Majlis Perbandaran Ampang Jaya v Profesional Porter Services (M) Sdn. Bhd (B-02(IM)(NCVC)-2148-10/2017)

There are two matters before us, namely: a. An appeal by Majlis Perbandaran Ampang Jaya against the decision of the learned Judge at High Court Shah Alam, given on 19.9.2017, in allowing the relief sought by Professional Porter Services (M) Sdn Bhd under prayers (iii) and (iv) of the Statement of Claim, that is, “Defendan-Defendan membayar kos binaan bagi struktur gerai Keramat Permai dan struktur gerai Bandar Baru Ampang yang berjumlah Ringgit Malaysia Satu Juta Enam Ratus Ribu Sahaja (RM1,600,000.00)” and “Gantirugi”. b. A cross-appeal by Professional Porter Services (M) Sdn Bhd against the decision of the learned Judge at High Court Sham Alam, given on 19.9.2017, in holding that the period of concession was 5 years and not 10 + 10 years.

Professional Porter Services (M) Sdn Bhd is the plaintiff in the High Court suit whereas Majlis Perbandaran Ampang Jaya is the 3rd Defendant [“the Majlis”].

The action against the Majlis arose from an offer made by the Majlis to the Plaintiff vide a Letter of Offer dated 11.1.2003 ["the Offer"] to construct the stall at, inter alia, AU1 Keramat Permai ["Keramat Permai"] and Bandar Baru Ampang ["Bandar Baru Ampang"] on a basis of “Built, Operate, Tender” ["BOT"], with the specific number of stall units to be determined by the Majlis at a later date. [Keramat Permai and Bandar Baru Ampang will be jointly referred to as the two sites]. See; Ikatan Teras Pihak Perayu [“Ikatan Perayu”] Jilid 2 Tab 2. 3

The Plaintiff constructed 25 units of stall at Keramat Permai and 21 units of stall a Bandar Baru Ampang, totaling 46 units. [the two places will be jointly referred to as “the two sites”].

The Plaintiff informed the Majlis that based on the number of stalls they had to build, a concession period of 5 years is not viable. In a subsequent meeting held on 9.7.2003 with the BOT concessionaries, the Majlis agreed to a concession period of 10 + 10 years based on the previous concession.

By 1.10.2003, the Plaintiff had completed the agreed units of stall at the two sites at the total cost of approximately RM1,600,000.00 comprised RM800,000.00 for the stalls at Keramat Permai site and RM800,000.00 at Bandar Baru Ampang site.

Thereafter the Plaintiff started the operation at the two sites by collecting rentals from stall operators to recoup the costs of construction.

The Majlis vide a notice dated 21.1.2009 addressed to the Plaintiff alleged that the concession period of five years for the two sites had expired on 28.2.2008 and required the Plaintiff to surrender the stalls to the Defendant. See: RR Bahagian C Jilid 3(1) page 250.

The BOT concessionaries sought the intervention of the then Menteri Besar which led to the formation of a task force in 2009.

By a letter dated 20.1.2010, the Majlis sought to unilaterally impose a rental of RM2000 per month on the Plaintiff in respect of Keramat Permai stalls and RM1,600.00 per month in respect of Bandar Baru Ampang stalls, with effect from January 2010. See: AR Jilid 3(1) page 240. 4

The Majlis vide a letter dated 20.3.2015 demanded the Plaintiff to surrender the stalls at the two sites with effect from 1.4.2015 as the concession period for the two sites had expired on 10.1.2008. See: Ikatan Perayu Jilid 1 Tab 9.

By a notice dated June 2015 [RR Bahagian C Jilid 3(1) page 250], the Majlis notified the stall operators at the two sites that it had taken over all matters pertaining to the stalls and advised the operators to contact the Majlis in all matters relating to the payment of rental and licence renewals.

By a letter dated 2.7.2015, the Majlis required all the stall operators to pay rental to them. See: RR Jilid 3(1) page 251.

Hence, the Plaintiff filed this suit against the Defendant.

The Majlis does not dispute the making of the offer to the Plaintiff but contended that the Plaintiff had never accepted it.

The Majlis also contended that the offer was a conditional offer subject to obtaining the temporary occupation licence [TOL] from the relevant authority in respect of the two sites.

The Defendant’s TOL application in respect of the Bandar Baru Ampang site had been rejected by the relevant Land Office.

The contract between the Plaintiff and the Majlis in respect of Keramat Permai was in breach of section 68 of National Land Code 1965, as the TOL granted in respect of the site could not be assigned to third parties. 5

Consequently, the construction of the stalls and the operation thereof by the Plaintiff without the relevant TOL has rendered the contract between the Plaintiff and the Defendant void and illegal pursuant to section 24 of the Contracts Act 1950. High Court’s Decision

On the issue whether there existed a valid contract between the Plaintiff and the Majlis with regard to the BOT concession and whether the contract is conditional upon obtaining the TOL, the trial Judge found that a contract had been concluded as between the Plaintiff and the Majlis and that the BOT concession contract is not conditional upon the issuance of TOL and that the Defendant had actively encouraged the Plaintiff to incur expenses in constructing the stalls on BOT basis.

As a result of the various breaches of the contract by the Defendant and active encouragement by the Defendant to the Plaintiff to expend on the construction of the stall on BOT basis, the Defendant is liable to pay to the Plaintiff the damages to be assessed.

On the issue as to the length of the concession period awarded to the Plaintiff, the learned trial Judge disagreed with the Plaintiff’s contention that the agreed period was 10 + 10 years. Whether there was a valid contract between the Plaintiff and the Majlis?

On behalf of the Majlis, it was contended that the trial Judge had erred in finding that there was a valid contract between the Plaintiff and the Majlis for a period of five years when in fact there was none. 6

It was contended that the offer vide the Letter of Offer is a conditional offer subject to obtaining TOL from the local authority.

It was contended that the Plaintiff had never accepted the offer as required under section 7 of the Contracts Act 1950.

No formal agreement had been executed by the Plaintiff and the Majlis.

It was contended that mere attendance of meeting between the Majlis and the BOT concessionaries on the BOT project held on 10.5.2005, 14.3.2007 and 10.5.2007 cannot be considered as unqualified acceptance of the Majlis’ conditional offer within the ambit of section 7 and 8 of the Contracts Act 1950. Court’s decision 28. For ease of reference, the relevant portion of the Letter of Offer dated 11.1.2003 is reproduced here: “2. Sukacita dimaklumkan bahawa Majlis Perbandaran Ampang Jaya (MPAJ) telah bersetuju meluluskan permohonan tuan untuk membina gerai secara “Built, Oprate, Transfer” (B.O.T.) di Jln 1/1 & Jln 1 Tmn Kosas, AU1 Keramat Permai Keramat, Jln Mewah 4 Pdn Mewah, Jln 3/8 Bdr Baru Ampang dan Tmn Mulia Jaya di mana jumlah unit dan kemudahan akan ditentukan oleh pihak Majlis setelah berunding dengan pihak tuan berdasarkan kesesuaian lokasi dan jumlah peniaga yang ada serta syarat-syarat seperti berikut:

2.1 Pihak tuan dikehendaki membina dan menyiapkan gerai tersebut dan pembinaan gerai hendaklah disiapkan di dalam tempoh yang ditetapkan iaitu 7 selewat-lewatnya sebelum 28 Februari 2003 dengan kos ditanggung sepenuhya oleh pihak tuan.

2.2. Pihak tuan adalah dibenarkan mengendali/menguruskan gerai tersebut selama 5 tahun dan gerai tersebut hendaklah diserahkan kepada MPAJ selepas tamat tempoh tersebut.

2.3 to 2.6……

2.7 Pihak tuan dibenarkan mengutip sewa mengikut kadar yang dipersetujui oleh Majlis termasuk kos penyelenggaraan, pembuangan sampah dan kebersihan daripada peniaga-peniaga yang menjalankan perniagaan sepanjang tempoh 5 tahun.

2.8 – 2.11 3. Sehubungan dengan ini, tuan adalah dikehendaki mengesahkan penerimaan tawaran dengan syarat-syarat di atas kepada pihak MPAJ dalam tempoh 3 hari dari tarikh surat ini dikeluarkan. Satu perjanjian akan disediakan oleh pihak MPAJ kemudian.

……. Sekian, terima kasih.”

A close perusal of the Letter of Offer above amply shows that it is not a conditional offer as contended by the Majlis. Nowhere in the letter did it state that the offer is subject to obtaining TOL from the local authority or the execution of a formal agreement.

It is distinguishable from the case of Low Kar Yit & Ors v Mohamed Isa & Anor [1963] 29 MLJ 165 [relied upon by the Majlis], where the option 8 to purchase the land was expressly subject to (a) a formal contract to be drawn up and agreed upon by the parties and (b) the approval of the sale and of the said contract by the High Court at Kuala Lumpur.

Section 3 of the Contracts Act 1950 provides, inter alia, that communication of acceptance is deemed to be made by “by any act” by which a party intends to communicate the acceptance, or which has the effect of communicating it.

Section 8 of the Contracts Act 1950 states:

Performance of the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal, is an acceptance of the proposal.

It is in evidence that the Plaintiff had upon receipt of the offer proceeded to construct and had completed the construction of 46 stalls at the two sites by 1.10.2003.

The Majlis claimed that based on the Letter of Offer, the number of stalls was yet to be determined by the Majlis. They claimed that the Plaintiff went to see the then Menteri Besar directly and thereafter entered the two sites to build the stalls without the Majlis’ knowledge. The Majlis only came to know during a meeting held on 9.7.2003.

However, based on the minutes of the meeting held on 9.7.2003 [Ikatan Perayu Jilid 1Tab 4], there is nothing in the minutes to show that the Majlis, upon learning of the Plaintiff’s construction of the stalls at the two site allegedly without their knowledge or before they had decided on the 9 number of stall, had raised objection on the ground that the Plaintiff had acted without the Majlis’s knowledge, without a formal agreement being signed by the parties and determination on the number of stalls had yet to be determined.

It will be shown in subsequent paragraphs 50 to 55 as to how the Majlis had actively encouraging and rushing the BOT concessionaries including the Plaintiff to enter their respective allocated sites to build and complete the stalls so that the stall operator or hawkers could start operating their business.

These evidence combined with the silence of the Majlis in the face of the knowledge of construction of stalls by the Plaintiff at the two sites is inconsistent with their assertion that there was no agreement as the Plaintiff had not accepted the conditional offer and a formal agreement had yet to be executed by the parties.

In our view, given the fact that the Plaintiff had performed the contract as per the offer dated 11.1.2003 with the Majlis’s knowledge and consent, it does not lie in the mouth of the Defendant to now alleged that there is no valid contract.

In the premise, we find no error in the learned trial Judge’s finding that there is a valid contract between the Plaintiff and the Majlis. Whether the Agreement is void and null due to illegality

For the Majlis, it was contended that in the event the Court finds that there is a valid Agreement, then the Agreement is null and void and 10 unenforceable on ground of illegality as it had contravened sections 65 to 67 and 425 of the National Land Code.

Counsel for the Defendant submitted that even though the Letter of Offer did not state that TOL was one of the conditions for the BOT concession, a letter from the office of the Selangor State Secretary dated 30.12.2002 [Ikatan Perayu Jilid 2 Tab 1] clearly stated that notwithstanding the approval of BOT program by the State Government, the approval is subject to the condition that the district authority must adhere to the existing rules in order to obtain the sites for the stalls.

In the premise, the approval of BOT project was subject to obtaining the TOL. Under the National Land Code, it is compulsory to obtain TOL in order for anyone to occupy State land. This requirement of TOL has never been exempted by the State Government. Unless TOL is obtained, the whole BOT scheme is illegal. Likewise, the performance of the agreement by the Plaintiff is tainted with illegality.

It was submitted that pursuant to the Letter of Offer, the Majlis would prepare the agreement for execution by the parties. However, a formal agreement could not be prepared and executed due to rejection of the TOL application by the state authority.

The TOL application for BOT project at Keramat Permai was approved for the period from 11.7.2008 till 31.12.2011, that is, five months after concession period had expired on 28.2. 2008.

44.

The Defendant contended that the Defendant does not own the two sites and therefore does not have the authority to surrender them to third party such as the Plaintiff to enter and to erect any building on the land.

Counsel for the Defendant submitted that although the BOT Agreement is valid, the performance of the agreement is unlawful as no TOL had been issued in respect of the two sites. Court’s Decision 47. It is to be noted that the Letter of Offer did not stipulate obtaining TOL as a condition precedent. Nor did it require the Plaintiff to apply for TOL.

Item 2.1 of the Letter of Offer, which is one of the eleven conditions, required the Plaintiff to “membina dan menyiapkan gerai tersebut dan pembinaan gerai hendaklah disiapkan di dalam tempoh yang ditetapkan iaitu selewat-lewatnya sebelum 28 Februari 2003”

In the meeting between the Majlis’ representatives with BOT concessionaries held on 9.7.2003 [which was before the Plaintiff had completed the construction of stalls on 1.10.2003], it is apparent from the minutes of the meeting that there was no mention of the requirement to apply and obtain TOL before a formal agreement could be signed. [Ikatan Perayu Jilid 2 TAG 4]

At paragraph 2.1 of the same minutes of meeting held on 9.7.2003, the Chairman confirmed that Majlis Mesyuarat Kerajaan Negeri 13/2003 dated 20.3.2003, had approved 18 stalls locations for BOT program at Majlis Perbandaran Ampang Jaya. 12

Paragraph 4.5 of the same minutes of meeting held on 9.7.2003 showed that the BOT concessionaries who had not yet carried out any construction had been directed to make preparation to build within two months and one month for related works. The estimated period was three months and “kemasukkan” hawkers was expected in October 2003.

At paragraph 5 of the minutes of the meeting held on 9.7.2003, it was recorded: Tuan Pengerusi menegaskan Pelarasan Penempatan dan Penyusunaan Semula Penjaja di bawah pentadbiran Majlis berlandaskan 3 peringkat:

Jabatan Perancang Bandar mengenal pasti lokasi dan rezab-rezab gerai bagi kelulusan untuk pembinaan gerai.

Jabatan Kejuruteraan membuat semakan pembinaan gerai mengikut spesifikasi yang ditetapkan.

Jabatan Perkhidmatan Bandar & Pengurusan Penjaja membuat kemasukan penjaja dan pelarasan mengikut statistik bancian.

The paragraph above shows that the Defendant was responsible to apply for approval for construction of stalls.

At paragraph 7.2 of the same minutes, the BOT concessionaries were directed to forward reports with pictures in diskette form to show the latest progress on stalls construction weekly to the Majlis.

What is abundantly clear from the minutes of the meeting on 9.7.2003 is that the Defendant was actively encouraging the BOT concessionaries including the Plaintiff to construct the stalls at the designated sites and even 13 rushing them to complete and get ready the stalls for the hawkers by October 2003.

The first time the issue of TOL was raised was during the meeting held on 10.5.2005. At paragraph 4.4 of the minutes of meeting held on 10.5.2005 [Ikatan Perayu Jilid 2 Tab 5], it stated as follows: Perjanjian dan Isu Tanah Perjanjian sedang dalam proses penyediaan oleh Jabatan Undang-Undang manakala Jabatan Penilaian dan Pengurusan Harta menguruskan permohonan hak milik tanah secara TOL dengan pejabat tanah. Pemaju yang masih tidak menyerahkan plan diminta membuat permohonan kemasukkan plan bagi memudahkan kerja-kerja permohonan hakmilik tanah.

By this time, the Plaintiff had long completed the construction of 46 stalls at the two sites at the cost of RM1.6 million and began operation.

The Defendant also made no mention whatsoever of illegality in the following notices issued to the Plaintiff: a. Letter dated 21.1.2009 notifying the Plaintiff of the expiry of the five years concession period on 28.2.2008 and requiring the Plaintiff to surrender the relevant units of stalls by the Plaintiff to the Defendant. b. Letter dated 20.3.2015 demanding the Plaintiff to surrender the stalls at the two sites with effect from 1.4.2015.

In the interim period, by a letter dated 20.1.2010 [AR Jilid 3(1) page 240] , the Defendant sought to unilaterally impose a rental of RM2,000.00 14 per months on the Plaintiff in respect of the stalls at Keramat Permai site and RM1,600.00 per month for the Bandar Baru Ampang site, with effect from January 2010.

By a notice issued in June 2015 [RR Bahagian C Jilid 3(1) page 250], the Defendant notified the stall operators at the two sites that it had taken over all matters pertaining to the stalls and advised them to contact the Plaintiff in all matters relating to the payment of rent bills and licence renewals.

When all the evidence alluded to in the above are considered in totality, it becomes apparent that the defence of illegality is an afterthought and not a bone fide defence.

Our above view is fortified by this. Going by the Defendant’s assertion that it is illegal under the National Land Code for anyone to enter State land to occupy and erect structure thereon without TOL being obtained, as such the structure of stalls on Bandar Baru Ampang site [TOL application of which was rejected], it begs the question why the Defendant continued to operate the stalls at Bandar Baru Ampang sites after the Plaintiff had surrendered it to them.

It is our considered view that the Plaintiff had performed the terms in the offer upon active encouragement by the Majlis, the latter is estopped from raising illegality to avoid the contract.

For all the reasons aforesaid, we find no merits in the Majlis’s appeal and we dismiss it accordingly. 15 Cross-Appeal by the Plaintiff Whether the length of concession period was 20 years

The Plaintiff cross-appeal against the decision of the learned trial Judge in finding that the concession period was 5 years and not 10 + 10 years. Learned counsel for the Plaintiff contended that at the meeting held between the Defendant’s representative and the BOT concessionaries on 14.3.2007, the Defendant had agreed that the concession period would be extended from 15 years to 20 years.

The Majlis, on the other hand, took the stance that at all material time, the concession period was 5 years as stated in the Letter of Offer.

Counsel for the Majlis further contended that Plaintiff were relying on the following minutes of meeting to allege that the Defendant had agreed to extend the concession period:

Counsel for the Defendant submitted that during the trial, the Plaintiff’s witness had agreed in cross-examination that it had not received any written offer from the Majlis whereby the Majlis had agreed to extend the concession period for 10 + 10 years. 16

Counsel for the Defendant contended that the agreement to extend the concession period 10 + 10 years was subject to the caveat that “Pihak Majlis akan membuat semakan tempoh konsesi yang bersesuaian berdasarkan kos pembinaan pemaju yang terlibat.”. The Defendant had not state in absolute terms that it had agreed to extend the concession period for the two sites, citing Deutsche Bank Ltd v MBF Holdings Bhd [2015] 6 MLJ 310 which held: It is unlikely that parties would consider themselves bound by contract in a commercial relationships of some complexity over a long period unless they had signed the formal agreement as envisaged between them. Court’s Decision 70. It is not disputed that the Letter of Offer provided for a concession period of 5 years.

However, Paragraph 6.6. of the minutes of meeting held on 9.7.2003 recorded:

6.6. TEMPOH KONSENSI Pihak Majlis akan membuat semakan tempoh konsensi yang bersesuaian berdasarkan kos pembinaan pemaju yang terlibat. Persetujuan nyata di dalam syarat terdahulu adalah 10 tahun + 10 tahun.

Paragraph 3.5 of the minutes of meeting held on 14.3.2007 under the heading “Masalah-Masalah Yang Berbangkit” [RR Bahagian C Jilid 3(1) page 214] recorded: 17 - Pada mesyuarat yang pernah di pengerusi oleh TYDP yang mewakili YDP ada menyatakan untuk mempercepatkan proses menandatangani perjanjian serta menambahkan tempoh penyerahan gerai-gerai B.O.T. daripada pemaju iaitu daripada 15 tahun kepada 20 tahun.

We agree with counsel for the Plaintiff that the agreement to extend the concession period from 15 to 20 years is consistent with the position taken by the Majlis itself that the pervious concessions had been granted for a period of 10 + 10 years.

Accordingly, there is merit in the cross-appeal and we allow the cross-appeal by order in terms of prayers (iv) and (v) of paragraph 29 of the Statement of Claim. We set aside the High Court order granting the relief per paragraph 29(iii) and (vi) of the Statement of Claim. Conclusion

For all the reasons aforesaid, we dismiss the Defendant’s appeal and allow the Plaintiff’s cross appeal with costs of RM20,000.00 subject to allocator. The deposit is to be refunded to the Appellant. Dated: 10th May 2019 Sgd YEW JEN KIE (delivering judgment of the court) Court of Appeal Judge Putrajaya For Appellants : 1) Ahmad Musthafi bin Mohamad 2) Tabian bin Tahir [AHMAD MUSTHAFI & CO] 18 For Respondents : 1) Mahathir Abdullah 2) M Govind [MAHATHIR] Notice: This copy of the court’s reasons for judgment is subject to editorial revision.