NBC Land Sdn Bhd v Majlis Perbandaran Klang [2021] 5 MLJ 717

Court of Appeal

Limitation — Breach of Contract — Trespass — Nuisance — Estoppel

1. The Appellant, NBC Land Sdn Bhd (formerly known as Banjaria Sdn Bhd), was a property development company that purchased 161.36 acres of land in Klang from Golden Hope Plantations Bhd on 30 June 2000. The Respondent, Majlis Perbandaran Klang (MPK), was the local authority established under the Local Government Act 1976 [Act 171].
2. Before the sale, Golden Hope had leased 36 acres of the land (Lots 77168 and 77169) to the Respondent in 1997 for use as a municipal dumpsite, under a lease which expired on 22 April 2002. The Appellant bought the land on an “as is where is” basis, meaning it accepted the land’s existing physical condition.
3. After the purchase, the Appellant discovered that MPK had actually used 39.479 acres, an excess of 3.479 acres beyond the leased portion. The Appellant instructed MPK to stop dumping, which MPK complied with. Subsequently, meetings were held between both parties to rehabilitate the affected area.
4. In a meeting on 2 December 2003, MPK agreed to share 50% of the rehabilitation cost, estimated at RM6 million. This agreement was confirmed in correspondence between March and April 2004. However, on 9 December 2016, MPK informed NBC Land that it would no longer abide by the 2003 agreement, effectively breaching its prior undertaking.
5. In 2017, NBC Land sued MPK for breach of contract, trespass, and private nuisance over the use and rehabilitation of its land. The High Court dismissed the claim as the contract claim was time-barred and trespass and nuisance were unproven, after which NBC Land appealed to the Court of Appeal.

1. Whether the breach of contract claim was time-barred under s 6(1)(a) of the Limitation Act 1953.
2. Whether MPK’s use of the land beyond the leased area constituted trespass.
3. Whether MPK’s failure to rehabilitate the land amounted to private nuisance.

(1)  Whether the breach of contract claim was time-barred under s 6(1)(a) of the Limitation Act 1953.

(a) The Court held that a cause of action in contract accrues at the time of breach, not when the agreement is made. This principle was reaffirmed in Nasri v Mesah [1971] 1 MLJ 32, where the Federal Court stated that a cause of action “arises when the breach of contract occurs”.

(b) The Court found that MPK only breached the 2003 agreement on 9 December 2016, when it expressly refused to honour its obligation to contribute to rehabilitation costs. Before that, the parties had continuously corresponded and negotiated in good faith, creating a shared assumption that the 2003 agreement remained valid. Therefore, the cause of action accrued in 2016, and the suit filed in 2017 was within the six-year limitation period prescribed by s 6(1)(a) of the Limitation Act 1953.

(c)  The Court also applied promissory estoppel, relying on Boustead Trading Sdn Bhd v Arab-Malaysian Merchant Bank Bhd [1995] 3 MLJ 331. It held that MPK’s prolonged assurances and conduct led NBC Land to reasonably believe that the agreement remained in effect. MPK was thus estopped from raising limitation as a defence, given the parties’ ongoing dealings and shared assumption that the 2003 agreement was still valid.

(d) Accordingly, the Court found the High Court’s finding of a “time frame” (2004–2005) for rehabilitation erroneous, and held that the contractual claim was not time-barred.

(2)  Whether MPK’s use of the land beyond the leased area constituted trespass.

(a) In Selvaduray v Chinniah [1939] 1 MLJ 253, the burden of proof lies on the plaintiff to establish unauthorized interference with land.

(b) Here, the Sale and Purchase Agreement dated 30 June 2000 clearly stated in Clause 6 that “approximately an estimated area of 36 acres” was leased to MPK for a dumpsite. The Court held that the term “approximately an estimated area” meant the figure was not exact but an estimation, allowing for reasonable variation.

(c)  Evidence showed that the use of the 39.479-acre area predated the Appellant’s ownership, and that such use was consented to by Golden Hope. Witness testimony (SP1) confirmed that NBC Land was aware of the dumpsite’s presence upon purchase. The land was also sold on an “as is where is” basis, indicating that the Appellant accepted its condition, including ongoing usage by MPK.

(d) Survey reports from 2002 and 2018 demonstrated that the dumpsite area remained consistent before and after NBC Land’s acquisition. Hence, no fresh trespass occurred during the Appellant’s ownership.

(e)  The Court concluded that NBC Land failed to discharge the burden of proof, and the trespass claim was properly dismissed.

(3)  Whether MPK’s failure to rehabilitate the land amounted to private nuisance.

(a) The Court held that NBC Land’s nuisance claim was dependent on proof of trespass. Since trespass was not established, the nuisance claims necessarily failed.

(b) The High Court’s omission to make specific findings on nuisance was therefore immaterial, as the claim had no legal basis.

The Court of Appeal partly allowed the appeal, finding that the breach of contract claim was not time-barred, as the cause of action only arose in 2016 when the Respondent repudiated the agreement.

However, the Court upheld the High Court’s dismissal of the trespass and nuisance claims, holding that they were not supported by sufficient evidence.

The matter was remitted to the High Court for an assessment of damages for breach of contract, and the Respondent was ordered to pay RM50,000 in costs to the Appellant.

1. The limitation period for a contractual cause of action commences upon the occurrence of a breach rather than from the date of the agreement’s execution.
2. The doctrine of promissory estoppel operates to preclude a party from relying on the limitation defence where its representations or conduct have induced the other party to assume the subsistence of the contractual obligation.