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WA-22IP-47-10/2022 Kand. 07/06/2024 16:20:36 IN THE HIGH COURT OF MALAYA AT DI KUALA LUMPUR CIVIL SUIT NO: WA-22IP-47-10/2022 BETWEEN GENUINE CONSULTANCY (M) SDN BHD ... PLAINTIFF AND MOHD FIRDAUS BIN REDZUAN MUHAMMAD SYAHMI BIN MUHAMMAD SANUSI WARDA NATASYA BINTI ZULHAZMI FAISHAM NORFARIHAH NATASYA BINTI MOHD ROSMI NUR AIMI FATIHAH BINTI MOHD SOFI ANGELUS CONSULTANCY ... DEFENDANTS oa FP ON = JUDGMENT [AFTER TRIAL] Introduction 1. This action as originally filed by the Plaintiff was for: (i) | Breach of fiduciary duty, breach of confidence and/or breach of confidentiality by the 1° to 5" Defendants; and (ii) | Conspiracy to injure, unlawful interference with trade, and fraud against all six Defendants (respectively “D1”, “D2”, “D3”, “D4”, “D5” and “D6”). § S/N VDTWGkVYm0KrwyHAUeasHw Page 1 of 42 2. All six Defendants counterclaimed against the Plaintiff for defamation. 3. On the last day of trial right after having issued directions to the parties for written submissions, | had also informed Counsel for all the parties that, having now heard all of the evidence, the parties may wish to re-evaluate and re-consider whether the Plaintiff would be proceeding with all of its claims against all of the Defendants, and whether all of the Defendants would be proceeding with the counterclaim against the Plaintiff and that, if there was any change, they should do the necessary and communicate the same to each other so that the written submissions would cover only those claims that they were actually proceeding with. Of course, if the Plaintiff still wished to proceed with all of its claims against all of the Defendants and all of the Defendants still wished to proceed with its counterclaim against the Plaintiff, then they were at liberty to. 4. Subsequently, by a letter dated 4.3.2024, the Plaintiff by its Solicitors informed the Court that it was withdrawing: (i) |The entire action against D2, D4 and D6; and (ii) | The claims for conspiracy to injure, unlawful interference with trade and fraud against all of the Defendants. with no order as to costs. S/N VDTWGkVYm0KrwyHAUeasHw Page 2 of 42 5. Atthe same time, by a letter dated 4.3.2024, the Defendants by their Solicitors informed the Court that D3, D4 and D5 were withdrawing their counterclaim for defamation against the Plaintiff with no order as to costs. 6. | Sure enough, the parties’ Written Submissions (both Main and Reply) covered the Plaintiffs claims for breach of fiduciary duty, breach of confidence and/or breach of confidentiality against D1, D3 and D5, and D1, D2 and D6é’s counterclaim against the Plaintiff for defamation. Thus, this Judgment will be on those claims/counterclaim. 7. However, before proceeding any further, | believe that there is a misconception which needs to be corrected. | believe the parties are of the mistaken belief that their respective Solicitors’ letters alone are sufficient to withdraw those claims with no order as to costs. 8. In truth, as a matter of procedure, claims or counterclaims cannot be withdrawn or discontinued simply by letters exchanged between them. Order 21 rule 3 of the Rules of Court, 2012 provides: “(1) Subject as provided by rule 2, a party may not discontinue an action (whether begun by writ or otherwise) or counterclaim, or withdraw any particular claim by him therein without the leave of the Court, and the Court hearing the application for grant of such leave may order the action or counterclaim to be discontinued, or any particular claim made therein to be struck out, as against any or all of the parties against whom it is brought or made on such terms as to costs, the bringing of a subsequent action or otherwise as it thinks just. » S/N VDTWGkVYm0KrwyHAUeasHw Page 3 of 42 (2) An application for leave under this rule shall be made by a notice of application.” 9. Rule 2 mentioned in Order 21 rule 3(1) above applies to situations where the withdrawal or discontinuance can be effected without the leave of the Court. The situation at hand is no one of them. 10. Procedurally, the effect of Order 21 rule 3 of the Rules applied here is that: (i) the Plaintiff could only have withdrawn the entire action against D2, D4 and D6 and the claims for conspiracy to injure, unlawful interference with trade and fraud against D1, D3 and D5 with leave of the Court; and (ii) D3, D4 and D5 Defendants could only have withdrawn their counterclaim for defamation against the Plaintiff with leave of the Court 11. Leave of the Court necessitates filing a formal application, unless of course they have mutually agreed to the withdrawals and the Court is in accord with that. Whether they can take that latter course when leave is required is still up to the Court. 12. Further, only the Court has the power to decide the terms of the withdrawal, including whether it was with no order as to costs, and no party can unilaterally decide the issue of costs for withdrawing any claim against the other. S/N VDTWGkVYm0KrwyHAUeasHw Page 4 of 42 13. Take this case alone for example. The Plaintiff started this action by making several serious allegations against the Defendants for breach of fiduciary duty, breach of confidence and/or breach of confidentiality, conspiracy to injure, unlawful interference with trade, and fraud against all six Defendants. Some of those allegations are quasi-criminal in nature. And at the trial all the Defendants had to defend themselves to the hilt. At the end of the trial, the Plaintiff obviously realized that none of those claims could be sustained against D2, D4 and D6, and only some of those claims could be sustained against the remaining three D1, D3 and D5. Could it justly and fairly withdraw those claims it decided it had no leg to stand on without any repercussion, especially after the time and legal costs all of the Defendants had to incur? What if it had decided that none of its claims could be sustained against all of the Defendants? Could it have just by letter informed the Court and the Defendants that it was withdrawing its claims against the Defendants with no order as to costs? Surely not. 14. In addition, upon hearing and allowing such application, the order the Court would make is to strike out that which is intended to be withdrawn / discontinued. The parties withdraw, the Court strikes out. 15. Thus, in the absence of any formal application by any of the parties to withdraw/discontinue, those claims and counterclaims are technically neither withdrawn nor discontinued. S/N VDTWGkVYm0KrwyHAUeasHw Page 5 of 42 16. Instead, | find that those claims and counterclaims not submitted on were in effect abandoned by the respective parties, with the issue of costs to still be decided by this Court alongside the Court's findings and decision on the claims and counterclaims that they elect to proceed with and did submit on. 17. As for costs, in the absence of any agreement by the Plaintiff that no costs be imposed on the D3, D4 and D5 for withdrawing their counterclaim for defamation against it, and in the further absence of any agreement by the Defendants that no costs be imposed on the Plaintiff for withdrawal by the Plaintiff of its claims as aforesaid, then this Court will assume that costs is still in issue. 18. Those perimeters having now been established, it is then time to move on to the merits of the Plaintiffs claims for breach of fiduciary duty, breach of confidence and breach of confidentiality against D1, D3 and D5, and then to D1, D2 and D6’s counterclaim for defamation. Salient facts for the claims and the counterclaim Breach of fiduciary duty, breach of confidence and/or breach of confidentiality 19. The Plaintiff is a company incorporated in Malaysia on 6.10.2020, and its nature of business as registered with the Companies Commission of Malaysia is “Advertising, business management consultancy services, other service activities N.E.C.”. The Plaintiff's principal is Mohammad Khairul Aizat Bin Md Ruslan (PW1), and he testified that he actually started the Plaintiff as a business enterprise S/N VDTWGkVYm0KrwyHAUeasHw Page 6 of 42 known as “Genuine Consultancy” in 2017, the Plaintiff's predecessor. 20. D1,D3 and D5 all have tertiary qualifications in accounting and were former employees of the Plaintiff. The brief details of their employment with the Plaintiff are as follows: (i) D1 is a relative of PW1. By a letter dated 29.8.2020, he was offered and accepted the position of Customer Relationship Manager, and held that position until he submitted his resignation on 8.8.2020 and left the Plaintiff on 9.8.2022. (ii) By a letter dated 28.12.2020, DW3 was offered and accepted the position of Pembantu Akauntan. By a letter dated 30.10.2021, she was offered and accepted the position of Customer Relationship Executive, and held that position until she submitted her letter of resignation on 4.1.2020 and left the Plaintiff on 3.2.2022. (iii) By a letter dated 22.12.2020, DW5 was offered and accepted the position of Pembantu Akauntan. By a letter dated 30.10.2021, she was offered and accepted the position of Customer Relationship Executive, and held that position until she submitted her letter of resignation on 28.1.2022 and left the Plaintiff on 5.2.2022. S/N VDTWGkVYm0KrwyHAUeasHw Page 7 of 42 21. D3 had formed D6, Angelus Consultancy, on 5.7.2021 whilst she was still an employee of the Plaintiff. Its nature of business is “Membantu Usahawan Menyediakan Laporan Kewangan”. Her husband, D2, also a former employee of the Plaintiff, joined her on 16.6.2022 after he left the Plaintiffs employ as Customer Relationship Manager. On 4.7.2022, they formed Angelus Corporate Services Sdn Bhd (“Angelus Corporate Services’). 22. When D3 and D5 left the Plaintiff's employ, they joined first Angelus Consultancy and, when Angelus Corporate Services, migrated to that company. When D1 left the Plaintiff's employ in In August 2022, he joined Angelus Corporate Services, not D6. D1, D3 and D5 are now all shareholders of Angelus Corporate Services. 23. Crucially, the Plaintiff did not adduce any evidence of any business activity of Angelus Consultancy while D3 was still employed by the Plaintiff, has now abandoned all of its claims against Angelus Consultancy, and did not add Angelus Corporate Services as a Defendant to this action. The importance of this will be pointed out in due course. 24. At this juncture, it may be appropriate to mention the Plaintiff's modus operandi. 25. The Plaintiffs nature of business is neither unique nor remarkable; it offers basic accounting services to the public, predominantly individuals, that probably hundreds of accounting firms in Malaysia already offer. These include doing personal tax returns, annual financial reports for small business and the like. S/N VDTWGkVYm0KrwyHAUeasHw Page 8 of 42 26. To provide these basic accounting services and keep its overheads low, the Plaintiff engages young, fresh accounting graduates with a degree in Accountancy who would have already received the necessary education from the university or college they spent years at to be qualified and able to provide them. Giving young talent a head-start upon graduation is nevertheless commendable. 27. The Plaintiff's methodology of offering those services is also neither unique nor remarkable; it trolls the world wide web for addresses of prospective clients / prospects, whom it calls ‘leads’. It then bombards the leads with emails about the Plaintiff's services, and then provides those services to those leads who positively respond, who would then become clients. Those leads who do not positively respond are then sent emails periodically, more or less until they succumb, but they remain as leads until they do. 28. Alternatively, their leads and prospects respond to the Plaintiff's online platforms that it set up on Google, FaceBook or Instagram. The contact particulars of all leads are kept in the Plaintiff's database. 29. On the law of numbers, the Plaintiff's list of leads on its database certainly far, far outnumber the list of its actual clients. Even then, because the services the Plaintiff provides are predominantly ad hoc, the clients would revert back to the status of being leads again once that ad hoc service is provided and until the following year when it is time to submit tax returns again. So, this is not a scenario where clients constantly remain clients all year round, but are leads for most of the time until that once-a-year tax return event and they S/N VDTWGkVYm0KrwyHAUeasHw Page 9 of 42 decide to engage the Plaintiff's services again. With abundant competition abound for such basic accounting services, therefore there is therefore no guarantee that those leads / prospects will re- engage the Plaintiff again or over and over again. 30. A further important feature of the Plaintiff's business is that the Plaintiffs principal, PW1, had appointed D1, his relative, as the leader and mentor of the young accounting professionals the Plaintiff engaged. Being at least a decade older than D2, D3, D4 and D5, they had looked up to and regarded him as an elder brother figure, and these young accounting professionals were evidently much, much closer to and enjoy an affinity with D1, as opposed to PW1 whom he has them call “Boss”. 31. Returning to the narrative, SP1 testified that he found out on 20.7.2022 that D1 had assisted D3 in the setting up of Angelus Consultancy, and had warned D1 not to do provide any further assistance, either in setting up or developing Angelus Consultancy’s business. He further obtained from D1 a “Perakuan Untuk Ditandatangani Oleh Pekerja Genuine Consultancy (M) Sdn Bhd Berkaitan Kesetiaan Dan Kerahsiaan Syarikat’. Crucially, none of the other Defendants, particularly D3 and D5 had signed any such Perakuan because they had already left the Plaintiffs employ months before. S/N VDTWGkVYm0KrwyHAUeasHw Page 10 of 42 32. Further crucial is the fact that the letters of employment of D1, D3 and D6 all state: “Polisi & Disiplin Anda akan diberi polisi syarikat sebaik sahaja mula bertugas minggu pertama dalam tempoh orientasi dan latihan. Anda akan dipantau dan gaji akan dinilai oleh penyelia yang telah dilantik.” 33. PW1 testified that that “polisi syarikat” is a Dasar Polisi Syarikat dated 21.12.2021 that was posted online on the Plaintiff's website. However, in my view, the Dasar Polisi Syarikat is not part the employment contractual terms between the Plaintiff and D1, D3 or D5 because: (i) | The Dasar Polisi Syarikat was unilaterally formulated by the Plaintiff and there was no evidence that the Plaintiff had offered any opportunity to any of D1, D3 or D5 to review and agree to its terms and contents; and (ii) | Paragraph 1.2 of Section 1 to the the Dasar Polisi Syarikat expressly states: “Polisi. syarikat merupakan garis panduan atau gambaran keseluruhan sesebuah syarikat merangkumi hak-hak pekerja, faedah dan peraturan. lanya bertujuan untuk membiasakan pekerja dengan maklumat penting tentang syarikat dalam usaha memupuk kesedaran dari segi kebajikan dan kesihatan di tempat kerja.” » S/N VDTWGkVYm0KrwyHAUeasHw Page 11 of 42 Defamation 34. D1, D2 and D6’s counterclaim for defamation arises from statements appearing in: (i) A posting on Whatsapp Story; (ii) A posting on a Kumpulan WhatsApp; and (iii) A posting of a Facebook Story on Facebook. Claim for breach of fiduciary duty by D1, D3 and D5 35. The Plaintiffs claim for breach of fiduciary duty, breach of confidence and/or breach of confidentiality against D1, D3 and D5 is predominantly based on its evidence of communications on information about the Plaintiff's leads / prospects between D1, while he was still an employee of the Plaintiff, with D3 and D5 after they had left the Plaintiff's employ and while they were already employed and/or engaged with Angelus Consultancy. The Plaintiff primary allegation is that D1 had passed data and information about the Plaintiffs leads to D3 and D5, who had then sought to offer accounting services to these leads / prospects under the umbrella of Angelus Consultancy, relying on the evidence of emails between them. That probably explains why the Plaintiff singled out D1, D3 and D5 and abandoned the claim for breach of fiduciary duty, breach of confidence and/or breach of confidentiality against D2, D4 and D6 given that there was no evidence of any such alleged communications between D1 and them. S/N VDTWGkVYm0KrwyHAUeasHw Page 12 of 42 36. In the Plaintiffs Submissions, the Plaintiff had lumped together its case for breach of fiduciary duty, breach of confidence and/or breach of confidentiality as if they are similar, if not synonymous. However, they are not. 37. Tosuccessfully bring a claim for breach of fiduciary duty against D1, D3 and D5, the Plaintiff must prove that they each owed a fiduciary duty to the Plaintiff and that they had breached that duty whilst still in the employ of the Plaintiff. Once an employee leaves the service of an employer, so too does end any fiduciary duty of that employee to the employer. Applied here, any fiduciary duty can only last as long as D1, D3 and D5 were each in the Plaintiffs employ, and the Plaintiff must be able to identify that breach occurring when they were each still in the Plaintiffs employ. To recount: (i) D1 left the Plaintiff's employ on 9.8.2022; (ii) D3 left the Plaintiffs employ on 3.2.2022; and (iii) D5 left the Plaintiff's employ on 5.2.2022. 38. Here, as the Plaintiff's claim for breach of fiduciary duty against D3 and D5 is in respect of their alleged acts when they had left the Plaintiff and joined Angelus Consultancy, then they would not at the time of the alleged acts have had or maintained any fiduciary duty to the Plaintiff and consequently breach of fiduciary duty by them simply does not arise. S/N VDTWGkVYm0KrwyHAUeasHw Page 13 of 42 39. It is different, however, for D1. He was appointed to a relatively senior position within the Plaintiff not just as a Customer Relationship Manager but further to serve as a leader and mentor to the much younger accountants engaged by the Plaintiff. The alleged incidents occurred when he was still an employee of the Plaintiff. | therefore find that D1 did owe a fiduciary duty to the Plaintiff. 40. Breach of confidence or confidentiality is different however, because it survives the termination of the employment relationship. In Scmidt Scientific Sdn Bhd v Ong Han Suan & Ors [1998] 1 CLJ 685, Kamalanathan Ratnam JC said: “The plaintiff contended that the defendants had breached their duty of fidelity and good faith while in the employment of the plaintiff by taking away and making copies of the confidential information and/or trade secrets of the plaintiff. | find that this duty of good faith or fidelity does not just require that the employee refrains from misuse or from disclosing information whilst still in the employment of the plaintiff. To my mind, there is also an implied duty that prohibits the employee from using any confidential information obtained during his employment without the employer's consent for his own or someone else's use after the employment contract ends.” 41. Breached of confidence and confidentiality are in effect the same. In this case, whether or not D1 breached his fiduciary duty to the Plaintiff is linked to whether he breached his duty of confidence and confidentiality to the Plaintiff as alleged by the Plaintiff. 8 S/N VDTWGkVYm0KrwyHAUVeasHw Page 14 of 42 42. Further, in this case the alleged breaches of confidence and confidentiality are inextricably linked because the Plaintiff alleges that its confidential information i.e. information about its leads, was misused by D1, D3 and D5 43. There are three elements for establishing breach of confidence and confidentiality. They are: (i) | The information having the necessary quality of confidence and confidentiality; (ii) That information must have been imparted in circumstances importing an obligation of confidence; and (iii) |. There must be an unauthorised use of that information to the detriment of the party communicating it. 44. These elements are set out in the Judgment of Megarry J in Coco v AN Clark (Engineers) Ltd [1969] RPC 41, in which he said: “In my judgment, three elements are normally required if, apart from contract, a case of breach of confidence is to succeed. First, the information itself, in the words of Lord Greene, M.R. in the Saltman case on page 215, must “have the necessary quality of confidence about it.” Secondly, that information must have been imparted in circumstances importing an obligation of confidence. Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it.” » S/N VDTWGkVYm0KrwyHAUeasHw Page 15 of 42 45. In Seager v Copydex, Ltd [1967] 2 All ER 415, Lord Denning MR said: “The law on this subject does not depend on any implied contract. It depends on the broad principle of equity that he who has received information in confidence shall not take unfair advantage of it. He must not make use of it to the prejudice of him who gave it without obtaining his consent. The principle is clear enough when the whole of the information is private.” 46. In BT Engineering Sdn Bhd v Team United Resources Sdn Bhd & Anor, [2012] 5 MLJ 720, in which Hanipah Farkullah JC (now FCJ) referred to Faccenda Chicken v Fowler [1985] FSR 105 that essentially categorized three types of information for considering whether there had been a breach of confidence by an employee or ex-employee: (i) | information which because of its trivial character or easy accessibility from public resources cannot be regarded by reasonable persons or by the law as confidential. The employee is at liberty to disclose it during his service or afterwards as he pleases, even to a competitor; (ii) information which the employee must treat as confidential (either because he is expressly told it is or because from the character it is obviously confidential) but which once learned necessarily remains in the employee’s head and becomes part of his own skill and knowledge applied in the course of his employer’s business. So long as the employment continues, he cannot otherwise use or disclose such information. But when he is no longer in the same service, the S/N VDTWGkVYm0KrwyHAUeasHw Page 16 of 42 law allows him to use his full skill and knowledge for his own benefit in competition with his former master; and (iii) specific trade secrets so confidential that, even though may necessarily have been learned by heart and even though the employee may have left the service, cannot lawfully be used save for the employer’s benefit. 47. In Ng Kim Fong v Menang Corporation (M) Sdn Bhd [2020] MLJU 644, the Court of Appeal referred to and approved of this passage in BT Engineering (see paragraph 135 of the Judgment of S. Nantha Balan JCA). 48. Applying this, the first step is to decide whether or not the information from the Plaintiffs database on its leads is confidential. Whether information was confidential 49. In my view, the information in the Plaintiffs database on its leads and prospects is confidential. Even though the contact particulars were initially either sourced from the internet or on enquiries from members of the public responding to the Plaintiff's accounts on Google, Facebook or Instagram and then stored in the Plaintiff's database, that database is confidential to the Plaintiff, thereby rendering the information contained therein relating to the Plaintiff's leads/prospects to also be confidential. S/N VDTWGkVYm0KrwyHAUeasHw Page 17 of 42 50. In Worldwide Rota Dies Sdn Bhd v Ronald Ong Cheow Joon