The appeal clarified fiduciary duties and entitlements under the Joint Venture Agreement, emphasizing the obligations of developers towards landowners.

Chong Siew Fai CJ (Sabah & Sarawak):

Introduction

This is an appeal by Newacres Sdn Bhd ("the developer") against the decision of the Court of Appeal entering judgment against them for Sri Alam Sdn Bhd ("the landowner") in a number of reliefs to which I shall allude in greater detail in the later part of this judgment. Owing to the complexity of the case, (the memorandum of appeal alone contained 38 grounds) the arguments before this court spanned intermittently over about 13 days, at the conclusion of which, judgment was reserved to a date to be fixed. I now give my judgment.

Background Facts

The facts heralding the dispute between the parties herein may be thus stated. In 1975, the landowner, though not a licensed developer, was desirous of developing its newly acquired 584 acres (approximately) of land into a residential estate cum commercial centre. To that end, they started selling unsubdivided empty lots to about 2100 purchasers with an undertaking to construct residential and other buildings on the said lots.

For brevity, suffice it that the landowner ran into serious financial problems necessitating a rescue plan to salvage the project. This resulted in a joint venture agreement dated 2 October 1980 ("JVA" for short) between the landowner and the developer. Clause 15 of the JVA provided, inter alia, that subject to certain payments to be made to and a guarantee to be executed in favour of the landowner, the land was to be transferred to the developer (which transfer was subsequently effected and completed) and that the developer was permitted to develop the land. In return, the landowner was to get certain entitlements in residential and commercial buildings in the said project as provided in cls. 5 and 22 of the JVA. It may be noted that cl. 15 thereof provided for the transfer of the land to the developer "subject always to the company's (landowner's) entitlement under cl. 5(a) hereof and the properties described thereof being held by the developer on trust for the company."

Unfortunately, discord arose over the implementation of the JVA resulting in the landowner filing a suit against the developer (Suit No. C 30 of 1985) which marked the beginning of a long and protracted litigation process between the parties, which, in view of its essentiality in the understanding of this appeal, deserves a brief mention.

It must be understood that the term "the landowner" used in this judgment is purely for convenience since the land in question had been transferred to the developer.

Litigation History

Suit No. C 30 of 1985 commenced by the landowner was heard before Abdul Razak J, and resulted in the making of a consent order on 21 January 1985. So far as concerning the suit presently under appeal, the only notable point respecting the consent order was the provision that:

(4) Plaintiff to apply to Court for a proper construction and interpretation of the Joint Venture Agreement as to respective entitlements of the parties thereunder, with liberty for plaintiff to lead evidence on existence of a collateral contract without prejudice to defendant;

Pursuant to the above order, the landowner on 2 October 1985 took out an Originating Summons No. C 189/85 against the developer seeking, inter alia, a declaration that the landowner was entitled to no less than RM226,336,730.59 minus all sums received by the landowner as at the date of the order to be made in the originating summons.

Several affidavits were filed in support and in opposition to the originating summons. In view of serious disputes of facts, Abdul Razak J ordered the said originating summons to be converted into a writ action. Consequent thereto, both parties filed their pleadings which subsequently underwent various amendments.

The re-amended statement of cla