Wa Skills Training Malaysia Sdn Bhd v Nurain Binti Mohd Sakirin (BA-22NCvC-432-10/2020)

NURAIN BINTI MOHD SAKIRIN [NRIC NO.: 730318-01-5996] …

PETER JOHN COOKE [PASSPORT NO.: N4047129] Grounds of Judgment Introduction [1] The plaintiff’s case is premised on claims as follows:

an account of the balance of Ringgit Malaysia 773,695.61 (“the balance CIDB sum”) arising from the payments received from the Construction Industry Development Board of Malaysia (“CIDB”) for services rendered, within 30 days after the date of judgment, and in the event of failure to account within this stipulated period, payment of the balance of Ringgit Malaysia 773, 695.61; 10/03/2025 15:00:07

an account of the sum of Australian Dollar 128,373.08 being the funds provided by WA Skills Training Pty Ltd to the plaintiff since 3 May 2016 (“WAST funds”), within 30 days after the date of judgment, and in the event of failure to account within this stipulated period, payment of the sum of Australian Dollar 128,373.08;

payment of Ringgit Malaysia 610,014.38 is the unauthorised withdrawal or payment made from the plaintiff’s Hong Leong Bank account no. 27800019373;

payment of Ringgit Malaysia 10,000.00 being the unauthorised payments of directors’ fees;

payment of Ringgit Malaysia 112,500.00 being the unauthorised increment of the first defendant’s salary;

damages for negligence, breach of fiduciary, statutory and contractual duties by the first defendant to be assessed by the Registrar;

damages for conspiracy by both the defendants to be assessed by the Registrar;

aggravated and exemplary damages;

interest at the rate of 5% per annum on the sums awarded by the Court in prayers (a) to (h) above from the date of judgement until the date of full settlement;

costs;

such further and other relief as the Court may deem fit and proper. [2] The Court allowed payers (a), (b), (f), (g), (h), interest to be at 5% per annum and costs of RM50,000.00 against the defendants. [3] Hence, the appeal is filed. Background Facts [4] The plaintiff is a private limited company incorporated in Malaysia. [5] The plaintiff’s business offered personnel, corporate, and industrial training activities, coaching, training and development, facilitation, business simulation, research, assessment, and certification services, primarily for the construction industry. [6] At all material times, the training services provided by the plaintiff were conducted by WA Skills Training Pty Ltd (WAST), a company established and based in Australia, with its business address at 12 Halifax Drive, Bunbury WA 6230, Australia. [7] The training services also included vocational qualifying courses per the Australian Qualification Framework and others as needed. [8] The first defendant is a Malaysian national. At all relevant times, she served as both a director and an employee of the plaintiff. [9] Before the plaintiff's incorporation, she was employed by WAST. [10] Her scope of work includes, among other things:

managing the daily operations of the plaintiff;

facilitating and assisting in the scheduling and coordination of training activities;

ensuring that the course materials and training staff comply with relevant laws and regulations; and;

ensuring that the plaintiff’s business operations comply with the laws and regulations. [11] The second defendant is an Australian citizen. [12] In 2016, he was promoted to Chief Operating Officer of WAST. Consequently, he moved to Malaysia to advance WAST’s business and oversee the plaintiff’s business and its operations. [13] In March 2017, the first and second defendants got married. [14] On July 1, 2018, the second defendant formally notified WAST of his resignation. [15] WAST encountered challenges in receiving payments from Malaysian customers, which led to the plaintiff's incorporation. [16] This plaintiff was incorporated in 2016, with three shareholders who also served as directors of the plaintiff. [17] The directors are as follows: Name Position No. of shares Bob Director 49 First Defendant Director 27 Ruzaini Director 24 [18] WAST provided the plaintiff funds to manage its operations and trainers to conduct training activities at all times. [19] The first defendant was the only authorised signatory for the plaintiff’s HLB account. [20] The first defendant oversaw the plaintiff's daily affairs and operations. [21] In 2016 and 2017, the plaintiff secured contracts with the Construction Industry Development Board of Malaysia (CIDB) to provide training to enhance the standards for Malaysian trainers. [22] CIDB paid RM1,073,664.22. However, the plaintiff paid only RM299,968.61 to WAST. [23] The plaintiff retained the remaining amount of RM773,695.61. [24] The plaintiff's directors mutually agreed that following the payment of the tax clearance, the balance would be transferred to WAST. [25] The defendants managed the plaintiff’s operations through funds from WAST. [26] The plaintiff's primary complaint against the first defendant concerned how she managed the company accounts. [27] The plaintiff alleged that the first defendant breached her duty of care, fiduciary duties, statutory obligations, and contractual duties owed to the plaintiff. [28] As a result, the plaintiff contended that it suffered loss and damages. [29] Concerning the second defendant, the plaintiff claimed that he conspired with the first defendant to misappropriate the plaintiff’s resources and funds. [30] The defendants asserted that a shareholders agreement existed among the directors of the plaintiff’s company. However, WA Skills Training Sea Sdn Bhd was never incorporated in Malaysia. [31] The plaintiff was said to have relied solely on a standard company constitution and/or articles of association for the company. [32] The plaintiff’s claim was denied. Issues To Be Tried [33] Whether the first defendant, being the director and the Head of Operations and Corporate affairs of the plaintiff, breached her duty of care, fiduciary duties, statutory duties or contractual duties by:

failing to account for monies received from CIDB for services rendered by the plaintiff;

failing to account for funds provided by WAST to the plaintiff;

making unauthorised withdrawals or payments amounting to RM610,014.38 from the plaintiff’s HLB account;

making unauthorised payments of directors’ fees from the plaintiff’s HLB account to her account;

making an unauthorised increment of her salary;

failing to keep or deliberately removing or concealing accounting and other records of the plaintiff; [34] Whether the defendants have committed a tort of conspiracy, by acting with improper motive and in contumelious disregard for the rights and duties owed to the plaintiff, against the plaintiff by:

having an agreement (i.e., a combination of efforts) to injure the plaintiff;

carrying out the following acts with the intention to injure the plaintiff:

making fraudulent statements concerning, inter alia, the plaintiff’s company compliance status and the contracts it had purportedly secured;

(ii) jeopardising and taking advantage of the plaintiff’s business and operations on purpose;

(iii) utilising the plaintiff’s funds and resources without proper purposes and authorisation which constitutes misappropriation of the plaintiff’s property; or

(iv) removing essential documentation such as accounting and other records from the plaintiff’s possession?

According to the acts mentioned above, causing damages to the plaintiff? [35] Does the plaintiff have a locus standi to commence the present legal proceeding? Decision of the Court [36] The defendant asserted that the first defendant owed no contractual obligations to the plaintiff. The sole reason being that there was no agreement between the first defendant and the plaintiff’s other directors. [37] The first defendant also asserted further that the shareholders' agreement is not applicable as it is unrelated to the plaintiff. It was not in the plaintiff's name and the company stated in the shareholders' company was never incorporated in Malaysia. The Court of Appeal decision in Agromate (M) Sdn Bhd v KTS Trading Sdn Bhd [2017] 1 LNS 1707 refers. [38] The Court assessed the evidence the plaintiff’s witnesses provided concerning the above assertion made by the first defendant. [39] The plaintiff's directors, PW1 (Bob) and PW2 (Ruzaini), testified that the shareholders agreement had been agreed upon for the plaintiff's use for all intents and purposes. [40] Bob's testimony that the shareholders forgot to change the company's name to “WA Skills Training Malaysia Sdn Bhd" remained unchallenged. [41] Ruzaini, another director of the plaintiff, also affirmed that the shareholders regarded the shareholders' agreement as the plaintiff's shareholders' agreement. [42] The directors of the plaintiff’s company, including the first defendant, had given evidence that only one company was incorporated in Malaysia. Before this Court, only one shareholders' agreement was presented. [43] Therefore, this Court disbelieves the first defendant’s testimony that the shareholders agreement is not binding on the first defendant because of a discrepancy of a single difference of one word in the name of the company mentioned in the shareholders agreement. [44] The first defendant owed an implied contractual duty of fidelity to the plaintiff. The cases referred to are the Court of Appeal decision in Bank Kerjasama Rakyat Malaysia Bhd v Abdul Aziz Zainal & Ors [2023] and the High Court decision in Soh Chee Gee v Syn Tai Hung Trading Sdn Bhd [2019] 2 MLJ 379. [45] As an employee of the plaintiff, the first defendant owed contractual duties to the plaintiff. The Court of Appeal decision in Zaheran bin Hj Zakaria v Redmax Sdn Bhd & Other Appeals [2016] 5 MLJ 91 refers. [46] The defendants contended that the first defendant has fulfilled all her obligations regarding her duty of care, fiduciary responsibilities, and statutory duties as the director of the plaintiff. [47] It was also submitted that the first defendant had provided all relevant documents to the company secretary and the auditors. The defendant contended that the management account had been prepared and delivered to (PW1) Bob accordingly. [48] The failure of (PW1) Bob to disclose the management account prompted the first defendant’s counsel to invite this Court to invoke section 114(g) of the Evidence Act 1950. The High Court decision in Parkunan a/l Achulingam v Kalaiyarasy a/p Periasamy [2004] 6 MLJ 240 refers. [49] This Court observed the first defendant’s obligations regarding her duty of care, fiduciary responsibilities, and statutory duties as the director of the plaintiff, which are undisputed. [50] It is undisputed that CIDB paid plaintiff RM1,073,664.22. A sum of RM299,968.61 was transferred to WAST. What remains unaccounted for is RM773, 695.61 / RM760,582.21. [51] The first defendant's defence was that the remaining sum was used for costs and expenses related to obtaining the CIDB contract. However, the first defendant failed to provide details and supporting documents to substantiate her claim. Furthermore, the assertion that the balance of the CIDB sum was used to secure the CIDB contracts defies logic, as the contract was already in place. Her bare denial is not accepted. [52] The defendant has submitted that there are insufficient details to justify the amount of AUD128,373.08 as a loan from WAST. It was WAST’s responsibility to provide funds to manage the plaintiff's daily operations. [53] It is noted that the defendants, in their defence, did not dispute the amount or the existence of the WAST funds. They merely plead in their defence that the funds were used as working capital for the plaintiff. However, the first defendant failed to provide details and supporting documents for her assertion. Her bare denial does not convince the Court. [54] I concur with the plaintiff’s proposition that the first defendant, as the exclusive authorised signatory of the plaintiff’s HLB account, is best positioned to elucidate the utilisation of WAST funds. [55] Regarding the withdrawal of RM610,014.38 from the plaintiff’s account by the first defendant, the first defendant contended that all withdrawals were executed following invoices issued by WAST, as part of the necessity to sustain the plaintiff's daily operations. Approvals from the COO and MD of WAST Australia were obtained. [56] All documents of these withdrawals have been submitted to the Company Secretary of RSM. The plaintiff witnesses, WSPW3 and WSPW4 (Woo / Wendy), denied this. [57] Included among the payments were the costs incurred from using a sand quarry for machinery-related training in Johor, which could not be completed due to the quarry's closure, the maintenance of the WAST Australia vehicles sent to Malaysia, the first defendant’s healthcare bills, and Bob’s travel expenses incurred while in Malaysia. [58] Upon reviewing the defendants' evidence, I concur with the plaintiff's submission for the following reasons:

The first defendant admitted that a business loan was provided to her brother regarding the Dorcas Sdn Bhd transaction. She refused to answer any further questions and stated that these questions should be posed to the second defendant;

The second defendant testified that RM50,000.00 was rent payable to Dorcas Sdn Bhd by the plaintiff for a sand quarry. However, Dorcas Sdn Bhd was supposed to repay RM100,000.00 to the plaintiff within three months. This explanation was entirely illogical. Moreover, the authenticity of Dorcas Global’s invoice, dated seven months after the transfer of RM50,000.00, remained questionable. Furthermore, the agreement was described as a "Loan Agreement," there was a provision to repay the loan within three months, which was never fulfilled.

The first defendant withdrew RM6,000.00 on 13-7-2017 for a “Hari Raya Open House,” as stated in the HLB account. The first defendant explained in court that the occasion was to invite customers and clients. It is undisputed that there was only one client, the CIDB. This court disbelieves the first defendant’s explanation without supporting evidence.

It was established in the trial through the EA form prepared by RSM that the first defendant was not entitled to any allowances. However, the evidence led proved that she used the plaintiff’s funds on the following: i. Maxis bills; ii. Insurance and road tax for a car; iii. Payment for rental and TNB related payments; iv. Second defendant’s claims; v. Holiday expenses. [59] The Court observed the first defendant's refusal to respond to questions concerning the Dorcas loan arrangement with the plaintiff, which suggests a lack of honesty on her part regarding this issue. Relevant cases are High Court decisions in Abd Rahman Soltan v Muara Simfoni Capital Sdn Bhd [2024] CLJU 1900 and Chin Wee Ming v Wong Pak Hock [2019] 1 LNS 1830. [60] The conduct of the first defendant in managing the Dorcas matter constituted a breach of her duties under sections 218(1), 221(1), and 225(1) of the Companies Act 1960. Regarding the 'Hari Raya Open House” and allowances paid, she breached section 218(1) of the Companies Act 2016. [61] Concerning the payment of directors' allowances, the first defendant stated that this was conducted with permission from PW1. Furthermore, PW2 did not express any complaints or file a police report. The first defendant also asserted that there was no requirement for approval from the Board of Directors, as the memorandum and articles of association did not specify this. [62] The first defendant provided no evidence that PW1 (Bob) had consented to the directors’ fee. Her conduct violated section 230(4) and (5) of the Companies Act 2016. [63] The defendants submitted that PW1(Bob) approved the salary increment of the first defendant. The amount was RM112,500.00 for 9 months. [64] The Court was presented with no evidence that PW1 (Bob) approved the salary increment. In contrast, the emails submitted during the trial refute the defendants’ claims. The emails indicate that the second defendant raised the first defendant’s salary. [65] The first defendant breached her duties by working alongside the second defendant to obtain an unauthorised increase in her salary. [66] The first defendant breached her statutory duties by failing to maintain proper accounts for preparing financial statements. Sections 244, 248, 259, and 267 of the Companies Act 1960 are relevant legal provisions. This is evidenced by 17 emails from RSM and Quest Secretarial Services Sdn Bhd requesting the first defendant to provide the necessary documents. [67] DW2 (Peter) was tasked with overseeing the plaintiff’s business and operations on behalf of WAST, and PW1 (Bob) placed his trust in DW2. [68] There is significant independent evidence from PW3 (Woo) and PW4 (Wendy) that the first defendant did not provide the requested documents despite numerous requests. [69] DW1's conduct resulted in the plaintiff being fined by the CCM for failing to maintain accounting records and submit audited financial statements to the Companies Commission Malaysia. [70] It is also important to note that both defendants contradict their testimonies numerous times during the trial, raising concerns about their honesty in conveying the actual sequence of events as presented in the contemporaneous documents. I adopt in extenso pages 43 to 56 of the plaintiff’s submission in reply, identifying all the material discrepancies in both defendants’ evidence in court. The pertinent cases regarding this matter include the High Court decisions in DKSH Malaysia Sdn Bhd v Ho Yuet Choon & Anor [2019] 1 LNS 1297 and Masyitah bt Md Hassan v Sakinah bt Sulong [2021] 7 MLJ 144. [71] Regarding the issue of the tort of conspiracy to injure the plaintiff, the defendants argue that the plaintiff has failed to provide the particulars of the alleged conspiracy between the first and second defendants. [72] Consequently, the defendants contended that paragraphs 21 to 51 of the statement of claim are unreliable as no specifics were provided concerning the actions of both defendants that constituted conspiracy. References relate to High Court cases in Ace Capital Growth Sdn Bhd v Kua Kee Koon & Ors [2021] MLRU 1488 and Teguh Kemajuan Sdn Bhd v Ngau Boon Keat & Ors [2020] MLRHU 1516. [73] The defendants further argued that the burden of proof placed on the plaintiff is beyond reasonable doubt and not on a balance of probabilities. They referenced the Federal Court decision in Saminathan v Papa [1981] 1 MLJ 121. [74] Conspiracy comprises the essential elements as follows:

a combination or agreement involving two or more individuals;

(ii) an intention to injure;

(iii) pursuant to the combination or agreement, and with that intention, certain acts were carried out; and

(iv) resulting loss and damage to the plaintiff. [75] The Court regards the plaintiff's submission on this matter as relevant. It is a well-established principle that pleadings must incorporate material facts, although they do not necessarily need to contain the evidential support for those facts. The court is convinced that the plaintiff has adequately articulated the necessary facts. [76] This Court fully adopts the pleaded facts and the relevant evidence presented during the trial, specifically from pages 31 to 38 of the plaintiff’s submission in reply. This evidence substantiates the conspiracy by unlawful means involving both the defendants and the particulars outlined on pages 47 to 50 of the plaintiff’s written submission. These elements demonstrate a concerted effort and mutual agreement between the first and second defendants to misappropriate the plaintiff’s funds. Relevant cases on the tort of conspiracy are Court of Appeal decisions in Cubic Electronic Sdn Bhd v MKC Corporate & Business Advisory Sdn Bhd and another appeal [2016] 3 MLJ 797 and Global Ventures Network Sdn Bhd v Lokman bin Dato Mohd Kamal and another appeal [2018] 6 MLJ 103. [77] Upon scrutinising the abundant evidence presented during the trial, it has been established that the defendants actively participated in and assisted one another in misappropriating the plaintiff’s funds, based on the balance of probabilities. Notably, the defendants employed an incorrect standard for the burden of proof in establishing the facts alleged against them beyond reasonable doubt. A relevant case is the Federal Court decision in Sinnaiyah & Sons v Damai Setia [2015] 5 MLJ 1. [78] This Court rejects all the bare allegations made by both defendants, as they are unsupported by documents. The Court of Appeal decision in the case of Ranggong ak Jenau & Ors v BLD Resources Sdn Bhd & Ors and another appeal [2017] 5 MLJ 700 refers. [79] Moving on to the next issue, the defendants contended that the plaintiff has no locus standi to commence this legal proceeding due to failure of PW1 (Bob) to initiate a derivative action as provided under section 347 of the Companies Act 2016. The defendants argued that PWI initiated the claim to recover his money invested in the plaintiff. The Federal Court's decision in the case of Low Cheng Teik & Ors v Low Ean Nee [2024] 5 MLJ 580 refers. [80] I accept the plaintiff’s submission that PW1 (Bob) and PW2 (Ruzaini), majority of the board of directors and shareholders, passed a resolution to initiate proceedings against the defendants. With the passing of the resolution, the plaintiff has a locus standi to initiate legal proceedings against the defendants. [81] It is established law that when a wrong is committed against the company, the appropriate plaintiff to initiate legal action is the company itself. Only when the majority shareholders neglect to remedy the damage inflicted upon the company may the minority shareholders enforce the company’s rights through a derivative action. The relevant case law is Low Cheng Teik & Ors v Low Ean Nee [2024] 5 MLJ 580, supra. Section 347 of the Companies Act 2016 refers. [82] I completely agree with the argument presented by the plaintiff that the remedies sought are associated with the missing funds from the plaintiff’s HLB account and are unaccounted for by the first defendant. In summary, the plaintiff is the company, and the remedies sought are for the wrongful acts committed against the company. Conclusion [83] The Court ruled that the plaintiff had proven its case based on the balance of probabilities against the defendants. [84] The reliefs granted are as follows:

an account of the balance of Ringgit Malaysia 773,695.61 arising from the payments received from the Construction Industry Development Board of Malaysia for services rendered, within 90 days after the date of judgment, and in the event of failure to account within this stipulated period, payment of the balance of Ringgit Malaysia 773,695.61;

an account of the sum of Australian Dollar 123,373.08 being the funds provided by WA Skills Training Pty Ltd to the plaintiff since 3 May 2016, within 90 days after the date of judgment, and in the event of failure to account within this stipulated period, payment of the sum of Australian Dollar 128,373.08;

damages for negligence, breach of fiduciary, statutory and contractual duties by the first defendant to be assessed by the Court;

damages for conspiracy by both the defendants to be assessed by the Court;

aggravated and exemplary damages by the

interest at the rate of 5% per annum on the sums awarded by the Court in prayers (a), (b),

(f), (g) and (h) above from the date of judgment until the date of full settlement; and

costs of RM50,000.00 against the defendants. Dated: 10th March 2025 (INDRA NEHRU SAVANDIAH) Judicial Commissioner High Court of Malaya Shah Alam Selangor Date of Decision: 20th December 2024 Counsels: For the Plaintiff: Cheah Soo Chuang & Khor Wei Wen, [Messrs Tay & Partners] For the Defendant: Hasshahari Johari Mawi, Rosly Ayub & Muhamad Hafizan Shafuan, [Messrs