DI DALAM MAHKAMAH TINGGI MALAYA DI JOHOR BAHRU
DI DALAM NEGERI JOHOR DARUL TAKZIM
GUAMAN SIVIL NO. (MT-1) 22-623-2005
ANTARA
SINDORA FURNITURE SDN. BHD.
…PLAINTIF
DAN
TOP – RANGE PRODUCT (M) SDN. BHD.
…DEFENDAN
DI DALAM KAMAR MAHKAMAH
DI HADAPAN Y.A. TUAN VERNON ONG LAM KIAT
HAKIM
GROUNDS OF JUDGMENT
The plaintiff’s claim is for USD28,209.60 being the purchase price for
goods sold and delivered. The defendant’s counterclaim is for loss and
damages arising from the defective goods supplied by the plaintiff.
Brief account of the facts
The plaintiff supplied and delivered
consignments of furniture as follows:
Page 1 of 8
to
the
defendant
two
Purchase Order
No.
5695
5729
Invoice no.
SFE/01464
SFE/01466
Delivery Order
No.
5186
5314
Total
Amount
USD13,511.40
USD14,698.20
USD28,209.60
PO No. 5695 relates to the supply and delivery of ‘Manhattan’
bedroom sets. The initial delivery of the bedroom sets were rejected and
returned by the defendant. Subsequently the plaintiff re-worked the
Manhattan bedroom sets. As the defendant was still dissatisfied, it was
agreed that the defendant carry out the re-work at the plaintiff’s costs. The
defendant exported the consignment after the re-work was completed. The
costs of the re-work came to RM8,082.00. The plaintiff has conceded that
the defendant is entitled to set-off RM8,082.00 being the costs of re-work
against the plaintiff’s claim of USD13,511.40.
PO No. 5729 relates to the supply and delivery of ‘Alaska’ bedroom
sets. The delivery of these bedroom sets were held back due to complaints
about the colour and sealer. After the necessary remedial works were
executed the plaintiff delivered the bedroom sets to the defendant. The
defendant subsequently exported the bedroom sets. There were no
subsequent complaints about these bedroom sets.
Plaintiff’s claim
It is the plaintiff’s contention that the defendant is liable to pay the
purchase price as they have accepted for the bedroom sets (ss 31 & 42
Sale of Goods Act 1957; Mukand Limited v Malaysia Steel Works (KL) Sdn
Bhd [2010] 5 CLJ 282; Wee Lian Construction Sdn Bhd v Ingersoll-Jati
Malaysia Sdn Bhd [2010] 4 CLJ 203).
Defendant’s defence
The defendant contends that the bedroom sets in question were
defective, not of merchantable quality and not according to the
specifications set by the defendant. The defendant received complaints
from its overseas customers that the bedroom sets had cracks and were
not of merchantable quality. As the bedroom sets were not according to
the defendant’s specifications and satisfaction the defendant is entitled to
refuse payment of the purchase price (s 56(c) Sale of Goods Act 1957;
Page 2 of 8
Lian Construction Sdn Bhd v Ingersoll-Jati Malaysia Sdn Bhd, supra). The
defendant did not accept or assert ownership of the bedroom sets. The
defendant informed the plaintiff that the bedroom sets were defective and
not of merchantable quality and also indicated that the goods were being
rejected by the defendant. Therefore the plaintiff is not entitled to receive
payment (Perbadanan Kemajuan Ekonomi Negeri Johor v Lim Shee Pin &
Anor [1986] 1 MLJ 184; Bolton v Mahadeva [1972] 2 ALL ER 1322).
Defendant’s counterclaim
The counterclaim for loss and damages is predicated on the plaintiff’s
breach of contract that:
(i)
(ii)
(iii)
(iii)
the goods supplied by the plaintiff were defective and not of
merchantable quality;
as a result of the plaintiff’s breach the defendant expended
extra effort, time and money;
as the defendant had to re-work the furniture, the defendant’s
regular orders were delayed up to six months, their production
interrupted and man hours wasted and their reputation
damaged;
the defendant’s business was badly affected when it lost its
customers who stopped purchasing their furniture.
The resulting losses should be allowed due to the plaintiff’s breach of
contract (Lee Chin Kok v Jasmin Arunthuthu Allegakoen & Ors [2004] 4
CLJ 305.
Findings of the Court
Plaintiff’s claim
In this case the plaintiff has performed its obligations when it
delivered the Manhattan and Alaska bedroom sets to the defendant and the
defendant has taken delivery and taken possession of the goods. After
taking delivery of the bedroom sets the defendant retained the goods
without intimating to the plaintiff that it has rejected them. In fact the
defendant subsequently exported the bedroom sets to its customers
overseas. Thus, in relation to the bedroom sets the defendant has acted in
a manner which is inconsistent with the ownership of the plaintiff qua seller.
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In the premises, the defendant is deemed to have accepted the goods (s
42 Sale of Goods Act 1957).
There is no evidence of any agreement between the plaintiff and the
defendant providing for payment of the price to be deferred to a later date.
In the absence of any contrary agreement, the delivery of the goods and
the payment of the price are concurrent conditions as provided under s 32
of the Sale of Goods Act 1957. In other words if the plaintiff is ready and
willing to give possession of the goods to the defendant in exchange for the
price, then the defendant should be ready and willing to pay the price in
exchange for possession of the goods. In this regard it is pertinent to note
that the duties of a buyer and seller in a contract of sale of goods
transaction are clearly spelt out under s 31 of the Sale of Goods Act 1957
which states:
31.
Duties of seller and buyer
It is the duty of the seller to deliver the goods and of the buyer to
accept and pay for them in accordance with the terms of the
contract of sale.
Having accepted the goods the defendant is obliged to pay the price
of the goods. The defendant’s allegations that the goods were defective
and were not of merchantable quality relates to a consignment of goods
under PO No. 5694. The defendant’s dissatisfaction with this particular
consignment is no defence to the plaintiff’s claim for the price of the goods
under PO Nos. 5695 and 5729. PO No. 5694 relates to another transaction
which is not the subject matter of the plaintiff’s claim. The Court finds that
on a balance of probabilities the plaintiff has made out its case to which the
defendant has not set up any defence or at all.
Defendant’s counterclaim
The defendant’s counterclaim is for the following heads of damages:
(i)
(ii)
(iii)
(iv)
(v)
loss of productivity
......................
detention charges
......................
haulage charges
......................
compensation paid to Anteak Style Furniture .......
transport charges/accommodation ......................
Page 4 of 8
RM20,000.00
RM23,520.00
RM4,722.00
RM12,160.00
RM5,000.00
(vi) loss of business
(vii) loss of reputation
...................... RM54,720.00
...................... RM172,800.00
It is settled law that in order for the defendant to succeed in its
counterclaim the defendant must show that the abovementioned loss and
damages is due to the breach of contract by the plaintiff. Once that is
established, the defendant has the additional burden of proving the
damages. The law on the recovery of damages which has been succinctly
described by Ramly Ali J (now JCA) in PB Malaysia Sdn Bhd v Samudra
(M) Sdn Bhd [2009] 7 MLJ 681 at 697 may be summarised as follows:
(1)
(2)
The burden of proof is on the party seeking the claim to prove
the facts and the amount of damages (Hock Huat Iron Foundry
(suing as a firm) v Naga Tembaga Sdn Bhd [1999] 1 MLJ 65
(CA); Bonham-Carter v Hyde Park Hotel Limited (1948) 64 TLR
177; Popular Industries Limited v Eastern Garment
Manufacturing Sdn Bhd [1989] 3 MLJ 360 and Sony Electronics
(M) Sdn Bhd v Direct Interest Sdn Bhd [2007] 2 MLJ 229 (CA)).
The damages must be proved with real or factual evidence.
Mere particulars, summaries, estimations or general
conclusions will not suffice (Lee Sau Kong v Leow Cheng
Chiang [1961] MLJ 17 (CA)).
According to En. Kamarulzaman Bin Alias (DW1) the former director
of the defendant company, in December 2002 the defendant appointed the
plaintiff as its sub-contractor for the manufacture of bedroom sets and other
furniture items vide PO No. 5694. Even though the delivery date for the
goods were on 26.12.2002 the goods were only delivered on 7.2.2002.
The goods were not manufactured according to the quality, design,
specifications and drawings provided by the defendant. DW1 said that he
wrote a letter of complaint to the plaintiff on 1.4.2003. On 5.5.2003 DW1
faxed a letter to the plaintiff referring to a joint inspection on 2.5.2003 which
was conducted based on a complaint received from the defendant’s
customers in South Africa where the bedroom sets were exported to. The
defendant faxed a letter to the plaintiff agreeing to the joint inspection. In
that fax the defendant also informed the plaintiff that they were incurring
detention charges of RM23,000.00 and other expenses due to the delay.
Subsequently, there was a second joint inspection on 16 & 17.6.2003. On
21.6.2003 the defendant sent a fax to the plaintiff complaining that the
defendant’s customer was losing patience due to the delay of more than 5
Page 5 of 8
months. The plaintiff then requested the defendant to carry out the re-work
on the bedroom sets at the plaintiff’s costs. From the aforesaid sequence
of events it can be seen that the defendant was put to inconvenience due
to the defects of the bedroom sets which required re-work. As a result the
deliveries of the bedroom sets to the defendant’s overseas customers were
delayed. DW1 also alluded to the loss of business in his fax of 15.11.2003.
However, apart from DW1’s bare assertions and the statements
contained in the faxes and letters written by DW1, the defendant did not
produce any facts or evidence to substantiate their claim for loss of
productivity of RM20,000.00. The defendant did not produce any facts or
figures to show how the re-work had affected their productivity. There is no
basis upon which the Court could be called upon to accept the figure of
RM20,000.00.
The defendant’s claim for detention charges in the sum of
RM23,520.00 is unsubstantiated. No invoice, receipt, payment voucher or
any other document was produced in support of this item of special
damages which must be proved. Similarly, there is no evidence to
substantiate the defendant’s claim for the haulage charges of RM4,722.00.
In respect of the claim for RM12,160.00 being the compensation paid
to Anteak Style Furniture, DW1 referred to a letter from Anteak Style
Furniture to the defendant dated 25.4.2003 which was marked as DID3. As
DID3 was not admitted in evidence, there is no evidence before the Court
to support this claim. Even if DID3 was received in evidence, it only shows
that Anteak Style Furniture paid Rand 42,700.00. Further this letter does
not refer to ‘Manhatan’ or “Alaska” bedroom sets; instead it makes
reference to ‘Alberton & Adore’ bedroom sets. Apart from DID3, the
defendant did not produce any payment vouchers or receipt in support of
the claim.
The claim for transport charges/accommodation of RM5,000.00
relates to DW1’s trip to South Africa. Apart from showing his passport
evidencing his trip to South Africa, there is no invoice, payment voucher,
receipt or other document to show that the defendant in fact expended
RM5,000.00 as claimed.
The defendant’s claim for loss of business for RM54,720.00 must
also be proved by real or factual evidence. Apart from DW1’s testimony
Page 6 of 8
there is no real or factual evidence in support of the claim. At the very least
the defendant ought to have produced the statements of account for the
corresponding periods before and after the breach of contract as evidence
of loss of business. As the burden of producing such evidence lies on the
defendant, the failure to adduce any supporting evidence shows that
DW1’s assertion is only a bare assertion.
Turning now to the defendant’s last item of claim - loss of reputation
for RM172,800.00. As a general rule damages for loss of reputation will
not be awarded for breach of contract (see Subramaniam Paramasivam &
Ors v Malaysian Airlines System Bhd [2002] 1 CLJ 230 where Kang Hwee
Gee J (now JCA) cited a passage by Selvam JC in Haron bin Mundir v
SAAA [1992] 1 SLR 18 at 30H). What we have here is a principally
commercial transaction between two commercial entities. As with contracts
of this nature non-pecuniary loss such as frustration, mental distress, loss
of reputation and injured feelings suffered by a party as a result of the
breach are not generally regarded as matters that arose in the natural
course of event or which were within the contemplation of the parties when
they entered into the contract. If, however, the contract is not primarily a
commercial contract, in the sense that it affects not the defendant’s
business interests, but his personal, social and family interests, then the
door should not be closed to awarding damages for mental suffering (or
any other non-pecuniary loss) if the court thinks that in the particular
circumstances of the case the parties to the contract had such damage in
their contemplation (McGregor on Damages 1997 edn, paras. 92 & 99). In
the circumstances the Court is of the view that loss of reputation is remote
and not recoverable.
In conclusion the Court finds that the defendant has fallen short of the
legal and evidential burden of proving the loss and damages aforesaid.
For the reasons adumbrated the plaintiff’s claim is allowed as follows:
(i)
(ii)
(iii)
Judgment for USD28,209.60 less RM8,082.00;
Interest on the judgment sum at 8% per annum from the date of
summons to the date of payment;
Costs of RM12,000.00.
The defendant’s counterclaim is dismissed. Costs of RM5,000.00 to the
plaintiff.
Page 7 of 8
(VERNON ONG)
JUDGE
HIGH COURT MALAYA
JOHOR BAHRU
DATED:
13TH AUGUST 2010
COUNSEL
Vinoben Mathiavaranam -Tetuan Reginald Vallipuram & Co., Suite 1, 23rd Floor, Kompleks
Tun Abdul Razak, Jalan Wong Ah Fook, 80000 Johor Bahru – for Plaintiff.
Tarlochan Singh Dhaliwa– Tetuan A S Dhaliwal, Unit 5-4, 5th Floor, Wisma Bandar, No. 18,
Jalan Tuanku Abdul Rahman, 50100 Kuala Lumpur – for Defendant.
VO-j-22-623-2005/mj
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