Case: Liverpool City Council v Irwin [1976] UKHL 1 ; [1977] AC 239
Outcome: applied
In Codelfa Constructions Pty Ltd v State Rail Authority (NSW) [1982] HCA 24 ; (1982) 149 CLR 337 at 345-346 Mason J adverted to the difference between these two categories of implied terms: Of course, I am speaking of an implied term necessary to give business efficacy to a particular contract, not of the implied term which is a legal incident of a particular class of contract, of which Liverpool City Council v. Irwin [1976] UKHL 1 ; [1977] AC 239 is an example. The difference between the two categories of implied term was mentioned by Viscount Simonds in Lister v. Romford Ice and Cold Storage Co Ltd [1956] UKHL 6 ; [1957] AC 555 at 576, where he referred to the search for the second category of implied term as being based 'upon more general considerations', a comment endorsed by Lord Wilberforce in Irwin at 255. 46 Liverpool City Council v Irwin [1976] UKHL 1 ; [1977] AC 239 ( Liverpool ) concerned multi-story council owned dwellings. The landlord retained control over common parts of the building. There had been a problem with vandalisation of the common parts. The question was whether the landlord was obliged to keep the common parts in repair. There was no express obligation to that effect in the leases. The House of Lords implied an obligation to take reasonable care to keep the common parts in reasonable repair and useability. After identifying instances of implication, including where there is an established usage in the relevant trade or activity and where without a term the contract will not work, Lord Wilberforce said at 254: The present case, in my opinion, represents a fourth category, or I would rather say a fourth shade on a continuous spectrum. The court here is simply concerned to establish what the contract is, the parties not having themselves fully stated the terms. In this sense the court is searching for what must be implied. After considering various possible implications, his Lordship went on at 254: In order to be able to choose between these, it is necessary to define what test is to be applied, and I do not find this difficult. In my opinion such obligation should be read into the contract as the nature of the contract itself implicitly requires, no more, no less: a test, in other words, of necessity. He then explained, by reference to the relationship between the parties (landlord and tenant) and the nature of the buildings (multi-occupation high rise dependent on stairs, lifts and chutes for access and liveability), that it was necessary that the landlord have some obligation to keep the common areas in repair. His Lordship concluded that since the test of the existence of the term was "necessity", the standard of repair required should not exceed what was necessary having regard to the circumstances. 47 The "necessity" test was adopted by the Privy Council in Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986] AC 80 at 104-105. The Board referred to Lord Salmon's explication of "necessity" in Liverpool --that the term sought to be implied must be one without which the whole transaction would become "inefficacious, futile and absurd". 50 Their Honours then quoted with approval the passage from Lord Wilberforce's speech in Liverpool set out at [46], and observations to the same effect by the House of Lords in Scally v Southern Health and Social Services Board [1992] 1 AC 294 at 307. 52 The appellant's contention that a contract for the supply of a computer program carries with it an implied licence to use the program and call for the source code is a claim for Chitty's "standardised" implied term that is not dependent on the intentions of the parties, actual or presumed. In order to determine whether the "necessity" test in Liverpool and the later cases is satisfied in relation to contracts for the supply of computer programs, it is necessary to consider the provisions of Division 4A of Part III of the Act. 53 This Division was inserted by the Copyright Amendment (Computer Programs) Act 1999 . It is headed Acts not constituting infringements of copyright in computer programs . Section 47AB provides that in Division 4A computer program includes any literary work that is: (i) incorporated in, or associated with, a computer program; and (ii) essential to the effective operation of a function of that computer program. That section builds on the definition of "computer program" in s 10, which is in Part II Interpretation : a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result. 54 Section 47D, which is headed Reproducing computer programs to make interoperable products , provides: (1) Subject to this Division, the copyright in a literary work that is a computer program is not infringed by the making of a reproduction or adaptation of the work if: (a) the reproduction or adaptation is made by, or on behalf of, the owner or licensee of the copy of the program (the original program) used for making the reproduction or adaptation; and (b) the reproduction or adaptation is made for the purpose of obtaining information necessary to enable the owner or licensee, or a person acting on behalf of the owner or licensee, to make independently another program (the new program), or an article, to connect to and be used together with, or otherwise to interoperate with, the original program or any other program; and (c) the reproduction or adaptation is made only to the extent reasonably necessary to obtain the information referred to in paragraph (b); and (d) to the extent that the new program reproduces or adapts the original program, it does so only to the extent necessary to enable the new program to connect to and be used together with, or otherwise to interoperate with, the original program or the other program; and (e) the information referred to in paragraph (b) is not readily available to the owner or licensee from another source when the reproduction or adaptation is made. (2) Subsection (1) does not apply to the making of a reproduction or adaptation of a computer program from an infringing copy of the computer program.