JE 13/19 4 November 2019 Ng Chin Tai, Trading In The Name And Style Of Lean Seh Fishery & Anor [2019] 6 MLRA v. Ananda Kumar Krishnan 47 NG CHIN TAI, TRADING IN THE NAME AND STYLE OF LEAN SEH FISHERY & ANOR v. ANANDA KUMAR KRISHNAN Federal Court, Putrajaya Ahmad Maarop PCA, Zaharah Ibrahim CJM, Aziah Ali, Alizatul Khair Osman Khairuddin, Rohana Yusuf FCJJ [Civil Appeal No: 02(f)-97-09-2017(P)] 17 October 2019 Contract: Damages — Assessment — Commission contract — Distinction between claim for agreed sum and claim for damages — Whether action in substance a suit claiming for an agreed sum — Whether rules on remoteness of damage and mitigation of loss applicable to a commission contract for an agreed sum — Contracts Act 1950, s 74 Contract: Nature of contract — Commission contract — Whether contract for commission a contract in perpetuity or a contract for a determinate duration — Whether such contract could be determined through giving of reasonable notice or through the happening of a subsequent event The 1st defendant’s son, DW7 had approached the plaintiff in February 2004 to help the 1st defendant, trading as Lean Seh Fishery (“LSF”), secure a contract for the supply of seafood to Tesco Stores (M) Sdn Bhd (“TESCO”). DW7 verbally offered the plaintiff a 5% consultant fee should he succeed in securing a contract for the supply of seafood. By a Letter of Appointment dated 6 February 2005 (“the Contract”) signed by DW7, the plaintiff was appointed as marketing consultant to negotiate with and promote LSF to TESCO for the purpose of securing a contract for the supply of fresh, frozen and processed seafood. Pursuant to the Contract, LSF agreed inter alia, to pay the plaintiff 5% of its total invoice value or billings to TESCO. The fee of 5% was to be paid to the plaintiff for the duration of the period that LSF or any of its associates or associate companies or related parties supplied seafood to TESCO. The plaintiff subsequently secured a contract for LSF and he also recruited and trained employees to ensure that its deliveries were made on time and invoices issued consistently. The plaintiff also convinced TESCO to continue its arrangements with the 1st defendant when TESCO complained about the 1st defendant’s poor services. The 1st defendant continued to pay the plaintiff his 5% fee on a weekly basis until the end of November 2005. On 30 December 2005, the 1st defendant emailed TESCO terminating the Contract with the plaintiff. In February 2006, the plaintiff sued the 1st defendant to recover inter Ng Chin Tai, Trading In The Name And Style Of Lean Seh Fishery & Anor 48 v. Ananda Kumar Krishnan [2019] 6 MLRA alia, the outstanding and continuing payments of his 5% fee. A few months after the plaintiff’s suit was filed the 2nd defendant was established with the 1st defendant, his wife and his two children as directors and shareholders. In September 2006, the 1st defendant stopped supplying seafood to TESCO and such supply was taken over by the 2nd defendant. The relationship between TESCO and the 2nd defendant was mutually terminated on 25 October 2015. The High Court found for the plaintiff and based on the evidence, awarded him a sum of RM19,266,746.16 as damages. The Court of Appeal affirmed the High Court’s decision. The Federal Court granted the defendants leave to appeal on the following two questions: (i) whether a contract for payment of commission may last in perpetuity without being subject to an implied term as to termination upon reasonable notice; and (ii) whether in determining the quantum of damages payable for breach of contract for the payment of a commission in perpetuity, damages are to be assessed in accordance with the principles in Hadley v. Baxendale; Transfield Shipping Inc v. Mercator Shipping Inc and s 74 of the Contracts Act 1950. Held (dismissing the appeal with costs): (1) Pursuant to para 4 of the Contract, it was clear that it was not, on the facts of the case, a contract in perpetuity. Whilst the Contract did not contain a termination clause, it did not mean that it was a contract of indeterminate duration — which is a contract prima facie enforceable in perpetuity but which may in certain circumstances be unilaterally terminated upon reasonable notice. The duration of the Contract was implicit from para 4 itself. The Contract provided for a specific period in which it remained enforceable and ceased to be in force upon the happening of a subsequent event, namely the cessation of the supply of seafood to TESCO by the 1st defendant or its associate companies, including the 2nd defendant. The Supplier Trading Agreement between TESCO and the 1st defendant which set out the circumstances under which the Agreement for the supply of seafood could be terminated by TESCO, further lent credence to such proposition. (paras 44-48) (2) The Contract, not being a contract “in perpetuity” could only be determined or come to an end upon the happening of a certain event, which in the instant case, was the cessation of the supply of seafood to TESCO by the 1st defendant or its associate companies. The Contract could not be terminated by reasonable notice. There was no purpose to answer the first question referred since it was premised on the presumption that the Contract was perpetual in nature. (paras 55-56) (3) There is a distinction between a claim for an agreed sum and a claim for damages. In the instant case, although the plaintiff may have used the word “damages”, reading his Statement of Claim in context revealed that the action was in substance a suit claiming an agreed sum, ie the 5% fee. It was not strictly a claim for “damages” in the ordinary sense of the word. The Contract was a Ng Chin Tai, Trading In The Name And Style Of Lean Seh Fishery & Anor [2019] 6 MLRA v. Ananda Kumar Krishnan 49 commission contract where there was a claim for an agreed sum. The rules on remoteness of damage and mitigation of loss as enunciated in Hadley v. Baxendale, Transfield Shipping Inc v. Mercator Shipping Inc and s 74 of the Contracts Act 1950 did not apply in a breach of commission contract where there is an agreed sum. (paras 64, 69, 70 & 74) (4) Parties in commission contracts are bound by the agreed sum stated in the contract, which in the instant case, the defendant deemed as “multiplier or multiplicand basis”. In the instant case, the agreed sum was 5% of the defendants’ total sales to TESCO. Since the plaintiff’s claim was not one for damages but a claim for an agreed sum, there was no necessity to answer the second question of law posed. (paras 75-77) Case(s) referred to: Chew Teng Cheong & Anor v. Pang Choon Kong [1981] 1 MLRA 223 (refd) Crawford Fitting Co v. Sydney Valve & Fittings Pty Ltd [1988] 14 NSWLR 438 (refd) Decro-Wall International SA v. Practitioners in Marketing Ltd [1971] 1 WLR 361 (refd) Dr Martens Australia Pty Ltd v. Raben Footwear Pty Ltd [2000] FCA 1122 (folld) Golden Star Video & Music Cen-Tre & Anor v. Daily Video Sdn Bhd [1994] 1 MLRH 878 (refd) Hadley v. Baxendale [1854] 9 Exch 341 (refd) Howe v. Motor Insurers’ Bureau [2017] EWCA Civ 932 (refd) Jervis v. Harris [1996] (Ch.19) (refd) Letrik Bandar Hup Heng Sdn Bhd v. Wong Sai Hong [2001] 4 MLRH 755 (refd) Martin-Baker Aircraft Co Ltd v. Canadian Flight Equipment Ltd; Martin-Baker Aircraft Co Ltd v. Murison [1955] 2 QB 556 (refd) Merbok Hilir Berhad v. Sheikh Khaled Jassem Mohammad And Other Appeals [2014] 1 MLRA 62 (refd) Rapatax (1987) Inc v. Cantax Corp 145 D.L.R. (4th) 419 (refd) Tong Lee Hua v. Yong Kah Chin [1978] 1 MLRA 628 (folld) Transfield Shipping Inc v. Mercator Shipping Inc [2009] AC 61 (refd) Winter Garden Theatre v. Millennium Productions Ltd [1948] AC 173 (refd) Legislation referred to: Contracts Act 1950, s 74 Courts of Judicature Act 1964, s 78(1) Trade Practices Act [Aus], s 52 Other(s) referred to: Cases and Materials on Contract Law in Australia, 4th edn, para 22.3 Chitty on Contracts, 28th edn, paras 23-046, 23-053, 27-008, 32-134 Halsbury’s Laws of England, 4th edn, para 531 Ng Chin Tai, Trading In The Name And Style Of Lean Seh Fishery & Anor 50 v. Ananda Kumar Krishnan [2019] 6 MLRA Counsel: For the appellants: Gopal Sri Ram, (Ram Karpal Singh, Yohendra Nadarajan, Damien Chan, Khairul Anwar & Harshaan Zamani with him); M/s Yohendra Nadarajan For the respondent: Gurdial Singh Nijar (Ambiga Sreenevasan & Lim Wei Jiet with him); M/s Sreenevasan JUDGMENT Alizatul Khair Osman Khairuddin FCJ: Introduction [1] This appeal arose from the decision of the High Court (subsequently affirmed by the Court of Appeal) which had allowed the respondent’s claim against the appellants for the sum of RM19,266,746.16 together with interest. [2] For convenience, the respondent will be referred to as the plaintiff while the appellants will be referred to as the (1st and 2nd) defendants respectively in this judgment. [3] We heard parties’ respective submissions, reserved judgment, and upon due consideration deliver this judgment. [4] This judgment is prepared and delivered pursuant to s 78(1) of the Courts of Judicature Act 1964, as both Justice Zaharah Ibrahim, CJM and Justice Aziah Ali, FCJ have since retired. This judgment is therefore the judgment of the remaining members of the panel. The Leave Questions [5] This court, on 17 August 2017 granted the defendants leave to appeal on the following Leave Questions: Leave Question (i) Whether a contract for payment of commission may last in perpetuity without being subject to an implied term as to termination upon reasonable notice? Leave Question (ii) Whether in determining the quantum of damages payable for breach of contract for the payment of a commission in perpetuity is to be assessed in accordance with the decisions in Hadley v.