Kockums AB v Commonwealth - [2002] FCAFC 138

FEDERAL COURT OF AUSTRALIA
Kockums AB v Commonwealth of Australia [2002] FCAFC 138
PRACTICE AND PROCEDURE – order for separate determination of questions – making of declarations in answer to separate questions – whether answering of the questions would provide, and making of declarations did provide, an “advisory opinion”
Federal Court of Australia Act 1976 (Cth) s 21
Federal Court Rules O 29 r 2
Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 applied
Director of Fisheries (Northern Territory) v Arnhem Land Aboriginal Land Trust (2001) 109 FCR 488 followed
Harts Australia Ltd v Commissioner of Taxation (2001) 109 FCR 405 followed
Copyright Agency Ltd v Charles Sturt University (No 2) (2001) 53 IPR 383 referred to
KOCKUMS AB v THE COMMONWEALTH OF AUSTRALIA & ANOR
N 1178 of 2001
FRENCH, LINDGREN & STONE JJ
17 MAY 2002
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 1178 OF 2001

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

KOCKUMS AB
APPELLANT

AND:

THE COMMONWEALTH OF AUSTRALIA
FIRST RESPONDENT

AUSTRALIAN SUBMARINE CORPORATION
PTY LIMITED
SECOND RESPONDENT

JUDGES:

FRENCH, LINDGREN AND STONE JJ

DATE OF ORDER:

17 MAY 2002

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1. The appeal be allowed.
2.Each of Questions 1(a) and 1(b) referred to in the order for separate determination made on 1 August 2001 in proceeding N 128 of 2001 be answered “Inappropriate to answer”.
3.The Declarations in paragraphs 4 and 5 of the orders made on 1 August 2001 in proceeding N 128 of 2001 be set aside.
4.The appellant be discharged from the undertaking it gave in paragraph 6 of the orders made on 1 August 2001 in proceeding N 128 of 2001.
5.The parties provide in writing to each of the Associates to the members of the Court by 24 May 2002 any submissions they may wish to make as to the costs of the appeal.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 1178 OF 2001

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

KOCKUMS AB
APPELLANT

AND:

THE COMMONWEALTH OF AUSTRALIA
FIRST RESPONDENT

AUSTRALIAN SUBMARINE CORPORATION
PTY LIMITED
SECOND RESPONDENT

JUDGES:

FRENCH, LINDGREN AND STONE JJ

DATE:

17 MAY 2002

PLACE:

SYDNEY

REASONS FOR JUDGMENT
THE COURT
INTRODUCTION

This appeal relates to two written contracts in respect of the supply to the first respondent (“the Commonwealth”) of six Collins Class submarines. The two contracts are a Head Contract dated 3 June 1987 (No C218269) between the Commonwealth and the second respondent (“ASC”) and a Design Sub-Contract dated 11 April 1988 between ASC and the appellant (“Kockums” – at that time called “Kockums Marine AB”). On 11 April 2001 the primary Judge dismissed an application by Kockums for interlocutory relief, and on 1 August 2001, he made declarations as to the proper construction and effect of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Kockums AB v Commonwealth

Details

AGLC: Kockums AB v Commonwealth [2002] FCAFC 138
Case: [2002] FCAFC 138
Decision Date: 17 MAY 2002

CaseChat Overview and Summary

Kockums AB, a Swedish company, sought relief against the Commonwealth of Australia and Australian Submarine Corporation (ASC) over disputes arising from contracts concerning the supply of six Collins Class submarines. Kockums had entered into a Design Sub-Contract with ASC, which was in turn party to a Head Contract with the Commonwealth. Kockums claimed ownership of intellectual property rights and copyright over the submarine propellers designed and manufactured for the Collins Class submarines. The company also sought declarations and injunctive relief preventing the Commonwealth and ASC from providing the propellers to third parties, including the United States Navy, and from disclosing confidential information contained in the design documents. The primary judge dismissed Kockums' application for interlocutory relief and made declarations regarding the interpretation of clauses 48.2 and 48.7 of the Design Sub-Contract. Kockums appealed the primary judge's decision.

The legal issues that the court needed to determine were the proper construction and effect of clauses 48.2 and 48.7 of the Design Sub-Contract. Clause 48.2 related to the assignment of intellectual property rights and copyright, while Clause 48.7 dealt with confidentiality and disclosure of information. The court had to decide whether Kockums owned the intellectual property rights and copyright in the submarine propellers and whether the Commonwealth and ASC were restrained from disclosing or providing the propellers and related design information to third parties, including the United States Navy. The court also needed to assess the validity of the declarations made by the primary judge.

The court found that the primary judge erred in making the declarations regarding clauses 48.2 and 48.7 of the Design Sub-Contract. The court held that Kockums did not own the intellectual property rights and copyright in the submarine propellers, and therefore, the declarations concerning ownership were inappropriate to answer. The court also set aside the declarations that restrained the Commonwealth and ASC from providing the propellers and related design information to third parties, including the United States Navy. The court discharged Kockums from the undertaking it gave in relation to the costs of the appeal.

The court allowed the appeal, set aside the declarations made by the primary judge, and discharged Kockums from the undertaking it gave in relation to the costs of the appeal. The court directed the parties to provide written submissions regarding the costs of the appeal by a specified date. The final orders of the court were to allow the appeal, set aside the declarations, and direct the parties to provide written submissions on the costs of the appeal.

Orders

Orders of the court

1. The appeal be allowed.

2. Each of Questions 1(a) and 1(b) referred to in the order for separate determination made on 1 August 2001 in proceeding N 128 of 2001 be answered “Inappropriate to answer”.

3. The Declarations in paragraphs 4 and 5 of the orders made on 1 August 2001 in proceeding N 128 of 2001 be set aside.

4. The appellant be discharged from the undertaking it gave in paragraph 6 of the orders made on 1 August 2001 in proceeding N 128 of 2001.

5. The parties provide in writing to each of the Associates to the members of the Court by 24 May 2002 any submissions they may wish to make as to the costs of the appeal.

Note:

Background

Background to the litigation

This appeal relates to two written contracts in respect of the supply to the first respondent (“the Commonwealth”) of six Collins Class submarines. The two contracts are a Head Contract dated 3 June 1987 (No C218269) between the Commonwealth and the second respondent (“ASC”) and a Design Sub-Contract dated 11 April 1988 between ASC and the appellant (“Kockums” – at that time called “Kockums Marine AB”). On 11 April 2001 the primary Judge dismissed an application by Kockums for interlocutory relief, and on 1 August 2001, he made declarations as to the proper construction and effect of cll 48.2 and 48.7 of the Design Sub-Contract, from which Kockums now appeals.BACKGROUND FACTS The Head Contract was for the construction and supply of the submarines and associated support requirements for the Royal Australian Navy. When the Head Contract was entered into, ASC was owned as to 70 per cent by or on behalf of the Commonwealth and as to 30 per cent by Kockums. However, shortly afterwards, Kockums’ share increased to about 50 per cent. The Design Sub-Contract was for the preparation, development and completion of the design of the submarines, including their propeller, but excluding the design of the combat system. Problems were experienced with the submarines supplied by ASC to the Commonwealth. Kockums maintains that the problems were not attributable to its design work. The hearing before the primary Judge concerned propeller Z9000, but his Honour referred to problems previously experienced with two other propellers by way of historical background. In August 1998 propeller Z8959, which had been fitted to “HMAS Farncomb”, was sent by the Commonwealth to the United States Navy (“the USN”) for repair, and the USN proposed modifications to the propeller. These were effected by LIPS Propellers Inc of Virginia (“LIPS Propellers” – that company subsequently changed its name to “John Crane Lips Inc”). The propeller arrived back in Australia in September 1999 and was fitted to “HMAS Collins”. In October 1999 a second propeller, Z8960, which had been fitted to the vessel “Dechaineux”, was sent by the Commonwealth to the United States for modification, again in accordance with the recommendations of the USN. The work was again undertaken by LIPS Propellers. The propeller was returned to Australia in July 2000. In early 2001 the Commonwealth proposed to have propeller Z9000 removed from HMAS Farncomb for transportation to the USN. It was this proposal which caused Kockums to commence the proceeding below on 13 February 2001. By its application Kockums claimed the following relief:“1.A declaration that the applicant is the owner of Intellectual Property rights [as defined in clause 1.37 of the Design-Subcontract between the second respondent and the applicant dated 11 April 1988] (the ‘Contract’) residing in or relating to the propellers designed and manufactured for the Collins Class submarines (‘the Propellers’) the subject of the Contract and Contract C218269 between the first and second respondents dated 3 June 1987 including any drawings in respect of those Propellers and any confidential information comprised in those drawings and the design of those Propellers.2.A declaration that the applicant is the owner of the copyright in and the confidential information comprised in the drawings, designs, specifications, instruction and operating manuals and other documentation and the information comprised therein in relation to the Propellers (the ‘Materials’) produced or provided by it under or in relation to the Contract.3.A declaration that the applicant’s disclosure of the Materials to the first and second respondents and their receipt by them was in confidence and constitutes confidential information owned by the applicant.4.An order that the first and second respondents, whether by themselves, their servants, agents or otherwise howsoever be restrained (without the prior written consent of the applicant) from:(a)providing Propellers forming part of a Collins Class submarine to any third party including, without limitation, the United States Navy;(b)providing any Propellers designed in accordance with the Materials to any third party including, without limitation, the United States Navy;(c)disclosing the contents of the Materials, whereby copying or otherwise, to any third party including, without limitation, the United States Navy;(d)infringing the applicant’s copyright in the Materials by reproducing or authorising the reproduction of Materials or a substantial part thereof;(e)using the materials to modify or seek to modify the design of the Propellers of the Collins Class submarines.5.An order that the respondents pay to the applicant:(a)damages for infringement of copyright pursuant to s 115(2) of the Copyright Act 1968; and(b)additional damages pursuant to s 116 of the Copyright Act 1968.6.Equitable compensation.7.Costs.8.Such further or other order as the Court thinks fit.”

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1178 OF 2001

BETWEEN:	KOCKUMS AB APPELLANT
AND:	THE COMMONWEALTH OF AUSTRALIA FIRST RESPONDENT AUSTRALIAN SUBMARINE CORPORATION PTY LIMITED SECOND RESPONDENT
JUDGES:	FRENCH, LINDGREN AND STONE JJ
DATE OF ORDER:	17 MAY 2002
WHERE MADE:	SYDNEY

JUDGES:	FRENCH, LINDGREN AND STONE JJ
DATE:	17 MAY 2002
PLACE:	SYDNEY