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2024 MarsdenLR 771
HIGH COURT MALAYA KUALA LUMPUR
SOON HOE CHUAN – Appellant
Versus
GLOMAC BERHAD – Respondent
[Civil Suit No: WA-22NCVC-230-05/2020]
A letter of appointment lacking authority does not create binding obligations due to the separate legal personality of subsidiary companies.
Headnote:(A) Companies Act 1965 - Separate Legal Personality - The court examined the validity of a letter of appointment for a CEO position in a subsidiary company, concluding it did not confer valid authority due to the doctrine of separate legal personality. (Paras 14-16)
(B) Evidence Act 1950 - Section 114(g) - The court ruled against invoking adverse inference for the non-calling of a witness, emphasizing that the burden of proof lies with the plaintiff. (Paras 17-18)
Facts of the case:
The plaintiff claimed unpaid management fees and profit shares based on a letter of appointment as CEO of Glomac Alliance, which the defendant disputed, asserting the letter was not a binding contract. (Paras 2-7)
Findings of Court:
The court found the letter of appointment did not confer a valid position as CEO and the plaintiff failed to prove services rendered pursuant to it. (Paras 25)
Issues: The primary issues were the validity of the plaintiff's appointment and whether services were rendered under the disputed letter. (Paras 14-24)
Ratio Decidendi: The court determined that the letter of appointment lacked legal effect due to the separate legal personality of the companies involved, and the plaintiff's claims were unsubstantiated. (Paras 16, 25)
Result: The plaintiff's claim is dismissed with costs of RM80,000.00.
JUDGMENT
Introduction
[1] The plaintiff's claim against the defendant relates to certain payments allegedly due for services rendered based on a purported appointment by the defendant. The purported appointment was in relation to a development project. The defendant disputes the validity of the appointment. At the conclusion of trial, this Court found in favour of the defendant and dismissed the plaintiff's claim.
Brief Salient Facts
The Plaintiff's Case
[2] The plaintiff claims that he was appointed by the defendant as the chief executive officer ("CEO") for Glomac Alliance Sdn Bhd ("Glomac Alliance"). At the material time, Glomac Alliance was a wholly-owned subsidiary of the defendant. The appointment was purportedly made vide a letter of appointment dated 19 October 2004.
[3] According to the plaintiff, the appointment was in relation to a joint venture development project between Glomac Alliance and the owner of the development land, Score Option Sdn Bhd ("Score Option"). The development land comprised of 90-acre land in Puchong ("Development Land").
[4] The letter of appointment was written by the plaintiff and addressed to the defendant for the attention of one Datuk Richard Fong. At the foot of the letter of appointment, there was an acknowledgement to the effect that the defendant agreed with the appointment of the plaintiff. The acknowledgement was signed on 10 November 2004 by Datuk Richard Fong.
[5] In effect, the letter of appointment was in the nature of a reverse-confirmation. Looking at the way it was worded, it appears that it was not a direct appointment made by the defendant but a confirmation by the plaintiff of his alleged appointment by the defendant. The letter of appointment contains terms relating to scope of work, tenure, professional fees and profit sharing and payment terms
[6] According to the plaintiff, he has rendered services pursuant to the letter of appointment and as such he should be entitled to payment as agreed. As of the date the action was filed, the plaintiff has been paid the sum of RM1,331,619.90 being the management fees but the defendant has yet to pay the remaining payments pursuant to the letter of appointment.
[7] The plaintiff claims for the following reliefs:
(a) the sum of RM5,301,910.90 being the balance of the management fees;
(b) the sum of RM11,470,070.00 being the plaintiff's 70% share of profit;
(c) pre-judgment interest at the rate of 8% per annum on the amount due and payable for loss of use of money;
(d) professional fees at the rate of 1.5% of GDV received by the defendant or Glomac Alliance from 14 June 2019 to the date the writ was filed;
(e) an order for 30% of the 20% profit sharing on the profits in excess on Phase 1-7 of RM43,000,000.00 (alternatively RM56,700,000.00) made by Glomac Alliance (alternatively the defendant and Glomac Alliance) in respect of the project to be held on trust in favour of the plaintiff pending withdrawal of profit from the housing development account (HDA);
(f) a declaration that the plaintiff is entitled to professional fees at 1.5% GDV and profit share at 20% for all profits in excess of RM43,000,000.00 (alternatively RM56,700,000.00) made by Glomac Alliance (alternatively the defendant and Glomac Alliance) in respect of the project;
(g) an account of sales values and profits in respect of the entire project;
(h) an order for payment of the profit share and professional fees pursuant to the said account;
(i) interest at the rate of 5% per annum on all sums quantified by this Honourable Court from the date of filing of the writ of summons to the date of full realisation;
(j) cost; and
(k) other reliefs.
The Defendant's Case
[8] The defendant on the other hand disputes the plaintiff's appointment. The defendant takes the position that the letter of appointment is not enforceable as it has no authority to act on behalf of Glomac Alliance. The defendant relies, inter alia, on the doctrine of separate legal personality.
[9] Accord
