An employee's breach of fiduciary duties may not suffice for claims of secret profits without clear evidence of receipt or existence of profit-sharing arrangements.

Introduction

[1] The plaintiff in this case, Pan Malaysian Pools Sdn Bhd, sued Kwan Tat Thai and Wan Kong Wai, the first and second defendants respectively, for (among others) the recovery of secret profits alleged to have been obtained by the defendants at the plaintiff's expense, in connection with the procurement by the plaintiff of information technology-related equipment. The defendants are former employees of the plaintiff.

[2] There were over 20 trial days for this case, and more than 3000 pages of exhibits. Submissions were commensurately lengthy. Despite the complexity and volume of the evidence, I found that the crux of the issue turned simply on the probative value of the forensic computer-generated evidence that had been recovered from the computer that been assigned to the first defendant.

[3] Having heard the submissions of counsel, I found that:-

(a) the defendants had breached their terms of employment by not disclosing the fact that they had made joint purchases of real properties together with the directors and shareholders of vendors of the plaintiff;

(b) however, the plaintiff had already availed itself of its remedy for breach of the employment terms when it dismissed the defendants; and

(c) the probative value of the forensic computer-generated documents was insufficient to prove that, on a balance of probabilities, a profit sharing arrangement existed between the defendants and the relevant representatives from the vendors, or that the defendants and/or such representatives had made profits or received any money from such arrangements.

[4] Although I refused the plaintiff's prayers for relief, I awarded costs of RM 100,000 to the plaintiff, to be borne equally by the defendants, on the basis that they were responsible for the events leading to the litigation of this matter.

[5] The plaintiff has now appealed against this decision.

Material Background Facts

[6] The background facts of this case, in so far as they were material to the determination of the issues in dispute, are summarised in the following paragraphs.

[7] The plaintiff conducts a number forecast totalisator business. It is not in dispute that this business places great reliance on the IT infrastructure employed by the plaintiff.

[8] The first defendant was a general manager of the plaintiff and headed its IT department. In addition, he was also a member of its Major Tender Committee and the chairman of its Minor Tender Committee, which are internal committees of the plaintiff that approves equipment purchases.

[9] The second defendant was the manager of the plaintiff's data centre operations within the IT department. He reported directly to the first defendant.

[10] In February 2007, the plaintiff's procurement department discovered that quotations for the purchase of routers received from vendors recommended by the defendants were significantly higher those obtained from independent vendors identified by the procurement department. An investigation was carried out, which culminated in a report dated 16 April 2007. At trial, I ruled that certain portions of this report was inadmissible as proof of the statements contained therein, on the basis that they were documentary hearsay. Nothing however turned on this, as the incident involving the purchase of the routers did not form the basis of the plaintiff's claim.

[11] Arising from April 2007 report, further investigations were carried out by the procurement department, this time involving five different types of IT-related equipment. A further report, dated 12 June 2007, was issued, which found that a group of vendors were regularly called upon to provide quotes and that the prices quoted, although close to