Poteck Enterprise Sdn Bhd v Richallenge Corporation Sdn Bhd

Case Significance

Illustrates the evidential rigour required in proving damages on a terminated construction contract: an appellate court will recalibrate an assessment resting on unsupported assumptions or unproven claims, reducing to nil or nominal figures those heads — such as variations and loss of profit — not established by clear factual evidence rather than expert opinion alone.

This Court of Appeal decision at Kota Kinabalu concerns an appeal on the assessment of damages following the termination of a construction contract. The appellant, the defendant in the High Court, and the respondent, the plaintiff, were both private companies, and the dispute concerned the quantum of damages the respondent was entitled to recover after the contract was terminated. The appeal engaged the principles that govern appellate interference with a damages assessment: an appellate court may intervene where the trial judge's findings are plainly wrong through a lack of judicial appreciation of the evidence, such as a failure to consider relevant facts or reliance on unsupported assumptions. Central to the court's approach was the rule that damages must be proved with clear and precise evidence, and that reliance solely on expert opinion without a supporting factual foundation is insufficient; where heads of claim such as variations or loss of profit are not adequately proved, they cannot be awarded in full. Applying these principles, the Court of Appeal found that the High Court had plainly erred in aspects of its assessment, and it unanimously allowed the appeal in part. It substituted the award for work done at RM783,200, substituted the award for variations at nil, and substituted the award for loss of profit at nominal damages of RM10,000. Determined by a panel comprising Lee Swee Seng, Lim Chong Fong and Alwi bin Abdul Wahab JJCA, the judgment is a useful illustration of the evidential rigour required in proving damages on a terminated construction contract: an appellate court will recalibrate an assessment that rests on unsupported assumptions or unproven claims, reducing to nil or to nominal figures those heads — such as variations and loss of profit — that are not established by clear factual evidence rather than expert opinion alone. The decision confirms that the burden of proving loss rests on the claimant and is not discharged by projections or assumptions unsupported by the underlying facts, however confidently they are advanced.