Supreme Court Judgement: Abdul Majeed v Male’ City Council

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Summary of the Decision

On 15 July 2020, the Supreme Court of Maldives affirmed the decision of the High Court in an appeal filed by Abdul Majeed (G. Thalvaarey, Male’) against the Male’ City Council (“MCC”).1 In the civil trial, Abdul Majeed petitioned the Court to order MCC to handover the Number 2 Food Court to him. Though the Civil Court ruled in favour of Abdul Majeed, the High Court struck down that part of the lower court’s decision, and on appeal, the Supreme Court affirmed the High Court’s decision.

 
The Background

  1. As per an announcement made by the Male’ Municipality on 28 April 2008, an invitation to tender for the Number 2 Food Court was extended to the public, and it was decided to award the plot to Abdul Majeed2 as he submitted the winning bid.
  2. However, the Number 2 Food Court was not awarded to Abdul Majeed and MCC re-announced for invitation to tender for the same Number 2 Food Court. Abdul Majeed sued3 MCC for not honouring the decision to award the plot to him, alleging that the decision to re-announce the invitation to tender for the Number 2 Food Court was an infringement of his rights and contravened social justice principles. The petition filed by Abdul Majeed pleaded the Court to nullify the second announcement made by the MCC and order the MCC to handover the Number 2 Food Court to Abdul Majeed.
  3. The Civil Court decided in favour of Abdul Majeed and held that Abdul Majeed submitted the winning bid for the initial announcement for the Number 2 Food Court and hence, declared the second announcement for invitation to tender of the Number 2 Food Court as null and void. The Court ordered MCC to handover the Number 2 Food Court to Abdul Majeed within 45 days of the Court’s Judgment.
  4. The Court further observed that Male’ Municipality collected the bid security in accordance with the initial announcement on 28 April 2008 and failed to return that amount to Abdul Majeed and was ordered to return the bid security. The Court, however, did not award damages to Abdul Majeed on the basis that the estimation of damages submitted by Abdul Majeed was prepared by him, and the Court cannot rely on such documents as the basis to award damages. The Court ruled that Abdul Majeed was not restricted from seeking damages under a separate claim.
  5. On appeal, the High Court4 struck down part of the trial court’s judgment that required MCC to handover the Number 2 Food Court to Abdul Majeed. The appellate Court observed that after Abdul Majeed was selected for submitting the winning bid, Male’ Municipality sent a letter to him, detailing the terms of the handover of the Number 2 Food Court. The Court, however, noted that Male’ Municipality and Abdul Majeed did not enter into a written contract to formalise the arrangement. The Court further noted that, even when the MCC was formed following the coming into force of the Decentralisation Act5, the Number 2 Food Court had not been handed over to Abdul Majeed.
  6. On appeal, the Supreme Court affirmed the High Court’s judgment. The apex court observed that the Law of Contract of the Maldives6 (“Law of Contract”) is silent on transactions concerning an invitation to tender. The apex court carefully examined established principles in foreign jurisdictions and observed the circumstances where an acceptance of a response to a ‘Request for Proposal’ (“RFP”) may constitute a legally binding contract and the circumstances where the same would not constitute a legally binding contract.
  7. The apex court, however, observed that an ‘expression of interest, would not in and of itself, constitute an offer, and is understood to be interest expressed by the parties that respond to the RFP. That response does not constitute an offer as provided for under Section 6 of the Law of Contract.
  8. The Court further examined the initial announcement made by Male’ Municipality on 28 April 2008 – invitation to tender for Number 2 food Court – and the conditions set out in the announcement did not contain the contractual terms upon which the party that submits the winning bid would have to agree to. The Court expounded that the parties that responded with their expression of interest were merely expressing their interest in the announcement. As the responses to the announcement by interested parties were merely an expression of interest, and as the announcement did not stipulate the terms and conditions which the subsequent contractual agreement would be based upon, the court opined that response to the announcement (Expression of Interest) did not constitute an offer under Section 6 of the Law Contract.
  9. The apex court made a key observation with respect to the type of contract formed between the State and private individuals. The Court observed that Male’ Municipality being a state institution was required to carry out monetary transactions in accordance with the Public Finance Act7. Section 6.05(d) of the Public Finance Regulations requires that state property can only be leased under a written contract that contains the terms and conditions stipulated under Section 6.05 of the Regulation. The Court opined that the said requirement under Section 6.95 of the Regulation must be construed in accordance with Section 4 of the Law of Contract.
  10. The apex court also examined whether MCC could renege on a decision made by Male’ Municipality. In examining this issue, the apex court referred to Section 145 of the Decentralisation Act, which was raised by Abdul Majeed and MCC in their arguments submitted to the Court. The Court opined that Section 145 presumes that provided where a contract entered in relation to an asset falling within the jurisdiction of a council was entered before the formation of the council, the contract will only remain valid if the council deems the contract to be valid. However, the Court opined that as no legally binding contract exists between Abdul Majeed and Male’ Municipality or MCC, there is no reason for the Court to apply Section 145 of the Decentralisation Act to the case before the bench.
  11. Abdul Majeed also contended that the the High Court’s decision to rule that the decision to handover the Number 2 food court to Abdul Majeed was void from the outset, violated the common law principle of promissory estoppel as determined in the Supreme Court Case Number 2009/SC-A/22. The apex court expounded the underlying conditions to be fulfilled for the application of promissory estoppel; a key condition being that the promisee suffers a financial or economic loss as a result of the promisee’s reliance on the promise The Court observed that Abdul Majeed was unable to provide documents,, which sufficiently proved such financial or economic loss. The Court further noted the well established principle that promissory estoppel is a shield, not a sword, i.e. promissory estoppel in itself cannot be used as a cause of action, can only be used as a defence.
  12. Abdul Majeed also contended that the High Court, in their judgment, made a ruling on an issue which was not submitted as a point of appeal by MCC and as such, contravened Section 33(d) of the Judicature Act, and Section 47(b) of the High Court Regulations and the legal principles set out in the Supreme Court Case Number 2013/SC-A/26. The apex court, however, observed that courts apply the law in connection to events, and as such courts are within their power to rule on issues raised by parties during court proceedings. The Court opined that the High Court’s decision to rule on a matter raised during the proceedings of the case at appeal, therefore, does not contravene Section 33(d) of the Judicature Act, and Section 47(b) of the High Court Regulations, nor does it conflict with the principles set out in Supreme Court Case Number 2013/SC-A/26.

 
The Decision

Appeal dismissed. The Supreme Court justices unanimously upheld the decision of the High Court to reverse part of the Civil Court’s decision.

References

1 2015/SC-A/08.
2 Male’ Municipality, under a prior commercial lease agreement had already leased out the Number 2 plot, located in Henveyru Artificial Beach, to Abdul Majeed to operat a food court.
3 2525/Cv-C/2011.
4 2012/HC-A/349.
5 Law Number 7/2010.
6 Law Number 4/91.
7 Law Number 3/2006.