Appeals court cuts Klang council’s landfill damages from RM117mil to RM3mil

The Court of Appeal has reduced a RM117 million damages award against the Klang municipal council to RM3 million in a dispute over the rehabilitation of a former municipal dumpsite.

A three-member bench chaired by Justice Ismail Brahim, sitting with Justices K Muniandy and Dean Wayne Daly, unanimously allowed the appeal by the Klang municipal council, now known as the Klang city council, against the damages awarded to property developer NBC Land Sdn Bhd.

Muniandy delivered the court’s grounds of judgment.

The court also set aside nearly RM50 million in pre-judgment interest awarded by the Shah Alam High Court and ordered NBC Land to pay RM60,000 in costs for the appeal and assessment proceedings.

The dispute arose from an agreement dated Dec 2, 2003, in which both parties agreed to share equally the estimated RM6 million cost of rehabilitating the dumpsite through soil capping.

However, the High Court assessed the overall rehabilitation cost at RM234 million, including the excavation and removal of nearly two million tonnes of waste and the replacement of the excavated material with engineered fill.

The council was ordered to pay half the amount, or RM117 million, together with interest.

In allowing the appeal, the Court of Appeal held that the assessment had gone beyond the scope of the original agreement.

Muniandy said the parties agreed to cover the waste with about 1.5m of compacted soil, not to excavate the entire landfill and restore the land to its original condition.

“The assessing court is bound to operate strictly within the four corners of the contract breached,” he said.

He said the soil-capping scheme in the agreement could not be replaced with a substantially different engineering operation costing almost 40 times the original estimate.

The court also noted that NBC Land bought the 161-acre estate in June 2000 for RM32.27 million on an “as is where is” basis, knowing that about 36 acres had been used as a municipal dumpsite.

Muniandy ruled that pre-judgment interest was unjustified because NBC Land had neither carried out the rehabilitation works nor paid contractors to do so.

Awarding interest on the unspent estimated cost would also result in an impermissible windfall, he said.

The court substituted the High Court’s award with RM3 million in damages, representing the council’s agreed 50% share of the RM6 million rehabilitation cost. It also ordered post-judgment interest of 5% per annum until full settlement.

Tommy Thomas, Nik Suhaimi Nik Sulaiman, Mervyn Lai, Fadzil Amin Yusoff and Atiqah Azman appeared for the council while Cecil Abraham, Harold Tan, Lee Sin Yee and Liu Poh Yeng represented NBC Land.

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