KOTA KINABALU: The High Court has ordered three people – including an elected representative – to pay damages to Borneo Samudera Sdn Bhd (BSSB) for unlawfully inducing the Bahagak Smallholders Scheme participants to breach their Joint Venture Agreement (JVA) with BSSB.
Justice Chew Soo Ho in his judgement on Sept. 30 found that BSSB had proven the requisite conditions in law of inducement of breach of contract. BSSB had claimed damages of RM557,641,716.29.
In the suit, BSSB as plaintiff had named Siti Rahfizah Mihaldin as first defendant, Samsuri Baharudin as second defendant and opposition PKR's Api Api Assemblywoman Christina Liew as the third defendant. It is understood to be the highest amount in damages in Malaysian judicial history ever to be awarded either singly or jointly against a serving elected representative.
In his judgement, Chew allowed BSSB's claim and also granted a declaration that the smallholders be relieved from all and every liability under the respective Sale and Purchase Agreements purportedly entered into by them with Siti.
An injunction was also granted to restrain the trio from committing further breaches or unlawfully interfering in the JVA with loss and damages against the Defendants to be assessed by the Deputy Registrar of Tawau, with interest and costs.
In the suit, BSSB, a subsidiary of government-linked company Sawit Kinabalu Sdn Bhd, alleged that the defendants had jointly and intentionally designed and schemed to unlawfully induce the breach of JVA to obtain the lots from about 819 smallholders (the JV land approximately 12,000 acres) for their own use and benefit, knowing that the said lots had been injected to the JV company and that the land has been fully developed by the JV company and BSSB in accordance with the JVA. BSSB further pleaded that Liew as an advocate and solicitor in preparing the alleged sale and purchase agreements ('SPA') had advised, conspired and colluded with her accomplices the first Defendant, Siti, the purchaser, who was her staff at the time of signing the various purported SPA, together with Samsuri Baharudin, the purported attorney of the smallholders to unlawfully wrest the JV land by inducing the smallholders to sell their land. The Court also found that the various sale and purchase agreements purportedly signed by the smallholders dated sometime in 2005 and 2006 were prepared by Liew based on her unilateral legal opinion that the JVA had been allegedly breached or terminated and that the smallholders were entitled to sell their respective lots. The Judge stated that "the third Defendant's role was not merely confined to giving advice to the smallholders but had taken active steps to get the smallholders through the second Defendant to allegedly sell their lots to the purchaser who was her own employee, knowing fully well that the smallholder lots had been pledged with the Plaintiff and/or JVC in return for shareholding in the JVC which the third Defendant had prepared the Form 32A to be executed by the smallholders in favour of the first Defendant. There was no termination of the JVA whether by the smallholders or through the third Defendant or by an Order of the court. The third Defendant knew that the said JVA was not terminated and the smallholders would have no right to sell their lots but still persisted on her own unilateral legal opinion to allegedly advise that the lots could be sold and proceed with the sale and purchase agreement of those smallholder lots with her own employee as the purchaser. The judge felt that Liew had been instrumental and played an active and major role in the whole transaction herein ignoring the fact that there was an existing JVA between the Plaintiff and smallholders whose lots in the said land had been pledged under the JVA.
During the trial, the smallholders testifying as witnesses claimed they were misled into signing the purported sale and purchase agreements and power of attorney.
Being illiterate they relied on the representation of Samsuri and Liew and that they did not know that they were signing sale and purchase agreements and power of attorney. They also claimed having no intention of selling their lots but that they were asked by Samsuri and Liew to sign or thumb print documents in blanks and were told that if they do so they would be paid certain sums of monies as "incentive payments" or "wang hangus". It was also stated in the trial that the three defendants under the guise of championing the smallholders' cause in actual fact took advantage of the smallholders' disadvantaged bargaining position for their own advantage. Under the SPA, vacant possession and profit of the land was to be given by the smallholders to Siti upon payment of RM1,000. In the event of breach by the smallholders, apart from refunding the monies already paid, they also need to pay to the purchaser a sum equivalent to 50 per cent of the purchase price as agreed liquidated damages. The total purchase price of the said land is to the tune of RM83 million.
The first Defendant, Siti, although a material witness, did not attend or testify in the trial. The fact that she was a staff of Liew was never disclosed until BSSB discovered before the trial and challenged Liew who responded that Siti was acting as a nominee for an "undisclosed principal."
However, this matter of the purported "undisclosed principal" was never pleaded by the Defendants and this mystery person, if any, remained a mystery. The Judge stated that "the non-disclosure and/or concealment of the first Defendant being an employee of the third defendant as the purchaser, to the Court, was a deliberate act tainted with ulterior motive to conceal their scheme, as submitted by the Plaintiff, to buy up all the smallholders' lots in the said land which by then had been developed into oil palm plantation and was yielding."
The Judge further stated that "it is abundantly clear that the first and second Defendants are going for the smallholders lots which the third Defendant had been directly involved with the first and second Defendant to buy up the smallholders' lots in the said land which had been by then developed into an oil palm plantation by the Plaintiff."
"They were going after the lands and not the smallholders' interest under the said JVA. It is a common knowledge that a developed oil palm plantation would have escalated in the land value as compared to a mere undeveloped State land. "The benefit that the Defendants will obtain and enjoy in purchasing and acquiring the smallholders' lots which had been developed into oil palm plantation is easily inferred as such developed land is insurmountable in value or land price when they are resold. "The deliberate and direct interference with the Plaintiff's said JVA with the smallholders is undoubtedly for the Defendants' ultimate personal gains or benefit or enrichment."
Incidentally, most of the smallholders who have purportedly entered into sale and purchase agreements with Siti had lodged police reports and commenced legal proceedings against Siti and Samsuri for fraudulent misrepresentation to induce them to sign the sale and purchase agreements. They alleged that being illiterate they relied on the representation of the purchaser's solicitor, Liew and they were not given the opportunity to obtain independent legal advice. Therefore, they sought declaration among other things that the purported sale and purchase agreements are null and void and of no legal effect and claim for loss and damages. BSSB was represented by Jeyan Marimuttu, Jimmy Chang and Vanessa Marimuttu of Messrs J. Marimuttu & Partners while the three Defendants were represented by Alex Decena, Azimi Fahad Yahya and Sherzali Asli.
