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Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd & Anor [ 2006] HCATrans 42  (10 February 2006)

Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd & Anor [ 2006] HCATrans 42  (10 February 2006)

Last Updated: 14 February 2006

[2006] HCATrans 042

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S399 of 2005

B e t w e e n -

CONCRETE PTY LIMITED

Applicant

and

PARRAMATTA DESIGN & DEVELOPMENTS PTY LIMITED

First Respondent

GHASSAN FARES

Second Respondent

Application for special leave to appeal

GLEESON CJ
KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 10 FEBRUARY 2006, AT 10.46 AM

Copyright in the High Court of Australia

MR B.W. RAYMENT, QC: May it please your Honours, I appear with my learned friends, MR A.J. SULLIVAN, QC and MR D.T. KELL, for the applicant. (instructed by Costa & Associates)

MR C.J. BIRCH, SC: May it please the Court, I appear with my learned friend, MR J. LOOFS, for the respondent. (instructed by Proctor & Associates)

GLEESON CJ: Yes, Mr Rayment.

MR RAYMENT: Your Honours, on the findings of the learned trial judge this case, in our respectful submission, was decided entirely consistently with earlier authority both in Australia in Beck’s Case and in the English Court of Appeal in Blair v Osborne. His Honour found that the purpose for which the architect prepared the plans was so that development consent could be obtained by the clients so that a building could be built in accordance with the plans by the clients.

It was prepared, according to the trial judge, for an agreed consideration. The consideration was agreed upon in the following way. The architect had been paid a fee for the preparation of earlier plans for an eight unit development which was no longer regarded as appropriate.

KIRBY J: I think we know the facts and there is an interesting question in this case, but was it not the logic of the conclusion of the Full Court on the question of apprehended bias that the whole trial miscarried and had to be retried?

MR RAYMENT: Their Honours did not do that. Their Honours chose to - - -

KIRBY J: They went on to make a finding on that question. Does that not, as it were, create a flaw in the conduct of the trial that the other party is entitled to have the matter reconsidered by a person who was not biased, if that is a good point?

MR RAYMENT: If that is a good point, then there ought to have been a new trial on the findings that ought to have been made in the Full Court, but there was not. Instead, the court selected what it regarded as - - -

KIRBY J: Would we become involved in that question because that is a - - -

MR RAYMENT: What the Full Court have done is to create - - -

KIRBY J: I suppose we would have to if we brought the matter up because there would be a notice of contention seeking to attack the judgment on that basis of an alternative - - -

MR RAYMENT: You would, in our respectful submission, need to receive the case in its entirety in order to dispose of it finally on all possible construction.

KIRBY J: Given the finding by the Full Court, could we sever the first point and just deal with that or would we have to – I suppose if there is a notice of contention or a cross-appeal, perhaps, we would have to consider the last one which, speaking for myself, I regard as a bit arguable.

MR RAYMENT: We, for our part, wish to submit that there was no foundation for the findings of bias, or apparent bias, which were made in the Full Court.

KIRBY J: But the judge obviously felt that the respondent was trying to do something which was wrong and he expressed that very clearly repeatedly. That is not unknown to happen.

MR RAYMENT: It is not uncommon. Only incidentally to the dealing with an entire series of questions of fact before his Honour.

KIRBY J: Mr Murr declined to put the point, as I understand it, ultimately.

MR RAYMENT: He did. That says it all, in one sense, in that he was - - -

KIRBY J: It is not determinative, of course, but it does show an experienced barrister has turned his mind to it and would not argue the point but then the Full Court seems to have accepted the point.

MR RAYMENT: Yes. Your Honours, what the Full Court have done with their reasons, in our submission, is to create a state of the law that is entirely out of accord with what Justice Jacobs decided in Beck’s Case and what the English Court of Appeal decided in Blair, such that if the Full Court is right those cases no longer have authority in this country or, at any rate, their authority is significantly weakened. In our respectful submission, that demands the consideration of this Court unless the Court regards what the Full Court says as unexceptionable. It is full of error, in our submission.

GLEESON CJ: Could I ask you one matter of background, Mr Rayment. Where there is an application for development approval in relation to land and the approval is granted and the land is sold to a purchaser with, as it were, the benefit of that approval, what is it contemplated the purchaser is going to do but develop the land in accordance with the approval that has been given?

MR RAYMENT: Precisely.

GLEESON CJ: Or, at least, but have the right to develop the land in accordance with the approval that has been given?

KIRBY J: Is that the ultimate foundation of an implied licence? Is that how the law deals with it?

MR RAYMENT: It is. It is the foundation of the trial judge’s judgment and, really, of the English Court of Appeal’s decision where - - -

GLEESON CJ: That is why advertisements for land, where it is possible to do so, state as a factor relevant to the price of the land that there has been a development approval granted.

MR RAYMENT: And in Blair’s Case the law was the same as it is in this country: a development consent ran with the land. Blair’s Case was against a buyer, not against the client of the - - -

GLEESON CJ: Is it also the case that you would only get the benefit of a development approval if you developed it in accordance with the proposal for development that had been put to the council?

MR RAYMENT: Yes.

GLEESON CJ: So, in this case, unless they used the plans that had been prepared by the respondent, the development approval was worthless?

MR RAYMENT: Subject to the possibility of an amendment.

GLEESON CJ: Yes.

KIRBY J: But that is all very well. These are principles of the common law, licences and applications and so on, but they have to stand against the Copyright Act of this country. That is a statute and that takes pre-eminence and if in fact it gives personal rights to those who make the original work, then all sorts of common law implications cannot stand against it, and that is quite an interesting question.

MR RAYMENT: But the kind of licence that, in our submission, and really in the findings of the trial judge, the Copyright Act requires is merely
a permission or consent. It can be oral. It can be implied. It need not be embodied in a written contract and it need not be embodied in a contract. The licence in this case stemmed from the involvement of the architect in the obtaining of development consent which ran with the land and which, in order to be exploited, required the plans to be used by a buyer.

GLEESON CJ: Did the architect have a financial interest in or association with the vendor?

MR RAYMENT: He did.

GLEESON CJ: If you sold land or offered land for sale on the basis that one of the benefits attaching to the land was development approval and you did not disclose that the purchaser would have no right to carry out the development in accordance with the plans that had been approved by the council, that would be a case of misrepresentation, would it not?

MR RAYMENT: Yes, it would.

GLEESON CJ: That, as I understand it, was what Justice Conti was, as it were, mentioning from time to time in the course of the trial.

MR RAYMENT: Yes.

KIRBY J: But the respondent is not unhappy about all this. It just says that, “You have to pay me for the benefit of my original work”, and he calls on the Copyright Act to sustain that claim.

MR RAYMENT: Yes, and we proved, of course, as a matter of fact that the proper fee for these plans was the same amount that he had been paid, about $30,000.

KIRBY J: Anyway, this would be quite a common issue in development approvals. You have, really, the interface of the common law of implications, of the dealings of the parties, you have the local government law and you have the federal copyright law hovering over it all.

MR RAYMENT: Yes.

KIRBY J: It will take great brain power to work all this out.

GLEESON CJ: Thank you, Mr Rayment. Yes, Dr Birch.

MR BIRCH: Your Honours, there are two reasons why we say the matter is not a fit matter for special leave. The first is that while there might be some interesting questions that could be debated at some time about the nature of the implied licence, the respondent’s case, in this instance, is a good deal stronger than your Honours may have apprehended and those issues are moot. I will explain why in a moment. The second issue is the complication added by the finding in a Full Court regarding the deficiencies in the trial. If I can turn to the key question, the nature of the implied licence.

KIRBY J: That did not seem to be very logical. The Full Court, in a sense, should have dealt with that first and if they were disquieted over that matter ordered a new trial as distinct from coming to a conclusion and then offering all these obiter statements in the second part of their reasons.

MR BIRCH: Your Honours, I think that is because there were three possibilities. One was a finding that we would win the case on any factual circumstance and in that instance we did not need or want a retrial if there was a finding in that way. It could have gone the other way. There could have been a finding that the law is such that no matter what factual contentions were upheld we would lose. The way the case is now put against us is that there would be an implied licence wherever plans become the subject of a development approval and the person seeking to use them is the owner of the land. If the Court were to declare that to be the law, then we would probably, after reflection - - -

GLEESON CJ: And has purchased the land from the person who prepared the plans.

MR BIRCH: That is not the case here, your Honour. I will come to that in a moment. It is put against us that the law should be declared that if plans become the subject of development approval then whomever is the owner of the land from time to time has an implied permission to use those plans, however they acquired the land. In this case what happened was that the plans were prepared for a joint venture. The joint venture collapsed. The land had to be sold by a trustees sale appointed under 66G of the Conveyancing Act. It was clear that the orders appointing the trustees vested the land only in the trustees and not any personal property of the joint venture.

So if one took the conventional route to find permission in the hands of owners of the land, the Beck v Montana route, by saying, “Was it an implication of the contract between the architect and the original client that there would be a licence and the licence would be assignable and the licence was assigned?”, then, in this instance, the applicant had to lose because even if there was a licence implied possessing those characteristics, it was not assigned, the trustees did not have title to it, and, importantly, there was nothing done to mislead this purchaser.

If I could take your Honours to page 213 in the application book. The property was sold at auction. The trustees and the joint venture partners exchanged views prior to the auction about the entitlement to use the plans. The trustees, nervous about their position, approached the Supreme Court for judicial advice and they, as a result of that advice, inserted clause 7.2 to 7.4, which is set out at the top of page 213 in the application book. So the purchaser here bought in circumstances where it had noticed that there was a dispute and that there was an issue and that it might not - - -

KIRBY J: Is your point attacking the common law principle or is it saying, let there be that principle, the interposition of the Conveyancing Act and the orders of the Supreme Court severs any implication that follows and it is determined by the orders of the Supreme Court under the Conveyancing Act?

MR BIRCH: The latter. Our point is that however you determine the nature and circumstances in which you imply the term, if there has to be a chain of assignments then we win on this case. There is a second pathway by which the applicant seeks to succeed. Rather than a chain of assignment it is said that there can be a direct permission implied in favour of third parties as a consequence of the circumstances in which the plans come into existence. This is where recourse is had to the statements of Lord Denning in Blair v Tomkins.

GLEESON CJ: Dr Birch, can I just ask you about a matter of practice. On page 213 in the quoted paragraph, paragraph 7.2 says:

The vendors are unable to provide copies of the plans and designs which accompanied the First and Second Development Consents.

Do you see that?

MR BIRCH: Yes.

GLEESON CJ: Would a person be able to inspect those plans and designs by going to the authority, such as the local council, that gave the development consent?

MR BIRCH: Your Honour, as I understand it, they would be able to inspect but I also understand that councils are wary about permitting copying and so it might be that they might be able to have inspections – I must say I am not absolutely certain, but they might be able to have inspections, they might not be able to make copies and take them away and give them to their draftsmen or builders or the like.

KIRBY J: In fairness, I do not read those clauses as giving away rights that are asserted here and were asserted in the courts below. They are simply being candid and putting it upfront to the potential purchasers.

MR BIRCH: This case was not one where a purchaser bought in circumstances where they had a belief induced by conduct of the architect or the vendors that they would be able to use the plans. They were buying into a dispute.

KIRBY J: Eyes wide open, you say?

MR BIRCH: They may have had legal advice, they may not have, that this was something that they would win in due course, but they obviously were aware that there was going to be a tussle and they took a risk.

KIRBY J: But you must admit it is an interesting case because we have the principle of Lord Denning which seems very sensible, the practice of developers which seems very practical, then you have your argument on the Conveyancing Act which is a very interesting one to interpose, and then in the background we have the Copyright Act. I mean, could one have more fun?

MR BIRCH: I have made it too interesting. Your Honours, I think I mentioned that there was an alternative pathway, and this is the one which is the manner Mr Rayment seeks to succeeds. Can I explain why that must also fail, why the issues are all moot? In Blair v Tomkins Lord Denning does say something to the effect that if an architect is employed and designs a building and there is development approval given that therefore people who subsequently buy the land would be able to use those plans.

Now, that might be said to be authority for the proposition that there will always be such an implied licence, no matter what the circumstances, but the Court of Appeal also containing Lord Denning only a few months later had to reconsider the matter in a decision called Stovin-Bradford v Volpoint [1971] Ch 1007. I think there was a copy of this provided to your Honours, but I will just read the - - -

KIRBY J: Yes, we have it.

MR BIRCH: The passage appears at the bottom of page 1014. Lord Denning there said, referring to Blair v Osborne:

The defendants argued that that case is a decisive authority against the architect. The result of it was, said the defendants, that whenever an architect prepared plans so as to get planning permission, the client could use them for the building, as he liked, without further payment, even though he did not employ the architect for the work.

The applicant does need to establish a proposition that broad to succeed, in our submission, but that was rejected by Lord Denning. He said:

I do not think that is a correct interpretation of Blair v Osborne & Tomkins, or of the Australian case, Beck v Montana –

Then, over the page – I will not read it – he says it does depend on all of the factual circumstances. It depends upon a judgment about whether, given the terms and conditions on which the architect was retained and the job that he was hired to do, it is appropriate to imply a permission that broad and he says, in that particular case, it is not because there the architect had done it for a nominal fee.

The Full Court approached it that way. They said one has to look at all the circumstances and determine whether it is appropriate to imply it. At page 219 of the application book, in the Full Court’s reasons – they are speaking here of the notion of an assignment, why would you imply into the initial contract a term permitting assignment to third parties, but that process of reasoning is equally applicable to the alternative pathway, why would you assume there would be a permission for third parties, with or without assignment, and their Honours said this:

Why should it be presumed that Parramatta Design would agree to such an assignment bearing in mind that it was not going to be paid for its work? Such a result might prove unfair, unjust and is, in any event, unnecessary. Architects should not be expected to work for free for the benefit of third parties. The position does not change merely because the architect has an interest in the proceeds of sale of the land.

KIRBY J: At 24 the Full Court says:

the right would interfere with copyright in the drawings in a way not envisaged by the Copyright Act.

MR BIRCH: Correct.

KIRBY J: Is that a matter that would be pressed upon us?

MR BIRCH: Indeed it would, because while one is looking for an implication in the arrangement between the architect and client and concerned to ask what must the parties have intended, objectively, in this particular relationship, one is in the world of licences and permissions in the conventional sense. But what the applicant says is, “You don’t have to engage in that inquiry at all. If I buy land and the land has development approval that is valid and in place, then I can use those plans.”

It would follow, looking at it from another perspective, if the applicant is right, then if an architect contracted with a client and said, “I’ll give you these plans. You can go and get development approval but I am expressly not licensing you to use them to go and build the building”. If there is a licence of the sort the applicant contends for, that could be ignored by a purchaser who would say, “Well, we now have a permission simply by virtue of the grant of development consent.”

KIRBY J: But the express qualification is a tad unreal in the real world where the whole point of doing the drawings to get the development consent is to permit the building to be built in terms of those drawings.

MR BIRCH: It depends on the structure of the architect’s remuneration, in our submission. The architect might say, “Look, I don’t know whether you will get permission or not. I will do the drawings for very little money and you will take them to council and try your luck, but if you get permission you can’t go and building it without my getting more money to remunerate me for my design work.” So the architect and the client may choose - - -

KIRBY J: That is a very unreal proposition. That just does not happen in the real world.

MR BIRCH: I would not want to speculate on whether it does or does not, your Honour. It ought to be available to a client and an architect to choose the structure, so to speak, as to how they will pay or be remunerated. The effect of a licence this broad would mean that a client could then - - -

KIRBY J: Your argument is basically an inappropriate vehicle-type argument.

MR BIRCH: Yes.

KIRBY J: You are saying whatever may be the interest and importance of this issue, these are very special facts and this is not a case to bring the matter up to resolve it because of the Conveyancing Act and because of the special dealing, because of the clauses of the contract and because of the terms of the Copyright Act.

MR BIRCH: And because, we say, there are so many factual issues determined in our favour that the applicant can only win at the very, very highest possible level, that is, a licence in favour of a purchaser of the land without regard to the terms and processes by which that purchaser became the owner.

KIRBY J: Could we sever the point about the disqualification of the judge in the sense that it all does seem to have been obiter dicta by the Full Court. They reached a conclusion. They dealt with the substantive question and then they added these words but it did not affect their orders. Their orders were disposing of the matter in litigation between the parties.

MR BIRCH: In our submission, the findings they made there provided an alternative basis for setting aside the orders that had been made below.

KIRBY J: But it led to different results, you see. If you set aside a judgment on the basis of bias, or apparent bias, on the part of the judge, that leads to retrial. It does not lead to a reversal of the judge’s orders which, in a sense, accept the validity of what the judge has done and deal with them on the merits. That is why it is an odd procedure that has been followed here.

MR BIRCH: Your Honour, the pragmatic position that I imagine that we would take – I would have to give consideration to it – would be that if the Court was to declare that the law was such that any factual finding was going to be beside the point, then we would not be seeking to have it referred back; we would urge the Court to simply dispose of the matter one way or the other. But our primary submission is that that the Court is not likely to declare the licence is one which exists simply in favour of any owner of the land.

KIRBY J: I realise that, but if we were to grant special leave would you be seeking, by notice of contention or by cross-appeal, to contend that the matter was invalid in its determination and ought to be redetermined or do you accept that Justice Conti’s decisions were valid and not affected by the suggested apparent bias?

MR BIRCH: Your Honour, our contention would be this, that if the Court had set aside Justice Conti’s decision on the grounds that there had been a miscarriage of the trial, that the Court could nevertheless, instead of referring the matter back for a retrial, determine the matter fully if it formed the view, for example, that a retrial was unnecessary because on the view it formed of the law there was no factual issue left requiring to be tried and the legal issues were ones the Court was capable of determining for itself. We would say that that would be the position if it was to come - - -

KIRBY J: I am not sure where that leaves you in answer to my question. Would you be seeking by a notice of contention or a cross-appeal to maintain an alternative attack on the orders, namely, the second part of the
reasons of the Full Court? If you do not have instructions on that, just say it and - - -

MR BIRCH: No, your Honour. I think it is because I am probably disagreeing with your Honour on a matter of principle. I suspect that what might be said by my opponent is that if I agree to the proposition that is being put to me then I lose the benefit of the Full Court’s orders because the only thing the Full Court could have done was to refer it back for a retrial. My submission is that while the Full Court findings would provide an alternative basis for setting aside the determinations made by the trial judge, I could maintain orders similar to those of the Full Court if the Court was to find that as a matter of law that, inevitably, was the result that should have followed for my clients.

GLEESON CJ: Thank you.

KIRBY J: Getting a concession out of you is as hard as getting it out of Mr Ellicott.

MR BIRCH: I am sorry, your Honours.

GLEESON CJ: Yes, Mr Rayment.

MR RAYMENT: Your Honours, in our submission, if you receive the case you should receive the whole case because the Full Court has dealt with it on a selective view of facts which it rather assumed rather than found, and then it has reached conclusions on those assumptions that are out of accord with the existing authorities and would set Australia apart from England and - - -

GLEESON CJ: What is your answer to the point that it made concerning the special terms and conditions of the contract of sale which drew the purchaser’s attention to the dispute about the availability of the plans?

MR RAYMENT: In Blair v Osborne what the Court of Appeal said was that the licence granted by the architect extended to the later owners of the land that it would be by its own force. That, in our respectful submission, is what happened here. Secondly, the architect in no way was a party to the contract and in no way by any document revoked or purported to revoke a licence and even if he had purported to do so, he would have needed the consent of his contracting parties to do so. All that clause did was, as Justice Kirby suggested and the trial judge found, put a purchaser on notice of that possibility. It was in no way to stop a licence from going to the buyer if it otherwise would go.

GLEESON CJ: It must follow, must it not, that if the purchaser got the benefit of the licence it did not get the benefit of the licence by virtue of any implication in the contract of sale because such an implication would be contrary to an express provision in the contract of sale?

MR RAYMENT: It either got the licence directly because, as the Court of Appeal said, it extended to a later buyer and, when need be, subagents, surveyors and the like, of its own force, so that it would go to all buyers of the land – it would follow that it would go, in our submission, to sub-buyers in the ordinary case – or it came by virtue of the mere transfer of the land by implication from the transfer, not the contract.

KIRBY J: Yes, but that had the complication that the transfer was effected by order of a court under the Conveyancing Act.

MR RAYMENT: Yes. It has no different consequences, we submit, than a sub-sale, the fact that the trustees for sale were appointed. If client was X, sold to Y, who then sold to Z, Z would have a licence directly from the architect so long as the development consents existed, in our submission.

KIRBY J: In every case and whatever the circumstances? Surely not.

MR RAYMENT: Unless it was negatived on the face of the development consent in some way, you would have it, we submit, because you owned the land and the land was able to be used in a certain way which required you to use the plans. In any event, we submit that the proper construction of that clause is not such as to preclude in any way the case which was made below.

GLEESON CJ: Yes. In this case there will be a grant of special leave to appeal.

We will adjourn for a short time to reconstitute.

AT 11.15 AM THE MATTER WAS CONCLUDED