The judgment establishes that breaches of confidentiality and fiduciary duties by an employee can lead to legal action for unlawful interference with the employer's business.

JUDGMENT

Anand Ponnudurai J:

Introduction

[1] It is not unusual for employment contracts to contain terms and conditions relating to maintaining confidentiality, conflict of interest etc and such terms may be applicable during employment and even once the employment relationship ceases. Hence, employees should be wary of their conduct at all material times during and post-employment so as to avoid any possible claim by the employer thereafter. If and when allegations arise that there has been a breach of those obligations, an employer will generally not hesitate to take action against such employee. This is one such case.

[2] The Plaintiffs have commenced these present proceedings against the 1st Defendant (D1), [a former employee of the 1st Plaintiff (P1)] and the 2nd Defendant (D2) (a company owned by D1) based on multiple causes of action ie breach of employment contract by D1 for setting up one Propac Asia Enterprise (hereinafter referred to as "Propac") and D2 which both shared businesses of a similar nature with P1; breach of duty of confidentiality (contractual and equitable) by D1 for the alleged misappropriation and misuse of P1's confidential information; breach of fiduciary duties and fidelity; unlawful interference with P1's business and breach of an oral arrangement/understanding relating to a share incentive scheme between the parties.

[3] The Defendants, on the other hand, have mounted a counterclaim against the Plaintiffs and one Mr Yeoh Chye Huat (hereinafter referred to as "Mr Yeoh") for damages predominantly on the basis that these legal proceedings/suit were not filed to seek a genuine redress but commenced with the underlying intention to obtain D1's shares in P1 and to eliminate the Defendants who are the Plaintiffs' competitors in the packaging trade.

[4] I will hereinbelow set out the salient background facts, issues to be tried, the parties' respective submissions/contentions, the applicable law and my analysis of the same in determining whether the Plaintiffs have successfully proven their claim against the Defendants on a balance of probabilities and similarly whether the Defendants have successfully proven their counterclaim against the Plaintiffs and Mr Yeoh.

[5] For ease of reference and the avoidance of doubt, the parties herein will be referred to as the Plaintiffs and the Defendants in their respective capacities in the main suit.

Background Facts

[6] Based on a perusal of the pleadings and parties' submissions, the background facts can be succinctly summarised as follows.

[7] P1 is a private limited company incorporated on 5 December 2017 and in the business of wholesale of paper in bulk, packaging materials, manufacture of other articles of paper and paperboard N.E.C. and printing.

[8] P2 and Mr Yeoh are currently directors (along with one Mr Yu Fong Chin) and shareholders of P1. D1 was previously one of the directors in P1.

[9] At the time P1 was incorporated on 5 December 2017, Mr Yeoh was involved in the following businesses:

[10] Sometime in November 2017, prior to the formation of P1, P2 invited D1 to work at P1 and by additionally offering the following share incentive scheme:

a. that D1 will be given 10% of shares in P1;

b. that D1 will be appointed as a director of P1; and

c. P2 alleges that D1 is under an obligation to return the said 10% shares in P1 and resign as a director if she ceases employment with P1.

(hereinafter referred to as "the share incentive scheme")

[11] The Plaintiffs plead that D1 agreed to the said share incentive scheme and was thereafter appointed as a director of P1 upon its incorporation on 5 December 2017. It is not disputed that 10% shares in P1 were allotted to D1 for the sum of RM1.00.

[12] Subsequently, on 2 February 2018, D1 signed a letter of appointment of employment as sales manager of P1 (hereinafter referred to as "the said letter of employment").

[13] Of importance in this case are cls 14 and 15 of the said letter of employment which inter alia provide terms and condi