A Kedah businessman has filed a legal suit against three companies intricately linked to a state-owned company for breaching a sale and purchase agreement involving a land transaction in 1996.

Shong Mor Sdn Bhd director Lai Yeow Choo ( photo ) named Cayman Development (Kedah) Sdn Bhd (Cayman), Yiked Pengkalan Kundor Sdn Bhd (Yiked Pengkalan) and Long Island Sdn Bhd (Long Island) as defendants in the suit filed in the Alor Setar High Court on June 12.

He is seeking to prevent disposal of the land - over which competing claims have since arisen - or reimbursement of the payment made to date towards purchase of the land.

The defendants, in their respective statements of defence, have also pointed fingers at one another.

In an interview with malaysiakini , Lai said he only decided to file the case this year as he had earlier been advised by the Housing and Local Government Ministry to await the outcome of its mediation in the matter.

A check with records held by the Companies Commission of Malaysia shows that one of the key shareholders of Yiked Pengkalan is Yiked Holdings Sdn Bhd, which is owned by the Kedah government. ( See chart )

Kedah Menteri Besar Syed Razak Syed Zain and Yayasan Islam Kedah general manager Adzmi Din are named as two of the three directors in Yiked Holdings.

Yayasan Islam Kedah, which is a state government agency, is the sole shareholder in Yiked Holdings - itself a main shareholder in Long Island Development.

Adzmi is a director in Yiked Pengkalan. Another director is Home Ministry parliamentary secretary and Pokok Sena member of parliament Abdul Rahman Ibrahim.

Agreement signed

Lai, 67, who deals in paints, chemicals, planks and construction hardware, said he had sought to buy an industrial lot under Taman Sri Tandop Project priced at RM201,326 located in Mukim Pengkalan Kundor, Daerah Kota, Alor Star.

The sale and purchase agreement was signed between him, Cayman (seller) and Yiked Pengkalan (land owner) on March 2, 1996, with payments to be made in by instalments.

Lai said he paid a total of RM180,326 to the two companies, and borrowed RM120,000 to pay the balance as well as to expand his business.

On April 30, 1998, he was asked for the balance of RM21,000. Lai claimed that he was ready to pay up, but was advised against it by his lawyer because the land was charged to a bank and a payment of RM65,000 was outstanding.

Subsequently, Lai and the bank filed two private caveats on Aug 10, 1998 and Feb 10, 1998 respectively to protect their interest.

In August 2002, Lai said he found out that Long Island was building 12 double-storey houses on the land without notifying him. The units were part of a housing estate called Taman Desa Seraya. ( photo )

He argued that, as Cayman and Yiked Pengkalan have retained his initial payment to date, the sale and purchase agreement remains valid.

Complaints were filed with several government agencies including the housing and local government ministry, the Prime Minister's Department, Kedah land office, Kota Setar municipal council and the town planning department.

A meeting was held at the Housing and Local Government Ministry in Kuala Lumpur on March 13 last year, followed by another meeting on Oct 16 at the Kedah land office.

"However, the defendants breached the agreement made during the meeting to sort out the problem by Dec 31," he alleged.

He added that the Alor Star municipal council has since issued the certificate of fitness (CF) for Taman Desa Seraya, although he had written to them about the dispute over the land.

Joint defence

Statements of defence have been filed, with Cayman and Yiked Pengkalan pleading their case jointly and Long Island on its own.

In their statement, Cayman and Yiked Pengkalan denied any responsibility for the situation.

They said 16 plots of land in Mukim Pengkalan Kundor, including the one claimed by Lai, had been handed over to Long Island Properties (Kedah) Sdn Bhd (parent company of Long Island) under an agreement signed on Nov 8, 2001.

On Nov 15, 2001, Long Island Properties signed an agreement with state-owned Yiked Holdings to set up Long Island Development Sdn Bhd to develop the land. Yiked Holdings holds 20 percent of the shares.

The statement said the land was handed over on condition that Long Island paid what was owed to Cayman to the bank which is holding the land title.

It claimed, however, that Long Island - without the knowledge of Cayman and Yiked Pengkalan - applied for a land title unlawfully from the Kedah land office without paying Southern Finance Bhd.

This has led to two sets of ownership documents being produced, according to the statement, which also said the two defendants had not consented to Long Island's action and that this was therefore out of their control.

"Because of this, Cayman and Yiked Pengkalan were unable to fulfill the agreement and to change the land ownership to Shong Mor. In addition, Shong Mor did not pay the balance to Cayman, so it cannot claim to be owner of the land," they said in the statement.

Long Island's reply

Long Island, in a statement filed by director Tan Chee Guan, said the application to convert the industrial land was approved during a state exco meeting on Jan 10, 2001.

He added that company's application for ownership of the land was approved at a subsequent exco meeting on Sept 12, 2002,

"Unfortunately, the minutes of the meeting cannot be revealed here as these have been categorised as 'confidential'," he said.

Tan said Shong Mor's allegation that Long Island has built houses on its land is untrue.

"The land bought by Shong Mor at the Sri Tandop Project has been taken over by Yayasan Islam Kedah and has been replanned," he said.

He argued that the dispute should be settled between Shong Mor, Cayman and Yiked Pengkalan who have signed the agreement, and should not involve Long Island.

'It would be unreasonable to ask Long Island to return the money paid by Shong Mor as we are not involved in that transaction," Tan said.

"Should there be compensation to Shong Mor, then it should be paid by Cayman and Yiked Pengkalan. Furthermore, I believe Yiked Holdings and Yayasan Islam Kedah have repeatedly explained that Long Island is not involved in the case."

It also questioned Shong Mor's motive in filing the case when Long Island applied for the CF.

Injunction rejected

Shong Mor had unsuccessfully applied to the Kedah High Court for an injunction against Long Island. This was rejected on June 28.

According to a copy of the notes of proceedings, Justice Hasan Lah said "the balance of convenience" was in Long Island's favour because the12 houses have been built and sold.

"If the injunction is given, then it will spoil the 12 houses that have been sold. Moreover, it is very late for Shong Mor to come to court after the houses were built and Long Island has spent a lot of money on the project," he said.

On June 27, the Housing and Local Government Ministry wrote to Shong Mor to say that action had been taken against Long Island.

The letter, signed by Muhammadin Taib of the Licence and Service Department, said the company's application for renewal of advertisement and selling permit would not be approved.