Hra Teguh Sdn. Bhd. v Goldix Resources Sdn Bhd (WA-22NCvC-625-09/2020)

GOLDIX RESOURCES SDN BHD

ADLIN SHAHARUDIN (NO. K/P: 730713-08-6135 … DEFENDAN-DEFENDAN JUDGEMENT Introduction 1. The Plaintiff’s claim against the 1st Defendant is for the breach of payment under a Novation agreement and against the 2nd Defendant for a personal guarantee, guaranteeing the payment of the sum agreed under the novation agreement. 26/03/2025 16:37:34 WA-22NCvC-625-09/2020 Kand. 120 Brief facts and background

The Plaintiff was appointed under a Master Development Agreement (“MDA”) by FELDA Investment Corporation Sdn Bhd (“FIC”) to develop a piece of land at Sesyen 4- PG, Daerah Jempol, Negeri Sembilan (“the said land”) registered under the Federal Land Development Authority (FELDA”).

The Plaintiff transferred all its rights and liabilities to the 1st Defendant under a Novation agreement dated 7/10/2016 for a consideration of RM3.5 million of which RM 1 million was paid to the Plaintiff’s lawyer to be held as a stake holder.

The 2nd Defendant had given a personal guarantee for the balance sum to be paid under the Novation Agreement.

The 1st Defendant failed to pay the balance sum as stipulated under the Novation Agreement and hence this suit was filed by the Plaintiff against both the Defendant to recover the sum owed under the Novation Agreement.

As a defense the Defendants contended that the Novation agreement was void ab initio as the FIC had entered into the MDA with the Plaintiff to a land belonging to FELDA without the approval of the Minister as required under the law. The issue 7. The Court noted in this case that the Defendants are not disputing the Novation agreement nor the personal guarantee but are challenging the validity of the MDA which in turn has the effect of invalidating the Novation Agreement.

The sole issue for determination in this case is the validity of the MDA and subsequently the Novation agreement. The Burden of proof 9. As the allegation of the invalidity of the MDA is raised by the Defendants the burden of proof is upon the Defendants as stipulated in section 103 of the Evidence Act 1950 which states: The burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.

A prosecutes B for theft and wishes the court to believe that B admitted the theft to C. A must prove the admission.

B wishes the court to believe that at the time in question he was elsewhere. He must prove it. 4 10. As the burden of proof is upon the Defendants the Court directed the Defendants to begin the case. The Court is empowered to set the directions for trial as provided for under Order 33 Rule 3 as follows:

Determining mode of trial (O. 33 r. 3)

In every action begun by writ, an order made at the pre-trial case management shall determine the mode of trial; and any such order may be varied by a subsequent order of the Court made at or before the trial.

In any such action, different questions or issues may be ordered to be tried by different modes of trial and one or more questions or issues may be ordered to be tried before the others. The Minister’s approval 11. The requirement for the Minister’s approval is contained in the Land Development Act 1956 and is worded as follows:

There shall be established for the purposes of this Act a body, to be known as the Federal Land Development Authority.

The Authority shall have the following duties:

to undertake and carry out land development projects;

to promote and assist in the investigation, formulation and implementation of projects for development, settlement and management of land in the Federation;

to promote, stimulate, facilitate and undertake economic, social, residential, agricultural, industrial and commercial development and management and other ancillary activities and services in any area for which the Authority has been vested with the power to carry out land development projects or any other area which has been acquired, purchased, leased by or alienated to or is otherwise held or enjoyed by the Authority or its corporations or companies for the performance of its functions;

to undertake and carry out such activities as may assist in the modernisation of the agricultural sector in the area mentioned under paragraph (c); and in particular activities relating to the production, utilisation, processing and marketing of crops, livestock and fresh water fisheries;

to assist, guide, advise, manage, administer and coordinate economic, social, residential, agricultural, industrial and commercial activities whether within or outside the area mentioned under paragraph (c). [(2)

The Authority shall have power, for the purpose of the discharge of its duties under subsection (2)- [(3) Am. Act A818:s.2]

to carry on all activities the carrying on whereof appears to it to be requisite, advantageous or convenient for or in connection with the discharge of its said duties including the provision of infrastructure and social amenities and other ancillary services; [(a) Am. Act A818:s.2]

to promote and co-ordinate the carrying on of any such activities by boards, corporations, companies and other bodies or persons and to give assistance to such boards, corporations, companies and other bodies or persons, including financial assistance, by way of grant, loan or otherwise; [(b) Am. Act A818:s.2]

with the approval of the Minister to enter into a partnership, joint venture, undertaking, co-operation in any manner, an arrangement for the sharing of profits or to carry on such activities in association or otherwise, with any person, public authority, corporation, company or other body (including the Government of the Federation or any State Government) carrying on or engaging in any such activities and to take or otherwise acquire shares and securities of any such public authority, corporation, company or other body, and to sell, hold on, reissue with or without guarantee, such shares and securities or otherwise dispose of or deal with them;

The Defendants contend that non approval by the Minister amounts to a breach of a statutory provision thus rendering the MDA as well as the Novation Agreement void. Section 24 of the Contracts Act stipulates that: The consideration or object of an agreement is lawful, unless-

it is forbidden by a law;

it is of such a nature that, if permitted, it would defeat any law;

it is fraudulent;

it involves or implies injury to the person or property of another; or

the court regards it as immoral, or opposed to public policy. In each of the above cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void. The Defendants’ evidence 13. The Court had given the opportunity to the Defendants to prove the absence of the Minister’s approval. The Defendants called 1 witness who testified from the records kept by her.

The Court noted that the witness called by the Defendants had no personal knowledge of any of the events leading to the MDA and could only testify from the record. All this witness could say is that the Minister’s approval was not in the record.

In the Court’s view absence of a written approval in the record cannot be equated with no approval from the Minister. The provision of the law above does not state that the approval must be in writing. Approval could have been given orally.

The only witness who could have testified on the approval, is the Minister himself. There is nothing to indicate that the Minister had refused to testify in this case. The Court is entitled to the best evidence and the best evidence in this case is the testimony of the Minister.

By failing to call the material witness in this case the Defendants have not only failed to discharge the burden of proof upon them but also caused the Court to invoke adverse inference under section 114(g) of the Evidence Act 1950.

Section 114 (g) of the Evidence act 1950 states that The court may presume:-

that evidence which could be and is not produced would if produced be unfavourable to the person who withholds it; The defense of non-approval of the Minister is an afterthought 19. The Court noted that when the case was first filed in 2020 the Defendants had no averred of the non-approval of the Minister in the Statement of Defense.

The defense of non-approval of the Minister was only raised in 2023 when the Defendants filed an amended Statement of Defense. This conduct of the Defendants is clearly an attempt to bolster up their defense in trying to avoid the performance of the Novation agreement and is an afterthought.

This conduct of the Defendants is a relevant factor to be taken into consideration by virtue of section 8 of the Evidence Act which states:

The conduct of any party, or of any agent to any party, to any suit or proceeding in reference to that suit or proceeding, or in reference to any fact in issue therein or relevant thereto, and the conduct of any person an offence against whom is the subject of any proceeding, is relevant if the conduct influences or is influenced by any fact in issue or relevant fact, and whether it was previous or subsequent thereto. Explanation 1 - The word "conduct" in this section does not include statements unless those statements accompany and explain acts other than statements; but this explanation is not to affect the relevancy of statements under any other section of this Act. Explanation 2 - When the conduct of any person is relevant any statement made to him or in his presence and hearing which affects his conduct is relevant. Approbation and Reprobation 22. The Defendants in this case are barred from challenging the validity of either the MDA or the Novation agreement after having not only signed the agreement but having partly performed the Novation agreement by paying the sum of RM 1million to the Plaintiff’s lawyer.

The Defendants cannot take a contradicting stand in choosing to abide by the agreement when it suits them and discarding the agreement in order to escape their obligations under the agreement. The Court’s finding 24. In the absence of any prove to the contrary the Court rules that both the MDA and the Novation agreements are valid agreements and the parties are obliged to perform their respective promises under the agreements.

The Court further rules that the Novation agreement is independent of the MDA. Any infirmities in the MDA enables the Defendant to take action against FIC but not the Plaintiff. This right upon the Defendants is conferred by the Novation agreement itself, whereby the Plaintiff have transferred all their rights and obligations to the Defendants under the Novation agreement 26. The rights of the Plaintiff under the Novation agreement is stated under Section 38 of the Contracts Act 1950, which mandates the parties to perform their obligations under the agreement entered by them. The provision states:

The parties to a contract must either perform, or offer to perform, their respective promises, unless the performance is dispensed with or excused under this Act, or of any other law.

Promises bind the representatives of the promisors in case of the death of the promisors before performance, unless a contrary intention appears from the contract. ILLUSTRATIONS

A promises to deliver goods to B on a certain day on payment of RM1,000. A dies before that day. A's representatives are bound to deliver the goods to B, and B is bound to pay the RM1,000 to A's representatives.

A promises to paint a picture for B by a certain day, at a certain price. A dies before the day. The contract cannot be enforced either by A's representatives or by B. Conclusion 27. Based on the factors above the Court allowed the Plaintiff’s claim as stated in paragraph 16 (a) to (e) of their amended Statement of Claim. The Defendants are obliged to make the payments under the Novation agreement and personal guarantee agreement as part of performance of the agreements.

The Court notes that the Plaintiffs are also entitled to be compensated for any damages or loss resulting from the Defendants breaching the agreements. This is provided in section 74 of the Contracts Act 1950 as follows:

When a contract has been broken, the party who suffers by the breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from the breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.

Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.

The Court disallowed the compensation for any loss or damage as no such loss or damage was proven by the Plaintiff.

Finally, the Court allowed a cost of RM50, 000 to be paid by each Defendant to the Plaintiff. Dated: 26.3.2025 sgd DATO’ HAJI AKHTAR BIN TAHIR Judge High Court of Malaya, Kuala Lumpur PARTIES For the Plaintiff: Nama Peguamcara: Baljit Singh Uppal / Nur Dhia Almas Tetuan Rajah Lau & Assoc. B-13-13, Block B, 13th Floor, Unit 13, Megan Avenue II, 12, Jalan Yap Kwan Seng, 50450 Kuala Lumpur. For the Defendant: Nama Peguamcara: M Pani / Madavy Krishnan Tetuan Pani Normala & Co. Unit 10-32, Kompleks Mutiara Office, No. 568, Batu 3 1/2, Jalan Ipoh, 51200 Kuala Lumpur.