Servicepower Asia Pacific Pty Ltd v Servicepower Business Solutions Ltd

On an application for summary judgment, a claim should proceed where the claimant has a real prospect of establishing that no further termination term can be implied into a contract which contains detailed express termination provisions. The possibility that a contract may continue indefinitely does not by itself justify implying termination on reasonable notice.

Contractual registration provisions do not extend territorial or substantive rights beyond the agreement’s express limits. Encouragement to pursue a prospective customer is not, without clear terms, authorisation to sell outside the permitted territory or to a non-end user. An estoppel requires clear and unequivocal words or conduct.

Servicepower Asia Pacific Pty Ltd sought declarations concerning the effectiveness of Servicepower Business Solutions Ltd’s purported termination of an Authorised Solutions Partner Agreement, the contractual status of Genpact International LLC, and the arrangements governing proposed sales of software through Genpact to customers outside the contractual territory.

SBS applied under CPR Part 24 for summary judgment, contending that SPAP had no real prospect of succeeding. The court also considered whether the parties had reached a binding settlement during negotiations in July 2008.

1. Settlement. The parties may have reached an agreement in principle during the July 2008 telephone discussions, but they contemplated that the detailed terms would be negotiated and reduced to writing. No legally enforceable compromise was concluded. Nor was there an enforceable agreement preventing SBS from taking further steps in the proceedings.
2. Termination. Section 20 of the Agreement contained detailed provisions governing termination for breach, specified causes and insolvency. Although the courts may imply termination on reasonable notice where an agreement contains no express termination provision, that implication is less obvious where the parties have carefully specified the circumstances of termination. SPAP therefore had a real prospect of establishing at trial that no further term could be implied. Summary judgment on the first declaration was refused.
3. Genpact’s contractual status. Sections 5, 7 and 12(b), read together, meant that registration under section 12(b) could not create rights in respect of sales outside Australia and New Zealand, or outside an extended Asia-Pacific territory, unless SBS had authorised those sales or SPAP had validly exercised the relevant option. Genpact was not an End User and was intended to resell to customers outside the permitted territory. SPAP’s unilateral communications therefore could not register Genpact as a contractual customer or account.
4. Authorisation and estoppel. SBS’s encouraging emails authorised negotiations only. They did not authorise sales under section 5, acknowledge Genpact as SPAP’s contractual customer, or establish an estoppel. Any possible claim for remuneration, such as a finder’s fee or quantum meruit, was not the declaratory claim before the court.
5. The declarations concerning Genpact and the Agreement or Rules of Engagement were struck out. The termination issue was permitted to proceed to trial, with directions to follow.