21-7-2009 [Kadam Anak Embuyang & 4 Others vs. Pelita Holdings Sdn. Bhd. & 4 Others]

7/30/2019 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)

1

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
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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:
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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

21-7-2009 [Kadam Anak Embuyang & 4 Others vs. Pelita Holdings Sdn. Bhd. & 4 Others]

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Transcript of 21-7-2009 [Kadam Anak Embuyang & 4 Others vs. Pelita Holdings Sdn. Bhd. & 4 Others]