Tamawood Limited v Habitare Developments Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2015] FCAFC 65

In 2007, Tamawood issued proceedings in the Federal Court of Australia against Habitare Developments, Bloomer Constructions and Mondo Architects (and their directors) alleging infringement of Tamawood’s copyright in two plans for project homes called the Torrington and the Conondale/Dunkeld (“Dunkeld”).  Among other things, the primary judge found that Tamawood’s copyright in only the Torrington plan had been infringed.  In its decision handed down on 21 May 2015, the Full Federal Court held that copyright in both of Tamawood’s plans had been infringed.

Background and relationship between Tamawood, Habitare and Mondo

Tamawood designs and builds project homes and Habitare (now in liquidation) was a developer of low cost, high density housing.  Habitare entered into discussions with Tamawood about designing and building low cost housing at two sites in Brisbane (development projects).  Tamawood prepared the Torrington and Dunkeld plans for construction on the two sites.

Habitare, with Tamawood’s consent, sought and received Council approval for the development projects, which included approval of the use of the two Tamawood plans.  The development approval was conditional upon Habitare constructing buildings “generally in accordance with” the Tamawood plans on the two sites.

Ultimately, Habitare and Tamawood could not come to agreement regarding the building of the development projects and Habitare decided not to engage Tamawood to build the dwellings on the two sites.  Habitare subsequently approached Mondo to prepare constructions plans for the development projects.  Mondo prepared plans (called Duplex 1 and Duplex 2) and obtained building certificates based on those plans.  Habitare then engaged Bloomer to complete construction of the development projects and it was not in dispute that the dwellings that were constructed by Bloomer were in accordance with the certified Mondo plans.

Tamawood commenced proceedings against Habitare, Bloomer and Mondo for copyright infringement, on the basis that the Mondo plans infringed the copyright subsisting in Tamawood’s plans.  Mondo also sued Habitare and its directors for misleading and deceptive conduct, on the basis that Habitare had assured Mondo that there were no outstanding issues with Tamawood concerning the use of Tamawood’s plans.

Trial decision – infringement found only of Torrington plan

At first instance, Collier J held that Habitare and Mondo had infringed Tamawood’s copyright subsisting in the Torrington plan but not the Dunkeld plan and rejected Habitare’s argument that Tamawood had authorised it to use the house plans under a contractual licence.  The primary judge also held that even though the Bloomer parties (being Bloomer Construction and its director, Mr Bloomer) had infringed Tamawood’s copyright, they were “innocent infringers” under s 115(3) of the Copyright Act, that Habitare’s directors had not authorised Habitare’s infringement of Tamawood’s copyright and that Tamawood was not entitled to additional damages.  As a result of the decision that the Bloomer parties were innocent infringers, Tamawood was ordered to pay the Bloomer parties’ costs, a portion of which were ordered to be paid on an indemnity basis.  Habitare was also found to be liable to Mondo for misleading or deceptive conduct as were two of its employees.

Full Court’s findings on appeal

On appeal, the Full Court held that:

Licence

  1. Tamawood had granted a bare licence to Habitare to use its plans.  Pursuant to the licence, Habitare was able to use the plans for the purposes of obtaining planning approval from the council but the licence to use those plans terminated when Habitare decided not to proceed with Tamawood as builder. 

Copyright in Dunkeld plans  

  1. Tamawood’s copyright in the Dunkeld plan had also been infringed.  The majority held that, when determining infringement of copyright, the question of whether or not there is a causal connection between the two works (ie whether there has been copying) needs to be determined before ascertaining whether or not there has been a substantial reproduction of the copyright work.  However, it was acknowledged that a degree of resemblance may lead to an inference of copying and the two questions necessarily overlap.  The majority held there were only minor differences between Tamawood’s Dunkeld plan and Mondo’s Duplex 1 and that the factual considerations which led the primary judge to conclude that there was a causal connection between Tamawood’s Torrington plan and Mondo’s Duplex 2 were equally relevant to the question of causal connection between the Dunkeld plan and the Duplex 1 plan.  According to their Honours, the “fundamental relationship between the internal spaces and the exterior of the building is substantially, indeed overwhelmingly, the same”.  The majority therefore held that the Mondo Duplex 1 plan substantially reproduced the Dunkeld plan as the essential features and substance of the Dunkeld plan had been copied and it was clear that the Dunkeld plan was embedded in the Duplex 1 design. 

Habitare’s directors authorised company’s infringement  

  1. Habitare’s directors had authorised the infringement of Tamawood’s copyright.  The Full Court held that the evidence presented a case overwhelmingly in favour of the inference that the two directors had authorised the infringements.  It was held that the directors knew that Habitare’s choice was either to avoid the risk of infringement by obtaining new development approvals or seek to have new plans drawn that were “generally in accordance with” Tamawood’s plans approved by the Council, and risk infringement.  By approving or endorsing the latter approach, which was the obvious shortcut, the directors knew that there was a risk of infringing copyright and that obtaining new development approvals would have avoided that risk. 

Additional damages  

  1. Tamawood was not entitled to additional damages.  Whilst flagrancy is not a pre-condition to a conclusion that additional damages should be awarded, Tamawood presented its case for additional damages as one based on flagrant conduct.  Having concluded that the conduct was not flagrant, there was no error in the trial judge’s decision not to award additional damages. 

Innocent infringement of Bloomer parties  

  1. The primary judge was correct in holding that the Bloomer parties had innocently infringed Tamawood’s copyright pursuant to section 115(3) of the Copyright Act 1968 (Cth).  However, the primary judge’s decision that Tamawood pay the Bloomer parties’ costs, including costs on an indemnity basis (subsequent to a settlement offer made to Tamawood by the Bloomer parties), was overturned.  The Full Court held that even though the primary judge found the Bloomer parties to be innocent infringers, it did not follow that Tamawood should be exposed to orders for costs in favour of the Bloomer parties, particularly costs on an indemnity basis.  A finding under s 115(3) merely protected the Bloomer parties from a claim for damages and rendered them liable only to an account of profits.  The Bloomer parties were still held to have infringed Tamawood’s copyright and also put Tamawood to proof of the whole of its claim, therefore the Full Court held that the Bloomer parties should pay their own costs.

Lessons for developers and those who commission copyright works

Taking the shortcut is not always the easiest (or safest) route – Habitare’s decision to commission plans “generally in accordance with” Tamawood’s plans, though not determinative of copyright infringement, opened Habitare up to a risk of infringement, which was ultimately found by both the trial judge and the Full Court.  This case again highlights that if a causal connection exists, it will generally be difficult to avoid a finding of substantial reproduction.  When developing house plans, developers and others should not refer to anyone else’s plans, unless they have permission to use those plans.  It is also useful for a licence to use plans to be in writing and to explicitly set out the terms of the licence.