Melaka Gateway developer fails to overturn judicial review leave rejection

PUTRAJAYA (April 9): The Court of Appeal has dismissed the appeal for leave by KAJ Development Sdn Bhd to initiate a judicial review to challenge the Melaka government's decision to terminate the agreement to reclaim land from the sea within a concession area at the Malacca Strait.

KAJ is the developer of the multibillion Melaka Gateway project, which has been accorded the status of national project and included in the country's Economic Transformation Programme.

A three-member bench, comprising Datuk Hanipah Farikullah, Datuk Azizah Nawawi and Datuk Ahmad Zaidi Ibrahim, affirmed the High Court's decision on Feb 17 that the termination did not involve public law elements as it was based on a contract which is commercial in nature.

KAJ can appeal the matter further at the Federal Court and has 30 days to file an application.

The company's counsel Datuk Loh Siew Cheang, along with lawyer Abdullah Abdul Rahman, argued that the reclamation agreement was in substance a grant of a concession by way of contract, and although styled as an agreement, the source of the power and authority was derived from the Melaka State Constitution, read together with relevant provisions of the National Land Code.

It was further argued that the agreement was infused with public elements on the part of the Melaka government and its various agencies, and that KAJ never had the 36 months to work because it was prevented from carrying out work due in part to the state government's action and also due to the Covid-19 pandemic that resulted in Movement Control Orders.

Loh further argued that the state government had terminated the reclamation agreement in total disregard of Section 7 of the Temporary Measures For Reducing The Impact of Coronavirus Disease 2019 (Covid-19) Act 2020.

The section provides that in the event of the inability of any party to perform any contractual obligation under certain types of contracts, including construction, due to the pandemic, the other party shall not exercise rights to terminate the contract.

"We contend that by terminating the reclamation agreement, the state government had acted illegally, unreasonably and disproportionately and therefore the termination notice is liable to be quashed under the judicial review principles quite apart from the contractual principles," the company contended.

KAJ filed the judicial review application on Dec 4 last year, after its agreement with the state was terminated. The company entered into an agreement with the Melaka government on Oct 4, 2017, to reclaim coastal land and islands surrounding the state.

It is seeking a certiorari order to quash the state government's order to issue the notice of termination dated Nov 11, 2020. The company also wants a declaration that the termination notice is declared null and void as it is ultra vires of Section 7 and 9(1) of the Temporary Measures to Reduce the Impact of Covid-19 Act, and another declaration that the termination is illegal and an unlawful act that is against the law.

Loh said the Melaka government is not entitled to appear in court at the leave stage of judicial review as this should be considered ex-parte.

"They can appear at the substantive stage once the court grants leave to initiate judicial review," he said.

However, senior federal counsel Zairani Tugiran from the Attorney General's Chambers objected to the leave application on the basis that the judicial review was not available to KAJ as the source of power for the issuance of the termination notice was purely contractual and therefore its remedy is in contract law.

"The Court of Appeal, however, rejected KAJ's arguments that the government has entered into a contract, and that it cannot act arbitrarily and unreasonably in its narrow, self-interested commercial interest to terminate merely because it is entitled to do so under the contract.

"This is in view of the fact that the government is funded by the public and its activities have public elements and in this type of action, questions of discriminatory conduct, disproportionality and bad faith may be taken into account to test the government's actions,"  Loh told theedgemarkets.com.

Get the latest news @ www.EdgeProp.my

Subscribe to our Telegram channel for the latest stories and updates

Click here for more property stories.