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2011 MarsdenLR 4074
HIGH COURT MALAYA, KUALA LUMPUR
VW CARS SDN BHD – Appellant
Versus
VOLKSWAGEN GROUP MALAYSIA SDN BHD – Respondent
[Suit No: D-22NCC-140-2010]
The termination of Dealer Agreements was found lawful due to the plaintiff's unauthorized marketing and sales outside agreed terms, establishing clear breach of contract.
Headnote:(A) Dealer Agreements - Termination - Legal principles governing termination were considered with respect to breaches of contract, including unauthorized sales, marketing, and modifications without consent. (Paras 12, 14, 31-32)
(B) Burden of Proof - Upon the defendant's claim of lawful termination, the burden was correctly placed on the defendant to prove the legality of the termination. (Paras 12-13)
Facts of the case:
The plaintiff operated under Dealer Agreements with the defendant and was alleged to have breached these agreements by unauthorized marketing and sales of vehicles from a separate legal entity's showroom. (Paras 5-30)
Findings of Court:
The court found the plaintiff in breach of contract for unauthorized sales and modifications of vehicles. (Paras 31-32)
Issues: Whether the plaintiff breached the Dealer Agreements and the validity of the defendant's termination.
Ratio Decidendi: The court concluded that termination was lawful due to established breaches by the plaintiff. (Paras 14, 31-32)
Result: Plaintiff's claim was dismissed; defendant's counterclaim was allowed.
Certainly. Based on the provided legal document, here are the key points summarized with appropriate references:
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The defendant lawfully terminated the Dealer Agreements due to the plaintiff's breaches, specifically unauthorized marketing, sales outside the defined territory, and modifications to vehicles without prior approval (!) (!) (!) .
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The plaintiff contended that the termination was unilateral and unlawful, asserting that the defendant bore the burden of proving the legality of the termination and limiting reliance to the breaches stated in the notice (!) (!) .
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The court found that the defendant successfully proved, on a balance of probabilities, that the plaintiff operated, marketed, and sold VW vehicles from Cartrade-ABT's Showroom in Bangsar without the required prior approval, breaching the Dealer Agreements (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) .
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The court held that the omission of the Territory of Responsibility in the Federal Highway Dealer Agreement did not restrict the plaintiff's operations, as the agreement explicitly states that the written terms are the sole contractual provisions, and no valid modification was demonstrated (!) (!) (!) (!) (!) (!) .
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The plaintiff was found to have promoted, marketed, and sold VW vehicles from Cartrade-ABT's Showroom, which belonged to a separate legal entity, thus breaching the restriction against operating from another entity's premises without prior written approval (!) (!) (!) (!) (!) (!) (!) .
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The evidence showed that modifications and installations of ABT Kits on vehicles occurred before registration and without prior consent, breaching the prohibition against vehicle modifications before registration (!) (!) (!) (!) (!) (!) (!) (!) .
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The court concluded that these breaches justified the lawful termination of the Dealer Agreements under the relevant contractual provisions, and as a result, the plaintiff's claim for damages was dismissed (!) (!) .
Please let me know if you need a more detailed analysis or specific legal advice based on these points.
| Table of Content |
|---|
| 1. factual background of defendant's dealership (Para 1 , 2 , 3 , 4 , 5) |
| 2. plaintiff's arguments against termination (Para 6 , 7 , 8) |
| 3. defendant's justification for termination (Para 9 , 10 , 11) |
| 4. court's preliminary observations (Para 12 , 13) |
| 5. court's findings on breaches of agreements (Para 14 , 20 , 21 , 22 , 23 , 31) |
| 6. territory of responsibility in agreements (Para 15 , 16 , 17 , 18 , 19) |
| 7. court's analysis of the territory of responsibility (Para 24) |
| 8. modification prohibitions in agreements (Para 32 , 33 , 34) |
| 9. defendant's counterclaims (Para 35) |
Brief Facts
[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.
[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.
[3] The defendant appointed Cartrade Sdn Bhd (Cartrade) as one of its independent authorised dealers and entered into a Dealer Agreement on 21 August 2006 in respect of the Federal Highway, Petaling Jaya outlet. The plaintiff was incorporated on 22 August 2006 to supercede Cartrade. The defendant entered into another Dealer Agreement with the plaintiff on 30 May 2007 in respect of the Mutiara Damansara, Petaling Jaya outlet.
[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.
[5] On 4 November 2009 the defendant gave written notice to the plaintiff to terminate the two 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 Art 3 of the Dealer Agreements;
b) modification of VW vehicles without our prior written approval, in breach of Art 4 of the Dealer Agreements."
The Plaintiff's Case
[6] The plaintiff contended inter alia that:
(i) the Notice of Termination dated 4 November 2009 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 two breaches stated in the Notice of Termination to prove its case against the plaintiff.
[7] 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 Arts 3 and 4 of the Dealer Agreements respectively.
[8] 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.
The Defendant's Case
[9] The defendant contended that it had properly and validly terminated the Dealer Agreements based on the Notice of Termination dated 4 November 2009 pursuant to Art 3 paras 6 and 7 and Art 4 para 3, respectively.
[10] Apart from relying on the two grounds stated in the Notice of Termination, the defendant sought to rely on 4 other breaches pleaded in paras 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 Volk
