Bee Wah Plastic Factory v

Francis Soh Kai Shuen

[1997]
Material fact of the case

● In this case, the appellant had orally agreed to made and supply the plastic gum
bottle to the respondent. For such purpose, the respondent also had given the
mould for creation of those plastic gum bottle however the appellant failed to
supply as promised.
● Hence, the respondent seek the order from the court. Appellant denied that they had
knowledge that the plastic gum bottle was intended for resale. The Magistrate court
awarded RM 20,972 to the respondent.
Cont..
● During the hearing of appeal, counsel of the appellant argued on two points, namely

i) that the respondent’s loss was unforeseeable; and

ii) there was no proof that the loss incurred.

● The issue for consideration was in relation to the assessment of damages made by
the Magistrate. The High Court held that there was insufficient proof for loss of
profit and only awarded the respondent nominal damages amounted to RM 2000.
Claims/ Losses claimed

● The respondent was earlier granted RM 20,972 by the Magistrate together with the
interest amount to 8% per annum, due to the cancellation on the order by the
appellant.
● However, in the appellate court, the court had reduce the award given to nominal
damages amounting to RM 2000 as the damages that respondent failed to prove the
loss of profit. Such decision was made based on the ruling in the case of Tan Sri
Khoo Teck Puat v Plenitude Holdings Sdn Bhd.
Judgement

● Initially, the court ruled in the favour of the respondent and awarded RM 20, 972
together with the interest rate of 8% pa thereon.
● During the appeal, the court found that the magistrate court consider that the gross
sale as loss profit and failed to take into account the cost of each bottle. This resulted
in an unfairness decision as there was insufficient proof regarding the loss profits even
though the appellant had breach the contract.
Cont..
● The court came into conclusion that the liability does exist when the appellant
failed to supply the bottles however there is no evidence pertaining the loss of
profit. This is based on the case Popular Industries Limited whereby, Judge Edgar
states it is axiomatic that when plaintiff seek to recover damages, he needs to prove
the damages that he attained or else he will only awarded nominal damages.
● Hence, compensation given will be reduced from RM 20, 972 to RM 2000 (nominal
damage) due to failure on part of respondent to prove the gross sale. It is
considered as a fair and reasonable nominal damages.
Ratio Decidendi

● Damages claimed must be reasonably foreseeable by the party in the breach of

contract but whether the party that caused breach could reasonably foresee such
damages depended on his imputed or actual knowledge.
● The court in Victoria Laundry (Windsor) Ltd v Newman Industries Ltd
reformulated the rule in Hadley v Baxendale with a specific focus on reasonable
foreseeability.
● The loss suffered by the plaintiff must be at the time of the contract reasonably
foreseeable as liable to result from the breach of contract.
Cont...

● In determining what was reasonable by the parties, the court must take into account
the knowledge possessed by the parties.
● There are two kinds of knowledge possessed which are imputed knowledge and
actual knowledge.
● In this case, the appellant claimed that he had no knowledge that the bottles were to
be sold to the third parties.
● The profits which the respondent lost from the sale of the plastic gum bottles was a
direct loss and one which was a result of the failure to supply the bottles.
● Thus, the profit claimed was not too remote.
Cont...

● The ordinary assessment of damages in cases which deal with the failure to supply
goods could be found in section 57 and 61 of the Sale and Goods Act 1957.
● Section 57 of SOGA states that the buyer may sue the seller for damages for non-
delivery if the seller wrongfully neglects or refuses to deliver the goods to the
buyer.
● Section 61 of SOGA states that both seller and buyer have rights to claim for
interest or special damages in any case where interest or special damages may be
recoverable.
Cont...

● The normal measure of damages for sale of goods cannot apply if the goods
concerned are special goods and are not readily available in the market.
● It can be calculated as the difference between the contract price and the market
price at the time of the breach, when the goods were available in the market and
was not based on the profit obtained from the supply of such goods.
Cont...

● Thus, in this case, the normal measure of damages could not be applied as the
goods which were to be produced by the appellant from the moulds given by the
respondent were special goods with specifications given by the respondent and
were not available in the market at the time the breach occurred.
● Hence, although the respondent had proved the appellant’s liability in failing to
supply the bottles, there was insufficient proof regarding the lost profits. Thus the
court awarded the respondent nominal damages amounted to RM2000.
Relevant Principles

● Popular Industries Limited v The Eastern Garment Manufacturing Co Sdn Bhd

(1990) -
● Victoria Laundry v Newman Industries (1949) - damages that can be claim must
reasonably foreseeable.
● Section 57 & Section 61 of Sales of Goods Act 1957
● Second limb of Section 74(1) of Contacts Act
● Second limb in Hadley v Baxendale
Evidences (if any)