420 Tan Sri Khoo Teck Puat & Anor. v. Plenitude Holdings Sdn. Bhd.

[1994] 1 MLRA

TAN SRI KHOO TECK PUAT & ANOR.

v.
PLENITUDE HOLDINGS SDN. BHD.

Federal Court, Kuala Lumpur

Tan Sri Edgar Joseph Jr, Chong Siew Fai, Wan Adnan Bin Ismail FCJJ
[Civil Appeal No. 02-220 Of 1994]
7 December 1994

JUDGMENT
Edgar Joseph Jr. FCJ:
The Background Facts
This judgment relates to the proceedings which were a sequel to the judgment of
the Supreme Court, dated 23 February 1993, reported under the name of Tan Sri
Khoo Teck Puat & Anor v. Plenitude Holdings Sdn Bhd [1993] 1 MLRA 144; [1994] 3
MLJ 777; [1995] 1 CLJ 15; [1995] 1 AMR 041 in the Malayan Law Journal, the
citation being [1993] 1 MLJ 113, and arose in this way.
In the High Court at Johor Bahru, on 23 May 1992, the learned Judge had, in a
persuasive judgment (reported in [1992] 2 MLJ 68), made an order for specific
performance of a contract for sale and purchase of land dated 20 August 1984,
("the Agreement") whereby the second defendant Rumah Nanas Rubber Estate
Sdn. Bhd. ("the Vendor") had agreed to sell to the plaintiff Plenitude Holdings Sdn.
Bhd. ("the purchaser") certain land comprised in Lot No.295 held under grant
no.17259, situated in the Mukim of Tebrau, in the district of Johor Bahru, in the
state of Johor, in area approximately 1,000 acres ("the land") at a price of
RM47,939,958. The Judge had made a further order that the Vendor do pay
damages to the purchaser to be assessed for wrongful termination of the Agreement
and yet another order that the Vendor and the first defendant Tan Sri Khoo Teck
Puat, ("Tan Sri Khoo") the chairman of the Vendor company do pay damages to
the purchaser for breach of certain oral undertakings.
By these undertakings, Tan Sri Khoo, on his own behalf and on behalf of the
Vendor, had promised to obtain a loan from the National Bank of Brunei or
another source, to enable the purchaser to pay the balance of the purchase price
("the Loan Undertaking") and further, by way of alternative, that in the event of
their being unable to secure such a loan, then Tan Sri Khoo had promised that his
company, the Vendor, would enter into a joint venture scheme to develop the land
("the Joint Venture Undertaking") and this, in turn, would have required the
incorporation of a company, with the purchaser and the Vendor having a 10% and
90%, equity therein, respectively.
[1994] 1 MLRA Tan Sri Khoo Teck Puat & Anor. v. Plenitude Holdings Sdn. Bhd. 421

The appeal by Tan Sri Khoo and the Vendor from the orders of the Judge
aforesaid to the Supreme Court had been dismissed on 23 February 1993 on the
grounds appearing in its judgment referred to in Tan Sri Khoo Teck Puat & Anor v.
Plenitude Holdings Sdn Bhd [1993] 1 MLRA 144; [1994] 3 MLJ 777; [1995] 1 CLJ
15; [1995] 1 AMR 041 para 1 supra.
Upon dismissal of the appeal aforesaid, the purchaser had paid the balance of the
purchase price of RM43,145,962.20, without recourse to the Loan Undertaking,
with the result, that the land had been transferred to the purchaser which became
the registered proprietor thereof, though only with effect from 17 March 1993.
Pursuant to the consequential orders of the Judge, aforesaid, the purchaser had
filed a summons for assessment of damages and, upon the hearing thereof, the
Judge had ordered that Tan Sri Khoo and the Vendor do pay to the purchaser the
following sums of money:
(1) RM31,000 and RM31,783.50 for wrongful termination of the Agreement;
(2) RM13,500,000 for loss of profits;
(3) RM867,969 for loss of cash flow investment; and
(4) the sum of RM1,756,772.91 by way of interest on the deposit which had been
paid by the purchaser to the Vendor under the Agreement.
In addition, the Judge had also ordered the payment of interest on the above
amounts.
It is from the above orders of the Judge made upon the summons for assessment of
damages, the reasons for which appear in his subsequent judgment reported in
[1994] 1 MLRH 420; [1994] 2 MLJ 273; [1994] 2 CLJ 796; [1994] 2 AMR 1050,
that the present appeal had been brought by Tan Sri Khoo and the Vendor. There
is also a cross-appeal by the purchaser against the order of the Judge awarding the
sum of RM13,500,000 for loss of profits, on the ground of its alleged inadequacy.
The Basic Issue
It is indisputable, and indeed it was common ground, that in Law, in appropriate
circumstances, compensation may be awarded against a vendor in addition to
specific performance. (See, s. 18, Specific Relief Act 1950 (Revised - 1974) which is
based on s.19 of the Indian Specific Relief Act 1877, which in turn, has its roots in
s. 2 of Lord Cairns' Act and Jacques v. Miller , 6 Ch. D. 153).
The appeal and the cross-appeal being only on quantum, the basic issue is whether
the basis on which the Judge had assessed the damages was right, having regard to
the particular circumstances of this case.
Preliminary Points
Before we embark upon a detailed consideration of the specific issues which arise
for decision, there are three preliminary matters which, at the outset, require
422 Tan Sri Khoo Teck Puat & Anor. v. Plenitude Holdings Sdn. Bhd. [1994] 1 MLRA

emphasis.
Firstly, that part of the judgment of the Judge which provides that the Vendor shall
pay to the purchaser damages to be assessed for wrongful termination of the
Agreement with costs and that Tan Sri Khoo and the Vendor shall pay to the
purchaser damages to be assessed for breaches of the undertakings, even though
affirmed on appeal, can in no way relieve the purchaser of satisfying the
fundamental requirement of having to prove its loss (if any) arising from those
breaches. To hold otherwise would amount to dispensing with proof of quantum
altogether, and that cannot be the law. In so saying, we are reminded of the words
of Lord Goddard in Bonham- Carter v. Hyde Park Hotel Ltd. 64, TLR 177, 178:
... 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, 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.
This dictum was referred to and applied by our Court of Appeal in John v.
Dharmaratnam [1961] 1 MLRA 497; [1962] MLJ 187.
And, in Popular Industries Limited v. Eastern Garment Manufacturing Sdn Bhd [1989]
2 MLRH 705; [1989] 3 MLJ 360; [1990] 2 CLJ 635, the Court had occasion to sa
ythis (at p.367):
It is axiomatic that a plaintiff seeking substantial damages has the, burden of
proving both the fact and the amount of damages before he can recover. If he
proves neither, the action will fail or he may be awarded only nominal damages
upon proof of the contravention of a right. Thus nominal damages may be
awarded in all cases of breach of contract (see Marzetti v. William ). And, where
damage is shown but its amount is not proved sufficiently or at all, the Court will
usually decree nominal damages.
See, for example Dixon v. Deveridge and Twyman v. Knowles .
In Malaysian Rubber Development Corporation Bhd v. Glove Seal Sdn Bhd [1994] 1
MLRA 394; [1994] 3 MLJ 569; [1994] 4 CLJ 783; [1994] 3 AMR 2407, at 582 E
to F, Mohd Dzaiddin, SCJ, speaking for the Supreme Court quoted, with
approval, the above passage in the Popular Industries case.
Secondly, it is important to identify the real nature of the purchaser's cause of
action.
It was held by the High Court, and affirmed on appeal, that though the Vendor had
purported to terminate the Agreement, it was not entitled to do so, with the result
that specific performance had been ordered of the Agreement. The effect of this
was that the Agreement was affirmed by the Court and so it remained alive and on
foot throughout. In the event, instead of obtaining title to the land in 1988 as
stipulated in the Agreement, the purchaser, did so only on 17 March 1993. This
meant that the purchaser had to wait for five years before it could obtain title to the
[1994] 1 MLRA Tan Sri Khoo Teck Puat & Anor. v. Plenitude Holdings Sdn. Bhd. 423

land and embark upon its development project. Clearly, the purchaser's cause of
action was for damages for delay in completion. That delay was brought to an end
by the decree for specific performance against the recalcitrant Vendor. We find,
quite apt, the following passage in McGregor on Damages (15th Edn.) para 911 p.
914:
... More often he (the purchaser) will have the property transferred to him late,
either because the delay does not discharge the contract or he elects not to treat the
delay as a discharge, or because he forces the seller's hand by successfully suing for
a decree of specific performance.
In such a situation the measure of damages is properly regarded as damages for
delay.
At this point, we would pause to refer to the Loan Undertaking, the object of
which was clearly to enable the purchaser to obtain title to the land. On the other
hand, the object for the alternative undertaking; namely, the Joint Venture
Undertaking, was to ensure that if the purchaser failed to get title to the land, then
at least it would be entitled to participate in a joint venture scheme involving the
land with the purchaser and the Vendor having a 10% and a 90% equity therein,
respectively. In other words, the Agreement contemplated, that if the purchaser
secured title to the land without recourse to the Loan Undertaking, this
undertaking would lose its importance, and similarly resort to the Joint Venture
Undertaking, would not even arise.
In the event, the purchaser did succeed to obtain title to the land, although
belatedly, and after forcing the hand of the Vendor, by way of an order for specific
performance, but without recourse to the Loan Undertaking. This leads to the
inevitable conclusion that the purchaser's true cause of action was for damages for
delay in delivering title as a result of the wrongful termination of the Agreement by
the Vendor.
In such a situation, neither undertaking was of anything more than historic
interest; the Loan Undertaking was a breach without consequence, no evidence
having been led as to what, if any loss, had been occasioned thereby; whilst the
Joint Venture Undertaking was inoperative and of no effect.
In this context, we find the following words of Lord Wilberforce in Johnson v.
Agnew [1979] 2 WLR 487 at p.491 H to 492 A apt:
In this situation it is possible to state at least some uncontroversial propositions of
law.
First, in a contract for the sale of land, after time has been made, or has become, of
the essence of the contract, if the purchaser fails to complete, the Vendor can either
treat the purchaser as having repudiated the contract, accept the repudiation, and
proceed to claim damages for breach of the contract, both parties being discharged
from further performance of the contract; or he may seek from the Court an order
424 Tan Sri Khoo Teck Puat & Anor. v. Plenitude Holdings Sdn. Bhd. [1994] 1 MLRA

for specific performance with damages for any loss arising from delay in
performance. (Similar remedies are of course available to purchasers against
vendors.) This is simply the ordinary law of contract applied to contracts capable
of specific performance.
Accordingly, the assessment of damages in this case should be arrived at having
regard to the loss, if any, which the purchaser had suffered and proved, by reason
of it not having obtained title to the land until after the order for specific
performance passed by the High Court had on appeal been affirmed by the
Supreme Court. It is vitally important that this point be kept in the forefront of our
minds as failure to do so will lead to confusion and injustice.
Thirdly, by way of elaboration, it should be added that the effect of the
undertakings was that if the purchaser had been able to raise the balance of the
purchase price, in time, whether with or without the assistance of Tan Sri Khoo,
there would be no joint venture scheme. But, if the purchaser had been unable to
raise the balance of the purchase price in time, whether with or without the
assistance of Tan Sri Khoo, there was to be a joint venture scheme, in which case,
the land would have been transferred to a joint venture company with the
purchaser and the Vendor having 10% and 90% equity therein, respectively.
In the events which transpired, the purchaser had been able to raise the balance of
the purchase price, suo motu , that is to say, on its own and so without any
assistance from Tan SriKhoo, and to obtain an order for specific performance of
the Agreement, with the result that the purchaser did not have to rely on either
undertaking, which had been overtaken by events.
To put it another way, the purchaser did not accept the Vendor's repudiation of the
Agreement, sue only for damages for breach, dropping any claim for specific
performance. Had it done so, the undertakings would have occupied centre stage
and the consequences of the Vendor's breaches of the undertakings would have
been most material in the assessment of damages.
To illustrate, if as a result of a breach of the Loan Undertaking, the purchaser
could not, suo motu , have obtained a loan from other sources and there had been a
breach of the alternative Joint Venture Undertaking to enter into a joint venture
scheme, then a claim for 10% of the profits (if any) accruing therefrom, would lie.
But, because the purchaser had been able, suo motu , to raise the balance of the
purchase price which had been duly paid pursuant to the order of Court granting
specific performance of the Agreement, thus obtaining title to the land, the Loan
Undertaking, even though breached, was of no consequence, since no evidence
had been led as to what, if any, loss had been sustained thereby. To illustrate, if as
a result of a breach of the Loan Undertaking, the purchaser could only have
obtained a loan from other sources at a higher rate of interest, a claim for
reimbursement of the excess interest would lie.
As Berger J. said in the British Columbia Supreme Court case of Bowlay Logging
[1994] 1 MLRA Tan Sri Khoo Teck Puat & Anor. v. Plenitude Holdings Sdn. Bhd. 425

Ltd. v. Domtar Ltd. [1978] 4 WWR 105 at p.117:

If the law of contract were to move from compensating for the consequences of
breach to compensating for the consequences of entering into contracts, the law
would run contrary to the normal expectations of the world of commerce. The
burden of risk would be shifted from the plaintiff to the defendant.
The defendant would become the insurer of the plaintiff's enterprise. ... The
fundamental principle upon which damages are measured under the law of
contract is restitutio in integrum . The principle contended for here by the plaintiff
would entail the award of damages not to compensate the plaintiff but to punish
the defendant.
In the case of the Joint Venture Undertaking, no question of a joint venture scheme
could have arisen considering that the purchaser was able, suo motu , to raise the
balance of the purchase price and to obtain title to the land with the result that the
Joint Venture Undertaking (which was an alternative undertaking) was inoperative
and of no effect. There could be no question of the purchaser having the land and
also a joint venture scheme.
It is against the backdrop of the three preliminary matters that we must embark
upon a consideration of the individual heads of award made by the Judge. But,
before doing so, it would be salutary to remind ourselves of certain well established
principles governing the measure of damages for breach of contract.
The Governing Principles
The starting point regarding this part of the case is s. 74 of the Contracts Act 1950
(Revised 1974), which is really declaratory of the Common Law rules enunciated
in the celebrated case of Hadley v. Baxendale [1854] 9 Ex 341 at 354; 156 E.R. 145 at
151. (See, Bank Bumiputra Malaysia Bhd. v. Mae Perkayuan Sdn. Bhd. [1993] 1
MLRA 198; [1993] 2 MLJ 76; [1993] 2 CLJ 495; [1993] 1 AMR 1079, 87-91).
At Common Law, the general principle which constitutes the starting point in the
assessment of damages for breach of contract is, in the words of Parke B. in
Robinson v. Harman (154 ER 363 at p. 365):
where a party sustains a loss by reason of a breach of contract, he is so far as
money can do it, to be placed in the same position with respect to damages, as if
the contract had been performed.
This was cited with approval by the Court of Appeal in C. Czarnikow Koufos Ltd .
[1969] 1 AC 350 at 414 and, 420.
But, the general principle aforesaid has been qualified and limited by Hadley v.
Baxendale where the principles enunciated are these:
Where two parties have made a contract which one of them has broken, the
damages which the other party ought to receive in respect of such breach of
contract should be such as may fairly and reasonably be considered either arising
426 Tan Sri Khoo Teck Puat & Anor. v. Plenitude Holdings Sdn. Bhd. [1994] 1 MLRA

naturally, i.e., according to the usual course of things, from such breach of contract
itself, or such as may reasonably be supposed to have been in the contemplation of
both parties, at the time they made the contract, as the probable result of the breach
of it.
Explaining the distinction between the first and the second rules in Hadley v.
Baxendale , Lord Wright in Monarch S.S. Co. v. Karlshamns Oljefabriker [1949] AC
196, said this (at p. 221):
The distinction there drawn (viz in Hadley v. Baxendale ) is between damages arising
naturally (which means in the normal course of things) and cases where there were
special and extraordinary circumstances beyond the reasonable prevision of the
parties. In the latter case it is laid down that the special facts must be
communicated by and between the parties.
The distinction between these types is usually described in English Law as that
between general and special damages.
It goes without saying, that if the effect of allowing a plaintiff's claim, is to put him
in a better position than he would have been if there had been no breach, then this
would be contrary to the principles enunciated in the cases cited above. This means
that any profit which he stands to make because of the breach, must be deducted
from the damages awarded - a point aptly put by Mr. Hugh Beale in his most
useful book on "Remedies for Breach of Contract" as follows:
The Basis of Assessment
In outline, the victim of a breach of contract is entitled to compensation for any
loss which results from the breach and which is neither too 'remote', or unlikely, a
consequence nor one which he could have avoided by taking reasonable steps in
'mitigation'. He is to be placed in the same situation as if the contract had been
performed' ( Robinson v. Harman [1848] 1 Ex. 850, 855). This involves considering
his overall position. The damages should compensate him for the performance
which he should have received but has not, with deductions for any savings he has
or should have made through not having to perform himself or by other action,
such as entering a substitute transaction with someone else. Any profit which he is
only able to make because of the breach of contract should also be deducted.
These deductions are made in accordance with the general principle that an award
of damages should not put the victim in a better position than if the contract had
been performed; he should recover no more than he has lost.
Punitive or exemplary damages might be awarded where a breach of contract was
also a tort, but in English law they are not awarded for a mere breach of contract (
Perera v. Vandiyar [1953] 1 WLR 672).
(Emphasis provided)
Also relevant in this context, is what Ackner LJ (as he then was) said in the Court
of Appeal case of C. & P. Haulage v. Middleton. [1983] 1 WLR 1461 at
[1994] 1 MLRA Tan Sri Khoo Teck Puat & Anor. v. Plenitude Holdings Sdn. Bhd. 427

pp.1466-1468):
[Middleton] is not claiming for the loss of his bargain, which would involve being
put in the position that he would have been in if the contract had been performed.
He is not asking to be put in that position. He is asking to be put in the position he
would have been in if the contract had never been made at all. If the contract had
never been made at all, then he would not have incurred these expenses, and that is
the essential approach he adopts in mounting this claim; because if the right
approach is that he should be put in the position in which he would have been had
the contract
been performed, then it follows that he suffered no damage. He lost his entitlement
to a further ten weeks of occupation after 5 October, and during that period he
involved himself in no loss of profit because he found other accommodation, and
in no increased expense - in fact the contrary - because he returned immediately to
his own garage, thereby saving whatever would have been the agreed figure which
he would have to have paid the plaintiffs ... [1467] It is not the function of the
Courts where there is a breach of contract knowingly, as this would be the case, to
put a plaintiff in a better financial position then if the contract had been properly
performed. In this case the defendant ... would indeed be in a better position
because, as I have already indicated, had the contract been lawfully determined as
it would have been in the middle of December, there would have been no question
of his recovering these expenses ... I do not consider that a plaintiff is entitled in an
action for damages for breach of contract to ask to be put in the position in which
he would have been if the contract had never been made.
Accordingly, save in the respect to which I have already made reference, namely
that there should be judgment for the defendant for nominal damages of 24310, I
would dismiss the appeal.
It is with the above principles in mind that we turn to consider the individual heads
of award made by the Judge.
The Award of RM13,500,000 for Loss of Profits:
In making this award the Judge said this (at [1994] 1 MLRH 420; [1994] 2 MLJ
273; [1994] 2 CLJ 796; [1994] 2 AMR 1050 at p.281):
In the instant case, the facts are somewhat similar to the Bank Bumiputra case. The
defendants knew at the time the contract was executed that if there was a breach of
contract and they did not honour their undertakings, the plaintiffs would suffer a
loss, as the land had been purchased with a view to developing it into a housing
project.
The loss suffered by the plaintiffs was a natural and probable result of the
defendant's breach of the contract.
More particularly, in giving his reasons for making this award the Judge said this
([1994] 2 MLJ 273 at pp.279-280):
428 Tan Sri Khoo Teck Puat & Anor. v. Plenitude Holdings Sdn. Bhd. [1994] 1 MLRA

Sometime in the middle of 1987, the plaintiffs and the defendants after some
discussions agreed to implement a joint venture scheme between the respective
parties.
The plaintiffs would hold a 10% share in that scheme and the defendants would
hold a 90% share.
As the plaintiffs had a 10% share in the joint development scheme with the
defendants, the profits derived from the scheme would accordingly be 10% of the
total gross profit before tax. PW1 stated that the total sales revenue projected by
him was RM645,935,000. The total expenditure projected was RM421,625,000,
and the gross profit before tax would amount to RM224,300,000.
The plaintiffs' share of profit would amount to 10% x RM224,300,000 or
RM22,430,000.
The defendants called a witness Lim Wooi Hwee (DW.1). She stated that she was
a Certified Public Accountant and was attached to a firm of accountants since
1979.
She had prepared a report in regard to her findings which was marked as D4. In
her evidence and her report, she stated that if the project had commenced in 1988,
the profit of the plaintiffs would be RM15,797,000, and this would be the loss of
profit of the plaintiffs.
And, later he concluded ([1994] 2 MLJ 273 at p.282):
There have been two different computations in regard to the loss of profits made by
PW.1 and DW.l. Taking all factors into consideration I take an average of the two
figures relating to the loss of profits on the basis that the project started in 1987/88.
The average of the two figures relating to the loss of profits amounts to
RM19,113,500. However, there could be adverse conditions affecting the
anticipated profits and a deduction of a reasonable percentage of 30% should be
applied to the sum which is thereby reduced to a round figure of RM13.5 million. I
accordingly award the plaintiffs a sum of RM13.5 million as damages for loss of
profits.
With respect, the Judge appears to have assumed, as did leading Counsel for the
purchaser before us, that, it was admitted by the Vendor's expert Miss Lim (DW.1)
that the purchaser had suffered a loss of profits, amounting to RM15.8 million. In
truth, Miss Lim made no admission of the sort.
On the contrary, the gist of Miss Lim's testimony was that the estimated share of
the purchaser's profits - had development commenced in 1988, when completion
should have, but did not take place - would have been a sum in the region of
RM15.8 million before tax, whereas, had construction commenced in 1993, when
it secured title to the land, belatedly, due to the recalcitrance of the Vendors and
the consequent litigation - it would have made a substantially larger profit, to wit,
RM23.2 million before tax.
[1994] 1 MLRA Tan Sri Khoo Teck Puat & Anor. v. Plenitude Holdings Sdn. Bhd. 429

In other words, according to Miss Lim, far from the purchaser suffering any loss of
profits as a result of the delay, had it commenced the project in 1993, it would most
probably have made a substantial increase in profit of RM7.4 million.
To revert to the judgment of the Court below, it is a curious fact, that while the
Judge said that he preferred the testimony of the purchaser's own expert Mr. Song,
an accountant in the permanent employment of the purchaser, who was very far
from being a disinterested witness, to that of the Vendor's expert Miss Lim, an
accountant in the employment of M/s. Coopers & Lybrand, a well known firm of
Chartered Accountants, on account of the former's superior experience in the
construction field, yet when it came to the crunch, his approach was to strike a
compromise, that is to say, he took an average of the two estimates of the two
experts as to profits likely to have accrued to the purchaser, had the project
commenced in 1988. In other words, he gave precisely the same weight to the
testimony of these two experts. He concluded by making a deduction of 30% to
allow for contingencies.
The next point to note is the different approaches adopted by the rival experts in
arriving at their conclusions as to the measure of damages.
In particular, Mr. Song's approach was to confine his estimate to the profits which
he considered would have accrued to the purchaser had the project commenced in
1988, studiously ignoring altogether, the amount of profits which would have
accrued to the purchaser, had the project commenced in 1993 - the year in which
the purchaser had secured title to the Land - and this, notwithstanding
cross-examination on that omission.
On the other hand, Miss Lim's approach was to make a comparison between the
profits which would have accrued to the purchaser had the project commenced in
those years, ending with the uncontradicted conclusion that the purchaser's profits
would have been more by RM7.4 million (RM23.2 million - RM15.8 million) had
the project commenced at the later stage.
The feasibility of the purchaser having commenced the development in 1993, was
manifestly evident from the following admissions made by Mr. Song, under
cross-examination at the trial (held in 1993); namely, that "the land is still available
for the purpose of a housing project." And also, "The land was purchased by the
plaintiffs for a housing scheme. The name of the scheme was referred to as Pekan
Yayasan in 1987 ... If conditions are right, we intend to develop the land".
Considering the area and location of the land - approximately 1,000 acres and just
8 miles from the City centre of Johor Bahru there is more than a ring of truth in
these admissions. There was also uncontradicted evidence in the shape of a
Valuation Report dated 23 July 1993, by the Vendor's Quantity Surveyor Mr. K.
Parampathy (DW.2), showing that the land was ripe for housing development in
September of 1987. The Agreement, it will be recalled, was dated 20 August 1984.
In his report, Mr. K. Parampathy had stated that:
430 Tan Sri Khoo Teck Puat & Anor. v. Plenitude Holdings Sdn. Bhd. [1994] 1 MLRA

(1) the first stage "approval-in-principle" for a housing scheme had been secured
from the State Authority on 16 December 1984. (2) second stage approval,
supported by layout and technical plans, had been secured from the State
Authority on 17 August 1985, and
(3) the final approval for the layout plan had been secured from Jabatan Perancang
Bandar & Desa, Johor, on 21 November 1987.
Furthermore, the Judge had conceded that the comparison approach adopted by
Miss Lim was "attractive", but criticised her computation for 1993, because she
had not taken into account the probable increase in the cost of building materials.
But, the Judge had overlooked to note, that as against that, Miss Lim did not take
into account, the probable increase in the price of dwelling houses in 1993.
The Judge also criticised the comparison approach adopted by Miss Lim on the
ground "that no consideration was given to the fact that between 1993 and 2001
there could be many fluctuating market conditions that may well render the project
a failure financially." ([1994] 2 MLJ 273 at p.281).
But, in this mortal world virtually anything is possible, and the correct approach
for the Judge to have adopted when assessing damages, which depends upon a
view of what will happen in the future, is that the Court must make an estimate as
to what are the chances that a particular thing will happen, and whether they are
more or less than even. In this, we are supported by the following passage in the
judgment of Lord Diplock in Mallett v. McMongale [1970] AC 166 (at p.176):
The role of the Court in making an assessment of damages which depends upon its
view as to what will be and what would have been is to be contrasted with its
ordinary function in civil actions of determining what was. In determining what
did happen in the past a Court decides on the balance of probabilities. Anything
that is more probable than not it treats as certain.
But in assessing damages which depend upon its view as to what will happen in the
future or would have happened in the future if something had not happened in the
past, the Court must make an estimate as to what are the chances that a particular
thing will or would have happened and reflect those chances, whether they are
more or less than even, in the amount of damages which it awards.
Had the Judge adopted this approach, as he undoubtedly should have - looking
ahead over a period of some eight years commencing in 1993, with the increase in
the cost of construction, both in terms of material and labour, not forgetting that
land is always deemed in law to have a special value and is in the nature of things,
absolutely limited, given continuing political stability, the chances of the price of
houses increasing was, part of "the ordinary course of things", and so, in the words
of Lord Diplock, "more than even". Such an approach would have supported Miss
Lim's projections.
Indeed, there is authority to show that the comparison approach adopted byMiss
[1994] 1 MLRA Tan Sri Khoo Teck Puat & Anor. v. Plenitude Holdings Sdn. Bhd. 431

Lim has much to be said for it. We refer to the case of Cochrane Decorators Ltd.
v.Sarabandi , [1983] 133 NLJ 588, where on the facts in a sale of land situation, a
delay in completion had led to a reduction of profit, and it was held that the
purchaser was entitled to recover. The summary of the case reported in the New
Law Journal dated 17 June 1983 at p.558 reads as follows:
Sale of Land: Delay in Completion
In September 1979, a property owned by S was advertised for sale for 243150,000
as being suitable for conversion. It was subsequently sold to C Ltd for 243142,500.
Completion was to be on 2 January 1980, but, in fact, was delayed until 10
November 1980. C Ltd had planned to make a profit of 243100,000 on the
conversion of the property into flats, but on account of the delay in completion,
they made a loss of 24325,000 for building costs had increased considerably and
the one-time buoyant property market was going into a decline. C Ltd now
claimed damages from S.
It was held (Judge Stabb) that damages of 243112,000 would be awarded.
Damages for delay in completion was a perfectly permissible cause of action. S
knew that the purchase of the property was made by C Ltd for the purpose of,
converting it into flats. It was within the contemplation of the parties that the
conversion was to be carried out for profit.
Any breach of contract which led to a reduction of that profit would be damages
which would properly be termed as having been in the contemplation of the parties
at the time of the making of the contract. ( Cottrill v. Steyning and Littlehampton
Building Society [1966] 2 AER 295, and Raineri v. Miles (Wiejski and another, third
parties) [1980] 2 AER 145, applied.)
It is true that in the Cochrane case, the purchaser was held entitled to recover for
loss of profits due to delay in completion. But we fail to see any distinction in
principle to prevent the same approach being adopted to demonstrate that the
delay in completion had resulted not in a reduction but an increase in profits,
which might go to show that the purchaser had in fact suffered no loss by reason of
the breach of the Agreement and, indeed, would be in a better position than if the
Agreement had been performed. In this, we are supported by the passages in the
judgment of Ackner L.J. in C & P. Haulage v. Middleton , quoted above.
Even more important than the evaluation of the testimony of Mr. Song and Miss
Lim, was the testimony of the Vendor's Chartered Surveyor Mr. K. Parampathy
who gave uncontradicted testimony that the land was worth RM119,560,000 at the
time of the trial, that is to say in 1993. When this fact was put to Mr. Song by
Counsel for the Vendor, he did not deny it but merely said that he did not know.
Considering that the contractual price in this case was just under RM48,000,000, it
is manifestly clear that far from suffering any loss by reason of the delay in the
completion of the sale, the purchaser in this case had received a very substantial
windfall of about RM70 million if, for example, it had sold the land instead of
432 Tan Sri Khoo Teck Puat & Anor. v. Plenitude Holdings Sdn. Bhd. [1994] 1 MLRA

developing it. This sum would, of course be considerably more than the measure of
profits of RM22.4 million estimated by Mr. Song as having been lost by the
purchaser. In this context, we fail to see how the Notice of Assessment of the
Assistant Collector of Stamp Duty, being Ex P5, could in any way assist the
purchaser since it merely states that the market value of the land had been
estimated by the Valuation Department of Inland Revenue Department to be
RM67 million at the date of Agreement which was dated 20 August 84, for the
purposes of stamp duty.
Nevertheless, it was submitted by Counsel for the purchaser that the fact that the
price of the land had appreciated substantially should be ignored as being irrelevant
in the assessment of damages. In other words, the effect of Counsel's submission is
that events after the breach should never be considered when the Court assesses the
quantum of damages. With respect, this view is not shared by the High Court of
Australia for in Wenham v. Ella [1972] 127 CLR 454, Gibbs J. said (at pp. 473 to
474):
The general principle that damages are normally measured by reference to the
circumstances at the date of the breach of contract does not mean that events that
have occurred after that date may never be considered. The appellants contention
on this point, if correct, would mean that evidence could never be given of the
amount of profits lost as the result of a breach and that the every-day practice of
receiving evidence as to the damage that had in fact flowed from a breach and as to
steps that were or could have been taken to mitigate a loss is erroneous.
However, the evidence as to the income in fact lost by the breach was in my
opinion plainly admissible ...
Moreover, Counsel for the purchaser's submission regarding this part of the case, is
flatly contradicted by Professor Hugh Beale who has pointed out in his book
"Remedies for Breach of Contract", "Any profit which he is only able to make
because of the breach of contract should also be deducted". (Emphasis provided).
(See, the passage quoted in full, supra ). And, similarly, as Ackner L.J. has pointed
out in C & P Haulage v. Middleton ( ibid ) at p.1467:
It is not the function of the Courts where there is a breach of contract knowingly,..
to put the plaintiff in a better financial position than if the contract had been
properly performed.
It was further submitted by Counsel for the purchaser that the purchaser required
the Land not for sale but for development. But this contention overlooks the point
that the purchaser was a developer which required the land to develop for profit in
which event it would have been sold.
Cottrill v. Steyning & Littlehampton Building Society [1966] 1 WLR 753 provides an
illustration of recovery for loss of profits eventually, where the contract was for sale
of land to a purchaser who carried on the business of development and to the
knowledge of the vendor required the land to develop for profit but there had been
[1994] 1 MLRA Tan Sri Khoo Teck Puat & Anor. v. Plenitude Holdings Sdn. Bhd. 433

a failure to complete and the vendor in breach of contract had conveyed the land to
a third party.
In assessing damages for loss of profits, Elwes J. took into consideration the
market value of the land at the date of the proposed development less expenses
attributable to the carrying out of the development. The following passages in his
judgment show his reasoning:
It is clear, in my opinion, that if the defendants are shown to have known that the
plaintiff intended to develop the land for profit special circumstances are
established which entitle the plaintiff to have the damages assessed by reference to
the profits which both parties contemplated he would make.
And, in the final para he concluded as follows:
I accordingly direct, on the basis of reasonable probability, that the damages
should be assessed on the footing that planning permission would have been
granted six months after 10 May 1957, the date of the plaintiff's return from
abroad, and that the required modifications of the treepreservation order would
have been made; that the plaintiff would have been able to proceed with his plan to
turn the hotel into flats and build six dwelling houses, and that such building and
alteration would have been completed within 18 months of May 10. The market
value of the property is to be ascertained accordingly and the damages assessed at
that figure less the expenses attributable to the building work and all matters
ancillary thereto.
There will be judgement for the plaintiff.
Similarly, here, assuming the Vendor had in breach of contract sold the land to a
third party the purchaser's loss would have been measured by the principles
enunciated in Hadley v. Baxendale . Therefore, in such a situation, since the Vendor
knew at the time of the Agreement of the purchaser's intention to develop the land
for profit, it would be liable to indemnify the purchaser for loss of those profits it
would have made in 1988 as was the case in Cottrill's case.
But, unlike Cottrill's case, under the order of the Judge not only has the purchaser
got the land and also the profits which the purchaser would have made had sales
taken place in 1988 but in addition to that, after final conversion and subdivision,
the purchaser would be making the sales at current rates. It follows that the value
of the land in 1993 after final conversion and subdivision estimated by Mr. K.
Parampathy at RM119,560,000 would be relevant as this is tied to the price of sales
at current rates.
On the other hand, if the purchaser had stood to make more profits in 1988 as
compared to 1993, then clearly it would be entitled to be reimbursed by the Vendor
in respect of the difference since this would represent its loss. By the same token, in
a converse situation, if the purchaser stands to make more profits from sales in
1993, reason and justice point to the conclusion that this too should be taken into
434 Tan Sri Khoo Teck Puat & Anor. v. Plenitude Holdings Sdn. Bhd. [1994] 1 MLRA

account and the Vendor given credit for it. Therefore, the value of the land in 1993
would also be relevant, as this, too, would be tied to the price of sales at current
rates.
In considering the overall position of the purchaser, the Court should not wear
blinkers and ignore the fact that the purchaser stands to make a substantial profit
on the price increase of the land alone only because of the breach of contract,
which should therefore be deducted from the loss of profits. Not to do so would be
to put the purchaser in a better position than it would have been if the contract had
been performed in 1988. Also, to countenance such a claim by the purchaser would
amount to countenancing a claim for double recovery.
In short, upon the evidence, the purchaser had not proved its claim for loss of
profits.
It follows that the award for loss of profits under this head must be, and is, set
aside.
The awards of RM31,000 and RM31,783 by way of reimbursement of fees for the Engineer
and the Surveyor, respectively, each of which included an element of service tax.
The basis of the purchaser's claim which resulted in these two awards, was that
they represented costs thrown away, that is to say, wasted expenses. But when it is
remembered that the purchaser had also claimed for loss of profits and that now
that it has secured title to the land, and most probably will be proceeding to
develop the land for profit, these two awards represent expenses which the
purchaser would have incurred anyway. In other words, these two awards do not
represent wasted expenses or costs thrown away.
The object of damages is to restore a plaintiff to the position he would have been in
but for the wrong. When, as here, the purchaser has claimed loss of profits for
anticipated sales, it would have to be assumed that these two awards are based on
expenses which would have been incurred anyway. This point was made in
Cullinane v. British Rema Manufacturing Co. Ltd.[1954] 1 QB 292 wherein it was held
that a plaintiff could not claim both his capital loss, i.e. expenditure incurred, as
well as his loss of gross profits. The plaintiff was required to choose between his
two claims; in other words, he would have to elect between being put back into the
position he would have been if the contract had not been made, that is to say
recover his net outlay or claim what he would have received if the contract had
been made, that is to say, recover his gross profits on lost sales.
It is also worth mentioning that these awards included an element of sales tax,
although at the material time, the law under which sales tax for professional
services rendered had not yet come into force.
The Judge should therefore have disallowed both these claims for the reasons
stated, and we would accordingly set aside these awards.
The Award of RM1,756,772.91 being Loss of Interest on the 10% deposit paid under the
[1994] 1 MLRA Tan Sri Khoo Teck Puat & Anor. v. Plenitude Holdings Sdn. Bhd. 435

Agreement
The Judge considered that the Vendor "by wrongfully terminating the Agreement
must in all fairness compensate the plaintiff".
With respect, there were concurrent findings both by the Judge and the Supreme
Court that the Agreement was never legally terminated. Both Courts went on to
hold that the purchaser was entitled to specific performance of the Agreement and,
consequent thereto, the purchaser had obtained title to the Land, although
belatedly. At all material times, the purchaser had treated the Agreement as being
alive and on foot and was vindicated by both Courts with the result that the deposit
became the property of the Vendor, the purchaser having no right to the use of the
money.
It follows that the award under this head of claim was, with respect, quite
untenable - a point, which incidentally, had been conceded by Counsel for the
purchaser - and must be, and is, set aside.
The Award of RM867,969 for Loss of Cash Flow Investment.
The rationale or basis of this claim is that the purchaser's surplus cash could be
invested in short term money market securities.
The Judge made this award by averaging the sum of RM325,000 quantified by the
Vendor's expert Miss Lim and the sum of RM1,410,900 quantified by the
purchaser's expert Mr. Song.
It was submitted by Counsel for the purchaser, and we agree, that this was not the
correct approach for the Judge to have adopted.
When, as here, there was a conflict of expert testimony, the correct approach for
the Judge to have adopted was not to cut the Gordion knot, as it were, by
averaging out the two quantifications aforesaid, but by analysing the reasoning of
the rival experts, and then concluding by accepting the version of one over the
other.
We have already referred to the fact that the anticipated profits of the project had it
commenced in 1993, would have been substantially higher than if the project had
commenced in 1988, so that on the basis of Miss Lim's testimony, the sum of
RM325,000 would have been offset by the higher profits.
But, more to the point, the idea underlying this head of claim was the concept of
the Joint Venture Scheme with the purchaser and the Vendor, having a 10% and a
90%, equity therein, respectively. However, as events turned out, the concept of a
Joint Venture Scheme never materialised, since the purchaser did, indeed, secure
title to the land. If the concept of a Joint Venture Scheme failed then this award
must necessarily fail.
We would accordingly set aside this award as being based on a misconception.
436 Tan Sri Khoo Teck Puat & Anor. v. Plenitude Holdings Sdn. Bhd. [1994] 1 MLRA

The Purchaser's Cross Appeal

In this Cross Appeal, Counsel for the purchaser had contended that when assessing
damages for loss of profits in the manner he had done the Judge should not have
made a deduction of 30% to allow for contingencies. A more appropriate
deduction - so he said - would have been one of 5% or 10%, in which case., the
resulting sum would have been at least RM19 million.
In view of our conclusions in the Principal Appeal on the award for loss of profits
made by the Judge, the Cross Appeal must fail and is accordingly dismissed.
In Retrospect
Stepping aside and taking a second hard look at this case and considering the
overall position of the parties, we would summarise, the probable scenarios past,
present and future as follows.
Broadly stated, the question for decision before us, is whether the basis upon which
the Judge had assessed the damages was right. In considering this question it
would be essential to keep in the forefront of our minds the guidance provided by
Lord Diplock in Mallett v. McMonagle ( supra ) as to the role of the Court in making
an assessment of damages, quoted above.
First of all, it is necessary to consider what might have happened if Tan Sri Khoo
and the Vendor had punctually performed their obligations under the Loan
Undertaking provided for in the Agreement. In such a situation, the loan would
have been arranged to enable the purchaser to complete the purchase, and upon
payment of the balance of the purchase price to the Vendor, the Land would have
been transferred to the purchaser in 1988, whereupon, the purchaser would have
been in a position to commence development in the same year or the next.
Secondly, and in the alternative, what would have happened if no loan had been
arranged by Tan Sri Khoo to enable the purchaser to pay the balance of the
purchase price and to complete the purchase?
In such a situation, assuming compliance by the Vendor with the Joint Venture
Undertaking, which was an alternative undertaking, as provided under the
Agreement, instead of securing title to the land, the purchaser would have secured
a 10% equity in a joint venture company to which the land would have been
transferred, while the Vendor would have had a 90% equity therein. Presumably,
the Joint Venture Company would then have commenced development, and the
purchaser would have received 10% of the profits from the sales whilst the Vendor
would have received 90% thereof. The point of central importance in this scenario,
would be that the purchaser would not be receiving both the land and profits.
Thirdly, in the events which transpired, what did happen, however, was that Tan
Sri Khoo and the Vendor did not honour either undertaking but the purchaser
succeeded in forcing the hand of the recalcitrant Vendor by way of a decree for
specific performance, granted by the Judge, and affirmed on appeal to the Supreme
[1994] 1 MLRA Tan Sri Khoo Teck Puat & Anor. v. Plenitude Holdings Sdn. Bhd. 437

Court. The purchaser then went on, suo motu , to raise the balance of the purchase
price on 31 December 1992 and to secure title to the land on 19 March 1993, when
the transfer had been registered. By then, according to the uncontradicted
testimony of the Vendor's Chartered Surveyor Mr. K. Parampathy, the fair market
value of the land had shot up to approximately RM120,000,000.
At the end of the day, the purchaser got the land worth approximately
RM120,000,000, for which they had paid only RM47,939,958, and in addition,
the Judge had awarded it: (a) a sum of RM13,500,000 for loss of profits arising
from anticipated sales of buildings on the Land, (b) a sum of RM867,969 being loss
of cash flow investments, (c) sums of RM31,000 and RM31,783.50, for wrongful
termination of the Agreement, and (d) a sum of RM1,756,772.91 by way of interest
on the deposit which had been paid by the purchaser to the Vendor under the
Agreement. And, with respect, what was overlooked by the Judge was that the
purchaser would now be in a position to make even more profits from sales at
current rates.
In the result, the purchaser was placed in a far better position than it would have
been in if there had been in due compliance by the Vendor and Tan Sri Khoo, with
their respective obligations, in 1988. This would be contrary to the fundamental
principle of the role of the Court when making an assessment of damages, namely,
to ensure that the victim of a breach of contract is "to be placed in the same
situation as if the contract had been performed". (See Robinson v. Harman (54 ER
363 at p.365).
Unfortunately, nowhere in his judgment did the Judge direct his attention to the
various scenarios outlined above, with the result that he did not consider the
overall position of the parties as he undoubtedly should have.
Conclusion
We need hardly add that in considering this appeal, and in particular, the grounds
upon which an Appellate Court would be justified in interfering by reassessment of
the damages, we have reminded ourselves of what Greer L.J. had said in Flint v.
Lovell [1935] i KN 354 CA (at p. 360). "This Court", he said:
will be disinclined to reverse the finding of a trial Judge as to the amount of
damages merely because they think that if they had tried the case in the first
instance they would have given a lesser sum. In order to justify reversing the trial
Judge on the question of the amount of damages it will generally be necessary that
this Court should be convinced either that the Judge acted upon some wrong
principle of law, or that the amount awarded was so extremely high or so very
small as to
make it, in the judgment of this Court, an entirely erroneous estimate of the
damage to which the plaintiff is entitled .
In other words, the two situations in which an Appellate Court would be justified
 438 Tan Sri Khoo Teck Puat & Anor. v. Plenitude Holdings Sdn. Bhd. [1994] 1 MLRA

in interfering by reassessment of the damages would be where the trial Judge has
acted on a wrong principle or has made an entirely erroneous estimate of the
damages.
The statement of the law in Flint v. Lovell , quoted above, was followed by the
House of Lords in Davies v. Powell Duffryn Collieries [1942] AC 601 (per Lord
Wright, at pp. 616-617 and per Lord Porter, pp 623-624) and also by the Judicial
Committee of the Privy Council in Nance v. British Columbia Electric Rly. (1951 AC
601, at 613).
For the various reasons adumbrated above, we are compelled to conclude, with
respect, that the basis upon which the Judge had assessed the various awards of
damages, cannot be supported in law, having regard to the particular
circumstances of the present case, and the relevant authorities.
In the result, we would allow this appeal with costs, set aside the judgment of the
Court below and substitute, in lieu thereof, judgment for the purchaser for nominal
damages only of RM10. There will, however, be no order as to costs in the Court
below because of the inconsistent positions taken by Counsel for the Vendor and
Tan Sri Khoo before us as compared to that in the Court below. In particular,
whereas in the Court below, Counsel's primary contention was that some
damages, other than nominal damages, though far less than had been claimed,
ought to be awarded, before us, his primary contention was that only nominal
damages should be awarded.
Deposit paid as security for the costs of the appeal to be refunded to the Vendor.

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