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2021 MarsdenLR 3068
HIGH COURT MALAYA SHAH ALAM
JEFFREY FOO KWAN PHENG – Appellant
Versus
KUMPULAN HARTANAH SELANGOR BHD – Respondent
[Civil Appeal No: BA-12B-5-01/2020]
Employees under share option schemes lose their options immediately upon employment termination, and employers have no obligation to inform regarding market conditions affecting such options.
Headnote:(A) Employment Law – Employees Share Option Scheme – Interpretation of ESOS-By-Law clauses 12 and 28 – Plaintiff's employment terminated due to redundancy; failed to exercise shares options in time. Court affirmed dismissal of claim as the clauses stipulate the options cease upon employment termination without need for notice or justification by the defendant. (Paras 9-10, 13-16, 20, 28-42)
(B) Misrepresentation – No liability or contractual duty on the defendant to inform the plaintiff of option's market value or changes; lack of evidence for deceit or misrepresentation. (Paras 29-39)
(C) Contracts Act 1950 – Reference to legal principles established in CIMB Bank Berhad v. Anthony Lawrence Bourke | Anor [2019] 2 MLJ 1 regarding validity of contract clauses, but main decision based on ESOS interpretation. (Paras 40-42)
Facts of the case: Plaintiff's employment terminated after offering ESOS shares; claimed losses due to alleged wrongful termination of ESOS.
Findings of Court: SCJ's decision not to follow precedent deemed justified due to differing issues; plaintiff's claims found baseless.
Issues: Whether termination of ESOS agreement wrongful, misrepresentation by defendant, and similar precedents applicable.
Ratio Decidendi: ESOS options ceased immediately upon termination of employment; no obligation on defendant for disclosure of share values.
Result: Appeal dismissed.
JUDGMENT
Introduction
[1] The appellant, who was the plaintiff at the court below, was not satisfied with the decision of the Sessions court Judge (hereafter 'SCJ') dismissing his claim on 17 January 2020. The appellant then filed an appeal to the High court. On 4 March 2021, this court dismissed the appellant's appeal and affirmed the decision of the SCJ. The reasons for the decision of this court are set out as below. For ease of reference, the parties hereafter shall be referred to according to their positions at the court below.
Brief Facts
[2] The plaintiff was an employee of the defendant company between 21 September 1981 and 31 December 2014. The plaintiff's employment was terminated due to a retrenchment exercise carried out by the defendant company. On 15 December 2014, the plaintiff was notified of his termination, and that the last day of his employment would be on 31 December 2014.
[3] In the course of the plaintiff's employment, the plaintiff was offered an option to purchase the defendant's company shares through an Employees Share Option Scheme (hereafter 'ESOS') by the defendant in December 2005. The option period for the ESOS was for 5 years effective from 21 December 2005 to 20 December 2010, and upon the expiry of the 5 years option period, the plaintiff was granted an extension for another 5 years effective from 21 December 2010 to 27 December 2015 (hereafter 'the ESOS option').
[4] However, when the plaintiff was notified of his termination on 15 December 2014, the plaintiff was left with only two weeks to exercise his ESOS option before his employment ended on 31 December 2014. Up to 31 December 2014, the plaintiff did not exercise his ESOS option. The ESOS agreement ended after 31 December 2014.
[5] The plaintiff was aggrieved by the termination of the ESOS agreement, and took out a civil suit against the defendant for, inter alia, a breach of the ESOS agreement. The plaintiff averred that the defendant had wrongfully terminated the ESOS agreement, and as a result of the wrongful termination, the plaintiff had suffered monetary losses amounting to RM846,000.00.
[6] The defendant averred that the termination of the ESOS agreement was in accordance with the ESOS-By-Law, particularly cl 12.1 which states as follows:
"In the event a Grantee ceases to be in the employment of the KHSB Group for whatever reason prior to the full exercise of an Option, such Option or the balance thereof, as the case maybe, shall forthwith cease to be valid without any claim against the Company PROVIDED ALWAYS THAT the Option Committee may, at its absolute discretion, by notice in writing, permit such Option to remain exercisable during the Option Period if such cessation occurs by reason of:
(i) retirement on attaining the retirement age under the KHSB Group's retirement policy; or
(ii) retirement before attaining the normal retirement age but with the account of the Option Committee; or
(iii) redundancy; or
(iv) ill-health, injury, physical or mental disability; or
(v) any other circumstances which are acceptable to the Option Committee."
[7] The defendant also relied on cl 28 of the ESOS-By-Law which states as follows:
"28.1 A Grantee who ceases to hold office or employment shall not be entitled to any compensation for the loss of any right or benefit or prospective right or benefit under the Scheme which he might otherwise have enjoyed whether such compensation is claimed by way of damages for wrongful dismissal or other breach of contract or by way of compensation for loss of office.
28.2 No Eligible Employee or Grantee or legal personal representatives shall bring any claim, action or proceeding against the Company or the Board of KHSB or the Option Committee or any other party for compensation, loss or damages whatsoever and howsoever arising from the suspension of his rights to exercise his Option or his Option ceasing to be valid pursuant to the provisions of these Bye-Laws, as maybe amended from time to time in accordanc
