A party breaching a contract cannot claim frustration if the breach is self-induced; damages for loss of profits can be awarded if properly established.

Nor Bee Ariffin JCA:

The Appeals

[1] After a full trial, the learned Judicial Commissioner (JC) allowed the plaintiffs claim against the defendant for breach of a joint venture agreement and awarded general damages for loss of profits in the sum of RM25,107,560.00 with 5% interest per annum from the date of judgment until full settlement.

[2] Appeal No: J-02(NCVC)(W)-329-02-2018 (Appeal No 329) is the defendant/appellant's appeal against the whole decision of the learned JC.

[3] Appeal No J-02(NCVC)(W)-330-02-2018 (Appeal No 330) is the plaintiff/respondent's appeal against part of the decision of the learned JC that allowed only one-half of the damages claimed by the plaintiff based on the alternative claim of damages.

[4] We heard the two Appeals together. With regard to Appeal No 329, we found no appealable error in the finding of facts and law by the learned JC to warrant our appellate intervention. We unanimously affirmed the decision of the learned JC and dismissed the appeal with costs.

[5] As for Appeal No 330, we were unanimous in our finding that the learned JC fell into error when he deducted the award of RM50,215,120.00 by half. We set aside the decision of the learned JC and allowed the appeal by the plaintiff for loss of profits in the full sum of RM50,215,120.00 with costs.

[6] We now give reasons for the decision arrived at.

[7] For convenience, the parties are referred to as they were in the High Court.

The Background Facts

[8] The plaintiff is a property developer.

[9] The defendant is a private limited company wholly owned by the Johor State Government (the State Government). The defendant's Board of Directors (BOD) is chaired by the Menteri Besar of Johor (MB).

[10] By letters dated 17 March 1996 and 26 February 1997 from the Pentadbir Tanah Johor Bahru and Pejabat Tanah dan Galian, Johor (PTG's letters) respectively, the defendant was informed that the Majlis Mesyuarat Kerajaan Negeri Johor (MMKN) had in its meeting on 22 January 1997, agreed to alienate to the defendant the lands PTB 17819, PTB 18145, Lot 20785 and Lot 20784. The defendant subsequently became the registered owner of those four pieces of land described as HS (D) 260235 PTB 18145, HS (D) 260234 PTB 17819, HS (D) 260233 Lot 20785, HS (D) 267780 PTB 20479.

[11] It is of some importance to note the following from the PTGs' letters. Firstly, the category of land use for the lands was building. Secondly, "Kerajaan juga bersetuju Kumpulan Prasarana Rakyat Johor Sdn Bhd dikehendaki mengemukakan permohonan serah balik dan kurnia semula sebelum membangunkan kawasan ini bagi tujuan Pembangunan Campuran". Thirdly, "syarat nyata akan ditentukan apabila permohonan serah balik dan kurnia semula dipersetujukan".

[12] The aforesaid essentially means that as the alienation to the defendant was for building and there must be application for surrender and re-alienation, the lands were alienated to the defendant for development. The purpose of surrender and re-alienation was for the subdivision of the lands. As per the PTG's letters, the defendant was required to apply for surrender and re-alienation of the lands prior to the development.

[13] On 2 August 1997, the defendant executed an agreement with Bitara Mawar Sdn Bhd (Bitara) (the Development Agreement) to develop the 4 aforesaid lands and Lot 19774 in respect of a proposed development project called Metro Larkin 1 (the said Project). The said Project was to be 100% commercial development. These four lands and Lot 19774 constituted the Project Land as particularised in Appendix A to the Development Agreement. It was not an issue that the defendant was not the registered owner of Lot 19774.

[14] On the same date, ie 2 August 1997, the plaintiff executed an assignment agreement with Bitara (the Assignment Agreement) to take over all Bitara's rights, obligations and liabilities under the Development Agreement.

[15] The plaintiff said it was induced into executing the Assignment Agreement by the oral assurances given