Parties are bound by the terms of contracts they execute, including referenced documents, and jurisdiction clauses must be respected unless strong justification to override them is provided.

S Nantha Balan JCA:

Introduction

[1] On 19 November 2019, Able Food Sdn Bhd (Company No 1033584-V) ("respondent") filed an action in the High Court of Malaya in Kuala Lumpur, to wit, Suit No: WA-22NCC-653-11/2019 ("Suit 653") against Open Country Dairy Limited (Company No 1911063) ("appellant") for alleged breach of contract(s) in, inter alia, supplying instant whole milk powder ("IWMP") of unmerchantable quality.

[2] The appellant was incorporated in New Zealand. Until the present dispute erupted, the respondent was a customer of the appellant. In Suit 653, the respondent's claim against the appellant was for special damages in the sum of USD3,493,048.80 plus general damages for loss of profit and loss of market.

[3] The respondent obtained leave of the High Court under O 11 r 1(1)(F) and r 4 Rules of 2012 ("ROC") and claimed that they had duly served the Notice of Writ on the appellant in New Zealand. However, the appellant alleged that the Notice of Writ was not regularly served on the appellant in New Zealand as the Malaysian consular authority in New Zealand had forwarded the same to them by post, instead of by hand. Thus, it was alleged that service was not in accordance with s 388 of the Companies Act 1993 (New Zealand).

[4] The appellant also contended that their "Terms of Trade" were incorporated by reference in each of the Sales Contracts wherein parties had agreed that the forum for any dispute is in New Zealand and parties had therefore submitted to the exclusive jurisdiction of the courts in New Zealand.

[5] The appellant entered appearance and filed a Notice of Application dated 8 July 2020 ("encl 19") pursuant to O 12 r 10 (1) and/or (2) ROC and/or the inherent jurisdiction of the Court, to (1) set aside the Notice of Writ to be served out of jurisdiction dated 23 December 2019, and (2) that the courts in Malaysia should not assume jurisdiction over this dispute as parties had submitted to the exclusive jurisdiction of the courts in New Zealand.

[6] On 9 November 2020, the learned Judicial Commissioner ("the JC") dismissed encl 19. See: Able Food Sdn Bhd v. Open Country Dairy Ltd, [2021] 9 MLJ 723 HC.

[7] The appellant lodged an appeal to this Court against the JC's said decision. In summary, the appellant's complaint was that the JC erred in law and/or in fact in finding that the Terms of Trade were not incorporated by reference in the Sales Contracts. It was also alleged that the JC erred in law and/or in fact, in failing to apply the correct principles in deciding whether the Court in New Zealand was the forum that had been agreed to by the parties for any dispute arising out of and/or in connection with the Sales Contracts. The appellant also contended that the JC erred in law and/or fact in finding that Malaysia was the most appropriate forum to hear this dispute.

[8] On 24 May 2021, we allowed the appellant's appeal and set aside the Order of the High Court dated 9 November 2020. We also ordered that the action in the High Court be stayed per prayer (5) of encl 19. This judgment explains our reasons for allowing the appeal.

Background

[9] The respondent purchased IWMP from the appellant via contracts that were entered into between November 2016 and September 2017. The details of the contracts (as evidenced by the Purchase Orders and Sales Contracts) are as stated in para (3) of the Statement of Claim dated 19 November 2019. It may be noted that the Statement of Claim omitted any reference to the Terms of Trade. This was presumably because, as far as the respondent was concerned, the Terms of Trade were not incorporated in the contracts for the supply of IWMP.

[10] According to the respondent, the salient terms of the contracts were all identical and they are as follows:

(a) The descriptions of the IWMP are as follows:

(i) Physical properties - light cream in colour and free flowing powder;

(ii) Flavour and odour - sweet desirable flavour, free from undesirable flavour; and

(iii) Expiration date - two years from