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2018 MarsdenLR 3912

HIGH COURT MALAYA KUALA LUMPUR
DR H K FONG BRAINBUILDER PTE LTD – Appellant
Versus
SG-MATHS SDN BHD & ORS – Respondent
[Civil Suit No: WA-22IP-40-08/2016]



Petitioner Advocates:Joy Wilson Appukuttan,Tan Sin Yee ,Respondent Advocate: Kok Pok Chin,Ong Hong Keit

Validity of agreements under statutory requirements for franchise registration.

Headnote:The case revolves around the applicability of the Franchise Act 1998 to a Master License Agreement and jurisdictional issues regarding the Malaysian courts. The key court findings reveal that the MLA is void due to breaches regarding registration under the Act. The court held there is no jurisdiction issue as all parties submitted to Malaysian jurisdiction. The suit and counterclaims were dismissed for lack of valid agreements. As per statute, all franchisors must register their franchises to avoid illegality.

Table of Content
1. validity of jurisdiction and applicability of law. (Para 1 , 2 , 3)
2. facts regarding the development and ownership of a teaching method. (Para 4 , 5 , 6)
3. plaintiff's relationship and development of the brainbuilder business. (Para 7)
[1] This case concerns "Dr Fong's Method" of teaching mathematics to students in primary and secondary schools (Dr Fong's Method) which has been developed by Dr Fong Ho Kheong (Dr Fong), a Singaporean citizen.

[2] Dr Fong incorporated the plaintiff company (Plaintiff) in Singapore. The Plaintiff has entered into a Master License Agreement dated 18 December 2013 [MLA (2013)] with the first defendant company (1st Defendant). The MLA (2013) allows the 1st Defendant to, among others, operate and manage the "BrainBuildef' business (a business to teach mathematics to students) (BrainBuilder Business) in Malaysia.

[3] The following issues arise in this case:

(1) in view of cl 37 MLA (2013) (Clause 37)-

(a) does Malaysian court have jurisdiction to hear this case? In this regard, have the Plaintiff and all the defendants (Defendants) in this matter submitted to the jurisdiction of Malaysian court?; and

(b) if this court has jurisdiction to hear this case, whether the law of Malaysia or Singapore applies to MLA (2013);

(2) if Malaysian law applies to MLA (2013)-

(a) whether the Franchise Act 1998 ( FA ) applies to MLA (2013);

(b) if FA applies to MLA (2013), have ss 6(1) and/or 6A(1) been breached in this case?; and

(c) if there is a breach of ss 6(1) and/or 6A(1) FA , whether the following documents are void under s 24(a) and/or (b) of the Contracts Act 1950 (CA).-

(i) is MLA (2013) void in its entirety or can the court sever the illegal part of MLA (2013) and enforce its remaining part?,

(ii) a guarantee dated 18 December 2013 executed by the second defendant (2nd Defendant) and third defendant (3rd Defendant) in favour of the Plaintiff (Guarantee) and

(iii) a power of attorney dated 18 December 2013 given by the 1st Defendant to the Plaintiff (PA);

(3) if MLA (2013), Guarantee and PA (3 Documents) are void, whether the court may grant remedy to any party under-

(a) s 66 CA;

(b) s 71 CA; or

(c) the doctrine of unjust enrichment;

(4) if the 3 Documents are valid-

(a) whether the 1st to 3rd Defendants have breached MLA (2013); and

(b) are the 2nd and 3rd Defendants liable to the Plaintiff under the Guarantee?;

(5) whether the 2nd to 6th Defendants have committed the following torts-

(a) the tort of conspiracy to defraud the Plaintiff; and

(b) the tort of breach of confidence;

(6) whether Dr Fong had misrepresented to the 1st to 3rd Defendants in respect of the 3 Documents; and

(7) whether the Plaintiff's suit in this case (Plaintiff's Suit) constitutes an abuse of court process.

B. Plaintiff's Case

[4] Dr Fong has a doctorate in Mathematics Education, a subject which focuses on mathematical theories, practice and development of curriculum materials. Dr Fong was a former Associate Professor in the National Institute of Education, Nanyang Technological University, Singapore. Dr Fong has given lectures to teachers of primary and secondary schools in Singapore, Malaysia, South Korea, Bahrain and United Arab Emirates.

[5] Dr Fong claims to have developed Dr Fong's Method to help students to learn Mathematics. Dr Fong then developed the BrainBuilder Business which uses Dr Fong's Method to teach Mathematics to students.

[6] The 2nd and 3rd Defendants have been Dr Fong's "best friends" for approximately 55 years. The 2nd and 3rd Defendants were interested to start the BrainBuilder Business in Malaysia. Consequently, the 1st Defendant was incorporated in Malaysia on 27 June 2005 with-

(1) the 2nd and 3rd Defendants owning a total of 85% of the paid up shares in the 1st Defendant;

(2) Dr Fong holds 15% of the paid up shares in the 1st Defendant; and

(3) the 2nd and 3rd Defendants are the only directors of the 1st Defendant.

[7] Dr Fong Brainbuilder Pte Ltd (DFB) is a company incorporated in Singapore by Dr Fong. DFB

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