Taipan Focus Sdn. Bhd. v 1. Menteri Besar Selangor (Pemerbadanan) (BA-21NCVC-88-11/2018)

MENTERI BESAR SELANGOR (PEMERBADANAN) (Previously named as Perbadanan Menteri Besar Selangor) (incorporated under Menteri Besar Selangor (Incorporation) Enactment 1994)

SELANGOR STATE GOVERNMENT … DEFENDANTS JUDGMENT (Court enclosure nos. 12 and 15)

The following two applications (2 Applications) are decided in this judgment:

in court enclosure no. 12 (Enc. 12), the plaintiff company (Plaintiff) has applied for summary judgment against the first defendant (1st Defendant) for a sum of RM114,079,500.00 (Amount Claimed) under O 14 rr 1(1) and 3(1) of the Rules of Court 2012 (RC); and 2

the 1st Defendant applied in court enclosure no. 15 (Enc. 15) to strike out the Plaintiff’s suit (This Action) under O 18 r 19(1)(a), (b), (d) RC and/or the court’s inherent jurisdiction. B. Novel issue

This judgment discusses a novel question of whether the court should exercise its discretion to dismiss the 2 Applications because, among others, it is in the public interest for this case to proceed to trial in view of the alleged unlawful disposal of land owned by a State statutory corporation to a private company. C. Background

By a power of attorney dated 10.10.1996 (1st PA), the 1st Defendant appointed Kumpulan Darul Ehsan Bhd. (KDEB) as the 1st Defendant’s attorney for matters stated in the 1st PA.

The Plaintiff and 1st Defendant entered into a Sale and Purchase Agreement dated 15.11.1996 (SPA). According to the SPA, among others, the Plaintiff purchased certain plots of land (Land) from the 1st Defendant for purpose of development as provided in the SPA.

On 15.10.2003, KDEB granted a power of attorney to the Plaintiff (2nd PA) for the purposes stated in the 2nd PA.

The 1st Defendant revoked the 1st PA by a “Deed of Revocation of Power of Attorney” dated 26.12.2008 (Revocation of 1st PA).

KDEB sent a letter dated 25.11.2009 to the Plaintiff [KDEB’s Letter (25.11.2009)] which stated, among others: 3

despite the Plaintiff’s obligation to pay quit rent of the Land (Quit Rent) under the SPA, KDEB requested the Plaintiff to withhold payment of Quit Rent (KDEB’s Request). KDEB’s Request was made for the following reasons -

this would enable the Land to be forfeited to the State Authority (SA);

a certain part of the Land would then be gazetted as an “Eco-Park” (Eco-Park Gazette); and

the remaining part of the Land (Remaining Land) would be re-alienated to the 1st Defendant for the purpose of the implementation of the SPA;

the Plaintiff had accepted KDEB’s Request;

the Plaintiff had not breached SPA and no payment was due from the Plaintiff under the SPA as of the date of KDEB’s Letter (25.11.2009); and

in consideration of the Plaintiff’s acceptance of KDEB’s Request, the following matters, among others, had been agreed -

the 1st Defendant “shall, at its absolute cost and expense shall procure” the SA to issue new titles for the Remaining Land in favour of the Plaintiff (New Replacement Titles) after the Eco-Park Gazette {Obligation [Paragraph (a)]}; and 4

“if for any reason whatsoever”, the 1st Defendant or KDEB is unable to fulfill Obligation [Paragraph (a)], the 1st Defendant “shall unconditionally and irrevocably pay [Plaintiff] a sum of RM150,000 per acre” for the entire Land “to recover potential loss of development, profit and loss of reputation, after which neither part shall have any claims against the latter” {Obligation [Paragraph (f)]}; KDEB’s Letter (25.11.2009) was signed by KDEB’s then President, Dato’ Haji Abdul Karim bin Munisar (Dato’ Karim);

On 9.12.2009, the 1st Defendant issued a resolution (1st Defendant’s Resolution) signed by Tan Sri Dato’ Abdul Khalid bin Ibrahim (Tan Sri Khalid). Tan Sri Khalid, the then Menteri Besar of Selangor (MB), signed the 1st Defendant’s Resolution as a trustee of the 1st Defendant. The 1st Defendant’s Resolution resolved, among others, as follows:

KDEB’s Letter (25.11.2009) was issued by KDEB as the 1st Defendant’s attorney “in accordance with the instructions” given by the 1st Defendant;

“the terms, conditions and contents” of KDEB’s Letter (25.11.2009) had been “approved and endorsed” by the 1st Defendant; and

the 1st Defendant “shall be fully and absolutely liable” for any non-compliance with KDEB’s Letter (25.11.2009) by KDEB and/or the 1st Defendant.

The Plaintiff’s solicitors sent a letter dated 12.3.2018 to the 1st Defendant and KDEB (Plaintiff’s Demand) which stated, among others, as follows: 5

the New Replacement Titles had not been issued to the Plaintiff;

no other land equivalent to the size and value of the Land was offered to the Plaintiff; and

unless the 1st Defendant and/or KDEB complied with, among others, Obligation [Paragraph (a)] within one month from the date of the Plaintiff’s Demand, the Plaintiff would proceed to enforce Obligation [Paragraph (f)] for which the 1st Defendant had to pay the Amount Claimed (RM150,000.00 × 760.53 acres) to the Plaintiff.

KDEB denied the Plaintiff’s Demand in a letter dated 11.4.2018 as follows, among others:

the “authenticity and legitimacy” of KDEB’s Letter (25.11.2009) was “questioned” by KDEB;

KDEB’s board of directors (BOD) did not approve the issuance of KDEB’s Letter (25.11.2009); and

in view of the Revocation of 1st PA, KDEB had no authority to issue KDEB’s Letter (25.11.2009).

The Plaintiff’s Demand was denied by a letter dated 12.4.2018 from Messrs Edwin Lim & Suren, the 1st Defendant’s then solicitors (1st Defendant’s Denial). 6 D. Enc. 15

I will decide Enc. 15 before Enc. 12. This is because if I allow Enc. 15, This Action is struck out and Enc. 12 will then become redundant. D(1). Application under O 18 r 19(1)(a) RC [Paragraph (a)]

Enc. 15 is premised firstly on Paragraph (a), namely the 1st Defendant contends that the Statement of Claim (SOC) in This Action does not disclose any reasonable cause of action.

I adopt the following approach in deciding Enc. 15 pursuant to Paragraph

(a):

the court cannot consider affidavit evidence - please see O 18 r 19(2) RC and the Court of Appeal’s judgment delivered by Ramly Ali JCA (as he then was) in See Thong v Saw Beng Chong [2013] 3 MLJ 235, at [9] and [10]; and

the court will assume that the contents of the SOC are true - please see the Court of Appeal’s judgment given by Mahadev Shankar JCA in Tuan Haji Ishak bin Ismail v Leong Hup Holdings Bhd & other appeals [1996] 1 MLJ 661, at 679.

The SOC discloses a cause action for breach of the 1st Defendant’s obligations owed to the Plaintiff pursuant to KDEB’s Letter (25.11.2009) and the 1st Defendant’s Resolution - please see paragraphs 9 to 18 and 22 SOC (Cause of Action). For the purpose of Paragraph (a), the court shall assume that the contents of SOC regarding the Cause of Action are 7 true - Tuan Haji Ishak bin Ismail. In the circumstances, Enc. 12 cannot succeed under Paragraph (a). D(2). Whether court should strike out This Action under O 18 r 19(1)(b) [Paragraph (b)], O 18 r 19(1)(d) [Paragraph (d)], O 92 r 4 RC and/or court’s inherent jurisdiction and/or power

In deciding Enc. 12 under Paragraph (b), Paragraph (d), O 92 r 4 RC, the court’s inherent jurisdiction and/or power, the court may consider affidavit evidence.

The 1st Defendant’s learned counsel has relied on the following two contentions to support Enc. 12 pursuant to Paragraph (b), Paragraph (d), O 92 r 4 RC, the court’s inherent jurisdiction and/or power (1st

ss 91 and 92 of the Evidence Act 1950 (EA); and

an “entire agreement clause” in clause 22 SPA (Clause 22).

I am not able to accept the 1st Defendant’s 2 Contentions as a ground to strike out This Action under Paragraph (b), Paragraph (d), O 92 r 4 RC, the court’s inherent jurisdiction and/or power. This decision is based on the following reasons:

KDEB’s Letter (25.11.2009) was “approved and endorsed” by the 1st Defendant’s Resolution. The Cause of Action is based on a breach of the 1st Defendant’s obligations as provided in KDEB’s Letter (25.11.2009) and the 1st Defendant’s Resolution - please see the above paragraph 15. The Cause of Action is not a breach of the SPA 8 itself. Sections 91 and 92 EA (which are applicable to the SPA) do not apply to the KDEB’s Letter (25.11.2009) and the 1st Defendant’s Resolution;

Clause 22 provides as follows - “ENTIRE UNDERSTANDING This Agreement sets out the entire understanding between [1st Defendant] and the [Plaintiff] and merges all prior discussions between them and neither of them shall be bound by any conditions, warranties or undertakings with respect to the subject matter of the Agreement other than such as are expressly put forth in this Agreement or in any subsequent amendments thereto agreed in writing by [1st Defendant] and the [Plaintiff].” In the Court of Appeal case of Master Strike Sdn Bhd v Sterling Heights Sdn Bhd [2005] 2 CLJ 596, at 607-608, Nik Hashim JCA (as he then was) has explained that an entire agreement clause “constitutes a binding agreement between [the parties] with regard to all matters mentioned in the contract and … the contract does not permit any term to be implied or import any other consideration not in the contract”. An entire agreement clause, such as Clause 22, does not prevent the 1st Defendant from issuing the 1st Defendant’s Resolution which has approved KDEB’s Letter (25.11.2009). As such, the 1st Defendant cannot now rely on Clause 22 to strike out This Action;

the 1st Defendant is estopped from denying the contents of the 1st Defendant’s Resolution which has accepted KDEB’s Letter (25.11.2009) - please see the wide application of the doctrine of 9 equitable estoppel as illustrated in Gopal Sri Ram JCA’s (as he then was) judgment in the Federal Court case of Boustead Trading

Sdn Bhd v Arab-Malaysian Merchant Bank Bhd [1995] 4 CLJ 283, at 294;

the 1st Defendant’s 2 Contentions require the court’s “mature consideration” during trial and consequently, This Action should not be struck out - please see the judgment of Gopal Sri Ram JCA (as he then was) in the Federal Court in Lai Yoke Ngan & Anor v Chin Teck Kwee & Anor [1997] 3 CLJ 305, at 331. It is decided by Ramly Ali FCJ in the Federal Court case of Seruan Gemilang Makmur Sdn Bhd v Kerajaan Negeri Pahang Darul Makmur & Anor [2016] 3 CLJ 1, at [28] as follows - “If one has to go into lengthy and mature consideration in detail of the issues of law and/or fact, then the matter is not appropriate to be struck out summarily. It must be determined at trial.” (emphasis added);

if there is at least one triable issue in a case, the striking out application of the case must be dismissed - Lai Yoke Ngan, at p.

I am of the view that This Action raises at least the following five questions to be tried by this court (5 Triable Issues) -

whether KDEB’s BOD had approved the issuance of KDEB’s Letter (25.11.2009) by Dato’ Karim; 10

did Dato’ Karim have the 1st Defendant’s authority to issue

whether KDEB is estopped from disputing the contents of

did Tan Sri Khalid have the authority of the 1st Defendant to issue the 1st Defendant’s Resolution?; and

whether the 1st Defendant is estopped from denying the 1st

in view of the 5 Triable Issues, this is not a plain and obvious case for this court to allow Enc. 15 - please see Mohd. Dzaiddin SCJ’s (as he then was) judgment in the Supreme Court case of Bandar Builder Sdn Bhd & Ors v United Malayan Banking Corporation Bhd [1993] 3 MLJ 36, at 43;

the mere fact that a pleaded claim is weak and is not likely to succeed, is not a ground to strike out that pleading - Bandar Builder Sdn Bhd, at p. 44; and

it is decided in Novaviro Technology Sdn Bhd v QL Plantation Sdn Bhd & Anor, Watermech Engineering Sdn Bhd (Third Party) [2018] 11 MLJ 392, at [28], as follows 11 “[28] The use of the permissive term “may” in O 18 r 19(1) RC means that the court has a discretionary power to strike out a suit under any one or more of the paragraphs in O 18 r 19(1)(a) to (d) RC.” (emphasis added). This case concerns the validity of transactions regarding land owned by a State statutory corporation. It is in the public interest for this court to exercise its discretion under O 18 r 19(1) RC to dismiss Enc. 15 so as to ensure that the 5 Triable Issues can be tried in open court. Such an exercise of discretion also ensures public accountability and transparency of decision-making process of State statutory corporations.

In view of the reasons explained in the above paragraph 18, I have no hesitation to dismiss Enc. 15. E. Whether This Action is time-barred

I am not able to accept the 1st Defendant’s submission that This Action is time-barred under s 6(1)(a) of the Limitation Act 1953 (LA). This decision is premised on the following reasons:

the Plaintiff’s Demand was sent on 12.3.2018. The 1st Defendant’s Denial was given on 12.4.2018. Limitation period commences from the earliest time when a cause of action accrues - please refer to the judgment of Shaik Daud Ismail JCA in the Court of Appeal case of Nik Che Kok v Public Bank Berhad [2001] 2 CLJ 157, at 160. 12 Hence, the earliest date of accrual of the Cause of Action was on 13.4.2018 (a day after the 1st Defendant’s Denial); and

the six-year limitation period under s 6(1)(a) LA for the Cause of Action commences on 13.4.2018 and shall end on 13.4.2024. This Action has been instituted on 12.11.2018, well within the six-year limitation period as required by s 6(1)(a) LA. F. Is This Action barred by laches?

According to s 32 LA, there is nothing in LA which “shall affect any equitable jurisdiction to refuse relief on the ground of acquiescence, laches or otherwise”.

Firstly, in view of the Plaintiff’s Demand and the 1st Defendant’s Denial, there was no inordinate delay on the part of the Plaintiff in the institution of This Action.

Secondly, whether a suit is barred by acquiescence or laches depends on the following questions which require parties to adduce oral evidence -

is there any reasonable explanation for the delay in the institution of the action?; and

should the court exercise its equitable jurisdiction to refuse relief on the ground of acquiescence or laches? The above two questions can only be answered at a trial of This Action and cannot be resolved summarily by way of a striking out application (such as Enc. 15). 13 G. Enc. 12

I adopt the following approach in deciding Enc. 8:

once the Plaintiff has fulfilled the following 3 conditions (3 Conditions) required by O 14 rr 1(1) and 2(1) RC, namely -

the SOC has been served on the 1st Defendant;

the 1st Defendant has entered appearance; and

the Plaintiff’s deponent (Deponent) has affirmed an affidavit verifying the facts on which the SOC is based and the belief of the Deponent that there is no defence by the 1st Defendant to the SOC - the burden then shifts to the 1st Defendant to resist Enc. 12 by satisfying the court under O 14 rr 3(1) and 4(1) RC that there is at least one issue to be tried in this case. This is clear from the following two Federal Court decisions -

George Seah FJ’s (as he then was) judgment in National Company for Foreign Trade v Kayu Raya Sdn Bhd [1984] 1 CLJ (Rep) 283, at 285; and

(ii) the judgment of Steve Shim CJ (Sabah & Sarawak) in Cempaka Finance Bhd v Ho Lai Ying & Anor [2006] 3 CLJ 544, at 551-552; and

even if the 1st Defendant cannot raise any triable issue, Enc. 12 may still be dismissed under O 14 r 3(1) RC if “there ought for some other 14 reason to be a trial”, namely there are circumstances in this case that ought to be investigated by the court - please see the Federal Court’s judgment delivered by Mohd. Dzaiddin FCJ (as he then was) in United Merchant Finance Bhd v Majlis Agama Islam Negeri Johor [1999] 1 MLJ 657, at 666-668.

It is clear that the 1st Defendant has discharged the onus to raise the following triable issues in this case:

the 5 Triable Issues - please see the above sub-paragraph 18(5); and

s 75 of the Contracts Act 1950 (CA) provides as follows -

“Compensation for breach of contract where penalty stipulated for When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.” (emphasis added). The effect of s 75 CA has been explained by Richard Malanjum CJ (Sabah & Sarawak) (as he then was) in the Federal Court case of Cubic Electronics Sdn Bhd (in liquidation) v Mars 15 Telecommunications Sdn Bhd [2019] 2 CLJ 723, at [74], as follows: “[74] In summary and for convenience, the principles that may be distilled from hereinabove are these: …

(iv) In determining what amounts to "reasonable compensation" under s 75 [CA], the concepts of "legitimate interest" and "proportionality" as enunciated in Cavendish (supra) are relevant.

A sum payable on breach of contract will be held to be unreasonable compensation if it is extravagant and unconscionable in amount in comparison with the highest conceivable loss which could possibly flow from the breach. In the absence of proper justification, there should not be a significant difference between the level of damages spelt out in the contract and the level of loss or damage which is likely to be suffered by the innocent party.

(vi) s 75 [CA] allows reasonable compensation to be awarded by the court irrespective of whether actual loss or damage is proven. Thus, proof of actual loss is not the sole conclusive determinant of reasonable compensation although evidence of that may be a useful starting point.

(vii) The initial onus lies on the party seeking to enforce a damages clause under s 75 [CA] to adduce evidence that firstly, there was a breach of contract and that secondly, the contract contains a clause specifying a sum to be paid upon breach. Once these two elements have been 16 established, the innocent party is entitled to receive a sum not exceeding the amount stipulated in the contract irrespective of whether actual damage or loss is proven subject always to the defaulting party proving the unreasonableness of the damages clause including the sum stated therein, if any.

(viii) If there is a dispute as to what constitutes reasonable compensation, the burden of proof falls on the defaulting party to show that the damages clause including the sum stated therein is unreasonable.” (emphasis added). If the 1st Defendant breaches Obligation [Paragraph (a)], Obligation [Paragraph (f)] names the Amount Claimed to be paid by the 1st Defendant to the Plaintiff in the event of the breach. There arises a triable issue of whether this contractual provision attracts the application of s 75 CA as explained in Cubic Electronics.

The triable issues as explained in the above paragraph 25, warrants a dismissal of Enc. 12.

In the alternative, even if it is assumed that the 1st Defendant cannot raise any issue to be tried in this case, I shall nevertheless dismiss Enc. 12. This is because I am satisfied that “there ought for some other reason to be a trial” within the meaning of O 14 r 3(1) RC, namely there are circumstances in this case which ought to be investigated by the court. This decision is premised on the following reasons: 17

in the United Kingdom’s Court of Appeal case of Bank fur Gemeinwirtschaft Aktiengesellschaft v City of London Garages Ltd. [1971] 1 WLR 149, at 158 (London Garages), Cairns LJ gave the following explanation regarding what circumstances would constitute “some other reason to be a trial” (which would defeat a summary judgment application) - “… It is not difficult to think of other circumstances where it might be reasonable to give leave to defend although no defence was shown: for example, if the defendant was unable to get in touch with some material witness who might be able to provide him with material for a defence; or if the claim were of a highly complicated or technical nature which could only properly be understood if oral evidence were given; or if the plaintiff’s case tended to show that he had acted harshly and unconscionably and it was thought desirable that if he was to get judgment at all it should be in the full light of publicity.” (emphasis added); London Garages has been followed by our Federal Court in United Merchant Finance, at p. 667; and

the triable issues which have been raised in this case, in particular the 5 Triable Issues, should be investigated by this court “in the full light of publicity”. It is clearly in the public interest for this case to be tried so as to ascertain the validity of disposal of land owned by a State statutory corporation to a private company. Furthermore, serious allegations have been made against Tan Sri Khalid (the then MB) and Dato’ Karim. 18 H. Court’s decision

Premised on the above reasons, the 2 Application are dismissed. I do not award any costs because both the Plaintiff and 1st Defendant are not successful in Enc. 12 and 15 respectively.

It is in the public interest for this case to proceed to trial “in the full light of publicity” (in the words of Cairn LJ in London Garages). WONG KIAN KHEONG Judge High Court of Malaya Shah Alam, Selangor Darul Ehsan DATE: 19 NOVEMBER 2019 Counsel for Plaintiff: Mr. Chuah Thiam Ming (Messrs Azri Chuah & Yap) Counsel for 1st Defendant: Ms. Ng Sai Yeang, Encik Norazmi bin Norazman & Ms Lye Ca-Ryn (Messrs Azmi Fadzly Maha & Sim) Counsel for 2nd Defendant: Puan Jamilah Binti Jamil (Pejabat Penasihat Undang-Undang Negeri