Fotopop (M) Sdn Bhd v Low Shu Nyok (BA-24NCvC-1553-12/2021)

By an Order dated 4-12-2023, this Court had ordered the removal of the Defendant’s private caveats on Hakmilik No. PM6013, Lot 53404 and Hakmilik No. PM6014 Lot No 53403, both at Seksyen 10, Tempat Hill Street Kajang, Bandar Kajang, Daerah Hulu Langat, Negeri Selangor (“Properties”). Pursuant to section 329(1) of the National Land Code 1965 the Defendant was further ordered to pay damages for losses caused by the wrongful entry of the private caveats.

An inquiry was held on 28-10-2024 pursuant to the Plaintiff’s Notice of Appointment of Assessment of Damages dated 19-3-2024. After hearing evidence and reviewing the documents and written submissions, this Court found that the Plaintiff failed to prove any actual loss. On 4-2- 2024, this Court awarded the Plaintiff RM10,000.00 in nominal damages, with costs of the proceedings in the sum of RM5,000.00 to the Defendant.

According to the Plaintiff, it is a dormant company. O&C Makok Isola Sdn Bhd and OCR Group Berhad are its related companies (“Related Companies”). The Plaintiff is wholly owned by one Serba Simfoni Sdn Bhd which is in turn wholly owned by one Grand Superland Sdn Bhd which is in turn wholly owned by OCR Group Berhad. O&C Makok Isola Sdn Bhd is a subsidiary of OCR Group Berhad which holds 50.01% of its shares.

The Related Companies had received financing offers dated 17-5- 2017, 11-6-2020 and 7-7-2020 from United Overseas Bank (Malaysia) Berhad (“UOB”) for a total of RM9 million for business expansion purposes, subject to a Third Party Charge over the Properties (“Loan Offers”).

The private caveats in question were lodged on 21-9-2021 and the Order for their removal was obtained on 4-12-2023. In the meantime, the Loan Offers lapsed on 25-11-2022. Accordingly, the Plaintiff sought to 4 recover the following categories of losses which it attributes to the presence of the Defendant’s private caveats on the Properties: Description Amount (RM)

Costs and expenses for the Valuation Report of the Properties for UOB 9,000.00 2. Legal fees of RM108,000.00 billed by Messrs Nandrajog to Fotopop Sdn Bhd 108,000.00 3. Loan documentation fees charged by UOB for the Loan Offers 100,000.00 4. Legal fees for UOB’s solicitors 30,012.94 5. Costs related to Private Placement Exercise offered by OCR Group Berhad 975,533.75 TOTAL 1,222,546.69 Analysis and Findings [6] After evidence taking concluded, I asked for submissions on two issues of law (a) recoverability of alleged losses by third parties; and (b) remoteness/reasonable foreseeability of alleged losses. For purposes of quantification, I also asked counsel to set out each item of loss in a table, with point form submissions on justification and grounds of objection, as it transpired during cross examination of the Plaintiff’s witness that numerous items in the volumes of claim documents were unrelated expenses. [7] Solicitors for the Plaintiff did not initiate the preparation of the quantification table as directed and no legal basis for the recovery of alleged losses suffered by the Related Companies was offered in submissions. Cost of Private Placement Exercises [8] The Plaintiff contended that the Related Companies undertook several rounds of Private Placement Exercises in 2020, 2021 and 2023 to raise funds (“Private Placement Exercises”) and incurred what appeared to be professional service fees and other fees and charges paid to lawyers, UOB Kay Hian Securities (M) Sdn Bhd, Mercury Securities Sdn Bhd, Kenanga Investment Bank Berhad and Bursa Malaysia Securities Berhad. [9] It was alleged that the Private Placement Exercises were alternative fund raising exercises that the Related Companies had to undertake because the Loan Offers could not be taken up. The Plaintiff therefore took the position that the expenses are recoverable in full because the private caveats prevented the creation of a Third Party Charge over the Properties as required by UOB that would have obviated it. [10] As noted, numerous items of expenses were conceded to be unrelated to the alleged Private Placement Exercises. Regardless, I would have rejected these claims because the Plaintiff did not prove that it had suffered the alleged loss. Per Coke & Coal Products (M) Sdn Bhd v Hon Swee Kong & Ors [2000] 1 CLJ 19: “The award made herein was not for property value loss, as there was no sale involved, but it was the amount of interest that would have accrued on the principal sum of RM2.57m at the rate mentioned. The SAR was clearly of the view that if the said loan facility had not been withdrawn the plaintiffs would have earned interest therefrom. In my opinion the decision of the SAR was erroneous, because the said loan concerned was not the plaintiffs' own money. Whether the very fund itself from the bank or the plough back amount, it is the same in principle. If the plaintiffs had made use of it, they would have to pay interest therefor. In other words, by not having to use the money, no interest was payable therefor and there would be no loss incurred. To sustain the claim the complainant must show that either he has thereby incurred a loss of his own money or that he has lost thereby the use of his own money.” [Emphasis added] [11] It was established that none of the RM1,222,546.69 claimed as damages was paid by the Plaintiff. No inter-company accounts were presented in evidence to show that any amount was back-charged to the Plaintiff. No evidence was led or any arguments advanced in any attempt to pierce the corporate veil on account of the Plaintiff and the Related Companies being a single economic unit despite their separate legal entities. [12] The case cited by the Plaintiff, Goo Sing Kar v Dato’ Lim Ah Cap & Ors [2013] 2 CLJ 936 on related company losses is distinguishable on the facts and does not assist. It concerned the enforcement of an undertaking as to damages when obtaining an ex-parte interlocutory injunction. No award of damages was made in favour of any non-parties as the group companies awarded damages were also parties in the action. [13] Even if the Plaintiff had been able to overcome the aforesaid challenges, as a matter of law, damages under s. 329(1) of the National Land Code must be assessed in accordance with the principles in the law of torts and that would be the reasonable foreseeability test. Thus, damages are recoverable if it falls within the range of damages recoverable and not otherwise (MD Biomedical Engineering (M) Sdn Bhd v Goh Yong Khai [2021] 6 CLJ 30). [14] The alleged losses from the Private Placement Exercises were not shown to have any direct nexus to the private caveats on the Properties and no evidence was presented to demonstrate that this head of loss was reasonably foreseeable. The submission that “it is common practice for property owners to charge their properties for Third Party Charges to banks as security for loans granted by the banks to third parties” is unsubstantiated and in fact, one might say the opposite is true. It is not reasonably foreseeable. [15] Furthermore, the evidence was unpersuasive that the alleged losses from the Private Placement Exercises would not have been incurred but for the private caveats considering the following:

The correct measure of loss must be something approximating the difference between cost of funding via the Loan Offers (i.e. interest and other costs and charges) and the cost funding via the Private Placement Exercises

There were other fund raising activities that accounted for the numerous unrelated items claimed and the amount of funds raised by the Private Placement Exercises far exceeded the Loan Offers [16] Finally, it should be pointed out that this action for the removal of the private caveats could have been initiated by the actual aggrieved parties. The Plaintiff had moved the Court under section 327 of the National Land Code 1965 which provides that: “(1) Any person or body aggrieved by the existence of a private caveat may at any time apply to the Court for an order for its removal, and the Court (acting, if the circumstances so require, ex parte) may make such order on the application as it may think just.” [17] It is not the function of the Court to remedy a situation caused by the non-joinder of relevant parties even if everything that the Plaintiff has brought forward in these assessment of damages proceedings is true. Expenses related to the Loan Offers [18] In respect of the alleged losses itemised as the costs and expenses for the Valuation Report of the Properties for UOB, loan documentation fees charged by UOB for the Loan Offers and legal fees for UOB’s solicitors, they were rejected because the expenses were not incurred by the Plaintiff. Legal fees [19] The amount claimed as legal fees was the solicitor-own client fees for the removal of the private caveats. This is not recoverable as damages based on Golden Star & Ors v Liang Peek Hoe & Anor And Another Appeal [2024] 6 CLJ 487 [FC] as they arose from the same proceedings and this Court had on 4-12-2023 ordered costs of the action in the sum of RM4,000.00. Conclusion [20] In a claim for damages, it is not sufficient for the plaintiff to merely state the amount of damages that he is claiming, he must prove the damage that he had in fact suffered to the satisfaction of the court However, this Court is bound by the following observation in Aeon Co (M) Bhd v. Asia Plywood Company Sdn Bhd & Another Appeal [2021] 5 CLJ 751: “[33] In our view under O 37 r 1 of the ROC 2012, the learned Deputy Registrar was to certify the amount of damages and it does not provide for the dismissal of a claim for damages after the completion of the evidentiary hearing. In Nirwana Construction Sdn Bhd v Pengarah Jabatan Kerja Raya Negeri Sembilan Darul Khusus &Anor [2008] 4 MLJ 157, Gopal Sri Ram JCA (as he then was) held that once it is held that the party is entitled to recover damages, what follows is an exercise of the assessment of those damages. If at that stage he or she is unable to evidentially establish the measure of damage suffered, nominal damages will be awarded.” [21] For the reasons set out above, this Court awarded nominal damages to the Plaintiff in the sum of RM10,000.00. However, the Plaintiff should bear the costs of the proceedings in the sum RM5,000.00 since it has substantially failed to evidentially establish the measure of damage put forward. Bertarikh : 24 Februari 2025 SGD ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA SHAH ALAM Peguam Untuk Plaintif: Dinesh Nandrajog, Messrs Nandrajog Untuk Defendan: Chiang Woei Chien, Messrs