Paragon Paper & Plywood Sdn. Bhd. v Advance Boilers Sdn. Bhd. (WA-22NCvC-498-07/2021)

The Plaintiff is a private limited company incorporated in Malaysia and having its factory and business address at Lot. P.T. Pro 6, Kawasan Perusahaan Kanthan (Fasa 3), 31200 Chemor, Perak (“Plaintiff’s Factory”). 18/08/2025 11:43:08

The Defendant is a private limited company incorporated in Malaysia and having its registered address at No. 1, Jalan Astaka U8/83, Section 8, Bukit Jelutong, 40150 Shah Alam, Selangor and business address at Lot 6074, Jalan Haji Abdul Manan, Meru, 42200 Kapar, Selangor.

At all material times, the Plaintiff is involved in manufacturing tissue paper, tissue related products and trading of plywood.

The Defendant is involved in the fields of design, manufacture, installation, test, commission and the service of boilers and unfired pressure vessels. The Defendant is also a wholly owned subsidiary of a reputable listed company, namely CB Industrial Product Holding Berhad.

By a Sales Contract dated 09.02.2017, the parties entered into a sales contract by virtue of Sales Contract No.: QAT1208/KL/AN/2017 (“Sales Contract”) whereby the Plaintiff agreed to purchase and the Defendant agreed to manufacture, supply, deliver, install and commission one (1) unit 10-ton Atlas woodfired steam boiler and one (1) unit of Dresser Rand Steam Turbine Generator (hereinafter referred to collectively as “the System”) for the Plaintiff.

The purchase price under the Sales Contract is RM2,820,000.00 (“Purchase Price”) after considering the discount of RM64,000.00.

The System is said to be able to generate an estimated 325eKW of power, which in effect will be able to assist the Plaintiff in savings of power and energy consumption (“the Intended Purpose”).

Based on the Sales Contract, it is stipulated that the specification and conditions of service (“Specification & Condition of Service”) of the System are as follows: Boiler Specification Details Brand ATLAS Model AT 10/22 Capacity 10000 kg/hr Type Fire Tube & Water Tube (COMBI) Working Pressure 22 BarG Tube Material BS 3059 Part 2 GR 360 HFS or equivalent Fuel WoodChips moisture <20 percent (2850 Kcal/kg) Design Pressure 23.5 BarG Grate Fix Grate Fuel Consumption Guarantee ± 3000 kg/hr

Inlet Steam Pressure bar(g)

Inlet Steam °C 0

Exhaust Steam bar(g) 5 Performance Data Turbine Speed (rmp) 5,700 Turbine Power (skW) 346 Est. Generator Power (ekW)

Steam Rate (kg/kw-hr) 67 Total Steam Flow (kg/hr) 9,968 Steam Rate Tolerance (+/-) 3%

9.

In consideration of the Sales Contract, the Plaintiff paid the Purchase Price to the Defendant the sum of RM2,690,280.00, as part payments of the Purchase Price : c) The Plaintiff had on 14.03.2017 paid the sum of RM597,840.00 in accordance with the Defendant’s Invoice No.: 3010; d) The Plaintiff had on 20.03.2018 paid the sum of RM896,790.00 in accordance with the Defendant's Invoice No.: 3088; e) The Plaintiff had on 21.05.2018 paid the sum of RM896,760.00 in accordance with the Defendant’s Invoice No.: 3130; and f) The Plaintiff had on 30.09.2018 paid the sum of RM298, 920.00 in accordance with the

Between November 2017 to September 2019, the Defendant delivered and installed the System at the Plaintiff’s Factory and commenced the commissioning and testing to check and make sure that the System was installed and functioning properly.

However, after the installation, the Plaintiff was not happy with the systems. The Plaintiff then filed this suit to seek redress allegedly due to the breach of contract by the Defendant.

The Defendant then counterclaimed against the Plaintiff for :

the sum of RM282,000;

and interest iii. The Trial 14. The trial was fixed for two (2) days. During the trial, the Plaintiff and the Defendant each called two (2) witnesses: PWS1 Masyudi bin Ariffin PWS2 Dato’ Chua Hock Gee DWS1 Chiunh Cheah How DWS2 Kevin Loh Eng Kit iv. Issued to be Tried 15. Before the trial, the Parties had agreed that the following are the issues to be tried : -

(i). Is there a breach of the Sales Contract?

(ii). If yes, is there a fundamental breach?

(iii). If yes, is the Plaintiff entitled to repudiate the Sales Contract? B. Findings and Decision of the Court 16. At the end of the trial, after deliberated on the submissions by the counsels, and after an extensive study on the evidence tendered, I have decided to allow the Plaintiff’s claim and dismiss the Defendant’s counterclaim. I shall address the issues in turn.

The law is trite that the Plaintiff bears the burden of proof to prove its claim against the Defendant. (Section 101(1) and 103 of the Evidence Act 1950) and Federal Court case of Inas Faiqah Helmi (A Child Suing Through Her Father and Next Friend; Mohd Helmi Abdul Aziz) v. Kerajaan Malaysia & Ors [2016] 2

Therefore, the burden is upon the Plaintiff to prove their claim against the Defendant on the balance of probability. Likewise, the burden is on the Defendant to prove their counterclaim against the Plaintiff on the balance of probability. Whether There is a Breach of Contract?

At the outset, it is pertinent to note that the Defendant was fully aware of the Intended Purpose of the Plaintiff and the Plaintiff’s reliance on the Defendant’s skills for the System.

This can be seen, not only from the Agreed Facts, but also from the Defendant's own pleadings at paragraph 12(c) as follows: “Turbin yang dibeli oleh Plaintif adalah sebagai aksesori kepada Dandang dan niat tujuannya adalah, apabila diguna bersama Dandang, dapat mengurangkan penggunaan daya dan tenaga di kilang Plaintif;”

I refer to the ratio of Federal Court in Yam Kong Seng & Anor v. Yee Weng Kai [2014] 4 MLJ 478 : “[16] … It is trite law that a judicial admission made in a pleading stands on a higher footing than evidentiary admission (Sarkar’s Law of Evidence) with the respondent’s admission therein be made the foundation of the rights of the parties (Satish Mohan Bilal v State of UP AIR 1986 All 126, at p 128; 1985 All CJ 507). Any failure on the part of the respondent to rebut the admission to avoid the legal consequences of his admission would entitle the appellants to enter judgment against him.” [Emphasis added]

I also refer to Sunrise Bhd & Anor v. L & M Agencies Sdn Bhd [1999] 3 MLJ 544 where the Court of Appeal held: “To my mind it is nothing more than common sense. If the defendant knows the purpose for which the plaintiff needs the particular goods, then it is clear that the plaintiff is relying on the seller’s skill and judgment to supply the suitable goods to cater for the particular purpose for which the goods were required …” [Emphasis added]

Therefore, it is established that the Defendant was fully aware of the Intended Purpose and the Plaintiff’s reliance on the Defendant’s skill for the System. Whether the System is Defective?

It is the Plaintiff's case that the System is defective. The Plaintiff submitted, inter alia, that the System ought to have generate EGP for 325eKW. However, there are clinching evidence to show that the System is defective for failing to generate EGP for 325eKW as promised under the Sales Contract.

In the Defendant’s Site Progress Report dated 25.09.2019, it was clearly recorded that: “’Client request to test turbine at maximum load. Turbine was running with inlet pressure 20barG with steam capacity of 9.8t/h. Pressure reading at exhaust is 5.5barG. Maximum power generate by turbine was 220kW. Test was done for 30 minute.”

I further refer to the Defendant’s Service Report No.: 3384 dated

25.09.2019 where it was clearly stated that the Turbine commissioning was done but Turbine can only generate EGP 220eKW.

Also, I refer to Turbokraft’s Field Service Report No. SR.: 100348 dated 25.09.2019 where it stated that the Turbine was tested and it was running for 30 minutes but can only generate EGP 220eKW.

This can also be confirmed by an oral admission by DW2 during the trial as follows: “DC : You turn to page 51. It is the same as this one. In this service report, the maximum that turbine could achieve is 220, you see that? : Yup DC : The maximum load of turbine can generate is 220 kilowatts. You see that? : Correct. … : That one is what they order. The most extreme document that can show is your own document on 25th, 54 and 55 the site progress report that I’ve showed you, the maximum is only 220. DW 2 : That one is commissioning… : So, when you write that time, you were definitely write your end but it might not always reflect what is the fact. The fact is Paragon can only see 220, agree? : Commissioning, yes.”

The Plaintiff implored this Court to consider and adopt the similar approach in Yeo Seng & Anor v. CAS Systems (M) Sdn Bhd [2019] 2 MLRH 669 where Khadijah Idris JC (as she then was) held that: “[37] Having considered the evidence as a whole, I am of the view that the Defendants has proven the Cutting Machine was not of merchantable quality. It was argued by the Plaintiff there was no expert evidence led to show the Cutting Maching was of unmerchantable quality. I am of the view there is sufficient contemporaneous evidence (as discussed above) for the court to infer that the Cutting Machine was not of merchantable quality. As such the absence of expert evidence and failure to call Xiao Chiang the worker of Yeo Seng Design to whom training was given is not fatal for purpose of proving the merchantable quality of the Cutting Machine.” [Emphasis added]

I agree with the Plaintiff above. Although there is no expert report (from SIRIM or otherwise) produced before me, the contemporaneous evidence, both oral and documentary evidence, are so obvious to show that there is a defect on the System which does not meet the specifications and requirements as agreed under the Sales Contract.

Furthermore, DW1 confirmed during the trial that there is no other evidence to show that the turbine installed can generate power at 325eKW as agreed under the Sales Contract. I reproduce the excerpt as follows: “PC : There is no documentary evidence produced within the bundles to show that the turbine installed has achieved 325 kW. DW1 : Yes. : Do you also agree that there is no documentary evidence to show the turbine installed power generated at 300 kW. DW1 :

The Plaintiff also submitted that the Defendant had on numerous occasions during his examination-in-chief admitted that there were repeated attempts to rectify the defects on the System as follows: “This document is the Progress Report by Muhammad Nazli Bin Sukamri dated 23.8.2019 on his attempt to test commission the Turbine…” [Refer DWS2/Q&A25] “These documents are pages 1 and 2 of Muhammad Nazli Bin Sukamri’s Progress Report on 24.8.2019 on his attempts again to test commission the Turbine… The Report shows that 3 attempts were made and there was a pressure problem encountered… Tubokraft identified the solutions to the problem…” [Refer DWS2/Q&A26] “This is the Service Report of Muhammad Nazli Bin Sukamri dated 23.09.2019 on his attempt again to commission the Turbine…” [DWS2/Q&A27] “These documents are the Service Reports of Muhammad Nazli Bin Sukamri dated 24 and 25.09.2019 at his attempts on the 24.09.2019 and decided to do another trial at full load which he did on 25.09.2019…” [DWS2/Q&A28]

In total, there were seventeen (17) attempts to rectify the alleged defects on the System.

The Plaintiff implored this Court to consider that the Defendant would not have made the repeated attempts if the System was not defective.

The Plaintiff refers to Yeo Seng [supra] as follows: [31] It is evidently clear that the problems posed by the Cutting Machine (inability to cut stainless steel of 2mm thickness using oxygen, laser power supply and the software driver machine) has led to the numerous steps taken by the Plaintiff to rectify the fault by the problems persisted. After the Cutting Machine was delivered to DW1 on 16 August 2016, the Plaintiff’s technicians (PW1 and PW2) had gone to the premises of Yeo Seng Design on numerous time to carry out inspections, checking and changing parts of the Cutting Machine. This is evident from the Service Delivery Order issued by the Plaintiff technicians for 15 September 2016, 10 October 2016, 14 October 2016, 17 October 2016, 24 October 2016 and 5 to 9 November 2016 (see Rekod Rayuan page 82 – 90) where various attempts made by the Plaintiff to rectify the various defects…”

Having considered the evidence available before me and having considered the submissions by the parties, it is my finding that the Plaintiff had established on the balance of probability that the System is defective and does not meet the specifications under the Sales Contract.

Therefore, I find that there is a breach of the terms of the Sales Contract on part of the Defendant. Implication of the Breach of Sales Contract as a Result of the Defective System 38. As I have discussed earlier, the Plaintiff has successfully proved that System is defective, and therefore, the Defendant has breached the terms of the Sales Contract.

It was further submitted by the Plaintiff that the defect was never resolved by the Defendant.

During the trial, the Plaintiff’s witness, PW2, has testified that: The Defective System has now hardly been used. The constant and persistent problems with the Defective System have deprived the Plaintiff of the full and effective use for its

As a result of the Defendant’s breach, the Plaintiff had suffered severe loss and general damages including but not limited to: i. Loss and monetary damages; ii. Loss of utility due to the Defective System; iii. Loss and monetary damages suffered as a result of disruption to the Plaintiff’s daily business conduct and operation; iv. Distress and/or inconvenience suffered by the Plaintiff as the result of the Defective System; and v. Additional costs to be incurred by the Plaintiff in order to make sure that the Plaintiff’s production can still carry on and avoid any delay.

It was further submitted by the Plaintiff that the Summary of Prices as listed down in the Sales Contract (wiring/piping) has been wasted as a result of the Defective System. As the Sales Contract was for a lump sum amount, the quantum as to each of the wasted costs is unascertained.

The above evidence was never challenged by the Defendant during the cross-examination.

I refer to Sarkar’s Law of Evidence 18th Edition, Vol. 2 at pp. 2792 to 2794 as follows: “…whenever the opponent has declined to avail himself of the opportunity to put his essential and material case in cross-examination, it must follow that he believed that the testimony given could not be disputed at all it is wrong to think that this is merely technical rule of evidence. It is a rule of essential justice…” “…Therefore, an omission or neglect to challenge the evidence in chief on material or essential pint by cross-examination, would lead to the inference that the evidence is accepted …” [Emphasis added]

In Wong Swee Chin v. Public Prosecutor [1981] 1 MLJ 212, Raja Azlan Shah CJ held that: “… there is a general rule that failure to cross-examine a witness on a crucial part of the case will amount to an acceptance of the witness’s testimony.”

Therefore, the above evidence is deemed to be accepted due to the failure to challenge the same by the Defendant.

In furtherance to the above, the Plaintiff seek from this Court: i. To repudiate and treat the Sales Contract as being discharged; ii. Reject and return the Boiler and Turbine to the Defendant; and iii. Demand for a refund of the Part Payments that were paid to the Defendant.

I refer to Section 40 of the Contract Act 1950 as follows: “When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promise may put an end to the contract, unless he has signified, by words or conduct his acquiescence in its continuance.”

I also refer to Section 76 of the Contracts Act 1950, “A person who rightly rescinds a contract is entitled to compensation for any damage which he has sustained through the non-fulfilment of the contract.”

Besides, Section 12 of the Sale of Goods Act 1957 is also relevant here: “(1) A stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition or a warranty.

A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated…”

Having heard the submissions by the parties and having perused the evidence presented before me, I find that the Plaintiff had proved its case on the balance of probabilities against the Defendant.

I find that there is a breach of the Sales Contract on part of the Defendant i.e., the Defendant had failed to deliver the System as per the terms and specifications under the Sales Contract.

The breach by the Defendant above is a fundamental breach. The Defendant has deprived the Plaintiff of the full and effective use of the System for its intended purpose. Therefore, the System is not of merchantable quality.

Therefore, it is only apt and conscionable for the Plaintiff to be allowed to rescind the Sales Contract. C.The Counterclaim 55. As for the Defendant’s counterclaim, having find that the Defendant is the one at fault in delivering a defective system to the Plaintiff, I see no reason to allow the counterclaim.

For the counterclaim, the Defendant argued that the Plaintiff is still liable for the balance of the purchase price, as the Plaintiff failed to prove a fundamental breach of contract and, through its actions, accepted the boiler and turbine, thus losing the right to reject them. The Defendant also argued that the Plaintiff, fully aware of the turbine's limitations and prioritizing fuel costs over power output, reneged on the agreement by failing to pay the remaining amount, and maintained that there is no evidence to support the claim that the Defendant admitted the system was defective.

In response, the Plaintiff contended that the Defendant's submissions lack merit and are inconsistent, as the Defendant has never disputed the System's failure to generate the promised power output. The Plaintiff also accused the Defendant of employing trial-by-ambush tactics by raising unpleaded issues and misinterpreting case law, asserting that the Plaintiff never relinquished its rights due to the breach of contract. Furthermore, the Plaintiff submitted that the Defendant attempted to introduce new terms to the Sales Contract, misrepresenting the Turbine as a mere accessory, and has withheld crucial evidence. All these rendered their contentions and witnesses unreliable and ultimately deserving of a dismissal of their counterclaim with costs.

My analysis and finding earlier have elaborated in detail all these points. Suffice to conclude here that I find that as far as the Defendant’s counterclaim is concerned, this Court still find in favour of the Plaintiff. D. Conclusion 59. To sum up, I allow the Plaintiff’s claim against the Defendant and subsequently dismissed the Defendant’s counterclaim against the Plaintiff.

The Defendant is to return and refund the Part Payments in the amount of RM2,690,280 (“Judgment Sum”) that was previously paid by the Plaintiff to the Defendant.

Upon clearance of the Judgment Sum, the Defendant is to dismantle and take back the Boiler and Turbine at its own costs and expenses.

I also allow an interest at the rate of 5% per annum on the Judgment Sum from the date of this order until the date of full settlement.

I award the Plaintiff a sum of RM30,000.00 to be paid by the Defendant to the Plaintiff as the cost of this case. Dated --------------------------------------------------------- YA DR. JOHN LEE KIEN HOW @ MOHD JOHAN LEE JUDGE HIGH COURT OF MALAYA KUALA LUMPUR For The Plaintiff : Wilson Lim Mao Shen Messrs Wilson Lim For The Defendant : Chong Phow Yew Messrs Kamaruzaman Arif Amran & Chong Table of Authorities Cases Inas Faiqah Helmi (A Child Suing Through Her Father and Next Friend; Mohd Helmi Abdul Aziz) v. Kerajaan Malaysia & Ors [2016] 2 CLJ 885). Sunrise Bhd & Anor v. L & M Agencies Sdn Bhd [1999] 3 MLJ 544 Wong Swee Chin v. Public Prosecutor [1981] 1 MLJ 212 Yam Kong Seng & Anor v. Yee Weng Kai [2014] 4 MLJ 478 : Yeo Seng & Anor v. CAS Systems (M) Sdn Bhd [2019] 2 MLRH 669 Statutes Contract Act 1950 Sale of Goods Act 1957 Treaties : Sarkar’s Law of Evidence 18th Edition, Vol.