Room 6 Music Sdn Bhd v Chua Zhua Yi (WA-22NCvC-596-10/2022)

This judgment deals with a breach of contract trial. I have on 15-03- 2024 dismissed the plaintiff’s suit for wrongful termination of contract and allowed the defendant’s counterclaim in prayer 28[a] for a declaration that the termination of contract was valid.

The defendant’s position is that she has lawfully terminated an Artiste Agreement dated 01-09-2016 (‘Artiste Agreement’) pursuant to clause 11.2 as the plaintiff has failed to comply with the Minimum Recording Commitment stipulated in clause 1. [See Bundle B pages 1- 29]. I had agreed with the defendant.

I would have thought this is a “tolerably plain case” but the plaintiff is determined to take this dispute further and has filed an appeal to the Court of Appeal on 25-03-2024.

It may be that the plaintiff is determined to extract his “pound of flesh” in the style of Shylock, from William Shakespeare’s play The Merchant of Venice, where Portia said to Shylock, on the insistence of Shylock for the payment of Antonio’s flesh, “The words expressly are ‘a pound of flesh’ / Take then thy bond, take thou thy pound of flesh…” [Act IV, Scene-1]

These are my Grounds of Judgment.

The plaintiff is an incorporated company limited by shares with a paid-up capital of RM 10,000.00 having an address at 10-1, Menara Great Eastern 2, 50 Jalan Ampang, 50450 Kuala Lumpur.

The plaintiff is involved in the business of artist management and development, production of songs, investment in movies and procurement of advertising and promotion in collaboration with other companies in the entertainment industry.

The defendant Chua Zhua Yi is a renowned international artiste in the Chinese entertainment industry and was one of the Plaintiff’s artistes. From a small number of 50,000 fans she now has close to 1.1 million followers on Instagram, 3.57 million followers on TikTok, 3.13 million on Weibo and 410 thousand followers on Facebook. [See Notes of Proceeding PDF page 43].

On and around September 2016, the plaintiff have agreed to engage the defendant as their exclusive recording artiste and the defendant agreed to render her services exclusively to the plaintiff for a term of seven (7) years and agreed to appoint the plaintiff as her exclusive business manager in the entertainment industry.

The plaintiff and the defendant have executed the Artiste Agreement incorporating the terms and conditions negotiated between the parties. [See Bundle B pages 1 - 29].

The salient terms of the Artiste Agreement are amongst others: - i. Clause 1 Interpretation Album – any Disc Record derived entirely from the Master Tapes of musical sound / visual recordings / digitalized recordings of at least 3 songs of musical works; Minimum Recording Commitment - means at least 1 Album per annum throughout the subsisting Term of this Agreement. … ii. Clause 2 Engagement of Artiste

2.1 The Company hereby agrees to engage the Artiste as one of its sole and exclusive recording artistes and the Artiste hereby agrees to render her services to the Company exclusively on the terms and conditions as detailed hereinafter throughout the territory during the term;

2.2 The Artiste agrees to permit the Company to make a Master Tapes in order to comply with the Minimum Recording Commitment in accordance with the Company’s instructions from time to time. iii. Clause 11 Termination

11.1 The Company has the right to terminate this Agreement or accept the repudiation by the Artiste of this Agreement at any time when the company is entitled to serve notice of suspension pursuant to the provisions of Clause 9.1 or at any time following the expiry of 14 days after the Company shall have given notice of suspension to either Clauses 9.2 or 9.3;

11.2 In the event the Company fails to comply with the Minimum Recording Commitment, the Artiste has the right to terminate this Agreement and this Agreement shall cease to have any effect on the Parties upon the expiry of 6 months period from the date of such notice being issued;

11.3 Where the Artiste unilaterally terminates this Agreement due to no breach or fault of the Company as stipulated under clause 11.2 above, during subsistence of the term, the Artiste shall forthwith pay the Company a sum amounting to Ringgit Malaysia One Million (RM 1,000,000.00) only; [Emphasis added] Court Dispute [12] The plaintiff filed a suit against the defendant for wrongful termination of contract. The defendant filed a counterclaim for a declaration that the termination of contract was valid. The pleaded case of the plaintiff [13] The plaintiff contends that the defendant wrongly issued a Notice of Termination dated 15-07-2021 to the plaintiff to terminate the Artiste Agreement with immediate effect on the alleged grounds that the Plaintiff has continuously failed and refused to provide her with the statement of accounts pertaining to the royalties due and payable to the defendant pursuant to the agreement and that the plaintiff has continuously failed and refused to comply with the minimum recording requirement. [14] The Notice of Termination dated 15-07-2021 can be found in Bundle B page 103. [15] The plaintiff contends the defendant’s allegations are without merits. The Plaintiff instructed their solicitors, Messrs Toh Liew & Gentry to issue a Notice of Demand dated 05-08-2021 to demand for the sum of RM 1,000,000.00 based on Clause 11.3 of the Artiste Agreement. [16] A copy of the Notice of Demand dated 05-08-2021 can be found in Bundle B pages 104 – 105. [17] The defendant has failed, refused and/or neglected to pay the plaintiff the sum of RM 1,000,000.00. The Pleaded Defence and Counterclaim of the defendant [18] The defendant contends that she has lawfully terminated the Artiste Agreement pursuant to Clause 11.2 as the plaintiff has failed to comply with the Minimum Recording Commitment stipulated in clause 1 of the Artiste Agreement. [19] Under Clause 1 the Minimum Recording Commitment is defined to mean at least 1 album per annum throughout the term of the Artiste Agreement and an album is defined as at least 3 songs of musical works. The Trial Process [20] The trial was heard over 2 days on 31-07-2023 and 05-12-2023 with a total of 2 witnesses. [21] The plaintiff called Soo Choon Guan (Jimi) “PW1” who is a director & shareholder of the plaintiff. [22] The defendant “DW1” testified in her own defence. [23] Parties concurrently filed their written closing submissions and written submissions in reply. [24] Oral submissions by counsel were held before me on 05-02-2024. Decision was reserved to 15-03-2024. I delivered decision on 15-03-

The Issues [25] There is really only one issue. The issue is whether the termination by the defendant was lawful. Analysis of the Court [26] Pursuant to Clause 1 of the Artiste Agreement, the plaintiff agreed to produce for the defendant a Minimum Recording Commitment. This required the plaintiff to produce one album per annum for the defendant, and an album is defined as at least 3 songs of musical works. [27] The evidence shows that the plaintiff failed to produce for each year of the Artiste Agreement, one album consisting of 3 songs as required under clause 1 of the Artiste Agreement. The plaintiff’s witness PW1 Soo Choon Guan has admitted this fact during trial. Notes of Proceeding dated 31-07-2023 page 17 “TJT So I would suggest to you, that in every of the year mentioned, whether it’s 2017, 2018, 2019, 2020 up to 2021. There are no 3 songs that were produced. Do you agree? PW1 Yes, I agree.” [28] Therefore, the defendant has a right to terminate under Clause 11.2 of the Artiste Agreement. As the termination is valid, the plaintiff cannot rely on clause 11.3 of the Artiste Agreement to claim compensation. [See Sections 38[1] and 40 Contracts Act and Tuan Mat Tuan Ismail v Tan Ah Hin & Ors [2019] 9 CLJ 104 at 125, CA per Abdul Rahman Sebli JCA]. [29] Section 38(1) of the Contracts Act, 1950 states - “The parties to a contract must either perform, or offer to perform, their respective promises, unless the performance is dispensed with or excused under this Act, or of any other law.” [30] Section 40 of the Contracts Act, 1950 states – “When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance.” [31] In Tuan Mat Tuan Ismail v Tan Ah Hin & Ors [2019] 9 CLJ 104 at 125, CA per Abdul Rahman Sebli JCA (now Chief Judge of Sabah and Sarawak) said - “[69] Thus, even if we were disposed not to agree with the learned trial judge's conclusion on the finality of the Terengganu High Court judgment, our view was that the learned trial judge was right in any event to hold that the settlement agreement had been properly terminated by the respondents due to its breach by the appellant, thereby validating the retransfer of the 4.9 million shares to the first and second respondents. [70] It is pertinent to note that the appellant himself admitted that he failed to comply with cl. 2 and cl. 4(b) of the settlement agreement. The breach had therefore been established by the appellant's own admission. Such admission carried more weight than evidence, oral or documentary, coming from the respondents.” [emphasis added] Counterclaim [32] In respect of the counterclaim the defendant’s counsel has informed me that he is asking for prayer 28[a] only and not asking for prayer 28[b]. Therefore, the court grants the defendant prayer 28[a] for a declaration that the termination of contract was valid. [33] I thank counsel for the parties for their submissions which had greatly assisted me.

[34] The plaintiffs claim is dismissed with costs. [35] For the defendant’s counterclaim prayer 28 [a] is allowed. [36] For both the claim and counterclaim the plaintiff is to pay the defendant costs of RM 20,000 subject to allocatur. …………(signed)……..…. Leong Wai Hong Judicial Commissioner High Court of Malaya Kuala Lumpur (NCVC 10) Dated: 01st April 2024 COUNSEL: 1) Stephanie Wong, YF Liew and Yap Pei Pei (Pupil in Chamber) for plaintiff. (Toh Liew & Gentry (Kuala Lumpur)) 2) Tan Jee Tjun, Rachel Ng Li Hui and Eunice Wong Kai Xin (Pupil in Chamber) for defendant. (Thomas Philip (Kuala Lumpur)) CASES REFERRED TO: 1) Tuan Mat Tuan Ismail v Tan Ah Hin & Ors [2019] 9 CLJ 104 CA. LEGISLATION REFERRED TO: 1) Section 38(1) of the Contracts Act, 1950. 2) Section 40 of the Contracts Act, 1950. LITERATURE REFERRED TO: 1) Shakespeare, William, 1564-1616. The Merchant of Venice Harlow, Essex, England: Longman, 1994.