Synn Palm Oil Sdn Bhd v Chow Kee Palm Oil MILL Holding Sdn Bhd (AB-22NCvC-3-01/2019)

1.

SYNN PALM OIL SDN BHD NG CHONG GENG & SONS SDN BHD AND DEFENDANT CHOW KEE PALM OIL MILL HOLDING SDN BHD 05/11/2024 00:17:06 AB-22NCvC-3-01/2019 Kand. 128 JUDGMENT Preface [1] There are two plaintiffs in this case, the first Synn Palm Oil Sdn Bhd, to be referred as P1, the owner of the palm oil processing mill located on a piece of land owned by its parent company Synn Heng Trading Company Sdn Bhd. The second plaintiff, to be referred as P2 is Ng Chong Geng & Sons Sdn Bhd, the owner of palm oil effluent plant located on a piece of land owned by it. [2] Both P1 and P2 entered into two separate lease agreements with the defendant, Chow Kee Palm Oil Mill Holding Sdn Bhd. [3] The first lease agreement, to be referred as LA1 was in respect of a palm oil processing mill premises together with plants and machineries (the demised premises) erected on a land owned by P1’s parent company, based at Taiping, Perak. LA1 is exhibited as P20 which could be found at pages 1 to 38 of the Common Bundle of Documents 1 (CBOD 1). [4] P1 was granted the absolute right by its parent company to lease the demised premises to the defendant. (See also P20 at pages 32 to 36 of CBOD 1). The terms and conditions of LA1, as agreed by parties, inter alia is as found at pages 7 and 8 of the plaintiffs written submission in enclosure 96. [5] There was another lease agreement between P2 and the defendant, referred to as LA2 which is in respect of palm oil effluent plants located on part of the land owned by P2. (See P21 at pages 39 to 63 of CBOD1). Its terms and conditions as agreed by parties, inter alia is at pages 9 and 10 of the plaintiffs written submission in enclosure 96. [6] Therefore, there are two (2) Lease Agreements and the Leased Premises are the Palm Oil Mill and the Effluent Plant. The Bank Guarantee [7] In respect of LA1, the defendant was to provide P1 by way of bank guarantees of the following: • a security deposit in the sum of RM450,000 and • utilities deposit in the sum of RM150,000 [8] However, the defendant had failed to do so, instead provided post-dated cheques dated 7.10.2018 for the above sum in favor of P1. It was agreed by parties that in the event the defendant failed to deliver the bank guarantees for the deposits to the plaintiff within three (3) months, the plaintiffs shall deposit the post-dated cheques for the said sums of deposits. The post-dated cheques were produced as exhibit P23A, at page 233 of CBOD1. [9] Since the bank guarantees were not forthcoming from the defendant, the plaintiffs banked in the post-dated cheques on 12.10.2018, but they were informed by the bank that the cheques were rejected and dishonored. Pursuant to which, PW1 sent an e mail dated 15.10.2018 to inform the defendant of the dishonored cheques and to arrange a meeting with the defendant on 17.10.2018. They met but the issue was not resolved. Unpaid rentals and utilities incurred. [10] Prior to commencement of the lease agreements on 15.6.2018, for the period from 16.4.2018 to 14.6.2018, the plaintiffs had allowed defendant to occupy the leased premises for about two (2) months in order for them to conduct the necessary inspection. It was supposed to be a rent-free period but the defendant is required to pay for the utilities consumed for the said period. [11] The lease agreements dated 4.7.2018 were signed by parties after the defendant was satisfied with the condition of the leased premises. [12] The rent for the period 15.6.2018 to 14.7.2018 was received from the defendant but it had refused and failed to pay the stamp duties under both lease agreements amounting to RM42,120.00. Additionally, rent for the period from 15.7.2018 to 14.8.2018 and 15.8.2018 to 14.9.2018 were not paid on or before the due date in accordance with the lease agreements and also the utilities charges incurred by the defendant since occupation of the leased premises on 16.4.2018. Termination Notices [13] Consequently, the plaintiffs had issued termination notice, in compliance with the lease agreements, on 29.8.2018. (See P28 at pages 219 to 225 of CBOD1). Resulting from that, the defendants had contacted the former solicitors of the plaintiffs, Messrs. Wong & Loh and arranged for the payment of stamp duties. Further a discussion had ensued between them and the defendant had informed the plaintiffs that it would arrange for the payment of outstanding rents and utilities incurred as well as the bank guarantees for the security and utilities deposit to the plaintiffs. (See P29 at page 226 of CBOD1). In view of the discussion and the ensuing agreement by the defendant, the termination notice dated

29.8.2018 was revoked and parties had continued with the lease agreements. [14] Sadly, the defendant had failed to provide the bank guarantees and make the payments for the rent and utilities incurred. At the meeting held on 17.10.2018 between parties, issues on the overdue rental and utilities was not resolved. Therefore, the plaintiff via their solicitors terminated both the lease agreements vide termination notice dated 2.11.2018, which came about due to the breach of the said agreements by the defendant to pay the outstanding rentals and utilities. (See P37 and P38 at pages 245 to 253 of CBOD1). Simultaneously, the plaintiffs had also demanded for the defendant to quit, yield up and deliver vacant possession of the leased premises by or before 4.11.2018. But, the defendant had only delivered vacant possession on 1.2.2019 after the present civil suit was instituted against them. (See P45 at page 293 of CBOD1). [15] Ensuing from breach of the lease agreements committed by the defendant, the plaintiffs had suffered loss and damages. Hence their prayers in their statement of claim (SOC) filed with the writ of summons. In the main their claim is for • Utilities bills during the rent-free period, from 16.4.2018 to 14.6.2018; • Arrears of rent from 15.7.2018 to 2.11.2018 under both lease agreements LA1 and LA2; • Utility bills during the occupation of the palm oil mill and the effluent plant between the period 15.6.2018 to 1.2.2019. Conduct of the defendant [16] On the contractual transaction between parties, the defendant had conducted itself in the following manner: • Save for payment of the first rent, the defendant had failed to pay the remaining outstanding rent and utility bills. The payment of the first rent was to comply with their obligation under the lease agreements. • Had refused to pay the stamp duty until the first termination letter was issued by the plaintiffs. As required for the lease agreements, they had finally paid the stamp duty. It was only paid after the first termination notice was issued by the plaintiffs on 29.8.2018. • It had issued post-dated cheques for subsequent payment of rent and utility bills which were dishonored. Issuance of the post-dated cheques was to honor their obligation under the lease agreements. • It had failed to provide security deposit vide bank guarantees as required under the lease agreements in the sum of RM450,000 and utilities deposit in the sum of RM150,000. • It had applied for the Malaysian Palm Oil Board (MPOB) license late. It has to be iterated that pursuant to clause 6.2 (b) of LA1, it is the defendant’s responsibility to obtain the relevant MPOB license for which P1 shall at its discretion render reasonable assistance to the defendant. • It delivered vacant possession of the demised premises late.

Issues raised by defendant The Lease Agreements are invalid and unenforceable. [17] This issue arises from the fact that the land is owned by Synn Heng Trading Company Sdn Bhd (Synn Heng) which is the plaintiffs’ parent company but the palm oil mill is owned by P1. This issue is canvassed by the plaintiffs on the following facts evident from the documentary and oral evidence proffered in the case: • Appendix A to LA1, states clearly that Synn Heng had given the requisite consent to P1 to enter into LA1. (See page 31 of CBOD 1) • P1 had the authority to do so as proprietor of the leased premises as well as agent of Synn Heng. • The demised premises in issue is the palm oil mill which was leased to the defendant. • The defendant was at all material times aware of this arrangement, hence they were not misrepresented or deceived into entering LA1. • In fact, the defendant entered into LA1 on its own volition and with free consent. • It was the defendant whom had proposed the terms and conditions of the lease agreements to the plaintiffs via its solicitors. • As the defendant intended to have an option to purchase the factories, which is the subject matter of the Lease Agreements, the National Land Code (NLC) was not be applicable. It is so pleaded at paragraph 2 (b) to (c) of the Reply to Defence and Defence to Counterclaim dated 5.3.2019. [18] On the law, section 115 of the Evidence Act 1950 (Act 56) which adumbrates the principle of estoppel by representation of fact, conduct and acquiescence operates against the defendant for the simple reason, as it has by its own act and conduct had intentionally caused or permitted the plaintiffs to believe the arrangement entered into amongst them to be true, and the plaintiffs had acted on that belief, the defendant now shall not be allowed in this proceeding to deny the truth of that arrangement which had come into fruition and also when the defendant chose not to honor its obligation to make the requisite payments of deposits, stamp duties (at the outset), rentals and utilities charges leading the plaintiffs to proceed against them in this court. [19] It is apparent that both the plaintiffs and defendant have conducted their dealings in accordance with the arrangement they have agreed to. Thus, the defendant is not allowed to go back on that arrangement which had operated well for the parties. The defendant cannot now approbate and reprobate. By taking a different stance now in the lease transaction, the plaintiff is placed in an unfair and disadvantaged position. Parties have acted in this lease transaction on the assumption that the state of facts revolving around the lease agreements is accepted as true, thus the defendant is now estopped from questioning the truth of the said facts, which in this case includes the validity, legality and enforceability of the lease agreements executed by the defendant. By reneging from the lease agreements, the law stands fair and the plaintiff will not be left remediless but equity would come to their aid. (See the Federal Court case of Boustead Trading (1985) Sdn Bhd v Arab Malaysian Merchant Bank Berhad (1995) 3 MLJ 331). [20] Further, statutorily the position of the plaintiff is preserved and protected by section 206 (1) and (3) of the National Land Code (NLC) which renders the following:

Subject to the following provisions of this section:

every dealing under this Act shall be effected by an instrument complying with the requirements of sections 207 to 212; and

no instrument effecting any such dealing shall operate to transfer the title to any alienated land or, as the case may be, to create, transfer or otherwise affect any interest therein, until it has been registered under Part Eighteen. …

Nothing in subsection (1) shall affect the contractual operation of any transaction relating to alienated land or any interest therein. Evidently, the contractual operation of the lease transaction between the plaintiffs and defendant had gone on unhindered and only at the eleventh hour when the plaintiff chose to institute civil proceeding against the defendant for breach of the lease agreements, it raises this issue on non-compliance with the NLC and that the lease agreements were rendered not valid and unenforceable as it is not registered pursuant to the provisions of the NLC. This smacks on an afterthought, raised purposely to thwart the claim made by the plaintiff for loss and damages due to breach by the defendant of the said lease agreements. [21] Further, conduct of parties saves the contractual transaction amongst them, albeit the lease agreements are not registered under the NLC. At the most the lease agreements are imperfect but not rendered void. The defendant whom had occupied the demised premises by virtue of their possession on it had become a tenant at will. Equity comes to the aid of the plaintiffs, and the lease shall be treated as an equitable lease, the unregistered lease to be treated as registered, compelling specific performance of the contractual obligation by the defendant in law. (See: S & F Jewellery Trading Sdn Bhd & Ors v Fui Lian Kwong-Hing Sdn Bhd (2015) 8 CLJ 16). The plaintiffs are entitled to place reliance on equitable lease pursuant to section 206 (3) of the NLC, as the facts supporting the legal proposition was pleaded and evidence supporting the proposition was led during the trial. (See Order 18 rule 7 of the Rules of Court (ROC) 2012). Thus, for all intents and purposes, the lease agreements entered into by the parties, operates as a binding contract and failure by the defendant to comply with it, places the defendant to be in breach of the said contract. It is reiterated that the defendant in this case had been in occupation of the palm oil mill and the effluent plant from 15.6.2018 until 1.2.2019. [22] The defendant too cannot now make an adverse turn and state that the lease agreements are void as it lacks free consent by them when entering into it, which is a requirement under the law of contract pursuant to section 10, 13 and 14 of the Contracts Act 1950 (Act 136). It cannot be so as they were at all times when the lease agreements were discussed and executed, represented by their own solicitors and legal counsel within the entity. Witnesses for the defendant DW4 and DW7 admits to this salient fact in their oral testimony in court, during cross-examination by counsel for the plaintiffs. In fact, DW7 being the controlling mind of the company, had agreed that the defendant was not forced to enter into the lease agreements.

Counterclaim by defendant – the alleged misrepresentation of the palm oil mill and effluent plant conditions by the plaintiffs. [23] It was alleged by the defendant that the plaintiff via Ng Cheong Loon and Hwang Cheong Synn misrepresented to them on the following: • That the palm oil mill and effluent plant were in good running condition; and • Only the alternator is absent but the plaintiffs sent it to the contractor for repair and it will be returned and installed again, which the plaintiffs failed to do so. Clause 2 (a) of the lease agreements stipulate that the leases were on an “as is where is” basis, which is to mean that the demised premises were leased in its current condition at that material time. This was positively agreed to by both DW1 and DW7 during cross-examination by counsel for plaintiffs. Further clause 14.1 of the lease agreements which provides for an entire agreement clause, supersedes any other agreement and the lease agreements was not entered into by the parties in reliance of any agreement, understanding, warranty or representation of any party not expressly contained or referred to in the agreement. This clause is binding on the defendant and the full contractual terms are only found in the agreement and nowhere else. Thus, any promises or assurances made in the course of negotiations of the agreement shall have no contractual force save if it is reflected and stipulated in the agreements. (See the case of Inntrepreneur Pub Co v East Crown Ltd (2000) 3 EGLR 31, which was referred to in the written submission by counsel for plaintiffs). Thus, in sum total clause 14.1 rank in priority over any alleged representation made by the plaintiffs which was not relied on by the defendant when it executed the lease agreements. To reiterate, the lease agreements supersedes any alleged or purported representation. [24] On the facts, the defendant was given opportunity to occupy the demised premises during the rent-free period from 16.4.2018 to 14.6.2018 to examine and inspect the leased premises before execution of the lease agreements. It was only executed on 4.7.2018, thus the defendant had ample time for about 2.5 months to inspect the leased premises before deciding to execute the lease agreements. DW7 had testified in agreement with the rent-free period. He is also no novice to the palm oil processing industry, and would be able to identify defects, if any on any of the equipment, installations and the leased premises after having inspected them. Moreover, pursuant to the testimony of DW1, the defendant had taken over the plaintiffs’ employees at the leased premises. In fact, prior to the execution of the lease agreements, the defendant had already engaged those workers to commence work at the leased premises, who were in a position to report to the defendant on the condition of the leased premises. No complaints whatsoever were made to the plaintiffs on the condition of the leased premises during the rent-free inspection period. That goes to show acceptance conduct on their part. Thus, to go an adverse turn is definitely an afterthought. DW1 who was a former employee of P1 had also testified that he knew that the leased premises were not in good condition prior to commencement of the lease agreements. That again, demonstrates knowledge on the part of the defendant that the leased premises were not in good running condition as it was in operation since July 2017. As the allegation of misrepresentation was also made against Hwang Cheong Synn, he had testified for the plaintiffs as PW2, stating that the leased premises were in good condition means that when we stop the mill that time it’s in good condition, after that, … we stopped the mill we don’t know whether the condition is good or no good. With regard to the alternator he had testified we not promise him that we bring back the alternator. We just told, tell him that the alternator is not in the mill but we sent to the workshop. If he wants the alternator back, we can give him the telephone and he contact the workshop himself to send, to take back the, whether he want to take back the alternator or not. Hence, the alternator saga is a non-issue.

Fraud [25] It was contended by the defendant that the plaintiffs had intended to induce them to enter into the lease agreements to repair the leased premises and had refused to hand over the Malaysian Palm Oil Board (MPOB) license. Back to LA1, in clause 6.2 (b) it is provided that it is the defendant’s responsibility to obtain the relevant MPOB license and P1 would in its discretion render reasonable assistance to the defendant. It is a fact that the defendant did not request for the plaintiffs to surrender the MPOB license. The issue was first brought up by the defendant at a meeting on 17.10.2018, by which time the defendant had breached the lease agreements. It is borne out by evidence that at all material times, there was no request by the defendant for the plaintiffs to surrender the MPOB license earlier than October 2018. [26] DW2 from the licensing authority, which is MPOB had testified that it was unnecessary for P1 to surrender its MPOB license before the defendant could apply for MPOB license under its name. Further an admission was made by DW7 that the license from the Department of Environment (DOE) was required before the defendant could apply for the MPOB license. The application for the DOE license was only submitted by the defendant to the DOE on 24.10.2018. The defendant too could not show that it had submitted any application for the MPOB license but P1 has given a copy of the MPOB license to the defendant. PW1 had testified that the MPOB license was already hanging in the offices. [27] It is also confirmed by both DW1 and DW2 that the defendant does not even fulfil the MPOB requirements set in its criteria and guidelines, wherein an applicant must have a capital of RM5 million to take over a palm oil mill but the defendant is only a RM1.00 company. Further, as of October 2018, the defendant had only paid one-month rental despite the fact that the lease agreements commenced on 15.6.2018, thus it is not necessary for the plaintiffs to surrender its MPOB license as the defendant had not paid rentals and had not applied for the MPOB license.

Unlawful termination of the lease agreements [28] It is contended by the defendant that the plaintiffs had terminated the lease agreements unlawfully on 1.11.2022. Stark is the evidence proffered in the case, that the defendant had breached the lease agreements by not fulfilling their obligation. For the defendant to claim unlawful termination of the lease agreements, when they were in breach of it, is in effect taking advantage of its own default or breach. The defendant whom is seeking this court to declare the termination of the lease agreements as unlawful is itself in default. Thus, it is estopped from alleging unlawfulness of which its own breach of the agreements is the causa causans. It is clear that the defendant is taking advantage of its own default, to avoid their obligations to pay security deposits, rentals and utilities charges under the lease agreements. (See the case of New Zealand Shipping (1917) 2 KB 717 at page 723 to 724 referred to by the Federal Court in the case of Arkitek Tenggara Sdn Bhd v Mid Valley City Sdn Bhd (2007) 6 CLJ 93, submitted by counsel for plaintiffs in their written submission). [29] It is also in evidence that the defendant was allowed ample opportunity to rectify their fault and neglect in order to act in accordance with the lease agreements. It was only after that, the termination of the agreements came about, thus it was not done prematurely. Contractually the defendant had failed to perform their obligation under the lease contract as required under the law pursuant to section 40 of Act 176 which stipulates that as the defendant being party to the contract has refused to perform its promise under the contract, the plaintiffs being the lessor may put an end to the contract in the absence of words or conduct by the defendant, of its acquiescence in its continuance.

Damages counterclaimed by defendant [30] The defendant had claimed general damages; loss of business and/or profit calculated on a daily basis based on mill capacity; compensation to the defendant’s employees who lost their jobs resulting from the unlawful termination of the lease agreements and costs of repair of the leased premises. Their basis being, they were not able to operate the palm oil mill and effluent plant, as the plaintiffs had refused to surrender the MPOB license; the poor condition of the leased premises and unlawful termination of the lease agreements. [31] It is apparent from the pleadings advanced by the defendant, their claim for losses are not particularized. Further, the alleged losses are unsubstantiated vide tangible evidence. What is clear as crystal is that, their own breach had caused the alleged unsubstantiated losses. Findings [32] On the issues raised by the defendant and the evidence tendered by both the plaintiffs and defendant, the following are this court’s findings: • Proof that the palm oil mill is legally owned or belonged to P1 was tendered by the plaintiffs. Thus, they have fulfilled their evidential burden. It is not in dispute that Synn Heng is the registered proprietor of the land on which the palm oil mill is located. P1 is the 100% wholly owned subsidiary of Synn Heng. • Synn Heng had given its consent to LA1, when it is stipulated in the agreement that it agree, allow and consent to the lessor to lease the demised premises to lessee subject to the terms and conditions stated herein. (See page 31 of CBOD1). • It is the intention of the defendant to lease the palm oil mill as well as the effluent plant to operate the palm oil mill. It is so stated in clause 3 of LA1. • Tangible evidence showing that P1 is the party that owned and operated the palm oil mill which is in issue, is the consent by Synn Heng (See page 31 of CBOD1); assessment receipts by the local authority (See P22A, P22B); the DOE (P31A) and MPOB license (P31B) which were all issued to P1. Those exhibits are found at pages 64 until 68 of CBOD1. • The lease agreements were drafted by the solicitors for the defendant and forwarded to the solicitors for the plaintiffs via e mail dated 8.4.2018 (See pages 109 and 110 to 137 of CBOD1). Further the solicitors for the defendant had identified P1 as the owner of the palm oil mill. In view of that, it is too late for the defendant to say otherwise and they are estopped from contending that P1 is not the legal owner of the palm oil mill. • As analyzed above, section 206 (1) and (3) of the NLC renders the lease agreements enforceable and binding, albeit it was not registered. The validity of the contractual transaction between parties is preserved by section 206 (3) of the NLC and all contractual obligations under the lease agreements remained unaffected by non-registration of the lease. Further pursuant to clause 12.13 of the lease agreements the defendant had knowingly covenanted not to endorse the tenancy on the title to the said land under the provisions of the NLC. • The pivotal issue in this court is on the operability and enforceability of the lease agreements LA1 and LA2 which have been duly executed and/or agreed by the parties. Its objectives, obligations and rights of the parties are set out expressly in the lease agreements, which the defendant is bound with as it knowingly executed the said agreements without any force or compulsion, as admitted to by DW7 in his testimony. So, to make an adverse turn and contend that it has to be registered under the NLC, and since it was not registered it could not be enforced is a belated disclosure and an afterthought in law. Parties were at consensus ad idem when the lease agreements were negotiated and executed. There were meeting of minds between the plaintiffs and defendant and they had a clear understanding of the terms and conditions of the agreements and its subject matter, thus it is legally binding on them. Legally, there is also an express consideration set out in the lease agreements which is the occupancy and utilization of the palm oil mill and effluent plant. • The defendant is bound by the interpretation of the lease agreements as agreed with the plaintiffs. Thus, there is no necessity for this court to inquire further if the interpretation of the lease agreements as adopted by the defendant now is correct or incorrect, but the acceptance by the defendant on the interpretation of the lease agreements together with the plaintiffs at the relevant time of negotiation and execution cannot now be disregarded, just because the defendant has now an afterthought on the understanding of the lease agreements, that it has got to be registered under the NLC. (See the case of Amalgamated Investment and Property Co Ltd (in liquidation) v Texas Commerce International Bank Ltd (1981) 3 AER 577 at page 584, adopted by the COA in the case of Noraini bte Mohamed Hadi v Pembangunan Tanah dan Perumahan and another appeal

4 MLJ 152). • On the facts and evidence tendered in this case which was vehemently cross-examined by the defendant via its counsel, it is this court’s finding that P1 is the correct party to LA1 whom was operating the palm oil mill with the rights accorded to it and it is not a stranger to the lease agreement. Confirmation of this could be found in the testimony of PW2 Hwang Cheong Synn who was the executive director for Synn Heng who had testified positively that Synn Heng had granted P1 the absolute right to lease out the palm oil mill. That piece of evidence stands unchallenged. • The palm oil mill was built and operated by P1. The defendant at all material times intended to utilize the said palm oil mill which forms the subject matter of the lease agreement. Having intended so and agreed to the contents of the lease agreement, the defendant cannot now renege and state that the land and building are separately owned by different entities and the correct party to sue would be Synn Heng. • From the evidence on record it is apparent that P1 was given a written consent by Synn Heng pursuant to the Consent of the Registered Proprietor of LA1 to enter into the agreement with the defendant. In respect of LA2, the palm oil mill effluent plant is owned by P2, thus consent is not required for P2 to enter into LA2 with the defendant. Further the lease agreements are not void by reason of non-registration, but it stands enforceable as it is saved by the operation of the exception found in section 206

of the NOC and also by way of equity. The contractual operation of the parties, from the point of inception of the lease agreement when it was negotiated, agreed upon and executed prevails at all times. As alluded to earlier the defendant cannot now renege, or resile from it, after having committed flagrant breaches of the lease agreements, pointedly to thwart the legitimate claim by the plaintiffs which in fact is premised on the same lease agreements. • This court is in full agreement with the submission by the plaintiffs that there is no condition precedent to be fulfilled by parties in order to allow the lease agreements to be effective. Reliance by the defendant is on clause 4.1 (a) and (b) of LA1 and clause 4 of LA2. As starter, the clauses do not say that the whole lease agreements will be ineffective in the event those clauses are not met by the defendant, thus it is not condition precedent. It too does not lay out the consequence of not complying with the said clauses within the stipulated period. (See the Federal Court case of Globe Engineering Sdn Bhd v Bina Jati Sdn Bhd (2014) 7 CLJ 1). It merely provides that the defendant would have to provide security deposit by way of a bank guarantee and pay utilities deposit. Although the defendant did not provide it but parties continued with the lease agreements. The defendant had mindfully continued with occupation of the palm oil mill until the delivery of vacant possession. It is also a fact that P1 did not seek to terminate the lease agreements despite the failure by the defendant to provide the bank guarantees for the securities deposit, thus, it was never the intention of the parties for the said clauses to be condition precedent. In any event, the plaintiffs had agreed to accept the post-dated cheques instead as payment of the security deposits, but it stood dishonored when it was banked in. The defendant cannot now take on an inconsistent stand in respect of the lease agreements, as if they were frustrated by the events that had unfolded that surrounds the lease agreements. They had the choice to leave the leased premises and seek out to terminate the said agreements but by their conduct they continued to occupy the leased premises and further delayed delivery of vacant possession even after termination notice was issued to them by the plaintiffs. • Procedurally, this issue that clause 4.1 (a) and (b) of LA1 and clause 4 of LA2 serves as condition precedent and it must be fulfilled before the agreements can be effectively commenced was never pleaded by the defendant in its pleading i.e. defence and counterclaim. It is salutary that the defendant is bound by its own pleading unless it is amended. It is also bound by the particulars, which forms part of the pleadings. Its aim is to prevent surprise and to limit and particularize events in order that both parties come to court to trial fully prepared for the issues. The defendant ought to be reminded of the salient rule on the object of pleadings which is referred to in the Federal Court case of Anjalai Ammal & Anor v Abdul Kareem (1969) 1 MLJ 22 where reference is made to a resourceful judgment by Jessel MR in the case of Thorp v Holdsworth (1876) Ch 637 at 639, which states: The object of pleadings is to bring the parties to an issue and the meaning of the rules was to prevent the issue being enlarged, which would prevent either party from knowing when the cause came on for trial, what the real point to be discussed and decided was. In fact, the whole meaning of the system is to narrow the parties to definite issues, and thereby to diminish expense and delay, especially as regards the amount of testimony required on either side at the hearing. • It is confirmed by DW7 during cross-examination that there is no clause in the lease agreements stipulating that the defendant shall pay rent after the MPOB license is obtained. There is also no evidence adduced to prove that the defendant had submitted any application for issuance of the MPOB license. Thus, the issue of the plaintiffs preventing them from peaceful enjoyment of the leased premises without the MPOB license is preposterous, as it is their obligation to have the license issued to them by MPOB. This could be found at clause 6.2 (b) of LA1. Ensuing from that to also claim that the defendant was not obliged to pay the rent as it had not obtained the MPOB license is also not in compliance with Clause 5 of the lease agreements, which is unambiguous. The payment of rent is provided for in that clause, stipulating that it is unconditional to the defendant obtaining the MPOB license or whether the palm oil mill and the effluent plant were in operation. It is reiterated that the entire lease agreement is for the tenancy of the palm oil mill and effluent plant and the tenancy is to operate the palm oil mill. Such claim by the defendant is also inconsistent with paragraph 64 (a) of the defence and counterclaim of the defendant where it is pleaded that it has paid all the outstanding rent to the plaintiffs. Thus, once again position taken by the defendant now, is an afterthought explanation and/or defence raised to thwart the legitimate claim by the plaintiffs. • There are on record contemporaneous documents tendered to the court to prove the outstanding rentals owed by the defendant, including letter dated 29.8.2018 and 29.10.2018 and relevant e mails, which could be found at pages 219 to 223; 228 as well as 241 to 244 of CBOD 1. Thus, the defendant has full knowledge of its default in rentals but continued defaulting, thus in breach continually. Hence, came about the termination notice on 2.11.2018 which was lawfully issued pursuant to clause 8 (a) of the lease agreements where it is stipulated that LA1 and LA2 shall be terminated upon service of a written notice from the plaintiffs to the defendant, issued as there was default of payment of rent. • No complaints were raised by the defendant to the plaintiffs with regard to condition of the leased premises during the rent-free inspection period. Such conduct only goes to demonstrate that the defendant was satisfied with the condition of the leased premises and thus intended to enter into the lease agreements willfully without any force or compulsion. • The defendant had raised an allegation that the plaintiffs appeared to have another plan and intended to sell the palm oil mill to a third party once the defendant has repaired it. As it is raised by the defendant, the evidential burden lies on them

The discrepancies include, positioning of the signature of DW7, Tan Eng Wah (DW1) and Mohd Zair bin Mohd Taib (DW6) and his staff; positioning of the company stamp in the original copy which is different from the copies filed. The discrepancies were fortified by the testimony of DW7 during cross-examination, when he testified there were multiple versions of the delivery orders, purchase orders and invoices filed in CBOD 5 and CBOD 6. Why is it so? This court finds, that per se casts doubt on the accuracy and reliability of those documentary proof, tending to show on a balance of probabilities that the plaintiffs are right when they had stated the documents are faked up to support a counterclaim against the plaintiffs. In fact, counsel for plaintiffs has produced a table of comparison with the notes on the discrepancies between the original documents tendered in court and the copies filed in CBOD 5 and CBOD 6 as Annexure D to their written submission at enclosure 96 as well as the delivery orders in the table of comparison in Annexure C to their written submission at enclosure 96 with the testimony of DW6 Mohd Zair in his witness statement of Q & A 8 and 12. o On the photos taken in support of the business documents issued by Palm Pro Engineering Sdn Bhd showing the repair works done, witness DW1 Tan Eng Wah for the defendant testified that he was the maker of the photo at page 1294 of CBOD 5 and page 1455 of CBOD 6. He is not truthful, as he was in the said photographs. He also testified that he was the maker of the photos listed in Annexure C to the written submission by counsel for plaintiffs at enclosure 96, but at the same breadth he admitted in his testimony in court that he had gained admission to the hospital from 26.7.2018 to 8.9.2018, which makes it impossible for him to take the said photos. o Reliance by the defendant on the photos as proof of its counterclaim smacks on untruthfulness, which per se tilts the balance of probabilities in favor of the plaintiffs. The said photos were relied on to show that Palm Pro carried out repair works at the leased premises in support of their counterclaim. But the defendant’s workers were seen repairing the palm oil mill, thus it is again untrue for Palm Pro to have carried out the actual repair works at the leased premises and incurred costs. PW2 was able to identify the workers in the photos who were carrying out repair works at the mill because they were the plaintiffs’ former employees, whom had subsequently worked with the defendant after it had taken over the palm oil mill operations at the leased premises. The photos referred to can be found at CBOD 5 at pages 1117, 1157, 1158, 1162 and at CBOD 6 at pages 1337, 1413 and 1470. Additionally, some of the photos showing repair works carried out by Palm Pro were dated prior to commencement of the lease agreements and issuance of the purchase orders. A tabulation of dates of those photos; purchase order; invoices; and delivery orders are tabulated at pages 90 to 91 of the written submission by counsel for plaintiffs. o Aside that, there are numerous delivery orders, invoices and purchase orders submitted as evidence, from Palm Pro which were dated after the lease agreements were terminated on 2.11.2018. Thus, question to be asked, what is need for continuance of repair of leased premises after the lease agreements were terminated, as they do not possess any more right to occupy and operate the palm oil mill? On a balance of probabilities, such costs and losses incurred by the defendant is not attributable to the plaintiffs. (See pages 1257 to 1259; 1261 to 1263; 1266 to 1268 of CBOD 5 and pages 1331 to 1333; 1349 to 1351; 1355 to 1357; 1369 to 1371 and 1410 to 1412 of CBOD 6). o DW7 was a director of Palm Pro before he resigned on 30.9.2009, then DW6 Mohd Zair was appointed as director of Palm Pro on 30.9.2009. It is also in evidence that both of them knew each other prior to the year 2018. In light of the various discrepancies of the photos and business documents alluded to above, on a balance of probabilities, the authenticity and reliability of business documents from Palm Pro raises eyebrows, showing its dubiousness to the extent that this court could not rely on those documents tendered as it is shrouded with a series of doubts, fortifying the submission by the plaintiffs that it were all faked up to support the counterclaim by the defendant, when it is not a legitimate claim mounted in this court. o The veracity of the documentary proof extends also to proof of payment adduced to show that payment was in fact made to other third-party contractors to repair the leased demised premises. Although proof of payment was adduced at CBOD 4 at pages 939, 1019, 1020 and 1038, the defendant did not adduce any receipts to show that payment was in fact made to third party contractors for the repairs. Further in this category of documents, there were invoices issued by Awan Timur Kluang Sdn Bhd to the defendant. Notwithstanding that, DW7 had admitted in court during cross-examination that the defendant did not pay monies to Awan Timur for the materials and services rendered. He went on to say that he is the common director in Awan Timur Kluang Sdn Bhd and the defendant and it had supplied palm oil mill and spare part materials to the defendant and paid on behalf of the defendant as the defendant did not have any account to purchase any materials. (See CBOD 4 at pages 945, 946, 970 and 971). But the fact remains, there is no proof of payment to show reimbursement by the defendant on the payments advanced by Awan Timur Kluang Sdn Bhd, for it to be entitled in law to counterclaim from the plaintiffs. The salient fact is that both the companies are two separate legal entities, and have separate juristic personalities. Further, DW5 had admitted in her testimony that the instruction came from DW7 to her to prepare the delivery orders corresponding to the purchase orders and that the defendant did not pay for the goods and materials supplied. So where is the proof of expenses incurred and it was in fact meant for the repair of the leased premises? o Claim by the defendant that the rent and utility payments were made stands unsupported. Production of the payment vouchers do not afford tangible proof of its case, supported by the testimony of DW7 himself that no payment was in fact made if there were no payment receipts but only payment vouchers. In the absence of payment receipts, proof by the defendant falls short of its legal burden in law of evidence pursuant to section 101 EA, on a balance of probabilities. Therefore, the summary of the alleged payments of rental and utilities by the defendant exhibited as D329 stands of no weight in evidence and disregarded by this court. o On the alleged loss of profit of a whopping RM18 million is unsupported by any data save for the price range of oil palm and related crops. As such, it is only an estimation by the defendant, as admitted to by DW7, rendering the figure to be inaccurate. Further, the figure raised is not substantiated with documents, thus wanting in tangible proof by the defendant of the counterclaim on a balance of probabilities. Conclusion [33] Parties to this civil suit are on equal footing, the plaintiffs being the lessor and the defendant, lessee. There was much meeting of minds, negotiation and execution of the lease agreements LA1 and LA2. The plaintiffs and defendant have knowingly and wilfully entered into a contractual transaction with the terms and conditions of the lease agreements binding on them and governing the lease transaction amongst them. By conduct the defendant had earlier breached the lease agreement, but as comity prevails on the parties, the plaintiffs had allowed the defendant time and opportunity to remedy their breaches. The aftermath being, the defendant was continually in breach showing no remorse, thus leading to the civil suit by the plaintiffs against them. After much goodwill in the contractual lease transaction, in this court, in order to thwart the claim by plaintiffs, the defendant had raised factual and legal issues which tantamount to be afterthoughts and belated disclosure, which are dismissed in limine, as it goes against the root of the lease agreements which came into fruition by consensus ad idem of both parties. Alluding to the above analysis of the facts and evidence proffered in this case and applying the correct law applicable, the following issues to be tried agreed by parties before inception of trial are answered accordingly, also as concluded in the written submission by parties. [34] The lease agreements are valid and binding. LA1 is for the leasing of the leased premises, which is only the palm oil mill owned by P1. Synn Heng, which is the owner of the land on which the palm oil mill situated had consented to LA1. The defendant had only paid one-month rental to the plaintiffs for the month of June 2018. Subsequently, the defendant did not pay any of the utilities during its occupation of the leased premises. Thus, the defendant has breached the lease agreements. Consequently, the plaintiffs had lawfully terminated the lease agreements in view of their default of payment of rentals which amounts to a material breach pursuant to clause 8 (a) of the agreements, allowing the plaintiffs to terminate the lease agreements. Resulting from that, the plaintiffs are entitled to the relief sought for in prayers to the statement of claim, which are the rentals and utilities from the month of July until October which had remained unpaid. In view of clause 6.20 (b) of the LA1 and 6.22 (b) of LA2 as well as legal provision in section 28 (4) (a) of the Civil Law Act 1956 (Act 67), the plaintiffs are also entitled to claim double rental. Further in view of the agreement by parties, interest at the rate of 8 % per annum has to be charged for the late payment, as stipulated in clause 5.2 of the lease agreements. On the issue of misrepresentation raised by the defendant, it is apparent from the record of evidence proffered in the case, that the plaintiffs did not represent to the defendant that the palm oil mill was in good running condition. Indeed, the defendant was given a rent-free period to occupy the leased premises in order for them to inspect before deciding to proceed with the lease agreements. The defendant had knowledge at all material times via DW1 and DW7 that the palm oil mill had ceased operation in the month of July 2017. After occupation of the leased premises during the rent-free period, the defendant at its own free will had executed the lease agreements. Further, pursuant to the stipulation at clause 14.1 of the lease agreements, parties have executed the said agreement without any reliance on any representation, but only in accord with the four corners of the lease agreements. It is also clear from the evidence tendered in court that the defendant did not enter into the lease agreements to repair the leased premises. It was the defendant whom had failed to obtain the MPOB license due to own delay, although the plaintiffs were willing to render assistance to obtain the said license. But, as the defendant had failed to pay the outstanding rentals and utilities pursuant to the stipulations in the lease agreements, the plaintiffs were left without a choice but to terminate the agreements, in view of the default. On the other hand, the defendant is disentitled to the counterclaim pleaded as the causa causans of the breach in this case is only attributable to them and not the plaintiffs. The numerous documents tendered to show to the court that it had suffered losses and damages, was merely an attempt to do so, as the evidence tendered turned out to be untruthful and it was in respect of another legal entity, not a party to this civil suit. [35] To conclude, the plaintiffs have proved their claim against the defendant on a balance of probabilities, thus their claim is allowed with costs of RM100,000 to be paid by the defendant. The counterclaim by the defendant against the plaintiffs is dismissed for want of proof with costs of RM80,000 to be paid by the defendant. The following prayers in the statement of claim are allowed. The amount stated is tabulated at pages 44 to 48 of the written submission by the plaintiffs in enclosure 96. • The total outstanding rental sum of RM558,642.15 to be paid to P1 with interest at the rate of 8% per annum from 19.1.2019 until full and final settlement of the outstanding amount; • The total outstanding rental sum of RM55,864.22 to be paid to P2 with interest at the rate of 8 % per annum from 19.1.2019 until full and final settlement of the outstanding amount; • Double rent for the period of 5.11.2018 until 18.1.2019 in the sum of RM739,726.03 to P1; • Double rent in the sum of RM300,000 a month for the period of 19.1.2019 until 1.2.2019 which is the date vacant possession of the Demised premises was delivered to P1; • Double rent for the period of 5.11.2018 until 18.1.2019 in the sum of RM73,972.60 to P2; • Double rent in the sum of RM30,000 a month for the period of 19.1.2019 until 1.2.2019 which is the date vacant possession of the palm oil effluent plants was delivered to P2; • Utilities charges in the sum of RM59,417.94 to P1; • Utilities charges incurred for the period of 1.1.2019 until 1.2.2019 which is the date vacant possession of the Demised Premises was delivered to P1; • Interest at the rate of 8% per annum on the outstanding utilities charges above; • Interest; and • Costs. [36] At this juncture, I wish to thank counsel for both the plaintiff and defendant whom had conducted the trial professionally throughout the multiple trial dates, intermittently fragmented because of the movement control order etc. They have also endeavored to their best to advance a thorough, categorical and well researched written submission which had assisted me a great deal to write this judgment, which is overdue. I must apologize to parties for the delay in rendering the written judgment, which is purely because of my heavy schedule currently. Claim by plaintiff allowed with costs. Counterclaim by defendant dismissed with costs. Dated 5 November 2024 SGD. Muniandy Kannyappan Judge, High Court. Parties Bryan Teo with Sri Richgopinath and Carmen Yen of Messrs. Joel & Mei for the plaintiffs. Beh Chee Wei of Messrs. Beh & Co for the defendant.