A summary of a recent Federal Court decision about special damages and exemplary damages. Grounds are attached and if not it’s Civil Appeal No. 02(f)-16-05/2024(J)
Background facts – Tenaga Nasional Berhad (“TNB”) disconnected electricity supply to the premises of an ice-making factory owned by one Ice Man Sdn Bhd (‘Ice Man’) operated by Big Man Management Sdn Bhd (‘Big Man’). Before disconnection, TNB discovered meter tampering by the factory but rectified the same. Big Man then sued TNB for damages premised on several causes of action.
Big Man being the Appellant appealed against the decision of the Court of Appeal which did not award any damages to Big Man despite a finding of liability against TNB.
The questions of law in respect of which leave to appeal was granted are set out below (verbatim) whilst the answers are deciphered by the author.
Q1 Whether the evidential approach of the Court of Appeal with reference to the expression “special damages must be specifically pleaded and strictly proven” stands to be corrected and/or clarified whereby special damages only need be established on a balance of probabilities before a trial court?
Answer: It is trite that special damages in a civil claim are premised on a balance of probabilities. The phrase “strictly proved” does not mean a higher degree than the balance of probabilities. Accordingly, it does not increase such burden in any manner otherwise than to require that it meets the civil standard of proof.
Q2 Whether exemplary damages are claimable by a consumer of electricity in a breach of contract claim against TNB, particularly in a case where TNB being a statutory body, has consciously and deliberately acted in excess of the powers granted to the same under statute; and in light of the fact that it is open for TNB to claim for this head of damage as established in Tenaga Nasional Bhd (TNB) v Evergrowth Aquaculture Sdn Bhd and other appeals [2021] 5 MLJ 937?
Answer: Only part of Q2 is in the affirmative i.e. a consumer who has been victimized by TNB by wrongful disconnection of electricity may be entitled to seek exemplary damages, depending on the particular facts of its case although such a case will be rare. The case of Evergrowth can’t be relied on for the proposition that exemplary damages can be sought in cases of breach of contract. Having considered the law in full above an expansion of the law on this area is not warranted at this juncture.
Author’s view: If it’s a strict breach of contract, exemplary damages can’t be granted. However, if there is a cause of action stemming from tort in the same factual matrix, then there could be an award of exemplary damages.
Q3 Whether exemplary damages contemplated under the first category of Rookes v Barnard (i.e. oppressive or arbitrary conduct) can be extended to claims made against statutory corporations following the development of the law by the House of Lords decision in Kuddus v Constable of Leicestershire Constabulary [2001] UKHL 29 in extending the first category in Rookes v Barnard to also private corporations and/or individuals?
Answer: TNB is not an ordinary private company. It is the sole statutory body established for the supply of electricity to the entire Peninsular Malaysia. It therefore cannot be equated to a private limited company. Just because TNB is not a governmental body cannot exculpate it from the scope of exemplary damages as it wields great power due to its monopoly on the supply of electricity, as constitutionally mandated.
Q4 Where a plaintiff has succeeded in establishing liability but fails to prove special damages, whether it is incumbent on a court to award general and/or nominal damages?
Answer: The question is premised on the basis that Big Man failed to prove special damages, there was no necessity to answer the same. Further, Big Man was only pursuing general and/or nominal damages in the alternative to its claim of special damages in respect of the wrongful disconnection of electricity. The sums awarded for special damages in respect of disconnections of electricity were sufficient to compensate Big Man. Damages are compensatory in nature and a plaintiff should not be unjustly enriched by an award of damages.
Q5 Where a plaintiff has succeeded in establishing liability but fails to prove damages, whether it is open to a court to order substantial costs against the successful party and against event having regard to the principles in Order 59, rules 2, 3 and 5(2) of the Rules of Court 2012?
Answer: Since the question is premised on the basis that Big Man failed to prove special damages there isn’t a need to address it.
