21-7-2009 [kadam anak embuyang & 4 others vs. pelita holdings sdn. bhd. & 4 others]
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CASE NO: 21-7-2009 (Kadam Anak Embuyang & 3 others vs. Pelita Holdings Sdn. Bhd. & 4 others)
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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 themselvesand 163 other proprietors,occupiers, holders and claimantsof 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]
Defendants
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JUDGEMENT
A. INTRODUCTION
1. The Plaintiffs who brought this action for themselves as well ason 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 theirrespective 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 orextent 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 acompany incorporated in Malaysia.
4. The 2nd Defendant is the Superintendent of Lands andSurveys, Sibu, employee of the 3rd Defendant (State
Government of Sarawak), having jurisdiction over the native
customary lands in question.
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5. The 1st Defendant entered into a joint-venture agreementwith 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 Defendantexecuted 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 asBoustead 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 1stDefendant 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 notedthat 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 theNCR Lands referred to by the Plaintiffs and the boundaries of
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the respective NCR Lands are as particularised in the
annexure to the Principal Deed dated 14.1.2002.
B. NATIVE CUSTOMARY RIGHT OF THE PLAINTIFFS11. 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 clearlyrecognize the native customary rights of the plaintiffs to the
NCR Lands mentioned in the Principal Deed.
C. REPRESENTATIVE ACTION
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14. In paragraph 1 of the statement of claim, the Plaintiffspleaded 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 PlaintiffBartholomew 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 34statutory declarations contained in pages 1 to 34 of 1SDBD
(1st Defendants 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?
A No, Iban still sleeping because they dont know. If like me I
know
.
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17. Learned counsel for the 1st Defendant submitted that thisaction is not a representative action on the following
grounds:
a.1st, 2nd, 4th and 5th Plaintiffs did not come forward to testifyon 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 maincriterias 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;
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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 anddid not share PW1s views;
iii.That PW1 had a different subject matter or grievanceas he wanted more contracts for himself, which is notthe case with the other natives;
iv.That the reliefs sought by PW1 would certainly harm theinterest of the majority Natives concerned.
18. In my view, in a representative action, it is not necessary thatall 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 1SDBDthat 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
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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 BousteadAdvisory 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
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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 representativeaction.
D. PLAINTIFFS CLAIM24. 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 ofclaim 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.
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26. The Plaintiffs pleaded in paragraph 6 of the statement ofclaim 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 Plaintiffspleaded 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
Bousteads 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 anddamages 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 9of 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.
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Particulars
a.Having knowledge of the fact that the said joint venturewould in all likelihood will not be profitable, represented to
the plaintiffs 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 nothaving 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 isunlawful under the provisions of the Sarawak Land Code.
(Land Code)].
c. In the middle of 209, the 1st defendant made somedividend 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.
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30. In the circumstances, the plaintiffs alternatively claim thatthe 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 thefollowing 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 saidNCR 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 Defendantseither jointly or severally were negligent in not ensuring
that the third party and/or investor did their part as
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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 eitherjointly 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 weredefrauded 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--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
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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--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.
E. ISSUES TO BE TRIED(i) Whether the said Principal Deed dated 14.1.2002, as
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between the Plaintiffs and the 1st Defendant is null and
void and of no legal effect vis--vis section 8 of the
Sarawak Land Code (the Land Code)?
(ii) If the Principle Deed is illegal, whether public policeneed to be considered.
(iii) Whether the Plaintiffs are estopped from resiling fromthe Principal Deed and the subsequent Joint Venture
Agreement?
(iv) Whether the principle of unjust enrichment bars thePlaintiffs from being unjustly enriched?
(v) Whether the 4th Defendant is entitled to restitutionunder section 66 of the Contracts Act 1950.
(vi) Whether the 1st and/or 3rd Defendants had failed,neglected and were in breach of their duties as trustees
of the Plaintiffs.
(vii) Whether the servants or agents of the 1st, 2nd and 3rddefendants had fraudulently misrepresented to the
plaintiffs that the joint venture with the 1st defendant
would reap profits for the plaintiffs?
(viii) Whether the Plaintiffs claim is statute-barred?
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(ix) Whether the Plaintiffs have bad motive?
F. LEGALITY OF THE PRINCIPAL DEED32. The first issue concerns the legality of the Principal Deed.
33. Before deliberation on this issue, it is helpful to set out therelevant 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 orconfer 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.
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(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 stipulatedin the notification.
34. By the clear provision of sections 8 of the Land Code, subjectto 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.
35. In Pawa Ajah v Chung Kok Chinag & Anor [2002] 8 CLJ 752(HC), Nyanau anak Bunya ('Nyanau') was the registered
proprietor of a piece of land classified as Native Area Land in
Kanowit, Sarawak ('the land'). In 1991 Nyanau created a
power of attorney in respect of the land in favour of the first
defendant, a non-native, authorizing the latter to deal with
the land. Thereafter, the first defendant sold the land to the
second defendant and executed a memorandum of
transfer in respect thereof. Following Nyanau's death in 1998,
the plaintiff, widow and administratrix of Nyanau's estate,
applied for declarations that the power of attorney and the
unregistered memorandum of transfer were null and void,
having contravened s. 8 of the Sarawak Land Code ('the
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Code') as well as section 2 and 24 of the Contracts Act 1950.
36. In determining the issue whether the power of attorney hadbeen entered for an illegal consideration and was hence
invalid, the learned Judge Clement Skinner J. (now JCA)
said:
Reverting to the facts of our case, it is very evident that those
rights which are comprised in the usual ownership of the said
land viz. the unrestricted right to sell the said land, the right to
rent out or lease the said land, the right to charge or
mortgage or raise a loan on security of the said land, the right
to convert the title of the said land or to subdivide and
surrender it, have been acquired or gained or obtained or
passed to the first defendant - a non-native and that has
been made possible only by virtue of the power of attorney. I
would also say that the execution of the power of attorney
has resulted in those rights and privileges I have just
mentioned being enjoyed and exercised by the first
defendant. From the extent of the rights and privileges which
have been granted over the said land under the power of
attorney to the first defendant, it is very apparent that
practically every right and privilege except the nominal
ownership in the said land has been parted with by Nyanau.
Thus, although the power of attorney states that the first
defendant acts on behalf of Nyanau in exercising those rights,
in reality they had passed to and were exercised and
enjoyed by the first defendant. The power of attorney was, in
my view, a colourable devise entered into to facilitate an
evasion of the Code and in fact deemed to be entered into
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for an illegal consideration under s. 8(b) of the Code.
37. In a recent case of Masa Nangkai & Ors v. Lembaga
Pembangunan Dan Lindungan Tanah & Ors [2011] 1 LNS 145
(HC) , the Court, upon examining the principal deed and
joint venture agreement, found that they were in violation of
section 8 of SLC and held that the same to be null and void.
The learned Judge Linton Albert J. (now JCA)said:
The Joint Venture Agreement was also in contravention of
Section 8 of the Land Code because neither TASB nor
TETANGGA had been declared a native at the time of the
Joint Venture Agreement and it did not matter that
TETANGGA was subsequently declared a native because it is
a principle of antiquity that things invalid from the beginning
cannot be made valid by a subsequent act. Section 8(a) of
the Land Code provides that 'a person who is not a native of
Sarawak may not acquire any rights or privileges whatever
over .... native customary land ....' The parasitic role of PHSB,
which had nothing to begin with has relegated the
landowners into absolute obscurity under the Principal Deed
and as the landowners are total strangers to the Joint Venture
Agreement, the Defendants cannot be heard to say that
TASB and TETANGGA had not acquired rights and privileges in
the native customary rights land that they have undertaken
to develop into an oil palm plantation: How else could DW22
whose sole interest was to do business, be attracted unless
TASB and TETANGGA had rights and privileges over the native
customary rights land which the latter would turn into an oil
palm plantation under the joint venture agreement. In
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CHUNG KHIAW BANK LTD v. HOTEL RASA SAYANG SDN BHD &
ANOR [1990] 1 CLJ 57 (Rep); [1990] 1 CLJ 675; [1990] 1 MLJ 361
Hashim Yeop A Sani CJ (Malaya) delivering the judgment of
the Supreme Court said:
"Thus, in our view, it may be stated as a general principle that
a contract the making of which is prohibited by statute
expressly or by implication, shall be void and unenforceable
unless the statute itself saves the contract or there are
contrary intentions which can reasonably be read from the
language of the statute itself".
38. On the strength of the two authorities mentioned above,
learned counsel for the Plaintiff contended that the Principal
Deed between the 1st Defendant, the NCR landowners and
the 3rd Defendant is illegal. This is because the 1st Defendant
is not a native and the intention of the Principal Deed is for
the 1st Defendant to acquire the rights or privileges in the
NCR Lands from the very beginning for a period of 60 years.
To press home the arguments, references are made to the
following provisions in the Principal Deed.
39. Clause 2 (a) & (b) of the Principal Deed states:
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 conditions of
this Principal Deed:-
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(a) to issue at the request of the NCR Owners, a registrabledocument of title for the said land in favour of the
Company;
(b) (c) that the term for the document of title shall be sixty (60)
years from date of registration thereof,
i. Clause 4(1) (b) (c) (i) (ii) (iii) (d) of the Principal Deed states:
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 asub-division or partition thereof under section 25 or
129 respectively of the Code;
(iii) the NCR Owners shall not in any manner, eitherdirectly or indirectly or howsoever, interfere with or
impede or disturb the use, enjoyment or
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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 thedate 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 orrights 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 1 st
Defendant who is not a native or accorded a native title at
the time of signing the Principal Deed, or to a company
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which is yet to be incorporated.
Status of the 1st Defendant
41. It is, in my view, an opportune juncture to consider the 1st
Defendants 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 anyland 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
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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 thetrustee 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.
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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
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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 beendeclared 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
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the 6th day of May, 1998.
Is the Principal Deed a Conditional agreement?
54. It is the common stance of all the five Defendants that the
Principal Deed is not illegal. They contended that the
Principal Deed is a conditional agreement conditional upon
the granting of native status to the 1st and 5th Defendants,
citing Penguasa (Jabatan Tanah & Survei, Bintulu) & Ors vAmit bin Salleh & Ors [2008] 4 MLJ 567 (CA) for support.
55. It was submitted that the relevant approvals were
subsequently given as evidenced by Exhibit D2 and Exhibit
D3.
56. In Amit Salleh case, the respondent (Natives) and Bumisar
entered into a joint venture agreement to develop the land
(a native communal reserve) for agriculture purpose.
Pursuant to joint venture agreement, a joint venture
company Bumisar Jaya was formed. Amongst the terms of
the joint venture agreement were that Bumisar Jaya would
submit a proposal to plant oil palm and other crops on the
land and the respondent would apply to the authorities to
convert the land from communal reserve land to mixed zone
land for at least 60 years. Pending the approval of the
various requests, the respondent with the help of Bumisar
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Jaya planted teak and setang trees on the land. The parties
terminated the JVA by mutual agreement. Then cessation
order was issued on 7.12.1998 and the land ceased to be a
native communal reserve. The Respondent commenced
action for special damage being value of the loss of the
trees and the deprivation of their customary rights, and
general damages.
57. The High Court held that although the joint venture
agreement, which sought to transfer rights or privileges over
native area land to a non-native company, was void for
illegality, the respondents were not attempting to recover
the consideration from the JV but damages from the loss of
the trees planted on the land that they were entitled to be
compensated for the loss of their communal rights as well asfor the crops.
58. At the appeal, the Court of Appeal posed this question: Is
the JV Agreement illegal? In answer thereto, it said:
[15] In order to answer this, one must examine the contents of the
JV Agreement against the provision of the law alleged to be
contravened.
[16] The recital and the operative part of the JV Agreement reveal
that the objective of the parties was to enter into a business venture
by setting up Bumisar Jaya to develop the said land for agricultural
purposes. The shares holdings in this joint venture company were in
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the proportion as disclosed. Under cl. 2 of this agreement, Bumisar
Jaya was to apply to the authorities concerned "for plantation of oil
palms and for other agricultural purposes and shall commence and
proceed with the plantation works on approval of the said
Proposals". And in cl. 3, it is stipulated that "The Development
Committee (respondents) shall apply to the authorities concerned
for the alienation or transfer of the said land to, the Joint Venture
Company (Bumisar Jaya Sdn Bhd) and for conversion of the said
land from Native Communal Reserve into Mixed Zone Land for a
term of at least sixty (60) years".
59. The Court of Appeal went on to say:
[18] Having examined these principal terms of the JV Agreement, I am
of the opinion that they do not contravene this provision of the Code.
The reason is simply this: the JV Agreement was a conditional
agreement. It was conditional upon approvals from the authorities for
the planting of oil palm and other agricultural products on the said
land. Further, it was conditional upon the approval by the authorities
for alienation and conversion the said land into a Mixed Zone Land
before it could be transferred to Bumisar Jaya. This agreement
conferred no right or privilege on Bumisar Jaya to deal with the said
land until these pre-conditions were met. When an agreement containsterms that require compliance with statutory provisions then such
agreement cannot be void for illegality. The Federal Court case ofFoo
Say Lee v. Ooi Heng Wai [1968] 1 LNS 38supports this. There, the plaintiff
had entered into an agreement with the defendant to purchase the
defendant's Malay Reserve land in Kelantan. The agreement stipulates
that the sale is subject to the approval of the Kelantan State
Government and Ruler in Council. In declaring the agreement is not
http://www.cljlaw.com/membersentry/headnoteresult.asp?LNS_1968_1_38;http://www.cljlaw.com/membersentry/headnoteresult.asp?LNS_1968_1_38;http://www.cljlaw.com/membersentry/headnoteresult.asp?LNS_1968_1_38;http://www.cljlaw.com/membersentry/headnoteresult.asp?LNS_1968_1_38; -
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null and void for illegality the Federal Court said:
If you read section 12(i) carefully, it will be apparent that only
attempts to deal in Reservation land contrary to the provisions of theEnactment would be null and void so that though the agreement
between the two parties could be regarded as an attempt to deal in
reservation land it is not in my view, an attempt to deal in the land
contrary to the provisions of the Enactment.
[19] This approach was reaffirmed by the Federal Court in Haji Hamid
bin Ariffin & Anor v. Ahmad bin Mahmud [1976] 1 LNS 36; [1976] 2 MLJ79 where Suffian LP observed;
Be it noted that the purported sale here was an "outright" sale. I
would be inclined to consider it valid if it had been conditional and
expressed to be subject to the State Authority (1) allowing the land to
be exercised under section 4 or (2) agreeing to declare the Siamese
lady a Malay for the purposes of the Enactment under section 19, forsuch an agreement of sale does not purport to vest in a non-Malay
right or interest in Malay Reservation land and is not "contrary to the
provisions of subsection (1) of section 6"; vide Foo Say Lee v. Ooi Heng
Wai".
[20] Based on these authorities, I am of the view that the learned trial
judge has erred in concluding that the JV Agreement is void for
illegality. [Emphasis added].
60. I agree with the following observations made by the Plaintiff
in Amit Salleh case:
http://www.cljlaw.com/membersentry/headnoteresult.asp?LNS_1976_1_36;http://www.cljlaw.com/membersentry/headnoteresult.asp?LNS_1976_1_36;http://www.cljlaw.com/membersentry/headnoteresult.asp?LNS_1976_1_36;http://www.cljlaw.com/membersentry/headnoteresult.asp?LNS_1976_1_36; -
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a.That the JV Co. Bumisar Jaya shall only commencework after approval of the business proposal [para 16 of
judgment quoted above].
b.That the alienation of the land be made only after theland is changed from Native Communal Reserve to
Mixed Zone [para 16 of judgment quoted above].
c.That the natives did the planting of the trees on the saidnative land as principal, whereas the non-native
partner was only assisting in the planting [para 22 of
judgment].
d.There was no provision in the agreement, which allowsthe non-native partner to plant trees on the said land.[para 21].
e.That the non-native partner was not in occupation ofthe native land. The word "occupy" denotes "the taking
of possession for one's use" or "to hold on to possession
of something" [paras 23-26 of judgment].
61. Learned counsel for the Plaintiffs submits that the Principal
Deed in the present case reveals as follows:
a. Clause 2(a) of the Principal Deed states that from the
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very beginning the title over the said NCR land would
be issued under the JV Company which was non-
existence then and non-native.
b. Clause 2(c) of the Principal Deed states that the termfor the document of title shall be sixty (60) years from
date of registration thereof.
c. Clause 4(1)(b) of the Principal Deed states that thePlaintiffs therein jointly and severally assign absolutely to
the 1st Defendant who was then not having a native
status, as Trustee.
d. Clause 4(1)(c) of the Principal Deed states that whilstthe JV Company is the registered proprietor of the saidLand;
(i) the plaintiffs shall have no beneficial, legal,equitable or caveatable interest in the said land
or any part thereof;
(ii) the plaintiffs shall not be entitled to apply for asub-division or partition thereof under section 25 or
129 respectively of the Code;
(iii) the plaintiffs shall not in any manner, either directlyor indirectly or howsoever, interfere with or
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impede or disturb the use, enjoyment or
development of the said land or any part thereof
by the JV Co.
e. Clause 4(1)(d) of the Principal Deed states that beforethe expiry of the 60 years period the plaintiffs 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 plaintiffs shall be void and
invalid, and unenforceable by the plaintiffs or any party
or person claiming any interest or right under and virtue
of such purported dealing, agreement or arrangement.
f. Clause 4(2) of the deed provides that the NCRlandowners shall only be entitled to claim interest or
rights to the NCR Lands after the JV Company ceases
to be the registered proprietor thereof.
62. The following significant facts of this case are also observed:
a. the 1st Defendant had already signed the Joint Venture
Agreement with Kuala Sidim Berhad (KSB) (now the
4th Defendant) even before the Principal Deed was
inked with the NCR landowners to develop the NCR
Lands into oil palm plantation. Under the Joint Venture
Agreement, a JV Company is to be incorporated by
the 1st Defendant and KSB, as a vehicle to undertake
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the implementation of oil palm plantation i.e. the
Project, and the name of the JV Company shall be
Kanowit Oil Palm Plantations bhd. (now the 5th
Defendant).
b.Not only that the Joint Venture Agreement was inkedprior to the Principal Deed, according to DW4, planting
had already commenced in the 6 Estates - Kelimut in
1997, Maong in 1998, Jih in 1998, Pedai in 1998, Bawan
in 1998 and Mapai in 1999. Under Q & A13, DW4
confirmed that the planting was completed in Kelimut
in 1999, and in Maong, Jih, Pedai, Bawan and Mapai in
2001. Under cross-examination DW4 confirmed that no
other Deed or Agreement had been signed between
any of the Defendants and the NCR Owners before 14th
January 2002.
c.under Clause 1 on Definitions, Company means aCompany to be incorporated, pursuant to the terms of
the said Agreement, by PHSB (as Trustee for the NCR
Owners) and the Developer, for the commercial
development on the said land into an oil palm
plantation.
63. It seems that even before the inking of the Principal Deed,
Kanowit Oil palm plantation Sdn. Bhd. (now the 5th
Defendant) (a non-native) had already entered the NCR
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Lands and started to plant the oil palm.
64. In Masa Nangkais case, the plaintiffs claimed to be entitled
to native customary rights over the disputed area land. They
claimed various declaratory reliefs relating to their native
customary rights over land in the disputed area. The LCDA
wholly owns the Pelita Holdings Sdn. Bhd. (PHSB also the 5th
Defendant in the present case). Under the principal deed
PHSB, the State Government of Sarawak and a group of
native customary rights landowners and a joint venture
agreement of the same date between PHSB and one
Tetangga Arkab Sdn. Bhd. (TASB) (the 3rd defendant),
Tetangga Arkab Pelita (Pantu) Sdn. Bhd. (TETANGGA), a
company formed and co-owned by PHSB and TASB
undertook the development of oil palm plantation project.The Defendant denied that the plan project that had been
undertaken and established had in any way encroached on
the Plaintiffs alleged entitlement to land under native
customary rights. In addition, they contended that the
Plaintiffs were aware that the plan project was to cover
native customary rights land whose owners had given their
consent as did the 4th defendant without whose sanction
and approval the oil palm plantation project could not have
been carried out.
65. Linton Albert J. upon examining the principal deed (which
contains similar recitals 5, clause 2, clause 4, clause 10 as the
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Principal Deed in this case), the joint venture agreement
between PHSB and TASB (which contains similar recital 1, 4
and clause 2.1 of the Joint Venture Agreement in the present
case, except for the names of the parties), was led to a
finding that under the principal deed and the joint venture
agreement, the rights and privileges of the natives had been
reduced to zero. To demonstrate his points, His Lordship set
out the following aspects of the principal deed.
Firstly, PHSB was to receive and collect the benefits of the
development of the native customary rights land into an oil palm
plantation, not the landowners;
Secondly, the commercial development of the native customary
rights land into an oil palm plantation was to be carried out by a
joint venture company formed by PHSB and TASB, a company
exclusively chosen by PHSB under a joint venture agreement in
respect of which the landowners are not even a party to.
Thirdly, the native customary rights lands are immediately
amalgamated and title is to be issued in the name of the 'joint
venture' company and the landowners would have no
beneficial legal equitable or caveatable interest in the land to
be issued with title.
66. In finding that the joint venture was also in violation of section
8 of the Land Code and therefore null and void, His Lordship
said:
..the parasitic role of PHSB, which has nothing to begin with
was relegated the landowners into absolute obscurity under the
Principal Deed and as the landowners are total strangers to the
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Joint Venture Agreement, the Defendant cannot be heard to
say that TASB and TETANGGA had not acquired rights and
privileges in the native customary rights land that they have
undertaken to develop into an oil palm plantation: how else
could DW22 whose sole interest was to do business, be attracted
unless TASB and TETANGGA has rights and privileges over the
native customary rights land which the later would turn into an oil
palm plantation under the joint venture agreement.
67. Although the Plaintiffs claim in Masa Nangkais case is their
entitlement to the native customary rights over the disputed
area and they were not parties to the principal deed or joint
venture agreement, I have no hesitation to adopt the view
or comment of the learned Judge on the effect of the
principal deed and joint venture agreement on the rights
and privileges of the native over their native customary land,
which is to reduced them to zero.
68. Reading Clauses 2(a)(c), 4(1)(b)(c)(d) and 4(2) together
with the fact that the 5th Defendant had already entered
the NCR Lands to start planting the oil palm, it is vivid that
under the Principal Deed, the NCR landowners rights andprivileges have been reduced to zero as they have
assigned them absolutely to the 1st Defendant (a non-
native), who then acquired the rights and privileges over the
NCR Lands which they have undertaken to develop into an
oil palm plantation.
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69. In Pawa Ajah, supra, Clement Skinner J. in examining the
meaning of the word acquire as used under section 8 of
the Land Code, said:
Accordingly, I would interpret the word acquire in the context in
which it appears as meaning no more than to gain or obtain or
exercise rightsand privileges over Native Area Land. By sointerpreting that word, I do notthink that construction would leadto any absurdity or repugnancy or inconsistency with the rest of the
provisions of the section or of the Code.
Having said that, it is my view that the approach I should take in
resolving this issue is that adopted by the appellate court in Idris bin
Haji Mohamed Amin v. Ng Ah Siew [1935] MLJ (Vol. IV) where the
court was called upon to interpret certain provisions of the Malay
Reservation Enactment which prohibited the transfer or vesting of
any right or interest of any Malay in reservation land to a non-Malay.
In that case the court first determined the intention of the
Enactment by reading the relevant sections of the Enactment and
then examined the transaction that had been entered into
between the appellant and the respondent as a whole before
deciding whether there was an attempt to evade the provisions of
the Enactment.
70. In arriving at the finding that the rights of the Plaintiff in Pawa
Ajahs case had been acquired through the execution of
the Power of Attorney, the learned Judge said:
Reverting to the facts of our case, it is very evident that those rights
which are comprised in the usual ownership of the said land viz. the
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unrestricted rightto sell the said land, the right to rent out or leasethe said land, the right to charge or mortgage or raise a loan on
security of the said land, the right to convert the title of the said
land or to subdivide and surrender it, have been acquired or
gained or obtained or passed to the first defendant a non-native
and that has been made possible only by virtue of the power of
attorney. I would also say that the execution of the power of
attorney has resulted in those rights and privileges I have just
mentioned being enjoyed and exercised by the first defendant.
From the extent of the rights and privileges which have been
granted over the said land under the power of attorney to the first
defendant, it is very apparent that practically every right and
privilege except the nominal ownership in the said land has been
parted with by Nyanau. Thus, although the power of attorney states
that the first defendant acts on behalf of Nyanau in exercising
those rights, in reality they had passed to and were exercised and
enjoyed by the first defendant. The power of attorney was, in my
view, a colourable devise entered into to facilitate an evasion of
the Code and in fact deemed to be entered into for an illegal
consideration under s. 8(b) of the Code.
[See also, Awang Osen Awang Mat v. Norhazlena
Abdurani & Ors [2004] 7 CLJ 1]
5th Defendant was Developer For The NCR Landowners?
71. This brings me to the contention of the 4th and 5th Defendants
for whom it has been submitted that the 1st Defendant is the
trustee or agent of the NCR landowners, who is entrusted to
find non-native to develop the Lands, and the 1st Defendant
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had engaged the 5th Defendant to develop the Lands into
oil palm plantation. As such, the project is not illegal as the
5th Defendant is doing the planting on behalf of the NCR
landowners, citing Amit Sallehs case for support.
72. At first blush this argument is persuasive, but upon careful
perusal of the contents of the Principal Deed and the Joint
Venture Agreement, it is vividly clear that Amit Sallehs case
is distinguishable from the facts in this case.
73. The facts in Amit Sallehs case distinctly show that the JV
company Bumisar Jaya shall only commence work after
approval of the business proposal and that alienation of the
land be made only after the land was changed from Native
Communal Reserve to Mixed zone. There was no provision in
the agreement which allowed the non-native to plant trees
on the land. The Court of Appeal turned to the evidence
which recorded that the plaintiff planted the said trees
through Bumisar Jaya. Thus, Bumisar Jaya carried out the
task for and on behalf of the respondent who were at all
material time the principal. The non-native was not in
occupation of the Native Communal Reserve.
74. In the present case, as stated earlier, the 1st Defendant
entered into the JV Agreement with KSB (now the 4th
Defendant) even before the inking of the Principal Deed with
the NCR landowners. Further, Kanowit Oil Palm Plantation
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Sdn. Bhd. (now the 5th Defendant) had entered into the NCR
Lands and started planting the oil palm thereon well before
the execution of the Principal Deed. The facts paint a
picture not of the 5th Defendant planting oil palm trees for
the NCR landowners. Quite to the contrary, they reflect that
the 5th Defendant had already acquired the rights and
privileges over the NCR Lands for which it was incorporated
to develop into an oil palm plantation. Thus, the argument
that the 5th Defendant was developing the oil palm
plantation on behalf of the NCR Lands holds no water.
75. In the light of the reasons aforesaid, it is my finding that the
Principal Deed is not a conditional agreement as contended
by the defendants. On the contrary, the Principal Deed and
the Joint Venture Agreement have clearly stripped the NCRlandowners of their rights and privileges in the NCR Lands
and the same are bestowed upon the 5th Defendant, a non-
native, incorporated as a vehicle to implement the oil palm
plantation project. The intention of the Principal Deed and
the JV Agreement has clearly circumvented the prohibition
in section 8 of the Land Code. For this reasons, I hold that
they are illegal agreements.
Retrospective Effect Of Exhibit D2 And D3
76. It is unchallenged fact that the retrospective effect of Exhibit
D2 and D3 effectively confirmed the native status of the 1st
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Defendant from 1 December 1995 and that of the 5th
Defendant from 6 May, 1998.
77. Does the retrospective effect of Exhibit D2 and D3 validate
the illegality produced by the breach of section 8 of the SLC?
I should think not. As stated earlier, the 1st Defendant and 5th
Defendant were non-native when they acquired the right
and privileges over the NCR Landowners in contravention of
section 8 of the SLC. That was illegal. To my mind, Exhibit D2
and D3 merely regulate their status by conferring the 1st
defendant and the 5th Defendant a native status. In absence
of a validating clause to remedy and cure the actions which
have produced the illegality, the illegality produced by
breach of section 8 remains.
78. In this connection, I can do no better than to echo the
following words Linton Albert J. in Masa Nangkai, supra:
the Joint Venture Agreement was also in contravention of
section 8 of the land Code because neither TASB nor TETANGGA
had been declared a native and it did not matter that
TETANGGA was subsequently declared a native because it is a
principle of antiquity that things invalid from the beginning
cannot be made valid by a subsequent act.
G. PUBLIC POLICY
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79. Learned counsel for the 4th and 5th Defendant submits that
the duty of the court is not only to look at the cold, harsh
words of the documents therein, but to further consider the
question of public policy. And public policy clearly favours
for the preservation of the sanctity of contract and the
observance by parties therein to the terms/ arrangement
agreed, citing Fusing Construction Sdn. Bhd. v EON Finance
Bhd & Ors [2000] 3 MLJ 95.
80. It was further submitted that the reliance by the High Court in
Masa Nangkai, supra, on Chung Khiaw Bank Ltd v Hotel Rasa
Sayang Sdn. Bhd. & Anor [1990] 1 CLJ 57 (Rep); [1990] 1 CLJ
675; [1990] 1 MLJ 361 is misplaced because it has been
overruled by the Federal Court in Lori (M) Bhd (Interim
Receiver) v Arab-Malaysia Finance Bhd [1999] 3 MLJ 81. [Toread].
81. On the point that Chung Khiaw Bank case, supra, has been
overruled by Lori case, it is useful to refer to this passage
uttered by Sri Ram JCA in Fusing Construction:
Now although so much of the judgement in the Chung Khiaw
case as relates to s 67 of the Companies Act 1965 has been
revered by the judgement of the Federal Court in Lori (M) Bhd
Arab-Malaysian Finance Bhd [1999] 3 MLJ 81, we are unable to
detect any overruling of the passage we have quoted a
moment ago. The views upon the principles of illegality operating
under s 24 of our Contracts Act 1950 as expressed by the Chief
Justice of Malaya on that occasion continue to be good law
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82. The relevant passage in Chung Khiaw case quoted in Fusing
Construction reads:
From the authorities, it would also seem clear that in considering
illegality under the common law, the question of public policy is
often considered.
..
That is the position in common law. But the courts in this country
are bound by statutory provisions of our Contracts Act 2950.
The provisions of s 24 of our Contracts Act 1950 referred to earlier
are explicit statutory injunctions. The statute provides expressly
that the considerations or objects referred to in paragraphs (a),
(b) and (e) of s 24 shall be unlawful and the agreement which
ensures shall be unlawful and void. Paragraph (a) deals with
what is forbidden or prohibited by law; para (b) deals with what
could be defeated the object of any law; and para (e) deals
with public policy...
Paragraphs (a), (b) and (e) of s 24 of the Contracts Act 1950
should be read disjunctively. Section 24 of the Contracts At 1950
is explicit in that if an agreement is forbidden by law or
prohibited by law or of such nature that it would be defeat the
law, that agreement is unlawful and void. If the agreement is
prohibited by law or forbidden by law or of such nature that it
would defeat the law then the question of public policy does not
arise at all. The question of public policy arises only in para (e)
where the court considers an agreement to be immoral or
otherwise opposed to public policy.
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83. The clear wording in section 8 of the Land Code expressly
prohibits non-native acquiring rights or privileges over Native
Area Land, Native Customary Land or Interior Area Land
(collectively referred to as classified lands) and stipulates
that any agreement purporting to transfer or confer any such
rights or privileges shall be deemed to have been entered
into for an illegal consideration. The purpose undoubtedly is
to protect and preserve the right or privileges of native
customary rights which the indigenous people have
acquired over the classified land. Paragraph (b) thereof
stipulates that illegal consideration which shall have been
paid or furnished shall be irrecoverable in any courts and
para (c) which impose a penal sanction against any persons
who entered into the illegal an agreement purporting to
transfer o confer any such rights or privileges. These twoprovisions show the serious intention of the Legislature in
protecting and preserving the indigenous peoples native
customary rights and privileges over the classified lands.
84. However, the prohibition in section 8 is not absolute as
section 9 of the same Code provides ways by which non-
native may acquire the land classified in section 8. Amongst
others, pursuant to paragraph (d) of section 9, this prohibition
does not apply to a non-native who has been deemed to
be a native by the Majlis Mesyuarat Negeri, by notification in
the Gazette, in respect of any category of dealing over
Native Area Land as stipulated in the notification.
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85. The facts as alluded to in the above clearly show that even
before the issue of Exhibit D2 and D3 which give native status
to the 1st Defendant and the 5th Defendant, the 5th
Defendant had already entered the NCR Lands and started
cultivation and under the Principal Deed and the Joint
Venture Agreement, the rights and privileges of the NCR
Landowners were relegated to naught while the 5th
Defendant had acquired the rights and privileges of the
native customary rights over the NCR Land that they
undertook to develop.
86. In my judgement, the Principal Deed and the subsequent
Joint Venture Agreement have contravened section 8 of theLand 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.
H. ESTOPPEL
87. Learned counsel for the 1st defendant submits that the
Plaintiffs by their conduct cannot resile from the Principal
Deed and the subsequent Joint Venture Agreement. This is
because the Principal Deed and the Joint Venture
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Agreement are not illegal in the first place. Having caused
the 4th and 5th Defendant and the 1st defendant over the
years to perform the contracts to their detriment and the 4th
and 5th Defendant having invested millions to develop the
native customary land, they cannot blow hot and cold and
reap the inequitable benefits by declaring the agreements
are illegal and wanting the native customary land back.
88. Learned counsel for the 4th and 5th Defendants submits that
applying the doctrine of promissory estoppel, the plaintiffs
are estopped from denying the promise and
encouragement by themselves given to the 4th Defendant
to develop the estates of the 5th Defendant. And upon this
promise the 4th and 5th Defendants had relied to their
detriment. Reliance is placed on BSNC Corporation Bhd vAffin Holdings Bhd & Anor [2009] 8 MLJ 11, Leong Huat
Sawmill (Pte) Ltd v Lee Man See [1985] 1 MLJ 47, and
Boustead Treading [1995] Sdn. Bhd. v Arab-Malaysia
Merchant Ban k Bhd. [1995] 4 CLJ 283.
89. It is also submitted that the Plaintiffs are estopped from
denying the promise to the 4th Defendants that 60% of the
joint-venture of the oil palm plantation on the Plaintiffs NCR
Landowners would be for the benefit of the 4th Defendant,
and to now plead alleged illegality of the Principal Deed in
order to avoid the contract altogether; a document which
was none of the 4th or 5thDefendants doing.
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90. Thus, submits learned counsel for the 4th and 5th Defendants,
the 4th and 5th Defendants would have an equitable interest
in the oil palm plantation of the 5th Defendant, which the
Court ought to uphold and enforce.
91. With respect, I do not think the equitable doctrine of
estoppel is available to the 4th and 5th Defendants to be used
as a sword in the present situation. As had been stated
earlier, the 5th Defendant had entered the native customary
land in 1997 even before the inking of the Principal Deed,
meaning the Defendants were trespassing upon the NCR
Lands. Moreover, right from the start upon the inking of the
Principal deed, the Defendants had intended to acquire
and enjoy the rights and privileges of the native customaryland over which the oil palm plantation project. It is not true
that it was encouraged by the 1st defendant to enter the
native customary land and to develop it.
92. Additionally, under the Joint Venture Agreement the 5th
Defendant being a non-native had acquired and enjoyed
the rights and privileges over the native customary land as
from 1997 in contravention of section 5 of the Land Code. I
have stated given my reason Exhibit D2 and Ex D3 do not
remedy and cure the action which have produced the
illegality produced by breach of section 8.
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93. The principle of Estoppel is a principle in equity, it is
established law that equity follows the law. See Amit Salehs
case, supra.
94. In the case of Holee Holdings (M) Sdn Bhd v. Chai Him & Ors
[1997] 1 LNS 424, Augustine Paul JC referred to few cases
where equitable principle including that of estoppels cannot
be invoke in an illegal transaction prohibited by law. His
Lordship said:
It is settled law that any attempt to contract out of clear statutory
provisions will be void and wholly ineffective as being contrary to
public policy (see Hotel Ambassador (M) Sdn Bhd v Seapower (M)
Sdn Bhd [1991] 1 MLJ 221). In Hj Taib v Ismail [1971] 2 MLJ 36, Syed
Agil Barakbah J (as he then was) said at p 39:
In the present case, as I have pointed out earlier, there
cannot be a contractual licence because the parties apart
from having contracted outside the Ordinance also
contravened the provisions of the Ordinance which rendered
the contract void and unenforceable at law. In this respect, I
am of opinion that the maxim equity follows the law applies,
in the sense that a court of equity will not attempt to enforce
a covenant which is void at law (see 14 Halsbury's Laws(3rd Ed)
p 526). 'Where a rule, either at the common or statute law, is
direct, and governs the case with all its circumstances, or the
particular point, a court of equity is as much bound by it as a
court of law, and can as little justify, a departure from it' (see
Snells' Principles of Equity (26th Ed) p 26).
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In United Malayan Banking Corp Bhd v Sykt Perumahan Luas Sdn
Bhd (No 2) [1988] 3 MLJ 352, Edgar Joseph Jr J (as he then was) said
at p 356:
In these circumstances, the charge having been registered in
breach of an explicit statutory prohibition imposed on the title
to the charged land pursuant to the provisions of s 120 of the
NLC 1965, the title or interest of the chargee is defensible
since registration thereof had been obtained by means of an
insufficient or void instrument (s 340(2)(b)) and also because
the Registrar of Titles, in registering the charge, had actedultra vires the powers conferred upon him: s 340(2)(c). The
defence of estoppels accordingly fails since there cannot be
an estoppels to evade the plain provisions of a statute:
Jagabandhu v Radha Krishna ILR 36 Cal 920, particularly
when as here, the non-compliance goes to the root of the
thing. In other words, if the terms of a statute are absolute and
do not admit of any relaxation or exemption, anything done
in contravention thereof, will be ultra vires and no person can
be estopped from putting forward the contention that what
was done was illegal or void: University of Delhi v Ashok Kumar
Chopra AIR 1968 Delhi 131.
Accordingly, no court is at liberty to enforce as valid, that
which a statute has declared shall not be valid nor can
compliance therewith be dispensed with even by consent of
the parties or by failure to plead or argue the point at the
onset: Surajmull v Triton Insurance Co Ltd AIR 1925 PC 83.
In Beesly v Hallwood Estates Ltd [1960] 2 All ER 314, Buckley J said at
p 324:
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On this part of the case counsel for the plaintiff referred me
to Central London Property Trust Ltd v High Trees House Ltd
[1956] 1 All ER 256; Hughes v Metropoliton Ry Co (1877) 2
App Cas 439 and to the statement derived from Combe v
Combe [1951] 1 All ER 767 which is contained in 15
Halsbury's Laws (3rd Ed) p 175. As I understand this part of
the law, which has been described as promissory estoppel,
it is that where one party is under an existing legal
obligation to another, who has so acted as to lead the
former party to believe that the latter will not enforce that
obligation, or not enforce it to its full extent, or for the time
being, intending the former party to act on that footing,
and the former party has so acted, the latter party may be
restrained in equity from enforcing the obligation on any
footing inconsistent with the belief so induced and may be
so restrained notwithstanding that he had received no
consideration for the modification of his rights. The doctrine
may afford a defence against the enforcement of
otherwise enforceable rights; it cannot create a cause of
action. It cannot, in my judgment, be invoked to render
enforceable a right which would otherwise be
unenforceable, nor to negative the operation of a statute
(see 15 Halsbury's Laws (3rd Ed) p 176). (Emphasis added.)
In Lloyds Bank plc v Carrick [1996] 4 All ER 630, it was held that a
proprietary estoppel over an interest cannot be created indirectly
when its direct creation has been prohibited by statute. Morritt LJ
said at pp 641642:
Section 4(6) of the 1972 Act invalidates, as against the bank,
any unregistered contract by the estate owner for the
conveyance of the legal estate. It cannot be
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unconscionable for the bank to rely on the non-registration
of the contract. I do not see how it could be right to confer
on Mrs Carrick indirectly, and by means of a proprietary
estoppel binding on the bank, that which Parliamentprevented her from obtaining directly by the contract it has
declared to be void.
95. On the strength of the above authorities that equitable
principles advanced by the 4th and 5th defendants cannot
be used to assist them.
I. UNJUST ENRICHMENT
96. It was contended for the 4th and 5th Defendant that if the
Plaintiff succeeded in their claim, the principle of unjust
enrichment would bar the Plaintiffs from being unjustly
enriched at the expense of the 4th Defendant. It was
submitted that the development of the estate of the 5 th
Defendant on the native customary land were from the
financing and investment of the 4th Defendant, without
which there would not have been any development of the
native customary land from which the Plaintiffs are now
reaping the dividends and profit.
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97. In Fernrite Sdn. Bhd. v Perbadanan Nasional Bhd. [2011]
(relied on by the 4th and 5th Defendant), the Court of Appeal
held:
We would gratefully distil the relevant fundamental principles as
follows:
(a) The principle ofunjust enrichmentrequires the recipient ofmoney to repay it when the circumstances are such that it
is contrary to 'the ties of natural justice and equity' for him
to retain it (see Lord Mansfield CJ's celebrated dictum in
Moses v. Macferlan [1760] 2 Burr 1005 at 1012, [1558-1774]
All ER Rep 581 at 585).
(b) A person who has been unjustly enriched at the expense
of another is required to make restitution to the other: see
American Law Institute's "Restatement of the Law,
Restitution" (1937) Chapter 1; and Goff and Jones "The Law
of Restitution" (4th edn, 1993) pp 12-13). This principle has
been authoritatively recognized in two judgments of the
House of Lords: Lipkin Gorman (a firm) v. Karpnale Ltd
[1992] 4 All ER 512, [1991] 2 AC 548 and Woolwich Building
Society v. IRC (No 2) [1992] 3 All ER 737, [1993] AC 70.
(c) The plaintiff is entitled to recover not damages, but a
quantified sum from a defendant who was not necessarily
a wrongdoer and who was not bound by any contract or
express undertaking to pay the sum claimed by the
plaintiff. The circumstances in which such a non-
contractual obligation can arise are various; the recovery
of money paid under a mistake of fact (though not,
historically and so far as English law is concerned, under a
mistake of law), or where the consideration in return forwhich the money was paid has failed, are well established
examples.
(d) ...
(e) Notwithstanding its roots in natural justice and equity, the
principle does not give the courts a discretionary power to
order repayment whenever it seems in the circumstance
of the particular case just and equitable to do so. The
recovery of money in restitution is not, as a general rule, a
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matter of discretion for the court. A claim to recover
money at common law is made as a matter of right; and,
even though the underlying principle of recovery is the
principle of unjust enrichment, nevertheless, where
recovery is denied, it is denied on the basis of legal
principle: See Lipkin Gorman [1992] 4 All ER 512 at 532,
[1991] 2 AC 548 at 578 per Lord Goff.
[Emphasis added by counsel]
98. Section 71 of the Contracts Act 1950:-
Where a person lawfully does anything for another person, ordelivers anything to him, not intending to do so gratuitously, and
such other person enjoys the benefit thereof, the latter is bound
to make compensation to the former in re
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