Peps-Jv (Melaka) Sdn. Bhd. v Vmg Transport (M) Sdn. Bhd. (M-02(NCvC)(W)-1810-10/2024)

There are before this Court, two appeals, each filed by one party against the other, arising from the decision of the High Court at Melaka in Civil Suit No. MA-22NCvC-14-03/2020, which concerned a dispute over transport services contracts. Both the appeals were heard together. For the sake of clarity in these Grounds, the parties will retain their designations from the court below.

In Appeal No. M-02(NCvC)(W)-1810-10/2024, the Defendant in the court below, PEPS-JV (Melaka) Sdn. Bhd. (“the Defendant”), appeals against part of the High Court's decision, in allowing the Plaintiff’s claim and awarding an amount of RM1,917,495.86 to the Plaintiff which is to be paid by the Defendant.

In Appeal No. M-02(NCvC)(W)-1811-10/2024, the Plaintiff in the court below, VMG Transport (M) Sdn. Bhd. (“the Plaintiff”), appeals against part of the same High Court decision, in dismissing the Plaintiff’s claim for special damages (ganti rugi khas) amounting to

The High Court, after a full trial, delivered its Grounds of Judgment on 5 December 2024. The court allowed the Plaintiff's primary claim for outstanding invoices, awarded nominal damages for wrongful termination, and dismissed all other claims and the Defendant’s counterclaim in its entirety.

The factual matrix, as found by the learned trial Judge, is as follows. The Plaintiff is a transportation company. The Defendant is a manufacturer of automotive components.

The parties entered into three agreements governing the transportation of automotive parts from the Defendant’s warehouse in Melaka to Honda Malaysia:

Transport Services Contract Line 1, dated 02 January 2015 (‘the 1st Contract’);

(ii) Transport Services Contract Line 2, dated 02 January 2015 (‘the 2nd Contract’); and

(iii) A Transportation Agreement dated 02 April 2018 (‘the 2018 Agreement’).

A dispute arose when the Plaintiff claimed the Defendant failed to pay outstanding invoices totaling RM8,119.60 under the 2015 Contracts and RM1,909,376.26 under the 2018 Agreement.

The Plaintiff’s claim further included:

a claim for RM692,399.99 for Goods and Services Tax (‘GST’) penalties allegedly incurred due to the non-payment of invoices;

(ii) a claim for RM25,290.00 for repair costs to its lorries, allegedly damaged by the Defendant on 18 February 2020; and

(iii) a claim for loss of future earnings amounting to RM10,212,000.00, premised on the allegation that the Defendant wrongfully terminated the 2018 Agreement on 19 February 2020.

In response, the Defendant filed a counterclaim seeking:

RM1,488,837.00 for alleged overpayments on invoices;

(ii) Special damages of RM23,147.50 for costs incurred in securing alternative transportation; and

(iii) Exemplary damages. PROCEEDINGS AT THE HIGH COURT

The learned trial Judge distilled the core issues for determination as follows (see paras 14-15 of the High Court Grounds of Judgment (“HC GOJ”)):

Whether the Plaintiff proved its claim for the outstanding invoices under the 2015 Contracts and the 2018 Agreement;

(ii) Whether an adverse inference under Section 114(g) of the Evidence Act 1950 should be drawn against the Plaintiff for not calling two named witnesses;

(iii) Whether either party committed a repudiatory breach leading to the termination of the 2018 Agreement;

(iv) Whether the 2018 Agreement was a fixed-term contract entitling the Plaintiff to claim loss of future earnings for its unexpired period;

Whether the Plaintiff could claim for the GST penalty and lorry repairs; and

(vi) Whether the Defendant proved its counterclaim for overpayment and special damages.

Upon a thorough evaluation of the evidence and submissions, the High Court delivered its findings on each issue. The findings of the High Court are summarised below:

The High Court held that the Plaintiff had successfully proven its claim for the outstanding invoices (See: HC GOJ, para 48(a)). The defence that the invoices were unsupported was rejected. The court found it critical that the Defendant’s own client, Honda Malaysia, had raised no contemporaneous complaints about non-delivery of goods corresponding to the disputed invoices (See: HC GOJ, para 20). Furthermore, the court emphasized the contractual 60-day period for disputing invoices. The Defendant’s failure to raise any dispute or issue debit notes within this period led the court to conclude that the invoices must be taken as accepted (See: HC GOJ, paras 21, 42-44).

The High Court declined to draw an adverse inference against the Plaintiff (See: HC GOJ, para 29). Applying the principle from Munusamy Vengadasalam v PP [1987] CLJ Rep 221; [1987] 1 CLJ 250, the High Court found that the failure to call the two witnesses did not amount to a "withholding or suppression of evidence." It held that the testimony of the Plaintiff’s witnesses, PW1 and PW2, together with the comprehensive documentary evidence, was sufficient to prove its case, and thus the Defendant was not prejudiced.

The High Court found that the Plaintiff’s suspension of services on 17 February 2020, following repeated non-payment, was a lawful response to a breach of payment obligations and did not in itself constitute a repudiation of the 2018 Agreement (HC GOJ, paras 34- 35). The court emphasized that Clause 8 of the Agreement provided only for termination with six months’ notice. The Plaintiff's suspension letter was not a notice of termination (HC GOJ, para 32). Consequently, the Defendant’s letter dated 19 February 2020, which purported to treat the suspension as a repudiatory breach and to terminate the 2018 Agreement, was held to be "premature and wrongful" (HC GOJ, para 35).

The High Court dismissed the Plaintiff’s claim for loss of future earnings (HC GOJ, para 39). The court ruled that the 2018 Agreement was not a fixed-term contract that guaranteed revenue for its full duration. The presence of the six-month termination notice clause in Clause 8 was decisive, as it "negatives any proposition that the Defendant is bound to the Plaintiff's services for the entire 3 years period" (HC GOJ, para 38). The court followed the principle in Dato' Sivananthan Shanmugam v. Artisan Fokus Sdn. Bhd. [2015] 2 CLJ 1062; [2016] 3 MLJ 122, stating that an obligation to pay for the full unexpired term upon early termination must be clearly expressed in the contract.

The Plaintiff’s ancillary claims were dismissed. The GST claim failed because the Plaintiff could not prove that the penalty was attributable solely to transactions with the Defendant, as the Plaintiff had other clients (HC GOJ, para 40). The claim for lorry repairs failed due to a lack of proof of causation; there was no independent evidence linking the damage to any act of the Defendant, and PW1 admitted to not having receipts for the repairs (HC GOJ, para 41).

The Defendant’s counterclaim was dismissed in its entirety. The claim for overpayment was found lacking in credibility. The court noted it was "common place" to issue debit notes for overpayments, which the Defendant failed to do within the 60-day period (HC GOJ, paras 42-44). The claim for special damages, being a direct consequence of the Defendant’s own wrongful termination, could not be sustained (HC GOJ, para 45).

In conclusion, the High Court (HC GOJ, para 48):

Allowed the Plaintiff’s claim for the outstanding invoices totalling RM1,917,495.86.

(ii) Awarded the Plaintiff RM30,000.00 in nominal damages for wrongful termination.

(iii) Dismissed all the Plaintiff’s other claims (GST, repairs, loss of future earnings).

(iv) Dismissed the Defendant’s counterclaim in full.

Awarded costs of RM10,000.00 to the Plaintiff.

Being aggrieved by specific parts of this decision, both parties have now filed the present appeals to this Court.

The Defendant raised four grounds of appeal. The grounds of appeal are:

the deliveries and incomplete documentation;

(ii) whether the purchase orders formed any part of the contractual agreement;

(iii) adverse inference under section 114(g) of the Evidence Act 1950 against the Plaintiff on account of its failure to call witness; and

(iv) premature dismissal of counterclaim.

The deliveries and incomplete documentation

The first ground of appeal raised by the defendant relates to a finding of fact by the trial judge, regarding the question of whether or not the deliveries had in fact been carried out by the Plaintiff.

The learned High Court Judge in this case found that the Plaintiff’s claim had been made out, as there was no contemporaneous evidence of any complaints of non-receipt of goods.

The High Court Judge held that the Plaintiff had successfully established its claim on the balance of probabilities. In arriving at this conclusion, the Court placed significant weight on the absence of any contemporaneous documentary evidence indicating that the goods in question had not been received. Notably, there were no written complaints, correspondence, delivery dispute notices, or internal records raised at or around the time of the alleged non-delivery. The Court inferred that, had the goods truly not been received, it would have been reasonable to expect prompt communication or formal complaint from the Defendant. The lack of such contemporaneous objection was therefore treated as strong evidentiary support for the Plaintiff’s position that delivery had in fact been effected.

The principles to be applied on an appeal on a finding of fact are well settled. Appellate intervention would only be warranted if the trial court was plainly wrong in coming to the finding of fact. So long as the trial judge’s findings are grounded in a rational assessment of the evidence, it is immaterial that an appellate court might have reached a different conclusion. Accordingly, factual determinations that are not plainly contrary to common sense should not be interfered with. In this regard, due deference must be accorded to the trial judge, who ought to be afforded a proper margin of appreciation when an appellate court reviews his or her evaluation of the evidence. See: Ng Hoo Kui & Anor v. Wendy Tan Lee Pheng, Administrator of the Estates of Tan Ewe Kwang, Deceased & Ors [2020] 10 CLJ 1.

We remind ourselves in this regard that, just because we would disagree with the findings of the trial court would not be sufficient. A court sitting in appeal can only overturn a finding of fact if it forms the view that the finding of fact was one that no reasonable court, similarly circumstanced, could have arrived at. This was explained by this court in MMC Oil & Gas Engineering v Tan Bock Kwee [2016] 2 MLJ 428 as reproduced below: “[14] The requirement for the trial judge to have come to a finding which was ‘plainly wrong’ before an appellate court may intervene is therefore well entrenched in our appellate philosophy and practice. In Henderson v Foxworth Investments Ltd and another, Lord Reed considered the meaning to be accorded to the phrase ‘plainly wrong’: … there may be some value in considering the meaning of that phrase. There is a risk that it may be misunderstood. The adverb ‘plainly’ does not refer to the degree of confidence felt by the appellate court that it would not have reached the same conclusion as the trial judge. It does not matter, with whatever degree of certainty, that the appellate court considers that it would have reached a different conclusion. What matters is whether the decision under appeal is one that no reasonable judge could have reached. [15] This is a point of some importance because it underscores the rationale that the appellate court is not at liberty to reverse or interfere in the finding of a trial judge even if the appellate court is clearly of the view that it would not have reached the conclusion the trial judge did on the evidence on record before it. It requires something more. The requisite or correct standard to be applied is that no reasonable judge, on the evidence on record, could have reached the conclusion of the trial judge. In other words, so long as the findings of the trial judge are plausible on the evidence on record, there is no room for interference merely on the grounds that the appellate court forms a different opinion on the same evidence. [16] There is, however, little room for variation in the application of the principle of intervention when the trial judge is ‘plainly wrong’. Appellant courts ought to be consistent in ensuring that appellate intervention only comes about when a trial judge reaches a conclusion which no reasonable judge could have reached. A lack of such consistency in approach would give rise to considerable uncertainty in the practice and progress of litigation. Litigants through their counsel should be able to assess with some degree of certainty, on clear and distinctly applied principles of law, whether a judgment obtained at first instance is likely to be overturned or not. This is only possible if there is a consistent application of the ‘plainly wrong’ principle underlying appellate intervention. [17] The obverse or counterpart to the requirement for appellate restraint in dealing with findings of fact by the trial judge is the fundamental requirement that the judgment of first instance does in fact amount to a comprehensive and cohesive determination of the material matters comprising the subject matter of dispute before the trial judge. This requires the trial judge to undertake a full evaluation of the evidence and issues placed before the court. A first instance judgment is open to challenge when it fails to address or wholly ignores material evidence or issues placed before it, or when bald findings of fact are made with no reasoning or evidence to substantiate such findings. Equally errors of law, a clear misunderstanding of relevant evidence and such clearly identifiable errors will all contribute towards a decision that would be considered to be ‘plainly wrong’. [18] Judicial decisions are required to be handed down expeditiously and with minimum delay. However this ought not to compromise the fundamental requirement that trial judges undertake a comprehensive and holistic approach to the evaluation of evidence in reaching their findings at first instance. A failure to consider the entirety of the evidence and material issues, a failure to make findings of fact or the making of bare findings of fact, all allow for appellate intervention. Apart from the real possibility of a miscarriage of justice, such omissions by a trial judge require the appellate courts to take on the role of first instance judges and review the evidence in its entirety afresh. This in turn amounts to a strain on judicial resources. The importance of a comprehensive consideration of the matter at first instance cannot be sufficiently emphasised. Equally when there has been just such a holistic approach adopted, there should be considerable appellate restraint exercised when reviewing a first instance judgment on appeal.”

The issue in this appeal is therefore, were the findings of the trial judge—as regards to the Plaintiff’s claim that the relevant deliveries had in fact been carried out—plausible on the evidence on record?

The answer in this case is a resounding yes, and we have no basis to disturb the finding of fact by the learned trial judge.

We observe that at the time the invoices were issued to the Defendant, there was no issue raised regarding the alleged insufficiency of supporting documents. The absence of any immediate protest or reservation strongly suggests that the invoices were, at that material time, regarded as regular and acceptable. It was only later that this was raised to justify non-payment of the invoices. In the circumstances, the belated nature of this complaint calls into question its credibility and weight.

(ii) Whether The Purchase Orders Formed Any Part of the Contractual Agreement

The second point of appeal relates to the letter issued on behalf of the Plaintiff dated 17 February 2020, by which the Plaintiff suspended its services. In this letter, reference was made to purchase orders. Counsel for the Defendant argued that purchase orders had never formed any part of the contractual arrangement between the Parties.

We accept the explanation given by counsel for the Plaintiff: that, properly construed, this letter sought to introduce a new procedural requirement. The Plaintiff was in essence informing the Defendant that it would only resume its services if it received a purchase order from the Defendant for each trip requested.

(iii) Adverse Inference

The third ground of appeal centred on the contention that an adverse inference under section 114(g) of the Evidence Act 1950 ought to be drawn against the Plaintiff on account of its failure to call Mr Laxman as witness.

Section 114(g) of the Evidence Act 1950 permits the court to draw an inference against a party that withholds evidence. The court may presume that the evidence, if adduced, would be adverse against that party. The presumption can only arise if there has been a withholding or suppression of evidence. The mere failure to adduce relevant evidence will not give rise to an adverse inference. Mohamed Azmi SCJ explained in Munusamy Vengadasalam v PP (Supra): “It is essential to appreciate the scope of section 114(g) lest it be carried too far outside its limit. Adverse inference under that illustration can only be drawn if there is withholding or suppression of evidence and not merely on account of failure to obtain evidence. It may be drawn from withholding not just any document, but material document by a party in his possession, or for non-production of not just any witness but an important and material witness to the case.

Presumptions ought not be drawn automatically. The circumstances of the case must be examined carefully to determine whether the presumption is justified. Ong J in Mohamed Ali v PP [1962] 1 MLJ 230 stated as follows: In drawing presumptions under section 114 of the Evidence Ordinance, 1950, it is to be observed that what the section says is that the existence of certain facts may be presumed which the court "thinks likely to have happened" in the circumstances of the particular case. Presumptions of fact must not be drawn automatically, or, as it were, by rule of thumb, without first considering whether in the circumstances of each particular case there were adequate grounds to justify any presumption being raised. Even, with regard to presumptions of law, Devlin L.J. said recently in Berry v British Transport Commission [1961] 3 WLR 450 463: "… Presumptions of law ought to be used only where their use is strictly necessary for the ends of justice. They are inherently undesirable – in the sense that 'estoppels are odious', and the 'doctrine should never be applied without a necessity for it'; per Bramwell L.J. Baxendale v Bennett (1878) 3 QBD 525, CA 529 – because they prevent the court from ascertaining the truth, which should be the prime object of a judicial investigation, and because if they are allowed to multiply to excess, the law will become divorced from reality and will live among fantasies of its own."

On the facts of the present case, we are unable to conclude that there has been any suppression or withholding of evidence, particularly in regard of the fact that all the material documents in this case has been classified as Part B documents.

(iv) Premature dismissal of counterclaim

The final ground of the Defendant’s appeal relates to the contention that its counterclaim had been prematurely dismissed.

As regards the contention of overpayment of invoices: this portion of the counterclaim was rightly dismissed once the Plaintiff’s claim in the main action was allowed.

The appeal in respect of the claim by the Defendant for the costs of an alternative transportation service provider is dismissed on two grounds. First, once it is established that it was the Defendant which had breached the relevant contracts, it cannot be permitted to claim for damages for non-performance on the part of the Plaintiff. Second, even if it were able to succeed on the merits, such losses had not been proven, because the Defendant would only be permitted to claim for the difference in the rates provided by the alternative service provider over the rates agreed with the Plaintiff under contract.

For these reasons, the entirety of the Defendant’s appeal is dismissed with costs. The Plaintiff’s appeal

The Plaintiff raised two grounds of appeal as follows:

expectation losses; and

(ii) damage to lorries.

Expectation Losses

The claim for expectation losses was dismissed, because the Plaintiff would not be permitted to claim the whole of the remaining revenue payable under contract. The true measure of damages would be the profits that it would have accrued had the contracts been performed. This means that it was incumbent on the Plaintiff to establish the costs it would have incurred in undertaking the services under the remaining duration of the contracts. No evidence had been led in this regard, and hence this portion of the claim was correctly dismissed by the trial judge (albeit for different reasons than those expressed here).

(ii) Damage to Lorries

As far as the claim relating to damage to the lorries, we are of the view that the Plaintiff was the author of its own losses for having parked the lorries in the Defendant’s loading bay. There was no evidence that any damage to the lorries was a direct consequence of the Defendant’s action of removing the lorries. There was no report from an adjuster to substantiate the Plaintiff’s claim that the damage to the lorries resulted from their removal from the Defendant’s premises.

Moreover, the claim by the Plaintiff for damage to the lorries was not supported by any receipts being proof of payment for the damages.

Furthermore, as explained by the trial judge, the question of causation had not been proven, and we have no reason to disagree with this finding of fact. For these reasons we are of the view that the Plaintiff’s appeal must also be dismissed in its entirety.

The decision of the High Court is hereby affirmed. The Defendant is to bear costs of RM80,000 in its appeal, while the Plaintiff is to bear costs of RM50,000 in its appeal. All such costs are to be subjected to allocatur fees. Dated : 20 April 2026 - sgd - (SHAHNAZ BINTI SULAIMAN) Judge Court of Appeal Malaysia Putrajaya For appeal: M-02(NCvC)(W)-1810-10/2024 Counsel For the Appellant : Wee Choo Keong Yeo Wei Min (Messrs. Wee Choo Keong & Faaiz) Counsel For the Respondent : Dalveena Jit Kaur Korotana a/p Malkit Singh Sarrenya a/p Santhakumar (Messrs. Arnold Andrew & Co) For appeal: M-02(NCvC)(W)-1811-10/2024 Counsel For the Appellant : Dalveena Jit Kaur Korotana a/p Malkit Singh Sarrenya a/p Santhakumar (Messrs. Arnold Andrew & Co) Counsel For the Respondent : Wee Choo Keong Yeo Wei Min (Messrs. Wee Choo Keong & Faaiz)