1
IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR
(COMMERCIAL DIVISION)
SUIT NO. 22NCC-1038- 07/2012
NETWORK PET PRODUCTS (M) SDN. BHD.
v.
1. ROYAL CANIN SAS
2. ROYAL CANIN MALAYSIA SDN. BHD.
GROUNDS OF JUDGMENT
Background
The Plaintiff is a company that trades and distributes pet products.
and was the sole distributer of the Royal Canin pet food products in
Malaysia and Brunei from 1996 until the end of 2012. According to
PW1, Shanmuganatahn a/l Nagalingam sometime in 1996 he was
approached by Luc Cuinet, a representative of the 1st Defendant in
the Asia Pacific region to establish a market in Malaysia and Brunei
for the Royal Canin brand with sole and exclusive distribution rights.
PW1 then set up the Plaintiff on 20.1.1996 as the distributer of
the said brand of food products supplying pet shops, veterinary clinic
and breeders. In 2003 a Distributorship Agreement (‘the Agreement’)
was formalized and duly executed between the Plaintiff and the
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1st Defendant. The Agreement, inter alia, defined the Plaintiff as
the distributer and sets out the legal status of the Plaintiff as a
distributer (Article 1),
“ THE DISTRIBUTER purchases, sells in its own name for its own
account. It has a status of an independent dealer vis-a-vis ROYAL
CANIN S.A. and vis-à-vis its customers. It will be held to promote sales
of the ROYAL CANIN products in the most effective manner, in the zone
of principal responsibility, without being authorized to act in the name
and on behalf of ROYAL CANIN….”.
The Agreement was for a period of 2 years from 1.1.2003 until
31.12.2004
and was
renewed
until
2007.
Renewal
of
the
distributorship were determined by achieved sales targets agreed to
by the Parties.
The Plaintiff continued as the sole and exclusive distributor of the
pet food products even after 2007. It is contended by the Plaintiff
that PW1 together with PW2 had a meeting with the 1st Defendant
representative Phillipe Estoit where he told the Plaintiff that the
1st Defendant want to create a more permanent relationship and
that the Plaintiff would be the 1st Defendant’s distributer for so long
that Plaintiff is able and willing to do so. This so-called meeting is
the basis of the Plaintiff’s claim of the existence of partnership as
described by the PW1 (Re: Q/A 21 WS/PW1). However, no written
partnership was drawn up by the parties. It is the Plaintiff’s case
that despite the non existence of a documented partnership such a
permanent relationship exist between the parties. It is now the duty of
this Court to determine whether such a partnership had been legally
formed as alleged by the Plaintiff.
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A partnership is described as the relation which subsists between
persons carrying on business in common with a view of profit (to
section 3(1) of the Partnership Act). A partnership does not confer
any limited liability on the partners, thus making a partner being liable
without limit to the debts incurred by the other partners. It is statutorily
provided under section 11 of the Partnership Act 1961 that the liability
of any of the partners in a partnership is one of joint liability (Re:
Guinness Anchor Marketing Sdn. Bhd. v. Chellam Joe Vetha Thya
Singh [1999] 7 CLJ 392; [1999] 3 AMR 2735); Nasir Kenzin & Tan v.
Elegant Group Sdn. Bhd. [2009] 1 CLJ 47 COA).
It is also provided under section 3(2) of the same Act that,
“ (2) The relation between members of any company or association which
is (a) registered as a company under the Companies Act 1965 [Act 125]
or as a co-operative society under any written law relating to cooperative societies; or
(b) formed or incorporated by or in pursuance of (i) any other law having effect in Malaysia or any part thereof; or
(ii) any letters patent, Royal Charter or Act of the Parliament of
the United Kingdom,
is not a partnership within the meaning of this Act.”.
Section 4 of the same Act provides that in determining whether a
partnership exists regard shall be had to the following rules:“ (a) joint tenancy, tenancy in common, joint property, common property,
or part ownership does not of itself create a partnership as to anything
so held or owned, whether the tenants or owners do or do not share any
profits made by the use thereof;
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(b) the sharing of gross returns does not of itself create a partnership ,
whether the persons sharing such returns have or have not a joint or
common right or interest in any property from which or from the use of
which the returns are derived;
(c) the receipt by a person of a share of the profits of business is prima
facie evidence that he is a partner in the business, but the receipt of such
a share, or of a payment contingent on or varying with the profits of a
business, does not of itself make him a partner in the business; and in
particular (i) the receipt by a person of a debt or other liquidated amount, by
installments or otherwise, out of the accruing profits of a business does
not of itself make him a partner in the business or liable as such;
(ii) a contract for the remuneration of a servant or agent of a person
engaged in a business by a share of the profits of the business does not of
itself make the servant or agent a partner.”.
The Learned Counsel for the Plaintiff referred to the case of Aw
Yong Wai Choo v. Arief Trading [1992] 1 MLJ 166 where Peh
Swee Chin said that Court would have to determine the real intention
of the parties in dispute. I agree that to do so this Court will have to
look at all the relevant factors taken together to ascertain whether the
relation exists or does not exist.
It is submitted by the Plaintiff that the Plaintiff is in true sense the
agent of the 1st Defendant and that the 1st Defendant is the principal
responsible for the manufacturing of the pet food products. It is
further submitted by the Plaintiff that the relationship between the
Plaintiff and the 1st Defendant after 2008 satisfies the definition of
partnership pursuant to section 3(1) of the Partnership Act.
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In order to determine whether there exist a partnership between the
Plaintiff and the 1st Defendant it is necessary at the outset to examine
the terms and conditions of the distributorship agreement. The terms
and conditions agreed upon as well as the conduct of the parties and
the surrounding circumstances throughout the business relationship
would reflect the desired intention of the parties.
It is stipulated under Article 1 that the Plaintiff is an independent
dealer. The 1st Defendant’s obligation as a supplier would be to
supply the Plaintiff with the products and will do everything possible
to ensure rapod delivery of the said products and further undertakes
to supply in the zone of principal responsibility to the exclusion of
others (Article II). The products delivered remains as the property of
the 1st Defendant up to the time of full payment.
Article VII stipulates that the Distributer will have the right to establish
freely its price of resale but it must resell under the Royal Canin
trademarks. Article VII further provides that the 1st Defendant is
the holder of the trademark and only grants to the Plaintiff the right
to sue the trademark in connection of the sales of the products in
accordance with the contract.
It is expressly provided under Article XVII that the present contract
period is valid for an initial period as indicated in Annex 3, which is for
a period of 2 years from 1.1.2003 until 31.12.2004. After that it may
be renewed for consecutive periods of one year subject to approval of
Royal Canin SAS and the acceptance of minimum sales target. For
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this purpose the parties will meet at the end of each year to negotiate
the minimum sales target. Article XV expressly provides that any
changes must be in writing.
The Agreement of 2003 sets out the basis of the business
relationship between the Plaintiff and the 1st Defendant. The parties
were obviously so comfortable with the manner and the success
of the enterprise that a by the end of 2004 they continued on a
yearly basis with the business. It is the evidence of PW1 that
sometime in January 2008, he together with the Plaintiff’s Operation
Manager, Miss Vanitha (PW2) had a meeting with Phillipe Estiot who
had informed them that the 1st Defendant’s desire to create a more
permanent relationship as the Plaintiff has been the 1st Defendant’s
sole distributer for 12 years. PW1 and Estiot on behalf of the
1st Defendant agreed that the parties will carry on the business by
entering into a relationship where according to the evidence in chief
of PW1 in his Witness Statement,
“ …the plaintiff will be the sole and exclusive distributer of the products in
Malaysia and Brunei for so long as the Plaintiff is able and willing…”.
It is on this basis that PW1 contends the beginning of the partnership
as he went on to state in his Witness Statement that,
“ For ease of reference, I will refer to the new relationship as” the
Partnership.”.
After the expiry of the 2 years the parties continued the business
relationship as usual. PW1 in evidence stated that he trusted the
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1st Defendant and therefore a written agreement on the Partnership
was unnecessary. The Learned Counsel for the Plaintiff submitted
that a partnership need not be in writing. Section 3(1) of the
Partnership Act was referred to and it is submitted by the Plaintiff
that the Plaintiff was in fact the agent of the 1st Defendant in Malaysia
and Brunei and the 1st Defendant was the principal who was
responsible for the manufacturing of the products. It is further
submitted that the classic definition of the term ‘profit’ is normally
represented in monetary value however legally the term has a wider
definition. Profit may therefore exist in kind as well as cash. Therefore
it is submitted that both the Plaintiff and the 1st Defendant were
interested in the success of the partnership which is measured not
only by the monetary profits but also the establishment of the
products in the region. It is submitted the wider the Plaintiff’s
distributions network the more profitable the partnership.
Findings and Evaluation
In coming to a decision in this case, this Court has carefully perused
all the evidence adduced by all the witnesses, both for the Plaintiff
as well as the Defendants. The Court also considered all the
documentary evidence including all relevant contemporaneous
correspondences between the parties. The Plaintiff’s claim is
premised on the existence of a partnership with the 1st Defendant.
As such, the first and main issue for determination by the Court
is whether the Plaintiff has successfully established that there was
a partnership and, if so, the terms of such relationship.
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Burden of Proof
It is submitted by the Learned Counsel for the Plaintiff that none
of the 4th Defendant’s witnesses had any personal knowledge
of the partnership which was entered into by both parties through
representations made by Phillippe Estiot sometime in January
2008. It is also the submission of the Plaintiff that the Plaintiff has
discharged its burden of proving a prima facie case on the existence
of the partnership. It is the Plaintiff’s case that the provisions for
renewal of the contract was not complied after 2007, no minimum
sales target set, PW1 & PW2 had also confirmed the meeting in
January 2008 as well as the various admission allegedly made by the
1st Defendant. The burden of proof according to the Plaintiff has
therefore shifted to the Defendant.
The law on the burden of proof is governed by the provisions in the
Evidence Act 1950 (‘the Act’). Section 101 of the Act provides that the
legal burden of establishing the facts pleaded against the Defendants
is on the Plaintiff. At the conclusion of the case this Court has a duty
to determine whether sufficient evidence had been adduced by the
Plaintiff to prove his case on a balance of probabilities. Section 106 of
the Act further provides that the burden to prove any facts which is
especially within the knowledge of the Plaintiff lies on the Plaintiff.
In the instant case I am of the considered view that the burden still
remains with the Plaintiff to prove that a partnership exist between the
parties. It is the Plaintiff’s case that the meeting of 2008 with Phillipe
Estiot is the beginning of the affirmation of a partnership between the
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parties. Therefore applying section 106 EA the burden lies on the
Plaintiff to prove that fact. In my considered view it is the Plaintiff
that should have called Phillippe Estiot as a witness to give evidence
that there was a meeting and that he had in fact indicated that
there is a partnership between the parties. PW1 in his evidence inchief said that that it was Estiot who had informed the Plaintiff that
1st Defendant’s wanted to create a more permanent relationship as
the Plaintiff has been the 1st Defendant’s sole distributer for 12 years.
Since there is no written agreement the burden is on the Plaintiff to
show that it was the intention to create a partnership and that the
partnership existed from 2008. PW1 during cross-examination when
asked what are the terms of the oral partnership he said,
“ we were given assurances that we will be partners ..”.
I agree with the submission of the Learned Counsel of the Defendant
that a reasonable and experienced businessman such as PW1
would not have kept silent about such a business relationship totaling
relying on assurances and not make any attempts whatsoever
to obtain a written confirmation from the head office i.e. the 1st
Defendant of such intention. The Court of Appeal in the case of
KGN Jaya Sdn. Bhd. v. Pan Reliance Sdn. Bhd. [1996] 1 MLJ
233 which was referred by the Learned Counsel for the Defendants
said that,
“ Further, Part X of the Contracts Act 1950, which contains the relevant
provisions on agency does not contain any requirement that the
appointment of an agent or sub-agent has to be in writing or be
evidenced in writing. Hence the appointment may be express or implied,
that is to say, it may be gathered from the facts and circumstances of a
10
case and from the conduct of the parties: see, Kuchwar Lime & Stone
Co v Dehri Rohtas Light Railway & Co Ltd AIR 1969 SC 193.
Another way of stating the proposition is that a party may, by his conduct
in all the circumstances of a particular case, be estopped from asserting
the absence of an agency relationship between him and he who claims
to be his principal.
Viewed in this way, we perceive that the key to the whole case lies in the
conduct of the appellant in this case. ……”.
In the instant case PW1 had ample opportunities after the 2008
to confirm and/or to raise the existence of the partnership with the
1st Defendant. At the meeting held on 18.10.2011 (pg 267-271 A) the
Plaintiff did not raise at all the issue relating to the existence of an
oral partnership. Both PW1 and PW2 attended the meeting. The
discussions at that meeting revolved around the non renewal of the
Plaintiff as the distributor of the pet food products which was and still
is the concern of the Plaintiff.
Estiot is the local representative of the 1st Defendant in 2008. The
Plaintiff’s contents that PW1 and PW2 is dealings with the 1st
Defendant was always with the local representatives namely Luc
Cuinet and Estiot. However, as explained by DW4, Francois
Gergaud, the President of the Asia Pacific Region in his Witness
Statement Luc Cuinet was the 1st Defendant Area Manager
overseeing SEA in 2009 and reported directly to him. As for Estiot
the first reported to Cuinet but when DW4 took over Estiot
reported directly to him. DW2 confirmed that the representative
do not have any authority to enter into any contracts on behalf of
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the 1st Defendant and that all contracts must be in writing and with
entered into by the head quarters in France. Furthermore the local
representative main function is to act as the coordinator on behalf of
the 1st Defendant and to conduct market research. His functions
do not extent into entering into business transactions or to conduct
any business activities. DW4 also confirmed that Cuinet never
reported to him of any partnership with the Plaintiff. In fact DW4 had
several meetings with PW1 since 2009 and the issue of partnership
was never raised,
“Answer to Q12: In
fact
I
had
several
discussions
with
Mr
Shanmugananthan since 2009 and never once has
the Plaintiff’s representative raised the issue of
alleged partnership with the 1st Defendant with me
before.”.
Adverse inference should be drawn against the Plaintiff for their
failure to call both Estiot and Cuinet to testify at the trial as it is still
the burden of the Plaintiff to prove that a partnership exist based on
the assurances made by Cuinet in 2008.
The test of a partnership
Section 3(1) of the Partnership Act provides that “Partnership is
the relation which subsists between persons carrying on business
in common with a view of profit.” In deciding whether or not a
partnership exists the Court must consider the intentions of the
parties based on the totality of the facts of the case. Section 4 of the
same Act further provides that,
“ In determining whether a partnership does or does not exist, regard shall
be had to the following rules:
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(a) joint tenancy, tenancy in common, joint property, common
property, or part ownership does not of itself create a partnership as
to anything so held or owned, whether the tenants or owners do or do
not share any profits made by the use thereof;
(b) the sharing of gross returns does not of itself create a partnership,
whether the persons sharing such returns have or have not a joint or
common right or interest in any property from which or from the use
of which the returns are derived;
(c) the receipt by a person of a share of the profits of business
is prima facie evidence that he is a partner in the business, but the
receipt of such a share, or of a payment contingent on or varying with
the profits of a business, does not of itself make him a partner in the
business; and in particular—
(i) the receipt by a person of a debt or other liquidated amount,
by installments or otherwise, out of the accruing profits of a
business does not of itself make him a partner in the business or
liable as such;
(ii) a contract for the remuneration of a servant or agent of a
person engaged in a business by a share of the profits of the
business does not of itself make the servant or agent a partner in
the business or liable as such;
(iii) a person being the widow or child of a deceased partner, and
receiving by way of annuity a portion of the profits made in the
business in which the deceased person was a partner, is not, by
reason only of such receipt, a partner in the business or liable as
such;
(iv) the advance of money by way of loan to a person engaged or
about to engage in any business on a contract with that person
that the lender shall receive a rate of interest varying with the
profits, or shall receive a share of the profits, arising from
carrying on the business, does not of itself make the lender a
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partner with the person or persons carrying on the business or
liable as such:
Provided that the contract is in writing and signed by or on behalf
of all the parties thereto; and
(v) a person receiving, by way of annuity or otherwise, a portion
of the profits of a business in consideration of the sale by him of
the goodwill of the business is not, by reason only of such
receipt, a partner in the business or liable as such.”.
Tenancy in common, joint property, common property, or part
ownership does not of itself create a partnership as to anything
so held or owned, whether the tenants or owners do or do not
share any profits made by the use
No evidence was adduced by the Plaintiff of the existence of
any tenancy, tenancy in common, joint property, common property
between the parties. The warehouse was set up by the Plaintiff to
store the pet food products. The 1st Defendant’s concern with regards
to the warehouse is that it must meet the standards of the
1st Defendant to ensure that the products are stored in optimum
condition as the pet food may deteriorate due to poor storage
conditions.
Sharing of gross returns does not of itself create a partnership,
whether the persons sharing such returns have or have not a
joint or common right or interest in any property from which or
from the use of which the returns are derived
Based on the evidence the Plaintiff has the right to establish freely
the price of the products. Article VII of the 2004 Agreement stipulates
that,
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“ THE DISTRIBUTER will have the right to establish freely its price of
resale ..”.
This arrangement continued even after 2008. There is no evidence
of any sharing of any gross returns between the parties. It would
seem that the operative word here at all material time is ‘price’. PW1
during cross-examination testified that after 2008 the Plaintiff was
not required to obtain the consent of the 1st Defendant to make any
profits from the sale of the products,
“ I didn’t have any sales target …free to sell at whatever volume I
wanted whatever price that I wanted…”.
There was no evidence adduced of sharing of gross returns. The
evidence seems to point to the fact that the Plaintiff and the
Defendants were entirely two different independent entities and
business enterprises.
Receipt by a person of a share of the profits of business is prima
facie evidence that he is a partner in the business, but the
receipt of such a share, or of a payment contingent on or
varying with the profits of a business, does not of itself make
him a partner in the business
There is also no evidence adduced of any share of profits. PW1
stated in his Witness Statement that,
“The Plaintiff was able to profit from the sales of the products…the
1st Defendant on the other hand profited from the Plaintiff’s wide
distribution as it was able to manufacture more…”.
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There is no evidence of any receipt of shares by the 1st Defendant
from the Plaintiff’s sales. During cross-examination PW1 in fact
confirmed that the Plaintiff do not share profits with the 1st Defendant.
It is the contention of the Plaintiff that one of the main features of
the partnership was that the Plaintiff would no longer be required
to submit the business plan one yearly basis. However, evidence
show that business plans were in fact submitted and were discussed
between PW1, PW2 and DW1.
PW1
PW1 is the founder of the Plaintiff’s company. However PW1 gave
inconsistent evidence in particular with regards to whom from the
1st Defendant had entered into the alleged partnership. PW1 had
testified in cross-examination that it was not Estiot but Luc Cuinet.
In his Witness Statement he said it was Estiot,
“A: The Plaintiff continued to be the sole and exclusive distributer
of the Products even ad0fter the year 2007. In January 2008,
the Plaintiff’s Operations manager, Vanitha , and I attended a
meeting with Phillipe Estiot at our office in Petaling Jaya. Philippe
informed me that the 1st Defendant wanted to create a more
permanent relationship with the Plaintiff in view of the fact that
the plaintiff has been the 1st Defendant’s s sole distributer for the
past 12 years.”
In cross-examination when he was asked whether Luc Cuinet make
the oral partnership agreement with him PW1 answered,
“I was always told by him that we were partners…all along”.
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He had also gave evidence that it was not only Luc Cuinet who
had indicated to him of the existence of a partnership but also others
whom he met at seminars.
In his Witness Statement PW1 had also stated that the partnership
materialized in 2008 but during cross-examination PW1 could not
confirmed when the partnership was actually formalized and even
stated that it existed in 1996 based on various assurances given,
Q: When did the oral partnership came into effect?
A: All the while…… in 1996”.
The Learned Counsel for the Plaintiff cited the case of Bova v.
Avanti [2009] NSWSC 921 at pg 38 where the Judge said that in the
absence of any written agreement,
“……the intention of the parties must be objectively ascertained form their
words and conduct. In doing so the description that the parties
themselves have placed on their relationship is not conclusive…what is
important is the substance of the transaction.”.
In the present case the Contract of Distributorship forms the basis
of the relationship between the Plaintiff and the 1st Defendant. Even
after the expiry of the Contract period (end of 2004) the parties
continued with the terms as provided. In fact in 2008 and beyond that
was the status of the business relationship between the parties, not
as partners but as a manufacturer/Supplier and a distributer. For
a partnership to exist not only there must be a sharing of profits
whether monetary or otherwise but the parties must be at idem to
create such a business union. In the instant case the relationship
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between the parties were nothing more than a union of mutual
commercial convenience within the parameters of the terms of the
contracts of distributorship. There is insufficient evidence to show that
a partnership relationship was cemented between the parties.
Conspiracy
It is the submission of the Learned Counsel for the Plaintiff that the
1st Defendant conspired with the 2nd Defendant to injure the Plaintiff’s
business and reputation. It is contended that by raising the issues of
the alleged of the Plaintiff’s poor performance was merely a reason to
oust the Plaintiff. As a result the Plaintiff has ceased its business.
Ahmad Maarop (JCA as he then was) in the case of SV Beverages
Holdings Sdn. Bhd. & Ors v. Kickapoo (Malaysia) Sdn. Bhd.
[2008] 4 CLJ said that,
“The law regarding the tort of inducement to breach of contract as
summarised in Greig v. Insole [1878] 2 All ER 449 at p. 484 was restated
by this court in Kelang Pembena Kereta-Kereta Sdn Bhd v. Mok Tai Dwan
[2000] 2 CLJ 132 at p. 145:
At common law it constitutes a tort for a third person deliberately to
interfere in the execution of a valid contract which has been concluded
between two or more other parties, if five conditions are fulfilled:
First, there must be (a) "direct" interference or (b) "indirect" interference
coupled with the use of unlawful means: see per Lord Denning MR in
Torquay Hotel Co Ltd v. Cousins [1969] 2 Ch 106, at 138. As to the
meaning of "interference" this is not confined to the actual procurement or
inducement of a breach of contract. It can cover a case where the third
person prevents or hinders one party from performing his contract even
though this be not a breach: see per Lord Denning MR.
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Secondly, the defendant must be shown to have knowledge of the
relevant contract.
Thirdly, he must be shown to have had the intent to interfere with it.
Fourthly, in bringing an action, other than a quia timet action, the Plaintiff
must show that he has suffered special damage, that is, more than
nominal damage: see Rookes v. Barnard [1964] AC 1129, at 1212, per
Lord Devlin. In any quia timet action, the plaintiff must show the likelihood
of damage to him resulting if the act of interference is successful: see
Emerald Construction Company Limited v. Lowthian [1966] 1 WLR 691, at
703, per Diplock LJ.
Fifthly, so far as it is necessary the plaintiff must successfully rebut any
defence based on justification which the defendant may put forward.
Slade J went on further to emphasise one point on the same page thus: If
these five conditions are fulfilled and the defendant is shown to have had
that intention to interfere with the relevant contract which is necessary to
constitute the tort it is quite irrelevant that he may have acted in good faith
and without malice or under a mistaken understanding as to his legal
rights; good faith, as such, provides no defence whatever to claim based
on this tort: see, for example South Wales Miner's Federation v.
Glamorgan Coal Co Ltd [1905] AC 239 per Lord Macnaghten.
In the tort of conspiracy, there must be an agreement or 'combination' of
two or more with the common intention to effect an unlawful purpose or to
do a lawful act by unlawful means resulting in damages to the plaintiff
(Industrial Concrete Products Bhd v. Concrete Engineering Products Bhd
& Other Suits [2001] 8 CLJ 262, Mulcahy v. R [1868] LR 3 HL 306 as 317
and Belmont Finance v. Williams Furniture (No. 2) [1980] 1 All ER 393 at
p. 403).".
The Plaintiff failed to adduce any evidence to show that there
was direct or indirect interference coupled with unlawful means. In
the tortious act of conspiracy, there must be an agreement or
19
combination of two or more with the common intention to effect an
unlawful purpose or to do a lawful act by unlawful means which will
result in damages to the Plaintiff. Mohamed Dzaiddin J (as he then
was) in Yap J.H. v. Tan Sri Loh Boon Siew & Ors. [1991] 4 CLJ
(Rep) 243 referred to the case of Lonrho Plc v. Fayed and Others
[1991] 3 All ER 303 where House of Lords affirmed that there are
two types of conspiracies:
“...(a) A and B combine to do an lawful act for an unlawful purpose which
causes loss to a third party, C; and
(a) A and B combine to do an unlawful act which causes loss to C...”.
Applying the above principles where the act is lawful, the
predominant purpose must be to cause loss to the Plaintiff for
there to be conspiracy. If the predominant purpose is for the self
interest or protection of the Defendants, it is not an unlawful purpose
and there is no conspiracy, even if the Plaintiff incidentally suffers
loss.
In Rookes v. Barnard [1964] 1 All ER 367 at 297... Lord Devlin
said:
“ There are, as is well known, two sorts of conspiracies, the Quinn v.
Leathern ([1901] AC 495...) type which employs only lawful means but
aims at an unlawful end, and the type which employs unlawful means.”..
In Crofter Hand Woven Harris Tweed Co Ltd v. Veitch [1942] AC
435 at 445 Viscount Simon LC said:
“ It is enough to say that if there is more than one purpose actuating a
combination, liability must depend on ascertaining the predominant
purpose. If the predominant purpose is to damage another person and
20
damages results, that is tortious conspiracy. If the predominant purpose
is the lawful protection or promotion of any lawful interest of the
combiners (no illegal means being employed), it is not a tortuous
conspiracy, even though it cause damage..”.
Therefore for conspiracy to take place, there must be an unlawful
object, or, if not in itself unlawful, it must be brought about by unlawful
means. There must also be a co-existence of an agreement with an
overt act causing damage to the Plaintiff. Hence, this tortious act is
complete only if the agreement is carried into effect, thereby causing
damage to the Plaintiff. To succeed in a claim based on the tort of
conspiracy, it is pertinent for the Plaintiff to establish the following,
(1)
an agreement between two or more persons;
(2)
for the purpose of injuring the Plaintiff; and
(3)
the execution of that agreement resulted in damages to
the Plaintiff.
Based on the facts and also the lack of evidence adduced the
Plaintiff failed to prove the allegation of conspiracy by the 1st and
the 2nd Defendant.
Conclusion
Having considered the entirety of the admissible evidence together
with the contemporaneous admitted documents, the submissions
as well as the authorities of both parties this Court finds that the
Plaintiff has fail to establish its claim on the balance of probabilities
against the Defendants. Based on the above mentioned reasons the
Plaintiff's claim is dismissed with cost of RM50,000.
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Counterclaim
The crux of the Defendant’s claim is the unauthorized setting up
the Facebook account by the Plaintiff under the trade style ‘Royal
Canin Malaysia without consent. The Plaintiff continued to use
the trade style ‘Royal Canin Malaysia’ even after the notice of
non renewal. It is submitted by the Learned Counsel that the use
and adoption of the trade style ‘Royal Canin Malaysia’ led to
misrepresentation that the Plaintiff’s Facebook account is that of
the 1st Defendant or in some way associated with the 1st Defendant.
The elements of passing off are: (i) goodwill and reputation of the
Plaintiff; (ii) misrepresentation by the Defendants in the course of
trade; and (iii) damage or the likelihood of damage will arise as
a result (see Meidi (M) Sdn Bhd v. Meidi-Ya Co Ltd, Japan &
Anor [2008] 6 MLJ 433; [2008] 1 CLJ 46; and McCurry Restaurant
(KL) Sdn Bhd v. McDonalds Corporation [2009] 3 MLJ 774; [2009] 3
CLJ 540.
In the instant case the Plaintiff had clearly misrepresented itself to
the 1st Defendant by setting up the Facebook account under the trade
style ‘Royal Canin Malaysia’. The Plaintiff never had the consent or
authorization of the 1st Defendant to do so. As a result causing
confusion to its customers as evidenced by the comments made by
the Facebook friends/participants/customers.
Goodwill or reputation is an important pre-requisite to an action in
passing off. The existence and extent of the Plaintiffs’ reputation is a
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question of fact and the main consideration is the likelihood of
confusion with consequential injury to the Plaintiff. The evidence
adduced show that the Facebook had created confusion to the
consumers. Through its products the 1st Defendant has established
itself in Malaysia and has sufficient goodwill and reputation.
In the case of Syarikat Zamani Hj Tamin Sdn. Bhd. & Anor
v. Yong Sze Fun & Anor [2006] 5 MLJ 262, it was held as follows:
“ Misrepresentation in the passing off sense is a false representation
on the part of the defendant which causes damage to the goodwill
and reputation of the plaintiff through an unlawful association created
between the defendant and the plaintiff. As set out by Lord Parker
in Spalding v Gamage at p 450:
“The basis of a passing off action being a false representation by
the defendant, it must be proven in each case as a fact that the
false representation has been made. It may, of course, have been
made in express words, but cases cf express misrepresentation
of this sort are rare. The more common case is where the
representation is implied in the use or imitation of a trademark,
trade name or get-up with which the goods of another are
associated in the minds of the public”.
In the case of Reckitt & Coiman Product Ltd v Borden Inc & Ors it was
held by Lord Oliver in the House of Lords judgment at p 880 of the report
that misrepresentation relates to representation by the defendant to the
public (whether or not intentional) leading or likely to lead the public to
believe that the goods and services offered by him are goods and
services of the plaintiff..”.
Therefore a Plaintiff in a passing off does not have to prove that it
has suffered damage by loss of business or in any other way. It is
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sufficient if it resulted in damage to his trade or business including
damage to his goodwill in respect of that trade or business (Re:
Bulmer (HP) Ltd v. J Bollinger SA [1978] RPC 79). The Plaintiff is
therefore liable for passing off. The counterclaim is allowed and the
Plaintiff is ordered to immediately deactivate the Facebook account
and pay to the 1st Defendant RM20,000 as damages.
t.t.
( HASNAH BINTI DATO’ MOHAMMED HASHIM )
Judge
High Court of Malaya
Kuala Lumpur.
17th June 2013
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Counsels:
For the Plaintiff/Appellant:
Messrs. Shook Lin & Bok
- M. Nagarajah
- Tanya Marie Lopez
- Ida Daniella Zulkifli
For the Defendant/Respondent:
Messrs. Rahmat Lim & Partners
- Daphne Koo Su Mei
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