued to the Plaintiffs as agreed between the Plaintiffs and the 1st to 3rd Defendants. All the OPT biomass fuel information, technical, operations, commercial data and experience obtained by the 2nd Plaintiff at the 2nd Plaintiff’s expense (indirectly SP2’s expense) had at all times been used by the Defendants for the benefit of the Defendants. After obtaining such a benefit from the Plaintiffs, the Defendants had cut off the Plaintiffs from the joint venture while the Defendants continued to run the business after having obtained funding.

 

12. SP2 gave the following evidence during his cross-examination:

 

(1) concerning the 1st Plaintiff –

 

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(a) from the first time SP2 knew the 1st Plaintiff in 1986 until the time the 1st Plaintiff informed SP2 about biomass fuel, SP2 agreed that the 1st Plaintiff was involved in the pharmaceutical, banking and insurance industries and not the biomass fuel industry;

 

(b) SP2 agreed with the Defendants’ learned counsel that SP2’s knowledge of what technical know-how the 1st Plaintiff had in the OPT biomass fuel industry, was solely based on what the 1st Plaintiff had informed SP2;

 

(c) the commercial viability of the OPT biomass business was based on what the 1st Plaintiff had informed SP2; and

 

(d) SP2 vouched for the 1st Plaintiff’s character and technical know-how to the 1st Defendant. In fact, SP2 highly recommended the 1st Plaintiff to the 1st Defendant;

 

(2) regarding the 2nd Plaintiff –

 

(a) SP2 was not a director of the 2nd Plaintiff and would not be involved in the day-to-day management of the 2nd Plaintiff;

 

(b) the 1st Plaintiff would carry out most of the day-to-day activities of the 2nd Plaintiff;

 

47

 

(c) SP2 had no idea whether there was a BOD resolution of the 2nd Plaintiff which had authorized SP2 to give evidence for the 2nd Plaintiff in this case. SP2 however disagreed that SP2 was not authorized to give evidence for the 2nd Plaintiff;

 

(d) SP2 agreed with the Defendants’ learned counsel that any work that the 1st Plaintiff did for the 2nd Plaintiff with regard to the biomass fuel was only from 19.4.2013, the date of incorporation of the 2nd Plaintiff;

 

(e) SP2 disagreed with the Defendants’ learned counsel that in all the dealings between the 1st Plaintiff and the Defendants, the 1st Plaintiff acted in the 1st Plaintiff’s personal capacity and not for the 2nd Plaintiff;

 

(f) SP2 agreed with the Defendants’ learned counsel that the 2nd Plaintiff did not object to the Defendants’ use of the information given by the 1st Plaintiff; and

 

(g) SP2 agreed that the 2nd Plaintiff’s audited accounts did not show that the 2nd Plaintiff had incurred expenses on behalf of the 3rd Defendant;

 

(3) SP2 was not personally involved in the Commercial Trials. Nor was SP2 present at the time the Commercial Trials were conducted. The 1st Plaintiff showed SP2 a business plan and presentation on how OPT biomass was generated and what the 1st Plaintiff had done so far in the 2nd Plaintiff;

 

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(4)

 

SP2 disagreed with the Defendants’ learned counsel that the joint venture envisaged only the involvement of the 1st Plaintiff and not the 2nd Plaintiff;

 

(5) SP2 admitted that SP2’s knowledge of the discussions between the 1st Plaintiff and the 1st Defendant was “primarily’ based on what the 1st Plaintiff had informed SP2. SP2 was not involved in any meeting after SP2 had introduced the 1st Plaintiff to the 1st Defendant;

 

(6) in respect of the 3rd Defendant –

 

(a) SP2 was not involved in the incorporation of the 3rd Defendant; and

 

(b) SP2 agreed that the 3rd Defendant is a legal entity which is different from the 2nd Plaintiff;

 

(7) regarding the Series 2 Fund –

 

(a) SP2 was aware that the Plaintiffs were not investors in the Series 2 Fund;

 

(b) SP2 knew that GAA Ltd. (not any of the Defendants) managed the Series 2 Fund and was a different company. SP2 however testified that the Defendants set up the Series 2 Fund; and

 

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(c) SP2 did not receive any dividend from SP2’s investment in the Series 2 Fund;

 

(8) SP2 agreed that a shareholder’s agreement was never executed by the 2nd Plaintiff and the Defendants for the 2nd Plaintiff to own 30% shares in the 3rd Defendant; and

 

(9) SP2 agreed that the 1st Plaintiff had an obligation to ensure the viability and profitability of the 3rd Defendant.

 

13. In re-examination, SP2 explained, among others, that the Series 2 Fund could have been managed by GAA Ltd. but this did not mean that GAA Ltd. was not owned by the Defendants.

 

14. SP3 has been subpoenaed by the Plaintiffs to give evidence in this case. In examination-in-chief, SP3 testified as follows, among others:

 

(1) SP3 first met the 1st Plaintiff in June or July 2013 when SP3 worked in BSW. BSW is owned by SP3’s brother-in-law, Mr. Chan Sai Wah (Mr. Chan). BSW sources and supplies OPT;

 

(2) SP3 discussed with the 1st Plaintiff the possibility of BSW supplying OPT to the 1st Plaintiff for a project in Serting Hilir, Negeri Sembilan. BSW however did not supply OPT to the 1st Plaintiff; and

 

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(3) the 1st Plaintiff introduced to SP3, the 1st to 3rd Defendants for the purpose of BSW’s supply of OPT to the 3rd Defendant. BSW then supplied OPT to the 3rd Defendant.

 

15. When cross-examined, SP3 gave the following evidence:

 

(1) when SP3 first met the 1st Plaintiff, SP3 was working for Mr. Chan’s sole proprietorship in the plastic manufacturing industry;

 

(2) BSW was incorporated on 18.10.2013. BSW’s directors were, among others, SP2 and Mr. Chan. SP2 resigned as BSW’s director on 6.11.2013;

 

(3) BSW only supplied OPT to the 3rd Defendant and not the 1st Plaintiff. The 1st Plaintiff negotiated on behalf of the 3rd Defendant with BSW. The contract between the 3rd Defendant and BSW was signed sometime in February, 2104 (BSW’s Contract). SP3 was aware that when BSW’s Contract was signed, the 1st Plaintiff had left the 3rd Defendant. The time-line for BSW to supply OPT to the 3rd Defendant kept changing because the 3rd Defendant had no factory;

 

(4) SP3 sent intimidating “WhatsApp” messages to the 1st Defendant for the 3rd Defendant to pay BSW. Consequently, the 1st Defendant made a Travers station police report no. 3472/15 against SP3; and

 

(5) SP3 agreed with the Defendants’ learned counsel that SP3 did not have personal knowledge about this suit.

 

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C(2). Defendants’ case

 

16. The 1st Defendant’s witness statement stated, among others, as follows:

 

(1) the 1st Defendant is a director of the 3rd Defendant and various other companies in various jurisdictions in the world, including the 4th and 5th Defendants. The 1st Defendant has been in the financial services industry for the past 34 years. The 1st Defendant has been an international fund manager since 2000;

 

(2) for almost 5 years, the 1st Defendant had been involved in the development of biomass to green energy solutions. Before meeting the 1st Plaintiff, the 1st Defendant had spent more than 4 years researching the growing and harvesting of biomass crops and waste with a view of turning them into green energy pellets. Green energy pellets can be burned instead of fossil fuels by power producers and industries that burn coal and this will reduce carbon emission and release of toxins. The 1st Defendant had been involved in the green biomass fuel industry through GAAGES which was incorporated on 19.2.2013. Before meeting the 1st Plaintiff, GAAGES had sent the following proposals –

 

(a) “Biomass – Sustainable Green Energy Proposal for the State of Pahang”, dated 10.5.2012 to the Economic Planning Unit of Pahang [UPEN (Pahang)]; and

 

(b) “Biomass – The Case for Growing Energy Crops in Trengganu”, dated 15.5.2013 to the Economic Planning Unit of Trengganu [UPEN (Trengganu)].

 

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The 1st Defendant was fully aware that green energy pellets could be made from OPT feed stock. In fact, FELDA had demonstrated the shredding of OPT as a feed stock for pellets in 2009 and this had been posted on YouTube (FELDA’s 2009 Publication);

 

(3) in respect of the Alleged Agreement –

 

(a) the 2nd Plaintiff was running at a loss and hence, the 1st Defendant did not want to invest in the 2nd Plaintiff;

 

(b) the 2nd Plaintiff and the 4th Defendant were not involved in the discussions regarding the new entity, the 3rd Defendant. At all times, the 1st Plaintiff was acting for himself which resulted in the 1st Plaintiff rendering his personal services to the 3rd Defendant as its COO;

 

(c) there was no joint venture between the 1st and/or 2nd Plaintiff with the 1st Defendant or the 4th Defendant’s Group in respect of the 3rd Defendant. There was also no agreement between the 1st Plaintiff and the 1st Defendant as at 14.8.2013;

 

(d) the understanding was that the 1st Plaintiff would be personally allocated a 30% shareholding in the 3rd Defendant if the 1st Plaintiff could ensure the viability and/or profitability of the 3rd Defendant and if the 1st Plaintiff acted in the 3rd Defendant’s best interest at all times;

 

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(e) the 3rd Defendant sent a letter dated 4.9.2013 (3rd Defendant’s Letter dated 4.9.2013) to Mr. HS Lee (Mr. Lee)

 

which stated, among others –

 

(i) with effect from 1.9.2013, the 2nd Plaintiff had been fully acquired by the 3rd Defendant; and

 

(ii) the 3rd Defendant’s acquisition of the 2nd Plaintiff included the purchase of all the 2nd Plaintiff’s assets.

 

The 3rd Defendant’s Letter dated 4.9.2013 was signed by the 1st Defendant. According to the 1st Defendant, the 3rd Defendant’s Letter dated 4.9.2013 was sent as a favour for the 1st Plaintiff who owed RM60,000 to Mr. Lee (please see Mr. Lee’s email dated 3.9.2013 to the 1st Plaintiff); and

 

(f) the 1st Plaintiff sent an email dated 24.12.2013 to the 1st Defendant to inquire when the shareholder’s agreement would be “completed’ (1st Plaintiff’s Email dated 24.12.2013). The 1st Defendant did not respond to the 1st Plaintiff’s Email dated 24.12.2013 because –

 

(i) by that time, the 1st and 2nd Defendants had doubts about the 1st Plaintiff’s suitability as the 3rd Defendant’s COO;

 

(ii) the 3rd Defendant was not profitable or viable with the 1st Plaintiff as its COO;

 

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(iii) the 1st Plaintiff continued to make unilateral decisions for the 3rd Defendant without reference to the 3rd Defendant’s management; and

 

(iv) the 1st Plaintiff was not making any effort to get on with either the 1st or 2nd Defendant;

 

(4) the 1st Defendant denied making the Alleged Representations. The 1st Defendant also denied representing to the Plaintiffs that the 4th Defendant would provide funding to the 3rd Defendant;

 

(5) as regards the 3rd Defendant –

 

(a) the 1st and 2nd Defendants are the only shareholders in the 3rd Defendant. The 1st Plaintiff, the 1st and 2nd Defendants are 3 out of 4 directors of the 3rd Defendant;

 

(b) there was no BOD resolution of the 3rd Defendant regarding the appointment of the 1st Plaintiff, the 1st and 2nd Defendants. There was no employment of the 1st Plaintiff, the 1st and 2nd Defendants by the 3rd Defendant. Furthermore, the 1st Plaintiff had no work permit;

 

(c) the 1st Plaintiff was paid RM30,000.00 per month by the 3rd Defendant. The understanding among the 1st Plaintiff, the 1st and 2nd Defendants was that a deferred sum of RM20,000.00 per month would be paid to each of the 1st Plaintiff, the 1st

 

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and 2nd Defendants subject to the 3rd Defendant making profits and/or being viable. The 3rd Defendant remained unprofitable and neither the 1st nor the 2nd Defendant had taken such a deferred sum. The 1st Plaintiff was only a consultant to the 3rd Defendant and was remunerated as such for the 1st Plaintiff’s services;

 

(d) there was no BOD resolution of the 3rd Defendant which had approved a monthly director’s fee of US$1,000. None of the directors of the 3rd Defendant, including the 1st and 2nd Defendants, had been paid any director’s fee; and

 

(e) the 3rd Defendant’s 1st and 2nd Letters dated 17.12.2013 had been issued by the 3rd Defendant at the 1st Plaintiff’s request only for the purpose of the 1st Plaintiff’s loan application;

 

(6) regarding the Series 2 Fund –

 

(a) the 1st Plaintiff had nothing to do with the operations and management of the Series 2Fund;

 

(b) the Series 2 Fund was completely separate from the 5th Defendant; and

 

(c) there was no possibility of the Series 2 Fund making available an investment capital of RM1.5 million to the 3rd Defendant because of 2 reasons. Firstly, the Series 2 Fund did not have the equivalent to RM1.5 million to trade the

 

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purchase of shares in the 3rd Defendant. Secondly, even if the Series 2 Fund had the equivalent to RM1.5 million, the Series 2 Fund would not have been able to trade until the Series 2 Fund had sufficient funds of between US$3 and US$5 million in order to launch the Series 2 Fund in the first place;

 

(7) with respect to the Alleged Confidential Information –

 

(a) the 1st Plaintiff was not an expert in biomass production and supply. The 1st Plaintiff’s curriculum vitae (CV) showed that the 1st Plaintiff had been mainly involved in insurance, banking, credit cards, detergent and pharmaceutical industries, primarily in customer sales and marketing;

 

(b) the 1st Plaintiff voluntarily provided information to the 1st Defendant without any qualification. The information provided by the 1st Plaintiff was generic and was available in the public domain; and

 

(c) the 1st Plaintiff sent an email dated 24.1.2014 to the 1st Defendant (1st Plaintiff’s Email dated 24.1.2014) which stated, among others –

 

Firstly, I told you [1st Defendant] the study in question was commissioned by my previous (and still competitive) company. I do not have a copy of that study, since I deleted all proprietary information belonging to my previous company, when I resigned from that company. …”

 

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(emphasis added);

 

(8) the 1st Plaintiff did not act in the best interest of the 3rd Defendant because –

 

(a) one Mr. Yong Chee Soon from GGS sent an email dated 19.12.2013 to the 1st Plaintiff and the 1st Defendant (GGS’s Email dated 19.12.2013) which stated, among others (with grammatical errors) –

 

Pertaining to your [1st Plaintiff] request on the commission for the sales of OPT Pellet line. I have checked with Joseph [from GGS] and I am directed to reply to you the following.

 

The conversation between [1st Plaintiff] and Joseph was agreed earlier that [1st Plaintiff] would be our agent to promote biomass pellet plant and for every succeeded deal, [1st Plaintiff] will be entitled to a 1% commission. However, the agreed term was not materialise [sic] for more than 6 months and Joseph has take [sic] that agreement is waived [sic].

 

Then, [1st Plaintiff] came back with confirmed investors to invest in the OPT Pellet line and [1st Plaintiff] is also one of the main player [sic] in the new company. Hence, Joseph did not think of the commission to [1st Plaintiff] is appropriate as this would be cause conflict of interest [sic]. But due to the long relationship with [1st Plaintiff],

 

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GGS has provide [sic] a really special package (further reduction) to [1st Plaintiff] for the OPT Pellet line. The further reduction amount is greater than the 1% commission which it was mentioned to deduct from the selling price quoted to [3rd Defendant]. …”

 

(emphasis added);

 

(b) the 1st Plaintiff had had dealings with VSEA before the Defendants’ involvement with the 1st Plaintiff. The 1st Plaintiff had never bought any equipment or machinery from VSEA and yet, the 1st Plaintiff recommended to the 3rd Defendant to purchase the Grinder from VSEA. The 1st Plaintiff even attempted to get the 3rd Defendant to pay for the Grinder by way of post-dated cheques. At that time, the 3rd Defendant had no factory and had no need for the Grinder;

 

(c) the 1st Plaintiff had had previous dealings with GGS before the Defendants’ involvement with the 1 st Plaintiff but the 1st Plaintiff had not purchased any equipment from GGS. The 1st Plaintiff recommended GGS as the supplier of choice to the 3rd Defendant. As with VSEA, the 1st Plaintiff attempted to get the 3rd Defendant to purchase GGS’s equipment by postdated cheques despite the fact that the 3rd Defendant did not have a factory at that time;

 

(d) the 1st Plaintiff unilaterally arranged meetings with Korean sale agent when the 3rd Defendant had no factory. Furthermore, the 3rd Defendant had not determined the pricing of the OPT Pellets. In fact, the 1st Plaintiff had not

 

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even gone through the 27 financial models prepared by the 2nd Defendant;

 

(e) the 1st Defendant had sent an email dated 4.11.2013 to the 1st Plaintiff to use the 3rd Defendant’s office email and to copy all of the 1st Plaintiff’s emails to the 1st and 2nd Defendants (1st Defendant’s Email dated 4.11.2013). Despite the 1st Defendant’s Email dated 4.11.2013, the 1st Plaintiff continued to use his personal email, namely amas4229@_biaoond. net. au; and

 

(f) the 1st and 2nd Defendants settled the 3rd Defendant’s outstanding sum to BSW;

 

(9) concerning MNP’s purchase of OPT fibre, the 1st Defendant sent an email dated 5.7.2013 to Mr. Liew Chin Keong from OCBC Bank Bhd. (OCBC) which was copied to the 1st Plaintiff (1st Defendant’s Email dated 5.7.2013). The 1st Defendant’s Email dated 5.7.2013 informed OCBC regarding MNP’s purchase of OPT fibre; and

 

(10) regarding the Defendants’ Counterclaim –

 

(a) the 1st Plaintiff had acted in a manner detrimental to the 3rd Defendant’s interest and had caused the 3rd Defendant to suffer loss. The 3rd Defendant’s accounts for 2013 and 2014 showed that the 3rd Defendant had been running at a loss; and

 

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(b) based on the 1st Plaintiff’s projection figures –

 

(i) the 3rd Defendant would have 3 factories in 2014 and 2 additional factories in 2015. The first 3 factories would be established from the profit of the operations of the 3 factories;

 

(ii) each factory running 2 pellet lines should produce 25,000 MT of OPT Pellets a year. 3 factories would produce 75,000 MT of OPT Pellets in 2014 and 5 factories would produce 125,000 MT of OPT Pellets in 2015;

 

(iii) the “Free On Board” Port Klang price per MT of OPT Pellets is US$175;

 

(iv) an independent “Argus Biomass Markets” report in 2013, showed the price at US$170/MT as at 13.2.2013;

 

(v) in 2014, 75,000 MT of OPT Pellets would be produced and sold at US$175/MT, totaling US$13,125,000.00. At the exchange rate of US$3.238:RM1, this meant RM42,470,000.00;

 

(vi) in 2015, 125,000 MT of OPT Pellets would be produced and sold at US$175/MT, totaling US$21,783,125.00. At the exchange rate of US$3.238:RM1, this meant RM70,783,125.00; and

 

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(vii) the establishment of 2 additional factories in 2015 would cost RM14,100,000.00. Hence, the net revenue for 2014 and 2015 would be RM97,075,000.00 [(RM42,470,000.00 + RM70,783,125.00) –

 

RM14,100,000.00].

 

17. The 1st Defendant gave the following evidence, among others, in his crossexamination:

 

(1) the abbreviation “GAA” represents “Global Asset Allocation” and is a form of branding. The 1st Defendant set up the 4th and 5th Defendants;

 

(2) regarding the Alleged Agreement –

 

(a) when the 1st Defendant met the 1st Plaintiff, the 2nd Plaintiff was not operational;

 

(b) the 3rd Defendant was set up to commercialise the conversion of any form of biomass, including green grass, to green energy;

 

(c) the 1st Defendant denied there was an understanding between the 1st Defendant with the 1st and 2nd Plaintiffs to work together in a joint venture. The 1st Defendant further denied that the 3rd Defendant was the JV Company set up by the 1st Defendant and the Plaintiffs. There was no intention for the 1st or 2nd Plaintiff to be a shareholder of the 3rd Defendant;

 

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(d) in respect of the 1st Plaintiff’s Email dated 11.8.2013, the Plaintiffs’ learned counsel asked the 1st Defendant whether the parties were still having an on-going discussion on 11.8.2013 regarding their respective shareholding in the 3rd Defendant. The 1st Defendant answered in the affirmative;

 

(e) the 1st Defendant denied that there was a concluded agreement on 13.8.2013 between the Plaintiffs on the one part and the 1st to 4th Defendants on the other part;

 

(f) the 1st Defendant disagreed with the Plaintiffs’ learned counsel that the 1st Plaintiff had informed the 1st Defendant that with the US$5 Million Injection, there would be immediate pelletisation. The 1st Defendant denied that the 3rd Defendant had insufficient funds for mobilisation; and

 

(g) as there was no concluded agreement between the parties, there was no agreement for the Series 2 Fund to bear all the operational cost and expenditure of the 3rd Defendant;

 

(3) the 1st Defendant denied making the Alleged Representations;

 

(4) with respect to the Alleged Confidential Information –

 

(a) the 1st Defendant disagreed with the Plaintiffs’ learned counsel that the 1st Plaintiff had sufficient expertise to convert OPT to green energy. The 1st Defendant also disagreed that the

 

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Defendants had used the 1st Plaintiff’s CV to market the Series 2 Fund; and

 

(b) the 1st Defendant disagreed with the Plaintiffs’ learned counsel that the 1st Defendant had misled the Plaintiffs to disclose the Alleged Confidential Information by offering to give shares in the 3rd Defendant to the Plaintiffs;

 

(5) the 1st Defendant denied that the 1st to 3rd Defendants did not expend efforts to obtain a work permit for the 1st Plaintiff; and

 

(6) regarding the Defendants’ Counterclaim, the 1st Defendant disagreed with the Plaintiffs’ learned counsel that the sum counterclaimed by the Defendants was purely speculative.

 

18. In re-examination, the 1st Defendant explained as follows, among others:

 

(1) although the abbreviation “GAA” is a form of branding, nonetheless all the companies with “GAA” as part of their names, are separate from each other;

 

(2) the 3rd Defendant was a project management company which was set up for green energy projects before this case. The 3rd Defendant has no link with the 5th Defendant;

 

(3) the Series 2 Fund is a project fund which can invest in any green energy project the Series 2 Fund wishes, including the 3rd Defendant;

 

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(4) the 1st Defendant had spent 2 years in research and development (R&D) in turning biomass which could be grass, coconut husks or any living plant, into pellets. Hence, the presentations by GAAGES to UPEN (Pahang) and UPEN (Trengganu);

 

(5) the 1st Defendant is not a lawyer and has used the term “joint venture” loosely in the sense of working together with the 1st Plaintiff. There is no “joint venture” in the sense that the Defendants would acquire the 2nd Plaintiff or that the 3rd Defendant would be the JV Company;

 

(6) there could not be an injection of RM1.5 million into the 3rd Defendant until the Series 2 Fund had “critical mass”, namely the Series 2 Fund had enough money to invest in the 3rd Defendant after the Series 2 Fund had received funds guaranteed by parties who had made pledges to the 1st Defendant. Funds had been injected into the 3rd Defendant in November 2013 when the 3rd Defendant purchased machinery with cash; and

 

(7) there was no Alleged Agreement because there were on-going discussions between the 1st Defendant and the 1st Plaintiff in face-to-face meetings and by way of emails and telephone calls.

 

19. SD2 gave the following evidence, among others, in his witness statement and oral examination-in-chief:

 

(1) SD2 is GGE’s managing director. GGE was incorporated on 7.6.2012 with 2 Dubai-based companies, Orca Steel DMCC (Orca) and Asset Investment and Holdings Ltd. (AIH), as GGE’s majority shareholders.

 

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Orca is owned by Mr. Fraser while AIH is owned by SD2 and SD2’s son;

 

(2) GGE is in the business of providing infrastructure and logistics technology to the agricultural industry to generate alternate energy. Mr. Fraser and SD2 had been involved in the biomass industry for more than 10 years with a track record in Lithuania and America. GGE had the expertise in the biomass industry and had developed various technologies related to the biomass industry, including the technology to “ water proof pellets”;

 

(3) in February 2012, Mr. Fraser had introduced the 1st Plaintiff to SD2. According to Mr. Fraser, the 1st Plaintiff knew the Malaysian biomass market. The 1st Plaintiff gave a presentation to Mr. Fraser and SD2 on what the 1st Plaintiff claimed to be the way forward in the Malaysian biomass industry. Consequently, on 1.4.2012, GGE appointed the 1st Plaintiff to be GGE’s Operations Director. The 1st Plaintiff was given 1 share in GGE as an incentive and to enable the 1st Plaintiff to be appointed as a director of GGE. The 1st Plaintiff did not pay for this share in GGE. Nor had the 1st Plaintiff given up this share;

 

(4) SD2 agreed to pump in US$600,000 into GGE to enable the 1st Plaintiff to expand GGE’s biomass business in Malaysia. The 1st Plaintiff’s duties as GGE’s Operations Director were –

 

(a) to raise funds and to bring in contracts for GGE; and

 

(b) to carry out trials and to do a feasibility study of the biomass industry in Malaysia for GGE;

 

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(5) GGE terminated the 1st Plaintiff’s employment because –

 

(a) GGE discovered that the 1st Plaintiff had no experience in the “biomass to green energy’ business. The 1st Plaintiff had never carried out any trial and the feasibility study prepared by the 1st Plaintiff, was incomplete;

 

(b) the 1st Plaintiff kept insisting that SD2 pump in funds into GGE with no benefit to GGE. The 1st Plaintiff kept paying third parties purportedly for trunks, harvesting and storage space when GGE did not have any order. The 1st Plaintiff insisted on spending money on matters which were not of priority when what was crucial at the material time was the need to come up with a feasibility study and a viable business plan;

 

(c) the 1st Plaintiff did not understand how the biomass business worked and spent SD2’s funds without any benefit to GGE; and

 

(d) the 1st Plaintiff had used GGE’s funds for the 1st Plaintiff’s personal gain. The 1st Plaintiff had lived beyond his means. GGE had a claim of approximately RM400,000.00 which was due from the 1st Plaintiff;

 

(6) SD2 discovered that the 1st Plaintiff had erased the whole hard disc of GGE’s server;

 

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(7) the results of the trials and studies carried out by the 1st Plaintiff when the 1st Plaintiff was employed by GGE, belonged to GGE (GGE’s Confidential Information). GGE had already developed the “chip and ship” technology long before the 1st Plaintiff’s involvement in GGE. GGE had developed mobile units to chip OPT in the plantations, remove the fluids from the OPT so as to squeeze out the moisture and shred the OPT prior to its transportation to the factory. The extracted moisture is then sold as fertilisers to chemical companies; and

 

(8) SD2 was shocked to find out that GGE’s Confidential Information had been adduced in this case. The 1st Plaintiff had never developed any intellectual property for GGE. Nor is the 1st Plaintiff authorized by GGE to use GGE’s Confidential Information for any third party. The contract between GGE and the 1st Plaintiff did not allow the 1st Plaintiff to disclose GGE’s Confidential Information to any person for 2 years from the date the 1st Plaintiff left GGE.

 

20. SD2 testified as follows, among others, during his cross-examination:

 

(1) SD2 did not adduce any documentary evidence in this case on the following matters –

 

(a) GGE’s involvement and expertise in the biomass industry;

 

(b) the written employment contract of the 1st Plaintiff by GGE;

 

(c) the payments made by the 1st Plaintiff through GGE to third parties;

 

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(d) that the 1st Plaintiff had used GGE’s funds for personal gain;

 

(e) that GGE had a claim of approximately RM400,000 due from the 1st Plaintiff to GGE;

 

(f) that the 1st Plaintiff had erased the whole hard disc of GGE’s server; and

 

(g) GGE’s intellectual property;

 

(2) the 1st Plaintiff could not be employed by GGE in April 2012 because GGE was incorporated on 7.6.2012. There were however efforts to promote and incorporate GGE in April 2012;

 

(3) SD2 disagreed with the Plaintiffs’ learned counsel that the 1st Plaintiff could not carry out trials and studies in GGE due to a lack of funds;

 

(4) the Plaintiffs’ learned counsel put to SD2 that the 1st Plaintiff had erased information pertaining to GGE after the 1st Plaintiff had left GGE. SD2 disagreed with such a matter put by the Plaintiffs’ learned counsel;

 

(5) SD2 disagreed with the Plaintiffs’ learned counsel that the 1st Plaintiff had resigned from GGE before SD2 terminated the 1st Plaintiff’s employment with GGE;

 

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(6) SD2 referred to SD2’s Email dated 22.3.2013 and stated that the 1st Plaintiff was not allowed to disclose GGE’s Confidential Information for a period of 5 years; and

 

(7) until this case, SD2 did not know that the 1st Plaintiff was involved in the same biomass industry after the 1st Plaintiff had left GGE.

 

21. During re-examination, SD2 clarified as follows, among others:

 

(1) GGE had the technology regarding OPT and knew what to achieve in Malaysia. The 1st Plaintiff’s job was to implement GGE’s plan in Malaysia but the 1st Plaintiff had failed to do so;

 

(2) before GGE was incorporated, SD2 had met the 1st Plaintiff in Dubai and had offered him a job to set up GGE. The 1st Plaintiff was paid from 1.4.2012 and had worked before GGE’s incorporation;

 

(3) funds were made available to GGE and trials should have been carried out in June, July or August 2012 by the 1st Plaintiff. The 1st Plaintiff however used the funds for other purposes. Hence, SD2 had to curb the amount of funds made available to GGE; and

 

(4) after the 1st Plaintiff left GGE, SD2 thought the 1st Plaintiff had gone back to investment banking and had gone to Singapore. The 1st Plaintiff had no known address in Malaysia. GGE was not aware that the 1st Plaintiff was in Malaysia until SD2 knew about this case. Had

 

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GGE known earlier that the 1st Plaintiff was in Malaysia, GGE would have most certainly taken legal action against the 1st Plaintiff.

 

22. The 2nd Defendant’s witness statement substantially corroborated the 1st Defendant’s evidence. According to the 2nd Defendant, among others –

 

(1) since the 1st Plaintiff had no work permit, the 1st Plaintiff was not employed by the 3rd Defendant;

 

(2) in a meeting with VSEA attended by the 1st Plaintiff and the 2nd Defendant, the 1st Plaintiff attempted to push through an agreement whereby the 3rd Defendant agreed to rent the Grinder for RM138,000.00 contingent upon the 3rd Defendant’s commitment to purchase plant and machinery from VSEA with a value of RM2.1 million. The 2nd Defendant refused to sign the agreement and VSEA revised its quote to the 3rd Defendant;

 

(3) the 1st and 2nd Defendants had worked beneficially for more than 15 years but the 1st Defendant had no mandate from the 2nd Defendant to act for the 2nd Defendant personally; and

 

(4) due to the 1st Plaintiff’s action, the 3rd Defendant is now running at a loss of RM1.773 million.

 

23. During cross-examination, the 2nd Defendant gave the following evidence, among others:

 

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(1) the 2nd Defendant agreed with the Plaintiffs’ learned counsel that before meeting the 1st Plaintiff, the 1st, 2nd, 4th and 5th Defendants had neither the business nor the funds in relation to OPT Pellets production. The 2nd Defendant also agreed that around the time of the setting up of the Series 2 Fund, both the 1st and 2nd Defendants did not have the expertise in the production of OPT Pellets;

 

(2) the 2nd Defendant disagreed with the Plaintiffs’ learned counsel that that the 2nd Defendant trusted the 1st Defendant to discuss matters with the 1st Plaintiff in the personal interest of the 2nd Defendant; and

 

(3) the 1st Plaintiff as the 3rd Defendant’s COO reported to the 1st Defendant (the 3rd Defendant’s CEO) and not to the 2nd Defendant (the 3rd Defendant’s CFO).

 

24. The 2nd Defendant explained as follows in his re-examination, among others:

 

(1) although the 1st and 2nd Defendants had worked together for more than 15 years, the 1st and 2nd Defendants had various disagreements;

 

(2) the 2nd Defendant disagreed with the Plaintiffs’ learned counsel that the 3rd Defendant lacked funds to purchase machinery and equipment because more than RM2 million had been injected into the 3rd Defendant prior to the end of 2013. Furthermore, the 3rd Defendant had committed itself to purchase more than RM2.1 million worth of pelletizing equipment to be supplied by GGS;

 

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(3) the 1st to 3rd Defendants could not have benefited from the date provided by the 1st Plaintiff because “a good number’ of the items in those data were “totally incorrect; and

 

(4) based on the 3rd Defendant’s audited accounts for the financial year ending 31.12.2014, exhibit D7, the 3rd Defendant’s accumulated loss totaled RM3,516,917.00.

 

D. Was 1st Plaintiff authorized to file this action and to testify for 2nd Plaintiff?

 

25. The Defendants’ learned counsel had submitted that the 1st Plaintiff was not authorized by the 2nd Plaintiff to file this suit and to give evidence on behalf of the 2nd Plaintiff in this case because there was no BOD resolution from the 2nd Plaintiff which had authorized the 1st Plaintiff to institute this action and to testify on the 2nd Plaintiff’s behalf.

 

26. I have no hesitation to reject this contention by the Defendants for the following reasons:

 

(1) the 1st Plaintiff is a director of the 2nd Plaintiff and has the ostensible authority to file this suit and to testify on behalf of the 2nd Plaintiff. The concept of ostensible authority has been recognized by our Federal Court in a judgment delivered by Syed Agil Barakbah FJ in Chew Hock San & Ors v Connaught Housing Development Sdn Bhd [1985] 1 MLJ 350, at 353; and

 

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(2) if a party (A) lacks the authority to testify for another party (B) in a case, A’s testimony does not bind B. A’s lack of authority to give evidence on behalf of B, does not affect the relevancy and admissibility of A’s testimony. This is because the questions of relevancy and admissibility of evidence are governed by our Evidence Act 1950 (EA) and not by the lack of authority to testify. Our EA, despite its name, is a code of law which is intended by the legislature to be comprehensive (please see the Privy Council’s opinion delivered by Lord Diplock on appeal from Malaysia in Public Prosecutor v Yuvaraj [1969] 2 MLJ 89, at 90). Furthermore, s 2 EA provides that EA applies to all judicial proceedings (except to affidavits and arbitration).

 

E. Evaluation of evidence

 

27. I find as a fact that the 1st Plaintiff lacks credibility in this case. This finding of fact is premised on the following evidence and reasons:

 

(1) after the 1st Defendant had orally informed the 1st Plaintiff on 18.2.2014 that the 1st Plaintiff had no further role in the 3rd Defendant, the 1st Plaintiff’s Email dated 24.2.2014 was sent. Hence, the significance of the 1st Plaintiff’s Email dated 24.2.2014 as the first contemporaneous documentary evidence from the 1st Plaintiff regarding an alleged breach of the Alleged Agreement. There are material contradictions between the oral evidence of the 1st Plaintiff and the 1st Plaintiff’s Email dated 24.2.2014 as follows –

 

(a) the 1st Plaintiff’s witness statement alleged that the Alleged Agreement had been concluded between the 1st and 2nd Plaintiffs

 

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on the one part with the 1st Defendant (acting in the 1st Defendant’s capacity and on behalf of the 2nd, 4th and 5th Defendants) on the other part. However, the 1st Plaintiff’s Email dated 24.2.2014 only mentioned an agreement between the 2nd Plaintiff and the 4th Defendant. The Plaintiff’s Email dated 24.2.2014 did not state that the 1st Plaintiff, 1st, 2nd and 3rd Defendants were parties to the Alleged Agreement;

 

(b) the 1st Plaintiff’s testimony claimed that the Alleged Agreement had been reached on or around 13.8.2013. Such evidence by the 1st Plaintiff was inconsistent with the 1st Plaintiff’s Email dated 24.2.2014 which stated that the Alleged Agreement was “struck around mid-2013”;

 

(c) according to the 1st Plaintiff’s evidence, by September 2013, the 2nd Plaintiff had completely stopped its own trading and was effectively subsumed into the 3rd Defendant. The 1st Plaintiff’s Email dated 24.2.2014 however stated that the 2nd Plaintiff “would further enhance” the Intellectual Property as the business developed and the 2nd Plaintiff would manage business operations; and

 

(d) the 1st Plaintiff’s witness statement averred that the Alleged Agreement provided for the 1st and/or 4th Defendant collectively to have 20% shareholding in the 3rd Defendant. Such evidence was contrary to the 1st Plaintiff’s Email dated 24.2.2014 which stated that GAA Ltd. would have 20% shares in the 3rd Defendant;

 

(2) there are material discrepancies between –

 

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(a) the 1st Plaintiff’s email sent at 9.58 pm, 21.3.2013 to SD2 and Mr. Fraser (1st Plaintiff’s Email dated 21.3.2013); and

 

(b) the 1st Plaintiff’s email dated 22.3.2013 to SD2 and Mr. Fraser (1st Plaintiff’s Email dated 22.3.2013).

 

In the 1st Plaintiff’s Email dated 21.3.2013, the 1st Plaintiff stated, among others –

 

(i) the partnership between the 1st Plaintiff, SD2 and Mr. Fraser had become not viable; and

 

(ii) GGE’s business was the 1st Plaintiff’s “baby’ and the 1st Plaintiff had “enormous faith” in GGE’s potential. The 1st Plaintiff was “personally committed” to the “opportunity’ in GGE. Accordingly, the 1st Plaintiff offered, among others, that both SD2 and Mr. Fraser “assigned” GGE and all of GGE’s assets to the 1st Plaintiff. In return, the 1st Plaintiff would give a promissory note of RM1,000,000.00 each to SD2 and Mr. Fraser.

 

Upon the 1st Plaintiff’s receipt of SD2’s Email dated 22.3.2013, the 1st Plaintiff’s Email dated 22.3.2013 was sent and stated, among others, that with immediate effect (22.3.2012), the 1st Plaintiff had decided to step down as “Managing Partner (CEO)” and director of GGE.

 

The material contradictions between the 1st Plaintiff’s Email dated

 

21.3.2013 and the 1st Plaintiff’s Email dated 22.3.2013 are as follows –

 

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(ia) in the 1st Plaintiff’s Email dated 21.3.2013, the 1st Plaintiff claimed, among others, to have “enormous faith” in GGE’s potential and offered to “buy out the interest of SD2 and Mr. Fraser in GGE. The very next day, by way of the 1st Plaintiff’s Email dated 22.3.2013, the 1st Plaintiff resigned as a director of GGE with immediate effect; and

 

(ib) the 1st Plaintiff described himself as a partner in GGE in the 1st Plaintiff’s Email dated 21.3.2013. In the 1st Plaintiff’s Email dated 22.3.2013, the 1st Plaintiff called himself the “Managing Partner (CEO)” of GGE. Yet, the “Managing Partner (CEO)” of GGE resigned with immediate effect. The 1st Plaintiff’s witness statement claimed that the 1st Plaintiff “co-founded” GGE. During cross-examination, the 1st Plaintiff testified that the 1st Plaintiff “cofounded” GGE with Mr. Fraser. There was no mention of SD2 and the fact that the 1st Plaintiff was actually only an employee (according to SD2, the 1st Plaintiff was only GGE’s Operations Director) and director of GGE with only 1 share in GGE. The 1st Plaintiff is clearly not a “co-founder’ “Managing Partner’ or CEO of GGE; and

 

(3) according to SD2’s Email dated 22.3.2013, the 1st Plaintiff had been dismissed with immediate effect from GGE. The 1st Plaintiff sought to explain that the 1st Plaintiff had earlier resigned from GGE by way of the 1st Plaintiff’s Email dated 22.3.2013. Such an explanation is not credible because –

 

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(a) if the 1st Plaintiff had indeed resigned from GGE instead of being dismissed, the 1st Plaintiff would have replied to SD2’s Email dated 22.3.2013 and would have expressly informed SD2 that the 1st Plaintiff had resigned (not dismissed) from GGE. This was however not done by the 1st Plaintiff;

 

(b) the thread of email clearly showed that SD2’s Email dated

 

22.3.2013 was prior to the 1st Plaintiff’s Email dated 22.3.2013. No expert evidence had been adduced by the Plaintiffs to show that the thread of email (which showed in chronological order the 1st Plaintiff’s Email dated 21.3.2013, SD2’s Email dated 22.3.2013 and only then, the 1st Plaintiff’s Email dated 22.3.2013) had been fabricated or tampered with;

 

(c) there was no reason why the 1st Plaintiff would wish to resign on

 

22.3.2013 when a day earlier, the 1st Plaintiff’s Email dated

 

21.3.2013 had stated that the 1st Plaintiff had “enormous faith” in GGE’s potential and had offered to “buy out the interest of SD2 and Mr. Fraser in GGE;

 

(d) it was probable that the 1st Plaintiff resigned immediately (in the 1st Plaintiff’s Email dated 22.3.2013) after receiving news of the 1st Plaintiff’s immediate dismissal (by way of SD2’s Email dated 22.3.2013) so as to avoid the ignominy of being dismissed by GGE; and

 

(v) if the 1st Plaintiff had actually resigned from GGE and was not dismissed by GGE, the 1st Plaintiff would have demanded by way of email and/or letter for SD2 to retract SD2’s Email dated

 

22.3.2013 (which could have possibly defamed the 1st Plaintiff). Furthermore, the 1st Plaintiff had not challenged the legality of the

 

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1st Plaintiff’s dismissal by way of a suit. Nor did the 1st Plaintiff institute an action for defamation against SD2 and/or GGE regarding SD2’s Email dated 22.3.2013 (which could have possibly libelled the 1st Plaintiff).

 

28. SP2 and SP3 were not involved in any discussion between the 1st Plaintiff and the 1st Defendant regarding the Alleged Agreement. As such, the evidence of SP2 and SP3 does not support the Plaintiffs’ Claim in any manner.

 

29. This court finds as a fact that the 1st and 2nd Defendants are credible witnesses. The testimonies of the 1st and 2nd Defendants were not inconsistent with any documentary evidence. To the contrary, the evidence of the 1st and 2nd Defendants was supported by the contemporaneous emails adduced in this case. Furthermore, the evidence of the 1st and 2nd Defendants mutually corroborated each other.

 

30. Regarding the evidence of SD2, I am aware that SD2 and GGE have a dispute with the 1st Plaintiff in respect of the 1st Plaintiff’s tenure in GGE. Hence, the possibility, if not the motive, for SD2 to give false testimony against the 1st Plaintiff. According to s 8(1) EA, the motive of a party or witness, is a relevant fact. Consequently, I will not attach any weight to SD2’s evidence which is not supported by contemporaneous documentary evidence. I find that the following evidence by SD2 is corroborated by contemporaneous documentary evidence:

 

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(1) the 1st Plaintiff’s immediate dismissal from GGE is supported by SD2’s Email dated dated 22.3.2013. More importantly, there was no denial of SD2’s Email dated dated 22.3.2013 by the 1st Plaintiff; and

 

(2) GGE’s Confidential Information had been confirmed in the 1st Plaintiff’s Email dated 24.1.2014 wherein the 1st Plaintiff informed the 1st Defendant that the 1st Plaintiff had “deleted all proprietary information belonging to my previous company, when I resigned from that company’. I will discuss the significance of the 1st Plaintiff’s Email dated 24.1.2014 subsequently in this judgment.

 

F. Had Plaintiffs proven existence of Alleged Agreement?

 

31. It is not disputed that the Plaintiffs bear the legal burden to prove on a balance of probabilities the Alleged Agreement in accordance with s 101(1), (2) and 102 EA.

 

32. Both learned counsel have cited an impressive array of cases on whether the Alleged Agreement has been concluded in this case. I am of the view that whether there has been a binding agreement in a case, depends on the evidence adduced in that case and the construction of the documentary evidence in question. As such, cases on whether there have been concluded agreements, are not binding precedents from the view point of the stare decisis doctrine.

 

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33. In deciding whether the Alleged Agreement had been concluded in this case, I rely on the judgment of Ismail Khan CJ (Borneo) in the Federal Court case of Lau Sieng Nguong v Hap Shing Co Ltd [1969] 1 MLJ 190, at 192, as follows:

 

“It is clear law that where a contract is to be deduced from a set of documents it is necessary to look into the whole of the correspondence between the parties to see if the parties have come to a binding agreement (see Hussey v Horne Payne (1879) 4 App Cas 311, Bristol Cardiff and Swansea Aerated Bread Co v Maggs (1890) 44 ChD 616, May v Thomson (1882) 20 Ch D 705 723 and Lau Brothers & Co v China Pacific Navigation Co Ltd [1965] 1 MLJ 1).”

 

(emphasis added).

 

34. I am of the view that the Plaintiffs have failed to discharge the legal onus to prove on a balance of probabilities that the Alleged Agreement has been concluded on or around 13.8.2013. There is also no evidence of the existence of the Alleged Agreement at any point in time. This decision is premised on the following evidence (in chronological order) and reasons:

 

(1) the first proposal by the 1st Plaintiff was contained in the 1st Plaintiff’s email dated 1.5.2013 to the 1st Defendant (1st Plaintiff’s Email dated 1.5.2013). The 1st Plaintiff’s Email dated 1.5.2013 did not evidence any contract as the 1st Plaintiff’s Email dated

 

1.5.2013 stated that the 1st Plaintiff would “very much like” to continue discussion with the 1st Defendant;

 

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(2)

 

the 1st Plaintiff’s Email dated 11.8.2013 stated, among others –

 

(a) the 2nd Plaintiff’s shareholders would agree to the 1st Defendant’s request to increase shareholding in the JV Company “subject to the following terms and conditions, to be confirmed in writing”, namely, among others –

 

(i) preparation as quickly as possible of a shareholder’s agreement which clearly defines the roles and responsibilities of each of the non-fund shareholders; and

 

(ii) the 1st Plaintiff’s party would be allocated 2 BOD seats in the JV Company; and

 

(b) the 1st Plaintiff asked for the 1st Defendant’s agreement to the terms and conditions stated in the 1st Plaintiff’s Email dated 11.8.2013, “so that we can move forward without further delay’;

 

(3) the 1st Defendant’s Email dated 12.8.2013 replied to the 1st Plaintiff’s Email dated 11.8.2013 as follows, among others –

 

I [1st Defendant] will respond to [the 1st Plaintiff’s Email dated 11.8.2013] in detail tomorrow, … as I [1st Defendant] am keen to document everything as soon as possible so that we can move the business forward on a mutually beneficial basis.”

 

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It is clear that the 1st Defendant’s Email dated 12.8.2013 did not accept the 1st Plaintiff’s terms and conditions as laid down in the 1st Plaintiff’s Email dated 11.8.2013;

 

(4) the 1st Defendant’s Email dated 13.8.2013 replied to the 1st Plaintiff’s Email dated 11.8.2013 as follows, among others –

 

(a) a shareholder’s agreement would detail the shareholding in the JV Company;

 

(b) the 1st Defendant believed that the 1st Plaintiff and the 1st Defendant had agreed to 1 BOD seat in the JV Company to be allocated to the 1st Plaintiff;

 

(c) capital would be made available to the JV Company based on 2 factors, namely the capital had been raised and received by the fund and there was agreement as to the “exact spending requirements”; and

 

(d) the 1st Defendant suggested that the 1st Plaintiff and the 1st Defendant should have a discussion on the telephone later on 13.8.2013 “to clarify any outstanding issues”.

 

Construing on an objective basis, the entire contents of the 1st Plaintiff’s Email dated 11.8.2013 and the 1st Defendant’s Email dated 13.8.2013, there was no concluded contract between the 1st Plaintiff and the 1st Defendant on 13.8.2013;

 

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(5)

 

the 1st Plaintiff’s email dated 13.8.2013 (1st Plaintiff’s 1st Email dated 13.8.2013) responded to the 1st Defendant’s Email dated

 

13.8.2013 as follows, among others –

 

(a) when would the shareholder’s agreement be distributed for approval?; and

 

(b) the 1st Plaintiff did not agree to 1 BOD seat in the JV Company.

 

It was clear from the 1st Plaintiff’s Email dated 13.8.2013 that the 1st Plaintiff and the 1st Defendant had not agreed in respect of, among others, the shareholder’s agreement and how many BOD seats should be given to the 1st Plaintiff;

 

(6) the 1st Plaintiff’s second email dated 13.8.2013 (1st Plaintiff’s 2nd Email dated 13.8.2013) negatived the Alleged Agreement by stating, among others, as follows –

 

“[1st Defendant’s name], honestly, if you [1st Defendant] have had second thoughts about this business and/or you [1st Defendant] think you [1st Defendant] don’t need [2nd Plaintiff’s] involvement, please just say so.

 

Beyond the shareholding, some of your [1st Defendant’s] proposed provisions seem to gloss over the value that [2nd Plaintiff] brings to the equation.

 

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If you [1st Defendant] wish to question all of these issues beyond sense and reason then I [1st Plaintiff] think we need to reconsider the proposed JV.

 

If so, I [1st Plaintiff] understand but please let me know soonest.”

 

(emphasis added);

 

(7) the 1st Defendant sent an email dated 14.8.2013 to the 1st Plaintiff (1st Defendant’s Email dated 14.8.2013) which stated, among others, as follows (with grammatical errors) –

 

… there seem [sic] to be some genuine differences in opinion as to how we are going to achieve our goals. …

 

Please let me [1st Defendant] know exactly by return what your [1st Plaintiff] biggest concerns are and lets [sic] talk about them as a matter of priority. Please outline once again how you [1st Plaintiff] see this moving forward and lets [sic] see if it is possible readdress [sic] the structure of the whole project to everyone’s satisfaction.

 

I [1st Defendant] look forward to hearing back from you [1st Plaintiff] soon.”

 

(emphasis added).

 

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The 1st Defendant’s Email dated 14.8.2013 clearly evidenced a lack of agreement between the 1st Plaintiff and the 1st Defendant;

 

(8) the 1st Plaintiff’s email dated 14.8.2013 (1st Plaintiff’s Email dated 14.8.2013) stated, among others, as follows –

 

However, I [1st Plaintiff] am concerned that the fundamental T&C’s [terms and conditions] are not yet settled and indeed seem to be regressing at a time when we urgently need to move forward to capitalize on the momentum …

 

With respect to the T&C’s of the JV, sorry to say but it’s GAA that is “moving the goalposts”.

 

… I want to get this deal done. I spoke to [2nd Defendant] last evening and I am going to PMC this afternoon to sign the Form 45 – Directors [sic] Consent – so I have every intention of seeing this through – but there needs to be an agreement on the basics that are still outstanding.”

 

(emphasis added).

 

The 1st Plaintiff’s Email dated 14.8.2013 is highly significant for 2 reasons. Firstly, the 1st Plaintiff’s Email dated 14.8.2013 was an admission under s 17(1) EA by the 1st Plaintiff himself that the Alleged Agreement had not been reached. Section 17(1) EA provides as follows –

 

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Admission and confession defined

 

17(1) An admission is a statement, oral or documentary, which suggests any inference as to any fact in issue or relevant fact, and which is made by any of the persons and under the circumstances hereinafter mentioned.”

 

(emphasis added).

 

Secondly, the 1st Plaintiff’s Email dated 14.8.2013 was significant to show the 1st Plaintiff’s impetuosity to “jump” into a business arrangement with the 1st Defendant when –

 

(a) there had not been any agreement, joint venture or otherwise, between the 1st Plaintiff and the 1st Defendant; and

 

(b) the 3rd Defendant had not even offered any employment to the 1st Plaintiff;

 

(9) the 1st Plaintiff’s Email dated 24.12.2013 which inquired from the 1st Defendant on when the shareholder’s agreement would be “completed”, clearly negatived the existence of the Alleged Agreement;

 

(10) the 3rd Defendant had been incorporated on 26.8.2013 with only 2

 

subscriber shareholders, namely the 1st and 2nd Defendants. If the Alleged Agreement had been concluded on or around 13.8.2013, the Plaintiffs would have insisted that 30% shares in the 3rd

 

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Defendant should be allotted to the Plaintiff without any payment as provided in the Alleged Agreement. Yet, the Plaintiffs did not send any email and/or letter to demand for the 30% of shares in the 3rd Defendant. Such a conduct by the Plaintiffs which is relevant under s 8(2) EA, supports this court’s finding of fact that there has not been any agreement, let alone a joint venture contract, between the Plaintiffs and the Defendants; and

 

(11) the 1st Plaintiff’s testimony that the 2nd Plaintiff had been subsumed into the 3rd Defendant is contrary to a fundamental principle of company law embodied in s 16(5) CA (1965), namely a company is a legal entity which is separate from another company. As such, the 2nd Plaintiff is a legal entity which is distinct from the 3rd Defendant and cannot be subsumed into the 3rd Defendant.

 

To lift or pierce the corporate veil of the 2nd Plaintiff and 3rd Defendant, 3 recent Federal Court judgments require the Plaintiffs to fulfil a two-fold requirement (2 Conditions), namely the Plaintiffs have to satisfy this court that –

 

(a) the piercing or lifting of a corporate veil is in the interest of justice; and

 

(b) there exists special circumstances to pierce or lift the corporate veil of the 2nd Plaintiff and 3rd Defendant, such as –

 

(i) actual fraud or Common Law fraud had been perpetrated by the Defendants against the Plaintiffs;

 

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(ii) equitable fraud or constructive fraud has been committed by the Defendants against the Plaintiffs;

 

(iii) to prevent the Defendants from evading liability due to the Plaintiffs; or

 

(iv) to prevent an abuse of corporate personality by the Defendants.

 

I rely on the following 3 Federal Court judgments which have laid

 

down the 2 Conditions –

 

(ai) Hasan Lah FCJ’s judgment in Solid Investment Ltd v Alcatel Lucent (M) Sdn Bhd [2014] 3 CLJ 73, at 92;

 

(aii) the decision of Richard Malanjum CJ (Sabah & Sarawak) in Gurbachan Singh s/o Bagawan Singh & Ors v Vellasamy s/o Pennusamy & Ors [2015] 1 MLJ 773, at paragraphs 96-99; and

 

(aiii) the judgment of Richard Malanjum CJ (Sabah & Sarawak) in Giga Engineering & Construction Sdn Bhd v Yip Chee Seng & Sons Sdn Bhd & Anor [2015] 9 CLJ 537, at paragraphs 39, 44 and 45.

 

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No evidence had been adduced by the Plaintiffs in this case which had satisfied the 2 Conditions to lift or pierce the corporate veil of the 2nd Plaintiff and the 3rd Defendants. Nor was there any evidence of the 2 Conditions to consider 4th Defendant’s Group as a single corporate entity.

 

35. The Plaintiffs have submitted that the 3rd Defendant’s name contains “Palm Power’ which is part of the 2nd Plaintiff’s name. Hence, according to the Plaintiffs, such a fact proved the existence of the Alleged Agreement. With respect, I am unable to accept this contention as 2 elements of a valid agreement, namely a proposal [defined in s 2(a) of the Contracts Act 1950 (CA)] and acceptance of the proposal [construed in s 2(b) CA], are absent in this case.

 

36. The Plaintiffs had contended that the joint presentation of the Series 2 Fund by the 1st Plaintiff and the 1st to 3rd Defendants, evidenced the Alleged Agreement. I cannot accede to this submission because the evidence and reasons stated in the above paragraph 34 clearly negative the existence of the Alleged Agreement.

 

37. The Plaintiffs had relied on certain minutes of the 3rd Defendant’s Management Meetings to submit that there was a binding Alleged Agreement between the Plaintiff and the Defendants. With respect, I am not able to accept this contention because –

 

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(a) the ASOC and the Plaintiffs’ evidence claimed that the Alleged Agreement had been made on or about 13.8.2013, before the 3rd Defendant’s incorporation (26.8.2013) and before the 3rd Defendant’s Management Meetings. In other words, the Plaintiff cannot now rely on the minutes of the 3rd Defendant’s Management Meetings; and

 

(b) I have perused all the minutes of the 3rd Defendant’s Management Meetings and cannot find any clear evidence of the existence of the Alleged Agreement.

 

G. 3rd Defendant had not ratified pre-incorporation Alleged Agreement

 

38. Even if this court assumes the existence of the Alleged Agreement on or about 13.8.2013, the 3rd Defendant was only incorporated subsequently on 26.8.2013. The question that arises is whether the 3rd Defendant is bound by a contract formed before the 3rd Defendant’s incorporation.

 

39. Section 35(1) CA (1965) provides as follows:

 

“Any contract or other transaction purporting to be entered into by a company prior to its formation or by any person on behalf of a company prior to its formation may be ratified by the company after its formation and thereupon the company shall become bound by and entitled to the benefit thereof as if it had been in existence at the date of the contract or other transaction and had been a party thereto ”

 

(emphasis added).

 

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40. Even if there is evidence of the existence of the Alleged Agreement, by reason of s 35(1) CA, the 3rd Defendant is not bound by the Alleged Agreement because the 3rd Defendant has not ratified the Alleged Agreement. I rely on the following cases:

 

(1) in Perman Sdn Bhd & Ors v European Commodities Sdn Bhd & Anor [2006] 1 MLJ 97, at 103, Gopal Sri Ram JCA (as he then was) delivered the following judgment of the Court of Appeal –

 

“[3] A joint venture agreement dated 22 August 1979 was entered into between three parties. One of them was the first defendant, Perman Sdn Bhd. I had better say something about it straightaway. It is private limited company whose shareholding was held equally by Raja Zainal and his wife, Tengku Zaidah. It was incorporated on 26 February 1981, that is to say, about 18 months after the joint venture agreement. So, it was not in existence when the joint venture agreement was executed. The effect of that is spelt out in s 35 [CA (1965)] which says:

 

There is nothing to show that the first defendant had ratified the joint venture agreement .”

 

(emphasis added); and

 

(2) our s 35(1) CA (1965) is in pari materia with the previous s 35(1) of the Singapore’s Companies Act [CA (Singapore)]. The present s 41(1) CA (Singapore) is also identical to our s 35(1) CA. The Privy Council in Cosmic Insurance Corporation Ltd v Khoo Chiang Poh [1981] 1 MLJ 61, at 63, in an opinion given by Lord Roskill, has held as follows in respect of the then applicable s 35(1) CA (Singapore) –

 

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“… But section 35(1) [CA (Singapore)], as amended, provides as follows:-

 

Their Lordships note three things about this subsection. First, so far as presently relevant before section 35(1) can be successfully invoked the alleged “contract or other transaction” must purport to have been entered into “by any person on behalf of a company prior to its formation”. Secondly, it is only after that first condition is satisfied that such a contract “may be ratified by the company after its formation…”. Thirdly, it is only if both those conditions are satisfied that such a contract upon such ratification is ante-dated to the date when it first purported to have been made ”

 

(emphasis added).

 

H. Whether 1st, 2nd and/or 3rd Defendants had made Alleged

 

Representations to Plaintiffs

 

41. Under ss 101(1), (2) and 102 EA, the Plaintiffs have the legal burden to prove on a balance of probabilities that –

 

(1) the 1st, 2nd and/or 3rd Defendants had made the Alleged Representations to the Plaintiffs;

 

(2) the Alleged Representations were not true and/or were misleading;

 

(3) the Plaintiffs had relied on the Alleged Representations and had suffered loss which was not too remote and was recoverable in law;

 

and

 

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(4) either –

 

(a) the 1st, 2nd and/or 3rd Defendants had actual knowledge; or

 

(b) case law would consider the 1st, 2nd and/or 3rd Defendants to have knowledge

 

– that the Alleged Representations were not true and/or were misleading.

 

42. Firstly, it is to be noted that the Plaintiffs have not specified the Alleged Representations as required by Order 18 rule 12(1)(a) of the Rules of Court 2012 (RC).

 

43. This court makes the following findings of fact:

 

(1) the Plaintiffs had failed to prove on a balance of probabilities that the Alleged Representations had in fact been made by the 1st, 2nd and/or 3rd Defendants. The contemporaneous emails in this case did not prove the Alleged Representations. As such, no question arises regarding the truth or otherwise of the Alleged Representations;

 

(2) there was no evidence that the Plaintiffs had relied on the Alleged Representations. On the contrary, the 1st Plaintiff’s Email dated 14.8.2013 showed that the 1st Plaintiff was willing, if not impetuous, to

 

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enter into a business arrangement with the 1st Defendant without any agreement and without any inducement whatsoever from the 1st Defendant; and

 

(3) there was no proof on a balance of probabilities that the Plaintiffs had suffered any loss due to the Alleged Representations.

 

I. No evidence of conspiracy by 1st to 3rd Defendants

 

44. There are 2 kinds of tort of conspiracy to injure, namely –

 

(1) tort of conspiracy to injure by unlawful means; and

 

(2) tort of conspiracy to injure by lawful means.

 

45. In Muniandy a/l Nadasan & Ors v Dato’ Prem Krishna Sahgal & Ors,

 

Kuala Lumpur High Court Civil Suit No. 22NCC-68-01/2013, I have followed, among others:

 

(1) KN Segara JCA’s judgment in the Court of Appeal case of Renault SA v Inokom Corp Sdn Bhd & other appeals [2010] 5 MLJ 394, at paragraphs 30-34;

 

(2) the judgment of Low Hop Bing JCA in the Court of Appeal case of SCK Group Bhd & Anor v Sunny Liew Siew Pang & Anor [2011] 4 MLJ 393, at paragraphs 13 and 14; and

 

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(3) Nallini Pathmanathan J’s (as she then was) judgment in the High Court case of Deepak Jaikishan a/l Jaikishhan Rewachand & Anor v Intrared Sdn Bhd & Anor [2013] 7 MLJ 437, at paragraph 100.

 

46. Based on my understanding of the prevailing case law, I have held as follows in Muniandy a/l Nadasan, at paragraph 21:

 

“21. Based on my understanding of the above cases –

 

(1) the 3 elements of the tort of conspiracy to injure by unlawful means (3 Elements), are as follows:

 

(a) there must be proof of –

 

(i) an agreement; and/or

 

(ii) a combination of efforts

 

of the conspirators to injure the plaintiff. Such an agreement or combination may be –

 

(ai) formal or informal; or

 

(aii) in writing or by word of mouth;

 

(b) there are acts committed to execute the agreement or combination to injure the plaintiff; and

 

(c) the plaintiff has suffered damage due to acts done in execution of the agreement or combination to injure the plaintiff; and

 

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(2) the tort of conspiracy to injure by lawful means has the 3 Elements and a fourth ingredient, namely there is a pre-dominant purpose or intention of the conspirators to injure the plaintiff.’

 

47. In this case, the ASOC had pleaded that the 1st to 3rd Defendants had conspired to cause loss and damage to the Plaintiffs by unlawful means. The Plaintiffs bear the legal onus under ss 101(1), (2) and 102 EA to prove such a tort on a balance of probabilities.

 

48. I make a finding of fact that the Plaintiffs have not discharged their legal burden to prove on a balance of probabilities that the 1st to 3rd Defendants had conspired to cause loss and damage to the Plaintiffs by unlawful means. This decision is based on the following reasons:

 

(1) there was no evidence that the 1st to 3rd Defendants had committed an unlawful act towards the Plaintiffs;

 

(2) no evidence had been adduced by the Plaintiffs to show an agreement or a combination of efforts on the part of the 1st to 3rd Defendants to injure the Plaintiffs;

 

(3) there was no act committed by the 1st to 3rd Defendants to execute an agreement or a combination of efforts to injure the Plaintiffs; and

 

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(4) the Plaintiffs had failed to show any loss or damage due to acts done by the 1st to 3rd Defendants in execution of the agreement or combination of efforts to injure the Plaintiffs.

 

49. For the sake of completeness, I will now decide whether there is any evidence to prove that the 1st to 3rd Defendants had conspired to cause loss and damage to the Plaintiffs by lawful means. I am of the view that the Plaintiffs have failed to prove such a tort on a balance of probabilities because of the reasons stated in the above paragraph 48 and the fact that the Plaintiffs had no adduced any proof of a pre-dominant purpose or intention on the part of the 1st to 3rd Defendants to injure the Plaintiffs.

 

J. Plaintiffs’ claim based on Alleged Confidential Information

 

50. Firstly, it is clear that the Alleged Confidential Information is not protected by way of a patent recorded in the “Register of Patents” under the Patents Act 1983 (PA). I also doubt whether the Five-Step Process or any item of the Alleged Confidential Information is patentable under s 11 PA on the following grounds:

 

(1) there is no evidence adduced by the Plaintiffs that the Alleged Confidential Information is new;

 

(2) the Alleged Confidential Information does not involve an inventive step; and

 

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(3) the Plaintiffs have not shown that the Alleged Confidential Information

 

is industrially applicable.

 

51. In Yeohata Machineries Sdn Bhd & Anor v Coil Master Sdn Bhd & Ors

 

[2015] 6 MLJ 810, at 819-820, Vernon Ong JCA held as follows in the Court of Appeal:

 

“[21] The learned trial judge also found that that on the facts, the

 

plaintiffs have failed to prove the existence of the three elements essential to a cause of action for breach of confidence, namely (a) that the information was of a confidential nature, (b) that it was communicated in circumstances importing an obligation of confidence and (c) that there was an unauthorised use of the information (see Coco v AN Clark (Engineers) Ltd[1969] RPC 41). …

 

On the evidence of the witnesses for the plaintiffs and defendants, the learned trial judge also found that the so-called confidential information was included in the suppliers list, parts and components, machine operation, design and art. SP1 confirmed that the suppliers list and the process have been in the public domain.”

 

(emphasis added).

 

52. Based on Yeohata Machineries, the Plaintiffs bear the legal burden to prove on a balance of probabilities the 3 elements of the tort of breach of confidence, namely –

 

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(1) the Alleged Confidential Information was of a confidential nature;

 

(2) the Alleged Confidential Information was communicated in circumstances which imported an obligation of confidence on the part of the Defendants and such an obligation was owed by the Defendants to the Plaintiffs; and

 

(3) there was an unauthorised use of the Alleged Confidential Information by the Defendants.

 

53. I make a finding of fact that the Plaintiffs have failed to prove on a balance of probabilities the commission of the tort of breach of confidence by the 1st to 3rd Defendants. This decision is premised on the following evidence and reasons:

 

(1) the 1st Defendant had already been involved in the green biomass fuel industry for the past 5 years. GAAGES had sent proposals regarding green biomass fuel industry to UPEN (Pahang) and UPEN (Trengganu) before the 1st Plaintiff met the 1st Defendant. In other words, the 1st Defendant would have known about green biomass fuel industry and it was thus improbable for the 1st Defendant to have relied on and use the Alleged Confidential Information;

 

(2) the Alleged Confidential Information was not of a confidential nature because –

 

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(a) FELDA’s 2009 Publication regarding the shredding of OPT as a feed stock for pellets, was already available in the public domain (on YouTube) since April 2009; and

 

(b) the 1st Plaintiff’s CV did not show that the 1st Plaintiff was an expert in green biomass fuel industry who was capable of developing the Alleged Confidential Information. No evidence regarding the Commercial Trials had been adduced which could prove the confidential nature of the Alleged Confidential Information. There was also no proof that the Plaintiffs had conducted any R&D regarding the Alleged Confidential Information;

 

(3) there was no evidence that the Alleged Confidential Information had been communicated by the Plaintiffs to the Defendants in circumstances which had imported an obligation of confidence on the part of the Defendants. This is because firstly, the Plaintiffs did not require the Defendants to execute a NDA regarding the Alleged Confidential Information. Secondly, none of the 1st Plaintiff’s emails to the 1st Defendant stated that the Alleged Confidential Information had been communicated to the 1st Defendant with the condition that the Defendants should keep such information confidential. The 1st Plaintiff’s emails and attachments were also not protected by way of a “password encryption”; and

 

(4) the 1st Plaintiff only raised the question concerning the Alleged Confidential Information for the very first time in the 1st Plaintiff’s Email dated 24.2.2014 (after 18.2.2014, the date when the 1st Defendant had orally informed the 1st Plaintiff that the business arrangement between the parties had ceased). It was therefore clear that the Alleged Confidential Information was an afterthought which had been contrived

 

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to extract maximum remuneration for the Plaintiffs as a result of the cessation of the business arrangement in this case.

 

54. Even if it is assumed that the Plaintiffs could prove the 3 elements of the tort of breach of confidence regarding the Alleged Confidential Information, GGE (not the Plaintiffs) has the right to take action in respect of the Alleged Confidential Information. GGE’s Confidential Information was admitted by the 1st Plaintiff in the 1st Plaintiff’s Email dated 24.1.2014 when the 1st Plaintiff stated that the 1st Plaintiff had deleted GGE’s Confidential Information.

 

55. Based on the above reasons, I have no hesitation to dismiss the Plaintiff’s claim based on the Alleged Confidential Information.

 

K. Could 1st Plaintiff claim against 3rd Defendant?

 

K(1). Was 1st Plaintiff an employee of 3rd Defendant?

 

56. I am of the view that the 1st Plaintiff is an independent contractor of the 3rd Defendant with the duties and functions as a COO. I am not able to find that the 1st Plaintiff was an employee of the 3rd Defendant. This decision is premised on the following evidence and reasons:

 

(1) there was no employment contract between the 1st Plaintiff and 3rd Defendant;

 

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(2) as stated in the 1st Plaintiff’s Email dated 14.8.2013, the 1st Plaintiff was willing to work for the 3rd Defendant despite the lack of a joint venture agreement between the parties. It is thus probable that the 1st Plaintiff had agreed to work for the 3rd Defendant as an independent contractor without the benefit of an employment contract; and

 

(3) the 1st Plaintiff had not obtained an “Employment Pass” from the “Controller’ [defined in reg. 1 of the Immigration Regulations 1963 (IR) to include any Immigration Officer] as required by reg. 9(1) IR. Regulation 9(1) IR provides as follows –

 

“9. Employment Pass.

 

(1) Subject to the provisions of this regulation, an Employment Pass may be issued by the Controller to any person other than a prohibited immigrant who satisfies the Controller that he wished to enter the Federation (otherwise than as a visitor, tourist, transit passenger or student) in order to take up employment under a contract of service with the Government of the Federation of any State in the Federation or of any city Council or Municipality in the Federation or to take up employment in the Federation under a contract –

 

(a) for a minimum period of two years employment in the Federation with a company or firm approved for the purposes of this sub-paragraph; and

 

(b) under which such person is entitled to a salary of not less than twelve hundred dollars per month;

 

Provided that where the Controller is satisfied that no person resident in the Federation is available to undertake employment of

 

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the kind referred to in any such contract, and that it would be unreasonable to except and employer to pay such a salary, he may waive the requirements of this sub-paragraph ”

 

(emphasis added).

 

The Controller has a discretion under reg. 21(1) IR to require an employer as a condition precedent to the issue of an “Entry Permit’ [defined in s 2(1) of the Immigration Act 1959/1963 (IA) to mean a Permit to enter and remain in Malaysia (issued under s 10 IA)] to furnish a “general security” in respect of all charges and expenses which may be incurred by the Malaysian Government in respect of the maintenance, repatriation or removal from Malaysia of the employee in question. There was no evidence that the 3rd Defendant had furnished any security for the 1st Plaintiff’s Entry Permit.

 

It is to be noted that under s 55B(1) IA, a person who employs another person who is not a Malaysian citizen or a holder of an Entry Permit, commits an offence which is punishable with a fine of not less than RM10,000.00 but not more than RM50,000.00 and/or may be imprisoned for a term not exceeding 12 months.

 

57. The contemporaneous emails as well as the conduct of both the 1st Plaintiff and the 1st to 3rd Defendants, in my opinion, showed that the 1st Plaintiff had agreed to be appointed as the 3rd Defendant’s COO with a gross monthly salary of RM30,000.00.

 

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58. I have not overlooked the 3rd Defendant’s 2 Letters dated 17.12.2013 which purportedly stated that the 1st Plaintiff was the 3rd Defendant’s employee. I am of the view that the 3rd Defendant’s 2 Letters dated 17.12.2013 did not evidence any employment contract between the 1st Plaintiff and the 3rd Defendant because –

 

(1) the contents of the 3rd Defendant’s 2 Letters dated 17.12.2013 in respect of, among others, the 1st Plaintiff’s purported monthly salary and EPF Contributions, were not true; and

 

(2) the 3rd Defendant’s 2 Letters dated 17.12.2013 had been given at the behest of the 1st Plaintiff solely for the purpose of a loan application by the 1st Plaintiff.

 

K(2). 1st Plaintiff could not claim from 3rd Defendant

 

59. As the 1st Plaintiff was not an employee of the 3rd Defendant and the 1st Plaintiff had been paid his gross monthly salary of RM30,000.00 until 18.2.2014 (when the 1st Defendant verbally informed the 1st Plaintiff that the 1st Plaintiff’s services were no longer required by the 3rd Defendant), this court is unable to allow the 1st Plaintiff’s claim for salary and/or benefit as the 3rd Defendant’s independent contractor.

 

60. Regarding the 1st Plaintiff’s claim for monthly director’s fee from the 3rd Defendant, article 1 of the 3rd Defendant’s Articles of Association (AA) provided that subject to AA and with the exception of regulations 71 and

 

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90, the regulations contained in Table A in the Fourth Schedule to CA (1965) (Table A) shall apply to the 3rd Defendant. Regulation 70 in Table A (Regulation 70) states as follows:

 

70. The remuneration of the directors shall from time to time be determined by the company in general meeting. That remuneration shall be deemed to accrue from day to day. The directors may also be paid all travelling, hotel, and other expenses properly incurred by them in attending and returning from meetings of the directors or any committee of the directors or general meetings of the company or in connection with the business of the company.”

 

(emphasis added).

 

According to s 33(1) CA (1965), AA binds the 3rd Defendant and the 3rd Defendant’s shareholders – please see, for example, the Court of Appeal’s judgment delivered by Mahadev Shankar JCA in Fairview Schools Bhd. v Indrani a/p Rajaratnam (No. 2) [1998] 1 MLJ 110, at 123.

 

There was no evidence that the 3rd Defendant’s shareholders had decided in a general meeting on the remuneration of the 3rd Defendant’s directors. Accordingly, the 1st Plaintiff’s claim for monthly director’s fee from the 3rd Defendant cannot succeed by reason of Regulation 70.

 

L. Defendants’ Counterclaim

 

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61. For reasons expressed above, the Alleged Agreement did not exist. As such, the 1st to 3rd Defendants had no contractual basis to counterclaim against the Plaintiffs.

 

62. Even if it is assumed that there is a binding agreement between the Plaintiffs and the 1st to 3rd Defendants, I find as a fact that the Defendants’ Counterclaim for the 3rd Defendant’s loss of net revenue of RM97,075,000.00 (3rd Defendant’s Alleged Loss) based on the 1st Plaintiff’s projection figures, are too remote and cannot be recovered in law under s 74(1) and (2) CA. Section 74(1) and (2) CA provide as follows:

 

“ Compensation for loss or damage caused by breach of contract 74(1) When a contract has been broken, the party who suffers by the breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from the breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.

 

(2) Such compensation is not to be given for any remote and

 

indirect loss or damage sustained by reason of the breach .”

 

(emphasis added).

 

63. It is trite law that the 1st to 3rd Defendants bear the legal burden to prove the 3rd Defendant’s Alleged Loss – please see Mohd. Dzaiddin SCJ’s (as he

 

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then was) judgment in the Supreme Court case of Malaysian Rubber Development Corp Bhd v Glove Seal Sdn Bhd [1994] 3 MLJ 569, at 575 and 576.

 

64. I am of the view that the 3rd Defendant’s Alleged Loss is too remote to be claimed by the 1st to 3rd Defendants within the meaning of s 74(1) and (2) CA because –

 

(1) the 3rd Defendant’s Alleged Loss did not naturally arise in the usual course of things within the meaning of the first limb of s 74(1) CA; and/or

 

(2) both the Plaintiffs and the 1st to 3rd Defendants did not know that the 3rd Defendant’s Alleged Loss was “likely to result from the breach” of the 1st Plaintiff as understood in the second limb of s 74(1) CA.

 

M. Whether 1st Plaintiff was liable to 3rd Defendant

 

M(1). 1st Plaintiff’s duties to 3rd Defendant

 

65. As a director of the 3rd Defendant, the 1st Plaintiff owed the following statutory duties to the 3rd Defendant:

 

(1) under s 132(1) CA (1965), the 1st Plaintiff shall at all times exercise his powers for a proper purpose and in good faith in the best interest of

 

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the company. In Pioneer Haven Sdn Bhd v Ho Hup Construction Co Bhd & Anor and other appeals [2012] 3 MLJ 616, at paragraphs 233-235 and 237-240, Zainun Ali JCA (as she then was) delivered the following judgment of the Court of Appeal –

 

“Duty to act in good faith and in the best interest to the company

 

[233] The prior provision of s 132(1) requires a director to act honestly. The current s 132(1) of the Act, requires a director to act in good faith in the best interest of the company. It is accepted that for all intents and purposes, the scope of the directors’ duties to act honestly under the old s 132(1) and the new s 132(1) are the same. Thus the old case laws relating to the duty to act honestly continues to be relevant (see Cheam Tat Pang v Public Prosecutor [1996] 1 SLR 541).

 

[234] It is also recognised that the duty to act in the best interest of the company means different things, depending on the factual circumstances.

 

[235] Consequentially, depending on the type of dispute or issue, the directors must place a higher priority on the interest of the persons who are truly affected.

 

[237] What then, is the test whether there is breach of such duty? Or putting it in another way in order for the decision of the directors to be challenged, what is the test?

 

[238] The test is nicely condensed in Ford’s Principles of Corporations Law (para 8.060), that there will be a breach of duty if the act or decision is shown to be one which no reasonable board could consider to be within the interest of the company.

 

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[239] This test is adopted in Charterbridge Cornp Ltd v Lloyds Bank Ltd [1970] Ch 62 at p 74, in that, to challenge a decision of the directors, the test is whether:

 

… an intelligent and honest man in the position of the director of the company concerned, could in the whole of the existing circumstances have reasonably believed that the transactions were for the benefit of the company.

 

[240] The above principle is often referred to as the ‘Charterbridge Principle’.”

 

(emphasis added); and

 

(2) the 1st Plaintiff shall exercise reasonable care, skill and diligence with the knowledge, skill and experience which may reasonably be expected of a director having the same responsibilities – s 132(1A) CA (1965).

 

66. Section 132(5) CA (1965) provides that the statutory duties imposed on a company’s directors, are in addition to and do not derogate from any rule of law relating to the duty and liability of a company’s directors.

 

67. In addition to the above statutory duties, the 1st Plaintiff has the following duties as the 3rd Defendant’s director –

 

(1) the 1st Plaintiff had a fiduciary duty to avoid a position wherein the 1st Plaintiff’s duties owed to the 3rd Defendant were in conflict, directly or

 

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indirectly, with the 1st Plaintiff’s personal interest – please see, for example, the judgment of Lord Cranworth LC in the House of Lords case of Aberdeen Railway Co v Blaikie Bros [1843-1860] All ER Rep 249, at 252. If a conflict of interest situation arises, the 1st Plaintiff had to disclose his interest in a contract or proposed contract to the 3rd Defendant’s BOD as required by s 133(1) and (5) CA (1965);

 

(2) the 1st Plaintiff owed a fiduciary duty not to make any personal profit from the 1st Plaintiff’s position as a director of the 3rd Defendant -please see, for example, the Privy Council’s opinion given by Lord Templeman in Attorney General for Hong Kong v Reid & Ors [1994] 1 All ER 1, at 4 (an appeal from Hong Kong); and

 

(3) the 1st Plaintiff had a Common Law duty to take reasonable care in the performance of the 1st Plaintiff’s duties, powers and functions as the 3rd Defendant’s director so as not to cause loss or damage to the 3rd Defendant – please see the judgment of Romer J (as he then was) in the English High Court case of Re City Equitable Fire Insurance Co Ltd [1925] Ch 407, at 427, 428-429 and 430, as follows –

 

“In order, therefore, to ascertain the duties that a person appointed to the board of an established company undertakes to perform, it is necessary to consider not only the nature of the company’s business, but also the manner in which the work of the company is in fact distributed between the directors and the other officials of the company, provided always that this distribution is a reasonable one in the circumstances, and is not inconsistent with any express provisions of the articles of association. In discharging the duties of his position thus ascertained a director must, of course, act honestly; but he must also exercise some degree of both skill and diligence. To the question of what is the particular degree of skill and diligence required of him, the authorities do not, I think, give any very clear answer. … If, therefore, a director is only liable for gross or culpable negligence, this means that he does not owe a duty to his company, to take all possible care. It is some degree of care less than that. The care that

 

ill

 

he is bound to take has been described by Neville J. in the case referred to above as “reasonable care” to be measured by the care an ordinary man might be expected to take in the circumstances on his own behalf. In saying this Neville J. was only following what was laid down in Overend & Gurney Co. v. Gibb as being the proper test to apply, namely: “Whether or not the directors exceeded the powers entrusted to them, or whether if they did not so exceed their powers they were cognisant of circumstances of such a character, so plain, so manifest, and so simple of appreciation, that no men with any ordinary degree of prudence, acting on their own behalf, would have entered into such a transaction as they entered into?”

 

There are, in addition, one or two other general propositions that seem to be warranted by the reported cases: (1) A director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. A director of a life insurance company, for instance, does not guarantee that he has the skill of an actuary or of a physician. In the words of Lindley M.R.: “If directors act within their powers, if they act with such care as is reasonably to be expected from them, having regard to their knowledge and experience, and if they act honestly for the benefit of the company they represent, they discharge both their equitable as well as their legal duty to the company”: see Lagunas Nitrate Co. v. Lagunas Syndicate. It is perhaps only another way of stating the same proposition to say that directors are not liable for mere errors of judgment. (2) A director is not bound to give continuous attention to the affairs of his company. His duties are of an intermittent nature to be performed at periodical board meetings, and at meetings of any committee of the board upon which he happens to be placed. He is not, however, bound to attend all such meetings, though he ought to attend whenever, in the circumstances, he is reasonably able to do so. (3) In respect of all duties that, having regard to the exigencies of business, and the articles of association, may properly be left to some other official, a director is, in the absence of grounds for suspicion, justified in trusting that official to perform such duties honestly. …

 

These are the general principles that I shall endeavour to apply in considering the question whether the directors of this company have been guilty of negligence.”

 

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(emphasis added).

 

68. I will now discuss whether a company’s COO who is an independent contractor (not an employee) and who is not a director of that company, is a fiduciary of the company. I refer to 2 judgments of the Supreme Court of Canada as follows:

 

(1) in LAC Minerals Ltd. v International Corona Resources Ltd. (1989) 61 DLR (4th Series) 14, at 28, 29, 30 and 32 (“LAC Minerals”), La Forest J identified 3 sets of circumstances wherein the term “fiduciary” has been commonly used –

 

“Much of the confusion surrounding the term “fiduciary” stems, in my view, from its undifferentiated use in at least three distinct ways. The first is as used by Wilson J. in Frame v Smith. There the issue was whether a certain class of relationship, custodial and non-custodial parents, were a category, analogous to directors and corporations, solicitors and clients, trustees and beneficiaries, and agents and principals, the existence of which relationship would give rise to fiduciary obligations. The focus is on the identification of relationships in which, because of their inherent purpose or their presumed factual or legal incidents, the courts will impose a fiduciary obligation on one party to act or refrain from acting in a certain way (“First Category”) …

 

This brings me to the second usage of fiduciary, one I think more apt to the present case. The imposition of fiduciary obligations is not limited to those relationships in which a presumption of such an obligation arises. Rather, a fiduciary obligation can arise as a

 

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matter of fact out of the specific circumstances of a relationship (“Second Category”). As such it can arise between parties in a relationship in which fiduciary obligations would not normally be expected….

 

The third sense in which the term “fiduciary” is used is markedly different from the two usages discussed above. It requires examination here because, as I will endeavour to explain, it gives a misleading colouration to the fiduciary concept. This third usage of “fiduciary” stems, it seems, from a perception of remedial inflexibility in equity. Courts have resorted to fiduciary language because of the view that certain remedies, deemed appropriate in the circumstances, would not be available unless a fiduciary relationship was present. In this sense, the label fiduciary imposes no obligations, but rather is merely instrumental or facilitative in achieving what appears to be the appropriate result .

 

In my view, this third use of the term “fiduciary”, used as a conclusion to justify a result, reads equity backwards. It is a misuse of the term. It will only be eliminated, however, if the courts give explicit recognition to the existence of a range of remedies, including the constructive trust, available on a principled basis even though outside the context of a fiduciary relationship .”

 

(emphasis added); and

 

(2) La Forest J in a subsequent case in Hodgkinson v Simms (1995) 117 DLR (4th Series) 161, at 176, opined that only parties falling within the First and Second Categories are “true fiduciaries”.

 

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69. Based on La Forest J’s judgments in LAC Minerals and Hodgkinson, I am of the respectful view that a company’s COO who is an independent contractor (not an employee) and who is not a director of that company, is a fiduciary of the company within the meaning of the First Category. This is because of the very nature and purpose of the relationship between a company and its COO wherein the company is substantially dependent on the COO. It is not uncommon for the COO to be the second person (after the CEO) to be in charge of a company’s day-to-day business, management and operation. In this case, the fiduciary nature of the relationship between the 1st Plaintiff and the 3rd Defendant was accentuated by the fact that the 1st Plaintiff was also the 3rd Defendant’s director.

 

M(2). Breaches of 1st Plaintiff’s duties owed to 3rd Defendant

 

70. GGS’s Email dated 19.12.2013 showed that the 1st Plaintiff had requested for 1% commission for the sales of OPT Pellet lines by GGS to the 3rd Defendant. Such a request by the 1st Plaintiff had breached the following duties owed by the 1st Plaintiff to the 3rd Defendant:

 

(1) the 1st Plaintiff had breached his statutory duty under s 132(1) CA (1965) to exercise the 1st Plaintiff’s powers for a proper purpose and in good faith in the best interest of the 3rd Defendant. It is clear that based on Pioneer Haven and applying the Charterbridge Principle, an intelligent and honest man in the 1st Plaintiff’s position in the 3rd Defendant, considering all the circumstances in this case, could not

 

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have reasonably believed that the 1st Plaintiff’s request for commission from GGS, was for the benefit of the 3rd Defendant;

 

(2) the 1st Plaintiff had violated his fiduciary duty to avoid a position wherein the 1st Plaintiff’s duties owed to the 3rd Defendant were in conflict with the 1st Plaintiff’s personal interest; and/or

 

(3) the 1st Plaintiff had breached his fiduciary duty not to make any personal profit from the 1st Plaintiff’s position as the 3rd Defendant’s director and COO

 

(1st Breach by 1st Plaintiff).

 

71. I agree with the contention of the Defendants’ learned counsel that the priority of the 3rd Defendant was to secure a site for the factory to produce OPT Pellets. During cross-examination, the 1st Plaintiff admitted that securing a factory for the 3rd Defendant, was an “urgent priority”. Without a factory for the 3rd Defendant, there was no commercial sense for the 1st Plaintiff to rush the 3rd Defendant to –

 

(1) purchase OPT (from BSW) and the Grinder (from VSEA);

 

(2) appoint Regalis to sell the OPT Pellets on behalf of the 3rd Defendant; and

 

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(3) approach Korean buyers to purchase the OPT Pellets

 

– when the 3rd Defendant lacked a factory to produce the OPT Pellets in the first place. In the circumstances, I am constrained to make a finding of fact that the 1st Plaintiff had breached the following duties owed by the 1st Plaintiff to the 3rd Defendant:

 

(a) the 1st Plaintiff’s statutory duty under s 132(1A) CA (1965) to exercise reasonable care, skill and diligence with the knowledge, skill and experience which might reasonably be expected of a director of the 3rd Defendant having the same responsibilities as the 1st Plaintiff; and/or

 

(b) the 1st Plaintiff had been negligent in breaching the 1st Plaintiff’s Common Law duty owed to the 3rd Defendant to exercise all reasonable care, skill, diligence and attention to secure a factory for the 3rd Defendant

 

(2nd Breach by 1st Plaintiff).

 

72. The 1st Plaintiff’s Email dated 22.12.2013 admitted that the 1st Plaintiff had failed to arrange for insurance coverage for the Grinder when the 1st Plaintiff proposed to rent the Grinder from VSEA. The rental for the Grinder was RM138,000.00 and its mobilization cost amounted to RM7,000.00. To commit the 3rd Defendant to such an expensive piece of machinery without insurance coverage, in my view, was negligence on the part of the 1st

 

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Plaintiff whereby the 1st Plaintiff had breached his statutory duty under s 132(1A) CA (1965) and/or Common Law duty of care (3rd Breach by 1st Plaintiff).

 

73. I will refer in this judgment to the “ 1st to 3rd Breaches by 1st Plaintiff as the “1st Plaintiff’s Breaches”.

 

74. There was evidence adduced by the Defendants that the 3rd Defendant had to pay BSW despite the fact that the 3rd Defendant’s factory had not been set up. Consequently, it is only just for this court to order the learned Registrar to assess all loss and damage suffered by the 3rd Defendant as a result of the 1st Plaintiff’s Breaches pursuant to Order 37 rule 4(a) RC (Assessment of Damages).

 

N. Court’s discretion to award costs and its quantum

 

75. After the trial of this case, the court has a discretion to award costs and its quantum under Order 59 rule 19(1) RC.

 

N(1). Whether court should award costs

 

76. For reasons stated above, the Plaintiffs’ Claim is dismissed against the 1st to 4th Defendants. Costs should be awarded to the 1st to 3rd Defendants who had resisted the Plaintiffs’ Claim. I do not exercise my discretion to

 

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award costs for the 4th Defendant as the Plaintiffs did not proceed with this suit against the 4th Defendant.

 

77. The Defendants’ Counterclaim is dismissed except for the 3rd Defendant’s counterclaim in respect of the 1st Plaintiff’s Breaches (3rd Defendant’s Counterclaim). As such, this court exercises its discretion as follows:

 

(1) the Plaintiffs are entitled to costs for the dismissal of the Defendant’s Counterclaim to be paid by the 1st to 3rd Defendants; and

 

(2) the 3rd Defendant is entitled to costs of the 3rd Defendant’s Counterclaim as against the 1st Plaintiff.

 

N(2). What is appropriate quantum of costs?

 

78. I will make only one order for costs in this case. This is because the Plaintiffs’ Claim and the Defendants’ Counterclaim have been tried together. Furthermore, both the Plaintiffs and Defendants had been represented by one firm of solicitors. There is also no reason why there should be a separate order for costs for each party in this case.

 

79. Order 59 rules 16(2) to (4), 19(1) and (2) RC provide as follows:

 

“Basis of assessment

 

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Order 59 rule 16(2) Subject to the other provisions of these Rules, the amount of costs which any party are entitled to recover is the amount allowed after determination of

 

rule 16(3)

 

rule 16(4)

 

costs on the standard basis where –

 

(a) an order is made that the costs of one party to proceedings be paid by another party to those proceedings;

 

(b) an order is made for the payment of costs out of any fund; or

 

(c) no order for costs is required,

 

unless it appears to the Court to be appropriate to order costs to be determined on the indemnity basis.

 

On an assessment of costs on the standard basis, there shall be allowed a reasonable amount in respect of all costs reasonably incurred and any doubts which the Court may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the paying party; and in these Rules, the term “the standard basis”, in relation to the determination of costs, shall be construed accordingly.

 

On a determination of costs on the indemnity basis, all costs shall be allowed except in so far as they are of an unreasonable amount or have been

 

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unreasonably incurred and any doubts which the Court may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the receiving party; and in these Rules, the term “the indemnity basis”, in relation to the determination of costs, shall be construed accordingly.

 

Costs payable for trial in the High Court

 

Order 59 rule 19(1) The amount of costs (excluding disbursement) that are payable shall be at the discretion of the Court and shall be determined upon the conclusion of the trial.

 

rule 19(2) In fixing the costs payable, the Court shall have

 

regard to the relevant circumstances including but not limited to the factors set out in the rule 16.”

 

(emphasis added).

 

80. In respect of the quantum of costs to be awarded, in See Teow Koon v Kian Joo Factory Bhd & Ors [2016] MLRHU 153, at paragraph 145, I have expressed the view that Order 59 rule 19(1) RC seems to indicate that the court has no discretion regarding disbursements and the amount of disbursements as submitted by the party entitled to costs, should generally be accepted by the court. As such, I allow all “out of pocket expenses” incurred by the 1st to 3rd Defendants in this case.

 

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81. The Defendants’ learned counsel had proposed a quantum of costs for “getting up” based on an “hourly rate”, namely the total legal fees paid by the Defendants to their lawyers according to the actual time spent by the Defendants’ lawyers at an agreed rate per hour. I am not able to find any Malaysian case which has discussed an “hourly rate” basis in respect of assessment of costs.

 

82. With respect to the Defendants’ learned counsel, I am not able to accept an “hourly rate” basis to assess “getting up” costs in this case. My reasons are as follows:

 

(1) as explained in See Teow Koon, at paragraph 140, the wording of Order 59 rule 16(2)(a) RC indicates that as a general rule, the court should exercise its discretion to order costs on a standard basis. Based on Order 59 rule 16(2) RC, costs on an indemnity basis should be the exception (where “it appears to the Court to be appropriate to order costs to be determined on the indemnity basis”). In this case, there is no exceptional reason why this court should order costs to be assessed on an indemnity basis. Hence, the 1st to 3rd Defendants are only entitled to an assessment of costs on a standard basis (Standard Basis Entitlement);

 

(2) according to Order 59 rule 16(3) RC, the Standard Basis Entitlement means that the 1st to 3rd Defendants are only entitled to a “reasonable amount in respect of all costs reasonably incurred and any doubts which the Court may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the paying party’. An “hourly rate” basis of assessment is clearly

 

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contrary to the Standard Basis Entitlement as embodied in Order 59 rule 16(3) RC; and

 

(3) if this court had quantified “getting up” costs on an “hourly rate” basis, the 1st to 3rd Defendants would have be given an unjustifiable windfall in the form of costs on an indemnity basis.

 

83. In accordance with the Standard Basis Entitlement, I award RM180,000.00 as “getting up” costs for the dismissal of the Plaintiffs’ Claim against the 1st to 3rd Defendants. Such an award is premised on the following reasons:

 

(1) the Plaintiffs’ Claim was based on 4 causes of action, namely breach of contract, misrepresentation, conspiracy to injure by unlawful means and tort of breach of confidence. The Plaintiffs’ Claim also involved issues on employment and immigration law (regarding employment pass). As such, this is not a simple and straightforward case [Order 59 rule 16(1)(a) RC] and senior counsel has indeed been retained by the 1st to 3rd Defendants [Order 59 rule 16(1)(b) RC];

 

(2) a total of 6 witnesses testified in this case and there were 8 days of trial;

 

(3) this case involved 339 documents spanning over 1597 documents [Order 59 rule 16(1)(c) RC];

 

(4) this case is very important to the 1st and 2nd Defendants because the 1st and 2nd Defendants are involved in the financial services industry

 

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wherein integrity and good reputation are essential [Order 59 rule 16(1)(e) RC];

 

(5) the value of the Plaintiffs’ Claim was approximately RM2.2 million, a substantial sum [Order 59 rule 16(1)(f) RC]; and

 

(6) 2 lengthy written submissions have been filed by the 1st to 3rd Defendants.

 

84. In respect of the dismissal of the Defendants’ Counterclaim, I consider a “getting up” costs of RM30,000.00 to be awarded in favour of the Plaintiffs. This is primarily because of the astronomical sum of RM97,075,000.00 counterclaimed by the 1st to 3rd Defendants.

 

85. As regards the 3rd Defendant’s Counterclaim, the 3rd Defendant should be given RM20,000.00 as “getting up” costs to be paid by the 1st Plaintiff. I have arrived at this sum because the 3rd Defendant’s Counterclaim concerned statutory, fiduciary and Common Law duties of the 1st Plaintiff as the 3rd Defendant’s director and COO. More importantly, there is a novel question of whether a company’s COO owes fiduciary duties to the company.

 

86. The upshot is that the Plaintiffs shall pay the 1st to 3rd Defendants a total “getting up” costs of RM170,000.00 [(RM180,000.00 – RM30,000.00) + RM20,000.00]. In accordance with Order 59 rule 24 RC, I award interest at

 

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the rate of 5% per annum on the total sum of “getting up” costs and disbursement (Costs Sum) from 2.2.2016 (date of assessment of costs) until the date of full payment of the Costs Sum by the Plaintiffs.

 

87. Lastly, costs of the Assessment of Damages should be paid by the 1st Plaintiff to the 3rd Defendant and I so order.

 

O. Summary of court’s decision and judgment

 

88. A summary of the above decision is as follows:

 

(1) the 1st Plaintiff had the ostensible authority as the 2nd Plaintiff’s director to –

 

(a) file this suit; and

 

(b) testify in this case

 

– on behalf of the 2nd Plaintiff;

 

(2) the contemporaneous emails and the conduct of the parties did not show the existence of the Alleged Agreement;

 

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(3) even if the Alleged Agreement existed, the 3rd Defendant was not bound by the Alleged Agreement under s 35(1) CA (1965) because the 3rd Defendant had not ratified the Alleged Agreement;

 

(4) there was no proof that the 1st, 2nd and/or 3rd Defendants had made the Alleged Representations to the Plaintiffs;

 

(5) there was no evidence that the 1st to 3rd Defendants had conspired to cause loss and damage to the Plaintiffs, by unlawful and/or lawful means;

 

(6) the Plaintiffs could not claim from the 1st to 3rd Defendants with regard to the Alleged Confidential Information;

 

(7) the 1st Plaintiff was not the 3rd Defendant’s employee and could not claim any salary and/or benefit from the 3rd Defendant. Nor could the 1st Plaintiff claim for monthly director’s fee from the 3rd Defendant;

 

(8) the Defendants’ Counterclaim for the 3rd Defendant’s Alleged Loss, is dismissed because –

 

(a) there was no contract between the Plaintiffs and the 1st to 3rd Defendants; and/or

 

(b) the 3rd Defendant’s Alleged Loss was too remote to be recoverable under s 74(1) and (2) CA;

 

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(9) the 1st Plaintiff had breached his statutory, fiduciary and Common Law duties owed to the 3rd Defendant as the 3rd Defendant’s director and COO; and

 

(10) costs should be awarded to the 1st to 3rd Defendants on a Standard Basis Entitlement and not on an “hourly rate” basis.

 

89. Based on the above reasons, the following judgment is made:

 

(1) the Plaintiffs’ Claim against the 4th Defendant is dismissed with no order as to costs;

 

(2) the Plaintiffs’ Claim against the 1st to 3rd Defendants is dismissed with costs;

 

(3) the Defendants’ Counterclaim is dismissed with costs except the 3rd Defendant’s Counterclaim which is allowed with costs and the following consequential order –

 

(a) Assessment of Damages; and

 

(b) costs of the Assessment of Damages shall be paid by the 1st Plaintiff to the 3rd Defendant;

 

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(4) interest at the rate of 5% per annum on the Costs Sum is awarded from 2.2.2016 (date of assessment of costs) until full payment of the Costs Sum; and

 

(5) allocator fee of 4% on the Costs Sum.

 

80. In closing, I express my gratitude to both learned counsel for their helpful written submissions.

 

WONG KIAN KHEONG

 

Judicial Commissioner High Court (Commercial Division) Kuala Lumpur

 

DATE: 13 MAY 2016

 

Counsel for Plaintiffs: Mr. James Khong Yoon Hong & Mr. Sreekant Pillai (Messrs James Khong)

 

Counsel for 1st to 3rd Cik Norliza Rasool Khan, Ms. P. Thavaselvi & Mr. Bryan Teo Wee Xin

 

Defendants: (Messrs. Zul Rafique & Partners)

 

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PDF Source: http://kl.kehakiman.gov.my