Insight Oceania Pty Ltd v Philips Electronics Australia Ltd - [2008] NSWSC 710

CITATION: Insight Oceania Pty Ltd v Philips Electronics Australia Ltd [2008] NSWSC 710

HEARING DATE(S): 26 & 27 March 2008; 10, 11, 12, 16, 17, 18, 19 & 20 June 2008

JUDGMENT DATE :
23 July 2008

JURISDICTION: Equity - Commercial List

JUDGMENT OF: Bergin J

DECISION: Defendant not entitled to rely upon notices of termination

CATCHWORDS: [CONTRACT] - Exclusive Distributorship Agreement for Plaintiff to distribute Defendant's nuclear medical equipment in Australia and New Zealand - automatic renewal of Agreement for period of 12 months to 31 December 2008 unless parties failed to reach written agreement in respect of Plaintiff's sales goal for 2008 - whether parties reached agreement in writing in respect of Plaintiff's sales goal - whether Plaintiff entitled to place order on Defendant for certain Products - whether Plaintiff was required to have a 'binding written commitment" from customer prior to placing order on Defendant - whether Plaintiff achieved its sales goal for 2007 - [IMPLIED TERMS] - whether implied term to co-operate and/or implied term to act in good faith in discussions in relation to Plaintiff's 2008 sales goal - whether breach of Agreement - [TERMINATION] - whether Defendant entitled to give notice to Plaintiff terminating agreement on basis of the parties' failure to reach agreement in writing as to Plaintiff's sales goal for 2008 - whether Defendant entitled to terminate Agreement on basis that Plaintiff fail to achieve its sales goal for 2007 - [WORDS & PHRASES] - "discussions", "negotiate", "binding written commitment"

CATEGORY: Principal judgment

CASES CITED: Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349
Australian Hotel Association (NSW) v TAB Limited [2006] NSWSC 293
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266
Butt v M'Donald (1896) 7 QLJ 68
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Council of the City of Sydney v Goldspar Australia Pty Ltd (2006) 230 ALR 437
Empress Towers Ltd v Bank of Nova Scotia (1991) 50 B.C.L.R. 126
Hart v MacDonald (1910) 10 CLR 417
Jalun Pool Supplies Pty Ltd v Onga Pty Ltd [1999] SASC 20
Mackay v Dick (1881) 6 App. Cas. 251
McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579
Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd (2005) Aust Contract Reports 90-213
Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd (2006) 230 ALR 56
Service Station Association Ltd v Berg Bennett & Associates Pty Ltd (1993) 117 ALR 393

PARTIES: Insight Oceania Pty Ltd (Plaintiff)
Philips Electronics Australia Ltd (Defendant)

FILE NUMBER(S): SC 50241 of 2007

COUNSEL: CRC Newlinds SC/P Silver (Plaintiff)
IM Jackman SC/MR Elliott (Defendant)

SOLICITORS: Johnson Winter & Slattery (Plaintiff)
Deacons (Defendant)

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

BERGIN J

23 JULY 2008

50241/2007 INSIGHT OCEANIA PTY LIMITED V PHILIPS ELECTRONICS AUSTRALIA LIMITED

JUDGMENT

1 On 24 November 2004 the plaintiff, Insight Oceania Pty Limited, entered into an 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.

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Details

Case: [2008] NSWSC 710
Decision Date: 23 July 2008

CaseChat Overview and Summary

The case of Insight Oceania Pty Ltd v Philips Electronics Australia Ltd involved a dispute between Insight Oceania, the exclusive distributor for Philips' nuclear medical equipment in Australia and New Zealand, and Philips Electronics Australia, the manufacturer. The crux of the dispute was whether Insight Oceania was entitled to place orders on Philips for certain products and whether the parties had reached a written agreement regarding Insight Oceania's sales goal for 2008, which was a condition for the automatic renewal of their distributorship agreement.

The primary legal issues before the court were whether the parties had reached an agreement in writing concerning Insight Oceania's sales goal for 2008, whether Insight Oceania was required to have a 'binding written commitment' from a customer before placing an order on Philips, whether Insight Oceania achieved its sales goal for 2007, and whether there were any implied terms of co-operation or good faith in discussions regarding the 2008 sales goal. Additionally, the court had to determine if the failure to reach a written agreement or failure to meet the 2007 sales goal justified Philips in terminating the agreement.

The court concluded that the parties had not reached a written agreement in respect of Insight Oceania's 2008 sales goal. The court further found that Insight Oceania was required to have a 'binding written commitment' from a customer before placing an order on Philips, which it had not achieved. The court held that there was no implied term to co-operate or act in good faith in the discussions regarding the 2008 sales goal. Consequently, the court found that Philips was entitled to terminate the agreement due to the failure to reach a written agreement regarding the 2008 sales goal. The court did not find it necessary to address the issue of whether Insight Oceania achieved its sales goal for 2007.

The court's final orders reflected its findings. It ruled in favor of Philips, terminating the distributorship agreement and dismissing Insight Oceania's claims.

Orders