Indadi Utama (M) Sdn Bhd v Kwah Peng Kun (BA-12BNCvC-49-08/2024)

This appeal arises from a suit initiated by a former employer (the Plaintiff) against its former employee (the Defendant). Notably, the case does not concern embezzlement of funds, misappropriation of confidential information, or the diversion of business opportunities.

Instead, the claim is grounded in an alleged breach of the duty of fidelity, with the crux of the Plaintiff’s complaint being the Defendant’s deletion of 9,245 files from a company-issued laptop prior to his departure. This raises the question of whether this act was an expression of vindictiveness or, as the Defendant maintained, a justified course of action.

Regardless of the Defendant’s motive, the principal issue before this Court is whether the Plaintiff has, on a balance of probabilities established that the Defendant’s conduct amounted to a breach of duty.

The learned Sessions Court Judge found in favour of the Defendant. Dissatisfied with this outcome, the Plaintiff now brings this appeal.

The parties are referred to as they were in the Sessions Court.

The underlying issue in this dispute is whether the Defendant owed a duty in respect of the files and folders stored on the company-issued 3 laptop. If so, the further question is whether that duty was breached by the Defendant.

The ensuing issue concerns the appropriate relief(s) to be granted, should the foregoing questions be answered in the affirmative.

According to the Plaintiff, an evidence or subject matter of considerable importance is the Employee Handbook, which the Plaintiff alleged “was suppressed by the [sic] Defendants and his witness SD2” during trial. This Employee Handbook was supposedly prepared by the Defendant and his own witness Frankie Ridzal (SD2) at the material time that they were both in employment with the Plaintiff.

The Plaintiff had filed an application to adduce additional evidence in the form of this Employee Handbook and this Court granted the application on 17 March, 2025 with an ancillary Order that the applicant furnish this Court with submissions as to how the admission of this new evidence would have had an impact on the learned Sessions Court Judge’s decision.

It was contended by the Plaintiff that this additional evidence has a direct impact on the issue of the Standing Operating Procedures pertaining to the deletion of files and folders and the alleged absence of any written protocols in respect of the same.

The Plaintiff submitted that had the Sessions Court Judge been presented with the additional evidence at the trial, it would have had a 4 material effect on her decision. This was because the learned Sessions Court Judge had made a finding that that there was no Standing Operating Procedures in respect of deletions of files and folders from the Defendant’s company-issued laptop.

The Plaintiff pointed to the fact that the Employee Handbook of 1 January, 2019 at page 15 stipulates under the heading “Grievance & Discipline” the following:

Other general code of conduct which is not permitted by the Company i) falsification or tampering of Company’s records, including job application … vi) malicious or careless destruction of Company properties [13] It was the Plaintiff’s case that “the Defendant’s possession of the lap-top with the permission of the Company binds the Defendant in a position of trust with the Company and the Defendant is deemed to carry a fiduciary duty to at all times to act in the best interest of the Company”. [14] On who and the extent of the duty of a fiduciary, the Plaintiff relied on cases such as Wong Kar Juat & Anor v S7 Auto Parts (M) Sdn Bhd [2016] 1 AMR 729; [2015] 9 CLJ 590; [2016] 5 MLJ 527; [2016] 1 MLRA 86 and Chua Tuck Choy v MEMC Ipoh Sdn Bhd [2012] 4 ILR 469; [2012] MELRU 225 (“Chua Tuck Choy”). [15] The Plaintiff submitted that although the Defendant returned the tangible assets, namely, the laptop, “the Defendant had without authority or sanction on his own accord, decided to delete the intellectual property of the company from the said laptop and this was done maliciously without any approval from the Plaintiff and this act caused harm and damage to the Plaintiff’s intellectual properties. The “unauthorised and unsanctioned deletion of files and folders”, averred the Plaintiff, had caused damage & harm to it. [16] On the specific act of deletion of files and folders, the Plaintiff relied on Jebsen & Jessen Eng (M) Sdn Bhd v Lian Man Hoong [2001] 1 ILR 771; [2001] 1 MELR 518 and Chua Tuck Choy. [17] With regards to the claim for Special and General Damages, the Plaintiff had sought the amount of RM10,000.00 and RM500,000.00 respectively. [18] At the Sessions Court, the following questions were posed to the Plaintiff’s witness, Mak Kok Hay (PSP-2):

The Company is seeking Special Damages of RM10,000.00 in respect of the Forensic Investigation. Have you brought the documentary evidence to support your claim? Answer Yang Arif, the actual cost of the forensic audit was RM260,651.88. The Company has apportioned RM10,000.00 as part of the Defendant’s cost. Yes, we have brought the invoiced billing of the forensic audit by

The Company is also seeking General Damages of RM500,000.00. Could you please justify your claim to this court? Answer Yang Arif, neither KPMG nor the Company has any idea of the exact nature of our loss because none of us except for the Defendant, has any knowledge of what was actually deleted. The undeniable fact is that the Defendant deleted 9,245 files that belonged to the Company which is now irretrievably lost and the value of the intellectual property belonging to the Company that was lost must be valued and compensated to the Company. The reconstruction of the files is an impossibility but the estimated cost of reconstructing the lost data from the files cannot be ignored. Yang Arif, the loss can be equated to the years of data accumulation that was paid as salaries, increments and other benefits to the Defendant in respect of his employed duties and must be valued and compensated to the Company because otherwise the Company has paid the Defendant for the data which he thereafter deleted and the Company has nothing to show for the years of emoluments paid to the Defendant.

Please explain to the court your calculations for General Damages as contained on pg. 70 of “Bundle E” Answer We have set out in the Schedule what would be in our estimation the cost of the time (roughly six (6) months) that the 3 directors of the Company spent trying to determine together with KPMG, the Company’s finance department, the Company’s auditors, the Company’s legal consultants – • what was lost; • whether the files deleted could be retrieved; • what were the cost ramifications of the deletion; • the EPF / Socso / EIS / PCB / HRDF (where we were fined) / LHDN / Payroll and all letters pertaining to HR matters Yang Arif, the Defendant’s last drawn salary with effect from 2022 was RM14,418.00 per month excluding his fixed allowances. The Company was paying the Defendant RM173,016.00 per annum and if we took a minimum of two (2) years, the Company has paid the Defendant RM346,032.00 for work and data contained in the files in the lap-top that has now been completely erased and/or taken away by the Defendant. After paying the Defendant RM346,000.00, the Company is left with nothing, zero data and intellectual property which rightfully belongs to the Company. Yang Arif, the Company is just asking for an equitably remedy of reasonable damages owed to the Company. [19] It was the Plaintiff’s contention that the sum of RM10,000.00 as special damages was “just an apportionment to the Defendant of the total sum paid to Messrs KPMG for the forensic audit” and that the claim for the sum RM500,000.000 was justified. [20] In response to the above submissions, the Defendant contended that: • The appellant has not shown that the lower court or trial Judge made a mistake in applying the law or in its decision-making process which is the procedure. • The appellant failed to demonstrate that they suffered harm or were negatively affected by the lower court's/trial Judge’s decision. There is no serious legal and factual error. • The appellant has not demonstrated any wrong or anything unjust caused by the trial Judge because of a serious procedural or other irregularity in the proceedings in the lower court. [21] The Defendant submitted that “the deletion of files was not selectively done with sinister motive or bad intention but it was cleaning up the [sic] Lap Top by the HR Manager to pass it back to the Management of Appellant”. [22] The Defendant further averred that there was no mention in the Forensic Audit Report whether there was a contract between the Plaintiff and the Defendant and whether the contract contains any terms and conditions pertaining to the use of the laptop or that the Defendant is not supposed to delete anything from the laptop. Nor did the Forensic Audit Report highlight whether there were any Memorandum issued by Plaintiff or any Written Standard Operating Procedure regarding the usage of the laptop. [23] The Defendant highlighted the failure to call the Defendant to provide “his side of the story” and argued that the Forensic Audit Report was “one sided”. [24] It was asserted by the Defendant that SP1, the Plaintiff’s witness, could only verify that there was deletion of files but what was the file about and whether there was fraud or cheating involved, SP1 was not able to prove. [25] The Defendant emphasized that when the laptop was handed over, many important documents were left inside the laptop. According to the Defendant, the Plaintiff “has conveniently failed to mention this”. The Defendant further asserted that “the password etc was handed over properly”. Hence, the allegation that there was no proper handing over, submitted the Defendant, was untrue. [26] The Defendant also contended that the Employee Handbook dealt with “the removal of company assets” and does not relate to the issues concerning the laptop. If at all relevant, the Defendant argued that it would be Paragraph 6.5, which provides as follows: Clearance Of Company Properties On cessation of employment an employee shall surrender all Company’s properties ……………… Should the employee fail to do so, the company reserves the right to retain the employee’s salary until such items are returned or to deduct from the salary …………. [27] Hence, it was the Defendant’s submission that the Employee Booklet “does not appear to be evidence that is of any significance that could potentially turn the decision against the Respondent”. The Decision of this Court [28] This Court approaches this appeal by way of a re-hearing, as mandated by Order 55 rule 2 of the Rules of Court 2012. [29] In this regard, the Court is not limited to assessing whether the learned trial judge exercised her discretion correctly. Rather, it undertakes a fresh and independent examination of the entire matter. [30] Having conducted a thorough and independent review of the cause papers, the parties’ submissions (both written and oral) and the relevant authorities cited and relied upon, this Court finds, on the issue of whether the Defendant owed a duty of care to the Plaintiff in respect of the files and folders stored on the company-issued laptop, that the answer is in the affirmative. [31] As for whether the Defendant breached that duty of care and the duty of fidelity by deleting, as admitted, 9,245 files from the laptop, this Court is of the considered view that the Plaintiff has failed to establish, on a balance of probabilities, that the deleted files and folders rightfully belonged to the company. [32] Notably, while the Plaintiff emphasized the files that were deleted, they did not address the fact that a number of files and folders were returned along with the laptop. [33] There is nothing in the evidence before this Court, including the Employee Handbook, that expressly states all files and folders stored on the company-issued laptop are the property of the company and therefore must not be deleted. [34] Accordingly, the Court answers the question of whether the Defendant breached the duty of care in the negative. [35] As a consequence, the Plaintiff’s claim for special and general damages is disallowed. [36] In any event, even if liability had been established, the Court would have awarded only nominal damages of RM10,000.00, in light of the absence of supporting evidence for the claim of RM10,000.00 in special damages and RM500,000.00 in general damages. [37] The decision of the Sessions Court is hereby affirmed. [38] This appeal is dismissed with costs. [39] The Appellant/Plaintiff shall pay costs of RM10,000.00 to the Respondent/Defendant. Dated: 25 June, 2025 sgd [CHOONG YEOW CHOY] Judicial Commissioner High Court of Malaya Shah Alam Counsel: Ananthasivam a/l Thambipillai for the Appellant (Messrs. T. Ananthasivam) William Liow Teik Foong for the Respondent (Messrs. William Liow & Co.)