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2021 MarsdenLR 2802
FEDERAL COURT PUTRAJAYA
FAEKAH HAJI HUSIN & ORS – Appellant
Versus
MENTERI BESAR SELANGOR (PEMERBADANAN) – Respondent
[Civil Appeal No: 02(f)-31-04-2019(B)]
The Menteri Besar Selangor, as a corporation sole, is not legally bound to seek approval from a Board of Directors for financial decisions as per the MBI Enactment.
Headnote:(A) Menteri Besar Selangor (Incorporation) Enactment 1994 – The plaintiff is a corporation sole, and the Menteri Besar’s actions in approving VSS Payments did not require prior approval from a Board of Directors (BOD) as per section 4 of the MBI Enactment. Good governance principles do not override statutory provisions. (Paras 12-32)
(B) Conspiracy Allegation – No material evidence to support claims of conspiracy or breach of fiduciary duty against the defendants. The VSS Payments were lawful and accepted practices in employment law. (Paras 66-68)
Facts of the case: The plaintiff, a body corporate, sought to recover payments approved by the Menteri Besar without BOD consent, alleging impropriety and conspiracy by the defendants. (Paras 4-7)
Findings of Court: High Court’s dismissal of the plaintiff's claims was correct as TSKI acted within his powers under the MBI Enactment, justifying the VSS Payments. (Paras 13-15)
Issues: Whether the MBI is a corporation sole and if the Menteri Besar required BOD approval for financial decisions. (Paras 17-19)
Ratio Decidendi: The Court held that TSKI was empowered to make decisions without BOD consent, reaffirming that statutory provisions dictate corporate governance over common law practices. (Paras 62-64)
Result: The appeal by the defendants is allowed, reinstating the High Court's judgment.
[1] The appellants, who were defendants in the High Court are appealing against the decision of the Court of Appeal by posing four legal questions before us.
[2] The appeal before us relates to the issue involving a body incorporated under Menteri Besar Selangor (Incorporation) Enactment 1994 (MBI Enactment).
[3] In this judgment, parties will be referred to, as they were, in the High Court.
[4] The plaintiff is a body incorporated under the MBI Enactment and is known as Menteri Besar Selangor (Pemerbadanan). The defendants were former employees of the plaintiff. The 1st defendant, Faekah Binti Haji Hassan was employed as the Chief Executive Officer(CEO), the 2nd defendant, Rohany Binti Dato' Talib was holding the position as the Chief Operating Officer (COO) and the 3rd to 8th defendants were all officers holding various positions in the plaintiff. They were all employed under their respective contracts of employment.
[5] The then Menteri Besar of Selangor, Tan Sri Dato' Seri Abdul Khalid Bin Ibrahim (TSKI) as a Menteri Besar (Pemerbadanan) had approved payment in the sum of RM2,713,590.00 to be paid to the defendants under a Voluntary Separation Scheme (VSS Payments). He did not seek any approval of the plaintiff's Board of Directors (BOD). According to the plaintiff, its Board of Directors (BOD) constituted the Menteri Besar Selangor, the State Secretary and the State Financial Officer.
[6] The VSS Payments was approved prior to his resignation as the Menteri Besar on 23 September 2014. Consequently, the VSS Payments were paid and received by all the defendants.
[7] The plaintiff subsequently initiated these proceedings in the High Court against all the defendants to recover the VSS Payments received by them, pleading that they were unlawful payments. The alleged unlawfulness was predicated on the fact that TSKI had approved the payment without the approval of the plaintiff's BOD. Instead, it was alleged that the 1st defendant and the 2nd defendant had conspired to injure the plaintiff in making that unauthorised and unapproved payment to the other defendants. In conspiring to injure the plaintiff, the 1st and 2nd defendants were said to have breached their fiduciary duties to the plaintiff which resulted in an unjust enrichment to each of the defendants.
[8] The allegation of conspiracy against the 1st defendant and the 2nd defendant was essentially grounded on the following narration: Before his resignation, on 25 August 2014 TSKI together with the other two members of the plaintiff's BOD held a meeting, where it was agreed in principle that the defendants be paid compensation in lieu of notice by way of VSS Payments. That minutes of meeting is found in encl 23 (CB Vol 4) p 154. In that minutes it was further noted that the BOD had resolved for the management to revert on the same.
[9] Subsequent to that decision, about a month later, on 20 September 2014, the 2nd defendant issued a memo to both the 1st defendant (CEO) and TSKI, proposing payment of three months' salary in lieu of notice plus three options formula on the computation of the payable VSS.
[10] TSKI indicated his approval on that memo written by the 2nd defendant. However, he did not make it clear which of the options were to be implemented. Another memo thus ensued. This time the CEO, the 1st defendant, wrote to TSKI to approve three months' salary in lieu of notice plus VSS Payments at 30% of last drawn salary, multiplied by the number of months served. TSKI approved the proposal and directed its implementation, resulting in the VSS Payments being paid out to all the defendants, respectively. TSKI did not deny in evidence that he did, in fact, approve the proposal for implementation on his own, without any approval of the BOD.
[11] This then led to the plaintiff's claim against the defendants being "..... inter alia grounded on the conspiracy between the 1st and 2nd defendants to injure the plaintiff in making unauthorised and unapproved paym
