Austral Masonry (NSW) Pty Ltd v Cementech Pty Limited

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.