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2024 MarsdenLR 1860
COURT OF APPEAL PUTRAJAYA
PENINSULAR HOME SDN BHD – Appellant
Versus
KO LIM TRISTAR SDN BHD – Respondent
[Civil Appeal No: W-03(IM)-63-10-2020]
An appellate court should not reverse trial findings on damages unless exceptional circumstances exist; damages for loss of profit must account for actual expenditures.
Headnote:(A) Courts of Judicature Act 1964 – Appeal concerning quantum of damages – The appellate court is disinclined to reverse findings of the trial judge on damages unless exceptional circumstances are demonstrated – The Plaintiff claimed damages for loss of profit based on rental income, but failed to prove actual losses incurred. (Paras 21, 27, 37)
(B) The Plaintiff's reliance on the Raine Horne Zaki Report for rental income was flawed due to lack of supporting data and assumptions made without basis. (Paras 40, 45)
(C) The court found that the Plaintiff is entitled to damages for loss of profit, but not gross rental income without deductions for expenses. (Paras 37, 56)
Facts of the case: The Plaintiff purchased 22 units in a development but faced delays in receiving vacant possession, leading to a claim for damages based on loss of rental income. (Paras 4-6)
Findings of Court: The court allowed the appeal in part, setting aside the previous damages awarded and determining a new amount based on proven losses. (Paras 67)
Issues: The main issues were whether the Plaintiff could claim gross rental income without deductions and the reliability of the RHZ Report. (Paras 19, 37)
Ratio Decidendi: The court ruled that damages for loss of profit must account for actual expenditures and that the Plaintiff failed to establish a credible basis for the claimed rental income. (Paras 37, 56)
Result: Appeal allowed in part, judgment entered for RM228,926.18 with interest. (Paras 67)
JUDGMENT
Introduction
[1] This is an appeal against the decision of the High Court Judge (HCJ) who on 23 September 2020 affirmed the assessment and award of damages by the Deputy Registrar (DR) given on 22 January 2019.
[2] After having heard and considered the submissions of both parties, we allowed the appeal in part and set aside the assessment of damages of the HCJ and DR. We now give our reasons for doing so.
[3] The parties will be referred to as in the High Court.
Parties And Background Facts
[4] The Plaintiff who is the Respondent here, is the purchaser of 22 units (the units) of a development in Tower A of Menara UOA, Bangsar (the premises). The units are located on the 19th, 20th and 22nd floors of the premises.
[5] The Defendant who is the Appellant here, is the developer for the premises, which comprises 2 office blocks and a podium for retail spaces.
[6] After the execution of the booking form on 4 October 2007, a dispute arose between parties. This resulted in the Plaintiff commencing action against the Defendant for specific performance and damages. In the Liability Proceedings, the High Court on 25 May 2012 ordered the specific performance of the sale of the units to the Plaintiff by the execution of Sales and Purchase Agreements (S&Ps) and that damages be assessed. The Defendant's appeal on liability to the Court of Appeal was dismissed on 25 June 2013 and its application for leave to the Federal Court was dismissed on 19 November 2013.
[7] The Defendant executed the S&Ps for the units in favour of the Plaintiff on 18 March 2014.
[8] The Plaintiff then filed the application of assessment of damages (Assessment Proceedings) which proceeded by way of affidavits.
[9] The damages awarded was RM7,234,457.46.
Submissions Of The Defendant (Appellant)
[10] It was submitted by the Defendant that in a breach of contract, the Plaintiff can claim for damages for either loss of profit or loss of expenditure. Here, the Plaintiff was claiming for loss of profit from January 2010 (the date the Defendant ought to have delivered vacant possession) until 17 March 2014 (the date the Plaintiff actually received vacant possession). This was in essence a claim for loss of gross revenue and not loss of profit.
[11] It was submitted that the Plaintiff had failed to prove the fact and the amount of loss and that the loss of revenue cannot be equated to loss of profit. The costs and expenditure such as service and maintenance charges, and other costs related to the premises, bank interest for the financing of the purchase of the premises and income tax payable on the profit, should have been deducted.
[12] Further the reliance on the Raine Horne Zaki Report (RHZ Report) as the basis for the amount of rental income between 2010 and 2014 was flawed. This was because there was no data, documents and/or comparison of the area in the vicinity with the premises. There was no valuation for 2010 where the Plaintiff assumed that the rent for 2010 would be the same as 2011. There was also no basis to calculate the rental income based on 100% occupancy.
[13] There was a further flaw on the calculation of the time period. The deposit had been paid on 4 October 2007 such that if the S&Ps had been signed in 2007, vacant possession (VP) would be 36 months on 3 October 2010. The period for loss of rental income should start from 3 October 2010 and not January 2010. The computation too should not end at 17 March 2014.
Submissions Of The Plaintiff (Respondent)
[14] It was submitted that it was an undisputed fact that the units are commercial units to be used solely for business purposes. The Plaintiff is a property investment company as evident from its Memorandum of Association. The purpose for the purchase of the units was to generate rental returns and income. It was foreseeable and within the contemplation of parties on the purpose of the purchase.
[15] The Defendant had acknowledged and adopted the same period for assessment and what was at variance w
