Khruse Enterprises Pty Ltd v Darwin Fibreglass Pty Ltd [1999] FCA 20 (22 January 1999)

Last Updated: 27 January 1999

FEDERAL COURT OF AUSTRALIA

Kruhse Enterprises Pty Ltd v Darwin Fibreglass Pty Ltd [1999] FCA 20

PRACTICE AND PROCEDURE - application for leave to appeal to the Full Court - whether there was a judgment that can be the subject of an application for leave - whether a successful appeal would bring the litigation to an end - whether any substantial injustice would result if leave were refused.

Copyright Act 1968 (Cth), ss 77, 131

Northern Territory Supreme Court Rules, O 47.04

Landsal Pty Ltd (in liq) v REI Building Society (1993) 113 ALR 643 followed

Decor Corporation Pty Ltd v Dart Industries Incorporated [1991] FCA 655; (1991) 104 ALR 621 followed

Niemann v Electronic Industries Ltd (1978) VR 431 cited

Arrowcrest Group v Gill [1993] FCA 541; (1993) 46 FCR 90 cited

KRUHSE ENTERPRISES PTY LTD v DARWIN FIBREGLASS PTY LTD

NO. DG 9 OF 1998

O'LOUGHLIN J

22 JANUARY 1999

ADELAIDE (Heard in Darwin)

IN THE FEDERAL COURT OF AUSTRALIA
NORTHERN TERRITORY DISTRICT REGISTRY	DG 9 OF 1998

BETWEEN:	KRUHSE ENTERPRISES PTY LTD Applicant
AND:	DARWIN FIBREGLASS PTY LTD (ACN 070 480 536) Respondent
JUDGE:	O'LOUGHLIN J
DATE OF ORDER:	22 JANUARY 1999
WHERE MADE:	ADELAIDE (Heard in Darwin)

THE COURT ORDERS THAT:

1. The application for leave to appeal to the Full Court be dismissed.

2. The applicant on the motion for leave pay the respondent's costs which costs are to be taxed in default of agreement.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NORTHERN TERRITORY DISTRICT REGISTRY	DG 9 OF 1998

BETWEEN:	KRUHSE ENTERPRISES PTY LTD Applicant
AND:	DARWIN FIBREGLASS PTY LTD (ACN 070 480 536) Respondent

JUDGE:	O'LOUGHLIN J
DATE:	22 JANUARY 1999
PLACE:	ADELAIDE (Heard in Darwin)

REASONS FOR JUDGMENT

1 Darwin Fibreglass Pty Ltd ("Darwin Fibreglass") instituted proceedings in the Supreme Court of the Northern Territory against Kruhse Enterprises Pty Ltd trading as Viking Swimming Pools and Spas ("Kruhse Enterprises"). They were business competitors; both parties carried on the business of manufacturing and selling precast fibreglass swimming pools in the Darwin area. Darwin Fibreglass alleged that Kruhse Enterprises had breached the copyright in a plug and mould that Darwin Fibreglass used in the manufacture of precast fibreglass spas and pools; it also claimed that Kruhse Enterprises had breached the copyright in the pools that are made from the plug and mould.

2 Kruhse Enterprises denied that Darwin Fibreglass possessed the rights that it asserted. In particular, Kruhse Enterprises submitted that the work of Darwin Fibreglass was not capable of protection under the Copyright Act 1968 (Cth) ("the Act").

3 With the consent of the parties, the Supreme Court ordered that certain issues be tried as separate questions before trial pursuant to Order 47.04 of the Northern Territory Supreme Court Rules.

The first of those questions was whether all or any of the plug, the mould or the pool was a "building" or a "model of a building" within the meaning of s 77(1)(a) of the Act. The questions were all answered in the affirmative by the learned trial judge in reasons described as "Reasons for Judgment" delivered on 10 July 1998. After recording his answers to the questions asked, his Honour concluded his reasons by stating:

"The question of costs is adjourned until final judgment in this matter."

His Honour did not therefore address further questions such as issues of breach of copyright, damages or an account of profits. They are matters that would, if they arose, be dealt with by his Honour at a later stage.

4 Kruhse Enterprises now applies for leave to appeal to the Full Court. In its application, Kruhse Enterprises claims that it is seeking leave to appeal "from the judgment of Mr Justice Mildren of the Supreme Court of the Northern Territory given on 10 July 1998 at Darwin". If there is a judgment from which an appeal lies - either with or without leave - then it is clear that it is this Court that is the appellate Court: s 131B of the Act.

5 The grounds of appeal in the event of leave being given are as follows:

"The Applicant seeks leave to appeal the Judgment of Mildren J on the following grounds:

that His Honour erred in finding:

(a) that the pool is a building within the meaning of the Copyright Act;

(b) that the mould and plug are models of a building; and

(c) that the Respondent has applied the design of the Respondent's swimming pool in Australia."

6 The first question to address is whether there is a judgment of the Supreme Court that can be the subject of an application for leave to appeal. No judgment has yet been entered and sealed. Despite the title "Reasons for Judgment", his Honour's concluding remarks (which are quoted above) may be taken by some as suggesting that he is merely answering preliminary questions as an exercise along the way to a final judgment.

7 The issue of what constitutes a final judgment was addressed by a Full Court of this Court in Landsal Pty Ltd (in liq) v REI Building Society (1993) 113 ALR 643 at 653. The Court said:

"If, in the exercise of his inherent jurisdiction, a judge decides to conduct a trial in separate parts, there is no requirement that he make an order reflecting the conclusions he has reached part way through the hearing. Whether a judge, in exercising this particular jurisdiction has reached a conclusion on some of the issues part way through the task, which can be immediately made the subject of an appeal, depends upon whether he has either formally incorporated those conclusions in an order or can be seen to have intended to have done that. If in such a case it can be seen that the judge did not intend to make an order reflecting conclusions he has reached part way through conducting the trial of a matter, then there is nothing that can be the subject of an appeal, whether by leave or as of right."

8 Having considered the contents of his Honour's reasons and the nature of the exercise undertaken by him, I am satisfied that the conclusion that he reached was such that a litigant could rightfully expect to obtain a formal judgment under the seal of the Court. It was more than "a preliminary ruling on a question of law" as was submitted by counsel for Darwin Fibreglass. As a matter of prudence, judgment should have been entered but its absence is not fatal. I am therefore prepared to proceed upon the premise that there is an interlocutory judgment of the Supreme Court of the Northern Territory that is currently the subject of an application for leave to appeal to a Full Court of this Court.

9 In his affidavit sworn on 31 July 1998, and filed in support of the application for leave, Mr McConnell, the solicitor for Kruhse Enterprises, has claimed that the determination of the preliminary questions in favour of Darwin Fibreglass has not finally determined the rights of the parties in the proceedings. In particular, Kruhse Enterprises alleges that the swimming pool, for which Darwin Fibreglass claims copyright protection, is an unoriginal design which was copied by Darwin Fibreglass without the permission of the manufacturer of that design. Kruhse Enterprises submitted that it is this manufacturer who would be entitled to the copyright protection which Darwin Fibreglass is presently asserting.

10 The point most favouring Kruhse Enterprises in its application for leave to appeal is that if the appeal is wholly successful then, putting to one side any question of a successful application for special leave to appeal to the High Court, the litigation will come to an end. On the other hand if leave is granted but the appeal is unsuccessful, there is a strong probability that Darwin Fibreglass would wish to further prosecute the action to obtain a finding of breach of copyright with a consequential award of damages or an order for a taking of accounts.

11 Mr McConnell has also deposed that his client:

"...will file a counterclaim against (Darwin Fibreglass) alleging breaches by (Darwin Fibreglass) of Kruhse Enterprise's copyright in other fibreglass inground swimming pools and spas."

Such an assertion does not impress: it smacks of an in terrorem statement. If indeed Kruhse Enterprises ever intended to file and serve a counterclaim the time to have done it was when it filed its defence. I will have no regard to this threat of a counterclaim in coming to my decision.

12 I proceed in my consideration of this matter in accordance with the reasons of the Full Court in Decor Corporation Pty Ltd v Dart Industries Incorporated [1991] FCA 655; (1991) 104 ALR 621. The Full Court addressed the question whether it should regard itself as bound to apply a formula said to have been laid down in Niemann v Electronic Industries Ltd (1978) VR 431. Emanating from that case it was said that there were two tests which were described by the Court in these terms:

"The first test, which relates to the prospect of the proposed appeal, is "whether, in all the circumstances, the decision is attended with sufficient doubt to warrant its being reconsidered by the Full Court:" The second: "...is whether substantial injustice would result if leave were refused, supposing the decision to be wrong."(p 622)

13 After reviewing the authorities, the Full Court in Decor Corporation v Dart Industries came to this conclusion:

"In our opinion, the principles discussed in Niemann and in the other cases to which we have referred provide general guidance which a court should normally accept. However, there will continue to be cases raising special considerations, and the court should not regard its hands as tied in any case beyond this, that by s 24(1A) the legislature has evinced a policy against the bringing of interlocutory appeals except where the court, acting judicially, finds reason to grant leave. When the court comes to exercise its discretion on a particular application, an important distinction to be observed is that between the common interlocutory decision on a point of practice - concerning which the High Court has given (see Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170 at 177; [1981] HCA 39; 35 ALR 625) a strong warning that "a tight rein" should be kept on appeals - and an interlocutory decision determining a substantive right - where leave will more readily be granted."(p623)

I acknowledge that this appeal is not a "point of practice" - it relates to an interlocutory decision determining a substantive right.

14 Two years or so after the decision in Decor Corporation v Dart Corporation Industries, a differently constituted Full Court commented that leave should be granted when the legal issue raised by the determination in the Court below "is one of importance to the case": Arrowcrest Group v Gill [1993] FCA 541; (1993) 46 FCR 90 at 101 per French J with whom Jenkinson & Spender JJ agreed.

15 Counsel for Kruhse Enterprises submitted three grounds favouring the granting of leave:

* that the grant of leave might terminate the litigation

* that there are important considerations of general application

* that it is a matter of public interest.

I cannot agree that the issues that would be determined on appeal would address important considerations of general application or matters of public interest and there is only a fifty per cent chance that the grant of leave might terminate the litigation.

16 An exercise such as this can often be finely balanced. There is an attraction in granting leave for it allows for the possibility that a successful appeal will bring the litigation to an end. On the other hand, reflecting upon the dicta in Niemann v Electronic Industries, Decor Corporation v Dart Industries and Arrowcrest Group v Gill - all of which give a measure of guidance - it is not obviously apparent that his Honour's decision was attended with sufficient doubt to warrant it being reconsidered and no material has been placed before the Court that points to a substantial injustice resulting if leave were refused and the decision of his Honour is ultimately found to be wrong.

17 The application for leave to appeal to the Full Court is dismissed with costs.

I certify that this and the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice O'Loughlin

Associate:

Dated: 22 January 1999

Counsel for the Applicant:	Mr D C McConnell
Solicitor for the Applicant:	Messrs Morgan Buckley
Counsel for the Respondent:	Mr L Silvester
Solicitor for the Respondent:	James Noonan
Date of Hearing:	11 December 1998
Date of Judgment:	22 January 1999