Jumbohan Omh Sdn. Bhd. v Kian Joo Can Factory Berhad, 05-08-2010

• Judge: HANIPAH BINTI FARIKULLAH
• Judgment Date: 05 August 2010
• Court: High Court (Malaysia)
• Record Number: D5-22-886-2003

IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

(COMMERCIAL DIVISION)

SUIT NO. D5-22-886-2003

BETWEEN

JUMBOHAN OMH SDN BHD

(COMPANY NO. 242005-U) … PLAINTIFF

AND

KIAN JOO CAN FACTORY BERHAD

(COMPANY NO. 3186-P) … DEFENDANT

GROUNDS OF DECISION

Background facts

1. The plaintiff was at all material times in the business, inter alia, of a licensed supplier of health supplements products. One of the health supplements sold by the plaintiff was a type of milk powder known as SM-6 Chewable Colostrum (Milk Powder) Tablets (“the plaintiff’s product”).

2. The plaintiff claims that at all material times, the defendant was aware or ought to have been aware that the said cans were to be used for the specific purpose of packing the plaintiff’s products for commercial sale, SM-6 Chewable Colostrum (Milk Powder) Tablets. In this connection, the plaintiff contends that the plaintiff’s products were shown to and inspected by the defendant before the plaintiff accepted the defendant’s revised quotation.

3. The plaintiff pleaded that the defendant knew or ought to have known that the plaintiff’s products have a shelf life of two (2) years and under the circumstances, the said cans offered to be sold and supplied to the plaintiff must be specifically fit for the purpose for which they were intended, to be free of defects and to have a shelf life similar or longer than the plaintiff’s products. In the circumstances, the plaintiff’s pleaded that as the defendant had knowledge of the purpose for which the said cans were required, the plaintiff had in accepting the defendant’s revised quotation relied on the defendant’s skill and judgment as to the suitability of the said cans for the intended purpose.

4. In this connection, the plaintiff contends that defendant failed or neglected to advice the plaintiff that the said cans to be supplied to the plaintiff not only had a shelf life of three (3) months but was susceptible to rusting on the outside.

The Plaintiff’s Claim

5. The plaintiff’s claim is for the sum of RM363,320.00 being the loss and damages suffered by them in the form of the loss incurred in respect of 10,352 tin cans (“the affected cans”) supplied by the defendant which were used to pack the plaintiff’s product all of which affected cans had rusted and hence were unable to be sold for amongst other reasons, health concerns to consumers The plaintiff’s claim includes the loss of profits of RM208,282.24 in respect of the affected cans suffered by the plaintiff which the plaintiff would have enjoyed had they been able to sell the affected cans. The plaintiff is also claiming for interest of 8% per annum on the sum of RM363,320.00.

The Defence and Counter-claim

6. The defendant denied the plaintiff’s claims. The defendant in its defence had not disputed the fact that the plaintiff had agreed to purchase tin cans from the defendant and the defendant had delivered tin cans to the plaintiff. However, the defendant contends that at all material times, the plaintiff had been informed pertaining to the life spans of the tin cans being warranted by the defendant and therefore it was the plaintiff’s obligation to utilize the tin cans before the expiry of the warranted tin cans life spans.

7. The defendant filed a counter-claim for a sum of RM9,081.00 being the advance payment of the purchase of the tin cans in accordance to the plaintiff’s Purchase Order No. 10156 dated 16.9.1999.

Issues

8. The issues to be determined by the court are as follows :

1. Whether the shelf life of the plaintiff’s product was communicated to the defendant.

2. Whether the rusting properties of the tin cans were communicated to the plaintiff.

3. Whether the plaintiff had established its claims of RM363,320.00 as damages.

4. Whether the defendant had established its counter-claim.

Plaintiff’s Case

9. The plaintiff called three (3) witnesses to support its claim. The first is Siew Yau Theam (PW1), who is the CEO of the plaintiff at the material time However in his witness statement PW1 said that he is the Managing Director of the plaintiff. In cross examination PW1 clarified that he had acted as it he was the Managing Director of the plaintiff as he was in charge in running the plaintiff since his daughter, Siew Yau Theam who is a director of the company was in Sabah at the material time PW2 and SP3 confirmed that PW1 was the actual person running the company.

10. The court finds that PW1 is the person in charge of the company. Even the defendant’s representative, in particular DW2, S.Y Lee and K.W Goo would not had a meeting with PW1 on 30.1.2002 to discuss the defective cans. This meeting was referred by the plaintiff vide its letter dated 5.2.2002 to the defendant and this was also confirmed by DW2 in cross-examination.

11. PW1 testified that prior to ordering tin cans from the defendant, the plaintiff had been using composite paper cans to contain the plaintiff’s product, a fact which the defendant was aware of as the use of such paper cans (samples of which were also shown and given to their representative) was informed to the defendant’s representative, one Kenneth Tang in the several meetings he held with the plaintiff’s representatives. When the plaintiff decided to change from composite paper cans to tin cans, it was the first time that the plaintiff had used tin cans to pack any of their products and the defendant knew that this was the case. This was confirmed by DW2 in cross-examination. PW1 explained that the plaintiff had decided to change from using composite paper cans to tin cans as the former type of material was susceptible to dents scratches and tearing being made of paper while the plaintiff thought that tin cans was a more durable form of container and had a smarter appearance.

12. It is an agreed fact that by a written revised quotation dated 7.9.1999 (“the Contract of Sale”) from the defendant to the plaintiff, which quotation was accepted by the plaintiff, the defendant offered to supply to the plaintiff 50,000 pieces of formed tin round cans at the price of RM0.67 per can upon the terms and conditions as set out therein.

13. It is not disputed between the parties that the tin can was first delivered on 26.11.1999 vide invoice dated 26.11.1999 (pg 2 Bundle “E”).

14. PW1 testified that about three (3) months after the first batch of tin cans was supplied by the defendant, the plaintiff began experiencing complaints from their customers (stockiest) that some of the tin cans had rusted resulting in such rusted cans being returned by the said customers. The fact of rusted tin cans being returned by the plaintiff’s customers over a period of time is evidenced by a set of the plaintiff’s records for tracking returned goods and this was in the form of Goods Return Advice Notes (Exhibit P6 at pages 2 to 9 of Bundle E) and also corroborated by the testimony of PW3, a former employee of the plaintiff then delegated with the responsibility of receiving returned/rejected goods, checking on their condition and filling up the said Goods Return Advice Notes (Exhibit P3 at pages 59 to 63 of the Notes of Evidence). PW3 had testified that upon receiving the rejected rusted tin cans, she would then report this fact to PW1 and PW2 as both of them were her superiors. Both PW1 and PW2 corroborated PW3’s evidence on this.

Defendant’s Case

15. The defendant’s first witness, Ms. Thean Kwee Chin (DW1) was the Sales Coordinator for the defendant at the material time. DW1 informed the court that eleven (11) days before the tin cans were delivered by the defendant, the defendant had issued the Stock Status Report to the plaintiff dated 15.11.1999 (Exhibit D26 pg 40 of Bundle “E”). According to DW1, the defendant had specifically mentioned on the life span of the tin cans warranted by the defendant in which the defendant shall not be held responsible if the usage of the tin cans by the plaintiff exceeded three (3) months from the date the tin cans were shaped and delivered.

16. However in cross-examination DW1 could not produce any evidence to show that the Status Report was actually sent to the defendant.

17. DW2 confirmed in cross-examination that Kenneth Tang showed him the plaintiff’s product before the defendant issue the quotation to the plaintiff. He also admitted that the shelf life of the product should last at least one (1) or two (2) years. DW2 also agreed in cross-examination that Kenneth Tang met with the plaintiff’s representative prior to the quotation bear issue.

18. The defendant’s second witness is Ng Su Yong, an Assistant Sales Manager of the defendant at the material time and he has been working for the defendant for twenty (20) years.

19. DW2 testified that there were no express terms stipulated in the Purchase Order that the defendant ought to supply the plaintiff empty cans that has a shelf life of three (3) years. DW2 testified that the first delivery pursuant to the Purchase Order was made on 26.11.1999 and last delivery was made on 6.7.2000.

20. DW1 gave evidence that the defendant never receive any complaint in writing in February 2000 from the plaintiff for the rusty tin cans According to him, the defendant received complaints for the...