1MDB suit against landowner transferred to Penang High Court

This article first appeared in The Edge Financial Daily, on July 23, 2019.
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KUALA LUMPUR: The suit filed by 1Malaysia Development Bhd (1MDB) to recover over RM6 million from a landowner in relation to parcels of land in Air Itam, Penang has been moved to the Penang High Court.

Lawyer Theomus Foo Chee Wai, appearing 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 the Penang court yesterday.

He said Judge Datuk Mohd Sofian Abdul Razak made the order after being informed of a mutual understanding between both parties for the transfer.

“The case will be jointly heard with another civil suit filed by my client against 1MDB in the Penang High Court, prior to the filing of this suit,” Foo said, adding that both cases will be mentioned at the Penang court on Aug 1.

Tan, the sole defendant in the suit filed by 1MDB for alleged breach of agreement after he failed to exchange the Air Itam land with the state fund, filed an application to have the suit transferred to the Penang court.

In his application filed on June 27, Tan said the Penang court is the most appropriate forum to resolve all the disputes, and also for this action to be heard together with the civil suit filed by him against 1MDB.

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

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

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 9 [AIRESB]), which collectively held about 75.68% of the total undivided shares or interest in the Air Itam Estate.

1MDB said a letter was sent to Tan in May 2013 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 interest 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 with or for 1MDB or its subsidiary, in return for certain parcels 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.

In September 2013, 1MDB, through AIPSB, acquired part of the undivided interest in three parcels 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 interest in the Air Itam Estate.

According to 1MDB, after the agreement was entered into 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 Tan had failed 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.

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

The company 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 due to Tan’s failure in exchanging or procuring the agreement of the other holders to exchange the land with the company.

Tan, in his statement of defence, stated 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, now residing in Penang, said based on the irrevocable offer by 1MDB, 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.

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 was relayed to the company.

Tan claimed 1MDB had failed to fulfil its obligations, 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.