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2020 MarsdenLR 1312
COURT OF APPEAL PUTRAJAYA
DAMANSARA REALITY (PAHANG) SDN BHD – Appellant
Versus
OM CAHAYA MINERAL ASIA BERHAD – Respondent
[Civil Appeal Nos: W-02(NCvC)(W)-2289-11/2018 & W-02(IM)(NCvC)-685-04/2019]
Termination of contract requires adherence to contractual notice procedures; failure to afford opportunity to remedy alleged breaches renders termination unlawful.
Headnote:(A) Contracts Act 1950 – Section 74 – Illegality under Mining Enactment – Contract for mining works – Defendant wrongfully terminated agreement based on alleged breaches – Plaintiff's argument that they completed preliminary works without illegal conduct upheld – Termination deemed unsubstantiated and unlawful – RM10.8 million awarded in damages overturned due to lack of evidence and improper pleading – Appeals 2289 (liability) dismissed, Appeal 685 (damages) allowed. (Paras 139-173)
Facts of the case: The plaintiff claimed wrongful termination of a mining contract after completion of initial works. The defendant argued the termination was justified due to alleged breaches by the plaintiff.
Findings of Court: The court found the termination letter unsubstantiated and the defendant's claims of illegality insufficient to justify the termination.
Issues: The primary issues were the legitimacy of the contract termination and the entitlement of the plaintiff for damages.
Ratio Decidendi: The court held that a termination for cause requires notice and an opportunity to remedy any breach; failure to provide this renders termination unlawful.
Result: Appeal 2289 dismissed; Appeal 685 allowed.
Introduction
[1] There are two appeals before us, viz Civil Appeal No: W- 02(NCvC)(W)-2289-11/2018 ("Appeal 2289") and Civil Appeal No: W-02(IM)(NCvC)-685-04/2019 ("Appeal 685"). The appeals arise out of decisions that were given by the learned Judge ("the Judge") in Kuala Lumpur High Court Suit No: WA-22NCvC-140-03/2016 ("Suit 140") after a full trial.
[2] The appellant in both appeals is Damansara Realty (Pahang) Sdn Bhd. They were the defendant in Suit 140. The plaintiff in Suit 140 was Om Cahaya Mineral Asia Berhad. For convenience, the parties shall be referred to according to their respective capacities in the High Court. Hence, the appellant in both appeals shall be referred to as "the defendant", and the respondent as "the plaintiff.
[3] The trial of Suit 140 was bifurcated into the liability phase and assessment of damages phase. The appeals before us are directed at the Judge's decisions on liability and damages.
[4] The defendant was the owner of the land which was the subject of an agreement with the plaintiff. Under the agreement, the plaintiff was to cut, clear, fill and level the defendant's land. Thereafter, the plaintiff was to extract minerals (bauxite) from the said land.
[5] According to the plaintiff, they had done all the necessary preparatory works and that the land was ready for mining operations to commence. However, the plaintiff could not proceed with the performance of their contractual obligations under the agreement because the defendant had issued a termination letter dated 11 September 2015.
[6] After the termination letter was issued, the plaintiff initially took a supplicatory stand and appeared to acquiesce to the defendant's right to terminate the agreement. They sought the defendant's indulgence and asked that they be allowed to continue with the performance of their obligations under the agreement, (see: plaintiff's letter dated 14 September 2015).
[7] Ultimately, the plaintiff took the robust position that the defendant's letter of termination was a manifestation of a wrongful termination of contract. In Suit 140, the plaintiff sought various reliefs, including a declaration that the agreement was wrongfully terminated, special damages (RM15,833,484.16 - for "wasted expenditure"), damages for loss of profit (USD85 million or RM366,656,000.00). Alternatively, the plaintiff sought specific performance of the agreement.
[8] The plaintiff filed Suit 140 on the basis that the defendant had wrongfully terminated the agreement.
[9] On 19 October 2018, the Judge delivered her decision on liability and held that the defendant had wrongfully terminated the agreement. Appeal 2289 is directed at the decision of the Judge dated 19 October 2018 in regard to the Judge's finding on liability.
[10] After deciding on liability, the Judge undertook an assessment of damages. The Judge's decision on damages was delivered on 29 March 2019. The plaintiff was awarded RM10.8 million as damages. Appeal 685 is the defendant's appeal against the award of damages in the sum of RM10.8 million.
[11] On 3 December 2020, we dismissed Appeal 2289 and affirmed the decision of the High Court dated 19 October 2018 on liability. We allowed Appeal 685. Consequently, we set aside the High Court's decision dated 29 March 2019. We made no order as to costs for both appeals. This judgment explains why we dismissed Appeal 2289 and allowed Appeal 685.
Background
[12] The plaintiff's business includes, inter alia, preparing and clearing sites for construction works. They undertake cut and fill work, plus site clearance and mineral extraction. They are also involved in the exportation of minerals.
[13] The defendant is the registered owner of a parcel of land known as Lots 1, 2, 3, 4, 9, 12 and 18 located at Mukim Sungai Karang, Daerah Kuantan, Pahang Darul Makmur measuring approximately 500 acres ("the land").
[14] The relevant local authority (planning authority) having jurisdiction over the land is the Majlis Perbandara
