Distie sets NSW contractual law precedent

The managing director of now-defunct distributor Electronic Tracking Systems (ETS) has won a ruling in the High Court of New South Wales that has the potential to set a new contractual law precedent in this country.

When a contract agreement broke down between ETS's Glenn Miller and Metrocall he wanted to take the US-based tracking vendor to court. The problem for Miller was Metrocall had no intention of coming to Australia and facing a law suit because of a standard clause nearly every distributor in Australia is subjected to in contracts with suppliers.

The "Governing Law" clause found in almost all import and distribution contracts held by Australian distributors infers that contract breaches and subsequent legal action is carried out in the manufacturer's country. This often incurs unreasonable expenses for the Australian distributor if they want to pursue breaches.

Miller, who is now managing director of software distributor Janteknology, has since won a three-year legal battle for, in effect, the right to try the contractual dispute here in Australia. This sets an important NSW legal precedent, which some pundits believe, will go a long way towards being acknowledged country-wide.

Miller claims the governing law clause impedes smaller distributors and importers seeking a legal resolution to broken contracts because of the inordinate costs associated with trialing a case in the US.

"While its existed in theory, its never existed in practice because it's just too expensive for a small, or even medium company to go up against a gorilla in the US," said Miller. "What [this win] means is the little guys don't just have to take it unreasonably on the chin anymore and then have to go away to lick their wounds."

With the contractual dispute slated to go to trial sometime this year, under NSW sub-judice legislation ARN is unable to report on the specific nature of the contract break down between ETS and Metrocall . However, Dale Kemp, senior litigation partner at legal firm Dibbs Barker Gosling, who acted for ETS, said the case was one of the most significant of its kind yet.

"The decision was very important in that it validates the powers of the New South Wales IRC (Industrial Relations Commission) to exercise jurisdiction in this area," said Kemp. "New South Wales companies and individuals are now entitled to have cases of this nature heard on home ground, with access to resources and witnesses, and cannot be forced to conduct them overseas."

ARN was unsuccessful in several attempts at contacting representatives from Metrocall.