CASES OF THE WEEK

The plaintiff/respondent (`Petroserv') was appointed, sometime in 1994, as the sole and exclusive agent for the defendant/appellant (`Merbok') to market the defendant's goods (ie, timber and timber-related products) in the Middle East. The appointment and the terms of the agency were not reduced into writing but were purely verbal. The agreement was entered into with one John Frederick Keen (`JFK') who was at the material time the Manager of Petroserv. The agency which was not for a fixed term was terminated with effect from 1 January 2003, ie, after about 8 1/2 years, when Merbok sent a letter of termination to Petroserv in Dubai. The letter of termination was addressed to "Petroserv-JFK Division". Petroserv requested for more time for it to find alternative suppliers but Merbok refused. Hence, Petroserv initiated legal proceedings against Merbok. The learned Judicial Commissioner (`JC') entered judgment in Petroserv's favour and awarded damages for unpaid commission during the period of notice given as well as damages for wrongful termination of the agency without giving sufficient notice. The JC held that a six months' notice period would have been proper. Since effectively prior notice of three months was given to Petroserv, the damages was calculated on the basis of three months' lost commission. Merbok appealed against this decision. The principal issue in the appeal was whether the notice of termination given was sufficient. The appellant contended that the JC erred in determining that there should be a notice period of six months since the contract here was not a fixed-term contract, and as such, ss. 158 and 159 of the Contracts Act 1950 (`CA50') would not apply. On the issue of locus standi, the appellant claimed that they had dealings only with JFK trading as Petroserv-JFK Division, not with Sheikh Khaled Jassem trading as Petroserv General Trading Establishment. JFK was an employee of Petroserv with the Sheikh being the licence holder under the laws of Dubai.

Held (dismissing appeal with costs)

Per Mohamad Ariff Yusof JCA delivering the judgment of the court:

(1) At all material times, whatever the arrangement between JFK and the plaintiff or the Sheikh, whether legal or illegal, was never the concern of the defendant and whatever arrangement between them did not affect the contract of agency between the plaintiff and defendant. The business arrangement between the plaintiff and JFK was an internal affair of the company which was of no concern to the defendant and could not be a valid ground to vitiate contracts concluded on the effort of Petroserv or JFK. Anyways, Petroserv-JFK Division was part and parcel of the plaintiff. (para 10)

(2) Reasonable notice of termination must still be accorded even though an agency contract was not for a fixed term. What amounts to a reasonable notice is dependent on the facts and circumstances of the particular case; Biing Han Enterprise Sdn Bhd v. Siew Leong (foll). (para 20)

(3) An agency relationship rests on trust and confidence and shares some similarities with the relationship between an employer and employee. Where an agency is contractually for a fixed term, and quite often parties agree on a clear notice period, they should be bound by it. In any event, the period of notice has to be reasonable, and furthermore, a fixed term agency cannot be terminated without sufficient cause, consistent with ss. 157 and 158 of the CA50. Where parties have not expressly agreed upfront on a period of notice and the contract is not for a fixed term, although in most cases of commercial agency it will be of a continuing nature, termination should also be preceded by a reasonable period of notice. (para 22)

(4) The jurisdiction of the Court of Appeal to intervene against a decision of the High Court has to rest on settled principles; the court should only upset a decision of the High Court where there is a clear error leading to a perverse finding or resulting in a miscarriage of justice, particularly where the lower court has decided on the basis of discretion. Where there has been a proper judicial appreciation of the evidence and a correct application of the law and it cannot be said that the learned judge has been plainly wrong, the High Court decision should be respected. (para 23)

(5) The JC had meticulously considered the peculiar circumstances of the case, and was satisfied that a period of six months was a fair and reasonable period for Petroserv to adjust its business after having lost a major part of its income by way of the commissions received from the agency contract with Merbok. The JC came to a correct decision both on the law and the facts which should not be interfered. (para 23)

Bahasa Malaysia Translation Of Headnotes

Plaintif/responden (`Petroserv') telah dilantik, sekitar tahun 1994, sebagai agen mutlak dan eksklusif bagi defendan/perayu (`Merbok') untuk memasarkan barangan defendan (iaitu balak dan bahan berkaitan balak) di Timur Tengah. Perlantikan dan terma-terma agensi tersebut tidak bertulis tetapi hanya secara lisan. Perjanjian tersebut dimasuki dengan seorang yang bernama John Frederick Keen (`JFK') yang pada masa material adalah pengurus Petroserv. Agensi yang bukan untuk terma tetap tersebut dibatalkan berkuatkuasa dari 1 Januari 2003, iaitu, selepas kira-kira 8 1/2 tahun, apabila Merbok menghantar surat pembatalan kepada Petroserv di Dubai. Surat pembatalan tersebut dialamatkan kepada "Petroserv-JFK Division". Petroserv meminta lebih masa untuk mencari pembekal alternatif tetapi Merbok enggan. Maka, Petroserv memulakan prosiding undang-undang terhadap Merbok. Yang Arif Pesuruhjaya Kehakiman (`PK') memasukkan penghakiman memihak kepada Petroserv dan mengawardkan ganti rugi bagi komisyen yang tidak berbayar semasa tempoh notis diberikan dan juga ganti rugi bagi pembatalan salah agensi tersebut tanpa memberikan notis yang mencukupi. PK memutuskan bahawa tempoh notis enam bulan adalah wajar. Memandangkan notis awalan tiga bulan telah diberikan secara efektifnya kepada Petroserv, ganti rugi dikira berdasarkan kerugian komisyen tiga bulan. Merbok merayu terhadap keputusan tersebut. Isu utama dalam rayuan adalah sama ada notis pembatalan yang diberikan adalah mencukupi. Perayu menghujah bahawa PK terkhilaf dalam memutuskan bahawa perlu ada tempoh notis enam bulan kerana kontrak tersebut bukannya suatu kontrak terma tetap, dan oleh demikian, ss. 158 dan 159 Akta Kontrak 1950 (`Akta') tidak terpakai. Atas isu locus standi, perayu menghujah bahawa mereka berurusan hanya dengan JFK yang berniaga sebagai Petroserv-JFK Division, dan bukan dengan Sheikh Khaled Jassem yang berniaga sebagai Petroserv General Trading Establishment. JFK adalah pekerja Petroserv dengan Sheikh sebagai pemegang lesen di bawah undang-undang Dubai.

Diputuskan (menolak rayuan dengan kos)

Oleh Mohamad Ariff Yusof HMR menyampaikan penghakiman mahkamah:

(1) Pada setiap masa material, apa-apa urusan antara JFK dan plaintif atau Sheikh, sama ada sah atau tidak sah, tidak berkaitan dengan defendan dan apa-apa urusan di antara mereka tidak menjejaskan kontrak agensi antara plaintif dan defendan. Urusan perniagaan di antara plaintif dan JFK adalah urusan dalaman syarikat yang tidak berkaitan dengan defendan dan tidak boleh menjadi alasan sah untuk membatalkan kontrak yang dimuktamadkan atas usaha Petroserv atau JFK. Walau apapun, Petroserv-JFK Division adalah sebahagian daripada plaintif.

(2) Notis pembatalan yang munasabah masih perlu diberikan walaupun kontrak agensi tersebut bukan untuk terma yang tetap. Apa yang menjadikan sesuatu notis munasabah bergantung kepada fakta dan hal keadaan sesuatu kes; (Biing Han Enterprise Sdn Bhd v. Siew Leong, diikuti).

(3) Hubungan sesuatu agensi terletak pada kepercayaan dan keyakinan dan berkongsi beberapa persamaan dengan hubungan antara majikan dan pekerja. Apabila sesuatu agensi secara kontrak adalah untuk terma yang tetap dan selalunya pihak-pihak bersetuju atas tempoh notis yang jelas, mereka harus terikat olehnya. Walau bagaimanapun, tempoh notis perlulah munasabah, dan selanjutnya, tempoh agensi yang tetap tidak boleh dibatalkan tanpa alasan yang mencukupi, konsisten dengan ss. 157 dan 158 Akta. Apabila pihak-pihak tidak secara jelas bersetuju mengenai tempoh notis dan kontrak bukan untuk tempoh yang ditetapkan, walaupun dalam kebanyakan kes agensi komersial ia adalah bersifat berterusan, pembatalan seharusnya didahului oleh tempoh notis yang munasabah.

(4) Bidang kuasa Mahkamah Rayuan untuk campur tangan terhadap keputusan Mahkamah Tinggi seharusnya berdasarkan prinsip-prinsip yang matan; mahkamah hanya boleh mengganggu keputusan Mahkamah Tinggi apabila terdapat kekhilafan yang jelas yang menjurus kepada dapatan yang salah atau mengakibatkan ketidakadilan, khususnya apabila mahkamah bawahan telah memutuskan atas alasan budi bicara. Apabila terdapat penilaian kehakiman terhadap keterangan dan pemakaian betul undang-undang dan ia tidak boleh dikatakan bahawa yang arif hakim jelas khilaf, keputusan Mahkamah Tinggi wajar dihormati.

(5) PK telah mempertimbangkan dengan teliti hal keadaan khusus kes dan berpuas hati bahawa tempoh enam bulan adalah adil dan munasabah untuk Petroserv menyelaraskan perniagaannya selepas kehilangan sebahagian besar pendapatannya melalui komisyen yang diterima daripada kontrak agensi tersebut daripada Merbok. PK mencapai keputusan yang betul kedua-duanya di sisi undang-undang dan fakta yang tidak wajar diganggu.

Case(s) referred to:

American International Assurance Company Ltd v. Koh Yen Bee [2002] 4 CLJ 49 CA (refd)

Biing Han Enterprise Sdn Bhd v. Siew Leong [2011] 4 CLJ 465 CA (foll)

Chan Chow Kian v. International Trading Company [1969] 1 LNS 20 HC (refd)

JK Sayani v. Bright Brothers Pvt Ltd AIR 1980 Mad 162 (refd)

Lonsdale (Trading as Lonsdale Agencies) v. Howard & Hallam Ltd [2007] UKHL 32 (refd)

Martin-Baker Aircraft Co Ltd v. Canada Flight Equipment Ltd [1955] 2 QB 556 (refd)

Sykt Jaya v. Star Publications (M) Bhd [1990] 1 CLJ 155; [1990] 3 CLJ (Rep) 151 HC (refd)

Wong Pa Hock v. American International Assurance Co Ltd & Anor [2002] 2 CLJ 267 HC (refd)

Legislation referred to:

Contracts Act 1950, ss. 157, 158, 159

Evidence Act 1950, s. 114(g)

Rules of the High Court 1980, O. 14A, O. 20 r. 9, O. 33 r. 2

Contracts Act 1872 [Ind], ss. 205, 206

Counsel:

For the appellant - Karin Lim (Shareen Abdul Manan with her); M/s Presgrave & Matthews

For the respondent - Simon Hue Fook Chuan (Goh Chee Hong with him); M/s Simon Hue & Assocs

[Editor's note: For the High Court judgment, please see Sheikh Khaled Jassem Mohammad Jassem Al-Thani v. Merbok Hilir Bhd (No 2) [2013] 1 CLJ 728]

Reported by Amutha Suppayah