Alami Vegetable Oil Products Sdn Bhd V Sime Darby Futures Trading Sdn Bhd


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Alasan Penghakiman No: D8-22-1645-2008






GUAMAN NO: D8-22-1645-2008














Alasan Penghakiman No: D8-22-1645-2008


The plaintiff’s claim against the defendant is for sums allegedly due and owing for the sale and purchase of crude palm oil (CPO) based on the standard terms of contract issued by Palm Oil Refiners Association of Malaysia (PORAM). The amount claimed is RM2,652,864.00 for the supply and delivery of 808.8 metric tonnes of CPO to Golden Jomalina Food Industries Sdn Bhd (Jomalina). The defendant is counterclaiming for the sum of RM3,270,000.00, which amount is said to be owing by the plaintiff under the Refined Bleached and Deodorised Palm Oil Contract (RBD contracts). Encl 7 is the plaintiff’s application for summary judgment under O 14 of the Rules of the High Court 1980 for the amount of RM2,652,864.00 whereas encl 10 is the defendant’s application for summary judgment on the counterclaim.


It is the case for the plaintiff that pursuant to a Sales Contract No. 2668-M dated 9.4.2008 entered into between the plaintiff and the defendant, the plaintiff agreed to sell and the defendant agreed to purchase 1000 metric tonnes of CPO at the price of RM3,280.00 per metric ton. Vide the affidavit in support of the O. 14 application the plaintiff avers that as at 12.5.2008 the plaintiff had delivered a total quantity of 808.8 metric tonnes of CPO but the defendant has failed or refused to pay the amount outstanding in the sum of RM2,652,864.00. It was also averred that the plaintiff had alternatively requested the defendant to apply the said sum of RM2,652,864.00 towards the cost of RBD palm oil which the plaintiff had purchased from the defendant (the subject matter of the defendant’s counterclaim).




Alasan Penghakiman No: D8-22-1645-2008


The defendant in its affidavit in reply to the O. 14 application averred inter alia that the defendant and Jomalina are fully owned subsidiaries of Sime Darby Plantation Sdn Bhd (Sime Darby); that the same group of traders from Sime Darby have been executing contracts for the sale and purchase of CPO with the plaintiff through Jomalina and subsequently through the defendant in continuity; that at all material times the plaintiff was and is fully aware that contracts entered into with either Jomalina or the defendant are to be treated as and are in essence, contracts entered into with Sime Darby; that at all material times, the agreement and understanding between the parties is that the plaintiff would fulfill the CPO contracts entered into with Sime Darby, whether through Jomalina or the defendant, on a ‘first in first out’ basis.


It was further the averment of the defendant that it has no obligation to make any payment under the Sales Contract No. 2668M as the plaintiff has not made any delivery under the said contract; that there are earlier contracts for the sale and purchase of CPO entered into between the plaintiff and Sime Darby through Jomalina; that the plaintiff has yet to fully deliver the quantities of CPO agreed under the earlier CPO contracts, some of which have been outstanding since November 2007 in blatant breach of the ‘first in first out’ PORAM condition; that the deliveries made by the plaintiff from 22.4.2008 to 12.5.2008 were towards partial fulfillment of the earlier CPO contracts.




Alasan Penghakiman No: D8-22-1645-2008


It must be noted that the purchase price for the earlier contracts was RM2,985.00 per m.t whereas the purchase price for contract No. 2668-M is RM3,280.00 per m.t.


The ‘first in first out’ basis referred to by the defendant is found in PORAM condition 4 which states “When there is more than one contact for the similar oil between the parties for the same delivery/collection period, the delivery/collection shall follow the dates of the respective contracts on a ‘first in, first out’ basis”.


The averment by the defendant on the non-compliance by the plaintiff with the PORAM conditions on the ‘first in first out basis’ and that deliveries were accepted towards partial fulfillment of the earlier CPO contracts is not a bare allegation. It finds support in the various e-mails and fax from Jomalina/Sime Darby (exhibit at DEF 3 encl 8) wherein the plaintiff was informed of the outstanding deliveries under the earlier CPO contracts. I wish to highlight only the following.


In an email dated 23.5.2008 Sime Darby wrote to the plaintiff that “… as discussed earlier, please arrange to deliver the contract on FIRST IN FIRST OUT BASIS and raise invoice accordingly.” Vide a letter dated 10.6.2008 to the plaintiff, Sime Darby states:“. we regret to say that although you have partially delivered our contract No. PUJ0711029034 dated 9 Nov 2007, you have wrongly invoiced this delivery, quoting a later contract number which was tagged at a higher price.




Alasan Penghakiman No: D8-22-1645-2008


Despite having highlighted these discrepancies to you in the earlier e-mails and also during the meeting held … no action has been taken to rectify this mistake, resulting in delays in settling your account. In order for us to make payments on the delivered tonnages, please arrange to amend the invoice accordingly.


We would also like to highlight that you have not delivered our long pending contracts for our Golden Jomalina refinery since November 2007 …


In view of our long term association, we request that you complete the contracts on “First In First Out” basis.”


If there is no basis in Sime Darby’s contention, it is reasonable to expect a response from the plaintiff. However, there is no response from the plaintiff to the various emails and letters from Sime Darby on the overdue delivery for the earlier contracts and that the plaintiff has failed to adhere to the ‘first in first out basis’ (see David Wong Hon Leong v Noorazman bin Adnan [1995] 4 CLJ 155). In the circumstances, I am of the view that the above undisputed contemporaneous documents give rise to a triable issue, particularly on whether the deliveries made by the plaintiff is partial fulfillment of the earlier contracts or whether it was for contract No. 2668-M claimed by the plaintiff. It is trite that if a defendant in an O. 14 application succeeds in raising even a single triable issue, it will not be a fit and proper case to order summary judgment (see South East Asia Insurance Bhd v Kerajaan Malaysia [1998] 1 CLJ 1045). Encl 7 is accordingly dismissed with costs to be taxed.




Alasan Penghakiman No: D8-22-1645-2008


As for encl 10, the application is premised on the following facts. Pursuant to several contracts entered into between the plaintiff and the defendant, the defendant has agreed to sell and the plaintiff has agreed to buy RBD palm oil (exhibit CC 1 encl 9). It is a term of the RBD contracts that payments have to be made by the plaintiff before delivery is made by the defendant. The RBD contracts also provided that the parties are to be bound by the terms and conditions set out by PORAM. Clause 9 of the standard PORAM contract states that “In default of fulfillment of this contract by either party, the other party at his discretion shall, after giving notice in writing or by cable, telegram or telex … have the right either to cancel the contract or the right to sell or purchase, as the case may be, against the defaulter who shall on demand make good the loss, if any, on such sale or purchase … the damages awarded against the defaulter shall be limited to the differences between the contract price and the market price on the date of the default..”


The plaintiff has failed, refused and/or neglected to make advance payment for the RBD palm oil. By a notice dated 24.7.2008 the defendant demanded that the plaintiff make advance payments for the contracted quality of the RBD palm oil by 31.7.2008 (which was later extended to 15.8.2008) failing which the defendant would hold the plaintiff in default of the RBD contracts. The plaintiff was further informed that the said RBD palm oil would be sold in the open market against the RBD contacts and the plaintiff would be held responsible for all costs, price differences, expenses and damages resulting from such sale (exhibit CC 3 encl 9).




Alasan Penghakiman No: D8-22-1645-2008


On 18.8.2008 the defendant sold all 3000 metric tonnes of RBD palm oil in the open market at RM2790.00 per metric tonne. The amount of RM3,270,000.00 claimed by the defendant is the difference between the market price and the price of the RBD palm oil contracted by the plaintiff (exhibit CC 4 encl 9). The defendant is also claiming for interest at the rate of 12% per annum on the sum of RM3,270,000.00 from 28.8.2008 as stipulated in its Debit Note to the plaintiff dated 21.8.2008.


The RBD contracts (Exhibit CC 1 encl 9) specifically states the payment terms as “PAYMENT BEFORE DELIVERY”. Hence there can be no issue that the plaintiff is under an obligation to make payment to the defendant before RBD palm oil is delivered to the plaintiff.


The plaintiff has averred that it had requested and authorized the defendant to apply the sum of RM2,652,864.00 allegedly due under the CPO contracts towards the cost of the RBD contracts and that the defendant’s refusal to do so is unjust and without legal basis. There is no provision in the RBD contracts that the amounts due to the defendant from the plaintiff for the RBD palm oil could be off set against the amount due from the defendant to the plaintiff for the CPO. The plaintiff has not produced anything to show that the parties have agreed to such an arrangement.




Alasan Penghakiman No: D8-22-1645-2008


Further, the plaintiff averred that under clause 9 of the PORAM conditions, the damages to be awarded against the defaulter shall be limited to the differences between the contract price and the market price on the day of the default. Indeed, the basis of the defendant’s counterclaim is the difference between the contract price and the market price of the RBD palm oil on the date of the default (see paragraph 9 encl 9; exhibit CC 3 encl 9; paragraph 8 encl 29). Further, vide several letters (exhibit CC4 encl 9) the defendant had informed the plaintiff of the sale of the RBD palm oil in the open market. There is no contemporaneous document from the plaintiff to show that the plaintiff had objected to the sale of the RDB palm oil in the open market on the ground that the sale was in breach of the PORAM conditions or on any other ground. In the circumstances I am of the view that there is no issue to be tried in respect of the defendant’s counterclaim.


Encl 10 is allowed. As for interest, my view is that it is unjust to award the rate of 12% which is unilaterally imposed by the defendant. Judgment is entered against the plaintiff for RM3,270,000.00 with interest of 8% per annum from the date of judgment till realization and costs to be taxed.








Dated 29 June 2010




Alasan Penghakiman No: D8-22-1645-2008


Encik Mohamed bin Abdullah bagi pihak Plaintif Tetuan Mohamed A & Co.


Peguambela dan Peguamcara Unit 2-3, Perdana The Place No. 1, Jalan PJU 8/5G Bandar Damansara Perdana 47820 Petaling Jaya.


Cik Claudia Cheah Pek Yee bagi pihak Defendan Tetuan Skrine


Peguambela dan Peguamcara Unit No. 50-8-1,8th Floor Wisma UOA Damansara 50, Jalan Dungun Damansara Heights 50490 Kuala Lumpur.



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