IN THE MOOT COURT OF
APPEAL UNIVERSITI TEKNOLOGI SHAH ALAM
IN THE STATE OF
SELANGOR DARUL EHSAN
APPEAL NO: W-004-TF OF
2014
BETWEEN
METAUDIO ... APPELLANT
AND
SENDERS' WALTZ SDN BHD ... DEFENDANT
1. Winn
Hargrove is a world-renowned jazz artiste who to date had earned the prestige
of 16 Jazzy Awards. He had in his 50 years career released over 20 albums which
at least 12 of them went platinum with record-breaking sales. Mr. Winn had
earned his voluminous accolades because of his attention to sound precision and
quality. There had been no releases of Mr. Winn that were short of an audio
innovation and sheer marvel. Mr. Winn is the quintessential audiophile with the
added insights of audio engineering genius.
2. After
half a century being involved in the music industry, Mr. Winn had an epiphany.
He had envisioned sharing his work at a more intimate zenith. Instead of
releasing a fully-composed audio recording to the masses, Mr. Winn intended to
share to his listeners how he perceives sound in its fullest attention and
detail. In his work, there is not a parsec of room for even a decibel of noise.
3. Mr.
Winn set forth to pursue his vision and had invented the “Incognito”, an active
sound-cancelling dynamic over-ear headphones. The blueprint of the headphone
shows that the headphone was engineered to generate the purest unperturbed
sound. The make of the headphone is a complex hybrid of a carbon-fibre body,
high-definition ultra-magnetic coils, solid gold input and output jacks, and
mahogany tone-wood cups for maximum noise-cancellation, anti-coloration and
high fidelity. The headphone boasts a ground-breaking frequency range of 5Hz to
75 000Hz. The headphone’s ear caps are made out of memory-foam and sown over
with a weave of high-abrasion suede and leather for the perfect fit and
durability.
4. Mr.
Winn had since under his own label, Metaudio, manufactured 5 million units of
the “Incognito” for worldwide sales distribution. The Incognito’s sales motif
is set as “High and Low, Incognito”. A full-blown marketing campaign was
scheduled to launch in March 2014. The label is a company incorporated in
London.
5. For
distribution in ASEAN countries, Metaudio had contracted with various
distributors in different countries to be sold to many other certified
retailers. For the distribution in Malaysia, Mr. Winn on behalf of Metaudio had
initially emailed the Managing Director of Senders’ Waltz Sdn. Bhd. (a
wholesale and distribution company incorporated in Malaysia), Miss Rania
Olstead the following excerpt:
“Dear
Miss Olstead,
The
Incognito is not just a mere consignment. What I intend to distribute is an
experience, not mere goods. What you are dealing with are cutting-edge
equipment and materials which beg for proper handling and care. If Metaudio was
to take you under our stride to distribute these experiences, I would take it
that you share my understanding and concerns.
“High and Low, Incognito”
Yours
exuberantly,
Winn
Hargrove” – sent [8.12.2013]
To which Rania had replied the
following:
“Dear
Mr Hargrove,
We
are honoured that you would consider our services to distribute your
headphones. We are willing to extend our utmost cooperation in ensuring that
the headphones are distributed in working condition alike all other contracts
that we had in our years of business.
We
had not even once failed your previous consignments of all your releases in the
past. It is, was, and always will be our pleasure to have done business with
Metaudio and yourself, maestro, for the past 5 decades.
“Let Senders Waltz”
Yours
faithfully,
Rania
Olstead” – sent [9.12.2013]
To which Mr. Winn followed with the
following reply:
“Dear
Miss Olstead,
I
am glad that we both are on the same page.
“High and Low, Incognito”
Yours exuberantly,
Winn Hargrove.
7. Following
this exchange of emails, Metaudio had entered into a distribution agreement,
the Malaysia Incognito Distribution Agreement (the “MIDA”) with Senders’ Waltz
for the distribution of 250 000 units of Incognito. The MIDA was entered into
between the two parties on 1.1.2014. The salient terms of the MIDA are as
follows:
Clause
1a. Metaudio
Inc, (“the supplier”), agrees to supply, for the purpose of distribution in
Malaysia, 250 000 units of the Incognito Headphones (“the headphones”), to
Senders’ Waltz (Malaysia) Sdn Bhd, (“the distributor”). The supplier agrees to
employ the distributor’s services for the purpose of distributing the
headphones to retailers in Malaysia.
1b. The distributor agrees to take delivery of
the headphones in Malaysia, as the port of destination for the purpose of
distribution in Malaysia.
2a. The supplier agrees to ship the
headphones to the port of destination on 15.2.2014 on-board the vessel, SS Coltrain as nominated and agreed by
both parties.
2b. The distributor agrees to take delivery of
the headphones shipped on-board the SS
Coltrain on 15.2.2014. The distributor shall ensure that the headphones are
distributed in proper working condition. The supplier shall have their
representative at the distributor’s warehouse for the final inspection of the
headphones before the headphones are distributed to retailers.
3a. The risk over the headphones shall remain
with the supplier until the headphones are delivered to the respective
retailers in Malaysia.
8. On
15.2.2014, Rania had already mobilised Senders’ Waltz’s trucks from their base
in Johor Bahru to Klang Port to accept delivery from Metaudio. However, as the
day grew weary and dark, SS Coltrain
was nowhere to be seen. The Port’s manifest had not registered any docked
vessels by the alias of SS Coltrain.
At about 6.00pm on the same day, the flustered Rania received a phone call from
Mr. Winn. Mr. Winn’s baritone voice chimed in a jagged rhythm as he explained
the absence of SS Coltrain. Mr. Winn
explained that SS Coltrain could not
set sail today. Mr. Winn exclaimed:
“The voyage had to be delayed as the port of shipment had
booked all their vacuum-sealed containers for other consignments prior to the
headphones. The headphones itself were not vacuum-sealed for environmental
reasons. As an avid environmentalist, the vacuum sealed plastic bags would only
be unsealed and thrown away by his listeners. Only a handful of people in the
world are conscious enough to break their backs to recycle. Most of them would
simply bludgeon the environment further having the plastic packages burnt in
incinerators and illegal open burning. Moreover, as the target audience of the
headphones are audiophiles, this segment of listeners would most probably own
their own vacuum storage unit to store their intricate electronics and musical
gadgets to keep them from oxidation and dampness. I reiterate that the
headphones were made of mahogany tone-wood, a luscious songstress wood
material. If the headphones were not sealed in vacuum, the headphones risk exposure
to moisture and the wood components would indubitably be compromised of its
integrity and the reverberating trait they hold. Especially along the port-side,
the density of sodium chloride (known to mere mortals as common salt) is more
prevalent in the air which increases the risk of oxidation of the metal
components of the headphones.
Metaudio
had no choice but to delay delivery to the port of shipment for three (3) days
pending the availability of vacuum-sealed containers. The consignment would
arrive 3 days later than the agreed date as per the MIDA.”
9. Rania
in turn in the same telephone conversation stated that the delay is
unacceptable. The delivery will fall outside of the agreed date in the
contract. Rania exclaimed:
“Late
delivery on your side would mean late delivery on our side. This will go beyond
the contracted date. I have already mobilised my carrier trucks in Klang Port
from Johor. That travel is nearly half of the country itself. As much as we had
been in business together for years, you still can’t expect Senders’ Waltz to
return the trucks back to Johor Bahru. It will be a waste of resources of time
and petrol. You will have to bear our expenses to remain in Klang for the next
3 days until the consignment arrives.”
10. Mr.
Winn agreed to cover Senders’ Waltz expenses in accommodating their stay
pending the arrival of the consignment in Klang Port.
11. On
19.2.2014, SS Coltrain safely berthed
at Klang Port and unloaded the headphones onto the port. At about 3.00pm in the
evening, all the headphones were successfully loaded unto the trucks. However,
when one of the trucks was revved up to move, the ball-joint between the truck
chassis and the cargo jerked violently and split into two. It was later found
that for the last three days, the trucks were left to park at the port in the
open air. The ball-joint seems to have rusted to the point of breakage. Rania
then immediately telephoned Skodania, the after-market service providers for
Senders’ Waltz carrier trucks. To Rania’s disdain, Skodania can only bring the
spare-parts and their mechanics for repair works the following day on
20.2.2014. Rania had no choice but to postpone the transportation till the next
day. Rania then telephoned Mr. Winn to inform of the unfortunate mishap. The
trucks had to travel in a convoy for the purposes of security.
12. Mr.
Winn was thoroughly disgruntled. He could not bear the thought of having the
headphones sitting senselessly for another day. Rania answered that they would
bear the cost for the one day stowage of the consignment in Klang Port. Mr.
Winn reminded Rania that the headphones require proper storage to prevent
deterioration and damage.
13. Rania
promptly called on the port officials to ascertain if there were cargo holds
still available to stow the consignment for the rest of the day till tomorrow
when the damaged truck was fit to operate after necessary repairs. The port
officials explained that there is one cargo hold which was available which had
the necessary equipment to store the consignment in a vacuum. However, the
officer who had the expertise to operate this specialised equipment was on
leave for the whole week. Rania skimmed through her contacts to see if there
was anyone that within her network that might have the expertise to operate the
hold around the Klang Valley area.
14. Fortunately,
Rania recalled that Mr. Har Bee Han Kuok, a storage specialist from Han Kuok
Specialty Storage and Delivery Sdn. Bhd. had his registered address in Petaling
Jaya. She immediately dialled Han Kuok to identify if he would be able to
assist Senders’ Waltz with storage management. Han Kuok immediately drove to
Klang Port to assess the situation.
15. Upon
assessing the consignment and storage hold, Han Kuok identified that he would
be able to operate the hold’s equipment. Both Rania and Han Kuok quickly drew
an agreement:
A. Han Kuok (“the handler”) shall be employed
from 19.2.2014 till 20.2.2014. The handler shall follow all the instructions
and guidelines provided by Senders’ Waltz (“the company”) in the management of
the consignment.
B. The handler shall stow the consignment in a
vacuum state utilising the equipment available in the cargo hold.
C. The Company shall pay the handler
remuneration for his work.
16. On
the following day, at the time the hold was opened, it was found that there
were vapours on the seams of the headphones’ packaging. It can be seen that the
foam paddings securing the headphones in their packages were slightly damp. It
was later found that Han Kuok had not secured one of the vacuum seals of the
cargo hold.
17. Notwithstanding
the state of the headphones at that time, Senders’ Waltz proceeded with their
journey and finally reached their headquarters in Johor Bahru. Mr. Harry Mason,
Metaudio’s inspections officer and representative conducted final inspection of
the goods with his team in Senders’ Waltz warehouse. The inspection concluded
that at least 35% of the headphones had a more profound sound absorption rate
than the other 65%. Sound waves were lost and were not channelled properly into
the audio engine.
18. The
inspection found that the cause of the weaker sound integrity was damp mahogany
tone-wood structures in the headphones. The affected headphones now could only
boast a 20Hz - 35 000Hz frequency range. Nevertheless, the headphones are in
working condition. These results were then communicated to Mr. Winn Hargrove.
19. Mr.
Winn was thoroughly infuriated. Without a moment’s hesitation, Mr. Winn had
called for a total-recall of all the units shipped to Senders’ Waltz. Mr. Winn
then communicated to Rania that Senders’ Waltz had conducted itself negligently
and in total disregard of the contract as the headphones were not up to spec.
20. Rania
however replied that Senders’ Waltz had not been in breach of the contract. The
headphones are indeed in proper working condition. The headphones are able to
properly function as they were intended to be used. There was no reason for the
total-recall of the headphones. In fact, not all of the headphones were
affected. Furthermore, Senders’ Waltz should be absolved from any liability
even in the instance of negligence. Senders’ Waltz understood that the MIDA
shall be similar to all of our contracts in the past which provides the
following exclusion clause:
“cl. 89:
The
distributor shall not be liable for any damages whatsoever on the goods caused
by neglect and/or wilful neglect on the part of the distributor.”
21. Notwithstanding
Rania’s revolt, Mr. Winn gritted his teeth, slammed his fists on his marble
table and stood firm with his decision. All the headphones were recalled by
Metaudio. Metaudio then had filed a suit in the High Court of Universiti
Teknologi MARA, which stood trial before Judge Zairi Zainudin. The High Court
had held the following:
I. -- It
was clear from the construction of the MIDA itself that time is of the essence.
As the Plaintiff had first, delayed delivery to the port of shipment, they had
breached the contract.
II. - The
Defendant was not in breach of the MIDA as the headphones were indeed in
working condition, fit to perform and operate as it was intended to perform and
operate as headphones at the time the goods were in the Defendant’s possession.
III. - The
Defendant was not at all negligent in the care and management of the headphones
and even if the Defendant was negligent, they are absolved from any liability
as the exclusion clause relied upon by the Defendant applies as intended by
both parties in the making of the MIDA.
IV. - The
Court finds that Han Kuok is the employee of the Defendant, and that the
Defendant should have been vicariously liable for Han Kuok’s negligence.
However, as the Defendant is protected by the exclusion clause, the Defendant
remains absolved from any liability.
Claim dismissed. Judgment for the Defendant,
Senders’ Waltz Sdn. Bhd.
Metaudio now appeals to the Court of
Appeal of Universiti Teknologi Mara against Zairi Zainudin J’s decision.
Moot Author
ZULFIKRI IBRAHIM
ZULFIKRI IBRAHIM
