The court found no binding Distributorship Agreement existed between the parties, and the termination of the Plaintiff's appointment was lawful due to outstanding debts.

JUDGMENT

Suria Kumar DJ Paul JC:

Introduction

[1] The dispute herein concerns the distributorship of goat's milk produced by the Defendant.

[2] Plaintiff claims they were appointed as sole and exclusive distributors by the Defendant.

[3] Whereas Defendant says Plaintiff is only an agent to distribute.

Background Facts

[4] The Defendant owns a goat farm and is involved in the business of producing goat's milk and other related products.

[5] They have been in the business of milking and selling goat's milk for delivery, selling in Shopee and exporting to Singapore for the past eighteen (18) years.

[6] Defendant's products are packed and distributed to their agents or suppliers to distribute to supermarkets, shops, retailers and other end users.

[7] Dr Tan I-Lene ("PW1"), one of the Plaintiff's directors has known Mr Goh Un Keng, a director of the Defendant ("DW1") since 2007. PW1 got acquainted with DW1 during her varsity years while being involved in a project at the Defendant's farm that provided PW1 with an insight into the Defendant's goat's milk business.

[8] PW1 maintained intermittent contact with DW1 and some years later, expressed an interest to DW1 in distributing the Defendant's products. She conveyed to DW1 the idea of exclusively distributing Defendant's products in the retail market in Malaysia since the Defendant's had limited clientele and distribution network.

[9] This culminated in a meeting on 14 June 2016 between the Plaintiff's directors PW1, Karen Kow Swee Mui ("PW2"), DW1 and one Amy Goh, an employee of Defendant and also the personal assistant to DW1. According to the Plaintiff, an agreement was reached between the parties for a Distributorship Agreement during the meeting.

[10] According to PW1, the salient terms of the Distributorship Agreement which was agreed between the parties are as follows:

(i) Distributorship: Asia Milk Traders ("AMT"), a sole proprietorship established by PW1, would exclusively distribute the Defendant's products to commercial retailers and supermarkets markets in Malaysia;

(ii) Price Stability: Product prices would remain fixed for the first three years of the agreement;

(iii) Credit Terms: AMT's product purchases would have a credit limit of RM200,000.00 with a 60-day credit term; and

(iv) Duration: The Distributorship Agreement will last 15 years, starting from 21 June 2016.

[11] In reliance of this purported Distributorship Agreement, AMT established a substantial clientele, including supermarket chains. Since there was consistent growth in the distribution of the Defendant's products, Plaintiff, Asia Farms Network Sdn Bhd was incorporated on 19 January 2017 to facilitate the business expansion.

[12] According to Plaintiff, the Distributorship Agreement between AMT and Defendant was then assigned and continued with Plaintiff. This was acknowledged by the Defendant and the parties maintained a continuous business relationship and fulfilled the contractual obligations according to the terms of the Distributorship Agreement.

[13] Whereas according to the Defendant from the middle of 2016 to December 2018, Plaintiff was one of the Defendant's agents who purchased the Defendant's products for distribution, re-sale and supply in Malaysia.

[14] The relationship between Plaintiff and Defendant from time to time was governed by the terms in the Agent Details and Quotation issued by Plaintiff to Defendant. In addition, the terms were also as stated in the purchase orders, delivery orders and invoices issued between parties.

[15] Defendant contends that the Plaintiff agreed to these terms The Plaintiff had a credit term for sixty (60) days.

[16] The Defendant duly supplied the products as ordered by the Plaintiff. However, Plaintiff was not prompt in making payment and as of 22 November 2018 an outstanding amount of RM247,826.20 in unpaid invoices was due and owing to Defendant.

[17] This prompted Defendant to issue a 5th revised Quotation dated 1 December 2018 giving Plaintiff a credit limit of RM200,000.00