OTL ASIA SDN. BHD. (dahulunya dikenali sebagai CKE TRANSPORT AGENCY SDN. BHD.) v 1. ) LEE YIK CHIEH (PA-22NCvC-80-03/2019)

LEE YIK CHIEH

SOH CHIN YIN

EUROASIA TOTAL LOGISTICS (M) SDN BHD (NO. SYARIKAT: 1293049-P) …DEFENDAN-DEFENDAN JUDGMENT (STAY OF EXECUTION) PRELUSION [1] On 30.11.2023, this Court pronounced a post-trial Judgment against the Defendants (Ds), on liability for the tort of breach of confidence. I also ordered damages to be assessed. [2] Ds appeal to the Court Of Appeal against the Judgment on liability. Ds then apply for a stay of execution of paragraphs 3 to 5 of the Judgment and a stay of the Plaintiff’s (P’s) assessment of damages proceeding. Ds’ application is for both a stay of execution as well as a stay of proceedings. 13/08/2024 15:45:45 PA-22NCvC-80-03/2019 Kand. 224 Page 2 of 13 [3] Should the Judgment on liability and the assessment of damages proceeding be stayed? THE LAW [4] I am mindful to be guided by, and to follow, the principles governing the grant or dismissal of an application for a stay. First—the Court has an absolute and unfettered discretion to grant or refuse an application for a stay—Hing Kim Pong v Teo Eng Jin [1980] 1 MLJ 43 (FC); [1979] CLJU 28; [1979] 1 MLRA 168; Syarikat Berpakat v Lim Kai Kok [1983] 1 MLJ 406 (HC); [1982] 1 MLRH 863. [5] Second—the burden on an applicant for a stay of proceedings is heavier than that for a stay of execution. This is because a stay of proceedings will “hinder the expeditious disposal” of the particular proceeding or the suit proper—Universal Trustee (M) Bhd v Lambang Pertama Sdn Bhd [2015] 7 MLJ 305 (HC); [2014] AMEJ 0904; [2014] CLJU 797; [2014] MLRHU 458. [6] In Universal Trustee (supra), Justice Wong Kian Kheong JC (now JCA) held that— [21] Case law does not distinguish stay of execution from stay of proceedings. Case law requires both the applicants for stay of execution and stay of proceedings to show ‘special circumstances’ to justify a stay. [22] I am of the view that an applicant for a stay of proceedings should bear a heavier burden vis a vis an applicant for a stay of execution. This is because an application to stay proceedings will hinder an expeditious disposal of a suit… [emphasis mine] Page 3 of 13 [7] Third—where an application for a stay of proceedings is intended to “stop or suspend” the proceeding—as it is here: to stay the assessment of damages proceeding—the application must be refused—Jagdis Singh a/l Banta Singh v Outlet Rank (M) Sdn Bhd [2013] 4 MLJ 213 (CA); [2013] 3 CLJ 47; [2013] 3 MLRA 104. [8] In Jagdis Singh (supra), the Court Of Appeal) held (at MLJ page 222 - 223) that—

it is important to stress that initiation of a suit in a court of law demands the suit will be heard expeditiously and completed without any inhibition midway. Therefore, where an application for stay of proceedings is intended to merely stop or suspend the proceedings; it will be refused. Some applicants, on seeing the weakness of their client’s case, would resort to application for stay and thereby waste the time of the other party and the court. The party simply cannot resort to the interlocutory of stay proceedings on having the slightest disagreement with any ruling of a trial judge. Courts are enjoined not to encourage such unwholesome practice; [emphases mine] [9] Fourth—merits in the appeal is not a relevant factor to be considered in an application for a stay, as merits in the appeal is not a special circumstance that warrants a stay. In my view, this principle coincides with the principle that the losing party who is applying for a stay has already had its defence canvassed, heard, and determined, and accordingly, the winning party should not be denied the fruits of its successful litigation—Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi Serbausaha Makmur Bhd [2004] 1 MLJ 257 (FC); [2003] 5 AMR 758; [2003] 4 CLJ 1; [2003] 1 MLRA 536. Page 4 of 13 [10] In Kosma Palm Oil Mill (supra), the Federal Court held— [19] Having expressed my views on the law, I shall now consider the motion. Both parties delved into some length on the merits of their respective case in the affidavits filed and the submission made in court. The merits of a party’s case in a stay application is not a relevant matter for consideration… [20] As Abdul Hamid Mohamad JCA (as he then was) said in Ming Ann Holdings Sdn Bhd v Danaharta Urus Sdn Bhd at p 67: The weight of authorities appears to me to say that the special circumstances must be special, not ordinary, common or usual circumstances and that go to the execution of the judgment and not to the validity or correctness of the judgment (or merits of the appeal). . [22] It is therefore unnecessary for me to consider the merits of the respective case of the applicants and respondents. [emphases mine] Ds’ ARGUMENTS [11] One—Ds’ main argument for a stay is that they have merits in their appeal. They say that they have a meritorious appeal because they assert that in my post-trial Grounds Of Judgment (GOJ), I had departed from the principle of stare decisis (binding judicial precedent). Ds submit that I did not follow the seminal case law authority on the tort of breach of confidence: the Federal Court case of Dynacast (Melaka) Sdn Bhd & Ors v Vision Cast Bhd & Anor [2016] 3 MLJ 417 (FC); [2016] 3 AMR 725; [2016] 6 CLJ 176; [2016] 4 MLRA 346. Page 5 of 13 [12] In Dynacast (supra), the Federal Court propounded that the three elements that should be satisfied to succeed in the cause of action for breach of confidence are—

first: the information itself must have the necessary quality of confidence i.e. the subject information must be confidential in nature;

second: the information must have been imparted in circumstances importing an obligation of confidence;

third: there must be an unauthorised use of that information, to the detriment of the party communicating it (usually the plaintiff). [13] Ds cite paragraphs [64] and [65] of my post-trial GOJ, and argue that I had disregarded case law precedent, by not adhering to the third element in the cause of action for breach of confidence. [14] But, I did not depart from the principles in Dynacast (supra). I did not deviate from the third element in the cause of action for breach of confidence. I set out here what I wrote in paragraphs [64] and [65] of my GOJ— [64] It is my respectful view that our law on breach of confidence claims should also progress from the conventional third element of requiring the plaintiff, in all cases, to prove unauthorised use and detriment—which was propounded a significantly long time ago in 1969 through Coco v AN Clark (supra)—to the more-equitable shift of the burden to the defendant to prove that there was no unauthorised use which caused detriment to the plaintiff. Page 6 of 13 [65] I would therefore, if necessary, adopt this refined and more robust approach, to apply it to this breach of confidence claim, because I am of the view that it will lead to a just and fair result. Instead of the burden that is conventionally placed on the plaintiff to prove that the defendants used the confidential information to the plaintiff’s detriment, the burden should be on the defendants to prove that there was no unauthorised use of the plaintiff’s confidential information to the plaintiff’s detriment. [15] Firstly, paragraphs [64] and [65] of my GOJ are obiter dicta. I was discussing the jurisprudence about the heavy burden that is placed on a plaintiff (in a breach of confidence case) to prove that there was unauthorised use of the subject confidential information. And by obiter dicta, I gave my views on where the jurisprudence should head towards. [16] Secondly, I followed Dynacast (supra). I followed and applied the established third element—that there must be proof of unauthorised use of confidential information. What I wrote in my post-trial GOJ is that on the evidence, I found that P here had favourably satisfied the burden of proving this third element on the balance of probabilities. What I then said was that the Courts should recognise that in this modern day and age, it is very difficult, in a breach of confidence case, for a plaintiff to be able to prove that the defendant used the confidential information without authority. This is because the confidential information is already with the defendant and the evidence of what the defendant did or is continuing to do with the confidential information is usually beyond the reach of the plaintiff. [17] I found that the Singapore Court Of Appeal recognised this reality. I found support for my views (obiter dicta) in the Singapore Court Of Appeal case of I-Admin (Singapore) Pte Ltd v Hong Ying Ting and others Page 7 of 13 [2020] 1 SLR 1130 (SGCA). This was my observation and opinion on the jurisprudence surrounding the law of breach of confidence. [18] Thirdly, paragraphs [64] and [65] in my post-trial GOJ were written (expressed) in an earlier section of my GOJ under the heading “THE HEAVY BURDEN TO PROVE THERE WAS UNAUTHORISED USE THAT CAUSES DETRIMENT”. This goes to show that I was making my observations, and discussing the difficulty of proving the third element of the cause of action of breach of confidence. I was not yet, at that juncture, evaluating the evidence and applying it to the facts of the case. [19] Fourthly, if Ds had perused and digested paragraphs [66] to [80] of my post-trial GOJ, they would have realised that I applied the law (including the third element of the cause of action for breach of confidence) to the facts which the evidence proved. And I found that P here satisfied the third element of the cause of action for breach of confidence. I found, on the balance of probabilities, that the evidence disclosed that Ds used P’s confidential information without P’s authority (unauthorised use), to P’s detriment. [20] I reproduce paragraphs [66] to [80] of my post-trial GOJ, with my notes within square brackets and my emphases in bold, to fortify this point. As for the definitions and abbreviations—“OTL” is P. “D1D2” are the 1st and 2nd Defendants. “ETL” is the 3rd Defendant. “WICE” is Ds’ corporate partner. “CIAD” is confidential information and documents— Applying the law to the facts [Note: Heading in the GOJ] [66] In the premises, these are my findings. Page 8 of 13 [67] On the first element, the evidence shows, and I so find, that OTL’s CIAD, which contain particulars of price, costs, routes and clients’ requirements and preferences—are confidential in nature, quality and character. [68] On the second element, I find that OTL’s CIAD were imparted to D1D2 in circumstances that place an obligation of confidence on D1D2—the evidence demonstrates that D1D2, as OTL’s employees, were in possession of OTL’s CIAD because of their work, which undoubtedly carries with it the obligation to keep the CIAD confidential. [69] On the third element of D1D2’s unauthorised use of OTL’s CIAD to OTL’s detriment—firstly, the evidence discloses that D1D2 took OTL’s CIAD by downloading the CIAD into his external hard drive (D1), and by forwarding the CIAD to himself (D2). [70] Secondly, D1 admitted that he partnered with WICE to form ETL, with the ambitious objective of listing ETL in five years. This evidence is the basis on which I infer, on the balance of probabilities, that there was, in some manner, unauthorised use of OTL’s CIAD (which was created through 29 years of doing business) for D1D2 and ETL’s benefit. OTL’s CIAD would go a long way to shorten the time that it would normally take a start-up company like ETL, in the cross-border logistics industry, to get publicly listed. [71] Why else would D1D2 download and forward to themselves OTL’s CIAD? This evidence is the basis on which I find, on the balance of probabilities, that D1D2 could have had no other pertinent purpose for getting OTL’s CIAD but to use the CIAD to accelerate and enhance ETL’s business. And by doing so, they would inevitably cause detriment to OTL. [72] D1D2 and ETL would immediately possess the information and documents that they need, to bring their business to be on par with a company like OTL, which has 30 years’ worth of experience in the industry. Page 9 of 13 OTL suffered detriment [Note: Heading in the GOJ] [73] OTL’s Table of Monthly Revenue from August 2018 to February 2020 discloses that OTL’s monthly revenue, according to clients, dropped for that period. August 2018 was when D1 incorporated ETL. September to October 2018 was when D1D2 started ETL’s directly competing business. [74] D1D2 and ETL needed to get business fast. D1 testified that he had the task of achieving the kind of high-level business that would enable ETL to be listed on the stock exchange in a mere five years. Armed with OTL’s CIAD, which was acquired and formulated over three decades of business, D1D2 and ETL could fast-track ETL to the volume of business and level of revenue that could take ETL public. [75] I find that it is not a coincidence that just as D1D2 left OTL to start doing business through ETL, OTL’s month-by-month revenue significantly dropped. There is a cause and effect between ETL starting its business and OTL’s continued drop in monthly revenue. [76] Taking three of OTL’s customers—Biforst, Agility and DBS—

Biforst—RM459K (in August 2018), dropped to RMzero (by February 2020);

Agility—RM3.3m (in August 2018), dropped to RM761K (by Feb 2020);

DBS—RM958K (in August 2018), dropped to RM17K (by February 2020). [77] As such, on the third element, I find that on the balance of probabilities, there was unauthorised use of OTL’s CIAD by D1D2 and ETL to OTL’s detriment. To my mind, OTL has sufficiently demonstrated that D1D2 and ETL used OTL’s CIAD to OTL’s detriment. [78] I find that OTL has sufficiently proven the three elements of its cause for breach of confidence. Page 10 of 13 [79] In any event [Note: as in: “Additionally”]—following the progressive principle propounded in I-Admin (Singapore), which I prefer to the 1969 Coco v AN Clark conventional approach—I find that D1D2 and ETL did not produce any evidence that directly proves, or any evidence from which it can be inferred, that there was no unauthorised use of OTL’s CIAD to OTL’s detriment. Or conversely, that their use of OTL’s CIAD was authorised. Or, where D1D2 and ETL used OTL’s CIAD, their use of OTL’s CIAD did not cause OTL any loss or damage i.e. did not lead to OTL’s detriment. [80] For these reasons, I find that D1D2 and ETL are liable to OTL for the tort of breach of confidence. [21] Fifthly, it is trite that the Court hearing a stay application should not delve into the merits of the appeal. I have clarified here that I adhered to case law precedent of Dynacast (supra) in my post-trial GOJ, and applied the law to the facts of this case. Although I expressed my opinion on the difficulty that a plaintiff faces in modern litigation in a breach of confidence case, particularly for the third element, I nevertheless found that P had satisfactorily proven the three conventional elements to succeed in this breach of confidence case. [22] Two—Ds argue that if a stay is granted in their favour, no prejudice will be caused to P. I find this argument untenable. A stay of execution and a stay of proceedings will prejudice P. A stay will delay P from enjoying the fruits of its successful litigation—Serangoon Garden Estate Ltd v Ang Keng [1953] 1 MLJ 116; [1953] CLJU 98; [1953] 1 MLRH 690. [23] In Serangoon Garden Estate (supra), the then-District Court Of Appeal held that— Page 11 of 13 …But it is a clear principle that the Court will not deprive a successful party of the fruits of his litigation until an appeal is determined, unless the unsuccessful party can shew special circumstances to justify it… [24] Three—Ds argue that if they succeed in their Appeal, their Appeal will be rendered nugatory. I find this argument untenable as well. If Ds succeed in their Appeal, their Appeal will not be rendered nugatory because if the assessment of damages proceeding is still ongoing, the assessment of damages proceeding can immediately stop (since the finding of liability would be reversed). If the assessment of damages proceeding had concluded, then the Order quantifying the amount of damages to pay would be set aside. Ds’ Appeal will not be rendered nugatory if they ultimately succeed in it. [25] Four—Ds argue that if a stay is not granted, and the Judgment is enforced, and the assessment of damages proceeding proceeds, and Ds succeed in their Appeal—there would have been an “inefficient allocation of court resources”. I also find this argument untenable. [26] As liability is found against Ds, the assessment of damages proceeding is part-and-parcel of the suit. The assessment of damages proceeding is the final or concluding part of the trial. The assessment of damages proceeding is not execution or enforcement proceedings. [27] In this suit, this Court—under the previous presiding Judge— bifurcated the trial into liability and quantum i.e. determine liability first; and if liability is found against Ds, then proceed to determine the quantum of damages. If this trial was not bifurcated in this manner, the trial would have included the assessment of damages proceeding. Evidence would Page 12 of 13 have been led on damages. And both liability and quantum could have been determined concurrently. [28] But this trial was bifurcated into liability and quantum—which renders the issue of the quantum of damages still to be determined through the assessment of damages proceeding. CONCLUSION [29] For these reasons, I dismiss Ds’ application for a stay of execution and a stay of proceeding, with costs of RM12K to be paid by Ds to P by 5.7.2024. Costs are subject to the allocatur. Dated: 13 August 2024 KENNETH ST JAMES Judicial Commissioner Penang High Court Counsel/Solicitors: For the Plaintiff: Yong Shu Xhuan Messrs. Alwin Rajasurya, (Kedah) For the Respondents: Roshan Selvaratnam with Isaac Huang Messrs. Peter Huang & Richard (Pulau Pinang) Page 13 of 13 Legislation referred to: - Cases referred to:

Hing Kim Pong v Teo Eng Jin [1980] 1 MLJ 43 (FC); [1979] CLJU 28; [1979] 1 MLRA 168.

Syarikat Berpakat v Lim Kai Kok [1983] 1 MLJ 406 (HC); [1982] 1 MLRH

863.

Universal Trustee (M) Bhd v Lambang Pertama Sdn Bhd [2015] 7 MLJ 305 (HC); [2014] AMEJ 0904; [2014] CLJU 797; [2014] MLRHU 458

Jagdis Singh a/l Banta Singh v Outlet Rank (M) Sdn Bhd [2013] 4 MLJ 213 (CA); [2013] 3 CLJ 47; [2013] 3 MLRA 104.

Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi Serbausaha Makmur Bhd [2004] 1 MLJ 257 (FC); [2003] 5 AMR 758; [2003] 4 CLJ 1; [2003]

Dynacast (Melaka) Sdn Bhd & Ors v Vision Cast Bhd & Anor [2016] 3 MLJ 417 (FC); [2016] 3 AMR 725; [2016] 6 CLJ 176; [2016] 4 MLRA 346

Serangoon Garden [1953] MLJ 116; [1953] 1 MLRH 690; [1953] CLJU

98.