Appeals court upholds finding of unlawful conspiracy in workforce contract dispute

The Court of Appeal set aside the finding of conspiracy by lawful means but upheld the finding of conspiracy by unlawful means against the five defendants. PUTRAJAYA: The Court of Appeal increased the damages payable by five defendants to an estate company to RM449,256.20 after upholding a finding that they conspired to make unlawful profits from a contract for estate operations.

A three-member bench comprising Justices Zaini Mazlan, Faizah Jamaludin and Aliza Sulaiman allowed the relevant appeals in the dispute involving Syarikat V K Kalyanasundram Sdn Bhd, the owner of Huntly Estate and manager of VKK Estate.

The company sued its director and managing director, Kalyani Balasubramaniam; former director and general manager, Barani Kumar Balasubramaniam; directors Vijay Anand P Harivasagan and Thulasingam Kaliappan; and Cosmos Resources Sdn Bhd.

On Aug 1, 2024, the High Court found the five defendants liable for conspiracy and awarded RM260,724 in damages jointly and severally.

The Court of Appeal reassessed the losses proven and increased the award to RM449,256.20.

The dispute arose from a 10-year agreement signed on Feb 3, 2021, under which Cosmos Resources was appointed to provide workers and harvesting and transportation services.

The company alleged that Cosmos Resources, a newly incorporated entity without its own workforce, was interposed between the estate and existing contractors, allowing it to retain substantial margins following revisions to service rates.

Payments allegedly channelled through Thulasingam to Kalyani, Barani and Vijay were disguised as salaries or loan repayments.

Faizah, who delivered the judgment, said the company's failure to establish fraud or prove that the agreement was a sham did not defeat its separate claims of conspiracy by unlawful means and breaches of duty.

The court set aside the finding of conspiracy by lawful means but upheld the finding of conspiracy by unlawful means against the five defendants.

The bench also affirmed findings that Kalyani and Vijay breached their fiduciary duties, while Barani breached his contractual duty.

Claims against two other defendants, Jeraman Narainan and Bhoo Pathy Ramakrishnan, were dismissed by the High Court, and the company abandoned its appeals against them.

Ranjit Singh and Navpreet Singh appeared for the company while K Shanmuga represented the five defendants. Lai Choe Ken acted for Jeraman and Bhoo Pathy.