Early Power Sdn. Bhd. v Ecspec Marketing Sdn. Bhd. (BA-12B-149-08/2016)

This is an appeal against the decision of the Sessions Court on 8.8.2016 which had, after a full trial, allowed the Respondent’s (Plaintiff) claim against the Appellant (Defendant).

The parties, in this judgment, will be known as they were in the Sessions Court.

The relevant factual background giving rise to this appeal based on the pleadings and written submissions of both counsels may be briefly stated as follows:

The dispute in this appeal involves goods sold and delivered between the Plaintiff and the Defendant. The Plaintiff is a private limited company incorporated under Companies Act 1965, having its business address at No. 32, Jalan Anggerik Vanilla AD31/AD, Kota Kemuning, Section 31, 40460 Shah Alam, Selangor Darul Ehsan.

The Plaintiff’s business is manufacturing and trading of filtration and other environmental control products. One of the environmental control products traded is the dust collector. The dust collectors are purchased from Technoair 3 Pollution Control Sdn Bhd which fabricates, that is custom-made, based on Plaintiff’s orders.

The Defendant is a private limited company incorporated under Companies Act 1965, having its registered address at 88-3, 3rd Floor, Wisma KPMG, Jalan Dato’ Haji Eusoff, Kuala Lumpur and a business address at No. 54, Jalan Industri USJ 1/1, Taman Industri USJ 1, Subang Jaya, 47610 Selangor and another business address at No. 35, Jalan Industri PBP 9, Taman Industri, Pusat Bandar Puchong, 47100 Puchong. The Defendant is a long-standing customer of the Plaintiff which bought accessories such as filter dust bags and filter cages from Plaintiff.

The Plaintiff claimed that at the request of the Defendant, the Plaintiff raised a quotation dated 28.12.2011 (reference no. KK1112051206 Rev 5) (the Quotation) to the Defendant for the purchase of one (1) unit of Jet Pulse Dust Collector with the specifications as stated in the Quotation (the Dust Collector) at the purchase price of RM136,000.

On 28.12.2011, the Plaintiff claimed that the Defendant agreed to purchase the Dust Collector by issuing a purchase order no. EM-DustCollector-20111228 (the Purchase Order) to the Plaintiff at the quoted price of RM 136,000.

The Plaintiff claimed that the agreed terms and conditions in the Purchase Order are, inter alia, are as follows: 4

“The said Dust Collector is in CKD form and suitable to be transported by ocean vessel. Our [the Defendant] latest ocean delivery as required by the LC is 31 January 2012. As such, you [the Plaintiff] are advisable to deliver to our Factory before 29 January 2012. In line with our Client requirement, you (hereinafter referred as ESCpec) will be penalized as liquidated damages of RM1,000 per day in the event that your delivery date falls after 29 January 2012.”

(ii) “Term of Payment: (aa) 30% amounting to RM40,800 on order (bb) 60% amounting to RM81,600 on deliver

(cc) 10% amounting to RM13,600 immediately after successfully commissioned or 90 days after the delivery. However, the 5% may be released earlier if the delivery is prompt and on time plus the quality of the goods is satisfied.”

The Purchase Order also contained variations to the description of the Dust Collector stated in the Quotation and additional requirements from the Defendant including the following:

The motor for the centrifugal (balancing) fan (Fan Motor) to be suitable for use in Indonesia;

(ii) The Dust Collector is to come with installation/operation manual and full and complete set 5 of drawings in Auto CAD version 2004 and rubber sheets with reinforced linings inside for packing.

(iii) The Dust Collector would be suitable to be transported by ocean vessel.

The Plaintiff stated that it agreed to accommodate the additional requirements in the Purchase Order out of goodwill but the Plaintiff maintains that the agreed description of the Dust Collector is only that contained in the Quotation.

The Plaintiff claimed that the Defendant enquired about shipping container which the Defendant can arrange for delivery of the Dust Collector from the Defendant’s factory to the Defendant’s customer in Indonesia to which the Plaintiff claimed that although it was not part of the agreement for the Plaintiff to arrange the said container, out of goodwill, the Plaintiff suggested to the Defendant to book a 40-foot container.

The Plaintiff claimed that based on the Purchase Order, the Plaintiff delivered the Dust Collector in good conditions (paragraph 3 of Plaintiff’s Reply to Defendant’s Counterclaim, page 43 of Appeal Record) to the Defendant’s factory at No. 54, Jalan Industri USJ 1/1, Taman Perindustrian USJ 1, Subang Jaya, Selangor on 27.1.2012 which was 2 days before the scheduled delivery date. 6

On the afternoon of 27.1.2012, Technoair’s lorry carrying the Dust Collector and the rubber sheets with reinforced linings, arrived at the Defendant’s factory at no. 54, Jalan Industri USJ 1/1, Taman Perindustrian USJ 1, Subang Jaya, Selangor where the Plaintiff was present with its lorry driver, Technoair’s lorry driver and the Defendant’s one Mr. Low and one of Defendant’s employees.

The Plaintiff claimed that when the Defendant’s employee transferred the Dust Collector parts from Technoair’s lorry to the Defendant’s shipping container, he dropped one of the Dust Collector’s parts in the process. The Dust Collector could not fit into the container prepared by the Plaintiff.

The Plaintiff claimed that, the Defendant nevertheless signed the Plaintiff’s Delivery Order to acknowledge delivery of the Dust Collector (page 366 – 369, Appeal Record (2)). The Plaintiff also passed the Invoice No. 313576 dated 27.1.2012 (pages 370-372, Appeal Record (2)).

On 28.1.2012, the Plaintiff delivered the 200 filter jet tube nozzles to the Defendant’s factory by motorcycle and the Defendant received the goods.

The Plaintiff claimed that there has been no complaint from the Defendant in respect of the quality of the Dust Collector since the delivery until to date. 7

The Plaintiff stats that the Defendant has paid to the Plaintiff the sum of RM108,800 as at to date, in two part payments as follows:

RM40,800 paid in 1.1.2012; and

(ii) RM 68,000 paid on 2.2.2012.

The Plaintiff claimed that the Defendant owes the Plaintiff the sum of RM27,200 (RM136,000 – RM108,800) which the Defendant has yet to settle to date.

The Plaintiff claimed that various reminders had been issued to the Defendant pertaining to the payment of RM27,200 between the month of May and June 2012. The Plaintiff also claimed that it had, via its former solicitors Leon & Lim’s letters dated 23.1.2013 and 27.7.2013 and its current solicitors, MahWengKwai & Associates’ letter dated 21.1.2014, demanded for the outstanding sum of RM27,200 from the Defendant. Despite the Plaintiff’s various reminders and demands, the Defendant has failed, omitted and/or neglected to settle the sum of RM27,200.00.

The Defendant alleged that the Dust Collector supplied and delivered by Plaintiff was defective, incomplete and incompliant with the agreed specifications and therefore in breach of the agreed terms between the parties (paragraph

(i)-(iv), pages 36-37 and paragraph (m), page 38 of Defence and Counterclaim, Appeal Record). The breach by 8 the Plaintiff is meted out at pages 38-39 of Defendant’s Defence and Counterclaim.

The Defendant stated that the Plaintiff bears the burden to prove the agreed terms and conditions of the Purchase Order and that the delivery was made on 27.1.2012 (paragraphs 5 and 6 of Defence and Counterclaim, page 32 and 33 of Appeal Record).

The Defendant’s counterclaim is for the cost of the delay of 827 days, RM827,000.00, ‘Kesediaan Kejuruteraan dan Rekaan Semula’, at RM25,000.00, Site Survey of RM20,000.00 and reassemble service of RM25,000.00, cost and other reliefs. Defendant’s case [4] The learned counsel for the Defendant advanced several grounds for this appeal (pages 15-18 of Appeal Record (Lampiran 2)). Having read the written submissions, the Defendant’s counsel submitted orally the main grounds before this Court. The crux of the matter revolves around the contention that the Plaintiff failed to supply and deliver a complete Dust Collector System in accordance with the terms as agreed by both parties and the Dust Collector System was found by the Defendant to be defective, incomplete and was not in accordance with the Purchase Order of 28.12.2011. The Defendant’s counsel argued that the Plaintiff had breached the implied condition under section 15 of the Sale of Goods Act 1957 and relied on the case of Wasco Lindung Sdn Bhd v Lustre Metals & Minerals Sdn Bhd [2015] 2 CLJ 427. 9 [5] The Defendant’s counsel submitted that the pertinent document agreed and executed by both parties was the Purchase Order (D23) (at page 355 – 356 of Appeal Record (Lampiran 3)) where the Plaintiff is subjected to all the terms that have become the contract and therefore the Plaintiff cannot averred that it was agreed on a goodwill basis. [6] The Defendant’s counsel pointed out to this Court the substantial differences and contradiction found on Plaintiff’s Quotation (pages 351- 352 of Appeal Record (Lampiran 3)) and in the subsequent Purchase Order claimed by the Defendant (pages 355-356 of Appeal Record (Lampiran 3)) as summarized at Defendant’s counsel’s written submission:  “Term (1)(a) > Rotary Valve: Excluded but there is price shown for the said Rotary Valve! Also the Defendant clearly requested for the Rotary Valve to be included.”  “Centrifugal Fan, Fan motor: Teco 50hp…415v/50Hz whereas the Defendant clearly requested that “All the Voltage should be 380v instead of 415 which is suitable for usage in Indonesia;”  “Term (2)(e) – Exclude Control Panel but there is inclusion > “Electronic Time Controller : 20 Points (1 set).” [7] It was argued by the Defendant’s counsel that the technical qualification of engineers of the Plaintiff is needed as it involves engineering equipment which is due for usage in Indonesia and both parties had agreed to execute the Purchase Order as at pages 355 – 356 of Appeal Record (Lampiran 3). It was pointed to this Court by the 10 Defendant’s counsel this is the first time the Defendant had placed an order for a delivery of a complete set of Dust Collector from Plaintiff which was based on a convincing representation by the Plaintiff that the Plaintiff has qualified and skilled engineers and contractors to deliver the Dust Collector. The Defendant’s counsel submitted that it transpired during the trial that the Plaintiff had wrongly misrepresented the Defendant as the Plaintiff does not have any qualified and skilled engineers and contractors. [8] The Defendant claimed that to date, the Plaintiff had failed, refused and/or neglected to deliver the engineering drawings and operation manual to the Defendant (pages 447 of Appeal Record (Lampiran 3)). It was also averred by the Defendant’s counsel that the Plaintiff had sent his men to rectify the goods is clear proof that the goods is defective and of poor quality. [9] It was asserted by the Defendant’s counsel that during the trial, some of the actual cutting parts were brought to the court during proceedings where the photos are at pages 462-463 of Appeal Record (Lampiran 3). The cutting parts and the photos corresponded are parts cut from the Dust Collector’s Body due to quality issue and was not the result of dropped by the Defendant’s employee. [10] It was also contended by the Defendant’s counsel that the rubber sheets with reinforced linings and the filter jet tube nozzles were never delivered to the Defendant and there was no indication in Plaintiff’s Delivery Order or any acknowledgement receipt by the Defendant of 11 those goods. The Defendant further avers that the 40-foot container was booked based on the information given by the Plaintiff (pages 433-434 of Appeal Record (Lampiran 3)) and that the Dust Collector could not fit into the container booked by the Defendant and the Defendant had on a later date ordered the High Cube type container. [11] The Defendant’s counsel contended that by merely signing the delivery order by the Defendant cannot be regarded as acceptance of the goods in compliant with the specification and asserted that it only shows an acknowledgment by the Defendant based on the Delivery Order presented by Plaintiff following section 41(1) of the Sale of Goods Act 1957 and the case of Wadkin Robinson (Malaysia) Sdn Bhd v Rimber Industries Sdn Bhd [1994] 2 CLJ 577. It was further argued that the Delivery order comes with the statement “content not checked”. It was contended by the Defendant’s counsel that due to the defective goods and incomplete specifications by the Plaintiff, the Plaintiff agreed to receive the RM68,000.00 being 50% instead of 60% and as per Purchase Order. [12] The counsel for the Defendant submitted that the Defendant posed many complaints to the Plaintiff that the goods were defective and it was not made one year later as found by the Session Judge (pages 416 – 424 of Appeal Record (Lampiran 3)). In relation to the counterclaim, it was submitted the complaint and a reminder was notified on 23.5.2013 in relation to the problems ensued and the penalty of RM1,000 per day (pages 448-452 of Appeal Record (Lampiran 3)) to deliver the full completed Drawing, Operation Manual Installation Manual, Details of Control, Filter and Fan which were not delivered to the Defendant. 12 Plaintiff’s case [13] The learned counsel for the Plaintiff advanced several points of arguments. At the hearing of this appeal, the main argument submitted is that the Plaintiff has supplied the whole Dust Collector accordingly where the terms on the description of the Dust Collector agreed between the parties is that as contained in Plaintiff’s Quotation (pages 351-352 of Appeal Record (2)) which was delivered to the Defendant and the Defendant signed the Plaintiff’s Delivery Order (pages 366-369 of Appeal Record (2)) in acceptance. [14] The Plaintiff’s counsel contended that the Defendant’s alleged quotation as relied by the Defendant, was doubtful as the Plaintiff never agreed to the amendments and the additions made and pointed to this Court that the Plaintiff did not placed its countersignature to the amended quotation and no evidence was adduced by the Defendant to prove Plaintiff’s acceptance. [15] It was also averred by the Plaintiff’s counsel that the goods were affirmed and accepted by the Defendant as testified (page 100 of the Supplementary Appeal Record). The Plaintiff’s counsel submitted that the Quotation excludes installation as the goods sold by the Plaintiff in Malaysia is in CKD which means completely knocked down and to be sold by the Defendant to its customer in Indonesia which are to be assembled in Indonesia. [16] In relation to the wrong information by Plaintiff on the suitable shipping container alleged by the Defendant, it was submitted that the 13 Plaintiff’s witness gave a suggestion to the Defendant out of good will as it was not part of the contract between parties. [17] In relation to the motor voltage of the Fan Motor, the Plaintiff’s counsel argued that this was suitable to be used in Indonesia based on the letter by the Plaintiff (page 92 of the Supplementary Appeal Record) during the cross-examination that the Plaintiff’s witness, SP3, a Sales Executive Teco Electric and Machinery which is the supplier of the Fan Motor, testified that the motor voltage could be used in Indonesia as it is designed for 400v + - 10% which proves to shows that the Fan Motor ‘400v + - 10%’ could be used for the voltage of 380. [18] The Plaintiff’s counsel submitted that the auto CAD 2004 drawing is a technical drawing and not an engineering drawing as claimed and was sent by the Plaintiff which had to be purchased from the supplier. The Plaintiff’s counsel denied that there was misrepresentation by the Plaintiff’s witness and argued, in the alternative, it was an innocent misrepresentation which is an exception under section 19 of the Contracts Act 1950. [19] The Plaintiff’s counsel asserted that the Defendant had delivered the Dust Collector to its customer in Indonesia in reliance of the Waybill for shipment (pages 439-440 of Appeal Record (Lampiran 3) and averred that the Defendant had accepted the goods delivered by the Plaintiff following the case of M. G. Sheth & Ors v Lam Thye Co [1954] 1 MLJ 230, Court of Appeal. 14 [20] It was further submitted by the Plaintiff’s counsel that there was no late delivery as the drawings had been delivered to the Defendant before the date of 29.1.2012 and no particularization of the defects were mentioned nor produced at the trial by the Defendant. The Plaintiff submitted that the Defendant had accepted the goods pursuant to section 42 of the Sale of Goods Act 1957 where the Defendant signed the Delivery Order and made payment of RM68,000.00 being 50% of the Price on 2.2.2012 which is six days after delivery and the Defendant did not reject the goods after they were delivered. THE COURT’S FINDING [21] Pertinent to the matter is whether the goods sold and delivered are as agreed by both parties and as delivered and accepted by the Defendant. This suit was brought by the Plaintiff, and it is the Plaintiff who first bears the burden to prove, on the balance of probability, that the Dust Collector sold and delivered are based on the agreed terms and specifications that had been delivered and accepted by the Defendant: section 101 of the Evidence Act 1950. I rely on the Federal Court case of Letchumanan Chettiar Alagappan @ L. Allagapan, M. Venkatachalam S/O Venkatachalam Chettiar v Secure Plantation Sdn Bhd No. 02-78-10/2014 which illustrates the burden of proof is on the party who asserts, the plaintiff and that once the burden is discharged by the plaintiff, the burden to prove and the onus to adduce evidence than shift to the Defendant. [22] The Plaintiff asserted that the goods were delivered based on its Quotation (pages 351-352 of Appeal Record (Lampiran 3) that was 15 exhibited as ‘P2’. This was one of the Defendant’s main grounds of appeal that there were two versions of quotation on the Dust Collector, one is the Plaintiff’s Quotation (pages 351-352 of Appeal Record (Lampiran 3)) whereas the Defendant’s quotation is marked as D22A and D22B (at pages 425-426 of Appeal Record (Lampiran 3)). [23] Upon careful perusal of Plaintiff’s Quotation issued by the Plaintiff’s witness, it was agreed by the Plaintiff to proceed with the goods to be sold and delivered based on Plaintiff’s minutes dated 28.12.2011 which refers to the telephone conversation (page 352 of Appeal Record (Lampiran 3)), and that the Defendant is to issue the Purchase Order and payment of deposit of 50%, where the minutes was signed by the Plaintiff. The Plaintiff’s witness had testified that he was not aware of the quotation relied by the Defendant. As the Defendant had asserted that the Defendant’s quotation is to be relied as the contract formed, the burden to prove as well as the onus to adduce evidence shifted to the Defendant. [24] Upon careful perusal of Defendant’s quotation (at pages 425-426 of Appeal Record (Lampiran 3)), this Court finds the amendments and additions had been made but without proof of acceptance by the Plaintiff. In normal practice of goods sold and delivered, the quotation issued by the seller that comes with terms and conditions including method of payments must come with proof of acceptance of the offer by the buyer for the quotation to be finalized and contract formed. In this case, the amended quotation relied by the Defendant is not the agreed contract as there was no proof of acceptance of the amended terms by the Plaintiff, that is the countersignature of the Plaintiff as testified by the Plaintiff’s witness (page 23 of the Supplementary Appeal Record). Furthermore, 16 there was no evidence adduced by the Defendant to prove Plaintiff’s acceptance to the amended quotation. [25] This is corroborated further by the Defendant’s admission that the Dust Collector sold and delivered to the Defendant by the Plaintiff is in accordance with the description as per Plaintiff’s Quotation (page 100 Supplementary Appeal Record): “Q : Refer to bundle pages 3-4. Do you agree that the description of the dust collector that the defendant is buying is based on this quotation? A : Yes.” It is evident that the Plaintiff’s Dust Collector was sold and delivered as agreed based on Plaintiff’s Quotation. [26] This Court holds the view that the Plaintiff’s Quotation clearly stated that it excludes installation as affirmed by the Plaintiff’s witness and which is consistent with the concept of CKD and both parties bear the knowledge that the Dust Collector meant to be delivered to Defendant’s customer in Indonesia is to be assembled in Indonesia and not by the Plaintiff. [27] Strengthened by the fact that the Dust Collector had been delivered by the Defendant to its customer in Indonesia based on the Non-Negotiable Sea Waybill (page 439-440 of Appeal Record (Lampiran 3)), is a clear acceptance of the Plaintiff’s goods by the Defendant according to section 42 of the Sale of Goods Act 1957 and following 17 the Court of Appeal case attributed by the Plaintiff’s counsel, the case of M. G. Sheth & Ors (supra). The Defendant’s oral evidence that the goods were delivered despite defective to its customer in Indonesia (page 115 of Supplementary Appeal Record) is no doubt a bad business practice, and found orally testified without documentary evidence. [28] In relation to the Fan Motor’s voltage suitability, it was evident by the Plaintiff’s witness who works for the supplier confirming that the voltage of ‘400V/3Ph/50Hz with +/-10%’ of voltage tolerance was to use for the 380V/3Ph/50Hz. This explains the letter of 26.8.2015 issued by the supplier (page 461 of Appeal Record (Lampiran 3)) which confirmed that the Fan Motor was designed as such and that the Fan Motor by TECO provides the one year warranty claim if there was a manufacturing defect. [29] This Court bears in mind that the Session Judge had the opportunity to observe the demeanour of all witnesses. Submission of the parts of the Dust Collector produced at the Sessions Court had been observed by the Session Judge. The facts submitted before this Court was that the parts produced by the Defendant which had a ‘face lift’ where they were shortened from the actual size delivered and accepted by the Defendant is therefore irrelevant to this case. It is also pertinent to add that those parts were not proven to be the same parts delivered and accepted by the Defendant nor were they proven to be defective as alleged by the Defendant. [30] This Court finds that the fact remains that some parts of the Dust Collector fell while the Defendant’s employee transferred them from Plaintiff’s transport to Defendant’s factory as admitted by the Defendant 18 during the oral testimony (page 112 of Supplementary Appeal Record). Therefore, the claim that the parts were defective could not be proven as defective caused by the Plaintiff (the causal link). [31] The failure to establish the causal link between the Plaintiff and the defects by the Defendant is based on the authority, Medicon Plastic Industries Sdn Bhdv Syarikat Cosa Sdn Bhd [1995] 2 MLJ 257 as submitted by the Plaintiff’s counsel which concerns a contract for the sale of a blow moulding machine. The Court of Appeal found that the plaintiff failed to prove whether the defects in the machine were caused by the defendant who was the seller or the manufacturer. The Court of Appeal in that case dismissed the plaintiff’s claim who was the buyer. [32] This Court holds the view that there was no shred of evidence by the Defendant that the Dust Collector was defective and the invoices produced by the Defendant after it was shipped to Indonesia in 2012 were all issued in 2013. The documentary evidence adduced thus far on the objection of Plaintiff’s goods was made after several demands by Plaintiff of the balance payment which was a handwritten letter dated 23.5.2013, more than one year after the goods had been sold and delivered to the Defendant (page 448 of the Appeal Record (Lampiran 3)). There was no proof by the Defendant that it had suffered damage due to breach of contract as alleged: Kokomewah SDn Bhd v Desa Hatchery Sdn Bhd [1995] 1 MLJ 214. [33] The Dust Collector was delivered as agreed and no specific damage or defects were reflected in the Defendant’s pleadings. The Defendant claimed that the parts were wrongly designed but damages for breach of warranty or condition was not pleaded. This Court holds the 19 view that parties are bound by the pleadings: Dato’ Tan Chin Wah v

[34] I wish to reiterate that I am mindful that this case went for a full trial where witnesses had been observed and evidence adduced had been evaluated by the Session Judge. The legal position is clear that an appellate court should but rarely interfere with the conclusion arrived by the trial judge unless the judge was plainly wrong, that is acted on a wrong principle of law which requires this Court’s intervention: Multar Masngud v Lim Kim Chet & Anor [1982] CLJ 237, FC and the case of Ming Holdings (M) Sdn Bhd v Syed Azahari Noh Shahabudin & Anor [2010] 6 CLJ 857, FC. This Court finds that the Session Judge did not misdirected herself in facts and law. In light of the above reasons, I affirmed the Session Judge’s decision and dismiss the appeal and the counterclaim with cost. Dated: 29 November 2017 (ZALITA DATO’ ZAIDAN) Judicial Commissioner Shah Alam High Court. 20 COUNSEL FOR THE APPELLANT BOWANIS SUSAMMA THOMAS A/PAT THOMAS Tetuan Deol & Gill 3rd Floor, Wisma Tune No. 19, Lorong Dungun 50490 Kuala Lumpur [Ref: DG/2371/EPSB/ECPEC/15-ST] Tel: 03-2242 3395 Fax:03-2242 3392 COUNSEL FOR THE RESPONDENT/DEFENDANT CHOO MUN WEI Tetuan MahWengKwai & Associates Level 10-1, Tower B, Menara Prima Jalan PJU 1/39, Dataran Prima 467301 Petaling Jaya Selangor Darul Ehsan [Ref: M6055A/RM/CMW]