Cosmo Maju Sdn Bhd v Erallex Sdn Bhd (BA-12BNCvC-2-01/2020)

ERALLEX SDN BHD (No. Syarikat : 802734-K)

LAW HOCK MENG (No. K/P : 850720-10-5531) … RESPONDEN-RESPONDEN (DALAM MAHKAMAH SESYEN DI SHAH ALAM DALAM NEGERI SELANGOR DARUL EHSAN, MALAYSIA GUAMAN NO : BA-A52NCVC-757-12/2018 ERALLEX SDN BHD (No. Syarikat : 802734-K) … PLAINTIF (No. Syarikat : 657232-D) … DEFENDAN (Disatukan berdasarkan Perintah bertarikh 22 Februari 2019 dan dibicarakan sebagai satu tindakan dengan kes Sesyen Shah Alam Guaman No.: BA-A52NCC-4-01/2019) (No. Syarikat.: 657232-D) … PLAINTIF

ERALLEX SDN BHD (No. Syarikat.: 802734-K)

LAW HOCK MENG (No. K/P.: 850720-10-5531) … DEFENDAN-DEFENDAN) 2 GROUNDS OF JUDGMENT

In granting an order for specific performance of a contract, the Court cannot make an order in terms which alter or change the contract terms between the contracting parties. An order of specific performance cannot be granted to compel the performance of a contract for services or a contract in which the Court is unable to supervise the performance thereof. In granting remedies for breach of contract, the Court has to avoid granting remedies in a manner or to an extent which gives the innocent party more benefits or entitlement than he would have obtained under the contract if there was no breach of the contract.

The abovementioned three basic principles of law have been overlooked by the learned Session Judge in the present appeal, thereby leading to this Court to allow the appeal in this appeal.

This appeal arose out of two below-mentioned suits which were consolidated and tried together in the Sessions Court :

The first suit is suit No. BA-A52NCVC-757-12/2018 (hereinafter known as ‘1st Suit’), whereby the Plaintiff-contractor is Erallex Sdn Bhd (“Erallex”) and the Defendant-supplier is Cosmo Maju Sdn Bhd (“Cosmo Maju”).

The second suit is suit No. BA-A52NCC-4-01/2019 (hereinafter known as ‘2nd Suit’) whereby the Plaintiff-supplier is Cosmo Maju Sdn Bhd (“Cosmo Maju”) and the Defendants are Erallex Sdn Bhd (the contractor) and Law Hock Meng (the guarantor). 3

The proceeding for both of these suits have been consolidated to be heard together pursuant to an order given by the learned Sessions Judge on 22.02.2019.

The summary of the suits are as follows:-

in the Amended Statement of Claim for 2nd Suit, Cosmo Maju has claimed for RM189,728.90 against Erallex being the unpaid price of goods sold to Erallex. Since Erallex has failed to pay for the goods, it is Cosmo Maju’s case that Law Hock Meng (“HM Law), as the guarantor for the transaction, shall be held liable to pay the sum of RM189,728.90 due and owing by Erallex to Cosmo Maju.

On the other hand, Erallex in their Re-amended Statement of Claim for the 1st Suit avers that the specification/description of the fire-rated doors supplied by Cosmo Maju to Erallex do not correspond to what was agreed by both parties. Hence, Erallex avers that Cosmo Maju has breached the fundamental term and condition of the contract between parties and seek for remedies as ordered by the Sessions Court. SUMMARY OF ISSUES TO BE TRIED

The Statement of Issues to be Tried summarised the issues before the Sessions Judge as follow:- 4

Whether Cosmo Maju is entitled to the reliefs claimed under 2nd Suit;

Whether Cosmo Maju has failed, refused and/or neglected to supply 2 hours Fire Rated door in accordance to the description provided;

Whether the defects or non-conformity in specification of the 2 hours Fire Rated doors and its accessories sold, supplied and delivered to First Respondent could be reasonably discovered at the time of delivery via reasonable examination;

Whether it is an implied term of the contract of sale entered into between parties that these fire-rated doors, accessories and door closers:-

shall be free from all defects, of merchantable quality and fit for its purpose which would not be apparent on reasonable examination; and

(ii) shall correspond with the description and specifications as per the oral representations made as well as the mock up or sample provided by Cosmo Maju to Erallex;

whether the 2 hours fire rated doors sold, supplied and delivered by Cosmo Maju to Erallex were defective, of unmerchantable quality and not fit for its purpose; 5

whether Cosmo Maju has breached the contract for the sale, supply and delivery of the 2 hours fire rated doors, its accessories and door closers entered into with Erallex;

whether Erallex is entitled to the relief and/or damages claimed against Cosmo Maju; and

whether the Second Respondent is liable to Cosmo Maju under the director’s guarantee.

During the 5 days trial, a total of 5 witnesses were called. List of Witness Erallex has called the following witnesses during full trial:- Name Witness referred as Witness Statement marked as

Teo Poh Kim SP1 PSP-1

Khoo Sin Jue SP2 PSP-2

Law Hock Meng SP3 PSP-3 Cosmo Maju has called the following witnesses during full trial:- Name Witness referred as Witness statement marked as

Liew Chze Sin SD1 PSD-1

Mohd Zaidi bin Dan SD2 PSD-2 6

After 5 days of trial, the Sessions Judge on 23.12.2019 held that:-

Cosmo Maju shall at its own costs and expense proceed to dismantle and remove all the said seventy-four (74) fire rated doors together with its accessories and door closers from the building and to transport these fire-rated doors back to Erallex’s premises within fourteen (14) days from the date of the judgment;

Cosmo Maju shall at its own costs and expense proceed to supply, delivery and install all seventy four (74) replacement fire rated doors together with its accessories and door closers at the building which corresponds with the sample and description provided by Cosmo Maju within seven (7) days from the expiry of the time period provided in the paragraph (a) hereinabove;

That upon completion of the obligations under paragraph 2 above, that Cosmo Maju shall immediately commence, undertake and complete all painting works on the fire rated doors so replaced by Cosmo Maju at its own costs and expense;

Cosmo Maju do pay Erallex forthwith the amount of RM92,452.84 being special damages;

Interest at the rate of five per centum (5%) per annum on the judgment sum calculated from this Judgment date until the date of full and final realization of the suit;

Cost in the sum of RM10,000-00; and 7

Cosmo Maju’s suit under Suit No.: BA-A52NCC-4-01/2019 is dismissed.

Cosmo Maju, being dissatisfied with the decision made by Sessions Judge, filed a notice of appeal dated 30.01.2020 against the entirety of the Sessions Judge’s decision.

Cosmo Maju referred to the Malaysian Civil Procedure 2018, Volume 1, commonly known as ‘Malaysia’s White Book’, at page 753 regarding the principles of appellate interference: “… It is trite that an appellate court will not interfere with findings of a trial judge since the latter had the benefit of seeing and hearing the witnesses and assessing their ability to tell the truth. An appellate court will only interfere if it can be demonstrated that the trial judge had (1) committed a misdirection of law (Capital Insurance Bhd v Cheong Heng Leong Goldsmiths (KL) Sdn Bhd [2005] 6 AMR 177; [2005] 4 CLJ 1, FC; Cosway (M) Sdn Bhd & Anor v Gan Poh Im [2005] 2 AMR 284; [2005] 1 CLJ 573, CA; Regina Sylvia Beltran (t/a Master Cut Salon & Hair Design School) v Chan Sit Yee [2002] MLJU 62, HC; (2) drawn wrong inferences from the facts (Abdul Majid Hj Nazardin & Orsv Paari Perumal [2002] 2 AMR 2449; [2002] 3 CLJ 133, CA); (3) made a finding which was perverse and unsupported by evidence (Capital Insurance Bhd v Cheong Heng Leong Goldsmith (KL) Sdn Bhd [2005] 4 CLJ 1; or

misconstrued crucial evidence, resulting in evidence of uncertain quality of one party being put in a favourable light and the consistency of the opposing party being disregarded (Multar v Lim Kim Chet & Anor [1982] 1 MLJ 184, FC; followed in Foo Lan Foow & Anor v Kamisah bte 8 Abdul Hanis (as the wife and dependent of Rahman bin Ismail, dced) [2004] AMEJ 0074; [2004] 5 MLJ 566, HC). Where there is no such error present, the court will dismiss the appeal: see Lucky Harvest Sdn Bhd & Ors v MBF Factors Sdn Bhd [2004] 4 MLJ 387, HC; Abdul Rahim Abdul Hamid v Perdana Merchant Bankers Bhd & Ors [2005] 1 AMR 1’ [2004] 4 CLJ 613, CA.” (emphasis added)

It is settled law that an appellate court will not interfere with the trial judge’s findings of fact in a case where the trial judge had the advantage of hearing the oral evidence and observing the demeanour of witnesses unless the trial judge’s findings of fact are plainly wrong. This is exemplified in many appellate decisions including:

In Joseph Paulus Lantip v. Tnio Chee Chang [2020] 5 MLJ 708, [2020] MLJU 12 Mary Lim JCA (now FCJ), delivering the judgment of the Court of Appeal, stated: “[25] Upon careful consideration of the records of appeal, the reasoning of the learned JC and the submissions as well as further submissions of all parties, we were unanimous in our deliberations and conclusion that both appeals before us were of merit, amply satisfying the plainly wrong test as laid down by the apex court in a long line of consistent decisions. See for example: See Leong Chye & Anor v United Overseas Bank Ltd & Another Appeal [2018] 10 CLJ 1, Tengku Dato’ Ibrahim Petra bin Tengku Indra Petra v Petra Perdana [2018] CLJ 123; Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 CLJ 453; UEM Group Berhad v Genisys Integrated Engineers Pte Ltd & Anor [2010] 9 CLJ 785; and Gan Yook Chin (P) & Anor v Lee Ing Chin @ Lee Teck Seng & Ors [2005] 1 MLJ 1. We were convinced that the decision reached by the learned JC was one which “could not 9 reasonably be explained or justified and was one which no reasonable judge could have reached” and which had to be set aside.”

In Lim Choon Seng v. Lim Poh Kwee [2020] 5 MLJ 587, [2020] MLJU 1155 the Federal Court in the judgment delivered by Abdul Rahman Sebli FCJ] held as follows: “[81] The principle on which an appellate court could interfere with findings of fact by the trial court was re-emphasised by this Court in reversing the decision of the Court of Appeal in Tengku Dato’ Ibrahim Petra bin Tengku Indra Petra v Petra Perdana Bhd and Another [2018] 2 MLJ 177. It is the ‘plainly wrong’ test, in the sense that the finding cannot reasonably be explained or justified and so is one which no reasonable judge could have reached; and that if the appellate court is not satisfied that the decision suffers from that infirmity, it is irrelevant that with whatever degree of certainty, it would have considered that it would have reached a different conclusion from that of the trial judge. [82] Thus, the mere fact that the appellate court would have come to a different conclusion on the evidence is not a ground for interference except where the decision of the trial court was based entirely on inferences to be drawn from the proved facts (as opposed to findings which involved the issue of the credibility of the witnesses), in which case the appellate court would be placed in the same position as the trial court. We do not think it is necessary to cite any authority for this trite proposition of law. 10 [83] The principle was applied with full force by this Court when, in reversing and setting aside the decision of the Court of Appeal, it gave the following reasons, amongst others, for its decision:

the Court of Appeal misread or misapprehended the judgment of the High Court;

the Court of Appeal did not make the appropriate determination that the trial court’s conclusions on primary facts were plainly wrong, bearing in mind ‘appeals are telescopic in nature, focusing narrowly on particular issues as opposed to viewing the case as a whole’ (Housen v Nikolaisen [2002] 2 SCR 235) – the majority judgment of the Supreme Court of

the Court of Appeal did not impeach the High Court judge’s analysis of the evidence on pivotal issues of fact and other critical issues in dispute between the parties;

the underlying basis for the Court of Appeal to justify its appellate interference was wholly misconceived and untenable, leading to a flawed finding that there was a misdirection in law and fact on the part of the High Court;

the basis on which the Court of Appeal relied on in justifying appellate intervention with the judgment of the High Court was based on flawed findings, the result of which was a severe miscarriage of justice.”

After analysis and re-visit of the case authorities in Malaysia and England, the Federal Court in the judgment delivered by Zabariah FCJ in Ng Hoo Kui & Anor v. Wendy Tan Lee Peng, Pentadbir Kepada Harta Pusaka Tan Ewe Kwang, Simati & 3 Others [2020] 12 MLJ 67, [2020] MLJU 1469 held inter alia as follows: 11 [33] “It was a long settled principle, stated and restated in domestic and wider common law jurisprudence, that an appellate court should not interfere with the trial Judge’s conclusions on primary facts unless satisfied that he was plainly wrong.” (The Supreme Court of United Kingdom in Mc Graddie v Mc Graddie [2013] WLR 2472). [34] The “plainly wrong” test operates on the principle that the trial court has had the advantage of seeing and hearing the witnesses on their evidence as opposed to the appellate court that acts on the printed records…. [62] The Malaysian position has always been that, a decision that is arrived at, due to a lack of judicial appreciation of evidence is plainly wrong. The Federal Court case of Gan Yook Chin & Anor v Lee Ing Chin & Anor (supra) call for consideration as to what constitutes as the “plainly wrong” test. [64] The “plainly wrong” test was also applied by this Court in UEM Group Berhad v Genisys Integrated Engineers Pte Ltd [2010] 9 CLJ 785, where it was held that: “[26]…the prime issue in respect of Questions 1 to 3 is whether the Court of Appeal had erred in interfering with the findings of facts of the trial judge. It is well settled law that an appellate court will not generally speaking, intervene with the decision of a trial court unless the trial court is shown to be plainly wrong in arriving at its decision. A plainly wrong decision happens when the trial court is guilty of no or insufficient judicial appreciation of evidence (See Chow Yee Wah & Anor v Choo Ah Pat [1978] 1 LNS 32; 12 Watt or Thomas v Thomas [1947] AC 484; and Gan Yook Chin & Anor v Lee Ing Chin & Ors [20004] 4 CLJ 309). [65] On the same issue of appellate intervention on findings of facts, this Court in Azman bin Mahmood & Anor v SJ Securities Sdn Bhd [2012] 6 MLJ 1, held that: “[25] The law on appellate intervention on findings of fact by a trial Judge is trite. In this context it may be useful to refer to the case of Multar v Lim Kim Chet and Anor [1982] 1 MLJ 184; [1982] CLJ 107 (FC), wherein it was held that an appellate court will interfere and disturb the finding of fact by the trial judge if crucial evidence had been misconstrued resulting in the uncertainty on one party’s evidence”- and the consistency of the other party’s evidence being disregarded. In the Privy Council case of Choo Kok Beng v Choo Kok Hoe and Ors [1984] 2 MLJ 165 it was held that when a trial judge had so manifestly failed to derive proper benefit from the undoubted advantage of seeing and hearing witnesses at the trial, and in reaching his conclusion, has not properly analysed the entirety of the evidence which was given before him, it is the plain duty of the appellate court to intervene and correct the error lest otherwise the error results in serious injustice….[emphasis added] [70] That appellate interference would only be justified in situations where the trial court has been “plainly wrong” has been repeatedly affirmed in the latest decisions of this Court: see Director of Forest Sarawak & Ors v. Nicholas Mujah Ason & Ors [2020] 2 CLJ 1 at paragraphs [73]-[74] and Jeli Anak Naga 13 & Ors v. Tung Huat Pelita Niah Plantation Sdn Bhd & Ors [2020] 1 CLJ 449 at paragraph [49]. [71] From the aforesaid authorities, there appears to be a difference in approach taken and applied by the UK Supreme Court and the approach taken by the Malaysian Courts. Whilst Lord Reed in Henderson (supra) separated the 4 non exhaustive identifiable errors of a trial judge from the plainly wrong test: (a) a material error of law; (b) a critical finding of fact which has no basis in the evidence; (c) demonstrable misunderstanding of relevant evidence; and (d) a demonstrable failure to consider relevant evidence; (all of which justifies appellate intervention of a trial judge’s decision), this Court in Gan Yook Chin (supra) effectively included them under what amount to the trial judge as being “plainly wrong”. [72] The phrase “lack of judicial appreciation of evidence” used in Gan Yook Chin (supra) could very well encompass 3 out of 4 errors of a trial judge (other than the “material error of law”) said to be identifiable by Lord Reed in Henderson (supra), namely: (a) critical factual finding which has no basis in evidence; (b) demonstrable misunderstanding of relevant evidence; and (c) demonstrable failure to consider relevant evidence. [73] Given that the issue at present is about identifying situations where the findings of fact by a trial court justify appellate intervention, the other identifiable error of “material error of law” listed by Lord Reed in Henderson (supra) can occur when a trial judge erroneously apply legal principles (eg rules of evidence) in the course of making a finding of fact, thus resulting in a lack of 14 judicial appreciation of evidence. For example, when a trial judge erroneously placed a burden of proof on a party, that will lead the judge to misdirect himself when he attempts to interpret the factual matrix before him. The commission of material error of law by the trial Judge in arriving at his conclusions (e.g. the requirement of proof of intention in constructive trust as oppose to express trust), also justifies an appellate court reversing such conclusions. [74] Thus, whilst there is slight difference in approach of appellate intervention, both the UK Supreme Court and our Federal Court effectively shares a common thread where it has been held that appellate intervention is justified where there is lack of judicial appreciation of evidence. [76] What is pertinent is that, the “plainly wrong” test is not intended to be used by an appellate court as a mean to substitute its own decision for that of the trial court on the facts. [77] It is to be observed that this Court in Tengku Dato’ Ibrahim Petra Tengku Indra Petra (supra) had referred to McGraddie (supra) and Henderson (supra) and has adopted the Henderson (supra) approach of the “plainly wrong” test in determining whether the trial court’s findings of fact is reversible upon appeal: “Recently in Henderson v Foxworth Investments Ltd and Another [2014] 1 WLR 2600, the United Kingdom Supreme Court held that in the absence of some other identifiable error, such as a material error of law or the making of a critical factual finding which had not interfered with the factual finding which had no basis in the evidence, an appellate court should not interfere with 15 the factual findings of a trial judge unless it was satisfied that the decision of the trial judge was “plainly wrong” in the sense that it could not reasonably be explained or justified and so was one which no reasonable judge could have reached, and that if the appellate court was not satisfied that the decision came within that category it was irrelevant that, with whatever degree of certainty, it considered that it would have reached a different conclusion from the trial judge.” [emphasis added] [78] Hence following this court’s ruling in Tengku Dato’ Ibrahim Petra Tengku Indra Petra (supra) an appellate court should not interfere with the factual findings of a trial judge unless it was satisfied that the decision of the trial judge was “plainly wrong” where in arriving at the decision it could not reasonably be explained or justified and so was one which no reasonable judge could have reached. If the decision did not fall within any of the aforesaid category, it is irrelevant, even if the appellate court thinks that with whatever degree of certainty, it considered that it would have reached a different conclusion from the trial judge.”

On inference to be drawn from facts, the appellate court is in as good a position as the trial judge to make the inferences: per Rahman Sebli FCJ in paragraph [82] of the Federal Court’s judgment in Lim Choon Seng v. Lim Poh Kwee [2020] 5 MLJ 587, [2020] MLJU 1155.

It is trite law that where the trial judge has erred in law or in principle, the appellate court is entitled to intervene by making a decision in accordance with the correct law or legal principle. 16 SUMMARY OF APPELLANT-COSMO MAJU’S SUBMISSIONS

Cosmo Maju’s submissions in this appeal can be summarised as follow:-

Sessions Judge’s Finding in relation to Appellant’s suit case number BA-A52NCC-4-01/2019 are contrary to the evidence;

(ii) Sessions Judge’s Judgment item No. 1 to No. 3 are defective and unable to be performed;

(iii) Several of the Sessions Judge’s findings are perverse and unsupported by evidence and/or based on assumption;

(iv) Sessions Judge has erred in Sessions Judge’s finding that Cosmo Maju has failed to inform Erallex of the differences between the initial fire rated door and the fire rated door supplied;

Sessions Judge has failed to consider that the Purchase Order issued by Erallex stated that the 2 hours Fire Rated Doors are to be made of ‘MGO Board’;

(vi) The alleged damage is due to the incorrect method of installation done by Erallex’s worker and/or employee as Cosmo Maju is merely a supplier only and not an installer;

(vii) Erallex’s and/or its agents’ and/or its employees’ action by proceeding to install each and every doors supplied by Cosmo Maju does not commensurate with the allegation that lower quality fire rated doors are supplied to them; 17

(viii) Sessions Judge has erred in decided that merely providing a copy of the catalogue of the 2 hours Fire Rated Door manufactured by THI Harmoni is insufficient to discharge Cosmo Maju’s burden in informing Erallex on the change of material used for the door leaf of the 2 hours Fire Rated Door and further hold that Cosmo Maju has a positive duty to expressly inform the change of material used for the door leaf of the 2 hours Fire Rated door; and

(ix) 10 years long standing business relationship does not entitle Erallex’s employee to be careless and not perform what is required of them. SUMMARY OF THE RESPONDENTS-ERALLEX& HK LAW’S SUBMISSIONS

In this appeal, Erallex submitted as follows:

it was an implied fundamental term and condition of the supply contract that these fire-rated doors, its accessories and door closers shall be equipped with the necessary approval(s) and/or certificate(s) from the relevant authorities including the Malaysian

(ii) any change or deviation to the description, materials and specifications relating to the fire rated doors and the door closers would result in a total failure of consideration; 18

(iii) the Sessions Court exercised her powers and duties rightly and applied correct principles of law;

(vi) the Sessions Court made the decision after seeing the witnesses in full trial for 5 days with numerous documentary evidence and 5 days of testimonies of witnesses;

the learned Sessions Court Judge made the correct findings of facts with sufficient judicial appreciation of the evidence during the trial;

(vi) Erallex also submitted specifically on the evidence pertaining to Cosmo Maju’s grounds of appeal, referred to the evidence in support of the Sessions Court’s findings of fact and further referred to the statutes and case law on sale of goods;

(vii) Erallex also referred to examples of inconsistencies in the evidence of Cosmo Maju’s witnesses;

(viii) it does not matter whether Cosmo Maju is merely a supplier and not an installer;

(ix) the court order does not mandate Cosmo Maju to uninstall, remove and reinstall the doors all by itself, and Cosmo Maju could employ contractors to comply with the court order;

there was evidence to warrant adverse inference to be drawn against Cosmo Maju; 19

(xi) the Sessions Court was correct in holding that Cosmo Maju failed to discharge its burden of proving its assertions;

(xii) the Sessions Court Judge has viewed the videos, photographs and demonstration conducted by SD2 and observed demeanour of witnesses;

(xiii) the Sessions Court has thoroughly examined the contemporaneous documents adduced in the Court;

(xiv) the Session Court was right in finding that the evidence of Erallex’s witnesses was consistent with each other and was supported by contemporaneous documentary evidence;

(xv) the Sessions Court was right in holding that Erallex rejected the doors promptly;

(xvi) when the shaky and loosen locksets appeared, R1 took the initiatives to fix an alternative recourse by adding on strengthening plates which required cost;

(xvii) the learned trial judge correctly applied the law and decided in fact that the discrepancy and defects were only discoverable upon reasonable inspection;

(xviii) the learned trial judge decided correctly in law and in fact that the breach of Cosmo Maju caused defects in the buildings;

(xix) that there was no valid basis for an appellate court to interfere with the Sessions Court’s findings of fact. 20 COUNSEL’S ORAL CLARIFICATIONS ON APPEAL ON 25.8.2020

After having read and considered the Appeal Records and the parties’ written submissions, this Court sought several clarifications from the parties’ counsel on 25 August 2020.

During the oral clarification to written submissions in open court on 25 August 2020, Erallex’s counsel clarified as follows:

There is no evidence of certification by any consultant of the building owner that any of the installed doors was eventually rejected by the building owner or by the consultant.

There was a report on the defects of doors, and Erallex as the main contractor had to add strengthening plates and remedy the same doors installed.

The Sessions Court found that the closing mechanism, hinges and accessories were partly defective and needed to be rectified;

The actual fire-rated doors supplied did not match with the mock-up door and therefore the door hinges could not be locked. At the oral clarification in open court on 25 August 2020, it was also confirmed by both counsel that before taking into account the costs of rectifying defects, the total unpaid value of the doors supplied by Cosmo Maju to Erallex for the projects in question was RM189,728.90. Erallex’s counsel confirmed that this unpaid value of the doors RM189,728.90 was not disputed. The disputes were relating to the defects, damages for defects and the remedies for Erallex in the case. 21

After having reconsidered the matter in light of the oral clarifications from the parties’ respective counsel, this Court on 25 August 2020 made the following orders:

Items (1) to (3) of the Sessions Court’s decision and order dated 23 December 2019 are set aside;

Item (4) of the Sessions Court’s decision and order dated 23 December 2019 is affirmed;

Item (6) of the Sessions Court’s decision and order dated 23 December 2019 is reversed;

Erallex and HK Law jointly and severally shall pay RM189,728.90 as unpaid value of the doors to Cosmo Maju, and Cosmo Maju shall pay to Erallex RM92,452.84 as special damages for defects rectification. After set-off, the differential amount RM189,728.90 - RM92,452.84 = RM97,276.06 shall be payable by Erallex and HK Law jointly and severally to Cosmo Maju together with interests thereon from the date of filing the 2nd Suit to the date of full realisation; and

The appeal is allowed with costs on the terms stated above. REASONS FOR THIS COURT’S DECISION

In the circumstances of the present case, this Court is not persuaded that in making her findings of fact the trial judge had so manifestly failed to derive proper benefit from the undoubted advantage of seeing and hearing witnesses at the trial, and in reaching her conclusion, has not properly analysed the entirety of the evidence which was given before 22 her. This Court does not find that the trial judge was “plainly wrong” in her findings of fact in the sense that the findings of fact could not reasonably be explained or justified and so was one which no reasonable judge could have reached. In the premises, consonant with the case authorities of the appellate courts as stated above, this Court holds that there is no sufficient basis for this Court to disturb the learned Sessions Court Judge’s findings of fact in the present case. This Court holds that the Sessions Court was justified in coming to the factual conclusion that the 74 fire-rated doors supplied by Cosmo Maju to Erallex were defective and that the defects in the 74 doors constituted breaches of the supply contract on the part of Cosmo Maju.

As a result, Cosmo Maju is liable to Erallex for breaches of contract in connection with the defects in the 74 doors supplied and for the damages caused by the defects.

The Sessions Court found on the facts that the amount of damages resulting from the defects in the 74 doors was RM92,452.84, being the total costs of rectifying the defects in the 74 doors. In the circumstances, there was evidential materials to justify the Sessions Court’s finding of RM92,452.84 as the total costs of rectifying the defects in the 74 doors. This Court does not find any error in principle or grossly excessive quantum in the award of RM92,452.84 as the costs of rectifying the defects in the 74 doors. As such, there is no valid basis for this Court sitting on appeal to disturb the quantum of RM92,452.84 as the total costs of rectifying defects in the 74 doors.

However, this Court finds that there are valid grounds to interfere with and reverse the following items (1), (2), (3) and (6) of the Sessions Court’s decision and order dated 23 December 2019: 23

an order that Cosmo Maju shall dismantle and remove 74 doors at its own costs and transport them to Erallex’s premises;

Cosmo Maju shall re-supply and install 74 new doors of correct specifications and at its own cost;

Cosmo Maju shall paint all the 74 new doors upon having installed them;

Cosmo Maju’s claim for unpaid value of doors in the amount of RM189,728.90 in the 2nd Suit is dismissed.

Items (1), (2) and (3) of the Sessions Court’s decision have in effect ordered Cosmo Maju to execute construction works (i.e. works involving personal services or which the Court cannot conveniently supervise) which are over and beyond the scope of Cosmo Maju’s supply contract with Erallex. Under Cosmo Maju’s supply contract with Erallex, Cosmo Maju’s scope of contract works was for

manufacture of the 74 doors; and

supply and deliver the 74 doors to Erallex at the construction site. In contrast, in the items (1), (2) and (3) of the Sessions Court’s decision dated 23 December 2020, the Sessions Court ordered Cosmo Maju to execute the following additional works over and beyond Cosmo Maju’s contractual scope of works:

dismantle the 74 installed doors;

re-install 74 new replacement doors; and

paint the 74 new doors. 24 Under the supply contract between Cosmo Maju and Erallex, these work items (c), (d) and (e) were the work scope of Erallex.

In principle, when the Court awards a remedy or relief to a plaintiff in a case of breach of contract, the Court cannot award to the plaintiff something over and above what the plaintiff would have obtained under the contract in question, or to let the plaintiff profit beyond what he would have obtained under the contract in question. It is fundamental principle in the law of damages in contract cases that the compensation or relief granted to a plaintiff is to restore him to the same position as he would be if the contract was not broken, and in doing so, the court cannot put the plaintiff in a better position or award him more advantage than the plaintiff would have had if the contract was not broken: see Milik Perusahaan Sdn Bhd & Anor v Kembang Masyur Sdn Bhd [2003] 1 MLJ 6 (Court of appeal); Clerk & Lindsell on Torts (16th Ed) at page 254 para. 5.04, etc. In Tan Sri Khoo Teck Puat & Anor v Plenitude Holdings Sdn Bhd [1994] 3 MLJ 777 the Federal Court held as follows: “It goes without saying that if the effect of allowing a plaintiff's claim is to put him in a better position than he would have been if there had been no breach, then this would be contrary to the principles enunciated in the cases cited above. This means that any profit which he stands to make because of the breach, must be deducted from the damages awarded – a point aptly put by Mr Hugh Beale in his most useful book on Remedies for Breach of Contract: The basis of assessment In outline, the victim of a breach of contract is entitled to compensation for any loss which results from the breach and which is neither too 'remote', or unlikely, a consequence nor one which he could have avoided by taking reasonable steps in 'mitigation'. He is 'to be placed in the same situation as if the contract 25 had been performed' (Robinson v Harman (1848) 1 Ex 850 at p 855). This involves considering his overall position. The damages should compensate him for the performance which he should have received but has not, with deductions for any savings he has or should have made through not having to perform himself or by other action, such as entering a substitute transaction with someone else. Any profit which he is only able to make because of the breach of contract should also be deducted. These deductions are made in accordance with the general principle that an award of damages should not put the victim in a better position than if the contract had been performed; he should recover no more than he has lost. Punitive or exemplary damages might be awarded where a breach of contract was also a tort, but in English law they are not awarded for a mere breach of contract (Perera v Vandiyar [1953] 1 WLR 672). (Emphasis added).

In the midst of a trial and decision-making process, a trial judge is sometimes overly swayed by the lengthy submissions presented by learned counsel so much so that the trial judge overlooked the fact that the entirety of damages and remedies prayed for by a claimant in a case on breach of contract would, if granted in their entirety, give the claimant more monetary benefits than he would have obtained if the contract was not broken at all. A practically effective to check against such excessive or erroneous award of damages and remedies is to tabulate side by side (a) the positions of the parties if the contract was performed and not broken; and (b) the positions of the parties as awarded by the Court. In the circumstances of our present case, the sum total effects of all the orders granted by the Sessions Court is that

Erallex does not have to pay anything for the unpaid value of fire-rated doors supplied by Cosmo Maju to Erallex; (b) Erallex can claim and collect the values of the fire-rated doors from the building owner; (c) 26 Erallex also recovers from Cosmo Maju the total costs of the rectifying and repairing the defects in the fire-rated doors, and (d) Erallex further gets the benefits of the dismantled fire-rated doors which Cosmo Maju has to return back to Erallex’s premises. The comparative positions are tabulated below, together with amounts stated, so as to illustrate the point: No. Position if the supply contract was not broken Position as ordered by the Sessions Court 1. Erallex pays Cosmo Maju RM189,728.90 for unpaid value of 74 doors Erallex does not have to pay any money to Cosmo Maju for any unpaid value of 74 doors 2. Erallex incurs labour and other ancillary cost of installation of doors, say amount “L” Cosmo Maju executes installation works and incurs labour and ancillary cost of installation of new doors, say amount “L”

Erallex incurs labour and material costs of painting the doors, say amount “P” Cosmo Maju supplies paint and executes painting works and incurs labour and ancillary cost of painting new doors, say amount “P”

Erallex collects total value of supply, installation and painting of doors from the building owner, for a total amount equivalent to RM189,728.90 + L + P + its profit “F”. Erallex collects total value of supply, installation and painting of doors from the building owner, for a total amount equivalent to RM189,728.90 + L + P + its profit “F”.

Erallex also recovers 27 RM92,452.84 as rectification and repair costs from Cosmo Maju for defects in doors.

Erallex further gets the 74 dismantled fire-rated doors sent to Erallex’s premises and the value thereof, say “R” The total net profit or monetary benefit to Erallex in the two comparative positions are as follows: Position if the supply contract was not broken Position as ordered by the Sessions Court Erallex gets a net profit of amount F in respect of the 74 doors. In respect of the 74 doors, Erallex gets RM189,728.90 + F + RM92,452.84 In the premises, the Sessions Court has erred in law in principle when awarding items (1), (2) and (3) orders to Erallex in the present case. The items (1), (2) and (3) orders granted by the Sessions Court contravenes the legal principles on award of damages and also would result in an unjust enrichment to Erallex.

In addition to the above, it is also settled law that the Court cannot grant specific performance of contract of services or make an order to compel a defendant to do something which the Court cannot conveniently supervise its performance. This law can be found in section 20(1) of the Specific Relief Act 1950. Execution of construction works is a matter which the Court should not grant specific performance or order the performance thereof: see illustration “A 28 contracts with B to execute certain works which the court cannot superintend” under section 20(10(b) of the Specific Relief Act. Moreover, where the party’s obligation under the contract is not sufficient precise to be capable of specific performance, the Court should not exercise its discretion to order specific performance: Co-operative Insurance Society Ltd v. Argyll Stores (Holdings) Ltd [1998] AC 1. Moreover, by awarding Erallex the entire costs of rectifying the defects, pursuant to Erallex’s claim in the 1st Suit, Erallex has already chosen his remedy and obtained satisfaction for the breach of contract. By virtue of section 23(c) of the Specific Relief Act, items (1), (2) and (3) of the Sessions Court’s decision in the nature of specific performance should not be granted, even if we were to assume that these items were within Cosmo Maju’s contractual scope. This is more particular so wherein the present case, the doors were still installed in the buildings and there is no evidence of any eventual rejection of the installed doors by the building owner or its consultant.

In further alternative, this Court also finds that in the circumstances of the present case, it is practically impossible for the orders in items (1),

and (3) of the Sessions Court’ decision to be implemented. In our present case –

The 74 doors, after having been rectified by Erallex, were installed in the buildings in end 2018 and remained installed as at the date of full trial. This is borne out by the very prayres made by Erallex for court order to compel Kosmo Maju to dismantle the 74 new and to re-supply and re-install new doors. A prayer for an order to dismantle the doors is an admission that the originally- 29 supplied doors were still installed at the buildings as at the date of the full trial. This is further confirmed by Erallex’s counsel’s oral clarification on 25 August 2020 that there is no evidence of any rejection certification by the building owner or its consultants.

Having regard to the common course of natural events and human habit, if a building owner or its consultant eventually rejects the installed door as being totally useless or utterly defective after rectification efforts, there would be a letter or document to notify the rejection to Erallex, the main contractor, and/or a written letter or instruction to Erallex to dismantle and remove the same and replace them with new doors. In our present case, there is no such letter or document whatsoever from the building owner or its consultant. The inference to be reasonably drawn is that neither the building owner nor its consultant has eventually rejected the 74 doors supplied by Cosmo Maju and rectified by Erallex. It can be reasonably inferred that by lapse of many months without any written notice of rejection, the building owner has by conduct accepted the 74 doors supplied by Cosmo Maju as rectified/repaired by Erallex. Such inference of fact can be properly made by this Court according to legal principles in light of section 114 of the Evidence Act the Court may presume the existence or non-existence of fact by having regard to common course of natural events and human habit.

On the same basis as sub-paragraph (2) above, it can be reasonably inferred that the building owner, after having accepted the installed doors by conduct and by occupying and operating his business and activities in the building for months since its 30 completion with the installed doors, would not allow a supplier to enter the building to dismantle the 74 doors thereby rendering the building exposed to thefts and burglary and causing much prejudice and disruption to his occupation and activities in the building. In our present case, there is not any iota of evidence to show the building owner’s consent or willingness to let a supplier enter his building and dismantle the 74 doors. In the premises, the Session Court’s order to dismantle and remove the 74 installed doors from the building within 14 days from date of order is practically impossible to be implemented.

In the premises, this Court on 25 August 2020 set aside items (1), (2) and (3) of the Sessions Court’s order dated 23 December 2020. In this regard, it is pertinent to note that any one of the reasons in paragraphs 21, 22 and 23 above by itself is sufficient to warrant the setting aside of items (1), (2) and (3) of the Sessions Court’s order dated 23 December 2020.

After the 74 fire-rated doors were rectified by Erallex due to defects in Cosmo Maju’s works on manufacture of the doors, the rectified fire-rated doors as installed at the building were not eventually rejected by the building owner or its consultant. As Erallex has been awarded the rectification costs of RM92,452.84 for defects in the doors, there is no valid ground for dismissing Cosmo Maju’s claim for unpaid valued of the 74 doors.

In cases of supply of goods with defects wherein the defects were rectified or repaired at a costs, the buyer of the goods has the remedy of deducting or setting off the costs of defects rectification from the unpaid value of the goods. The remaining balance amount of the 31 unpaid value of goods after set-off for defects rectification costs has to be paid by the buyer to the seller of the goods. The buyer cannot recover the defects rectification costs and also refuse to pay or account for the value of the goods.

In the premises, after having awarded RM92,452.84 to Erallex for rectifying defects in the 74 doors, it was erroneous in principle and also double recovery for the Sessions Court to dismiss Cosmo Maju’s claim for the unpaid value. As clarified by Erallex’s counsel on 25 August 2020 and as shown in the evidence in the present case, the unpaid value of the 74 doors is RM189,728.90. This Cosmo Maju’s claim for unpaid value of 74 doors should be allowed in favour of Cosmo Maju, subject to set off of RM92,452.84 as costs of repairs and rectification in favour of Erallex.

In conclusion, this Court held on 25 August 2020 as follows:

Items (1) to (3) of the Sessions Court’s decision and order dated 23 December 2019 are set aside;

Item (4) of the Sessions Court’s decision and order dated 23 December 2019 is affirmed;

Item (6) of the Sessions Court’s decision and order dated 23 December 2019 is reversed;

Erallex and HK Law jointly and severally shall pay RM189,728.90 as unpaid value of the doors to Cosmo Maju, and Cosmo Maju shall pay to Erallex RM92,452.84 as special damages for defects rectification. After set-off, the differential amount RM189,728.90 - 32 RM92,452.84 = RM97,276.06 shall be payable by Erallex and HK Law jointly and severally to Cosmo Maju together with interests thereon from the date of filing the 2nd Suit to the date of full realisation; and

The appeal is allowed with costs on the terms stated above.

After hearing both parties’ respective counsel on the quantum of costs, this Court assessed the costs of appeal at the amount of RM10,000 in favour of Cosmo Maju, subject to allocator. Dated : 2nd April 2021 Signed ........................................... TEE GEOK HOCK JUDICIAL COMMISIONER HIGH COURT OF MALAYA AT SHAH ALAM (NCVC 10) To the parties’ solicitors:

For the Appellant : Jerane Lee Hui Ming @ M.K. Liaw Messrs Ming, Yee & Co.

For the Respondents :