Contracts involving illegal agreements are void, and parties must restore benefits received under such agreements.

Ishak Bakri J:

Introduction

[1] The plaintiff is a company running a business related to education. Amongst its business is running a special need education centre.

[2] The first defendant is the developer of a commercial project known as Jaya One located at No 72A, Jalan Universiti, 46200 Petaling Jaya, Selangor.

[3] The plaintiff has withdrawn its claim against the second defendant, Jaya One Management Corporation on 24 April 2019. Thus, the trial proceeded between the plaintiff and the first defendant only,

[4] Through a letter of offer dated 5 December 2017 the first defendant ("defendant") let to the plaintiff the two premises in Jaya One known as Lot No 100-1.027 and 100-1.029 located on Level 1 and Lot No 100- U1.025, 100-U 1.027 and 100-U1.029 located on Level U1.

[5] Level 1 premises and Level U1 premises are collectively referred to as "the premises" at a combined monthly rental of RM35,000.00 (RM22,000.00 for Level U1 premises and RM13,000.00 for Level 1 premises) for a period of 3 years starting from 1 January 2018 to 31 December 2020. The plaintiff accepted the offer for the rental on 8 December 2017.

[6] The immediate past tenant of the premises is Sprouts Kids Sdn Bhd ("Sprouts Kids") whose director and shareholder, Wong Wai Hon ("SD1") is also the director of the first defendant.

[7] Vacant possession of the Level U1 premises was handed over to the plaintiff on 1 January 2018. The plaintiff however contended that the first defendant has never handed over vacant possession of the Level 1 premises and the key and access to the same was never given to the plaintiff.

[8] Subsequently the plaintiff discovered that there are internal renovation done in the premises which have deviated from the original building plan without approval from the local authority ie Majlis Bandaraya Petaling Jaya ("MBPJ") and consequently the plaintiff was unable to apply for trade licenses. Thus, the plaintiff terminated the agreement vide letter dated 18 December 2018 on the grounds that the agreement was void for illegality.

[9] Unknown to the plaintiff, the defendant then filed an ex-parte distress proceedings via originating summons No BA-A45-17-03/2019 ("distress proceedings") against the plaintiff for alleged unpaid rental. The writ of distress was executed on 22 March 2019 resulting in the plaintiff's properties being seized by the Court.

[10] On 15 March 2019, the plaintiff filed the present suit seeking, amongst other, a declaration that the agreement is null and void and refund of RM332,684.40 being the payments that have been made to the defendant for the premises.

[11] The defendant however counterclaimed against the plaintiff for RM262,959.17 being alleged outstanding rental and charges for the premises, and damages to be assessed by the Court for loss of rental for unexpired term of the tenancy and reinstatement cost.

[12] By a consent order dated 17 May 2019, the plaintiff and the defendant agreed to stay the public auction of the plaintiffs properties seized under the distress proceedings pending disposal of the present suit.

Facts Of The Case

[13] The defendant is the owner of premises at Level 1 and Level U1 (collectively referred to as "the premises") located at Jaya One, Jalan University, Petaling Jaya.

[14] The plaintiff and the defendant have signed a letter of offer dated 5 December 2017 for the rental of the premises. Pursuant to the agreement, the plaintiff has paid the defendant the sum of RM84,000.00 as a deposit.

[15] Before the agreement was signed, the premises were occupied by Sprouts Kids Sdn Bhd At all material times, Wong Wai Hon was