Plaza Premium Lounge Malaysia Sdn. Bhd. v Malaysia Airports (Sepang) Sdn. Bhd. (BA-22NCvC-290-07/2024)

Enclosure 5 is the plaintiff’s application for an interim injunction against the defendant to preserve the status quo of the premises pending the disposal of the main suit. After considering a lengthy submission from counsel for both parties on 13 February 2025, this Court dismissed Enclosure 5 with costs.

Plaintiff is part of the Plaza Premium Group of companies that provide airport lounges, airport dining areas, concierges, and hotels in 16/03/2025 15:37:53 BA-22NCvC-290-07/2024 Kand. 80 S/N B5sJukDakmFizKsPO7fsQ **Note : Serial number will be used to verify the originality of this document via eFILING portal 2 more than 30 countries, 80 international airports, and 250 locations, including various places in Malaysia.

The Plaintiff is operating one Airport Lounge (i.e. Plaza Premium Lounge) and three Food & Beverage Outlets (F&B outlets), which are Flight Club Signature (FCS), The Summerhouse (TS) and Flight Club (FC) in KLIA 1.

The Defendant is a wholly owned subsidiary of Malaysia Airports Holding Berhad, responsible for the management, operation, maintenance and development of the KLIA. For KLIA Terminal 1, Defendant provides airport services to more than 23 million passengers annually and manages more than 100 tenants, ranging from core business types such as retail, food and beverages, services, and tenancies such as storage and offices. The defendant has rented out 56 food and beverage outlets at KLIA.

The plaintiff is one of the defendant's tenants, operating three food and beverage outlets; FCS, FC and TS.

The subject matter of the Injunction Application relates to three tenancy agreements entered into between the plaintiff and the defendant for F&B outlets at Kuala Lumpur International Airport Terminal 1:

Tenancy Agreement dated 15.6.2023 for the premises known as Flight Club Signature (FCS), an F&B outlet. It is located at SAT-M-A23, Mezzanine Level, Satellite S/N B5sJukDakmFizKsPO7fsQ Building, KLIA Terminal 1 (FCS Agreement). The FCS Agreement was terminated by the Defendant on 27.6.2024.

Tenancy Agreement dated 15.6.2023 for the premises known as The Summerhouse (TS), an F&B outlet located at SAT-M-A22, Mezzanine Level, Satellite Building, KLIA Terminal 1 (TS Agreement).

Tenancy Agreement dated 15.6.2023 for the premises known as Flight Club (FC), an F&B outlet. It is located at CPI-4-A04, Contact Pier International, KLIA Terminal 1 (FC Agreement). LEGAL PRINCIPLES [7] The principle of granting an interlocutory injunction is settled. In the application of an interlocutory injunction, I am guided by the principle 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 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. [8] This Court is also guided by the principle laid in Keet Gerald Francis Noel John v Mohd Noor bin Abdullah. The Court of Appeal S/N B5sJukDakmFizKsPO7fsQ summarise that a judge hearing an application for an interlocutory injunction should undertake an inquiry along the following lines:

The judge asks himself whether the totality of the facts presented before him discloses a bona fidei serious issue to be tried. When considering this question, he must remember that the pleadings and evidence are incomplete. Above all, he must refrain from determining the merits of the claim or any defence to it. It is sufficient if he identifies with precision the issues raised on the joinder and decides whether these are serious enough to merit a trial. Next, after finding a serious question to be tried, this court should move on to its next inquiry step as follows-

(ii) The Court must consider where the justice of this case lies. In making this assessment, the Court must consider all relevant matters, including the practical realities of the case. The Court must weigh the harm that the injunction would produce by its grant against the harm resulting from its refusal. This court is entitled to consider, inter alia, the relative financial standing of the litigants. If, after weighing all matters, this court concludes that the plaintiff would suffer greater injustice if relief is withheld, then the plaintiff is entitled to the relief, especially if this court is satisfied that the plaintiff is in a financial position to meet his undertaking in damages. Similarly, if this court concludes that the defendant would suffer the greater injustice S/N B5sJukDakmFizKsPO7fsQ by granting an injunction, this court would be entitled to refuse relief.

(iii) This Court is also entitled to consider all discretionary considerations, such as delay in making the application or any question going to the public interest. PLAINTIFF’S SUBMISSION [9] The defendant terminated one of the tenancy agreements and gave the plaintiff notice until 26.7.2024 to vacate the premises because of the plaintiff’s B2B business. [10] The defendant also issued a notice requesting that the plaintiff remedy the same until 26 July 2024 to avoid terminating the other two tenancy agreements. [11] The plaintiff submitted that, based on the six affidavits filed by the parties, it is clear that there are serious issues to be tried. The principal issue from the plaintiff’s perspective is the illegality of the defendant’s actions in terminating the FCS Agreement and issuing a Final Notice for the Tenancy Agreement concerning TS and FC. The plaintiff averred that the defendant had breached section 28 of the Contracts Act 1950 and competition law. [12] The trite principle according to the plaintiff is the Court will not enforce an illegal act; the purported FCS Termination Notice and/or the TS and FC Final Notice are void ab initio and have no effect. The plaintiff S/N B5sJukDakmFizKsPO7fsQ relied on the Court of Appeal case of Ee Nyan Hon & Brothers Sdn Bhd v. Metro Charm Sdn Bhd [2009] 6 MU 450, 459 that – “[19] This clear and well recognized legal maxim is founded in good sense. No court will enforce an illegal contract or allow itself to be made the instrument of enforcing obligations arising out of a contract or transaction which is illegal, and the illegality is duly brought to the notice of the court, and the person invoking the aid of the court is himself implicated in the illegality, even if the defendant has not pleaded the illegality. So long as the evidence adduced by the plaintiff proves the illegality, the court will not assist him”. [13] Another issue the plaintiff raises is whether the defendant, as the landlord, can impose additional terms to prevent the plaintiff from conducting business-to-business (B2B) transactions at the FCS, TS, and FC after the tenancy has commenced. The plaintiff contends that no clauses in the Tenancy Agreement prohibit them from engaging in B2B business within the F&B outlets. [14] The plaintiff and its predecessors have maintained a business relationship with the defendant since 1998. Over the years, they have developed strong connections with banks and/or airlines (collaborative companies), which have provided access to the plaintiff’s lounge as a benefit and/or reward for their eligible customers or cardholders. S/N B5sJukDakmFizKsPO7fsQ [15] Currently, the plaintiff continues to collect revenue from these customers' patronage, while the collaborative companies are responsible for making the payments associated with this patronage. [16] Therefore, the plaintiff argued that this Court should grant an interim injunction to protect the sanctity of the Tenancy Agreements from being terminated while the serious issues to be tried are determined. [17] The plaintiff is relying on the case of Winter Garden Theatre (London) Ltd v Millenium Productions Ltd {1947] 2 All ER 33, in which the UK House of Lord held – “The settled practice of the courts of equity is to do what they can by an injunction to preserve file sanctity of a bargain. To my mind, as at present advised, a licensee who has refused to accept the wrongful repudiation of the bargain which is involved in an unauthorised revocation of the licence is as much entitled to the protection of an injunction as a licensee who has not received any notice of revocation, and, if the remedy of injunction is properly available in the latter case against unauthorised inference by the licensor, it is also available in the former case. In a court of equity, wrongful acts are no passport to favour...” S/N B5sJukDakmFizKsPO7fsQ DEFENDANT’S SUBMISSION [18] The defendant argued that the B2B business is exclusively reserved for lounges, not F&B outlets. [19] The defendant further asserts that for the F&B outlets rented by the defendant, the prescribed authorised business outlined in all such tenancies, which the tenant may conduct, is “Food & Beverage Outlet – Premium Café," as specified in Item 4, Schedule 1 of the Tenancy Agreements, in Exhibit 9 of Enclosure 7. [20] A specific menu and price listing further emphasises that the defendant allows the tenant to sell food and beverages to outlet patrons (Product & Price List). [21] However, the defendant contends that the plaintiff has violated the authorised business in F&B outlets as well as the Product & Price List offerings. For instance:

The Product and Price List for FCS, FC and TS state, among others, the price for orange juice is RM12.00, the fresh brew is RM9.00, and main courses such as Grilled beef ribeye is RM35.00, and Caesar salad is RM11.50 as can be seen in Encl.7, Exhibit 8 – 10.

For FCS, the plaintiff offers an all-day grazing station and free-flowing coffee or tea (Encl.20, Exhibit 46). Defendant contends that they do not sanction this, nor is it reflected in S/N B5sJukDakmFizKsPO7fsQ the Product & Price List. Currently, the grazing station and free-flowing coffee or tea are being offered.

For FC, Plaintiff offers a corporate menu to credit card users, which includes two set meals and two beverages, which can be seen in Encl.16, Exhibit MAHB-12. The defendant averred that the credit card user may choose their meals from four different sets, i.e. porridge set, noodles set, rice set, vegetarian set and two beverages. It is contended by the defendant that the type of beverages is not listed in the “corporate menu”. None of this is sanctioned by the defendant or reflected in the Product & Price List.

All three F&B outlets offer the above meals and beverages, which the plaintiff sells to patrons without charging them. [22] According to the defendant, F&B outlets may sell food and drinks to patrons under the agreed menu offerings and prices set out in the tenancy agreement. Consequently, the plaintiff is not permitted to provide such products (food and beverages) complimentary to the patrons of its outlet, nor is it authorised to offer food and beverages not included on the Product & Price List unless permission is obtained from the defendant to do so. Therefore, there must be a sale of food and beverages by the operator to the customer at the outlet. [23] The defendant cannot ascertain what the bank pays the Plaintiff, as the plaintiff refuses to disclose its collaboration agreements with the banks and/or airlines, citing confidentiality. S/N B5sJukDakmFizKsPO7fsQ [24] It is the defendant’s submission that the tenancy agreements for the F&B outlets, namely FC, FCS and TS, do not permit the customers to be provided with complimentary food and beverage at the outlet or to chill at the food and beverage outlet whilst waiting for their flight with the provision of free food and beverage. If an airport user wishes to relax and unwind at a space and be provided with complimentary food and drinks whilst waiting for his or her flight, he or she will go to an airport lounge at KLIA. [25] The central issue to be determined based on the defendant’s submission is whether the plaintiff provided complimentary corporate set meals to its customers at FCS FC and TS, and if so, whether that constituted a breach of the authorised business of the F&B outlets. [26] The defendant further submits that the plaintiff is fully aware of this, as it operates Plaza Premium lounges. Defendant offers tenancies for lounges at KLIA, where the authorised business is designated as “Service Outlet—Paid Lounge,” as indicated in Encl.16, Exhibit MAHB-2. In these lounges, patrons are provided with complimentary food and beverages and a space to relax and unwind while awaiting their flight. [27] In other words, the tenancy agreements for the lounges grant passengers departing from KLIA access to paid spaces. These lounge services and facilities generally feature private seating areas where passengers can unwind and enjoy complimentary food and beverages. These lounges are usually obtained through bank credit card privileges and restricted to a specific time. S/N B5sJukDakmFizKsPO7fsQ ANALYSIS AND DECISION [28] There is only one Kuala Lumpur International Airport, and the plaintiff cannot move anywhere. This airport is under the defendant's control, and the plaintiff is not the sole tenant. [29] The plaintiff has undertaken extensive renovations per international standards for the F&B lounges. Regarding B2B relations in the F&B lounges, the plaintiff asserted that it collaborates with various co-airlines, including Singapore Airlines. Singapore Airlines allocates its business class passengers to the plaintiff, allowing them to visit the plaintiff’s F&B lounges. The plaintiff also collaborates with banks, whereby credit cardholders can enjoy food and beverages at the plaintiff’s outlets, with the banks settling the payments on behalf of the cardholder. [30] The plaintiff submits that no express provisions state that the plaintiff cannot engage in B2B in the F&B outlets. The defendant only asserts that the lounge can participate in B2B, but B2B is not intended for the F&B outlets. [31] The key issues relate to the plaintiff's operation of the B2B business model at the F&B outlets, specifically FCS, TS and FC, rather than in the lounge. Clause 15.13(a) of the Tenancy Agreement outlines a list of Authorised Businesses. [32] The Tenancy Agreements for the three F&B outlets of FCS, TS and FC were entered between parties on 15.6.2023. On 4th November 2023, the plaintiff received a complaint letter from the defendant alleging, among S/N B5sJukDakmFizKsPO7fsQ others, that the plaintiff was offering privileges akin to lounge access and/or free food and beverage and/or invitation-only space to unwind. [33] The Plaintiff submitted that no terms prohibit the plaintiff from entering into B2B business in the Tenancy Agreements for the F&B outlets. The plaintiff went on to submit that there are B2B management solutions mentioned in their tender document. According to the plaintiff, their marketing DNA is to create demand and loyalty, and airlines and banks are the DNA of this business. [34] Concerning the tender and request for proposal issue, the defendant asserted that the request for proposal does not bind the parties. The letter of offer issued to the plaintiff and the tenancy agreement are the documents that govern the parties. [35] Thereafter, the defendant issued three Letters of Variation to the Plaintiff for the three tenancy agreements to impose a term that B2B business is disallowed at FCS, TS and FC. [36] The variation letter dated 16.11.2023 is to include a new term stating, “3. Not allowed to offer lounge like services/ entitlement to credit card users. [37] Guided by the principle from the authorities mentioned above, it is my considered view that there is a serious triable issue concerning whether B2B is part of the terms in the Tenancy Agreements for three F&B outlets; FCS, TS and FC, either by implication or by the terms of the contract. S/N B5sJukDakmFizKsPO7fsQ [38] The plaintiff also submitted that another main issue is whether the plaintiff is prohibited from conducting B2B business in its F&B outlets. [39] As for the defendant, the main issue to be determined is whether the plaintiff provided complimentary corporate set meals to its customers at FCS, FC, and TS and, if so, whether that constituted a breach of the authorised business of the F&B outlets. These questions also raised a serious issue that needs to be tried. [40] In this application, the plaintiff seeks to restrain the defendant, a subsidiary of Malaysia Airport Holdings Berhad, which operates Malaysia International Airports, KLIA Terminal 1 and KLIA Terminal 2, from exercising its right to terminate the plaintiff for a breach of authorised use. [41] The plaintiff submitted that if the interim injunction is refused, there are genuine risks that the defendant would wrongfully evict the plaintiff from the FCS premises and terminate the Tenancy Agreement for TS and FC, despite the plaintiff not having breached the said agreement. [42] A scrutiny of the pleadings and the plaintiff’s affidavit in support of the notice application showed significant disputes regarding the facts, making it essential to hear viva voce evidence. This Court will not examine the merits of the case at this stage. Where does the balance of convenience lie? [43] The plaintiff also argued that their reputation would be affected if the injunction were not permitted. S/N B5sJukDakmFizKsPO7fsQ [44] The plaintiff asserted that the balance of convenience favours them, as the defendant could receive double rental income if, at the conclusion of the trial, the judgment is not in favour of the plaintiff. [45] In SV Beverages Holdings Sdn Bhd & Ors v Kickapoo (M) Sdn Bhd [2008] 4 MLJ 187, the Court held that public interest is a relevant consideration in granting an interim injunction. [46] The Court of Appeal in Timbermaster Timber Complex (Sabah) Sdn Bhd v Top Origin Sdn Bhd [2002] 1 MLJ 33 also considered the public interest element when the subject matter of the dispute related to Pengurusan Danaharta Nasional Berhad (“Danaharta”). The Court granted a mandatory interlocutory injunction to compel the respondent to deliver vacant possession of the land leased to the respondent from the appellant. [47] After considering all pertinent matters, including the practical realities of this case, I believe that granting an injunction would result in greater injustice for the defendant. My reasons are as follows:

The defendant operates critical public amenities and services within the airport and must be granted the authority to effectively regulate and manage its tenants and limited spaces according to changes in passenger footfall and demand trends from time to time. If the injunction is granted, the defendant will be hindered from enforcing and regulating the authorised business at KLIA.

In KLIA, Lounges are typically located on higher levels, while F&B outlets are in convenient, high-traffic areas. The plaintiff is paying rent based on the sale of F&B transactions, not a lounge.

(ii) The defendant rented out 56 F&B outlets in KLIA, and they have the same rules for all tenants to maintain the serenity of the Malaysian Airport. Allowing the interim injunction will result in a negative precedent, where F&B outlets in KLIA Terminal 1 must abide by their authorised business, and product and price listings will start adopting a similar business model to that of the plaintiff.

(iii) The terms in the Tenancy Agreement concerning the authorised business between the defendants and their tenant for F&B outlets stipulate that the tenant must display the menu and pricing. The tenant must sell the food and beverages to customers at the specified price and collect payment from them.

(iv) At the end of the month, the defendant will ascertain the rent to be charged to the tenant of the F&B outlet based on the sales for that specific month.

The plaintiff must secure the defendant's approval to pursue a promotion at the F&B outlet. S/N B5sJukDakmFizKsPO7fsQ Whether damages are an adequate remedy [48] The plaintiff further averred that damages are not an adequate remedy due to the loss of reputation and irreparable damage caused, as the plaintiff is a well-known brand operating in airports internationally and domestically. However, the plaintiff has not exhibited a collaboration agreement with the banks to support its allegation of loss. [49] The principle in Inter Heritage (M) Sdn Bhd v ASA Sports Sdn Bhd [2009] 2 CLJ 221 also guides this Court that damages are an adequate remedy in tenancy cases. The COA held that – [42] The instant appeal arose from a dispute pertaining to a tenancy agreement for the operation of a nightclub, the breach of which would at most give rise to quantifiable damages as an adequate and proper remedy. It is trite law that injunction would not be granted in such cases. [50] Besides that, if the termination of the plaintiff’s F&B outlet is determined at the trial to be unlawful, the plaintiff’s loss of profit is easily quantifiable based on the previous records of monthly gross sales. [51] I also refer to the Federal Court case in Merita Merchant Bank Singapore Ltd v Dewan Bahasa dan Pustaka [2018] supp MLJ 33 on page 44, which held that – It is trite that parties are free to enter into a contract with terms and conditions as they deem fit and these terms and conditions are S/N B5sJukDakmFizKsPO7fsQ binding on the parties who have in the first place agreed to be bound by it… It was a well-established principle sanctioned by the doctrine of sanctity of contract that parties who make agreement must adhere to their terms. CONCLUSION [52] Based on the reasons stated above, the plaintiff's application for an interim injunction in Enclosure 5 is dismissed with costs in cause. Dated: 16th March 2025. Signed ........................................................... HAZIZAH KASSIM

For the Plaintiff : Justin Voon dan Victor Pang Messrs Justin Voon Chooi & Wing (Wilayah Persekutuan Kuala Lumpur)

For the Defendant : Shanti Mogan, Yiew De Quan dan Ching Hao Yan Messrs Shearn Delamore & Co. (Wilayah Persekutuan Kuala Lumpur)