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2024 MarsdenLR 3412
HIGH COURT MALAYA SHAH ALAM
MUDAJAYA CORPORATION BERHAD – Appellant
Versus
MICHEAL CHUA KHIAN KENG & ORS – Respondent
[Civil Suit No: BA-22NCVC-53-02/2018]
The court upheld the validity of Property Transfer Agreements acknowledging a debt despite insufficient evidence to support the full amount of unauthorized payments claimed by the plaintiff.
Headnote:(A) Contracts Act 1950 – Sections 15 and 16 – Breach of fiduciary duty and trust – Plaintiff claimed unauthorized payments totaling RM72,195,919.86 by former employee and co-defendants – Court found insufficient evidence to support full amount claimed as secret profit – Defendants admitted to receiving funds but denied unauthorized payments – Court upheld validity of Property Transfer Agreements (PTAs) executed by defendants acknowledging debt of RM65,000,000.00 – Defendants' counterclaim dismissed. (Paras 108, 114, 115)
Facts of the case: The plaintiff alleged that Michael Chua and co-defendants misappropriated funds from subcontractors without authorization, leading to significant financial losses. The defendants claimed the funds were returned to the plaintiff and denied any wrongdoing. (Paras 1-13)
Findings of Court: The court found that while unauthorized payments occurred, the exact amount claimed by the plaintiff was not proven. The PTAs executed by the defendants were valid and enforceable. (Paras 108, 114)
Issues: The main issues included whether the defendants received unauthorized payments and the validity of the PTAs executed acknowledging the debt. (Paras 1, 108)
Ratio Decidendi: The court ruled that the plaintiff failed to prove the exact amount of secret profit claimed, but the defendants' admission of debt through the PTAs was upheld. (Paras 108, 114)
Result: Judgment entered against the defendants for RM43,547,282.19 with interest and costs awarded to the plaintiff. (Paras 114, 117)
JUDGMENT
Introduction
[1] The plaintiff's main cause of action centers on breach of fiduciary duty and/or breach of trust committed by its former employee Michael Chua Khian Keng (the 1st defendant) (hereinafter "Michael"), when he was in the employment with the plaintiff company. The alleged breach is that Michael had received unauthorized payments and/or misappropriated a sum of RM72,195,919.86 (hereafter "secret profit") from the plaintiff company when he was a Senior Costing Manager in the plaintiff company.
[2] It is the plaintiff's case that Michael had received part of the secret profit, and the other part of the secret profit was received by the following parties under Michael's instructions:
(i) A company known as Nescaya Integrasi Sdn Bhd (hereafter "Nescaya") which belonged to Michael and Tan Kah Luan;
(ii) Tan Kah Luan (hereafter "Tan KL"), who is Michael's wife, the 2nd defendant; and
(iii) Inner Cube Co (hereafter "Inner Cube"), an enterprise which belonged to Michael's brother, Joseph Chua Thian Song (hereafter "Joseph"), the 3rd defendant.
[3] The 4th defendant, Madam Yeo Siok Boi, is Michael's mother. She was brought into the action because she was a party to a Property Transfer Agreement in which Michael, Tan KL and her acknowledged owing a debt of RM65,000,000.00 to the plaintiff.
[4] The parties have gone through a lengthy trial. The plaintiff called 18 witnesses, and the defendants called 6 witnesses. This Court will discuss and examine the relevant parts of the evidence of the witnesses. If any evidence is not mentioned in the judgment, it does not mean it was not considered, that evidence is either trivial or does not affect the final outcome of the finding of this Court.
The Salient Facts
The Plaintiff's Main Cause Of Action
[5] The plaintiffs main cause of action is that Michael, Tan KL, Nescaya, and Inner Cube/Joseph had without authorization or had secretly received monies from the plaintiff's subcontractors in sums amounting to RM72,195,919.86 (defined as 'the secret profit') without the knowledge of the plaintiff. The subcontractors that were involved in the payments of the secret profit were:
i) Giga Engineering & Construction Sdn Bhd (hereafter "Giga");
ii) Juang Antara Bina Sdn Bhd (hereafter "Juang");
iii) Pembinaan Meiima (M) Sdn Bhd (hereafter "Melima"); and
iv) Puncak Gunung Piling Sdn Bhd (hereafter "Puncak Gunung").
[6] Essentially, the plaintiff was the main subcontractor of a project known as Manjung Coal Fired Power Plant (hereafter "Project M4"). The plaintiff had engaged the services of Giga, Juang and Melima for various construction works, and Puncak Gunung was the spun piling contractor.
[7] Lim Ah Sam (PW5) from Puncak Gunung said that Puncak Gunung was instructed by Michael to carry out the spun piling works under the "supervision" of the three subcontractors, namely Giga, Juang and Melima. PW5 explained that Puncak Gunung would issue invoices to Giga, Juang and Melima for its spun piling works done on a monthly basis. However, the amount to be invoiced to Giga, Juang and Melima would depend on the instructions given by Michael. PW5 admitted that the amounts invoiced to Giga, Juang and Melima were not the actual quantity of spun piles used.
[8] PW5 also admitted that Puncak Gunung had adjusted the rates and the quantity of the spun piles in its invoices so that the amounts invoiced would match the figures as instructed by Michael. In other words, Puncak Gunung had inflated the rates of the spun piling works and the quantity of the spun piles in its invoices. This means Puncak Gunung had invoiced Giga, Juang and Melima for an amount over and above its actual work done. PW5 admitted that Puncak Gunung was in fact overpaid for the actual work done, and the over payment amounted to approximately RM58,000,000.00. This money was paid to Micheal, Nescaya and Inner Cube over a period of time from 2012 to 2014. PW5 told the Court that he was informed by Michael that this money was meant for
