Mohd Khalid Bin Mohd Noor v UEM Land Berhad (WA-22NCvC-776-11/2020)

The Plaintiff’s claim against the Defendant is for a breach of contract whereby the Defendant pre maturely terminated a tenancy of the Plaintiff to grow a turf on the Defendant’s land for a period of 3 years (“the Agreement”). 24/10/2024 17:00:06 WA-22NCvC-776-11/2020 Kand. 111 S/N ozPdqgUo5keDWijxh7YRaQ

The dispute between the Plaintiff and the Defendant proceeded for a full trial. The parties had filed a statement of agreed facts, issues to be tried, Bundle of Documents, adduced oral testimony of witnesses as well as filed written submission which formed part of the proceeding before the Court which the Court considered in deciding this case. Agreed facts

The Plaintiff is an individual carrying on a business and a sole proprietor of Emkay Enterprise which had a registered address at No.18, Jalan 3 Kampong Sri Jambu, 43000 Kajang, Selangor and was involved in the agriculture sector.

The Defendant is an incorporated limited liability company having a registered address at Level U@, Block C5, 2 Solaris Dutamas, No.1 Jalan Dutamas, 50480 Kuala Lumpur.

A proposal by the Plaintiff was accepted by the Defendant whereby the Plaintiff was appointed by way of a letter dated 21/6/2016 as the operator of the Turf Farm on a parcel of land at Serene Heights, Bangi belonging to the Defendant.

For the purpose of appointment, the Plaintiff and the Defendant entered into the Agreement dated 12/1/2017 for a period of 3 years.

The Plaintiff had carried out the turf works and during this period of tenancy both the Deputy General Manager of the Defendant and S/N ozPdqgUo5keDWijxh7YRaQ the Plaintiff were investigated by the Anti-Corruption Agency

As a result of this investigation the Plaintiff and the Defendant had met twice on 21/3/2018 and 23/5/2018. This culminated in the issuance of the Termination Agreement which was purportedly signed by the Plaintiff. The issue 9. The 2 main issues for determination in this case are first whether the investigation by the MACC justified the Defendant in terminating the Agreement with the Plaintiff and secondly whether the Plaintiff had agreed to the Termination Agreement. The investigation by MACC

The Defendant’s main justification in terminating the Agreement is the investigations conducted by the MACC in relation to the Agreement. This is reflected in paragraphs 12 and 13 of their Statement of Defense.

It is the Defendant’s contention that as a consequence of this MACC investigations which had sullied the reputation of the Defendant, the Plaintiff and the Defendant had agreed to terminate the Agreement by virtue of entering into the Termination Agreement. S/N ozPdqgUo5keDWijxh7YRaQ

The Plaintiff in the Statement of Claim agrees that the actual cause of termination of the Agreement was the investigation by the MACC. The Plaintiff however denies that they had mutually agreed to the termination.

The Court looked at the purported Termination Agreement and what is glaring is that no reasons for the termination is given in this Termination Agreement. In the Court’s view if the termination was due to Investigations by the MACC it should be stated expressly so in the Termination Agreement.

What is stated in the Termination Agreement is merely “The Landlord and the Tenant have agreed to mutually terminate the Tenancy agreement effective upon expiry of 3 months from the date of this letter without recourse to each other….”. This is insufficient and the Court regards this non disclosure of the reasons for termination is a material omission in the Termination Agreement rendering the Termination Agreement defective.

The Court also notes that in the Agreement there is no option for mutually terminating the Agreement. It therefore means neither party anticipated or intended that the tenancy could be mutually terminated. This mutual termination is therefore a variation to the Agreement. As such any variation to the Agreement must be agreed by both parties.

The Defendant’s argument is that apart from the Termination Agreement, the Defendant is allowed under clause 15 of the Agreement to terminate the Agreement by giving a 3 months’ S/N ozPdqgUo5keDWijxh7YRaQ notice. The Court is of the view that this clause cannot be read independently but must be read together with clause 6 of the Agreement which states that the Agreement can be terminated only on the defaults of the Plaintiff as stated in the clause. Further in the Court’s view the termination under clause 15 if applied by the Defendant must be justified and not given at the whims and fancy of the Defendant. If this was so, the Court deems the clause to be unconscionable and therefore unlawful.

In the Court’s view the Defendant’s reliance on clause 15 of the Agreement is also misconceived and an afterthought as the Defendant’s main defense to the Plaintiff’s claim in their Statement of Defense is the Termination Agreement. The Defendant’s reliance upon clause 15 of the Agreement is both untenable and unjustified and a mere ploy to escape liability. The Defendant cannot approbate and reprobate their reliance on the Agreement and the Termination Agreement to suit their purpose.

The more important fact is that by their conduct the Defendant did not have clause 15 of the Agreement in mind in terminating the Agreement. If they had, they would not have gone out of their way to obtain the consent of the Plaintiff by getting the Plaintiff to sign the Termination Agreement. Clause 15 from literal reading allows unilateral termination of the Agreement by the Defendant.

Conduct is a relevant fact for the Court to take into account as stated in section 8 of the Evidence Act 1950:

The conduct of any party, or of any agent to any party, to any suit or proceeding in reference to that suit or S/N ozPdqgUo5keDWijxh7YRaQ 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.

The Defendant in further justifying the termination of the Agreement relies on a Vendor’s declaration dated on 28/9/2016 signed by the Plaintiff. In the said Declaration the Plaintiff had pledged not to be involved in any corrupt practice. The breach of this Declaration according to the Defendant entitles the Defendant to terminate the Agreement.

The reliance on this Declaration is misconceived as the Agreement does not even mention this Declaration. The Agreement must be construed within its 4 walls and external agreements cannot be taken into account in construing the Agreement unless the Agreement expressly incorporates the said Declaration or makes S/N ozPdqgUo5keDWijxh7YRaQ references to it. Any way the Termination Agreement does not give the breach of the Declaration as a reason for the termination.

An overriding factor on this issue, which the Court took into account, is that neither party have knowledge of the actual nature of the MACC investigation. Whether the investigation of the MACC was in relation to the Agreement between the Plaintiff and Defendant is merely speculative.

More importantly the investigation by MACC resulted only in the Defendant’s Deputy General Manager being charged and convicted. The offence for which this officer was charged and convicted is not clear.

The Plaintiff nor any of its employees were charged in Court although they were called in for questioning. The complicity of the Plaintiff with the offence committed by the Defendant’s Deputy General Manager has not been shown or established. Mere suspicion cannot be basis to implicate the Plaintiff with any offence.

Taking into consideration of all the above factors the Court rules that the Termination Agreement relied upon by the Defendant to terminate the Agreement with the Plaintiff is not only invalid but also unjustified. S/N ozPdqgUo5keDWijxh7YRaQ Was the termination mutual?

The events leading to the Termination Agreement being presented to the Plaintiff is undisputed. On 23/5/2018 an officer of the Defendant Mohd Nor Hilmi had met the Plaintiff in person at Serene Heights gallery. The Termination Agreement was presented to the Plaintiff by the said officer on behalf of the Defendant.

What actually transpired at the meeting is however disputed. The Plaintiff contends that at the meeting he was handed the Termination Agreement which was in English. The Plaintiff found it odd that the Defendant had met him instead of his General Manager which was the normal practice.

At the meeting the Plaintiff had indicated to the Defendant’s representative that he needed time to consult with his officers on the contents of the Termination Agreement. Although he had signed the Termination Agreement it was an acknowledgement of receipt rather that ageing to the terms stated in the Termination Agreement. As a support for his contention, the Plaintiff testified that he had not signed at the acceptance portion of the Termination Agreement which was left blank.

The Defendant’s representative on the other hand contended that the all the terms of the Termination Agreement had been explained to the Plaintiff and the Plaintiff understood the terms and had voluntarily signed the agreement. S/N ozPdqgUo5keDWijxh7YRaQ

In viewing this discrepancy between both the testimonies, the Court took into account and considered the fact that at the initial presentation of the proposal for the Agreement the Plaintiff was assisted by his officers and the major part of the presentation was done by the Plaintiff’s officer in English.

The Defendant contends that as the Plaintiff was present he understood the presentation which was in English and the Plaintiff had also participated in the presentation. The fact that the Plaintiff was assisted during the presentation by his officer whereby the major presentation was by the Plaintiff’s officer shows in the Court’s view, the Plaintiff’s dependency on his officers.

On the Plaintiff’s fluency in English the Court finds that although the Plaintiff can understand English his testimony that he was not very fluent in the language is believable and more probable. The fact that he needed assistance to make the presentation is itself a proof that he was not fluent in English.

Further in all fairness the Defendant should have not met the Plaintiff alone to explain such an important document as the Termination Agreement when they had more dealings with the Plaintiff’s officers. The Court views this conduct of the Defendant suspicious and views it as a means to exploit the Plaintiff and get him to agree to the termination.

The fact that the Defendant had to cajole the Plaintiff to accept the termination also showed that the Defendant had no material reason S/N ozPdqgUo5keDWijxh7YRaQ to terminate the Agreement especially when no breach on the part of the Plaintiff could be established.

The Court also noted that the portion of the Agreement requiring the signature of acceptance was left blank. This supports the fact the signature of the Plaintiff was only an acknowledgement of receipt of the Termination Agreement and not an agreement to terminate the Agreement.

In short the Court finds that the termination was not mutual but a unilateral termination which was not justified under the Agreement. The Court concludes taking into account all the factors above that the Defendant has breached the Agreement with the Plaintiff. Effect of the breach 31. The obligations of parties to a contract is stated in section 38(1) of the Contracts Act 1950 as follows:

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.

In this case the Agreement between the Plaintiff and the Defendant provides for reciprocal promises whereby the Defendant promised to provide the land upon which the Plaintiff has promised to grow turf. S/N ozPdqgUo5keDWijxh7YRaQ

From the evidence led and also viewing the photographs of the Defendant’s land the Court is satisfied that the Plaintiff have proven that they have kept their promises to grow the turf at the designated area and have not breached any terms of the Agreement.

The Defendant have by terminating the Agreement had purposely prevented the performance of the entirety of the Agreement. In such a circumstance the Agreement becomes voidable at the instance of the Plaintiff who has suffered the breach. This is stipulated in section 58 of the Contract Act 1950: When a contract contains reciprocal promises, and one party to the contract prevents the other from performing his promise, the contract becomes voidable at the option of the party so prevented; and he is entitled to compensation from the other party for any loss which he may sustain in consequence of the non-performance of the contract. ILLUSTRATION A and B contract that B shall execute certain work for A for RM1,000. B is ready and willing to execute the work accordingly, but A prevents him from doing so. The contract is voidable at the option of B; and, if he elects to rescind it, he is entitled to recover from A compensation for any loss which he has incurred by its non-performance. S/N ozPdqgUo5keDWijxh7YRaQ Relief 35. As provided in section 58 of the Contracts Act above the Plaintiff has an option to rescind the contract and claim for compensation for any loss suffered as a result of the non-performance of the Agreement.

In determining the compensation to be awarded the Court deemed it fit to allow the Plaintiff’s claim for legitimate expectation of income from the remaining 3 cycles of harvesting the turf in the remaining 10 months of the Agreement 37. The Court allowed the expected income for the 3 cycles as advocated by the Plaintiff as it was a reasonable sum with no evidence to the contrary that was led by the Defendant. Conclusion 38. The Court allowed compensation of RM1,134,960.75 to the Plaintiff with an interest of 5% from the filing of the writ until the full settlement of the sum. The Court also allowed the Plaintiff a cost of RM150,000. S/N ozPdqgUo5keDWijxh7YRaQ Dated: 24.10.2024 sgd DATO’ HAJI AKHTAR BIN TAHIR Judge High Court of Malaya, Kuala Lumpur S/N ozPdqgUo5keDWijxh7YRaQ PARTIES For the Plaintiff: Nama Peguamcara: Ng Yih Miin; Fellyna Mustafe Kamal Tetuan T.S. Ong & Ng 8.2, Solaris Mont Kiara, Jalan Solaris 5, Off Jalan Duta Kiara, 50450 Kuala Lumpur. For the Defendant: Nama Peguamcara: Subramaniam Anjan; Karishma Kaur. Tetuan Shahrizat Rashid & Lee, Ground & First Floor, Wisma Prima, 17, Jalan Sri Semantan Satu, Damansara Heights, 50490 Kuala Lumpur. S/N ozPdqgUo5keDWijxh7YRaQ