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IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR
(COMMERCIAL DIVISION)
SUIT NO. 22NCC-388-2009
PERBADANAN NASIONAL BERHAD
v.
MAKHTAR BIN MOHAMED
GROUNDS OF JUDGMENT
The Plaintiff’s claim is as follows:
(a)
Specific Performance of the Put and Call Option Agreement
dated 22.10.2002;
(b)
Damages;
(c)
Or alternatively to paragraph (a) and (b) damages for breach
of the Put and Call Option Agreement dated 22.10.2002;
(d)
Interest at 8% per annum from the date of the Statement
of Claim from 4 November 2008 till realization;
(e)
Costs; and
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(f)
Such further and other reliefs may be deemed just and
reasonable by the Court.
Background
The Plaintiff subscribed 8,850,000 shares and 4,425,500 rights
subscription shares in SMPC Corporation Bhd. (SMPC). A Put
and Call Option Agreement was executed between the Plaintiff
and the Defendant dated 20.10.2000. However, the Agreement
was subsequently revoked and another Put and Call Option
Agreement was executed between the parties dated 22.10.2002
(PCOA). By a Subscription of Shares Agreement dated 29.7.2000
between the Plaintiff and a company known as SMPC Corporation
Berhad (SMPC) the Plaintiff agreed to provide financial assistance
to SMPC by subscribing to 8,850,000 ordinary shares issued by
SMPC pursuant to the Special Bumiputra Issue. Pursuant to the
2000 PCOA the Defendant granted to the Plaintiff the put option
requiring the Defendant to purchase from the Plaintiff the 5,000,000
at RM1.10 each share.
The Call Option Agreement can be exercised by the Defendant
between 22.10.2002 until 31.12.2003. The Put Option can be
exercised by the Plaintiff after 31.12.2003.
At the request of the Defendant, the Plaintiff agreed to grant to
the Defendant an irrevocable Call Option Agreement with respect
to 7,550,000 ordinary shares owned by the Plaintiff in SMPC
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subject to the terms and conditions. Under the Put and Call Option
Agreement the Defendant had agreed to grant an irrevocable put
option on the Option Shares subject to the terms and conditions of
the Put and Call Option Agreement.
Some of the salient terms of the 2002 PCOA are as follows:i.
The Parties agreed to rescind and revoke the first Put
and Call Option Agreement subject to the terms and
conditions of a Deed of Revocation dated 22.10.2002
entered into between the Plaintiff and the Defendant.
ii.
The Defendant grants to the Plaintiff the Put Option to
require the Defendant to purchase from the Plaintiff
all or any of the Option Shares at the Put Option Price
(Clause 2.1).
iii.
In the event the Defendant fail to purchase or complete
the purchase of the Option Shares, the Plaintiff be entitled
to the remedy of specific performance and to divest itself
and deal with the Option Shares in its sole and absolute
discretion (Clause 2.3).
iv.
The Plaintiff grants to the Defendant the Call Option to
require it to sell all of the Option Shares to the Defendant
at the Call Option Price (Clause 2.4).
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It is the Plaintiff’s contention that by the Defendant’s breach, the
Plaintiff is entitled either to:a)
the relief of specific performance; or
b)
a claim for damages.
Plaintiff’s Case
It is submitted by the learned Counsel for the Plaintiff that the
following evidence supported the facts pleaded:i.
The Subscription of Shares Agreement dated 29.7.2000
between the Plaintiff and SMPC.
ii.
The Put and Call Option Agreement dated 20.12.2000
between the Parties.
iii.
The deed of Revocation dated 22.10.2002 between the
Parties revoking the Put and Call Option Agreement
dated 20.12.2000.
iv.
The terms of the Put and Call Option Agreement dated
22.10.2002 as follows:a)
The Defendant granted to the Plaintiff the put
option requiring the Defendant to purchase from
the Plaintiff the 5,000,000 at RM1.10 each share
(Clause 2.1);
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b)
The Price payable for the Option Shares has been
determined at RM1.10 per Option Shares (Clause
1.1);
c)
The Plaintiff may exercise the Put Option by notice
in writing at any time during the Put Option Period
(Clause 2.2);
d)
The Put Option as defined in clause 1.1 provides
that it is the period commencing from the expiry of
the call Option Period;
e)
The Defendant agreed to indemnify the Plaintiff in
full in the event of a shortfall; and
f)
The Plaintiff is irrevocably authorized by the
Defendant to sell the Option Shares if the
Defendant fails to complete the purchase of the
Option Shares.
The Defendant’s Case
It is the submission of the learned Counsel for the Defendant
that the Plaintiff and the Defendant, through the Professional
Entrepreneurs in the Making (EIM Scheme) administered through
the Plaintiff, became joint partners into the investment ventures
involving SMPC. The Plaintiff had represented to the Defendant
that an investment in SMPC would be beneficial to the Defendant
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and in reliance to that representation, the Defendant entered into
the SMPC investment.
It is further submitted that upon the discontinuance of the 1st action
without liberty to file afresh, the Plaintiff is estopped from filing this
Action. The Defendant is therefore prejudiced as that the 1st action
was withdrawn without liberty to file afresh.
It is also argued by the learned Counsel for the Defendant that
specific performance cannot be ordered as,
a)
Subject matter of the contract has ceased to exist.
b)
The performance was exercised over a period of 3 years.
Section 20(g) of the Specific Relief Act 1950 provides,
“ 1) The following contracts cannot be specifically enforced ………..
g) a contract the performance of which involves the performance of a
continuous duty extending over a longer period than three years
from its date..”.
It is also submitted by the Defendant that the Plaintiff’s action are
guilty of laches for the delay in filing the action.
Findings and reasons for decision
The Plaintiff commenced legal proceedings vide suit no D5-22610-2005 against the Defendant for specific performance of the
put and call option. Judgment in Default (JID) was entered against
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the Defendant on 17.6.2005. Subsequently, the Plaintiff set the
said JID aside. A fresh action was then entered against the
Defendant and JID was once again entered against the Defendant.
PW1, Tengku Mohammed Fadli bin Tengku Hamzah, the Plaintiff’s
Head of Monitoring Department of the Investment Division could
not explained why the JID was entered against the Defendant in
the instant suit (Re: Q/A 50 PW1 Witness Statement).
In his Witness Statement PW1 explained that after their previous
solicitor obtained a JID, the Plaintiff then instructed their current
solicitors
to
commence
bankruptcy
proceedings
against
the
Defendant based on the JID obtained. The Plaintiff were advised
by their current solicitors that the JID was bad in law. The JID
was then set aside and the Statement of Claim amended.
In October 2009 the Plaintiff then filed a Notice of Discontinuance
(NOD) dated 16.11.2009 without liberty to file afresh. The Notice
is central to the Defence and must be set out in full so as to aid
appreciation of the arguments of Counsels,
“ AMBIL PERHATIAN bahawa Paintiff sama sekali memberhentikan
tindakan ini terhadap Perayu tanpa kebebasan memfailkan semula dan
tanpa sebarang perintah kos.”.
The learned Counsel for the Plaintiff argued that the Plaintiff is not
estopped from pursuing the instant suit against the Defendant as the
NOD was filed after the commencement of the suit and that the
earlier suit against the Defendant was unilaterally withdrawn by the
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Plaintiff. He further submitted that the 1st action was not withdrawn
and not heard on merits and as such the Plaintiff is not estopped for
pursuing this current suit against the Defendant.
It is a general rule that once an action has been withdrawn by
a notice of discontinuance, there is nothing left on which the
Court may adjudicate. Where the parties to a cause or matter
have proceeded upon a common assumption that a notice of
discontinuance is to be acted upon, then, the Court will not permit
either party to assert the propriety of the discontinuance. In other
words, if one of the parties to litigation is faced with two mutually
exclusive alternatives and he elects to pursue one then he will
be estopped from retreating from the position he has adopted by
his election. In the case of Annie Quah Lay Nah v. Syed Jafar
Properties Sdn. Bhd. & Ors. and Another [2007] 1 CLJ 1 the
Court of Appeal cited with approval and adopted the following
passage from Lai Yoke Ngan & Anor v. Chin Teck Kwee @ Chin
Teck Kwi & Anor [1997] 3 CLJ 305; [1997] 3 AMR 2458; [1997]
2 MLJ 565, where the doctrine of estoppel was stated as follows:
“ In the context of litigation, it usually arises where a party to an action
has at least two alternative and mutually exclusive courses open to him.
If by words or conduct he elects to pursue one of them and thereby
leads his opponent to believe that he has abandoned the other, he
may, if the circumstances so warrant, be precluded from later
changing course. Decisions upon the application of the doctrine to
litigation are but mere illustrations of the broader proposition. Indeed
this is true of all cases where the doctrine has been applied to other
spheres of human activity.”.
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This principle of estoppel should only be applied where justice
dictates and according to the facts and circumstances of each
particular case and its operation depends much upon the conduct of
the parties.
In the instant case, the NOD may have been filed after the suit was
filed but that said NOD remains intact and not set aside. The Plaintiff
cannot be blowing hot and cold neither can they benefit from their
own folly. By filing the NOD the Plaintiff have relinquished its claim
against the Defendant. The Statements of Claim filed in the first
suit and the second suit are in substance identical, resting on the
same facts and issues. The doctrine of estoppel as expounded in
Boustead Trading (1985) Sdn. Bhd. v. Arab Malaysia Merchant
Bank [1995] 3 MLJ 331 is applicable. To allow the second suit
based on the same facts or substantially the same facts is unjust
and grossly prejudicial to the Defendant. The doctrine of estoppel
is a flexible principle by which justice is done according to the
circumstances. It is a doctrine of wide utility and has been resorted
to in varying fact patterns to achieve justice. The maxim ‘estoppel
may be used as a shield but not a sword’ and it does not limit the
doctrine of estoppel to the Defendants alone. Plaintiffs too may have
recourse to it. Lord Denning in WJ Alan & Co. Ltd v. El Nasr Export
and Import Co. [1972] 2 QB 189 said:
“ If one party by his conduct, leads another to believe that the strict rights
arising under the contract will not be insisted upon, intending that the
other should act on that belief, and he does act on it, then the first party
will not afterwards be allowed to insist on strict legal rights when it would
be inequitable for him to do so.”.
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The Court of Appeal in the Annie Quah’s case reproduced the
authoritative text by Spencer, Brown and Turner on “The Law relating
to Estoppel by Representation” as well as the Privy Council case
of Meng Leong Development Pte Ltd v. Jip Hong Trading Co.
Pte Ltd [1985] CLJ 8 (Rep); [1985] 1 CLJ 20; [1985] 1 MLJ 7,
which states:
“ The last of the four fields in which the doctrine under discussion may be
observed in operation, and, perhaps, the most important and interesting
of them all, because yielding the greatest variety of illustrative examples,
is the conduct of litigation, in the course of which it very frequently
happens that a party litigant is confronted with the necessity of
immediately making a definite choice between two possible courses of
action which are mutually exclusive. Whenever this occurs, the general
rule of estoppel by election comes into play: that is to say, if by words, or
(as is almost invariably the case) by conduct or inaction, he represents
to the other party litigant his intention to adopt one of the two alternative
and inconsistent proceedings or positions, with the result that the latter is
thereby encouraged to adopt or persevere in a line of conduct which he
otherwise would have abandoned or modified, or (as the case may be)
to change tactics from which he otherwise would never have deviated,
the first party is estopped, as against his antagonist, from resorting
afterwards to the course or attitude which, of his free choice, he has
waived or discarded.”.
In the instant case the JID was entered and subsequently set
aside. In October 2009, the Plaintiff filed a Notice of Discontinuance
(NOD) dated 16.11.2009 against the Defendant without liberty to
file afresh. Is it fair, just or equitable for the Plaintiff to say that
despite the said notice of discontinuance with no liberty to file afresh,
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the Plaintiff can still proceed against the Defendant? I am of the
considered view that question must be in the negative. It would
be most unjust to the Defendant as the NOD filed by the Plaintiff
expressly states that the matter is discontinued and without any
liberty to file afresh.
In coming to a decision in this case, this Court has carefully
considered both the oral and documentary evidence adduced, the
written submissions as well as the authorities and I am satisfied that
the Plaintiff failed to prove its case against the Defendant on a
balance of probabilities. Based on the reasons mentioned above,
the Plaintiff’s claim is dismissed with cost.
sgd.
( HASNAH BINTI DATO’ MOHAMMED HASHIM )
Judge
High Court of Malaya
Kuala Lumpur.
21st January 2014
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Counsels:
For the Plaintiff/Appellant:
Messrs. Mustafa Ling & Co.
- Norsyazwani
For the Defendant/Respondent:
Messrs. Mas Kumar
- M.V. Kumar