The court held that the sale of shares does not breach confidentiality agreements, and directors are not obliged to refuse registration of shares based solely on third-party transactions.

JUDGMENT

Atan Mustaffa Yussof Ahmad J:

Introduction

[1] This judgment concerns an originating summons filed by a company seeking declaratory and injunctive reliefs against another company, to prevent the registration of shares sold to a third party on the grounds that it would result in a breach of confidentiality clauses in software agreements between the parties. The Plaintiff contends that the sale of shares would enable the third party to access confidential information provided to the Defendant, thereby prejudicing the Plaintiff's business interests. The Defendant argues that the Plaintiff has sued the wrong party, as the shares belong to the Defendant's sole shareholder, over which the Defendant has no control, and that the third party becoming a shareholder would not result in disclosure of confidential information. The key issues are whether the Plaintiff has a valid claim against the Defendant, and whether the injunctive reliefs sought can be granted.

Background Facts

[2] The Plaintiff, Presgo Gateways Sdn Bhd, is a company whose main business is the operation of parking facilities for motor vehicles in the state of Johor. The Plaintiff is currently conducting its business as a car park managing agent appointed by the Johor Bahru City Council (MBJB) pursuant to a Car Park Lots Management Agreement dated 25 April 2016.

[3] The Defendant, Aim-Force Software Sdn Bhd, is a tech company that specialises in providing and supplying total integrated solutions known as "e-Enforcement" which is designed specially for councils to enhance and aid the management of parking and enforcement in the local council's area of jurisdiction. The Defendant was incorporated on 21 November 2002.

[4] To facilitate the Plaintiff's obligations under the Car Park Lots Management Agreement with MBJB, the Plaintiff entered into the following agreements with the Defendant:

a) An e-Enforcement Agreement dated 21 June 2016 (" the 1st Software Agreement') for the commissioning and implementation of the Defendant's e-Enforcement Solution to manage parking and enforcement.

b) A Software Maintenance Agreement dated 1 January 2022 ("the 2nd Software Agreement') upon expiry of the 1st Software Agreement, for the Defendant to continue providing maintenance services for the e-Enforcement Solution.

c) A Software and Maintenance Agreement dated 1 March 2023 ("the 3rd Software Agreement') to develop and enhance an upgraded version of the Plaintiff's MBJB Spot parking application to include additional features apart from parking payment, upgrade the software to include a command-and- control function, and for the Defendant to continue providing maintenance services.

[5] In order for the Plaintiff to utilise the Defendant's e- Enforcement Solution, the Plaintiff furnished the Defendant with information relating to its operations, including workflow, design of day-to-day monitoring, income monitoring, day-to-day enforcement, customer information and legal action against parking defaulters.

[6] The 2nd Software Agreement and 3rd Software Agreement contained confidentiality clauses at cl 6 and cls 1.1 and 7 respectively, which required the parties to maintain the confidentiality of information provided to each other for the purposes of the agreements.

[7] The implementation of the Defendant's e-Enforcement Solution led to the development of the MBJB Spot parking application by the Plaintiff and Defendant. The Defendant also developed a Command-and-Control Centre for the Plaintiff, which is a central monitoring unit to which data of the Plaintiff's entire operations is fed to enable the Plaintiff to control its operations.

[8] On 27 July 2023, the Plaintiff informed the Defendant of its intention to purchase shares in the Defendant. The Defendant, by letter dated 23 August 2023, rejected the Plaintiff's offer to purchase shares, stating that it was not the right time for such a sale.

[9] On 3 October 2023, the Plaintiff was informed by one of the Defendant's directors, Mr Lew Chiew