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2022 MarsdenLR 2984
COURT OF APPEAL PUTRAJAYA
EVER-YIELD SDN BHD – Appellant
Versus
YAP KEAT CHOON & OTHER APPEALS – Respondent
[Civil Appeal No: S-02(NCVC)(W)-1824-09/2018 S-02(NCVC)(W)-1825-09/2018 S-02(NCVC)(W)-1826-09/2018 S-02(NCVC)(W)-1827-09/2018 S-02(NCVC)(W)-1828-09/2018 S-02(NCVC)(W)-1829-09/2018 S-02(NCVC)(W)-1830-09/2018 S-02(NCVC)(W)-1831-09/2018 S-02(NCVC)(W)-1832-09/2018 & S-02(NCVC)(W)-1813-09/2018]
Directors' remuneration requires either shareholder approval or consists of unanimous consent per the Duomatic principle; misconduct in handling company funds justifies termination without notice.
Headnote:(A) Companies Act 1965 – Director's remuneration – Fiduciary duties of directors – Claim for unpaid director's fees, salary, and benefits against various subsidiary companies upheld, following Duomatic principle – It was established that there was unanimous consent for remuneration from respective directors and shareholders – Claims also included for personal loans and damages for unlawful termination – Counterclaims regarding unauthorized withdrawals dismissed, but one counterclaim upheld – Misconduct established in context of issuance of cheques during suspension justified dismissal without notice – Various evidential issues considered in ruling (Paras 28, 37, 67, 115, 124, 134).
Findings of Court:
The claims of the respondent were substantiated while the counterclaims were primarily dismissed, with some exceptions.
Issues
: Whether the claims for remuneration and damages were justified despite absence of formal resolutions; and if counterclaims showed sufficient grounds for recovery.
Ratio Decidendi:
Directors' fiduciary duties impact entitlement to remuneration absent express consensus; misconduct regarding company funds justified termination without notice (Para 122).
Result:
Appeals allowed in part and certain counterclaims dismissed.
Introduction
[1] These appeals arose from 10 writ actions commenced by the respondent, each against a different but related appellant company, all of which suits were jointly tried at the High Court where the learned High Court Judge allowed the claims of the respondent as the plaintiff, and dismissed the respective counterclaims filed by three of the 10 appellants as the defendants, all of whom now appealed against the said decisions. We heard the 10 appeals together, by way of remote communication technology via Zoom. We allowed the appeal in part in respect of the main claim as well as the counterclaims.
Key Background Facts
[2] The dispute was between individuals related by marriage, revolved around the control of company businesses and appeared to have manifested itself in the fall out following the death of the family patriarch, Tan Sit Seng @ Lim Yen Siew who had founded the main business entity, Sit Seng & Sons Realty Sdn Bhd ("Sit Seng & Sons"), also one of the appellants herein, way back on 9 November 1979, with subsidiaries in Peninsular Malaysia and in East Malaysia. Yap Keat Choon, the plaintiff at the High Court and the respondent now before us, was a brother in law of Tan Sit Seng.
[3] Between the two, the arrangement was for the respondent to manage the business operations of Sit Seng & Sons in Sabah whilst Tan Sit Seng focussed on running the operations in the Peninsular.
[4] Tan Sit Seng passed away in October 2013.
[5] Following his demise, resolutions were several months later passed to remove the respondent as a director in all the 10 defendant companies (the 10 appellants herein; in the case of Ever Yield on 27 October 2014). On 29 October 2014 the respondent was informed of his removal as a director from the boards of the 10 appellant companies (among others via a letter from Sit Seng &Sons dated 28 October 2014). The respondent's executive positions in the relevant appellant companies were also terminated the day after, on 30 October 2014.
[6] The 10 appellant companies which had each been separately sued by the respondent at the High Court, in the order they were registered, as follows:
(i) Ever-Yield Sdn Bhd ("Ever Yield");
(ii) Aikbee Timbers (Sabah) Sdn Bhd ("Aikbee");
(iii) Borneo Glow Sdn Bhd ("Borneo Glow");
(iii) Belutanian Sdn Bhd ("Belutanian");
(iv) Lubah Plantation (S) Sdn Bhd ("Lubah Plantation");
(v) Realwood Enterprise Sdn Bhd ("Realwood");
(vi) Sapatanian Sdn Bhd ("Sapatanian");
(vii) Sit Seng & Sons Realty Sdn Bhd;
(viii) Syarikat Tani Desa Sdn Bhd ("Tani Desa"); and
(x) Upaya Abadi Sdn Bhd("Upaya Abadi")
[7] The 10 appellants, all family related entities, are involved in the business of saw milling and oil palm plantation and all are wholly owned by Sit Seng & Sons, apart from Aikbee which is solely owned by Aikbee Resources Sdn Bhd, and Borneo Glow which shares are held by the respondent at only 5% and Ever Yield at 95%.
The Claims & Counterclaims And The Decisions Of The High Court
[8] It is apposite that what the respondent sought from the Court against the appellants be stated. Essentially the reliefs prayed for by the respondent at the trial Court concerned payments which he claimed was due to him from the appellant companies.
[9] Thus, as pleaded, as against Ever-Yield, he asked for (a) the sum of RM448,703.23 being unpaid director's fees, salary and statutory deductions for the period of the financial years 2013 and 2014; (b) the sum of RM3,512,000.00 being the balance of a personal loan to Ever Yield; (c) the sum of RM769,569.84 being the cheques given by Ever Yield to the respondent in exchange for cash from him; and (d) a declaration that the termination of the respondent as a director and chief executive officer of Ever Yield is unlawful, null and void and of no effect, with damages to be assessed for wrongful termination of service as director and chief executive officer of Ever Yield.
[10] In its decision, the High Court allowed the claims, in the aggregate
