Plaintiff v Defendant

1 This proceeding concerns questions relating to the ownership and control of "PINK LADY" trademarks in Chile and, in particular, as to the operation, meaning and effect of an option deed dated 12 June 2007 between the Plaintiff ("APAL") and the Defendant ("PLA"). In the reasons which follow, this deed is referred to as the "Option Deed"[1] and a Deed of Variation between APAL and PLA which was not executed is referred to as the "Deed of Variation".[2]

2 The trial, which has presently only been set down to determine questions of liability, raises the following questions for determination:[3]

JOINT STATEMENT OF ISSUES

In this statement of issues, the plaintiff (APAL) and the defendant (PLA) list the principal matters in dispute between them, for determination in this proceeding.

A. Exercise of the Option

A.1 Did APAL exercise the Option under the Option Deed expressly, alternatively impliedly, such that the licence under clause 5.1 of the Option Deed (clause 5.1 Licence) was enlivened and became operative?

A.2 Is APAL estopped from denying that the Option was exercised by APAL and that the clause 5.1 Licence was enlivened and became operative?

1. The meaning and effect of the Option Deed and the clause 5.1 Licence

Issues arising on APAL's case

B.1 Upon a proper construction of the Option Deed, does the clause 5.1 Licence relate only to the use of the trade marks listed in Schedule 1 of the Option Deed, and not any other trade marks, names or devices?

B.2 Upon a proper construction of the Option Deed, does the clause 5.1 Licence relate only to the use of the relevant trade marks with respect to trade in fresh whole apples and processed apples of Cripps Pink variety, and not Rosy Glow, Maslin Pink, Lady-in-Red or any other variety of apples or fruit?

B.3 Upon a proper construction of the Option Deed, does the clause 5.1 Licence relate only to the use of the relevant trade marks with respect to trade in the relevant apples between Chile and North America (United States of America, Canada and Mexico), and not between any other territories?

B.4 Upon a proper construction of the Option Deed, does the clause 5.1 Licence include the right to sub-license or assign any rights (and, if so, what)?

Issues arising on PLA's case

B.5 Was the Option Deed varied, from about 2008, such that the trade marks the subject of the clause 5.1 Licence came to include the "updated Flowing Heart logo"?

B.6 Was the Option Deed varied, on or about 17 March 2008, such that the definition of "Products" was substituted for a new definition (as set out in an unsigned Deed of Variation - Option Deed)?

B.7 Upon a proper construction of the Option Deed:

1. Was the grant of the Option by PLA to APAL made in consideration of, and solely upon terms that, in the event that it exercised the Option, APAL thereby granted the clause 5.1 Licence to PLA?
2. Does APAL's ability to enjoy the rights as registered proprietor of the relevant trade marks assigned to it by PLA only continue for as long as APAL continued to provide to PLA the full benefit of the clause 5.1 Licence?

1. Is APAL obliged to re-assign to PLA the ownership of the trade marks the subject of the Option Deed if APAL, in breach of the Option Deed, denies to PLA the full benefit of the clause 5.1 Licence?

B.8 Are there implied terms of the Option Deed that:

1. APAL would not do anything that would or might have the effect of depriving PLA of the full benefit of the clause 5.1 Licence?
2. APAL would not do anything that would or might have the effect of derogating from the grant of any of the rights conferred on PLA under the clause 5.1 Licence?

1. Should APAL, in breach of the Option Deed, deny to PLA the full benefit of the clause 5.1 Licence, APAL would be obliged to re-assign to PLA the ownership of the trade marks the subject of the Option Deed?

1. Whether PLA breached and repudiated the Option Deed (as alleged by APAL)

C.1 Has PLA breached clauses 6.4(b) and/or 6.4(d) of the Option Deed, as alleged by APAL?

C.2 If PLA has so breached the Option Deed:

1. Has PLA thereby repudiated the clause 5.1 Licence under the Option Deed (if enlivened and operative)?
2. Has APAL accepted the said repudiation and terminated the clause 5.1 Licence?

1. Is PLA liable to pay APAL damages (and, if so, in what amount)?

1. Whether APAL breached and repudiated the Option Deed (as alleged by PLA)

D.1 Has APAL breached the Option Deed, as alleged by PLA by:

1. applying to register the updated flowing heart logo;
2. purporting to limit the geographical reach of the clause 5.1 Licence to United States of America and Mexico, and to exclude Canada;

1. asserting that the clause 5.1 Licence applies to Cripps Pink variety of apples only, and not to the Rosy Glow variety of apples?

1. Has APAL repudiated the Option Deed?
2. If so, is PLA entitled to accept the repudiation and terminate the Option Deed and the clause 5.1 Licence?

1. If PLA has accepted APAL's repudiation, is APAL obliged to re-assign the registration of the relevant trade marks to PLA, and to desist from purporting to exercise the rights of the registered proprietor of the relevant trade marks?

1. If APAL is entitled to retain its registration of the relevant trade marks, does PLA's right to the clause 5.1 Licence continue to subsist in full force and effect?
2. Is APAL liable to pay PLA damages (and, if so, in what amount)?

1. Misleading or deceptive conduct (as alleged by PLA)

E.1 Did APAL represent to PLA that, if PLA assigned its rights to the relevant trade marks:

1. APAL would grant the clause 5.1 Licence to PLA?
2. The clause 5.1 Licence would continue in perpetuity and would be royalty free?

1. Subject only to compliance with the quality control provisions, APAL would not revoke the clause 5.1 Licence or any part of it?

1. If APAL did purport to revoke the clause 5.1 Licence or any part of it, APAL would re-assign to PLA the rights to the relevant trade marks?

1. Was the conduct within the extended operation of the Trade Practices Act 1974 (Cth) (TPA), by reason of s 6(3)(a)?
2. Was the conduct in trade or commerce?

1. Did PLA enter into the Option Deed in reliance on the said representations?

1. Were the said representations false and untrue?
2. Did APAL engage in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the TPA?

E.3 If APAL did so contravene s 62 of the TPA, is APAL liable to pay PLA damages under s 87 of the TPA (and, if so, in what amount)?

3 APAL, in its submissions, addresses these issues, as does PLA, though the structure of the submissions is somewhat different. Consequently, it is most convenient - and, I think, clearer - to address these issues under a variety of subject heads then, in conclusion, to state briefly the position reached with respect to each issue by reference, whether express or implied, to these reasons.

4 APAL commenced this proceeding by a writ and statement of claim dated 7 April 2014 seeking declarations as to the status and meaning of the Option Deed and the parties' rights, as well as injunctive relief and damages. PLA has denied the claims and filed a counterclaim.

5 A trial as to issues of liability was conducted between 24 and 27 August 2015. The principal issues for determination were set out in the Joint Statement of Issues dated 11 August 2015 which was settled and filed by agreement between the parties in advance of the trial.[4] APAL also filed an outline of opening submissions dated 11 August 2015, and PLA filed an outline of opening submissions dated 18 August 2015.[5]

6 During the trial, PLA amended its pleading to introduce a new claim that the Option Deed was varied and, in the alternative, that the parties agreed that PLA would grant to APAL a new option ("New Option"). PLA abandoned the claim under s 52 of the Trade Practices Act 1974 (Cth) (now the Competition and Consumer Act 2010 (Cth)).

(a) APAL's Amended Statement of Claim dated 30 April 2014;

(b) PLA's Second Amended Defence and Amended Counterclaim dated 25 August 2015;

(c) PLA's Further and Better Particulars dated 25 August 2014 (served in response to APAL's request dated 31 July 2014); and

(d) APAL's Amended Reply and Defence to Counterclaim dated 4 September 2014.

8 At the trial, APAL called two witnesses, Jon Maxwell Durham and Garry Thomas Langford, each of whom provided a witness statement and was cross-examined. Mr Durham held various senior roles over numerous years with APAL and its predecessors until his retirement in October 2013. Mr Langford has held various roles at APAL and its predecessor entity since 1997, and he has been the manager of APAL's intellectual property division since November 2010. Relevantly, they were successively the responsible officers of APAL in respect of the matters the subject of this proceeding.

9 PLA called three witnesses, Lynnell Brandt (the controlling shareholder of PLA), Patrick Ballew (a United States lawyer who acted for PLA and others) and Ms Gabriela Paiva Hantke (a Chilean lawyer who acted for PLA and others). Each provided a witness statement - except for Mr Brandt, who provided two witness statements - and was cross-examined. By an agreed list of objections that was tendered with the witness statements, parts of PLA's witness statements were admitted as relevant to the witness's state of mind only.[6]

10 In addition to the witness statements and the list of objections, APAL tendered an amended version of Annexure A to APAL's Amended Statement of Claim dated 30 April 2014 which the parties agree is accurate,[7] and the parties tendered a number of documents from the Court Book as identified in a Consolidated Tender List dated 3 September 2015.

11 An Amended Joint Chronology dated 4 September 2015 has been prepared and filed by the parties, with references to the documentary evidence.

12 I note that many of the documents relied upon by the parties contain minor discrepancies as to date or time. I accept the Plaintiff's submission that these discrepancies are an artefact of the international dateline, across which the parties communicated at various times.[8]

13 APAL is a not-for-profit company which is the peak representative body in Australia for commercial apple and pear growers. APAL has developed and maintained the "PINK LADY" brand and an international portfolio of trademarks for apples and other products.

14 The "PINK LADY" brand was first used in connection with the Cripps Pink apple variety that was bred in Western Australia in the 1970s by crossing Golden Delicious and Lady Williams apple varieties. The Cripps Pink apple variety and some other apple varieties derived from it have since been developed and successfully marketed under the "PINK LADY" brand around the world. APAL is the successor in title to Australian Apple and Pear Growers' Association Inc ("AAPGA").

15 By 2007, APAL was the registered proprietor of "PINK LADY" trademarks in many countries around the world, but not in the USA and Mexico - where a US company, Brandt's Fruit Trees Inc ("BFT"), is the registered proprietor - Switzerland or Chile. As the owner of certain "PINK LADY" trademarks in the USA and Mexico,[9] BFT has granted an exclusive licence to PLA to manage those trademarks for it. Additionally, BFT is the exclusive licensee from APAL to exploit certain "PINK LADY" trademarks in Canada (under the "Canada Agreement").[10] BFT has held these rights since 2005. PLA is also a US company (incorporated in the State of Washington) under common ownership with BFT.

16 In Chile, Viveros Requinoa Ltda ("VR"), a tree nursery business which assisted APAL in Chile over several years, had registered two flowing heart device trademarks ("the VR marks") and APAL and VR were in negotiations for the transfer of those trademarks to APAL. Chile is a major southern hemisphere producer of apples, and is now the largest southern hemisphere exporter of "PINK LADY" branded apples. In addition to having become a major producer and exporter of Cripps Pink apples, Chile has significant plantings of Rosy Glow apple trees.[11] The evidence is that Chile has the prospect of becoming a major producer and exporter of Rosy Glow apples.[12]

17 APAL, BFT and VR were members of the International Pink Lady Alliance ("IPLA"), an alliance of various stakeholders in the "PINK LADY" brand worldwide which commenced in about 1999.[13] PLA became a member from June 2004.[14] Mr Durham was the inaugural chairman of IPLA and he has been involved throughout. The IPLA was established to provide a forum for key parties with interests in the international "PINK LADY" business, for the exchange of information, to assist in the development of policy surrounding the "PINK LADY" brand (to deal with matters such as royalties, quality standards and branding arrangements) and to provide recommendations to the owners of the intellectual property.[15]

18 IPLA does not itself own any intellectual property rights but under clause 4 of the IPLA Operating Agreement,[16] an agreement which was executed on 28 September 1999[17] and which was in force at relevant times, the parties agreed to meet at least every year and[18]

to establish a consistent advertising and marketing strategy for use of the PINK LADY Trademarks and the methods of selling apples under the PINK LADY Trademarks, and to establish a uniform and consistent design for all packaging used to store, ship, display, and sell PINK LADY brand apples.

19 Advertising and marketing strategies were to be voted on, with a 75% vote binding on all. Clause 4 continues: [19]

Once voted upon and approved, the agreed upon strategy and packaging design shall be used by all parties to this Agreement, regardless of whether a particular party has agreed or disagreed with the approved strategy or packaging design.

20 The recitals to the IPLA Operating Agreement recorded that: AGWA (later, the Department of Agriculture and Food, Western Australia - "DAFWA") had developed the "PINK LADY" trademark and had filed registrations in many countries (recital 2.2); AGWA had licensed foreign patent (ie plant variety) rights to many entities, including BFT (recital 2.3); AAPGA (later, APAL) had licensed foreign trademark rights to various entities including BFT in respect of Canada (recital 2.4); AGWA had assigned all foreign trademark rights to AAPGA (recital 2.5); and BFT owned the common law and statutory rights in the "PINK LADY" trademark in the US and Mexico (recital 2.6).

21 In view of the purpose of the IPLA and clause 4 of the IPLA Operating Agreement, membership of the IPLA carried with it a requirement to use "PINK LADY" trademarks (include APAL's) in accordance with the strategy and designs resolved upon by the IPLA members from time to time for the purposes of international export trade in apples, and therefore a permission or licence in respect of such use by members of IPLA.

22 The principal trademark in use in trade of "PINK LADY" branded apples in 2006 and 2007 was the "PINK LADY flowing heart with kangaroo" combined device. At that time, PLA conducted its commercial activities in Chile by issuing export licences to Chilean exporters of "PINK LADY" apples using the "PINK LADY flowing heart with kangaroo" combined device.

23 Prior to 2006 or 2007, APAL and its predecessors had applied for, but failed to obtain, registration of "PINK LADY" trademarks in Chile.[20] Given the significance of Chile as a producer and exporter of Cripps Pink apples, APAL's inability to obtain trademark registration of the "PINK LADY" brand in Chile had been a major issue for APAL for many years and an impediment to its ability to effectively manage the "PINK LADY" brand in Chile.[21]

24 Where apples bearing the "PINK LADY" brand are exported from a territory where one party owns the trademark rights to a territory where another owns those rights, the management of those rights can be complicated. It was necessary for a seamless mechanism to be utilised to permit the trademark rights of both owners to be utilised without undue cost and trouble. The mechanism utilised was called the "Pier-to-Pier System".[22]

25 In late 2006 and early 2007 PLA applied to register in Chile certain trademarks in the "PINK LADY" brand for use with the trade in apples.[23] In June 2007, PLA agreed to assign those trademarks to APAL.[24] PLA contends that it agreed to do so subject to APAL granting back to it an exclusive, perpetual[25] and royalty free licence permitting it to use, and license others to use, those marks in the export of certain apple varieties from Chile to the USA, Canada, and Mexico (these countries collectively described as "North America").[26] PLA says that it was vitally interested in maintaining its ability to control that export channel.[27] The exclusive licence in clause 5.1 of the Option Deed was to come into operation "in the event that APAL exercises" the option. It is common ground that no "Option Notice" in the form of the Annexure A to the Option Deed[28] was signed by APAL and served on PLA. Nevertheless, it is, as contended by PLA, common ground that PLA assigned the trademark applications that were on foot, and sold for nominal consideration one trademark that had become registered to PLA, in April and May 2008.[29]

26 APAL maintains that absent service of the Option Notice, the option was not exercised by APAL. It says that the assignments of the trademarks were done by PLA outside the terms of the Option Deed and unrelated to it. APAL says that, as a consequence, the exclusive licence to PLA under clause 5.1 of the Option Deed to use the Chilean registered trademarks in the trade channel between Chile and North America was never enlivened and that thus, PLA never had any rights to use the trademarks. Moreover, in all the circumstances, APAL says that the pending applications for trademarks in Chile and the prospective right to use the marks applied for under clause 5.1 of the Option Deed were of little, if any, operational value to PLA. Prior to the entry into the Option Deed, APAL says that PLA was annually licensing the export of apples from Chile under the "PINK LADY flowing heart with kangaroo" logo. The PLA export licences were, APAL says, superseded by APAL and PLA issuing joint export licences from May 2008. The joint export licences issued by APAL and PLA for the 2008 to 2011 shipping seasons were also, APAL says, voluntary permissions which related to a specific shipping season and specified fruit.[30] They did not refer to the Option Deed or to the exercise of the Option and nor, APAL says, was there any need to do so. APAL also says that whether or not PLA and APAL had entered into the Option Deed, PLA was entitled to license the export of apples from Chile using the IPLA permitted marks, and using BFT's rights in North America.

27 Additionally, APAL says that the joint export licences stood on a different footing to the Option Deed, as is evident from the circumstance that the rights conferred on PLA, and by PLA on exporters, under the joint export licences were different in extent and character from the licence contemplated by clause 5.1 of the Option Deed. APAL says that PLA expressly eschewed any link between the Option Deed and PLA's right to license exporters in Chile to export "PINK LADY" branded apples to North America. From 2012, APAL and PLA issued separate export licences to exporters.

28 A joint export licence was under discussion between APAL and PLA from early 2008. It was also then known to IPLA members - including APAL and PLA - that the IPLA would soon adopt replacement uniform trademarks which would not include national references such as kangaroos. Thus, APAL says, this meant that the "PINK LADY flowing heart with kangaroo" combined device which was the subject of PLA's pending applications was soon to be retired. Thus, APAL says, by March 2008, the trademarks the subject of PLA's pending applications did not have ongoing operational value for PLA, and that licence under clause 5.1 of the Option Deed did not secure for PLA rights of any practical utility.

29 Mr Ballew, a US lawyer and businessman, had control of PLA's interests in the matter at hand. Mr Ballew also acted for VR in its overlapping negotiations with APAL for a Trade Mark Master Licence Agreement (the "TMMLA") in respect of "PINK LADY" trademarks in Chile. APAL notes that Mr Ballew is married to Ms Paiva, PLA's Chilean trademark lawyer, whose company in Chile, Global Licensing Association, Ltda ("GLA"), APAL says was also advantaged by the course that was pursued by PLA.

30 APAL submits that PLA's position is that it now contends that it concluded a wider agreement with APAL, which was varied, and that - as a result of conduct by APAL in 2012 and 2013 - PLA has "revoked" APAL's rights and "taken back" from APAL the ownership, management and control of the "PINK LADY" brand in Chile, to the exclusion of APAL. APAL understands that PLA's position is put on the basis that PLA says that there was an implied term of the Option Deed pursuant to which APAL is obliged to re-assign trademarks to PLA.

31 PLA makes a number of responses to APAL's position:

(a) The facts demonstrate that the parties agreed to APAL exercising the option in a manner different to that expressed in the Option Deed, and that this Court will give effect to that exercise;

(b) In the period leading up to the assignment of the trademarks, the facts demonstrate that the parties proceeded on the basis that the assignments would be done pursuant to the Option Deed; and

(c) In the period from March 2008 until the issue of the Writ in this proceeding on 8 April 2014, APAL repeatedly and expressly stated and conducted itself on the basis that it (APAL) had exercised the option, that the licence under clause 5.1 of the Option Deed had been enlivened, and PLA conducted its affairs on the same basis. If the option was not exercised by APAL as it alleges, then a conventional estoppel arises that prevents APAL from denying that the option was so exercised.

32 PLA contends that on 17 March 2008, the parties agreed to vary the definition of "Products" in the Option Deed with the effect that Rosy Glow became a variety that PLA was entitled to use and to license the use of under the "PINK LADY" trademarks in the Chile-North America trade.[31] It is common ground that a document, the Variation Deed, was prepared by APAL[32] and agreed by PLA.[33] It is also common ground that the parties did not execute the Variation Deed. APAL now says that the failure to have executed the Variation Deed means that the parties are not bound by it. PLA says that the failure to have executed the Variation Deed as intended is not determinative, and the parties are bound by it, and have acted pursuant to it. PLA says that this is clear as PLA and APAL jointly for years issued export licences for the use of the "PINK LADY" trademarks for Rosy Glow apples.[34]

33 From early 2011, the parties fell into dispute about various matters. Relevantly, from April 2011, APAL first asserted that the Option Deed gave PLA no rights in respect of the Rosy Glow variety.[35] PLA denied that this was so.[36]

34 From about May 2013, APAL denied that PLA's rights arising under clause 5.1 of the Option Deed extended to Canada. This was, PLA says, done by APAL's issue of a standard form export licence for Chile for the 2013 season that excluded Canada from the definition of PLA's Export Territories, and included Canada in APAL's export territories.[37] PLA denies that APAL had the right to excise Canada from the reach of the clause 5.1 Licence.

35 The conduct of APAL in purporting to limit PLA's clause 5.1 Licence under the Option Deed was, PLA contends, a repudiation of the Option Deed which gave rise to PLA's right to resume ownership of the assigned trademarks.[38] APAL denies that it repudiated the Option Deed and does not plead to the allegation that it is obliged to reassign the trademarks.[39]

36 Since 2008 or 2009, the IPLA, led by APAL, determined that licence-holders should move towards utilising a consistent branding throughout the world.[40] This was promoted through the production by the IPLA of a Brand Manual which set out the requirements.[41] PLA says that this requirement necessarily had the effect that, as between itself and APAL, the trademarks that the Option Deed applied to was expanded to include the updated Flowing Heart logo.[42] APAL denies that this is so.[43]

37 PLA contends that since late 2013, both PLA and APAL have each acted on the basis that they are or are entitled to be the registered owners of the trademarks and to exercise all of the associated rights of the owner.

38 Before embarking upon a consideration of the specific issues raised in the Joint Statement of Issues, it is helpful to highlight a number of important provisions in both the Option Deed and the Deed of Variation.

39 At the outset, regard should be had to the context of the provisions of those deeds as seen by the parties and expressed in their recitals. The recitals to the Option Deed are as follows:[44]

A APAL is the owner of the copyright subsisting in the Trade Marks.

1. PLA has agreed to grant to APAL an option, to be exercised after a limited period of time, to acquire ownership of any Trade Marks that might ultimately issue in the Territory to APAL, subject the terms, conditions, restrictions, and grant of license rights contained herein.

1. APAL also wishes to confirm that it has licensed and will license to PLA the copyright subsisting in the Trade Marks for the purposes of:

(a) PLA applying for and obtaining registration of the Trade Marks in the Territory, and exercising ownership and control of any issued registrations for a limited period of time;

(b) PLA exercising its rights as APAL's exclusive licensee under Trade Marks with respect to all trade between the Territory and North America, in the event that APAL exercises the Option; and

(c) to the extent necessary for PLA to fully exercise its rights, and to fulfil its obligations under this Deed.

1. PLA wishes to confirm that it will immediately grant an exclusive licence to APAL regarding any rights that PLA has in the Trade Marks in the Territory, which exclusive licence shall cover all trade between the Territory and countries other than the United States, Canada, and Mexico (collectively referred to as North America).

And, as might be expected, the recitals to the Deed of Variation are more briefly cast, as follows:[45]

1. APAL and PLA are the parties to the Option Deed.
2. The parties wish to vary the Option Deed on the terms set out in this deed of variation.

40 The particularly important provisions of the Option Deed are as follows:[46]

1. Grant of Option and Withdrawal of Opposition Proceedings

2.1 Grant of Option

PLA hereby grants the Option to APAL, subject to the requirement that following the exercise of the Option that APAL continue to use a Pier-to-Pier Licensing System with respect to all trade in Products originating from the Territory as set out in clause 5.2.

2.2 Withdrawal of Opposition

APAL hereby agrees to withdraw all opposition proceedings filed in the Territory with regard to any of the Trade Marks at such a time and in such a manner as will be set forth in written instructions that APAL's Chilean counsel will receive from PLA's Chilean legal counsel.

3.1 PLA to notify APAL

PLA must notify APAL in writing immediately after any successful grant of registration in the Trade Marks in the Territory.

3.2 Exercise by APAL

APAL may, at any time during the Exercise period, exercise the Option by serving on PLA an Option Notice.

3.3 Expiry of Option

If the Option is not exercised in accordance with the provisions of this clause 3 during the Exercise Period, and, unless otherwise agreed by the parties in writing, the rights granted to APAL by this Deed in relation to the Option shall immediately cease.

4.1 Grant of licence

APAL hereby grants to PLA a royalty free licence to use the copyright subsisting in the Trade Marks to the extent required for PLA to:

(a) apply to register the Trade Marks and Applications as trade marks; and

(b) use the Trade Marks and any Applications as trade marks;

in the Territory and as permitted under this Deed.

4.2 Term of licence

The licence granted under clause 4.1 will:

(a) where the Option is exercised by APAL, continue for the term of the PLA Exclusive Licence as specified in clause 5.3; or

(b) where the Option is not exercised by APAL, continue in perpetuity.

4.3 Acknowledgment

APAL and PLA acknowledge and agree that the copyright rights that are licensed herein are in respect of the copyright in the Territory alone.

5.1 PLA Exclusive Trade Mark Licence

In further consideration of the granting to APAL of the Option by PLA, and in the event that APAL exercises its Option rights under this Deed, APAL will hereby grant to PLA an exclusive licence to use the Trade Marks with respect to all trade in Products between the Territory and North America. This licence will be royalty free, and will last in perpetuity subject only to the quality control provisions contained herein. APAL acknowledges that PLA has the unrestricted right to establish and maintain a Pier-to-Pier Licensing System regarding all trade between the Territory and North America involving the Trade Marks, and that PLA has the unrestricted right to select PLA's quality control agent in the Territory, and to direct and control the activities of the PLA's quality control agent in the Territory provided that:

(a) the Trade Marks are used on Products which meet U.S. Fancy Grade standards or better, as currently in effect or revised from time to time;

(b) on giving seven days notice to PLA, APAL or its representatives shall have the right to inspect and view any of the Products which will be exported from the Territory association with the Trade Mark by the PLA as authorised by this clause 5.1;

(c) if APAL, acting reasonably, is of the view that any such Products do not meet the quality standards as specified in clause 5.1(a), then APAL may give notice to PLA to that effect;

(d) PLA will have 45 days from the date of the notice issued in accordance with clause 5.1(c) to ensure, to the satisfaction of APAL acting reasonably, that the Products meet the quality standards as specified in clause 5.1(a);

(e) if PLA fails (to the satisfaction of APAL acting reasonably) to ensure that the specified Product meets the quality standards as prescribed within 45 days from the date of the notice issued in accordance with clause 5.1(a), APAL may, at any time thereafter give written notice to PLA that it requires the licence granted under this clause 5.1 to terminate;

(f) if PLA does not agree that the Product failed to meet the quality standards, and the matter ("the dispute") is not resolved within 2l days from the date of the notice referred to in clause 5.1(e), then the dispute shall be referred to mediation in accordance with the following:

(i) The dispute shall be referred for mediation in accordance with the Mediation and Conciliation Rules for the time being of the Institute of Arbitrators & Mediators of Australia to:

(B) if APAL and PLA are unable to agree on a mediator within 14 days, a mediator appointed by the then current President of the Law Institute of Victoria, Australia.

(g) If APAL and PLA fail to resolve the dispute through a reasonable and good faith mediation effort within 60 days from the commencement of the mediation, APAL may terminate the licence granted under this clause 5.1 by giving notice in writing to PLA at anytime thereafter.

(h) Nothing in this clause will prevent either APAL or PLA from immediately commencing legal proceedings in a court in any jurisdiction for an injunction, delivery or other relief to protect its rights in relation to the Trade Marks.

5.2 APAL Exclusive Trade Mark Licence

PLA hereby grants to APAL an exclusive licence regarding any rights that PLA has in the Trade Marks in the Territory with respect to all trade between the Territory and the world, except for trade between the Territory and North America which PLA reserves solely for itself. This licence is royalty free, and will last in perpetuity subject only to the quality control provisions contained herein, or APAL's exercise of the Option. The grant of this licence is subject to the requirement that APAL put into place a Pier-to-Pier Licensing system to control the shipment of Products bearing the Trade Mark from the Territory to any countries within the European Union, including the UK, within three (3) years from the date of entry into this Deed, and subject to the requirement that APAL select and actively employ their own quality control agent (which agent may be, at APAL's choice, the same one employed by PLA) in the Territory, provided that:

...

6.1 Terms and conditions of assignment

PLA must, within 10 Business Days from the receipt of an Option Notice, assign to APAL, free of any encumbrances, the entirety of its right, title and interest in any issued registration in the Territory of the Trade Marks and any Applications.

6.2 No Warranties by PLA

APAL acknowledges that PLA's attempt to register the Trade Marks in the Territory may not be successful, and that there may be information about the Trade Marks in the Territory that is unknown to both PLA and APAL. Therefore, APAL acknowledges and agrees that PLA makes no warranties or representations of any kind regarding the validity or enforceability of the Trade Marks in the Territory, and no warranties or representations of any kind regarding any third party claim of right to use or own the Trade Marks in the Territory. PLA does agree that it will not create though its own actions, or the actions of any person under PLA's control, any encumbrances in or over the Trade Marks or Applications. PLA also agrees not to assign or license any rights in the Trade Marks in the Territory to any party other than APAL. And, PLA also agrees that it will have the unrestricted right and ability to assign or license to APAL, on a quit-claim basis, whatever rights PLA may have in the Trade Marks in the Territory, although APAL acknowledges that PLA may in fact have no rights in the Trade Marks in the Territory.

...

6.4 Mutual Obligations of Parties

Both APAL and PLA undertake:

(a) to execute all documents and do all such acts which are necessary or appropriate to enable either party APAL [sic] to obtain their intended benefit under this Deed;

(b) not to do, or assist any other person to do, any act which would or might:

(i) invalidate or put in dispute PLA's or APAL's title to the Trade Marks;

(ii) invalidate, or render unenforceable, any registration of the Trade Marks in due course; or

(iii) support an application to remove the Trade Marks as registered Trade Marks in the Territory;

(c) not to oppose or cancel, or assist any other person to oppose or cancel, any application for registration, or issued registration of the Trade Marks;

(d) not to use a substantially identical or deceptively similar mark to the Trade Marks in the Territory without the written authorisation of APAL after the date of the assignment; and

(e ) to provide to each other all non-privileged records in their respective possession or control in connection with the Trade Marks in the Territory. Privileged records are those records that are protected by the attorney-client privilege.

...

6.6 Binding agreement

On the date that an Option is exercised, or deemed to have been exercised, pursuant to the provisions of clause 3, PLA and APAL shall for all purposes be deemed to have entered into a binding and enforceable agreement for the future assignment of the Trade Mark.

...

18 Governing law and jurisdiction

18.1 Governing law

This Deed is governed by the laws in force in Victoria, Australia.

18.2 Jurisdiction of courts

The parties submit to the non-exclusive jurisdiction of courts of Victoria including the Federal Court sitting in Victoria and any courts that may hear appeals from those courts about any proceedings in connection with this Deed.

41 These provisions of the Option Deed must be interpreted having regard to the definitions contained in clause 1.1 of that deed. Of particular significance are the following definitions:[47]

APAL Exclusive Trade Mark Licence means the exclusive licence that PLA grants to APAL regarding any rights that PLA has in the Trade Mark in the Territory, solely with respect to all trade between the Territory and the world, except for trade between the Territory and North America which PLA reserves solely for itself, as is more fully described in clause 5.2.

Application means any application made by PLA for registration of a trade mark in the Territory which is:

(a) substantially identical or deceptively similar to the Trade Marks or otherwise incorporates the words "PINK LADY";

(b) existing at the time an Option Notice is issued in accordance with 3.2; and

(c) approved of by APAL in accordance with clause 12 of the Trade Mark Master Licence;

...

Exercise Date means the date on which APAL exercises the Option in accordance with clause 3;

Exercise Period means

(a) the period commencing:

(i) 24 months from the date of registration of trade mark application no. 753.414 in the Territory, or

(ii) if trade mark application no. 753.414 is not registered, 24 months from the date of registration of trade mark application no. 760.964 in the Territory, or

(iii) if trade mark application nos. 760.965 and 753.414 are not registered, 24 months from the date of registration of trade mark application no. 770.217 in the Territory;

and ending 180 days later; or

(b) any date that is mutually agreed to by both APAL and PLA;

Option means the right of APAL to have assigned to it from PLA, and the obligation on PLA to assign to APAL, the Trade Marks and any Applications in accordance with clause 2;

Option Notice means a notice substantially in the form of the document annexed as Annexure A to this Deed which has been executed by APAL;

Pier-to-Pier Licensing System means a system of trademark licences whereby both importing activity and exporting activity with respect to a target consuming country is licensed. For example, a Pier-to-Pier Licensing System for a trademark used with goods exported from the Territory and imported into North America would require at least the following basic licence elements:

1. Import Licence document in place for each company that is importing the goods bearing the trademark into North America from the Territory. The Import Licence would authorize the licensed importer to receive goods bearing the trademark from any licensed exporter in the Territory.

2. Export Licence document in place for each company that is exporting the good bearing the trademark from the Territory to North America. The Export Licence would authorize the licensed exporter to ship goods bearing the trademark from the Territory to any licensed importer in North America

3. Quality Control Agent of the owner/exclusive licensee of the trademark in the importing country, which agent would be physically located and active in the exporting country to administer the Export Licence documentation;

PLA Exclusive Trade Mark Licence means the exclusive licence that APAL will grant to PLA regarding the Trade Marks and all trade between the Territory and North America in the event that APAL exercises the Option as is more fully described in clause 5.1, below;

Products means fresh whole apples of the Cripps Pink variety, processed apples of the Cripps Pink variety in the form of fresh cut apple slices, dried apples, apple sauce, apple cider, and apple juice, and

(a) in respect of PLA, all other related promotional goods for which either PLA or Brandt's Fruit Trees currently have PINK LADY trademark registrations for in the United States or Mexico; or

(b) in respect of APAL, all other goods or services for which APAL currently has PINK LADY trade mark registrations for anywhere in the world;

Territory means Chile; and

Trade Marks mean the pending trade marks as set out in Schedule 1.

Schedule 1 then sets out the pending trademarks as follows:[48]

42 The critical provisions of the Deed of Variation which, as indicated previously, was not actually executed by the parties, are as follows:[49]

2. Amendment

2.1 Amendment

On and from the Amendment Date, the Option Deed is amended as follows:

(a) the following definition is added to clause 1.1 of the Option Deed;

'Essentially Derived Varieties means any apple varieties which are an essentially derived variety of the Cripps Pink apple variety within the meaning of the laws of the relevant territory'.

(b) the definition of Products in clause 1.1 of the Option Deed is deleted and replaced with the following definition:

'Products' means fresh whole apples of the Cripps Pink variety or the Rosy Glow variety, processed apples of the Cripps Pink variety or the Rosy Glow variety in the form of fresh cut apple slices, dried apples, apple sauce, apple cider or apple juice, any fresh whole apples or processed apples of varieties that are Essentially Derived Varieties of the Cripps Pink variety as agreed to by the parties in writing from time to time, and:

(i) in respect of PLA, all other related promotional goods for which either PLA or Brandt's Fruit Trees currently have PINK LADY trademark registrations for in the United States or Mexico; or

(ii) in respect of APAL, all other goods or services for which APAL currently has PINK LADY trade mark registrations for anywhere in the world'.

2.2 Other terms

In all other respects, the terms and conditions of the Option Deed remain in full force and effect.

43 It is also noted that clause 12 of the Option Deed provides that "[t]his Deed may only be altered or varied in writing signed by each party" and that the Option Deed and the Deed of Variation contain an "Entire Deed" and "Entire agreement" provision in clauses 14 and 7, respectively. The Deed of Variation also provides that it is governed by the laws in force in Victoria and that the parties submit to the non-exclusive jurisdiction of courts of Victoria, including the Federal Court sitting in Victoria.[50]

Was the option exercised or the clause 5.1 Licence otherwise operative?

44 The position of APAL is that the option was not exercised because the time for the exercise of the option had not yet arrived and, further, because no Option Notice in the form of Annexure A to the Option Deed was signed by APAL and served on PLA.

45 In relation to the first matter, the time for the exercise of the Option, PLA contends that the position taken by APAL in this respect ignores the provisions of paragraph (b) of the definition of "Exercise Period" as that definition appears in the Option Deed. In that definition, paragraph (a) specifies the relevant period in terms of temporal limits, but then the effect of paragraph (b) is that the period is also defined to mean "any date that is mutually agreed to by both APAL and PLA". In a sense, this provision, or proviso, to the definition of "Exercise Period", simply states the obvious in that, as a matter of law, it is always open to parties to transcend the provisions or requirements of an agreement between them at any time. The position of PLA is that the facts do demonstrate that the parties agreed to the exercise of the option by APAL earlier than the period stipulated in paragraph (a) of the definition of "Exercise Period". For the reasons which follow, I accept that this is the position.

46 In relation to the second matter, I am also of the view that, as discussed in the reasons which follow, the conduct of the parties does demonstrate that they agreed on the Option being exercised in a manner otherwise than in strict compliance with the Option Deed. They dispensed with the requirement for APAL to serve an Option Notice and, instead, by the exchange of email correspondence, APAL called for the assignment of the trademark application to it pursuant to the Option Deed, and thereafter accepted such assignments and effected a sale and purchase for nominal consideration of the trademark that had already become registered.

47 It is undoubtedly true, as a general proposition, that the conditions for the exercise of an option must be strictly complied with and it is also the case that the courts will give effect to the exercise of an option that is not exercised in accordance with the manner required by the option agreement, if it is plain that the parties consensually adopted some other course. The characterisation of the process does, however, depend upon the particular circumstances because the characterisation may be that the option has been exercised or, alternatively, that the process of purported exercise resulted in a counter offer - rather than the exercise of the option according to its terms - but that the process was consummated by the production of contractual relations because the counter offer by the optionee was accepted by the optionor. These aspects of the matter are explored further by reference to the authorities, to which I now turn.

48 The nature of an option has been discussed in many cases and there remains argument as to the proper characterisation of an option.[51] Nevertheless, in Gilbert J McCaul (Aust) Pty Ltd v Pitt Club Ltd, the Full Court of New South Wales discussed the nature of an option and unanimously adopted the "irrevocable offer" view:[52]

In the present case the lessor irrevocably offered to grant a lease. Its offer prescribed the time and manner for acceptance. Only by performing the conditions prescribed could it be accepted and result in an agreement for a lease. A purported acceptance without performance of the prescribed conditions would not and could not be an acceptance of the offer. It would in reality be a counter-offer by the original offeree requiring acceptance by the original offeror if an agreement were to result. If a conditional offer is made and the offeree without performing the condition purports to accept it, that is to say makes a counter-offer and that counter-offer is accepted, it is a loose although not uncommon use of language to say that the original offeror has waived performance of the condition which was prescribed by his offer as being the manner of accepting. In contemplation of law the original offeror has done no such thing. What he has done is to accept a counter-offer and in the result an agreement is made but it is not an agreement consisting of the original offer and an acceptance of that offer.

It follows from this analysis that if an option is exercised, a new contract is created, but that the purported exercise of an option other than in accordance with the strict requirements of the option agreement constitutes a counter offer by the grantee of the option which, if accepted by the grantor of the option, gives rise to an enforceable agreement, which may or may not be an agreement in terms of the option. The terms of the agreement thus formed would, naturally, depend upon the nature of the counter offer. If the counter offer was, in a sense, merely procedural in that it involved acceptance of the option and all that would flow from the acceptance of the option according to its terms, then the agreement produced would be in the same terms as the agreement that would have been produced as a result of strict compliance with the terms of the option. It is, however, not uncommon for the purported acceptance to involve a counter offer which would, if accepted, also vary the substance of the agreement thus produced, a variation from that which would have been produced as a result of the strict compliance with the option acceptance process provided for in the option agreement. For reasons which follow, that does not, however, appear to have been the result in the present circumstances. The result of the dealings between the parties has been to produce an agreement in accordance with the provisions of the Option Deed and the Deed of Variation as though the option had been exercised strictly according to its terms.

49 The analysis in McCaul's Case was not doubted by the High Court in Bowman v Durham Holdings Pty Ltd,[53] a case concerning an option to purchase a reversionary interest in mineral deposits. In Bowman, the owner of an interest in coal and minerals under certain land granted an option to purchase that land which was exercisable within 12 months; which period was able to be extended by 12 months by the grantee of the option upon giving notice within a stipulated period and the payment of a sum of money. The grantee of the option did not, however, give notice in sufficient time to properly extend the option, but did pay the required sum of money for an extension. Twelve months later, the grantee of the option purported to exercise the option to purchase. The exercise of the option was rejected by the grantor, claiming defective service of the notice of exercise at that time. The grantor also alleged that there was no option available to be exercised because of the defective exercise of the notice to extend the period of the option 12 months earlier. In relation to the second aspect, the High Court held that under circumstances where:

(a) the grantor accepted and retained the payment to extend the option period;

(b) there had been long correspondence and conduct of the parties which evidenced that each party regarded the option as being on foot;

(c) that the giving of the notice to extend the option rights, although outside the time stipulated for so doing, constituted an offer by the grantee of the option to accept a new option on identical terms, which offer was accepted by the grantor of the option; and

(d) the acceptance and retention by the grantor of the option of the price for the extension of the period for exercise of the option was legally incongruous with the position it thereafter adopted that the option no longer existed.

Moreover, the position reached by the High Court was arrived at without resort to doctrines of estoppel. Similarly, in Bruner v Moore, Farwell J held that, notwithstanding that the term of an option had expired, the conduct of the parties thereafter, when they mistakenly believed it to be still on foot, was sufficient to demonstrate an agreement that the term of the option was extended.[54]

50 It would, of course, be remiss in discussing these issues not to mention the decision of the Victorian Full Court in BS Stillwell & Co Pty Ltd v Budget Rent-a-Car System Pty Ltd.[55] In that case, O'Bryan J said (with whom Crockett J agreed; as did Gray J, adding some further reasons):[56]

In Australia the true nature of an option to purchase and whether such an option may be expressed as an agreement to sell upon condition or an offer together with an agreement not to revoke it or as the grant of an option so called has been considered in many cases. In Gerraty v McGavin, Isaacs J said: "An option given for valuable consideration is merely an irrevocable offer, but beyond that there is no contract for a further term, unless and until the offer is duly accepted by exercising the option."[57]

The nature of an option was also considered by Gibbs J in Laybutt v Amoco Australia Pty Ltd, particularly at pp 71-6.[58] Gibbs J concluded "that an option to purchase [in a form that the option might be exercised by notice in writing to the grantor by a specified date and by payment to a specified agent within the specified date of a specified deposit] is a contract to sell the land upon condition that the grantee gives the notice and does the other things stipulated in the option. An option to purchase, regarded in that way, is not an agreement which gives one of the parties the right to perform it or not as he chooses; it gives the grantee the right, if he performs the stipulated conditions, to become the purchaser."[59]

In McCaul's Case the Full Court in New South Wales was concerned with a clause in a lease granting the tenant an option to renew the lease for a further term of five years subject to the giving of three months' previous notice in writing to the lessors, the punctual payment of rent and the due performance of covenants by the tenant. An issue arose as to whether performance of the term relating to payment of rent was a condition precedent to the tenant being able to accept the offer of renewal of the lease contained in the option clause.

The Full Court (Owen J, Roper CJ in Eq and Herron J) held that an option of renewal of a lease "is no more than an offer to make a contract". The court said: "In the present case the lessor irrevocably offered to grant a lease. Its offer prescribed the time and manner for acceptance. Only by performing the conditions prescribed could it be accepted and result in an agreement for a lease. A purported acceptance without performance of the prescribed conditions would not and could not be an acceptance of the offer. It would in reality be a counter offer by the original offeree requiring acceptance by the original offeror if an agreement were to result. If a conditional offer is made and the offeree without performing the condition purports to accept it, that is to say makes a counter offer and that counter offer is accepted, it is a loose although not uncommon use of language to say that the original offeror has waived performance of the condition which was prescribed by his offer as being the manner of accepting it. In contemplation of law the original offeror has done no such thing. What he has done is to accept a counter-offer and in the result an agreement is made but it is not an agreement consisting of the original offer and an acceptance of that offer."[60]

The court also determined that because the lessee was required to perform the conditions stated in the option clause before the offer to renew the lease could be accepted, performance of the conditions was the only way by which the offer could be accepted. Accordingly, non-performance of a condition could not be waived by the offeror (lessor).

McCaul's Case was considered in the High Court in Bowman, a case concerned with an option to purchase an interest in reversion in mineral deposits under certain land.[61] Stephen J, who delivered the principal judgment of the court comprising Barwick CJ, Menzies and Stephen JJ, upheld an argument that the doctrine of waiver was inapplicable in circumstances where there is a right available to the grantee to purchase by exercise of an option but only by the observance by it of certain conditions. The correctness of McCaul was not doubted by Stephen J with whose judgment in this respect the other members of the court agreed.

51 Accordingly, I accept the Defendant's contention that these cases make good the proposition that it is always open to the parties, by their words and conduct, to agree to the exercise of an option in a manner that departs from the strict requirements of the option agreement, and the resulting further agreement contemplated by the option will come into being; subject to my observations in relation to, what might be described as, an agreement which transcends procedural matters and an agreement which not only transcends matters of that kind, but also affects the substance of the agreement flowing from the exercise of the option. I also accept that this is hardly surprising, having regard to the doctrine of freedom of contract, and all the more so will a court find this result where the grantor of the option has accepted and still retains the consideration stipulated for in the option agreement, yet then disclaims that the option was properly exercised.

52 There are a number of circumstances leading to the preparation and execution of the Option Deed which should also be kept in mind. In particular, and of more general import, in discussions between Lynnell Brandt and Jon Durham in relation to PLA's applications for trademarks in Chile, Mr Brandt agreed to work with APAL as long as PLA and BFT's interests in the Chile-North America trade were protected.[62] In an email dated 1 March 2007, APAL and PLA acknowledged that PLA would be seeking to obtain the trademark rights in Chile, but APAL sought assurance that PLA would assign any such marks as issued to it.[63] In reply, Mr Brandt did not simply agree to do so but, rather, noted APAL's request in this respect and suggested a discussion so that the interests of all concerned might be satisfied.[64] On 4 May 2007, APAL's solicitors wrote to Mr Ballew proposing that PLA grant an option to APAL to take an assignment of the trademarks that issued in Chile.[65] On 9 May 2007, APAL's solicitors wrote to Mr Ballew requiring the comfort of an executed Option Deed by 10 May 2007, failing which APAL would oppose PLA's application for trademark registration in Chile.[66]

53 The email exchanges between the parties continued and, by email dated 10 May 2007, Mr Ballew wrote that "it has always been the intention of Pink Lady America and Brandt's Fruit Trees to transfer the ownership of the Chilean PINK LADY applications to APAL at some time".[67] It is clear, however, that, notwithstanding the statement, APAL had been unsuccessful in obtaining trademark registration in Chile until that time and that this was an impediment to the orderly management of the "PINK LADY" brand in Chile.[68] It is also clear that APAL regarded these rights as very valuable to it. Moreover, whether or not PLA was able to maintain trademark rights in Chile is not to the point. The parties believed that PLA may achieve some success in the applications in Chile, and PLA was not prepared, simply, to assign those marks without conditions. The conditions outlined in the 10 May 2007 email were that PLA retain ownership and control the application process, although the parties could agree to an early transfer by mutual consent; and that upon transfer of the trademark registrations to APAL, PLA required an exclusive licence to maintain and operate a Pier-to-Pier Licensing system in relation to the Chile-North America trade.[69]

54 The conditions put in the 10 May 2007 email were received positively by APAL's solicitors,[70] and drafts of the Option Deed were exchanged on 10 and 11 May 2007.[71]

55 APAL's solicitors advised, on 15 May 2007, that APAL had approved the then-latest draft but that - as the Option Deed was not yet finalised - it intended to file oppositions to PLA's trademark applications in Chile.[72] Consequently, provisions were included in the Option Deed for the withdrawal of those oppositions.[73]

56 The final version of the Option Deed was executed by APAL on 12 June 2007 and by PLA sometime before 3 July 2007.[74]

57 Reference has been made to the assertion by APAL that PLA's applications for the trademarks registration in Chile were "speculative" in nature.[75] This assertion is, however, in my view, beside the point in the present circumstances for a variety of reasons. First, it is not entirely clear what "speculative" means in this context. As the evidence indicates, a trademark application in Chile, or in any other jurisdiction for that matter, carries the risk of failure for a variety of reasons. The evidence was, however, clear that APAL had been unsuccessful in obtaining registration of the desired trademarks in Chile, whereas PLA apparently had a prospect of doing so.[76] It is also clear that APAL desired to obtain these trademark registrations in Chile and was prepared to pay a commercial price to do so having regard to the "gap" the lack of these Chilean trademark registrations created in the worldwide protection of the "PINK LADY" brand. Against this background, it is not surprising, in my view, that the terms of the Option Deed were agreed by the parties to include the clause 5.1 exclusive, perpetual and royalty free licence to PLA.

58 The inter-relationship between the assignment of the trademarks from PLA to APAL and the licence back to PLA under clause 5.1 of the Option Deed is, clearly, at the heart of the transaction. At the risk of repetition, it is helpful to set out clause 5.1 at this point:[77]

In further consideration of the granting to APAL of the Option by PLA, and in the event that APAL exercises its Option rights under this Deed, APAL will hereby grant to PLA an exclusive licence to use the Trade Marks with respect to all trade between the Territory and North America. This licence will be royalty free, and will last in perpetuity subject only to the quality control provisions contained herein. APAL acknowledges that PLA has the unrestricted right to establish and maintain a Pier-to-Pier Licensing System regarding all trade between the Territory and North America involving the Trade Marks, and ...

59 Under clause 2.2 of the Option Deed, APAL was obliged to withdraw its opposition to PLA's trademark applications "at such time and in such manner as will be set forth in written instructions that APAL's Chilean counsel will receive from PLA's Chilean legal counsel".[78] A number of emails were exchanged between the parties and their legal representatives in relation to the withdrawal of APAL's opposition to PLA's applications.[79]

60 Mr Durham, the Managing Director of APAL at this time in 2007, had responsibility for the conduct of the transactions. In cross-examination, he said that when Mr Ballew rang him on 5 November 2007,[80] and proposed that the assignments be made "at that time", he knew that the assignments referred to were those that he had agreed with Mr Brandt would be made in return for a licence from APAL back to PLA.[81] Mr Durham also said that the assignments that were made were "completely consistent with the agreements" that he had reached with Mr Brandt[82] and that the agreement he had with Mr Brandt was contained in the Option Deed.[83] Mr Durham also said that the assignments were done in accordance with the agreement that PLA would assign the ownership of the trademarks and PLA would get the licence back.[84]

61 Initially, Mr Durham's evidence was that nowhere in any communication between the parties prior to the time of the assignments was there any reference to the assignments being made other than under the Option Deed.[85] He said that he had never had any conversation with PLA stating that the assignments that were to be made were otherwise than being made under the Option Deed.[86] Moreover, Mr Durham's evidence was that the email sent on 20 March 2008 by Mr Ballew and copied to him accurately summarised the effect of the agreement that had been reached, as follows:[87]

There is an agreement in place between APAL and Pink Lady America that provides for an early transfer of the pending Pink Lady applications in Chile subject to the continued prosecution of those applications being handled by Gabriela Paiva for the joint benefit of both APAL and Pink lady America. APAL will retain an ownership interest in any registrations that issue, while Pink Lady America receives a master exclusive licence under the Pink Lady brand for all apples shipped under that brand from Chile to North America. To evidence that agreement Mr. Jon Durham executed a power of attorney in Chile on November 6, 2007, granting APAL's power of attorney to Gabriela Paiva with respect to APAL's pending trademark applications.

Thus, Mr Durham said, the agreement that had been reached with Mr Brandt had been carried out and honored, though earlier than provided for under the Option Deed, and that as a consequence the clause 5.1 Licence under that deed was active.[88] He also agreed that that is how APAL behaved thereafter.[89]

62 Mr Durham also said that he was prepared to accept the assignments earlier than contemplated in the Option Deed because it was thought that this would enhance the prospects of success in the applications.[90]

63 By November 2007, Ms Paiva had advised that in her view it would be appropriate for the applications to be assigned to APAL then, rather than waiting for the registrations to be completed. Consequently, by email dated 6 November 2007, Mr Ballew advised Ms Paiva, and copied in Mr Durham and APAL's solicitor, that PLA was agreeable to assigning the pending trademark applications to APAL, provided that Ms Paiva continued the application under power of attorney from APAL.[91] On the same day, APAL gave a power of attorney to Ms Paiva to act on its behalf in intellectual property matters in Chile.[92]

64 APAL contends that this course of events is merely indicative of PLA electing to assign the trademark applications for its own unstated commercial purposes outside the purview, and otherwise than in pursuance, of the Option Deed.[93] However, I accept the Defendant's contention that it is not apparent that there was any commercial advantage to PLA in doing so. Indeed, that conclusion flies in the face of the commercial realities. PLA held the valuable right conferred under clause 5.1 of the Option Deed and I accept that - absent some explanation for the proposition advanced by APAL - it is simply not conceivable that PLA would give up this right for no apparent reason.

65 At this time, Mr Ballew was also acting for VR, in its negotiations with APAL regarding the TMMLA. The evidence is that there were difficulties with those negotiations, and on 3 December 2007 Mr Ballew wrote to Mr Durham regarding the TMMLA. He wrote that he could not - [94]

in good conscience recommend the assignment of the pending PINK LADY application in Chile from PLA to APAL until and unless the Master Licence Agreement between APAL and Juan Concha is finalized - because all of these relationships are linked together.

Unlike much of the other email traffic emanating from Mr Ballew, this email was not copied to his client, PLA. I accept that it is also clear that he was writing that email in his capacity as Attorney for VR. APAL submits that Mr Ballew attempted to leverage the assignment of the PLA Chilean trademark applications in his negotiations with APAL on behalf of VR. [95] However, it is not correct, in my view, to conclude that Mr Ballew's conduct on behalf of VR can be linked or "sheeted home", as the submissions by PLA put it.[96] The negotiations between APAL and VR are part of the background circumstances that existed at the time, but are, in my view, essentially irrelevant to the matters to be determined. Emails were exchanged in September and November 2007 in relation to the manner and timing of APAL's withdrawal of its opposition to PLA's pending trademark applications.[97]

66 Mr Ballew's email of 3 December 2007, to which reference has been made, seems to have stopped the assignment of the trademark applications. APAL's solicitors wrote to Ms Paiva on 6 December 2007 that due to last minute developments she was not to assign the trademark applications until further instructed.[98] This instruction was noted by Ms Paiva.[99] On 7 December 2007, Mr Ballew wrote to APAL's solicitors, copying in Mr Brandt and Ms Paiva.[100] The email, the subject line of which was "Option Deed Issues", noted the failure of the Option Deed to include essentially derived varieties ("EDVs") of Cripps Pink and noted that the parties must have intended these to be included. Mr Ballew proposed a variation deed to include these definitions of products. The second issue related to withdrawal of APAL's opposition to PLA's trademark applications.

67 On 11 December 2007, APAL's solicitors responded to the 7 December 2007 email, copying in Ms Paiva and Mr Durham.[101] The email says that APAL was not averse to the idea of amending the definition of "Products" under the Option Deed to include EDVs but preferred to focus on the assignment of the trademark applications. In relation to that issue, the email reads:

Assignment of PINK LADY trade mark filed by Pink Lady America LLC

I confirm from our discussions on Friday that APAL is prepared to accept an assignment of this pending trade mark at any time.

In respect of your comments that APAL has indicated that it will maintain its opposition, I do not understand how you are under the impression that this was APAL's intention. This was never communicated to you and nor was it communicated to Ms Paiva.

In fact, the opposite is true. APAL's authority to withdraw the opposition was communicated to its Chilean Counsel on 7 November. This was communicated to you and there has been nothing from APAL or me to indicate that the contrary has occurred or will occur.

More fundamentally, why would APAL maintain its opposition when it has agreed to accept an assignment of this pending mark?

APAL also wishes to point out that it is under no obligation under the Option Deed to accept an assignment of the PINK LADY mark at this stage. However, it is willing to agree to this assignment if this is the strategy put forward by Ms Paiva. APAL also recognises the delicate situation in respect of securing trade mark registration in Chile and is very appreciative of the work being done by Ms Paiva.

Next Steps

APAL's instructions to its Chilean Counsel are therefore:

• to either accept an assignment of PLA's pending PINK LADY mark or extend the application process, depending on what PLA requests; and
• to coordinate a withdrawal of APAL's opposition to PLA's pending mark with PLA's Chilean Counsel.

68 In my view, it is correct to say, as PLA contends, that this email expressly links the assignment of the trademark applications at that time to performance of the obligation to assign under the Option Deed. It does, in my view, make clear that the early assignment is done in pursuance of the obligation of the parties under the Option Deed. Consequently, it is to be construed as the exercise of the option under the Option Deed "on a date that is mutually agreed to by both APAL and PLA"; as provided by subparagraph (b) of the definition of "Exercise Period" in the Option Deed. This manner of exercise of the option, though differing from that prescribed by the Option Deed was, as is indicated in the reasons which follow, clearly accepted by PLA and acted upon.

69 By email dated 20 December 2007, Mr Ballew wrote to APAL's solicitors copying in Ms Paiva and Mr Brandt.[102] He noted that Snr Hernan Rios, APAL's Chilean counsel, had cooperated with Ms Paiva in filing a writ to suspend the trademark applications. As to including EDVs within the purview of the Option Deed, he asked whether APAL's solicitors would like to produce a first draft variation deed.

70 The further matter that evidences the agreement referred to in the 20 March 2008 email by Mr Ballew[103] is the conclusion of an agreement by APAL and PLA that the definition of "Products" in the Option Deed would be substituted by the definition of "Products" contained in the Deed of Variation. As set out previously, but which is convenient to repeat now, the definition of "Products" in the Deed of Variation is as follows:[104]

"Products" means fresh whole apples of the Cripps Pink variety or the Rosy Glow variety, processed apples of the Cripps Pink variety or the Rosy Glow variety in the form of fresh cut apple slices, dried apples, apple sauce, apple cider or apple juice, any fresh whole apples or processed apples of varieties that are Essentially Derived Varieties of the Cripps Pink variety as agreed to by the parties in writing from time to time, and:

(i) in respect of PLA, all other related promotional goods for which either PLA or Brandt's Fruit Trees currently have PINK LADY trademark registrations for in the United States or Mexico; or

(ii) in respect of APAL, all other goods or services for which APAL currently has PINK LADY trade mark registrations for anywhere in the world.

The effect of that agreement was that the trademarks the subject of the Option Deed could be used with the Rosy Glow variety apples as well as Cripps Pink. It also provided for further EDVs of Cripps Pink to be included if agreed by the parties in writing from time to time.

71 APAL contends that the assignments were made outside the purview of the Option Deed, with the consequence that the option was never exercised and the clause 5.1 Licence never became enlivened. Moreover, in its closing submissions, APAL's case is that the assignments were made in pursuance of a right held by PLA under clause 6.2 of the Option Deed to make the assignments on a quit-claim basis.[105] This apparently current manifestation of the APAL case was criticised by PLA on the basis that it is unpleaded, was not referred to in APAL's opening submissions and only a passing reference was made in the oral opening by APAL that "the conduct that was undertaken is entirely consistent with that outcome [meaning clause 6.2 of the Option Deed] as well."[106] In the course of Mr Brandt's cross-examination, attention was drawn to clause 6.2 of the Option Deed, but it was not put to him that this was the basis upon which the assignments were actually made.[107] It is true that clause 6.2 of the Option Deed was drawn to Mr Ballew's attention in cross-examination,[108] yet, in an exhaustive cross-examination of Mr Ballew as to whether or not the assignments were made pursuant to the Option Deed, it was never put to him that the assignments were made on a quit-claim basis under clause 6.2 of that deed.[109] Moreover, no such allegation is made in APAL's Amended Reply and Defence to Counterclaim and it is the position, as submitted by PLA, that the case has not been conducted on the basis that this is what was done.

72 As noted previously, on 5 November 2007, the issue arose of the making of the assignments earlier than they would have been made as permitted under paragraph (a) of the definition of "Exercise Period" contained in the Option Deed and rather at a "date mutually agreed" as provided for under sub-clause (b) of that definition.[110] By 6 November 2007, it was agreed that the assignments would be made earlier and as provided for under the Option Deed.[111] The issue is not a simple one. It became complicated and protracted as a result of Mr Ballew advising that he would not advise PLA to make the assignments until the TMMLA with VR was concluded.[112] Consequently, the assignments went "on hold"[113] until, on 7 December 2007, Mr Ballew sought the variation of the definition of "Products" in the Option Deed.[114] There was then correspondence relating to both of these issues, which culminated in an exchange of emails on 17 to 20 March 2008.[115]

73 In his email of 17 March 2008, Mr Ballew approved the form of the Variation Deed and instructed his client to print and sign it. The email continued:[116]

In light of the successful conclusion of the Deed of Variation, Gabriela Paiva proposes to instruct APAL's counsel in Chile to file documents that she will prepare that withdraw APAL's opposition to Pink Lady America's application for the PINK LADY trademark. Gabriela will also be preparing the documents necessary for APAL to take ownership of this pending Chilean application, and she proposes to execute those assignment documents on behalf of both APAL and Pink Lady America. These assignment documents will place ownership of the pending Chilean trademark application for PINK LADY with APAL, and it is Gabriela's opinion, and I agree, that this assignment will improve the chance of a successful registration of PINK LADY in Chile (although the prior history of PINK LADY still makes this a problematic situation).

In its response on 18 March 2008, APAL thanked Mr Ballew for his email and noted that Mr Hamilton had just spoken to Mr Durham and he had been asked to communicate with APAL's attorney in Chile to confirm APAL's instructions to accept an assignment of PLA's pending marks and withdrawal of its opposition.[117] Mr Ballew wrote a further email on 20 March 2008[118] to Snr Rios, copying in Messrs Durham and Hamilton, in which he described the effect of arrangements that APAL would take assignment of the applications and would obtain ownership of any registrations that issue and PLA would have an exclusive licence to use those marks in relation to apples exported under the brand from Chile to North America.

74 Reviewing this correspondence, I am of the view that, by his email of 17 March 2008, Mr Ballew made clear that the parties had reached final agreement on the terms of the Deed of Variation and also made explicit that the assignment of trademark applications was to be done pursuant to the Option Deed, as now varied by the Deed of Variation.[119] In my view, the explicit link with the Option Deed is quite clear and this position is not affected by the fact that this email falls within a continuum of communications.[120] Neither Mr Durham nor Mr Hamilton, APAL's solicitor, expressed any disagreement with these propositions. Indeed, in his reply email dated 18 March 2008, Mr Hamilton wrote that he had - [121]

just spoken to Jon [Durham] and ha[d] been asked to communicate with our legal counsel in Chile to confirm APAL's instructions to accept an assignment of PLA's pending marks and withdrawal of its opposition. I will now instruct APAL's legal counsel accordingly.

Mr Ballew responded by email on 19 March 2008:[122]

Thank you for your prompt confirmation of APAL's instructions to Gabriela and of your communications with APAL's Chilean counsel. Today Gabriela will be coordinating the filing of the withdrawal of opposition and the preparation and filing of the trademark application assignment documents, thus taking all appropriate actions in Chile to ensure the best chance for a successful prosecution of the pending Chilean trademark applications for PINK LADY.

75 In my view, this chain of correspondence constitutes or evidences (objectively) PLA and APAL's agreement that the exercise of the option under the Option Deed did occur, though in a manner different to that specified in the Option Deed.[123] On the authority of Bowman and the other authorities to which reference has been made, the Court will give effect to that form of exercise of the option, either on the basis that there was an offer to exercise a new option on identical terms to the original option in the manner now proposed, which offer was accepted, or, alternatively, that there was a variation to the Option Deed to permit the original option to be exercised in this manner. Both bases arise on application of the ordinary contractual rules of offer and acceptance and the provision of valuable consideration.[124]

76 Thus, the linkage between the Deed of Variation and the completing of the assignments and the trademark applications and registrations which were then on foot is made explicitly clear. The expansion of the definition of "Products" in the Option Deed to include Rosy Glow does only have meaning for the operation of the clause 5.1 Licence. Thus, as PLA contends, it is eloquent and compelling evidence that, following the assignments, the Option Deed had further work to do, and this concerned the clause 5.1 Licence. Moreover, if APAL's argument that the parties agreed to make the assignments independently of the Option Deed were correct, then, upon making the assignments in that way, the Option Deed would have no further work to do in governing the relationship between the parties. If that were so, there would then have been no point in agreeing the terms of the Deed of Variation. I accept PLA's submission that the construction of events put by APAL leads to manifest absurdity which is at odds with the plain purpose of the documents.

77 In his oral opening of the case for APAL, of the 20 March 2008 email from Mr Ballew to Snr Rios,[125] Senior Counsel for APAL said:[126]

So we have a couple of lines thrown away which appear to refer to the intended future outcome of the option deed, but not a matter that Señor Rios has any interest in.

As PLA observes, it may or may not be true that Snr Rios was not interested in that matter but, nevertheless, the email was copied to both Messrs Durham and Brandt, and the meaning of those words are inescapably clear and bear repeating:[127]

APAL will retain an ownership interest in any registrations that issue, while Pink Lady America receives a master exclusive licence under the Pink Lady brand for all apples shipped under that brand from Chile to North America.

These words do, in my view, accurately describe the effect of the Option Deed and its continued operation through the clause 5.1 Licence.[128]

78 As contended by PLA, I am of the view that, having regard to the documents and evidence of Mr Durham, it is impossible for APAL to maintain that by 20 March 2008 the parties did not reach a consensus that APAL would take the assignments of the trademark applications[129] then extant at that time, and the registration that had ensued, but that this was done pursuant to a variation of the Option Deed as alleged in paragraph 16AA(a) to (e) of the Second Amended Defence and Amended Counterclaim or pursuant to the New Option as defined in paragraph 16AA(e).[130] Moreover, this conclusion is reached without regard to the raft of subsequent conduct of APAL which makes it clear that the parties conducted themselves as though the option in the Option Deed had been exercised and the clause 5.1 Licence was enlivened and active. This position is also, in my view, entirely consistent with the evident commercial purpose of the arrangements between the parties, to which reference is made elsewhere in these reasons.

79 PLA contends that nothing turns on the fact that the Deed of Variation was not signed by the parties. In addition to a variety of matters which PLA relies upon as providing "cogent and compelling evidence" that the parties did agree to vary the Option Deed to include Rosy Glow, it submits that this position is demonstrated and made very clear by the fact that each of the Joint Brand Licences for the 2008 to 2011 export years included Rosy Glow as permitted varieties.[131] Moreover, in cross-examination, Mr Durham responded to questioning as follows:[132]

Q: ... So, in accordance with your agreement, with your agreement as far as you were concerned the parties were now agreed that Rosy Glow is included within the purview of the option deed clause 5.1; correct?

A: Certainly Rosy Glow and EDVs approved by the parties.

Mr Durham did not qualify his answer to the effect that the agreement was subject to the document being signed by both parties. Additionally, Mr Langford said in cross-examination that he was aware in March 2011 that there was a Deed of Variation, but said that he could not find a signed copy of it.[133] Mr Langford said that he did not recall discussing the matter with Mr Durham before writing to PLA on 11 April 2011[134] asserting that Rosy Glow was not included in the clause 5.1 Licence.[135] Nevertheless, he agreed that if he had discussed the matter with Mr Durham and Mr Durham was of the view that the Rosy Glow was included in the clause 5.1 Licence, he would have accepted this position.[136]

80 The conclusion that although the parties did not sign the Deed of Variation, they conducted themselves on the basis that it was binding is also demonstrated by the manner in which the parties conducted themselves with respect to the Joint Export Licences. By email dated 20 January 2012, Dr Reeves, on behalf of PLA, asserted PLA's right to issue Export Licences in relation to both Cripps Pink and Rosy Glow apples. The Joint Export Licences issued by APAL and PLA for the years 2008, 2009, 2010 and 2011 each defined "Products" to include both Cripps Pink and Rosy Glow.[137]

APAL's Export Licences issued for the 2012-2014 export seasons

81 APAL's Export Licences issued for the 2012 to 2014 seasons, licences which were not issued jointly with PLA, continued to assert that APAL had granted a licence to PLA to use the trademarks in Chile for the purpose of export to PLA territories. This appears from the recitals to those export licences, which were in the following form:

1. APAL is the owner of all rights in the Trade Marks in the Territory and APAL Export Territory.
2. APAL has granted a licence to Pink Lady America to use the Trade Marks only in relation, and to the extent necessary, to export apples of the Cripps Pink variety from the Territory to the Pink Lady America Export Territory.

1. APAL is the owner of all rights in the Trade Marks in the Territory and APAL Export Territory.
2. APAL has granted a licence to Pink Lady America to use certain trademarks only in relation, and to the extent necessary, to export apples of the Cripps Pink variety from the Territory to the Pink Lady America Export Territory. The trade marks applicable under this licence are set out in Schedule 4.

1. APAL is the owner of all rights in the Trade Marks in the Territory and APAL Export Territory.
2. APAL has granted a licence to Pink Lady America to use certain trademarks only in relation, and to the extent necessary, to export apples of the Cripps Pink variety from the Territory to the Pink Lady America Export Territory. The trade marks applicable under this licence are set out in Schedule 4.

82 APAL contends, with respect to the Joint Brand Licences, that they are merely voluntary permissions and nothing more should be read into the words "APAL has granted a licence to Pink Lady America" in Recital B of those licences.[141] Nevertheless, by the 2012 season, the parties had discontinued issuing those Joint Brand Licences. There is no evidence of any correspondence, negotiations, or agreement between APAL and PLA of some other licence granted in the form of that described in APAL's own 2012 to 2014 Export Licences. Absent some further agreement between APAL and PLA, the Recitals can only refer to the clause 5.1 Licence under the Option Deed and hence it must be concluded that the Export Licences were predicated on the clause 5.1 Licence having been enlivened and operational during the currency of these Export Licences. Moreover, Mr Durham accepted that the licence referred to in Recital B of the 2012 APAL Export Licence was a reference to the clause 5.1 Licence under the Option Deed.[142] Mr Langford also agreed that the licence referred to in Recital B of the 2012 APAL Export Licence was the licence that PLA held under the Option Deed.[143]

Commercial reality and the abandonment of contractual rights

83 As discussed previously,[144] APAL contends that PLA assigned the trademarks to APAL without obtaining the benefit of the clause 5.1 Licence under the Option Deed, for its own unstated commercial purpose. This position was, as PLA observes, reiterated in APAL's oral opening in support of an argument that the trademark registration applications were "worthless" and "speculative". Senior Counsel for APAL said that APAL took no benefit when taking the assignments and that:[145]

These were speculative applications which PLA instructed be given over to us and it wasn't a matter of waiting while PLA prosecuted these applications to a result and then taking the benefit of it. It was, if anything, quite the reverse; PLA wanted to get rid of these applications.

This argument put by APAL does, as PLA contends, amount to an argument that PLA abandoned the contractual rights that it held under the Option Deed, most particularly the clause 5.1 Licence.

84 The nature of abandonment of a contract as an inferred discharge by agreement was discussed by Dixon CJ and Fullagar J in Fitzgerald v Masters.[146] Their Honours distinguished between a variety of cases where contracts, which were wholly executory, had been found to be abandoned, and noted it was unlikely that a party which had partly performed a contract would intend to abandon its acquired rights without calling for the return of that which had been given by way of performance.

85 It is true that the situation here is not one of abandonment by reason of inordinate delay, as it was in Fitzgerald v Masters, but I accept that there is no basis for concluding that the same reasoning articulated in that case would not apply with equal force. Here, there is no evidence that PLA intended to abandon its right to the clause 5.1 Licence that it would acquire by the performance of the obligation under the Option Deed to assign the trademark applications, had an Option Notice been served. There is no evidence that PLA invoked clause 6.2 of the Option Deed. Neither is there evidence of PLA calling for the retransfer to it of the applications or the trademarks, except as a consequence of the breach in 2013, on the basis that the clause 5.1 Licence had not been provided to it. Neither is there any evidence that PLA obtained any benefit from assigning the trademark applications and the trademark, if it were not done under the Option Deed. The case that it transferred the applications and the trademark outside the Option Deed does not, in my view, bear analysis in terms of logic or commercial reality. Finally, there is no evidence to suggest, as APAL does, that the applications were burdensome to PLA - presumably to seek to provide an explanation for alleged abandonment of rights.

86 Turning to the latter, the commercial realties were - in my view and for the reasons indicated and on the basis of the evidentiary and other matters relied upon - as set out by PLA in its closing submissions as follows:[147]

(a) The Court is referred to the most eloquent iteration of the commercial reality at Court Book, 890. This is a letter written by Mr Durham to Ms Paiva:

Dear Gabriela,

The successful registration of the Pink Lady trademark has been a fantastic achievement by you. Please accept my congratulations on behalf of the APAL board and all of the international Pink Lady business family. The absence of intellectual property rights in Chile has been a major issue for the Pink Lady business for many years. Your successful registration will certainly play a major role in our collective ability to effectively manage Pink Lady in Chile.

(b) This letter makes clear that APAL regarded the obtaining of registration of the PINK LADY trademarks in Chile as a valuable matter.

(c) It also highlights what is implicit in the letter, that APAL had been unable to obtain those registrations itself. The Court can readily infer that if it could have done so, it would have.

(d) Mr Brandt explained that he was only prepared to transfer ownership of the Chilean trademarks if he could obtain the commercial reality that he needed to have.[148] He said he wanted to ensure that he could maintain the ability to have exports coming from Chile into North America as he had been doing.[149]

(e) When it was put to Mr Brandt that he had the right under clause 6.2 of the Option Deed to assign the applications on a quit-claim basis - he said "But why would I do that?"[150]

(f) During cross-examination no proposition was put to Mr Brandt as to why he would do that. It was also not put to him that he had assigned the applications and the registered mark pursuant to clause 6.2. ...

(g) This is to be distinguished from the cross-examination of Mr Durham who said that he knew that it would make no commercial sense for PLA to agree to make the assignments without obtaining the benefit of the licence under the Option Deed.[151]

87 APAL, on the other hand, argues for the view that there was a commercial benefit to PLA to have assigned the trademarks outside the purview of the Option Deed.[152] The basis of these APAL submissions appears to rely upon a variety of considerations, namely, that prior to 2007, PLA had been issuing licences to exporters in Chile to use the trademarks in the export of apples to North America; and that in entering the Option Deed, PLA regarded the trademark applications as speculative and contracted for the right to assign the applications to APAL on a quit-claim basis under clause 6.2 of that deed.[153] Moreover, it is said that as a consequence of their membership of the IPLA, both APAL and PLA knew that they would all be obliged to move to a refreshed trademark at some point in the foreseeable future and, consequently, the rights under the Option Deed were worthless to PLA. This meant that, as a consequence of the IPLA Operating Agreement, PLA was entitled to use the refreshed trademark after it was introduced and hence did not need the rights under the Option Deed. Additionally, it is said that the registration of the VR Heart logo in Chile presented an insuperable obstacle to the applications for the "PINK LADY" trademarks that PLA had made and that it therefore wanted "to get rid of them". Finally, it is said by APAL that by the joint brand licences that were under discussion, PLA would be able to continue operating its business as it had done in the past.

88 These submissions and arguments on behalf of APAL do, however, in my view, fail at many levels.

89 First, PLA was able to issue export licences prior to 2007 for use of the trademarks because no-one held the registration of those marks in Chile. Upon the trademarks becoming registered and upon APAL becoming the registered owner of those trademarks, without a licence from APAL, PLA would not be able to continue as before. Secondly, upon APAL becoming the registered owner of those trademarks, PLA's ability to control the trade in apples from Chile to North America, in which it was vitally interested, would become legally tenuous and, absent the clause 5.1 Licence, its position would be entirely subject to APAL's "grace and favour". Thirdly, while it is true that PLA acknowledged in the Option Deed that the applications were speculative, it was busily engaged in the exercise of attempting to obtain the trademarks and spending money on lawyers to do so. The clause 6.2 quit-claim right does not in any way mean that the parties regarded the applications as worthless or bound to fail. So far from regarding the registration of the VR Heart as an insuperable obstacle, Mr Brandt did not regard it as an impediment to the applications that PLA had made.[154] It was possible that VR might oppose the applications, but it also might not. Indeed, Mr Brandt said that he did not believe that VR would oppose the applications.[155] Moreover, APAL supported PLA making the applications[156] and I accept that the Court can and should infer that it did so because it thought there might be prospects of success. Indeed, I ask rhetorically, what would be another sensible commercial explanation? The same should be inferred from the fact that APAL took the trouble and expended funds on its lawyers to negotiate and enter the Option Deed.

90 Additionally, the fact that both PLA and APAL were aware that under the IPLA Operating Agreement they would be obliged to move to a refreshed trademark, if and when introduced, does not mean that the rights under the Option Deed were worthless. Mr Brandt was cross-examined in this respect and his view was to the effect that by reason of the similarity of the refreshed trademark to the registered trademarks, a refreshed trademark would be encompassed by the Option Deed.[157] In my view, it is clear that knowledge of this surrounding circumstance and the fact that the clause 5.1 Licence was granted in perpetuity compels the conclusion that it was an implied term that the clause 5.1 Licence would subsist over any refreshed trademark, whenever introduced. Alternatively, it might be said, as PLA contends, that in compliance with their obligations under the IPLA Operating Agreement, the clause 5.1 Licence would necessarily be varied upon that happening. It is not, however, for the reasons previously indicated, necessary to rely on the latter proposition, though this would, in my view, follow from the provisions of the IPLA Operating Agreement in the context of the express or implied agreements between APAL and PLA as found in the Option Deed. As contended by PLA, the obligation on the parties to the IPLA Operating Agreement required the refreshed trademark to be made available by APAL to PLA. The terms upon which that was to be done are not, however, contained within the IPLA Operating Agreement. The Option Deed provided PLA with the clause 5.1 Licence, royalty free, in perpetuity and subject to a very limited right of termination to APAL. The right of PLA to compel APAL to make the refreshed trademark available under the IPLA Operating Agreement is a much more limited right and, it follows, a right which must be inherent in PLA's rights with respect to the grant provided by the 5.1 Licence for that licence to have effect according to its terms, its very broad grant.

91 In my view, the position contended for by PLA with respect to the ambit of the clause 5.1 Licence is the correct position, as the Joint Brand Licences did not provide PLA with the ability to continue its business as it had previously. Unconnected to the clause 5.1 Licence, there was no obligation on APAL to permit PLA to continue to issue them - or indeed to permit PLA to issue any export licence at all. Consequently, it is clear that the alleged commercial purpose for PLA to have made the assignments on a quit-claim basis under clause 6.2 of the Option Deed, or otherwise than pursuant to the Option Deed, is entirely illusory. In the absence of a clearly articulated intention on the part of both parties to have assigned the trademark applications outside the purview of the Option Deed, and a clear commercial benefit to PLA in so doing, APAL's case that this was done must be rejected.

92 In this respect, PLA relies upon a series of correspondence whereby, it is said, APAL and its solicitors expressly and repeatedly wrote to PLA asserting that the option had been exercised by APAL. The correspondence is set out in PLA's opening submissions, as follows:[158]

1. APAL and its solicitors expressly and repeatedly wrote to PLA asserting that the option had been exercised by APAL.

(a) On 11 April 2011 Mr Langford wrote to Mr Brandt and Mr Ballew that:[159]

I have had a chance to review the Option Deed, between PLA and APAL and how I understand this works in respect of Chile. The Option Deed is linked to Cripps Pink and therefore does not apply to Rosy Glow.

(b) On 8 December 2011 Mr Langford wrote to Mr Brandt noting:[160]

As we discussed, Pink Lady America has rights under the Option Deed to complete export arrangements from Chile to its trade mark territories for PINK LADY branded product from Cripps Pink trees only.

(c) By letter dated 9 February 2012 from APAL's solicitors to Dr Reeves of PLA, APAL wrote challenging PLA's right to do anything in Chile in relation to the Rosy Glow variety as follows:[161]

PLA has no right to do so as it has no rights in respect of the PINK LADY trade mark in relation to the Rosy Glow variety in Chile because, absent the "joint export licences", PLA's sole right to use and license the use of the PINK LADY trade mark with respect to Chile arises from an "option deed" entered into between APAL and PLA on or about May 2007 (Option Deed). We enclose a copy of the Option Deed for your reference.

The Option Deed was entered into in contemplation of PLA assigning the PINK LADY Chile trade mark applications to APAL.

We draw your attention to clause 5 of the Option Deed: "in the event that APAL exercises its Option Rights under this Deed (being an option to acquire the PINK LADY trade mark applications in Chile which was, clearly, exercised by APAL), APAL will hereby grant to PLA an exclusive licence to use the Trade Marks with respect to all trade in Products between the Territory i.e. Chile) and North America".

"Products" is defined as "fresh whole apples of the Cripps Pink variety, processed apples of the Cripps Pink variety in the form of fresh cut apple slices, dried apples, apple sauce, apple cider and apple juice".

The "joint licence" was the agreement which permitted PLA to license the PINK LADY mark in respect of apples of the Rosy Glow variety exported from Chile as APAL (being a party to this agreement) approved of this licence. As you would be aware, these licences were issued on an annual basis and so any right of PLA to license the PINK LADY mark in relation to apples of Rosy Glow being exported from Chile was for the limited duration of the "joint export licence".

Clearly, therefore, if the joint export licence is no longer issued, then PLA no longer has any right to license the PINK LADY mark on apples of the Rosy Glow variety which are exported from Chile.

As such, PLA now has no rights in relation to the PINK LADY brand in Chile with respect to any apple variety (including apples of the Rosy Glow variety) other than the Cripps Pink variety.

Therefore, PLA has no authority to do the acts referred to in items (a) and (b), above.

APAL also wishes to bring to PLA's attention that, under the Option Deed, the only PINK LADY logo PLA is licensed to use is the PINK LADY "flowing heart with kangaroo" logo set out in Schedule I of the Option Deed. Consequently PLA is not authorised under the Option Deed to use any logo other than this logo (including, for example, a PINK LADY "flowing heart" logo which doesn't contain the kangaroo image).

(d) In a letter from Mr Langford to Mr Allen Brandt dated 6 March 2012 he wrote:[162]

APAL has granted a right to PLA to issue export licences for PINK LADY in Chile in respect of fruit from Cripps Pink trees, but this right does not extend to any mutations of Cripps Pink such as Rosy Glow.

(e) In a letter from its solicitors dated 8 March 2012 APAL wrote to Dr Reeves:[163]

PLA has no right to issue licences which purport to authorise export of apples from Chile under the PINK LADY trade mark unless consented to by APAL as APAL owns the PINK LADY trade mark registrations in Chile. The Option Deed is the document which gives PLA rights in relation to apples of the Cripps Pink variety. No such rights exist in relation to apples of the Rosy Glow variety or any other apple variety.

(f) On 19 October 2012 APAL explicitly invoked the terms of clause 5.1 of the Option Deed and wrote:[164]

We refer to the Option Deed between Apple and Pear Australia Limited (APAL) and Pink Lady America LLC (PLA) which provides the mechanism for PLA to export Product bearing the Trade Marks from Chile to the USA.

APAL requests confirmation of the following matters:

• that PLA has selected a quality control agent in Chile, in accordance with clause 5.1; and
• that PLA's quality control agent in Chile conducts quality inspections to ensure that the Trade Marks are only used on Products which meet U.S. Fancy Grade standards or better, in accordance with clause 5.1(a)."

(g) On 9 November 2011 APAL again explicitly invoked clauses 5.1(a) and 6.4(e) of the Option Deed and wrote:[165]

We refer to our letter of 19 October 2012 seeking confirmation that Pink Lady America LLC (PLA) has selected a quality control agent in Chile and the agent conducts quality inspections.

As we received no response to our letter, Apple and Pear Australia Limited (APAL) hereby notifies PLA that APAL exercises its rights pursuant to clause 5.1(a) of the Option Deed.

We hereby give PLA seven days notice that APAL or its representatives will inspect and view any of the Products (as defined in the Option Deed) which will be exported from Chile in association with the Trade Marks (as defined in the Option Deed).

In order for APAL to properly carry out the inspections, please provide APAL with the following:

• Details of all companies licensed by PLA to export Product from Chile. This information is requested pursuant to clause 6.4(e) of the Option Deed.
• Details of all licensees who may still pack Product this season, in order for APAL to arrange for an inspection to be conducted.

PLA may wish to inform all of its licensees, unless already provided for in the export licence issued by PLA, of APAL's right to conduct inspections. This will ensure inspections are carried out appropriately, pursuant to clause 6.4(a) of the Option Deed.

(h) On 1 March 2013 APAL by its solicitors wrote to BFT and PLA:[166]

(i) By letter dated 7 June 2013 APAL by its solicitors wrote to PLA's solicitors:[167]

The rights licensed by APAL to PLA in relation to APAL's registered trade marks in Chile for PINK LADY are found in the Option Deed only.

We attach a copy of the Option Deed for your reference.

Under the Option Deed, APAL has granted limited rights to PLA in relation to Chile. These rights are limited to apples of the variety Cripps Pink as the definition of "Products" expressly refers to Cripps Pink apples and are limited to very specific PINK LADY trade marks (set out in schedule 1 of the Option Deed).

Neither PLA nor BFT have any rights in Chile (which include no right to authorise export from Chile) in relation PINK LADY except in relation to apples of the Cripps Pink variety and those rights are only in relation to the specific trade marks set out in schedule 1 of set Option Deed.

93 PLA contends that the post-contractual conduct referred to in the preceding paragraphs is admissible as to the question whether the parties agreed that the Option Deed was varied as alleged or whether the parties agreed to the New Option as alleged, and as to whether the assignments were done in pursuance of those agreements. In my view, for the reasons which follow and, particularly, having regard to the authorities to which reference is made, this is correct.

94 The authorities have now settled the law that post-contractual conduct is not admissible on the question of what a contract means as distinct from the question whether it was formed.[168] It follows that post-contractual conduct is admissible on the question whether a contract was formed.[169] The current state of the law is conveniently summarised in Cross on Evidence to the effect that despite the prohibition on using post-contractual conduct as an aid to construing a contract, such conduct is admissible for a range of purposes:[170]

The post-contract conduct of the parties may, of course, be relevant to matters other than the construction of the document. It may show that the parties varied the terms of the contract, or that one of them waived a right under it; it may be relied on to raise an estoppel or to expose illegality; it may be relevant to show the true intention of the party in so far as that is relevant to a claim for rectification. And where there is a dispute as to the existence of a contract, or the contract is oral or there is a question as to how the contract is to be characterised or there is a question of whether a term was incorporated into a contract, or where there is a question of an implied term, the parties' subsequent conduct may be relied upon to establish the existence of that contract, and what the terms of the contract were, but these are not, properly speaking, cases concerning the interpretation of a document.

Post-contract conduct can be employed to assist in the establishment of what dealings there were between the parties which are said to be contractual: that is a factual controversy often turning on credibility, and subsequent conduct can be relevant to credibility.

95 The law and authority on admissibility of post-contractual conduct was considered at some length by the New South Wales Court of Appeal in County Services Pty Ltd v Challenger Group Holdings Pty Ltd.[171] McColl JA provided the following review of the authorities:[172]

1. Whether a contract has been formed, and the terms of contractual arrangements, requires objective determination: Equuscorp Pty Ltd v Glengallan Investments Pty Ltd[173]; Ermogenous v Greek Orthodox Community of SA Inc[174]; Pacific Carriers Ltd v BNP Paribas[175]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd[176]. Objective determination requires consideration, not only of the text of the documents, but also the surrounding circumstances known to participants, and the purpose and object of the transaction, but not the participants' subjective beliefs: Pacific Carriers Ltd v BNP Paribas[177]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd[178]; International Air Transport Assn v Ansett Australia Holdings Ltd[179].
2. County's submissions emphasised that the Transfer Agreement was made in circumstances where notwithstanding "[o]ffer and acceptance analysis [did] not work well" it was possible to find a contract "even though it [was] not easy to locate an offer or acceptance"[180]. Heydon JA's remarks in Brambles have some resonance in the reference in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd, to - [181]

the cogency of the statement of H L A Hart that usually it is not possible to define a legal concept such as "contract" merely by specifying certain necessary and sufficient conditions for its application because:

any set of conditions may be adequate in some cases but not in others and such concepts can only be explained with the aid of a list of exceptions or negative examples showing where the concept may not be applied or may only be applied in a weakened form.

1. These observations are echoed in Giles JA's statement in Hendriks v McGeoch (at [10]) that - [182]

[a] contract need not be made by formal offer and acceptance, or by an overt course of negotiation [and] [e]ntry into a contract can be found in the conduct of the parties, in what they said and did towards each other.

In the same case Basten JA eschewed an analysis which depended on a distinction between an express contract and an implied contract, preferring the approach that "[i]t is sufficient to ask whether the existence of a contract has been established on the evidence".[183] In this case, as shall become apparent, I have concluded the no loss term for which County contended was an express term of the Transfer Agreement, so that it is unnecessary to consider the implications of Basten JA's observation.

1. In Brambles Heydon JA referred with approval to Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd as reflecting his approach. There McHugh JA (Hope and Mahoney JJA agreeing) said:[184]

[A] contract may be inferred from the acts and conduct of parties as well as or in the absence of their words ... The question in this class of case is whether the conduct of the parties, viewed in the light of the surrounding circumstances, shows a tacit understanding or agreement ... The conduct of the parties, however, must be capable of proving all the essential elements of an express contract ... Care must also be taken not to infer anterior promises from conduct which represents no more than an adjustment of their relationship in the light of changing circumstances ... Moreover, in an ongoing relationship, it is not always easy to point to the precise moment when the legal criteria of a contract have been fulfilled. Agreements concerning terms and conditions which might be too uncertain or too illusory to enforce at a particular time in the relationship may by reason of the parties' subsequent conduct become sufficiently specific to give rise to legal rights and duties. In a dynamic commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to look at the whole relationship and not only at what was said and done when the relationship was first formed.

1. Allsop J (Drummond and Mansfield JJ agreeing) collected, and helpfully summarised, the authorities on this approach to contractual determination in Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd.[185] In that case the parties had had lengthy commercial dealings involving a cattle station in the Northern Territory. In late 1993 their interests were re-arranged and on 23 December 1993 they executed and exchanged a number of documents. The primary judge held that the parties had intended certain matters, not entirely or adequately reduced to writing, to be legally binding. His conclusion was upheld on appeal.
2. Allsop J said:[186]

[A] number of authorities discuss the need not to constrict one's thinking in the formation of contract to mechanical notions of offer and acceptance. Contracts often, and perhaps generally do, arise in that way. They can also arise when business people speak and act and order their affairs in a way without necessarily stopping for the formalities of dotting i's and crossing t's or where they think they have done so ... Sometimes this failure occurs because, having discussed the commercial essentials and having put in place necessary structural matters, the parties go about their commercial business on the clear basis of some manifested mutual assent, without ensuring the exhaustive completeness of documentation. In such circumstances, even in the absence of clear offer and acceptance, and even without being able (as one can here) to identify precisely when a contract arose, if it can be stated with confidence that by a certain point the parties mutually assented to a sufficiently clear regime which must, in the circumstances, have been intended to be binding, the court will recognise the existence of a contract. Sometimes this is said to be a process of inference or implication_. For my part, I would see it as the inferring of a real intention expressed through, or to be found in, a body of conduct, including, sometimes, communications, even if it be the case that the parties did not consciously advert to, or discuss, some aspect of the relationship and say: 'and we hereby agree to be bound/ in this or that respect. The essential question in such cases is whether the parties' conduct, including what was said and not said and including the evident commercial aims and expectations of the parties, reveals an understanding or agreement or, as sometimes expressed, a manifestation of mutual assent, which bespeaks an intention to be legally bound to the essential elements of a contract._ The authority for the above can be found in, at least, the following: Meates v Attorney-General;[187] Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Aust) Pty Ltd;[188] Vroon BV v Foster's Brewing Group;[189] Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd;[190] Pagnan SpA v Feed Products Ltd;[191] Pobjie Agencies v Vinidex Tubemakers;[192] Brambles Holdings Ltd v Bathurst City Council[193]; though see Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd;[194] and in this context see also Electrical Enterprises Retail Pty Ltd v Rodgers[195] and Manzi v Smith.[196]

Some authorities, for example, Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd, citing Williston on Contracts,[197] refer to the possibility of this class of contract, lacking manifested offer and acceptance, as rare. For my part, I think the use of such language of prediction of frequency tends to create an unwarranted presumptive barrier to the application of the approach referred to above.

96 PLA submits in this respect that the Option Deed was varied or that the New Option was agreed and implemented. It also alleges that the parties agreed to include the variety "Rosy Glow" within its purview. APAL denies that this is the position. In any event, these issues go directly to the question of what was the agreement reached between the parties and what were its terms. PLA contends in this respect that the post-contractual conduct is admissible and compels the conclusion that: first, the parties reached an agreement that APAL took the assignments at that time; secondly, that PLA had the benefit of the clause 5.1 Licence; and, thirdly, that Rosy Glow was included within its purview. In terms of the evidence supporting this position, PLA relies upon the provisions of the Joint Brand Licence Agreements issued in 2008 to 2011 by APAL and PLA, and also APAL's Export Licences which were issued for the 2012 to 2014 export seasons. The evidence in the latter respect has already been discussed.[198] Accordingly, attention is now directed to the Licences issued between 2008 and 2011. In any event, for the reasons which follow and those already set out with respect to the export licences, the position contended for by PLA is, in my view, well supported by the evidence.

97 The Joint Brand Licences issued between 2008 and 2011 each did two things. First, they included Rosy Glow within the permitted products to which PLA could authorise exporters to apply the trademarks;[199] and they contain a Recital A that reads:[200]

APAL is the owner of all rights in the Trade Marks in the APAL Export Territories and has granted a licence to Pink Lady America to use the Trade Marks in the Territory to the extent necessary for it to enter into this Licence.

98 APAL's case on these Joint Brand Licences is that they were not agreed to by APAL on the basis of the clause 5.1 Licence in the Option Deed but, rather, were mere "voluntary permissions" given by APAL to PLA on an annual basis.[201] The nature of the licences and their significance in the present context requires consideration as to how, as PLA puts it, they "were to play on the ground in Chile".[202]

99 The Joint Brand Licences were licences by APAL to exporters who wished to export apples under the trademarks to APAL's export territories. They were also a licence by PLA to exporters who wished to export apples under the trademarks to PLA's export territories. The relationship of APAL and PLA to the trademarks that were to be applied in Chile were, however, different. APAL was the owner of these trademarks and PLA was not. In order for PLA to be able to license an exporter to apply those trademarks in Chile to the relevant apples, the exporter would be concerned to know that it, the exporter, was properly authorised to do so. The only way that PLA could authorise the exporter to do so was if PLA had been granted a licence from APAL as the registered owner of the trademarks to permit this. As recorded in Recital A to these Joint Brand Licences, the position stated for the benefit and information of the exporter was that PLA had been granted such a licence by APAL. Consequently, it is the position, in my view, that, as contended by PLA, the Joint Brand Licence must be understood as a document that springs from the different legal positions that APAL and PLA had in respect of the trademarks under the "PINK LADY" brand in Chile. This licence accommodates those different positions and amalgamates them in a way that produced one document for both APAL and PLA to use for the purpose of licensing exporters to export apples under the "PINK LADY" brand to their respective territories.

100 This position was reaffirmed by Mr Ballew in cross-examination:[203]

Well, there was linkage between two things. The option deed was the first step and then, with the exercise of the option, that then put into effect the licence between APAL and Pink Lady America, and then the question was how best to present the respective trademark rights and licences to the Chilean industry, and the strategy that was agreed upon was a single document. Rather than Pink Lady America going to the exporters with one document and APAL going with a different one and having them trying to negotiate one form or another between the two, it was decided that a joint approach seemed to make more commercial sense.

101 Arguing against this position, APAL places great emphasis on the fact that the VR Flowing Heart logo, that was registered to VR, could not properly be incorporated into the 2008 Joint Brand Licence until the TMMLA with VR was concluded. It follows, APAL contends, that the fact that the VR Flowing Heart logo was not one of the trademarks included in the Option Deed, that this meant that the 2008 Joint Brand Licences, which did include the VR Flowing Heart logo, were not linked to the Option Deed. The position put by APAL in this respect does, however, fail to acknowledge that the Joint Brand Licence accommodates, first, APAL's position as the owner of the "PINK LADY" trademarks in Chile, which included the VR Flowing Heart logo; and secondly, PLA's position as the exclusive licensee under the clause 5.1 Licence of the right to authorise the use of, amongst other things, the Flowing Heart with Kangaroo logo. In my view, the correct position is, as contended by PLA, that the presence of the VR Flowing Heart logo as an authorised trademark under the 2008 Joint Brand Licence merely reflects the blended nature of the document.

102 Nowhere in any of the evidence is there any express or implied licence granted by APAL to PLA other than that provided for in terms of the clause 5.1 Licence of the Option Deed. In his evidence, Mr Durham accepted that the 2008 Joint Brand Licence constituted the export licence that PLA was permitted to utilise as a result of the clause 5.1 Licence that he had agreed with Mr Brandt.[204] Initially, Mr Langford asserted that the 2011 Joint Brand Licence that he was responsible for approving had absolutely nothing to do with the Option Deed and that the Joint Brand Licence did not need to make any reference to the Option Deed.[205] Mr Langford did, however, agree that: "Somebody at APAL was ensuring that there was proper concordance between the Option Deed and this joint brand licence"[206] and that "the position that you put that the joint brand export licences had absolutely nothing to do with the Option Deed was incorrect."[207] This evidence followed Mr Langford being taken to a draft of the 2011 Joint Brand Licence which contains the following note:

According to the Option Deed with Pink Lady America, this trademark is not the word mark but is the Flowing Heart with kangaroo device.

103 As PLA observes, it was put to Mr Brandt in cross-examination that Recital A to the 2008 Joint Brand Licence was not related to the Option Deed. Mr Brandt's answer was, as noted, instructive:

Yes, I didn't frankly care about the other agreement. I looked at this as a direct output and only possible because of the option agreement and the variation deed that we put together. This was the result of it. That's my extent of my examination and my interest in this agreement, that it actually endorsed everything that we had put on the plate and done.

In the absence of a clear articulation of some basis upon which the 2008 Joint Brand Licence was agreed, other than the Option Deed and the Deed of Variation, there would be no objective basis for thinking anything else; and there is none in the evidence.

104 For the preceding reasons, it follows, in my view, that APAL's assertion that there was some alternative basis upon which APAL might have granted a licence to PLA as stated in Recital A of the Joint Brand Licence, principally on the basis of the TMMLA between APAL and VR, simply fails the test of credibility. As a footnote to this contention, PLA says:[208]

An attorney acting for two clients in related matters on the basis that there is no conflict of interest between them, does not thereby have the individual retainers of each of them merged into some sort of joint retainer. The Court should not accept the inference that because Mr Ballew acted for both PLA and VR, that each act of his constituted an act done in both capacities. Neither should it accept that Mr Ballew's knowledge acquired on behalf of VR is imputed to PLA.

The Court should note that Mr Brandt did not see the APAL/VR TMMLA until in discovery in this proceeding and was not privy to its negotiation.[209] Mr Ballew said that if he had copied Mr Brandt into any emails relating to it, that was a matter of oversight: Transcript 423. Indeed, there are many emails in the Court Book relating to the APAL/VR TMMLA that are not copied to Mr Brandt.[210]

For the reasons advanced by PLA and on the basis of the material relied upon, I am of the view that its contentions in this respect are well established.

105 The development of the Joint Brand Licence Agreements by APAL and PLA were intended to be the primary means by which the export trade using the "PINK LADY" brand was to be managed in Chile. It does not follow, however, that this documentation was the repository of all rights as between APAL and PLA.[211] The Joint Brand Licence was the document by which the management of the export trade from Chile under the "PINK LADY" brand was controlled by APAL and PLA as Licensors on the one hand and exporters on the other. In this context, Recital A in the 2008-2011 Joint Brand Licences states:

APAL is the owner of all rights in the Trade Marks in the APAL Export Territories and has granted a licence to Pink Lady America to use the Trade Marks in the Territory to the extent necessary for it to enter into this Licence.

Clearly, the licence described in this Recital must only refer to the clause 5.1 Licence under the Option Deed.

106 As it is common ground that the 2009, 2010 and 2011 Joint Brand Licences are based on the 2008 version of the Joint Brand Licence, it follows that these Joint Brand Licences are part of the post-contractual conduct that evidences: first, the variation of the Option Deed as pleaded in paragraph 16AA(a)-(d) of the Second Amended Defence and Amended Counterclaim; second, and alternatively, the New Option alleged in paragraph 16AA(a)-(e) of the Second Amended Defence and Amended Counterclaim; and, thirdly, that whichever of these analyses applies, the parties agreed that the "Rosy Glow" variety would be included in the clause 5.1 Licence under the Option Deed on the basis of the Deed of Variation.

Is APAL estopped from denying the option was exercised and the clause 5.1 Licence was enlivened?

107 In the alternative, PLA's case is that the parties conducted themselves at all times on the assumed basis that the option had been exercised under the Option Deed and that it would be unjust for APAL now to deny that this was so.

108 APAL, in support of its contention that the elements of estoppel by convention are not established, makes reference to various authorities.

109 In Strategic Property Reservoir Pty Ltd v Condec Pty Ltd, Almond J summarised the principles relating to the doctrine of estoppel by convention, as follows:[212]

[178] Estoppel by convention is founded on the conduct of relations between the parties on the basis of an agreed or assumed state of affairs (whether as to a matter of fact or a matter of legal effect), which both will be estopped from denying. The assumed state of affairs takes as a given the terms of the contract between the parties, but from which the parties have departed in the course of furthering their relationship under the contract.

[179] In the Indian Grace, Lord Steyn said:[213]

an estoppel by convention may arise where parties to a transaction act on an assumed state of facts or law, the assumption being either shared ... or made by one and acquiesced in by the other. The effect of an estoppel by convention is to preclude a party from denying the assumed facts or law if it would be unjust to allow him to go back on the assumption.

[180] In Ryledar Pty Ltd v Euphoric Pty Ltd (which also concerned an alleged variation to terms of a contract), the New South Wales Court of Appeal summarised the elements required to establish an estoppel by convention.[214] The plaintiff must prove that:

(a) the plaintiff has adopted an assumption as to the terms of its legal relationship with the defendant;

(c) both parties have conducted their relationship on the basis of that mutual assumption;

(d) each party knew or intended that the other act on that basis; and

(e) departure from that assumption will occasion detriment to the plaintiff.

110 In Ryledar Pty Ltd v Euphoric Pty Ltd, Tobias JA observed that an estoppel by convention applies "for the period of time and to the extent required ... [O]nce a common assumption is revealed to be erroneous the estoppel would not apply to future dealings between the parties".[215]

111 In Ell v Ell, the New South Wales Court of Appeal recently stated:[216]

[33] Where the conventional basis upon which the parties conducted themselves is not revealed by the contract, it is open to the parties to establish a common assumption by other means. There may be respects in which such a common assumption can be articulated will be imprecise; nevertheless, it must be clear that there was a common assumption and as to the core content.

[34] There is authority for the view that the common assumption must be communicated or manifested by both parties; that reflects the explanation given by Dixon J in Thompson v Palmer (and repeated in Grundt v Great Boulder Proprietary Gold Mines Ltd) that "[w]hether a departure by a party from the assumption should be considered unjust and inadmissible depends on the part taken by him in occasioning its adoption by the other party". In Coghlan v SH Lock (Aust) Ltd Samuels JA (with whom Hope JA agreed), observed in relation to this passage "I do not think that, in the context of Grundt's case, the reference to 'the adoption' of the assumption excludes estoppel if ... the assumption was originated by the party asserting the estoppel and fostered by the opponent". The High Court has since reiterated that "there is no estoppel unless it can be shown that the alleged assumption has in fact been adopted by the parties as the conventional basis of their relationship". That raises a factual question.

[35] Because it is necessary that both parties have adopted the common assumption as the conventional basis of their transaction, at the very least the common assumption should be capable of articulation, once the factual circumstances have been established.

112 The approach to be applied is illustrated in Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd, where the High Court held:[217]

The final question is whether the parties are bound by an estoppel by convention because their business relationships were conducted on the footing that the broker alone was liable to the insurer. If so, Norwich cannot maintain the present action. Estoppel by convention is a form of estoppel founded not on a representation of fact made by a representor and acted on by a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying. The existence of an estoppel based on a convention between the parties has often been recognized.... But in our opinion the doctrine has no application to the present case for two reasons. First, there is no estoppel unless it can be shown that the alleged assumption has in fact been adopted by the parties as the conventional basis of their relationship.... In the absence of proof of custom, there is no evidence that the parties adopted the alleged assumption. Secondly, just as estoppel by representation requires a representation of fact, so too estoppel by convention requires the assumed state of affairs to be an assumed state of fact.... The state of affairs relied on by Con-Stan is that the parties conducted their business relationship on the basis that the broker was alone liable to the insurer for the premiums. That is clearly an assumption as to the legal effect of their conduct, and not an assumption of fact. The submission with respect to estoppel accordingly fails.

113 APAL draws attention to more recent authority which has cast doubt upon whether the second reason given by the High Court in the passage quoted above represents the law in Australia, and suggests that this question remains unsettled.[218]

114 On the basis of the authorities, APAL contends that in this case, the evidence does not establish that the parties conducted their relationship on a common, assumed basis that the Option had been exercised by APAL or the clause 5.1 Licence was enlivened, nor that each party knew or intended that the other would act on that basis. For the reasons which follow, I do not accept this position to be the case.

115 The conduct relied upon by PLA includes, in part, conduct to which reference has already been made in these reasons.[219] The critical conduct is, in my view, in all relevant respects objective and evidenced by the communications between the parties, and not to any extent based on subjective belief.[220] The further conduct relied upon by PLA in this respect begins with Mr Ballew, on 20 March 2008, writing to Snr Rios and copied to Mr Durham, Mr Hamilton and Mr Brandt.[221] The email concerned Snr Rios' querying of instructions to withdraw opposition to PLA's trademark applications in Chile. In this respect, Mr Ballew wrote:[222]

There is an agreement in place between APAL and Pink Lady America that provides for an early transfer of the pending Pink Lady applications in Chile subject to the continued prosecution of those applications being handled by Gabriela Paiva for the joint benefit of both APAL and Pink lady America. APAL will retain an ownership interest in any registrations that issue, while Pink Lady America receives a master exclusive licence under the Pink Lady brand for all apples shipped under that brand from Chile to North America ...

It is clear that this email is relevantly describing the effect of the option having been exercised and the clause 5.1 Licence having been enlivened. There was no evidence that APAL dissented from this position, in the correspondence between the parties or otherwise.

116 Each of the Joint Brand Export Licences from 2008 to 2011 were issued jointly by APAL and PLA and contained the following in Recital A:[223]

APAL is the owner of all rights in the Trade Marks in the APAL Export Territories [which included Chile] and has granted a licence to [PLA] to use the Trade Marks in the Territory [Chile] to the extent necessary for it to enter into this Licence.

The same language continued to be used by APAL in its own separate Export Licence for the 2012 year.[224] In APAL's Export Licences in the 2013 year[225] and 2014 year[226] a slightly different form of words was used, but, nevertheless, still expressly referring to the grant of a licence.

117 The licence that PLA provides to Chilean exporters under that Joint Brand Licence is to use the trademarks in association with apples of the Cripps Pink and Rosy Glow varieties to be exported to the USA, Canada and Mexico.[227] The terms of the 2008 Joint Brand Export Licence for the "PINK LADY" brand were under negotiation at the same time as the parties were negotiating and concluding the Deed of Variation and the assignment of the pending trademark applications.[228] As has been mentioned previously in these reasons, APAL's submissions assert that these Joint Licences were nothing other than "voluntary permissions granted by APAL, in conjunction with PLA, which relate to a specific shipping season, and are limited to specified fruit."[229]

118 There is no mention in the correspondence to which reference has been made of APAL giving to PLA some licence to use the trademarks in Chile other than a licence under clause 5.1 of the Option Deed. Having regard to this and the proximity in time to the conclusion of the Deed of Variation and the assignments of the application and trademark, the only possible conclusion must be that the licence referred to in Recital A is the clause 5.1 Licence under the Option Deed.

119 APAL emphasises in its submissions that on a position taken by Mr Ballew in 2008 that the Option Deed does not change the ability of PLA to directly license exporters in Chile to export "PINK LADY" brand apples to North America.[230] Nevertheless, the context of this discussion must be considered. It concerned the form of the licence having regard to the fact that APAL had concluded the TMMLA with VR. The discussion concerned the issue by APAL of the licence to exporters to APAL export territories. It did not concern PLA at all. APAL took the view that, in light of this fact, the proper party to provide the APAL licence under the Joint Licence was VR. Mr Ballew was concerned that the parties had agreed that collection of fees had to occur outside Chile and by parties other than VR. His view was that there were legal and political impediments to VR so doing.[231] Mr Hamilton, however, took a different view. He noted that the basis of the licensing mechanism was that the collection of the royalty was done by the importer in the destination country pursuant to a licence granted by VR to the exporter.[232] Mr Ballew then responded raising various arguments including that the Pier-to-Pier Licensing system did not involve the use of any intellectual property in Chile.[233] Mr Ballew recited the history that PLA had previously directed licensed exporters to export "PINK LADY" apples to any licensed importer in North America. He asserted that neither the Option Deed nor the Variation Deed changed this. This was overreaching. The changed circumstance that APAL had become the registered owner of the "PINK LADY" trademarks in Chile had necessitated PLA obtaining the exclusive licence under clause 5.1 of the Option Deed and utilising it to grant licences under the Pier-to-Pier system provided for. I accept PLA's submission that merely because Mr Ballew incorrectly stated this point does not negate the parties' assumption that the option had been exercised and the clause 5.1 Licence had been enlivened. Ultimately, APAL and VR agreed to amend the TMMLA such that APAL would directly issue its licences under the Joint Brand Export licences.[234]

120 At this point, having made reference to the Joint Brand Export licences and the TMMLA, it is convenient to discuss what is, in my view, APAL's mischaracterisation of the effect of the TMMLA with respect to those licences as this mischaracterisation underpins an argument put by APAL that PLA was acting other than on the basis of the enlivened clause 5.1 Licence.

121 The critical provisions of the TMMLA in this context are as follows:[235]

1. APAL owns the APAL Extraterritorial Registered Trade Marks outside of the Territory. APAL has taken assignment from Pink Lady America, LLC, of a pending Chilean trademark application for the PINK LADY brand. APAL also owns pending Chilean trademark applications for the FLAVOR ROSE brand, and the CRIPS brand, which are additional brands used in the PINK LADY branded program.
2. Viveros Requinoa owns the Heart Logo Trade Marks in the Territory.

1. Viveros Requinoa desires to assign the Heart Logo Trade Marks to APAL, in order to consolidate ownership of the PINK LADY brand, and related trademarks, to a single entity in the Territory.

1. APAL desires to grant Viveros Requinoa the master exclusive licence in the Territory for the Heart Logo Trade Marks, the PINK LADY brand, and all related trademarks.
2. APAL further desires to designate Viveros Requinoa as APAL's "manager" in the Territory to provide all professional and technical services required by APAL in the Territory to administer the Export Licences that APAL issues to Chilean exporters with respect to the APAL Extraterritorial Registered Trade Marks.
3. Viveros Requinoa desires to accept from APAL the exclusive licence in the Heart Logo Trade Marks and all PINK LADY brand related trademarks in the Territory, and further desires to accept APAL's designation as APAL's "manager" in the Territory for the all Export Licences that APAL issues to Chilean exporters.

In this Agreement, including the recitals, schedules and annexures, unless the context otherwise requires:

APAL Chilean Trade Marks means the Heart Logo Trade Marks after Viveros Requinoa has assigned them to APAL and APAL has reimbursed Viveros Requinoa for the costs related to the registration of the Heart Logo Trade Marks; all trademarks that are assigned or transferred to APAL from Pink Lady America; all future APAL trademarks in Chile related to the PINK LADY brand, the FLAVOR ROSE brand, and the CRIPS brand; and the Chilean trademark rights in any other brands, logos, or trademarks that APAL uses anywhere in the world in connection with the sale of fresh whole apples, and any other products, made from Cripps Pink variety apples, Rosy Glow variety apples, or any other Essentially Derived Varieties.

Essentially Derived Varieties means any apple varieties which are essentially derived varieties from the Cripps Pink apple variety, from the Rosy Glow variety, or from any other sport mutation of Cripps Pink, within the meaning of the laws of the relevant territory

Export Licence means the export licences titled "PINK LADY® BRAND EXPORT LICENCE" that APAL issues to Chilean exporters licencing the exportation of Produces or Licensed Products from Chile to a Licensed Importer located in an Export Territory, and also includes any other licences, authorizations, or permissions, either direct or indirect, whether written or oral, by which APAL grants any rights to any Chilean growers, packers, marketers, shippers or exporters to export Products or Licensed Products from Chile to a Licensed Importer located in an Export Territory, including all such licences that are in effect in Chile as of the Commencement Date, and all future Export Licences that APAL grants in Chile during the Term of this Agreement.

Export Territory means a territory in which APAL owns APAL Extraterritorial Registered Trade Mark rights, to which Products or Licensed Products are exported to from Chile, but excludes the US, Mexico and Canada;

Licensed Products means Products which are sold, or otherwise dealt with in the course of trade, using the APAL Extraterritorial Registered Trade Marks as authorised under an Export Licence, or using the APAL Chilean Trade Mark rights as authorised under this Agreement or a Sub-Licence;

(a) fresh whole apples of the Cripps Pink variety, or the Rosy Glow variety, which meet the quality specifications prescribed under clause 9;

(b) fresh whole apples of other Essentially Derived Varieties as approved in writing by APAL from time to time and which meet the quality specifications prescribed under clause 9;

(c) processed apples of the Cripps Pink variety, or the Rosy Glow variety, or other Essentially Derived Varieties in the form of fresh cut apple slices, dried apples, apple sauce, apple cider or apple juice;

1. Grant of Master Licence and Designation of "Manager"

Subject to clause 2.2 APAL hereby grants to Viveros Requinoa an exclusive master licence to use, exploit, or to prohibit or stop the sue or exploitation of, the APAL Chilean Trade Marks in relation to Products produced and sold in the Territory or imported into the Territory.

APAL hereby designates Viveros Requinoa as APAL's "manager" in the Territory to provide all services, including professional and technical services, required by APAL in the Territory to administer all Export Licences issued by APAL that are currently in effect as of the date of this Agreement, and all Export Licences that APAL may issue in the future. APAL expressly consents to Viveros Requinoa employing the Global Licensing Associate, Ltda, a Chilean company based in Santiago, Chile, to carry out some or all of the services for which Viveros Requinoa is responsible to provide in the Territory as APAL's "manager", "subject to the Global Licensing Association's written agreement to adhere to all the terms and conditions of this Agreement". The APAL Export Licences only licence the exportation of Product or Licensed Product to Licensed Importers in Export Territories. APAL will advise Viveros Requinoa of the names of all such Licensed Importers as of the Commencement Date of this Agreement, and will provide Viveros Requinoa with written updated information within 5 Business Days after APAL becomes aware of any new information about new or existing Licensed Importers.

(a) Viveros Requinoa is prohibited from issuing any sub-licences authorizing the export of Product or Licensed Products under the APAL Chilean Trade Marks to any Export Territory. Also, this Agreement does not grant to Viveros Requinoa any rights under APAL's Extraterritorial Registered Trade Marks, and so Viveros Requinoa has no power to grant any sub-licences under the APAL Extraterritorial Registered Trade Marks.

(b) Viveros Requinoa may issue, at Viveros Requinoa's absolute discretion, sub-licences for domestic use of the APAL Chilean Trade Marks inside of the Territory, subject to APAL's express written approval, which may be withheld at APAL's absolute discretion.

122 APAL's case is that the TMMLA and the Joint Brand licences, rather than the clause 5.1 Licence, were to govern Chile. This position is, however, not supported by the provisions of the TMMLA.

123 Recital A of the TMMLA recites APAL's ownership of the APAL Extraterritorial Registered Trade Marks outside of the "Territory". The word "Territory" is defined in clause 1.1 of the TMMLA to mean Chile. Continuing with Recital A, it is said that APAL has taken assignment from PLA of a pending Chilean trademark application for the "PINK LADY" brand. Recital B states that VR owns the "Heart Logo Trade Marks" in the Territory, namely, Chile. These are the Flowing Heart trademarks which the evidence established were not in use. Recital C states that VR desires to assign these trademarks to APAL in order to consolidate ownership of the "PINK LADY" brand and related trademarks to a single entity in the Territory, namely, Chile. It follows that the result will be a Master Exclusive Licence within Chile, that is, domestically. Recital E states that APAL also desires to designate VR as APAL's "manager" in the Territory, that is, Chile, to provide all professional and technical services required by APAL in Chile to administer the Export Licences that APAL issues to Chilean exporters with respect to the "APAL Extraterritorial Registered Trade Marks". In other words, the stated intention in these recitals is that APAL wanted VR to manage the Export Licences that APAL would issue in respect of export to territories controlled by APAL. Recital F is consistent with this position.

124 I turn now to some relevant definitions made within the TMMLA. The expression "APAL Chilean Trade Marks" means the Heart Logo trademarks after VR assigned them to APAL; all trademarks assigned or transferred to APAL from PLA; all future APAL trademarks in Chile related to the "PINK LADY" brand, the Flavor Rose brand and the "Crips" brand, and the Chilean trademark rights in any other brands, logos or trademarks that APAL uses anywhere in the world in connection with the sale of fresh whole apples and any other products made from Cripps Pink variety apples, Rosy Glow variety apples or any other EDVs. In relation to these provisions, APAL observed, rightly, in my view, that by this stage it is clear that APAL is firmly committed to Rosy Glow being used, which is why there was so little resistance or ready acceptance to the Deed of Variation. Moreover, the "Essentially Derived Varieties" definition does include Rosy Glow.

125 A further definition of considerable importance is the definition of "Export Licence", which means the export licences titled "PINK LADY® Brand Export Licence" that APAL issues to Chilean exporters licensing the exportation of "Products" or "Licensed Products" from Chile to a Licensed Importer located in an "Export Territory". The expression "Export Territory" is also defined and means a territory in which APAL owns "APAL Extraterritorial Registered Trade Mark" rights to which "Products" or "Licensed Products" are exported from Chile "but excludes the US, Mexico and Canada".[236] Thus, it is clear, as submitted by PLA, that VR's role in managing exports from Chile specifically excludes their role as being involved in the export to North America - that is, to the US, Mexico or Canada. It follows that neither the provisions of TMMLA nor the provisions of any of the Joint Export licences affect the operation of the licence under clause 5.1 of the Option Deed and thus these agreements do not detract from PLA's position that the clause 5.1 Licence was enlivened and in operation, as were the provisions of the Deed of Variation. In other words, the TMMLA simply does not permit VR to issue export licences in respect to North American exports, or to administer them.

126 PLA also observes that, in spite of these provisions of the TMMLA, until the issue of these proceedings, APAL continued to assert that the Option had been exercised and that the clause 5.1 Licence gave rights to PLA to authorise the export of apples under the "PINK LADY" brand from Chile to North America. Moreover, under cross-examination, Mr Durham accepted that the clause 5.1 Licence was active, or had been enlivened, and that APAL behaved as though that were so.[237] I accept that this is cogent evidence going to the assumption that APAL had throughout accepted and acted on the basis that this was the position. Additionally, Mr Langford expressly states that he assumed that the clause 5.1 Licence had been enlivened[238] and in cross-examination said that throughout the relationship until the commencement of these proceedings, APAL's position was always that the clause 5.1 Licence had been enlivened.[239] He also accepted that APAL's view was that the option clearly had been exercised.[240]

127 Mr Brandt was not cross-examined on whether or not PLA acted upon the assumption that the Option had been exercised or that the clause 5.1 Licence was enlivened. The issue was, however, nearly reached in cross-examination in relation to the Joint Brand Licences. It was, in cross-examination, put to Mr Brandt that it was his understanding that Recital A of the 2008 Joint Brand Licence[241] was not related to the Option Agreement. His response was that:[242]

I looked at this as a direct output and only possible because of the option agreement and the variation deed that we put together. This was the result of it. That's my extent of my examination and my interest in this agreement, that it actually endorsed everything that we had put on the plate and done.

Mr Brandt was also cross-examined about a letter written by Dr Reeves on 15 February 2012 in which Dr Reeves asserted that the export licences did not use any Chilean trademark rights. Mr Brandt disagreed with Dr Reeves' position and asserted the rights that PLA had to use the Chilean trademarks as a result of the provisions of the Option Deed.[243]

128 Finally, consistently with the position that the parties did act on the assumption that the clause 5.1 Licence had been enlivened, there was no other contemporaneous evidence to the contrary. For this and the preceding reasons, I am of the opinion that an estoppel by convention does apply so as to prevent APAL from now denying that this was so.

Does the clause 5.1 Licence relate only to the trademarks listed in the Schedule to the Option Deed?

129 As has been observed previously, the Option Deed refers, in its terms, to certain trademarks and devices which are listed in Schedule 1 to that Deed. Nevertheless, both APAL - by its predecessor AAPGA - and PLA were parties to the IPLA Operating Agreement.

130 As submitted by APAL, this issue must be addressed in light of the proper approach of the courts to the construction and interpretation of commercial contracts.[244] The proper approach to the construction and interpretation of commercial contracts was considered by the High Court in Electricity Generation Corporation v Woodside Energy Ltd, where the plurality said:[245]

[T]his Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". As Arden LJ observed in Re Golden Key Ltd (in rec), unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption "that the parties ... intended to produce a commercial result". A commercial contract is to be construed so as to avoid it "making commercial nonsense or working commercial inconvenience".

131 Reference should also be made to the following statement of Mason J in Codelfa Construction Pty Ltd v State Rail Authority (NSW):[246]

[W]hen the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.

132 In Codelfa, Mason J also referred to the "true rule", namely, that "evidence of surrounding circumstances is admissible to assist in the interpretation of [a] contract if the language is ambiguous or susceptible of more than one meaning." The current status of the "true rule" is the subject of some conjecture[247] which is not of present moment.

133 Finally, a general principle concerning the use which may be made of the parties' conduct subsequent to the making of the contract should be noted: "[I]t is not legitimate to use as an aid in the construction of [a] contract anything which the parties said or did after it was made".[248]

134 It is the case, as APAL contends, that the Option Deed is a formal written agreement which was signed by the parties. It was the result of a process of negotiation and drafting in which the parties were represented by lawyers throughout. It is also the position, as APAL contends, that the manifest purpose of the Option Deed is to regulate the parties' respective rights with respect to the trademarks the subject of pending applications made by PLA in Chile, both prior to and after any successful registration of those trademarks.

135 APAL also contends that the Option Deed identifies in clear and plain language the trademarks to which the clause 5.1 Licence relates, as follows:

(a) Clause 5.1 states that "APAL will hereby grant to PLA an exclusive licence to use the Trade Marks..." (emphasis added).

(b) "Trade Marks" is defined to mean "the pending trade marks as set out in Schedule 1".

(c) Schedule 1 is headed "Trade Marks" and it contains a table with details of three trademarks the subject of applications then pending.

136 In this way, APAL says, the parties confined their agreement and the scope of the clause 5.1 Licence to the particular trademarks the subject of PLA's pending applications. The clear and plain language of the deed, APAL submits, does not permit of any doubt as to the parties' intention in this regard. APAL also submits that giving effect to that clear and plain language leads to the sensible, commercial result that the clause 5.1 Licence is limited to the trademarks the subject of the applications made by PLA and not some different and unspecified trademarks, whether registered at the time the Option Deed was entered into (for example the VR marks in Chile and the "PINK LADY" word mark in many other countries around the world) or trademarks which may in the future be developed for use and become registered (for example the "updated Flowing Heart logo"). For the reasons which follow and having regard to the commercial aspects[249] of the Option Deed and the dealings between the parties, I do not accept that the approach for which APAL contends leads to a sensible commercial result or that it otherwise constitutes the proper approach to the construction and interpretation of a commercial contract in conformity with the authorities to which reference has been made. Moreover, this issue, as argued by PLA is, at least principally and critically, one of construction and interpretation - and not of variation of the terms of the Option Deed in circumstances where clause 12 of that deed may come into play and thus require alteration or variation in writing signed by each party.[250] In any event, as discussed elsewhere, the parties may agree to transcend such a provision, expressly or implicitly.[251]

137 As noted previously, the IPLA Operating Agreement was an agreement between the international stakeholders in the "PINK LADY" brand for - [252]

the purpose of maintaining high quality standards for all apples sold internationally under the PINK LADY brand, to establish standards for consistent advertisement and marketing strategy, and where appropriate, to adopt a uniform and consistent packaging design in order to promote sales of apples under the PINK LADY Trademarks.

Moreover, clauses 4 and 6 of the IPLA Operating Agreement provided as follows:[253]

4. Advertising, Marketing, and Packaging. All parties to this Agreement agree to meet (or to confer by telecommunications means) on a mutually scheduled basis, but in no event less than once every year, to establish a consistent advertising and marketing strategy for use of the PINK LADY Trademarks and the methods of selling apples under the PINK LADY Trademarks, and to establish a uniform and consistent design for all packaging used to store, ship, display and sell PINK LADY brand apples. The advertising and marketing strategy, and packaging design must be agreed upon by three fourths (75%) of the parties to this Agreement, with each Master Representative entitled to a total of two votes, except the Australia Representative and AAPGA which shall each have one vote. The agreed upon advertising and marketing strategy, and packaging design, shall be committed in writing or color illustration when they are adopted by vote, and a copy provided to all parties. Once voted upon and approved, the agreed upon strategy and packing design shall be used by all parties to this Agreement, regardless of whether a particular party has agreed or disagreed with the approved strategy or packaging design. A meeting or telecommunications conference to discuss a new strategy or packaging design, or any issue concerning the existing strategy or packaging design, may be scheduled by agreement of three fourths of the parties to this Agreement. The current approved advertising and marketing strategy shall be appended to this Agreement as Appendix E. Illustrations of the current approved packaging design shall be appended to this Agreement as Appendix F.

...

6. Breach of this Agreement. The failure of any Master Representative to adhere to the minimum quality standards established under the procedure set forth in Section 3 above, or the failure to adhere to the advertising and marketing strategy established under the procedure set forth in Section 4 above, or any failure to confer or breach of any agreement reached between parties under the procedure set forth in Section 5, shall be a breach of this Agreement.

138 Under the IPLA Operating Agreement, the parties were obliged to implement any strategy agreed upon by a 75 per cent majority of members as to the uniform development of trademarks for the sale of apples under the "PINK LADY" brand. There had been discussion amongst IPLA members that a single refreshed "flowing heart" logo should be developed and utilised globally to enhance its consumer recognition; discussions which had been continuing from 2007.[254] Significantly, in the present context, by 9 May 2007, the Executive of the IPLA had determined to develop a Brand Manual that would represent a manual of "do's and don'ts" of the "PINK LADY" brand.[255] It is significant in the present context that the logo represented in the heading of the Minutes of this Executive meeting shows a representation of the refreshed "flowing heart" logo. Consequently, it must be accepted that it was apparent from these circumstances that both APAL and PLA knew that it was the intention of the IPLA that the refreshed "flowing heart" logo would become the mandated logo to be used on all promotion, advertisement and packaging of apples under the "PINK LADY" brand. It is clear that the IPLA Operating Agreement bound both APAL and PLA to conform to that arrangement. The documents and conduct relevant in this respect are set out in Mr Brandt's witness statement.[256]

139 Within a short space of time, particularly having regard to the perpetual nature of the clause 5.1 Licence, the Brand Manual was produced.[257] The effect of the Brand Manual in the context of the IPLA Operating Agreement provisions was clear. It required the parties to use the refreshed "flowing heart" logo and to cease using old trademarks. It is also noteworthy, as PLA observes, that APAL had the principal responsibility for producing the Brand Manual and was the steward of the brand.

140 If there was any doubt that it was APAL's intention that all those using the "PINK LADY" brand should use the updated "flowing heart" logo, this was dispelled by the Chairman of APAL, Mr Dall, who wrote in the December 2008 "PINK LADY" Association Newsletter that the AGM and Directors Meeting of the IPLA had been held in October 2008 in New Zealand, noting that:[258]

The introduction of the Pink Lady Brand Guidelines manual at the 2008 IPLA AGM, which specifies globally the requirements of the Pink Lady brand and adoption of a new, refreshed Pink Lady logo, means that new packaging and labelling will be introduced in 2009.

141 By the time the 2010 Joint Export Licence was agreed between APAL and PLA, it contained on its front cover images of both the old "flowing heart" logo with kangaroo and the refreshed "flowing heart" logo.[259] It is plain from these matters that IPLA required all parties, including PLA, to move to the use of the refreshed "flowing heart" logo and it did so, with the knowledge of APAL. By about 2012, almost all exports of Cripps Pink apples to North America under the "PINK LADY" brand were using the refreshed "flowing heart" logo.[260]

142 For these reasons, I am of the opinion that the parties must have intended that the licence to PLA under clause 5.1 of the Option Deed would include any such logo that became the mandated logo to be used internationally. Otherwise, the licence to PLA would become worthless within a period that was shortly contemplated to occur. This conclusion is reinforced by the perpetual nature of the licence under clause 5.1 of the Option Deed within a landscape where the parties knew that the required trademarks may, and indeed shortly would, change.

143 Finally, I observe that it is significant that the first time that APAL sought to restrict PLA's right to use anything other than the trademarks set out in the Option Deed was by letter from APAL's solicitors to Dr Reeves of PLA dated 9 February 2012.[261] This letter was written in the context of APAL and PLA having fallen into substantial dispute. Having regard to the matters already discussed, I am of the view that the position adopted on this point appears to be opportunistic and to fly in the face of the way the parties conducted themselves prior to falling into dispute. Additionally, I note that APAL relies upon clause 12 of the Option Deed, which requires that any variation of the Option Deed be in writing signed by the parties, as an impediment to any variation of the Deed that is not in writing. Such a clause is, of course, ineffective where the parties have agreed to make the variation concerned otherwise than in writing.[262]

144 As now appears to be accepted by APAL,[263] the IPLA Operating Agreement imposed obligations on APAL and PLA to implement the Updated Flowing Heart Logo, although it denies that this has either of the effects contended for by PLA. It follows, in my view, that the obligation on the parties to comply with the Operating Agreement, and their knowledge that the IPLA would move to a refreshed mark are surrounding circumstances to be taken into account in construing the term "Trade Marks" in the Option Deed. Having regard to these circumstances, and that the grant of the clause 5.1 Licence was in perpetuity, the construction that "Trade Marks" includes any mark the parties were obliged to use as a consequence of a decision taken by the IPLA is overwhelmingly compelling; particularly in the commercial context of the Option Deed and wider commercial considerations as between APAL and PLA.[264]

145 This position is, however, not one embraced by APAL:[265]

1. In PLA's Outline of Opening Submissions reference is made to this known circumstance and it is submitted that:
   1. The parties must have intended that the licence to PLA under clause 5.1 of the Option Deed would include any such logo that became the mandated logo to be used internationally. Otherwise the licence to PLA would become worthless within a period that was shortly contemplated to occur.
   2. This conclusion is reinforced by the perpetual nature of the licence under clause 5.1 within a landscape where the parties knew that the required trademarks may, and indeed shortly would, change.
2. That submission cannot be sustained on an application of orthodox principles of contractual construction to the uncontroverted facts. In an objective assessment of the parties' presumed common intention, the fact that the parties knew at the time they entered into the Option Deed that the Trade Marks (as defined) would likely soon not be in use, and they nevertheless expressed the clause 5.1 Licence as being confined to the Trade Marks, compels the conclusion that the parties did not intend clause 5.1 Licence to extend to "any such logo that became the mandated logo to be used internationally". A fortiori where, as here, the parties were advised by lawyers who documented the parties' agreement in a deed signed by the parties. In contending for the opposite conclusion, PLA seeks impermissibly to subjugate and override the plain and unambiguous language of the parties' written agreement in favour of an unstated and contrary supposed intention.

146 Thus, APAL's argument runs that because the parties knew that a refreshed mark would be introduced and did not include language expressly accommodating for that mark means that they did not intend it to be included. In my view, APAL's submissions in this respect lead to an absurd result, particularly in the context of the commercial aspects discussed in these reasons.

147 Moreover, the APAL position involves offending or ignoring the explicit language in the clause 5.1 Licence: if the APAL position were correct, the clause 5.1 Licence would only have a very limited life. Yet the licence is granted in perpetuity.[266] The parties knew that the IPLA Operating Agreement obliged them to utilise any mark that was agreed by the IPLA members. How else can the perpetual licence be understood, if not that the parties intended it to include any refreshed mark that they were obliged to implement by the IPLA? This emphasises that the construction contended for by PLA is the commercial and reasonable one. Indeed, if APAL's contention were to be accepted, it would render the entire exercise of entering into the Option Deed a patent waste of time. If that were the correct construction, then PLA could simply have assigned the application and any marks that ensued to APAL with no conditions attached. This was plainly not the intention of APAL or PLA. Moreover, the argument advanced by APAL that the position is otherwise with respect to this position and the commercial considerations to which reference is made in these reasons on the basis of what can only be described as subsidiary provisions in the Option Deed with respect to copyright licensing is not sustainable.[267] For all these reasons, the Option Deed had no real or significant work to do as between the parties other than with respect to the clause 5.1 Licence. That was the heart of the "deal" between them (with apologies to "flowing hearts").

148 APAL objects that the IPLA possessed no means of enforcing its decisions or to compel the parties to implement such decisions.[268] Even if that is correct (which it is not), that is not to the point for two reasons: first, the Court should not without evidence impute to the parties the intention to breach their contracted obligation under the IPLA Operating Agreement;[269] and, secondly, the obligations in that agreement are part of the surrounding circumstances known to the parties from which the Court will find the objective intention of the parties to the contract.

149 The alternative view contended for by PLA is that the Option Deed was varied so as to include that refreshed mark once the decision to implement the Brand Manual was taken in October 2008. Having regard to the preceding reasons, it is not necessary to address this point.

Does the clause 5.1 Licence have limitations in terms of the geographical trade to which it applies?

150 In about early 2011, Mr Langford appears to have become involved in managing APAL's relationship with PLA. On 11 April 2011, Mr Langford wrote to Mr Brandt and Mr Ballew that "the Option Deed is linked to Cripps Pink and therefore does not apply to Rosy Glow."[270] This was the commencement of APAL's adopting the position that PLA's rights under the Option Deed did not include Rosy Glow. The issue actually arose in the context of issues relating to "tree certification" in Chile. The tree certification process is a process by which an entity certifies that a tree is true to the type of apple tree that it purports to be. That is, in the present circumstances, that what purports to be a Cripps Pink or Rosy Glow tree is indeed a tree of that type.[271] The issue of "tree certification" is not, however, relevant to the question whether APAL breached the Option Deed by denying that PLA was entitled to utilise the clause 5.1 Licence in relation to apples of the Rosy Glow variety.

151 By email dated 19 May 2011, Mr Ballew confirmed a conversation with Mr Langford in which Mr Ballew advised that PLA did have the right to issue licences to export Rosy Glow apples from Chile to North America.[272] It is, however, clear from the tone of emails at this time that relations between Messrs Langford and Ballew had become severely strained.

152 A further issue arose between about June and August 2011 in relation to the form of licence PLA was to issue for the 2011 export year for apples to be exported from the United States to APAL Territories. This was not the same licence issued in respect of the Chile export trade and is not to be confused with it. Rather, the issue concerned, among other things, whether the form of licence APAL required would involve it and PLA in what might be considered anti-trust conduct in the United States, conduct which would attract criminal sanctions.[273]

153 In December 2011, Mr Langford advised PLA by email that APAL would no longer issue joint export licences with PLA in respect of the Chile trade.[274] This email stated that under the Option Deed, PLA had rights in respect of Cripps Pink only and that the recitals in APAL's Export Licence would be amended to reflect that. The email further stated that APAL would seek to be licensed by PLA to issue export licences for Rosy Glow apples destined for PLA Territories. APAL purported, by this conduct, to assume the role that PLA had under clause 5.1 in respect of the Rosy Glow apples.

154 Dr Reeves, on behalf of PLA, wrote, on 20 January 2012, to Mr Langford advising that PLA would issue its own separate export licence in respect of both Cripps Pink and Rosy Glow apples.[275] On 7 February 2012, APAL issued its Brand Export Licence for Chile,[276] which noted in its recitals that PLA was licensed by APAL in respect of Cripps Pink variety apples only. This licence also defines Pink Lady Territories as the United States, Canada and Mexico.[277] A few days later, on 9 February 2012, APAL's solicitors wrote to PLA asserting that PLA had no right to issue licences for the export to North America of Rosy Glow apples under the "PINK LADY" brand.[278] As observed previously, this letter also sought to restrict PLA's trademark use to the old "flowing heart" with kangaroo logo.

155 PLA responded, on 15 February 2012, by email asserting that it was entitled to issue export licences for Rosy Glow apples exported from Chile to North America.[279] PLA also advised that it would no longer issue joint licences with APAL in New Zealand. On 23 February 2012, APAL responded advising that it would no longer issue joint licences with PLA anywhere in the world.[280] In a letter dated 6 March 2012 from Mr Langford to Mr Brandt, Mr Langford again noted that APAL had granted rights to PLA in respect of Cripps Pink, but not Rosy Glow.[281] APAL's solicitors again wrote to PLA, by letter dated 8 March 2012, on this occasion denying that PLA had any rights in respect of the Rosy Glow variety.[282] In a responsive letter, dated 15 November 2012, from PLA to APAL, PLA noted, among other things, that APAL had lodged a US trademark application for the "PINK LADY" brand.[283]

156 PLA contends that, by this stage, it is apparent that APAL was actively engaged in conduct that was intended to damage PLA and, or alternatively, BFT and their business. It is said that this is further reinforced by its conduct in encouraging exporters in the United States to export to the United Kingdom their Cripps Pink apples "unstickered" - meaning not utilising the "PINK LADY" trademarks that PLA held - thus depriving PLA of royalties and then relabelling them upon arrival under the "PINK LADY" brand. Royalties then would be payable to Pink Lady Europe.[284] Following correspondence between BFT and APAL in relation to royalty payments from BFT to APAL under the Canada Agreement,[285] on 26 July 2013, APAL purported to issue a Notice of Termination of the Canada Licence.[286] BFT disputed APAL's right to issue such a notice.[287]

157 Moreover, the 2013 Chilean Export Licence issued by APAL excluded Canada from the defined PLA Export Territories.[288] Further, on 16 April 2013, APAL issued a letter to Master Licensees and Managers noting that the Canada Agreement was limited in scope to Cripps Pink apples and did not apply to Rosy Glow apples.[289] This letter also noted that for exports of Rosy Glow apples to Canada, APAL's licences apply and that no royalty is payable to BFT.

158 Focussing first upon the exclusion of Canada from the reach of the clause 5.1 Licence, it is contended that the issue by APAL of the 16 April 2013 letter to Master Licensees and Managers in which they were advised that no export licence other than that issued by APAL was required or authorised for the export of apples from APAL Territories to Canada[290] and of its 2013 Brand Licence in April 2013 that excluded Canada from PLA's defined Territories and included Canada among APAL's defined Territories,[291] each constituted clear breaches of the clause 5.1 Licence. When examined about those documents, each of Messrs Durham[292] and Langford accepted as much.[293] Moreover, APAL's conduct in excluding Rosy Glow from the clause 5.1 Licence is also a breach.[294]

159 In my view, this conduct does make out the position put by PLA that APAL thereby restricted PLA's rights under the clause 5.1 Licence by excluding Canada from its reach. Regardless of whether the Canada Agreement was validly terminated or not, the clause 5.1 Licence constituted an independent contractual right granted by APAL to PLA to license the export of apples under the "PINK LADY" brand from Chile to Canada. In my view, it is correct to say that the excision of Canada by APAL was a fundamental breach of that Licence. Moreover, for the preceding reasons, the Deed of Variation was agreed by the parties and extended the varieties within the ambit of the clause 5.1 Licence to Rosy Glow. Consequently, the denial of this right with respect to this variety was similarly a fundamental breach of that Licence.

Does the clause 5.1 Licence include the right to sub-license?

160 APAL contends that the clause 5.1 Licence does not include the right to sub-license or assign any rights.[295] PLA denies this and refers in its pleading to clause 5.1 of the Option Deed (which, PLA alleges, "includes the right to establish a Pier-to-Pier Licensing system as defined") and to the joint export licences issued for the 2008-2011 shipping seasons (which, PLA alleges, "includes the grant by PLA of a non-exclusive sub-licence to growers to utilise the trademarks in the export of product from Chile to North America").[296]

161 APAL submits that the construction for which it contends accords with the plain language of the Option Deed:

(a) The right that is conferred by the clause 5.1 Licence (if enlivened) is a limited right "to use the Trade Marks with respect to all trade in Products between the Territory and North America_"_ (emphasis added).

(b) It is a right that is personal to PLA, as appears from the text of clause 5.1 and is stated in clause 11.1 ("The rights and obligations of each party under this Deed are personal").

(c) By clause 6.2 "PLA also agrees not to assign or license any rights in the Trade Marks in the Territory to any party other than APAL".

(d) By clause 11.2 "[t]he parties may not assign or otherwise deal with their rights or obligations under this Deed_"_.

(e) It is not stated in clause 5.1 or elsewhere in the Option Deed that PLA is permitted to issue sub-licences in respect of the right under clause 5.1, nor does it state the terms upon which that may occur. There is no cause to read into the Option Deed the language that would be needed to achieve that effect.

162 Additionally, APAL submits that, contrary to PLA's pleaded position, neither the reference to the "Pier-to-Pier Licensing System" in clause 5.1 nor the joint export licences for the 2008 to 2011 shipping seasons support a conclusion that the clause 5.1 Licence includes the right to sub-license or assign any rights.

163 In support of the latter submission, particularly, APAL says that in respect of the "Pier-to-Pier Licensing System", in clause 5.1 it is stated that "APAL acknowledges that PLA has the unrestricted right to establish and maintain a Pier-to-Pier Licensing System regarding all trade between the Territory and North America involving the Trade Marks". That is, it says, an acknowledgement by APAL as to a present state of affairs, at the time the Option Deed was executed;[297] not a description of rights to be conferred by the clause 5.1 Licence in the event that the Option was to be exercised.

164 Moreover, APAL says that Mr Brandt gave evidence that, prior to entry into the Option Deed, PLA "had initiated the Pier-to-Pier licensing system earlier, and that required a licensed exporter that had the duty to ensure that the material was true to type and met our grade standards", and that this was administered in Chile for PLA by VR and involved export licences in writing which related to use of BFT's US trademarks for packing and distribution purposes in the export trade towards America and Mexico.[298] Mr Brandt confirmed that that system continued until there was a joint export licence with APAL in 2008, and that the business PLA was doing with respect to the sale of apples in that way continued unchanged by the entry into the joint export licence and until 2011.[299] APAL submits that this bears out what is clear from the language of the Option Deed, that the "Pier-to-Pier Licensing System" continued without change under the Option Deed, whether or not the Option was exercised and the clause 5.1 Licence was enlivened.

165 Finally, APAL again seeks to emphasise a point it made a number of times, namely its characterisation of the joint export licences for the 2008 to 2011 shipping seasons are voluntary permissions granted by APAL, in conjunction with PLA, which relate to a specific shipping season, and are limited to specified fruit. Further, it says that in the contemporaneous communications between the parties, PLA eschewed any link between the Option Deed and PLA's right to license exporters in Chile to export "PINK LADY" branded apples to North America. From 2012, APAL and PLA abandoned the joint export licences and issued separate export licences.[300] As discussed elsewhere in these reasons, I am of the view that this is a mischaracterisation of these licences, so APAL's position is not advanced by this submission.[301]

166 I turn now to consider this issue in light of these submissions and those of PLA.

167 Under the clause 5.1 Licence, PLA was granted the exclusive right to use the trademarks with respect to all trade in Products between the Territory and North America. PLA is not a Chilean grower of apples and so in respect of trade from Chile to North America, the only relevant way in which the clause 5.1 Licence can operate is to permit PLA to license Chilean exporters to use the trademarks on their apples destined for North America. This accords with the practice that had been occurring for years and of which APAL was well aware. This construction is reinforced by the next part of the clause 5.1 Licence provisions by which APAL acknowledges that PLA will have the right to re-establish and maintain a Pier-to-Pier Licensing System with respect to all trade between the Territory and North America involving the trademarks. The Pier-to-Pier Licensing System is defined to include, at least among other things, an export licence by which the exporter is authorised to ship goods bearing the trademark from the Territory to any licensed importer in North America.

168 By reason of these matters, APAL acknowledges that PLA will establish such a system by which the exporter holds an export licence to ship goods bearing the trademarks from Chile to North America. In my view, as PLA contends, this can only mean sensibly that the licence to use the trademarks granted to PLA under clause 5.1 includes the right to authorise exporters to apply the trademarks on goods for export destined for North America. I accept that to hold otherwise would denude the clause 5.1 Licence of its obvious intended effect; particularly in the commercial context of the Option Deed, which has already been discussed in the preceding reasons.[302]

169 APAL argues that the words contained in clause 5.1 with respect to establishing and maintaining a Pier-to-Pier Licensing System are words that merely acknowledge an extant state of affairs - that is, a present state of affairs at the time the Option Deed was executed. APAL says that this is not a description of rights to be conferred by the clause 5.1 Licence in the event that the Option was to be exercised. In my view, accepting APAL's submission would emasculate the meaning of the words "establish and maintain"; again, particularly in a commercial context.

170 In this respect, PLA also relies upon the Macquarie Dictionary (3rd edition) definition of the word "maintain", as follows:[303]

1. to keep in existence, or continuance; preserve; retain.
2. to keep in due condition, operation, or force; keep unimpaired.
3. to keep in a specified state, position.

PLA contends that each of these meanings connotes action to maintain a state of affairs into the future, hence the argument that the use of the word does no more than describe a present state of affairs is untenable.

171 Quite apart from considerations of language and dictionary definitions, I am of the view that APAL's submissions in this respect fail to take account of the chain of circumstances that would pertain once APAL was to become the registered owner of the trademarks in Chile. Absent PLA's rights under the Option Deed to issue an export licence to an exporter, as registered owner of the trademarks in Chile, APAL would have the ability to prevent PLA from authorising an exporter to apply the trademarks to apples and packaging that was destined for export to a PLA controlled territory. The Pier-to-Pier Licensing System is defined in the Option Deed and as permitted to be operated by PLA under the clause 5.1 Licence requires an:[304]

Export Licence document in place for each company that is exporting the good bearing the trademark from the Territory to North America. The Export Licence would authorize the licensed exporter to ship goods bearing the trademark from the Territory to any licensed importer in North America.

These words clearly contemplate PLA issuing the Export Licence. Indeed, in my view, the Joint Brand Licences issued for the 2008 to 2011 years are the Export Licences contemplated under that clause.

172 APAL alleges that PLA breached clause 6.4(b) and (d) of the Option Deed and thereby repudiated the Option Deed, which repudiation APAL has accepted, resulting in the termination of the Option Deed. PLA denies that it has breached and repudiated the Option Deed as alleged by APAL.

173 APAL says that the basis upon which PLA seeks to defend the allegations of breach and repudiation were clarified by its Counsel in opening PLA's case, as follows:[305]

[I]t seems to us that it falls this way. If my client is right about that implied term of the agreement, then it's entitled to be the owner of the mark and therefore do all the things that it has done, and the oppositions to that conduct by our learned friends would be a breach of those rights or an interference with those rights. If my client is wrong as to that, then it falls the other way.

Accordingly, APAL says, PLA's defence to this claim hinges upon the fate of its argument that there is an implied term - which was enlivened in the circumstances - that APAL is obliged to re-assign the "PINK LADY" trademarks to PLA. APAL contends that there is no such term in the Option Deed, a matter which is discussed further in the reasons which follow. On this basis, APAL submits that it follows that PLA breached and repudiated the Option Deed and that APAL has accepted the repudiation and terminated the Option Deed.

174 APAL relies upon a number of matters in support of its contention of breach and repudiation of the Option Deed by PLA. First, reference is made to the provisions of the Option Deed, which PLA is said to have breached. These provisions have been set out previously, together with other related provisions of the Option Deed, but it is, nevertheless, convenient to set them out here so that it is entirely clear which provisions are the basis of the allegations by APAL. The relevant provisions are as follows:[306]

6.4 Mutual Obligations of Parties

Both APAL and PLA undertake:

...

(b) not to do, or assist any other person to do, any act which would or might:

(i) invalidate or put in dispute PLA's or APAL's title to the Trade Marks;

(ii) invalidate, or render unenforceable, any registration of the Trade Marks in due course; or

(iii) support an application to remove the Trade Marks as registered Trade Marks in the Territory;

...

(d) not to use a substantially identical or deceptively similar mark to the Trade Marks in the Territory without the written authorisation of APAL after the date of the assignment;

Reference is also made to clause 6.2 of the Option Deed, where it states that:[307]

PLA does agree that it will not create through its own actions, or the actions of any person under PLA's control, any encumbrances in or over the Trade Marks or Applications.

175 APAL contends that PLA has breached these obligations and repudiated the Option Deed by directly attacking APAL's rights as owner of "PINK LADY" trademarks in Chile, citing by way of example:

(a) In March 2013, PLA filed an opposition to APAL's application to register a "PINK LADY" trademark in Chile.[308]

(b) In September 2013, PLA filed applications to register "PINK LADY" trademarks in Chile,[309] which are the same as or substantially identical to APAL's registered trademarks.

(c) Since August 2013, PLA has asserted to APAL and the industry that PLA has "revoked" APAL's rights to use the "PINK LADY" trademarks in Chile and "taken back" from APAL the ownership, management and control of the "PINK LADY" brand in Chile, and that PLA is entitled to be registered as proprietor and to use such trademarks with respect to all trade in apples of Cripps Pink and other varieties.[310]

(d) PLA has moved to implement a "Royalty Simplification Plan" for Chile, in purported exercise of its rights to own, manage and control the "PINK LADY" brand in Chile.[311]

APAL also relies upon the matters set out in Mr Langford's witness statement with respect to PLA's conduct alleged to be in breach and repudiation of the Option Deed.[312] APAL also sets out, by way of illustration of PLA's conduct, the form of the 2014 export licences which PLA issued to Chilean exporters, which include the following recitals:[313]

1. In 2013 APAL breached the 2007 Agreement with Pink Lady America, and consequently Pink Lady America has now terminated that contract and reclaimed ownership of all Pink Lady Trademarks identified in Schedule 2, for all goods and classes, in Chile.

1. Because of APAL's breach of its 2007 Agreement with Pink Lady America, Pink Lady America has terminated the APAL licence and any use of its Trademarks and now controls the complete, exclusive and permanent rights to license and control all exports from Chile, and imports into Chile, of all apple varieties and apple products, and related goods, using the Trademarks between Chile. This includes the right to license and control all exports from Chile, all trade between Chile and North America, and imports from all countries into Chile, of all approved apple varieties using the Trademarks.

176 APAL also contends that, as a result of APAL referring to the Option Deed in this way - in terms of the "2007 Agreement" - it is thus common ground that the Option Deed has been terminated. On the basis of further illustration, APAL makes reference to a letter dated 1 April 2014 to all marketers and exporters in the apple industry in Chile, which was written by PLA:[314]

RE: 2014 Chilean Exports of Pink Lady® Brand Apples from Chile to any Country

2014 Chilean Shipments to North America

Dear Marketer/Exporter,

The big news for 2014 is that Pink Lady America has taken back from APAL the ownership and management of the Pink Lady® Brand in Chile. Few people know that Pink Lady America was the original owner of the first successful Pink Lady® trademark registration in Chile. Since 2007, Pink Lady America had an agreement with APAL allowing APAL to administer the Pink Lady® Brand in Chile, subject to certain requirements. APAL did not honor that agreement, and so starting in 2014 Pink Lady America has taken back control of the Pink Lady® Brand in Chile.

Be assured, you will enjoy Pink Lady® Brand management in Chile under Pink Lady America. You are a commercial company, and Pink Lady America is a commercial company. We speak the same commercial language, and we have the same goals - to increase your profits and your usage of the Pink Lady® Brand. So the first question in your mind is: Will I have to pay higher royalties now? The answer is NO. Your royalty rates will be the same or less. In fact, our first action in Chile is to implement a Royalty Simplification Plan for the Pink Lady® Brand. This Plan has two parts:

1. Royalty Simplification Plan for Chile-North America - Starting immediately Pink Lady America is offering a 50% discount on the royalty for Pink Lady® Brand apples shipped to North America, and the only requirement is that you must agree to send all of your fresh market Cripps Pink or Rosy Glow apples that are U.S. Fancy grade or better as Pink Lady® Brand apples. Slicing apples can still be sent however you want. The normal royalty for Chile-North America is $77 USD/metric ton, so a 50% discount means a royalty of only $38.50 USD/metric ton. To accept this 50% royalty discount, just check the "I Agree" box in Section 2.6 of the enclosed 2014 Shipping Licence, sign the Licence at Section 2.6, and sign again at the end of the Licence.

2. Royalty Simplification Plan for Chile-World (Except North America) - In 2014, there will be NO CHANGE in your royalties for exports to APAL countries.

APAL contends that the conduct of PLA in sending this letter constitutes a direct challenge to APAL's rights as owner of the "PINK LADY" trademarks in Chile, which APAL says is in flagrant breach of the PLA's obligations under the Option Deed. There is no issue as to whether this letter was sent. The issue is, rather, its significance in the context of dealings between the parties.

177 In any event, APAL contends that PLA's conduct clearly evinces the intention no longer to be bound by the Option Deed. Moreover, it is said that PLA has committed serious breaches of the Option Deed which go to its very root, and it has persisted with its untenable assertion of full ownership and control of the "PINK LADY" brand in Chile. Indeed, APAL says, it is not possible to regard PLA's conduct other than treating the Option Deed and PLA's obligations as at an end. Thus, it is said that the Option Deed has been repudiated by PLA, and APAL has accepted the repudiation and terminated the parties' agreement.

178 APAL's case that PLA has breached the Option Deed requires a finding by the Court that APAL's own conduct was not in breach of the Option Deed and that it is entitled to retain ownership of the trademarks. For the preceding reasons, that is not the position that has been reached.

179 In terms of PLA, the conduct alleged against it by APAL constitutes the breach of clause 6.4(b) and, or alternatively, clause 6.4(d) of the Option Deed does not offend against the Option Deed in that, upon APAL's conduct breaching the clause 5.1 Licence, PLA became entitled to a re-assignment of the trademarks and to exercise the rights of the owner.

180 Moreover, even if PLA's conduct was in breach of the Option Deed and was repudiatory conduct, which it denies, as discussed elsewhere in these reasons, the clause 5.1 Licence survives any termination of the Option Deed.[315]

181 PLA alleges that APAL breached the provisions of the Option Deed by:

(a) applying to register the "updated Flowing Heart logo";

(b) purporting to limit the geographical reach of the clause 5.1 Licence to United States of America and Mexico, and to exclude Canada; and

(c) asserting that the clause 5.1 Licence applies to Cripps Pink variety of apples only, and not to the Rosy Glow variety of apples.[316]

PLA pleads that the alleged breaches by APAL constitute a repudiation of the Option Deed.[317] The alleged breaches and repudiation are denied by APAL.[318]

182 APAL contends that the breaches alleged in paragraphs (a) and (c), above, are not established by PLA because the Option Deed is not to be construed, and it was not varied, in the manner for which PLA contends. APAL says, more specifically, that the clause 5.1 Licence does not include the "updated Flowing Heart logo" or the new definition of "Products" which were contained in the draft "Deed of Variation". For the preceding reasons, I do not accept that this is the position and, rather, am of the view that PLA has established its case in respect of these matters.[319]

183 APAL also contends that in respect of the alleged breach set out in paragraph (b), above, PLA relies upon the form of export licence which APAL used for the 2013 shipping season,[320] in which the term "Pink Lady America Export Territory" is defined to mean "the United States of America or Mexico". Moreover, APAL says that PLA also placed reliance upon the APAL letter dated 16 April 2013 addressed to "PINK LADY Master Licensees and Managers".[321] APAL also says that in the form of export licence which APAL used for the 2014 shipping season,[322] the term "Pink Lady America Export Territory" was defined to mean "the United States of America, Canada or Mexico". It also says that the form of export licence that was issued by PLA for the 2012 shipping season granted a licence in respect of exports to the "Pink Lady America Export Territory", which it was defined by PLA to mean USA only.[323]

184 By 2013, APAL and BFT had fallen into dispute and, by a notice dated 26 July 2013,[324] APAL terminated the licence between APAL and BFT in respect of "PINK LADY" trademarks in Canada.[325] BFT disputed APAL's entitlement to terminate the Canadian licence. Consequently, APAL says that whether the Canadian licence was terminated, and therefore whether PLA was entitled to licence any importations of "PINK LADY" branded apples into Canada, are not issues in this case. Moreover, APAL submits that PLA adduced no evidence of any harm to PLA caused by the statements made by APAL excluding Canada from the reach of any clause 5.1 Licence in 2013. In the circumstances, APAL says, there is no issue of loss to be investigated hereafter, and no basis for an argument in favour of a right to terminate for breach or repudiation based on the scale of consequences of any breach as going to the root of the contract or depriving PLA of the substantial benefit of the contract, being the Option Deed. In a similar vein, APAL says that even if it were the fact that the Option Deed extended to include Rosy Glow apples or an updated flowing heart logo, which it denies, PLA adduced no evidence of harm flowing to PLA as a result of either denial. Continuing, it says that in fact the 2014 export licence adopted by PLA extended to the updated logo on the basis solely that an application had been made for that mark in the USA.[326] In the circumstances, APAL contends that there is no issue of loss to be investigated hereafter on these accounts either, and no basis for an argument in favour of a right to terminate for breach or repudiation based on the scale of the consequences of either alleged breach as going to the root of the contract or depriving PLA of the substantial benefit of the Option Deed.

185 The first response of PLA to these submissions by APAL that no harm or damage was caused by these breaches is that this is a trial on liability only, so questions of harm and damage do not arise at this point. Secondly, PLA submits that the clause 5.1 Licence was given in perpetuity. Moreover, it is said that the exclusion of Canada and Rosy Glow from its purview are matters that do not require express evidence for the Court to infer that damage will follow. I accept that it does seem to be common ground that Rosy Glow will produce substantial export of product from Chile in due course.[327] Having regard to the perpetual nature of the clause 5.1 Licence and that the licence was the sole benefit received by PLA in exchange for assignments, this conduct was both a breach productive of damage and, as discussed in these reasons, of sufficient gravity to be repudiatory. APAL's position in this respect was, however, maintained in correspondence between solicitors.[328]

186 The principles governing repudiation of a contract were helpfully summarised by Ashley JA in R & A Cab Co Pty Ltd v Kotzman as follows:[329]

[44] The appellant's case rested, as I have said, solely upon the submission that the respondent had repudiated the contract. I should shortly state some of the key principles which emerge from the authorities.

[45] First, in Shevill and Anor v The Builders Licensing Board, Wilson J said that - [330]

[r]epudiation of a contract is a serious matter and is not to be lightly found or inferred: Ross T. Smyth & Co, Ltd v T. D. Bailey, Son & Co.[331] In considering it, one must look to all the circumstances of the case to see whether the conduct "amounts to a renunciation, to an absolute refusal to perform the contract": Mersey Steel and Iron Co v Naylor, Benzon & Co.[332]

[46] In the same case, Gibbs CJ observed that a binding contract - [333]

may be repudiated if one party renounces his liabilities under it - if he evinces an intention no longer to be bound by the contract (Freeth v Burr) or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way.

[47] Second, whether a party's conduct amounts to repudiation is - [334]

not ascertained by an inquiry into the subjective state of the mind of the party in default; it is to be found in the conduct, whether verbal or other, of the party in default which conveys to the other party the defaulting party's ... intention not to perform it or to fulfil it only in a manner substantially inconsistent with his obligations, and not in any other way.

[48] Third, it has been stated very often that the whole circumstances of the case must be examined in order to see whether there was repudiation. Lord Keith of Kinkel put it this way in Woodar Investment Development Ltd v Wimpey Construction UK Ltd:[335]

My Lords, in deciding the issue of repudiation which arises in this appeal, the guiding principle is that enunciated by Lord Coleridge CJ in Freeth v Burr.

In cases of this sort, where the question is whether the one party is set free by the action of the other, the real matter for consideration is whether the acts or conduct of the one do or do not amount of an intimation of an intention to abandon and altogether to refuse performance of the contract.

The matter is to be considered objectively - per Bowen LJ in Johnstone v Milling:

The claim being for wrongful repudiation of the contract it was necessary that the plaintiff's language should amount to a declaration of intention not to carry out the contract, or that it should be such that the defendant was justified in inferring from it such intention. We must construe the language used by the light of the contract and the circumstances of the case in order to see whether there was in this case any such renunciation of the contract.

The importance of looking at the whole circumstances of the case was emphasised by Lord Selborne LC in Mersey Steel & Iron Co Ltd v Naylor, Benzon & Co and by Singleton LJ in James Shaffer Ltd v Findlay Durham & Brodie.

[49] Fourth, qualifying to some extent the principle noted at [47], in some circumstance, "a mere honest misapprehension, especially if open to correction, will not justify a charge of repudiation". The proposition has typically fallen for consideration where the defaulting party has acted in reliance upon an erroneous interpretation of the contract. In that particular context, the bona fides (or otherwise) of the defaulting party is a relevant factor. In Australia, as in England, it has been suggested that an aggrieved party should take steps to persuade the mistaken party of its error if it wishes to rely upon that other party's conduct as a repudiation of the contract.

187 Similarly, Finn J summarised the relevant principles in GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd as follows:[336]

(i) A party will have repudiated a contract if, by words or conduct, it evinces an intention no longer to be bound by it or if that party shows it intends to fulfil the contract only in a manner substantially inconsistent with its obligations and not in any other way: Shevill v Builders Licensing Board;[337] Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd.[338]

(ii) The party's conduct is to be judged objectively by reference to the effect it would be reasonably calculated to have upon a reasonable person: Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd;[339] Satellite Estate Pty Ltd v Jaquet.[340]

(iii) A party that acts on a genuine but erroneous view of its obligations under the contract will not for that reason alone have repudiated it. That party may still be willing to perform the contract according to its tenor; to recognise its heresy; or to accept an authoritative exposition of the contract: DTR Nominees Pty Ltd v Mona Homes Pty Ltd;[341] Woodar Investment Development Ltd v Wimpey Construction UK Ltd.[342] But persistence in an untenable construction will ordinarily be regarded as repudiatory: Summers v The Commonwealth;[343] see also Chitty on Contracts.[344]

188 In my view, APAL's breaches of the Option Deed do, as PLA contends, and for the preceding reasons, go to the heart of the clause 5.1 Licence, and hence to the heart of the Option Deed itself. More particularly, given the perpetual and royalty-free nature of that licence, the denial of that licence to Rosy Glow, in terms of product, and Canada, in terms of its geographical extent, is, in my view, so serious as to be fundamental. Moreover, APAL has evinced an intention not to be bound by the clause 5.1 Licence. It follows, in my opinion, that APAL did repudiate the Option Deed as alleged.

Is PLA entitled to terminate the Option Deed in any event?

189 PLA pleads that the alleged breaches of the Option Deed by APAL constitute a repudiation of the provisions of the Option Deed,[345] but at the same time maintains that it has not accepted APAL's repudiation.[346] PLA pleads in the alternative that if it has accepted APAL's repudiation of the Option Deed, then, among other things, APAL is obliged to re-assign the "PINK LADY" trademarks to PLA.[347] PLA pleads other consequences in the event that APAL is entitled to retain its registration of the "PINK LADY" trademarks.[348]

190 In the face of these pleadings, APAL denies that it has breached or repudiated the Option Deed.[349] Moreover, APAL says that it did not plead to PLA's allegations that were premised upon PLA having accepted the alleged repudiation[350] because PLA did not plead that it had accepted any repudiation by APAL. Consequently, APAL contends that a promisee in PLA's position must elect to terminate the relevant contract for repudiation in order to found a cause of action but that, until then, there is no justiciable controversy.[351]

191 On this basis, APAL's concluding submissions on this point are as follows:[352]

It is plain, however, that PLA's contentions that it retains rights to elect to terminate the Option Deed, dependent on findings hereafter made by the Court of breach or repudiation by APAL, are entirely without merit. PLA walked away from (that is, renounced or repudiated) the Option Deed at the latest when it opposed APAL's application for "PINK LADY" trade mark registration in Chile and lodged its own applications in 2013, and when it told the world (in recital C to the 2014 PLA export licence) that it had terminated the Option Deed. APAL unambiguously accepted that repudiation. It is simply not open to PLA to contend that it retains some right to elect to terminate the Option Agreement for breach or repudiation on the part of APAL.

As, however, will be clear from the preceding reasons, I do not share the view of the rights of the parties in these proceedings in the manner upon which these submissions are predicated. Rather, in my view, PLA has established its case, both with respect to alleged breaches of the Option Deed and with respect to its entitlement to treat relevant breaches as repudiatory.

192 In any event, PLA wrote to APAL that it reserved its position as to whether it would accept the repudiation.[353] If the repudiation has not been accepted, then the clause 5.1 Licence remains in full force and effect. As has been discussed elsewhere in these reasons,[354] the Option Deed is to be construed as, or alternatively incorporating an implied term, that if the full benefit of the clause 5.1 Licence was denied by APAL, it would be obliged to re-assign the trademarks to PLA. On this basis, APAL's conduct is such that APAL is now obliged to re-assign those trademarks to PLA, and PLA may now assert all the rights as the trademark owner. Those rights include the right to oppose any applications by APAL to register any other "PINK LADY" trademarks. The corollary is that APAL must desist from asserting rights that now reside in PLA, which includes opposing any applications by PLA to register any further "PINK LADY" brand trademarks.

Is APAL obliged to re-assign to PLA the ownership of the trademarks the subject of the Option Deed?

193 PLA alleges[355] and APAL denies[356] that upon a proper construction of the Option Deed:

(a) The grant of the Option by PLA to APAL was made in consideration of, and solely upon terms that, in the event that it exercised the Option, APAL thereby granted the clause 5.1 Licence to PLA.

(b) APAL's ability to enjoy the rights as registered proprietor of the relevant trademarks assigned to it by PLA only continue for as long as APAL continued to provide to PLA the full benefit of the clause 5.1 Licence.

(c) APAL is obliged to re-assign to PLA the ownership of the trademarks the subject of the Option Deed if APAL, in breach of the Option Deed, denies to PLA the full benefit of the clause 5.1 Licence.

194 APAL submits that this series of interpretations, or approach to interpretations, of the Option Deed for which PLA contends would, if accepted, carry the consequence that PLA is entitled to ownership of the trademarks the subject of the Option Deed if APAL denies to PLA the "full benefit" of the clause 5.1 Licence. That is, PLA would enjoy unfettered rights as owner of registered trademarks, to the exclusion of APAL. APAL says that this consequence does not find expression in the Option Deed, notwithstanding that the Option Deed does contemplate termination of the clause 5.1 Licence by APAL under clauses 5.1(e) and (g).[357] Moreover, APAL submits that PLA has not contended that the Option Deed is relevantly ambiguous, and bears the meaning contended for, when regard is had to surrounding circumstances at the time of its execution. APAL says that the position for which PLA contends is that, whether as a matter of construction or by reason of the operation of an implied term, the position which would otherwise obtain at common law following termination for breach or repudiation is reversed. In support of this proposition, reference is made to the common law position in this respect.

195 At common law, termination for breach or on acceptance of a repudiation does not terminate the contract ab initio. In Nangus Pty Ltd v Charles Donovan Pty Ltd (in liq), Young CJ said:[358]

[T]he common law principles of the legal consequences of acceptance of repudiation by an innocent party to a contract was stated and explained by Sir Owen Dixon in McDonald v Dennys Lascelles Lt,[359] as follows:

When a party to a simple contract, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning. Both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected. When a contract is rescinded because of matters which affect its formation, as in the case of fraud, the parties are to be rehabilitated and restored, so far as may be, to the position they occupied before the contract was made. But when a contract, which is not void or voidable at law, or liable to be set-aside in equity, is dissolved at the election of one party because the other has not observed an essential condition or has committed a breach going to its root, the contract is determined so far as it is executory only and the party in default is liable for damages for its breach.

196 As has been indicated, APAL's position is that on a proper construction of the Option Deed, there is no obligation on APAL to assign to PLA the trademarks referred to in Schedule 1 of the Option Deed. APAL contends that it should be remembered that, from the outset of the transaction, it was always the parties' intention that APAL have the right to own the trademarks for which PLA had applied and that this was always the bargain. It says that PLA's proposed construction would have the effect of nullifying the bargain and instead imposing a new regime which is inconsistent with it. This, of course, depends upon how one characterises the nature of the bargain, particularly whether it is characterised appropriately broadly to take into account the entirety of the real commercial considerations driving the parties and the agreement or agreements they reached.[360]

197 PLA alleges in the alternative that the Option Deed contains implied terms to similar effect, as follows:

(a) APAL would not do anything that would or might have the effect of depriving PLA of the full benefit of the clause 5.1 Licence.

(b) APAL would not do anything that would or might have the effect of derogating from the grant of any of the rights conferred on PLA under the clause 5.1 Licence.

(c) Should APAL, in breach of the Option Deed, deny to PLA the full benefit of the clause 5.1 Licence, APAL would be obliged to re-assign to PLA the ownership of the trademarks the subject of the Option Deed.

PLA pleads that the terms referred to in paragraphs (a) and (b), above, are implied by law and that the term referred to in paragraph (c) is "implied in order to give business efficacy to the Option Deed".[361] APAL denies the allegations.[362]

198 APAL contends that the terms referred to in paragraphs (a) and (b) in the preceding paragraph are reminiscent of the usual term implied by law that the parties shall do all that is reasonably necessary to secure performance of their contract,[363] and of clause 16 of the Option Deed whereby "[e]ach party agrees to do everything necessary or desirable to give full effect to this Deed and the transactions contemplated by it".[364]

199 Thus, the position put by APAL is that the benefit to PLA contemplated by the Option Deed if the Option is exercised, is a right to use the Schedule 1 trademarks in respect of trade in the "Products" between Chile and North America. It says that the full benefit of the Option Deed to PLA does not entail, in any circumstances, the transfer of the trademarks to PLA. Accordingly, it is said that there is no scope for implying from the alleged paragraphs (a) and (b) terms any right to a transfer of the trademarks to PLA because that was never the intention of the parties to the contract, even assuming the perfect and complete performance of that contract. APAL submits that such a construction would offend the principles upon which terms may be implied in law, including the requirement of necessity.

200 In support of this position, APAL refers to Commonwealth Bank of Australia v Barker, where the High Court said:[365]

1. In Byrne v Australia Airlines Ltd, McHugh and Gummow JJ emphasised that the "necessity" which will support an implied term in law is demonstrated where, absent the implication, "the enjoyment of the rights conferred by the contract would or could be rendered nugatory, worthless, or, perhaps, be seriously undermined" or the contract would be "deprived of its substance, seriously undermined or drastically devalued".[366] The criterion of "necessity" in this context has been described as "elusive" and the suggestion made that "there is much to be said for abandoning" the concept. Necessity does, however, remind courts that implications in law must be kept within the limits of the judicial function. They are a species of judicial law-making and are not to be made lightly. It is a necessary condition that they are justified functionally by reference to the effective performance of the class of contract to which they apply, or of contracts generally in cases of universal implications, such as the duty to cooperate. Implications which might be thought reasonable are not, on that account only, necessary. The same constraints apply whether or not such implications are characterised as rules of construction.

APAL also observes that although the implication of a term ad hoc and the implication of a term as a matter of law are distinct concepts, they are both founded on necessity and tend in practice to "merge imperceptibly into each other", as, it says, was affirmed by French CJ, Bell and Keane JJ in Barker in the preceding paragraph to that which is set out above.[367] Thus, APAL contends, there is, accordingly, no basis for distinguishing the observations of the High Court in the above paragraph on the basis that the Court was dealing with an implication as a matter of law in Barker as, it says, the opening submissions of PLA appear to suggest.[368] In light of these submissions, it is, in my view, important to consider precisely what the High Court did say in that immediately preceding paragraph; which, accordingly, is now set out:[369]

1. An implication in law may have evolved from repeated implications in fact. As Gaudron and McHugh JJ observed in Breen v Williams,[370] some implications in law derive from the implication of terms in specific contracts of particular descriptions, which become "so much a part of the common understanding as to be imported into all transactions of the particular description." The two kinds of implied terms tend in practice to "merge imperceptibly into each other". That connection suggests, as is the case, that the "more general considerations" informing implications in law are not so remote from those considerations which support implications in fact as to be at large. They fall within the limiting criterion of "necessity", which was acknowledged by both parties to this appeal. The requirement that a term implied in fact be necessary "to give business efficacy" to the contract in which it is implied can be regarded as a specific application of the criterion of necessity. The present case concerns an implied term in law where broad considerations are in play, which are not at large but are not constrained by a search for what "the contract actually means".

In my view, when regard is had to the actual statement made by the Court in this paragraph, the criticism by APAL of the PLA submissions with respect to Barker fall away. In any event, I will come to the PLA submissions in this respect in due course.

201 APAL also makes reference, in support of its contentions in this respect, to Codelfa Construction Pty Ltd v State Rail Authority of NSW, where Mason J said:[371]

The more detailed and comprehensive the contract the less ground there is for supposing that the parties have failed to address their minds to a question at issue.

202 I turn now to the third term sought to be implied, that is, the term to which reference is made in paragraph (c), as set out above. APAL contends that if such a term is to be implied in fact, as PLA alleges, it must derive from the Court's view of the objective intention of the parties and it must satisfy the conditions for the implication of a term in fact in order to give business efficacy to a contract. The conditions relevant in this respect are as follows:[372]

(b) The term must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it;

(c) The term must be so obvious that "it goes without saying";

(d) The term must be capable of clear expression; and

(e) The term must not contradict any express term of the contract.

These conditions are, as the authorities indicate, stringent[373] and cumulative, and they import different considerations.[374] APAL says that the pleaded term does not satisfy these conditions. In particular, it is submitted that the pleaded term does not satisfy the requirements that the term must be reasonable and equitable, that it be necessary, that it be so obvious that it goes without saying and that it does not contradict any express term of the contract.

203 In relation to whether the term is reasonable or equitable, APAL submits that the termination of a contract for breach does not put the parties back in the position they would have been in if the contract had not been made, let alone in a better position as, it says, this implied term would do for one party only. APAL says that PLA's applications were speculative and opposed by APAL. APAL withdrew its opposition and the applications were conducted on its behalf. APAL says that it is not reasonable or equitable to imply a right on the part of PLA to ownership of trademarks for which PLA had only a speculative, opposed claim, to the detriment of the opponent who bore the cost of the applications and whose superior title to the trademarks had effectively been conceded in the recitals to two previous agreements between them. These submissions are addressed more fully in this context and in other contexts in these reasons but, for present purposes, it suffices to say that this is to take a very narrow view of the commercial context of the discussions and negotiations and agreements between the parties and significantly overlooks the position that it was most unlikely indeed that APAL could itself have achieved trademark registrations in Chile having regard to its past history with Chilean trademark authorities. Also, it is difficult to know what significance any assertion that trademark applications are speculative has in the present context as it is clear from the evidence that it would be common ground that all parties would and did take the view that there was no guarantee of success in the Chilean trademark applications made by or on behalf of PLA; but that is of no significance, as indicated elsewhere, in the present context.

204 APAL also submits that the term is not necessary to give business efficacy to the contract. In this respect, it says that PLA had no need to have title to the trademarks in order to enjoy the licence under clause 5.1. It says that PLA was able to enjoy the full benefit of the Option Deed, duly performed without any breach, without obtaining title to the trademarks. Moreover, it says that in the event of breach by APAL, there were curial remedies of specific performance and injunctions to compel APAL to perform its part of the agreement.[375] Again, the commercial context is discussed elsewhere, as are these submissions.[376]

205 APAL says that the term is not so obvious that it "goes without saying". It says that the licence granted by clause 5.1 proceeded on the basis between APAL and PLA that APAL held the title which permitted the grant of the licence, and there were adequate curial remedies to ensure performance of the bargain. Accordingly, APAL says, it is not obvious at all that in the event of breach APAL should forfeit the trademarks to PLA. Again, these matters are considered elsewhere.

206 Finally, APAL submits that the term contradicts express terms of the contract. The express term of the licence identified in this respect is that PLA would receive a perpetual licence. APAL says that the premise of this term, in the circumstances, was that APAL would hold the title to the trademarks indefinitely. It is said it would be inconsistent with the licence if the performance of the contract at any point should entail PLA acquiring title to the trademarks. As discussed elsewhere, this is, in my view, a conflation on APAL's part of two distinct circumstances; the circumstance where PLA is being allowed to enjoy the full benefit of the clause 5.1 Licence and the circumstance where this is not the case. In the latter circumstance, the argument is, of course, that the deed does not deal with this in a manner consistent with the commercial considerations to which reference has been made.

207 PLA agrees in its submissions that the law on the implication of terms in contracts is uncontroversial and says that the statement in some identified paragraphs of APAL's Outline of Opening Submissions of those principles is adequate, although some care must be taken with the quoted passage in the Barker case.[377] PLA submits that the requirements for the implication of these terms are adequately made out. In my opinion, this is the position, for the preceding reasons and for the reasons which follow in relation to some of the specific issues raised in this context. Before turning to the specific terms, it is helpful to consider some more general matters with respect to the provisions of the Option Deed.

208 It is apparent from the plain words of clause 5.1 of the Option Deed that the assignment of trademarks was done in consideration of the clause 5.1 Licence. It is apparent from the terms of the Option Deed that PLA was prepared to assign to APAL the commercially valuable right to the trademarks in return for the ability to protect the trade from Chile to the territories in which it was the trademark holder of the "PINK LADY" brand. That is the evident commercial purpose of the transaction for both parties, as has been discussed elsewhere in these reasons. Similarly, whether or not PLA had the ability to obtain the trademarks concerned is not to the point. If it did so, these were very valuable rights for APAL. So much so that it gave the perpetual and royalty-free licence sought by PLA.

209 The parties also agreed that they would do all such acts which are necessary or appropriate to enable either party to obtain their intended benefit of the Option Deed.[378] This is a statement of the duty on all parties to a contract to cooperate to ensure that the contract is performed. If any authority for this proposition were to be required, reference is made to the general duty of cooperation implied in every contract, as articulated by Lord Blackburn in Mackay v Dick:[379]

[A]s a general rule, where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect.

Similarly, the High Court said, in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd that:[380]

It is not to be thought that this rule of construction is confined to the imposition of an obligation on one contracting party to co-operate in doing all things necessary to be done for the performance by the other party of his obligations under the contract. As Griffith CJ said in Butt v M'Donald:[381]

It is a general rule applicable to every contract that each party agrees, by implication, to do all things as are necessary on his part to enable the other party to have the benefit of the contract.

One aspect of a duty of cooperation is that a party must not act so as to hinder or prevent the fulfilment of the other party's purpose.[382]

210 PLA submits that the Court should construe this clause as prohibiting either party from doing anything that would prevent the other party from obtaining the intended benefit under the Option Deed. It says that the constructions contended for by PLA are the corollary of the duty not to do anything to deprive PLA of the benefit of the clause 5.1 Licence. Moreover, PLA submits that if it is correct that the quid pro quo in the Option Deed was that the assignment be made on the basis of the perpetual licence to PLA under clause 5.1, then upon a breach by APAL of the duty not to render part or all of that licence nugatory, then the apparent basis for APAL to continue to enjoy the benefit of the assignment must fall away. Under those circumstances, it is contended that the proper construction of the Option Deed requires that in those events, APAL would be obliged to re-assign the rights to PLA.

211 APAL criticises the pleaded form of the implied term in paragraph (c), as set out above, in that it refers to the "full benefit" of the clause 5.1 Licence. It says that the pleaded terms are not "necessary" as explained in Barker.[383] In response, PLA says that, first, the use of the words "full benefit" adds little. The word "full" could be deleted and the implied term would lose nothing. The words "full benefit" are appropriate insofar as, in the case of the clause 5.1 Licence, the trade concerned was between Chile and the United States, Mexico and Canada. For APAL to deprive PLA of the benefit of the clause in relation to one of those territories, it would be, and in my view, clearly, depriving PLA of "the benefit" of the Licence and of the "full benefit" of the Licence. Secondly, PLA submits that it is evident from the judgment in Barker, particularly from paragraph 28 of the judgment, the paragraph immediately preceding the paragraph 29 quote from Barker set out in APAL's submissions, that the discussion was in relation the requirement of "necessity" as a criterion for the implication of a term in a contract by operation of law, rather than an implication in fact based on the presumed intention of the parties. As indicated previously, I accept that this is the correct analysis of these parts of the judgment of the High Court in Barker.

212 More specifically, in relation to the pleaded terms as set out in paragraphs (a) and (b), they are, as PLA contends, no doubt necessary in the relevant sense. Recalling that the clause 5.1 Licence was granted in perpetuity, to deprive PLA of, for example, one of the territories in which it can ply the export trade using the trademarks would or could seriously undermine or drastically devalue the rights conferred on PLA under the contract. As PLA says, the rendering of the terms as relating to the "full benefit" of the contract recognises the nature of the clause 5.1 Licence.

213 Additionally, the term sought to be implied by PLA as set out in paragraph (c) does, in my view, adequately meet the requirements for implication of a term in fact. At the time of the contract, APAL recognised that if PLA could obtain registration of the trademarks, this would present a valuable asset for it. If PLA could obtain the registrations, then APAL wanted them. PLA said that it would only agree to assign them to APAL if APAL provided an exclusive licence to PLA to use those trademarks in the trade between Chile and North America in perpetuity and royalty-free. In my view, it is quite clear that if the officious bystander had said to the parties, "Well, if APAL later deprives PLA of its licence, surely APAL cannot keep the trademarks?", both parties would have agreed. PLA would do so as the trademarks are the price it paid to obtain the licence, and APAL would, because it would be legally incongruous and unconscionable for it to have taken the benefit, but then refused to pay the price, which in this case is the provision of the licence in perpetuity. Further, PLA would not have agreed to the assignment if APAL had dissented. Additionally, all this is in the context of the commercial considerations which are referred to in these reasons, particularly that there seemed little or no prospect of APAL itself obtaining these trademark registrations in Chile.[384] Consequently, there is nothing unreasonable or inequitable about the term pleaded. It is unreasonable and inequitable for APAL to retain the trademarks without providing the licence to PLA.

Does PLA retain a right to a clause 5.1 Licence?

214 PLA contends that if the Option Deed has been terminated and APAL is entitled to retain the Schedule 1 trademarks, then PLA holds a clause 5.1 Licence as "a fully accrued right ... under the Option Deed such that it continues".[385]

215 APAL submits that when a contract is discharged for breach or on acceptance of a repudiation, it is discharged as to its future operation only, and rights acquired unconditionally thereunder at the point of discharge are not divested, as the passage from Dixon J in McDonald v Dennys Lascelles Ltd indicates:[386]

Both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected.

APAL submits, however, that the conclusion for which PLA contends does not follow, for a number of reasons. First, it says that the licence is not a property right which has a separate existence apart from the contract which confers it, such as might be said, for example, in respect of an accrued right to payment for work done under a contract of employment. Secondly, it says that the Option Deed shows that the enjoyment of the permission which is the licence is conditional on the continuing observance of the conditions referred to in clause 5.1. Thirdly, APAL contends that this, as a consequence, is not an accrued right, such as a right to payment, fully formed once and for all regardless of whether the contract from which it derives continues to subsist. It is, by contrast, it is said, a permission which subsists only for so long as the contract which governs it continues to subsist. Fourthly, it is said that being a contractual right of a personal nature[387] which arises from day to day, it is a right which the Option Deed contemplates is terminable[388] and so is not acquired once and for all time in perpetuity when the option is exercised.

216 PLA's position is, as indicated, that if the Option Deed has been terminated, either by PLA's conduct constituting an acceptance of APAL's repudiation or by PLA's repudiation, which PLA denies, having been accepted by APAL and if it is found that APAL is entitled to retain ownership of the trademarks, then the clause 5.1 Licence was a fully accrued right of PLA under the Option Deed such that it now continues.

217 This position is further reinforced by the provisions of clause 10 of the Option Deed, which contains a "no merger" clause. In the passage of Dixon J in McDonald v Dennys Lascelles Ltd quoted above,[389] his Honour had in mind in that case not simply that a party has a right to damages, as that is encompassed by the reference to "causes of action which arise from its breach". Rather, his Honour had in mind other rights that a party has acquired by means of partial execution of a contract. Those must be accrued rights.

218 The question whether a right is accrued such that it survives termination for repudiatory breach is a matter of construction of the contract concerned.[390] In this case, PLA has paid the price to acquire the perpetual licence under clause 5.1. The price was paid by the assignment of the trademark and the trademark applications to APAL. By that partial execution, it acquired the clause 5.1 Licence. In this respect, the words of the licence are very important:

This licence will be royalty free, and will last in perpetuity subject only to the quality control provisions contained herein.

The words of the licence indicate that there is only one basis upon which the licence may be brought to an end. This is reinforced by clause 5.1(g), which explicitly gives APAL the right to terminate the clause 5.1 Licence in that event. That is for failure to comply with the quality control provisions contained within it. In my view, these matters are sufficient to indicate that the parties' intention was that, once enlivened, the clause 5.1 Licence could not be brought to an end, except in that one circumstance. Consequently, as a matter of construction, the clause 5.1 Licence survives termination of the Option Deed. Considerations of this kind, namely as to the proper construction of the Option Deed do, in my view, indicate that the more general provisions, such as clause 11.1, which is relied upon by APAL, are not significant in this circumstance as they are, in my view, not inconsistent with the position contended for by PLA and, further, to the extent that they might be ambiguous as to effect, in this context would - if given the significance which APAL seeks to give them - be at odds with the commercial considerations to which reference has been made.

219 As foreshadowed in the earlier part of these reasons, the position I have reached in relation to the agreed statement of issues is as follows:[391]

A.1 Yes and, in the alternative, impliedly.[392]

B. The meaning and effect of the Option Deed and the clause 5.1 Licence

B.5 Unnecessary to decide as the issue is not one of variation but one of construction; because as a matter of construction the clause 5.1 Licence does include the updated Flowing Heart logo.[398]

B.8 Are there implied terms of the Option Deed that:

1. Whether PLA breached and repudiated the Option Deed (as alleged by APAL)

1. Whether APAL breached and repudiated the Option Deed (as alleged by PLA)

D.1 Has APAL breached the Option Deed, as alleged by PLA by:

e. Not applicable at this stage as the trial has only proceeded in terms of liability issues.

E. Misleading or deceptive conduct (as alleged by PLA)

220 The parties are to bring in orders to give effect to these reasons. The question of costs is reserved and I will hear further submissions from the parties in relation to this issue.

221 Further directions will be made for the conduct of the remainder of the trial in this proceeding and I will hear the parties accordingly.

[1] Court Book, Apple & Pear Australia Ltd v Pink Lady America LLC (Supreme Court of Victoria, S CI 2014 01635, Croft J) 375-92 ("Court Book").

[3] Joint Statement of Issues (11 August 2015) (citations omitted). The trial which commenced on 24 August 2015 was as to issues of liability only, pursuant to paragraph 1 of the Orders made by Croft J on 1 May 2015.

[5] Plaintiff's Outline of Opening Submissions (11 August 2015); Opening Submissions for Trial of the Defendant (PLA) (18 August 2015).

[6] Evidence Act 2008, s 136.

[7] Transcript of Proceedings, Apple & Pear Australia Ltd v Pink Lady America LLC (Supreme Court of Victoria, S CI 2014 01635, Croft J) 368 ("Transcript").

[9] Witness Statement Lynnell Brandt (23 April 2015) [18]-[20], [33].

[11] Witness Statement Lynnell Brandt (23 April 2015) [55], [88].

[12] Witness Statement Lynnell Brandt (23 April 2015) [88].

[13] Witness Statement of Jon Maxwell Durham (25 August 2015) [26]. PLA and BFT resigned from IPLA in June 2010: Court Book 1185.

[14] Witness Statement Lynnell Brandt (23 April 2015) [41].

[15] Witness Statement of Jon Maxwell Durham (25 August 2015) [27].

[17] Although the IPLA Operating Agreement produced is undated, a Deed of Termination of it dated 2 November 2012 recites the date of execution as being 28 September 1999 (see Court Book 1441-2).

[20] Witness Statement Lynnell Brandt (23 April 2015) [56].

[22] The Pier-to-Pier System is described at Witness Statement Lynnell Brandt (23 April 2015) [47] and is incorporated in the Option Deed in the definition of "Pier-to-Pier Licensing System" contained in paragraph 1.1 of that Deed.

[23] Witness Statement Gabriela Paiva Hantke (28 July 2015) [9]. The applications are to be found at Court Book 201-3, 204-7, 242-3 and 487-8.

[24] The agreement was ultimately consummated as the Option Deed: Court Book 378.

[25] As to the "perpetual" nature of this licence and the context in which the word "perpetual" is used in these reasons with respect to the licence, see below [213]-[218].

[26] See Option Deed, clause 5.1: Court Book 382. In this respect, PLA contends that although clause 5.1 is stated to refer to the trade between Chile and North America (that is, trade going in both directions), relevantly for these proceedings, it is said that the trade concerned is export from Chile to North America.

[27] Witness Statement Lynnell Brandt (23 April 2015) [60], [94].

[29] Witness Statement Gabriela Paiva Hantke (28 July 2015) [13].

[30] Plaintiff's Outline of Closing Submissions (3 September 2015) [119].

[34] Opening Submissions for Trial of the Defendant (PLA) (18 August 2015) [105].

[35] Court Book 1300, 1347, 1421, 1428-30.

[38] Second Amended Defence and Amended Counterclaim (25 August 2014) [27]-[30].

[39] Amended Reply and Defence to Counterclaim (4 September 2014) [27]-[30].

[40] Witness Statement Lynnell Brandt (23 April 2015) [97]-[109].

[42] Second Amended Defence and Amended Counterclaim (25 August 2014) [14B(b)].

[43] Second Amended Defence and Amended Counterclaim (25 August 2014) [6].

[51] See Bradbrook, Croft and Hay, Commercial Tenancy Law, LexisNexis Butterworths (3rd ed, 2009) [14.1].

[52] (1959) SR (NSW) 122 at 123-4 ("McCaul's Case").

[53] [1973] HCA 55; (1973) 131 CLR 8 ("Bowman").

[54] [1904] 1 Ch 305 at 314.

[55] [1990] VicRp 52; [1990] VR 589.

[56] [1990] VicRp 52; [1990] VR 589 at 594-5. See also 603-4.

[57] [1914] HCA 23; (1914) 18 CLR 152 at 163.

[58] [1974] HCA 49; (1974) 132 CLR 57.

[59] [1974] HCA 49; (1974) 132 CLR 57 at 76.

[60] (1959) SR (NSW) 122 at 123-4.

[61] [1973] HCA 55; (1973) 131 CLR 8.

[62] Witness Statement Lynnell Brandt (23 April 2015) [60].

[66] Court Book 252. See also Plaintiff's Outline of Closing Submissions (3 September 2015) [47]-[56].

[69] Court Book 253-4. The importance to PLA of having rights with respect to a Chilean registered trademark for the purpose of packaging and labeling apples in Chile is discussed below at [160]-[171]. Cf Plaintiff's Outline of Closing Submissions (3 September 2015) [40]-[56].

[71] Court Book 257-91, 293-309, 311-28.

[75] Plaintiff's Outline of Opening Submissions (11 August 2015) [29]-[34]; Plaintiff's Outline of Closing Submissions (3 September 2015) [53], [57]-[60].

[76] See also reasons for rejection of Application No 410.558 "Pink Lady" (Sub-departamento Juridico De Propiedad Intelectual, 30 March 1999).

[80] Witness Statement of Jon Maxwell Durham (25 August 2015) [39]; Court Book 432.

[89] Plaintiff's Reply in Closing (10 September 2015) [13].

[93] Plaintiff's Outline of Closing Submissions (3 September 2015) [61]-[80]. Cf Opening Submissions for Trial of the Defendant (PLA) (18 August 2015) [43].

[95] Plaintiff's Outline of Closing Submissions (3 September 2015) [68]-[80]. Cf Opening Submissions for Trial of the Defendant (PLA) (18 August 2015) [37]-[42].

[96] Opening Submissions for Trial of the Defendant (PLA) (18 August 2015) [38].

[105] Plaintiff's Outline of Closing Submissions (3 September 2015) [65], [96], [102]. See also above [40].

[110] Witness Statement of Jon Maxwell Durham (25 August 2015) [39].

[115] See Court Book 452, 458, 493-5, 596, 597.

[116] Court Book 654-5 (emphasis added). APAL, in Plaintiff's Outline of Closing Submissions (3 September 2015) [136]-[137], makes the point that the Deed of Variation was marked "draft" and contained drafting instructions; but to the extent this is a feature of the document, it does not preclude agreement with or without these attributes with respect to the document - matters which are relatively minor in any event.

[119] Cf Plaintiff's Outline of Closing Submissions (3 September 2015) [131], [133]-[142].

[120] Cf Plaintiff's Reply in Closing (10 September 2015) [16].

[123] See Atco Controls Pty Ltd (in liq) v Newtronics Pty Ltd [2009] VSCA 238; (2009) 25 VR 411. Cf Plaintiff's Outline of Closing Submissions (3 September 2015) [100]-[104].

[124] Bowman [1973] HCA 55; (1973) 131 CLR 8 at 20.

[125] Court Book 693-4. See also above [61].

[126] Transcript 58-9. See also Plaintiff's Outline of Closing Submissions (3 September 2015) [83].

[128] Cf Plaintiff's Reply in Closing (10 September 2015) [14].

[129] And in light of the correspondence between the parties, there is no basis for arguing that the parties were contemplating the assignment of an "application" singular; and in any event this position is not supported by the provisions of the Option Deed, particularly clause 5.1: Court Book 382.

[130] Second Amended Defence and Amended Counterclaim (25 August 2015) [16AA(a)]-[16AA(e)].

[131] Defendant's Closing Submissions (8 September 2015) [19].

[137] Court Book 460-86, 1058-94, 1151-81, 1188-217.

[146] [1956] HCA 53; (1956) 95 CLR 420 at 432-3.

[147] Defendant's Closing Submissions (8 September 2015) [29].

[152] See Plaintiff's Outline of Closing Submissions (3 September 2015) [24]-[27].

[153] See Plaintiff's Outline of Closing Submissions (3 September 2015) [53], [57]-[60].

[158] Opening Submissions for Trial of the Defendant (PLA) (18 August 2015) [70].

[161] Court Book 1421 (emphasis in original).

1. [168] Lederberger v Mediterranean Olives Financial Pty Ltd [2012] VSCA 262; (2012) 38 VR 509 at 517-8, [26]-[27], citing Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 at 163-4, [25]-[27] ("Brambles"); and Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 at 461-2; Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 at 483; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 at 179.

[169] Lederberger v Mediterranean Olives Financial Pty Ltd [2012] VSCA 262; (2012) 38 VR 509 at 517-9 [26], [28], [31]. See also Howard Smith & Co Ltd v Varawa [1907] HCA 38; (1907) 5 CLR 68 at 77-8; Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647 at 668-9, 672.

[170] Cross on Evidence (Australian Looseleaf Edition, LexisNexis Online) [39290] (citations omitted).

[171] [2008] NSWCA 193.

[172] [2008] NSWCA 193, [150]-[155]. See also the review of the authorities by Spigelman CJ in that case at [14]-[27].

[173] [2004] HCA 55; (2004) 218 CLR 471 at 483.

[174] (2002) 209 CLR 95 at 105-6.

[175] [2004] HCA 35; (2004) 218 CLR 451.

[176] [2004] HCA 52; (2004) 219 CLR 165 at 179.

[177] [2004] HCA 35; (2004) 218 CLR 451 at 461-462.

[178] [2004] HCA 52; (2004) 219 CLR 165 at 179.

[179] [2008] HCA 3; (2008) 82 ALJR 419, [8].

[180] Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 at 176-7, [71], [74].

[181] [2004] HCA 52; (2004) 219 CLR 165 at 183.

[182] [2008] NSWCA 53, [10].

[183] [2008] NSWCA 53, [39].

[184] (1988) 5 BPR 11,110 at 11,117-8 (emphasis added).

[185] [2001] FCA 1833; (2001) 117 FCR 424.

[186] [2001] FCA 1833; (2001) 117 FCR 424 at 525-6 (emphasis added).

[187] [1983] NZLR 308 at 377.

[188] (1988) 5 BPR 11,110 at 11,117-8.

[189] [1994] VicRp 53; [1994] 2 VR 32 at 81-83.

[190] (1988) 14 NSWLR 523 at 555.

[191] [1987] 2 Lloyd's Rep 601 at 611.

[192] [2000] NSWCA 105 at [22]-[24].

[193] Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 at 177-8.

[194] [1994] VicRp 55; [1994] 2 VR 106 at 178.

[195] (1988) 15 NSWLR 473 at 489.

[196] [1975] HCA 35; (1975) 132 CLR 671 at 674.

[197] Richard A Lord, Williston on Contracts (Thompson Reuters) Vol 1, 258.

[199] The definition of "Products" in each of those licences is to be found at Court Book 462, 1060, 1153, and 1190.

[200] Court Book 460-461, 1058-9, 1151-2, 1188-9.

[201] Plaintiff's Outline of Opening Submissions (11 August 2015) [54]; Plaintiff's Outline of Closing Submissions (3 September 2015) [120]. See also Transcript 72-4.

[202] Defendant's Closing Submissions (8 September 2015) [43].

[208] Defendant's Closing Submissions (8 September 2015) [53] n 58 (emphasis in original).

[210] Court Book 438, 443-4, 456-7, 492, 496, 652, 726-8, 742-6, 753, 759, 845.

[211] Court Book 729. See also Transcript 355-6.

[212] [2012] VSC 634, [178]-[180] (citations omitted).

[213] India v India Steamship Co Ltd (The Indian Endurance and The Indian Grace) (No. 2) [1997] 2 WLR 818, 913.

[214] [2007] NSWCA 65; (2007) 69 NSWLR 603 at 645 [200].

[215] [2007] NSWCA 65; (2007) 69 NSWLR 603 at 651 [232], quoting from the judgment of Bingham LJ in The "Vistaford" [1988] 2 Lloyds Rep 343.

[216] [2015] NSWCA 38 (citations omitted).

[217] [1986] HCA 14; (1986) 160 CLR 226 at 244 (citations omitted).

[218] See, eg, Santos v Delphi Petroleum Pty Ltd [2002] SASC 272 at [471]-[489], [644], [684]-[689]; Equuscorp Pty Ltd v Wilmoth Field Warne (a firm) (2007) 18 VR 250 at 268 [71], where the Victorian Court of Appeal stated that "[w]e doubt that estoppel by convention is any longer limited to assumptions as to fact".

[219] See above [69]-[78]. See also the correspondence quoted above at [92].

[220] Cf Plaintiff's Outline of Closing Submissions (3 September 2015) [126]; Plaintiff's Reply in Closing (10 September 2015) [1]-[5].

[222] Court Book 693 (emphasis added).

[223] Court Book 460-86, 1058-94, 1151-81, 1188-217.

[227] Clause 2.2, Recitals D and F, and definitions: Court Book 460-86.

[228] Commencing on about 7 January 2008 emails relating to "reciprocity" of licensing: Court Book 489, 494-5, 493. On 17 March 2008 Mr Ballew sent to APAL and its solicitors a first draft Joint Licence: Court Book 654, 663-86. On 20 March 2008 Mr Hamilton sent to Mr Ballew a revised draft: Court Book 697-713. Further correspondence continued at Court Book 714**,** 716, 770-812. The final form was agreed on about 22 May 2008: Court Book 816-44.

[229] Plaintiff's Outline of Opening Submissions (11 August 2015) [54].

[230] Plaintiff's Outline of Opening Submissions (11 August 2015) [55]. See, eg, Plaintiff's Outline of Closing Submissions (3 September 2015) [88], [120].

[234] Court Book 721. See also the TMMLA as executed: Court Book 855-89.

[236] Court Book 857 (emphasis added).

[237] Transcript 241, 249, 252-5, 259, 262-3.

[238] Witness Statement of Garry Thomas Langford (2 April 2015) [21(o)]. See also Transcript 271.

[243] Transcript 364-5. Cf Plaintiff's Outline of Closing Submissions (3 September 2015) [141]-[142].

[244] Plaintiff's Outline of Closing Submissions (3 September 2015) [145]-[148].

[245] [2014] HCA 7; (2014) 251 CLR 640 at 656-7 (citations omitted).

[246] [1982] HCA 24; (1982) 149 CLR 337 at 352.

[247] As the Victorian Court of Appeal noted in Grocon Constructors (Victoria) Pty Ltd v APN DF2 Project 2 Pty Ltd [2015] VSCA 190, [85] n 39, the most recent discussion at an appellate level of the ongoing application of the "true rule" is to be found in Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184; (2014) 310 ALR 113 at 130-4; Newey v Westpac Banking Corporation [2014] NSWCA 319, [89]; Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [2014] WASCA 164, [33]-[45], [190]-[216]; Stratton Finance Pty Ltd v Webb [2014] FCAFC 110; (2014) 314 ALR 166 at 174.

[248] Whitworth Street Estates Ltd v Miller [1970] AC 583 at 603, repeated by Gibbs J in Administration of Papua and New Guinea v Daera Guba (1973) 130 CLR 353 at 446, and referred to by Gummow, Hayne and Kiefel JJ in Agricultural and Rural Finance Pty Limited v Gardiner (2008) 238 CLR 570 at 582.

[249] As to "commercial aspects" more generally, see above [57]-[68].

[250] Cf Plaintiff's Outline of Closing Submissions (3 September 2015) [158].

[252] IPLA Operating Agreement, clause 2.11: Court Book 44.

[254] Witness Statement Lynnell Brandt (23 April 2015) [97].

[256] See Witness Statement Lynnell Brandt (23 April 2015) [97]-[109].

[257] Court Book 946-1038. See also Witness Statement Lynnell Brandt (23 April 2015) at [98]-[100] which reproduces the relevant parts of the Brand Manual.

[260] Witness Statement Lynnell Brandt (23 April 2015) [109].

[262] Mendelssohn v Normand Ltd (1970) 1 QB 177 at 183; Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723 at 750-1; Santos v Delhi Petroleum Pty Ltd [2002] SASC 272, [756]; Alstom Ltd v Yokogawa Australia Pty Ltd (No. 7) [2012] SASC 49, [1519].

[263] Plaintiff's Outline of Closing Submissions (3 September 2015) [161].

[265] Plaintiff's Outline of Closing Submissions (3 September 2015) [155]-[156].

[267] Cf Plaintiff's Reply in Closing (10 September 2015) [18(a)] citing Option Deed clause 4: Court Book 382.

[268] Plaintiff's Outline of Closing Submissions (3 September 2015) [161].

[269] Indeed, Mr Durham affirmed that following the implementation of the Brand Manual, APAL expected the IPLA members to move to the refreshed mark, and in respect of the clause 5.1 Licence, APAL expected PLA to move towards using the refreshed mark in issuing its export licences and encouraged them to do so: Transcript 262.

[271] See the tree certification issue as discussed in various emails at Court Book 1300-6.

[273] The issue is the subject of various emails at Court Book 1311, 1337, 134-2.

[285] Court Book 1450, 1533, 1542, 2545, 1597, 1625, 1627, 1631.

[295] Plaintiff's Outline of Closing Submissions (3 September 2015) [165]-[172].

[296] Second Amended Defence and Amended Counterclaim (25 August 2015) [17(d)].

[297] APAL says that this is also borne out by the requirement in clause 2.1 that "following the exercise of the Option ... APAL continue to use a Pier-to-Pier Licensing System..." (emphasis added).

[300] When APAL decided to issue a separate licence in 2012, Mr Brandt was not happy about it, but he did not complain: Transcript 313. See also email dated 11 December 2011 from Mr Langford to Mr Brandt (Court Book 1347) and email dated 20 January 2012 from Ms Warnock to Mr Langford (Court Book 1409).

[303] The definition of "maintain" in the Macquarie Dictionary (6th ed) is relevantly the same.

[312] Witness Statement of Garry Thomas Langford (2 April 2015) [22]-[27], [31]-[38].

[314] Court Book 1760 (emphasis in original). See also Witness Statement Lynnell Brandt (23 April 2015) [153].

[316] Second Amended Defence and Amended Counterclaim (25 August 2015) [25]-[26].

[317] Second Amended Defence and Amended Counterclaim (25 August 2015) [27].

[318] Amended Reply and Defence to Counterclaim (4 September 2014) [13]-[14].

[319] See above [134]-[148], [96]-[106].

[324] Court Book 1634. See also Witness Statement of Garry Thomas Langford (2 April 2015) [21(t)].

[326] Court Book 1709-33, particularly at 1732.

[327] Witness Statement Lynnell Brandt (23 April 2015) [88].

[328] Court Book 1625, 1627, 1631, 1684.

[329] [2008] VSCA 68, [44]-[49] (citations omitted).

[330] [1982] HCA 47; (1982) 149 CLR 620 at 633.

[331] (1940) 3 All ER 60 at 71.

[332] (1884) 9 App Cas 434 at 439.

[333] [1982] HCA 47; (1982) 149 CLR 620 at 625-6.

[334] Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623 at 647.

[335] [1980] 1All ER 571 at 586 (citations omitted).

[336] [2003] FCA 50; (2003) 128 FCR 1 at 202-3. See, eg, Re Venture Capital Group Pty Ltd (No 2) [2015] VSC 319, [147].

[337] [1982] HCA 47; (1982) 149 CLR 620 at 625-6.

[338] [1989] HCA 23; (1989) 166 CLR 623.

[339] [1989] HCA 23; (1989) 166 CLR 623 at 658.

[340] (1968) 71 SR (NSW) 126 at 150.

[341] [1978] HCA 12; (1978) 138 CLR 423 at 431-2.

[342] [1980] UKHL 11; [1980] 1 WLR 277.

[343] [1918] HCA 33; (1918) 25 CLR 144 at 152.

[344] Hugh G Beale, Chitty on Contracts (Sweet & Maxwell, 28th ed) vol 1, [25-018].

[345] Second Amended Defence and Amended Counterclaim (25 August 2015) [27].

[346] Further and Better Particulars (25 August 2014) [7].

[347] Second Amended Defence and Amended Counterclaim (25 August 2015) [30].

[348] Second Amended Defence and Amended Counterclaim (25 August 2015) [31].

[349] Amended Reply and Defence to Counterclaim (4 September 2014) [13]-[14].

[350] See Second Amended Defence and Amended Counterclaim (25 August 2015) [30]; Amended Reply and Defence to Counterclaim (4 September 2014) [17].

[351] Heyman v Darwins Ltd [1942] AC 536 at 396; The Laws of Australia: Contract (2003) at 7:6:57.

[352] Plaintiff's Outline of Closing Submissions (3 September 2015) [202].

[355] Second Amended Defence and Amended Counterclaim (25 August 2015) [23].

[356] Amended Reply and Defence Counterclaim (4 September 2014) [10].

[357] See above [40], where these provisions are set out in full.

[358] [1989] VicRp 17; [1989] VR 184 at 192.

[359] [1933] HCA 25; (1933) 48 CLR 457 at 476-7.

[360] See, with respect to the relevant commercial considerations, the preceding reasons, particularly [57]-[68], [86]-[90].

[361] Second Amended Defence and Amended Counterclaim (25 August 2015) [24].

[362] Amended Reply and Defence to Counterclaim (4 September 2014) [11].

[363] See Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596 at 607.

[364] See also Option Deed clause 6.4(a): Court Book 385.

[365] [2014] HCA 32; (2014) 88 ALJR 814 at 823 (citations omitted) ("Barker").

[366] (1995) 185 CLR 410 at 450, 453.

[367] [2014] HCA 32; (2014) 88 ALJR 814 at 823.

[368] Referring to Opening Submissions for Trial of the Defendant (PLA) (18 August 2015) [120].

[369] [2014] HCA 32; (2014) 88 ALJR 814 at 823 (citations omitted).

[371] [1982] HCA 24; (1982) 149 CLR 337 at 346.

[372] See BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 at 283; Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 at 347.

[373] Vroon BV v Foster's Brewing Group Ltd [1994] VicRp 53; [1994] 2 VR 32 at 68.

[374] Grocon Constructors (Victoria) Pty Ltd v APN DF2 Project 2 Pty Ltd [2015] VSCA 190, [140].

[375] As is consistent with advice given to PLA by its Australian counsel, which was referred to by Mr Ballew in his email dated 7 December 2007: Court Book 448-9.

[377] The paragraphs in the Plaintiff's Outline of Opening Submissions (11 August 2015) are [110], [112]-[114]. These paragraphs are reflected in the Plaintiff's Outline of Closing Submissions (3 September 2015) [212], [214]-[218]; as discussed in these reasons, above at [196]-[200].

[378] See clause 6.4 of the Option Deed: Court Book 385.

[379] (1881) 6 APP Cas 251 at 263.

[380] [1979] HCA 51; (1979) 144 CLR 596 at 607.

[382] Shepherd v Felt & Textiles of Australia Pty Ltd [1931] HCA 21; (1931) 45 CLR 359 at 378.

[383] [2014] HCA 32; (2014) 312 ALR 356.

[385] Opening Submissions for Trial of the Defendant (PLA) (18 August 2015) [152].

[386] [1933] HCA 25; (1933) 48 CLR 457 at 476-7.

[387] See clause 11.1 of the Option Deed: Court Book 388.

[388] Clause 5.1(g) of the Option Deed: Court Book 383.

[389] [1933] HCA 25; (1933) 48 CLR 457 at 476-7. See above [215].

[390] Photo Production Ltd v Securicor Transport Ltd [1980] UKHL 2; [1980] 1 AC 827 at 842-3.

[391] The footnote references to the preceding parts of these reasons are particular references only as with respect to many of these issues the whole or other parts of the preceding reasons are also relevant.

[399] See above [70]-[76], [79]-[80].