L Vince Sdn Bhd v Sekolah Menengah Stella Maris (Persendirian) Kuala Lumpur (WA-12BNCvC-127-10/2024)

RM784,519.00 for the price of unsold school uniforms; 11/05/2025 19:35:23

RM24,549.00 being storage costs incurred since 27 May 2021 for the said unsold uniform stock, which continues at RM167.00 per day;

5% interest per annum on the judgment sum from the filing date until full realisation;

General damages to be assessed; and

Costs. [3] Starting with the basics, let me now go back to the origin story to describe what prompted the plaintiff/appellant to file the action against the defendant/respondent in the first place. [4] The parties will be referred to as they were at the Sessions Court from here on out. Background facts leading to this appeal Parties' relationship [5] A contract was entered into between the plaintiff and the defendant on 30 November 2016 for the plaintiff to operate a shop (school uniform shop) on the defendant's premises and to supply and sell uniforms designed specifically for the school as well as the related merchandise from the defendant. Page 3 of 17 [6] As a private secondary school, the defendant allegedly has a specific uniform design that makes it distinctive from other schools. [7] As part of what I will refer to as the original contract, the following terms were included:

Original contract period was 1 December 2016 to 30 November 2019, subject to renewal [Clause 1];

There must be mutually agreed terms and conditions for the renewal [Clause 1];

The plaintiff agreed to pay the defendant RM2,200.00 per month as rent [Clause 2];

School uniforms would be sold at a price authorised by the defendant [Clause 3];

In the event of any breach or default of any of the original contract terms, the parties may terminate the original contract within one (1) year of receiving notice to do so [Clause 5]; and

A termination would result in all stocks being absorbed by the defendant [Clause 6]. Page 4 of 17 Plaintiff’s causes of action [8] At the end of the original contract terms, there was an alleged consensus ad idem or meeting of the minds between both parties that the original contract would be renewed for another three (3) years. [9] From 30 November 2019 to 11 May 2021, the plaintiff operated the school uniform shop based on such a belief. [10] It then claimed that during such alleged renewed term, the defendant had rejected the plaintiff's attempts to formalise the new contract. [11] It was alleged that the defendant had attempted to change the terms of the original contract in an effort to exclude or limit its responsibility under Clause 6. [12] Since the plaintiff was not in agreement with the defendant's proposed change, the parties agreed on 15 May 2020 to terminate the renewal after a year in accordance with Clause 5. [13] Consequently, the plaintiff vacated the school uniform shop premises on 11 May 2021. [14] Pursuant thereto, the plaintiff informed the defendant that it would send the remaining school uniform stocks to the defendant. Page 5 of 17 [15] Despite two attempts to return all the stocks, the defendant refused to accept them on 17 May 2021 and 20 May 2021. [16] As a result, an action was filed at the Sessions Court claiming all the relief mentioned above. Defendant's defences [17] Before the end of the original contract, the parties explored the possibility of renewing it. The discussion was held on 26 November 2019. [18] Despite their efforts, both parties could not agree on the revised terms since the defendant did not agree to include Clause 5 and 6 Clause in the new contract. [19] As a result, the original contract expired at the end of its term. [20] Following that, the parties negotiated the process of winding down and ceasing the plaintiff's operations on the defendant's premises. [21] The plaintiff then requested a year to do so. [22] As a gesture of goodwill, the defendant did not charge rent during this time. [23] This resulted in the plaintiff vacating the premises on 11 May 2021. [24] As a result, the original contract has not been renewed. Page 6 of 17 [25] Due to this, the defendant also refused to buy the school uniform stock that allegedly remained. An overview of the findings of the Sessions Court [26] After carefully studying the learned Sessions Court Judge's Grounds of Judgment, I was able to analyse His Honour's findings in a compendious manner. [27] The following are the main findings the Sessions Court made in dismissing the plaintiff's claim:

In cross-examination of the plaintiff's director, PW1, she confirmed that neither party had terminated the original contract.

PW1 further confirmed during cross-examination that the parties did not enter into a memorandum of renewal.

In one of its emails, the plaintiff admitted that the original contract had expired.

Since there was no termination or renewal of the original contract, the defendant was not obligated to buy the balance uniform stocks in the plaintiff's possession.

The original contract was not renewed either verbally or in writing.

Having been unable to agree to the defendant's amendments, the plaintiff informed the defendant in one of its emails that it was unable to renew the original contract.

A consensus ad idem was never reached between the parties. The plaintiff did not offer any other corroborating evidence on the balance of probabilities that the parties reached a consensus ad idem for the renewal of the original contract.

As the original contract had already expired, it was the plaintiff who had notified the defendant again in an email that it was interested in a discussion.

In the middle of 2020, the plaintiff was still writing an email to the defendant about the possibility of renewing the original contract.

The defendant's principal, DW1, testified in cross-examination that the uniforms were not unique as other schools had similar pants, skirts and t-shirts. Only the school badge was unique, and it can always be removed.

On the quantum, the plaintiff did not tender as evidence any of the so-called unique school uniforms that cannot be sold elsewhere.

It was also mentioned by the plaintiff in its email in mid-2020 that it had purchased uniform stocks for the next three (3) Page 8 of 17 years, but it did not submit any receipts to prove that this was true.

Aside from failing to submit security and utility deposits to prove storage rental, the plaintiff also failed to submit an alleged tenancy agreement for the storage facility that was only dated 1 June 2021 and stamped on 26 November 2021 after the filing of this action on 21 October 2021. Thus, the plaintiff's action was an afterthought.

The plaintiff's claim was, in fact, a claim for lost profits. Plaintiff’s complaint against the Sessions Court’s decision [28] Clearly, the plaintiff's complaints against the Sessions Court's decision in this appeal relate to the above findings. [29] Despite the plaintiff's Memorandum of Appeal raising eleven (11) grounds, it has succinctly distilled them into five (5). [30] To this end, the plaintiff argues that His Honour had erred in fact and/or law by holding that the original contract had never been renewed as well as failing to make a finding that the terms of the original contract continued to bind the parties to that contract. [31] The learned Sessions Court Judge also erred in fact and/or law by holding that the plaintiff's claim was actually one for loss of profits. Page 9 of 17 [32] Moreover, by referring to the Covid-19 Act 2020 and holding that it applied to this case, the learned Sessions Court Judge erred in fact and/or law. [33] Additionally, the plaintiff challenged His Honour's finding that the storage costs were an afterthought on the plaintiff's part simply because the tenancy agreement was stamped after the plaintiff filed his action. [34] The learned Sessions Court Judge's finding has also been challenged on the grounds that His Honour failed to recognise that the plaintiff was, in fact, bearing the costs of storing the stocks during the period when they were in its possession. Court’s analysis and findings [35] As a starting point for my analysis of the plaintiff's complaints in light of the learned Sessions Court Judge's findings, it is important for me to note that I only have the right to intervene in the learned Sessions Court Judge's decision to dismiss the plaintiff's breach of contract claim if there was a ‘plainly wrong’ element in His Honour’s decision. This means that the learned Sessions Court Judge's decision cannot be explained or justified in reasonable terms since no or insufficient judicial appreciation of the evidence has been given by His Honour in arriving at the decision as His Honour did. [36] My guiding principle in this regard is found in His Lordship Steve Shim CJSS's observations at pp 10 & 11 of the Federal Court case Page 10 of 17 of Gan Yook Chin (P) & Anor v Lee Ing Chin @ Lee Teck Seng & Ors [2005] 2 MLJ 1: “[14] In our view, the Court of Appeal in citing these cases had clearly borne in mind the central feature of appellate intervention, ie to determine whether or not the trial court had arrived at its decision or finding correctly on the basis of the relevant law and/or the established evidence. In so doing, the Court of Appeal was perfectly entitled to examine the process of evaluation of the evidence by the trial court. Clearly, the phrase ‘insufficient judicial appreciation of evidence’ merely related to such a process. This is reflected in the Court of Appeal’s restatement that a judge who was required to adjudicate upon a dispute must arrive at his decision on an issue of fact by assessing, weighing and, for good reasons, either accepting or rejecting the whole or any part of the evidence placed before him. The Court of Appeal further reiterated the principle central to appellate intervention, ie that a decision arrived at by a trial court without judicial appreciation of the evidence might be set aside on appeal. This is consistent with the established plainly wrong test.” [37] As consistently argued by the plaintiff, the parties have renewed the original contract. This is because the plaintiff operated the school uniform shop after the expiration of the original contract until 11 May

It is alleged that the defendant received benefits from the plaintiff's part of the contract during that period and allowed the plaintiff to operate there. As the plaintiff points out, DW1 had agreed under cross-examination that the original contract was to be renewed for another three (3) years during the discussions between the parties and that the original contract would govern the parties Page 11 of 17 pending the discussions that took place. Thus, both parties reached a consensus ad idem. And as a result, the defendant is estopped from arguing otherwise. [38] Moreover, as stated in Clause 6 of the original contract, the defendant was required to purchase the balance stocks since the renewed contract had been terminated. The plaintiff further claims that it is unconscionable for the defendant to deny that the uniforms were made following such a contract. [39] Having read and heard the arguments of the parties, I find no plainly wrong element in the learned Sessions Court Judge’s decision after the full trial. To this end, I agree with His Honour's findings that there was no concluded contract between the parties after the original contract expired. [40] In this regard, I have taken note of the glaring fact from the conduct of the plaintiff itself, which clearly stated that no contract had been concluded. In support of this, the plaintiff sent the defendant an email dated 15 May 2020, as follows: “[1] As discussed at our meeting, the school is unable to agree to the inclusion of clauses 5 & 6 of the contract, and we are unable to agree to exclude the same, as it would cause our business with the school to be unsustainable. As such, the contract is unable to be renewed... [3] Seeing that the contract will not be renewed, we would require a 1-year period for us to wind our operations down. As such, Page 12 of 17 we will look to cease operating the uniform shop and vacate the current premises on 16th May 2021.” [41] As a gesture of goodwill, the defendant in its email dated 23 September 2020 acknowledged the plaintiff's position as outlined in its email above and informed the plaintiff that no rental fee would be charged during that period. Consequently, the plaintiff emailed the defendant on 5 October 2020, thanking the defendant for the waiver of rent and ensuring that the premises would be vacated as negotiated. [42] Having decided as such, I find that the defendant was not liable for absorbing or purchasing the balance of uniform stocks that were allegedly sourced by the plaintiff under the alleged renewed contract. In light of the evidence, it appears that this would only apply if any of the original contract terms were breached or defaulted as outlined in Clause 5, which resulted in a termination, hence would require the defendant to absorb all the stocks as described in Clause 6. [43] Additionally, it must be noted that even PW1 admitted under cross-examination that no termination of the original contract was made under Clause 5. The defendant in this particular matter never agreed in writing to extend the original contract for another three (3) years as PW1 admitted. In fact, it was even agreed that the original contract would be renewed only on the agreed-upon terms and conditions. In the end, the parties only entered into discussions and negotiations with regard to the same without any finality. As time elapsed, the original contract expired. Consequently, the parties do Page 13 of 17 not have a binding contract after the contract has expired. Moreover, since there was no consensus ad idem between the plaintiff and the defendant, they were unable to conclude a contract. [44] In Dae Hanguru Infra Sdn Bhd v Baldah Toyyibah (Prasarana) Kelantan Sdn Bhd and Another Appeal [2022] 4 MLJ 51, the Federal Court ruled that a binding contract would not be created by the proposal of the new terms and the lack of evidence that such terms had been accepted by all the parties. As Her Ladyship Rohana Yusuf PCA observed at pp 64 & 65: “[45] One of the essential requirements to form a valid contractual relationship is indeed the meeting of the mind, or consensus ad idem. It was held by the Court of Appeal there was no meeting of minds between the first defendant with the plaintiff… [49] The proposal of new terms in the plaintiff’s proposal dated 12 February 2013 differing from the ones stated in the LOI and LOA issued to CDJV was another compelling evidence against the plaintiff’s case. In that plaintiff’s proposal, the plaintiff sought financial support from the first defendant for the project, which included the request for the first defendant to grant the plaintiff a contract to operate the Kelantan State Government’s quarry site, to supply not just for the project but also to be given exclusive right to supply to other projects in Kelantan and its neighbouring states. There was also a request by the plaintiff for the third-party guarantor (Perwaja Steel who was given license for Manganese Mining Operations) to guarantee a minimum payment of RM650m to an escrow account for 15 years and at the same time, supply steel bars to the plaintiff for the project on a mutually-agreed Page 14 of 17 deferred-payment scheme. The plaintiff’s proposal was on completely new terms. There was no evidence that any of these terms had been agreed to by the first defendant at any point in time to constitute a valid agreement between them.” [45] It is also significant to note that, as a gesture of goodwill, the defendant did not charge any rental during the winding down of the plaintiff's operations. This proves that the parties were not able to reach an agreement between them. [46] As regards the COVID-19 Act 2020 as relied on by the learned Sessions Court Judge, the plaintiff argues that His Honour had made findings on this issue based on the defendant's argument with regard to the same, notwithstanding that there were no pleaded facts by the defendant on this issue. Based on the learned Sessions Court Judge's Grounds of Judgment, I find that these findings do not affect the main basis of His Honour's analysis in arriving at His Honour's decision, in that consensus ad idem was not present at all. [47] Similarly, in relation to the fact that the learned Sessions Court Judge found that the plaintiff claimed loss of profits, I find that after reviewing His Honour's Grounds of Judgment, His Honour made this remark after concluding that the original contract had expired and that a new contract was not in force. In other words, the plaintiff would only be claiming loss of profits after the original contract expired. Regardless, the facts and evidence will still show that there was no contract in existence after the original contract expired, which means His Honour's ratio decidendi is unaffected. Page 15 of 17 [48] In light of the above findings, I do not find any appealable errors in the learned Sessions Court Judge's judgment. [49] Consequently, quantum is not an issue that needs to be addressed as a result of this. [50] However and for completeness, I find that the plaintiff failed to adduce sufficient and reliable evidence that it had, in fact, paid RM784,519.00 for the alleged purchase of the remaining stocks as well as storage costs. It was also admitted by PW1 under cross-examination when she stated that no documentation had been produced to support the purchase of stocks after the original contract period expired. The plaintiff's claim would have been fatal even if it had proven the defendant's liability, but unfortunately, it failed to prove its case on the balance of probabilities. In addition to this, the plaintiff failed to provide even a single school uniform to prove such a claim. [51] In this regard, the law on proving special damages is clear. They must not only be pleaded but also strictly proven. The following is what His Lordship S Nantha Balan JCA has to say on this subject at pages 812 & 813 of Tenaga Nasional Bhd v. Big Man Management Sdn Bhd [2024] 2 CLJ 775: “[94] We turn now to damages. It is appropriate at the outset to set out the trite principles in relation to proof of damage. Here, it is important to note that the main focus of the present discussion is the hefty amount claimed as special damages, which must be specifically pleaded and strictly proven… Page 16 of 17 [96] The following cases illustrate the point as to the quality of evidence necessary to justify a claim for special damages. In particular, the cases emphasise that there must be evidence of a credible paper trail to show that payment was made. Indeed, invoice/vouchers per se without receipts, will not suffice…” [52] Moreover, since the original contract was not renewed, the defendant would not be responsible for storage costs of RM24,549.00. The plaintiff, in this regard, appears to have entered into a Tenancy Agreement for storage on 1 June 2021, after having already vacated the premises on 11 May 2021 as well as after acknowledging on 15 May 2020 that the contract could not be renewed and emphasising its intention to vacate within one (1) year. Conclusion [53] In light of the foregoing, I find the appeal to be without merit and dismiss it with costs of RM15,000.00, subject to allocatur. …………………………………………… (RAJA AHMAD MOHZANUDDIN SHAH) Judge High Court of Kuala Lumpur Dated 20th February 2025 Page 17 of 17 For the Appellant/Plaintiff - Messrs Xavier & Koh Partnership Kenneth Koh Zhong Wey & Sahain Nada Puthucheary For the Respondent/ - Messrs Vanaja, Allison & Jee