Introduction

Both these suits were taken out on 22 February 1979 and were tried together because a lot of the facts are common to both. However, since the narration of the events of Civil Suit No. 352 of 1979 (Suit 352) ends earlier I will consider and decide on Suit 352 first but only in relation to the claim of the Plaintiffs and not the counterclaim of the Defendants against the Government of the State of Sabah.

SUIT 352

The Plaintiffs in this suit are the Sabah Foundation ("Sabah Foundation") and Seranum Sdn. Bhd. ("Seranum") while the Defendants are Datuk Syed Kechik Bin Syed Mohamed ("DSK") and Banita Sdn. Bhd. ("Banita"). As against DSK the Plaintiffs claim:

a. a declaration that DSK is accountable to the Plaintiffs for all profits made in respect of a special timber licence;

b. a declaration that DSK is accountable to the Plaintiffs for the profit which would have accrued to the Plaintiffs if the said licence had been issued to them;

c. an account of profits, loss profits and an order for payment; and

d. damages

while the claim against Banita is for:

a. a declaration that they hold and have at all times held the said licence as constructive trustees for the Plaintiffs;

b. an account of profits and an order for payment; and

c. damages

Before I turn to the task of setting out the facts of this case that give rise to this action and of deciding on the factual disputes, the claims of the Plaintiffs have to be set out in more detail so that the disputes can be identified.

The Claim

The allegations against DSK are that he was "guilty of a fraudulent and dishonest design and acted in breach of his fiduciary duty" as director of Sabah Foundation and as managing director of Seranum in that:

1. he deliberately failed and neglected to make the necessary arrangements with which he was expressly entrusted by the State Government for the whole of certain surrendered timber areas to be given to the Sabah Foundation or Seranum;

2. he made use of the opportunity and knowledge acquired by him as fiduciary agent of the Plaintiffs to make a profit for himself and Banita or for unknown persons to the detriment of the Sabah Foundation or Seranum;

3. he fraudulently concealed from the trustees of Sabah Foundation and the board of directors of Seranum the fact that Banita had applied for and been granted a special timber licence over the said timber area and he failed to disclose his control and beneficial interest in Banita; and

4. he dishonestly informed the State Government that Sabah Foundation had agreed to the special timber licence being given to Banita and did so without the knowledge or proper authority of the Sabah Foundation or Seranum.

All those allegations are denied by the Defendants and their defences will be referred to when the issues are considered. I turn now to the facts.

Facts of case

In 1965 DSK was sent by the Federal Government to Sabah to be the political and legal advisor of Tun Mustapha ("TM") and TM was later, on 11 May 1967, to become the Chief Minister cum Minister of Natural Resources of Sabah. In 1968 DSK opened a law office in Kota Kinabalu. The Sabah Foundation Enactment (No.8) 1966 ("the Enactment"), setting up the Sabah Foundation was passed and came into force on 10 May 1966 with TM as the first Chairman. On 15 June 1967 DSK was appointed its first director, and also a trustee as from 7 September 1975, which two posts he held until 14 June 1976.

The preamble says the Enactment is "to provide for the establishment of a Sabah Foundation for the purposes of improving, and furthering the progress of, education and educational facilities in Sabah and of encouraging and promoting a Malaysian consciousness therein and to assist and to promote a more equitable distribution of economic wealth amongst the peoples of Sabah and Malaysian citizens residing in Sabah and for giving aid to charitable institutions; for the establishment of a Fund and the appointment of Trustees for the carrying out