Kingdom Animalia LLC v Mecca Brands Pty Ltd

Kingdom Animalia LLC, the applicant, sought to challenge a decision of the Supreme Court of Victoria that upheld an exclusive distribution agreement between itself and Mecca Brands Pty Ltd, the respondent. The agreement provided for Mecca Brands to be the exclusive distributor and retailer of Kingdom Animalia’s cosmetic products within Australia, with a rolling term and a [redacted]-year notice of termination period. The applicant argued that the exclusive distribution arrangement constituted an unlawful restraint of trade, and that the judge erred in identifying Mecca Brands’ legitimate interest requiring protection by the restraint, and in finding the restraint reasonable as affording no more than adequate protection for Mecca Brands’ legitimate interest. The applicant also sought to challenge the trial judge's construction of an incomplete clause concerning force majeure, arguing that the incomplete clause was not severable from the agreement.

The legal issues before the court were whether the exclusive distribution arrangement constituted an unlawful restraint of trade, and whether the trial judge erred in identifying Mecca Brands’ legitimate interest requiring protection by the restraint, and in finding the restraint reasonable as affording no more than adequate protection for Mecca Brands’ legitimate interest. The court also needed to determine whether the incomplete clause concerning force majeure was severable from the agreement.

The court held that there was no error by the judge in finding the restraint reasonable, as it afforded no more than adequate protection for Mecca Brands’ legitimate interest. The court found that Mecca Brands had a legitimate interest in protecting its investment and goodwill in establishing and maintaining a distribution network for Kingdom Animalia’s products, and that the restraint was no wider than necessary to protect that interest. The court also held that the incomplete clause concerning force majeure was severable from the agreement, and that there was no arguable error in the trial judge's construction of the agreement. Leave to appeal was granted in relation to the restraint of trade issue, but the appeal was ultimately dismissed.

The court made no orders in relation to the severance of the incomplete clause, as the applicant had not succeeded in its appeal on that issue.