Plaintiff v Defendant

Consideration and disposition - breach of good faith allegations 133

Alleged provision of confidential information to Mayo 142

ANNEXURE 'A' - Table of Alleged Confidential Information 220

1 This dispute relates to the circumstances in which a distribution agreement between the plaintiff (ATG or plaintiff) as manufacturer and supplier of ATG safety gloves, and the defendant (Safety Mate or defendant) as exclusive distributor of the gloves in Australia, New Zealand and Papua New Guinea (Territory), (Agreement) came to an end in September 2019.

2 ATG contended that the Agreement was validly terminated with effect from midnight on 30 September 2019 (Termination Date) by its notice of termination dated 21 March 2019 (Termination Notice) and it seeks a declaration to that effect.

3 Safety Mate contended, among other things, that the Termination Notice was invalid, that it was not served in accordance with the terms of the Agreement, and that it was given in breach of ATG's express contractual obligation to, at all times in its relations with Safety Mate, act in good faith (Good Faith Obligation).[1] Safety Mate contended further that the Agreement was validly extended for an additional two years by a written notice dated 26 March 2019 given by Safety Mate to ATG pursuant to clause 2.2.2 of the Agreement (Extension Letter).

4 Safety Mate alleged that ATG breached the Agreement by, among other things: failing to act in good faith in connection with its giving of the Termination Notice; refusing supply to Safety Mate; sharing Safety Mate's confidential information with ATG's proposed new distributor Mayo Hardware Pty Ltd (Mayo); and appointing Mayo as ATG's new distributor for the Territory. By its counterclaim Safety Mate seeks damages, declarations, and other relief.[2]

5 For the reasons that follow I have determined that:

(a) ATG did not breach the Agreement by failing to act in good faith in the exercise of its termination right under clause 2.2.1 of the Agreement.

(b) The Agreement was validly terminated by ATG's Termination Notice with effect from midnight on 30 September 2019.

(c) The Agreement was not extended for a further two-year period from 1 October 2019 by Safety Mate's Extension Letter.

(d) ATG breached clauses 4.1.1 and 4.3 of the Agreement by failing to use reasonable endeavours to supply to Safety Mate the goods the subject of what are defined later in these reasons as the Four Purchase Orders.

(e) Safety Mate established that it suffered loss and damage, being loss of profits of $25,266 in respect of purchase order PO 964.

(f) Safety Mate did not establish that it suffered any loss and damage by reason of ATG's failure to use reasonable endeavours to supply to Safety Mate the goods the subject of purchase orders PO 965, PO 974, and PO 980.

(g) ATG's liability to Safety Mate for the loss of $25,266 in respect of purchase order PO 964 is excluded by clauses 13.1 and 13.2 of the Agreement.

6 ATG designs and manufactures what it regards as premium quality safety gloves for distribution through its exclusive distributors around the world. Those distributors are known as primary sales partners or PSPs. ATG is a substantial company employing more than 5,000 staff and its gloves are manufactured in production facilities across more than 15 buildings in multiple sites in Sri Lanka.

7 ATG's managing director is Mr Abdeen. Mr Kyle Browning is ATG's director of global sales, having been appointed to that position in 2015. Prior to that he was head of global business development from 2013. Before that he was country manager for North America, having originally commenced with ATG in 2008. Mr Jason Sheerin is ATG's country manager for the Territory. He commenced with ATG in July 2014, having previously been Ansell's corporate accounts director. He was introduced to ATG by Safety Mate's Mr Tee, whom Mr Sheerin met when he worked at Ansell.

8 ATG manufactures four main brands of 'families' of gloves for use in different environments in what it describes as its 'pro range'. They are: MaxiFlex for use in dry environments; MaxiCut for use in environments with a high cut risk; MaxiDry for use in wet or oily environments; and MaxiChem for use in chemical environments. ATG also manufactures a number of other brands of gloves in its classic range, including: MaxiLite, MaxiTherm, MaxiFoam, NBR-Lite and NovaTril. In each glove brand there are a large number of different sub-categories for each available size and colour of a glove type, each of which is assigned its own 'stock keeping unit', known as an SKU.

9 ATG manufactures its gloves on a made-to-order basis worldwide. It does not keep any inventory of spare stock, except in rare cases. The time from the initial placing of an order by a PSP to the point where it is loaded into shipping containers and transported to the port of Colombo in Sri Lanka is about three months. The time from this point until the actual time of receipt by a PSP in each country is affected by various factors, including the distance from Colombo, customs and quarantining requirements, and the distance from the PSP's home port to the PSP's warehouse. Sometimes PSPs request gloves to be delivered by air freight, which is at the PSP's cost. The ordering process and the time lag between ordering and arrival of stock is relevant to aspects of the dispute between the parties, and particularly Safety Mate's alternative damages claim against ATG for refusing to fill purchase orders 964 (29 May 2019), 965 (3 June 2019), 974 (3 July 2019), and 980 (3 July 2019) (collectively, Four Purchase Orders).

10 The production process begins with each PSP around the world placing an order containing the PSP's desired SKUs and quantities for a given production month. ATG requires orders to be placed by PSPs worldwide two months before the start of the relevant production month, and three months prior to the requested dispatch date. This requirement exists for a range of reasons, including enabling ATG to: purchase raw materials; schedule production across various facilities; schedule staff; ensure the required machinery at production facilities are available and have capacity for global demand for each relevant SKU for that month; ensure that enough water is treated at ATG's water treatment plants to meet manufacturing requirements; and to ensure that there will be sufficient space in the relevant production facilities for the gloves in the pre- and post-production state.

11 Upon receipt of the purchase orders for a given production month ATG collates the worldwide orders and assesses its capacity to meet them. ATG then prepares a pro-forma invoice which it issues to each PSP. Each pro-forma invoice sets out the types and quantities of each SKU that ATG can supply to the relevant PSP. These quantities may not match what the PSP has ordered. This is usually as a result of worldwide demand issues. It also occurs from time to time where ATG understands that a particular PSP is ordering quantities which exceed its actual requirements at that time. Operational production and planning issues for ATG were said to rely on strict adherence by PSPs to the production process, including its made-to-order approach. ATG requires and relies upon PSPs to place accurate and timely advance orders.

12 The timing from the initial placing of the purchase order by a PSP until the sending of the pro-forma invoice by ATG is about two weeks. The pro-forma invoice has terms and conditions, which are also referred to in the distribution agreements between ATG and its PSPs. Following receipt of the pro-forma invoice, and after acceptance of any variations, the PSP signs the pro-forma invoice and returns it to ATG for processing. The timing from initial placing of the order to this point is about three to four weeks.

13 When the worldwide orders have been finalised ATG commences the process of raw material acquisition, water treatment, staffing, machinery scheduling and related matters. For efficiency, the manufacturing process then begins for all worldwide orders for a particular SKU occurring together. The time from the initial placing of orders until the commencement of manufacturing is about two months. The manufacturing process begins at the start of the relevant production month and continues throughout the course of that month.

14 When the manufacturing process is complete the gloves are separated out according to the quantities of each SKU ordered by each PSP. They are then bundled into lots, compressed and packaged with ATG's and the PSP's branding and any other relevant information required to be included. They are then placed into boxes and loaded into shipping containers and transported to the port of Colombo (unless airfreight has been requested). As mentioned, from the placing of the order until this point is about three months. Shipping to Australia from the port of Colombo takes additional weeks.

15 At the end of each production month the production facility is entirely emptied of finished products and ATG has no inventory of finished products except on the odd occasion where there has been a small amount of stock from a production overrun.

16 ATG distributes its gloves globally through a network of approximately 30 PSPs, with each PSP having exclusive distribution rights in the relevant country, region or territory. Each PSP is overseen by a country or regional manager employed by ATG who in turn reports to ATG's director of global sales, which is currently Mr Browning. ATG describes its model or approach as being focused upon a channel partner network. A channel partner is at the level of distribution within the supply chain which provides the products direct to the end user. They are independent businesses which will generally sell products from a range of manufacturers to retail stores or end users. There were said to be about 40 channel partners in Australia, with most sales being achieved through the five or so largest channel partners. The largest channel partner in Australia is J Blackwood & Son Pty Ltd (Blackwoods), which is owned by Wesfarmers Limited. This channel partner was said to be responsible for about 50% of Safety Mate's ATG sales in Australia.

17 Mr Browning said a simple explanation of the relationship was as follows:

(a) a PSP will buy the product from ATG pursuant to a distribution agreement;

(b) the PSP will aim to sell the products to a channel partner; and

(c) a channel partner will sell the product to the ultimate end user, being a variation of either wholesalers, storefronts or directly to industry.

He described it as a top-down model with a focus on the PSP first and the channel partner second, and said that the approach did not generally provide for ATG or the PSP to be engaging with the end user directly, except in close cooperation with the channel partner and even then only rarely.

18 ATG's areas of focus are referred to in its brand charter comprising Schedule 7 to the Agreement, with the first in importance being stated in the following terms:

Proximity and presence: of the ATG® offering delivered through the primary sales and channel partners. At ATG® we know that it is the primary sales and channel partners that primarily deliver the ATG® message and promise on a daily basis. ATG® sees it as its role to ensure the appropriate level/quality of services to support.'

19 The importance of channel partners to ATG was also reflected in the key performance indicator (KPI) scorecard comprising Schedule 8 to the Agreement (KPI Scorecard). All five KPIs in the scorecard refer to channel partners, with emphasis on the same in KPIs 1 to 4. KPI 1 is headed 'Australian Channel Partner Engagement'.

20 Mr Sheerin said that each PSP's role within their respective territory includes: promoting and supplying the gloves to channel partners; in conjunction with channel partners, promoting the gloves to end users; ordering sufficient gloves in advance to meet local demand in the upcoming sales period; providing regular training to channel partners to assist them in marketing the gloves to their customers; and to provide to ATG on a monthly basis information regarding sales, stock levels and forecasts. Mr Browning referred to PSPs' responsibilities as including utilising ATG sales and marketing collateral, channel partner engagement, and PSP sales team engagement. With respect to channel partner engagement he considered that a PSP must build a strong channel partner network, engage in training of channel partners' sales team members, and provide a path into 'C-Level'[3] channel partner engagement. Mr Browning said the channel partner engagement involves ATG locking 'arm in arm' with a PSP to present value to channel partners' senior management.

21 With respect to ATG's role Mr Sheerin said that it provides training, tools, market intelligence and other support to PSPs, but does not itself sell directly to channel partners or end users, only to PSPs. He said that it generally requires PSPs to sell only to channel partners, not end users, and ATG expects PSPs to focus the majority of their attention on dealing with channel partners and to engage with end users only in conjunction/cooperation with channel partners. He referred to this being the 'channel partners approach' and said that ATG had used this distribution model throughout the world since ATG was formed in 2009 and that its predecessor, John Ward Ceylon Limited, used the same model. Mr Browning reinforced the importance of this approach worldwide, which was described as the 'ATG Model'. That precise term, 'ATG Model', is not used or defined in the Agreement, although reference is made to 'this business model' in the Brand Charter forming part of the Agreement.

22 Safety Mate carries on business as a distributor of hand and eye protection wear throughout the Territory. Mr Clint Tee is one director and Mr Mike Temperton is the other. Seventy-five per cent of the shares in Safety Mate are owned by family or entities associated with Mr Tee, and 25% are owned by a company controlled by Mr Temperton. Mr Tee is in charge of the day-to-day operations, which includes managing the sales team, overseeing supplies and purchase orders, contract negotiations, high-level contact with customers and sourcing suppliers and new customers. Mr Temperton is a qualified accountant and is involved in all board level decisions and in overseeing cashflow and other finances of the business. He was also said to be involved with important decisions and issues as they arose, including in this case being kept informed of negotiations with ATG in the lead up to the execution of the Agreement. Mr Tee said it was his usual practice to email a note of conversations he had with Mr Browning or Mr Sheerin to Mr Temperton following important discussions.

23 Mr Tee first became engaged with ATG (when it was known as John Ward Ceylon) in late 2004/early 2005 whilst on a trip to India. At that time the Australian glove market was dominated by Ansell Limited. In India Mr Tee obtained a catalogue of ATG's products. His first contact was with the then commercial sales director, Mr Goth, who remained the main sales contact for the first six years of the relationship.

24 In November 2007 ATG and Safety Mate signed a five-year distribution agreement.

25 On 1 January 2012 Safety Mate entered into a further distribution agreement in respect of ATG products for Australia, New Zealand and 'Oceania' until 31 December 2016, with an option to continue for a further 12 months. The 2012 agreement was signed by Mr Tee and continued until 30 September 2017. As Mr Tee acknowledged in his evidence, at that time there was no obligation on either party to extend the term of the then distribution agreement, or enter into a new agreement. Both parties were free to walk away.

26 Like the Agreement, the 2012 distribution agreement also contained terms mandating compliance with ATG's 'brand charter', which was addressed in clause 36 of the 2012 agreement. Clause 36.8 of that agreement also emphasised the focus and importance of the 'ATG offering [being] delivered through the primary sales partner and channel partners.'

27 Prior to 2014 there was no country manager for Australia based in Australia. In early 2014 Mr Goth visited Safety Mate in Brisbane to discuss the market. During that time he asked Mr Tee if he knew anybody who could perform the role of country manager. Mr Tee suggested that they seek to hire Mr Sheerin, who was then working at Ansell, and who Mr Tee had met at a trade exhibition in Darwin. Mr Tee understood Mr Sheerin had a good relationship with Wesfarmers' key personnel and decision-makers. Mr Sheerin joined ATG in July 2014 as the country manager for the Territory.

28 Mr Tee said that historically Safety Mate imported and sold safety equipment to channel partners and not end users, with Safety Mate's channel partners then onselling the products to end users. Examples of end users were large mining companies, such as Rio Tinto, BHP, Illawarra Coal Ltd (owned by South 32 Ltd), and Anglo American plc. Examples of channel partners were Wesfarmers Industrial and Safety Pty Ltd, which includes Blackwoods, Aqua Terra Oil and Mineral Service and Supply Company Pty Ltd, Torrens Safety Pty Ltd and Industrial Protective Products (WA).

29 Mr Tee said that the sales strategy differed for each channel partner. Sometimes engagement was with end users first and face to face in providing samples and obtaining feedback. He would then go to the channel partners and try to persuade them that they should buy the gloves and products from Safety Mate that the end users wanted. Other times Mr Tee said he was approached by end users directly to help them solve specific hand protection issues they may have on site and that once he understood the end user need he would refer the business back to the channel partner. Safety Mate's initial strategy for ATG products was to visit supply managers of large distributor companies such as Blackwoods and business owners of small independently owned distributors.

30 From around 2007 Safety Mate began to change the sales strategy for ATG products from only approaching channel partners to instead beginning to meet with the end users and sending employees to do so. Mr Tee said his objective was to try to convert them to the ATG brand and then hopefully persuade the channel partners to buy the brand from Safety Mate due to their customers liking the product.

31 When Mr Sheerin commenced as country manager in July 2014, he had a good working relationship with Safety Mate and Mr Tee and there was frequent contact. Mr Sheerin said that this deteriorated after about six months and that many communications had become unpleasant. He said that a consistent theme of the conversations related to him being unable to persuade Mr Tee that the channel partners' approach was the appropriate way for him to operate Safety Mate's business as ATG's PSP, and Mr Tee being unable to persuade Mr Sheerin that Safety Mate should continue to operate without applying that approach. Mr Sheerin said that this introduced a level of friction into the communications which has never been resolved, and the telephone calls went from speaking nearly every day in the early times to becoming very infrequent so that most of the communications were by email. Such calls as did occur were said to be strained. Mr Sheerin also spoke of some examples regarding issues with channel partners. I accept the substance of Mr Sheerin's evidence in this regard, which was also apparent from email and other communications during the relationship, aspects of which are referred to later in these reasons.

32 Mr Browning said, and I accept, that in September 2015, Mr Goth, Mr Sheerin, and he met with Mr Tee and others in Brisbane, during which the ATG model and approach was discussed. This included a presentation that reflected and emphasised ATG's channel partner approach through its PSPs. Mr Browning had originally created this presentation many years before, which he revised from time to time. Among other things, the presentation set out ATG's sales strategy and compared it to others with the relevant slides recording and underscoring in different ways how ATG works through channel partners. For example, the approach with ATG's exclusive PSPs in a territory was diagrammatically presented as follows:

The presentation recorded in various ways ATG's strong view regarding the importance and benefits of its channel partners' approach and PSP engagement with channel partners. A goal to achieve growth was said to be for PSPs to develop multiple resources within multiple channel partner sales teams and to increase the number of channel partner sales team members selling ATG's products.

33 Mr Browning said, and I accept, that following the presentation, Mr Tee said words to the effect that Safety Mate disagreed with the ATG approach and that the Safety Mate strategy was to go to market to target end users directly rather than adopt the ATG channel partner approach. In 2015 Safety Mate's Mr Roberson had also made a remark to Mr Browning about his view that distributors (meaning channel partners) were a waste of time. Mr Browning was materially concerned about this approach, which he expressed, as well as his view regarding the channel partner approach being successful globally. Although Mr Tee did not agree with Mr Browning's recollection, where there are differences I generally prefer the evidence of Mr Browning, as I later explain.

34 The fact that Mr Browning and ATG felt strongly about ATG's approach to market was also apparent from Mr Tee's email of 8 September 2015, in which he referred to ATG having '... pushed very hard to have contact with distributors ...'. That Mr Goth and Mr Browning were '... extremely passionate about ATG and the way [ATG] go to market ...' was also referred to in Mr Sheerin's email of 10 September 2015, as well as the content of the presentation. Mr Tee's comments regarding Mr Sheerin in his email of 8 September 2015 to Mr Temperton also reflected a deteriorated relationship with him, as was also apparent from earlier email communications, including, for example, the exchanges between Mr Tee and Mr Sheerin on 14 July and 14 August 2015. It was also the position that personal issues had impacted on aspects of Mr Sheerin's work at the time.

35 Throughout 2015 Mr Sheerin routinely reported back to Mr Browning, typically by monthly phone calls. In substance they were said generally to include comments to the effect that despite attempts to persuade Safety Mate otherwise, it had not made any real changes to adopt sufficiently the ATG approach and was continuing with its go-to-market strategy. Mr Browning said that he raised again his concerns with Mr Tee at a meeting in Germany in late 2015 and referred back to the earlier discussions about the ATG approach. Mr Browning said that Mr Tee said words to the effect that 'the go to market strategy works for us and is the strategy we will employ.'

36 I accept the substance of Mr Browning's evidence that he had a discussion with Mr Tee at the meeting in Dusseldorf in Germany in October 2015, which sits comfortably with ATG's documented approach, the matters raised earlier in September 2015, and the terms of the 2012 Agreement. It is also consistent with Mr Browning's belief in ATG's approach, as was referred to at the time in email correspondence. To the extent the substance of Mr Browning's evidence was inconsistent with the evidence of Mr Tee about what transpired, I prefer the evidence of Mr Browning. Further, even if it was the case that the particular words, 'ATG model' or 'go to market approach' were not used, I am satisfied that the ATG channel partners' approach was discussed, as was the existence of the differences between the parties on this issue. This was also addressed by Mr Browning's evidence in re-examination, which I accept. He explained that any time he had a discussion around distribution with Mr Tee it came to the same conclusion and that '... it always felt like when we've had a discussion with Safety Mate, specifically with Clint Tee, either Jason or myself, we were told that, "This is Safety Mate's business, this is Safety Mate's market", and they're going to manage and handle the market the way they see fit and they just seemed to be very resistant to any conversations about a change or a new adoption of a different way to approach the market. The conversation would always end in the same position where they would basically tell us that it was their business and they knew what their market was and they knew more than we did'.[4] Another illustration Mr Browning referred to was Safety Mate's National Sales Manager, Mr Roberson, expressing the view that 'distributors are a waste of time'. A further example mentioned was a statement by Mr Tee that 'Our focus is 90 per cent on the end user', which Mr Browning said was generally 'Clint's approach'. Mr Browning also expressed the view, which I accept was genuinely held, that Safety Mate always appeared to want to continue to argue the point, which is also reinforced by a number of the documents referred to in these reasons.

37 Mr Browning's view about Safety Mate's approach, causing issues in the market and distributors being concerned was not based only on that which Mr Sheerin told him, although Mr Sheerin's observations were to the same effect. Mr Browning explained, and I accept, that Mr Browning had also formed his own opinions based on conversations with others. As he said during his oral evidence this included his conversations with Mr Tee and conversations with members of Wesfarmers' staff that had told him '... that they had issues with the way that Safety Mate approached the market and approached the end users and they didn't feel like there was a lot of opportunity for real partnership with Safety Mate'. During re-examination Mr Browning explained who it was that he had met with in September 2015 when the issues had been raised. He also confirmed, and I accept, that he had spoken again with Wesfarmers' Mr Wood at a trade show in 2017 where '... he again expressed concern over the way that Safety Mate had approached the market and the way that they worked in the market place, and so it was still a problem for them.'[5]

38 That there were other positive communications and exchanges between the parties at the time and subsequently does not alter the position or change the fact that throughout the relevant periods there was an apparent difference of view between ATG and Safety Mate about the preferable market approach. Although in my view Mr Tee displayed a tendency in his evidence to want to play down this difference, it was well supported by the evidence of Mr Browning and Mr Sheerin on the point, as well as apparent from numerous references in the email communications and other documents in evidence. I accept that there was an ongoing issue between the parties in their business relationship about this topic and that each of ATG and Safety Mate held strong but different views about it.

39 Mr Browning said, and I accept, he told Mr Sheerin to keep doing his job and explained that this involved working with Safety Mate and channel partners and to train them, and to work with Mr Tee to get him to change his approach and continue to report back. He said Mr Sheerin usually reported monthly that he was trying to achieve these goals whilst also trying to keep the relationship with Safety Mate relatively cordial, and that he was approaching the matter in a non-adversarial way.

40 The challenged working relationship between Safety Mate and Mr Sheerin was apparent from many communications in evidence. It was also apparent from many of Mr Tee's email communications, whether internal to Safety Mate or external to ATG, that Mr Tee was a forthright individual with strong views on many topics and strong belief in his own position in things. Further examples of emails revealing the challenged relationship with Mr Sheerin included the internal and external email exchanges in January, February and March 2016. It was also apparent that Safety Mate was hoping to engage Mr Browning's support, although later email exchanges in February 2017 between Mr Tee and Mr Temperton recorded Mr Tee's concern more than once that Mr Browning was, or appeared to be, supporting Mr Sheerin, even though earlier he had said it was part of Mr Sheerin's job to fix the strained relationship with Safety Mate. I prefer the evidence of each of Mr Browning and Mr Sheerin to that of Mr Tee where it was in conflict regarding the nature of the strained relationship and its manifestations. To the extent that Mr Tee denied awareness or knowledge of the existence of a strained and challenged relationship, I do not accept that evidence. The documents and the evidence of Mr Sheerin and Mr Browning established otherwise.

41 During 2014 to 2016 Safety Mate and ATG had been engaging in relation to the prospect of Safety Mate being appointed as the PSP for Japan. This was an important issue to Safety Mate as the email correspondence in evidence reflected. It also revealed tension between the parties in various ways, including in relation to what Safety Mate saw and said was poor communication and 'a lack of correspondence' from ATG and Mr Browning on the topic in response to expressed concerns of Mr Tee.[6]

42 Ultimately Safety Mate was not appointed as PSP for Japan, because in mid-2016 ATG decided to go to the Japanese market directly. Safety Mate was very disappointed with ATG's approach and said so. The email exchanges at the time reflect that Mr Tee was upset about the issue, as was Mr Temperton, who considered that ATG's approach 'did not sit well' with them. ATG's letter of 23 August 2016 addressed an issue of expenses and commission compensation for Safety Mate and stated, among other things, 'ATG's position [that] this decision was made for the best of the business and due to the manner of distribution that must be adopted in Japan ...'.

43 Given the timing, this issue formed part of the backdrop to the negotiations that took place between the parties in connection with the entry into the Agreement in 2017. By his email of 8 September 2016 in response to ATG's letter of 23 August 2016, Mr Tee: referred to the Japan issue noting that '... we have clearly stated that we are not happy with the position ATG has taken, we have accepted that we need to move on and put the matter behind us.' Mr Tee's proposal included compensation for expenses and claimed commission but also added a 'further request that our current territory agreement, which is due for renewal, be extended for a period of 10 years', which a later email recorded that the request 'only arose out of the Japan outcome'.[7]

44 The email correspondence that followed expressed ATG's concern by Mr Browning about what was seen as an attempt by Safety Mate 'to muddy two issues', being the Japan issue and renewal of agreement negotiations. Mr Tee said that Mr Browning had informed Safety Mate that the negotiation of any new agreement was completely separate from the Japan issue.

45 Although Mr Tee's email of 10 February 2017 recorded his belief that it was obvious that ATG did not plan to agree to a 10-year agreement, Mr Temperton considered at that time that Safety Mate should 'keep pushing'[8] for an initial term of 10 years plus a five-year option.

46 The email exchanges at this time also recorded Mr Tee seeking to explore with Mr Browning whether he had an issue with Mr Sheerin, who was the country manager for the Territory. Mr Temperton counselled against this approach saying: 'No, I think he is behind Jason [Sheerin], and not happy he is not being included, we will see this in the new Agreement.'[9] The email exchange that followed revealed that Mr Browning was of the view that Safety Mate was excluding or seeking to step around Mr Sheerin as country manager, that he was not happy about it, and that this was conveyed to Mr Tee and Mr Temperton. It also recorded that Mr Browning was insisting that Mr Sheerin handle any contract renewal and be involved in the negotiations. Mr Temperton's email of 10 February 2017 (8:49am) also recorded that Mr Browning had said that he was not happy and did not like the way Mr Sheerin was being treated, and that '... there are things more important than figures'.

47 The subsequent emails between Mr Temperton and Mr Tee on 11 February 2017 also further revealed a challenged relationship between Safety Mate and ATG and between Mr Tee and Mr Temperton on the one hand and Mr Browning and Mr Sheerin on the other. Mr Temperton was clear about his strategy or approach, considering that no forewarning should be sent to Mr Browning about how Safety Mate 'will want to handle Jason [Sheerin]' and that any mention of Mr Sheerin to Mr Browning 'will only steady his belief in what Jason has been saying'. On the topic of business approach by Mr Browning and ATG, Mr Temperton stated that:

Jason aside, Kyle has to be driven by business principles, and where they are going is trying to run the business of their PSP's which is not on. Injecting their country manager into a PSP's business which is not on ... Let's focus on the contract, get the detail right, then bring the war to Jason [Sheerin] based on their own clear guidelines'.[10]

48 This is a further example of the existence of true differences between ATG and Safety Mate. Mr Tee also referred in his email of 11 February 2017 to Mr Temperton having said many times before that Mr Sheerin is a 'dangerous animal'.

49 In this email exchange between Mr Tee and Mr Temperton reference was also made to Safety Mate having excluded Mr Sheerin from a Safety Mate Christmas function, with Mr Tee stating that:

Sorry for going back to this, but that xmas lunch thing would really look bad to Kyle [Browning] and Jason [Sheerin] would have milked it massively. Kyle would probably almost think what sort of psychotic people are we ... and that is his lasting impression and has possibly told John and others this, which is also concerning ...

But I guess too late to change that now...[11]

50 Mr Browning also spoke of the challenged relationship in his oral evidence, which I accept. He was of the view in 2017 that things needed to change, with a primary issue being Safety Mate's view about the approach to market, in addition to other concerns including a lack of transparency. At that point he was of the view that '... it just seemed at that stage that it was, the relationship was beginning to fall into disrepair'.[12] This was consistent with Mr Sheerin's evidence and was apparent from the email communications in any event.

51 Mr Browning further explained in his oral evidence, and I accept, that it is not just sales and numbers that are important in a PSP, noting also that the way a PSP approaches '... the distribution channel, the distribution network tends to have a great bearing on the longevity of our partnerships with existing sales partners across the globe.' During his cross-examination Mr Browning also explained how the fact that ATG's products were a significant part of Safety Mate's business 'was always an issue'. Mr Browning said, and I accept, that ATG had 'challenged' Safety Mate several times throughout the relationship to expand their business offering so as to grow Safety Mate's importance amongst the distribution network with multiple product lines and multiple product categories. This was because it was considered it would make Safety Mate more relevant to the marketplace and more relevant to distributors if more product lines are available to a distributor.

52 The claims in this proceeding had previously included allegations that an agreement reached in relation to the payment of expenses and compensation to Safety Mate by ATG in respect of dealing with them in relation to the distribution of ATG's gloves in Japan had been breached. The court was informed that this claim had been resolved by agreement between the parties and that it was not necessary for the court to determine.

53 Mr Browning tasked Mr Sheerin with the negotiations associated with the proposed renewal of the distribution agreement in advance of the end of the 2012 distribution agreement on 30 September 2017. The draft agreement provided by ATG to Safety Mate included the KPI Scorecard, the inclusion of which was not well received by Safety Mate. The KPI Scorecard had an emphasis on channel partner engagement. Although it was initially said in opening that there was no reference in the Agreement to the channel partner approach and focus, this was not so. The 'Brand Charter' and KPI Scorecards are two examples.

54 During the period of February to October 2017 communications passed between Safety Mate and ATG in relation to the negotiation of the terms of the Agreement. It was common ground that these communications were relevant context and background for the purposes of Safety Mate's breach of the good faith allegation. Mr Sheerin and Mr Tee were the people most involved with the negotiations, with Mr Sheerin reporting to and being overseen by Mr Browning. Mr Temperton also had some involvement for Safety Mate.

55 One main difference between the parties at that time was the period proposed for the Initial Term and any extensions or options. As noted earlier, Safety Mate had originally sought 10 years, which as negotiations progressed became a request for five years plus five years. ATG's position was different, and it was only prepared to offer an initial contract term of two years plus two extensions or options each of two years, giving a potential six-year total. ATG did not change its position on this issue. Safety Mate was not happy about this, which can also be seen in and inferred from the email exchanges at the time,[13] and did not like having to deal with Mr Sheerin in relation to this and related issues.

56 The communications between Safety Mate and ATG regarding the negotiation of the Agreement included meetings and discussions between Mr Tee and/or Mr Temperton on the one hand and Mr Sheerin for ATG on the other. Email exchanges at the time again evidence a challenged relationship, and what appears at times to have been Safety Mate sending somewhat workshopped and one-sided or not fully balanced emails. An example was reflected in the email exchanges regarding the meeting on 9 March 2017, including Mr Sheerin's contemporaneous email of 13 March 2017 to Mr Browning annotating Mr Temperton's email regarding the meeting, and noting that '... some of what Mike [Temperton] has below is a very one sided view and skewed to their wishes. I will address each of these with Mike when next we meet.' These exchanges also reveal again differences of approach and the importance to ATG of having a good working relationship and 'working partnership' to the success of any relationship.

57 For completeness I add that the fact that the email in response (from Mr Sheerin to Mr Temperton and Mr Tee) did not record all of these matters in the same way does not detract from the position of Mr Sheerin or the content of his email to Mr Browning. It is also apparent from Mr Tee's comment to Mr Temperton (when they were workshopping the content of the email to be sent to Mr Sheerin about the meeting) that 'Jason and Kyle' would both contend that 'ATG's strategy has always been channel partner training ...' and that they would question Safety Mate's assertion that ATG's approach had changed, that Mr Tee and Safety Mate were in fact aware of ATG's approach - as other documents supported in any event.

58 It was apparent from the documents evidencing communications regarding the proposed agreement that there were further tensions. However, to the extent that Mr Tee said that Mr Sheerin was using words to the effect of 'take it or leave it', I do not accept that evidence, noting Mr Sheerin's denial. That said, whether or not it was said would make no difference to the outcome in this proceeding.

59 Mr Browning said he spoke to Mr Tee about once or twice a year from 2015 until 2019 and that a recurring feature of the conversations involved exchanges about Safety Mate needing to shift its focus from end users to a channel partner approach and Mr Tee being resistant. Mr Tee disputed this, but I accept and prefer the evidence of Mr Browning. The evidence of Mr Sheerin and Mr Browning established that Safety Mate, including Mr Tee, Mr Temperton and Mr Roberson were aware of ATG's channel partner approach. So much was also apparent from various documents, including for example: the 2012 Agreement; Mr Browning's presentation that was addressed with Safety Mate in 2015; Mr Tee's comments by email of 13 March 2017 (at 8:36am) on a draft email of Mr Temperton to Mr Sheerin; various communications between the parties, including the email of 3 July 2017 from Mr Browning referred to below and Mr Temperton's response of 5 July 2017; and the draft and final terms of the Agreement passing between the parties in 2017, including the KPIs and the brand charter terms.

60 The email from Mr Browning to Mr Tee and Mr Temperton dated 3 July 2017 read in part as follows (emphasis added):[14]

Hi Michael & Clint-

I trust both of you are doing well. It sounds like great news regarding the Wesfarmers decision! Congratulations!

After the many conversations I have had with Jason, John and Fazal regarding the agreement, I feel compelled to speak to you directly to hopefully clearly explain our position regarding the term of the agreement. From our position the agreement is a 6 year agreement with 2 year review periods scheduled throughout the term of the agreement. This is a similar plan put into place with other sales partners with agreements longer than 3 years. Most other agreements which have recently been put into place are for a period of 3 years, especially when there is any apprehension regarding differing go-to-market philosophies. In the case of Safety Mate, we are offering a 6 year agreement, but with 2 year review periods where a formal review of market strategy will take place. If the wording of this portion of the agreement is an issue, then please offer another suggestion, keeping in mind the 2 year review periods would need to be included.

Prior to the start of negotiations around this agreement, we communicated on several occasions our unease with the end-user focused market approach employed and consistently communicated by Safety Mate. Our primary success in the bulk of markets where we have achieved market shares of 25% or greater has been the focus on training at the distributor level and our sales partners focus on building long term partnerships with the distribution channel. We believe a sales partner who focuses upon building an army of distributor sales representatives who are champions of the ATG products is much more efficient than our sales partners focus at the end-user level. When the end-user is the focal point, our sales partners are only as effective as the number of sales people they employ. In addition, we have found when our sales partners work end-user engagements without the distributor in a partner role, it tends to lead to distrust, resentment and a broken supply relationship.

Over the course of the last few years, it has become clear through conversations from Safety Mate to Howard, Jason and myself that Safety Mate feels strongly about their market approach, however we politely disagree. We feel this is a limitation to the success levels which can be achieved, especially when one distributor controls such a large market share. We have heard things like "distributors are a waste of time" and "our focus is 90% on the end-user". It seems that when we have brought these concerns forward, we have been told it is not ATG's concern and Safety Mate must be allowed to run their market how they see fit. Our reasoning for inclusion of a 2 year review period is due to these apprehensions. We firmly believe the exclusivity must allow for ATG's ability to be included in the development of our sales partners market strategy. To date, we don't believe our viewpoint is taken into account.

Perhaps it would be best for you, Jason and me to get on a brief conference call to try and move forward. It feels as of late, we continue to discuss the same point and unless we can come to some sort of compromise we may never conclude the process. It is our position to continue a long term partnership, however we hope to make sure it is a partnership with a system in place where both viewpoints are taken into consideration.

Please let me know your thoughts regarding a conference call.

Kind regards-

Kyle

61 The existence of a difference of view with ATG and Mr Browning regarding this approach was also apparent from the responding email of 5 July 2017, which in part also recorded Safety Mate stating that it hoped that Mr Browning did not '... take it as "there those Australians go again [emphasis added] wanting to do it their way" ...'. Safety Mate expressed the view that it did not see that 90% of time with distributors would be 'prudent or effective', but that it '[does] agree a larger percentage, in the 30% to 40% range ... should be spent with distributors ...'. Mr Tee and Mr Temperton also stated that their '... motivation is not one of stubbornness, or push back for the sake of push back, but rather one of protecting what has been built whilst still maintaining growth ...'. It was also stated that Safety Mate was committed to some more distributor focus.

62 On 8 August 2017 aspects of the draft agreement were discussed in a teleconference between Mr Tee, Mr Temperton, Mr Sheerin, and Mr Browning. As with various other conversations there was some dispute between Mr Tee on the one hand and Mr Browning or Mr Sheerin on the other as to what was said, although in most instances (including this one) the resolution of such matters is not germane given other evidence regarding the events, the approach of ATG, and the state of the relationship. However, given the issues being addressed at the time, the email exchanges prior to the meeting, Safety Mate being unhappy with a two-year initial term and the issue between the parties regarding the channel partner approach, I am satisfied that it is at least likely that Mr Temperton raised various matters. These included not being pleased with the two years, and Safety Mate's view that it knew the Australian market and what works best in terms of market approach. I also accept that Mr Browning raised the channel partner approach; not being happy with Safety Mate's approach; Mr Sheerin being there to help and support, and the need to work with him; the initial period being two years and the need to get the relationship back on track; and the importance of ATG's approach to it. It is also consistent with Mr Sheerin's email of 30 August 2017 in which he stated in closing 'Looking forward to having this process completed enabling us to focus back on market domination!!'.

63 The commencement date under the Agreement was 1 October 2017 (Commencement Date). It was signed on 3 October 2017. At a trade fair in Germany on 18 October 2017 Mr Browning and Mr Sheerin met with Mr Tee and Mr Temperton where the Agreement was executed again and copies were exchanged. Mr Sheerin said that at this time Mr Browning said words to the effect of 'Let's use this as an opportunity to repair the relationship and move forward' and that Mr Tee expressed agreement. Mr Tee said he does not recall Mr Browning saying this. However, it is consistent with Mr Tee's email to Mr Browning of 3 November 2017 in which he referred to the trade fair ('show'), the finalised agreement, and his belief that the only matter to 'finalize' was the Japan compensation '... so that we can close the book on the past 12 months and turn our focus on moving forward'. It is also consistent with evidence regarding the history of the events leading to the finalisation of the Agreement and existence of a challenged relationship more generally at that time, as was supported by the documentary evidence, including that referred to above. I accept Mr Sheerin's evidence regarding the making of the statement at the time - although whether or not that was so makes no difference to the outcome of the case in any event. It was also consistent with the lack of trust between the parties that existed, which was apparent from the communications and, for example, expressly referred to in Mr Sheerin's notes of his meeting with Mr Tee and Mr Temperton on 9 March 2017.

64 On 27 October 2017 Safety Mate informed ATG by email of its 'hard costs' associated with the exploration of the Japan market which were said to be $75,426.83.

65 A quarterly review meeting took place between Mr Sheerin, Mr Tee, and Mr Temperton on 11 December 2017. At quarterly review meetings the quarterly KPI Scorecards were addressed and discussed. As Mr Sheerin said, the KPIs were generally 'met' but not 'exceeded'.

66 The evidence revealed that by at least late 2017 and also in early 2018 a strained relationship had developed or existed between Safety Mate's National Sales Manager, Wade Roberson, and Mr Sheerin, and that Mr Tee was involved. The email communications at the time (and earlier) revealed that issues between the parties included issues in relation to the channel partners' sales approach, a comment Mr Roberson made to Mr Goth and Mr Browning some time ago regarding distributors being 'a waste of time', and some of the KPIs in the Agreement being created because of Mr Roberson's approach and his comments. This was apparent from, among others, the email exchanges between Mr Roberson and Mr Sheerin in late 2017, including the exchanges on 22 and 23 November 2017, Mr Roberson's email of 26 January 2018, and Mr Tee's email of 14 December 2017 in which he refers to issues between them, noting also that '... we do not want to return to a "you" and "us" situation'. The November 2017 exchange between Mr Roberson and Mr Sheerin involved Mr Roberson disagreeing with ATG involvement in some engagement and resistance to the suggested involvement of channel partners in a particular initiative. Mr Sheerin expressed frustration regarding the issues not being raised at the time of the relevant meeting, noting also that 'Time and again we have discussed the different approach of ATG and SM [Safety Mate] have in the market especially when it comes to CP [channel partner] involvement.' Mr Tee also referred to the issues between Mr Sheerin and Mr Roberson in Mr Tee's email to Mr Temperton of 22 January 2018 following what was there recorded as Mr Roberson just having had a heated discussion about various matters with Mr Sheerin.

67 On 28 February 2018 ATG provided Safety Mate with a forecast sales figure for the financial year 2018/2019 of 5,768,546 pairs of gloves. On 4 March 2018 Safety Mate informed ATG that it was content to work off that number. The email communications at that time recorded Mr Sheerin calculating this as reflecting an 8.1% growth rate, which Safety Mate was 'happy to work off'.

68 On 20 April 2018 there was a quarterly review meeting between Mr Sheerin, Mr Tee, and Mr Temperton. There was a further quarterly review meeting of the same kind on 26 June 2018. Also on that day, ATG paid Safety Mate $75,426.83 by way of credit note in respect of Safety Mate's Japan market related expenses.

69 Mr Browning said that he spoke with Mr Sheerin after each quarterly meeting held between Mr Sheerin and Safety Mate and that he was told by Mr Sheerin that things were not going well, and Safety Mate was not changing its substantive approach to sales of ATG products. He said he continued to encourage Mr Sheerin to keep trying to get Safety Mate to change to ATG's approach to have a greater channel partner focus.

70 Mr Sheerin said he had a range of concerns with Safety Mate, including a very strained and challenged relationship, being difficult to deal with, the differences of view regarding ATG's channel partner approach, limited information sharing, a secretive approach, and a lack of candour resulting from the poor relationship.

71 By way of illustration about channel partners, one example raised was Safety Mate dealing with end users in a way that was not co-ordinated with or risked cutting across the relevant channel partner's approach with the same end user. An example given was some dealings with Illawarra Coal (as an end user) by Safety Mate that had resulted in Mr Sheerin being informed by the channel partner Blackwoods representative of difficulties with the approach taken by Safety Mate. Mr Tee accepted in cross-examination that if things had occurred how Mr Sheerin said he was told they had occurred that would be an issue for the channel partner. Although Mr Tee had a different position, I accept that Mr Sheerin was informed of the matters he referred to by the Blackwoods representative, and his evidence was not at all shaken in cross-examination. I also accept, however, that there was engagement of the kind referred to by Mr Tee, as reflected in the email exchanges, including, for example, in March 2019 - noting also that the initial exchange was direct between the end user (Illawarra Coal) and Safety Mate. That said, what happened in this particular instance is not ultimately material to the outcome of the determination of the issues in this proceeding.

72 At an ATG internal sales meeting in Sicily in September 2018 there was discussion regarding what was said to be Safety Mate's lack of adherence to the ATG channel partner sales approach and the possibility of terminating the Agreement with Safety Mate. Mr Sheerin was asked to ascertain whether the Agreement could be terminated. Although the idea of termination was being explored at that time, no decision had been made to terminate the Agreement.

73 Mr Browning held the view that ATG could not consider terminating Safety Mate or bringing the matter to the ATG directors until there was a viable replacement PSP for Safety Mate. This was because if Safety Mate was to be terminated and no replacement PSP was in place it would have caused commercial problems with distribution throughout the market, leading to potential lost market share and damage to ATG's reputation. Mr Browning decided that until a replacement PSP could be found he would hold off on the decision to terminate the Agreement with Safety Mate, and bringing that issue to ATG's directors. The prospect of terminating the Agreement with Safety Mate was discussed further between Mr Sheerin and Mr Browning between September 2018 and January 2019, and it was agreed between them that termination should be recommended and that a new PSP should be appointed. Mr Sheerin was asked to give recommendations regarding a possible replacement PSP.

74 In about January 2019 Mr Sheerin informed Mr Browning that: termination was possible if notice was given by 31 March 2019; he remained not satisfied with Safety Mate's approach to dealings with ATG, including its approach to the channel partner model and a general failure to act as a true sales partner; he found Safety Mate secretive, adversarial and generally difficult to deal with; and he did not think Safety Mate was likely to change its approach. Mr Browning said that Mr Sheerin had reviewed potential replacement PSPs and suggested that Safety Mate be replaced with Mayo. This recommendation was said to be based upon Mr Sheerin having done some due diligence regarding Mayo in the marketplace and his belief that it would be a material improvement from Safety Mate. There were a range of commercial reasons why Mr Sheerin believed Mayo looked to be a 'fantastic option' for ATG in the market.

75 Based on his experience and knowledge of the market, Mr Sheerin thought Mayo would be the best fit for ATG in a PSP role. He said he was attracted to Mayo for a range of reasons including: Mayo's outstanding reputation in the market; Mayo's existing excellent relationships with channel partners, including Blackwoods; Mayo's large and stable workforce, many of whom Mr Sheerin had met at various trade shows and considered to be professional in their conduct; Mayo having a wider range of products in its offerings than Safety Mate but very little if any products in its range that would be competitive with ATG's gloves; and Mayo being of the size and capability to take on the responsibilities of being ATG's PSP in the region.

76 Further quarterly review meetings occurred between Mr Sheerin, Mr Tee and Mr Temperton on 2 October 2018 and 31 January 2019, and KPI Scorecards were completed and addressed.

77 Mr Tee's position and perspective was different to that of Mr Browning and Mr Sheerin. He criticised Mr Sheerin's performance, which as earlier noted was the subject of some communications with Mr Browning. Mr Tee also believed that relationship issues Mr Sheerin was having in his personal life were impacting upon his work. He said that in the quarterly review meetings Mr Sheerin never raised the channel partners approach, or the ATG model, or said that Safety Mate was failing to adhere to it, or failing to meet ATG's expectations. He said that whilst there were discussions about a greater focus by Safety Mate on channel partners, ATG had not requested it to be a term of the Agreement. To the extent there was a difference between the channel partners focus issue being raised at review meetings, I prefer the evidence of Mr Sheerin, which is also consistent with the existence of the ongoing difference of view about the best way to approach the market.

78 So far as his recollection was concerned Mr Tee said that each review meeting was positive and ended with statements from Mr Sheerin to the effect that things are going in the right direction, with references being made to positive trends continuing. He also said there was never any mention of an expectation that KPIs should be exceeded, although it may be noted that the scorecards recorded this as a performance measure on their face. The KPI Scorecards addressed at the meetings each had a colour-coded key with the categories being: KPI Exceeded, KPI Met, KPI Not Met, and KPI Failed. As mentioned, Safety Mate generally achieved the 'KPI Met' score. Mr Sheerin explained that ATG wanted to see PSPs exceed the KPIs and see a 'sea of blue' - which was the colour code for achieving that level on the KPI Scorecard. He also said, and I accept, that exceeding KPIs was discussed from time to time with Mr Roberson and Mr Tee. To the extent this was inconsistent with Mr Tee's evidence I prefer the evidence of Mr Sheerin. Mr Sheerin's perception was that Safety Mate was content to do just enough to meet KPIs.

79 Mr Tee said that because of the meetings and Safety Mate's ongoing meeting of the KPIs he was taken by surprise when he received a notice of termination. He said that at no stage during the term of the Agreement had Mr Browning or Mr Sheerin said that Safety Mate was not performing its duties or that Safety Mate was expected to do better. As is addressed later in these reasons, he made no mention in his statement of a representation regarding reviews being made to him or being relied on by him.

80 Mr Sheerin first contacted Mayo about the prospect of becoming ATG's PSP in the Territory in December 2018 by telephoning a key account manager, Paul McGregor, who he had previously met at a trade show. He did not tell him that ATG had in mind to terminate the Agreement with Safety Mate, but said he spoke in vague terms of an opportunity that may exist for Mayo to distribute some ATG products and that he was looking for the person with whom he could speak about that. A day later he was told by email that he should speak with the national sales manager of Mayo, Steve Torpey, but that he and others would not be available until after 7 January 2019.

81 On 16 January 2019 Mr Sheerin had a discussion with Mr Torpey about the possibility of Mayo being appointed, and he reported on that conversation to Mr Browning by email of 17 January 2019 in the following terms:

Hi Kyle,

Yesterday I had the first "formal" conversation with my top choice as a new PSP, Mayo Hardware. The chat was with their National Sales Manager, Steve, and was primarily for me to outline what I'm looking at doing and an opportunity for Steve to ask a few questions to enable him to paint the picture of the opportunity to the senior management team. During the call I was able to confirm the majority of my existing assumptions and all was as I expected. As it stands they are certainly interested and I'll know more of their G.M.'s thoughts early next week where we will then likely evolve the discussions to include some more detail post getting them to sign an NDA (I have already advised Steve of this requirement).

Steve mentioned a potential road block might come from DeWalt tools. They are the exclusive Australian importer and DeWalt do have gloves within their range and a clause stating no competitive product. Steve did confirm gloves are a practical non-existant [sic] line with DeWalt so they should be able to work around it with them, but will need to check etc. I advised that we would be looking at the same thing in reverse with our product. DeWalt does have a couple of CSK gloves available, but Mayo only bring in 3 cut and sewn styles into Australia and sell then [sic] via Bunnings (our biggest DIY chain).

Mayo is certainly a different beast than Safety Mate. For a start they are large very professional and well respected company with a [sic] Industrial sales team of 85 staff and a further 50 in the retail side, this is in comparison to Safety Mate's 6 staff. Of course Mayo do have more products to focus on, however with their strength being tag out (lock out), they are already speaking with safety managers within the CP network and at the EU's. They have won multiple supplier of the year awards from Wesfarmers and Mitre 10 (Mitre 10 is the 2nd largest DIY chain here). On numerous occasions I've seen their CEO dining with the Wesfarmers CEO at functions, vs Clint having never met him. Their tag line is "supplier of value" and during my discussion with Steve he confirmed on many occasions they are all about the cost of life conversation and selling premium product (as reflected in their range). Mayo are also active in New Zealand so we could have that mess solved.

If you would like to take a look their website is:

http://www.mayohardware.com.au

So while it is still early days and I'll find out more about their interest next week, I suspect this could advance quite quickly should Mayo want to progress. With that in mind I will next contact an Australian based lawyer to get advise [sic] on the existing Safety Mate contract as well as how to approach Mayo (or another prospective PSP). Further to my monthly report update, Safety Mate has just lost yet another sales manager. This means out of the 6 sales managers they should have they are down to 3 and I know the NZ guy is going to leave in Feb or March. I've also had another (now 4) CP advise me to "get away from Safety Mate for the sake of your product" - unfortunately we were then joined by Wade (from Safety Mate) at that point so he didn't have the opportunity to expand, but I'll follow up on it.

I'll give you a call next week to discuss this, and can cover any questions on that ESR spreadsheet (note I found one formula error and have fixed it on my version, so please don't send out the one you have).

Thanks,

Jason

82 Further communications occurred with Mayo thereafter, including by email. On 11 February 2019 Mayo executed a deed of confidentiality (Mayo Confidentiality Deed). By that deed Mayo agreed, among other things, to keep any confidential information (which was defined broadly) provided to it strictly confidential for three years and not to use it for any purpose other than considering a potential transaction with ATG. Mayo's Mr Thame confirmed by email on 11 February 2019 that all of the team involved in the discussions would be bound by the Mayo Confidentiality Deed.

83 In early February 2019 a meeting was arranged between Mr Sheerin and Mayo representatives, which took place at Mayo's premises on 13 February 2019. Mr Sheerin stated in his email to Mayo dated 28 January 2019 (which enclosed the confidentiality agreement) that he aimed '... during that meeting to be able to share with you enough information enabling Mayo Hardware to make a very well informed review of the opportunity ATG is presenting in terms of company synergies, growth prospects and commercial considerations.'

84 By email of 11 February 2019 Mr Sheerin informed Mayo's Mr Thame that he had a short slide presentation and that he had '... pulled together a few slides outlining: ...' a bit about ATG; an overview of ATG's products and what separates ATG from the rest; ATG's commitment to strong corporate sustainability initiatives; how ATG goes to market via its PSP (Primary Sales Partner) network; and some of the figures that related to the Australian and New Zealand market. Mr Sheerin invited Mr Thame to let him know if there was anything in particular he wanted to see so he could do his best to have it with him, but otherwise he believed that what he had pulled together would cover most questions.

85 Mr Thame responded by email dated 12 February 2019 which was in the following terms:

Hi Jason,

We'll have a projector available.

In addition to what you've flagged below, we were also keen to get an understanding of:

• * The current customer mix, and focus on reseller v end user and types of end user industries.

• * The current distributor's model and what kind of resources they are allocating to the business

• * The geographical split of the business

• * Size of the market, current share and future opportunities

• * Market dynamics, positioning vs other leading brands

• * It would also be great if you had some product samples for us to see and touch

Plan for Wednesday:

• * Short facilities tour

• * Mayo business overview

• * ATG overview and opportunity discussion

• * Mayo's Safety & Industrial Sales & Marketing Capability

• * Brief overview of Mayo's Corporate & Independent Retail Capability

Present from our team will be Steve Torpey - Trade Sales Manager, Simon Kotz - Marketing Manager, James Mayo - Director/Co-owner and myself.

Look forward to seeing you tomorrow, we're at 4 Secombe Place Moorebank, first left of Anzac Rd if your [sic] coming from the Moorebank avenue end - give me a call if you have any issues in finding us.

...

Cheers,

Mark

86 The Mayo meeting took place on 13 February 2019 with Mr Sheerin during which Mr Sheerin presented his slide pack, which dealt with: who we are; innovation quality and products; planet and its people; partnership; and 'Commercial Aspects'. The slides addressing 'partnership' and 'ATG's 'Market Philosophy' emphasised its channel partner approach as follows:

• We have an "exclusive" club of less than 30 Primary Sales Partners (PSP's) world-wide
• We work diligently with the PSP to set-up, maintain and support the distribution network
• The PSP must provide/create the path into the Channel Partner (CP) senior management
• PSP / ATG to present value to CP Senior Management
• Our commercial team enhances the process
• Enhancement through "training tools"

87 The slides addressing 'Commercial Aspects' addressed: history in the Territory; aspects of the current 'local' market in the Territory; market size and growth targets; ATG's 'Tried and proven method' through PSPs and channel partners; features of the 'offer' of distribution exclusivity for the Territory; 'Expatiations' [sic], including enthusiasm, dedication to the brand, product and ATG philosophies, collaboration and openness, and adherence to brand representations; 'Confidential Figures'; and 'Next Steps & Timeline'.

(a) Addressed the matters referred to above.

(b) Recorded ATG's concern that Safety Mate had 'focused heavily on the EU [end users], with little regard for the Distributor.

(c) Contained a table of figures (Figures Table) (referred to below).

(d) Recorded the next steps and timeline as follows:

• Progress to a "committed to move forward" stage

  • In order to ensure a smoother transition we will need to notice to the incumbent PSP by mid March

  • Prior to 8th Mar 19

  • Ramp up period

    • Marketing collateral, Stock arrangements, Distribution notification, Team training
    • April - Sep 19

  • Commencement date

    • 1st Oct 19

89 The Figures Table was headed 'CONFIDENTIAL FIGURES' and was presented on the relevant slide as follows:[15]

90 Safety Mate contend that the Figures Table contained confidential information of Safety Mate that was disclosed to Mayo in breach of the Agreement. Such alleged disclosure is one of the circumstances said to support Safety Mate's allegation that the Termination Notice was invalid and of no effect because it was given in breach of the Good Faith Obligation. This and other allegations regarding confidential information being passed to Mayo are addressed in more detail later in these reasons when considering the breach of good faith allegations. The relevant alleged confidential information is referred to in Annexure A to these reasons.

91 Mayo also gave a presentation to Mr Sheerin about its business, Mr Sheerin having earlier raised a number of matters that he wanted to understand about Mayo in his email to Mayo of 12 February 2019.

92 The day after the meeting the Mayo executive team resolved to go ahead and seek to become the new PSP in the Territory with effect from 1 October 2019.

93 Further email exchanges passed between Mr Sheerin and Mayo after the meeting with each expressing enthusiasm for the prospect of the appointment of Mayo as a PSP. For example, Mr Sheerin recorded in his email the next day that his '... take home from yesterday only confirmed most and if anything led [him] to see additional synergies and opportunities that exist between Mayo and ATG - of course that is quite exciting.' Arrangements were also made for a further meeting later in the month.

94 The email exchanges also included Mr Sheerin's email of 21 February 2019 to Ms Sarah Mayo before she was leaving for an overseas trip. It referred to Ms Mayo 'touching base' and stated:

I think most things have now been covered and the remaining finer details I'm sure Mark [Thame] and I will be able to manouvre [sic] through. As you mention there is more to a partnership than just the ability to generate sales and this is a key reason I believe ATG ↔ Mayo will work well together.

95 At an ATG meeting of directors held in February 2019 Mr Browning (who was not a member of the Board) recommended the termination of Safety Mate and the appointment of Mayo as a new PSP in place of Safety Mate. The directors present were Mr John Taylor, Mr Abdeen and Mr Goth. Those directors accepted the recommendation to terminate Safety Mate and appoint Mayo, and Mr Browning told Mr Sheerin to implement that decision. There were no minutes of the meeting, although it was not a formal Board Meeting. Mr Browning addressed his beliefs and views about Safety Mate in his witness statement and during aspects of his cross-examination and re-examination. He expressed his view, which I accept was genuinely held, that he believed the Agreement should end because of the state of the relationship and approach to the market. He considered there to be no relationship and collaboration and that there seemed to be a barrier between ATG's view and Safety Mate's view which could not be overcome. It was apparent from the evidence, and could be inferred in any event, that Mr Sheerin, Mr Browning and Mr Abdeen believed ATG was entitled to terminate the Agreement. It was not suggested that they did not hold such a belief.

96 When addressing a draft agreement between Mayo and ATG, Ms Mayo noted in her email of 14 March 2019 that she could not see any note in the Agreement regarding payment terms. Mr Sheerin responded the next day stating that, in respect of terms of the proposed agreement '... it looks like we are all on the same page with just a few small details to sort out.' He also stated that:

I've also attached a copy of a Proforma invoice to this email. On the 2nd last page the payment terms are covered by a simple statement, being T/T before shipment. FYI - this proforma is an actual one from a Safety Mate order and is typical of a monthly order.

97 The attached Safety Mate pro forma invoice was dated 31 October 2018. Safety Mate contends that this conveyed confidential information to Mayo in breach of the Agreement and that this further supports its allegations regarding ATG breaching the Good Faith Obligation.

98 On 14 March 2019 ATG forwarded a draft distribution agreement to Mayo for its consideration, and further emails were exchanged regarding the draft. Various provisions of the drafts, and Schedule 6 to them, refer to what is described as a 'Proforma Invoice'.

99 On 21 March 2019 the notice of termination was prepared by ATG's solicitors (HDL). It was in the following terms:

Dear Messrs Tee and Temperton,

Notice of Termination

of

Distribution Agreement between ATG Lanka (PVT) Limited and Safety Mate Pty Ltd

We act for ATG Lanka (PVT) Limited (our client).

Our client and Safety Mate Pty Ltd (Safety Mate) are parties to a document titled ATG Lanka (PVT) Limited and Safety Mate Pty Ltd DISTRIBUTION AGREEMENT (the agreement).

We now say as follows :

1. The Term of the agreement is defined as the Initial Term (and any extensions thereto as permitted under clause 2.2.2 of the agreement) being two (2) years from the Commencement Date which is 01 October 2017.

2. Therefore, it can then be said that the Initial Term ends on 30 September 2019.

3. Clause 2.2 of the agreement states as follows:

2.2 This Agreement shall come into effect on the Commencement Date and shall continue in force for the Initial Term unless:

2.2.1 terminated earlier by either party giving not less than [6 months'] prior written notice to expire on the expiry date of the Initial Term

(emphasis added by the writer)

4. Clause 14 permits termination in accordance with clauses 2.2 or 17.3.

5. Clause 31 sets out the provisions for "Notice" under the agreement which relevantly say as follows:

(i) The notice must be in writing in English;

(ii) The notice must be signed by or on behalf of the party giving it;

(iii) Shall be delivered personally or sent by express post.

We now give notice on behalf of our client that the agreement is terminated and will come to an end on 30 September 2019.

This notice of termination is being served by email as a courtesy noting such is not stated to be an acceptable form of service under clause 31 of the agreement.

This notice of termination is however also being served personally and by express post, and has been signed by the writer, and therefore constitutes acceptable service.

To discuss this further please contact the writer direct on (03) 9001 6909 or derek@hdlegal.com.au.

Yours faithfully,

Derek Lippner

Principal

HDL LEGAL AND CONSULTING

100 There was no issue between the parties regarding the form of the notice other than that relating to where and by what means the Notice of Termination was given, and Safety Mate's contention that it was invalid because it did not specify a termination date 'earlier' than 30 September 2019. These matters are addressed later in these reasons.

101 At the time the Termination Notice was given the registered office of Safety Mate was Level 9, 100 Creek Street, Brisbane Queensland 4000 (Brisbane Address) and its principal place of business was 19 Capri On Via Roma Level 1, Suite 3, 15-21 Via Roma, Isle of Capri, QLD 4217 (Capri Address). The address of Safety Mate recorded in the Agreement was 11/11 Karp Court, Bundall, Queensland (Bundall Address).[16] At the time the Termination Notice was given Safety Mate no longer operated from the Bundall Address. The Bundall Address was occupied by a different entity not related to Safety Mate and it was also no longer Safety Mate's registered office.

102 The evidence demonstrated (and it was not relevantly in issue in any event) that service of the Termination Notice upon Safety Mate was sought to be effected as follows:

(a) Attempted personal service at 9:00am on 25 March 2019 at the Bundall Address, which was discovered not to be occupied by Safety Mate and the process server could not effect service. The process server was informed Safety Mate had left about six months before.

(b) Hand delivery to the sales manager of Safety Mate at the Capri Address at 9:30am on 25 March 2019 who said he was authorised to accept service for Mr Tee and Mr Temperton as directors.

(c) By an email from Mr Lippner to Mr Tee and Mr Temperton at 2:27pm on 25 March 2019 attaching a copy of the Termination Notice. That email also stated that the Termination Notice had been served by Express Post and by hand on Safety Mate's principal place of business and registered office.

(d) Hand delivery by a process-server at the Brisbane Address at 11:50am on 26 March 2019 by delivery to an employee who said she was authorised to accept the documents.

(e) By Express Post by posting in an Express Post mailbox at 4:00pm on 21 March 2019 three Express Post envelopes each containing a notice of termination and addressed to Mr Tee and Mr Temperton of Safety Mate at the Brisbane Address, the Capri Address, and the Bundall Address. The Express Post envelopes were delivered:

(i) to the Bundall Address at 10:19am on 26 March 2019;

(ii) to the Capri Address at 12:07pm on 27 March 2019;

(iii) to the Brisbane Address at 1:23pm on 26 March 2019.

103 Safety Mate accepted that the Termination Notice was brought to its attention prior to the Extension Letter being sent to ATG.

104 At 2:26pm[17] on 26 March 2019 Safety Mate sent the Extension Letter to ATG by facsimile. The letter read as follows:

Dear Kyle

Pursuant to clause 2.2.2 of our agreement, we hereby exercise our right to extend the agreement for a further period of two years commencing on 1 October 2019.

We note that this extension, as well as according with the terms of the contract, accords with the intended duration of the contract as recorded in exchange of emails between us at the time that the contract was entered into.

Yours faithfully

Safety Mate Pty Ltd

105 On 28 March 2019 the Extension Letter was also sent by facsimile to Thomas Eggar LLP, which was the name of the solicitor's firm appearing in the bottom right corner on the cover page of the Agreement. That firm had acted for ATG some years ago when it was preparing distribution agreements to be used with PSPs. It did not act for ATG, nor was it involved in the negotiations and communications regarding the Agreement between Safety Mate and ATG. At the time the firm had been merged into another firm of a different name. Mr Tee confirmed in cross-examination that the firm had never been engaged by Safety Mate and that there had never been any arrangements between that firm and Safety Mate about receiving documents on behalf of Safety Mate.

106 On 29 March 2019 the writ and statement of claim filed by ATG in this proceeding seeking a declaration that the Agreement was validly terminated by ATG was filed.

107 By email dated 3 April 2019 Mr Sheerin asked ATG's production staff to let him know 'the latest Mayo could place an order to arrive late August so I guess ship late July'. He was informed that the order would need to be in by the first week of May 2019.

They (and I) will be keen to have their 'own' stock ready to go in case Safety Mate are unwilling to sell their remaining stock to them in October. The current plan is Safety Mate's last order on us should be to ship end July. This would arrive with SM end Aug, I see no reason for an order after that as it would arrive only a week or so before they are no longer able to sell ATG. However please note I still need to check this with our lawyers.

This leaves July a busy month for us with us likely needing to ship to two separate companies here in Australia. Is the factory able to produce an additional 500,000-600,000 pairs in July?[18]

The table below shows the current thought on the transition of orders. Please advise if you see an issue with July?

109 Mr Sheerin's email had been sent in response to a query from ATG's internal production staff to ATG's Mr Andrew as to whether orders would be running to Safety Mate until August 2019 and if there was a deadline when the last container should reach Safety Mate. Mr Andrew responded that Mr Sheerin was coordinating things on a daily basis and needed to be kept in the loop. He also confirmed that 'Safety Mate will be terminated September 30th with Mayo taking over on October 1st', so he would expect to run until August 2019. He stated further that Mr Sheerin was '... correct about the need to balance their orders and keep an eye on quantities. There is no point them having excessive additional stock at the end of the notice period.'

110 After a meeting between Mr Sheerin and Mayo representatives on 17 April 2019 Mr Sheerin sent an email to Mr Thame later that day regarding he having missed discussing at the meeting the packaging style for products, which he addressed in the email. Mr Sheerin noted that one option had a small cost impact and that he had added it to the 'Initial Stock Profile spreadsheet that we were looking at today' (Profile Spreadsheet). The email attached three excel spreadsheets being the Profile Spreadsheet, a spreadsheet titled '2018 cal year - shipping volume.xlsx' (Volume Spreadsheet), and a spreadsheet titled 'SM-Mayo transition plan.xlsx'. The email also explained that in the Profile Spreadsheet 'cells AR6:AR11' were Safety Mate's sales out (which ATG refer to as Exit Sales Rate or ESR) and that 'cells AP13:AP19' were Safety Mate's stock on hand.

111 Safety Mate contended that the Profile Spreadsheet and the Volume Spreadsheet contained confidential information provided to Mayo in breach of the Agreement and that this supported its allegation regarding ATG's breach of the Good Faith Obligation.

112 On 1 May 2019 Mayo placed its first order with ATG, for July shipping. In the email correspondence with Mayo about the order Mr Sheerin informed Mayo that there had been higher than average demand from some other PSPs and that Safety Mate still needed to be supplied in July so that there was potential for some of Mayo's volume in the order to need to go over to August 2019. He also stated that 'to confirm unless overridden legally, we will not be supplying Safety Mate in August'. After referring to a particular product supplied via Blackwoods to South 32, he stated that there were 'many moving parts at this tricky time, so we will stay in touch often and maintain as much flexibility as possible on our side to lead to the best suited stock profile for you on day one.'

113 By letter dated 3 May 2019 HDL informed Safety Mate's solicitors that ATG would not be accepting orders from Safety Mate for gloves to be produced in the production month of August 2019 or thereafter. The letter also stated that ATG would be enforcing clause 15 of the Agreement at the end of the Initial Term, which included ATG's right to buy back from Safety Mate its stock on hand at the landed price. The letter read as follows:

Mr Bruce Patane

Patane lawyers

Level 10, 100 Edward Street

Brisbane Queensland 4000

By Email: bruce.patane@patanelaw.com.au

ATG Lanka (PVT) Limited v Safety Mate Pty Ltd

Dear Sir

Conduct between now and the final day of the agreement

As you are aware our client has terminated the distribution agreement between the parties meaning the agreement will come to an end on 30 September 2019.

Bearing in mind the final day of the agreement is less than five (5) months away, our client has instructed us to advise your client of the following which is relevant to the period between now and 30 September 2019, and also for the period on and from 01 October 2019:

1. The final product order our client will supply to Safety Mate will be in the July 2019 production run. Your client is well aware of the lead time in production and subsequent supply and will therefore understand why the aforementioned date has been stated.

2. Safety Mate is to stop representing itself as an ATG PSP (primary sales partner), an exclusive supplier, a distributor or re-seller of ATG products at the close of business 30 September 2019.

3. Safety Mate is to remove all references to ATG from its website, social media, electronic media and other advertising/promotional media as at the close of business 30 September 2019.

4. Safety Mate is to cease the production or provision to third parties of any hard copy media which references ATG and/or its products as at the close of business 30 September 2019.

5. Any ATG promotional material shall be handled in accordance with clause 15.2.4.

6. Safety Mate is reminded of its contractual obligations as set out in clause 15.5.

7. Safety Mate is prohibited from suppling product on and from the close of business 30 September 2019.

Safety Mate is prohibited from completing any product orders which have not been fulfilled on or before 30 September 2019. Any orders which remain open must be provided to our client.

Safety Mate is to provide ATG a full stock-take of any remaining ATG stock by close of business Thursday 03 October 2019.

Clauses 15.2.1 and 15.2.2 shall govern in relation to the remaining stock on and from 01 October 2019. At this point in time, ATG expects it will exercise the option contained in clause 15.2.1 and will purchase all remaining stock, although a final decision will be made in relation to this closer to the day.

For the sake of completeness, our client intends to enforce the entire of the provisions of the agreement, including but not limited to those contained in clause 15 of the agreement.

Safety Mate's Product Orders

Our client is quite concerned by your client's highly unusual order requests since they were provided with the Notice of Termination of the distribution agreement.

Historically your client's run rate is around 530,000 yet they have made repeated requests for orders in the vicinity of 700,000.

Our client understands that your client already has substantial stock of the products and therefore an increase in the orders is not justified. If anything, it could be said your client's orders should be decreasing.

Furthermore, our client has raised this point with your client and sought an explanation for the significant increase in order volume and your client has refused to provide an explanation for such.

We ask that your client explain the reasons which substantiate an increase in order volume.

Joint Statement to the Market

Our client proposes the following statement be released jointly by our respective clients. Would you please seek instructions and revert to us.

ATG Lanka (Pvt) Limited and Safety Mate Pty Ltd

ATG Lanka and Safety Mate wish to advise you that they have reached the mutual decision to bring their working relationship to an end effective 30 September 2019.

Safety Mate will continue to be the exclusive supplier of ATG Lanka's products until 30 September 2019.

ATG Lanka will notify you further once they have appointed a distributor for the period on and from 01 October 2019.

ATG Lanka and Safety Mate thank you for your ongoing patronage.

Conclusion

Please provide your client's responses to the above by 4 p.m. Tuesday 07 May 2019.

To discuss this further please contact the writer direct on (03) 9001 6909 or derek@hdlegal.com.au.

Yours faithfully,

Derek Lippner

Principal

HDL LEGAL AND CONSULTING

114 On 13 May 2019 Safety Mate sent an email regarding stock levels and forecasts and contesting the claim that Safety Mate was overstocked. Mr Sheerin had earlier sent an email chasing up the May order for shipment to Safety Mate at the end of July and expressing concern that the delay could result in the July production run being missed.

115 By email dated 23 May 2019 from Mr Thame to Mr Sheerin, Mayo sent its signed ATG pro-forma invoice for its first order to ATG. The email was in the following terms:

Hi Jason,

Please find attached the signed pro-forma invoice for the first order. Please note that the recommended purchase quantities have been made by ATG on the basis of their understanding of the Australian and NZ market requirements and their intention to appoint Mayo Hardware as Primary Sales Partner (PSP) for Australia and NZ. Therefore in addition to the standard terms and conditions the order is approved on the following additional conditions:

• * That the quantities of each item are broadly in-line with the market demand for the products, in the event that any items on the purchase order can't be sold into the market in a reasonable time period then ATG and Mayo will agree on a stock rebalancing and ATG will bear any associated costs.

• * That Mayo Hardware and ATG enter into a formal agreement appointing Mayo Hardware as ATG's PSP for the Australian and New Zealand territory. In the event that Mayo Hardware is not appointed PSP or is unable to commence selling the products into the territory in a reasonable time period from taking receipt of the inventory then ATG will reimburse Mayo Hardware for the full landed cost of the inventory and any associated handling costs.

Thank you for assistance in putting together the order plan and we'll follow up shortly in regards to getting the products and order details into our system.

We're excited to be moving forward.

Cheers,

Mark

Mark Thame

General Manager Mayo Hardware

Hi Mark,

Thanks for getting this back - we are well on our way now.

In relation to the additional conditions you mention below, we understand their foundation and agree with them. I do confirm all advise [sic] given around products and quantities has been to the best of ATG's market knowledge utilising our sales information in support. I hope to have the supply agreement back to you early next week (I was given the updated copy just this morning for review) and within that you will notice a new clause that basically says should ATG be prevented from appointing Mayo as our PSP then we agree to take the stock back etc.

Talk soon,

Jason

117 There was no signed agreement between ATG and Mayo discovered or in evidence and senior counsel for ATG confirmed that this was because no such agreement exists or has ever existed. As to the timing of Mayo's appointment as ATG's PSP, ATG's position in closing submissions was that this occurred by May 2019 but to take effect only in respect of the period following the end of the Initial Term of the Agreement so that Mayo's appointment as ATG's PSP for the Territory took effect from 1 October 2019.

118 On 29 May 2019 Safety Mate sent purchase order PO 964 to ATG. The required shipment date was stated to be 30 August 2019 with a required arrival date of 30 September 2019. The order total was $32,204.68 (USD). Delivery instructions requested delivery to Armour Safety (Armour) in New Zealand. Safety Mate's relationship with Armour is discussed later in these reasons when addressing loss and damage.

119 On 3 June 2019 Safety Mate sent purchase order PO 965 to ATG. The required shipment date was 30 August 2019 with a required arrival date of 30 September 2019. The order total was $1,305,146.49 (USD) and delivery was requested to be to Safety Mate in Australia, care of its agent, A Hartrodt in Queensland.

120 On 14 June 2019 Mayo placed its second order with ATG.

121 On 17 June 2019 ATG declined to accept purchase orders PO 964 and PO 965. Mr Sheerin's email to Safety Mate said as follows:

Hi Aimee,

In reference to the below purchase order along with P0965.

We acknowledge receipt of your emails containing product orders to be delivered to port on or about 30 September 2019.

As we have provided a Notice of Termination of the Distribution Agreement, stating the agreement is at an end as at 30 September 2019, we decline to accept the orders.

If you could please refer any further correspondence you may have on this topic or any other directly to myself rather than Rizana that would be appreciated.

Regards,

Jason

122 On 2 July 2019 Mr Sheerin sent an email to Mr Thame at Mayo regarding the September order which read as follows:

Hi Mark,

I've taken a shot at a September order while market information is a little restricted I've factored in trends and what information I do have. This order will be produced in September and arrive with Mayo late October, so by that stage you should have begun chewing into the stock that will arrive in your first two orders (presumably having consumed almost a months worth).

To come up with the order I took the following into account as best as possible:

• * Average sales compared with what Mayo will be holding on 01Oct19 (i.e. Depleting your stock holding by what we sell on average each month).

• * Total volume of the order is approx one months average sales. The first two orders were focused on getting a "kitty" of stock in and will be a bit over two months at a high level point of view. For Sept and moving forward we should be able to, in very simple terms, order what is sold each month.

• * I've focused heavily on the fast moving products, so should an over stock situation occur on them, it is likely to only last 1 - 2 months at the most.

• * I reviewed the order Safety Mate tried to place for August. In doing so I balanced the quantities and products they were seeking with what Mayo will have from the first two orders. Where a gap was found I placed some of that into this Sept order.

• * For the next order "Oct production, arriving late Nov" we should have some data from Blackwoods, IPP, NZSB and ATOM hopefully. Thus have a better forward view of the current market consumption. That order will need to be placed on us at the end of July.

Please let me know if you have any questions or wish to make any changes. I certainly welcome a "sniff test", so should something look out of place please challenge it.

Once you confirm all is in order I'll get it over to the factory to ensure it fits into production (I'm not seeing any issues there) and will return with the PFI.

Thanks,

Jason

123 On 3 July 2019 Safety Mate sent purchase orders PO 980 and PO 974 to ATG. Order PO 980 had a requested shipment date of 30 September 2019 and a required arrival date of 31 October 2019. The order total was $1,023,811.68 (USD) and delivery was to be to Safety Mate care of its agent. Order 974 had the same shipping and arrival dates and was in the amount of $33,710.36 (USD). The delivery was to be to Armour in New Zealand.

124 On 5 July 2019 ATG declined to accept purchase orders PO 980 and PO 974, with Mr Sheerin stating in his email that 'as you are aware from our prior correspondence, as the distribution agreement is at an end as of 30 September 2019, we cannot accept orders for delivery of product post 30 September 2019.'

125 On 11 July 2019 Mayo placed its third order with ATG.

126 On 13 July 2019 Mr Sheerin sent Mayo's Mr Torpey an email attaching a list of current channel partners currently selling and promoting ATG products. The email read as follows:

Hi Steve,

Following on from what we discussed today I've attached that list of the CP's (distributors) that are currently selling / promoting ATG.

This list may be missing a few, but should they not be on the list they are going to be very small indeed and only as a result of Safety Mate not informing us of their inclusion.

As per usual, only a handful of the CP's [sic] make up the majority of the sales and I've highlighted those in light yellow. The highlights capture the volume of sales, there are a few other CP's [sic] that are not highlighted, due to low sales, however are fully supportive of ATG and just lack the reach etc. We can discuss them individually shortly.

Can you please make your way down the list and let me know [sic] If there are any that Mayo do not currently deal with?. [sic] We can then discuss their viability moving forward and either move away from them or see if Mayo is willing to begin trading directly with them.

Thanks,

Jason

127 In July 2019 Ms Mayo sent an email to staff emphasising that no steps were to be taken prior to 1 October 2019 and any enquiries before then should be referred to Safety Mate.

128 On 2 August 2019 Safety Mate sent purchase order PO 989 and PO 990 to ATG.

129 On 6 August 2019 ATG declined to accept purchase orders PO 989 and PO 990, again stating by email that, as referred to in prior correspondence, because the Agreement was to be at an end as of 30 September 2019, ATG could not accept orders for delivery of products post-30 September 2019.

130 On 28 August 2019 Safety Mate filed a summons seeking, among other things, an injunction preventing ATG proceeding with the termination of the Agreement. For the reasons given by Kennedy J in ATG Lanka (PVT) Ltd v Safety Mate Pty Ltd[19] (ATG Lanka) the injunction application was refused.

131 By 30 August 2019 Mayo had ordered and paid for ATG products at a cost of $2,626,000 (USD).

132 At the time the decision to terminate was made, and at the end of the Initial Term, Safety Mate had not achieved any of the sales targets for New Zealand or Papua New Guinea for either the 2017/2018 or 2018/2019 financial years specified in the Agreement. Clause 14.2.1 of the Agreement provided that a failure to meet the sales targets for two consecutive years was a material breach of the Agreement.

133 The Initial Term under the Agreement expired on 30 September 2019.

134 Mayo commenced distributing gloves for ATG on and from 1 October 2019.

135 By their letter of 1 October 2019 ATG's lawyers referred to their letter of 3 May 2019 and, among other things, it was stated that ATG exercises the option conferred on it by clause 15.2.1 of the Agreement in respect of the whole of the stock that Safety Mate has on hand with the costs of the shipping to be borne by Safety Mate in the manner referred to in clause 15.2.1. Safety Mate's lawyers responded by letter of 4 October 2019 and stated, among other things: that the Agreement had not been validly terminated; that it sat in tension with the letter of 3 May 2019, which had not been followed; that ATG had waived its right to rely on the option or was estopped from doing so; that the notice was required to be given within 30 days of the termination notice and not the end of the term; and that the quantum of goods had not been specified.

136 The imposition of COVID-19 restrictions two business days in advance of the commencement of the trial resulted in the hearing taking place by audiovisual means rather than in person. ATG's lay witnesses were its solicitor, Mr Lippner, its Managing Director, Mr Abdeen, its Director of Global Sales, Mr Browning, and its Country Manager for the Territory, Mr Sheerin. Mr Lippner, Mr Sheerin, and Mr Browning were each cross-examined. Mr Abdeen's affidavit was tendered without objection and he was not cross-examined. ATG called one expert witness, Ms Dawna Wright, who addressed financial and accounting matters.

137 Safety Mate's lay witnesses were Mr Tee, a director of Safety Mate, and Ms Zhu, Safety Mate's management accountant. Mr Tee was cross-examined. Ms Zhu's witness statement was tendered without objection and she was not cross-examined. Her evidence related to accounting matters relevant to Safety Mate's sales, expenses, books and accounts that were addressed in connection with the briefing of Safety Mate's independent expert. Safety Mate called one expert witness, Mr Vincent, who dealt with financial and accounting matters. The expert evidence of Ms Wright and Mr Vincent was given concurrently, and largely by reference to their joint report.

138 Mr Lippner's evidence in chief (by witness statement) primarily related to the service of the Termination Notice and the address of the registered office of Safety Mate. Although he was cross-examined more broadly, no attack was made on his credit, which was understandable. Mr Lippner presented as an honest, credible, straightforward and responsive witness.

139 Mr Abdeen is the Managing Director of ATG and one of the directors who took the decision to terminate the Agreement. He was the only ATG Board member to give evidence. His evidence in chief addressed ATG's background, ATG's products, and the manufacturing, supply and shipping process. He was not cross-examined at all.

140 Mr Browning's evidence in chief was by witness statement. Mr Browning has been with ATG since 2008 and had dealt with Safety Mate in previous years as well as during the Initial Term. He is the head of global sales and has country managers reporting to him, one of whom is Mr Sheerin. Mr Browning's evidence in chief related to, among other things: his role; ATG's global distribution through a network of about 30 PSPs; the role of PSPs; ATG's model and focus involving distribution by PSPs to channel partners and channel partners to end users (as opposed to PSPs to end users); differences and challenges with Safety Mate's approach in relation to channel partners and end users; dealings with Safety Mate, including Mr Tee; negotiations leading to the execution of the Agreement; and the circumstances and events leading up to the giving of the Termination Notice and Mayo taking over as ATG's PSP for the Territory.

141 I observed Mr Browning giving evidence during the nearly two-hour period of his cross-examination. He was giving evidence from the United States at an unsociable hour, with his cross-examination concluding at about 2:00am US local time. The audio visual link was sound, clear and quite close up.

142 Mr Browning presented as an honest, straightforward and responsive witness doing his best to answer directly and openly the questions that were asked of him. He did not appear defensive or appear as a person seeking to argue ATG's case on its behalf. His manner was calm and his engagement with senior counsel for Safety Mate and with the court was evident and clear. Mr Browning openly conceded matters where he considered that was a responsive answer to the question. This occurred more than once including, for example, regarding the nature of aspects of the relationship early in his cross-examination. He did not seek to make speeches or 'guild the lily'. He was not a witness who sought to make self-serving statements, and he did not present as an individual with an axe to grind. He presented in an open, honest and genuine manner. In short, Mr Browning was a most credible witness and no material attack was made on his credibility. To the extent there were direct differences between Mr Browning and Mr Tee that are not able to be determined by reference to other evidence, I generally prefer the evidence of Mr Browning. As will be seen from my observations regarding Mr Tee below, I have some reservations about aspects of Mr Tee's credibility on some matters.

143 Mr Sheerin was the primary witness for ATG. As ATG's country manager for the Territory he was the person who was most involved with Safety Mate whilst it was ATG's PSP for the Initial Term (and beforehand (from mid-2014) pursuant to the earlier distribution agreement between Safety Mate and ATG. It will be recalled that originally Mr Tee recommended to ATG that Mr Sheerin be engaged as its country manager in the Territory in 2014. They once got on well, although that is no longer so, and has not been so for many years. Mr Sheerin was involved with nearly all aspects of the dealings between ATG and Safety Mate during the Initial Term, including the termination.

144 Mr Sheerin's evidence covered a range of topics including: his background; ATG's distribution model; ATG's production model; the history of the relationship with Safety Mate and what Mr Sheerin regarded as its deteriorating and challenged nature; negotiations prior to entering into the Agreement; dealings with Safety Mate post the Agreement; ATG's channel partner approach; issues with Safety Mate and its approach and the relationship with ATG; the circumstances preceding the termination; the selection and appointment of Mayo; events after the Termination Notice was given in March 2019 and dealings with Safety Mate and with Mayo; Mayo's orders; supply to Safety Mate; and other matters.

145 I observed Mr Sheerin as a witness in cross-examination[20] over about one and a half days. The audio and vision was sound, clear, and relatively close up. I generally found Mr Sheerin to be a straightforward and engaged witness doing his best to address honestly the questions asked of him, even when on occasion it was not clear to him what was being asked. This remained so when the occasional logistical challenge presented itself with parties, the court, witnesses and counsel each being in different locations. I observed that Mr Sheerin generally listened, responded to the questions asked and did not seek to make speeches, self-justify or add non-responsive comments in defence of his position when faced with questions conveying express or implicit criticism. To my observation he did not present as a defensive or self-serving witness, which a fair reading and review of the transcript also confirms.

146 When faced with questions that might have been thought to be designed to elicit answers favourable to aspects of Safety Mate's contentions, I observed generally that Mr Sheerin's straightforward and responsive approach remained. A good example of this was his acknowledgement about certain information being information of Safety Mate and it having been passed on to Mayo in advance of Mayo's appointment. Another example related to how he generally responded to cross-examination regarding KPIs at quarterly meetings. A further example related to responses to questions regarding the proposed appointment of, and communications with, Mayo in the lead up to it commencing distribution of ATG's gloves on 1 October 2019.

147 I do not accept that there is material force in Safety Mate's strong attacks on the credit of Mr Sheerin, which in my view were largely misplaced. Mr Sheerin's hesitancy on occasion to admit in an unqualified way that a particular document in the Court Book was an attachment to a particular email displayed caution not evasiveness. As Mr Sheerin said or intimated more than once, because he did not have the actual email or his records in front of him, he could not confirm categorically that the static page or document shown to him electronically on screen in the Court Book was in fact the very same attachment as that which would have been apparent if he was viewing the email and attachment itself in its original form. This is not uncommon in trials when documents are shown electronically. In addition, on various occasions he explained that he was not denying such matters, and more than once volunteered that it 'seemed so', or words to that effect. I also do not accept that, generally speaking, there was force in the criticisms of Mr Sheerin's statements about not recalling particular matters. Commonly these questions were based around recollection and Mr Sheerin was typically saying that as he sat there giving evidence he did not actually recall the particular thing or matter, but again frequently making it apparent, implicitly or expressly, that it seemed so, or that he was not challenging the issue.

148 I do not accept the submission that it was established or could be inferred that Mr Sheerin had deliberately arranged for parts of certain discovered documents to be redacted for confidentiality so as to conceal from the court or Safety Mate that ATG had disclosed aspects of Safety Mate's confidential information to Mayo. Mr Sheerin was not evasive about these matters, although on occasion he was initially confused by aspects of some of the questions which given the documents and the issue, were not always easy to follow. For the avoidance of doubt, this is not conveyed as a criticism of counsel. Mr Sheerin's denial of any wrongdoing of the kind alleged was natural and responsive, and I accept that it was honestly given. Given Safety Mate's emphasis on this redaction topic in cross-examination and submissions, it warrants making some further brief observations about it.

149 The focus of Safety Mate's attention in this context was the content of an affidavit of documents sworn by Mr Sheerin on 5 February 2021 (February Discovery Affidavit), in which it was stated that various redactions had been made for various specified reasons associated with commercial information, which is a common experience in commercial litigation. One particular document that received strong attention was a slide presentation made by Mr Sheerin to Mayo on 13 February 2019. It was asserted that the redacted parts were redacted on Mr Sheerin's instruction so as to conceal from Safety Mate and the court that ATG had disclosed Safety Mate's confidential information to Mayo.

150 Safety Mate's attack on Mr Sheerin's credit in this regard fell flat and was not made out. Not only was it not established as a result of Mr Sheerin's evidence and denial on the topic, which I accept, but there were objective circumstances separate to such evidence that undermined Safety Mate's forensic theory in this regard. It is sufficient to mention the following.

151 First, and as is well established, the existence of a claim of confidentiality in respect of claimed commercial information does not generally operate so as to prevent disclosure to another party or the court, but rather to potentially result in some level of restrictions on disclosure of it. The circumstance in question was no different here given the terms of the orders made requiring the February Discovery Affidavit to be filed and served.

152 Second, the other documents discovered and produced revealed in various ways much of the nature and general extent of the communications between Mayo and Mr Sheerin. Thirdly, and significantly, the terms of the February Discovery Affidavit made plain in express terms that the redaction in the slide deck and numerous spreadsheets had 'for the time being, been made to parts of documents'. The affidavit also stated the claimed basis of confidentiality and expressly stated that ATG did not oppose unredacted copies being provided to Safety Mate's legal representatives upon receipt of signed confidentiality undertakings from them along the lines of those which ATG's legal representatives have signed in respect of Safety Mate's confidential documents.

153 For completeness, I also observe that Mr Sheerin explained naturally and logically why a small aspect of an email of 14 March 2019 had been redacted. It was also apparent on the face of the material in the circumstances why various redactions had been made to the draft distribution agreements passing between ATG and Mayo that were referred to in items 93 to 96 of the table in the February Discovery Affidavit.

154 To the extent that Safety Mate persisted with a contention that there has been a wrongful withholding of, or non-disclosure of, other relevant documents between ATG and Mayo that were required to be disclosed, I do not accept that submission. Such alleged wrongful conduct on the part of ATG or Mr Sheerin has not been established. It is also evident that the February Discovery Affidavit substantively and directly engaged with the terms of the court order that directed that it be filed, as a comparison between the order and the affidavit illustrates. So much was apparent from documents in evidence and was expressly referred to in the February Discovery Affidavit. There is also in my view nothing of substance in the concern expressed by Safety Mate about Mr Sheerin having used 'WeTransfer' as well as emails when communicating. He explained that he did so in his role from time to time in a natural and open way. When Mr Sheerin was asked about this in cross-examination I observed that he responded naturally and openly to the questions asked and was not defensive. He also explained his 'guest status' and that he did not have a WeTransfer account, and such matters were not relevantly fruitfully further pursued by way of cross-examination or by the leading of evidence by Safety Mate on the topic. Mr Sheerin also volunteered that he had given his 'Mayo folder' to ATG's lawyers as part of the discovery process.

155 The upshot is that, although it seems that the lawyers for Safety Mate harboured concerns of wrongdoing by ATG in the context of document production, such allegations have not been made out - and neither have their linked and strong attacks on Mr Sheerin's credit in this regard.

156 To the extent that it was submitted that the documents relating to the supply of yellow rather than orange gloves to a Blackwoods customer (Irrewarra Coal) relevantly undermined Mr Sheerin's evidence about a discussion he had with a Blackwoods representative regarding its concern about Safety Mate dealing with the end user directly without its knowledge, I do not accept that submission. Mr Sheerin was clear about the position in his witness statement regarding what he had been informed of and he responded naturally and directly in relation to the issue in cross-examination. He said he had the conversation referred to and his evidence was credible. He also said that the documents and communications with Safety Mate and Blackwoods followed 'after the fact', which sits comfortably with the run of correspondence in evidence and that which Mr Sheerin said occurred, and the initial email of Safety Mate's sales manager Mr Priest with the end user (Illawarra Coal) of 17 February 2019 - which Mr Tee referred to in his evidence. I accept his evidence in relation to that which he said he was told had occurred and been said regarding the yellow and orange glove orders, Safety Mate, Illawarra Coal and Blackwoods, noting also Mr Tee's concession in cross-examination that Ms Coccia was a Blackwoods person who would have known the position and that if she informed Mr Sheerin of it, it was likely to be true.

157 As I have said, and contrary to the contention of Safety Mate, Mr Sheerin presented as a straightforward, credible witness doing his best to answer openly and honestly the questions asked of him. Whilst it was clear from his evidence, that of Mr Tee and Mr Browning, and many emails, that the relationship between Mr Sheerin on the one hand and Mr Tee and Mr Temperton on the other,[21] had deteriorated and was a challenge to the ATG/Safety Mate business relationship, generally speaking this did not reflect adversely on Mr Sheerin's credit. Rather it was the nature of the commercial relationship that had developed between the individuals concerned during the relevant period and during which time there were tensions between them about various issues.

158 Over the relevant but reasonably extended period these included, for example: Mr Tee's perception of Mr Sheerin's performance and Mr Sheerin's perception of Mr Tee's, Mr Roberson's and Safety Mate's approach; aspects of Mr Browning's support of Mr Sheerin; Safety Mate's disappointment and frustration regarding distribution in Japan and ATG's decision to deal with that market directly instead of through Safety Mate as the Japan PSP; ongoing differences between Safety Mate about the approach to market and ATG's emphasis on channel partners; communication issues between Mr Tee and other Safety Mate personnel on the one hand and ATG and Mr Sheerin and Mr Browning on the other; Safety Mate's unsuccessful attempt to seek a 10-year initial term renewal of the Agreement or a five-year plus five-year renewal; differences between the parties about various other aspects of the negotiations for a new Agreement, including the inclusion of various KPIs; the importance of a sound working partnership; the issues between Mr Roberson and Mr Sheerin earlier referred to and Mr Tee's involvement with the same; and aspects of ongoing disputes in relation to compensation for Japan.

159 Mr Tee is one of Safety Mate's directors and has a direct or indirect ownership interest in 75% of its shares. He was the person at Safety Mate most engaged with the day-to-day and operational dealings with ATG, as the evidence of the witnesses and documents revealed. His evidence in chief was largely by witness statement. It covered a broad range of topics including: Safety Mate's business, ownership and operations; the financial position of Safety Mate and the role of Ms Zhu; Mr Tee's initial engagement with ATG; previous distributorship agreements with ATG; the alleged agreement regarding Japan and communications regarding the same; dealings with ATG, including from 2014/2015 onwards; negotiations between February and October 2017 leading up to the execution of the Agreement with ATG; the relationship with ATG, including Mr Sheerin and Mr Browning; ATG's distribution approach; the channel partner approach and Safety Mate's sales approach; responses to aspects of ATG's evidence in witness statements of Mr Sheerin and Mr Browning; information sharing; alleged lack of candour; staff turnover; sales targets; what Mr Tee described as the 'purported termination' of the Agreement; Safety Mate's Extension Letter; ATG's order and supply process; the placing of purchase orders after the Termination Notice was received that were not accepted by ATG; Safety Mate's entry into a new distributorship agreement with Hanvo; and loss of profits said to have been suffered by Safety Mate.

160 Mr Tee's cross-examination also proceeded by way of the audio visual link, which remained sound, clear and quite close up. As for others, I observed and listened to Mr Tee closely during the approximately two hours and 45 minutes that he gave evidence, the vast majority of which was cross-examination by senior counsel for ATG. Mr Tee presented as quite a strongminded and forthright person with some firmly held views, which was also consistent with the content and tone of many of his emails in evidence over an extended period, including some of those passing between Mr Tee and his fellow director, Mr Temperton. The emails between Mr Tee and Mr Temperton regarding the negotiation of the terms of the Agreement in 2017 provide some good examples.

161 I have some general reservations and concerns regarding aspects of Mr Tee's evidence and his credit. During his period of cross-examination in my view he presented as a witness with a considerable consciousness as to whether he considered an answer might (in his perception) aid or detract from Safety Mate's position. At times this was reflected in less than direct answers and volunteering statements or comments and longer answers from time to time that it appeared he considered to be best suited to Safety Mate's position.

162 For example, two areas where such a consciousness was in my view apparent was during cross-examination regarding the relationship between ATG and Safety Mate having deteriorated and the differences between Safety Mate and ATG regarding ATG's channel partner marketing approach. Given the other evidence and the documentary evidence it appeared that Mr Tee was seeking to downplay any such issues. Generally on these topics I prefer the evidence of Mr Browning and Mr Sheerin to that of Mr Tee. Similarly, where there is a direct contest between the evidence of Mr Tee, and that of Mr Browning or Mr Sheerin, I generally prefer the evidence of Mr Browning and Mr Sheerin. A further area where Mr Tee's evidence displayed this tendency was during his cross-examination about Mr Browning's email of 3 July 2017 and the topic of review. Another example was his evidence regarding how he interpreted the Eggar Address on the front cover of the Agreement as the address for service. A further instance was during his cross-examination about what would have occurred with the Four Purchase Orders and the prospect of ATG exercising its buyback option.

163 As I have said earlier, the existence of the difference of approach and the challenged relationship more generally is also supported by various emails and documents over an extended period - including the emails passing between Safety Mate and ATG and emails between Mr Tee and Mr Temperton.

164 The evidence also allows me to be satisfied that the difference in sales approach issue between ATG and Safety Mate, on what was a very important matter to ATG, did in fact exist as an ongoing issue and that there were, and had been for some time, real challenges in the business relationship connected with this difference of approach and other issues that had arisen. These issues included the unsuccessful attempt to be the Japan PSP; the failed attempts to secure a much longer period of fixed tenure as the PSP for the Territory; the communications and dealings with Mr Sheerin; and the negotiations for the agreement renewal. I also refer in this regard to the issues identified above when addressing the evidence of Mr Sheerin and the areas of difference, dispute, tension and challenge referred to in the Background and factual matters section above.

165 The documents supporting the existence of the sales approach issue between the parties are many and include, for example: the references to the PSP/channel partner approach in the earlier 2012 distribution agreement as part of the Brand charter provisions; Mr Browning's presentation; the inclusion and emphasis in the KPIs on channel partner related matters; the communications and correspondence in 2017; Safety Mate's dislike of the inclusion of KPIs in the terms proposed; Mr Browning's email of 3 July 2017 in which he expressed in clear terms the importance of the channel partners' approach and ATG's position regarding the same; the email communications between Mr Tee and Mr Temperton in which they workshopped a proposed response to Mr Browning's 3 July 2017 email; Mr Tee's suggestion in the email to Mr Temperton of paying only 'lip service' to the position of ATG if Safety Mate's 'market approach' was the main issue; the final form of the response to Mr Browning and the differences that it reflected; the implicit and express acknowledgments in the email to Mr Browning regarding the historical and ongoing differences on the correct approach; and aspects of the content of Mr Tee's email of 11 February 2017, including Mr Tee's 'unless they have gained access to our internal emails' remark.[22]

166 The difference of approach was also reflected in other statements, including, for example, that of Mr Temperton in his communication to Mr Tee that:

Jason aside, Kyle [Browning] has to be driven by business principles, and where they are going is trying to run the business of their PSP's [sic] which is not on. Injecting their country manager into a PSP's business is not on. Let's focus on the contract, get the detail right, then bring the war to Jason ...

167 As senior counsel for ATG sought to demonstrate during his cross-examination of Mr Tee, the many email communications between Mr Tee and Mr Temperton revealed extensive workshopping of draft emails between them before replies were sent back to ATG. The tone and content of many emails of this character revealed the suspicious, distrustful and challenged nature of the ongoing relationship between Safety Mate and ATG, with Mr Tee also acknowledging during cross-examination that his emails possibly would not record references to parts of communications that had not gone so well between the parties. It was also apparent that the level of distrust between the parties was real, which was also referred to in, and to be inferred from communications between the parties and internal communications. This trust issue was also referred to in Mr Sheerin's meeting note from the 9 March 2017 meeting and his email to Mr Browning of 13 March 2017. This also referred to the relationship needing to improve.

168 The above observations are not intended to convey that all of Mr Tee's oral evidence was approached in the way I have described above and there were numerous occasions where Mr Tee was straightforward in responses. However, and generally speaking, in giving his evidence he appeared somewhat desirous of seeking to downplay the existence of the materially challenged commercial relationship between ATG and Safety Mate and the different sales approach issue that was an ongoing issue between them. Where there is a contest in the evidence of Mr Tee and Mr Sheerin or Mr Browning on these issues and other issues that cannot be resolved by reference to other evidence I generally prefer the evidence of Mr Sheerin and Mr Browning.

169 Mr Vincent and Ms Wright each filed expert reports addressing claimed loss and damage. They each presented as relatively straightforward, direct and engaged expert witnesses during the full day of expert evidence that was given concurrently by audio visual link. The link was clear and close up and I was able to observe Mr Vincent and Ms Wright closely throughout the day. Hearing the evidence concurrently proved to be effective and efficient, with the relevant differences between the experts being identified in their joint report and the concurrent evidence proceeding largely by reference to the areas of disagreement identified in their joint report.

170 In their oral evidence, and after becoming comfortable with the concurrent evidence approach, each of Mr Vincent and Ms Wright engaged effectively and responsively to the questions and issues raised by the parties and by the court. There was no material issue raised about their respective expertise and it was plain that they possessed the necessary expertise to address and opine upon the issues under consideration.

171 The experts also engaged effectively but courteously when responding to each other. Although in the very early stages of the session it appeared that Ms Wright was a little more enthusiastic in defending her opinions on a couple of matters, this quickly settled and I perceived this to be more a reflection of initially adjusting to the environment and hearing dynamics, which is not uncommon for experts at the start of concurrent evidence sessions at trial. Although there were some material areas of disagreement, generally speaking it was apparent that each of Mr Vincent and Ms Wright were properly conscious of their duty to the court. They also each made concessions or qualified opinions expressed in their reports when they considered appropriate, although areas of disagreement remained. These included, for example, the sales growth rate, the discount rate, and the appropriate methodology for addressing the impact on sales of the COVID-19 pandemic.

172 As to ATG's submission that Mr Vincent's evidence should be accorded less weight because his firm, being a firm that he founded, has been Safety Mate's accountants for an extended period and remains so, I do not accept that in the circumstances of this case there is material force in that submission. Whilst it is true that there is a connection, and that the firm receives remuneration for the professional services provided to Safety Mate and thereby indirectly benefits Mr Vincent, the connection was disclosed by Mr Vincent, and Mr Vincent addressed naturally and responsively questions asked of him on the topic during cross-examination by ATG's senior counsel. He said, and I accept, that he has not done any professional work for Safety Mate other than this assignment and that the commercial relationship between his firm and Safety Mate has not influenced his views. He also said, and I accept, that the only work he has been doing in the firm for an extended number of years is forensic accounting work - which was also consistent with the terms of his curriculum vitae.

173 To the extent that Safety Mate pressed its submission that Ms Wright's methodology and approach to the assessment of the impact of the COVID-19 pandemic and her resistance to embrace Mr Vincent's position should '... cause the court considerable concern regarding ... her independence',[23] or concern regarding Ms Wright being 'partial',[24] I do not accept that submission. Whilst there was a material issue between the experts about the appropriate methodology to adopt to assess the impact of COVID-19, my assessment was and remains that this was a genuine difference of opinion between the experts. Contrary to Safety Mate's submission, it does not impact on Ms Wright's integrity as an expert witness. Of course, that is to say nothing regarding how the difference between the experts is to be resolved.

174 The agreed Revised Issues List recorded the issues for determination in the following terms:

(a) Whether the Termination Notice and the termination which it sought to effect were invalid and in breach of the Agreement by reason of:

(i) the operation of the terms of clause 2.2.1 of the Agreement and the failure of the Termination Notice to specify a termination date 'earlier' than the end of the two-year 'Initial Term' of the Agreement;

(ii) any alleged non-compliance with the notice requirements in clause 31 of the Agreement;

(iii) the operation of the terms of clause 2.2.2 of the Agreement and the notice given by Safety Mate's Extension Letter; or

(iv) any alleged breach by ATG of its express Good Faith Obligation in connection with the giving of the Termination Notice (referred to below).

(i) clause 16 of the Agreement by providing Mayo with Safety Mate's confidential information;

(ii) clause 4.2.1 of the Agreement by appointing Mayo as a distributor of ATG's gloves in the Territory;

(iii) clause 4.3 of the Agreement by refusing to accept four purchase orders for the months of August and September 2019, being purchase orders PO 964, PO 965, PO 974, and PO 980 (Four Purchase Orders); or

(iv) clauses 4.1.1, 4.1.5, 4.1.6 and 4.3 of the Agreement by supplying ATG's gloves to Mayo.

(i) make any enquiry or any reasonable enquiry of Safety Mate in relation to the truth of:

(A) alleged problems that Safety Mate was creating in the market;

(B) the alleged failure by Safety Mate to adopt ATG's preferred model of product marketing;

(C) the alleged failure by Safety Mate to act as a true sales partner;

(D) the alleged failure by Safety Mate to provide information and data to ATG in accordance with the Agreement;

(ii) consult with Safety Mate in relation to, or provide Safety Mate an opportunity to respond to:

(A) alleged problems that Safety Mate was creating in the market;

(B) the alleged failure by Safety Mate to adopt ATG's preferred model of product marketing;

(C) the alleged failure by Safety Mate to act as a true sales partner;

(D) the alleged failure by Safety Mate to provide information and data to ATG in accordance with the Agreement;

(iii) conduct a review of Safety Mate's market strategy and performance before the end of the Initial Term of the Agreement.

(d) If one or more of the alleged breaches or failures referred to in paragraphs (b) and (c) above are established:

(i) did ATG breach the express obligation to at all times in its relations with Safety Mate act in good faith by seeking to terminate the Agreement pursuant to clause 2.2.1?

(ii) If so, what follows from that breach?

(e) If ATG's Termination Notice and the termination which it sought to effect was invalid and in breach of the Agreement, whether Safety Mate suffered loss and damage, and if so, the quantum of that loss or damage.

(f) If the Termination Notice and the termination which it sought to effect was valid, and ATG breached clause 4.3 of the Agreement by failing to accept one or more of the Four Purchase Orders, whether Safety Mate suffered loss and damage, and if so, the quantum of that loss and damage.

Construction of commercial contracts and notices

175 There was no relevant controversy between the parties regarding the principles of construction to be applied when construing a commercial contract. They have been addressed in countless authorities and it is convenient to draw upon the recent observations on the topic by the Court of Appeal in Aventus Cranbourne Thompsons Road Pty Ltd v Home Consortium Leasehold Pty Ltd:[25]

36. The general principles applicable to the construction of contracts apply equally to leases.[26] The general principles to be applied in the construction of commercial contracts were summarised by French CJ, Nettle and Gordon JJ in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd in the following terms:

The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.

In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.

Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.

However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'. It may be necessary in determining the proper construction where there is a constructional choice.

...

Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations.

Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption 'that the parties ... intended to produce a commercial result'. Put another way, a commercial contract should be construed so as to avoid it 'making commercial nonsense or working commercial inconvenience'.[27]

37. In Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd, Kiefel, Bell and Gordon JJ said:

It is well established that the terms of a commercial contract are to be understood objectively, by what a reasonable businessperson would have understood them to mean, rather than by reference to the subjectively stated intentions of the parties to the contract. In a practical sense, this requires that the reasonable businessperson be placed in the position of the parties. It is from that perspective that the court considers the circumstances surrounding the contract and the commercial purpose and objects to be achieved by it.

Clause 4 is to be construed by reference to the commercial purpose sought to be achieved by the terms of the lease. It follows, as was pointed out in the joint judgment in Electricity Generation Corporation v Woodside Energy Ltd, that the court is entitled to approach the task of construction of the clause on the basis that the parties intended to produce a commercial result, one which makes commercial sense. It goes without saying that this requires that the construction placed upon cl 4 be consistent with the commercial object of the agreement.[28]

38. In addition, the Court must have regard to all of the words used in the agreement 'so as to render them all harmonious one with another'[29] and to ensure the 'congruent operation [of] the various components [as] a whole'.[30] In Kosciusko Thredbo Pty Ltd v Commissioner of Taxation (Cth), the High Court observed that: 'permitted use provisions, like any other provision in a written document, must be construed according to their terms and as part of the entire document.'[31]

176 This approach to construction had earlier been succinctly stated by a differently constituted Court of Appeal in PCCEF Pty Ltd v Geelong Football Club Ltd (PCCEF):[32]

27. The judge set out the principles governing the construction of the Lease in a manner that is uncontroversial. In short, the primary duty of a court construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. The meaning of the contractual terms is to be determined objectively, by reference to what a reasonable business person would have understood the terms to mean.[33] The proper approach involves 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 or lease.[34] Ordinarily, the process of construction is possible by reference to the contract alone.[35] At least where the language of the commercial contract is ambiguous or susceptible of more than one meaning, evidence of the surrounding circumstances is admissible to assist in the interpretation of the contract.[36]

177 Drawing on the reasons of Tate JA in Apple and Pear,[37] the court also emphasised that while a court should construe a commercial contract to avoid commercial nonsense, it is not part of its role to construe an agreement that otherwise has an explicable commercial result in a manner that increases the commercial benefits to one party to the agreement.[38]

178 In Siemens Gamesa Renewable Energy Pty Limited v Bulgana Wind Farm Pty Ltd (Siemens),[39] Riordan J helpfully summarised the principles as follows:

87. To construe the terms of a commercial contract, the Court asks 'what a reasonable businessperson would have understood those terms to mean'.[40] To answer that question, 'the reasonable businessperson [is] placed in the position of the parties',[41] and the Court applies the following principles:

(a) The terms are construed objectively and the subjective intentions of the parties are irrelevant.[42]

(b) The objective approach requires reference to the text and its ordinary meaning, together with:

(iii) the context, being the entire text of the contract including matters referred to in the text; and

(iv) the purpose.

These matters will ordinarily be identified by reference to the contract alone,[43] but evidence of mutually known objective background circumstances relevant to the purpose is admissible 'no matter how clear the "ordinary meaning" of the words'.[44] Identification of purpose may allow admission of evidence of the genesis of the transaction, the background, the context and the market in which the parties are operating.[45]

179 In Siemens, Riordan J went on to consider the ambiguity requirement in Codelfa, and more particularly, the question of whether evidence of surrounding circumstances could be admitted to establish the existence of ambiguity, ultimately concluding that the 'true rule' in Codelfa does not permit evidence of surrounding circumstances in order to identify ambiguity.[46] For present purposes it is not necessary to add further to this discussion as both parties recognised that ambiguity was apparent from the termination clause in the Agreement itself, although each party confirmed that they considered the substance of the legal position to be as reflected in the reasons of Riordan J in any event.

180 In the context of a poorly drafted agreement, Safety Mate referred to the observations of the High Court in Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd:[47]

[97] Finally, it is to be observed that, even if the resultant lease were considered to be a remarkably poor deal from the Lessor's point of view (and, to repeat, it is not obvious that it should be so regarded), the precept that commercial contracts be construed as it is thought an honest and reasonable businessperson would construe them will stretch only so far. As Lord Mustill observed in Charter Reinsurance Co Ltd v Fagan:[48]

"There comes a point at which the court should remind itself that the task is to discover what the parties meant from what they have said, and that to force upon the words a meaning which they cannot fairly bear is to substitute for the bargain actually made one which the court believes could better have been made. This is an illegitimate role for a court."

[98] Poor drafting may justify a court in being more ready to depart from the natural and ordinary meaning of the terms of a contract,[49] and no doubt, the poorer the drafting, the less willing a court should be to be "driven by semantic niceties to attribute to the parties an improbable and unbusinesslike intention".[50] But poor drafting provides "no reason to depart from the fundamental rule of construction of contractual documents that the intention of the parties must be ascertained from the language they have used interpreted in the light of the relevant factual situation in which the contract was made".[51] Where there is ambiguity which permits of two alternative and semantically not improbable interpretations, construction in accordance with what it may be supposed would be the approach of honest and reasonable businesspersons may assist in choosing one such alternative over the other. But where, as here, the language and surrounding circumstances of a commercial contract present a choice between, on the one hand, a plain, ordinary and commercially not irrational meaning of a clause and, on the other, a meaning which is significantly removed from the natural and ordinary meaning of the terms of the clause, which ill-accords with other provisions of the agreement, and which in the end produces an outcome that is more commercially acceptable from one of the parties' point of view only, the precept runs out of application. Unless the Anglo-Australian objective theory of contract is now to be cast aside, the commercial approach to construction[52] is not a licence to alter the meaning of a term that is "clear and fairly susceptible of one meaning only" to achieve a result that the court may think to be reasonable.[53] The court is not authorised under the guise of construction to make a new contract for the parties at odds with the contract to which they have agreed.[54] Where, as here, all things considered, the words of a clause are fairly susceptible of only one meaning, they must be given that effect.

181 Each of the parties referred to various observations that have been made regarding the consideration and construction of notices given or purportedly given pursuant to the terms of a commercial contract. Those observations included the following.

182 In JPA Finance Pty Ltd v Gordon Nominees Pty Ltd,[55] McLeish JA made the following observations regarding notices given under a commercial contract and issues regarding the need for strict compliance or otherwise after considering the decisions in Tricontinental Corporation Ltd v HDFI Ltd,[56] and Bond v Hongkong Bank of Australia Ltd,[57]

[60] Taken together, the judgments in Bond reaffirm that the question whether a contract requires strict compliance with provisions as to notice, in order for a notice given in connection with the contract to be effective, is one of construction of the contract.

[61] Neither Tricontinental nor Bond stands for the proposition that notice requirements always require strict compliance. Both of them turned on the language of the relevant contract and, at least to some extent, on its nature as a contract of suretyship or guarantee.

...

[64] He continued:

In my view, such documents should be construed practically, so as to give effect to their presumed commercial purposes and so as not to defeat the achievement of such purposes by an excessively narrow and artificially restricted construction. The law facilitates and upholds commercial contractual obligations and the expectations that derive from them. Statute and equity may sometimes come to the aid of parties where various forms of unfairness or inequality can be shown. None was invoked in this appeal. But as between a commercial enterprise and a finance provider, such as a bank, the law should be the upholder of agreements. It should eschew artificialities and excessive technicalities for these will not be imputed to the ordinary businessperson. Business is entitled to look to the law to keep people to their commercial promises.[58]

...

[66] The question whether a contractual stipulation as to the mode of giving notice has been complied with may also involve a process of construction of the notice itself. The construction of the contract and the notice raises common issues, especially because both matters concern the same contractual and commercial context.

[67] The principles of construction of notices are not relevantly different to those governing the construction of contracts. This Court has endorsed Lord Steyn's articulation of the principles in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd.[59] It is convenient to set out the analysis of Gillard AJA (with whom Winneke P and Buchanan JA agreed) in MLW Technology Pty Ltd v May,[60] which was also endorsed by Warren CJ, Tate and Beach JJA in Salta Constructions Pty Ltd v St George Bank:[61]

The law should strive to uphold a contract wherever possible to avoid the reproach of being the destroyer of bargains. The principle applies not only to contracts but also to the actions of businessmen. The point has been recently reinforced in the House of Lords in relation to a notice given pursuant to a contract by Lord Steyn in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd . That case concerned a lease and the validity of a notice to determine the lease. The notice wrongly stated the date of termination and the question arose whether it was effective. The Court of Appeal, adopting a strict approach, held that it was not. On appeal, the House of Lords by a majority held that it was sufficient. Lord Steyn formulated a number of propositions and stated with respect to proposition 2 the following:

(2) The question is not how the landlord understood the notices. The construction of the notices must be approached objectively. The issue is how a reasonable recipient would have understood the notices. And in considering this question the notices must be construed taking into account the relevant objective contextual scene.

... the question is what reasonable persons, circumstanced as the actual parties were, would have had in mind. It follows that one cannot ignore that a reasonable recipient of the notices would have had in the forefront of his mind the terms of the leases. Given that the reasonable recipient must be credited with knowledge of the critical date and terms of clause 7(13) the question is simply how the reasonable recipient would have understood such a notice.

His Lordship noted that the law had moved on from a strict technical approach and said:

Since then there has been a shift from strict construction of commercial instruments to what is sometimes called purposive construction of such documents ... It is better to speak of a shift towards commercial interpretation. About the fact of the change in approach to construction there is no doubt.

In determining the meaning of the language of commercial contract, and unilateral contractual notices, the law therefore generally favours a commercially sensible construction.[62] The reason for this approach is that a commercial construction is more likely to give effect to the intention of the parties. Words are therefore interpreted in the way in which a reasonable commercial person would construe them. And the standard of the reasonable commercial person is hostile to technical interpretations and undue emphasis on niceties of language.

... The approach also accords with authority in this Court.[63]...

183 Each of the parties rightly considered the Agreement to be poorly drafted in numerous respects, with neither party seeking to 'defend the drafting'. How the challenged drafting came to be was not altogether clear, although it appeared likely that a standard form agreement drafted for ATG some years ago by its then lawyers in the United Kingdom may have been used as a base, and adapted for different PSPs over time, including for Safety Mate in 2017. Whether that is correct or not is not relevantly material.

184 In any event, and without reciting all of its terms, before addressing the various construction and other issues raised it is desirable to give insight into various features and terms of the Agreement.

185 Clause 2 of the Agreement is headed 'PSP Appointment and Term' and is in the following terms:

2 PSP APPOINTMENT AND TERM

2.1 ATG hereby appoints the PSP as its exclusive distributor to import and distribute the Products in the Territory on the terms of this Agreement. The PSP shall describe itself as an Authorised Distributor for the Products in the Territory and shall be entitled to all rights and privileges accompanied by this title and which are listed below. Nothing in this Agreement shall confer upon the Distributor any authority to act in any way for or on behalf of the Company without the prior written consent of the Company and the PSP shall not hold itself out as ATG's agent of the Product nor may the PSP bind ATG in any manner.

2.2 This Agreement shall come into effect on the Commencement Date and shall continue in force for the Initial Term unless:

2.2.1 terminated earlier by either party giving not less than [6 months'] prior written notice to expire on the expiry date of the Initial Term, or

2.2.2 the Agreement is continued for further 2 year + 2 year periods, Contract Term, on the same terms, by either party giving not less than six (6) months' prior written notice to the second and forth (sic) anniversary of the expiry date of the Initial Term, or

2.2.3 the Agreement is terminated in accordance with the provisions of Clause 14 (Termination) below.

186 'Commencement Date' is defined as 1 October 2017 and 'Initial Term' is defined to mean two years from the Commencement Date. The 'Term' of the Agreement is defined to mean 'the Initial Term and any continuation of the Agreement in accordance with clause 2.2 and until the Agreement is terminated by the parties'. 'Year' is stated to be the period of 12 months from the Commencement Date and each consecutive period of 12 months afterwards whilst the Agreement continues.

187 The 'Territory' is the country based geographic area as specified in Schedule 2 to the Agreement, which in turn lists Australia, New Zealand and Papua New Guinea as the said areas. The 'Product' is defined as the glove products of the type and specification manufactured and packed under ATG's trademarks as listed in Schedule 1, which ATG permits the PSP to distribute in the Territory. That schedule lists the numbers of 80 product styles available for purchase at the Commencement Date, and as updated, from time to time by ATG at ATG's discretion.

188 Clause 1.2 contains interpretation sub-clauses 'except as the context otherwise requires'. Among other things, these clauses: expressly incorporate the schedules as part of the Agreement; state that headings are for convenience and shall not affect interpretation; include plural/singular and singular/plural interpretation rules; include an inclusive definition of 'writing' and 'written' that includes faxes, letters, agreements or orders '... but not e-mail communications'.

189 Various obligations and undertakings of Safety Mate are recorded in clause 3, including the following:

3.1.1 use all reasonable endeavours to actively promote the distribution and sale of the Products (including any new Products which are added to Schedule 1 over the course of the Term) in the Territory, and where possible to increase sales of such Products, and undertake the following duties and activities:

(a) keep ATG supplied with up to date information as to market conditions in the Territory for the Products including competitors' prices and activities.

(b) cooperate fully with ATG's Sales Manager in all aspect [sic] of the commercial operations of ATG.

(c) meet on a regular basis with appropriate personnel of ATG and actively communicate with ATG in order to ensure the successful collaboration of the parties;

(e) submit written reports at monthly intervals to ATG showing details of sales, stocks, and orders placed by the PSP with ATG still outstanding and any other information relating to the performance of its obligations under this Agreement that ATG may reasonably require from time to time;

(j) make every effort to achieve the purchase targets each year as per the Sales Target in Schedule 3.

(k) maintain field representatives, as agreed by the Company, in each of the territories such that the territory has the market potential to support the cost of the number of representatives.

(l) focus efforts to achive (sic) the Key Performance Indicators (KPI's) [sic] as listed in the PSP scorecrd (sic) which will be reviewed and updated quarterly, attached in Schedule 8.

3.2 Without prejudice to the provisions of clause 3.1 the PSP shall be required [to] supply Channel Partners in the Territory that wish to be supplied with Products for sale in the Territory, unless the PSP can provide reasonable evidence satisfactory to ATG that to do so would be detrimental to the PSP's and ATG's business interests. ATG shall provide notice in writing to the PSP of any Channel Partners ATG wishes the PSP to supply and at the Commencement Date this shall include Wesfarmers Limited.

190 The KPIs are set out in Schedule 8 to the Agreement.

191 Various obligations and undertakings of ATG are recorded in clause 4, which provides as follows:

4 ATG'S COVENANTS AND DUTIES

4.1 ATG undertakes and agrees with the PSP at all times during the Term of this Agreement to:

4.1.1 supply the Products to the PSP for resale in the Territory in accordance with the duties in clause 3 and the terms of this Agreement;

4.1.2 provide any information and support service, including sales and technical training, as may reasonably be requested by the PSP to enable it properly and efficiently to discharge its duties under this Agreement;

4.1.3 provide access to the PSP to its VIP zone on the Website;

4.1.4 provide the PSP with reasonable quantities of glove display units;

4.1.5 meet on a regular basis with appropriate personnel of the PSP and actively communicate with the PSP in order to ensure the successful collaboration of the parties; and

4.1.6 inform the PSP immediately of any changes in ownership or Control of ATG and of any change in its organisation or method of doing business which might affect the performance of its or the PSP's duties under this Agreement.

4.2 ATG shall not during the Term of this Agreement engage in any of the following:

4.2.1 appoint any other person, firm, or company in the Territory as an agent or distributor for the Products; or

4.2.2 supply the Products directly to any other person firm or company in the Territory whether for use or for resale; or

4.2.3 supply the Products to an agent or distributor outside the Territory with the intention that the outside distributor sells or will sell the Product within the Territory.

4.3 ATG undertakes to use its reasonable endeavours to meet all orders for the Products sent to ATG by the PSP in accordance with ATG's Proforma invoice and terms of Delivery to the extent that the orders do not exceed the forecast for each type of the Products provided under sub-clause 5.2 (save for Events of Force Majeure).

4.4 ATG shall be under no liability with respect to any defect arising from normal wear and tear, wilful damage, negligence, abnormal working conditions, failure to follow ATG's instructions, misuse or alteration or repair of the Products without ATG's prior approval.

4.5 ATG shall maintain a reasonably competitive offering for the Products provided that ATG shall not be expected to compete with unfair competition or engage in illegal or unethical practices.

4.6 If it comes to the attention of ATG that a distributor of ATG outside the Territory is selling the Products in the Territory, ATG will advise the outside distributor of the exclusive rights of distribution granted to the PSP in the Territory by this Agreement and ATG will cease to supply the Product to the outside distributor if the practice is repeated after notice is given by ATG.

4.7 ATG is entitled:

4.7.1 upon giving six (6) months' written notice to the PSP to vary Schedule 1 to:

a) exclude from this Agreement one or more of the Products as it thinks fit if for any reason the production of such Products has been permanently discontinued, or

b) add new product(s) to the range of Products to be distributed and include the detail and Sales Targets in Schedules 1 and 3, to be agreed with the PSP

and

4.7.2 to make changes to the Specification of the Products which do not adversely affect that Product (e.g. a reduction in EN performance levels) and shall give notice of such changes to the PSP as soon as reasonably practicable.

4.8 ATG shall refer all enquiries received by it for the sale of the Products in the Territory to the PSP during the continuance of this Agreement;

192 Product ordering process and sales terms and conditions are addressed in clause 5, with separate incorporated sale terms and conditions being incorporated through Schedule 4. Rejection and return of products is dealt with in clause 6, with pricing and payment addressed in clause 7 and Schedules 4 and 5.

193 Clause 9 addresses, among other things, advertising and promotion and expressly provides that any advertising and promotional literature is to adhere to the 'Brand Charter', which is set out in schedule 7. Clause 14.2.2 provides, for the avoidance of doubt, that a breach of the Brand Charter is a 'material breach' for the purpose of the termination provisions in clause 14.

194 The use and licensing of intellectual property is addressed in clause 11.

195 Warranties, representations and undertakings are addressed further in clause 12.1 in respect of each party. Among other things Safety Mate warrants, represents and undertakes that:

12.1.1 it is of sound financial standing and the PSP is not aware of any circumstances or actions against it which may adversely affect that financial standing in the future;

12.1.2 it shall properly perform its obligations and provide services in the Territory under this Agreement and such obligations shall be performed in compliance with the documentation and instructions provided by ATG from time to time, and the provisions of this Agreement (all applicable laws, enactments, orders, regulations, Local Regulations), and guidance and it shall maintain all consents, licenses and approvals required by law and/or any governmental, regulatory or other authority;

12.1.4 in entering into this Agreement, it has not relied on any representation, warranty, condition or other term, express or implied statutory or otherwise, save for those expressly provided in this Agreement or those which cannot be prohibited by law;

12.1.10 all information, representations and statements communicated (whether in writing or otherwise) to ATG by the PSP or its personnel in connection with or arising out of the subject matter of this Agreement are true, complete and accurate in all respects.

196 By clause 12.2 ATG 'warrants and undertakes' (among other things) that 'it shall at all times act in its relations with the PSP [Safety Mate] in good faith'.

197 Clause 13 contains limitation of liability provisions. These are addressed later in these reasons when dealing with loss and damage.

198 Clause 14 deals again with termination and clause 15 is headed 'Effects of Termination'. Those clauses provide as follows:

14 TERMINATION

Termination by either party

14.1 Without prejudice to any other accrued rights and remedies to which it may be entitled, either party may give notice in writing to the other terminating this Agreement:

14.1.1 in accordance with clause 2.2 or 17.3;

14.1.2 or with immediate effect if:

(a) the other party commits a material breach of any of the terms of this Agreement and, if such a breach is remediable, fails to remedy that breach within thirty (30) days of that party being notified of the breach;

(b) the other party repeatedly breaches any of the terms of this Agreement in such a manner as to reasonably justify the opinion that its conduct is inconsistent with it having the intention or ability to give effect to the terms of this Agreement;

(c) there is a change of Control of the PSP or loss of Control by the current and existing shareholders;

(d) the other party purports to assign its rights or obligations in breach of this Agreement;

(e) the other party suspends, or threatens to suspend, payment of its debts or is unable to pay its debts as they fall due or admits inability to pay its debts or (being a company) is deemed unable to pay its debts within the meaning of Section 95A(2) of the Corporations Act 2001 or the other party goes into liquidation (except for the purposes of amalgamation or reconstruction, the terms of which have been agreed in writing by ATG);

(f) the other party commences negotiations with its creditors with a view to rescheduling any of its debts or makes a proposal for or enters into any compromise or arrangement with its creditors or a petition is filed and notice is given that a resolution is passed or an order is made, for or in connection with the winding up of that other party;

(g) an application is made to court or an order is made for the appointment of an administrator or if an administrator or administrative receiver is appointed over the other party;

(h) a person becomes entitled to appoint a receiver over the assets of the other party or a receiver is appointed over the assets of the other party;

(i) a creditor or encumbrancer attaches or takes possession of the whole or any part of its assets and such attachment or process is not discharged within thirty (30) days;

(j) any event occurs, or proceeding is taken, with respect to the other party in any jurisdiction to which it is subject that has an effect equivalent or similar to any of the events mentioned in clause 14.1.2 (c) to clause 14.1.2 (i) (inclusive); or

(k) the other party suspends or ceases or threatens to suspend or cease to carry on all or a substantial part of its business.

14.2 For the avoidance of doubt:

14.2.1 Failure to meet the Sales Target for two (2) consecutive fiscal years;

14.2.2 Breach of the Brand Charter; and

14.2.3 a breach of any of Clauses 3 (PSP's Covenants and Duties), 9 (Advertising and Promotion), 10 (Compliance with Laws and Regulations), 11 (Intellectual Property) such as has a material adverse effect of [sic] ATG.

is a material breach for the purposes of this clause.

Termination by ATG

14.3 In accordance with clause 7.6.2, ATG may give one (1) month's notice in writing to the PSP terminating the exclusivity of this Agreement.

14.4 ATG may terminate this Agreement in writing with immediate effect where, in accordance with Schedule 6:

14.4.1 the PSP has placed an order for Products; and

14.4.2 ATG has issued a Proforma invoice in respect of that order; and

14.4.3 the PSP has returned the Proforma invoice signed by an authorised signatory of the PSP; and

14.4.4 the PSP purports to cancel that order.

Termination by the PSP

14.5 The PSP shall have the right to give at least six (6) months' notice in writing to terminate this Agreement in the event of any one of the following:

14.5.1 Failure of Products to Conform: there is significant or persistent failure of the Products to conform to their Specification and in the event of an alleged non-conformity ATG shall be entitled at the shared expense with the PSP to refer such Products to an independent testing house to be examined in accordance with the Specification for the Products and such opinion of the testing house shall be final and conclusive between the parties; or

14.5.2 Significant or Persistent Delay: there is significant or persistent delay to supply accepted orders to the PSP; or

14.5.3 ATG is in breach of any of Clause 4 (ATG's Covenants and Duties) in this Agreement.

15 EFFECTS OF TERMINATION

15.1 Termination of this Agreement however caused shall be without prejudice to any rights or liabilities accrued at the date of termination.

15.2 Upon termination of this Agreement:

Products Paid for:

15.2.1 ATG shall have the option (but not obligation) to purchase from the PSP any stock of the Products (as are in first class order and condition) at the Landed Price. The option must be exercised within thirty (30) days of termination stating the quantities of Products it wishes to buy. The costs of shipping the Products to ATG shall be borne by the PSP. The PSP shall deliver such Products to ATG within twenty (20) days of receiving ATG's notice and ATG shall pay for the Products within thirty (30) days of the delivery;

15.2.2 However, if ATG chooses not to exercise its option under sub-clause 15.2.1 to re-purchase the Products or purchases only part of the PSP's stock of the Products, the PSP shall be permitted for a period of three (3) months following termination of the Agreement to sell and distribute any stocks of the Products as it may at the time have in store or under its control; thereafter, the PSP shall promptly return all remaining stocks of the Products to ATG at the expense of the PSP or otherwise dispose of the stock of Products as ATG may instruct.

Products not paid for:

15.2.3 Upon agreement with ATG, the PSP shall return to ATG at its cost a quantity of the Product(s) not paid for equivalent in value to any outstanding unpaid invoices.

Return/Disposal of Promotional Materials

15.2.4 Upon the exercise of ATG's option to repurchase the Products or upon return of Products by the PSP to ATG in accordance with clause 15.2.1 or 15.2.3 respectively, or on the expiration of the three (3) month period under sub-clause 15.2.2, the PSP shall promptly return to ATG or otherwise dispose of as ATG may instruct all samples, technical pamphlets, catalogues, advertising materials, specifications and other materials, documents or papers whatsoever sent to the PSP and relating to ATG's business (other than correspondence which has passed between the parties) which the PSP may have in its possession or under its control.

15.3 The termination of this Agreement shall not give rise to any liability on the part of ATG to pay any compensation to the PSP for loss of profits or goodwill.

15.4 Subject to sub-clause 15.2 all other rights and licences of the PSP under this Agreement shall terminate on the termination of this Agreement.

15.5 The PSP shall not, except with ATG's prior written consent for a period of one (1) year following the termination or expiry of this Agreement, be involved directly or indirectly in the manufacture or supply of any Products, or similar products in the Territory which compete with the Products, on its own account for resale.

15.6 Following terminattion (sic) the PSP shall refrain:

a) from actively seeking customers for the Products; and

b) from establishing any branch or maintaining any distribution depot for the sale of the Products in the Territory.

15.7 The PSP shall not:

15.7.1 represent itself as a distributor of ATG for any purpose; or

15.7.2 pledge ATG's credit

except as stated in this Agreement, give any condition or warranty or make any representation on ATG's behalf;

15.7.3 commit ATG to any contracts;

15.7.4 make any promises or guarantees with reference to the Products beyond those contained in the promotional material supplied by ATG; or otherwise incur any liability on behalf of ATG.

15.8 ATG shall be entitled to cancel all orders placed by the PSP within thirty (30) days prior to the termination date, whether or not such orders have been accepted by ATG, without incurring any liability of any nature to the PSP.

199 Confidentiality and use of Confidential Information is addressed in clause 16. 'Confidential Information' is defined to mean:

any knowledge of whatever nature, that the PSP has gained, relating to ATG's, or that ATG has gained relating to the PSP's information and intellectual property, including, methods of manufacture of, Products, and Other Products, materials, suppliers, know how, trade secrets, information of commercial value, ideas, patents, granted, pending or applied for, research and development, sales and marketing plans, customer lists, financials, prices, payment terms, personnel, or any matter of whatsoever nature relating to ATG, or communicated to the PSP through dealings with ATG.

16 CONFIDENTIALITY

16.1 Each party agrees and undertakes that during the term of this Agreement and thereafter it will keep confidential and will not use for its own purposes nor without the prior written consent of the other party disclose to any third party any Confidential Information unless the information is:

16.1.1 public knowledge or already known to that party at the time of disclosure or subsequently becomes public knowledge other than by breach of this Agreement; or

16.1.2 subsequently comes lawfully into the possession of that party from a third party; or

16.1.3 is independently developed by the party.

16.2 Each party may disclose the other party's Confidential Information:

16.2.1 to those of its personnel, officers, representatives or advisers who need to know such information for the purpose of carrying out the party's obligations under this Agreement. Each party shall ensure that its personnel, officers, representatives or advisers to whom it discloses the other party's confidential information comply with this clause 16; and

16.2.2 as may be required by a law court order or any governmental or regulatory authority, or to any customers or prospective customers;

16.2.3 (where the party is a body corporate) to any member of the same group of companies, and to any employees of the party or of any of the above;

provided that before any such disclosure the PSP and ATG shall make those persons aware of its obligations of confidentiality under this Agreement and shall obtain a binding undertaking as to confidentiality from all such persons.

201 Clause 20 is an entire agreement clause, with clause 21 dealing with variation and waiver. Set off is addressed in clause 24 and severance in clause 25. Clause 30 is headed 'Further Assurance' and provides as follows:

The parties shall use their reasonable endeavours to do or procure to be done all such further acts and things and execute or procure the execution of all such other documents and make payments as the other party may from time to time reasonably require for the purpose of giving that other party the full benefit of the provisions of this Agreement.

202 The giving of notice is the subject of clause 31, which is in the following terms:

31 NOTICES

31.1 A notice served under this agreement:

31.1.1 shall be in writing in the English language;

31.1.2 shall be signed by or on behalf of the party giving it; and

31.1.3 shall be:

(a) delivered personally; or

(b) sent by fax; or

(c) sent by commercial courier; or

(d) sent by pre-paid first-class or express post or recorded delivery; or

(e) (if the notice is to be served by post outside the country from which it is sent) sent by airmail requiring signature on delivery.

31.2 The addresses for service of notice are as set out on page 1 of this agreement.

31.3 A notice or any other communication given in connection with this agreement is deemed to have been received:

31.3.1 if delivered personally, at the time of delivery; or

31.3.2 in the case of fax, at the time of transmission; or

31.3.3 if sent by commercial courier, at the time of signature of the courier's delivery receipt; or

31.3.4 in the case of pre-paid first class or express post or recorded delivery, 9.00 am on the sixth (6) Business Day after posting; or

31.3.5 in the case of standard airmail, 9.00 am on the tenth (10) Business Day after posting.

31.4 For the purposes of this clause:

31.4.1 all times are to be read as local time in the place of deemed receipt; and

31.4.2 if deemed receipt under this clause is not within business hours (meaning 9.00 am to 5.30 pm Monday to Friday on any Business Day), the notice shall be deemed to have been received at the opening of business on the next Business Day in the place of receipt.

31.5 To prove delivery, it is sufficient to prove that the notice was transmitted by fax to the fax number of the party or, in the case of post, that the envelope containing the notice was properly addressed and posted.

203 Clause 32 addresses governing law and jurisdiction. The Agreement and any dispute or claim arising out of or in connection with it, its subject matter or formation (including non-contractual disputes or claims), is to be governed by and construed in accordance with Australian law. The parties agreed that the 'courts of Australia' are to have non-exclusive jurisdiction.

Whether Termination Notice invalid by reason of the failure to specify a termination date 'earlier' than the end of the two-year 'Initial Term'

204 As earlier referred to, there was no relevant dispute between the parties regarding the principles applicable to the construction of commercial contracts. Applying those principles ATG submitted that, upon the proper construction of the Agreement, the Termination Notice and the termination that it effected were valid.

205 ATG submitted that meaning was required to be given to the objective purpose of clause 2.2, namely to give either party the ability to terminate the Agreement at the end of the Initial Term of 30 September 2019 by giving at least six months' notice. It was submitted that the reference to the word 'earlier' in clause 2.2.1 can only logically be read as being a reference to the Termination Notice being given earlier than the end of the Initial Term, not the term coming to an end earlier than the Initial Term. This, so it was said, must follow given that clause 2.2.1 expressly stated that the prior written notice was to expire on the expiry date of the Initial Term and because that part of the clause does not state that the written notice is to expire before or by the expiry of the Initial Term, or before that date.

206 The matters said to support ATG's construction included the following:

(a) The language of clause 2.2 and, in particular, clause 2.2.1.

(b) The absurd or uncommercial result that would follow from Safety Mate's construction, namely that either party could have given notice terminating the Agreement for convenience as little as one minute after signing the Agreement in October 2017, thus bringing it to an end as early as April 2018.[64]

(c) The inconsistency between Safety Mate's construction and the express terms of clause 2.2.1, and the result that the express terms would be ignored and have no work to do.

(d) The claimed uncommercial result that a termination at, say, 11:58pm on the expiry date of the Initial Term would be valid, but a termination at midnight would not be.

(e) The construction favoured by Safety Mate would be contrary to the objective intention of the parties as reflected in the written agreement.

(f) Insofar as there was an ambiguity, which was accepted to exist, the surrounding circumstances leading up to the execution of the Agreement supported the objective intention that the Initial Term was to be two years. In this context both parties submitted that the law regarding the 'ambiguity gateway' is as reflected in the reasons of Riordan J in Siemens,[65] which in turn drew upon the Victorian Court of Appeal's decision in PCCEF.[66]

(g) Safety Mate not ever advancing the construction now relied upon until it was raised for the first time by Kennedy J in her reasons for decision when refusing to grant Safety Mate an interlocutory injunction on 20 September 2019.[67]

207 During oral closing submissions ATG also advanced an alternative construction contention, namely that if upon the proper construction of the Agreement the notice was required to specify a time earlier than the expiry of the Initial Term, the notice should be construed as operating from: the first moment on the date of the expiry of the Initial Term; alternatively, at the commencement of business hours[68] on that day, being 9:00am; alternatively, at the end of business hours on that day, being 5:30pm.

208 Safety Mate submitted that, upon the proper construction of clause 2.2, the default position was that the Agreement lasts for the Initial Term unless (relevantly) it is terminated 'earlier' by either party under clause 2.2.1. Safety Mate contended that because the Termination Notice did not purport to terminate the Agreement prior to the end of the Initial Term it was not a notice of the kind contemplated by clause 2.2.1 and was therefore of no effect for this reason alone, whether or not valid service of the notice had been effected on Safety Mate.

209 The primary matters said to support Safety Mate's construction were as follows:

(a) The objective purpose of clause 2.2.1 was to enable termination before the expiry of the Initial Term not at the end of it, which was a logical and businesslike interpretation.

(b) Safety Mate's construction takes into account the language and surrounding circumstances of the commercial contract and gives a plain, ordinary and commercially rational meaning to the clause. It is what reasonable businesspeople would have understood it to mean.

(c) The terms of clause 2.2 allow either party to give notice extending or terminating the Agreement - but not both. That is, a validly given termination notice cannot override or 'trump' an extension notice, and a validly given extension notice cannot trump a termination notice. This, so it was said, supports the 'termination earlier' construction.

(d) No commercial absurdity arises. The clause simply reflects the termination and extension arrangements agreed to between the parties.

(e) Adopting ATG's construction involves rewriting the clause - which could easily have been done at the time the Agreement was entered into if that had been the objective intention.

(f) The words '... Prior written notice to expire on the expiry date of the Initial Term;' address the date by which the notice is to be given rather than determining that which is to be stated in it or its expiry date.

(g) ATG's construction ignores the existence and operation of the chapeau to clause 2.2 and the words 'unless terminated earlier' at the commencement of clause 2.2.1. Because clause 2.2 provides that the Agreement 'shall continue in force for the Initial Term' clause 2.2.1 would have no work to do if its only purpose was to bring the Agreement to an end at the end of the Initial Term because it only continues in force until that time anyway, unless terminated earlier or extended, pursuant to clause 2.2.1 or clause 2.2.2 respectively.[69]

(h) Safety Mate's construction gives effect to the language of the clause and the objective intention of the parties and provides a logical set of circumstances where the Agreement:

(i) comes to an end on 30 September 2019; or

(ii) comes to an end on an earlier date for convenience following a valid termination notice in writing being given by either party pursuant to clause 2.2.1; or

(iii) is extended by either party by giving notice pursuant to clause 2.2.2; or

(iv) is terminated in accordance with the termination for cause provisions in clause 14 of the Agreement.

210 Although initially submitting that there was no ambiguity, and that therefore recourse to surrounding circumstances was neither necessary nor appropriate, it was ultimately common ground between the parties that ambiguity was apparent on the face of the clause, although it was essentially submitted by both parties that little assistance was to be derived from the surrounding circumstances. Safety Mate further submitted that insofar as ATG wished to draw upon material reflecting subjective intention or post-contractual conduct for the purposes of construction, this was impermissible.

Consideration and disposition - 'terminated earlier' issue

211 I do not accept Safety Mate's submission that the Termination Notice was invalid because it did not purport to terminate the Agreement at a date or time prior to the end of the Initial Term. Applying the established applicable principles of construction earlier referred to I have concluded that, upon its proper construction, clause 2.2.1 of the Agreement did not require the Termination Notice to specify a termination date prior to or 'earlier' than the end of the Initial Term. I elaborate as to why below.

Termination notice under clause 2.2.1 is to expire on the expiry date of the Initial Term

212 A material factor supporting the conclusion I have reached is the language of clause 2.2.1, when both construed in the context of the terms of the Agreement as a whole and clause 2.2 alone. Although there is some tension in the language of the clause by reason of the existence of the word 'earlier' in clause 2.2.1 and the opening words of clause 2.2, such tension as exists is to be resolved in favour of the express words that follow in the clause. These words control in terms both the end date by which a termination notice can be given by either party, and the date at which any such notice is to be stated to expire and is to take effect.

213 By mandating in plain terms that the written notice of termination is 'to expire on the expiry date of the Initial Term'[70] the clause makes tolerably clear that, notwithstanding the tension that arises given the opening words of clause 2.2 and the existence of the word 'earlier' in clause 2.2.1, termination under clause 2.2.1 is not to, and cannot, take effect earlier than the expiry of the Initial Term. That being so, it also relevantly defines or identifies the end point from which the not less than six months' written notice of termination may be given under the clause.

214 Although the parties were correct in their common view that clause 2.2 of the Agreement is one of the many clauses of the Agreement that is not well drafted, in my view a reasonable businessperson would have understood clause 2.2.1 to have operated in the way that I have described, which is supported by the language used, the terms of the Agreement as a whole, and the purpose or object to be secured by the Agreement. In this regard I draw attention to the following:

(a) The Agreement is an exclusive distribution agreement containing rights and obligations in respect of the distribution of particular products in the Territory for the mutual benefit of each of ATG and Safety Mate. As earlier noted, the distribution of the products involves a lead time of a number of months between order initiation by Safety Mate and product manufacture and supply by ATG.

(b) Construed in the way that I have determined, and absent termination for cause,[71] the substantive commercial effect of clause 2.2.1 is to provide for a minimum, but clear and certain, initial period of two years of supply and distribution under the Agreement for the benefit of each of ATG and Safety Mate. Subject to the other terms of the Agreement, the construction of the Agreement gives commercial certainty to the parties regarding the existence and operation of their relationship for that period.

(c) As Safety Mate accepted, if its contended construction was correct then ATG[72] would have been able to give six months' notice of termination moments after entering into the Agreement (or at various other times thereafter). I do not accept that this is a meaning that a reasonable businessperson would have understood clause 2.2.1 to have had. Further, in the context of the terms of the Agreement as a whole and the commercial relationship that it embodies, such a position would in my view be an uncommercial and absurd result - although it does not matter even if Safety Mate was correct in its contention that the result would not be absurd. This is because the meaning supported by Safety Mate is not a meaning that would be given to it by a reasonable businessperson in the circumstances in any event.

(d) If the objective intent of clause 2.2.1 had been to allow notice of termination to be given in the way contended for by Safety Mate it would also require material revision to the clear and definite language employed in what I have concluded to be the determinative aspects of the terms of clause 2.2.1.

(e) Construing the Agreement in the way I have described sits comfortably and harmoniously with the object and purpose of the Agreement, which at its core, is the appointment of Safety Mate as ATG's exclusive distributor in the Territory on the terms of the Agreement. If clause 2.2.1 were to be construed as permitting ATG[73] to give six months' notice of termination immediately upon (or shortly after) entering into the Agreement, this in my view sits far less comfortably, and in greater tension, with the object and purpose of the Agreement. It also does not sit well with the ordering, manufacturing and supply process and timeline reflected in the Agreement, which takes place over a number of months for each monthly order - which the parties were also well familiar with given their past dealings over many years, and is reflected in aspects of the Agreement in any event.

(f) The construction I have arrived at also sits comfortably and harmoniously with the potential extension periods referred to in clause 2.2.2 of the Agreement. This is because, upon its proper construction, clause 2.2.1 allows for a certain two-year Initial Term, and each of the potential extension periods are also each for a two-year period. Further, in the context of the entry into a new distribution agreement for the exclusive distribution in the Territory, construing the clause to reflect a certain two-year Initial Term is a businesslike interpretation, whereas a construction allowing a fresh commercial relationship to be terminated on giving six months' notice is not.

(g) Even if it is correct that, when considered with the definition of 'Initial Term', the words in the chapeau of clause 2.2 operate so that the Agreement would expire at the end of the two-year Initial Term, this does not in my view materially assist Safety Mate with its primary contention regarding the construction of clause 2.2.1. This is because it does not assist in resolving the tension that exists with the clear and direct language regarding the requirement that the 'written notice' is '... to expire on the expiry date of the Initial Term ...'. As has been seen, that expiry date is discernible from the definition of 'Initial Term' because it 'means 2 years from the Commencement Date'. Further, it is not the case that clause 2.2.1 would be without utility if the Initial Term lapses in any event. Termination is a different matter and the clause requires not less than six months' notice to be given by a terminating party. Such notice may also have utility for either party in and of itself. In addition, other terms of the Agreement engage where the Agreement is terminated (as opposed to lapses), a good example of which is clause 15.

(h) Further, and notwithstanding the poor and clumsy drafting of various aspects of clause 2.2, it is in my view evident from the terms, framework, and structure of clause 2.2 that the objective intention of the parties is for the clause to operate in respect of set two-year blocks, subject to termination under clause 2.2.1 or termination for cause under clause 14. So much is apparent from the terms of clause 2.2 itself and the definition of Initial Term, which is stated to mean '2 years from the Commencement Date'. Commencement Date is defined to mean 1 October 2017.

(i) Having regard to the observations in the preceding sub-paragraph, construing clause 2.2.1 in the way that I have sits harmoniously and comfortably with the structure and framework of all of clause 2.2 and its place in the Agreement, including its relationship with the termination for cause provisions in clause 14. It also sits well with the object and purpose of the Agreement insofar as that relates to the grant of exclusive distributorship rights in the Territory for the benefit of both parties.

215 Having regard to the above it is not necessary to resort to the known surrounding circumstances leading up to the entry into the Agreement to resolve any ambiguity. Indeed, the parties, and particularly Safety Mate, contended that there was no need to look beyond the terms of the Agreement. However, if such an approach had been necessary the objectively known circumstances serve to support rather than detract from the conclusion I have reached regarding the proper construction of clause 2.2.1 of the Agreement. In part this is because of the known material length of the lead time and the nature of the manufacturing and supply process between the ordering of products by Safety Mate and its supply by ATG.[74] The evidence also revealed that, as each party knew at the time, Safety Mate was actively seeking certainty over the period of appointment and an appointment for a much longer fixed period than that which was ultimately agreed and recorded in the Agreement. That was a 10-year initial period. It was expressly refused and a two-year Initial Term was all that ATG would agree to, as was reflected in the communications between them. However, the result would be no different if that was not so, or this circumstance was to be seen as falling outside the parameters of an objective circumstance to be taken into account. These aspects of the circumstances known to both parties at the time also speak against a construction that would allow for a termination notice to be given by ATG[75] moments after entering into the Agreement and expiring in six months from that time.

216 It will be apparent from the above that I do not accept that the conclusion I have reached involves an impermissible rewriting of the clause as contended by Safety Mate. It involves construing the language of the poorly drafted clause, and the Agreement more broadly, in accordance with the well-established principles to which I have earlier referred.

217 Insofar as it was maintained, I also do not accept Safety Mate's submission that the words in clause 2.2.1 that refer to the prior written notice having 'to expire on the expiry date of the Initial Term' describe or are directed at the date by which a termination notice is to be given - as opposed to its expiry date and that which is to be stated in the notice regarding the expiry date of the notice. Shortly stated, the language of the clause does not support and is not capable of supporting such a contention, which in my view is without merit.

218 To the extent that Safety Mate sought support from an observation made by Kennedy J[76] in her reasons when refusing Safety Mate's application for an interlocutory injunction, what was there said in that context does not assist Safety Mate's position regarding the final determination of the issue. Briefly, the making of the observations by Kennedy J arose in this way. Neither at the time of the application, nor in the various exchanges between the lawyers, or in the submissions, was it contended that clause 2.2.1 operated in the way now contended for by Safety Mate. Rather, it was Kennedy J who raised the issue in her published reasons when addressing the existence or otherwise of a serious question to be tried regarding construction issues.[77] Her Honour noted that the 'terminated earlier' issue had not been raised by the parties and it was apparent and common ground that it was not the subject of submissions or detailed or substantive consideration by Kennedy J. So much is unsurprising given the interlocutory nature of the application and the urgent circumstances in which it was being addressed by her Honour. The issue was identified in the reasons as one of the 'issues of construction ... raised for investigation at trial'.[78] Whilst this history may reveal the genesis of Safety Mate's engagement with the issue, it does not enhance the merits or otherwise of its submissions regarding its determination at trial.

A termination notice under clause 2.2.1 overrides or 'trumps' an earlier extension notice under clause 2.2.2

219 In partial support of its 'termination earlier' construction contention Safety Mate also appeared to submit that it was aided by its submission that, upon its proper construction, clause 2.2 operated so that either party could give notice, but not both, meaning that a termination notice served after an extension notice had been given under clause 2.2.2 of the Agreement could not override or 'trump' the extension notice even if it was served not less than six months prior to the expiry date of the Initial Term.

220 To the extent that this contention was ultimately relied upon by Safety Mate in aid or support of its 'termination earlier' construction argument regarding the meaning and operation of clause 2.2.1 and the validity of the Termination Notice, it does not assist Safety Mate's position. I do not accept that, properly construed, clause 2.2 operates in the way contended for by Safety Mate. It is not a meaning that a reasonable businessperson in the position of the parties would give the clause, and nor is it supported by the object or purpose of the Agreement earlier referred to.

221 This conclusion is well supported and can be shortly illustrated by considering only aspects of that which would follow from Safety Mate's position if it was correct in this regard. If Safety Mate was correct, it would allow for the following:

(a) Safety Mate[79] being entitled to give a notice extending the Agreement for a further two years from the end of the two-year Initial Term[80] moments (and at various times thereafter) after the Agreement had been entered into and when little if any of the Initial Term had elapsed;

(b) upon the giving of such notice by Safety Mate, ATG immediately becoming bound to a further additional two-year extension[81] of the Agreement; and

(c) ATG not having any right to give a termination notice pursuant to clause 2.2.1 bringing the Agreement to an end at the end of the Initial Term upon the giving of not less than six months' notice '... to expire on the expiry date of the Initial Term ...'.

222 This is not a meaning that a reasonable businessperson would give to clause 2.2. Given the terms of clause 2.2, the terms of the Agreement as a whole, and the object and purpose earlier referred to, I accept that such a construction would be uncommercial and absurd. But even if it were not to be characterised as absurd, it would remain as a meaning that would not be given to the clause by a reasonable businessperson in the circumstances.

223 In addition to the points made earlier regarding clause 2.2 and the proper construction of clause 2.2.1, I make the following additional observations.

224 Given the structure and framework of clause 2.2 and the three two-year blocks that it addresses, as well as the distribution rights, obligations, and commercial relationship created, I do not accept that a reasonable businessperson would take the clause to mean that the distributor, Safety Mate,[82] could lock the supplier into a further two-year period moments after the Agreement was entered into. Construed in the context of the Agreement as a whole, and having regard to the terms, structure and framework of clause 2.2, I do not accept that this was the objective intention of the parties, or that the use of the word 'or' in clauses 2.2.1 and 2.2.2 can or should lead to such a conclusion.

225 Further, if Safety Mate was correct it would then have the capacity to deprive ATG (or Safety Mate) of the objectively intended benefit of being able to bring the Agreement to an end without cause at the end of the Initial Term only moments after entry into the Agreement. As I have said, this is not a meaning that would be ascribed to it by a reasonable businessperson in the circumstances.

226 However, if clause 2.2 was construed to allow a termination notice to be given (by either party) under clause 2.2.1 after an extension notice has been given under clause 2.2.2, no absurd or uncommercial position arises. This is because in those circumstances it would allow for the following:

(a) A first in time notice of termination to be given expiring at the expiry of the Initial Term, which would be effective at that time and allow the other party the benefit and certainty of the objectively intended two-year period of the Initial Term.

(b) A first in time notice of extension to be given which, absent a later termination notice being given within the time referred to in clause 2.2.1, would be effective to extend the term of the Agreement.

(c) A second in time notice of termination to be given after an extension notice, which would override or 'trump' the earlier extension notice - but still allow the other party the benefit and certainty of the objectively intended two-year period of the Initial Term.

227 This gives rise to no uncommercial or absurd position and is a meaning that would be ascribed to the clause by a reasonable businessperson. It would: preserve for each party the certainty of the two-year Initial Term; sit comfortably with the '2 year block' terms and framework of clause 2.2; not have the capacity to deprive either party of the benefit of the termination right objectively intended to be granted by clause 2.2.1; sit comfortably with the object and purpose of the Agreement and the distribution rights and obligations that the Agreement embodies for both parties; and not impact on the rights in clause 14.

228 Further, and relevantly, because the rights under clauses 2.2.1 and 2.2.2 are reciprocal, the position referred to operates for the benefit of both parties and reflects a construction evident from the terms and structure of clause 2.2 when objectively construed by reference to established principles. It is also supported by the surrounding circumstances earlier referred to, although the position does not change if they are put to one side.

229 Having regard to the above, and applying the established principles earlier referred to, clause 2.2 of the Agreement - and in particular, clauses 2.2.1 and 2.2.2 - should not be construed in the manner contended for by Safety Mate. Upon their proper construction, and relevantly in this case:

(a) Under clause 2.2.1 of the Agreement ATG was entitled to terminate the Agreement on the expiry date of the Initial Term of the Agreement by giving Safety Mate not less than six months' prior written notice to expire on the expiry date of the Initial Term.

(b) Under clause 2.2.1 of the Agreement Safety Mate was entitled to terminate the Agreement on the expiry date of the Initial Term of the Agreement by giving ATG not less than six months' prior written notice to expire on the expiry date of the Initial Term.

(c) Each of Safety Mate and ATG had the right to give extension notices pursuant to clause 2.2.2 of the Agreement.

(d) If a valid extension notice was given by one party to the other in accordance with clause 2.2.2 before the expiry of the time in which a termination notice could be given by one party to the other pursuant to clause 2.2.1 of the Agreement, a subsequent valid termination notice given within the time referred to in clause 2.2.1 would have the effect of terminating the Agreement on the expiry date of the two-year Initial Term notwithstanding the existence of the earlier extension notice of the other party.

230 Put another way, and to employ the succinct colloquial term used at times by the parties in the written and oral submissions, a valid termination notice given by one party to the other within the time permitted in clause 2.2.1 will 'trump' an earlier valid extension notice given by the other party to the terminating party. The consequence in that circumstance is that the Agreement will end on the expiry date of the Initial Term, being two years after the Commencement Date.

231 Finally on this 'trumping' construction point, and in the context of the construction of clause 2.2.1, even if I had determined the issue in the way contended for by Safety Mate, I do not see it as being of relevant or material assistance to Safety Mate regarding its contention that the Termination Notice is invalid by reason of its failure to specify a termination date earlier than the expiry date of the Initial Term. Although it was raised by Safety Mate in this context (as well as in relation to the service of notice issue which is discussed below), it does little if anything to assist in resolving the 'termination earlier' tension in clause 2.2.1 of the Agreement that the parties have been grappling with and which I have addressed above.

232 Further, even if it was the case that acceptance of Safety Mate's contention regarding an earlier extension notice trumping a later termination notice was essential to its 'terminated earlier' construction argument - which it was not submitted to be - given the conclusion that I have reached regarding the proper construction and operation of each of clauses 2.2.1 and 2.2.2, the contention provides no support to Safety Mate for its claim that the Termination Notice was invalid by reason of the failure to specify an 'earlier' date or time of termination.[83]

233 For completeness I add that the terms of clause 2.2.2 are also poorly drafted and have other internal challenges and issues. Although it is not necessary to address them in any further detail at this juncture, one obvious example that may be mentioned is the specified end point prior to which not less than six months' notice of extension is to be given. The language of clause 2.2.2 provides for the Agreement continuing for the 'further 2 + 2 year periods, Contract Term [sic] on the same terms, by either party giving not less than six (6) months' prior written notice to the second and forth [sic] anniversary of the expiry date of the Initial Term ...' (emphasis added).

234 So, if construed literally, the language would allow (for example) for the notice to extend the Agreement beyond the two-year Initial Term to be given not less than six months after the second anniversary of the expiry date of the Initial Term. That second anniversary date is two years after the end of the Initial Term - being the end of the same (extended) two-year period that the extension notice is intended to create after the giving of such notice. Thus, if construed literally, it would allow the extension notice to be given up to 18 months after the start of that two-year extension period that it seeks to create by the giving of such notice. Such a result is logically and otherwise absurd and cannot have been intended, although this was not the subject of submissions and need not be further explored for present purposes given the issues under consideration.

Conclusion on the 'terminated earlier' construction issue

235 As I have said, having regard to the proper construction of clause 2.2.1 of the Agreement, the Termination Notice and the termination that it sought to effect was not invalid by reason of its failure to specify a date earlier than, or prior to the end of, the Initial Term of the Agreement. As a consequence, this aspect of Safety Mate's defence and counterclaim fails.

Whether Termination Notice invalid by reason of the alleged non-compliance with the notice requirements in clause 31

236 ATG submitted that the Termination Notice had been validly served under the Agreement and that this occurred prior to Safety Mate serving the Extension Letter. As noted above, in this context it further submitted that, upon the proper construction of the Agreement, a termination notice under clause 2.2.1 did not need to be served prior to any extension notice being given pursuant to clause 2.2.2 of the Agreement in any event, provided not less than six months' written notice of termination was given, to expire on the expiry date of the Initial Term.

237 With respect to the claimed effective service of the Termination Notice, in substance it was submitted that:

(a) It was plain on the evidence and not disputed by Safety Mate that the practical reality was that it was in actual possession of the Termination Notice prior to it issuing the Extension Letter.

(b) On the proper construction of the Agreement:

(i) The 'addresses for service of notice' referred to in clause 31.2 means the address specified for each of the parties referred to on page 2 of the Agreement and it would be absurd to construe that clause as referring to the street, postal, facsimile, DX, and/or website address of the solicitor's firm Thomas Eggar LLP on the cover page of the Agreement.

(ii) For a notice to be delivered personally within the meaning of that expression in clause 31 of the Agreement, it need not be delivered to a person. Rather, it needs to be delivered by a person to the address. Further, the Agreement does not incorporate s 109X of the Corporations Act 2001 (Cth) (Act), or 'personal service' requirements that apply to court documents.

(iii) The deemed service provisions in clause 31 of the Agreement yield to an earlier time of receipt if such an earlier time can be established.

(c) Effective service of the Termination Notice had been carried out. The Termination Notice was in writing, in the English language, sent by the solicitors for ATG, and delivered personally and sent by Express Post to each of the Brisbane Address, the Capri Address and the Bundall Address.

(d) The time for service was no later than 10:19am on 26 March 2019, when the Express Post envelope was personally delivered to the Bundall Address, being the address specified in the Agreement.

(e) Even if the address for service had been the Capri Address, it was personally delivered to that address by Express Post at 12:07pm on 27 March 2019. Further, Safety Mate accepted in opening that it was delivered to the Capri Address on 25 March 2019, which was consistent with the admission in paragraph 7(a)(ii) of Safety Mate's counterclaim.

238 It was further submitted that the timing of service of the Termination Notice was immaterial in the circumstances in any event because the Termination Notice was served in time and would be effective even if it was held to have been served after Safety Mate had served the Extension Letter. This, so it was said, was because the service of an extension letter under clause 2.2.2 of the Agreement does not preclude the later service of a termination notice under clause 2.2.1.

239 Safety Mate emphasised that if its construction argument regarding the expression 'terminated earlier' was accepted and the Termination Notice was invalid, then the 'notice issue' was redundant.

240 Alternatively, Safety Mate submitted that if ATG was correct regarding the proper construction of clause 2.2.1 and the termination date under clause 2.2.1 is 30 September 2019:

(a) a termination right under clause 2.2.1 cannot be exercised after a notice of extension has been given under clause 2.2.2;

(b) the Extension Letter was first in time and therefore validly extended the term of the Agreement for a further two years; and

(c) the Termination Notice was of no effect because it could not be given after a valid extension notice had been given pursuant to clause 2.2.2.

241 In this context, there was ultimately little dispute regarding that which factually transpired in relation to the provision of notice. However, Safety Mate submitted that the Termination Notice given under clause 2.2.1 had not been given in accordance with the notice provisions of the Agreement. Further and in any event, it was submitted that if notice was found to have been in accordance with the terms of the Agreement, it was not given until after the Extension Letter was deemed to have been received and therefore the Termination Notice was ineffective.

242 It was submitted that because 'first in time' may mean the difference between a termination or continuation of an extremely valuable right, the notice provisions in the Agreement must be complied with strictly. Reference was made to the Victorian Court of Appeal's decision in JPA Finance Pty Ltd v Gordon Nominees Pty Ltd[84] and related authorities. In this context, Safety Mate submitted, in substance, as follows:

(a) Because clause 31.2 of the Agreement stated that '[t]he addresses for service of notice are as set out on page 1 of this agreement', the addresses were those addresses listed for the firm of solicitors Thomas Eggar LLP on the unnumbered cover page of the Agreement. It was observed that the next page of the Agreement was numbered '2' and attention was drawn to the street address, facsimile address, DX address, and the website address on the cover page of the Agreement.

(b) Although at first blush a single address for service is unconventional, the principles of construction are such that the court must give effect to the clear words of the contract.

(c) Whilst in exceptional cases where the clear and literal meaning of the words used is commercially absurd it can be safely inferred that the parties did not intend the words to have that meaning, this is not such an exceptional case. There was no absurdity present and it was not self-evident that the parties intended some other address for service. Reference was also made to the observations of the New South Wales Court of Appeal in National Australia Bank Ltd v Clowes[85] in relation to its argument that there was no commercial absurdity in having a single UK address for service.

(d) This is not a rectification case and rectification is not sought by ATG.

(e) If the address for service was not Thomas Eggar, LLP in London, Safety Mate validly served the Extension Letter on ATG's registered address on 26 March 2019 by facsimile, the effect of which was to deem service to have been effected at the time of transmission, namely 2:26pm. This was in accordance with clause 31.3.2 of the Agreement.

(f) If the addresses for service are found to be the registered office addresses appearing on numbered page 2 of the Agreement, Safety Mate's address recorded in the Agreement is its former principal place of business, which ATG was aware of. Safety Mate submitted that, in the alternative to the place of service being Thomas Eggar, properly construed, it was the objective intention of the parties that Safety Mate's current principal place of business was to be the address for service under the Agreement.

(g) The termination notice was received at Safety Mate's current principal place of business by hand delivery to an employee of Safety Mate on 25 March 2019, but was not served personally by delivery or service on a director of Safety Mate. Therefore it was not received at the Capri Address until 27 March 2019 when the Termination Notice was received by Express Post, which was a day after the service of the Extension Notice.

(h) Further, even if the Bundall Address was taken to be the proper address for service, the deemed time of service of the Termination Notice pursuant to clause 31.3 on the Bundall Address was 29 March 2019, being 9:00am on the sixth business day after posting, as provided for in clause 31.3.4 of the Agreement.

243 In the context of the meaning of the expression 'delivered personally' in clauses 31.1.3 and 31.3.1 of the Agreement Safety Mate also referred to the observations made in MGW Engineering Pty Ltd t/a Forefront Services v CMOC Mining Pty Ltd[86] and those made by the Victorian Civil and Administrative Tribunal in Bedwell v Wantirna Park Estate Pty Ltd (Residential Tenancies).[87]

244 Having determined that the Termination Notice is not invalid by reason of a failure to state a termination date earlier than the end of the Initial Term, it is necessary to address Safety Mate's notice arguments.

245 Putting to one side the breach of good faith allegations for the moment, I am satisfied that ATG has established that the Termination Notice gave Safety Mate not less than the required six months' notice and that it was validly provided to, and received by, Safety Mate pursuant to the Agreement before the Extension Letter was sent to ATG by Safety Mate.

246 Even if that had not been so and the Termination Notice was (or was deemed to have been) received by Safety Mate after the Extension Letter was sent to ATG, it would not have mattered. This is because, for the reasons set out earlier, the Termination Notice would have been effective in any event and overridden or 'trumped' the Extension Letter.[88]

247 It will be apparent from these conclusions that I do not accept Safety Mate's various notice arguments, or that they adversely affect the validity or effectiveness of the Termination Notice. These contentions are addressed in the reasons that follow below.

248 I do not accept Safety Mate's submission that the terms of the Agreement required notices (including the Termination Notice) to be served on the Thomas Eggar LLP (solicitors) London address (Eggar Address) recorded in the bottom right hand corner of the cover page of the Agreement. Although several opportunities were provided to Safety Mate to reconsider this contention, it pressed the point throughout. The contention is without merit.

(a) The Eggar Address is recorded on what is self-evidently the cover page of the Agreement. It appears, and can be inferred to be, the address of the firm that originally drafted the Agreement or an earlier version of it. The cover page is not a numbered page in that it does not bear a page number.

(b) The page after the cover page is self-evidently the first page of the operative terms of the Agreement (Operative Page). That bears the page number '2' and all pages thereafter are consecutively numbered thereafter, including the schedules incorporated as part of the Agreement.

(c) The opening words of the Agreement on the Operative Page record, among other things, that the Agreement is 'BETWEEN':

(i) ATG LANKA (PVT) Limited a company registered in Sri Lanka with the registered number BOI 3924-16-12-2008 whose registered office is at Spur Road 7, IPZ Phase 2, Katunayake, Sri Lanka ("ATG"); and

(ii) Safety Mate Pty Ltd a company registered in Australia with registered number 15 104 784 241 whose registered office is at 11/11 Karp Court, Bundall, QLD, Australia ("the PSP").

(d) Clause 31.2 of the Agreement provides that 'The addresses for service of notice are as set out on page 1 of this agreement.'

250 Safety Mate reasoned that because the Operative Page bears '2' as a page number then the cover page is 'page 1' of the agreement for the purposes of clause 31.2 of the Agreement. It follows, so it was said, that the Eggar Address is the address for service of all notices, whether served by ATG or Safety Mate. I make the following observations as to why this contention cannot be accepted, which can be relatively briefly stated.

251 This is not an interpretation that a reasonable businessperson in the position of the parties would ascribe to it. In my view the construction is also uncommercial and absurd, but even if it were not to be so vividly characterised as absurd, it is not a construction that principle will allow or facilitate.

252 For Safety Mate to be correct it requires a conclusion that these two parties, being a company in Sri Lanka and a company in Australia, as parties to a forward looking commercial agreement between them regarding distribution in Australia, New Zealand and Papua New Guinea, objectively intended that any notices under the Agreement served by either of them would be served on the London law firm Thomas Eggar LLP at the Eggar Address and not on each other - and in circumstances where their respective addresses are set out in the opening words of the Operative Page. It was also a known and objective fact that Thomas Eggar was not and had not been acting for Safety Mate in connection with the transaction and that the first draft agreement with the cover page was sent by ATG to Safety Mate.

253 When regard is had to the terms of the Agreement as a whole, including its context and purpose, it is tolerably clear that the reference in clause 31.2 is intended to be a reference to the two registered office addresses set out in the Operative Page. Clause 31.2 refers to 'addresses' (plural) and, unsurprisingly, there are two parties to the Agreement and two addresses set out on the Operative Page: the address of ATG and the address of Safety Mate, being the only parties to the Agreement. The reference in clause 31.2 of the Agreement to 'page 1 of this agreement' is to be construed as a reference to the Operative Page notwithstanding that it bears '2' as a page number, and not as a reference to the cover page. So much is obvious.

254 I also do not accept the submission that the reference to 'addresses' (plural) in clause 31.2 applies to the Eggar Address on the cover page because the cover page records more than one address for Thomas Eggar LLP, namely a postal address, a DX address, and a website address. This is not a businesslike interpretation and in my view also compounds the strained, uncommercial and absurd construction contended for by Safety Mate. It would also follow from this submission, as was acknowledged, that this would mean that service on any one of these Thomas Eggar addresses was sufficient, including on its website address if that be possible. A reasonable businessperson in the position of the parties would not so construe the Agreement in this way.

255 I also do not accept the contention that clause 1.2(b) operates so as to allow the plural 'addresses' in clause 31.2 of the Agreement to be read as meaning 'address' (singular) so as to provide support for the contentions regarding the Eggar Address. Such a contention is artificial, strained, and seeks to conveniently ignore or step around the language used in clause 31.2. The contention is without merit.

256 To so conclude is not to deny that it is possible and open for parties to an agreement to agree on a single address for service of notices - or, indeed, any number of addresses. However, each case is necessarily to be determined by reference to its own facts and circumstances. Here it is in my view clear that, properly construed, the reference in clause 31.2 of the Agreement to the 'addresses' '... set out on page 1 of this agreement' is a reference to the addresses of ATG and Safety Mate as set out in the opening words on the Operative Page of the Agreement.

257 I add that Safety Mate's position on this topic is not assisted by the authorities it referred to dealing with construction of termination and notice provisions. As has been made clear in many cases, each case depends on its own facts and by reference to the application of established principles of construction. The circumstances considered by the Court of Appeal in JPA Finance[89] were materially different and were not addressing an issue of the kind now in question.

258 Further, and as McLeish JA explained,[90] whether a contract requires what might be described as strict compliance with notice provisions in order for a notice to be effective is a question of ordinary construction of the contract. It was also uncontroversially observed that whether a contractual stipulation as to notice has been complied with may require construction of the notice itself. McLeish JA further observed that it was not the case that notice requirements always require strict compliance, noting also that the cases very often depend upon the language and nature of the contract in question.[91]

259 As was referred to earlier when addressing relevant principles of construction, the Court of Appeal in JPA Finance echoed observations in other decisions regarding principles of construction of notices not being different to those governing construction of contracts, drawing also on the Court of Appeal's decision in MLW Technology Pty Ltd v May,[92] and in Salta Constructions Pty Ltd v St George Bank.[93] In so doing the Court of Appeal was again underscoring that the law should strive to uphold a contract wherever possible to avoid the reproach of being a destroyer of bargains, and that this applies not only to contracts but the actions of businesspeople - again emphasising that the law generally favours a commercially sensible construction.[94]

260 In any event, even if the law was such that strict compliance with notice provisions was required it would not assist Safety Mate regarding its Eggar Address contention. This is because it is first necessary to address whether, upon its proper construction, the addresses referred to in clause 31.2 are the addresses on the cover page or the Operative Page. Only after that construction question has been determined can the question of strict compliance or otherwise be addressed. In this case the antecedent construction question has been determined against Safety Mate. Consequently, strict compliance with clause 31.2 would not have been achieved by service on the Eggar Address because that is not the address that clause 31.2 of the Agreement allowed notices to be served on.

261 Having determined that, upon the proper construction of the Agreement, it is not necessary for a termination notice given by either party under clause 2.2.1 to be given prior to the other party giving an extension notice under clause 2.2.2,[95] it is not strictly necessary to determine whether Safety Mate is correct in its contention that service of the Extension Letter was first in time. However, in deference to the submissions made, I state below my conclusions on the topic together with my reasons for the same.

262 Again putting to one side for the moment the good faith issue, in my opinion ATG is correct in its contention that the Termination Notice was given by ATG and received by Safety Mate prior to the Extension Letter being sent by Safety Mate to ATG. It follows that I do not accept Safety Mate's submission that the Extension Letter was first in time. That being so, even if Safety Mate had been correct in its contention that a termination notice given by either party under clause 2.2.1 cannot override or trump an earlier extension notice given by the other party under clause 2.2.2, it would have made no difference to Safety Mate's position because the Termination Notice was first in time.

263 Safety Mate advanced a number of submissions in support of its contention that the Extension Letter was first in time, which I address in the reasoning that follows. In so doing I proceed on the basis that the time of service of the Extension Letter on ATG under the Agreement was 2:26pm on 26 March 2019, which was common ground between the parties and reflected in the evidence and the Agreed Chronology.

(a) The registered office address of Safety Mate recorded on the Operative Page of the Agreement was the Bundall Address.[96]

(b) At the time the Termination Notice was prepared and given in March 2019 the registered office of Safety Mate was the Brisbane Address.

(c) At the time the Termination Notice was prepared and given in March 2019, Safety Mate's principal place of business was the Capri Address. It no longer operated from the Bundall Address, which was occupied by a different entity not related to Safety Mate.

265 The evidence revealed[97] that service of the Termination Notice on Safety Mate was sought to be effected as follows:

(a) Attempted personal service at 9:00am on 25 March 2019 at the Bundall Address which was discovered to be occupied by another entity such that the process server could not effect service.

(b) By an email from Mr Lippner to Mr Tee and Mr Temperton at 2:27pm on 25 March 2019 attaching a copy of the Termination Notice.

(c) By hand delivery to an employee of Safety Mate at 9:30am on 25 March 2019 at the Capri Address who said that he was authorised to accept service for Mr Tee and Mr Temperton as directors of Safety Mate.

(d) Hand delivery by a process-server at the Brisbane Address at 11:50am on 26 March 2019 to an employee who said she was authorised to accept service of the documents.

(e) By Express Post by posting in an Express Post mailbox at 4:00pm on 21 March 2019 three Express Post envelopes each containing a notice of termination and addressed to Mr Tee and Mr Temperton of Safety Mate at the Brisbane Address, the Capri Address, and the Bundall Address. The evidence established (and it was common ground) Express Post envelopes were hand delivered:

(i) to the Bundall Address at 10:19am on 26 March 2019;

(ii) to the Brisbane Address at 1:23pm on 26 March 2019; and

(iii) to the Capri Address at 12:07pm on 27 March 2019.

266 It is apparent that ATG went to considerable lengths in order to ensure that the Termination Notice was received by Safety Mate. The evidence also established (and it was not ultimately in dispute) that the Termination Notice came to the attention and was in the hands of Safety Mate's directors before Safety Mate sent the Extension Letter to ATG at 2:26pm on 26 March 2019.

267 I accept ATG's submission that the time of service of the Termination Notice under the Agreement was no later than 10:19am on 26 March 2019 when the Express Post envelope was delivered to the Bundall Address. As I have determined, this was the Safety Mate address referred to in the Agreement and no relevant variation to the Agreement was made or suggested to have been made between the parties.

268 Further, upon its proper construction, clause 31.2 does not provide for the only or exclusive addresses for effective service of notices under the Agreement. That is not what the Agreement says in clause 31.2 or elsewhere. The stating of the specified addresses is facilitative of effective service but not prescriptive. Service on the specified address is sufficient, but it is not the only way that effective notice may be given under the Agreement. This is supported by the terms of clause 31.2, which it may be observed does not only not state that the addresses are to be the only or exclusive addresses for service, but it also does not employ the emphatic language of 'shall' that is used in each of the sub-clauses in clause 31.1. It is also a meaning and businesslike interpretation that a reasonable businessperson in the position of the parties would arrive at. It also sits comfortably with the Court of Appeal's observations in JPA Finance and the other decisions there referred to about construction of agreements and the law seeking to uphold agreements and related acts of businesspeople.

269 That being so, even if service on the Bundall Address at 10:19am on 26 March 2019 had not been effective under the Agreement, at least each of the following would have been:

(a) service at the then registered office at the Brisbane Address at 11:50am on 26 March 2019 by a process server; and

(b) service at 1:26pm on 26 March 2019 at the registered office at the Brisbane Address by Express Post.

270 In these instances (and the time of service on the Bundall Address at 10:19am on 26 March 2019 by Express Post), service of the Termination Notice was effected before the Extension Letter was sent to ATG and was first in time.

271 In the above discussion I have not addressed the attempted service by email on 25 March 2019, even though I am satisfied on the evidence that the email attaching the Termination Notice was sent by ATG and received by Safety Mate on 25 March 2019. It is not addressed because it appears that service by email raises additional issues given that clause 1.2(e) of the Agreement provides that '"writing" or "written" includes faxes, letters, and agreements or orders but not email communications'. This issue was also expressly referred to in the Termination Notice. Given the other conclusions reached above in this context it is not necessary further to explore this issue.

272 It will be apparent from the above that I do not accept that Safety Mate's submissions regarding s 109X of the Act, the deeming provision in clause 31.3 of the Agreement, or its other submissions relevantly advance its position on the timing of service issue. I make the following brief observations about these matters.

273 Section 109X of the Act and s 29 of the Acts Interpretation Act 1901 (Cth) (Acts Interpretation Act) do not assist Safety Mate. Even if s 109X of the Act can be engaged in a contractual context,[98] it is facilitative and not exhaustive. Further, the section expressly permits service by leaving the document at, or posting the document to, a company's registered office. The Termination Notice was hand delivered to the registered office by a process server at 11:50am on 26 March 2019 and delivered by Express Post to the same registered office at the Brisbane Address at 1:23pm the same day.

274 In those circumstances, if s 109X applied then s 29 of the Acts Interpretation Act would not assist Safety Mate regarding the deemed time of service being the time at which the Termination Notice would be delivered in the ordinary course of post. This is because the section's time of service deeming effect does not engage with the hand delivery to the registered office by the process server. In addition, s 29 of the Acts Interpretation Act only sets a deemed time for service by post and it does not apply if 'the contrary is proved'. On the evidence it was established - and properly accepted - that the Termination Notice was delivered to Safety Mate's registered office at the Brisbane Address by Express Post at 1:23pm on 26 March 2019 and by a process server to the same address at 11:50am the same day.

275 For completeness I add that although no substantive argument was directed at s 160 of the Evidence Act 2010 (Vic), it would not relevantly impact the position either, even putting to one side the jurisprudence addressing the interaction between s 160, s 29 of the Acts Interpretation Act, and s 109X of the Act.[99] This is because the deeming provision in s 160 of the Evidence Act 2010 (Vic) does not engage with hand delivery and, further, the four working day postal presumption does not apply where 'evidence sufficient to raise a doubt about the presumption is adduced' - as was the position in the present case regarding the service by Express Post.[100]

276 I also do not accept Safety Mate's alternative contention that, in the alternative to the Eggar Address, upon the proper construction of the Agreement, the address for service for Safety Mate in clause 31.2 is its current place of business, being the Capri Address. That is not what the Agreement says and applying the established principles of construction there is no legitimate basis for so concluding. There has also been no revision to the Agreement to that effect, noting also that clause 21.1 requires any variation to be in writing and signed by or on behalf of the parties. It was also not alleged that a unilateral attempt had been made by Safety Mate to inform ATG of a change of address for the purpose of service of notices under the Agreement.[101]

277 As I have determined, by the terms of clause 31.2, properly construed the parties agreed that service at the addresses specified on the Operative Page will be effective and those provisions do not refer to, implicitly or otherwise, and are not to be construed as specifying, different addresses - whether it be the parties' registered offices from time to time, or one or more of the parties' respective places of business from time to time. However, and as I have also determined, the addresses at which it has been agreed that effective service can be carried out are not exclusive or exhaustive and service can be carried out in other ways, subject of course to establishing that effective service has occurred.

278 Further, even if upon the proper construction of the clause and the Agreement the address for service of Safety Mate referred to in the Agreement was to be construed to be a current address of Safety Mate of some kind (or for that matter ATG),[102] the better view would have been the address of Safety Mate's current registered office and not one or more of its places of business. This would be consistent with Safety Mate's and ATG's approach under the Agreement, as was reflected by them expressly specifying in the opening words of the Operative Page that the addresses there recorded were the parties' respective registered office addresses.[103] It is also a more businesslike interpretation and a meaning that, on the alternative basis that I have stated, a reasonable businessperson in the position of the parties would give to it in that alternative scenario. And even if that were to be so, it would not assist Safety Mate because the Termination Notice was delivered to the registered office Brisbane Address at 11:50am on 26 March 2019 by hand and at 1:23pm on the same day by Express Post.

279 To the extent that Safety Mate pressed a submission that service under the contract ought to be viewed as in some way as importing personal service requirements of the kind mandated in, or analogous to, court rules or other statutes, I do not accept that submission. The Agreement does not do so by reference or otherwise, and the provisions of the Agreement relating to service and notice are to be construed and interpreted by reference to their terms, in the context of the Agreement as a whole, the object and purpose of the Agreement, and by reference to the application of established principles.

280 I do not accept Safety Mate's further alternative contention that if the Bundall Address is the correct address for service, the Termination Notice is deemed by the operation of clause 31.3.4 not to have been received until 9:00am on 29 March 2019, being what is said to be the sixth business day after posting. Upon the proper construction of clause 31.3, the deeming provisions are facilitative and not prescriptive. That is, these deeming provisions will operate to deem service of notices being effective at particular dates but not to the exclusion of establishing that they were in fact effectively served earlier. The language does not mandate otherwise and such a construction is a businesslike interpretation and a meaning that a reasonable businessperson would give it. It serves well the commercial object of the purpose of the service of documents under the Agreement and does not detract from the certainty provided by the deeming provisions if earlier times cannot be established or proved. It also again sits well with the observations made by the Court of Appeal in JPA Finance that I have earlier referred to, and the cases there cited.

281 But even if Safety Mate was correct in its deeming contention regarding the timing of service by Express Post, I have determined that service on Safety Mate by hand delivery of the process server to its registered office at 11:50am on 26 March 2019 was effective in any event, which occurred before the sending of the Extension Letter.

282 I also do not accept that the deeming provision in clause 31.3.1 of the Agreement relevantly assists Safety Mate. It provides that a notice or other communication given in connection with this Agreement is deemed to have been received 'if delivered personally, at the time of delivery ...'. So much is unsurprising. However, it does not operate so as to impose a requirement on the parties to the Agreement to undertake personal service of the kind contemplated by Safety Mate or impose an obligation on (in this case) ATG to serve a notice personally on a director of Safety Mate if a notice is to be served at the address in the Agreement or, for example, at another place where service is effected on Safety Mate. It does no more than express the obvious proposition that where something is delivered personally then the time of service will be deemed to be the time of its delivery.[104]

283 As I have said, the Termination Notice was served validly on Safety Mate under the Agreement before Safety Mate served the Extension Letter and was therefore first in time. Even if that had not been so it would have made no difference because upon the proper construction of the Agreement the Termination Notice would override or 'trump' the Extension Letter.

Whether the Termination Notice is invalid and of no effect by reason of the operation of clause 2.2.2 of the Agreement and the Extension Letter being first in time

284 This issue has already been discussed and addressed in the context of the construction and notice issues dealt with above. Given the previous analysis and discussion above regarding the terms and operation of clause 2.2, the interrelationship between an extension notice being given under clause 2.2.2 and a termination notice being given under clause 2.2.1, and the service of the Termination Notice and the Extension Letter in this case, the position in relation to this issue can be shortly stated.

285 For the reasons earlier stated, upon the proper construction of the Agreement, a termination notice under clause 2.2.1 can be given by one party to the other subsequent to the other party giving the (terminating) party a notice of extension under clause 2.2.2. Provided that the termination notice under clause 2.2.1 is not invalid for some other reason, and it gives no less than the required amount of notice, it will be effective and operate so as to override or 'trump' an extension notice under clause 2.2.2 that was first in time.

286 Even if that had not been so it would not have assisted Safety Mate. This is because, for the reasons discussed earlier, the Termination Notice was served on Safety Mate by ATG before the Extension Letter was served by Safety Mate on ATG. The Termination Notice was first in time.

Whether the Termination Notice and the termination which it sought to effect were invalid by reason of ATG breaching its express Good Faith Obligation in connection with the decision to terminate the Agreement and the giving of the Termination Notice

Introduction - breach of good faith allegations

287 When seeking an interlocutory injunction in this court to enjoin ATG from acting on the Termination Notice, Safety Mate contended that ATG breached its contractual Good Faith Obligation when exercising its right of termination under clause 2.2.1 of the Agreement and that the Termination Notice was therefore invalid and ineffective.[105] At that time it relied upon, among other things, allegations regarding ATG negotiating with and appointing Mayo as its new PSP, the alleged limiting of supply to Safety Mate after the Termination Notice was given, the supply of gloves to Mayo, and allegations that ATG had supplied Mayo with Safety Mate's confidential information.

288 On the material then before the court, Kennedy J was not satisfied that Safety Mate had raised 'any arguable case that the right to terminate was not exercised in good faith', but concluded that there were issues of construction of the Agreement relevant to the Termination Notice that raised a serious question to be tried in any event.[106] For reasons that are not presently germane, the application for an interlocutory injunction was refused.

289 At trial Safety Mate pursued the substance of its breach of good faith allegations (as revised) in support of its damages claim. Given the outcome of the interlocutory injunction application and that which had occurred in the meantime between ATG and Mayo, Safety Mate understandably did not pursue its claims for permanent injunctions or specific performance of the Agreement.

290 By way of overview, Safety Mate ultimately contended that, by reason of one or more of the alleged breaches or 'failures' referred to below, ATG's decision to terminate the Agreement, the Termination Notice, and the termination that it sought to effect, were carried out in breach of ATG's obligation of good faith and therefore invalid.

291 The alleged breaches and 'failures' relied upon by Safety Mate were referred to in the Revised Issues List and set out earlier in these reasons, namely:[107]

(a) ATG breached the Agreement by: providing Mayo with confidential information in breach of clause 16; appointing Mayo as a PSP in breach of clause 4.2.1; refusing to accept the Four Purchase Orders in breach of clause 4.3; and supplying gloves to Mayo in breach of clauses 4.1.1, 4.1.5, 4.1.6 and 4.3 of the Agreement.

(b) ATG was obliged to, but failed to, make any enquiry or reasonable enquiry of Safety Mate as to the truth of, consult in relation to, or provide an opportunity to respond to: alleged problems Safety Mate was creating in the market; the alleged failure by Safety Mate to adopt ATG's preferred model of product marketing; the alleged failure by Safety Mate to act as a true sales partner; and the alleged failure by Safety Mate to provide information and data to ATG in accordance with the Agreement.

(c) ATG was obliged to, but failed to, conduct a review of Safety Mate's market strategy and performance before the end of the Initial Term of the Agreement.

(a) because the Termination Notice and the termination it sought to effect were invalid there was no valid termination of the Agreement;

(b) the Extension Letter operated according to its terms and validly extended the term of the Agreement for a further two years;

(c) ATG's refusal and failure to perform the Agreement after the expiry of the Initial Term for the further two years the subject of the Extension Letter was a wrongful repudiation of the Agreement that had been accepted by Safety Mate; and

(d) Safety Mate was entitled to recover from ATG loss and damage said to have been suffered by it as a result of the loss of the benefit of the Agreement for the further two-year renewal period and the further two-year option period after that.

293 Putting to one side for the moment Safety Mate's alternative damages claim in respect of the Four Purchase Orders,[108] Safety Mate did not make or seek to pursue any separate damages or other claims in respect of any of the alleged breaches and failures referred to above. Rather, the alleged breaches and failures were the acts and omissions said to comprise the relevant conduct constituting the breach of good faith by ATG when exercising its termination right under clause 2.2.1 of the Agreement.

(a) It did not commit any of the alleged breaches of the Agreement.[109]

(b) It was not obliged to take the steps that Safety Mate alleged ATG failed to take, and to the extent that there was any 'failure' to take such steps this did not give rise to any breach of good faith by ATG in exercising its right to terminate the Agreement.

(c) Even if it had been the case that one or more of the breaches were established and/or that there was a relevant failure to take a step or steps of the kind alleged, taken alone or in combination, this did not amount to a breach of ATG's obligation of good faith.

(d) The Termination Notice was valid and effective and the Extension Letter was of no effect.

(e) Safety Mate did not suffer any loss or damage.

295 In the balance of this part of the reasons I address the following. First, I return to the relevant clause, being clause 12.2 of the Agreement. Second, I set out some observations regarding the law relating to contractual obligations of good faith and its application in a commercial contract context. Third, I refer to ATG's and Safety Mate's respective, but closely aligned, formulations of the content of the Good Faith Obligation in clause 12.2 of the Agreement.[110] Fourth, I address and determine Safety Mate's breach of good faith allegations, and in so doing I address each of the alleged breaches and failures in the breach of good faith context. Fifth, I state briefly my conclusion regarding the breach of good faith allegations and the validity of the termination and Termination Notice.[111]

Clause 12.2 of the Agreement - the express good faith obligation

296 I addressed the structure and terms of the Agreement earlier in these reasons.

297 Clause 12 is headed[112] 'WARRANTIES AND INDEMNITIES'. Clause 12.1 is headed 'The PSP's Warranties' and comprises a chapeau (numbered 12.1) and a series of numbered sub-clauses setting out Safety Mate's warranties, representations and undertakings.

298 Clause 12.2 is headed 'ATG's Warranties' and its (not numbered) chapeau states that 'ATG warrants and undertakes that:'

12.2 it shall at all times act in its relations with the PSP in good faith;

299 Although there appears to be an error in the formatting and numbering of the chapeau, it is clear that ATG is warranting and undertaking to Safety Mate that 'it shall at all times act in its relations with the PSP [Safety Mate] in good faith'.

300 ATG accepted, responsibly, that this obligation extended to the exercise by ATG of its rights and powers under the Agreement, including (relevantly) the exercise of ATG's right to terminate the Agreement pursuant to clause 2.2.1 of the Agreement. So much is plain from the terms of clause 12.2 and the Agreement in any event.

301 The expression 'good faith' is not defined in the Agreement, and neither clause 12.2 nor the other clauses of the Agreement set out or seek to describe what is encompassed by the term 'good faith'. This is a matter of construction of the Agreement in accordance with established principles of construction and taking into account the relevant authorities that have dealt with contractual obligations of good faith, which are addressed further below. Of course the good faith obligation in clause 12.2 falls to be construed as part of the Agreement as a whole, which relevantly includes the termination right in clause 2.2.1 - and the termination rights in clauses 14 and 17.3.

302 For completeness, I add that because clause 12.2 of the Agreement contains an express obligation of good faith it is not necessary to consider the extent to which, if any, an analogous or equivalent term or duty is to be implied[113] - noting also that Safety Mate informed the court that it was no longer pressing any allegation regarding the existence of an implied term to similar effect.[114]

Good faith in a commercial contract context and the content of the obligation

303 As the parties observed, the content or ambit of express or implied obligations of good faith in a commercial contract context has been the subject of considerable judicial and academic discussion. Although at times during submissions there were differences in emphasis on the topic by the parties, there was in substance little if anything relevantly in dispute regarding that which had been observed in the well-rehearsed authorities.[115] Attention or emphasis was at times also given to the meaning of acting reasonably in this context, and to the place and influence of a contracting party's right to act in its own legitimate interests. It is therefore convenient and instructive to refer to a number of observations made in the decided cases over time regarding the content and application of a contractual obligation of good faith.[116] Although aspects of some of these observations may seem repetitive of each other,[117] closer examination reveals the consistency with which the courts have spoken over time regarding: the content of the obligation; the importance of the particular facts and contract in question; and the right of contracting parties to act in their own legitimate interests and not subordinate the same to the other party.

304 As others have done, in Alcatel Australia Ltd v Scarcella (Alcatel),[118] reference was made to the following extra-judicial observations of Sir Anthony Mason on the topic of good faith:[119]

In his 1993 Cambridge Lecture, Sir Anthony Mason said that he thought it probable that the "concept of good faith" embraced no less than three related notions:

(1) an obligation on the parties to co-operate in achieving the contractual objects (loyalty to the promise itself);

(2) compliance with honest standards of conduct; and

(3) compliance with standards of contract which are reasonable having regard to the interests of the parties.

305 Both parties at times gave attention to the observations of Finkelstein J in Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd (Pacific Brands),[120] which in part were as follows:

[64] For the purposes of this case it is necessary to find, as I do, that the duty of good faith is an incident (not an ad hoc implied term) of every commercial contract, unless the duty is either excluded expressly or by necessary implication. The duty cannot override any express or unambiguous term which is to a different effect. Further, I presently incline to the view (but not with complete conviction) that the duty is not an independent term of the contract the breach of which would give rise to a remedy, but that it operates as a fetter upon the exercise of the discretions and powers created by the contract, including the power of termination. ...

[65] I appreciate that the standard of conduct imposed by a covenant of good faith is incapable of precise definition. That does not produce an unworkable obligation. There are many instances to be found in the law of contract and elsewhere of obligations that are incapable of clear definition. Reference need only be made to the obligation of reasonableness that pervades so much of our law. Be that as it may, a good starting point in any particular enquiry is to see whether the impugned conduct (in this case a termination) was motivated by bad faith, or was for an ulterior motive or, if it be any different, whether the defendant acted arbitrarily or capriciously. It may also be proper to investigate whether the impugned act was oppressive or unfair in its result. If any of these things can be established then, in all probability, the obligation will be breached and the resultant act (or omission) of no effect.

[66] What then was the reason for the termination of the sub-licence?... It was willing to make life as difficult as possible for Underworks in an endeavour to lead it into a breach of the sub-licence. It was then willing to act on any breach, however trivial. In England such conduct would not be unacceptable. As Professor Goode has said, there the motive for terminating an agreement is irrelevant. Fortunately that view has now been rejected in Australia. Pacific Brands' conduct was reprehensible, being motivated as it was by bad faith and it would be unjust and oppressive to Underworks to permit Pacific Brands to terminate the sub-licence in the circumstances which prevailed.

306 In Esso Australia Resources Pty Ltd v Southern Pacific Petroleum NL (Esso),[121] Buchanan JA said the following regarding the content of an implied contractual obligation of good faith:

[28] The content of an implied contractual duty of good faith has been variously described. In Renard[122] Priestley JA equated good faith with reasonableness. In Garry Rogers[123] Finkelstein J said that an obligation of good faith required a party "not to act capriciously". Breach of the obligation has been described as seeking to prevent the performance of the contract or withholding its benefits[124] and as seeking to further an ulterior purpose or purpose extraneous to that for which a right or power is conferred.[125] In my opinion the provision in the proposed deed of arrangement for the winding up of SPP is not unreasonable, capricious or the pursuit of an ulterior purpose and did not prevent the performance of the contract or deny Esso its benefits.

307 In Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service (Macquarie),[126] Allsop P (as he then was) was dealing with an express contractual term that imposed an obligation of 'utmost good faith' and noted the importance of construing the language of the contract:

[8] The content of the clauses is to be understood and ascertained by construing the language of the parties in the context in which the clauses appear. They are contractual terms to be construed, like any other. Here, the commercial and contractual relationship was envisaged to be (in the transaction documents) for a century. This was also envisaged in the Heads of Agreement, although that contract was preliminary to the formation of others. The performance of the agreements required planning by both parties, consultation among the parties and the expenditure of very large amounts of money upon planning and building work and the operation of a significant hospital in proximity to, and in connection with, a large hospital of the other party. The parties can be seen, by the clauses providing for the utmost good faith, to have required honesty and fair dealing of a high standard to govern their contractual behaviour.

308 In Paciocco v Australia and New Zealand Banking Group Ltd (Paciocco),[127] the content of an obligation of good faith was addressed by Allsop CJ, whilst emphasis was also placed on the parties' rights to act in their own legitimate interests, the importance of the facts and circumstances of each case, and the need to ensure that in any given case that the 'legal norm' is not confused with the question of its factual satisfaction or otherwise:

[288] The usual content of the obligation of good faith that can be extracted from cases such as Renard Constructions; Hughes Bros Pty Ltd v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (1993) 31 NSWLR 91; Burger King Corp v Hungry Jack's Pty Ltd (2001) 69 NSWLR 558; [2001] NSWCA 187; Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349; [1998] NSWSC 483 and United Group Rail Services Ltd is an obligation to act honestly and with a fidelity to the bargain; an obligation not to act dishonestly and not to act to undermine the bargain entered or the substance of the contractual benefit bargained for; and an obligation to act reasonably and with fair dealing having regard to the interests of the parties (which will, inevitably, at times conflict) and to the provisions, aims and purposes of the contract, objectively ascertained.

[289] None of these obligations requires the interests of a contracting party to be subordinated to those of the other. It is good faith or fair dealing between the parties by reference to the bargain and its terms that is called for, be they both commercial parties or business dealing with consumers. As Posner J said in Market Street Associates Ltd Partnership v Frey [1991] USCA7 746; (1991) 941 F.2d 588 the contractual notion of good faith varies in what is required for its satisfaction by reference to the nature of the contract. But the notion is rooted in the bargain and requires behaviour to support it, not undermine it, and not to take advantage of oversight, slips and the like in it. To do so is akin to theft, and if permitted by the law led to over-elaborate contracts, and defensive and mistrustful attitudes among contracting parties...

[290] The standard of fair dealing or reasonableness that is to be expected in any given case must recognise the nature of the contract or relationship, the different interests of the parties and the lack of necessity for parties to subordinate their own interests to those of the counterparty. That a normative standard is introduced by good faith is clear. It will, however, not call for the same acts from all contracting parties in all cases. The legal norm should not be confused with the factual question of its satisfaction. The contractual and factual context (including the nature of the contract or contextual relationship) is vital to understand what, in any case, is required to be done or not done to satisfy the normative standard.

309 The content of an express contractual obligation to act reasonably and in good faith in an agreement for lease fell for consideration by the Court of Appeal in Masters Home Improvement Pty Ltd v North East Solution Pty Ltd (Masters).[128] That content was succinctly and similarly summarised in the last part of the following passage:

(c) Legal principles - Act reasonably and in good faith

[99] The content of the contractual duty to act reasonably and in good faith was not in issue in the appeal. The judge set out the relevant law in respect of the duty, in comprehensive terms, in the Reasons.[129] Woolworths submitted that although the judge accurately set out the relevant legal principles, on a number of occasions the judge misapplied the principles by bifurcating the expression 'reasonably and in good faith.' In essence, Woolworths' submissions reduced to criticisms of many of the judge's findings of fact and his conclusions based on those findings that Woolworths had not acted reasonably and in good faith. Those matters are dealt with in detail below. Before turning to them, it is sufficient for present purposes to note that the contractual duty to act reasonably and in good faith encompasses the basic obligations (a) to act honestly and with fidelity to the bargain; (b) not to undermine the bargain or the substance of the contractual benefit bargained for; and (c) to act reasonably and with fair dealing having regard to the interests of the parties (which will, commonly, at times be in conflict), and to the provisions and objectives of the contract, objectively ascertained.[130] The obligation does not require that a party subordinate its legitimate interests to those of the other party.[131] The content of the obligation is informed by the contractual, commercial and factual context.[132]

310 The decision in Virk Pty Ltd (in liq) v YUM! Restaurants Australia Pty Ltd (Virk)[133] involved an appeal addressing an implied obligation of 'good faith and reasonableness' in franchise agreements, and its application to a franchisor's exercise of discretion to set maximum prices for the sale of pizzas by franchisees. One contention raised in the appeal was that the concept of reasonableness in the good faith context posed an objective question of reasonableness and imposed a duty to take reasonable care in the exercise of contractual rights and powers akin to the tortious duty. The Full Federal Court addressed the content of the obligation and the concept of reasonableness in part as follows:

[163] Her Honour's approach in the context of examining the composite obligation expressed as one of 'good faith and reasonableness' was to consider the reasonableness of Yum's conduct by evaluating Mr Houston's conduct in arriving at his decision to fix the maximum price.

[164] In our opinion, no error has been demonstrated in this approach. Moreover, we would reject the appellant's submission that the notion of reasonableness within the composite phrase is to be viewed distinctly from the obligation of good faith. The obligation, expressed as one of good faith and reasonableness, is to be considered in a composite and interrelated sense. To the extent the consideration is given to whether a party's conduct is reasonable or not, it is directed to the primary component of the obligation, namely of good faith. Reasonableness ... goes to the quality of the conduct, here in exercising the price setting power, to discern whether it was capricious, dishonest, unconscionable, arbitrary or the product of a motive which was antithetical to the object of the contractual power. Conduct attended by any of those qualities could never be said to be in good faith. Consideration of the relevant conduct within these confines informs the question whether or not the power has been exercised in good faith.

[174] It may generally be noted, as Allsop CJ observed in Paciocco at [287], that good faith in the performance of contracts is a good example of the presence of values in the common law. As to the nature of those values, it is again useful to have recourse to Allsop CJ in Paciocco, where, at [292], his Honour observed that good faith is rooted in honest and reasonable fair dealing, citing Macquarie International Health Clinic at [12]-[13]. Kiefel J (as her Honour then was) in Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169 at [104] similarly observed that fairness in dealings as between contracting parties may be understood as an aspect of a duty of good faith. Sir Anthony Mason in his Cambridge Lecture stated that he used "good faith" mainly in the sense of loyalty to the promise itself and as excluding "bad faith behaviour".

[175] Thus viewed, reasonableness is referable to the standard of a party's conduct or behaviour in relation to the performance of a contractual obligation or exercise of a contractual power. It may, for example, include consideration of a party's real intention or purpose in exercising a contractual power. It calls into consideration, for example, whether that conduct is or is not honest, capricious, arbitrary or for an extraneous purpose. This last example may be no more than saying that the conduct was capricious or arbitrary, as Sheller JA observed in Alcatel Australia Ltd v Scarcella [1998] NSWSC 483; (1998) 44 NSWLR 349 at 368. In any event, such an adaption was central to the case mounted by DPL at trial, to which we refer in more detail below. Such characterisations of conduct are ascertained upon the evidence in a particular case and in the context of the particular contract, having regard to acceptable norms of commercial conduct.

[176] There is considerable support for the characterisation of reasonableness that we have outlined in the Australian authorities referred to in these reasons.

[177] In Burger King, the breach of the implied obligation of good faith and reasonableness was by reason of the appellant's use of its contractual discretion under clause 4.1 for a purpose foreign to that for which it was granted. In that case, what was reasonable was ascertained by reference to the terms of the contract.

[178] Importantly, and contrary to the appellant's alternative submission, it may also be seen that 'reasonableness' as an adjunct to an obligation of good faith has never been regarded as a duty to exercise due care and skill or to produce a reasonable outcome.

[179] Thus, the expressions within the composite phrase are necessarily and closely related. Consideration of the reasonableness of a party's conduct will inform the question of whether good faith or its absence has been brought to the performance of the contractual obligation or exercise of the power.

...

[183] However the question whether the 'conduct' of a contracting party is capricious or arbitrary or dishonest or for a purpose foreign to the objective of the contractual obligation or power and thus exhibiting a lack of good faith will instead be adjudicated upon the evidence in a particular case and in the context of the particular contract, having regard to acceptable norms of commercial conduct.

[184] As Allsop P said in _Macquarie International Health Clini_c at [15], in the context of an express obligation of good faith, an objective element of reasonableness in fair dealing is appropriate, "taking its place with honesty and fidelity to the bargain in the furtherance of the contractual objects and purposes of the parties, objectively ascertained".

[185] His Honour, too, in Paciocco at [290] said that it is clear that a normative standard is introduced by good faith but that the legal norm should not be confused with the 'factual question' of its satisfaction and, moreover, that "[t]he contractual and factual context (including the nature of the contract or contextual relationship) is vital to understand what, in any case, is required to be done or not done to satisfy the normative standard".

[186] Thus, particular kinds of unreasonable conduct may be found to exist, upon the evidence, as offending acceptable norms. However, this is not the objective assessment of reasonableness for which the appellant contends, namely involving consideration of whether due care and skill has been brought to bear in the exercise of the discretionary power to fix minimum prices and/or the objective reasonableness of the outcome of that exercise. Such an approach forms no part of an obligation or power, express or implied, of good faith and reasonableness in contract law. To the extent that the appellant pleads this formulation of an 'objective' approach to reasonableness, it is incorrect.

311 When dealing with the content of a contractual obligation of good faith in Trampoline Enterprises Pty Ltd v Fresh Retailing Pty Ltd (Trampoline Enterprises),[134] the Court of Appeal set out the observations of Buchanan JA in Esso (referred to above) and endorsed the observations made in Virk regarding the concept of reasonableness.[135]

312 In Australian Competition and Consumer Commission (ACCC) v Geowash Pty Ltd (Subject to a Deed of Co Arrangement) (No 3) (Geowash),[136] Colvin J helpfully addressed many of the authorities on the topic when considering the content of the express good faith obligation in clause 6 of the Franchising Code of Conduct. After his detailed and careful review of the cases, he summarised the position in the following terms:

Good faith within the meaning of the unwritten law

[746] Having regard to the above authorities which indicate some progression and development in the understanding of what is required by an obligation to act in good faith in a contractual context, I would summarise the current state of the unwritten law as to the meaning of good faith for the purposes of cl 6(1) of the Code in the following terms:

(1) the term 'good faith' imports a normative standard to be observed by the parties in dealings as to matters to which the standard is applied;

(2) the normative standard embraces an obligation to act honestly and with fidelity to the bargain concluded between the parties;

(3) the normative standard also embraces an obligation to act co-operatively in matters related to performance;

(4) the standard does not require a party to subordinate its legitimate interests to those of the counterparty, but it does require due regard to the legitimate interests that both parties have in the performance of the contract they have made;

(5) conduct which is dishonest, capricious, arbitrary or motivated by a purpose which is antithetical to the evident object of any provision of the franchise agreement or the Code that governs the conduct being scrutinised or conduct which is otherwise motivated by bad faith will not meet the standard;

(6) where the scrutinised conduct, viewed in the particular context, is objectively unreasonable then the unreasonableness may form part of the basis for a conclusion that there has been a lack of good faith, but objective unreasonableness is insufficient of itself to amount to a lack of good faith; and

(7) the quality of the scrutinised conduct is to be evaluated having regard to the circumstances of the particular parties, particularly their sophistication, commercial power and the relative significance for each party of the subject matter of the conduct.

ATG's and Safety Mate's good faith formulations

313 In an attempt to expose any real issues between the parties regarding the content (as opposed to factual satisfaction) of the good faith obligation in clause 12.2, at my request Safety Mate provided its good faith formulation, which ATG then considered and annotated. The annotated formulation captured many elements from the decided cases, although Safety Mate's formulation did not elaborate so much regarding the concept of reasonableness, or specifically address the right of a party to act in its own legitimate interests. These matters were addressed in ATG's annotations. The annotated formulation was in the following terms,[137] noting that the underlined parts reflect ATG's annotations to Safety Mate's formulation (including footnotes):

Good faith

1. Is an obligation to act honestly and with a fidelity to the bargain;

2. Is an obligation not to act to undermine the bargain entered or the substance of the contractual benefit bargained for;

3. Is an obligation to act reasonably[138] and with fair dealing having regard to the interests of the parties (which will, inevitably, at times conflict) and to the provisions, aims and purposes of the contract, objectively ascertained;

4. Is an obligation not to act without reasonable[139] justification in a manner where the result would be to substantially nullify the bargained objective or benefit contracted for by the other, or to cause significant harm to the other, contrary to the original purpose and expectation of the parties";

5. Is an obligation not to act capriciously or arbitrarily;

6. Is an obligation not to act for a purpose extraneous to the contract;

7. Is an obligation not to act so as to unreasonably[140] interfere with the enjoyment of a benefit conferred by the express contractual terms so that the enjoyment becomes (or could become) ... "nugatory, worthless or, perhaps, seriously undermined";

8. Is an obligation not to act in a way motivated by bad faith or for an ulterior motive;

BUT: A party will not act in breach of good faith where its action is consistent with promotion of its legitimate interests, that is, those interests consistent with the basis on which the parties may be taken to have entered into the contract.

314 Ultimately there was in substance little difference between the parties on the issue in closing submissions, which was unsurprising given the extensive discussion in the authorities, including that which I have referred to above.[141] That said, and as is apparent from the annotations, ATG placed additional emphasis on the issue of purpose and motive, the right of a party to act consistently with its legitimate interests, and the composite meaning of reasonableness in the good faith context. However, the real issue between the parties was the application of the good faith obligation in clause 12.2 to the facts in question rather than its content in the abstract, as is often the case when dealing with breach of good faith allegations. This 'factual satisfaction' question is addressed in the next part of these reasons.

315 As mentioned, and as is frequently the position with express obligations of good faith in commercial contracts, the Agreement does not seek to set out or describe the content of the clause 12.2 good faith obligation. The issue is therefore one of construction. Having regard to the terms of the Agreement, its object and purpose, the applicable principles of construction, and the above discussion,[142] the content of the obligation of good faith in clause 12.2 is to be seen as carrying with it obligations of the kind and character referred to in the above authorities. This was also substantially consistent with the parties' position, as can be seen from the annotated formulation extracted above.

Consideration and disposition - breach of good faith allegations

316 Having regard to the evidence, the applicable principles, and the submissions of the parties, I do not accept that Safety Mate has established that, in exercising its contractual right to terminate the Agreement pursuant to clause 2.2.1, ATG breached its obligation to act in good faith as required by clause 12.2. Given the other conclusions referred to in these reasons above, Safety Mate's claim that the Termination Notice, and the termination that it sought to effect, were invalid must fail. I am satisfied that, in exercising its power to terminate the Agreement pursuant to clause 2.2.1, ATG did not breach its obligation to act in good faith, that the Termination Notice was valid and effective, and that the Termination Notice operated so as to terminate the Agreement in accordance with its terms on 30 September 2019. I elaborate below regarding my reasons.

317 Before addressing the particular acts and omissions of ATG alleged by Safety Mate to have constituted the breach of good faith by ATG in the exercise of its right to terminate the Agreement, and at the risk of some repetition, it is convenient first to briefly outline again some, but not all, of the factual context and timeline relevant to the termination decision and the serving of the Termination Notice, most of which has been referred to earlier in these reasons. Relevant matters in this context include (but are not limited to)[143] the following:

(a) ATG and Safety Mate are and were at all relevant times experienced commercial entities who were parties to a commercial distribution agreement, being the Agreement.

(b) The people involved on each side were experienced businesspeople.

(c) Although ATG and Safety Mate were parties to the 2012 distribution agreement,[144] the term of that agreement was expiring in circumstances where each party was free to go their separate way if no new agreement was reached between them.

(d) The evidence established that at the time of, and during the extended negotiations for, the new Agreement, and for some period before, the relationship between ATG and Safety Mate was at least strained and challenged in various ways. Differences and tensions over time in the relationship included, for example, those relating to: ATG's desired approach to the market through its focus on channel partners and Safety Mate's differences of view in relation to the same; the role of Mr Sheerin; ATG's desire that Safety Mate expand its product lines; ATG's view regarding Safety Mate being adversarial; a lack of trust; ATG's position in relation to distribution in Japan; costs, expenses and other amounts being sought by Safety Mate connected with its failure to secure Japan as a territory; Safety Mate's desire for, and unsuccessful attempts to achieve, a 10-year, or 5-plus-5-year term for the proposed new agreement; various terms proposed by ATG for the new Agreement; issues between Mr Sheerin and Mr Roberson; the limited proposed two-year Initial Term under the Agreement and ATG's refusal to provide a longer term; the introduction of KPIs into the Agreement when they had not been included in the previous agreement; Safety Mate's perception and expressed disdain about ATG trying to run a PSP's business and 'inject' its country manager into a PSP's business which it considered 'is not on'; a dislike and distrust of Mr Sheerin; Mr Browning's concern about Mr Sheerin's exclusion and treatment by Safety Mate; Safety Mate's concern about Mr Browning's support of Mr Sheerin and his insistence that Mr Sheerin be included; and the extent of the involvement of Mr Sheerin in the negotiations and the process leading to the entry into the Agreement.

(e) As part of its approach to distribution around the world ATG desired to have positive, close, open and strong working relationships with its PSPs. At times this was expressed by ATG as the relationship needing to have qualities akin to a 'partnership'[145] and by reference to the fact that there were things more important than money or figures.[146] Other language used to describe the desired nature of the relationship was 'a true sales partner'. Mr Sheerin shared the view that there was '... more to a partnership than just the ability to generate sales' and that this was a key reason why he believed ATG and Mayo would work well together.[147]

(f) ATG was aware of and concerned about the strained and challenged nature of the relationship at the time of the negotiations, before then, and at the time of entry into the Agreement in October 2017. It was apparent from the direct evidence, and could be inferred from the communications relating to the negotiation of the Agreement in any event, that ATG wanted and hoped for change and an improved and better commercial relationship with Safety Mate as its PSP for the Territory. As Mr Browning said, from ATG's perspective, things needed to change.

(g) The terms of the Agreement provided for a fixed Initial Term of two years, with two further options, each of two years. Importantly, each of ATG and Safety Mate had a contractual right to terminate the Agreement at the end of the Initial Term by giving not less than six months' written notice to the other, with such notice to expire on the expiry of the Initial Term. In effect, and as each of the parties described it during the hearing, this 'no cause' termination right allowed either party to terminate the Agreement without cause at the end of the Initial Term.

(h) In contrast to aspects of the 'termination for cause' provisions in clause 14, the termination right of each of the parties in clause 2.2.1 was not subject to any other pre-conditions, process, or machinery provisions requiring prior steps to be taken in advance of giving notice of termination pursuant to clause 2.2.1. This operated equally and for the benefit of both parties.[148]

(i) Email communications and the other evidence revealed that the relationship between ATG and Safety Mate remained, at least, strained and challenged after the Agreement was entered into and that the issues that remained, included, for example: ongoing differences of view between ATG and Safety Mate regarding the approach to market and ATG's level of desired focus on channel partners; an ongoing strained and difficult relationship with ATG's now longstanding country manager, Mr Sheerin; ATG's concern about how it understood Safety Mate was approaching the market; ATG's view regarding Safety Mate being adversarial; a lack of trust; issues between Mr Roberson and Mr Sheerin, and Mr Tee's involvement in the same; lingering issues in relation to Japan compensation; and the extent to which ATG wanted to engage with aspects of Safety Mate's activities or business, including with channel partners.

(j) On any view of the evidence, the relationship between Safety Mate and ATG before and after the entry into the Agreement and prior to termination was not the positive, open, close and effective working relationship that ATG desired to have with its PSPs. The evidence established that it was far from a relationship of that character and that it was and remained at least strained and challenged. A review of the full run of communications in evidence, both internal and external to the parties, and the oral evidence,[149] demonstrated that to be so. It is also evidence from which the same position can be inferred had it not been so demonstrated. I note in passing that some aspects of the approach to ATG addressed between Mr Tee and Mr Temperton (and revealed in the internal emails passing between them) provided some colourful examples of the strained relationship, including, for example: the exchange during negotiations in which Mr Tee raised the suggestion of paying 'lip service' to ATG's position regarding its preferred market approach; the proposal to bring 'the war' to Mr Sheerin after the Agreement was finalised; and the reference to Mr Temperton having observed a number of times that Mr Sheerin was a 'dangerous animal', which was a view Mr Tee shared. However, even if such colourful examples are put to one side, the position remains the same. For completeness, I add that the fact that the review meetings occurred as they did and KPIs were generally shown as being 'met' does not detract from this conclusion regarding the nature of the relationship, or that which is expressed in the previous paragraphs when considered in the context of all of the evidence regarding the relationship between the parties.

(k) During the Initial Term there had been regular quarterly review meetings between ATG and Safety Mate. Safety Mate generally 'met' but did not 'exceed' the KPIs, which was reflected in the KPI Scorecards.

(l) The possibility of terminating the Agreement arose between Mr Browning and Mr Sheerin in late 2018. This did not occur immediately and it was apparent that it was being further considered by Mr Sheerin and Mr Browning, and that legal advice was sought and obtained by ATG. Mr Sheerin ascertained that the Agreement could be terminated if notice was given by 31 March 2019, which he supported doing. He remained not satisfied with Safety Mate's approach to its dealings with ATG, which he regarded as secretive and adversarial and generally difficult, also being of the view that the relationship was not one of a 'true sales partner'.

(m) Mr Sheerin had been earlier tasked by Mr Browning with identifying a distributor who could replace Safety Mate if the Agreement was terminated and Mr Sheerin identified Mayo, as earlier referred to. The position of Mayo and its dealings and communications with ATG upon which Safety Mate relies in support of its breach of good faith allegations, are addressed in detail further below - including the sharing of information with Mayo, selecting it as the new PSP, and supplying gloves to it so as to enable it to commence operating as PSP from 1 October 2019.

(n) Mr Browning did not have the authority to make the decision to terminate Safety Mate and the issue was addressed at a meeting of three ATG directors in February 2019, being Mr Abdeen the Managing Director, Mr Taylor and Mr Goth. Mr Browning and Mr Sheerin held the view that the Agreement should end. Mr Browning considered that the relationship was poor, that it lacked collaboration, and that there seemed to be a barrier between ATG's view and approach and Safety Mate's view that could not be overcome.

(o) The ATG directors accepted the recommendation to terminate Safety Mate as the PSP for the Territory with effect from the end of the Initial Term and to appoint Mayo in its place. Mr Browning tasked Mr Sheerin with implementing the termination decision, which he did in the manner referred to in the evidence and outlined earlier in these reasons.

(p) The Termination Notice was prepared and provided to Safety Mate on 25, 26, and 27 March 2019 by the various methods earlier referred to.

(q) Safety Mate was not given advance notice of the proposed termination and alleges that the failure to consult it involved a breach of ATG's obligation of good faith in the exercise of its termination right. This is further addressed later in this section of the reasons.

(r) The Extension Letter was sent to ATG by facsimile at 2:23pm on 26 March 2019.

(s) Preparations for Mayo to take over as the PSP for the Territory from 1 October 2019 continued between Mayo and ATG, as in part is outlined in the Background and factual matters section above.

(t) Because the goods the subject of the Four Purchase Orders were to arrive in Australia on and after the Termination Date, ATG refused to accept them.

(u) Safety Mate ceased operating as the PSP for the Territory on 30 September 2019 and Mayo commenced operating as PSP from 1 October 2019.

318 The decision to terminate the Agreement came about in the manner and circumstances outlined earlier in these reasons. It was apparent that Mr Browning and Mr Sheerin each held the view that the relationship between ATG and Safety Mate was strained and challenged, that Safety Mate was difficult to deal with, and that there remained material differences between ATG and Safety Mate regarding ATG's desired approach to the market. I accept that these views were genuinely held by each of Mr Browning and Mr Sheerin - noting also that the evidence established that the relationship was at least strained and challenged and that there remained material differences between ATG and Safety Mate regarding ATG's desired approach to the market. I also accept, as the evidence established, that each of Mr Browning and Mr Sheerin genuinely considered that Mayo would be a good replacement, more collaborative, and a better overall partner than Safety Mate. This was based upon aspects of Mr Sheerin's industry knowledge and experience, some background work he had done, and his communications with Mayo regarding the prospect of being appointed.

319 Mr Sheerin and Mr Browning were each cross-examined regarding aspects of the decision to recommend termination and appoint Mayo. Neither this cross-examination nor any other evidence detracted in any material way from the existence of the genuinely held views of Mr Browning and Mr Sheerin about the strained state of the relationship with Safety Mate, the termination of the Agreement, and the commercial desirability of the appointment of Mayo in place of Safety Mate.

320 Mr Abdeen, Mr Goth and Mr Taylor were the directors who had the authority to decide to terminate the Agreement and were the directors to whom the recommendation was made. The issue was discussed with Mr Browning who conveyed his view, and that of Mr Sheerin, that they believed ATG should end the Agreement as it was considered that there was no real relationship or collaboration and that there seemed to be a barrier between ATG's views and approach and that of Safety Mate. Mr Browning also conveyed his and Mr Sheerin's view that Mayo would be a suitable replacement and that it was considered that Mayo would be more collaborative, a better overall partner, and more professional than Safety Mate.

321 Mr Abdeen, who was the managing director, was a witness for ATG. As mentioned earlier, his evidence in chief addressed various matters regarding ATG's background, its products, and the manufacturing, supply and shipping process. He was not cross-examined at all - whether about the termination decision, what the directors were told by Mr Browning, the absence of minutes or other records,[150] or any other matter.

322 As will be seen from the discussion that follows on the good faith issue in this section of the reasons, no ulterior or improper motive or purpose emerged from the evidence and it was apparent that the position taken by ATG was seen by Mr Browning and Mr Sheerin[151] to be a genuine and rational commercial decision in the circumstances, which the evidence also demonstrated to be so. The evidence did not show or suggest that the decision was dishonest, capricious, arbitrary, or unreasonable - or even that it was hastily reached. It was also apparent[152] that ATG genuinely and reasonably considered that it was entitled to terminate the Agreement pursuant to clause 2.2.1. Safety Mate has not established that the exercise of the right to terminate the Agreement was exercised in breach of ATG's obligation to act in good faith. On the contrary, the evidence established that ATG was exercising a contractual right in what it genuinely and honestly considered to be its legitimate commercial interests, as it was entitled to do. In so acting ATG was acting in accordance with the terms of the Agreement. It was not acting for a purpose extraneous to the contract, acting in a way that substantially nullified the bargained for objective or benefit, acting oppressively, or acting in a way that otherwise reflected any of the hallmarks of an absence of good faith.

323 As I have said, I have concluded that the matters sought to be relied upon by Safety Mate[153] as establishing or demonstrating a failure by ATG to act in good faith in connection with the exercise of its right to terminate the Agreement do not lead to such a result. I elaborate in relation to these matters below.

Alleged provision of confidential information to Mayo - clause 16 of the Agreement

324 Confidential Information is defined in the Agreement in the manner referred to earlier, and clause 16 of the Agreement addresses confidentiality and is in the terms earlier set out. The definition is broad, but clumsy. Safety Mate contended that ATG breached its confidentiality obligations in that clause by providing confidential information of Safety Mate to Mayo. The alleged confidential information was said to be contained in documents provided to Mayo, namely, a PowerPoint presentation (PowerPoint), a pro forma invoice dated 31 October 2018 (October Pro Forma), an Excel spreadsheet headed '2018 cal year - shipping volume.xlsx' (previously defined as the Volume Spreadsheet), and an Excel spreadsheet headed 'Initial Stock Profile.xlsx' (previously defined as the Profile Spreadsheet), (the spreadsheets collectively, Excel Spreadsheets). The particular items of alleged confidential information in question were identified in more detail in a 'Table of Confidential Information' (Information Table) prepared by Safety Mate and responded to by ATG, which is substantially reproduced as an Annexure A to these reasons.[154]

325 Among other things, clause 16.2.2 of the Agreement permitted a party to disclose Confidential Information to any 'customers or prospective customers' provided those persons were made aware of the obligations under clause 16 and 'a binding undertaking as to confidentiality' was obtained from such persons. It will also be recalled that ATG had required Mayo to sign a confidentiality deed, which occurred on 11 February 2019[155] and that by his email of 11 February 2019 Mayo's Mr Thame confirmed that all of the team involved would be bound by the deed. ATG contended that if any confidential information was conveyed, it was permitted by clause 16.2 given that ATG had ensured that Mayo signed a confidentiality deed.

326 Safety Mate contended that the disclosure of the alleged confidential information to Mayo constituted a breach by ATG of its obligation of good faith in the exercise of the termination right in clause 2.2.1, which meant that termination and the Termination Notice were invalid.

327 It was not in dispute that the documents referred to were provided to Mayo, which was established on the evidence in any event. The PowerPoint was shown to Mayo on 13 February 2019. The October Pro Forma was sent to Mayo by email on 15 March 2019 and the Excel Spreadsheets were sent by email on 17 April 2019. The circumstances in which the documents were sent to or seen by Mayo are referred to in part in the 'Background and factual matters' section above.

328 Although Safety Mate contended that it could be inferred that the Volume Spreadsheet and the Profile Spreadsheet were provided to Mayo prior to the decision being made to terminate Safety Mate, I do not accept that submission. It was not established on the evidence, and no such inferences to that effect can be or should be drawn. Even if they had been, no different result would follow.

329 The reference in the 17 April 2019 email to the Volume Spreadsheet having been 'previously sent' to Mayo does establish that it had been sent previously but does not establish when. Mr Sheerin could not recall when it was sent, and the information suggesting the possible initial creation of the document on 6 February 2019 does not speak to when it was completed or when it may have been provided to Mayo. There was also no expert or other evidence sought to be led by Safety Mate regarding its date of creation - or the date of creation of the Profile Spreadsheet. Whilst some limited information common to the Volume Spreadsheet appears to be referred to in the PowerPoint, the presentation and other emails relating to the PowerPoint do not refer to the Volume Spreadsheet. Mr Sheerin also volunteered in cross-examination that extracts of the data may have been used or referred to at the meeting with Mayo on 13 February 2019. Mr Sheerin also explained that the numbers would come from a database in any event. Mr Sheerin also explained that the document contained the sort of information he 'tracked and kept regardless', also stating that he was not able to say when it was created. When the Volume Spreadsheet was first sent was not established and the contention that it is to be inferred that it was sent before the termination decision was made in February 2019 involves too much speculation.

330 The end result is the same regarding the Profile Spreadsheet, although the position involves even more speculation given that there was no reference in the documents or other evidence stating that this spreadsheet had been previously provided to Mayo. It also appeared to be a document created by another person, and Mr Sheerin explained that it was generated from a spreadsheet he received from another ATG employee, 'Namarle, monthly, regularly'. The position does not change even if it is assumed to have been a document created in whole or in part in November 2018, which was not established on the evidence in any event. Further, the terms of the email of 17 April 2019 are consistent with the Profile Spreadsheet having been provided at that time and having been examined at that point. Mr Sheerin also said that it looked to be the case that the email followed an earlier conversation that day. It is just too speculative to infer that either of the Excel Spreadsheets were provided to Mayo prior to the termination decision being made - or even the Termination Notice being prepared and despatched on 21 March 2019. As I have said, it was not established on the evidence and it is not open to infer that it occurred.

331 For completeness I add that I do not accept that the attacks on Mr Sheerin's credit or the course of the discovery process in the proceedings assist Safety Mate in its contentions regarding these inferences. I have earlier addressed Mr Sheerin's position as a witness and the falling flat of Safety Mate's discovery and redaction related strong credit attack. I also observe that his evidence given in cross-examination regarding the documents and their contents was given directly and responsively and that he naturally and openly acknowledged that certain information was information of Safety Mate. He also volunteered that he had given his 'Mayo folder' to ATG's lawyers. But even if there had been greater force in the submissions regarding Mr Sheerin's credit in this context, it would still be the case that neither of the inferences suggested about the time at which the Excel Spreadsheets were provided to Mayo should be drawn as it would involve too much impermissible speculation.

332 That said, even if such inferences could have been drawn it would make no difference. This is because, as is discussed below, any disclosure of confidential information of the kind sought to be relied upon does not, whether alone or in combination with any other circumstances, give rise to or constitute a breach of good faith by ATG in the exercise of its right of termination under clause 2.2.1 of the Agreement.

333 Although there were contested issues regarding, among other things: whether various aspects of the information referred to in the Information Table were captured by the broad but somewhat poorly drafted definition of 'Confidential Information'; whether much of the information was ATG's own information; whether Safety Mate's claims of misuse of information were exaggerated; and whether ATG was permitted to disclose the information under clause 16.2.2, it is not necessary to determine these issues. Much of the detail of the issues is apparent from the Information Table comprising Annexure A to these reasons. It is not necessary to determine these issues because even if what is alleged by Safety Mate to be captured by the definition of Confidential Information is assumed to be correct, and it is assumed that disclosure of the information breached clause 16 of the Agreement, it does not give rise to a breach of good faith by ATG in the exercise of the termination right under clause 2.2.1 that would invalidate the termination decision or the Termination Notice.[156]

334 I now elaborate as to why the disclosures of information do not assist Safety Mate with its invalid termination contentions even if it is assumed that they involved disclosure of Confidential Information to Mayo in breach of clause 16 as alleged. In so doing I address the various submissions raised by Safety Mate in support of its breach of good faith arguments in this context.

335 The decision to terminate came about and the Termination Notice was issued in the circumstances earlier referred to. It involved the exercise by ATG of an express contractual termination right that each of ATG and Safety Mate had the right to exercise. That right was exercised by ATG against the backdrop that I have earlier described and in circumstances where it was exercised on the basis of honestly and, genuinely held views regarding the commercial relationship between the parties. It has not been shown to have been exercised for a motive or purpose antithetical to the Agreement or to have been exercised arbitrarily, capriciously, unfairly, oppressively or unreasonably.

336 The essential point is this: even assuming that ATG disclosed 'Confidential Information' to Mayo in breach of clause 16 in the way that was alleged, it does not relevantly impugn ATG's decision to terminate the Agreement, the exercise of its contractual right pursuant to clause 2.2.1, or the Termination Notice. Whilst such disclosure would, on the assumptions made, be a breach of clause 16.1, it does not in the circumstances establish that ATG breached its good faith obligation in the exercise of its power to decide to terminate the Agreement. This remains the case even if by so acting it is assumed that such disclosure would also constitute a separate breach of the good faith obligation in clause 12.2. This does no injustice to Safety Mate because it would have been open to Safety Mate to pursue, for example, separate claims for the relevant breaches of contract, including claims for damages, if any damage was suffered by reason of such breaches. That course was not taken, no doubt responsibly by counsel and solicitors for Safety Mate, and these observations do not imply any criticism of that course. However, the assumed breach of clause 16.1 in the present circumstances cannot be fashioned or reshaped into a breach of good faith by ATG in the exercise of its contractual right to exercise the reciprocal power to terminate the Agreement pursuant to clause 2.2.1 so as to impugn or invalidate that termination.

337 It is also to be noted in this context that, as I have found, with the exception of the PowerPoint shown to Mayo at the meeting on 13 February 2019, the other documents relied upon were not provided until after the termination decision was made and Mr Sheerin was directed to implement it. The Pro Forma was sent later on 15 March 2019 and the Excel Spreadsheets on 17 April 2019. The time line also reveals that the decision to recommend termination had been under consideration and decided by Mr Browning and Mr Sheerin before that, and that the issue was first addressed at the meeting in September 2018. Some further steps were then taken and in about January 2019 Mr Browning and Mr Sheerin had reached a landing on the issue and decided to recommend termination to the directors. This was before any of the documents in question were provided to Mayo - although for the reasons mentioned above the position would not be any different in the present circumstances even if that had not been so and the landing had not been reached until after that.

338 I do not accept Safety Mate's submission in this context that ATG's actions in terminating the Agreement were not consistent with the promotion of its legitimate interests. The circumstances I have outlined earlier and the conclusions reached demonstrate the contrary. It was in ATG's permissible legitimate interests to exercise its express contractual right to terminate the Agreement without cause in the circumstances, which included the existence of an ongoing challenged relationship with its PSP, Safety Mate. Whilst on the assumptions I have made above that would, of course, not excuse ATG's breach of its other contractual obligations under the Agreement, it does not in this case mean that a breach of the confidentiality provisions by disclosure of documents in the circumstances alleged gives rise to a breach of good faith by ATG in the exercise of its contractual termination right.[157]

339 To the extent that Safety Mate pressed a contention that the breach of clause 16 brought about the termination because it facilitated the appointment of Mayo, I do not accept that submission - or that it is of assistance to Safety Mate in any event. The background to the termination has been rehearsed above and the reasons for termination emerged much earlier, as the timeline referred to well illustrates. It is unsurprising that ATG wanted to have identified a suitable replacement for Safety Mate before the Agreement was terminated, which it did in Mayo. That identification occurred before any of the information was provided to Mayo and the evidence revealed that Mayo was very interested in the opportunity from the outset, and that it had strong market knowledge and connections. Mr Mayo's affidavit also recorded that the Mayo executive decided to proceed the day after the 13 February 2019 meeting, which was 14 February 2019. It was not established that if some or all of the information shared had not been provided to Mayo the termination would not have occurred or that Mayo would not have taken up the opportunity. But even if that had not been so, given the circumstances of this case leading to the decision to terminate the Agreement it would not have made any difference to the result. This is because it would still not amount to a failure to exercise good faith in ATG's decision to exercise its contractual right to terminate the Agreement with effect from the end of the two-year Initial Term.

340 To the extent that Safety Mate contended that its position was aided by a principle that a party should not be able to take advantage of its own wrong, it is not relevantly assisted by this contention in the present context. It is not a case where ATG's position or conduct brought about the right to terminate the Agreement or anything similar to it. The ability to terminate arose through the existence of the agreed express contractual right to terminate the Agreement without cause pursuant to clause 2.2.1 - which was a right available to both parties. It is also not a case where Safety Mate's reference to the 'springboard doctrine' and the decision of Ryan J in RLA Polymers Pty Ltd v Nexus Adhesives Pty Ltd[158] can assist. To elaborate a little, that case involved a breach of confidence claim relating to the alleged use of confidential information regarding the formula and production methods of certain adhesives and was dealing with materially different circumstances and issues. It was also not addressing the exercise of a contractual termination power or any relationship between acting in good faith, the exercise of a contractual power of termination, and the disclosure of confidential information. Again it is to be remembered that, no doubt for sound reasons, Safety Mate did not bring any separate breach of contract claim or claim in equity seeking damages or other relief in relation to the alleged breach of confidence. This of course is not to cast any shadow over the doctrine, although it does underscore the importance of having a sharp focus on the circumstances of each case.

341 Given the above and the absence of any separate claim in relation to the alleged disclosure of confidential information it is not necessary to determine the contested issues as to whether the information in question was 'Confidential Information' or whether ATG was entitled to disclose it pursuant to clause 16.2 of the Agreement by reason of, among other things, the execution of the confidentiality deed.

Appointment of Mayo - clause 4.2.1 of the Agreement

342 Safety Mate's contentions regarding the appointment of Mayo by ATG during the 'Term' of the Agreement being a breach of clause 4.2.1 of the Agreement do not assist it with its invalid termination contentions based on the alleged breach of good faith. Taken alone or in combination with any other circumstance it does not establish that ATG failed to act in good faith in the exercise of is termination right under clause 2.2.1 of the Agreement.

343 Although there was no signed distribution agreement between Mayo and ATG it was established, and ultimately accepted by ATG, that Mayo was appointed by ATG as the new PSP to replace Safety Mate. Senior counsel for ATG acknowledged that this appointment can be taken to be inferred by no later than when the first order was placed by Mayo, which was 1 May 2019. Whatever be the precise date of appointment, which need not be determined, it was common ground between the parties that it was before the end of the Initial Term of the Agreement, and therefore before the end of the 'Term' of the Agreement, even though the evidence referred to the fact that no agreement was to be signed until on or after 1 October 2019, which at the time of trial had not been signed.

344 By the terms of clause 4.2.1 ATG undertook and agreed not to appoint any other person, firm, or Company in the Territory as an agent or distributor for the Products. Clause 4 of the Agreement dealt with, among other things ATG's covenants and duties. Clause 4.2 provided, relevantly, that ATG shall not during the term of this Agreement engage in any of the following:

4.2.1 appoint any other person, firm, or company in the territory as an agent or distributor for the products ...

345 Safety Mate contended that by appointing Mayo as a PSP for the Territory ATG breached both clause 4.2.1 and clause 12.2. It submitted that when considered alone or with the other acts and omissions raised, it demonstrated a significant departure from the terms of the Agreement in a manner that was oppressive, capricious, unfair and contrary to fair and reasonable commercial dealing thereby rendering the termination decision and the termination invalid. It is sufficient to mention the following reasons why these submissions cannot be accepted.

346 First, I do not accept that, upon its proper construction, clause 4.2.1 operates in the literal way asserted. Applying the established principles of construction earlier referred to, upon its proper construction it operates to prevent ATG appointing an agent or distributor for the 'Term' - which is defined to mean 'the Initial Term or any continuation of the Agreement in accordance with clause 2.2 and until the Agreement is terminated by the parties'. That is the meaning that a reasonable businessperson in the circumstances would give it and it well serves the object and purpose of the Agreement.

347 To so construe the Agreement does not interfere with the exclusive distribution right that Safety Mate has for the Initial Term (or any extensions) and it also allows for the commercial reality that when there is to be a change of PSP it is necessary for various matters to have been attended to in advance, including the identification and appointment of the new PSP for the period after the end of the Term. It also sits comfortably with the other provisions of the Agreement, including the entitlement to give six months' notice of termination, and does not adversely impact Safety Mate's rights and benefits under the Agreement during its Term.

348 Second, it was clear on the evidence that ATG was not seeking to appoint, or appointing Mayo for any part of the Initial Term. Rather, it was always the case that Mayo's appointment was to be in respect of a period commencing on 1 October 2019, the day after the end of Safety Mate's two-year Initial Term - which is what occurred. The fact that some preparatory steps were taken prior to the end of the Initial Term so as to ensure that the new PSP would be in a position to proceed from 1 October 2019 did not mean that Mayo was appointed as the PSP in respect of any period earlier than 1 October 2019. The evidence was clear about this, and also revealed that Mayo was cognisant of the position as, for example, the email to Mayo staff from Ms Mayo that was referred to in her affidavit relied on by Safety Mate demonstrated.

349 Third, although the directors had resolved to appoint Mayo in place of Safety Mate after the end of the Initial Term, the appointment did not occur at that time. As earlier addressed, various other steps were taken in anticipation of that appointment, but it did not occur unilaterally on the making of the decision by the directors - in the same way that the termination did not occur on the making of the decision by the directors to terminate the Agreement.

350 Fourth, to the extent that Safety Mate pressed a contention raised during opening that ATG could not even begin the process of selecting a replacement PSP until 1 October 2019, I do not accept that submission. The Agreement does not so provide, and to construe the Agreement in this way would, in my view, give rise to a commercially absurd position. Even if that were not so, it is not a meaning that a reasonable businessperson in the position of the parties would give it. This is because it would almost inevitably lead to, or at least risk creating, a material lacuna or hiatus between PSPs given the time that would need to be taken to identify and select a new PSP and have them in a position to take over at the end of the Term of an existing PSP. As ATG submitted, such a notion is, in my view, disconnected from commercial reality.

351 Fifth, having regard to the proper construction of clause 4.2.1, ATG did not breach the Agreement by appointing Mayo as its PSP for the period commencing after the end of the Initial Term. It was also not a breach of the good faith obligation in clause 12.2 in its own right. It is not and was not an act that carries any of the hallmarks sufficient to so characterise it. It was not dishonest, capricious, arbitrary, unfair, unreasonable in the relevant sense, or oppressive. It also did not materially nullify the benefit bargained for, remembering again that the Agreement provided an express termination right to both parties to terminate the contract without cause at the end of the Initial Term by giving at least six months' notice.

352 Sixth, even if clause 4.2.1 were to be construed in the manner contended for by Safety Mate, it would not make any relevant difference. This is because a breach of clause 4.2.1 by appointing a new PSP prospectively prior to the end of the Term, but only in respect of the period after the Term, would not, whether considered alone or in any other combination of the circumstances, establish a breach of good faith in the exercise of ATG's contractual right to terminate the Agreement. I refer in this regard to the observations earlier made regarding the background and events leading to the decision to terminate and the termination. The position would remain that the exercise of that power was not dishonest, capricious, arbitrary, unfair, unreasonable in the relevant sense, or oppressive and it would not bear other hallmarks of an absence of good faith. It also would not materially nullify the benefit bargained for. It would remain the position that Safety Mate would be ATG's PSP for the Territory during the Term.

353 The evidence also demonstrated that it was never contemplated that Mayo would be permitted to act as the PSP in the Territory prior to the end of the Term. Mayo was only to operate as the exclusive PSP in the Territory from the end of Safety Mate's Initial Term and did not in fact act as the PSP for the Territory until 1 October 2019.

354 To the extent that the contention that the termination date selected was arbitrary was pressed, I do not accept it. The date was mandated by the express terms of clause 2.2.1 of the Agreement.

355 For completeness I note again in the context of this allegation that Safety Mate has not sought to pursue any separate claim for damages or other relief in respect of the alleged breach of clause 4.2.1 in its own right, or any distinct claim for a breach of clause 12.2 in this context that is separate to its invalid termination contention. As for other observations of this kind, this conveys no implied criticism of the decision-makers, inferring as I do that it is no doubt a reflection of responsible decision making by those advising.

Failure to supply the Four Purchase Orders - clauses 4.1.1 and 4.3 of the Agreement

356 Safety Mate contended that ATG's failure to supply gloves the subject of the Four Purchase Orders was a further act on the part of ATG that supported its case that the exercise of the termination power in clause 2.2.1 of the Agreement was in breach of ATG's obligation of good faith. In this context it was said that the failure to supply breached clauses 4.1.1, 4.2.2 and 4.3 of the Agreement. A separate but alternative claim for damages in the alternative to Safety Mate's primary claim was brought in respect of these alleged breaches. The issue of loss and damage is addressed later below.

357 The relevant non-supply facts were not in dispute and are referred to in the background section above. The ordering, manufacturing and supply process was as described earlier, and involved the material time lag between ordering and loading on a ship, followed by the additional shipping time and the time required for clearing customs and transport to Safety Mate's warehouse after arrival at the destination port.

358 In a letter from ATG's solicitors on 3 May 2019 ATG informed Safety Mate, among other things, that the parties were aware that ATG had terminated the distribution agreement between the parties meaning that it would come to an end on 30 September 2019. The letter stated that the solicitors were instructed to advise Safety Mate regarding various matters relevant to the period between 3 May and 30 September 2019, and the period on and from 1 October 2019. Relevantly for present purposes, the 3 May 2019 letter stated that the final product order that ATG would supply to Safety Mate would be in the July 2019 production run, and that Safety Mate was well aware of the lead time in production and subsequent supply and would therefore understand why the date had been chosen. The letter also stated that ATG expected that it would exercise the option in clause 15.2.1 to purchase all remaining Safety Mate stock on hand at the end of the Initial Term. By its solicitors' letter of 1 October 2019 ATG informed Safety Mate that it was giving notice that '... ATG hereby exercises the option conferred on it by clause 15.2.1 ... by this letter ...'.

359 Safety Mate's specified requested arrival date in each of the Four Purchase Orders was on or after the Termination Date of 30 September 2019. Purchase orders 964 (sent 29 May 2019) and 965 (sent 3 June 2019[159]) had a requested arrival date of 30 September 2019, and purchase orders 974 (sent 3 July 2019[160]) and 980 (sent 3 July 2019) had a requested arrival date of 31 October 2019. It was also established that even if stock had arrived in Australia on 30 September 2019 it then needed to be forwarded to Safety Mate's warehouse, with Mr Tee's evidence suggesting that it would not have been available to Safety Mate for about another week.

360 Mayo was to commence operating as the new PSP for the Territory from 1 October 2019. Mayo placed its first order for goods on 1 May 2019, and further monthly orders thereafter.

361 As to the issue of good faith in connection with these alleged breaches, Safety Mate acknowledged that because they occurred after termination they were not in and of themselves contraventions that impacted upon the determination of the Agreement. It was submitted, however, that this conduct and these breaches formed part of ATG's broader plan and were relevant to determining whether the exercise of the termination power was done in good faith. Safety Mate contended that it was not, and that these actions of non-supply were all part of the same continuous process of breaching the Agreement with the purpose of removing Safety Mate and appointing Mayo. It was said that the breaches form part of a purpose extraneous to the Agreement, being to give ATG the ability to appoint Mayo and terminate Safety Mate.

362 ATG submitted that the supply obligation in clause 4.3 of the Agreement imposed no more than a reasonable endeavours obligation, and that this was subject to a further caveat that such endeavours were only required to the extent that the orders did not exceed the PSP's forecast requirements under clause 5.2 of the Agreement. Clause 5.2 required the PSP to place orders with ATG in accordance with the Sales Targets for products to be purchased for that year as set out in Schedule 3 of the Agreement. ATG submitted that, upon the proper construction of the Agreement, ATG could not be required to supply gloves beyond the quantity reasonably required to meet Safety Mate's actual requirements. Therefore, it was submitted, it cannot be a breach not to fulfil the Four Purchase Orders that were not going to arrive until after the Termination Date of 30 September 2019. This, so it was said, was underscored by the exercise of the buyback option in clause 15.2 of the Agreement as referred to in ATG's solicitors' letters of 3 May 2019 and 1 October 2019.

363 With respect to Safety Mate's good faith contentions, ATG contended that even if there had been a breach of a supply obligation there was no basis for concluding that any such breach impacted on, or could impact on, the earlier exercise by ATG of its power to terminate the Agreement pursuant to clause 2.2.1. In this context emphasis was placed upon the timeline of events, including the Four Purchase Orders all post-dating the exercise by ATG of its termination right under the Agreement.

364 Although the issue is not without some challenges given the poorly drafted Agreement, I have determined that, contrary to the submissions of ATG, ATG breached clauses 4.1.1 and 4.3 of the Agreement by refusing to exercise reasonable endeavours to supply the gloves the subject of the Four Purchase Orders. I have also concluded that this does not provide any relevant assistance to Safety Mate in respect of its claim that ATG breached its obligation of good faith when exercising its right to terminate the Agreement pursuant to clause 2.2.1 of the Agreement. My reasons for so concluding follow.

365 The period of the Initial Term was two years. Because the Agreement was terminated with effect from the end of the Initial Term then the 'Term' of the Agreement (as defined) was the Initial Term.[161] As is reflected in clauses 2.1 and 2.2, Safety Mate had exclusive distribution rights in the Territory for the Initial Term.

366 Clause 4.1.1 imposed an obligation upon ATG 'at all times during the Term of this Agreement to:

4.1.1 supply the Products to the PSP for resale in the Territory in accordance with the duties in clause 3 and the terms of this Agreement.'[162]

367 It is evident that the obligation under clause 4.1.1 is an obligation that is imposed upon ATG and that it endures during the Term of the Agreement. This supply obligation is also expressed to be qualified by reference to the supply being (relevantly) '... in accordance with the terms of this Agreement ...'. Clause 4.3 addresses more specifically aspects of the obligation to meet orders from Safety Mate and provides that:

4.3 ATG undertakes to use its reasonable endeavours to meet all orders for the Products sent to ATG by the PSP in accordance with ATG's Proforma invoice and terms of Delivery to the extent that the orders do not exceed the forecast for each type of the Products provided under sub-clause 5.2 (save for Events of Force Majeure).

368 Clause 5.2 requires Safety Mate to place orders each year in accordance with the sales targets set out in Schedule 3 to the Agreement. Schedule 3 sets out the numbers for each country in the Territory in terms of numbers of pairs of gloves and purchase value in $USD. It also provides that the sales targets will be reviewed on the anniversary of the Commencement Date and varied upon 'mutual agreement'. In this case the sales targets for the second year of the Initial Term were varied by agreement, the detail of which need not be set out.

369 Schedule 4 to the Agreement set out ATG's terms and conditions that apply to the 'Proforma Invoice' process, which is said to apply to all sales made by ATG to the 'Customer'. The term 'Customer' is not defined, although for present purposes on this issue that is not material.[163] For the relevant orders no proforma invoices were issued by ATG in respect of the gloves the subject of the Four Purchase Orders because each of the Four Purchase Orders were not accepted and that point in the ordering and supply process was not reached.

370 Although it was submitted by ATG that the forecast for the period post-termination can only have been 'zero', that is not the enquiry that the qualification in clause 4.3 is directed at. The qualification on the reasonable endeavours obligation is only engaged where the orders exceed the forecast under clause 5.2, which in turn refers to the sales targets in the schedule - which were increased by agreement as earlier referred to. Relevantly to the issue under consideration, it was not established on the evidence - or even addressed directly in this way - that the Four Purchase Orders exceeded the forecasts provided under clause 5.2 of the Agreement. Consequently, the forecast carve out to the reasonable endeavours obligation in clause 4.3 was not engaged.

371 I have concluded that in the circumstances of this case, and upon the proper construction of the Agreement, ATG was required during the Term of the Agreement to use its reasonable endeavours to meet all orders for the products sent to ATG by Safety Mate. Each of the Four Purchase Orders was sent to ATG by Safety Mate during the Term of the Agreement - being in May, June and July of 2019. ATG was required by the Agreement to use its reasonable endeavours to meet them.

372 Such a construction is supported by the terms of the clauses in question, the object and purpose of the Agreement, and the terms of the express regime provided for in clause 15, which deals with the effects of termination. I draw attention to the following features of clause 15 that support this conclusion, and which demonstrate why it is a businesslike construction and a meaning that a reasonable businessperson in the position of the parties would take it to mean.

373 First, clauses 15.2.1 and 15.2.2 contemplate the prospect that the PSP will be in possession of stock of the gloves at the time of termination. Second, clause 15.8 expressly contemplates that orders from a PSP may have been placed within 30 days prior to the termination date, and that such orders may or may not have been accepted. Third, clause 15.8 gives an express right to ATG '... to cancel all orders placed by the PSP within (thirty 30) days prior to the termination date, whether or not such orders have been accepted by ATG, without incurring any liability of any nature to the PSP'. Fourth, clause 15.2.1 provides ATG with an option, but not an obligation, to purchase back from the PSP at the 'Landed Price' any stock remaining with the PSP. Fifth, if the option is not exercised it is expressly contemplated by clause 15.2.2 that the PSP will be permitted for a period of three months following termination to sell and distribute any stock it may at the time have in store or under its control. Thereafter, the PSP is required to promptly return all remaining stock of the PSP or otherwise dispose of the stock as ATG may instruct.

374 The existence of this agreed and relatively elaborate regime on termination speaks against the construction contended for by ATG and against a construction that permits a refusal to exercise best endeavours to meet orders made during the Term and in advance of the termination date. The agreed regime in clause 15 builds in various levels of protection for each party, including ATG's rights to: cancel orders made in the last 30 days; acquire any stock on hand; recover stock not paid for; and not take back stock and thereby allow the PSP a further three months to sell it. It is also to be recalled that the Four Purchase Orders were not made in the last 30 days but were placed in May, June and July of 2019.

375 There is also a further objective commercial consideration that supports the construction that I consider to be the correct construction, although the result would not change even if this was put to one side. Construing the supply provisions as I have done also facilitates any sale transactions made by a PSP to a channel partner (or end user) prospectively in advance of the delivery of products to the PSP by ATG.

376 It was common ground, and established on the evidence, that ATG did not make any endeavours to seek to supply to Safety Mate any of the goods the subject of the Four Purchase Orders and I am satisfied that by not so doing ATG breached the obligation in clause 4.1.1 and clause 4.3 of the Agreement.

377 It will be recalled that the only additional claim to the invalid termination claim pursued by Safety Mate in this proceeding was in respect of alleged loss of profits by reason of the failure to supply the goods the subject of the Four Purchase Orders - which was brought in the alternative to the damages claim for the alleged wrongful termination. The question of whether this breach caused Safety Mate any loss and damage and, if so, the quantum of that loss is dealt with later in these reasons.

378 Given the matters addressed above, it will be apparent that I do not accept ATG's alternative construction contentions - noting also that its submissions regarding forecasts do not properly engage with the terms of the forecast carve out in clause 4.3 of the Agreement. Further, although there was some evidence regarding forecasts, it did not establish, and it was not submitted that it did, that such evidence operated to enliven the forecast carve out in clause 4.3 of the Agreement. ATG's submission that clause 15.8 is irrelevant because it only relates to orders that have been accepted is misplaced. It provides, expressly, that it applies to orders 'whether or not' they have been accepted. ATG's contention that clause 4.1.1 is to be construed as meaning 'for resale in the Territory during the Term' is not to be preferred to the construction I have arrived at, for the reasons mentioned above. As noted, clause 15 contemplates that there may be subsequent sales.

379 I return now to the relationship between the reasonable endeavours supply breach and Safety Mate's breach of good faith allegations.

380 The fact that a breach of the supply obligation has been established does not assist Safety Mate with its primary case regarding ATG exercising its termination right in breach of good faith. Given the preceding discussion of other aspects of good faith above,[164] this can be addressed relatively briefly.

381 The decision to terminate the Agreement and the Termination Notice occurred in the circumstances earlier referred to, and ATG's later conduct in relation to supply, does not give rise to a breach of its good faith obligation in the exercise of its termination right. Having regard to the manner in which the non-supply arose and the explanation given at the time by ATG, it cannot be meritoriously said that the non-supply breach in some way establishes that ATG's exercise of its termination right was in breach of good faith - whether considered alone or in combination with any other circumstances. It has no hallmarks of the kind necessary to establish a breach of good faith.

382 I also observe that, although I have concluded that ATG breached the obligation to use reasonable endeavours to supply, the issue was not straightforward and it can be seen well enough why a commercial party might have considered that supply ought not to be required if it was to be provided after the Termination Date. It was also foreshadowed and explained in ATG's solicitor's letter of 3 May 2019 and subsequent emails from ATG when the orders were placed. However, although not straightforward, a close examination of the Agreement reveals the true position, as I have determined. It was also apparent on the evidence that what occurred appears to have been preceded by the obtaining of legal advice, although the detail of that advice was not in evidence. Whilst that does not change the fact that there was a breach of the Agreement, it further underscores that the non-supply breach conduct was not of a character that would allow it to be characterised as conduct reflecting one or more of the hallmarks of an absence of good faith, whether in its own right or in the exercise of the termination right under clause 2.2.1.

383 Even if the decision not to supply had been undertaken with an improper motive, capriciously, or oppressively,[165] which was not established, it would not change the result in relation to the earlier termination decision and the termination that it effected. In this context Safety Mate is again seeking impermissibly to contort and stretch too far other later circumstances with the aim of establishing a breach of good faith in the earlier exercise of ATG's contractual termination right. Contrary to Safety Mate's contentions, ATG's failure to use reasonable endeavours to supply the goods the subject of the Four Purchase Orders does not assist with Safety Mate's invalid termination claim.

Supply of product to Mayo - clauses 4.2.2 and 4.3 of the Agreement

384 ATG's acceptance of orders from, and supply of gloves to, Mayo to put it in a position to commence operating as the PSP from 1 October 2019 is another matter that does not assist Safety Mate in its termination and good faith contentions, whether it is considered alone or in combination with any other circumstances. This is for reasons analogous to those referred to above in the context of the other matters raised - and it remains the position whether or not such supply amounted to a breach of clause 4.2.2 of the Agreement.

385 The supply to Mayo in order to put it in a position to have a smooth transition as the new PSP from the end of the Initial Term and after the Termination Date was reached was shown to be a practical commercial measure addressed at the realities of the commercial circumstances, including the lead time required to order, manufacture, and ship the products. It was clear that such supply was only in respect of Mayo being able to commence sales from 1 October 2019, and the evidence was all one way on this point. Such supply was carried out in the context of ATG's worldwide manufacture and supply process and was consistent with its method of operation. Further, Safety Mate's emphasis in its submissions on ATG's senior counsel's use of the expression in opening about enabling Mayo to 'hit the ground running' was somewhat misplaced. It was the commercial reality that the new PSP would need stock from 1 October 2019 and that was what ATG was seeking to facilitate in advance of that date but in no circumstances suggesting or creating the impression, to the market or otherwise, that it could be resold prior to the end of the Initial Term. Again, whether in breach of the Agreement or not, the evidence provides no sound basis for concluding that approaching the matter in this way, in the circumstances established, that ATG was acting in breach of good faith in the exercise of its contractual right under clause 2.2.1 of the Agreement. ATG's conduct was not of that character and possessed none of the required hallmarks of an absence of good faith.

386 It is also evident from the background and time line earlier referred to that Mayo's orders post-dated the decision to recommend termination, the termination decision by the directors, and the preparation and despatch of the Termination Notice. ATG's conduct, however characterised, cannot be seen to establish in any way that the exercise of the termination right had one or more of the necessary hallmarks of an absence of good faith - and that remains so even if the supply in and of itself was assumed to also constitute a breach of the good faith obligation in its own right, which was not established in any event.

387 Given the above,[166] it is not strictly necessary to determine whether the supply was in breach of clause 4.2.2 of the Agreement. Had it been necessary to determine this issue I would conclude that, upon its proper construction, the supply of gloves to Mayo in the circumstances so as to ensure that it had products from the time that it began to operate in the market as the PSP from 1 October 2019, did not constitute a breach of clause 4.2.2 of the Agreement.

388 Applying the established principles of construction, and properly construed, clause 4.2.2 did not prevent ATG supplying gloves to an identified new PSP who was to operate as such for the Territory with effect from the end of the Term, so as to put it in a position to so act when that time arrived. To the extent that it is necessary, the reference in clause 4.2.2 to the supply 'for ... resale', should be construed as meaning 'for ... resale during the Term'. Such a construction is a businesslike interpretation and a meaning that a reasonable businessperson in the position of the parties would give it. It is also consistent with the object and purpose of the Agreement and does not alter the status of the existing PSP remaining as such during the Term and before the Termination Date.

389 ATG did not act in breach of the Agreement by supplying gloves to Mayo for resale after the end of the Term. Even if it had been a breach of the Agreement it would not assist Safety Mate with its invalid termination contentions.

390 For completeness I note that the reference in the Revised Issues List to clauses 4.1.1, 4.1.5 and 4.1.6 of the Agreement in connection with the supply of gloves to Mayo appears misplaced, which I note is also consistent with Safety Mate's third further amended defence and counterclaim.[167] In any event, the supply to Mayo was not a breach of any of those terms. Clauses 4.1.1 and 4.3 address ATG's obligation to supply Safety Mate, which have been dealt with above. It is not a breach of these terms to supply another person. Further, neither of clauses 4.1.5 or 4.1.6 address the issue of supply and the supply of gloves to Mayo was not a breach of either of these terms. Even if the supply of gloves to Mayo had been a breach of any of these terms, for the reasons mentioned above it would not have assisted Safety Mate with its contentions regarding the alleged breach of good faith by ATG in the exercise of its termination right under clause 2.2.1.

Alleged failure of ATG to enquire of, consult with, or provide an opportunity to Safety Mate to respond to ATG, regarding:

(a) Safety Mate's claimed failure to act as a true sales partner;

(b) Safety Mate not adopting ATG's preferred marketing approach or model;

(d) Safety Mate not providing information and data

391 By amendments made to its defence and counterclaim on the fourth day of the trial Safety Mate supplemented its breach of good faith allegations by, among other things, alleging that ATG breached its obligation of good faith by failing to take the steps referred to above prior to exercising its right of termination (Pre-termination Steps). As formulated in the Revised Issues List filed after the evidence but before closing submissions, these matters were framed by reference to the question of whether ATG was 'obliged but failed' to take the Pre-termination Steps. Safety Mate's pleading amendments alleged[168] that the obligation to take the Pre-termination Steps 'was an incidence of the express obligation to act in good faith in clause 12.2 of the ...' Agreement. In its closing submissions Safety Mate also sought to draw on clauses 4.1.5 and 4.1.6 of the Agreement, although breaches of these provisions were not raised in the further amended pleading or raised in the Pre-termination Steps context in the Revised Issues List.

392 In substance it was submitted that Mr Sheerin did not tell Mr Browning the true state of affairs so that Mr Browning was misinformed about Safety Mate's performance and the impact on the market. Safety Mate contended that 'fundamentally', prior to ATG deciding whether to terminate the Agreement and appoint Mayo as a replacement PSP, ATG should have made all reasonable enquiries to determine whether or not any purported basis of termination was true and should have relayed any concerns to Safety Mate and given it an opportunity to respond. Safety Mate further submitted that ATG's obligation to act in good faith when exercising its termination right under clause 2.2.1 required it to co-operate and collaborate with Safety Mate in a way that ensured that the termination was not arbitrary, capricious, oppressive or unfair in the result.

393 ATG contended that these allegations failed at the first hurdle, being the threshold question of obligation. This, so it was said, was because ATG was not required, as a matter of law, to do any of the things that it is alleged that ATG failed to do. ATG submitted further that, in any event, it had engaged with and communicated with Safety Mate regarding the matters of concern referred to by Safety Mate. It also submitted that any failure to take one or more of the Pre-termination Steps did not amount to a breach of good faith in the exercise by ATG of its termination right.

394 Before addressing these submissions I refer again to the context and circumstances leading to ATG's exercise of its termination right addressed earlier in this section of the reasons and in the 'Background and factual matters' section above, including the strained and challenged nature of the relationship, which I have concluded was a matter apparent to, and known by, each of ATG and Safety Mate.[169] I note also that each of Mr Browning and Mr Sheerin held what I accept were genuine views regarding the desirability of terminating the Agreement for commercial reasons, and not improper motives, being views they were each entitled to hold - and views that had been formed in the context of an extended history with Safety Mate, including the many challenges and tensions in the relationship.

395 In this context it may be noted that the views relevantly held by Mr Browning or Mr Sheerin about Safety Mate, which I accept were genuinely held, included the following:

(a) The working relationship had deteriorated and Safety Mate was secretive, adversarial and generally difficult to deal with.

(b) Over time Mr Tee had ceased being open with Mr Sheerin.

(c) That there was 'no relationship' or effective collaboration with Safety Mate and that the friction and challenges in the relationship, and concerns regarding Safety Mate's approach, impacted effective communication and the ability to have a positive relationship.

(d) A level of friction in the communications between Mr Sheerin and Mr Tee developed that had never really resolved.

(e) That there seemed to be a barrier between ATG's view and approach to the market and that of Safety Mate's view that could not be overcome.

(f) It was not considered that Safety Mate was acting as a true sales partner with ATG.

(g) Safety Mate was not likely to change its approach.

396 Having regard to the evidence concerning the background to and nature of the relationship, including the run of communications between the parties, and the communications internal to Safety Mate, these views were not only genuinely held but can be seen to be rationally held views - or at least not irrational, arbitrary or capricious. That is not to say that Safety Mate was legally or otherwise obliged to share the views of ATG. It was entitled to have a different view to ATG about the market approach and other matters, as it was apparent that it did. But each party was entitled to take into account their respective genuinely held views and beliefs regarding commercial matters and the history and nature of the commercial relationship between them, including their respective experiences and perceptions of the other in connection with their respective roles under the Agreement, in exercising their respective discretions as to whether or not they wished to exercise the termination right in clause 2.2.1 of the Agreement.

397 It was also the case that, as Mr Sheerin explained, there were many reasons why ATG considered that Mayo would be a superior PSP for the Territory, which I also accept were genuinely held views that were rational and not demonstrated to be arbitrary, capricious, or of like character. They were focussed on commercial matters and included genuinely held views formed from experience in the market and from relevant enquiry. The reasons Mayo was considered to be the 'best fit for ATG'[170] included the views reached by Mr Sheerin regarding: Mayo's 'outstanding' reputation in the market; Mayo's 'excellent ' relationship with channel partners and Blackwoods in particular; what was considered to be a large and stable workforce of Mayo; Mr Sheerin's personal engagement over time in the industry with Mayo representatives at various trade shows and his impression that Mayo was very professional in its conduct; Mayo's much wider range of product offerings than Safety Mate where little in its range was considered to be competitive with ATG's gloves; and Mayo's size and capability to take on the role of the PSP in the Territory. Mr Sheerin's genuine belief regarding the suitability of Mayo was also apparent during cross-examination when he described Mayo as a 'fantastic option'.

398 Keeping in mind the unqualified nature of the reciprocal termination right in clause 2.2.1 of the Agreement,[171] it was open to ATG to take these matters and its views regarding the nature and state of its relationship with Safety Mate into account in deciding whether or not to exercise the termination right before the time for so doing expired. It was also the same on the flip side for Safety Mate. It was open to it to take into account its genuinely held views regarding commercial matters and the nature and state of its relationship with ATG, and such other matters that were relevant to it, when deciding whether or not to exercise its termination right under clause 2.2.1.

399 I return now to the contentions regarding the Pre-termination Steps.

400 I do not accept the submission that ATG was obliged to take one or more of the Pre-termination Steps prior to exercising its termination right under clause 2.2.1 of the Agreement. Contrary to Safety Mate's submission it was not an 'incidence' of ATG's good faith obligation in this context. The failure to take any such steps in advance of the termination in the circumstances does not carry with it any of the hallmarks of an absence of good faith or establish that the exercise of the termination right was undertaken in breach of that obligation, whether considered alone or in combination with any other circumstances.

401 It was an express term of the Agreement, and known to both parties, that they each had the right to terminate the Agreement as of right[172] pursuant to clause 2.2.1 of the Agreement, provided the appropriate amount of notice was given, as it was in this case. In contrast to termination for breach under clause 14.1.2 - and the force majeure provisions in clause 17 - there was no obligation on either party to give advance notice of its intention or decision to terminate, a breach, or anything akin to it. The termination right in clause 2.2.1 existed for the benefit of each party and could be exercised by either party by giving notice in accordance with the requirements of the clause, as each of Safety Mate and ATG would be taken to have known given the express terms of clause 2.2.1.

402 Taking one or more of the Pre-termination Steps was not an 'incidence' of the good faith obligation. For ATG to exercise its termination right in the circumstances of this case without ATG first consulting or enquiring of Safety Mate about ATG's reasons for so doing - or proposing to do so - was not a breach of the obligation of good faith in clause 12.2. It cannot be said in the circumstances of this case that not taking the Pre-termination Steps in the context of the exercise of the contractual termination right under clause 2.2.1 can be characterised as dishonest, capricious, arbitrary, unfair, unreasonable in the relevant sense, having been done for an improper motive, or possessing other characteristics of bad faith.

403 To the extent that it was submitted that in acting in this way ATG substantially undermined or nullified the benefit bargained for by each party, that submission cannot be accepted. An essential benefit of the bargain was a certain Initial Term of two years, which was what Safety Mate (and ATG) got. Another central benefit of the bargain for each party was the right to terminate the Agreement at the end of the Initial Term pursuant to clause 2.2.1 without cause. What occurred was that one of the parties, ATG, exercised that reciprocal termination right. It did so in what it genuinely considered to be its legitimate commercial interests, which it was entitled to do. ATG was not obliged to take the Pre-termination Steps whether as an incidence of the good faith obligation or otherwise. To the extent that it did not do so does not amount to a breach of good faith in the exercise of its termination right or otherwise.

404 Given the above conclusion it is not strictly necessary to consider the extent to which there was consultation and engagement between ATG and Safety Mate, even though ATG contended that there was. However, given the submissions made by the parties, some brief observations on the topic follow.

405 First, I accept that over the course of the Agreement (and before) the issue regarding a difference of view about the importance of channel partners and ATG's approach to the market had been raised with Mr Tee. As I have said earlier, I accept the evidence of Mr Sheerin and Mr Browning about this being an ongoing issue and having been raised by them from time to time. To the extent that the evidence is inconsistent with Mr Tee's recollection, I prefer the evidence of the Mr Browning and Mr Sheerin. It is something that was also apparent from numerous documents, some of which I have earlier referred to.

406 Safety Mate's over-emphasis in its submission on the language of the 'ATG Model' was perhaps misplaced, although its genesis being ATG's material was understandable enough. I have outlined earlier aspects of the evidence regarding ATG's preferred channel partners sales approach and Safety Mate's awareness of the same - as was also reflected in various respects in the Agreement. There were also numerous documents that illustrated as much as I have said. Whilst there may be disagreement between the parties about whether Safety Mate was adopting the approach to the extent desired by ATG, it does not alter the fact that each of Mr Browning and Mr Sheerin had a genuine view about the issue, which ATG was entitled to hold and take into account.

407 There is in my view no sound basis upon which it could be concluded that Mr Sheerin's evidence on the topic was false, or that he was reporting to Mr Browning a view that he did not hold,[173] and I do not accept Safety Mate's submission to the contrary. Mr Sheerin's strong denials in his oral evidence about being dishonest in his reporting to Mr Browning were not artificial and I accept his evidence in this regard. It also sits comfortably with many documents. To the extent Mr Tee contests Mr Sheerin's evidence about this issue being an ongoing tension between Safety Mate and ATG, I prefer the evidence of Mr Sheerin - which is consistent with the views held and expressed at times by Safety Mate on the topic as evidenced by, for example, the internal emails between Mr Tee and Mr Temperton earlier referred to and the exchanges in July 2017 with Mr Browning. Safety Mate was well aware of these ongoing differences.

408 Second, it was apparent, and I accept, that Mr Sheerin genuinely held the view that, to his observation, Safety Mate's approach was causing some issues with channel partners and end users in the market from time to time. Mr Browning's evidence about conversations he had himself at an earlier time was also consistent with this position. It was further supported by Mr Browning's evidence regarding conversations he had with Mr Sheerin starting in about 2016 - noting in particular channel partners becoming frustrated with Safety Mate interactions at end user level, including at times without channel partner knowledge or co-operation. That Safety Mate was addressing end users in various ways was also supported inferentially by its stated view about its preferred method of operation, which included a higher end user focus than ATG considered desirable. This was not news to Safety Mate.

409 As ATG pointed out, one example referred to in Mr Sheerin's evidence related to Illawarra Coal, which Mr Sheerin referred to as a typical example. Another related to Blackwoods, albeit some time ago. I also accept that another market-related issue for ATG was Safety Mate not expanding its product range, as Mr Browning explained during cross-examination and re-examination.

410 That Safety Mate held a different view is not so much to the point. Differences of view about market impact are perhaps in part explained by the difference of view more generally between the parties about the best way to approach the market. However, Mr Sheerin and Mr Browning having concerns about Safety Mate's market approach on channel partners or end users was something that ATG was entitled to take into account in its decision making about the exercise of its termination right. Again, to the extent that Safety Mate contended that these views were not genuinely held by Mr Sheerin, or that he was telling lies to Mr Browning about them, I do not accept that submission.

411 Third, it is apparent from the evidence of Mr Sheerin and Mr Browning that references to Safety Mate not being regarded by ATG as a 'true sales partner', or not approaching the relationship as 'a partnership', or similar language, are expressions or figures of speech directed towards what was regarded as the deteriorated and unsatisfactory nature of the commercial relationship more generally - including the ongoing differences about channel partner involvement, ATG's desire to be involved with Safety Mate's dealings with channel partners, and tensions that had developed over time in connection with the various issues identified earlier in these reasons. As Mr Browning had observed in correspondence and in his oral evidence, what ATG was looking for in a sales partner is about more than the sales or the figures. Mr Sheerin expressed a similar view in his email of 21 February 2019 to Ms Mayo in which he said '... as you mention there is more to partnership than just the ability to generate sales and this is a key reason I believe ATG ↔ Mayo will work well together.' At the time the Agreement was entered into with Safety Mate, ATG held the view that the relationship needed to change and at the time the Agreement was terminated it held the view that it had not changed, and was not going to.

412 The evidence established that Mr Sheerin and Mr Browning held the view that the overall nature of the relationship was strained and challenged such that it was their genuinely held belief that Safety Mate was not acting as the sort of sales partner that ATG wished to continue with. I have accepted that the views held were genuinely held and not contrived, arbitrary, dishonest, capricious or otherwise infected by the hallmarks of the absence of good faith. That the relationship was challenged was clear from the documentary and other evidence, as I have found.

413 It is also the case that the strained nature of the relationship was something that was known to Mr Tee and Safety Mate. So much could be inferred from the communications between the parties in any event - and the internal email exchanges between Mr Tee and Mr Temperton. Whilst it was not contended that it was put to Mr Tee by ATG in terms that it considered Safety Mate not to be a 'true sales partner', it could not have been, and was not, lost on Mr Tee that the relationship was strained and that the issues between the parties included: the channel partner and market approach issue; ATG wanting more information shared about, and engagement with, channel partners; and Safety Mate's approach to Mr Sheerin. There was no need to put to Mr Tee or others at Safety Mate that the commercial relationship was strained and challenged. That was something that was known by Safety Mate and supported by the documents. To the extent that Mr Tee suggested otherwise, I do not accept that evidence.

414 The existence of such issues in the relationship is not inconsistent with the fact that the parties were working together in various respects, or generally meeting[174] KPIs as reflected in the KPI Scorecard, or exchanging pleasantries, including at year end in the way referred to by Mr Sheerin in his cross-examination. It is also not inconsistent with positive statements being made between the parties. Commercial relationships have dimensions. But these matters do not detract from what I have accepted were genuinely held views of Mr Sheerin and Mr Browning. Nor do they or other evidence allow for any conclusion that Mr Sheerin was intentionally telling lies to Mr Browning about Safety Mate, which submission I do not accept and was not established.

415 Further, even if it were to be assumed that Safety Mate was complying with the terms of the Agreement, that does not preclude the prospect of an ongoing strained or challenged relationship or the right of either party to have their own views of the same in a commercial context, and to take them into account, in the exercise of the contractual rights under clause 2 of the Agreement. To conclude otherwise is in my view commercially unrealistic. For completeness I add that I do not accept that Mr Tee was not aware that ATG wanted KPIs to be exceeded. I accept that this was raised by Mr Sheerin on occasion. But even if it had not been, it was obvious. The colour-coded KPI Scorecards were addressed in reviews, and 'exceeded' was a level referred to on the face of the same. Mr Tee's implicit or express suggestion that he did not appreciate that ATG wanted the KPIs to be exceeded was not credible.

416 Fourth, Mr Sheerin's evidence, which I accept, established that he genuinely held the view that as the relationship between ATG and Safety Mate deteriorated Mr Tee and Safety Mate became less open, less candid, and more secretive. In so doing he gave examples, and referred to the change in approach with telephone calls, infrequency of contact, email communications, and the friction that had developed. One such example of not being open or candid was in respect of the dealings with Blackwoods, noting also his evidence that this experience was repeated in relation to a number of other channel partners '... in that I found Safety Mate to be resistant to keeping me informed of dealings and relationships with channel partners to the extent that I would describe Safety Mate's approach in that regard as secretive'. Mr Sheerin formed the view, which I accept he held genuinely, that Safety Mate was not approaching the relationship with ATG as a 'partnership' as he considered should occur, consistently with ATG's channel partners' approach, or in a way that was the most effective way of promoting ATG's brand and products.

417 Mr Sheerin was entitled to form the views that he had in his role as ATG's Country Manager. As it happens, the difference of view between the parties and Safety Mate's view about not wanting ATG to interfere in a PSP's business was also supported by a number of the email exchanges and other documents earlier referred to. Whilst that does not mean ATG's view of the best marketing approach is necessarily correct, or that Safety Mate's view where it differed is incorrect, it was open to ATG to take into account its genuinely held views regarding its relationship with Safety Mate when deciding whether or not to exercise its termination right under clause 2.2.1 of the Agreement. Safety Mate was also entitled to do the same regarding its views of its relationship with ATG.

418 It can at least be inferred that Safety Mate was aware of these differences of view between the parties, accepting as I do that Mr Tee is and was an experienced and astute businessperson. The email exchanges in July 2017 with Mr Browning well illustrate the point, as do the internal emails between Mr Tee and Mr Temperton, including Mr Tee's colourful suggestion of paying 'lip service' to the position of ATG. It was not necessary to spell out to Mr Tee or Safety Mate what it already knew about the state of the relationship, or the extent to which it was not being as open and candid with ATG as ATG wanted to see from its PSP. That said, I also accept Mr Sheerin's evidence that this was a topic raised between them from time to time, and prefer his evidence to that of Mr Tee's on the topic.

419 I also accept Mr Sheerin's evidence that he genuinely felt an ongoing source of frustration by what he regarded as resistance by Safety Mate to responding to some requests for information, including the examples he gave regarding particular kinds of monthly breakdowns of gloves beyond the 'high level' product family figures that he further explained during cross-examination had been the subject of a number of conversations. I also accept Mr Sheerin's evidence that he had asked for more detail at early review meetings down to the glove and SKU level and that it was requested to better assist ATG to plan production capacity and forecasting. To the extent Mr Tee's evidence is inconsistent, I prefer the evidence of Mr Sheerin - noting also that his evidence on the topic was not shaken in cross-examination and that he addressed it naturally and openly, also explaining what was being sought and the commercial reasons for so doing. It is also supported by the raising of the issue when negotiating the terms of the Agreement with Mr Tee and Mr Temperton. This concern of Mr Sheerin about information being withheld was referred to more than once in Mr Temperton's email to Mr Sheerin of 13 March 2017, which followed a meeting between them on 9 March 2017.

420 Fifth, I accept Mr Sheerin genuinely held the view that there had been material staff turnover with Safety Mate over time and that, based on his observations and experience, he considered it to be less than desirable from an effective sales point of view. He had dealt with Safety Mate and its staff over time and was entitled to form this view and take it into account when considering ATG's position with respect to its preferred PSP for the Territory. However, to the extent that reference was made to some staff changes post the termination, this is of little relevance - recognising also that such matters might be expected or anticipated given the Agreement was to be terminated with effect from 30 September 2019. Of course, Safety Mate was aware of its own staffing position.

421 Sixth, there is in my view nothing of force in the contention that ATG should have carried out some further separate verification of the genuinely held views of Mr Sheerin or Mr Browning before deciding to exercise the termination right under clause 2.2.1. ATG has a sophisticated and established sales network with Mr Browning as head of global sales and country managers in different regions and territories. Mr Sheerin was the country manager for ATG and had been for some years. He was also experienced in the industry, having operated in it for many years beforehand with Ansell. Mr Browning also had many years of experience with ATG, as the witness evidence and the documents showed. I have accepted that the views held by Mr Sheerin and Mr Browning were genuinely held and that they are not coloured by an absence of good faith or anything akin to it. I have also rejected the submission that it has been established that what Mr Sheerin was relaying about his own view of the situation was false or involved deliberate lying. It may also be observed that Mr Abdeen, one of the directors who made the decision to terminate, gave evidence and was not cross-examined at all - whether about the termination decision, motives, or otherwise.

422 In these circumstances there is in my view no sound basis for concluding that ATG breached its obligation of good faith in the exercise of its termination right by not taking additional verification or other steps to those that it took prior to the exercise of its contractual right to terminate the Agreement. The position taken by ATG has not been shown to be anything other than bona fide.

423 Seventh, having regard to the above, I am satisfied that Safety Mate was aware of the strained and challenged relationship and at least generally aware of the difference of views between it and ATG regarding the approach to market, the desire for additional information, and ATG's desire to have a positive and open sales partner relationship. It also necessarily knew of the approach it was taking to the relationship, which the evidence established involved playing many of its cards close to its chest. That is not to say that this was an impermissible approach for Safety Mate to take. It was just part of the nature of the relationship.

424 In these circumstances, even if it had been an incidence of the good faith obligation in clause 12.2 to engage with Safety Mate regarding the matters addressed above, and taking into account Safety Mate's own knowledge, the engagement as there had been over time on the topics was such that any failure further to engage again before exercising the right of termination could not be characterised as a breach of good faith in the exercise of that power, or possessing any hallmarks of the same.

425 Although ATG is correct that allegations of breach of clause 4.1.5 and 4.1.6 were not raised in this context in Safety Mate's third further amended defence and counterclaim or the Revised Issues List, Safety Mate's attempt to draw upon them late in closing submissions in the context of the Pre-termination Steps would not assist it even if the issues had been properly raised before the court. In addition to the observations made above regarding the alleged failure to consult and enquire, I make the following further observations about these clauses.

426 Clause 4.1.6 concerns ATG's obligation to notify Safety Mate of changes in ownership or control 'and of any change in its organisation or method of doing business which might affect the performance of its or [Safety Mate's] duties under [the] Agreement'. This provides no basis for contending that ATG was required in the circumstances of this case to undertake one or more of the Pre-termination Steps. It is self-evidently directed at different matters and cannot be construed as imposing additional limitations on the termination right in clause 2.2.1. The clause also provides no support for the contention that the obligation to take the Pre-termination Steps is an incidence of the good faith obligation in clause 12.2. Such a conclusion also sits comfortably with the express terms of clause 2.2.1 and the termination provisions in clause 14.

427 Even if clause 4.1.6 could conceivably have been engaged in the context of the exercise of the termination right it would have made no difference. This is because the Termination Notice would have constituted effective notice of 'a change of the method of doing business' under clause 4.1.6 in any event.

428 The terms and operation of clause 4.1.5 are also similarly of no relevant assistance to Safety Mate. By this clause ATG agrees to '... meet on a regular basis with appropriate personnel of the PSP and actively communicate with the PSP in order to ensure the successful collaboration of the parties;'.

429 As for clause 4.1.6, clause 4.1.5 provides no material support for the contention that the obligation to take the Pre-termination Steps was an incidence of the good faith obligation in clause 12.2 when exercising the termination right in clause 2.2.1. Applying the established principles of construction, clause 4.1.5 is not to be read as imposing some additional fetter on the exercise of the termination right in clause 2.2.1. Not only does it not say so, what is required in relation to termination is expressly addressed in clauses 2.2.1 and 14. Clause 2.2.1 requires six months' notice to be given, and allows termination without cause by either party. Clause 14 addresses termination for cause and sets out varying requirements depending on the particular termination trigger. There is no sound basis for construing clause 4.1.5 or clause 4.1.6 - whether considered together or alone - as imposing additional obligations on the exercise of the termination right in clause 2.2.1 - or, for that matter, any other termination right. That is not a meaning that a reasonable businessperson in the position of the parties would give it and it sits in tension with the express terms of clause 2.2.1. It is also not a businesslike construction given that the benefit contained in clause 2.2.1 for each party is the entitlement to terminate without cause by the giving of six months' notice.[175]

430 Further and in any event, the evidence of Mr Sheerin and Mr Browning, together with review meetings and the communications between the parties throughout the course of the Agreement, did reveal that the parties met on a regular basis and that ATG, through Mr Sheerin and to a lesser extent given his global position, Mr Browning, actively communicated with Safety Mate. Due to the issues in his dealings with Safety Mate regarding matters such as channel partners, engagement, resistance, and his perceptions of the strong personalities he was dealing with at Safety Mate, that resulted in Mr Sheerin taking what he considered to be an approach of 'guide with a feather, and not a brick' and 'pick my battles'. Mr Sheerin was entitled to take such an approach and such active consideration of how best to engage with and communicate effectively with Safety Mate was also consistent with active communication of the kind contemplated by clause 4.1.5.

431 Finally, even if it was the case that clause 4.1.5 imposed an obligation on ATG to communicate with Safety Mate about its proposed exercise of its termination right under clause 2.2.1 and its reasons for the same, any failure to do so does not amount to a breach of the obligation of good faith in the exercise of that right. Having regard to the circumstances, not so communicating cannot be characterised as dishonest, capricious, arbitrary, unfair, unreasonable,[176] as having been done for an improper purpose or motive, or possessing any other characteristics of an absence of good faith.

Alleged failure to conduct a review of Safety Mate's market strategy and performance before the end of the Initial Term of the Agreement

432 A further amendment to the pleaded breach of good faith allegations that was made during the trial was the addition of a representation allegation that:[177]

(b) the two-year term was for the purpose of review[178] such that, based on representations made by Kyle Browning and Jason Sheerin between around March 2017 and July 2017, Safety Mate had a reasonable expectation that:

(i) a 2 year review would take place;

(ii) the review would be based on Safety Mate's 'market strategy';

(iii) Safety Mate's performance would be measured with KPIs; and

(iv) The KPIs would be included in Schedule 8 of the distribution agreement.

433 In the Revised Issues List this was expressed by the parties to be an issue of whether ATG was obliged but failed to conduct a review of Safety Mate's market strategy and performance before the end of the Initial Term of the Agreement.

434 Safety Mate contended that it was represented that a formal review of Safety Mate's market strategy and performance would take place and that such a formal internal review was promised and expected - thereby at least implicitly contending that the representations were relied upon. It was submitted that it did not take place because of the clandestine decision to appoint Mayo and, as a result, the termination was arbitrary, capricious, oppressive and unfair in the result.

435 Again, Safety Mate submitted that this failure, whether taken alone or in combination with one or more of the other breaches or failures, constituted a failure to act in good faith in the exercise of the termination right, thereby rendering it invalid. No separate claim of any kind was made,[179] or relief claimed, in relation to these alleged representations. As with the other matters, they were only relied upon in support of Safety Mate's termination related breach of Good Faith Allegations.

(a) ATG noted that the argument emerged late in the amended pleading[180] filed on day four of the trial, but after Mr Sheerin and Mr Browning had given their evidence and had been excused.

(b) ATG denied that it made the alleged representations.

(c) ATG submitted that it would not have been open to Safety Mate to rely upon the representation in the light of the entire Agreement clause and ancillary provisions in clauses 20.1-20.3 of the Agreement.

(d) ATG denied that it would have been reasonable for Safety Mate to rely on any alleged representations given that it alleged the review was to occur at the two-year mark on or about the Termination Date, whereas the right to terminate for convenience expired six months prior to the Termination Date.

(e) ATG submitted that Safety Mate led no evidence from its sole witness, Mr Tee, regarding the making of the alleged representations or any reliance by him on them.

437 ATG further observed that Safety Mate did not call any evidence from Mr Temperton. It submitted that as a company director Mr Temperton was a central figure in the agreement negotiation process, and the factual narrative that preceded it and came after it, and that an inference should be drawn that any evidence he could have given would not have assisted Safety Mate on this issue - or anywhere else where his evidence may have been material.

438 I do not accept that it has been established that any operative or continuing representation was made to Safety Mate by ATG to the effect alleged. Even if it had been, I do not accept that: it was established that it was relied upon; that it created the expectation alleged; that the failure to conduct such a review was established to be because of a 'clandestine decision' to appoint Mayo; or that, as a result, the termination was arbitrary, capricious, oppressive, unfair, or otherwise marked by an absence of good faith.

439 The representations were alleged to have been oral and in writing. Insofar as they were said to be oral, by the amendments made on day four of the trial, it was alleged that they were made at a meeting between 'Safety Mate and Mr Sheerin on or around 9 March 2017'. This was not raised by Mr Tee in his witness statement and even though additional oral evidence in chief was given, this topic was not addressed in chief. Mr Tee did not give any oral evidence in chief about such a representation being made at the meeting, the issue being important to Safety Mate, or any representation being relied on by him or anyone else. Mr Temperton was the other person at the meeting and he was not called as a witness.

440 To the extent that Safety Mate sought to rely on Mr Tee being surprised when he received the Termination Notice as establishing the making of the alleged representations, I do not accept that submission. His evidence regarding being surprised was not said to be linked to any representation, which was not mentioned. This was also not addressed in his additional oral evidence in chief or re-examination. That does not mean that he was not surprised.

441 The documents relied upon in closing submissions as evidencing the representations comprised Mr Sheerin's note of a meeting between Mr Sheerin, Mr Tee and Mr Temperton on 9 March 2017 regarding various terms of the Agreement, and an email of 3 July 2017 from Mr Browning to Mr Tee and Mr Temperton. There was no evidence that Mr Tee or Mr Temperton ever saw the note of the meeting, and Mr Sheerin was cross-examined on the basis that the note was not provided to Mr Tee or anyone else at Safety Mate.

442 The meeting note in March 2017 records a number of matters under a heading 'Agreement Discussion Points' and it is self-evident that it relates to a discussion around the terms of the draft agreement being considered at that time. The document relevantly states in part:

1. "Confidential Information" (Page 3)

1. Mike inserted wording to protect SM as well as ATG.

   1. I commented that it should be ok, however it will need to be checked by our lawyers.

2. "Initial Term" (Page 4)

1. SM requested 5+5 years, against our proposed 2+2+2.
   1. This was a very long discussion that became circular around Trust, Partnership & the need for a review.
   2. SM's position was:

1. They are being penalised being moved from a 5yr agreement to a 2yr.

a. I explained the intent is 6 yrs, but we need to ensure we are heading on the right track, thus a review every 2.

2. SM don't feel comfortable with sharing any information if the agreement is only 2 yrs.

3. SM believe the relationship will improve with the Scorecard and reinstatement of regular reviews.

a. I commented that SM pulled back form [sic] the review meetings and trust was already diminished under the current 5 yr agreement, thus needs to now be reviewed more regularly and their basis for requesting a 5 yr agreement to improve trust was unfounded.

4. SM feel they have been taken from no measurement before this agreement, and now have to share "SM confidential information" along with a shorter agreement. They feel it has come out of the dark.

1. Eventually the conversation stalled and it was agreed that SM would send some comments around this point and I would review that internally. It was clear Clint thought the 2 yrs was my idea and would be overturned by Kyle etc. I didn't say Kyle supported the 2 yrs as I want to see what they put in writing to us around the term 1st, however I did say it would be unlikely to change as my position have been supported and they should view this as 6 yrs with regular reviews.

...

14. Schedule 8 - Page 49 - Scorecard

1. SM were ok with the principal once explained that it is to review progress towards targets that will be set to drive the partnership/relationship in the right direction. I suggested things like the following would all feature and be reviewed.

   1. Joint CP visits at C level

   2. SM staff training

   3. Key promotions with CP's

   4. Sharing of sales info (CP volumes etc)

   5. I advised that the scorecards will feature heavily in the contract review in 2 yrs, thus will be geared around improving the relationship and partner approach into the market. There should be no surprises in 2 yrs as the scorecards will be reviewed quarterly together.

   6. I will fill in the scorecards for discussion at the next round of agreement talks.

443 The email of 3 July 2017 was in the terms earlier set out in the background section of these reasons.[181]

444 The terms ultimately agreed between the parties were reflected in the Agreement which was signed in October 2017. The termination right in clause 2.2.1 was reciprocal, giving each party the right to terminate, and was not qualified by any other process or steps, be it by way of review or otherwise. As earlier noted, it was in the following terms:

2.2 This Agreement shall come into effect on the Commencement Date and shall continue in force for the Initial Term unless:

2.2.1 terminated earlier by either party giving not less than [6 months'] prior written notice to expire on the expiry date of the Initial Term, or

445 The statements referring to a 'review' in the documents relied on formed part of the lengthy and extended negotiation that ultimately resulted in the Agreement being finalised. In those circumstances, I do not accept that when considered in that context, there was at the time of the entry into the Agreement any ongoing or operative representation that a review of the kind now alleged would be carried out after two years or prior to the exercise of any termination right under clause 2.2.1.

446 Not only is it clear that the Agreement does not contemplate a two-year (or other) review being taken in connection with the reciprocal termination right, but such a review after two years is necessarily inconsistent with the express terms of clause 2.2.1 of the Agreement. This is because if a review was to take place after the first two years, that would be at the end of the Initial Term and six months after the last date that each of the parties were entitled to exercise their contractual right of termination.

447 To so conclude also sits comfortably with Mr Tee's evidence that he and Mr Temperton considered the Agreement very carefully (which was evident from the documents) and that they got legal advice about it. The conclusion also sits well with the entire agreement clause in clause 20 of the Agreement. By this clause the parties agree that the Agreement constitutes the whole agreement and understanding and supersedes any previous arrangement, understanding or agreement between the parties relating to the subject matter of the Agreement. The Agreement also records in clause 20.2 an acknowledgement that, in entering into the Agreement, neither party had relied on any statement, representation, assurance or warranty other than those expressly set out in the Agreement. Whilst it is of course trite that such entire agreement clauses do not preclude the making of operative representations, they form part of the context in which the analysis is to be undertaken, although the result would be no different even if these clauses were to be put to one side.

448 As ATG submitted, it can also be inferred from the failure to call Mr Temperton in relation to this issue that any evidence he could have given on the topic would not have assisted Safety Mate. But no different result would follow even if this inference is not drawn. As mentioned above, Mr Tee's brief evidence in his witness statement about being surprised when receiving the Termination Notice was not said to be linked to or related to the existence or reliance on such representations, which he did not mention in his statement. And no inference of such reliance could or should be drawn from this surprise.

449 In any event it is also apparent that the statements in each of the two documents refer to the prospect of the Agreement running for six years and only refer to the concept of a review after two years. Although Mr Tee did not see the meeting notes, he did receive the email from Mr Browning of 3 July 2017 that addressed at some length the issue ATG had with Safety Mate's approach to the market. As Mr Tee agreed in his cross-examination, the comments of Mr Browning regarding review conveyed that assuming the Agreement went for six years, '... you have a review at two years and a review at four years ... to make sure you are in agreement about market strategy ...'.[182] He also acknowledged during cross-examination, as is apparent in any event, that: there was nothing in the email about a review in 18 months after the start of the Agreement; that there was nothing linking the review to any right of termination of the Agreement; and that Safety Mate never sought to seek the inclusion of any linking of a review to termination rights in the Agreement.

450 Notwithstanding the evidence initially given regarding the acceptance of what was plain from the terms of the email, and after agreeing that Safety Mate could exercise the right to terminate under clause 2.2.1, Mr Tee then added or volunteered a self-serving statement that was not responsive to the question to the effect that 'we were relying on the two year review before the agreement as by the discussions'.[183] This followed a similarly volunteered self-serving statement not long before, that although Mr Tee agreed that neither Mr Browning nor anyone at ATG linked the concept of a two-year review with the power of a party to terminate the Agreement, 'we did interpret that as being a review for the purpose of review or extension of the two year plus two year'.[184] Mr Tee was then required to accept, which he did, that this was not what the email said.

451 As I have said, I do not accept that, even if the email carried with it a representation about a two-year review, it continued or was operative by the time the Agreement was entered into. To the extent that Safety Mate further shifted its position in closing submissions to contend that a representation was made that a review would occur six months or more in advance of the end of the two-year Initial Term, I do not accept that any such statement or representation was made in the documents referred to, or can be implied or inferred. Further, even if it could have been, I do not accept that it continued to the time of entry into the Agreement.

452 In addition, to the extent Safety Mate sought to rely upon Mr Tee's somewhat self-serving volunteered statements about his interpretation of the email and reliance, I do not accept that evidence of Mr Tee. It was an illustration in my view of Mr Tee stating things he considered to be helpful to Safety Mate's case. It was also in circumstances where: the Agreement was entered into in October 2017; the termination took effect in 2019; the allegations were not raised in previous pleadings; the alleged representation or its reliance were not addressed in Mr Tee's witness statement, his oral evidence in chief or in re-examination; and the relevant allegation was not introduced into the pleading until day four of the trial. Given these matters and my other observations regarding Mr Tee and his evidence, I do not accept his evidence regarding how he interpreted Mr Browning's email or that he relied on it in relation to any review - whether it was to occur before or after the end of the two-year Initial Term.

453 That said, even if representations to the effect alleged were assumed to have been made, it would not assist Safety Mate. This is because, contrary to the submission of Safety Mate, in the circumstances of this case the failure to conduct such a review at the end of the two-year Initial Term does not make ATG's exercise of its termination right in that scenario arbitrary, capricious, oppressive, unfair in the result - or otherwise establish any want of good faith. It is sufficient to note two things in this regard. First, that if Safety Mate waited to conduct such a review until at or about the end of the two-year Initial Term, it would have lost the contractual right to terminate the Agreement, because that right was required to be exercised no later than six months before that. Second, it has not been established that Safety Mate relied on any such representation, noting further that the entire Agreement and no reliance clauses also speak against such reliance. It may also be observed that quarterly reviews were being carried out anyway, which in part informed ATG's views. For completeness, I add that I do not accept that ATG's approach can be characterised as 'clandestine'. ATG was exercising an express contractual right that each party was able to do. It was not obliged to inform Safety Mate of its proposed exercise and the position was the same for Safety Mate. ATG was also not obliged to inform Safety Mate of its proposed appointment of Mayo. None of these matters involve a breach of good faith in the exercise of ATG's termination right.

454 Given the above it is not strictly necessary to address the submissions of the parties as to whether, if it had been established, a breach of good faith in the exercise of the termination right would invalidate the Termination Notice. That said, in my view, if it had been established that the termination right had been exercised in breach of ATG's obligation of good faith then it would not have been a valid exercise of that power under the Agreement and the termination would have been invalid. It will be recalled that it was accepted, and evident in any event, that the exercise of that termination right is subject to the good faith obligation in clause 12.2 of the Agreement.

455 For the reasons referred to above it has not been established that ATG breached its obligation of good faith in the exercise of its termination right pursuant to clause 2.2.1 of the Agreement. The Termination Notice and the termination of the Agreement that it effected were valid.

456 As earlier mentioned, in the alternative to its primary claim regarding the alleged invalid termination and the extension of the Agreement for a further two years by the Extension Letter, Safety Mate made a claim for damages based on the alleged loss of profits on the resale of the goods the subject of the Four Purchase Orders. In the context of the good faith allegations I have already determined that ATG breached its obligations in clauses 4.1.1 and 4.3 by failing to use reasonable endeavours to supply goods in response to the Four Purchase Orders.

457 It was not submitted by ATG that if reasonable endeavours had been exercised it would not have been able to supply Safety Mate with relevant goods, and on the evidence it may at least be inferred that ATG would have been in a position to do so. The real issue therefore is whether Safety Mate has established that the breach caused Safety Mate loss and damage by way of loss of profits as it alleged. This issue is addressed below.

458 Safety Mate claimed loss and damage in three ways. First, loss and damage for an alleged loss of profits in respect of the two-year extension period the subject of the Extension Letter. Second, loss and damage for the alleged lost opportunity to further extend the term of the Agreement for years 5 and 6. Third, and in the alternative to the primary claims, loss and damage for an alleged loss of profit on each of the Four Purchase Orders. Safety Mate's first loss claim and the (alternative) third loss claim were said to be direct loss of profits claims.[185]

459 The loss and damage issues were the subject of the expert reports of Mr Vincent for Safety Mate and Ms Wright for ATG. Following an expert conclave Mr Vincent and Ms Wright prepared a Joint Expert Report dated 3 June 2021 (Joint Report) setting out areas of agreement, areas of disagreement, and a summary of their respective positions in relation to the areas of disagreement. The expert evidence was then heard concurrently over the course of one day and each party had the opportunity to cross-examine each other party's expert. Although there was ultimately considerable common ground between the experts, substantial areas of disagreement included: discount rates, which Mr Vincent opined should be 2% and Ms Wright considered should be 12.5% on one scenario and 15% on another; Mr Vincent's assumed sales growth rate of 8.1%, which Ms Wright considered was not a reasonable or sustainable assumption;[186] and the differing methodologies by each of Mr Vincent and Ms Wright used to assess the impact on sales of the COVID-19 pandemic.

460 Having concluded that the Agreement was validly terminated on 30 September 2019 and that the Extension Letter did not operate to extend the Agreement for any further period, the first and second damages claims referred to above must fail. This is because the Agreement came to an end on 30 September 2019 and Safety Mate has not and cannot establish that it suffered loss and damage in respect of either of the additional two-year extension periods referred to in clause 2.2.2 of the Agreement. It is therefore not necessary to address the evidence or submissions in relation to these issues, which is what the majority of the expert evidence and submissions regarding areas of disagreement were directed to.

461 However, it is necessary to consider Safety Mate's third and alternative damages claim relating to the alleged loss of profits that it was said would have been earned on the sale of the goods the subject of the Four Purchase Orders that were not accepted by ATG.

462 Safety Mate submitted that if the goods had been supplied they would have been sold by it, stating also that from time to time Safety Mate air-freighted goods, which would have been another possibility open to it. It was further submitted that the court could not be satisfied on the balance of probabilities that ATG would have exercised its buyback right under clause 15.2.1 of the Agreement (the terms of which were set out earlier in these reasons), and that Mr Sheerin's evidence in paragraph 91 of his witness statement supported this position.

463 Consequently, so it was contended, pursuant to clause 15.2.2 of the Agreement Safety Mate would have had a further three months within which to sell the goods the subject of the Four Purchase Orders. It was submitted that the evidence established, or that it could be inferred, that there was no reason why they would not have been sold at their normal profit margin. Safety Mate also contended that there was nothing to suggest that the goods could not have been shipped by the requested dates, the last requested shipping date being 30 September 2019. The two requested 'arrival dates' in question were 30 September 2019 and 31 October 2019.

464 Safety Mate submitted that the likelihood of selling the goods could be inferred from various matters including: Safety Mate's sales history; the strength of the market as reflected by past sales and growth; ATG's position with Mayo; and Mr Tee's evidence about not being able to persuade Blackwoods and another channel partner, South 32, to move from the ATG glove to the NXG product.

465 It was also submitted that if the goods were to be sold at any discount, Mr Tee's evidence supported the contention that it would not have been a 'deep' discount, although no submission was made or specific evidence given by Mr Tee as to what level of discount that might be.[187]

466 With respect to the two purchase orders to be delivered to Armour in New Zealand (Armour Purchase Orders)[188] it was submitted that the position was clearer because the goods were 'back orders' to be delivered to Armour in New Zealand. It was common ground that these were not substantial purchase orders and that the combined total claim made in respect of them was for $51,037.

467 Safety Mate submitted that Ms Wright wrongly assumed that it was only the goods the subject of the Armour Purchase Orders that could be sold and that, in respect of the other goods, she did not take into account: the prospect of sale before arrival; the three-month period under clause 15.2.2; that Safety Mate continued to sell goods after 30 September 2019; or Mr Sheerin's evidence in paragraph 91 of his witness statement.

468 Based on the calculations of Mr Vincent regarding profit on sales in the relevant period, it was submitted that the lost profit on the sale of all of the goods the subject of the Four Purchase Orders was $1,857,664.

469 Putting to one side ATG's submissions on the issue of whether it breached clauses 4.1.1 and 4.3 of the Agreement by not exercising reasonable endeavours to supply the goods, which I have addressed earlier, ATG submitted that Safety Mate had not established that it had suffered any loss in any event - and that, ironically, it would only have suffered loss if the goods had been supplied. The irony was said to exist because Safety Mate would have had to ship the goods back to ATG at Safety Mate's own cost pursuant to clause 15.2.1 if they had been supplied.

470 ATG submitted that there would have been no entitlement to sell the goods because even before the goods would have reached Safety Mate's warehouse, or that of Armour, ATG would have exercised its buyback option on 1 October 2019, obliging Safety Mate to ship the goods back to ATG. Consequently, there would never have been an entitlement or opportunity for Safety Mate to sell the goods from which a profit might have been derived.

471 ATG submitted further that, in any event, the amount claimed could not be accepted because it was based on the historical gross profit margin of 37.2%, but that, as Ms Wright had pointed out, this was contrary to the instructed assumption given to Mr Vincent that Safety Mate was required to 'heavily discount' ATG products sold after termination on 30 September 2019.

472 ATG also submitted that, even though Ms Wright had opined that, if sold, the lost profit on the Armour Purchase Orders would have been $51,037 - the arithmetic of which was not in dispute between the experts - this position was based on an incorrect assumption that the goods would have been sold before the exercise of the buyback option because the order related to a supply to Armour. ATG also contended that the order for Armour was not a 'sale' and that because the buyback option would have been exercised it would have applied to the Armour Purchase Orders. ATG therefore did not adopt Ms Wright's position on this matter.

473 ATG further submitted that the position regarding the relationship between Safety Mate and Armour was ambiguous. This was said to be supported by Mr Vincent being instructed that Safety Mate had a relationship with Armour and the 'equally ambiguous' comments of Mr Tee in paragraph 73 of his witness statement and Mr Sheerin's evidence that Armour effectively filled the role of a PSP (as opposed to a channel partner) in New Zealand. ATG said that even though Mr Tee might have labelled Armour a 'channel partner' in aspects of his oral evidence, it was in reality an agent of Safety Mate. ATG's position was that the Armour Purchase Orders should be treated no differently to the other two of the Four Purchase Orders, which would also have been subject to the exercise of the buyback option by ATG.

474 Mr Vincent and Ms Wright agreed about the methodology and arithmetic for the calculations of any loss associated with the loss following from the non-supply of the Four Purchase Orders. However, based on the assumptions Ms Wright made or was asked to make she opined that, on the assumption that there was a sale to Armour as Safety Mate's channel partner, any purchase order losses should be limited to only the Armour Purchase Orders. If that was so, Ms Wright accepted that the loss of profits on the Armour Purchase Orders would be as set out below. With respect to the other two orders Ms Wright expressed five main reasons why the claimed loss of profit would not have been suffered or, if it was, it should not be calculated in the way Mr Vincent had done.

475 Given the expert evidence and common position of the experts regarding the methodology and arithmetic in this context (as opposed to the amounts arrived at), which I have considered and accept was an appropriate methodology to adopt, it is not necessary to address much of the calculations and their methodology. In summary form that methodology was depicted in Table 9 of Mr Vincent's first report (Table 9), as follows:

476 If Safety Mate could and would have sold the goods the subject of the Four Purchase Orders prior to the exercise by ATG of its buyback at what was loosely described as its 'normal gross profit margin', it was common ground between Mr Vincent and Ms Wright that the lost profit would be calculated in the manner referred to by Mr Vincent in Table 9 which, as can be seen from the above, would have resulted in a loss of net profit of $1,857,664, made up as follows:

(a) $25,266 in respect of purchase order PO 964;

(b) $1,023,936 in respect of purchase order PO 965;

(c) $25,771 in respect of purchase order PO 974; and

(d) $782,691 in respect of purchase order PO 980.

477 As noted, ATG contended that Ms Wright was incorrect regarding the position with Armour and said that it did not adopt her position because of the flawed factual assumptions referred to above.

478 The reasons why Ms Wright opined that the ultimate result of the loss calculations for the other two purchase orders were misconceived or incorrect were summarised in the Joint Report and addressed in Ms Wright's first expert report.[189] Briefly, the reasons were said to be that: Safety Mate would not have been permitted to sell the stock; the level of sales that would need to have been implied in order to sell them in a given month was unachievable when compared to historical average monthly sales and related figures; ATG may not have had the inventory to fill the orders; and, in any event, the loss calculations of Mr Vincent were based on the 37.2% gross profit margin for the quarter ending 30 September 2019, when Mr Vincent had been instructed that Safety Mate's stock sold was 'heavily discounted' after 30 September 2019.

479 Ms Wright also opined in the alternative that if the goods the subject of the other two purchase orders were to be included in the loss they should be 'heavily discounted'. In this context it was observed that for the year ended 30 June 2019 the average discount as a percentage of sales was 14%, but for the quarter ended 30 December 2019 it rose to 25% as a percentage of sales.[190]

480 Mr Vincent stated in his report that he was instructed that stock on hand at the Termination Date was largely sold between the months of October 2019 to December 2019, although minor stock holdings continued to be sold during January to May 2020. He also stated that the gross profit margin on sales fell to 13% in the December 2019 quarter, when it had been 37% for the September 2019 quarter. He calculated the actual gross profit margin on sales for the year ending 30 September 2019 as 35.7%.[191] These historical gross profit margins were not disputed by Ms Wright.

481 That said, in the context of the loss of profit claim in respect of the Four Purchase Orders, the real issues between the parties related to matters of fact in the hypothetical counterfactual, not expert opinion, regarding the likelihood of the exercise of the buyback option by ATG in respect of the goods (if they had been supplied), and the likelihood of the goods having been sold in the meantime. These matters are addressed further below.

Consideration and disposition - loss and damage

482 For the reasons that follow I have concluded that Safety Mate's claim for loss of profits for breach of the Agreement in connection with the non-supply of the goods the subject of one or more of the Four Purchase Orders should not succeed.

483 Safety Mate established on the balance of probabilities that it suffered loss in the form of loss of profits in the sum of $25,266 (Loss Amount) in respect of the goods the subject of PO 964. Safety Mate has not established on the balance of probabilities that it suffered any loss of profits in respect of the goods the subject of the remaining three purchase orders, which would have been Safety Mate stock that was subject to the prior exercise by ATG of the buyback option in clause 15.2.1 of the Agreement. However, ATG is not liable to Safety Mate for the Loss Amount because it is a liability excluded by the operation of clauses 13.1 and 13.2 of the Agreement.

484 The evidence established that the requested ship arrival date for the first two orders (PO 964 and PO 965) was 30 September 2019. For the other two orders (PO 974 and PO 980) the requested ship arrival date was 31 October 2019. The first ship arrival date was the last day of the Initial Term and the second ship arrival date was a calendar month after that. Additional days, up to about a week, would have been required for the goods to be physically received by Safety Mate at its premises and, it may be inferred, by Armour at its premises in New Zealand. I proceed on the basis that it may be inferred that the arrival dates would have been met, noting also that it was not submitted that the shipping arrival dates would not have been met, or that there were other likely arrival dates established on the evidence.[192]

485 Turning to the hypothetical counterfactual, I have concluded that it has not been established on the evidence, and cannot be inferred, that on the balance of probabilities any of the goods the subject of purchase orders PO 965, PO 974, and PO 980 would have been sold by Safety Mate to a channel partner or other purchaser (including Armour in respect of PO 974) before (at least) 1 October 2019.

486 Further, had the goods the subject of the Four Purchase Orders been supplied and shipped by ATG as requested by Safety Mate, I am satisfied that, on the balance of probabilities, ATG would have exercised its buyback option in respect of all of Safety Mate's stock pursuant to clause 15.2.1 the day after the end of the Initial Term, being 1 October 2019 - as in fact it had done in respect of 'the whole of the stock' that Safety Mate held at the time. This had also been foreshadowed by the letter from ATG's solicitor of 3 May 2019 and the option was in fact exercised by the letter of 1 October 2019 from Safety Mate's solicitors.

487 That being so, by reason of the operation of clause 15.2.1 of the Agreement, Safety Mate would then have been required to deliver the remaining stock to ATG at Safety Mate's cost within 20 days of receipt of ATG's notice, with ATG being required to pay the 'Landed Price 'for the products within 30 days of delivery to it. 'Landed Price' was defined in the Agreement to mean 'the price of the initial purchase price by the PSP plus any import taxes and duties and the delivery costs of the Products to ATG or any party nominated by ATG'.

488 In that scenario, which I am satisfied on the balance of probabilities would have occurred, Safety Mate would not have been permitted under the Agreement to sell the goods the subject of purchase orders PO 965, PO 974, and PO 980 and therefore would not have been in a position to make profits on any sale. It should be noted in this context that the permission for a PSP to sell remaining stock during the three-month window following termination was only enlivened where 'ATG chooses not to exercise its option under sub-clause 15.2.1 to re-purchase the Products or purchases only part of the PSP's stock of the Products ...'. I elaborate below as to why I am satisfied that it is more likely than not that the position would have been as described above had the goods the subject of the Four Purchase Orders been supplied as ordered.

489 It will be recalled that Mayo was taking over as ATG's exclusive PSP for the Territory from 1 October 2019 and that Safety Mate ceased to be so from midnight on 30 September 2019. ATG operated in the Territory on an exclusive PSP basis and had done so for many years. When addressing both the non-supply of the goods to Safety Mate and ATG's solicitor's letter of 3 May 2019 foreshadowing the exercise of the buyback option, Mr Sheerin explained in his evidence that he considered that 'ATG's intention to exercise that [buyback] option made obvious commercial sense for both parties ...'.[193] It may be inferred that the obvious commercial sense included having only a single PSP in the market selling the ATG goods, which on and from 1 October 2019 was to be Mayo.

490 Given this view of Mr Sheerin; the fact that it may be seen to be commercially rational; the fact that the anticipated exercise of the buyback option was referred to and foreshadowed in the letter of 3 May 2019; and the fact that the buyback option was actually exercised in respect of the whole of the stock held by Safety Mate at 1 October 2019; it may be inferred that, in the hypothetical counterfactual under consideration, it was more probable than not that the buyback option would also have been exercised by ATG in the same way in respect of the 'whole stock' if ATG had in fact shipped the goods the subject of the Four Purchase Orders. The commercial result would then have been that, consistent with ATG's preferred approach, it had its exclusive PSP, Mayo, operating in the market on and from the first day of Mayo's term as ATG's new PSP.

491 It may be apparent from the above that I do not accept that Mr Sheerin's other evidence in paragraph 91 of his witness statement has the character or hue referred to by Safety Mate, or that it can fairly be characterised in the way that Safety Mate sought to do in its closing submissions on this topic. As ATG submitted, Mr Sheerin was not saying that if the goods were supplied then ATG would not exercise the buyback option in respect of them (or all stock on hand) because of the loss, cost and inconvenience that would be borne by ATG in connection with return freight, unpacking and repackaging. Viewed fairly and in the context of paragraphs 87 to 92 of that statement, Mr Sheerin was explaining the reasons why the Four Purchase Orders had not been accepted. This included the fact that by the time the earliest of the goods arrived at Safety Mate the Agreement would have expired. In the context of the letter of 3 May 2019 having already been sent more than three weeks before the first of the purchase orders was sent by Safety Mate on 29 May 2019, Mr Sheerin was explaining that 'it would not have wished to have had to exercise that option in relation to excessive stock that may have been ordered by Safety Mate beyond its reasonable requirements for performing the Agreement up until 30 September 2019.'

492 In this context it is apparent, and I find, that Mr Sheerin was cognisant that ATG had foreshadowed the exercise of the buyback option on 3 May 2019, and in that knowledge, wanted to avoid overstocking Safety Mate given the costs and other issues associated with the buyback option the exercise of which had already been foreshadowed. Mr Sheerin was not there suggesting or implying that if the stock had been supplied ATG would not, or would not likely have, exercised the buyback in relation to all stock held by Safety Mate, or that ATG's view of the commercial position had changed or would change.

493 Further, taken together with the other evidence I have referred to, Mr Sheerin's evidence supports rather than detracts from the conclusion that it was more probable than not that the buyback option would have been exercised for the 'whole' of the remaining stock - as it was in fact. Mr Sheerin is conveying in part, at least implicitly, that he was cognisant that the buyback was likely to be exercised,[194] and he was wanting to minimise the amount of stock that would be on hand and that would then be returned in response to the exercise of the buyback option. Again, it is to be remembered that Mr Sheerin was addressing this issue in the context of his reasons for not accepting the Four Purchase Orders, which the contemporaneous documentary evidence shows he considered was not stock that Safety Mate could sell given that the Agreement was to terminate on 30 September 2019 and the arrival dates for the stock the subject of the Four Purchase Orders were 30 September 2019 and 31 October 2019.

494 That said, even if Mr Sheerin's evidence was considered to be no more than neutral on the issue regarding the likelihood or otherwise of the buyback option being exercised, given the circumstances referred to regarding: Safety Mate ceasing as the PSP and Mayo taking over; the terms of the letters of 3 May 2019 and 1 October 2019 from ATG's solicitors; ATG's preferred approach of operating through one PSP in the Territory; and the commercial reality that Mayo would be operating as ATG's new PSP from 1 October 2019; it may still be inferred that, on the balance of probabilities, ATG would have exercised the buyback option in respect of all stock on hand of Safety Mate, which would have included the goods the subject of purchase orders PO 965, PO 974, and PO 980.

495 As I have said, I am not satisfied that it has been established on the balance of probabilities that the goods the subject of purchase orders PO 965, PO 974, and PO 980 would have been sold before the buyback option was exercised on 1 October 2019 (or even a little later) in respect of the whole of Safety Mate's then stock. This includes the Armour Purchase Order PO 974, noting also that PO 974 was not due to arrive by ship until 31 October 2019, which would not have reached Armour until a few days or a week later, being in November 2019.

496 The topics of Armour and its relationship with Safety Mate, forward sales, stock on hand including 'stock on the water' that Safety Mate had paid for, and back orders, was addressed by Mr Tee in some supplementary evidence in chief and in cross-examination[195] and the position of Armour was also addressed by Mr Tee in his witness statement and in the instructions given to Mr Vincent.

497 As ATG submitted, the precise nature of the relationship between Armour and Safety Mate was not clear and was not established on the evidence. Although in his supplementary oral evidence in chief Mr Tee referred to Armour being a 'channel partner'[196] in New Zealand, this sat somewhat in tension with the way he described the position in paragraphs 72 and 73 of his witness statement. The order and sale process with 'customers (the Channel Partners)' was addressed by Mr Tee in paragraph 72. Armour was addressed separately in the following paragraph. It was not described as a 'Channel Partner', but it was said that 'Safety Mate has a relationship with [Armour] which is a company located in New Zealand'. Mr Tee then described aspects of (but not all) of the sale process with Armour.[197] This description was consistent with the instructions provided to Mr Vincent.

498 Mr Sheerin's evidence in cross-examination when asked if Armour was the channel partner in New Zealand explained that it was 'a complicated one', and that Armour 'effectively filled the role as a PSP over there [New Zealand], although that's not what we [ATG] wanted'. He further explained that Safety Mate would sell to Armour and that it was Armour that would go to the channel partner market in New Zealand.

499 The upshot is that the true nature and extent of the relationship between Safety Mate and Armour remained somewhat unclear, although given the above I am not satisfied that it was established that Armour was a channel partner as such. Even if it had been, it would make no difference to the outcome in this case. I also do not accept that it is open on the evidence to find that Armour was Safety Mate's agent as submitted by ATG. Whatever be the true characterisation of the relationship, it was established that Armour was an entity to whom Safety Mate sold ATG products from time to time over the course of the Agreement.

500 As Mr Tee said, 'stock on the water' whilst being shipped from ATG was regarded as part of Safety Mate's stock on hand, it having been paid for before shipping - which was also consistent with the terms of the pro-forma invoices and some examples of the actual invoices between Safety Mate and ATG. It was also the case that clause 15.2.1 contemplated that the relevant goods being bought back pursuant to the buyback option would have been paid for by Safety Mate, which was unsurprising and uncontroversial.

501 I am satisfied, therefore, that Safety Mate's 'stock of the Products' in clause 15.2.1 includes its stock on hand, which includes 'stock on the water' whilst being shipped. The shipments for PO 964 and PO 965 were not due to arrive (in New Zealand and Australia respectively) until 30 September 2019, following which the goods would be transported to the warehouses of Armour and Safety Mate respectively, up to about a week later to allow for clearing customs and bonding requirements.

502 The evidence did not establish that, had the goods been supplied, it was likely that there would have been any advance sale of any of the goods by Safety Mate to any channel partner, Armour, or others whilst the goods were on the water. As was apparent from Mr Tee's evidence during his supplementary evidence in chief and during cross-examination, a 'back order' or 'pre-order' did not amount to a sale or pre-sale. So much is unsurprising.

503 Although the evidence regarding the true nature of the relationship and payment terms with Armour was limited, if not scant in connection with payment terms, it is to be viewed in the context of a commercial relationship between them that involved the sale of goods by Safety Mate to Armour, sometimes involving direct shipment to New Zealand. Mr Tee's evidence revealed that Safety Mate orders with ATG for products to be sold to Armour were paid for by Safety Mate, pending sale to Armour. Given that PO 964 was due to arrive in New Zealand on 30 September 2019 and be transported to Armour by up to about a week later, it is in my view likely, and reasonable to infer, that payment would have likely been made by Armour at or shortly before the time of arrival of the goods at the New Zealand destination port, and that the goods were received at the port on behalf of Armour. It will be recalled in this context that Safety Mate did not operate in New Zealand as such and that Mr Sheerin had the view that Armour operated effectively as a PSP for New Zealand via Safety Mate.

504 It is therefore reasonable to infer that, had they been supplied, payment for the goods the subject of PO 964 would have occurred at the time of arrival at the New Zealand port, or shortly before, which also sits sufficiently comfortably with Mr Tee's rather vague evidence on the topic that he volunteered to qualify a concession made regarding Safety Mate's sales approach not involving pre-sales. That being so, in the hypothetical counterfactual under consideration, the sale of the goods the subject of PO 964 would have taken place prior to the buyback option being exercised and the goods would not be caught by it.

505 The same cannot be said of the other Armour Purchase Order, PO 974. This is because the requested shipping arrival date was not until 31 October 2019, nearly a month after the buyback option would have been exercised in the hypothetical scenario under consideration.

506 Although reference was made by Mr Tee in his supplementary evidence in chief regarding advance sales or pre-sales,[198] it became clear that pre-sales and advance sales were more a possibility than a probability, even taking into account the somewhat opaque position with Armour. In cross-examination about pre-sales and advance sales it became apparent that this was not how Safety Mate did business in Australia (at least), which is of course no criticism of Safety Mate. The result, however, is that, even if it were to be assumed that pre-sales were possible, or even that they happened from time to time, I am not satisfied on the evidence that, had the other goods been supplied, it was more likely than not that any of the goods would have been actually sold until, at the earliest, on or shortly before the shipping arrival date of 31 October 2019 - which would have related only to the second Armour purchase order, being PO 974 in any event.

507 This also sits comfortably with the instructions provided to Mr Vincent regarding the need for heavy discounting that he refers to in his evidence and the reduction in the gross profit margin in the December 2019 quarter. It is also not in tension with Mr Vincent's instructions that he referred to in his evidence that actual stock on hand was sold during the months of October, November, and December 2019, with even additional amounts being sold in January to May 2020. These instructions were supported by the calculations he referred to regarding sales in, at least, the December 2019 quarter. In all of the circumstances, and recognising also that Mayo commenced as the new PSP from 1 October 2019, I am not satisfied that it has been established on the balance of probabilities that, if the orders had been accepted, any of the goods the subject of purchase orders PO 965, PO 974, and PO 980 would have been sold by Safety Mate before the exercise by ATG of the buyback option in clause 15.2.1 of the Agreement. Even if the instructions to Mr Vincent are put to one side, the position remains the same.

508 It may also be observed that Ms Wright's evidence was that, in respect of purchase orders PO 965 and PO 980, the volume of additional sales that would have been needed in order to have sold them in a month was such that it would have required a drastic increase in the number of sales when compared to monthly averages across the October 2018 to October 2019 period. Ms Wright also observed that an assumption that the sale of the goods would have occurred in September 2019 involved a level of 'implied sales' that was more than twice the sales of most other months and represented almost three months of annual sales. This further supports the conclusion that it was not established to be likely that the goods the subject of purchase orders PO 965 and PO 980 would have been sold before the buyback option would have been exercised had the goods been supplied.[199]

509 Whilst I accept that requesting that goods be sent by airfreight happened on occasion between ATG and Safety Mate, and that this was at least a theoretical option for Safety Mate to request, the evidence did not establish that Safety Mate did so at the time of sending or after the Four Purchase Orders were sent, all of which expressly specified transport by ship. There was no other basis on the evidence for finding that it was likely that some or all of the goods would have been delivered by air-freight if the Four Purchase Orders had been accepted.

510 That Safety Mate continued to sell stock in the 'actual scenario' notwithstanding the exercise of the buyback option by the letter of 1 October 2019,[200] which I find was an effective exercise of that option, provides Safety Mate no relevant assistance. Continuing to sell stock in breach of clause 15.2.1 cannot help Safety Mate in this context. No additional force in the contention can be found in the submission that it was up to ATG to stop Safety Mate from so selling by obtaining a court order or by some other means.

511 In these circumstances it is not necessary to address the question of whether, if Safety Mate was entitled to sell some or all of the goods, they would have been sold at the 'normal profit margin', or at a discount. Had it been necessary to decide I would have concluded that it had not been established on the balance of probabilities that the small Armour Purchase Orders would have needed to have been sold at a discount. This was also consistent with the position of Mr Vincent and Ms Wright. There was little, if any evidence, regarding the impact of the termination and Mayo appointment on the New Zealand market position. It was also the case that the Armour Purchase Orders were back orders or pre-orders and that they were for only small amounts.

512 That being so, had it been established on the balance of probabilities that if the Armour Purchase Orders had been accepted they would have been sold before the exercise of the buyback option by ATG,[201] the loss of profit for Safety Mate would be determined to be the amounts referred to above, namely $25,666 in respect of PO 964 and $25,771 in respect of PO 974.

513 Again, although not necessary to decide, the position with the other two larger purchase orders would have been different, and is informed by Mr Vincent's evidence regarding Safety Mate's actual drop in gross profit margin from 37% in the quarter ending 30 September 2019 to 13% in the quarter following the end of the Initial Term, and Ms Wright's evidence regarding the sales discounts increasing to 25% as a percentage of sales for the December 2019 quarter. Noting the matters addressed above, it is during this period after the end of the Initial Term that the goods the subject of purchase orders PO 965 and PO 980 would have been sought to be sold had they been supplied, which given the sales evidence of Mr Vincent, and Ms Wright's evidence regarding historical sales, suggests would likely not have been without difficulty.

514 Taking into account: the position regarding the sale of stock on hand that in fact occurred; Mayo commencing to operate as the PSP on 1 October 2019; the implied level of sales evidence of Ms Wright (which I accept); Ms Wright's evidence regarding the increase in sales discounts for the December 2019 quarter; and the material drop in gross profit margin in the December 2019 quarter as referred to by Mr Vincent, I am satisfied on the balance of probabilities that if the goods the subject of purchase orders PO 965 and PO 980 had been supplied, Safety Mate would have had to discount them for sale - and that this is what would have occurred. Although Mr Tee spoke of not needing a 'deep' discount, the evidence regarding sales and discounts post-termination and the material drop in gross profit margin, suggests that Mr Tee was seeking to downplay the position, which was also my impression when he gave that evidence. But even if that was not so, and given that the parties offered no submissions regarding the size and impact of the discount to be applied, it is left to the court to do the best that it can on the evidence that it has.

515 Had it been necessary to determine the impact of the need to discount price on gross profit, and taking into account the circumstances prevailing after termination, the best guide on the evidence is the gross profit margin for the December 2019 quarter, as referred to by Mr Vincent, which was 13%. Consequently, if it had been established that Safety Mate had suffered loss of profits by reason of the non-supply of purchase orders PO 965 and PO 980 I would have carried out the damages assessment based on a gross profit margin of 13%.[202] This sits comfortably with Mr Vincent's evidence in paragraph 5.2.11 of his first report, which was in the following terms:

During the quarter ended 31 December 2019, gross profit margin fell to 13% (down from 37% during the quarter ended 30 September 2019). I am instructed that this reduction in gross profit margin is due to Safety Mate heavily discounting ATG products in order to reduce its stock holdings of ATG products as at the termination date (i.e. 30 September 2019).

516 The effect would have been to materially reduce the amount of resulting net profit arrived at. However, because I have concluded that Safety Mate has not established that it suffered any loss of profits in relation to purchase orders PO 965 and PO 980,[203] it is not necessary for me or the parties finally to complete or determine this arithmetical calculation for each of the two purchase orders. Whilst my preliminary calculations suggest that this would have yielded a lost net profit of $295,136[204] for purchase order PO 965 and $106,889[205] for purchase order PO 980, these arithmetical calculations are a matter that I would have raised with the parties before making final orders had it been necessary to do so. I also note that the calculation has been done on the basis of the same costs and expenses referred to by Mr Vincent in Table 9 above because, as he said, these costs are essentially fixed costs. This is another matter upon which there was no relevant dispute between the experts in this context.

517 For completeness, I should address briefly another matter. Although it was faintly put that ATG somehow waived reliance on the buyback option, I do not accept that submission. The only evidence was some rather vague evidence given by Mr Tee during cross-examination, which did not really get any clearer with the re-examination, which is no criticism of either counsel. It again appeared as a somewhat self-serving statement, appearing as though its substance may have been drawn from Safety Mate's interpretation of paragraph 91 of Mr Sheerin's witness statement. But even assuming that was not so, at best it was evidence of an uncommunicated understanding and is of little weight. It was also not addressed in the witness statement of Mr Tee in any material way, nor apparent from any of the documentary evidence. It also sat in tension with the letters of 3 May 2019 and 1 October 2019.

518 It was not established on the evidence that there was any sound basis for concluding that reliance on the exercise of the buyback option by ATG had been waived.[206] As I mentioned earlier, seeking to rely on the fact that ATG did not take court or other action to compel compliance also provides no sound basis for the waiver contention, whether considered alone or in combination with any other circumstances.

519 If the exclusion clauses discussed below were put to one side, the end result would have been a finding that ATG is liable to pay Safety Mate damages in the sum of $25,266 for loss of profits in respect of the goods the subject of purchase order PO 964. However, as is discussed below, that liability is excluded by the operation of the exclusions in clauses 13.1 and 13.2. Consequently, Safety Mate's damages counterclaim fails entirely.

520 By paragraph 42 its amended reply and defence to the third further amended defence and third further amended counterclaim filed 8 June 2021 ATG, alleged 'in answer to the whole of the counterclaim', among other things, that the damages claims were excluded by clauses 13.1, 13.2, and/or 15.3 of the Agreement.

521 In the alternative to its submission that Safety Mate had not established that it had suffered any loss and damage, ATG submitted that any liability for any loss suffered was excluded by clauses 13.1, 13.2 and 15.3 of the Agreement.

522 Safety Mate submitted that ATG's reliance on the exclusion clauses was misplaced for four reasons. First, because ATG did not raise the clauses at the injunction hearing before Kennedy J, where it was said that it also submitted[207] that damages would be an adequate remedy. It was submitted that an election was made and ATG is bound by that election and therefore precluded from reliance upon the exclusion clauses now. Second, that the amended pleading was an abuse of process given what occurred at the injunction hearing and therefore paragraph 42 of the pleading should be struck out as an abuse of process. Third, the exclusions in clauses 13.1 - 13.5 related to exclusions and limitations 'resulting from or arising in the course of this Agreement' and do not engage with damages for repudiation, with clause 15.3 being in 'a similar vein'. This was said to be because it was a clause that '... precludes loss of profits arising out of a legitimate termination of the Agreement' and would not engage with a wrongful termination. Fourth, the exclusions do not shield ATG from damages for failure to perform the contract, drawing in part on the observations of Devlin J in Firestone Tyre & Rubber Co Ltd v Vokins & Co Ltd (Firestone).[208] It was submitted that the words in the Agreement should be read and construed so as not to apply to a breach which would defeat the main object of the Agreement, and such a breach was the deliberate and wilful non-delivery of the Four Purchase Orders.

523 Given the above findings it is only necessary for me to determine the issues regarding ATG's reliance on (relevantly) the exclusions and limitations in clauses 13.1, 13.2, and 15.3 of the Agreement in connection with $25,266 Loss Amount, which relates only to purchase order PO 964. That said, the conclusions here reached would apply equally to the other three purchase orders had it been determined that Safety Mate had suffered damage in the form of a loss of profits as a result of ATG's breach of its supply obligation.

524 As has been rehearsed in many cases, the ordinary principles of construction apply to exclusion clauses and limitation clauses in commercial contracts. These principles have been addressed earlier in these reasons and need not be repeated. In the context of exclusion clauses, reference is frequently made to the following observations of the High Court in Darlington Futures Ltd v Delco Australia Pty Ltd:[209]

The question then is whether cl. 6 protects the appellant from the consequences of what otherwise would be breaches of contract. Mr. Bennett relies on statements in recent decisions of the House of Lords to support the approach that exclusion clauses should be simply construed in accordance with their language and that they should not be subjected to a strained construction in order to reduce the ambit of their operation. These statements have been made in a series of cases beginning with Photo Production Ltd. v. Securicor Ltd.[210] in which the House of Lords rejected the doctrine of fundamental breach previously adopted in Suisse Atlantique Societe d'Armement Maritime SA. v. N. V. Rotterdamsche Kolen Centrale.[211] In place of that doctrine their Lordships have stated that, although an ambiguous exclusion clause will be construed contra proferentem, such a clause is to be given its natural construction. So, in Photo Production, a case decided on a contract entered into before the Unfair Contract Terms Act 1977 (U.K.) came into operation, Lord Diplock, observing that the court was not entitled to reject the exclusion clause "however unreasonable the court itself may think it is, if the words are clear and fairly susceptible of one meaning only", said:[212]

"In commercial contracts negotiated between business-men capable of looking after their own interests and of deciding how risks inherent in the performance of various kinds of contract can be most economically borne (generally by insurance), it is, in my view, wrong to place a strained construction upon words in an exclusion clause which are clear and fairly susceptible of one meaning only even after due allowance has been made for the presumption in favour of the implied primary and secondary obligations."

...

These decisions clearly establish that the interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity. Notwithstanding the comments of Lord Fraser in Ailsa Craig[213], the same principle applies to the construction of limitation clauses. As King C.J. noted in his judgment in the Supreme Court, a limitation clause may be so severe in its operation as to make its effect virtually indistinguishable from that of an exclusion clause. And the principle, in the form in which we have expressed it, does no more than express the general approach to the interpretation of contracts and it is of sufficient generality to accommodate the different considerations that may arise in the interpretation of a wide variety of exclusion and limitation clauses in formal commercial contracts between business people where no question of the reasonableness or fairness of the clause arises.

525 Given Safety Mate's contention regarding the clause defeating the object of the Agreement, the observations of the Court of Appeal in Kamil[214] warrant extraction:

It was submitted on behalf of the consignee that the exception defeated the main object of the contract because there had been a misdelivery (notwithstanding that it was due to theft) which amounted to defeat of the main object of the contract namely, one of delivery of the goods to the owner at Sydney. ...

The [High] court [in Nissho Iwai Australia Ltd v Malaysian International Shipping Corporation[215]] said nothing which qualified or was in conflict with previous High Court or House of Lords authorities. On the contrary, it applied Darlington Futures (which in tum applied Securicor). Thus in Nissho Iwai the court said at 227 of the exemption clause:

The context in which cl. 8(2) has to be construed includes ... the carrier's agreement to deliver the goods to the owner at Sydney. But, relevant as that object is in the construction of cl. 8(2), the meaning of that provision ultimately depends on its language, read in context. and not on any a priori notion that the non-delivery of goods was not intended to be protected.

Counsel submitted that the two passages above quoted from 227, concerning the role of "the main object" of a contract, require close reading. I think that they do. I do not consider, however, that they contain anything which is different in principle from previous decisions.

They mean no more than this. First, parties may agree to conditions of carriage which protect the carrier against liability for loss which may defeat the main object of the carriage contract. This is not new. So much was made plain by the House of Lords in all the cases, particularly in Suisse Atlantique and Securicor. It was merely said that such an agreement must be made manifest in clear and unambiguous terms. Next, if the exemption clause specifies events on the happening of which loss occurs, then the exemption clause will apply even although the event, when ii happens, may defeat the main object of the contract. This again is consistent with the clear words of principle to be found in Securicor. It is another way of saying that the power to imply a limitation does not exist where it is clear that the parties have expressly stated in clear and unambiguous language that on the occurrence of certain events there will be no consequential liability for loss of the goods. There is even less room for implication to the contrary where the specified events are ones which ordinarily do not arise from default on the part of the carrier.

526 The application of ordinary principles of construction was recently re-emphasised by the High Court in Price v Spoor,[216] which was a case involving an exclusion clause in a mortgage that was said to prevent a mortgagor relying upon a limitations defence under the relevant statute that had the effect of extinguishing the mortgagee's 'title' to the land in question. The exclusion clause was held to be enforceable. As was uncontroversially observed by Kiefel CJ and Edelman J regarding the construction of the exclusion clause:[217]

An objective approach is required to determine the rights and liabilities of a party to a commercial contract, by reference to its text, context and purpose. The meaning to be given to its terms is determined by reference to what a reasonable business person would have understood those terms to mean.

527 Steward J, who generally agreed with the other members of the court, also referred with approval to the observations of Lord Hope in Sidhu v British Airways Plc[218] that:

Any person is free, unless restrained by statute, to enter into a contract with another on the basis that his liability in damages is excluded or limited if he is in breach of contact. Exclusion and limitation clauses are a common feature of commercial contracts.

528 Steward J thereafter observed that in the case before the court it was open to the parties to exercise their freedom of contract by including the exclusion clause, which represented 'a legitimate adjustment of the private rights of the appellants, which they were free to include, amongst others, in their original bargain ...'.[219]

529 With the established principles and well-rehearsed authorities in mind, I turn to the relevant clauses and the facts in question.

530 Clause 15.3 does not assist ATG in the context of the loss of profits claim relating to the Four Purchase Orders. This clause provides:

The termination of this Agreement shall not give rise to any liability on the part of ATG to pay any compensation to the PSP for loss of profit.

531 In the circumstances under consideration the clause does not engage. This is because it is not the termination of the Agreement that gives rise to the liability to pay damages for the breach of the Agreement in respect of the non-supply of the goods the subject of purchase order PO 964. It is the breach of the supply obligation in clauses 4.1.1 and 4.3 of the Agreement that gives rise to the liability to pay the Loss Amount, not the termination of the Agreement. It is to be remembered in this context that the breach of contract claim relating to the Four Purchase Orders was in respect of acts and omissions of ATG during the course of the Agreement, in its Initial Term.

532 Although not necessary to decide, I also accept Safety Mate's submission that clause 15.3 would not have engaged if I had concluded that the termination was invalid. This is because it would have been an ineffective and invalid termination and therefore not a 'termination' within the meaning of that expression as used in clause 15.3. That is a businesslike construction and a meaning that a reasonable businessperson in the position of the parties would give it. Moreover, if the termination had been invalid there would have been no 'termination' with which the clause could engage.

533 Clauses 13.1 and 13.2 are in the following terms:

13.1 To the extent permitted by law, ATG shall not be liable for and excludes any liability or claims or costs incurred resulting from or arising in the course of this Agreement except for:

13.1.1 death or personal injury arising from any fault or defect in the materials or workmanship of the Products, or performance of ATG, or

13.1.2 any other liability which cannot be excluded or limited under applicable law,

to the extent that the liability arises as a result of the breach, negligent performance or omission of action or by negligent action of ATG, its agents or subcontractors.

13.2 Subject to Clause 13.1 ATG shall not be liable to the PSP for any damage or loss of goods, data, loss of profit, anticipated profits, revenues, anticipated savings, goodwill or business opportunity, loss of reputation and all interest, penalties and legal and other reasonable professional costs and expenses or for any direct, indirect or consequential loss or damage incurred resulting from or arising in the course of this Agreement.

534 Applying the established principles of construction referred to above, ATG's liability to pay Safety Mate the Loss Amount is a liability captured and excluded by the terms and operation of clause 13.1. Although not eloquently drafted, it is evident that the terms engage with the liability and capture it. The liability in respect of the Loss Amount is captured by the language of clause 13.1 because it was in respect of a 'claim' 'arising in the course' of the Agreement and arising 'as a result' of the 'breach' of the Agreement by ATG.

535 Upon its proper construction, the reference to 'breach' includes a breach of the Agreement, subject to the carve outs in clauses 13.1.1 and 13.1.2. Whilst the liability cannot be said to 'result' from the Agreement, it does arise 'in the course' of it. Upon its proper construction this expression means during its course - as opposed to before the Agreement or after it has ended. These are meanings that a reasonable businessperson would give to the terms. I add that it was not submitted that the liability was excluded by the terms of the carve outs to the exclusions in clauses 13.1.1 and 13.1.2, which was not surprising.

536 Assuming for the moment that clause 13.2 is to be seen as a stand-alone exclusion clause rather than a qualification or elaboration on the kinds of loss to which the exclusion in clause 13.1 applies,[220] then this would also capture ATG's liability for the Loss Amount. This is because the liability for the Loss Amount is in respect of a claim for damages for one or more of: loss of profit; loss of anticipated profit; loss of revenue; and indirect or consequential loss or damage,[221] arising during or in the course of the Agreement (but not resulting from it).

537 If, however, clause 13.2 was to be construed as a qualification or elaboration on the kinds of loss to which the liability exclusion in clause 13.1 applies, the position is no different. This is because each of the clauses would still engage for the reasons mentioned.

538 The end point is that ATG's liability to Safety Mate for the Loss Amount is excluded by the terms and operation of clauses 13.1 and 13.2 of the Agreement.

539 It will be apparent from this conclusion that I have not been persuaded by Safety Mate's other submissions to the contrary that have not been expressly or implicitly addressed in the above discussion. I make the following further observations.

540 I do not accept that the fact that the exclusion clauses were not raised or referred to[222] during the injunction application constitutes an election not to rely on these clauses at all in the proceeding. The principles regarding election are well known and need not be rehearsed. Even assuming the requisite knowledge of ATG, the act of ATG relied upon by Safety Mate was the making of a submission in the context of the interlocutory application that it was opposing, and where it was also open to Safety Mate to raise these terms of the Agreement to contend that damages was not, or may not be, an adequate remedy. It seems that Safety Mate did not do so either, although the result would be no different on this point if it had.

541 The short point is that ATG not making the submission in the circumstances of the urgent contested application where it was Safety Mate who needed to establish that damages was not or may not be an adequate remedy, is not an alternative or inconsistent right to ATG's entitlement to rely upon the terms of the exclusion clause at trial in the defence of the claims made.[223]

542 The strike out contention regarding the paragraph of the pleading containing the exclusion clause allegations was first referred to in the written closing submissions. This was raised with Safety Mate during oral closing submissions in the context of, among other things, the amendments to the parties' respective pleadings having been made in circumstances where they were not opposed by the other party, and the absence of any application to strike out the pleading. Senior counsel for Safety Mate responsibly indicated that the abuse of process and strike out point was not being pursued and that no application to strike out the allegations would be made. To the extent that Safety Mate was emphasising its election contention in this context, I refer to the above discussion on this point.

543 Given that I have determined that the termination of the Agreement was valid and effective, it is not necessary to address the submissions regarding termination, although I refer to my observations above regarding the proper construction and operation of clause 15.3 of the Agreement.

544 Finally, and having regard to the established principles and authorities earlier referred to, I do not accept the submission that either clause 13.1 or clause 13.2 should be read so as not to apply to the breach in question, or that upon their proper construction they defeat the main object of the Agreement earlier referred to. As was recently underscored by Steward J in Spoor v Price, it is open to businesspeople to enter into contracts that contain clauses excluding liability for damages for breach, as the parties did here. There is also no ambiguity here present that could lead to a contra proferentem construction that would exclude the liability for the damages for loss of profits comprising the Loss Amount.

545 The established principles referred to above are well known, as I have said, and to the extent that the cases referred to by Safety Mate state and apply these principles they are helpful illustrations, as are the myriad of other authorities. But each case necessarily depends on the particular terms of the contract in the relevant circumstances of that case. Perhaps all the more so when, as here, the court is dealing with an individual or bespoke agreement and not common or similar form contracts as is seen in various fields. Contracts of carriage are one example. Some construction contracts are another. The decisions in Firestone,[224] Cessnock,[225] Glebe Island,[226] Darlington Futures[227] and Kamil[228] referred to by Safety Mate each involved materially different circumstances and materially different exclusion and limitation clauses. Except to the extent that they address the principles and illustrate their application to particular facts, they do not provide any material assistance to Safety Mate or the court in the construction and application of the clauses in question.

546 As the Court of Appeal in Kamil[229] observed, it is open for parties to agree to an exclusion clause that might defeat the object of the contract between contracting parties, but I do not accept that this is what clause 13.1 or clause 13.2 does. Whilst it is not necessary nor desirable to seek to define the outer boundaries of the exclusions, it is apparent that clause 13.1 does not exclude all claims, as is evident from the carve outs in clauses 13.1.1 and 13.1.2. Further, although upon its proper construction the liability referred to in clause 13.1 is to be construed as including a liability to pay a monetary amount by way of damages, it is not to be construed as excluding the payment of particular sums required to be paid by ATG pursuant to other provisions of the Agreement. Clause 13.1 is also not to be construed as relating to claims for other relief, such as specific performance of the Agreement, noting as I do that as a matter of construction, the clause is directed at monetary liability. This reflects a businesslike construction arrived at by the application of the established principles. It also recognises that it is open to people of commerce to reach agreement in relation to such matters even if, upon their proper construction, they exclude a liability for damages for breach or adversely impact the object of the Agreement.[230]

547 Even if it had been necessary for present purposes to imply a limitation on the exclusions, or read them down, it would not assist Safety Mate. This is because there is in my view no sound basis for reading the clause down, or implying a limitation, that would have the effect of narrowing the exclusion so as to remove from it a damages liability for loss of profits. In my view it is plain from the terms of clauses 13.1 and 13.2 that such a liability is objectively intended to be covered, as indeed it is.

548 To the extent that it was contended that the breach of the reasonable endeavours supply obligation relating to the Four Purchase Orders should be characterised as 'wilful' or deliberately wrong, I do not accept that submission, which is supported by the background and circumstances in which it occurred, as earlier referred to. As has been seen, the issue involved an issue of construction that was not straightforward, and it was evident that ATG was seeking legal advice in what I find was a bona fide manner. Further, and perhaps most importantly in this context, the primary consideration related to the fact that the contract was to terminate on 30 September 2019 and the goods would not arrive until that day for two of the orders and 31 October 2019 for the other two - and in circumstances where ATG had foreshadowed the likelihood of exercising the buyback option in respect of all of Safety Mate's stock on hand, as in fact it did.

549 Finally on the topic, although given my above conclusions it is not strictly necessary to decide whether clauses 13.1 and 13.2 are to be construed as stand-alone provisions rather than clause 13.2 being an expression or elaboration of the types of liability covered by clause 13.1, it is perhaps desirable that I state briefly my conclusion on the point. Having regard to the language, structure, terms and subject matter of the clauses, and applying the principles of construction earlier referred to, I consider the better view to be that, whilst complementary of each other, clauses 13.1 and 13.2 are 'stand-alone' exclusions in their own right that operate in accordance with their own terms. This is well supported by their terms, including the opening words of clause 13.2. There is also no express linking of the two clauses except that clause 13.2 is made subject to clause 13.1, which necessarily imports the carve outs in clauses 13.1.1 and 13.1.2. That said, I appreciate that it is not readily apparent what would be caught by clause 13.2 that would not already be captured by clause 13.1.

550 As I have said, the end point is quite straightforward. ATG's liability to Safety Mate for the Loss Amount is excluded by clauses 13.1 and 13.2 of the Agreement.[231] It follows from this and my earlier findings that Safety Mate's damages claim for loss of profits in respect of the goods the subject of the Four Purchase Orders cannot succeed.

551 ATG has succeeded in its claim for a declaration that the Agreement was validly terminated. Although Safety Mate established that ATG breached clauses 4.1.1 and 4.3 by failing to use reasonable endeavours to supply Safety Mate the goods the subject of the Four Purchase Orders, its counterclaim for damages alleged to have been suffered by reason of this breach and the claimed invalid termination of the Agreement have failed.

552 As noted in the introduction and summary above:

(a) ATG did not breach the Agreement by failing to act in good faith in the exercise of its termination right under clause 2.2.1 of the Agreement.

(b) The Agreement was validly terminated by ATG's Termination Notice with effect from midnight on 30 September 2019.

(c) The Agreement was not extended for a further two-year period from 1 October 2019 by Safety Mate's Extension Letter.

(d) ATG breached clauses 4.1.1 and 4.3 of the Agreement by failing to use reasonable endeavours to supply to Safety Mate the goods the subject of the Four Purchase Orders.

(e) Safety Mate established that it suffered loss and damage, being the Loss Amount of $25,266, in respect of purchase order PO 964.

(f) Safety Mate did not establish that it suffered any loss and damage by reason of ATG's failure to use reasonable endeavours to supply to Safety Mate the goods the subject of purchase orders PO 965, PO 974 and PO 980.

(g) ATG's liability to Safety Mate for the Loss Amount of $25,266 is excluded by clauses 13.1 and 13.2 of the Agreement.

553 I propose to make orders to the following effect:

1. The Court declares that the distribution agreement between the plaintiff and the defendant that had a 'Commencement Date' of 1 October 2017 (Agreement) was validly terminated by the plaintiff's Notice of Termination dated 21 March 2019, with effect from midnight on 30 September 2019.

2. The Court declares that the plaintiff breached clause 4.1.1 and clause 4.3 of the Agreement by failing to use reasonable endeavours to supply to the defendant the goods the subject of purchase orders PO 964, PO 965, PO 974 and PO 980.

3. The counterclaim of the defendant is otherwise dismissed.

554 I will hear from the parties in relation to costs.

ANNEXURE 'A' - Table of Alleged Confidential Information

SAFETY MATE PTY LTD (ACN 104 784 241) Defendant

Why is it Confidential Information pursuant to the defined terms of "Confidential Information" in the Agreement

Evidence relied upon regarding character of confidential information and Reference in Safety Mate's Closing submissions and Closing submissions in reply and pleadings

Document: "Power Point Presentation under heading: Commercial Aspects. ATG History in the Territory"

• Safety Mate utilising Armour Safety in New Zealand
• Remaining sales are all via Armour Safety
• The penetration in PNG as being minimal
• Safety Mates sales into PNG are via Bishops

It is information that ATG has "gained relating to" Safety Mate's:

• Information of a commercial value;
• Customer lists;
• Sales.

All of these matters are information gained by ATG through Safety Mate, because it is effectively Safety Mate's sales information to ITS customers and the penetration Safety Mate has in the market.

It is of commercial value to both Safety Mate and Mayo as it tells Mayo who the CP is in both the New Zealand and PNG markets and in the case of PNG, provides information about the penetration into that market.

"Client and market information of Safety Mate is kept confidential and not disclosed to anyone outside the organisation."

Armour Safety is a Channel Partner of Safety Mate and New Zealand is the market.

CB 863: KPI 3 Papua New Guinea Market Development and in 3.1 the local CP is Bishops have been re-appointed:

Bishops is a channel Partner in PNG and PNG is the market.

See also CB 1286 where Sheerin asks on 1 February 2019 for a copy of Bishop's commitment to hold stock in PNG or evidence thereof as he had looked on their website and there is no mention of ATG.

Third Further Amended Defence and Counterclaim [9(1)(iii)(L)-(M)].

1. No evidence was led by Safety Mate to demonstrate that any of this information was:

1. 'gained by ATG through Safety Mate', let alone on what date or by what means; or

1. of 'commercial value to both Safety Mate and Mayo',

to enable such assertions to be tested by cross-examination or accepted by the Court.

2. No allegations regarding this page of the PowerPoint Presentation (Presentation) were pleaded or raised in evidence or submissions (the sole focus of which instead was the slide which appears at CB2643) at all.

3. Neither this page, nor any information on it, were put to any witnesses, thus offending the rule in Browne v Dunn (1893) 6 R 67.

4. If either of the above steps had occurred, ATG would have had the opportunity to not only test the assertions by cross-examination, but also lead evidence in response, including as to such information being, either at the time or subsequently:

1. public knowledge (including by reference to members of the PPE industry); or

1. separately known to ATG (about what is its own product & market),

so as to enliven the operation of subclauses 16.1.1-3.

5. Safety Mate ought not be permitted to now press this new allegation, as ATG no longer has the ability to call evidence to respond to the allegation, and to cross-examine Safety Mate's witnesses in relation to it. Alternatively, the new allegation should be treated with caution and/or accorded little if any weight in the circumstances.

6. In relation to the allegation that 'Armour Safety is a Channel Partner of Safety Mate', ATG refers to paragraphs 5.6-5.7 of its Closing Submissions.

Document: "Power Point Presentation under heading: Commercial Aspects. Current Local ATG Market"

• "Blackwoods=-60%"
• ATOM, Bunzl, PIP & IPP = -25%
• the number of "45 active distributors in total"
• "End Users and the penetration into various sectors - specifically referencing "Retail= non-existent, great opportunity"
• the "Territories" and their size/development;
• List of various End Users - i.e., BHP, Rio Tinto
• Market size

It is information that ATG has "gained relating to" Safety Mate's:

• Information of a commercial value;
• Customer lists;
• Sales.

All of these matters are information gained by ATG relating to Safety Mate, because it is effectively Safety Mate's sales information to its customers and the penetration Safety Mate has in the market.

It is noted that the information does not have to be gained from Safety Mate. All that is required pursuant to the definition of "Confidential Information" is that the information is knowledge that ATG has "gained relating to" Safety Mate's information or intellectual property. It is broad enough to include knowledge of commercial value to Safety Mate that has been derived by ATG from other information or other means including experience in the market where someone such as Sheerin would likely know Safety Mate's prices (See T 270.5-7; T 272.8-10).

This is exactly the type of information Sheerin was requesting from Safety Mate in early 2019 [see CB 1295-1297] and is information Safety Mate keeps confidential (Tee at [180]). It is no coincidence.

It is information of commercial value to Safety Mate and Mayo because it provides Mayo with valuable information about customers at Channel Partner and End User level; market penetration and opportunities for expansion.

It is noted that, on ATG's case, the Power Point Document is the only information provided to Mayo. On that basis, the NDA Deed was entered into for the provision of the information in the Power Point Presentation alone. Given that both Mayo and ATG agreed to enter into an exclusive agreement (and ATG to terminate Safety Mate) on the back of the Power Point Presentation, it should be inferred that the information contained in the document (referred to in this table) was of significant commercial value.

Third Further Amended Defence and Counterclaim [9(1)(iii)(L)-(M)].

"Client and market information of Safety Mate is kept confidential and not disclosed to anyone outside the organisation."

CB 1208, 865 and 1252 - Sheerin requests and is provided with, list of CP's and contacts

CB 1220 and 1228 - Sheerin requests and is provided with, CP sales figures (pairs per major customer)

CB 1295-1297 - where Sheerin asks for and is provided with information in a table at CB 1295 regarding market penetration which Safety Mate submits has been replicated in the Power Point Presentation.

See also CB 1278 regarding confidentiality of information

7. In response to the whole of this allegation, ATG refers to and repeats point 1 above.

8. In response to the allegation that 'the information does not have to be gained from Safety Mate', ATG refers to subclauses 16.1.1-3 of the Distribution Agreement, and point 4 above.

9. In response to the allegation that 'this is exactly the type of information Sheerin was requesting from Safety Mate in early 2019', ATG refers to its oral submissions at T1091:23- T1094:8, namely: what was provided by Mr Robeson to Mr Sheerin is not the information which appears in the Presentation at CB2639.

10. In response to the allegation that 'the information is of commercial value to Safety Mate and Mayo', ATG refers to and repeats point 1(b) above.

11. In response to the allegation that 'on ATG's case, the Power Point Document is the only information provided to Mayo', ATG denies this and refers to and repeats paragraph 6.12 of its Outline of Closing Submissions in Reply dated 21 July 2021 (ATG Reply Submissions), which specifically state that paragraph 5 of Safety Mate's Submissions reference the Presentation as the sole information provided by ATG to Mayo 'which preceded the Termination Notice' (cf. in toto).

Document: "Power Point Presentation under heading: Commercial Aspects. Confidential Figures"

Reference to "Pairs" of products by number from 2016-2018 is a reference to the precise number of gloves purchased by Safety Mate from ATG

The reference to COGS(AUD) is the specific costs of goods sold to Safety Mate from 2016-2018

It is information that ATG has gained relating to Safety Mate's:

• Information of a commercial value; and
• Sales.

The number of pairs of gloves purchased by Safety Mate and the costs of the goods sold is information of commercial value to both Safety Mate and Mayo as it assists Mayo to know:

• how much stock is being purchased by Safety Mate on a yearly basis;
• that purchases have been increasing from 2016 to 2018;
• the prices for the stock

Hence why it is being provided to Mayo, to entice it to enter into an agreement with ATG.

It is also information gained by ATG from Safety Mate by virtue of the ordering process of Products by Safety Mate. The number of pairs of products purchased by Safety Mate is therefore information gained by ATG from Safety Mate.

Third Further Amended Defence and Counterclaim [9(1)(iii)(A) and (D)].

See also T 269.24-T 270.1-3, 14-16 and T 271.27 - T 272.1-10.

Sheerin also admits at T 313.11-18 that the contents of the Pro Forma Invoice at CB 2848-2855 and 2970-2971 contains Safety Mate's confidential information which includes:

Quantity of pairs of gloves, by types as well as total value in $USD for that shipment. If that information is confidential, the information on this slide of the Power Point Presentation is also confidential information.

Otherwise, the quality or character of the confidential information is inferred from the face of the document, the construction of the Distribution Agreement and the NDA and the fact that the information was given to Mayo to entice it to enter into an agreement with ATG.

12. In response to the whole of this allegation, ATG refers to and repeats points 1, 4 and 5 above.

13. ATG also refers to subparagraph 6.13(a) of the ATG Reply Submissions, which notes that 'Mr Sheerin has confirmed that the figures in the ... first two columns of that table were derived from ATG's own data (and thus fall within the clause 16.1.1 exception)', as recorded by the unchallenged evidence given by Mr Sheerin at T270:2-3.

Document: "Power Point Presentation under heading: Commercial Aspects. Confidential Figures"

It is information that ATG has gained relating to Safety Mate's:

• Information of a commercial value;
• Sales; and
• Financials

Safety Mate's revenue is specific for each year. Whilst it acknowledges that minor assumptions are made, it is clearly information about Safety Mate's revenue that Sheerin has gained from somewhere or has been derived from somewhere.

It has been "gained" from somewhere. Likely from Sheerin's meetings with and dealings with Safety Mate and its Channel Partners and End Users. It is clearly information of commercial value to Safety Mate and it is not an answer to say that it was a guess - that is not what it purports to be.

It is also too specific to be a guess as it is rounded to the nearest $1000. Even if it is based upon the costs of goods sold, it is therefore based on Safety Mate's confidential information.

Sheerin's "assumptions" are minor and only relate to discounts and CPS. The document speaks for itself - it is a representation to Mayo as to Safety Mate's actual revenue.

It is also not independently developed by Sheerin. Independently developed does not mean derived from other information or reverse engineered. It is not the sort of information that can be independently developed as opposed to e.g a formula, recipe, method of creation or specification for a glove.

Third Further Amended Defence and Counterclaim [9(1)(iii)(E)].

Otherwise, the quality or character of the confidential information is inferred from the face of the document, the construction of the Distribution Agreement and the NDA and the fact that the information was given to Mayo to entice it to enter into an agreement with ATG.

14. In response to the whole of this allegation, ATG refers to and repeats point 1 above.

15. ATG also refers to subparagraph 6.13(b) of the ATG Reply Submissions, which notes that 'Mr Sheerin has confirmed that the figures in the ... third column of that table were expressly stated in the Presentation to be ATG's own estimates (and thus fall within the clause 16.1.3 exception)', as recorded by the unchallenged evidence given by Mr Sheerin at T270:3-11.

16. In response to the new allegation that the information has been likely gained by ATG from meetings with 'Channel Partners and End Users', (which was not put to Mr Sheerin, nor was any evidence led in support of it), even if established, this would enliven subclause 16.1.1-3 of the Distribution Agreement.

17. In response to the new allegation that the information 'is too specific to be a guess', this was not put to Mr Sheerin, thus offending the rule in Browne v Dunn, and depriving him of the opportunity to explain the calculations he used to make the estimates.

18. The allegation that 'Sheerin's "assumptions" are minor and only relate to discounts and CPS" is not supported by the evidence. Mr Sheerin's evidence was that the 'PSP Revenue' figures at large were based on his assumptions: T270:3-4.

19. Safety Mate's construction of 'independently developed' is unworkably narrow, and its example relates to a scenario which could not constitute the confidential information of the other party in the first place. Rather, read in conjunction with subclauses 16.1.1 and 16.1.2, and in accordance with the principle of ejusdem generis, 16.2.1.3, properly construed, means 'information which we have come up with' (and would include data relating to ATG's own sales to its PSPs).

Document: "Power Point Presentation under heading: Commercial Aspects. Confidential Figures"

• PSP Gross Profit Margin $
• PSP Gross Margin %

It is information that ATG has gained relating to Safety Mate's:

• Information of a commercial value;
• Sales; and
• Financials

Both Gross Profit margin figures are based upon the PSP Revenue less the cost of goods sold.

It is clearly information about Safety Mate's revenue that Sheerin has gained from Safety Mate's purchases of ATG Products (COGS) and from somewhere else relating to Safety Mate's sales to Channel Partners. It has been "gained" from Safety Mate and/or somewhere else. It is clearly information of commercial value to Safety Mate and it is not answer to say that it was a guess - that is not what it purports to be. Given that it is based (at least partially) upon the costs of goods sold, it is therefore based on Safety Mate's confidential information.

Sheerin's "assumptions" are minor and only relate to discounts and CPS. The document speaks for itself - it is a representation to Mayo as to Safety Mate's actual revenue growth.

It is also not independently developed by Sheerin. Independently developed does not mean derived from other information or reverse engineered. It is not the sort of information that can be independently developed as opposed to e.g a formula, recipe, method of creation or specification for a glove.

Third Further Amended Defence and Counterclaim [9(1)(iii)(F)-(H)].

See also T 269.24-T 270.1-3, 14-16 and T 271.27 - T 272.1-10.

Otherwise, the quality or character of the confidential information is inferred from the face of the document, the construction of the Distribution Agreement and the NDA and the fact that the information was given to Mayo to entice it to enter into an agreement with ATG.

20. In response to the whole of this allegation, ATG refers to and repeats point 1 above.

21. ATG also refers to subparagraph 6.13(b) of the ATG Reply Submissions, which notes that 'The figures in remaining fourth, fifth and sixth columns are calculations based on the first three columns.'

22. To illustrate the above point, each figure in the:

1. 4th column is simply the product of subtracting the figure in the 2nd column from the figure in the 3rd column (eg. $21,838,000 - $12,428,000 = $9,410); and

1. 5th column is simply the percentage that the figure in the 4th column is of the figure in the 3rd column (eg. $9,410,000 is 43% of $21,838,000).

23. ATG further repeats paragraphs 18 and 19 above.

Document: "Power Point Presentation under heading: Commercial Aspects. Confidential Figures"

It is information that ATG has gained relating to Safety Mate's:

• Information of a commercial value; and
• Financials

Safety Mate provided regular stock on hand reports to ATG and provided the SOH for January 2019 to ATG on 4 February 2019 (see CB1283). It is information gained by ATG from Safety Mate.

At this stage, no products were sold to Mayo, therefore the Stock on Hand figure referred to in the power point could only be that of Safety Mate's.

It demonstrates the likely stock on hand at a particular time and would be of commercial benefit and advantage to Mayo as a new entrant to the market for ATG products - hence why it is in the document.

Third Further Amended Defence and Counterclaim [9(1)(iii)(I) and (K)].

See also T 269.24-29 and T 272.1-10, 18-20, and T 303.31- T 304.1, 11-12.

Otherwise, the quality or character of the confidential information is inferred from the face of the document, the construction of the Distribution Agreement and the NDA and the fact that the information was given to Mayo to entice it to enter into an agreement with ATG.

24. In response to the whole of this allegation, ATG refers to and repeats point 1 above.

25. Whilst it was put to Mr Sheerin that he received stock on hand information from Safety Mate in general terms [T272:18-20], it was not put to him (or any other ATG witness) that the specific stock on hand figure on this slide was derived from Safety Mate. Further, the figure in the cited page of the Court Book (which was also not put to Mr Sheerin or any other ATG witness) does not match the figure on this slide, nor do any of the 'stock on hand' emails provide a dollar figure.

Document: "Power Point Presentation under heading: Commercial Aspects. Confidential Figures"

It is information that ATG has gained relating to Safety Mate's:

• Information of a commercial value; and
• Financials

This is the amount of Safety's Mates order that it has purchased from ATG which was currently in transit to it. It is information gained by ATG from Safety Mate directly from Safety Mate's purchases.

At this stage, no products were sold to Mayo, therefore the transit figures referred to in the power point could only be that of Safety Mate's.

This information would be of commercial benefit to Mayo as it may assist Mayo in knowing how much product is in transit on a monthly basis for the purposes of insurance, storage etc- hence why it is in the document.

It is also not independently developed by Sheerin. Independently developed does not mean derived from other information or reverse engineered. It is not the sort of information that can be independently developed as opposed to e.g a formula, recipe, method of creation or specification for a glove.

Third Further Amended Defence and Counterclaim [9(1)(iii)(I)].

Otherwise, the quality or character of the confidential information is inferred from the face of the document, the construction of the Distribution Agreement and the NDA and the fact that the information was given to Mayo to entice it to enter into an agreement with ATG.

26. In response to the whole of this allegation, ATG refers to and repeats point 1, 4 and 5 above.

27. There was no puttage to any ATG witness regarding 'in transit' figure at all, thus offending the rule in Browne v Dunn.

28. Safety Mate made no reference to the in transit figures in any pleading, submissions or evidence, thus depriving ATG of the opportunity to lead evidence on it, including as to the fact that information regarding stock in transit was (and must, as a matter of logic be) already known to / developed by ATG, thus falling within the operation of subclause 16.1.1-3.

Document "Pro forma invoice dated 31 October 2018"

• The quantity of pairs, the number of cartons, the price in USD and the value FOB Colombo for each type of glove, separated by size and style;
• The total quantity of pairs and cartons;
• The total value in USD$;
• Packing descriptions;
• Payment terms

It is information that ATG has gained relating to Safety Mate's:

• Information of a commercial value; and
• Payment terms;
• Prices.

The pro-forma invoice contains is information gained by ATG from Safety Mate based upon the specific quantity, type and price requested by Safety Mate.

Each aspect is information of commercial value to Safety Mate and Mayo. It is information upon which Mayo can determine its likely costs, payment terms, logistics and specific types of Product that the market (ie, Safety Mate's customers) require.

Each aspect of the document assists Mayo in providing it with a "springboard" into Safety Mate's market.

In the email, Sheerin went beyond just providing the PFI to Mayo, he also told Mayo that it represented a typical monthly order by Safety Mate (CB2971)

Third Further Amended Defence and Counterclaim [9(1)(iii)(N)].

And admissions of Sheerin at T 313.16-20 and T 315.8-12.

Otherwise, the quality or character of the confidential information is inferred from the face of the document, the construction of the Distribution Agreement and the NDA and the fact that the information was given to Mayo to entice it to enter into an agreement with ATG.

30. ATG refers to and repeats paragraphs 6.15-6.19 of the ATG Reply Submissions, and acknowledges that this document (PFI) contains 'Confidential Information' within the meaning of clause 1.1 but notes that the PFI was provided to Mayo:

1. on 15 March 2019, after the relevant decision to terminate had been made in February 2019, and less than a week before the termination notice was in fact issued;

1. for the sole purpose of illustrating ATG's payment terms, which appear at the back of the PFI, as is plain from the covering email [CB 2970];

1. not (as alleged in paragraph 26 of Safety Mate's Closing Submissions), with any malicious motive, such as to '_entice Mayo to seize Safety Mate's busines_s', as the parties had by 15 March already determined to engage with each other; and

1. without causing any loss or damage, and without any absence of good faith.

Document: "2018 cal year - shipping volume.xlsx"

Contains the 2018 volume of gloves sold to Safety Mate at 6,106,176 which is recorded by glove range.

It also sets out pairs per carton and other categories of volume in metre squared.

[Agreed by parties that email sent on 17 April - inference as to other possible date denied by ATG]

Inference that it was provided on a date prior to this due to:

• reference in 17 April 2019 email to it having been previously sent to Mayo;
• creation of document on 6 February 2019;
• identical information contained in the Power Point Presentation: T 299-306.6;
• When asked when it was provided Sheerin said "I can't recall": T 281.15.

See paragraphs [101]-[105] of Safety Mate's closing submissions regarding the inference it asks the Court to make from the available and unavailable evidence.

It is information that ATG has gained relating to Safety Mate's:

The number of pairs of gloves purchased by Safety Mate is information of commercial value (hence why it was provided to Mayo in the Power Point Presentation to entice it to enter into an agreement with ATG).

It is also information gained by ATG from Safety Mate by virtue of the ordering process of Products by Safety Mate. The number of pairs of products purchased by Safety Mate is therefore information gained by ATG from Safety Mate.

Third Further Amended Defence and Counterclaim [9(1)(iii)(B)].

Otherwise, the quality or character of the confidential information is inferred from the face of the document, the construction of the Distribution Agreement and the NDA and the fact that the information was given to Mayo to entice it to enter into an agreement with ATG.

31. In response to the whole of this allegation, ATG refers to and repeats points 1, 4 and 5 above.

32. From a timing perspective, this document (1st Spreadsheet) was provided to Mayo on 17 April 2019, well after the relevant decision to terminate was made in February 2019 and actioned on 21 March 2019.

33. In relation to the content of the 1st Spreadsheet, ATG refers to subparagraph 2.7(c) of its Outline of Closing Submissions dated 5 July 2021 (ATG Closing Submissions), and to Mr Sheerin's unchallenged evidence that Safety Mate only reported stock on hand at a family level, so he would 'take a spread of purchases and a ratio and apply it to the family' (as recorded at T301:28-29).

34. In relation to the allegation that there is an 'inference that it was provided on a date prior to this', ATG refers to and repeats paragraphs 6.21-6.23 of the ATG Reply Submissions.

• the product type of ATG products purchased by Safety Mate from ATG for the 2018 calendar year;
• the price of ATG products purchased by Safety Mate from ATG for the 2018 calendar year;
• The market into which the Products were sold;
• Safety Mate's exit sales of ATG products for the months January, February and March 2019;
• Safety Mate's 'stock on hand' of ATG products as at:

[Agreed by parties that email sent on 17 April - inference as to other possible date denied by ATG]

See paragraph 106-109 of Safety Mate's closing submissions regarding the inference it asks the Court to make from the available and unavailable evidence.

It is information that ATG has gained relating to Safety Mate's:

• Information of a commercial value;
• Prices;
• Sales.

The number of pairs of gloves purchased by Safety Mate and the costs of the goods sold, by each type of glove over the past 12 months, is information of commercial value to both Safety Mate and any competitor.

It is also information gained by ATG from Safety Mate by virtue of the ordering process of Products by Safety Mate. The number of pairs of products purchased by Safety Mate is therefore information gained by ATG from Safety Mate.

The exit sales are commercially valuable because they demonstrate the volume of sales, by glove, made by Safety Mate between January and March 2019 as well as the stock on hand.

Closing Submissions at Paragraphs [106]-[109]; and

Third Further Amended Defence and Counterclaim [9(1)(iii)(J)-(L)].

See admissions of Sheerin in relation to exit sales and stock on hand at T 303.24-305.17

"Cells AR6 : AR11 = Safety Mate's sales out (What we call Exit Sales Rate, ESR)

Otherwise, the quality or character of the confidential information is inferred from the face of the document, the construction of the Distribution Agreement and the NDA and the fact that the information was given to Mayo to entice it to enter into an agreement with ATG.

35. In response to the whole of this allegation, ATG refers to and repeats points 1, 4 and 5 above.

36. From a timing perspective, this document (2nd Spreadsheet) was also provided to Mayo on 17 April 2019, well after the relevant decision to terminate was made in February 2019 and actioned on 21 March 2019.

37. In relation to the content of the 2nd Spreadsheet, ATG refers to subparagraph 2.7(b) of ATG's Closing Submissions, and to Mr Sheerin's unchallenged evidence regarding his estimating of the relevant figures, noting that Safety Mate never provided any information to ATG at the SKU level (as recorded at T276:5-9 and 20-22).

38. In relation to the inference that Safety Mate 'asks the Court to make from the available and unavailable evidence', ATG refers to and repeats paragraph 6.24 of the ATG Reply Submissions, and notes that the language of the 17 April 2019 covering email [CB 2244] confirms that the 2nd Spreadsheet was first shown to Mayo in a meeting that day.

[1] Clause 12.2 of the Agreement contains an express good faith obligation to this effect.

[2] The court was informed that Safety Mate's counterclaim regarding what was referred to as the 'Japan Agreement' had been resolved between the parties, and that it was not necessary for the court to determine this issue. Safety Mate also did not press its claim that clause 15.5 of the Agreement was an unlawful restraint of trade, which was not listed as an issue in the originally filed Agreed List of Issues.

[3] Meaning very senior level, such as 'CEO', 'COO' and 'CFO' level.

[6] This was reflected through the run of email exchanges at the time, including the chain of emails that included Mr Tee's email to Mr Browning on 18 July 2016 at 3:51pm. Another example is the email from Mr Tee to Mr Goth and Mr Browning which formed part of the same exchange and was responded to by Mr Browning on 13 June 2016 at 2:02pm.

[7] Email from Mr Tee to Mr Browning dated 27 January 2017 at 8:54am.

[8] Email from Mr Temperton to Mr Tee dated 10 February 2017 at 6:56am.

[9] Email from Mr Temperton to Mr Tee dated 10 February 2017 at 8:33am.

[10] Email from Mr Temperton to Mr Tee dated 11 February 2017 at 5:51am.

[11] Email from Mr Tee to Mr Temperton dated 11 February 2017 at 6:16am. This was responded to by email from Mr Temperton in which he noted that ATG did not do something for Safety Mate at Christmas time when '... our normal suppliers always send or provide something thank us for using their product ... 2 ways to look at most things'.

[13] And the email exchanges earlier referred to above.

[14] This email was also relied on by Safety Mate in connection with its allegation about a review representation, which is addressed later in these reasons.

[15] The information in the table has not been published in these reasons as it is said to be commercially sensitive and it is not necessary to do so.

[16] Which was also stated in the Agreement to be its registered office.

[17] Which was the recorded 'Time Finished' on the facsimile transmission sheet.