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2015 MarsdenLR 151
COURT OF APPEAL PUTRAJAYA
WONG KAR JUAT & ANOR – Appellant
Versus
S7 AUTO PARTS [M] SDN BHD – Respondent
[Civil Appeal No: B-02(NCVC)(W)-181-01-2013]
In fiduciary relationships, the burden of proof lies on the claimant to establish breaches against the alleged fiduciary.
Headnote:Statute Analysis: The case examines fiduciary obligations of employees under common law principles in relation to breaches of trust. Facts: The appellants, as sales managers of the respondent, were accused of breaching fiduciary duties leading to financial losses.
Findings of Court:
The court found insufficient evidence linking the appellants to the alleged loss.
Issues: The court evaluated the core issues around accountability for missing sums of money and engines.
Ratio Decidendi: The court emphasized the burden of proof on the respondent to establish its claims against the appellants.
Result: The learned Judicial Commissioner’s order was set aside, and the appeal was allowed.
| Table of Content |
|---|
| 1. introduction and statement of facts regarding fiduciary duties. (Para 1 , 2 , 3 , 4 , 5) |
| 2. appellants' defense against breaches succeeded. (Para 10 , 11 , 12 , 13) |
| 3. judgment on burden of proof regarding claims. (Para 14 , 15 , 16 , 17 , 18) |
| 4. critical assessment of evidence regarding missing funds. (Para 19 , 20 , 21 , 22 , 23) |
| 5. issues concerning sales transactions and evidence production. (Para 24 , 25 , 26 , 27 , 28 , 29) |
| 6. investigation and evidence of missing engines. (Para 30 , 31 , 32 , 33 , 34 , 35) |
| 7. critical evaluation of missing utilized evidence. (Para 36 , 37 , 38 , 39 , 40) |
| 8. conclusion emphasizing lack of evidence for claims. (Para 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48) |
Introduction
[1] The appeal in the present instance had been brought by the appellants in light of the High Court's decision in allowing the respondent's claim against the appellants. We heard both counsel for the appellants and the respondent and accordingly at the conclusion of the arguments, allowed the appeal.
The Suit
[2] Before we embark upon a consideration of the merits of, and the reasons for allowing the appeal, it would be desirable to lay down some of the material facts in this suit. The respondent is a company, which at the material time was in the business of trading in used engines and spare parts imported from Japan. It was incorporated on 13 May 2009. One Gwee Bok Wee (PW6) and his wife Lau Kiat Hoon were the shareholders and Directors of the respondent. The respondent in fact, was part of a larger group of companies under the control of the holding company known as Sungei Sendok Holdings Sdn Bhd. This group of 30 companies in total was led by PW6 who was the group Managing Director and a Director in each of these companies as a representative of the holding company.
[3] In May 2009, the respondent appointed the appellants as its Sales Managers and each was paid a monthly salary of RM7,000.00. The statement of claim revealed that the appellants were fully responsible in managing the respondent's business and the respondent allowed its business operations to be run entirely by the appellants. The respondent had 18 employees including the appellants.
[4] It was the respondent's pleaded case that the appellants were promised a share in the business so long as they performed and showed that they were capable of bringing profit to the respondent. All the investments into the respondent company would come from PW6.
[5] From their position as employees and persons in charge of the day to day management, operations and administration of the respondent, it was further pleaded that the appellants owed fiduciary duties to the respondent. Such duties were said to arise as the appellants were required:
a. at all times to act bona fide, honestly and in good faith;
b. not to make a secret profit based on the trust placed upon them by the respondent;
c. not to place themselves in a position where their personal interest would be in conflict with that of their responsibilities; and
d. not to act in a manner that would benefit them or third party and would adversely affect the respondent's position or to act for the benefit of the third party without knowledge or prior consent of the respondent.
[6] As events turned out, it was alleged that the appellants had committed a breach of fiduciary duty to the respondent and a breach of trust and confidence as well as fraud which according to the respondent, had caused it to suffer losses. It became apparent from the statement of claim that these allegations of breaches by the appellants began with the discovery some time in late March 2011 by the respondent through PW6 that there were discrepancies in the respondent's account. It was discovered that several transactions concerning sales of goods to a third party could not be accounted for because payments that ought to have been received by the respondent, were not received. The respondent in consequence, appointed one accountant
