non pecuniary loss

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Classification of Losses

Physical Inconvenience and Discomfort

Injury to feelings and Mental Distress

Common Law and Malaysian Law Position

Recent Updates of Non-Pecuniary Loss

Suggestion

Conclusion

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Pecuniary Loss

Easier to be handled

Such breaching has been

precluded in the contract

Non-Pecuniary Loss

Deals with emotional things

It doesn’t straight forward and it depends

on judges

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*Generally the court wouldn’t entertain non-

pecuniary loss.

*However, there are a few exception situations

where the court will embrace :

Physical

InconvenienceDiscomfort

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Watts & Anor v Morrow

•The defendants negligently put the plaintiffs at the wrong station, the plaintiffs have to walk back in drizzling rain

•The plaintiffs claimed for damages of the physical inconvenience

Hobbs and Wide v The London and South Western Railway Co.

•The plaintiffs purchased the house after believing the defendant had done his survey perfectly and later he found out that there was a great defect.

•Plaintiffs claimed for the cost of repair as well as damages for mental distress.

•The court doesn’t award such damage as such distress was only mentally.

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Farley V Skinner

• Exception where mentally discomfort can be awarded for non-pecuniary loss

• The court held that the plaintiff wouldn’t have been buying the house if he knew the house would be affected by the aircraft noise.

• The contract was made on the ground of both parties’ contemplation that they wouldn’t have been entering into the contract if the plaintiffs knew it

• The court awarded such damages

• In other words, the plaintiffs cannot raise for mental distress, unless the contract was made of such purpose

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*The general principle has always been no

damages could be awarded for injured feelings.

*The landmark case was :

Addis v Gramophone Co. Ltd

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The plaintiff claimed for injured feelings as he felt that he was humiliated

The defendant hired another and took steps to prevent the plaintiff from acting as manager during the “six months notice”

The plaintiff was dismissed by the defendant

Addis v Gamophone Co. Ltd

Held that no award of damages for mere injury to feelings

will be allowed

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*Eventually, the courts showed mercy to allow

exceptional situations.

*The courts established another rule :

* If the contract was to provide for enjoyment and

to prevent further distress, the award of non-

pecuniary loss was allowed

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Jarvis v Swans Tours Ltd

• The plaintiff booked a 15-days winter sports holiday package but eventually turned out very unlikely to the brochure.

• He claimed for non-pecuniary loss for his disappointment expectations

• The court awarded such damages according to the rules established

Malik v Bank of Credit and Commerce International SA

• The plaintiff claimed non-pecuniary loss from the defendants after they went into liquidation as the defendants were involved in a corrupt and dishonest manner

• The court held since the defendant breached the implied terms between the parties, they have to be liable for such loss.

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Common Law

The court will not keen to award such damagesThere are exceptions which had already mentioned

Malaysian Law

Our Contract Law is silent on this matter

S.3(1) and S.5 of Civil Law Act 1956

Common Law may be introduced

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*There is a trend calling upon all the countries to standardize the amount of non-pecuniary loss

*However, such call of establishing of scale of relative severity has experienced some objections

*This is because no single general scale could ever represent every single countries, as every countries have different living standards or economics standards.

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Subramaniam a/l Paramasivam v Malaysian Airline System Bhd

• The plaintiff who is a lawyer and a politician claimed that defendants’ act of checking his luggage has caused him serious humiliation

• In this case, the plaintiff was a celebrity, and he reasonable excuses to claim such loss.

• However, in another situation, when another man who is just a civilian experiences the same, he couldn’t claim such loss

• That’s why we are saying that establishing a general scale of relative severity or standardized amount of non-pecuniary loss is inappropriate.

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*Non-pecuniary loss may not be the best

resolution.

*In my humble opinion, there is a better way

which it can be resolved easily, which ADR can

be used to resolve such issue.

*ADR allows negotiation, the result is

confidential and it saves costs of the parties,

meanwhile, it still bears legal effect.

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*Non-pecuniary loss has always been seen as a tool to gain extra award of damages from the breach of the contract.

*As mentioned in the last slide, it may not be the best resolution as it might be unfair to those who doesn’t possess knowledge in the field of law as they might be exploited by the other parties.

* In Malaysian position, we allow non-pecuniary loss as long as that particular loss wasn’t within the contemplation as if the contract has been performed