JUDGMENT
See Mee Chun JCA:
Introduction
[1]
What is the price of loyalty, and conversely, disloyalty? For the
appellant, it was RM10 million, which was the amount stated in the bond
by Parti Keadilan Rakyat (PKR/party) dated 25 April 2018 (the bond)
signed by her, in the event of breach of the bond. This then, is one of
the issues before us, as to the reasonableness or otherwise, of the RM10
million bond.
Parties
[2] The appellant was
the defendant and had contested in the 14th General Election (GE-14) in
the Ampang Parliamentary seat as a PKR candidate and won with a majority
vote of 41,956. The respondent is the plaintiff in his capacity as the
Secretary General of PKR.
Background Facts And Issues
[3]
According to the respondent, on or about 24 February 2020, the
appellant along with ten other Members of Parliament announced their
resignation from the party without resigning as Members of Parliament
for their respective constituencies. The respondent sued the appellant
for the payment of RM10 million under the bond and in the alternative,
for RM12,049,459.20 under s. 71 of the Contracts Act 1950.
[4] At the HC, the appellant had resisted the claim, inter alia,
on the basis that the bond was an invalid document and not enforceable
against her; she had not signed the bond and therefore had not consented
to it; the bond was invalid for restricting her constitutional right of
freedom of association; and that the RM10 million was an unconscionable
amount.
[5] The claim was allowed by the High Court (HC) and this is the appeal by the appellant.
[6]
Before us, the appellant raised three main issues and therefore these
grounds including our reference to the grounds of judgment of the HC
will only deal with these three issues. These issues were:
(i) the reasonableness of the RM10 million amount vis-Ã -viss. 75 of the Contracts Act 1950;
(ii) the trigger event of the bond had not occurred; and
(iii) past consideration.
Decision Of The HC
[7] The grounds of judgment of the HC Judge (GOJ) can be seen in encl. 22/13-28.
[8] Essentially, the HC found the bond to be an agreement which fulfilled all the requirements of a valid contract under s. 2 of the Contracts Act 1950
(paras. 6 to 10) and the purpose of the bond was not to restrict the
appellant's right of association but to instill the importance of
loyalty to the party as well as the awareness that the party had made
many sacrifices since its formation (para. 15). This was after the HC
had considered the evidence in Q&A 6 of the respondent's witness
statement as to why the bond had been executed.
[9] The HC
further found the signature on the bond was that of the appellant
(paras. 18 to 19) and there was no evidence that the appellant had
signed the bond unwillingly (paras. 22 to 24).
[10] The HC dealt with the issue of unconscionable amount as follows:
25.
The defendant also alleges that the sum of RM10 million quoted in the
bond is excessive and there is no proof that such a money was spent on
her for the purpose of being chosen as a candidate.
26. This
allegation of the defendant flies in her own face by the express
admission by her in the bond that the plaintiff has spent a sum in
excess of RM10 million on her. The third recital in the bond states:
WHEREAS,
I acknowledge that Parti Keadilan Rakyat by its letter of appointment
to me to be a candidate of Parti Keadilan Rakyat and grant me use of the
Parti Keadilan Rakyat logo, insignia and Party flag as a candidate of
Parti Keadilan Rakyat has provided me substantial value which exceeds
Ringgit Malaysia Ten Million (RM10,000,000.00).
27. The defendant is bound by her own admission as provided under s. 21 of the Evidence Act 1950:
Admissions are relevant and may be proved as against the person who makes them or his representative in interest:
but they cannot be proved by or on behalf of the person who makes them
or by his representative in interest except in the following cases:...
28.
Apart from the defendant's admissions, it is the court's view that the
whole purport of the bond is to deter an elected candidate from being
disloyal to the party. This being the case the sum of RM10 million is
not an excessive or a punitive sum and will act as a deterrent for any
disloyalty. Any amount lesser than this might not be an effective
deterrence.
29. The court further rules that the evidence adduced
by the plaintiff showing its income and expenditure accounts is not a
relevant or a necessary factor in determining this issue.
(emphasis added)
Our Decision
Trigger Event
[11]
We will first deal with the issue of trigger event where the submission
of the appellant was that the events as stipulated in the bond had not
occurred or had not been triggered. This is because if there is no such
trigger event, there would be no breach of the bond and the issue of
reasonableness of the RM10 million will not arise.
[12] We reproduce the provisions of the bond in end. 23/12 as follows:
.jpg)
[13]
It was contended by the appellant that in order for the bond to be
enforced, the conditions in unnumbered para. 4(2) must have been
triggered or had occurred. These relate to the issuance of a certificate
that the appellant has resigned or that her membership is terminated.
In para. 12 of the statement of claim, it was stated that the appellant
had resigned and in para. 14, that the appellant was terminated. There
was also no certificate issued and what was exhibited was a
certification of authentication of resolution. The question further
arises if the appellant had resigned, how then could she have been
terminated. Thus, the submission was that the trigger event in (2) had
not occurred.
[14] The aforesaid paras. 12 and 14 of the statement of claim in encl. 39/634 (non-PDF) are set out below:
12.
On or about 24.02.2020, the Defendant in a statement with another 10 of
the Party's Member of Parliament ("the Defectors") announced her resignation from the Party without resigning as a member of parliament for Ampang.
...
14. On 24.02.2020 the Party's Majlis Pimpinan Pusat ("MPP")
approved a resolution to terminate the Defendant's membership in the
party with immediate effect. The Plaintiff in his capacity as the
Party's Secretary General, issued the Certificate dated 24.07.2020, to
confirm that the Defendant's membership in the Party has been
terminated.
(emphasis added)
[15] We
note that in fact the appellant in her defence has alluded to her
resignation. This can be seen in paras. 8.8, 14 and 17 of the statement
of defence in encl. 39/647, 651 and 652 (non-PDF) as follows:
8.8
Defendan sesungguhnya menegaskan bahawa Defendan bukannya seorang
pembelot sepertimana yang dituduh oleh Plaintif. Sebaliknya, Defendan
menekankan bahawa ianya bukan keputusan yang mudah untuk Defendan keluar
daripada PKR memandangkan pengorbanan Defendan sendiri untuk
membangunkan PKR....
14. Dalam keadaan sedemikian, Defendan
sesungguhnya percaya dan menyatakan bahawa tindakan beliau untuk
meletakkan jawatan sebagai ahli dan juga Naib Presiden di dalam PKR...
17. Perenggan
12 Pernyataan Tuntutan tersebut adalah diakui setakat mana Defendan
telah mengumumkan peletakan jawatan beliau di dalam PKR dan kekal sebagai Menteri Perumahan dan Kerajaan Tempatan dibawah kerajaan Perikatan Nasional. (emphasis added)
[16]
From the evidence of the respondent, it is relying on the appellant
having left the party as the basis for enforcing the bond. Refer to
Q&A 8 in encl. 23/68-69 as follows:
S8: Sila
terangkan kepada Mahkamah apakah tindakan yang telah dilakukan oleh
Defendan yang menyebabkan beliau berada dalam suatu keadaan di mana
beliau perlu membayar pampasan tersebut kepada Parti tersebut ?
J8:
Defendan telah membuat keputusan untuk keluar parti pada 24.02.2020,
setelah Defendan telah menang dalam PRU14 dan dipilih sebagai Ahli
Parlimen bagi kawasan pilihan raya P.99 Ampang.
Rujuk: Pernyataan di laman Facebook Azmin Ali bertarikh 24.2.2020, Ikatan Dokumen Bersama Bahagian B m/s 6, ditanda sebagai
tindakan sedemikian telah meletakkan Defendan dalam keadaan di mana
beliau berkewajipan untuk membayar pampasan dalam amaun RM10,000,000.00
kepada Parti tersebut, sebagaimana yang dipersetujui di antara Defendan
dan Parti tersebut dalam perenggan 1, Ikatan Bon tersebut. (emphasis
added)
[17] This is consistent with the
respondent's para. 12 of the statement of claim, and the appellant's
statement of defence in paras. 8.8, 14 and 17.
[18] On
there being no certificate issued by the Secretary General of PKR as
required under (2) of the bond, we refer to the Perakuan Resolusi dated
24 July 2020 in encl. 24/349 as reproduced below:
.jpg)
[19]
We find this to be sufficient evidence of there being a resolution of
the MPP of PKR effective on 24 February 2020. That resolution states as
follows:
Adalah Diputuskan Seperti Berikut:
1. Bahawa menurut Perkara 9.1(c) dan/atau (d) Perlembagaan Parti Keadilan Rakyat ("Parti tersebut"), keahlian Zuraida Binti Kamaruddin No. Keahlian: B0800005981 ditamatkan dengan serta merta mulai 24 Februari 2020. (emphasis added)
[20]
We further refer to the sentence "Perakuan ini merupakan bukti yang
konklusif bahawa petikan ini adalah rekod resolusi-resolusi MPP yang
benar dan tepat". This is the evidence of the record of the resolution.
[21]
The existence of the resolution is as averred in para. 14 of the
statement of claim referred to earlier and is further confirmed by the
evidence of the respondent in Q&A 26. We set out the relevant part
of that evidence from encl. 23/89:
S26: Apakah tindakan yang diambil oleh Parti tersebut setelah pembelotan defendan?
J26:
Pada 24.02.2020 Majlis Pimpinan Pusat Parti ("MPP") telah meluluskan
resolusi untuk melucutkan keahlian Defendan dalam Parti tersebut dengan
serta merta. Plaintif dalam jawatannya sebagai Setiausaha Agung Parti,
mengeluarkan Sijil bertarikh 24.07.2020, untuk mengesahkan bahawa
keahlian Defendan dalam Parti tersebut telah ditamatkan.
Parti
tersebut menerusi peguamnya mengeluarkan surat tuntutan bertarikh
07.08.2020 yang memerlukan Defendan untuk membayar jumlah
RM10,000,000.00 menurut terma-terma Bon tersebut. Parti tersebut juga
telah menerbitkan notis tuntutan di akhbar Parti tersebut dan/atau
portal berita Parti tersebut, Suara Keadilan pada 29.07.2020.
Defendan
telah gagal, enggan dan/atau abai untuk membayar sama sekali jumlah
tersebut sebanyak RM10,000,000.00 atau sebahagian daripadanya.Oleh yang
demikian, saya telah mengambil tindakan ini sebagai Pegawai Awam Parti
tersebut untuk membuat tuntutan jumlah sebanyak RM10,000,000.00 dari
Defendan untuk Parti tersebut.
[22] The
reference to "menurut perkara 9.1(c) dan/atau (d) Perlembagaan
keahlian... ditamatkan" is also consistent with the manner of perlucutan
keanggotaan in the party's constitution in encl. 23/26 as follows:
.jpg)
[23]
We would therefore conclude on this issue that the event triggering the
obligation to enforce the bond has occurred. Pursuant to unnumbered
para. 4, the appellant has agreed to pay the stated amount not later
than seven days upon the occurrence of the event in (2):
Now
I hereby agree that the above written obligation to pay Parti Keadilan
Rakyat the sum of Ringgit Malaysia Ten Million (RM 10,000,000.00) not later than seven (7) days upon the occurrence of any one of the following events:-... (emphasis added)
[24]
Hence, we agree with the finding of the HCJ that there had been a
breach of the bond. The question is the reasonableness of the stipulated
amount in the bond.
Reasonableness Or Otherwise Of The Bond Amount
[25]
It will be recalled that the HCJ found that RM10 million was not
excessive as the purpose of the bond was to deter an elected candidate
from being disloyal to the party such that any lesser amount would not
be an effective deterent. The issue raised by the appellant was that the
HCJ did not consider whether the amount was reasonable. It was
submitted that such an amount is unreasonable, excessive and exorbitant.
[26]Section 75 of the Contracts Act 1950 (the Act) provides as follows:
Compensation for breach of contract where penalty stipulated for
When
a contract has been broken, if a sum is named in the contract as the
amount to be paid in case of such breach, or if the contract contains
any other stipulation by way of penalty, the party complaining of the
breach is entitled, whether or not actual damage or loss is proved to
have been caused thereby, to receive from the party who has broken the
contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for. (emphasis added)
[27] In this regard, the Federal Court in Cubic Electronics Sdn Bhd (In Liquidation) v. Mars Telecommunications Sdn Bhd [2019] 2 CLJ 723;
[2019] 6 MLJ 15 has laid down the principles as to what constitutes
reasonable compensation and whether actual loss has to be proven.
[28]Cubic too had set out the prior position (our emphasis) as enunciated in Selva Kumar Murugiah v. Thiagarajah Retnasamy [1995] 2 CLJ 374; [1995] 1 MLJ 817 and Johor Coastal Development Sdn Bhd v. Constrajaya Sdn Bhd [2009] 4 CLJ 569; [2009] 4 MLJ 445. At p. 750 (CLJ); pp. 41 and 42 (MLJ), the following was stated:
[61] And
presently the local position has always been that an innocent party in a
contract that has been breached, cannot recover simpliciter the sum
fixed in a damages clause whether as penalty or liquidated damages. He
must prove the actual damage he has suffered unless his case falls under
the limited situation where it is difficult to assess actual damage or
loss. (See: Selva Kumar Murugiah v. Thiagarajah Retnasamy [1995] 1 MLJ 817, approving the Privy Council decision in Bhai Panna Singh v. Bhai Arjun Singh AIR 1929 PC 179).
[62] As such the courts have always insisted that actual damage or reasonable compensation must be proved in accordance with the principles set out in Hadley v. Baxendale (1854) 9 Exch 341 (See: Johor Coastal Development Sdn Bhd v. Constrajaya Sdn Bhd [2009] 4 CLJ 569; [2009] 4 MLJ 445 at 459-460).
[63] Accordingly,
the effect is that no provision in a contract by way of liquidated
damages in this country is recoverable in a similar manner as it would
have been under the pre-Cavendish (supra) English law since in every case the court has to be satisfied that the sum payable is reasonable.
[64] Having
noted the foregoing, does this then mean that for every case where the
innocent party seeks to enforce a clause governing the consequences of
breach of a primary obligation, it invariably has to prove its actual
loss or damage? Selva Kumar and Johor Coastal seem to answer in the
affirmative, unless the case falls under the limited situation where it
is difficult to assess actual damage or loss. (emphasis added)
[29] Having asked the question in para. 64, the Federal Court answered as follows at p. 750 (CLJ); p. 42 (MLJ):
[65] With respect and for reasons we shall set out below, we
are of the view that there is no necessity for proof of actual loss or
damage in every case where the innocent party seeks to enforce a damages
clause. Selva Kumar and Johor Coastal should not be interpreted (as
what the subsequent decisions since then have done) as imposing a legal
straightjacket in which proof of actual loss is the sole conclusive
determinant of reasonable compensation. Reasonable compensation is not
confined to actual loss, although evidence of that may be a useful
starting point.
[66] As for our reasons we begin by saying that in view of the legislative history of section 75 of the Act which need not be elaborated in this Judgment, we
are of the considered opinion that there is nothing objectionable in
holding that the concepts of "legitimate interest" and "proportionality"
as enunciated in Cavendish are relevant in deciding what amounts to
'reasonable compensation' as stipulated in s 75 of the Act. Ultimately, the central feature of both the Cavendish case and section 75 of the Act is the notion of reasonableness. Indeed, the ParkingEye v. Beavis
[2015] UKSC 67 judgment is replete with instances where the United
Kingdom Supreme Court conflated "proportionality" with "reasonableness"
(see: ParkingEye (supra) at paragraphs [98], [100], [108], [113] and [193]).
(emphasis added)
[30] It went on to say at p. 751 (CLJ); p. 43 (MLJ):
[68] Consequently, regardless of whether the damage is quantifiable or otherwise, it
is incumbent upon the court to adopt a common sense approach by taking
into account the legitimate interest which an innocent party may have
and the proportionality of a damages clause in determining reasonable
compensation. This means that in a straightforward case, reasonable
compensation can be deduced by comparing the amount that would be
payable on breach with the loss that might be sustained if indeed the
breach occurred (emphasis added). Thus, to derive reasonable
compensation there must not be a significant difference between the
level of damages spelt out in the contract and the level of loss or
damage which is likely to be suffered by the innocent party.
[69] Notwithstanding the foregoing, it must not be overlooked that s. 75 of the Act
provides that reasonable compensation must not exceed the amount so
named in the contract. Consequently, the impugned clause that the
innocent party seeks to uphold would function as a cap on the maximum
recoverable amount.
(emphasis added)
[31] The question of burden of proof was dealt with at p. 752 (CLJ); pp. 43 and 44 (MLJ):
[71] If
there is a dispute as to what constitutes reasonable compensation, the
burden of proof fails on the defaulting party to show that the damages
clause is unreasonable or to demonstrate from available evidence and
under such circumstances what comprises reasonable compensation caused
by the breach of contract. Failing to discharge that burden, or in
the absence of cogent evidence suggesting exorbitance or
unconscionability of the agreed damages clause, the parties who have
equality of opportunity for understanding and insisting upon their
rights must be taken to have freely, deliberately and mutually consented
to the contractual clause seeking to pre-allocate damages and hence the
compensation stipulated in the contract ought to be upheld.
[72]
It bears repeating that the court should be slow to refuse to give
effect to a damages clause for contracts which are the result of
thorough negotiations made at arm's length between parties who have been
properly advised. The court ought to be alive to a defaulting
promisor's natural inclination to raise "unlikely illustrations" in
argument to show substantial discrepancies between the sum due under the
damages clause and the loss that might be sustained in the unlikely
situations proposed by the promisor (see: Philips Hong Kong Ltd at page 59) so as to avoid its liability to make compensation pursuant to that clause. (See: Tham, Chee Ho, "Non-compensatory Remedies",
The Law of Contract in Singapore, Ed., Andrew Phang Boon Leong,
(Singapore: Academy Publishing, 2012), pages 1645-1862 at page 1654.)
(emphasis added)
[32] Finally, at pp. 752 to 753 (CLJ); pp. 44 and 45 (MLJ), the Federal Court summarised the principles as below:
[74] In summary and for convenience, the principles that may be distilled from hereinabove are these:
(d) In determining what amounts to "reasonable compensation" under section 75 of the Act, the concepts of "legitimate interest" and "proportionality" as enunciated in Cavendish are relevant;
(e) A
sum payable on breach of contract will be held to be unreasonable
compensation if it is extravagant and unconscionable in amount in
comparison with the highest conceivable loss which could possibly
flow from the breach. In the absence of proper justification, there
should not be a significant difference between the level of damages
spelt out in the contract and the level of loss or damage which is
likely to be suffered by the innocent party;
(f) Section 75 of the Act
allows reasonable compensation to be awarded by the court irrespective
of whether actual loss or damage is proven. Thus, proof of actual loss
is not the sole conclusive determinant of reasonable compensation
although evidence of that may be a useful starting point;
(g) The initial onus lies on the party seeking to enforce a damages clause under s. 75 of the Act
to adduce evidence that firstly, there was a breach of contract and
that secondly, the contract contains a clause specifying a sum to be
paid upon breach. Once these two elements have been established, the
innocent party is entitled to receive a sum not exceeding the amount
stipulated in the contract irrespective of whether actual damage or loss
is proven subject always to the defaulting party proving the
unreasonableness of the damages clause including the sum stated therein,
if any; and
(h) If there is a dispute as to what
constitutes reasonable compensation, the burden of proof falls on the
defaulting party to show that the damages clause including the sum
stated therein is unreasonable. (emphasis added)
[33] There was also mention of the concepts of legitimate interest and proportionality as enunciated in Cavendish Square Holding BV v. El Makdessi which was heard together with ParkingEye Ltd v. Beavis [2016] 2 All ER 519. Much discussion went into the issue of what made a contractual provision penal in nature and at p. 538:
[32] The
true test is whether the impugned provision is a secondary obligation
which imposes a detriment on the contract-breaker out of all proportion
to any legitimate interest of the innocent party in the enforcement of
the primary obligation. The innocent party can have no proper interest
in simply punishing the defaulter. His interest is in performance or in
some appropriate alternative to performance. In the case of a
straightforward damages clause, that interest will rarely extend beyond
compensation for the breach, and we therefore expect that Lord Dunedin's
four tests would usually be perfectly adequate to determine its
validity, But compensation is not necessarily the only legitimate
interest that the innocent party may have in the performance of the
defaulter's primary obligations.... (emphasis added)
[34] For context, Lord Dunedin's four tests as in Dunlop Pneumatic Tyre Co Ltd v. New Garage and Motor Co Ltd [1915] AC 79 in para. 21 of Cavendish at pp. 532 and 533:
[21]...
In his speech, Lord Dunedin formulated fourtests 'which, if applicable
to the case under consideration, may prove helpful, or even conclusive'
([1915] AC 79 at 87, [1914-15] All ER Rep 739 at 742). They were: (a)
that the provision would be penal if 'the sum stipulated for is
extravagant and unconscionable in amount in comparison with the greatest
loss that could conceivably be proved to have followed from the
breach'; (b) that the provision would be penal if the breach consisted
only in the non-payment of money and it provided for the payment of a
larger sum; (c) that there was 'a presumption (but no more)' that it
would be penal if it was payable in a number of events of varying
gravity; and (d) that it would not be treated as penal by reason only of
the impossibility of precisely pre-estimating the true loss.
At p. 533, Cavendish was quick to note in para. 22 that the four tests are not rules but only considerations (line c).
[35] In Chitty on Contracts (33rd edn), it was opined at paras 26 to 211 at p. 1930 with reference to ParkingEye
that there can be permissible deterrence in protecting a legitimate
interest or broader interests. It goes further by referring to Cavendish
at paras. 26 to 214 at p. 1933 that an agreed damages clause or other
type of clause that falls within the scope of the penalty doctrine will
be valid if it is designed to protect the legitimate interest of the
innocent party and the amount involved is not extravagant or
unconscionable in proportion to that interest.
[36] Paragraphs 70 and 74(g) of Cubic cast the burden on the respondent as the party seeking to enforce a clause under s. 75 of the Act
to prove a breach and that the contract contains a clause specifying a
sum to be paid upon breach. As found earlier, there was a trigger event
and the bond contains the agreement of the appellant to pay the amount
of RM10 million.
[37] As the appellant had breached the bond, the respondent is the innocent party and Cubic
has held in para. 65 that there is no necessity for proof of actual
loss or damage. It falls back on whether the RM10 million is reasonable
compensation, where legitimate interest and proportionality, as stated
in Cavendish and approved in Cubic, can be considered.
[38] We are reminded further of Cavendish
where the true test is whether the impugned provision is a secondary
obligation which imposes a detriment on the contract-breaker who is the
appellant out of proportion to any legitimate interest of the innocent
party who is the respondent in the enforcement of the primary
obligation.
[39] We refer to Q&A 6, 12 and 16 of the respondent which, inter alia,
states that the party has incurred substantial costs and expenditure in
promoting the name, political brand and marks of the party, the sum of
RM10 million takes into account the legitimate interest of the party,
the value of the party name, reputation and the loss of goodwill to the
party's political brand. Such loss of goodwill was acquired through
great costs, expenditure and efforts since the inception of the party.
[40] Q&A 6 (encl. 23/67 to 68), 12 (encl. 23/70 to 71) and 16 (encl. 23/27) are set out below:
S6: Apakah tujuan Ikatan Bon tersebut disediakan?
J6:
Ikatan Bon tersebut disediakan untuk memastikan Defendan yang akan
bertanding dalam Pilihan Raya Umum Ke-14 (PRU14) atas tiket Parti
memahami dan mengakui bahawa Parti tersebut teiah menanggung
perbelanjaan yang besar untuk mempromosikan nama "Parti Keadilan Rakyat"
dan penggunaan logo, lambing, symbol dan bendera Parti tersebut serta
pemberian perkhidmatan dan sokongan oleh anggota-anggota Parti adalah
sangat bernilai bagi seseorang, termasuk Defendan, yang ingin bertanding
sebagai calon atas tiket Parti tersebut, dalam PRU14.
Ikatan Bon
tersebut juga disediakan bagi memastikan Defendan memahami dan mengakui
bahawa pelantikan Defendan sebagai calon dan pemberian kebenaran kepada
Defendan untuk mengguna pakai logo, lambang, symbol dan bendera Parti
adalah bernilai lebih daripada RM10,000,000.00.
S12: Apakah asas kepada penentuan pampasan dalam amaun RM10,000,000.00 dan bukannya amaun yang lain?
J12:
Jumlah RM10,000,000.00 merupakan suatu anggaran yang tulen bagi
menjamin kepentingan sah Parti tersebut, nama baik dan reputasi Parti
tersebut
Asas penganggaran tersebut adalah berdasarkan
faktor-faktor yang berikut: (i) kos dan perbelanjaan penyelanggaran
pejabat dan struktur organisasi sebagai sebuah parti nasional setama
satu tahun; (ii) kehilangan ahli, aktivis dan penyokong serta kehilangan
keupayaan untuk merekrut ahli baru oleh Parti tersebut; (iii)
kehilangan keupayaan menjana tajaan dan mengumpul dana; (iv) kerosakan
kepada rangkaian komunikasi Parti tersebut; dan (v) kehitangan dan
kemusnahan nilai jenama Parti tersebut dan nama baik tanda Parti
tersebut berdasarkan kos sejarah untuk membangunkannya sejak tahun 1998.
S16:
Apakah jawapan kamu kepada cadangan Defendan bahawa amaun pampasan
sebanyak RM10,000,000.00 adalah terlampau tinggi dan oleh itu adalah
bersifat suatu dendan?
J16: Seperti mana yang saya telah pun
terangkan sebelum ini, amaun RM10,000,000.00 adalah suatu anggaran yang
tulen. Ianya bukanlah mengikut suka hati Parti tersebut. Sebaliknya,
penentuan amaun sedemikian adalah berasaskan beberapa faktor yang telah
pun diterangkan sebelum ini. Hakikatnya, kita tidak boleh menafikan
bahawa tindakan seseorang calon seperti Defendan mengkhianati Parti
tersebut adalah membawa kerosakkan dan kerugian kepada Parti tersebut.
Namun,
adalah sukar untuk Parti tersebut membuat suatu penentuan secara tepat
apakah nilai kerosakan dan kerugian yang sebenar dan yang perlu dipampas
oleh mereka yang bertanggungjawab. Oleh itu, setelah mempertimbangkan
pelbagai faktor, Biro Politik Parti tersebut telah menentukan amaun
RM10,000,000.00 sebagai suatu jumlah pra-anggaran yang telah pun
dipersetujui oleh Defendan.
...
[41] At
Q&A 13 (encl. 23/71-76), the respondent had given evidence on the
estimated damage to the political brand, reputation and goodwill to
obtain financial and other support which include the following:
(i)
the annual costs and expenses for operating the headquarters and
organisation structure as a national party at RM1,952,584.72;
(ii)
the voluntary services provided by members and volunteers including
those acting as canvassing agents, polling and counting agents which
would cost at least RM152,670,000 if the party is to pay 100 workers at
RM150 per day for 14 days election campaign for 222 Parliament and 505
State Assembly seats;
(iii) the total loss of goodwill in raising
funds and financial support for the five years after GEM which is
estimated at RM221,800,000;
(iv) the cost of setting up and maintaining the social media network and communication system at RM223,984.20.
[42] In cross-examination (encl. 23/158 to 160), the respondent explained as follows:
Nizamuddin
Hamid/Nurul Najwa: Seperti terma yang suka digunakan oleh rakan Datuk
Seri dalam Parti, apa formula 10 juta ni. Apa formula dia?
...
Saifuddin
Nasution: Baik. Yang Arif, pertamanya, Parti mempunyai beberapa
peringkat dan tahap. Satu, Majlis Pimpinan Pusat. Dua, Majlis Pimpinan
Negeri. Tiga, kepimpinan diperingkat cabang. Empat, jawatankuasa
diperingkat kerusi Parlimen, yang Parti bertanding. Lima, jawatankuasa
di peringkat Dewan Undangan Negeri di mana Parti bertanding dan meletak
calon. Seterusnya, sayap Angkatan Muda, sayap Wanita. Kemudian, kita ada
Jawatankuasa Pilihan Raya. Kesemua struktur Parti ini, Yang Arif,
mempunyai keupayaan dan aktiviti mengumpulkan dana mengikut cara
masing-masing, sama ada melalui crowdfunding, ataupun melalui
penganjuran majlis makan malam, ataupun melalui penerimaan sumbangan
daripada simpati-simpati. Mereka bukan anggota Parti Yang Arif, tetapi
mereka memberikan sumbangan.
Berasaskan kepada keupayaan ini Yang
Arif, saya bagi contoh, Majlis Pimpinan Pusat misalnya, dalam satu
tahun, melalui program crowdfunding, penganjuran majlis makan malam,
terimaan daripada sumbangan individu atau mana-mana syarikat Yang Arif.
Kami mempunyai keupayaan mengumpul sehingga satu juta, satu juta
setengah, atau dua juta Yang Arif, setiap tahun. Dan, kalau kita kalikan
dengan lima tahun, satu penggal Parlimen Yang Arif, itu saja sudah
memberikan anggaran 10 juta, Yang Arif.
Begitu juga, di peringkat
Parlimen Yang Arif, setiap bulan mereka mampu, setiap hari mereka mampu
mengumpul sehingga dua ribu atau tiga ribu melalui sumbangan
crowdfunding ataupun simpati-simpati. Jadi itu memberikan dalam setahun
mereka mampu mengumpul antara 40 ribu hingga 50 ribu Yang Arif. Dan itu
memberikan setahun, kemudian kita kalikan dengan dua 222 cabang. Parti
Keadilan adalah parti nasional Yang Arif. Kami berdaftar di kesemua 222
Parlimen. Kalau satu kawasan Parlimen kami berupaya mengumpul dana
sebulan 50 ribu atau setahun 50 ribu Yang Arif, kalikan dengan 222
cabang, kalikan dengan lima tahun. Itu akan memberikan angka yang cukup
besar Yang Arif.
Begitu juga sayap Pemuda, sayap Wanita, kemudian di peringkat Dewan Undangan Negeri....
Berasaskan
formula ini Yang Arif, kutipan bulanan, kutipan tahunan, kita kalikan
dengan dua 222 cabang, 222 sayap Pemuda, 222 sayap Wanita, kepimpinan
Pusat, Pemuda Pusat, Wanita Pusat, peringkat Parlimen, peringkat Dewan
Negeri, dan kita tabulate-kan untuk tempoh lima tahun Yang Arif. Angka
200 juta itu adalah angka yang reasonable, genuine, berasaskan
pengalaman 20 tahun Parti Keadilan bergerak Yang Arif.
...
Nizamuddin Hamid/Nurul Najwa:
Terima kasih untuk perkongsian formula tersebut, Datuk Seri. Jadi
soalan saya berdasarkan formula tersebut, saya cadangkan, tidak wajar
beban kemampuan penjanaan dana Parti Keadilan Rakyat diletakkan kepada
seseorang calon kerana formulanya mengambil kira keseluruhan, kesemua
peringkat, kesemua cabang, kesemua peringkat Wanita yang utama, Pemuda,
tetapi hendak, itu formulanya. Saya cadangkan ianya tidak wajar, it's
unreasonable, kerana berdasarkan formula yang mengambil kira semua ini,
jumlah 10 juta tersebut hendak dikenakan kepada seorang sahaja. Saya
cadangkan itu tidak wajar. Setuju tak dengan saya?
Saifuddin Nasution: Saya tak setuju.
...
Nizamuddin Hamid/Nurul Najwa:
Boleh Datuk Seri kongsi formula bagaimana gaji seorang menteri yang
tidak sampai sepenggal, seperti Defendan, tak cukup sepenggal, hampir
cukup, tidak cukup penuh sepenggal, boleh membayar jumlah 10 juta
ringgit.
Saifuddin Nasution: Baik, dua bahagian. Yang pertama, 10 juta itu cuma lima peratus Yang Arif, daripada 200juta.
Anggaran lima tahun, keupayaan kutipan dana Parti. Lima peratus sahaja.
Kedua Yang Arif, angka 10 juta itu, seperti Yang Arif bertanya, adalah
keputusan... (emphasis added)
[43] In re-examination (encl. 23/173), on the issue of one person to having to bear all, it was explained:
Navpreet
Singh: Soalan yang ditujukan kepada Datuk Seri semasa cross-
examination ialah, "Ianya tidak wajar kemampuan penjanaan dana Parti
diletakkan ke atas seorang calon sahaja kerana ini mengambil kira
kesemua organisasi Parti.
Datuk Seri tidak bersetuju dengan cadangan ini. Tolong jelaskan kenapa.
Saifuddin
Nasution: Yang Arif, parti ni berusaha untuk mengumpul dana kerana
penyertaan Parti dalam proses pilihan raya menelan belanja yang sangat
besar. Yang Arif, dana parti ini akan terkumpul melalui pelbagai earn
dan pelbagai saluran.
Pemimpin-pemimpin Parti
lebih-lebih lagi memikul tanggungjawab yang lebih berat berbanding
anggota biasa ataupun simpati-simpati. Kerana itu saya mengambil,
menjawab seperti mana yang disebut tadi. (emphasis added)
[44]
It was submitted that the RM10 million is not confined to one
parliamentary seat but that as a national party the damage is done to
all 222 divisions, at each of the levels in the organisation.
[45]
Although it is not necessary for there to be proof of actual loss and
damage, the respondent had tried to establish its losses where, inter alia,
it had incurred substantial costs and expenditure in promoting the
political brand and marks of the party. There was also the legitimate
interest it had as a political party.
[46] The above was
also to show the legitimate interest and proportionality where RM10
million was 5% of RM200 million in building up the party name, goodwill
and marks. In that sense, it was also said to be not unconscionable.
[47]
Another aspect of the legitimate interest of the party, being political
in nature, was the consequence of the appellant resigning and joining
another political party. The appellant was regarded as a defector. The
effects of her defection to join another political party led to the
collapse of the Government of the day and political instability which
are further explained by the respondent in Q&A 25.1 and 25.2 (encl.
23/84 to 88).
[48] The thrust of the respondent's
submission ultimately was that the RM10 million was reasonable
compensation within the meaning of s. 75 of the Act.
[49]
Since the appellant was disputing that this was reasonable
compensation, it was her burden to prove otherwise. We are of the
considered opinion that this burden has been discharged for the
following reasons.
[50] Although there is a legitimate
interest of the party to maintain its political position, the RM10
million is out of proportion to such interest of the party in the
enforcement of the obligation of the bond. As explained by the
respondent, the RM10 million is not confined to one parliamentary seat
but as a national party the damage is done to all 222 divisions.
Therefore, it is not reasonable for the appellant to take on the
liability of the RM10 million single handedly when the formula of the
RM10 million was based on 222 divisions for the party at a national
level. Seen in this light, the amount is also not proportionate.
[51]
We further say the amount is not proportionate as the undisputed 22
months of the appellant's service as a member of Parliament had not been
considered.
[52] The HCJ had upheld the RM10 million as a
deterrent for any disloyalty and any lesser amount might not be an
effective deterrence. However, what was not considered was whether this
was a reasonable compensation and s. 75 of the Act and the relevant authorities such as Cubic and Cavendish were not discussed.
[53]
To conclude on this issue, after considering the evidence and the
principles of legitimate interest and proportionality, we find the RM10
million cannot be construed as reasonable compensation. We find it to be
unreasonable, extravagant and unconscionable and not in proportion to
the legitimate interest sought to be protected.
Admission
[54]
The HCJ had also found that the appellant had admitted the substantial
value provided by the party far exceeds RM10 million in the recital to
the bond:
Whereas I acknowledge that Parti Keadilan Rakyat by its letter of appointment to me be a candidate of Parti Keadilan Rakyat and
agreeing to grant me use of the Parti Keadilan Rakyat logo, insignia
and Party flag as a candidate of Parti Keadilan Rakyat has provided me
substantial value which exceeds Ringgit Malaysia Ten Million
(RM10,000,000.00). (emphasis added)
[55]Section 23 of the Evidence Act 1950 which recognises that "admissions are relevant and may be proved as against the person who makes them" was referred to.
[56] The respondent referred to Luggage Distributors (M) Sdn Bhd v. Tan Hor Teng & Anor [1995] 3 CLJ 520; [1995] 1 MLJ 719 where this court said at p. 540 (CLJ); p. 747 (MLJ):
It
is a cardinal rule in the interpretation of contracts that recitals may
be taken into account as an aid to construction and this is all the
more so where there is ambiguity in the document. Further, in an
appropriate case, the court may construe a recital as carrying with it
an obligation to carry into effect that which is recited.
[57]Greer and Another v. Kettle [1938] AC 156, at p. 171 was also cited:
Estoppel
by deed is a rule of evidence founded on the principle that a solemn
and unambiguous statement or engagement in a deed must be taken as
binding between parties and privies and therefore as not admitting any
contradictory proof....
[58] We were then referred to The Interpretation of Contracts
(6th edn) by Sir Kim Levinson at p. 560 that "Where a recital of fact
is intended to be a statement of all parties, all parties are estopped
from denying the truth of the recital. But where the recital is the
statement of one party only, only that party is so estopped." Greer was cited by the learned author to support that proposition.
[59]
The appellant referred to a further passage in the same page that "An
estoppel will only arise where the recital recites a statement of fact.
It will not arise where the recital purports to state the legal effect
of the document". Here, very clearly the recital relates to a statement
of fact that the party has provided the appellant substantial value
exceeding RM10 million. It was not a statement of legal effect by the
appellant. However, the very last passage ends with "This is a
reflection of the principle that although the parties are free to
contract in whatever terms they please, the legal effect of what they
have agreed is a question of law for the court". Essentially this leaves
the interpretation of that admission to the court where we are of the
opinion that the admission must be read in light of what constitutes
reasonable compensation.
[60] This equally applies to the
other admissions which were said to have been made by the appellant on
the efforts and difficulty in obtaining funds for the party. Refer to
para. 76(c)(i) to (iv) of the respondent's written submission dated 2
September 2024.
What Then Is The Reasonable Compensation
[61]
Our finding that RM10 million is not reasonable compensation does not
absolve the appellant from any liability. The fact and finding remains
that the appellant breached the bond and it follows that the respondent
is entitled to some reasonable compensation but not RM10 million.
[62]
It behoves upon us to determine what the reasonable compensation ought
to be. We are of the opinion that such amount ought to consider the
maximum amount to be spent in GE-14 for a parliamentary seat which is
RM200,000, the appellant's 22 months as a member of parliament and the
contribution of the appellant in the party and the GE-14 election
campaign. We think that these are valid factors which go towards
proportionality. Towards this end, we find RM100,000 to be reasonable
compensation.
Past Consideration
[63] The
issue of past consideration was also raised. We find that this was not
pleaded in the defence nor raised in the memorandum of appeal and as
such will not be considered.
Conclusion
[64]
For all the above reasons, we find that the HCJ was plainly wrong to
have allowed the respondent's claim of RM10 million. However, we cannot
ignore the breach of the bond by the appellant and we vary the amount
payable to RM100,000. The appeal is partly allowed, and the decision of
the HC is varied to that extent. We award costs of RM40,000 to the
appellant, subject to allocatur.
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