Syarikat V.K. Kalyanasundram Sdn Bhd v Kalyani a/p Balasubramaniam & Ors

Appellant(s): Syarikat V.K. Kalyanasundram Sdn Bhd

Respondent(s):

• Kalyani A/P Balasubramaniam
• Barani Kumar A/L Balasubramaniam
• Vijay Anand A/L P Harivasagan
• Jeraman @ Jayaraman A/L Narainan
• Bhoo Pathy A/L S. Ramakrishnan
• Thulasingam A/L Kaliappan
• Cosmos Resources Sdn Bhd

• YA Datuk Mohamed Zaini Bin Mazlan
• YA Dato' Faizah Binti Jamaludin
• YA Dato' Hajah Aliza binti Sulaiman

• The plaintiff company engaged a newly incorporated contractor to supply harvesting and transportation labour, which continued to use the plaintiff's pre-existing individual contractors while charging the plaintiff at revised (higher) rates.
• Part of the monies paid by the plaintiff were routed through the contractor's director to the first, second and third defendants, who were respectively a director/former managing director, a former general manager, and a director of the plaintiff, without disclosure.
• The High Court rejected the plaintiff's case that the contractor was a fraud vehicle and the agreement a sham, but found the first, second, third, sixth and seventh defendants liable for conspiracy, the first and third defendants liable for breach of fiduciary duty, and the second defendant liable for breach of contractual duty, awarding RM260,724.00; three cross-appeals followed.

• Whether rejection of the fraud/sham allegations precluded liability on the remaining pleaded causes of action (conspiracy, fiduciary/contractual breach, dishonest assistance, unjust enrichment), and whether such findings went beyond the pleaded case.
• Whether conspiracy by lawful or unlawful means was made out, given that lawful-means conspiracy requires a predominant intention to injure whereas unlawful-means conspiracy only requires unlawful acts (such as fiduciary/contractual breaches) intentionally used to injure as a means of self-benefit.
• Whether unjust enrichment could independently sustain joint liability for the full profit margin, and how an account of profits (gain-based) is to be distinguished from compensatory damages for loss in quantifying recovery.

• The Court held that the dismissal of the fraud/sham case did not defeat the separately pleaded claims, as the material facts for conspiracy, breach of duty and dishonest assistance had been pleaded, contested, and supported by evidence independent of the fraud/sham allegation.
• The finding of lawful-means conspiracy was set aside (as predominant intent to injure was not proved) but replaced with a finding of unlawful-means conspiracy against the first, second, third, sixth and seventh defendants, based on their fiduciary/contractual breaches and knowing participation in the concealed payment scheme; findings of fiduciary breach (first and third defendants) and contractual breach (second defendant) were affirmed, and dishonest assistance was additionally found against the second, sixth and seventh defendants.
• The Court set aside unjust enrichment as an independent basis for joint liability, recalculated the plaintiff's actual loss from the primary documents (rejecting both parties' figures), and increased the joint and several award from RM260,724.00 to RM449,256.20, holding that the personally-received sums did not warrant any additional separate award on top of the compensatory figure.