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 Rainbow Bay Sdn Bhd

The Court held there was no fundamental breach by MLGH in failing to deliver the 150-acre title; performance of the JVA/SA was legally impossible and therefore frustrated by (i) the rejection of the DEIA Final Report and (ii) the subsequent s9A amendment to the Sabah Land Ordinance prohibiting alienation of the affected land; frustration was not self-induced by the State; the State was not liable for inducement; relief is governed by Civil Law Act s15 and limited to proven expenses/benefits prior to discharge, leading to an award of RM6,355,371.00 to the Developer against MLGH with interest.

Citation
S-01(NCvC)(W)-163-04/2019 (Mahkamah Rayuan)
Parties
1st Appellant / 1st Defendant / Vendor: MLGH (Sabah) Sdn Bhd; 2nd Appellant / 2nd Defendant: The State Government of Sabah; Respondent / Appellant / Developer / Plaintiff: Rainbow Bay Sdn Bhd
Court
NCvC
Jurisdiction
Malaysia
Judgment Date
7 February 2023
Case Number
S-01(NCvC)(W)-163-04/2019 (Mahkamah Rayuan)
Procedural Posture
Civil Appeal / Judgment on Appeal From High Court (court of Appeal)
Outcome
Appeal by Defendants allowed in part; High Court award varied. Court of Appeal held contract frustrated and set aside most of High Court's awards against the State; affirmed limited award for expenses against MLGH; Developer's appeal on loss of profits dismissed.
Legal Topics
Frustration of Contract, Supervening Illegality (statutory Amendment), Inducement of Breach of Contract, Remedies and Assessment of Compensation Under Civil Law Act S15, Power of Attorney (irrevocable), Piercing the Corporate Veil
Source Language
Malay/English
Contract Law Administrative Law Tort (inducement) Environmental Law Property Law Company Law Frustration of Contract Supervening Illegality (statutory Amendment) +4 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 / Developer / Plaintiff

Procedural Posture

Civil Appeal / Judgment on Appeal From High Court (court of Appeal)

Legal Issues

  1. 1 Whether MLGH breached the JVA/SA by failing to deliver title to the 150-acre land
  2. 2 Whether the JVA/SA was frustrated by (a) rejection of the DEIA Final Report and (b) the Sabah Land Ordinance amendment (s9A) prohibiting alienation of the affected land
  3. 3 Whether frustration was self-induced by the State or its subsidiary

Ratio Decidendi

The Court held there was no fundamental breach by MLGH in failing to deliver the 150-acre title; performance of the JVA/SA was legally impossible and therefore frustrated by (i) the rejection of the DEIA Final Report and (ii) the subsequent s9A amendment to the Sabah Land Ordinance prohibiting alienation of the affected land; frustration was not self-induced by the State; the State was not liable for inducement; relief is governed by Civil Law Act s15 and limited to proven expenses/benefits prior to discharge, leading to an award of RM6,355,371.00 to the Developer against MLGH with interest.

Court Disposition

Appeal by Defendants allowed in part; High Court award varied. Court of Appeal held contract frustrated and set aside most of High Court's awards against the State; affirmed limited award for expenses against MLGH; Developer's appeal on loss of profits dismissed.

Orders

  • Set aside judgment against D2 The State Government of Sabah
  • Affirmed award against D1 MLGH (Sabah) Sdn Bhd of RM6,355,371.00 (expenses 1998-2003) with interest at 5% per annum from 10.10.2015 until full payment