In brief – There can be doubt about who owns the copyright in development consent plans
A purchaser of land subject to an unperformed development consent cannot assume that the development consent plans can be used to carry out the development. Use of the plans may infringe copyright, in which case use of the plans could be stopped by injunction.
Who could be affected?
This is relevant to purchasers of land especially developers; sellers of land; architects and other designers who prepare plans to be used for a development application; banks and other lenders in connection with land to be developed; land owners or developers entering into a joint venture (JV) or similar; and builders.
What you need to know about the development consent plans
A purchaser buying land with an unperformed development consent needs to establish by due diligence enquiries:
- Who is the author(s) of the plans?
- Who owned/now owns the copyright (taking account of all of the legal rules that are relevant)?
- Are you dealing with the current copyright owner (or a person with an adequate copyright licence that permits sublicensing or assignment) and purchasing the copyright or at least getting an adequate licence to use the plans, or can you otherwise be confident that there will be a sufficient implied copyright licence?
- Has that person or company given any personal property security (PPS) over the copyright (or the licence that they hold), that may take priority anyway; and is any PPS "taking free" rule going to allow you to ignore any PPS?
- At a minimum, will you have a licence to use and adapt the plans to carry out the development, or something similar, on the site?
All of that is very hard to achieve with complete (or even much), certainty.
Using other risk reduction strategies
Other risk reduction and risk management steps may help - warranties, guarantees, indemnities, securities, and even insurance may be available.
Everything had been looking reasonably safe
For a purchaser in this situation buying a site subject to a development consent, everything had been looking reasonably safe after a 2006 High Court decision where in similar circumstances, a purchaser succeeded with a claim that they had an implied licence to use the copyright plans that formed the basis of the application for development consent.
The licence was implied in that case because the architect hadn't put anything in place to say otherwise; and having got a commercial benefit, was viewed as having intended that implied licence result, so it was too late to change things.
But the High Court in that case did make it clear that there is a "gap" and that a purchaser isn't always assured of success in these situations.
Now we have a clear example of the "gap".
Different circumstances meant plans unable to be used in Tamawood v Habitare
In May 2013 the Federal Court held in Tamawood Limited v Habitare Developments Pty Limited  FCA 410 that where a designer didn't get any benefit for producing the plans and also had imposed a condition on the original land owner (in that case, that the plans wouldn't be used unless the designer was retained as the builder), then there was no "travelling" implied licence for the owner of the site (or its builder), to use the plans.
An argument was put to the court that there had to be an implied licence because the designer had consented to the plans being used for the development application. If the designer was now able to refuse consent to use of the copyright plans, that would mean that the development consent that had been obtained couldn't be used and a fresh application would have to be made.
The court said – "that [is] precisely the outcome contemplated".
Doctrine of "innocent infringer" does not prevent injunction
The doctrine of "innocent infringer" may be a little help to a purchaser but usually not.
It is only available for someone who has no reasonable grounds for suspecting a copyright infringement; and it doesn't prevent an injunction being issued, ordering that a development not go ahead where that would otherwise involve breach of copyright.
There is a warning there not just for purchasers of development sites.
Implications for architects and designers
Architects and designers who prepare plans that are to be used for a development application need to be very clear in formal signed initial engagement conditions, about exactly what are the copyright assignment and licensing arrangements.
Implications for banks and other lenders
Banks and other lenders need to ensure that there is appropriate due diligence and that security documents over a development property capture the relevant copyright rights.
Implications for developers
Developers entering into a JV or similar need to ensure up front that there are:
- appropriate due diligence steps taken
- JV documents that adequately deal with the relevant copyright rights
- appropriate assignment or licensing provisions in the engagement conditions with any architect or other designer and in favour of the appropriate parties.
Implications for builders
Builders need to be wary if there is anything that might indicate that plans they are being asked to follow might be the subject of a copyright claim by someone who the builders are not dealing with. The builder was also joined in the court proceedings in Tamawood v Habitare.David Kennedy
Colin Biggers & Paisley
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.