Fujikura Federal Cables Sdn Bhd V Luen Wah Electric Co. (M) Sdn Bhd

  

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MALAYSIA

 

IN THE HIGH COURT IN KUALA LUMPUR COMMERCIAL TRIAL NO. D6-22-1561-2000

 

Between

 

FUJIKURA FEDERAL CABLES SDN BHD … PLAINTIFF (No. 77903-A)

 

And

 

LUEN WAH ELECTRIC CO. (M) SDN BHD … DEFENDANT (No. 18157-M)

 

BEFORE THE HONOURABLE JUDICIAL COMMISSIONER Y.A. DR. HAJI HAMID SULTAN BIN ABU BACKER

 

IN OPEN COURT

 

JUDGMENT

 

This is my judgment in respect of the plaintiff’s claim against the defendant for goods sold and delivered for the sum of RM591,551.65 and the defendant’s counterclaim for damages in the sum of more than 2 million ringgit on the grounds the goods delivered purportedly did not comply with the relevant specifications. At the commencement of trial parties have agreed that it is sufficient if I deal with the issue of liability first in respect of the defendant’s counterclaim and if the plaintiff is

 

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found liable, the matter can be referred to the deputy registrar for assessment of damages.

 

Brief facts

 

1. The plaintiff sold and delivered electrical cables to the defendant who was a sub-contractor in relation to a project. The defendant had accepted the goods, made part payments and entered into a settlement agreement to pay the balance but was not able to do so as the project was abandoned and the main contractor had become insolvent.

 

2. The defendant complains that the cables supplied were not of the contract requirement and/or were not delivered on time. And the cables were not in accordance with specification. And the learned counsel for the defendant summarises the complaint as follows:

 

Based on the aforesaid Law of Evidence, it is my most humble submission that the Fire Rated Cables supplied by the Plaintiff to the Defendant were not in compliance with IEC 332, IEC 754 Par 1 and Categorise Y of BS 6387 and even if they were, but the Plaintiff had failed to produce the “test certificates ” documentations adequate and/or sufficient to substantiate the said compliance. The Plaintiff did not do it at that relevant time in 1997 and even today, in court it is only their bare allegations that they do have these “test certificates”. In fact, the Plaintiff’s offer to “guarantee” the Fire Rated Cables manufactured by them, rather than just simply producing and showing the relevant “test certificates” amounts to an admission that they in fact did not have the relevant “test certificates ”. If they do, just show it, no need to guarantee.

 

Thereby, the Plaintiff are in breach of their contractual obligation in failing to produce/submit “test certificates to substantiate” their Fire Rated Cables’ “compliance” with IEC 332, IEC 754 Part 1 and Categorise Y of BS 6387. Hence, as to whether their Fire Rated Cables are actually in compliance or not, nobody really knows; and the best that this Honourable Court can do now, is to adversely infer and presume that not in compliance, otherwise they surely would have produced the certificates, when requested in 1997.

 

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Preliminaries

 

3. One witness gave evidence for the plaintiff and four for the defendant. It is clear from the evidence that the defendants have never rejected the goods at any time or at all. And the defendant had not made any formal complaint at the earliest opportunity or at the relevant material time in respect of the goods, in the manner pleaded by the defendant. In addition the complaint is in respect of the plaintiffs failure to produce the relevant test certificates and not so much on the goods supplied. It is trite that the jurisprudence relating to sale of goods will not allow the defendant to lead evidence at the trial that the goods were not according to specification, merchantable quality etc; if objection was not taken at the material time. It is pertinent to note that section 42 of Sales of Goods Act 1957 (SGA 1957) states as follows:

 

“Acceptance

 

42. The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them. “

 

4. I have heard the evidence, read the documents and submission in detail. I do not wish to deal with the evidence and submission in detail as parties have dealt with them in their respective submissions. I take the view the plaintiffs claim must be allowed and the defendant’s counterclaim must be dismissed. My reasons are as follows:

 

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(a) The defendant’s complain in essence is that the plaintiff did not supply the relevant test certificates with the goods. It was never established the goods were defective at that material time. If the test certificate was so important, the defendant ought not to have accepted delivery without the test certificates. It is as simple as that. However, the defendant chose to accept delivery, and installed the goods and now complains the goods were not according to specifications. This line of defence on the facts of the case is not permissible under SGA 1957. The buyers’ right to examine goods before delivery is enshrined in section 41 of SGA 1957. And that section reads as follows:

 

“Buyer’s right of examining the goods

 

41. (1) Where goods are delivered to the buyer which he has not previously examined, he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract.

 

(2) Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound, on request, to afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract. “

 

In the instant case the defendant had all the opportunity to examine the goods after delivery and/or request for the necessary test certificates before acceptance of goods. Both of which the defendant did not do or lodge the relevant complaints. Section 41 of SGA 1957 militates the defendant’s defence and counterclaim in law. It must not be forgotten that section 41 of SGA 1957 stands as a protection for

 

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the seller as well as the buyer and is intended to arrest vexatious litigation, relating to sale of goods.

 

(b) In addition, the defendant has also entered into a settlement agreement making the defence and counterclaim untenable in law and/or after thought reducing it to the categories of sham defence.

 

(c) Further, in this case the defendant had not made any challenge to the plaintiff by way of further and better particulars or notice to produce the test certificates at the trial. The plaintiff’s evidence that they have the relevant certificates, and would have produced the same if the defendant has requested the same carries much weight though it may not be a necessary criteria to evaluate when in actual fact the defendant had entered into settlement agreement and paid part of the sum.

 

(d) In this case, the SGA 1957 governs the transaction. The defendant’s defence and/or counterclaim must be and/or as far as possible relate to one of the said section. Here the defendant is saying that the goods were not according to specification. And relies on sections 15 and 16 of the SGA 1957. However evidence was not adduced to show that the goods were not according to specification. The defendant’s only complain was that the test certificate was not given. Sections 15 and 16 do not deal with test certificates but goods. There are four preconditions:

 

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(i) the buyer must make known to the seller the particular purpose for which the goods are required; (ii) it must be shown that there was reliance by the buyer on the seller’s skill and judgment, and the buyer must in fact rely on the seller to supply suitable goods; (iii) the goods must be of a description which it is in the course of the seller’s business to supply; and (iv) if the goods are specific, they must not be sold under their patent or trade name. [see Alloy (M) Sdn. Bhd. v. Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd [1993] 3 MLJ167]. The defendant had not satisfied the said precondition in law to mount their defence and counterclaim for damages.

 

2. For reasons stated above I allow the plaintiffs’ claim for the sum of RM591, 551.65 with interest as prayed in the statement of claim with costs. The getting up fees shall not exceed RM50, 000.00. The counterclaim is dismissed with costs. The getting up fees shall not exceed RM25, 000.00. If costs cannot be agreed the plaintiff is at liberty to tax costs.

 

I hereby order so.

 

(Y.A. DR. HAJI HAMID SULTAN BIN ABU BACKER)

 

Judicial Commissioner

 

High Court (Commercial Division)

 

KUALA LUMPUR

 

Date: 11th June 2009

 

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For the Plaintiff: Mr. K. Siva Balan and Puan Sharifah Ainul; Messrs. Shahrizat Rashid & Lee

 

For the Defendant: Mr. Michael Teo; Messrs. Richard Talalla & Co.

 

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