K'tan govt suit against Petronas to continue only on issues of law

PUTRAJAYA: The Court of Appeal today dismissed the Kelantan government's appeal against the ruling by the High Court that its breach-of-contract suit against Petroliam Nasional Berhad (Petronas) should be heard and disposed of by way of issues of law.

The court also dismissed the plaintiff's appeal for access to documents related to the case following High Court judge Datin Zabariah Mohd Yusof ordering the parties to first proceed with the suit in accordance to Order 14A of the Rules of the High Court 1980 without going for full trial.

With these decisions, the matter will be heard before Zabariah without calling any witnesses with case management set for April 30.

A three-man bench of the Court of Appeal headed by justice Datuk Ramly Ali in a unanimous decision found that Zabariah had not erred in her decision when she granted leave to Petronas and the federal government for the suit to be dealt with by way of issues of law.

Justice Ramly said there was no reason for the court to intervene in the matter.

However, he allowed the appelant's counsel Tommy Thomas's application for a stay of the proceedings set for April 30 at the Kuala Lumpur High Court pending an appeal on today's dismissals to the Federal Court.

The other two judges on the panel were justices Datuk Lim Yee Lan and Datuk Clement Allan Skinner.

Earlier, Thomas had submitted that the High Court judge had erred when dismissing their application for a full trial and access to related documents.

He contended that there were substantial issues of fact and law to be tried between parties and that disposal of the suit by way of law would be an unjust and unfair method to resolve a highly contested dispute.

Thomas also submitted that depriving trial in the normal way would severely prejudice the state of Kelantan.

Meanwhile, counsel Tan Sri Cecil Abraham, acting for Petronas, submitted that Zabariah had acted in accordance with principle and precedence in passing the order that the action in the High Court proceed by means of Order 14A.

He contended that whether Petronas had the obligation to make cash payment to Kelantan under the Petroleum Development Act, 1974, was a question of law.

He added that the exercise of contractual interpretation and statutory interpretation by a court of law cannot be aided by the testimony of witnesses.

"As long as the main issue is settled by the determination of the preliminary point, the procedure would render the benefits contemplated with a speedier trial at less expenses," submitted Abraham.

Senior federal counsel Datin Azizah Nawawi, who appeared for the federal government, favoured Abraham's submission and urged the court to dismiss the appeals.

In the lawsuit filed on Aug 30, 2010, the plaintiff had named Petronas as the first defendant.

The federal government, however, had succeeded in its intervenor application and was named as second defendant.

In its statement of claim, the Kelantan government demanded that Petronas pay outstanding and future cash payments for petroleum produced off the Kelantan coast as set in their petroleum exploration agreement.

The state government is also seeking damages and costs. However, it did not specify the total amount of the claim sought from Petronas.

In the suit, the state government said that the Kelantan Petroleum Agreement signed on May 9, 1975, clearly stated that Petronas should pay in cash five per cent of oil revenue either from exploration onshore or offshore.

It said that a clause of the agreement stated that the payment should be made in cash twice a year, on or before March 1 and on or before Sept 1.