Austral Masonry (NSW) Pty Ltd v Cementech Pty Limited

Case [2014] FCAFC 72

FEDERAL COURT OF AUSTRALIA

Austral Masonry (NSW) Pty Ltd v Cementech Pty Limited [2014] FCAFC 72

Citation: Austral Masonry (NSW) Pty Ltd v Cementech Pty Limited [2014] FCAFC 72
Appeal from: Cementech Pty Ltd v Austral Masonry (NSW) Pty Ltd [2013] NSWSC 1888
Parties: AUSTRAL MASONRY (NSW) PTY LTD v CEMENTECH PTY LIMITED and ADBRI MASONRY PTY LTD
File number: NSD 103 of 2014
Judges: JAGOT, NICHOLAS AND YATES JJ
Date of judgment: 17 June 2014
Catchwords:

CONTRACTS – construction and interpretation – survival of clause after termination – common intention of parties – commercial practicality – contractual scheme for enforcement of intellectual property rights against third party infringers  – whether appellant obliged to contribute to respondent’s costs of litigation against infringer – whether obligation only arose upon appellant giving notice of infringement by third party – whether scheme amounted to code between parties – whether parties intended obligation to continue beyond termination of contract in circumstances where litigation commenced during term of contract

PRACTICE AND PROCEDURE – declarations – exercise of discretion – whether declaration related to hypothetical matters or amounted to an advisory opinion

PRACTICE AND PROCEDURE – appeals – leave to raise issue not argued before primary judge – whether evidence could have been led on issue at first instance
Legislation: Patents Act 1990 (Cth), ss 13, 120(1)
Cases cited: Bass v Permanent TrusteeCo Ltd (1999) 198 CLR 334; [1999] HCA 9
Cementech Pty Limited v Austral Masonry (NSW) Pty Ltd [2013] NSWSC 1888
Coulton v Holcombe 1986) 162 CLR 1
House v the King (1936) 55 CLR 499
Lansen v Minister for Environment and Heritage [2008] FCAFC 189
Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268
McDonald v Dennys Lascelles (1933) 48 CLR 457
O’Brien v Komesaroff (1982) 150 CLR 310
Peacock v Human Rights & Equal Opportunity Commission [2003] FCAFC 50
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418
Westralian Farmers Limited v Commonwealth Agricultural Service Engineers Limited (In liq) (1936) 54 CLR 361
Date of hearing: 8 May 2014
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 32
Counsel for the Appellant: A Bannon SC with N Murray
Solicitor for the Appellant: Robinson Legal
Counsel for the First Respondent: R Dubler SC with A Fox
Solicitor for the First Respondent: Hall Partners

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 103 of 2014
ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES
BETWEEN:

AUSTRAL MASONRY (NSW) PTY LTD
Appellant
AND:

CEMENTECH PTY LIMITED
First Respondent

ADBRI MASONRY PTY LTD
Second Respondent

JUDGES:

JAGOT, NICHOLAS AND YATES JJ

DATE OF ORDER:

17 JUNE 2014

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The declaration made by the Supreme Court of New South Wales in proceeding 2013/0225446 on 17 December 2013 be amended to read as follows:

Declare that, on the proper construction of cl 9.2(b) of the Exclusive Intellectual Property Licence Agreement made between Cementech…

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AGLC
Austral Masonry (NSW) Pty Ltd v Cementech Pty Limited [2014] FCAFC 72
Case
[2014] FCAFC 72
Decision Date

CaseChat Overview and Summary

Austral Masonry (NSW) Pty Ltd, the appellant, challenged the decision of the Supreme Court of New South Wales, which had ruled in favour of Cementech Pty Limited, the respondent, in a dispute concerning the interpretation and enforceability of a clause in an Exclusive Intellectual Property Licence Agreement. The primary issue before the court was whether certain obligations survived the termination of the agreement, specifically whether the appellant was required to contribute to the respondent's costs of litigation against third-party infringers. The court had to determine if the obligation only arose upon the appellant notifying the respondent of the infringement by the third party and if the parties intended the obligation to continue beyond the termination of the contract in circumstances where litigation had commenced during the term of the contract.

The court held that the obligation to contribute to the litigation costs was not contingent on the appellant notifying the respondent of the infringement by a third party. Instead, the obligation was to be triggered by the initiation of the litigation by the respondent. The court also found that the parties intended the obligation to survive the termination of the contract, given the commercial practicality and the overarching contractual scheme for the enforcement of intellectual property rights. The court further clarified that the scheme did not amount to a code between the parties and that the obligation could indeed survive the termination of the contract.

In its ruling, the court dismissed the appeal, except to the extent necessary to amend the declaration made by the primary judge. The declaration was amended to clarify that the appellant was obliged to pay the respondent one half of the costs and disbursements reasonably incurred by the respondent in bringing and prosecuting the proceedings as those costs and disbursements were incurred. The court also dismissed the appeal in all other respects and ordered the appellant to pay the respondent's costs of the appeal as agreed or taxed.

The final orders of the court were that the declaration made by the Supreme Court of New South Wales be amended to reflect the proper construction of the clause in question and that the appeal be dismissed in all other respects, with the appellant to bear the respondent's costs of the appeal.

Orders

Orders of the court

1. The declaration made by the Supreme Court of New South Wales in proceeding 2013/0225446 on 17 December 2013 be amended to read as follows:

Declare that, on the proper construction of cl 9.2(b) of the Exclusive Intellectual Property Licence Agreement made between Cementech Pty Ltd and Austral Masonry (NSW) Pty Ltd of 11 February 2010, Austral is obliged to pay Cementech one half of the costs and disbursements reasonably incurred by Cementech in the bringing and prosecuting of these proceedings as and when those costs and disbursements are incurred.

2. The appeal otherwise be dismissed.

3. The appellant pay the respondents’ costs of the appeal as agreed or taxed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

It follows that the terms of the declaration are not internally inconsistent. The fact that there may be future disputes between the parties about whether particular costs and disbursements were or were not reasonably necessary for the bringing and prosecuting of these proceedings does not disclose any difficulty with the terms of the declaration as made by the primary judge. Conclusions For the reasons set out above, the appeal should be dismissed other than to the extent necessary to permit the declaration to be amended as set out above.

Ratio Decidendi

Legal Principle Established

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