Setia Promenade Sdn Bhd V Pph Resorts (Penang) Sdn Bhd

  

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IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

 

(COMMERCIAL DIVISION)

 

SUIT NO: D-22 NCC-268-2010

 

BETWEEN

 

SETIA PROMENADE SDN BHD – PLAINTIFF

 

AND

 

PPH RESORTS (PENANG) SDN BHD – DEFENDANT

 

JUDGMENT

 

1. By a Summons in Chambers (Enclosure 5) dated 15.3.10 the Defendant applied for an order to transfer Kuala Lumpur High Court Civil Suit No. D-22NCC-268-2010 to the Penang High Court and be consolidated with Penang High Court Civil Suit No. 22-174-10 for further hearing at the Penang High Court.

 

2. On 6/4/10 after reading Enclosure 5 and the affidavits filed by the Plaintiff and the Defendant respectively and upon hearing Counsels for both parties, I granted the order for the transfer and consolidation as prayed for to the Defendant.

 

3. The Plaintiff being dissatisfied with the order now appeals against the said decision.

 

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Brief facts of the case

 

4. The Plaintiff and the Defendant had entered into a Joint Venture Agreement (JVA) dated 12/12/06 to develop a piece of land for housing in the south west district of Penang.

 

5. Due to unresolved disputes arising between the Plaintiff and the Defendant in the joint venture development, the Plaintiff on 15/12/09 issued a letter to the Defendant to terminate the said JVA. The Plaintiff subsequently filed this civil claim in Kuala Lumpur on 11/2/10 claiming from the Defendant, inter alia, a sum of RM14,829,408.81 and for a declaration that the JVA is void for frustration or alternatively that the agreement has been lawfully terminated.

 

6. Subsequent thereto, the Defendant filed the Penang High Court Civil Suit on 12/3/10 claiming for, inter alia, an order of injunction for the return of the said land and for the removal of private caveats lodged on the ground of the unlawful termination of the JVA by the Plaintiff.

 

7. The Plaintiff has filed an application to strike out the Defendant’s Penang High Court Civil Suit or alternatively to transfer that suit to the Kuala Lumpur High Court.

 

8. The grounds relied on by the Defendant for the transfer of the Kuala Lumpur High Court Civil Suit to the Penang High Court and for consolidation with the Penang High Court Civil Suit are:-

 

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a) the defendant has a registered address and a business address in Penang;

 

b) the land for the proposed joint-venture development is located in Penang;

 

c) all the relevant approvals obtained are from the various authorities in Penang such as layout approvals granted by Majlis Perbandaran Pulau Pinang and the approval from Jabatan Alam Sekitar Pulau Pinang;

 

d) the postal address of the Plaintiff’s company which manages and undertakes the obligations under the JVA is in Bayan Lepas, Penang.

 

e) all the Plaintiff’s consultants are based in Penang;

 

f) all site meetings for the development were held in Penang;

 

g) all relevant documents pertaining to the JVA and development are kept in Penang;

 

h) most of the Plaintiff’s and Defendant’s witnesses are from Penang;

 

i) the letter of termination of the JVA dated 15/12/09 was issued from the Plaintiff’s Penang office to the Defendant.

 

9. Counsel for the Defendant also contended that the Plaintiff being aware of the aforesaid facts had abused the process of the court by filing this action in the Kuala Lumpur High Court.

 

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10. On the other hand, Counsel for the Plaintiff submitted that the Plaintiff’s Civil Suit should remain in the Kuala Lumpur High Court on the following grounds:-

 

a) the JVA dated 12/12/06 between the Plaintiff and the Defendant was signed in Kuala Lumpur;

 

b) the Plaintiff has its registered and business address in Puchong, Selangor;

 

c) there was no indication from Counsel for the Defendant that a suit would be imminently filed in the Penang High Court when he inquired of Counsel for the Plaintiff whether he has instructions to accept service of process;

 

d) that there was no mala fide on the part of the Plaintiff in filing the suit in the Kuala Lumpur High Court;

 

e) the Plaintiff should not be disadvantaged for having filed the Kuala Lumpur High Court Civil Suit prior to the Defendant filing the Penang High Court Civil Suit;

 

f) while most of the Plaintiff’s witnesses are from Penang, the inconvenience caused to the Plaintiff’s witnesses cannot support the Defendant’s application for a transfer of the case to the Penang High Court and

 

g) importantly, by clause 20.2 of the JVA, the Defendant had waived any objection to proceedings in any Court in Malaysia on the ground of venue or forum non conveniens.

 

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Reasons for decision

 

1. Section 23 (1) of the Courts of Judicature Act 1964 (the Act) states:

 

“Subject to the limitations contained in Article 128 of the Constitution the High Court shall have jurisdiction to try all civil proceedings where:-

 

a) the cause of action arose, or

 

b) the defendant or one of several defendants resides or has his place of business, or

 

c) the facts on which the proceedings are based exist or are alleged to have occurred, or

 

d) any land ownership of which is disputed is situated,

 

within the local jurisdiction of the Court and notwithstanding anything contained in this section in any case where all parties consent in writing within the local jurisdiction of the other High Court.”

 

Section 23 (1) of the Act clearly provides for the territorial jurisdiction of the High Court of Malaya and the High Court of Sabah and Sarawak. The present civil suit is well within the jurisdiction of the High Court of Malaya and any branch of the High Court of Malaya shall have jurisdiction and shall be equally competent to try the case.

 

Sulaiman Daud JC (now JCA) in the cited case of Cita Marine Sdn Bhd v Progressive Insurance Bhd [2001]6CLJ 506, after considering the case of Sykt Nip Kui Cheong Timber Contractor v Safety Life and General Insurance [1975] 2 MLJ 115 held:

 

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“From the above it is clear that reference to jurisdiction in sub-s.

 

23(1) of the Act is a reference to either the territorial jurisdiction of the High Court of Malaya or the High Court of Sabah and Sarawak”

 

If one of such High Court has jurisdiction over any cause or matter it shall necessarily follow that any branch of the High Court within the same territorial limit shall likewise have jurisdiction thereon.”

 

2. However in the present case the real issue to be determined by the Court is not which of the 2 courts, namely the Kuala Lumpur High Court or the Penang High Court has jurisdiction to hear the case. It is without doubt that both courts have equal jurisdiction or are equipollent to hear the Plaintiff’s case.

 

3. The main issue to be determined in the Defendant’s Summons in Chambers is whether the Kuala Lumpur High Court or the Penang High Court is the more suitable or appropriate forum to try the case.

 

4. Counsel for the Plaintiff contended that it is not in dispute that the Defendant had, by agreement, waived any objection to forum by reason of clause 20.2 of the JVA and that there is no reason whatsoever for the Court to refuse to recognize the Defendant’s agreed waiver. Counsel for the Defendant on the other hand argued that there was no such waiver of objection on the part of the Defendant and that the power of the Court cannot be ousted by agreement.

 

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5. Clause 20.2 of the JVA provides:

 

“In relation to any legal action or proceedings arising out of or in connection with this Agreement (“Proceedings”), the parties hereby irrevocably submit to the jurisdiction of the Courts of Malaysia and waive any objection to Proceedings in any such court on the grounds of venue or forum non conveniens

 

To my mind, the waiver referred to in clause 20.2 of the JVA merely means that the parties cannot raise any objection to the jurisdiction of the Courts in Malaysia, having submitted to it, by reason of venue or forum non conveniens. It however does not mean that the respective parties have waived any objection to a specific venue or forum at which the case may be tried. By way of illustration, if a plaintiff chooses to file a claim against the defendant at the Kota Bahru High Court when the cause of action arose in Penang and where the defendant resides in Kuala Lumpur, then in such a situation the defendant will be at liberty to apply to transfer the civil suit from the Kota Bharu High Court to either the Kuala Lumpur High Court or to the Penang High Court for trial notwithstanding that the Kota Bharu High Court has concurrent jurisdiction with the Kuala Lumpur and Penang High Courts.

 

6) In the Supreme Court case of American Express Bank Ltd v Mohamad Toufic Al-Ozier and Anor [1995] 1 CLJ 273 Peh Swee Chin SCJ considered the effect of a clause similar to that of clause 20.2 of the JVA. His Lordship referred to clause 19 of the Foreign Exchange, Metal and Option Trading Agreement applicable in that case.

 

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Clause 19: aforesaid reads

 

“…. The Customer waives any objection on the grounds of venue or forum non conveniens or any similar grounds and agrees that..”

 

Peh Swee Chin SCJ when considering the distinction between the point of jurisdiction and that of forum non conveniens went on to say, “It would be clear that, notwithstanding such clauses, a Malaysian Court that is, High Court below, could not be precluded simpliciter thereby from exercising the discretion, according to the doctrine of forum non conveniens, as to whether to hear the instant case or not”.

 

To my mind, what Peh Swee Chin SCJ in the case of American Express Bank Ltd said was that notwithstanding the existence of a clause such as clause 20.2 of the JVA (which is similar in terms to clause 19 of the Foreign Exchange, Metal and Option Trading Agreement) a High Court in Malaysia cannot simply be precluded from hearing a case according to the doctrine of forum non conveniens. I am of the view that the Court when exercising its discretionary power to determine the venue or forum of a case, the Court ought to treat the provisions of a clause such as clause 20.2 of the JVA as one of the factors to be considered together with the 4 criteria mentioned in Section 23 (1) of the Act. The burden in on the Defendant to satisfy the Court that the Penang High Court is the more appropriate forum to try the action which the Plaintiff had launched.

 

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7. In the case of Malacca Securities Sdn Bhd v Loke Yu [1998] 3 CLJ

 

22, Augustine Paul J (as he then was) when considering the territorial jurisdiction of a branch High Court; the power of a branch High Court to transfer proceedings pending before it to another branch High Court and the applicability of the doctrine of forum conveniens enunciated the following propositions of law:

 

i) the civil jurisdiction of the 2 High Courts in Malaysia is governed by Section 23 (1) of the Act. This section read with section 3 of the Act sets out the territorial jurisdiction of the High Court in Malaya and the High Court in Sabah and Sarawak.

 

ii) A plaintiff is entitled to file an action in any branch of the High Court in Malaya regardless of whether the cause of action arose in another state. However, the fact that the Court has juridisction to hear the dispute is not the end of the matter. The criticial issue for determination is whether this Court is the forum conveniens to hear the dispute notwithstanding the fact that it has jurisdiction to do so.

 

iii) For all practical purposes, the branch High Courts can be considered as having their own jurisdiction. It would therefore be oppressive and vexatious to commence proceedings in a particular branch of a High Court in Malaya when it could have been more suitably or appropriately commenced in another branch as it would defeat the very object for which the branch High Courts were set up. It would amount to a defendant being improperly vexed by legal procedure if a plaintiff is to be allowed to choose a branch High Court

 

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of his choice by virtue of the local jurisdiction of the High Court in Malaya. It is part of the general jurisdiction of the court to prevent such abuse. The corollary is that an action should be filed and heard in the proper branch of the High Court in Malaya.

 

iv) It follows that a branch High Court can decline to exercise its jurisdiction even when the other forum is another branch court. In declining to exercise jurisdiction, however, a court does so not on grounds of convenience but of the suitability or appropriateness of another tribunal in the interests of all parties and for the ends of justice. It would constitute very strong grounds for the court to decline to exercise its jurisdiction to hear the case in cases where an action is filed in the wrong branch of the High Court.

 

I wholly agree with the above principles set out by Augustine Paul J (as he then was).

 

8. In view of my determination that the Defendant by clause 20.2 of the JVA had agreed to submit to the jurisdiction of the Courts of Malaysia and had not waived any objection as to venue or forum, the next issue to be determined was whether it is more suitable or appropriate to have the case heard in the Penang High Court. I find in this case, considering the many grounds put forth by the Counsel for the Defendant, that the case may be tried more suitably at the Penang High Court in the interest of all parties and also for the ends of justice. It would also be in the best interest of business efficacy of the Plaintiff and Defendant and there would be no peculiar difficulties which the Plaintiff would face in Penang.

 

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In the case of American Express Bank Ltd (supra) Peh Swee Chin SCJ also held:-

 

the fundamental principle in regard to this doctrine (of forum non conveniens) ie that “there is some other tribunal, having competent jurisdiction, in which, the case may be tried more suitably for the interest of all parties and also for the ends of justice.” Lord Goff cautioned that the word “conveniens” in forum non conveniens meant suitability or appropriateness of the relevant jurisdiction and not one of convenience.”

 

Peh Swee Chin, SCJ was there referring to the main judgment in the case of Spiliada Maritime Corp v Consulax Ltd (The Spiliada) [1986] 3 AER 843 delivered by Lord Goff, who adopted the diction of Lord Kinnear in Sim v Robinow [1892] 19 R (Ct. of Sess.) 665, 668.

 

9. The Defendant had also by its Summons in Chambers applied for an order of consolidation of the Kuala Lumpur High Court Civil Suit with the Penang High Court Civil Suit. It will be noted that the Counsel for the Plaintiff, other than objecting to the application for transfer, did not raise any objection specifically to the application for consolidation. As the subject matter and the parties in the 2 suits are in respect of or arise out of the same transaction namely, the JVA although different reliefs have been prayed for by the respective Plaintiffs and in the absence of any objection for consolidation raised by Counsel for the Plaintiff, the Court had no hesitation in granting the order for consolidation under O. 4 r 1 of the Rules of the High Court 1980. With the order of consolidation being granted, the

 

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Kuala Lumpur High Court Civil Suit would have of necessity to be transferred to the Penang High Court in any event.

 

10. Accordingly, the Defendant’s application for the transfer and consolidation of the Kuala Lumpur High Court Civil Suit with the Penang High Court Civil Suit was allowed with costs in the cause.

 

Dated 28th day of April 2010

 

sgd

 

Y.A. TUAN MAH WENG KWAI Judicial Commissioner High Court Malaya Kuala Lumpur

 

For the Plaintiff : Tharminder Singh (Mohd Izral Khairy and Kamini

 

Visvananthan with him);

 

Messrs Izral Partnership

 

For the Defendant : Chang Kong Weng (L.K. Chan with him);

 

Messrs Stanley Chang & Partners

 

(K) – 060410 Enc. 5

 

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