Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd
[2004] FCA 1312
•13 OCTOBER 2004
FEDERAL COURT OF AUSTRALIA
Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd
[2004] FCA 1312
COPYRIGHT – syndicate of two corporations owning development site as to two thirds and one third respectively – architect holder of one half of issued capital of two thirds landowner corporation – architect prepared plans for property development – development consent of Council to building in accordance with plans of architect – before development physically commenced outbreak of dispute between the two corporations – appointment by Supreme Court of trustees for sale – purchase of land for value by unrelated third party corporation – whether architect conferred implied licence of architectural copyright on purchase – complex factual disputes – finding of implied licence of architectural copyright attributable to architect in favour of purchaser
Conveyancing Act 1919 (NSW) s 66G
Real Property Act 1900 (NSW)
Environmental Planning and Assessment Act 1979 (NSW) ss 78A, 81A, 95 and 103
Copyright Act 1968 (Cth) s 10 (definitions of ‘artistic work’ and ‘drawing’), ss 202(1) and (2)
Environmental Planning and Assessment Regulations 1994 (NSW)
Environment Planning and Assessment (Building Code of Australia) Regulation 1999 (NSW)
Environment Planning and Assessment Regulations 2000 (NSW)
Concrete Pty Limited v Parramatta Design & Developments Pty Limited [2004] FCA 169 referred to
Concrete Pty Limited v Parramatta Design & Developments Pty Limited [2004] FCA 293 referred to
Concrete Pty Limited v Parramatta Design & Developments Pty Limited [2004] FCA 483 referred to
Avel Pty Limited v Multicoin Amusements Pty Ltd (1990) 171 CLR 88 cited
Cowan v Abel (1995) 58 FCR 157 cited
Australian Consulting & Training Pty Ltd v Tiltform Pty Ltd [2001] FCA 1072 applied
U & I Global Trading (Australia) Pty Ltd v Tasman-Warajay Pty Ltd (1995) 32 IPR 494 applied
Lido Manufacturing Co Pty Ltd v Meyers & Leslie Pty Ltd (1964) 5 FLR 443 applied
Attorney General of Gambia v N’Jia [1961] AC 617 cited
Ealing Borough Council v Jones [1959] 1 QB 384 cited
Tensing (t/as Apple House Music) v Mucider (1993) 28 IPR 111 cited
Maatsechappij Voor Fondsenbezit v Shell Transport & Trading Co [1923] 2 KB 166 applied
Amalgamated Mining Services Pty Ltd v Warman International Ltd (1988) 19 FCR 324 applied
Beck v Montana Constructions Pty Ltd (1963) 5 FLR 298 applied
Ryde Municipal Council v The Royal Ryde Homes (1970) WN 440 referred to
Auburn Municipal Council v Szabo (1971) 67 LGRA 427 referred to
Eaton & Sons Pty Ltd v Warringah Shire Council (1972) 129 CLR 270 referred to
Parramatta City Council v Shell Co of Australia Ltd (1972) 2 NSWLR 632 referred to
Avenhouse v Hornsby Shire Council (1998) 44 NSWLR 1 referred to
House of Pearce Pty Limited v Bankstown City Council [2000] NSWCA 44 referred to
Chanrich Properties Pty Ltd v Baulkham Hills Shire Council [2001] NSWSC 229 referred to
Winn v Director-General of National Parks and Wildlife [2001] NSWCA 17 referred to
Liverpool City Council v Irwin [1977] AC 239 cited
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] 149 CLR 337 cited
Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104 referred to
Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322 referred to
Byrne v Australian Airlines Ltd (1995) 185 CLR 410 applied
Ng v Clyde Securities Ltd [1976] 1 NSWLR 443 applied
Blair v Osborne & Tomkins [1971] 2 QB 78 applied
Acohs Pty Ltd v R A Bashford Consulting Pty Ltd and Others [1997] 144 ALR 528 applied
Bialkower v Acohns Pty Ltd and Others [1998] 41 IPR 33 referred to
Solar Thomson Engineering Co Ltd v Barton [1977] RPC 537 applied
Bourke v Filmways Australasian Distributors Pty Ltd unreported, SCNSW, 9 October 1979 applied
Devefi Pty Ltd v Mateffy Perl Nagy Pty Ltd (1993) 37 IPR 477 applied
Gruzman Pty Ltd v Percy Marks Pty Ltd (1989) 99 FLR 116 applied
Torpey Vander Have Pty Ltd v Mass Constructions Pty Ltd [2002] 55 IPR 542 applied
J McKeough, A Stewart and P Griffith, Intellectual Property in Australia, 3rd edn, LexisNexis Butterworths, Sydney, 2004
CONCRETE PTY LIMITED v PARRAMATTA DESIGN & DEVELOPMENTS PTY LIMITED AND GHASSAN FARES
N 1509 OF 2003
CONTI J
13 OCTOBER 2004
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 1509 OF 2003
BETWEEN:
CONCRETE PTY LTD
APPLICANTAND:
PARRAMATTA DESIGN & DEVELOPMENTS PTY LTD
FIRST RESPONDENTGHASSAN FARES
SECOND RESPONDENTPARRAMATTA DESIGN & DEVELOPMENTS PTY LTD
CROSS-CLAIMANTCONCRETE PTY LTD
CROSS RESPONDENTJUDGE:
CONTI J
DATE OF ORDER:
13 OCTOBER 2004
WHERE MADE:
SYDNEY
INDEX OF JUDGMENT
Page Paragraphs Headings 1 – 5 1 – 9 History and outline of proceedings 5 – 15 10 – 29 Outline of the principal transactions and events involved in the proceedings 15 – 28 30 – 54 The threshold issue as to whether PDD and/or Mr Fares threatened Concrete with proceedings for infringement of copyright 28 – 33 55 – 63 Whether the applicant Concrete is authorised by the general law of copyright to use the plans and drawings approved by Port Stephens Council for the construction of the fourteen home unit building the subject of that approval – the case propounded by Concrete in outline 33 – 46 64 – 88 Concrete’s first main basis for rejection of the case for breach of copyright in the subject plans and drawings – an implied licence to use the plans the subject of the development consent may operation in personam in favour of a successor in title Page Paragraphs Headings 46 – 50 89 – 96 Concrete’s second main basis for rejection of the case for breach of copyright in the subject plans and drawings – s 66G of the Conveyancing Act and architect’s involvement in joint venture provide strong reasons for implication of the Beck-type licence 50 – 55 97 – 107 Concrete’s third main basis for rejection of the case for breach of copyright in the subject plans and drawings – architect’s clients/principals had implied licence of copyright that was transferred to Concrete 55 – 70 108 – 128 The case propounded by PDD and Mr Fares in response 70 – 81 129 - 150 Conclusions on the first two propositions of legal significance formulated by Concrete and my reasons in summary 81 – 82 151 - 152 Resolution of the factual issues arising: the steps taken to put those issues before the Court for resolution 82 – 90 153 – 166 The terms of appointment of PDD as architect to the joint venture and whether that appointment extended to or included appointment of PDD as builder under a design and build contract – an overview of the relevant facts and circumstances 90 – 98 167 – 182 The testimony of Ms Jeanette Haviland 98 – 105 183 - 203 The testimony of Mr Kevin Rix 105 – 108 204 – 210 The testimony of Mr David Rix 108 – 110 211 – 212 The expert testimony of Mr Peter Brooks (architect) 110 – 132 213 – 249 The testimony of Mr Ghassan Fares 132 – 141 250 - 265 The testimony of Mr Benjamin Barrak 141 – 144 266 – 271 The expert testimony of Mr Brendan Farrugia (quantity surveyor) 144 – 149 272 – 283 The factual issue arising in the context of my determination of Concrete’s third main basis for rejection of the case for breach of copyright of the subject plans drawings – whether there was an agreement made between the parties whereby PDD (and/or Mr Fares) was to be the builder of the fourteen home unit development, whereby PDD (and/or Mr Fares) was to be rewarded for its work by periodic draw downs of up to ten per centum of the construction costs during the construction process Pages Paragraphs Headings 149 – 156 284 – 296 Findings in relation to the payment of $27,000.00 made to PDD on 19 April 1999 156 – 158 297 – 303 Conclusion on the third proposition of legal significance formulated by Concrete
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 1509 OF 2003
BETWEEN:
CONCRETE PTY LTD
APPLICANTAND:
PARRAMATTA DESIGN & DEVELOPMENTS PTY LTD
FIRST RESPONDENTGHASSAN FARES
SECOND RESPONDENTPARRAMATTA DESIGN & DEVELOPMENTS PTY LTD
CROSS-CLAIMANTCONCRETE PTY LTD
CROSS RESPONDENTJUDGE:
CONTI J
DATE OF ORDER:
13 OCTOBER 2004
WHERE MADE:
SYDNEY
THE COURT DECLARES THAT:
1.The respondents’ threats, or either of them (as contained in the letters dated 9 September and 1 October 2003 from Barrak Lawyers and further defined in the Statement of Claim), are unjustifiable within the meaning of s 202 of the Copyright Act 1968 (Cth).
THE COURT ORDERS THAT:
2.Each of the respondents by itself, himself and its or his servants or agents be restrained from making any further threat in the form substantially of the respondents’ threats.
3.There be an enquiry into the quantum of damages sustained by the applicant by reason of the respondents’ threats.
4.The amended cross-claim of the cross-claimant be dismissed.
5.The costs of the proceedings to date be reserved pending:
(i)the receipt of written submissions of the applicant/cross-respondent on the issue of costs, and against whom such orders should be made, within three working days; and
(ii)the receipt of written submissions of the respondents/cross-claimant in reply, on the issue of costs, and against whom such orders should be made, within three working days thereafter.
6.Liberty to apply as to the making of orders as to costs, including as to default in complying with directions as to costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 1509 OF 2003
BETWEEN:
CONCRETE PTY LTD
APPLICANTAND:
PARRAMATTA DESIGN & DEVELOPMENTS PTY LTD
FIRST RESPONDENTGHASSAN FARES
SECOND RESPONDENTPARRAMATTA DESIGN & DEVELOPMENTS PTY LTD
CROSS CLAIMANTCONCRETE PTY LTD
CROSS RESPONDENT
JUDGE:
CONTI J
DATE:
13 OCTOBER 2004
PLACE:
SYDNEY
REASONS FOR JUDGMENT
History and outline of the proceedings
These proceedings were commenced by application of Concrete Pty Limited (‘Concrete’) filed on 7 October 2003 against Parramatta Design & Developments Pty Limited (‘PDD’) and Ghassan Fares (‘Mr Fares’). Mr Fares is a qualified architect and the sole director and shareholder of PDD. The application seeks the following relief:
‘A.A declaration that the Respondents’ Threats (as contained in the letter dated 9 September 2003 and 1 October 2003 from Barrak Lawyers and further defined in the Statement of Claim) are unjustifiable within the meaning of s 202 of the Copyright Act 1968 (Cth).
B.An order restraining each of the Respondents by itself, himself and its or his servants or agents, from making any further threat in the form substantially of the Respondents’ Threats.
C.An order for an enquiry into the quantum of damages sustained by the Applicant by reason of the Respondents’ Threats.
D. Interest.
E. Costs.’
Those pleaded threats of PDD and Mr Fares were said by Concrete to be for their enforcement of copyright in respect of certain architectural plans and drawings relating to a fourteen home unit building proposed to be constructed on property situated in Nelson Bay in the State of New South Wales (‘the property’ or ‘the Nelson Bay land’), for which development consent had been earlier granted, on the application of PDD, by Port Stephens Council on 10 May 2000 (DA No. 16-2000-103-1). Prior to that time on 7 March 1999, development approval had been sought, and on 24 September 1999 granted, to an eight unit development. At the time of grant of the consent to both prospective developments, the co-owners of the property as tenants in common were Landmark Building Developments Pty Limited (‘Landmark’) and Toyama Pty Limited (‘Toyama’), as to two thirds and one third respectively. Concrete is an arms length successor in title to the property for value, pursuant to its purchase from trustees for sale of the property appointed by the Supreme Court of New South Wales made on the application of Toyama as one of those co-owners.
By amended defence of the respondents PDD and Mr Fares and cross-claim of PDD alone filed on 17 March 2004, it was asserted (inter alia) that by reason of Landmark and Toyama failing to perform their financial obligations in favour of PDD for architectural design work involved in the compilation of those plans and drawings relating to the fourteen unit development, there does not exist any entitlement under copyright law on the part of Concrete, as present successor in title to Landmark and Toyama, whether by way of implied licence or otherwise, to use the same for the purpose of constructing the home unit building the subject thereof on the property. Other matters are pleaded by the amended defence and cross-claim, but what I have just outlined is probably the principal complaint of the defence and cross-claim, PDD asserting an absence of payment for the preparation of those plans and drawings.
Certain interlocutory applications were made prior to the final hearing by PDD and Mr Fares, in relation to which I provided reasons for judgment. Each application was unsuccessful, and I will briefly summarise the same. Before doing so, I should record that Mr Fares and a Sydney solicitor Benjamin Barrak (‘Mr Barrak’) have been at all times associated together in a business sense, in that they are equal shareholders of Landmark, of course a private company. In addition, according to ASIC official records, both were directors of PDD until Mr Barrak resigned that office on 15 May 2000, for reasons apparently unexplained, but inferentially in no way by reason of any change to the proximity of their business relationship.
The first interlocutory application in point of time sought orders for the cross-vesting of the present proceedings to the Supreme Court of New South Wales, in order that the same would become consolidated with proceedings, apparently of a commercial nature, which are yet to be heard and determined. Prior to the hearing of that cross-vesting motion on 11 February 2004, the proceedings commenced in this Court had been already set down for final hearing on 1, 2 and 8 April 2004. Concrete opposed the motion for cross-vesting and I dismissed the same, for the reasons appearing in my judgment of 1 March 2004 (Concrete Pty Limited v Parramatta Design & Developments Pty Limited [2004] FCA 169). Costs were reserved.
The second interlocutory application in point of time sought an order pursuant to Order 29 Rule 2 of the Federal Court Rules that certain separate questions be determined in advance of the final hearing of the present proceedings, and in addition an order for security for costs. It was submitted on behalf of PDD and Mr Fares that succinct legal questions could be distilled from the pleadings which would dispose of the litigation, or substantially so, in favour of PDD and Mr Fares. That application was also dismissed, for the reasons appearing in my judgment of 5 March 2004, and PDD and Mr Fares were ordered to pay the costs of the application (Concrete Pty Limited v Parramatta Design & Developments Pty Limited [2004] FCA 293).
The third interlocutory application was made to the Court at the commencement of the third day of the substantive hearing of the proceedings, that is, on 8 April 2004, without prior notice to Concrete or to the Court, whether formal or informal. At that stage of the proceedings, Mr Fares had apparently completed his evidence in chief (inclusive of cross-examination), and Mr Barrak had completed his evidence in chief and had been under cross-examination for some hours on the previous day (subsequently Mr Fares made a further affidavit and was further cross-examined). The application sought my disqualification from further hearing of the proceedings on the ground of apprehended bias. A substantial body of written submissions, referring to an abundance of authority, was presented to the Court on behalf of PDD and Mr Fares, and the hearing took up almost a full day. I dismissed the application upon the close of the submissions of the parties, for the reasons subsequently appearing in written form, and reserved the making of orders as to costs (Concrete Pty Limited v Parramatta Design & Developments Pty Limited [2004] FCA 483). Mr D.H. Murr of senior counsel, who had been leading Mr T.A. Hall of counsel since the commencement of the final hearing, ceased to appear for PDD and Mr Fares on the application for my disqualification, the same being conducted by Mr Hall alone. After the application for my dismissal had been determined, Mr B.H.K. Donovan of senior counsel replaced Mr Murr as Mr Hall’s leader.
On 21 April 2004, Mr Donovan QC sent to my Chambers fifteen pages of written submissions, plus a bundle of annexures, under cover of a letter reading as follows:
‘Myself and Mr Hall have been instructed to put material before your Honour in relation to the disqualification. We are both aware that your Honour has ruled on this and put forward the enclosed material with no disrespect whatever to your Honour. The material is put forward as a supplement to that of 8th April 2004, for your Honour to consider and if appropriate grant leave to reopen the Application.
No further oral submissions will be sought to be made in relation to the material and if leave were granted the only material and submissions would be the enclosed. Again no oral submission would be made.’
My response was to the effect that it would not be appropriate for me to take that course. No application was made by the respondents for leave to appeal against my refusal of disqualification.
The hearing of the proceedings recommenced on 23 April 2004, despite initially being set down for three days only, and continued on 27, 28 and 29 April 2004, and further on 13 and 17 May and 3 June 2004, inclusive of oral addresses made largely by reference to extensive written submissions. The written submissions provided by the parties were very comprehensive, as appears from the number of pages involved described below:
Concrete - 10 May 2004 – 68 pages;
PDD/Fares- 12 May 2004 – 106 pages (these replaced earlier lengthy written submissions which had been lacking transcript page references);
PDD/Fares- 28 May 2004 (24 pages);
PDD/Fares- 7 July 2004 (103 pages); and
Concrete- 27 July 2004 (25 pages).
In an endeavour to keep these reasons within appropriate and hopefully comprehensible limits, I have not recited every submission made by the parties, nor referred to every authority cited. In particular I should record that the 103 page submission in purported reply was almost wholly foreign to any legitimate notion to reply, and understandably Concrete submitted that I should not receive the same. Since however it is evident that to do so would doubtless alone assist to provoke the indefinite prosecution of this litigation by PDD and Mr Fares, being a course on their part which is more than evident from the events which I have set out in these reasons, I have taken that material into account, to the limited extent if at all which has not already been propounded. In any event, I have sought to confine these reasons to what I have appraised to be material events and matters of at least potential materiality or significance to the issues arising on the pleadings.
Outline of the principal transactions and events involved in the proceedings
In about late September or early October 1998, a joint venture agreement was orally formed for the purchase of the property at Nelson Bay for the purpose of home unit development, and the subsequent resale of at least a material number of the home units. It was made between:
(i)Mr Barrak as to a one-third interest in the joint venture, he being (as above stated) a solicitor who conducts a legal practice under the name of Barrak Lawyers;
(ii)Mr Fares as to a further one-third interest, he being (as above stated) a qualified architect; and
(iii)Jeanette Haviland (‘Ms Haviland’), a solicitor and Kevin Rix (‘Mr Rix’), her former husband, jointly as to the remaining one-third interest.
Apparently Mr Barrak and Mr Fares had been earlier associated together in property development in the Hurstville and Parramatta districts of the metropolitan area of Sydney. Ms Haviland was engaged as a solicitor in her own practice, though not apparently to any major extent. Before each of Mr Barrak and Ms Haviland entered separate private legal practice, each apparently as sole practitioners, they had become acquainted as employed solicitors engaged in the State Crown Solicitor’s Office in Sydney.
The oral arrangements for this tripartite association engaged in the subject property development were formalised to the extent that the respective proposed one third interests of each of Mr Barrak and Mr Fares were taken up together in the name of Landmark, and the remaining one third interest of Ms Haviland and Mr Rix became taken up together in the name of Toyama. No other property venture had previously been undertaken by all four of these persons together. In the events which happened, the Nelson Bay project never advanced to the stage of commencement of construction. It was part of the oral arrangements between the parties that Mr Fares and/or PDD would perform the architectural services for the joint venture. No written retainer of either Mr Fares or PDD appears to have been brought into existence. The co-ownership or joint venture arrangements were never reduced to writing in the form of a joint venture or syndicate agreement.
The Nelson Bay property was purchased for the price of $560,000 pursuant to contract for sale entered into on 2 October 1998, and completion of the purchase took place shortly thereafter. In order to assist the funding of the purchase of the property, the joint venture vehicles Landmark and Toyama, being also the registered proprietors as two thirds and one third respectively as tenants in common, borrowed $448.000 from National Australia Bank (‘the Bank’ or ‘NAB’), the loan being made to Mr Fares, Mr Barrak and Ms Haviland as debtors. The balance of the purchase price of $112,000 and the associated costs of purchase were contributed, as to two-thirds by what may be broadly described as the Landmark/Fares/ Barrak interests, and as to one-third by what may be broadly described as the Toyama/Haviland/Rix interests. Mr Barrak acted as the solicitor for the joint venture, until the parties fell into dispute. Mr Fares and Mr Barrak sided together in the dispute, and in the ensuing litigation, as did Ms Haviland and Mr Rix together. Each of those four persons gave evidence in the proceedings.
Although the Port Stephens Council granted development approval on 10 May 2000 for the construction of fourteen (14) home units and associated infrastructure on the Nelson Bay property, upon the terms and conditions outlined in a certain letter and attached schedules addressed to PDD, construction of the development, as I have already observed, was never subsequently commenced. Thereafter the relationship between the four individual persons involved appeared to deteriorate. During June 2002, in the context of verbal discussions between Messrs Barrak and Fares and Ms Haviland, the Nelson Bay land was advertised for sale. Verbal offers were received, and ultimately a written offer dated 27 June 2002 was received from a company Tangate Pty Ltd (‘Tangate’) for the purchase of the land for $1.8 million. Writing on a Landmark letterhead, Mr Barrak wrote on 10 July 2002 to Tangate, stating inter alia as follows:
‘We refer to your offer to purchase the above property and confirm that the owners accept your offer.
We put you on notice that we are relying on your offer and the acceptance of such offer by the owners, in the making of certain commercial decisions.
The full size copy of the approved plans as requested… in your letter may be collected from our office. Please telephone the writer… in order to arrange a mutually convenient time for collection of the copy…
…
The contract will be prepared and sent to your shortly. We would prefer an expeditions exchange with payment of the standard 10% deposit and settlement to be effected within 14 days of exchange…
…’
The reference above to ‘the approved plans’ was to the plans for the fourteen home unit development the subject of the development consent granted on 10 May 2000. Toyama communicated its individual acceptance of Tangate’s offer direct to Tangate by letter of 11 July 2002, and requested that an independent solicitor be instructed to act for Landmark and Toyama in relation to the conveyancing work involved in relation to the sale. Though Tangate renewed its purchase offer in writing, the sale was called off by Tangate on 15 July 2002, in circumstances according to what was alleged in Tangate’s letter of 15 July 2002 to have been unfortunate professional behaviour on Mr Barrak’s part.
On the same day (10 July 2002), Mr Barrak also wrote on a Landmark letterhead to Toyama, marked to the attention of Ms Haviland, stating inter alia as follows:
‘…
We attach a copy of our letter to Tangate Pty Ltd dated today being acceptance of the offer. We suggest that it would be expedient for Toyama Pty Ltd to also write to Tangate Pty Ltd by way of confirmation of the acceptance of the offer prior to the expiration of the 14-day period referred to at point 5 of the offer.
As requested by you, we nominate your choice of any one of the following solicitors to conduct the conveyance on behalf of the owners:
…’
In the context of continuing disputes between the parties, in the course of which Messrs Barrak and Fares became ultimately aligned together against Ms Haviland, two senior Sydney solicitors were appointed by the Supreme Court of New South Wales Equity Division as trustees for the sale of the Nelson Bay land on 12 December 2002, pursuant to the application of Toyama made under s 66G of the Conveyancing Act 1919 (NSW) (‘the Conveyancing Act’), and those trustees for sale were authorised to pay out of the net proceeds of sale two thirds thereof to Landmark and one third thereof to Toyama. In the events which happened, Landmark received its two thirds share of those proceeds, but according to Mr Barrak’s evidence, upon the application apparently of Mr Fares and Mr Barrak, a Mareva injunction was apparently granted by the Supreme Court which prevented, and continues to prevent, Toyama from obtaining access to its one third share indirectly for the benefit of Ms Haviland and Mr Rix.
Soon after the appointment of the statutory trustees for sale, PDD moved to at least inhibit the trustees in relation to the disposition of the Nelson Bay land. On 13 January 2003, Mr Fares wrote on PDD letterhead to the solicitors for the trustees for sale, Cornwall Stodart, inter alia as follows:
‘… we are the designers and owners of the copyright of an approved DA for the above property. We put you on notice that we do not consent to the utilisation of our copyright, design or plans in the marketing and/or sale of the above property.
We also put you on notice that we will not grant a licence for the use of our copyright or our plans.
We demand that your marketing material will not breach our above wishes and that all potential purchasers will be advised of the above situation.’
Thereafter on 20 February 2003, Barrak Lawyers wrote on behalf of PDD and/or Mr Fares to Cornwall Stodart inter alia as follows:
‘…our client was not engaged to design the development for payment and our client has not been paid any moneys whatsoever for its substantial work on the approved DA.
Furthermore, our client’s preparation of the plans is conditional on our client building the project as part of the “design and constructions” formula. Therefore, in the absence of our client building the project itself, there can be no implied licence to use the plans by anyone other than our client.
…
Our client is adamant that under no circumstances will it relinquish its legal rights in regard to use of its plans and will vigorously pursue anyone who breaches our client’s copyright.
We request that you inform your clients that any use of our client’s plans in any advertising or sale campaign will result in vigorous legal action being taken against the Trustees in damages for breach of copyright. Given the value of the Development Approval, we anticipate that the damages will be substantial.
…
We trust that you will immediately advise your client’s of the contents of this letter to ensure that no attempt is made to obtain copies of our client’s plans and that no reference is made to the DA plans in any promotional material.
We stress once again that if this letter is not complied with, vigorous legal action will ensue against the Trustees.’
For a brief time, there was a change of legal representation on behalf of PDD and/or Mr Fares, and Mark Rahme & Associates wrote on 18 March 2003 to Cornwall Stodart asserting the absence of any implied licence to use its copyright, and making thereafter the following threats:
‘…We stress in the strongest terms that if your client makes any reference to our client’s plans, development consent or shows our client’s plans to anyone, legal action will be taken against the Trustees in damages that we anticipate will be quite substantial.
We demand a statement in writing from your clients that they will not make any reference whatsoever to the plans and that a suitable special condition be inserted into the contract, which must be approved by us in advance, to the effect that the property is sold “as is” with no warranties whatsoever by the Vendor about any development.
…We await hearing from you as a matter of urgency.’
A further letter was sent by Mark Rahme & Associates on 14 April 2003 to Cornwall Stodart, again asserting the absence of an implied licence, and making the following further threat of legal action:
‘Your clients should now comply with the Orders of the Supreme Court. The Trustees should proceed with the sale as per the Orders of the Supreme Court without any reference to the existence of our client’s plans and with an appropriate special condition being placed in the contract as per our previous correspondence. Given the repeated notices about our client’s copyright that have been given by your clients, we respectfully submit that failure by your clients to adequately address the copyright issue by a suitable special condition will leave your clients open to being sued for damages.’
The reference to ‘Orders of the Supreme Court’ are of course to those appointing the trustees for sale on 12 December 2002.
As a result of this and other correspondence on behalf of Toyama, the trustees for sale understandably sought judicial advice from the Supreme Court and in the result, Young CJ in Eq responded on 22 May 2003 as follows:
‘On the motion by the trustee, I advise the trustee by order under s 63 of the Trustee Act that they would be justified in selling the property, 5 Laman Street, Nelsons Bay, as expeditiously as circumstances allow, on the basis that the contract of sale would disclose the existence of the development approval issued by the local council but specifically giving no warranty as to the availability of or ability to use the plans in relation to that development approval.’
By contract for sale dated 7 August 2003, Concrete purchased the Nelson Bay land at public auction from the trustees for sale for the sum of $2,760,000, and completion of the purchase took place shortly thereafter. I observe in passing that the increase in purchase price from that of $560,000 originally paid by Landmark and Toyama for what was then, and presently remains, vacant land, may inferentially be attributable largely to the grant in the meantime of the development approval of Port Stephens Council on 10 May 2000 for the erection of the fourteen home units development. Doubtless by reason of the judicial advice of the Chief Judge in Equity the Contract for Sale of the Nelson Bay land contained the following special condition 7:
‘7. DEVELOPMENT CONSENTS
7.1Annexed and marked with the letters indicated are copies of the following:
“A”Front page of Notice of Determination of Development Application 24 September 1999 from the Port Stephens Council excluding all conditions (“the First Development Consent”).
“B”Letter from Port Stephens Council to Parramatta Design & Development (“the Council letter”).
“C”Notice of Determination of Development Application 10 May 2000 from the Port Stephens Council (“the Second Development Consent”).
7.2The vendors are unable to provide copies of the plans and designs which accompanied the First and Second Development Consents.
7.3The vendors disclose that a dispute exists in relation to the right to use the plans and designs which accompanied the Development Applications, including as to the existence of any licence to make use of the copyright in those plans and designs. The vendors further disclose that legal action has been foreshadowed in respect of any future use of those plans and designs.
7.4The vendors give no warranty as to the availability or the right to use the plans and designs which accompanied the First and Second development Consents.
7.5The purchaser acknowledges that it has satisfied itself in respect of all matters referred in or arising out of the First and Second Development Consents and will not raise any objection, requisition or claim for compensation in respect of any of the matters arising out of the First and Second Development Consents.’
It may therefore be seen that Messrs Barrak and Fares took steps to at least inhibit any prospective purchaser of this development site from the trustees for sale from obtaining and using the plans and designs the subject of at least the fourteen home unit development consents, by reason of the copyright claims of PDD being advanced in relation thereto. The reference in special condition 7.1 of the Contract for Sale to the Council’s earlier notice of determination of 24 September 1999 was to that superseded approval of the Council to the earlier proposed eight home unit development for the same site. I should add that by its amended defence and cross-claim filed on 17 March 2004, PDD pleaded inter alia that Concrete purchased the Nelson Bay land with ‘… full knowledge and/or acceptance of [PDD’s] subsisting interest in the copyright’, purportedly referring thereby to the Contract for Sale of 7 August 2003 partly extracted above. That pleaded assertion overstated the purport and effect of the special conditions of the Contract for Sale of 7 August 2003. Pursuant to Order 11 Rule 1B, Mr Barrak, as solicitor on record for PDD and Mr Fares at that relevant time, was required to, and did in fact, certify at the foot of the amended defence and cross-claim as to the existence of a proper basis for each allegation in the pleading of the cross-claim, and para 3 of the amended cross-claim purported to affirm ‘the matters set out in the… defence’.
Completion of the contract of purchase of the Nelson Bay land was effected by Concrete on 15 September 2003 by payment of the balance of the total purchase price of $2,760,000 to the trustees for sale appointed by the Supreme Court, Concrete having earlier paid a deposit on the signing of the contract. On completion, the trustees for sale as transferors delivered to Concrete as transferee an instrument of transfer of the land, together with relevant muniments of title, and consequently Concrete became, and remains, the registered proprietor in fee simple under the provisions of the Real Property Act 1900 (NSW) in respect of the Nelson Bay land. As already indicated, that purchase price was distributed by the trustees for sale, after repayment of the mortgage debt of Landmark and Toyama to the Bank, as to two thirds thereof to Landmark as representative of the Barrak and Fares interests corporately, but the remaining one third has not yet been paid to the Haviland and Rix interests corporately represented by Toyama.
There is no dispute that the development consent of Port Stephens Council granted on 10 May 2000, and addressed to PDD, remains currently in force, the same being effective until 10 May 2005. Apparently there would be no or little prospect of renewal to the same scope or extent of development approval. Section 95 of the Environmental Planning and Assessment Act 1979 (NSW) (‘EPA Act’) provides, so far as is presently material, that ‘a development lapses… 5 years after the date from which it operates…’, subject to the provisions of sub-section (4) reading as follows:
‘Development consent for:
(a)the erection of a building,
…
does not lapse if building, engineering or construction work relating to the building… is physically commenced on the land to which the consent applies before the date on which the consent would otherwise lapse under this section.’
The notion of ‘substantial commencement of construction’ has been of course the subject of many reported cases.
Though a development consent ‘enable(s) the erection of a building’, any such erection cannot commence until a construction certificate is issued by the relevant consent authority, being here of course Port Stephens Council : see subss 81A(1) and (2) of the EPA Act. Full sized copies of the plans for the 14 unit approval of the Council each bear the following notation:
‘PORT STEPHENS COUNCIL
This plan relates to Development Application No 103.00 and is subject to conditions as shown on that consent.’
By the terms of the EPA Act at least then prevailing, it is provided by s 78A(1) thereof that ‘[a] person may, subject to the regulations, apply to a consent authority for consent to carry out development’, and further by s 81A(1) thereof that ‘[a] development consent that enables the erection of a building is sufficient to authorise the use of the building when erected for the purpose for which it was erected if that purpose is specified in the development application…’. Moreover by s 105(1) of the EPA Act, it is further provided that ‘… the regulations may make provision for or with respect to… (d) the form of development applications… (e) the documents and information required to accompany development applications…’.
Clause 46A of the Environmental Planning and Assessment Regulations 1994 (NSW) (‘EPA 1994 Regulations’) provided at all material times that a development application ‘(a) must be in Form 1’, and ‘(b) must be accompanied by the information required by Form 1’. That form is regulated by Schedule 1 to the Environment Planning and Assessment (Building Code of Australia) Regulation 1999 (NSW), which stipulated at all material times that where the proposed development is or includes the ‘erection of a building’, the applicant for approval must provide to the Council ‘3 copies of plans/drawings of proposed development…’, and a further copy of the plans and drawings for purposes of clause 48B of the EPA 1994 Regulations. That clause 48B, which relates to ‘Extracts of development applications to be publicly available’, stipulates that the same should include, in the case of the erection of a building, ‘a plan of the building that indicates its height and external configuration, as erected, in relation to the site on which it is to be erected’.
The Form 1 requirements for the plans and drawings, published in the New South Wales Government Gazette No 144 of 24 December 1999 at pages 12217-12221, are set out in notes 6 and 7 thereto, reading as follows:
‘Note 6Plans or drawings describing the proposed development must indicate (where relevant):
(a)the location of proposed new buildings or works (including extensions or additions to existing buildings or works) in relation to the land’s boundaries and adjoining development
(b)floor plans of proposed buildings showing layout, partitioning, room sizes and intended uses of each part of the building
(c)elevations and sections showing proposed external finishes and heights
(d)proposed finished levels of the land in relation to buildings and roads
(e)building perspectives, where necessary to illustrate the proposed building
(f)proposed parking arrangements, entry and exit points for vehicles, and provisions for movement of vehicles within the site (including dimensions where appropriate)
(g)proposed landscaping and treatment of the land (indicating plant types and their heights and maturity)
(h)proposed methods of draining the land.
Note 7Where relevant an A4 plan of the building that indicates its heights and external configuration, as erected, in relation to the site on which it is to be erected.’
The subsequent Environment Planning and Assessment Regulations 2000 (NSW) (‘EPA Regulations’) did not commence in operation until 1 January 2001, and thus the EPA 1994 Regulations are those here relevant and applicable to the issues arising in the proceedings.
As appears from the statutory and regulatory provisions I have already identified, development plans and drawings represent in two-dimensional form the subject matter of a development consent given by a so-called responsible authority, that authority here involved being of course Port Stephens Council. Without the graphic illustrations and exemplifications of those plans and drawings, here of course prepared by PDD and/or Mr Fares, the nature and scope of the development consent or approval would lack definition and illustration. The conceivable relevance of a development consent, purportedly granted according to local government law, provides a controversial bearing upon the operation of the law of copyright in the context of these proceedings.
The threshold issue as to whether PDD and/or Mr Fares threatened Concrete with proceedings for infringement of copyright
Concrete seeks in the context of the present proceedings effectively to establish and maintain in its favour title to the copyright inherent in the relevant Port Stephens Council approved plans and drawings as an ‘artistic work’, in the nature of a ‘drawing’, within the respective definitions of those two expressions contained in s 10 of the Copyright Act 1968 (Cth) (‘the Copyright Act’), and hence for the purposes of the reproduction provisions of subs 21(1) of the Copyright Act. Thus by the mechanism of its application to the Court, reproduced in full at the commencement of these reasons, Concrete seeks declaratory relief based upon the unjustifiable threats provisions of s 202 of the Copyright Act, and consequential restraint upon the respondents from the making of further threats, and thereby to compel PDD and/or Mr Fares as respondents to establish any copyright of either or both of them allegedly held in those plans and drawings, pursuant to Division 2 of Part III of the Copyright Act, and s 37 thereof in particular (see generally in that regard Avel Pty Limited v Multicoin Amusements Pty Ltd (1990) 171 CLR 88 at 94-95 (Mason CJ, Deane and Gaudron JJ) and at 105 (Dawson J) as to the purport and operation of s 202). Concrete contends that in the events which happened, comprising the grant of development consent for the construction of the fourteen home unit building by Port Stephens Council on 10 May 2000 in respect of the Nelson Bay property in favour of Landmark and Toyama, and Concrete’s subsequent acquisition of that property by purchase from the trustees for sale appointed by the New South Wales Supreme Court on the application of Toyama, it acquired by implied licence whatever copyright existed and continues to exist in those plans and drawings.
PDD and Mr Fares as respondents in the proceedings (PDD being also of course the cross-claimant) deny any entitlement of Concrete to copyright in relation to the plans and drawings the subject of the Council’s development consent to the fourteen unit building granted on 10 May 2000, and maintain that copyright has at all material times resided, and continues to reside, in PDD, though it was further stated, not in Mr Fares personally, notwithstanding that Mr Fares alone has architectural qualification to practice in Australia. They asserted that Concrete purchased the property with full knowledge and/or acceptance of inter alia the inability of the trustees for sale to provide copies of those plans and drawings, and of PDD’s copyright in respect thereof, and denied any right of Concrete to any present or future use of those plans and drawings. PDD and Mr Fares further denied that the trustees for the sale of the subject property appointed by the Supreme Court were ever authorised to sell any right or licence to use the copyright in those plans and drawings. They maintained that PDD was at all times and remains the owner of the copyright in the plans and drawings, pursuant to s 35 of the Copyright Act, and further that Concrete has no implied licence, or any other form of licence, to use the copyright in those plans and drawings. Of course PDD and Mr Fares made similar claims in respect of the plans and drawings for the eight home unit building earlier approved by the Council, but those previous plans and drawings were not directly the subject of the issues arising in the proceedings.
Moreover PDD and Mr Fares pointed to the special conditions of the Contract for Sale of the Nelson Bay land made between the trustees for sale as vendors and Concrete as purchaser (which I have earlier extracted), whereby Concrete was said to have been put on notice, and to have at least implicitly accepted, that there was no licence conferred on Concrete to use PDD’s copyright. As I have already observed, the special conditions do not have that asserted scope of meaning; the fact that the trustees for sale eschewed the giving of any warranty, as to the right in a prospective purchaser to use ‘the plans and designs’, plainly did not constitute any acknowledgment, explicitly or implicitly on Concrete’s part, of the absence of conferral of any such right arising by implication of law upon Concrete (or for that matter upon any future successors in title to Concrete to the Nelson Bay land). Understandably the trustees for sale had merely sought to stand apart from the copyright disputes of the warring former registered proprietors of the Nelson Bay land.
The respondents PDD and Mr Fares thus in effect asserted at the threshold that certain letters sent by Barrak Lawyers (the designation of Mr Barrak’s legal practice conducted by him apparently as a sole practitioner) on their behalf to Concrete’s legal representative, after the purchase by Concrete of the Nelson Bay land, constituted ‘mere notifications of the existence of copyright’ within ss 202(2) of the Copyright Act, and ‘did not constitute a threat of an action within the meaning of Section 202(1)’, though the apparent interpretation of the trustees for sale of that correspondence was that legal action had been foreshadowed in respect of any future use of the plans and designs, being legal action at the instance of the author(s) or designer(s). Further, the respondents submitted that those letters sent by Barrak Lawyers ‘merely comply with the special condition 7.3 of the Contract for Sale of Land dated 7 August 2003, wherein the trustees for sale, as Vendors, disclose to the Applicant that legal action has been foreshadowed in respect of any future use of the plans and designs’. For ease of reference, it is appropriate to reproduce ss 202(1) and (2) of the Copyright Act below, which provides:
‘(1)Where a person, by means of circulars, advertisements or otherwise, threatens a person with an action or proceeding in respect of an infringement of copyright, then, whether the person making the threats is or is not the owner of the copyright or an exclusive licensee, a person aggrieved may bring an action against the first-mentioned person and may obtain a declaration to the effect that the threats are unjustifiable, and an injunction against the continuance of the threats, and may recover such damages (if any) as he or she has sustained, unless the first-mentioned person satisfies the court that the acts in respect of which the action or proceeding was threatened constituted, or, if done, would constitute, an infringement of copyright.
(2)The mere notification of the existence of a copyright does not constitute a threat of an action or proceeding within the meaning of this section.’
In my opinion, the respondents misstated the purport and content of the documentary material falling explicitly and implicitly within the scope of their submissions just outlined. For one matter, special condition 7.3 of the Contract for Sale was inserted by the trustees for sale obviously because of the numerous letters written by or on behalf of PDD and/or Mr Fares, which purported to threaten, if not harass, the trustees for sale as to the scope of what they might at least implicitly seek to sell. Commencing with the letter of 20 February 2003 from Barrak Lawyers to the trustees for sale’s solicitors Cornwall Stodart, PDD and/or Mr Fares warned, inter alia, ‘[o]ur client is adamant that under no circumstances will it relinquish its legal rights in regard to use of its plans and will vigorously pursue anyone who breaches our client’s copyright’. Special condition 7.3 of the Contract for Sale merely involved disclosures on the part of the independent trustees for sale appointed by the Supreme Court as to prior contentious events, and contained no stipulations constituting any acknowledgement of title to copyright in favour of PDD or Mr Fares as original author of any relevant plans or drawings for a development of the subject land. The absence of any threat having been made on the part of the respondents within s202(2) is fanciful, and should never have been advanced. It denies the reality of what occurred. So much is readily evident from the circumstances I will now further record.
By letter dated 4 September 2003, the solicitors acting for Concrete on its purchase of the Nelson Bay property, Costa & Associates, wrote to Mr Fares as follows:
‘By contract executed on 7th August 2003, our client purchased the subject property which included a development approval for the construction of 14 residential units. We note that clause 7.3 of the Special Conditions of the contract discloses the existence of a dispute relating to copyright over the plans and designs which accompany the development application.
Our client is very anxious to proceed with the development of the site and would invite you as a matter of urgency to indicate upon what basis such a dispute is founded. Our enquiries with your former business partners have disclosed that you paid yourself for all design work by writing and endorsing a cash cheque in the amount of $27,000.00 dated 19th April 1999 from a National Bank account held in the name of J. Haviland, B. Barrack and yourself and bearing the number 000010 at the bottom of the cheque butt. This cheque was presented and the funds withdrawn from the said account.
Should we not hear from you within the next seven (7) days we will assume that all professional fees due to you in relation to the architectural services rendered have been settled in full and we will hence proceed with the development of the site in accordance with the development application and plans. If our assumption in this regard is incorrect would you please advise us as to your position within the same time frame, including but not limited to, the nature and quantum of any outstanding debts you claim to be due.’
The reference to ‘your former business partners’ was obviously to Ms Haviland and Mr Rix. As will be later discussed, the circumstances whereby Mr Fares obtained payment of architectural fees in relation to design work on 19 April 1999 were extraordinary, and understandably attracted intense cross-examination of Mr Fares on the part of senior counsel for Concrete.
By letter dated 9 September 2003, Barrak Lawyers replied to Costa & Associates as follows (again omitting formal parts):
‘We refer to your letter of 4 September 2003 in which you indicate that in default of hearing from us within 7 days, your client purchaser of the above property will proceed with construction in breach of our client’s copyright.
We claim the copyright on the basis that the service rendered by our client in respect of the drawings and works subject of the development application were never paid for. Accordingly there is no implied licence for anyone to use our client’s plans and copyright. Such copyright vests in our client to the extent that the terms of the contract as to production of the works were not complied with.
We note your advice that our client’s “former business partners” have disclosed to you that our client has been paid “for all design work”. Such representation is not true. Our client considers that this statement constitutes misleading and deceptive conduct and is actionable by your client against the maker of such representation.
We inform you that the issue of our client’s copyright has been the subject of Supreme Court proceedings and special condition 7 of the Contract has been inserted into the contract in accordance with directions of the Supreme Court. This special condition puts all prospective purchasers on notice of our client’s interest so that such purchasers may act with full knowledge. Special Condition 7.2 states that the “… Vendors are unable to provide copies of the plans and designs…”. We suggest that the reason for this is that any such provision would constitute a breach of our client’s copyright. Special condition 7.3 puts you on notice that “legal action is foreshadowed in respect of any future use of those plans and designs”. Special condition 7.4 puts you on notice that the vendors “give no warranty as to the availability or the right to use the plans and designs”. Therefore, when your client purchased the subject property, it did so with full knowledge of our client’s interest.
Our client never contracted with your client to prepare the drawings. We say that our client owns the drawings, the copyright subsisting in them and any re-production. The Supreme Court of New South Wales agrees with us. If your client proceeds to build in breach of our copyright, it does so at its own risk.
Your letter indicates that your client is in possession of certain documents and information. We request that you provide us with the following within 7 days:
1.A copy of the cheque butt and other documents in your possession which you claim substantiate your assertion that our client has been paid “for all design work”;
2.Return all documents that pertain to our client’s copyright, including plans, sketches and drawings to our office.
3.Advise us of the manner in which you obtained the documents referred to in (1) and (2) above.
4.Identify by name the persons you describe as our client’s “former business partners” and the representations that such persons made.
Should we not hear from you within the next 7 days in relation to points 1 – 4 above, we will assume that you accept our within assertions about copyright.
We trust that the above clarifies the situation as it relates to copyright. If you have any further query, please do not hesitate to contact us.’
The letter was perhaps unclear as to whether it was purportedly referable solely to the earlier eight unit plans and drawings, or the subsequent fourteen unit plans and drawings, or both. Be that as it may, it is common ground between the parties that no payment was made of architectural fees for the subsequent fourteen unit drawings and plans, but on Concrete’s case for particular reasons. Moreover no indication was given in Mr Barrak’s above letter as to when and by what means ‘The Supreme Court… agrees with us’, in fact in my opinion an untenable assertion. By subsequent letter of 15 August 2003, Concrete’s solicitors asked in effect for an explanation of that assertion, the purported response of which will shortly be extracted. In any event, the stance taken in the above letter of Barrak Lawyers might be thought to be at least commercially enigmatic, leaving aside the copyright issues sought to be advanced. Through his one third indirect interest in the Nelson Bay property (ie as one-half owner, indirectly, of Landmark’s issued capital), PDD and/or Mr Fares would by then have derived beneficially albeit indirectly, one third of the substantial profit arising on the sale of the Nelson Bay land by the trustees for sale to Concrete for the price of $2,760,000, being a sum very substantially in excess of the purchase price of $560,000 originally outlaid about five years earlier by Landmark and Toyama as purchasers. Moreover as alleged in the foregoing letter of Concrete’s solicitors of 4 September 2003, Mr Fares had been paid the sum of $27,000.00, nearly five months earlier, out of the joint venture bank account, for what Concrete’s solicitors were asserting in any event to be for ‘all design work’, yet that alleged payment was not adequately addressed or explained in Mr Barrak’s letter of response. Be all that as it may be, the issues in the proceedings are all about the existence or otherwise of implied licence of copyright, being issues of complexity of law and fact.
By further letter dated 1 October 2003 (and in purported response to Concrete’s earlier letter of 15 August 2003), Barrak Lawyers notified Concrete’s solicitors Costa & Associates as follows (inter alia):
‘We refer to our letter of 9 September 2003 which requires that you provide us with the following within 7 days:
1.A copy of the cheque butt and other documents in your possession which you claim substantiate your assertion that our client has been paid “for all design work”;
2.Return all documents that pertain to our client’s copyright including plans, sketches and drawings to our office.
3.Advise us of the manner in which you obtained the documents referred to in (1) and (2) above.
4.Identity by name the persons you describe as our client’s “former business partners” and the representations that such persons made.
Our letter notes that should we not hear from you within the said 7 days in relation to points 1 – 4 above, we will assume that you accept our assertions about copyright.
We note you letter of 15 August 2003 states that you are seeking your client’s instructions in relation to points 1 – 4 above. You have had ample opportunity to obtain such instructions and we remind you that we are yet to hear from you in relation to the above. We again press for your response.
We again put you on notice that if your client breaches our client’s copyright it does so at its own risk.’
The above concluding paragraph is directly material to the s 202 issue raised by the respondents as to an alleged absence of threat on the part of PDD and/or Mr Fares of an action or proceeding against Concrete for breach of copyright in respect of the plans and drawings for the fourteen home unit building.
Concrete’s solicitors responded by letter of 3 October 2003 as follows:
‘We refer to your letter dated 1 October 2003.
We assume that you act for Parramatta Design and Developments Pty Ltd as well as Mr Gus Fares. Please let us know if this is not the case.
Our client does not accept that it has no implied licence to use the plans and drawings that accompanied the development applications lodged in respect of 5 Laman Street, Nelson Bay.
In your letter dated 9 September, 2003 you indicated that the basis on which your clients claim copyright was that the service rendered by your client in respect of the drawings and works the subject of the development applications were never paid for.
By our letter dated 4 September, 2003 we requested that your clients advise what amount is claimed to be outstanding in respect of the fees for the preparation of the plans and drawings. In order to try and avoid any dispute with your clients, and without in any way conceding that our client is obliged to do so, our client is prepared to consider paying a reasonable sum, comparable to a reasonable industry rate, in respect of any unpaid fees claimed by your clients. Accordingly, please let us know what sum is claimed as outstanding by your clients and provide copies of the relevant invoices and, if applicable, statements recording part-payments. Please also provide your clients’ confirmation that should our client decide to agree to pay such sum (or such other amount as the parties agree), your client will consent to our client utilising the plans and drawings for the proposed development on the land.’
No response, or at least no response understandably satisfactory to Concrete, was made to that last letter, despite what might well be objectively thought to reflect a reasonable basis for meeting claims of outstanding fees for professional architectural work, if the same were susceptible to objective substantiation. Thereafter Concrete moved promptly, and on 7 October 2003, commenced the present proceedings by filing the application for declaratory relief in terms of s 202 of the Copyright Act, and for an injunction to restrain the respondents PDD and Mr Fares from making further threats of breach of copyright, in the terms earlier set out at the commencement of these reasons.
The basis of Concrete’s invocation of s 202 of the Copyright Act, as pleaded, and extracted at the commencement of these reasons, is based explicitly upon the following correspondence, apart from and irrespective of the circumstances surrounding that correspondence which conveyed at least the implication of threats of alleged breach of copyright:
(i)letter dated 9 September 2003 from Barrak Lawyers to Costa & Associates, and in particular the sentence ‘[i]f your client proceeds to build in breach of our copyright, it does so at its own risk’; and
(ii)further letter dated 1 October 2003 from Barrak Lawyers to Costa & Associates, and in particular, the concluding sentence ‘[w]e again put you on notice that if your clients breaches our client’s copyright it does so at its own risk’.
The unspecific ‘risk’ was implicitly in context at least of proceedings for breach of the respondent’s alleged copyright.
As I have earlier outlined, the respondents submitted that Concrete should fail from the outset on its application and statement of claim, upon the basis that the effect of the foregoing letters written on their behalf constituted ‘[t]he mere notification of the existence of copyright…’ within s 202(2) of the Copyright Act, and not so-called ‘self-help’ measures of the nature referred to by Wilcox J in Cowan v Abel (1995) 58 FCR 157 at 163. Further the respondents asserted that the prior correspondence ‘… does not give rise to any logical inference of a threat of proceedings of any form at all’, that correspondence being characterised by the respondents as ‘simply [the reinstatement of] the position generally that persons that embark or engage upon a certain course of conduct in any aspect of commercial or other life do so at their own risk’, and as being akin to a landowner merely erecting a sign ‘Beware of the dogs. Enter at your own risk’ or a car park owner erecting a sign ‘Park your vehicle at your own risk’. In substance and reality, both of those analogies are plainly as inappropriate as they are inadequate.
Concrete drew my attention for its part to the authoritative dictum of Mansfield J in Australian Consulting & Training Pty Ltd v Tiltform Pty Ltd [2001] FCA 1072, made in the context of the analogous provisions of the Australian patents legislation, and also of Cooper J in U & I Global Trading (Australia) Pty Ltd v Tasman-Warajay Pty Ltd (1995) 32 IPR 494, albeit again in the context of the same analogous provisions. In Australian Consulting & Training, his Honour said at [9]:
‘That decision [whether conduct constituted a threat] must be made in the light of the circumstances in which the impugned conduct took place… and from the perspective of a reasonable recipient of the communication in those circumstances… It may not be necessary for there to be an explicit reference to enforcement proceedings.’
Further, in I & U Global, his Honour said at 500-501:
‘The test is whether the language would convey to any reasonable person that the author of the letter in the present case intended to bring proceedings for infringement against the person said to be threatened. It is not necessary that there be direct words that action would be taken… It is a threat to sue for infringement if the Respondent is so minded on a future occasion. It is no less a threat that the Respondent may not be so minded… .’
It is readily apparent that PDD’s and/or Mr Fares’ submissions on this point do not accord with the reality of either the content of the abovementioned letters of Barrak Lawyers or the context in which the same were written, or the perspective of a reasonable recipient. Those letters individually and cumulatively can fairly be read and understood as notice to Concrete to the effect of PDD and/or Mr Fares being prepared to exercise their legal rights of enforcement in relation to the subject matter of their claims to copyright subsequently advanced in present proceedings. To suggest otherwise is to defy reality as well as rationality. As was also observed by McClelland CJ in Eq in Lido Manufacturing Co Pty Ltd v Meyers & Leslie Pty Ltd (1964) 5 FLR 443 at 450-451:
‘… the absence of direct words by Mr Meyers, saying that he would take action, does not involve in my view that no threat within the meaning of s 121(1) was made…’
Those letters of Barrak Lawyers of 9 September 2003 and 1 October 2003 did not comprise even merely indirect threats of legal proceedings, but went further.
PDD and/or Mr Fares raised a further s 202 submission of no intrinsic merit, which must nevertheless be addressed. The submission was that Concrete was not a ‘person aggrieved’ within s 202(2) of the Copyright Act. It was said that the tender by Concrete of the Transfer of the title to the Nelson Bay land (Exhibit A20), and the correspondence referred to and extracted above (Exhibit A21), did not establish the ownership of the Nelson Bay land by Concrete, nor did such documents establish that Concrete was a ‘person aggrieved’. The respondents further submitted that ‘[e]ven if the court accepts the contract exhibited at pages 151-157 of the Affidavit of Mr Barrak sworn 24 March 2004 in these proceedings, this is evidence of nothing more than a base purchase by Concrete but nothing more’, and further that ‘[n]othing is known about whether the purchase proceeded to settlement and whether Concrete became the registered proprietor of the property 5 Laman Street, Nelson Bay. The certificate of title is not in evidence. It is submitted that as an evidentiary point, this is fatal to the applicant’s case’. It was yet further submitted that ‘[i]f this Honourable Court accepts Concrete Pty Ltd as being the registered proprietor, nothing is known about what Concrete believed or hoped for or intends to do with the property’.
Senior counsel for PDD and Mr Fares referred me to three authorities which have spoken of the notion ‘aggrieved’. The first was Cowan, where in addition to what I have already recorded, Wilcox J said at 163-164 as follows:
‘The term “person aggrieved” is not separately defined. It is plainly intended to include any person adversely affected by the threat or threats. The supplier to the recipient of a threatening letter of the goods the subject of the threat, who loses sales or potential sales as a result of the letter, falls within the concept of a “person aggrieved”.
The second was Attorney General of Gambia v N’Jia [1961] AC 617, where at 634, the Privy Council said that the words include a person who has a genuine grievance as distinct from a mere busybody who is interfering in things which do not concern him.
The third was Ealing Borough Council v Jones [1959] 1 QB 384 at 392 where the following appears:
‘…if one came to the expression without reference to judicial decision one would say that the words “person aggrieved by a decision” mean no more than a person who had had the decision given against him; but the courts have decided that the words mean more than that, and have held that the word “aggrieved” is not synonymous in this context with the word “dissatisfied”.’
It was further submitted by PDD and/or Mr Fares that ‘[Concrete] is a sole director company under the directorship of a Mr Hafez Alameddine. Mr Alameddine has sworn an affidavit on 7 October 2003 in these proceedings and his affidavit has not been read. We submit your Honour should draw the obvious inferences’. It was further submitted that ‘[t]he person who speaks the corporate mind of this company is a Mr Hafez Alameddine who, although [he] has sworn an Affidavit of 7 October 2003 which affidavit is on the record in these proceedings, Mr Alameddine was intentionally not called to give evidence and his Affidavit was not read although it has been utilised in two (2) sets of interlocutory proceedings (being for cross-vesting and for determination of a separate issue) where Mr Alameddine could not be cross-examined. It is submitted that your Honour should draw the appropriate inferences from the absence of Mr Hafez Alameddine. Mr Brooks, for the Applicant, gave evidence to the effect that he has never known nor heard of him’. Why the decision was taken on behalf of Concrete not to read Mr Alamaddine’s affidavit does not appear.
The respondents PDD and/or Mr Fares did not seemingly state with precision or even at all what those ‘obvious inferences’ were supposed to be. Their submissions continued nevertheless over a further eight pages, referring to one authority involving personal injury proceedings and another involving s 60 of the Evidence Act 1995 (Cth), that section relating to an exception to the hearsay rule, and s 135 relating to the discretion to exclude or limit the use of evidence. In any event it was submitted that ‘[p]roof of the fact that a person is ‘aggrieved’ is a matter calling for specific evidence of the corporate mind in precisely the same way as a party to a contract must prove damages – that is – that damages must be definitively proven’.
The submissions of PDD and/or Mr Fares demonstrate in my opinion confusion of thought. Damage is not of the gist of a cause of action for breach of copyright; in any even Concrete has sought an enquiry into damages, being an enquiry yet to be undertaken after the Court has resolved the complex issues of breach of copyright tendered by Concrete. In my further opinion, there is an abundance of evidentiary material demonstrative of aggrievement on the part of Concrete. It suffices to demonstrate or establish that element of s 202 of the Copyright Act simply by reference to the inferences flowing from the development consent of Port Stephen Council given on 10 May 2000 for the erection of fourteen units on the Nelson Bay land, the Contract for Sale bearing date 7 August 2003 made between the trustees for sale as vendors and Concrete as purchaser relating to the Nelson Bay land, the instrument of transfer dated 15 September 2003, whereby the trustees acknowledged receipt of the sum purchase price of $2,760,000 outlaid by Concrete for the acquisition of title to the Nelson Bay land. That development consent remains available for the Nelson Bay land in favour of Concrete pursuant to the general law of local government, as will shortly be established. Whether of course Concrete is able to make use of those plans and drawings the subject of the development consent, pursuant to an implied licence of copyright operating upon the events which have happened is the central issue in the proceedings that remains to be resolved. To the extent, if at all, those exhibited documents require to be placed in further evidentiary contexts, any such contexts are readily provided by the affidavits of Benjamin Barrak sworn 29 August 2003 and Ghassan Fares sworn 22 October 2003, neither of which were read by the respondents in the proceedings, but both of which were tendered into evidence by Concrete as exhibits A11 and A23 respectively.
Plainly in my opinion, the s 202 point raised by the respondents therefore has no substance or merit. As counsel for Concrete submitted, Concrete has inter alia sought declaratory relief as to non-infringement of the respondents’ alleged copyright, plainly an appropriate course in the event of any doubt as to the crystallisation of the operation of s 202 in favour of a party invoking the operation thereof in its favour: see for instance Tensing (t/as Apple House Music) v Mucider (1993) 28 IPR 111.
Moreover I would put matters somewhat further than I have already ventured above. I think that the correspondence to which I have identified already serves to sufficiently demonstrate that PDD and/or Mr Fares adopted, in the circumstances of the pre-litigation correspondence, the role of ‘the attackers’, and Concrete the role of ‘the defender’, to cite the description of Scrutton LJ in Maatsechappij Voor Fondsenbezit v Shell Transport & Trading Co [1923] 2 KB 166 at 176-178 which was adopted by Wilcox J in Amalgamated Mining Services Pty Ltd v Warman International Ltd (1988) 19 FCR 324 at 325, in the context of his Honour’s consideration of the operation of s 202 of the Copyright Act. I do so particularly in the light of the description which Wilcox J coined to the effect that ‘… in a practical sense the present applicant has been forced to take legal action’. Given the position adopted by PDD and/or Mr Fares, and also by Mr Barrak, not just as their legal representative formally in the name of Barrak Lawyers (indeed at all material times he was seemingly the sole principal of the practice using that firm name), but also indirectly as a one third joint venturer, together with Mr Fares as to a further one third joint venturer, per medium of their respective equal shareholdings in Landmark, PDD and/or Mr Fares adopted in reality at the material times I have above reviewed the role of an ‘attacker’, and Concrete conversely that of a ‘defender’, in the context of copyright claims being advanced by PDD and/or Mr Fares. Concrete found itself placed in the position of being forced to commence the legal action which it thereupon undertook, in order to preserve its very substantial investment of capital constituted by its acquisition of the Nelson Bay land on the basis at least of the development consent granted on 10 May 2000 for the erection of a fourteen unit building.
It follows that Concrete has clearly and unequivocally established its locus standi to maintain the present proceedings against PDD and Mr Fares for at least the declaratory and injunctive relief it seeks, within and pursuant to the scope of operation of s 202 of the Copyright Act. I should perhaps add for completeness that it can scarcely be doubted that when writing his letters of 9 September 2003 and 1 October 2003, Mr Barrak was speaking on instructions from PDD, whereof he had been a director according to the general law definition at all material times, irrespective of what have been the more limited period of entry appearing in official records (20/10/99 – 15/05/00), as well as on instructions from Mr Fares, who was also of course his co-director of and equal shareholder directly or indirectly in Landmark. The respondents PDD and Mr Fares have of course maintained and affirmed the s 202(1) threat by continuing to assert in the proceedings their denial of the implied licence pleaded by Concrete in the proceedings, and it can scarcely be doubted that such conduct on their part represented their intention and position ab initio. This is particularly evident in a subsequent letter of 15 October 2003 to Concrete’s solicitors, where Barrak Lawyers stated in the concluding paragraph ‘[w]e put you on notice that if your client breaches our client’s copyright, vigorous legal action will be taken against your client.’ The fact that this letter was headed ‘Private & Confidential save as to costs’ is immaterial for present purposes.
Incidentally and merely for completeness, Mr Barrak acted thereafter as solicitor on the record for each of the respondents PDD and Mr Fares until 24 March 2004, at which time a change of legal representative in favour of Proctor & Associates took place in the context of certain discovery controversies which occurred in interlocutory proceedings before me. Furthermore Mr Barrak continued to attend the Court hearings until the conclusion of the hearing of the proceedings, and gave extensive evidence in the proceedings as a witness in the case for PDD and Mr Fares, both on affidavit and viva voce.
Whether the applicant Concrete is authorised by the general law of copyright to use the plans and drawings approved by Port Stephens Council for the construction of the fourteen home unit building the subject of that approval – the case propounded by Concrete in outline
Following upon completion of its contract for purchase of the subject land from the trustees for sale appointed by the Supreme Court, Concrete became the registered proprietor in fee simple under the provisions of the Real Property Act 1900 (NSW) in respect of the subject land at Nelson Bay. By reason of those circumstances, Concrete became entitled, as successor in title to ownership of the land, by operation or implication of the general law of local government, to the benefit of the currently prevailing development consent granted by Port Stephens Council on 10 May 2000, being a consent given under the authority of the EPA Act, and as a consequence became entitled in principle, pursuant to the general law of local government, to develop the subject land at Nelson Bay by erecting the fourteen home unit building in conformity with the terms of that consent. Given however that the development approval was granted upon the basis of the plans and drawings prepared by Mr Fares and/or PDD, and that the author (whether according to law that was Mr Fares or PDD) has withheld and continues to withhold consent as the architectural designer of those plans and drawings to the use thereof by Concrete, the issue arises as to whether Concrete is nevertheless entitled to proceed with the construction of that fourteen unit building in accordance with those plans and drawings, without thereby breaching the asserted copyright of PDD and/or Mr Fares in respect thereof.
Concrete framed the following three bases, in the alternative though to an extent overlapping, for establishing its implied copyright authority or entitlement in personam to use the plans and drawings for the construction of the fourteen home unit building the subject of Port Stephens Council’s development consent:
(i)first, in circumstance where Mr Fares (or PDD) prepared those plans and drawings for use in the development application the subject of that consent, and in the further circumstance where, as a principle of the general law of local government, a development approval runs with the land, and thus in favour and for the benefit of successors in title, PDD (or Mr Fares) may be taken to have implicitly licensed all persons in personam, who might for the time being own the land during the subsistence of the development approval, to use those plans and drawings to the extent necessary to erect the improvements the subject of that development approval;
(ii)secondly, the circumstance that an implied licence ‘typically arises’, as between an architect and his or her client (as recognised by the landmark case of Beck v Montana Constructions Pty Ltd (1963) 5 FLR 298), which may extend in favour of a subsequent purchaser in personam of the property upon and for which the building the subject of the architectural plans is designed; that principle was said by Concrete to be here operational, given the existence of a joint venture reflected in the tenancy in common structure involving first, Messrs Barrak and Fares as corporators of Landmark, and secondly involving Ms Haviland and Mr Rix as corporators together of Toyama, and further given the possibility from the outset of a dispute between the parties leading to an enforced sale of the property having the benefit of a viable development consent relating to architectural material, being an enforced sale by trustees for that purpose appointed pursuant to s 66G of the Conveyancing Act; and
(iii)thirdly, the implication that for at least the statutory/regulatory five years duration of the development consent of Port Stephens Council granted on 10 May 2000 to Landmark and Toyama as then owners of the Nelson Bay land, PDD or Mr Fares licensed the joint venturers Landmark and Toyama, and any entity to whom Landmark and Toyama (or any subsequent transferees in turn from them and so on) might transfer that land, in each case in personam, to use those architectural plans for the purpose of utilising or giving effect to that development consent.
In the context of framing the above third basis of authorisation, Concrete acknowledged that it was required to make good its denial of the allegations of the respondents PDD and Mr Fares that there was an agreement made by which PDD was to be the builder of the development, and in addition, that PDD and/or Mr Fares was to be rewarded for the architectural work involved in preparing the plans and drawings for the building, by way of periodic draw-downs of up to ten per centum of the construction costs incurred during the construction process. Generally in relation to all three propositions, as already made explicitly clear, Concrete did not conflate the in rem nature of a development which ‘runs with the land’ with the in personam nature of an implied licence of copyright.
Moreover it was submitted by senior counsel for Concrete that in respect of documents in evidence upon which Mr Farrugia purportedly relied, Mr Farrugia effectively conceded, in the course of cross-examination, that instances thereof purporting to evidence work undertaken by a builder were typically documents that equally evidenced work undertaken by a developer, or at times by an architect, and that documents relied upon by Mr Farrugia were therefore essentially neutral on point; Concrete submitted moreover that at least in his capacity as a director and corporator of Landmark, Mr Fares was in substance a developer.
It was further submitted by Concrete that even if any of the documents relied upon by Mr Farrugia did in fact demonstrate that PDD purported to undertake any work normally performed by a builder, a proposition which Concrete in any event denied, that would only demonstrate that PDD sought to be the appointed builder, and perhaps purportedly undertook some preliminary work as a builder, and did not nor could not constitute evidence that Mr Haviland and Mr Rix agreed on behalf of Toyama that PDD would be the builder of the Nelson Bay development.
In my opinion, the submissions of Concrete as to an absence of, or at least shortcomings in, qualification for admissibility of Mr Farrugia’s opinions, and of exaggerations, if not fanciful expressions of views on his part, were at least for the most part soundly conceived, and essentially correct. I gained the clear perception of Mr Farrugia’s evidence, particularly his written material, as being largely deficient in careful analytical and objective thought. Moreover at least to the extent that Mr Farrugia's testimony was inconsistent with that of Mr Brooks, I am of the opinion that Mr Brooks’ qualifications, and his objective reasoning, were such as to require that his evidence should prevail.
The factual issue arising in the context of my determination of Concrete’s third main basis for rejection of the case for breach of copyright of the subject plans drawings – whether there was an agreement made between the parties whereby PDD (and/or Mr Fares) was to be the builder of the fourteen home unit development, whereby PDD (and/or Mr Fares) was to be rewarded for its work by periodic draw downs of up to ten per centum of the construction costs during the construction process
The resolution of this issue requires the assessment by the Court of the veracity of the testimonies, on the one hand of Messrs Fares and Barrak, and on the other hand of Ms Haviland, Mr Kevin Rix and Mr David Rix, and also of any contemporaneous documentary material bearing upon the issue as to the likelihood or otherwise of any such arrangement the subject of this issue having been made between those two groups, in the context of their evolving relationship. Again in this and the segments which follow, it is convenient to combine reference to PDD and Mr Fares together as PDD, and it should be understood that Mr Fares is to be treated as included in any use of that expression.
Given the length of time which each of those persons spent in the witness box, (apart from Mr David Rix, whose written and viva voce testimony, by comparison with the other four, was relatively short), I had the opportunity of assessing the credibility of their conflicting evidentiary accounts, and of gaining an insight into the integrity or otherwise whereby each of them gave answers under the pressure of cross-examination, and in particular as to whether there was maintained a genuine recollection on oath, or else a commitment to answers which might be thought to best advance their respective cases. In that regards, one major difficulty in resolving the factual issues in this litigation has been the limited availability of contemporaneous documentation, and in particular, authentic documentation, with the consequence that any witness who was prepared to be untrue to his or her oath, in order to advance his or her case, was potentially afforded ample scope for reconstruction of events.
I therefore found it necessary to scrutinise the demeanours and reactions of each of those persons individually, as they gave their viva voce evidence, particularly under cross-examination, as well as to endeavour to place into temporal context, in particular what each was saying, and thus to determine whether a favourable outcome to his or her case was more important than fulfilment of his or her oath to be truthful, and duty otherwise to the Court. Some time before the time the proceedings came on for hearing, Messrs Fares and Barrak on the one hand and Ms Haviland and Mr Rix on the other hand, had fallen into irreconcilable dispute, and mutual bitterness had become evident from the content of their respective affidavits. What few contemporaneous, or relative contemporaneous, documents existed were limited in scope. The parties did not keep minutes of meetings, or correspond with each other in writing, at least to any material extent. Accordingly the assessment of the probabilities has not been a simple task.
My assessment of the credibility of Ms Haviland’s testimony must be undertaken with reservation as to her emotional reaction to what she evidently considered to have been a betrayal by Mr Barrak, in favour of his financial advancement, of a longstanding relationship somewhat akin to that of a foster parental role, borne out of a longstanding friendship commenced at the State Crown Solicitor’s Office. It is evident that her now former husband Mr Kevin Rix bore a less affectionate and sympathetic attitude towards this young man, and from the outset was less confident in relation to any commitment to the business relationship with Mr Barrak, and with Mr Fares, who had been introduced to Ms Haviland and Mr Rix by Mr Barrak. Moreover both Mr Rix and Ms Haviland were understandably reluctant to become involved in and committed to significant financial risk and exposure. Messrs Fares and Barrak, being significantly younger, were evidently bent on a course of gaining wealth as early as possible in a rising property market.
There is evidence from which the inference may readily be drawn that Mr Barrak and Mr Fares did not have sufficient financial asset grounding to undertake this Nelson Bay development, and it was they who solicited the involvement of Ms Haviland and Mr Rix. Hence the task fell on them, particularly Mr Barrak to persuade Ms Haviland and Mr Kevin Rix to join in this venture. As I have earlier recorded, the evidence discloses that it was the relationship, at least of Ms Haviland, if not also Mr Kevin Rix, with NAB which secured the funding required to purchase the Nelson Bay land at favourable interest rates. My observation of Mr Kevin Rix was that of someone, as in the case of his now former wife Ms Haviland, who fully comprehended the fundamental importance of the implications of testimony to the court on oath, but though I have kept in mind, in my evaluation of the credibility of the testimony of each of Mr Rix and Ms Haviland to the Court, the need for reservation because of the extent of the emotional resentment which by then they harboured against Mr Barrak, and also Mr Fares. In short, both Mr Rix and Ms Haviland, being elderly in comparison with Messrs Barrak and Fares, would have readily understood, and readily eschewed, the prospect of any open-ended commitment to PDD or Mr Fares of the somewhat extraordinary nature which, with the support of Mr Barrak, they have asserted in these extraordinary proceedings.
I find that both Ms Haviland and Mr Kevin Rix evinced substantially more determination to be truthful in their recounting of past events than either Mr Barrak or Mr Fares. I have derived assistance in reaching that finding from the testimony of Mr David Rix, who was an impressive witness. Although I must bear in mind his filial relationship with Mr Kevin Rix and Ms Haviland as their son, he tended to be one step apart from the intensity of the emotion that visited this unfortunate saga of litigation in this Court, and apparently about to continue in the Supreme Court. He was unequivocally sure of his recollection as to what was said in the course of the crucial conversations at the La Grillarde Restaurant on 4 August 1999. His vastly greater experience in the building industry to that of Mr Fares and Mr Barrak reflected implicitly in his evidence a fundamental lack of experience and qualification in any practice sense for Mr Fares to undertake the construction of a not insubstantial development in the vicinity of Newcastle.
The inference clearly open to be drawn from my acceptance of Mr David Rix’s evidence on that occasion was that at least up to that point in time, no suggestion had been advanced on behalf of Mr Fares and Mr Barrak that the building work at Nelson Bay would be undertaken by PDD and/or Mr Fares. By that point in time, matters had been advanced to the stage that the eight home unit development was awaiting the approval of Port Stephens Council, being an approval that was subsequently granted on 24 September 1999. Once the prospect of a fourteen unit development consent emerged, the clear inference I would draw was that neither Ms Haviland and Mr Kevin Rix committed themselves to proceeding with the building of that development, much less by PDD and/or Mr Fares. Particularly was that so in the light of the counsel received earlier from their son David.
As to the testimony on oath of Mr Barrak, I have the misfortune to conclude in respect of a professional person that he was prepared to say virtually anything on oath which was destructive or disparaging of the case of the applicant Concrete. It is apparent, from what was disclosed as to the issues involved in the Supreme Court proceedings, that Mr Barrak holds indirectly a financial interest in the outcome of the present litigation, in particular in relation to the evidentiary issue, and the implications of the issue, as to whether PDD or not Mr Fares was mutually agreed to be the builder of the fourteen unit development in particular. The absence of any written agreement to that effect, however informal, provides eloquent testimony alone to the absence of an agreement of such radical dimension. The case for establishing a finding in favour of the respondents requires me to prefer the oral testimony of Mr Barrak and Mr Fares to that of Ms Haviland and Mr Kevin Rix, a course which without reservation I would not take.
As I have earlier recounted, there is also some documentary evidence before me from which the inference may be drawn as to the absence of any such extraordinary arrangement. If any such appointment was the subject of a contractual arrangement, I would have expected that an arrangement of that inherent complexity and far reaching benefit to Mr Fares as one of the joint venturers in reality would have been reduced to writing, at the very least in the form of exchange of formal correspondence. The very open-ended nature of any such arrangement, whereby virtually all risks and exposures would pass to Landmark and Toyama, without at least the existence of an agreement in writing underpinning the arrangement giving some definition thereto, almost beggars belief as to the reality of its existence. For completeness I should add that not even any financial arrangements had been concluded for any such open-ended arrangement.
The evidence of Mr Kevin Rix as to the numerous reasons why he would not have entertained any arrangement of the kind postulated was as convincing as it was sensible and realistic from any business perspective. I would not accept that Ms Haviland would have come to any view inconsistently with that of Mr Kevin Rix, and a fortiori with that of her son, and thus made any commitment in line with any such inconsistency. I accept without any material reservation Mr Kevin Rix’s evidence reflective of his reasons as to his absence of confidence in Mr Fares as a builder/developer generally, much less in relation to the daunting prospect of a development requiring the borrowing of substantial funds, with all the personal exposure thereby entailed, as not only essentially truthful, but furthermore as reflecting the commonsense of not proffering to a person, having no evident experience as a builder of a large development in a locality with which Mr Fares had no experience or connection. Moreover despite the fracture of their marriage, whenever that actually occurred whereof there is no evidence, the evident relationship between Mr Kevin Rix and Ms Haviland has implicitly continued on a basis of mutual communication, such as would render highly improbable that one would have made the decision to proffer Mr Fares such an open-ended financial arrangement in the absence of support of the other.
It is always a matter of regret to find of a person engaged in litigation that his evidence on oath on any of the contentious factual issues arising in these proceedings cannot be accepted. I gained the ultimate impression from Mr Fares’ testimony, by the time of conclusion of his cross-examination, that he would literally say anything in support of the contention that he was appointed by Landmark and Toyama to be the builder of either the eight unit development or the fourteen unit development, irrespective of the truth thereof. In summary, I have the misfortune to find that Mr Fares struck me as a devious, albeit intelligent person, who was prepared to say anything in his evidence which he perceived would assist his case. I have insufficient confidence in making any finding in his favour on any critical or material issue in the proceedings, unless unequivocally supported by written material having independent force of operation. Moreover as in the case of my findings in respect of Mr Barrak, to the extent that his account of any conversations on significant or critical matters involving himself with Ms Haviland and/or Mr Rix (and also of course Mr David Rix), I would prefer without any hesitation the evidence of each of the latter.
I have made a number of observations, in the course of my outline of the facts and circumstances in this case, which have tended to point, or assist to point, against the likelihood, indeed the inherent unlikelihood, of any agreement as to the appointment of PDD or Mr Fares as the builder of both the eight and fourteen unit developments. I need not therefore repeat the same, except perhaps to emphasise first, that the objective circumstances (in particular those involving the joint ‘for sale’ advertisement, the authorship of which I have no hesitation in ascribing knowingly and intentionally to Mr Fares as well as to Ms Haviland), and secondly the absence of any written confirmation of the existence of such an unusual if not extraordinary arrangement, being oral to boot, at the centre of the radical factual controversy bearing upon and essential to Concrete’s third proposition of legal significance, operate together to require my unequivocal rejection of the existence of any contractual arrangement having ever been made. I refer of course to the alleged arrangement to the effect that PDD and/or Mr Fares was to be the builder of the fourteen unit development, or for that matter of the earlier eight unit development. I will next make further findings on the controversial $27,000.00 payment made to Mr Fares on 19 April 1999, which related directly of course to the earlier proposed eight home unit development.
Findings in relation to the payment of $27,000.00 made to PDD on 19 April 1999
In relation to PDD’s case that it was to be the builder of the earlier eight and later fourteen unit developments, which I have rejected above, a manifest inconsistency arose in relation to the payment of $27,000.00 made out of the NAB joint bank account conducted in the names of Ms Haviland, Mr Barrak and Mr Fares on 19 April 1999. That is because if such an agreement was reached for PDD to be the builder and therefore compensated for the design and building work by various draw-downs throughout the construction, it must be asked why the requirement for the joint venture to make the $27,000.00 payment upfront of commencement of construction, which in fact of course occurred. Put another way, the payment of architectural fees of $27,000.00 was inconsistent with the thrust of the PDD’s and/or Mr Fares’ case as to appointment of PDD and/or Mr Fares as the builder, since that supposed appointment was made on the footing of ten per centum of all construction costs, whatever they might happen to be. This payment produced a substantial amount of evidentiary attention, PDD claiming that the reason for the payment was to expedite the application for the development consent and subsequent construction certificate for the eight unit develolpment.
Prior to the payment of the $27,000.00 on 19 April 1999, the following sums were deposited to the credit of the joint bank account:
(i) by Ms Haviland on behalf of herself and Mr Rix on 1 April 1999: $17,500; and
(ii) by Messrs Fares and Barrak on 19 April 1999: $35,000.
A handwritten note made by Ms Haviland in evidence as Exhibit A12 indicated that at that time, there were the following project claims or debts totalling $52,500 outstanding in respect of the eight unit development originally proposed for the Nelson Bay land:
‘DA & Construction Cert $27,000
Engineering plans $10,000
Council fees $5,000
Artists impression $1,500
Interest etc $9,000’
That information was said to have been given to her by Mr Barrak, which I accept. No vouchers were provided to her in respect of those sums.
To restate in broad summary the case propounded by PDD in the course of the hearing:
(i)PDD was originally to be remunerated for preparing the design plans, and for undertaking the construction of the eight home unit residential development, by an amount equal to ten per centum (10%) of the construction cost, payable by periodic drawdowns;
(ii)PDD was subsequently to be remunerated on the same basis for preparing the design plans, and for undertaking the construction of the fourteen home unit residential development, upon the same financial basis; and
(iii)otherwise the three project participants (ie Mr Fares as to one third, Mr Barrak as to one third, and Ms Haviland and Mr Rix as to one third) would be partners or joint venturers together by way of their respective nominated corporate entities (albeit Mr Fares and Mr Barrak combining together in relation to a single corporate entity (ie Landmark) as to a two thirds share, and Ms Haviland and Mr Rix combining together in relation also to a single corporate entity (ie Toyama) as to a one third share), and all outgoings and income would be borne and shared (as the case may be) in those basic shares.
To restate in summary Concrete’s essential case in outline, based as it was on the evidence of Ms Haviland and Mr Rix, PDD and/or Mr Fares were to be a one third joint venturer in relation to each of those successive projects, and Mr Barrak was to be another one third joint venturer, and Ms Haviland and Mr Rix were to comprise together the remaining one third joint venturer, upon the initial footing that PDD and/or Mr Fares would be remunerated for the architectural design work in relation to the original eight home unit development, but upon the later footing that they would not be remunerated at all for architectural design work in respect of the fourteen home unit development, other than of course by way of effective sharing of one third of the capital expected profits on resale of the Nelson Bay land. Subject thereto, the three parties or party groups were mutually intended to be, and would be effectively partners or joint venturers together in equal shares. In particular, so far as the position of Ms Haviland and Mr Rix extended, and upon which Concrete relied in the presentation of its case, neither PDD nor Mr Fares was to be the builder of either development.
The circumstances in which Ms Haviland and Mr Rix made payment of the sum of $27,000.00 into the joint bank account of the venturers on 19 April 1999 became the focus of attention in the course of the hearing, because of the bearing of that circumstance, at least indirectly, upon the central issue or issues in the proceedings, which I have last addressed and resolved. Those circumstances have been, at least for the most part, already identified in these reasons.
Concrete contended that the somewhat belated production by Mr Barrak of his informal accounting statement to Ms Haviland (Exhibit A7), containing as it did the words ‘architectural plans, DA and CC’, and reference to the payment of $27,000.00 made to PDD earlier in April 1999 by Mr Barrak, being a payment which, according to Ms Haviland’s evidence, was dissembled from her until she received that accounting statement, constituted an implausible attempt on the part of Messrs Barrak and Fares to combat the so-called manifest inconsistency arising by way of PDD’s purported reliance on an agreement, supposedly reached with Ms Haviland in late October 1998, to pay for disbursements required to expedite the application for the development approval and the issue of a construction certificate in relation to the original eight home unit development.
In support of that contention, Concrete pointed to the following objective circumstances:
(i)no reference was made to the Council expedition agreement in PDD’s pleadings; I observe that PDD’s amended defence and cross-claim filed as late as 17 March 2004, which I have earlier set out in considerable detail in these reasons because of the breadth of PDD’s allegations contained therein, was lengthy and complex;
(ii)Mr Barrak made no reference to that alleged Council approval expedition agreement in his original affidavit sworn 24 March 2004, a matter which he was obliged to concede under cross-examination; Mr Barrak further conceded under cross-examination moreover that the alleged expedition agreement was raised for the first time when he was giving his viva voce evidence;
(iii)Mr Fares made no reference to the alleged expedition agreement in his affidavit of 22 October 2003 which Mr Barrak prepared for Mr Fares in the proceedings, and which again Mr Barrak found himself obliged to concede in cross-examination; that affidavit was not read by PDD, but was tendered by Concrete as evidence in its case; sub-par 12(f) of that Fares affidavit of 22 October 2003 contained the following:
‘[PDD] has not received any reward for the approved architectural plans for the development of the property for 14 units. The payment of $27,000 on 19 April 1999… relates to disbursements for an application to Port Stephens Council for 8 units… Parramatta has not received any moneys or reward whatsoever in respect of the DA for 14 units which is the subject of these proceedings.’
(iv)Ms Haviland was emphatic in her testimony that no such agreement as to expedition was ever made; in any event, the very notion of disbursements relating to expedition was either inconsistent with the surrounding circumstances or at least doubtful in that regard at best; the same plans for a development consent had to be prepared when it became appropriate to apply for the same, whether or not the development application was to be expedited; and
(v)the description, which Mr Barrak accorded to the $27,000.00 payment in the contemporaneous documents (eg the cheque butt (Exhibit A6) and the Barrak schedule (Exhibit A7)) brought into existence in 1999, made no reference whatsoever to expedition; moreover Mr Barrak conceded his awareness of the reason why Ms Haviland required the financial information the subject of that schedule he prepared, namely to provide the same to her accountants for income tax reporting purposes.
I agree with the further submissions of Concrete that in the course of his cross-examination, Mr Barrak sought to avoid the inferences normally and rationally arising from the language of the documents to which I have above referred, by characterising the same as merely prepared in ‘shorthand’ form. The differing descriptions given by Messrs Barrak and Fares, concerning the nature and purpose of the $27,000.00 payment, did not however assist the credibility of PDD’s case on that subject, or generally in terms of the credibility of Messrs Barrak; I refer to the following examples at least cumulatively:
(i)‘… relates to disbursements for an application to Port Stephens Council for 8 units being DA number D483/99 which was approved on 24 September 1999’ (par 12(f) of Mr Fares’ affidavit of 22 October 2003 prepared by Mr Barrak), that description implicitly pointed to disbursements in the nature of council fees, none of which were components of the $27,000.00 the subject of PDD’s evidence;
(ii)virtually the same description appears in Mr Fares’ affidavit of 24 March 2004, being of course the affidavit which purported to replace his earlier affidavit of 22 October 2003, which was not read at the hearing of the proceedings;
(iii)in his oral evidence given on 1 April 2004, Mr Fares said that this sum of $27,000.00 paid to him or PDD was incurred ‘[f]or staff, photocopying and all other expenses that my office incurred at the time of the preparation: plans, photocopying plans, printing plans…, plans, faxes…’;
(iv)in his rather belated affidavit of 24 March 2004, which was his only affidavit read in the proceedings, Mr Barrak said in effect that in April 1999, he had undertaken relevant calculations for PDD (whereof he incidentally was no longer at least formally a director), and had concluded that ‘[w]e need funds to pay the draftsmen and other bills’); he said thereafter that he telephoned Ms Haviland and ‘informed her of the… $27,000.00 outstanding for draftsmen’; and
(v)however the documents purporting to evidence payments made to draftsmen suggested that draftsmen had been progressively paid within a relatively short period of time of invoices having been rendered; moreover at the time of the payment of the $27,000.00 made out of the NAB joint bank account of the joint venture parties, there were apparently no draftsmen retained by PDD and then unpaid.
The submissions of Concrete, relevant to the veracity of PDD’s case in relation to the $27,000.00 payment, next addressed Mr Fares’ evidence in more detail; I agree with the thrust of those submissions to the effect that his evidence as to the $27,000.00 payment was particularly unsatisfactory, and had changed in the course of the hearing. Those submissions were in summary as follows:
(i)in his affidavit of 24 March 2004, Mr Fares said that when preparing the plans for the fourteen home unit development, he worked with ‘… one draftsman full time’;
(ii)in his oral evidence, he said in effect that no one was employed to assist him at the time of the fourteen units; and
(iii)yet he confirmed that for the purpose of producing the plans for the eight home unit development, he expended the controversial amount of $27,000.00 wholly in payment of wages of persons he employed for that purpose.
Mr Fares’ responses in cross-examination produced inconsistencies in his account as to the purported expenditures aggregating approximately $27,000.00 in respect of the first set of plans, and in relation to the circumstances whereby the second set of plans came to be prepared; for instance in the latter case, his evidence was somewhat confusingly expressed as follows:
‘… I did all the work. I think I used someone on the 14 for just a little bit but he didn’t continue. That’s why my reference to this person, I remember now that this person he only worked in maybe very very minor minor time but he wasn’t at all in charge, or he did much work on the 14’.
I need go no further into the detail of what was careful and responsible cross-examination on the part of senior counsel for Concrete, and which exposed inconsistencies in PDD’s case, being inconsistencies leading to the conclusion, in my opinion, that the respective testimonies of Messrs Fares and Barrak, as to the circumstances of preparation of the plans and drawings for the eight and fourteen home unit developments, and the basis for governing the remuneration of PDD and Mr Fares, were substantially contrived.
In my opinion, no reliance can be justifiably placed on the accuracy or reliability of any internal documents of record relating to PDD or Mr Fares which were tendered in PDD’s case, unless independently verified by other evidence; by ‘independently verified’ I have the misfortune to conclude, in the light of his professional status, that I find myself obliged to exclude Mr Barrak as a source of verification of any critical evidentiary issue in dispute, in the absence of verification by objective circumstances, or by a witness other than Mr Fares (or for that matter Mr Barrak). As to the internal documents comprising a number of purported fee notes from draftsmen, the name bore no independent documentary verification, and co-incidentally totalled slightly more than $27,000.00, thereby purportedly demonstrating that neither PDD or Mr Fares profited at all from that payment. Only three invoices, which I have earlier reproduced, bore any purportedly adequate detail of times and dates of engagement.
A further principal consequence, inherent in Mr Fares’ explanations, as Concrete rightly submitted, is that if the agreement of PDD was to provide architectural services as part of a design and build agreement, it would not have been to the point whether Mr Fares undertook the drafting personally, or whether PDD engaged the draftsmen. In either case, it was to be reasonably expected, on the basis of any such alleged retainer, that PDD would bear the cost of business activities to be undertaken by PDD, being a cost that PDD would necessarily have to incur in the course of earning its alleged entitlement to receive beneficially payment of ten per centum (10%) of the construction costs pursuant to the alleged design and construct contract said by PDD to have been made in its favour by or on behalf of the co-owners of the Nelson Bay land.
In any event, given that PDD and/or Mr Fares was to be the builder upon the basis alleged, why the requirement for payment of the $27,000.00 in the first place, Concrete submitted rhetorically, and rightly so, even if all of the supporting documentation put in evidence had been independently verified.
Conclusion on the third proposition of legal significance formulated by Concrete
Upon the basis of my findings that no agreement was made in September/October 1998 (or indeed at any other time) that PDD and/or Mr Fares (‘PDD’) would be the builder of the Nelson Bay development, whether under a design and construct contract or otherwise and that the only agreement relevantly made was for PDD to prepare architectural plans for the eight unit development, for which it was rewarded by the payment of $27,000.00, it follows that the joint venture of Landmark and Toyama received a licence, implied by the law of copyright, to use the plans of PDD for the purpose of building the fourteen unit development in accordance with the consent of Port Stephens Council granted on 10 May 2000. Moreover whilst not strictly relevant in regard to that principal issue, given my findings of fact, it may be observed that despite the denial by PDD that such a licence had passed to the joint venture, nevertheless in the letter of 10 July 2002 from Landmark to Tangate earlier extracted in these reasons, Landmark (of whom Mr Fares was and still is a director and shareholder) stated, inter alia, that ‘[t]he full size copy of the approved plans… may be collected from our office’.
It therefore further follows, on the authority of Beck, Blair, Acohs and Bourke, that a term should be implied by law in the relevant contractual relationship to the effect that PDD’s said corporate clients became entitled to use the relevant architectural plans for the purpose for which they were created. Such a licence, on the authority for instance of Beck, Blair, Ng and Torpey extends in principle to any purchaser of the subject property to use the plans for the purpose of developing the land to which the same relate. As was said by Spigelman CJ in Torpey at 549, ‘[o]n the authority of Beck it would readily be concluded… that such a licence conferred permission to construct the dwellings in accordance with the plans and to transfer the right to do so to a purchaser of the property.’ On that same point, again in Torpey, Young CJ in Eq stated ‘[t]he authorities show that ordinarily the licence is considered as transferable together with the land to which it relates where the particular purpose for which the licence was granted was in connection with the land which was assigned.’ The circumstances that Concrete was a purchaser from trustees for sale acting beneficially on behalf of Landmark and Toyama, albeit appointed by the Supreme Court, can make no difference.
Despite this line of authority, the position was taken by PDD from the outset, as has been stated throughout my reasons, that even if a licence could be implied to extend to the joint venture companies, yet on the authority of Torpey, such a licence could not pass to Concrete per medium of the trustees for sale appointed pursuant to s 66G of the Conveyancing Act. It was emphatically submitted by PDD that although no mortgage is here relevantly involved, yet on the facts the present case is ‘on all fours’ with Torpey which, on the further submission of PDD, stands for ‘the principle that an implied licence for copyright must be specifically assigned to subsequent acquirers of the property in title.’ In this context, PDD thereby sought to equate a mortgagee, exercising power of sale upon a mortgagor’s default, to trustees for sale appointed in circumstances of disputing co-owners of land.
As I have emphasised in my earlier discussion of Torpey at some length, such an analogy is misconceived. In my opinion, one cannot equate trustees for sale of realty appointed by the Supreme Court pursuant to s 66G of the Conveyancing Act with a mortgagee exercising power of sale. Trustees for sale are analogous to administrators or receivers who exercise power of sale of property pursuant to authority confined by an appropriate instrument, in order to gain proceeds of sale for distribution to creditors. Other analogies of vendors, not being beneficial owners, also come readily to mind. In effect, trustees for sale in the current context stand ‘in the shoes’ relevantly of the co-owners of property, being co-owners normally in dispute.
There is therefore no precept in law, nor any basis in fact, that operates to prevent the implied licence to use the plans and drawings for the fourteen unit development on the Nelson Bay land being transferred from the joint venture companies to Concrete (being a purchaser for value) per medium of the trustees for sale involved in the circumstances of these proceedings. As was submitted by counsel for Concrete, ‘to the contrary, the relevant factual and regulatory matrix strongly support the notion that the licence be impliedly transferred with the land for the benefit of the purchaser’.
In my opinion Concrete’s third main basis for rejection of the case for breach of copyright is therefore also well founded in the circumstances and in accord with established principles. It follows that Concrete has been impliedly licensed to use the architectural plans the subject of this litigation on each of the three basis postulated by Concrete and PDD’s cross-claim must fail. At the request of Concrete, I reserve the question of costs for submissions in the light of the reasons I have provided, including the issue as to who should be the subject of costs orders. I have made directions accordingly.
I conclude by observing the underlying reasons for this litigation are mystifying. It is somewhat enigmatic that such expensive and protracted litigation could have occurred in circumstances where Landmark and Toyama made such a substantial capital profit from their Nelson Bay venture in such a relatively short period of time, and why the persons respectively standing behind those companies have become locked into expensive litigation in this Court and (shortly) in the Supreme Court, and why Concrete as a third party has become embroiled in such extraordinary litigation in the first place. Perhaps there is more to the circumstance of this litigation than ‘meets the eye’, but whatever the case may be, the Court has not been spared the task of a ten day hearing and of subsequent consideration of hundreds of pages of written submissions, and in the case of the respondents PDD and Mr Fares, containing a considerable body of material having no or no sufficient bearing upon the critical issues falling for resolution.
I certify that the preceding three hundred and three (303) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti.
Associate:
Dated: 15 October 2004
Counsel for the Applicant/Cross-Respondent:
BW Rayment QC with DT Kell
Solicitor for the Applicant/Cross-Respondent:
Oliveri Attorneys
Counsel for the Respondents/Cross-Claimant:
DH Murr SC with TA Hall (1 & 2 April 2004)
TA Hall (8 April 2004)
BHK Donovan QC with TA Hall (23, 27, 28 & 29 April, 13 & 17 May & 3 June 2004)
Solicitor for the Respondents/Cross-Claimant:
Proctor & Associates
Dates of Hearing:
1, 2 & 8 April, 23, 27, 28 & 29 May & 3 June 2004
Date of Final Submissions
27 July 2004
Date of Judgment:
13 October 2004
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