1|Page

In the Federal Court

Between

Mammoth Construction Sdn Bhd   ...Appellant

And 

Rex Land Sdn Bhd ...Respondent

Bundle of Authorities

  

Cases:

1. Attorney General v Blake (Jonathan Cape Ltd Third Party) [2001] 1 AC 268

2. Banque Financiere de la Cite v Parc (Battersea) Ltd [1999] 1 AC 221

3. Cassell & Co Ltd v Broome [1972] AC 1027

4. Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2013] MLJU 551

5. Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441

6. Tradewinds Properties Sdn Bhd v Zulhkiple bin A Bakar & Ors [2019] 1 MLJ 421

7. Rookes Appellant; and Barnard and others respondents [1964] A.C. 1129

1
 2|Page

INDEX Page

1. Attorney General v Blake (Jonathan Cape Ltd Third Party) 3-4

2. Banque Financiere de la Cite v Parc (Battersea) Ltd 5

3. Cassell & Co Ltd v Broome 6

4. Dream Property Sdn Bhd v Atlas Housing Sdn Bhd 7-9

5. Dream Property Sdn Bhd v Atlas Housing Sdn Bhd 10-14

6. Tradewinds Properties Sdn Bhd v Zulhkiple bin A Bakar & Ors 15-16

7. Rookes v Barnard (No.1) 17-19

2
 Attorney General v Blake (Jonathan Cape Ltd Third Party) [2001] 1 AC 268

committing the wrong, but "one of compensating the plaintiff". In Occidental Worldwide Investment Corporation v
Skibs A/S Avanti [1976] 1 Lloyd's Rep 293, 337, Kerr J summarily rejected a claim for an account of profits when
ship owners withdrew ships on a rising market.

There is a light sprinkling of cases where courts have made orders having the same effect as an order for an
account of profits, but the courts seem always to have attached a different label. A person who, in breach of
contract, sells land twice over must surrender his profits on the second sale to the original buyer. Since courts
regularly make orders for the specific performance of contracts for the sale of land, a seller of land is, to an extent,
regarded as holding the land on trust for the buyer: Lake v Bayliss [1974] 1 WLR 1073. In Reid-Newfoundland Co v
Anglo-American Telegraph Co Ltd [1912] AC 555 a railway company agreed not to transmit any commercial
messages over a particular telegraph wire except for the benefit and account of the telegraph company. The Privy
Council held that the railway company was liable to account as a trustee for the profits it wrongfully made from its
use of the wire for commercial purposes. In British Motor Trade Association v Gilbert [1951] 2 All ER 641 the
plaintiff suffered no financial loss but the award of damages for breach of contract effectively stripped the
wrongdoer of the profit he had made from his wrongful venture into the black market for new cars.

These cases illustrate that circumstances do arise when the just response to a breach of contract is that the
wrongdoer should not be permitted to retain any profit from the breach. In these cases the courts have reached the
desired result by straining existing concepts. Professor Peter Birks has deplored the "failure of jurisprudence when
the law is forced into this kind of abusive instrumentalism"; see "Profits of Breach of Contract" (1993) 109 LQR 518,
520. Some years ago Professor Dawson suggested there is no inherent reason why the technique of equity courts
in land contracts should not be more widely employed, not by granting remedies as the by-product of a phantom
"trust" created by the contract, but as an alternative form of money judgment remedy. That well known ailment of
lawyers, a hardening of the categories, ought not to be an obstacle: see "Restitution or Damages" (1959) 20 Ohio
SLJ 175.

My conclusion is that there seems to be no reason, in principle, why the court must in all circumstances rule out an
account of profits as a remedy for breach of contract. I prefer to avoid the unhappy expression "restitutionary
damages". Remedies are the law's response to a wrong (or, more precisely, to a cause of action). When,
exceptionally, a just response to a breach of contract so requires, the court should be able to grant the discretionary

  [*285] 

remedy of requiring a defendant to account to the plaintiff for the benefits he has received from his breach of
contract. In the same way as a plaintiff's interest in performance of a contract may render it just and equitable for
the court to make an order for specific performance or grant an injunction, so the plaintiff's interest in performance
may make it just and equitable that the defendant should retain no benefit from his breach of contract.

The state of the authorities encourages me to reach this conclusion, rather than the reverse. The law recognises
that damages are not always a sufficient remedy for breach of contract. This is the foundation of the court's
jurisdiction to grant the remedies of specific performance and injunction. Even when awarding damages, the law
does not adhere slavishly to the concept of compensation for financially measurable loss. When the circumstances
require, damages are measured by reference to the benefit obtained by the wrongdoer. This applies to interference
with property rights. Recently, the like approach has been adopted to breach of contract. Further, in certain
circumstances an account of profits is ordered in preference to an award of damages. Sometimes the injured party
is given the choice: either compensatory damages or an account of the wrongdoer's profits. Breach of confidence is
an instance of this. If confidential information is wrongfully divulged in breach of a non-disclosure agreement, it
would be nothing short of sophistry to say that an account of profits may be ordered in respect of the equitable
wrong but not in respect of the breach of contract which governs the relationship between the parties. With the
established authorities going thus far, I consider it would be only a modest step for the law to recognise openly that,
exceptionally, an account of profits may be the most appropriate remedy for breach of contract. It is not as though

1
 Attorney General v Blake (Jonathan Cape Ltd Third Party) [2001] 1 AC 268

this step would contradict some recognised principle applied consistently throughout the law to the grant or
withholding of the remedy of an account of profits. No such principle is discernible.

The main argument against the availability of an account of profits as a remedy for breach of contract is that the
circumstances where this remedy may be granted will be uncertain. This will have an unsettling effect on
commercial contracts where certainty is important. I do not think these fears are well founded. I see no reason why,
in practice, the availability of the remedy of an account of profits need disturb settled expectations in the commercial
or consumer world. An account of profits will be appropriate only in exceptional circumstances. Normally the
remedies of damages, specific performance and injunction, coupled with the characterisation of some contractual
obligations as fiduciary, will provide an adequate response to a breach of contract. It will be only in exceptional
cases, where those remedies are inadequate, that any question of accounting for profits will arise. No fixed rules
can be prescribed. The court will have regard to all the circumstances, including the subject matter of the contract,
the purpose of the contractual provision which has been breached, the circumstances in which the breach occurred,
the consequences of the breach and the circumstances in which relief is being sought. A useful general guide,
although not exhaustive, is whether the plaintiff had a legitimate interest in preventing the defendant's profit-making
activity and, hence, in depriving him of his profit.

It would be difficult, and unwise, to attempt to be more specific. In the Court of Appeal [1998] Ch 439 Lord Woolf
MR suggested there are at least

  [*286] 

two situations in which justice requires the award of restitutionary damages where compensatory damages would
be inadequate: see p 458. Lord Woolf MR was not there addressing the question of when an account of profits, in
the conventional sense, should be available. But I should add that, so far as an account of profits is concerned, the
suggested categorisation would not assist. The first suggested category was the case of "skimped" performance,
where the defendant fails to provide the full extent of services he has contracted to provide. He should be liable to
pay back the amount of expenditure he saved by the breach. This is a much discussed problem. But a part refund
of the price agreed for services would not fall within the scope of an account of profits as ordinarily understood. Nor
does an account of profits seem to be needed in this context. The resolution of the problem of cases of skimped
performance, where the plaintiff does not get what was agreed, may best be found elsewhere. If a shopkeeper
supplies inferior and cheaper goods than those ordered and paid for, he has to refund the difference in price. That
would be the outcome of a claim for damages for breach of contract. That would be so, irrespective of whether the
goods in fact served the intended purpose. There must be scope for a similar approach, without any straining of
principle, in cases where the defendant provided inferior and cheaper services than those contracted for.

The second suggested category was where the defendant has obtained his profit by doing the very thing he
contracted not to do. This category is defined too widely to assist. The category is apt to embrace all express
negative obligations. But something more is required than mere breach of such an obligation before an account of
profits will be the appropriate remedy.

Lord Woolf MR [1998] Ch 439, 457, 458, also suggested three facts which should not be a sufficient ground for
departing from the normal basis on which damages are awarded: the fact that the breach was cynical and
deliberate; the fact that the breach enabled the defendant to enter into a more profitable contract elsewhere; and
the fact that by entering into a new and more profitable contract the defendant put it out of his power to perform his
contract with the plaintiff. I agree that none of these facts would be, by itself, a good reason for ordering an account
of profits.

The present case

The present case is exceptional. The context is employment as a member of the security and intelligence services.
Secret information is the lifeblood of these services. In the 1950s Blake deliberately committed repeated breaches

2
Attorney General v Blake (Jonathan Cape Ltd Third Party) [2001] 1 AC 268

3
 BANQUE FINANCIERE DE LA CITÉ APPELLANTS AND PARC (BATTERSEA) LTD. AND OTHERS
RESPONDENTS [1999] 1 A.C. 221

Restitution (1985), be unjust enrichment by subtraction. If the case is approached in this way it follows that B.F.C. is
either entitled to a

  [*227] 

restitutionary remedy or it is not so entitled. After all, unjust enrichment ranks next to contract and tort as part of the
law of obligations. It is an independent source of rights and obligations.

Four questions arise. (1) Has O.O.L. benefited or been enriched? (2) Was the enrichment at the expense of B.F.C.?
(3) Was the enrichment unjust? (4) Are there any defences? The first requirement is satisfied: the repayment of
£10m. of the loan pro tanto improved O.O.L.'s position as chargee. That is conceded. The second requirement was
in dispute. Stripped to its essentials the argument of counsel for O.O.L. was that the interposition of the loan to Mr.
Herzig meant that the enrichment of O.O.L. was at the expense of Mr. Herzig. The loan to Mr. Herzig was a genuine
one spurred on by the motive of avoiding Swiss regulatory requirements. But it was nevertheless no more than a
formal act designed to allow the transaction to proceed. It does not alter the reality that O.O.L. was enriched by the
money advanced by B.F.C. via Mr. Herzig to Parc. To allow the interposition of Mr. Herzig to alter the substance of
the transaction would be pure formalism.

That brings me to the third requirement, which was the ground upon which the Court of Appeal decided against
B.F.C. Since no special defences were relied on, this was also the major terrain of debate on the present appeal. It
is not seriously disputed that by asking for a letter of postponement B.F.C. expected that they would obtain a form
of security sufficient to postpone repayment of loans by all companies in the Omni Group until repayment of the
B.F.C. loan. In any event, that fact is clearly established. But for B.F.C.'s mistaken belief that it was protected in
respect of intra-group indebtedness B.F.C. would not have proceeded with the refinancing. In these circumstances
there is in my judgment a principled ground for granting a restitutionary remedy.

Counsel for O.O.L. challenged the view that restitutionary liability is prima facie established by submitting that there
was no mutual intention that B.F.C. should have priority as against O.O.L. Restitutionary liability is triggered by a
range of unjust factors or grounds of restitution. Defeated bilateral expectations are a prime source of such liability.
But sometimes unilateral defeated expectations may be sufficient, e.g. payments made under a unilateral mistake
of fact where the ground of liability is the mistake of one party. I would reject the idea that in a case such as the
present a test of mutuality must be satisfied.

It is now necessary to mention the other factors which the Court of Appeal relied on in concluding that B.F.C. was
not entitled to succeed. Perhaps in passing Morritt L.J. commented that neither Parc nor O.O.L. was guilty of any
misrepresentation. It is sufficient to say that restitution is not a fault-based remedy. Morritt L.J. then pointed out that
B.F.C. failed to take elementary precautions to safeguard their interests. Counsel for O.O.L. conceded that this
feature is not a self-sufficient answer to the claim. At one stage he argued that this feature is relevant to the
exercise of a discretion but I understood him ultimately to concede that the relief sought is not discretionary. In any
event, the neglect of B.F.C. is akin to the carelessness of a mistaken payor: it does not by itself undermine the
ground of restitution.

  [*228] 

On the arguments as presented in the Court of Appeal Morritt L.J. concluded that B.F.C., if subrogated, would be in
competition with R.T.B. Factually this is incorrect. B.F.C. knew that R.T.B. had a first charge over the property. The
letter of postponement, and the circumstances of the case, show that B.F.C. merely expected to receive priority
over loans by other companies in the Omni Group. This particular obstacle is not a real one.

The Court of Appeal considered that subrogation if allowed would place B.F.C. in a better position than if the
 BANQUE FINANCIERE DE LA CITÉ APPELLANTS AND PARC (BATTERSEA) LTD. AND OTHERS
RESPONDENTS [1999] 1 A.C. 221

postponement letter had been binding on Parc and O.O.L. The Court of Appeal considered the matter from the
point of view of B.F.C. seeking to step into the shoes of R.T.B. as chargee.
 CASSELL & CO. LTD. APPELLANTS AND BROOME AND ANOTHER RESPONDENTS [1972] A.C.
1027

11 (1955) title "Damages"; p. 233, para. 391:

"Exemplary damages. Where the wounded feeling and injured pride of a plaintiff, or the misconduct of a defendant, may be
taken into consideration, the principle of restitutio in integrum no longer applies. Damages are then awarded not merely to
recompense the plaintiff for the loss he has sustained by reason of the defendant's wrongful act, but to punish the
defendant in an exemplary manner, and vindicate the distinction between a wilful and an innocent wrongdoer. Such
damages are said to be 'at large,' and, further, have been called exemplary, vindictive, penal, punitive, aggravated, or
retributory."

This passage clearly shows the extraordinary confusion of terminology reflecting differences in thinking and
principle which existed up to 1964. Apart from anything else, "aggravated" damages, classed as compensatory by
Mayne and MacGregor, and by Professor McCormick, are assimilated to exemplary or punitive damages as such,
as is the phrase damages "at large," - an expression so indefinite in its connotation that counsel for the appellants
in argument felt able to include within it (as this passage suggests inappropriately) even the general damages for
pain and suffering in a personal injuries case. Clearly, before Rookes v. Barnard, the thinking and the terminology
alike called aloud for further investigation and exposition, and, since in such cases it is the classic function of this
House to make such reviews, I cannot accept eke simplicity doctrine of the Court of Appeal either that there was no
need to make it, or that the only thing to restore clarity is to go back to the state of the law as it was in 1963. In
passing, I may say that I do not attach so much importance as did the Court of Appeal to the circumstance that eke
two categories mentioned by Lord Devlin had never been discussed in argument by counsel. The cases and
textbooks on exemplary damages had been exhaustively read, and when this House undertakes a careful review of
the law it is not to be described as acting per incuriam or ultra vires if it identifies and expounds principles not
previously apparent to the counsel who addressed it or to the judges and text book writers whose divergent or
confusing expressions led to the necessity for the investigation. Of course, in a sense, it would be easy enough to
direct a jury under the old law if one simply said to them that anyconduct of which they chose on rational grounds to
disapprove would give rise to an award of exemplary damages and that any sum they chose to think appropriate as
the penalty would be acceptable. But no one in recent years has ever thought this, although it is noteworthy

 [*1070] 

that as recently as 1912 the author of Sedgwick's A Treatise on the Measure of Damages, 9th ed., vol. I, para. 349,
pp. 688-689 was writing:

"Until comparatively recent times juries were as arbitrary judges of the amount of damages as of the facts … Even as late
as the time of Lord Mansfield it was possible for counsel to state the law to be that 'The court cannot measure the ground
on which the jury find damages that may be thought large; they may find upon facts within their own knowledge. …' … The
doctrine of exemplary damages is thus seen to hail e originated in a survival in this limited class of cases of the old arbitrary
power of the jury." (Italics mine.)

Clearly modern juries must be given adequate professional guidance and the object of Lord Devlin's opinion in
Rookes v. Barnard was to enable them to have it. Speaking for myself, and whatever view I formed of the
categories, I would find it impossible to return to the chaos which is euphemistically referred to by Phillimore L.J.
[1971] 2 Q.B. 354, 399 as "the law as it was before Rookes v. Barnard."

Before I examine the actual decision in Rookes v. Barnard I would now propose to make two sets of observations of
a general character. The first relates to the context in which damages must be awarded, the second to the
terminology to be used in particular classes of case.

The subjective element in damages

Of all the various remedies available at common law, damages are the remedy of most general application at the
present day, and they remain the prime remedy in actions for breach of contract and tort. They have been defined
as "the pecuniary compensation obtainable by success in an action for a wrong which is either a tort or a breach of
 Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2013] MLJU 551
....

to the following passage in the judgment of the Court in Mohd Zain Yusoff & Ors v Avel Consultant Sdn Bhd & Anor
[2006] 6 MLJ 314 at page 377 where the learned judge said that:

"[7] The main issue to be decided in this appeal by the appellants is whether the respondents are only entitled to profits,
and not gross income derived by the appellants from their breaches. It is the appellants' case that the respondents are only
entitled to profits and that the appellants should be allowed to make deductions for the expenditure incurred by them to
earn the income. We are in agreement with the contention of the appellants and it is for this reason that this Court had
earlier ordered the SAR to take an account of the income and expenses incurred by the appellants and submit his findings
to the Court, on this point, we find support in the principle as applied in the Australian High Court case of Warman
International Limited & Anor v Brian Dwyer & 2 Ors [1995] 2 CLJ 326. In that case, there was a breach of fiduciary duty by
the general manager of the company ('the former employer') when he formed new companies to carry out the business of
the former employer. The Court inter alia held that in ascertaining the damages the former employer would be entitled, the
appropriate order is for an account of profits of the business of the new companies before tax less an appropriate allowance
for expenses, skill, expertise, effort and resources contributed by them"

and the further passage in the judgment of this Court in Tengku Abdullah Ibni Sultan Abu Bakar & Ors v Mohd Latiff
Bin Shah Mohd & Ors and Other Appeal [1996] 2 MLJ 265 at page 442 stating that:

"there is, we find, little difficulty in this area of the law. a Plaintiff who proves a case of breach of trust or of fiduciary
relationship is entitled to a wide range of relief. He may ask for and obtain an account of profits. Or he may have a receiver
appointed to recover money due to him. Or he may obtain damages. The appropriateness of the particular remedy depends
very much upon the facts of each case, (see, eg, the orders made in Avel Consultants Sdn Bhd & Anor v Mohamed Zain
Yusof & Ors [1985] 2 MLJ 209".)

[34]Learned counsel for the appellant submitted that arising from Her Ladyship's earlier finding that there existed no
trust / fiduciary relationship between the parties, this order was plainly inconsistent with Her Ladyship's own earlier
ruling. The inconsistency consisting of Her Ladyship dismissing prayer (i) but ordering the consequential relief in the
form of the taking of accounts and payment of profit. A further criticism of this order was that Her Ladyship had
ordered the appellant to not merely pay the profits but also all income derived from the Mall. To the extent that
income includes profits, counsel submitted that the order of Court effectively rendered the appellant to be liable
twice over for the income derived from its activities in the Mall.

[35]With respect, there is no merit in the submission of learned counsel for the appellant. In our judgment, the
Learned Trial Judge was right to apply the principles of law enunciated by Lord Nichols in Attorney General v. Blake
on the facts of this case. We acknowledge that the principles of law enunciated by Lord Nichols is to apply in
exceptional cases of breach of contract only. However, in our judgment, this is such a case. First, the appellant
proceeded with the construction of the Mall when he had been expressly required to refrain from doing so.
Admittedly, he proceeded with the construction on the assumption that the SPA continued to subsist following the
order of the Federal Court. However, the fact remains that the appellant opted to proceed with the construction
when there was a genuine dispute as to whether the SPA had been terminated. In other words, the appellant took
the risk and following the judgment of the High Court in the respondent's favour, the appellant cannot be seen to
benefit from the use of what was in effect in law the respondent's land at all times. In other words, the appellant was
for all intents and purposes a trespasser on the respondent's land following the automatic termination of SPA in
May 2006. The appellant may well argue that the respondent could have prevented this state of affairs by obtaining
an injunction from the Court to restrain it from continuing with the development on the land. With respect, there is no
such obligation on the respondent. Furthermore, there is no certainty that a Court of law would have granted such
an injunction as damages may very well have been considered an adequate remedy since the injunction would
have only resulted in the presence of an abandoned building on the land. Secondly, the use of the PA by the
 Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2013] MLJU 551
....

appellant to conclude Sale and Lease Agreements was clearly beyond the authority of the appellant. This abuse of
authority coupled with the finding of the Learned Trial Judge that the appellant had acted in bad faith clearly justified
the order of the Learned Trial requiring the appellant to account to the respondent for the benefits it received by the
use and occupation of the land and the Mall following the termination of the SPA.

[36]Furthermore, we are in agreement with Her Ladyship that a purchaser let into possession of land before
completion of the contract is liable for the use and occupation of the land based on the decision of the English Court
in Howard v Shaw [1841] 151 ER 973. The Supreme Court of Auckland in the case of Hayes v Ross (no.3) [1919]
NZLR 786 opined that there is no reason why the right of compensation of a wronged vendor in a sale and
purchase agreement for the sale of land should be limited to an account for the rents only by a purchaser in
possession of his land prior completion. The Court reasoned that it could:

"see no actual difference between the fruits of possession in the shape of rent collected from tenants and the advantage
derived from the use of the land" (at page 791).

With respect, we share the opinion expressed by Chapman J in Hayes v. Ross in supporting the ruling of the
Learned Trial Judge that the appellant must account to the respondent for the benefits derived by the appellant by
way of rental income and sale proceeds of the units constructed on the land while in possession of the land till the
surrender of possession of the land and the Mall to the respondent. In this respect, we note that the
pronouncements of Chapman J in Hayes v. Ross have since been approved and followed by Herdman J in Martin v
Finch [1923] NZLR 570 and cited with approval by Dr. Visu Sinnadurai in his book Law of Contract (see page 243).

[37]We agree with the submission of learned Counsel for the appellant that the Learned Trial Judge should not
have ordered for the appellant to be liable to the respondent for both income and profits bearing in mind that the law
is concerned to only compensate the victim of the breach for its losses and not enrich the victim. However, in our
judgment, in fact, the Learned Trial Judge only ordered the appellant to pay the profits and not the income. This is
evident from paragraph 129 of Her Ladyship's judgment which reads as follows:

'I therefore ordered for assessment of the incomes received from the sale and letting of the land and for all profits acquired
by the Defendant before the Registrar to be paid to the Plaintiff'.

In other words, what Her Ladyship ordered was for all of the income derived by the appellant to be assessed by the
Learned Registrar and thereafter for the appellant to pay the ensuing profits derived from such income only to the
respondent.

FIFTH ISSUEDECISION OF THE HIGH COURT ON THE RELIEF SOUGHT BY THE APPELLANT

[38]Apart from disputing the respondent's claim that the appellant was in default in the payment of the balance
purchase price by the due date under the SPA, the appellant also sought to resist the respondent's claim on the
ground that the building to be constructed under the SPA had been completed and was of considerable value
presently. For this reason, learned counsel for the appellant contended that to allow the respondent to rescind the
SPA and grant vacant possession of the land to the respondent would be unjust and consequently the appellant's
relief for specific performance the more appropriate remedy in all the circumstances of this case. This submission
found no favour with the Learned Trial Judge and, in our judgment, rightly so, since it is settled law that a Court of
Law will not preclude a wronged vendor from exercising its right to forfeiture of the land or recovering the land
following the lawful termination of the sale and purchase agreement solely on the ground that this would result in
the respondent enjoying a 'windfall'. Our Courts and the Courts in Australia have consistently distinguished between
 Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2013] MLJU 551
....

cases where the vendor seeks to invoke the right to rescission of the agreement in equity (see Section 36 of the
Specific Relief Act) so as to render the contact void ab initio and common law rescission following the lawful
termination which merely affects obligations de futuro (see LSSC Development Sdn Bhd v Thomas a/l Iruthayam
and Anor and Tanwar Enteprises Pty Ltd v Cauchi and others [2003] 201 ALR 359). For instance, the Federal
recognized to fall within a third category of the common law … called quasi-contract or restitution"

as the basis for this opinion. According to Her Ladyship, apart from the common law principle of unjust enrichment,
the party in breach is also entitled to compensation for any benefit conferred upon the victim pursuant to Section 71
of our Contracts Act. For this reason, Her Ladyship opined that following her decision to allow the respondent
vacant possession of the land and for the receipt by them of the profits received by the appellant by the occupation
and use of the land, the only question that remained to be answered was:

"Whether it was conscionable to allow the plaintiff to receive a windfall (the mall) to the tune of hundreds of million of ringgit
irrespective of the conduct of the parties or whether or not any party might have a wrong or a breach".

(see paragraph 134 of the judgment of the Court)

Her Ladyship proceeded to answer this question in the negative and consequently ordered that there be an
assessment before the Registrar of the costs of the construction of the Mall and for such costs following the
assessment to be paid by the respondent to the appellant.

[43]Her Ladyship did not provide any reasons why Her Ladyship only ordered for the compensation to take the form
of the costs of construction and not the market value of the Mall in Her Ladyship's judgment of 11th November
2011. We were initially inclined to substitute the learned judge's order with an order that the respondent pay the
market value of the Mall. Our inclination to do so was influenced by the fact that the appellant had good reason to
complete the building in a hurry. This reason being the need to complete the construction before Chinese New Year
in early 2007. However, on a careful consideration of the implications of such an order, we are persuaded that the
order made by the Learned Judge that the compensation be limited to the costs of construction is the proper order
to be made in all circumstances of this case. In our opinion, the market value of the Mall is inextricably linked to the
value of the land. As such, in our judgment, to make an order for the respondent to pay the market value of the Mall
would effectively enable the appellant to benefit from any appreciation in the value of the land notwithstanding being
the contract breaker. Accordingly, to order compensation based on market value would, with respect, amount to
allowing the contract breaker to benefit for his wrong. This would be contrary to the pronouncements of the Federal
Court in its judgment in Berjaya Times Square v. M Concept Sdn Bhd (Supra).

[44]We are also in agreement with Her Ladyship that the appellant is entitled to recover the costs of the
construction of the Mall under the alternative route of Section 71 of the Contracts Act. It is generally accepted that
Section 71 is wider in scope than the doctrine of unjust enrichment as applied under England law (see page 753 of
Pollock & Mulla 11th Edition). In our judgment, the appellant's claim for compensation meets the 3 conditions
required to establish the right of compensation under Section 71. These being:

(i) The thing must be done lawfully;

(ii) It must be done by a person not intending to act gratuitously; and
(iii) The person for whom the act is done must enjoy the benefit of it
 Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2013] MLJU 551
....

(see page 756 of Pollock & Mulla 11th Edition)

 Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441

answer to Question 7: We decline to answer, as it is posed without reference to the provisions of the SPA or the
facts of the case; and
answer to Question 8: In the negative. The SPA was not kept alive or revived nor has the plaintiff waived its
right to terminate the SPA.

[93]So far we have dealt with the issues pertaining to the liability questions. We conclude that the defendant only
paid 10% deposit of the purchase price and failed to pay the balance of the purchase price even though obliged to
do so under the SPA. As correctly decided by the High Court and the majority of the Court of Appeal, the plaintiff
had, in our judgment, validly terminated the SPA.

[94]This brings us to the relief questions.

The relief questions(a) Unjust enrichment and restitution

[95]To a large extent, this issue deals with the restitution that the defendant claims it is entitled to, over and above
the costs of construction of the mall, under the law of unjust enrichment. In essence, the defendant claimed that it
should also be awarded for the improvement and enhancement it made to the land. In its amended defence and
counterclaim, the defendant among others pleaded that by building the mall at the costs of RM124m it had greatly
enhanced the value of the land; in no event should the plaintiff be allowed to reap a windfall at the expense of the
defendant and that the plaintiff was not entitled to be unjustly enriched. In consequence, it was further pleaded, the
land with the completed mall should be independently valued, and full credit be given to the defendant on the
ground that it would constitute an unjust enrichment for the plaintiff to receive the mall without paying any adequate
consideration for it.

[96]In addressing this crucial issue, the following points have already been made earlier but deserved to be
reiterated. The SPA was somewhat unconventional in that it specifically allowed the defendant immediate access to
the land and the right to carry out construction of a commercial development on the land upon execution of the SPA
and well before the completion of the SPA. In addition, a PA was also granted to the defendant which allowed the
defendant to perform all acts and deeds in relation to the land as a registered owner could. The plaintiff was aware
that the defendant wanted to buy the land for the purpose of constructing and completing the mall and be ready for
business before Chinese New Year of 2007. The defendant's rights to commence, continue and complete
construction of the mall on the land was separate from and independent of the delivery of vacant possession of the
land.Even with the ongoing litigation between the defendant and the plaintiff, the defendant carried on with the
construction of the mall on the land as the defendant took the position that it was entitled to do so under the SPA
and the PA. The plaintiff did not seek any interim injunctive relief to restrain the defendant from carrying substantial
construction works prior to and/or after the completion date of the SPA of 21 March 2006. By the time the High
Court delivered its decision on 11 November 2011, the mall had been fully operational for more or less a period of
five years since its completion in early January 2007.

[97]It is against the above background, learned counsel for the defendant contended that the majority of the Court
of Appeal in making an order for the return of the land and the mall (together with the business now ongoing
therein) and to only compensate the defendant for the construction costs of the mall would enrich the defendant to a
tune of at least RM263m. The submission of learned counsel was that this draconian award and benefit to the
plaintiff amounts to 'punitive damages' at its highest level. He added that the plaintiff should not be allowed to reap
a windfall at the expense of the defendant and that the plaintiff was not entitled to be unjustly enriched. The main
thrust of learned counsel's contention was that the majority of the Court of Appeal erred in failing to decide the
appeal in a just and equitable manner and instead created a manifestly unfair result by virtue of a failure to fully
judicially appreciate that what was required to be returned to the plaintiff was not the land that the plaintiff had sold
to the defendant, but a physical building of a mall constructed by the defendant (with its own costs of RM124m),
and a vastly enhanced asset in the form of the business of a shopping mall, which enhancement was done through
the sole effort and at the sole costs of the defendant. He also put forward a submission that the majority of the
Court of Appeal in holding the defendant to be a contract-breaker paid inadequate attention to the unconscionable
 Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441

So the remedy of restitution differs from that of damages. It is the gain that needs to be measured, not the loss to the
claimant. The gain needs to be reversed if the claimant is to make good his remedy.

[117]The above passages from the judgments of the House of Lords are instructive and are significant contribution
to the development of law of unjust enrichment. The principle underlying the cases of Banque Financiere de la Cite
v Parc (Battersea) Ltd and Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v IRC is that, in the context of the
present case, a cause of action in unjust enrichment can give rise to a right to restitution where it can be
established that:
(iii) the plaintiff must have been enriched;
(iii) the enrichment must be gained at the defendant's expense;
(iii) that the retention of the benefit by the plaintiff was unjust; and
(iii) there must be no defence available to extinguish or reduce the plaintiff's liability to make restitution.

[118]Nearer home, there is now no longer any question that unjust enrichment law is a new developing area of law
which is recognised by our courts. That the principle of unjust enrichment is the basis to justify an award of
restitutionary relief can be seen inSediperak Sdn Bhd v Baboo Chowdhury [1999] 5 MLJ 229 and in Air Express
International (M) Sdn Bhd v MISC Agencies Sdn Bhd [2012] 4 MLJ 59. Nevertheless, it has to be said that despite
the increase in judicial reference to the expression of unjust enrichment to justify an award of restitutionary reliefs,
the law of unjust enrichment is still in its formative stage in our jurisdiction (see article entitled 'An Introduction to the
Law of Unjust Enrichment' [2013] 5 MLJ i by Alvin W-L See). In our view, the time has come for this court to
recognise the law of unjust enrichment by which justice is done in a range factual circumstances, and that the
restitutionary remedy is at all times so applied to attain justice.

[119]Applying those principles, we now turn to consider whether the defendant has made out a cause of action in
unjust enrichment: the plaintiff has been enriched, that this enrichment was gained at the defendant's expense, that
the plaintiff's enrichment at the defendant's expense was unjust, and whether there are any special defences to the
claim.

[120]We will consider each of the requirements in turn. But first it must be noted that no special defence was relied
on by the plaintiff; in that sense the fourth requirement was not in dispute.

Was the plaintiff enriched

[121]Benefits are only capable of generating claims in unjust enrichment if they have monetary value (see Goff &
Jones on The Law of Unjust Enrichment para 4-03). In this regard, it is important to point out that what is required to
be returned to the plaintiff is not the land that the plaintiff had sold to the defendant, but an enormously enhanced
and improved asset in the form of the business of a mall, which unquestionably have a monetary value. One
important fact requires to be kept in mind. The mall, has been a thriving mall with an occupancy rate of more than
80% tenanted with over 250 retail outlets, operating for the past seven years since its completion in December
2006.

[122]It cannot be disputed that the market value of the mall far exceeds that of the value of the land. As submitted
by learned counsel for the defendant, if the mall were to be sold to a third party, the unjust enrichment and undue
benefit accrued to the plaintiff would be enormous. At its very worst, the land if left empty or vacant would not have
appreciated considerably. This in itself would enrich the plaintiff with a windfall of a fully occupied and vibrant mall
with tenants on the land resulting in undue enrichment far in excess of the contractual price of the land.

[123]The plaintiff has unquestionably benefited even though it did not request for the mall to be constructed. But the
mall was not constructed and maintained by the defendant to benefit the plaintiff gratuitously. The plaintiff does not
 Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441

seek the aid of the court to pull down the mall. The plaintiff undoubtedly is now in a position to have the benefit of a
completely constructed mall. The construction of the Mall is indeed an objective enrichment to the plaintiff. The
plaintiff would receive a massively enhanced asset and this adds to its enrichment. The mall is an indisputable
benefit to the plaintiff.Therefore, we conclude that the first requirement is satisfied.

Was the enrichment at the expense of the defendant

[124]The defendant did not only construct a building, or merely constructed a property on land. The defendant had
built and continues to build an entire enterprise, brand name, goodwill encompassing all that is known as the mall.
But more than that, the defendant's bona fide improvement and enhancement of the land, namely by obtaining
permission, building plan approval and constructing the mall were all done entirely through the sole act and effort
and at the sole costs of the defendant. By reason of the defendant constructing the mall at its own costs on the
land, it had substantially enhanced in value.

[125]In this regard, we have given our utmost consideration of the two cases relied on by learned counsel for the
plaintiff, namely Blue Haven Enterprises Ltd v Tully and JS Bloor Ltd v Pavillion Developments Ltd to point the
difference of that cases from the case before us. In the present case the majority decision of the Court of Appeal
made a finding that the construction in itself was lawful and that the defendant had a legal right to continue the
construction of the mall pending the final determination of the suit herein in the High Court as the PA was not
terminated. Moreover, apart from issuing a single letter dated 18 October 2006 to ask that the defendant cease all
construction work on the land, the plaintiff took no other action to stop the defendant from constructing on the land.
The plaintiff at no time took any steps to revoke the PA given to the defendant.The plaintiff did not obtain an
injunction to stop the defendant from constructing the mall after the alleged breach of contract at the relevant period
in question.

[126]The defendant had embarked upon the promotion of the mall and was responsible for the overall running,
upkeep and maintenance of the building, road and infrastructure as well as the general administration of the mall.
The defendant had expended time, effort, expertise and all at its own costs in establishing and maintaining the
business venture known as the mall to the stature and success it had reached to date. This involved extensive and
continuous marketing and promotional strategies since the inception of the mall.

[127]In our judgment, the enrichment or benefit of the plaintiff was undoubtedly at the expense of the defendant.

Was the enrichment unjust

[128]The most important question which we must now asked is whether it is unjust for the plaintiff to retain to the
benefit (the unjust question). The English approach to the unjust question is to ascertain an unjust factor such as,
for example, mistake or failure of consideration. This differs with the civilian approach to the unjust question which
consider whether there is a lack of juristic basis.Goff & Jones on The Law of Unjust Enrichment, para 1-11,
explained these two approaches as follows:

Many civilian and mixed law systems have a law of unjustified enrichment, under which a claimant will be entitled to
restitution if he can show that a defendant was enriched at his expense and that there was no legal ground for the
defendant's enrichment.Under these systems a defendant can escape restitutionary liability by showing that there was a
legal ground for his enrichment, for example because the claimant was required to benefit the defendant by statute or by
contract. The reason why there is no liability in these circumstances is that the defendant's enrichment is not unjustified and
so the claimant has no prima facie right to restitution.

The English law of unjust enrichment frequently produces the same results as the law of civilian and mixed law systems,
but it works in a different way. Under English law, a claimant will be entitled to restitution if he can show that a defendant
was enriched at his expense, and that the circumstances are such that the law regards this enrichment as unjust. For
example, a claimant will have a prima facie right to restitution where he has transferred a benefit to a defendant by mistake,
under duress, or on a basis that fails. Nevertheless, the defendant can escape liability if another legal rule entitles him to
 Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441

keep the benefit, and this rule overrides the rule generated by the law of unjust enrichment which entitles the overrides the
rule generated by the law of unjust enrichment which entitles the defendant to restitution. For example, a claimant may
there were no accounting of profits awarded. With all respect, the majority of the Court of Appeal was patently
wrong in applying the above cases in holding that the defendant was liable to account for profits derived from its
use and occupation of the land.

[151]More significant still, as a matter of general principle, it is settled that relief for account for profits would only be
awarded in instances where it is established that there has been a breach of fiduciary duty (see Mohd Zain Yusoff
& Ors v Avel Consultant Sdn Bhd & Anor [2006] 6 MLJ 314, Tengku Abdullah Ibni Sultan Abu Bakar & Ors v Mohd
Latiff bin Shah Mohd & Ors and other appeals [1996] 2 MLJ 265 and Avel Consultants Sdn Bhd& Anor v Mohamed
Zain Yusof & Ors [1985] 2 MLJ 209).

[152]In Mohd Zain Yusoff & Ors v Avel Consultant Sdn Bhd & Anor [2006] 6 MLJ 314, the Court of Appeal held:

The main issue to be decided in this appeal by the appellants is whether the respondents are only entitled to profits, and
not gross income derived by the appellants from their breaches. It is the appellants' case that the respondents are only
entitled to profits and that the appellants should be allowed to make deductions for the expenditure incurred by them to
earn the income. We are in agreement with the contention of the appellants and it is for this reason that this court had
earlier ordered the SAR to take an account of the income and expenses incurred by the appellants and submit his findings
to the court. On this point, we find support in the principle as applied in the Australian High Court case ofWarman
International Limited & Anor v Brian Dwyer & 2 Ors [1995] 2 CLJ 326. In that case, there was a breach of fiduciary duty by
the general manager of the company ('the former employer') when he formed new companies to carry out the business of
the former employer. The court, inter alia, held that in ascertaining the damages the former employer would be entitled, the
appropriate order is for an account of profits of the business of the new companies before tax less an appropriate allowance
for expenses, skill, expertise, effort and resources contributed by them.

[153]In the present case there was no fiduciary relationship between the defendant and the plaintiff. An order to
account for profits is contrary to established principles of law where it is settled that relief for account for profits
would only be awarded in instances where it is established that there has been a breach of fiduciary duty. This point
was ignored by the majority of the Court of Appeal.

[154]Finally, we come now to the case of Ministry of Defence v Ashman (1993) 66 P & CR 195 relied by learned
counsel for the defendant to contend that the defendant was entitled to subjectively devalue the compensation
payable and/or benefits/profits gained or generated from the occupation of the land. We do not agree with this
contention. In the first place, as pointed out by learned counsel for the plaintiff, the principles set-out in Ministry of
Defence v Ashman follow on from earlier case, namelySwordheath Properties Ltd v Tabet [1979] 1 WLR 285 where
Megaw LJ approved a passage in Halsbury's Laws of England which stated:

Where the defendant has by trespass made use of the plaintiff's and the plaintiff is entitled to receive by way of damages
such sum as should reasonably be paid for the use. It is immaterial that the plaintiff was not in fact thereby impeded or
prevented from himself using his own land either because he did not wish to do so or for any other reason.

In another part of his judgment, Megaw LJ set-out the approach to be adopted by a court assessing damages for
trespass as follows:

The plaintiff, when he has established that the defendant has remained on as a trespasser in residential property, is
entitled, without bringing evidence that he could nor would have let the property to someone else in the absence of the
trespassing defendant to have as damages for the trespass the value of the property as it would fairly be calculated; and in
the absence of anything special in the particular case, it would be the ordinary letting value of the property that would
determine the amount of damages.

[155]Coming back to the case of Ministry of Defence v Ashman, the brief facts are that the Ashman family lived in
the married quarters of the Ministry of Defence. This privilege was valid as long as Mr Ashman continued to stay in
 Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441

the quarters as he was an employee of the Ministry of Defence. In 1991, Mr Ashman left his family and moved out.
However, the family continued to occupy the quarters as there was no alternative accommodation available.The
Ministry of Defence commenced proceedings against Mrs Ashman seeking possession and mesne profits for
trespass. Mrs Ashman subsequently got alternative accommodation, ie a flat, from the local authority which was let
out at a substantial discount compared to market rate. Hoffman LJ held that Mrs Ashman would not have stayed in
the quarters at market rate rent if she had a choice. Since being evicted from the quarters, she was able to get a flat
from the local authority. As such, Hoffman LJ held the value of the quarters was no more than what Mrs Ashman
would have had to pay for suitable local authority housing if this was available immediately.

[156]There are three points that must be noted here. First, as pointed out by learned counsel for the plaintiff, the
principles as set-out in Ministry of Defence v Ashman were not raised in the High Court and the Court of Appeal.
Secondly, the defendant did not provide any evidence about its 'subjective devaluation' analysis; and thirdly,
Ministry of Defence v Ashman case is about residential property and the assessment of damages. The case
involved the wife of an officer in the armed forces who was getting divorced, and whose husband had left her living
as trespasser in married quarters. In that case, the English Court of Appeal was considering the issue of tenant of
residential property that was paying a lower rent than charged commercially due to government subsidies.

[157]We therefore agree with the submissions of learned counsel for the plaintiff that the principle from the case of
Ministry of Defence v Ashman is distinguishable and it is not applicable to the facts of the present case. The facts in
that case were exceptionally different from the present case.

[158]In the present case, the special clause in the SPA and the PA gave the defendant immediate possession of
the land upon payment of the deposit and allowing it to build the mall before the balance of the purchase price was
paid. More than that, the majority of the Court of Appeal itself made a finding that the defendant's conduct of
continuing with its occupation of the land and constructing the mall was lawful. The irresistible deduction to be
drawn is that had the defendant known that it did not have good title to the land, it would most certainly not have
proceeded to spend large sums of money in improving the land by building the mall on it. In the circumstance, we
conclude that the plaintiff is only entitled for the market rent of the unimproved land and not for an account of profits
as held by A-G v Blake.

Answers to the relief questions

[159]In consequence, our answers to the relief questions are as follows:

(a) answer to Question 1: The defendant is not precluded from being awarded restitution pursuant to the law of
unjust enrichment in respect of the defendant's improvement and enhancement of the land at the
defendant's own costs, effort and experience;
(b) answer to Question 2: The measure of for unjust enrichment is the market value of the mall and it is not
restricted to the costs of construction of the building;
(c) answer to Question 3: As there is no fiduciary relationship between the plaintiff and the defendant and
since there are other normal measures of relief available, the defendant should not be required to account
for profits;
(d) answer to Question 4: In the circumstances of this case, it is unnecessary to answer this question;
(e) answer to Questions 9: The defendant ought to pay the plaintiff calculated on the basis of market rent for
the occupation of the unimproved land;
(f) answer to Questions 10: In the negative; and
(g) answer to Question 11: In the affirmative.

CONCLUSION

[160]Based on all the above mentioned reasoning, we hereby make the following orders:
Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441
 Tradewinds Properties Sdn Bhd v Zulhkiple bin A Bakar & Ors [2019] 1 MLJ 421

the defendants attempting to defraud the plaintiff by depriving it from receiving the sums as agreed in the CJ. We
find  [*438] 
that the first defendant has carried on the business of the second defendant with intention to defraud the plaintiff, as
the second defendant’s creditor.

EXEMPLARY DAMAGES

[49]The concept of exemplary damages has been explained by this court in Sambaga Valli a/p KR Ponnusamy v
Datuk Bandar Kuala Lumpur & Ors and another appeal [2018] 1 MLJ 784:

[33] 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 347; AB v
Southwest Water Services [1993] All ER 609 Broome v Cassell & Co [1971] 2 QB 354, Laksamana Realty Sdn Bhd v Goh
Eng Hwa and another appeal [2006] 1 MLJ 675).

[50]There are two categories provided in the case of Rookes v Barnard, for claim of exemplary damages:

… The first category is oppressive, arbitrary or unconstitutional action by the servants of the government. I should not
extend this category — I say this with particular reference to the facts of this case — to oppressive action by private
corporations or individuals. Cases in second category are those in which the defendant’s conduct has been calculated by
him to make a profit for himself which may well exceed the compensation payable to the plaintiff …

[51]In this instant appeal, the plaintiff sought exemplary damages. In claiming exemplary damages under the
second category, the plaintiff must be able to prove that the defendants have made a profit for themselves.

[52]James Foong J (as he then was) in Roshairee bin Abdul Wahab v Mejar Mustafa bin Omar & Ors [1996] 3 MLJ
337; [1997] CLJ Supp 39 had set the guidelines for awarding exemplary damages:

While considering the request for exemplary damages, this court must bear in mind that the objective for an award under
this category is to punish the defendants, and to display the court’s indignant attitude towards the acts committed by the
defendants. However, through the enlighten judgment of Lord Devlin in Rookes v Barnard & Ors [1964] AC 1129 at p 1226,
such damages must be restricted to situation where there are ‘oppressive, arbitrary or unconstitutional action by the
servants of the government’ or where ‘the defendant’s conduct has been calculated  [*439] 
by him to make a profit for himself which may well exceed the compensation payable to the plaintiff’.
 Tradewinds Properties Sdn Bhd v Zulhkiple bin A Bakar & Ors [2019] 1 MLJ 421

Outside these two categories, exemplary damages should not be awarded.

[53]This court in Sambaga Valli KR Ponnusamy explained with clarity that exemplary damages are not intended to
compensate the plaintiff and are not recoverable as a matter of right:

… we would like to emphasis again that 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 amages 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.

[54]Thus, applying the principles in Rookes v Barnard to the factual circumstances and evidence of the case there
is absolutely no basis for any exemplary damages, which is punitive in nature, to be even considered under any of
the three categories.

CONCLUSION

[55]In conclusion, after having heard the parties at length and upon careful perusal of the records of appeals, we
are of the considered opinion that this is a case in which appellate intervention is warranted. For the foregoing
reasons, we unanimously allowed the appeal with costs of RM45,000 subject to the payment of allocator fees.

[56]The decision of the learned judge is therefore set aside. We ordered that the first and third defendants be jointly
and severally liable to pay to the plaintiff the sum RM796,000 together with interest thereon of 5%pa from 8  March
2013 until full realisation being the debt owed by the second defendant to the plaintiff under the judgment.

[57]We further ordered that the deposit be refunded.

Order accordingly.

Reported by Ashok Kumar

End of Document
 ROOKES APPELLANT; AND BARNARD AND OTHERS RESPONDENTS. [1964] A.C. 1129

where a trade dispute was involved "on the ground only" of that interference (post, p. 1177); applying that to both
parts of section 3 it did not protect inducement of breach of contract or interference with trade, business or
employment where they were brought about by intimidation or other illegal means; accordingly, section 3 did not
protect the defendants because their interference with the plaintiff's employment was brought about by unlawful
intimidation (post, pp. 1178, 1203, 1218).
Dicta of Lord Loreburn L.C. in Conway v. Wade [1909] A.C. 506, 511-512; 25 T.L.R. 779, H.L.(E.) considered.
Held, allowing the defendants' cross-appeal and ordering a new trial on the question of damages, that exemplary
damages could be awarded in cases (i) of oppressive, arbitrary or unconstitutional acts by government servants;
(ii) where the defendant's conduct had been calculated by him to make a profit for himself which might well
exceed the compensation payable to the plaintiff; (iii) where expressly authorised by statute (post, pp. 1226,
1227); that in a case in which exemplary damages were appropriate a jury should be directed that only if the sum
which they had in mind to award as compensation (which might of course be aggravated by the defendant's
behavior to the plaintiff) was inadequate to punish and deter him, could it award some larger sum (post, p. 1228);
that the facts disclosed in the summing-up showed no case for exemplary damages and possibly none for
aggravated damages (post, pp. 1232, 1233); however, the plaintiff could, without any departure from the
compensatory principle, invite the jury to look at all the surrounding circumstances and award a round sum
based on the pecuniary loss proved (post, pp. 1221, 1233).

 [*1132] 
Wilkes v. Wood (1763) Lofft. 1; Benson v. Frederick (1766) 3 Burr. 1845; and Bell v. Midland Railway Co. (1861)
10 C.B.N.S. 287 applied.
Owen and Smith (trading as Nuagin Car Service) v. Reo Motors (Britain) Ltd. (1934) 151 L.T. 274, C.A. and
Williams v. Settle [1960] 1 W.L.R. 1072; [1960] 2 All E.R. 806, C.A. disapproved.
Loudon v. Ryder [1953] 2 Q.B. 202; [1953] 2 W.L.R. 537; [1953] 1 All E.R. 741, C.A. overruled.
Decision of the Court of Appeal [1963] 1 Q.B. 623; [1962] 3 W.L.R. 260; [1962] 2 All E.R. 579, C.A. reversed.

APPEAL from the Court of Appeal (Sellers, Donovan and Pearson L.JJ.).
This was an appeal, by leave of the Court of Appeal, by the appellant, Douglas Edwin Rookes, who was the plaintiff
in the action, from a decision of the Court of Appeal, dated April 17, 1962, allowing the appeal of the respondents,
Alfred James Barnard, Margaret Ellisdon, executrix of Reginald John Silverthorne, deceased, and Trevor John
Fistal, from an order dated May 19, 1961, whereby judgment was entered for the plaintiff against the defendants,
Barnard, Silverthorne and Fistal for £7,500 on the trial of the action before Sachs J. and a jury.
The appellant, Douglas Edwin Rookes, employed as a senior draughts man by British Overseas Airways
Corporation in their design iffy at London Airport resigned his membership of the Association of Engineering and
Shipbuilding Draughtsmen on November 24, 1955, because of differences which had arisen between him and
certain of the union officers. The first respondent, Alfred James Barnard, was the chairman of the union's Feltham
branch, which included London Airport within its boundaries. The second respondent, Margaret Ellisdon, was the
executrix of Reginald John Silverthorne, who, at the material time, was the divisional organiser of an area which
included the Feltham branch, and who died after the trial but before the appeal. The third respondent, Trevor John
Fistal, was the union's corresponding member or shop-steward at London Airport. The first and third respondents
were employed by B.O.A.C., but Silverthorne (hereafter referred to as "the second respondent") was not.
An agreement made on April 1, 1949, between the employers' and employees' sides of the Draughtsmen's,
Planners' and Tracers' Panel of the National Joint Council for Civil Air Transport, which became part of each
contract of employment between B.O.A.C.

 [*1133] 
and the members of A.E.S.D., provided that no lockout or strike should take place and that in the event of disputes
occurring the matter should be dealt with as provided for in the institution of the National Joint Council for Civil Air
Transport.
 ROOKES APPELLANT; AND BARNARD AND OTHERS RESPONDENTS. [1964] A.C. 1129

the infringement, and if satisfied that effective relief would' not otherwise be available to the plaintiff may award such
additional damages as it considers appropriate.
My Lords, I express no view on whether the Copyright Act, 1956, authorises an award of exemplary, as distinct from
aggravated, damages. But there are certainly two other Acts of Parliament which mention exemplary damages by
name. The Law Reform (Miscellaneous Provisions) Act, 1934, section 1 (2) (a) provides that where a cause of
action survives for the benefit of the estate of a deceased person, the damages recoverable shall not include any
exemplary damages. The Reserve and Auxiliary Forces (Protection of Civil Interests) Act, 1951, section 13 (2),
provides that in any action for damages for conversion in respect of goods falling within the statute the court may
take into account the defendant's conduct an a award exemplary damages.
These authorities convince me of two things. First, that your
 
132 [1953] 2 Q.B. 202.

 
133 [1960] 1 W.L.R. 1072; [1960] 2 All E.R. 806, C.A.

 [*1226] 
Lordships could not, without a complete disregard of precedent, and indeed of statute, now arrive at a determination
that refused altogether to recognise the exemplary principle. Secondly, that there are certain categories of cases in
which an award of exemplary images can serve a useful purpose in vindicating the strength of the law and thus
affording a practical justification for admitting into the civil law a principle which ought logically to belong to the
criminal. I propose to state what these two categories are; and I propose also to state three general considerations
which, in my opinion, should always be borne in mind when awards of exemplary damages are being made. I am
well aware that whatI am about to say will, if accepted, impose limits not hitherto expressed on such awards and
that there is powerful, though not compelling, authority for allowing them a wider range. I shall not, therefore,
conclude what I have to say on the general principles of law without returning to the authorities and making it clear
to what extent I have rejected the guidance they may be said to afford.
The first category is oppressive, arbitrary or unconstitutional action by the servants of the government. I should not
extend this category - I say this with particular reference to the facts of this case - to oppressive action by private
corporations or individuals. Where one man is more powerful than another, it is inevitable that he will try to use his
power to gain his ends; and if his power is much greater than the other's, he might, perhaps, be said to be using it
oppressively. If he uses his power illegally, he must of course pay for his illegality in the ordinary way; but he is not
to be punished simply because he is the more powerful. In the case of the government it is different, for the
servants of the government are also the servants of the people and the use of their power must always be
subordinate to their duty of service. It is true that there is something repugnant about a big man bullying a small
man and, very likely, the bullying will be a source of humiliation that makes the case one for aggravated damages,
but it is not, in my opinion, punishable by damages.
Cases in the second category are those in which the defendant's conduct has been calculated by him to make a
profit for himself which may well exceed the compensation payable to the plaintiff. I have quoted the dictum of Erle
C.J. in Bell v. Midland Railway Co.134 Maule J. in Williams v. Currie135 suggests the same
 
134 10 C.B.N.S. 287.

 
135 1 C.B. 841, 848.

 [*1227] 
thing; and so does Martin B. in an obiter dictum in Crouch v. Great Northern Railway Co.136 It is a factor also that
is taken into account in images for libel; one man should not be allowed to sell another man's reputation for profit.
Where a defendant with a cynical disregard for a plaintiff's rights has calculated that the money to be made out of
his wrongdoing will probably layered exceed the damages at risk, it is necessary for the law to show that it cannot
be broken with impunity. This category is not confined to moneymaking in the strict sense. It extends to cases in
which the defendant is seeking to gain at the expense of the plaintiff some object - perhaps some property which he
covets - which either he could not obtain at all or not obtain except at a price greater than he wants to put down.
Exemplary damages can properly be awarded whenever it is necessary to teach a wrongdoer that tort does not
pay.
To these two categories which are established as part of the common law there must of course be added any
category in which exemplary damages are expressly authorised by statute.
 ROOKES APPELLANT; AND BARNARD AND OTHERS RESPONDENTS. [1964] A.C. 1129

I wish now to express three considerations which I think should always be borne in mind when awards of exemplary
damages are being considered. First, the plaintiff cannot recover exemplary damages unless he is the victim of the
punishable behavior. The anomaly inherent in exemplary damages would become an absurdity if a plaintiff totally
unaffected by some oppressive conduct which the jury wished to punish obtained a windfall in consequence.
Secondly, the power to award exemplary damages constitutes a weapon that, while it can be used in defence of
liberty, as in the Wilkes case,137 can also be used against liberty. Some of the awards that juries have made in the
past seem to me to amount to a greater punishment than would be likely to be enquiry if the conduct were criminal;
and, moreover, a punishment imposed without the safeguard which the criminal law gives to an offender. I should
not allow the respect which is traditionally paid to an assessment of damages by a jury to prevent me from seeing
that the weapon is used with restraint. It may even be that the House may find it necessary to follow the precedent it
set for itself in Benham v. Gambling,138 and place some arbitrary limit on awards of damages that are made
 
136 (1856) 11 Ex. 742, 759.

 
137 Lofft 1.

 
138 [1941] A.C. 157; 57 T.L.R. 177; [1941] 1 All E.R. 7, H.L.(E.).

 [*1228] 
by way of punishment. Exhortations to be moderate may not be enough.
Thirdly, the means of the parties, irrelevant in the assessment of compensation, are material in the assessment of
exemplary damages. Everything which aggravates or mitigates the defendant's conduct is relevant.
Thus a case for exemplary damages must be presented quite differently from one for compensatory damages; and
the judge should not allow it to be left to the jury unless he is satisfied that it can be brought within the categories I
have spoofed. But the fact that the two sorts of damage differ essentially does not necessarily mean that there
should be two awards. In a case in which exemplary damages are appropriate, a jury should be directed that if, but
only if, the sum which they have in mind to award as compensation (which may, of course, be a sum aggravated by
the way in which the defendant has behaved to the plaintiff) is inadequate to punish him for his outrageous conduct,
to mark their disapproval of such conduct and to deter him from repeating it, then it can award some larger sum. If a
verdict given on such direction has to be reviewed upon appeal, the appellate court will first consider whether the
airway can be justified as compensation and if it can, there is nothing further to be said. If it cannot, the court must
consider whether or not the punishment is, in all the circumstances, excessive. There may be cases in which it is
difficult for a judge to say whether or not he ought to leave to the jury a claim for exemplarydamages. In such
circumstances, and in order to save the possible expense of a new trial, I see no objection to his inviting the jury to
say what sum they would fix as compensation and what additional sum, if any, they would award if they were
entitled to give exemplary images. That is the course which he would have to take in a claim to which the Law
Reform (Miscellaneous Provisions) Act, 1934, applied.
I must now return to the authorities I have already reviewed and make quite plain what it is that I have not accepted
from them. As I have said, damages that are at large can always be fixed as a round sum. Some juries have in the
past been very liberal in their ideas of what a round sum should be, and the courts, which have always been very
reluctant to interfere with awards of damages by a jury, have allowed very liberal awards to stand. Williams v.
Currie139 might, on one view, be regarded
 
139 1 C.B. 841.

 [*1229] 
as a rather extreme example of this. It would not be right to take the language that judges have used on such
occasions to justify their non-intervention and treat their words as a positive formulation of a type of case in which
exemplary damages can be awarded. They have used numerous epithets - wilful, wanton, high-handed,
oppressive, malicious, outrageous - but these sorts of adjectives are use a in the judgments by way of comment on
the facts of a particular case. It would, on any view, be a mistake to suppose that any of them can be selected as
definitive, and a jury directed, for example, that it can award exemplary damages whenever it finds conduct that is
wilful or wanton.
But when this has been said, there remains one class of case for which the authority is much more precise. It is the
class of case in which the injury to the plaintiff has been aggravated by malice or by the manner of doing the injury,
that is, the insolence or arrogance by which it is accompanied. There is clear authority that this can justify
ROOKES APPELLANT; AND BARNARD AND OTHERS RESPONDENTS. [1964] A.C. 1129