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2025 MarsdenLR 3288
HIGH COURT SABAH & SARAWAK KUCHING
KV DISTRIBUTORS SDN BHD – Appellant
Versus
ANTARES VENTURES SDN BHD – Respondent
[Case No: KCH-12BNCvC-8-7/2023]
A distribution agreement remains valid despite the lack of a license if not expressly prohibited by law, affirming proper evidentiary support is crucial for establishing contractual obligations.
Headnote:(A) Control of Padi and Rice Act, 1994 - Distribution Agreement - Appeal against the Sessions Court decision dismissed; plaintiff proved breach of contract; defendant's counterclaim dismissed. (Paras 2, 9, 24)
(B) Validity of Contract - A contract is not rendered void for lack of license unless expressly stated by statute, reaffirming proper evidence is necessary to demonstrate privity of contract. (Paras 55, 60)
(C) Licensing Requirement - No explicit prohibition against entering into a distribution agreement without a license in the relevant act and regulations. (Paras 56, 61)
Facts of the case:
The plaintiff entered an exclusive distribution agreement with the defendant for rice distribution, but the defendant claimed no direct dealings with the plaintiff, asserting all transactions were with an unlicensed entity, Antares Enterprise. (Paras 7, 16, 32)
Findings of Court:
The plaintiff's claim was evidenced sufficiently, affirming the validity of the distribution agreement based on established communications and terms, with the counterclaim from the defendant dismissed for lack of merit. (Paras 36, 37, 49)
Issues: The primary issues were the existence of a valid contract between the plaintiff and the defendant and whether there was a breach of the distribution agreement. (Paras 24)
Ratio Decidendi: The court determined that the distribution agreement was not void due to licensing issues, as the obligations under the agreement remained enforceable despite the lack of license initially held by the plaintiff. (Paras 60)
Result: Appeal dismissed with costs.
| Table of Content |
|---|
| 1. dismissal of the appeal with costs. (Para 1 , 2 , 3 , 4) |
| 2. background facts of the distribution agreement. (Para 7 , 8) |
| 3. defendant's argument regarding licensing issues. (Para 10 , 11 , 12 , 15 , 19) |
| 4. court's reasoning on factual findings. (Para 35 , 36 , 49) |
| 5. validity of the distribution agreement. (Para 56 , 61) |
Appeal
Introduction
[1] The matter before this Court is an appeal by the defendant, KV Distributors Sdn Bhd against the entirety of the decision of the learned Sessions Court Judge ("SCJ") delivered after a full trial on 27 June 2023.
[2] Having carefully considered the grounds of judgment of the learned SCJ, together with the evidence adduced by both parties at trial, this Court finds no merit in the appeal. It is the considered view of this Court that the learned SCJ did not err in allowing the plaintiff's claim and in dismissing the defendant's counterclaim.
[3] Given the above, the Defendant's appeal is dismissed with costs. The findings and decision of the learned SCJ are affirmed accordingly.
[4] The Defendant is dissatisfied with this Court's decision and has filed an appeal to the Court of Appeal.
[5] Below are the grounds for my decision.
[6] For convenience, reference to the plaintiff shall mean the respondent, and reference to the defendant shall mean the appellant.
Brief Background Facts
[7] Based on the Grounds of Decision of the learned SCJ, the brief background facts of this case are as follows:
(a) This case involved an agreement known as the Exclusive Distribution Agreement ("the Distribution Agreement") entered into between the plaintiff and the defendant. Based on the Distribution Agreement, the plaintiff is the "Principal" and the defendant is the "Distributor".
(b) The facts leading to the signing of the Agreement are these. On 6 June 2017, Antares Enterprise was established by Brendan Kon (PW1). The objectives of its establishment are to empower the rural paddy farmers in Sarawak by increasing their household income, improving their livelihood and preserving the unique indigenous rice species in Sarawak, which was declining in production and demand. Antares Enterprise managed to list the KENYALANG Sarawak rice in the major supermarkets in Sarawak such as Everrise, Choice Supermarket, Ta Kiong, Emart and H&L.
(c) Around October 2018, Antares Enterprise was approached by the Defendant at AgroFest Exhibition at Demak Konvensyen Centre and the latter then expressed to Antares Enterprise of its interest to distribute KENYALANG rice in the East Malaysia markets which also drove Antares Enterprise to expand its business and strengthen its local community support throughout Sarawak.
(d) On 25 February 2019, the plaintiff and the defendant entered into the Distribution Agreement, which was marked as exh P2, for the purpose of appointing the defendant to be the sole distributor for the sale of KENYALANG Sarawak Rice in Sabah and Sarawak.
(e) The Plaintiff has filed the claim against the defendant for breach of the said Distribution Agreement, which the plaintiff claimed has caused losses to the plaintiff.
(f) In order to shirk the liability, the defendant has submitted that the dealings were actually between the defendant and Antares Enterprise and not with the plaintiff. The Defendant relied on the admission by PW1 in his evidence when he told the Court that the deal was temporarily between Antares Enterprise and the defendant in order to avoid any issues with the government agency concerned ie Kawal Selia.
(g) It is no doubt that when the plaintiff entered into the Distribution Agreement, the plaintiff did not have licence to sell rice and padi on wholesale. The licence was held by Antares Enterprise, which was issued pursuant to Control of Padi and Rice (Licensing of Wholesalers and Retailers) Regulations 1996 ('the Regulations") [see exh P1 (p 99)].
(h) The Plaintiff was later incorporated on 18 February 2019 and the license in respect of the plaintiff was finally obtained
