Penang Port Sdn Bhd v 1. ) Prasarana Malaysia Berhad (WA-22NCvC-587-08/2021)

PRASARANA MALAYSIA BERHAD [REGISTRATION NO. 199801011092 (467220-U)]

RAPID FERRY SDN BHD [REGISTRATION NO.: 201701009499 (1223664-P)] … DEFENDANTS

The Court shall only deal with the remaining claim by the 1st Defendant (Prasarana Malaysia Berhad) against the Plaintiff 27/08/2025 17:39:35 WA-22NCvC-587-08/2021 Kand. 92 (Penang Port Sdn. Bhd. / PPSB) in their Defence & Counterclaim (Encl. 7/BOP A p. 77) as follows:

that the Plaintiff do pay the 1st Defendant the sum of RM30,000,000.00 pursuant to Clause 4 of the Business and Asset Purchase Agreement (BPA) dated 22.12.2016 together with interest thereon at the rate of 5% per annum from such date(s) as deemed appropriate by this Court.

By a consent judgment dated 5.7.2022 the parties having agreed to the terms and that as a full and final settlement of the Plaintiff’s application under Encl. 5 and the Plaintiff’s claim in this action against each Defendant as follows:

The 1st Defendant shall pay to the Plaintiff, the sum of RM10,783,846.55, together with interest on the same at the rate of 5% per annum from 30.8.2021 until 4.4.2022.

That the payment to be made in paragraph (1) above shall be stayed pending the final disposal of the Defendants' Counterclaim dated 17.11.2021, including any appeal(s) arising from the same to the Court of Appeal and to the Federal Court (upon obtaining leave to appeal).

The parties shall bear their own costs.

The Plaintiff made payment of RM119,941.17 on 27.11. 2021 as reflected in the payment advice (B2 p. 476) to the 2nd Defendant (Rapid Ferry Sdn. Bhd.) regarding the Defence & Counterclaim that “the Plaintiff do pay the 2nd Defendant RM119,941.17 being the amount payable on the Ferry Coupons Facility.”

PPSB is responsible for the operation, management and provision of a wide range of services and facilities for all port users. This includes handling of cargo, warehousing and various logistical services essential to the port’s functionality.

Prasarana is a wholly owned subsidiary of the Ministry of Finance Inc. a body corporate formed under the Ministry of Finance (Incorporation) Act 1957.

Rapid Ferry is a wholly owned subsidiary of Prasarana and was nominated by Prasarana to take over the Penang Ferry Operations and undertook the Business (Penang Ferry Business) for the period 1.5.2018 to 31.12.2020.

PPSB issued a letter dated 30.10.2019 (B1 p. 284) to Prasarana, confirming that the acquisition of the Business and Assets (Penang Ferry Business) by Prasarana had been completed on 1.5.2018 (i.e. the BPA had been completed) and stating amongst others that PPSB was prepared for Penang Port Human Capital Services Sdn. Bhd. (PPHCS) to continue providing the Operational Assistance and PPSB to continue providing the Transitional Assistance until 14.11.2019. (The subject matter of this letter pertains to the Operational Assistance Agreement (OAA) dated 25.4.2018 between the 2nd

PPSB issued a cheque dated 27.3.2019 (B1 p. 267) for the sum of RM10,000,000.00 being payment on account of the Operational Loss.

The parties held a meeting on 4.11.2019 where it was agreed that pending approval of the Malaysian Cabinet relating to the Penang Ferry Business, PPSB would continue to provide the Operational Assistance and Transitional Assistance, with the period for both to be extended on a monthly basis effective on 15.11.2019. Further meetings were held to discuss the continued operation of the Penang Ferry Services, including:

a meeting held on 2.7.2020 chaired by the Under Secretary, Maritime Division of Ministry of Transport Malaysia, Captain Mohamad Halim Ahmed, at the office of the Ministry of Transport Malaysia in Putrajaya and attended by the representatives from Ministry of Transport Malaysia, PPSB, Prasarana and Penang Port Commission (PPC) at which PPSB made a commitment that PPSB would continue to provide the Operational Assistance until the Handing Back of the Ferry Operations took place so that the Ferry Operations were not halted in any event; and

a meeting held on 6.8.2020 chaired by the Secretary General of Ministry of Transport Malaysia, YBhg. Datuk Isham Ishak, at the office of the PPC and attended by the representatives from Ministry of Transport Malaysia, PPSB, Prasarana, the 2nd Defendant (Rapid Ferry) and PPC.

Prasarana and Rapid Ferry’s solicitors, Messrs Christopher & Lee Ong (CLO) issued a letter dated 2.10.2020 (B1 p. 384) to Messrs Shaikh David & Co’s (SDC). SDC issued a letter to CLO dated 6.10.2020 stating inter alia that PPSB would continue providing Operational Assistance and Transitional Assistance until 31.10.2020.

CLO issued a letter dated 22.10.2020 (B1 p. 389) to SDC, stating inter alia that:

in an endeavour to ensure that Ferry Operations continued unhindered pending the actual handing back of the Ferry Operations to PPSB at the end of the transitional period (i.e. from 1.9.2020 to 31.12.2020) (Transitional Period), Prasarana enclosed a cheque made out to PPSB for the sum of RM17,402,758.15, being payment for the invoices issued in respect of the Operational Assistance provided by PPHCS to Rapid Ferry from 1.5.2018 until 14.11.2019 pursuant to the Operational Assistance Agreement dated 25.4.2018 (OAA);

Further:

upon the request of PPSB, Rapid Ferry issued ferry coupons (Ferry Coupons) to PPSB (to enable the employees of PPSB to use the Penang Ferry services without separate payment by the employees) (Ferry Coupons Facility) during the period in which Prasarana operated the Ferry Business;

invoices were issued on a monthly basis by Rapid Ferry to PPSB for use of the Ferry Coupons facility, as particularised at Annexure “A” of the Defence and Counterclaim dated 17.11.2021. The principal sum of RM119,941.17 due and payable by PPSB to Prasarana in respect of the Ferry Coupons Facility was paid on 27.11.2021. Completion of the BPA.

By letter dated 1.5.2018 (B1 p. 210) from PPSB to the Defendants, the parties have agreed that Completion shall take place on 1 May 2018 in respect of the BPA dated 22.12.2016 as supplemented by an agreement on 30.8.2017 between PPSB as the vendor and Prasarana as the Purchaser of the business and assets as defined in the BPA. The letter further states in para. 3 that the vendor has fulfilled its obligations on the Completion Date and upon fulfilment of the Purchaser’s obligations under Clause 7.1 (b) of the BPA, Completion of the BPA is taken to have occurred on the Completion Date.

The Issues to be tried are as follows:

Whether Prasarana is entitled to be paid the Operational Loss Payment under Clause 4 of the BPA in the sum of RM30,000,000.00 by PPSB;

Whether PPSB can take the position that Prasarana is not entitled to the Operational Loss Payment given the terms of the BPA and the circumstances of the matter; and

Whether there is any term in the BPA which requires Prasarana to continue the Ferry Operations for any particular duration in order to be entitled to the Operational Loss Payment.

For ease of reference, the relevant contemporaneous documents, dates and reference can be gleaned from the table below: No.

Business Purchase Agreement (BPA)

12.2016 B1 p. 54 2

Supplemental Agreement to BPA

8.2017 B1 p. 97 3 Asset, Rental, Sale & Purchase

14.6.2021 B2 p. 439 4

5.7.2022 B1 p. 260

The Plaintiff submits in a nutshell as follows:

the RM30,000,000.00 compensation was expressly tied to its long-term commitment over the business and not an unconditional entitlement and to allow the Defendants’ counterclaim is an unearned windfall at PPSB expense.

Clause 4 provides a fixed amount of RM30,000,000.00 in equal instalments over 3 years reinforcing the fact that the payments were not tied to operational results but to Prasarana’s assumption of an ongoing financial burden.

The structure of the BPA, contemporaneous agreements, and regulatory approvals confirms that Prasarana’s obligation under the BPA, contemporaneous agreements and regulatory approvals confirms that Prasarana’s obligation under the BPA was to sustain the Ferry Operations as public service in the long run. The Ferry Operations was acquired for RM1.00 as this nominal purchase price is significant because it reflects that the business was not profit making but a financial liability.

The Ferry Development plan was an operational blueprint submitted to Unit Kerjasama Awam & Swasta (UKAS) by Prasarana as a demonstration of Prasarana’s long term commitment towards the ferry operations.

The Defendants submit as follows:

Prasarana (and its subsidiary Rapid Ferry) are prepared to honour its contractual obligations, PPSB must also honour its contractual obligation to pay the Operational Loss of RM30,000,000.00 to Prasarana for the potential operational loss in undertaking the Penang Ferry Business in accordance with Clause 4 of BPA more so in view of the fact that Prasarana has incurred losses exceeding RM47,000,000.00 in running the Penang Ferry Business which exceeded the Operational Loss sum of RM30,000,000.00 provided under the BPA.

the Parties at all times proceeded on the basis that the operational Loss Payment of RM30,000,000.00 was due and payable by PPSB to Prasarana. This is reflected in Clause 4 of the BPA and thereafter fortified by both parties agreeing to Clause 7 of the ARSPA which preserved the rights of Prasarana under Clause 4 of the BPA.

The legal principle that contracts must be interpreted sensibly and in line with their commercial purpose in respect of the commercial intention of Clause 4. The Federal Court in the case of Berjaya Times Squares Sdn. Bhd. (formerly known as Berjaya Ditan Sdn. Bhd.) v. M Concept Sdn. Bhd. [2010] 1 MLJ 597 at pp. 606 & 607 succinctly explains the role of the court is to interpret the contract in a sensible fashion where the parties were at complete liberty in accordance with the doctrine of freedom of contract agree on any terms they thought fit as follows: “In determining the meaning of the language of a commercial contract, and unilateral contractual notices, the law therefore generally favours a commercially sensible construction. The reason for this approach is that a commercial construction is more likely to give effect to the intention of the parties. Words are therefore interpreted in the way in which a reasonable commercial person would construe them. And the standard of the reasonable commercial person is hostile to technical interpretations and undue emphasis on niceties of language. (see Loh Wai Lian v. SEA Housing Corporation Sdn. Bhd. [1987] 2 MLJ 1)”

The Court of Appeal in the case of Damansara Realty Bhd v. Bungsar Hill Holdings Sdn. Bhd. & Anor [2011] 6 MLJ 170 at p. 185 decided that an agreement must be construed in a commercially sensible manner as follows: “[42] The property development agreement is a commercial contract. Being a commercial contract, the agreement must be construed in a commercially sensible manner, that is to say, in a manner in which a reasonable commercial person would construe them.”

It is clear that when parties enter into a new agreement that supersedes the former, the former agreement is effectively ended. This principle of contract law is reflected as follows: S. 63 of the Contracts Act 1950 (Act 136) “63. Effect of novation, rescission and alteration of contract If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed.”

I have read and perused the Written Submissions and Authorities filed by the Plaintiff and the 1st Defendant. I have also considered the Oral Submissions and Arguments forwarded and articulated by the respective parties’ counsel.

Clause 4 of the Business Purchase Agreement (BPA) reads as follows: Operational Loss The Vendor shall pay to the Purchaser the sum of RM30,000.000.00 in three equal instalments for the potential operational loss in undertaking the Business over a period of 3 years from the Completion Date.

Clause 4 of the BPA was designed to compensate the 1st Defendant for permanently assuming the financial burden of the Ferry Operations as a long-term public service obligation and was never intended as an unconditional payment to Prasarana. The only justification for Clause 4 was Prasarana’s permanent assumption of the Ferry Operations and by returning the Ferry Operations in less than 3 years, Prasarana had eliminated the justification for Clause 4.

The expectation of a permanent commitment from Prasarana was not just implicit in the structure of the BPA but also in the regulatory framework governing the transaction as reflected in the 30 year operating license granted by PPC to Rapid Ferry (B3 p. 33A). On 1.5.2018 the PPC granted Rapid Ferry a 30 year lease over the land where the Ferry Operations were conducted. (B3 pp. 4 – 33). Needless to say, the 30 year license and lease obtained by Rapid Ferry confirms that the BPA was intended to be a long term and permanent commitment. Asset, Rental, Sale & Purchase Agreement (ARSPA)

Prasarana abandonment of the Ferry Operations was recorded through the execution of the ARSPA. ARSPA was executed between Prasarana and PPSB on 14.6.2021 which constitutes a new agreement which effectively substituted the BPA extinguishes all rights and obligations previously arising under it. By entering into the ARSPA, both parties have mutually agreed to rescind the BPA and to replace it with a new set of rights and obligations set out in the

In applying section 63 of the Contracts Act 1950, if the intention on the part of both parties here is to substitute a new contract, the old need not be performed even if the new merely alters certain terms of the old. The test basically is this, if a new contract is entered into by the parties, whatever its terms, the old contract is extinguished. (see the case of Puncak Alam Housing Sdn. Bhd. (formerly known as Bukit Cerakah Development Sdn. Bhd.) v. Menta Construction

Essentially, the ARSPA was to formalise the return of the Ferry Operations from the Prasarana to the PPSB effective 1.1.2021 (B 2 p. 439) and the ARSPA was necessary to record the transfer after Prasarana abandoned the business. The Court is inclined to agree with the Plaintiff’s submissions that Clause 7 of the ARSPA merely gives the parties the freedom to argue their respective positions. On the contrary, the submissions of the 1st Defendant that there is no term in the BPA or ARSPA which requires Prasarana to continue the Ferry Operations for any duration of time in order to be entitled to the Operational Loss Payment is devoid of any merits. Clause 7 of the ARSPA (B1 p. 449) states as follows: “The parties agree that this Agreement shall not operate as an amendment or a waiver of any right or remedy of PMB and/or PPSB under the BPA, or constitute a waiver of any provision of the BPA. Each party reserves all its rights now existing or hereafter arising under the BPA.” Whether Prasarana is entitled to be paid the Operational Loss Payment under Clause 4 of the BPA in the sum of RM30,000,000.00 by PPSB?

The commercial purpose behind Clause 4 can be gleaned from the 1st Defendant witness PW1 (Amir Bin Hamzah) who was the Chief Executive of Rapid Rail Sdn. Bhd. (a subsidiary of the 1st Defendant) evidence in cross-examination (Notes of Evidence Encl. 73 p. 19) as reflected in Encl. 55 whereby PW1 admitted that Prasarana intended to turn the loss-making business into a profitable one and that the RM30,000,000.00 was meant to help Prasarana to start the business.

PW1 (Amir Bin Hamzah) further confirmed that the compensation was meant to assist the 1st Defendant in the first 3 years of a business that was intended to last 30 years and that the compensation that was provided was to help the 1st Defendant towards achieving a 30 year undertaking of the Ferry Operations. (see Notes of Evidence Encl. p. 22). Needless to say, by returning the ferry operations in less than 3 years, Prasarana had eliminated the justification under Clause 4 of the BPA.

I am of the considered view that Clause 4 was never an unconditional entitlement. The compensation was expressly tied to the 1st Defendant continued assumption of the loss-making Ferry Operations and consequently the 1st Defendant abandonment of the business extinguished with it the right to compensation. Whether Prasarana is entitled to the Operational Loss Payment given the terms of the BPA and the circumstances of the matter.

According to PW1 (Encl. 55 witness statement Q. 8) PPSB issued a cheque of RM10,000,000.00 on 27.3.2019 (B1 pp. 267 – 269) However, PPSB later cancelled the cheque as reflected in Prasarana’s letter dated 24.10.2019 (B1 p. 281). After the government’s directive to return the business, PPSB made it clear that there was no obligation as reflected the PPSB letter dated 30.6.2020 (B3 p. 227) as follows: “Prasarana’s suggestion to set off the annual amount of RM10,000,000.00 payable by PPSB in respect of Operational Loss under the Business and Asset Purchase Agreement dated 22.12.2016 (BPA) is already captured under the Operational Assistance Agreement between Penang Port Human Capital Services Sdn. Bhd (PPHCS) and Rapid Ferry Sdn. Bhd. (Rapid Ferry) dated 25.4.2018 (OAA) which as you are aware expired on 31.10.2019 is no longer valid and effective.” Whether there is any term in the BPA which requires Prasarana to continue the Ferry Operations for any particular duration in order to be entitled to the Operational Loss Payment.

PPSB accepted Prasarana’s payment of RM17,402,758.15 in a letter by the 1st Defendant’s solicitors dated 27.10.2020 (B2 p. 406) and this acceptance was made strictly without prejudice to their position that no payment of Operational Loss was payable to Prasarana. Hence, it is crystal clear that PPSB had not conceded to any liability for Operational losses.

The evidence of PW1 (Encl. 61 Q. 19 para. C) states that the actual losses sustained by Prasarana exceeding RM47,000,000.00 included sums incurred in respect of the Operational and Transitional Assistance totaling RM28,186,604.70 as follows:

RM17,402,758.15 paid by Prasarana to PPSB; and

RM10,783,846.55 payable by Prasarana to PPSB pursuant to the Consent Judgment dated 5.7.2022. Summary of Court’s analysis.

The Court makes the following findings:

The 1st Defendant is not entitled to be paid the Operational Loss Payment under Clause 4 of the BPA in the sum of RM30,000,000.00 by the Plaintiff;

The 1st Defendant is not entitled to the Operational Loss Payment given the terms of the BPA and the circumstances of the matter; and

The Plaintiff was not under any obligation to pay the Operational Losses for the return of the Ferry Operations.

Based on the aforesaid reasons, the 1st Defendant claim of RM30,000,000.00 against the Plaintiff in the Counterclaim in Encl. paragraph 30 (a) is hereby dismissed with costs of RM50,000.00 (subject to allocatur). Dated: 22 August 2025 sgd. ………………………………………….. (EDDIE YEO SOON CHYE) Judge Commissioner High Court of Malaya Kuala Lumpur Counsel for the Plaintiffs: Dato’ David Morais, Shaikh Abdul Saleem, Pavithra Pillai, Sara Jailany & Mah Dick Son. Messrs. Shaikh David & Co. Kuala Lumpur. Counsel for the 1st & 2nd John Matthew, Sivaram Prasad, Ong Defendants: Ong Wei Ying & Andre Tan Guan Yu (PIC) Messrs. Christopher & Lee Ong Kuala Lumpur