Bank Pertanian Malaysia v 1. Kayu Gaharu (M) Sdn Bhd (Guaman No. 22M-154-09/2015)

KAYU GAHARU (M) SDN BHD (No. Syarikat : 731262 – U)

ALIAS BIN HASHIM (No. K/P: 630911 – 03 – 5199)

OSMAN BIN HANAPI (No. K/P: 510202 – 02 – 5581)

ROHANA BINTI MOHAMAD (No. K/P: 710712 – 08- 5150) … DEFENDAN-DEFENDAN Grounds of Judgment Azizah Nawawi, J: Introduction [1] The plaintiff’s claim against the defendants is for the sum of RM12,242,584.50 as at 14.5.2015 being the amount due and owing under the Al-Bai Bithaman Ajil facility provided by the plaintiff to the 1st defendant. 2 [2] The 1st defendant filed a counterclaim against the plaintiff, inter alia, for a breach of the facility in failing to continue to disburse the facility, and claims as follows:

Damages in the sum of RM150,000,000.00 for the loss of kayu gaharu trees;

(ii) Damages in the sum of RM1,500,000,000.00 for loss of income from the 300,000 trees that were destroyed;

(iii) Damages in the sum of RM4,000,000,000.00 for the loss of income from the small planters;

(iv) Damages in the sum of RM2,300,000.00 as expenses for the lease of land from Persatuan Bekas-bekas Polis Cawangan Pasir Puteh;

RM10,842.69 for expenses to obtain approval to build the factory;

(vi) Damages in the sum of RM100,000.00 for the expenses on research and development with University Technology Mara;

(vii) Damages in the sum of RM110,968.00 for the expenses of inoculation;

(viii) RM30,000.00 for farming and operating expenses with University Putra Malaysia;

(ix) RM30,000.00 for research expenses with University Science Malaysia;

Damages for loss of reputation to be assessed; and

(xi) General and aggravated damages. 3 [3] On 4.4.2016, summary judgment was allowed in respect of the plaintiff’s claim against the defendants. An appeal filed was subsequently withdrawn. [4] This trial is in respect of the 1st defendant’s counterclaim against the plaintiff. [5] Having considered the evidence and the submission of the parties, this Court had dismissed the 1st defendant’s counterclaim with costs. The Salient Facts [6] The plaintiff (the “Bank”) is a financial institution incorporated in Malaysia and governed by the Bank Pertanian Act 2007. [7] The 1st defendant (“Company”) is a private limited company incorporated in Malaysia, whilst the 2nd, 3rd and 4th defendants are shareholders and directors of the Company. [8] Vide a letter dated 24.9.2007, the Ministry of Finance had approved the Company’s application for a RM25,000,000.00 loan under the “Dana Pertanian Komersial” to finance the project for the plantation and processing of Agarwood and Herbs (the “Project”), subject to the terms and conditions imposed by the Bank. 4 [9] By a Letter of Offer dated 7.11.2007 (“LOO dated 7.11.2007”), the Bank granted the Company a financing facility of RM25,000,000.00 under the principles of Al-Bai Bithaman Ajil (the “BBA Facility”) for the purpose of:

to part finance the cost of developing 1008 acres of land for the planting of kayu gaharu (agarwood) and herbs; and

(ii) for the construction of a factory to process the kayu gaharu and herbs in Jeli, Kelantan. [10] One of the salient terms of the LOO dated 7.11.2007 is that the Company is to execute a 3rd party first (1st) legal charge over the 168 lots of land measuring about 1008 acres at Belimbing, Tepi Sungai, Jajahan Jeli and Sg Batang Kuala Stong, Dabong Jeli/Kuala Kerai (the “Kelantan Land”) in favour of the Bank (“clause 9.2”) [11] The following documents were executed as security for the Financing Facility (the “Facility Agreements”):

The Asset Purchase Agreement dated 31.12.2007 (the “APA”);

(ii) The Asset Sale Agreement dated 31.12.2007 (the “ASA”); 5

(iii) The Debenture dated 31.12.2007 wherein the Company had created a first and floating charge over the assets, rights, title and profit of Kayu Gaharu (the “Debenture”);

(iv) The Guarantee and Indemnity Agreement dated 31.12.2007 signed by the guarantors, namely the 2nd, 3rd and 4th defendants (the “Guarantee and Indemnity”);

A third party charge by Iswardy bin Osman over a property held under GM 2538, Lot 2814, Mukim Pasir Genda, Jajahan Tanah Merah, Kelantan (the “Tanah Merah land”);

(vi) Deed of Iqolah dated 29.10.2010 entered between the Bank and Kayu Gaharu (“Deed of Iqolah dated 29.10.2010”) and

(vii) Deed of Assignment of Property dated 29.10.2010 wherein the Company had assigned all its rights, title and interests over a property known as Lot 15, Kawasan Perindustrian Bentong, Pahang (the “Bentong land”) [12] The Bank made four (4) disbursements under the Financing Facility in the sum of RM9,635,000.00, namely:

A sum of RM800,000.00 on 5.2.2008 (the “1st disbursement”); 6

(ii) A sum of RM1,200,000.00 on 4.4.2008 (the “2nd disbursement”);

(iii) A sum of RM1,635,000.00 on 5.8.2008 (the “3rd disbursement”); and

(iv) A sum of RM6,000,000.00 on 16.3.2009 (the 4th disbursement”) [13] After the 4th disbursement, the Company requested to change the location of the factory from Kelantan to Bentong, Pahang. [14] Under the LOO dated 7.11.2007, the first repayment is due in April

However, the Company has requested to extend the payment period and this was agreed to by the Bank, by issuing the Letter of Offer dated 2.7.2010 (“2nd LOO dated 2.7.2010”). The additional terms of the 2nd LOO dated 2.7.2010, inter alia, are:

The moratorium period was extended from 24 months to 36 months, and shall lapse on 1.3.2011;

(ii) The Company shall produce a valuation report for the Bentong land;

(iii) The Company shall produce all the relevant building approvals from the relevant authorities; and 7

(iv) The Company shall execute a supplementary agreement to incorporate the additional terms and conditions. [15] At the request of the Company, the terms of the LOO dated 7.11.2007 were again amended vide the Letter of Offer dated 25.11.2013 (“3rd LOO dated 25.11.2013”) and Letter of Offer dated 22.1.2014 (“4th LOO dated 22.1.2014”). The additional terms of the 3rd LOO dated 25.11.2013 includes:

The moratorium period of 36 months is extended to 76 months, which shall lapse on 1.8.2014;

(ii) The Company shall provide a valuation report for

the Kelantan land measuring 1008 acres; and

the Bentong land after the factory is constructed.

(iii) The Company shall provide a valuation report from the relevant authorities, such as MTIB to verify the expected return from kayu gaharu; and

(iv) The next disbursement will only be allowed on the terms that the Company allows FRIM to conduct a test on the capacity of the machine to be used or that the machine is to be bought from FRIM. 8 [16] The 4th LOO dated 22.1.2014 was to correct the clerical error in the 3rd LOO dated 25.11.2013 from 24 months to 76 months. [17] When the Company did not pay the monthly instalment repayment after 1.8.2014, the Bank issued a letter of demand and subsequently issue a letter dated 18.5.2015 to terminate the Facility Agreement. [18] When the Company refused to pay the amount due and owing under the Financing Facility, the Bank commence this action and obtained summary judgment on 4.4.2016. [19] The Company’s counterclaim proceeded for trial. Issues to be Tried [20] Parties have agreed to the following issues to be tried:

Whether the Company had fulfilled all the terms and conditions of the BBA Facility for the disbursement of the BBA

(ii) Whether the Bank had breached the terms and condition of the Facility Agreement by withholding further disbursement of the monies under the BBA Facility; and 9

(iii) If (ii) above is answered in the affirmative, whether the Company has suffered loss and/or damages as a result of the purported breach of the terms and conditions of the BBA Facility by the Bank. The Findings of the Court Issues (i) and (ii) [21] In paragraph 13 of the Company’s ‘Pembelaan dan Tuntutan Balas Defendan-Defendant’, the Company pleads that: “Plaintiff telah gagal melepaskan wang pembiayaan kepada Defendan Pertama untuk pembinaan kilang, pembelian jentera/mesin dan peralatan walaupun Defendan Pertama telah berulang kali meminta berbuat demikian. Plaintif juga gagal mematuhi tanpa sebarang alasan arahan-arahan dan keputusan yang telah dibuat oleh KKM untuk Plaintif melepaskan wang pembiayaan bagi pembinaan kilang, pembelian jentera/mesin dan peralatan.” [22] As submitted by the Company, the crux of its counter claim against the Bank is that the Bank has breached the facility agreement in not releasing the RM15,365,000.00 for the construction of the factory for the processing of the agarwood trees, and for the purchasing of machineries and equipment for the factory. 10 [23] The Company takes the position that the Bank had imposed unnecessary conditions for the release of the balance of the loan sum and further defeat the real purpose of the loans. (see paragraph 16 and 17 of the Written Submission). However, as can be seen from paragraph 13 of the Company’s ‘Pembelaan dan Tuntutan Balas Defendan-Defendan’, the issue of imposing unnecessary conditions for the release of the disbursements is not a pleaded issue.It is trite law that the parties are bound by their pleadings. In Aseambankers Malaysia Bhd & Ors v. Shencourt Sdn Bhd & Anor [2014] 4 MLJ 619, the Court of Appeal held: “(3) The parties are bound by their pleadings. The court is not entitled to decide a suit on a matter that is not pleaded. When the trial court decides on an issue that is not pleaded, the judgment can be set aside. (para 67)” [24] It is also not in dispute that the factory was to be constructed in

Tanah Merah, Kelantan. However, vide a letter dated 4.6.2009,

11.2009 and 12.1.2010 (to MOF), the Company had requested for a change of the location of the factory from Tanah Merah, Kelantan to Bentong, Pahang. The reason for the relocation is because the Tanah Merah land is not categorized as industry land (see paragraph 4 of letter dated 12.1.2010). [25] However, since the purpose of the BBA Facility was to part finance the construction of the factory in Tanah Merah Kelantan, not in Bentong Pahang, there cannot be any disbursement until the terms 11 and conditions of the BBA Facility are amended accordingly, to enable the Company to construct the factory in Bentong, Pahang. In Bank Bumiputra Malaysia Bhd v Sal Enterprise Sdn Bhd & Ors [2005] 4 CLJ, the Court of Appeal held at page 298: “ …The said facility was given for the specific purposes and the 1st respondent has to satisfy several conditions before monies could be released. The 1st respondent cannot utilize the monies under the said facility for purposes other than that spelt out in the said letter of offer read together with the said amended letter of offer.” (emphasis added) [26] After securing the approval from MOF, the terms and conditions of the BBA Facility were revised, to include, inter alia, that the purpose was to part finance the construction of the factory in Bentong, Pahang; that the moratorium period was extended to 36 months; that the Company was to submit a valuation report on the Bentong land as well as to submit the approvals from the relevant authorities and the Department of Environment (see 2nd LOO dated 2.7.2010). [27] By a letter dated 22.11.2010, the Company requested for a further disbursement. However, I am of the considered opinion and I agree with the Bank that the Bank was justified in withholding the disbursement as at 6.12.2010 because the Company has failed to fulfil the terms and conditions of the 2nd LOO dated 2.7.2010, namely: 12

that the Company had not obtained the approvals from the relevant authorities for the construction of the factory in Bentong, Pahang; and

(ii) that the Company had not submitted the valuation report of the Bentong land. [28] Bearing in mind that the Planning and Building Plan approvals from the relevant authorities were only secured on 20.11.2011 and 30.3.2012 respectively, as at 22.11.2010, the disbursement cannot be made due to non-compliance with the terms and conditions of the 2nd LOO dated 2.7.2010. [29] Added to that, the 36 months’ moratorium vide the 2nd LOO dated 2.7.2010 expired on 1.3.2011, and the Company is supposed to make the monthly repayments, but it failed to do so. Therefore, I agree with the Bank that the Company is not entitled to any disbursement if it is in default of the BBA Facility, that is to make the monthly repayments after 1.3.2011. Under s. 28 of the ASA dated 31.12.2007, it is clearly provided that the release of the BBA facility is subject to no event of default has occurred. In the present case, as at 1.3.2011 and thereafter, the Company is not entitled to the disbursement due to the event of default in the repayments. [30] Parties then sign the 3rd LOO dated 25.11.2013. The additional terms of the 3rd LOO dated 25.11.2013 includes: 13

The moratorium period of 36 months is extended to 76 months, which shall lapse on 1.8.2014;

(ii) The Company shall provide a valuation report for

the Kelantan land measuring 1008 acres; and

the Bentong land after the factory is constructed.

(iii) The Company shall provide a valuation report from the relevant authorities, such as Malaysian Timber Industry Board (“MTIB”) to verify the expected return from kayu gaharu; and

(iv) The next disbursement will only be allowed on the terms that the Company allows FRIM to conduct a test on the capacity of the machine to be used or that the machine is to be bought from FRIM. [31] With regards to the valuation report for the Kelantan land, the Company submits that this 1008 acres of Kelantan land belongs to the Persatuan Bekas Polis, and the Persatuan has 168 members who jointly owned the said land. The Company has entered into a 99 years lease with the Persatuan, the land owner, to plant agarwood and herbal trees on the said land. However, the Company was not able to provide the valuation report of the said land as the titles of the said land was yet to be issued. The Company submitted that at the time of the trial, the applications for the subdivision of the land in the name of the members of the 14 Persatuan was still pending in the land office (see paragraph 25 to 29 of the Written Submission). [32] However, the issue about the ownership and/or subdivision of the land is not a pleaded issue and was not raised during the trial. In fact, from the Company’s letter dated 12.6.2014, the Company requested for more time to prepare the valuation report. The Company did not raise the issue of subdivision then. In the said letter dated 12.6.2014, the Company informed the Bank that: “...berhubung dengan valuation report untuk ladang kami di Dabong Kelantan, pihak kami tidak dapat menyediakan kerana dalam urusan tindakan yang belum selesai...” [33] Added to that, there is no evidence to establish that the Kelantan lands is owned by the Persatuan, and that there is a pending application for subdivision in the land office. The latest letter from the land office, Pejabat Tanah dan Jajahan Kuala Kerai, dated 5.2.2017 (annexed to the letter dated 6.3.2017 issued by Tetuan MS Vethanayagam & Associates) clearly shows that the Persatuan’s application for alienation of the said land is still being considered. Therefore, the Company cannot provide the valuation report simply because the Persatuan does not own the said land. The said letter reads: 15 “...

Saya mengesahkan bahawa pentadbiran ini telah menerima permohonan dan bayaran daftar fail, memperenggang tanah serta bayaran premium permulaan daripada 168 ahli Persatuan Bekas-Bekas Polis Pasir Puteh, Kelantan pada April 2008. ….

Permohonan tuan dalam proses pengeluaran hakmilik kepada ahli-ahli persatuan dalam tindakan pentadbiran ini dan pertimbangan Pihak Berkuasa Negeri.” [34] Added to that, the Company’s witness DW2 gave evidence that the Kelantan land have been alienated to a third party: “Q: Encil Alias tahu pada masa itu permohonan telah dibuat oleh peserta bekas Polis di Kelantan dan untuk mendapat tanah daripada Kerajaan Kelantan. Dan mereka juga telah memasuki surat janji dengan Kayu Gaharu untuk memberi Kayu Gaharu Sdn Bhd pajak geran tanah itu untuk 99 tahun, itu Encik Alias tahu? Saya tahu Tetapi geran tanah itu atas nama peserta bekas Polis belum dikeluarkan, Encik Alias tahu fakta itu? Tahu. 16 Adakah Encik Alias juga tahu geran sekarang telah dikeluarkan dan telah diberi ke pihak lain. Adakah Encik Alias tahu fakta itu? Kami dimaklumkan hal itu tapi saya nak highlight sedikit sebenarnnya kita dah melantik lawyer untuk menguruskan hal tersebut … ….. Bilakah Encik Alias dimaklumkan geran tanah telah diberikan kepada pihak lain? Pada masa dah lama. Saya tidak ingat tapi setelah projek jalan ...” [see pages 161 – 163 NOP] [35] At the same time, I agree with the Bank that since the Company has contractually agreed to provide the valuation report, then they must fulfil the same. In OCBC Bank (M) Bhd v Belton Springs Industries Sdn Bhd & Anor [2005] 7 MLJ 289, the Court held that the terms and conditions in a letter of offer are contractual and are therefore binding on the parties. [36] As such, I agree with the Bank that the Company has failed to comply with the additional terms and conditions of the 3rd LOO dated 25.11.2013, by providing a valuation report of the Kelantan lands. [37] Further, I agree with the Bank that since the Company has breached the BBA facility for failing to execute the charge on the Kelantan lands, then the Bank is entitled to withhold the 17 disbursements. Clause 9.2 of the LOO dated 7.11.2007 requires the Company to execute a 3rd party first (1st) legal charge over the Kelantan Lands in favour of the Bank. This has not been complied with by the Company as the said Kelantan land was never alienated to the Persatuan. [38] The Bank also takes the position that the Company has failed to fulfil another term of the 3rd LOO dated 25.11.2013, that is the Company is to allow FRIM to conduct a test on the capacity of the machine to be used or that the machine is to be bought from FRIM. [39] The main trust of the Company’s submission is that there is no evidence that FRIM was able to conduct the test on the agarwood processing machine, ‘Electrical Extractor Unit’ designed by Dr. Mohd Hezri and developed under the collaboration between Universiti Teknologi Malaysia (UiTM) and Ikhlas Resmi (M) Sdn Bhd, the machine which the Company intends to use. [40] However, I agree with the Bank that this is not a pleaded issue. In paragraph 25 of the Bank’s Statement of Defence/Reply to Counterclaim, the Bank pleads that the Company has failed to satisfy the terms and conditions under the 3rd LOO dated 25.11.2013, “in particular to produce a valuation report for the Project Land and to allow FRIM to verify the machine that would be used by the Company to confirm its capacity.” 18 [41] In paragraph 8 of the Company’s Reply dated 14.12.2015, in specific reference to the Bank’s paragraph 25 above, the Company made no reference to the term on FRIM’s verification. [42] In any event, the Company had accepted the 3rd LOO dated 25.11.2013, which clearly stipulates that the next disbursement will only be allowed if the Company allows FRIM to conduct a test on the machine to verify its capacity. Since the Company had accepted this term, it is not for the Company to now raise the issue of the capability of FRIM. [43] Added to that, the Company did not raise the issue of FRIM’s ability to verify the machines or sell the machines to process kayu gaharu in its letter dated 29.11.2013. In the said letter, the Company had requested to exclude FRIM on the issue of copyright of the agarwood processing machine, ‘Electrical Extractor Unit’ designed by Dr. Mohd Hezri. Therefore, apart from being not a pleaded issue, the issue of FRIM’s ability to verify the machines or sell the machines to process kayu gaharu is indeed an afterthought. [44] Premised on the reasons enumerated above, I am of the considered opinion and I agree with the Bank that the Bank did not breach the terms and conditions of the BBA Facility by failing to allow further disbursement, as it was the Company who had failed to fulfil the terms and conditions of the BBA Facility. 19 [45] On the evidence before this Court, I find that the Bank was entitled to reject the Company’s request for further disbursements of the BBA Facility as the Company had failed to fulfil the terms and conditions therein. In Bank Islam Malaysia Berhad v Aquasix Corp Sdn Bhd & Ors [2014] 3 MLJ 812, the Court held that: “[14] ….. The defendant’s obligation to disburse or to allow drawdown of the banking facilities must first be preceded by the first plaintiff furnishing to the defendant the relevant document of the title of the said property or farm. In order to do that the first plaintiff must have completed the taking over of the second plaintiff’s assets and liabilities and subsequently obtain the relevant documents of title or interest in respect of the acquisition of the second plaintiff. If the first plaintiff fails to fulfil this obligation, then the defendant is not bound to disburse or to allow drawdown of the banking facilities to the first plaintiff…” (emphasis added) [46] Therefore, my findings on issues (i) and (ii) are as follows:

Whether the Company had fulfilled all the terms and conditions of the BBA Facility for the disbursement of the BBA Facility – the answer is in the ‘Negative’; and 20

(ii) Whether the Bank had breached the terms and condition of the Facility Agreement by withholding further disbursement of the monies under the BBA Facility – the answer is in the “Negative”. Issue (iii) [47] In view of my findings that the Bank has not breached the terms and condition of the Facility Agreement by withholding further disbursement of the monies under the BBA Facility, then the Company is not entitled to any damages. [48] However, if I am wrong on the issue of a breach of the BBA Facility, I will now deal with the issue of damages. In order for the Company to be able to claim damages, the Company must prove the damage and it is not enough to merely write down the particulars and rely on the same. In Tan Sri Khoo Teck Puat & Anor v. Plenitude Holdings Sdn. Bhd. [1995] 1 CLJ 15, the Federal Court held as follows: “Before we embark upon a detailed consideration of the specific issues which arise for decision, there are three preliminary matters which, at the outset, require emphasis. Firstly, that part of the judgment which provides that the vendor shall pay to the purchaser damages to be assessed for wrongful termination of the agreement with costs and that Tan Sri Khoo and the vendor shall 21 pay to the purchaser damages to be assessed for breaches of the undertakings, even though affirmed on appeal, can in no way relieve the purchaser of satisfying the fundamental requirement of having to prove its loss (if any) arising from those breaches. To hold otherwise would amount to dispensing with proof of quantum altogether, and that cannot be the law. In so saying, we reminded of the words of Lord Goddard in Bonham – Carter v. Hyde Park Hotel Ltd 64 TLR 177 at p. 178: Plaintiffs must understand that if they bring actions for damages it is for them to prove their damages; it is not enough to write down the particulars, so to speak, throw them at the head of the court, saying: ‘this is what I have lost, I ask you to give me these damages’ They have to prove it”. (emphasis added) [49] In Popular Industries Ltd v. Eastern Garment Manufacturing Sdn Bhd [1990] 1 CLJ 133; [1989] 3 MLJ 360, the Court held at p. 367: “It is axiomatic that a plaintiff seeking substantial damages has the burden of proving both the fact and the amount of damages before he can recover. If he proves neither, the action will fail or he may be awarded 22 only nominal damages upon of the contravention of a right. Thus nominal damages may be awarded in all cases of breach of contract (see Marzetti v. Williams 109 ER 842). And, where damage is shown but its amount is not proved sufficiently or at all, the court will usually decree nominal damages. See, for example Dixon v Deveridge (1825) 2 C & P 109; 172 ER 50 and Twyman v. Knowles 138 ER 1183”. (emphasis added) [50] The Company’s claim for damages is based on a breach of the BBA Facility under section 74 of the Contracts Act 1950. With regards to section 74 of the Contracts Act 1950, in Malaysian Rubber Development Corp Bhd v Glove Seal Sdn Bhd [1994] 3 MLJ 569 SC, it was held by Mohamed Dzaiddin SCJ at page 575/b-e: “In considering the above question, it is important to bear in mind that the normal measure of damages for breach of contract in this country is prescribed by s 74(1) of the Contracts Act 1950, which is the statutory enunciation of Hadley v Baxendale (1854) 9 Ex 341 (Teoh Kee Keong v Tambun Mining Co Ltd [1968] 1 MLJ 39 ; Bank Bumiputra Malaysia Bhd Kuala Terengganu v Mae Perkayuan Sdn Bhd & Ors [1993] 2 MLJ 76 , SC). In essence, the section states that the party may recover any loss or damage for any breach which: (a) naturally arose in the usual course of things; or (b) which the parties knew, when they made the contract, to be likely to result from the breach of it. For 23 the sake of completeness, it should be mentioned that our courts have treated the position under the second limb of the section to be similar to the second limb of Hadley v Baxendale, which is, the party may recover damages which may ‘reasonably be supposed to have been in contemplation of both the parties, at the time they made the contract’ (emphasis added) [51] In Voo Nyuk Fah & Anor v Lam Yat Kheong & Anor [2012] 5 CLJ 229, the Court held as follows: “It is trite law that the task of accounts and assessment of damages is an exercise of judicial discretion. Such discretion is based is a judicial one, as it is not exercised based on whims and fancies, but be reference, guidance and application of established judicial principles and of course having regard to all the facts and evidence adduced before the officer or the judge who undertakes the assessment.” [52] Premised on the settled principles above, I will now deal with the pleaded issues on damages. The first claim is for the sum of RM150 million being damages for the loss of the kayu gaharu. The kayu gaharu trees were planted on the Kelantan land, which have not been alienated to the Persatuan. The Company and/or the Persatuan do not own the said land, and therefore they cannot claim to own the gaharu trees said to be planted on the said land. 24 Therefore, they cannot claim for the loss of the kayu gaharu as they do not own the same. [53] On the claim for RM1.5 billion for loss of income from the 300,000 trees that were destroyed, I find that there is no evidence to establish that the Company owned 300,000 gaharu trees. Added to that, this claim is contradicted by the MTIB report that around 164,000 trees were planted on the Kelantan land. Again, since the Company do not own the said lands, they cannot claim damages of the said trees in the Kelantan land. Further, I find that the Company has failed to provide credible documentations to substantiate its claim and there is no evidence to show that the Company can fully extract the gaharu oil or that the kayu gaharu trees have been successfully inoculated to produce the maximum result which the Company is now claiming. [54] On the claim of RM4 billion for loss of income from small planters, I agree with the Bank that there is no nexus between the purpose of the BBA Facility and the Company’s alleged arrangements with the small planters. Added to that, there is simply no evidence to substantiate this colossal claim. [55] On the claim of RM2.3 million being the expenses for the lease of land from the Persatuan, that is an issue between the Company and the Persatuan. The problem lies with the fact that the Company had entered into the lease with the Persatuan before the Persatuan can secure the alienation of the Kelantan Land. In fact, the land was 25 never alienated to the Persatuan. If the Company is aggrieved, then it can sue the Persatuan for the return of the said sum. This has nothing to do with the Bank. [56] With regards to the other heads of damages claimed by the Company, I find that the same is not substantiated by evidence and that the BBA Facility has nothing to do with these claims, such as the expenses on research. Damages for loss of reputatain are not recoverabler in an action premised on a breach of contract (see Kewangan Bersatu Berhad v. Skycon Development Sdn Bhd, Hj Abdul Rahim bin Hj Abdul Rahman & Zain Bte Mohd Osman [2011] MLJU 410) Conclusion [57] Premised on the reasons enumerated above, I find that the Company has failed to establish its counterclaim on the balance of probability and the same is dismissed with cost. (AZIZAH BINTI HAJI NAWAWI) JUDGE HIGH COURT MALAYA (Appellate and Special Powers Division 2) KUALA LUMPUR Dated: 19 July 2018 26 For the Plaintiff/Defendant Counterclaim: Andrew Chiew / Wong Te Jie Messrs Lee Hishammuddin Allen & Gledhill Kuala Lumpur. For the Defendant 1/Plaintiff Counterclaim : Stanislaus Vethanayagam / Rutharakumaran Messrs M S Vethanayagam & Associates Kuala Lumpur. Cases referred:

Aseambankers Malaysia Bhd & Ors v. Shencourt Sdn Bhd & Anor [2014] 4 MLJ 619.

Bank Bumiputra Malaysia Bhd v Sal Enterprise Sdn Bhd & Ors [2005]

OCBC Bank (M) Bhd v Belton Springs Industries Sdn Bhd & Anor [2005] 7 MLJ 289.

Bank Islam Malaysia Berhad v Aquasix Corp Sdn Bhd & Ors [2014] 3

Tan Sri Khoo Teck Puat & Anor v. Plenitude Holdings Sdn. Bhd. [1995] 1 CLJ 15.

Popular Industries Ltd v. Eastern Garment Manufacturing Sdn Bhd [1990] 1 CLJ 133; [1989] 3 MLJ 360.

Malaysian Rubber Development Corp Bhd v Glove Seal Sdn Bhd [1994] 3 MLJ 569.

Voo Nyuk Fah & Anor v Lam Yat Kheong & Anor [2012] 5 CLJ 229.

Kewangan Bersatu Berhad v. Skycon Development Sdn Bhd, Hj Abdul Rahim bin Hj Abdul Rahman & Zain Bte Mohd Osman [2011] MLJU 410. 27