Chapter 9 - Damages, LAD, Deposits & Part-Payments Flashcards
DAMAGES
overview
1) Scope of claim for damages
2) Types of damages
3) Remoteness of damages
4) Mitigation of damages
SCOPE OF CLAIM FOR DAMAGES
Overview
1) Scope of S.74
2) Action in damages for breach vs action for indemnity
3) What can be claimed
4) Who can claim
SCOPE OF CLAIM FOR DAMAGES
Scope of S.74
Malaysian Rubber Development Corp Bhd v Glove Seal Sdn Bhd:
- Naturally arose in the usual course of things; or
- Which the parties knew, when they made the ctt, to be likely to result from the breach.
- No actual knowledge is necessary, in contemplation is sufficient.
Originally:
Hadley v Baxendale:
- Naturally arose in the usual course of things; or
- Which the parties knew, when they made the ctt, to be likely to result from the breach.
- No actual knowledge is necessary, in contemplation is sufficient.
SCOPE OF CLAIM FOR DAMAGES
damages vs indemnity
Malayan Banking Bhd v Basaruddin Ahmad Khan:
1) damages:
- compensation for loss or injury suffered;
- arising from the breach of ctt & not a subject of the contract.
2) indemnity:
- right which has to be provided for in the original bargain;
- formal legal acceptance of responsibility for damages or loss.
- does not take away right to claim for damages.
SCOPE OF CLAIM FOR DAMAGES
Types of damages that can be claimed
Ismail v Hj. Taib:
General damages - first limb S.74:
- to protect expectation of interest;
- based on dimunition of value and costs of care & loss of profits.
Special damages - second limb S.74:
- to protect reliance interest;
- parties have not suffered any loss of profits, but has incurred expenses in reliance of contract.
- based on wasted expenditure or damages in preparation of the performance of the contract.
SCOPE OF CLAIM FOR DAMAGES
Who can claim
Lim Foo Yong & Sons Realty Sdn Bhd v Datuk Eric Taylor:
- The word “party” under S.74 can only mean a party who is a signatory to the contract or his estate.
TYPES OF DAMAGES
Overview
1) Compensatory damages
2) Non-compensatory damages
COMPENSATORY DAMAGES
Types & scope
1) Pecuniary loss:
- loss of profit or reliance expenditure.
2) Non-pecuniary loss:
- e.g. damages for inconvenience, distress or anxiety.
Watts v Marrow:
- General rule: a contract-breaker is not liable for any distress, frustration or anxiety which his breach may cause;
- Exception: When the very object of the ctt provide for pleasure, relaxation & peace of mind.
- Example: Holiday CTT (Jarvis Swan Tours Ltd), CTT with solicitor to prevent further distress (Heywood v Wellers);
- in such a case, damages may be recoverable if the breach & mental suffering are directly related to that inconvenience & discomfort.
NON-COMPENSATORY DAMAGES
Overview
1) Nominal damages
2) Exemplary damages
NON-COMPENSATORY DAMAGES
Nominal damages
Popular Industries Limited v Garment Manufacturing Sdn Bhd:
- P seeking for damages must prove the damages & the amount of damages;
- If he proves contravention of rights, he will be awarded nominal damages;
- If he proves damages but not the amount, he may be awarded nominal damages.
NON-COMPENSATORY DAMAGES
Exemplary damages - when
Rookes v Barnard:
- there has been oppressive, arbitrary & unconstitutional conduct; or
- D’s conduct has been calculated by him to make a profit for himself which may well exceed the compensation payable by himself; or
- Where a statute has expressly authorised it.
NON-COMPENSATORY DAMAGES
Exemplary damages - example
Breach of promise to marry - Dennis v Sennyah:
- Damages in action for breach of promise to marry is not to repay the P for the temporal loss but to punish the D in an exemplary manner.
REMOTENESS OF DAMAGES
First limb S.74 - naturally would arise - general damages
1) Bee Chuan Rubber Factory Sdn Bhd v Loo Sam Moi:
- Damages recoverable for delay in completion of an ordinary house required for personal occupation include reasonable cost of living accommodation elsewhere and storing furniture.
- i.e. the cost to store furniture & accommodation to live somewhere is damages that naturally would arise due to the breach.
2) Bank Bumiputra Bhd Kuala Terengganu v Mae Perkayuan Sdn Bhd:
- the loss of of profits on the housing project which the customer would suffer was the natural & probable result of the breach of agreement by bank.
- i.e. the loss of profits is damages that naturally would arise due to the breach.
REMOTENESS OF DAMAGES
Second limb S.74 - which the party knew to be likely to result from the breach - special damages
1) Teoh Kee Keong v Tambun Mining Co Ltd:
- Appellant claims for the value of work done, outlay and materials used as well as labour and expenses.
FC held: - Claims allowed;
- It was clearly in contemplation of the contracting parties that the appellant should not be denied the fullest opportunity to recoup all the monies he had invested into the enterprise.
2) Tham Cheow Toh v Associated Metal Smelters Ltd:
- From the evidence it is clear that the defendant had special knowledge regarding the required temperature.
- When the specification was not complied with, judge made an award for loss of profit of P who required the furnace for his business;
- Damages for loss of profit in this case is made under 2nd limb (instead of 1st limb) as D had special knowledge of the required temperature.
MITIGATION OF DAMAGES
Duty to mitigate damages
Kabatasan Timber Extraction Co v Chong Fah Shing:
- General rule: party seeking damages is under duty to mitigate his losses.
- P cannot claim to be compensated for something that is not due to the breach of D, but to his own failure to behave unreasonably after the breach.
MITIGATION OF DAMAGES
Meaning of “duty”
SGCA, 2010
The Asia Star:
- legal requirement imposed on aggrieved party to take measures to minimise avoidable losses.
- Breach of duty to mitigate does not entitle aggrieved party to claim the part of the loss.
MITIGATION OF DAMAGES
Basic rules on mitigation
SGCA, 2010
The Asia Star:
- Aggrieved party must take all reasonable steps to mitigate losses;
- Cannot recover damages for any loss which it could have avoided;
- Aggrieved party who goes beyond what the law requires will not be entitled to any damages;
- May recover expenses incurred in the course of taking reasonable steps to mitigate its loss;
- Burden of proving failure to mitigate is on the defaulting party.
MITIGATION OF DAMAGES
Sales of goods
Tansa Enterprise Sdn Bhd v Temenang Engineering Sdn Bhd:
- proportion of bricks not supplied by P were so small compared to total value of contract;
- D should have mitigated as bricks were common goods & no shortage at the market;
- D who bought the bricks from cheaper supplier cannot be allowed to counter-claim.
MITIGATION OF DAMAGES
Recovery of losses or expenses
Malaysian Rubber Development Corp Bhd v Glove Seal Sdn Bhd:
- P taking steps to mitigate & incur expenses while at it may recover damages to indemnify him in respect of the expenses;
- the fact that D does not know or expect the expenses incurred by P in the course of mitigating his losses does not make D not liable to compensate P.
MITIGATION OF DAMAGES
Anticipatory breach & mitigation of losses
Ban Chuan Trading Co Sdn Bhd v Ng Bak Guan:
- CA disallowed P’s claims for general damages;
- P should have minimised his losses by taking steps to terminate the agreement as soon as it was made known to him that the premise is not available, i.e. as soon as he can anticipate the breach.
ASSESSMENT OF DAMAGES
date of assessment
1) General rule - Eikobina (M) Sdn Bhd v Mensa Mercantile Pte Ltd:
- on the difference between the contract price & market price at the time of breach.
2) Claims for breach of warranty - Lee Heng & Co v C Melchers & Co:
- values are assessed on the date of delivery of goods ordered.
ASSESSMENT OF DAMAGES
taxation of damages
Daishowa (M) Woods Products Sdn Bhd v Kepong Products Co Sdn Bhd:
- deductions should be made for any sum which P would have been liable to pay in taxes.
- conditions:
1) The money for the loss of which damages are awarded would have been subject to tax as income; and
2) Damages awarded should not be liable for another taxation.
LAD
Whether proof of loss is necessary
1) the law:
S.75
2) Whether proof of loss is necessary - Cubic Electronics Sdn Bhd v Mars Telecommunications Sdn Bhd:
- To claim for LAD under S.75, proof of actual loss is not necessary or mandatory.
- Onus is on the party seeking to enforce LAD clause to adduce evidence of breach & evidence of the existence of the clause.
- Once these two are established, he is entitled to the sum stipulated in the clause.
- To raise the disputes, defaulting party may show that the damages are unreasonable or demonstrate by evidence the reasonable amount for his breach.
DEPOSIT
Overview
1) Meaning of deposit
2) Scope of deposit
3) Right to forfeit deposit
4) Whether prove of actual damage is necessary
5) Right to sue for unpaid deposit & recovery of unpaid deposit
6) Relief against forfeiture of deposit
7) Equitable relief against forfeiture of deposit
