Teh Keh Hin v 1. ) Acara Kreatif Sdn. Bhd. (JA-22NCvC-111-07/2022)

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HONG SIEW ING Kedua-duanya berniaga atas nama dan gaya TEH AQUACULTURE ENTERPRISE …….PLAINTIF-PLAINTIF

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TCB LAND SDN. BHD. …DEFENDAN-DEFENDAN GROUNDS OF JUDGMENT [Enclosures 51 & 54] Introduction [1] These are two applications filed by the Defendants seeking for –

a determination pursuant to O. 14A of the Rules of Court (“ROC”) on whether the License Agreement entered into 18/06/2023 10:23:40 JA-22NCvC-111-07/2022 Kand. 122 between the Plaintiffs and the Defendants was validly renewed on the construction of the Agreement read together with certain documents related thereto; and

summary judgment under O. 14 of the ROC against the Plaintiffs in respect of the Defendants’ counterclaim. [2] As a background of facts, the 1st Defendant is the registered proprietor of a land held under HS(D) 15423, PTD 304, Mukim Sedili Kechil, Daerah Kota Tinggi, Negeri Johor measuring approximately 103 acres (“Land”). [3] Vide a tripartite License Agreement (“License Agreement”) entered into by the 1st Defendant (as the proprietor of the Land), 2nd Defendant (as the beneficial proprietor of the Land and the Licensor) and the Plaintiffs (as the Licensee), the Defendants agreed to grant the Plaintiffs a license to rear prawns and related activities on the Land “(License”) for a period of one year beginning from 1.10.2020 and ending on 30.9.2021. [4] Clause 2.2 of the License Agreement provides for the renewal of the license as follows:

2.2 Option to renew In consideration of the License Fees payable by the Licensee under this Agreement and provided no existing breach of all the covenants and terms on the part of the Licensee hereinafter contained, the Licensor may its sole and absolute discretion upon receipt of written notice to be issued by the Licensee seeking renewal of the License not later than two (2) months prior to the Expiry Date grant to the Licensee renewal of this License for a further period of (1) year. [5] Less than two months prior to the expiry of the License, on 11.8.2021, the 1st Plaintiff wrote a letter to Tradewinds Corporation Berhad (“Tradewinds”), one of the 1st Defendant’s shareholders stating that the Plaintiffs would like to apply for the renewal of the License. [6] The 2nd Defendant in its letter dated 6.10.2021 to the Plaintiffs stated that the Defendants decided not to renew the License and requested the Plaintiffs to vacate the Land as well as to remove all equipment, buildings and structures on the Land pursuant to clause 5.10 of the License Agreement. [7] On 15.10.2021, the Plaintiffs wrote an appeal letter to Tradewinds. Nonetheless, the appeal was rejected by the 2nd Defendant vide its letter dated 12.1.2022. [8] Vide a letter dated 13.4.2022, the 2nd Defendant agreed to allow the Plaintiffs to vacate the Land on or before 30.4.2022 after taking into consideration that a few numbers of prawn ponds were still in operation as at 28.2.2022. [9] On 27.6.2022, the 2nd Defendant sent another letter to the Plaintiffs giving the latter a notice to vacate the Land within 14 days of the date of the letter failing which a legal action would be taken against the Plaintiffs to enable the Defendants taking possession of the Land. [10] Instead of vacating the Land, the Plaintiffs filed a writ against the Defendants on 25.7.2022 seeking for the following reliefs, inter alia:

a declaration that the Plaintiffs are the valid Licensee of the Land for a period beginning on 1.10.2021 until 30.9.2022;

a declaration that any legal action taken by the Defendants against the Plaintiffs as to take possession of the Land is illegal;

as an alternative, damages to be assessed as a result of the Defendants’ actions affecting the peaceful enjoyment of the

an injunction to restrain the Defendants from not allowing the Plaintiffs from entering the Land and to restrain the Defendants from cutting off the electricity supply on the Land. [11] On the same day, Hisam bin Hamzah, the 2nd Defendant’s Assistant Vice President lodged a police report stating that the Plaintiffs failed to comply with the 2nd Defendant’s demand to vacate the Land and the 2nd Defendant’s intention to close the main access road as well as to cut off the water supply from the ocean to the prawn ponds on the Land. [12] The Plaintiffs later filed an ex-parte application in Enclosure 3 for interim injunction to restrain the Defendants from preventing the Plaintiffs from entering the Land. On 26.7.2022, this court allowed the Plaintiffs’ application. Subsequently, the Defendants filed an application in Enclosure 18 seeking to set aside the interim injunction order. On 14.8.2022, this court allowed the Defendants’ application with costs and the interim injunction order was set aside. The Plaintiffs appealed against the decision to the Court of Appeal and the appeal is still pending during the hearing of these applications. The grounds of my judgment when allowing the Defendants’ application can be found in Teh Keh Hin & Anor v. Acara Kreatif Sdn Bhd & Anor [2022] 1 LNS 3019. [13] On 16.11.2022, the Defendants filed an application in Enclosure 51

the Plaintiffs’ letter dated 11.8.2021;

Tradewinds’s letter dated 6.10.2021;

the Plaintiffs’ letter dated 15.10.2021;

Tradewinds’s letter dated 12.1.2022;

Tradewinds’s letter dated 13.4.2022 and

Tradewinds’s letter dated 27.6.2022. [14] On the same day, the Defendants filed another application under O. 14 r. 1 of the ROC in Enclosure 54 seeking for summary judgment against the Plaintiffs in respect of the Defendants’ counterclaim. The Defendants’ application pursuant to O. 14A [15] To begin with, let me deal with the Defendants’ application pursuant O. 14A first. [16] For ease of reference, I reproduce O. 14A r. 1 of the ROC – Determination of questions of law or construction (O. 14A, r. 1)

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The Court may, upon the application of a party or of its own motion, determine any question of law or construction of any document arising in any cause or matter at any stage of the proceedings where it appears to the Court that —

such question is suitable for determination without the full trial of the action; and

such determination will finally determine the entire cause or matter or any claim or issue therein.

On such determination the Court may dismiss the cause or matter or make such order or judgment as it thinks just.

The Court shall not determine any question under this Order unless the parties have had an opportunity of being heard on the question.

The jurisdiction of the Court under this Order may be exercised by a Registrar.

Nothing in this Order shall limit the powers of the Court under Order 18, rule 19 or any other provisions of these Rules.”. [17] On the significance, principles and conditions of O.14A, I can do no better than to reproduce the summary of these by Muniandy Kannyappan J in Kok Kon Sang v. CIMB Bank Berhad [2023] 1 LNS 740 as follows: [9] For that to take place, on plain reading of O. 14A ROC as well as case authorities which are applicable and binding on this court, succinctly elaborating on the operation and enforceability of O. 14A entails, in order for this court to exercise its power to summarily dispose of an action, there shall be no dispute between plaintiff and defendant on the relevant and material facts pleaded in the pleadings. [10] Jurisprudence applicable in order to deal with an application under Order 14A ROC, which is a summary procedure is laid down in the rule itself to dispose of the case altogether after determining it on a point of law. By virtue of proceeding under Order 14A ROC, this court in fact would consider and determine a point of law which has arisen from facts of the case, premised on the pleadings as well as the available affidavit evidence explaining the transaction in issue. If that point of law is finally resolved, it would be unnecessary for an open court trial. The determination on point of law would also have the effect of declaring rights of the parties. Application and enforceability of Order 14A ROC is demonstrated by the following principles of law, distilled from the rule itself as well as decided case authorities explaining construction of the said rule, which is the following: 

The defendants have entered an appearance to the writ.

(ii) The question of law or construction is suitable for determination without a full trial of the action.

(iii) Such determination will be final to the entire cause or matter or any claim or issue therein.

(iv) There is no dispute as to all necessary and material facts relating to the subject matter of the question when the court proceeds to determine the question.

The parties have had an opportunity of being heard on the question of law. [18] In this application, the Defendants averred that there is no dispute of the material facts pleaded in the pleadings relating to the subject matter of the question especially when the Plaintiffs did not dispute the validity of the License Agreement and the letters mentioned by the Defendants in the application. The Plaintiffs also admitted that they were late in applying for the renewal vide their letter dated 11.8.2021. The Plaintiffs’ arguments [19] In refuting the Defendants’ application, the Plaintiffs contended that O.14A is not applicable in the present action as there are disputed material facts as follows:

the Plaintiffs stated that since 2003 they have been renewing the tenancy or license orally based on a purported joint venture agreement dated 8.9.2003 (“JVA”) which was entered into by the 1st Plaintiff and one See Kok Chai (“SKC”). SKC is a director and the majority shareholder of SEP Concrete Pump Services Sdn Bhd (“SEPCPS”). SEPCPS then signed a tenancy agreement (“Tenancy Agreement”) with the 2nd Defendant relating to the Land on 8.9.2005. The Plaintiffs averred that based on the parties’ conduct in relation to the contracts, the time is no longer an essence in relation to the License

the contra proferentem rule ought to be applied against the Defendants since the License Agreement was prepared by them; and

the sole and absolute discretion afforded to the 2nd Defendant contradicts the option to renew the License and violates the Contract Act 1950. [20] Now, let me discuss the Plaintiffs’ 1st ground. Upon careful perusal of the Statement of Claim and Statement of Defence, I find that the existence of the JVA and Tenancy Agreement were not mentioned in both pleadings but was only raised by the Plaintiffs in their submission in Enclosure 73. Be that as it may, as far as the JVA is concerned, I find that the Defendants were not even a party therein. Further, the JVA expressly stated that only SKC has the exclusive right over the Land and not the 2nd Plaintiff. Thus, I agree with the Defendants that the JVA does not create any nexus or whatsoever between the Plaintiffs and the Defendants or the Land. [21] For the Tenancy Agreement, the Plaintiffs are not a party therein. Again, the Plaintiffs failed to establish any relation between the Tenancy Agreement and the License Agreement. [22] In the upshot, I find that there is no basis for the Plaintiffs could rely on the parties’ conduct in relation to the contracts since there is no an iota of evidence for this court to draw an inference that the Plaintiffs and the Defendants had any dealing prior to the License Agreement. [23] On the contra proferentum rule raised by the Plaintiff, it is trite that this rule is only applicable when there is an ambiguity in the contractual provision. In the Federal Court case of CIMB Bank Bhd v. Anthony Lawrence Bourke & Anor [2019] 2 CLJ 1, it was held that – [32] We are dealing here with cl. 12 of the loan agreement. In our view, given its natural and ordinary meaning, the said clause is susceptible to one meaning only and that meaning must be given effect to and enforced however unreasonable the court may think it is. The words in the clause are clear and one does not even need to resort to the contra proferentum rule of construction. [24] The rule is also applicable when the provision in a contract is either controversial or open to two or more possible readings which leads to ambiguity was highlighted in Syarikat Lee Heng Sdn Bhd v. Port Swettenham Authority [1971] 1 LNS 133; [1971] 2 MLJ 27 where the Federal Court held that – In the second place, I am of opinion that the contra proferentum rule should apply to the construction of r. 91(1) just as much as it does to any exemption clause in a contract. The very fact that serious controversy has arisen as to whether the rule has placed the onus of proof on the bailor or bailee to show how the goods came to be lost clearly demonstrates that it suffers from ambiguity. As Evershed MR said in i John Lee & Son (Grantham), Ltd v. Railway Executive [1949] 2 All ER 581, 583:- We are presented with two alternative readings of this document and the reading which one should adopt is to be determined, among other things, by a consideration of the fact that the defendants put forward the document. They have put forward a clause which is by no means free from obscurity and have contended that, on the view for which they argued, it has a remarkably, if not an extravagantly, wide scope;... I think that the rule of contra proferentum should applied. [25] Nonetheless, in our present case, the Plaintiffs failed to identify to the court any ambiguity in clause 2.2 of the License Agreement. It is my view that the wordings in the clause are plain and clear. The clause clearly gives the 2nd Defendant an absolute discretion to renew the License provided that the Plaintiffs must give notice to the 2nd Defendant of their intention to the renewal not later than 2 months prior to the expiry of the License. Thus, the contra proferentum rule is not applicable in construing this plain and clear clause. [26] The next issue raised by the Plaintiffs is about the discretionary power afforded to the 2nd Defendant to renew the License. The Plaintiffs contended that this power contradicts the Plaintiffs’ option to renew the License. The Plaintiffs also averred that the power violates the Contract Act 1950. [27] Upon perusal of the exhibits filed in this action, I find that there is no evidence showing that the Plaintiffs raised this issue vis-à-vis the contradiction to the Defendants prior to the latter filed the application pursuant to O. 14A. If this issue really matters to the Plaintiffs, it should have triggered them to complaint to the Defendants or to request for the amendment to the License Agreement. Nevertheless, this was not done by the Plaintiffs. In the absence of this, I agree with the Defendants that this issue is no more than a mere afterthought. [28] On the issue of contradiction itself, although the Plaintiffs have the option for the renewal of the License, the option must be done by the Plaintiffs within the time frame set out in clause 2.2 before the Defendants in their absolute discretion to agree for the renewal. Therefore, clearly there is no contradiction between the Plaintiffs’ option to renew the License and the Defendants’ discretion to renew the same. [29] The Plaintiffs referred to the case of Luggage Distributors (M) Sdn Bhd v. Tan Hor Teng & Anor [1995] 2 CLJ 713; [1995] 1 MLJ 719 to support their argument. With respect, I find that the principle in that case is not applicable here. In that case, the recital in the agreement is silent as to the time within which the renewal is to be made. However, this is not the case in the present action. The time frame given to the Plaintiffs to seek the renewal from the Defendants is clearly spelt out in the License Agreement. [30] In Zainal Abidin v. Century Hotel Sdn Bhs [1986] 1 LNS 2, [1987] 1 MLJ 236, the Supreme Court held that the option clause in a lease does not give rise to any legal obligations on the part of either party unless and until the Lessee gives notice in writing to the Lessor, of his intention to extend the Lease. Seah SCJ when delivering the judgment of the Court had said this: In our opinion, an option clause (like the one here) in a lease does not give rise to any legal obligations on the part of either party unless and until the Lessee gives notice in writing to the Lessor, within the stipulated period, of his intention to extend the lease and the parties have mutually agreed to the new rent. Until these two conditions are satisfied the option clause, in our judgment, could not be legally enforced against the Lessor. Applying this to the facts of this case, it is plain that none of the conditions had been complied with and it follows that the learned Judge was right to make no award under this head. This ground of appeal therefore fails. [31] A similar situation was dealt in Common Ground TTDI Sdn Bhd v. Ken TTDI Sdn Bhd [2021] 1 LNS 1611 where Mohd Nazlan Mohd Ghazali J (now CJA) held that - [32] The renewal would only be valid subject to the fulfilment of the conditions as spelt out in Clauses 10.1 and 10.2. As mentioned, chief of which these include, first that the plaintiff has submitted a written request not more than eight (8) months and not less than six (6) months before the expiration of the then current term. [33] This I observe the parties agreed did occur. I should add that as emphasised by the defendant, the relevant words employed in Clause 10.1 are "written request from the Tenant". The word "request" may be generally understood as the act of asking for something. This therefore suggests that renewal is not automatic if a request needed to be made, as against a situation where a written notice would suffice. [32] Undoubtedly, the License Agreement has an option clause which must be done within a specified time. Thus, the Defendants' decision for not renewing the License was within the ambit of their sole and absolute discretionary power provided by the License Agreement when the Plaintiffs flagrantly failed to fulfil the condition precedent in the option clause which required them to seek the renewal within a definite time frame. [33] On the allegation that the absolute discretion given to the Defendants violates the Contract Act, I find that it is only a bare statement without any explanation offered by the Plaintiffs. As such this court is not prepared to accept the Plaintiffs’ allegation as an issue to consider. [34] From the above analysis, the Plaintiffs failed to establish that there is any disputed fact which could prevent this court from dealing with the Defendants’ application pursuant to O. 14A. The Defendants’ application pursuant to O. 14A [35] As mentioned before, the nub of this application is to determine whether the License Agreement was validly renewed by the Plaintiffs on the construction of the Agreement read together with the documents exhibited in the Affidavit in Support of the Defendants. [36] In the preceding paragraphs, I have discussed at length that the 2nd Defendant’s absolute discretion not to renew the License is valid after the Plaintiffs failed to comply with the clear condition precedent in the option clause. I do not intend to be repetitive in my judgment. Suffice to say that the proposed question by the Defendants must be answered in the negative that is in favour of the Defendants. The Defendants’ application for summary judgment in respect of the Defendants’ counterclaim [37] Now let me deal with the Defendants’ application for summary judgment under O. 14 of the ROC against the Plaintiffs in respect of the Defendants’ counterclaim. In this application, the Defendants seek for the following reliefs as their counterclaim:

a declaration that the License Agreement was not renewed and thus expired on 30.9.2021;

an order for vacant possession of the Land; and

an order for damages to assessed by this court. [38] In Cempaka Finance Bhd v. Ho Lai Ying & Anor [2006] 3 CLJ 544, the Federal Court held that any party who refutes the application for summary judgment has the burden to raise triable issues. [39] On this note, I find that the Plaintiffs raised the similar grounds that they used in refuting the Defendants’ application pursuant to O. 14A as their grounds in opposing the Defendants’ application for summary judgment. [40] I have canvassed these grounds in the Defendants’ application pursuant to O. 14A above. I do not propose to repeat them here. Suffice to say that based on my reasons adumbrated in that application, the Plaintiff’s License was validly not renewed and expired on 30.9.2021. [41] This court’s answer in the Defendants’ proposed question pursuant to O. 14A reflects that there are no triable issues established by the Plaintiffs in relation to the Defendants’ counterclaim. Therefore, I allow the Defendants’ application in Enclosure 54 with costs. Dated: 16.6.2023 -SIGNED- (SHAMSULBAHRI BIN HAJI IBRAHIM) Judicial Commissioner, Johor Bahru High Court Counsels: For the Plaintiffs – Yahya Chuah (Gavin Low Peng Kuan with him); Messrs. Lau Kok Guan, Liana & Kuan For the Defendants – Yeoh Cho Keong (Villie Nethi with him); Messrs. Ranjit Singh & Yeoh Cases referred to:  Cempaka Finance Bhd v. Ho Lai Ying & Anor [2006] 3 CLJ 544  CIMB Bank Bhd v. Anthony Lawrence Bourke & Anor [2019] 2 CLJ 1  Common Ground TTDI Sdn Bhd v. Ken TTDI Sdn Bhd [2021] 1 LNS 1611  Kok Kon Sang v. CIMB Bank Berhad [2023] 1 LNS 740  Luggage Distributors (M) Sdn Bhd v. Tan Hor Teng & Anor [1995] 2 CLJ 713; [1995] 1 MLJ 719  Syarikat Lee Heng Sdn Bhd v. Port Swettenham Authority [1971] 1 LNS 133; [1971] 2 MLJ 27  Teh Keh Hin & Anor v. Acara Kreatif Sdn Bhd & Anor [2022] 1 LNS 3019  Zainal Abidin v. Century Hotel Sdn Bhd [1986] 1 LNS 2, [1987] 1 MLJ 236 Legislations referred to:  Rules of Court 2012 – O. 14 & 14A r.