NESB CONSTRUCTION SDN BHD TRASPADU ENGINEERING (M) SDN BHD & SATU LAGI TRASPADU ENGINEERING (M) SDN BHD & SATU LAGI NESB CONSTRUCTION SDN BHD

NESB CONSTRUCTION SDN BHD TRASPADU ENGINEERING (M) SDN BHD & SATU LAGI TRASPADU ENGINEERING (M) SDN BHD & SATU LAGI NESB CONSTRUCTION SDN BHD

The High Court upheld the Sessions Court's finding of liability against the First Appellant because the trial judge properly appreciated the evidence establishing the subcontracting arrangement and payments pattern (97%-3%), and the Appellants failed to rebut the claims or prove their counterclaim; however the finding of personal liability against the Second Appellant was reversed because mere agency or alter-ego conduct in administering payments is insufficient to impose a constructive trust or personal liability absent unconscionable appropriation or pleaded legal basis; an alternative remedy against the director exists under s.540 Companies Act 2016 if fraud is proven in winding up.

Citation
WA-12AC-18-10/2019 & WA-B52C-25-07/2018 (Mahkamah Tinggi)
Parties
First Appellant / First Defendant: TRASPADU ENGINEERING (M) SDN BHD; Second Appellant / Second Defendant: TAJUDDIN BIN YAHAYA; Respondent / Plaintiff: NESB CONSTRUCTION SDN BHD
Court
High Court
Jurisdiction
Malaysia
Judgment Date
16 February 2021
Case Number
WA-12AC-18-10/2019 & WA-B52C-25-07/2018 (Mahkamah Tinggi)
Procedural Posture
Civil Appeal / High Court Hearing on Appeal From Sessions Court (re Hearing Under Order 55 Rule 3 Rules of Court 2012)
Outcome
Appeal allowed in part: allowed as to Second Appellant and dismissed as to First Appellant
Legal Topics
Unpaid Progress Payments, Breach of Contract, Constructive Trust / Breach of Trust, Personal Liability of Directors, Appellate Review Standard, Remedies Under Companies Act
Source Language
Malay/English
Construction Law Contract Law Trust Law Company Law Civil Procedure Unpaid Progress Payments Breach of Contract Constructive Trust / Breach of Trust +3 more

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Parties

TRASPADU ENGINEERING (M) SDN BHD

First Appellant / First Defendant

TAJUDDIN BIN YAHAYA

Second Appellant / Second Defendant

NESB CONSTRUCTION SDN BHD

Respondent / Plaintiff

Procedural Posture

Civil Appeal / High Court Hearing on Appeal From Sessions Court (re Hearing Under Order 55 Rule 3 Rules of Court 2012)

Legal Issues

  1. 1 Whether the Respondent was subcontractor entitled to unpaid progress payments from the First Appellant
  2. 2 Whether the Second Appellant is personally liable for breach of trust or as a constructive trustee
  3. 3 Whether the Sessions Court was plainly wrong in its factual appreciation

Ratio Decidendi

The High Court upheld the Sessions Court's finding of liability against the First Appellant because the trial judge properly appreciated the evidence establishing the subcontracting arrangement and payments pattern (97%-3%), and the Appellants failed to rebut the claims or prove their counterclaim; however the finding of personal liability against the Second Appellant was reversed because mere agency or alter-ego conduct in administering payments is insufficient to impose a constructive trust or personal liability absent unconscionable appropriation or pleaded legal basis; an alternative remedy against the director exists under s.540 Companies Act 2016 if fraud is proven in winding up.

Court Disposition

Appeal allowed in part: allowed as to Second Appellant and dismissed as to First Appellant

Orders

  • Judgment against Second Appellant set aside
  • Judgment against First Appellant in the sum of RM695,285.11 together with interest and costs of RM10,000.00 is maintained