Defendant lawfully terminated Dealer Agreements based on Plaintiff's breaches, thereby validating its counterclaim for outstanding payments.

1. Brief Facts

1.1. The Defendant is a wholly owned subsidiary of Volkswagen AG of Germany and is the representative and supplier of Volkswagen (VW) vehicles, parts and accessories in Malaysia.

1.2. The Defendant however does not sell VW vehicles, parts and accessories or provide after sales services directly to car buyers in Malaysia. To do so, the Defendant appoints independent authorised dealers.

1.3. The Defendant appointed Cartrade Sdn Bhd (Cartrade) as one of its independent authorised dealers and entered into a Dealer Agreement on 21/8/06 in respect of the Federal Highway, Petaling Jaya outlet. The Plaintiff was incorporated on 22/8/06 to supercede Cartrade. The Defendant entered into another Dealer Agreement with the Plaintiff on 30/5/07 in respect of the Mutiara Damansara, Petaling Jaya outlet.

1.4. Cartrade carried on the business of selling cars and accessories at its showroom at No. 73, Jalan Maarof, Bangsar, Kuala Lumpur known as Cartrade-ABT's Showroom.

1.5. On 4/11/09 the Defendant gave written notice to the Plaintiff to terminate the 2 Dealer Agreements with immediate effect. The Notice of Termination stated as follows:-

"We have in our possession evidence to confirm that VW Cars Sdn Bhd ("VW Cars") have committed inter alia , the following breaches of the Dealer Agreements namely:-

a) unauthorised marketing and/or selling of VW vehicles at Cartrade-ABT's Showroom at 73, Jalan Maarof, Bangsar, Kuala Lumpur in breach of Article 3 of the Dealer Agreements;

b) modification of VW vehicles without our prior written approval, in breach of Article 4 of the Dealer Agreements."

2. The Plaintiffs Case

2.1. The Plaintiff contended inter alia that:-

(i) the Notice of Termination dated 4/11/09 terminating the Dealer Agreements in respect of the Federal Highway Dealer Agreement and the Mutiara Damansara Dealer Agreement was unilateral and unlawful;

(ii) the Defendant, who had allegedly terminated the contract unlawfully, bore the burden to prove that the termination was in compliance with the Dealer Agreements and was lawful and as such the Defendant should begin the trial and

(iii) the Defendant should not be allowed to rely on any other breaches, besides the 2 breaches stated in the Notice of Termination to prove its case against the Plaintiff.

2.2. The Plaintiff denied that it had marketed and/or sold VW vehicles at Cartrade-ABT's Showroom or had modified VW vehicles without the prior written approval of the Defendant in breach of Articles 3 and 4 of the Dealer Agreements respectively.

2.3. The Plaintiff also contended that as Appendix 3 of the Federal Highway Dealer Agreement, pertaining to the "Territory of Responsibility", was left blank it could not be implied that the business of the Plaintiff under that Dealer Agreement ought to be confined to the "territory" of Petaling Jaya only.

3. The Defendant's Case

3.1. The Defendant contended that it had properly and validly terminated the Dealer Agreements based on the Notice of Termination dated 4/11/09 pursuant to Article 3 paragraphs 6 and 7 and Article 4 paragraph 3, respectively.

3.2. Apart from relying on the 2 grounds stated in the Notice of Termination, the Defendant sought to rely on 4 other breaches pleaded in paragraphs 7.1 and 14 of the Amended Defence and Counterclaim as further grounds to terminate the Dealer Agreements, namely:-

"(a) continuously failing to pay, despite repeated reminders, for the Volkswagen Contractual Products supplied by the Defendant to the Plaintiff, in breach of Article 26 paragraph 5 of the Dealer Agreements;

(b) refusing to make available complete customer database to the Defendant, despite receiving notice to do so from the Defendant, contrary to Article 13 paragraph 6(c) of the Dealer Agreements;

(c) failing to achieve the Dealer Performance Standard, despite receiving notice to do so from the Defendant, in breach of Article 15 of the Dealer Agreements;

(d) failing to provide sales and/or after sales services of satisfactory quality to the customers of V