The court held that damages from a wrongful Anton Piller Order are recoverable only if direct causation can be established, considering the appropriation of rights and conduct of the parties involved.

Introduction

[1] This judgment concerns Encl 377, which is the assessment of damages payable to the second defendant ("D2") pursuant to the plaintiffs' cross-undertaking as to damages. This obligation arose after the discharge of an Anton Piller Order ("APO") obtained against D2. Initially granted ex-parte by this Court to preserve evidence linked to allegations of intellectual property infringement and breach of trust, the APO was later unseated by the Court of Appeal, which decreed that the order should never have been issued against D2. Thus, the stage is now set for this Court to grapple with the pivotal question: what loss has D2 suffered due to the wrongful execution of the APO, for which the plaintiffs, by their cross-undertaking, are bound to answer?

Background Facts

[2] M3 Technologies (Asia) Berhad and M3 Online Sdn Bhd ("plaintiffs") developed and marketed software products over 20 years, including M3 Blast, i3TeamWorks, i3Display, and i3AppsBuilder. D2 through D8 were former or current employees of the plaintiffs in critical roles such as management, operations, and R&D. Amaz Digital Sdn Bhd ("D9") was incorporated shortly after the resignation of some defendants, with its directors and shareholders being former employees.

[3] The plaintiffs allege that D9 launched products mirroring plaintiffs' software, using similar branding and client lists. It is alleged that defendants retained employment at the plaintiffs while purportedly developing competing products under D9. In substantiating their claim, the plaintiffs showed D9's use of marketing materials referencing the plaintiffs' clients and software. E¬mail checks is argued to reveal connections between D9 and its former employees. D2, who was a former managing director of the plaintiffs, is suspected to be the person behind the scene as well as the funder of D9. Therefore, based on these allegations and the available evidence, the ex-parte APO was granted by my predecessor against all defendants on 19 August 2021 to prevent evidence tampering or destruction. This was subsequently confirmed through an inter parte APO on 20 January 2022.

[4] Affected by the APO, D2 filed an appeal to the Court of Appeal wherein his appeal was allowed with costs of RM30,000.00; and that the APO against D2 was set aside. The plaintiffs' application to the Federal Court seeking leave to appeal was dismissed on 13 December 2023 with costs of RM30,000.00. The relevant portion of the Court of Appeal's 14 July 2023 order granting right to assess damages states as follows:

"(b) Permohonan Perayu di dalam Rayuan Sivil No.: W-02(IM)(IPCv)-296-02/2022 dan W-02(IM)(IPCv)-297-02/2022 dibenarkan setakat mana gantirugi akan ditaksirkan oleh Mahkamah Tinggi;"

[5] Following an assessment of damages in accordance with a notice issued under O 37 r 1 of the Rules of