Contractor Merong Mahawangsa Sdn Bhd which was awarded the controversial crooked bridge project today won in its appeal against paying businessman Shazryl Eskay Abdullah RM20 million.

The Federal Court allowed the appeal by the company as it deemed the contract to pay Shazryl RM20 million for getting the project void because it ran contrary to public policy.

The judgment was delivered by Justice Jeffrey Tan ‎Kok Wha. The panel was led by Chief Judge of Sabah and Sarawak, Richard Malanjum.

The court decided on the question of law, that is, whether an agreement to provide services to influence the decision of a public decision maker to award a contract is a contract opposed to public policy, as defined under Section 24 (e) of the Contract Act 1950, and is therefore void.

With this question, Justice Tan answered in the negative.

This was despite the High Court having ruled that the 'services' rendered by Eskay were not opposed to public policy.

The court ordered Shazryl Eskay to pay RM100,000 in costs.

The case caught headlines in 2012 when it was filed after the High Court in Kuala Lumpur dismissed the appeal for Eskay to get the RM20 million as commission.

A three-member bench at the Court of Appeal then allowed Eskay's appeal and ordered Merong Mahawangsa to pay RM20 million to him.

Eskay had named Merong Mahawangsa, and its executive director Yahya Abdul Jalil in the suit over the crooked bridge project, which was former prime minister Dr Mahathir Mohamad's brainchild but was awarded when Anwar Ibrahim was deputy prime minister and finance minister.

'Claim doomed to fail'

Justice VT Singham, before he retired as a KL High Court judge, said since the awarded project had ceased to exist, the claim by Eskay for commission in getting the project was no longer valid.

The project was shelved by the government on April 12, 2006, during the tenure of Abdullah Ahmad Badawi as prime minister.

Justice Singham, acknowledged the pivotal role played by Eskay to secure the project for Merong Mahawangsa and in securing additional funding for the company to boost its share in the consortium from 20 to 60 percent.

In ruling that the plaintiff's application was doomed to fail, he said it was not because the agreement was opposed to public policy but because of Eskay agreeing to refund RM20 million in the event the project was cancelled.

"Hence, the court rules that the plaintiff is not entitled to the RM20 million claim, as the undertaking agreement (which Merong Mahawangsa, its executive director Yahya Abdul Jalil and Eskay signed on July 3, 1998) is construed that the project could no longer go on. Accordingly, the plaintiff's claim is dismissed," Justice Singham ruled.

However, on April 3, 2013, Justice Ramly Ali, who was then a Court of Appeal judge, ruled that Eskay completed his job in getting the contract for the crooked bridge and the question of the project being abandoned did not arise.

Justice Ramly, now a Federal Court judge, said the amount to be paid was not on condition that the project must be completed.

Court bound to take notice of illegality

Justice Tan in his judgment today said the court is bound, at all stages, to take notice of illegality, whether or which later appeared, and to refuse to enforce the contract.

“Section 24 of the Malaysian Contracts Act 1950 is a codification of the English Common Law. Therefore, it is contrary to Malaysian public policy that a person, hired for money or valuable consideration, to use his position and interest to procure a benefit from the government, as the sale of influence engenders corruption and undermines public confidence in the government.

“Given our finding that the letter of undertaking was contrary to public policy, and therefore void and unenforceable, we need not deal with the issue of whether it was an award or contract that was withdrawn,” Justice Tan said.

The judge said the apex court agreed with the High Court finding that when the project was withdrawn, the RM20 million was not payable and if paid, the letter of undertaking provided that it should be returned.

“We could not fathom how the illegal agreement could be upheld by the trial court or how illegality could pass without a word of comment by the Court of Appeal,” he said in allowing the company's appeal.

Merong Mahawangsa was represented by Firoz Hussein Ahmad Jamaluddin of Hafarizam, Wan Aisha and Mubarak, while Eskay was led by senior counsel CV Prabhakaran.

The other judges were Ahmad Maarop, Apandi Ali who is now attorney-general and Abu Samah Nordin.