Whether the Defendant is entitled to succeed in its counterclaim for the balance of RM40,000. Issue One: The RM40,000 Deposit The Plaintiff submitted that the RM40,000 was not a true deposit but a part-payment of the contract price. It was argued that since no delivery took place, the consideration wholly failed and the sum ought to be refunded. Counsel relied on Cubic Electronics v Mars Telecommunications [2019] 6 MLJ 15, where the Federal Court held that section 75 of the Contracts Act 1950 requires the Court to scrutinise whether any sum retained is reasonable compensation and not penal in nature. On that basis, the Plaintiff contended that the forfeiture of the RM40,000 was unjustified. The Defendant, however, took the position that the RM40,000 was expressly described as a deposit in both the Purchase Order and the invoice, and must therefore be treated as earnest money. Learned counsel referred to Linggi Plantations v Jagatheesan [1972] 1 MLJ 89, where the Federal Court held that a deposit is not merely an advance instalment but a guarantee of performance, and that it may be forfeited if the purchaser fails to proceed, subject to the requirement of reasonableness under section 75. The Defendant also pointed to the WhatsApp message dated 17 March 2023 in which the Plaintiff clearly stated that it could not wait further and requested the Defendant to sell the goods to others. According to the Defendant, this amounted to a unilateral cancellation by the Plaintiff. The Notes of Evidence show that SP2, Nor Azmawati binti Abd Aziz, confirmed in cross-examination that the WhatsApp message of 17 March 2023 was indeed sent by the Plaintiff, instructing the Defendant to sell the goods elsewhere. Her testimony corroborates the Defendant’s position that the cancellation was initiated by the Plaintiff. The Notes of Evidence further record that SP1, Dato’ Hasan @ Sharfuddin, admitted he had no personal knowledge of the cultivation process and was unable to dispute that seeding had commenced. His testimony was therefore peripheral and of limited probative value on the central issue. The Notes of Evidence also record the testimony of SD1, Rohimatul Hikmah, who explained that cultivation of the mushroom blocks had already commenced but that the blocks were only partially matured on 14 March 2023. She maintained that with a short extension the goods would have been deliverable. This reinforces the conclusion that the Defendant had not refused to perform but merely required additional time. The Court further notes that the Plaintiff issued no formal notice after 14 March to make time essential or to place the Defendant on strict notice to perform. Instead, the Plaintiff cancelled unilaterally on 17 March 2023. The Court reiterates that in commercial contracts time for delivery is not automatically of the essence unless expressly stipulated or made so by notice. In the absence of such stipulation or notice, a short delay cannot by itself amount to repudiation. This Court also finds guidance in DMC Event Management Sdn Bhd v Attractive Zone Sdn Bhd [2022] MLJU 2630, where the High Court emphasised the distinction between deposits and part-payments. That decision reaffirmed that while part-payments are generally refundable if a contract fails, deposits serve as earnest money and may be forfeited if the purchaser defaults, provided the forfeiture is reasonable and not excessive. The principle has long been recognised in English law. In Howe v Smith (1884) 27 Ch D 89, Fry LJ observed that a deposit is “not merely a part payment. It is a guarantee that the contract shall be performed, and if the contract is not performed by the depositor, it is forfeited.” This dictum has been adopted into Malaysian jurisprudence and was expressly applied by the Federal Court in Linggi Plantations. Having considered the submissions and the evidence, the Court finds that the RM40,000 paid in this case was a deposit and not a mere part-payment. The documents described it as a deposit, the sum represented half of the contract price, and the order itself involved a large-scale cultivation that required advance preparation. The Defendant’s witness testified that preparations had commenced and that delivery was only delayed because the mushroom blocks were not fully matured by 14 March 2023. The Defendant did not refuse to deliver. By contrast, the Plaintiff cancelled unilaterally on 17 March 2023 without issuing any formal notice or providing a reasonable opportunity to perform. The Notes of Evidence confirm that the Plaintiff’s decision to cancel was also influenced by its own operational constraints, namely manpower and storage limitations. Section 75 requires the Court to ensure that any sum retained is reasonable compensation. On the facts, this Court is satisfied that the forfeiture of the RM40,000 is fair. The sum reflects a genuine pre-estimate of the Defendant’s preparatory expenditure, opportunity costs and the disruption caused by the Plaintiff’s sudden withdrawal. It is not excessive or penal. Consistent with the authorities of Linggi Plantations, DMC Event Management, and the proportionality analysis in Cubic Electronics, the Court held that the RM40,000 deposit is forfeitable. Accordingly, the Plaintiff is not entitled to restitution of the RM40,000 deposit. Issue Two: The Counterclaim for the Balance of RM40,000 The Defendant sought by way of counterclaim the remaining RM40,000 of the contract sum. It was argued that preparations for cultivation had commenced and that the Plaintiff’s cancellation caused the Defendant loss equivalent to the balance price. The Plaintiff opposed the counterclaim. It was submitted that under the terms of the Purchase Order and invoice, the balance was payable only upon delivery. As no delivery took place, the contractual condition for payment never arose. Further, the Defendant adduced no documentary evidence of its alleged losses. No invoices, receipts, payroll records or other financial documents were produced. The only evidence consisted of the oral testimony of SD1 and some photographs of cultivation. The Notes of Evidence confirm that SD1, Rohimatul Hikmah, candidly admitted during cross-examination that no invoices, receipts or records of expenditure were available to substantiate the alleged loss. She maintained that cultivation had started, but acknowledged that she could not produce any documents to quantify the costs incurred. The Court accepts her candour but considers that her oral assertions, without more, are insufficient to establish the claim. The Defendant, being a commercial entity, could reasonably be expected to maintain proper accounting records. Its failure to produce even a single invoice, receipt or record of expenditure significantly undermines the credibility of its counterclaim. The Plaintiff relied on Bonham-Carter v Hyde Park Hotel [1948] 64 TLR 177. In that case, Tucker LJ cautioned that claimants “must understand that if they bring actions for damages, it is for them to prove their damage. It is not enough to write down particulars and, so to speak, throw them at the head of the Court, saying “This is what I have lost, I ask you to give me these damages”. The principle has since been consistently applied in Malaysia, including in Boustead Trading (1985) Sdn Bhd v Arab-Malaysian Merchant Bank Bhd [1995] 3 MLJ 331 (FC) and Selva Kumar Murugiah v Thiagarajah Retnasamy [1995] 1 MLJ 817 (FC), both of which emphasise that damages must be established by credible evidence. The Federal Court in Cubic Electronics v Mars Telecommunications [2019] 6 MLJ 15 clarified that section 75 of the Contracts Act 1950 empowers the Court to award reasonable compensation even in the absence of strict proof where a deposit or agreed sum is concerned. However, where a party seeks additional damages, the burden of proof remains firmly on the claimant. Applying these principles, the Court finds that the Defendant has not discharged its burden. The balance sum was contingent upon delivery, which never occurred. Even if the counterclaim is treated as one for damages, the Defendant failed to prove any actual loss with the requisite documentary support. Oral assertions and photographs cannot substitute for evidence of actual expenditure or loss. To allow recovery in such circumstances would be to act in direct contravention of the principles laid down in Bonham-Carter and affirmed by the Malaysian Federal Court authorities. Accordingly, the Court holds that the Defendant’s counterclaim for RM40,000 must be dismissed. Findings On the first issue, concerning the Plaintiff’s claim for restitution of the RM40,000 deposit, the Court finds that the payment was in truth a deposit and not a mere part-payment. This conclusion is compelled by the contractual documents which expressly described it as a deposit, by the fact that it represented half of the contract sum, and by the commercial context of a bespoke cultivation order requiring advance preparation. The Notes of Evidence confirm that the Defendant had commenced seeding and had not refused to perform, while the Plaintiff unilaterally cancelled the order on 17 March 2023 without notice or demand. The Court is fortified by the authorities of Linggi Plantations v Jagatheesan and DMC Event Management v Attractive Zone, both of which reaffirm that a deposit, as earnest money, may be forfeited if the purchaser defaults. The proportionality requirement in Cubic Electronics v Mars Telecommunications is also satisfied, since the sum forfeited reflects reasonable compensation rather than a penalty. The Court therefore holds that the Plaintiff is not entitled to restitution of the deposit. On the second issue, regarding the Defendant’s counterclaim, the Court finds that the claim for the balance of RM40,000 cannot be sustained. The express contractual term made the balance payable only upon delivery, and as no delivery took place, the obligation never arose. Even if the counterclaim is treated as one for damages, the Defendant failed to substantiate its alleged losses with credible evidence. The Notes of Evidence reveal only oral testimony and photographs, but no invoices, receipts, or other documentary proof. The Court is guided by the principle articulated in Bonham-Carter v Hyde Park Hotel that damages must be strictly proven, and by the Federal Court decisions in Boustead Trading and Selva Kumar, both of which emphasise that compensation under section 75 of the Contracts Act 1950 must be supported by evidence of loss. To allow the counterclaim in the absence of such proof would be contrary to settled principle. The counterclaim is therefore dismissed. The Court’s findings reflect the balance that the law strikes between two principles. On the one hand, deposits as earnest money may be forfeited when the purchaser defaults. On the other hand, damages beyond a deposit require strict proof. This balance ensures fairness and certainty in commercial dealings. Conclusion For the reasons set out above, the Court dismisses the Plaintiff’s claim for restitution of the RM40,000 deposit. The Court also dismisses the Defendant’s counterclaim for the balance of RM40,000. In view of the outcome, there will be no order as to costs. Observations Before parting with this case, the Court finds it apposite to make one further observation. Commercial transactions involving perishable goods and bespoke orders demand clarity of terms and discipline of performance. A deposit once paid is not a trivial sum but a solemn assurance of commitment. Parties must therefore be slow to treat deposits as casually refundable and equally cautious in assuming that further sums may be claimed without proof of actual loss. This case illustrates two sides of the same principle. On the one hand, the Plaintiff’s unilateral cancellation without affording the Defendant a proper opportunity to perform justifies the forfeiture of the deposit as reasonable compensation. On the other hand, the Defendant’s inability to demonstrate with credible evidence the actual quantum of any further loss underscores the necessity of strict proof when damages are sought. The law remains consistent in that certainty in contract is always balanced by reasonableness in compensation. The Court reiterates that litigation is not merely about asserting positions but about proving them. Where proof is absent, claims must fail, however sympathetic they may appear. This, in the Court’s view, is the lasting lesson from this dispute. The Court further hopes that this case will remind contracting parties of the importance of precision in drafting their agreements and of maintaining proper documentation of performance and expenditure. These are not mere formalities but the very disciplines that uphold fairness and certainty in commerce. Dated 23 June 2025 …………………….sgd……………………..