Airservices Australia v Jeppesen Sanderson Inc [2006] FCA 906 | Case summary

17 On the hearing of the motion, which lasted for two full days, the first and second respondents were represented by J V Nicholas SC and C Dimitriadis of counsel and the applicant was represented by R Cobden SC and H P T Bevan of counsel. 18 The applicant does not oppose the proposed order 1.5, but is emphatic in its opposition to the other orders sought. 19 Apart from quite extensive exhibits, the evidence on the hearing of the motion consisted of an affidavit of Gary Albert Rumble, a partner in Phillips Fox, affirmed 4 May 2006, a further affidavit of that deponent affirmed 30 June 2006 and an affidavit of David Larcombe Yates, a senior associate at Allens, sworn 9 June 2006 (a 51 paragraph affidavit), a further affidavit of the same deponent sworn 9 June 2006 and an affidavit of Deborah Susan Vine-Hall sworn 9 June 2006, filed on behalf of the applicant. 20 Much of the material in the several affidavits was objected to and either not read or rejected. In the case of the affidavit of Deborah Susan Vine-Hall none of it got into evidence. Even in respect of those parts of the affidavits which were not objected to or were allowed over objection I must say that I have grave reservations as to the necessity for including much of the material, especially where that material did no more than provide a recitation of the pleadings and the correspondence all of which spoke for themselves. 21 Notwithstanding the relatively slow start to the proceedings it must be recognised that the case as ultimately advanced will be an important one. Expressed in the most simple terms the case concerns claims to copyright made by the applicant in respect of numerous aeronautical publications. One of the problems the applicant faces in the presentation and preparation of its case is that the publications themselves are regularly updated and revised. They are not static. 22 It is common ground that the first respondent is a company incorporated in the State of Delaware in the United States of America which carries on business as an international aeronautical information materials business offering for sale, selling and distributing aeronautical information materials to members of the aviation industry. For present purposes it is unnecessary to specify the business of the second respondent beyond noting that the applicant contends that the second respondent was at various times an agent of the first respondent or otherwise involved in the marketing, importation into Australia and sale in Australia of the first respondent's products. 23 The applicant has claimed copyright in numerous works and now alleges infringement of that copyright, although it did not originally do so. The respondents dispute the applicant's claims and also contend that if they published or otherwise used works in which the applicant had copyright, they did so under licence so that there was no relevant infringement. 24 The circumstances in which copyright in an original literary, dramatic, musical or artistic work will be found to subsist is dealt with in s 32 of the Copyright Act 1968 (Cth) ('the Act'). The nature of copyright in original works is dealt with in s 31 of the Act. For present purposes it is sufficient to refer to the following: '31(1) For the purposes of this Act, unless the contrary intention appears, copyright, in relation to a work, is the exclusive right: (a) in the case of a literary, dramatic or musical work, to do all or any of the following acts: (i) to reproduce the work in a material form; (ii) to publish the work; (iii) to perform the work in public; (iv) to communicate the work to the public; (vi) to make an adaptation of the work; (vii) to do, in relation to a work that is an adaptation of the first-mentioned work, any of the acts specified in relation to the first-mentioned work in subparagraphs (i) to (iv), inclusive; and (b) in the case of an artistic work, to do all or any of the following acts: (i) to reproduce the work in a material form; (ii) to publish the work; (iii) to communicate the work to the public; and (c) in the case of a literary work (other than a computer program) or a musical or dramatic work, to enter into a commercial rental arrangement in respect of the work reproduced in a sound recording; and (d) in the case of a computer program, to enter into a commercial rental arrangement in respect of the program. (2) The generality of subparagraph (1)(a)(i) is not affected by subparagraph (1)(a)(vi). …' 25 In s 10(1) of the Act the following definitions relevantly appear: 'In this Act, unless the contrary intention appears: … "artistic work" means: (a) a … drawing …, whether the work is of artistic quality or not; … "literary work" includes: (a) a table, or compilation, expressed in words, figures or symbols; … … "work" means a literary, dramatic, musical or artistic work. …' 26 The applicant's case is that the aeronautical publications with which the proceedings are concerned are literary works or combined artistic and literary works. 27 Sections 36 et seq of the Act deal with acts which constitute infringement of copyright and s 115 of the Act makes provision for the bringing of actions for infringement of copyright by the owner of such copyright. 28 The court's power to order costs is found in s 43 of the Federal Court of Australia Act 1976 (Cth). Section 43(2) provides: '43(2) Except as provided by any other Act, the award of costs is in the discretion of the Court or Judge.' 29 It is well established that the power is of a most general nature. Costs are in the unfettered discretion of the Court to be exercised judicially in light of all the circumstances of the particular case (per Franki J in Thompson v Mastertouch TV Services Pty Limited (1977) 15 ALR 487 at 498; per Einfeld J in Re Sanchez; Ex parte Smits (1994) 49 FCR 326). In DSE (Holdings) Pty Limited v InterTAN Inc [2004] FCA 1251 at [14] Allsop J said: 'Section 43 of the Federal Court of Australia Act is a broad and ample power not to be read down otherwise than by judicial principle conformable with the amplitude of the power. …' 30 Order 62 rule 3 of the Federal Court Rules is concerned with the time for dealing with costs. It provides: '3(1) The Court may in any proceeding exercise its powers and discretions as to costs at any stage of the proceeding or after the conclusion of the proceeding. (2) Where the Court makes an order in any proceeding for the payment of costs the Court may require that the costs be paid forthwith notwithstanding that the proceeding is not concluded. (3) An order for costs of an interlocutory proceeding shall not, unless the Court otherwise orders, entitle a party to have a bill of costs taxed until the principal proceeding in which the interlocutory order was made is concluded or further order.' 31 In lengthy and complex cases where substantial costs have been thrown away as a result of ill-considered pleadings being drawn, the power to order that costs thrown away be paid forthwith should be used less sparingly than it has in the past. Such costs should be capable of being recovered without the innocent party having to wait, possibly years, for that to occur (per Weinberg J in McKellar v Container Terminal Management Services Limited [1999] FCA 1639 at [41]). 32 The making of an order under Order 62 rule 3 is justified where, through no fault of a party, such as the first and second respondents in the present case, there has been substantial delay in the proceedings because an applicant has attempted a number of versions of the Application and of the Statement of Claim, additional directions hearings have taken place which should not have been necessary, interlocutory steps have been taken and applications have been brought unnecessarily given the changes to the pleadings that have occurred (see All Services Australia Pty Ltd v Telstra Corporation Ltd (2000) 171 ALR 330 at 333 [11]. 33 The circumstances of this case clearly bring it into the category where, if costs are to be ordered by reference to the changes that have been proposed or made to the Application and/or the pleadings of the applicant, then justice requires, firstly, that the burden of the costs thrown away should fall upon the applicant who has put the first and second respondents to wasted and unnecessary expense and, secondly, requires that such costs should be payable forthwith. It follows that the first and second respondents should be entitled to have any costs that are ordered to be paid forthwith, taxed forthwith also. 34 As will become clear, fine lines will have to be drawn by the taxing officer upon the taxation or assessment in accordance with Order 62 of any costs that may be so ordered in this case. In some areas, the distinction between what are truly costs thrown away and costs related to matters which will necessarily form part of the first and second respondent's preparation of their case in response to the pleadings as they now stand, will not be readily apparent. For example, in relation to affidavits that may have been filed, discovery that may have been sought and given and inspection of documents that has occurred, the task of the taxing officer may be a challenging one. Whilst the nature of the challenge militates against an order for taxation forthwith being made, nevertheless, the rights of the first and second respondents and the economic impact upon them of the steps which the applicant has taken, cannot be put to one side. 35 In many instances the determination of what work has been undertaken and expense incurred, which has been rendered redundant, will be quite obvious. 36 I trust that I do not do an injustice to the applicant's case by saying that the applicant gives the appearance of being a somewhat reluctant suitor. From the little that I know about the matter thus far, the appearance is that, whilst the applicant is firm in its resolve to secure a commercial outcome which ensures that it is rewarded for its efforts in relation to the aeronautical publications in which it claims that copyright exists of which it is the owner, it does not want to, if I may use the vernacular, kick its bedfellows, the respondents, with whom it almost certainly will have an ongoing business relationship. 37 This appearance may have been the reason for its unwillingness, until 31 March 2006 to stand up and propound a case that ought properly occupy the time of the Court. Another problem for the applicant may have been its difficulty in formulating a manageable case where the publications in respect of which it claims copyright are forever changing. 38 Under Order 13 rule 2 of the Federal Court Rules, it is, of course, possible for an applicant to plead facts and matters in an amendment to its pleadings that have occurred or arisen since the commencement of the proceedings and to effect amendments that add new claims for relief or foundations in law for claims for relief which arise out of facts and matters that have occurred or arisen since the commencement of the proceedings. 39 Prior to the introduction of the amendments to Order 13 rule 2 of the Rules to allow such amendments, it was possible for a party to plead a fact or matter that had occurred or arisen since the commencement of the proceeding (see Order 11 rule 7), but amendments to a Statement of Claim were impermissible if they had the effect of introducing into the Statement of Claim a cause of action based upon facts which had not arisen at the time when the Statement of Claim was filed (see Baldry v Jackson [1976] 2 NSWLR 415 at 419). But for the changes to the rule, the applicant's task may have been easier to undertake. 40 Even now, the applicant wishes to progress the matter by way of separate questions before the trial in the proceedings (see Order 29 rule 2). There may be merit in such a proposal as it may allow a convenient snapshot to be taken when the issues of copyright and infringement could be addressed in respect of a discrete selection of aeronautical publications rather than in respect of all such publications at all times covered by the current Statement of Claim (see generally ss 21 and 22 of the Federal Court of Australia Act). 41 In the Application as originally filed the applicant made no claims of infringement in respect of the works in respect of which it claimed that copyright subsisted and of which it claimed to be the owner. 42 In the Amended Application filed 26 July 2004, this position remained the same. All that was sought was declaratory relief in respect of the subsistence and ownership of copyright. 43 In a draft Second Amended Application forwarded by Corrs to Phillips Fox on 18 July 2005 a prayer for relief was added seeking a declaration that: '(a) the First Respondent is not entitled to reproduce or adapt the Copyright Works or any of them or any substantial part thereof, without the Applicant's licence or authority; (b) the Respondents or one or other of them has infringed and will infringe the Applicant's copyright in the Copyright Works; (c) the Applicant is entitled to restrain the First Respondent from reproducing or adapting the Copyright Works and each of them without its licence or authority.' 44 Whilst the draft Second Amended Application included a prayer for relief for such further or other orders as the Court may consider appropriate, it is clear that, at least at that stage, the applicant had no interest in securing any injunctive relief against the first and second respondents or either of them or an order for damages or an account of profits. The second proposed version of the Second Amended Application sent by Corrs to Phillips Fox on 28 July 2005 did not relevantly alter the position. It continued to seek nothing other than declaratory relief as indicated in the earlier draft. 45 Neither of the 18 July 2005 nor 28 July 2005 proposed Second Amended Applications were ever filed. 46 It was not until Allens filed the applicant's 'Second Amended Application' on 31 March 2006 that the relief sought in the proceedings was expanded to go beyond declaratory relief and include claims for injunctions, damages, accounts of profit and delivery up of alleged 'Infringing Materials'. 47 Turning to the various versions of the applicant's Statement of Claim, including the three proposed versions of the 'Second Further Amended Statement of Claim', it is evident that the applicant shifted its ground in relation to the nature of the aeronautical publications in respect of which it alleged that copyright subsisted and of which it claimed to be the owner and also in relation to the dates at which the questions of subsistence and ownership were to be determined. 48 The original Statement of Claim asserted that the applicant was the owner of copyright in certain literary and artistic works being compilations of aeronautical information or data and charts. The particulars provided in the Statement of Claim made it clear that what was being claimed was that copyright subsisted, of which the applicant was the owner, in a compilation being an integrated aeronautical information package and in, what I might describe as, the sub-compilations making up that compilation. 49 In the Further Amended Statement of Claim filed 26 July 2004, the claim was expanded to include the compilation, the sub-compilations and, what I might describe as, sub sub-compilations making up the sub-compilations. 50 Ultimately, in the Second Further Amended Statement of Claim filed 31 March 2006 and 20 April 2006, the claim was changed to one in respect of the compilation being an Australian integrated aeronautical information package and, with some exceptions, each of the component documents which were said to be works the subject of copyright. 51 In the original Statement of Claim the works in respect of which copyright was claimed would appear to have been all those covered by the description contained in paragraph 4 of the Statement of Claim which were 'created and first published by the Applicant in 1995' and thereafter, up to, one would assume, the filing of the Application on 9 December 2003. 52 The Further Amended Statement of Claim focused on works said to have been first published on or about 9 January 2003 and subsequently thereto. 53 The first proposed Second Further Amended Statement of Claim of 18 July 2005 sought declaratory relief in respect of works as at 2 September 2004 and/or alternatively as at 25 November 2004 - what one might call 'snapshot' claims as at those dates. 54 As I understand it, the second proposed Second Further Amended Statement of Claim of 28 July 2005 sought to maintain the 'snapshot' approach, but by reference to a differently described package of claimed original works. 55 The Second Further Amended Statement of Claim filed on 31 March 2006 and 20 April 2006 abandoned the snapshot approach and sought to advance claims of copyright not only in respect of the compilation described as the Australian integrated aeronautical information package but also, as I understand it, in respect of most of the relevant component works first published since 1 July 1995 and presumably up to 31 March 2006. It also contained allegations of infringement of copyright from 'at least 9 December 1997'. 56 During the course of argument on the first and second respondents' motion I was taken to several requests for further and better particulars and responses thereto and to passages from the transcript of directions hearings with a view to demonstrating that what the applicant was saying in each of its pleadings was quite clear and well understood by the first and second respondents. 57 The applicant also sought to draw comfort from paragraph 19 of an outline of submissions which the first and second respondents' counsel prepared on 12 July 2005 for a hearing in respect of a discovery motion before Merkel J in 22 July 2005. That paragraph read as follows: '19. The end result is that the applicant's claim - in which it seeks declarations as to subsistence and ownership of copyright in each and every one of such "Copyright Works" since "at least on or about 9 January 2003" - covers a vast number of separate works, of different kinds, each of which is alleged to be a copyright work in its own right, as well as being part of one or more series of larger "compilation" works forming part of the IAIP in which copyright is also asserted.' (footnotes omitted) 58 Whilst the expression 'a vast number of separate works, of different kinds' could be read as a vast number of separate compilation works of different kinds or a vast number of separate component works of different kinds, I do not think that the use of the expression can be seen to be an admission on the part of the first and second respondents that they understood or perhaps misunderstood, the then current pleading as one which related to more than compilations, sub-compilations and sub sub-compilations. 59 At a time when the second proposed Second Further Amended Statement of Claim of 28 July 2005 was under consideration the then solicitors for the applicant wrote to the solicitors for the respondents stating: '… 3. Costs of the amendment You state in your facsimiles dated 20 July 2005 and 28 July 2005 that the costs incurred by the Respondents since 17 December 2005 (sic) which are thrown away by reason of the amendment, should be on a solicitor/client basis and that all costs thrown away by the Respondents by reason of the amendment should be payable forthwith. As stated in our facsimile dated 21 July 2005, the Applicant accepts that it will be liable to pay the Respondents' costs thrown away by reason of the amendment. As also stated in that facsimile, the Applicant's position is that costs should be taxed on the usual basis. That is, that costs be taxed on a party/party basis. …' 60 In a letter dated 17 March 2006 from the applicant's current solicitors to the solicitors for the respondents the following was said in respect of the amendments ultimately made to the Application and the Statement of Claim on 31 March 2006: '13. Our client proposes that the Court order that the costs which may have been thrown away by your clients in connection with the proposed amendments to the pleadings (if any) be reserved at this time.' 61 Thereafter, a letter dated 28 March 2006 from the current solicitors for the applicant to the solicitors for the respondents contained an offer to pay costs in the following terms: 'Our client is prepared to consent to the following order as to costs in connection with the amendments of its pleadings [those ultimately effected on 31 March 2006]: The Applicant pay the Respondents' costs of and occasioned directly by the amendments, but costs thrown away or otherwise resulting from the amendments be reserved for the trial.' 62 Considering the history of the matter, the uncertainty of the applicant's claims as expressed in its earlier pleadings and the several changes which I have briefly attempted to summarise above, I find the conclusion inescapable that the first and second respondents are entitled to orders in accordance with paragraphs 1.1, 1.2, 1.3, 1.4 and 1.5 of the proposed Short Minutes of Order. As indicated above, the applicant accepts that the first and second respondents are entitled to an order in terms of paragraph 1.5. 63 In relation to the costs order of 17 December 2004 in relation to the discontinuance of the first and second respondents' cross-claim, it seems to me that given the volte-face which is apparent in the applicant's attitude to the relief sought, the clear indication which preceded the volte-face that infringement relief was not sought and the circumstances in which the cross-claim was discontinued, it would be quite unjust to allow the costs order of 17 December 2004 to stand. This does not mean that an order having the same effect would be inappropriate at the end of the day. However, it should be a question for the trial judge as to whether such an order should be made. In my opinion an order should now be made setting aside the earlier costs order as sought in paragraph 2 of the respondents' Short Minutes of Order. 64 In relation to the costs of the first and second respondents' motion the applicant has failed conclusively. In the circumstances the costs should follow the event and an order should be made in accordance with paragraph 3 of the respondents' Short Minutes of Order. 65 In relation to paragraph 4, I have already stated the relevant principles to be applied by the Court in the exercise of its discretion on such a matter. In my opinion this is a clear case where the order sought in paragraph 4 of the Short Minutes of Order should be made. I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham.

Airservices Australia v Jeppesen Sanderson Inc

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