Rocla Pty Ltd v Plastream Pipe Technologies Pty Ltd - [2011] SASC 80

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
ROCLA PTY LTD v PLASTREAM PIPE TECHNOLOGIES PTY LTD & ANOR
[2011] SASC 80
Judgment of The Honourable Justice Anderson
12 May 2011
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - OFFER AND ACCEPTANCE - OFFER - OPTION FOR VALUABLE CONSIDERATION OR UNDER SEAL - EXERCISE OF OPTION - TIME FOR EXERCISE
DEEDS - ALTERATION OF DEED AFTER EXECUTION
On 22 August 2008, parties entered into a business sale agreement (BSA) with a third-party (Caliber Pty Ltd) for the purchase by the plaintiff of the Caliber business - Caliber carried on business using intellectual property sub-licensed to it by the first defendant which in turn licensed it from the second defendant as owner.
On the same date, parties entered into various ancillary agreements for the benefit of the plaintiff in carrying on the Caliber business – form of agreements attached as schedules to the BSA - first defendant entered into a new sub-licence deed with the plaintiff for the intellectual property as contemplated by the BSA (Sub-licence) – Sub-licence contained option to purchase specific equipment – plaintiff and first defendant later purported to vary the Sub-licence to extend the time for exercise of the option – option purportedly exercised within extended period.
Whether option exercised within time - whether time for exercise of option validly extended - whether consent of second defendant, as a non-party to sub-licence, required to extend option – whether Sub-licence part of a series of agreements (including the business sale agreement) and therefore a single transaction – whether option validly exercised in accordance with terms of Sub-licence.
Held: Period for exercise of option validly extended – parties to Sub-licence did not require consent of non-party to extend option – Sub-licence not part of other agreements comprising single transaction - option validly exercised within extended period.
PRIVITY OF CONTRACT
Whether privity principles prevent argument from second defendant, a non-party to Sub-licence.
Held: Privity does not prevent argument because second defendant joined in action and issues raised by plaintiff as to valid exercise of option.

ESTOPPEL - ESTOPPEL BY CONVENTION
Whether conventional estoppel arises on the facts – whether mutual adoption by the parties to the BSA of an assumed state of fact that no party would vary terms of ancillary agreements without consent of all parties.
Held: Requirements of conventional estoppel not made out.

TRADE AND COMMERCE - TRADE PRACTICES ACT 1974 (CTH) AND RELATED LEGISLATION - CONSUMER PROTECTION - UNCONSCIONABLE CONDUCT
Whether conduct of plaintiff and first defendant in extending period for exercise of option was unconscionable.
Held: Conduct not unconscionable.

PROCEDURE - MISCELLANEOUS PROCEDURAL MATTERS - DECLARATIONS
EQUITY - GENERAL PRINCIPLES - MISTAKE - EQUITABLE RELIEF IN CASE OF MISTAKE - RECTIFICATION
Declarations – whether declarations should be made regarding construction of document.
Held: Declarations sought required hypothetical or academic answers – not appropriate for declarations – privity of contract means declarations by non-party not appropriate.

EQUITY - GENERAL PRINCIPLES - MISTAKE - EQUITABLE REMEDIES - RECTIFICATION
Rectification – whether document…

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: [2011] SASC 80
Decision Date: 12 May 2011

CaseChat Overview and Summary

Rocla Pty Ltd, the plaintiff, filed a suit against Plastream Pipe Technologies Pty Ltd, the second defendant, and others, regarding the validity of an option to purchase specific equipment under a sub-licence deed. The sub-licence deed was part of a series of agreements executed on 22 August 2008, which included a business sale agreement between Rocla and Caliber Pty Ltd. The sub-licence deed contained an option for Rocla to purchase certain equipment within a specified period, which was later extended by an agreement between Rocla and the first defendant. The primary issues before the court were whether the extended period for exercising the option was valid, if the consent of the second defendant was necessary, and if the sub-licence deed was part of a single transaction with the other agreements. Other issues included whether privity of contract and estoppel principles prevented the second defendant's argument, if the conduct of the parties was unconscionable, and if there was a basis for rectification or damages.

The court determined that the period for exercising the option was validly extended, and the consent of the second defendant was not required. The sub-licence deed was not part of a single transaction with the other agreements. The privity of contract did not prevent the second defendant's argument because they had joined in the action, and issues raised by the plaintiff regarding the valid exercise of the option were relevant. The court found that the requirements of conventional estoppel were not met, and the conduct of the parties was not unconscionable. The court also held that rectification was inappropriate because the party seeking it was not a party to the contract, and there was no entitlement to damages even if the option was not validly exercised.

Based on the findings, Rocla was entitled to the first two declarations it sought, which confirmed the variation of the option period and the valid exercise of the option. The court did not grant the third and fourth declarations due to insufficient details about the agreement for the continuation of supply of the SRP strip pending the completion of the litigation. The first defendant was a beneficiary of the declarations, while the second defendant, SRLA, was not entitled to the orders or damages it sought. The court planned to hear the parties on costs.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

ANDERSON J

For these reasons, as I say, had the option not been validly exercised, which may have entitled SRLA to damages, I would have been unable to find any damages proved for the reasons I have given.7 Conclusion and orders On the basis of my findings, Rocla is entitled to the first two declarations it seeks.1.A declaration that clause 11.1 of the SRP Technology Licence Deed was varied such that the words “at any time within the first 20 months of the Term” were replaced by words to the effect of “on or before 21 May 2010”.2.A declaration that the plaintiff gave notice to the first defendant in accordance with clause 16 of the SRP Technology Licence Deed on or before 21 May 2010 and consequently exercised the option in clause 11 of the SRP Technology Licence Deed. So there will be declarations in those terms. As to the third and fourth declarations sought, I will hear the parties as I do not have sufficient details of the agreement reached between the parties for the continuation of supply of the SRP strip pending the completion of this litigation. The first defendant is also the beneficiary of the declarations above as it supported the remedies sought by the plaintiff. SRLA is not entitled to the orders it seeks and is not entitled to damages. I will hear the parties on costs.

Ratio Decidendi

Legal Principle Established

Established by: ANDERSON J

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