Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd [2018] FCA 142

Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd [2018] FCA 142

Directed OE established a reasonable prima facie case that there was a legally enforceable supply agreement containing an implied term requiring reasonable notice of termination, and a reasonable prima facie case for a notice period of about 6 months, but only a weak case for 12 months. The balance of convenience favoured limited interlocutory relief because damages were not an adequate remedy, having regard to reputational harm and enforcement difficulties, and Directed OE had sufficient financial strength to support the undertaking as to damages. Relief was therefore granted only to restrain the fifth and twelfth respondents from acting on the Hanhwa Korea Notice until 17 May 2018.

Jurisdiction
Australia
Judgment Date
19 February 2018
Procedural Posture
Interlocutory Injunction Application / Interlocutory Application Dated 14 February 2018
Outcome
Application granted in part; limited interlocutory injunction granted until 17 May 2018 and costs reserved.
Legal Topics
['interlocutory Injunction' 'termination of Supply Arrangements' 'reasonable Notice of Termination' 'implied Terms' 'balance of Convenience' 'adequacy of Damages']
['practice and Procedure' 'commercial Contracts'] ['interlocutory Injunction' 'termination of Supply Arrangements' 'reasonable Notice of Termination' 'implied Terms' 'balance of Convenience' 'adequacy of Damages']

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Procedural Posture

Interlocutory Injunction Application / Interlocutory Application Dated 14 February 2018

Legal Issues

  1. 1 ['Whether Directed OE had a prima facie case that a legally enforceable long-term supply agreement existed between it and the Hanhwa Korea Parties rather than ad hoc purchase order contracts.' 'Whether any supply agreement contained an implied term requiring reasonable notice of termination.' 'What period of notice was arguably reasonable in the circumstances.' 'Whether the balance of convenience favoured granting interlocutory injunctive relief, including whether damages would be an adequate remedy and whether the undertaking as to damages was sufficient.']

Ratio Decidendi

Directed OE established a reasonable prima facie case that there was a legally enforceable supply agreement containing an implied term requiring reasonable notice of termination, and a reasonable prima facie case for a notice period of about 6 months, but only a weak case for 12 months. The balance of convenience favoured limited interlocutory relief because damages were not an adequate remedy, having regard to reputational harm and enforcement difficulties, and Directed OE had sufficient financial strength to support the undertaking as to damages. Relief was therefore granted only to restrain the fifth and twelfth respondents from acting on the Hanhwa Korea Notice until 17 May 2018.

Court Disposition

Application granted in part; limited interlocutory injunction granted until 17 May 2018 and costs reserved.

Orders

  • ['The fifth and twelfth respondents be restrained from acting upon the Hanhwa Korea Notice as defined in paragraph 129 of the statement of claim dated 13 December 2017 in this proceeding until 17 May 2018.' "The costs of and incidental to the applicant's interlocutory application dated 14 February 2018 be reserved."]