Court of Appeal slashes Klang council’s RM117m dumpsite damages bill to RM3m

PUTRAJAYA, Oct 26 — The Court of Appeal today reduced the damages payable by the Klang Municipal Council, now known as the Klang Royal City Council, to property developer NBC Land Sdn Bhd from RM117 million to RM3 million in a dispute over the rehabilitation of a former dumpsite.

A three-man bench comprising Datuk Ismail Brahim, K. Muniandy and Datuk Dean Wayne Daly also set aside nearly RM50 million in pre-judgment interest previously imposed by the Shah Alam High Court on the local authority.

Delivering the broad grounds of judgment, Justice Muniandy said the Shah Alam High Court was plainly wrong in principle and in law in the assessment of damages which warranted the intervention of the appellate court.

“The contractual damages flowing from the breach of the Dec 2, 2003 agreement must be assessed based on the works contemplated under the contract, namely the soil capping scheme estimated at RM6 million of which the appellant (Klang Municipal Council) was to bear 50 percent,” he said.

Justice Muniandy said the agreement reached by parties was not an open warranty by the local authority to eradicate all waste or convert the dumpsite into virgin ground, rather the consensus was based on a specific proposal by the company’s own consultant to execute an in-situ soil capping of approximately 1.5 meters of compacted soil over the waste, at an estimated cost of RM6 million.

“The parties agreed to share this estimated cost of RM6 million equally, 50 percent each (RM3 million each),” he said. 

Justice Muniandy said that the High Court also erred in law in awarding the pre-judgment interest under Section 11 of the Civil Law Act 1956 as the award of pre-judgment interest cannot stand because the rehabilitation works were never executed and the landfill was also never excavated and third-party contractors were also not paid.

“To award nearly nine years of pre-judgment interest, amounting to approximately RM50 million, on an unspent, unliquidated estimate of works penalises the appellant (Klang Municipal Council) and produces an impermissible windfall,” he said.

Therefore, he said the court substitute the High Court’s award with RM3 million in damages, representing the council’s agreed 50 per cent share of the RM6 million rehabilitation cost.

NBC Land acquired the land and obtained approval for residential development. It is not disputed that NBC Land knew at the time of acquisition that the land had been used as a dumpsite.

On Dec 2, 2003, following discussions between parties, an agreement was reached whereby the council agreed to carry out rehabilitation works in respect of the subject land and to bear 50 percent of the rehabilitation cost which was estimated at RM6 million. However, the council did not carry out the rehabilitation works.

In July 2020, the earlier panel of the Court of Appeal had held that the council was in breach of the agreement and remitted the matter back to the High Court for assessment of damages. The High Court proceeded to assess damages and in Feb this year entered judgment in favour of the company for RM117 million.

At the proceeding today, Tan Sri Tommy Thomas, Datuk Seri Nik Suhaimi Nik Sulaiman, Muhd Fadzli Amin Muhd Yusoff and Atiqah Azman represented the Klang Municipal Council while Harold Tan Kok Leng represented NBC Land. — Bernama