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The first issue in the question is whether Kamil is in breach of duty to avoid conflict of

interest when he assisted his nephew Mat in preparing tender application for the maintenance bid
and also had discussed the bids prior to the meeting where he pointed out to Khoo and Jamilah
on the other bids shortcomings?

According to section 218(1) (b)of the Companies Act 2016 , the director of the company is
prohibited to use any information acquired by virtue of his position as a director in the company
unless there is a clear consent given by the shareholders or ratification made by the general
meeting. But beforehand the rule of no-conflicts duty must be established by the director where
the director must not be in conflict with his own personal interest and such duties that he owes to
the company (fiduciary duty). This rule can be derived from the case law of Aberdeen Railway
Co v. Blaikie Bros (1854) 1 Macq 46 where in this case it was held that the chairman of the
board of directors for Aberdeen Railway was found to be in breach of his fiduciary duty as the
director of the company as he did not disclose his position as the managing partner in Blaikie
Bros which Aberdeen Railway has entered into a contract with. The main issue to be ascertained
in this case is the application rule of universal application where no one, having such duties to
discharge shall be in no position to enter into other contracts which he have personal gains and
may conflict any interest which he need to protect. Therefore, fiduciary duty is not in breach if
the director can actually exclude himself from being surrounded by conflict of interest.
Moreover, to determine whether there is such conflict in this situation, the test apply is whether a
reasonable man based on the circumstances given would consider that there was a real possibility
of conflict. This test has been adopted from the case of Boardman v. Phipps (1967) 2 AC 46
where the House of Lords decision has actually referred to the judgement laid d own in the
previous mentioned case (Aberdeen Railway) where the Lords agreed that there was a
possibility of conflict of interest happening on the ground that the advice seek by the solicitor
and beneficiary whom might have come to Boardman for advice as to the purchases of the shares
whereby they owed fiduciary duties (to avoid any possibility of a conflict of interest) because
they were negotiating over use of the trust's shares for the trust fund. In another point, it is
irrelevant to prove that the duty of conflict of interest shall be disregarded in situations such as
the company has not suffered loss or such action will bring benefit to the company as has been
decided in the case of Regal Hastings v Gulliver (1967) 2 AC 134 where the court held that the
duty to avoid conflict of interest has been breached even if the company had profited from the
transaction as long as there is no approval made by the boards. The director in such occasion of
conflict of interest must disclose his personal conflict before the board of the company and the
shareholders in the general meeting as being outlined by s.219(1)(a) and (c)where notice in
writing need to be done by the director to disclose his interest and also matters relating to his
personal interest.Moreover, under section 221(1) of the Companies Act 2016 have outline that
such disclosure of interest regardless direct as well indirect need to be made at the board of
directors meeting for the purpose that other directors shall be full aware of the conflicts of
interest and its potential influence on any director’s decision. Furthermore, such disclosure
would stand as a reminder for directors of their duties and to give preference first to the
company’s interest. In the decided case of Yeo Geok Seng v. PP (2000) 1 SLR 195 where Yeo
failed to declare his interest to the board of directors of MFED as its managing director and to
XMS as its director has actually place himself in the condition of conflict of duty and self -
interest .Therefore, Yeo was held to be liable for breach of fiduciary duty.
Therefore by applying the principles discussed above, the facts have rendered Kamil to
be liable of breach of his fiduciary duty to avoid conflict of interest as he failed to disclose
his relationship with Mat before the board of the directors meeting in the event of the
maintenance bidding took place. Such failure of disclosure of conflict of interest which in
this question is of indirect interest which is of his relationship and the issue that Mat’s
proposal suits the company’s interest is irrelevant to be exempted from liability from breach
of duty. Although Mat and Kamil’s nature of relationship is not considered to be of interest
of the family members of based on section 221(9), which highlights on spouse, child and
stepchild , Kamil is still liable for not fully disclosing on any capable circumstances which
may lead to any conflict of interest on his capacity as a director of the company.
However, section 221(2) has clearly outline an exception to the duty of disclosure if the
said director interest is not of material interest. Material interest is not clearly defined under the
Companies Act 2016 but can be defined further in the decided cases where the definition of
material interests are discussed. In the decided case of McGellin v Mount King Mining NL
(1998) 144 FLR 288, the word “material” as it has been outlined under the previous s232A of
the Australia’ Corporations Act highlighted that an interest which involves a relationship of a
particular components of the matter in the consideration of the contract proposed is considered to
be material. In the latest case of the Federal Court of Australia on the case of Grand
Enterprises Pty Ltd v Aurium Resources (2009) 256 ALR 1, Baker J in delivering his
judgement has opined that for such interest to be material it must be of important value and
detrimental to the company’s day to day basis .In his deliberate judgement , Baker J also referred
to the decision in the case of Kriewaldt v Independent Direction Ltd (1995) 14 ACLC
73 where the issue on personal interest suggest that where the proposal under consideration
would promote the company's interests rather than the director's personal interest, such conflict
of interest shall not prevailed, but in some such circumstances, a matter under discussion might
both promote the company's best interests and advance a personal interest of the director
.Therefore , such conflict of interest shall prevail/.In another hand, such misuse of information
In applying the principles in the decided cases mentioned above to the relevant facts of
the case, the fact that Kamil has assisted his nephew Mat with all the particular concerns
of the board of the directors on the maintenance bidding resulted for Mat’s bid to be
accepted is considered by fact to be of material interest .Although the bidding plan
proposed by Mat suits the
The second issue in the question is whether Jamilah is in breach of duty to avoid conflict
of interest when she on behalf of CepatDapat Sdn Bhd had approached and entered into a
contract with Tisco Bhd after her resignation from Creed Sdn Bhd?
According to section 218(1) (d), the director of a company is prohibited to use the
opportunity of the company when he knows about it as his position as a director of the company
unless there is a consent or ratification of a general meeting. Basically, it is necessary to
determine whether the opportunity belongs to the company or not so that the directors can refrain
themselves from misappropriating it. There are two tests could be used namely the maturing
business test and the current line of business test. Firstly, the maturing business test considers the
opportunity belongs to the company when the company is actively seeking or considering the
opportunity. This test has been illustrated in Island Export Finance v Umunna [1986] BCLC
460 where the court held that the director who resigned and later received an order from the
company’s former customer was not liable for breach of duty. This is because, at the time the
director resigned and exploited the opportunity, the company was not actively seeking the
business.
However, the ‘current line of business test’ considers whether there was a real sensible
possibility of conflict because the business opportunity was information which was relevant to
know the company business. This means that the opportunity is in corporation’s line of business
when a conflict of interest would arise between the company and the director if the director took
the opportunity. Under the second test, there is no need to prove the element of the company is
actively seeking the opportunity. This test has been applied in Bhullar v Bhullar [2003] 2
BCLC 241, where in this case the court decided that although the company was not actively
sought the opportunity, the directors were still in breach of duty. It was found that the
opportunity in this case was in line with the business transaction. This is because the company
was involved in property development and the fact that the directors had acquired the adjoining
property was considered as a diversion of corporate opportunity.
Therefore, by applying this, the offer made by Tisco Bhd to Creed Sdn Bhd is a business
opportunity belonging to the company as the offer by Tisco Bhd was in line with Creed Sdn Bhd
business and the real sensible possibility of conflict would arise. The offer is something that the
company might reasonably be interest to get involved in the future even though the company is
not actively seeking the business opportunity.
Nonetheless, in the case of Robash Pty Ltd v Gladstone Pacific Nickel Pty Ltd (2011)
86 ACSR 432, the court decided that “the conflict would cease to exist when the transaction
giving rise to the conflict has no real prospect of proceeding”. This means that when the board
rejects the business opportunity in good faith, there is no longer any real possibility of conflict.
By applying this, even though the Tisco’s offer is considered as the business opportunity belong
to Creed Sdn Bhd, the real sensible possibility of the conflict of interest is not exist anymore
because the board of Creed has decided to reject the offer in the first place. Additionally, it
seems likely that the board of Creed’s decision to reject the offer made by the Tisco Bhd was
made in good faith since it has not been influenced by Jamilah’s interest. Therefore, Jamilah who
resigned from the company may exploit the offer for CepatDapat Sdn Bhd since the Creed Sdn
Bhd has no longer interested in the business.
Apart from that, the directors owe a duty to avoid conflict of interest only within a tenure
as a director. Upon the resignation as a director, he would be released from the duty owes to the
company. In addition, the directors may resign from the company although the company would
suffer harm due to his resignation. However, it should be noted that the resignation of a director
must not be motivated to acquire the business opportunity for himself and the activities in the
future do not involve the exploitation of confidential information. This has been illustrated in the
case of Avel Consultants Sdn Bhd & Anor v Mohd Zain Yusof & Ors [1985] 2 MLJ 209. In
this case, the court found that the respondents were liable for breach of duty even though they
took the contract after they resigned from the Avel company. This is because at the time they
formed the rival company of Avel, they were still directors and its formation was intended to
acquire the contract.
By applying this to the case, it appears that Jamilah has a choice to resign from Creed
Sdn Bhd and should not be responsible for the loss of company upon her resignation.
Furthermore, the reason for her resignation is not solely for the purpose acquiring the offer of
Tisco Bhd. Rather, it is because to be closer to her son and help him in his business. The
situation in Jamilah case is to be distinguished in Avel Consultants case as even though the
establishment of CepatDapat Sdn Bhd by her son was when she was still a director, but her
resignation was not influenced or motivated to get the offer by Tisco Bhd. Therefore, the act of
Jamilah approached Tisco and managed to secure it as a customer of CepatDapat Sdn Bhd was
done in her personal capacity. It is not due to her position at the time she was a director of Creed
Sdn Bhd. Instead, it is a new initiative or proposal made by Jamilah on behalf of CepatDapat Sdn
Bhd since the board of Creed had decided to reject the offer made by Tisco Bhd.
In conclusion, it seems likely that Jamilah is not liable for breach of duty to avoid the
conflict of interest which she owed to Creed Sdn Bhd when had entered into a contract with
Tisco Bhd upon her resignation on behalf of CepatDapat Sdn Bhd.
The third issue is whether Aliff and the other minority shareholders can apply for leave of
court to sue the directors on behalf of the Creed Sdn Bhd?
Derivative action is an action taken on behalf of the company by a member of the
company for the purpose of remedying the wrong done against the company. A statutory
derivative action can be taken on the basis of breach of director’s duty as it is an infringement of
company’s rights. By virtue of Section 347 of the Companies Act 2016, before minority
shareholders can sue the directors on behalf of the company, they must first apply leave of the
court. In consequent, in order to obtain the leave of court, the court will take into considerations
two factors in order to grant the leave based on what is stated in Section 348(4). Firstly, the court
will see whether the complainant is acting in good faith in bringing an action against the
directors. What defines a good faith has been explained in the case of Pang Yong Hock and
Another v PKS Contracts Services Pte Ltd. In this case, the court explained that the best way
of demonstrating good faith is to show a legitimate claim which the directors are unreasonably
reluctant to pursue with the appropriate vigour. Since it is the defendant who has the burden of
proving that the plaintiff lack of good faith, they will seek to show that the application is
motivated by an ulterior purpose, such as dislike, ill-feeling, or other personal reasons, rather
than applicant’s concern for the company. Furthermore, the court stated although the element of
hostility is present between the parties, it is not sufficient to prove lack of good faith but the
court may doubt the applicant’s good faith if the application made motivated by vendetta, purely
for his personal favour.
Secondly, the court take into account whether the application for leave be granted
appears prima facie to be in the best interest of company. In answering on the question of best
interest of the company, the same case of Pang Yong Hock and Another v PKS Contracts
Services Pte Ltd stated that having established that an applicant is acting in good faith and that a
claim appears genuine, the court must nevertheless weigh all the circumstances and decide
whether the claim ought to be pursued. Whether the company stands 'to gain substantially in
money or in money's worth' relates more to the issue of whether it is in the interests of the
company to pursue the claim rather than whether the claim is meritorious or not. A $100 claim
may be meritorious but it may not be expedient to commence an action for it. The company may
have genuine commercial consideration for not wanting to pursue certain claims. Perhaps it does
not want to damage a good, long-term, profitable relationship. It could also be that it does not
wish to generate bad publicity for itself because of some important negotiations which are
underway. In other words, under the factor of best interest of the company, the court look upon
whether or not the leave of court ought to be granted. On the other hand, the case of Celcom (M)
Bhd v. Mohd Shuaib Ishak had reaffirmed on this point by mentioning that to determine
whether it is in the best interest of the company for leave to be granted, a company’s genuine
commercial reasons not to proceed with any litigation must also be considered. It means that if
there is any objection in proceeding with litigation and the objection relates to maintain the
image and future prosperity of the company, the court may not grant the leave of court. In
addition, in Vinciguerra v MG Corrosion Consultants Pty Ltd, to see whether it is in the best
interest of the company, the court will see at the availability of alternative remedy. With this
being said, the court after weighing all circumstances will look upon if there is an alternative
remedy in granting the leave of court.
In applying the law to the present case, on the part of whether Aliff and the other
minority shareholders are acting in good faith, it is necessary to ascertain whether the claim
brought by them is a legitimate claim. Aliff and the minority shareholders cannot be said to be
acting in bad faith because they want to pursue what they genuinely consider to be a valid claim
against the proposed defendants. The action sought to be instituted is a legitimate and arguable
one. Besides, anything that benefits the company will indirectly benefit the shareholders by
increasing the share value. On the other hand, the conduct of the directors brushed aside Aliff’s
views and rejected the request of minority shareholders to call a meeting of members to consider
the proposal to sue the directors clearly shown that the voice of the minority has been denied and
this indicates an act of oppression. Furthermore, the act of Lat and Boh in ignoring Aliff’s
request can be said of mala fide as they ignored him because of the previous disagreements they
had in the general meetings. Hence, the claim made by Aliff and the other minority shareholders
can be said of good faith.
Whereas in addressing whether Aliff and the other minority shareholders has acted in
the best interest of the company in applying the leave of court, the court will weigh on whether
the action is ought to be pursued. In this case, the opposing party which is the board contended
that since they were in the process of negotiation for a big project and that any litigation will
affect the image of the company and if that happens the negotiation might fail and the company
will suffer loss. In considering all the circumstances, it is safe to say that the contention of the
board is reasonable. If litigation happens, it will somehow badly influence the reputation of the
company. After all, utilising on what has been mentioned in Vinciguerra’s case, the court will
look at if there is any available alternative remedy to decide on the end result. In this current
case, since Lat and Boh had oppressed Aliff as a minority shareholder, Aliff can choose to apply
for an oppression remedy rather than derivative. Therefore, the element of the best interest of the
company is absent in this case. To sum up, Aliff and the other minority shareholders might not
able to sue the directors on behalf of the company but instead, they have other alternative like the
oppression remedy.

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