Euro Saga Sdn Bhd v Prototech Sdn Bhd (DA-12BNCvC-19-12/2025)

This is an appeal by the Appellant against the decision of the learned Sessions Court Judge allowing the Respondent's claim in the sum of RM204,829.75 and dismissing the Appellant's Counterclaim.

The appeal concerns the supply of Grade C32/40T2 ready-mix concrete by the Respondent for the Highway Project known as "Membina Lebuhraya Kota Bharu ke Kuala Krai, Kelantan Pakej 2C & 3A: Kok Lanas ke Bukit Tiu". The Appellant contends that the concrete supplied by the Respondent failed the prescribed cube tests and subsequent coring test, resulting in rectification works and additional costs amounting to RM358,823.56.

Having considered the Record of Appeal, the documentary evidence, the Notes of Proceedings, the Grounds of Judgment of the learned Sessions Court Judge and the submissions of parties, I am of the view that the appeal ought to be allowed.

The Appellant was awarded the Highway Project by JKR. Thereafter, the Appellant approached the Respondent for the supply of ready-mix concrete for use in the Highway Project. The evidence shows that the Respondent was aware from the outset that the concrete was intended for use in a highway project undertaken pursuant to JKR requirements.

Subsequently, the Respondent prepared various trial concrete mixes, including Grade C32/40T2. Cube test samples were prepared and subjected to testing and trial mix results showed strengths exceeding the required characteristic strength of 40 $ N / m m^{2}. $

Following those results, the Appellant issued Purchase Order No. 7159 for the supply of Grade C32/40T2 concrete and Respondent subsequently supplied concrete for Core Bored Pile Nos. 10 and 11 ("CBP10" and "CBP11").

Cube samples were subsequently taken and subjected to the prescribed testing regime. The 28-day cube test for CBP10 yielded a result of $ 3 9. 9 8 \mathrm{~ N / m m^{2}} $ whilst the 28-day cube test for CBP11 yielded a result of $ 3 8. 3 1 \mathrm{~ N / m m^{2}} $ . Both results fell below the specified minimum requirement of $ 4 0 \mathrm{~ N / m m^{2}} $ .

Following these failures, a Non-Conformance Product Form was issued. Thereafter, coring tests were conducted. The coring test for CBP10 yielded readings of $ 1 8. 0 \mathrm{~ N} / \mathrm{m m}^{2} $ and $ 2 0. 5 \mathrm{~ N} / \mathrm{m m}^{2} $ respectively. In respect of CBP11, no suitable core sample could be extracted.

The Appellant's case is that these failures necessitated rectification works involving six additional bored piles, pile caps, maintained load tests and other associated works, resulting in losses amounting to RM358,823.56.

The Appellant contends that the learned Sessions Court Judge erred in dismissing the Counterclaim by wrongly treating the matter as one involving privity of contract, failing to appreciate the contractual obligation undertaken by the Respondent to supply Grade C32/40T2 concrete, failing to appreciate the significance of the failed cube tests and coring test, failing to appreciate the admissions extracted from the Respondent's own witnesses, wrongly treating the absence of a witness from JKR as fatal and failing to award losses flowing naturally from the Respondent's breach.

The Respondent on the other hand maintains that there was no contractual basis rendering it liable for the losses claimed, that it was not a party to the Highway Project contract and that the Appellant failed to establish its Counterclaim on a balance of probabilities.

The issues for determination are as follows:

Whether the learned Sessions Court Judge erred in dismissing the Counterclaim on the basis of privity of contract;

Whether there existed a contractual basis rendering the Respondent liable for the losses claimed;

Whether the Respondent supplied concrete which complied with the agreed contractual specification;

Whether the absence of a witness from JKR was fatal to the Counterclaim;

Whether the Appellant's rectification works constituted acceptance or waiver; and

Whether the Appellant established its Counterclaim on a balance of probabilities. Principles Governing Appellate Intervention

In Azman bin Mahmood & Anor v SJ Securities Sdn Bhd [2012] 6 MLJ 1, the Federal Court held that an appellate court is entitled to interfere where crucial evidence has been misconstrued or where the trial court has failed to properly analyse the entirety of the evidence.

Similarly, in Ng Hoo Kui & Anor v Wendy Tan Lee Peng (administratrix for the estate of Tan Ewe Kwang, deceased) & Ors [2020] 12 MLJ 67, the Federal Court recognised that appellate intervention is justified where there exists a material error of law, a critical finding unsupported by the evidence, a misunderstanding of material evidence or a failure to consider relevant evidence.

The learned Sessions Court Judge appears to have accepted the Respondent's contention that because the Highway Project contract existed between the Appellant and JKR, and that the Respondent could not be liable for the losses subsequently incurred by the Appellant because the Respondent was not a party to that contract.

With respect, I find that this reasoning overlooks the true nature of the Appellant's Counterclaim. The Appellant's claim is not founded upon the Highway Project contract. The Appellant does not seek to enforce any right belonging to JKR. Nor does the Appellant seek to impose obligations arising under the Highway Project contract upon the Respondent.

In fact, the Appellant's complaint is that the Respondent breached its own contractual obligation to supply Grade C32/40T2 concrete meeting the agreed specification pursuant to the Purchase Orders.

The evidence clearly establishes a direct contractual relationship between the Appellant and the Respondent. The Respondent prepared the mix design, supplied the concrete pursuant to the Purchase Orders and invoiced the Appellant accordingly.

Once that contractual relationship is identified, the issue ceases to be one of privity. The real issue becomes whether the Respondent supplied concrete complying with the agreed specification.

In this regard, the learned Sessions Court Judge addressed the wrong legal question. The proper inquiry was not whether the Respondent was bound by the Highway Project contract, but whether the Respondent complied with its own obligations under the supply contract.

The learned Sessions Court Judge further found that there was no contractual basis rendering the Respondent liable for the losses claimed. However, I find that the contemporaneous documents and evidence adduced at the trial shows otherwise.

The documentary evidence demonstrates that the Appellant specifically ordered Grade C32/40T2 concrete. The Purchase Orders, Delivery Orders and Concrete Mix Design Proposal consistently identify the required grade and strength.

The Respondent's obligation was therefore not merely to deliver concrete. Its obligation was to supply concrete conforming to the agreed specification.

Section 15 of the Sale of Goods Act 1957 provides that where goods are sold by description, there is an implied condition that the goods shall correspond with that description.

Section 16(1)(a) further provides that where a buyer makes known the purpose for which goods are required and relies upon the seller's skill and judgment, there is an implied condition that the goods shall be reasonably fit for that purpose.

The evidence demonstrates that the Respondent knew the concrete was required for bored piles forming part of a major highway project. The Appellant relied upon the Respondent's expertise as a specialist manufacturer and supplier of ready-mix concrete, and the Respondent itself prepared the mix design and represented that the concrete would achieve the required strength.

In those circumstances, the Respondent assumed a contractual obligation to supply concrete corresponding with the agreed description and reasonably fit for its intended purpose.

This issue lies at the heart of the appeal. The evidence demonstrates that the 28-day cube test for CBP10 yielded a result of 39.98 N/mm $ ^{2} $ . The corresponding result for CBP11 was 38.31 N/mm $ ^{2} $ . Both results fell below the specified requirement of 40 N/mm $ ^{2} $ .

The significance of those results cannot be understated. The parties contracted for concrete capable of achieving a specified strength. The prescribed testing regime existed for the very purpose of determining whether the supplied concrete achieved that strength.

Following the failed cube tests, a Non-Conformance Product Form was issued and further investigations were carried out. A coring test conducted on CBP10 yielded readings of only 18.0 $ N/mm^{2} $ and 20.5 $ N/mm^{2} $ respectively. Those figures were substantially below the specified requirement.

These are not matters resting upon speculation or inference. They are objective scientific test results generated pursuant to the quality assurance process adopted for the project.

However, despite the evidence of the test failures, the learned Sessions Court Judge appears to have attached significance to the fact that no complaint was raised when the concrete was delivered and poured.

That consideration carries little weight. Concrete strength cannot be conclusively determined by visual inspection. The very reason cube tests and coring tests exist is because compliance can only be assessed after curing and testing. Therefore, the absence of an immediate complaint does not establish compliance with the contractual specification.

Applying the principles in Good Win Concrete Sdn Bhd v IJM Construction Sdn Bhd [2021] MLJU 1683, ATSH Construction Sdn Bhd v Strong Mixed Concrete Sdn Bhd [2025] MLJU 1458 and Top Forest Wood Sdn Bhd v Vimix Concrete Sdn Bhd [2020] MLJU 2005, I find that the failed cube tests, the failed coring test and the issuance of the Non-Conformance Product notice constitute compelling evidence that the concrete supplied for CBP10 and CBP11 failed to comply with the agreed specification. The evidence of the Respondent's witnesses

The Appellant further relied on admissions extracted from the Respondent's own witnesses. Those witnesses accepted that cube tests are recognised indicators of concrete strength. They further accepted that failed cube tests would ordinarily trigger investigations into the condition of the pile and the adequacy of the concrete supplied. These admissions are significant because they emanate from witnesses called by the Respondent itself.

If cube tests are accepted as recognised indicators of compliance, and if those cube tests failed, it becomes difficult to reconcile the Respondent's position that the concrete nevertheless complied with the contractual specification.

In this regard, I find that insufficient weight was accorded to these admissions by the learned Sessions Court Judge.

Much emphasis was placed on this issue by the learned Sessions Court Judge. However, the issue before the Court is not why JKR required rectification works. The issue before the Court is whether the Respondent supplied concrete complying with the agreed contractual specification.

That issue could be established through the Purchase Orders, Delivery Orders, Concrete Mix Design Proposal, cube test reports, coring reports and the evidence of those directly involved in the manufacture, supply and testing of the concrete. The test results speak for themselves, and in any event the failure of the concrete supplied by the Respondent to pass the tests is not in dispute.

The absence of a witness from JKR does not alter those results. Accordingly, I find that the learned Sessions Court Judge attached undue significance to the absence of a witness from JKR and thereby diverted attention from the more fundamental issue, namely whether the concrete supplied by the Respondent complied with the agreed specification.

Once the failed test results emerged, investigations and remedial works became inevitable. Section 74 of the Contracts Act 1950 provides that a party suffering loss arising from a breach is entitled to recover losses naturally arising from that breach.

The Respondent knew from the outset that the concrete was required for bored piles forming part of a major highway project. The Respondent knew that compliance with the specified strength requirement was critical.

The costs of additional piles, pile caps, maintained load tests and associated rectification works were not remote losses. They flowed naturally and directly from the failure of the concrete to achieve the required strength. In any event, the quantum of the rectification costs was not seriously challenged at the trial by the Respondent.

The Appellant remained contractually obliged to complete the Highway Project. Once the failed test results emerged, it could not simply abandon the project or refuse to comply with the requirements imposed by JKR.

Further, the Appellant was also under a legal duty to mitigate its losses. Viewed in that context, the rectification works undertaken by the Appellant were entirely consistent with its duty to mitigate loss.

In any event, the Appellant had informed the Respondent that the concrete supplied had failed the required tests and requested the Respondent to submit its rectification proposal to resolve the issue vide letter dated 28.12.2021, failing which, the Appellant notified the Respondent that it would appoint a third party to carry out the works and would back charge the direct and indirect costs to the Respondent if the Respondent failed.

Therefore, the rectification works carried out by the Appellant cannot be said to signify an acceptance of defective concrete nor were they acts indicating an intention to abandon the Appellant's rights against the Respondent. In fact, they were carried out as a result of the Respondent's failure to accede to the Appellant's request for rectification plan.

Drawing the evidence together, I am satisfied that the Appellant has discharged the burden resting upon it. The Appellant established that the Respondent agreed to supply Grade C32/40T2 concrete for the Highway Project and that the contractual requirement was for concrete capable of achieving a characteristic compressive strength of 40 N/mm $ ^{2} $

The Appellant also established through objective documentary evidence that the concrete supplied by the Respondent had failed the cube tests and the subsequent coring test for CBP10, which produced significantly deficient results.

The Appellant further successfully established that a Non-Conformance Product Form was issued as a consequence of those failures resulting in the necessity for the rectification works and that additional costs were incurred.

Upon careful examination of the evidence available at the trial, I find that the Respondent was unable to provide a satisfactory explanation as to why concrete which failed the prescribed tests should nevertheless be regarded as complying with the agreed contractual specification.

Accordingly, I find that the Appellant has established, on a balance of probabilities, that the Respondent breached its contractual obligation to supply concrete meeting the agreed specification and that the losses claimed by the Appellant flowed naturally from that breach.

For the reasons stated above, the appeal is allowed with costs of RM20,000.00 here and below.

The order dismissing the Appellant's Counterclaim is set aside. Judgment is entered in favour of the Appellant on the Counterclaim in the sum of RM358,823.56.

The Respondent's claim in the sum of RM204,829.75 shall be set off against the Appellant's Counterclaim. The balance remaining after set-off shall be payable by the Respondent to the Appellant. This Grounds of Judgment is dated 1.7.2026 SHAMSUL BAHRIN BIN ABDUL MANAF Pesuruhjaya Kehakiman Mahkamah Tinggi (3) Kota Bharu Kelantan PIHAK-PIHAK: Peguam bagi pihak Perayu: Tetuan Christopher & Lee Ong Level 22, Axiata Tower, No.9, Jalan Stesen Sentral 5, Kuala Lumpur Sentral, 50470 Kuala Lumpur. Peguam bagi pihak Responden: Tetuan Lua & Mansor 4355-G, Jalan Pengkalan Chepa, 15400 Kota Bharu, Kelantan.