(e) that Apple was unaware of the view or contemplations of Optus; (f) that the second notice breached the good faith term pleaded because: (i) the termination reason was known but not communicated to Apple prior to entry into the agreement; (ii) Apple was not given a genuine opportunity to tender as a distributor under the new arrangements; (iii) the reason for termination had nothing to do with any failure on the part of Apple; and (g) the second notice breached the extant reason term as the reason was in existence and in contemplation of Optus as at 23 November.
14 The second claim of Apple is on entry into the contract it was not aware of any reason in contemplation of Optus upon which it might rely to exercise the termination power and it assumed that no such reason was in contemplation. This is claimed to give rise to an estoppel preventing Optus from relying on the second notice of termination.
The good faith term
15 It is now established that such a term may be implied in contracts and that such duty applies to both performing obligations and exercising rights. Alcatel Australia Limited v Scarcella (1998) 44 NSWLR 349. Many of the relevant authorities are referred to in the judgment of Sheller JA in that case at pages 363-369. Whether or not the term must be implied in all contracts is perhaps not finally established, but I do not think that matters here. Although the contract here is a commercial contract there is no reason not to imply the term.
16 Three reasons are pleaded by the statement of claim for their being a breach of this term. I will deal with them out of order. The second reason is that there was a breach of good faith or failure to act fairly in terminating without giving Apple the opportunity to tender as a distributor under the new arrangements. That would, I think, place an unjustified condition upon a contractual right and the necessity to determine whether Apple was entitled to be considered for one of a reduced number of positions.
17 The third reason is that the termination was arbitrary or capricious or for an extraneous purpose because the termination reason had nothing to do with the conduct of Apple or its performance as distributor. If a contract allows for termination for any reason then it does not seem to me to be unreasonable to terminate it for a reason unconnected with conduct of a contracting party. If a system of operation is decided to be inappropriate, that would be a proper reason for changing that system. The claim under this head - which was much the same as failure to allow an opportunity to tender - that the selection criteria was not applied fairly in view of Apple's record, was not established. Although sales figures gave some support for this Mr Rigby gave an explanation of those figures which would at least give room for doubt.
18 I return to the first reason, namely that it was a breach of good faith to terminate because Optus wished to implement new distribution arrangements requiring fewer distributors and this change was based upon a view held or contemplated on 23 November 2000.
19 Optus is a major commercial enterprise; Apple, while not so large, is also a big enterprise. It was accepted that at any time changes must be in contemplation for such organisations. Mr Cheng himself said he would have expected changes in distribution arrangements over the three year expected term. He knew the details of the termination clause but asked nothing about it. There was no suggestion he was relying on past practices with other distributors. While I am inclined to think, and Mr Rigby seemed to accept, that it would have been better not to enter into the agreement other than for a trial period, that does not seem to me to translate to a holding that there was a breach of good faith in exercising rights under a contract when there was a proper reason to exercise those rights. Even if it were thought that there was lack of good faith in entering into the contract, I am by no reason certain that this should effect the entitlement to exercise rights under the contract. Businesses as large as Optus must constantly be considering changes to their modes of operation and certainly could not be expected to disclose these considerations in a way which might make them public. For instance, had they made the disclosure to Apple, one might well have expected that this information would somehow would get into the public arena, possibly causing loss of other distributors concerned about the future. As there was clearly considerable work to be done before any final new distribution system was decided upon, it does not seem to me that it was unreasonable to enter into the distribution agreement with Apple taking into account the fact of its being a commercial agreement in a competitive industry.
Implied term - extant reason under paragraph 20 of the amended statement of claim.
20 This term is not made out. The contract is perfectly clear without it and is effective without it. It does not go without saying.
Estoppel
21 There is no evidence that Mr Cheng assumed that "Optus did not have any contemplation or any reason to exercise the powers under 17.3 on 23 November 2000". He did not say that he did. He did not ask about this. He did not say he relied upon silence and in any event misrepresentation was not part of the plaintiff's claim which was founded upon the principles outlined in Thompson v Palmer (1933) 49 CLR 507. None of the matters referred to by Dixon J at page 549 as giving rise to an estoppel in pais or estoppel by convention are present in this case. Conventional estoppel requires an assumption by both parties as the basis of their relationship. That did not exist here.
Result
22 It follows from this that the plaintiff's claim, so far as it is based on the second notice of termination, fails and the defendant is entitled to a declaration on the cross-claim that upon the expiry of thirty days from service of the second notice of termination, the agency agreement will be terminated.
23 As the proceedings were originally founded upon the first notice of termination I will hear argument as to whether or not any declarations are required so far as it is concerned and any question of costs.