As a result, after first two payments and shipments, the remaining outstanding debt should equal to 158751.20USDand we will be ready to pay it off within 4 weeks equal transfers. Please, kindly confirm the agreement from your side so we could agree the exact transfer/shipment dates and proceed accordingly.” [42] On 18.5.2022, the Defendant’s representative sought clarification from Igor regarding the timing of the instalment payments. Igor responded confirming that the instalments would commence the week following the final shipment of Contracts 1B and 2B. S/N jJ79Ku7gqUjm96buEpcPA [43] On 31.5.2022, Igor sent a WhatsApp message to the Defendant’s representative, Syazana, stating: “Market is down. So, we are not interested in pending contracts anymore.” This message was sent approximately two weeks after the letter dated 17.5.2022. [44] On 3.6.2022, Igor sent an email to the Defendant proposing amendments to the payment terms set out in his letter of 17.5.2022. The proposed amendments included: a) specific dates for each payment and shipment; b) reciprocal termination rights if either party failed to perform; and c) interest at 12% per annum for late performance by either party. [45] On 7.6.2022, Igor sent an email to the Defendant stating that since the parties were unable to find common ground regarding the amendment of payment terms for the pending contracts, the Plaintiff could not agree to the new terms proposed by the Defendant, specifically refusing to agree to prepayment before loading. The Plaintiff required the contracts to be confirmed under the “old terms” (the original contract terms). It reads: “Since we still cannot find a common ground on amending the terms of payment for the pending contracts, we cannot agree to the news terms you S/N jJ79Ku7gqUjm96buEpcPA propose - we do not agree to prepayment before loading. We are still willing to confirm them under the old terms of payment as originally stipulated into the contracts - 75 days after BL date. It’s up to you to make the final decision - if you are willing to ship them or not.” [46] The Defendant did not respond to the email of 7.6.2022 to assert that a binding variation had already been concluded. Instead, the Defendant simply ceased communication regarding shipment of Contracts 1B and 2B. [47] On 8.8.2022, the Defendant sent a letter of demand to the Plaintiff claiming: a) the outstanding sum of USD87,780.00 under the 1st Batch of Sales Contracts; and b) loss of profits on Contracts 1B and 2B. The letter purported to terminate Contracts 1B and 2B for the Plaintiff’s alleged failure to make advance payment. [48] On 19.8.2022, the Plaintiff responded denying the Defendant’s purported termination and asserting that it was the Defendant who had breached the contracts. [49] On 31.5.2024, the Plaintiff commenced Suit 689 by filing a Writ of Summons and Statement of Claim in the Sessions Court at Kuala Lumpur (which was subsequently transferred to the High Court). The Defendant filed its Defence and Counterclaim on 9.7.2024. The Plaintiff filed its Reply and S/N jJ79Ku7gqUjm96buEpcPA Defence to Counterclaim on 23.7.2024. The Defendant filed its Reply to Defence to Counterclaim on 6.8.2024. SUIT 153: PARTIES’ PLEADED CASES Plaintiff’s Case [50] The Plaintiff entered into two sales contracts with the Defendant for the supply of the CNO Goods. Contract 3DE dated 11.3.2021 covered 212.800 metric tons for USD380,912.00, while Contract 4GH dated 22.4.2021 covered 106.400 metric tons for USD187,264.00. Both contracts were on FOB terms. A material term of both contracts specified that the goods must have an acid value expressed as FFA of not more than 0.1 percent. [51] The Plaintiff claims that the Defendant breached these contracts by supplying defective goods. The pleaded case asserts that the coconut oil had FFA values far exceeding the contractual specification of 0.1 percent at the point of packing. The Plaintiff alleges that these defects were caused by the Defendant’s use of poor quality raw materials and inadequate manufacturing processes, and that the defects existed at the time of packing and shipment from Malaysia. The Plaintiff contends that prior deliveries of similar goods under comparable shipping, handling and storage conditions arrived without defects, suggesting that the problem lay with these particular batches. S/N jJ79Ku7gqUjm96buEpcPA [52] The Plaintiff seeks damages totalling USD378,651.30, comprising USD377,651.30 for loss of profits and compensation paid to customers who suffered losses due to the defective goods, plus USD1,000.00 for joint testing costs. Alternatively, the Plaintiff seeks damages to be assessed, together with general damages and interest at five percent per annum. Defendant’s Defence [53] The Defendant denies any breach of the contracts. The Defendant’s primary defence is that the goods supplied fully complied with the agreed specifications at the point of packing and shipment from Malaysia. The Defendant relies on contemporaneous CoAs which documented that the FFA values were below 0.1 percent when the goods were packed. The Defendant contends that all manufacturing, packing and delivery processes were conducted in accordance with proper standards and specifications. [54] The Defendant attributes any deterioration in the goods to post-shipment factors entirely beyond its control and responsibility. It pleads that if any degradation occurred, it resulted from improper handling during shipment by the shipper nominated by the Plaintiff, improper storage temperature conditions at the Plaintiff’s designated warehouse in Russia, or other factors during the lengthy period between shipment and the eventual joint testing conducted some nine to fifteen months later. The Defendant S/N jJ79Ku7gqUjm96buEpcPA emphasises that under FOB terms, risk passed to the Plaintiff upon loading, and points out that no other customers who purchased from the same batches complained of any defects. [55] The Defendant puts the Plaintiff to strict proof of all allegations of defect, breach, causation and loss. The defence denies that the communications between the parties were without prejudice discussions or protected by privilege, thereby maintaining that those communications remain available as evidence. Defendant’s Counterclaim [56] The Defendant brings a counterclaim seeking recovery of USD110,971.20, representing the unpaid balance for goods supplied under Contract 4GH. The pleaded case establishes that the total purchase price for the two batches supplied under Contract 4GH amounted to USD186,876.80. The Plaintiff paid only USD75,905.60, leaving the claimed balance outstanding. The Defendant contends that this sum became due and payable on 12.2.2022, and that the Plaintiff has repeatedly acknowledged this debt through numerous communications but has failed to settle the amount. [57] The counterclaim seeks the principal sum of USD110,971.20 together with late payment interest at the rate of 1.5 percent per month from the payment due date S/N jJ79Ku7gqUjm96buEpcPA until judgment, calculated in accordance with the contractual terms. In the alternative, if the court finds that the Plaintiff has suffered losses due to defective goods, the Defendant seeks a declaration that it is entitled to set off the unpaid sum against any damages awarded to the Plaintiff. The Defendant also claims interest at five percent per annum from the date the cause of action arose until judgment, and further interest at five percent per annum on the judgment sum until full settlement. Plaintiff’s Defence to Counterclaim [58] In defending against the counterclaim, the Plaintiff does not dispute the arithmetic calculation of the alleged outstanding amount under Contract 4GH, nor does it deny that partial payments totalling USD75,905.60 were made. Instead, the Plaintiff’s defence rests entirely on the proposition that the goods supplied under Contract 4GH were defective and failed to comply with contractual specifications. The Plaintiff asserts that because the goods were not fit for purpose and did not meet the agreed FFA specification, the Defendant is not entitled to full payment under the contract. [59] The Plaintiff pleads that any sums allegedly due under Contract 4GH must be set off against the damages claimed in the main action for the supply of defective goods. The defence maintains that FOB terms do not absolve the Defendant of liability for supplying defective goods that failed to meet specifications or were unfit for purpose. The S/N jJ79Ku7gqUjm96buEpcPA Plaintiff denies any obligation to pay the outstanding sum while asserting its entitlement to damages, and contends that inherent defects in the goods caused degradation during transit through no fault of the Plaintiff or the shipping conditions. The Plaintiff expressly denies that the Defendant is entitled to charge late payment interest given the fundamental breach of contract alleged in the main claim. SUIT 689: PARTIES’ PLEADED CASES Plaintiff’s Case [60] The Plaintiff commenced Suit 689 alleging breach of contract by the Defendant arising from the wrongful termination and non-delivery of goods under two sales contracts: Contract 1B dated 17.12.2021 (for 66 MT of the CBS Goods at USD166,320.00 on FOB terms) and Contract 2B dated 24.12.2021 (for 22 MT of the CBS Goods at USD56,958.00 on FOB terms), collectively totaling 88 MT valued at USD223,278.00. These contracts required delivery by February 2022, with payment to be made seven days before arrival of goods in Russia. [61] The Plaintiff pleaded that it had entered into back-to-back contracts with Russian buyers Veles TD LLC (“Veles”) on 16.12.2021 (for 66 MT at USD235,818.00, delivery by May 2022) and Oiltrade LLC (“Oiltrade”) on 24.12.2021 (for 22 MT at USD80,410.00, delivery by June 2022). On 25.2.2022, the Defendant raised international sanctions S/N jJ79Ku7gqUjm96buEpcPA against Russia as a concern, refusing to ship. On 15.4.2022, the Defendant suggested for the first time that the Plaintiff should make advance payments prior to shipment, contrary to the original contract terms. Despite discussions continuing into early June 2022, no agreement was reached on the proposed variation of payment terms. [62] The Plaintiff maintained that the Defendant unlawfully terminated Contracts 1B and 2B and refused to deliver the goods, causing the Plaintiff to breach its obligations to Veles and Oiltrade. The Plaintiff claimed total damages of USD84,737.00 comprising: a) loss of profits of USD15,166.80, calculated as the sale proceeds of USD347,850.80 (including 10% Russian VAT) less the contract price to the Defendant of USD223,278.00 and less estimated freight, VAT, import duties and ancillary costs of USD109,406.00; and b) penalties paid to Veles and Oiltrade totaling USD69,570.20 under contractual penalty clauses for failure to deliver. The Defendant’s Case [63] The Defendant denied any breach of Contracts 1B and 2B. The Defendant pleaded that by March 2022, there was an outstanding sum of USD87,780.00 due under earlier S/N jJ79Ku7gqUjm96buEpcPA contracts, namely Contract 5FG dated 22.4.2021 and Contract 6K dated 15.10.2021. On or about 21.4.2022, the Defendant informed the Plaintiff that it would not supply and deliver the CBS Goods under Contracts 1B and 2B unless the Plaintiff: a) made payment of 50% of the unpaid sum of USD99,000.00 due under Contracts 5FG and 6K and Contract 4GH; and b) made advance payment for the total purchase price of USD223,278.00 under Contracts 1B and 2B. [64] The Defendant asserted that on 17.5.2022, the parties reached a mutual agreement to vary the payment terms whereby the Plaintiff would: a) pay USD166,320.00 for Contract 1B before delivery plus towards the outstanding balance; b) pay USD56,958.00 for Contract 2B before delivery plus towards the outstanding balance; and c) pay the remaining balance of USD158,751.20 in equal weekly instalments over four weeks. S/N jJ79Ku7gqUjm96buEpcPA [65] The Defendant contended that the correspondence between 17.5.2022 and 3.6.2022 involved only minor, cosmetic clarifications and that the parties had mutually agreed to vary the contracts either by express agreement or through their course of conduct. [66] The Defendant pleaded that on 7.6.2022, the Plaintiff reneged on this agreement and failed to make the agreed advance payment of USD223,278.00, constituting a breach of Contracts 1B and 2B. The Defendant submitted that the Plaintiff’s change of position was motivated by a market downturn, as evidenced by a WhatsApp message on 31.5.2022 stating, “Market is down. So, we are not interested in pending contracts anymore.” The Defendant terminated Contracts 1B and 2B on 28.6.2022 for the Plaintiff’s breach. The Defendant also pleaded that the Plaintiff failed to take reasonable steps to mitigate its losses and failed to prove its claimed quantum of USD84,737.00. The Defendant’s Counterclaim [67] By way of counterclaim, the Defendant sought: a) the outstanding sum of USD87,780.00 under Contracts 5FG and 6K, for which the Plaintiff had failed, neglected or refused to pay despite there being no dispute on the quality of goods supplied; S/N jJ79Ku7gqUjm96buEpcPA b) loss of profits of USD80,938.00, being the price difference between the contractual price of the CBS Goods under Contracts 1B and 2B agreed in December 2021 and the market price as at termination on 28.6.2022; and c) late payment interest at the rate of 1.5% per month from the respective due dates, namely 19.3.2022 for the unpaid balance and from termination for the loss of profits. [68] The Defendant also sought, in the alternative, a declaration that it was entitled to set off the unpaid sums against any amounts due to the Plaintiff, and interest on judgment sums at 5% per annum from judgment until full settlement. The Plaintiff’s Defence to Counterclaim [69] In its Defence to Counterclaim, the Plaintiff denied agreeing to vary the payment terms of Contracts 1B and 2B. The Plaintiff maintained that there was no agreement to the proposed variation. The Plaintiff denied that there was any breach of Contracts 1B and 2B on its part, asserting that it was the Defendant who had unlawfully and without basis demanded a variation of the payment terms and subsequently breached by refusing to deliver. S/N jJ79Ku7gqUjm96buEpcPA [70] Regarding the Defendant’s claim for the outstanding sum of USD87,780.00 under Contracts 5FG and 6K, the Plaintiff did not specifically dispute the quantum or liability for this sum. However, the Plaintiff pleaded that any such sums due to the Defendant should be set off against the damages awarded to the Plaintiff in both Suit 153 and Suit 689. The Plaintiff submitted that the Defendant had failed to take reasonable steps to mitigate its losses, if any (which was denied), and that the Defendant had failed to prove its counterclaim for loss of profits on Contracts 1B and 2B. WITNESSES [71] Four witnesses appeared for the Plaintiff as follows: a) PW1 is Dr. Vedhakumar Valliappan, the Plaintiff’s expert witness, who holds a PhD in Science (Food Technology) and possesses extensive experience in the oils and fats industry. His evidence primarily relates to determining the root cause of the extraordinary increase in FFA levels in the KM 24- 001 supplied by the Defendant. He testified that environmental factors during shipment and storage, such as temperature, moisture and oxygen, could be safely ruled out as causes for the spoilage because the BIB packaging remained intact, preventing ingress, and the recorded transit and warehouse temperatures were within safe limits for the product. Consequently, he concluded that the defect was S/N jJ79Ku7gqUjm96buEpcPA likely inherent, stemming from pre-shipment issues within the Defendant’s control, such as poor-quality raw materials, processing failures during refining, or moisture exposure during packing. b) PW2 is Olga Manekina, the Managing Director of Oiltrade. Her evidence primarily relates to the non-delivery of 22MT of the CBS Goods by the Plaintiff to Oiltrade and the resulting penalties incurred. She testified that Oiltrade placed an order for the goods on 24.12.2021, which the Plaintiff failed to deliver, that the specific product was difficult to replace as customers would not accept substitutes, and that Oiltrade consequently charged the Plaintiff a contractual penalty of 20 per cent, amounting to the losses claimed by the Plaintiff, which the Plaintiff paid in March 2023. Her Witness Statement was marked as WSPW2. c) PW3 is Alexey Sipin, the Finance Director of Veles. His evidence primarily relates to the non-delivery of 66MT of the CBS Goods ordered by Veles from the Plaintiff and the subsequent penalties incurred. He testified that Veles placed an order for the goods on 16.12.2021, which the Plaintiff failed to deliver because the Defendant refused dispatch, that sourcing alternatives was difficult as clients refused substitutes, and that Veles consequently imposed a contractual penalty of 20 per cent on the Plaintiff, S/N jJ79Ku7gqUjm96buEpcPA which was paid in March 2023. His Witness Statement was marked as WSPW3. d) PW4 is Igor Viktorovich Silantyev, the Managing Director of the Plaintiff. His evidence primarily relates to the storage conditions and inspection of the CNO Goods in Russia alleged to be defective, the negotiations regarding payment terms for the undelivered CBS Goods under Contracts 1B and 2B, and the quantification of the Plaintiff’s alleged losses. He testified that the CNO Goods were stored in cool, ventilated conditions where temperatures rarely exceeded 30°C, that the BIB packaging remained largely intact upon receipt with only minor exceptions, and that while proposals were exchanged regarding prepayment for Contracts 1B and 2B, no final agreement was ever concluded. His Witness Statement was marked as WSPW4. [72] Five witnesses appeared for the Defendant as follows: a) DW1 is Muhammad Hakim See Abdullah, the former Head of Industrial Sales and Head of Commercial Indonesia for the Defendant. His evidence primarily relates to the operational implementation of the disputed sales contracts, the handling of the Plaintiff’s complaints regarding the defective CNO Goods, the negotiations to vary payment terms for Contracts 1B and 2B following the imposition of S/N jJ79Ku7gqUjm96buEpcPA international sanctions, and the recovery of outstanding payments and alleged losses. He testified that, in respect of the CNO Goods, the contracts were on FOB terms, meaning that risk passed to the Plaintiff upon shipment, that in relation to Contracts 1B and 2B, while proposals were made to vary payment terms to require prepayment, he admitted during cross-examination that technically no agreement was concluded as Credit Committee approval was pending, and that the Plaintiff remained liable for outstanding invoices under Contracts 4GH, 5FG and 6K, although he conceded that he could not explain the specific basis for the interest calculations charged in the Defendant’s Statement of Account. His Witness Statement was marked as WSDW1. b) DW2 is Nor Elliya Zee Bt Omar, the former Senior Executive, Quality Assurance of the Defendant. Her evidence primarily relates to the quality control procedures and the issuance of CoAs for the alleged defective CNO Goods supplied under Contracts 3DE and 4GH. She testified that she personally issued the CoAs for Batches L280 and L303, which confirmed that the FFA levels were within the contractual limit of 0.1 per cent at the point of packing, and that generally products are tested and packed on the same day. Her Witness Statement was marked as WSDW2. S/N jJ79Ku7gqUjm96buEpcPA c) DW3 is Mohd Hamdi bin Abd Karim, the former General Manager of the Defendant. His evidence primarily relates to the manufacturing operations, quality control investigations regarding the alleged defective CNO Goods and the results of testing conducted on retained samples. He testified that following the Plaintiff’s first complaint, the Defendant tested its retained sample for Batch L280, which showed a FFA value of 0.061 per cent, well within the contractual limit of 0.1 per cent, that another client, Global Agri-Trade Corporation (“Global Agri-Trade”), purchased goods from the same production batch without complaint, and that the timing of packing refined oil into BIB containers depends on shipping terms and customer payment, meaning that the oil may be stored in bulk tanks prior to packing. His Witness Statement was marked as WSDW3. d) DW4 is Prof. Dr. Tan Chin Ping, the Defendant’s expert witness, who is a professor in the Department of Food Technology with expertise in lipid chemistry. His evidence primarily relates to the scientific evaluation of the causes behind the elevated Acid Value and FFA levels in the KM 24-001 supplied by the Defendant and the rebuttal of the Plaintiff’s expert opinion regarding manufacturing defects. He testified that RBDCO inherently possesses high oxidative stability and is resistant to FFA increase unless exposed to moisture, which triggers S/N jJ79Ku7gqUjm96buEpcPA hydrolysis, a process chemically distinct from oxidation, that the significant time gap of 9 to 15 months between the compliant pre-shipment CoAs and the subsequent inspections suggests that the deterioration was caused by post-shipment environmental factors, and that temperature fluctuations during transit, where internal container heat can exceed ambient levels, combined with compromised packaging allowing moisture ingress, were the most probable causes of the spoilage. e) DW5 is Tan Swan Wui Eric, the Director of GATC Agri Pte Ltd (“GATC”). His evidence primarily relates to the satisfactory quality of RBDCO supplied by the Defendant to Global Agri-Trade, the holding company of GATC, and the absence of any customer complaints regarding the same. He testified that his company purchased RBDCO from the Defendant under various sales contracts and, notably, received goods sourced from the same production lot as the Plaintiff without receiving any complaints regarding the quality of the oil from third-party clients. His Witness Statement was marked as WSDW5. SUIT 153 ISSUES TO BE TRIED [73] The parties filed a Statement of Agreed Statement of Issues to be Tried dated 1.3.2024, which identified the following issues for determination for Suit 153: S/N jJ79Ku7gqUjm96buEpcPA a) Issue 1: Whether the acid value of above 0.1% (lauric acid) of KM 24-001 supplied by the Defendant to the Plaintiff by way of Batches L280, L303, L342 and L420 pursuant to Contracts 3DE and 4GH (the CNO Goods) was caused by inherent defects in the goods and/or by the Defendant? b) Issue 2: Whether the alleged defects in the goods, if any, were caused by the Plaintiff? c) Issue 3: Whether the contracts are on FOB terms and if so, whether: (3.1) any such Free on Board terms absolves the Defendant from any alleged defects in the goods if Issue 1 is answered in the affirmative; and/or (3.2) the Plaintiff as the purchaser of the goods under the contracts shall bear all risk of loss or damage to the goods once cargo has passed the ship’s rail at the port of shipment? d) Issue 4: If Issue 1 is answered in the affirmative and/or Issue 2 in the negative, whether the Plaintiff suffered loss and/or: S/N jJ79Ku7gqUjm96buEpcPA (4.1) the Plaintiff is obliged to pay the Defendant for the goods and/or the sums allegedly outstanding pursuant to the contracts; and/or (4.2) the Plaintiff is entitled to damages, including the sum of USD 378,651.30? e) Issue 5: If Issue 1 is answered in the negative and/or Issue 2 in the affirmative, whether the Defendant suffered loss and/or is entitled to: (5.1) the sum of USD 110,971.20 in alleged unpaid sum pursuant to Contract 4GH; and/or (5.2) late payment interest at the rate of 1.5% per month on the sum of USD 110,971.20 from the date of the respective invoices issued pursuant to Contract 4GH? f) Issue 6: Whether the Plaintiff breached Contract 4GH dated 22.4.2021? [74] Notwithstanding the above issues, from the facts of the case, defences relied on by the Defendant and the Plaintiff in the original action and counterclaim respectively, and the submissions of parties, the court frames the following main issues for deliberation which this court considers pivotal to the resolution of this case: S/N jJ79Ku7gqUjm96buEpcPA a) Whether the CoAs issued by the Defendant, based on same-day testing and packing using accredited laboratories and internationally recognised American Oil Chemists’ Society (“AOCS”) methods, constitute reliable and contemporaneous evidence that the CNO Goods met the contractual FFA specification at the point of packing, notwithstanding the Plaintiff’s contention that inherent defects or undetected contaminants existed which only manifested in elevated FFA values months later. b) Whether, on a proper evaluation of the competing expert evidence, the dramatic increase in FFA values was attributable to inherent defects arising from the Defendant’s raw materials or manufacturing process as alleged by the Plaintiff’s expert, or instead to post-shipment hydrolytic degradation consistent with established lipid chemistry principles as explained by the Defendant’s expert. c) Whether, under the FOB terms of Contracts 3DE and 4GH, the Defendant discharged its contractual obligations by delivering goods that met specification at the point of loading, such that the risk of any subsequent deterioration passed to the Plaintiff notwithstanding the Plaintiff’s allegation of inherent defects at the point of packing. S/N jJ79Ku7gqUjm96buEpcPA d) Whether the prolonged delay in testing, the stability of the retained sample kept under controlled conditions, and the absence of similar complaints from other purchasers, the dramatic increase in FFA values was more likely caused by post-shipment environmental factors during transit and/or storage rather than by any defect existing at the point of packing. e) Whether the Plaintiff failed to discharge its burden of proving on a balance of probabilities that the goods were defective at the point of packing and shipment, such that the Defendant was not liable for the subsequent increase in FFA values and the Plaintiff’s claim must be dismissed. f) Whether the Defendant is entitled to judgment for the unpaid balance of USD110,971.20 under Contract 4GH together with contractual interest at 1.5% per month from 19.2.2022 until full payment. [75] The court’s analysis will be structured on the framed issues above. The Suit 153 Issues to be Tried as filed will be revisited for determination upon the court’s findings being made on the issues above framed by this court. S/N jJ79Ku7gqUjm96buEpcPA SUIT 689 ISSUES TO BE TRIED [76] The parties filed a Statement of Agreed Issues to be Tried dated 25.11.2024, which identified the following issues for determination: a) Issue 1: Whether there was any agreement between the Plaintiff and the Defendant to vary the payment terms of Contracts 1B and 2B in the following manner prior to shipment: i) Plaintiff to make payment to the Defendant of 50% of the unpaid sum of USD99,000 due under Contracts 5FG and 6K; ii) Plaintiff to make advance payments for a total purchase price of USD223,278.00 to the Defendant for the purchase of KC 35- 001under the contracts? b) Issue 2: If Issue 1 is answered in the negative, whether: (2.1) the Defendant breached the contracts when it refused to deliver the goods and/or unlawfully terminated Contracts 1B and 2B; and S/N jJ79Ku7gqUjm96buEpcPA (2.2) if so, whether the Plaintiff is entitled to any or all the relief claimed by way of the Original Action? c) Issue 3: If Issue 1 is answered in the affirmative, whether: (3.1) the Plaintiff breached the contracts when it did not make advance payments for the goods before shipment; and (3.2) if so, whether the Defendant is entitled to any or all the relief claimed by way of the Counterclaim? [77] Notwithstanding the above issues, from the facts of the case, defences relied on by the Defendant and the Plaintiff in the original action and counterclaim respectively, and the submissions of parties, the court frames the following main issues for deliberation which this court considers pivotal to the resolution of this case: a) Whether, having regard to the governing principles on contractual variation, the original payment terms of Contracts 1B and 2B were ever validly varied by express agreement, implied agreement, or course of conduct, or whether the parties’ communications between April and June 2022 amounted only to S/N jJ79Ku7gqUjm96buEpcPA ongoing negotiations that never crystallised into a binding variation. b) Whether, in the event the court finds an absence of any binding variation to the original payment terms, the Defendant’s refusal to deliver the goods unless advance payment was made, and its subsequent purported termination of Contracts 1B and 2B, constituted a repudiatory breach of those contracts. c) Whether, if the court finds that the Defendant has breached Contracts 1B and 2B, the Plaintiff proved on the evidence that it suffered a recoverable loss of profits in the sum of USD15,166.80 arising from unperformed back-to-back on-sale contracts with its customers. d) Whether the penalties of USD69,570.20 paid by the Plaintiff to its customers pursuant to contractual penalty clauses were a direct and foreseeable consequence of the Defendant’s breach of Contracts 1B and 2B, and whether the Plaintiff took reasonable steps to mitigate its loss such that those penalties are recoverable as damages. e) Whether, in light of the Plaintiff’s admitted non-payment, the Defendant is entitled to judgment for the unpaid balance of USD87,780.00 under Contracts 5FG and 6K, subject only to any applicable S/N jJ79Ku7gqUjm96buEpcPA set-off against sums awarded in the parties’ respective claims. f) Whether the Defendant, if found to be in repudiatory breach of Contracts 1B and 2B, is precluded as a matter of law from recovering any alleged loss of profits arising from its own refusal to perform those contracts. [78] Similarly, the court’s analysis will be structured on the framed issues above. The Issues to be Tried as filed will be revisited for determination upon the court’s findings being made on the issues above framed by this court. SUIT 153 MAIN ACTION ANALYSIS AND FINDINGS Introduction [79] The central issue in Suit 153 is whether the CNO Goods supplied under Contracts 3DE and 4GH was defective at the point of packing and shipment from Malaysia, such that the Defendant is liable for breach of contract. The burden of proof rests squarely on the Plaintiff to establish, on a balance of probabilities, that the defects existed at the time of shipment and were caused by the Defendant. [80] This is a case that turns fundamentally on the evaluation of scientific evidence, documentary evidence, and witness testimony. The court heard evidence from expert witnesses S/N jJ79Ku7gqUjm96buEpcPA on both sides, as well as factual witnesses with knowledge of the manufacturing process, shipping arrangements, and storage conditions. I shall address the key areas of evidence and analysis in turn. The Burden and Standard of Proof [81] The Plaintiff submits that this is not a case of direct proof but of science, documents and inference. The Plaintiff argues that it has discharged its burden of proving, on the balance of probabilities, that the goods were defective at the point of packing. The Plaintiff contends that the burden is to prove that something was more likely than not to have occurred (i.e., 51% likelihood), not to prove with 100% certainty. The Plaintiff argues that where direct evidence is unavailable, circumstantial evidence can be stronger than direct testimony. [82] The Defendant submits that the Plaintiff has wholly failed to discharge its burden of proof. The Defendant argues that the contemporaneous CoAs constitute objective documentary evidence that the goods met specification at the point of packing, and that the Plaintiff has adduced no credible evidence to discredit these Certificates. The Defendant contends that the dramatic increase in FFA values discovered many months after shipment, in the absence of any evidence regarding transit and storage conditions, points inexorably to post-shipment degradation rather than pre-existing defects. S/N jJ79Ku7gqUjm96buEpcPA [83] I accept that the applicable standard of proof is proof on a balance of probabilities, meaning that the Plaintiff must prove that it is more likely than not (i.e., more than 50% probable) that the defects existed at the point of packing. As stated in Elizabeth Chin Yew Kim & Anor v Dato’ Ong Gim Huat (Sued as Public Officer of Hospital Lam Wah Ee) and Other Appeals [2017] 1 MLJ 328 (Court of Appeal), the burden is not to prove with absolute certainty, but to establish that the asserted fact is more probable than not. [84] However, I do not accept the Plaintiff’s characterisation of this case as one where “circumstantial evidence can be stronger than direct testimony” somehow relieves the Plaintiff of its burden to prove its case with sufficient evidence. The principle from Tan Sri Dato’ (Dr) Rozali Ismail & Ors v Chua Lay Kim & Ors [2016] 3 CLJ 84 (Federal Court) is that circumstantial evidence can be sufficient to discharge the burden of proof, provided that the circumstances are such as to lead to a reasonable inference in favour of the party bearing the burden. Circumstantial evidence is not, by its nature, superior to direct evidence; rather, each case must be assessed on the totality of the evidence presented. [85] In the present case, the Plaintiff seeks to prove that the defects existed at the point of packing despite the existence of contemporaneous CoAs showing compliance with specifications. The Plaintiff thus faces the challenge of explaining why the court should disregard or discount S/N jJ79Ku7gqUjm96buEpcPA objective documentary evidence created at the material time, in favour of inferences drawn from events occurring many months later in circumstances where critical information about transit and storage is absent. [86] With these principles in mind, I turn to examine the evidence adduced by both parties. The Certificates of Analysis and Testing Procedures [87] The Defendant’s witness, DW3 Mohd Hamdi bin Abd Karim (“Hamdi”), testified that he was the Quality Assurance Manager at the Defendant’s Pasir Gudang refinery at the material time. Hamdi holds a Bachelor’s degree in Chemical Engineering from Universiti Technologi Malaysia, Skudai. He explained in detail the Defendant’s testing and quality control procedures for the production, testing, and packing of KM 24-001. [88] According to Hamdi’s evidence, which I accept, the Defendant conducts laboratory testing on every batch of KM 24-001 on the same day as packing. Samples are taken from the production batch and tested in the Defendant’s accredited laboratory. The tests include measurement of FFA values using the standard AOCS method. Once testing is completed and the results confirm that the product meets specifications, the CoA is issued and the batch is approved for packing and shipment. This procedure was corroborated by the testimony of DW2 Nor Elliya Zee Bt Omar (“Nor S/N jJ79Ku7gqUjm96buEpcPA Elliya”), who was the Senior Executive, Quality Assurance of the Defendant from March 2019 to March 2022. When asked whether the product would be packed and tested on the same day, Nor Elliya testified: “Usually the product will be packed and tested on the same day.” [89] The evidence establishes that for all four batches in question, testing and packing occurred on the same day. Critically, the CoAs were dated on the same day as packing, eliminating any significant time gap during which the condition of the goods might have changed: a) Batch L280: Tested and packed on 20.6.2021, CoA dated 20.6.2021 showing FFA of 0.057%; b) Batch L303: Tested and packed on 12.7.2021, CoA dated 12.7.2021 showing FFA of 0.042%; c) Batch L342: Tested and packed on 13.8.2021, CoA dated 13.8.2021 showing FFA of 0.070%; d) Batch L420: Tested and packed on 1.12.2021, CoA dated 1.12.2021 showing FFA of 0.098%. [90] Hamdi further testified that the Defendant’s laboratory is accredited to ISO 17025 standards, which is the international standard for the competence of testing and calibration laboratories. The laboratory follows internationally recognised testing methods. Specifically, the S/N jJ79Ku7gqUjm96buEpcPA FFA testing methodology used by the Defendant conforms to the AOCS Official Method Ca 5a-40, which is the industry standard for measuring free fatty acids in oils and fats. [91] A critical observation arises from the cross-examination of Hamdi regarding the time gap between the production date and the CoA date for certain batches. Using Batch L420 as an example, Hamdi clarified that whilst the production date was recorded as August 2021, the CoA was dated 1.12.2021 which is a gap of approximately four months. Hamdi explained that this gap represents the period between the completion of refining (when the oil is stored in bulk tanks) and the subsequent packing for shipment. The CoA is produced “just before the oil move out from the factory” based on testing conducted on the same day as packing. Significantly, despite this four-month storage period in the Defendant’s controlled facility, Batch L420 exhibited an FFA value of 0.098% at the point of packing and testing which is still comfortably below the contractual specification of 0.1%. This evidence directly contradicts any suggestion that the passage of time between production and packing would inevitably result in deterioration of the product to the extent claimed by the Plaintiff. [92] Significantly, Hamdi’s evidence regarding the testing procedures, the ISO 17025 accreditation, the use of the AOCS standard testing methodology, and the timing of testing relative to packing was not challenged in cross-examination. The Plaintiff did not adduce any evidence to S/N jJ79Ku7gqUjm96buEpcPA suggest that the Defendant’s laboratory was not properly accredited, that the testing methodology was flawed, or that the results recorded in the CoAs were inaccurate or fabricated. The Plaintiff’s cross-examination of Hamdi focused on the timing issues discussed above, but did not challenge the fundamental integrity of the testing process itself. [93] When asked specifically whether the Plaintiff had provided any feedback or raised any objections to the CoAs at the time they were issued, Hamdi testified: “No. There’s no dispute on the COA.” The contemporaneous documentary evidence confirms this. The CoAs were issued to the Plaintiff on 29.6.2021, 16.7.2021, 26.8.2021, and 8.12.2021 respectively. At no point did the Plaintiff raise any objection to, or dispute the accuracy of, these Certificates. The Plaintiff’s first attempt to challenge the reliability of these Certificates was made at trial, which is clearly an afterthought and is not supported by any contemporaneous documentary evidence. [94] The Plaintiff’s case is not that the CoAs were deliberately falsified or that the testing was not conducted. Rather, the Plaintiff’s position is that the Certificates cannot be relied upon because: a) they do not reflect the true condition of the goods at the point of packing due to inherent defects in the S/N jJ79Ku7gqUjm96buEpcPA raw materials or manufacturing process that would only manifest later; and/or b) there must have been moisture or other contaminants present at the time of packing that were not detected by the FFA test but which subsequently caused the dramatic increase in FFA values. [95] This is a subtle but important distinction. The Plaintiff is essentially arguing that whilst the FFA values measured on the date of packing may have been below 0.1%, the products were nevertheless defective in a way that would inevitably lead to rapid degradation. In support of this theory, the Plaintiff relies primarily on the expert evidence of PW1 Dr Vedhakumar Valliappan (“Dr Kumar”), who opined that the dramatic increase in FFA values was most likely caused by inherent defects in the goods resulting from poor quality raw materials and/or inadequate processing by the Defendant. [96] Having considered the evidence adduced, I find that the CoAs constitute contemporaneous documentary evidence of the condition of the goods at the point of packing. The principle that contemporaneous documentary evidence is to be preferred over subsequent recollection is well-established. In the Federal Court decision of Tindok Besar Estate Sdn Bhd v Tinjar Co [1979] 2 MLJ 229, the Federal Court emphasised that: S/N jJ79Ku7gqUjm96buEpcPA “(it is) safer to refer to and rely on the acts and deeds of a witness which are contemporaneous with the event and to draw the reasonable inferences from them than to believe the witness’s subsequent recollection or version of it, particularly if he is a witness with a purpose of his own to serve and if he did not account for the statements in his documents and writings.” [97] In the present case, the CoAs were created on the same day as testing and packing, eliminating any significant time gap during which the condition of the goods might have changed. The testing was conducted by the Defendant’s ISO 17025-accredited laboratory using the internationally recognised AOCS Official Method Ca 5a-40. These are objective, contemporaneous records created in the ordinary course of the Defendant’s business, long before any dispute arose between the parties. [98] The Plaintiff has adduced no evidence to challenge the accuracy of the testing or the integrity of the Certificates. The Plaintiff’s expert, Dr Kumar, did not suggest that the testing methodology was flawed or that the results were unreliable. Instead, Dr Kumar’s evidence was directed to explaining how the goods might have been defective despite the low FFA readings at the time of packing, a theory which I shall examine in detail when considering the expert evidence. S/N jJ79Ku7gqUjm96buEpcPA [99] Further, the Plaintiff’s failure to raise any objection to the CoAs upon receipt is significant. The Federal Court’s decision in Boustead Trading (1985) Trading Sdn Bhd v Arab-Malaysian Merchant Bank Bhd [1995] 3 MLJ 331 is instructive. In that case, the Federal Court held that where a party fails to challenge the validity of commercial documents within a reasonable timeframe upon receipt, that party may be estopped from subsequently asserting that nothing was due under those documents. By analogy, the Plaintiff’s acceptance of the CoAs without demur at the material time undermines its belated attempt to challenge their accuracy at trial. In the absence of any credible challenge to the CoAs, I accept them as reliable evidence that the CNO Goods met the contractual specification of FFA not exceeding 0.1% at the point of packing. This finding is significant because it means that the Plaintiff must explain how goods that met specification at the point of packing came to exhibit FFA values between 0.68% and 0.85% (or 8 to 12 times higher than specification) when tested jointly by Saybolt and SGS on 19.9.2022, some 9 to 15 months after shipment. The Expert Evidence Introduction [100] The expert evidence is central to this case. Both parties called expert witnesses to give evidence regarding the likely causes of the dramatic increase in FFA values. The S/N jJ79Ku7gqUjm96buEpcPA determination of this issue requires the court to make findings on complex questions of lipid chemistry, including the chemical processes that affect the stability of refined, bleached, and deodorised coconut oil. I shall examine the evidence of each expert in turn. Dr Vedhakumar Valliappan (PW1) - The Plaintiff’s Expert [101] Dr Kumar holds a Bachelor of Science degree with Honours in Microbiology, Zoology, and Botany from Poona University (awarded in 1973), a Master of Science degree in Applied Microbiology from Heriot Watt University (awarded in 1975), and a Ph.D. in Science from Bombay University (awarded in 1986). His career experience includes positions as Senior Lecturer at the Institute Teknologi Mara Shah Alam from 1973 to 1989, where he specialised in analytical techniques, particularly gas-liquid chromatography for analysing fatty acid composition of oils and fats, and as Group Research and Development Manager at Network Food Industries Shah Alam from 1989 to 1995, where he was involved in quality control and product development. Dr Kumar prepared two reports for these proceedings: an initial expert report dated 23.12.2024 and a rebuttal report dated 9.3.2025. [102] Dr Kumar’s central thesis is that the dramatic increase in FFA values was most likely caused by inherent defects in the goods resulting from poor quality raw materials and/or inadequate processing by the Defendant. Dr Kumar S/N jJ79Ku7gqUjm96buEpcPA identified several potential causes related to the Defendant’s manufacturing process: poor quality crude coconut oil sourced from smallholder farms in Indonesia, Papua New Guinea, and India, where inadequate drying techniques result in high moisture content in copra; use of expeller press methods that expose the oil to temperatures of 90°C in open air, potentially damaging the triglyceride molecules; mixing of oils with different FFA levels to achieve the target specification for crude oil (5% FFA maximum); failures of sensors, relays, or motors during processing, resulting in temporary loss of vacuum or temperature control; high processing temperatures and insufficient vacuum during refining, which could weaken triglyceride bonds; inadequate nitrogen blanketing after refining, allowing oxidation; and splashing during oil transfers, causing oxidation and spoilage. [103] Dr Kumar’s theory is that these factors during the sourcing of raw materials and/or the manufacturing process resulted in products that, whilst showing acceptable FFA levels at the time of testing, were inherently unstable and susceptible to rapid degradation. In his rebuttal report dated 9.3.2025, Dr Kumar stated: “I would also like to add that from the COA, the certificate of analysis alone, one will not be able to tell whether there are any other inherent issues with the product caused by the manufacturing process which could have made the product more susceptible to damage including extraordinary increase in FFA after testing.” S/N jJ79Ku7gqUjm96buEpcPA [104] When asked during examination-in-chied to explain what “inherent issues” he was referring to, Dr Kumar testified: “This I have elaborated very much in my total original report, right. There, I have mentioned that most of the small holdings where the copra is coming from, 96% of the acreage is smallholdings, and they do not have proper procedures for drying copra. On top of that, the crude manufacturers from whom Malaysia buys most of the crude oil from, they have, they use expeller press and expeller presses go up to 90 degrees centigrade without any protection at Indian atmosphere, which means they are exposed to air and heat at 90 degrees centigrade, that’s the first thing. The second thing is you can have a mixing of oils to get the 5 FFA max target that crude oil is supposed to have, you can have one that is 9 FFA and one that is 2 FFA, different quantities will give you the 5 FFA, alright. This is rampantly practiced all over the world especially Indonesia, Papua New Guinea and India, alright, that’s the other issue. And also, the, in the processing the censors can fail, relays can fail, motors can break down, right? And temporarily there is no protection from vacuum, there is no protection from temperature controls, alright? And this can actually cause problems to the triglyceride molecule.” [105] During his examination-in-chief on 24.3.2025, Dr Kumar was asked about the relationship between oxidative stability and FFA. His evidence on this point is crucial and I set it out in full: Here you talked about the relatively high oxidative stability of a coconut oil product. Now, can I just ask you this? What is the relation to a high oxidative stability to the readings of an FFA, free-fatty acid of a product? Oxidative stability will actually affect the FFA, the FFA will have effect on oxidative stability. S/N jJ79Ku7gqUjm96buEpcPA How does the oxidative stability affect FFA? The moment the triglyceride breaks down, it gets oxidized. The moment the triglyceride breaks down, and gets oxidized into various, and the various other reactions also take place and it becomes bad. Ok, and how does that again relate to free-fatty acids? Free-fatty acid can go up and remain stable, but if the spoilage keeps going on in other areas, the peroxide value goes up. And then peroxide value comes down, because it’s converted into other things. It’s not a single reaction, it keeps continuing.” [106] During cross-examination on 24.3.2025, Dr Kumar was extensively questioned about the scientific basis for his opinions. When pressed to identify which of his cited publications in Annexure N supported his theory about poor quality raw materials from Indonesia and Papua New Guinea causing FFA increases, the following exchange occurred: Dr Kumar, you have produced Annexure N. And then you made this statement that those that we import are from poor quality copra. Which publication says that in Annexure N? Now, the publications – Which publication in Annexure N says that? There are three publications you have given. The first one is at page 131. Second is at page 145. The third is at page 148. Sorry, there are four publications. Sorry. The fourth is at page 180. Sorry, I think it went on all the way to page 242. Which publication says that the one that Malaysia imports is from poor quality copra with poor drying techniques? Which one says that? S/N jJ79Ku7gqUjm96buEpcPA You see, if it’s, none of them would say that directly.” [107] This was a significant concession. Dr Kumar admitted that none of the publications he had cited actually supported the specific proposition that crude coconut oil imported by Malaysia from Indonesia, Papua New Guinea, and India was of poor quality. This admission fundamentally undermined the evidentiary foundation of his expert opinion regarding the alleged poor quality of the raw materials used by the Defendant. [108] Most fundamentally, Dr Kumar’s evidence demonstrated a fundamental misunderstanding of the chemistry of oil degradation. His assertion that “the moment the triglyceride breaks down, it gets oxidized” conflates two entirely distinct chemical processes: hydrolysis and oxidation. This conflation is scientifically incorrect, as I shall explain when discussing the Defendant’s expert evidence. Professor Dr Tan Chin Ping (DW4) - The Defendant’s Expert [109] Professor Dr Tan Chin Ping (“Prof Tan”) testified on 1.8.2025 that he is a Professor at the Department of Food Technology, Faculty of Food Science and Technology, Universiti Putra Malaysia. Prof Tan has extensive academic qualifications and research experience in the field of lipid chemistry and edible oils. His expertise is particularly focused on palm oil, though he also has knowledge of coconut oil. Prof Tan prepared three affidavits for these S/N jJ79Ku7gqUjm96buEpcPA proceedings: an initial expert report dated 12.2.2025, a supplementary report, and a rebuttal report responding to Dr Kumar’s evidence. Prof Tan’s evidence was clear, scientifically rigorous, and well-supported by references to peer-reviewed academic literature. [110] Prof Tan explained that RBDCO is recognised for its exceptional oxidative stability, primarily due to its high saturation level and low content of polyunsaturated fatty acids. During his examination-in-chief on 1.8.2025, Prof Tan testified that coconut oil contains approximately 92% saturated fatty acids. This inherent stability means that RBDCO is highly resistant to quality degradation under proper storage conditions. Prof Tan’s expert report cited the published research by Young (1983) and Gordon & Rahman (1991), which provides substantial evidence supporting the stability of RBDCO and its resistance to acid value and FFA increases during storage. Young (1983) highlights that coconut oil has a very low degree of unsaturation, with 91.7% of its fatty acid composition being saturated, primarily lauric acid. Gordon & Rahman (1991) further supports this claim, stating that crude coconut oil already possesses natural oxidative stability, which is only slightly affected by processing. The study found that RBDCO retains most of its stability unless poor refining conditions or excessive removal of natural antioxidants occur. S/N jJ79Ku7gqUjm96buEpcPA [111] Crucially, Prof Tan explained the critical distinction between hydrolysis and oxidation which are two separate and independent chemical processes. Hydrolysis is the breakdown of triglycerides in the presence of water molecules, resulting in the formation of free fatty acids. Hydrolysis is measured by FFA value. Temperature accelerates hydrolysis, but moisture is the essential causative factor. In the absence of moisture, hydrolysis will not occur regardless of temperature. Oxidation is caused by the presence of oxygen and affects only unsaturated fatty acids. Oxidation is measured by peroxide value (for primary oxidation) and anisidine value (for secondary oxidation). Oxidation does not cause FFA formation. [112] During his examination-in-chief on 1.8.2025, Prof Tan was specifically asked about Dr Kumar’s theory that triglyceride breakdown automatically leads to oxidation. His evidence on this point is critical: Ok. Arising from this, I have some questions. Please listen carefully to my question. On the last occasion when the Plaintiff’s expert testified, the Plaintiff’s expert was asked “What is the relation to a high oxidative stability to the readings of FFA, free fatty acid”. And the Plaintiff’s expert explained it in this way, “The moment the triglycerides break down, it gets oxidised. FFA can go up and remain stable but if the spoilage keeps going up in other areas, the peroxide value goes up”. That was the explanation given by the Plaintiff’s expert. Well, because for our benefit, I am going to try to break it down all these scientific concepts. Can I first ask you this question? Does breakdown of triglycerides automatically lead to oxidation? Not necessary. S/N jJ79Ku7gqUjm96buEpcPA Can you please briefly explain for us what is the triglycerides breakdown process? The breakdown process is termed hydrolysis where triglycerides or triacylglycerol consists of three fatty acids. So, during the breakdown process which we usually term it as hydrolysis, is to breakdown the ester bond in order to release the free fatty acids from the triacylglycerol. One molecule of triacylglycerol will eventually give you three fatty acids.” [113] Prof Tan continued: Now the Plaintiff’s expert also appears to suggest that the peroxide value goes up after formation of FFA. My question is, does formation of FFA automatically cause peroxide value to go up? No. If the increase in FFA is involving saturated fatty acids, these group of fatty acids will not get oxidised no matter in what form. So once they are not able to be oxidised, there is no chance to get an increase in peroxide value. Does oxidative degradation automatically leads to FFA formation? No. The FFA formation usually involving hydrolysis of triacylglycerol. Oxidation will not have any involvement in the increase in FFA.” [114] Prof Tan also addressed the question of whether high processing temperatures or inadequate refining conditions could cause the problems alleged by Dr Kumar. Prof Tan testified that triglyceride ester bonds are generally stable under standard refining conditions, and that the increase in FFA is typically caused by hydrolysis (moisture), not by “bond weakening” during processing. S/N jJ79Ku7gqUjm96buEpcPA [115] Prof Tan explained that when coconut oil is stored under optimal conditions, specifically in airtight, moisture-free environments with stable temperatures preferably maintained below 25°C, the likelihood of significant quality degradation is minimal. Conversely, poor storage conditions such as exposure to humid environments, fluctuating temperatures, or direct sunlight can significantly increase the risk of spoilage through hydrolysis and oxidation. Under proper storage conditions (sealed, oxygen-free, low-moisture environment, room temperature), coconut oil can retain its quality for years without significant acid value or FFA increases. RBDCO typically exhibits induction periods exceeding 30 hours in the Rancimat test, indicating prolonged resistance to oxidation and hydrolytic degradation. [116] Significantly, Prof Tan explained that it is not uncommon for FFA to increase without impacting other parameters such as peroxide value and anisidine value. This is because hydrolysis can occur independently of oxidation. Prof Tan testified on 1.8.2025: Now during the cross-examination again of the same witness from the Defendant, the Defendant’s witness gave evidence that it was weird that only the FFA reading of the oil was affected. And during re-examination, the Defendant’s witness then clarified that if FFA level increases, there may be a high likelihood that oxidation may occur. When the oxidation occurs, other quality parameters such as peroxide value and colour of the oil would also typically be affected. All very scientific for us. So, my question is this, Prof. Is it uncommon for the FFA to increase without impacting other parameters? S/N jJ79Ku7gqUjm96buEpcPA It is not uncommon for such a case involving edible oil. So, there are issues where FFA increase because it is due to hydrolysis process. While when you are referring to increase in peroxide value, it involving another reaction which is oxidation. So, hydrolysis can happen because of moisture and heat but not necessary always followed by oxidation. So, you can have increase in FFA without increasing the peroxide value.” [117] In the present case, only FFA was measured during the joint testing in September 2022; peroxide value and anisidine value were not tested. Prof Tan confirmed: “Based on my reference to all documents, there is no such measurement of peroxide and anisidine values.” [118] During cross-examination on 1.8.2025, Prof Tan candidly acknowledged the limitations of his expertise. He confirmed that he does not have direct experience with the shipping and storage conditions during transport of coconut oil by sea, and that he has not personally conducted research on the effect of crude coconut oil quality on the final product’s stability. When asked about the potential impact on his conclusions if the CoAs were removed from consideration, he testified: “If the COA has been removed, then I will include possibility of two more factors. One which is possibility of quality of raw material in questions. Second, the processing parameters, the yes.” These limitations, however, do not undermine the core scientific principles he explained regarding the chemistry of FFA formation. S/N jJ79Ku7gqUjm96buEpcPA Assessment of the Expert Evidence [119] Before assessing the expert evidence in this case, it is useful to recall the general principles governing the admissibility and weight to be attached to expert evidence. In Batu Kemas Industri Sdn Bhd v Kerajaan Malaysia Tenaga Nasional Bhd [2015] 7 CLJ 849 (Court of Appeal), the court cited with approval the enunciation in National Justice Compania Naviera SA v Prudential Assurance Co Ltd (“The Ikarian Reefer”) [1993] 2 Lloyd’s Rep 68 at pp 81- 82: “Expert evidence presented to the court should be, and should be seen to be, the independent product of the expert uninfluenced as to form or to content by the exigencies of litigation.” [120] The Court of Appeal further stated at paragraph [36(2)]: “An expert witness should provide independent assistance to the court by way of objective unbiased opinion in relation to matters within his expertise (see Polivitte Ltd v Commercial Union Assurance Co Plc [1987] 1 Lloyd’s Rep 379 at 386 per Garland J and Re J [1991] FCR 193 per Cazalet J). An expert witness in the High Court should never assume the role of an advocate.” [121] In Junaidi bin Abdullah v Public Prosecutor [1993] 4 CLJ 201; [1993] 3 MLJ 217 (Supreme Court), the Supreme Court held that the court must first determine whether the nature of the evidence requires special skill, and second, whether the witness has acquired the necessary skill either by academic qualification or experience. The Supreme Court emphasised: S/N jJ79Ku7gqUjm96buEpcPA “The speciality of the skill required of an expert witness under s 45 would depend on the scientific nature and complexity of the evidence sought to be proved. The more scientific and complex the subject matter, the more extensive and deeper will be the court required to enquire into the ascertainment of his qualification or experience in the particular field of art, trade or profession. But in the final analysis in a non-jury trial, it is for the trial judge himself as both judge of fact and law to determine the weight to be attached to such evidence notwithstanding the outstanding qualification or experience (or lack of it) of the expert.” [122] Having heard and considered the evidence of both experts, I prefer the evidence of Prof Tan. His explanation of the chemistry of oil degradation was clear, logical, and well-supported by references to authoritative scientific literature. His distinction between hydrolysis and oxidation was scientifically sound and exposed the fundamental error in Dr Kumar’s evidence. [123] Dr Kumar’s assertion that triglyceride breakdown automatically leads to oxidation is simply wrong. Hydrolysis and oxidation are distinct chemical processes with different causes, different mechanisms, and different measurement methods. Dr Kumar’s conflation of these processes demonstrates a fundamental gap in his understanding of lipid chemistry. When this error is compounded by his admission that none of his cited publications actually support his theory about poor quality raw materials, the reliability of his expert opinion is severely undermined. S/N jJ79Ku7gqUjm96buEpcPA [124] Furthermore, Dr Kumar’s theory requires the court to accept that the Defendant’s products, despite testing within specification at the point of packing, contained “inherent issues” that would cause them to degrade dramatically over the subsequent months. However, Dr Kumar provided no concrete evidence of what these “inherent issues” might be, how they could be present despite the goods meeting specification, or why such issues would manifest uniformly across four separate batches produced over a six-month period. [125] The Plaintiff’s reliance on Dr Kumar’s theory about poor quality raw materials from smallholder farms in Indonesia, Papua New Guinea, and India is speculative at best. There is no evidence that the crude coconut oil used by the Defendant was sourced from such farms, no evidence regarding the quality of the crude oil actually used, and no evidence of any quality control failures during the refining process. Dr Kumar’s concerns about expeller press temperatures of 90°C, mixing of oils with different FFA levels, sensor failures, inadequate nitrogen blanketing, and splashing during transfers are all theoretical possibilities, but none are supported by any evidence specific to the Defendant’s operations. [126] In contrast, Prof Tan’s evidence regarding the stability of RBDCO and the causes of FFA increases is consistent with established scientific principles and well-documented in the academic literature. His explanation that moisture is the S/N jJ79Ku7gqUjm96buEpcPA primary cause of hydrolysis, that temperature merely accelerates the process, and that coconut oil has exceptional oxidative stability under proper storage conditions due to its high saturated fatty acid content (approximately 92%), provides a scientifically sound framework for understanding what occurred in this case. Prof Tan’s reliance on published research by Young (1983) and Gordon & Rahman (1991) demonstrates that his opinions are grounded in peer-reviewed scientific literature rather than speculation. [127] Prof Tan’s evidence that it is not uncommon for FFA to increase without impacting other parameters such as peroxide value and anisidine value is particularly significant. This explains why the quality degradation observed in this case manifested solely as increased FFA values. The explanation is straightforward: hydrolysis (which causes FFA formation) and oxidation (which causes increases in peroxide value and anisidine value) are independent processes. If the primary cause of degradation was exposure to moisture and heat during shipment and storage, one would expect to see increased FFA values without necessarily seeing increases in oxidation parameters, particularly given coconut oil’s high saturation level and consequent resistance to oxidation. [128] I therefore accept Prof Tan’s expert evidence and reject Dr Kumar’s expert evidence insofar as it conflicts with Prof Tan’s evidence. S/N jJ79Ku7gqUjm96buEpcPA The FOB Terms and Risk Transfer [129] The Defendant submits that both Contracts 3DE and 4GH expressly provided for delivery on FOB Pasir Gudang terms, as stipulated in the contracts dated 11.3.2021 and 22.4.2021 respectively. The Defendant argues that under FOB terms, the seller’s obligation is to deliver goods meeting the contractual specification at the point of loading onto the vessel, after which risk of loss or damage passes to the buyer. The Defendant contends that since the goods met the contractual specification at the point of packing and loading, as evidenced by the CoAs dated 20.6.2021,