IN THE COURT OF APPEAL OF MALAYSIA

(APPELLATE JURISDICTION)
CIVIL APPEAL NO. B-02(C)(W)-1205-07/2016

BETWEEN

TARGET RESOURCES SDN BHD … APPELLANT

(COMPANY No: 163178-V)

AND

PUTRAJAYA HOLDINGS SDN BHD … RESPONDENT

(COMPANY No: 364152-K)

[In the matter of High Court at Shah Alam,

In Selangor Darul Ehsan, Malaysia]
Suit No.: 22C-14-07/2015

BETWEEN

TARGET RESOURCES SDN BHD … PLAINTIFF

(COMPANY No: 163178-V)

AND

PUTRAJAYA HOLDINGS SDN BHD … DEFENDANT

(COMPANY No: 364152-K)

CORAM

DAVID WONG DAK WAH, JCA

DR. HAJI HAMID SULTAN BIN ABU BACKER, JCA
UMI KALTHUM BINTI ABDUL MAJID, JCA

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 JUDGMENT OF THE COURT

Introduction:

1. This appeal relates to a construction contract in which the

Appellant/Plaintiff took out legal action against the Respondent

/Defendant for wrongful termination of the same. In response, the

Respondent counterclaimed for breach of the construction contract

and for damages.

2. The learned Judge dismissed the Appellant’s claim for wrongful

termination and sustained the Respondent’s counterclaims in the

following terms:

(i) RM14,533,708.39 as damages;

(ii) Indemnity for any additional costs in completing the

works to be assessed upon completion;

(iii) Indemnity for any late delivery charges payable to the

Respondent’s purchasers.

3. We heard the appeal and after due consideration to respective

submissions of counsel, we allowed the appeal in part. We now

give our reasons for our decision.

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 4. Learned counsel for the Appellant from the outset of the hearing

informed the Court that he will not be pursuing the dismissal of the

Appellant’s claim for wrongful termination except for allowing the

calling on the performance bond by the Respondent but will only

concentrate on the learned Judge’s sustaining the counterclaims of

the Respondent.

Background facts:

5. The Appellant was engaged on 22.6.2012 by the Respondent to

construct and complete 60 units of semi-detached houses in

Precinct 8, Putrajaya on the following terms:

(i) For a fixed lump sum of RM65,420,000.00;

(ii) To be completed on or before 15.3.2014;

(iii) Provide performance bond in the form of a bank

Guarantee in the sum of RM3,271,000.00 which was

complied with through RHB Islamic Bank on 17.7.2012.

6. The Respondent extended the date of completion of the

construction to 31.12.2014 but this was not complied with by the

Appellant which resulted in the Respondent terminating the

construction contract on 9.2.2015.

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 7. To complete the construction of the 60 units of semi-detached

houses, the Respondent engaged two other contractors, namely

Trans Resources Corporation Sdn Bhd and Lion Pacific Sdn Bhd.

8. In its counterclaims, the Respondent had made two heads of claim

and they were:

(i) Costs of completion of the 60 units of semi-detached

houses;

(ii) Late payment charges to the purchasers of the

Respondent

High Court decision:

9. In regard to the termination of the construction contract by the

Respondent, the learned Judge found it to be lawful as there were

ample evidence to show that the Appellant had not complied with

the fundamental condition of completion of the construction within

the agreed date. The Appellant had offered no valid reason to

show that the Respondent was not entitled to exercise its right to

terminate pursuant to clause 59 of the construction contract. This

explained why learned counsel to his credit did not pursue this

finding in the appeal.

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10. Regarding the Bank Guarantee, the learned Judge in view of the

lawful termination of the construction contract logically found that

the Respondent was fully entitled to call on the performance bond

pursuant to clause 8.2 which states as follows:

“Further to the provisions in Clause 8.1 if the Contractor

commits any breach of his obligations under the Contract,
the Employer or the E.R. on its behalf, notwithstanding
whether any dispute arises between the Parties as to such
breach may utilize and make payments out of or deductions
from the Performance Bond (if applicable) or any part thereof
and receive payments thereto in accordance with the terms
of this Contract or forfeit the same.”

11. As for the award of RM14,533,708.39, the details were these:

"CONTRACT SUM: RM 65,420,000.00

LESS
VALUE OF WORK COMPLETED BY
(RM20,011,654.39)
PLAINTIFF AND PAID BY THE
DEFENDANT
UNCOMPLETED WORKS BY THE
RM 45,408,345.61
PLAINTIFF
LESS
COST OF COMPLETION : (RM 59,634,956.60)
% GST : (RM 3,578,097.40)
ADD
BANK GURANTEE : (RM 3,271,000.00)
BALANCE : (RM 14,533,708.39)."

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 12. In sustaining aforesaid the award, the learned Judge relied on the

Respondent’s production of two letters of award to the respective

contractors and the failure on the part of the Appellant to produce

evidence to the contrary. The challenge by the Appellant according

to the learned Judge at the trial was only in respect of the

excessive amount claimed by the Respondent.

Our grounds of decision:

13. After listening to oral submissions from respective counsel on

27.2.2017, we requested counsel to submit to the following

questions:

(i) Whether the 2 letters of Award entered into

between the Respondent and the rescue
contractors are sufficient to prove the losses and/or
damages suffered by the Respondent in
completing the remaining Contract Works
uncompleted by the Appellant? and

(ii) Whether the evidence given by the Appellant’s

witness that there would be an increase of price for
10% for the rescue contractors to complete the
remaining works, constitutes an admission by the
Appellant that it will be the losses suffered by the
Respondent in completing the remaining Contract
Works?
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Issue (i): 2 letters of award as proof of damages.

14. We had framed the two questions as the appeal before us

basically was whether the Respondent had proved its damages

alleged to have suffered by it. The Appellant relied on the much-

quoted case of Bonham-Carter v Hyde Park Hotel (1948) 64

TLR 177 where Lord Goddard CJ said as follows:

“Plaintiffs must understand that if they bring actions for

damages it is for them to prove their damages; it is not
enough to write down the particulars, and, so to speak,
throw them at the head of the Court, saying: ‘This is
what I have lost, I ask you to give me these damages.’
They have to prove it.”

15. As stated earlier, the Respondent had relied on two letters of

award to prove its damages suffered and the learned Judge

accepted the aforesaid letters as adequate proof of damages. For

clarity, we produce the two letters of award herein:

Our Ref : PJHOMES/TCD/S/CTR/0315/133(007)

Date : 23 March 2015

TRANS RESOURCES CORPORATION SDN. BHD. (Co. No. 120265-P)

TRC Business Centre,
Jalan Andaman Utama,
6800 Ampang,
Selangor Darul Ehsan.

Attn.: Dato’ Abdul Aziz Mohamad

(Executive Director)
Dear Sir,

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THE PROPOSED CONSTRUCTION AND COMPLETION OF THE
REMAINING AND RECTIFICATION WORKS OF 50 UNITS 3-STOREY
SEMI-DETACHED HOUSES, 10 UNITS 2-STOREY SEMI-DETACHED
HOUSES AND ASSOCIATED WORKS AT PLOT 8R7, PRECINCT 8,
PUTRAJAYA
CONTRACT NO. : RES/PUB/P8/8R7/CONTRACTOR/2015-0002

- LETTER OF AWARD
___________________________________________________________

We, Putrajaya Homes Sdn. Bhd. (the “Employer”), have the pleasure in
awarding you the contract for “THE PROPOSED CONSTRUCTION AND
COMPLETION OF THE REMAINING AND RECTIFICATION WORKS OF
50 UNITS 3-STOREY SEMI-DETACHED HOUSES, 10 UNITS 2-
STOREY SEMI DETACHED HOUSES AND ASSOCIATED WORKS AT
PLOT 8R7, PRECINCT 8, PUTRAJAYA” (CONTRACT NO.:
RES/PUB/P8/8R7/CONTRACTOR/2015-0002) (the “Works”) for a sum of
Ringgit Malaysia : Fifty Three Million Nine Hundred Thirty Five Thousand
only (RM53,935,000.00) (the “Contract Sum”) based on the following
terms and conditions:
………….

b. The Works shall be based on Provisional Bills of Quantities based on

drawings, specification and schedule of rates and subject to final
remeasurement. For avoidance of doubt, the rationalization of the rates
shall be done upon your acceptance of this Letter of Award (“Letter”).

--------------------------------------------------------------------------------------------------

Our Ref : PJHOMES/TCD/S/CTR/0415/352(008)

Date : 3 April 2015

LION PACIFIC SDN. BHD. (Co. NO. 207616-P)

No. 599, Jalan Samudra Utara 2,
Taman Samudra,
68100 Batu Caves,
Selangor Darul Ehsan

Attn.: Datin S. Gumasundari A/P Subramaniam

(Director)
Dear Madam,

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 THE PROPOSED CONSTRUCTION AND COMPLETION OF THE
REMAINING AND RECTIFICATION WORKS OF INFRASTRUCTURE
AND ASSOCIATED WORKS AT PLOT 8R7, PRECINCT 8, PUTRAJAYA
(CONTRACT NO.: RES/PUB/P8/8R7/CONTRACTOR/2015-0013)

LETTER OF AWARD
_________________________________________________________

We, Putrajaya Homes Sdn. Bhd. (the “Employer”), have the pleasure in
awarding you the contract for THE PROPOSED CONSTRUCTION AND
COMPLETION OF THE REMAINING AND RECTIFICATION WORKS OF
INFRASTRUCTURE AND ASSOCIATED WORKS AT PLOT 8R7,
PRECINCT 8, PUTRAJAYA (CONTRACT NO. RES/PUB/P8/8R7/
CONTRACTOR /2015-0013) (the “Works”) for a sum of RINGGIT
MALAYSIA: FIVE MILLION SIX HUNDRED NINETY NINE THOUSAND
NINE HUNDRED FIFTY SIX AND SEN SIXTY ONLY (RM5,699,956.60)
(the “Contract Sum”) based on the following terms and conditions:

……

b. The Works shall be based on Provisional Bills of Quantities based on

drawings, specification and schedule of rates and subject to final re-
measurement.

16. It was the submission of the Appellant’s learned counsel that the

two letters of award were not sufficient enough to satisfy the

burden of proof to be discharged by the Respondent. Reliance was

also made on the fact that the provisional contract sums stated in

the letters of award were subjected to a ‘rationalization of the rates’

and there was no evidence from anyone from Trans Resources

and Lion Pacific to say what those ‘rationalizations’ were. It was,

as contended, like coming to Court and saying: ‘This is what I have

lost, I ask you to give me these damages’.

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17. In response, learned counsel for the Respondent submitted that

this is a case where damages were difficult to prove and the

Courts in such circumstance can award substantial damages. Two

cases were referred to us, namely Selva Kumar a/l Murugiah v.

Thiagarajah Retnasamy [1995] 2 CLJ 374 and Nikmat Masyhur

Sdn Bhd v Kerajaan Negeri Johor Darul Ta’zim [2008] 9 CLJ

46.

18. In Selva Kumar a/l Murugiah (supra) the Federal Court at page

385, held as follows:

“Thirdly, therefore, we hold that the precise attributes of

such contracts in which it is difficult for a Court to assess
damages for the actual damage or loss are cases where
there is no known measure of damages employable, and
yet the evidence clearly shows some real loss inherently
and such loss is not too remote, then the Court ought to
award, not nominal damages, but instead, substantial
damages not exceeding the sum so named in the
contractual provision; a sum which is reasonable and fair
according to the Court's of good sense and fair play.”

19. In Nikmat Masyhur Sdn Bhd (supra), the learned Judicial

Commissioner, at apage 58, paragraph 13, held as follows:

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 “In the assessment of the quantum for loss of profits
certain matters of speculation will be involved and this
may, on the fact of it, present some difficulty in
assessing damages. However, where there it is clear, as
in this case, that there has been actual loss resulting
from the breach of the JVA, it is not necessary that there
should be absolute measure of damages. Indeed, the
difficulty of assessing damages is no bar to the recovery
of damages. It is also not necessary to have an absolute
measure of damages since to a certain extent damages
would be a matter of speculation.”

20. We have no hesitation to find that the two letters of award were not

adequate to cross the threshold of proving the damages suffered

by the Respondent. Our reasons were simply these. The two

letters of award, though admitted as exhibits, were neutral

evidence so to speak as proof of damages suffered when the

authors of the same were not in Court to verify what were stated in

them. Furthermore, we agreed with learned counsel for the

Appellant that the provisional sums mentioned in the two letters of

award were in fact subject to re-measurement, hence there were

no specific proof of what the exact amount of damages suffered.

In anyone’s view, the 2 letters of award cannot be equated to

adequate proof in law.

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21. In the circumstance of the case at hand, proof of damages can and

should be proved by calling the two contractors who came into the

picture after termination of the construction contract to testify as to

what construction works they did and how much were charged to

and paid by the Respondent. Unfortunately, no such evidence was

called.

22. With respect to the learned Judge, she appeared to have over

looked at what we have stated above. The 2 letters of award were

at best estimates of construction costs of the contractors and

estimates at law, despite the lack of contrary evidence, cannot

amount to proof in law. No contrary evidence is necessary when

the Respondent’s evidence had not crossed the threshold of

establishing a prima facie case for the Appellant to rebut.

23. That said, it was made clear to us during submission by learned

counsel for the Respondent and not disputed by learned counsel

for the Appellant that at the time of trial, the construction of the 60

units of semi-detached houses had not been fully completed. This

is evident in the testimony of SD3 who had testified as follows:

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 Q : After the termination, are you prepare for final
account?

A : After the termination, we did one valuation. It’s

supposed to be a joint valuation which we
addressed, we send it to them which they did
not come to sign. The final account will only
be prepared after the whole development.
That means after the whole development is
completed. That means the third party
contractors now come on board. He will
complete is work and anything that it’s
technically to be resolved there and it would be
resolved because it’s one parcel so it will come
back to target.

Q : You agree with me that the Plaintiff not

accepted your final account figure?

A : We have not prepared the final account on

this project yet.

Q : Until today?

A : Until today, we have not prepared the final

account, we have prepared a final valuation
yes but we have not prepared the final
account.

24. Relying on the aforesaid undisputed fact of non-completion of the

60 units of semi-detached houses at the trial, we opined that

though the 2 letters of award did not amount to adequate proof, the

learned Judge, with respect, should have ordered the damages to

be assessed as this was provided for in paragraph 38(a) of the

counterclaim of the Respondent which reads as follows:

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 38. Wherefore, the Defendant counterclaims against the
Plaintiff and prays as follow:-

(a) The Total Outstanding of RM17,804,708.39 (subject

to re-measurement and/or any payment made under
the Performance Bond) to be paid by the Plaintiff to the
Defendant;

(b) The Plaintiff to indemnify the Defendant for such further

costs in completing the Remaining Works (if any) to be
assessed upon completion of the same;

(c) The Plaintiff to indemnify the Defendant for Late

Payment Charges payable to the Defendant’s Purchasers;

(d) Further and/or in the alternative, liquidated and

ascertained damages amounting to RM29,000.00 per day,
commencing from 01.01.2015, i.e. one day after the
Revised Completion Date, until the full completion of the
Remaining Works, to be paid by the Plaintiff to the
Defendant;

(e) Interest on all sum(s) awarded until full and final

settlement thereof;

(f) Costs;

(g) Such further and/or other relief as deemed fit and just
by this Honourable Court.

25. The phrase “(subject to re-measurement and/or any payment

made under the Performance Bond)”, together with prayer (g), in

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 our view, should have alerted the learned Judge to order that the

damages and losses were to be assessed.

Issue 2: Was the evidence of 10% increase of price by the

Appellant’s witness amounted to an admission?

26. In view of the overwhelming evidence that the non- completion of

the 60 units of semi-detached houses within the agreed time for

completion by the Appellant, there was little doubt that the

Appellant was liable for damages suffered by the Respondent.

Hence there was no necessity for us to even consider whether

there was admission by the Appellant of its liability for breach of

contract and damages arising therefrom. Further, we agreed with

counsel for the Respondent that the Appellant at the trial was more

concerned with the quantum of damages rather than that of its

liability.

Conclusion:

27. This is another case where the claiming party had not fully

understood the manner in which claim for damages and losses

ought to be proved in the Court of law. The Court must be given

the best evidence in the form of direct evidence of how the

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 additional expenses had to be incurred and paid and to whom. The

relevant witnesses from the new contractors must be called to give

their evidence. The rule of hearsay evidence must not be breached

bearing in mind that the burden of proof is always on the party who

asserts it.

28. In the circumstances and for reasons set out above, this appeal

was allowed in part where we ordered as follows:

(i) The orders of the High Court were set aside.

(ii) Damages (as claimed in paragraph 38(a) –(c)) to be

assessed by the learned Judge.

(iii) Interest on all sum(s) awarded until full and final

settlement thereof.

(iv) Costs of the assessment inquiry to the Respondent.

(v) No order as to costs.

(vi) Deposit to be refunded.

Dated : 11 September 2017

(DAVID WONG DAK WAH)

Judge
Court of Appeal Malaysia

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For the Appellant : Conrad Young
Rohan Arasoo Jeyabalah
Messrs. Adnan Rahim & Co.

For the Respondent : Alan Wong

Andrew Heng & Roger Leong
Messrs. Zain Megat & Murad

Notice: This copy of the Court's Reasons for Judgment is subject

to formal revision.

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