Cubic Electronics v Mars Telecommunications – Revisited or Misunderstood?

​In the recent decision of Macvilla Sdn Bhd v Mervyn Peter Guan Yin Hui and Another, the Court of Appeal revisited the principles on forfeiture of deposits and the treatment of liquidated damages clauses in contracts that had been adopted and discussed by the Federal Court in Cubic Electronics v Mars Telecommunications in 2018.

​I.         INTRODUCTION
​
The Federal Court decision in Cubic Electronics v Mars Telecommunications[1] was generally welcomed by members of the legal fraternity as well as the construction and related sectors in Malaysia as being a commercially sensible and much needed restatement of the law on damages clauses. Prior to the said Federal Court decision, the use of damages clauses in most contracts was severely limited by Malaysian law pursuant to Section 75 of the Contracts Act 1950 (‘S.75 CA’). The Federal Court in Cubic Electronics held that S.75 CA allows the use of damages clauses unless they are proven to be penalty clauses and, inter alia, that S.75 CA would apply to the forfeiture of deposits. This landmark decision generated a great deal of interest from academicians as well as practitioners and has been cited with approval in a number of High Court decisions as well as a Court of Appeal decision.[2] However, the Court of Appeal subsequently handed down a rather unexpected decision in the case of Macvilla Sdn Bhd v Mervyn Peter Guan Yin Hui and Another (‘Macvilla’).[3] The Macvilla judgement appears to be critical of the approach taken by the Federal Court in Cubic Electronics.[4] While most of its statements on the law are obiter, the decision may well generate some confusion with regard to the clear restatement of the law on S.75 CA by the apex court.    

​II.        MACVILLA SDN BHD V MERVYN PETER GUAN YIN HUI AND ANOTHER

Facts: The Appellant is a developer for a housing project known as ‘Vision Residence’ (‘the Project’) and the Appeal is related to the award of the Tribunal of Homebuyers Claims, (‘the 2nd Respondent’) established under the Housing Development (Control and Licensing) Act 1966. On 22.3.2017, a purchaser (‘the 1st Respondent’) filed a RM 38,732.06 claim before the 2nd respondent for liquidated ascertained damages (‘LAD’) for late delivery of vacant possession of a unit of condominium in the Project, known as parcel no. B-5-2 (‘the Property’), purchased vide a sale and purchase agreement dated 01.08.2013 (‘the statutory SPA’). Although the 1st Respondent did not file any documents to support his claim, the 2nd Respondent had on 25.04.2017 allowed the claim and had given an award in favour of the 1st Respondent for the LAD sum of RM32,011.79 (‘the Award’). The Appellant applied to the Kuala Lumpur High Court for judicial review to, inter alia, quash the 2nd Respondent’s decision in giving the Award, or alternatively, for the Award to be replaced with a lawful order for LAD (‘the JR Application’). The High Court had on 30.11.2017 heard the JR Application and had dismissed the same with costs, which led to this Appeal. 

Issue: The Appellant’s counsel had agreed to restrict their argument to the issue of compensation related to S.75 CA[1], inter alia:

• Whether S.75 CA applies to the statutory SPA prescribed under the Schedules of the Housing Development (Control and Licensing) Regulations 1989, and 
• Whether the 1st Respondent was entitled to the LAD sum calculated on the purchase price as stated in the statutory SPA as the 1st Respondent has failed to prove the loss and damage suffered by him.   
  
  

Held: The Appeal was dismissed for the following reasons:

1. The Appellant’s application in seeking the Court to strike out and/or not give effect to the clause on the ground of S.75 CA is misconceived. Statutory contracts are subject to the provisions of the Contracts Act 1950.
2. The agreed liquidated sum provision does not offend section 75 CA as ultimately it is for the court to decide what should be reasonable compensation which is one of statutory discretion.
3. The learned trial judge has rightly applied the jurisprudence related to ‘Post-Payment Damages’ within the spirit of section 74 as well as section 75 and have come to the correct conclusion.[2] 

 
Before going on to comment on the Court of Appeal judgement vis-a-vis the Cubic Electronics decision, it would be necessary to make note of three preliminary points:

1. I will not be discussing the underlying jurisprudence relating to S.74 and S.75, as in general the distinct applications of S.74 and S.75 Contracts Act are quite clear,[3] and any confusion as suggested by the Court of Appeal Judgement is overstated.
2. S.75 CA as interpreted by the Federal Court in Cubic Electronics applies to Post-Payment Damages (damages clauses) as well as Pre-Paid Payments (deposits) as defined in Macvilla. Since Macvilla itself relates to what is termed Post-Payment Damages (damages clauses), its criticism of the application of S.75 CA by Cubic Electronics to Prepaid Damages (deposits) is merely obiter. Cubic Electronics, on the other hand, is a Federal Court case that did in fact deal with the issue of forfeiture of deposits.
3. Notwithstanding the Court of Appeal’s apparent criticism of the Cubic Electronics judgement, the Court of Appeal did not depart from the Federal Court’s decision in any material sense in its application of the legal principles set out by the Federal Court on the issue of the damages clause in the said statutory SPA.  

 
A.        The “Three cases” Cited in Macvilla

It was pointed out early in the judgement that the Appellant’s counsel relied on three decisions of the Federal Court, namely: (a) Selva Kuma a/l Murugiah v Thiagarajah a/l Retnasamy;[4] (b) Johor Coastal Development Sdn Bhd v Constrajaya Sdn Bhd ;[5] and (c) Cubic Electronics  to assert that the 1st Respondent’s claim ought to have been dismissed as he has failed to prove damage.[6] This is a problematic approach as the three Federal Court decisions cited together do not share a common ratio decidendi. Cubic Electronics practically overruled Selva Kumar and Johor Coastal by holding that the aggrieved party may recover the sum stated therein without having to prove actual loss, unless the damages clause is proven by the defaulting party to be a penalty.[7] In other words, a damages clause is not struck down by S.75 CA unless it is shown to be a penalty clause. Otherwise, the damages clause would be enforceable and the aggrieved party may recover the sum provided therein simpliciter. This is in fact one of the most significant aspects of the decision in Cubic Electronics by which the confusion and problems caused by the earlier decisions in both Selva Kumar and Johor Coastal were resolved by the Federal Court. The Appellant counsel’s argument that proof of damage is required based on the “Three cases” is therefore incorrect and appears to have led to the misunderstanding of Cubic Electronics by the Court of Appeal in Macvilla.
 
It is evident in the cases[8] leading up to Cubic Electronics that Malaysian courts had  felt bound by the ruling in Selva Kumar to reject the application of numerous well-drafted damages clauses which were negotiated at arm’s length and agreed upon by commercial parties. This had not only undermined the freedom to contract by commercial parties, but seriously impeded the effectiveness of damages clauses in providing certainty for contracting parties on the risks to be undertaken respectively in the event of breach. The constraint of the Selva Kumar ruling had also caused parties to resort to drafting contracts which contained barely-disguised attempts to exclude the effect of S.75 CA.[9] When Cubic Electronics was heard before the Federal Court, it was time for the Federal Court to reconsider the enforceability of damages clauses in Malaysia in view of their importance. This provision adopted by both parties to a contract to provide for the agreed compensation payable in the event of non-performance of contractual obligations also serves to avoid costly and time-consuming court proceedings. I have set out the scenario faced by all relevant parties in relation to the law on damages clauses leading up to Cubic Electronics in an earlier article published here.[10] 
 
The Federal Court in Cubic Electronics considered the current position in the United Kingdom (‘UK’)[11] as well as in India[12]  before radically restating the legal principles relating to damages clauses as well as the forfeiture of deposits by adopting a comprehensive and modern approach. Richard Malanjum, the learned Chief Judge of Sabah and Sarawak (as he then was), in his judgement had thoroughly analysed the development of the penalty rule on damages clauses and the law on forfeiture of deposits before ruling on the scope of S.75 CA. It is regrettable that the wrongful categorisation of the ‘Three cases’ (the only common factor being cases involving ‘deposits’) has brought about much confusion in the Macvilla Appeal and led to the inaccurate analysis of the legal principles decided by Cubic Electronics.[13] The Court of Appeal in Macvilla had to navigate through legal arguments based on the misreading of what the apex court has said in Cubic Electronics as well as numerous statements of law which are not consistent with general legal principles on contract law. In analysing the Macvilla decision, it is therefore necessary to first set out clearly what has been decided by Cubic Electronics and to understand its application to both cases of damages clauses and the forfeiture of deposits.   
 
III.      THE CUBIC ELECTRONICS DECISION 

In delivering the unanimous Federal Court decision in Cubic Electronics, the learned CJSS summarised the restatement of the legal principles now applicable to damages clauses in Malaysia at para 74 of the judgement (‘restatement of the law on S.75 CA’) as follows:

1. If there is a breach of contract, any money paid in advance of performance and as part-payment of the contract price is generally recoverable by the payer. But a deposit paid which is not merely part payment but also as a guarantee of performance is generally not recoverable.
2. Whether a payment is part-payment of the price or a deposit is a question of interpretation that turns on the facts of a case, and the usual principles of interpretation apply. Once it has been ascertained that a payment possesses the dual characteristics of earnest money and part payment, it is a deposit.
3. A deposit is subject to section 75 of the Act. (emphasis added)
4. In determining what amounts to ‘reasonable compensation’ under section 75 of the Act, the concepts of ‘legitimate interest’ and ‘proportionality’ as enunciated in Cavendish (supra) are relevant. (emphasis added)
5. A sum payable on breach of contract will be held to be unreasonable compensation if it is extravagant and unconscionable in amount in comparison with the highest conceivable loss which could possibly flow from the breach. In the absence of proper justification, there should not be a significant difference between the level of damages spelt out in the contract and the level of loss or damage which is likely to be suffered by the innocent party.
6. Section 75 of the Act allows reasonable compensation to be awarded by the court irrespective of whether actual loss or damage is proven. Thus, proof of actual loss is not the sole conclusive determinant of reasonable compensation although evidence of that may be a useful starting point.  (emphasis added)
7. The initial onus lies on the party seeking to enforce a damages clause under section 75 of the Act to adduce evidence that firstly, there was a breach of contract and that secondly, the contract contains a clause specifying a sum to be paid upon breach. Once these two elements have been established, the innocent party is entitled to receive a sum not exceeding the amount stipulated in the contract irrespective of whether actual damage or loss is proven subject always to the defaulting party proving the unreasonableness of the damages clause including the sum stated therein, if any.
8. If there is a dispute as to what constitutes reasonable compensation, the burden of proof falls on the defaulting party to show that the damages clause including the sum stated therein is unreasonable.

 
It must be noted the Federal Court clearly held that a deposit is subject to section 75 of the Contracts Act. This is a departure from the previous position held by the Privy Council in Linggi Plantation Ltd v Jegatheesan,[14] an important reversal which the Court of Appeal in Macvilla failed to follow by holding that S.75 CA does not apply to deposits.[15] The  CJSS’s conclusion that deposits are subject to S.75 CA follows the alignment of the penalty rule (which traditionally deals with damages clauses) with the rule relating to forfeiture of deposits, as expounded by the UK Supreme Court in the case of Cavendish Square Holdings BV v Talal El Maksessi.[16] The UK Supreme Court had held therein that first, the fundamental principle is that the penalty rule regulates only the contractual remedy available for the breach of primary contractual obligations; and secondly, while the relevant contractual remedy usually stipulates payment of money, it equally applies to obligations to transfer assets or clauses where a party forfeits a deposit in the event of breach.[17] The learned CJSS has explored in his judgement how the courts in the UK and India[18] now hold that the legal principles on damages clauses are equally applicable to forfeiture of deposits instead of the mutually exclusive approach previously taken.[19] Therefore, it is evident that S.75 CA would apply to both Pre-Paid Payments (deposits) and Post Payment Damages (damages clauses) as defined in Macvilla contrary to the view taken by the Court of Appeal therein.[20]   
 
IV.       DEVELOPING THE LAW OF CONTRACT IN MALAYSIA

It is unfortunate that the Court of Appeal in Macvilla has taken a very restrictive view on how judges may develop the law of contract in Malaysia. While Malaysian courts are not bound by the latest English common law decisions on contract law[21], there is every reason for our courts to consider the development of contract law in the UK and other commonwealth jurisdictions, and to decide whether to adopt or allow such development to inform the interpretation of the provisions in the Contracts Act 1950. When a more progressive or modern approach is adopted in the dynamic arena of contract law such as in the law relating to economic duress [22] or in understanding of what makes a contractual provision penal, it would be rather surprising for the courts to refuse to even consider such development in interpreting the provisions of the Contract Act 1950. Such consideration is particularly relevant as our Contracts Act 1950 is based on the English common law on contracts and many common law decisions have been adopted by the apex court even after the cut-off dates of the reception of English Law pursuant to Section 3 and Section 5 of the Civil Law Act 1956.[23]
 
In light of the UK Supreme Court’s comprehensive review of the historical development and the authorities from England and Scotland relating to the penalty rule and its reformulation of the penalty test in Cavendish, it is not wrong for the Federal Court to study the UK Supreme Court judgement closely to see how we may reconsider the position under our Contracts Act 1950. The UK Supreme Court had taken the opportunity to reformulate the true test on the penalty rule as being ‘whether the impugned provision is a secondary obligation which imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in enforcement of the primary obligation.’[24] What the Federal Court did was to adopt the concepts of ‘legitimate interest’ and ‘proportionality’ in deciding what amounts to reasonable compensation stipulated in S.75 CA as explained by His Lordship:

‘As for our reasons we begin by saying that in view of the legislative history of section 75 of the Act which need not be elaborated in this Judgement, we are of the considered opinion that there is nothing objectionable in holding the concepts of “legitimate interest” and “proportionality” as enunciated in Cavendish (supra) are relevant in deciding what amounts to “reasonable compensation” as stipulated in section 75 of the Act. Ultimately, the central feature of both the Cavendish case (supra) and section 75 of the Act is the notion of reasonableness.’[25]   
 
What is remarkable is the step taken by the Federal Court, while discussing the scope of S.75 CA in light of the Cavendish decision, to restore the enforceability of damages clauses by departing from Selva Kumar and Johor Coastal which required proof of actual loss in deciding what is meant by reasonable compensation in S.75 CA.[26] By setting aside the need to prove actual loss[27] and instead adopting the reasonableness test based on the concepts of ‘legitimate interest’ and ‘proportionality’, the Federal Court in a deft move reinstated the effectiveness of damages clauses which was practically outlawed by the Selva Kumar rulin. This aspect of the Cubic Electronics decision had nothing to do with blindly following a new common law position, and everything to do with righting an incorrect interpretation of S.75 CA by Selva Kumar and Johor Coastal in restricting the use of damages clauses.
 
The Federal Court went on to clarify that ‘regardless whether the damage is quantifiable or otherwise, it is incumbent upon the court to adopt a common sense approach by taking into account the legitimate interest which an innocent party may have and the proportionality of damages in determining reasonable compensation.’[28] Where the Federal Court came up short is in failing to categorically overrule the wrong decisions in Selva Kumar and Johor Coastal, which may leave the door ajar for problematic arguments such as those based on “the Three Cases” raised in Macvilla.              
 
There is no doubt the Federal Court was somewhat equivocal in some of its comments on S.75 CA as well in its treatment of the decisions of Selva Kumar and Johor Coastal,[29] likely due to its reluctance to overrule two of its own landmark decisions. Nevertheless, it is clear from the Restatement of the Law on S.75 CA in the Federal Court judgement[30] that Selva Kumar no longer represents the law on damages clauses. It is settled law that damages clauses would now be enforceable unless they are shown to be penalty clauses in accordance with the new penalty test based on the concepts of ‘legitimate interest’ and ‘proportionality’. If the damages clause is not found to be a penalty under the new test, the aggrieved party may recover the amount stated therein without having to prove actual loss. The aggrieved party seeking to enforce a damages clause under S.75 CA is only required:

'to adduce evidence that firstly, there was a breach of contract and that secondly that the contract contains a clause specifying a sum to be paid upon breach”. Once these two elements have been established, the innocent party is entitled to receive a sum not exceeding the amount stipulated in the contract irrespective of whether actual damage or loss is proven subject always to the defaulting party proving the unreasonableness of the damages clause including the sum stated therein…’. [31]  
 
If the defaulting party challenges the damages clause under the penalty rule, the burden of proof then shifts to the defaulting party to prove that the amount of damages stated in the damages clause is unreasonable in accordance with the new penalty test based on the concepts of ‘legitimate interest’ and ‘proportionality’.[32] I have in my earlier article disagreed with this aspect of the Federal Court decision on the issue of who should bear the burden of proof.[33] Nevertheless, it is clear that the Federal Court has chosen to follow the English law position.  What is required to be proven by the defaulting party, in challenging the damages clause under the penalty rule, is that the aggrieved party has no legitimate interest to be protected in the event of breach and that the compensation imposed in the damages clause is unreasonable, in terms of being extravagant, exorbitant or unconscionable. The issue of proving actual loss by the aggrieved party does not arise until and unless the damages clause has been proven to be a penalty clause by the defaulting party using the new penalty test.     
 
A.        Application of The New Penalty Test

As stated by the Federal Court,[34] the burden of proof is on the defaulting party to prove that the damages clause is a penalty in accordance with the new test based on the concepts of ‘legitimate interest’ and ‘proportionality’. The meaning of legitimate interest was most clearly illustrated by the case of ParkingEye Ltd v Beavis[35] which was heard together with the appeal in Cavendish. The UK Supreme Court explained that the validity of a clause providing for consequences of a breach of contract depends on whether the innocent party has a legitimate interest in the enforcement of the clause. It is evident that there is a legitimate interest in the recovery of a sum constituting a reasonable pre-estimate of damages, but the decision in ParkingEye establishes that the innocent party may have a legitimate interest in performance which extends beyond the recovery of pecuniary compensation. In fact, the learned CJSS pointed out that ‘ParkingEye …is also a good illustration of how the court may uphold an impugned clause in the absence of actual loss or damage by applying the concepts of legitimate interest and proportionality.’[36]
 
In ParkingEye, the respondent company agreed with owners of the Riverside Retail Park to manage the car park at the site. The respondent company displayed numerous notices throughout the car park, saying that a failure to comply with a two hour time limit would ‘result in a Parking Charge of £85’. On April 15 2013, Mr Beavis parked in the car park but overstayed the two hour limit by almost an hour. When ParkingEye demanded payment of £85, Mr Beavis argued that the Parking Charge was unenforceable at common law as a penalty, and/or that it was unfair and unenforceable by virtue of the Unfair Terms in Consumer Contracts Regulations 1999. In ruling that the charge of £85 was not a penalty, the UK Supreme Court opined that both ParkingEye and the landowners had a legitimate interest in charging overstaying motorists, which extended beyond the recovery of any loss. The interest of the landowners was the provision and efficient management of customer parking for the retail outlets. The interest of ParkingEye was in income from the charge, which met the running costs of a legitimate scheme plus a profit margin. Further the charge was neither extravagant or unconscionable, having regard to practice around the UK, and taking into account the use of this particular car park and the clear wording of the notices.[37]
 
The case of Cubic Electronics involves an offer by the Plaintiff to purchase a piece of land in Mukim Bukit Katil, Melaka from the Defendant, together with the plant and machinery thereon (collectively known as ‘the properties’) for RM90 million. Based on the terms set out in the Information Memorandum, the Plaintiff would have to pay an earnest deposit of RM1 million after the Defendant accepted the offer. The Plaintiff would have to execute the Sale and Purchase Agreement (“SPA”) within one month from the date of the acceptance, unless otherwise extended, failing which the earnest deposit of RM1 million would be forfeited as agreed liquidated damages and not by way of penalty. Only upon the signing of the SPA would a 10% deposit have to be paid by the Plaintiff.  On numerous requests for extension of time to execute the SPA by the Plaintiff coupled with the payment of further sums by the Plaintiff toward the earnest deposit, the Defendant had extended the time for the Plaintiff to execute the SPA on three occasions. By the time a final request for an extension was turned down by the Defendant, the Plaintiff had made a total payment of RM3 million.
 
One of the issues considered in Cubic Electronics was whether, in a sale and purchase agreement of property, where terms and conditions of the SPA have been agreed and a date is fixed for the execution of the SPA, any additional deposit paid for the extension of time for was forfeitable as liquidated damages.[38] Applying the new penalty test based on the concepts of ‘legitimate interest’ and ‘proportionality’ to the facts of the case, the Federal Court held, inter alia, that:

1. The Defendant’s deprivation of the chance to enter into negotiations with a third party in addition to its goal of securing the execution of the SPA and avoiding delay in completion, are all legitimate interests which the forfeited payments were intended to guard against.[39] (emphasis added)
2. In considering whether the payments forfeited was disproportionate, the additional RM2 million paid is not too large a figure when compared against the total purchase price of the properties, that is RM90 million. Combined with the initial deposit of RM1 million (which the Plaintiff is not contesting), the additional sum of RM2 million represents only 3.33% of the purchase price of the properties.[40] (emphasis added)
3. The onus lies on the Plaintiff to show the forfeiture of the additional RM2 million payments was excessive. The Plaintiff had failed to adduce any proof showing that the forfeited payments were exorbitant or unreasonable and consequently, the forfeiture of the additional RM2 million amounts to reasonable compensation.[41] (emphasis added)     
   
   

One of the criticisms levelled at the Cubic Electronics decision is that the Federal Court failed to apply its own test on what is unreasonable compensation set out in para 74 (v) of its judgement. In Cubic Electronics, the Federal Court merely had to consider the industry standard for deposit in a sale and purchase transaction for landed property (which is about 10% of the purchase price) and arrived at the conclusion that the deposit of RM3 million representing only 3.33% of the purchase price for the properties amounted to reasonable compensation. Similarly, in ParkingEye, the UK Supreme Court looked at the industry standard, which is the maximum amount prescribed by the British Parking Association (which is £100), in deciding that the £85 charge was reasonable. This would seem to have been the approach taken by the Court of Appeal in Macvilla when the learned Court of Appeal Judge, having referred to Standard Form Contracts pursuant to an Act (in this case, the Housing Developers Regulations 1989) and reputable institutions of the industry such as PAM or CIBD, opined that ‘…it is best for the court to deal with the issue of compensation summarily to satisfy the stipulated sum is reasonable, according to market practice.’[42]    
 
This would mean that in a straightforward case, the court merely needs to refer to the industry standard practice to determine what is reasonable compensation and only where that is not available or applicable, to apply the test of ‘proportionality’ to determine the reasonableness of the sum paid as deposit or stated in the damages clause. This can be ascertained by comparing the amount that would be forfeited or payable on breach with the possible loss arising from the breach. Thus, to establish reasonable compensation, ‘there should not be a significant difference between the level of damages spelt out in the contract and the level of loss or damage which is likely to be suffered by the innocent party.’[43] The aggrieved party may need to show some elements of proof for the loss likely to be suffered and it is in this context that the Federal Court has opined that “proof of actual loss is not the sole conclusive determinant of reasonable compensation although evidence of that may be a useful starting point.”[44] It would be interesting to see how this test would be applied in a relevant case where there is not an industry standard ready to be adopted by the court.[45] 
 
V.        CONCLUSION
​
It would appear that the Court of Appeal in Macvilla may have misunderstood what the Federal Court in Cubic Electronics set out to achieve. It is evident that the apex court in Cubic Electronics has made a significant and radical decision to reinstate the importance of damages clauses in its interpretation of S.75 CA. This is a deliberate departure from the previous position taken by Selva Kumar and Johor Coastal, in line with what is vital for the relevant commercial sectors. The Federal Court has further, in the process of looking at the development of the law in the UK and India, chosen to adopt the modern reformulation of the penalty rule in its determination of what amounts to reasonable compensation in S.75 CA. I am of the view that the Cubic Electronics decision has not only resolved the previous problematic legal positon on damages clauses, but has also brought the application of the penalty rule as embodied in S.75 CA up to date with modern commercial practices. It is to be hoped that such welcomed development would not be continually undermined by the disingenuous arguments of those merely seeking to avoid the enforcement of damages clauses (including by way of forfeiture of deposits) in contracts which have been agreed to by both parties. The better approach would be for the defaulting party to challenge the unreasonableness of a damages clause with the new penalty test in order to render said clause unenforceable as a penalty clause. Such an approach would indeed contribute to the growth of Malaysian contract law congruent with the needs of modern commerce.       

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Written by Ms Choong Shaw Mei, a lawyer and part-time lecturer in University of Malaya.

Edited by Tan Jia Shen.
​
Disclaimer: The opinions expressed in this article are those of the author and do not necessarily reflect the views of the University of Malaya Law Review, and the institution it is affiliated with.

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Footnotes:
​
[1] Cubic Electronics Sdn Bhd (In Liquidation) v Mars Telecommunications Sdn Bhd [2019] 6 MLJ 15 FC

[2] Bumimetro Construction Sdn Bhd v Sun-Jaya M&E Sdn Bhd [2020] MLJU 136; Ms Elevators Engineering Sdn Bhd v Jasmurni Construction Sdn Bhd and another appeal [2019] 5 MLJ  209 CA; VTS Capital Sdn Bhd  v Capitol Avenue Development Sdn Bhd (Sabah Electricity Sdn Bhd, third party) [2019] MLJU 167; Malaysian Resources Corporation Berhad v HSBC Bank Malaysia Berhad & Ors and another suit [2019] MLJU 813;  Global Mix Sdn Bhd v Wong Brothers’ Building Construction Sdn Bhd [2019] MLJU 1040, Ambank (M) Bhd v Oilfield Technical Inspection Sdn Bhd & Ors [2019] MLJU  375; Barisan Arena Sdn Bhd v Perbadanan Prima Malaysia [2019] MLJU 1166  

[3] [2019] MLJU 693

[4] [2019] MLJU 693 [46](d)(iii)

[5] Macvilla Sdn Bhd v Mervyn Peter Guan Yin Hui and Another [2019] MLJU 693 [31]

[6] Macvilla Sdn Bhd v Mervyn Peter Guan Yin Hui and Another [2019] MLJU 693 [55]

[7] S.74 CA is discussed under the topic of Remoteness of Damages while S.75 CA is discussed under the topic of Liquidated Damages; see Cheong, M. F. & Lee, Y. H.(2016) Civil Remedies. Malaysia: Sweet & Maxwell, 131-150 and 186-194.; and Sinnadurai, V.(2015) Contracts Act, A Commentary. Malaysia: LexisNexis Malaysia Sdn Bhd, 557-571 and 589-598.    

[8] [1995] 1 MLJ 817

[9] [2009] 4 CLJ 569

[10] Macvilla Sdn Bhd v Mervyn Peter Guan Yin Hui and Another [2019] MLJU 693 [3]

[11] Cubic Electronics Sdn Bhd (In Liquidation) v Mars Telecommunications Sdn Bhd  [2019] 6 MLJ 15 FC [74] (vi)

[12] Malayan Cement Industries Sdn Bhd v Golden Island Shipping (L) Bhd [2018] 1 CLJ 228 [CA]; Saycon Construction Sdn Bhd v Rosado Tradeline Sdn Bhd [2018] 4 MLJ 652 and Tekun Nasional v Plentitude Drive (M) Sdn Bhd and 2 Others Appeals [2018] 8 CLJ 693

[13] Clause 22.2 of the Standard Agreement and Conditions of PAM Contract 2018

[14] Choong, S.M. (2019, Feb 10). A Stunning Restatement of the Law on Liquidated Damages. Lex, in Breve University of Malaya Law Review. Retrieved from <https://www.umlawreview.com/lex-in-breve/a-stunning-restatement-of-the-law-on-liquidated-damages-clauses-by-the-federal-court>. Site accessed on 31 March 2020.

[15] Cubic Electronics at para [44] -[45]

[16] Cubic Electronics  at para [42]-[43]

[17] Macvilla at para[50]

[18] [1972] 1 MLJ 89

[19] Macvilla Sdn Bhd v Mervyn Peter Guan Yin Hui and Another [2019] MLJU 693 [12]-[13]

[20] Cavendish Square Holdings BV v Talal El Maksessi [2015] UKSC 67

[21] Cavendish Square Holdings BV v Talal El Maksessi [2015] UKSC 67 [14]-[18]

[22]  S74 of Indian Contracts Act 1872 is in pari materia with our s75 CA

[23] Cubic Electronics Sdn Bhd (In Liquidation) v Mars Telecommunications Sdn Bhd  [2019] 6 MLJ 15 FC [44]

[24] Macvilla Sdn Bhd v Mervyn Peter Guan Yin Hui and Another [2019] MLJU 693 [19]

[25] Sections 3 & 5 of The Civil law Act 1956 provide for the application of English law on commercial matters in Malaysia as at 07.04.56 for West Malaysia and as at 01.12.1951 and 12.12.1949 for Sabah and Sarawak respectively. 

[26] Zainol@ Zainol Abidin bin Mohamed v Lee Lim Huat [2015] 11 MLJ 395; Emar Sdn Bhd (under receivership) v Aidigi Sdn bhd and Another Appeal [1992] 2 MLJ 734 SC; Teck Guan Trading Sdn Bhd v Hydrotek Engineering (S) Sdn Bhd & Ors [1996] 4 MLJ 331

[27] The English cases of City and Westminster Properties (1934) Ltd v Mudd [1959] Ch 129 and J Evans & Son v Andrea Merzario [1976]2 All ER 930 were accepted by Raja Azlan Shah CJ (as he then was) as strong authorities for the concept of collateral contract in the Federal Court decision of Tan Swee Hoe Co Ltd v Ali Hussain Bros [1980] MLJ 16, FC   

[28] Cavendish Square Holdings BV v Talal El Maksessi [2015] UKSC 67 [32]

[29] Cubic Electronics Sdn Bhd (In Liquidation) v Mars Telecommunications Sdn Bhd [2019] 6 MLJ 15 FC[66]

[30] Cubic Electronics Sdn Bhd (In Liquidation) v Mars Telecommunications Sdn Bhd [2019] 6 MLJ 15 FC [61]-65]

[31] This is not consistent with wording of S.75 CA itself and is, in fact, a less laboured interpretation than the Selva Kumar ruling in promulgating the limited “first class of cases” in which actual loss need not be proven.

[32] Cubic Electronics Sdn Bhd (In Liquidation) v Mars Telecommunications Sdn Bhd [2019] 6 MLJ 15 FC [68]

[33] Cubic Electronics Sdn Bhd (In Liquidation) v Mars Telecommunications Sdn Bhd [2019] 6 MLJ 15 FC [74](vii)

[34] Cubic Electronics Sdn Bhd (In Liquidation) v Mars Telecommunications Sdn Bhd [2019] 6 MLJ 15 FC [74]

[35] Cubic Electronics Sdn Bhd (In Liquidation) v Mars Telecommunications Sdn Bhd [2019] 6 MLJ 15 FC [74] (vii)

[36] Cubic Electronics Sdn Bhd (In Liquidation) v Mars Telecommunications Sdn Bhd [2019] 6 MLJ 15 FC [74] (iv)

[37] Choong, S.M. (2019, Feb 10). A Stunning Restatement of the Law on Liquidated Damages. Lex, in Breve University of Malaya Law Review. Retrieved from <https://www.umlawreview.com/lex-in-breve/a-stunning-restatement-of-the-law-on-liquidated-damages-clauses-by-the-federal-court>. Site accessed on 31 March 2020.

[38] Cubic Electronics Sdn Bhd (In Liquidation) v Mars Telecommunications Sdn Bhd [2019] 6 MLJ 15 FC [74](viii)

[39] [2015] UKSC 67

[40] Cubic Electronics Sdn Bhd (In Liquidation) v Mars Telecommunications Sdn Bhd [2019] 6 MLJ 15 FC [67]

[41] ParkingEye Ltd v Beavis [2015] UKSC 67 [100]-[101]

[42] Cubic Electronics Sdn Bhd (In Liquidation) v Mars Telecommunications Sdn Bhd [2019] 6 MLJ 15 FC [1](i)

[43] Cubic Electronics Sdn Bhd (In Liquidation) v Mars Telecommunications Sdn Bhd [2019] 6 MLJ 15 FC [86]

[44] Cubic Electronics Sdn Bhd (In Liquidation) v Mars Telecommunications Sdn Bhd [2019] 6 MLJ 15 FC [87] 

[45] Cubic Electronics Sdn Bhd (In Liquidation) v Mars Telecommunications Sdn Bhd [2019] 6 MLJ 15 FC [88] 

[46] Macvilla Sdn Bhd v Mervyn Peter Guan Yin Hui and Another [2019] MLJU 693 [53]

[47] Cubic Electronics Sdn Bhd (In Liquidation) v Mars Telecommunications Sdn Bhd [2019] 6 MLJ 15 FC [74] (v)

[48] Cubic Electronics Sdn Bhd (In Liquidation) v Mars Telecommunications Sdn Bhd [2019] 6 MLJ 15 FC [74] (vi)

[49] The cases in which Cubic Electronics are cited mostly involve the sale and purchase of property or construction contracts, both of which have clear industry standard for agreed damages.