Facts

The sole director of the architectural firm Parramatta Design & Developments Pty Ltd (‘Parramatta Design’) entered into a joint venture for the purchase and development of vacant land located at Nelsons Bay in New South Wales. Subsequent to the purchase of the land, the joint venturers agreed to engage the architect to prepare plans for an eight unit development for which approval was to be sought and the cost of construction shared by the joint venturers. The plans were prepared for a fee of $27,000.00 and approval for the development of eight units was granted by the local council.

Subsequent to the granting of the approval, the owners of the adjoining block were successful in obtaining approval for sixteen units. As a result, the architect sought the agreement of the joint venture partners for the preparation and submission of a new development plan requesting council approval for fourteen units.

Some of the parties to the joint venture were resistant to the proposal but were persuaded by the architect who offered to prepare the revised plans for the fourteen unit development free of charge. On that basis, the joint venturers agreed to the preparation and submission of the new plans which were ultimately approved by the local council.

Subsequent to the approval of the fourteen unit development, the joint venture disintegrated and an application was made to the Supreme Court for the property to be sold and the proceeds split between the joint venturers. Trustees were appointed to sell the land, at which time Parramatta Design gave notice that it would not give its consent for a subsequent purchaser to use its building plans to construct a development in accordance with the approved plans. However, the architect consented to the sale of the land (for a sum far in excess of the original purchase price) with the approved plans which ran with the land.

Concrete Pty Ltd (‘Concrete’) purchased the land from the trustees and ultimately sought to construct a development in accordance with the approved plans and made an offer to Parramatta Design to pay a fee for the use of the building plans.

Parramatta Design refused to give this consent and reserved its rights under the Copyright Act in relation to the ownership of the plans. Planning approval for the fourteen units was granted for a period of five years upon which time they would lapse and a new planning regime meant that only eight units could be constructed on the property. As Concrete were unable to prepare its own plans for a fourteen unit development within the time frames, it sought to construct according to the plans and commenced proceedings seeking a declaration confirming its right to do so.

Parramatta Design defended the proceedings on the basis that no payment was made to the Architect by the owners of the land.

Ruling of the High Court

In the circumstances, the Court found that an implied licence had been given by Parramatta Design to the owner of the property and subsequent purchasers, to use the building plans to develop the property in accordance with the planning approval.

The architectural plans were to be used by the owners to develop the site from the stage of obtaining planning approval to achieving profits from the sale of any development built in accordance with planning approval. It was held that those purposes must encompass and include a sale of the land with the benefit of planning approval by the owners, after planning approval has been obtained and before completion of the development.

The relevant point in which to consider whether an implied licence has been granted is the point at which the instructions are given by the owner of the land to the architect for the drafting of the plans. The court found it incongruous to allow Parramatta Design to benefit from the sale of the property with planning approval but then deny Concrete the ability to make full use of the plans which were an integral part of planning approval.

Parramatta Design's ownership of copyright in the drawings was held to be subject to any consent to use, reproduce or publish any copyright drawings which had already been impliedly granted.

Effects of the Decision

While each case must be decided according to its facts, this decision affirms that developers who purchase land with the benefit of a planning approval (which runs with the land) are entitled to use the building plans on which approval was obtained.

For architects, the decision means that they should ensure that they are paid for plans produced prior to the lodging of those plans with any application for planning approval. While they retain the ownership of the copyright of the plans in relation to the copy of the plans copied or used for other properties, once planning approval has been granted, the ability to build according to those plans on that property will transfer to subsequent purchasers. Where payment for preparing the plans is not received prior to approval, the architect must pursue their own client, not the subsequent purchaser.

Overall, the decision gives clarity for both developers and architects in relation to plans which are prepared for the use of gaining planning approval for a property.

The full citation for the case is Concrete Pty Limited v Parramatta Design & Developments Pty Limited and Ghassan Fares [2006] HCA 55.

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