Clomart Sdn. Bhd. v Hexamine Sdn. Bhd. (BA-22NCvC-399-10/2022)

At some point, the Defendant further represented to the Plaintiff that the Product names Sichuan Xincheng SARS-CoV-2 Antigen Assay and Sichuan Xincheng (Diacegene) SARS-CoV-2 Antigen Assay were interchangeable, and that the appears for the international market. Facts leading to dispute [8] On 1-11- was visited by officers from the MDA on a routine inspection. The MDA officers issued a Statement of Inspection brand of Covid-19 test kit on sale and that a search of the MDA portal revealed that there is no approval for the sale of test kits under this brand. [9] Hearsay evidence about what the MDA officers had allegedly said were offered by a witness for the Plaintiff from Sunlight Pharmacy (SP-2) which I have disregarded as inadmissible. [10] The Plaintiff wrote to the Defendant on 5-11-2021 to report the incident affecting Sunlight Pharmacy, and sought to recall and return all unsold units of the Product to the Defendant and claim for a refund. The Plaintiff relied on a term in the P.O. that provided: product recall exercise by government according to latest policy or

The Defendant rejected the return and refund request. The parties discussed the matter but could not reach any resolution. By email dated 10-11-2021, the Defendant referred the matter to its solicitors. [12] In the ensuing exchange of letters between solicitors, the Plaintiff was notified by letter dated 7-12-2021 that the MDA had on 2-12-2021, device under the MDA Conditional Approval to Sichuan Xincheng (Diacegene) SARS-CoV-2 Antigen Assay. The Plaintiff was further notified that it may proceed to distribute the Product in the ordinary course of business. [13] The MDA Conditional Approval was valid for a year from 9-8-2021, which meant that the Plaintiff had a further 8 months to clear the stocks purchased. Analysis and findings [14] The Plaintiff contends that the Defendant-contractual pproval for importation, distribution and sale to the market in Malaysia was false, in that the Product sold and delivered with the logo its packaging, never received such approval from the MDA.

Based on the pleaded case, the issues to be determined are as follows:

whether the Defendant misrepresented that the Product sold and delivered to the Plaintiff with the logo its packaging, for importation, distribution and sale to the market in Malaysia;

whether in the alternative, the Defendant breached the contract for the sale and purchase of the said Product;

whether the Plaintiff suffered special damages in the sum RM1,009,156.96, comprising (i) RM929,536.96 for recalled and unsold stocks of the Product; and (ii) RM79,620.00 for undelivered Product. Misrepresentation [16] The law on misrepresentation as a vitiating factor in contract is well-established. Sections 18 and 19 of the Contracts Act 1950 are relevant and this is highlighted because in submissions, the Plaintiff relied on those provisions to argue that the contract for the sale of the Product had been rescinded due to misrepresentation. [17] According to section 19 of the Contracts Act 1950 however, misrepresentation renders a contract voidable, not void. It is not the pleaded case that the Plaintiff had elected to rescind the contract such as to render it void ab initio. is only for damages. [18] To put this issue to rest, the contract for sale in this case is evidenced by the transaction documents, including the P.O.. Based on the pleading, facts and evidence of the case, the Plaintiff had relied on the term in the P.O. as justification for the return of the Product. [19] As an action for damages, the parties did not address the question of the Defendant s intention (or the state of mind of the person making the representations complained of) when the alleged misrepresentations were made. I have put a pin on the issue while I consider first, whether or not any misrepresentations were made at all.

MDA Conditional Approval [20] By a letter dated 9-8-2021 from the MDA to the Defendant with Reference No. (7) MDA.600-1/6/27, the MDA gave the Defendant conditional approval to import and distribute a Covid-19 Self Test Kit as a medical device under the Medical Device Act 2012 ( ). The medical device was identified as follows: [21] The MDA Conditional Approval together with the conditions of approval and a technical report by a University Malaya laboratory were also attached to a brochure for the Product. The brochure used the following product branding and showed the following product packaging: The technical report referred to the Product as Sichuan Xincheng SARS-CoV 2 Antigen Assay. [22] The Product on the shelf of Sunlight Pharmacy which was inspected by the MDA officers during the routine inspection on 1-11-2021 had the packaging set out above. The Statement of Inspection by the MDA officers reported that the Diacegene brand of Covid-19 test kits was not found on the official MDA portal. That in essence was all that the MDA officers had highlighted in the report. [23] From the evidence, the official MDA portal does not identify the ditional approval by brand name. As at 24-8-2021, the official MDA portal for Self-Test Covid-19 Test Kit with conditional approval identified the Product as follows: [24] It is also worth noting that neither Sichuan Xincheng SARS-CoV-2 Antigen Assay nor Sichuan Xincheng (Diacegene) SARS-CoV-2 Antigen Assay are stated on the packaging as the name of the Product. As far as this Court can discern, the name of the Product on the packaging was SARS-CoV-2 Antigen Assay kit by Latex Immunochromatography method Self-Testing type. [25] There is no evidence that the MDA Conditional Approval was for any specific type of packaging for the Product. The evidence of the , who is the (SD-1) was credible when he explained that due to the Covid-19 pandemic emergency, the MDA approval process was new for everyone and he did not recall MDA asking initially for the submission of packaging for approval. [26] As it transpired, the further approval on 18-11-2021 to reflect the change of the Product name was an addendum to the existing MDA Conditional Approval which was never revoked. This is evident from the letter dated 2-12-2021 from the MDA which is reproduced below: [27] The above letter from the MDA was signed by Ahmad Shariff bin Hambali, the retired CEO of the MDA who was called to testify at the trial as SD-3. He testified under cross examination that the packaging with the on it was not approved for sale. [28] This Court noted that SD-3 was not asked and did not say what packaging, if any, was approved. In re-examination, SD-3 explained that the reason for the change of the product name to Sichuan Xincheng (Diacegene) SARS-CoV-2 was to avoid confusion in the market since the name in the approved list was different. [29] Ultimately, SD-3 explained that the change of name request was approved upon verification, that the Product on the shelf at Sunlight Pharmacy was the same medical device registered with the MDA Conditional Approval. Product as at 9-8-2021.

Stop Sale/Product Recall [30] SD-3 also confirmed that there was no order to stop sales or recall the Product at any time. Following the inspection at Sunlight Pharmacy on 1-11-2021, there was a period of uncertainty which was resolved by 18- 11-2021 as explained in 2-12-2021 (reproduced above) and tter dated 13-12-2021 (reproduced below): [31] As the MDA Conditional Approval was never cancelled, revoked or suspended, there was an unbroken period of approval for the importation, distribution and sale of the Product to the market since 9-8-2021. [32] Having thus the approval for importation, distribution and sale to the market in Malaysia were true, in that the Product that was always intended to be sold and , was the same Product that enjoyed such approval from the outset. [33] Accordingly, the Plaintiff failed to prove that there was any false representation by the Defendant to support a claim of misrepresentation. [34] Even if I am wrong on this, I would have found no evidence to regard any misrepresentation about the scope of the MDA Conditional Approval as anything but an innocent one. The Defendant had taken a consistent stand from the outset in assuring the Plaintiff that the al market. This was also accepted by the MDA. It is trite that no claim for damages can be made in the case of an innocent misrepresentation. Breach of Contract [35] alternative claim for breach of contract is premised on the same facts, this claim also fails.

Refund for Unsold Inventory [36] Based on the pleaded case, it should have sufficed for the Court to consider whether the Plaintiff was entitled to return its stock of unsold Product and seek a refund based on the term in the P.O. it relied on, namely: recall exercise by government according to latest policy or any latest [37] The issue is moot since there was no product recall exercise by the Government affecting the Product as confirmed by SD-3. SD-3 also confirmed that no order to stop the sale of the Product was issued by the MDA either. That being the case, the Plaintiff failed to prove the contractual entitlement to return its stock of unsold Product for a full refund. [38] As special damages, this Court has determined that the Defendant is not liable for misrepresentation or breach of contract. Accordingly, no damages are recoverable. For completeness, I would have found in any event that the Plaintiff failed to prove special damages in the sum RM929,536.96 as claimed. [39] The figure RM929,536.96 is based on the cost of 70,048 units of the Product which the Plaintiff claims were recalled from its customers or otherwise unsold. However, no corroborating evidence was produced by the Plaintiff even though, as the Court has noted:

No inventory records or photographs were tendered of the alleged 70,048 units returned and unsold Product in the

No extract of the tendered to show an accounting of the alleged returned and unsold

No record of any Product recall by the Plaintiff issued to custom customer (including Sunlight Pharmacy) were adduced. [40] It is trite that special damages must be proven. Cited in Popular Industries Limited v Eastern Garment Manufacturing Sdn Bhd [1989] 3 MLJ 360, the following is Lord Goddard s dictum in Bonham-Carter v Hyde Park Hotel [1948] WN 89 that applies: it is for them to prove their damage; it is not enough to write down the particulars, and so to speak, throw them at the head of the

Refund of Undelivered Product [41] As set out above, the Plaintiff paid RM1,459,700.00 for 110,000 units of the Product, but the Defendant only delivered a total of 104,000 units. The Plaintiff pleaded in its reply that the Defendant had failed and/or defaulted in delivering the 6,000 units of Product to the Plaintiff. [42] Based on the evidence however, the decision not to accept further delivery of the 6,000 units happened in September 2021. According to the Defendant, the Plaintiff was notified that the shortfall of 6,000 units of Product was ready to be delivered to the Plaintiff at noon on 8-9-2021, but was requested not to do so following a drop in market price for the Product. [43] On the following day, when the Defendant informed the Plaintiff that they would be giving rebate units due to a drop in market price, and asked when the rebate units could be delivered, the Plaintiff again requested that the delivery not be made. [44] In evidence, (SP-1) confirmed that there was a discussion between the parties to cancel the order for the 6,000 units and use the credit from the undelivered Product worth RM79,620.00 for future orders following a Government announcement on the ceiling price for Covid-19 self-test kits to RM19.90. [45] Admittedly therefore, there was neither a breach by the Defendant nor any agreement to refund the sum to the Plaintiff. The Plaintiff pleaded no other cause of action to recover the RM79,620.00. Conclusion [46] In conclusion, the Plaintiff has failed to prove that the Product sold sale to the market in Malaysia as represented by the Defendant. [47] Accordingly, this Court finds no case of misrepresentation and/or breach of contract by the Defendant and t s claim is dismissed with costs of RM25,000.00. Bertarikh : 20 Januari 2025 SGD ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA SHAH ALAM Peguam Untuk Plaintif : Francis Goh Yun Hung, Messrs Francis Goh & Co. Untuk Defendan : Lai Kok Wai (With Chuah Chuen),