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REMEDI

PENSYARAH
ENCIK HIZRI HASSAN
ENCIK NOORFAJRI BIN ISMAIL

DISEDIAKAN OLEH
FIRMA 22
Tetuan Rohimi & Co

WAN AHMAD HAKIMI BIN WAN AHMAD JAAFAR A146503


NURSYAFIQAH BINTI KHIRUDDIN A146453
THAM YONG WEN A146480
AMIZA BINTI ABD KAHAR A146781

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TETUAN ROHIMI & CO
PARTNERS ADVOCATES & SOLICITOR
ASSISTANTS BANKING & FINANCE
ROHIMI SHAPIEE CAPITAL MARKETS
WAN AHMAD HAKIMI B WAN AHMAD CORPORATE
LL.B (HONS) (MALAYA), LL.M (MONASH),
JAAFAR INTELLECTUAL PROPERTY
PH.D (MANCHESTER), CERT. ARABIC
LL.B (UKM)
STUDIES (UMM AL-QURA)

NOORFAJRI BIN ISMAIL NURSYAFIQAH BINTI KHIRUDDIN No. 22, Jalan Dutamas 1,
LL.B (HONS)(UKM) LL.B (UKM) Solaris Dutamas,
HIZRI HASSAN THAM YONG WEN
50480 Kuala Lumpur,
LL.B (UKM), LL.M(UKM) LL.B (UKM) Wilayah Persekutuan Kuala Lumpur

AMIZA BINTI ABD KAHAR Tel: 03-6205 3322


LL.B (UKM)
Fax: 03-62053311
Email: tetuanrohimi@gmail.com
Website: www.tetuanrohimi.com.my

RCO/LIT/CIV/001/2017/NSK
15 May 2017

MULTI FOREST SDN BHD


Lot 334, Wisma Multi Forest,
43000 Kajang, Selangor Darul Ehsan.

Dear Sir/Madam,

Re: Legal Opinion On Remedies Sought by Multi Forest SDN BHD

We refer to the meeting held with us this past week at our office between your representative and
four of our solicitors, Mr. Hakimi, Miss Syafiqah, Miss Amiza and Miss Tham and to your fax to
us dated 04.05.2017 wherein you have sought our legal opinion pertaining to the problems that
face by your company. In this letter, we will provide you with my legal opinion and analysis so
you can make a qualified decision regarding the charges you face. We will first restate the facts, as
we know them, to confirm their accuracy. Next, we will provide you with an explanation of the
law as it applies in your case, and lastly, give you our opinion on whether your company can claim
for those remedies.

FACTS
In 2013, the state government has launched a privatization project for the reforestation of Tea
tree plantation. To implement this project, the State Government of Selangor agreed to set up a
joint venture between the state companies which is Perbadanan Kemajuan Perhutanan Selangor
(PKPS) with a private company Multi Forest Sdn Bhd (MFSB). Therefore, the following
agreements were signed on 23.04.2013

Based on the Agreement and the discussion at the said Meeting, we understand the facts to be as
follows: -

i. A Lease and Concession Agreement had been sign between State Government of
Selangor and PKPS where the State Government has granted timber concessions and

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leases of government land located in Rantau Panjang Forest Reserve which is 10,000
hectares to PKPS for 50 years and in return PKPS agreed to pay an annual royalty to the
State Government.

ii. Based on the Partnership Agreement between the PKPS and MFSB, PKPS agreed to
appoint MFSB as partners where MFSB will act as prime contractor carrying out the
work of cleaning, replanting, and produce timber production. The maturity of the Teak
tree is felled between 10 to 12 years. PKPS also agreed to provide access and occupation
license to MFSB regarding the lease area for a period of 50 years. In terms of financing
project, the parties agreed to pay together for a maximum amount of RM10 million and
other financing is through a bank loan to make lease land as collateral.

iii. After the replanting carried out, in September 2016, MFSB requested that the PKPS to
get an authorization from State Government of Selangor in order to allow the forest
reserve land as collateral financing. However, the State Government did not agree on the
grounds that the forest reserves land is owned by government, and therefore no grants of
titles will be awarded. Further, the project has been delayed due to financing problems.

iv. Due to the absence of any replanting activities and no royalty payment is received,
Majlis Mesyuarat Kerajaan Negeri Selangor has on 31.03.2017 made a decision to
revoke the Concession and Lease Agreement where the lease land instructed to be
withdrawn and placed under the supervision of the Jabatan Perhutanan Negeri Selangor.

v. Jabatan Perhutanan Negeri Selangor has issued notices on 05.04.2017 to demolish all the
buildings and structures erected by MFSB as a temporary office within two months on
the grounds that the construction had violated the provisions of the National Forestry Act
1984. Meanwhile, right to be heard are not giving to MFSB before a decision made by
the Majlis Mesyuarat Kerajaan Negeri Selangor. In fact, no compensation had been paid
to MFSB.

vi. On 12.04.2017, the PKPS has filed a writ against MFSB at the Shah Alam High Court to
order the cancellation (rescission) of Joint Venture Agreement based on the ground of
Selangor State Government's decision to withdraw the lease.

ISSUES

Arising from the above, you have sought our legal opinion on the following issues:-

1. Whether remedies of injunctions can be applied due to the notice given by Jabatan
Perhutanan Negeri Selangor to demolish the building erected by MFSB and procedure
in order to apply for an interim injunction immediately.

2. Whether PKPS has the right to seek for remedies of cancellation (rescission) to
terminate the Joint Venture Agreement.

3. Whether MFSB can apply for remedy of specific performance to continue the Joint
Venture Agreement.

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4. Whether MFSB can apply remedy for judicial review to challenge the decision of the
State Executive Council and the procedures for filing a judicial review.
Based on the above available documents, we append below our opinion as follows: -

ISSUE 1 : Whether injunction can be grant against the notice given by Jabatan
Perhutanan Negeri Selangor in order to demolishing buildings and structures erected
by your company which is Multi Forest Sdn Bhd (MFSB) and if can procedure in
applying interim injunction.

(A) Types of Injunction

First and foremost, we will start with the basic concept of injunction. Injunction is an
additional remedy which performs a preventive function granted at the discretion of the court
addressed to a specified person or party refrain him from doing certain act. An injunction
which forbidding or refrain a specified person or party to do a certain act is known as
prohibitory injunction, while in the opposite, an injunction which orders a party or person to
perform or do a certain act is known as mandatory injunction. Nevertheless, injunction also
divided into two main types which is perpetual and temporary injunction. Perpetual
injunction normally is granted at the end of a trial after the hearing of the action and must be
made inter partes which means in the presence of both parties and it can only be granted by
the decree made at hearing and upon the merits of the suit. An temporary injunction also
known as interim or interlocutory injunction as refer to the case of Nicholas & Ors v Gan
Realty Sdn Bhd [1970] 2 MLJ 89 which opined that temporary injunction under section 50 of
Specific Relief (Malay States) Ordinance is same things as interlocutory injunction and such
temporary injunctions are such to continue until a specific time or hearing of the case and
generally until further order. Whereas there is distinction or differences between interlocutory
and interim injunction based on the case of Arab Malaysian Corp Builders Sdn Bhd & Anor v
ASM Development Sdn Bhd [1998] 2 CLJ 169. The case interpret interlocutory injunction as
an order to preserve a particular set of circumstances pending full trial of the matter in dispute
while interim injunction refer to an order that restraining the defendant only until or after a
further order or specified period for example few days. Interlocutory is the general type of
temporary injunction while interim injunction is more specific under interlocutory injunction.

Same as stated in section 51(1) of the Specific Relief Act, temporary injunction is
said to be continue until a specified time, or until the further order of court and may be
granted at any period of suit, and are regulated by the law relating to civil procedure. In
simple words it means that a temporary or interlocutory injunction can be granted after or
during the commission of the act which in this case the act refer to the demolishing of all the
buildings and structures erected by MFSB and it is issued as a temporary measure before the
case is brought to the court. The main purpose of interlocutory injunction is to preserve the
status quo of the parties pending trial.

Based on the overall view of the types of injunction as stated above, the most
suitable injunction to apply in your case is interim prohibitory injunction which is a
temporary injunction in order to prohibit Jabatan Perhutanan Negeri Selangor from
demolishing buildings and structures erected by your company before trial begin.

(B) Principle in Granting Interlocutory/ Interim Injunction

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In granting interlocutory injunction, Malaysian courts have consistently applied the principle
as decided in the leading case of American Cyanamid Co v Ethicon Ltd [1975] 1 All ER 504.
There are two requirements the court have to take in consideration before granting an
interlocutory injunction which is first the court have to determine whether there is a serious
question to be tried and if the answer is yes, the court have to go on and consider whether
based on the balanced of convenience, an interlocutory injunction should be granted.
Applying the principle in this case, obviously there is serious matter to be tried as refer to
section 94 (3) of National Forestry Act 1984, order from the court should be made and grant
before prosecution which in this case, no order be presented by Jabatan Perhutanan Negeri
Selangor but only notice to inform your company regarding the demolishing. Therefore they
should have no rights to demolish the buildings.

The next requirements should be consider by the courts are balance of convenience
which means equity and fairness, the balance of convenience must favour the grant of the
interim injunction. The judge will consider whether it is the plaintiff or the defendant that
would suffer greater hardship and injustice if the interim injunction were granted or refused.
With refer to the case of Alor Janggus Soon Seng Trading Sdn Bhd & Ors v Sey Hoe Sdn
Bhd & Ors [1995] 1 MLJ 241, held that the grant or refusal of an interlocutory injunction
must be decided on fundamental principle that the court should take whichever that appears
to carry the lowest risk of injustice. As applying the principle in recent case, the court will
consider the risk that if interlocutory injunction is refused but later on your company, MFSB
succeed in establishing at the trial your legal rights to the protection for which the injunction
has been sought, whether there is bigger risk that your company may in the meantime have
suffered harm and inconvenience or monetary loss due to the of demolishing buildings by
Jabatan Perhutanan Negeri Selangor which the monetary compensation will not provide
adequate recompense. Moreover, refusal for the grant of injunction will lead to injustice as it
had deprive your legal rights to the protection as according the law it is obvious that Jabatan
Perhutanan Negeri Selangor din not have the rights to demolish the buildings and structure
erected by your company. Therefore, in order to grant interlocutory injunction, your company
have to show that your company had legal interest that needed to be protected by way of an
interlocutory or interim injunction. As taking into considerations the principle stated above,
interlocutory injunction is more likely will be grant.

Next, although there is a trite law that stated in section 29 (1) of Government
Proceeding Act 1956, no order of injunction should be grant by court in any civil proceedings
against the government read together with section 54(d) of Specific Relief Act 1950 which
injunction cannot be granted to interfere with public duties. However, MFSB still can grant
an interlocutory or interim injunction as refer to the case of Saonah bte Bedul v Pentadbir
Tanah dan Daerah Melaka [1994] 3 MLJ 758 which held that section 29 of the Government
Proceeding Act did not bar the grant of an interlocutory or interim injunction against the
government. So do based on the decision that approved in the case of Tan Suan Choo v
Majlis Perbandaran Pulau Pinang [1983] 1 MLJ 323 that section 54 of the Specific Relief Act
1950 only apply to perpetual injunction and not interim injunction and it supported by Rules
of the High Court 1980 that nothing will constitutes a bar to the granting of an interim
injunction against municipality so do against the government. As in this recent case, there
should be no obstacle in granting injunction against Jabatan Perhutanan Negeri Selangor as
we are applying for interlocutory or interim injunction.

(C) Procedure to Apply Interim Injunction

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Application of injunction is govern by order 29 rules 1 of Rules of Court. Such application
may be made by a notice of application which is form 57 in Rules of Court 2012 supported
by an affidavit. While in this case since there is a serious issue to be tried, we are of the
opinion to file a Writ to initiate a suit against the Jabatan Perhutanan Negeri Selangor where
the suit would have the usual prayers of interim injunction against Jabatan Perhutanan Negeri
Selangor. Meanwhile since this case is one of urgency, therefore application may be made ex-
parte as refer to case of Lim Hean Pin v Thean Seng Co Sdn Bhd [1992] 2 MLJ 10 which
mean by one side that is apply by your company MFSB. The application for an injunction is
usually made before a judge in chambers, a Summon in Chamber (SIC) have to be filed in
order to seek an ex-parte, interim/interlocutory Injunction; and that SIC should also attached
with an affidavit explaining the reasons for the need to have an injunction against Jabatan
Perhutanan Negeri Selangor besides showing that the matter is urgent. A Certificate of
Urgency is filed together with that SIC to seek leave from the Registrar that the case of your
company to be heard as soon as possible, usually on the very day the SIC is filed.

As stated in order 29 rules 1 (2A) of the Rules of Court 2012, the affidavit in
support attached must contain clear and concise statement of:-

a) the facts giving rise to the claim;


b) the facts giving rise to the application for interim injunction;
c) the facts relied on to justify the application ex parte, including details of any notice
given to the other party or, if notice has not been given, the reason for not giving
notice;
d) any answer by the other party (or which he is likely to assert) to the claim or
application;
e) any facts which may lead the Court not to grant the application ex parte or at all;
f) any similar application made to another Judge, and the order made on that application;
and
g) the precise relief sought.

Meanwhile, an interim injunction granted only valid for 21 days start from the date
it was granted unless earlier revocation and such order must be served within 7 days to the
opposite which is Jabatan Perhutanan Negeri Selangor.

(D) Conclusion on Issue 1

Therefore, based on the foregoing and subject to the assumptions and legal opinion set forth
herein, we are of the opinion that your company should apply for interim prohibitory
injunction to restrain or prohibit Jabatan Perhutanan Negeri Selangor to demolish buildings
erected by your company before trial begin. There is a serious matter to be tried as Jabatan
Perhutanan Negeri Selangor has no right to demolish the buildings as no order from court
given pursuant to section 94 (3) of National Forestry Act 1984 therefore the balance of
convenient should be favourable to MFSB to avoid injustice besides it must show that your
company had legal interest that needed to be protected by way of an interlocutory or interim
injunction. Meanwhile, remedy of injunction generally is not applicable against any
government department pursuant to section 29 (1) of Government Proceeding Act 1956 and
54(d) of Specific Relief Act 1950 however both provisions only apply to perpetual injunction
instead of interim injunction, hence there was no effect to us at all. Moreover, a Summons in
Chamber should file together with Certificate of Urgency, notice of application, affidavit in
support and writ in order to apply for interim injunction.

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ISSUE 2: Whether PKPS has the right to claim rescission to terminate the joint venture
agreement.

(A) Rescission is a form of remedy

First and foremost, rescission is a form of remedy. Rescission occurs when a contract made
between parties is set aside and they are restored to the position they would have been in had
the contract never been made. The contract is in effect voidable. For your information, if the
joint venture agreement (JVA) is successfully rescinded by PKPS, the contract is deemed to
be terminated. It also nullifies the contract from the very beginning. Thus upon rescission,
each party is entitled to be relieved of his obligations under the contract and to recover any
benefit which he may have conferred upon the other party. Definitely MFSB will be
compensated by PKPS upon discretion of court. However, we opined that compensation
ordered by court may not be adequate as your work done. As we know the agreement
involves a big project and it consumes a big amount of monies, efforts and times which the
project should not be terminated nor rescinded. Thus, we strongly advise that you shall
oppose the rescission by PKPS by bringing a legal action against PKPS. We will explain the
ground to oppose the rescission after we had explained the grounds PKPS may use for suit of
rescission.

There are a few grounds where PKPS may use to rescind the said agreement. First of
all, PKPS might argue that there was a common mistake in JVA which both parties had given
mutual consent that the said land shall charge to the bank in order to apply financing loan.
PKPS also had made an application to the State Government but it was rejected due to the
said land has no individual title as it is a forest reserved land and it is not possible to charge
the said land to the bank. Therefore, PKPS may depend on this common mistake to claim for
rescission.

Next, PKPS might contend that there is no subject matter which refers to the said land
stated in JVA between PKPS and MFSB. Consequently, the JVA is impossible to perform
without the said land. This is because the contract between the State Government and PKPS
had been withdrew and the said land had been taken back by State Government due to failure
payment of royalty by PKPS and no activity of replanting been carried out by PKPS on the
said land.

Besides that, PKPS may argue that the JVA had been frustrated as there is unforeseen
event occurred. A frustrated contract is a contract that without fault of either party is
incapable of being performed due to an unforeseen event, resulting in the obligations under
the contract is different from those contemplated by the parties to the contract. Hence, PKPS
may rely on the refusal by State Government to charge to bank as unforeseen event. Last but
not least, PKPS may apply to the court under Section 34 (1) (a) of Specific Relief Act 1950 to
have the contract rescinded by the court. The JVA is voidable contract and PKPS has rights to
rescind it under law.

(B) Grounds for MFSB to oppose the claim of rescission made by PKPS

According to Section 40 of the Contracts Act 1950, it provides that when a party to a contract
has refused to perform or disabled himself from performing his promise in its entirety, the
innocent party may put an end to the contract(rescind the contract). Referring to the case of

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Yong Mok Hin v. United Malay States Sugar Industries Ltd[1967] 1 LNS 220; [1967] 2 MLJ
9 It was held that under sec 40, when the appellant has refused to perform his promise, the
contract is voidable at the option of the respondents.

Moreover, where the innocent party alleges that he has the right to rescind for breach,
it must first be determined whether there has been a breach of the term of the contract or a
mere misrepresentation, and secondly, whether the breach is sufficiently serious to justify
rescission as opposed to a claim for damages. Refer to the case Ching Yik Development Sdn
Bhd v Setapak Heights Development Sdn Bhd [1997] 1 CLJ 287, the court held that if the
term that is fundamental to the contract is breached, the innocent party can entitled to
terminate the contract due to the non-performance. However, if the term is not fundamental
but only minor or subsidiary, the innocent party may just recover the damages arise due to the
non-performance.

In this case, PKPS wanted to claim for rescission of the joint venture agreement
because of the decision of Kerajaan Negeri Selangor to terminate the lease. However, MFSB
as the main contractor did not wilfully breach the contract because they cannot perform the
contract due to the lack of financing. It was already stated in the consensual agreement that
the other financing will be through a bank loan by making the lease land as collateral and
MFSB already asked PKPS to obtain leave from the State Government to allow the forest
reserve land as collateral (security) but it was the State Government whom did not allowed it.
PKPS does not have the right to rescind because there was no serious breach by MFSB.

Next, there are clauses in the Joint Venture Agreement that stated about the
Termination of Contract where a party who elects to rescind the contract may exercise his
right by giving notice to the other party of his intention to rescind the contract within a
reasonable time. This is by virtue of Section 67 of the Contracts Act 1950 provides that the
rescission of a voidable contract may be communicated or revoked in the same manner, and
subject to the same rules, as apply to the communication or revocation of a proposal.
Referring to the case of Lintel Pines Pty Ltd v Nixon [1991]1 VR 287 , a notice of rescission
must comply strictly and absolutely with the contract requirements. It was a requirement of
the contract that the notice of rescission refer to clause CL16. The notice failed to state that
the rescission would be pursuant to CL16, and as such was insufficient to rescind the
contract.

Hence in this case, since time is of the essence of the contract, PKPS, in order to
rescind the contract must give reasonable notice to the MFSB before claiming this remedy.
PKPS had failed to give the notice to MFSB, thus PKPS does not have the right to rescind the
contract.

Furthermore, it also involves a Premature Contract Termination. The Clause in the


Joint Venture Agreement stated that either party has the right to terminate this Agreement
with immediate effect upon giving a written notice to the other party in the event the other
party materially breaches this Agreement, including but not limited to, a breach of the
obligations under Articles 7.1, 7.2 and 7.3 of this Agreement, and fails to cure its such breach
within 30 days from the date it receives the written notice of its breach from the non-
breaching party. The termination of this Agreement shall not prejudice the rights or remedies
of the terminating party at law or otherwise. Within the valid term of this Agreement, the
Licensor may, at any time, terminate this Agreement upon giving prior 30 days written notice
to the Licensee.

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Bear in mind that on 23/4/2013, PKPS has agreed to give an access and temporary
occupation license towards MFSB for the period of 50 years. But, on 12/2/2017 PKPS has
filed a writ action toward MFSB for rescission order on the Joint Venture Agreement. Until
now, the time of the performance was only 4 years compared to the term agreed in the Joint
Venture Agreement which is 50 years. The premature contract termination does not refer
only the time but must also see the performance of the parties. PKSP in this case does not
have reasonable ground to terminate the contract during the premature of contract. In this
case PKPS and MSFB contracted under a joint venture agreement. Therefore, fiduciary
relationship existed among them. The fiduciary undertakes or agrees to act for, on behalf or in
the interest of, the beneficiary, being a person in the position of vulnerability. The essence of
fiduciary relationship is one of trust and confidence between the fiduciary and the
beneficiary. In the case of Farah Construction Pty Ltd v. Say-dee Pty Ltd [2007] HCA 22, the
court stated that the parties to a joint venture owe duties of trust or fiduciary responsibilities
to their co-ventures.

In this case, PKPS claim of rescission of the joint venture contract amount to breach
of fiduciary relationship. This is because if the claim of rescission is being granted, the parties
go back to their original position as the agreement is not exist. The consequences of
rescission is that it will restrain MFSB from obtain any damages from the breach of the
fiduciary relationship. This will cause injustice to the MFSB as his right to be heard was
denied when Majlis Mesyuarat Kerajaan Negeri Selangor had made the decision to terminate
Perjanjian Konsesi dan Pajakan. Besides that, Jabatan Perhutanan Negeri Selangor also
issued a notice to demolish temporary office that has been built by MFSB. MFSB can claim
another type of remedy to continue the joint venture agreement without having to rescind.
This will be discussed on the next issue.

(C) Conclusion on Issue 2

In conclusion, we would like to advice that before MFSB bring a legal action towards PKPS,
your company shall make an application to stay on proceeding and refer both parties, which
is PKPS and MFSB to arbitration. Proceeding is the worst solution for both parties and act as
your legal adviser, we would like to suggest your company may communicate with PKPS and
hold a negotiation with PKPS in order to minimize the losses of both parties.

Besides that, MFSB should make application under Section 10 of Arbitration Act
2005 read together with Order 69 Rule 10 of Rules of Court 2012. The application shall be
filed to High Court and it must be supported by affidavit and the copy of application shall be
served to PKPS within 14 days. In the meantime, after application to stay of proceeding has
been granted, MFSB may apply for judicial review on the decision made by MMKNS
because MFSB as an interested party to said land shall enjoy the right to be heard during
decision making. The decision was made without MFSBs presence therefore the decision is
unjust and not absolute.

As an alternative, MFSB may apply straight to State Government directly to continue


the said project if the decision of withdrawal is upheld during judicial review. Based on our
understanding, purpose to charge the said land to the bank is as security document to obtain
the financing loan to secure a repayment. However, the charge is not the only form of security
document and it may be replaced by way of assignment in order to secure the repayment.

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ISSUE 3: Whether MFSB can apply for remedy of specific performance to continue the
Joint Venture Agreement.

(A) Validity of Contract

In Malaysia, our contract law is basically governed and enforced by the Contract Act 1950.
The remedy of specific performance presupposes the existence of a valid contract between
the parties to the controversy. The terms of the contract must be definite and certain. This is
significant because equity cannot be expected to enforce either an invalid contract or one that
is so vague in its terms that equity cannot determine exactly what it must order each party to
perform. It would be unjust for a court to compel the performance of a contract according to
ambiguous terms interpreted by the court, since the court might erroneously order what the
parties never intended or contemplated.

As a general rule, performance of a contract must be exact and precise and should be
accordance to with what the parties had promised. Section 38(1) of the Contracts Act 1950
provides that the parties to a contract must either perform or offer to perform their respective
promises, unless such performance has been dispensed with by any law. In order to form a
contract agreement that is enforceable by law, the following six elements must be fulfilled by
both parties namely (a) proposal or offer, (b) acceptance, (c) consideration, (d) intention to
create legal relations, (e) capacity to contract and (f) free consent.

Based on my understanding of the law of contract, there is a valid contract between


MFSB and PKPS. There is a contractual basis between the parties, therefore there can be a
basis for any claim for specific performance.

(B) Definition of Specific Performance

Specific Performance means, 'a decree issued by the court that the defendant shall actually
perform and carry out the promise that he has made, or the obligation, expressly or impliedly,
cast upon him by the conduct between the parties.' Specific performance is an equitable
remedy in the English law. Specific performance is a remedy sought in civil court, instead of
money. It requires a defendant to actually go through with a certain action he promised to do,
instead of just paying money for not keeping his promise. Specific performance is referred to
under the law as an equitable remedy.

According to Mohamed v Ho Wai [1961] MLJ 7, specific performance will only be


granted in the discretion of the court in the cause of executory contracts. Specific
performance is the correct remedy where MFSB want an order that PKPS should carry out
his part of the contract. Where the court grants an order of specific performance, the
contracting party who in breach of the contract refuses to perform his obligation(s) under the
contract, will be compelled to perform the obligation(s). Failure to do so will render him
liable for contempt of court for non-compliance with an order of court. In Hutton v Watling
[1947] 2 All ER 641, specific performance is founded simply upon the fact that the normal
common law remedy for breach of a contract, namely damages, is not in all cases and
adequate remedy. This is particularly so in contract dealing with the unique subject-matter.

Notwithstanding there are many rules and laws governing the awarding of specific
performance, specific performance can be granted by the court when the court thinks that it is
proper and just to grant it. More complete and perfect justice is achieved by compelling the

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parties to perform exactly what they had agreed to perform. The discretionary nature of the
remedy is well illustrated by a consideration of the matters such as the conduct of the plaintiff
which the court may consider as a bar to specific performance. Under the circumstances,
justice will be done between the parties.

(C) Statutory Principles

The Act which governs and provides specific performance in Malaysia is the Specific Relief
Act 1950 (revised in 1974) (Act 137). Section 11 (1) gives the discretion to the court to order
specific performance in four categories. It is a decree by the court to compel a party to
perform his contractual obligations as stated under Section 21 as it is basically an equitable
remedy. It is usually only ordered where damages are not an adequate remedy.

The power of the court to grant damages, in addition to, or in lieu of specific
performance, under section 18 was considered by the Federal Court in Lee Hoy & Anor v
Chen Chi [1971] 1 MLJ 77. It was held in this case that the court could award damages under
this section only in cases where the plaintiffs asks for specific performance. In Ganam
Rajamany v Somoo Sinnah [1984] 2 MLJ 290, the Federal Court held that a party seeking the
relief of specific performance was required to treat the contract subsisting and was
required to prove a continuous readiness and willingness to perform the contract on his
part.

i. Situations in which specific performance enforceable

According to section 26 (a), specific performance of a contract may be enforced


against either party to the contact. Based on the situation given, MFSB may apply specific
performance remedy to continue the agreement with PKPS following the guidelines provided
in section 11 for the court to take into account in exercising their discretion as to whether to
grant specific performance.

Firstly, act agreed to be done in performance of a trust. Section 11 (1) (a) provides
that when the act agreed to be done is in the performance, wholly or partly of a trust, this is
factor which the court should take into account in exercising its discretion in favour of
granting specific performance.

Secondly, where there is no standard for ascertaining the actual damage. Section 11
(1) (b) provides that the fact there exists no standard for ascertaining the actual damage
caused by non-performance of the act agreed to be done is also a factor which the court
should take into account in exercising its discretion in favour of granting specific
performance. Generally, specific performance is granted where damages would not be an
adequate remedy to compensate MFSB for the losses caused to him by PKPSs rescission of
contract. If the fact are such that it is not possible to assess the losses suffered by MFSB in
financial terms, it may not be possible to award damages. Therefore, the fact that damages
cannot be assessed, points in favour of the court granting MFSB specific performance of the
contract. In Pamaron Holdings Sdn Bhd v Ganda Holdings Bhd [1988] 3 MLJ 346, it was
held that a seller of shares not freely saleable in the open market is entitled to specific
performance to enforce the sale of such shares.

Thirdly, where pecuniary compensation would not afford adequate relief. Section 11
(1) (c) provides when the act agreed to be done is such the pecuniary compensation for its

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non-performance would not afford adequate relief, the court would more likely exercise its
discretion to grant specific performance. In HA Securities Sdn Bhd v Ng Kong Yeam [1993]
3 MLJ 489, specific performance of a memorandum of understanding for sale of shares was
refused on the grounds that the shares were freely available in the open market and that
damages would be an adequate remedy. If damages would adequately compensate MFSB,
there is no point in forcing PKPS to specifically perform the contract. Where the court finds
that damages would not be adequate remedy for MFSB, the balance lie in favour of granting
specific performance. In fact there is not pecuniary compensation is given to MFSB.

Lastly, where pecuniary compensation cannot be obtained. Section 11 (1) (d) provides
that when it is probable that pecuniary compensation cannot be obtained for the non-
performance of the act agreed to be done, the court should take this into account as a factor in
a favour of exercising its discretion to grant specific performance of the contract to MFSB as
no pecuniary compensation was paid.

ii. Discretion as to decreeing specific performance

Where the plaintiff has done substantial acts or suffered losses in consequences of the
contract. A case where the court may properly exercise its discretion to order specific
performance is where MFSB has done substantial acts (replanting works) or suffered losses
(recession of joint ventures agreement by PKPS) in consequences of contract according to
section 21 (3). However, this is provided that the contract is question specifically enforceable.
The fact that MFSB has partly performed the contract in the expectation that PKPS would
perform the rest of the contract provides an equitable remedy for MFSB and would not
enable PKPS to escape from the obligation of contract. The court will order specific
performance of the contract.

For example in the case of Wan Salimah bte Wan Jaafar v Mahmood bin Omar [1998]
5 MLJ 162, an agreement for a lease had been partly executed by possession having been
taken under it and two buildings had been built on it. The court held that the equitable remedy
of specific performance would be undoubtedly an appropriate remedy. It was further held that
the plaintiff certainly had a remedy against the defendant and a court of equity will strain its
power to enforce full performance of the agreement in favour of plaintiff. In Mawar Awal (M)
Sdn Bhd v Kepong Management Sdn Bhd & Anor [2005] 7 CLJ 296, the court found it just
and equitable to grant specific performance of the sale and purchase agreement because the
plaintiff had expended a substantial amount of money on the land based on defendants
promise to comply with its obligations under the sale and purchase agreement.

(D) Common Law and Equitable Principles

Apart from the statutory considerations discussed earlier which operate to determine whether
or not to grant a remedy of specific performance of a contract, various other common law and
equitable defences may also be raised against a claim for specific performance. Equitable
remedies and doctrines are therefore flexible and adaptable to particular circumstances.

The court will not grant specific performance where there is no equity in favour of the
applicant. Since specific performance is an equitable remedy, the equity maxims of he who
seeks equity must do equity or he who comes to equity must come with clean hands will
apply. The basis of the remedy of specific performance lies in equity and as such, where the
plaintiff does not come with the clean hands, the court will be entitled to refuse the remedy in

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order to protect the defendant from being a victim of sharp practice. The court will not grant
specific performance where there is no equity in favour of the MFSB. Moreover, MFSB must
also show that they has performed their obligations under the contract or that they had been at
all times ready, able and willing to do so. In Tay Tho Bok & Anor v Segar Oil Palm Estate
Sdn Bhd [1996] 3 MLJ 181, the court held that as the decree of specific performance is a
form of equitable relief so as to ensure that justice is done, the plaintiffs were entitled to insist
on specific performance, to put them in the position in which they would have been if the
representation had been true.

Next, equity will do nothing in vain. Specific performance also will not be granted
where the performance of the contract would prove useless. The court may refuse to order
specific performance where it would involve ordering PKPS to perform an act that they is not
legally competent to perform.

Furthermore, where there is no valid and binding contract. The jurisdiction to order
specific performance is based on the existence of valid enforceable contract. In seeking
specific performance of a contract, the plaintiff must prove that the contract has been
breached by the defendant and that despite the breach, that the contract still remains valid and
in force. It will be a defence for the defendant to show that there is no valid and binding
contract between the parties. Specific performance is an equitable relief given by the court to
enforce against PKPS the duty of doing what he agreed and not simply order a recession of
the contract. To invoke the remedy, three conditions must be fulfilled according to the case if
Sivapragasam Nagamany v Amaravathy Nadeson & Anor [2001] 8 CLJ 706 namely, the
contract (a) is valid in form (b) has been made between competent parties and (c) is
unobjectionable in nature and circumstances. Therefore, where PKPS is able to show that no
valid contract exists in the first place with MFSB, then obviously there will be no contractual
obligation to be specifically enforced.

In conclusion, on behalf of MFSB, the court shall grant a remedy of specific


performance because there is equity in favour of MFSB. PKPS is legally competent to
perform their obligations based on the contract because it is proven contract between MFSB
and PKPS is valid and binding contract at the first place. If not it will prejudice to MFSB
because recession or discontinuance of the contract will make the company suffer losses
therefore no pecuniary compensation is granted.

(E) Conclusion on Issue 3

As a conclusion, we are of the view that MFSB has valid and strong basis to be granted
remedy of specific performance and the court might grant the order by taking into
considerations of the following above matters. MFSB has not be given right to be heard
before decision made by Majlis Mesyuarat Kerajaan Negeri Selangor and also MFSB had
suffered from losses. Furthermore, MFSB did not received compensation in money as an
adequate relief from PKPS. If the court in the exercise of its discretion decides that the case is
not a proper one for an order of specific performance to be made, we suggest that if possible
to be awarded with compensation according to section 18 (2). The court, when assessing
damages under section 18, adopt the same basis of assessment of damages under section 74
of the Contact Act 1950. The court can only award compensation under section 18 in a case
where MFSB prays for specific performance and they did pray for specific performance. We
also note that the fact that a contract has become incapable of specific performance will not
preclude the court from exercising the jurisdiction conferred by section 18 (5).

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Issue 4: Whether MFSB can apply remedy for judicial review to challenge the decision
of the State Executive Council and the procedures for filing a judicial review.

Introduction of Judicial Review

Generally, a person or an organization aggrieved by decision of public authority can go to


Court to challenge their decision. This is known as judicial review. Judicial review is
concerned with legality of the decision making process of the executive and not with merits
of the decisions. The application on judicial review concerns on the review and not on appeal.
Judicial review is the process by which decisions made by government agencies or
government can be challenged in the High Court by the affected person. The difference
between a judicial review and an appeal is that, appeal is of right whereas certain conditions
and leave must be obtained for application of judicial review.

(A) Principle of Judicial Review

The principle of judicial review derives from the constitutional doctrine of separation of
powers. The doctrine of separation of power is consist with three important institutions
namely the Legislature, Executive and Judiciary. The doctrine separation of power protect
liberty and abuse of power. As the saying goes, absolute power corrupts absolutely. The
mechanism of check and balance in Malaysia operates in a way that, all the three branches
can limit or control the powers of the others. Thus, the judicial branch checks on the
Executive decision through judicial review.

(B) Purpose of Judicial Review

The main purpose of judicial review is for protection of individual against illegal acts and
omission of the administration. Judicial review provide remedies from wrong done to an
individual or organization, to ensure that the administrative bodies act lawfully within the
boundaries of law and lastly, to ensure that the administrative bodies perform their public
duties according to the law and not against the law. If the authority acts ultra vires which is
more than the power conferred to them, then it is unlawful. In that case, the court will
interfere by reviewing the decision to determine the lawfulness of the decision, action or
omission. It is important to note that before an application of judicial review can be made
there need to be decision from the Executive Body that affected the aggrieved person. In the
current case of MFSB v Kerajaan Negeri Selangor, the decision of Mesyuarat Kerajaan
Negeri Selangor to cancel and suspend the contract and decision from Jabatan Perhutanan
Negeri Selangor to demolish projects made has affected MFSB as a contracting party.

(C) The requirement of Locus Standi in Judicial Review

Before a party can apply for judicial review, he or she must shows to have a locus standi on
the matter. In law, locus standi means the right to bring an action, to be heard in court, or to
address the court on a matter before it, it is the ability of a party to demonstrate to the court
sufficient connection to and harm from the law or action challenged to support that partys
participation in the case. A person is qualified to take legal action, as he is affected to some
degree by the issue he is taking action against. Locus standi is one of the important
requirement in applying Judicial Review.

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There is a development in Malaysian law regarding the test on locus standi. The main case in
discussing requirement of Locus Standi is Government of Malaysia v Lim Kit Siang [1988] 1
CLJ 219. This case was about the construction of Federal Highway project, Projek Lebuhraya
Utara Selatan (PLUS). The Supreme Court held that a litigant may only commence an action
if he seeks redress for an interference with a right that is private or personal to him or, in
the event of an interference to a right that is common to all members of the public, if he
suffers special damage peculiar to himself. As a result, the Court ruled that Lim did not
have locus standi to commence the action because it could not be said that there was or
would be an interference with his private or personal right nor could it be said that he had or
would suffer special damage peculiar to himself.

Another case of Malaysian Trade Union Congress v Menteri Tenaga, Air


dan Komunikasi. In this case, Perbadanan Urus Air Selangor Bhd, which was subsequently
taken over by Syarikat Bekalan Air Selangor Sdn Bhd ("SYABAS"). SYABAS was granted a
30-year concession to supply treated water to the State of Selangor and the Federal Territory
under a Concession Agreement which, inter alia, provided that SYABAS was entitled to
increase the water tariffs if it achieved a 5% reduction in what was known as non-revenue
water. SYABAS subsequently applied to increase the water tariffs by 15% based on an audit
report which purportedly confirmed that SYABAS had achieved a 5% reduction in non-
revenue water. Thereafter the Minister announced that SYABAS had met the performance
target and was eligible to increase water tariffs by 15% as from 1 November 2006. MTUC
and 13 others filed an application for judicial review asking for, amongst others, a declaration
that the general public and MTUC had a right to view the two documents and an order
directing the Minister to disclose the contents of the same.

In this case, the court stated that a locus standi needs at least a genuine interest in an
issue but no longer needs to prove that his rights are affected. It was later emphasized that the
test under Order 53 Rules of Court 2012, for the applicant to pass the adversely affected
test, the applicant has to at least show that he has a genuine interest in the subject matter but it
is not necessary for the applicant to establish infringement of a private right or the suffering
of a special damage. Thus an applicant must show that he has genuine interest on the matter
and was adversely affected by the Executives decision.

The decision of Mesyuarat Kerajaan Negeri Selangor in terminating the contract of


MFSB and PKPS gives a valid Locus Standi to MFSB. MFSB has fulfilled the obligation to
replanting the forest. MFSB is the aggrieved party that was adversely affected from the
Kerajaan Negeri Selangor.

(D) Procedure to Apply for Judicial Review

The procedure to apply for judicial review is stated in Order 53 of Rules of Court 2012.
Firstly, before an application of judicial review can be made, party must obtained leave from
the court as stated in Order 53 Rule 3. An ex parte application must be made to a Judge in
Chambers and must be supported by a statement setting out the name and description of the
applicant, the relief sought and the grounds on which it is sought accompanied with an
affidavits verifying the facts relied on.

The second step is the applicant must give notice of the application for leave not later
than three days before the hearing date to the Attorney Generals Chambers and must at the
same time lodge in those Chambers copies of the statements and affidavits.

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Based on Order 53 Rule 3 (6), the time limit for application of judicial review shall be
made promptly within 3 months from the date when the grounds of application first arose or
when the decision is first communicated to the appellant. Nevertheless, the court in its
discretion may extend the time provided there is a good enough reason.

Order 53 Rule 4 talks about notice upon granting of leave by the court. Based on
Order 53 Rule 4 (1), where leave has been granted under this rule, the applicant shall within
fourteen days after the grant of such leave, file a notice in Form 110.

Based on Order 53 Rule 4 (2), upon extraction of the sealed copy of Form 110, the
applicant shall serve a copy of the same together with a copy of the statement and all
affidavits in supports on all persons directly affected by the application not later than fourteen
days before the date of hearing.

Order 53 Rule 5 states that the Court may award damages to the applicant if it is
included in the statement in support of his application for leave under rule 3 a claim for
damages arising from any matter to which the application relates and if the court is satisfied
that if the claim has been made in an action begun by the applicant at the time of making his
application, he could have been awarded damages. Thus, these are procedures for application
of judicial review under Rules of Court 2012.

Grounds for Judicial Review

Basically, there are 3 grounds for Judicial Review which are, illegality, irrationality, and
procedural impropriety.

The first ground of illegality concern about whether the decision made by the
Executive is contrary to law such as Federal Constitution, State Constitution, Act of
Parliament, State Enactment, subsidiary legislation, rules or by laws. If an Executive body
acts mala fide it also amounts to an illegality. In this matter, the issue of illegality under
section 94 (3) of National Forestry Act 1984 should be discusses in the Judicial Review
process.

The second ground is irrationality. According to the case of Associated Provincial


Picture Houses Ltd v. Wednesbury Corp [1948] 1 KB 233, the court is entitled to investigate
the action of the local authority with a view to seeing whether they have taken into account
matters which they ought not to take into account or conversely have refused to take into
account. Once that question is answered in favour of the local authority, it may be still
possible to say that although the local authority have kept within the four corners of the
matters which they ought to consider they have nevertheless come to a conclusion so
unreasonable that no reasonable authority could ever have come to it. In such a case, the court
can interfere.

The power of the court to interfere in each case is not as an appellate authority to
override a decision of the local authority but as judicial authority which is concerned to see
whether the local authority have contravened the law by acting in excess of the power which
Parliament has confided in them. Therefore irrationality results in prejudice to the aggrieved
party. The Kerajaan Negeri Selangor should be rational in finding the conclusion to terminate
the contract. MFSB had fulfilled the obligation in performing replantation activities.

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The third ground is procedural impropriety. This ground can be used, when the
decision making process was unfair or unjust and breached the rules of natural justice. In
Sarawak Electricity Supply Corporation v. Wong Ah Suan [1980] 1 MLJ 65, the court stated
that if a person were to be deprived of any of their rights, the rule of audi alteram
partem must be strictly observed. Therefore, it is fundamental to fair procedure that both
sides should be heard. MFSB should be given the right to be heard based on the rule of audi
alteram parterm before Kerajaan Negeri Selangor terminate the contract.

(E) Conclusion on Issue 4

In Conclusion, we are in view that MFSB should apply for judicial review under Order 53 of
Rules of Court. This is strongly advised as MFSB has a locus standi in applying judicial
review. All the three grounds had been fulfilled in establishing Judicial Review process which
are illegality, irrationality, and procedural impropriety.

CONCLUSION

Based on the explanation above, we hereby advise that these further steps can be taken:

1. MFSB should apply for interim prohibitory injunction to restrain or prohibit Jabatan
Perhutanan Negeri Selangor to demolish buildings erected by your company before
trial begin.

2. MFSB should apply for Stay of Proceedings under Section 10 of Arbitration Act 2005
and Order 69 Rule 10 of Rules of Court 2012 in waiting for arbitration process to end.

3. MFSB should apply to court for grant a remedy of Specific Performance in preventing
MFSB suffering losses.

4. MFSB should apply for Judicial Review in upholding justice especially on the
grounds of a fair trial.
On the procedural view, we strongly advised that MFSB could take a serious action in
entering appearance upon receiving the Writ from PKPS. The Memorandum of Appearance
(MOA) should be filled before 26.04.2017

We hope that above opinion has furnished you with a better understanding on the issues and
will assist you to seek justice on your behalf. Please do not hesitate to contact us should you
need further clarification.

Yours faithfully,

MESSRS

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