EMClarity Pty Ltd v BSO Network Inc - [2022] QCA 177

SUPREME COURT OF QUEENSLAND

CITATION:

EMClarity Pty Ltd v BSO Network Inc & Anor [2022] QCA 177

PARTIES:

In Appeal No 11321 of 2021:

EMCLARITY PTY LTD
ACN 139 128 180
(appellant)
v
BSO NETWORK INC
(first respondent)
APSARA NETWORKS INC
(second respondent)

In Appeal No 10237 of 2022:

BSO NETWORK INC
(first appellant)
APSARA NETWORKS INC
(second appellant)
v
EMCLARITY PTY LTD
ACN 139 128 180
(respondent)

FILE NO/S:

Appeal No 11321 of 2021
Appeal No 10237 of 2022
SC No 12112 of 2019

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeals

ORIGINATING COURT:

Supreme Court at Brisbane – [2021] QSC 73 (Ryan J)

DELIVERED ON:

16 September 2022

DELIVERED AT:

Brisbane

HEARING DATE:

10 and 11 March 2022

JUDGES:

McMurdo and Bond JJA and Flanagan J

ORDERS:

1.   In appeal number 11321/21:

a.   Allow the appeal by:

              i.      setting aside order number 3 of the orders made by the primary judge on 31 August 2021; and

            ii.      varying paragraph 4(a) of those orders by deleting the following:

“(i) Dr Stephane Tyc, Dr Robert Meade, Mr Timothy Boyle or Mr Paul Kennard; or

(ii)”

b.   Otherwise dismiss the appeal.

2.   In appeal number 10237/22:

a.   Allow the appeal by:

              i.      varying paragraph 6(d) of those orders by adding the words “limited to damages for breach of the W-Band Development Agreement”;

            ii.      declaring that EMClarity Pty Ltd breached the 2019 Agreements by not delivering the radios by 20 July 2020;

b.   Otherwise dismiss the appeal.

3.   Dismiss the cross-appeal.

4.   Direct the parties to provide written submissions as to the costs of the proceedings in this Court, and of any order which should be made to vary the order for costs made on 31 August 2021, within 21 days from the delivery of this judgment, such submissions not to exceed five pages in length.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – PARTIES – where the appellant designs, produces and supplies radio technology – where the first respondent provides IT and telecommunication services – where the second respondent is a wholly-owned subsidiary of the first respondent – where in 2018, the appellant entered into an agreement for the development of radio products with the first respondent (“2018 agreement”) – where the 2018 agreement was partly performed – where in 2019 the appellant issued to the respondents at large quotations for the supply of radio products – where the second respondent responded to the quotations – where a contract or contracts for supply was formed (“2019 agreements”) – whether by the 2019 agreements the appellant contracted with the first respondent or the second respondent

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – where the 2019 agreements do not refer to the 2018 agreement – where the 2018 agreement was a development agreement while the 2019 agreements were referable to a contract or contracts for supply – where the 2019 agreements did not depend on further development of the radio products – where the parties to the 2018 agreement…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read EMClarity Pty Ltd v BSO Network Inc and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2022] QCA 177
Decision Date: 16 September 2022

CaseChat Overview and Summary

EMClarity Pty Ltd, the appellant, brought an appeal against BSO Network Inc and Apsara Networks Pty Ltd, the respondents. The appellant designs, produces, and supplies radio technology, while the respondents provide IT and telecommunication services. The dispute centred on the validity and interpretation of contracts for the supply of radio products between the parties. Specifically, the appellant sought to determine whether the contracts in question constituted variations to or displacements of a prior development agreement. Additionally, the appellant argued that its delay in delivering the products was justified by an extraordinary circumstance beyond its control.

The court was tasked with interpreting the 2019 agreements and determining whether they constituted variations to the 2018 development agreement. The court examined the language of the contracts, the parties' conduct during negotiations, and the payment terms. The court found that the 2019 agreements did not depend on further development of the radio products and that the parties to the 2018 agreement were different to those of the 2019 agreements. The court concluded that the 2019 agreements did not displace the 2018 agreement but rather constituted variations to it. The court also considered whether the 2019 agreements contained an implied term regarding the reasonable time for delivery of the products, a matter not contested on appeal.

The court assessed whether the appellant's delay in delivering the products constituted a repudiatory breach of the 2019 agreements. The court found that the appellant's implementation of a "quality review" and subsequent cancellation of orders for component parts indicated a lack of willingness to perform the contracts, amounting to repudiation. The court also examined whether the appellant breached an equitable duty of confidence by disclosing certain materials to a competitor company post-contract. The court held that the disclosure did not breach the equitable duty of confidence as it was an internal communication of the appellant's governing minds.

The court concluded that the appellant's delay in delivering the components was extraordinary and beyond its control, thus postponing the date upon which a reasonable time for delivery would have elapsed. The court dismissed the respondents' challenge to this finding and varied the primary judge's orders accordingly. The court allowed the appeal in part, varying the orders to reflect the breaches of the 2019 agreements and dismissing the cross-appeal. The court also directed the parties to provide written submissions on the costs of the proceedings.

Orders

Orders of the court

1. In appeal number 11321/21:

a. Allow the appeal by:

i. setting aside order number 3 of the orders made by the primary judge on 31 August 2021; and

ii. varying paragraph 4(a) of those orders by deleting the following:

“(i) Dr Stephane Tyc, Dr Robert Meade, Mr Timothy Boyle or Mr Paul Kennard; or

(ii)”

b. Otherwise dismiss the appeal.

2. In appeal number 10237/22:

a. Allow the appeal by:

i. varying paragraph 6(d) of those orders by adding the words “limited to damages for breach of the W-Band Development Agreement”;

ii. declaring that EMClarity Pty Ltd breached the 2019 Agreements by not delivering the radios by 20 July 2020;

b. Otherwise dismiss the appeal.

3. Dismiss the cross-appeal.

4. Direct the parties to provide written submissions as to the costs of the proceedings in this Court, and of any order which should be made to vary the order for costs made on 31 August 2021, within 21 days from the delivery of this judgment, such submissions not to exceed five pages in length.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Her Honour then reasoned as follows:“[380]I am prepared to proceed on the basis that there was an extraordinary delay in the delivery of these components, for reasons outside EMClarity’s control, and that EMClarity acted, at least at this point, with reasonable despatch in response to this supplier delay (even though they did not cancel that order and seek out another supplier). I am therefore prepared to proceed on the basis that this supplier delay postponed the date upon which a reasonable time for delivery would have elapsed beyond 31 January 2020. But, on the evidence, it is impossible for me to nominate a date in the future, at which a reasonable time for delivery would elapse, in any reasoned way.[381]Reasonable inferences about timing, which might have been available to me based on the date upon which components were actually delivered, are not available because the defendant cancelled its orders for relevant components. No other evidence was called on this issue. Nor does the evidence assist me with alternatives to the suppliers originally engaged.Conclusion[382]It is tempting to conclude that a reasonable time for delivery had elapsed by the date of trial, but I am concerned that to so conclude would involve some speculation on my part.” Her Honour there said that EMC cancelled its orders for relevant components. Earlier in her judgment, she recorded that this occurred after the McKay Brothers’ acquisition of EMC.[63][63]Judgment [223]. The evidence of Dr Baines referred to cancellations on 16 January and 9 March 2020. Correspondence between the parties, upon which the judge relied, showed an initial delay of some two months “due to one of the materials” which was followed by a further delay, advised by EMC to Apsara on 10 October 2019, and resulting in the “ship date” being revised to 16 December 2019, due to the supplier of one of the parts having to perform testing before confirming a date for the delivery of that part.[64][64]Judgment [220]-[222]. The respondents challenge the judge’s finding that there was an extraordinary delay in the delivery of components, for reasons outside EMC’s control, which postponed the date upon which a reasonable time for delivery would have elapsed beyond 31 January 2020.[65] It is said that this involved four errors by the judge.[65]Judgment [380]. First, it is said that it was not open on the evidence to find that the delays in the components needed for the production of the W Band radios were extraordinary or outside EMC’s control. It is said that EMC led no evidence that, by reasonable precautions or exertions, it could not have procured the necessary components elsewhere or earlier and so have avoided the delay which followed. The respondents emphasise the occurrence of the so-called quality review, by which the development of a W Band prototype and the production of Apsara’s radios ceased, and orders for the supply of relevant components were cancelled. From these circumstances, considered together with the estimates of the time required for delivery in the negotiations leading up to the making of the 2019 agreements, they say that there was nothing extraordinary or outside EMC’s control in the component delays.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	EMClarity Pty Ltd v BSO Network Inc & Anor [2022] QCA 177
PARTIES:	In Appeal No 11321 of 2021: EMCLARITY PTY LTD ACN 139 128 180 (appellant) v BSO NETWORK INC (first respondent) APSARA NETWORKS INC (second respondent) In Appeal No 10237 of 2022: BSO NETWORK INC (first appellant) APSARA NETWORKS INC (second appellant) v EMCLARITY PTY LTD ACN 139 128 180 (respondent)
FILE NO/S:	Appeal No 11321 of 2021 Appeal No 10237 of 2022 SC No 12112 of 2019
DIVISION:	Court of Appeal
PROCEEDING:	General Civil Appeals
ORIGINATING COURT:	Supreme Court at Brisbane – [2021] QSC 73 (Ryan J)
DELIVERED ON:	16 September 2022
DELIVERED AT:	Brisbane
HEARING DATE:	10 and 11 March 2022
JUDGES:	McMurdo and Bond JJA and Flanagan J
ORDERS:	1. In appeal number 11321/21: a. Allow the appeal by: i. setting aside order number 3 of the orders made by the primary judge on 31 August 2021; and ii. varying paragraph 4(a) of those orders by deleting the following: “(i) Dr Stephane Tyc, Dr Robert Meade, Mr Timothy Boyle or Mr Paul Kennard; or (ii)” b. Otherwise dismiss the appeal. 2. In appeal number 10237/22: a. Allow the appeal by: i. varying paragraph 6(d) of those orders by adding the words “limited to damages for breach of the W-Band Development Agreement”; ii. declaring that EMClarity Pty Ltd breached the 2019 Agreements by not delivering the radios by 20 July 2020; b. Otherwise dismiss the appeal. 3. Dismiss the cross-appeal. 4. Direct the parties to provide written submissions as to the costs of the proceedings in this Court, and of any order which should be made to vary the order for costs made on 31 August 2021, within 21 days from the delivery of this judgment, such submissions not to exceed five pages in length.
CATCHWORDS:	CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – PARTIES – where the appellant designs, produces and supplies radio technology – where the first respondent provides IT and telecommunication services – where the second respondent is a wholly-owned subsidiary of the first respondent – where in 2018, the appellant entered into an agreement for the development of radio products with the first respondent (“2018 agreement”) – where the 2018 agreement was partly performed – where in 2019 the appellant issued to the respondents at large quotations for the supply of radio products – where the second respondent responded to the quotations – where a contract or contracts for supply was formed (“2019 agreements”) – whether by the 2019 agreements the appellant contracted with the first respondent or the second respondent CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – where the 2019 agreements do not refer to the 2018 agreement – where the 2018 agreement was a development agreement while the 2019 agreements were referable to a contract or contracts for supply – where the 2019 agreements did not depend on further development of the radio products – where the parties to the 2018 agreement…