QUESTION ONE

Datuk Bahar is the managing director of ​Harapan Express Sdn Bhd (Harapan Express), a
company involved in publishing books. In ​January 2019​, Harapan Express was awarded a
lucrative contract by the Government to publish 200,000 copies of Sejarah textbook for RM
1.8 million. The books were to be delivered to the Government by ​15 July 2019​. As Harapan
Express has only one printing press, Datuk Bahar was assigned to look for other printers.

Xian, a friend of Datuk Bahar introduced Feng Teng, the director of ​FT Sdn Bhd (a printing
company) to assist in the printing. ​Xian told Datuk Bahar that FT Sdn Bhd had adequate
resources in printing the books​. A meeting was arranged between Datuk Bahar and Feng
Teng on ​2 February 2019​. At the meeting, both parties signed an agreement and the terms
inter alia are:

i) ​It is FT Sdn Bhd's responsibility to design the cover and the interior of the books
until the printing process. It is essential that Harapan Express must be identified as
the publisher of the book.

ii) FT Sdn Bhd must deliver 200,000 copies of bound copies of Sejarah textbook to
Harapan Express before 15 June 2019 which failure to do so, ​FT Sdn Bhd must pay
the latter RM 2 mil as liquidated damages​.

On 5 March 2019​, FT Sdn Bhd secured a printing contract from ​one educational institution to
print 1,000 copies of law book for the sum of RM 2.5 million. The books are to be delivered
by ​30 June 2020​. Sometime in ​May 2019​, Feng Teng called Datuk Bahar asking for an
extension of time to complete the printing work. Datuk Bahar could not agree to allow an
extension of time as Harapan Express had committed itself to deliver the books to the
Government by 15 July 2019. ​Harapan Express stood to gain about RM 1 million as their
profit from the transaction. On 15 June 2019, FT Sdn Bhd had failed to deliver the textbooks
to Harapan Express. Since then, Harapan Express had been blacklisted by the Government.

Disappointed, Harapan Express wants to initiate legal proceedings against FT Sdn Bhd.
Advise Harapan Express on the likelihood of success in claiming damages for:
i) Loss of profit of RM 1 million;
ii) RM 2 mil as Liquidated damages;
iii) Loss of reputation; and
iv) Mental distress and disappointment (35 marks)
Pecuniary damages
1. Loss of profit of RM 1 million;
Basically, pecuniary loss is a financial and material loss ​(boleh define)​. This is to
protect the innocent party’s expectation and reliance interest. Expectation interest means
damages meant to put the Plaintiff in the position he would have been in had the contract
been performed thus includes loss of profit. ​(Harapan express expects to gain RM1M. so
since dia nak claim, dia kena fulfill legal requirement to ensure success in claiming this)
FIrst legal principle (S74 (2) + (1)). Elaborate the two limbs. Staright away
incorporate Hedley Baxendale and Victoria Laundry + one local case
Second legal principle must prove actual loss amounting to RM1M. explain law.
Identify measure dulu. The price of copy of sejarah textbook. cost of printing - market value.
Documentary evidence(invoice, receipt of expenses, market price -
catalog/documents/contract you supplied to other bookstore). Measure in proving loss of
profit 1M.
Special ke ordinary loss? Kena discuss why baru dapat markah. Ordinary loss
common practice in publishing business, order publisher also will incurred loss of profit.
More logical ordinary loss. ​So yang the fact dia ada agreement dgn government to under
loss of reputation. ​The fact that they are the publisher themselves? Only have 1 printer? Apa
special circumstances yang FT kena tau? It is not a usual course of practice for other
publisher to find other printers? // ​TAK boleh assume facts!! ​If nak argue under second limb,
kena argue on actual knowledge of FT that should they fail to published on time, then HE
unable to deliver the books to the government as agreed before 15 June. so since no actual
knowledge, so the loss of profit will be too remote. So since likelihood success under second
limb is low, so can we argue on the first limb? It is usual practice for any publishing co to
print the required amount of books in acc to terms of contract, failure to do so will suffer loss.
Then it is imputed knowledge. FT is expected to know that they should deliver book within
stipulated time. If you can argue under first limb, it will be an ordinary loss.
Bcs assume harapan ada knowledge. - kena show fulfill req? LOP suffered maybe fll
under 2nd limb - x common practice sub contract with another publisher yg receive project dr
gov. Kena inform another company kena supply kt gov tu. in matter of discussion. X usual
cost of practice.
Make sure justification is strong.
The amount itself RM1M. if able to produce docs ke? Dah identify..?
Third legal principle, mitigation there is 2 months to find other company, and they
also asked for extension, there is reasonable way to lessen the loss of profit he suffered -
gap 2 months. S74(3) + 1 local case. If reasonable ke 2 months tu? If 2 months tu short time
untuk cari another printer, meaning there is no reasonable way.
 No exact answer, all depends on argument. Dont worry if answer is diff from your
friend. Lecturer look at the content, justify ke tak apa bla3. If ada wasted expenditure,
discuss reliance, relate to objective, no need to explain the law again, but diff application one
by one. Principle of election jangan lupaa. This q no need to discuss. principle of election -
reliance loss involved more. Apply reliance, pastu buat satu para buat principle of election.
As long as clear and systematic.
Discuss on remoteness. Dont bother RM1M. for second principle baru discuss RM1M
not lesses than that prove it.
In the case of ​Cullinane v British Rema Manufacturing Co Ltd [1954] 1 QB 292
the court of appeal ruled that both his capital damages could not be asserted by a claimant.
In example, incurred expenditure as well as his reduction of gross income. Between his two
arguments, the plaintiff needs to choose. The same principle applies in Malaysia, however,
in the case of ​Heller Factoring Sdn Bhd(previously known as Matang Factoring Sdn
Bhd v. Metalco Industries (M) Sdn Bhd [1995] 2 MLJ 153​, CA the Court of Appeal granted
both expectation and reliance loss. In the words of Mahadev Shankar JCA, the machine was
not a standard item which in terms of specification or price, was readily available on the
market. The correct measure of the harm to be awarded to Metalco was an amount of
money that would restore Metalco to its position before Matang confiscated the machine, i.e.
the difference in the price at which Matang later resold it plus all the abortive expense
incurred by Metalco in transporting and installing the machine at its premises.

for expectation interest :

•2 possible measures can be adopted in order to put the P back in position had the
contract been performed:

i)‘​diminution in value​’ –difference in value between what the P has received and what
he expected to receive; diminution in fair market value. ii)‘​cost of cure​’ (reinstatement cost)–
the cost of putting the P into the position which he would have been in had the contract been
fully performed.

reliance interest - wasted expenditure

Case - Jones v Herxheirmer [1950]

the damages may be assessed on the basis of what it has cost or will cost the claimant to
have the contract performed by a third party in order to ensure that the contract is fully
performed.
In other words, if work contracted for is not performed or is performed badly, the claimant is
entitled to the cost of substitute or remedial work to be carried out by a third party where it is
possible/reasonable to do so

Subjected to Principle of Election.

P may wish to claim on reliance measure when:

- Has not suffered any loss of profit but incurred expenditure in reliance of the contract
- May suffer loss of profit, but difficult in ascertaining and proving the amount of profit.

SECOND LEGAL PRINCIPLE

· ​Assuming that plaintiff succeed with loss not too remote, next step is he must also ​prove
his actual loss

·​ ​Must prove to the court how you come to that amount. (tender documentary evidences)

FIRST STEP
1. Observe the types of claims made by the parties : pecuniary/non pecuniary
2. Also involved equitable remedies
Pecuniary
- Loss of profit
Non pecuniary
- Loss of reputation and mental distress
Issue of liquidated damages
Letak intro apa damages. (maybe cam tort haritu)
No need issue
Ada marks on objective of damages, so put in introduction
- Expectation interest (protect) (To restore innocent party in a position as if the contract
has not been breached)
- Should the plaintiff suffered reliance loss, the damages should be awarded to protect
this reliance loss (Walaupun takde involve wasted expenditure bla3, discuss jugak
reliance loss)
Start with - sec 74? // pecuniary loss boleh nak kaitkan
 2. Liquidated damages

If there is an existence of express term which should the party breach the contract,
the other party must pay a sum as liquidated damages, thus ​Section 75 Contracts Act
1950 ​provides that when a contract has been broken, if a sum is named in the contract as
the amount to be paid in case of such breach, the party complaining of the breach is entitled,
whether or not actual damage or loss is proved to have been caused thereby, to receive
from the party who has broken the contract ​reasonable compensation not exceeding the
amount so named or, as the case may be, the penalty stipulated for.

2 principles. Does not involve deposit part. Discuss Selva kumar and cubic.

In current situation, Datuk Bahar and Feng Teng has signed an agreement and there
is express term in which failure to deliver 200 000 copies of bound copies of sejarah
textbook to Harapan Express before 15 June 2019 shall resulting FT Sdn Bhd to pay RM2
Million as liquidated damages. However, FT Sdn Bhd has breached the contract by failure to
deliver copies of Sejarah Textbook to Harapan Express on 15 June 2019. Thus, due to the
existence of this express term, Section 75 will apply where Harapan Express can claim the
amount of RM2 Million which has been stipulated in the agreement.

Thus, in the existence of liquidated damages in the contract, few issues need to be
discussed in resolving the enforceability of liquidated damages clause for the innocent party.
This can be referred to in the case of ​Cubic Electronics Sdn Bhd (in liquidation) v Mars
​ here the Federal Court discusses 3 important
Telecommunications Sdn Bhd [2018] w
matters which firstly related to ​whether the innocent party must prove actual loss​. The court
held that there is no necessity for proof of actual loss or damage in every case where the
innocent party seeks to enforce a damages clause. Section 75 used the word ‘whether or
not’ which means that the section does impose no obligation to prove the actual loss. This
case has departed from the decision in ​Selva Kumar a/l Murugiah v Thiagarajah a/l
Retnasamy [1995]​, where the Federal Court established two limbs; the first limb is that the
Plaintiff need not have to prove if he has difficulty in proving actual lose and ;the second limb
is if your situation does not fall under the first limb, you have to prove actual loss.

Kena prove actual loss ke tak? Harapan Express. Ada way ke tak nak prove.
Difficulty for what reason? If there is no way for HE to measure RM2M. so dia falls under the
first limb. But whether the court will award RM2M. Only a reasonable amount. Reduced ke
tak? Kalau reduced what basis.- look at the contract. Buku cuma 1.8 M so kenapa kena
award 2M. The word itself! Cubic - x needs prove. In determining the amount, ct akan tgk
legitimate commercial interest. HE kena prove by claiming liq damages per clause, amount
able to protect ​commercial legitimate interest​. So apa CLI dalam soalan ni? Loss of
reputation ke profit nak argue(?) CLI ni pasal contract between P adn D, not aftermath effect
after breach of contract (loss of reputation). So discuss on the profit HE stood to gain RM1M.
so that would be CLI HE must protect and justified their claim on LD. most probably the
reasonable compensation would be RM1M instead of RM2M/RM1.8M as it is profit that they
need to protect. So only by claiming LD, the amount of LD enable HE to protect their loss of
RM1M because of the breach FT. ​Discuss mana more helpful no need discuss mitigation ke
prove loss ke…(?)

However, there are 3 matters that need to be resolved before Harapan Express can
enforce the liquidated damages clause as provided in Cubic Electronics’ case. The first
matter is whether Harapan Express needs to prove the actual loss or not. Since Section 75
does not provide obligation to prove actual loss, thus Harapan Express has no necessity to
prove any actual loss.

The second matter is related to ​reasonable compensation stated in Section 75.

Reasonable compensation is not confined to actual loss, although evidence of that may be a
useful starting point. If there is a dispute as to what constitutes reasonable compensation,
the burden of proof falls on the defaulting party to show that the damages clause is
unreasonable. However, if the defaulting party failed to show that the amount is
unreasonable, the court still has the power to decide the reasonable amount of liquidated
damages based on wording of Section 75.

Looking at our current situation, in determining whether the liquidated damages is

reasonable or not, the court shall look into the facts of the case. Moreover, it gives the right
to FT Sdn Bhd to dispute on the reasonableness of the liquidated damages, the burden of
proof shall lie on them to prove it. If FT Sdn Bhd failed to prove the reasonableness of the
clause, thus the court shall determine whether RM2 Million amounts to reasonable
compensation towards Harapan Express as result of the breach.

Thus, as per Cubic Electronics’ case, the likelihood of success of Harapan Express
Sdn Bhd to claim for RM2 Million as liquidated damages due to breach by FT Sdn Bhd is
high as the matter that needs to be discussed gives more advantages on Harapan Express.
Non-pecuniary loss
1. Loss of reputation
Basically, loss of reputation of non-pecuniary loss does not relate to defamation.
According to ​Addis v. Gramophone where in this case loss of reputation due to difficulty in
finding new employment is not recoverable. This is emphasized in the case of ​CCA
Holdings Ltd v Palm Resort Bhd [1998] ​where the plaintiff and managers of Defendant's
club under a technical and managerial agreement. Defendant terminated the agreement on
the ground the club had not generated profit as required in the agreement. Plaintiffs claimed
that such a manner of termination of their services would have an adverse impact on their
goodwill and reputation as managers of prestigious clubs internationally. Thus, James Fong
J stated that it is now an issue whether the plaintiff’s losses fall within the exception
provided. They are not bankers, not actors, and not those in the literary field. Their business
and duty were not to attract publicity for themselves. They engaged as professionals to
operate the club and not to sell themselves. Undoubtedly, if they are successful they will
gain reputation. But this is consequential thus it does not fall within the exceptions set out in
decided cases.

In simply the Court will not consider Plaintiff’s own injured feeling but what society
viewed the Plaintiff. If ridicule due to Breach of Contract by Defendant, whether or not
Plaintiff may succeed in claiming for loss of reputation, it depends on whether the Plaintiff
succeed in proving that because of Breach by Defendant, he suffered loss of reputation, and
because loss of reputation, he suffered financial loss. Hence, what he must prove is whether
he suffered loss as a result of loss of reputation. If not, referred back to ​ADDIS V.
​ here loss of reputation due to difficulty in finding new employment is not
GRAMOPHONE w
recoverable.

There are 4 exceptions where loss of reputation may be possible to recover

damages. One of them is the Defendant’s breach comprises a refusal to allow an actor’s
appearance, or a breach to publish an author’s book thus able to recover for loss of income
flowing from ‘loss of publicity’. In the case of ​Herbert Clayton & Jack Waller Ltd. v. Oliver
(1930) where Lord Buckmaster held in the present situation, without qualification, the old and
well-established rule applies, the damages are those that can reasonably be expected to
have been in the contemplation of the parties at the time when the contract was signed, as
the probable result of its violation, and if one of the parties was unaware of any exceptional
circumstances, the damages connected with and resulting from that breach should not be
caused. Here all parties knew that the claimant would be fined and promoted as performing
at the Hippodrome as flowing from the contract, and this is a precious privilege in the
theatrical profession.

In ​Malik v Bank of Credit and Commerce International SA (in liquidation) [1997],​

the House of Lords held that if an employer was in violation of the implied term of confidence
and trust in an employment contract and the potential employment opportunities of an
employee were adversely affected as a result, the employee may seek damages.

In applying to the factual situation given, the contract entered into by both Harapan
Express and FT Sdn Bhd, is an agreement for printing books as for the publishing the
Harapan Express contract by the Government to publish 200,000 copies of Sejarah
textbook. Therefore, this falls under the exceptions where loss of reputation may be awarded
where the FT Sdn Bhd breach comprises a breach to publish an author’s book thus able to
recover for loss of income flowing from ‘loss of publicity’. FT Sdn Bhd had failed to deliver
the textbooks to Harapan Express. ​Since then, Harapan Express had been blacklisted by the
Government. Therefore, it would arise possibilities that other companies or people would not
enter into agreement or business with Harapan Express anymore. Hence, loss of financial.
By virtue of Malik v Bank of Credit’s case, it can cause serious disadvantage to Harapan
Express.

In conclusion, Harapan Express may claim non-pecuniary damages on loss of

reputation against FT Sdn Bhd as the potential to get new jobs of publication may be
severely affected after the Government had blacklisted them and their loss of publicity as
well as loss of reputation resulted into loss of financial. Hence, damages may be
recoverable.

Before start claim 3,4, dedicate 1 para explain what is non pecuniary loss. What it
aptitude of the court in addis gramaphone, most likely HE wont be able to claim for these
losses. So GR principle for NPL. one short application. However, there are exceptions. Most
probably the court may award LOR despitedit NPL if P suffered financial loss. Provide case,
straight away apply. Kalau leh prove loss of profit. The fact that govt dah blacklisted them, so
govt memang takkan enter contract dengan HE. no doubt they suffered loss of reputation.
But to claim, they must suffer financial loss. If they manage to prove that they also incurred
financial loss due to blacklisted, then they court most likely to award.

LOR most likely not claimable. But if nobody enter agreement with you due to loss of
reputation then you can claim.
 2. Mental distress and disappointment

Damages on mental distress and disappointment fall under non-pecuniary damages.

Before further discussion on the damages claimed by Harapan Express, it shall be noted
that under the common law, the general rule is the damages for mental distress and
disappointment is not recoverable as there is difficulty in assessing and quantifying damages
to be awarded. This can be seen in the case of ​Addis v Gramaphone Co Ltd [1990] where
the plaintiff claimed damages for loss of reputation and distress. However, the plaintiff was
not entitled to the “harsh and humiliating way” in which his contract of employment had been
broken on the ground that it is hard to quantify the damages and mental distress or injury to
feeling is not a foreseeable loss and too remote.

Despite the general rule that disallow recoverable damages for anxiety or distress
caused by the breach, there are several important exceptions for the non-pecuniary losses
to be recoverable. One of the exceptions is the object of the clause which refers to the
objective of the clause​.

No physical discomfort, no peace of mind, inconvenience. The contract is purely

commercial in nature. As decided in Hayes' case, none of the exceptions are applicable.

However, this exception is only applicable to contracts providing peace of mind or

freedom. Similarly in ​Bliss v South East Thames Regional Health Authority, ​Dillon LJ
stated that such damages should be confined to cases "where the contract which has been
broken was itself a contract to provide peace of mind or freedom from distress”. Thus, if
distress arises out of breach of a ​purely commercial contract​, damages are not recoverable.
This has been illustrated in ​Hayes & Anor v James & Charles Dodd (A firm) [1990] where
this case is relating to contract purchasing premise for a motor repair business. As the object
of the contract was not providing pleasure or the relief, but simply carrying on a commercial
activity with a view to profit, thus this does not fall under the exception.

Referring to the factual situation, Harapan Express wanted to claim damages on

mental distress and disappointment against FT Sdn Bhd due to the decision of the
government to blacklist Harapan Express as failure to fulfil lucrative contract in publishing
200,000 copies of sejarah textbook within stipulated time. FT Sdn Bhd also contributed to
the failure since Harapan Express made an agreement with them and they failed to deliver
copies of textbook to Harapan Express on 15 June 2019. Harapan Express has to bear in
mind that damages for mental distress is not recoverable. However, there are few
exceptions and they need to see whether the nature of the contract falls under the exception
or not. The exception fits the situation is object of the contract. However, this is a commercial
contract with a view of profit as it is a legally binding agreement between Harapan Express
and FT Sdn Bhd to design the cover and interior of the books and delivered the copies to
Harapan Express before 15 June 2019. The exception is only applicable when the contract
provides peace of mind or freedom from distress. Thus, applying the case of Hayes v
James, the exception is not applicable and thus, the damages for mental distress and
disappointment is not claimable.

In conclusion, the likelihood of success of Harapan Express Sdn Bhd to claim

damages for mental distress and disappointment against FT Sdn Bhd is low as it is not
recoverable and does not fall under the exception.

Objective purely commercial in nature then bagi kes. Tak perlu pergi satu satu
exception. Focus Gen Principle. Exception if ANY.