Hasilharta (Malaysia) Sdn. Bhd. v 1. ) Ideal Advantage Sdn. Bhd. (WA-22NCvC-681-09/2019)

1.1 On 25.02.2025, after considering the facts, the evidence adduced, and the parties' submissions, I allowed part of P’s claim for damages and costs of RM5000.00 to be paid to the plaintiff within 30 days 30 from the date of the order.

1.2 Aggrieved, the plaintiff appealed as follows: “(a) Ganti rugi sebanyak RM25,000.00 untuk perbelanjaan sia-sia (wasted expenses) atau kos dibuang (costs thrown away) untuk fi guaman yang 35 ditanggung oleh Perayu untuk transaksi berkenaan dengan Perjanjian Jual Beli bertarikh 4.12.2017 antara Perayu dan Home Entity PLT yang telah dibatalkan.

Ganti rugi sebanyak RM80,000.00 untuk fi guaman yang ditanggung oleh Perayu untuk membela Mahkamah Tinggi Kuala Lumpur Guaman No. 40 WA-22NCVC-414-07/2018 antara Perayu dan Home Entity PLT. 19/05/2025 09:52:22

Ganti rugi sebanyak RM1,400,000.00 untuk kehilangan keuntungan yang ditanggung oleh Perayu akibat daripada pembatalan Perjanjian Jual Beli bertarikh 4.12.2017 antara Perayu dan Home Entity PLT; dan

Faedah pada kadar 5% setahun atas jumlah ganti rugi yang diawadkan 45 dikira dari tarikh pemfailan guaman sivil di Mahkamah Tinggi (13.9.2019) hingga tarikh pembayaran penuh.” My reasons are as follows: 50 BRIEF FACTS [2] The facts are summarised as follows:

2.1 On 21.02.2024:

The Court of Appeal set aside this Court’s decision and entered judgment in favour of P for the trespass committed by D1 on 55 P’s land.

Leave to appeal to the Federal Court was dismissed on 14.01.2025, which renders the decision of the Court of Appeal final and conclusive. 60 2.2 In its determination, the Court of Appeal ordered that:

D1 is to pay P RM1,313,002.73 together with interests.

Any further damages P allegedly suffers will be assessed (if any).

Costs of RM30,000.00 were awarded. 65 The matter was remitted back to this Court for assessment.

2.3 On 04.06.2024, P filed a Notice of Assessment for Damages under O.37 r.1 Rules of Court 2012 (L.89), against D1. 70 THE LAW [3] O.37 r.1-6 RC 2012 sets out the procedure for assessment of damages after liability has been held against a party to a proceeding. 75 “O.37 Assessment of Damages Assessment of damages by Registrar (O. 37 r. 1)

Where judgment is given for damages to be assessed and no provision is made by the judgment as to how they are to be assessed, the damages 80 shall, subject to the provisions of this Order, be assessed by the Registrar, and the party entitled to the benefit of the judgment shall, within one month from the date of the judgment, apply to the Registrar for directions and the provisions of Order 34 shall, with the necessary modifications, apply. 85

On the hearing of the application for directions, the Registrar may, in addition to making such orders as are necessary and appropriate under Order 34, give directions as to the time by which a notice of appointment for assessment of damages shall be filed and such notice upon being filed shall, notwithstanding anything in Order 62, rule 10, be served not later 90 than seven days thereafter on the party against whom the judgment is given. Notice of appointment for assessment of damages shall be in Form 62A.

If the party entitled to the benefit of the judgment fails to comply with 95 paragraph (1), the Court may, on the application of the party against whom the judgment is given, proceed to assess damages or make such other order as it thinks just.

The attendance of witnesses and the production of documents before the 100 Registrar in proceedings under this Order may be compelled by subpoena, and the provisions of Order 35 shall, with the necessary adaptations, apply in relation to those proceedings as they apply in relation to proceedings at the trial. 105

Subject to any direction given by the Registrar pursuant to this rule, the party entitled to the benefit of the judgment shall file a notice of appointment for assessment of damages within six months of the date of judgment. 110

A party shall not file a notice of appointment for assessment of damages by the Registrar pursuant to this rule unless directions for filing and exchange of affidavit evidence under Order 34 have been given or complied with, as the case may be. 115 THE PARTIES ARGUMENTS [4] THE PLAINTIFF’S (P) SUBMISSION Alleged losses arising from the Termination of the SPA 120

4.1 The Court of Appeal has concluded that D1 was liable for the losses suffered by P resulting from the termination of SPA and ordered D1 to pay the sum of RM1,313,002.73 (i.e. the sum of money previously paid by P in compliance with the summary judgment awarded to Home Entity PLT in Suit 414).

4.2 It was argued that P is entitled to “that sum of money which will put it in the same position as it would have been if it had not sustained the wrong for which he is now getting his compensation or reparation”: Cheng Hang Guan & Ors v Perumahan Farlim 130 (Penang) Sdn Bhd & Ors [1993] 3 MLJ 352. Based on the findings of the Court of Appeal, D1 must be made to compensate P for causing the Termination of the SPA, and the only issue left to be determined is “Whether P has suffered other losses (apart from the award granted 135 by the Court of Appeal) resulting from the Termination of the SPA”

4.3 P claimed to have suffered RM1,505,000.00 of damages as follows:

RM1,400,000.00: Loss of profits from the failed sale of the P’s Land resulting from the Termination of SPA (Purchase Price 140 RM2,000,000.00 minus Market Value RM600,000.00).

RM25,000.00: Legal fees allegedly paid to P’s solicitors, who handled the sale and purchase transaction between the Plaintiff and Home Entity PLT.

RM80,000.00: Legal fees allegedly paid to the P’s solicitors in defending Suit 414 between Home Entity PLT and P, relating to the Termination of the impugned SPA. 150 Loss of Profits 4.4 It was argued by P that the loss of profits suffered by P for the termination of the impugned SPA was a real and ascertainable loss:

If the sale of P’s land had been completed (without being terminated due to D1’s trespass), P’s Land would have been 155 sold for RM2,000,000.00.

The market price of P’s Land at the time of the SPA was valued by DW4 (D1’s valuer) at RM600,000.00, given the existence of the sewage treatment plant erected on the land. 160 4.5 During cross-examination, DW4 confirmed that the market value of the P’s land was RM600,000.00 and if the land had been sold above that price, that would constitute a price higher than its market value.

4.6 It was therefore submitted that:

P would have supposedly received a profit of RM1,400,000.00 (the difference between the Purchase Price and Market Value).

It was further argued that this constitutes a loss suffered by P, which was a natural and probable result of D1’s trespass on the land.

The market value was derived from the valuation report produced by D1, which enables this court to place more weight on it and have fewer complications.

4.7 P suggested that there is also no necessity to consider whether 175 these damages are too remote for the plaintiff to claim since it is no longer a live issue after the Court of Appeal had already held that D1 is to be made liable for all losses (if any) supposedly suffered by P resulting from the termination of the impugned SPA. 180 4.8 Citing Cheng Heng Guan & Ors v Perumahan Farlim (Penang) Sdn Bhd & Ors [1993] 3 MLJ, HC for support. P argued that it must be compensated for this loss of profit (RM1,400,000.00) to “put it in the same position as it would have been if it had not sustained” the termination of the SPA caused by D1’s trespass. 185 Legal Fees 4.9 P also claimed the supposed legal fees it incurred, amounting to:

RM25,000.00 in the failed SPA transaction that represents wasted expenses or costs thrown away.

RM80,000.00 for defending Suit 414 between Home Entity PLT and P that must be taken as tortious damages or losses caused by D1’s trespass. In support, P cited:

The Federal Court of Australia in Grey v. Sirtex Medical Ltd [2011] 276 ALR 267, which applied the principle that if a person loses an action brought by a third party, he may recover the costs of the first suit against the wrongdoer who has committed the tort. He will get all the costs he has reasonably incurred. 200 The Court allowed legal costs to be recovered as damages since the claim was brought through a crossclaim against a third party. The principles recognised in Grey (supra) were recently referred to and considered by the Federal Court in Golden Star & Ors v Ling Peek Hoe & Anor and another 205 appeal [2024] 4 MLJ 749.

The Court of Appeal in MD Biomedical Engineering (M) Sdn Bhd v Goh Yong Khai [2021] 5 MLJ 408 allowed the appellant’s claim for ‘total legal fees and disbursement of RM70,000’ to remove a caveat on a land and safeguard his 210 interest as tortious damage and found that the claim for such legal fees was not too remote resulting from the wrongful entry of caveats (tort committed) by the respondent.

The Court of Appeal in Yap Boon Hwa v Kee Wah Soong [2020] 1 MLJ 37, awarded legal fees of RM54,855.35 incurred 215 by the defendant in defending an action flowing from the fraudulent misrepresentation committed by the wrongdoer.

4.10 P argued that there is no evidence before this court that the costs expended by the plaintiff for the failed SPA and defending Suit 414 220 were anything other than reasonable. It must be allowed to recover from D1 the wasted expenses for the failed SPA (RM25,000.00) and the legal costs incurred for defending Suit 414 (RM80,000.00). THE FIRST DEFENDANT (D1’S) SUBMISSION 225 [5] Encroachment Structure Removed by Third Party.

5.1 D1 argued that the encroachment structure, which was central to P’s claim, had already been removed by D1’s tenant:

Removing the structure eliminates any ongoing loss or detriment to the plaintiff.

This should account as mitigating factors, including remedial actions taken by D1 or third parties.

P could not possibly claim damages for losses allegedly caused by a structure that no longer exists. 235 Plaintiff’s Duty to Mitigate Losses 5.2 It is trite law that P must mitigate its losses:

P cannot recover damages for losses that reasonable steps could have avoided.

The plaintiff has failed to demonstrate any steps taken to 240 mitigate its losses when:

Failed to explore alternatives to terminating the SPA.

Failed to lease or develop the land to offset the alleged losses. It was argued that this inaction undermines P’s claim for damages. 245 Loss of Profit 5.3 In response to P’s claim for an alleged speculative loss of profits, it was argued that the Court must consider that:

The Court of Appeal had already awarded RM1.3m, which 250 covers the deposit that was paid and the penalty due to the termination of the impugned SPA.

The terminated SPA has yet to be concluded and was far from being concluded.

In such circumstances, it is unreasonable to argue that P could 255 profit from the aborted sale in any situation.

The purchase price in the aborted SPA was based on a challenged Valuation Report.

The termination of the SPA was also the result of P’s failure to ensure its land was free from encumbrances and 260 encroachment.

P’s failure to ensure compliance with the terms of the SPA was its fault, which was compensated despite D1 not being a party to Suit 414 brought against P.

The claim for loss of profit is founded on mere assumptions and 265 estimations:

Even if P is to rely on Section 74 CA 1950: compensation for loss or damages caused by contract, it does not apply to D1 when D1 was not privy to the SPA.

The terms and conditions and obligations are on P to 270 ensure its land is available for sale.

In its award, the Court of Appeal has awarded P reasonable compensation for the encroachment.

5.4 The encroachment was caused by the D1’s tenant, not D1 directly. 275 While D1 acknowledges the Court of Appeal’s finding on liability, this factor should weigh in favour of limiting the quantum of damages. This court has discretion to apportion damages in cases where D1’s role in causing the harm is limited. Citing in support Guinness Anchor Marketing Sdn Bhd v. Man Seng Trading & Marketing 280 Sdn Bhd [2022] 2 CLJ 81, where the Court of Appeal observed: "[62] The respondent must prove actual loss for each and every head of claim, and if actual loss is not proven, then the claim ought to be dismissed, or only nominal damages could be granted…” 285 5.5 P was already being put into its original position as far as the award was concerned. Any attempt of any amount to go beyond the Court of Appeal award does not reflect the principles of compensation for loss of profit and will put P well beyond what it rightfully is. Citing in support Mahsurimas Sdn Bhd v. Dorsett Regency Hotel (M) 290 Sdn Bhd [2024] MLRHU 1172, where the High Court ruled that: According to Julian Bailey in Construction Law (Volume II), 3rd ed., pages 1149-1153, paras 13.20 -13.26, six matters were to be considered concerning damages for loss of profit: "(a) First, damages awarded to a claimant for loss of profit will be calculated 295 by looking at the overall position of the claimant. The claimant is not entitled to be put in a better position than it would have been had the contract been performed and not broken...

Secondly, where a party claims to have suffered a loss of profit (or a loss of an opportunity to make a profit) as a consequence of another's breach 300 of contract, it is for the party to adduce sufficient evidence of its loss based on factual material, as opposed to hypothetical calculation that bears little or no relation to the facts of the case...

Thirdly, even if a party who claims damages for a loss of profit does adduce cogent evidence, it may be appropriate (although ultimately the 305 position is fact sensitive) to make a deduction from the sum calculated by the claimant to reflect general vicissitudes, and the risk that the claimant would not have derived that profit even if the contract in question had been performed and not broken.

Fourthly, depending upon the circumstances in which the parties 310 transacted, an identified loss of profit may be regarded as either a direct loss recoverable under the first limb of Hadley v. Baxendale, or an indirect loss recoverable only under the second limb...

Fifthly, the award of damages for future loss of profits will be discounted to take account of the time value of money.

Sixthly, the costs that are taken into account in determining whether there has been a loss of profit, and if so, what that loss is, may include indirect costs such as overheads, at least where it is realistic to attribute such indirect costs to the project in question... " 320 5.6 The learned counsel concluded that:

P’s claim for damages is excessive, speculative, and unsupported by credible evidence.

Damages, if any, should be strictly limited to the value of the encroached area as determined by D1’s valuation report.

The plaintiff’s claim for rental losses or mesne profits should be dismissed entirely. Citing in support, Popular Industries Limited v. Eastern Garment Manufacturing Sdn Bhd [1989] 2 MLRH 705; [1989] 3 MLJ 360; 330 [1990] 2 CLJ 635, the court said: “It is axiomatic that a plaintiff seeking substantial damages has the burden of proving both the fact and the amount of damages before he can recover. If he proves neither, the action will fail, or he may be awarded only nominal damages upon proof of the contravention of a right. Thus, nominal damages may be 335 awarded in all cases of breach of contract (see Marzetti v. William). And, where damage is shown but its amount is not proved sufficiently or at all, the Court will usually decree nominal damages. See, for example, Dixon v. Deveridge and Twyman v. Knowles. 340 In the circumstances, D1 prays for an order that P’s claim for damages be assessed solely based on the encroachment area and that the costs of this assessment exercise be borne by P. FINDINGS 345 [6] I have duly considered all the relevant cause papers and submissions by the respective parties and find as follows:

6.1 Two valuation reports are produced in this Court to substantiate the party's position on the quantum of damages. However, the plaintiff 350 has elected to refer to and use the valuation report adduced by D1 to mitigate conflicts in arguments for or against the quantum of damages to be assessed.

6.2 Therefore, since one valuation report (D1’s) is to be referred to as the basis of the assessment, it would simplify the process. I take 355 guidance from:

The Court of Appeal in Imbi World Sdn Bhd v Deluxe Tours Sdn Bhd & Another Appeal [1997] 1 MLRA 333; [1997] 3 MLJ 531; [1997] 3 CLJ 504, CA that cited and followed Bonham-Carter v Hyde Park Hotel Ltd [1984] 64 TLR 177, at 360 pg.178 that I summarised as follows:

The plaintiff seeking damages must prove it.

Simply listing it down and telling the Court is insufficient.

The quality of compelling or persuasive evidence is expected of a plaintiff:

Where precise evidence is obtainable, the Court naturally expects to have it.

(ii) The Court must do its best where it is not.

(iii) The difficulty of proof does not dispense with the necessity for proof.

I also take guidance from Popular Industries Limited v Eastern Garment Manufacturing Sdn Bhjd [1989] 2 MLRH 705; [1989] 3 MLJ 360; [1990] 2 CLJ 635, HC, that I have summarised as follows:

A plaintiff seeking substantial damages must prove the fact and quantum before recovery is allowed.

Failing to do so, the claim will fail, or he may only be awarded nominal damages if a contravention of right is proven. 380

A decree in nominal damages may follow where damage is shown, but its amount is not proven persuasively. [7] In part (a) and part (b) of its Notice of Appeal (L.107), P seek to recover the supposed legal expenses it had allegedly incurred as 385 follows:

Ganti rugi sebanyak RM25,000.00 untuk perbelanjaan sia-sia (wasted expenses) atau kos dibuang (costs thrown away) untuk fi guaman yang ditanggung oleh Perayu untuk transaksi berkenaan dengan Perjanjian Jual Beli bertarikh 4.12.2017 antara Perayu dan Home Entity PLT yang 390 telah dibatalkan.

Ganti rugi sebanyak RM80,000.00 untuk fi guaman yang ditanggung oleh Perayu untuk membela Mahkamah Tinggi Kuala Lumpur Guaman No. WA-22NCVC-414-07/2018 antara Perayu dan Home Entity PLT. 395 I take guidance from the Federal Court in Golden Star & Ors v Ling Peek Hoe & Anor and another appeal [2024] MLJU 909, FC observation on the legal question of whether legal fees can be claimed as special damages that was allowed by the High Court and denied by the Court of Appeal. That suit concerned a long legal 400 battle spanning over seventeen (17) years:

On 28.12.2012:

The High Court determined (original order) favouring the respondents. The appellant escalated the issue to the Court of Appeal.

On 13.03.2015, the Court of Appeal overturned this decision.

On 20.06.2017, the Federal Court reinstated it. The appellants filed three separate review applications, but the FC dismissed them, with the last struck out with prejudice 410 (27.05.2019).

The original order by the High Court stated:

The general, special, punitive, and exemplary damages were to be assessed by the Registrar, with costs to be taxed.

(ii) The respondents claimed legal fees of RM 2,918,000.00 during 415 the assessment. After the Registrar's assessment, among other things, the claim for legal fees of RM2,918,000.00 was allowed.

Dissatisfied, the appellants escalated that determination to the Court of Appeal on 18.04.2023, where the appellate 420 court allowed it by halving the quantum.

On 18.10.2023:

The Federal Court granted the appellants leave to appeal on two questions of law:

Do costs defined under O.59 r.1 RC 2012 differ from damages?

Are costs recoverable as special damages between similar parties?

Are legal fees a species of special damages and thus claimable over and above costs?

(ii) Should the Commonwealth legal authorities' ruling that legal fees cannot be recovered as damages be adopted as law in Malaysia? 435

In overruling the determination of the Court of Appeal, the Federal Court observed:

Legal fees fall within the definition of costs under O. 59 r. 1 RC 2012 and are subject to the court's discretion.

Damages are compensatory and aim to indemnify for loss 440 due to a civil wrong, requiring proof by the claimant.

Legal fees are distinct and should not be conflated with damages assessed under different principles.

Allowing legal costs to be claimed as damages would contradict the established regime on costs and the 445 discretionary power of the court:

Costs are addressed extensively in O. 59 RC 2012, which governs and regulates the recovery of costs.

(ii) Claiming legal costs on a full indemnity basis is an exception and not the norm.

(iii) Claiming for extra legal costs or full indemnity legal costs other than the costs awarded by the Court is disallowed as a matter of social policy to bring down litigation costs, encouraging finality in litigation and enhancing access to justice.

The Original Order provided for taxing costs if parties 455 disagreed.

Therefore, it is not open for the respondents to claim the legal costs by assessing damages.

The High Court lacks the authority to award the legal costs as damages, including expenses from the Court of Appeal 460 and the Federal Court. The High Court’s power to award costs is governed by Section 25(2) of the Courts of Judicature Act 1964, which does not extend to proceedings beyond its jurisdiction.

Concerning costs on an indemnity basis, the High Court 465 cannot assess costs on this basis without a specific court order, which was absent in the Original Order.

The Federal Court’s decision in (Golden Star & Ors v Ling Peek Hoe & Anor and another appeal [2024] MLJU 909) has 470 effectively overruled Yap Boon Hwa v Kee Wah Soong [2020] 1 MLJ 37, CA, where the Court of Appeal awarded damages in the form of legal fees incurred by the defendant for defending an action concerning fraudulent misrepresentation. 475 [8] In light of the foregoing, after considering the legal position, I hold P’s claims as follows:

Damages of RM25,000:

Being wasted expenses or costs thrown away by the plaintiff for the legal fees supposedly incurred in the 480 aborted SPA with Home Entity PLT are disallowed in light of the Federal Court’s observation in Golden Star & Ors, and also for want of compelling evidence for completeness.

I have not been alluded to any cogent materials supporting 485 the amount expended to be examined.

Messrs Tze & Co's supposed invoice in L.40 pg.3 is the only supposed evidence. There is no evidence that the invoice had ever been admitted as an exhibit to support any argument by P. The law is trite in that regard that 490 unadmitted materials cannot be used to support any argument before the Court.

There is also no evidence of payment, and neither is there any receipt to corroborate the transaction. 495

Damages of RM80,000:

Legal fees supposedly incurred by P in defending KLHC Suit No: WA-22NCVC-414-07/2018 between Home Entity PLT and P are disallowed in light of the Federal Court observation in Golden Star & Ors and want of compelling 500 evidence for completeness.

I have not been alluded to any cogent materials supporting the amount expended to be examined.

Messrs Eunice Derek & Co's invoice in L40 pg.4 is the only supposed evidence. There is no evidence that the invoice 505 had ever been admitted as an exhibit to support any argument by P. The law is trite in that regard that unadmitted materials cannot be used to support any argument before the Court.

There is no evidence of payment, and neither is there any 510 receipt to corroborate the transaction.

Damages in the sum of RM1,400,000:

The supposed loss of profits in the aborted SPA with Home Entity PLT is dismissed for want of compelling evidence. I 515 find it speculative.

I remained unconvinced by the plaintiff’s uncompelling short arguments in paragraph G1 in L.98 pp.18-19.

I agree with D1’s assertion that the plaintiff had already reverted to its original position by the Court of Appeal 520 award.

A 5% interest per annum is awarded on the judgment sum calculated from the date of this judgment to the date of actual realisation: 525 A 5% interest per annum is awarded on the judgment sum calculated from the date of this judgment to the date of actual realisation. O.42 r.12 provides that subject to rule 12A, except when it has been otherwise agreed between the parties, every judgment debt shall carry interest at such rate as the Chief 530 Justice may from time to time determine (refer to Arahan Amalan Ketua Hakim Negara Bil.1 Tahun 2012) or at such other rate not exceeding the rate aforesaid as the court determines, such interest to be calculated from the date of judgment until the judgment is satisfied. In the present case, the matter before 535 this court is for assessing damages. Therefore, the 5% interest per annum ought to be calculated from the date of this judgment to the date of actual realisation.

Cost for this assessment is awarded to the plaintiff to be 540 payable by D1 within thirty (30) days from the date hereof. CONCLUSION [9] In light of the foregoing, after considering the facts, the evidence 545 adduced at the trial, the parties' respective written and oral submissions, I allowed only part of the plaintiff’s claim for damages and cost of RM5,000.00 to be paid to the plaintiff within 30 days from the date of this order. 550 Dated 18.05.2025 555 (HAYATUL AKMAL ABDUL AZIZ) JUDGE HIGH COURT OF MALAYA KUALA LUMPUR 560 Counsels: 565 Sean Tan Tee Li, together with Lock Jun Qi Messrs. Jeffrey Tan & Chng Counsels for the plaintiff 570 Muhammad Azwar bin Ab Manab Messrs. Azwar & Partners, Counsel for the First Defendant