Silicon Design (M) Sdn Bhd Malayan Banking Berhad

DALAM MAHKAMAH TINGGI MALAYA DI JOHOR BAHRU DALAM NEGERI JOHOR DARUL TAKZIM RAYUAN SIVIL NO: JA-12B-25-07/2019 ANTARA SILICON DESIGNS (M) SDN BHD (No. Syarikat : 576673-H) ..PERAYU DAN MALAYAN BANKING BERHAD (No. Syarikat : 3813-K) ...RESPONDEN [DALAM MAHKAMAH SESYEN DI JOHOR BAHRU DALAM NEGERI JOHOR DARUL TAKZIM, MALAYSIA GUAMAN SIVIL NO: JA-A52-41-10/2017] ANTARA SILICON DESIGNS (M) SDN BHD (No. Syarikat : 576673-H) ...PLAINTIF DAN MALAYAN BANKING BERHAD (No. Syarikat : 3813-K) ..DEFENDAN ALASAN PENGHAKIMAN Introduction [1] The Plaintiff had filed a claim against the Defendant for breach of a statutorily implied warranty. The Plaintiff's claim was dismissed by the Sessions Court Judge (SCJ) while the Defendant's counterclaim was allowed. The Plaintiff's appeal to the High Court was allowed. This is the Defendant’s appeal against the decision of the High Court. Facts [2] In August 2011 the Plaintiff purchased a brand new Range Rover 3.6 WUM 7731 (vehicle) from a dealer Sime Darby Auto Connection S/B (dealer). The Plaintiff entered into a hire purchase agreement dated 9-8- 2011 with the Defendant, a bank (HP, RR/129-136). The total hire purchase price was RM671,629.37. [3] On 20-8-2016 the vehicle had a complete and total breakdown near Ayer Keroh Melaka. It was towed to the service centre of the dealer in Petaling Jaya for inspection and diagnosis. Subsequently the Plaintiff was informed by letter dated 19-7-2017 from the service centre (RR/152) that “the vehicle’s turbochargers has failed due to wear and tear’. Attached to the letter was a quotation for repair totaling RM145,242.45 (RR/153-156). The vehicle was returned to the Defendant on 15-8-2017, as per the letter from the Plaintiff's counsel dated 27-8-2017 (RR/146-147) and attaching the surrender of vehicle form (RR/148). Analysis and finding [4] The Plaintiffs claim was that the wear and tear to the vehicle was not normal wear and tear such as to brake pads or tyres. The vehicle purchased was expected to be resilient, reliable, durable and high end as befitting its price. Hence for the vehicle to experience a total breakdown amounted to a breach of the statutorily implied warranty. [5] The defence of the Defendant was that the breakdown was due to wear and tear where the performance of the vehicle would have deteriorated after 5 years of usage. [6] In the grounds of judgment (RRT/19-38) the SCJ gave 2 main reasons for dismissing the Plaintiffs claim. In paragraphs 21 to 24 (RRT/30-32) it was stated the cause of breakdown was due to normal wear and tear and the Plaintiff failed to prove the vehicle was durable and of high quality and the vehicle had been serviced regularly. The 2nd reason related to that of warranty. It was stated the Plaintiff had failed to prove there was any warranty on the durability of the vehicle in the HP and the only warranty provided by the Defendant to the Plaintiff in the HP via the quotation dated 11-2-2011 was for 3 years which had since expired by the time of the breakdown and when the Defendant was 1st notified on 15-8-2017 (paragraphs 25-29, RRT/32-35). (i) Relationship between parties [7] The Federal Court in Ong Siew Hwa v UMW Toyota Motor Sdn Bhd [2018] 8 CLJ 145 has made in a clear that in a situation such as this where the Plaintiff purchased the vehicle from the dealer and then obtains financing from the Defendant though the HP, it is the HP that remains as the only contractual arrangement. At page 168 it was stated that- “.. whatever contractual relationship between the plaintiff and the first defendant was superceded by the hire purchase agreement. The first defendant completely faded out of the picture and the only contract that remained was the hire purchase agreement entered into between the plaintiff and the second defendant.” [Here the plaintiff had purchased the vehicle in question from the first defendant who then arranged credit facilities for the plaintiff from the second defendant. The plaintiff entered into a hire purchase agreement with the second defendant]. [8] This bears significance as at page 169 (paragraph 44), the Federal Court went on to say that under the Consumer Protection Act, the first defendant was not the supplier of the vehicle. In the context of the present appeal, this would mean the Defendant who entered into the HP with the Plaintiff is the supplier of the vehicle to the Plaintiff which means the Consumer Protection Act 1999 (CPA) and/or the Hire Purchase Act 1969 apply. (ii) Express warranty [9] Hence turning 1st to the issue of warranty, the Court was of the considered opinion that the HP in itself contained no express warranty, a fact acknowledged by the Plaintiff, througn PW1 (RR/80, lines 13-28). However this was not fatal to the Plaintiff's claim which was premised on a statutorily implied warranty. [10] On the finding that the warranty to the Plaintiff having expired, this could. not be so where there was no express warranty from the Defendant. The warranty in question dated 11-2-2011 (RR/159) which stated “3 years/100,000 km whichever comes first” was in fact from the dealer to the Plaintiff. As noted by the Court earlier, once there was an HP between the Plaintiff and the Defendant, whatever contractual relationship between the Plaintiff and the dealer had been superceded by the HP. The Defendant was now a supplier within the meaning of CPA 1999. (iii) _ Implied warranty [11] Section 3 of CPA 1999 defines a supplier to mean- ““supplier’ means a person who, in trade- (a) supplies goods to a consumer by transferring the ownership or the _possession of the goods under a contract of sale, exchange, lease, hire or hire-purchase to which that person is a party; or [12] Within CPA 1999 there are implied guarantees as to acceptable quality as follows- “32. (1) Where goods are supplied to a consumer there shall be implied a guarantee that the goods are of acceptable quality. (2) For the purposes of subsection (1), goods shall be deemed to be of acceptable quality- (a) if they are- (i) fit for all the purposes for which goods of the type in question are commonly supplied; (ii) acceptable in appearance and finish; (iii) free from minor defects; (iv) safe; and (v) durable; and (b) a reasonable consumer fully acquainted with the state and condition of the goods, including any hidden defects, would regard the goods as acceptable having regard to- (i) the nature of the goods; (ii) the price; (iii) | any statements made about the goods on any packaging or label on the goods; (iv) any representation made about the goods by the supplier or the manufacturer; and (v) all other relevant circumstances of the supply of the goods.”. [13] In Puncak Niaga (M) Sdn Bhd v NZ Wheels Sdn Bhd [2011] 9 CLJ 833, it was recognised there can be statutorily implied conditions. It was stated at page 842- “_.. It cannot be denied that there are statutory implied conditions and/or guarantees that the Mercedes-Benz motor car are of acceptable quality and fit for all the purpose for which goods of the type are commonly supplied. Section 32 of the Consumer Protection Act 1999 enacts as follows ...”. [14] With regard to the cause of breakdown, the evidence as shown in the letter from the service centre dated 19-7-2017 (RR/152) was that “the vehicle’s turbochargers has failed due to wear and tear”. At the time of the breakdown on 20-8-2016, the vehicle had done 147,318km (RR/162) and was about 5 years old. Hence the Defendant’s contention was the wear and tear was damage from continuous use and referred to the Oxford Dictionary and Usage Guide to the English Language. [15] However, here now was a high end vehicle, a Range Rover, with a purchase price exceeding half a million, to be precise RM671,629.37 which experienced a complete breakdown in the highway such that it had to be towed to the dealer’s service centre. This meant the vehicle did not meet the implied guarantee as to acceptable quality in terms of free from minor defects, safety and durability having regard to the nature of the vehicle and its price. [16] In the Oxford Advanced Learner’s Dictionary, “durable” means “goods which are expected to last for a long time after they have been n bought, such as cars ...”. In the Oxford Living Dictionary, durability is the ability to withstand wear, pressure or damage. [17] As stated by PW1 in his Q&A 16 ~ “16. Q: What was your reaction upon discovering that the catastrophic failure was due to “normal wear and tear”? A: | was greatly shocked and thoroughly disappointed as the vehicle is not just an ordinary vehicle but one that was held out by the seller and commonly bought not only for the purpose of driving it but that of doing so with the degree of comfort, ease of handling, reliability and the pride in its appearance, appropriate for the market at which the vehicle is aimed at (i.e. the high end market). With these characteristics, this vehicle purchased must not breakdown the way it did due normal wear & tear.”. (RR/51) [18] This was asked of DW1- ‘S : Saya cadangkan lah wear and tear normal macam ini ada kehausan, jika ada kehausan ini, kita tukar part tidak sampai kereta itu mati di jalan raya, itu wear and tear saya cadangkan. Kita tukar part macam break pad, tidak terus mati macam itu, itu bukan wear and tear saya cadangkan, betul tak? Setuju? J : Setuju. Ss : Kereta ini kereta canggih, kereta ini, kereta mewah betul? Luxury car betul? Ya. Kereta ini tahan lasak betul? Betul. nO we Kereta ini boleh masuk paya, boleh masuk bukit-bukit, rally, kawasan-kawasan lasak, kawasan sungai, saya pernah tengok video, boleh masuk batu-batu, mana-mana lah boleh masuk, kawasan-kawasan yang sukar dimasuki betul tak? Kereta ini? Setuju. Ss : Kereta tahan lasak betul? Sebab boleh masuk gunung, boleh masuk sungai betul? Kereta tahan lasak setuju ya? J : Setuju.”. (RRT/95-96) [19] The evidence as above would show that the vehicle supplied was not durable or safe such that there was a complete breakdown of the vehicle. It was probably not a minor defect where the estimated repair would cost RM145,242.45 (RR/153-156). Although the car was more than 5 years it had done about 150,000 km mileage and there had been no complaints prior to the breakdown. It could not probably be the wear and tear associated with normal use. On the Plaintiff's failure to call the mechanic to prove wear and wear, this was actually the Defendant's defence as the Plaintiff was asserting the breakdown could not have been due to that. [20] Reverting to Puncak Niaga (supra), the particulars of breach of implied guarantees were 7 occasions of the vehicle not being able to start where on 6 occasions it was towed to the workshop for repairs. The plaintiff too sought relief under CPA 1999. it was held at page 843 that — “.. given the numerous fundamental problems encountered by the plaintiff appellant, we are of the view that the Mercedes-Benz motor car is not of an acceptable quality within the provisions of the Consumer Protection Act 1999. ...”, [21] Although in Puncak. Niaga (supra) the vehicle was new, the principle from that case is that one may turn to CPA 1999 to determine acceptable quality and as in that case too, be entitled to reject it. [22] Interestingly Puncak Niaga referred to Rogers and Anor v Parish (Scarborough) Ltd and Anor [1987] 1 QB 933 where at page 845 the vehicle in question was a Range Rover and this was said- “... Next, the description ‘Range Rover would conjure up a particular set of expectations, not the same as those relating to an ordinary saloon car, as to the balance between performance, handling, comfort and resilience. The factor of price was also significant. At more than £14,000 this vehicle was, if not at the top end of the scale, well above the level of the ordinary family saloon. The buyer was entitled to value for his money.” (iii) Maintenance and service [23] It was PW1’s evidence the vehicle had had been maintained and serviced exclusively at the dealer's service centre. As to the Plaintiff not being able to show documents pertaining to the service of the vehicle, PW1 had referred to a letter in RR/140 where the Plaintiff wrote to the dealer inter alia that “the vehicle has always been maintained by you” and there was no rebuttal from the dealer. He explained that this was relevant as otherwise the dealer would have stated non service to be the cause of the breakdown. Refer to RRT/76-77. This is cogent evidence that although the Plaintiff did not have the service records, the fact that the dealer did not rebut the vehicle having been serviced at the centre and not stating the vehicle not being serviced to have been the cause of breakdown, would point towards the vehicle having been serviced regularly. It was also PW1's evidence there were no complaints about the vehicle which must show the vehicle had been serviced. Further the problem was not one of service but as per PW1’s evidence, “the car just fail” (RRT/82). (iv) Received in good condition [24] On the Plaintiff having confirmed he signed documents to the effect he received the vehicle in good condition, this must be viewed in the light of PW1's explanation as below- “Q : You look at delivery note page 18, Ikatan Dokumen Bersama B. Is this the document that states you received it in new condition. A: Yes. Q__: My question on this document which is the continuation just now. ’ When you sign these documents were you expected to also inspect the turbo chargers and was it possible for you to do so? > No, | don't think | was expected and it also not possible for me. 2) You are not expected to inspect the turbo chargers and it possible ya that is what you say. Why is it in possible can you explain? | think the turbo chargers is part of the internal part. Because it is internal part? Internal part of the engine and it is obvious on a visual inspection. Oo PrP OD PY Who’s down to the next final question on this? We talk about visual inspection. So when we you took the document you sign, you took the vehicle you sign that docurnent what is the visual examination that you saw? Visual inspection that you saw? What you see when you sign and agreed is good condition? 10 A: |sawa shining car. You saw a shiny car, | mean there were no scratches? H =: There were no? SP1: I mean it wasn’t scratch in any way or damages the body this kind of things. Like a normal brand new car that is what look like. OD So you're trying to say, when you say good condition is you look at each part of the car? | think on external. External? Ya. Oo Pr Oo > Are you in anyway a person who qualified to check on turbo charges, engine and certify is in good conditions? Are you are the person with that qualification? A: No, I'm not.”. (RRT/80-81). [25] Hence having received the vehicle in good condition did not necessarily mean PW1 could have seen the turbochargers which were internal parts. He only saw the external of the vehicle which to him looked in good condition with no scratches. In any event as PW1 put it, he is not qualified to check on turbochargers. (v) Rejection not within reasonable time [26] It was also contended by the Defendant the Plaintiff could not exercise the right to reject the vehicle as it had not been done within a reasonable time as required by section 43 (1)(a) CPA 1999. However that provision cannot possibly apply where there was a total breakdown of the vehicle. 11 Conclusion [27] For the above reasons, the Plaintiff's appeal was allowed where it followed that since the claim was allowed, the Defendant's counterclaim must necessarily fail. Dated: 26th April 2020 See Mee Chun Hakim Mahkamah Tinggi Johor Bahru Counsel for the Appellant/Plaintiff Mr G. K Sritharan Tetuan G. K. Sritharan & Co. Johor Bahru Counsel for the Respondent/Defendant Ms Zuraini binti Hj Abu Talib Tetuan Azmi Zuraini & Associates Johor Bahru 12