Sambaga Valli a/p KR Ponnusamy v Datuk Bandar Kuala Lumpur & Ors and Another Appeal [2018] 1 MLJ 784

Case: Sambaga Valli a/p KR Ponnusamy v Datuk Bandar Kuala Lumpur & Ors and Another Appeal [2018] 1 MLJ 784

Court: Court of Appeal (Putrajaya)

Topic: Exemplary Damages

Facts

1.     In this case, the Appellant was a scrap metal trader who rented trading premises from the Kuala Lumpur City Hall Workers Union.

2.     The Appellant had a valid business registration license from the registrar of business and an exemption certificate from the Royal Malaysian Police, which were obtained in accordance with the Second Hand Dealers Act 1946.

3.     However, the Appellant did not have a license for the premises or approval from the First Respondent to construct the structure on the land concerned.

4.     On January 16, 2008, the Respondents conducted an enforcement action and demolished the structure on the land.  They also seized certain goods belonging to the Appellant, which were never returned.

5.     As a result, the Appellant filed a lawsuit against the Respondents, claiming trespass, conversion and detinue (wrongful retention of someone else’s property), negligence, breach of statutory duty, conspiracy, and misfeasance in public office.

6.     After the trial, the Court ruled in favor of the Appellant and ordered damages to be assessed by the Senior Assistant Registrar (SAR).   The SAR awarded the Appellant RM 2,012,100.00 in special damages, RM 2,000,000.00 in general damages, RM 2,000,000.00 in aggravated damages, and RM 2,503,000.00 in exemplary damages.

7.     However, on appeal against the assessment, the presiding judge; a Judicial Commissioner (JC) reviewed the awards and made some adjustments.  The JC reduced the awards for special damages and general damages to RM 55,000.00 but upheld the RM 2,000,000.00 award for aggravated damages.

8.     Additionally, the JC awarded 25% of the total of the special, general, and aggravated damages, amounting to RM 527,500.00 as exemplary damages.

9.     The Appellant appealed against the entire decision of the JC.   In a separate appeal, the Respondents only appealed against the awards for exemplary and aggravated damages.

10.  They argued that since they were merely carrying out their statutory duties of enforcement action, it was inappropriate for the Court to award aggravated and exemplary damages against them, as those damages are punitive in nature.

11.  Both the SAR and the JC believed that the awards were justified because the actions of the Respondents had violated the constitutional rights of the Appellant.

12.  The main task of the Court of Appeal is to review the arguments and evidence presented by both parties and determine whether the damages awarded by the SAR and JC were appropriate considering the circumstances of the case.

Issue 1.      Whether the exemplary damages can be awarded to the Appellant?
Ratios

1.      In deciding the issue, the Court of Appeal made an independent interpretation for the term of exemplary damages where it has been alluded with much clarity as follows:

“The exemplary damages or punitive damages, the two terms now regarded as interchangeable — are additional damages awarded with reference to the conduct of the defendant, to signify disapproval, condemnation or denunciation of the defendant’s tortious act, and to punish the defendant.  Exemplary damages may be awarded where the defendant has acted with vindictiveness or malice, or where he has acted with a ‘contumelious disregard’ for the right to the plaintiff. The primary purpose of an award of exemplary damages may be deterrent, or punitive and retributory, and the award may also have an important function in vindicating the rights of the plaintiff (see Rookes v Barnard [1964] 1 All ER 367”   [Emphasis Added]

2.     As far as the present case is concerned, the Court of Appeal decided that the Appellant should receive exemplary damages based on the findings of the Courts below as the Respondents were found liable for trespass, conversion, and detinue regarding the Appellant’s seized goods.

3.     While reviewing the judicial decision of the Courts below, the Court of Appeal also concurred that while the Respondents had the right to remove the Appellant’s goods from the land, they did not have the right to convert them.

4.     This conversion deprived the Appellant of her rights under the Federal Constitution, specifically Article 13.  The judge concluded that the Respondents, who were government servants, acted oppressively and unconstitutionally. Consequently, the Appellant is entitled to exemplary damages.

5.     The propounded principle in the landmark case of Rookes v Barnard [1964] 1 All ER 367 also has been followed by the Court of Appeal where the exemplary damages is awarded in the event that there are oppressive, arbitrary or unconstitutional action by the servants of the government towards the people.

6.     The Court of Appeal was in the view that the exemplary damages awarded in this case was to penalize the Respondents for their oppressive and unconstitutional behavior as the government servants and to discourage similar actions in the future.

7.     While assessing the quantum of damages, there are outlined principles which had also been clearly emphasized by the Court of Appeal as follows:

Exemplary damages are not intended to compensate the plaintiff and are not recoverable as a matter of right.  The amount of the exemplary damages award is left to the judge’s discretion and is determined by considering the character of the defendant’s misconduct, the nature and extension of the plaintiff ’s injury and the means of the defendant. The quantum of exemplary damages to be awarded must be appropriate to the wrongdoing inflicted to the parties involved. Exemplary damages must not be uncontrolled or arbitrary; they must be of an amount that is the minimum necessary to achieve their purpose in the context of the particular case.”   [Emphasis Added]

8.     A reference also has been made to the case of Sin Heap Lee-Marubeni Sdn Bhd v Yip Shou Shan [2005] 1 MLJ 515 where the award for exemplary damages should be calculated at 25% of the award for compensatory damages.

9.      As the matter of quantum of damages were put into the discretion of the judges by considering the three (3) abovementioned consideration and the referred case in Sin Heap Lee, it was held by the Court of Appeal that the amount of exemplary damages to be awarded to the Appellant was RM 703,025.00.

Decision

1.     The exemplary damages was awarded at RM 703,025.00 to the Appellant.

2.    The appeals by the Appellant & Respondent respectively were partly allowed and varied.

Key Take Away

1.     Exemplary damages or punitive damages may be awarded in two categories of cases as outlined in Rookes v Barnard [1964] AC 1129

(a)  Oppressive, arbitrary, or unconstitutional action by government servants.

(b)  Cases where the defendant’s conduct was calculated to make a profit for themselves that may exceed the compensation payable to the plaintiff.

2.     The listed three principles for assessing the quantum of exemplary damages were also outlined in the present case as follows:

(a)  Exemplary damages are not intended to compensate the plaintiff and are not a guaranteed right of recovery.

(b)  The amount of exemplary damages is at the judge’s discretion and is determined by considering the character of the defendant’s misconduct, the nature and extent of the plaintiff’s injury, and the means of the defendant.

(c)  The quantum of exemplary damages awarded must be appropriate to the wrongdoing inflicted upon the parties involved.

3.     It is important to note that an order for exemplary damages will generally only be granted if the circumstances of the case fall within the two categories mentioned above and fulfill the considerations set out in Rookes v Barnard.

4.     It is up to the discretion of the Court to carefully assess the nature of the defendant’s misconduct, the harm suffered by the plaintiff, and the appropriate amount necessary to address and deter such wrongdoing.

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