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SALE OF GOODS
Damages – Claim for damages arising from breach of condition – Buyer paid compensation to third party and claimed for amount paid from seller in damages


Clariant Masterbatches (M) Sdn Bhd v Prestige Dynamics Industries Sdn Bhd
[2019] 5 CLJ 835, Federal Court

see the grounds of judgment here


Facts The appellant, Clariant Masterbatches (M) Sdn Bhd (‘Clariant’), produced and supplied masterbatches[1] and supplied it to the respondent, Prestige Dynamics Industries Sdn Bhd (‘Prestige’). Clariant gave to Prestige samples and presentation cards or laboratory references containing technical information such as, the presence of heavy metal pigments (HMP). Prestige chose a product which contained HMP and continued to place 14 more orders. In one of Prestige’s subsequent orders, Prestige stated in a note in the PO (‘the subject PO’), requesting for Clariant to attach the test report and hazardous substance with every delivery and added that no hazardous substance was allowed in the products and packaging. Clariant delivered the products as specified to Prestige. Prestige claimed to have used the product made for Robert Bosch Power Tools Sdn Bhd (RBPT). The Swedish Chemical Agency inspected a tool sold by Robert Bosch AB (RBAB) and found that a plastic part component of the tool contained a chemical which was in breach of the European Union Directive and it was supplied to RBAB by RBPT and the same part was supplied by Prestige and the said colourant supplied by Clariant. RBPT claimed for damages against Prestige for breach of contract and the latter paid a compensation sum to the former. Prestige commenced an action at the High Court against Clariant for damages as a result of the latter’s breach of condition and was dismissed. The Court of Appeal allowed the claim for damages, on the grounds that the existence of hazardous substance in the product could only be confirmed by a test report and in the absence of such test report, it could not be said that Prestige waived the condition that there will be no hazardous substance in the product. Hence, the present appeal.

Issue Whether a buyer of goods having made payment and having waived any alleged breach of contract by the seller, is able to recover damages for any further and/or consequential loss arising out of the buyer’s own liability to a third party, which loss did not naturally arise in the usual course of the seller selling the goods.

Held In dismissing the appeal, the court agreed with the findings of the Court of Appeal which held that the existence of any hazardous substance in the product could only be confirmed by a test report. In the absence of such test report, it could not be said that Prestige had waived the condition that there will be no hazardous substances in the product and allowed the sum claimed by Prestige as damages, being the compensation sum paid to RBSB.

 


[1] Colour concentrates or colourants

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