Shell Malaysia Trading Sdn Bhd v Motor Fuel (M) Sdn Bhd (JA-24NCvC-259-03/2025)

(M) Sdn Bhd Dan Dalam Perkara Adendum Lanjutan Tempoh bertarikh 12/12/2024 kepada Perjanjian Rakan Kongsi Peruncit Dan Dalam Perkara mengenai Seksyen-Seksyen 11, 18, 21 , 50 dan 51 Akta Relief Spesifik 1950 Dan Dalam Perkara Seksyen 74 Akta Kontrak 1950 Dan Dalam Perkara Aturan-Aturan 7, 28 dan 29 Kaedah-Kaedah Mahkamah 2012 13/03/2026 11:57:57 JA-24NCvC-259-03/2025 Kand. 64 Dan Dalam Perkara Aturan 92 Kaedah 4 Kaedah-Kaedah Mahkamah 2012 Antara Shell Malaysia Trading Sdn Bhd [No. Syarikat : 196501000279 (6087-M) ] … Plaintif Dan Motor Fuel (M) Sdn Bhd [No. Syarikat : 201201011372 (984889-D) ] … Defendan Grounds of Judgment (Enclosure 1)

Plaintiff (“P”) via Originating Summons (“OS”) dated 04.03.2025 (Enclosure 1) moved this Court for the following reliefs:-

A declaration that there is a valid renewed Retailer Partner Agreement dated 13.3.2015 (“Agreement”) for a further term of 10 years effective from 13.3.2025 until 12.3.2035;

Specific performance of the renewed Agreement;

Further or alternatively, damages to be assessed in addition to or in lieu of specific performance together with interest thereon.

For the purpose of maintaining the status quo of the matter, this Court had on 20.5.2025 allowed an interlocutory injunction restraining the Defendant (“D”) from carrying out any act that could interfere with the usual running of business relating to the Agreement pending the disposal of Enclosure

1.

After hearing both parties, this Court allowed Enclosure 1 with costs of RM 15,000.00 to be paid by D to P.

D has now appealed to the Court of Appeal against this Court’s decision.

This is the Court’s ground of judgment.

P is a company whose principle business involves blending of lubricating oils and marketing of petroleum products under a well-known brand ‘Shell’.

7.

Further terms of the Agreement which are relevant to the instant matter include:-

the duration of the Agreement is for ten (10) years;

the Agreement commences on 13.03.2015 until 12.03.2025; and

the Agreement is subject to rights of termination as provided under Clause 1.3 of the Agreement;

upon the Agreement expiring, P is given the option to renew the agreement by giving 3 months’ written notice to D prior to the expiration of the Agreement (Clause 1.4), and such renewal may be:-

for such further period as it deems fit either on the same terms and conditions of the Agreement save for the clause on renewal (First Limb); or

(ii) on such new terms and conditions as specified by P in a new agreement to be entered into by both parties (Second Limb).

D had purported to terminate the Agreement by way of a letter dated 06.12.2023.

P in response, by way of a letter dated 05.01.2024 reminded D among others that apart from the agreement being for a fixed term, the unlawful termination of the agreement before its expiry could amount to a material breach of the agreement.

Subsequent to the above, D continued its obligations under the Agreement thus effectively retracting its prior letter dated 06.12.2023.

P then via letter dated 17.09.2024 made an offer to D to extend the agreement until 13.03.3035 with new terms and conditions pursuant to the Second Limb of Clause 1.4 of the Agreement. P repeated this offer to D via its’ letters dated 04.11.2024 and 18.11.2024 respectively.

A meeting was then held on 20.11.2024 between representatives of both P and D which was not fruitful.

Consequently, P then by way of letter dated 12.12.2024 to D exercised its option to renew the Agreement until 12.03.2035 on the same terms and conditions pursuant to the First Limb of Clause 1.4 of the Agreement. As such, P took position that the Agreement was renewed and extended till 12.03.2035.

D however vide its letter dated 18.12.2024 informed P that it did not wish to continue with the Agreement on its expiry.

In response, P vide letter dated 07.02.2025 among others informed D that the Agreement has been extended pursuant to Second Limb under Clause 1.4 of the Agreement and that the initial offers of renewal with new terms under the First Limb of Clause 1.4 have automatically lapsed.

However, vide its letter dated 24.02.2025 D maintained with their intention not to continue with the Agreement on its expiry. In the same letter, D also requested P to remove all of its assets, equipment and materials from the site by 20.03.2025.

P objected to this and the same was communicated to D in their letter dated 27.02.2025.

D’s solicitors had then written to P’s solicitors via letter dated 05.03.2025 essentially reiterating D’s position and that P is precluded from renewing the Agreement due to various breaches allegedly committed by P. It was also informed that D will cease the operation of the Shell petrol filing station effective 14.03.2025.

Hence, the OS filed by P as per Enclosure 1. Whether the agreement could be renewed by P

At the outset, it must first be stressed as a matter of law that an option is a unilateral right which must be exercised strictly in accordance with the terms of the agreement which had incorporated it in order for it to be binding on parties.

The Court of Appeal in Elizabeth Jeevamalar Ponnampalam & Ors v Karuppannan Ramasamy & Anor [2007] 3 CLJ 465 had lain emphasis on the said principle in the following words:- “[9] There is no documentary evidence from Messrs. Skrine & Co. showing acceptance of the UMBC cheque 711034. On the contrary Messrs. Skrine & Co. vide their letter dated 19 October 1988 returned the said original cheque 711034, indicating that it was never banked in. This in itself would follow that there was no acceptance of the sum of RM17,500 representing a portion of the ten percent deposit. It is also noted that there is no evidence adduced on behalf of the intervener plaintiffs through their witnesses S11, S12 and S13 that they had paid the differential sum of RM35. It is settled law that an option is a unilateral contract which does not become binding on the grantor of the option until the exact terms of the option are complied with.”

In Cayman Development (Kedah) Sdn Bhd v Puah Kiew & Ors [1990] 3 MLJ 110, the said principle was also emphasized by the High Court at page 111 that:- “The law on contractual options seems clear enough. Where a covenant requires that the tenant shall give notice of his intention to take a renewal before the determination of the term, and, when this is the case, he will lose his right if he fails to give the notice in time: Bayly v Leominster Corp (1972) 1 Ves Jun 476; 30 ER 446. An option is a unilateral contract which does not become binding on the grantor of the option until the exact terms of the option are complied with: Teo Siew Peng v Guok Sing Ong & Anor [1983] 1 MLJ 132.”

In the instant matter, albeit the non-conclusion of P’s initial offer to D for the renewal of the Agreement with new terms under the Second Limb of Clause 1.4, it is in evidence that P subsequently had given its notice in writing dated 12.12.2024 to D of its intention to renew the Agreement until 12.03.2035 under the same terms and conditions as per the First Limb of Clause 1.4.

In my view, the extension being sought falls within the ambit of the First Limb to Clause 1.4 of the Agreement. Further, the said notice from P was also given within the prescribed time of three (3) months. It is also my view that Clause 1.4 of the Agreement is also worded in plain language and as such I do not see any ambiguity in the setting out P’s right to renew the Agreement.

That being said, there is thus no reason in law to doubt the legality of the extension of the Agreement by P pursuant to the said notice dated 12.12.2024 delivered by P to D.

As to whether P is precluded from renewing the agreement due to the alleged breaches committed by P, this Court disagrees with D’s position because Clause 1.4 of the Agreement makes no mention of such. In other words, under the four corners of the Agreement, none is found by this Court to support D’s contentions that any breaches allegedly perpetrated by P would disqualify them from exercising their option to renew the Agreement.

In construing the commercial terms in any agreement such as this, this Court refers to Investors Compensation Scheme Ltd v West Brownwich Building Society [1998] 1 WLR 896 where it was held by the House of Lords that:- “(5) The 'rule' that words should be given their 'natural and ordinary meaning' reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania Naviera SA v. Salen Rederierna AB [1985] AC 191, 201: If detailed semantic and syntactical analysis of words in a commercial contract is going to lead to conclusion that flouts business common sense, it must be made to yield to business common sense.”

Further, should this court agree with D’s contention, that would have the effect of reading words into the agreement which was never there in the first place. Reference is made to Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 where it was held by the House of Lords at page 771 as follows:- “In determining the meaning of the language of a commercial contract, and unilateral contractual notices, the law therefore generally favours a commercially sensible construction. The reason for this approach is that a commercial construction is more likely to give effect to the intention of the parties. Words are therefore interpreted in the way in which a reasonable commercial person would construe them. And the standard of the reasonable commercial person is hostile to technical interpretations and undue emphasis on niceties of language. In contradistinction to this modern approach, Lord Greene M.R's judgment in Hankey v. Clavering [1942] 2 KB 326 is rigid and formalistic.”

Reference is also made to Attorney General of Belize v Belize Telecom [2009] UKPC 10 where the Privy Council had pronounced its opinion that:- “The Court has no power to improve upon the instrument which it is called upon to construe, whether it be a contract, a statute or articles of association. It cannot introduce terms or make it fairer or more reasonable. If it is concerned only to discover what the instrument means. However, that meaning is not necessarily or always what the authors or parties to the document would have intended. It is the meaning which the instrument would convey to a reasonable person having all the background knowledge which would reasonably be available to the audience to whom the instrument is addressed... It is this objective meaning which is conventionally called the intention of the parties or the intention of Parliament, or the intention of whatever person or body was or is deemed to have been the author of the instrument.” Whether P is entitled to specific performance

Section 11 of the Specific Relief Act 1950 states:- “(1) Except as otherwise provided in this Chapter, the specific performance of any contract may, in the discretion of the court, be enforced -

when the act agreed to be done is in the performance, wholly or partly, of a trust; A holds certain stock in trust for B. A wrongfully disposes of the stock. The law creates an obligation on A to restore the same quantity of stock to B, and B may enforce specific performance of this obligation.

when there exists no standard for ascertaining the actual damage caused by the non-performance of the act agreed to be done; A agrees to buy, and B agrees to sell, a picture by a dead painter and two rare China vases. A may compel B specifically to perform this contract, for there is no standard for ascertaining the actual damage which would be caused by its non-performance.

when the act agreed to be done is such that pecuniary compensation for its non-performance would not afford adequate relief; or ILLUSTRATIONS

A contracts with B to sell him a house for RM1,000. B is entitled to a decree directing A to convey the house to him, he paying the purchase-money.

In consideration of being released from certain obligations imposed on it by its Act of incorporation, a railway company contracts with Z to make an archway through their railway to connect lands of Z served by the railway, to construct a road between certain specified points, to pay a certain annual sum towards the maintenance of this road, and also to construct a siding and a wharf as specified in the contract. Z is entitled to have this contract specifically enforced, for his interest in its performance cannot be adequately compensated for by money; and the court may appoint a proper person to superintend the construction of the archway, road, siding, and wharf.

A contracts to sell, and B contracts to buy, a certain number of railway-shares of a particular description. A refuses to complete the sale. B may compel A specifically to perform this agreement, for the shares are limited in number and not always to be had in the market, and their possession carries with it the status of a shareholder, which cannot otherwise be procured.

A contracts with B to paint a picture for B, who agrees to pay therefor RM1,000. The picture is painted. B is entitled to have it delivered to him on payment or tender of the RM1,000.

when it is probable that pecuniary compensation cannot be got for the non-performance of the act agreed to be done. A transfers without endorsement, but for valuable consideration, a promissory note to B. A becomes insolvent, and C is appointed his assignee. B may compel C to endorse the note, for C has succeeded to A's liabilities and a decree for pecuniary compensation for not endorsing the note would be fruitless.

Unless and until the contrary is proved, the court shall presume that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money, and that the breach of a contract to transfer movable property can be thus relieved.”

In Yap Seong Yee V Eureka Property Management Sdn Bhd & Another Appeal [2018] 8 CLJ 713 the Court of Appeal held that:- “[41] Upon our evaluation of the evidence before the court, we found that the learned judge had misunderstood the law and the principle applicable for the grant of a remedy for specific performance. We were guided by the various relevant cases cited by the learned counsel for Madam Yap and Phra Ruam such as Leelavathi K Govindasamy v. Sivan Subramaniam & Anor [2015] 1 LNS 62; [2015] 3 MLJ 187; Wong Kup Sing v. Jeram Rubber Estates Ltd [1969] 1 LNS 201; [1969] 1 MLJ 245; Pakharsingh v. Kishansingh AIR 1974 Raj 112; Malaysian Building Society Berhad v. Prima First Development Sdn Bhd & Another Appeal [2013] 5 CLJ 239, where the courts had held that before the court grants the remedy in the form of specific performance, the court must be satisfied that there must be a continuance of readiness and willingness of the part of the party seeking for the relief in the form of specific performance to perform his part of the bargain from the date of the contract up to the date of hearing. In the case quoted above, the party seeking for a specific performance must not only demonstrate to the court its willingness or readiness to perform his obligation but he must also adduce evidence of his willingness and readiness to do so.”

In RHB Trustees Bhd v Always Ahead (M) Sdn Bhd [2024] 7 CLJ 645, it was held by the High Court that:- “I shall begin by setting out the applicable legal principles. Section 11(1) of the Specific Relief Act 1950 provides that subject to the provisions in the Act, specific performance of a contract may in the discretion of the court be enforced when (a) there exists no standard for ascertaining actual damage caused by non-performance; or (b) pecuniary compensation for non-performance would not afford adequate relief. Section 11(2) further provides that the court shall presume, unless the contrary is proven, that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money. Illustration (a) to s. 11(1)(c) makes it clear that a contract for the sale of a house at a stated price is specifically enforceable at the election of the purchaser.”

Returning to the instant matter, it must be recalled that the said Agreement in essence concerns with the operation of a petrol station. The business operated by D under the Agreement with P since 2015 has caused to be developed a substantial brand recognition, goodwill and customer association with the petrol station site. Hence, the Shell Petrol Filing Station operated by D on the site is publicly known to be supplied and serviced under P’s retail identity, standards and branding.

Not only that, the petrol station site also carries Shell’s branding, colors, layout and signage as rightly put by P’s counsel in his submissions. All of these in turn are rightfully distinctive and associated in the mind of the public with P’s services and business. This connection and/ or link and/ or association forms the basis of P’s reputation or goodwill based on Reckitt & Colman Products Ltd v Borden Inc [1990] IAU 877 where the House of Lords held at page 880 that:- “The law of passing off can be summarised in one short general proposition, no man may pass off his goods as those of another. More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. These are three in number. First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying 'get-up' (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiffs goods or services.”

Less one forgets that the present case concerns one of breach of contract and not passing off, it would still be pertinent to refer to Reckitt’s case above in order to ascertain the establishment of goodwill and how it is legally recognized.

Accordingly, in the event the Shell Petrol filing station ceases operation as evinced by D’s own letters and that of their solicitors, the immediate outcome that could be foreseen by this court is a loss of reputation, goodwill and customer association currently attached to the site. This disruption would then entail affecting P’s trade reputation, goodwill, market position, brand continuity and customer loyalty. All these losses albeit real could not be calculated in monetary terms.

In New-West Management Group Sdn Bhd v Ng Ah Kow & Anor [2008] 8 CLJ 18 it was held by the High Court that:- “Further the loss of goodwill and reputation suffered by the plaintiff cannot be quantifiable or compensated easily by damages.”

As such, this Court agrees that any reputational and goodwill loss as a result of the disruption at the site being real and substantial, could not be compensated by damages.

At the same time, this Court also agrees with P’s contention that while there is an expectation for loss of future profits under the Agreement to be renewed, this is however uncertain and also not capable of being quantified.

That being the case, any estimate of losses would be speculative as it could not be calculated precisely since to do so would require this court to make numerous assumptions on various factors such as market behavior, fuel pricing and retail performances among others which to be noted are all uncertain in nature.

Thus, this Court finds that damages would not be an adequate remedy for P.

For reasons stated above, the OS is allowed with costs of RM 15,000.00 to be paid by D to P, subject to payment of allocator fee. Dated : 13.3.2026 …………………………………….. (NOOR HISHAM BIN ISMAIL) Judge High Court, Johor Bahru For the Plaintiff: Messrs Lee Hishamuddin Allen & Gledhill Advocates & Solicitors Tingkat 6, Menara 1 Dutamas, Solaris Dutamas No 1, Jalan Dutamas 1 50480 Kuala Lumpur For the Defendant: Messrs Thomas Philip Advocates & Solicitors No 5-1, Jalan 22A/70A Wisma CKL 50480 Kuala Lumpur