The court affirmed that a party cannot terminate a contract without meeting its own obligations and that unlawfully terminated contracts can lead to rightful claims for damages.

Nor Bee Ariffin JCA:

The Appeals

[1] These two appeals No C-02 (NCVC)-1348-07-2017 (Appeal No 1348) and No C-02(IM)(NCVC)-1349-07-2017 (Appeal No 1349) arose from the decision of the learned High Court Judge on 14 June 2017.

[2] In the High Court, the plaintiff (Forest Steel) sued the 1st defendant (Iconic) and the 2nd defendant (Neoh) who is a shareholder of Iconic, for breach of contract for the termination of the Bauxite Sale and Purchase Contract dated 20 June 2015 (BSPC) and the Letter of Appointment (LA) also dated 20 June 2015 and sought several reliefs.

[3] Iconic resisted the claim and counterclaimed against Forest Steel and one Sam Siew Chong (Sam) who is the managing director of Forest Steel. Iconic sought among others a declaration that the BSPC and LA were lawfully and validly terminated by a notice dated 21 September 2015.

[4] The learned judge, after a full trial, allowed part of Forest Steel's claims for special damages and disallowed Forest Steel's claims for general damages and loss of profit. The learned judge dismissed Iconic's counterclaim.

[5] Being dissatisfied with the decision of the learned Judge in allowing Forest Steel's claim and the damages awarded and dismissing their counterclaim, Iconic and Neoh appealed against the whole decision in Appeal No 1348.

[6] Dissatisfied with the damages awarded, Forest Steel appealed against part the decision of the learned judge in Appeal No 1349.

Background Facts

[7] The dispute between the parties concerned the mining of bauxite on lands belonging to seven landowners of Lots 33301, 33303, 33304, 33286, 33293, 33294 and 33298 in Felda Bukit Goh, Kuantan, Pahang. The landowners are settlers in lands developed and managed by the Federal Land Development Authority (Felda).

[8] For the State of Pahang, mining of bauxite is subject to the provisions of the Mineral Enactment 2001 - Enactment No 7 of 2001 (Mineral Enactment). The Pengarah Tanah dan Galian Pahang (PTG) is responsible for the due administration of the Mineral Enactment.

[9] Insofar as it concerned the Felda Wilayah Kuantan's areas, Felda informed the PTG that Inspirasi Gabungan Felda Wilayah Kuantan Sdn Bhd (Inspirasi) would be carrying out the extraction of natural resources.

[10] On 11 October 2014, Inspirasi appointed Iconic as its joint venture company (syarikat usahasama). By the appointment, which was subsequently reduced into an agreement between Inspirasi and Iconic on 3 July 2015, Iconic was given the rights to undertake the works for the exploration, excavation, extraction and to sell bauxite from Lots 33301, 33304, 33293, 33294, 33286, 3333 and 33298.

[11] At the material time, Neoh, Chaye Muk Leng (PW2) and Che Kwon Wooi (PW3) were shareholders of Iconic with shareholdings of 80%, 10% and 10%) respectively (Shareholders Agreement dated 9 April 2015). Neoh's wife subsequently became another shareholder.

[12] The directors of Iconic are PW2, PW3, Gan Wey Kiat (DW1) and Ng Peak Lim. PW3 was in charge of mining operations and documentations including applications for mining licences.

[13] Six landowners appointed Iconic to manage their lands and granted Iconic power of attorneys, all dated 1 April 2015, to carry out works to explore, excavate, extract and sell bauxite and all related matters including applying for necessary permit or licence for their lands. They are:

(a) Abdul Jamal Ishak for Lot 33303;

(b) Che Munah Yusoff for Lot 33304;

(c) Husin Mamat for Lot 33286;

(d) Hamid Deraman for Lot 33293;

(e) Munah Ab Rahman for Lot 33294; and

(f) Ismail Che Lah for Lot 33298.

(the Lots are collectively referred to as the Bauxite Land).

[14] Two landowners who had obtained titles to their lands, namely Ismail Che Lah for Lot 33298 (DW3) and Abdul Jamal Ishak for Lot 33303 had signed surat akuan authorising bauxite to be extracted from their respective lands and had appointed Inspirasi to undertake the bauxite project.

[15] On 17 April 2015, all six landowners signed separate Perjanjian Melombong (Mining Agreements)