Rehau Pte Ltd v AAP Industries Pty Ltd

Rehau Pte Ltd (appellant) appealed from a judgment of the Supreme Court of New South Wales, which had dismissed its claim against AAP Industries Pty Ltd (respondent) for breach of contract. The dispute concerned whether an implied term of exclusivity should be read into a distribution agreement between the parties. The appeal was heard in the Court of Appeal of New South Wales by Macfarlan JA, Sackville AJA, and Emmett AJA.

The primary legal issue before the Court of Appeal was whether the trial judge erred in finding that the distribution agreement did not contain an implied term that Rehau Pte Ltd would be the exclusive distributor of AAP Industries Pty Ltd's products in Australia. This involved considering the principles governing the implication of terms into contracts, particularly in circumstances where a party alleges a breach of an implied term of exclusivity. The court also considered issues relating to costs, including the effect of a Calderbank offer and the application of proportionate costs orders under rule 42.34 of the Uniform Civil Procedure Rules 1999 (NSW).

The Court of Appeal affirmed the trial judge's conclusion that no term of exclusivity should be implied into the agreement. The judges applied the established test for implying terms, which requires that the term be necessary to give business efficacy to the contract and that it be so obvious that it "goes without saying." They found that the evidence did not support the implication of such a term, as the contract, as written, was capable of operating without it and the alleged implied term was not obvious. The court also addressed the costs issues, noting that the Calderbank offer made by AAP Industries Pty Ltd was relevant to the exercise of discretion regarding costs.

The appeal and cross-appeal were dismissed. Rehau Pte Ltd was ordered to pay AAP Industries Pty Ltd's costs of the appeal, and AAP Industries Pty Ltd was ordered to pay Rehau Pte Ltd's costs of the cross-appeal.