In Big Man Management Sdn Bhd v Tenaga Nasional Berhad¹ (“Big Man”), the Federal Court had occasion to affirm the evidential approach that ought to be taken in relation to the proving of special damages, as well as the factors to be considered in assessing the availability of exemplary damages to an aggrieved party.
 
In this case, the aggrieved party was the Appellant, Big Man Management Sdn. Bhd, who had  successfully sued the Respondent, Tenaga Nasional Berhad (“TNB”), in the High Court for special damages and exemplary damages as a result of multiple instances of TNB wrongfully disconnecting its electricity supply to the ice-making factory which the Appellant operated on grounds of an alleged tampering of the meter. However, despite the Court of Appeal agreeing that the Appellant had established liability on the part of TNB, it held that the Appellant had not proven the damages it was seeking and therefore reversed the High Court’s award of such damages. Aggrieved, the Appellant obtained leave to appeal to the Federal Court.
 
Proving Special Damages
 
The Appellant had claimed special damages in relation to various losses it suffered, namely expenses incurred for the rental and purchase of generators as a result of the wrongful disconnection of its electricity supply by TNB, the purchase of diesel to operate the generators, and the payment of compensation to the owner of the ice-making factory being operated by the Appellant due to the disruption of the operations.
 
The Court of Appeal embarked upon a detailed examination of the evidence put forward by the Appellant in support of its claims for special damages which the High Court had found to be credible and supportive of the Appellant’s claims. In disagreeing with the High Court, the Court of Appeal pointed to factors such as the lack of invoices, quotation, return notices, receipts and/or statements of account which show the payment and/or receipt of monies reflective of the special damages which the Appellant claimed to have suffered.
 
Despite the lack of the particular types of evidence which the Court of Appeal was searching for, the Appellant did produce evidence – both oral and documentary – which did tend to establish the incurment of the said expenses claimed by the Appellant and which had been accepted by the High Court. To the Federal Court, the Court of Appeal’s rejection of such evidence as a whole was not warranted, stating as follows: “When such a large volume of documentary evidence adduced in Court and supported by oral evidence is dismissed outright as being insufficient for proof of the matters stated therein, it follows that such rejection can only be premised on the inference that the entirety of the evidence is made-up or fictitious. However, this was never suggested to any of the witnesses.” Accordingly, the Federal Court held that there was insufficient basis for the Court of Appeal to reverse the decision of the High Court.
 
In making its decision, the Federal Court provided the following guidance in respect of the evidential approach that ought to be taken in relation to proving special damages: 

As such, the High Court’s award of special damages to the Appellant was reinstated by the Federal Court.
 
Proving Exemplary Damages
 
Next was the issue of the High Court’s award of exemplary damages to the Appellant. Recognising that exemplary damages are punitive and not compensatory in nature (as is the usual nature of relief for breaches of contract), the Federal Court considered a number of authorities from various Commonwealth jurisdictions which highlighted the limited availability of exemplary damages in disputes involving a breach of contract or in commercial disputes, and the minimal role typically played by the court in regulating the conduct of contracting, commercial parties. The Court acknowledged that transporting concepts of ‘punishment’ and ‘deterrence’ too readily into the realm of contractual and commercial disputes should be done exceptionally, and for egregious conduct where there is another deliberate, actionable wrong in addition to the breach of contract being complained of. For example, one recognised category of action which may warrant the granting of exemplary damages is set out in the  renowned case of Rookes v Barnard [1964] AC 1129, namely oppressive, arbitrary, or unconstitutional actions by government officials, which was also extended by the House of Lords’ decision in Kuddus v Constable of Leicestershire Constabulary [2001] UKHL 29 to include such actions perpetuated by national and international companies wielding enormous power.
 
In the present case, the Federal Court pointed to the breach of TNB’s statutory duties under the Electricity Supply Act 1990 (“ESA 1990”) as an actionable wrong pleaded by the Appellant. For example, TNB’s notices of disconnection were issued pursuant to section 38(1) ESA 1990, despite the fact that the meter it alleged was tampered with was rectified. As affirmed in the Federal Court’s decision in Tenaga Nasional Bhd v Chew Thai Kay & Anor [2022] 2 MLJ 25, the disconnection of electricity despite rectifying the impugned meter is an unlawful act.
 
The High Court had based its award of exemplary damages against TNB on findings that TNB had intentionally punished the consumer through the disconnection of its electricity supply, prolonged the first disconnection for a maximum of three months without any acceptable basis for doing so, refused to meet the Appellant’s representative for possible reconciliation, and effected the second disconnection with impunity. The Federal Court agreed that the circumstances of the case, including the following, warranted the awarding of exemplary damages: 

To the Federal Court, it was not proper for the Appellant to be victimised and held at ransom by TNB through an abuse of its special statutory powers as the sole supplier of electricity in Malaysia.
 
Comments
 
The Federal Court’s judgment in Big Man identifies the relevant factors and considerations that ought to be borne in mind when assessing and presenting a claim for special damages and exemplary damages in relation to the suffering of commercial losses, particularly in cases where such losses are caused by the actions of entities that yield important control over the operations and efficacy of a business undertaking. That said, it is apparent from the Federal Court’s decision that the inquiry to be undertaken is highly dependent on the facts of the case in hand.
 
It should also be noted that the award of exemplary damages in Big Man was based on a breach of statutory duty by TNB and not on breach of contract. Having considered the legal position on the award of exemplary damages in several other Commonwealth jurisdictions, our apex court concluded that an expansion of this head of damages to contractual disputes is not warranted at this juncture.
 
 
Case Note by Arif Umar Faruq Bin Faiz (Senior Associate) of the Dispute Resolution Practice of Skrine.
 
 

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