PERAK INTEGRATED NETWORK SERVICES SDN BHD v 1. ) PINS OSC & MAINTENANCE SERVICES SDN BHD 2. ) URBAN DOMAIN SDN. BHD.

Case Significance

Confirms that a supervening winding up does not automatically cap the period of an assessment of damages fixed by a liability judgment, and applies res judicata and estoppel so that an issue available at the liability stage cannot be reopened at the quantum stage; quantum was remitted to a court-appointed expert.

This Federal Court decision, one of three related appeals heard together, arises from a common-law derivative action in which Urban Domain Sdn Bhd sued on behalf of a joint-venture company, PINS OSC Maintenance Services Sdn Bhd, against its joint-venture partner Perak Integrated Network Services Sdn Bhd (PINS) for loss of profit flowing from a breach of the parties' Management Agreement and its supplement. After the joint-venture company obtained a liability judgment, questions arose at the quantum stage that the Federal Court was asked to resolve.

The appeals raised two issues of general importance. The first — the "Subsequent Winding Up Issue" — was whether the winding up of a company after it has obtained a liability judgment in a derivative action, but before quantum is assessed, limits the recoverable quantum to the period ending on the winding-up date. The second — the "Interpretation of Liability Judgment Issue" — was whether, where a judgment specified only an item to be deducted from the gross revenue of certain services, the assessment of quantum should also take into account the costs and expenses the company incurred in generating that gross revenue.

On the winding-up issue the Federal Court held that a subsequent winding up "did not in any way affect the period for which PINS was held liable", the winding up being irrelevant to the assessment; and, applying principles of res judicata and estoppel, that PINS was in any event precluded from raising the winding up at the quantum stage when it was a matter known to PINS and capable of being raised in the earlier liability appeals. On the interpretation issue, the court directed that the quantum be assessed by a court-appointed expert, whose determination was to be final save for patent and perverse errors, and gave directions for the preparation of that report.

The judgment is significant for confirming that a supervening winding up does not automatically cap the period of an assessment of damages already fixed by a liability judgment, and for its application of the principle that an issue available at the liability stage cannot be reopened at the quantum stage.