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2020 MarsdenLR 1320
HIGH COURT MALAYA KUALA LUMPUR
KOPERASI TELEKOM MALAYSIA BERHAD – Appellant
Versus
ISMAIL NORDIN & ORS – Respondent
[Civil Suit No: WA-22NCC-349-06-2019]
Defendants did not breach fiduciary duties related to a RM2 million payment; plaintiff failed to prove misappropriation.
Headnote:(A) Co-operative Societies Act 1948 (Co-operative Societies Act 1993) – Fiduciary duties of board members – Claim for recovery of RM2 million from the defendants for breach of fiduciary duty regarding payment to Rimbun Dermaga Sdn Bhd – Court found defendants did not breach duty despite claims of misappropriation – Plaintiff failed to discharge the burden of proof. (Paras 10, 35, 61)
(B) Evidence Act 1950 – Sections 101 and 102 – Burden of proof lies on the party who asserts that the facts exist – Plaintiff did not provide enough evidence to prove fraudulent misappropriation. (Paras 56, 58)
Facts of the case: The plaintiff alleged that defendants, as trustees, misappropriated RM2 million intended for a development project without proper authorization. (Paras 9, 10)
Findings of Court: The defendants acted in good faith; the RM2 million was paid properly to Rimbun Dermaga. (Paras 61, 62)
Issues: Whether the defendants caused the plaintiff to incur a loss and the nature of the RM2 million payment. (Paras 10, 56)
Ratio Decidendi: The court held that the plaintiff could not establish claims of fraudulent misappropriation or that defendants acted contrary to their duties as trustees. (Paras 61, 62)
Result: Plaintiff's remaining claims dismissed; agreed costs of RM15,000. (Para 63)
JUDGMENT
Introduction
[1] This is my judgment upon conclusion of trial on 4, 5 and 11 February 2020 wherein two witnesses testified on behalf of the plaintiff and the 1st defendant testified on behalf of the defendants. Both parties had filed extensive written submissions and this decision is based on the evidence adduced as well as able submissions by both learned counsel.
[2] As a majority of the plaintiff's claims were conceded by the defendants pre-trial, I propose to first set out the plaintiff's claims in full, then the claims conceded to by the defendants and then to proceed to highlight only the two agreed remaining issues to be tried. I will then go on to consider the evidence led and the rival contentions on those two issues and render my decision. As will become apparent at the conclusion, the court's decision will ultimately be largely predicated on the documents tendered as evidence as opposed to the oral testimony or the credibility thereof.
[3] For completeness, I will just add that the defendants had vide encl 7 applied to strike out the plaintiff's claim herein but the same was dismissed on 6 January 2020 (see: Koperasi Telekom Malaysia Bhd v. Ismail Nordin & Ors, ).
[4] To fully appreciate the factual matrix, the relationship between the parties and the crux of the plaintiff's claim, it would be apt to set out the facts of this matter which are as follows where it is to be noted that they are substantially agreed to by both parties vide the Statement of agreed facts in Tab D. Those agreed facts are inter-alia, as follows:
1. The plaintiff is a co-operative established under the Co-operative Societies Act 1948 (Co-operative Societies Act 1993) under the Co-operative Commission Malaysia on 21 July 1922 of which the decision making of the plaintiff is subject to the Co-operative Act 1993 and Malaysian Commission of Co-operatives (Suruhanjaya Koperasi Malaysia).
2. D1, D2 and D3 were the former Board members of the plaintiff from the 1990s.
3. D2 held the position as the plaintiff's Co-operative Secretary from the 1980s.
4. Whereas D3 held the position as the plaintiff's Co-operative Secretary cum Chairman of the plaintiff's Co-operative from 2003 onwards.
5. D1, D2 and D3 are individuals who were responsible to determine the direction and play the role more than the rest of the plaintiff's Board of Co-operatives members in the matter regarding the plaintiff's administration and/or any decision made and shall be made by the plaintiff.
6. The defendants as the Chairman, Secretary and the Treasurer of the plaintiff's Co-operative Board had specific responsibilities and liabilities as provided - amongst others - under ss 47, 48 and 49 of the Undang-Undang Kecil Koperasi - and of which the defendant had full control of the plaintiff's Co-operative and the plaintiff's Co-operative Board.
7. At all material times, D1, D2 and D3 had control and full control over the management of the plaintiff's Co-operative including the general management, members, investment decisions, expenditures and other matters.
8. At all material times, D4 was a dormant company.
9. D1, D2 and D3 were the Directors and the joint shareholders of D4 as per the following:
(i) D1: Director and shareholder of 782 shares in D4;
(ii) D2: Director and shareholder of 759 shares in D4; and
(iii) D3: Director and shareholder of 759 shares in D4.
10. The plaintiff's Co-operative was established on 21 July 1922 and is a co-operative that is established to enhance the economic interests, to benefit and give profits to its members in accordance with the principles of the Co-operative. The main function of the plaintiff's Co-operative is credit and where the plaintiff's Co-operative allows to carry out activities pursuant to Clause 9 of the Undang-Undang Kecil Koperasi.
11. The plaintiff's Co-operative at all material times has members made up of all of the employees from TM Group as well as the subsidiaries of the TM Group and Celcom Axiata - from all races,
