Parameswaren A/L Perumal v Delta Zeeforce Security Services Sdn. Bhd. (JA-12BNCvC-14-07/2024)

This is an appeal by the Appellant (“Plaintiff”) against the entire decision of the learned Sessions Court Judge (“SCJ”) dated 30 June 2024 which dismissed the Plaintiff's claim against the Respondent (“Defendant”) with costs to be borne by each party.

For ease of reference and consistency, parties in this appeal will be referred to as they were at the trial Court.

Both parties have filed their written submissions and bundle of authorities and orally submitted before this Court. This Court now delivers its decision.

The Plaintiff was appointed by the Defendant via a letter of appointment dated 25 February 2015 as manager/agent at the Southern Zone branch to manage tenders in the Southern Zone. This appointment was effective from March 2016.

The consideration for the contract agreed between the Plaintiff and the Defendant was based on profit-sharing on the total bills/invoices issued by the Plaintiff to the Defendant, whereby the profit-sharing ratio was 88% to the Plaintiff and 12% to the Defendant.

The Plaintiff successfully secured a contract with Badan Pengurusan Pangsapuri Duta Impiana dated 3 March 2018 to supply security guards for Projek Skyview, as well as a contract with Persatuan Penduduk Rini Heights dated 15 October 2018 to supply security guards for Taman Mutiara Rini.

The Defendant terminated the Plaintiff's appointment via a letter dated 31 October 2018 with immediate effect. The Plaintiff claims that the termination was wrongful and invalid, and seeks damages from the Defendant.

The Plaintiff claims, inter alia –

a declaration that the Defendant's termination letter dated 31.10.2018 is wrongful and invalid;

the sum of RM391,923.39;

general damages;

interest at the rate of 5% per annum; and

costs.

The learned SCJ identified three issues for trial –

whether the Plaintiff was appointed as agent cum manager of the

whether the contract between the Plaintiff and the Defendant is illegal and void; and

whether the Plaintiff is entitled to claim damages from the Defendant.

On the first issue, the learned SCJ found that the Plaintiff was not only a manager but also an agent of the Defendant, based on the Plaintiff's own evidence during examination-in-chief and cross-examination.

On the second issue, the learned SCJ found that the contract between the Plaintiff and the Defendant, particularly the arrangement regarding the use of the Defendant's licence by the Plaintiff, constituted proxy, lease or rental of the licence which clearly contravened the conditions issued by the authorities under the Private Agencies Act 1971 [Act 27] and Surat Pekeliling Agensi Persendirian Bilangan 4 Tahun 2010 (“Surat Pekeliling KDN Bil 4/2010”).

The learned SCJ referred to the Federal Court decision in Merong Mahawangsa Sdn Bhd & Anor v Dato' Shazryl Eskay Bin Abdullah [2015] 5 MLJ 619 and held that the contract was void ab initio.

On the third issue, the learned SCJ held that the Plaintiff was not entitled to claim damages because the contract contained an element of illegality and based on the maxim ex turpi causa non oritur actio, the Court would not enforce an illegal contract.

It is important to note that the learned SCJ highlighted on the following– "9. Pihak Defendan telah membangkitkan isu berkenaan illegality yang tidak diplidkan oleh Defendan. Adalah prinsip undang-undang yang mantap bahawa perkara berkenaan ketidaksahan (illegality) boleh dipertimbangkan dan diputuskan oleh Mahkamah walaupun tidak diplid".

Accordingly, the learned SCJ dismissed the Plaintiff's claim.

The main issue to be determined by this Court is – Whether the learned SCJ erred in law when it decided the Plaintiff's claim based on the issue of illegality, which was not pleaded by the Defendant?

The Plaintiff submits that the learned SCJ erred when it dismissed the Plaintiff's claim based on the issue of illegality, which was never pleaded by the Defendant.

On this point, the Plaintiff distinguishes between two categories of illegality –

Ex facie illegality, an illegality that is clearly apparent on the face of the document or transaction itself. In such circumstances, the Court may act without pleading; and

Non-ex facie illegality, an illegality that is not apparent and only emerges after evidence is adduced. In such circumstances, the facts giving rise to illegality must be pleaded pursuant to Order 18 rule 8 of the Rules of Court 2012 (“ROC 2012”).

The Plaintiff refers to the Federal Court decision in Dato' Hamzah bin Abdul Majid v Omega Securities Sdn Bhd [2015] 6 MLJ 725, which held that only ex facie illegality may be taken cognisance of without pleading.

The Plaintiff also refers to the Court of Appeal decision in Kunci Semangat Sdn Bhd v Thomas Varkki a/l MV Varkki & Anor [2022] 3 MLJ 857 which confirmed that although illegality need not be expressly pleaded, the facts giving rise to illegality must be pleaded pursuant to Order 18 rule 8 ROC 2012.

The Plaintiff submits that in the present case, the illegality was not ex facie. The Plaintiff's Statement of Claim only disclosed an ordinary breach of contract claim i.e. wrongful termination of appointment as branch manager. No one reading the Statement of Claim would conclude that there was any illegality without knowledge of Act 27 and Surat Pekeliling KDN Bil. 4/2010.

The Plaintiff also submits that the Defendant failed to plead the following material facts –

that the Plaintiff did not have a private agency licence;

Surat Pekeliling KDN Bil 4/2010; and

section 3 of Act 27.

The Plaintiff also cites a long list of authorities from the Federal Court and Court of Appeal supporting the principle that parties are bound by their pleadings. Among others are –

Samuel Naik Siang Ting v Public Bank Bhd [2015] 6 MLJ 1 (FC);

AmBank (M) Bhd (formerly known as Arab-Malaysia Bank Bhd) v Luqman Kamil bin Mohd Don [2012] 3 MLJ 1 (FC);

Iftikar Ahmed Khan (as the executor of the estate for Sardar Mohd Roshan Khan, deceased) v Perwira Affin Bank Bhd (previously known as Perwira Habib Bank Malaysia Bhd) [2018] 2 MLJ 292 (FC);

Instantcolor System Sdn Bhd v Inkmaker Asia Pacific Sdn

Tan Keng Yong @ Tan Keng Hong & Anor v Tan Hwa Ling @

Boustead Naval Shipyard Sdn Bhd v Dynaforce Corp Sdn

The Defendant submits that the learned SCJ was correct in deciding on the issue of illegality even though it was not pleaded, based on the principle in Merong Mahawangsa Sdn Bhd & Anor v Dato' Shazryl Eskay Bin Abdullah [2015] 5 MLJ 619.

The Defendant emphasises the Plaintiff's own admissions during cross-examination –

the Plaintiff was not an employee of the Defendant;

the Plaintiff did not receive a fixed salary, EPF or SOCSO;

the Plaintiff rented his own business premises;

the Plaintiff used the Defendant's licence "to find business"; and

the Plaintiff received 88% of the revenue.

The Defendant submits that these admissions clearly demonstrate that the arrangement between the parties was proxy, lease or rental of the licence which is prohibited under the KDN Circular.

The Defendant relies on Merong M ahawangsa Sdn Bhd which states – "Clearly, therefore, courts are bound at all stages to take Notice of illegality whether ex facie or which later appears, eventhough not pleaded, and to refuse to enforce the contract..."

Against this backdrop, this is the Court’s analysis and findings.

This Court has observed that both Plaintiff and Defendant relied on different Federal Court cases decided by the same judge to support their stand on illegality. The cases are –

Merong Mahawangsa Sdn Bhd & Anor v Dato' Shazryl Eskay Bin Abdullah [2015] 5 MLJ 619 (decided on 25 August 2015); and

Dato' Hamzah bin Abdul Majid v Omega Securities Sdn Bhd [2015] 6 MLJ 725 (decided on 4 November 2015).

In this Court’s judgment, to determine this appeal, this Court must carefully analyse these two Federal Court decisions, both delivered in 2015 by Jeffrey Tan FCJ.

The fact that both cases were decided in the same year by the same judge is significant. It means both cases are contemporaneous and neither takes precedence over the other by reason of time. Therefore, in my considered view, both cases must be read harmoniously and not in conflict with each other.

The case of Merong Mahawangsa Sdn Bhd involved a claim by Dato' Shazryl Eskay for payment of RM20 million for services allegedly rendered to procure a construction contract for the "Crooked Bridge" from the Government of Malaysia.

The Plaintiff in that case had pleaded in his own Statement of Claim that he had "used his influence and good relations with the Government of Malaysia" to procure the said project. He also gave particulars of his close relationships with certain Federal Ministers and his dealings with them concerning the project.

In other words, in Merong Mahawangsa Sdn Bhd, the illegality was clearly apparent on the face of the pleading itself. The Plaintiff himself disclosed that he was being paid to use his influence with government officials, i.e., influence peddling, which is clearly contrary to public policy.

The Federal Court in that case held – "Therefore, 'the question of illegality would not depend on pleading or procedure or on who first might or should produce the documents. It would be a question of substance, of which, if necessary, the court would give effect' (Vita Food Products Inc v Unus Shipping Co Ltd (in Liquidation) [1939] 1 ALL ER 513 per Lord Wright)".

Further, the Federal Court held – "Clearly, therefore, courts are bound at all stages to take Notice of illegality whether ex facie or which later appears, eventhough not pleaded, and to refuse to enforce the contract..."

This Court observed that the phrase "whether ex facie or which later appears" in Merong Mahawangsa Sdn Bhd appears to suggest that a court may take cognisance of illegality whether it is apparent on its face or emerges later. However, this phrase must be read in the context of that case, where the illegality was indeed apparent on the face of the respondent's own pleading.

The case of Dato' Hamzah bin Abdul Majid provides important clarification on when illegality may be taken cognisance of without pleading. The Federal Court clearly stated that only ex facie illegality, i.e., illegality that is clearly apparent on the face of the transaction, may be taken cognisance of without pleading.

This Court is of the view that Jeffrey Tan FCJ, when delivering both judgments in the same year, could not have intended for both cases to conflict with each other. The only logical and harmonious reading is–

Merong Mahawangsa Sdn Bhd establishes the general principle that courts are bound to take cognisance of illegality and cannot enforce an illegal contract;

Dato' Hamzah bin Abdul Majid provides clarification/limitation that illegality may be taken cognisance of without pleading and it only applies to ex facie illegality.

In summary, Dato' Hamzah bin Abdul Majid provides clarification and limitation to the general principle in Merong Mahawangsa Sdn Bhd. The two cases, read together, establish the following principle– Courts are bound to take cognisance of illegality when it emerges. But if the illegality is not ex facie (i.e. not apparent on the face of the pleading or document), then the facts giving rise to illegality must be pleaded pursuant to Order 18 rule 8 of ROC 2012.

This harmonious reading is consistent with the rationale behind pleading requirements. Order 18 rule 8 ROC 2012 provides – "A party must in any pleading subsequent to a statement of claim plead specifically any matter, for example, performance, release, any relevant statute of limitation, fraud or any fact showing illegality..."

The rationale behind this requirement is to ensure procedural fairness. Parties are entitled to know the case they have to meet. If illegality is not apparent on the face of the document and only emerges through extrinsic evidence, the opposing party must plead the material facts so that the other party is not "ambushed" at trial. The Distinction between Ex Facie and Non-Ex Facie Illegality

For clarity, this Court explains the distinction between the two categories of illegality as follows.

Ex facie illegality means illegality that is clearly apparent "on the face" of the document or transaction itself, without the need to refer to extrinsic evidence. For example –

a contract to kill someone;

a contract to supply prohibited drugs; and

the contract in Merong Mahawangsa Sdn Bhd, where the pleading itself disclosed that the respondent was being paid to use his influence with government officials.

In such circumstances, anyone reading the document or pleading would immediately realise that there is illegality. No special knowledge or additional evidence is required.

On the other hand, Non-ex facie illegality is illegality that is not apparent on the face of the document and only emerges when extrinsic evidence, such as evidence about a particular statute, regulation or surrounding circumstances of the transaction is adduced.

In such cases, a person reading the pleading would not realise any illegality. The illegality only emerges after evidence is adduced at trial.

This Court now applies the above principles to the facts of this case.

The Plaintiff's Statement of Claim disclosed an ordinary breach of contract claim which resulted in a wrongful termination of appointment as branch manager. The Plaintiff pleaded –

the letter of appointment dated 25 February 2015;

duties as branch manager;

88% or 12% profit-sharing;

wrongful termination on 31 October 2018; and

loss suffered.

There is nothing in the Statement of Claim that discloses illegality on its face. A person reading the pleading would not conclude that there was any contravention of Act 27 or Surat Pekeliling KDN Bilangan 4/2010 without –

knowledge of Act 27;

knowledge of Surat Pekeliling KDN Bil. 4/2010; and

evidence about the operational details that the Plaintiff did not have his own licence, rented his own premises, paid guards through his own company, etc.

The Defendant's Statement of Defence also did not plead illegality. The Defendant only pleaded –

the Plaintiff was an agent, not an employee;

the Defendant was entitled to terminate the appointment at any time; and

the Plaintiff had breached the terms of appointment.

The Defendant did not plead –

that the Plaintiff did not have a private agency licence;

Section 3 of Act 27;

Surat Pekeliling KDN Bil. 4/2010; or

that the arrangement between the parties constituted proxy, lease or rental of licence which is prohibited.

The illegality only emerged during trial, through the Plaintiff's own evidence during cross-examination. As recorded by the learned SCJ, the Plaintiff admitted – "This Delta Zeeforce license, as understanding between Parameswaran and Delta Zeeforce, because I do not have a security license. I am a 30 years’ experience in this line. So, were if I want to do security business, Puan, I need a legal license with a good company, so I had approach this is the director Mr. Mukesh, he had into with me, he is very happy with me and my background and some of recommendation so, he work together, so he said I can take his license use his license to go and find business and run a branch in Johor Bahru..."

These admissions, that the Plaintiff did not have his own licence and used the Defendant's licence to operate, are extrinsic evidence that disclosed the illegality. The illegality was not apparent on the face of the pleadings.

Accordingly, this Court finds that the illegality in this case was not ex facie. It only emerged through evidence at trial. Therefore, following the principle in Dato' Hamzah bin Abdul Majid, the facts giving rise to illegality should have been pleaded by the Defendant pursuant to Order 18 rule 8 of ROC 2012.

In this case, the Defendant failed to do so. Therefore, the learned SCJ erred when it decided the Plaintiff's claim based on the issue of illegality, which was not pleaded. The Principle that Parties are Bound by their Pleadings

The principle that parties are bound by their pleadings is a fundamental principle in our civil justice system. It ensures procedural fairness, so that each party knows the case to be answered and is not "ambushed" by issues that were never raised.

In Samuel Naik Siang Ting v Public Bank Bhd [2015] 6 MLJ 1, the Federal Court affirmed – "It is trite that the parties are bound by their pleadings and any evidence on any matter not pleaded ought not to be considered".

In AmBank (M) Bhd (formerly known as Arab-Malaysia Bank Bhd) v Luqman Kamil bin Mohd Don [2012] 3 MLJ 1, the Federal Court stated – "It is a fundamental principle that parties must be bound by their pleadings. The object of pleadings is to define the issues and thereby to inform the parties in advance of the case they have to meet".

The Court of Appeal in Kunci Semangat Sdn Bhd v Thomas Varkki a/l MV Varkki & Anor [2022] 3 MLJ 857 confirmed that although illegality need not be expressly pleaded by using the words "void" or "illegal", the facts giving rise to illegality must be pleaded pursuant to Order 18 rule 8 of ROC 2012.

In the present case, the Defendant failed to plead any facts giving rise to illegality. The Plaintiff was never informed that the Defendant would rely on Act 27 or the Surat Pekeliling KDN Bilangan 4/2010 to oppose his claim. The Plaintiff was thus denied the opportunity to know and meet the case against him.

This Court also notes that there is an element of unfairness in the Defendant's conduct. The Defendant –

entered into this arrangement with the Plaintiff;

registered the branch with KDN with the Plaintiff as Branch

operated under this arrangement for several years; and

only raised the issue of illegality when sued by the Plaintiff.

There is something deeply inequitable in allowing a party to benefit from an arrangement for years, then escape liability by raising illegality that it never pleaded, especially when that party itself brought the Plaintiff into the arrangement.

This supports the policy rationale behind requiring illegality to be pleaded : to prevent parties from using illegality as a tactical weapon at trial without giving prior notice.

Based on the analysis above, this Court finds that –

Both Merong Mahawangsa Sdn Bhd and Dato' Hamzah bin Abdul Majid were decided in 2015 by Jeffrey Tan FCJ and must be read harmoniously;

Merong Mahawangsa Sdn Bhd establishes the general principle that courts are bound to take cognisance of illegality and cannot enforce an illegal contract;

Dato' Hamzah bin Abdul Majid clarifies that this principle that illegality may be taken cognisance of without pleading only applies to ex facie illegality;

in the present case, the illegality was not ex facie. It was not apparent on the face of the pleadings and only emerged through evidence at trial;

therefore, the Defendant should have pleaded the facts giving rise to illegality pursuant to Order 18 rule 8 ROC 2012 but failed to do so; and

the learned SCJ erred when it decided the Plaintiff's claim based on the issue of illegality which was not pleaded.

Since illegality was not properly pleaded, the issue was not before the learned SCJ and should not have formed the basis for dismissing the Plaintiff's claim.

This is a clear example of how the appellate court may disturb the findings and the decision of a trial court. As stated in Gan Yook Chin

(P) & Anor v Lee Ing Chin @ Lee Teck Seng & Ors [2005] 2 MLJ 1, a decision arrived at by a trial court without proper judicial appreciation of the evidence, or where the trial judge has misdirected himself, may be set aside on appeal. In the present case, the learned SCJ misdirected herself by deciding the case based on the issue of illegality which was not pleaded and therefore not properly before the court. This misdirection occasioned a failure of justice as the Plaintiff was denied the opportunity to know and meet the case against him.

This Court opted not to make any finding on the merits of the illegality issue, i.e. whether the arrangement between the parties actually constituted proxy, lease or rental of licence prohibited under the Act 27 and Surat Pekeliling KDN Bilangan 4/2010.

This is because the issue was not properly pleaded and therefore was not before this Court for determination. The Plaintiff was not given adequate opportunity to present his case on this issue, including adducing evidence regarding KDN's approval of the branch and the security clearance approved for the Plaintiff as Branch Manager.

If the Respondent wishes to raise the issue of illegality in future, it is at liberty to apply to amend its pleadings or commence fresh proceedings if so advised.

Based on the grounds set out above, this Court orders as follows–

the appeal is allowed;

the decision of the learned SCJ dated 30 June 2024 is set aside;

costs of RM 8,000.00, subject to the allocatur; and

Plaintiff's claim is to be heard on merit. Merit Of Plaintiff’s Case

Having decided that the learned SCJ erred in adjudicating and deciding upon the issue of illegality which was not pleaded by the Respondent, this Court is mindful that an appeal to the High Court from the learned SCJ is by way of rehearing pursuant to Order 55 rule 2 of ROC 2012 and section 29 of the Courts of Judicature Act 1964 [Act 91]. The Court is vested with the power to hear the appeal on the evidence and to make its own findings of fact and draw its own conclusions there from.

As stated by the Court of Appeal in Nor Hazliza bt Ismail & Anor v Mohamed Yusoff bin Shaik Madar [2024] 4 MLJ 770, an appeal by way of rehearing means that the appellate court may look at and re-assess the evidence presented before the trial court for the sake of justice in the case (see also Young Yean Chin & Ors v Quek Yak Kang & Ors [2016] 6 CLJ 860). Similarly, in Monoluxury Sdn Bhd lwn Willem Pomp [2024] 9 MLJ 718 the High Court, citing Government of Malaysia v Zainal bin Hashim [1977] 2 MLJ 254b, affirmed that on rehearing, the appellate court is authorised to make such order as ought to be made according to the law at the time of the appeal.

To ensure the speedy administration of justice for both parties, this Court will now proceed to examine the merits of the Plaintiff's claim for wrongful termination of contract.

This Court is mindful that an appellate court should be slow to disturb findings of fact made by a trial judge who had the advantage of seeing and hearing the witnesses. However, as stated by the Federal Court in Gan Yook Chin (P) & Anor, this rule is not absolute. An appellate interference is warranted where the decision was arrived at without proper judicial appreciation of the evidence, or where the trial judge misdirected himself.

In the present case, the learned SCJ did not make any credibility findings on the Defendant's witnesses as the case was decided solely on the illegality issue. Since the illegality issue was wrongly decided, this Court must now assess the evidence afresh, including making findings on the credibility of the witnesses. This is not a case of overturning credibility findings made by the trial court, but rather of making such findings for the first time on appeal by way of rehearing.

In examining the merits of the Plaintiff's claim, this Court has considered and relied upon the Record of Appeal which includes the pleadings, the Notes of Evidence, the documentary exhibits and the written submissions filed by both parties at the trial court level.

Apart from the illegality issue which this Court has dealt with above, the Defendant's Written Submission at the trial court raised the following arguments on the merits –

that the Plaintiff was appointed as an agent cum manager, not a contractual branch manager as pleaded;

that the Rini Heights contract was only for a probationary period of 3 months (from 15.10.2018 to 14.01.2019), and therefore even if termination was wrongful, damages should be limited to 3 months only;

that the Plaintiff failed to supervise and monitor security guards, manage workers' welfare, and pay their salaries;

that the Plaintiff hired 6 Nepalese security guards without proper work permits;

that DW1 and DW2 (Nepalese workers) complained about being forced to work excessive hours without proper rest; and

that the termination was justified to protect the Defendant's licence from repercussions by KDN.

The Plaintiff's Reply Submission countered as follows –

on the Rini Heights probationary period issue, the Plaintiff argued that the Defendant's own breach caused the contract to fail the probation period and therefore the Defendant cannot rely on its own wrong to limit damages;

pursuant to section 74 of the Contracts Act 1950 [Act 136], the Plaintiff is entitled to damages for the remainder of the contract due to wrongful termination;

the Defendant's claims about worker mistreatment are unsubstantiated as they are merely the Defendant's own defence pleadings and not supported by documentary evidence;

the termination letter dated 31.10.2018 was vague and did not clearly state the reasons for termination, merely stating that the Defendant had received complaints from security guards ("telah mendapat aduan daripada pengawal keselamatan yang bekerja di bawah seliaan tuan"); and

the Defendant repudiated both the Duta Impiana and Rini Heights contracts simultaneously without proper justification.

In the Plaintiff's Additional Reply Submission, the Plaintiff raised the doctrine of approbation and reprobation, arguing that the Defendant cannot "blow hot and cold". Having agreed to and benefited from all the arrangements with the Plaintiff, the Defendant cannot now claim those same arrangements were grounds for termination. The Plaintiff relied on Boustead Trading (1985) Sdn. Bhd. v. Arab-Malaysian Merchant Bank Berhad [1995] 4 CLJ 283 and Cheah Theam Kheng v. City Centre Sdn Bhd (In Liquidation) & Other Appeals [2012] 2 CLJ 16.

Hence, the issue to be consider is – Has the Plaintiff proven his claim against the Defendant on the balance of probabilities?

The law is trite. To succeed in a claim for breach of contract through wrongful termination, the Plaintiff must prove –

the existence of a valid contract between the parties;

the Defendant breached the said contract; and

the Plaintiff suffered loss as a result of the breach. First Element: Existence of Contract

The existence of a contract between the parties is not disputed. The Letter of Appointment dated 25.2.2015 clearly shows that the Respondent had appointed the Appellant as Manager of the Southern Zone Branch.

The key terms of the contract include –

the Plaintiff was responsible for managing operations in the Southern Zone;

the Plaintiff received 88% of gross collections while the Defendant received 12%;

the Plaintiff was responsible for paying workers' salaries from his share; and

no fixed term was specified in the contract.

The fact that this contract was performed for over 2 years from March 2016 until October 2018 without any dispute as to its validity is evidence of a valid and subsisting contract. This is supported by SD4's own testimony that the arrangement was 'going on very fine' prior to the termination. Second Element: Breach of Contract

Immediate Termination Without Notice

It is not disputed that the Defendant terminated the Plaintiff's services by letter dated 31.10.2018 with immediate effect on the same day. Notably, the termination letter itself was vague and did not clearly state the reasons for termination, merely stating that the Defendant had received complaints from security guards ("telah mendapat aduan daripada pengawal keselamatan yang bekerja di bawah seliaan tuan") without specifying the nature of these complaints or affording the Plaintiff any particulars. Furthermore, the Letter of Appointment did not specify –

any notice period for termination; or

any right to terminate with immediate effect. This was admitted by SD3 during cross-examination when he agreed that the Letter of Appointment doesn't state that the Defendant has absolute right to terminate immediately without giving any notice.

In the absence of an express provision in the contract for immediate termination, the law implies a term requiring reasonable notice of termination (see : Merbok Hilir Bhd v Sheikh Khaled Jassem bin Mohammad Jassem Al-Thani (t/a Petroserv General Trading Establishment) and other appeals [2013] 5 MLJ 407).

No Investigation or Show Cause Letter

The unchallenged evidence shows –

No show cause letter which SD3 (Dato' Sameer) admitted in cross-examination – "Did you send a show cause to Parameswaran on the allegation by your guards?" "No, I did not".

(ii) No formal investigation. When asked how the investigation was conducted, SD3 answered – "By listening to my workers and seeing with my eyes, that's it."

(iii) Written report not produced. SD3 admitted preparing a written report but did not produce it in Court – "Did you forward that report? The written report to Parameswaran?" "No".

SD3 acknowledged the principle of natural justice : that a person has the right to defend himself, yet failed to afford the Plaintiff this right as below – “Pegawai Plaintif : "So, let me ask you a question, do you believe in the saying that the man have a right to defense himself?" Saksi SD 3 : "Yes". Pegawai Plaintif : "Yes. It's a natural justice. You also get it right?" Saksi SD 3 : "Yes".

Natural Justice Denied

SD3 himself admitted that the Plaintiff was denied his right to respond to the allegations – Plaintiff's Counsel : "...I am putting to you that you have deprive the plaintiff of his right to answer to all the charges allegation made by the Nepalese, agree or not? Witness SD3 : "What right that he has when the contract he signs between Rini Height and Delta Zeeforce, what is the right is Mr Param have?"

This answer demonstrates the Defendant's disregard for the principles of natural justice. The Plaintiff was never given an opportunity to respond to any allegations before termination. Credibility of the Defendant's Witnesses

No Documentary Evidence for Complaints

The Court finds that the complaints allegedly made by the Nepalese security guards are not supported by any documentary evidence – Complaint Evidence Produced Forced to work 16-18 hours overtime No attendance records Broken bicycle No photographs or evidence Insufficient rest No documentary evidence Forced to work without leave No leave records Unpaid overtime No pay slips or records

Further, SD2 admitted in cross-examination : "Tidak ada bukti, Puan" when asked about documentary evidence for overtime, insufficient rest and working double shifts. SD3 also conceded "there is no evidence in court".

Witness Statements Questionable

There are serious questions regarding the preparation of the Witness Statements of SD1 and SD2 –

SD1 admitted "tidak pernah jumpa Peguam" before the day of trial;

(ii) SD2 stated that the meeting with the lawyer was to "discuss the Rini Heights situation" and not for preparation of the Witness Statement; and

(iii) both witnesses appeared to be seeing the Witness Statement for the first time in Court.

Guards Could Not Read/Write

SD3 admitted in cross-examination that the Nepalese guards could not read or write in English or Malay when sent to Johor – Plaintiff's Counsel : "...could they read and write?" Witness SD3 : "At that time no".

This was confirmed when Plaintiff's Counsel put to SD3 : "...you are saying they can't read and write when they came" and SD3 answered : "Yes, correct".

This raises serious questions about how the alleged complaints could have been documented and verified.

No Police Report

Despite the Defendant's allegation that the guards were "severely mistreated and ill-treated", no police report was made by any of the Defendant's witnesses. SD3 admitted : "No, I did not". SD4 also confirmed : "Yes" (agreeing there was no police report). Even SD2, the complainant himself, admitted : "Tidak ada laporan polis, Puan".

When asked whether a police report would be important for the Court, SD3 answered : "Yes, it is important, correct".

In this Court’s judgment, the failure to make a police report despite such serious allegations is inconsistent with the seriousness of the allegations.

Contradictions in Evidence

There are material contradictions between the Witness Statement and oral evidence in Court –

SD2's Witness Statement stated that the Plaintiff used "kata-kata buruk" ("abusive language"); but in cross-examination, SD2 admitted the Plaintiff was "keras" ("strict") but : "Tidak ada kata-kata kesat, kata buruk" ("No abusive words, no bad language."); and

(ii) similarly, SD1's Witness Statement alleged the Plaintiff used abusive language, but in cross-examination SD1 admitted : "Beliau tidak ada kata kasar" ("He did not use harsh words").

These contradictions undermine the credibility of the Witness Statements. The Plaintiff's Evidence

In contrast, the evidence of the Plaintiff (SP1) and his witness (SP2 - Jamaliah) was consistent –

no complaints were received throughout approximately two and a half years of service.

termination was effected without any warning or opportunity to respond;

all clients - Rini Heights, Duta Impiana, Teong Hin and Basewell - never made any complaints; and

no evidence was produced by the Respondent that these clients were dissatisfied. The Respondent's Own Conduct

The Respondent's own conduct is inconsistent with allegations of serious breach –

the three-year relationship without complaints. SD4 admitted : "Because we are very close friends. So we talk on the phone...";

no warning letter or shows cause. Despite SD4's claim that there were breaches of contractual terms (pay slips, EPF, SOCSO), no warning letter was ever sent;

continued to receive payments and share profits. The Respondent continued to receive 12% throughout the contract period without any written objection;

terminated all 4 projects simultaneously. The Respondent terminated not only Rini Heights but also Duta Impiana, Teong Hin and Basewell on the same date. Even though the alleged complaints only concerned Rini Heights.

Based on the above, the Court finds that –

the Respondent breached the contract by terminating the Appellant's services with immediate effect without reasonable notice;

the Respondent failed to comply with principles of natural justice by not giving the Appellant an opportunity to respond to allegations;

the complaints allegedly made by the Nepalese guards are not supported by sufficient evidence and the credibility of the witnesses is questionable. As for the allegation that the Plaintiff hired Nepalese workers without proper work permits, no documentary evidence was produced to support this allegation;

the Respondent's own conduct - terminating all 4 projects simultaneously, no warning letters, continued profit-sharing - is inconsistent with allegations of serious breach; and

the Plaintiff's argument on approbation and reprobation has merit. The Defendant entered into this arrangement with the Plaintiff, registered the branch with Kementerian Dalam Negeri with the Plaintiff as Branch Manager, accepted twelve percent share of profits for over three years and only raised issues when sued by the Plaintiff. As held in Cheah Theam Kheng v. City Centre Sdn Bhd (In Liquidation) & Other Appeals [2012] 2 CLJ 16, a party cannot adopt two inconsistent attitudes towards another; having elected to adopt one stance, he cannot thereafter be permitted to go back and adopt an inconsistent stance. The Defendant, having benefited from the arrangement throughout the contract period, cannot now rely on alleged breaches by the Plaintiff to justify the termination. Damages

The Plaintiff claims damages in the sum of RM391,923.39 for wrongful termination.

The principle of damages for breach of contract is to place the injured party in the position as if the contract had been performed (see : Tan Sri Khoo Teck Puat & Anor v Plenitude Holdings Sdn Bhd [1994] 3 MLJ 777). This principle is statutorily embodied in section 74 of the Contracts Act 1950, which provides that when a contract has been broken, the party who suffers by such breach is entitled to receive compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach.

For contracts with a fixed term that are wrongfully terminated, damages are calculated based on the loss suffered for the unexpired period of the contract. For contracts without a fixed term, damages are usually calculated based on the reasonable notice period that should have been given.

In the present case, the Letter of Award dated 10.10.2018 at Clause 4F expressly provided that upon successful completion of the probation period, the contract would be extended. The Services Agreement dated 15.10.2018 further confirmed that the duration of the Rini Heights contract was two years, with an expiry date of 14.10.2020. It was the Defendant's wrongful termination on 31 October 2018, only 16 days into the probation period, that prevented this extension from taking place.

110.

This Court has considered the Defendant's submission that the Rini Heights contract was only for a probationary period of three months, and therefore damages should be limited accordingly. However, for the reasons stated above, this submission is rejected.

Regarding the quantum of damages, the Court finds the sum of RM391,923.39 to be reasonable, having regard to –

the unexpired term of the Rini Heights contract which was for two years;

the simultaneous termination of all 4 projects, namely Rini Heights, Duta Impiana, Teong Hin and Basewell;

the Plaintiff's loss of income from the 88% share of gross collections he was entitled to receive under the contracts; and

the established relationship of over 3 years which was abruptly terminated.

Based on the analysis above, on the totality of the evidence considered and weighted based on the Appeal Record, on the balance of probabilities Court finds that –

the Plaintiff has proven the existence of a valid contract;

the Plaintiff has proven the Defendant breached the contract through immediate termination without reasonable notice and without giving an opportunity to respond to allegations; and

the Defendant has failed to prove there was justification for immediate termination;

For the reasons on the merit of the Plaintiff’s claim stated above, the Court decides as follows –

the Plaintiff's claim against the Defendant is allowed;

the Defendant is ordered to pay the Plaintiff –

damages in the sum of RM391,923.39;

(ii) interest at the rate of 5% per annum from the date of judgment until full realisation; and

(iii) costs of RM 50,000.00 subject to the allocator. Dated 23 January 2026 -signed-Dr Noradura Binti Hamzah Judicial Commissioner High Court Civil 2 Johor Bahru Solicitor for the Appellant / Plaintiff : : G.K. Sritharan together with M.K. Tan Messrs G.K. Sritharan & Co Solicitor for the Respondent / Defendant : : Satvinder Kaur A/P Avtar Singh Messrs Satvinder K & Associates