Archives

BREACH OF FIDUCIARY DUTY – UK SUPREME COURT SHUTS DOWN ‘WHAT IF’ DEFENCE IN FIDUCIARY BREACH: NO PROFIT MEANS NO EXCUSE

In Rukhadze & Ors v Recovery Partners GP Ltd and Anor [2025] 1 Lloyd’s Rep 329, the UK Supreme Court reaffirmed the uncompromising “no profit” rule for fiduciaries. The Court held that a fiduciary who profits from their position must account for those gains – regardless of good faith, intent, or hypothetical outcomes. The appellants’ argument that they would have earned the profit even without a breach was firmly rejected. The decision emphasises that loyalty, not speculation, is the standard, and reaffirms equity’s strict stance on conflicts of interest.

EMPLOYMENT – CONSTRUCTIVE DISMISSAL VIA TRANSFER: WHEN MANAGEMENT PREROGATIVE CROSSES THE LINE

In Saharunzaman bin Barun v Perodua Sales Sdn Bhd & Anor [2025] 2 MLJ 17, the Court of Appeal reinstated the Industrial Court’s decision that three long-serving employees were constructively dismissed after being ordered to report for duty at distant branches within three days, following their refusal to resign and accept a fixed-term contract with an associated company. The Court found that Perodua’s actions were unreasonable, mala fide, and amounted to a fundamental breach of the employment contract, especially as no valid work permits were arranged for postings in Sabah and Sarawak. The ruling affirms that “reasonableness” clauses in transfer provisions carry enforceable weight and cannot be used as tools for disguised terminations.

MEDICAL NEGLIGENCE – WHEN SILENCE HURTS: COURT SLAMS GOVERNMENT WITH RM2M+ IN AMPUTATION NEGLIGENCE SUIT

In L/Kpl Naraayanan Nair a/l Subramaniam v Kerajaan Malaysia & Ors [2025] 8 MLJ 503, the High Court delivered a landmark ruling in a medical negligence suit involving a young police corporal who lost his arm due to delayed and negligent treatment. Citing emotional trauma, denial of timely access to medical records, and ongoing life-altering consequences, the court awarded over RM2 million in damages – including RM200,000 in aggravated damages – this shows the judiciary’s increasing emphasis on dignity, transparency, and rehabilitative justice in personal injury claims.

TORT OF DEFAMATION – NO MALICE, NO DEFAMATION: POLITICAL COMMENTARY STANDS PROTECTED

In Lim Guan Eng v Datuk Tan Teik Cheng & Anor [2025] 2 MLJ 791, the Court of Appeal dismissed a defamation claim over a politically charged article alleging conditions tied to a RM4 million school allocation. The Court ruled that the statements – framed as a call for explanation – were not defamatory when read in full context. The defendants successfully relied on the defences of fair comment and reportage, with the Court emphasising that political commentary, if rooted in fact and honestly held, remains protected speech – even during an election campaign. Malice was not proven, and the article’s publication in a neutral “Letters to the Editor” section further insulated the publisher from liability.

ILLEGALITY AND CONTRACT – RM49 MILLION MISTAKE? ADW2 STRUCK DOWN FOR NO CONSIDERATION DIMENSI SDN BHD LEGALLY VALID?

In Kuala Dimensi Sdn Bhd v Port Kelang Authority [2025] 2 MLJ 238, the Federal Court reaffirmed a core principle of contract law – no consideration, no contract. The Court held that the supplemental agreement (ADW2), which increased interest payable by RM49 million, was void for want of consideration, despite being acted upon. Notably, the Court rejected the “practical benefit” doctrine from Williams v Roffey, clarifying that Malaysian law continues to uphold traditional consideration requirements. Estoppel, too, could not rescue the agreement. This case sends a clear message: contractual variations must be backed by clear and enforceable consideration, or risk being struck down.

CUSTOMS ACT 1967 – CUSTOMS’ DELAY TURNS SEIZURE INTO COSTLY MISSTEP

Non-compliance with s 128 of the Customs Act 1967 is fatal as it involves a deprivation of property which is protected under Article 13(1) of the Federal Constitution. Customs authorities must strictly adhere to statutory timelines; failure to do so renders seizures unlawful and entitles claimants to damages.

GAMBLING DEBT – NOT JUST A LOAN, STILL A GAMBLE – FEDERAL COURT DEALS FINAL BLOW TO CASINO CREDIT RECOVERY

In Dato’ Ting Ching Lee v Ting Siu Hua [2025] 2 MLJ 295, the Federal Court delivered a decisive ruling on the enforceability of gambling-related debts disguised as credit facilities. The Court held that credit lines granted for the sole purpose of purchasing casino chips constituted a composite gambling contract, not a genuine loan – and are therefore unenforceable under Malaysian law.

In overruling Wynn Resorts (Macau) SA v Poh Yang Hong, the Court reinforced that no matter how cleverly disguised, claims tied to gambling are void and against public policy. The decision serves as a stark reminder: Malaysian courts will not act as debt collectors for foreign casinos.

REGULATIONS – GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT 1947 )

On 3.4.2025, the United States imposed a 24% tariff on Malaysian exports, triggering concerns over its legality under international trade law. The measure appears to breach core WTO obligations, including Most-Favoured Nation treatment and tariff bindings. Malaysia has strong grounds to challenge the tariff through WTO dispute settlement, though enforcement could be delayed due to the Appellate Body impasse. In the meantime, Malaysia is pursuing diplomatic avenues, highlighting the importance of rules-based trade amid rising global protectionism.

SHIPPING – ADMIRALTY IN REM – ANCHORED BUT NOT ADRIFT: REDEFINING “SHIP” IN ADMIRALTY JURISDICTION

The Singapore High Court in Vallianz Shipbuilding & Engineering v Owner of the Vessel ‘Eco Spark’ [2025] 1 Lloyd’s Rep 195 clarified the definition of a ‘ship’ under admiralty jurisdiction. Despite conversion into a stationary floating fish farm, the vessel retained its status as a ship due to its inherent navigational capability, significantly broadening the scope of admiralty law.

TORT OF NEGLIGENCE – STRATA MANAGEMENT – HOLDING DEVELOPERS ACCOUNTABLE FOR DEFECTS – A WIN FOR CONDO OWNERS!

The decision in Badan Pengurusan Bersama Subang Parkhomes v Zen Estates Sdn Bhd (Fadhlullah & Associates Consulting Engineers Sdn Bhd) [2025] 7 MLJ 780 emphasizes developers’ clear duty of care toward condominium residents, reinforcing their responsibility to properly rectify defects. It highlights the essential role developers play in ensuring quality and compliance, protecting residents from bearing unnecessary financial burdens arising from poorly completed projects.