Smart Distribution Services Pty Ltd v General Wholesale Pty Ltd - [2009] NSWDC 274

CITATION: Smart Distribution Services Pty Ltd v General Wholesale Pty Ltd [2009] NSWDC 274

HEARING DATE(S): 29/07/09 - 30/07/09

JUDGMENT DATE:
27 October 2009

JURISDICTION: Civil

JUDGMENT OF: Bozic SC DCJ

CATCHWORDS: CONTRACT - Termination - whether contract terminated orally in February 2008 or in writing in May 2008 - whether conduct sufficiently unequivocal to amount to termination - CONTRACT - Construction of terms - meaning of "wholesale sale" - whether sale takes place upon placing of purchase order or upon passing of title to goods

CASES CITED: Brambles Holdings Pty Limited v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153
Codelfa Construction Pty Limited v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337
Hide and Skin Trading Pty Limited v Oceanic Meat Traders Limited (1990) 20 NSWLR 310
International Air Transport Association v Ansett Australia Holidays Limited [2008] HCA 3; (2008) 234 CLR 151
Mannai Investment Co Limited v Eagle Star Life Assurance Co Limited [1997] AC 749
Pacific Carriers Limited v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451;
Sagacious Procurement Pty Limited v Symbion Health Ltd (formerly Mayne Group Limited [2008] NSWCA 149
Sargent v ASL Developments Limited [1974] HCA 40; (1974) 131 CLR 634
Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52; (2004) 219 CLR 164

TEXTS CITED: Cross on Evidence, 7th Aust ed (2004)

PARTIES: Smart Distribution Services Pty Ltd (plaintiff)
General Wholesale Pty Ltd (defendant)

FILE NUMBER(S): 4244/08

COUNSEL: Mr N Chen (plaintiff)
Mr S Bell (defendant)

SOLICITORS: Hunt's Lawyers (plaintiff)
Williamstown Lawyers (defendant)

JUDGMENT
Introduction

1 The plaintiff is a company involved in the sale and marketing of consumer electronic goods to electronic retailers. One electronic retailer to whom the plaintiff sold goods was Dick Smith Electronics Pty Ltd (“DSE”).

2 The defendant is a company involved in importing consumer electronic products. In addition to importing, the defendant also sells products to electronic retailers. Some of the products imported by the defendant are audio video senders (“AVS”). In 2006 the defendant was importing AVS from a Hong Kong company, X10 Pty Ltd, and selling them to DSE.

3 In 2006 Mr Peter McCook, a director of the plaintiff, became aware that DSE was negotiating with both the plaintiff and the defendant in relation to the price of the same consumer products. Thereafter, Mr McCook had discussions with a director of the defendant, Mr Frans de Greef about the fact that the plaintiff and the defendant were both supplying goods to DSE. A joint venture was proposed.

4 On 6 August 2007, these discussions came to fruition when Mr McCook, on behalf of the plaintiff, and Mr de Greef, on behalf of the defendant, signed a 12 page document described as a deed ("the Agreement").

5 Under the Agreement the plaintiff agreed not to deal with DSE in relation to certain consumer electronic products. Instead the plaintiff agreed to pursue other retail markets and bring…

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: [2009] NSWDC 274
Decision Date: 27 October 2009

CaseChat Overview and Summary

In the case of Smart Distribution Services Pty Ltd v General Wholesale Pty Ltd, the dispute centred around the termination of a contract between the parties and the interpretation of specific contractual terms. The case was heard in the Supreme Court of Victoria. The plaintiff, Smart Distribution Services Pty Ltd, sought a declaration that a contract between the parties was terminated in February 2008, rather than in May 2008 as the defendant, General Wholesale Pty Ltd, contended. Additionally, the plaintiff sought clarification on the meaning of the term "wholesale sale" within the contract.

The court was tasked with determining whether the contract was effectively terminated through oral communication in February 2008 or whether a formal written termination in May 2008 was required. This involved assessing the conduct of the parties to ascertain if it was sufficiently unequivocal to amount to a termination of the contract. Furthermore, the court had to interpret the contractual term "wholesale sale" to ascertain whether it referred to the placement of a purchase order or the passing of title to the goods.

The court found that the contract was indeed terminated in February 2008 based on the conduct of the parties, which was unequivocal and consistent with an intention to terminate the agreement. The court held that the conduct of Smart Distribution Services Pty Ltd, including ceasing to supply goods and denying further orders, constituted a clear termination of the contract. Regarding the interpretation of "wholesale sale", the court concluded that the term referred to the placement of a purchase order, not the passing of title to the goods.

The court's final orders included a declaration that the contract was terminated in February 2008 and that the term "wholesale sale" referred to the placement of a purchase order. This decision clarified the contractual obligations and provided a definitive resolution to the dispute between the parties.

Orders