Taman Rimba Kiara: Rebutting the FT ministry’s clarification

I write in response to Sankara Nair’s reply on behalf of the honourable minister on the subject of the Taman Rimba Kiara land.

At the outset, I wish to express my appreciation to Federal Territories Minister Khalid Samad and Nair for the reply. I am grateful to Nair for clarifying the fact that there has in this matter not been an alienation of land but only a joint venture agreement between Yayasan Wilayah Persekutuan (YWP) and the developer Memang Perkasa Sdn Bhd (MPSB) to which DBKL is not a party.

Having made that point I had expected that he would have then advanced arguments as to why MPSB would not be entitled to a sum in excess of RM 150 million in compensation, from DBKL, for the breach of contract, given the fact that DBKL is not a party to the contract.

Additionally, the rules of equity against unjust enrichment are old and well established and it is hard then to understand why the minister and Nair are instead advancing arguments against it. One would expect that DBKL would find every possible reason to cut MPSB’s claims for compensation down to reasonable costs, but evidently not.

Then, having reminded us of the rules of privity of contract and impressing upon us that DBKL is not privy to the contract between YWP and MPSB, Nair does not explain why DBKL might be held liable for any losses that the joint venture (JV) might suffer if DBKL rescinds the relevant development approvals. Khalid and DBKL have always had the power to rescind development orders.

In this case, the reasons for rescinding are obvious.

Further, the development approvals were, or should have been, granted to the JV. If it was granted to MPSB, the public is owed an explanation. That explanation should make clear why it was MPSB and not the JV, to which YWP is a party, that was granted the approvals. DBKL would then need to explain why YWP which it controls via its trustees might want to support an action for compensation against DBKL.

Be that all as it may, I am far from satisfied with the reply. I regret that Nair has completely misunderstood the legal point that I make.

First, Nair asserts that because the land has been alienated to YWP, Section 340 ceases to be relevant. With due respect to Nair, it is precisely in those circumstances that Section 340 needs to be invoked by the original registered proprietor to recover ownership of its land. If the land was still registered to DBKL, there will be no need to have recourse to Section 340 so as to recover the land for DBKL.

The legal point he has not grasped is this: DBKL is a statutory body whose powers are circumscribed by law and an entity which is the beneficiary of public funds. The alienation of its land may be challenged in a court of law, if there is evidence that such alienation was not at arm’s length / in abuse of power and /or for unlawful gain to individuals.

Since the minister at the material time is alleged to have an indirect interest in the developer and was in a position of conflict by reason of being a director of YWP, my question was really whether Khalid has examined the possibility of setting aside the alienation on these grounds.

My further point was that if the court agrees to set aside the alienation, then, the development order granted to the developer would automatically cease to be valid as the application for a development order can only be made by a registered proprietor. The effect of the setting aside being that, in law, the land always remained with DBKL.

Nair further assumes, erroneously that the persons seeking to invoke Section 340 must be squatters on the land. However, this again misses my premise that it is for DBKL to make an application pursuant to Section 340.

Nair relies on the Federal Court case of Sidek Muhamad v Govt of the State of Perak.

In that case, it was held by the Court that squatters cannot successfully sue the State Govt for the alienation of state land. Nair is right to rely on that case, but the matter before us is not one that concerns squatters.

Secondly, Nair disingenuously suggests that DBKL was not privy to the negotiations between the developer and YWP. This claim is hard to fathom when the minister at the relevant time was involved in the decision making bodies for alienation of the land, as well, as the joint venture agreement. A company search reveals the former minister to be a director of YWP at the material time.

Thirdly, Nair asserts that the Malaysian Anti-Corruption Commission has not set aside the JV agreement. I find this assertion very strange as the JV is a contract entered into by YWP and as such it is for YWP to terminate the contract. As YWP is in possession of all the information available to the MACC, what the Taman Tun residents want to know is this: Why is the current federal territories minister so reluctant to set aside the JV agreement and insistent on contending that there is a concluded contract.

Nair, I am sure, is aware that the present government is actively seeking to set aside contracts concluded by the previous government. What is it about this agreement that everyone must accept its validity as a fait accompli?

DBKL and Khalid must advance more cogent reasons why it is not possible to terminate the JV in the face of such blatant conflicts of interest and other considerations raised in this reply, instead of incessantly repeating the mantra that RM150 million is the price for termination.

Incidentally, I do not propose to dwell at length on what constitutes the correct amount payable as damages to the developer, if any, because in my view the computation of damages can be incredibly difficult in some cases. However, the task, in this case, is much easier as it only involves the interpretation of section 26(6).

With due respect to Nair, sub-section (7) only applies if there were modifications to the planning approval and I believe there was none in this case.

It appears to me on a literal interpretation of Section 26(6) that substantial damages are unlikely to result because the developer had only commenced site clearing prior to GE 14 and all work stopped following the outcome of the election.

Besides, the discretion rests with the Commissioner to rule on the validity of some of the claims raised by the developer.

In my experience, it is unlikely that a court of law will disregard the bona fide findings of the Commissioner.

The minister should provide a breakdown of how he arrived at the figure of RM150 million so that the residents of Taman Tun are persuaded that this amount is not being “thrown” at them to force them to accept the JV as a concluded contract incapable of being terminated without the payment of any damages or the limited amount contemplated by Section 26(6).

K Anantham is a former Court of Appeal judge. - FMT