Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd

Case [2018] FCA 142


FEDERAL COURT OF AUSTRALIA

Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd [2018] FCA 142

File number: VID 1157 of 2017
Judge: BEACH J
Date of judgment: 19 February 2018
Date of publication of reasons 22 February 2018
Catchwords: PRACTICE AND PROCEDURE – interlocutory injunction – where applicant alleges a supply agreement arising from long-standing conduct – where suppliers have notified intention to terminate supply – what constitutes a reasonable period of notice – application granted in part
Cases cited:

Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57

Australian Rugby Union Ltd v Hospitality Group Pty Ltd [1999] FCA 1136

Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499; [1988] FCA 206

Crawford Fitting Co v Sydney Valve & Fittings Pty Ltd (1988) 14 NSWLR 438

Metro Investments Holdings Pty Ltd v GM Holden Ltd [2017] FCA 1523

Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 2] [2013] WASC 375

Moonlighting International Pty Ltd v International Lighting Pty Ltd [1999] FCA 1872

Moonlighting International Pty Ltd v International Lighting Pty Ltd [2000] FCA 41

Samsung Electronics Company Ltd v Apple Inc (2011) 217 FCR 238

Sanderson Motors (Sales) Pty Ltd v Yorkstar Motors Pty Ltd [1983] 1 NSWLR 513

SPAR Licensing Pty Ltd v MIS Qld Pty Ltd (No 1) [2011] FCA 1054

Date of hearing: 19 February 2018
Registry: Victoria
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Category: Catchwords
Number of paragraphs: 63
Counsel for the Applicant: Mr M Wise SC and Ms N Hickey
Solicitor for the Applicant: K&L Gates
Counsel for the Fifth and Twelfth Respondents: Mr M Osborne QC and Mr T Warner
Solicitor for the Fifth and Twelfth Respondents: Mills Oakley

ORDERS

VID 1157 of 2017
BETWEEN:

DIRECTED ELECTRONICS OE PTY LTD (ACN 130 647 737)

Applicant

AND:

OE SOLUTIONS PTY LTD (ACN 119 188 019)

First Respondent

HANHWA AUS PTY LTD (ACN 614 943 092)

Second Respondent

HANHWA HIGHTECH AUSTRALIA PTY LTD (ACN 153 718 435) (and others named in the Schedule)

Third Respondent

JUDGE:

BEACH J

DATE OF ORDER:

19 FEBRUARY 2018

UPON THE APPLICANT UNDERTAKING TO THE COURT BY ITS COUNSEL TO:

(a)submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by the operation of order 1 below or any continuation (with or without variation) thereof; and

(b)pay the compensation referred to in (a) to the person or persons there referred to.

THE COURT ORDERS THAT:

1.The fifth and twelfth respondents be restrained from acting upon the Hanhwa Korea Notice as defined in paragraph 129 of the statement of claim dated 13 December 2017 in this proceeding until 17 May 2018.

2.The costs of and incidental to the applicant’s interlocutory application dated 14 February 2018 be reserved.

Note:   Entry of orders is dealt with…

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AGLC
Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd [2018] FCA 142
Case
[2018] FCA 142
Decision Date

CaseChat Overview and Summary

In the case of Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd, the dispute involved an application for an interlocutory injunction by the applicant, Directed Electronics OE Pty Ltd, against several respondents, including OE Solutions Pty Ltd and Hanhwa Korea. The applicant sought to prevent the respondents from terminating a supply agreement, which it claimed was based on long-standing conduct and not formally documented. The matter was heard in the Federal Court of Australia.

The legal issues the court was required to decide included whether the applicant had established a sufficient likelihood of proving the existence of a valid contract, whether the applicant would suffer irreparable harm if the injunction was not granted, and what constituted a reasonable period of notice for terminating the supply agreement. The court also needed to weigh the harm that each party would suffer if the injunction was granted or denied.

In its decision, the court found that while the respondents had some valid arguments, the applicant would suffer greater harm if the injunction was not granted than the respondents would suffer if it was granted. The court also found that damages may not be an adequate remedy for the applicant. Therefore, the court granted the injunction, but in a more limited form than requested by the applicant, extending only until 17 May 2018. The court considered this period to be a reasonable notice period for the respondents to wind down the supply arrangement.

The final orders of the court were that the fifth and twelfth respondents were restrained from acting upon the Hanhwa Korea Notice until 17 May 2018. The costs of the interlocutory application were to be reserved.

Orders

Orders of the court

1. The fifth and twelfth respondents be restrained from acting upon the Hanhwa Korea Notice as defined in paragraph 129 of the statement of claim dated 13 December 2017 in this proceeding until 17 May 2018.

2. The costs of and incidental to the applicant’s interlocutory application dated 14 February 2018 be reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

In summary, whilst I consider that the Hanhwa Korea Parties’ submissions have some force, I consider that on balance Directed OE would suffer greater harm if I refused the injunction than the Hanhwa Korea Parties would suffer if I granted the injunction, and that it is problematic as to whether damages will be an adequate remedy. But mindful of the position of the Hanhwa Korea Parties, I have considered that a more limited form of injunction through and until 17 May 2018 (reflecting a period of 6 months) is more appropriate.CONCLUSION It is for the foregoing reasons that I granted the injunction against the Hanhwa Korea Parties, albeit in more limited terms than that sought by Directed OE.

Ratio Decidendi

Legal Principle Established

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