When you buy land with a development consent, can you assume that you can use the architect’s plans submitted with the consent to build? What if there is a dispute between the architect and the developer - will you be drawn into the litigation mire as a purchaser of the land? A decisive answer to this question can be found in the High Court decision Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd  HCA 55 (6 December 2006).
An architect (or his or her employer), who creates plans owns the copyright in them, whether or not the architect has been paid its fee, unless the copyright is assigned in writing to the client.
Where an architect is engaged to prepare plans and a fee is paid, there is an implied licence to the client to use the plans. However, it has long been assumed that where no fees are paid, no implied licence arises. This assumption was challenged in 2005 in Parramatta Design & Developments Pty Ltd v Concrete Pty Ltd  FCAFC 138; 219 ALR 373.
Because of its importance, the case went to the High Court in Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd  HCA 55, which clarified when these plans can be used, and what effect a development consent has on the issue.
In 1998, Landmark Developments and Toyama entered an unwritten joint venture to purchase and develop land at Nelson Bay. Architectural drawings and plans were commissioned from Parramatta Design, a company wholly owned by one of the directors of Landmark. The joint venture participants obtained a development consent based on those plans in 2000.
Due to a falling out between Landmark and Toyama, the development did not proceed. Trustees were appointed to oversee sale of the land, which was purchased by Concrete Pty Ltd (‘Concrete’) in 2003. Concrete requested permission to use the plans and offered $33,000 to Parramatta Design for the right to use the plans. Parramatta Design refused permission on the basis it owned copyright in the plans and wanted $5 million for a licence.
Concrete commenced proceedings in the Federal Court on the basis of ‘unjustifiable threats’ under section 202 of the Copyright Act 1968 (Cth) by Parramatta Design and its director. At first instance, the court held Concrete did have a right to use the plans, however the Full Federal Court reversed this on appeal. Concrete subsequently appealed to the High Court.
The High Court unanimously reversed the Full Federal Court decision and found that Concrete was entitled to utilise the plans prepared by Parramatta Design, despite the fact that Parramatta Design had not been paid.
In general, a person who commissions plans has an implied licence (or consent) to use those plans for the purpose for which they were created.
The High Court found, in this case, the architectural plans and drawings were contemplated to be used by the joint venturers to develop the site from the stage of obtaining development consent, through to achieving profits from the sale of any development built in accordance with that development consent. Therefore in this case the purpose extended to a sale of the land by the joint venturers.
Accordingly, once the development consent was granted, the implied licence to the site owners to use the plans for the purpose was irrevocable, because one of the purposes for which the plans and drawings were prepared had been achieved. The benefit of this implied licence could subsequently be relied upon by Concrete.
The fact that Parramatta Design had not been paid a fee for preparing the plans and drawings did not alter the High Court’s view that an implied licence exists to use plans and drawings prepared for the construction of a development on a particular site.
The High Court concluded the fact Parramatta Design did not charge the joint venturers a fee to prepare the plans suggested no more than that Parramatta Design was willing to contribute architectural services to the joint venturer free of charge, given Parramatta Design’s indirect interest in the success of the joint venture.
The following implications can be drawn from the High Court’s decision:
- Architects should ensure that their agreement with clients comprehensively define any express permission to use the resulting plans and drawings to use by third parties. This should be done in writing (in a letter, email prior to commencement of work).
- Property developers should ensure that their rights to use architectural plans and drawing are clearly expressed and the scope of any licences clearly defined to avoid commercial uncertainty occurring. This should also be in writing.
- In the absence of express terms to the contrary, it is implied an architect consents to the owner of land using the plans for the purpose for which they were prepared. This consent extends to any successor in title to the land.
- The implied licence becomes irrevocable, without the agreement of the architect, when a key purpose for which the plans were prepared is achieved, eg the grant of development consent subject to those plans.