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2017 MarsdenLR 2484
COURT OF APPEAL PUTRAJAYA
MALAYAN CEMENT INDUSTRIES SDN BHD – Appellant
Versus
GOLDEN ISLAND SHIPPING (L) BHD – Respondent
[Civil Appeal No: P-02-2668-11-2012]
Parties must prove actual losses, even with liquidated damages clauses.
Headnote:The appellant contested the High Court's decision allowing the respondent's claim for liquidated damages due to the shortfall in agreed supply of iron ore. The court examined sections 74 and 75 of the Contracts Act 1950 regarding loss proof requirements and damage mitigation obligations. The court concluded that the appellant still had a burden to prove losses notwithstanding the liquidated damages clause. The appeal was allowed.
| Table of Content |
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| 1. burden of proof and mitigation obligation. (Para 1) |
| 2. burden of proof on loss in contract breach. (Para 3) |
[1] This appeal turns on a very short and narrow compass, namely, whether the plaintiff (the appellant herein) has the burden to prove its loss and as a corollary to that, to mitigate its losses where the parties have stipulated liquidated damages in the event of breach in the agreement.
[2] For convenience, in this judgment, the parties will be referred to as they were in the High Court.
Brief Factual Background
[3] The relevant factual background giving rise to this appeal may be briefly stated as follows:-
(a) The plaintiff is a supplier of iron ore. The defendant is a company which manufactures cement and uses iron ore in its manufacturing process.
(b) Vide an agreement dated 1 April 2004 between the plaintiff and the defendant (the said agreement), the plaintiff had agreed to supply an approximate total of 60,000 metric tonnes of iron ore to the defendant from 1 January 2004 to 31 December 2004 at a price of RM44.50 per metric tonnes and that the defendant shall place a monthly requirement of not less than 4,000 metric tonnes.
(c) The defendant had in breach of the said agreement failed to take delivery of the total of 14,311 metric tonnes of iron ore supplied by the plaintiff.
(d) Clause 4.2 of the said agreement provides for the price to be fixed at RM44.50 per metre tonne and clause 13 reads:
The company shall and hereby undertakes to purchase from the supplier a minimum quantity of not less than 48,000 mt per annum (ie A minimum of 4,000 mt per month) failing which the Company shall pay the Supplier the shortfall thereof in any event..
(e) The plaintiff 's claim against the defendant is therefore calculated as follows:
14,311 x RM44.50 = RM636,839.50
(f) In other words, the plaintiff 's claim against the defendant is for a lump sum of RM636,839.50 being the value of the shortfall of 14,311 metric tonnes of iron ore calculated at the price of RM44.50 per metric tonne.
(g) At the end of trial, the learned Judicial Commissioner (learned JC) (as he then was) allowed the amount claimed by the plaintiff (RM636,839.50) with interest at the rate of 4% per annum from the date of filing of the writ to the date of realisation and costs of RM20,000.00.
(h) Being aggrieved with the said decision, the defendant appealed to this Court.
