The Intermediate Court has found Ummi Trading Company liable for unlawfully purchasing and reselling YOU.C1000 beverages designated for sale in Indonesia only, causing loss and damage to the brand’s exclusive distributor in Brunei.
Judge Pengiran Hajah Norismayanti Pengiran Haji Ismail delivered the judgment on February 25 in Civil Suit No. 33 of 2020, brought by Lau Kee Ming, trading as Hui Huang Enterprise, against Ampuan Hajah Rohani Ampuan Haji Yusof, trading as Ummi Trading Company. The court reserved the assessment of damages, pre-judgment interest and costs for a further hearing.
The plaintiff had held exclusive distributorship rights for YOU.C1000 products in Brunei Darussalam and Kota Kinabalu, Sabah, under an agreement with Indonesian manufacturer P.T. Djojonegoro YOU.C1000.
The dispute arose after the plaintiff discovered that local retailers were selling beverages labelled “Hanya dijual di Indonesia”, meaning “Only for sale in Indonesia”. The products were supplied by the defendant, which had purchased 220 cartons from a supplier based in Miri, Sarawak, in August 2019.
The defendant sold the beverages to 17 supermarkets and minimarts at BND23 a carton, below the plaintiff’s selling prices of BND23.80 to BND27 a carton. The defendant maintained that it had purchased the products through a legitimate commercial transaction and argued that parallel importation was not inherently unlawful.
The court accepted that the plaintiff was the manufacturer’s sole authorised distributor in Brunei and that the products supplied through the Miri based company were intended exclusively for the Indonesian market. It found that the goods had entered Brunei through a supply chain that breached the manufacturer’s territorial restrictions.
However, the court distinguished between the defendant’s role as a purchaser and reseller and the statutory responsibilities of an importer. It found insufficient evidence that the defendant had physically brought the goods into Brunei or caused them to be imported, and therefore did not establish that the defendant had breached statutory obligations as an importer under the Customs Act.
Nevertheless, the judge found that the defendant, an experienced food and beverage operator, had failed to make reasonable inquiries about the products’ origin, authorisation and regulatory compliance. The court concluded that the defendant knew or ought to have known that the products were outside the manufacturer’s authorised distribution network.
In reaching its decision, the court considered the Malaysian Federal Court decision in Guangzhou Light Industry & Trade Group Ltd v Lintas Superstore Sdn Bhd. It noted that the case concerned trademark infringement and passing off, whereas the plaintiff in the present proceedings did not own the YOU.C1000 trademark. The court therefore declined to apply that decision as direct authority for establishing liability, while recognising the legal significance of territorial restrictions.
The plaintiff claimed BND205,934.40 in losses. However, the court found that the claim relied on unaudited internal sales reports, included marketing and sponsorship expenses that would have been incurred regardless of the defendant’s conduct, and treated shortfalls against internal sales targets as recoverable losses without sufficiently establishing causation.
The court also noted that the defendant had made a total profit of BND761.25 from the sale of the 220 cartons. While this did not determine the extent of the plaintiff’s loss, the plaintiff had failed to establish a reliable evidential link between the defendant’s sales and the full amount claimed.
The judge nevertheless found that the defendant’s conduct had caused some commercial harm to the plaintiff, including the impact of lower-priced products on its sales and exclusive distribution position. The court said it could make a reasonable estimate of damages where loss had been established but precise quantification was difficult.
The parties will be heard further on the amount of damages and the plaintiff’s application for pre-judgment interest. Costs were also reserved.
The plaintiff was represented by Lieutenant Colonel (Rtd) Haji Harif Haji Ibrahim and Nur Khairunnisa Haji Hanipiah of Messrs Lt Col (Rtd) Harif Ibrahim, while the defendant was represented by Lim Rui and Navrita Kaur of Messrs Raed Lim.