Universiti Utara Malaysia (UUM) v MAGNA HARTAMAS SDN. BHD. (KA-22NCvC-3-01/2022)

This is a plain case. The dispute is not particularly complex but the relationship between parties is. It started off well but along the way 02/07/2026 08:43:36 KA-22NCvC-3-01/2022 Kand. 69 the relationship was strained leading to each suing another as can be seen from the title to the action herein.

The Plaintiff in Suit 3 (and the Defendant in Suit 5), Universiti Utara Malaysia ("UUM"), is a public institution of higher learning. The other opposite party in the respective Suit, Magna Hartamas Sdn. Bhd. ("Magna"), is a company limited by shares incorporated and organized under the company law of Malaysia. Hereafter for convenience UUM will be referred to as the Plaintiff and Magna will be referred to as the Defendant.

On 21.5.2015, the Plaintiff and Defendant entered into an Agreement for the Renovation, Upgrading, Maintenance and Management of the Existing Varsity Mall Complex via Design and Build under the Private Finance Initiative (PFI) ("the Principal Agreement").

By a letter dated 22.3.2021, the Plaintiff terminated the said Principal Agreement effective from 1.4.2021.

The Defendant applied for the termination of the Principal Agreement to be postponed to allow room to settle the arrears, and the Plaintiff agreed. Both parties subsequently entered into a Settlement Agreement dated 12.7.2021 without prejudice to the Plaintiff's rights under the Principal Agreement.

Further, the Plaintiff by a letter dated 7.10.2021 informed that the Defendant had failed to comply with the conditions of the Settlement Agreement and gave notice of termination of the said Settlement Agreement, maintaining the termination of the Principal Agreement dated 22.3.2021 and stating that the Plaintiff would enter, take over, manage and operate the New Varsity Mall in accordance with the terms of the Principal Agreement.

The Plaintiff commenced action against the Defendant in Suit 3 claiming breach of contract and seeking damages. Subsequently, the Defendant filed an action in Suit 5 for wrongful termination of contract and similarly claimed damages.

By an Order dated 21 July 2021, Suit 5 was ordered to be consolidated and heard together with Suit 3.

After a full trial, this Court allowed the Plaintiff's claim in Suit 3. Suit 5 was dismissed.

The following are the reasons for the court's decision.

On 21.05.2015, the parties signed the Principal Agreement for the renovation, upgrading, maintenance and management of Varsity Mall via PFI, with the project financing to be fully borne by the Defendant.

By a letter dated 22.03.2021, the Plaintiff terminated the Principal Agreement effective 1.04.2021. On 18.05.2021, the Plaintiff directed the Defendant to cease operations of the New Varsity Mall, hand over vacant possession, and settle damages and outstanding payments.

Upon the Defendant's request to postpone the termination, the parties entered into a Settlement Agreement dated 12.07.2021, where the Plaintiff agreed to postpone the takeover subject to the Defendant: a) paying RM240,000 before 1.10.2021; b) completing the issuance of the certificate of completion and compliance; and, c) confirming the utility meter readings with evidence if there were discrepancies.

The Plaintiff, by a letter dated 7.10.2021 alleged that the Defendant had failed to comply with the conditions of the Settlement Agreement.

The Plaintiff subsequently: a) terminated the said Settlement Agreement; b) maintained the termination of the Principal Agreement dated 22.3.2021; and c) gave notice that the Plaintiff would enter, take over, manage and operate the New Varsity Mall in accordance with the terms of the Principal Agreement.

The Plaintiff entered and took over the New Varsity Mall on 10.10.2021. However, the Plaintiff did not enter the Defendant's management office and did not remove or disturb any goods belonging to the Defendant located in that management area.

From the factual matrix set out above, it seems to the Court that the issues in focus which require determination are as follows:

Whether the Defendant breached the Principal Agreement

and the Settlement Agreement (2021) through its failure to complete the project, obtain the CCC, pay concession and utility charges, and maintain the Varsity Mall, and whether the Plaintiff was entitled to validly terminate both agreements pursuant to their terms.

(ii) Rights to the Claims of Both Parties - Whether the Plaintiff is entitled to its claims in Suit No. KA-22NCvC-3-01/2022 and whether the Defendant is entitled to its claims in Suit No. KA- 22NCvC-5-02/2022. ANALYSIS Breach of the Principal Agreement (2015) and the Settlement Agreement (2021) Issue of Delay

The Defendant acknowledged, pursuant to Clause 6.2.1 of the Principal Agreement, its obligation to complete the project by 23.03.2016. The Plaintiff had granted a brief extension until 27.03.2016.

The Defendant admitted that the Certificate of Practical Completion (CPC) was only issued on 25.08.2016 but argued that the Plaintiff had not issued any notice regarding failure to meet the completion deadline.

The Defendant attributed the delay to factors beyond its control, including further instructions to provide a car park, adverse weather, and delays in obtaining vacant possession from tenants who had not vacated their lots. It maintained that these external impediments contributed to the late completion.

The Court, however, found no merit in these assertions. SP1 denied that external factors caused the delay. SD4 further admitted during cross-examination that, apart from the five-day extension, the Defendant had never issued any formal request for additional time based on the grounds now alleged.

The Court held that if the delay had genuinely resulted from external circumstances, a timely application for an extension would have been expected. The absence of such a request rendered the Defendant’s explanations an afterthought.

Accordingly, the Court is satisfied that the delay was attributable to the Defendant’s own failure and finds the defence on this issue unsustainable. Issue of failure to obtain CCC

The Defendant’s failure to obtain the Certificate of Completion and Compliance (CCC) was undisputed, despite the extended deadline of 27.03.2016.

The Defendant argued that the project was effectively completed when the Certificate of Practical Completion (CPC) was issued on 25.08.2016, claiming the works were mere renovations not requiring a CCC, and that only plan approval under section 70(1) of the Streets, Drainage and Buildings Act 1974 was necessary.

The Defendant further asserted that both parties had agreed the CPC would suffice as proof of completion, relying on minutes from a Varsity Mall Committee Meeting. However, SP5 confirmed no such approval was granted by the Plaintiff’s top management, and the Vice Chancellor expressly rejected any proposal to substitute the CCC with the CPC. The Court accepted that allowing operations after the CPC was merely to facilitate student use and did not waive the CCC requirement. Clause 6.0(a) of the Settlement Agreement also confirmed the Defendant’s ongoing responsibility for obtaining the CCC.

The Court rejected the Defendant’s interpretation of section 70(1), holding that section 70(16) extends “to erect a building” to include alterations and repairs. SD2’s evidence showed the works involved substantial structural changes, thus requiring both a development plan and a CCC. The Defendant produced no evidence of exemption from the local authority (MPKP), nor did it call any MPKP witness, warranting an adverse inference under section 114(g) of the Evidence Act 1950.

Weighing all the evidence, the Court found that section 70(1) applied, no exemption was proven, and the Plaintiff never agreed to replace the CCC with the CPC. The Defendant thus failed to establish any legal or factual basis to deny its obligation to obtain the CCC for the Varsity Mall Project. Issue of failure to pay concession fee and consideration 29. The Defendant argued that its failure to pay concession fees was due to the loss of rental income after the Varsity Mall closed during the COVID-19 pandemic. It contended that, pursuant to Clause 6.3 of the Principal Agreement, rental collection constituted the consideration for its obligations, and the obligation to pay concession fees became untenable once rental ceased.

Relying on Section 26 of the Contracts Act 1950 and Kuala Dimensi Sdn Bhd v Port Kelang Authority [2025] 2 MLJ 238, the Defendant submitted that an agreement without consideration is void. It further cited the case of Lim Swee Choo & Anor v Ong Koh Hou [2025] 6 MLJ 327, which the Federal Court refer to Viscount Simon’s observation in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 that failure of consideration must be total and refers to non-performance of the promised act, not merely the temporary absence of benefit.

The Defendant maintained that it had completed the Varsity Mall and provided rental lots, asserting that the inability to collect rent during the pandemic was beyond its control and amounted to a total failure of consideration, thereby rendering the agreement void.

The Court found these arguments unsustainable. Section 26 applies only if there is no consideration at all. Here, both the Principal Agreement and the Settlement Agreement provided consideration: the Defendant received the right to manage and operate the Mall in return for paying concession fees and utility charges. Temporary difficulties in collecting rent did not amount to a total failure of consideration, and the Defendant remained contractually bound to pay the requisite charges.

There was no clause in the agreements exempting the Defendant from payment if rental income was insufficient. As such, failure to collect rent did not justify non-performance.

Furthermore, the Defendant’s non-payment began in 2016, well before the pandemic. This showed that the pandemic-related explanation lacked credibility and was advanced merely to obscure earlier breaches.

The Court was satisfied that valid consideration existed and found the allegation of total failure of consideration to be without merit.

The Defendant’s failure to pay concession fees and utility charges cannot be justified by rental difficulties or the pandemic. The assertions of absence or failure of consideration are entirely without basis and are unequivocally rejected. Issue of Student Lots and UUM's responsibility 37. The Defendant referred to Clause 5.1 of the Principal Agreement, which required that at least 23 shop lots be set aside for UUM student entrepreneurship. Evidence from SD3 showed that UUM was responsible for providing participants for these lots, but only 7 or 8 were occupied, leaving the remainder vacant.

The Defendant alleged that UUM’s failure to fully utilise the student lots caused a loss of rental income, which was the main source for concession payments.

The Court considered the Defendant’s claim that UUM did not utilise or rent out 30% of the student lots, allegedly resulting in losses. SP5 categorically denied these allegations and confirmed that all student lots had been allocated to students as required by the agreement.

The Court found no term in the agreement relieving the Defendant from paying concession fees if the student lots were not fully rented, nor any provision placing a duty on UUM to keep all student lots continuously tenanted.

Cross-examination of SD4 established that the Defendant had never sent a letter of complaint to UUM about any rental losses. SD3 also admitted to having no direct knowledge of the agreement’s terms, relying only on information from SD4.

The Court concludes that the issue of student lots was raised as an afterthought by the Defendant to avoid concession and utility payments already agreed to in the Principal Agreement.

The Court is satisfied that student lots were allocated and used by students as stipulated, and there is no evidence of any failure by UUM to perform its obligations regarding these lots.

In summary, the Defendant’s assertion that its losses arose from unlet student lots is unsupported by evidence and lacks legal foundation. Issues of invoices and proof of delivery 45. The Defendant denied receiving the concession-fee invoices, alleging that they were not sent to its official address as required under Clause 13.1 of the Principal Agreement. The Defendant relied on Wong Chee Keong (practising under the name and style of Chee Keong Architect) v KYK Development Sdn Bhd [2018] MLJU 254 to argue that the Plaintiff had failed to prove delivery, as no evidence of registered posting or acknowledgment of receipt was produced.

This issue was never pleaded in the Defence and was raised for the first time during SD4’s testimony. It is well established that unpleaded issues do not warrant consideration.

Regardless, the allegation is without merit. Evidence showed that from 2015 to 2021, the Defendant consistently used the Pandan Prima address as its business address, including in both the Principal and Settlement Agreements. Correspondence sent to this address was received and acted upon. SD4 admitted that although these documents had been before the Court since 2022, the Defendant never objected due to non-receipt or notified the Plaintiff of any change of address.

The Defendant also executed the Settlement Agreement dated 12.07.2021, which expressly identified the Pandan Prima address as its business address and acknowledged outstanding concession fees, LAD, and utility charges totalling RM2,240,954.15. This acknowledgment is wholly inconsistent with the claim that the invoices were never received.

The Court finds SD4’s denial wholly unsubstantiated and patently untrue. The allegation of the wrong address was never pleaded; the Defendant consistently used the Pandan Prima address; and the claim of non-receipt is contradicted by documentary records and the Defendant’s own acknowledgment in the Settlement Agreement. The contention is accordingly rejected in its entirety. Issues regarding utility bills and electricity meter readings 50. The Defendant alleged that the electricity bills were unreasonable and not backed by valid meter readings, claiming a spike in consumption during the semester break and that readings were taken solely by the Plaintiff without verification from Tenaga Nasional Berhad (TNB).

The Plaintiff, however, produced all utility bills and complete meter-reading records (Bundles B and C). Under Section 101 of the Evidence Act 1950, the Plaintiff had discharged its burden of proving the utility charges.

Conversely, the Defendant failed to prove its allegation of inaccuracy as required under Sections 102 and 103. SP2, the Plaintiff’s electrical engineer, gave detailed evidence on the meter readings, yet the Defendant did not cross-examine him on their accuracy. In line with the Federal Court in the case of He-Con Sdn Bhd v Bulyah Bt Ishak & Anor [2020] 7 CLJ 271 as well as the Court of Appeal in the case of Small Medium Enterprise Development Bank Malaysia v Lim Woon Katt [2016] 9 CLJ 73, the failure to cross-examine on a material point amounts to acceptance of that evidence.

The Court noted that the Defendant’s allegation regarding inaccurate readings was raised only in 2019, after nearly three years of occupying Varsity Mall without paying utility bills. The Defendant never appointed an electrical consultant, never disputed the water or sewerage bills, and offered no technical evidence to support its claim.

The Court is satisfied that the Plaintiff has fully established the utility charges, and the Defendant has failed to show any inaccuracy in the meter readings. The absence of cross-examination and supporting evidence demonstrates acceptance of the Plaintiff’s records. The Defendant’s allegations are unfounded and were advanced merely to avoid payment.

Accordingly, the Court rejects the Defendant’s arguments in their entirety. Magna had failed, refused and/or neglected to maintain, service and/or return the New Varsity Mall to UUM in a proper state of repair and in a condition fit for occupation

The Plaintiff sought to recover maintenance and repair costs for the New Varsity Mall, alleging that the Defendant failed and neglected to maintain the premises and to return them in a proper state of repair, fit for occupation.

The Defendant denied liability, arguing that it was neither informed nor consulted, and was not given an opportunity to review or verify the alleged repair costs. The Defendant also noted that no representative had been called to inspect the damage or confirm whether the repairs were attributable to it. The absence of a joint inspection, in its view, cast doubt on the Plaintiff’s assertions.

The Plaintiff relied on photographs depicting the condition of the premises, though the Defendant challenged their evidential value as the photographs were undated, a fact confirmed by SP4.

The Plaintiff’s evidence showed that the repair works performed were consistent with prior notices issued to the Defendant. Documentation established that the Plaintiff had properly notified the Defendant of its obligation to return the premises in good and habitable condition, yet the Defendant did not undertake any repairs before handing over vacant possession.

On the question of repair dates, the Court accepted SP3’s testimony that the timing of the repairs was verified through contractor records, including roof-leak repairs on 7 April 2021, corroborated by the contractor’s claims. These documents were deemed more reliable than the absence of dates on the photographs.

SP3 provided consistent and detailed testimony regarding the location, nature of the damage, and repairs undertaken. This evidence was not materially challenged during cross-examination, and the Court was satisfied that the repairs shown in the photographs were executed by the Plaintiff after taking over the premises.

In these circumstances, the Court rejected the Defendant’s contention that the absence of dates on the photographs undermined the Plaintiff’s case. The documentary evidence of repair dates, supported by credible witness testimony, was sufficient to establish when the repairs were performed.

Accordingly, the Court found that the Plaintiff had proven the existence of damage at the time of takeover and that repairs were necessary to restore the premises to a habitable condition. The Defendant’s arguments regarding notice and proof of repairs were inconsistent with the evidence. Rights to the Claims of Both Parties: Plaintiff’s claims Suit No. KA-22NCvC-3-01/2022 (Suit 3)

The Court finds that the Defendant breached both the Principal Agreement (2015) and the Settlement Agreement (2021) by failing to complete the project, obtain the Certificate of Completion and Compliance, pay concession fees and utility charges, and adequately maintain the Varsity Mall. As a result, the Plaintiff was entitled to validly terminate both agreements and is likewise entitled to the damages claimed. Defendant claims in Suit No. KA-22NCvC-5-02/2022 (Suit 5)

The Defendant contends that the Plaintiff’s termination of the agreements and takeover of the New Varsity Mall were carried out in bad faith, alleging the conduct was oppressive, dishonest, and intended for unjust enrichment at the Defendant’s expense.

According to the Defendant, it is entitled to damages because the Plaintiff allegedly failed to ensure full rental of the Student Lots as required under the Principal Agreement.

The Defendant submits that, having fully financed and completed the project, the Plaintiff’s subsequent termination and takeover without compensation allowed the Plaintiff to benefit from the New Varsity Mall while the Defendant bore the losses.

The Court previously found that the student lots were properly allocated and used by students as agreed, and no evidence showed the Plaintiff failed in its obligations regarding these lots. Accordingly, the Defendant’s claim that the Plaintiff failed to ensure full rental of the Student Lots is not supported by evidence or law.

In Suit 3, the Defendant raised the Student Lots as a defence. In Suit 5, the Defendant reframed the issue as the basis for its claim for losses and damages.

The Defendant stresses that all renovation and upgrading costs were borne solely by it under the PFI arrangement as set out in Clause 4.1 of the Principal Agreement.

SME Bank financing documents were produced to show the loan was for the project. The Defendant argued that its return on investment depended completely on rental income, which was intended to service the SME Bank loan and operating costs. The alleged failure by the Plaintiff to ensure full rental of student lots, it claimed, deprived the Defendant of income and contributed to its financial difficulties and winding up.

The Defendant maintains it completed the project as required but that the Plaintiff failed to provide the contractual consideration, namely, ensuring rental of the student lots.

Central to the Defendant’s case is the allegation that the Plaintiff took over the completed Mall without paying compensation, thereby enjoying commercial benefits financed by the Defendant.

To support its claim, the Defendant relied on Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441, where the Federal Court recognised restitution for unjust enrichment even in cases of contractual breach, and held that enrichment includes not only construction costs but also planning, design, expertise and commercial value.

The Defendant further argued that its inability to collect rental income led to default on the SME Bank loan, resulting in legal action and winding up. The former shareholders continued the claim, asserting Magna had fulfilled its obligations and was entitled to compensation.

The Court noted that unjust enrichment requires proof of: enrichment of the Plaintiff; enrichment at the Defendant’s expense; unjust retention of the benefit; and absence of a valid legal defence.

The Court referred to Tan Chong Industrial Equipment Sdn Bhd v Transnasional Express Sdn Bhd & Ors [2025] 3 CLJ 585, affirming that unjust enrichment cannot override or rewrite express contractual terms unless the contract is first set aside.

In this case, Clause 11.2 of the Principal Agreement expressly entitled the Plaintiff to terminate the agreement and retake possession upon the Defendant’s default. The Plaintiff followed the required procedure, issuing a Notice of Breach and allowing a remedy period before exercising the right to terminate and take over the Mall. The takeover was thus based on clear contractual authority.

Since the Plaintiff acted in accordance with the contract, the element of “unjust retention of benefit” was not met.

The Court found Dream Property (supra) distinguishable, as that case involved restitution in the absence of specific contractual provisions on termination. Here, the parties had agreed to the rights and consequences under Clause 11.2.

The Defendant also failed to prove the quantum of loss allegedly suffered from the termination and takeover.

The Court further held that the SME Bank loan was an internal decision of the Defendant. Clause 4.1 made clear that project financing was solely the Defendant’s responsibility. SD4 confirmed that the loan had no connection to the Plaintiff. Any financial consequences from the loan could not be attributed to the Plaintiff.

The SME Bank loan, therefore, had no relevance to the Plaintiff’s contractual obligations, and the Defendant’s attempt to link the loan to the Plaintiff was without basis.

After considering all evidence and legal principles, the Court concluded that the Defendant failed to prove unjust enrichment. The Plaintiff acted within its contractual rights, and no restitution or compensation is due. The Defendant’s claim is dismissed.

In the upshot the Plaintiff's claims in KA-22NCvC-3-01/2022 is allowed and the Defendant claim in case no KA-22NCvC-5-02/2022 is dismissed.

Accordingly, in the case of KA-22NCvC-3-01/2022 it is hereby ordered that: a) that the Agreement for Renovation, Upgrading, Maintenance and Management of the Existing Varsity Mall Complex via Design and Build under the Private Finance Initiative (PFI) dated 21.5.2015 between the Plaintiff and Defendant was validly terminated by the Plaintiff consequent to the Defendant's breach of that contract; b) that the Settlement Agreement dated 12.7.2021 between the Plaintiff and Defendant was validly terminated by the Plaintiff consequent to the Defendant's breach of that contract; c) that effective from 1.10.2021 the Defendant no longer has the right to operate and/or in any manner manage the New Varsity Mall located within the Plaintiff's campus in Sintok, Kedah (hereinafter referred to as "the said New Varsity Mall"); d) that effective from 1.10.2021 the Defendant no longer has the right to collect any rent and/or any other money from the tenants of lots or stalls in the said New Varsity Mall; e) that effective from 1.10.2021 the Plaintiff has the right to enter and retake full possession as well as operate and manage the said New Varsity Mall together with all fixtures and fittings therein and all relevant infrastructure either by itself and/or through its agent and/or contractor; f) that effective from 1.10.2021 the Plaintiff has the right to collect and take all rent and/or other monies from the tenants of lots or stalls in the said New Varsity Mall; g) that the Defendant must, immediately and not later than fourteen (14) days from the date of service of this Judgment upon it, vacate and hand over to the Plaintiff vacant possession of the Defendant's management office in the said New Varsity Mall together with other areas in the said New Varsity Mall used by the Defendant for the purpose of managing the said New Varsity Mall in good and perfect condition; h) that the Plaintiff may enter and retake vacant possession of the Defendant's management office in the said New Varsity Mall together with other areas in the said New Varsity Mall used by the Defendant for the purpose of managing the said New Varsity Mall after the expiry of fourteen (14) days from the date of service of this Judgment upon the Defendant; i) that the Defendant must, immediately and not later than fourteen (14) days from the date of service of this Judgment upon the Defendant, hand over to the Plaintiff all information, correspondence, agreements and other documents relating to and/or required for the purpose of operating and/or managing the said New Varsity Mall; j) that the Plaintiff may enter the Defendant's management office in the said New Varsity Mall together with other areas in the said New Varsity Mall used by the Defendant for the purpose of managing the said New Varsity Mall after the expiry of fourteen

days from the date of service of this Judgment upon the Defendant and take all information, correspondence, agreements and other documents relating to and/or required for the purpose of operating and/or managing the said New Varsity Mall; k) that the Defendant must, immediately and not later than fourteen (14) days from the date of service of this Judgment upon it, hand over to the Plaintiff all deposit monies that have been collected by the Defendant from the tenants of shop lots/stalls in the said New Varsity Mall; l) an order that the Plaintiff may take action to clean, repair and restore the said New Varsity Mall to good and perfect condition as ought to have been done by the Defendant under the terms of the said Principal Agreement and the Defendant must pay to the Plaintiff all costs and expenses incurred by the Plaintiff for that purpose; m) the sum of RM226,500.00 is to be paid by the Defendant to the Plaintiff as LAD damages; n) the sum of RM247,700.00 is to be paid by the Defendant to the Plaintiff for arrears of concession payments and other payments; o) the sum of RM18,300.00 is to be paid by the Defendant to the Plaintiff for arrears of sewerage charges; p) the sum of RM1,921,903.05 is to be paid by the Defendant to the Plaintiff for arrears of utility bills; q) the sum of RM58,181.50 is to be paid by the Defendant to the Plaintiff for costs of repair and maintenance works for damage; r) costs of this action in the sum of RM80,000.00 payable by the Defendant to the Plaintiff subject to allocatur.

Further, in the case of KA-22NCvC-5-02/2022 it is hereby ordered that the Plaintiff's claim against the Defendant is dismissed with costs of RM20,000.00 subject to allocatur.

For completeness, based on the letter of undertaking by the Director of the Defendant, Magna to the Director General of Insolvency, Encik Mohd Nizam bin Morad dated 28.9.2025, the costs payable by the Magna in both these actions shall be paid by him Encik Mohd Nizam bin Morad personally. Dated: 18 June 2026 (Mohd Aimi Zaini Bin Mohd Azhar) Judicial Commissioner High Court Malaya Alor Setar Kedah Darul Aman For the Plaintiff: Kanesh Sundrum (Elavarasi Manokaran with him) Messrs. Kanesh Sundrum & Co For the Defendant: Tengku Hezrul bin Tengku Abdul (Saidina Khatijah Zaharah Khairulnisak binti Haji Mohd Noor, and Muhd Zamir Aflah bin Mohd with him) Messrs Saidina & Co.