1MDB suit against Air Itam landowner to recover RM6m to be heard at Penang High Court

KUALA LUMPUR (July 22): The suit filed by 1Malaysia Development Bhd (1MDB) against a landowner to recover over RM6 million in relation to 94.7ha in Air Itam, Penang, has been moved to the Penang High Court.

Lawyer Theomus Foo Chee Wai, who appeared on behalf of the landowner — Tan Jiak Chye, told reporters that the High Court here allowed his client's application to transfer the case to Penang High Court today.

He said High Court Judge Datuk Mohd Sofian Abdul Razak made the order after being informed that there was a mutual understanding between both parties for the transfer.

The suit will be mentioned at the Penang High Court on Aug 1, to inform the High Court of the outcome of the transfer application, he added.

"The case will be jointly heard with another civil suit filed by my client against 1MDB in Penang High Court, prior to the filing of this suit," Foo said.

Tan, who has been named as the sole defendant in the suit filed by 1MDB for breach of agreement after he allegedly failed to exchange the Air Itam land with the state fund, filed an application to have the suit transferred to the Penang High Court from Kuala Lumpur.

In his application filed on June 27 and sighted by theedgemarkets.com, Tan claimed that the Penang High Court is the most appropriate and convenient forum to resolve all the disputes, and also to have this action to be heard together with the civil suit filed by him against 1MDB.

Tan said he had filed a civil suit against 1MDB in Penang on April 11 to claim all losses and damages suffered by him after 1MDB breached the said agreement entered into by both parties on May 3, 2013.

"The parties to the disputes, facts and transactions on which the present suit are based are the same or substantially the same as the Penang suit and concerning the same subject matters," he added.

Tan stressed that the land whose ownership is disputed is situated in the vicinity of Air Itam town, covering an area of approximately 234.7 acres held under 60 separate titles.

"Two inconsistent judgments will come into existence if the present suit is not transfer and be heard together with the Penang suit," he further said.

To recap, according to the statement of claim filed by 1MDB on April 30, the company was in the process of acquiring the undivided shares or interest in various parcels of land located around Air Itam town covering 94.7ha.

Undivided shares in a piece of land mean that the land has a single title listing several parties as its owners; the land has not been subdivided into separate plots with their own titles.

1MDB, through Aluminium Development Co Sdn Bhd (renamed Ayer Itam Properties Sdn Bhd (AIPSB)) purchased the entire issued share capital of Gerak Indera Sdn Bhd (GISB) and Farlim Properties Sdn Bhd (renamed AI Real Estate Sdn Bhd (AIRESB)), which collectively held about 75.68% of the total undivided shares or interest in the Air Itam Estate.

1MDB said a letter dated May 3, 2013 was sent to Tan proposing to exchange the undivided shares or interest in the land in Air Itam Estate with the latter.

"This is whereby Tan is to exchange or procure the exchange of approximately 14.3% undivided shares or interests in the Air Itam Estate held by him and Chong Sie Cheong, Choong Lye Hock Estates Sdn Bhd (holding in trust for the estate of the late Chor Phaik Sim) and Ng Peng Wah to 1MDB or its subsidiary, in return for certain parcels of lands in the Air Itam Estate," said the claim.

Tan accepted the proposal contained in the letter and was paid RM6 million pursuant to the agreement by 1MDB on the same day.

On or around Sept 23, 2013, 1MDB, through its property arm 1MDB Real Estate (Ayer Itam) Sdn Bhd (formerly AIPSB), acquired part of the undivided interest in three parcels of land in the Air Itam Estate.

As a result of the acquisition, 1MDB, through GISB, AIRESB and AIPSB held about 85.7% of the total undivided shares or interests in the Air Itam Estate.

According to 1MDB, after the agreement was entered between the company and Tan, the company took all reasonable steps to fulfil its obligations to procure the release and discontinuance of the pending suits against Tan and other land holders.

However, it claimed that in breach of the agreement, Tan had failed, refused and/or neglected to perform his obligations under the agreement to exchange or procure the agreement of the other holders to exchange the land with 1MDB or its subsidiary.

"As a result of the defendant's failure to perform his obligations under the agreement, the exchange of land has not been completed to date," the company claimed.

Currently, 1MDB no longer owns any interest in GISB, AIRESB and AIPSB.

1MDB claims that under the agreement, Tan is obliged and liable to return the RM6 million to the company as the exchange of land failed to take place by reason of Tan's failure to exchange or procure the agreement of the other holders to exchange the land with the company or its subsidiary.

"It would be unjust for the defendant to retain the sum of RM6 million which represents a benefit received by the defendant at the expense of the plaintiff," stressed the company in the claim.

Tan, in his statement of defence filed on June 13, stated that at all material times, he was ready and willing to fully perform his obligations under the agreement entered into by both parties on May 3, 2013.

The 64-year-old, who now resides in Penang, said that based on the irrevocable offer made by 1MDB and duly accepted by him, he had agreed to convey to Kek Lok Si Temple a portion of the land in the Air Itam Estate.

"Subsequently, the said intended conveyance was confirmed in a consent order dated Feb 1, 2018 in the Penang High Court," he said, adding that the consent order will be referred to during the hearing of this suit.

He added that pursuant to the agreement, 1MDB was to procure the release and discontinuance of all current lawsuits against him and other land holders in relation to the land in Air Itam Estate, after sufficient information relating to the suits had been relayed to the company.

Tan, however, claimed 1MDB had refused, neglected or failed to fulfil its obligations as stipulated in the agreement despite repeated reminders and letters sent to the company or its appointed agents or servants, resulting in him suffering losses and damages, and also impeded the performance of a consent order entered into between him and Kek Lok Si Temple.

He said as a result of losses and damages suffered by him due to 1MDB's alleged breach of the agreement, he had on April 11 filed a civil suit against the company at the Penang High Court.

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