Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd

Pacific Brands Sport & Leisure Pty Ltd and Underworks Pty Ltd were involved in a legal dispute that reached the appellate court. The primary issue was whether Underworks had consented to the assignment of certain rights by Pacific Brands, or whether their conduct constituted a consent to the assignment. The secondary issues involved allegations of breach of the Sub-Licence agreement by Underworks, and whether Pacific Brands' termination of the Sub-Licence was in breach of an implied duty of good faith.

The court found that Underworks' conduct did not constitute consent to the assignment of rights by Pacific Brands. Instead, their actions were a holding measure while they sought a resolution to the matter. The court also found that the substantive obligations of the Sub-Licence had not been assigned to Pacific Brands and remained with Sara Lee. The court then considered the allegations of breach of the Sub-Licence by Underworks, finding that they were not in breach of the agreement. The court also found that Pacific Brands' termination of the Sub-Licence was not in breach of an implied duty of good faith.

The appeal was dismissed, and Pacific Brands was ordered to pay the costs of the appeal. The court's decision highlights the importance of evaluating the parties' conduct in the context of the negotiations and the nature of the agreement. The court also emphasised the importance of ensuring that the obligations of an agreement are properly assigned before a party can enforce them against another.