Negeri Sembilan govt wins appeal against water supply firm’s breach of contract claim

The Court of Appeal awarded the Negeri Sembilan state government RM250,000 in costs.

PUTRAJAYA: The Court of Appeal today ruled that there was no contract between the Negeri Sembilan government and a private company, NS Water Konsortium Sdn Bhd, over a concession relating to water supply.

In the unanimous decision to set aside a High Court ruling, judge Azizah Nawawi said no question arose over the concept of “frustration” as evidence showed that there was no contract between the parties.

She said even assuming there was a contract between the parties in 2006, such frustration could only begin in January 2008.

Azizah said this was because there was an amendment to the Federal Constitution that shifted the water services from the states to Putrajaya.

However, she said the federal government could not act until Parliament passed the Water Services Industry Act in 2006 which only came into effect in January 2008.

“So the contract, if it existed, could have only been frustrated in 2008,” she added.

Judge Harminder Singh Dhaliwal and Soraya Othman were the other judges on the bench who heard the appeal on Jan 30.

The bench also ruled that other respondents – Abdul Rahiman A S Dawood, Azrahi Hotels Sdn Bhd and Drard Holdings Sdn Bhd – were not parties to the contract and could not claim any “indemnity” against the state at all.

The court also awarded the state government RM250,000 in costs.

In April 2007, NS Water Konsortium and its related companies, Azrahi Hotels and Drard Holdings and the company’s director Rahiman filed a suit against the state for breach of contract.

They alleged that the state had in 2006 breached a water concession agreement with them over a 30-year period.

NS Water Konsortium claimed for general damages and future loss of profits.

Azrahi Hotels, Drard Holdings and Rahiman also demanded the state indemnify them for their losses.

The trial before High Court judge Siti Mariah Ahmad lasted 43 days and former menteri besar Mohd Isa Abdul Samad was among the witnesses who testified for the plaintiffs.

In July 2017, Siti Mariah held there was a contract between the parties and that damages would be assessed.

The state, represented by GK Ganesan, state legal adviser Mohd Azhar Mohd Yusoff, Muhammad Fairuz Iskandar, Karthigesan Shanmugam and KN Geetha, filed an appeal to the Court of Appeal.

Lawyers Cyrus Das, Krishna Dallumah and Terrance Kanagaratnam appeared for the respondent. - FMT