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TORT – PURE ECONOMIC LOSS BAR REAFFIRMED: MMC LIABLE FOR NEGLIGENCE BUT PROTECTED FROM LOST PROFIT CLAIMS

1. Summary and Facts:
Asia Pacific Higher Learning Sdn Bhd v Majlis Perubatan Malaysia & Anor” [2025] MLJU 3144 concerns a dispute between a private higher education institution, Asia Pacific Higher Learning Sdn Bhd (“APH”) and the Malaysian Medical Council (“MMC”) where the plaintiff alleged that the defendants had acted negligently, breached their statutory duties, and committed misfeasance in public office in regards to the accreditation process for its medical degree programmes. The MMC, through its Joint Technical Committee (“JTC”), had been tasked to evaluate the plaintiff’s local and offshore medical programmes.
However, during two separate survey visits, the second defendant unilaterally imposed additional requirements not provided for under the Accreditation Guidelines namely, the physical attendance of proposed lecturers. Causing the plaintiff to incur substantial loss in bringing lecturers from overseas. The second defendant further decided, without authority, to reclassify two of the plaintiff’s offshore Ukrainian programmes as absorbed into its local programme MQA/PA 0927, thereby reducing the overall student quota. In which eventually led to the termination of several medical programmes and significant financial losses for the plaintiff.

2. Legal Issues:
• Whether pure economic losses may be claimed against a local authority or against the government in a tortious cause of action.

3. Court’s Findings:
• The High Court ruled that the claims for loss of profits to be dismissed, for the reason that:-
o Pure Economic Loss is not recoverable in tortious claims against the local authorities.
o The applicable statute (“Medical Act 1971”) does not confer a statutory cause of action in favour of the plaintiff.
o Referring to the reasoning of Federal Court decisions in the Highland Tower’s case, if it is a pure economic loss in tort, therefore it should be barred under Section 3 of the Civil Law Act 1956 as non-recoverable for policy reasons.
o Court is of the view that the general limitation against pure economic loss in tortious cause of action ought to apply.

4. Practical Implications:
This case strengthens the policy-based limitation on claims for pure economic loss in Malaysia whereas;
• Court clarifies that even where wrongful conduct by a stutory body is established, however only actual and foreseeable economic loss are compensable.
• While, claims for loss of profits, goodwill or commercial opportunities remain barred when they stem from the performance of a public function.
This judgment reaffirms that public authorities owes no duty of care to protect individuals from pure economic loss, unless expressly provided by statutes or exceptional circumstances.

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