Love Pets World Sdn. Bhd. v Jong Siew Sian (MA-22NCvC-49-12/2021)

This is an action by a private limited company against its former director, sounding in breach of fiduciary duty, breach of statutory duty under the Companies Act 2016, breach of trust, and fraud, with consequential claims for an account of secret profits, an indemnity in respect of unauthorised liabilities exemplary and aggravated damages, and ancillary relief.

The matter came on for trial before me on 26 May 2026. The Defendant did not appear, although she had been informed of the trial date by letter dated 22 May 2026 served upon her last known address. I directed, under Order 35 rule 1(2) of the Rules of Court 2012, that the trial proceed in her absence. The Plaintiff called one witness, Mr Ng Wan Li Mann (WSP1), tendered its documentary evidence, and closed its case. There was no cross-examination and no defence evidence.

Although the trial proceeded ex parte in substance, the constitutional obligation of this Court remains as it would be in and on the proper application of legal principle, satisfy itself that the Plaintiff has discharged its burden of proof on the balance of probabilities. The absence of the Defendant does not relieve the Plaintiff of that burden; nor does it relieve this Court of its duty to scrutinise the claim with care. As the Federal Court reminded in Takako Sakao v Ng Pek Yuen [2009] 6 MLJ 751, the want of contradiction is not the same as proof, although in appropriate cases an adverse inference may be drawn from a defendant's failure to testify. The case must still be made out on its merits.

Before turning to the merits, it is desirable to set out a preliminary matter that bears upon the locus standi of the Plaintiff to maintain this action. On 27 October 2022, in Penggulungan Syarikat No. MA-28NCC-6-02/2022, the Plaintiff was wound up by order of this Court and Mr Wan Mohamad Shukri bin Wan Ab Kadir of Messrs WMS Associates, Chartered Accountants, was appointed Liquidator. The petition was presented by TS Logistics Links Sdn. Bhd., which is, as it happens, one of the judgment creditors whose debt the Plaintiff now seeks to recover from the Defendant by way of indemnity.

Upon the making of the winding up order on 27 October 2022, the management and conduct of the Plaintiff's affairs, including the conduct of legal proceedings in its name and on its behalf, vested in the Liquidator pursuant to section 486(1) of the Companies Act 2016 read together with Part I of the Twelfth Schedule. The continuation of proceedings by a company in liquidation must therefore be undertaken by, or under the authority and control of, the Liquidator. In this regard, the authorities disclose a significant divergence as to the juridical basis and limits of a liquidator's "sanction" or authorisation to others to litigate in the company's name. Because that controversy has not, to my knowledge, been authoritatively resolved at appellate level, and because the proper disposition of this case requires the Court to take a considered position upon it, I shall address the controversy in a separate section below before returning to the substantive merits.

The factual position concerning the Liquidator's authority in this action is, however, clear and uncontroversial. By letter dated 11 November 2022 from Messrs WMS Associates under the hand of Mr Wan Mohamad Shukri bin Wan Ab Kadir as Liquidator, filed in this Court as Enclosure 45 on 14 November 2022, the Liquidator expressly confirmed that he had "no objection" to the Plaintiff's solicitors continuing and proceeding with the pending legal proceedings in this suit, specifically identified as MA- 22NCvC-49-12/2021. That authorisation was issued shortly after the winding up order and prior to all material subsequent steps in the proceedings. Significantly, the existing solicitors on the record before the winding up, Messrs Rajesh, Chew & Ho, were thereby permitted to continue acting; no new or independent litigation conductor was introduced; and the action has at all material times remained in the name of, and prosecuted for the benefit of, the Plaintiff (In Liquidation). Whether, as a matter of law, those factual circumstances suffice to render the proceedings properly maintained is the question to which I now turn.

Before turning to that question, however, I observe that the Liquidator's sanction is a matter material to the conduct of the trial which ought, in the ordinary course, to have been brought specifically to the Court's attention either in the Plaintiff's Case Summary, in the witness statement of WSP1, or in the Plaintiff's Written Submissions. None of these documents adverted to Enclosure 45. The Court was left to identify the existence of the Liquidator's sanction by its own examination of the file. That is not a satisfactory state of affairs in a contested matter - still less in a matter being tried in the absence of the Defendant, where the Court's scrutiny of the Plaintiff's standing must be especially vigilant. It is hoped that, in future cases involving companies in liquidation, this aspect will be expressly and clearly drawn to the Court's attention. C. THE LIQUIDATOR'S SANCTION: A CONTROVERSY EXAMINED

The doctrinal controversy surrounding a liquidator's sanction to others to conduct litigation in the company's name has, in recent years, generated a body of conflicting High Court authority. I am conscious that no party has invited me to enter the controversy, and the Defendant's absence means that there is no contradictor to test the Plaintiff's standing. But a court of unlimited original jurisdiction cannot dispense judgment in favour of a company in liquidation without satisfying itself that the proceedings are properly maintained, and that determination requires the Court to identify the correct legal test before applying it to the facts. I therefore propose to examine the controversy with some care and to indicate the approach which, in the circumstances of this case, I consider to be the proper one. D. THE STATUTORY FRAMEWORK

The starting point must be the statute. Section 486(1) of the Companies Act 2016 confers on a liquidator the powers listed in the Twelfth Schedule, the exercise of certain of which is, by section 486(2), made subject to the control of the Court. Among the powers listed in Part I is the power at Item (a) to "bring or defend any action or other legal proceeding in the name and on behalf of the company". Item (j) confers a power to "appoint an agent to do any business which the liquidator is unable to do himself". Item (l) is a residual sweeping-up power to "do all such other things as are necessary for winding up the affairs of the company and distributing its assets". The Schedule itself contains no express power of delegation in respect of any of these powers.

Two propositions are uncontroversial and require no judicial elaboration. The first is that the litigation power conferred by Item (a) vests, by operation of law, in the liquidator upon his appointment; the board of directors becomes functus officio in that respect. The second is that this Court itself retains a supervisory jurisdiction over the liquidator's exercise of his powers under section 486(2), the ambit of which extends to compelling, sanctioning or controlling that exercise, and which includes, where the justice of the case so requires, the grant of sanction nunc pro tunc: Winstech Engineering Sdn Bhd v ESPL (M) Sdn Bhd [2014] 2 CLJ 1 (Federal Court). These two propositions are common ground in all the authorities. The controversy concerns a narrower point: whether the liquidator, in the exercise of his statutory powers, may himself confer authority upon another to conduct litigation in the company's name without the prior or contemporaneous sanction of the Court.

The strict view: Oren Venture [11] The strictest answer to that question is to be found in Small Medium Enterprise Development Bank Malaysia Bhd v Oren Venture Sdn Bhd & Ors [2022] MLJU 410. Azlan Sulaiman JC there held that the powers conferred by Item (a) of the Twelfth Schedule are not, in terms, delegable; that the agency power at Item (j) is properly understood as a power to engage an agent for the performance of particular tasks the liquidator personally cannot do (such as the realisation of an asset or the procurement of a valuation), and not as a vehicle for the wholesale transfer of substantive litigation conduct to a creditor or contributory; and that the residual power at Item (I) cannot be deployed to create a substantive power of delegation that Parliament conspicuously refrained from conferring in respect of Item (a). Where the liquidator declines, lacks funds, or is otherwise unwilling to prosecute proceedings, the proper course for a creditor or contributory who wishes to litigate in the company's name is to apply to the Court under section 486(2) for sanction. On this view, the only valid authorisation for litigation in a wound-up company's name is either (i) the liquidator personally conducting the action, or (ii) a Court order made under section 486(2). A purported "sanction" issued by the liquidator to a third party stands outside the statutory architecture and is ineffective. [12] The strict view has its attractions. It preserves the integrity of the statutory architecture: powers conferred by Parliament upon a particular officer should, prima facie, be exercised by that officer. It preserves the supervisory role of the Court. It guards against the abdication of statutory responsibility, particularly where a liquidator might seek to insulate himself from costs and risk by inviting creditors to fund and direct litigation while the liquidator remains nominally on the record. The Court in Oren Venture was rightly concerned about indemnity and security arrangements that effectively transferred control of litigation to creditors with their own commercial interests at stake. These concerns reflect a wholly orthodox application of the principle that statutory powers are not, in the absence of express conferral, delegable: generalia specialibus non derogant - a general residuary power cannot do the substantive work which Parliament has not committed to it.

The broad view: Ooi Kim Geik [13] The opposing line of authority is represented by Ooi Kim Geik v Ng King Chong & Ors [2022] MLJU 3630. Azmi Ariffin J there held that a liquidator does have power to issue sanction to a contributory or other party to conduct litigation in the company's name. The learned Judge grounded that conclusion in a purposive reading of Items (j) and (l) of the Twelfth Schedule; drew support from the practical recognition, in Zaitun Marketing Sdn Bhd v Boustead Eldred Sdn Bhd [2010] 3 CLJ 785 and Lai King Lung v Merais Sdn Bhd [2020] 5 MLJ 614, that liquidator-issued authorisations to existing solicitors have long been treated as effective; and distinguished, with respect rightly, between unsupervised wholesale delegation (impermissible) and a controlled, conditional and revocable authorisation issued by the liquidator subject to appropriate reporting and accountability (permissible). On this view, the liquidator's sanction stands as a free-standing source of authority, the validity of which depends not on its label but on whether, in substance, it amounts to true delegation or merely to authorised assistance under the liquidator's continued principal control. [14] The broad view also has its attractions. It reflects the commercial reality that liquidations are frequently underfunded, that liquidators must conserve the estate's limited resources, and that a strict reading would force every authorised continuation of pending litigation through an additional interlocutory application to the Court, generating cost and delay disproportionate to the regulatory benefit. It also reflects the historical practice of liquidators in Malaysia, in which sanction letters of the kind exhibited in this case have long been treated by the profession, and accepted by the courts, as sufficient authority to continue existing proceedings. The ratio decidendi of Zaitun Marketing is, properly read, not that liquidators have a general power of delegation, but that the express written confirmation of authority by a liquidator to his company's existing solicitors is to be treated as effective and not as a basis for striking out.

The middle path: MKP Builders [15] Between the strict and broad poles, a middle path is discernible in MKP Builders Sdn Bhd v Glocal Tech Engineering Sdn Bhd [2022] 1 LNS 2481. The court was invited to apply Oren Venture to strike out proceedings in which the liquidator had merely permitted the existing solicitors of record to continue acting. The court declined to do so. The court's reasoning, although briefly stated, draws what is in my respectful view a critical distinction: the strictures of Oren Venture are properly understood as directed at wholesale delegation of litigation conduct to outsiders - in particular, to creditors or contributories with independent interests - but not at the much more limited and benign step of permitting the company's pre-existing solicitors to continue prosecuting an action already on foot. In the latter case, the solicitors continue to act for, and on behalf of, the company; the liquidator retains overall control as principal; and no third party with an independent interest is interposed. MKP Builders thus supplies the seed of a doctrinal distinction; the systematic exposition of that distinction is, however, a task left for subsequent cases. [16] The availability of retrospective sanction under section 486(2), independently established by the Federal Court in Winstech Engineering (supra), provides a further important corrective. Where any genuine doubt exists as to the formal sufficiency of a liquidator's authorisation, the Court is not powerless: it may, in the exercise of its supervisory jurisdiction, grant sanction with retrospective effect upon being satisfied that the action is properly constituted in substance and that the interests of creditors and contributories are not prejudiced. The existence of that curative jurisdiction necessarily informs how the doctrinal question above should be approached: the consequence of a defect in liquidator-issued sanction need not be the wholesale invalidity of the proceedings, provided that the Court, on supervisory examination, is satisfied that the action is being properly conducted in the name of and for the benefit of the company in liquidation.

The Court's resolution of the controversy [17] In my respectful view, the apparent conflict between the strict line in Oren Venture and the broad line in Ooi Kim Geik dissolves once it is appreciated that the two lines of authority are addressed to materially different factual configurations, and that the resolution lies not in choosing between them in the abstract but in identifying which configuration the case before the Court presents. The principles emerging from Oren Venture are properly understood as directed to the case of wholesale delegation - that is, the transfer of the substantive conduct of litigation to a creditor or contributory who is independent of the company, who controls the litigation, and who carries the indemnity, security and commercial risk while the liquidator remains insulated. That is, in substance, an abdication of the liquidator's statutory duty, and is properly forbidden. The strict reading of section 486 and the Twelfth Schedule applies to such cases with full rigour. [18] The principles emerging from Ooi Kim Geik, when read in conjunction with MKP Builders, are properly understood as directed to the very different case of a liquidator who, in the exercise of his statutory powers, authorises the continuation of existing proceedings by the company's pre-existing solicitors, on behalf of and in the name of the company itself, with no third party interposed and the liquidator retaining ultimate control as principal. That is not delegation at all in any meaningful sense; it is the ordinary exercise of the statutory power conferred by Item (a) of the Twelfth Schedule, facilitated, where appropriate, by Items (j) and (l) and supervised, where necessary, under section 486(2). To characterise such an arrangement as falling foul of Oren Venture would be to extend the rule beyond the mischief at which it was directed; conversely, to read Ooi Kim Geik as licensing the wholesale delegation forbidden by Oren Venture would be to misapprehend its ratio. [19] So read, the authorities are reconcilable and yield a workable test, the four limbs of which are properly understood as facets of a single underlying inquiry: namely, whether the arrangement amounts in substance to the liquidator's continued conduct of the action through familiar instruments, or to a transfer of statutory function to others. The four questions are these. First, does the action remain in the name of, and is it prosecuted for the benefit of, the company in liquidation? Secondly, are the persons conducting the action the company's pre-existing solicitors of record, or are they outsiders introduced solely for the purpose of conducting the litigation? Thirdly, does the liquidator retain ultimate control as principal, with the power to terminate, withdraw, settle or compromise the action? Fourthly, has any indemnity, security, or commercial control arrangement been imposed which effectively transfers the conduct of the litigation, and the costs and risks attendant on it, to a third party with an independent interest? Where the answers to the first three questions are affirmative and to the fourth negative, the authorisation is, in my respectful view, plainly valid as an exercise of the liquidator's statutory powers under Item (a), supplemented where appropriate by Items (j) and (l). Where they are not, the matter falls squarely within the stricter doctrine in Oren Venture, and the proper course is for the liquidator or the would-be litigator to obtain prior sanction from the Court under section 486(2), or to apply for retrospective sanction in the manner contemplated by Winstech Engineering.

Application to the present case [20] Applying that test to the facts of the present case, the four questions all resolve in favour of the proceedings being properly maintained. First, the action remains in the name of the Plaintiff (In Liquidation) and is prosecuted for its benefit; the prospective fruits of the action will, if recovered, fall into the liquidation estate for distribution among creditors. Secondly, the solicitors conducting the action are Messrs Rajesh, Chew & Ho, who were on the record as solicitors for the Plaintiff prior to the winding up; no new or outside conductor has been introduced. Thirdly, there is nothing on the file to suggest that the Liquidator has surrendered ultimate control or that the action is being directed by any party with an interest independent of the company; on the contrary, the Liquidator's letter of 11 November 2022 reads, in substance, as a deliberate adoption of the action on behalf of the Plaintiff. Fourthly, no indemnity, security or commercial arrangement diverting the conduct or risk of the litigation to a third party with an independent interest has been disclosed or relied upon. On a substance-over-form analysis which is the approach commended by MKP Builders and which, in my respectful view, this Court should adopt the Liquidator's authorisation falls comfortably within the permissible category. The strictures of Oren Venture are not engaged on these facts. [21] For the avoidance of doubt, I add this. Even if I had taken the strict view in Oren Venture and concluded that the Liquidator's sanction letter standing alone was insufficient authority, I would in any event have regarded the present proceedings as susceptible of being regularised by retrospective Court sanction under section 486(2), the Federal Court having recognised the availability of that course in Winstech Engineering (supra). I would, in that event, have granted such sanction nunc pro tunc upon the Court's own motion under its supervisory jurisdiction over the winding up, having regard to the Liquidator's clear and contemporaneous adoption of the action, the absence of any opposition from any creditor or contributory, the substantive merit of the claim, and the fact that the recovery will accrue to the liquidation estate for the benefit of creditors. The result would have been the same.

Best practice and concluding observation [22] Until the controversy is authoritatively resolved at appellate level the safest practical course for liquidators and their solicitors is to obtain both the liquidator's express written authorisation and, in any case of doubt or where a third party is under section 486(2). The cost and time involved in such an application are modest compared with the consequences of an unsuccessful challenge to locus standi after a long trial. In the present case, the absence of contemporaneous Court sanction is, as I have explained, immaterial because the Liquidator's authorisation falls within the permissible category. But that conclusion has required this Court to undertake an extensive doctrinal analysis on its own motion. Future litigants should not assume that the same indulgence will be extended. [23] For the reasons set out in this section, I am satisfied that the Plaintiff, although in liquidation, is properly before the Court; that the action has been properly maintained throughout under the express authority of the Liquidator; and that the Court has jurisdiction to determine the substantive claim and to grant such relief as is appropriate. I proceed to the merits. E. TRIAL IN THE ABSENCE OF THE DEFENDANT [24] The procedural history bearing upon the Defendant's non appearance is as follows. By Order dated 2 May 2025 (Encl. 58), the Defendant's former solicitors, Tetuan Nandrajog, were granted leave to cease acting. The Defendant did not thereafter appoint solicitors to take over conduct of her defence. [25] At the case management on 22 May 2026, the trial dates originally fixed for 23 and 24 June 2026 were vacated and the trial was brought forward to 26 May 2026 at 2:00 pm. By letter dated 22 May 2026, the Plaintiff's solicitors informed the Defendant of the vacated dates, the re-fixed trial date, her liberty to appoint solicitors, and the consequence that her failure to attend would result in final judgment being entered in terms of the Writ of Summons. That letter was served by deposit into the letterbox at the Defendant's last known address at No. 8-3 Tingkat 9, P/Puri Laksamana Cheng Ho 2, Jalan Laksamana Cheng Ho, 75000 Melaka, on 22 May 2026 at approximately 12:29 pm. The fact and mode of service is deposed to in the Affidavit Penyampaian of Ho You Wei affirmed on 25 May 2026 (Encl. 68), with photographic evidence exhibited as Exhibit "H-1". [26] Having examined Encl. 68 and Exhibit "H-1", and noting the absence of any attendance, application for adjournment, witness statement, or explanation from the Defendant, I was satisfied that effective notice had been brought to her attention and that she had elected to absent herself. Order 35 rule 1(2) of the Rules of Court 2012 confers a discretion upon the Court, where a party fails to attend at the trial, to proceed with the trial in his absence. I exercised that discretion in favour of proceeding, and recorded my reasons in the Court Direction of 26 May 2026. [27] I add this. Order 35 rule 1(2) is a power to be exercised with caution. The Court of Appeal in Lai Yoke Ngan v Chin Teck Kwee [1997] 2 MLJ 565 emphasised that a litigant should not lightly be deprived of his day in court. But where, as here, the Defendant has had ample notice, has chosen not to appoint counsel, has filed no witness statement in compliance with the pre-trial directions, has made no application to adjourn, and has tendered no explanation for her absence, the interests of justice both to the Plaintiff and to the orderly administration of the Court's lists - require that the trial proceed. The Defence remains on record. The Defendant is bound by the consequences of her election. F. THE EVIDENCE ADDUCED [28] The Plaintiff called Mr Ng Wan Li Mann (WSP1), a director of the Plaintiff, whose witness statement is filed as Enclosure 62. He affirmed the statement on oath at trial. There being no crossexamination, the entirety of his evidence stands unchallenged. The documentary evidence was tendered through the Common Bundle of Documents (Encl. 40) and the Plaintiff's Bundle of Documents (Encl. 61). [29] The substance of WSP1's evidence may be summarised under five headings. The first concerns the Defendant's position. The Defendant has been a director of the Plaintiff since its incorporation on 29 August 2019 and holds 15 percent of the issued shares. She was entrusted with the day-to-day management of the Plaintiff's affairs: she employed and controlled the workforce; she held the passwords to the Plaintiff's bank accounts; she held the keys to the business premises; she held the Plaintiff's documents; and she alone made purchases of the Plaintiff's business goods (Q&A 7-8 of Encl. 62). [30] The second concerns the discovery of the wrongdoing. PW1 says that in or about early October 2021, he discovered that the Defendant had been operating her sole proprietorship, Love Pets World Enterprise ("LPWE"), through the Plaintiff. LPWE traded in the same goods pet food and cat litter and operated from the same business address. The Defendant carried on the LPWE business while continuing to hold office as a director of the Plaintiff. Police reports were lodged (Q&A 9 of Encl. 62; Encl. 40 at pages 1-2). [31] The third concerns the mechanics of the alleged diversion. WSP1's evidence is that the Defendant operated as the "maker" within the Plaintiff's online banking system. She would create transaction instructions, insert payment amounts and payee particulars, and then transmit photographs of those transactions to WSP1 and to one Chai Chee Keong for approval, deliberately concealing material particulars so as to mislead them into approving payments without disclosure of the true recipient of the goods. Once payment was effected through the Plaintiff's account, the goods were diverted to LPWE rather than entered into the Plaintiff's inventory, and were then sold by LPWE for the Defendant's benefit (Q&A 10-13 of Encl. 62). WSP1 says further that the Defendant changed the keys to the Plaintiff's business premises and excluded the other shareholders and directors from access to the accounting records (Q&A 14 of Encl. 62). [32] The fourth concerns the quantification of the loss. The Plaintiff identifies five overseas purchases between 18 September 2020 and 23 November 2020, totalling USD62,503.87, said to have been placed in the Plaintiff's name but received by LPWE (Annexure A to Encl. 62; Encl. 40 at pages 74-83). It further identifies eighteen onward sales by LPWE between 2 February 2021 and 23 September 2021, generating sale proceeds of RM115,660.00 (Annexure B to Encl. 62; Encl. 40 at pages 54- 72). WSP1 says that none of these proceeds were paid into the Plaintiff's account or otherwise accounted for to the Plaintiff. [33] The fifth concerns the consequences to the Plaintiff. Two Judgments in Default were entered against the Plaintiff in respect of debts allegedly incurred by the Defendant on its behalf without authority: RM15,000.00 in MA-A72NCC-145 09/2021 (judgment dated 13 October 2021) and RM60,995.70 in MA-A72NCC-146-09/2021 (judgment dated 5 October 2021). The latter judgment debt founded the winding up petition presented by TS Logistics Links Sdn. Bhd., culminating in the order for winding up made on 27 October 2022. G. THE LEGAL FRAMEWORK [34] The duties of a director of a company are governed by a combination of statute, equity and the common law. The statutory duties are now codified principally in sections 213, 218 and 221 of the Companies Act 2016. Section 213(1) requires a director to exercise his powers in good faith in the best interest of the company, and section 213(2) requires the exercise of reasonable care, skill and diligence. Section 218(1) prohibits a director from, inter alia, using the property of the company, or any information acquired by virtue of his position, or his position itself, to gain a benefit for himself or for another person, or to cause detriment to the company. Section 221 imposes a duty of disclosure where a director has a direct or indirect interest in a matter relating to the company's affairs. [35] These statutory provisions do not displace, but rather supplement, the equitable duties of loyalty and good faith historically owed by a director as a fiduciary. The classical statement is that of Lord Cranworth LC in Aberdeen Railway Co v Blaikie Bros (1854) 1 Macq 461, that a fiduciary is bound to act bona fide in the interests of the beneficiary and must not place himself in a position where his duty and his interest may conflict. Bristol and West Building Society v Mothew [1998] Ch1,18, per Millett LJ, articulates the irreducible core: "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." [36] Malaysian authority is clear that the no-conflict and no-profit rules are strictly enforced against directors. The Federal Court in Avel Consultants Sdn Bhd v Mohamed Zain Yusof [1985] 2 MLJ 209 held that a director who diverts a corporate opportunity to himself or to an entity in which he has an interest is liable to account, irrespective of whether the company could itself have exploited the opportunity. To similar effect is the High Court decision in Sysmex (Malaysia) Sdn Bhd v Sia Kee Chow [2013] 8 CLJ 120, upon which the Plaintiff relies and which I shall consider further in due course. [37] Where a director is alleged to have committed fraud, the standard of proof remains the civil standard. The Federal Court in Sinnaiyah & Sons Sdn Bhd v Damai Setia Sdn Bhd [2015] 7 CLJ 584 has finally laid to rest the previously vexed question whether allegations of fraud in civil proceedings require proof beyond reasonable doubt. They do not. The standard is the balance of probabilities, although the inherent improbability of dishonest conduct is a factor to be weighed in the calibration of the evidence. H. ANALYSIS AND FINDINGS

Whether the Defendant was in a fiduciary position [38] The first question is whether the Defendant owed fiduciary and statutory duties to the Plaintiff. On the unchallenged evidence of PW1, the answer is plainly yes. The Defendant was a director of the Plaintiff continuously from incorporation on 29 August 2019. She held 15 percent of the shares. More significantly, she had been entrusted with operational control extending well beyond the ordinary remit of a non-executive director: she alone controlled the banking access, the keys, the documents, the employees and the purchasing function. She was, in substance, the executive officer of the Plaintiff. [39] On these facts, the Defendant fell within the strictest category of fiduciary. She owed the duties imposed by sections 213,218 and 221 of the Companies Act 2016. She owed, in addition, the equitable duties of loyalty, good faith, and the avoidance of conflict. I so find.

(ii) Whether the Defendant breached those duties [40] The second question is whether the Defendant breached those duties. The Plaintiff's case is that she did so in two interrelated ways: by trading on her own account in competition with the Plaintiff through LPWE, and by causing the Plaintiff to fund purchases of goods that were then diverted to LPWE for the Defendant's own benefit. [41] On the unchallenged evidence, the Defendant carried on the business of LPWE - selling the same goods, from the same address-while she remained a director of the Plaintiff. That conduct, without disclosure to and without sanction by the board, is a paradigm breach of the no-conflict rule. It is also a breach of section 218(1)(c) of the Companies Act 2016, which prohibits a director from using his position to gain a benefit for himself. [42] I have considered whether the historical antecedence of LPWE which was, on the evidence, the predecessor enterprise from which the Plaintiff company was originally to be converted affords the Defendant any answer. It does not. Once the Plaintiff was incorporated on 29 August 2019, with separate shareholders contributing capital on the footing that the business would thereafter be conducted through the Plaintiff, the Defendant was no longer at liberty to treat LPWE as her own personal trading vehicle competing with the Plaintiff. The two are separate legal persons. The Defendant's continued operation of LPWE in the same line of business required, at the very least, disclosure under section 221 and informed sanction. There was neither.

(iii) The diversion of goods and proceeds [43] The graver allegation is that of diversion. PW1's evidence is that the Defendant operated as "maker" within the Plaintiff's online banking system, transmitting photographs of transactions to PW1 and Mr Chai Chee Keong for approval whilst deliberately concealing the true recipient of the goods. The Plaintiff thereby paid for goods that were then received by LPWE and sold by LPWE for the Defendant's account. [44] The documentary evidence supports this account. The five invoices itemised in Annexure A (Encl. 40 at pages 74-83) are addressed to or routed through the Plaintiff. The Defendant has not produced - and is not in a position to produce, having absented herself - any evidence that LPWE made payment for those goods. As the Plaintiff submits, the documents that would establish such payment, if it occurred, lie peculiarly within the Defendant's knowledge and control: LPWE's bank statements, remittance slips, supplier receipts, accounting ledgers, stock cards. None has been produced. [45] Section 106 of the Evidence Act 1950 places the burden of proving a fact especially within a person's knowledge upon that person. Whether or not LPWE paid for the disputed stock is, in the nature of things, a matter within the Defendant's exclusive knowledge. Her silence is, in these circumstances, eloquent. I am entitled to, and do, draw an adverse inference under section 114(g) of the Evidence Act 1950 from her failure to attend court and offer any explanation: see Munusamy v Public Prosecutor [1987] 1 MLJ 492 and, in the civil context, Jaafar Shaari v Tan Lip Eng [1997] 3 MLJ 693. [46] I am therefore satisfied, on the balance of probabilities, that the goods listed in Annexure A — totalling USD62,503.87 — were purchased through the Plaintiff's name, paid for from the Plaintiff's funds, but caused by the Defendant to be received by LPWE without ever being entered into the Plaintiff's inventory. I am further satisfied that the goods listed in Annexure B were sold by LPWE to third parties for sums totalling RM115,660.00, and that those proceeds were neither accounted for to the Plaintiff nor paid into the Plaintiff's account.

(iv) Fraud and dishonesty [47] It remains to consider whether the Defendant's conduct rises to the level of fraud. I approach that question with care. Sinnaiyah confirms that the civil standard applies, but the gravity of the allegation requires that the evidence be cogent. I bear in mind that the Defendant has not had the opportunity to respond although that is a circumstance of her own making. [48] On the unchallenged evidence, the Defendant did not merely fail to disclose her interest in LPWE. She used her position as "maker" in the banking system to procure approvals from her co-directors by concealing the true beneficiary of the payments. That is not negligence; it is misrepresentation by concealment. The classical elements of the tort of deceit, as restated by the House of Lords in Derry v Peek (1889) 14 App Cas 337 and adopted in Sim Thong Realty Sdn Bhd v Teh Kim Dar @ Tee Kim [2003] 3 CLJ 227, are satisfied: a false representation (by concealment of material fact); knowledge of its falsity (or recklessness as to its truth); intention that it be acted upon (the Defendant procured approval by means of the partial disclosure); reliance (PW1 and Mr Chai approved the payments in ignorance of the diversion); and consequent loss. [49] I accordingly find that the Defendant committed fraud at common law. I further find that she committed equitable fraud in the sense recognised in Nocton v Lord Ashburton [1914] AC 932 - by abusing her fiduciary position to divert the Plaintiff's property to herself through LPWE. I. RELIEF [50] I turn to the question of relief. The Plaintiff seeks declarations, an account, monetary judgment for specific sums, an indemnity in respect of the two Judgments in Default and consequential losses, exemplary and aggravated damages, interest and costs. J. DECLARATORY RELIEF [51] I grant the declarations sought in paragraphs (a), (b) and (c) of the prayer, namely:

a declaration that the Defendant breached her fiduciary duties as a director of the Plaintiff;

(ii) a declaration that the Defendant breached her statutory duties under sections 213, 218 and 221 of the Companies Act 2016; and

(iii) a declaration that the Defendant committed fraud and breach of trust against the Plaintiff. K. THE SUM OF RM115,660.00 [52] I order that the Defendant pay the Plaintiff RM115,660.00, being the secret profits earned by the Defendant through LPWE from the sale of goods funded by the Plaintiff. This sum is recoverable on the well-established principle that a fiduciary may not retain a profit made by virtue of her position: Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134; Boardman v Phipps [1967] 2 AC 46. L. THE SUM OF USD62,503.87 - INDEMNITY FOR UNAUTHORISED PURCHASES [53] I order that the Defendant indemnify the Plaintiff in the sum of USD62,503.87, or its Ringgit Malaysia equivalent at the rate prevailing on the date of payment. I decline to fix the conversion rate at RM4.227 as proposed by the Plaintiff. The orthodox rule, deriving from Miliangos v George Frank (Textiles) Ltd [1976] AC 443, is that a judgment in a foreign currency is to be converted at the rate prevailing on the date of payment, or, if execution is required, on the date when the Court authorises execution. Adopting the 8 December 2021 rate, as the Plaintiff invites me to do, would be arbitrary and would not reflect the true loss in present-day Ringgit terms. The judgment will accordingly be expressed in the foreign currency, with conversion at the date of payment. M. INDEMNITY IN RESPECT OF THE JUDGMENTS IN DEFAULT [54] I order that the Defendant indemnify the Plaintiff in respect of:

the judgment debt of RM15,000.00 entered against the Plaintiff in Suit MA-A72NCC-145-09/2021, together with interest and costs as taxed therein; and

(ii) the judgment debt of RM60,995.70 entered against the Plaintiff in Suit MA-A72NCC-146-09/2021, together with interest and costs as taxed therein. [55] These judgment debts are the crystallisation of the unauthorised liabilities created by the Defendant in the course of her dealings with the Plaintiff's suppliers. They are recoverable as consequential loss flowing directly from her breach of duty. N. ACCOUNT AND INQUIRY [56] I order that the Defendant render to the Plaintiff a full account of all monies, proceeds, profits, benefits and assets received by her, or by LPWE, arising from or referable to (i) the goods listed in Annexure A to Encl. 62, and (ii) all other goods purchased through or paid for by the Plaintiff during the Defendant's tenure as director and which were not entered into the Plaintiff's inventory. The taking of the account shall be conducted before the Senior Assistant Registrar. O. EXEMPLARY AND AGGRAVATED DAMAGES [57] The Plaintiff seeks exemplary damages. The award of exemplary damages in Malaysia remains governed by the principles in Rookes v Barnard [1964] AC 1129, as received and applied in Malaysian jurisprudence: see Sambaga Valli a/p KR Ponnusamy v Datuk Bandar Kuala Lumpur & Ors and another appeal [2018] 1 MLJ 784.In Tradewinds Properties Sdn Bhd v Zulhkiple bin A Bakar & Ors [2019] 1 MLJ 421, the court confirmed that exemplary damages is to be confined to specific categories, of which only the second — conduct calculated by the defendant to make a profit which may well exceed the compensation payable to the Plaintiff — could conceivably apply here. I am not persuaded that any mechanical percentage of compensatory damages is the appropriate measure of an exemplary award. [58] I am satisfied that this case does fall within that second category. The Defendant's conduct was a calculated, sustained exercise in misappropriation, undertaken in the expectation that the diverted profits would exceed any compensation that might ultimately be ordered against her. I award exemplary damages in the sum of RM50,000.00. That sum reflects the gravity of the breach of trust, the calculated nature of the diversion, and the catastrophic consequence to the Plaintiff its eventual winding up - while remaining proportionate. [59] As to aggravated damages, these compensate the Plaintiff for the additional injury caused by the manner of the wrongdoing, including the abuse of trust reposed in the Defendant as a director and as "maker" within the banking system. I award aggravated damages in the sum of RM100,000.00. P. THE WINDING-UP CONSEQUENCE [60] The Plaintiff invites me to find that the Plaintiff's winding up on 27 October 2022 was caused by the Defendant's conduct, and to award further damages on that footing. I decline to make a separate award on this head. The winding up flowed from the unsatisfied judgment debt in MA-A72NCC-146-09/2021, for which the Defendant has already been ordered to indemnify the Plaintiff. Any further loss attributable to the winding up the appointment of a liquidator, the dissipation of going-concern value, the costs of liquidation is more properly recovered through the account and inquiry that I have directed. To award general damages in addition would risk double recovery. The order I make in paragraph 40 above is sufficient to bring all such consequential losses within the ambit of the relief. Q. INTEREST AND COSTS [61] I order interest at the rate of 5 percent per annum on the judgment sums of RM115,660.00 and USD62,503.87, from the date of filing of the Writ (8 December 2021) to the date of full realisation. Interest on the indemnity sums (the Judgments in Default) shall run from the date of this judgment. Interest on the awards of exemplary and aggravated damages shall run from the date of this judgment. [62] As to costs, the Plaintiff has been substantially successful and is entitled to its costs. I fix costs at RM 20,000.00, subject to allocator. R. CONCLUSION [63] There is, accordingly, judgment for the Plaintiff in the following terms:

the declarations set out in paragraph 35 above;

the sum of RM115,660.00, being secret profits;

an indemnity in the sum of USD62,503.87 (or its Ringgit equivalent at the date of payment), in respect of unauthorised purchases;

an indemnity in respect of the two Judgments in Default totalling RM75,995.70, with interest and costs as taxed in those proceedings;

an account and inquiry as ordered in paragraph 40 above;

exemplary damages of RM50,000.00;

aggravated damages of RM100,000.00;

interest as ordered in paragraph 45 above; and

costs of RM 20,000.00, subject to allocator. Dated 26 May 2026 (YA Dato' Sri Raja Segaran A/L S. Krishnan) (Judicial Commisioner) High Court Of Malaya Malacca High Court (MELAKA) Lawyer For Plaintiff : Encik Ho You Wei Tetuan Rajesh , Chew & Ho Peguambela dan Peguamcara Suite - 1, 21, Jalan Abdullah Off Jalan Bangsar, 59000 Kuala Lumpur.