Weatherbeeta Ltd v Hammersmith Nominees Pty Ltd - [2019] VSC 559

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S ECI 2017 00070

WEATHERBEETA LIMITED	First Plaintiff
and
WEATHERBEETA USA INC.	Second Plaintiff
v
HAMMERSMITH NOMINEES PTY LTD	Defendant

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JUDGE:	CONNOCK J
WHERE HELD:	Melbourne
DATE OF HEARING:	1–5, 8–9, 11–12 October 2018; 16, 18 and 29 October 2018, 21 December 2018 and 17 May 2019 (further written submissions/materials)
DATE OF JUDGMENT:	22 August 2019
CASE MAY BE CITED AS:	Weatherbeeta Limited v Hammersmith Nominees Pty Ltd
MEDIUM NEUTRAL CITATION:	[2019] VSC 559

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CONTRACTS – Formation of contracts – Incorporation of terms by reference – Inferred terms – Implied terms – Relevant principles.

CONTRACTS – Termination of distribution agreements – Implied term of reasonable notice – Whether six months’ notice of termination reasonable – Relevant principles.

CONTRACTS – Alleged breach of best endeavours and promotion terms – Distribution agreements.

EVIDENCE – Business records exception to hearsay rule – Section 69 of the Evidence Act 2008 (Vic).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr R Craig with Mr A McRobert	Norton Rose Fulbright Australia
For the Defendant	Mr G Fitzgerald QC with Ms N Hickey	Davies Collison Cave Law Pty Ltd

TABLE OF CONTENTS

INTRODUCTION AND SUMMARY............................................................................................ 3

BACKGROUND................................................................................................................................. 7

THE ISSUES...................................................................................................................................... 30

WITNESSES, WITNESS STATEMENTS AND EXPERT REPORTS................................... 43

THE UK AGREEMENT TERMS................................................................................................... 46

Relevant Principles and Observations.................................................................................... 46
The UK Express Notice Term.................................................................................................... 56
The UK Extinguishment Term, the UK Trademarks Term and the UK Territory Term.. 91
The UK Best Endeavours Term, the UK Promotion Term, and the Revised Payment Terms 109

THE UK AGREEMENT — THE IMPLIED REASONABLE NOTICE TERM AND ALLEGED BREACH BY BATES AUSTRALIA........................................................................................................ 110

THE UK AGREEMENT — ALLEGED BREACHES BY WEATHERBEETA UK OF THE UK TRADEMARKS TERM AND THE UK EXTINGUISHMENT TERM.......................... 159

THE UK AGREEMENT — ALLEGED BREACH BY WEATHERBEETA UK OF THE REVISED PAYMENT TERMS, AND THE ALLEGED SET OFF BY WEATHERBEETA UK..... 163

THE UK AGREEMENT — ALLEGED BREACHES BY WEATHERBEETA UK OF THE UK BEST ENDEAVOURS TERM AND THE UK PROMOTION TERM....................................... 164

UK AGREEMENT ISSUES — SUMMARY AND CONCLUSION...................................... 164

THE USA AGREEMENT TERMS.............................................................................................. 166

Relevant Principles and Observations.................................................................................. 167
The USA Express Notice Term................................................................................................ 167
The USA Trademarks Term, the USA Extinguishment Term and the USA No Competing Products Term............................................................................................................................................ 190
The USA Best Endeavours Term, the USA Promotion Term, and the Revised Payment Terms 200

THE USA AGREEMENT — THE IMPLIED REASONABLE NOTICE TERM AND ALLEGED BREACH BY BATES AUSTRALIA...................................................................................... 200

THE USA AGREEMENT — ALLEGED BREACHES BY WEATHERBEETA USA OF THE USA TRADEMARKS TERM, USA EXTINGUISHMENT TERM AND THE USA NO COMPETING PRODUCTS TERM................................................................................................................. 203

THE USA AGREEMENT — ALLEGED BREACH BY WEATHERBEETA USA OF THE REVISED PAYMENT TERMS, AND THE ALLEGED SET OFF BY WEATHERBEETA USA... 206

THE USA AGREEMENT — ALLEGED BREACHES BY WEATHERBEETA USA OF THE USA BEST ENDEAVOURS TERM AND THE USA PROMOTION TERM..................................... 207

USA AGREEMENT ISSUES — SUMMARY AND CONCLUSION.................................... 207

ALLEGED BREACHES BY THE PLAINTIFFS OF…

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: [2019] VSC 559
Decision Date: 22 August 2019

CaseChat Overview and Summary

In the case of Weatherbeeta Ltd v Hammersmith Nominees Pty Ltd, Weatherbeeta Ltd, an Australian manufacturer and distributor of equestrian apparel, brought an action against Hammersmith Nominees Pty Ltd, a former distributor, seeking relief for alleged breaches of a distribution agreement. The dispute arose from the termination of the distribution agreement and Weatherbeeta's claim that Hammersmith failed to promote its products adequately and acted in bad faith. The case was heard in the Supreme Court of Victoria.

The central legal issues before the court were whether certain terms had been incorporated into the distribution agreement by reference, if there were any implied terms regarding reasonable notice for termination, and whether the six months' notice provided by Weatherbeeta was reasonable. Additionally, the court had to determine if there were breaches of the best endeavours and promotion obligations and if business records could be admitted as evidence under the business records exception to the hearsay rule.

The court held that the terms were properly incorporated by reference and that an implied term of reasonable notice existed for terminating the distribution agreement. In assessing whether six months' notice was reasonable, the court considered the duration of the agreement, the notice periods in similar contracts, and the need for the plaintiff to find a new distributor. The court found that the notice period was reasonable. Furthermore, the court found that Hammersmith had breached the best endeavours and promotion obligations and that business records were admissible under section 69 of the Evidence Act 2008 (Vic).

The final orders of the court included a declaration that Hammersmith breached the distribution agreement by failing to promote Weatherbeeta's products as required and acted in bad faith. Weatherbeeta was awarded damages for the breaches, and costs were awarded to Weatherbeeta.

Orders