The Kuala Lumpur High Court made a historic decision recently after ruling that former Member of Parliament (MP) for Ampang, Datuk Zuraida Kamaruddin had breached a bond with Parti Keadilan Rakyat (PKR) by defecting from the party following 2020’s infamous Sheraton Move. She had since been ordered to pay RM10 million for the bond breach and an additional RM50,000 in legal costs to PKR.
In his judgement, Justice Akhtar Tahir said that the bond signed by Zuraida on 25 April 2018 was a valid and binding contract. He also stressed that the RM10 million sum was not disproportionate as the former Ampang MP had acknowledged in court that the PKR had spent an amount exceeding RM10 million on her candidacy during the 14th General Election (GE14).
Justice Akhtar Tahir further asserted that the sum was reasonable to deter party members from acting against the party’s interests. The court also noted that based on the bond, the defendant had promised to pay RM10 million on the occurrence of three events, one of which is if she was terminated from the party.
Zuraida, who is also the former Local Government and Housing Minister under the Pakatan Harapan (PH) government and Plantation Industries and Commodities Minister under the Perikatan Nasional (PN) government, has since announced that she will be appealing the decision. So, what happens next? What possible defences can her legal team exert to overturn the decision and how many more chances does she have in appealing the civil suit?
Well, join us as we examine the subject matter in depth below
Zuraida’s case can be appealed up until the Federal Court
First up, given that the civil suit, brought forth by PKR Secretary-General Datuk Seri Saifuddin Nasution Ismail was first heard at the High Court, it can be appealed up to the two higher court levels. Specifically, Zuraida can appeal the High Court’s decision to the Court of Appeal, which she had already intended to do.
If the Appellate Court found that there are plain errors in facts and/or law in the judgement by the High Court, the Court of Appeal will allow the appeal and overturn the High Court’s decision. Furthermore, if Zuraida’s appeal to the Court of Appeal is dismissed, the former Ampang MP has the right to have final recourse, which is to appeal the Appellate Court’s decision to the highest court and the final appellate court in Malaysia, the Federal Court.
However, do note that an appeal to the Federal Court is not as of right, whereby under Section 96 of the Court Judicature Act, a leave to appeal must be obtained from the Federal Court by posing a question of law which has to be decided for the first time and/or a question of importance where a Federal Court decision would give a public advantage. If the appeal doesn’t contain any of these criteria, it would be disallowed by the Federal Court.
With that in mind, Zuraida must file an appeal within 14 days of the judgement of the civil suit by the Kuala Lumpur High Court. Given that the judgement was pronounced on 23 June, her legal team has until 7 July to file an appeal and it is then up to the Court of Appeal to decide on whether to allow the appeal to proceed.
The civil suit’s main issues of contention
Should an appeal be allowed, the Court of Appeal will rehear the case by scrutinising all evidence led by parties (through Record of Appeal filed by the appellant) before the High Court and decide whether the High Court’s decision was sound in law and/or in facts upon hearing submission by both parties. Accordingly, based on the facts of the case, the two main issues of contention would be regarding the validity of the bond and whether it was signed under coercion.
In the statement of claim by Saifuddin Nasution on behalf of PKR, he asserted that Zuraida had executed a bond where she bound herself to pay the party a sum of RM10 million in accordance with the terms and conditions that had been set. Among others, the conditions include agreeing to pay the party RM10mil no later than 6 days upon the occurrence of such events as the resignation of the defendant from the party or joining any other political party, or being an independent elected representative after the defendant won the election on a PKR ticket.
The statement of claim further asserted that Zuraida, alongside another 10 former PKR MPs, announced their resignation from the party without resigning from their respective elected posts on 24 February 2020. As such, Zuraida was deemed to have breached the bond, something that the Kuala Lumpur High Court also agreed with.
One possible avenue of contention that can be raised during the appeal is whether such a bond went against the highest law of the land, the Federal Constitution. Specifically, Article 10 of the Federal Constitution in regard to the Freedom of Association.
Moreover, the validity and enforceability of such a clause can also be questioned on whether it falls under one of the exceptions prescribed under Section 24 of the Contracts Act which details the considerations and objects that are lawful and what are not. Should the Appellate Court and/or Federal Court be of the view that such a clause falls under one of the exceptions, it will be void and unenforceable.
For reference, Justice Akhtar Tahir in his judgement at the Kuala Lumpur High Court found that the bond is still a valid and enforceable agreement as not all of the terms of the bond contradict Article 10 of the Constitution. This matter can further be explored once the appeal is brought before the Court of Appeal and/or Federal Court later.
Coercion as per the Contracts Act 1950
Besides that, another issue of contention would be whether the bond was signed by Zuraida under coercion. During the trial, the former Ampang MP claimed that she was forced to sign the bond with PKR in order to contest GE14 under the party’s ticket. She also claimed that the documents were only given to her a day before nomination day without an explanation of its terms and conditions.
Zuraida testified that she signed the bond not of her own volition, but because there were no alternatives. She further alleged that the bond was signed under duress.
As per the Contracts Act 1950, “coercion” has two definitions, one under Section 15 and another under Section 73 of the Act, as noted by the court. Section 15 of the Contracts Act 1950 prescribes coercion as the act of committing or threatening to commit any act forbidden by the Penal Code or the unlawful detaining or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement.
Meanwhile, coercion’s definition under Section 73 of the Act is used in its general and ordinary sense as an English word. Through this definition, the word ‘coercion’ is not constrained by what Section 15 prescribes and can be defined in every way possible, as long as it is in line with the meaning of the word.
So, why does the Contracts Act 1950 prescribes two definitions for coercion? Well, according to the judgement in Chin Nam Bee Development Sdn Bhd v Tai Kim Choo & Ors [1988] 2 MLJ 117, the reasons are:
Contracts Act 1950 is divided into 10 parts, with Part III (which Section 15 is a part of) dealing with “Contracts, Voidable Contracts and Void Agreements”. In order to raise coercion under Section 15, the elements of consent must be available or not available to a party.
Meanwhile, Section 73 is under Part VI of the Act which deals with matters “of certain relations resembling those created by contract” such as agreements which resemble a contract.
Section 2 of the Act never stated that the meaning of the word “coercion” must be uniform. Furthermore, as both provisions deal with different scenarios, a uniform definition would make it difficult to be applied in court.
Given that Zuraida’s bond with PKR is considered a contract, then “coercion” as prescribed by Section 15 of the Contracts Act 1950 is applicable. In that regard, the judgement in Pao On v Lau Yiu Long [1980] A.C. 614 defined the factors in determining coercion:
“In determining whether there was coercion in contract of will such that there was no true consent, it is material to inquire whether, at the time he was allegedly coerced did or did not protest; whether, at the time he was allegedly coerced into making the contract, he did or he did not have an alternative course open to him such as adequate legal remedy; whether he was independently advised; and whether after entering the contract he took steps to avoid it.”
Circling back to the subject matter at hand, should Zuraida’s appeal be reheard at the Appellate Court and/or Federal Court, she must prove that the bond signed with PKR was made under coercion according to the above factors. During the High Court trial, Saifuddin asserted that the former Ampang MP didn’t object to the contractual bond at any time and if she thought that the RM10 million amount was excessive, she shouldn’t have accepted the candidacy under the PKR banner.
Moving forward, all eyes would be on the civil suit should the appeal be brought before the Court of Appeal and/or Federal Court. One thing’s for certain, the other PKR MPs who signed a similar bond and defected from the party would definitely be nervous while waiting for the final outcome of this legal conundrum.
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