PARAMESWAREN A/L PERUMAL v DELTA ZEEFORCE SECURITY SERVICES SDN. BHD.

Case Significance

Illustrates the pleading of illegality: a non-ex facie illegality must be pleaded and proved under Order 18 rule 8, so a wrongful-termination claim otherwise established succeeds where the alleged licence-misuse illegality was neither apparent on the face of the contract nor properly raised; the immediate termination without notice was held a breach.

This High Court decision is an appeal from the Sessions Court in a wrongful-termination dispute, notable for its treatment of an illegality defence that had not been pleaded. The appellant — the plaintiff below, a natural person referred to here by role — had been appointed by Delta Zeeforce Security Services Sdn. Bhd. as a manager or agent for its Southern Zone on a profit-sharing basis (88% to him, 12% to the company), and had secured security-guard supply contracts before the company terminated his appointment with immediate effect. He sued for wrongful termination, claiming a substantial sum in unpaid profit share and damages.

The Sessions Court had dismissed the claim on the ground of illegality. It found that the arrangement, under which the appellant used the company's licence, amounted to a proxy, lease or rental of that licence contrary to the conditions under the Private Agencies Act 1971 and the associated Ministry circular, and, relying on the Federal Court's decision in Merong Mahawangsa Sdn Bhd v Dato' Shazryl Eskay bin Abdullah, held the contract void ab initio and the plaintiff barred from recovery under the ex turpi causa maxim.

On appeal the High Court reversed. A key consideration was that illegality had not been pleaded, engaging the distinction between ex facie illegality (apparent on the face of the contract, which a court will not enforce even if unpleaded) and non-ex facie illegality (which must be pleaded and proved under Order 18 rule 8 of the Rules of Court 2012). On the totality of the evidence, the court found that the plaintiff had proved a valid contract, that the company had breached it by terminating immediately without reasonable notice and without an opportunity to answer the allegations, and that the company had failed to justify the immediate termination. It allowed the claim, ordering damages of RM391,923.39 with interest and costs of RM50,000.

The judgment is a valuable illustration of the pleading of illegality: a defendant relying on a non-ex facie illegality must plead it under Order 18 rule 8, and a wrongful-termination claim otherwise proved will succeed where the alleged illegality was neither apparent on the face of the contract nor properly raised.