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