MALAYSIA: DOCTRINE OF RES JUDICATA

September 26th, 2014

 

Built Prospect Trading (hereinafter referred to as “Plaintiff”) had previously filed an action against Mr. Chong Chee Siong (hereinafter referred as “the 1st Defendant”) and Deltric Sdn. Bhd. (hereinafter referred as “the 2nd Defendant”) at the High Court of Malaya, Kuala Lumpur claiming that 1st Defendant breached the contract of employment between the Plaintiff and 1st Defendant by leaking the Plaintiff’s trade secret and that the 2nd Defendant had collaborated with the 1st Defendant to leak the trade secret and use the trade secret in business.

The High Court held that the 1st Defendant had breached the contract of employment agreement and he had breached duty of good faith and fidelity that has impacted the Plaintiff’s business and that the 2nd Defendant had breached duty of confidentiality for having collaborated with the 1st Defendant for using the Plaintiff’s trade secret.

In terms of declaration of orders, the High Court has ordered the defendants to pay damages amounting to RM46768.99 (approximately USD14700.00) and getting up cost amounting to RM51744.00 (approximately USD16200.00) to the Plaintiff.

The 1st and 2nd Defendants had then filed an appeal against the decision of the High Court at the Court of Appeals but the decision of the High Court was upheld by the Court of Appeal.

The 1st and 2nd Defendants had then paid the damages amounting to RM46768.99 (approximately USD14700.00) to the Plaintiff. However, they had decided not to pay the getting up cost and had then filed an appeal against the getting up cost with an Appellate Judge at the High Court of Malaya in Kuala Lumpur.

In the appeal, the 1st and 2nd Defendants had argued that getting up cost is excessive and unjustified because the hearing in High Court was concluded within one day and that there were only two witnesses, one called by Plaintiff and the other one by Defendant. The 1st and 2nd Defendants had also argued that there was only one issue to be decided i.e. whether there was any breach in the confidentiality clause and there were no legal question which is complex, difficult or novel.

The 1st and 2nd Defendantsargued that the Plaintiff was estopped from claiming getting up cost because they have paid the damages to the Plaintiff’s previous solicitors “as full and final settlement of the case” vide a letter dated 28 July 2011, that the Plaintiff’s previous solicitors had received the payment and did not make argue against the use of the words “as full and final settlement of the case” in the letter.

The Appellate Judge held that the Plaintiff was not estopped because the decision of the High Court in finding that the 1st and 2nd Defendants guilty. Therefore, the decision of the High Court was final under doctrine res judicata underpublic policy.

Under the doctrine, the 1st and 2nd Defendants cannot question the High Court’s decision or rely on the doctrine of estoppel to prevent the Plaintiff to enforce the getting up cost. The Appellate Judge held that it the Plaintiff was estopped, it will be deemed to have altered the High Court’s decision and it will be considered to be a setting aside of the getting up cost.

Furthermore, the Appellate Judge held that a party has a limitation period of 12 years to enforce a court’s decision under the Limitation Act 1953. Therefore, the Plaintiff in this particular case has specified periods of time under the law to enforce the High Court’s order and that order cannot be circumvented through the 1st and 2nd Defendants’ letter. Assuming estoppel arguments based on 1st and 2nd Defendants’ letter are accepted, it means that any letter which alleges acceptance of a payment will be full and final settlement must be denied within a reasonable period of time. The Appellate Judge had indicated that based on research, there are no cases in Malaysia or in any Commonwealth countries that held that there is a common law obligation or an equitable duty to deny acceptance of a payment and failure to deny payment will cause the payment to be full and final settlement.

The Appellate Judge had indicated in his judgment that the getting up cost can be set aside only if the High Court had erred in calculating the cost or without any basis.

With that, the Appellate Judge had refused the appeal with cost.