ETA Global Resources Sdn Bhd v PI Brilliant Berhad (BA-22NCvC-228-05/2021)

The disputes between the parties arose in respect of a Tenancy Agreement for a parcel of land used for operation of Midnight Bazaar at Bangi, Selangor.

After 2 days of full trial and the closing submissions, this Court on 50 May 2022 dismissed the Plaintiff’s claims in connection with the termination of the Tenancy Agreement and allowed the Defendant’s counterclaim for outstanding rentals.

Dissatisfied with the said decision, the Plaintiff has filed an appeal to the Court of Appeal.

In gist the Plaintiff in his Statement of Claim pleaded that the termination of the Tenancy Agreement by the Defendant was allegedly wrongful and/or the Defendant has been unjustly enriched by the infrastructure works done at the subject land. The Plaintiff claimed for damages for allegedly wrongful termination and/or for the value of the alleged unjust enrichment. 2

In a summary the Defendant’s pleaded defences and counterclaim are that:

It is the Defendant’s defence that the termination of the Tenancy Agreement was valid because the termination pursuant to the instruction of the landowner was stipulated by the Tenancy Agreement, the Plaintiff was in breach of the terms of the Tenancy Agreement and/or had no licence from the local council to continue with operation of night bazaar there; and

The Defendant counterclaims for the unpaid rentals up to the date of the Plaintiff’s departure from the subject land. [6] From the trial, the issues to be determined can be boiled down to the following broad issues:-

Whether the termination was lawful?

(ii) Whether the Defendant is entitled to the counter-claim? Cause Papers, Proceedings and Full Trial [7] Prior to the commencement of the full trial the following cause papers filed and exchanged between the parties were marked as follows:

(iii) Ikatan Pliding (Bundle BP – Enclosure 8);

(iv) Fakta-Fakta Yang Dipersetujui (marked as “SAF” – Enc. 12)

Isu-Isu Yang Dibicarakan (marked as “SIT” – Enc. 13)

(vi) Ikatan Dokumen Bersama Bahagian B (Jilid 1) (marked as agreed Agreed Bundle “AB1” – Enc. 16);

(vii) Ikatan Dokumen Bersama Bahagian B (Jilid 2) (marked as Agreed Bundle “AB2” – Enc. 17);

(viii) Ikatan Dokumen Tambahan Bersama (marked as Agreed Bundle “AB3” – Enc. 18); 3

(ix) Ikatan Dokumen Tambahan Bersama II (marked as Agreed Bundle “AB4” – Enc. 19);

Pernyataan Saksi SP-1 (Enc. 21), marked at the trial as “WS-PW1”;

(xi) Pernyataan Saksi SP-2 (Enc. 20), marked at the trial as “WS-PW2”;

(xii) Pernyataan Saksi SD-1 (Enc. 22), marked at the trial as “WS-DW1”;

(xiii) Pernyataan Saksi SD-2 (Enc. 23), marked at the trial as “WS-DW2”. [8] It was also the agreed procedure that:

At the full trial, upon the witness' affirmation and confirmation of the contents of his/her Witness Statement as his/her evidence, the Witness Statement and its contents are deemed to be read and there is no necessity for the witness to read the contents of the Witness Statement into the CRT system. This procedure is without prejudice to the rule against hearsay, i.e. the principle of evidence which requires witnesses to testify as to facts and matters within their personal knowledge and not on hearsay evidence. Liberty is given to the counsel to ask supplementary or additional question in examination-in-chief to clarify or explain or highlight salient parts of the Witness Statement before the cross-examination begins.

In order to save time and costs at the full trial, the Part A and Part B documents referred to in the witnesses' statements and evidence are marked as per the marking of Agreed Bundles of Documents as “AA” and “AB” numbers respectively followed by the page numbers and there is no necessity to mark the relevant pages of the Part A and Part B documents with separate exhibit numbers again. However, this procedure shall be without prejudice to the rule against hearsay. Part C document, when either upgraded into Part B document or its original have been tendered by the maker and verified as authentic, shall be marked with a separate exhibit number. [9] The trial proceeded for 2 days on 21.3.2022 and 22.3.2022 at which the following witnesses attended and gave oral evidence: 4

The Plaintiff called the following witnesses:-

Mohd Khairi Safwan bin Mohd Alwi (SP-1); and

(ii) Datuk Mohd Shah bin Taib (SP-2). SP-1 is the Pengurus Projek and also business partner in the Plaintiff and SP-2 is the Pengarah Urusan of the Plaintiff.

The Defendant called the following witnesses:-

Mohd Zain Bin Sarman (SD-1); and

(ii) Syuhaimi Bin Abdullah Shukor [10] After the completion of the full trial, the parties filed and exchanged their Written Submissions and their Reply Submissions. Background Facts [11] By letter dated 03.09.2019, the Plaintiff expressed their interest to be the organizers of DOWN TOWN or MIDNIGHT MARKET (“Night Bazaar”) at a rental rate of RM19,000 a month. [Refer to p. 1 of Bundle AB1 (Enc. 16)] [12] By letter dated 17.09.2019, the Plaintiff proposed a cost of RM353,000 for the preparation of the “TAPAK KOSONG TANAH PKNS DISEBELAH PASARAYA ECO DI SEKSYEN 9 BANGI” [ Refer to p. 2 & 3 of Bundle AB1 (Enc. 16)]. As was admitted by PW2, PKNS gave permission for the Defendant/Landlord to rent the subject land to the Plaintiff/Tenant as PKNS was, and still is, the registered proprietor of the subject land: see PW2’s evidence under cross-examination at page 82 of Notes of Evidence (Day 1) lines 13 – 29. [13] The Defendant issued a Letter Offer dated 01.10.2019 [Refer to p. 4 – 8 of Bundle AB1 (Enc. 16)] offering to rent out the land Lot 48374 (“the Said Land”) to the Plaintiff for a period of 12 months starting from 01.11.2019 at a rate of RM19,000 a month which was accepted by the Plaintiff. [p. 37 of Bundle AB1 (Enc. 16)] [14] It is undisputed that the said Land belongs to Perbadana Kemajuan Negeri Selangor (“PKNS”) [para. 3 of the Fakta-Fakta Yang Dipersetujui, “SAF” (Enc. 12) and p. 24 – 26 of Bundle AB1 (Enc. 5 16)] and hence Clause 6.2 of the Letter Offer [p. 7 of Bundle AB1 (Enc. 16)] provides that Defendant shall terminate the tenancy and return the said Land to PKNS should PKNS gives instruction to the Defendant to that effect. [15] The Parties entered into a Tenancy Agreement dated 21.10.2019 [p. 10 – 37 AB1 (Enc. 16)] and Recital 5 provides that the terms of the LETTER OFFER is taken to be read together with the Tenancy Agreement [p. 12 of Bundle AB1 (Enc. 16)] and Clause 4.5 provides the same terms as Clause 6.2 of the LETTER OFFER. [p. 17 of Bundle AB1 (Enc. 16)]. [16] The Plaintiff failed to obtain license from Kalang Muncipal Council, Majlis Perbandaran Kajang (“MPKj”) to operate the Night Bazaar in November 2019 and hence requested from the Defendant to waive the payment of rental for November 2019 via letter dated 19.11.2019.[ p. 55 of Bundle AB1 (Enc. 16)] [17] The Defendant, by letter dated 22.11.2019 allowed the Plaintiff to defer the payment of rental for November 2019 by way of 6 monthly instalments from December 2019 to May 2020 to which the Plaintiff agreed to the arrangement as stated in their letter dated 25.11.2019.[ p. 56 - 57 and 59 of Bundle AB1 (Enc. 16)]. [18] MPKJ via letter dated 31.01.2020 gave a conditinal approval (“LULUS BERSYARAT”) to the Plaintiff’s application for license with a 6 months period from 01.02.2020 to 30.07.2020. [p. 71 of Bundle AB1 (Enc. 16); paragraph 4 of SAF]. [19] By letter dated 12.06.2020, the Plaintiff requested from MPKj renewal of the said license beyond 30.7.2020 [p. 83 of Bundle AB1 (Enc. 16)], however, the Plaintiff’s request for renewal was rejected by MPKj on 14.07.2020. [p. 119 of Bundle AB1 (Enc. 16)]. This fact was not disputed by either party hereto. [20] PKNS then issued a letter to the Defendant on 28.07.2020, among others, demanding the said Land to be returned to PKNS.[ p. 1 – 2 of Bundle AB4 (Enc. 19)] [21] The Defendant then, by letter dated 30.07.2020, issued the termination letter to the Plaintiff giving the Plaintiff 30 days to vacate the said Land and return vacant posession to the Defendant.[ p. 6 – 126 of Bundle AB1 (Enc. 16)] [22] Pursuant thereto, the Plaintiff issued the letter dated 03.08.2020 to its penyewa-penyewa Bazar Malam to vacate the said Land before 31.08.2020.[ p. 127 of Bundle AB1 (Enc. 16)] [23] Upon the Plaintiff’s request for extension, PKNS allowed the Plaintiff extension until 04.10.2020 for the cleaning and vacating works on the said Land.[ p. 15 of Bundle AB3 (Enc. 18)] [24] Upon vacating and returning the said Land to PKNS, the Plaintiff then issued their letter of demand dated 21.10.2020.[ p. 128 – 131 of Bundle AB1 (Enc. 16)] Findings and Decisions of this Court The tenancy was for a period of 12 months from 1.11.2019 to 31.10.2020: Enclosure 12, Statement of Agreed Facts “SAF”, paragraph 2. [25] The terms of the Tenancy Agreement [AB1/10 – 37] included:

Clause 2.1(x) : if Tenant fails to get licence permit, Landlord can terminate immediately and forfeit the Deposit. This is clear from the express wording of clause 2.1(ix) provides as follows:- “2.1(x) In the event the Tenant fails to get the license permit, the Landlord shall be at liberty to terminate this tenancy with immediate effect and the Security Deposit shall be forfeited by the Landlord;” Clause 4.5 : If Landlord is instructed by PKNS to take back the said Land, Landlord can terminate by giving 30 days’ notice and return Deposit to Tenant. This is clear from the express wording of clause 4.5 which provides as follows: “4.5 Notwithstanding Clause 4.3 and Clause 4.4 above, at any time during the commencement of the Tenancy if the Landlord is instructed by PKNS to take back the said Land from the Tenant, the Landlord shall have the liberty to terminate this Tenancy Agreement by given thirty (30) 7 days’ notice to the Tenant. In such event, the Landlord shall return the Security Deposit to the Tenant in the manner as stated in item 3.1.2 of the Letter of Award.”

Clause 4.1 : forfeiture procedure in event of default in paying rental. [26] It is trite law that parties are bound by the terms of the agreement to which they had agreed to. As there is no pleading or allegation of implied term in the present case, the Court’s role in the present case is to interpret the express terms of the contract. In the course of the interpretation of the terms of the contract, the Court cannot re-write the terms of the parties’ contract and cannot improve the contractual rights of the parties. This principle has been decided by the Federal Court in Berjaya Times Square Sdn Bhd v. M-Concept Sdn Bhd [2010] 1 CLJ 269 where it was held that “The court has no power to improve upon the instrument which it is called upon to construe, whether it be a contract, a statute or articles of association. It cannot introduce terms to make it fairer or more reasonable. It is concerned only to discover what the instrument means” (emphasis added). In Wong Pa Hock v. American International Assurance Co Ltd & Anor [2002] 2 CLJ 267 Clement Skinner J. expressed the principle in the following words: “... The court must not rewrite the contract or audit the bargain between the parties but should instead hold them to the contract they had made for themselves by giving effect to the clear and unequivocal words of cl. 24(b)” (emphasis added). [27] On 30.1.2020, the Plaintiff/Tenant received MPKj’s conditional approval / permit to operate Midnight Bazaar from 1.2.2020 to 30.7.2020 : SAF/4. [28] The Plaintiff did preparatory works, including earthworks, at the site to get ready for operation of the Midnight Bazaar in end 2019 and early 2020. [29] Covid lockdown started from 18.3.2020 and prohibited business activities in open space : SAF/5. After the Covid lockdown was lifted in May 2020 and with the preparatory works done at the said Land, the Plaintiff / Tenant operated Midnight Bazaar for short period of time. 8 [30] Due to complaints of the Plaintiff/Tenant’s breach of MPKj’s conditions of licence / permit including pollution at river / drains, MPKj brought the breaches / complaints to the attention of PKNS and the Plaintiff/Tenant: see MPKj’s letter dated 24.7.2020 in AB3/8 – 10 testified to by the Defendant’s witness and also the Plaintiff’s witnesses. See WS-PW1 Mohd Zain S&J 10(a) – 10(j) dan S&J11(a) – 11(i). [31] When the matters complained of were not remedied after notice, PKNS by letter dated 28.7.2020 cancelled the permission to use the site for bazaar and wanted to take back the said Land : Enclosure19, AB4/1. This fact was admitted by the Plaintiff’s witness in their evidence: see PW1’s evidence in lines 1 – 5 at page 24 of the Notes of Evidence (Day 1); PW2’s evidence in lines 6 – 17 at page 92 and line 37 at page 106 and lines 2- 6 at page 107 of the Notes of Evidence (Day 1). See also paragraph 6 of Agreed facts, SAF (Enclosure 12). [32] MPKj also decided not to extend the conditional permit for bazaar beyond 30.7.2020 : Enclosure 18, AB3/13. This fact was not disputed by the Plaintiff’s witness in their evidence. [33] By the Defendant / Landlord’s letter dated 30.7.2020, the Defendant / Landlord gave notice of termination of Tenancy Agreement and notified the Plaintiff / Tenant to vacate the site within 30 days. The grounds of termination are (1) Tenant’s failure to comply with MPKj’s conditions in letter dated 24/7/2020; (2) clause 6.2 of Offer Letter and clause 4.5 of Tenancy Agreement (PKNS’ instruction): Enclosure 16, AB1/125. The Defendant’s witnesses testified to the service of the notice of termination and the Defendant’s witnesses admitted the notice of termination was received by the Plaintiff: see PW2’s evidence on Day 1 at page 83 of Notes of Evidence (Day 1) lines 1 – 7. [34] By letter dated 23.9.2020, PKNS agreed to give time until 4/10/2020 for the Plaintiff / Tenant to vacate the site : Enclosure 18, AB3/15. Notwithstanding such giving of time to vacate the site, it did not alter the fact that there was no renewal or extension of the licence permit to operate the bazaar at the subject land as from 31.7.2020. [35] This Court holds that failure to get licence permit is different from failure to comply with the conditions of the licence permit. Therefore, the 1st ground of termination is not a valid ground for the 9 Defendant / Landlord to terminate the Tenancy Agreement on breaches of conditions of the licence permit. However, when the Plaintiff request to MPKJ for renewal of the said license beyond 30.7.2020 [p. 83 of Bundle AB1 (Enc. 16)] was rejected by MPKJ on 14.07.2020, the Plaintiff would have the contractual right to terminate the Tenancy Agreement on 30.7.2020. [p. 119 of Bundle AB1 (Enc. 16)] [36] From the evidence adduced it is clear that before the Defendant’s issuance of the notice of termination of tenancy to the Plaintiff, PKNS had issued an instruction to the Defendant to terminate the Plaintiff’s tenancy arising from MPKj’s complaints of the Plaintiff’s breaches of conditions of the licence permit. In his evidence under cross-examination, PW2 also agreed that the Defendant’s termination notice was issued pursuant to and/or in accordance with clause 6.2 of the Letter Offer and clause 4.5 of the Tenancy Agreement: see lines 19 – 34 at page 85 of the Notes of Evidence (Day 1). [37] In the context of PKNS’s instruction to take back the land, there is no material or real difference between termination by giving 30 days’ notice and termination with notice to vacate within 30 days. [38] In the circumstances, the termination is valid under clause 4.5 of the Tenancy Agreement read with clause 6.2 of the Offer Letter. Deposit is to be refunded to the Plaintiff / Tenant by deducting from the rentals payable. Rental for 9 months : RM171,000.00 Less : amounts paid (126,666.64) (including of Deposit) Balance rent payable RM 44,333.34 In Dw2 Syuhaimi’s evidence, he testified that the total amount of the unpaid rentals was RM52,333.34: see WS-DW2 S&J 4 (Enclosure 23). In the Defendant’s Submission in Reply, the Defendant submitted that based on the documentary evidence adduced, the unpaid balance of rentals should be RM44,333.34. This Court accepts the Defendant’s revised quantum of RM44,333.34 as the correct amount of unpaid rentals based on the reasons and explanation in paragraphs 5.1 to 5.11 of the Defendant’s Submission in Reply. 10 [39] In PW1 and PW2’s evidence, they also confirmed that the Plaintiff / Tenant were in breach of some conditions of the MPKj’s licence permit for bazaar: see PW2’s evidence in lines 6 – 17 at page 92, line 37 at page 106 and lines 2 – 6 at page 107 of the Notes of Evidence (Day 1); PW1’s evidence in lines 1 – 5 at page 24 of the Notes of Evidence (Day 1). [40] As the MPKj has decided not to extend the licence permit of the bazaar beyond 30.7.2020, even if the termination were held to be invalid, the Plaintiff / tenant also could not operate the bazaar at the said Land and no damages could be claimed against the Defendant / Landlord. [41] There is no pleading of any cause of action in unjust enrichment, and the Court cannot consider it. Even if pleaded, the Defendant / Landlord does not enjoy any benefit of improvement to the land as it has been taken back by PKNS. In our present case, there is no evidence whatsoever to show that the Defendant still retains any proprietary or possessory rights to or interest in the subject land after it has been taken back by PKNS, a different legal entity. [42] On quantum issues, the Court agrees with the Defendant’s submission that the Plaintiff has failed to prove specifically the alleged quantum of Plaintiff’s claims. There is no proof or evidence to support the alleged quantum of Plaintiff’s claim for loss of profit. [43] The Defendant / Landlord’s entitlement to arrears of rental is clearly stipulated in the Tenancy Agreement, and Covid Act’s relief does not apply to the period of time involved in this tenancy rental claim here. [44] This Court also rejects the Plaintiff’s belated argument that the tenancy agreement was frustrated. In the first place, the Plaintiff has not expressly pleaded frustration of contract, and on this ground alone, the Plaintiff’s argument on alleged frustration should be rejected. In the second place, the Plaintiff’s witnesses have not given evidence as to the alleged supervening event which is said to have frustrated the contract and in what way the contract has become impossible of performance. In the third place, the Plaintiff’s witnesses have also failed to adduce evidence as to what reliefs the Plaintiff ought to obtain from the Defendant arising from any alleged frustration of contract. Moreover, the Plaintiff acts and conduct in asking for time to make payments of rentals and in paying rentals 11 by instalments did not support the Plaintiff’s argument of frustration of contract. A more burdensome contract due to occurrence of adverse events would not constitute frustration of the contract. Conclusion [45] In conclusion this Court held on 30 May 2022 that the Defendant’s termination of the Tenancy Agreement was valid and was done in accordance with the terms of the Tenancy Agreement and that there was unpaid balance rentals which the Plaintiff owed to the Defendant. [46] In the premises, the entirety of the Plaintiff / Tenant’s claims are dismissed with costs, and the Defendant/Landlord’s counterclaim is allowed in the amount of RM44,333.34 with costs. [47] On quantum of costs of action, the Defendant’s counsel submitted that the costs of action should be RM30,000, while the Plaintiff’s counsel submitted the costs of action should be RM10,000. Bearing in mind this is a writ action involving full trial of two days and the amount in dispute is more than RM1 million, this Court assessed and awarded costs in favour of the Defendant in the amount of RM25,000 as the total costs for original action and counterclaim action in combination, subject to allocatur. Dated : 27th June 2022 Signed ..…..….............................................................. TEE GEOK HOCK JUDICIAL COMMISSIONER HIGH COURT OF MALAYA AT SHAH ALAM (NCVC 10) 12 To the parties’ solicitors:

For the Plaintiff : Nudisham Amar Syafiq Messrs Hifdzi Salmiah Kee Hanisah & Co (Bandar Baru Bangi)

For the Defendant : Mohd Munzeer Adam Lokman bin Hamdan Zaid bin Daud Messrs Yusfarizal Aziz & Zaid (Kuala Lumpur)