SUPREME COURT OF QUEENSLAND
CITATION: BSO Network Inc & Anor v EMClarity Pty Ltd [2021] QSC 73 PARTIES: BSO NETWORK INC
(first plaintiff)
&
APSARA NETWORKS INC
(second plaintiff)v
EMCLARITY PTY LTD
ACN 88 139 128 180(defendant)
FILE NO: BS12112 of 2019
DIVISION: Trial Division
PROCEEDING: Originating Application, continued as if commenced by way of Claim
ORIGINATING COURT:
Supreme Court at Brisbane DELIVERED ON:
9 April 2021 DELIVERED AT:
Brisbane HEARING DATES:
20 – 23 July 2020, 19 August 2020; 21 and 22 October 2020 (further written submissions) JUDGE: Ryan J
ORDERS: The parties are directed to confer about the next steps in this litigation and to contact my associate by no later than 23 April 2021 with agreed draft directions or orders; or a request for a date for a review of the matter.
Until further order, I will restrict publication of these reasons to the parties and to their solicitors and counsel (subject, in the case of the defendant, to the orders made by Brown J on 27 November 2019, and varied by me on 4 August 2020).
CATCHWORDS: CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – PARTICULAR PARTIES – PRINCIPAL AND AGENT – CREATION OF RELATIONSHIP OF AGENCY – FORMATION AND PROOF OF AGENCY – where alleged principal wholly owned subsidiary of alleged agent – where alleged principal undisclosed to other contracting party – whether holding company negotiating “on behalf of” subsidiary created agency relationship
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – IMPLIED TERMS – whether contract an unconditional contract for supply of goods or a development contract, with supply to follow only if development successful – where, if an unconditional contract for supply, the contract was silent as to when the goods were to be delivered – whether a term requiring delivery within a reasonable time ought to be implied – determination of period of reasonable time – whether there had been failure to supply the goods within a reasonable time
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH – REPUDIATION AND NON-PERFORMANCE – REPUDIATION – DELAY AND PROVISIONS AS TO TIME – where defendant agreed to supply goods to second plaintiff – where defendant then unilaterally implemented a “Quality Review” of all its products and a pause on shipping until the review was complete – where defendant informed plaintiffs about Quality Review and pause on shipments but would provide no information to plaintiffs about when the review might be completed – where defendant cancelled orders for components for second plaintiff’s product –– whether conduct of defendant repudiatory
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH – where contract between first plaintiff and defendant contained obligation of confidence – where plaintiffs’ competitor acquired defendant – where, prior to acquisition, during due diligence, defendant provided redacted versions of plaintiffs’ confidential information to plaintiffs’ competitor – where, after acquisition, defendant provided un-redacted copies of plaintiffs’ confidential information to plaintiff’s competitor –…
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- Case
- [2021] QSC 73
- Decision Date
CaseChat Overview and Summary
The court was required to address several key legal issues. These included whether an agency relationship existed between the plaintiffs and the defendant, specifically if the defendant's actions constituted negotiating on behalf of a subsidiary of which the defendant was the principal. The court also had to determine whether a term implying a reasonable time for delivery should be incorporated into an unconditional contract for the supply of goods. Additionally, the court assessed whether the defendant's actions constituted a repudiatory breach of contract, particularly in relation to delays and the implementation of a quality review that halted shipments. Another issue was whether the defendant breached confidentiality obligations by sharing the plaintiffs' confidential information with a competitor both before and after acquiring the defendant.
In its reasoning, the court found that the defendant's conduct did not create an agency relationship with the subsidiary, as the subsidiary was undisclosed to the plaintiffs. The court also determined that a term requiring delivery within a reasonable time should be implied in the contract for the supply of goods, setting a specific timeframe based on industry standards and the nature of the goods. Regarding the quality review and pause on shipments, the court concluded that the defendant's actions amounted to a repudiatory breach. The court further held that the defendant breached both the contractual and equitable obligations of confidence by disclosing the plaintiffs' confidential information to their competitor. The court found that the equitable obligation of confidence was not broader in scope than the contractual obligation.
The court ordered the parties to discuss the next steps in the litigation and to provide a proposed schedule for further proceedings by a specified date. Until further order, the publication of the reasons for judgment was restricted to the parties and their legal representatives, subject to previous orders made by another judge.
Orders
Orders of the court
The parties are directed to confer about the next steps in this litigation and to contact my associate by no later than 23 April 2021 with agreed draft directions or orders; or a request for a date for a review of the matter.
Until further order, I will restrict publication of these reasons to the parties and to their solicitors and counsel (subject, in the case of the defendant, to the orders made by Brown J on 27 November 2019, and varied by me on 4 August 2020).
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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