Damages for breach of contract must be reasonable; prescribed penalties in contracts may be deemed unenforceable under Section 75 of the Contracts Act 1950.

Hasnah Mohammed Hashim FCJ:

Introduction

[1] The appeals concern the application of s 75 of the Contracts Act 1950 ( CA ) in relation to the assessment of damages arising out of a termination of an agreement. There were two appeals before us, namely Civil Appeal No 02(f)- 90-10-2018(W) and Civil Appeal No 02(f)-92-10-2018(W) both appeals by Tekun Nasional, the defendant in the High Court suit. For ease of reference the Civil Appeal No 02(f)-90-10-2018(W) will be referred to as the 'MG Appeal' and Civil Appeal No 02(f)-92-10-2018(W) is the 'SI Appeal'. In this judgment Tekun Nasional will be referred to as 'Tekun' and Plenitude Drive (M) Sdn Bhd will be referred as 'Plenitude'.

Preliminary Objection

[2] At the commencement of the hearing of the appeals, learned counsel for Plenitude raised a preliminary objection with regards to the appeals before us. Learned counsel contended that the Notice of Appeal ('NOA') filed by Tekun is confusing as there is an alternative prayer. The NOA reads as follows:

(1) The whole of the decision in the MG appeal and the SI appeal that the alleged contract between Tekun and the respondent ("PDSB") dated 18 September 2014 ("the contract") was valid and enforceable instead illegal and void; and

(2) Alternatively, such part of the decision in the MG appeal and the SI appeal which affirmed the decision of the High Court judgment dated 15 November 2016 that Tekun shall pay PDSB that general damages to be assessed in Civil Suit. No 22NCVC-382-07/2015 for breach of the contract, and the remission of the case to the High Court for the said assessment.

[3] Learned counsel for Plenitude impressed upon us that the alternative prayer in the NOA that is, for damages to be assessed has no nexus between the issue as stated in the NOA and the question that was allowed. Both the High Court and the Court of Appeal did not decide on the agreement involving the SI. The appeal by Tekun is only in relation to the MG. If the NOA remains as it is Plenitude would have to argue on all the issues related to the claim when the questions for this Court are centered on the assessment of damages, and not on the validity of the agreement. Furthermore, both the High Court and the Court of Appeal had concluded that the agreement dated 18 September 2014 was valid and enforceable and not illegal or void. The decision was made only in the MG suit. The proposed question on illegality was not allowed by the Federal Court. Learned counsel further argued that even though illegality can be raised at any time, the refusal by the Federal Court to allow the question on illegality has rendered this issue res judicata.

[4] In relation to para 2 of the NOA, Tekun appealed against the decision in the MG appeal and the SI appeal. Learned counsel further argued that if that is the position taken by Tekun in this appeal before this Court, then Plenitude will be seriously prejudiced as it would not be able to resist the appeal effectively without knowing against which part of the decision Tekun is appealing. There is effectively no appeal before this Court against the Court of Appeal's decision in the Plenitude's appeal. Hence, the NOA is not only confusing but also misleading. Learned counsel for Plenitude moved this Court to strike out both the appeals.

[5] Learned counsel for Tekun conceded and agreed to amend the NOA by deleting para (1) and amending para (2) by deleting the word "Alternatively" as follows:

Such part only of the decision in the MG appeal which affirmed the High Court judgment dated 15 November 2016 that Tekun shall pay to PDSB general damages to be assessed in Civil Suit No:22NCVC-382-07-2015 for breach of the contract, and the remission of the case to the High Court for the said assessment.

[6] With the amendments to the NOA as proposed by learned counsel, the SI Appeal was struck out. The amended NOA only relates to the order of assessment of general damages by the High Court in relation to the MG appeal.

[7] In granting leave,