DECISION
43 I have been provided with extensive written submissions on this point which I will leave with the papers. I will not repeat those submissions. I will from time to time in these reasons just refer very briefly to points put by Counsel on either side.
44 Mr Archer for the plaintiff submitted that clause 4.4 of the IPA Deed entitled INMS to delivery up and use of the relevant source codes. He submitted that the evidence showed that ongoing satisfactory use of the software provided by Objectif required modification and adaptation to deal with faults or bugs as they arose, and that could not be achieved without the benefit of the relevant source codes. He submitted that the reference to use of Objectif's software in clause 4.4 meant practical and efficacious use, which could only be achieved in that way.
45 In my opinion, clause 4.4 does no more than remove an obstacle that might otherwise exist to using, sublicensing and copying software, arising from Objectif's intellectual property rights in that software. It does no more than make permissible what would otherwise be a breach of those rights.
46 That seems to me to be the natural meaning and effect of the words, and it is confirmed both by the circumstance that the license referred to in clause 4.4 is perpetual, irrevocable and royalty free, and also by the circumstance that the matters on which Mr Archer relied to support the other view are expressly addressed, so it seems to me, in clause 4.6.
47 Mr Archer then submitted that clause 4.6 entitles INMS to be given the means to modify and adapt Objectif's software, and that requires access to the source codes. He relied also on clause 4.8, which requires delivery up of the source codes for Objectif's software for the purposes of the license under clause 4.6. He submitted that, on the evidence, Objectif was unwilling or unable to provide the support or other services referred to in clause 4.6, so that INMS had a present entitlement to use the source codes. He submitted that, even if that was not the case, clause 4.8 required delivery up of the source codes to be held by INMS but only to be used if and when the condition under clause 4.6 was satisfied.
48 Dealing first with that last point, I note that Mr Jacobson for Objectif submitted that clause 4.8 would require delivery up of source codes only if the license in 4.6 was actually activated by reason of the relevant unwillingness or inability of Objectif. Mr Archer submitted that the requirement in clause 4.8 that this take place on acceptance was inconsistent with the position put by Mr Jacobson.
49 I should mention one other argument of Mr Jacobson in relation to clause 4.8, namely that it does not directly impose an obligation on Objectif to deliver the source codes but only an obligation on I-Tel to ensure that the subcontractor, that is Objectif, does this.
50 Dealing first with the point as to whether the obligation under clause 4.8 is activated only if the license under 4.6 is activated, it seems to me relevant to look at similar provisions in the DSA and in the subcontract. Clause 11.7 of the DSA imposes a similar obligation as between I-Tel and INMS, but sets it out in a way which in my opinion makes it clear that the item referred to in clause 11.7(d) is to be delivered up on acceptance at the same time as the items referred to in paragraphs (a), (b), (c) and (e) of that clause, but in the case of subparagraph (d), the item is not to be used in any way unless the license referred to in clause 11.5 is activated. It seems clear that what then is required is that the source code be treated by INMS as confidential and not used in any way at all unless, within the meaning of clause 11.5, I-Tel becomes unwilling or unable to provide relevant services.
51 In the subcontract there are very similar provisions as between Objectif and I-Tel, and similar comments apply. In my opinion, when one reads clause 4.8 of the IPA Deed, having regard to those other provisions contained in agreements that are expressly referred to in the IPA Deed, the interpretation put forward by Mr Archer is the preferable one.
52 The other point raised by Mr Jacobson does raise a curious question about the clause in question. The objective of the IPA Deed appears to have been, at least in part, to impose obligations on Objectif which could be directly enforced by INMS, yet in that particular clause no obligation of Objectif to INMS is directly expressed. However, when regard is had to the circumstance that the relevant source codes were required on acceptance, which in fact occurred in September 2000, to be delivered by Objectif to INMS under the subcontract, and having regard to the circumstance that clause 4.6 of the IPA Deed contemplates that INMS will have the facility to modify and adapt the software, this requiring access to the relevant source codes, it seems to me that clause 4.8 should be considered as imposing an obligation on Objectif.
53 The next question I need to consider is whether clause 4.6 has been activated. Although on the view I have taken, Objectif is required to deliver up copies of the source code, plainly the plaintiff is contemplating making use of that source code, and the question whether the plaintiff is entitled to do so has been fully argued before me.
54 As I understand it, Mr Archer has accepted that the onus of proving activation of clause 4.6 lies on INMS. I think it is clear that this is so. INMS would have no freedom to modify and adapt Objectif's software unless the condition in clause 4.6 is satisfied. I think it is clearly incumbent on INMS then to prove satisfaction of that condition.
55 The question of whether that condition is or is not satisfied depends very much on how one is to understand what is meant by "unwilling or unable to provide support or other services". Mr Archer has submitted that since the provision of such services was to be done under the subcontract, and since that subcontract has been terminated, Objectif must from that circumstance alone be considered as unwilling or unable to provide the services. Alternatively, as I understand it, he submits that unless Objectif is willing and able to provide the services for no remuneration, then it is unwilling or unable to provide the services.
56 Mr Jacobson submits that the Objectif is not unwilling or unable to provide the services so long as it is prepared to negotiate bona fide for terms on which it would provide those services, or alternatively if it is prepared to provide such services at market rates, or alternatively, if it is prepared to provide such services at the rates provided for in the subcontract.
57 In my opinion, these terms of clause 4.6 mesh with the obligation placed on Objectif by clause 4.5. The wording is not quite the same. Clause 4.5 refers to supporting and maintaining the software, whereas clause 4.6 refers to providing support or other services to maintain, modify and adapt the software. However, in my opinion there is no relevant difference in meaning. It seems clear that supporting and maintaining software does involve modifying and adapting it to deal with bugs; and on the other hand, I do not read "modify and adapt" in clause 4.6 as requiring any more than making such modifications and adaptations as are appropriate to fulfil an obligation to support and maintain.
58 Mr Archer submitted that clause 4.5, when read with clause 3.2 of the IPA Deed, made it clear that Objectif's obligation under clause 4.5 to support and maintain was not conditional on any payment to be made to it by INMS, so that in circumstances where it was not now going to receive payment from I-Tel, Objectif had to provide these services for no cost.
59 In my opinion, this matter has to be considered in the light of the overall contractual situation as it existed when the IPA Deed was made, and also in the light of subsequent events.
60 Under clause 3.3 of the subcontract, Objectif promised I-Tel to perform these same services during the term, that is until 16 November 2005 or earlier determination, for the rates set out in schedule 4, relevantly about $15,000 a month. Under clause 22.3 of the subcontract Objectif promised I-Tel to perform disengagement services during the disengagement period for the rates provided for additional services in schedule 4. In clause 11.2 of the subcontract, Objectif promised I-Tel to perform these services after the disengagement period "on terms to be mutually agreed with INMS or its nominee".
61 I note incidentally that clause 4.5 of the draft IPA Deed, which is schedule 6 to the subcontract, also contemplates that services performed after the disengagement period would be "on terms to be mutually agreed with INMS". There is no evidence before me as to why the wording changed in the final version of clause 4.5.
62 That consideration of terms of the subcontract shows that, under the subcontract, Objectif was obliged to do what clause 4.5 of the IPA Deed requires in return for payments by I-Tel, or after disengagement on terms mutually agreed with INMS. It is also clear from the terms of the subcontract and the DSA that these services to be provided by Objectif were part of the Bureau Services to be provided by I-Tel to INMS, for which INMS was to pay I-Tel about $120,000 per month. Presumably the $15,000 per month for Objectif was to be funded from that $120,000 per month.
63 The DSA provides that on the termination of that agreement there should be a disengagement plan. However, as I have said, no such plan was ever finalised or agreed, and INMS chose not to proceed by way of a disengagement plan, but rather to enter into a new contract with Paradigm to provide essentially the same services as I-Tel was to provide. The agreement with Paradigm, which is in evidence, indicates that the services to be provided by Paradigm include the support for the system that was to be provided by Objectif and which Objectif essentially agrees to provide in clause 4.5 of the IPA Deed.
64 In my opinion, if Objectif were indeed obliged by clause 4.5 of the IPA Deed to perform these services for nothing, that would mean that it was obliged for no payment to perform part of what Paradigm is to perform under its contract with INMS for a payment to Paradigm, the amount of which is not disclosed in the evidence but which presumably bears some relationship to the $120,000 per month provided in the I-Tel contract.
65 In my opinion, for Objectif to be obliged by clause 4.5 to do this would involve some kind of unjust enrichment either for INMS or for Paradigm or both. INMS is seeking equitable relief in these proceedings, and in my opinion in seeking that relief it must do equity. In my opinion, in seeking, in substance, to enforce an obligation under clause 4.5, INMS should do equity by offering, in return for the services required by clause 4.5, the same payment to Objectif as would have been made by I-Tel under the subcontract.
66 Then, applying that approach to the construction and application of clause 4.6 in the present circumstances, it seems to me that, if such an offer is made and Objectif is not then willing and able to provide the services upon those terms, then the condition in clause 4.6 would be triggered and INMS would be free to use the source codes; but otherwise it would not.
67 In the light of those reasons, it seems to me that INMS is entitled to a declaration and possibly an order giving effect to the view I have taken of clause 4.8 of the IPA Deed. However, I think Objectif is entitled to some declaration or order which will ensure that the software in question is only used if the condition in clause 4.6 is in fact satisfied.
68 I will stand the matter over to 9.30 next Wednesday.