1. Assessment of damages payable under cross-undertaking after discharge of Anton Piller order on appeal. (Para 1 , 3 , 4 )
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2025 MarsdenLR 6681
HIGH COURT (KUALA LUMPUR)
YUSRIN FAIDZ, JC
M3 Technologies (Asia) Bhd & Anor – Plaintiff
Versus
Voon Sze Lin & Ors – Defendant
SUIT NO WA-22IP-41–07 OF 2021
Advocates:
Ng Zong Hui (Kheng Hoe & Lee Yuen) for the plaintiff. Mohd Rizal Bahari (with Amirfarid Nawawi) (Bahari & Bahari) for the second defendant.
Ng Zong Hui (Kheng Hoe & Lee Yuen) for the plaintiff. Mohd Rizal Bahari (with Amirfarid Nawawi) (Bahari & Bahari) for the second defendant.
A defendant is entitled to damages under a cross-undertaking if an Anton Piller order was improperly granted or executed. Recoverable damages include costs paid under court orders, general damages for distress, and aggravated damages for non-disclosure, though legal fees for the same proceeding and exemplary damages are generally excluded.
Headnote:(A) Rules of Court 2012 O 37 r 1 - Undertaking as to damages - Discharge of an Anton Piller order (APO) - Assessment of damages following the setting aside of an APO by an appellate court - Determination of whether losses were caused by the wrongful execution of the order and the appropriate quantum of compensation.
(B) Causation - The analysis of losses in a failed APO focuses on whether the losses directly result from the wrongful grant or execution of the order. The court assesses the nexus between the applicant's conduct, the order's issuance, and the harm claimed. Key principles include direct causation, the presence of bad faith or failure to make full and frank disclosure, and whether the losses were reasonably foreseeable. (Paras 16-17)
(C) Special Damages - Legal fees incurred in the same proceedings generally cannot be claimed as special damages under a cross-undertaking. However, sums paid in satisfaction of costs orders necessitated by the now-discharged APO are properly recoverable. (Paras 24-26)
(D) General and Aggravated Damages - General damages may be awarded for distress, embarrassment, and mental anguish caused by the intrusive nature of an APO's execution. Aggravated damages are justified where an order is obtained without a strong prima facie case, without full and frank disclosure of material facts, or through reliance on false evidence, reflecting the court's disapproval of the misuse of a draconian order. (Paras 30-32, 36-42) (E) Exemplary Damages - Exemplary damages are generally not recoverable under an undertaking for an ex parte injunction because obtaining relief that is later discharged does not constitute a wrongful act, breach of contract, or breach of duty. Such damages are only applicable if they fall within recognized categories of oppressive, arbitrary, or unconstitutional conduct. (Paras 44-45)
Facts of the case:
Plaintiffs obtained an ex parte Anton Piller order against former employees alleging intellectual property infringement and breach of trust. The order was subsequently set aside by the Court of Appeal. The court then proceeded to assess damages payable by the plaintiffs under their cross-undertaking, considering the an intrusive search of the defendant's private residence and the plaintiffs' conduct in obtaining the order.
Findings of Court:
The court found that the APO was improperly granted as the plaintiffs failed to establish a strong prima facie case and failed to disclose material facts. The reliance on a false statutory declaration and the intrusive nature of the search caused significant hardship. Special damages were awarded for costs paid under court orders, and general and aggravated damages were awarded for distress and misconduct. Exemplary damages were disallowed.
Issues: Whether the damages suffered by the defendant were caused by the failed APO and the appropriate quantum of special, general, aggravated, and exemplary damages.
Ratio Decidendi: The court ruled that the undertaking as to damages provides a method of compensating a party if an injunction was wrongly granted. While legal fees for the same proceeding are not recoverable, other pecuniary losses and non-pecuniary hardships directly linked to the wrongful order are. The misuse of a draconian APO through bad faith or non-disclosure warrants aggravated damages to discourage such conduct, though exemplary damages are inappropriate as the failure to sustain an injunction is not a tortious wrongful act.
Result: Application allowed; total sum of RM186,400 awarded as damages with interest at 5%pa and costs of RM20,000.
Legal Category Hierarchy
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practice and procedure
- interim orders
- damages
- evidence
- intellectual property
Table of Contents
2. Plaintiffs argued no causation of loss; defendant claimed losses directly resulted from wrongful execution of the Anton Piller order. (Para 8 , 9 )
3. Losses directly caused by intrusive execution of failed Anton Piller order due to plaintiff's non-disclosure and false evidence. (Para 18 , 19 , 20 , 21 , 22 )
4. Damages under an Anton Piller undertaking require direct causation; exemplary damages not recoverable under such undertaking. (Para 16 , 44 )
5. Plaintiff ordered to pay damages of RM186,400 with interest and costs to second defendant. (Para 46 )
6. What must a defendant prove to recover damages under an Anton Piller cross-undertaking?
The defendant must prove direct causation between the order's execution and the loss, showing the loss was reasonably foreseeable and directly resulted from the wrongful order. (Para 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 )
7. Are legal fees recoverable as special damages in an assessment under an Anton Piller cross-undertaking?
No. Legal fees incurred in the same proceedings are not recoverable as special damages, following the Federal Court's binding decision in Golden Star. (Para 24 , 25 )
8. Can exemplary damages be awarded under an undertaking for an ex parte injunction?
No. Exemplary damages are not recoverable under an undertaking as the plaintiff commits no wrongful act; the undertaking is a court-ordered compensation mechanism. (Para 44 )
9. What constitutes special circumstances to bar recovery under an Anton Piller cross-undertaking?
Special circumstances include the plaintiff's good faith, refusal of costs against the plaintiff, or inequitable conduct of the defendant. (Para 15 )
10. When may aggravated damages be awarded upon discharge of an Anton Piller order?
Aggravated damages may be awarded where the plaintiff obtained the order without a strong prima facie case, failed to give full disclosure, or introduced false evidence. (Para 36 , 37 , 38 , 39 , 40 , 41 , 42 )
Yusrin Faidz JC
:INTRODUCTION
[1]This judgment concerns encl 377, which is the assessment of damages payable to the second defendant (‘D2’) pursuant to the plaintiffs’ cross-undertaking as to damages. This obligation arose after the discharge of an Anton Piller order (‘APO’) obtained against D2. Initially granted ex parte by this court to preserve evidence linked to allegations of intellectual property infringement and breach of trust, the APO was later unseated by the Court of Appeal, which decreed that the order should never have been issued against D2. Thus, the stage is now set for this court to grapple with the pivotal question: what loss has D2 suffered due to the wrongful execution of the APO, for which the plaintiffs, by their cross-undertaking, are bound to answer?
BACKGROUND FACTS
[2]M3 Technologies (Asia) Bhd and M3 Online Sdn Bhd (‘plaintiffs’) developed and marketed software products over 20 years, including M3 Blast, i3TeamWorks, i3Display, and i3AppsBuilder. D2 through D8 were former or current employees of the plaintiffs in critical roles such as management, operations, and R&D. Amaz Digital Sdn Bhd (‘D9’) was incorporated shortly after the resignation of some defendants, with its directors and shareholders being former employees.
[3]The plaintiffs allege that D9 launched products mirroring plaintiffs’ software, using similar branding and client lists. It is alleged that defendants retained employment at the plaintiffs while purportedly developing competing products under D9. In substantiating their claim, the plaintiffs showed D9’s use of marketing materials referencing the plaintiffs’ clients and software. Email checks is argued to reveal connections between D9 and its former employees. D2, who was a former managing director of the plaintiffs, is suspected to be the person behind the scene as well as the funder of D9. Therefore, based on these allegations and the available evidence, the ex parte APO was granted by my predecessor against all defendants on 19 August 2021 to prevent evidence tampering or destruction. This was subsequently confirmed through an inter parte APO on 20 January 2022.
[4]Affected by the APO, D2 filed an appeal to the Court of Appeal wherein his appeal was allowed with costs of RM30,000 and that the APO against D2 was set aside. The plaintiffs’ application to the Federal Court seeking leave to appeal was dismissed on 13 December 2023 with costs of RM30,000. The relevant portion of the Court of Appeal’s 14 July 2023 order granting right to assess damages states as follows:
(b) Permohonan Perayu di dalam Rayuan Sivil No: W-02(IM)(IPCv)-296–02 Tahun 2022 dan W-02(IM)(IPCv)-297–02 Tahun 2022 dibenarkan setakat mana gantirugi akan ditaksirkan oleh Mahkamah Tinggi;
[5]Following an assessment of damages in accordance with a notice issued under O 37 r 1 of the Rules of Court 2012 (‘the Rules’), I had on 4 October 2024, granted the total sum of RM186,400 along with costs of RM20,000, in favor of D2. My decision encompasses the following:
(a)with regards to special damages, I awarded the sum of RM36,400 to D2;(b)with regards to general damages, I awarded the sum of RM100,000 to D2;(c)with regards to aggravated damages, I awarded the sum of RM50,000 to D2;(d)D2’s claim for exemplary damages is disallowed; and(e)interest at 5%pa on the judgment sum to be calculated from 4 October 2024 until the date of full realisation.
[6]By a notice of appeal dated 17 October 2024, the plaintiffs have appealed against the entirety of the aforementioned decision. Meanwhile, vide a notice of appeal dated 2 November 2024, D2 is cross-appealing on the issue quantum granted for general and special damages, as well as against my decision to disallow exemplary damages. This judgment is prepared for, and equally applies to, both appeals.
ISSUES
[7]The application addresses the following issues:
(a)whether damages incurred by D2 resulted from the failed APO (‘causation’); and(b)how much in damages D2 is entitled to, considering the re
