JUDGMENT

James Foong JCA:

Introduction

[1] The 1st Defendant, a family owned Company, is the owner of a piece of land of approximately 7 acres and held under HS (D) KA 81943 for lot PT 162011 in the Mukim of Hulu Kinta, Perak (the said land). It is strategically located in Ipoh where there is a hyper market known as Jaya Jusco right opposite. The 2nd Defendant is a director of the 1st Defendant who was authorized to deal with the said land. On 16 November 2000, the 2nd Defendant issued a letter for and on behalf of the 1st Defendant to one Lee Soon Tuan, a promoter of a Company to be incorporated, agreeing to let the said land for an entertainment outlet. It was agreed that this arrangement was to be formalized by a written tenancy agreement between the company to be incorporated and the 1st Defendant, and pending the execution of this written tenancy agreement, the tenant was allowed to take possession of the said land provided that the tenant shall apply "to the relevant authorities for the necessary licences for the operation of the entertainment outlet and the erection of structures". the plaintiff was subsequently recognized by the 1st Defendant as the tenant of the said land. Soon after this letter of 16 November 2000, Lee Soon Tuan wasted no time in securing the relevant licences to operate the entertainment outlet. This included an application to the District Office for permission to operate a public house and to sell liquor therein, an application to the Customs Department for permission to provide taxable services and, application to Majlis bandar raya Ipoh (MBI) to operate restaurants and cafes on the said land. The last is commonly known as the "business licence". From evidence adduced, all such licences were secured except for the last which had conditions attached. MBI's letter dated 15 January 2001 stated it in this manner:

Permohonan Untuk Kelulusan Pelan Pembangunan Restoran Dan Kafe Di Atas Plot 162011, Jalan Teh Lean Swee, 30350 Ipoh, Perak Darul Ridzuan

Adalah saya dengan segala hormatnya merujuk surat tuan bertarikh 7 Disember 2000 mengenai perkara di atas dan dimaklumkan bahawa Jawatankuasa yang bermesyuarat pada 21 Disember 2000 pada dasarnya telah meluluskan cadangan tersebut tertakluk kepada mematuhi syarat-syarat berikut:

i. Mengemukakan semula pelan pembangunan dan kertas konsep projek berkenaan kepada Majlis bandar raya Ipoh sebelum memulakan pembangunan;

ii. Menjelaskan yuran pelan sebanyak 20 kali ganda mengikut Akta Jalan, Parit dan Bangunan (Undang-Undang Kecil Bangunan Seragam) kerana telah memulakan pembangunan tanpa mendapat kelulusan pelan terlebih dahulu;

iii. Mematuhi syarat-syarat Perlesenan, Jabatan Kesihatan, Majlis bandar raya Ipoh;

iv. Menyediakan "Buffer" dengan skim perumahan bersebelahan;

v. Jalan keluar - masuk hendaklah melalui Jalan Teh Lean Swee dan tidak ke Jalan Chan Chee Keong;

vi. Posisi tanda hendaklah mengikut nasihat Majlis.

2. Bersama-sama ini dikembalikan sejumlah 10 salinan pelan susunatur untuk dibuat pindaan untuk tindakan pihak tuan selanjutnya...

(Azizuddin bin Haji Alias, AMP, PPT, APPM)

Pengarah Perancang bandar raya)

bp Datuk Bandar Ipoh.

[2] Aside from applying for these licences, the plaintiff also proceeded to construct structures on the said land. Once these were completed, the plaintiff began to operate the entertainment outlet thereon.

[3] Having an interest in this Plaintiff's venture, the 2nd Defendant invested a sum of RM100,000 in the plaintiff. But shares in the plaintiff were not issued to him. Instead, he was made a director together with Lee Soon Tuan and one Lee Gim Aik, who were the principal shareholders of the plaintiff. Though the 2nd Defendant was one of the three directors of the plaintiff, he was made a compulsory signatory of all cheques and banking documents of the plaintiff.

[4] On 5 February 2001, a formal written tenancy agreement for the said land was entered into between the 1st Defendant and the plaintiff. It was for a period of three years commenci