Architectural Copyright Series Part 5

Who Can Use the Building Plans?

Do the plans come with the land?

Imagine you buy a block of land that already has council approval for a set of units. The approval was obtained using an architect’s plans.

You pay more for the land because the approval is in place. You are ready to build.

Then the architect writes to you: “Those are my plans. You can’t use them.”

Or imagine you are a developer. A designer drew plans for your project, and they were used to get council approval. You then fall out with the designer and hire someone else to finish the job.

Can you keep using the plans?

These questions come up from time to time and the answer often turns on something called an “implied licence”.

This is permission to use the plans that is not written down anywhere, but which the law treats as having been given because of the circumstances.

In this fifth article in our architectural copyright series, we look at two cases that came to very different outcomes: Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd [2006] HCA 55, decided by the High Court of Australia, and Tamawood Ltd v Habitare Developments Pty Ltd [2015] FCAFC 65.

And, as always, we will try to explain the law in legal ease, not legalese®.

Case 1: Concrete v Parramatta Design – land sold with an approval

Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd [2006] HCA 55 began with a block of land at Nelson Bay, on the New South Wales coast.

Nelson Bay is a coastal holiday town on Port Stephens in New South Wales, about an hour’s drive north of Newcastle and around two and a half hours from Sydney, known for its beaches, marina and dolphin-watching.

It started back in 1998 when two companies formed a joint venture to buy the land and build units on it.

One of the people behind the venture was an architect.

His company drew plans for eight units and when neighbour won approval for a bigger building, the architect offered to draw plans for 14 units at no extra charge. Council approved the 14-unit development in May 2000. The approval was to last for five years.

Then the business partners fell out. The court appointed trustees to sell the land.

Before the sale, the architect’s company told the trustees it owned the copyright in the plans and would not let anyone use them.

The sale contract disclosed that there was a dispute about the plans and gave no promise that the buyer could use them.

A company called Concrete bought the land in 2003 and offered to pay $33,000 for permission to use the plans but the architect’s company asked for $5 million instead.

What did the courts decide?

The case was appealed again and again until it reached Australia’s highest court, whose decision is final and must be followed by all other courts.

The trial judge decided in Concrete’s favour. The Full Federal Court reversed that decision, saying a buyer who had not paid for the plans had no right to use them.

The High Court unanimously restored the trial judge’s decision. Concrete could use the plans to build the approved development.

The High Court explained that when landowners have plans prepared to obtain a development approval, they will often have an implied permission to use those plans for that purpose.

When the land is sold with the benefit of the approval, that permission can pass to the buyer.

The fact that the land was sold earlier made no difference and, two judges in the case described it this way:

“An earlier sale than was originally contemplated does not extinguish that implied consent.”

The High Court also found it significant that the architect had been part of the joint venture himself so he could not now turn around and demand that the buyer stop using those plans.

Why this case matters

Its generally known that a development approval can add real value to land. But if the plans behind it could be locked away, the land could be left unproductive, unable to be used for the purpose it was approved for, this would not be ideal.

Although we do need to stop here and say that the decision did turn on its particular facts and even the Court said that the outcome might have changed if the contract had stated otherwise.

Case 2: Tamawood v Habitare. What happens if the deal falls through?

The Concrete case might suggest that once plans have been used to win an approval, they might be okay to use.

Tamawood Ltd v Habitare Developments Pty Ltd [2015] FCAFC 65 shows that this is not always so.

Habitare was a property developer in Queensland. It arranged for Tamawood, a company that designs and builds project homes, to design houses for a development. Tamawood’s plans were used to obtain planning approval.

Tamawood did not charge for preparing the plans on the understanding that it would be engaged to build the houses.

But the two companies could not agree on terms. Habitare went elsewhere: it hired an architecture firm, Mondo Architects, to draw up the plans for the houses and another builder to construct them.

Tamawood sued Habitare, the new architects and others. By the time the case was decided, Habitare had administrators and receivers appointed.

What was decided?

The trial judge, Justice Collier of the Federal Court, found that Habitare had only a limited permission to use Tamawood’s plans. It covered using them for the planning application while Tamawood was expected to build the houses.

Once Habitare decided not to go ahead with Tamawood, that permission ended.

Using the plans beyond that point was not allowed.

The new architects were also found to have infringed Tamawood’s copyright in some of their plans.

They did, however, win a separate claim against Habitare and two of its principals, who had told them the copyright issues with Tamawood had been sorted out.

On appeal in 2015, three judges of the Full Federal Court agreed that the permission had ended when Habitare walked away from Tamawood. They also went further than the trial judge, finding that another of the new architects’ designs copied a Tamawood design, despite the differences between them.

Why this case matters

Concrete and Tamawood came to different results because the circumstances were different.

In Concrete, the architect was part of the business that obtained the approval and shared in the profits from selling the land with it.

In Tamawood, the designer provided the plans free of charge for one reason: it expected to get the building work.

Decoding the Copyright Act

Copyright Act 1968 (Cth) protects house plans as drawings, and buildings too (section 10(1)). The person who draws the plans, or their employer, usually owns the copyright (section 35).

Only the copyright owner can reproduce the plans or build from them, unless they have given permission, called a “licence” (sections 31 and 36(1)).

A licence does not have to be in writing. It can be spoken, or implied from the circumstances (section 196(4) recognises that non-exclusive licences need not be written). That is why the background to a project matters so much.

Permission given by someone bound to the copyright owner can also count as the owner’s permission (section 15). This was important in Concrete.

It is also against the law to make unjustified threats of copyright proceedings (section 202).

More to come in our architectural copyright series

This article is Part 5 of our series exploring architecture and copyright in Australia.

In Part 4, we looked at homeowners and builders who took plans from one builder to another, and the myth that changing a plan by “10%” makes it safe to use.

How we can help you

We assist architects, building designers, builders, property developers and homeowners with architectural copyright, licences, contracts and disputes.

We can review design contracts, prepare licences that travel with the land, and advise you when a project changes hands. If you are buying or selling land with an approval, or a project has fallen over, contact us before taking further steps.

At Sharon Givoni Consulting, we explain the law in legal ease, not legalese®.

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Please note the above article is general in nature and does not constitute legal advice.

Please email us info@iplegal.com.au if you need legal advice about your brand or another legal matter in this area generally.