M A L A Y S I A
IN THE HIGH COURT IN SABAH AND SARAWAK AT SIBU
SUIT NO. 21-7-2009
BETWEEN
1. KADAM ANAK EMBUYANG [WNKP 490412-13-5281]
2. GENTA ANAK SAKA [WNKP 460218-13-5299]
3. BARTHOLOMEW AJI LANYAU [WNKP 510814-13-5255]
4. RIMONG ANAK JANTAN [WNKP 490801-13-5365]
5. LAJA @ MERIS AK AUGUSTINE IGOH [WNKP 670512-13-5535]
[Suing on behalf of themselves and 163 other proprietors, occupiers, holders and claimants of Native Customary Rights (NCR) land situated at Sg. Kelimut, Kanowit District also known as Block D1 in Kanowit District].
… Plaintiffs
AND
1. PELITA HOLDINGS SDN BHD [Co. No. 182028-W]
2. SUPERINTENDENT OF LANDS & SURVEYS,
Sibu, Sarawak.
3. STATE GOVERNMENT OF SARAWAK
4. BOUSTEAD PLANTATIONS BERHAD [Co. No. 1245-M]
5. BOUSTEAD PELITA KANOWIT SDN. BHD.
[Co. No. 364761-H]
JUDGEMENT
A. INTRODUCTION
1. The Plaintiffs who brought this action for themselves as well as on behalf of those whose names are stated in the Annexure to the statement of claim are Iban by race and are natives of Sarawak.
2. The Plaintiffs have acquired native customary rights over their respective NCR Lands as stated and particularized in the map marked "M" annexed to the statement of claim [“the NCR Lands”] located at SG. Kelimut, Kanowit District also known as Block D1 of Kanowit District. The boundaries or extent of the respective said NCR Lands are as particularised in the annexure to the Principal Deed dated 14.1.2002, between the Plaintiffs and the 1st and 3rd Defendant.
3. The 1st Defendant Pelita Holdings Sdn. Bhd. (PHSB) is a company incorporated in Malaysia.
4. The 2nd Defendant is the Superintendent of Lands and Surveys, Sibu, employee of the 3rd Defendant (State Government of Sarawak), having jurisdiction over the native customary lands in question.
5. The 1st Defendant entered into a joint-venture agreement with Kuala Sidim Berhad (now known as Boustead Plantations Berhad i.e. the 4th Defendant) on 6 May 1998 to develop into an oil palm plantation on all the native customary lands.
6. The Plaintiff and the 1st Defendant and the 3rd Defendant executed a Principal Deed dated 14 January 2002 to develop the NCR Land into oil palm plantation.
7. Kanowit Oil Palm Plantation Sdn. Bhd. (now known as Boustead Pelita Kanowit Sdn. Bhd.) i.e. the 5th Defendant was incorporated as the vehicle to implement the palm oil plantation on the NCR Lands.
8. By the Summons in Chambers dated 15 March 2011, the 1st Defendant applied to add the 4th and 5th Defendants as defendants, the same was granted by the Court with consent of the parties.
9. I would like to make an observation here. It is to be noted that the map marked “M” referred to by the Plaintiff as the map indicating the NCR Lands is in fact a list marked Annexure “M” setting out the names or persons on whose behalf the Plaintiffs allegedly have brought this action.
10. There is, however, no dispute by the Defendants that the NCR Lands referred to by the Plaintiffs and the boundaries of
the respective NCR Lands are as particularised in the annexure to the Principal Deed dated 14.1.2002.
B. NATIVE CUSTOMARY RIGHT OF THE PLAINTIFFS
11. The recital of the Principal Deed states:
“WHEREAS the said land forms part of all that parcel of land which the Government has approved for development into an oil palm plantation as part of its overall scheme for development of land held currently under Native Customary Rights.”
12. Clause 2 of the Principal Deed states:
“RECOGNITION OF NATIVE CUSTOMARY RIGHT TO LAND
Upon the representations made by the NCR Owners and being satisfied that the NCR Owners have acquired Native Customary Rights to or over the said land except State land therein), the Government as agreed, subject to the terms and condition of this Principal Deed:
…..”
13. The foregoing express provisions in the Principal Deed clearly recognize the native customary rights of the plaintiffs to the NCR Lands mentioned in the Principal Deed.
C. REPRESENTATIVE ACTION
14. In paragraph 1 of the statement of claim, the Plaintiffs pleaded that they bring this action on their own behalf as well as on behalf of the names or persons stated in the Annexure to the statement of claim.
15. The Plaintiffs called only one witness, that is, the 3rd Plaintiff Bartholomew Aji Lanyau. He affirmed in his witness statement (WSPW1) that the Plaintiffs have brought this action on their own behalf as well as on behalf of 163 families whose names are stated in the Annexure of the statement of claim.
16. During cross-examination of PW1, he was referred to 34 statutory declarations contained in pages 1 to 34 of 1SDBD (1st Defendant’s Supplementary Bundle of Documents). It was put to PW1:
Q69. ………….These statutory declarations from pages 1 to 34 are signed by numerous NCR owners declaring openly that the plaintiffs including you have not been given the authority to commence this action, agree?
A No, I have my own land, not their land.
Q70 From your statement here, you want to
disassociate yourself from all these people in the statutory declaration. Agree?
17. Learned counsel for the 1st Defendant submitted that this action is not a representative action on the following grounds:
a. 1st, 2nd, 4th and 5th Plaintiffs did not come forward to testify on their purported representative capacity to commence this action. Therefore, (1) an adverse inference ought to be drawn against them under section 114(g) of the Evidence Act 1950 that this action is not a representative action as claimed and (2) the evidence of the 1st defendant is presumed to be true, consistent with the unchallenged documentary exhibits tendered. Takako Sakao v Ng Pek Yuen & Anor [2010] 1 CLJ 381 cited for support.
b. The 3rd Plaintiff (PW1) has failed to fulfill the five main criterias to constitute a representative actions as laid down in Smith & Others v Cardiff Corporations [1953] 2 All ER 1373, namely:
i. The Action must be for ‘all the members of the class’;
ii. They all had a common interest;
iii. They have a common subject matter;
iv. They all had a common grievance;
v. The relief was in its nature beneficial to them all.
c. It was submitted:
i. That PW1 failed to show that the Natives had a common grievance on the common subject matter;
ii. That the majority Natives concerned were happy and did not share PW1’s views;
iii. That PW1 had a different subject matter or grievance as he wanted more contracts for himself, which is not the case with the other natives;
iv. That the reliefs sought by PW1 would certainly harm the interest of the majority Natives concerned.
18. In my view, in a representative action, it is not necessary that all the Plaintiffs and those for whom the action is brought must attend court to testify. The plaintiffs have listed out the natives whom they are representing in the Annexure "M" annexed to the statement of claim. The Plaintiffs and those whom they are representing are the natives who have entered into the Principal Deed.
19. The 1st defendant sought to show through exhibit 1-34 1SDBD that there are NCR landowners who have not authorized the Plaintiffs to represent them. Even there is a faction among the NCR landowners who holds a dissenting view on this action, it does not, in my view, mean that the Plaintiffs cannot represent those who share the common interest and common grievance as the Plaintiffs.
20. Haidar Mohd. Noor J. (as he then was) in Jok Jau Evong & Ors v Marabong Lumber Sdn. Bhd. & Ors [1990] 2 CLJ (Rep) 2 625, in addressing the issue of representative action and the common interest test, referred to John v Rees [1969] 2 All ER 274 where Megarry J said at page 284:
“The artificial nature of the process is shown by the fact that, as Fletcher Moulton LJ, pointed out in Markl & Co. Ltd v. Knight Steamship Co Ltd [1910] 2 KB 1039, a plaintiff suing in a representative capacity does not have to obtain the consent of those whom he purports to represent, and they are not liable for costs, though by estoppels or res judicata they will be bound by the results of the case.
21. The learned judge went on to say:
“Subject to the divisions in opinion between the two factions, the plaintiffs and those they purportedly to represent, all have common interest and a common grievance and seek relief beneficial to all they proposed to represent is they are successful in their action.”
22. DW4, Senior Manager, Estate Department of Boustead Advisory and Consultancy Services and Boustead Estates Agency Sdn. Bhd., testified that there were road blockades, staged by the NCR Landowners in various estates, the most serious of which were the blockades in Kelimut and Maong estates by the Landowners, especially in 2008 and 2009. To my mind, this goes to show there is a group of NCR Landowners sharing the same grievance as PW1 and therefore having the common interest in the present proceedings.
23. In the premise, I am satisfied that this is a representative action.
D. PLAINTIFFS’ CLAIM
24. The Plaintiffs’ claim is founded on (1) negligence (2) breach of trust (3) fraudulent representation, (4) fraud and (5) illegality.
25. The Plaintiffs pleaded in paragraph 5 of the statement of claim that the Defendants and their servants or agents represented to the Plaintiffs and/or promise, and guaranteed to the Plaintiffs that in consideration the Plaintiffs assign absolutely to the 1st defendant as trustee, their respective interests, rights, shares and estate in the NCR Land, the Plaintiffs will benefit or profit through the development of the NCR Lands into an oil palm plantation; the profits or benefits to be received after four years of planting 4 years of planting oil palm on the NCR Lands.
26. The Plaintiffs pleaded in paragraph 6 of the statement of claim that 1st Defendant and/or the 3rd Defendant had failed, neglected and/pr were in breach of their trust given them by the plaintiffs as the development program of the NCR land was a total failure with no foreseeable opportunity of making money or bring benefits or profits to the plaintiffs.
27. In paragraph 7 of the statement of claim, the Plaintiffs pleaded that the Plaintiffs and/or their representative together with their advocates had attended a briefing at the District Office Kanowit, and were informed by the investor Boustead’s servants or agents that the joint-venture with the st Defendant to date has never achieve any profits so far. In fact, the joint venture in question is losing more than RM100 million.
28. The plaintiffs claimed that they have suffered loss and damages as a result of the negligence and/or breach of trust of the 1st and/or 2nd and 3rd Defendants.
29. The Plaintiffs pleaded by way of alternative, in paragraph 9 of the statement of claim that the 1st defendant and/or servants or agents of the 2nd and 3rd defendants had fraudulently misrepresented to the plaintiff that such joint venture with the 1st defendant would reap profits for the plaintiffs.
Particulars
a. Having knowledge of the fact that the said joint venture would in all likelihood will not be profitable, represented to the plaintiff’s that after four years of planting the plaintiffs will receive their shares of dividends from the joint venture. The planting of oil palm on the NCR Land started in 1996 or 1997 but to date there is no evidence that the joint venture is making money.
b. Having the knowledge that the 1st defendant is not having the status of a native under the Land Code, all the Defendants and/or their servants or agents advised the plaintiffs to sign the Agreement in order to lure the Plaintiffs to part with their right and interest in the NCR Land for the defendants’ benefits, when in fact this transaction is unlawful under the provisions of the Sarawak Land Code. (Land Code)].
c. In the middle of 209, the 1st defendant made some “dividend payment” to the plaintiffs when the joint venture in fact made no profit. The plaintiffs claim that such payment was not dividend from the profit but borrowed sum from somewhere with the intention of pacifying the plaintiffs’ anger towards the defendants.
30. In the circumstances, the plaintiffs alternatively claim that the Principal Deed dated 14 January 2002 between the plaintiffs and the 1st defendant and any other agreement pursuant to this agreement or joint venture involving the plaintiffs is/are null and void and of no legal effect viz-a-viz on ground of fraud and/or section 8 of the Land Code.
31. Hence, the Plaintiffs claim against the Defendants the following reliefs:
i. A Declaration order that the Plaintiffs had acquired and/or inherited Native title and/or Native Customary Rights (NCR) over the area as claimed by the Plaintiffs respectively referred to in the Annexure to this Statement of Claim marked as exhibit “M” hereto herein (the said NCR Lands);
ii. A Declaration that the 1st Defendant and/or 2nd and 3rd Defendants either jointly or severally had failed, neglected and/or was negligent in protecting the interests of the Plaintiffs in the said NCR Lands against the investors and/or third party who was asked to develop the said NCR Lands;
iii. A Declaration that the 1st and/or 2nd or 3rd Defendants either jointly or severally were negligent in not ensuring that the third party and/or investor did their part as investor to profitably develop the said NCR Lands as guaranteed by all the Defendants to the Plaintiffs;
iv. A Declaration that 1st and/or 2nd or 3rd Defendants either jointly or severally were in breached of the trust given them by the Plaintiffs in developing the said NCR Lands in not ensuring that the third party and/or investor did their part as investor to profitably develop the said NCR Lands as guaranteed by all the Defendants to the Plaintiffs;
v. Alternatively, a Declaration that the Plaintiffs were defrauded by the Defendants by misrepresenting to the Plaintiffs that the said venture in developing the said NCR Lands would bring the Plaintiffs profits and benefit which is a total lie;
vii. A Declaration that the in view of the breach in trust and the negligent of the Defendants vis-à-vis the Plaintiffs as aforesaid, the Principal Deed dated 14.1.2002, between the Plaintiffs and the 1st or 3rd Defendants and any other subsequent agreement pursuant thereof be deemed null and void;
viii. A Declaration order that the Plaintiffs be given back their rights over the said NCR Lands respectively and be allowed to carry on any activities on the said NCR Lands with no order as to costs to the 1st Defendant and/or any third party or investors for the development of the said NCR Lands;
ix. Alternatively, that the said the Principal Deed dated 14.1.2002, as between the Plaintiffs and the 1st Defendant is null and void and of no legal effect vis-à-vis section 8 of the Land Code (Cap.81);
x. A mandatory injunction against the 1st Defendant and/or its employees, servants and/or agents to cease operations and remove all structures and their equipments or machineries from the Plaintiffs’ said NCR Lands forthwith;
xi. Damages to be assessed by the Registrar;
xii. Exemplary damages, alternatively, aggravated damages;
xiii. Costs to be taxed unless agreed;
xiv. Any further order or relief as the thinks proper and just.
F. LEGALITY OF THE PRINCIPAL DEED
32. The first issue concerns the legality of the Principal Deed.
33. Before deliberation on this issue, it is helpful to set out the relevant provisions in the Land Code.
Section 8 of the Land Code states:
“8. Save as provided in section 9 —
(a) a person who is not a native of Sarawak may not acquire any rights or privileges whatever over any Native Area Land …
(b) any agreement, purporting to transfer or confer any such rights or privileges or which would result in such person enjoying any such right or privilege, shall be deemed to have been entered into for an illegal consideration and, in particular … any consideration which shall have been paid or furnished shall not be recoverable in any court nor shall any relief be afforded to any person claiming that any consideration promised has not been paid or furnished.
ACQUISITION OF LAND BY NON-NATIVES
9.(1) Section 8 shall not be deemed to prohibit the acquisition by any non-native of any land to which the provision of that section apply, or of any rights or interest in or over such land –
(a) to (c) – not applicable here.
(d) where such non-native has been deemed to be a native, by the Majlis Mesyuarat Kerajaan Negeri, by notification in the Gazette, in respect of any category of dealing over Native Area Land as stipulated in the notification.
34. By the clear provision of sections 8 of the Land Code, subject to section 9 of the Land Code, a non-native is prohibited from acquiring any rights or privileges over Native Area Land and any agreement purporting agreement conferring such rights or privileges as to allow a non-native enjoy such rights or privileges is deemed to have been entered for an illegal consideration.
4(1). The NCR Owners hereby jointly and severally declared that:-
(a)……..
(b) they assign absolutely to PHSB as Trustee of their
respective interests, rights, shares and estate in the
said land;
(c) whilst the Company is the registered proprietor of
the said land
(i) the NCR Owners shall have no beneficial, legal, equitable or caveatable interest in the said land or any part thereof;
(ii) the NCR Owners shall not be entitled to apply for a sub-division or partition thereof under section 25 or 129 respectively of the Code;
(iii) the NCR Owners shall not in any manner, either directly or indirectly or howsoever, interfere with or impede or disturb the use, enjoyment or
development of the said land or any part thereof by the Company.
(d) until after the expiry of the terms of sixty (60) years from the date of issue of the document of title for the said land to the Company, the NCR Owner or any of them shall not enter into any dealing, agreement over in respect of the said land or any part thereof with any other person. Any such dealing, agreement or arrangement by any of the NCR Owners shall be void and invalid, and unenforceable by the NCR Owners or any party or person claiming any interest or right under and virtue of such purported dealing, agreement or arrangement.
ii. Clause 4(2) states:
(a) The NCR Owners shall only be entitled to claim interests or rights to the said land after the Company ceases to be the registered proprietor thereof, provided that they shall not be entitled to claim any interest, right or estate to any area which, pursuant to clause 8, is required for industrial or related purposes and the market value thereof has been paid to PHSB under clause 8.4 below.
[All emphasis added by the Plaintiffs’ counsel].
40. Learned counsel for the plaintiffs submitted that under the Principal Deed, the Plaintiffs had practically lost their rights and privileges in their respective NCR Lands to either the 1st Defendant who is not a native or accorded a native title at the time of signing the Principal Deed, or to a company which is yet to be incorporated.
Status of the 1st Defendant
41. It is, in my view, an opportune juncture to consider the 1st Defendant’s status.
42. Learned State Legal Officer for the 2nd and 3rd Defendant submitted that pursuant to section 3 of the Land Custody Development Authority Ordinance (LCDA Ordinance), Land Custody Development Authority (LCDA) shall, for the purpose of the SLC, be deemed a non-native of Sarawak.
43. Learned State Legal Officer further submitted that section 12(2) of the LCDA Ordinance states:
“(1) Where a notice has been served upon the owner of any land in a Development Area under subsection (2) of section 11, the Authority may cause to be carried out or may undertake such works for the improvement or development of the land in such manner as is provided in paragraph (b), (c), (d), (e), (f) or (g) of subsection (1) of section 10.
(2) Where the Authority enters into an agreement with the owner of the land to do all such works as may be necessary to develop the land under the complete control of the Authority in accordance with any scheme relating thereto made under subsection (3) of section 11, the owner shall forthwith take all necessary steps to convey or transfer his title or rights to the land to the Authority, which shall hold the same in trust to sell the land as soon as possible after the same has been developed and to hold the proceeds of the sale in trust for the owner, after deducting therefrom all costs, charges, expenses, interests, and fees incurred by, or payable under the agreement to the Authority in respect of the development.
44. It was submitted that LCDA for all intent and purpose is the trustee for the natives who have rights to the customary land within the area declared as development area. LCDA (through the 1st Defendant) as trustee, is developing the NCR Lands for and on behalf of the Natives. In doing so, it engages non-natives to undertake the task of carrying out the development work, for and on behalf of or for the benefit of the natives, such a scheme is not illegal.
45. Recital (2) of the Joint Venture Agreement states:
“The Sarawak Government has nominated Land Custody Development Authority (hereinafter referred to as “PELITA”) AND PELITA has subsequently nominated PHSB for appointment by the NCR Owners to act as trustee for and on their behalf for the development of the said Land into an oil palm plantation.”
46. To avoid confusion, PELITA is the acronym of LCDA.
47. There is a clear fact that the 1st defendant is a Native by virtue of section 3 of the LCDA Ordinance.
48. The non-native statue of the 5th Defendant is evident in clause 3 of the Joint Venture Agreement (Exhibit D1), which states:
“PHSB shall, as soon as practicable after the incorporation of the Company, apply to the Majlis Mesyuarat Kerajaan Negeri, or the State Secretary to whim powers have been delegated vide The Delegation of Powers (Dealing in Native Area Land) Notification 1995 (Swk. L.N. 55), for a special direction pursuant to section 9(1)(d) of the Land Code, that the Company be deemed a native for all purposes pertaining to the acquisition, holding or dealing in any interest, rights or estate in the said land or any part thereof.”
49. Learned counsel for the 4th and 5th Defendant submitted that the 1st defendant is an agent of the PELITA/LCDA and by virtue thereof, it is entitled to derive the native status as conferred by section 3(2) of the LCDA Ordinance.
50. If, by virtue of the 1st Defendant being an agent of LCDA/ PELITA and therefore entitled to derive the native status enjoyed by LCDA conferred by section 3(2) of LCDA Ordinance, it begs the question as to why it is necessary for the Majlis Mesyuarat Negeri Kerajaan to subsequently issue a Direction under section 9(1) of the SLC i.e. Exhibit D2 to confer native status to the 1st Defendant.
51. In my view, when the PELITA/LCDA, as trustee of the NCR Landowners, engaged the 1st Defendant (a non-native) as its agent to develop the native customary land into an oil palm plantation, it has merely created a relationship of principal and agency between the two entities. It does not in any way change the character of 1st Defendant as a non-native. The 1st Defendant remains as a non-native and that is why the Majlis Mesyuarat Negeri Sarawak had to subsequently issue a Direction under section 9(1) of the SLC i.e. D2 to confer natives status on the 1st Defendant.
52. It is to be noted that Pursuant to the Land (Dealing in Native Area Land)(Authorisation)(No. 7) Direction 2011 made under section 9(1)(d) of the SLC, in exercise of the power conferred upon the Majlis Mesyuarat Kerajaan Negeri gazetted in Vol. LXVI No. 12 on 1st April, 2011, the 5th Defendant has been declared and deemed to be Native of Sarawak for the purposes of the SLC (Exhibit D2). The same shall be deemed to have come into force on the 1st December 1995.
53. Further, pursuant to the Land (Dealing in Native Area Land)(Authorisation)(No. 21) Direction 2011 made under section 9(1)(d) of the SLC, in exercise of the power conferred upon the Majlis Mesyuarat Kerajaan Negeri, gazetted in Vol. LXII No. 31 on 11 October 2007, Boustead Pelita Kanowit Sdn. Bhd. i.e. the 1st Defendant has been declared and deemed to be Native of Sarawak for the purposes of the SLC (Exhibit D3). The same shall be deemed to have come into force on the 6th day of May, 1998.
In my judgement, the Principal Deed and the subsequent Joint Venture Agreement have contravened section 8 of the Land Code. The making of these agreements are prohibited by statutes expressly and falls under paragraph (a) of the Contracts Act 1950. Since it does not fall into paragraph (e) of the Contracts Act, on the authority of Lori case, supra, it is not necessary to consider the question of public policy.
The question to be asked is this: Did the Plaintiffs benefit from the oil palm plantation project? The planting of the oil palm started in 1997 and the NCR landowners received their first divided of RM1.393 million in 2008, RM1.678 million in 2009, followed by RM1.699 million in 2010 and RM3.4 million for 2011,
101. The breakdowns of the dividends are:
Year 2008, RM100 per hectare for all estates, except for Kelimut estate, which is RM250 per hectare.
Year 2009, RM150.00 per hectare.
Year 2010, RM150 per hectare.
Year 2011, RM300 per hectare.
102. The Plaintiffs (including PW1) accepted the dividends.
103. A divided of RM150 per hectare after almost 14 years (from the time the 5th Defendant started planting on the native customary land in 1997) or almost 7 years from the execution of the Principal Deed, is, by any standard a pittance.
104. In Masa Nangkai, supra, Linton Albert J. remarked , “It matters not that the landowners have been paid some dubious “up front” money of RM120.00 per hectare a miserly sum considering the fact that oil palm planted on their land had been harvested for more than three years.”
105. In our case, the NCR Landowners only received a misery sum of RM100-RM250 per hectare since 1997.
106. The 5th Defendant tried to paint a picture that the yield improved and profit improved, hence the 5th Defendant was able to give divided from 2009-2000.
107. It is curious as to how the 5th Defendant who could not make enough profit to give out divided in previous years was able to make profit and give out dividend at the period where there was blockades disrupting the operation and productivity of the oil palm.
108. DW3 Chin Sup Chien, the Chief Financial Officer of Boustead Estate Agency Sdn. Bhd., told the court under cross-examination that the 4th and 5th Defendants were not in the financial position to pay divided in September 2009 or any time before 2009.
According to him, for the company to pay dividend, it must achieve profit. If it does not achieve profit, it cannot pay divided. [Q & A 281-285 of the notes of proceedings]. According to DW3, the 4th and 5th Defendants would be able to break even in 2024.
109. I believe PW1 who testified that he attended a meeting during which the 4th and 5th Defendants’ agent informed that the joint venture with the 1st defendant had until then not achieved any profit. It had in fact made a loss of more than RM100 million.
110. I believe PW1 who said that the Plaintiffs received their first dividend because there was blockades and complaints. I also believe that but for these complaints the NCR Landowners might not even received any dividend.
111. So, it is not true that the Plaintiffs have enriched themselves through the giving up of their native customary land for development into the oil palm plantation project.
112. In alleging unjust enrichment, the 4th and 5th Defendants have forgotten that they have enjoyed the rights and privileges over the native customary land over all these years without paying anything to the Plaintiffs until 2009. Just think, they have been using the Plaintiffs’ NCR Land all the while from 1997 until 2007 without paying a single cent for the use of the lands.
113. For the reasons stated aforesaid, I find no merits in the contention of unjust enrichment.
J. SECTION 66 OF THE CONTRACTS ACT
114. Learned counsel for the 4th and 5th Defendant further contended that if the Principal Deed were to be held illegal in any way, and the Plaintiffs be given any of the remedies sought, the 4th Defendant are still entitled to, as pleaded therefore in the counterclaim, restitution as is provided for in Section 66 of the Contracts Act, citing Lori (M) Bhd (Interim Receiver) V Arab-Malaysian Finance Bhd [1999] 3 MLJ 81.
115. Suffice it to say that section 66 is not available to the 4th and 5th Defendant because they are not the parties to the Principal Deed.
K. WHETHER THE 1ST AND/OR 3RD DEFENDANTS HAD FAILED, NEGLECTED AND WERE IN BREACH OF THEIR DUTIES AS TRUESTEES OF THE PLAINTIFFS
116. The Plaintiffs pleaded in paragraph 6 of the statement of claim thus:
“6. The 1st Defendant and/or the 3rd Defendant had failed, neglected (sic) and/or were in breached of their trust given them by the Plaintiffs as the development of the said native customary lands was a total failure with no foreseeable opportunity of making money or bring benefits or profits to the Plaintiffs.”
127. PW1 said that this disclosure shocked the Plaintiffs as by then it was the 8th year after the planting of the oil palm and there is still certainty of when the investor could break even in their business.
128. Such fear was confirmed by the financial controller of the 5th Defendant, DW3 who said in his witness statement marked WSDW3:
Q11. What was the position of the 5th Defendant, financially by the end of 2007?
A11. Shareholders’ equity of the 5th Defendant was a deficit of RM160,088,955 because accumulated losses of RM194,648,955 had exceeded ordinary share capital of RM34,560,000 (refer to page 9 of the audited financial statements 31 December 2008). By the end of year 2007, amount owing to the 4th Defendant stood at RM380,110,746, comprising advances of about RM194,334,065 and unpaid interest of about RM185,776,681. The loans carried interest at 8% per annum as of that date. The 5th Defendant’s operations were financed solely by the 4th defendant.”
129. DW3 testified in cross-examination:
Q281 Can you tell the court by the month of September
2009, the project related to this claim as far as the 4th and 5th Defendants was concerned was still losing?
A Yes. But on the operation side, the estate was okay
Q282 What do you mean by that?
A That means, if you exclude the interest, costs, and administrative side, it is okay.
Q283 Would the 4th and 5th defendants at that stage be able to pay dividend to the participant of the project in 2009?
A For the company to pay dividend, the company must achieve profit. If it does not achieve profit, it cannot pay dividend.
Q284 I am asking were the 4th and 5th Defendants in the position to pay dividend in September 2009?
A No.
Q285 Were they in the position to pay any dividend at any time before 2009?
A From the company financial position, it was not possible to pay dividend.
130. DW3’s foregoing testimony is in respect of the month of September 2009, and the meeting in Kanowit attended by PW1 was in March 2009. DW3’s evidence supports what PW1 and the Plaintiffs had been told in the meeting.
131. PW1 said that the agents or servants of the 1st, 2nd or 3rd Defendant had promised them to be paid their first dividend after four years of planting the oil palm. He named them as Slvester Entri Anak Maran, Mr Yap of Boustead and Steven Sunny.
132. Notwithstanding that the Plaintiffs did not call the named Sylvester Entri Anak Maran, Mr Yap of Boustead and Steven Sunny, I believe it is highly probable that such representation had in fact been made. I say so for the following reasons.
133. It is pertinent to consider the objective of the development of NCR lands into oil palm plantation. The objective is best described in the following words penned by YAB Datuk Patinggi Tan Sri (DR.) Haji Abdul Taib Mahmud, Chief Minister of Sarawak, in his “Perutusan” on the program book for the launching of the oil palm plantation project in Kanawit found on page 4 Exhibit PBD, which states, “Rancangan Kerajaan untuk memajukan Tanah NCL adalah merupakan rancangan yang terbaik untuk meletakkan taraf hidup Bumiputra di luar Bandar diatas garis kemiskinan…”
134. Given that the concept of developing NCR land into oil palm plantation was new to the native landowners in the mid-90s, it is fair to say that the NCR landowners would need to be convinced to participate in the development scheme. Since the objective of the NCR Lands Development is to raise the living standard of the rural indigenous folks, it is reasonably expected of them for wanting to know what it was in it for them in terms of monetary benefit and how soon they would enjoy these benefits. Hence, it is highly probable that the representatives of the 1st Defendant and the 3rd Defendants would have represented to the NCR Landowners that they would receive profit after four years. It is unlikely for them to tell the NCR Landowners that they have to wait for the company to make profit before they could enjoy dividend.
135. PW1 testified that the NCR landowners received the first dividend in 2008 in a paltry sum between RM120-250 per hectare.
136. DW3 said in cross-examination that the 4th and 5th Defendant would be able to break even in Year 2024.
137. The 4th and 5th Defendants sought to adduce evidence through DW4, to show the reasons that have affected the profitability of the project, such factors include reduced available development area (only 12,639 hectares out of 14,129 hectares are available for development), challenges such as NCR landowners are not focused on the development of the project, NCR landowners are unfamiliar with agricultural practices, NCR landowners demanded wages higher than the industry practice, land disputes/ownership amongst landowners, landowners are resistant to outside or foreign workers, unreasonable demands on the management of the 5th Defendant and blockades.
138. Whatever the reasons that may be, the fact remains that the Plaintiffs did not receive their divided after four years of planting and they received their first divided only after eight years or so from the Principal Deed, only after the blockades and suing the 1st to 3rd Defendants in court. The divided thus received was not from the profit as evident in DW3’s testimony, only paid to pacify the Plaintiffs’ anger towards the Defendants. Further, in the meantime before the Plaintiffs could receive their dividends, the Plaintiffs had no income whatsoever from the NCR Lands.
139. In my judgement, the Plaintiffs have proved on the balance of probabilities that 1st and 3rd defendants had failed, neglected and/or in breach of the trust given to them by the Plaintiffs. The 3rd Defendant having been involved right from the start in the development program in encouraging the natives to participate in the development program as shown in Exhibit 1 to 13 of PBD should ensure that the interest of the Plaintiffs are protected from beginning to end, instead of leaving everything in the land of the 1st Defendant. The 1st and 3rd Defendant have breached their trust duty as the development program on the NCR Land was a total failure with no foreseeable opportunity of bring benefits or profit to the Plaintiffs.
L. WHETHER THE SERVANTS OR AGENTS OF THE 1ST, 2ND AND 3RD DEFENDANTS HAD FRAUDULENTLY MISREPRESENTED TO THE
PLAINTIFFS THAT THE JOINT VENTURE WITH THE 1ST DEFENDANT WOULD REAP PROFITS FOR THE PLAINTIFFS?
140. Having considered the submission and the evidence adduced by the Plaintiff in this connection, suffice it to say that the Plaintiffs have not proved on beyond reasonable doubt the fraudulent misrepresentation.
N. BAD MOTIVE
143. Learned counsel for the 1st defendant submits that PW1 reneged and breached the Principal Deed due to greed of wanting more profit, because he knows now that NCR Land had been planted with oil palm trees, millions have been invested, so he alleged illegality, negligence, fraudulent misrepresentation because he wanted to cancel the Principal Deed. See, Q & A 76, 69, 70.
144. Learned counsel for the 4th and 5th Defendants submits that the credibility of PW1 has been compromised to a very large extent as the ravings of a bitter man, whose anger and bitterness had resulted from his failure to obtain contracts from the Defendant. The failure, or the inability rather, to call other witness to support his case lends credence to the proposition that PW1 is acting alone herein in this action.
145. In my impression, PW1 is an honest witness who admitted that the focus of the claim is the profit, which he said was too little. He readily admitted he tried to get contract from the 5th Defendant and was unhappy that they gave them to Semananjung people instead. He also admitted that the attitude of the NCR Land owners by not allowing outside workers or Indonesian workers to enter their land had caused problems for the estate.
146. In my judgement, the anger of the PW1 is understandable as he has felt let down on the promise that the NCR landowners would be paid the first dividend four years after the planting of the oil palm had commenced. Even then the dividend he finally got to receive was a pittance. Instead of having received the reasonable profit, he has his rights and privileges in his NCR Land being reduced to naught for a paltry sum and not having opportunity to obtain contracts in the estate. In my opinion, he does not stand alone in having this feelings judging from the blockades that took place in 2008 and 2009.
147. In my judgement, the Plaintiffs did not bring this action with bad motive.
COUNTER CLAIM OF 4th and 5th DEFENDANTS
148. In the light of what has been said under Paragraph J “Section 66 of the Contracts Act”, I dismiss the counterclaim of the 4th and 5th Defendants.
CONCLUSION
149. In conclusion, the court finds as follows:
a. That it is admitted fact that the Plaintiffs have NCR over the land described in the Principal Deed (the said NCR Land”).
b. that the Plaintiffs have proven on the balance of probabilities that the Principal Deed and the JV Agreement are illegal and therefore null and void. The retrospective effect of D2 and D3 only regularise the capacity of the 1st and 5th Defendants but do not validate the illegality produced by breach of section 8 of the SLC. As such, estoppel is not available as a sword to the Defendants.
c. that the Plaintiffs have failed to prove beyond reasonable doubt the fraudulent misrepresentation.
d. that the Plaintiffs have proved on the balance of probabilies that the 1st and the 3rd Defendants have breached or negligent or failed in their fiduciary duty to the Plaintiffs.
e. As the defence of Limitation is not pleaded and the Defendant cannot rely on it to defeat the Plaintiffs’ claim.
150. Accordingly, the following orders are made:
a. A Declaration that the 1st and 3rd Defendants either jointly or severally were negligent in not ensuring that the third party and/or investor did their part as investor to profitably develop the said NCR Lands as guaranteed by all the Defendants to the Plaintiffs;
b. A Declaration that in view of the breach in trust of the 1st and 3rd Defendants vis-à-vis the Plaintiffs as aforesaid, the
Principal Deed dated 14.1.2002, between the Plaintiffs and the 1st and 3rd Defendants and any agreement in connection thereto are deemed null and void;
c. A Declaration order that the Plaintiffs be given back their rights over the said NCR Lands respectively and be allowed to carry on any activities on the said NCR Lands with no order as to costs to the 1st Defendant and/or any third party or investors for the development of the said NCR Lands;
d. the Principal Deed dated 14.1.2002, as between the Plaintiffs and the 1st Defendant is null and void and of no legal effect vis-à-vis section 8 of the Land Code (Cap.81);
e. A mandatory injunction against the 1st Defendant and/or its employees, servants and/or agents to cease operations and remove all structures and their equipments or machineries from the Plaintiffs’ said NCR Lands within 15 days hereof.
….…….…………………
DATUK YEW JEN KIE, J.
Dated the 30th day of April, 2012.
For Plaintiff: Mr. Baru Bian
Messrs. Baru Bian & Co. Advocates
No.6, 2nd Floor, Lot 5430,
Block G, RH Plaza,
Jalan Lapangan Terbang,
93350 Kuching.
For 1st Defendant: Mr. Shankar Ram
Messrs. Thomas Shankar Ram & Co. Advocates
1st Floor, Lot 355,
Section 50, Jalan Rumbia,
93100 Kuching.
For 2nd & 3rd Defendants: Mr. Mcwillyn Jiok
Sarawak State Attorney-General’s
Chambers
Tingkat 15 & 16,
Wisma Bapa Malaysia,
Petra Jaya,
93502 Kuching.
For 4th & 5th Defendants: Mr. Leslie Entigar Linton
Messrs Battenberg & Talma Advocates
No. 9, 1st & 2nd Floor,
Law Gek Soon Road,
97000 Bintulu.
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