Bank Kerjasama Rakyat Malaysia Berhad v Kamuja Hartamas Sdn Bhd

Appellant(s): Bank Kerjasama Rakyat Malaysia Berhad

Respondent(s): Xxxx

• YA Datuk Ismail Bin Brahim
• YA Datuk Dr Lim Hock Leng
• YA Datin Paduka Evrol Mariette Peters

• The bank wrongfully terminated Islamic financing facilities granted to the developer for a housing project, a finding of liability that was conclusively established in earlier proceedings and affirmed on appeal.
• Following remittal for assessment of damages, the Deputy Registrar awarded only nominal damages of RM5,000, finding that the developer had failed to prove causation between the wrongful termination and the project's failure.
• On appeal, the High Court reversed this finding and awarded RM15,140,156.15 for loss of profits (based on a revised development proposal), which was then reduced to RM7,506,518.67 after deductions for income tax and land sale proceeds, prompting cross-appeals by both parties on quantum.

• Whether the earlier Court of Appeal judgment on liability rendered the claim for loss of profits res judicata, and whether the bank's wrongful termination was the effective cause of the project's failure under the first limb of section 74 of the Contracts Act 1950.
• Whether damages based on a revised development proposal (never formally approved by the bank) were within the parties' reasonable contemplation under the second limb of section 74, including the applicability of estoppel by silence/acquiescence.
• Whether the High Court erred in its quantum assessment, including the propriety of deductions for land sale proceeds and income tax (applying the Gourley principle), and whether pre-judgment interest was correctly awarded absent an express direction from the earlier liability judgment.

• The Court held there was no res judicata as the earlier judgment merely remitted the matter for assessment without finally determining damages, and found on the evidence that the wrongful termination (not the developer's alleged lack of financial capacity or subsequent conduct) was the effective cause of the project's failure.
• The Court held that the bank was estopped from denying the revised development proposal, having stood by without objection despite being informed of it and supplied with supporting documents; loss of profits based on that proposal were therefore foreseeable and recoverable under section 74, and the High Court's GDV-GDC assessment method was upheld as not plainly erroneous.
• The Court set aside the RM4 million deduction for land sale proceeds and substituted a deduction of RM4,220,000 (the net benefit after accounting for acquisition cost), upheld the 24% income tax deduction per the Gourley principle, and held that interest (not being pre-judgment interest in this context) properly ran from 6 June 2016; the bank's appeal was allowed only in part and the developer's cross-appeal was dismissed in its entirety.