Spatialinfo Pty Ltd v Telstra Corporation Ltd [2005] FCA 1629 (11 November 2005)

Last Updated: 17 November 2005

FEDERAL COURT OF AUSTRALIA

Spatialinfo Pty Ltd v Telstra Corporation Ltd [2005] FCA 1629

General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 cited
Brambles Ltd v Wail [2002] VSCA 150; (2002) 5 VR 169 discussed



























SPATIALINFO PTY LIMITED v TELSTRA CORPORATION LIMITED

VID 240 OF 2004

SUNDBERG J
11 NOVEMBER 2005
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 240 OF 2004

BETWEEN:	SPATIALINFO PTY LIMITED (ACN 071 977 921) APPLICANT AND CROSS-RESPONDENT
AND:	TELSTRA CORPORATION LIMITED (ACN 051 775 556) RESPONDENT AND CROSS-CLAIMANT
JUDGE:	SUNDBERG J
DATE OF ORDER:	11 NOVEMBER 2005
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. On the motion of the respondent notice of which was filed on 5 August 2005, paragraphs 13 to 17 of the applicant’s further amended statement of claim dated 31 May 2005 be struck out.
2. The applicant have leave to replead the paragraphs referred to in Order 1 by 9 December 2005, the repleading to be incorporated in the second further amended statement of claim referred to in Order 5.
3. The motion referred to in Order 1 be otherwise dismissed.
4. The motion of the applicant made ore tenus on 26 October 2005 be dismissed.
5. The applicant have leave to file and serve on or before 9 December 2005 a second further amended application and statement of claim incorporating amendments consequential upon the Order of Justice Sundberg made on 26 October 2005 granting the applicant leave to join Autodesk Australia Pty Ltd as a respondent.
6. The proceeding be listed for directions before Justice Sundberg at 10.15am on 16 December 2005.
7. The applicant pay the respondent’s costs of and incidental to the motions referred to in Orders 1 and 4.

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 240 OF 2004

BETWEEN:	SPATIALINFO PTY LIMITED (ACN 071 977 921) APPLICANT AND CROSS-RESPONDENT
AND:	TELSTRA CORPORATION LIMITED (ACN 051 775 556) RESPONDENT AND CROSS-CLAIMANT

JUDGE:	SUNDBERG J
DATE:	11 NOVEMBER 2005
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

THE MOTION

1 On 5 August 2005, the respondent (Telstra) filed a notice of motion (the notice) for orders that paras 13 to 17 and 43 to 59 of the applicant’s (Spatialinfo’s) Further Amended Statement of Claim dated 31 May 2005 (the claim) be struck out pursuant to O 11 r 16 of the Rules and further, or in the alternative, summary judgment be given for Telstra on the allegations in paras 13 to 17 of the claim pursuant to O 20 r 2(1) of the Rules (the motion).

2 At the return of the notice on 26 October 2005, Telstra’s counsel indicated that, following the filing of an affidavit sworn two days earlier by Spatialinfo’s solicitor, Telstra no longer sought the striking out of paras 43 to 59 of the claim.

3 In the period between the filing of the notice and its return:

• Telstra filed a defence and cross-claim (the defence); and
• Spatialinfo served on Telstra proposed additional particulars to para 13 of the claim (the proposed particulars).

4 From the bar table, senior counsel for Spatialinfo moved the Court for leave to amend the claim to include the proposed particulars (the oral motion). However, he did not thereby, at least expressly, concede that paras 13 to 17 of the claim were inadequate in their present form. Therefore, I will first decide whether the relevant parts of the claim as it currently stands ought to be struck out pursuant to O 11 r 16.

THE CLAIM

The parties

5 By deed made on or about 5 February 1996, Spatialinfo (then known as Convergent Group Asia Pacific Pty Ltd) purchased the assets of ARC CADcentre Pty Ltd (ARC) (then known as ARC Systems Pty Ltd). By another deed made on or about 6 February, ARC assigned to Spatialinfo all intellectual property rights in all software and related documentation owned by ARC.

6 Part 1 of the Telstra Corporation Act 1991 (Cth) provides that Telstra is a legal entity resulting from the merger of the Australian Telecommunications Corporation (ATC, then commonly known as Telecom Australia) and OTC Limited. Section 11 of that Act has the effect of converting ATC’s rights and liabilities into Telstra’s rights and liabilities.

The Head Contract

7 On or about 14 May 1991, ARC and ATC "entered into a contract [(the Head Contract)] pursuant to which ARC was to design, develop and create for ... ATC a national implementation of a computer-based Cable Plant Records system" (the System). The Head Contract was partly in writing and partly to be implied.

8 The Head Contract distinguished between two types of intellectual property: "Background Intellectual Property" (BIP) and "Foreground Intellectual Property" (FIP). The BIP comprised "all technical data and all industrial property, the exercise of which is necessary to fulfilment of the [Head Contract] and which:

i) was owned prior to the letting of the [Head Contract]; or
ii) is generated separately and concurrently with the fulfilment of the [Head Contract]."

9 The Head Contract included terms that:

• BIP owned by ARC was and would remain ARC’s sole property; and
• "subject to the negotiation of mutually acceptable terms and conditions, ARC will grant to ... ATC a non-exclusive licence, by itself, or its contractors, to use, exercise or enjoy ARC’s [BIP] for ... ATC’s purposes in Australia".

10 ARC’s BIP included:

(a) both (i) "a suite of confidential computer programs" and (ii) "confidential computer software libraries written in" that suite (the Software);
(b) "confidential source code of the ... Software" (the Source Code); and
(c) "confidential information on the design of the ... Software and ... Source Code and the proprietary computer techniques that allow the ... Software to function" (the General Information).

The General and Specific Information

11 According to particular (b) of para 9 of the claim, the General Information is "contained in" the Source Code and other documents prepared by ARC’s employees and contractors. The General Information was part of ARC’s BIP and thus ARC’s sole property: para 10 of the claim.

12 As part of its work under the Head Contract, ARC produced certain documents (the Documentation). The Documentation contains parts of the General Information (the Specific Information).

The Continuing Licence

13 Spatialinfo alleges that, pursuant to the Head Contract, from on or about 16 May 1991, ARC and then Spatialinfo has licensed ATC and then Telstra "to use within Australia (but not to license any third parties to use) [the Specific Information] so as to allow ... ATC and then ... [Telstra] to operate the ... System" (the Continuing Licence). By the particulars to the relevant paragraph of the claim (para 13), it is said that:

(a) The Continuing Licence is partly in writing and partly to be implied. In so far as it is in writing, it is constituted by an unexecuted "Non-Exclusive Licence and Software Maintenance Agreement" (the 1991 Licence) which forms the twentieth attachment to the Head Contract.
(b) In so far as it is to be implied, it is to be implied "by reference to the [Head Contract] and in particular cl 9.4 thereof, the conduct of the parties and the need to give business efficacy to the [Head Contract]".
(c) The initial term of the Continuing Licence was one year.
(d) For three years after the expiry of that term, Telstra renewed the Continuing Licence by the periodic payment of fees set out in the Head Contract in accordance with clause 4.7 of the Continuing Licence.
(e) From the end of that period (ie about 9 May 1995) "to the present day, [Telstra] has continued to use the [Specific Information] in relation to the ... System pursuant to the terms of the [Continuing Licence]".

14 The Continuing Licence included terms that ATC and then Telstra would:

• use the Specific Information solely for the purposes of operating the System;
• maintain the confidentiality of the Specific Information; and
• not disclose the Specific Information to a third party.

The particulars to the relevant paragraph of the claim (para 14) refer to clauses 1, 2 and 6 and Schedule F of the 1991 Licence.

15 Spatialinfo alleges that, on dates since 2 March 1998 (the breach date) which it cannot specify before discovery and inspection, Telstra has, in breach of the terms described at [14], disclosed the Specific Information to third parties without its authority or licence (the breach): paras 15 and 16.

16 By reason of the breach, Spatialinfo alleges that it has suffered loss and damage amounting to approximately $23,030,293: para 17.

THE DEFENCE AND CROSS-CLAIM

The parties

17 Telstra does not admit the deeds described at [5]. It admits what is set out at [6].

The contract

18 Telstra pleads that "in or about May 1991, ... ATC and ARC entered into a contract ... for the national implementation of a computer system ..., based on previously developed prototype and trial systems, to enable the electronic storage and extraction of ... ATC’s geographic, network and cadastral data relating to its external plant infrastructure". This contract is to be distinguished from the Head Contract because Telstra pleads that it was in writing only.

19 Though it accepts the definition of BIP set out in the last sentence at [8], Telstra pleads that, for the purposes of the contract,

"(1) technical data ... shall mean all knowledge and material necessary for the performance of the ... contract and for ... ATC’s subsequent use, exercise and enjoyment of any product, process, material item, subject matter or thing produced under and during the contract; and
(2) industrial property ... means relevantly all technical data in respect of which action has been taken or it has been determined that action shall be taken to keep the data confidential".

However, Telstra denies that the contract contained the terms described at [9].

20 Telstra pleads that what is set out at [10] is embarrassing in so far as it contains any allegations. First, no allegations as to the "suite of ... computer programs" referred to at [10](a)(i) are made against Telstra. Subject to that objection, Telstra does not admit those allegations. Secondly, the "computer software libraries" referred to at [10](a)(ii) have not been "adequately identified". Subject to that objection, Telstra pleads that "to the extent that any part of the executable code included in the ... System, or the pre-compiled human-readable computer programs included in the ... System ..., or information therein or relating thereto, was in existence prior to the letting of the [contract], all or part of that ... was owned by ... ATC". Telstra otherwise denies what is set out at [10] in so far as it contains any allegations.

The General and Specific Information

21 As to [12], Telstra does not admit that ARC produced the Documentation and says that if it did, (a) it did so "under and during" the contract and (b) ATC owned the Documentation.

The Continuing Licence

22 Telstra says that the pleadings described at [13] to [16] disclose no reasonable cause of action against Telstra and are embarrassing. Under cover of that objection, Telstra:

(a) denies what is set out at [13], [14] and [16]; and
(b) subject to what is set out at [23] to [24], denies the breach described at [15].

The 1997 Licence

23 By an agreement on or about 29 August 1997 (ie before the breach date), Spatialinfo granted "a perpetual, non-exclusive licence to Telstra permitting Telstra itself or through its agents and contractors in Australia or elsewhere to reproduce, use, modify and maintain the ‘Source Code’ as therein defined for the purposes of Telstra’s business in Australia". For the purposes of this licence (the 1997 Licence), the Source Code is defined as "the pre-compiled human-readable computer programs included in the [System]." (That definition reflects what is set out in the fifth sentence at [20].)

24 Paragraph 13 of the defence pleads that:

(a) The terms of the 1997 Licence permitted Telstra to disclose confidential information in the Source Code to its agents and contractors for the purposes of its business in Australia on written notice to Spatialinfo, and subject to the execution of a disclosure agreement.
(b) The Specific Information is contained in the Source Code: particular (b) to para 9 of the claim (see [11]).
(c) Further, or in the alternative, the terms of the 1997 Licence permitted Telstra to, (i) itself or through its agents and contractors, use any confidential information in the Specific Information for the purposes of its business in Australia and (ii) disclose any confidential information in the Specific Information to its agents and contractors for the purposes of its business in Australia on written notice to Spatialinfo, and subject to the execution of a disclosure agreement.
(d) In or about February and March 1998 Telstra disclosed, or authorised the disclosure of, versions of the Documentation, including the Specific Information, to one or more parties participating in a tender (the tenderers) for a project.
(e) The disclosures were for the purposes of Telstra’s business in Australia.
(f) Before the disclosures, Telstra entered into disclosure agreements with the tenderers that were in the nature of confidentiality agreements and the obligations under those agreements survive their expiration or termination.
(g) On or about 2 March 1998 (ie the breach date), Telstra gave Spatialinfo written notice of the disclosures.
(h) Accordingly, if the Specific Information constituted confidential information of Spatialinfo (which Telstra denies), Telstra denies that the disclosures constitute a breach of any of its obligations as they were permitted by the 1997 Licence.

The remainder of para 13 of the defence pleads that – after initially objecting – Spatialinfo acquiesced in, or consented to, the disclosures and that it is estopped from contending that the disclosures were a breach of its rights or without its consent or licence.

THE CHALLENGE TO THE CLAIM

25 Telstra contends that paras 13 to 17 of the claim as it currently stands are deficient in various respects.

26 The most obvious deficiency is to be found in the particulars to para 13 of the claim (see [13]). That paragraph pleads the Continuing Licence. Particular (c) pleads the initial term of the Continuing Licence (see [13](c)). Particular (d) pleads renewals of the Continuing Licence up to about 9 May 1995 (see [13](d)). However, particular (e) provides the sole foundation for the allegation that the Continuing Licence was in existence as at and after the breach date (see [13](e)). It is an insufficient foundation. In the absence of renewals of the Continuing Licence – whether or not by the payment of fees – after about 9 May 1995, the use of the Specific Information before and after the breach date cannot, by itself, establish that the Continuing Licence was in existence as at and after the breach date. That is additionally so where the use has not been particularised. Nor is that deficiency cured by Spatialinfo’s further and better particulars – which say that:

"From about July 1991 to about 2004, ARC and ... [Spatialinfo] knew of and acquiesced in [Telstra’s] use of the [Specific Information] subject to the terms of the [Continuing Licence]. In particular, the purpose of the ... Documentation was to enable ... ATC and [Telstra] to understand ARC’s ... Source Code and its development environment and throughout the development, use and maintenance of the ... System, ARC and [Spatialinfo] and ... ATC and [Telstra] frequently used and referred to the ... Documentation.

ARC and [Spatialinfo] have not at any time sought to terminate or vary [ATC’s] or [Telstra’s] licence to use the [Specific Information] subject to the terms of the [Continuing Licence]."

Spatialinfo’s unilateral knowledge, acquiescence and forbearance are only relevant if one assumes that the Continuing Licence was in existence as at and after the breach date.

27 Further, the claim is unclear as to how the Continuing Licence eventually became a contract between Spatialinfo and Telstra. Ordinarily, the burden of a contract cannot be assigned. Rather, it must be novated. What is set out at [5] falls well short of an allegation that the Continuing Licence was novated so that Spatialinfo became a party to it or, failing novation, that Spatialinfo and Telstra otherwise agreed to be bound by it.

THE ORAL MOTION

28 Were it not for the oral motion (see [4]), I would, for the reasons set out at [26] and [27], order that paras 13 to 17 of the claim be struck out pursuant to O 11 r 16. However, I must now consider whether the proposed particulars cure the deficiencies that Telstra has identified in the relevant parts of the claim as it currently stands (the old deficiencies). I must also consider whether, as Telstra asserts, the proposed particulars introduce further deficiencies (the new deficiencies). If I come to the view that the proposed particulars do not sufficiently address the old deficiencies and/or introduce the new deficiencies, I must then decide whether the relevant parts of the claim should be struck out and whether Spatialinfo should have leave to replead the same. Such an approach reflects the fact that the burden of Telstra’s attack fell on the proposed particulars. Finally, I must consider whether judgment should be given for Telstra on the relevant parts of the claim as it currently stands pursuant to O 20 r 2(1).

The proposed particulars

29 The proposed particulars replace particular (e) to para 13 of the claim (see [13](e)) with a new particular (e) and add new particulars (f) to (l).

30 New particular (e) says that:

"Between about 9 May 1995 to about 31 December 1997, [Telstra] entered into a series of ‘interim’ renewals of the written licence constituted by the [1991 Licence] which included (among other things) the [Continuing Licence], as evidenced by the following correspondence with ARC and [Spatialinfo]".

That correspondence is described in sub-paras (i) to (xxxiv) of new particular (e) and comprises letters, invoices from ARC and Spatialinfo to Telstra and remittance advices from Telstra to ARC and Spatialinfo. By its letters to ARC and Spatialinfo, Telstra, in the main, requested extensions of the 1991 Licence. ARC and Spatialinfo acceded to those requests.

31 New particular (f) says that:

"In or about February 1996, by force of various agreements entered into at that time between ARC and [Spatialinfo], ARC and [Telstra] and [Spatialinfo] and [Telstra] respectively, the [1991 Licence], which included (among other things) the [Continuing Licence] was assigned, transferred and novated from ARC to [Spatialinfo] such that [Spatialinfo] acquired the benefit of [Telstra’s] obligations to ARC under the [1991 Licence], including the [Continuing Licence], and became subject to the burden of ARC’s obligations to [Telstra] thereunder.

(i) The agreements are partly in writing and partly to be implied from conduct.
(ii) Insofar as the agreements are in writing, they are constituted by the Asset Purchase Deed, the Technology Transfer Deed [ie the deeds described at [5]] and the Deed of Warranty [ie a deed dated 5 February 1996 and referred to in Article 1 of the Asset Purchase Deed].
(iii) Insofar as the agreements are to be implied, they are to be implied from the fact that [Telstra] ceased to deal with ARC under the [Head Contract] and the [1991 Licence] and instead dealt exclusively with [Spatialinfo], as evidenced by the fact that from about February 1996:

(A) [Spatialinfo] performed the obligations of ARC under the [1991 Licence] by providing maintenance services pursuant to the [1991 Licence];
(B) [Spatialinfo] invoiced [Telstra] for licence fees and work [Spatialinfo] conducted under the [1991 Licence], as evidenced by [Spatialinfo’s] Invoice ... referred to [in sub-para (xxvi) to new particular (e)];
(C) [Telstra] paid licence fees payable under the [1991 Licence] to [Spatialinfo], as evidenced by [Telstra’s] Remittance Advice ... referred to [in sub-para (xxvii) to new particular (e)];
(D) [Telstra] corresponded with [Spatialinfo] in relation to the [1991 Licence] as evidenced by the letter ... referred to [in sub-para (xxv) to new particular (e)]; and
(E) [Telstra] expressly acknowledged to [Spatialinfo] the continued operation of the [1991 Licence] in negotiations with [Spatialinfo] for proposed new licence and maintenance agreements for the ... System, as evidenced by [two specific items of] correspondence".

32 New particular (g) says that "[t]hroughout the development, use and maintenance of the ... System, ARC and [Spatialinfo] and ... ATC and [Telstra] frequently used and referred to the ... Documentation" and that this is "evidenced by" certain matters. New particular (h) says that "[a]t all times between the creation of the ... Documentation and the present, ARC and [Spatialinfo] have been aware that [Telstra] was using and referring to the ... Documentation and the [Specific Information] for the purpose of undertaking the work referred to in [new particular (g)] as evidenced by" the same matters referred to in new particular (g).

33 New particular (i) says that Telstra has, after the execution of the 1997 Licence, "acknowledged that it required a licence from [Spatialinfo], in addition to the [1997 Licence], to continue to use, operate, modify, maintain and review the ... System, including to continue to use the ... Documentation, as evidenced by the following conduct." The following is a summary of that conduct.

(a) Negotiations in about September 1995 between ARC and Telstra on replacing the Head Contract and the 1991 Licence contemplated them executing "a new ‘Development Agreement’ that [they] intended would become an umbrella agreement for all future work in relation to the ... System, including the ownership and licensing of the intellectual property in the ... System." Those negotiations were continued by Spatialinfo but not concluded when it went into voluntary administration in about April 1997.
(b) During that administration, Telstra informed Spatialinfo that, pending the negotiation of the Development Agreement, Telstra "was concerned to ensure that it would have ongoing access to the source code of the ... System [and] maintenance services for the ... System ..., in the event that [Spatialinfo] was wound up following its administration." Those concerns led to the execution of the 1997 Licence.
(c) "The [1997 Licence] did not purport to grant [Telstra] a licence to use or disclose other aspects of [BIP] owned by ARC under the [Head Contract], such as [BIP] contained in the executable [computer] programs of the ... System or in the ... Documentation."
(d) Negotiation of the Development Agreement continued after the execution of the 1997 Licence. A draft of the former was prepared. The draft would have granted Telstra "a licence to use or disclose aspects of the [BIP] owned by ARC under the [Head Contract], other than the ‘Source Code’ licensed to [Telstra] under the [1997 Licence], such as [BIP] contained in the executable [computer] programs of the ... System or in the ... Documentation." However, failing agreement, the draft was not executed. Notwithstanding that, Spatialinfo and Telstra "continued to use and refer to the ... Documentation, as set out in [new particular (g)]."
(e) "[Spatialinfo] and [Telstra] acknowledged the continued operation of [the Head Contract] and the [1991 Licence] after entering into the [1997 Licence], as evidenced by [Telstra’s] Time and Materials RFP/Quote/Work Order No 20816 dated 30 September 1997, which contained a note that [Spatialinfo] as ‘Lead Contractor’ was ‘bound to the existing CPR Contract 73521’, that is, the [Head Contract]."

34 New particular (j) says that

"[a]t around the time [of the disclosure described at [24](d)], [Spatialinfo] and [Telstra] engaged in discussions and correspondence as to the extent to which [Telstra] was entitled to disclose certain information relating to the ... System, including the ... Documentation, to third parties. In response to [Telstra’s] requests for [Spatialinfo’s] views on this issue, [Spatialinfo] asserted that [Telstra] was not entitled to disclose the ... Documentation without approval from [Spatialinfo] due to the terms of the [Head Contract] and the [Continuing Licence]".

This is said to be "evidenced by" certain correspondence.

35 New particular (k) says that "ARC and [Spatialinfo] have not at any time sought to terminate or vary [Telstra’s] licence to use the [Specific Information] subject to the terms of the [Continuing Licence]." New particular (l) says that

"[i]n the absence of the finalisation of the [draft Development Agreement referred to at [33], Spatialinfo and Telstra] have each acted as if the [Head Contract] and the [Continuing Licence] continued to govern their relationship in relation to [Telstra’s] use of the [Specific Information] required by [Telstra] to operate the ... System, including the use and disclosure of the ... Documentation."

The old deficiencies

36 All of the old deficiencies ultimately relate to one issue: whether the claim discloses that the Continuing Licence was in existence as at and after the breach date (the main issue).

37 The issue of novation that is referred to at [27] is severable from the main issue. New particular (f) goes some way to addressing the point I made at [27]. Such a matter is preferably the subject of a pleading as opposed to a particular. But, in the circumstances, that is neither here nor there.

38 New particular (g) seeks to address the point I made at [26] that Spatialinfo has not particularised the use of the Specific Information that it relies upon to establish the existence of the Continuing Licence as at and after the breach date. To that end, it describes certain conduct in relation to the Documentation that occurred both before and after the breach date. The latter involves Telstra, "to the knowledge of and with the assistance of" Spatialinfo, updating the Documentation and Spatialinfo, "at [Telstra’s] request", doing likewise. Senior counsel for Telstra contended for a distinction between such conduct and the use of the Specific Information: the updating of "voluminous" specifications does not, by itself, establish that any Specific Information therein was ever used by Telstra. Though that may be so, I do not propose to decide the point now.

39 Senior counsel for Telstra contended that, in any case, such use is insufficient to establish the existence of the Continuing Licence as at and after the breach date. However, by its written submissions, Spatialinfo notes that para 13(e)(B)(iii) of the defence pleads that

"[a]s Spatialinfo was at all material times aware, it would be impossible or alternatively impracticable or alternatively inefficient for Telstra, its contractors or agents to reproduce, use, modify or maintain the [source code as defined in the 1997 Licence] in accordance with the [1997 Licence] without making any use of and/or reference to the [Specific Information]."

The real issue between the parties is not whether the Specific Information was used – or even how it was used – but what that use means. This is not the time to resolve that issue. It is one for the trial.

40 My observations following the quotation at [39] are, mutatis mutandis, equally applicable to the questions raised by Spatialinfo’s alleged knowledge of and acquiescence in Telstra’s use of the Specific Information. However, new particulars (g) to (l) – and especially new particular (j) – do particularise that knowledge and acquiescence and, in the case of the latter, go beyond "mere" acquiescence.

41 By its written submissions, Spatialinfo accepts that its forbearance from terminating the Continuing Licence is, by itself, insufficient to establish the existence of the Continuing Licence as at and after the breach date. However, it submits that it is "a relevant matter to be taken into account when the Court determines [the main issue]."

The new deficiencies

42 The most serious of the new deficiencies arise from the manner in which the claim makes Spatialinfo’s case on the main issue. That case is based, in part, on the "renewal" of contracts. Telstra complains that:

(a) each renewal involves an allegation of a separate contract and is not separately pleaded;
(b) it is unclear what contracts are alleged to have been renewed; and
(c) the pleading of the renewals ignores the fact that the terms of the contracts varied from renewal to renewal.

(Collectively, the renewal-related new deficiencies.) Telstra complains that further new deficiencies arise out of:

(d) the opacity of the relationship between the General Information – and through it the Specific Information – and the Source Code (whether as defined in the claim or in the 1997 Licence); and
(e) the proposed particulars’ repeated use of the phrase "evidenced by".

(Collectively, the miscellaneous new deficiencies.)

The renewal-related new deficiencies

43 In order to make Spatialinfo’s case on the main issue, the claim posits the following sequence of events:

(a) Following the expiry of the initial term of the Continuing Licence on or about 15 May 1992, the Continuing Licence was renewed until about 8 May 1995 by the periodic payment of fees set out in the Head Contract in accordance with clause 4.7 of the Continuing Licence. See particular (d) to para 13 of the claim: [13](d).
(b) From about 9 May 1995 to 31 December 1997, there was "a series of ‘interim’ renewals of the written licence constituted by the [1991 Licence] which included (among other things) the [Continuing Licence]". Those renewals were initially for a period of one month, then for a period of three months and finally for a period of six months. See new particular (e): [30].
(c) From about 1 January 1998 to the present day, Spatialinfo and Telstra have, by conduct, agreed to renew the Continuing Licence. See new particulars (f) to (l): [31] to [35].

44 The renewal-related new deficiencies stem from the "rolled up" nature of the pleading in the particulars – extant and proposed – to para 13 of the claim. One need only read [43] to see that para 13 is being asked to do a lot, Telstra says too much. As a starting point, Telstra contends that each renewal involves an allegation of a separate contract that must be separately pleaded. By its written submissions, Telstra insists that "[t]his is not just a matter of form [because] the proposed particulars fail to identify what agreements are said to be renewed, on what terms, and at what times."

45 I do not agree with Telstra that each and every contract should necessarily be separately pleaded. The claim is complex enough as it is. However, Telstra’s specific complaints in the last sentence at [44] are well-founded.

46 I agree with Telstra that the proposed particulars are confusing and contradictory as to which contract is being renewed. That confusion and contradiction is introduced by new particular (e). Particular (a) says that the Continuing Licence, in so far as it is in writing, is "constituted by" the 1991 Licence and particular (d) says it was renewed until about 8 May 1995. However, new particular (e) says that the 1991 Licence "which included (among other things)" the Continuing Licence was renewed from about 9 May 1995 to about 31 December 1997. That is, though the written part of the Continuing Licence is to be found in the 1991 Licence, the 1991 Licence is more than just the written part of the Continuing Licence. If that is what Spatialinfo intended to say in new particular (e), it seems inconsistent with particular (a).

47 Further, the proposed particulars necessarily imply, but do not acknowledge, that the terms of the contracts said to be renewed are, to some extent, different in each case. (Moreover, new particular (k) seems to contradict this.) New particular (e) suggests that the subject matter of the 1991 Licence is broader than that of the Continuing Licence. One type of fees was paid before May 1995, another until December 1997 and none afterwards. The implied renewal from about 1 January 1998 may or may not be in perpetuity.

The miscellaneous new deficiencies

48 The Specific Information is that subset of the General Information found in the Documentation. Particular (b) to para 9 of the claim says that the General Information is "contained in" the Source Code. According to Telstra, this means that the Specific Information is contained in the Source Code (see [24](b)). Telstra complains that, by contrast, Spatialinfo’s further and better particulars to para 12 say that the Specific Information is "derived from" the General Information and the Source Code. That language is found in the heading row of each of the three – voluminous – tables that comprise those further and better particulars. However, the request to which they respond was as follows:

"Give the usual details by which it is alleged that the technical data in the ... Documentation pursuant to the [Head Contract] constitutes, reproduces, contains or is otherwise derived from [General Information] owned by ARC prior to the letting of the [Head Contract]."

(The emphasis is mine.) Telstra can hardly complain that Spatialinfo responded to its request in the form suggested by it.

49 A more serious complaint is that the proposed particulars repeatedly use the phrase "evidenced by". Telstra rightly says that such a phrase does not necessarily mean that Spatialinfo will rely only on the matters so described. Spatialinfo’s case on the main issue largely depends on establishing an historical background of conduct from which certain legal conclusions are to be implied. Further, it has had considerable time in which to plead its claim. It should exhaustively state – and say it is exhaustively stating – what matters it will rely upon to establish that background.

The conclusion on the oral motion

50 I will not give my conclusion on the oral motion until after I have considered the application for summary judgment referred to at [1].

SUMMARY JUDGMENT

51 A party seeking summary judgment faces a very high hurdle. Barwick CJ noted in General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 that the power should be exercised cautiously and only in circumstances where the claimant’s case is so untenable that it cannot possibly succeed.

52 The decision of the Court of Appeal of the Supreme Court of Victoria in Brambles Ltd v Wail [2002] VSCA 150; (2002) 5 VR 169 was relied on by Spatialinfo as an answer to the application for summary judgment. In that case, the defendant to a workers’ compensation claim sought to rely upon the terms of an indemnity in its favour given by the plaintiff’s employer (ie the defendant’s contractor) in a written agreement that had expired about three months before the injury that gave rise to the workers’ compensation claim. The Court held that the indemnity remained in force because the evidence showed that the defendant and the defendant’s contractor had proceeded as though their relationship was still governed by the terms of the expired written agreement. In doing so, the Court approved the following statement in Chitty on Contracts:

"There may also be an implied contract where the parties make an express contract to last for a fixed term, and continue to act as though the contract still bound them after the term has expired. In such a case the court may infer that the parties have agreed to a newly expressed contract for another term."

The Court also approved American authorities that are to similar effect.

53 Senior counsel for Spatialinfo conceded that the facts in its case are not on all fours with those in Brambles. Brambles involved the implied renewal of a written agreement without modification – except, of course, as to termination – as a result of continued performance in accordance with that agreement. By contrast, Spatialinfo’s case is that a partly written and partly oral agreement (ie the Continuing Licence) was impliedly renewed with modification as a result of performance that had changed over time.

54 Not surprisingly, senior counsel for Telstra emphasised those differences. Though the last renewal pleaded in new particular (e) expired on 31 December 1997, the claim does not allege that the 1991 Licence or any other written agreement was renewed on and from that date and past the breach date to the present day. Further, the claim alleges that key terms of the 1991 Licence were changed after 31 December 1997 (see [47]). Finally, Telstra contends that even if Brambles does apply, the claim does not allege compliance with the material terms of any licence. Rather, what it discloses is consistent only with non-compliance with the material terms of the 1991 Licence.

55 Notwithstanding those differences, I am of the view that Spatialinfo’s case is not so untenable that it cannot possibly succeed. As the Court in Brambles emphasised, the question before it was one of fact not law. Although Spatialinfo is experiencing difficulty in fully particularising the relevant part of its claim, in the exercise of my discretion I do not propose at this early stage, without having heard the evidence, summarily to terminate that part of the proceeding. In reaching this conclusion I have taken into account that the bulk of Spatialinfo’s numerous causes of action, which are not the subject of the application for summary judgment, will proceed to hearing in any event.

CONCLUSION ON THE ORAL MOTION

56 As noted at [36], the main issue for present purposes is whether the claim discloses that the Continuing Licence was in existence as at and after the breach date. Telstra’s case is that it was not because such a licence never existed. By the defence, Telstra pleads that only the 1997 Licence regulated its use of the Specific Information and that the use was in compliance with the licence. Notwithstanding the old and new deficiencies, Telstra evidently understands the case that is made in the relevant parts of the claim. To that extent, the claim – even though it is not an ideal form – has performed its essential task.

57 However, I will not grant leave to amend the claim in the form of the proposed particulars. The proposed particulars ameliorate the old deficiencies. However, they introduce some of the new deficiencies – adding further complexity to an already complex case that could have been more simply pleaded. Therefore, I will strike out paras 13 to 17 of the claim but grant leave to replead them. In doing so, I urge Spatialinfo to take heed of Telstra’s criticisms – especially those in relation to the new deficiencies. (I also remind Spatialinfo that it has had numerous opportunities to plead the claim.) I will not say anything more than I have already said as to the form of any amendment: repleading is a task for the litigant, not the Court.

FURTHER ORDERS

58 At the hearing of the motion and the oral motion, I granted Spatialinfo leave to join Autodesk Australia Pty Ltd as a respondent to the proceeding. Now that the motion and the oral motion have been disposed of, that order necessitates further consequential orders: see Orders 5 and 6.

59 The appropriate order as to costs is that Spatialinfo should pay Telstra’s costs of the motion and the oral motion.

I certify that the preceding fifty-nine (59) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg.

Associate:

Dated: 11 November 2005

Counsel for the Applicant:	JE Middleton QC, PH Wallis
Solicitor for the Applicant:	Middletons
Counsel for the Respondent:	J Beach QC, E Heerey
Solicitor for the Respondent:	Freehills
Date of Hearing:	26 October 2005
Date of Judgment:	11 November 2005