DI DALAM MAHKAMAH TINGGI MALAYA DI JOHOR BAHRU
DI DALAM NEGERI JOHOR DARUL TAKZIM
GUAMAN SIVIL NO. (MT-1) 22-371-2006
ANTARA
1.
2.
SINDORA TRADING SDN. BHD.
SINDORA FURNITURE SDN. BHD
…PLAINTIF-PLAINTIF
DAN
TOP-RANGE PRODUCTS (M) SDN. BHD
…DEFENDAN
DI DALAM MAHKAMAH TERBUKA
DI HADAPAN Y.A. VERNON ONG
HAKIM
GROUNDS OF JUDGMENT
The plaintiffs’ claim is for the purchase price of RM108,177.04 for
laminated boards sold and delivered to the defendant. The defendant is
counterclaiming for RM2,870,558.00 in damages.
Brief account of the facts
The 1st plaintiff is the manufacturer of the laminated boards whilst the
2nd plaintiff is the 1st plaintiff’s trading arm. Pursuant to the defendant’s
purchase order nos. 5743 and 5794 to the 2nd plaintiff, the 1st plaintiff sold
and delivered 2 consignments of laminated boards to the defendant. The
defendant took delivery of the following consignments from the 1st plaintiff.
Purchase Order No.
5743
5794
Invoice no.
ST/340/2003
ST/362/2003
Delivery Order No.
D-022/2003
D-042/2003
Total
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Amount
RM48,869.15
RM59,307.89
RM108,177.04
Plaintiff’s claim
The first consignment of the laminated boards were accepted by the
defendant. The defendant did not reject any of the laminated boards. The
defendant also accepted the second consignment of the laminated boards.
After the defendant complained that 162 of the 1,500 laminated boards
were de-laminated due to high moisture the plaintiff sent another
consignment of 162 laminated boards to the defendant. But the defendant
rejected this replacement consignment on the grounds of high moisture
content. The plaintiff sent another consignment of 112 laminated boards.
Although the defendant complained that the 112 laminated boards had high
moisture content, the defendant did not reject or return the laminated
boards. As the defendant has taken delivery of all the laminated boards,
the defendant is liable to pay the purchase price.
Defendant’s defence and counterclaim
The defendant contends that due to the defects in the laminated
boards the defendant is not liable to pay the purchase price. The
defendant is counterclaiming against the plaintiffs for losses and expenses
incurred as a result of the defective laminated boards.
Findings of the Court
Khairuddin Bin Salleho (PW1) the 1st plaintiff’s marketing manager at
the material time produced the purchase orders, delivery orders and
invoices relating to the 2 consignments of laminated boards. PW1’s
evidence on this was not challenged or contradicted. The fact that the
purchase orders were issued by the defendant and that the laminated
boards were delivered to the defendant is not disputed.
1st consignment
There were no complaints about the first consignment of 1,230
laminated boards under invoice no. ST/340/2003. As the defendant has
taken delivery of the first consignment, the defendant is obliged to pay the
purchase price for it. Therefore, the defendant is liable to pay to the
plaintiffs the purchase price of RM48,869.15 for the first consignment under
invoice ST/340/2003 dated 7.2.2003 (s 31 of the Act; Panglima Aces Sdn
Bhd v Highway Brick Works (Serendah) Sdn Bhd [2006] 3 CLJ 628;
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Mukand Limited v Malaysia Steel Works (KL) Sdn Bhd [2010] 5 CLJ 282
(CA)).
2nd consignment
Notwithstanding the defendant’s complaints about the 2nd
consignment, the defendant’s obligation to pay the purchase price is
unaffected.
The defendant had accepted delivery of the second
consignment. It had converted the laminated boards when it utilised them
in the process of manufacturing its furniture (s 42 of the Act) . On the
authority of Panglima Aces Sdn Bhd. supra and Mukand Limited, supra, the
defendant is liable to pay RM59,307.89. The issue of the damages for
alleged defects is the subject matter of the defendant’s counterclaim.
Defendant’s counterclaim
The defendant’s counterclaim is for the following heads of damages:
(i) costs of replacing laminated boards/completed items
(ii) costs of replacement works
(iii) loss of productivity
(iv) external warehouse costs
(v) payment to American Homes
(vi) freight charges
(vii) loss of business
(viii) loss of reputation
Total
......... RM 11,114.00
......... RM 21,030.00
......... RM 180,000.00
......... RM
600.00
......... RM
2,900.00
......... RM
1,200.00
......... RM1,080,000.00
......... RM1,573,714.00
--------------------RM2,653,714.00
---------------------
According to the facts as disclosed in the evidence, it is not disputed
that some of the laminated boards under the second consignment were
defective. The defective laminated boards had become delaminated and
cracked. When the plaintiff was informed of the defects, the plaintiff initially
delivered a replacement consignment of 162 laminated boards. The
defendant rejected this replacement consignment because of high moisture
content.
Subsequently, the plaintiff delivered another replacement
consignment of 112 laminated boards to the defendant. The defendant’s
witness Kamarulzaman Bin Alias (DW1) had written to the 2nd plaintiff on
two occasions: on 17.4.2003 when the defendant wrote to the plaintiff
complaining about the cracks, and again on 3.5.2003 referring to the
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defendant’s rejection of the 162 replacement laminated boards and to the
defects in the 112 replacement laminated boards. DW1 also produced a
letter from its customer in South Africa complaining about the furniture.
DW1 also produced photographs depicting the delamination and cracks in
the finished and semi-finished furniture. DW1 also wrote to the 2nd plaintiff
on 18.7.2003 informing that the defendant was unable to assess the
damages as a result of the cracking problem. On the evidence as a whole,
the Court is satisfied that the defendant has shown that there were defects
in the laminated boards.
To prove its counterclaim for damages, DW1 produced a letter dated
29.9.2003 to the plaintiff. It contains the particulars of the damages
incurred by the defendant over the last 5 to 6 months amounting to
RM264,596.84. By another letter dated 1.10.2003 DW1 informed the
plaintiff that they will be visiting their customers overseas to ascertain the
impact of the problems. By a letter dated 17.11.2003, DW1 informed that
they received another complaint from their customers. DW1 also testified
that the defendant suffered losses related to loss of productivity, reworking
on the furniture, detention charges, haulier charges, transport costs,
accommodation for workers, loss of reputation and loss of future business
amounting to RM2,870,558.00.
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 has been succinctly
enunciated by Ramly Ali J (now JCA) in PB Malaysia Sdn Bhd v Samudra
(M) Sdn Bhd [2009] 7 MLJ 681 at 697. It may be summarised as follows:
(1)
(2)
The party seeking the claim bears the burden of proof 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
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conclusions will not suffice (Lee Sau Kong v Leow Cheng
Chiang [1961] MLJ 17 (CA)).
Other than DW1’s testimony and the statements contained in the
faxes and letters written by DW1, the defendant did not prove any facts or
produce any evidence to substantiate their claim for items (i) to (vi) of the
counterclaim. Accordingly, the defendant has failed to satisfy the burden of
proving the aforesaid items of damages.
Similarly, the defendant’s claim under item (vii) for loss of business
for RM1,080,000.00 must also be proved by real or factual evidence. Apart
from DW1’s testimony there is no real or factual evidence in support of the
claim. At the very least the defendant ought to have produced the list of
customers and statements of account for the corresponding periods before
and after the breach of contract occurred 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
unsubstantiated.
The defendant’s last item of claim (viii) is for loss of reputation for
RM1,573,714.00. 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 claim for loss of reputation is remote and not
recoverable.
Page 5 of 6
Conclusion
For the reasons adumbrated above the plaintiff’s claim is allowed in
prayers (a), (b) with costs of RM12,000.00. As the defendant has failed to
satisfy the legal and evidential burden of proving the damages, the
defendant’s counterclaim is dismissed with costs of RM5,000.00.
(VERNON ONG)
JUDGE
HIGH COURT MALAYA
JOHOR BAHRU
DATED:
20TH DECEMBER 2010
COUNSEL
Vinoben Mathiavaranam and Reginald Vallipuram – Tetuan Reginald Vallipuram & Co., Suite
1, 23rd Floor, Kompleks Tun Abdul Razak, Jalan Wong Ah Fook, 80000 Johor Bahru – for
Plaintiffs.
Tarlochan Singh Dhaliwal – Tetuan A S Dhaliwal, Unit 5-4, 5th Floor, Wisma Bandar, No. 18,
Jalan Tuanku Abdul Rahman, 50100 Kuala Lumpur – for Defendant.
VO-j-22-371-2006/mj
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