Wong Poh Wah v Sea Tackle Sdn Bhd (B-02(NCvC)(W)-1841-09/2022)

Wong Poh Wah (NO K/P: 750429-14-5070)

Teo Tzi Sin

Nakayama Takeshi (Pasport Jepun No : TR5763891) 29/08/2025 07:21:59

Ou Wee Chuan (NO K/P:760117-01-5989)

Greatsea Tackle Sdn Bhd (No. Syarikat: 1267897-K)

Yoidore Sdn Bhd (No. Syarikat: 976219-W)

Tan Hong Chan (NO K/P: 780814-14-5226) … Defendants CORAM: SUPANG LIAN, JCA LIM CHONG FONG, JCA ALWI BIN HJ. ABDUL WAHAB, JCA GROUNDS OF JUDGMENT Introduction [1] Both the 1st and 2nd Appellants (the 1st and 2nd Defendants (D1 and D2) in the High Court) were the former directors of the Respondent. [2] The Respondent was the Plaintiff in the High Court claiming against the 1st and 2nd Appellants for damages premised on breach of fiduciary duties. [3] On 15.9.2025, the learned High Court Judge (“HCJ”) allowed the Respondent’s claim after a full trial. [4] Aggrieved with the HCJ’s decision, the 1st and 2nd Appellants appealed to this Court. Factual background [5] The Respondent is a company incorporated in Malaysia and is involved in the business of supplying and distributing fishing equipment and other fishing accessories. [6] The 1st Appellant and 2nd Appellant who are husband and wife were at all material times the directors of the Respondent until their removal on 8.2.2018. [7] 1st Appellant is also a shareholder of the Respondent holding 311,400 ordinary shares. [8] The 3rd Defendant (D3) at the High Court is Nakayama Takeshi. He is the director and shareholder of the 6th Defendant (D6) i.e. Yoidore Sdn Bhd holding 33,334 ordinary shares. [9] D6 is a company trading in fishing equipment and other fishing related activities. At all material times, D6 is also the supplier of fishing equipment, tools and accessories that are sold and supplied by the Plaintiff to the buyers. [10] D3 is also a shareholder in Livebreak Sdn Bhd, which operates a Japanese food restaurant in Selangor, holding 150,000 shares wherein the 1st and 2nd Appellants are the other shareholders holding 150,000 and 200,000 shares respectively. [11] The 4th Defendant (D4) at the High Court is the sole director and shareholder in 5th Defendant (D5) i.e. (Greatsea Tackle Sdn. Bhd.), a company created on 9.2.2018, one day after the removal of the 1st and 2nd Appellants on 8.2.2018. [12] The 7th Defendant (D7) at the High Court was an accounts manager at the Respondent’s company who left the said company when 1st and 2nd Appellants were removed. [13] Parties are referred to as the Plaintiff and the Defendants (D1 – D7 whichever is applicable) in their respective capacities in the High Court. The Respondent/Plaintiff’s case [14] It is the Plaintiff’s pleaded case that the 1st and 2nd Defendants (D1 and D2), as directors of the Plaintiff’s company are trustees and agents of the Plaintiff and by that token they owed a fiduciary duty to the Plaintiff. [15] The Plaintiff claimed that D1 and D2 had breached their fiduciary duties and had acted in clear conflict of interest due to their business relationship with D3 in D6 and in the Japanese food restaurant. [16] The Plaintiff also claimed that D1 and D2 had fraudulently misappropriated the Plaintiff’s funds in connivance with D7, making fraudulent claims, and using the Plaintiff’s assets for personal gain. [17] The wrongful and unlawful acts committed by D1 and D2 amounts to a severe abuse of their powers as directors of the Plaintiff and as a result the Plaintiff had suffered losses. The 1st and 2nd Appellants/1st and 2nd Defendants’ case [18] D1 and D2 contended that the Plaintiff has failed to plead in the Statement of Claim that their actions were beyond or outside the scope of their authority as directors and officers of the Respondent’s company. [19] The pleadings related to the purported breach of fiduciary duty by D1 and D2 are highly defective, vague, and legally insufficient. The allegations of conspiracy and conflict of interest by D1 and D2 and the other Defendants in the claims of fraud involving the Plaintiff’s assets are vague, incomplete, and legally deficient, and should therefore be struck out. [20] Similarly, the accusations of misappropriation of assets and/or funds in the Statement of Claim are highly defective, unclear, legally insufficient, and should be dismissed; [21] Particularly, D1 and D2 claimed that they had acted in accordance with the powers granted by the company's Memorandum and Articles of Association and asserted that there was no conflict of interest in their actions as complained of by the Plaintiff. [22] D1 and D2 further contended that the Plaintiff failed to present evidence regarding the alleged misappropriation and also failed to prove the allegations of fraud concerning the assets; and [23] Consequently, D1 and D2 contended that the Plaintiff has not established any damages suffered as a result of an agreement to injure because the same had never been pleaded. The High Court’s decision [24] The learned HCJ found in favour of the Plaintiff, thus allowing the Plaintiff’s claims against D1 and D2 as follows: “MAKA ADALAH DIHAKIMKAN BAHAWA tuntutan Plaintif terhadap Defendan Pertama dan Defendan Kedua dibenarkan seperti berikut:-

Gantirugi berjumlah RM1,000,000.00 (Ringgit Malaysia Satu Juta) bagi pelanggaran tanggungjawab-tanggungjawab fidusiari;

Faedah pada kadar 5% setahun ke atas jumlah gantirugi RM1,000,000.00 (Ringgit Malaysia Satu Juta) daripada tarikh penghakiman hingga tarikh penyelesaian penuh; dan

Kos sebanyak RM50,000.00 (Ringgit Malaysia Lima Puluh Ribu) dibayar oleh Defendan Pertama dan Defendan Kedua kepada Plaintif secara keseluruhan”. [25] Learned HCJ had not allowed the Plaintiff’s claim for conspiracy to defraud as can be seen in the sealed Judgment of the Court and stated as follows: “SETERUSNYA, ADALAH DIHAKIMKAN BAHAWA tuntutan Plaintif terhadap Defendan Ketiga, Defendan Keempat, Defendan Kelima, Defendan Keenam dan Defendan Ketujuh adalah ditolak dan kos adalah seperti berikut:-

Kos sebanyak RM10,000.00 (Ringgit Malaysia Sepuluh Ribu) dibayar oleh Plaintif kepada Defendan Ketiga dan Defendan Keenam secara keseluruhan;

Kos sebanyak RM10,000.00 (Ringgit Malaysia Sepuluh Ribu) dibayar oleh Plaintif kepada Defendan Keempat dan Defendan Kelima secara keseluruhan; dan

Kos sebanyak RM5,000.00 (Ringgit Malaysia Lima Ribu) dibayar oleh Plaintif kepada Defendan Ketujuh.” [see the seal Judgment at pages 56-57 PDF of Encl. 33] The Issues [26] In the High Court, the following key issues were determined by the High Court namely:

whether D1 and D2 owed a fiduciary duty to the Plaintiff;

(ii) whether D1 and D2 breached their fiduciary duty to the Plaintiff;

(iii) whether D1 and D2 acted within the scope of powers granted pursuant to the Memorandum and Articles of Association of the company. Whether D1 and D2 owed a fiduciary duty to the Plaintiff [27] Learned HCJ finds that D1 and D2 owed statutory and fiduciary duties to the Plaintiff in the exercise of their rights and duties in respect of the funds and assets of the company. At paragraph 73 and 74 of the learned HCJ’s Grounds of Judgment, she stated: “(73) From the outset, there can be no dispute that D1 and D2 as directors of the Plaintiff owe the following fiduciary duties: -

to act honestly;

(ii) to act in good faith;

(iii) to hold on trust and protect the assets of the Plaintiff;

(iv) not to misappropriate and/or steal and/or cheat the funds and assets of the Plaintiff;

not to defraud the Plaintiff of its funds and/or assets;

(vi) not to fraudulently misrepresent to third parties that the Plaintiff has or is ceasing operations and/or that the Plaintiff is closing down its business;

(vii) not to intentionally terminate and/or cancel the Plaintiff's supply and/or distribution agreements with third parties to cause irreparable loss and damage to the Plaintiff. [74] It is the duty of D1 and D2 not to place themselves in a position where their duty to the Plaintiff and their own interest might conflict. Apart from that D1 and D2 were under a duty not to act for their own benefit or for the benefit of a third party without the informed consent of the Plaintiff's Board of Directors”. Whether D1 and D2 breached their fiduciary duty to the Plaintiff [28] On whether D1 and D2 had breached their fiduciary duty to the Plaintiff, learned HCJ held that: [75] Having found that D1 and D2 are fiduciaries and that they owed a duty of care to the Plaintiff, it would follow that the next issue to be determined is whether they had breached their fiduciary duties to the Plaintiff. Both the Plaintiff's witnesses had given detailed evidence of the breach of fiduciary duties by D1 and D2. The breach of duties complained of are specifically those which are listed in the earlier paragraphs above. The Plaintiff has contended that its complaints against the Defendants are supported by documentary evidence. [76] I pause here to discuss first the Defendants' argument that there was a failure to plead the specific facts and details of the breach of fiduciary duties supposedly committed by the Defendants in the Plaintiff's Statement of Claim, that there were no allegations made against the Defendants that they or any of them had acted beyond the scope of their respective authorities. It was argued that there was failure to allege that any or all of them had acted otherwise than in the interest of the Plaintiff company. With that the Defendants say that there was no cause of action against either one of the Defendants. [77] Having scrutinized and carefully read the Statement of Claim I found that the Defendants' complaints are unsubstantiated. The Plaintiff Statement of Claim is replete with details and particularization of all the breaches that had been committed by the Defendants. I would particularly refer to Paragraphs 15(1) to 15(18) of the Plaintiff's SOC where there are specific allegations of breach of fiduciary duties alleged to have been committed by the 1st and 2nd Defendants jointly and severally. Therefore the reliance by the Defendants to the case of Cranborne Enterprises Limited & Anor v Export-Import Bank of Malaysia Berhad & Ors {2019} 1 LNS 1580 is misconceived. Not surprisingly this argument fails. [78] To begin with, let us start with the allegation of breach of fiduciary duty on the part of D1 and D2 with regard to the Japanese food restaurant business that they run together with D3. Both Defendants admitted that they together with D3 are carrying out the Japanese food restaurant business. D1 and D2 did not deny that they frequently entertained their clients at the Japanese restaurant and had subsequently made claims for expenses incurred as a result of entertaining the Plaintiff's clients at the Japanese restaurant. The Defendants defended themselves seeing nothing wrong in this and could not fathom the Plaintiff's objections in regard to this matter. [79] It is my considered view that the relationship of the parties which gave rise to the conflict of interest is patent. To reiterate, the Japanese Restaurant is owned by D1, D2 and D3. D1 and D2 were directors of the Plaintiff company at the material time while D3 is the director of D6. At the same time the Plaintiff has a business relationship with D6. D6 is one of the Plaintiff's suppliers of fishing equipment. The Court could not overlook the probability or the likelihood of D1 and D2 being obliged to give or award contracts for the supply of fishing equipment to D6 in light of their business relationship in the Japanese Restaurant. To avoid allegations of impropriety in their business dealings in the Plaintiff company, it behoved upon D1 and D2 to declare and disclose their interest in the Japanese Restaurant to the Plaintiff. [80] The Defendants did not disclose their interest in Lifebreak Sdn Bhd to the Plaintiff's Board of Directors. DW 3 tried to justify herself by saying that the other two directors (PW 1 and PW 2) knew of her interest in Lifebreak Sdn Bhd, that PW 1 had also gone for meals in their restaurant. At any rate the fact that the other directors had gone to the restaurant to eat would not sum up to having fulfilled the duty of giving full and frank disclosure to the Plaintiff's Board of Directors. … … [83] I am satisfied and I find that the Defendants actions in regard to the transactions involving Lifebreak Sdn Bhd, Yoidore Sdn Bhd and D3 were not just potential conflict of interest but actual conflict of interest. It was crystal clear there was a direct pecuniary relationship between the Defendants as directors of the Plaintiff and D6. Thus I agree with the Plaintiff that D1 and D2 in blatant breach of their fiduciary duties had acted in clear conflict of interest. The business relationship between the Plaintiff is tainted with conflict of interest. … [85] I have no doubt that the Defendants have suppressed and concealed their conflict of interest with D3 and D6 from the Plaintiff. The authorities I have cited earlier have strictly postulated that a fiduciary may not without the informed consent of his principal place himself in a position where his interest may conflict with his duty to the principal. … … [88] Next, I refer to the Plaintiff's allegation that the Defendants had paid to themselves the sums of RM200,000 each from the funds belonging to the Plaintiff without the knowledge or authority of the Plaintiff's Board of Directors. [89] The documentary evidence adduced herein by the Plaintiff clearly and consistently established the Defendants had in connivance paid to themselves the said sum of monies. The documentary evidence in the form of salary slips at pgs 201 to 203 (B2) clearly showed the payments made directly to D1 and D2 respectively. This is consistent with and shown up through the instructions given to Public Bank Berhad for the transfer of those funds into the respective accounts of both the Defendants. [90] The Plaintiff has exhibited the salary slips of D1 and D2 which clearly indicate the amount of money misappropriated by them. Together with these are appended the written instructions to Public Bank Bhd issued by D1 and D2 for the transfer of the monies. The transfers were carried out before their removal as directors of the Plaintiff company. No one else could have authorised the payment of these sums which are referred to as payment of bonus other than both the 1st and 2nd Defendant because prior to 8.2.2018, they were the only two directors in full control of the Plaintiff company. … … … [94] Apart from the RM200,000.00 that was misappropriated there is also an additional sum of RM97,550.40 paid to third parties including a sum of RM70,000 to D7. All these payments were undertaken without the knowledge and approval of the Plaintiff's Board of Directors. [95] The evidence of this payout can be seen from the salary slip of D7 (p. 203 B2). The bank statement of the Plaintiff (p.205 B2) is evidence of the said sums transferred out from the Plaintiff's account. The Request for Transfer made to Public Bank contains the IC numbers, account numbers of the Defendants and more importantly the signature of the 2nd Defendant authorising the transfer of the money to them. [29] The learned HCJ then said the onus of proof is shifted from the Plaintiff to the Defendants to disprove the allegations made by the Plaintiff. In their replies, the Defendants merely denied the allegation. The learned HCJ’s observed that: “[96] … They merely denied that those monies were paid into their respective accounts. Mere denial is insufficient to discharge the burden that had shifted to them. The Defendants could not support their bare averments with any evidence such as their bank accounts to disprove that those monies were not transferred into their accounts and/or the third parties accounts. The Defendants had more than ample time since the commencement of this civil suit against them in 2018 to appraise themselves with the particulars of the allegations made against them. They were provided with the bundles of documents containing all the documentary evidence supporting the Plaintiff's allegations. The Defendants have not seen it fit to provide documentary proof to dislodge the allegations made against them…” [30] In regard to the siphoning of the Plaintiff’s funds in the sum of USD50,000 paid to the Defendants by using invoices issued by D6, the learned HCJ finds that the explanation given by the Defendants to be suspicious because the money was not credited into the bank account number as provided in the invoice, neither was it credited into the bank account of D6 but was paid out into a different bank account. [31] The learned HCJ finds that the Plaintiff has discharged the evidentiary burden to prove that this sum was misappropriated from the Plaintiff's coffers and paid to D1 and D2 without the knowledge and consent of the Plaintiff's Board of Directors. Since D1 and D2 were the only ones in charge of administrative and financial matters, it followed that they were the ones responsible for the misappropriation. [32] Learned HCJ further finds that Defendants have made claims for expenses using the receipts from the Japanese Restaurant which they owned together with D3. These receipts are found at p. 163 - 173 B2. It has already been established that both D1 and D2 had acted in conflict of interest in their dealings as directors of the Plaintiff company as well as directors of Livebreak with D6 and D3. Both the Defendants had kept their association out of the knowledge of the Plaintiff's Board of Directors. [33] The learned HCJ also made a finding of facts that D1 and D2 had siphoned the Sports Club funds by making cash withdrawals without authorisation when they were no longer directors of the Plaintiff after their removal on 8.2.2018. [34] The learned HCJ made further findings that D1 and D2 had misused the Plaintiff’s funds by making payments for goods which although paid for by the Plaintiff were never delivered to the Plaintiff company. Subsequent to police intervention, D1 and D2 had in clear admission of their misconduct, returned some of the goods to the Plaintiff. [35] In relation to the Tenancy Agreement signed by D2 purportedly on behalf of the Plaintiff, the learned HCJ finds that:

it was signed by D2 on 6.2.2018, 2 days before he was removed as director of the Plaintiff;

(ii) the Notice of EGM to remove D1 and D2 had been duly and properly served on them on or around 24.1.2018. Hence they were aware of their pending removal;

(iii) the Letter of Offer to rent the premises is dated 27.1.2018 which is after the Notice of EGM had been served on the Defendants;

(iv) the Tenancy Agreement was signed personally by D2 and not in his capacity as director of the Plaintiff;

the payment of deposit and advance rental were paid by D2 and not the Plaintiff;

(vi) D2 did not make any counterclaim against the Plaintiff for the payments made in pursuant to the Tenancy Agreement;

(vii) the reasons to rent another alternative premises are unreasonable, illogical and baseless;

(viii) the Defendants did not obtain the consent of the Board of Directors before entering into the Tenancy Agreement. [36] On the balance of probability, the learned HCJ thus concluded that D1 and D2 has abused their powers in their capacities as the Plaintiff’s then directors and acted in breach of their fiduciary duties to the Plaintiff. Whether D1 and D2 acted within the scope of powers granted pursuant to the Memorandum and Articles of Association of the company [37] In respect of this issue, learned HCJ had dealt with it succinctly at paragraphs 116 to133 of her grounds of judgment where she held that: “[120] The Defendants relied on clauses 3(8), 4, 76, 80 and 104 of the company's Articles of Association to support their stand that they were merely exercising their functions within the scope in discharging of their duties as directors. The Articles of Association of the Plaintiff serves as its rule of internal management and sets out the precise powers and duties of its directors, subject always to the overriding provisions of the law. it provides for the general power to manage the company. … … [123] The Defendants have not been able to show that they had informed the Board of Directors that they were shareholders and directors of Livebreak Sdn Bhd. In fact, they have supressed and concealed their conflict of interest with D3 and D6 from the Plaintiff. They did not obtain the informed consent of the Plaintiff. Instead they have placed themselves in a position where there is a real likelihood that their interest in the Japanese restaurant business will affect the discharge of their duties as directors of the Plaintiff and which will prejudice the Plaintiff.” [38] The learned HCJ held that clauses 76 of the Articles of Association is of no assistance to the 1st and 2nd Defendants in justifying the payment of remuneration and bonuses to themselves because they had not furnished any evidence that such payments had ever been put to the vote in general meeting of the company as envisaged by the said clause. [39] Similarly, the learned HCJ rejected the 1st and 2nd Defendants reliance on Clause 3(8) of the Articles of Association when she held at paragraphs 128 and 129 of her grounds of judgment: “[128] The Tenancy Agreement was entered into without the informed consent of the Board of Directors. The Defendants were unable to furnish any resolution passed consenting to the execution of the Tenancy Agreement. [129] Furthermore there were no valid reasons furnished for the need to have another office at a business address owned by D5. The timing of the execution of the Tenancy Agreement and the hasty manner in its execution was highly suspicious and gave rise to the reasonable inference s that this was premeditated and an intentional act to cause irreparable loss and damages to the Plaintiff. This court very much doubted the bona fides of the two Defendants in their actions leading up to their removal as directors. This in itself suffice to take their defence outside the Said v Butt principle.” [40] Further, the 1st and 2nd Defendants’ reliance on Clauses 4 and 104 of the Articles of Association asserting their authority and power to sign the Development Agreement and Sales and Purchase Agreement with D6 was held to be misconceived by the learned HCJ as held at paragraphs 131 and 132 of her grounds of judgment: “[131] The Defendants as directors of the Plaintiff had wide ranging powers of management but these powers equally came with simultaneous statutory duties and responsibilities. Clearly they did not comply with the provisions of the Articles of Association namely to obtain the consent of the Board of Directors. The Defendants failed to produce any written resolution from the Board of Directors as proof otherwise. I would say that the Defendants have failed to discharge the evidential burden that was placed upon them. “[132] I now wish to touch on one of the defences advanced by the Defendants i.e. that it made good business sense and it was in the best interest of the Plaintiff for the Defendants to enter into those agreements mentioned earlier. I reminded myself that I ought to apply the yardstick of the reasonable expectation of sensible business to that fact. However after having carefully reviewed the evidence adduced, be it oral and documentary, I find that the Defendants had failed to muster this line of defence. I feel driven to the conclusion that these agreements were intended to further the personal interests of the Defendants. It was never with an intention in furtherance of the interest of the company.” [41] In summing up, the learned HCJ held: “[133] This Court is satisfied and has come to the finding that the 1st and 2nd Defendants have breached their fiduciary duties to the Plaintiffs. They have failed in their duty to act honestly, in good faith and to hold on to the trust and to protect the asset of the Plaintiff. Further they have put themselves in a position where their duty to the Plaintiff and their own Interest has clashed and in conflict. It is not difficult to see that they had acted for their own benefit. They have breached their duty in failing to obtain the informed consent of the Plaintiff. They have acted in a manner which could hardly absolve them from being immune from liability. In breach of all the aforesaid they have caused losses and damage to the Plaintiff.” Our Findings [42] Learned counsel for D1 and D2 submitted that the Plaintiff’s Statement of Claim lacked particularity, as it merely asserted the alleged claims without substantiating the damages or losses suffered. The Plaintiff’s own witness, PW1, conceded during trial that no evidence was adduced to establish the extent of the Plaintiff’s loss. [43] It was further submitted that the Plaintiff’s allegations of conspiracy and conflict of interest involving D1, D2, and the other Defendants, particularly in relation to the purported fraud concerning the Plaintiff’s assets are vague, lacking in material particulars, and legally untenable. In light of their insufficiency, it was contended that such claims ought properly to be struck out. [44] Upon our careful examination of the Plaintiff’s Statement of Claim dated 10.8.2018, it is evident that the Plaintiff has articulated, with sufficient particularity, the alleged breaches of fiduciary duty committed by D1 and D2, as set out in paragraphs 15(1) through 15(18) thereof. [45] As a general rule, fiduciary duty arises when one party (the fiduciary) undertakes to act for or on behalf of another (the principal) in circumstances that give rise to a relationship of trust and confidence. The fiduciary is expected to act with loyalty, good faith, and integrity, prioritizing the principal’s interests above their own. [46] It is apt to quote the authoritative exposition of fiduciary obligations as articulated by Millett LJ in Bristol and West Building Society v Mathew [1998] Ch 1, wherein His Lordship delineated the core duties of a fiduciary with clarity and precision as follows: "A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations. They are the defining characteristics of the fiduciary." [47] In the present appeal, D1 and D2, as directors of the Plaintiff company, stood in a fiduciary relationship with the Plaintiff. In discharging their powers and responsibilities over the company’s funds and assets, they were bound to act in the best interests of the Plaintiff in the entire operations of the Plaintiff. It was incumbent upon them to avoid any situation in which their personal interests might conflict, or appear to conflict, with their duty to the company. [48] The Plaintiff adduced documentary evidence, duly accepted by the learned HCJ, establishing that funds were transferred from the Plaintiff’s account into the respective accounts of D1 and D2. In light of this prima facie showing, the evidential burden shifted to D1 and D2 to rebut the Plaintiff’s case. However, rather than producing material evidence, such as their bank statements to demonstrate that the transfers were lawful or otherwise justified, D1 and D2 offered bare denials, unsupported by any corroborative documentation. [49] Further, it is undisputed that D1 and D2 were charged and pleaded guilty before the Sessions Court on 20.12.2024 for offences involving the misappropriation of the Plaintiff’s funds, for which each was fined RM100,000.00. While the criminal proceedings were not addressed in the judgment of the learned HCJ, the fact of conviction may nonetheless bear upon the assessment of the fiduciary obligations said to have been breached in this suit. [50] Apart from holding directorial positions in the Plaintiff, it is not disputed that the D1 and D2 were also shareholders of Livebreak Sdn Bhd, in which D3 held the remaining equity interest. By their own admission, D1 and D2, together with D3, were actively engaged in the operation of a Japanese food restaurant business. It is further noted that they frequently entertained the Plaintiff’s clients at the said establishment and subsequently submitted claims to the Plaintiff for the expenses incurred. [51] Additionally, D3 was the proprietor of D6, Yoidore Sdn Bhd, a company with which the Plaintiff maintained a commercial relationship. D6 acted as the Plaintiff’s supplier of fishing equipment, tools, and accessories, which the Plaintiff subsequently sold and distributed to its own customers. The learned HCJ did not err in observing that there existed a likelihood of D1 and D2 being obliged to award the supply contract to D6, owing to their close business association with D3 in the Japanese restaurant enterprise. The dual role of D1 and D2 as directors of the Plaintiff and business associates of D3, who owns D6 raises legitimate concerns regarding the transparency of procurement decisions and the possibility of undisclosed interest. [52] The actions and conduct of D1 and D2 undertaken without the informed consent of the Plaintiff’s board of directors vis-à-vis their business association with D3 and Yoidore Sdn Bhd (D6), placed them squarely in a position where their fiduciary duties to the Plaintiff were in direct conflict with their personal interests. This was not a mere theoretical or potential conflict, but an actual and operative conflict of interest in a direct pecuniary relationship between the directors of the Plaintiff and a supplier to the Plaintiff. The learned HCJ was correct in her finding that D1 and D2 had breached their fiduciary duties owed to the Plaintiff. [53] In the Privy Council case of Deloitte & Touche AG v Johnson [2000] Vol 1 BCLC 485 at 492, Lord Millett described conflict of interest as follows:- “… Their Lordships observe that the expression `conflict of interest’ is an abbreviation for `conflict of interest and duty’. The rule is that a fiduciary may not without the informed consent of his principal place himself in a position where his interest may conflict with his duty to the principal. The danger is that his interest may affect him in the discharge of his duty to the prejudice of his principal. …”. [54] In Attorney General v Blake (Jonathan Cape Ltd Third Party) [2001] 1 AC 268 at 280, Lord Nicholls of Birkenhead said:- “Breach of trust and fiduciary duty I should refer briefly to breach of trust and breach of fiduciary duty. Equity reinforces the duty of fidelity owed by a trustee or fiduciary by requiring him to account for any profits he derives from his office or position. This ensures that trustees and fiduciaries are financially disinterested in carrying out their duties. They may not put themselves in a position where their duty and interest conflict. To this end they must not make any unauthorized profit. If they do, they are accountable. Whether the beneficiaries or persons to whom the fiduciary duty is owed suffered any loss by the impugned transaction is altogether irrelevant. The accountability of the army sergeant is Reading v Attorney General [1951] AC 507 is a familiar application of this principle to a servant of the Crown.” [55] The conflict rule is a strict fiduciary principle of universal application. It prohibits any person in a position of fiduciary responsibility from entering into transactions in which their personal interest conflicts, or may potentially conflict, with their duty to the beneficiary or principal. Crucially, the rule operates irrespective of the fairness or commercial reasonableness of the transaction. Once a conflict is established, the fiduciary is precluded from benefiting from the arrangement, and no inquiry is permitted into whether the terms were objectively favourable or disadvantageous to the beneficiary. [56] In the House of Lords case of Aberdeen Railway Co v Blaikie Bros

1 Macq 461; [1843-60] All ER 249, 252, Lord Cranworth LC held:- “…it is a rule of universal application that no one having such duties to discharge shall be allowed to enter into engagements in which he has or can have a personal interest conflicting or which possibly may conflict with the interests of those whom he is bound to protect. So strictly, is this principle adhered to that no question is allowed to be raised as to the fairness or unfairness of a contract so entered into. It obviously is, or may be, impossible to demonstrate how far in any particular case the terms of such a contract have been the best for the cestui qua trust which it was impossible to obtain. It may sometimes happen that the terms on which a trustee has dealt or attempted to deal with the estate or interests of those for whom he is a trustee have been as good as could have been obtained from any other person; they may even at the time have been better. But still so inflexible is the rule that no inquiry on that subject is permitted.” [57] Upon a comprehensive evaluation of the evidence, the learned HCJ concluded that D1 and D2 had acted in breach of the fiduciary obligations owed to the Plaintiff. This conclusion was grounded in their role in the misappropriation of the Plaintiff’s funds and their undisclosed business affiliations with D3 and D6, which gave rise to a clear conflict of interest and undermined their duty of loyalty. It has not been shown to us that the above findings are plainly wrong. We have no reason to intervene and we affirm findings of the learned HCJ in regard to the liability of D1 and D2. Damages [58] D1 and D2 contended that the Plaintiff had failed to establish the constituent elements of conspiracy, as well as the damages allegedly suffered as pleaded in the Statement of Claim. It is evident from the decision of the learned HCJ which expressly disallowed the claim for conspiracy to defraud, rendering it irrelevant to the issues on appeal. The Plaintiff’s cause of action before the High Court against D1 and D2 was grounded in breach of fiduciary duties, which the learned Judge found to be proven on the balance of probabilities. As stated earlier, we agree with the learned HCJ and affirm that finding. [59] On the issue of damages, learned HCJ held as follows: “[146] … The Plaintiff's witnesses have stated that as a result of the actions of the Defendants, the Plaintiff suffered great losses and damages. The Plaintiff's funds and assets were diverted for their personal gain, goods were stolen and misappropriated by the Defendants for sale even though the goods were paid with Plaintiff's funds. The Defendants enriched themselves with their actions and caused losses to the Plaintiff. The Plaintiff's business was adversely affected when its suppliers believed that the Plaintiff had closed its business. The Plaintiff estimated its losses at RM5,000,000 but could not produce documentary evidence to show the same. … … … [149] I kept in mind that compensatory damages should not be exponential but instead should as nearly as possible put the wronged party in the same position as the wronged party would have been in if not for the tortious acts committed by the Defendants. I kept in view that even though the Plaintiff has no documentary evidence to prove that the sum oof RM5,000,000 was indeed the quantum of losses and damages suffered the Plaintiff should still be adequately compensated, but not unjustly enriched or over compensated at the same time. [150] I am of the view that the amount of damages should be fair, appropriate and reasonable in order to adequately compensate the Plaintiff while not to economically devastate the Defendants. This is to drive home the point that D1 and D2 had deliberately and patently caused losses and hardship to the Plaintiff in carrying out their fiduciary duties. They misused the Plaintiff’s resources and funds with impunity and without any remorse even rationalizing their actions to all for the benefit of the Plaintiff. [151] Having considered the evidence as well as the law, I am of the view that damages in the sum of RM1,000,000.00 would be an adequate compensation and which I consider is fair and reasonable. This amount is to be borne equally by the 1st and 2nd Defendants.” [60] The Court of Appeal in Tengku Abdullah Ibni Sultan Abu Bakar & Ors v Mohd Latiff Shah Mohd & Ors & Other Appeals [1997] 2 CLJ 607 held: “…A plaintiff who prove a case of breach of trust or of fiduciary relationship is entitled to a wide range of relief. He may ask for and obtain an account of profits. Or he may have a receiver appointed to recover moneys due to him. Or he may obtain damages. The appropriateness of the particular remedy depends very much upon the facts of each case. (See, e.g., the orders made in Avel Consultants Sdn. Bhd. & Anor. v. Mohamed Zain Yusof & Ors. [1985] 2 MLJ 209.)” [61] Thus, it is clear that the Plaintiff having proven its case for breach of fiduciary duties is entitled to damages deemed appropriate taking into account the seriousness of the breaches and misappropriation of the funds and assets of the Plaintiff as proven during the trial and set forth clearly in the learned HCJ’s Grounds of Judgment (See paragraphs 134(i) to 134(xi) at pages 107 to 108 PDF of Enclosure 33). [62] Upon review, we are satisfied that the learned HCJ correctly applied the governing legal principles in quantifying damages, and rightly awarded RM1,000,000.00 to the Plaintiff, apportioned equally between D1 and D2. There is no indication that the findings were plainly erroneous, and we see no justification for appellate intervention. Conclusion [63] For the above reasons, the appeal is dismissed. The learned HCJ’s decision is affirmed. [64] We award costs to the Respondent of RM 25,000.00 which costs is subject to allocatur. Dated this: 27th August 2025 -sgd-ALWI BIN HJ. ABDUL WAHAB JUDGE COURT OF APPEAL Counsel: For the Appellants/1st and 2nd Defendants: Ong Wen Li Tetuan W.L. Ong & Associates For the Respondent/Plaintiff: R Thayalan (Ahmad Maliki bin Ahmad Marzulai with him) Tetuan Nadzifah Sagunthala & Associates