Companies And Corporations: Lifting of corporate veil - Interests of justice - Company having goodwill in brand name - Major shareholder and director bringing action against defendant for passing off brand name - Whether such shareholder entitled to bring personal claim to recover damages for losses occasioned to company - Whether court ought to lift corporate veil and allow shareholder to bring such action - Whether company the proper claimant to recover damages

Trade Marks: Passing off - Goodwill - Whether shareholder had established goodwill in brand name - Whether company owned goodwill in brand name - Whether shareholder could personally bring action against defendant for using impugned brand name

The plaintiff asserted that he was a famous and influential celebrity and had numerous fans nationally and internationally, and went by the name "Hafiz Hamidun". He was also a singer and composer and had produced various music albums and had won several music awards using the name "Hafiz Hamidun". The plaintiff was also a major shareholder and director of one HSB, previously known as Mikraj Concept Sdn Bhd. HSB manufactured and traded clothes, garments and related clothing accessories. The plaintiff claimed that he had earned valuable goodwill and reputation in the brand name "Hafiz Hamidun" not only in the music industry but also in the fabrics industry in Malaysia and had been selling and promoting his clothing line under HSB using the brand name "Hafiz Hamidun" since 2014. The defendant was established in 1972 and was a retailer and wholesaler of various fabrics with 28 stores throughout Malaysia. The plaintiff claimed against the defendant in the High Court for passing-off fabrics for "Baju Melayu" that had been printed, labelled and marketed under the brand name "Hafiz Hamidun". The defendant resisted the plaintiff's claim and denied that the plaintiff was the owner of the goodwill in the brand name "Hafiz Hamidun" for fabrics or apparel. In essence, the defendant submitted that the company, Mikraj Concept Sdn Bhd (later known as HSB) and not the plaintiff, that owned the goodwill in the brand name "Hafiz Hamidun". The High Court allowed the plaintiff's claim. The Judge held, inter alia, that: (i) the plaintiff had earned valuable goodwill and reputation in the brand name "Hafiz Hamidun" not only in the music industry but also in the fabric industry; (ii) the goodwill of the fabrics and apparel business belonged to the plaintiff and not HSB; (iii) the defendant had misrepresented and caused the likelihood of confusion to its customers that the defendant's fabrics were products produced by the plaintiff or endorsed by the plaintiff as a result of a collaboration between the plaintiff and the defendant; and (iv) the plaintiff had established a probability or likelihood of damage to the plaintiff's goodwill in the brand name "Hafiz Hamidun." The defendant appealed to the Court of Appeal.

Held (allowing the defendant's appeal with costs):

(1) The High Court Judge was plainly wrong in his analysis on the issue of goodwill. Where there was an issue of who was the owner of the goodwill in a business or product, the issue was required to be determined as a question of fact by reference to the detailed circumstances of the case. The law of passing- off was designed to protect goodwill and prevent one person from passing- off his services as those of another. In the instant case, the High Court Judge did not have proper regard to the evidence adduced during trial which clearly showed that HSB was the company that carried out business in the fabrics or fashion line that had been using the brand name "Hafiz Hamidun" since 2014. The High Court Judge overlooked the fact that the goodwill related to the business was a subject of separate ownership. (paras 31, 33, 34, 39, 40 & 44)

(2) The High Court Judge was wrong to lift the corporate veil of the company (HSB) to sustain the plaintiff's claim. The lifting or piercing of the corporate veil was not permitted merely where the "interests of justice" required it. The High Court had misapprehended the law in allowing the plaintiff to sue independently from the company in respect of all goods and services bearing the plaintiff's name. Generally, the company was the proper claimant in an action to recover the loss that it had suffered. A shareholder could not in substance avoid that rule by bringing a personal claim to recover damages for losses merely because the company in which he had an interest in had suffered damage, even if the conduct of which he complained gave him personally, and not the company alone, a cause of action. The shareholder did not suffer loss. His loss was only through the company. Such policy was to ensure that the loss to the complainant was recovered only by the company and the proceeds of recovery were not diverted to the shareholders to the potential prejudice of the creditors. (paras 45, 46, 47, 50, 51, 52 & 53)

(3) In his statement of claim, the plaintiff had pleaded that the company was the owner of the goodwill in fabrics and not himself. The plaintiff did not plead that the company was a mere licensee. It was thus clear that the plaintiff had considered himself as having goodwill in the brand name "Hafiz Hamidun" in so far as his career as an entertainer was concerned, but such goodwill was exploited by HSB where fabrics and apparel were concerned. However, the evidence of the plaintiff did not lead to the conclusion that he personally owned the goodwill. No evidence was led as to an independent right on the part of the plaintiff personally to sue for loss in respect of goodwill in fabrics and apparel. The plaintiff had not demonstrated any independent goodwill in fabrics and apparel. (paras 57, 58, 61 & 63)

(4) The company was at all material times a separate legal personality. Thus, it was clear that any injury caused by the alleged passing-off would have been sustained by HSB and not the plaintiff. The plaintiff was not the proper party to sue for the alleged passing-off in the instant case. The HSB company owned the goodwill in the brand name "Hafiz Hamidun". (paras 64-66)

Case(s) referred to:

AG Spalding & Bros v. AW Gamage Ltd (1915) 32 RPC 273 (refd)

Abdul Rahim Aki v. Krubong Industrial Park (Melaka) Sdn Bhd & Ors [1995] 2 MLRA 63 (refd)

Bumiputra-CommerceBankBerhadv. Augusto PompeoRomei& Anor [2013] MLRAU 421 (refd)

Butler v. Evans [1980] STC 613 (refd)

Chanel v. Melwani2 International Sdn Bhd & Ors And Other Cases [2017] 6 MLRH 175 (refd)

Erven Warnink BV v. J Townend & Sons (Hull) Ltd [1980] RPC 31 (refd)

Foss v. Harbottle (1843) 67 ER 189 (refd)

Foo Ton Yeong & Ors v. Jonah Wong ChingHang [2019] MLRAU 299 (refd)

Giga Engineering & Construction Sdn Bhd v. Yip Chee Seng & Sons Sdn Bhd & Anor [2015] 6 MLRA 686 (refd)

Gurbachan Singh Bagawan Singh & Ors v. Vellasamy Pennusamy & Ors [2015] 1 MLRA 107 (refd)

Henderson and Others v. Radio Corp Pty Ltd [1969] RPC 218 (distd)

Irvine v. Talksport Ltd [2003] FSR 35 (distd)

KTL Sdn Bhd & Anor v. Leong Oow Lai [2014] MLRHU 1014 (refd)

Law Kam Loy & Anor v. Boltex Sdn Bhd & Ors [2005] 1 MLRA 521 (refd)

Meidi (M) Sdn Bhd v. Meidi-Ya Co Ltd Japan & Anor [2007] 3 MLRA 782 (refd

Perak Integrated Networks Services Sdn Bhd v. Urban Domain Sdn Bhd & Anor [2018] 3 MLRA 249 (refd)

Prudential Assuarance Co Ltd v. Newman Industries Ltd (No 2) [1982] Ch 204 (refd)

Revertex Ltd & Anor v. Slim Rivertex Sdn. Bhd. & Ors [1989] 3 MLRH 359 (refd)

Reckitt & Colman (Products) Ltd v. Borden Inc [1990] 1 WLR 491 (refd)

Solid Investments Ltd v. Alcatel-Lucent (Malaysia) Sdn Bhd [2014] 1 MLRA 526 (refd)

Star Industrial Co Ltd v. Yap Kwee Kor [1976] FSR 256 (refd)

Singham Sulaiman Sdn Bhd v. Appraisal Property Management Sdn Bhd & Anor & Another Appeal [2018] MLRHU 196 (refd)

Sinma Medical Products (M) Sdn Bhd v. Yomeishu Seizo & Co Ltd [2004] 1 MLRA 691 (refd)

Seet Chuan Seng & Anor v. Tee Yih Jia Food Manufacturing Pte Ltd [1994] 1 MLRA 68 (refd)

TC Pharmaceutical Industries Co Ltd & Anor v. Koay Sai Leat & Ors [2016] 3 MLRH 409 (refd)

Walton International Ltd v. Yong Teng Hing; Pendaftar Cap Dagangan Malaysia (Interested Party) [2010] 2 MLRA 418 (refd)

Yong Sze Fun & Anor v. Syarikat Zamani Hj Tamin Sdn Bhd & Anor [2012] 2 MLRA 404 (refd)

Other(s) referred to:

Professor Wadlow, The Law of PASSING-OFF, Unfair Competition By Misrepresentation, 4th edn, pp 111-112, para 3-007

Counsel:

For the appellant: Malik Imtiaz Sarwar (Eugene Roy Joseph, Yong Cheng Aik & Khoo Sul Chyi with him); M/s Joseph Chambers

For the respondent: Thevini Nayagam (Rahman with her); M/s Rahman Rohaida

[For the High Court judgment, please refer to Mohammad Hafiz Hamidun v. Kamdar Sdn Bhd [2019] 1 MLRH 454]

JUDGMENT

Hanipah Farikullah JCA:

[1] This is a passing-off action, the underlying subject matter of which is the respondent's (plaintiff) fabrics for "Baju Melayu" labelled and marketed under the brand name "Hafiz Hamidun".

[2] The appellant, Kamdar Sdn Bhd (defendant) appealed against the judgment of the learned High Court Judge given on 24 January 2018 after a full trial allowing the plaintiff's claim for the tort of passing-off the appellant's fabrics for that has been labelled and marketed under the brand name "Hafiz Hamidun" as fabrics which have been manufactured by, or related to the plaintiff.

[3] In this case, the plaintiff contends that he is the owner of the goodwill in the business of selling fabrics/apparel under the brand name "Hafiz Hamidun" and the conduct of the defendant in selling "Hafiz Hamidun" branded fabrics/apparel to the public constitutes the tort of passing-off.

[4] The plaintiff sought the usual remedies sought in passing-off actions: injunction and damages or account of profits by the defendants in selling "Hafiz Hamidun" branded fabrics/apparel to the public, which constitutes the tort of passing-off.

[5] The defendant resisted the plaintiff's claim and denied that the plaintiff was the owner of the goodwill in the brand name "Hafiz Hamidun" for fabrics/apparel. In essence, the defence is that, at all times, the goodwill in the brand name "Hafiz Hamidun" had been owned by the company, Mikraj Concept Sdn Bhd (now known as Haje Sdn Bhd (HSB)) and not the plaintiff.

[6] In our judgment, for the reasons explained below, the learned High Court Judge erred in the conclusions which he drew from the facts as found by him that the plaintiff owed the goodwill in the fabrics and apparel sold by HSB which bore the name "Hafiz Hamidun".

[7] Essentially for that reason, which we will expand upon later in this judgment, we consider that the plaintiff's claim in passing-off cannot succeed.

The Background

[8] The facts are straightforward and can be drawn from the judgment of the learned High Court Judge and the documents to which he referred. The defendant is a company that sells various fabrics through retail and wholesale stores. It was established in 1972 and had since conducted its business using the "KAMDAR" trade mark. At the material time, the defendant had a total of 28 stores in Malaysia.

[9] The plaintiff asserted that he is a famous and influential celebrity and has numerous fans in Malaysia as well as on an international level who is known as and/or goes by the name "Hafiz Hamidun". Apart from being listed on The World's 500 Most Influential Muslims (The Muslim 500) in the year 2015 and 2016 as an influential Muslim celebrity in the world, the respondent is also a singer and/or music composer who has produced various music albums and won various music awards using the name "Hafiz Hamidun".

[10] The plaintiff is also a shareholder and director of HSB. As we have stated earlier, HSB was previously known as Mikraj Concept Sdn Bhd. The change of name took place subsequent to the filing of this suit. HSB carries out the business of manufacturing and trading clothes, apparel, garments and related clothing accessories.

[11] We should mention one other fact. The plaintiff owns 80% of the total issued shares of HSB and is also its director since its incorporation on 23 September 2014. The plaintiff testified that he had incorporated HSB.

[12] The plaintiff contended that it is evident that he had earned a valuable goodwill and reputation in the brand name "Hafiz Hamidun" not only in the music industry but also in the fabrics industry in Malaysia wherein the plaintiff had been selling and promoting his clothing and/or fashion line under HSB using the brand name "Hafiz Hamidun" since 2014.

Decision Of The High Court

[13] The plaintiff has claimed against the defendant for the act of passing-off the fabric for baju Melayu that has been printed, labelled and marketed under the brand name "Hafiz Hamidun" produced by the defendant as products produced by the plaintiff.

[14] The issue before the High Court was whether the plaintiff's claim had fulfilled the characteristics of a passing-off action as laid down in the case of AG Spalding & Bros v. AW Gamage Ltd [1915] 32 RPC 273 and followed by numerous cases (see: Meidi (M) Sdn Bhd v. Meidi-Ya Co Ltd Japan & Anor [2007] 3 MLRA 782, Revertex Ltd & Anor v. Slim Rivertex Sdn. Bhd. & Ors [1989] 3 MLRH 359 and Seet Chuan Seng & Anor v. Tee Yih Jia Food Manufacturing Pte Ltd [1994] 1 MLRA 68).

[15] In his judgment, the learned High Court Judge found in favour of the plaintiff on the issue of liability.

[16] It was common ground that the plaintiff had to satisfy the tests in an action for passing-off. In the present case, that means demonstrating:

(i) whether the plaintiff owns the goodwill in the sale of fabrics using the brand name "Hafiz Hamidun";

(ii) misrepresentation by the defendant;

(iii) damage to the goodwill by reason of the misrepresentation.

Goodwill

[17] It is settled law that a plaintiff in a passing-off claim must establish that it has actual goodwill in respect of the products or services in question. The learned High Court Judge held that the plaintiff earned valuable goodwill and reputation in the brand name "Hafiz Hamidun" not only in the music industry but also in the fabric industry by relying on the documentary evidence and testimony of the witnesses during the trial.

[18] At paras 26 to 32 of his Judgment, the learned High Court Judge considered the question of whether the plaintiff had goodwill in the business regarding the plaintiff's name. The learned High Court Judge accepted the plaintiff's argument that the goodwill of the fabrics and apparel business belonged to the plaintiff and not the company.

[19] Referring to the case of Singham Sulaiman Sdn Bhd v. Appraisal Property Management Sdn Bhd & Anor & Another Appeal [2018] MLRHU 196, the learned High Court Judge stated that the tort of passing-off does not protect a plaintiff's Business Indicium per se but the plaintiff's goodwill in the business.

[20] He went on to say:

"30. I have no hesitation to find as a fact that the plaintiff's Goods are promoted and sold based on the plaintiff's name. This finding is supported by the following evidence and reasons:

(1) Exhibit P5 with the plaintiff's name (marked P5A) constitutes the best evidence;

(2) The plaintiff's demand had expressly stated that due to the defendant's promotion and sales of the defendant's Goods which carried the plaintiff's name, the sales of the plaintiff's own "clothing line" had been affected. If the plaintiff's Goods do not carry the plaintiff's name, the defendant could have easily stated as such in the defendant's reply to the plaintiff's demand. However, there was no reply by the defendant to the plaintiff's demand. Hence, any averment by the defendant that the plaintiff's Goods do not bear the plaintiff's name, is clearly an afterthought which should be rejected by this Court; and

(3) The plaintiff had given evidence that the plaintiff's Goods are advertised and sold based on the plaintiff's name. There is no doubt regarding the veracity of the plaintiff.

31. In view of the promotion and sales of the plaintiff's Goods which carry the plaintiff's Name, I find as a fact that the plaintiff's name has acquired a secondary meaning in the sense that the plaintiff's name is descriptive of the plaintiff's goods and of the plaintiff's goods alone - please see Lord Oliver's judgment in Reckitt & Colman Products, at pp 885-886.

[21] The learned High Court Judge continued:

"32. Due to the plaintiff's fame as a Nasyid singer, the plaintiff has substantial or significant goodwill in the business regarding the plaintiff's Name (plaintiff's Goodwill) when the plaintiff's name is used in relation to the plaintiff's goods. As explained in Muller's case, when the plaintiff's Goods are marketed and sold based on the plaintiff's Name, the plaintiff's Name constitutes an "attractive force which brings in custom". The plaintiff's Goodwill is clearly shown in the Messages From The Plaintiff's Fans."

Misrepresentation

[22] The learned High Court Judge held that the defendant has misrepresented and/or caused to be misrepresented and caused the likelihood of confusion to its customers that the defendant's fabrics are products produced by the plaintiff and/or products endorsed by the plaintiff and/or products as a result of a collaboration between the plaintiff and the defendant.

Damage

[23] Damage caused to the goodwill of the plaintiff - the learned High Court Judge held that the plaintiff had established a probability or likelihood of damage to the respondent's goodwill in the brand name "Hafiz Hamidun" as required for a passing-off action.

The Issues On The Appeal

[24] The main question arises in this case is: given there is no statutory trade mark registration, who is the common law owner of the goodwill in the brand name "Hafiz Hamidun" for fabrics/apparel sold by HSB. Is it the plaintiff or HSB?

[25] It follows, the plaintiff does not have the standing to sue for passing-off unless he owed the goodwill in the brand name "Hafiz Hamidun" for fabrics/apparel sold by HSB.

Ownership Of Goodwill

[26] Learned counsel for the defendant submitted that the learned High Court Judge fell into error in the following aspects.

[27] Firstly, the learned High Court Judge failed to consider it was HSB that was using the brand name "Hafiz Hamidun" for fabrics and apparel. Thus the goodwill was owed by HSB rather than the plaintiff.

[28] Further, learned counsel for the defendant submitted that the learned High Court Judge was wrong to lift the corporate veil of HSB, namely to hold that the plaintiff was the alter ego of the said company and that the goodwill in the brand name "Hafiz Hamidun" belonged to the plaintiff.

[29] As to these submissions, learned counsel for the plaintiff made a number of responses. First, he submitted that on the proper interpretation of the facts, the learned High Court Judge had correctly assessed all the evidence tendered during the trial in arriving at the decision that the plaintiff had earned goodwill and reputation in the name and/or brand "Hafiz Hamidun" in line with the principles set down in AG Spalding & Bros v. AW Gamage Ltd [1915] 32 RPC 273 and as reiterated in the case of TC Pharmaceutical Industries Co Ltd & Anor v. Koay Sai Leat & Ors [2016] 3 MLRH 409.

[30] Relying on the case of KTL Sdn Bhd & Anor v. Leong Oow Lai [2014] MLRHU 1014 and Chanel v. Melwani2 International Sdn Bhd & Ors And Other Cases [2017] 6 MLRH 175 learned counsel for the plaintiff also submitted that the learned High Court Judge had correctly distinguished between the piercing and lifting of a corporate veil and proceeded to lift HSB corporate veil to ascertain the following based on evidence before the Court:

i. The plaintiff is the alter ego of HSB by reason of him owning 80% of the shares issued and being a founding Director;

ii. The goodwill attached to the name and/or brand "Hafiz Hamidun" used to promote and sell HSB goods was that of the plaintiff and not HSB;

iii. The respondent has earned a substantial or significant goodwill in the name and/or brand "Hafiz Hamidun" as a nasyid singer based on evidence tendered and the goods sold by HSB was promoted and/or sold using the name and/or brand "Hafiz Hamidun" as an "attractive force which brings in custom"; and

iv. There exist special circumstances to lift HSB's corporate veil to prevent the appellant from evading liability for the tort of passing-off the respondent's name and/or brand "Hafiz Hamidun" on the appellant's goods.

[31] With due respect to the learned High Court Judge, we are of the opinion that his analysis on the issue of goodwill is plainly wrong.

[32] As Lords Diplock and Fraser pointed out in Advocaat case, and Erven Warnink BVv. JTownend & Sons (Hull) Ltd [1980] RPC 31, the action for passing- off protects a claimant's interest in the goodwill of his business or products. Indeed, Lord Fraser quoted the words of Lord Diplock in the earlier Privy Council case of Star Industrial Co Ltd v. Yap Kwee Kor [1976] FSR 256 at 259:

A passing-off action is a remedy for the invasion of a right or property... in the business or goodwill likely to be injured by the misrepresentation made by passing-off one person's goods as the goods of another.

[33] The cases indicate that where there is an issue of who is the owner of the goodwill in a business or product, the issue required to be determined is a question of fact by reference to the detailed circumstances of the case. (See generally Butler v. Evans [1980] STC 613).

[34] It is important to note that the law of passing-off is not designed to protect a person against the sale of others of the sale goods or even copied goods. What it protects is goodwill and it prevents one person from passing-off his goods or services of those of another. As Lord Oliver explained in Reckitt & Colman (Products) Ltd v. Borden Inc [1990] 1 WLR 491, 499, a claimant must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the particular name or get up under which the goods or services are offered to public, such that the name or get-up is recognized by the public as distinctive of the claimant's goods or services. Second, he must demonstrate a misrepresentation by the defendant to the public leading or likely to lead the public to believe that the goods or services offered by him are the goods or services of the claimant. Third, he must demonstrate that he suffers or, in a quia timet action that he is likely to suffer, damage by reason of the erroneous belief endangered by the defendant's misrepresentation that the source of the defendant's goods or services is the same as the source of those offered by the claimant.

[35] Reckitt & Colman Products Ltd has been followed by a number of Malayisan cases. See: Yong Sze Fun & Anor v. Syarikat Zamani Hj Tamin Sdn Bhd & Anor [2012] 2 MLRA 404, Meidi (M) Sdn Bhd v. Meidi-Ya Co Ltd Japan & Anor [2007] 3 MLRA 782, Sinma Medical Products (M) Sdn Bhd v. Yomeishu Seizo & Co Ltd [2004] 1 MLRA 691 and Walton International Ltd v. Yong Teng Hing; Pendaftar Cap Dagangan Malaysia (Interested Party) [2010] 2 MLRA 418.

[36] In this case, it is highly relevant to consider the distinction between goodwill and reputation. As noted by the learned author Professor Wadlow, The Law of PASSING-OFF, Unfair Competition By Misrepresentation (4th edn) at para 3-007, pp 111 to 112:

Goodwill as form of legal property is also to be distinguished from mere reputation, which is primarily a matter of fact. In so far as reputation may be a legally protected interest, it is a non-proprietary one. It is true that the two are very closely related, and a business with goodwill (at least in the sense in which the term is used in passing-off) can hardly fail to have a reputation in some sense. The converse, however, is not true, and the existence of a reputation associated with a person, product, name or mark does not necessarily imply the existence of goodwill:

[T]hat, as it seems to me, is to confuse goodwill, which cannot exist in a vacuum, with mere reputation which may, no doubt, and frequently does, exist without any supporting local business, but which does not by itself constitute a property which the law protects. Reputation may be relevant to the passing-off action in three respects. The most important is that proof of misrepresentation often turns on the reputation of the claimant's mark in the sense of its being recognised as distinctive by a sufficiently large proportion of the public. The other two are that the claimant's reputation, in a somewhat different sense, will suffer if the goods passed off by the defendant are inferior; and that the existence of reputation (in either preceding sense) may go some way to proving the existence of goodwill. It is unfortunately not uncommon to find the word "reputation" used interchangeably in the various senses of widespread repute, perceived high quality, trademark distinctiveness, and goodwill in the strict sense. Likewise, "goodwill" is quite often used when reputation in some sense is meant.

[37] Reverting to the present case, the argument advanced by the plaintiff was that he has goodwill in connection with his business activities and further, that the use of his name "Hafiz Hamidun" on the defendant's fabrics amounted to a misrepresentation and was likely to deceive members of the public into believing that the defendant's fabrics is the fabrics produced and marketed by the plaintiff.

[38] However, emphasis is placed by the defendant that there was no evidence adduced by the plaintiff on the basis that he was personally the owner of the goodwill of the fabrics and apparel business.

[39] The evidence clearly shows that the plaintiff carried out the fabrics and apparel business through HSB. It was not simply the plaintiff personally. In this connection, the plaintiff said in his evidence that:

"Lebih-lebih lagi, tindakan defendan yang menggunapakai nama dan/atau jenama "Hafiz Hamidun" pada kain dan/atau fabrik baju Melayu defendan adalah lebih mengelirukan dan/atau mengelirukan memandangkan saya pun menjual baju Melayu menggunakan nama dan/atau jenama "Hafiz Hamidun" melalui perniagaan kain dan/atau fesyen saya, Mikraj Concept Sdn Bhd yang kini dikenali sebagai Haje Sdn Bhd yang boleh dibeli secara online dan/atau dari butik kami.

[Emphasis Added]

[40] In this present case, we are satisfied that the learned High Court Judge did not have proper regard to the evidence adduced during trial which clearly shows that Mikraj Concept Sdn Bhd (later known as HSB), the company founded by the plaintiff, which is the company that carried out business in the fabrics and/or fashion line selling various clothing such as baju melayu, jubbah and/or kurta, amongst others, has been using the brand name "Hafiz Hamidun" since 2014.

[41] The learned High Court Judge relied on the case of Henderson and Others v. Radio Corp Pty Ltd [1969] RPC 218 and Irvine v. Talksport Ltd [2003] FSR 35 as supporting his decision that if a person has goodwill in the business regarding a Business Indicium (which may consist of the actual name, stage name, moniker or image of the person in question), it is only just that the person be allowed to claim for the tort of passing-off against another person who has used the Business Indicium without the former's consent.

[42] In Irvine v. Talksport, the motor racing driver Eddie Irvine was already active and successful in the business of endorsing products of various kinds. He recovered £25,000 damages (increased from £2,000 on appeal) for the conspicuous and recognisable use of his photograph in a promotional mailshot for the defendant's radio station. The recipients would assume that Mr Irvine was endorsing the defendant, and the latter was therefore making unauthorised use of his goodwill. Because Mr Irvine was already active in granting endorsements and had goodwill in relation to that activity, there was no circularity involved in awarding him damages on the basis of what he could have charged.

[43] In Henderson, the defendant in that case issued a record of music for ballroom dancing and used a photograph of the plaintiff dancers on its sleeve without their authority. The Full Court of New South Wales rejected the trial judge's finding of actual damage as speculative, but found for the plaintiffs on the ground that a misappropriation of it professional reputation was sufficient damage in itself. The plaintiffs had been deprived of the fee they could have charged for their endorsement as effectively as if the defendant had handed over the money and then stolen it back.

[44] We think, however that Henderson and Irvine relied by the High Court Judge are not relevant to the facts of the present case as the goodwill in the fabrics and apparel business in this present case is owed by the company, HSB and not the plaintiff. Personally, in our view, the learned High Court Judge appeared to have overlooked the fact that the goodwill related to the business is a subject of separate ownership.

Lifting The Corporate Veil

[45] The defendant's next submissions proceeded on the basis that the learned High Court Judge was wrong to lift the corporate veil of the company to sustain the plaintiff's claim. The learned High Court Judge held:

"12. For the Court to pierce or lift a corporate veil, three Federal Court cases, namely Solid Investments Ltd v. Alcatel-Lucent (Malaysia) Sdn Bhd [2014] 1 MLRA 526, Gurbachan Singh Bagawan Singh & Ors v. Vellasamy Pennusamy & Ors [2015] 1 MLRA 107 and Giga Engineering & Construction Sdn Bhd v. Yip Chee Seng & Sons Sdn Bhd & Anor [2015] 6 MLRA 686, require two conditions to be fulfilled (2 Conditions) namely:

(1) the piercing or lifting of a corporate veil is in the interest of justice (1st Condition); and

(2) there exist special circumstances to pierce or lift the corporate veil (2nd Condition).

...

14. I am of the view that the 2 Conditions for the lifting of HSB's corporate veil (to reveal that the plaintiff is HSB's alter ego) have been fulfilled in this case. This decision is based on the following evidence and reasons:

(1) the 1st Condition is satisfied because the lifting of HSB's corporate veil is in the interest of justice as follows:

(a) the Plaintiff owns 80% of the total issued shares of HSB; and

(b) the Plaintiff is a director of HSB since its corporation on 23 September 2014. Such evidence supports the Plaintiff's testimony that he has incorporated HSB; and

(2) if this suit is dismissed solely on the ground that HSB is not joined as a co-plaintiff, the defendant would be allowed to evade liability for the tort of passing-off. In this sense, the 2nd Condition is fulfilled in this case because there exist special circumstances to lift HSB's corporate veil so as to prevent the Defendant from evading liability to the plaintiff for the tort of passing-off the Plaintiff's name on the Defendant's Goods.

[46] With respect, we reject this argument. The terms "lifting" and "piercing" the corporate veil are used interchangeably by the Malaysian courts. These terms are employed where a claim is mounted against an individual who seeks to hide behind a company to escape liability for his fraudulent conduct.

[47] Since the decision of the Court of Appeal in Law Kam Loy & Anor v. Boltex Sdn Bhd & Ors [2005] 1 MLRA 521, lifting or piercing the corporate veil is not permitted merely where the "interests of justice" require it. Gopal Sri Ram JCA (as he then was) said at p 525:

"In my judgment, in the light of the more recent authorities such as Adams v. Cape Industries Pic [1990] Ch 433, it is not open to the courts to disregard the corporate veil purely on the ground that it is in the interests of justice to do so. It is also my respectful view that the special circumstances to which Lord Keith referred include cases where there is either actual fraud at common law or some inequitable or unconscionable conduct amounting to fraud in equity."

[48] This decision was endorsed by the Federal Court in Solid Investments Ltd v. Alcatel-Lucent (Malaysia) Sdn Bhd [2014] 1 MLRA 526 and Gurbachan Singh Bagawan Singh & Ors v. Vellasamy Pennusamy & Ors [2015] 1 MLRA 107.

[49] In Giga Engineering & Construction Sdn Bhd v. Yip Chee Seng & Sons Sdn Bhd & Anor [2015] 6 MLRA 686, the appellant had argued that the corporate veil of the respondents ought to be lifted "in order to do justice". The Federal Court had maintained the position stated in Alcatel which cited Boltex, and later followed in Gurbachan Singh.

[50] Thus, it did not matter that the plaintiff was a well-known entertainer. We are of the view that the learned High Court Judge had misapprehended Lord Macnaghten's dicta in Muller's Case in concluding that the principle stated therein extended to allowing the plaintiff to sue independently from the company in respect of all goods and services bearing the plaintiff's name.

[51] It is a clear law that in order to redress a wrong done to the company or to recover monies or damages as alleged to be due to the company, the action should prima facie be brought by the company itself. These cardinal principles are laid down in the well-known cases of Foss v. Harbottle [1843] 67 ER 189 and in numerous other cases (see also Abdul Rahim Aki v. Krubong Industrial Park (Melaka) Sdn Bhd & Ors [1995] 2 MLRA 63, Perak Integrated Networks Services Sdn Bhd v. Urban Domain Sdn Bhd & Anor [2018] 3 MLRA 249; and Bumiputra-Commerce Bank Berhad v. Augusto Pompeo Romei & Anor [2013] MLRAU 421).

[52] As a general rule, the company is the proper claimant in an action to recover the loss that itself has suffered. A shareholder cannot in substance avoid that rule by bringing a personal claim to recover damages for losses merely because the company in which he has intereste has suffered damage, even if the conduct of which he complains gave him personally, and not the company alone, a cause of action (see Foo Ton Yeong & Ors v. Jonah Wong Ching Hang [2019] MLRAU 299). The shareholder does not suffer loss. His only loss is through the company. (See Prudential Assuarance Co Ltd v. Newman Industries Ltd (No 2) [1982] Ch 204).

[53] This policy is to ensure that loss to the complainant is recovered only by the company and the proceeds of recovery are not diverted to the shareholders to the potential prejudice of the creditors. It similarly ensures that the process of recovery is conducted only by the company and that the company's right to recover is not adversely affected by outside compromises with the shareholders to the potential prejudice of creditors.

[54] We would therefore differ from the learned High Court Judge on this point which he decided at para 39 of his grounds of judgment.

The Plaintiff's Pleading

[55] As a result of the arguments on this appeal about the difference between the pleaded case as to ownership of the goodwill, it is necessary to examine the relevant pleadings. That will reveal how the case was put by the plaintiff and how the defendant responded to it.

[56] What was the cause of action in the present case? In his statement of claim, the plaintiff averred inter alia:

(1) that he was a singer and composer of repute who has promoted himself under the name "Hafiz Hamidun". To that end, he has released an album under that name. On this basis, and on the further basis set out in paras 6 and 7 of the statement of claim, the plaintiff contended that he has acquired goodwill in the said name.

(2) that he had established a company called Mikraj, which the evidence showed was renamed as Haje on 13 October 2017. The plaintiff contended that as a businessman, he has established that company "yang menjalankan perniagaan dalam bidang kain dan/atau fesyen yang menjual pelbagai jenis pakaian seperti baju melayu, jubah dan/atau kurta, antara lainnya, dengan menggunapakai nama dan/atau jenama "Hafiz Hamidun" sejak tahun 2014".

[57] In our view, the clear implication of the pleading in para 6 of the statement of claim is that the company was the owner of the goodwill in fabrics and apparel and not the plaintiff. It must be noted that the plaintiff did not plead that the company was a mere licensee.

[58] We accept the defendant's submission that from the pleading, it is thus clear that the plaintiff considered himself as having goodwill in the brand name "Hafiz Hamidun" in so far as his career as an entertainer was concerned, but such goodwill was exploited by HSB where fabrics and apparel were concerned.

[59] This is made even clear by the following:

(1) The alleged passing-off centered on the defendant selling fabric which bore the name "Hafiz Hamidun". This is evident from the particulars of alleged wrongdoing in paras 11.1 to 11.3 of the statement of claim.

(2) In para 12 of the statement of claim, the plaintiff contended that as a consequence of the alleged "passing-off", the plaintiff had "mengalami kerugian dari segi jualan penjualan produk-produk jenama plaintif di bawah syarikat Mikraj Concept Sdn Bhd dan juga kerosakan terhadap nama baik, imej dan/atau reputasi plaintif".

(3) From this paragraph it is evident that the plaintiff's claim for loss was for two heads of loss:

a. A decline in sales by Mikraj Concept Sdn Bhd. This was particularised in para 12.1; and

b. A loss of prestige and reputation. This was particularised in paras 12.2 and 12.3.

[60] It is important to note that loss of prestige and reputation does not feature in a claim for passing-off. Such a claim would not cover the type of loss particularised in paras 12.2 and 12.3 of the statement of claim.

[61] In our view, the evidence of the plaintiff does not lead to the conclusion that he personally owned the goodwill:

(1) In attempting to establish that he had goodwill in fabrics and apparel, the plaintiff relied only on exh P-5, which was the apparel sold by HSB. This apparel bore the brand "Haje by Hafiz Hamidun". The brand was separately marked as exh P-5A. In fact, the evidence shows that the company HSB was only renamed Haje on 13 October 2017 after the commencement of the claim in the High Court.

(2) At trial, in cross-examination, the plaintiff said:

"ERJ: En Mohammad Hafiz setuju bahawa Haje adalah jenama yang digunakan bagi produk baju Melayu kurta atau jubah oleh Haje Sdn Bhd.

YA: Slowly. Kamu setuju atau pun tidak Haje adalah nama, jenama yang digunakan.

ERJ: Jenama yang digunakan bagi produk baju Melayu kurta atau jubah Haje Sdn Bhd? Berdasarkan gambar ini.

HAFIZ: Saya setuju."

(3) In his examination-in-chief, the plaintiff said:

"Lebih-lebih lagi, tindakan defendan yang menggunapakai nama dan/atau jenama "Hafiz Hamidun" pada kain dan/atau fabrik baju Melayu defendan adalah lebih mengelirukan dan/atau mengelirukan memandangkan saya pun menjual baju Melayu menggunakan nama dan/atau jenama "Hafiz Hamidun" melalui perniagaan kain dan/atau fesyen saya, Mikraj Concept Sdn Bhd yang kini dikenali sebagai Haje Sdn Bhd yang boleh dibeli secara online dan/atau dari butik kami."

[Emphasis Added]

[62] Taking all the foregoing into account, it was the case of the plaintiff that the company was entitled to exploit the goodwill in so far as fabrics and apparel are concerned. However, the learned judge failed to appreciate that it was necessary for the plaintiff to demonstrate goodwill in the goods that were the subject of the claim for passing-off. This is shown by the way in which the learned judge approached the subject:

a. In para 35 of his grounds of judgment, the learned judge referred to "goodwill attached to the plaintiff's business". This goodwill does not feature in claims for passing-off, which concern goodwill in goods or services, though such goodwill is attached to a business. In Reckitt & Colman Products Ltd v. Borden Inc and others [1990] 1 All ER 873, Lord Oliver said at p 880:

"The law of passing-off can be summarised in one short general proposition, no man may pass off his goods as those of another. More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. These are three in number. First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying 'get-up' (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff's goods or services."

b. In para 36(1) of his grounds of judgment, the learned Judge considered the "right to endorse or recommended the defendant's goods" and a loss of "licence fee or royalty". We find that this was not the pleaded claim of the plaintiff. In any event, the plaintiff did not lead evidence to show that the company was a mere licensee.

c. In para 36(2) of the grounds of judgment, the learned judge considered the likelihood that the sales of the plaintiff's goodwill be adversely affected. As we have stated earlier, exh P-5 was an example of the Haje's goods and not the plaintiff's. This was acknowledged by the learned judge in para 2(2) of the grounds of judgment where the learned High Court Judge noted:

"[2] The plaintiff testified as follows, among others:

(1) the plaintiff is a singer and composer of songs. The plaintiff is known by his name "Hafiz Hamidun" (plaintiff's name). In fact, the plaintiff's name is the title of one of his albums;

(2) the plaintiff started a company, Mikraj Concept Sdn Bhd (MCSB) [now known as Haje Sdn Bhd (HSB)]. Based on the plaintiff's name, HSB (previously MCSB) sells various:

(a) clothes, including "Baju Melayu" (traditional Malay outfit for men), "Kurta" shirts and robes; and

(b) fabrics"

d. In para 36(3) of his judgment, the learned High Court Judge found that the plaintiff would lose his exclusive right to use the plaintiff's name for the plaintiff's goods. However, the learned High Court Judge failed to take into consideration the fact that it was Haje that was using the name for fabrics and apparel.

[63] It is significant that no evidence was led as to an independent right on the part of the plaintiff personally to sue for loss in respect of goodwill in fabrics and apparel. The plaintiff had not, in any event, demonstrated any independent goodwill in fabrics and apparel given that the plaintiff had confined his claim to exh P-5 and exh P-5A.

[64] In any event, the company was at all material times a separate legal personality.

[65] Therefore, it is clear that any injury caused by the alleged passing-off would have been sustained by HSB and not the plaintiff.

[66] Applying the above authorities to the facts of this case, the plaintiff is not the proper party to sue for the alleged passing-off in the present case. In our view, HSB owned the goodwill in the brand name "Hafiz Hamidun".

[67] In light of the foregoing, it is not necessary for us to consider the other elements of passing-off, namely misrepresentation and damage.

Conclusion

[68] For the reason set out above, we conclude that the learned High Court Judge erred in his findings which warrants appellate intervention. Therefore, we unanimously allowed the appeal with cost of RM85,000.00 here and below subject to the payment of allocatur. Accordingly, the decision of the learned High Court judge is set aside.