PROMINENT VALLEY BERHAD MESIA (M) SDN BHD

DALAM MAHKAMAH TINGGI MALAYA DI SHAH ALAM DALAM NEGERI SELANGOR DARUL EHSAN RAYUAN SIVIL NO: BA-12BNCVC-7-02/2021 ANTARA PROMINENT VALLEY BERHAD (NO. SYARIKAT : 403613-W) …PERAYU DAN MESIA (M) SDN BHD (NO. SYARIKAT : 348067-D) …RESPONDEN [DALAM MAHKAMAH SESYEN DI SHAH ALAM DALAM NEGERI SELANGOR DARUL EHSAN, MALAYSIA GUAMAN SIVIL NO. BA-A52NCVC-494-09/2019 ANTARA MESIA (M) SDN BHD …PLAINTIF (NO SYKT: 348067-D) DAN PROMINENT VALLEY BERHAD (NO. SYARIKAT : 403613-W) …DEFENDAN] GROUNDS OF JUDGMENT Introduction 1. This is an appeal against the decision of the Sessions Court after a full trial on the issue of liability and quantum, arising out of a claim for breach of contract. The Session Court allowed the claim of the Respondent and ordered that damages of RM 239,199.60 be paid by the Appellant. Costs of RM 15,000 was also ordered. 1 2. For the purposes of this appeal, the parties will be referred to as they were in the Sessions Court. Background facts 3. The suit by the Plaintiff arises from the following factual matrix. Both Plaintiff and Defendant are locally incorporated companies. The Defendant has a business address at Taiping Golf and Country Club, Jalan Bukit Jana, 34600 Kamunting, Perak. 4. On 5.3.2017, both parties entered into an agreement titled “2- Seater Buggy Rental Contract for Prominent Valley Berhad” (“Rental Agreement”) wherein the Plaintiff was to supply 30 units of golf buggies and 2 additional units as replacement buggies to the Defendant for use at the Taiping Golf and Country Club. 5. The salient terms of the Rental Agreement are as follows:- (i) the contract was to commence on 15.3.2017 and end on 28.2.2020; (ii) the monthly rental for the buggies was RM 17,490.00 calculated based on 30 units at the rate of RM 550 per unit; and (iii) the monthly rental was payable on or before the 10th of every month, failing which interest at the rate of 3% will be imposed. 2 6. 10 units of buggies were delivered prior to the execution of the contract, at the request of the Defendant. The remaining 20 were then supplied on 15.3.2017, and the 2 replacement buggies were supplied on 16.6.2017. 7. The Defendant defaulted in the monthly rental in January 2019, and on 10.3.2019, the Plaintiff terminated the Rental Agreement and took possession of the buggies in April 2019. 8. The Plaintiff then commenced the present action for the arrears of rental until the end of the contract period. In addition, the Plaintiff also claimed for an additional amount of RM 14,214.60 arising from repair works on the buggies and a further amount of RM 9,000 being battery replacement stolen from 2 units of buggies whilst they were on the Defendant’s premises. Invoices dated 25.11.2017 and 20.9.2018 respectively were issued for these claims. 9. A summary of the Plaintiff’s claim is as follows:- PARTICULARS AMOUNT (RM) Accident claim 14,214,60 Wet battery claim 9,000 Outstanding monthly rental from January 2019 49,500 to March 2019 (RM 16,500 x 3 months) Interest at the rate of 3% on the outstanding 1,485.00 monthly rental from January 2019 to March 2019 3 Monthly rental for the unexpired term of the Contract from April 2019 to February 2020 (RM 16,500 x 11 months) (16,500) TOTAL RM 239,199.60 10. At the trial, the Defendant conceded to the accident claim, wet battery claim and outstanding monthly rental from January 2019 to March 2019 for 25 buggies. The Defendant disputed that rental was payable for the remaining 5 buggies alleged to be damaged. The Defendant therefore concedes to the amount of RM 64,464.00 comprising of accident claim, wet battery claim and three months rental for 25 buggies. However, from this amount, the deposit of RM 16,500 paid earlier will have to be deducted. The nett amount of RM 47,964.60 only is the Plaintiff’s entitlement upon termination of the Rental Agreement. 11. However, the entire claim of the Plaintiff was allowed by the Sessions Court. Grounds of appeal 12. The Memorandum of Appeal raises 2 principal grounds in this appeal. Firstly, the Defendant contends that the learned Sessions Court Judge erred in allowing the Plaintiff’s claim based on 30 buggies. The Defendant alleged that only 25 were in working condition as 5 others were defective and needed to be repaired. 4 13. In the course of submission in these proceedings, the Defendant made a further concession that the interest amount of RM 1,485 is payable as it is a contractual interest. 14. The second ground is with regard to claim for the unexpired term of the contract. The Defendant’s ground for strongly contesting this claim is that the Rental Agreement does not allow the Plaintiff to claim the remaining contract sum as the right to do so arises only if the Defendant determines the agreement. In support of this contention, the Defendant relies on clause 10 of the Rental Agreement which provides, Clause 10 Notwithstanding any provisions in this contract, in the event of the Club determining this contract at any time before the expiration of the term hereby created, the Club shall give one (1) month prior written notice to the Contractor. Provided that, the Club shall compensate the Contractor the remaining of the contract sum. 15. By amplication of this point, the Defendant further refers to clause 12 which provides for the parties’ right to determine the agreement in the event of either parties’ breach. 16. Clause 12 is herewith produced as follows, Clause 12 Both party may terminate the Contract in the event that any party have defaulted and breached any terms and conditions in this contract. 5 17. The Rental Agreement was terminated pursuant to Clause 12. The Defendant contends that Clause 12 is silent on the Plaintiff’s right to claim for the remaining of the contract sum. Premised on the express provisions of the Rental Agreement, the Plaintiff has no right to claim for rental for the unexpired term as the agreement does not provide for it. 18. Further, the provision of only 25 buggies constituted a breach of the Rental Agreement on the part of the Plaintiff. 5 of the 30 buggies contracted were defective and damaged. As the Plaintiff themselves had breached the said agreement, the Defendant is not liable to pay for the entire amount of RM 239,199.60 claimed by the Plaintiff. 19. In addition, all the buggies were taken away by the Plaintiff in April 2019. The Defendant did not have the use nor enjoyment of the buggies and hence, there was a total failure of consideration. The action of the Plaintiff in removing the buggies from the premises of the Defendant was tantamount to a repudiation of the Rental Agreement. Analysis and decision of this court The law on appellate interference 20. I am mindful that this is an appeal after a full trial and that an appellate court will generally be hesitant to disturb the findings of the trial judge unless there are clearly appealable errors. 6 21. Matters of finding of facts and legitimate exercise of discretion by the courts of original jurisdiction are often not interfered with by the appellate courts unless the trial judge has made a decision which is plainly wrong. (See: Wee Lian Construction Sdn Bhd v Ingersoll-Jati Malaysia Sdn Bhd [2010] 3 MLJ 425, Master Jaya Environmental Sdn Bhd v Pentas Flora Sdn Bhd [2020] 2 MLJ 117) 22. The Federal Court in S Quarry Sdn Bhd v Desaru Development Corporation Sdn Bhd & Ors [2019] MLJU 99 laid down several instances when decisions are considered to be plainly wrong or perverse. Some of the instances where the trial judge’s decision is perverse, are where he had:- (i) misdirected itself on the evidence; (ii) failed to judicially appreciate the evidence; (iii) failed to consider any material evidence; (iv) acted on some irrelevant evidence as to render the decision wholly erroneous; (v) made wrong inference from facts; (vi) misapprehended the facts; (vii) gave reasons which are wholly unsatisfactory or contradictory of each other. (See also: Lee Ing Chin @ Lee Teck Seng & Ors v Gani Yook Chin and Anor [2003] 2 MLJ 97, Md Hilmi Md Noor v Azman Ahmad & Ors [2016] 7 CLJ 360, and N. Ganesan N Narayan v Waytha Moorthy A/L Ponnusamy [2020] 1 LNS 29). 7 The Plaintiff’s claim based on 30 buggies 23. The learned Sessions Court judge found no evidence on 5 buggies being defective or damaged as claimed. He was of the view that the sole witness for the Defendant, Dr. Zulkifli bin Mohd Isa (DW1) was not an appropriate witness. DW1 was the senior manager for shared services of MK Land Bhd, of which the Defendant is a wholly owned subsidiary. 24. DW1 admitted in evidence that he was neither involved in the negotiation nor execution of the contract. He also did not deal with the Plaintiff on the rental of the buggies. He therefore did not have personal knowledge of the facts of the case. 25. Instead, other witnesses who had direct knowledge of the rental of the buggies were not called to testify. The Sessions Court Judge was therefore right when he held that the Head of Operation, and two other representatives of the Defendant who liased with the Plaintiff for the repairs and maintenance of the buggies would have given material and relevant evidence on the issue of repairs and damage as alleged. These witnesses were referred to in evidence in the course of the trial, but for some reason, were not called. The conclusion that the learned Sessions Court then drew was that had they been called, their evidence would have been unfavourable to the Defendant. 26. The learned Sessions Court Judge also found that clauses 7 and 8 of the Rental Agreement require the Defendant to first notify the Plaintiff of any damage or defect within 24 hours by phone call 8 and/or email. Upon such notification, the Plaintiff was then obliged to carry out the repair of the buggy within 3 working days thereof. Upon hearing the testimony of DW1, the Sessions Court found that there was no proof of any notification to the Plaintiff of alleged defects. He therefore surmised that there was no defective buggies. 27. I find no error in the finding of fact arrived at by the Sessions Court, and am in agreement with the conclusion arrived at. As the Defendant had made a specific assertion of 5 defective buggies, the onus was on the Defendant to prove the allegation. (See: section 103 of the Evidence Act 1950). However, the allegation of the defective and damaged buggies was not borne out by credible evidence adduced by the Defendant. In the circumstances, the Sessions Court was right to allow the Plaintiff’s claim based on 30 buggies. 28. In view of this finding, the contention of the Defendant that the Plaintiff was in breach of the Rental Agreement as it only supplied 25 working buggies, does not arise. There is no breach in this regard. 29. Also, I note that the Defendant did not file any counterclaim to set- off the claim for the 5 buggies which were allegedly not in working condition. That might have lent some credence to its contention that 5 of the buggies were not working, and consequently it was entitled to a set-off. 9 The claim for rental for the unexpired term of the contract 30. The Plaintiff terminated the Rental Agreement by issuing a Notice of Termination on 10.3.2019 after the Defendant defaulted in payment of the rental for the buggies from January 2019. The Plaintiff was entitled to do so under Clause 12 of the Rental Agreement. The Defendant conceded that it was liable to pay the arrears from January 2019 until March 2019. Having made the concession, the Defendant’s breach of the Rental Agreement is no longer in issue. 31. What remains to be considered is merely the amount of damages the Plaintiff is entitled to claim. Apart from the arrears in rental, the Plaintiff also claims for the balance rental due under the contract. This claim arises from the provisions of section 74 of the Contracts Act, 1950. 32. Section 74 of the Contracts Act provides, 74 Compensation for loss or damage caused by breach of contract (1) When a contract has been broken, the party who suffers by the breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from the breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. (2) Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. 10 33. In Cahaya Berlian Sdn Bhd v Datuk Bandar Kuala Lumpur [2021] 1 LNS 838, the Court of Appeal held, [23] The law is that the general principle for the assessment of damages is compensatory. The Federal Court in Datuk Mohd Ali bin Hj Abdul Majid & Anor & Co v. Public Bank Bhd [2014] 4 MLJ 465 at page 475 held that the object of an award of damages is to give the claimant compensation for the damage, loss or injury he has suffered. The Apex Court quoted the principle as to damages enunciated by Lord Blackburn in Livingstone v. Rawyards Coal Co [1880] 5 App Cas 25, who said that the measure of damage is “…. that sum of money which will put the party who has been injured, or who has suffered, in the same position he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation”. [24] Thus the general rule is that damages are meant to place the appellant in the same position as if the Contract had been performed (see Guan Soon Tin Mining Company v. Wong Fook Kum [1969] 1 MLJ 99; Tan Sri Khoo Teck Puat & Anor v. Plenitude Holdings Sdn Bhd [1995] 1 CLJ 15; Popular Industries Limited v. Eastern Garment Manufacturing Sdn Bhd [1989] 3 MLJ 360). [25] Section 74 of the Contract Act 1950 governs the law on compensation for loss or damage caused by breach of contract (Toeh Kee Keong v. Tambun Mining Company Ltd [1968] 1 MLJ 39; The Supreme Court case of Bank Bumiputra Malaysia Bhd. Kuala Terengganu v. Mae Perkayuan Sdn. Bhd. & Anor [1993] 2CLJ 495; Malaysian Rubber Development Corporation Berhad v. Glove Seal Sdn Bhd [1994] 4 CLJ 783; Nikmat Masyhur Sdn Bhd v. Kerajaan Negeri Johor Darul Ta’zim [2008] 9 CLJ 46)) . [26] In Malaysian Rubber Development Corporation Berhad, supra, the Supreme Court held that at page 790 – “…. It is important to bear in mind 11 that the normal measure of damages for breach of contract in this country is prescribed by s. 74(1) of the Contracts Act 1950, which is the statutory enunciation of Hadley v. Baxendale [1854] 9 Exch. 341: (Toeh Kee Keong v. Tambun Mining Company Ltd [1968] 1 MLJ 39; [2021] 1 LNS 839 Legal Network Series 8 Bank Bumiputra Malaysia Bhd. Kuala Terengganu v. Mae Perkayuan Sdn. Bhd. & Anor [1993] 2CLJ 495 SC. In essence, the section states that the party may recover any loss or damage for any breach which (a) naturally arose in the usual course of things or (b) which the parties knew, when they made the contract, to be likely to result from the breach of it. For the sake of completeness, it should be mentioned that our Courts have treated the position under the second limb of the section to be similar to the second limb of Hadley v. Baxendale, which is, the party may recover damages which may “reasonably be supposed to have been in contemplation of both the parties, of the time they made the contract”…”. 34. The claim of the Plaintiff is not pursuant to any term of the Rental Agreement. Therefore the contention of the Defendant that there is no express provision allowing the Plaintiff to claim by reference to the Rental Agreement is misconceived, and without merit. 35. The question that arises is whether the claim for the balance rental falls within the scope of section 74? The Sessions Court held that the claim was lawful as the Plaintiff ought to be put in the position in which he would have been had the contract been performed. If there was no breach, the Plaintiff would have received the monthly rental for the unexpired term of the Rental Agreement. 36. In my view, the Sessions Court Judge was right in arriving at that conclusion. The Defendant breached the contract by failing to pay the rental fees for the buggies. Having breached its obligations, the 12 Plaintiff terminated the agreement and sued for damages. The Rental Agreement having come to an end, the loss occasioned to the Plaintiff was the loss of rental fees it would have enjoyed had the Defendant performed its obligations to the end of the contract period. This is the loss the Plaintiff bargained to be compensated for when the Rental Agreement was entered. To my mind, this loss is one which the parties knew, when they made the contract, to be likely to result from the breach of it. 37. The Plaintiff referred to several cases which were decisions on tenancy agreements to apply the principles enunciated in those cases (See: Perniagaan Ayam Segar S.L Sdn Bhd v Victoria Hwang (f) [2017] 1 LNS 335, Sargunam Seeniappan v Vello Vallian @ Vellayan [2017] 1 LNS 290, Achievers Paragon Sdn Bhd v Martego Sdn Bhd [2010] 1 LNS 1520). Having considered these decisions I am of the view that the same principles are applicable to the instant case where the contract is for rental fees for the duration of a specific period. The Plaintiff is entitled to enforce its rights to claim damages as the Defendant was in breach. The learned Sessions Court Judge was correct in deciding that such damages are claimable. 38. The Plaintiff’s claim to the entire unexpired duration is also subject to efforts taken to mitigate its loss. (See: Malayan Cement Industries Sdn Bhd v. Golden Island Shipping (L) Bhd [2018] 1 CLJ 228, Kabatasan Timber Extraction Co v. Chong Fah Shing [1969] 2 MLJ 6 FC). The Plaintiff led evidence on this issue where quotations to several potential customers were issued. However none of these potential customers responded. The 13 Sessions Court Judge considered the issue of mitigation and held that the Plaintiff did not manage to rent its buggies to other customers despite its best efforts. I have to reason to interfere with this finding. 39. Finally, the Defendant’s contention that buggies were removed from the premises and could not be used by the Defendant after April 2019 is not a valid ground to preclude the Plaintiff from claiming damages. The Defendant having breached the Rental Agreement, cannot complain about the Plaintiff enforcing its rights consequent upon the breach. Conclusion 40. For the foregoing reasons, the Sessions Court was correct to find that the Plaintiff was entitled to the claim for 30 buggies. It was also correct in arriving at the conclusion that the Plaintiff was entitled to claim for the balance rental term as these the claim falls within the provisions of section 74 of the Contracts Act, 1974. 41. Consequently, the Defendant’s appeal is dismissed and I also order that costs of RM 3,000 be paid to the Plaintiff. Dated : 18th October 2021 ………..-sgd-….…….. Alice Loke Yee Ching Judicial Commissioner High Court of Malaya at Shah Alam 14 Counsel for the Appellant : Mr. Ramesh N P Chandran (Miss Tejal Harash and Miss Reavle Rashell James Pang with him) Tetuan Ramesh Yum & Co. Counsel for the Respondent : Miss Vincy Wong Vin Shih Tetuan Vincy Wong & Co. 15