Rainbow Bay Sdn Bhd 1. ) MLGH (Sabah) Sdn Bhd 2. ) The State Government of Sabah

Rainbow Bay Sdn Bhd 1. ) MLGH (Sabah) Sdn Bhd 2. ) The State Government of Sabah

The Court held there was no fundamental breach by MLGH in failing to deliver title; the contract was frustrated by lawful supervening events — the rejection of the DEIA by the State EPD and the subsequent statutory amendment (Sabah Land Ordinance s9A) prohibiting alienation of the affected land — rendering performance impossible and unlawful; frustration was not self-induced and the State was not liable for inducing breach of its wholly-owned subsidiary; under Civil Law Act s15 the Developer was entitled only to recover proven expenses incurred before discharge (RM6,355,371), not speculative loss of profits; judgment against the State was set aside and the Developer's appeal on loss of...

Citation
S-01(NCvC)(W)-164-04/2019 (Mahkamah Rayuan)
Parties
1st Appellant / 1st Defendant / Vendor: MLGH (Sabah) Sdn Bhd; 2nd Appellant / 2nd Defendant: The State Government of Sabah; Respondent / Appellant / Plaintiff / Developer: Rainbow Bay Sdn Bhd
Court
NCvC
Jurisdiction
Malaysia
Judgment Date
7 February 2023
Case Number
S-01(NCvC)(W)-164-04/2019 (Mahkamah Rayuan)
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeals From Kota Kinabalu High Court (heard Together)
Outcome
Appeal by Defendants allowed in part; High Court order against State set aside; contract held frustrated; Developer's appeal dismissed in respect of loss of profits; award limited to expenses proved
Legal Topics
Frustration of Contract, Breach of Contract, Inducement of Breach (tort), Assessment of Damages, Judicial Review, Statutory Amendment and Supervening Illegality, Power of Attorney, Corporate Separate Legal Personality
Source Language
Malay/English
Contract Law Administrative Law Tort Environmental Law Property Law Company Law Frustration of Contract Breach of Contract +6 more

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Parties

MLGH (Sabah) Sdn Bhd

1st Appellant / 1st Defendant / Vendor

The State Government of Sabah

2nd Appellant / 2nd Defendant

Rainbow Bay Sdn Bhd

Respondent / Appellant / Plaintiff / Developer

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeals From Kota Kinabalu High Court (heard Together)

Legal Issues

  1. 1 Whether MLGH breached the JVA/SA by failing to deliver title to 150-acre land
  2. 2 Whether the JVA/SA was frustrated by rejection of DEIA and the Sabah Land Ordinance amendment (s 9A) prohibiting alienation
  3. 3 Whether frustration was self-induced by the State or MLGH

Ratio Decidendi

The Court held there was no fundamental breach by MLGH in failing to deliver title; the contract was frustrated by lawful supervening events — the rejection of the DEIA by the State EPD and the subsequent statutory amendment (Sabah Land Ordinance s9A) prohibiting alienation of the affected land — rendering performance impossible and unlawful; frustration was not self-induced and the State was not liable for inducing breach of its wholly-owned subsidiary; under Civil Law Act s15 the Developer was entitled only to recover proven expenses incurred before discharge (RM6,355,371), not speculative loss of profits; judgment against the State was set aside and the Developer's appeal on loss of...

Court Disposition

Appeal by Defendants allowed in part; High Court order against State set aside; contract held frustrated; Developer's appeal dismissed in respect of loss of profits; award limited to expenses proved

Orders

  • Affirmed award against MLGH limited to RM6,355,371.00 (expenses) with interest at 5% per annum from 10-10-2015 until full payment
  • Judgment entered against The State Government of Sabah set aside (no liability for inducement)