LIA 3015

REMEDIES

FINAL EXAM

MUHAMMAD SYADAD BIN NOR AZMAN

17204109/1
Question 1

The first issue is whether Ivan has any rights and remedies that may be available for him
in the law of remedies.

A breach of contract occurs when a party without lawful reason had failed to perform the
terms of a contract that had been agreed. Some of examplesof breach of contract includes non-
performance or defective or delayed oerfiormance in a contract of service. It is tosay that a right
to rescind a contract occurs when the defaulting party commits a fundamental breach of the
contract. Under the contract act, a breach of contract falls under section 40 of the Contracts Act
whereby it gives the aggrieved party the right to rescind a contract if the defaulting party had
refused to perform or disabled himself from performing his obligation under the contract in its
entirety. It said that the contract does not comes to an end but the aggrieved party has an option
to either rescind the contract or to continue the contract. One instance of a fundamental breach of
contract can be seen in the case of Syarikat Jaya v Star Publications Sdn Bhd where the change
of contract period of sole agency from 3 years to year to year contract where court held that the
defendant by doing so had made an intention to carry out the contract in a way substantially
inconsistent with their continual obligation so as to deprive the plaintiff of substantially the
whole benefit of the contract.

In this case, it is clear that Kem Maju Sdn Bhd had agreed in the first place that theu
would have a contract for three years at RM 350,000 per annum and the initial payments need to
be made on the 1st of February 2020, subsequently, on 25th January 2020, kewm Maju had
informed Ivan that the hirer wanted to alter the leasing agreement with a year-toyear lease
instead of a three year term. This had the consequence of Kem Maju Sdb Bhd to breach the first
contract with Ivan as the change of the term amounts to a substantially inconsistent with their
continual obligation an therefore had deprived Ivan to the whole benefit of the contract. In this
instance, Ivan had a right to either rescind or continue the contract. It is the right granted to him
because of the breach and therefore this is his first right for the breach. Although this would be
the case, it seems that the contract is affirmed as the contract was continued when Kem Maju still
took possession of the cars.

In conclusion, Ivan has the right to tecind the contract in the first place for the
fundamental breach of the contract by Kem Maju Sdn Bhd.
 Damages can be defined as sum of money awarded to compensate for the loss suffered by
the plaintiff upon defendants breach of contract and it is compensatory in nature Section 74 of
the CA shows the measure of damages that can be made by the aggrieved party towards the
defaulting party. It includes when a contract that had been broken in the natural course of the
breach and such compensation is not to be given for any remote and indirect loss or damage
sustained by the reason of breach. Assessment of damages included in the case of Tan Sri Khoo
Teck Puat & Anor v Plenitude Holdings Sdn Bhd where the federal court held that the general
principle is to place a party who has sustained a loss by breach, in the same situation as if the
contract had been performed. Pecuniary loss mens that expectation interest or loss is the income
which innocent party had expected to obtain out of the contract but was loss due to the breach of
contract. Pecuniary loss also include all financial and material loss sustained due to a breach, its
objective is to protect the innocent party and expectation of onterest and to protect innocent
party’s reliance interest. There are two claims where the claims is an expecatation loss or wasted
expenditure courts have held that the aggrieved party can choose either one and cannot both.

In this instance, Ivan, who had incurred several expenses to buy two new Toyota
Vellfires for RM 300,000 eachfor the expectation that hirer would sign a leasing agreement. In
this case, he also pauinted the cars in accordance to the hirers wishes with the company colors
and logos which cost him RM25,000, because of the breach of contract earlier, Ivan has the right
to claim for pecuniary losses under damages where he can claim of expectation loss. Because of
the breach, Ivan did not have sufficient funds to pay his loan facilities for the 2 new Vellfires
which he had bought for the leasing agreement.

In conclusion, Ivan has the right to claiom for pecuniary losses that had been incurred by
him because of the leasing agreement.

In damages there are three types of damages that are general damages, specific damages,
nominal damages, punitive damages and aggravated damages. In general damages it is when the
court agrees to give damages where it is resulted from the infringement of a legal right or duty.
We look at the remoteness of damages when assessing damages as damages that are too remote
is not the liability of the defendant or the defaulting party. In this casewe look in the rule of
Hadley v Baxendale where the test is given where the fact is that the plaintiffs mill stopped
working and the denfendant hired carriers to send the broken crankshaft, the defendant knew that
they had to carry the broken crankshaft but did not know that the mill cannot be used without it,
the delivery was delayed and the mill was inoperable thus plaintiff claimed loss of profit. The
court held that the loss of profit was too remote and defendants are not liable. The two limbs
presented are where the first limb is that the loss suffered arise from natural course of the
contract and the second limb are reasonable contemplation. The position of remoteness in
Malaysia is enshrined in section 74(1) and 74(2) of the CA where it is quite similar to Hadley v
Baxendale case. this can be seen in the case of Bee Chuan Rubber Factory Sdn Bhd where the
appellants entered into contract to sell land and to build house for respondents. In breach of
contract, appellants delayed completion of contract and both pareties accepted this delay. Later,
respondents give only a month to appellants to complete the contract through letter dated august
21 1975. Respondents not given delivery of the house. The court held that damages is given to
the respondents for every month from September 21 1970 to April 3rd 1975. This is the first limb
of the case, the second limb can be seen in the case of Tham Cheow Toh v Association Metal
Smelters where there was a breach of contract when appellant failed to supply furnace at the
requisite temperature. Respondents was awarded damages by court for loss of profits. Appellant
already had knowledge they were required to deliver a furnace which would produce 2600
degrees Fahrenheit within 45 days. They are awareof the urgency of the matter but still breached.

In this case, the contract was breached by Kem Maju Sdn Bhd because of the default
payment of the contract. This means that the default arise of natural course of the contract and
breach thus the first limb has been observed. The second limb however looks ionto the
contemplation of both of the parties. In this case, the loss is of the non payment of the fees which
has been interacted by both of the parties where the payment would be meade annually for three
years. The defaulting party (the hirer) knows of this matter and thus the damages that had been
incurred is not too remote thus Ivan has the right to apply for general damages that is available
under the law of remedies.

In assessing also in damages, there are matters that needs attention by the innocent party
where it his duty to mitigate any loss that can be mitigated. Innocent party cannot seek to recover
losses which he could of avoided by taking reasonable steps possible. This can be seen in the
case of Kebatasan Timber Extraction Co v Chong Fah Shing where it was held that the
respondent had a duty to take reasonable steps to mitigate its loss. Instead of expending money to
purchase new timber, all that was required of the respondent was to arrange to move the logs to
the saw-mill. This then comes to the rules of mitigation where avoidable losses and avoided
losses will not be recoverable but in cases where money had been spent to mitigate losses is
recoverable. This can be seen in the case of Hoffberger v Ascot Internatiuonal Bloodstock
Bureau Ltd where the defendfants breached the contract to buy a horse, the plaintiffkept the
horse for an entire year in hopes of selling it at a higher price. However, after a year, the horse
was sold at a much lower price and thus the court awarded damages to the plaintiff in having
kept the horse for a year. Other case can be seen in the case of Malaysia Rubber Development
Corp Bhd v Glove Seal Sdn Bhd where the court held that in cases involving sale of goods, the
innocent party should act immediately upon the breach, and buy or sell in the market, if there is
an available market.

In this case, in order to rent out the 5 Toyota Vellfires to a third party, Ivan carried out
repairs amonting to RM 100,000 ehcih also includes maintenance, repainting, and servicing and
he only managed to rent the 2 newly bought purchase vellfires to Sino Sdn Bhd for a two year
term leasing agreement. In this instance, because of the breach, Ivan had taken back all the
vehicles under clause 8 of his agreement with Kem Maju Sdn Bhd. Ivan had also incurred
expenses to re-modified and maintain the cars that was taken to lease it back to another
customers. Following the decisions of the decided case, Ivan is entitled for the compensation for
the repairs that had been amounted from Kem Maju Sdn Bhd for the cost of the repairs that is
RM 100,000 for he had made the modifications to lease the car into the market so that he can get
back his losses.

The next issue is whether Kem Maju would likely to succeed in their action for breach of
contract and specific performance against Ivan

In the case of breach of contract, Section 40 of the contracts act govern the matters of
breach. Where fundamental breach is concerned we look at the facts of the case. where there is
non payment of the contract also considered as fundamental breach of the contract

In this case, Kem Maju Sdn Bhd would likely fail in their attempt for an action under the
breach of contract as their defaulting payment and also the change of the contract that was made
between them and Ivan can be constituted as fundamental breach under section 40 of the CA.
The claim would also fail as clause 8 specifically says that in the event of default being made
inany yearly payment for 14 days or more after the due date, the owner may take possession of
the car, in which Kem Maju Sdn Bhd had defaulted their payments on 1 st February 2021 and 14
February 2021, which follows the clause laid down.

Specific performance is an equitable remedy in which enforces the defendants positive

contractual obligations. This means that it forces the defendant to do what he had promised to do.
In Mawar Awal (M) Sdn Bhd v Kepong Management Sdn Bhd & Anor the learned judged
examine the following conditions which must be fulfilled to invoke the remedy of specific
performance that is the first is the contract must be valid in form, it is made between competent
parties and it is unobjectionable in its nature and circumstances. The law of specific performance
in Malaysia is enshrined in Section 11 to 29 of the Special Relief Act 1950. Although there are
specific act, it does not mean that if a contract falls within section 11 that the court must grant
specific performance. It is said that specific performance is awarded according to discretion of
the court because it an equitable remedy. Courts had the discretion to give out specific
performance under Section 21 of the SRA the courts however will look into other considerations
when exercising their discretiuon that includes unreasonable conduct, this can be seen in the case
of Ganam v Somoo where Seah FHJ made the following finding where “Although there was
evidence that the D was willing & ready to complete the sale but it must be remembered that D
would only do so on his own terms based on the purchase price of RM75,000 and not on the
agreed purchase price of RM90,000. Nowhere did D plead nor did he say in evidence that if the
court should hold the contract price to be RM90,000 then he would be ready & willing to pay the
balance as fixed by the court.” He went on to observe: “Although, so far as the Act [Indian
Specific Relief Act 1877 which is in pari materia with our SRA 1950] is concerned, there is no
express statement that the averment of readiness and willingness in an Indian suit for specific
performance as necessary as it always was in England [s24(b) and our s23(b) is the nearest ] it
seems invariably to have been recognised, and on principle, their Lordships think rightly, that the
Indian and English requirements in this matter are the same…..” unreasonable conduct includes
section 23 of the SRA here it states that specific performance of a contract cannot be enforced in
favour of a person who has become incapable of performing or violates any essential term of a
contract on his part remains to be performed, this is in line with the equitable remedies that “he
who seeks equity must do equity”
 In this case, Kem Maju Sdn Bhd is the one that had defaulted their payments under the
contract thus taking back the vehicles was the right of Ivan, in order for Kem Maju Sdn Vhd to
apply for the specific performance certain matters must need to be looked at first. First is that the
contract must be in valid form. Based on the facts of the case, although there was an alteration
that was not agreed in the first place, the contract still continues as Kem Maju Sdn Bhd still took
possession of the vehicles making it that the contract still continues therefore there is a valid
contract, the second condition is that the contract was made between competent parties. In this
case both Ivan and Kem Maju is seen as competent as Ivan has a leasing company and Kem
Maju is a company by itself is competent to contract. Next is it is unobjectionable in its nature
and circumstances. In this case, the contract is considered to be objectionable as there was no
completion of payment that was met by Kem Maju Sdn Bhd. In order for specific performance to
be allowed the courts will look at the contract and based on Section 23, Kem Maju Sdn Bhd will
not be successful in their attempt for specific performance.

In conclusion, Kem Maju Sdn Bhd would likey to fail in their actions for both breach of
contract and also their application for specific performance.