A Rare Insight into a Decision of the Magistrate’s Court in Quantarad Technologies Sdn Bhd v Everest Integrated Logistics Sdn Bhd [2022] MLJU 733 at the Tail End of a Supply Chain

When this author stumbled across this case in the LexisNexis database, there was an irresistible urge that drove him to write about it. It is not always that the legal fraternity and academia gets to have a peek at the decision making process of a Magistrate. Further, this was a case about whether a carrier or its representatives in the Maritime Logistics and Supply Chain have the authorisation to open packages and then re-seal it, before transporting it. Plus the case also deals with the associated consequences if matters go south, for example, if the goods are fragile and are subsequently damaged. Note that since this is a decision of the Magistrate’s Court, under the doctrine of binding precedent, it does not bind the courts above it. Also note that this is an unreported case and is only available in the database in transcript form. Further, the judgment was written in Bahasa Melayu, so it had to be translated by yours truly as this article was being written.

With the preliminaries out of the way, let us have a look at the facts in this case. The Plaintiff was a private limited company that supplied high tech laboratory instruments, and also provided technical services and training. The Defendant was also a private limited company, but carried on business as a courier, packaging, warehousing and related logistics services. The Plaintiff engaged the Defendant to transport and deliver medical equipment and accessories known as Ulrich CT Motion (the Goods) to Singapore.

The Plaintiff carefully packaged the Goods at its warehouse in Ara Damansara. It was carefully wrapped with shrink wrapped on a pallet for collection by the Defendant. A sticker with the words ‘Fragile’ was stuck on the palleted goods. After the goods were taken by the Defendant, the Plaintiff was told that the Goods were unpackaged and re-packaged again. At no time whatsoever, did the Plaintiff give permission for this process to be carried either by the Defendant or its agents. Note, the Defendant’s agent in this case was a third party to the contract of carriage, DSK Murugesan Transport Agency (DSK). Due to the re-packaging, the goods were packed upside down and a few parts were damaged. The Consignee rejected these damaged goods and the Plaintiff had to replace the goods at a cost of EUR14,010.00.

According to the Defendant, the Goods were handed over to its agent DSK exactly as it was received from the Plaintiff on 3 August 2018. The Defendant explained that DSK was appointed as its agent to deal with Customs related matters when the Goods were being sent to Singapore. After the goods cleared Customs, on 5 August 2022, the goods were handed over to the Plaintiff’s agent. Pictures at that time appear to show that the goods were fine. On 8 August 2018, the Plaintiff complained via e-mail to the Defendant that some glass parts on the goods were broken. The Defendant conducted an investigation and said that the opening of the packaging, followed by the re-packaging was to ensure that the goods were in good condition, before sending it to the Consignee (ie The Buyer / Plaintiff’s Customer).

The Magistrate, Noorfazlin Hamdan, held that the Plaintiff had the burden of proving on a balance of probabilities that the Defendant was responsible for the damage to the goods, see Mohd Ridzwan bin Abdul Razak v Asmah bt Hj Mohd Nor [2016] 4 MLJ 282 (FC). This means that if the court can say that it was more probable than not that the Defendant caused the damage to the Plaintiff’s goods, then the Plaintiff would have discharged its burden of proof, by adducing affirmative evidence to prove his case. see Unsung Rasad v. PP [2019] 1 LNS 662, where Abang Iskandar Abang Hashim JCA quoted the judgment of Denning J (as he then was) in Miller v Minister of Pensions [1947] 2 All ER 372.

The learned Magistrate made the following findings:

[1] The packages were opened and re-packaged without the permission of the Plaintiff. The court found that this was done because the Defendant’s agent did not have a forklift to move the palletised goods. The Defendant should not have opened the package, and re-packaged the goods without the express consent of the Plaintiff, see Section 186 of the Contracts Act 1950 and PT Karya Sumiden Indonesia v Oceanmasters Marine Services Sdn Bhd & Anor [2016] 7 MLJ 589.

[2] The goods were in good condition before it was packed by the Plaintiff. The goods were properly packed in shrink wrap by the Plaintiff. As the damage to the goods were only discovered after the goods were unpacked and re-packaged by the Defendant, it could be inferred that the Defendant or its agent caused this damage, since the damaged occurred when the Goods were in the care of the Defendant or its agent.

[3] The Defendant was liable for the acts and/or omission of its agent. Opening the package and re-packaging the goods was not within the scope of authority of the agent. Both the Defendant principal and its agent were liable. The Defendant, in particular was liable for failure to supervise, look after and care for the Goods whilst it was in the Defendant’s possession. Matters were made worse by the fact that the Defendant appointed an agent to handle the goods without the knowledge or consent of the Plaintiff, see Section 186 of the Contracts Act 1950 and PT Karya Sumiden Indonesia v Oceanmasters Marine Services Sdn Bhd & Anor [2016] 7 MLJ 589.

[4] The Defendant knew that the Goods were ‘fragile’. The Goods were of high value, ie EUR 20,000.00 and coupled with the sticker ‘fragile’ on the package, was sufficient to the Defendant that the care was required in handling the goods. A ‘fragile’ sticker indicates that the Goods were ‘breakable’.

[5] The delay of 3 days by the Plaintiff in informing the Defendant that the goods were damaged were reasonable. The Plaintiff had to conduct its own Internal Quality Check (IQC). This was necessary as the Goods were medical equipment sensitive to impact and it had to be determined whether its usage posed a danger to patients. The ‘delay’ in making a complaint was not a reason to exclude the Plaintiff’s claim.

[6] The Plaintiff was transparent with the Defendant (via email) as to the exact nature of the damage. At no time did the Defendant challenge the nature of this damage.

[7] The witnesses appearing on behalf of the Plaintiff were credible and there were no reasons to exclude their testimony. The evidence given by these witnesses were consistent and withstood the test of cross-examination. The court adopted the test of determining the credibility of a witness by Evrol Mariette Peters JC in Chew Yee Hui V Tan Siew Nee [2020] 1 LNS 136 (High Court, Johor Bahru).

[8] The Plaintiff would have to prove the actual damages it suffered due to the damage inflicted on the Goods, see Hamidon Ramli V. Cheng Wee Ming & Anor [2019] 1 LNS 687 per Aliza Sulaiman JC, quoting Lord Goddard in Bonham-Carter v. Hyde Park Hotel [1948] 64 T.L.R. 177 and cited by Thomson C.J. in Lee Sau Kong v. Leow Cheng Chiang [1960] 1 LNS 56; [1961] 27 MLJ 17. The original value of the loss was in EUR. If the claim is made in Malaysian currency, the conversion can be made at the date of the judgment, see AMMB International (L) Ltd v Penas Holdings Sdn Bhd & Anor [2005] 2 MLJ 509 per Abdul Malik Ishak J.

The Magistrate’s Court therefore concluded that the Plaintiff had proven its case. This case is also interesting for the fact that the Court preferred the testimony of the witnesses testifying for the Plaintiff. The evidence was consistent and survived the rigour of cross examination. The opposite was true of witnesses for the Defendant. The testimony of the witnesses for the Plaintiff were also consistent with the events as written in various documents.

Thank you for reading IMSML Website Article 18/2022

Stay tuned for the next IMSML Website Article 19/2022:

A Tale of Whether An Arbitration Award Rendered Court Proceedings Academic in Orin Energy Investments Ltd v The Owners of The Ship Or Vessel MT ‘Cavalier’ [2022] MLJU 673 (High Court, Kuala Lumpur) per Azlan Sulaiman JC

Signing-off for today,

Dr Irwin Ooi Ui Joo, LL.B(Hons.); LL.M (Cardiff); Ph.D (Cardiff); CMILT

Professor of Maritime and Transport Law

Head of the Centre for Advocacy and Dispute Resolution

Faculty of Law

Universiti Teknologi MARA Shah Alam

Selangor, Malaysia

29 October 2022

Note that I am the corresponding author for the IMSML Website Articles. My official email address is: uijoo310@uitm.edu.my