ATG Lanka (Pvt) Limited v Safety Mate Pty Ltd

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IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL COURT

COMMERCIAL LIST

S ECI 2019 01329

ATG LANKA (PVT) LIMITED	Plaintiff
v
SAFETY MATE PTY LTD (ACN 104 784 241)	Defendant

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JUDGE:

Connock J

WHERE HELD:

Melbourne

DATE OF HEARING:

1, 2, 3, 7, 8, 10, 15 June, 10, 11, 18 August 2021

— 31 August and 1 September 2021, additional submissions and materials

DATE OF JUDGMENT:

10 December 2021

CASE MAY BE CITED AS:

ATG Lanka (PVT) Limited v Safety Mate Pty Ltd

MEDIUM NEUTRAL CITATION:

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CONTRACT – Termination of distribution agreement – Good faith – Express term to act in good faith – Breach of contract – Alleged failure to act in good faith – Validity of termination notice – Notice requirements – Address for service of notice – Claimed extension of agreement – Damages claimed for breach of contract – Alleged disclosure of confidential information – Loss of profits claim – Construction of contracts – General principles of construction – Construction of notice clauses – Construction of termination clauses – Service of notices – Section 109X of the Corporations Act 2001 (Cth) – Section 29 of the Acts Interpretation Act1901 (Cth) – Exclusion and limitation clauses – General principles regarding exclusion and limitation clauses – Freedom of contract – Loss of profits.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	D Williams QC with S Cromb	HDL Legal and Consulting Pty Ltd
For the Defendant	P Corbett QC with H Forrester	Patane Lawyers

TABLE OF CONTENTS

Introduction and summary  1

Background and factual matters  2

Witnesses  49

Mr Lippner  49

Mr Abdeen  49

Mr Browning  50

Mr Sheerin  51

Mr Tee  57

Expert witnesses – Mr Vincent and Ms Wright  61

Issues  62

Construction of commercial contracts and notices  65

The Agreement  73

Whether Termination Notice invalid – ‘terminated earlier’ issue  84

ATG’s submissions  85

Safety Mate’s submissions  86

Consideration and disposition – ‘terminated earlier’ issue  89

Whether Termination Notice invalid – notice requirements  101

ATG’s submissions  101

Safety Mate’s submissions  102

Consideration and disposition  105

Whether Termination Notice invalid – Extension Letter  118

Whether Termination Notice and termination invalid – good faith allegations              119

Introduction – breach of good faith allegations  119

Clause 12.2 of the Agreement – the express good faith obligation  122

Good faith in a commercial contract context and the content of the obligation             124

ATG’s and Safety Mate’s good faith formulations  131

Consideration and disposition – breach of good faith allegations  133

Alleged provision of confidential information to Mayo  142

Appointment of Mayo  149

Failure to supply the Four Purchase Orders  153

Supply of product to Mayo  161

Alleged failure to enquire and consult  164

Clauses 4.1.5 and 4.1.6 of the Agreement  176

Alleged failure to conduct a review  179

Conclusion – good faith allegations  187

Four Purchase Orders claim  188

Loss and damage  188

Safety Mate’s submissions  189

ATG’s submissions  191

Expert evidence  192

Consideration and disposition  195

Clauses 13.1, 13.2 and 15.3 of the Agreement  207

Conclusion and proposed orders  218

ANNEXURE ‘A’ - Table of Alleged Confidential Information  221

HIS HONOUR:

Introduction and summary

1. This dispute relates to the circumstances in which a distribution agreement between the plaintiff (ATG or plaintiff) as manufacturer and supplier of ATG safety gloves, and the defendant (Safety Mate or defendant) as exclusive distributor of the gloves in Australia, New Zealand and Papua New Guinea (Territory), (Agreement) came to an end in September 2019.  

1. ATG contended that the Agreement was validly terminated with effect from midnight on 30 September 2019 (Termination Date) by its notice of termination dated 21 March 2019 (Termination Notice) and it seeks a declaration to that effect.

1. Safety Mate contended, among other things, that the Termination Notice was invalid, that it was not served in accordance with the terms of the Agreement, and that it was given in breach of ATG’s express contractual obligation to, at all times in its relations with Safety Mate, act in good faith (Good Faith Obligation).[1]  Safety Mate contended further that the Agreement was validly extended for an additional two years by a written notice dated 26 March 2019 given by Safety Mate to ATG pursuant to clause 2.2.2 of the Agreement (Extension Letter).

   [1]Clause 12.2 of the Agreement contains an express good faith obligation to this effect.

1. Safety Mate alleged that ATG breached the Agreement by, among other things: failing to act in good faith in connection with its giving of the Termination Notice; refusing supply to Safety Mate; sharing Safety Mate’s confidential information with ATG’s proposed new distributor Mayo Hardware Pty Ltd (Mayo); and appointing Mayo as ATG’s new distributor for the Territory.  By its counterclaim Safety Mate seeks damages, declarations, and other relief.[2]  

   [2]The court was informed that Safety Mate’s counterclaim regarding what was referred to as the ‘Japan Agreement’ had been resolved between the parties, and that it was not necessary for the court to determine this issue.  Safety Mate also did not press its claim that clause 15.5 of the Agreement was an unlawful restraint of trade, which was not listed as an issue in the originally filed Agreed List of Issues.

1. For the reasons that follow I have determined that:

(a)        ATG did not breach the Agreement by failing to act in good faith in the exercise of its termination right under clause 2.2.1 of the Agreement.

(b)       The Agreement was validly terminated by ATG’s Termination Notice with effect from midnight on 30 September 2019.

(c)        The Agreement was not extended for a further two-year period from 1 October 2019 by Safety Mate’s Extension Letter.

(d)       ATG breached clauses 4.1.1 and 4.3 of the Agreement by failing to use reasonable endeavours to supply to Safety Mate the goods the subject of what are defined later in these reasons as the Four Purchase Orders.

(e)        Safety Mate established that it suffered loss and damage, being loss of profits of $25,266 in respect of purchase order PO 964.

(f)        Safety Mate did not establish that it suffered any loss and damage by reason of ATG’s failure to use reasonable endeavours to supply to Safety Mate the goods the subject of purchase orders PO 965, PO 974, and PO 980.

(g)       ATG’s liability to Safety Mate for the loss of $25,266 in respect of purchase order PO 964 is excluded by clauses 13.1 and 13.2 of the Agreement.

Background and factual matters

1. ATG designs and manufactures what it regards as premium quality safety gloves for distribution through its exclusive distributors around the world.  Those distributors are known as primary sales partners or PSPs.  ATG is a substantial company employing more than 5,000 staff and its gloves are manufactured in production facilities across more than 15 buildings in multiple sites in Sri Lanka.

1. ATG’s managing director is Mr Abdeen.  Mr Kyle Browning is ATG’s director of global sales, having been appointed to that position in 2015.  Prior to that he was head of global business development from 2013.  Before that he was country manager for North America, having originally commenced with ATG in 2008.  Mr Jason Sheerin is ATG’s country manager for the Territory.  He commenced with ATG in July 2014, having previously been Ansell’s corporate accounts director.  He was introduced to ATG by Safety Mate’s Mr Tee, whom Mr Sheerin met when he worked at Ansell.

1. ATG manufactures four main brands of ‘families’ of gloves for use in different environments in what it describes as its ‘pro range’.  They are:  MaxiFlex for use in dry environments; MaxiCut for use in environments with a high cut risk; MaxiDry for use in wet or oily environments; and MaxiChem for use in chemical environments.  ATG also manufactures a number of other brands of gloves in its classic range, including: MaxiLite, MaxiTherm, MaxiFoam, NBR-Lite and NovaTril.  In each glove brand there are a large number of different sub-categories for each available size and colour of a glove type, each of which is assigned its own ‘stock keeping unit’, known as an SKU.

1. ATG manufactures its gloves on a made-to-order basis worldwide.  It does not keep any inventory of spare stock, except in rare cases.  The time from the initial placing of an order by a PSP to the point where it is loaded into shipping containers and transported to the port of Colombo in Sri Lanka is about three months.  The time from this point until the actual time of receipt by a PSP in each country is affected by various factors, including the distance from Colombo, customs and quarantining requirements, and the distance from the PSP’s home port to the PSP’s warehouse.  Sometimes PSPs request gloves to be delivered by air freight, which is at the PSP’s cost.  The ordering process and the time lag between ordering and arrival of stock is relevant to aspects of the dispute between the parties, and particularly Safety Mate’s alternative damages claim against ATG for refusing to fill purchase orders 964 (29 May 2019), 965 (3 June 2019), 974 (3 July 2019), and 980 (3 July 2019) (collectively, Four Purchase Orders).

1. The production process begins with each PSP around the world placing an order containing the PSP’s desired SKUs and quantities for a given production month.  ATG requires orders to be placed by PSPs worldwide two months before the start of the relevant production month, and three months prior to the requested dispatch date.  This requirement exists for a range of reasons, including enabling ATG to:  purchase raw materials; schedule production across various facilities; schedule staff; ensure the required machinery at production facilities are available and have capacity for global demand for each relevant SKU for that month; ensure that enough water is treated at ATG’s water treatment plants to meet manufacturing requirements; and to ensure that there will be sufficient space in the relevant production facilities for the gloves in the pre- and post-production state.

1. Upon receipt of the purchase orders for a given production month ATG collates the worldwide orders and assesses its capacity to meet them.  ATG then prepares a pro-forma invoice which it issues to each PSP.  Each pro-forma invoice sets out the types and quantities of each SKU that ATG can supply to the relevant PSP.  These quantities may not match what the PSP has ordered.  This is usually as a result of worldwide demand issues.  It also occurs from time to time where ATG understands that a particular PSP is ordering quantities which exceed its actual requirements at that time.  Operational production and planning issues for ATG were said to rely on strict adherence by PSPs to the production process, including its made-to-order approach.  ATG requires and relies upon PSPs to place accurate and timely advance orders.

1. The timing from the initial placing of the purchase order by a PSP until the sending of the pro-forma invoice by ATG is about two weeks.  The pro-forma invoice has terms and conditions, which are also referred to in the distribution agreements between ATG and its PSPs.  Following receipt of the pro-forma invoice, and after acceptance of any variations, the PSP signs the pro-forma invoice and returns it to ATG for processing.  The timing from initial placing of the order to this point is about three to four weeks.

1. When the worldwide orders have been finalised ATG commences the process of raw material acquisition, water treatment, staffing, machinery scheduling and related matters.  For efficiency, the manufacturing process then begins for all worldwide orders for a particular SKU occurring together.  The time from the initial placing of orders until the commencement of manufacturing is about two months.  The manufacturing process begins at the start of the relevant production month and continues throughout the course of that month.

1. When the manufacturing process is complete the gloves are separated out according to the quantities of each SKU ordered by each PSP.  They are then bundled into lots, compressed and packaged with ATG’s and the PSP’s branding and any other relevant information required to be included.  They are then placed into boxes and loaded into shipping containers and transported to the port of Colombo (unless airfreight has been requested).  As mentioned, from the placing of the order until this point is about three months.  Shipping to Australia from the port of Colombo takes additional weeks.

1. At the end of each production month the production facility is entirely emptied of finished products and ATG has no inventory of finished products except on the odd occasion where there has been a small amount of stock from a production overrun.

1. ATG distributes its gloves globally through a network of approximately 30 PSPs, with each PSP having exclusive distribution rights in the relevant country, region or territory.  Each PSP is overseen by a country or regional manager employed by ATG who in turn reports to ATG’s director of global sales, which is currently Mr Browning.  ATG describes its model or approach as being focused upon a channel partner network.  A channel partner is at the level of distribution within the supply chain which provides the products direct to the end user.  They are independent businesses which will generally sell products from a range of manufacturers to retail stores or end users.  There were said to be about 40 channel partners in Australia, with most sales being achieved through the five or so largest channel partners.  The largest channel partner in Australia is J Blackwood & Son Pty Ltd (Blackwoods), which is owned by Wesfarmers Limited.  This channel partner was said to be responsible for about 50% of Safety Mate’s ATG sales in Australia.

1. Mr Browning said a simple explanation of the relationship was as follows:

(a)        a PSP will buy the product from ATG pursuant to a distribution agreement;

(b)       the PSP will aim to sell the products to a channel partner; and

(c)        a channel partner will sell the product to the ultimate end user, being a variation of either wholesalers, storefronts or directly to industry.

He described it as a top-down model with a focus on the PSP first and the channel partner second, and said that the approach did not generally provide for ATG or the PSP to be engaging with the end user directly, except in close cooperation with the channel partner and even then only rarely.

1. ATG’s areas of focus are referred to in its brand charter comprising Schedule 7 to the Agreement, with the first in importance being stated in the following terms:

Proximity and presence: of the ATG^® offering delivered through the primary sales and channel partners. At ATG^® we know that it is the primary sales and channel partners that primarily deliver the ATG^® message and promise on a daily basis. ATG^® sees it as its role to ensure the appropriate level/quality of services to support.’

1. The importance of channel partners to ATG was also reflected in the key performance indicator (KPI) scorecard comprising Schedule 8 to the Agreement (KPI Scorecard).  All five KPIs in the scorecard refer to channel partners, with emphasis on the same in KPIs 1 to 4.  KPI 1 is headed ‘Australian Channel Partner Engagement’.

1. Mr Sheerin said that each PSP’s role within their respective territory includes:  promoting and supplying the gloves to channel partners; in conjunction with channel partners, promoting the gloves to end users; ordering sufficient gloves in advance to meet local demand in the upcoming sales period; providing regular training to channel partners to assist them in marketing the gloves to their customers; and to provide to ATG on a monthly basis information regarding sales, stock levels and forecasts.  Mr Browning referred to PSPs’ responsibilities as including utilising ATG sales and marketing collateral, channel partner engagement, and PSP sales team engagement.  With respect to channel partner engagement he considered that a PSP must build a strong channel partner network, engage in training of channel partners’ sales team members, and provide a path into ‘C-Level’[3] channel partner engagement. Mr Browning said the channel partner engagement involves ATG locking ’arm in arm’ with a PSP to present value to channel partners’ senior management.

   [3]Meaning very senior level, such as ‘CEO’, ‘COO’ and ‘CFO’ level.

1. With respect to ATG’s role Mr Sheerin said that it provides training, tools, market intelligence and other support to PSPs, but does not itself sell directly to channel partners or end users, only to PSPs.  He said that it generally requires PSPs to sell only to channel partners, not end users, and ATG expects PSPs to focus the majority of their attention on dealing with channel partners and to engage with end users only in conjunction/cooperation with channel partners.  He referred to this being the ‘channel partners approach’ and said that ATG had used this distribution model throughout the world since ATG was formed in 2009 and that its predecessor, John Ward Ceylon Limited, used the same model.  Mr Browning reinforced the importance of this approach worldwide, which was described as the ‘ATG Model’.  That precise term, ‘ATG Model’, is not used or defined in the Agreement, although reference is made to ‘this business model’ in the Brand Charter forming part of the Agreement.

1. Safety Mate carries on business as a distributor of hand and eye protection wear throughout the Territory.  Mr Clint Tee is one director and Mr Mike Temperton is the other.  Seventy-five per cent of the shares in Safety Mate are owned by family or entities associated with Mr Tee, and 25% are owned by a company controlled by Mr Temperton.  Mr Tee is in charge of the day-to-day operations, which includes managing the sales team, overseeing supplies and purchase orders, contract negotiations, high-level contact with customers and sourcing suppliers and new customers.  Mr Temperton is a qualified accountant and is involved in all board level decisions and in overseeing cashflow and other finances of the business.  He was also said to be involved with important decisions and issues as they arose, including in this case being kept informed of negotiations with ATG in the lead up to the execution of the Agreement.  Mr Tee said it was his usual practice to email a note of conversations he had with Mr Browning or Mr Sheerin to Mr Temperton following important discussions.

1. Mr Tee first became engaged with ATG (when it was known as John Ward Ceylon) in late 2004/early 2005 whilst on a trip to India.  At that time the Australian glove market was dominated by Ansell Limited.  In India Mr Tee obtained a catalogue of ATG’s products.  His first contact was with the then commercial sales director, Mr Goth, who remained the main sales contact for the first six years of the relationship.

1. In November 2007 ATG and Safety Mate signed a five-year distribution agreement.

1. On 1 January 2012 Safety Mate entered into a further distribution agreement in respect of ATG products for Australia, New Zealand and ‘Oceania’ until 31 December 2016, with an option to continue for a further 12 months.  The 2012 agreement was signed by Mr Tee and continued until 30 September 2017.  As Mr Tee acknowledged in his evidence, at that time there was no obligation on either party to extend the term of the then distribution agreement, or enter into a new agreement.  Both parties were free to walk away.

1. Like the Agreement, the 2012 distribution agreement also contained terms mandating compliance with ATG’s ‘brand charter’, which was addressed in clause 36 of the 2012 agreement.  Clause 36.8 of that agreement also emphasised the focus and importance of the ‘ATG offering [being] delivered through the primary sales partner and channel partners.’

1. Prior to 2014 there was no country manager for Australia based in Australia.  In early 2014 Mr Goth visited Safety Mate in Brisbane to discuss the market.  During that time he asked Mr Tee if he knew anybody who could perform the role of country manager.  Mr Tee suggested that they seek to hire Mr Sheerin, who was then working at Ansell, and who Mr Tee had met at a trade exhibition in Darwin.  Mr Tee understood Mr Sheerin had a good relationship with Wesfarmers’ key personnel and decision-makers.  Mr Sheerin joined ATG in July 2014 as the country manager for the Territory.

1. Mr Tee said that historically Safety Mate imported and sold safety equipment to channel partners and not end users, with Safety Mate’s channel partners then onselling the products to end users.  Examples of end users were large mining companies, such as Rio Tinto, BHP, Illawarra Coal Ltd (owned by South 32 Ltd), and Anglo American plc.  Examples of channel partners were Wesfarmers Industrial and Safety Pty Ltd, which includes Blackwoods, Aqua Terra Oil and Mineral Service and Supply Company Pty Ltd, Torrens Safety Pty Ltd and Industrial Protective Products (WA).

1. Mr Tee said that the sales strategy differed for each channel partner.  Sometimes engagement was with end users first and face to face in providing samples and obtaining feedback.  He would then go to the channel partners and try to persuade them that they should buy the gloves and products from Safety Mate that the end users wanted.  Other times Mr Tee said he was approached by end users directly to help them solve specific hand protection issues they may have on site and that once he understood the end user need he would refer the business back to the channel partner.  Safety Mate’s initial strategy for ATG products was to visit supply managers of large distributor companies such as Blackwoods and business owners of small independently owned distributors.  

1. From around 2007 Safety Mate began to change the sales strategy for ATG products from only approaching channel partners to instead beginning to meet with the end users and sending employees to do so.  Mr Tee said his objective was to try to convert them to the ATG brand and then hopefully persuade the channel partners to buy the brand from Safety Mate due to their customers liking the product.

1. When Mr Sheerin commenced as country manager in July 2014, he had a good working relationship with Safety Mate and Mr Tee and there was frequent contact.  Mr Sheerin said that this deteriorated after about six months and that many communications had become unpleasant.  He said that a consistent theme of the conversations related to him being unable to persuade Mr Tee that the channel partners’ approach was the appropriate way for him to operate Safety Mate’s business as ATG’s PSP, and Mr Tee being unable to persuade Mr Sheerin that Safety Mate should continue to operate without applying that approach.  Mr Sheerin said that this introduced a level of friction into the communications which has never been resolved, and the telephone calls went from speaking nearly every day in the early times to becoming very infrequent so that most of the communications were by email.  Such calls as did occur were said to be strained.  Mr Sheerin also spoke of some examples regarding issues with channel partners.  I accept the substance of Mr Sheerin’s evidence in this regard, which was also apparent from email and other communications during the relationship, aspects of which are referred to later in these reasons.

1. Mr Browning said, and I accept, that in September 2015, Mr Goth, Mr Sheerin, and he met with Mr Tee and others in Brisbane, during which the ATG model and approach was discussed.  This included a presentation that reflected and emphasised ATG’s channel partner approach through its PSPs.  Mr Browning had originally created this presentation many years before, which he revised from time to time.  Among other things, the presentation set out ATG’s sales strategy and compared it to others with the relevant slides recording and underscoring in different ways how ATG works through channel partners.  For example, the approach with ATG’s exclusive PSPs in a territory was diagrammatically presented as follows:

The presentation recorded in various ways ATG’s strong view regarding the importance and benefits of its channel partners’ approach and PSP engagement with channel partners.  A goal to achieve growth was said to be for PSPs to develop multiple resources within multiple channel partner sales teams and to increase the number of channel partner sales team members selling ATG’s products.

1. Mr Browning said, and I accept, that following the presentation, Mr Tee said words to the effect that Safety Mate disagreed with the ATG approach and that the Safety Mate strategy was to go to market to target end users directly rather than adopt the ATG channel partner approach.  In 2015 Safety Mate’s Mr Roberson had also made a remark to Mr Browning about his view that distributors (meaning channel partners) were a waste of time.  Mr Browning was materially concerned about this approach, which he expressed, as well as his view regarding the channel partner approach being successful globally.  Although Mr Tee did not agree with Mr Browning’s recollection, where there are differences I generally prefer the evidence of Mr Browning, as I later explain.

1. The fact that Mr Browning and ATG felt strongly about ATG’s approach to market was also apparent from Mr Tee’s email of 8 September 2015, in which he referred to ATG having ‘… pushed very hard to have contact with distributors …’.  That Mr Goth and Mr Browning were ‘… extremely passionate about ATG and the way [ATG] go to market …’ was also referred to in Mr Sheerin’s email of 10 September 2015, as well as the content of the presentation.  Mr Tee’s comments regarding Mr Sheerin in his email of 8 September 2015 to Mr Temperton also reflected a deteriorated relationship with him, as was also apparent from earlier email communications, including, for example, the exchanges between Mr Tee and Mr Sheerin on 14 July and 14 August 2015.  It was also the position that personal issues had impacted on aspects of Mr Sheerin’s work at the time.

1. Throughout 2015 Mr Sheerin routinely reported back to Mr Browning, typically by monthly phone calls.  In substance they were said generally to include comments to the effect that despite attempts to persuade Safety Mate otherwise, it had not made any real changes to adopt sufficiently the ATG approach and was continuing with its go-to-market strategy.  Mr Browning said that he raised again his concerns with Mr Tee at a meeting in Germany in late 2015 and referred back to the earlier discussions about the ATG approach.  Mr Browning said that Mr Tee said words to the effect that ‘the go to market strategy works for us and is the strategy we will employ.’

1. I accept the substance of Mr Browning’s evidence that he had a discussion with Mr Tee at the meeting in Dusseldorf in Germany in October 2015, which sits comfortably with ATG’s documented approach, the matters raised earlier in September 2015, and the terms of the 2012 Agreement.  It is also consistent with Mr Browning’s belief in ATG’s approach, as was referred to at the time in email correspondence.  To the extent the substance of Mr Browning’s evidence was inconsistent with the evidence of Mr Tee about what transpired, I prefer the evidence of Mr Browning.  Further, even if it was the case that the particular words, ‘ATG model’ or ‘go to market approach’ were not used, I am satisfied that the ATG channel partners’ approach was discussed, as was the existence of the differences between the parties on this issue.  This was also addressed by Mr Browning’s evidence in re-examination, which I accept.  He explained that any time he had a discussion around distribution with Mr Tee it came to the same conclusion and that ‘… it always felt like when we’ve had a discussion with Safety Mate, specifically with Clint Tee, either Jason or myself, we were told that, “This is Safety Mate’s business, this is Safety Mate’s market”, and they’re going to manage and handle the market the way they see fit and they just seemed to be very resistant to any conversations about a change or a new adoption of a different way to approach the market.  The conversation would always end in the same position where they would basically tell us that it was their business and they knew what their market was and they knew more than we did’.[4]  Another illustration Mr Browning referred to was Safety Mate’s National Sales Manager, Mr Roberson, expressing the view that ‘distributors are a waste of time’.  A further example mentioned was a statement by Mr Tee that ‘Our focus is 90 per cent on the end user’, which Mr Browning said was generally ‘Clint’s approach’.  Mr Browning also expressed the view, which I accept was genuinely held, that Safety Mate always appeared to want to continue to argue the point, which is also reinforced by a number of the documents referred to in these reasons.

   [4]Transcript 429.

1. Mr Browning’s view about Safety Mate’s approach, causing issues in the market and distributors being concerned was not based only on that which Mr Sheerin told him, although Mr Sheerin’s observations were to the same effect.  Mr Browning explained, and I accept, that Mr Browning had also formed his own opinions based on conversations with others.  As he said during his oral evidence this included his conversations with Mr Tee and conversations with members of Wesfarmers’ staff that had told him ‘… that they had issues with the way that Safety Mate approached the market and approached the end users and they didn’t feel like there was a lot of opportunity for real partnership with Safety Mate’.  During re-examination Mr Browning explained who it was that he had met with in September 2015 when the issues had been raised.  He also confirmed, and I accept, that he had spoken again with Wesfarmers’ Mr Wood at a trade show in 2017 where ‘… he again expressed concern over the way that Safety Mate had approached the market and the way that they worked in the market place, and so it was still a problem for them.’[5]

   [5]Transcript 428.

1. That there were other positive communications and exchanges between the parties at the time and subsequently does not alter the position or change the fact that throughout the relevant periods there was an apparent difference of view between ATG and Safety Mate about the preferable market approach.  Although in my view Mr Tee displayed a tendency in his evidence to want to play down this difference, it was well supported by the evidence of Mr Browning and Mr Sheerin on the point, as well as apparent from numerous references in the email communications and other documents in evidence.  I accept that there was an ongoing issue between the parties in their business relationship about this topic and that each of ATG and Safety Mate held strong but different views about it.

1. Mr Browning said, and I accept, he told Mr Sheerin to keep doing his job and explained that this involved working with Safety Mate and channel partners and to train them, and to work with Mr Tee to get him to change his approach and continue to report back.  He said Mr Sheerin usually reported monthly that he was trying to achieve these goals whilst also trying to keep the relationship with Safety Mate relatively cordial, and that he was approaching the matter in a non-adversarial way.

1. The challenged working relationship between Safety Mate and Mr Sheerin was apparent from many communications in evidence.  It was also apparent from many of Mr Tee’s email communications, whether internal to Safety Mate or external to ATG, that Mr Tee was a forthright individual with strong views on many topics and strong belief in his own position in things.  Further examples of emails revealing the challenged relationship with Mr Sheerin included the internal and external email exchanges in January, February and March 2016.  It was also apparent that Safety Mate was hoping to engage Mr Browning’s support, although later email exchanges in February 2017 between Mr Tee and Mr Temperton recorded Mr Tee’s concern more than once that Mr Browning was, or appeared to be, supporting Mr Sheerin, even though earlier he had said it was part of Mr Sheerin’s job to fix the strained relationship with Safety Mate.  I prefer the evidence of each of Mr Browning and Mr Sheerin to that of Mr Tee where it was in conflict regarding the nature of the strained relationship and its manifestations.  To the extent that Mr Tee denied awareness or knowledge of the existence of a strained and challenged relationship, I do not accept that evidence.  The documents and the evidence of Mr Sheerin and Mr Browning established otherwise.

1. During 2014 to 2016 Safety Mate and ATG had been engaging in relation to the prospect of Safety Mate being appointed as the PSP for Japan.  This was an important issue to Safety Mate as the email correspondence in evidence reflected.  It also revealed tension between the parties in various ways, including in relation to what Safety Mate saw and said was poor communication and ‘a lack of correspondence’ from ATG and Mr Browning on the topic in response to expressed concerns of Mr Tee.[6]

   [6]This was reflected through the run of email exchanges at the time, including the chain of emails that included Mr Tee’s email to Mr Browning on 18 July 2016 at 3:51pm.  Another example is the email from Mr Tee to Mr Goth and Mr Browning which formed part of the same exchange and was responded to by Mr Browning on 13 June 2016 at 2:02pm.

1. Ultimately Safety Mate was not appointed as PSP for Japan, because in mid-2016 ATG decided to go to the Japanese market directly.  Safety Mate was very disappointed with ATG’s approach and said so.  The email exchanges at the time reflect that Mr Tee was upset about the issue, as was Mr Temperton, who considered that ATG’s approach ‘did not sit well’ with them.  ATG’s letter of 23 August 2016 addressed an issue of expenses and commission compensation for Safety Mate and stated, among other things, ‘ATG’s position [that] this decision was made for the best of the business and due to the manner of distribution that must be adopted in Japan …’.

1. Given the timing, this issue formed part of the backdrop to the negotiations that took place between the parties in connection with the entry into the Agreement in 2017.  By his email of 8 September 2016 in response to ATG’s letter of 23 August 2016, Mr Tee:  referred to the Japan issue noting that ‘… we have clearly stated that we are not happy with the position ATG has taken, we have accepted that we need to move on and put the matter behind us.’  Mr Tee’s proposal included compensation for expenses and claimed commission but also added a ‘further request that our current territory agreement, which is due for renewal, be extended for a period of 10 years’, which a later email recorded that the request ‘only arose out of the Japan outcome’.[7]  

   [7]Email from Mr Tee to Mr Browning dated 27 January 2017 at 8:54am.

1. The  email correspondence that followed expressed ATG’s concern by Mr Browning about what was seen as an attempt by Safety Mate ‘to muddy two issues’, being the Japan issue and renewal of agreement negotiations.  Mr Tee said that Mr Browning had informed Safety Mate that the negotiation of any new agreement was completely separate from the Japan issue.

1. Although Mr Tee’s email of 10 February 2017 recorded his belief that it was obvious that ATG did not plan to agree to a 10-year agreement, Mr Temperton considered at that time that Safety Mate should ‘keep pushing’[8] for an initial term of 10 years plus a five-year option.

   [8]Email from Mr Temperton to Mr Tee dated 10 February 2017 at 6:56am.

1. The email exchanges at this time also recorded Mr Tee seeking to explore with Mr Browning whether he had an issue with Mr Sheerin, who was the country manager for the Territory.  Mr Temperton counselled against this approach saying:  ‘No, I think he is behind Jason [Sheerin], and not happy he is not being included, we will see this in the new Agreement.’[9]  The email exchange that followed revealed that Mr Browning was of the view that Safety Mate was excluding or seeking to step around Mr Sheerin as country manager, that he was not happy about it, and that this was conveyed to Mr Tee and Mr Temperton.  It also recorded that Mr Browning was insisting that Mr Sheerin handle any contract renewal and be involved in the negotiations.  Mr Temperton’s email of 10 February 2017 (8:49am) also recorded that Mr Browning had said that he was not happy and did not like the way Mr Sheerin was being treated, and that ‘… there are things more important than figures’.

   [9]Email from Mr Temperton to Mr Tee dated 10 February 2017 at 8:33am.

1. The subsequent emails between Mr Temperton and Mr Tee on 11 February 2017 also further revealed a challenged relationship between Safety Mate and ATG and between Mr Tee and Mr Temperton on the one hand and Mr Browning and Mr Sheerin on the other.  Mr Temperton was clear about his strategy or approach, considering that no forewarning should be sent to Mr Browning about how Safety Mate ‘will want to handle Jason [Sheerin]’ and that any mention of Mr Sheerin to Mr Browning ‘will only steady his belief in what Jason has been saying’.  On the topic of business approach by Mr Browning and ATG, Mr Temperton stated that:

Jason aside, Kyle has to be driven by business principles, and where they are going is trying to run the business of their PSP’s which is not on. Injecting their country manager into a PSP’s business which is not on ... Let’s focus on the contract, get the detail right, then bring the war to Jason [Sheerin] based on their own clear guidelines’.[10]

[10]Email from Mr Temperton to Mr Tee dated 11 February 2017 at 5:51am.

1. This is a further example of the existence of true differences between ATG and Safety Mate.  Mr Tee also referred in his email of 11 February 2017 to Mr Temperton having said many times before that Mr Sheerin is a ‘dangerous animal’.

1. In this email exchange between Mr Tee and Mr Temperton reference was also made to Safety Mate having excluded Mr Sheerin from a Safety Mate Christmas function, with Mr Tee stating that:

Sorry for going back to this, but that xmas lunch thing would really look bad to Kyle [Browning] and Jason [Sheerin] would have milked it massively. Kyle would probably almost think what sort of psychotic people are we … and that is his lasting impression and has possibly told John and others this, which is also concerning …

But I guess too late to change that now…[11]

[11]Email from Mr Tee to Mr Temperton dated 11 February 2017 at 6:16am.  This was responded to by email from Mr Temperton in which he noted that ATG did not do something for Safety Mate at Christmas time when ‘… our normal suppliers always send or provide something thank us for using their product … 2 ways to look at most things’.

1. Mr Browning also spoke of the challenged relationship in his oral evidence, which I accept.  He was of the view in 2017 that things needed to change, with a primary issue being Safety Mate’s view about the approach to market, in addition to other concerns including a lack of transparency.  At that point he was of the view that ‘… it just seemed at that stage that it was, the relationship was beginning to fall into disrepair’.[12]  This was consistent with Mr Sheerin’s evidence and was apparent from the email communications in any event.

   [12]Transcript 431.

1. Mr Browning further explained in his oral evidence, and I accept, that it is not just sales and numbers that are important in a PSP, noting also that the way a PSP approaches ‘… the distribution channel, the distribution network tends to have a great bearing on the longevity of our partnerships with existing sales partners across the globe.’  During his cross-examination Mr Browning also explained how the fact that ATG’s products were a significant part of Safety Mate’s business ‘was always an issue’.  Mr Browning said, and I accept, that ATG had ‘challenged’ Safety Mate several times throughout the relationship to expand their business offering so as to grow Safety Mate’s importance amongst the distribution network with multiple product lines and multiple product categories.  This was because it was considered it would make Safety Mate more relevant to the marketplace and more relevant to distributors if more product lines are available to a distributor.

1. The claims in this proceeding had previously included allegations that an agreement reached in relation to the payment of expenses and compensation to Safety Mate by ATG in respect of dealing with them in relation to the distribution of ATG’s gloves in Japan had been breached.  The court was informed that this claim had been resolved by agreement between the parties and that it was not necessary for the court to determine. 

1. Mr Browning tasked Mr Sheerin with the negotiations associated with the proposed renewal of the distribution agreement in advance of the end of the 2012 distribution agreement on 30 September 2017.  The draft agreement provided by ATG to Safety Mate included the KPI Scorecard, the inclusion of which was not well received by Safety Mate.  The KPI Scorecard had an emphasis on channel partner engagement.  Although it was initially said in opening that there was no reference in the Agreement to the channel partner approach and focus, this was not so.  The ‘Brand Charter’ and KPI Scorecards are two examples.

1. During the period of February to October 2017 communications passed between Safety Mate and ATG in relation to the negotiation of the terms of the Agreement.  It was common ground that these communications were relevant context and background for the purposes of Safety Mate’s breach of the good faith allegation.  Mr Sheerin and Mr Tee were the people most involved with the negotiations, with Mr Sheerin reporting to and being overseen by Mr Browning.  Mr Temperton also had some involvement for Safety Mate.

1. One main difference between the parties at that time was the period proposed for the Initial Term and any extensions or options. As noted earlier, Safety Mate had originally sought 10 years, which as negotiations progressed became a request for five years plus five years. ATG’s position was different, and it was only prepared to offer an initial contract term of two years plus two extensions or options each of two years, giving a potential six-year total. ATG did not change its position on this issue. Safety Mate was not happy about this, which can also be seen in and inferred from the email exchanges at the time,[13] and did not like having to deal with Mr Sheerin in relation to this and related issues.

   [13]And the email exchanges earlier referred to above.

1. The communications between Safety Mate and ATG regarding the negotiation of the Agreement included meetings and discussions between Mr Tee and/or Mr Temperton on the one hand and Mr Sheerin for ATG on the other.  Email exchanges at the time again evidence a challenged relationship, and what appears at times to have been Safety Mate sending somewhat workshopped and one-sided or not fully balanced emails.  An example was reflected in the email exchanges regarding the meeting on 9 March 2017, including Mr Sheerin’s contemporaneous email of 13 March 2017 to Mr Browning annotating Mr Temperton’s email regarding the meeting, and noting that ‘… some of what Mike [Temperton] has below is a very one sided view and skewed to their wishes.  I will address each of these with Mike when next we meet.’  These exchanges also reveal again differences of approach and the importance to ATG of having a good working relationship and ‘working partnership’ to the success of any relationship.

1. For completeness I add that the fact that the email in response (from Mr Sheerin to Mr Temperton and Mr Tee) did not record all of these matters in the same way does not detract from the position of Mr Sheerin or the content of his email to Mr Browning.  It is also apparent from Mr Tee’s comment to Mr Temperton (when they were workshopping the content of the email to be sent to Mr Sheerin about the meeting) that ‘Jason and Kyle’ would both contend that ‘ATG’s strategy has always been channel partner training …’ and that they would question Safety Mate’s assertion that ATG’s approach had changed, that Mr Tee and Safety Mate were in fact aware of ATG’s approach — as other documents supported in any event.

1. It was apparent from the documents evidencing communications regarding the proposed agreement that there were further tensions.  However, to the extent that Mr Tee said that Mr Sheerin was using words to the effect of ‘take it or leave it’, I do not accept that evidence, noting Mr Sheerin’s denial.  That said, whether or not it was said would make no difference to the outcome in this proceeding.

1. Mr Browning said he spoke to Mr Tee about once or twice a year from 2015 until 2019 and that a recurring feature of the conversations involved exchanges about Safety Mate needing to shift its focus from end users to a channel partner approach and Mr Tee being resistant.  Mr Tee disputed this, but I accept and prefer the evidence of Mr Browning.  The evidence of Mr Sheerin and Mr Browning established that Safety Mate, including Mr Tee, Mr Temperton and Mr Roberson were aware of ATG’s channel partner approach.  So much was also apparent from various documents, including for example:  the 2012 Agreement; Mr Browning’s presentation that was addressed with Safety Mate in 2015; Mr Tee’s comments by email of 13 March 2017 (at 8:36am) on a draft email of Mr Temperton to Mr Sheerin; various communications between the parties, including the email of 3 July 2017 from Mr Browning referred to below and Mr Temperton’s response of 5 July 2017; and the draft and final terms of the Agreement passing between the parties in 2017, including the KPIs and the brand charter terms.

1. The email from Mr Browning to Mr Tee and Mr Temperton dated 3 July 2017 read in part as follows (emphasis added):[14]

   [14]This email was also relied on by Safety Mate in connection with its allegation about a review representation, which is addressed later in these reasons.

Hi Michael & Clint-

I trust both of you are doing well. It sounds like great news regarding the Wesfarmers decision! Congratulations!

After the many conversations I have had with Jason, John and Fazal regarding the agreement, I feel compelled to speak to you directly to hopefully clearly explain our position regarding the term of the agreement. From our position the agreement is a 6 year agreement with 2 year review periods scheduled throughout the term of the agreement. This is a similar plan put into place with other sales partners with agreements longer than 3 years. Most other agreements which have recently been put into place are for a period of 3 years, especially when there is any apprehension regarding differing go-to-market philosophies. In the case of Safety Mate, we are offering a 6 year agreement, but with 2 year review periods where a formal review of market strategy will take place. If the wording of this portion of the agreement is an issue, then please offer another suggestion, keeping in mind the 2 year review periods would need to be included.

Prior to the start of negotiations around this agreement, we communicated on several occasions our unease with the end-user focused market approach employed and consistently communicated by Safety Mate. Our primary success in the bulk of markets where we have achieved market shares of 25% or greater has been the focus on training at the distributor level and our sales partners focus on building long term partnerships with the distribution channel. We believe a sales partner who focuses upon building an army of distributor sales representatives who are champions of the ATG products is much more efficient than our sales partners focus at the end-user level. When the end-user is the focal point, our sales partners are only as effective as the number of sales people they employ. In addition, we have found when our sales partners work end-user engagements without the distributor in a partner role, it tends to lead to distrust, resentment and a broken supply relationship.

Over the course of the last few years, it has become clear through conversations from Safety Mate to Howard, Jason and myself that Safety Mate feels strongly about their market approach, however we politely disagree. We feel this is a limitation to the success levels which can be achieved, especially when one distributor controls such a large market share. We have heard things like “distributors are a waste of time” and “our focus is 90% on the end-user”. It seems that when we have brought these concerns forward, we have been told it is not ATG’s concern and Safety Mate must be allowed to run their market how they see fit. Our reasoning for inclusion of a 2 year review period is due to these apprehensions. We firmly believe the exclusivity must allow for ATG’s ability to be included in the development of our sales partners market strategy. To date, we don’t believe our viewpoint is taken into account.

Perhaps it would be best for you, Jason and me to get on a brief conference call to try and move forward. It feels as of late, we continue to discuss the same point and unless we can come to some sort of compromise we may never conclude the process. It is our position to continue a long term partnership, however we hope to make sure it is a partnership with a system in place where both viewpoints are taken into consideration.

Please let me know your thoughts regarding a conference call.

Kind regards-

Kyle

1. The existence of a difference of view with ATG and Mr Browning regarding this approach was also apparent from the responding email of 5 July 2017, which in part also recorded Safety Mate stating that it hoped that Mr Browning did not ‘… take it as “there those Australians go again [emphasis added] wanting to do it their way” …’.  Safety Mate expressed the view that it did not see that 90% of time with distributors would be ‘prudent or effective’, but that it ‘[does] agree a larger percentage, in the 30% to 40% range … should be spent with distributors …’.  Mr Tee and Mr Temperton also stated that their ‘… motivation is not one of stubbornness, or push back for the sake of push back, but rather one of protecting what has been built whilst still maintaining growth …’.  It was also stated that Safety Mate was committed to some more distributor focus.

1. On 8 August 2017 aspects of the draft agreement were discussed in a teleconference between Mr Tee, Mr Temperton, Mr Sheerin, and Mr Browning.  As with various other conversations there was some dispute between Mr Tee on the one hand and Mr Browning or Mr Sheerin on the other as to what was said, although in most instances (including this one) the resolution of such matters is not germane given other evidence regarding the events, the approach of ATG, and the state of the relationship.  However, given the issues being addressed at the time, the email exchanges prior to the meeting, Safety Mate being unhappy with a two-year initial term and the issue between the parties regarding the channel partner approach, I am satisfied that it is at least likely that Mr Temperton raised various matters.  These included not being pleased with the two years, and Safety Mate’s view that it knew the Australian market and what works best in terms of market approach.  I also accept that Mr Browning raised the channel partner approach; not being happy with Safety Mate’s approach; Mr Sheerin being there to help and support, and the need to work with him; the initial period being two years and the need to get the relationship back on track; and the importance of ATG’s approach to it.  It is also consistent with Mr Sheerin’s email of 30 August 2017 in which he stated in closing ‘Looking forward to having this process completed enabling us to focus back on market domination!!’.

1. The commencement date under the Agreement was 1 October 2017 (Commencement Date).  It was signed on 3 October 2017.  At a trade fair in Germany on 18 October 2017 Mr Browning and Mr Sheerin met with Mr Tee and Mr Temperton where the Agreement was executed again and copies were exchanged.  Mr Sheerin said that at this time Mr Browning said words to the effect of ‘Let’s use this as an opportunity to repair the relationship and move forward’ and that Mr Tee expressed agreement.  Mr Tee said he does not recall Mr Browning saying this.  However, it is consistent with Mr Tee’s email to Mr Browning of 3 November 2017 in which he referred to the trade fair (‘show’), the finalised agreement, and his belief that the only matter to ‘finalize’ was the Japan compensation ‘… so that we can close the book on the past 12 months and turn our focus on moving forward’.  It is also consistent with evidence regarding the history of the events leading to the finalisation of the Agreement and existence of a challenged relationship more generally at that time, as was supported by the documentary evidence, including that referred to above.  I accept Mr Sheerin’s evidence regarding the making of the statement at the time — although whether or not that was so makes no difference to the outcome of the case in any event.  It was also consistent with the lack of trust between the parties that existed, which was apparent from the communications and, for example, expressly referred to in Mr Sheerin’s notes of his meeting with Mr Tee and Mr Temperton on 9 March 2017.

1. On 27 October 2017 Safety Mate informed ATG by email of its ‘hard costs’ associated with the exploration of the Japan market which were said to be $75,426.83.

1. A quarterly review meeting took place between Mr Sheerin, Mr Tee, and Mr Temperton on 11 December 2017.  At quarterly review meetings the quarterly KPI Scorecards were addressed and discussed.  As Mr Sheerin said, the KPIs were generally ‘met’ but not ‘exceeded’. 

1. The evidence revealed that by at least late 2017 and also in early 2018 a strained relationship had developed or existed between Safety Mate’s National Sales Manager, Wade Roberson, and Mr Sheerin, and that Mr Tee was involved.  The email communications at the time (and earlier) revealed that issues between the parties included issues in relation to the channel partners’ sales approach, a comment Mr Roberson made to Mr Goth and Mr Browning some time ago regarding distributors being ‘a waste of time’, and some of the KPIs in the Agreement being created because of Mr Roberson’s approach and his comments.  This was apparent from, among others, the email exchanges between Mr Roberson and Mr Sheerin in late 2017, including the exchanges on 22 and 23 November 2017, Mr Roberson’s email of 26 January 2018, and Mr Tee’s email of 14 December 2017 in which he refers to issues between them, noting also that ‘… we do not want to return to a “you” and “us” situation’.  The November 2017 exchange between Mr Roberson and Mr Sheerin involved Mr Roberson disagreeing with ATG involvement in some engagement and resistance to the suggested involvement of channel partners in a particular initiative.  Mr Sheerin expressed frustration regarding the issues not being raised at the time of the relevant meeting, noting also that ‘Time and again we have discussed the different approach of ATG and SM [Safety Mate] have in the market especially when it comes to CP [channel partner] involvement.’  Mr Tee also referred to the issues between Mr Sheerin and Mr Roberson in Mr Tee’s email to Mr Temperton of 22 January 2018 following what was there recorded as Mr Roberson just having had a heated discussion about various matters with Mr Sheerin.

1. On 28 February 2018 ATG provided Safety Mate with a forecast sales figure for the financial year 2018/2019 of 5,768,546 pairs of gloves.  On 4 March 2018 Safety Mate informed ATG that it was content to work off that number.  The email communications at that time recorded Mr Sheerin calculating this as reflecting an 8.1% growth rate, which Safety Mate was ‘happy to work off’.

1. On 20 April 2018 there was a quarterly review meeting between Mr Sheerin, Mr Tee, and Mr Temperton.  There was a further quarterly review meeting of the same kind on 26 June 2018.  Also on that day, ATG paid Safety Mate $75,426.83 by way of credit note in respect of Safety Mate’s Japan market related expenses. 

1. Mr Browning said that he spoke with Mr Sheerin after each quarterly meeting held between Mr Sheerin and Safety Mate and that he was told by Mr Sheerin that things were not going well, and Safety Mate was not changing its substantive approach to sales of ATG products.  He said he continued to encourage Mr Sheerin to keep trying to get Safety Mate to change to ATG’s approach to have a greater channel partner focus.

1. Mr Sheerin said he had a range of concerns with Safety Mate, including a very strained and challenged relationship, being difficult to deal with, the differences of view regarding ATG’s channel partner approach, limited information sharing, a secretive approach, and a lack of candour resulting from the poor relationship.

1. By way of illustration about channel partners, one example raised was Safety Mate dealing with end users in a way that was not co-ordinated with or risked cutting across the relevant channel partner’s approach with the same end user.  An example given was some dealings with Illawarra Coal (as an end user) by Safety Mate that had resulted in Mr Sheerin being informed by the channel partner Blackwoods representative of difficulties with the approach taken by Safety Mate.  Mr Tee accepted in cross-examination that if things had occurred how Mr Sheerin said he was told they had occurred that would be an issue for the channel partner.  Although Mr Tee had a different position, I accept that Mr Sheerin was informed of the matters he referred to by the Blackwoods representative, and his evidence was not at all shaken in cross-examination.  I also accept, however, that there was engagement of the kind referred to by Mr Tee, as reflected in the email exchanges, including, for example, in March 2019 — noting also that the initial exchange was direct between the end user (Illawarra Coal) and Safety Mate.  That said, what happened in this particular instance is not ultimately material to the outcome of the determination of the issues in this proceeding.

1. At an ATG internal sales meeting in Sicily in September 2018 there was discussion regarding what was said to be Safety Mate’s lack of adherence to the ATG channel partner sales approach and the possibility of terminating the Agreement with Safety Mate.  Mr Sheerin was asked to ascertain whether the Agreement could be terminated.  Although the idea of termination was being explored at that time, no decision had been made to terminate the Agreement.

1. Mr Browning held the view that ATG could not consider terminating Safety Mate or bringing the matter to the ATG directors until there was a viable replacement PSP for Safety Mate.  This was because if Safety Mate was to be terminated and no replacement PSP was in place it would have caused commercial problems with distribution throughout the market, leading to potential lost market share and damage to ATG’s reputation.  Mr Browning decided that until a replacement PSP could be found he would hold off on the decision to terminate the Agreement with Safety Mate, and bringing that issue to ATG’s directors.  The prospect of terminating the Agreement with Safety Mate was discussed further between Mr Sheerin and Mr Browning between September 2018 and January 2019, and it was agreed between them that termination should be recommended and that a new PSP should be appointed.  Mr Sheerin was asked to give recommendations regarding a possible replacement PSP.

1. In about January 2019 Mr Sheerin informed Mr Browning that:  termination was possible if notice was given by 31 March 2019; he remained not satisfied with Safety Mate’s approach to dealings with ATG, including its approach to the channel partner model and a general failure to act as a true sales partner; he found Safety Mate secretive, adversarial and generally difficult to deal with; and he did not think Safety Mate was likely to change its approach.  Mr Browning said that Mr Sheerin had reviewed potential replacement PSPs and suggested that Safety Mate be replaced with Mayo.  This recommendation was said to be based upon Mr Sheerin having done some due diligence regarding Mayo in the marketplace and his belief that it would be a material improvement from Safety Mate.  There were a range of commercial reasons why Mr Sheerin believed Mayo looked to be a ‘fantastic option’ for ATG in the market. 

1. Based on his experience and knowledge of the market, Mr Sheerin thought Mayo would be the best fit for ATG in a PSP role.  He said he was attracted to Mayo for a range of reasons including:  Mayo’s outstanding reputation in the market; Mayo’s existing excellent relationships with channel partners, including Blackwoods; Mayo’s large and stable workforce, many of whom Mr Sheerin had met at various trade shows and considered to be professional in their conduct; Mayo having a wider range of products in its offerings than Safety Mate but very little if any products in its range that would be competitive with ATG’s gloves; and Mayo being of the size and capability to take on the responsibilities of being ATG’s PSP in the region.

1. Further quarterly review meetings occurred between Mr Sheerin, Mr Tee and Mr Temperton on 2 October 2018 and 31 January 2019, and KPI Scorecards were completed and addressed.

1. Mr Tee’s position and perspective was different to that of Mr Browning and Mr Sheerin.  He criticised Mr Sheerin’s performance, which as earlier noted was the subject of some communications with Mr Browning.  Mr Tee also believed that relationship issues Mr Sheerin was having in his personal life were impacting upon his work.  He said that in the quarterly review meetings Mr Sheerin never raised the channel partners approach, or the ATG model, or said that Safety Mate was failing to adhere to it, or failing to meet ATG’s expectations.  He said that whilst there were discussions about a greater focus by Safety Mate on channel partners, ATG had not requested it to be a term of the Agreement.  To the extent there was a difference between the channel partners focus issue being raised at review meetings, I prefer the evidence of Mr Sheerin, which is also consistent with the existence of the ongoing difference of view about the best way to approach the market.

1. So far as his recollection was concerned Mr Tee said that each review meeting was positive and ended with statements from Mr Sheerin to the effect that things are going in the right direction, with references being made to positive trends continuing.  He also said there was never any mention of an expectation that KPIs should be exceeded, although it may be noted that the scorecards recorded this as a performance measure on their face.  The KPI Scorecards addressed at the meetings each had a colour-coded key with the categories being:  KPI Exceeded, KPI Met, KPI Not Met, and KPI Failed.  As mentioned, Safety Mate generally achieved the ‘KPI Met’ score.  Mr Sheerin explained that ATG wanted to see PSPs exceed the KPIs and see a ‘sea of blue’ — which was the colour code for achieving that level on the KPI Scorecard.  He also said, and I accept, that exceeding KPIs was discussed from time to time with Mr Roberson and Mr Tee.  To the extent this was inconsistent with Mr Tee’s evidence I prefer the evidence of Mr Sheerin.  Mr Sheerin’s perception was that Safety Mate was content to do just enough to meet KPIs.

1. Mr Tee said that because of the meetings and Safety Mate’s ongoing meeting of the KPIs he was taken by surprise when he received a notice of termination.  He said that at no stage during the term of the Agreement had Mr Browning or Mr Sheerin said that Safety Mate was not performing its duties or that Safety Mate was expected to do better.  As is addressed later in these reasons, he made no mention in his statement of a representation regarding reviews being made to him or being relied on by him.

1. Mr Sheerin first contacted Mayo about the prospect of becoming ATG’s PSP in the Territory in December 2018 by telephoning a key account manager, Paul McGregor, who he had previously met at a trade show.  He did not tell him that ATG had in mind to terminate the Agreement with Safety Mate, but said he spoke in vague terms of an opportunity that may exist for Mayo to distribute some ATG products and that he was looking for the person with whom he could speak about that.  A day later he was told by email that he should speak with the national sales manager of Mayo, Steve Torpey, but that he and others would not be available until after 7 January 2019.

1. On 16 January 2019 Mr Sheerin had a discussion with Mr Torpey about the possibility of Mayo being appointed, and he reported on that conversation to Mr Browning by email of 17 January 2019 in the following terms:

Hi Kyle,

Yesterday I had the first “formal” conversation with my top choice as a new PSP, Mayo Hardware. The chat was with their National Sales Manager, Steve, and was primarily for me to outline what I’m looking at doing and an opportunity for Steve to ask a few questions to enable him to paint the picture of the opportunity to the senior management team. During the call I was able to confirm the majority of my existing assumptions and all was as I expected. As it stands they are certainly interested and I’ll know more of their G.M.’s thoughts early next week where we will then likely evolve the discussions to include some more detail post getting them to sign an NDA (I have already advised Steve of this requirement).

Steve mentioned a potential road block might come from DeWalt tools. They are the exclusive Australian importer and DeWalt do have gloves within their range and a clause stating no competitive product. Steve did confirm gloves are a practical non-existant [sic] line with DeWalt so they should be able to work around it with them, but will need to check etc. I advised that we would be looking at the same thing in reverse with our product. DeWalt does have a couple of CSK gloves available, but Mayo only bring in 3 cut and sewn styles into Australia and sell then [sic] via Bunnings (our biggest DIY chain).

Mayo is certainly a different beast than Safety Mate. For a start they are large very professional and well respected company with a [sic] Industrial sales team of 85 staff and a further 50 in the retail side, this is in comparison to Safety Mate’s 6 staff. Of course Mayo do have more products to focus on, however with their strength being tag out (lock out), they are already speaking with safety managers within the CP network and at the EU’s. They have won multiple supplier of the year awards from Wesfarmers and Mitre 10 (Mitre 10 is the 2nd largest DIY chain here). On numerous occasions I’ve seen their CEO dining with the Wesfarmers CEO at functions, vs Clint having never met him. Their tag line is “supplier of value” and during my discussion with Steve he confirmed on many occasions they are all about the cost of life conversation and selling premium product (as reflected in their range). Mayo are also active in New Zealand so we could have that mess solved.

If you would like to take a look their website is:

while it is still early days and I’ll find out more about their interest next week, I suspect this could advance quite quickly should Mayo want to progress. With that in mind I will next contact an Australian based lawyer to get advise [sic] on the existing Safety Mate contract as well as how to approach Mayo (or another prospective PSP). Further to my monthly report update, Safety Mate has just lost yet another sales manager. This means out of the 6 sales managers they should have they are down to 3 and I know the NZ guy is going to leave in Feb or March. I’ve also had another (now 4) CP advise me to “get away from Safety Mate for the sake of your product” — unfortunately we were then joined by Wade (from Safety Mate) at that point so he didn’t have the opportunity to expand, but I’ll follow up on it.

I’ll give you a call next week to discuss this, and can cover any questions on that ESR spreadsheet (note I found one formula error and have fixed it on my version, so please don’t send out the one you have).

Thanks,

Jason

1. Further communications occurred with Mayo thereafter, including by email.  On 11 February 2019 Mayo executed a deed of confidentiality (Mayo Confidentiality Deed).  By that deed Mayo agreed, among other things, to keep any confidential information (which was defined broadly) provided to it strictly confidential for three years and not to use it for any purpose other than considering a potential transaction with ATG.  Mayo’s Mr Thame confirmed by email on 11 February 2019 that all of the team involved in the discussions would be bound by the Mayo Confidentiality Deed.

1. In early February 2019 a meeting was arranged between Mr Sheerin and Mayo representatives, which took place at Mayo’s premises on 13 February 2019.  Mr Sheerin stated in his email to Mayo dated 28 January 2019 (which enclosed the confidentiality agreement) that he aimed ‘… during that meeting to be able to share with you enough information enabling Mayo Hardware to make a very well informed review of the opportunity ATG is presenting in terms of company synergies, growth prospects and commercial considerations.’

1. By email of 11 February 2019 Mr Sheerin informed Mayo’s Mr Thame that he had a short slide presentation and that he had ‘… pulled together a few slides outlining: …’ a bit about ATG; an overview of ATG’s products and what separates ATG from the rest; ATG’s commitment to strong corporate sustainability initiatives; how ATG goes to market via its PSP (Primary Sales Partner) network; and some of the figures that related to the Australian and New Zealand market.  Mr Sheerin invited Mr Thame to let him know if there was anything in particular he wanted to see so he could do his best to have it with him, but otherwise he believed that what he had pulled together would cover most questions.

1. Mr Thame responded by email dated 12 February 2019 which was in the following terms:

Hi Jason,

We’ll have a projector available.

In addition to what you’ve flagged below, we were also keen to get an understanding of:

•*  The current customer mix, and focus on reseller v end user and types of end user industries.

•*  The current distributor’s model and what kind of resources they are allocating to the business

•*  The geographical split of the business

•*  Size of the market, current share and future opportunities

•*  Market dynamics, positioning vs other leading brands

•*  It would also be great if you had some product samples for us to see and touch

Plan for Wednesday:

•*  Short facilities tour

•*  Mayo business overview

•*  ATG overview and opportunity discussion

•*  Mayo’s Safety & Industrial Sales & Marketing Capability

•*  Brief overview of Mayo’s Corporate & Independent Retail Capability

Present from our team will be Steve Torpey – Trade Sales Manager, Simon Kotz – Marketing Manager, James Mayo – Director/Co-owner and myself.

Look forward to seeing you tomorrow, we’re at 4 Secombe Place Moorebank, first left of Anzac Rd if your [sic] coming from the Moorebank avenue end – give me a call if you have any issues in finding us.

…

Cheers,

Mark

1. The Mayo meeting took place on 13 February 2019 with Mr Sheerin during which Mr Sheerin presented his slide pack, which dealt with:  who we are; innovation quality and products; planet and its people; partnership; and ‘Commercial Aspects’.  The slides addressing ‘partnership’ and ‘ATG’s ‘Market Philosophy’ emphasised its channel partner approach as follows: 

•    We have an “exclusive” club of less than 30 Primary Sales Partners (PSP’s) world-wide

•    We work diligently with the PSP to set-up, maintain and support the distribution network

•    The PSP must provide/create the path into the Channel Partner (CP) senior management

•    PSP / ATG to present value to CP Senior Management

•    Our commercial team enhances the process

•    Enhancement through “training tools”

1. The slides addressing ‘Commercial Aspects’ addressed:  history in the Territory; aspects of the current ‘local’ market in the Territory; market size and growth targets; ATG’s ‘Tried and proven method’ through PSPs and channel partners; features of the ‘offer’ of distribution exclusivity for the Territory; ‘Expatiations’ [sic], including enthusiasm, dedication to the brand, product and ATG philosophies, collaboration and openness, and adherence to brand representations; ‘Confidential Figures’; and ‘Next Steps & Timeline’.

1. Among other things the slides:

(a)        Addressed the matters referred to above.

(b)       Recorded ATG’s concern that Safety Mate had ‘focused heavily on the EU [end users], with little regard for the Distributor.

(c)        Contained a table of figures (Figures Table) (referred to below).

(d)       Recorded the next steps and timeline as follows:

•Progress to a “committed to move forward” stage

–In order to ensure a smoother transition we will need to notice to the incumbent PSP by mid March

–Prior to 8^th Mar 19

•Ramp up period

–Marketing collateral, Stock arrangements, Distribution notification, Team training

–April – Sep 19

•Commencement date

–1^st Oct 19

1. The Figures Table was headed ‘CONFIDENTIAL FIGURES’ and was presented on the relevant slide as follows:[15]

   [15]The information in the table has not been published in these reasons as it is said to be commercially sensitive and it is not necessary to do so.

Pairs	COGS (AUD)	PSP Revenue+	PSP Gross Margin $ (ex Freight and CPS)	PSP Gross Margin % (ex Freight and CPS	Revenue Growth
2016	[…]	[…]	[…]	[…]	[…]	[…]
2017	[…]	[…]	[…]	[…]	[…]	[…]
2018	[…]	[…]	[…]	[…]	[…]	[…]

* USD/AUD @ 0.72 for all years

+ Minor assumptions made, ex discounts / CPS

Stock On Hand – Jan 19

[…] pairs = $3.5m AUD

In transit = […] pairs = ~$1.4m AUD

1. Safety Mate contend that the Figures Table contained confidential information of Safety Mate that was disclosed to Mayo in breach of the Agreement.  Such alleged disclosure is one of the circumstances said to support Safety Mate’s allegation that the Termination Notice was invalid and of no effect because it was given in breach of the Good Faith Obligation.  This and other allegations regarding confidential information being passed to Mayo are addressed in more detail later in these reasons when considering the breach of good faith allegations.  The relevant alleged confidential information is referred to in Annexure A to these reasons.

1. Mayo also gave a presentation to Mr Sheerin about its business, Mr Sheerin having earlier raised a number of matters that he wanted to understand about Mayo in his email to Mayo of 12 February 2019.

1. The day after the meeting the Mayo executive team resolved to go ahead and seek to become the new PSP in the Territory with effect from 1 October 2019.

1. Further email exchanges passed between Mr Sheerin and Mayo after the meeting with each expressing enthusiasm for the prospect of the appointment of Mayo as a PSP.  For example, Mr Sheerin recorded in his email the next day that his ‘… take home from yesterday only confirmed most and if anything led [him] to see additional synergies and opportunities that exist between Mayo and ATG — of course that is quite exciting.’  Arrangements were also made for a further meeting later in the month.

1. The email exchanges also included Mr Sheerin’s email of 21 February 2019 to Ms Sarah Mayo before she was leaving for an overseas trip.  It referred to Ms Mayo ‘touching base’ and stated:

I think most things have now been covered and the remaining finer details I’m sure Mark [Thame] and I will be able to manouvre [sic] through.  As you mention there is more to a partnership than just the ability to generate sales and this is a key reason I believe ATG ↔ Mayo will work well together.

1. At an ATG meeting of directors held in February 2019 Mr Browning (who was not a member of the Board) recommended the termination of Safety Mate and the appointment of Mayo as a new PSP in place of Safety Mate.  The directors present were Mr John Taylor, Mr Abdeen and Mr Goth.  Those directors accepted the recommendation to terminate Safety Mate and appoint Mayo, and Mr Browning told Mr Sheerin to implement that decision.  There were no minutes of the meeting, although it was not a formal Board Meeting.  Mr Browning addressed his beliefs and views about Safety Mate in his witness statement and during aspects of his cross-examination and re-examination.  He expressed his view, which I accept was genuinely held, that he believed the Agreement should end because of the state of the relationship and approach to the market.  He considered there to be no relationship and collaboration and that there seemed to be a barrier between ATG’s view and Safety Mate’s view which could not be overcome.  It was apparent from the evidence, and could be inferred in any event, that Mr Sheerin, Mr Browning and Mr Abdeen believed ATG was entitled to terminate the Agreement.  It was not suggested that they did not hold such a belief. 

1. When addressing a draft agreement between Mayo and ATG, Ms Mayo noted in her email of 14 March 2019 that she could not see any note in the Agreement regarding payment terms.  Mr Sheerin responded the next day stating that, in respect of terms of the proposed agreement ‘… it looks like we are all on the same page with just a few small details to sort out.’  He also stated that:

I’ve also attached a copy of a Proforma invoice to this email.  On the 2^nd last page the payment terms are covered by a simple statement, being T/T before shipment.  FYI — this proforma is an actual one from a Safety Mate order and is typical of a monthly order.

1. The attached Safety Mate pro forma invoice was dated 31 October 2018.  Safety Mate contends that this conveyed confidential information to Mayo in breach of the Agreement and that this further supports its allegations regarding ATG breaching the Good Faith Obligation.

1. On 14 March 2019 ATG forwarded a draft distribution agreement to Mayo for its consideration, and further emails were exchanged regarding the draft.  Various provisions of the drafts, and Schedule 6 to them, refer to what is described as a ‘Proforma Invoice’.

1. On 21 March 2019 the notice of termination was prepared by ATG’s solicitors (HDL).  It was in the following terms:

Dear Messrs Tee and Temperton,

Notice of Termination

of

Distribution Agreement between ATG Lanka (PVT) Limited and Safety Mate Pty Ltd

We act for ATG Lanka (PVT) Limited (our client).

Our client and Safety Mate Pty Ltd (Safety Mate) are parties to a document titled ATG Lanka (PVT) Limited and Safety Mate Pty Ltd DISTRIBUTION AGREEMENT (the agreement).

We now say as follows :

1. The Term of the agreement is defined as the Initial Term (and any extensions thereto as permitted under clause 2.2.2 of the agreement) being two (2) years from the Commencement Date which is 01 October 2017.

2.Therefore, it can then be said that the Initial Term ends on 30 September 2019.

3.Clause 2.2 of the agreement states as follows:

2.2This Agreement shall come into effect on the Commencement Date and shall continue in force for the Initial Term unless:

2.2.1terminated earlier by either party giving not less than [6 months'] prior written notice to expire on the expiry date of the Initial Term

(emphasis added by the writer)

4.Clause 14 permits termination in accordance with clauses 2.2 or 17.3.

5.Clause 31 sets out the provisions for "Notice" under the agreement which relevantly say as follows:

(i)The notice must be in writing in English;

(ii)The notice must be signed by or on behalf of the party giving it;

(iii)Shall be delivered personally or sent by express post.

We now give notice on behalf of our client that the agreement is terminated and will come to an end on 30 September 2019.

This notice of termination is being served by email as a courtesy noting such is not stated to be an acceptable form of service under clause 31 of the agreement.

This notice of termination is however also being served personally and by express post, and has been signed by the writer, and therefore constitutes acceptable service.

An objective approach is required to determine the rights and liabilities of a party to a commercial contract, by reference to its text, context and purpose. The meaning to be given to its terms is determined by reference to what a reasonable business person would have understood those terms to mean.

[217][2021] HCA 20 [12]-[20], [38]–[42], [82]–[99] (Kiefel CJ, Gageler, Gordon, Edelman, and Steward JJ).

[218]Ibid, [27], and the cases there cited at n 35. Related observations were made by Gageler and Gordon JJ at [42], and Steward J at [98]–[99].

1. Steward J, who generally agreed with the other members of the court, also referred with approval to the observations of Lord Hope in Sidhu v British Airways Plc[219] that:

Any person is free, unless restrained by statute, to enter into a contract with another on the basis that his liability in damages is excluded or limited if he is in breach of contact. Exclusion and limitation clauses are a common feature of commercial contracts.

[219][1997] AC 430, 453 (Lords Browne-Wilkinson, Jauncey, Mustill and Steyn agreeing).

1. Steward J thereafter observed that in the case before the court it was open to the parties to exercise their freedom of contract by including the exclusion clause, which represented ‘a legitimate adjustment of the private rights of the appellants, which they were free to include, amongst others, in their original bargain …’.[220]

   [220]Ibid, [99].

1. With the established principles and well-rehearsed authorities in mind, I turn to the relevant clauses and the facts in question.

1. Clause 15.3 does not assist ATG in the context of the loss of profits claim relating to the Four Purchase Orders.  This clause provides:

The termination of this Agreement shall not give rise to any liability on the part of ATG to pay any compensation to the PSP for loss of profit.

1. In the circumstances under consideration the clause does not engage.  This is because it is not the termination of the Agreement that gives rise to the liability to pay damages for the breach of the Agreement in respect of the non-supply of the goods the subject of purchase order PO 964.  It is the breach of the supply obligation in clauses 4.1.1 and 4.3 of the Agreement that gives rise to the liability to pay the Loss Amount, not the termination of the Agreement.  It is to be remembered in this context that the breach of contract claim relating to the Four Purchase Orders was in respect of acts and omissions of ATG during the course of the Agreement, in its Initial Term.

1. Although not necessary to decide, I also accept Safety Mate’s submission that clause 15.3 would not have engaged if I had concluded that the termination was invalid.  This is because it would have been an ineffective and invalid termination and therefore not a ‘termination’ within the meaning of that expression as used in clause 15.3.  That is a businesslike construction and a meaning that a reasonable businessperson in the position of the parties would give it.  Moreover, if the termination had been invalid there would have been no ‘termination’ with which the clause could engage.

1. Clauses 13.1 and 13.2 are in the following terms:

13.1To the extent permitted by law, ATG shall not be liable for and excludes any liability or claims or costs incurred resulting from or arising in the course of this Agreement except for:

13.1.1death or personal injury arising from any fault or defect in the materials or workmanship of the Products, or performance of ATG, or

13.1.2any other liability which cannot be excluded or limited under applicable law,

to the extent that the liability arises as a result of the breach, negligent performance or omission of action or by negligent action of ATG, its agents or subcontractors.

13.2Subject to Clause 13.1 ATG shall not be liable to the PSP for any damage or loss of goods, data, loss of profit, anticipated profits, revenues, anticipated savings, goodwill or business opportunity, loss of reputation and all interest, penalties and legal and other reasonable professional costs and expenses or for any direct, indirect or consequential loss or damage incurred resulting from or arising in the course of this Agreement.

1. Applying the established principles of construction referred to above, ATG’s liability to pay Safety Mate the Loss Amount is a liability captured and excluded by the terms and operation of clause 13.1.  Although not eloquently drafted, it is evident that the terms engage with the liability and capture it.  The liability in respect of the Loss Amount is captured by the language of clause 13.1 because it was in respect of a ‘claim’ ‘arising in the course’ of the Agreement and arising ‘as a result’ of the ‘breach’ of the Agreement by ATG. 

1. Upon its proper construction, the reference to ‘breach’ includes a breach of the Agreement, subject to the carve outs in clauses 13.1.1 and 13.1.2.  Whilst the liability cannot be said to ‘result’ from the Agreement, it does arise ‘in the course’ of it.  Upon its proper construction this expression means during its course — as opposed to before the Agreement or after it has ended.  These are meanings that a reasonable businessperson would give to the terms.  I add that it was not submitted that the liability was excluded by the terms of the carve outs to the exclusions in clauses 13.1.1 and 13.1.2, which was not surprising.

1. Assuming for the moment that clause 13.2 is to be seen as a stand-alone exclusion clause rather than a qualification or elaboration on the kinds of loss to which the exclusion in clause 13.1 applies,[221] then this would also capture ATG’s liability for the Loss Amount.  This is because the liability for the Loss Amount is in respect of a claim for damages for one or more of:  loss of profit; loss of anticipated profit; loss of revenue; and indirect or consequential loss or damage,[222] arising during or in the course of the Agreement (but not resulting from it).

   [221]Which is not necessary to decide given the conclusion reached in the following paragraph.

   [222]As to which see Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd (2008) 19 VR 358, [93] where Nettle JA observed that ‘… ordinary reasonable business persons would naturally conceive of “consequential loss” in contract as everything beyond the normal measure of damages, such as profits lost or expenses incurred through the breach’.

1. If, however, clause 13.2 was to be construed as a qualification or elaboration on the kinds of loss to which the liability exclusion in clause 13.1 applies, the position is no different.  This is because each of the clauses would still engage for the reasons mentioned.

1. The end point is that ATG’s liability to Safety Mate for the Loss Amount is excluded by the terms and operation of clauses 13.1 and 13.2 of the Agreement.

1. It will be apparent from this conclusion that I have not been persuaded by Safety Mate’s other submissions to the contrary that have not been expressly or implicitly addressed in the above discussion.  I make the following further observations.

1. I do not accept that the fact that the exclusion clauses were not raised or referred to[223] during the injunction application constitutes an election not to rely on these clauses at all in the proceeding.  The principles regarding election are well known and need not be rehearsed.  Even assuming the requisite knowledge of ATG, the act of ATG relied upon by Safety Mate was the making of a submission in the context of the interlocutory application that it was opposing, and where it was also open to Safety Mate to raise these terms of the Agreement to contend that damages was not, or may not be, an adequate remedy.  It seems that Safety Mate did not do so either, although the result would be no different on this point if it had.

   [223]Which I have assumed to be the case but need not decide.

1. The short point is that ATG not making the submission in the circumstances of the urgent contested application where it was Safety Mate who needed to establish that damages was not or may not be an adequate remedy, is not an alternative or inconsistent right to ATG’s entitlement to rely upon the terms of the exclusion clause at trial in the defence of the claims made.[224]

   [224]I add, without criticism, that neither party brought to the court’s attention any case where such a conclusion had been reached on similar facts and further research to date has not uncovered any cases.

1. The strike out contention regarding the paragraph of the pleading containing the exclusion clause allegations was first referred to in the written closing submissions.  This was raised with Safety Mate during oral closing submissions in the context of, among other things, the amendments to the parties’ respective pleadings having been made in circumstances where they were not opposed by the other party, and the absence of any application to strike out the pleading.  Senior counsel for Safety Mate responsibly indicated that the abuse of process and strike out point was not being pursued and that no application to strike out the allegations would be made.  To the extent that Safety Mate was emphasising its election contention in this context, I refer to the above discussion on this point.

1. Given that I have determined that the termination of the Agreement was valid and effective, it is not necessary to address the submissions regarding termination, although I refer to my observations above regarding the proper construction and operation of clause 15.3 of the Agreement.

1. Finally, and having regard to the established principles and authorities earlier referred to, I do not accept the submission that either clause 13.1 or clause 13.2 should be read so as not to apply to the breach in question, or that upon their proper construction they defeat the main object of the Agreement earlier referred to.  As was recently underscored by Steward J in Spoor v Price, it is open to businesspeople to enter into contracts that contain clauses excluding liability for damages for breach, as the parties did here.  There is also no ambiguity here present that could lead to a contra proferentem construction that would exclude the liability for the damages for loss of profits comprising the Loss Amount.

1. The established principles referred to above are well known, as I have said, and to the extent that the cases referred to by Safety Mate state and apply these principles they are helpful illustrations, as are the myriad of other authorities.  But each case necessarily depends on the particular terms of the contract in the relevant circumstances of that case.  Perhaps all the more so when, as here, the court is dealing with an individual or bespoke agreement and not common or similar form contracts as is seen in various fields.  Contracts of carriage are one example.  Some construction contracts are another.  The decisions in Firestone,[225] Cessnock,[226] Glebe Island,[227] Darlington Futures[228] and Kamil[229] referred to by Safety Mate each involved materially different circumstances and materially different exclusion and limitation clauses.  Except to the extent that they address the principles and illustrate their application to particular facts, they do not provide any material assistance to Safety Mate or the court in the construction and application of the clauses in question.

   [225][1951] 1 Lloyd’s Rep 32.

   [226][2021] NSWSC 1329.

   [227](1993) 40 NSWLR 206.

   [228](1986) 161 CLR 500.

   [229](1996) 1 VR 538.

1. As the Court of Appeal in Kamil[230] observed, it is open for parties to agree to an exclusion clause that might defeat the object of the contract between contracting parties, but I do not accept that this is what clause 13.1 or clause 13.2 does.  Whilst it is not necessary nor desirable to seek to define the outer boundaries of the exclusions, it is apparent that clause 13.1 does not exclude all claims, as is evident from the carve outs in clauses 13.1.1 and 13.1.2.  Further, although upon its proper construction the liability referred to in clause 13.1 is to be construed as including a liability to pay a monetary amount by way of damages, it is not to be construed as excluding the payment of particular sums required to be paid by ATG pursuant to other provisions of the Agreement.  Clause 13.1 is also not to be construed as relating to claims for other relief, such as specific performance of the Agreement, noting as I do that as a matter of construction, the clause is directed at monetary liability.  This reflects a businesslike construction arrived at by the application of the established principles.  It also recognises that it is open to people of commerce to reach agreement in relation to such matters even if, upon their proper construction, they exclude a liability for damages for breach or adversely impact the object of the Agreement.[231]

   [230](1996) 1 VR 538.

   [231]Although in this case I have concluded that the purpose or object is not defeated, and that the clauses do not render the contract illusory.

1. Even if it had been necessary for present purposes to imply a limitation on the exclusions, or read them down, it would not assist Safety Mate.  This is because there is in my view no sound basis for reading the clause down, or implying a limitation, that would have the effect of narrowing the exclusion so as to remove from it a damages liability for loss of profits.  In my view it is plain from the terms of clauses 13.1 and 13.2 that such a liability is objectively intended to be covered, as indeed it is.

1. To the extent that it was contended that the breach of the reasonable endeavours supply obligation relating to the Four Purchase Orders should be characterised as ‘wilful’ or deliberately wrong, I do not accept that submission, which is supported by the background and circumstances in which it occurred, as earlier referred to.  As has been seen, the issue involved an issue of construction that was not straightforward, and it was evident that ATG was seeking legal advice in what I find was a bona fide manner.  Further, and perhaps most importantly in this context, the primary consideration related to the fact that the contract was to terminate on 30 September 2019 and the goods would not arrive until that day for two of the orders and 31 October 2019 for the other two — and in circumstances where ATG had foreshadowed the likelihood of exercising the buyback option in respect of all of Safety Mate’s stock on hand, as in fact it did.

1. Finally on the topic, although given my above conclusions it is not strictly necessary to decide whether clauses 13.1 and 13.2 are to be construed as stand-alone provisions rather than clause 13.2 being an expression or elaboration of the types of liability covered by clause 13.1, it is perhaps desirable that I state briefly my conclusion on the point.  Having regard to the language, structure, terms and subject matter of the clauses, and applying the principles of construction earlier referred to, I consider the better view to be that, whilst complementary of each other, clauses 13.1 and 13.2 are ‘stand-alone’ exclusions in their own right that operate in accordance with their own terms.  This is well supported by their terms, including the opening words of clause 13.2.  There is also no express linking of the two clauses except that clause 13.2 is made subject to clause 13.1, which necessarily imports the carve outs in clauses 13.1.1 and 13.1.2.  That said, I appreciate that it is not readily apparent what would be caught by clause 13.2 that would not already be captured by clause 13.1.

1. As I have said, the end point is quite straightforward.  ATG’s liability to Safety Mate for the Loss Amount is excluded by clauses 13.1 and 13.2 of the Agreement.[232]  It follows from this and my earlier findings that Safety Mate’s damages claim for loss of profits in respect of the goods the subject of the Four Purchase Orders cannot succeed.

   [232]As would any liability for nominal damages if it had not been found that Safety Mate suffered loss and damage, being the Loss Amount.

Conclusion and proposed orders

1. ATG has succeeded in its claim for a declaration that the Agreement was validly terminated.  Although Safety Mate established that ATG breached clauses 4.1.1 and 4.3 by failing to use reasonable endeavours to supply Safety Mate the goods the subject of the Four Purchase Orders, its counterclaim for damages alleged to have been suffered by reason of this breach and the claimed invalid termination of the Agreement have failed.

1. As noted in the introduction and summary above:

(a)        ATG did not breach the Agreement by failing to act in good faith in the exercise of its termination right under clause 2.2.1 of the Agreement.

(b)       The Agreement was validly terminated by ATG’s Termination Notice with effect from midnight on 30 September 2019.

(c)        The Agreement was not extended for a further two-year period from 1 October 2019 by Safety Mate’s Extension Letter.

(d)       ATG breached clauses 4.1.1 and 4.3 of the Agreement by failing to use reasonable endeavours to supply to Safety Mate the goods the subject of the Four Purchase Orders.

(e)        Safety Mate established that it suffered loss and damage, being the Loss Amount of $25,266, in respect of purchase order PO 964.

(f)        Safety Mate did not establish that it suffered any loss and damage by reason of ATG’s failure to use reasonable endeavours to supply to Safety Mate the goods the subject of purchase orders PO 965, PO 974 and PO 980.

(g)       ATG’s liability to Safety Mate for the Loss Amount of $25,266 is excluded by clauses 13.1 and 13.2 of the Agreement.

1. I propose to make orders to the following effect:

1.   The Court declares that the distribution agreement between the plaintiff and the defendant that had a ‘Commencement Date’ of 1 October 2017 (Agreement) was validly terminated by the plaintiff’s Notice of Termination dated 21 March 2019, with effect from midnight on 30 September 2019.

2.   The Court declares that the plaintiff breached clause 4.1.1 and clause 4.3 of the Agreement by failing to use reasonable endeavours to supply to the defendant the goods the subject of purchase orders PO 964, PO 965, PO 974 and PO 980.

3.   The counterclaim of the defendant is otherwise dismissed.

1. I will hear from the parties in relation to costs.

ANNEXURE ‘A’ - Table of Alleged Confidential Information

[as prepared by the parties to the proceeding]

IN THE SUPREME COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL COURT

GENERAL COMMERCIAL LIST NO. SEC2019 01329

BETWEEN:

ATG LANKA (PVT) LIMITED Plaintiff

and

SAFETY MATE PTY LTD (ACN 104 784 241) Defendant

TABLE OF CONFIDENTIAL INFORMATION

Confidential Information	Date provided to Mayo	Source	Why is it Confidential Information pursuant to the defined terms of “Confidential Information” in the Agreement	Evidence relied upon regarding character of confidential information and Reference in Safety Mate’s Closing submissions and Closing submissions in reply and pleadings	ATG’s Response
Document: “Power Point Presentation under heading: Commercial Aspects. ATG History in the Territory” Containing a reference to: ·     Safety Mate utilising Armour Safety in New Zealand ·     Remaining sales are all via Armour Safety ·     The penetration in PNG as being minimal ·     Safety Mates sales into PNG are via Bishops	13 February 2019 T 268.8-11 Agreed by parties	CB 2638 – Power Point Presentation	It is information that ATG has “gained relating to” Safety Mate’s: ·     Information of a commercial value; ·     Customer lists; ·     Sales. All of these matters are information gained by ATG through Safety Mate, because it is effectively Safety Mate’s sales information to ITS customers and the penetration Safety Mate has in the market. It is of commercial value to both Safety Mate and Mayo as it tells Mayo who the CP is in both the New Zealand and PNG markets and in the case of PNG, provides information about the penetration into that market.	Tee at [180]: “Client and market information of Safety Mate is kept confidential and not disclosed to anyone outside the organisation.” Tee at [73] and T 521.13: Armour Safety is a Channel Partner of Safety Mate and New Zealand is the market.  CB 863: KPI 3 Papua New Guinea Market Development and in 3.1 the local CP is Bishops have been re-appointed: Bishops is a channel Partner in PNG and PNG is the market. See also CB 1286 where Sheerin asks on 1 February 2019 for a copy of Bishop’s commitment to hold stock in PNG or evidence thereof as he had looked on their website and there is no mention of ATG. Third Further Amended Defence and Counterclaim [9(1)(iii)(L)-(M)].	1.   No evidence was led by Safety Mate to demonstrate that any of this information was: a.   ‘gained by ATG through Safety Mate’, let alone on what date or by what means; or b.   of ‘commercial value to both Safety Mate and Mayo’, to enable such assertions to be tested by cross-examination or accepted by the Court. 2.   No allegations regarding this page of the PowerPoint Presentation (Presentation) were pleaded or raised in evidence or submissions (the sole focus of which instead was the slide which appears at CB2643) at all. 3.   Neither this page, nor any information on it, were put to any witnesses, thus offending the rule in Browne v Dunn (1893) 6 R 67. 4.   If either of the above steps had occurred, ATG would have had the opportunity to not only test the assertions by cross-examination, but also lead evidence in response, including as to such information being, either at the time or subsequently: a.   public knowledge (including by reference to members of the PPE industry); or b.   separately known to ATG (about what is its own product & market), so as to enliven the operation of subclauses 16.1.1-3. 5.   Safety Mate ought not be permitted to now press this new allegation, as ATG no longer has the ability to call evidence to respond to the allegation, and to cross-examine Safety Mate’s witnesses in relation to it.  Alternatively, the new allegation should be treated with caution and/or accorded little if any weight in the circumstances. 6.   In relation to the allegation that ‘Armour Safety is a Channel Partner of Safety Mate’, ATG refers to paragraphs 5.6-5.7 of its Closing Submissions.
Document: “Power Point Presentation under heading: Commercial Aspects. Current Local ATG Market” Containing a reference to: ·     “Blackwoods=-60%” ·     ATOM, Bunzl, PIP & IPP = -25% ·     the number of “45 active distributors in total” ·      “End Users and the penetration into various sectors – specifically referencing “Retail= non-existent, great opportunity” ·     the “Territories” and their size/development; ·     List of various End Users – i.e., BHP, Rio Tinto ·     Market size	13 February 2019 T 268.8-11 Agreed by parties	CB 2639 – 2640 Power Point Presentation	It is information that ATG has “gained relating to” Safety Mate’s: ·     Information of a commercial value; ·     Customer lists; ·     Sales. All of these matters are information gained by ATG relating to Safety Mate, because it is effectively Safety Mate’s sales information to its customers and the penetration Safety Mate has in the market. It is noted that the information does not have to be gained from Safety Mate.  All that is required pursuant to the definition of “Confidential Information” is that the information is knowledge that ATG has “gained relating to” Safety Mate’s information or intellectual property.It is broad enough to include knowledge of commercial value to Safety Mate that has been derived by ATG from other information or other means including experience in the market where someone such as Sheerin would likely know Safety Mate’s prices (See T 270.5-7; T 272.8-10). This is exactly the type of information Sheerin was requesting from Safety Mate in early 2019 [see CB 1295-1297] and is information Safety Mate keeps confidential (Tee at [180]).  It is no coincidence. It is information of commercial value to Safety Mate and Mayo because it provides Mayo with valuable information about customers at Channel Partner and End User level; market penetration and opportunities for expansion. It is noted that, on ATG’s case, the Power Point Document is the only information provided to Mayo.  On that basis, the NDA Deed was entered into for the provision of the information in the Power Point Presentation alone.  Given that both Mayo and ATG agreed to enter into an exclusive agreement (and ATG to terminate Safety Mate) on the back of the Power Point Presentation, it should be inferred that the information contained in the document (referred to in this table) was of significant commercial value.	Closing Submissions at paragraph [100]; Reply Submissions at paragraph [12]-[13]. Third Further Amended Defence and Counterclaim [9(1)(iii)(L)-(M)]. Tee at [180]: “Client and market information of Safety Mate is kept confidential and not disclosed to anyone outside the organisation.” CB 1208, 865 and 1252 – Sheerin requests and is provided with, list of CP’s and contacts CB 1220 and 1228 – Sheerin requests and is provided with, CP sales figures (pairs per major customer) CB 1295-1297 – where Sheerin asks for and is provided with information in a table at CB 1295 regarding market penetration which Safety Mate submits has been replicated in the Power Point Presentation. See also CB 1278 regarding confidentiality of information	7.   In response to the whole of this allegation, ATG refers to and repeats point 1 above. 8.   In response to the allegation that ‘the information does not have to be gained from Safety Mate’, ATG refers to subclauses 16.1.1-3 of the Distribution Agreement, and point 4 above. 9.   In response to the allegation that ‘this is exactly the type of information Sheerin was requesting from Safety Mate in early 2019’, ATG refers to its oral submissions at T1091:23– T1094:8, namely: what was provided by Mr Robeson to Mr Sheerin is not the information which appears in the Presentation at CB2639. 10.   In response to the allegation that ‘the information is of commercial value to Safety Mate and Mayo’, ATG refers to and repeats point 1(b) above. 11.   In response to the allegation that ‘on ATG’s case, the Power Point Document is the only information provided to Mayo’, ATG denies this and refers to and repeats paragraph 6.12 of its Outline of Closing Submissions in Reply dated 21 July 2021 (ATG Reply Submissions), which specifically state that paragraph 5 of Safety Mate’s Submissions reference the Presentation as the sole information provided by ATG to Mayo ‘which preceded the Termination Notice’ (cf. in toto).
Document: “Power Point Presentation under heading: Commercial Aspects. Confidential Figures” Reference to “Pairs” of products by number from 2016-2018 is a reference to the precise number of gloves purchased by Safety Mate from ATG The reference to COGS(AUD) is the specific costs of goods sold to Safety Mate from 2016-2018	13 February 2019 T 268.8-11 Agreed by parties	CB 2643	It is information that ATG has gained relating to Safety Mate’s: ·     Information of a commercial value; and ·     Sales. The number of pairs of gloves purchased by Safety Mate and the costs of the goods sold is information of commercial value to both Safety Mate and Mayo as it assists Mayo to know: ·     how much stock is being purchased by Safety Mate on a yearly basis; ·     that purchases have been increasing from 2016 to 2018; ·     the prices for the stock Hence why it is being provided to Mayo, to entice it to enter into an agreement with ATG. It is also information gained by ATG from Safety Mate by virtue of the ordering process of Products by Safety Mate. The number of pairs of products purchased by Safety Mate is therefore information gained by ATG from Safety Mate.	Closing Submissions at paragraph 100; Reply Submissions at paragraphs [12]-[13]. Third Further Amended Defence and Counterclaim [9(1)(iii)(A) and (D)]. See also T 269.24-T 270.1-3, 14-16 and T 271.27 – T 272.1-10. Sheerin also admits at T 313.11-18 that the contents of the Pro Forma Invoice at CB 2848-2855 and 2970-2971 contains Safety Mate’s confidential information which includes: Quantity of pairs of gloves, by types as well as total value in $USD for that shipment.  If that information is confidential, the information on this slide of the Power Point Presentation is also confidential information. Otherwise, the quality or character of the confidential information is inferred from the face of the document, the construction of the Distribution Agreement and the NDA and the fact that the information was given to Mayo to entice it to enter into an agreement with ATG.	12.   In response to the whole of this allegation, ATG refers to and repeats points 1, 4 and 5 above. 13.   ATG also refers to subparagraph 6.13(a) of the ATG Reply Submissions, which notes that ‘Mr Sheerin has confirmed that the figures in the … first two columns of that table were derived from ATG’s own data (and thus fall within the clause 16.1.1 exception)’, as recorded by the unchallenged evidence given by Mr Sheerin at T270:2-3.
Document: “Power Point Presentation under heading: Commercial Aspects. Confidential Figures” PSP Revenue from 2016-2018	13 February 2019 T 268.8-11 Agreed by parties	CB 2643	It is information that ATG has gained relating to Safety Mate’s: ·     Information of a commercial value; ·     Sales; and ·     Financials Safety Mate’s revenue is specific for each year. Whilst it acknowledges that minor assumptions are made, it is clearly information about Safety Mate’s revenue that Sheerin has gained from somewhere or has been derived from somewhere.  It has been “gained” from somewhere. Likely from Sheerin’s meetings with and dealings with Safety Mate and its Channel Partners and End Users. It is clearly information of commercial value to Safety Mate and it is not an answer to say that it was a guess – that is not what it purports to be. It is also too specific to be a guess as it is rounded to the nearest $1000.  Even if it is based upon the costs of goods sold, it is therefore based on Safety Mate’s confidential information. Sheerin’s “assumptions” are minor and only relate to discounts and CPS.  The document speaks for itself – it is a representation to Mayo as to Safety Mate’s actual revenue.  It is also not independently developed by Sheerin.  Independently developed does not mean derived from other information or reverse engineered.  It is not the sort of information that can be independently developed as opposed to e.g a formula, recipe, method of creation or specification for a glove.	Closing Submissions at paragraph 100; Reply Submissions at paragraphs [12]-[13]. Third Further Amended Defence and Counterclaim [9(1)(iii)(E)]. See also T 269.24-29 and T 271.27 – T 272.1-10. Otherwise, the quality or character of the confidential information is inferred from the face of the document, the construction of the Distribution Agreement and the NDA and the fact that the information was given to Mayo to entice it to enter into an agreement with ATG.	14.   In response to the whole of this allegation, ATG refers to and repeats point 1 above. 15.   ATG also refers to subparagraph 6.13(b) of the ATG Reply Submissions, which notes that ‘Mr Sheerin has confirmed that the figures in the … third column of that table were expressly stated in the Presentation to be ATG’s own estimates (and thus fall within the clause 16.1.3 exception)’, as recorded by the unchallenged evidence given by Mr Sheerin at T270:3-11. 16.   In response to the new allegation that the information has been likely gained by ATG from meetings with ‘Channel Partners and End Users’, (which was not put to Mr Sheerin, nor was any evidence led in support of it), even if established, this would enliven subclause 16.1.1-3 of the Distribution Agreement. 17.   In response to the new allegation that the information ‘is too specific to be a guess’, this was not put to Mr Sheerin, thus offending the rule in Browne v Dunn, and depriving him of the opportunity to explain the calculations he used to make the estimates. 18.   The allegation that ‘Sheerin’s “assumptions” are minor and only relate to discounts and CPS” is not supported by the evidence. Mr Sheerin’s evidence was that the ‘PSP Revenue’ figures at large were based on his assumptions: T270:3-4. 19.   Safety Mate’s construction of ‘independently developed’ is unworkably narrow, and its example relates to a scenario which could not constitute the confidential information of the other party in the first place. Rather, read in conjunction with subclauses 16.1.1 and 16.1.2, and in accordance with the principle of ejusdem generis, 16.2.1.3, properly construed, means ‘information which we have come up with’ (and would include data relating to ATG’s own sales to its PSPs).
Document: “Power Point Presentation under heading: Commercial Aspects. Confidential Figures” ·     PSP Gross Profit Margin $ ·     PSP Gross Margin % Both for 2016-2018 Revenue Growth for 2017 and 2018	13 February 2019 T 268.8-11 Agreed by parties	CB 2643	It is information that ATG has gained relating to Safety Mate’s: ·     Information of a commercial value; ·     Sales; and ·     Financials Both Gross Profit margin figures are based upon the PSP Revenue less the cost of goods sold. It is clearly information about Safety Mate’s revenue that Sheerin has gained from Safety Mate’s purchases of ATG Products (COGS) and from somewhere else relating to Safety Mate’s sales to Channel Partners.  It has been “gained” from Safety Mate and/or somewhere else. It is clearly information of commercial value to Safety Mate and it is not answer to say that it was a guess – that is not what it purports to be.  Given that it is based (at least partially) upon the costs of goods sold, it is therefore based on Safety Mate’s confidential information. Sheerin’s “assumptions” are minor and only relate to discounts and CPS.  The document speaks for itself – it is a representation to Mayo as to Safety Mate’s actual revenue growth.  It is also not independently developed by Sheerin.  Independently developed does not mean derived from other information or reverse engineered.  It is not the sort of information that can be independently developed as opposed to e.g a formula, recipe, method of creation or specification for a glove.	Closing Submissions at paragraph 100; Reply Submissions at paragraphs [12]-[13]. Third Further Amended Defence and Counterclaim [9(1)(iii)(F)-(H)]. See also T 269.24-T 270.1-3, 14-16 and T 271.27 – T 272.1-10. Otherwise, the quality or character of the confidential information is inferred from the face of the document, the construction of the Distribution Agreement and the NDA and the fact that the information was given to Mayo to entice it to enter into an agreement with ATG.	20.   In response to the whole of this allegation, ATG refers to and repeats point 1 above. 21.   ATG also refers to subparagraph 6.13(b) of the ATG Reply Submissions, which notes that ‘The figures in remaining fourth, fifth and sixth columns are calculations based on the first three columns.’ 22.   To illustrate the above point, each figure in the: a.   4th column is simply the product of subtracting the figure in the 2nd column from the figure in the 3rd column (eg. $21,838,000 - $12,428,000 = $9,410); and b.   5th column is simply the percentage that the figure in the 4th column is of the figure in the 3rd column (eg. $9,410,000 is 43% of $21,838,000). 23.   ATG further repeats paragraphs 18 and 19 above.
Document: “Power Point Presentation under heading: Commercial Aspects. Confidential Figures” Stock on Hand – Jan 19 1,240,000 pairs=-$3.5m AUD	13 February 2019 T 268.8-11 Agreed by parties	CB 2643	It is information that ATG has gained relating to Safety Mate’s: ·     Information of a commercial value; and ·     Financials Safety Mate provided regular stock on hand reports to ATG and provided the SOH for January 2019 to ATG on 4 February 2019 (see CB1283). It is information gained by ATG from Safety Mate. At this stage, no products were sold to Mayo, therefore the Stock on Hand figure referred to in the power point could only be that of Safety Mate’s. It demonstrates the likely stock on hand at a particular time and would be of commercial benefit and advantage to Mayo as a new entrant to the market for ATG products – hence why it is in the document.	Closing Submissions at paragraph 100; Reply Submissions at paragraphs [12]-[13]. Third Further Amended Defence and Counterclaim [9(1)(iii)(I) and (K)]. CB 1283: Safety Mate SOH for January 2019 See also T 269.24-29 and T 272.1-10, 18-20, and T 303.31- T 304.1, 11-12. Otherwise, the quality or character of the confidential information is inferred from the face of the document, the construction of the Distribution Agreement and the NDA and the fact that the information was given to Mayo to entice it to enter into an agreement with ATG.	24.   In response to the whole of this allegation, ATG refers to and repeats point 1 above. 25.   Whilst it was put to Mr Sheerin that he received stock on hand information from Safety Mate in general terms [T272:18-20], it was not put to him (or any other ATG witness) that the specific stock on hand figure on this slide was derived from Safety Mate. Further, the figure in the cited page of the Court Book (which was also not put to Mr Sheerin or any other ATG witness) does not match the figure on this slide, nor do any of the ‘stock on hand’ emails provide a dollar figure.
Document: “Power Point Presentation under heading: Commercial Aspects. Confidential Figures” In transit= 490,000 pairs = $1.4m AUD	13 February 2019 T 268.8-11 Agreed by parties	CB 2643	It is information that ATG has gained relating to Safety Mate’s: ·     Information of a commercial value; and ·     Financials This is the amount of Safety’s Mates order that it has purchased from ATG which was currently in transit to it. It is information gained by ATG from Safety Mate directly from Safety Mate’s purchases. At this stage, no products were sold to Mayo, therefore the transit figures referred to in the power point could only be that of Safety Mate’s. This information would be of commercial benefit to Mayo as it may assist Mayo in knowing how much product is in transit on a monthly basis for the purposes of insurance, storage etc– hence why it is in the document. It is also not independently developed by Sheerin.  Independently developed does not mean derived from other information or reverse engineered.  It is not the sort of information that can be independently developed as opposed to e.g a formula, recipe, method of creation or specification for a glove.	Closing Submissions at paragraph 100; Reply Submissions at paragraphs [12]-[13]. Third Further Amended Defence and Counterclaim [9(1)(iii)(I)]. See also T 269.24-29 and T 272.1-10, 18-20. Otherwise, the quality or character of the confidential information is inferred from the face of the document, the construction of the Distribution Agreement and the NDA and the fact that the information was given to Mayo to entice it to enter into an agreement with ATG.	26.   In response to the whole of this allegation, ATG refers to and repeats point 1, 4 and 5 above. 27.   There was no puttage to any ATG witness regarding ‘in transit’ figure at all, thus offending the rule in Browne v Dunn. 28.   Safety Mate made no reference to the in transit figures in any pleading, submissions or evidence, thus depriving ATG of the opportunity to lead evidence on it, including as to the fact that information regarding stock in transit was (and must, as a matter of logic be) already known to / developed by ATG, thus falling within the operation of subclause 16.1.1-3. 29.   ATG further repeats paragraph 19 above.

Document “Pro forma invoice dated 31 October 2018” This contains: ·     The quantity of pairs, the number of cartons, the price in USD and the value FOB Colombo for each type of glove, separated by size and style; ·     The total quantity of pairs and cartons; ·     The total value in USD$; ·     Packing descriptions; ·     Payment terms	15 March 2019 CB 2848-2855 and 2970-2971 Agreed by parties	CB 2848-2855 and 2970-2971	It is information that ATG has gained relating to Safety Mate’s: ·     Information of a commercial value; and ·     Payment terms; ·     Prices. The pro-forma invoice contains is information gained by ATG from Safety Mate based upon the specific quantity, type and price requested by Safety Mate. Each aspect is information of commercial value to Safety Mate and Mayo. It is information upon which Mayo can determine its likely costs, payment terms, logistics and specific types of Product that the market (ie, Safety Mate’s customers) require. Each aspect of the document assists Mayo in providing it with a “springboard” into Safety Mate’s market.  In the email, Sheerin went beyond just providing the PFI to Mayo, he also told Mayo that it represented a typical monthly order by Safety Mate (CB2971)	Closing Submissions at paragraphs [100]-[102]; Reply Submissions at paragraphs [12]-[13]. Third Further Amended Defence and Counterclaim [9(1)(iii)(N)]. And admissions of Sheerin at T 313.16-20 and T 315.8-12. Otherwise, the quality or character of the confidential information is inferred from the face of the document, the construction of the Distribution Agreement and the NDA and the fact that the information was given to Mayo to entice it to enter into an agreement with ATG.	30.   ATG refers to and repeats paragraphs 6.15-6.19 of the ATG Reply Submissions, and acknowledges that this document (PFI) contains ‘Confidential Information’ within the meaning of clause 1.1 but notes that the PFI was provided to Mayo: a.   on 15 March 2019, after the relevant decision to terminate had been made in February 2019, and less than a week before the termination notice was in fact issued; b.   for the sole purpose of illustrating ATG’s payment terms, which appear at the back of the PFI, as is plain from the covering email [CB 2970]; c.   not (as alleged in paragraph 26 of Safety Mate’s Closing Submissions), with any malicious motive, such as to ‘entice Mayo to seize Safety Mate’s business’, as the parties had by 15 March already determined to engage with each other; and d.   without causing any loss or damage, and without any absence of good faith.
Document: “2018 cal year – shipping volume.xlsx” Contains the 2018 volume of gloves sold to Safety Mate at 6,106,176 which is recorded by glove range. It also sets out pairs per carton and other categories of volume in metre squared.	17 April 2019 [Agreed by parties that email sent on 17 April – inference as to other possible date denied by ATG] Inference that it was provided on a date prior to this due to: ·     reference in 17 April 2019 email to it having been previously sent to Mayo; ·     creation of document on 6 February 2019; ·     identical information contained in the Power Point Presentation: T 299-306.6; ·     When asked when it was provided Sheerin said “I can’t recall”: T 281.15. See paragraphs [101]-[105] of Safety Mate’s closing submissions regarding the inference it asks the Court to make from the available and unavailable evidence.	CB 2244 and 2254-2256	It is information that ATG has gained relating to Safety Mate’s: ·     Information of a commercial value. The number of pairs of gloves purchased by Safety Mate is information of commercial value (hence why it was provided to Mayo in the Power Point Presentation to entice it to enter into an agreement with ATG). It is also information gained by ATG from Safety Mate by virtue of the ordering process of Products by Safety Mate. The number of pairs of products purchased by Safety Mate is therefore information gained by ATG from Safety Mate.	Closing Submissions at paragraphs [104]-[105] Third Further Amended Defence and Counterclaim [9(1)(iii)(B)]. See admission of Sheerin at T 298.12-299.5 Otherwise, the quality or character of the confidential information is inferred from the face of the document, the construction of the Distribution Agreement and the NDA and the fact that the information was given to Mayo to entice it to enter into an agreement with ATG.	31.   In response to the whole of this allegation, ATG refers to and repeats points 1, 4 and 5 above. 32.   From a timing perspective, this document (1st Spreadsheet) was provided to Mayo on 17 April 2019, well after the relevant decision to terminate was made in February 2019 and actioned on 21 March 2019. 33.   In relation to the content of the 1st Spreadsheet, ATG refers to subparagraph 2.7(c) of its Outline of Closing Submissions dated 5 July 2021 (ATG Closing Submissions), and to Mr Sheerin’s unchallenged evidence that Safety Mate only reported stock on hand at a family level, so he would ‘take a spread of purchases and a ratio and apply it to the family’ (as recorded at T301:28-29). 34.   In relation to the allegation that there is an ‘inference that it was provided on a date prior to this’, ATG refers to and repeats paragraphs 6.21-6.23 of the ATG Reply Submissions.
Initial Stock Profile.xlsx Contains: ·     the product type of ATG products purchased by Safety Mate from ATG for the 2018 calendar year; ·     the price of ATG products purchased by Safety Mate from ATG for the 2018 calendar year; ·     The market into which the Products were sold; ·     Safety Mate’s exit sales of ATG products for the months January, February and March 2019; ·     Safety Mate’s ‘stock on hand’ of ATG products as at: 1)   January 2019; 2)   February 2019; and 3)   March 2019.	17 April 2019 [Agreed by parties that email sent on 17 April – inference as to other possible date denied by ATG] See paragraph 106-109 of Safety Mate’s closing submissions regarding the inference it asks the Court to make from the available and unavailable evidence.	CB 2246-2252	It is information that ATG has gained relating to Safety Mate’s: ·     Information of a commercial value; ·     Prices; ·     Sales. The number of pairs of gloves purchased by Safety Mate and the costs of the goods sold, by each type of glove over the past 12 months, is information of commercial value to both Safety Mate and any competitor.   It is also information gained by ATG from Safety Mate by virtue of the ordering process of Products by Safety Mate. The number of pairs of products purchased by Safety Mate is therefore information gained by ATG from Safety Mate. The exit sales are commercially valuable because they demonstrate the volume of sales, by glove, made by Safety Mate between January and March 2019 as well as the stock on hand.	Closing Submissions at Paragraphs [106]-[109]; and Reply Submissions at [14]-[16]. Third Further Amended Defence and Counterclaim [9(1)(iii)(J)-(L)]. See admissions of Sheerin in relation to exit sales and stock on hand at T 303.24-305.17 CB 2244: “Cells AR6 : AR11 = Safety Mate’s sales out (What we call Exit Sales Rate, ESR) Cells AP13 : AS19 = Safety Mate’s Stock On Hand” Otherwise, the quality or character of the confidential information is inferred from the face of the document, the construction of the Distribution Agreement and the NDA and the fact that the information was given to Mayo to entice it to enter into an agreement with ATG.	35.   In response to the whole of this allegation, ATG refers to and repeats points 1, 4 and 5 above. 36.   From a timing perspective, this document (2nd Spreadsheet) was also provided to Mayo on 17 April 2019, well after the relevant decision to terminate was made in February 2019 and actioned on 21 March 2019. 37.   In relation to the content of the 2nd Spreadsheet, ATG refers to subparagraph 2.7(b) of ATG’s Closing Submissions, and to Mr Sheerin’s unchallenged evidence regarding his estimating of the relevant figures, noting that Safety Mate never provided any information to ATG at the SKU level (as recorded at T276:5-9 and 20-22). 38.   In relation to the inference that Safety Mate ‘asks the Court to make from the available and unavailable evidence’, ATG refers to and repeats paragraph 6.24 of the ATG Reply Submissions, and notes that the language of the 17 April 2019 covering email [CB 2244] confirms that the 2nd Spreadsheet was first shown to Mayo in a meeting that day.