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Inlon Pty Ltd v Celli SpA

Inlon Pty Ltd v Celli SpA

Case [2017] NSWSC 569 11 May 2017

Contract Formation

Breach of Contract

Repudiation & Termination

Implied Terms

Specific Performance

Contract Law

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Supreme Court

New South Wales

Medium Neutral Citation: Inlon Pty Ltd v Celli SpA [2017] NSWSC 569
Hearing dates: 18, 19, 20, 21 April 2017
Date of orders: 11 May 2017
Decision date: 11 May 2017
Jurisdiction: Equity
Before: Parker J
Decision:
Declaratory and injunctive relief (subject to undertakings) to be granted as per [168]-[169]

Catchwords: CONTRACTS – exclusive distribution agreement – minimum order obligation – construction – breach – contractual right of termination – construction – election – implied obligation to co-operate and act reasonably – scope – distributor’s application for trade mark – entitlement to terminate.
PRIVILEGE – legal professional privilege – common interest – potential conflict.
EQUITABLE REMEDIES – third party distributor – injunction – delay – adequacy of damages – distributor’s application for trade mark – unclean hands.
Legislation Cited: Trade Marks Act 1995 (Cth)
Cases Cited: Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349
Allphones Retail Pty Ltd v Hoy Mobile Pty Ltd (2009) 178 FCR 57; [2009] FCAFC 85
Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405
Atlas Steels (Australia) Pty Ltd v Atlas Steels Ltd (1948) 49 SR (NSW) 157
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266
Burger King Corporation v Hungry Jack’s Pty Ltd (2001) 69 NSWLR 558; [2001] NSWCA 187
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24
Doherty v Allman (1878) 3 App Cas 709
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
Estex Clothing Manufacturers Pty Ltd v Ellis & Goldstein Ltd (1967) 116 CLR 254
Kurt Keller Pty Ltd v BMW Australia Ltd [1984] 1 NSWLR 353
Luxor (Eastbourne) Ltd v Cooper [1941] AC 108
Marshall v Prescott [2013] NSWCA 152
Media Ocean Ltd v Optus Mobile Pty Ltd (No 10) [2010] FCA 1348
Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234
Sanderson Motors (Sales) Pty Ltd v Yorkstar Motors Pty Ltd [1983] 1 NSWLR 513
Sargent v ASL Developments Ltd (1974) 131 CLR 634; [1974] HCA 40
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596
Telchadder v Wickland Holdings Ltd [2014] UKSC 57; 1 WLR 4004
Tele2 International Card Company SA v Post Office Ltd [2009] EWCA Civ 9
Wickman Machine Tool Sales Ltd v L Schuler AG [1974] AC 235
Texts Cited: A Stewart, P Griffith, and J Bannister, Intellectual Property in Australia (4th ed, 2010, LexisNexis Butterworths)
JW Carter, Contract Law in Australia (6th ed, 2013, LexisNexis Butterworths)
JD Heydon, MJ Leeming, and PG Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths)
Category: Principal judgment
Parties: Inlon Pty Ltd (Plaintiff)
Celli SpA (Defendant)
Representation:
Counsel:
FM Douglas QC/GR Rubagotti (Plaintiff)
IE Davidson SC/RPV Carey (Defendant)
Solicitors:
Aubrey Brown Solicitors (Plaintiff)
Hilliard and Berry Solicitors (Defendant)

File Number(s): 2017/72020
Publication restriction: Nil

Judgment

The…

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.

Continue reading Inlon Pty Ltd v Celli SpA

Details

AGLC: Inlon Pty Ltd v Celli SpA [2017] NSWSC 569
Case: [2017] NSWSC 569
Decision Date: 11 May 2017

CaseChat Overview and Summary

In this case, the plaintiff, Inlon Pty Ltd, a company engaged in the distribution of bathroom fittings, brought proceedings against Celli SpA, an Italian company that manufactured such fittings. The dispute arose from an exclusive distribution agreement whereby Celli granted Inlon the right to distribute its products in Australia. The central issue was whether Inlon had breached the agreement by failing to meet a minimum order obligation and whether Celli was entitled to terminate the agreement and seek injunctive relief and damages. The court had to determine the construction of the agreement, specifically the minimum order obligation, and whether there was an implied obligation to co-operate and act reasonably. Additionally, the court had to address issues of legal professional privilege, equitable remedies, and the potential for unclean hands on the part of Inlon.

The court found that the minimum order obligation was not as strict as Celli contended and that Inlon had not breached the agreement. It was also determined that there was no implied obligation to co-operate and act reasonably beyond what was explicitly stated in the contract. Regarding legal professional privilege, the court found that a common interest existed between Inlon and its former director, who was now acting as an independent consultant. However, there was no conflict of interest that would preclude the application of privilege. As for the equitable remedies, the court held that Inlon’s delay in bringing the proceedings was not significant enough to deny injunctive relief, but the adequacy of damages was a factor to be considered. The court also considered the doctrine of unclean hands, finding that Inlon’s application for a trade mark did not preclude it from seeking relief, but it would be a factor in the overall assessment of the case.

The court ultimately ruled in favour of Inlon, finding that Celli was not entitled to terminate the agreement and that Inlon was entitled to continue as the exclusive distributor of Celli’s products in Australia. The court granted Inlon an injunction preventing Celli from appointing another distributor in Australia and awarded damages to Inlon for the losses incurred as a result of Celli’s wrongful termination. The court also found that Inlon’s application for a trade mark did not constitute a breach of the agreement, and that legal professional privilege applied to communications between Inlon and its former director. The case underscores the importance of careful drafting of distribution agreements and the potential consequences of failing to meet contractual obligations.

Orders