Can legal fees be claimed as special damages?

In Golden Star & Others v Ling Peek Hoe & Others, the Federal Court answered this question with a resounding no, both on principle and by reason of social policy.

This case involved protracted litigation spanning over 17 years involving multiple appeals. When the Respondents finally succeeded on liability, the Respondents’ claimed as part of special damages, legal fees expended in the sum of RM2.918 million. Out of this sum, RM2.6 million was allowed by the High Court and affirmed by the Court of Appeal.

The Federal Court disagreed with both High Court and Court of Appeal and was of the view that the award of costs is, quite different from an award of damages. Damages is one of the elements that must be proved in order to succeed in a claim, be it tort or contract. On the other hand, awarding a successful litigant costs is a matter of discretion by Courts, and cannot be in itself a cause of action, whether in separate or the same proceedings. More so, when in this case there was already a specific order on costs.

In the circumstances, the Federal Court set aside the decision of the Court of Appeal and the High Court on the award of legal fees as part of special damages. This clarification on the distinction between cost and damages has finally put an end to various conflicting decision in the lower courts on this issue.

Read all about it here:

https://tinyurl.com/zne2e52y