Saman Kerajaan Malaysia

KFH IJARAH HOUSE (M) SDN BHD v. KERAJAAN MALAYSIA
HIGH COURT MALAYA, KUALA LUMPUR
LAU BEE LAN J
[SUIT NO: S-21-186-2003]
3 NOVEMBER 2010

ADMINISTRATIVE LAW: Public servants - Authority - Authority of government servant to enter into contracts binding government - Assistant Curator of Muzium awarding contract without knowledge or approval of Jabatan Muzium - Whether contract binding upon Jabatan Muzium - Whether officer had express or ostensible authority to award contract - Whether exception to Turquand's case applied - Whether Jabatan Muzium had by conduct represented officer as having requisite authority - Whether Jabatan Muzium estopped from denying authority of officer

AGENCY: Agent - Public servants - Authority of government servant to enter into contracts binding government - Assistant Curator of Muzium awarding contract without knowledge or approval of Jabatan Muzium - Whether contract binding upon Jabatan Muzium - Whether officer had express or ostensible authority to award contract - Whether exception to Turquand's case applied - Whether Jabatan Muzium had by conduct represented officer as having requisite authority - Whether Jabatan Muzium estopped from denying authority of officer

Panji Alam Creative (M) Sdn Bhd ("Panji Alam") was awarded a contract by Jabatan Muzium Dan Antikuiti Malaysia ("Jabatan Muzium") to supply historical artifacts for Kompleks Kota Ngah Ibrahim or Kompleks Sejarah Matang and Muzium Perak ("Kompleks Kota Ngah Ibrahim") valued at RM1,212,650. Panji Alam applied to the plaintiff for an Al-Murabaha facility to finance the purchase of the historical artifacts and for this purpose, absolutely assigned the payment under the said contract to the plaintiff. By a letter dated 11 September 2000 Jabatan Muzium acknowledged and agreed to the assignment of the payment to the plaintiff and also of payment directly to the plaintiff. The plaintiff then purchased and paid for the historical artifacts which were delivered to Kompleks Kota Ngah Ibrahim. However, no payment was made to the plaintiff by the defendant and hence this claim by the plaintiff. The defendant claimed that it had no knowledge about the plaintiff and of the contract allegedly awarded to the plaintiff. It was argued that any purported award of contract was made by Encik Abdul Latib, the then Assistant Curator ("Latib") without any direction, knowledge, agreement and approval by the Jabatan Muzium and the Ministry of Finance Malaysia ("MOF") and that the former had acted in his own personal capacity in dealings with Panji Alam. According to the defendant, Latib had wrongfully used the defendant's letterhead without the consent, knowledge or permission of the defendant and he acted in his own capacity. Hence, the defendant contended that the contract was in contravention of the procedures in accordance to s. 2 of the Government Contracts Act 1949 ("the Act") and therefore the plaintiff was not entitled to any claim for payment. The issues arising for determination were: (i) whether Latib had express and/or ostensible authority to award the contract to supply historical artifacts to Kompleks Kota Ngah Ibrahim; (ii) whether the defendant was bound by the letter of 11 September 2000 to effect payment for the historical artifacts to the plaintiff; and (iii) whether the defendant was in any event liable to pay to the plaintiff for the historical artifacts.

Held (allowing the plaintiff's claim):

(1) The exception to the Turquand's case did not apply in the factual matrix of this case. The fact that Latib was the Assistant Curator of Muzium Perak was confirmed. Latib and all other officers of the Muzium Department were a single composite known as the government; each of their act was an act of the government; the acts carried out by Latib was part of a chain of command and the decision made by the government through him was indicative of a devolution of power from a higher authority which was an integrated part of the system of government. (paras 11-11.4)

(2) Latib was provided with letterheads of Jabatan Muzium from the headquarters for him to issue letters for his daily duties as the highest ranking officer at Kompleks Kota Ngah Ibrahim. Latib dealt with members of the public as part of his daily duties. There was no limitation or restriction printed on the letterheads with regard to Latib's authority to issue or sign letters on behalf of Jabatan Muzium. (paras 11.3 & 11.4)

(3) Panji Alam and the plaintiff had honestly and reasonably believed in the existence of the authority to the extent apparent to Latib. In addition, the defendant as principal had held out Latib as their agent to have the authority to deal with the public including Panji Alam and the plaintiff on matters relating to Kompleks Kota Ngah Ibrahim. (para 11.6)

(4) Even if Latib did not have the authority to sign the disputed letters, the defendant had by their conduct represented or permitted to be represented to the plaintiff that Latib had the authority to act on the defendant's behalf and consequently the defendant was bound by Latib's acts to the same extent as if he had the authority. The defendant was now estopped from denying the authority of Latib. Latib had apparent or ostensible authority, if not actual authority, to enter into the contract with Panji Alam and also to acknowledge the assignment to pay the plaintiff. (para 11.8)

(5) The defendant through Jabatan Muzium had entered into the contract and were now trying to escape liability to invalidate the same on the ground that s. 2 of the Act was not followed. The court should be slow to declare the contract void and unenforceable; and "would not be astute to lend its aid" to enable the defendant to avoid liability under s. 2 of the Act having regard to the fact that Kompleks Kota Ngah Ibrahim had used the items supplied for ten years. (paras 14.2-15)

(6) The assignment of the debt from Panji Alam to the plaintiff was an absolute assignment. The defendant had on a balance of probabilities received the notice of assignment.