URICA LIBRARY SYSTEMS BV v SANDERSON COMPUTERS PTY LTD [1997] NSWCA 326

URICA LIBRARY SYSTEMS BV v SANDERSON COMPUTERS PTY LTD

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

MASON P, MEAGHER and SHELLER JJA 22 August 1997, 2 October 1997 [1997] NSWCA 326

Contracts — construction and interpretation — computer software — distribution agreement — royalty and commission calculations

This appeal concerns the construction of a Software Distribution Agreement made between the appellant and the respondent. The dispute arose out of the language of the clause dealing with the calculation of royalties and commission.

The trial Judge, in response to a summons begun by the appellant in the Commercial Division, made declarations as to the proper construction of the clause. The appeal is from this decision.

Held:

This is a case where two constructions are open but the appellant's is the one which avoids consequences which appear to be capricious, unreasonable, inconvenient or unjust, even though the construction may not be the most obvious.

Words and phrases

"include"

Dilworth vy Commissioner of Stamps [1899] AC 99 at 105-6 per Lord Watson; Lillyman v Pinkerton (No 2) (1982) 71 FLR 135 at 138; per Gummow J in Hepples v Federal Commissioner of Taxation (1990) 94 ALR 81 at 101 applied.

Mason P I agree with Sheller JA.

Meagher JA I agree with Sheller JA. Sheller JA

INTRODUCTION

This appeal concerns the construction of a Software Distribution Agreement (the Agreement) made between the appellant, Urica Library Systems BV, and the respondent, Sanderson Computers Pty Ltd, then known as General Automation Pty Ltd, on 5 October 1993. By the Agreement the respondent was appointed as the appellant's Licensee in Territory, referred to in the Agreement as "the Total Territory", in respect of "the Licensed Software" which was defined relevantly to mean the URICA Software Product. There are two types of software, operations software and applications software. Operations software is the set of instructions, which provides the common facilities to assist the computer in functioning without tailoring the computer to achieve any particular function. Applications software contains the instructions necessary to achieve a particular function or produce a required output. The Licensed Software was applications software. It was designed for use in a "Computerised Library System".