DALAM MAHKAMAH RAYUAN, MALAYSIA (APPEAL JURISDICTION) RAYUAN SIVILNO. P-02-855-2011
PRAI POWER SDN BHD …. PERAYU
MALAYAWATA STEEL BERHAD …. RESPONDEN
DALAM PERKARA MENGENAI MAHKAMAH TINGGI DI PULAU PINANG GUAMAN SIVIL NO: MT-22129-2003
MALAYAWATA STEEL BERHAD ….PLAINTIF
PRAI POWER SDN BHD ….DEFENDAN
LIM YEE LAN, HMR DAVID WONG DAK WAH, HMR ROHANA BINTI YUSUF,HMR
DAVID WONG DAK WAH JCA
1. This is an appeal against the decision of High Court where the learned Judge sustained the Respondent / Plaintiff’s claim for
negligence against the Defendant and the sum of RM563,627.00 with interest at the rate 8% per annum effective from 1/1/2003 till full settlement of the judgment sum. Costs of RM15,000.00 was also awarded to the Respondent.
2. On 19/3/2013 we heard the appeal and after due consideration by us, we allowed the appeal for reasons set out below.
3. The Appellant had wanted to build a power plant on an adjoining land belonging to the Respondent. To access the power plant land, the Appellant had to pass through a portion of the Respondent’s land and to facilitate this access the Respondent and the Appellant entered into a lease for that portion of land on 1/6/2001 for the purpose of constructing an access road.
4. For the purpose of building the power station, the Appellant appointed Sumitomo Corporation Limited to construct the power plant and the access road.Sumitomo in turn appointed one Mudajaya Corporation Berhad to construct the access road.
5. During the construction of the access road, damage was caused to high tension cables embedded on the Respondent’s land. It was the contention of the Respondent that the damage was caused by the negligence of the Appellant when constructing the access road. The Appellant had denied such negligence.
High Court decision:
6. The agreed issue at the High Courtwas basically whether the Appellant was negligent when constructing the access road, as a result of which caused damage to the embedded cables resulting in loss of profit to the Respondent.
7. On the issue of liability, the learned Judge found that the Appellant was negligent on the following grounds:
(i) Sumitomo being an experienced and wellknown contractor (as put forth by the Respondent) failed to obtain the relevant information from Tenaga Nasional Berhad in respect of the location of the high tension cables on the Respondent’s land.
(ii) There is also no evidence from the Appellant that they had taken any reasonable steps to avoid causing damage to those high tension cables.
(iii) The Appellant had also failed to obtain consent from TNB before they started the construction of the access road as required by law.
(iv) PW2 (an officer from Tenaga) had testified that Sumitomo had acknowledged to him that they had made a mistake and agreed to repair the damage at their costs.
8. As for the proof of damages, the learned Judge relied on documents as in Bundle C as supported by Bundle H and I as confirmed
by PW3, PW4 and PW5.
Grounds of appeal and Our grounds of decision:
9. Having perused the Appeal Records, the grounds of appeal and the submissions of respective learned counsel, we are of the view that there are basically two issues before us and they are:
(i) Whether the learned Judge was correct in finding that the Appellant was negligent in the construction of the access road, resulting in the damage to the high tension cables on the Respondent’s land?
(ii) Whether the learned Judge was correct in awarding the sum of RM563,627.00?
Issue (i) – Liability
10. It is our view thatthe learned Judge was perfectly correct in his finding that the Appellant through his contractor and subcontractor had been negligent in view of undisputed evidence of PW2 and the lack of evidence by the Appellant in showing that they had taken reasonable steps in ensuring that the embedded cables on the Respondent’s land would not be damaged by the piling works during the construction of theaccess road. It would not be wrong for us to say that the Appellant through their counsel’s submission had not seriously challenged the learned Judge’s finding on liability. Furthermore since there is undisputed evidence that there was damage done to the high tension cables and the Appellant was the only party doing construction works in that vicinity, the principle of res ipsa loquitur can and should have been
With that we now look at the issue of quantum.
Issue (ii) – quantum of damage:
11. To recap, the crucial evidence relied on by the learned Judge are Bundle C as supported by Bundle H and I. However before we examine these documents, it would be useful to look at the Respondent’s claim in its statement of claim.
12. In its statement of claim, the Respondent had claimed as follows:
(i) Jumlah Keseluruhan kerugian bagi “Steel making plant” -RM537,287.00
(ii) Jumlah Keseluruhan kerugian bagi “Rolling Mill 1″
(iii) Jumlah Keseluruhan kerugian bagi “Rolling Mill 2″ Jumlah Kerugian produksi
(iv) Kerugian reputasi (30% daripada RM563,627.00) Jumlah Keseluruhan
– RM7,500.00 -RM18.840.00
– RM563.627.00 -RM167.088.00 -RM732.715.00
13. The learned Judge only awarded the sum of RM563,627.00 to the Appellant. This amount as per page 119 of Record of appeal is
particularized as follows:
Less Higher actual costs of goods sold.. (RM1,331,100.00)
Add adjustment to cost of goods sold as. RM328,727.00
It should have been lower due to
economies of scale
14. As stated above, the learned Judge accepted the evidence contained in Bundle C as supported by Bundle H and I and confirmed by
PW3, PW4 and PW5.
15. We start off with the evidence of PW5 as it was him who had produced the particulars of RM563,627.00 which is reflected at page 1 of Bundle C. PW5 is the Respondent’s accountant and in respect of RM563,627.00, he testified that it is a ‘loss in gross profit’. It is also his testimony that the production figures for the breakdown period from 22/8/2001 to 29/8/2001 had been audited and approved.
16. PW5 was able to tender Bundle I despite objection by learned counsel for the Appellant. It cannot be disputed that the primary purpose of Bundle I was to supplement Bundle C.
17. In cross examination, PW5 gave some illuminating answers and for clarity that part of testimony is set out here:
Q: In August 2001 on the disruption day there was pending order?
A: Yes there are.
Q: Claim for lost of opportunity. Can you show any orders had
been cancelled due to the disruption?
A: I don’t know.
Q: Any document in any Court bundle to show cancellation?
Q: Any late delivery due to the disruption.
A: Not aware about it.
Q: In respect of the disruption any of your clients claim damages.
18. It is our view that for any claim for loss of profits, the primary evidence of sales contract must bethe starting point in any exercise to prove loss of profit. Here PW5 cannot show the Court as to whether there was any cancellation of orders or any evidence that the clients of the Respondent had complained about their inability to obtain goods from the Respondent. Without such evidence we are at a loss how the Respondent was able to prove their loss of profits. The logic is simple. If there were no orders for goods, how could the Respondent suffer any loss of revenue when there is nothing to generate revenue?
19. As for bundle I, it is our view that it does not help the Respondent. This is what PW5 said in testimony in cross examination:
Q: As a matter of fact do you know whether the weight is correct?
A: I don’t know.
Put:You are in position to confirm the data in P12 (bundle I) page 1 -228?
Evidence where the witness cannot explain because he was not the maker cannot be admissible evidence. They are purely hearsay evidence and as such no weight should be given to it.
20. As for the evidence of PW3 and PW4, we agree with learned counsel for the Appellant that their evidence gave no insight to the loss of profit being claimed by the Respondent. Hence it is not necessary for us to make any comments on their evidence.
21. In any claim for damage of loss, we are always guided by what Lord Goddard’s dictum in Bonham-Carter v Hyde Park Hotel (1948)
WN 89 and it is this:
“Plaintiffs must understand that if they bring actions for damages it is for them to prove their damage; 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.”
22. With respect, this is what the Respondent had done here. They made no attempt to prove their claim. PW5 appears to rely on the fact that the figures were all audited by the auditors. The flaw on this contention is reflected in the case of KPM Khidmat Sdn Bhd v Tey Kim Suie (1994) 3 CLJ 1 where Mohamed Dzaiddin SCJ (as he then was) said this:
The mere fact that the summary of the particulars were
made could never be taken as proving that the contents were correct. It has to be proved by calling the maker to explain the facts and the basis of the calculation of the amount claimed. Moreover the record book upon which the maker based her summary must be in evidence …”
23. In Sony Electronics (M) Sdn Bhd v Direct Interest Sdn Bhd (2007) 1 CLJ, the Court of Appeal gave clear instructive guidance on how to prove loss of profits. Zainun Ali JCA (as she then was) delivering the judgment of the Court at page 625 said this:
“ Thus even if the authenticity of the statements was notcalled into question, it is still incumbent upon the respondent toprove their contents and to show how they are related to thealleged breach of the agreement (if respondent were to depend on the said documents to prove its case).
 We would go further and say that even if the sourcedocuments, ie, account books were in evidence, the one vital linkwhich is missing is the presence of a person of skill, of whomRamlan is not one.
 This person of skill is required, on the strength of s.
34 ofthe Evidence Act, to prove the entries and documents as he is“someone having personal knowledge of the transactions reflectedin such entries …”
 His ‘skills’ would be critical in this case, in giving professionalinput as regards, inter alia:
(a) The percentage of the loss;
(b) Whether the loss is due to the loss of a particular contract;
(c) Giving a comparative study of business trend of therespondent (calculating loss of future business);
(d) In calculating gross margin or the net margin;
(e) Chart the performance of the company etc.
 As in the Popular case ( 1 CLJ 133), there was also a set of purportedlyaudited accounts but which lack:
(a) Books to substantiate the statements;
(b) Accountant/accountants who themselves audited the accountsto testify to the truth and accuracy of the statements.
 If the said accounts were to be admitted, then someone isto testify from where they were obtained.
 Thus in the absence of that person of skill to prove therespondent’s documents, the respondent’s claim for
damagesremain obscure, unacceptable and consequently inadmissible.
 The essence of all these is that, the burden of proof interms of admissibility and relevancy never shifted from therespondent. ”
24. We have examined the witness statements of PW3, PW4 and PW5 with care in the context of Bundles C, H and I and formed the view that the Respondent had failed to comply with the guidelines set out in Sony Electronics (supra). First and foremost, the auditors were not called as witnessesto confirm the figures which the Respondent were relying on. Secondly PW5 by his own admission had testified that he could not confirm the figures which he was relying on to advance the Respondent’s case.
25. With respect, the learned Judge failed to take into consideration the guidelines set out in Sony Electronics (supra) on proof of damage/loss. We also take the opportunity to restate the duty to prove by referring to the majority judgment in Government of theState of Sabah v. Suwiri Sdn Bhd  4 CLJ 727 where Nik Hashim JCA (as he then was) held as follows:
“As for the claim for damages for breach of contract, the respondent must strictly prove its loss or damage. In the present case, the learned JC awarded the respondent RM21,890,113.75 as damages for the defendant’s alleged breach of contract on the unchallenged evidence of PW2 which appeared to the learned JC to be clear and
comprehensive. However, on the evidence, the respondent had failed to prove it. A profit projection even though unchallenged is not sufficient to establish the would-be losses of profit especially taking into account exigencies, risks and fluctuations in the logging and timber trade which will have an impact on the alleged projected profits (see Sime Properties Bhdv. Woon Nyoke Lin  3 CLJ 719; KPM Khidmat Sdn Bhd v.
Tey KimSuie  3 CLJ 1). ”
In the appeal before us, there was of course cross examination by learned counsel for the Appellant, the result of which had showed the weakness of the Respondent’s case but was not remedied even though it was given a chance to do so.
26. Although we find that the Respondent had failed to prove the quantum of its loss, we are nevertheless of the view that it should be awarded nominal damages which we do so by awarding a sum of RM30,000.00 to the Respondent. The amount is arrived at after taking into consideration the circumstances in which the negligent act was committed and the period of immobility caused by the damage to the cables.
27. For reasons stated above, we allowed the appeal with no order as to costs, set aside the High Court‘s order and substitute it with an order that the Appellant to pay the Respondent a sum of RM30,000.00 as a nominal loss of profit. We further ordered that the deposit be refunded.
Dated :7thJuly 2013
For the Appellant
For the Respondent
(DAVID WONG DAK WAH)
Court of Appeal Malaysia
T. Sudharsanan with Hadi Mukhlis and Cilia Chong
Tetuan Shook Lin & Bok
Tan Bak Lee Tetuan Bak Lee & Co.
Notice: This copy of the Court’s Reasons for Judgment is subject to formal revision.