PUTRAJAYA (July 16): The Court of Appeal on Wednesday (July 15) has upheld a decision by the Penang High Court which had ordered Farlim Group (Malaysia) Bhd (KL:FARLIM) to refund RM8.388 million to Ayer Itam Properties Sdn Bhd for a dispute in the land sale of a quarter of Lot 1561 land in Ayer Itam, Penang.
A three-member bench, led by Datuk Dr Choo Kah Sing who sat with appellate court judges Datuk Lim Hock Leng and Datuk Amarjeet Singh Serjit Singh, unanimously found that there was no error in the High Court’s decision to justify appellate intervention.
In the Court of Appeal decision delivered by Lim on Wednesday, the court found that Farlim had been unjustly enriched by claiming the sale of three parcels of land including the quarter of the disputed land for a total of RM112.5 million to Ayer Itam Properties, and therefore needed to make restitution for it.
Ayer Itam Properties — previously known as 1MDB Real Estate (Ayer Itam) Sdn Bhd — had acquired the land from Farlim between 2013 and 2014.
Lim noted that Farlim’s sale agreement was for three parcels of land that included the quarter of Lot 1561, which has several caveats, for RM112.5 million.
The original ownership of Lot 1561 land had been with Chong Lye Hock Estates (CLHE), which later sold interests to Farlim. Farlim then sold it to Ayer Itam Properties.
However, a quarter of Lot 1561 has caveats, as CLHE had sold portions of the land to various individuals without separating the land titles. So, they protected their interests by lodging private caveats on the master title.
'No one can give what they do not have'
The appellate court noted that the land was to be sold free of encumbrances to Ayer Itam Properties. However, Farlim effectively owned only 581,087.97 square feet, and not the entire 657,342.97 square feet.
“Hence, the appellate court agrees with the High Court judge that the principle of nemo dat quod non habet (a common law principle to mean 'no one can give what they do not have') applies.
“Farlim could not sell, nor pass the title to the land, which did not belong to it,” Lim said in his 12-page grounds, adding that the High Court judge was right to conclude that Farlim could not convey to Ayer Itam Properties the 76,255 sq feet previously excluded from Farlim’s own acquisition.
Lim said the appellate court thus found no basis to disturb the trial judge’s acceptance of evidence procured during the hearing.
The evidence, the judge said, showed that the settlement agreement that was entered did not disclose the caveats to Ayer Itam Properties during the sales and purchase transaction.
“The learned trial judge was entitled to reject Farlim’s arguments based on waiver, affirmation, and mistake. Having regard to the foregoing findings, we are satisfied that the learned trial judge correctly concluded that Farlim had been enriched at Ayer Itam Properties’ expense, by receiving payment for 76,255 square feet that Farlim did not own and could not lawfully convey,” he said.
“The [trial] judge therefore rightly ordered Farlim to refund RM8,388,050, representing 76,255 square feet calculated at RM110 per square foot. We find no basis to interfere with the decision of the learned trial judge and this appeal (by Farlim) is dismissed with costs of RM50,000.”
Farlim was represented by Robert Lazar, Farah Nabilah Shaharuddin, Habib Rahman Seeni, and Nyon Mun Ci from Messrs Ezrilaw firm, while Jeyasingam Balasingam and Kartikumar Seamereasan of Messrs Ghazi & Lim appeared for Ayer Itam Properties.