TAZ Logistics Sdn Bhd v TAZ Metal Sdn Bhd & 4 Lagi (W-02(NCC)(W)-21-01/2017)

Preamble

Pursuant to this share sale agreement the obligations of the parties was divided and categorised such that, amongst other terms and conditions: a) Asdion provided both capital support and the heavy equipment required (vide a subsidiary) to Taz Logistics for the stevedoring business; while b) The second defendant (‘Tengku Azlan’), who was the Chairman of the Kuantan Port Authority or the Lembaga Pelabuhan Kuantan (‘LPK’) and Dato’ Ridzuan undertook the responsibility to ensure that the requisite licences and agreements were procured for Taz Logistics. [5] Taz Logistics commenced its stevedoring business profitably, for a short time. However it is contended that very soon after the commencement of its business, the profitability and operational ability of Taz Logistics was “systematically” destroyed deliberately by the defendants vide a series of events (which will be detailed below). [6] Essentially these events involved conflict of interest situations between some of the defendants, who were directors of Taz Logistics, coupled with active attempts to preclude Taz Logistics from acquiring essential requirements for its stevedoring business, such as land space. Additionally it is contended that the defendants acted in concert to divert assets, employees and potential business to another entity, namely the first defendant, Taz Metals Sdn Bhd (‘Taz Metals’). 4 [7] Taz Metals is a private limited company with a paid up capital of RM2-00 divided into two shares, which are held by the second and third defendants respectively. As soon as the relevant assets, business opportunities and employees had been diverted to, or misappropriated by Taz Metals, Tunku Jawahir and Dato’ Ridzuan resigned with immediate effect from Taz Logistics. Even the office space occupied by Taz Logistics was taken over by Taz Metals while Taz Logistics had to downsize to a smaller space as it had lost virtually every employee. [8] In summary, the claim by Taz Logistics is that the entirety of its business was diverted to, and acquired by Taz Metals through a series of acts and omissions amounting to: a) breaches of fiduciary duty by Dato’ Ridzuan and Tunku Jawahir and knowing assistance on the part of Tengku Azlan and the third defendant (‘Tengku Aslahuddin’); as well as b) a conspiracy to acquire Taz Logistics’ business resulting in loss and damage to it, but to the ultimate gain of the defendants through the acquisition of the same stevedoring business vide Taz Metals. The conspiracy comprises the deliberate diverting of business, assets and employees of Taz Logistics to Taz Metals by the defendants collectively. [9] It is significant, in this context, that the defendants are inter-related. 5 [10] Tengku Azlan, the second defendant and Tunku Jawahir, the fourth defendant, are husband and wife, while Tengku Aslahuddin, the third defendant (‘Tengku Aslahuddin’), is their son. Dato’ Ridzuan, the fifth defendant, while not related to Tengku Azlan, Tunku Jawahir and Tengku Aslahuddin, is acknowledged as a “trusted friend” of the family who takes care of and guides them in their investments. Tunku Jawahir was named the executive director of Taz Logistics. The causes of action pleaded by Taz Logistics [11] The plaintiff’s claim against: a) the fourth and fifth defendants who were directors of Taz Logistics, is premised on a breach of fiduciary duties; b) the second and third defendants, is premised on knowingly assisting the fourth and fifth defendants in the breaches of their duties owed to Taz Logistics; c) the first defendant (‘Taz Metals’), is for knowing receipt of assets, property and business opportunities rightfully belonging to Taz Logistics; d) all the defendants, is for conspiracy to injure the plaintiff by lawful means with the predominant purpose of injuring the plaintiff and as a consequence of which Taz Logistics suffered loss and damage. 6 [12] Particulars relating to each of these causes of action have been set out in the statement of claim. The defences [13] In their defence and counterclaim, the defendants wholly deny these allegations. The defendants maintain that the claim by Taz Logistics is untrue, and that it is occasioned by confusion on the part of its new directors, or amounted to an attempt to mislead the court that there was collusion between the defendants to misappropriate Taz Logistics’ assets and business. The defendants then go on to express their grievance that after the setting up of Taz Metals, the new directors of Taz Logistics sought to unlawfully take possession of files and documents and took pictures of such documents before leaving. They further complain of attempts to break into Taz Metal’s office, singling out one Tey Por Yoong, the majority shareholder of Asdion, for blame. [14] They further maintain that space for their stevedoring business was lawfully acquired by Taz Metals; that they did not seek to divert payments due to Taz Logistics from its customers to Taz Metals, as the customers were personal customers of the third defendant, rather than Taz Logistics’ customers. [15] In essence a perusal of the defence discloses that essentially the defence is a denial of the allegations taken singly on a paragraph by paragraph basis with some degree of explanation for the various events comprising the subject matter of Taz Logistics’ claim against them. The counterclaim is a repetition of the defence and simply 7 seeks damages, including aggravated damages for trespass subsequent to the defendants having distanced themselves completely from Taz Logistics. [16] It is difficult to conclude otherwise than to state that the defences of Taz Metals, Tengku Azlan and Tengku Aslahuddin, i.e. the first, second and third defendants, as well as the separate joint defence of Tunku Jawahir and Dato’ Ridzuan i.e. the fourth and fifth defendants, amount in essence to a denial of the various allegations made against them. The High Court Judgment [17] The learned High Court Judge concluded that Taz Logistic’s claim was misconceived and dismissed it outright against all of the defendants. In arriving at her conclusion Her Ladyship held, inter alia, as follows: a) with regards to the purported duties owed by the second defendant, no evidence was adduced to show whether the second defendant was a de facto or shadow director. Therefore the learned High Court judge held that the second defendant is not in breach of any fiduciary duties to the plaintiff; b) with regards to the allegation that the second defendant misled Asdion, the learned High Court judge held that the plaintiff has no cause of action on behalf of Asdion who is not a party to these proceedings. In any case, it is trite law 8 that the director’s duty is to the company, not to any shareholder, whether majority or minority. Asdion is the plaintiff’s majority shareholder. So this allegation has nothing to do with the plaintiff’s claim against its directors; c) with regards to the allegation that Orion Base Shipping (M) Sdn Bhd (‘Orion’) directed payments to be made directly to the second defendant, the learned High Court judge held that this allegation has not been proven under sections 101 and 102 of the Evidence Act 1950; d) with regards to the cancellation of the second site offer, the learned High Court judge held that the plaintiff did not plead that the defendants had influenced the Kuantan Port Consortium to cancel the offer. In any case, the fourth and fifth defendants were not the cause of the cancellation. The offer was cancelled by the Kuantan Port Consortium; e) with regards to the move to a smaller office, the learned High Court judge held that the move did not adversely affect the plaintiff’s business. Since the plaintiff’s work involves moving cargo from ships, the work takes place outside the office, at the port or at the storage yard. Therefore there is no need to have a large office. If required, the plaintiff can obtain a larger office in the future, because the current office is merely rented premises; f) with regards to the allegation that the defendants caused the plaintiff to lose corporate property, the learned High 9 Court judge held that there was no explanation of what is meant by corporate property. SP-1 merely lodged a police report on damage to property, not in relation to loss of property (emphasis ours). The learned High Court judge found that there was no registered list of assets adduced as proof of loss of property and there was no cross-examination on this point; g) the learned High Court judge found that likewise, there was no explanation as to what was meant by corporate opportunities which were said to have been lost through the fourth and fifth defendants’ breach of duties; h) with regards to the mass resignation of staff, SP-7 had admitted that he was the one who suggested that the staff join the first defendant. Therefore, the learned High Court judge found that it could not be said that the fifth defendant was the one who planned this mass resignation. The fifth defendant testified that there was nothing untoward or unusual in the mass resignation because the staff worked on the site, and there was no need for their services any longer as the site offer had been revoked. The fifth defendant also testified that it was his business plan to use outsourced stevedoring staff; i) with regards to the allegation that the plaintiff’s customers were stolen, the letter dated 18 August 2015 from the first defendant (signed by the third defendant) instructing Citra Offshore Maritime Sdn Bhd and Citra Sarana Sdn Bhd to 10 make payments to the first defendant’s account instead of the plaintiff’s account, was issued after the second site offer had been revoked. At that time, the plaintiff no longer had a storage yard, but the first defendant did. Furthermore, the letter dated 18 August 2015 referred to handling charges. It is not clear whether that term referred to stevedoring charges or storage charges. The plaintiff’s counsel also did not seek clarification from SD-2 on this point; j) with regards to the involvement of the fifth defendant in the first defendant to steal the plaintiff’s customers, the learned High Court judge held that there was nothing to show such involvement. The fifth defendant was only authorised to be one of the first defendant’s cheque signatories since he was a family friend of the first defendant’s owners, the second and third defendants who were too busy with other businesses to give their undivided attention to the first defendant’s affairs; k) with regards to the sudden resignation of the fourth and fifth defendants, the learned High Court judge held that they have not breached any obligations under section 132 of the Companies Act 1965 because a director is free to resign. 11 The Decision of this Court [18] On appeal to this Court we unanimously determined that the decision of the learned High Court Judge ought to be reversed, and we so order. Having considered the entirety of the factual matrix and the law as propounded inter alia by learned counsel for the parties as well as the evidence on record, we concluded that Her Ladyship had failed to draw the correct and patent/obvious inferences that arose from a mature consideration of the evidential record. There was a failure or omission to consider the relevant contemporaneous documents and events, which to our minds, were at complete odds with the conclusions Her Ladyship drew from those same documents and events. [19] In short, in our considered view there was a distinct lack of judicial appreciation of the factual matrix as a whole resulting in a failure to draw the inescapable inferences of fact and law that arose from a consideration of the same. It is apparent to us that no reasonable court, judicially considering the series of facts in this case would or could arrive at any conclusion other than that there were clear instances of breaches of fiduciary duty by Dato’ Ridzuan and Tunku Jawahir vis a vis Taz Logistics as well as a conspiracy between the entirety of the defendants to utilize Taz Logistics to set up for their own benefit and profit the competing entity known as Taz Metals, thereby injuring Taz Logistics economically and commercially. [20] In arriving at this decision we reminded ourselves of the confines within which this Court, as an appellate court, is bound to 12 exercise its powers. An exposition of the exercise of the appellate power of review is set out in the decision of MMC Oil & Gas Engineering Sdn Bhd v Tan Bock Kwee & Sons Sdn Bhd [2016] 2 MLJ 428 where this Court held, inter alia as follows: “…..Appellate courts will not generally intervene save in the face of clear errors of law. Such errors can arise even in relation to findings on credibility and demeanour when the findings are inconsistent with the evidence on record before the court. In Tindok Besar Estate Sdn Bhd v Tinjar Co [1979] 2 MLJ 229; [1979] 1 LNS 119 Lee Hun Hoe (CJ Borneo) relied on Yuill v Yuill when reversing the trial judge in relation to his findings on the credibility of witnesses and their evidence. He explained his reasons for doing so as follows: “Nevertheless the learned trial judge expressed himself to be completely satisfied with the veracity of the respondent’s witnesses and their evidence. He purported to come to certain findings of fact on the oral evidence but did not notice or consider that the respondent’s oral evidence openly clashed with its contemporaneous documentary evidence. For myself, I would with respect feel somewhat safer to refer to and rely on the acts and deeds of a witness which are contemporaneous with the event and to draw the reasonable inferences from them than to believe his subsequent recollection or version of it, particularly if he is a witness with a purpose of his own to serve and if it did not account for the statements in his documents and writings. Judicial reception of evidence requires that the oral evidence be critically tested against the whole of the other evidence and the circumstances of the case. Plausibility should never be mistaken for veracity.......” [11] More recently in Merita Merchant Bank Singapore Ltd v Dewan Bahasa dan Pustaka [2014] 9 CLJ 1064, Raus Sharif (President of the Court of Appeal) opined as follows in relation to the powers of the appellate court: “[45] It is trite law that an appellate court will not readily interfere with the findings of fact arrived at by the court of first instance to which the law entrusts the primary 13 duty of evaluation of the evidence. However, the appellate court is under a duty to intervene in a case where the trial court has so fundamentally misdirected itself. In our judgment we find that there was insufficient judicial appreciation by the learned trial judge of the pleadings and contemporaneous evidence in the instant case when she allowed Merita’s claim. Such erroneous finding warranted appellate interference which the Court of Appeal rightfully done so, and we have no reason to disagree. We agree with the Court of Appeal in finding that the learned trial judge erred in finding........” [12] The frequently cited dicta of Steve Shim CJ (Sabah Sarawak) in Gan Yook Chin (P) & Anor v Lee Ing Chin @ Lee Teck Seng & Ors [2005] 2 MLJ 1; [2004] 4 CLJ 309 similarly sets out the criteria when an appellate court is bound to intervene in findings made by a trial court: “Suffice to say that we re-affirm the proposition that an appellate court will not, generally speaking intervene unless the trial court is shown to be plainly wrong in arriving at its conclusion. But appellate interference will take place in cases where there has been no or insufficient judicial appreciation of the evidence. It is, we think, appropriate that we say what judicial appreciation of evidence involves. ....A judge who is required to adjudicate upon a dispute must arrive at his decision on an issue of fact by assessing, weighing and for good reasons, either accepting or rejecting the whole or any part of the evidence placed before him. He must when deciding whether to accept or to reject the evidence of a witness test it against relevant criteria. He must also test the evidence of a particular witness against the probabilities of the case.” [13] Most recently, the Federal Court in Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441; [2015] 2 CLJ 453 reiterated the principle to be adopted by an appellate court when reversing findings of fact by a trial court: “...It is now established that the principle on which an appellate court could interfere with findings of fact by the trial court is “the plainly wrong test” principle; see the Federal Court in Gan Yook Chin & Anor (P) v Lee Ing Chin @ Lee Teck Seng & Anor [2005] 2 MLJ 1; [2004] 4 CLJ 309 (at p.10) per Steve Shim CJ SS. More recently this principle of appellate intervention was affirmed by the Federal 14 Court in UEM Group Berhad v Genisys Integrated Pte ltd [2010] 9 CLJ 785 where it was held at p. 800: It is well-settled law that an appellate court will not generally speaking, intervene with the decision of a trial court unless the trial court is shown to be plainly wrong in arriving at its decision. A plainly wrong decision happens when the trial court is guilty of no or insufficient judicial appreciation of evidence. (see Chow Yee Way & Anor v Choo Ah Pat [1978] 1 LNS 32; Watt v Thomas [1947] AC 484; and Gan Yook Chin (P) & Anor v Lee Ing Chin @ Lee Teck Seng & Ors [2005] 2 MLJ 1; [2004] 4 CLJ 309.” [14] The requirement for the trial judge to have come to a finding which was “plainly wrong” before an appellate court may intervene is therefore well entrenched in our appellate philosophy and practice. In Henderson v Foxworth Investments Ltd and another Lord Reed considered the meaning to be accorded to the phrase “plainly wrong”: “.....there may be some value in considering the meaning of that phrase. There is a risk that it may be misunderstood. The adverb “plainly” does not refer to the degree of confidence felt by the appellate court that it would not have reached the same conclusion as the trial judge. It does not matter, with whatever degree of certainty, that the appellate court considers that it would have reached a different conclusion. What matters is whether the decision under appeal is one that no reasonable judge could have reached.” [15] This is a point of some importance because it underscores the rationale that the appellate court is not at liberty to reverse or interfere in the finding of a trial judge even if the appellate court is clearly of the view that it would not have reached the conclusion the trial judge did on the evidence on record before it. It requires something more. The requisite or correct standard to be applied is that no reasonable judge, on the evidence on record, could have reached the conclusion of the trial judge. In other words, so long as the findings of the trial judge are plausible on the evidence on record, there is no room for interference merely on the grounds that the appellate court forms a different opinion on the same evidence.” 15 [21] The instances where an appellate court will intervene are succinctly set out in the recent English Supreme Court case of Henderson v Foxworth Investments Limited [2014] UKSC 41 where Lord Reid summarized the position thus at paragraph 67 of his judgment: “It follows that, in the absence of some other identifiable error, such as (without attempting an exhaustive account) a material error of law, or the making of a critical finding of fact which has no basis in the evidence, or a demonstrable misunderstanding of relevant evidence, or a demonstrable failure to consider relevant evidence, an appellate court will interfere with the findings of fact made by a trial judge only if it is satisfied that his decision cannot reasonably be explained or justified.” [22] Applying the foregoing principles, we arrived at a decision to reverse the trial judge only after considerable and anxious consideration as we are not wont to interfere with or fault the findings of a trial judge who has the primary advantage afforded by the unique ability to hear and assess the witnesses and consider the evidence both oral and documentary in the context in which it is given. It is a first-hand opportunity which we are aware, as appellate court judges, we do not have. However this is one of those rare cases in which we are constrained to intervene to ensure that there is no miscarriage of justice, given the clarity of the events and documents supporting the case put forward by Taz Logistics, not to mention the careful pleadings and relief sought. [23] We append below the reasons for our decision. We commence with the salient background facts. It is necessary to consider the factual matrix closely in the instant appeal as the 16 contemporaneous course of events and conduct of the parties comprise the substantive basis for the cause of action in breach of fiduciary duty to arise vis a vis the requisite directors, as well as for conspiracy to injure to be inferred in respect of the defendants collectively. Salient Background Facts [24] As stated in paragraph 3 above, the relevant events began in late November 2014 when Asdion entered into negotiations with Tengku Azlan and Dato’ Ridzuan with regards to the stevedoring business. 4 December 2014 – Stevedoring Agreement between Kuantan Port Consortium Sdn Bhd and Taz Logistics [25] While these negotiations were proceeding, Taz Logistics entered into a stevedoring agreement dated 4 December 2014 with the Kuantan Port Consortium Sdn Bhd (‘KPC’) which handles port operations at Kuantan Port. It will be recalled that Tengku Azlan was the Chairman of KPC. 30 January 2015 – Rental of business space to Taz Logistics [26] Taz Logistics was offered the rental of a yard measuring 16,770 square metres on 22 January 2015 by KPC, which was finalised on 30 January 2015. 17 30 January 2015 – Share Sale Agreement between Asdion and Dato’ Ridzuan whereby Asdion acquired 51% of Taz Logistics [27] Meanwhile the negotiations between Asdion, Tengku Azlan and Dato’ Ridzuan culminated in a share sale agreement between Asdion and Dato’ Ridzuan for the purchase of 51% of his shareholding in Taz Logistics for a sum of RM6 million. As a consequence, Asdion became the major shareholder while the balance shareholding was held collectively by Tengku Azlan’s wife, Tunku Jawahir, and Dato’ Ridzuan. [28] The primary obligations of Tengku Azlan and Dato’ Ridzuan (effectively representing all the defendants apart from Taz Metals) are evident in clause 2 (a) of Annexure 1 of the Share Sale Agreement which provides by way of a vendor’s representation and warranty: “…. the Company (i.e. Taz Logistics) has all the necessary licences (including statutory licences), permits, consents and authorities (public and private) for the proper and effective carrying on of its business……and all such licences, permits, consents and authorities are valid and subsisting……” 30 January 2015 – Shareholders’ Agreement between Asdion, Tunku Jawahir and Dato’ Ridzuan [29] With respect to the management of Taz Logistics, it was agreed vide a shareholders’ agreement between Asdion, Tunku Jawahir and Dato’ Ridzuan also dated 30 January 2015 that the 18 board of the company would comprise 5 directors. Asdion was entitled to appoint two executive directors and one chairman. Tunku Jawahir and Dato’ Ridzuan were entitled to appoint one director each in their stead. [30] Asdion’s primary role, it will be recalled, was to provide virtually all the financing necessary for this venture. When the share sale agreement of 30 January 2015 was signed, Taz Logistics’ net assets were approximately RM100,000-00 only, that too comprising largely of trade and sundry debtors. It had no fixed assets. It was therefore dependent from its very inception on Asdion to provide the financing necessary to get the stevedoring business off the ground. 10 February 2015 – TAZ Metals was set up [31] Immediately after signing the share sale agreement and the shareholders’ agreement which envisaged Asdion providing the capital for the setting up of the stevedoring business in Taz Logistics, Taz Metals was incorporated. Taz Metals has a paid up capital of RM2-00 and the shareholders are Tengku Azlan who holds one share and Tengku Aslahuddin who holds the other share. They are and remain the first and only directors of Taz Metals. 12 February 2015 – TAZ Logistics entered into a consultancy agreement with Orions [32] On 12 February 2015 Taz Logistics entered into a consultancy agreement with Orion for a sum of RM395,000-00. The agreement was executed by Dato’ Ridzuan, in his capacity as director of Taz 19 Logistics. Vide letter dated 10 March 2015, Orion instructed Taz Logistics to make all payments directly to Tengku Azlan. This is evident from a letter signed one Dato’ Mustafa, a friend of Dato’ Ridzuan, who authorises such payments and undertakes to indemnify Taz Logistics for any loss or damages it may suffer in making such direct payments. 20 March 2015 – Revocation of rental of business space to Taz Logistics [33] KPC revoked the rental of the yard space to Taz Logistics on the foregoing date, less than two months after the agreement had been finalised. The revocation was not disclosed to Asdion. At that material time, the business operations of Taz Logistics was managed or controlled largely by Dato’ Ridzuan through its general manager, one Dato’ Wan, who subsequently resigned. Neither Dato’ Ridzuan nor Tunku Jawahir reported this revocation of rental space. 8 April 2015 – Appointments to the Board of Asdion [34] On 8 April 2015, Tengku Azlan and Dato’ Ridzuan were appointed to the board of Asdion. The latter was appointed the Executive Director while Tengku Azlan was appointed the Chairman. As such Dato’ Ridzuan was at all material times an Executive Director of Asdion which was the majority shareholder of Taz Logistics, as well as a director and shareholder of Taz Logistics. 20 May 2015 [35] It appeared that TAZ Logistics had succeeded in setting up its stevedoring business such that Dato’ Ridzuan suggested to the Board of Asdion, which was responsible for providing capital, that TAZ move on to become a total logistics provider. This is evident from the minutes of the board of directors of Asdion on 28 May 2015 where he held out inter alia as follows in the course of a briefing on TAZ Logistics: “….. TAZ was moving forward to being a total logistics solution provider for Kuantan Port offering yard, storage, stockpiling trucking, stevedoring and clearing services……Dato’ Mohamed Ridzuan added that TAZ was the only total logistics solution provider.” [36] Subsequently, Dato’ Ridzuan sought funding from Asdion to purchase trucks and excavators. Such equipment was not required for a stevedoring business. 2 June 2015 – Offer received from KPC for the rental of a new yard [37] On 2 June 2015, TAZ Logistics received the offer of rental of a new yard measuring 25,000 square feet from KPC to take effect from 1 July 2015. [38] But very shortly after this, on 1 July 2015, KPC suddenly terminated this second offer of rental citing the non-fulfilment of 21 conditions. This was despite the fact that the fulfilment of the conditions was only to be effected from the date of commencement. [39] However on this same date, namely 1 July 2015, the same yard was offered by way of rental to Taz Metals. It will be recalled that Taz Metals is the company incorporated in February 2015 where its shareholders and directors are Tengku Azlan and Tengku Aslahuddin. 2 June 2015 [40] Dato’ Ridzuan contended in evidence that his exit from Taz Logistics was prompted by reason of a breakdown in the relationship between himself and one Dato’ Tey Por Yee (‘TPY’), who Dato’ Ridzuan contended in evidence, was the alter ego of Asdion. The reason for the alleged fall-out was that on 2 June 2015, TPY advised that Asdion had awarded a contract for the supply of bauxite to one of its other subsidiaries, namely Venice Sanctuary Sdn Bhd (‘VSSB’) instead of Taz Logistics. Dato’ Ridzuan was also “infuriated” by the fact that the agreement for the transaction with Hong Kong International Mining Exchange Limited had not been placed before the board of Asdion prior to its execution. 10 July 2015 – New directors from Asdion in Taz Logistics [41] It was resolved by Asdion, including Tengku Azlan and Dato’ Ridzuan, that three new nominee directors from Asdion were to be appointed to the board of Taz Logistics but this did not take effect. 22 1 August 2015 – Resignation of Taz Logistics’ pivotal management employee – Dato’ Wan [42] On this date, less than a month after it had been determined that there would be nominee directors from Asdion on the board of Taz Logistics, Dato’ Wan tendered his resignation. He was to serve a two month notice period which would end on 30 September 2015. 28 August 2015 – Proposal for acquisition of Taz Logistics [43] On 28 August 2015, Tengku Azlan and Dato’ Ridzuan put forward a proposal to the Board of Asdion for Asdion to acquire the remaining shareholding of 40% in Taz Logistics. This proposal was discussed. 1 September 2015 – Mass resignations from Taz Logistics [44] On 1 September, seventeen out of the remaining twenty-two employees of Taz Logistics tendered their resignations. On 19 October 2015, another employee resigned. Taz Logistics was effectively left with two employees. All the employees who had resigned took up employment with Taz Metals. 1 September 2015 – Tenancy Agreement for Taz Metals [45] On the same day that all the employees tendered their resignations, Taz Metals (where Tengku Azlan and Tengku Aslahuddin were directors and shareholders) entered into a tenancy agreement with KPC (where Tengku Azlan was chairman). The 23 tenancy, interestingly enough, was the office space occupied by Taz Logistics. [46] As a consequence, Taz Logistics had no option but to move to a different unit on the first floor of the same building at the same time. In short, Taz Logistics was constrained to leave its own office to make way for Taz Metals which had also coincidentally taken over nearly the entirety of its employees including its key management employee, i.e. the general manager Dato’ Wan. [47] None of this was reported to Asdion by either Dato’ Ridzuan or Tengku Azlan, nor Dato’ Wan. No tenancy agreement between Taz Metals and KPC has been located either. 26 September 2015 – Resignation of directors from Asdion [48] On this date, Tengku Azlan and Dato’ Ridzuan and one Yen Soon Ai resigned from the board of Asdion with immediate effect. [49] On 28 September 2015 an immediate board meeting was called as news of the existence of Taz Metals had come to the fore. Prior to this, Asdion had no knowledge of the existence of Taz Metals. Asdion then commenced an investigation. 16 October 2015 [50] Three of Asdion’s nominee directors namely Jason (SP-1), Farid (SP-2), and TPY (SP-3) were appointed to the board of Taz Logistics. 24 21 October 2015 [51] Two working days later on 21 October 2015, both Tunku Jawahir and Dato’ Ridzuan resigned as directors of Taz Logistics with immediate effect. They did not effect any handover of the operations of Taz Logistics, nor did they give any notice. Taz Logistics was simply left bereft of management, in terms of directors as well as management employees as Dato’ Wan had left by then, as had the employees. End October 2015 [52] Taz Logistics was left with no yards to run its business, no operations staff and no office at the Kuantan Port. It had a bank balance of less than RM130,000-00. It had been effectively stripped down to nought and its entire business and operations diverted to Taz Metals. Dato’ Ridzuan and Tunku Jawahir had resigned as directors, as had Dato’ Ridzuan and Tengku Azlan as directors of Asdion earlier on. Their entire interests had by this point been safely ensconced in Taz Metals, where Tengku Azlan and Tengku Aslahuddin were the shareholders and directors. [53] Premised on the foregoing chronology of events, it is the plaintiff’s case that the entire business, operations and management of Taz Logistics was diverted to Taz Metals. The primary “actor” who contrived this, according to the plaintiff, was Dato’ Ridzuan, who in doing so was assisted by Tengku Azlan and Tengku Aslahuddin. Taz Metals was a convenient vehicle to divert the entirety of the business because its name was easily connected to or confused 25 with that of the plaintiff by reason of the word ‘Taz’. This would confuse not only the customers but even the employees. This is borne out inter alia by several invoices bearing Taz Logistics’ letter head but which were approved utilising Taz Metal’s stamp. The accounts clerk, SP-8, confirmed that she was confused with the use of the stamp by reason of the similarity in the names. Analysis of the Chronology of Material Events [54] Having given lengthy and anxious consideration to the entirety of the events as set out above, the revealing testimony of the witnesses as well as the pleadings, particularly the defence, it is apparent to us that the plaintiff clearly established: a) breaches of fiduciary duty by Dato’ Ridzuan and Tunku Jawahir vis a vis Taz Logistics, causing it to suffer considerable loss and damage; b) a deliberate and concerted plan effected to divert the business of Taz Logistics to Taz Metals, which plan was successfully conducted but which caused great loss and damage to Taz Logistics. In point of fact, Taz Logistics was effectively destroyed. [55] We so concluded for the reasons that follow, premised on the evidential record before the High Court. Taz Logistics was nurtured as a profitable company until around August 2015 when Dato’ Ridzuan reported to the board of Asdion that it was worth approximately RM16 million. It is further borne out by the evidence 26 of Dato’ Ridzuan that when he and Tunku Jawahir put forward a proposal to sell their 49% shareholding in Taz Logistics to Asdion, they were asking for a sum of RM 6 million. He explained how he arrived at this valuation in his evidence in some detail, stipulating that the price quoted was justified. (In this context, it will be recalled that just eight months earlier in January 2015, Dato’ Ridzuan had profited by RM6 million vide his sale of 51% of the shareholding of Taz Logistics to Asdion.) [56] After August 2015 however, Taz Logistics was essentially deliberately “disassembled”, with a view to diverting the business to Taz Metals. The evidence on record is compelling, as borne out by the sequence of events set out above. Did the roles played By Dato’ Ridzuan and consequently Tunku Jawahir with regards to control over Taz Logistics and the subsequent transfer of the business of Taz Logistics to Taz Metals amount to a breach of fiduciary duty of each of these directors vis a vis Taz Logistics? [57] It is not disputed that Dato’ Ridzuan was in complete charge of the affairs and business of Taz Logistics. Tunku Jawahir testified to this effect in her evidence stating inter alia that she left everything to him. She pointed out that Dato’ Ridzuan’s father-in-law had a “wealth of knowledge” in the stevedoring, so he managed Taz Logistics with assistance from his father-in-law. Tunku Jawahir was briefed from time to time, according to her, whereupon she would sign the requisite resolutions and minutes of the directors’ meeting. It is clear from the record of evidence that Tunku Jawahir took little 27 part in the management of Taz Logistics and left everything to Dato’ Ridzuan. Essentially, she failed to act in the interests of Taz Logistics by simply approving all the steps taken by Dato’ Ridzuan to transfer the business to Taz Metals. As her husband and son were the sole shareholders of Taz Metals, it could not have escaped her notice that the business had been effectively transferred to their family company by October 2015. Control of the business of Taz Logistics and on the transfer of its business to Taz Metals, by Dato’ Ridzuan through Dato’ Wan, the general manager [58] It is also evident that Dato’ Ridzuan controlled Taz Logistics through the key management employee, Dato’ Wan. Dato’ Wan was the general manager who effectively ran the business of Taz Logistics on a day to day basis. So when Dato’ Wan resigned suddenly, it effectively crippled Taz Logistics. The situation was exacerbated when all the employees resigned en masse, coupled with the termination of the office premises of Taz Logistics which was inherited on the same day by Taz Metals, where Dato’ Wan took over seamlessly as the management employee in charge of day to day operations. [59] The fact that the business, management and operations were diverted in its entirety to Taz Metals such that it operated on a similar basis is also clear from the evidence (notwithstanding that Taz Metals held itself out as a bauxite storage and logistics provider). Ultimately, the common thread that runs through Taz Logistics and Taz Metals is that they are both logistics service providers in relation 28 to transport and port related services. The employees who served Taz Logistics were simply transplanted to Taz Metals, as was the general manager, and the yards from which to operate. There is also evidence of the same clients utilising the services. In the course of effecting this transfer, control throughout continued to be wielded by Dato’ Ridzuan, from Taz Logistics through to Taz Metals. This is evident from the following evidence. Day to Day Operations of Taz Metals, the first defendant [60] The third defendant, Tengku Aslahuddin, although named as the person having the day to day control and running of Taz Metals, did not actually do so. In the course of his evidence Tengku Aslahuddin testified that it was Dato’ Wan “who did most of the work”. He also confirmed that he was not a bank signatory and admitted that he did not know who had to be paid or how much they were paid, as that would be undertaken by Dato’ Wan too. He merely signed vouchers. [61] Similarly on the issue of procuring customers, Tengku Aslahuddin confirmed that Dato’ Wan “did a lot of the work and I think he did most of the ground work. ….. I left it to him”. [62] Even more telling was his admission that he did not know whether Taz Metals had a physical office space or not. He testified that he could not remember because he would not go to the office of Taz Metals but to that of KPC. [63] Dato’ Wan in turn took his instructions from Dato’ Ridzuan. 29 [64] With regard to the day to day operations Tengku Aslahuddin stated, inter alia, that he knew and understood that a stock yard had to be rented, but he was unsure about “lorries something like that, I won’t have any say to that. I won’t decide whether to rent lorry or not because we don’t have to rent any lorries”. When it was put to him that lorries would be needed to transport bauxite, his reply was that all these things were left to Dato’ Wan. It is evident from his evidence on record that he was entirely unsure of the day to day business of Taz Metals. [65] Similarly with regards to correspondence, he testified that Dato’ Wan “handles everything” and that he delegated everything to him. He conceded that he only came to Kuantan once or at most twice a month. The Bank Signatories of Taz Metals [66] The bank signatories of Taz Metals, which signify a vital function in the operations and control of the company, were one Yeo Soon Ai and Dato’ Ridzuan. It will be recalled that the former resigned from Asdion on the same day as Tunku Jawahir and Dato’ Ridzuan. Tunku Aslahuddin was unable to even recall Yeo Soon Ai. He only knew that Dato’ Ridzuan was one of the signatories. That signifies that Dato’ Ridzuan was again in control of Taz Metals as he had been of Taz Logistics, together with Dato’ Wan. [67] The second defendant Tengku Azlan, the other shareholder and director of Taz Metals, was similarly uninvolved in the running 30 and business of the company. When asked when the business of storage of bauxite commenced, he testified that he did not know because he was not involved in the day to day running of Taz Metal’s business. He also left the issue of who should be the bank signatory to his son. He went along with his son’s suggestion that it should be Dato’ Ridzuan. [68] Dato’ Ridzuan himself explained that he was the bank signatory because he was a good and trusted friend of Tengku Azlan and Tengku Aslahuddin and the two were always travelling. This affords clear evidence of the fact that Dato’ Ridzuan controlled Taz Metals through Dato’ Wan, as he did with Taz Logistics. Diversion and coercion of the services of management and employees of Taz Logistics to Taz Metals – breach of the fiduciary duty owed by Dato’ Ridzuan and Tunku Jawahir to Taz Logistics? [69] Dato’ Wan had 19 years in the port business so he was an important figure. What is pertinent though, is that after Dato’ Wan tendered his resignation vis a vis Taz Logistics, he continued to remain the general manager there until September with his two month notice period. As such, he was working for both Taz Logistics and Taz Metals at the same time after his resignation. [70] Dato’ Ridzuan and Tunku Jawahir as well as the other defendants would or ought to have been completely aware of this conflict of interest, which was the core basis on which the operations and business of Taz Logistics was diverted and transferred to Taz 31 Metals. This is in fact borne out by Dato’ Ridzuan’s own evidence who said that he instructed Dato’ Wan to “get things moved” from Taz Logistics to Taz Metals. This is because he didn’t entrust anyone other than Dato’ Wan to “move any items of the plaintiff” i.e. Taz Logistics. [71] This in itself amounts to an express breach of the fiduciary duty owed by Dato’ Ridzuan to Taz Logistics. The fact that Tunku Jawahir did not actively participate in the same does not exonerate her, as by her silence she was complicit in this transplanting of the employees and management of Taz Logistics to Taz Metals. As such, this too amounts to a breach of a fiduciary director’s duty owed by Tunku Jawahir to Taz Logistics. Diversion of yards essential to the business of Taz Logistics to Taz Metals – Breach of fiduciary or director’s duties owed by Dato’ Ridzuan and Tunku Jawahir to Taz Logistics? [72] The further diversion of assets is also borne out by the fact that the yards which were offered to Taz Logistics between January 2015 to October 2015 were revoked or terminated by KPC. There was no attempt to recoup these yards in Taz Logistics’ interests. It is significant that with respect to the second yard, it was offered immediately to Taz Metals on the same day that the offer with Taz Logistics was revoked on 1 July 2015, as mentioned earlier. In this context, neither of the directors of Taz Logistics, albeit Dato’ Ridzuan or Tunku Jawahir or even Dato’ Wan Abdullah sought to retain these properties for Taz Logistics. 32 [73] Dato’ Ridzuan maintained that he had no knowledge that Taz Metals was offered the second yard. He maintained that that was a matter falling solely within the purview of the Kuantan Port Commission (KPC). However the learned Judge in wholly accepting this evidence failed to give consideration to the contemporaneous events and acts of the relevant parties at this time. [74] In June 2015, Taz Logistics had hired an engineering firm to carry out infrastructure works on its second yard. The firm was called Yesoon Engineering & Construction Sdn Bhd (‘Yesoon’). The evidential record shows that the project manager for Yesoon, SP- 10, testified that these works, initially ordered for Taz Logistics, were in fact completed in or around September 2015, but were for the benefit of Taz Metals and not Taz Logistics. In short the second yard was appropriated by Taz Metals, as were the infrastructure works carried out on it, which were meant for Taz Logistics. [75] The details pertaining to the procurement and utilisation of this firm to carry out works at the purported behest of Taz Logistics in June 2015 culminating in works done for the benefit of Taz Metals is clearly borne out by the following sequence of events as testified to by SP-10: i. SP-10 was approached by Dato’ Ridzuan and Dato Wan for a quotation for and on behalf of Taz Logistics in June 2015; ii. On 24 June 2015, Yesoon requested for an advance payment to enable them to purchase steel required for the 33 project to avoid fluctuations in price whereupon Taz Logistics made an advance payment of RM300,126-81; iii. This was followed up by a formal quotation from Yesoon dated 3 July 2015 given to Taz Logistics; iv. By this time however, the rental of the second yard had been terminated and given to Taz Metals; v. Despite the fact that by this juncture Taz Logistics had no second yard on which such works could be carried out, Taz Logistics on 15 July 2015 issued a letter of award to Yesoon for works in the sum of RM600,253-62. The total cost together with the advance payment therefore amounted to RM900,380-43; vi. The quotation and the letter of award contain an appendix with a common sketch. An examination of this sketch reveals the name Taz Metals on a particular work area marked as Land 3 work area. This is in fact the second yard; vii. SP-10 testified that the sketch was provided by Dato’ Wan and further stated that the marking ‘TAZ Metals’ was on the sketch given to him. SP-10 was not cross-examined on this point. [76] The clear inference that emanates from this series of events is that as early as June 2015, Dato’ Ridzuan had already 34 contemplated and was putting into effect a plan to transfer or transplant the second yard from Taz Logistics to Taz Metals, at the expense of Taz Logistics. This amounts to a clear breach of his director’s duties owed to Taz Logistics. Equally this would extend to Tunku Jawahir who knew or ought to have known or at the very least refused to approve or be complicit in this appropriation of the assets of Taz Logistics in favour of Taz Metals. The fact that her son and husband were the prime shareholders and directors of Taz Metals lends support to this irresistible inference. [77] Tengku Aslahuddin as a director purportedly having control over the operations of Taz Metals was questioned as to the acquisition of the second yard. His response was that he did not think they had put in any request for any specific yard. [78] It must be said that it was established at trial that subsequently Taz Logistics and Taz Metals entered into a ‘contra’ agreement whereby Taz Metals would directly refund Taz Logistics for the advance payment initially made to Yesoon. However this does not and cannot detract from the effective transplanting of the yards from Taz Logistics to Taz Metals. [79] Another aspect of the transfer of the rental of the yard space from Taz Logistics to Taz Metals is the fact that when KPC offered these yards to Taz Metals between July and August 2015 (having terminated its offers to Taz Logistics), Taz Metals was constrained to make deposit payments of not inconsiderable sums (about) RM300,000-00s each in respect of 3 yards). This totalled in point of fact a sum of RM848,866-00 that was payable by Taz Metals. These 35 sums were in fact paid out for Taz Metals. In this context, it must be remembered that Taz Metals had a paid up capital of RM2-00. Notwithstanding this, these sums were paid out and Dato’ Ridzuan was the person who signed off all payments for Taz Metals. All this happened at or around the time that the rental of yard space in favour of Taz Logistics was revoked by KPC and Yesoon was hired for engineering works on the yard space, namely towards the second half of June 2015. [80] When Dato Ridzuan was queried about why Yesoon was hired on 3 July 2015 if the yard space had been revoked vis a vis Taz Logistics, his response was that he did not know about this termination of the agreement with Taz Logistics by KPC, which occurred on 1 July 2015. That same yard was offered to Taz Metals on the same day, i.e. 1 July 2015. That in turn necessitated a deposit payment on or by 8 July 2015 (close to the time when the formal letter of award was issued to Yesoon). And it was Dato’ Ridzuan who, as bank signatory and having de facto day to day control of Taz Metals, would have authorised and signed the necessary cheques. The only reasonable inference to draw from this is that Dato’ Ridzuan clearly knew that when hiring Yesoon and making advance payments to Yesoon, it was being done for the benefit of Taz Metals. This again is a clear inference from the evidential record that the learned Judge failed and/or chose not to do. [81] Tengku Aslahuddin when queried about how these payments were made from a company with no monies, had absolutely no knowledge on the subject. He once again, referred to Dato’ Wan, the general manager. When pressed further, Tengku Aslahuddin 36 maintained that the monies could perhaps have come from his father, Tengku Azlan. Tengku Azlan however maintained that he was not involved in Taz Metals. So the matter remains entirely unclear. As no documents were produced by Taz Metals to substantiate how payment was made, it follows that there is no accounting for the infrastructure expenditure that Taz Metals made. [82] Taken as a whole, this series of events clearly establishes not only breaches of fiduciary duty as directors by both Dato’ Ridzuan and Tunku Jawahir, but also that the defendants as a whole had acted in concert to divert the yard space in favour of Taz Metals. The roles played by Tunku Jawahir, Tengku Azlan and Tengku Aslahuddin may not on the face of it appear to be prominent, in comparison to Dato’ Ridzuan, but it must be borne in mind that as the directors and shareholders of Taz Metals, it cannot simply be concluded that Tengku Azlan and Tengku Aslahuddin had absolutely no knowledge or had not been complicit. This is apparent from Tengku Azlan’s chairmanship of KPC, Tengku Aslahuddin’s role as the director having day to day management of Taz Metals (even if he did not carry out this role) and the relationship between them and Tunku Jawahir. [83] While the profits are directly attributable to Taz Metals, the second and third defendants as shareholders stood to gain from the acquisition of a thriving logistics company which had been built from the assets of Taz Logistics. And Tunku Jawahir as a director of the latter, as well as enjoying a familial relationship with the second and third defendants, facilitated this. Dato’ Ridzuan actively facilitated this as his hand or role is patently evident. 37 Management and Staff Resignations [84] The timing and movement of the entirety of the staff from Taz Logistics to Taz Metals has been described above. What lends to the claim of a conspiracy on the part of the directors of Taz Logistics, namely Dato’ Ridzuan and Tunku Jawahir is the fact that: i. Dato’ Wan’s resignation on 1 August 2015 was never reported to the fellow shareholder of Taz Logistics, Asdion; ii. Neither was the fact that he was working for Taz Metals prior to his resignation (as is evident from the events between June and July 2015); iii. The existence of Taz Metals was unknown to Taz Logistics; iv. According to Dato’ Wan, he left Taz Logistics because he received a better offer from Taz Metals; v. Dato’ Ridzuan’s attempt to camouflage the reason for Dato’ Wan’s resignation. Dato’ Ridzuan testified that Dato’ Wan resigned because he could not bear working with one Dato’ Larry from Asdion. However this is at odds with Dato’ Ridzuan’s own testimony that throughout Dato’ Wan’s time at Taz Logistics he dealt with Dato’ Ridzuan only. [85] The fact of Taz Metals making a better offer in itself evidences the probability of a conspiracy, particularly with the complicity of 38 Dato’ Ridzuan and Tunku Jawahir as directors of Taz Logistics. Their complicity is evident from the fact that while Dato’ Ridzuan was in control of Taz Logistics, he was also in de facto control of Taz Metals and its setting up, as he was the primary bank signatory. Dato’ Wan worked almost solely with him in both entities. Therefore it is difficult to accept his testimony on record that he was unaware of Dato’ Wan’s resignation until he was informed of the same by Tengku Azlan. The fact that Taz Metals was started up at or around the time when Dato’ Wan was an employee of Taz Logistics and was reporting to Dato’ Wan detracts from the truth of the testimony of Dato’ Ridzuan. [86] In any event, Dato’ Wan’s letter of resignation throws no further light on the matter as he states there that he resigned in order to take a rest from any work or commitment. That certainly proved to be less than true, given the busy schedule and commitment he had taken on in respect of the day to day running of Taz Metals. [87] However, this may well have proven less difficult than anticipated because it ultimately amounted to a mere transfer of office space and employees to a different space, while continuing on with the business that had been built up and run by Taz Logistics. [88] This too is a clear series of events which the learned Judge failed or chose not to consider in arriving at her conclusion that the resignations of the employees was entirely unrelated to either a conspiracy or a breach of the fourth and fifth defendants’ duties as directors of Taz Logistics. 39 [89] Similarly, it will be recalled that the majority of the remaining staff numbering 17 in total tendered their resignations en masse on 1 September 2015 with a one month notice period. This coincided with the completion of Dato’ Wan’s notice period, thereby entitling the smooth operations of Taz Metals. A smooth take-over with the employees seeing little if any change, merely to the name of the entity they were serving. As was the case with Dato’ Wan, this mass resignation was not reported to the major shareholder Asdion. This failure to report this series of resignations, which were all timed so as to coincide in terms of leaving Taz Logistics, is a major matter which the directors chose not to disclose, taken together with their sudden departure and Dato’ Ridzuan’s continued role in Taz Metals, all lend credence and substance to the existence of a conspiracy calculated to transplant the business of Taz Logistics to Taz Metals at the expense of the former. [90] As a result of this non-disclosure, Taz Logistics was left completely paralysed and cannabalised when the directors, namely Dato’ Ridzuan and Tunku Jawahir resigned with immediate effect on 21 October 2015. Although the learned Judge sought to explain this non-disclosure on the basis that there was no duty owed to Asdion, the reality is that the non-disclosure of all these matters taken cumulatively, resulted in serious and irreparable injury to Taz Logistics. It is Taz Logistics and not Asdion that suffered loss. The learned Judge failed or chose not to judicially appreciate these pertinent facts. [91] The learned Judge also failed to take note of the fact that upon resigning from Taz Logistics, these same employees were 40 immediately re-employed by Taz Metals. Prior to this, Taz Metals had no employees of its own. This is a glaring fact that is difficult to ignore. It shows a deliberate coercion of staff to a competing entity. [92] Dato’ Ridzuan’s response to the resignation of the staff en masse was to ultimately state that it was good that they had resigned as with the revocation of the yards, Taz Logistics was only able to concentrate on its stevedoring business. This required less staff and reduced overheads and was to that extent a benefit to Taz Logistics. The lack of credibility of this evidence from the evidential record is apparent when contrasted with the timing of the events that occurred during this period including the moving of the business to Taz Metals, the utilisation of the staff in Taz Metals, and the part played by Dato’ Ridzuan himself in both the setting up and running of Taz Metals. How could a director of Taz Logistics argue that Taz Logistics benefitted from the transfer of its employees to a ‘competitor’ which was set up and operated by that same director who ran Taz Metals’ business on a day to day basis, and was its signatory? Such a contention offends logic. Notwithstanding this, the learned Judge failed to give any consideration to this clear evidence of a breach of fiduciary duties by Dato’ Ridzuan in relation to his position as a director of Taz Logistics. [93] A perusal of the evidence of two former employees of Taz Logistics who joined Taz Metals bears out the fact that they were induced to join Taz Metals by Dato’ Wan. They were also unclear about the movement between the two entities. What emerges from their testimony is that they did not resign of their own accord but 41 were asked to do so by management. This too lends support to the plea of a conspiracy to injure Taz Logistics. Taz Logistics’ loss of office space [94] This too has been described above in the chronology. Essentially, Taz Metals took over the office space rented by Taz Logistics on 1 September 2015 forcing Taz Logistics to move to a small space elsewhere in the building. Dato’ Ridzuan explained this as a cost cutting measure. [95] As this measure took place on 1st September 2015, it begs the question why the same director, Dato’ Ridzuan when asked about the valuation of Taz Logistics as late as August 2015, maintained that Taz Logistics was generating approximately RM 16 million in sales. This is hardly a figure that warrants cost-cutting. Such a measure could not have been essential between August 2015 and 1 September 2015. It is simply not credible. [96] Taz Logistics was then left to occupy a small unit resembling storage space. SP-1 was consistent in maintaining this fact notwithstanding counsel’s feverish attempts to put to him otherwise. [97] This too lends support to both the pleas put forward by Taz Logistics, namely a breach of directors’ duties as well as a conspiracy to injure it. 42 Diversion of Customers [98] Citra Offshore Maritime Sdn Bhd and Citra Saran Sdn Bhd (collectively known as ‘Citra’) are customers who were diverted from Taz Logistics to Taz Metals. This is evident from the fact that Taz Metals wrote to Citra on 18 August 2015 instructing them on a change of accounts from Logistics to Metals. The defendants in response maintained that Taz Logistics had no exclusive right to any client, and secondly that Citra was originally intended to be Taz Metals’ customers but were temporarily “parked” with Taz Logistics while Taz Metals was set up. [99] Neither of these contentions offers a convincing response. It was not for Taz Metals to instruct a customer of Taz Logistics to switch to it. That would have to be done by Taz Logistics. As such, this is a clear example of a diversion of a customer. [100] As for the second contention, that amounts to an admission that at all material times there was a plan to set up Taz Metals notwithstanding the corporate setting up of Taz Logistics and the sale of its shareholding to Asdion with a view to procuring capital from the latter to build up the business of Taz Logistics. [101] This is borne out by the evidence of Tengku Aslahuddin who expressly stated that it was the understanding between himself and Dato’ Ridzuan that Taz Logistics would only have Citra as customers “on a temporary basis” until Taz Metals commenced its own business. 43 [102] However the evidence from the witnesses contradicts this contention. Citra was in fact a customer of Taz Logistics in April 2015, well before Taz Metals decided to go into bauxite mining. When Taz Metals was set up in February 2015 the nature of its business was stated to be the mining of gold. Tengku Aslahuddin confirmed that there was a change to bauxite storage in mid-2015 when Taz Metals was given the opportunity of yard rental from KPC. Moreover Taz Metals is acknowledged as having commenced its business activities in inter alia bauxite storage as of August 2015. [103] In any event, Taz Metals failed to call a witness it had named as one Agus Chandra Wijaya, a director of Citra, to establish its contention. As this was not done, Taz Metals’ contention that it did not divert a customer of Taz Logistics is doubtful on the evidential record, at best. However the learned judge has failed to seriously consider or judicially appreciate the evidence on record in relation to this issue. Resignations of Dato’ Ridzuan and Tunku Jawahir – timing and manner [104] Notwithstanding that they comprised the key directors in charge of Taz Logistics, the timing and manner of resignation of these two directors is astonishing. They had both managed Taz Logistics since its inception in December 2014. They had set up the company, brought in its employees and built up the business. Notwithstanding this, they resigned without notice on 21 October 2015, some three days after the appointment of Asdion’s nominee directors onto the board of Taz Logistics. 44 [105] The surreptitious nature of their leaving is further borne out by the lack of explanation or handing over. As a consequence, the newly appointed directors were constrained to unearth the facts afresh as it were, without any direction or information from these two directors. As such these directors did not know that the employee head count had shrunk demonstrably, as had the office space coupled with a complete lack of yard space. None of this, it will be recalled, was reported to the other majority shareholder Asdion. [106] The acts and omissions of Dato’ Ridzuan and Tunku Jawahir in failing to report or disclose material matters pertaining to the fundamental basis for the operations of Taz Logistics amounts in itself to a breach of their directors’ duties. They failed to evince any form of responsibility for the operations of the company immediately prior to their resignations, leaving it paralysed and cannabilised. They remain responsible for their acts and omissions as directors of Taz Logistics notwithstanding their sudden and surreptitious departure on 21 October 2015. [107] The reality would appear to be that there was in existence an orchestrated plan for Taz Metals to take over the business, staff and assets not to mention customers of Taz Logistics. This could not have happened overnight and required careful and detailed planning. When this movement of staff en masse is considered in conjunction with the resignation of the key management employee, Dato’ Wan, the strange revocation of yard space supposed to be utilised by Taz Logistics, the immediate take-over of such yard space by Taz Metals, the immediate take-over of the key management employee and the majority of the staff of Taz Logistics 45 by Taz Metals, all coupled with the role of Dato’ Ridzuan which is apparent from his evidence, the only reasonable inference to be drawn is that there was a clear plan to transplant Taz Logistics in substance to Taz Metals. This was done with the knowledge and complicity of the other defendants, as has been pointed out earlier in the judgment. That points more than credibly to the existence of a conspiracy, not to mention serious breaches of directors’ duties by Dato’ Ridzuan and Tunku Jawahir. The Law Relating to Directors’ Duties and Conspiracy to Injure: Fiduciary Duties of Directors [108] We found considerable guidance on the case-law relating to this subject in the submissions of learned counsel for Taz Logistics particularly at the High Court level. [109] On fiduciary obligations, the Federal Court in the case of The Board of Trustees of the Sabah Foundation & Ors v. Datuk Syed Kechik bin Syed Mohamed & Anor [2008] 1 LNS 100; [2008] 5 MLJ 469 cited the following passage by Millet L.J. in the English case of Bristol and West Building Society v. Mathew [1988] Ch. 1 (‘Bristol and West Building Society’): “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. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may 46 conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations. They are the defining characteristics of the fiduciary.” The nature of the obligation determines the nature of the breach. The various obligations of a fiduciary merely reflect different aspects of his core duties of loyalty and fidelity. Breach of fiduciary obligation, therefore, connotes disloyalty or infidelity. Mere competence is not enough. A servant who loyally does his incompetent best for his master is not unfaithful and is not guilty of a breach of fiduciary duty.” (emphasis ours) [110] The directors in question in relation to this suit are Tunku Jawahir and Dato’ Ridzuan in relation to Taz Logistics. It is trite that a director as a fiduciary is bound by: a) the no profit rule meaning that that he cannot profit from his position; and b) the no conflict rule meaning that a director should not put himself in a position which conflicts with the interests of the company. The Statutory Position [111] The statutory position is encapsulated in section 132 of the Companies Act 1965 (which is the relevant legislation for this appeal, rather than the revised Companies Act 2016) which provides, inter alia as follows: 47 “132 As to the duty and liability of officers