RAFIZUDDIN BIN RAMLY v FLOWBIRD MALAYSIA SDN BHD

Case Significance

Illustrates that an employee who, while still owing duties to his employer, diverts its confidential information to a competitor and prepares to compete breaches his fiduciary duty and remains answerable for that misuse after resignation, the Court of Appeal upholding findings against a former employee.

This Court of Appeal decision, heard together with a related appeal, concerns the breach of fiduciary duty and misuse of confidential information by a former employee of a company in the car-parking solutions business. The respondent, a Malaysian company forming part of an international group, alleged that the appellant, one of its former employees, together with another former employee, had disclosed its confidential business information to a Swiss competitor before and around the time of their resignations, and that the information had been used to pursue parking-solution projects abroad and in Malaysia. This record concerns the appeal by the former employee. The court examined the duties owed by an employee to his employer and whether they had been breached. On the evidence — the former employees' meeting with the competitor at an industry event, the emails transmitting information belonging to the respondent while the appellant was still employed by it, the timing of the resignations, and the subsequent establishment of and directorships in related entities that bid for similar projects — the court held that the evidence established both the misuse of the respondent's confidential information and a breach of fiduciary duty on the appellant's part. It reasoned that the duties of confidence and good faith an employee owes are not discharged the moment he decides to leave, and that using his position to gather and transmit the employer's confidential information to a competitor, and to lay the ground for a rival venture before departing, is the very conduct those duties forbid; the later incorporation of separate entities did not cleanse the earlier breach. It accordingly upheld the findings of the High Court against the appellant and dismissed the appeal, ordering that the parties bear their own costs. The judgment illustrates that an employee who, while still owing duties to his employer, diverts its confidential information to a competitor and prepares to compete breaches the fiduciary duty he owes, and remains answerable for that misuse after his resignation.