Ward Equipment Ltd v Preston

Case [2017] NZCA 444


IN THE COURT OF APPEAL OF NEW ZEALAND

CA145/2017
[2017] NZCA 444

BETWEEN

WARD EQUIPMENT LIMITED
First Appellant

TPL LIMITED
Second Appellant

AND

MARKUS JOHANNES PRESTON
First Respondent

PRESTON HIRE (NZ) LIMITED
Second Respondent

PRESTON HIRE GROUP NZ LIMITED
Third Respondent

MEVON PTY LIMITED (ACN 002 601 363)
Fourth Respondent

Hearing:

30 May 2017

Court:

Kós P, French and Winkelmann JJ

Counsel:

DJG Cox for Appellants
J D McBride and P T Hall for Respondents

Judgment:

10 October 2017 at 2.30 pm

JUDGMENT OF THE COURT

AThe appeal is allowed.

BThe declaration made in the High Court is set aside.

CDeclaration made that the licence agreement was not terminable at will and on reasonable notice.

DThe respondents must pay the appellants one set of costs for a standard appeal on a band A basis and usual disbursements.

ECosts in the High Court are to be addressed in that Court.

____________________________________________________________________

REASONS

French and Winkelmann JJ  [1]
Kós P  [84]

FRENCH AND WINKELMANN JJ

(Given by Winkelmann J)

  1. The first appellant, Ward Equipment Ltd, and the fourth respondent, Mevon Pty Ltd, are parties to a licence agreement by which Mevon licensed Ward to import, hire and sell a range of patented construction products, and also granted the exclusive right to the use of the Preston trade mark in New Zealand.[1]  The second appellant, TPL Ltd, claims to be a sub-licensee under that agreement.  The issue on this appeal is whether Mevon was entitled to terminate the licence agreement on reasonable notice and, if so, whether three months’ notice was enough. 

    [1]Mevon is part of the Preston group of companies, owned by the first respondent Mr Markus Preston.

  2. In the High Court Fogarty J found that the licence agreement was subject to an implied term that it was terminable on reasonable notice in the absence of breach of the contract, and that three months was reasonable notice.[2]  Ward and TPL now appeal that finding.  They argue that the implication of such a term is inconsistent with the express agreement reached between the parties.  Alternatively, if a term requiring reasonable notice is to be implied, three months is not reasonable notice.

    [2]Ward Equipment Ltd v Preston [2017] NZHC 240 [HC judgment] at [41] and [51].

  3. For reasons we set out below we conclude that Fogarty J erred in construing the licence agreement as terminable on reasonable notice.  We do not therefore go on to consider Ward and TPL’s second submission that if the licence agreement were terminable on reasonable notice, three months’ notice was not enough.

Factual background

  1. In 1998 Mr Timothy McMaster, as director of an equipment‑hire company called The Trestle Plank & Ladder Hire Co Ltd (Trestle Hire), negotiated a licence agreement with Patent Marketing Corp Pty Ltd, a company associated with Mr John Preston — the inventor of a number of innovative items of construction equipment and machinery. 

The terms of the licence agreement

  1. The licence agreement granted rights to the use of intellectual property which included copyrights, patents…

Continue reading Ward Equipment Ltd v Preston

Sign in free to access the full text

Details
AGLC
Ward Equipment Ltd v Preston [2017] NZCA 444
Case
[2017] NZCA 444
Decision Date

CaseChat Overview and Summary

Ward Equipment Ltd and TPL Ltd appealed against a High Court decision that their licence agreement was terminable on reasonable notice by Mevon Pty Ltd. Mevon had given Ward three months’ notice of termination of the agreement, which Ward had previously assumed when it took over the business of Trestle Hire, a company which had originally entered into the licence agreement with Mevon. The Court of Appeal allowed the appeal. The Court found that the licence agreement was not terminable on reasonable notice. The Court found that the agreement contained detailed provisions governing termination, which did not include the right to terminate on reasonable notice. The Court found that the nature of the contract did not support a construction that it was terminable on reasonable notice. The Court found that there was no preference or presumption in the law that commercial contracts, or licence agreements, should be construed as terminable on reasonable notice. The Court of Appeal set aside the declaration made in the High Court and declared that the licence agreement was not terminable at will and on reasonable notice. The respondents were ordered to pay the appellants one set of costs for a standard appeal on a band A basis and usual disbursements. Costs in the High Court were to be addressed in that Court.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.