HC Appeal_LNS_2013_1_364

[2013] 1 LNS 364 Legal Network Series
IN THE HIGH COURT OF MALAYA IN KUALA LUMPUR
(COMMERCIAL DIVISION)
[CIVIL SUIT NO: D-22IP-56-2010]
BETWEEN
1. TAN MEI LI
2. BLUEFIRE (M) SDN BHD
3. BLUEFIRE (KL) SDN BHD ... APPELLANTS/
PLAINTIFFS
AND
GOLDEN REGAL RESTAURANT SDN BHD … RESPONDENT/
DEFENDANT
GROUNDS OF JUDGMENT
A. THE APPEAL:
1. The Appellants/Plaintiffs appealed to the Judge in Chambers in
enclosure 36 against the decision of the learned Senior Assistant Registrar
(“SAR”) given on 13.9.2012 in respect of the assessment of damages (“the
Decision”) wherein she ordered -
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1.1. the Second Plaintiff's claim for damages for loss of income was
dismissed;
1.2. the Third Plaintiff's claim for damages for loss of income was allowed
for the sum of RM10,066.00; and
1.3. the sum of RM50,000.00 was allowed for damages for loss of good
name and reputation of the Plaintiffs.
2. The Plaintiffs prayed that the assessment of the loss of income of the
Second and Third Plaintiffs be reassessed and the Plaintiffs' claim for
damages for loss of good name and reputation at the sum of
RM500,000.00 be allowed.
3. For ease of reference I will refer the parties as the Plaintiffs and
Defendant respectively.
B. BACKGROUND FACTS:
4. By a Judgment and Order dated 24.8.2011 (“the said Judgment”), this
Court found amongst other things, the Defendant liable to the Plaintiffs for
passing off through the use of the trade mark or service mark SOCIAL KL
or SOCIAL @ KL over food and beverage services and/or restaurant
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services without the permission, consent or agreement from the Plaintiffs
and/or the Defendant's misuse of the said mark thereby gaining
commercial benefit, goodwill and reputation which was earned by the
Plaintiffs over the said mark for the period 16.8.2010 to 31.8.2011. Of
relevance to this appeal is paragraph (viii) of the said Judgment which
stipulated that -
“(viii) segala gantirugi yang dialami Plaintif akibat perbuatan Defendan
mengelirupakan dan/atau salah guna kelebihan dagang, nama baik dan reputasi
Plaintif-Plaintif ditaksirkan serta dibayar oleh Defendan dan/atau atas pilihan
Plaintif, suatu akaun keuntungan daripada Defendan;”
5. Pursuant to that Judgment/Order, a Notice of Appointment for
Assessment of Damages before the learned SAR was filed by the Plaintiffs
on 18.11.2011. A total of 7 affidavits were exchanged and an oral hearing
was conducted.
6. On the 13.9.2012, the learned SAR delivered the Decision orally and
proceeded to give her written grounds of judgment.
7. On 26.9.2012 the Plaintiffs filed the Notice of Appeal to the Judge in
Chambers against the Decision.
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The Plaintiffs' Position
8. It was contended by the Plaintiffs before the learned SAR that their
pecuniary damages must be assessed as follows:
8.1. the sum of RM787,500.00 as damages from the Defendant's account
of profits as admitted by the Defendant's director in full trial before
this Court; or
8.2 the sum of RM1,072,672.21 in loss of sales and/or decline in sales or
revenue collections suffered by the Second and Third Plaintiffs
restaurant business for the duration of 16.8.2010 until 31.8.2011
caused by the Defendant's act of passing off; and
8.3. the sum of RM100,000.00 in franchising fees suffered by the Plaintiffs
as loss of business opportunity, loss of royalty or licensing revenue at
the sum of RM150,000.00 and loss of advertising and promotions
fees of about RM90,000.00 for the duration of 16.8.2010 until
31.8.2011 caused by the Defendant's act of passing off;
whilst their -
8.4. damages for loss of goodwill be assessed in the sum of
RM500,000.00 to compensate for the Plaintiffs' loss of goodwill and
reputation over the Plaintiffs' SOCIAL or THE SOCIAL @ marks and
related restaurant businesses in Malaysia for the duration of
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16.8.2010 until 31.8.2011 caused by the Defendant's act of passing
off.
9. In view of the SAR's Decision, the Plaintiffs are now appealing on the
following grounds:
9.1. the learned SAR had failed to guide and/or direct herself in
accordance with the terms and spirit of the said Judgment;
9.2. the Second Plaintiff's claim for damages in the form of decline in
sales and/or loss of income was absolutely disallowed;
9.3. the Third Plaintiffs claim for damages in the form of decline in sales
and/or loss of income was allowed in the sum of RM10,066.00 which
is grossly low and inadequate to compensate the Plaintiff's damages.
9.4. the Plaintiffs' claim for damages in the form of loss of goodwill and
reputation allowed at the sum of RM50,000.00 is grossly low and
inadequate to compensate the Plaintiffs' damages.
10. It would appear from the Plaintiffs' counsel's submission, the Plaintiffs
had dropped their claim in respect of the items on franchising fees, loss of
royalty and licensing revenue and advertising and promotion fees other
than to mention them in passing in paragraph 19 of the Plaintiffs'
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Submission. So I will not deal with them and the learned SAR's Decision in
their respects is affirmed.
11. The Plaintiffs had elected to proceed on their claims to damages by
way of decline in sales or loss of revenue. The Plaintiffs had produced their
own statements of accounts vis the First Plaintiffs affidavits and affidavit by
Shahidan bin Mazkri (SP2).
12. It was contended by the Plaintiffs that in assessing the Plaintiffs' loss
of profit, the learned SAR had based her assessment on the statements of
account produced by the Plaintiff which was not in compliance with item
(viii) of the said Judgment whereas she should have directed her mind on
the damages claimed by the Plaintiffs. Therefore there was a miscarriage
of justice by the learned SAR and her Decision therefore is ultra virus item
(viii) of the said Judgment, and hence invalid and should be set aside and
reassessed by the Court.
13. To make matters worse, it was contended by the Plaintiffs that the
learned SAR had once again misdirected herself when she decided that the
Second Plaintiff was not entitled to any claim when in fact the Defendant
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had already been found to be liable for passing off the Plaintiffs' mark
under the said Judgment. Under the said Judgment the duty of the learned
SAR was to assess all the damages and losses suffered by the Second
Plaintiff (be it nominal or greater) but which the learned SAR had failed to
do so as seen in the said Decision.
14. The Plaintiffs in claiming for damages and losses suffered by the
Second Plaintiff had taken into account the actual decline in sales and
claiming only for the total period of two months as shown in the evidence
tendered by the Plaintiffs before the learned SAR.
15. Further, it was contended that the learned SAR had failed to
distinguish the facts of the present case from that of Taiping Poly (M) Sdn.
Bhd. v. Wong Fook Toh & Ors [2011] 3 CLJ 837 F.C. when she decided
that the principle for assessment of damages in Taiping Poly should be
applicable to the Plaintiffs in this case that is, principle on assessment of
the profit made by the infringer or an award of damages representing the
lost profit suffered by the originator. She had also failed to appreciate that
in Taiping Poly, the Federal Court in handing down the judgment had as
its objective to restore the Plaintiffs to the position they would have been
in had the Defendant not infringed.
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16. It was also submitted by the Plaintiffs that the learned SAR had failed
to consider the evidence tendered by the Plaintiffs.
The Defendant's Position
17. For the Defendant, it was submitted that it is trite law the Plaintiffs
must elect whether to claim for damages or to obtain an account of profits
from the Defendant, and the Plaintiffs cannot claim for both. In this case,
the Plaintiffs had elected to claim for damages. That based on Taiping
Poly's case, the Plaintiffs are not entitled to claim for “loss of sales” but for
“loss of profits”.
18. The Defendant submitted, without cross appealing, that the Plaintiffs
had failed to prove the “loss of sales” in respect of the Third Plaintiff. That
all the evidence tendered by the Plaintiffs did not constitute “primary
evidence” and took the form of charts and Summary of Sales without
tendering the “foundational/primary evidence” on which these documents
are based on for example receipts. The Plaintiffs' witnesses SP1 and SP2,
had testified that the Plaintiffs had used the “Point of Sale (POS) System”
and that all sales would be entered into the said POS system. After each
day when the business is closed and after any adjustments made, the POS
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system would be closed. SP1 and SP2 had testified that the charts and the
Summary of Sales were derived from the report generated from the POS
system. Since the POS system can produce a daily report, that constituted
the primary evidence, which were not tendered by the Plaintiffs. SP2
testified that the Manager would send monthly reports to him and he would
in turn give the Manager/Director of the Plaintiffs the reports in the Excel
format. These reports were tendered as “TML-1”, “TML-2”, “TML-4”, and
“TML-5” (see enclosure 39). But the monthly reports were not tendered in
Court. Furthermore, there were discrepancies found between “TML-1” and
“TML-4” and between “TML-2” and “TML-5”. It was therefore contended by
the Defendant that the Plaintiffs had failed to prove their sales in order for
their claims in damages be granted. The Defendant referred to the
following cases as its authorities:
18.1. Sony Electrics (M) Sdn. Bhd. v. Direct Interest Sdn. Bhd. [2007] 1
CLJ 611 C.A.;
18.2. KPM Khidmat Sdn. Bhd. v. Tey Kim Suie [1994] 3 CLJ 1 S.C.;
18.3. Butera v. DPP [1987] 76 ALR 45 H.C. Australia;
18.4. Johnson v. Kershaw [1847] Eng. R.430; (1847) 1 De G & Sm 260
(63 ER 1059).
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19. It was therefore submitted that the learned SAR had erred in fact and
in law when she had used the Summary of Sales Revenue of the Third
Plaintiff in Exhibit “TML-2” and “TML-5” to award damages to the Third
Plaintiff when the foundational evidence in respect of those Exhibits were
not tendered. It was also submitted that Exhibits “SBM-1”, “SBM-2” and
“SBM-3”, tendered through SP2, could not constitute “foundational/primary
evidence” in respect of the sales and service tax paid by the Plaintiffs. This
was because the primary evidence for sales would be in the form of
payment receipts or POS System Report issued on a daily basis. Whilst the
primary evidence for the service tax would take the form of service tax
payment receipts issued by the Customs Department. In this case, none of
such primary evidence had been tendered. Without the primary evidence or
“source documents” Exhibits “TML-1”, “TML-2”, “TML-4” and “TML-5”
constitute hearsay evidence which are inadmissible.
20. The Defendant also submitted that the Plaintiffs failed to prove the
profit margin enjoyed by the Third Plaintiff. That SP1 had merely made a
bare statement in respect of the rate of profits of the Plaintiffs at 10% to
12% without referring to any documents to prove it. But when he was
cross-examined, SP2 was referred to Bundle C1, page 428 and he
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admitted that the Plaintiffs' rate of profit for the year 2009 and 2010 was
about 4.92%. This showed there was discrepancy in the evidence adduced
by the Plaintiffs, and hence the Plaintiffs' failure to prove the rate of profit
enjoyed by the Third Plaintiff. In view of the Plaintiffs' failure to prove the
Third Plaintiff's losses, it was submitted that at most only a nominal sum
should be awarded to the Third Plaintiff. The case of Sony Electrics (M)
Sdn Bhd (supra) was cited as the Defendant's authority.
C. THE DECISION
21. I allow the Plaintiffs' appeal in part and disallow in part, with costs at
RM5,000.00. For that part I disallow, I affirm the decision of the learned
SAR. I do so for the following reasons.
On Franchising Fees, Loss of Royalty and Licensing Revenue,
Advertising, Promotion Fees.
22. As I have stated in paragraph 11 above, since the Plaintiffs had
dropped their claim in respect of these items in their submission, I affirm
the learned SAR's Decision on these items when she had disallowed them
(as the Plaintiffs had failed to raise/tender evidence in their regard).
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The Second Plaintiff's Claim for Damages Suffered.
23. I allow the Plaintiffs' appeal in respect of the Second Plaintiff's claim
for damages only to the extent that no sums were awarded to the Second
Plaintiff. I, however, agree with the approach taken by the learned SAR
when, in order to determine the damages suffered by the Second Plaintiff,
she took into account the loss of profits suffered by the Second Plaintiff
instead of the loss of revenue suffered by the Second Plaintiff as
contended by the Second Plaintiff. It is my considered view that the loss of
revenue does not reflect the true loss/damages suffered by the Second
Plaintiff due to the infringing actions of the Defendant. In Black's Law
Dictionary, Seventh Edition, “revenue” has been defined as -
“revenue. Gross income or receipts.”
In any event this Court is bound to follow the principles of law as laid down
by the Federal Court in Taiping Poly's case, and which was correctly
applied by the learned SAR. The learned SAR had quoted the salient part
of the said decision of the Federal Court as follows (at page 845, paragraph
15):
“[15] The current potential civil remedy against an infringer of an intellectual
property right is either as assessment of the profit made by the infringer or an
award of damages representing the lost profit suffered by the originator. And in
an action for infringement of a trade mark and passing off it is trite law that the
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same principle applies when considering the award of damages ... The usual
principal head of damage is the loss of business profits caused by the diversion
of the plaintiff's customers to the defendant as a result of the defendant's
misrepresentation.”
I therefore will be referring to the damages suffered by the Second Plaintiff
as the loss of profits by it.
24. In order to determine the loss of profits suffered by the Second
Plaintiff, the available documents tendered to Court are the Second
Plaintiff's Financial Reports in Bundle C1, which have been admitted as
Exhibits of the Court in the main trial. That being the case I see no reason
not to base my findings of fact as far as possible on the Financial Reports
in Bundle Cl in order to derive the loss of profits by the Second Plaintiff.
25. In its submission before the learned SAR, the Second Plaintiff was
seeking damages/loss of sales in respect of 2 months only, that is, August
and September 2010 for the sum of RM94,845.44. Based on its Financial
Reports in the form of its Annual Reports and Financial Statements for the
year ended 31.3.2010 (pages 419-444, Cl, Exhibit P17), being the only
available document presented by the Second Plaintiff for the year 2010,
and in view of the fact that the Defendant had passed off the Second
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Plaintiff's trade mark as its own, damages must have occurred to the
Second Plaintiff and as found by this Court in the said Judgment, I hold that
the damages/loss of profits suffered by the Second Plaintiff be calculated
as follows:
25.1. Net profit before taxation for year 2010 (page 444, C1, Exhibit P17) =
RM215,263.00 ÷ 12 months = RM17,938.58 per month (average
profit earned)
25.2. Second Plaintiff's claim for damages/loss of profits = 2 months
(August and September 2010) therefore 2 months x RM17,938.58 =
RM35,877.16.
25.3. RM35,877.16 less 50% (the 50% is a random figure to avoid over
compensating the Second Plaintiff in respect of the same 2 months) =
RM17,938.58.
25.4. The loss suffered by the Second Plaintiff for the months of August
and September 2010 is RM17,938.58.
26. I therefore set aside the learned SAR's Decision disallowing the
Second Plaintiff's claim for damages and allow the Second Plaintiff's claim
for damages in the sum of RM17,938.58.
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The 3rd
Plaintiff's Claim for Damages
27. The Third Plaintiff is claiming damages for loss of sales for the
months of August 2010 to August 2011 that is, for 12 and half months,
since the infringement was for the period 16.8.2010 to 31.8.2011.
28. I find the reasoning of the learned SAR in awarding the sum of
RM10,066.00 and later amended to RM11,309.28 (in her grounds of
judgment) as most puzzling and confusing and I do not wish to dwell on it
further. Suffice for me to say that I allow the Third Plaintiff's appeal, set
aside her Decision in respect of the Third Plaintiff's claim for damages, and
award damages to the Third Plaintiff in the sum of RM27,760.17.
29. In determining the said sum, I had employed the same principle of
law as laid down in Taiping Poly's case, referred to the Third Plaintiff's
Financial Reports in the form of the Financial Summary from 1.12.2009 to
30.11.2010 at pages 471-482 of Bundle C1 (“the Financial Summary”)
(Exhibit P19) which were admitted as evidence in Court during the main
trial and adopted similar approach as when calculating the damages to be
awarded to the Second Plaintiff.
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30. Based on the Financial Summary, I had obtained the following sums as
representing the profit/loss of the Third Plaintiff for the period December
2009 to November 2010:
RM
December 2009 - 45,960.32
January 2010 - 12,044.55
February 2010 - 19,530.31
March 2010 - 6,213.64
April 2010 - -53,713.55 (negative)
May 2010 - 7,752.31
June 2010 - 11,154.27
July 2010 - 9,128.82
August 2010 - 22,532.19
September 2010 - -17,326.76 (negative)
October 2010 - 36,747.23
November 2010 - 25,177.58
Total Profits 125,200.91
I had taken into account the profits earned by the Third Plaintiff in
December 2009 as the starting point seeing that the Third Plaintiff was only
able to produce the Financial Summary from December 2009 and only up
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to November 2010, and nothing for the year 2011. I then obtained the
average profits earned by the Third Plaintiff by dividing the sum of
RM125,200.91 by 12 months to obtain the average sum of RM10,433.41
per month as follows:
Monthly
average
profit
= Total Profits (December 2009 - November 2010) RM125,200.91
12 months
= RM10,433.41 per month
31. Since the monthly average profit was found to be RM10,433.41 per
month the Third Plaintiff did not suffer any losses for the months of August,
October and November 2010. The Third Plaintiff only suffered losses for
the month of September 2010 where it registered a loss of profit at minus
RM17,326.76. That being the case I find that the damages suffered by
Third Plaintiff for the month of September 2010 to be at RM27,760.17
calculated as follows:
Damages suffered by Third Plaintiff for September 2010=
- RM17,326.76 + RM10,433.41 = RM27,760.17
32. Since the Third Plaintiff was unable to present its financial
statement/summary for the month of December 2010 and the year 2011, I
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am unable to award it any losses it may have suffered for the month of
December 2010 and the months of January to August 2011. To do
otherwise would be speculative in nature and would be against the basic
principles of law that he who claims must prove his losses
Generally
33. I have taken the said approach in computing the damages suffered
by the Plaintiff in view of the fact that the Plaintiff had failed to tender
complete sets of Financial Reports and the like. I refer to Justice BN
Krishnan's book entitled “Law of Damages and Compensation”, Second
Edition, at pages 384-385 for assistance in understanding how to approach
this assessment and I quote at length as follows:
“... In case there is no agreement between the parties, the plaintiff has to prove
the actual loss or damage he has suffered. The court has to assess damages, as
best as it can, on the material available. There is a distinction between cases:
(a) where there is an absence of evidence, which makes it impossible to fix
damages; and
(b) where there is difficulty in assessing damages because of the nature of
the damages proved.
In the former case, the case of the plaintiff may fail, but, in the latter case, the
court should make an effort to put the injured party in the same position as he
would have been, if he had not sustained the wrong.
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The undoubted law is, that damages must be proved by the plaintiff. He
must satisfy the court both as to the fact of loss or damage, and as to its amount,
when he claims substantial damages. If it is clear that the plaintiff has sustained
substantial loss or damage, the fact that the assessment of compensation is
difficult for some reasons, is no reason for not awarding damages. In Chaplin v.
Hicks [1911] 2 KB 786, Vaughan Williams ll, said:
The fact that damages cannot be assessed with certainty does not relieve
the wrongdoer of paying damages.
And in Biggin & Co Ltd v. Permanite Ltd [1951] 2 KB 314, Devlin J, said:
Where precise evidence is obtainable, the court naturally expects to have
it. Where it is not, the court must do the best it can.
The principle that difficulty of proof does not dispense with the necessity of proof,
cannot be strictly applied in such cases. Even if applied, all that can be expected
is reasonable certainty. In Ratcliffe v. Evans [1892] 2 QB 524, it was said:
In all actions, accordingly on the case, where the damage actually
done is the gist of the action, the character of the acts themselves
which produce the damage, and the circumstances under which
these acts are done, must regulate the degree of certainty and
particularity with which the damage done ought to be stated and
proved. As much certainty and particularity must be insisted on,
both in pleading and proof of damage, as is reasonable, having
regard to the circumstances and to the nature of the acts
themselves by which the damage is done. To insist upon less
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would be to relax old and intelligible principles. To insist upon more
would be the vainest pedantry.
The following statement of law appears in Halsbury's Law:
A distinction must be drawn, however, between cases where the
difficulties are due to uncertainty as to the causation of damage,
where questions of remoteness arise, and cases where they are
due to the fact that the assessment of damages cannot be made
with any mathematical accuracy. Lack of relevant evidence may
make it impossible to assess damages at all, as where the extent
of the loss is dependent upon too many contingencies, and, in such
cases, where liability is established, nominal damages only may be
awarded. Where it is established, however, that damage has
been incurred for which a defendant should be held liable, the
plaintiff may be accorded the benefit of every reasonable
presumption as to the loss suffered. Thus, the court ... doing
the best that can be done with insufficient material, may have
to form conclusions on matters on which there is no evidence,
and to make allowance for contingencies even to the extent of
making a pure guess.
It must be kept in mind that where two parties have made a contract which
one of them has broken, the injured party must be awarded damages
which have to be measured in accordance with the rules laid down in this
section. The guilty party must not be allowed to go scot-free, simply
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because the evidence adduced is insufficient to prove the exact
amount of compensation. The court should form conclusions on
matters on which there is no evidence, and make allowance for
contingencies even to the extent of making a pure guess.”
[Emphasis added]
Damages On Loss Of Goodwill And Reputation
34. The learned SAR had awarded the sum of RM50,000.00 under this
head of damages. She did so in view of the breach of the Plaintiffs' trade
mark had affected the business reputation of the Plaintiffs as adduced in
evidence by SP1 who had received comments from the Plaintiffs'
customers which showed there was confusion in their minds with the
existence of the Defendant's restaurant with those of the Plaintiffs'
restaurants. SP1 had received negative comments amongst which had
stated that the service and food in the Defendant's restaurant were not the
same as the service and food served in the Plaintiffs' restaurants before
then. With the closure of the Defendant's restaurant, it had caused the
public to presume that the Plaintiffs had suffered losses. The learned SAR
had also taken into account the period of business conducted by the
Plaintiffs and the fact that the local society as well as outside clientele have
known about them. The learned SAR also took into consideration the fact
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that the breach of the Plaintiffs' trade mark was for the duration of one year,
wherein the Plaintiffs had failed to prove that they had suffered losses
continuously as a result of the closure of the Defendant's restaurant up to
date of the trial.
35. It was contended by the Plaintiffs that the learned SAR had misled
herself when she failed to reasonably assess the damages under this head
and in doing so she had failed to consider the amount proposed by the
Plaintiffs. To the Plaintiffs, the amount awarded was a nominal one.
Learned counsel for the Plaintiffs then referred to Taiping Poly's case
(supra) where the amount for loss of goodwill and reputation of
RM50,000.00 was awarded by the High Court and affirmed by the Court of
Appeal. In the Federal Court, that Court did not disturb the said sum and
had affirmed it as the Appellant did not propose a higher sum to be
assessed. In distinguishing Taiping Poly's case with the Plaintiffs' case,
the Plaintiffs are seeking this Court's consideration to order the sum of
RM500,000.00 as damages for the Plaintiffs' loss of goodwill and
reputation.
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36. It was submitted for the Plaintiffs that their reputation and goodwill
over the SOCIAL or THE SOCIAL @ trade mark or service mark were
affected substantially due to the Defendant's passing off and has yet to
recover in full till to date. This submission was made in the light of the
Plaintiffs have established a food and beverage service business and/or
restaurant business in Malaysia since 2001 which is well known to
Malaysians as well as foreigners and which had generated a revenue in
excess of RM35 million during the span of 10 years in business at the
minimum as at the assessment hearing date. The amount of RM50,000.00
awarded by the learned SAR was grossly insufficient as it is not even close
to the revenue generated by the Plaintiffs monthly, with an average of
RM250,000.00.
37. Further, it was submitted that the awarded sum could not be justified
in view of the Defendant's passing off conduct of the Plaintiffs' trade
mark/service mark for one full year or more wherein the Defendant through
its witness DW1 had admitted that the “revenue received was between
RM200,000.00 up to RM250,000.00 a month” and “the rate of profit margin
received by the Defendant's stands at the sum of twenty five (25%) per
cent which totals to an average of RM56,250 per month in profit”.
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38. Reference was also made to Taiping Poly's case (supra) where, at
page 852, per Richard Malanjum CJ (Sabah and Sarawak), he stated as
follows:
“Now, on the loss of goodwill and reputation it is trite law that it is presumed and
that the sum to be awarded is a matter of discretion.”
Reference was also made to Uda Holdings Sdn. Bhd. v. Koperasi
Pasaraya Malaysia Bhd. [2007] 5 CLJ 489 C.A. for the definition of
“goodwill”.
39. The Defendant submitted that only a nominal amount should be
awarded for the loss of “goodwill” as the Plaintiff was not entitled to it. The
Defendant submitted so without cross-appealing against the learned SAR's
Decision. Amongst the reasons given by the Defendant for submitting that
the Plaintiffs were not entitled to damages for loss of goodwill are -
39.1. the Defendant had carried on its business by using the Plaintiffs'
trade mark for only one year;
39.2. the Plaintiffs did not own the trade mark “Social” and “Social KL”
before the action was filed;
39.3. the Plaintiffs failed to prove that there were Plaintiffs' customers who
stopped being the Plaintiffs' customers as a result of the Defendant's
actions.
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40. I allow the Plaintiff's appeal in regard to this head of damages and set
aside the learned SAR's award of RM50,000.00 and I award the sum of
RM100,000.00 to the Plaintiffs. I do so for the following reasons:
40.1. I find the learned SAR's awarded sum of RM50,000.00 as being
grossly undervalued;
40.2. the learned SAR had been influenced by the sum of RM50,000.00
being awarded by the High Court in the Taiping Poly's case and
affirmed by the Court of Appeal, but may have failed to appreciate
the fact that the Federal Court chose not to disturb the said sum as
the Appellant there chose not to propose a higher sum to be
assessed. The learned SAR failed to allude to the sum of
RM500,000.00 as proposed by the Plaintiffs to indicate she had
considered the said sum but found it to be too inflated before deciding
on the sum of RM50,000.00;
40.3. the sum I have awarded I consider as not an inflated one in view of
the fact that the Defendant, through its witness DW1, being the
Director of the Defendant, had admitted that the “revenue received
was between RM200,000.00 up to RM250,000.00 a month” and “the
rate of profit margin received by the Defendant's stands at the sum of
twenty five (25%) percent which totals to an average of RM56,250
25

per month in profit”. By this evidence it showed that what was gained
by the Defendant was at the expense of the Plaintiffs and hence the
loss of goodwill and reputation suffered by the Plaintiffs;
40.4. the Defendant had passed off the Plaintiffs' trade mark as theirs for a
period slightly over one year and it is not for the Defendant to argue
that the Plaintiffs did not own the said trademarks before the action
was filed;
40.5. the Plaintiffs had been carrying on its business for a span of 10 years
and as such the goodwill built thereby must be valued substantially,
especially seeing that the Plaintiffs' business had generated a
revenue in excess of RM35 million during the span of 10 years (see
Bundles C1 and C2. Also paragraphs 24-49, High Court Judge's
Grounds of Judgment, Tab C, enclosure 37, Rekod Rayuan);
40.6. in the given circumstances I am of the view the sum of RM100,000.00
is a reasonable sum to award the Plaintiffs.
D. CONCLUSION:
41. For the reasons stated above -
41.1. I allow the Plaintiffs' appeal with costs at RM5,000.00 here while
costs before the learned SAR in respect of the main trial and the
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assessment of damages are to be taxed and the Decision of the
learned SAR is set aside to the following extent:
41.1.1. the second Plaintiff's claim for damages suffered is
allowed for the sum of RM17,938.58;
41.1.2 the Third Plaintiff's claim for damages suffered is allowed
for the sum of RM27,760.17;
41.1.3 the plaintiff's claim for damages for loss of goodwill and
reputation is allowed for the sum of RM100,000.00;
41.2. I affirm the learned SAR's Decision in disallowing any sums claimed
for franchising fees, loss of royalty and licensing revenue, advertising and
promotions fees and allowing the interest payable on the damages
assessed and as determined by the said Judgment.
(UMI KALTHUM ABD MAJID)
Judge
High Court (Commercial Division)
Kuala Lumpur
Dated: 10 JULY 2013
27

Counsels:
For the appellants/plaintiffs - Mahendra Kumar Balakrishnan; M/s
Bustaman
Lot C9-3, Jalan Selaman 1,
Dataran Palma,
68000 Ampang,
Selangor Darul Ehsan.
For the respondent/defendant - Saleem Mohamed Ali; M/s Hisham
Yoong K C Lim
No. 4-A, Jalan USJ 10/1E,
UEP Subang Jaya,
47620 Subang Jaya,
Selangor Darul Ehsan.
28

HC Appeal_LNS_2013_1_364

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