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2024 MarsdenLR 2722
HIGH COURT MALAYA SHAH ALAM
KOH EILEEN & ANOR – Appellant
Versus
AZMAN AHMAD & ANOR – Respondent
[Civil Suit No: WA-22NCC-520-10/2022]
The court confirmed the validity of the Trust Deed, established breaches of fiduciary duty by the 1st defendant, and clarified the adjudication process for wrongful termination under the Industrial Relations Act.
Headnote:(A) Trust Law - Breach of Trust - The court found the Trust Deed valid and binding, dismissing the 1st defendant's claim of coercion in signing it. The 1st defendant breached fiduciary duties by misappropriating funds amounting to RM211,054.00. (Paras 12, 16, 30)
(B) Employment Law - Wrongful Termination - The court ruled that claims for wrongful termination must be adjudicated under the Industrial Relations Act 1967 and not in civil court. (Paras 35-41)
(C) Loan Agreement - The court accepted the existence of a friendly loan of RM100,000, with RM83,500 outstanding, based on the 1st defendant's admission in a statutory declaration. (Paras 42-52)
Facts of the case:
The plaintiffs claimed against the 1st defendant for breach of trust and sought the return of misappropriated funds. The 1st defendant counterclaimed for unpaid salaries and forfeiture of a loan.
Findings of Court:
The plaintiffs' claim was proven, and the 1st defendant's counterclaim was dismissed.
Issues: The court addressed the validity of the Trust Deed, breach of fiduciary duties, wrongful termination, and the loan's status.
Ratio Decidendi: The court affirmed the Trust Deed's validity, established the 1st defendant's fiduciary breaches, and clarified the appropriate forum for wrongful termination claims.
Result: Plaintiffs' claims allowed; the 1st defendant's counterclaim dismissed.
JUDGMENT
A. Introduction
[1] The plaintiffs filed this action for breach of trust and breach of duties against the defendants. The 2nd plaintiff also sought the return of an outstanding amount under a loan given to the 1st defendant.
[2] The 2nd defendant did not enter an appearance, and a judgment in default of appearance was obtained against him on 9 November 2022.
[3] The trial of this action therefore proceeded only in respect of the 1st defendant. The 1st defendant filed a counterclaim against the 2nd plaintiff, seeking unpaid salaries and forfeiture of the amount outstanding under the loan.
[4] The court allowed the plaintiffs' claim and dismissed the 1st defendant's counterclaim. The reasons for the decision are set out below.
B. Background Facts
[5] The 1st defendant and one Lee Lai Peng ("PW4") were co-workers at Surya Resources Sdn Bhd, a company related to the 1st plaintiff's husband.
[6] In 2011, The 1st plaintiff approached PW4 and the 1st defendant (through PW4) to hold shares on her behalf in the 2nd plaintiff, a company involved in the trading of liquor, alcohol, cigars, cigarettes and tobacco related products.
[7] Consequently, a deed of trust dated 28 July 2016 ("Trust Deed") was executed by the 1st defendant and PW4 in favour of the 1st plaintiff. Pursuant to the Trust Deed, the 1st defendant and PW4 held shares in the 2nd plaintiff on behalf of the 1st plaintiff.
[8] The 1st defendant was also appointed as the operations manager of the 2nd plaintiff, responsible for the stocks, inventories and business operations of the 2nd plaintiff.
[9] The plaintiffs claimed that the 1st defendant had diverted the earnings, revenue and profits from the 2nd plaintiff for his personal gains by fraudulently invoicing customers of the 2nd plaintiff. The 1st defendant was terminated from his position in the 2nd plaintiff. The plaintiffs sought the return of the amounts misappropriated by the 1st defendant, and an outstanding amount due from the 1st defendant pursuant to a loan the 2nd plaintiff provided to the 1st defendant.
[10] The 1st defendant filed a counterclaim against the 2nd plaintiff, seeking unpaid salaries, and forfeiture of the amount outstanding under the loan.
C. Issues And Considerations
Issues To Be Tried
[11] The facts set out raise the following issues to be tried by this court:
a. The status of the T rust Deed;
b. Whether the 1st defendant breached his fiduciary duties to the plaintiffs;
c. Whether the 1st defendant was wrongly terminated; and
d. Whether the 2nd plaintiff provided a loan to the 1st defendant, and if so, whether there is an outstanding amount due under the loan.
What Is The Status Of The Trust Deed?
[12] The Trust Deed was executed by the 1st defendant and PW4 in favour of the 1st plaintiff. Pursuant to the T rust Deed, the 1st defendant and PW4 agreed to hold all rights, title and interest in the shares in the 2nd plaintiff on trust for the 1st plaintiff.
[13] The 1st defendant challenged the validity of the Trust Deed, alleging that he was forced to sign the Trust Deed. However, apart from the bare allegation, the 1st defendant did not produce any evidence to show that he was forced to sign the Trust Deed.
[14] I note that the Trust Deed contains the 1st defendant's signature and initials. There was no challenge on the signature and initials. As such, the bare allegation raised by the 1st defendant is insufficient to prove that the 1st defendant was forced to sign the Trust Deed.
[15] Thus, I find the Trust Deed to be valid and binding on the parties.
Did The 1St Defendant Breach His Fiduciary Duties To The Plaintiffs?
[16] The basis of the claim for breach of fiduciary duties is the plaintiffs' allegation that the 1st defendant had fraudulently invoiced customers of the 2nd plaintiff in the total amount of RM211,054.00, and misappropriated this amount, for his own personal gains.
[17] The 1st defendant had signed a statutory declaration dated 20 May 2021 ("SD") admitting his action. In para 3 of the
