On 25 March 2022, the High Court of Malaysia dismissed an application by an airport operator to strike out a suit brought by two airlines pertaining to the contractual breaches and negligence by the airport operator in providing facilities and services at an international airport in Malaysia (“the Suit”). The damages sought by both airlines in the Suit are in excess of RM479 million.
The airport operator had primarily sought to strike out the Suit on grounds that:-
(1) the principle of res judicata estopped the airlines from bringing the Suit as its subject matter was previously determined by the High Court in a prior dispute between the parties over the imposition of aeronautical charges (“the Aeronautical Charges Dispute”); and
(2) alternatively, the airlines were estopped from bringing the Suit by virtue of the rule in Henderson v. Henderson[1] as it ought to have been brought by way of a counterclaim in the Aeronautical Charges Dispute.
The airport operator had also adduced letters issued by the parties in the course of settlement negotiations to contend that the Suit ought to be struck out on the premise that a settlement agreement had been concluded.
The striking out application was strenuously resisted by both airlines on, inter alia, the following grounds:-
(1) the High Court in the Aeronautical Charges Dispute had at most determined that the airlines were contractually barred from raising the subject matter of the Suit as a defence of set-off;[2]
(2) in this regard, the principle of res judicata did not apply to estop the airlines from filing the Suit as its underlying facts and issues were not determined necessarily and with complete precision by the High Court in the Aeronautical Charges Dispute;[3]
(3) the rule in Henderson v. Henderson was also inapplicable to the facts and issues underlying the Suit as they are patently distinct from those raised in the Aeronautical Charges Dispute;[4] and
(4) there was no concluded settlement agreement in light of the whole series of correspondence between the parties as well as the conduct of the airport operator and its solicitors.[5]
Justice Mohd Arief Emran Arifin decided in favour of the airlines by dismissing the airport operator’s striking out application and by further expunging the letters issued in the course of settlement negotiations as no settlement agreement had been concluded.
Jeremiah Rais of Messrs Steven Thiru & Sudhar Partnership appeared as co-counsel for both airlines in the High Court of Malaysia.
[1] Henderson v. Henderson [1843-60] All ER Rep 378 (HOL)
[2] Permodalan Plantations Sdn. Bhd.v. Rachuta Sdn. Bhd. [1985] 1 MLJ 157 (FC)
[3] Prestasia Sdn. Bhd. v. Mow Wai Lan [1997] 2 MLJ 236 (CA)
[4] Au Yong Kun Min v. Tractors Malaysia Bhd. [1996] MLJU 613 (HC)
[5] Hussey v. Horne-Payne and wife [1874-80] All ER Rep 716 (HOL)