Plaza Premium Lounge Malaysia Sdn. Bhd. v Malaysia Airports (Sepang) Sdn. Bhd. (BA-22NCvC-299-07/2024)

And Malaysia Airports (Sepang) Sdn. Bhd.

Malaysia Airports Sdn. Bhd. …Defendants GROUNDS OF JUDGMENT Introduction [1] Plaintiff filed an application via enclosure 4 for an interim injunction to restrain the Defendants from issuing notices to terminate the tenancy agreements. The Parties [2] Plaza Premium Lounge Malaysia Sdn. Bhd. is part of the Plaza Premium Group of Companies, which provides airport lounges, airport dining areas, concierges, hotels in more than 30 countries and 80 international airports in 250 locations, including Malaysia. 03/03/2025 13:31:17 BA-22NCvC-299-07/2024 Kand. 52 [3] The Defendants are wholly owned subsidiaries of Malaysia Airports Holding Berhad, responsible for the management, operation, maintenance and development of the airports all over Malaysia. The 1st Defendant manages airports such as Kuala Lumpur International Airport (KLIA) Terminal 1 and Terminal 2, whereas the 2nd Defendant manages the Penang International Airport, Langkawi International Airport and the Kota Kinabalu International Airport (KKIA). [4] Regarding KKIA, the 2nd Defendant provided airport services to 3,305,580 passengers in 2023 and managed more than 50 tenants, ranging from core business types such as retail, food and beverages, services, and tenancy such as storage and offices. [5] To date, the 2nd Defendant rented out 19 food and beverage outlets and two lounges at KKIA, of which the Plaintiff operates one food and beverage outlet under the name of "Flight Club" (FC). [6] Plaintiff and its predecessor have been supporting Malaysia Airports for the past 25 years with the business of "Plaza Premium Lounge" at various airports in Malaysia. Plaintiff currently operates lounges at KLIA, Penang Airport and Langkawi Airport. Plaintiff's Submissions [7] The issue arises from tenancy agreements between the parties, whether Defendants as the landlord can impose further terms and conditions to restrain the Plaintiff from conducting "business to business" (B2B) transactions when the terms of the tenancy agreement do not expressly prohibit such business conduct. [8] The Defendants asserted that the reason why they prohibited Plaintiff from conducting B2B business at KKIA was that complaints were made by lounge operator Select Service Partner Malaysia Sdn. Bhd (SSP) who is operating an airport lounge in the Satellite Building in KLIA. [9] 2nd Defendant issued a termination notice to Plaintiff even when there is no proof that the operation at KKIA affects SSP in any way. [10] Plaintiff contended that the SSP complaints letters to the 1st Defendant were founded on a misconception that B2B business is confined only to lounge business. [11] Plaintiff submitted that there is no law nor rule that B2B business is confined to lounges and not Food and Beverages (F&B) outlets. There is also no express provision in the KKIA tenancy agreement to prohibit B2B business in the F& B Outlet. [12] Legal issues arose therefrom was whether the prohibition of B2B business sought to be imposed by the Defendant is illegal and void pursuant to section 28 of the Contract Act (the CA) as a restrain of Plaintiff's lawful trade. [13] A further issue was whether the prohibition sought to be imposed on the Plaintiff's F&B Outles is anti-competitive as it seeks to limit or control the market outlets or market access to the prejudice of consumers, in contravention to section 10 of the Competition Act and/or section 53 of the Malaysian Aviation Commission Act. [14] Plaintiff further submits that the legality of the KKIA tenancy notice of termination by the 2nd Defendant can only be determined at the full trial; therefore, it is justified for an order of interim injunction to preserve the sanctity of the tenancy agreements. Defendants' Submission [15] The Plaintiff seeks relief from this Court to restrain the Defendants from issuing notices of termination in respect of the Plaintiff's Lounges Agreement and Storage Agreement occupied by the Plaintiff in the Defendants' airports across Malaysia based on the cross-default clause. [16] Defendants submitted that this is misconceived. They did not issue any notices of breach to Plaintiff concerning the tenancy agreements for the lounges or storage space or threaten to terminate those agreements. [17] Therefore, Plaintiff cannot ask the Court to fetter Defendants with respect to tenancy agreements that are not part of this dispute and with respect to which the Defendants have made no allegations of breach. [18] Plaintiff is asking the Court for a quia timet injunction, i.e. an injunction to prevent an injury from occurring in respect of an act that has not taken place (see Proctor v Bayley [1889] 42 Ch D 39). The Defendant asserts that there is no factual and legal justification for this. There is no threat or intent on the part of the Defendants to call breach and effect a termination of the agreements (refer to PPES Resorts Sdn Bhd v Keruntum Sdn Bhd [1990] 1 MLJ 436). [19] The Defendants submitted that there is no real risk of any termination of any tenancy agreement. [20] Defendants objected to this application as it would lose its right to enforce its authorised business over the Plaintiff and its right to regulate the authorised business of all its tenants. In other words, Defendant would lose its authority over its tenants as an airport operator. All tenants (over 50 tenants compared to the Plaintiff's one rental unit) would be allowed to sell anything they want in contravention of their 'Authorised Business' without consideration of the product mix available in KKIA. [21] With regard to the KKIA agreement, Plaintiff is permitted by the 2nd Defendant, as part of the tenancy, to sell food and beverages to patrons of the outlet. Without approval from the 2nd Defendant, Plaintiff is only allowed to follow what was stipulated/approved in offering food and beverages to the airport patrons. [22] However, Plaintiff has breached the authorised business and the Product & Price List offerings. For example (refer to paragraph 32 of the Defendants' submission):

The Product and Price List for FC KKIA state the product list to be same as the product list at Flight Club at KLIA Terminal 1 with slight price adjustment, among others, price for coke light is RM7.00, Chocolate Lava Cake is RM15.00 and Singapore Curry Noodles is RM23.00

The 2nd Defendant discovered that KKIA was not selling food and drinks to patrons per the agreed Product and Price List annexed to the tenancy agreement but allowing patrons to accept complimentary corporate meals at the outlets using bank credit card privileges. This is apparent from terms on various banks' website.

Further, the 2nd Defendant discovered that airport patrons may redeem a corporate meal set including free-flow drinks by using Singapore Airlines KrisFlyer American Express card at FC KKIA. None of this is sanctioned by the 2nd Defendant or reflected in the Product & Price List. [23] Defendants submitted that Food and beverage outlets are permitted to sell food and drinks to patrons under the agreed menu offerings and prices stipulated in the tenancy agreement. Plaintiff is not permitted to provide such products (food and beverages) on a complimentary basis to the patrons of its outlet, nor is it permitted to offer food and beverages not on the Product & Price List unless permission is obtained from the 2nd Defendant to do so. As such, the operator must sell food and beverages to the customer at the outlet. [24] The tenancy agreement for FC KKIA does not permit the customers to be provided with complimentary food and beverages at the outlet or to chill at the food and beverage outlet whilst waiting for their flight with the provision of free food and beverages. [25] If an injunction is granted, the 2nd Defendant will be prevented from enforcing and regulating its tenants' authorised business; by the time the trial is heard and determined, at least a year would have passed, and the Plaintiff's tenancy would have gone on for at least 2 of its 3 years in breach of its authorised businesses. That can never be undone, no matter what financial compensation is awarded to the 2nd Defendant. [26] However, if after the Court's determination, it is held that the Plaintiff did not breach its authorised business, the Plaintiff will be fully compensated for its loss of business for the remaining term of the tenancy. It is financial loss as the Plaintiff is doing a business; it is readily quantifiable in financial terms as loss of profits and revenues. For this reason, injunctive relief is not a remedy that ought to be granted to the Plaintiff. Damages are more than adequate. [27] The 2nd Defendant issued the Final Notice to Remedy because Plaintiff was allowing patrons access to FC KKIA and giving them set meals comprising of main course and beverages on a complimentary basis. Defendants aver that the complementary set offering is not disputed by Plaintiff. [28] The receipt (as exhibited) clearly indicates that the Plaintiff is providing lounge-like services to customers at FC KKIA, providing 'access' to a space to stay for a fixed duration with complimentary food and beverages; the customers are not required to buy the food and beverages; they consume them for free as one does in a lounge having entered using credit card privileges where banks pay the fixed lounge access fee. This, according to Defendants, is a breach of the Plaintiff's authorised business and is akin to what lounges offer. [29] The complimentary meal offerings are not captured as part of the authorised business of the FC KKIA. As the above is not disputed by the Plaintiff, no trial is required for any factual determination. [30] On section 28 of the CA, Defendants contended, firstly, that it is not applicable as it does not apply during the currency of a contract (see Polygram Records Sdn Bhd v The Search & Anor [1994] 3 MLJ 127 678). Secondly, it does not apply to contracts restrictive of the ways in which the profession, business or trade can be carried out and only applies to a contract restraining the same from being carried out (see Kamarudin Merican Noordin (suing for himself and on behalf of all the members of the Association of West Malaysian Race Horse Trainers) v Kaka Singh Dhaliwal (sued as the public officer of the Malayan Racing Association) [2011] 7 MLJ 281). Thirdly, based on the wording of Section 28 of the CA, it is apparent that the same is only intended to apply to individuals and not companies such as the Plaintiff. [31] On the Competition Law, Defendant submitted that the purpose of having "authorised business" for every tenant in the airport is to ensure a well-balanced environment with a diverse tenant mix within the airport. The 2nd Defendant plans its product mix and locations based on passenger flow and footfall. This is not against competition law. Authorised business is not anti-competitive. It is essential to sustain the tenant/retail mix. The issues raised. [32] Plaintiff contended that they have bona fide issues to be tried, as follows:

The purported FC KKIA final notice issued by the 2nd Defendant is illegal, invalid and/or unenforceable as: - There is no breach of "Authorised Business" in the FC KKIA Agreement by the Plf. - The B2B collaboration does not change the nature of the FC KKIA business; it remains a food and beverage outlet and not a lounge. - There was nothing in the provision of the agreement that prohibits the Plaintiff B2B collaboration.

The terms and conditions of the banks regulate the relationship between the banks and their customers, and Plf has no control over it.

Defendants alleged breaches of the online posting by unknown persons are misconceived and ought to be ventilated in a trial.

The purported failure of the POS system is disputed, and Plf has furnished an explanation for this issue, which was just a technical glitch in the POS system. This does not constitute a breach.

Defendants is estopped from denying that B2B business is allowed in KK FC as Plaintiff disclosed this in the tender material.

Alternatively, there is an implied term to carry out lawful trade without interference by the Defendants. Plaintiff alleged that Defendants are collaborating with SSP to unlawfully interfere with Plaintiff's trade.

Condition sought by Defendant to prohibit Plaintiff from conducting B2B business contravenes section 28 of the CA. The Law on Interlocutory Injunction [33] The principles governing the grant of interlocutory injunctions are well-established. In American Cynamid Co v. Ethicon Ltd [1975] 1 AER 504; [1975] AC 396, Lord Diplock laid down three key elements that must be fulfilled:

There is a serious question to be tried;

Damages would not be an adequate remedy; and

The balance of convenience lies in favour of granting the injunction. [34] These principles were adopted in Malaysia in Keet Gerald Francis Noel John v. Mohd Noor Bin Abdullah [1995] 1 CLJ 293; where Gopal Sri Ram JCA (as he then was) held that the Court should:

Consider whether there is a bona fide serious issue to be tried;

Consider where the justice of the case lies; and

Take into account all relevant matters, including the practical realities of the case. [35] With these principles in mind, considering all relevant matters, I will need to deliberate whether there was a serious question to be tried, where the justice of the case lies, whether damages would be an adequate remedy and on whom the balance of convenience lies. Analysis and Findings [36] A Plaintiff seeking an interlocutory injunction is seeking an equitable remedy. Therefore, the Plaintiff's conduct must be equitable as those who seek equity must do equity, and those who come to equity must come with clean hands (refer to Timbermaster Timber Complex (Sabah) Sdn Bhd v. Top Origin Sdn Bhd [2002] 1 CLJ 566,CA). [37] In Lian Keow Sdn Bhd & Anor v. Overseas Credit Finance (M) Bhd & Ors [1982] CLJ 350, Salleh Abas FJ (as he then was) explained what is meant by "interlocutory injunction" in the following manner: "Interlocutory injunction is a temporary and discretionary remedy. To consider whether to grant it or to refuse it the Court is not concerned with the chances of success or failure of the appellants in proving their civil suit at the forthcoming trial, neither is the Court's function to evaluate the evidence and materials before it for that purpose. The Court is simply concerned with what it has to do in the meantime in order to protect the right of the parties so that no irreparable injury would be caused to either of them. Further whilst the Court is not concerned with such questions the Court must however, be satisfied that there are serious questions to be gone into in that suit, lest an application for an injunction should be made on frivolous and vexatious grounds." - Emphasis added [38] The need to establish serious issues or questions to be tried was enunciated by the Supreme Court in the case of Alor Janggus Soon Seng Trading Sdn Bhd & Ors v. Sey Hoe Sdn Bhd & Ors [1995] 1 CLJ 461 where the Court led as follows: "[5] at an interlocutory proceeding for an injunction, the Court must be satisfied that there is a serious issue to be tried, which issue, before anything else, must first be established by the applicant." [39] Thus, the keyword here is that the purpose of an interim injunction is to protect the rights of the parties so that no irreparable injury would be caused to either of them, and there are serious questions to be gone into in this suit. With regard to irreparable injury, I will also need to consider whether damages would be an adequate remedy in the given circumstance. [40] In the present case, after deliberating on the lengthy submissions of both parties, I find that the issue of whether the Plf has purportedly breached the "Authorised Business" of the tenancy agreement is a serious bona fide issue to be tried (refer to Macci Fashion & Sales Centre Sdn Bhd v Stable Properties Pte Ltd & Ors (2002) MLJU 351). [41] Even though Defendants submitted that there is no real risk of any termination of any tenancy agreements, it was not disputed that the Final Notices to Remedy were issued. This in itself justified the Plaintiff's concern about the possibility of eviction. [42] Defendants argue that it could lose its rights to regulate other tenants/authorised business, which is inexcusable as this restraining order does not have an effect on the other parties not related to this suit. Perhaps it does put the Defendant in an awkward position, but legally, they are at liberty to enforce any right they have towards other authorised businesses to regulate and operate the airport. [43] Hearing an equity application such as this, this Court should do what it can to preserve the sanctity of a bargain (see Winter Garden Theatre (London) Ltd v Millenium Productions Ltd (1947) 2 All ER 331). [44] If I were to determine the possible contravention of Section 28 of CA, it would have an effect of restricting the liberty of the Plaintiff to carry on their business (See Nagadevan a/l Mahalingam v Millenium Medicare Services (2011) 4 MLJ 739, CA). Although the Defendants denied this, it does, at this juncture, constitute serious issues to be tried. [45] I also find that the balance of convenience lies in favour of granting the interim injunction. There is a risk that the Defendants would, rightly or wrongfully, terminate the agreement despite Plaintiff not being given the opportunity to disprove the alleged breach. [46] Having an extensive business scale throughout Malaysia, there is a real possibility that Plaintiff would be unable to restore to its original position even if this Court decides in their favour at the trial. A substantial amount was invested by Plaintiff to operate the business, and any premature eviction or termination before the issues could be resolved, though it can be compensated, would be highly prejudiced against Plaintiff if this temporary restraining order was not granted. Loss of investment, losses to workers, loss of reputation, and business credibility are things that a company such as Plaintiff should not have to suffer (refer to Digital Tempo Sdn Bhd v Pengangkutan Awam Putrajaya Travel & Tours Sdn Bhd (2021) 8 MLJ 55). [47] The relationship between parties is bound by a temporary right of a tenancy agreement which undisputedly will lapse, or Defendant could legally exercise their right not to extend or renew. Therefore, I see no reason for a temporary halt of the matter pending disposal of a trial which had been fixed as early as this Court could accommodate the parties would prejudice the Defendants in any way. [48] I agree with the Plaintiff that the paramount consideration is the issue of interest of justice, which should take precedence. I found that both parties' cases against each other are evenly balanced; therefore, on the balance of convenience, applying the principle enunciated in Alor Janggus, "the grant or refusal of an interlocutory injunction must be decided on the fundamental principle that the court should take whichever course that appears to carry the lower risk of injustice". [49] Therefore, I find the need to preserve the status quo of the parties in order to produce a just result of a full trial. [50] I appreciate both counsels' submission on all legal issues; however, it explicitly relates to the factual matrix of this case, which needs to be determined with proper evidence tendered by both parties. It is not the duty of this Court at this juncture to make any findings on the issues raised as they should be resolved at the trial. [51] Based on the above analysis, I am satisfied that Plaintiff had met the threshold requirements for granting an interlocutory injunction as laid out in the case of Keet Gerald Francis Noel John. I also find that damages would not be an adequate remedy, and the balance of convenience tilts in favour of granting the injunction to the Plaintiff. [52] Accordingly, the Plaintiff's application for an interim injunction is hereby allowed as prayed for in Enclosure 4 with cost in the cause. Dated this: 3rd March 2025 ~signed~ (NOOR HAYATI BINTI HAJI MAT) Judge Shah Alam High Court NCVC 9 Counsels: For the Plaintiff: Justin Voon Tiam together with Victor Pang Chee Siong Messrs Justin Voon Chooi & Wing For the Defendants: Shanti Mogan together with Yiew De Quan and Ching Hao Yan Messrs Shearn Delamore & Co.