Rockwell Automation (Malaysia) Sdn Bhd v Samtech Solutions Sdn Bhd (WA-22NCVC-290-05/2016)

This action concerns the manufacture of Motor Control Centre Panels (“MCC Panels”). A Motor Control Centre Panel is described as “an apparatus that centrally controls a group of electric motors”. It is essentially a main console for turning on, turning off and controlling electric motors in a factory.

The controversy in this case concerns two purchase orders issued by the plaintiff to the defendant for the manufacture of MCC Panels. The purchase orders were subsequently terminated by the plaintiff. In consequence the plaintiff claims it had to pay for the construction of the MCC Panels by another supplier and had, thereby, suffered loss and damage. 2 [3] The defendant, on the other hand, maintained that the termination was wrongful. In turn, the defendant mounted a counterclaim. The counterclaim is premised on several claims. The first is a claim for a sum that had been agreed upon by the parties. This agreement is said to have been arrived at after the alleged wrongful termination of the two purchase orders.

In addition, the defendant has two other claims based on two separate purchase orders issued by the plaintiff. They are additional purchase orders and are said to be unconnected to the two that were terminated by the plaintiff.

The plaintiff is a Malaysian incorporated company. It carries on business in, inter alia, the trading of machinery and spare parts and the provision of related technical services.

Sometime around April 2014, the plaintiff sought quotations from various suppliers for the supply of MCC Panels.

The defendant was one of the suppliers approached by the plaintiff. The defendant is a company incorporated in Malaysia and carries on business trading in electrical and electronic products.

Several visits and inspections were carried out by the plaintiff at workshops that the defendant would use. These were workshops of the defendant‟s sub-contractors Osisu Electric Engineering Works‟ (“Osisu”) 3 at Seri Kembangan, Selangor and Syapower sdn bhd (“Syapower”) at Kampong Subang, Selangor.

It is an agreed fact that during one of these site visits the defendant represented that it was capable of producing MCC Panels and it has experienced draftsmen who could design them.

Sometime in May 2014, the plaintiff was awarded a contract by Metix Malaysia Sdn Bhd (“Metix”). This contract was for the supply of MCC Panels. The MCC Panels to be supplied were intended for Sakura Ferroalloys Sdn Bhd (“Sakura”), a smelter in Bintulu, Sarawak.

Eventually, the defendant provided the plaintiff with a quotation dated 5.6.2014, bearing the reference RWA 140605 – 2R1. It was found agreeable to the plaintiff. Accordingly, the plaintiff issued the defendant with a purchase order bearing the reference number 52153287 and dated 23.6.2014, for a sum of RM1, 997,521.00 (“1st PO”).

The 1st PO contained inter alia the following provision: “1. Where a standard is specified for the production of material for Rockwell Automation (the Plaintiff). The latest revision of the standard must be used unless otherwise specified… …Unless this order or schedule agreement is governed by a separate written agreement between us, the terms and conditions of purchased located at http://www.rockwellautomation.com/ rockwellautomation/legal-notices/terms-of-puchase.page?#tab3 will govern this order or schedule agreement.” 4 [13] Significantly, it is an agreed fact that the 1st PO itself does not contain any specifications for the works and that the document at the link provided in the 1st PO does not set out any specifications or required standard(s).

Following the 1st PO, the defendant proceeded to design and produce the drawings for the MCC Panels. The drawings were submitted to the plaintiff for approval and they were approved by Metix and/or the plaintiff sometime in February 2015.

Fabrication and assembly of the MCC Panels were then carried out by the defendant, after the drawings had been approved.

In view of a variation sought by Metix, the plaintiff again turned to the defendant. A further quotation was sought. This resulted in the defendant‟s quotation bearing the reference RWA 150122-1R dated 22.01.2015.

Following this quotation from the defendant, the plaintiff issued the defendant with a second purchase order. This purchase order, dated 18.03.2015, was for a sum of RM1,435,000.55 and it bore the reference number 52201133 (“2nd PO”).

It is also an agreed fact that both the 1st PO and the 2nd PO contained identical terms and, in addition to the provision referred to, they included the following: 5 “16.1 the clause on acceptance of the Pos which provides that the Defendant may accept the Pos by, amongst others, providing the products ordered;

16.2 Clause 4 which provides that the Defendant warrants to the Plaintiff that all products, inter alia, will:

16.2.1. conform to the specifications, drawing samples or other written descriptions that are made a part of the Pos;

16.2.2. be free of defects, made with new materials (unless parties otherwise agree in writing), of merchantable quality and workmanship, and suitable for the Plaintiff‟s intended purpose;

16.2.3. be free from defects in design, material, and workmanship; and

16.2.4. fully comply with all laws, regulations, and industry standards where the products are manufactured, stored, shipped, used, and sold;

16.3. Clause 9 which provides, inter alia, that the Plaintiff‟s payment for the products does not necessarily mean that the Plaintiff has accepted the products. At any time and at the Defendant‟s expense, the Plaintiff may reject and/or return the products to the Defendant that violate the Defendant‟s warranties. If the Plaintiff returns products that violate the Defendant‟s warranties, the Defendant will replace them as soon as possible with products that meet the Defendant‟s warranties or refund the Plaintiff‟s purchase price (plus inbound transportation charges, if bought FCA shipping point), whichever the Plaintiff chooses, and the Defendant will reimburse the Plaintiff for the Plaintiff‟s damages; 6 16.4 Clause 11 which provides that the Plaintiff may cancel the Pos at any time if the Defendant fails to perform any of the Defendant‟s obligations under the Pos or cannot assure the Plaintiff that the Defendant will be able to continue to perform the Defendant‟s obligations. The Plaintiff will not be responsible for any costs the Defendant incurs, and the Plaintiff will have all rights and remedies available to the Plaintiff under law or in equity; and

16.5 Clause 15 which provides that the Defendant will indemnify, defend and hold the Plaintiff (and the Plaintiff‟s affiliates, shareholders, directors, officers, employees, agents, subcontractors, suppliers and customers) harmless from any and all liabilities, damages, injuries, losses, claims, suits, judgments and expenses (including but not limited to reasonable legal fees, court costs and out-of-pocket expenses) arising from products provided by the Defendant under the Pos, including but not limited to, inter alia, the following:

16.5.1 a breach of the Pos by the Defendant or the Defendant‟s employees, agents or subcontractors; or

16.5.2 omissions related to the Pos by the Defendant or the Defendant‟s employees, agents or subcontractors. ” [19] Under the 1st PO, payments were to be made upon certain milestones. The following table sets out the various milestones and the payments that had to be made by the plaintiff. 7 [20]

Down Payment 399,504.20

(ii) Upon drawing approval 299,628.15

(iii) Upon completion of 1st batch FAT 699,132.35

(iv) Upon completion of 2nd batch FAT 399,504.20

Upon submission as built drawing 199,752.10 Total 1,997,521.00 ” 8 [24] Following the FAT, the defendant was asked to re-design the layout arrangement of the MCC Panels. There were also rectification works that were to be carried out by the defendant. [25] According to the plaintiff, around 19.3.2015, it received a copy of Sakura‟s report from Metix. Sakura had, in its report (“Sakura Report”), rejected the MCC Panels tested i.e. 31MCCO3EM and 32MCC03EM. It is pleaded in paragraph 20 of the Amended Statement of Claim that the reasons for rejecting the MCC Panels set out in the Sakura Report were among the reasons why the purchase orders were subsequently cancelled or terminated by the plaintiff. [26] The reasons for Sakura‟s rejection of the MCC Panels, based on the Sakura Report, are set out under paragraph 18 of the Amended Statement of Claim and they are as follows:

the components are randomly stacked in the workshop;

the FAT area was not barricaded;

there were no lists of tests equipment and calibration certificates which were required by Metix;

the IP54 certificate i.e. which certifies that the MCC Panels were splash-proof and dust-proof, was not available;

there was no proof of any sign off of the structure of the MCC Panels or of the complete routine tests as per the agreed IEC standards;

the MCC Panels and its components were not labelled and „danger signs‟ were not available; 9

there were scratches and dents spotted at various portions of the MCC Panels;

the MCC Panels were not built as IP54 as required by the IEC standards;

when requested, no torque certificate and/or test for the busbar was available;

the assembly and/or layout of the components of the MCC Panels did not match the design layout and did not allow ease of maintenance access;

the earthing works of the MCC Panels were incomplete;

there was exposure of the electrical live components of the MCC panels;

the components of the MCC Panels were damaged during the installation;

adequate tools were not available to conduct certain tests and

functional tests on the MCC Panels were absent and ground fault trips were not incorporated. [27] Following this report, the plaintiff cancelled and terminated the 1st PO and the 2nd PO with effect from 9.4.2015. The termination was effected by an email sent by one Allen Say Teck Soh (“Allen Soh”) of the plaintiff to one Patrick Kam of the defendant dated 9.4.2015. Allen Soh was the plaintiff‟s former project manager who was actively involved in this project, liaising closely with Patrick Kam. Patrick Kam, who is actually Kam Weng Seng and who testified as DW2, was the former sales manager of the defendant. The reason given by Allen Soh for the termination of the purchase orders in his email to the defendant was: 10 “This is due the reason SameTech and it associate partners of panels builders (Osisu and Mega Auto) failed to design and build the MCC panel with compliance to the international IEC standard. The panel design and assembly method does not go accordingly to the requirement from IEC60439 and the major issue is there were no Type Test MCC panel for certified along with the design as your ASTA certification is purely based on the MSB. Hence, we decided you need to pull out from now as it serve no purpose to continue with the rectification and remaining panel work. At the end, Sakura will not accept the panel that we built and this will put us all in risk.” [28] Therefore, the reasons pleaded in the Amended Statement of Claim for the termination were much greater in number than the reason given in this email. The plaintiff’s claims [29] By reason of the defendant‟s alleged breaches of its obligations under the purchase orders, the plaintiff alleged that it had to engage another company in Singapore, M & I Electric Industries Inc (“M & I”), to repair the MCC Panels built and assembled by the defendant and to undertake the works to completion. [30] All this, it is alleged, resulted in the Plaintiff suffering loss and damage and the particulars whereof delivered in the Amended Statement of Claim, are as follows: 11 “ Particulars of Loss and Damage No. Particulars Sum

23.1 Cost of new contract to engage M&I

23.2 Cost of variation claim from M&I

23.3 Costs for engaging additional manpower for Project management, engineering and administration

23.4 Costs for engaging 2 specialist engineers to oversee the Works undertaken by M&I

23.5 Costs for engaging panel drafters from C+G Instruments Pte Ltd to complete the re-design of the MCC Panels

23.6 Costs for engaging 5 technicians from Kimtech Marine to expedite the Works

23.7 Costs for engaging 1 technician from Integrated System Solutions to expedite the Works

23.8 Cost for hiring additional storage, container facilities and materials for the MCC Panels.

23.9 Cost of shipping materials to transport the MCC Panels from Malaysia to Singapore

23.10 Cost of additional living expenses for manpower to reside in Singapore

23.11 Cost of packing for shipment of MCC Panels from Singapore to Bintulu

23.12 Payment made to the Defendants for the 1st PO RM1,997,521.00 ” 12 The defendant’s defence and counterclaim [31] The defendant maintains that the termination of the purchase orders, either upon the ground given by Allen Soh, or upon the grounds cited in the Sakura Report, was wrongful. [32] It is contended on behalf of the defendant that it was never told of, or provided with, Metix‟s required specifications for the MCC Panel‟s to be supplied under the two purchase orders. The defendant maintains that these specifications, that the Plaintiff contended were not complied with, were never part of either the 1st PO or the 2nd PO. In particular, there was no specific IEC standard required of the defendant in respect of the MCC Panels to be produced. [33] The defendant further contends that the other breaches, even if true, were not of such a nature that warrants a termination. They were minor and the defendant was in the process of rectifying them as instructed by the plaintiff. The defendant maintains that, in fact, a list of items to be rectified was provided to the defendant for rectification. [34] As regards the claims in the counterclaim, the defendant contends that the plaintiff has practically admitted the claims in respect of the two invoices that are unrelated to the 1st PO and the 2nd PO. As for the RM800,000.00, plus Goods and Services Tax claimed, the defendant contends that the RM800,000.00 claimed is admitted. This is because, in paragraph 26.1 of the Amended Statement of Claim, the plaintiff has taken that sum into account by reducing its claim for damages by that amount, thus, leaving only the claim for Goods and Services Tax disputed. 13 Were the specifications made part of either the 1st PO or 2nd PO? [35] The specifications in question are those required by Metix of the Plaintiff which, in turn, are in fact the specifications required by Sakura of Metix. The defendant claims never to have received any copy of it, or seen it, at the material time. [36] As stated above, it is an admitted fact that the 1st PO does not contain any especial specifications in respect of the MCC Panels to be supplied. The issue then is whether the specifications in question were made known to and required of the defendant. [37] The defendant, through DW2, denied being given the specifications required by Metix of the Plaintiff. [38] PW1, Dubey Abhay Madhusudan (the plaintiff‟s Country Manager), admits that he did not give DW2 a copy of the specifications in question. Furthermore, PW1 admits that he has no record of any document indicating that the specifications in question were given to the defendant. [39] There was in fact no witness called by the plaintiff who could testify that the specifications in question were given to the defendant or made part of the purchase orders. [40] The plaintiff says, however, that it may be inferred that the defendant was given the specifications as otherwise it would not have been able to provide the quotations it did. This proposed inference is however rebutted by DW2‟s direct testimony that the quotations were 14 prepared based on the defendant‟s F2B type panel with the load list and diagrams provided by Allen Soh. DW2 testified that the defendant has had the experience of designing and fabricating MCC Panels, particularly, a F2B type panel for a palm oil mill in Sabah. [41] There is also, in evidence, the quotations provided by DW2 to Allen Soh. Several quotations were given by the defendant and they contain varying details. This suggests that in producing these quotations, someone was providing the defendant with the necessary details – consistent with DW2‟s testimony. [42] However, after the 1st PO but prior to the issue of the 2nd PO, DW2 was passed an enquiry whether in Malaysia MCC Panels had to comply with IEC 60439 or IEC 61439. This was in an email dated 28.11.2014 addressed to inter alios Allen Soh. Allen Soh then forwards this email to DW2, asking him to look into the matter. [43] DW2 maintains that he made it clear to Allen Soh that the defendant did not have any such certifications. However, it is alleged that Allen Soh insisted that the defendant continue with the works. DW2 then maintains that he looked for subcontractors with such certification and the closest he could find was Mega Auto Energy Industries Sdn Bhd (“Mega Auto”). DW2 testified that he provided Allen Soh with Mega Auto‟s brochures. This can be seen in DW2‟s email to Allen Soh of 3.12.1014. Mega Auto‟s brochure is found in Bundle CBD2 pp 753 to

Mega Auto‟s brochure shows clearly that it had the IEC 61439-2 certification. However, Mega Auto‟s certification was not in respect of MCC Panels – they were for a different component i.e. Main Switch Board (“MSB”) as opposed to MCC Panels. Allen Soh would have 15 known of this fact from the brochure sent to him. If he had wanted to stop the project at this stage due to this fact, he could have, but did not. Instead, the fact that Mega Auto‟s certification was only for MSB was given by Allen Soh in his email of 9.4.2015 as a reason for terminating the purchase orders. [44] Prior to the issue of the 2nd PO, by an email dated 8.12.2014, the defendant was informed that the MCC Panels the defendant was to produce had to comply with IEC 61439. In his email to DW2, Allen Soh sets out 3 issues in respect of which the defendant‟s response was requested. The relevant portion of the email states this: “Hi Patrick, You need to provide us the following info which looks crucial for Metix to make final decision by tomorrow evening. a) … … c) Your panel manufacturer has to comply with IEC-61439 with no additional cost to be charge.” Please continue to work on the remaining GA by removing the side drop bar compartment and resubmit by Friday. …” (Emphasis added) [45] Thus, while there is no evidence that Metix‟s entire specifications for the MCC Panels was made or became part of the terms in the purchase orders, there is nevertheless evidence that the IEC standard – particularly IEC-61439, was required. 16 [46] Equally important is the agreed fact between the parties that the defendant‟s drawings were approved by Metix, and thus the plaintiff, sometime in February 2015. [47] The 2nd PO was issued by the plaintiff on 18.3.2015. Again, no particular specifications were referred to, attached with, or incorporated into the terms and conditions of the 2nd PO. [48] However, according to DW2 and as earlier indicated, Allen Soh was well aware that the certification required in respect of the MCC Panels was not available. Notwithstanding this, DW2 testified that Allen Soh gave instructions for the defendant to proceed with the works with Mega Auto. This can be seen again in Allen Soh‟s email to DW2, which was as late as 30.3.2015, found in Bundle CBD4 p 1251. [49] In tandem with this is the fact that payments were being made by the plaintiff to the defendant in respect of the 1st PO right up to February 2015. According to DW2, the last payment made to the defendant under the 1st PO was on 17.4.2015. It is an agreed fact that the plaintiff paid the defendant RM1,997,521.00 in respect of the 1st PO. This was the value of the 1st PO. This means the 1st PO was fully paid by the plaintiff, without any suggestion of any inability to perform on the part of the defendant. [50] Counsel for the plaintiff argues that clause 4 of the 1st PO makes it clear that the specifications were part of it. Clause 4 states this: 17 “4. Warranties The law provides us with certain warranties. In addition to those, you warrant to us and our customers that all Products will (a) conform to the specifications, drawings samples, or other written descriptions that are made part of this Order;…” [51] However, from the plain words of this clause, it merely creates or imposes a warranty that what is agreed to in the purchase order will conform to specifications “that are made part of this Order”. This clause does not assist in determining what, if any, specifications were in fact made part of the 1st PO. [52] As was, with respect, quite sensibly pointed out in Shia Kian Eng (trading as Forest Contractors) v Nakano Singapore (Pte) Ltd [2001] SGHC 68 by Judith Prakash J (as she then was):- “It is difficult to incorporate as part of a contract documents which are not furnished (and not simply shown) by one party to the other either prior to or at the time of signing of the contract unless there is clear indication by that other party that he would accept documents subsequently given as part of the contract. This did not happen in this case.” [53] It did not happen in this case too. This is to be contrasted with the case in Jurong Engineering Ltd v Paccan Building Technology Pte Ltd [1999] 3 SLR 667, where the words incorporating a clause in the general conditions of a main contract to a subcontract, was found to be clear. 18 [54] Therefore, the only conclusion that this Court may come to on this issue is that the Metix specifications were never incorporated as part of the purchase orders. [55] In this regard, it is significant to point out that the defendant was paid for its services under the 1st PO. This also suggests that there was in fact no contestation by the plaintiff of the defendant‟s work in relation to the 1st PO. [56] It is also noted that the termination issued by the defendant on 9.4.2015 was a termination of “…the current MCC Contract with SameTech…”. As at that date, i.e. 9.4.2015, the work under the 1st PO had by then been varied and encompassed in the 2nd PO. Termination [57] DW2 testified in his answer to question 36 of his witness statement DW2-WS, that sometime on or around 1.4.2015, the defendant learnt from the plaintiff that a 3rd party inspector had informed that the MCC Panels to be constructed by Mega Auto did not comply with IEC 60439-2. DW2 maintains that he was surprised as he was not told that the MCC Panels had to comply with IEC 60439. As can be seen in Allen Soh‟s email of 8.12.014 referred to above, reference was made to IEC 61439 and not IEC 60439. 19 [58] On 4.4.2015, DW2 received an email from PW2. PW2 is one Srinivasan Hariharan, the Application Centre Manager of System and Solutions of Rockwell Automation South East Asia, a company related to but different from the plaintiff. This email was copied to Allen Soh. In this email it is stated, inter alia, that: “Moving staging to Mega does nothing – Mega Auto would have

Make us priority.

Redesign to IEC 610439 [sic] and IP54/65 certified designs … even if they are larger.

Re-build Metix/RA confidence… Otherwise they are a waste of time. Bottom line we need to find shop that can meet the spec ASAP. See what shops we can identify ASAP.” (Emphasis added) [59] This was followed by Allen Soh‟s said email of 9.4.2015 stating that, “The panel design and assembly method does not go accordingly to the requirement from IEC 60439 and the major issue is there were no Type Tested MCC panel for certified along with the design as your ASTA certification is purely based on the MSB”. [60] It is an agreed fact between the parties that the purchase orders were then terminated with effect from 9.4.2015. 20 [61] Even if IEC–61439 became part of the 1st PO, as amended by the 2nd PO, there is nevertheless evidence that even that standard was changed by the Plaintiff a few days before the termination. More importantly, there is no evidence that the defendant agreed to this change being a term of the contract between the parties. [62] After the termination, and in reply to Allen Soh‟s email of 9.4.2015, DW2 sent an email protesting as follows:- “Hi Allen, Prior to receiving your official PO, your parties have been visited our panel builder few times. Your sides are well informed & acknowledged to our certification status. But your side still insist us to carry out this job. At a later time, with your knowledge & consent, we appoint Mega Auto (a panel builder when has IEC 61429-2 Standard) to carry out the job after being communicated by yourself that IEC Standard is required (All certifications & company profiles are with you a copy).” There was no reply to this email. [63] Having regard to the contemporaneous documentary evidence, it is clearly the case that the purported termination, in so far as it is predicated on the defendant‟s MCC Panels failure to meet IEC 60439, cannot be countenanced. Even if the Court accepts that IEC 61439 became a term that the defendant had to comply with, there was clearly a sudden switch to IEC 60439 on the plaintiff‟s part. Even though one may be a later version of the other, they are nonetheless different standards. 21 Other grounds for termination [64] Although the email of 9.4.2015 terminating the purchase orders cited non-compliance with IEC 60439, pleaded in the Amended Statement of Claim are several other reasons. They have been set out above. [65] The plaintiff maintains that even if a particular ground is given to terminate a contract, the innocent party may rely on any other ground, if they exist. This is a principle that is well known to the law. In the Court of Appeal‟s decision in Joo Seng Trading Co v Commercial Importers and Distributors Sdn Bhd [2007] 4 MLJ 128, Gopal Sri Ram JCA (as he then was) stated: “[5] The next point that was taken by the appellant was this. The notice of termination, the appellant says, does not given any reason for terminating the contract. But it is settled law that where a contract breaker gives no reason or gives a bad reason for terminating a contract, he or she is entitled at the trial to justify the termination on good grounds. So, in Boston Deep Sea Fishing & Ice Co v Ansell

39 Ch D 339, a master dismissed a servant on alleged acts of misconduct which they were not able to substantiate at the material time. The servant had in fact received a secret commission, a fact which only came to light after the dismissal. The court held that the master could rely on the after-acquired evidence of misconduct and the dismissal was upheld on the ground. So too in Taylor v Oakes, Roncoroni & Co [1922] 38 TLR 349, a buyer of goods rejected them for a bad reason. At the trial, the seller‟s claim was dismissed because the buyer was able to justify the breach for a good reason. The only exception to this principle lies in the doctrine of estoppel. If a contract breaker has conducted himself or herself towards the innocent party so as to lead the latter to believe that no other ground for termination is being or will be advanced, then the contract breaker will not be permitted by the court to introduce a fresh ground of justification at the trial. See Panchaud Freres SA v 22 Etablissesments General Grain Co [1970] 1 Lloyd‟s Rep 53, particularly, the judgments of Lord Denning MR and Winn LJ.” [66] The defendant countered by contending that the plaintiff is somehow estopped from relying on other grounds for the termination. The defendant contends that the actual reason given for the termination is the failure to comply with the required IEC Standard. As such, the plaintiff is estopped from alleging that the plaintiff had terminated on the basis that the defendant was “incapable of rectifying the Works to satisfy the requirement of the Project”. [67] I do not however see any merit in the estoppel argument. If the defendant‟s proposition is maintainable, it would render the principle explained in Joo Seng Trading Co redundant. More importantly, on the facts, there is no evidence that the plaintiff had conducted itself in such a manner as to lead the defendant into believing that no other grounds for termination will be relied upon. The exception in Joo Seng Trading Co therefore does not arise. [68] DW2 maintained that what was given to the defendant following the FAT was what is referred to as Sakura‟s “punch-list” – i.e. a list of items that were not completed or improperly completed. There is in evidence such a punch-list. [69] It is an agreed fact that the FAT took place between 11.3.2015 and 13.3.2015. There is firstly, in evidence, the minutes of a meeting that took place on 13.3.2015. PW3, PW2, Allen Soh and DW2 were all present at this meeting. The minutes of this meeting discloses 23 that there were 4 main concerns that needed attention. The minutes of the meeting states this: “Minutes of Meeting There were 4 main concern that address to Metix and required their immediate attention to get confirmation from the end user to allow our punchlist work to continue in order to achieve the target timeline for completion of all work by 18th March 2015.” [70] The last paragraph in the minutes states as follows: “The punchlist clearance has been started since 11th Mar as we plan to complete all work by 18th Mar subject there is no further delay for confirmation on above items. If (a) and (c) to be taken place, hence impose of LD will need to be considered. Appreciate Metix to provide us confirmation asap to avoid further delays.” [71] It is recorded in the minutes that items a) to c) were still pending confirmation. In relation to item b) the following is stated in the minutes: “b) Bucket component re-arrangement We did a mockup and Metix send for Sakura review and waiting for confirmation. This is the major work holding for most panel rectification work. Need to have the end user confirmation by end of today. Conclusion: Still pending on confirmation. This would delay on the rectification work that plan to complete by 18 Mar.” 24 [72] Therefore, certain aspects of the defendant‟s rectification works could not have started immediately because Sakura‟s confirmation had yet to be obtained. What is significant is that there was no allegation in the minutes that any of these complaints were due to any failure to comply with any particular set of specifications. There is, also, no hint that the defendant was not capable of carrying out the required rectification. [73] There is then the punch-list itself. It is common ground that this punch-list is found in a document called the Deviation Log Sheet. In this, is listed a series of items that needed rectification. [74] As was pointed out by the defendant, the items in this punch-list were not things that could not be rectified. More importantly, contrary to what has been submitted, it does not appear at all that the defendant‟s work was rejected outright during the FAT. There were things that the defendant was required to rectify and there were design issues that the defendant had to attend to, that had to await the confirmation of Sakura, through Metix. This also indicates that even Metix had encountered a design aspect that had not been finalized and which required Sakura‟s confirmation. [75] There is then the subsequent Sakura Report which, in the Amended Statement of Claim, is said to have rejected the MCC Panels based on a list of the 15 reasons set out above. The defendant claims that it was never provided this list of items and there is no evidence led to demonstrate that it was. 25 [76] The defendant maintains that if the list provided by the Sakura Report is examined, it will be noticed that the majority of the complaints were remediable save for certain specifications that were not made part of either the 1st PO or the 2nd PO. In fact, it is not in dispute that the defendant was in the midst of rectifying the defects in the punch list when it was notified of the termination. [77] Apart from the complaints found in the Sakura Report that relates to specifications the defendant maintains were never part of the purchase orders, there were indeed complaints that seemed minor. [78] Those alleged breaches in the Sakura Report referred to above in (1), (2) and (14) under paragraph [26] above, do not actually relate to the MCC Panels as such. Other than the IEC standard allegedly applicable, the defendant contends that the rest of the items listed were relatively minor and could be remedied. It was pointed out by counsel for the plaintiff that some of these items are potentially hazardous and can have serious consequences e.g. exposed wires. However, it does not follow that the remedy for everything hazardous is necessarily difficult or complex. Dangerous though exposed wires may be, nevertheless, it is often easily remediable. Suffice it to say that the punch-list was produced with the objective of the items being remedied – suggesting that they were in fact remediable by the defendant. [79] As for the allegation that the assembly and/or layout of the components did not match the design layout, it is an agreed fact that the drawings for this had been approved by the plaintiff. However, the drawings were altered by the plaintiff. Sakura, following the FAT, found the drawing not to be in conformity with what was required. 26 Consequently, the defendant was required to redesign the lay out of the bucket. This can be seen in PW2‟s email to DW2 of 1.4.2015 where PW2 reproduced Metix‟s email to PW3 and another, informing them that: “Gents Please find co-ordinated drawings attached between Metix and Sakura.

E3s to be moved back to far left position to enable short exit of power cables directly to motor terminals. CV breaker & terminals to be moved to the right.” [80] Thus, right up to 1.4.2015, there were changes and the defendant was expected to effect them. [81] In DW2-WS, DW2 sets out the list of defects said to be from Sakura‟s Report and explains that all the items listed could be remedied. [82] PW3 under cross examination agreed that the certifications and the IP ratings were the main reasons for the termination. However, he himself admitted that the other reasons given were minor. PW3‟s own words, under cross examination, were: “PW3 Agree that they were the certification and the IP ratings were the main reasons, were the major reasons those are the fatal flaws, these other reasons were minor reasons My Lord.” [83] It seems to me probable that the defendant was not informed of the list of defects set out in Amended Statement of Claim, which is said to be the basis of the defendant‟s breach. 27 [84] If the defendant had been given the list based on the Sakura Report, it would not have been likely for the plaintiff to have terminated citing the ground that the MCC Panels do not meet the standard set by IEC 60439, without mentioning the items in the list. Indeed, as pointed out, compliance with IEC 60439 was itself a very sudden requirement. [85] Unfortunately Allen Soh was not called to testify. His testimony, whether it corroborates or contradicts DW2‟s testimony, would have been helpful. [86] While the plaintiff is in law entitled to rely on other available grounds for its termination, grounds other than those given at the time of termination, it remains to be considered whether the other grounds warranted a termination of what, in law, was clearly a contract between the parties. [87] In light of the evidence led and the contemporaneous documents, I am of the view that the plaintiff‟s termination premised on the defendant‟s failure to comply with, and achieve, IEC 60439 certification is not warranted and wrongful. There is no evidence that it was ever a term of either the 1st PO, or the 2nd PO, that the defendant was to comply with IEC 60439. [88] I am of the view that in fact, no breach as such, had occurred to warrant termination. After the FAT, there was a punch-list with items meant for the defendant to put right. There were other items including changes that the defendant was expected to effect. Hence, the defendant had not delivered any final MCC Panels, as such, under the purchase orders. 28 [89] The testimony of PW1 in his answer to question 53 of his witness statement was this: “53. Why did you say “the defendant was incapable of rectifying the Works?” It became clear to me that the Defendant was simply not able to complete the MCC Panels required. Further, the facilities were not suitable or kept in good condition. We were concerned that the eventual MCC Panels produced would not conform to specification, standards and would ultimately be rejected once again, based on the Defendant‟s continued failure to produce MCC Panels up to par. Another primary concern was that, due the reasons stated above, the Defendant would not have been able to meet the deadline of the Project.” [90] This reason was also echoed by PW2 in his witness statement in answer to question 43. [91] In paragraph of 20 of the Amended Statement of Claim it is pleaded that: “20. Based on the aforesaid matters complained of in paragraphs 18 and 19 of this SOC above and as it became clear to the Plaintiff that the Defendant was incapable of rectifying the Works to satisfy the requirements of the Project, the Plaintiff cancelled the POs with effect from 9.4.2015.” [92] Thus, the termination of the purchase orders was based only on the plaintiff‟s opinion that the defendant could not produce the MCC Panels required. It was not because of the breach of any term or terms in the purchase orders as such. This opinion was formed 29 notwithstanding the fact that less than a month before the termination, the defendant was given the task of rectifying and varying certain items in a punch-list. [93] There is no evidence that any deadline was set by the plaintiff for the rectification works. As such, no time was set or made of the essence for the rectification works. Indeed, as the evidence shows, the defendant could not even start on some of the items as the confirmation required was still pending from Sakura. [94] Therefore, having regard to the circumstances of this case, the evidence tendered and the plaintiff‟s pleaded case, it is my view that the original ground given and the additional grounds given for the termination of the purchase orders are unfounded. Indeed, they are also not the grounds for the termination of the purchase orders pleaded in the Amended Statement of Claim. [95] Accordingly I hold that the plaintiff‟s termination of the purchase orders was unlawful. Plaintiff’s claim for damages [96] Notwithstanding my finding on the issue of the plaintiff‟s claim for breach of contract against the defendant, I am also of the view that the plaintiff‟s claim for damages suffered was not proven. [97] PW4 and PW5 testified for the plaintiff in respect of its claim for damages. PW4 is the Finance Supervisor in the plaintiff‟s finance 30 department and a director. PW5 is the Operations Manager for the Plaintiff. [98] PW4 tendered screenshots of various documents and various Microsoft Excel documents from the plaintiff‟s computer, which houses the company‟s accounting software. PW5 did practically likewise. [99] These documents are then the documents upon which the claim for damages is based. The truth of the contents of these documents was not accepted by the defendant. Both PW4 and PW5 were cross examined and they candidly agreed that they were not involved in any of the transactions which the documents they tendered were supposed to evidence. [100] PW3 also testified in respect of the plaintiff‟s claim for damages. In his witness statement, PW3 candidly stated that he was not aware of the losses particularised by the plaintiff in its amended statement of claim. All that PW3 testified to was that certain expenses were necessary. The following was PW3‟s testimony: “35. Please see paragraph 23 of the Plaintiff‟s Amended Statement of Claim at pages 41-12 of the Bundle of Pleadings. You will note that the Plaintiff particularizes its loss in this paragraph. Are you aware of these losses? No, I am not aware. I can however confirm that the following was necessary for the Works in Singapore:

The Plaintiff entered into a contract to engage M&I. This contract was for M&I to supply the required MCC 31 Panels in line with specifications. See pages 803-811 and pages 861-880 of CBOD Vol. 3.

(ii) Additional manpower was also needed for the Works for Project, such as more Rockwell personnel (page 1241 of CBOD Vol. 3) to assist in administration, management and technical input of the project that now needed expediting, specialist engineers (page 1205 of CBOD Vol. 3) to assist in equipment set-up in particular variable frequency drives (“VFDs”) and soft starters during pre-FAT and FAT, panel drafters from C+G Instruments Pte Ltd (pages 845-848 of CBOD Vol. 3) to provide schematics and drawing updates, technicians (wiremen) form Kimtech Marine (page 1199 of CBOD Vol. 3) to expedite wiring that was proving to be a bottleneck in the execution of the project, a technician from Integrated System Solutions (pages 1201-1203 of CBOD Vol. 3) to test the relays.

(iii) There may also have been living expenses attached to such manpower as well as some of them were travelling from overseas.

(iv) There was also the need for additional storage, container facilities and materials for the MCC Panels as well shipping materials and packing to transport the MCC Panels from Singapore to Malaysia. [101] Both PW1 and PW2 also testified in respect of the damages claimed. PW1‟s testimony is found in his answer to question 60 of his witness statement and PW2‟s testimony is found in his answer to question 48 of his witness statement. The answers and the questions put to both are practically identical. In PW1‟s witness statement, he states this: “60. What was the cost of rectifying the MCC Panels? 32 The following are the costs of requiring a third party to rectify the Works:

Cost of new contract to engage M&I – SGD1,236,150.00. The M&I contract price (which was accepted) is at pages 803-811 of CBOD Vol. 3. It is to be noted that Rockwell had asked for M&I to reduce the price, to mitigate its losses, which M&I obliged.

(ii) Cost of 3 variation claims from M&I for the MCC Panels-SGD570,746.02. This is the M&I offer price, at pages 861-880 of CBOD Vol. 3) for variations that were needed for the delivery of the MCC Panels.

(iii) Costs for engaging additional manpower for Project management, engineering and administration of the Works – USD105,102.00. The tabulation at page 1241 of CBOD Vol. 3 is a calculation of the Rockwell manpower and time spent, at the respective daily rates, for overseeing and supporting the Works in Singapore.

(iv) Costs for engaging 2 specialist engineers to oversee the Works undertaken by M&I – USD67,179.49. The tabulation of the expenses and labour incurred for this is at page 1205 of CBOD Vol. 3.

Costs for engaging panel drafters from C+G Instruments Pte Ltd to complete the re-design of the MCC Panels – SGD42,657.70. The quotation for the same (which was accepted) is at pages 845-848 of CBOD Vol. 3.

(vi) Costs for engaging 5 technicians from Kimtech Marine to expedite the Works – SGD105,900.00. The tabulation for the manhours spent on this is at page 1199 of CBOD Vol. 3.

(vii) Cost for engaging 1 technician from Integrated System Solutions to expedite the Works – SGD8,400.00. The 33 proposal for the same (which was accepted) is at pages 1201-1203 of CBOD Vol. 3.

(viii) Cost for hiring additional storage, contained facilities and materials for the MCC Panels – SGD61,363.00. The price lists for these are at pages 849 and 855 of CBOD Vol. 3.

(ix) Cost of shipping materials to transport the MCC Panels from Malaysia to Singapore – RM99,971.15. The invoices for these are at pages 894-902 of CBOD Vol.

Cost of additional living expenses for manpower to reside in Singapore – SGD15,033.07. The charges can be found at pages 883-893 of CBOD Vol. 3. These were the expenses incurred by the various individuals who were required to be present during the work being done on the MCC Panels.

Cost of packing for shipment of MCC Panels from Singapore to Bintulu – SGD68,933.68. The invoices for these can be found at pages 903-911 of CBOD Vol. 3. These costs were initially borne by Rockwell Singapore, and then reimbursed by the Plaintiff when invoiced. These invoices are at pages 912-928 of CBOD Vol. 3. My colleague, Srinivasan Hariharan was managing these rectification works in Singapore. [102] As can be seen, all that was provided were claims, tabulations, quotations, proposals, price lists and invoices. As was stated by the Federal Court in Datuk Mohd Ali bin Hj Abdul Majid & Anor (both practising as Messrs Mohd Ali & Co) v Public Bank Bhd [2014] 4 MLJ 465: “[32] It is trite law that a claimant claiming damages must prove that he has suffered the damage. The claimant has the burden of proving both liability and quantum of damages, before he can 34 recover the sum claimed. This follows from the general rule that the burden of proving a fact is upon him who alleges it and not upon him who denies it, so that where a particular allegation forms an essential part of a person‟s case, the proof of such allegation falls on him (see s 103 of the Evidence Act 1950). If he fails to prove both the liability and the quantum of damages, he loses the action. [33] Therefore, in a claim for damages, it is not sufficient for the plaintiff to merely state the amount of damages that he is claiming, he must prove the damage that he had in fact suffered to the satisfaction of the court. This principle is borne out in the case of Bonham-Carter v Hyde Park Hotel (1948) 64 TLR 177 where Lord Goddard CJ observed: Plaintiffs must understand that if they bring actions for damages it is for them to prove their damage; it is not enough to write down the particulars, and, so to speak, throw them at the head of the court, saying: „This is what I have lost, I ask you to give me these damages.‟ They have to prove it. [Emphasis added] [103] The defendant in this case never agreed to dispense with formal proof of the alleged damages suffered or claimed. Ultimately, there was no witness who testified to the underlying transactions portrayed by the documents tendered, or that the amounts disclosed therein were in fact paid by the plaintiff for purposes relating to the MCC Panels that the defendant was to produce (see also Popular Industries Limited v Eastern Garment Manufacturing Sdn Bhd [1989] 3 MLJ 360). The counterclaim [104] The defendant‟s counterclaim is in respect of 3 discrete claims. As mentioned earlier, the first is a claim for payment in respect 35 of the 2nd PO of an amount of RM848,000, which sum is inclusive of Goods and Service Tax. [105] The second and third are claims in respect of separate purchase orders issued by the plaintiff, which are unrelated to the 1st PO or the 2nd PO. These purchase orders are Purchase Order 52162443 dated 5.8.2014 for an agreed sum of RM266,828.29 and Purchase Order No 52218511 dated 28.5.2015 for an agreed sum of RM516,845.11. [106] In respect of Purchase Order 52162443, the defendant claims that its work thereunder had been completed, part payments have been made but there is a balance of RM129,211.28 still due and owing by the plaintiff. This sum is made up of payments still due and owing under the defendant‟s invoice number W202754 and invoice number W202755, both dated 26.3.2015. [107] In respect of the Purchase Order No 52218511, the defendant claims that its work thereunder had been completed but no payment has been made by the plaintiff. Accordingly, there is due and owing by the plaintiff of a sum of RM266,828.29, in respect of which the defendant had issued an invoice bearing number 15-000600797 and dated 29.5.2015. [108] No evidence was led against the defendant‟s counterclaim in respect of Purchase Order 52162443 and Purchase Order No

There were no reasons given why these claims should not be met, save for the bare assertion that they should not be allowed and if allowed, the amounts should be set-off against the plaintiff‟s claim. 36 However, there is in fact no set-off pleaded against the amounts claimed under these two invoices in the plaintiff‟s Amended Reply and Defence to Counterclaim. These claims are merely not admitted and the plaintiff put to strict proof. At oral clarification, counsel for the plaintiff conceded that the claims in respect of Purchase Order 52162443 and Purchase Order No 52218511 are not disputed. [109] As such, I find that by reason of counsel‟s concession, in addition to the fact that, save for a bare denial, no defence has been made out or offered against the defendant‟s claims in respect of Purchase Order 52162443 and Purchase Order No 52218511, these claims must be allowed. [110] As for the defendants claim under the 2nd PO, this is said to be based on an agreement arrived at between the parties in respect of outstanding payments due under the 2nd PO. [111] Under the 2nd PO, the contracted amount payable by the plaintiff was RM1,435,000.00. However, upon the plaintiff‟s termination of the contract embodied in the 1st PO as varied by the 2nd PO, the parties negotiated and the defendant agreed to accept a lower sum of RM800,000.00 in respect of the 2nd PO. There was then a letter prepared under what appears to be the letterhead of Rockwell Automation, and dated 14.4.2015. The agreement to the terms in this letter was indicated by the signatures of the parties‟ representatives. This letter is reproduced below: 37 38 ” 39 [112] PW2 who signed this letter on behalf of the plaintiff does not deny having done so. His explanation is that he had to because the defendant refused to release what had been fabricated and materials that were supplied by the plaintiff to the defendant. [113] As a consequence of the agreement in the letter of 14.4.2015, the defendant raised an invoice for an amount of RM848,000.00, which is made up of the agreed amount of RM800,000.00 plus RM48,000.00 being Goods and Service Tax (“GST”). [114] The plaintiff did not seek to set aside this agreement to pay. The plaintiff‟s defence is that the defendant is not entitled to payment under this agreement because of the defendant‟s alleged breaches in respect of the 1st PO and the 2nd PO and, in any event, the plaintiff is entitled to set off the same against its claim for damages. In addition, the plaintiff contends that GST was not included and the plaintiff should not be obliged to bear the same. [115] Having regard to the foregoing, I hold that pursuant to the agreement embodied in the letter of 14.4.2015, the plaintiff is obliged to make payment to the defendant the agreed sum of RM800,000.00. However, there was no agreement that the plaintiff was to bear GST. Unless agreed otherwise, GST is to be borne by the supplier. Conclusion [116] Having regard to the foregoing and for the reasons given above: 40

the plaintiff‟s claim against the defendant is dismissed;

(ii) in respect of the defendant‟s counterclaim, I hold that the plaintiff is pay the defendant:

a sum of RM129,211.28 in respect of the plaintiff‟s purchase order number 52162443 together with interest at the rate of 5% per annum from 26.3.2015 to date of full payment;

a sum of RM266,828.29 in respect of the plaintiff‟s purchase order number 52218511 together with interest at the rate of 5% per annum from 29.5.2015 to date of full payment; and

a sum of RM800,000.00 in respect of the 2nd PO as per the agreement of 14.4.2015 together with interest at the rate of 5% per annum from the date hereof to date of full payment. Dated this 6th day of July 2018. sgd (YA TUAN DARRYL GOON SIEW CHYE) Judicial Commissioner High Court Civil NCVC 2 Kuala Lumpur 41 CASES CITED Yong Sze Fatt v Pengkalen Securities Sdn. Bhd. [2011] 4 MLJ 805. Sivalingam a/l Periasamy v Periasamy & Anor [1995] 3 MLJ 395. Syarikat Letrik Sabalan Sdn Bhd v Sazone Contractor Sdn. Bhd [1996] MLJU 83. Hadley v Baxendale [1854] 9 Exch 341.

Scandinavian Bunkering (Singapore) Pte Ltd v Misc Bhd [2015] 3 CLJ

Lee Sau Kong v Leow Cheng Chiang [1961] 1 MLJ 17. Malaysian Rubber Development Corp Bhd v Glove Seal Sdn. Bhd. [1994] 3 MLJ 569. Tatung Electronics (S) Pte Ltd v Binatone International Ltd [1991] 3 MLJ

Kho Tian Boo v Tengku Ibrahim Petra bin Tengku Indra Petra [2013] MLJU 270. Abu Bakar Pangis & Ors v Tung Cheong Sawmill Sdn Bhd & Ors and Anor Appeal [2015] 2 CLJ 753. AmFinance Bhd v Ultimate Eight Sdn Bhd & Ors (2014) 1 MLJ 2014. Joo Seng Trading Co v Commercial Importers and Distributors Sdn Bhd [2007] 4 MLJ 128. Formuexcel Sdn Bhd v Chong Chee Fah [2010] 1 LNS 1609. 42 Chiropractic Speciality Centre Sdn Bhd v Orthorelief & Care Sdn Bhd [2017] MLJU 1533. Asean Bintulu Fertilizer Sdn Bhd v Wekajaya Sdn Bhd [2016] MLJU 354. Travelsight (M) Sdn Bhd & Anor v Atlas Corp Sdn Bhd [2003] 6 MLJ

Hong Kong (Sar) Hotel Ltd v Wing Key Construction Co Ltd [2016] 166 Con LR 187. Jurong Engineering Ltd v Paccan Building Technology Pte Ltd [1999] 3 SLR 667. Shia Kian Eng (trading as Forest Contractors) v Nakano Singapore (Pte) Ltd [2001] SGHC 68. GIB Automation Pte Ltd v Deluge Fire Protection (SEA) Pte Ltd [2007] 2 SLR 918. Lam Hong Leong Aluminium Pte Ltd v Llian Teck Huat Construction Pte Ltd and Another [2003] SGHC 53. Hi-Amp Engineering Pte Ltd v Technicdelta Electrical Engineering Pte Ltd [2003] SGHC 316. Amanah Raya Bhd (suing as administrator of estate of Devia Nathan s/o Savarimuthu, deceased) v Jerneh Insurance Bhd (formerly known as Jerneh Insurance Corp Sdn Bhd) [2005] 4 MLJ 1. Rahanny Rojela v Public Prosecutor [2017] 1 MLJ 196 (CA) at 208. LEGISLATION AND LEGAL TEXT CITED S.90A and Section 114, illustration (g) of the Evidence Act 1950. 43 S.74 of the Contracts Act 1950. Sarkar‟s Law of Evidence (15th Edition) “Presumption From Not Calling Witnesses Acquainted With Facts and Keeping the Adversary Out of Possession of Evidence”. COUNSEL FOR THE PLAINTIFF: Aneera Joshini Chowdhury (G.L. Ambrose with her) (Louis Ambrose Chambers Unit A-1-3A, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi 59200 Kuala Lumpur Tel : 03-2710 8935 Faks : 03-2710 8934) COUNSEL FOR THE DEFENDANT: Kelvin Ng Chun Yee (Michele M. Maman with him) (Vin & Isaac Lee A-07-08, Empire Tower, Empire Subang, Jalan SS16/1, 47500 Subang Jaya,