FEDERAL COURT OF AUSTRALIA

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

THE COURT ORDERS THAT:

1.    The parties confer and submit within 14 days agreed or competing proposed orders which reflect the reasons for judgment published today.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

THE COURT ORDERS THAT:

1.    The parties confer and submit within 14 days agreed or competing proposed orders which reflect the reasons for judgment published today.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

THE COURT ORDERS THAT:

1.    The parties confer and submit within 14 days agreed or competing proposed orders which reflect the reasons for judgment published today.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

greenwood j:

1    These proceedings are concerned with three appeals (and related notices of contention) arising out of a judgment in this Court in proceedings in which the appellant in the first appeal, Tamawood Limited (“Tamawood”), claimed, put simply and relevantly for present purposes, relief against a developer, Habitare Developments Pty Ltd (“Habitare”), and its related entities, Habitare’s architects, Mondo Architects Pty Ltd (“Mondo”), and Habitare’s builder, Bloomer Constructions (Qld) Pty Ltd (“Bloomer”), arising out of contended infringements (and authorisations of those infringements) of Tamawood’s copyright subsisting in plans for particular project homes described as the Torrington and the Conondale/Dunkeld (which I will call the “Dunkeld”) by two-dimensional and three-dimensional reproduction of the copyright works.

2    Relief was also claimed in the principal proceeding against a number of individuals: Mr Peter O’Mara, a director of Habitare; Mr David Johnson, another director of Habitare (although Mr Johnson’s trustee in bankruptcy did not appear in the principal proceedings to resist Tamawood’s claims against Mr Johnson); and Mr Wayne Bloomer, a director of Bloomer. Apart from Tamawood’s original proceedings, Mondo brought proceedings against Habitare, Mr Peter Speer who worked for Habitare, and Mr Shane O’Mara (Mr Peter O’Mara’s son) who also worked for Habitare, for contended contraventions of the Trade Practices Act 1974 (Cth) which, of course, is now the Competition and Consumer Act 2010 (Cth).

3    I have had the benefit of reading in draft the joint reasons for judgment of Jagot and Murphy JJ. In those reasons, their Honours set out in more precise detail the various parties to the primary proceedings and the nine issues agitated before the Full Court in respect of the three appeals and the notices of contention. I set out those nine issues and my position on each issue at [92] to [100] of these reasons.

4    In these reasons, I propose to address the question of whether Tamawood’s copyright in the plan for the Conondale/Dunkeld duplex was infringed in the way contended for by Tamawood on appeal.

5    A short synopsis of the background facts (particular aspects of which will need to be examined in a little detail) is, for present purposes, this. Tamawood is a company which produces plans for low cost project housing in Australia which it uses for building dwellings on relevant sites. Habitare was at all relevant times a company involved in the construction of “low-cost, intensive housing projects in Brisbane”: Tamawood Limited v Habitare Developments Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) (No 3) [2013] FCA 410 (the “primary judgment”) at [7]. In 2005, Habitare (through related entities continued reference to which is no longer relevant), engaged in discussions with Tamawood with a view to Tamawood producing plans for low cost housing to be built by Tamawood for Habitare at two sites described as Hamish Street, Calamvale in Brisbane and Gawler Street/Norris Road, Brackenridge in Brisbane.

6    Plans relating to the two sites were produced by Tamawood for a single-storey duplex called the Dunkeld, and a two-storey duplex called the Torrington. Habitare then lodged applications with the Brisbane City Council so as to obtain development approval for a housing development on each site. Habitare, with Tamawood’s agreement, lodged Tamawood’s plans for the Torrington and the Dunkeld with the Brisbane City Council as part of the development approval application. The Brisbane City Council issued a development approval for the Hamish Street development on 7 July 2006. Condition 1 of the development approval was, relevantly, in these terms:

Carry out the approved development generally in accordance with the approved drawing(s) and/or document/s.

GUIDELINE

The condition refers to the approved plans, drawings and documents to which the approval relates and is the primary means of defining the extent of the approval. Approved Plans, drawings and Documents are stamped referred to in the Approval and are dated to reflect the date of approval by the Council’s Delegate.

7    The Brisbane City Council issued a development approval for the Gawler Street/Norris Road development on 1 March 2006. Condition 1 of the approval is in the same terms as Condition 1 quoted at [6] of these reasons.

8    Habitare and Tamawood were ultimately unable to agree upon the terms and conditions of a commercial engagement under which Tamawood would build houses based on its plans on each site for Habitare. Habitare did not use Tamawood to construct dwellings on either site. In order to develop plans for dwellings to be built on each site, Habitare approached Mondo to develop house plans for construction on each site. In order to comply with Condition 1 of each development approval, the dwellings to be constructed on each site were required to be “generally in accordance with the approved drawing(s) and/or document/s”. The approved drawings were the Tamawood plans. Mondo prepared plans for dwellings for each site to enable building certificates to be obtained for construction. Those building certificates were obtained by Habitare based on the Mondo plans. Habitare ultimately engaged Bloomer to construct or complete construction of dwellings on each site. Structures reflecting a three-dimensional reproduction of the Mondo plans were erected on each site.

9    Although the plans for dwellings on each site were required to be generally in accordance with the approved drawings (and thus Tamawood’s drawings for Torrington and Dunkeld), Mr Raymond Sweeney, a director of Mondo, gave evidence before the primary judge in an affidavit sworn 20 September 2011, that the parameters of the development approval included such things as the gross floor area; the size, shape and height of the dwellings; the number of dwellings; the distances between dwellings; and the distances between the dwellings and the boundaries. Mr Sweeney also gave evidence that based on his experience as an architect, the internal design of the dwellings is not “evaluated” or taken into account by the Brisbane City Council in the development assessment process except where it creates an impact on one of the assessment parameters. At [200], the primary judge notes the evidence of Mr Scott Richards (set out in an expert report) to the effect that amendments which can be considered as “generally in accordance with” an approved development (for the purposes of the Integrated Planning Act 1997 (Qld)) relate to:

… less substantial matters that have no bearing on town planning generally and no impact on town planning criteria or development assessment matters (para 4.2.14). Materially, Mr Richards opines further that such amendments can include amendments to internal layouts, such as removal of walls and rearrangement of rooms, but that more substantial amendments proposed to an approved development would require lodgement of a new development application (para 4.2.14 and para 4.2.27).

                                [emphasis added]

10    At [201], the primary judge observes, however, that Mondo was under some pressure to produce documents which “generally accorded” with the plans of Tamawood which had already received development approval.

11    Arising out of these events, Tamawood contended that the Mondo plans for the single-storey and two-storey duplexes infringed its copyright in the Dunkeld and Torrington plans respectively with the result that the two-dimensional drawings and the three-dimensional structures on the sites were reproductions in a material form of Tamawood’s copyright works in each case. As mentioned, Tamawood maintained proceedings against the developer (Habitare), the builder (Bloomer), Mr Bloomer, the directors of Habitare (Mr Peter O’Mara and Mr Johnson) and Mondo.

12    In the result, the primary judge ultimately made a number of declarations on 7 May 2014 arising out of the trial of the action and the reasons for judgment published on 7 May 2013. The relevant declarations were these:

2.    … in making [the two-storey] drawings for the purposes of the Habitare developments at the Calamvale and Brackenridge sites, Mondo infringed [Tamawood’s] copyright in the Torrington drawings.

3.    … in building dwellings at the Calamvale and Brackenridge sites in accordance with Mondo’s [two-storey] drawings, the Habitare Respondents infringed [Tamawood’s] copyright in the Torrington drawings.

4.    … the Habitare Respondents authorised Mondo’s infringement of [Tamawood’s] copyright in the Torrington drawings …

5.    … the Habitare Respondents authorised Bloomer Constructions’ innocent infringement of [Tamawood’s] copyright in the Torrington drawings in providing to Bloomer Constructions the [two-storey] drawings created by Mondo for use in the construction of dwellings at [the] Calamvale and Brackenridge sites.

6.    … the Habitare Respondents engaged in a common design to infringe [Tamawood’s] copyright [in the Torrington drawings].

7.    … [Tamawood] is not entitled to any additional damages pursuant to section 115(4) of the Copyright Act.

13    Apart from these declarations, the primary judge granted two injunctions and made costs orders. In the orders made on 7 May 2014, the “Habitare Respondents” are defined to mean Habitare and three Habitare entities no longer relevant for present purposes. As appears from the declarations, the primary judge found for Tamawood in respect of the Torrington two-storey plan but not the single-storey Dunkeld plan. The primary judge rejected Habitare’s contention (and that of Mr Shane O’Mara) that Tamawood had conferred upon Habitare and Mondo a licence (contractual or non-contractual) for the purposes of s 36(1) of the Copyright Act 1968 (Cth) (the “Act”) to exercise the reproduction right in s 31(1) of the Act in Tamawood’s plans. The primary judge also dismissed Tamawood’s claims against the directors of Habitare, Mr Peter O’Mara and Mr Johnson for authorisation of Habitare’s infringement of Tamawood’s copyright in the Torrington plans. As reflected in the declarations, the primary judge found that Tamawood was not entitled to any additional damages pursuant to s 115(4) of the Act as against Habitare or the directors of Habitare or Mondo in respect of conduct in connection with the Torrington plans. The primary judge also made declarations on 26 November 2013 in these terms:

1.    In building dwellings at the Calamvale and Brackenridge sites in accordance with Mondo’s [two-storey] drawings, Bloomer Constructions innocently infringed [Tamawood’s] copyright in the Torrington drawings.

2.    Wayne Norman Bloomer authorised Bloomer Constructions’ innocent infringement of the applicant’s copyright in the Torrington drawings referred to in the preceding order.

3.    In respect of the infringements of [Tamawood’s] copyright by Bloomer Constructions and Wayne Norman Bloomer those respondents made out a defence under s 115(3) of the [Act], commonly known as “innocent infringement”.

14    In the Mondo proceedings, the primary judge found contraventions of s 52 of the Trade Practices Act 1974 (Cth) by Habitare and found that Mr Speer and Mr Shane O’Mara were knowingly concerned in Habitare’s contraventions and thus also liable to Mondo in respect of those contraventions by Habitare.

15    In their draft reasons for judgment, Jagot and Murphy JJ identify nine issues that arise on these appeals (and the notices of contention) for determination. I agree that these proceedings before the Full Court raise those nine issues and I will not repeat at this point in these reasons a list of each separate question. Apart from later setting out my position on each of the nine issues before the Full Court, the principal question I propose to address in these reasons is this: If Tamawood is not precluded by reason of the pleadings in the proceeding and the way in which the case was conducted before the primary judge from arguing that an inference of indirect copying by Mondo should be drawn, did the primary judge err in finding that Mondo did not infringe Tamawood’s copyright in the Dunkeld plan?: Issue 3 before the Full Court.

16    I should immediately say that I agree with the observations of Jagot and Murphy JJ that Tamawood is not precluded, by reason of the pleadings or the conduct of the case before the primary judge, from arguing that an inference of indirect copying by Mondo should be drawn. The question then is whether having regard to all the relevant circumstances such an inference should be drawn. For my part, I respectfully disagree with the views of Jagot and Murphy JJ on that question. In my view, Mondo’s Duplex 1 plan does not infringe the copyright subsisting in Tamawood’s Dunkeld plan for the reasons set out in these reasons.

17    In the course of the appeal, counsel for Tamawood handed up to the members of the Court (with copies to the parties) two enlarged plans which frame, at least so far as the plans are concerned apart from other contextual issues, the question of whether Mondo’s plan for a single-storey duplex (Duplex 1) is a reproduction in a material form of Tamawood’s Dunkeld plan. The plan in suit is called the Dunkeld plan but that plan is sometimes known as “Stad 939” and also Conondale/Dunkeld. Each enlarged plan is a plan for a single-storey duplex. Each plan contains a layout for such a duplex on each side of a concrete block common wall and thus the floor plan for the right-hand side of that common wall is a mirror image of the plan for the left-hand side of the common wall. It is therefore only necessary to have regard to the plan for the left-hand side of the duplex in each case. In the reasons for judgment of the primary judge, there are many A4 reproductions of plans which are very difficult to read. Similarly, annexed A4 plans to affidavits are difficult to read. No doubt for this reason, counsel for Tamawood delivered up an enlargement of the two immediately relevant plans in suit on this issue. Accordingly, I have incorporated within these reasons the plan for the left-hand side of each of the enlarged plans as delivered up by counsel for Tamawood. The first plan set out below is Tamawood’s copyright work in suit labelled “Stad 939/Conondale/Dunkeld” and the second plan set out below is Mondo’s plan for its Duplex 1:

Stad 939 Conondale/Dunkeld

Mondo’s Duplex 1

18    I will return to each of these plans later in these reasons.

Some relevant principles

19    In S W Hart & Co Pty Ltd v Edwards Hot Water Systems (1985) 159 CLR 466 at 472, Gibbs CJ observed (with Mason J agreeing at 478 and Brennan J agreeing at 491) that the notion of reproduction for the purposes of copyright law involves two elements: resemblance to, and actual use of the copyright work, or put another way, a “sufficient degree” of objective similarity between the two works in suit and “some causal connection” between, in this case, Tamawood’s Dunkeld plan and Mondo’s plan. The Chief Justice then adopted at 472 the observations of Lord Reid in Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 W.L.R. 273 at 276 that “[b]roadly, reproduction means copying, and does not include cases where an author or compiler produces a substantially similar result by independent work without copying” [emphasis added]. These two issues of a “sufficient degree of objective similarity” between the two works and “some causal connection” between them are discrete yet overlapping issues.

20    The issues are discrete in the sense that in the absence of some causal connection, objective similarity (or for that matter a high degree of reconciliation) between the two works does not give rise to reproduction for the reasons Lord Reid identifies. They overlap, however, because an assertion of a causal connection between the claimant’s work and that of the contended infringer is often made on the footing that an inference of access to and use of the claimant’s work (in the absence of an admission) ought to be drawn because of, generally, a high degree of similarity or striking similarity between the two works (coupled with opportunity (access)) and often also coupled with a failure by the contended infringer to adequately explain that party’s assertions of independent origination (authorship) of the work said to infringe: an analysis sometimes called “probative similarity” (Eagle Homes Pty Ltd v Austec Homes Pty Ltd (“Eagle Homes v Austec”), (1999) 87 FCR 415, Lindgren J at [84], Finkelstein J agreeing at [111].

21    The issues are also discrete in the sense that once the issue of a causal connection is made good (absent an admission) by reason of an inference drawn based upon the degree of similarity (relevant in the particular case) between the two works, a further question must nevertheless be addressed of whether there is a “sufficient degree” of objective similarity so as to amount to reproduction of the copyright work in suit: sometimes called the “second limb” or more commonly “substantial similarity” (Eagle Homes v Austec at [85]).

22    Care needs to be taken with the use of the “rolled up” term “copying”. Generally, when the term “copying” is used in the authorities, the term is used in the context of the making of a finding of fact of whether a causal nexus has been made good between the two works. That is to say, use of the copyright work consciously or unconsciously “although it must be said that in the case of works such as architectural plans it would be surprising to find many cases of unconscious copying”: Clarendon Homes (Aust) Pty Ltd v Henley Arch Pty Ltd (“Clarendon v Henley Arch”) (1999) 46 IPR 309, Heerey, Sundberg and Finkelstein JJ at [24].

23    Once the causal link is made good a further question is whether the whole or a substantial part of the copyright work has been reproduced.

24    In Clarendon v Henley Arch, the Full Court said this at [27]:

The question whether, in the absence of an admission, copying (that is a causal nexus between the plaintiff’s work and the defendant’s work) is established is not the same as the question whether, once copying has been established, the whole or a substantial part of the plaintiff’s work has been appropriated. We accept that very often the two issues will overlap. But nevertheless they are discrete issues and the answer to one does not necessarily produce an answer to the other. For example, in order to prove that there has been a copying it is usual to attempt to show opportunity, that is access to the plaintiff’s work, and such similarities between the plaintiff’s work and the defendant’s work as makes independent creation by the defendant unlikely. Such similarities may or may not be substantial. They can include common error, sometimes deliberately inserted in the plaintiff’s work. Paradoxically, there will be occasions where dissimilarities may provide the basis for an inference of access and copying.

                                [emphasis added]

25    See also Tamawood Limited v Henley Arch Pty Ltd (2004) 61 IPR 378, Wilcox and Lindgren JJ at [44]; Pacific Gaming Pty Ltd v Aristocrat Leisure Industries Pty Ltd (“Pacific Gaming v Aristocrat”) (2001) 116 FCR 448, Sackville, Finn and Kenny JJ at [19].

26    Whether a causal link is made good is a question of fact.

27    To the extent that proof of a causal link rests upon an inference drawn from primary facts of access, opportunity and objective similarities between the relevant works, the objective similarities would normally need to be “sufficiently great” (Pacific Gaming v Aristocrat at [19]) or in the case of project home plans “[i]t is understandable that in such cases of project home plans there will be an emphasis on the need for close similarity if infringement [an observation made in the context of probative similarity or causal link] is to be proved”: Eagle Homes v Austec at [84].

28    However, the two elements of causal link and sufficient objective similarity “are but aspects of ‘reproduction’” and it can be “artificial to consider them separately … where actual copying [access to and use of the copyright work] is found to have occurred”: Eagle Homes v Austec at [98]. That follows because a finding of copying “can add significance to objective similarity”: Eagle Homes v Austec at [98].

29    It should also be remembered that the notion of reproduction of a work in a material form (s 31(1)(a)(i) of the Act) includes a reference to reproduction of a substantial part of the work (s 14(1) of the Act) and thus the greater includes the lesser in the sense that the Act recognises a distinction between the “undifferentiated whole of a copyright work” (for example, a floor plan for a project home) and a substantial part of the undifferentiated whole of that work: see Eagle Homes v Austec at [70]. Thus, the copyright owner might seek to establish reproduction by showing “a sufficient degree of objective similarity” in the undifferentiated whole of the plan, or alternatively, by showing a substantial part of the work has been reproduced, or both.

30    Where the issue is whether the undifferentiated whole of the copyright work has been reproduced (rather than the isolation of a particular part of the work and then an examination of the quantitative and qualitative aspects of the part said to be taken), the question to be determined in circumstances where the copyright work is not precisely or exactly taken, is how closely must the impugned work resemble the copyright work before reproduction is made out. The answer, put generally, is that “a sufficient degree of objective similarity” in the circumstances of each case must be proved. The sufficiency of that degree is, however, influenced by the overlapping nature of the otherwise discrete questions.

31    In Eagle Homes v Austec, Lindgren J at [85] (Finkelstein J agreeing at [111]), in the context of a finding of actual copying (that is, opportunity, access and probative similarity) found error in reasoning to the following effect: because project home plans are simple drawings of the “commonplace”, lack “marked originality” and can be expected to have some similarities (as project home plans share certain features), it follows that sufficient objective similarity could not exist in the absence of a very close resemblance between the two project house plans. Lindgren J regarded that reasoning as flawed which led his Honour to also observe, in the context of a causal link made good by subjective copying, as follows at [86]:

It is reasonable, therefore, to think that copyright law is concerned to protect against subjective copying and that where subjective copying occurs there can be expected to be found an infringement, unless it transpires that the product is so dissimilar to the copyright work that the copyright work can no longer be seen in the work produced.

                                [emphasis added]

32    And at [91], Lindgren J also observed:

In no case concerning project homes of which I am aware where there has been such a finding of actual copying, has it been held that nonetheless the copier will not have infringed copyright unless there is in addition an extraordinarily close resemblance between his or her drawing and the copyright work. Rather, I think that the issue of sufficient objective similarity simply poses in the case of project homes, as in other cases, the usual question whether the copyright drawing can still be seen embedded in the allegedly infringing drawing, that is, whether the allegedly infringing drawing has adopted the “essential features and substance” of the copyright work: Hanfstaengl v Baines & Co [1895] AC 20 at 31 (Lord Shand) …

                                [emphasis added]

33    Thus, the Full Court regarded the issue, in the case of project home plans, of whether sufficient objective similarity exists as simply raising the usual question which is: Can the copyright drawing still be seen embedded in the impugned drawing or, put another way: has the impugned drawing adopted the essential features and substance of the copyright work?

34    Thus, the notion that there must be, in the case of plans for project homes, an extraordinarily close resemblance between the copyright work and the impugned work is “too stringent” a test for determining a sufficient degree of objective similarity so as to amount to reproduction. In expressing the test in the way described, Lindgren J for the Full Court was seeking to demonstrate that the near absolutism of exact reproduction (as a test) reflected in the reasoning of the primary judge (in that case) of the need for “extraordinarily close resemblance” as the measure of a sufficient degree of objective similarity (in a case of proven copying) unnecessarily goes beyond, as a matter of principle, the statutory concept of reproduction as explained in the authorities.

35    His Honour’s adoption of terms of emphasis such as embedded in, essential features and substance of the work, simply reflect the notion that what is required in cases involving plans for project homes (like any other copyright work) is a sufficient degree of objective similarity in the particular circumstances of the particular case measured by reference to the essential features and substance of the copyright work in suit as expressed in the form of the floor plan (in this case) and the form of expression of the impugned plan by the contended infringer.

36    Three other things should be mentioned.

37    First, where reproduction is sought to be made good by reference to objective similarities in the undifferentiated whole of Tamawood’s Dunkeld plan, and Mondo’s Duplex 1 plan (should a causal link be made good) reproduction (that is, a sufficient degree of objective similarity) might find expression, in part, in the “layout and traffic flows and the shapes, proportions and interrelationships of the rooms and other spaces – elements which permeate the whole of the project home”: Eagle Homes v Austec at [74].

38    Second, where the contended infringer has not reproduced the precise or exact expression of the copyright work, and a sufficient degree of objective similarity between two works is sought to be made out by reference to elements such as those described at [37] of these reasons, questions will arise of whether, simply, ideas reflected in the copyright work have been engaged with, adopted and used resulting in the expression of the contended infringer’s plan or whether the very expression of the copyright work has been reproduced due to the sufficiency of the degree of objective similarity between the two works.

39    It is in this sense that causal connection and objective similarity also overlap yet remain discrete questions to be addressed.

40    Third, in Eagle Homes v Austec, Lindgren J (Finkelstein J agreeing) said that where subjective copying occurs an expectation of a finding of infringement arises (that is, an expected finding of a sufficient degree of objective similarity arises) unless the contended infringing work is so dissimilar to the copyright work that that work can no longer be seen in the impugned work. Reproduction is made out by an applicant when a sufficient degree of objective similarity is made good and the contended infringer has made actual use of the copyright work either directly or through an intermediary instructor. Actual use of the copyright work will necessarily “add significance” (see [28] of these reasons) to a finding of sufficiency of objective similarity, as will a finding of attempted obfuscation by a putative infringer of his or her use of the copyright work in bringing the impugned work into existence.

41    If the reference to so dissimilar that the copyright work can no longer be seen in the impugned work simply means (as it seems to me it does so mean) that the requirement of a sufficient degree of objective similarity is satisfied (in circumstances of subjective copying) when the essential features of the copyright work can still be seen in the impugned work (either as a whole or as to a substantial part), I would agree that such a formulation is an accurate statement of the test for reproduction, informed as it is, by subjective copying. If, however, Lindgren J’s formulation of the test (in the circumstances his Honour identifies) assumes an expected starting point of sufficiency of objective similarity unless the impugned work is so dissimilar that there is no element of similarity between the two works, such a test does not accurately reflect, in my view, the proper test and ought not to be adopted for determining whether the Duplex 1 plan bears a sufficient degree of objective similarity to the Dunkeld plan. For one thing, the notion that the copyright work can “be seen” in the contended infringing work or that one can look through the infringing work, like a milky window, and see the copyright work in the contended infringing work, might simply mean that one can see the ideas contained within the copyright work in the infringing work. There is nothing unlawful in using the ideas in one work as the foundation for the expression of one’s own work expressed by reason of the work, skill, effort and judgement of the author of the contended infringing work.

The appeal

42    At this point, it is necessary to say something about the methodological approach adopted by the primary judge to determining infringement.

43    I am satisfied, respectfully, that the primary judge fell into error by adopting an approach characterised by Lindgren J in Eagle Homes v Austec as “artificial” (see [28] of these reasons) of almost entirely separately considering first, whether reproduction of the Tamawood plans in suit had been made out (by reason of whether a sufficient degree of objective similarity was evident as between the relevant plans) and then considering as an entirely independent question whether a causal connection had also been made out.

44    If there is any sequence as such to the inquiry to be made (recognising, however, that no answer to a particular question in the sequence forecloses asking the other questions as each question overlaps with the other) it is probably this. Logically, the first question (in the absence of an admission) is whether initially there appears to be a sufficient degree of resemblance between Tamawood’s plans and those of Mondo. Taking into account the answer to that question, the next question is whether a causal connection has been made out informed by considerations such as Mondo’s opportunity to secure access to and use of Tamawood’s drawings and apparent similarities (particularly an apparent, high degree of objective similarity in the case of floor plans for low cost project homes) coupled with an assessment of any contended explanation of the similarities by the putative infringer: “probative similarity”.

45    The next question, where actual copying is found to have occurred on whatever ground made out, is whether the Mondo plans exhibit a sufficient degree of objective similarity so as to constitute reproduction of the copyright work recognising that a finding of copying can add significance to objective similarity: see [24]-[28] of these reasons as to the overlapping nature of these questions.

46    Thus, it is necessary to consider whether the primary judge’s error as described at [43] of these reasons leads to the result contended for by Tamawood on the appeal.

47    In the appeal, Tamawood says that the findings of the primary judge concerning the Torrington plan are relevant findings of fact bearing upon Mondo’s conduct concerning copying and reproduction of the Dunkeld plan. At [173], the primary judge found “substantive duplication” of the Torrington plan by Mondo’s Duplex 2 and Duplex A drawings (“D2/DA”) and also found that, although there is some variation in the arrangement of the first floor rooms, the drawings have “very similar content”. At [174], the primary judge found a sufficient degree of objective similarity to support a finding of substantial reproduction of the Torrington plan in Mondo’s D2/DA drawings.

48    The primary judge then made observations concerning the question of substantial reproduction of the Dunkeld plan by Mondo’s Duplex 1 plan. I will return to that matter later in these reasons.

49    The primary judge then considered the question of causal connection between Tamawood’s copyright works in suit and Mondo’s conduct so as to form a view about “copying”. The primary judge made the following findings about the Tamawood and Mondo plans in a general sense before turning specifically to the Torrington and Dunkeld plans.

50    At [191], Habitare requested Mondo to prepare drawings for the Calamvale and Brackenridge sites. At [192], those Mondo plans needed to be generally in accordance with the plans the subject of the Brisbane City Council Development Approval for each site. At [193], Mr Sweeney (Mondo) met with Mr Speer and Mr Shane O’Mara (both of Habitare) on 21 June 2006. Mr Sweeney was told that Habitare would not be engaging Tamawood as builder and was asked whether Mondo could prepare construction drawings based on the Development Approval drawings in order to obtain building approvals. At [194], by June 2006, Habitare and Mondo were both concerned about “copyright issues” in Mondo preparing plans for Habitare generally in accordance with Tamawood’s plans the subject of the Development Approvals. At [194], Mr Speer and Mr Shane O’Mara represented to Mr Sweeney that there were no outstanding issues between Habitare and Tamawood concerning use of Tamawood’s plans. At [195], Mondo produced its plans for Habitare for each site with the intention that its plans be generally in accordance with the approved Tamawood drawings, after Mondo had been shown the Tamawood drawings. Thus, at [195], an inference arose that Mondo’s plans were “copied” from the Tamawood plans.

51    As to the Torrington plan specifically, the primary judge made these findings.

52    At [198], Mondo’s D2/DA drawings were the result of copying the Torrington drawings, intentional or otherwise. At [199], “precursor Mondo designs” (that is, Mondo’s precursor plans to its D2/DA drawings) were “significantly different” in “many respects” from the Torrington plan yet Mondo’s D2/DA plans “have very similar content” (at [173]) to the Torrington plan. Moreover at [199], Mondo’s D2/DA plans represent “some departure” from Mondo’s earlier versions of its plans for a two-storey duplex, with “no real explanation given” by Mondo for the changes. At [200], Mondo’s D2/DA plans were created so as to satisfy Habitare’s need for plans “generally in accordance with the Tamawood plans”. At [201], having accepted Habitare’s retainer, Mondo was under “some pressure” to “produce documents” which generally accorded with Tamawood’s plans which had already received Development Approval.

53    The primary judge notes at [201], Mr Speer’s evidence that a new Development Approval process would “take too long” and that the dilemma put by Mr Speer to Mr Sweeney was that new plans were needed substantially in accordance with the existing approvals yet the new plans must not give rise to “copyright problems” with Tamawood. At [203], Mr Keiler (an architect at Mondo) gave evidence that Mondo’s plans would have to fit the “footprint” of the Development Approval. At [204], the “direct similarities” between the Torrington plan and Mondo’s D2/DA plan are “significant”, notwithstanding that “similarities” in plans for project houses “arise out of functional necessity” such that independently-created plans may well bear similar features.

54    As to the authorship of Mondo’s D2/DA design, the primary judge at [204] observes that it is clear from Mr Keiler’s evidence that the D2/DA plan was created by him “shortly after” Tamawood’s brochure drawings were printed by Mondo from the Tamawood website and reviewed by Mr Keiler; Mr Keiler’s work occurred either contemporaneously with or shortly after he received copies of the Development Approvals from Habitare; and his work occurred contemporaneously with his discussions with Habitare personnel in order to discuss Habitare’s requirements.

55    Thus, at [205], the primary judge says this:

While the brief to Mondo was to produce plans “generally in accordance with” the Tamawood plans, this is a circumstance where the objective similarities between the Torrington and Duplex 2/Duplex A designs are sufficiently great, and the prior access by Mondo to Tamawood’s work sufficiently clear, such that the Court should draw the inference of copying: [Pacific Gaming v Aristocrat at 454].

                                [emphasis added]

56    As to the question of objective similarities between Tamawood’s Dunkeld plan and Mondo’s Duplex 1, the primary judge at [182] observes that there are “important differences” between the two “designs”. Six such differences are identified by the primary judge. They are these:

•    In the [Dunkeld] the entry opens immediately into a living area. In Duplex 1 the entry opens into a hallway, which allows access to Bedrooms 2 and 3 and the bathroom, and leads to the kitchen.

•    In the [Dunkeld], Bedroom 3 is at the back of the dwelling, accessed through the Dining room. In Duplex 1 Bedroom 3 is at the front of the dwelling, abutting the garage.

•    In the [Dunkeld], the position of Bedroom 1 (with its ensuite) and Bedroom 2 are reversed compared with the positioning of those rooms in Duplex 1.

•    In the [Dunkeld] access to Bedrooms 1 and 2 and the bathroom is from a hallway accessed from the kitchen. In the Duplex 1, access to Bedroom 1 is from the Dining room.

•    In the [Dunkeld], the Living and Dining rooms are separated by the Kitchen. In Duplex 1, the Dining and Living rooms are one open space, at the rear of the dwelling.

•    In Duplex 1 an outside patio is accessed from the Dining room. No such patio exists on the [Dunkeld] drawings.

57    Having regard to the evidence of Tamawood’s expert, Mr Miller, the primary judge at [184] said this:

In my view, the quality of the differences between the [Dunkeld] and Duplex 1 means that, for all intents and purposes, the designs represent quite dissimilar dwellings.

                                [emphasis added]

58    At [185], the primary judge said this:

While the overall shape of the duplex building is very similar in all three designs (in particular the Dunkeld and Duplex B):

•    The Conondale does not feature an ensuite to Bedroom 1, whereas the Duplex B has that feature.

•    The Duplex B features Bedrooms 2 and 3 at the front of the dwelling, unlike the Conondale/Dunkeld.

•    Bedroom 1 and the ensuite in Duplex B are at the back of the dwelling, unlike in the Conondale/Dunkeld drawings.

•    The Kitchen in Duplex B is not in the middle of the dwelling unlike the Conondale/Dunkeld design, but abutting the common wall, and the Laundry is accessed through the Kitchen.

•    The middle of the dwelling in the Duplex B is dominated by a Family/Living space, unlike the Conondale/Dunkeld design.

[emphasis added]

59    Apart from reliance placed by the primary judge upon Mr Miller’s evidence, the primary judge also said this at [186]:

Again, looking at the quality of the plans, in my view they represent significantly different dwellings.

                                [emphasis added]

60    At [187], the primary judge found in these terms:

Accordingly, not only is there no reproduction in whole of the Conondale/Dunkeld in the Duplex 1 or in Duplex B, but it cannot be said that there is reproduction of a substantial part of those designs.

                                [emphasis added]

61    The primary judge’s ultimate conclusion at [188] is in these terms:

It follows that in my view Tamawood’s claims involving infringement of its copyright in Conondale/Dunkeld drawings cannot be substantiated.

62    The primary judge then considered, in any event, whether a causal connection had been made out between Tamawood’s Dunkeld plan and Mondo’s Duplex 1 plan. As to that, the primary judge said this at [208]:

In the absence of reproduction, I am satisfied that there is no causal connectivity between those Tamawood drawings and the Mondo Duplex 1.

                                [emphasis added]

63    The primary judge also said this at [209] concerning a drawing produced by Mondo in February 2006 described as Drawing 3 to Exhibit RJS-13 to the affidavit of Mr Sweeney sworn 20 September 2011:

In relation to exhibit RJS13-3 produced by Mondo in February 2006, while in my view there are strong similarities between this design and the Dunkeld, this Mondo plan was not used by Mondo or Habitare as a design “generally in accordance” with the development approval. Duplex 1 was the design so used. I am not persuaded that any inference of relevance should be drawn from the existence of RJS13-3, other than the possibility of this design representing progressive internal experimentation in designs by Mondo including by reference to the work of competitors (but evidently, in relation to this design, not used).

                                [emphasis added]

64    Tamawood contests the finding of fact of no causal connection to the Dunkeld plan due to the primary judge’s error in the approach to fact finding. Tamawood says these things.

65    First, having regard to the drawings and plans contained in a document described as “Mondo Architects Schedule of Additional Drawing References in the Evidence of Mr Sweeney” (“Schedule of Mondo Drawings”) handed up to the Full Court (with copies to the parties) together with documents described as 12A, B, C, D, E, F, G, H, I, J and K (also handed up) based on Exhibits RJS-11, RJS-12 and RJS-13 to Mr Sweeney’s affidavit of 20 September 2011, Tamawood contends that nothing in the work of Mondo prior to the early part of 2006 demonstrates drawings similar to the Dunkeld plan.

66    Second, in February 2006, Mondo produced the drawing in CAD form at RJS13-3. That plan exhibits “strong similarities” to the Dunkeld plan (see [63] of these reasons and the finding at [209] of the primary judge’s reasons).

67    Third, the drawing of February 2006 emerged from Mondo at a time when Habitare was seeking to re-engage with Mondo and at this time Habitare requested Mondo to prepare architectural drawings and cost those drawings.

68    Fourth, the reason Mondo’s February 2006 drawings exhibit, as found, “strong similarities” to the Dunkeld plan (and represent a departure from prior Mondo drawings) is explained by the circumstance that Habitare’s Development Approvals (of 1 March 2006 and 7 July 2006; see [6] and [7] of these reasons) would be based upon Tamawood’s plans and thus other architectural designs, having no approved application to each site and thus no utility for either site, would be of no interest or relevance to Habitare.

69    Fifth, Mr Keiler, for Mondo, played a central role in engaging with Habitare personnel in early 2006 and was largely responsible for creating the February 2006 drawing at RJS13-3 (which is a departure from Mondo’s drawings prior to that time). Tamawood relies upon Mr Keiler’s concessions in cross-examination that his engagement with Habitare involved some “toing and froing” consisting of either sending Habitare designs by email or engaging in face-to-face meetings with Habitare and receiving feedback from Habitare about the ideas presented by Mr Keiler to Habitare.

70    Sixth, Tamawood says that by February 2006 Mondo had produced a drawing that, first, had emerged out of Mr Keiler’s engagement with Habitare as described and, second, represented a significant departure from that which went before within Mondo. Thus, the so-called “toing and froing” between Mr Keiler and Habitare must, it is said, have resulted in the Habitare people examining Mr Keiler’s sketches and designs and telling him the layout of the floor plan they wanted and where the rooms were to go on that floor plan. In doing so, Habitare was, it is said, “working directly” from Tamawood’s Dunkeld plan and thus instructing Mr Keiler in the essential features of the Dunkeld plan it wanted to see adopted in the Mondo plans.

71    Seventh, Habitare had good commercial reasons for so instructing Mondo because it knew that each Development Approval was conditioned upon carrying out each development generally in accordance with the approved Tamawood drawings. Getting on with each project was important, it is said, because, as Mr Speer said in his evidence, Habitare had settled the purchase of the development sites and “interest was ticking away, [and] it was costing us a lot of money”: see [202] of the primary judge’s reasons.

72    Eighth, the constraints imposed by the Development Approvals meant that Habitare found it necessary to review and be familiar with Tamawood’s plans; retain the same “footprint” for the duplex homes and ensure that any changes from the Tamawood drawings as might be reflected in the Mondo drawings for each site were small or largely inconsequential.

73    Finally, Tamawood says that the objective similarities between Tamawood’s Dunkeld plan and Mondo’s Duplex 1 are such that the Dunkeld plan can be seen embedded in Mondo’s plan (to use the language of Lindgren J) and one can look through Mondo’s plan and see the Dunkeld plan: see [32] of these reasons. Thus, there is said to be a sufficient degree of objective similarity between the two drawings having regard to Habitare’s use of the Tamawood plan by instructing or, in effect, filling up Mondo with the essential features of the Dunkeld plan.

74    Mondo supports the finding of the primary judge at [184] that the floor plans for the Dunkeld and Duplex 1 project homes represent quite dissimilar dwellings and the finding at [186] that looking at the quality of the plans, they represent significantly different dwellings. Mondo also says that by 6 April 2006 it had produced its Duplex 1 plan (see the plan described as “Duplex Single Option 3”, plan at p 17 (also marked p 261), Schedule of Mondo Drawings) well before it ever saw Tamawood’s Dunkeld plan.

75    The case put against Mondo, however, is that by reason of the exchanges (which seem as to real particularity largely content free “toing and froing”) between Mr Keiler and Habitare in the early part of 2006, Mondo produced by February 2006 (although apparently not specifically for the two project sites in issue in the proceedings) a drawing (RJS13-3) which represents a departure from Mondo’s genetic footprint of floor plan designs to that time and one which, as found by the primary judge at [209], bears “strong similarities” to Tamawood’s Dunkeld plan. That plan is at [207] of the primary judge’s reasons.

76    I agree that the plan at [207] represents both a departure from Mondo’s earlier work and that the arrangement of rooms and the “layout and traffic flows and the shapes, proportions and interrelationships of rooms and other spaces – elements which permeate the whole of the project home” (see [37] of these reasons) reflect strong similarities with Tamawood’s Dunkeld plan, as the primary judge found. It also seems very likely that the Mondo plan at RJS13-3 produced in February 2006 (so close to the impending Development Approval for Gawler/Norris Road on 1 March 2006), emerged out of Mondo in circumstances where Habitare personnel were acting in their dealings with Mondo, by reference to the Dunkeld plan which Habitare had before it. It seems that Mr Keiler’s authorship of the plan at RJS13-3 was as a result of Habitare pressing strongly for a plan generally as close as possible to Tamawood’s Dunkeld plan that would be the subject of the upcoming Development Approvals and the blunt reality that undertaking a new Development Approval process would “take too long” and cause additional “interest costs” to run should a new process need to be undertaken. It seems very likely that Mr Speer instructed Mr Keiler in the features and content of RJS13-3 with some real precision drawn from Tamawood’s Dunkeld plan.

77    I thus accept that an inference is open that the explanation for the emergence of CAD drawing RJS13-3 out of Mondo’s office by February 2006 in a form that was strikingly similar to the Dunkeld plan is that Mr Keiler was giving effect to Habitare’s instructions given with precise reference to the Dunkeld plan.

78    Tamawood, however, does not rely upon RJS13-3 as the contended infringing Mondo drawing. It relies upon RJS13-3 so as to demonstrate “copying” based on instructions to Mr Keiler from Habitare.

79    The question then is this: Once it is accepted (by drawing the inference) that Mondo’s February 2006 drawing emerged out of access to and use by Habitare of Tamawood’s Dunkeld plan resulting in precise instructions to Mondo about the essential features of that plan (and thus a causal connection to the Dunkeld plan), does the Mondo plan said to infringe in these proceedings depicted at [17] of these reasons (which is not RJS13-3) reveal a sufficient degree of objective similarity so as to constitute reproduction of Tamawood’s Dunkeld plan recognising the significance copying adds to objective similarity?

80    Just as the drawing at RJS13-3 reveals a departure from Mondo’s earlier drawings, Mondo’s Duplex 1 said to infringe represents a departure from RJS13-3. The primary judge finds at [209] that RJS13-3 was not used by Mondo or Habitare. Mondo made changes to the floor plan to bring about Duplex 1. Is there a sufficient degree of objective similarity between Tamawood’s Dunkeld plan and Mondo’s Duplex 1 plan recognising the role Habitare had earlier played in instructing Mondo about the content of the Dunkeld plan so as to produce RJS13-3?

81    The important considerations in answering that question seem to me to be these.

82    First, although the Development Approval for each site required Mondo to retain the “footprint” for the duplex, the layout, traffic flows within the house and the proportions and inter-relationships of rooms and other spaces was not dictated by the footprint.

83    Second, as to the requirement that the Mondo plan be generally in accordance with the approved drawings, it does not seem to be asserted that that condition would necessarily bring about or require use of a drawing in the development on each site that would be characterised as a reproduction in a material form of the Tamawood drawings. There seems to be some latitude or flexibility to use a drawing generally in accordance with the approved drawings. Each drawing, generally, contained a number of elements: three bedrooms (and thus a structure and plan designed to accommodate a number of individuals who would normally populate three residential bedrooms in a low cost project home); an ensuite attached to one of those bedrooms (described as Bedroom 1); a bathroom immediately adjacent to a second bedroom and separated by a wall, immediately next to the ensuite so as to utilise, no doubt, plumbing connections to “wet areas”; two of the bedrooms and wet areas along an external side wall; a toilet; a living room; a dining room; a kitchen; a laundry and a garage.

84    Is a floor plan (other than Tamawood’s Dunkeld plan), which incorporates these general features, one which might properly be described as generally in accordance with the approved plans without necessarily being a reproduction in a material form of the approved plans? No party seems to suggest that a plan generally in accordance with the Development Approval must necessarily be an infringement of the Dunkeld plan. Tamawood contends, however, that Mondo’s particular plan is a reproduction of the Dunkeld plan recognising the two aspects of reproduction: see [28] of these reasons.

85    Third, the Dunkeld plan at [17] of these reasons shows an arrangement of rooms and spaces dictating shapes and traffic flows in the following way. The plan shows a porch entry into a living room. Thus, one immediately enters into a large living space. Across the diagonal space from the entry door, is a “false head” entry to the kitchen sited in the centre point of the house. The kitchen looks onto and serves the dining room. Thus, entry into the house engages the amenity of the living room which leads to the kitchen and across the kitchen space to the dining room. The left side wall of the living room divides off the main bedroom at the front of the house (described as Bedroom 1). That wall continues to the rear of the house dividing the dining room from Bedroom 2. That wall contains a “false head” entry and exit through a space in that wall from the kitchen into an area that provides spatial access to a number of rooms. The possibilities are, to the left, passage past the bathroom and entry through a door into Bedroom 1; passage to the toilet; passage to the bathroom or passage to an entry door to Bedroom 2. The laundry is located to the right of the kitchen behind the garage and is located between the kitchen on one side and the block common wall on the right hand side. To the right of the dining room and behind the laundry space is Bedroom 3. The single garage is represented by the space between the block common wall on the right hand side of the diagram and the living room wall on the left side. The footprint for the duplex has the dimensional characteristics reflected in the drawing at [17]. The dimensions of each room are also set out in the floor plan at [17]. In the Dunkeld, the main bedroom at the front of the house has an ensuite bathroom. Apart from the ensuite bathroom servicing the main bedroom, the plan provides for an entirely separate toilet and a separate bathroom.

86    Fourth, Mondo’s Duplex 1 has a footprint which reflects different dimensions as to the footprint itself and other dimensional differences. For example, Tamawood’s Dunkeld is 11.125 metres wide and 11.460 metres deep. Mondo’s Duplex 1 is 10.800 metres wide and 11.800 metres deep. In the Mondo plan, entry is from a porch through the front door into an entry corridor. The three bedrooms making up the duplex are clustered together in the sense that they are all positioned away from the block common wall where the mirror image duplex sets out the living space for the immediate neighbour. In the Mondo plan, one enters by the entry corridor which has a bedroom to the left and a bedroom to the right. On the right hand front side is Bedroom 3 and on the left hand front side is Bedroom 2. Having entered the dwelling, the passageway continues between Bedrooms 2 and 3 to the end of Bedroom 3 and into the kitchen which is sited in the centre of the dwelling. The kitchen engages with the amenity of a combined dining and living room which in turn provides access and entry to a large patio area immediately adjacent to the dining room. The patio area is a quite substantial space.

87    The amenity of the house involves an L shape cluster of bedrooms and wet areas to the left of the structure along the external wall and the third bedroom at the front of the house. It involves another L shaped cluster of what might be described as the societal amenity of the house of food preparation, cooking, dining, entertaining and living consisting of the kitchen and the combined open space of a living and dining room to the back of the structure inter-relating with a patio and pergola.

88    The traffic flows draw a person down the entry hallway into the bedroom cluster or alternatively into the integrated kitchen, dining, living and patio areas. Access into the wet areas involves a different spatial arrangement to that of the Dunkeld. Rather than moving through a false head entry from what otherwise amounts to the mid-point of the kitchen wall into a space serving access to Bedroom 1, the bathroom, the toilet and Bedroom 2, a person moves from the kitchen into the end of the entry corridor so as to gain access to either the separate bathroom or the separate toilet or Bedroom 2. Access to Bedroom 1 is by a doorway directly into that bedroom from the dining room.

89    For my part, having regard to the layout and traffic flows and the shapes, proportions and inter-relationships of rooms and other spaces being the elements which permeate the whole of Mondo’s Duplex 1 project home, I am not satisfied that there is a sufficient degree of objective similarity between Tamawood’s Dunkeld plan and Mondo’s Duplex 1 plan so as to constitute reproduction of the Dunkeld plan in a material form. Nor am I satisfied that Mondo’s plan reproduces a substantial part of the Dunkeld plan. There is no doubt that both plans show an arrangement of two bedrooms and wet areas in conjunction with one another on the external wall of the duplex (that is, in the plans at [17]) on the left hand external wall of the dwelling. In that sense, both plans reflect the idea of an arrangement of rooms as far away as possible from the common block wall between the two dwellings which share that common block wall. There would be no rational point in the notion of locating Bedrooms 1 and 2 and the wet areas along the common block wall immediately next to Bedrooms 1 and 2 and the wet areas of the mirror image duplex.

90    The idea in each plan is to place the two principal bedrooms and wet areas on the exterior walls of each duplex for the obvious reason. The particular arrangement of those rooms and wet areas is not, however, in the same terms and for my part I do not regard the location and inter-relationship of those bedrooms and wet areas as a reproduction of a substantial part of the Dunkeld plan. In any event, during the course of oral submissions before the Full Court emphasis was placed by Tamawood upon the notion that reproduction had occurred independently of any question of reproduction of a substantial part. Both limbs remained alive recognising, however, the nature of reproduction as discussed at [29] of these reasons.

91    For my part, I would dismiss Tamawood’s appeal from the orders of the primary judge dismissing its claim of copyright infringement of the Dunkeld plan.

The nine issues before the Full Court

Issue One

92    Did the primary judge err in finding that the conduct of Habitare (and those associated with it) and Mondo was not authorised by a licence? I agree with the observations of Jagot and Murphy JJ.

Issue Two

93    Is Tamawood precluded from arguing that an inference of indirect copying by Mondo should be drawn by reason of the pleadings and the way the case was run before the primary judge? I agree with the observations of Jagot and Murphy JJ.

Issue Three

94    If Tamawood is not so precluded, did the primary judge err in finding that Mondo did not infringe the copyright in Tamawood’s Dunkeld plan? The primary judge did not fall into error.

Issue Four

95    Did the primary judge err in finding that Mondo was precluded from arguing that it was an “innocent infringer” within s 115(3) of the Copyright Act 1968 (Cth)? I generally agree with the observations of Jagot and Murphy JJ.

Issue Five

96    Did the primary judge err in finding that Mr Peter O’Mara and Mr Johnson of Habitare did not authorise Habitare’s infringements of Tamawood’s Torrington and Dunkeld plans? I agree with the observations of Jagot and Murphy JJ as to the Torrington infringement.

Issue Six

97    Did the primary judge err in finding that Mr Peter O’Mara, Mr Johnson and/or Mondo are not liable for additional damages under s 115(4) of the Copyright Act? I agree with the observations of Jagot and Murphy JJ.

Issue Seven

98    Did the primary judge err in finding that the Bloomer parties were “innocent infringers” under s 115(3) of the Copyright Act? I agree with the observations of Jagot and Murphy JJ.

Issue Eight

99    Did the primary judge err in respect of the costs orders made in favour of the Bloomer parties? I agree with the observations of Jagot and Murphy JJ.

Issue Nine

100    Did the primary judge err in finding Mr Shane O’Mara liable to Mondo for misleading and deceptive conduct? I agree with the observations of Jagot and Murphy JJ.

101    The parties ought to confer and submit within 14 days agreed or proposed competing orders reflecting the position adopted by the majority judges, including submissions with respect to costs.

Associate:

Dated:    15 May 2015

REASONS FOR JUDGMENT

JAGOT AND MURPHY JJ:

THE ISSUES

102    This matter involves three appeals and four notices of contention between multiple parties arising from orders consequential on two judgments (Tamawood Ltd v Habitare Developments Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) (No 3) (2013) 101 IPR 225; [2013] FCA 410, referred to below as the principal judgment and Tamawood Ltd v Habitare Developments Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) (No 6) [2013] FCA 1383, referred to below as the costs judgment).

103    Despite this apparent complexity, there are nine issues which arise for determination. To understand these issues it is necessary to identify the parties and the claims between them.

104    Tamawood Ltd (Tamawood) designs and builds project homes.

105    Habitare Developments Pty Ltd (Habitare), now in liquidation, was a developer of low cost, high density housing. Habitare used other subsidiary companies, in this case Eight March Pty Ltd (as trustee of the Eight March discretionary trust) and First Priority Developments Pty Ltd, to acquire and develop sites. It is unnecessary to distinguish between Habitare and its subsidiary companies for the purposes of this matter and thus all references below are to Habitare despite the fact that the relevant company might have been one of the subsidiaries.

106    Peter O’Mara was a director of Habitare. David Johnson was also a director and the financial officer of Habitare. Mr Johnson was declared bankrupt on 14 July 2014. His trustee in bankruptcy was notified of this matter and advised that he did not intend to appear.

107    Shane O’Mara is Peter O’Mara’s son and worked for Habitare.

108    Peter Speer also worked for Habitare.

109    Mondo Architects Pty Ltd (Mondo) is a firm of architects. Raymond Sweeney is a director of Mondo. Shane Keiler is an employee of Mondo who prepares architectural plans.

110    Bloomer Constructions (Qld) Pty Ltd is a building company. Wayne Bloomer is a director and the principal of this company. Together, they are referred to below as the Bloomer parties.

111    Habitare, through its subsidiaries, owned and wished to develop two sites with low cost housing, one at Hamish Street, Calamvale and the other at Gawler Street/Norris Road Brackenridge. Habitare entered into discussions with Tamawood about designing and building the low cost housing. Tamawood prepared plans including plans for housing known as the Conondale/Dunkeld (referred to below as the Dunkeld), a single storey duplex, and the Torrington, a two storey duplex. With Tamawood’s agreement, Habitare lodged Tamawood’s plans with the Brisbane City Council (the Council) and obtained development approvals for the development of each site based on those plans. Habitare did not use Tamawood to construct the buildings on either site. It approached Mondo to prepare construction plans. The conditions of the development approvals required, amongst other things, the buildings to be constructed “generally in accordance with” the Tamawood plans. Mondo prepared plans for the two sites to enable building certificates to be obtained. Building certificates were obtained based on the Mondo plans. Habitare, after its initial builder went into liquidation, engaged the Bloomer parties to complete the construction of the buildings on each site. The Bloomer parties did so.

112    Insofar as now relevant, Tamawood claimed that Mondo’s plans infringed copyright in Tamawood’s plans for the Dunkeld and the Torrington houses. Tamawood sued Habitare, Peter O’Mara and Mr Johnson of Habitare, Mondo, and the Bloomer parties in respect of the alleged infringements of copyright under the Copyright Act 1968 (Cth) (the Copyright Act). Mondo sued Habitare, Mr Speer and Shane O’Mara for misleading and deceptive conduct under the (then in force) Trade Practices Act 1974 (Cth).

113    The primary judge found for Tamawood against Habitare and Mondo but only in respect of the Torrington plan, not the Dunkeld plan. In so doing, the primary judge rejected an argument by Habitare and parties associated with it, including Shane O’Mara, that Tamawood had authorised Habitare’s acts under a contractual licence, and another argument by Mondo that Tamawood had authorised Habitare’s and thus Mondo’s acts under a non-contractual licence.

114    The primary judge rejected Tamawood’s claims against Peter O’Mara and Mr Johnson for authorisation of Habitare’s infringement of Tamawood’s copyright in the Torrington plan.

115    The primary judge rejected Tamawood’s claim that it was entitled to orders against Habitare, Peter O’Mara and Mr Johnson and Mondo for additional damages under s 115(4) of the Copyright Act.

116    The primary judge found the Bloomer parties to be “innocent infringers” under s 115(3) of the Copyright Act but concluded that Mondo was not entitled to argue that it was also an “innocent infringer”. Her Honour ordered Tamawood to pay the costs of the Bloomer parties including costs on an indemnity basis from 2 September 2011 onwards, the date on which a letter offering to settle the proceedings had been sent by the solicitor for the Bloomer parties to the solicitor for Tamawood.

117    The primary judge found Habitare liable to Mondo for misleading and deceptive conduct and that Mr Speer and Shane O’Mara were “knowingly concerned” in Habitare’s conduct and thus also liable to Mondo in this regard.

118    The issues that arise on the appeals and the notices of contention, against this background, may be summarised as follows:

(1)    Did the primary judge err in finding that the conduct of Habitare (and those associated with it) and Mondo was not authorised by a licence?

(2)    Is Tamawood precluded from arguing that an inference of indirect copying by Mondo should be drawn by reason of the pleadings and the way the case was run before the primary judge?

(3)    If Tamawood is not so precluded, did the primary judge err in finding that Mondo did not infringe copyright in Tamawood’s Dunkeld plan?

(4)    Did the primary judge err in finding that Mondo was precluded from arguing that it was an “innocent infringer” within s 115(3) of the Copyright Act?

(5)    Did the primary judge err in finding that Peter O'Mara and Mr Johnson of Habitare did not authorise Habitare’s infringements of Tamawood’s Torrington and Dunkeld plans?

(6)    Did the primary judge err in finding that Peter O’Mara, Mr Johnson and/or Mondo are not liable for additional damages under s 115(4) of the Copyright Act?

(7)    Did the primary judge err in finding that the Bloomer parties were “innocent infringers” under s 115(3) of the Copyright Act?

(8)    Did the primary judge err in respect of the costs orders made in favour of the Bloomer parties?

(9)    Did the primary judge err in finding Shane O’Mara liable to Mondo for misleading and deceptive conduct?

119    It is convenient to deal with the primary judge’s reasons by reference to each of the nine issues set out above, given that her Honour was dealing with a much broader dispute between the parties.

ISSUE 1 – THE LICENCE

Primary judge’s reasons

120    The primary judge dealt with the licence issue at [95] to [150] of the principal judgment. The primary judge concluded that Tamawood had granted to Habitare a licence (albeit a bare rather than a contractual licence) authorising Habitare to use the Tamawood plans “in the application to the Brisbane City Council for development approval” (at [147]). However, “once Habitare resolved that it would not engage Tamawood to build those dwellings and took steps to engage someone else, Habitare was no longer entitled to use the” Tamawood plans (at [149]). The primary judge also noted that if the licence was contractual, contrary to the conclusion she had reached, then in any event the contractual licence would have been “subject to a similar term” (at [150]).

121    In reaching these conclusions the primary judge observed that there was little evidence about the dealings between Tamawood and Habitare. She relied, in particular, on the following evidence:

    A conversation between representatives of Tamawood and Habitare in which Habitare’s representatives said Habitare wanted Tamawood to build the duplexes on the Calamvale and Brackenridge sites using plans of Tamawood in which the Tamawood representative said “[w]e are happy to form a relationship where we will invest our drafting time and our money on the understanding that we be appointed as the builders and we will then work together” and the Habitare representative said Habitare was happy and Tamawood should “go ahead and prepare the plans for the two projects” (at [102]).

    Subsequent discussions between representatives of Tamawood and Habitare in which it was said that Tamawood would be appointed the builder for the development of the two sites (at [103]).

    Tamawood’s business model, in which Tamawood builds houses in accordance with its plans (at [104]).

    The fact that when Habitare realised it could not resolve outstanding issues relating to Tamawood being appointed the builder (Tamawood having already given Habitare the plans to use for the development application), Habitare then “went elsewhere to get new plans done” (at [110]).

    The fact that Habitare and Tamawood “took it for granted” that Tamawood would be appointed the builder for the projects, that being understood by “all parties” (at [112]).

    The fact that despite numerous meetings between Habitare and Tamawood the relationship came to an end because three issues could not be resolved, being whether there should be separate contracts for each building or a single contract for each project, whether Tamawood should be paid progressively or on a lump sum basis, and the timing for completion of the building works (at [113]).

Shane O’Mara’s submissions

122    Shane O’Mara emphasised the following evidence in support of his contention that there was a contractual rather than a bare licence:

…Mr Souter-Robertson [Tamawood] told Mr Speer [Habitare]:

We are happy to form a relationship where we invest our drafting time and our money on the understanding that we be appointed as the builders and we will then work together.

Mr Speer said:

“I am more than happy with that. So go ahead and prepare the plans for the two projects.”

Mr Souter-Robertson gave evidence that:

In the same meaning Shane said words to the effect:

How much is it going to cost to get these plans from you so that we can pass them to our own town planner who is going to do the application to the Council. Our town planner will be Harvey Property Consultants.

I said words to the effect:

We know Harvey Property Consultants. We don’t charge for you using our plans to get the development approval from Council as long as we build the duplexes as soon as the plans are approved and the civil works are underway.

Shane said:

Of course Tamawood will be the builder.

Mr Mizikovsky [Tamawood] gave the following evidence:

… This then lead to the second issue namely the question of what would happen if Habitare got the building approvals and then Tamawood decided to increase its prices. I was asked by either Peter Speers [sic] or Peter O’Mara in words to the effect

‘What happens if we get the building approvals and then Tamawood decides to increase prices’.

I replied in words to the effect: “The prices for Tamawood designs are all electronically updated and continuously displayed on Tamawood’s website and therefore the margins that Habitare will be paying will remain constant and any price changes will be in common with the remainder of the industry.

…

I can also recall another similar conversation in relation to the second issue with Peter [sic] Speers [sic] and Peter O’Mara in which I said words to the effect ‘you can use our plans because the price is always available on our website’.

123    As it was put for Shane O’Mara, after these discussions Tamawood handed over its plans and Habitare used those plans to obtain the development approvals.

124    According to the submissions for Shane O’Mara:

From those interactions, the following points of agreement may be identified:

(a) Tamawood would provide drawings to Habitare “on the understanding [sic] that [Tamawood] would be appointed builders”;

(b) Tamawood would not charge for provision of the drawings;

(c) Tamawood would be appointed builder;

(d) the price to be charged for each dwelling would be whatever Tamawood generally charged for such a construction at the time that construction commenced.

125    Further, whether or not the licence was contractual or bare, the term implied by the primary judge (that the licence would automatically terminate on Habitare deciding not to appoint Tamawood the builder), it was submitted, failed to satisfy any of the five criteria for the implication of a term (obviousness, clarity, fairness, necessity, and consistency with express terms, see BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283). Accordingly, it was contended that:

The term is unnecessary because the parties agreed on an exchange of rights: Tamawood would provide the drawings, and receive the right to be engaged when building commenced in return. The term to be implied suggests a right on the part of Habitare unilaterally to refuse to appoint Tamawood as builders, having exploited the valuable opportunity the drawings provided to obtain the development approval. It would be difficult to draw this from the interactions described above. In the absence of any such right on the part of Habitare, what was the need for the suggested implied term? Tamawood would have had a remedy in damages for breach of contract.

The term is also inconsistent with express terms. The grant’s being conditional on the promise that Tamawood would be appointed builder, it plainly extended to building and subsequent sale of the dwellings. A requirement for automatic revocation at some earlier point is inconsistent with that grant.

…

There is no doubt that there was agreement or that legal rights were intended to arise

from that agreement. The terms of the agreement were certain enough: Tamawood

provided plans in return for the right to be appointed builder and to build at prices

ascertainable by a certain mechanism.

…

In this case the consideration existed in the exchange of rights expressly identified by

the parties: use of the plans in exchange for the right to be appointed as builder and to

build at ascertainable prices.

In interpreting the parties' conduct to establish the terms of their contract, the Court is

bound to consider what a reasonable businessperson would have understood from

their conduct. In doing that, the Court will consider the language used by the parties, in

the context of the commonly known surrounding circumstances and the commercial

objectives pursued. In the absence of any contrary intention, the Court assumes that

the parties intended to produce a commercial result.

The commonly known surrounding circumstances will include both facts and matters of law known to the parties as well as those reasonably available to them.

Those principles matter in this case because, ultimately, Tamawood's position is both

counter-intuitive and uncommercial. No reasonable businessperson could look at the

facts accepted by Her Honour and think that the parties intended that Habitare, having used the building plans to obtain the development approval, could simply resile from its promise to appoint Tamawood as the builder.

Mondo’s submissions

126    Mondo did not press its argument that the licence granted by Tamawood was a contractual licence. According to Mondo, it may be accepted that the licence was a bare licence but the primary judge erred in respect of the implied term that the licence would automatically terminate once Habitare decided that Tamawood would not be appointed to build the houses.

127    As Mondo put it, Habitare and Mondo both must have realised that they may not be able to agree on Tamawood building the houses. For its part, by preparing and permitting the use of its plans, Tamawood gained the valuable opportunity of being appointed to construct the houses. In this context, it makes no sense for the licence to terminate on Habitare deciding not to use Tamawood to construct the houses. It was well known that the constructed buildings would have to be “generally in accordance with” the development approval plans. In these circumstances, it could not be expected that Habitare would have to start again and obtain new development approvals using new plans. It must have been the common expectation that, in exchange for the valuable opportunity it had to construct not merely one or two but dozens of houses, Tamawood authorised Habitare to use its plans for the entirety of the development approval and construction process. The circumstances are not unlike those of an architect who, having prepared plans for a development application, is taken to have granted a licence permitting the use of those plans for construction purposes. Mondo submitted as follows in this regard:

The relevance of a development approval being part of a progressive process was recognised by Kirby and Crennan JJ in Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577; [2006] HCA 55 as follows:

It has been recognised, at least since Blair v Osborne, that the preparation of plans and drawings as part of an application for a development consent by a local council is part of a progressive process governed by legislation. If a development application is successful it will form the basis of more detailed plans and drawings leading to finals plans and drawings in accordance with which a building, as approved, will be built.

And:

It has already been explained that this is not a case of a bare licence. However, in any event, in the absence of any reservation of copyright in the plans and drawings, or any withdrawal of the development application by Parramatta Design prior to its determination, once the development consent has been granted the implied licence or consent to the owners must be irrevocable, because one of the purposes for which the plans and drawings were prepared has then been achieved.

128    Mondo, in common with Shane O’Mara, submitted that the term the primary judge implied, involving an automatic termination of the licence on Habitare deciding not to appoint Tamawood the builder, failed to satisfy the requirements for implication of a term. In particular, the implied term depends on the subjective intention of Habitare which is unsatisfactory. As Mondo put it:

The learned Primary Judge erred in finding that the scope and duration of the licence was determined by the state of the subjective intention of Habitare. Such a term would not be implied because it is unworkable. Objectively, parties would not agree that whether the licence remained in force depended upon proof of the subjective intention of one of them. In circumstances where, as here, it was likely that sub-licences would be granted to others, a determination of the ongoing existence of the licence by reference to the subjective intention of Habitare puts sub-licensees, such as Mondo, in an impossible position.

129    If any term at all may be implied, it could only be a term that the licence was revocable on notice by Tamawood. No such notice, however, was given. Mondo submitted as follows:

Whether the licence subsisted at the time Mondo produced its drawings then depends upon whether the licence had been revoked before that time.

Tamawood did not plead that it revoked the licence which had been granted. There was no evidence that the licence was revoked. The Primary Judge made no finding

that the licence was revoked.

To the extent that there is evidence about ongoing discussions between Tamawood and Habitare, that evidence is dealt with by the Primary Judge at Reasons [139] … as follows:

The facts demonstrate a relatively casual approach by both Tamawood and

Habitare concerning their approach to the retention of the Tamawood drawings by Habitare, and their use by Habitare, at least until the second half

of 2006 when the relationship between the parties broke down over the contractual negotiations.

And at Reasons [142]…:

It was not until late 2006 that communications between Mr Souter-Robertson

and Mr Shane O'Mara ceased ... "

The relevant drawings had been produced by Mondo well before late 2006. Work commenced on the work on 22 June 2006. The work is dated 11 July 2006.

It follows that, on the evidence, the licence had not ceased at the time Mondo

produced the relevant drawings. On the construction of the licence most favourable

to Tamawood, the learned Primary Judge ought to have found that Tamawood failed

to discharge its onus that there was no relevant licence.

130    Insofar as Tamawood submitted that the licence was confined to lodgement of the development application and no more, the submission is inconsistent with the findings of the primary judge and should not be accepted.

Discussion

131    The argument for the existence of a contractual licence is unpersuasive. The evidence does not support any intention on the part of Tamawood and Habitare to enter into a legally binding arrangement before the terms and conditions under which Tamawood would build the houses had been agreed. This is not a case where the details of an agreement were left for resolution by means other than express agreement between the parties. The parties knew that they disagreed about matters fundamental to them being able to reach a concluded agreement by which they would be bound – the nature of the contracts for the building (one for each building or a single contract for each project), the payment schedule, and the completion date. These were matters all anterior to any agreement on price. The notion that Habitare agreed, presumably implicitly, to pay whatever price happened to be published on Tamawood’s website from time to time, irrespective of the payment schedule and the completion date issues and without any regard to the fact that Tamawood would not be building a single house but a whole development, has little to commend it. The consideration asserted to exist by Shane O’Mara, the right to be appointed the builder, was no consideration at all. The common intention of the parties to negotiate in good faith so Tamawood could be appointed the builder is one thing; discerning an intention to be legally bound by reason of that common intention is another. The commercial result that the parties can be intended to have presumed in the present case is not that for which Shane O’Mara contends. There is no doubt that the parties were negotiating in good faith in order to reach an agreement, but the fact is they did not reach an agreement.

132    The primary judge did not err in rejecting the contention that the licence was contractual. A bare licence arose by reason of the conduct of the parties.

133    The attack on the primary judge’s implication of a term that the licence was automatically terminated once Habitare decided not to appoint Tamawood as the builder is also unpersuasive. The problem for Shane O’Mara and Mondo is this. While the precise articulation of the implied term may well be the subject of the debate, nothing in the evidence supports the existence of a licence which extended to the use made of Tamawood’s plans by Habitare and Mondo. This case is not analogous to that of any architect who, having been paid to prepare plans for a development application, is taken to have granted a licence for the construction of the building in accordance with those plans. The valuable opportunity to Tamawood to build a large number of houses was an opportunity which Habitare had given to Tamawood from the outset. It was not an opportunity in exchange for Tamawood preparing plans for the development applications. Tamawood prepared those plans and permitted Habitare to lodge them with the development application in the common expectation that Habitare would appoint Tamawood the builder. Habitare could not have (and, in fact, did not have) any expectation at any time that, having decided Tamawood could not be appointed the builder due to the fundamental issues not able to be resolved between them, Habitare would nevertheless be able to use Tamawood’s plans for the construction of the buildings. It is obvious that Habitare never had that expectation (and rightly so) because it engaged Mondo to prepare plans that were “generally in accordance with” Tamawood’s plans for construction purposes without infringing Tamawood’s copyright. That Habitare did not in fact avoid infringing Tamawood’s copyright (as found by the primary judge) does not change the fact that Habitare knew it was not authorised to use Tamawood’s plans once it decided not to proceed to engage Tamawood as the builder.

134    Nor can Mondo’s submissions about timing be accepted. Habitare engaged Mondo for the very reason that it knew its negotiations with Tamawood had not yielded fruit. While Habitare might have continued to talk to Tamawood throughout 2006, the inescapable reality is that the only reason Mondo was engaged at all was because of the fact that Habitare could not resolve a satisfactory agreement to build with Tamawood. To the extent the primary judge at [139] might be considered to have said to the contrary, given the “relatively casual” approach of Habitare and Tamawood to arrangements between them, the proper inference which should have been drawn on the evidence is that Habitare had no intention of appointing Tamawood the builder from the moment that it decided to engage Mondo. The possibility that if, contrary to the prevailing circumstances at the time, some agreement might be able to be reached between Habitare and Tamawood in the future is immaterial. At the time Habitare decided to engage Mondo, Habitare must be taken not to have intended to appoint Tamawood the builder.

135    This raises the content of the implied term. As noted, an implied term is one way of looking at the issue. Another way of looking at the issue is simply to characterise the scope of the licence. On the first approach, the licence was subject to an implied term that it would automatically terminate on Habitare deciding not to appoint Tamawood the builder. On the second approach, the licence authorised Habitare to use the plans for so long as Habitare intended to appoint Tamawood the builder but not otherwise. Contrary to the submissions for Shane O’Mara and Mondo, the fact that the implied term (or the scope of the licence) depends on Habitare’s intention does not give rise to concern. The licence was from Tamawood to Habitare. Insofar as third parties are concerned, Tamawood and Habitare alone could involve such parties. Although we prefer to resolve the issue by reference to the scope of the licence the parties must be taken to have intended rather than the implication of a term, we do not accept that the implied term found by the primary judge fails to satisfy the requirements for such implication. The facts are that Tamawood permitted Habitare to lodge its plans with the development application solely because, at that time, Tamawood and Habitare expected Tamawood would be appointed the builder. When it became apparent (at least to Habitare) that this could not happen within Habitare’s required time constraints, Habitare knew it had no licence to use Tamawood’s plans further. This is why Habitare engaged Mondo. Habitare knew this because it knew that it had shared a common intention with Tamawood that Habitare could use the Tamawood plans only in anticipation of Tamawood being appointed the builder. Once that anticipation was removed (as it was as soon as Habitare decided to engage Mondo) Habitare had no licence to do anything with Tamawood’s plans. In the context of what had happened between Tamawood and Habitare it is not uncommercial for Habitare to have known that it would have to start the development application process again. This is exactly what Habitare knew it would have to do if it could not succeed in its alternative proposal of having new plans prepared which nevertheless satisfied the “generally in accordance with” condition on its development approvals.

136    We also do not accept the argument that notice of revocation had to be given by Tamawood to Habitare. That would not accord with the dealings between Tamawood and Habitare. Tamawood could not know when Habitare decided it had exhausted efforts to reach agreement with Tamawood. Only Habitare knew that. It is for this reason that the primary judge, rightly, focused on Habitare’s state of mind as defining the extent of the licence.

137    For these reasons the conclusion which the primary judge reached, that the licence that Tamawood had granted did not authorise the acts she had found in respect of Tamawood’s plans, discloses no error. It follows that grounds 1 and 2 of Mondo’s appeal in QUD 235/2014 must be dismissed. So too must ground 1 in the appeal of Shane O’Mara in QUD 240/2014.

ISSUE 2 – INDIRECT COPYING – TAMAWOOD PRECLUDED FROM RAISING?

138    Mondo contended that Tamawood’s oral submissions involved a new case (referred to as indirect copying) which had not been pleaded or run below, having been raised for the first time in closing submissions, and which should not be permitted to be raised in the appeal. According to Mondo it could or would have run its own case before the primary judge differently had Tamawood made a case for indirect copying before closing submissions.

139    First, the pleadings. Tamawood pleaded (paras 17D and 31AC) that at some time in 2006 Habitare retained Mondo to review and effect insubstantial changes to Tamawood’s plans (relevantly, of the Torrington and Dunkeld). It pleaded also that after the development approvals had been obtained, at some point, Mondo obtained knowledge of those approvals (specifically, the Tamawood plans that formed part of those approvals) and that an agreement, understanding or mutual belief was reached between Habitare and Mondo that the plans required for the further phases of the developments should differ as little as possible from the development approval plans (paras 20KB to 20KD and 31AD). Further, that without the licence of Tamawood, Mondo made plans which are a substantial reproduction of the Tamawood plans (paras 20K to 20P and 31A to 31E).

140    Second, the conduct of the hearing below. In its closing submissions before the primary judge Tamawood identified three types of infringement – precise copying, the creation of “generally in accordance with” plans by Mondo, and the use of those plans by the Bloomer. It is the scope of the second category that is in issue. In its closing submissions Tamawood contended that the Mondo plans had been prepared “with an eye to the Tamawood plans”. As Tamawood put it, there was constant pressure on Habitare and Mondo not to change the Tamawood plans as they are what had been approved and Habitare and Mondo yielded to that pressure.

141    Mondo’s case was that it had created the Mondo plans independently. It adduced evidence of plans pre-dating the first occasion on which Mondo had seen the development approvals to support its contention of independent creation. Tamawood challenged that by reference to the plans and also contended that certain emails, produced by Mondo after Mr Sweeney (Mondo’s principal) but before Mr Keiler (the person at Mondo who drew the plans said to infringe) had given evidence, opened a new line of inquiry which had been explored in cross-examination with Mr Keiler. It was said that this evidence demonstrated that there was substantial conduct between Mr Keiler and Habitare in about February 2006 when Habitare asked Mondo to prepare plans for low cost housing not aimed at any identified construction sites, well before Habitare instructed Mondo in June 2006 to prepare the construction plans in issue. Tamawood submitted it should be inferred that Habitare let Mr Keiler know its requirements (in effect that Habitare used the Tamawood development approval plans to instruct Mondo in the preparation of plans intended to be as close as possible to the Tamawood plans), there being “no doubt on the authorities that a plan created by way of a description of a plan in suit can be a reproduction of it in the copyright sense”. Tamawood cited in support LED Builders Pty Ltd v Eagle Homes Pty Ltd (1996) 35 IPR 215 in which Davies J found an infringement of copyright by reason of indirect copying involving oral instructions.

142    In its closing submissions in response to Tamawood’s case of indirect copying Mondo said that the issue was not pleaded or particularised and arose for the first time during cross-examination. Mondo did not submit that Tamawood should be precluded from putting the submission. It did not submit that it was prejudiced by the submission on the ground that, had it been put earlier, Mondo would have run its case in any different way. Instead, after making the point about the lack of a pleading, Mondo dealt with the substance of the submission on the basis that Mr Sweeney’s evidence that Habitare asked Mondo to develop lower cost housing models and did not instruct Mondo to “denature” Tamawood’s plans should be accepted.

143    We have not been provided with the transcript of closing submissions before the primary judge but it is apparent from her Honour’s reasons that she did not feel called upon to decide whether Tamawood should be permitted to run its case of indirect coping. This appears from the fact that the primary judge did not raise any concern about Tamawood’s indirect copying case but simply treated it as part of the issues with which she was required to deal (see the principal judgment at [152.2]).

144    In its written submissions on the appeal Tamawood contended that the primary judge erred in respect of the Dunkeld and ought to have found infringement of copyright based on the same argument of indirect copying as set out in Tamawood’s closing submissions before the primary judge. Having received those submissions Mondo responded in writing. In so doing Mondo did not suggest that Tamawood was running a case that it should not be permitted to run.

145    In its relatively lengthy oral submissions in the appeal Tamawood, amongst other things, sought to make good its case of indirect copying. Mondo did not object. It was not until Mondo made its oral submissions on the appeal that, for the first time, Mondo contended that Tamawood should not be permitted to make its case of indirect copying.

146    One problem for Mondo is that the same case was made before the primary judge and it must be inferred that, apart from its observation in the written submissions, Mondo did not object to Tamawood making that case and, in particular, did not submit that the primary judge was required to decide whether Tamawood should be permitted to make that case or not. Mondo also suggested no prejudice to the primary judge. In these circumstances it is unsurprising that the primary judge treated the issue of indirect copying as one issue, amongst many, she had to determine. Where pleading points were expressly raised before the primary judge and she was required to rule on them, she did so; for example, the Mondo innocent infringement point (at [265]). It must be inferred that Mondo effectively acquiesced in Tamawood running its case below on the basis of both direct and indirect copying.

147    It is also relevant that the case below was conducted, at least in part, on the basis of indirect copying. This was the purpose of part of the cross-examination of Mr Keiler. This cross-examination occurred without objection. If Mondo, at the time of the hearing, had believed it was prejudiced by the indirect copying case it may be expected that Mondo would have said so, in strong terms, at least during the closing submissions when it could not have been more clear that Tamawood was putting its infringement case on three separate bases. The fact that Mondo did nothing but observe that the case put during the hearing was not as pleaded strongly suggests that Mondo was not in fact prejudiced at all. The things it now suggests it might have done differently are mere speculation, inconsistent with the way in which Mondo in fact conducted itself below.

148    One more point should be made. It should not be too readily accepted that the indirect copying case falls outside the case as pleaded in any event. While there is no doubt that a case of direct copying was pleaded, the pleading included a broad claim that there was some agreement, understanding or mutual belief reached between Habitare and Mondo that the plans required for the further phases of the developments should differ as little as possible from the development approval plans. This encompasses Tamawood’s case of indirect copying as it ultimately emerged from the cross-examination of Mr Keiler.

149    For these reasons, Mondo’s argument that Tamawood should be precluded from arguing its case of indirect copying should not be accepted.

ISSUE 3 – COPYRIGHT INFRINGED IN THE THE DUNKELD PLAN

Primary judge’s reasons

150    The primary judge dealt with this issue at [151] to [210] of the principal judgment.

151    The primary judge said this, which is critical to Tamawood’s contention of error:

162 The first question is whether, in whole or substantially, the Torrington drawings were reproduced in the Duplex 2/Duplex A drawings and the Conondale/Dunkeld drawings were reproduced in the Duplex 1/Duplex B drawings. As the Full Court explained in Ron Englehart, “reproduction” raises the question whether there is a “sufficient degree of objective similarity” between the respective works.

163 If the answer to the first question is in the affirmative, the second question is whether there has been an infringement of Tamawood’s copyright by the respondents in so reproducing the Tamawood drawings – that is, is there a causal connection between the respective works.

152    In respect of the Torrington, the primary judge concluded that there is “sufficient degree of objective similarity between the designs to support a finding of substantial reproduction of the Torrington in the Duplex 2 and Duplex A drawings” (at [174]). Her Honour was also satisfied that “the Duplex 2/Duplex A drawings were the result of copying, whether intentional or otherwise, of the Torrington drawings” (at [198]). Her reasons were that:

    The Mondo Duplex 2/Duplex A drawings was significantly different from any earlier Mondo designs and represented “some departure” from those earlier designs which was unexplained (thereby rebutting Mondo’s independent creation argument) (at [199]).

    The Mondo drawings were created by Mondo to “satisfy Habitare’s need for plans “generally in accordance with” the Tamawood plans” (at [200]).

    “…having accepted the retainer from Habitare, Mondo was under some pressure to produce documents which “generally accorded” with the plans which had already received development approval” (at [201]).

    Mr Keiler said the Mondo drawings would have to “fit the “footprint”” of the Tamawood drawings (at [203]).

    While “similarities in project housing arise out of functional necessity such that independently-created designs may indeed bear similar features, the direct similarities between the Torrington drawing and the Duplex 2/Duplex A are significant” (at [204]).

    The Mondo drawings, according to Mr Keiler, were created “shortly after Tamawood brochure drawings (including the Torrington) were printed by Mondo from the Tamawood website and reviewed by him”, “either contemporaneously with or shortly after he had received copies of the development approvals from Habitare” and “contemporaneously with his discussions with Habitare personnel in order to discuss their requirements” (at [204]).

153    In respect of the Dunkeld, the primary judge concluded at [185] that while the “overall shape of the duplex building is very similar in all three designs (in particular the Dunkeld and Duplex B)”, there were differences, being:

•    The Conondale does not feature an ensuite to Bedroom 1, whereas the Duplex B has that feature.

•    The Duplex B features Bedrooms 2 and 3 at the front of the dwelling, unlike the Conondale/Dunkeld.

•    Bedroom 1 and the ensuite in Duplex B are at the back of the dwelling, unlike in the Conondale/Dunkeld drawings.

•    The Kitchen in Duplex B is not in the middle of the dwelling unlike the Conondale/Dunkeld design, but abutting the common wall, and the Laundry is accessed through the Kitchen.

•    The middle of the dwelling in the Duplex B is dominated by a Family/Living space, unlike the Conondale/Dunkeld design.

154    The primary judge said:

186 Again, looking at the quality of the plans, in my view they represent significantly different dwellings.

187 Accordingly, not only is there no reproduction in whole of the Conondale/Dunkeld in the Duplex 1 or in Duplex B, but it cannot be said that there is reproduction of a substantial part of those designs.

155    Insofar as the issue of causal connection on the Dunkeld is concerned, the primary judge said:

208 In relation to the Duplex 1, I have already found that the Duplex 1 (and Duplex B) are not substantial reproductions of the Conondale/Dunkeld drawings. In the absence of reproduction, I am satisfied that there is no causal connectivity between those Tamawood drawings and the Mondo Duplex 1.

209 In relation to exhibit RJS13-3 produced by Mondo in February 2006, while in my view there are strong similarities between this design and the Dunkeld, this Mondo plan was not used by Mondo or Habitare as a design “generally in accordance” with the development approval. Duplex 1 was the design so used. I am not persuaded that any inference of relevance should be drawn from the existence of RJS13-3, other than the possibility of this design representing progressive internal experimentation in designs by Mondo including by reference to the work of competitors (but evidently, in relation to this design, not used).

Tamawood’s submissions

156    Tamawood endorsed the primary judge’s reference to the principles in Ron Englehart Pty Ltd v Enterprise Constructions (Aust) Pty Ltd (2012) 95 IPR 64; [2012] FCAFC 4, in particular at [46] where Jacobson, Nicholas and Yates JJ said:

Whether or not there has been a reproduction of a work or substantial part of a work raises two discrete but often overlapping issues. First, it must be shown that the copyright work and the putative infringement have a “sufficient degree of objective similarity”. Second, it must be shown that this objective similarity is the result of copying. In SW Hart & Co Pty Ltd v Edwards Hot Water Systems (1985) 159 CLR 466, Gibbs CJ (with whom Mason and Brennan JJ agreed) said at 472:

The notion of reproduction, for the purposes of copyright law, involves two elements – resemblance to, and actual use of, the copyright work, or, to adopt the words which appear in the judgment of Willmer L.J. in Francis Day & Hunter Ltd. v. Bron [[1963] Ch. 587, at p. 614], “a sufficient degree of objective similarity between the two works” and “some causal connection between the plaintiffs’ and the defendants’ work”. Lord Reid said in Ladbroke (Football) Ltd. v. William Hill (Football) Ltd [[1964] 1 W.L.R. 273, at p. 276; [1964] 1 All E.R. 465, at p. 469]:

Broadly, reproduction means copying, and does not include cases where an author or compiler produces a substantially similar result by independent work without copying. And, if he does copy, the question whether he has copied a substantial part depends much more on the quality than on the quantity of what he has taken.

(See also [1964] 1 W.L.R., at pp. 283, 288 and 293; [1964] 1 All E.R., at pp. 473, 477 and 481.) In the same case, Lord Evershed said [[1964] 1 W.L.R., at p. 283; [1964] 1 All E.R., at p. 473], “that what amounts in any case to substantial reproduction ... cannot be defined in precise terms but must be a matter of fact and degree”.

157    According to Tamawood, however, the primary judge erred by treating the question of objective similarity as necessarily anterior to the question of causal connection when these are “discrete but often overlapping issues”.

158    As Tamawood put it the primary judge:

    erred by making positive findings on the factually distinct question of causal connection based entirely on the finding as to lack of objective similarity (at [208]);

    erred by equating the ultimate question of reproduction with the question of objective similarity (at [186]);

    correctly gave weight to the surrounding circumstances which indicated causal connection between the relevant Mondo drawings and the Torrington but failed to give any weight to the same circumstances which were equally relevant to the question of causal connection between the relevant Mondo drawings (exhibit RJS13-3 and Duplex 1) and the Dunkeld.

159    Tamawood submitted that the proper inference on the evidence was one of causal connection on the following basis (the principal judgment being referred to as PJ):

Prior to early 2006 Mondo had not independently created drawings that were similar to the Dunkeld.

In February 2006, Mondo produced a drawing, which for the first time resembled the Dunkeld. This drawing is at PJ [207]. The creation of the drawing at PJ [207] occurred at a time when Habitare was re-commencing its relationship with Mondo.

In the process of Habitare re-commencing its relationship with Mondo, one of its principal initial requests was for costings and drawings for dwellings for Habitare.

That Mondo’s drawings in February 2006 (after Habitare recommenced a relationship with Mondo) were strikingly similar to the Dunkeld and very different from any earlier Mondo drawings was logical. At that time, with development consent based on Tamawood’s plans imminent, Habitare would hardly be interested in hypothetical designs that had no immediate application.

Mr Keiler, an employee of Mondo, played a central role in the creation of the February 2006 drawing and the interactions between Habitare and Mondo in early 2006. His evidence during cross-examination should be read in full; it included the following (emphasis added):

Thanks. And there would have been, would there not, some toing and froing in terms of sending them designs – either sending them designs by email or in terms of face-to-face meetings? ---Yes.

Because they would have to have looked at whatever your ideas were and given you the feedback? --- That’s correct.

The only explanation for a sudden shift in Mondo’s plans so as to be so close to the Dunkeld is that when Mr Keiler sent whatever preliminary sketches he had done…the people from Habitare indicated where they wanted the rooms to go, and what layout they wanted. Mr Keiler…working directly from the Dunkeld which, it is common ground, were plans that were in Habitare’s possession, and indeed had been used in the DAs lodged in December 2005. Habitare had every good reason for doing so: it knew the Tamawood plans were part of the DAs approved by Brisbane City Council and that the plans could be built very economically…a critical consideration at the time (PJ [201]-[202]).

…

In addition to the above matters, as her Honour found, Habitare needed Mondo’s plans to be “generally in accordance” with the plans which Habitare had used to submit its DA to the Brisbane City Council: PJ [192]. Her Honour noted that this was not in dispute: PJ [192]. Thus: (1) Tamawood’s plans were necessarily reviewed; (2) the footprint of the dwellings had to be the same as the DA; and (3) any changes in the Mondo drawings had to be “smaller, inconsequential” in scope and indeed less than the types of changes which are referred to in the planning legislations as “minor” and in respect of which there is a separate application process.

160    Further, approached by reference to proper principles it can be seen that:

Her Honour also erred in finding that Duplex 1 and Dunkeld “represent significantly different dwellings”. To the contrary, there was clearly sufficient resemblance to amount to the taking of a substantial part. Although there are differences, the overall level of resemblance far outweighs the differences. Using Lindgren J’s approach in Eagle v Austec (1999) 87 FCR 415 at 435, one can look through the Duplex 1 and see the Dunkeld “embedded” in the design.

Mondo’s submissions

161    Mondo emphasised that the primary judge had held that:

…even considering the Conondale and Dunkeld as a single work:

(a) The evidence of the expert called by Mondo is to be preferred

(b) The alleged work in suit and the infringing work are “quite dissimilar dwellings”

(c) Consequently there is no reproduction of the whole or even a substantial part

162    Further, that:

A side by side comparison of the Conondale and the alleged infringing work, the Mondo Duplex 1, shows that they are completely different works having regard to both the inside arrangement of rooms and the outside shape of the entire structure.

163    Mondo submitted that the primary judge had not erred in that:

As a matter of logic, if there is no objective similarity, then the process leading to creation of the alleged infringing work does not matter.

The appellants’ contention, that a finding of intention to copy means that there must be a finding of objective similarity, is expressed based on passages from the reasons of Lindgren J in Eagle v Austec [(1999) 87 FCR 415)] at [86] and [92] … In Tamawood Ltd v Henley Arch Pty Ltd [(2004) 61 IPR 378; [2004] FCAFC 78] at [46], Lindgren J, with whom Wilcox J agreed said, regarding Eagle:

The primary judge expressed ... surprise at a statement in Eagle (at [86]) that

'where subjective copying occurs there can be expected to be found an infringement, unless it transpires that the product is so dissimilar to the copyright, work that the copyright work can no longer be seen in the work produced. Referring to an expectation, that statement allows for exceptions. Also it must be read in context. As stated earlier in the judgment (at [72]) Eagle was better regarded as a case of reproduction of the whole of the copyright work, so it was strictly not necessary to undertake the 'substantial part' enquiry. Eagle was a case of subjective copying of the shapes and arrangement of, and inter-relationship between rooms, and of traffic flow, throughout the house. …

It was acknowledged several times elsewhere in the judgment in Eagle (at [69], [74] and [103], for example) that subjective copying alone is not enough, and that where a part is taken it must be a substantial part of the copyright work. (Peterson J's aphorism, 'What is worth copying is prima facie worth protecting', …was in fact invoked in the context of infringement and 'substantial part' in Ladbroke by Lord Reid at 279 and by Lord Pierce at 293-294, but the House of Lords may be taken to have cautioned against this practice in Designer’s Guild).

The passages in Eagle relied upon by the appellants in their submissions are not a foundation for the proposition that a finding of subjective copying displaces the need to find objective similarity, or for the proposition that subjective copying demonstrates objective similarity.

Discussion

164    We conclude that the primary judge’s consideration of the issues of causal connection in respect of the Dunkeld plans miscarried for the reasons given by Tamawood. In particular, the factual considerations which led her Honour to conclude that there was a causal connection between Mondo’s Duplex 2/Duplex A plans and Tamawood’s Torrington plans were equally relevant to the question of causal connection between Mondo’s Duplex 1 plans and Tamawood’s Dunkeld plans.

165    For these reasons, error having been established, it is necessary for this Court to consider the issues for itself.

166    First, insofar as causation is concerned, Tamawood’s submissions should be accepted for precisely the reasons the primary judge gave in respect of the Torrington plans. The Duplex plan created by Mondo in February 2006 which is Exhibit RSJ 13-3, as the primary judge correctly said, discloses “strong similarities” with the Dunkeld plans, and is of real significance. As Tamawood said, this plan is both strikingly similar to the Dunkeld plans and different from any Mondo design that preceded it. The plan first appears at the time that Habitare re-commenced dealings with Mondo. The inference that Tamawood contends should be drawn from the evidence is not only proper, but compelling. There is simply no other explanation for the striking similarity between exhibit RJS 13-3 to the Dunkeld plans other than the “toings” and “froings” between Habitare and Mr Keiler of Mondo who prepared exhibit RJS 13-3, and the “feedback” which Habitare gave to Mr Keiler as part of that process. The obvious inference, and the one that should be drawn, is that Habitare as part of that feedback process, told Mr Keiler what it wanted, and what it wanted was a development similar enough to the Dunkeld to satisfy the development approval condition of “generally in accordance with”. It must be inferred that, for this purpose, Habitare used the Dunkeld plans as the basis for its instructions to Mr Keiler.

167    This conclusion does not answer, but is relevant to, the question of objective similarity. Given that substantial reproduction involves the quality of what is taken more than the quantity and is a question of fact and degree, the finding of causal connection between the copyright work and the alleged infringing work cannot be divorced from the assessment of objective similarity.

168    Comparison between the two sets of plans discloses sufficient objective similarity to conclude that the primary judge’s conclusion cannot be sustained. The footprints of the duplexes are identical but for the addition of the patio at the rear of the Mondo Duplex 1 plans. The internal and other external differences all result from two changes – swapping the position of bedroom 1 with bedroom 2 and swapping the position of bedroom 3 with the living/entry space. All changes appear consequential on these two basic changes in location. The changes, however, are minor, in the sense that the overall relationship between the internal spaces and the exterior remain the same. The duplex is a single storey side by side and mirror reversed building. Each building consists of eight basic spaces – bedrooms 1, 2 and 3, bathroom, kitchen, living, dining and garage. In the Dunkeld bedrooms 1 and 2 align along the exterior side wall with an en-suite bathroom in bedroom 1 and a toilet in between the bedrooms. In the Mondo Duplex 1 the differences are only that bedrooms 1 and 2 are reversed and bedroom 1 has a smaller en-suite bathroom so that the other area (a toilet in the Dunkeld) is the major bathroom area in the Duplex 1. Next to the bedrooms are an entry, living and dining area. The difference is that the Dunkeld dining/living area is aligned along the rear of the building, adjoining bedroom 3. In the Mondo Duplex 1 bedroom 3 has been shifted to the entry/living area in the Dunkeld, with the consequence that the entry must be separated into a hallway leading to the kitchen. In both the kitchen sits in the middle area of the building as a galley style area. In the Dunkeld the kitchen sits between the dining and living rooms. In the Mondo Duplex 1, because of the relocation of bedroom 3, it sits between the dining/living space and bedroom 3. The garage sits in the same location in both sets of plans.

169    The particularly striking feature between the two plans is that it is relatively easy, in the mind’s eye, to picture the Dunkeld plan, swap over bedrooms 1 and 2 and make a minor adjustment to the bathroom arrangements between those bedrooms, put bedroom 3 to the front of the building in the entry/dining area, and the picture that results is the Mondo Duplex 1. The fundamental relationship between the internal spaces and the exterior of the building is substantially, indeed overwhelmingly, the same.

170    In Eagle Homes Pty Ltd v Austec Homes Pty Ltd (1999) 87 FCR 415; [1999] FCA 138 at [91] Lindgren J said:

In no case concerning project homes of which I am aware where there has been such a finding of actual copying, has it been held that nonetheless the copier will not have infringed copyright unless there is in addition an extraordinarily close resemblance between his or her drawing and the copyright work. Rather, I think that the issue of sufficient objective similarity simply poses in the case of project homes, as in other cases, the usual question whether the copyright drawing can still be seen embedded in the allegedly infringing drawing, that is, whether the allegedly infringing drawing has adopted the "essential features and substance" of the copyright work: Hanfstaengl v Baines & Co [1895] AC 20 at 31 (Lord Shand)…

171    Similarly, in this case, the Dunkeld plans can be seen embedded in the Mondo Duplex 1 plans. Whether that necessarily leads to a conclusion that Mondo reproduced the whole of the work in suit is moot. It is sufficient to say that there has been substantial reproduction of the Dunkeld plans. Its essential features and substance have been copied. It follows that the primary judge was in error in concluding to the contrary. Tamawood made out its case that Habitare and Mondo had infringed Tamawood’s copyright in the Dunkeld by their conduct in respect of the Mondo Duplex 1 plans, which reproduced a substantial part of the Dunkeld without the licence of Tamawood.

172    For these reasons ground 1 in Tamawood’s appeal in QUD 223 of 2014 must be allowed.

ISSUE 4 – MONDO AS AN INNOCENT INFRINGER

173    The primary judge said this:

264 In its written submissions Mondo submits that issues relevant to the claim against Mondo raise the question of innocent infringement by Mondo.

265 Tamawood submits that Mondo has not pleaded this defence. In my view this submission is correct. I can identify no aspect of Mondo’s second further amended defence which raises innocent infringement in accordance with s 115(3) of the Copyright Act. It follows that I do not accept Mondo’s submission that the question of innocent infringement is relevant in relation to Mondo’s defence against claims by Tamawood.

174    Mondo contended that the primary judge erred. According to Mondo, although its defence did not refer to s 115(3) of the Copyright Act (the provision which provides for what is referred to as “innocent infringement”), the issue was “alive on the pleadings” and in the hearing because Mondo had raised the issue in a joint statement of issues and the evidence dealt with the same substantive matters as s 115(3) albeit without expressly referring to that provision.

175    Section 115(3) provides that:

Where, in an action for infringement of copyright, it is established that an infringement was committed but it is also established that, at the time of the infringement, the defendant was not aware, and had no reasonable grounds for suspecting, that the act constituting the infringement was an infringement of the copyright, the plaintiff is not entitled under this section to any damages against the defendant in respect of the infringement, but is entitled to an account of profits in respect of the infringement whether any other relief is granted under this section or not.

176    Mondo also contended that the primary judge erred in an interlocutory decision in which, after the principal judgment had been delivered, she refused to grant Mondo leave to amend its defence to raise s 115(3) (Tamawood Ltd v Habitare Developments Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) (No 4) [2013] FCA 1047).

177    These submissions do not have merit. It is plain that Mondo did not raise s 115(3) in the hearing below. It was on notice through the joint statement of issues that Tamawood sought to hold Mondo to its lack of pleading of s 115(3) and yet made no application to amend its defence until after the principal judgment was delivered. The primary judge was entitled to refuse leave in all of the circumstances and made no error of principle in so doing. It should not be concluded that Mondo’s conduct had no effect on Tamawood’s conduct of the hearing below. Had Mondo pleaded s 115(3) Tamawood would have had every reason to explore in cross-examination issues that were not explored on the issues in dispute. Contrary to Mondo’s submissions the finding at [295] of the principal judgment (that “Mondo would never have entered a contract with Habitare to produce drawings for the developments of the Calamvale and Brackenridge sites had Mr Speer and Mr O’Mara, on behalf of Habitare, not assured Mr Sweeney that there were no outstanding issues with Tamawood”) does not answer the tests in s 115(3). As Tamawood submitted that finding, and the evidence that was adduced, does not properly engage with issues such as the inquiries that could or should have been made by Mr Sweeney so as to satisfy the objective limb of s 115(3).

178    That said, there is a better reason not to disturb the primary judge’s finding. It is that the notion that Mondo, on the evidence, could satisfy the requirements of s 115(3) borders on the fanciful.

179    Mondo submitted as follows:

(e) by June 2006 key personnel at both Habitare and Mondo were concerned about copyright issues in connection with Mondo preparing “generally in accordance with” plans. This is manifest in the following:

(i) evidence from Speer that he knew and understood the existence of copyright when Habitare would not be able to use the house designs which had been prepared;

(ii) Sweeney gave evidence at a meeting with Speer and O’Mara on 21 June 2006. He asked Speer whether Tamawood would be concerned about Habitare proceeding with the development approval in relation to the Tamawood plans notwithstanding that Habitare would not engage Tamawood;

(f) in cross examination Speer said the following words:

As far as I was concerned at that point in time there was no outstanding issues with Tamawood.

(g) O’Mara gave evidence that he recalled a conversation in which Speer was asked by Sweeney, “Is everything resolved with Tamawood so that you are okay to go ahead and use the DA?” and Speer replied, “No everything is fine and there is no problem;”

(h) the June conversation was the substantive defence raised by Mondo in response to the allegation against it by Tamawood that Mondo was a joint tortfeasor together with the Habitare respondents in the infringement action and in relation to Tamawood’s claim based on section 115(4). The allegation against Mondo in this respect failed because of the existence of the June conversation.

180    The problem is this. Mr Sweeney was an experienced architect. It would have been easy for him to call Tamawood and ask it what the position was in respect of copyright. The primary judge’s findings that Mr Sweeney had “every reason” to accept Habitare’s assurances (at [294]) and had sought to avoid infringing Tamawood’s copyright (at [295]) are not findings in the context of s 115(3). They were findings in the context of Mondo’s cross-claim against Habitare for misleading and deceptive conduct. The contexts are different and call up different considerations.

181    The findings do not establish that Mondo made reasonable enquiries about the existence of copyright. Having done nothing more than rely on the assurances of Habitare, which was sufficient to satisfy the primary judge on Mondo’s misleading and deceptive conduct claim, does not come close to establishing that Mondo had no reasonable grounds for suspecting that its acts would infringe Tamawood’s copyright. Mondo would have to have done far more than this in an evidentiary sense to satisfy s 115(3). Mondo’s problem is thus one of substance, not merely pleading.

182    For these reasons grounds 3 of Mondo’s appeal in QUD 235/2014 must be dismissed (the consequence being that the whole of Mondo’s appeal in QUD 235/2014 must be dismissed given the preceding conclusions).

ISSUE 5 – AUTHORISATION OF HABITARE’S INFRINGEMENTS

Primary judge’s reasons

183    The primary judge (at [220]) referred to the principal provision concerning infringement of copyright, ss 36(1) and (1A) of the Copyright Act, as follows:

(1) Subject to this Act, the copyright in a literary, dramatic, musical or artistic work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorizes the doing in Australia of, any act comprised in the copyright.

(1A) In determining, for the purposes of subsection (1), whether or not a person has authorised the doing in Australia of any act comprised in the copyright in a work, without the licence of the owner of the copyright, the matters that must be taken into account include the following:

(a) the extent (if any) of the person's power to prevent the doing of the act concerned;

(b) the nature of any relationship existing between the person and the person who did the act concerned;

(c) whether the person took any reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice.

184    Following consideration of the statements of the High Court in University of New South Wales v Moorhouse (1975) 133 CLR 1 at 12-13 and 20-21, that the word “authorise” should be understood to mean “sanction, approve, countenance” (at [223] and [224]) the primary judge referred to the competing submissions about the liability of Peter O’Mara and Mr Johnson of Habitare in these terms:

228 Tamawood’s claims of authorisation and procurement are similar in relation to Mr Peter O’Mara and Mr Johnson. In summary, Tamawood claims:

•    Mr O’Mara has been a director of the sixth respondent since 19 December 2001, the seventh respondent since 3 October 2001 and the eighth respondent since 18 January 2002. Mr Johnson was the company secretary of the sixth, seventh and eighth respondents for over five years until December 2007, and has been an alternate director of each company since April 2008.

•    Evidence of Mr Speer during cross-examination demonstrated that Mr O’Mara held the most senior position at Habitare, made final decisions on which projects would be picked up and which would not, and could properly be described as “the boss”. To that extent, Mr O’Mara was the controlling mind of the Habitare companies.

•    Evidence of Mr Shane O’Mara during cross-examination included that Mr Johnson was aware of negotiations with Tamawood and the lodgement of the application for development consent, was taking a close interest in matters such as the pricing of the homes, was involved in making the final decision to proceed with the developments, and was aware of the breakdown of the relationship between Habitare and Tamawood and the need to engage Mondo.

•    Both Mr Peter O’Mara and Mr Johnson were responsible for the structuring of the business, in particular financial arrangements involving the Habitare business.

•    The evidence before the Court was that Habitare had only approximately 12 employees in the 2005-2006 period, which reinforces the likely knowledge Mr Peter O’Mara and Mr Johnson would have had of the affairs and activities of the Habitare companies.

•    In 2005-2006 the Calamvale and Brackenridge projects were two of the four main projects on Habitare’s agenda, necessitating a high degree of attention from Habitare executives.

•    Both Mr O’Mara and Mr Johnson had power and authority to prevent infringement by the Habitare companies.

•    It is significant that neither Mr O’Mara nor Mr Johnson gave evidence at the trial.

229 Tamawood’s claims are rejected by Mr O’Mara and Mr Johnson on the basis that, in summary:

•    Neither Mr Peter O’Mara nor Mr Johnson were engaged in the day to day management of either the Calamvale or the Brackenridge projects. The evidence demonstrates that Mr Speer and Mr Shane O’Mara were directly responsible for both projects.

•    The principal activities of Mr Peter O’Mara and Mr Johnson were on the financial side of the business, including raising funds for projects and marketing.

•    Tamawood is asking the Court to take some generalities and infer knowledge at particular times of particular acts, which Tamawood does not identify.

•    There is nothing which demonstrates that Mr Johnson or Mr Peter O’Mara were aware of an act of copying at some time after Mr Speer had made a decision not to employ Tamawood as the builder. In light of the engagement by Habitare of Mondo, the most likely state of their knowledge was that any potential breach of Tamawood’s copyright would be avoided by the employment of Mondo.

185    The primary judge concluded at [230] that “neither Mr Peter O’Mara nor Mr Johnson authorised any act comprised in Tamawood’s copyright in the Tamawood drawings, nor procured any such act”. Her reasons may be summarised in these terms:

(a)    while the executive roles of Mr Peter O’Mara and Mr Johnson clearly gave them significant authority in the affairs of Habitare and its subsidiaries, it “does not follow that either s 36(1) of the Copyright Act or cases in which this section has been considered justify an automatic conclusion in all circumstances that a director of a company, even a managing director or company secretary, has “authorised” an act committed by the company infringing copyright of a third party” (at [231] and [233]);

(b)    “[t]he mental element required by s 36(1) must, in my view, contemplate some level of sanction or endorsement by the director of the act by the company infringing the copyright of the third party” (at [234]);

(c)    “the evidence before the Court shows no direct involvement by Mr Peter O’Mara or Mr Johnson in the active management of the Calamvale and Brackenridge project developments, or of any relationship with Mondo. While both Mr Peter O’Mara and Mr Johnson may have been apprised in general terms of the events relevant to the development of the Calamvale and Brackenridge sites, it is clear that Mr Speer and Mr Shane O’Mara were the persons responsible for making critical decisions pertinent to this project as project managers consulting to Habitare” (at [235]); and

(d)    accordingly, “it cannot be said, however, that expressly or impliedly Mr Peter O’Mara and Mr Johnson “authorised” the commission of acts by [Habitare and its subsidiaries] to infringe the copyright of third parties” (at [235]).

186    The primary judge also observed at [237] that:

it is reasonable for the Court to infer that the engagement of Mondo as new architects in relation to the Calamvale and Brackenridge sites by Habitare (following the decision of Mr Speer and Mr Shane O’Mara) would lead Mr Peter O’Mara and Mr Johnson to the conclusion that the possibility of any infringement of Tamawood’s copyright by [Habitare and its subsidiaries] had been averted. Considered in that light, a reasonable inference to draw is that Mr Peter O’Mara and Mr Johnson had no knowledge or reason to suspect that any infringement of Tamawood’s copyright might occur (cf remarks by the Full Court in Cooper v Universal Music Australia Pty Ltd (2006) 156 FCR 380 at [145]). It also follows that Mr Peter O’Mara and Mr Johnson cannot be said to have authorised any infringements of Tamawood’s copyright by Mondo.

Tamawood’s submissions

187    Tamawood submitted that the primary judge erred. Peter O’Mara and Mr Johnson did not give evidence. There was no explanation for them not being called. Accordingly, an inference was open that their evidence would not have assisted their case (Blatch v Archer (1774) 1 Cowp 63; (1774) 98 ER 969). However, instead of drawing that inference the primary judge drew an inference in favour of Peter O’Mara and Mr Johnson. She inferred that the engagement of Mondo led to the inference that Peter O’Mara and Mr Johnson considered the possibility of infringement of Tamawood’s copyright had been averted (at [237]). This was not open to the primary judge.

188    Further, the primary judge imposed a requirement for direct involvement and active management of the developments (at [235]) which imposes an unwarranted gloss on the terms of s 36(1A). In any event, there was ample evidence of such involvement as follows:

By way of background, the evidence established that in 2005-06 Habitare only had about 12 employees and the Calamvale and Brackenridge projects were two of four main projects on Habitare’s agenda.

In respect of P. O’Mara: (a) at all material times he was a director of the Sixth, Seventh and Eighth Respondents; (b) the structuring of the business and the use of corporate vehicles was in his province together with Mr Johnson…(c) he had the “final call” on “these sorts of projects”… (d) he was aware of negotiations with Tamawood and the lodgement of the application for development consent… (e) he knew the sorts of houses Tamawood was proposing to build as he had seen Tamawood’s plans and the DA… (f) Shane O’Mara told him that an agreement with Tamawood would not be finalised… (g) Shane O’Mara told him that Mondo had been engaged to assist through this difficulty… (h) Shane O’Mara told him that, unless the Sixth and Seventh Respondents intended to start afresh with a new DA then plans that they used for the developments going forward had to be certified as “Generally in Accordance” with Tamawood’s plans the subject of the development approval… and (i) Shane O’Mara kept him updated on how the solution with Mondo was working…

In respect of Mr Johnson: (a) he was variously Secretary and alternate director of the Habitare companies… (b) he was taking a close interest in matters such as pricing of the homes… was involved in making the final decision to proceed with the developments…he put the “numbers together” to determine the feasibility of the project… (c) he was aware of the sorts of plans Tamawood was proposing to use for the developments… (d) Shane O’Mara told him that there would be a problem using Tamawood’s plans and that the Sixth and Seventh Respondents had to start afresh… and (e) Mr Johnson’s file note of a meeting with Tamawood on 8 September 2005…which records “Need evidence of finance before plans lodged” demonstrating Mr Johnson’s understanding that Habitare were not free to use Tamawood’s plans…

189    Tamawood also submitted that:

Moreover, at the very least, there was conferred by Mr P. O’Mara and Mr Johnson on Shane O’Mara and Peter Speers “a general permission” such that “it is…unnecessary that the authorizing party have knowledge that a particular act comprised in the copyright will be done”: per Jacobs J University of New South Wales v Moorhouse (1975) 133 CLR 1 (Moorhouse) at pp 20-21 (in this respect unaffected by Roadshow Films Pty Ltd v iiNet Ltd (2012) 248 CLR 42), which is authorisation within the Act.

Peter O’Mara’s submissions

190    For Peter O’Mara it was submitted that:

Tamawood’s task was to prove a suite of facts sufficient to warrant the conclusion that it was more likely than not that Mr Peter O’Mara knew that it was likely that copyright infringement would take place and, having that knowledge, did nothing to stop it.

The facts upon which Tamawood rely in this appeal are sufficient to demonstrate its failure. He knew, as Tamawood points out, that Mondo had been engaged to assist in avoiding the difficulty which the decision to part ways with Tamawood presented. The difficulty presented was Tamawood’s copyright. Any person with the level of comprehension that Tamawood wants to attribute to Mr Peter O’Mara would have drawn that conclusion in the circumstances and would have understood the appointment of Mondo to be directed towards avoiding that difficulty.

That being so, Tamawood simply failed to raise its circumstantial case against Mr Peter O’Mara beyond the level of competing conjectures.

That failure is not repaired by reference to the much-misunderstood principles articulated in Jones v Dunkel. That case is (relevantly) authority for the proposition that the Court may (not must) infer from the failure of a party to call a witness that the witness would not have said anything to assist the party’s case.

Jones v Dunkel is not authority for the proposition that the Court can infer from such circumstances that the witness would have said something to assist the opposing party’s case. That is what Tamawood suggests the learned trial judge should have done, although it does identify the precise fact to be inferred.

It is also important to understand that Jones v Dunkel does not hold that, in the absence of a party giving evidence, the Court may not draw an inference favourable to that party on the proven facts. Indeed, that is antithetical to Jones v Dunkel. The point is that the facts must be examined, however proved, to determine whether, and if so, what, inference can be drawn.

…

This case is distinguishable from Moorhouse. In Moorhouse, the University supplied the photocopier and the books and there was an implied invitation for users to use the photocopiers to copy the library’s books. In this situation, Mr Peter O’Mara and Mr Johnson gave Mr Shane O’Mara and Mr Peter Speer conduct of the early stage of the developments. Mr Peter O’Mara and Mr Johnson did not hand Tamawood’s plans to Mr Shane O’Mara and Mr Speer and say ‘use these’. There has been no suggestion of their creating some culture encouraging, or workplace facilitating, infringement.

In any event, supposing that knowledge could be implied through the “general permission” as Tamawood contends (presumably satisfying the mental element that her Honour found was lacking), section 36(1) of the Copyright Act specifies ‘the matters that must be taken into account’ when considering authorisation including whether reasonable steps were taken to avoid or prevent the doing of the act. As set out above, her Honour found that engaging Mondo to prepare new plans by Mr Peter O’Mara constituted reasonable steps. A finding which Tamawood does not seek to disturb.

191    Mr Johnson, who has been declared bankrupt, did not appear. His trustee in bankruptcy raised no objection to the matter proceeding against Mr Johnson.

Discussion

192    Contrary to the submissions for Peter O’Mara, the evidence, as referred to by Tamawood, presented a case overwhelmingly in favour of the inference that Peter O’Mara and Mr Johnson authorised the infringements. The issue is not one to be resolved at the level of principle, by reference either to Blatch v Archer or Jones v Dunkel. The problem is that, on the facts as found and the undisputed evidence, no inference could properly be drawn that Peter O’Mara and Mr Johnson considered that the possibility of any infringement of Tamawood had been averted by the appointment of Mondo.

193    First, in the circumstances as described by Tamawood in its submissions, Peter O’Mara and Mr Johnson must have known that the development, as constructed, would have to be “generally in accordance with” the Tamawood plans. To state the obvious, this had the consequence that in order to be useful any plans prepared by Mondo would also have to be “generally in accordance with” the Tamawood plans.

194    Second, Peter O’Mara and Mr Johnson must be taken to have known that Habitare’s choice was either to avoid any risk of infringement by obtaining new development approvals on the basis of new plans (which, for obvious and possibly compelling commercial reasons Habitare did not wish to do) or to proceed by instructing Mondo to prepare construction plans “generally in accordance with” the Tamawood plans. While the requirement for the construction plans to be “generally in accordance with” the Tamawood plans did not necessarily mean that there would be an infringement of copyright (the two concepts being different and arising in different contexts), it is (or ought to have been) obvious that the shortcut which Habitare wished to take involved a risk of infringing copyright that obtaining new development approvals would have avoided. The evidence discloses keen awareness of this risk on the part of Habitare and Mondo – an awareness that Peter O’Mara and Mr Johnson must be taken to have shared.

195    Third, despite this awareness, Peter O’Mara and Mr Johnson must also be taken to have endorsed and ultimately approved the shortcut approach.

196    In these circumstances, the proper inferences to be drawn are that Peter O’Mara and Mr Johnson had the power to prevent the infringements. They could have required Shane O’Mara and Mr Speer to obtain fresh development approvals in order to avoid the real risk of infringement that the shortcut approach involved but did not do so. In so doing, it must be inferred that they preferred Habitare’s commercial interests to those of Tamawood (not surprisingly). They were in ultimate control of the development process and the actions taken by Habitare and its subsidiaries. They did not take steps to avoid the infringement either by ensuring that fresh development approvals, not based on the Tamawood plans, were sought or that the conduct of Habitare’s employees and their instructions to Mondo would not involve any infringement of copyright in the Tamawood plans. In these circumstances, there was no proper foundation for inferring that Peter O’Mara and Mr Johnson believed that the possibility of infringement of copyright in the Tamawood plans had been averted by the engagement of Mondo. It was the engagement of Mondo to prepare construction plans that were “generally in accordance with” the Tamawood plans that itself gave rise to the obvious risk, perceived by all, of infringement of copyright. The fact that the Habitare employees and Mondo might have thought (or hoped) they had successfully avoided that risk does not speak against the conclusion that Peter O’Mara and Mr Johnson authorised the infringements of copyright found to have been committed by Habitare’s employees and its subsidiaries.

197    The arguments put for Peter O’Mara against this conclusion are not persuasive. They fail to confront the reality of the circumstances as disclosed in the submissions for Tamawood summarised above. Those circumstances demand the inference that it was more likely than not that Peter O’Mara and Mr Johnson knew that there was a real risk that the process in which Habitare was involved would infringe Tamawood’s copyright and did nothing to avert that real risk. To the extent that it was submitted that the risk that they needed to appreciate was that it was more likely than not that copyright would be infringed, that submission should not be accepted. Authority was not cited to support it. As a matter of principle, why it is necessary, for authorisation to be found, for the risk of copyright infringement perceived by a principal to itself be a probable, as opposed to a real (in the sense of not trivial or fanciful) risk of infringement is obscure. In any event, the circumstances do not lead to a conclusion of mere competing conjectures, for the reasons already given.

198    It follows from these matters that grounds 2 and 3 of Tamawood’s appeal should be allowed.

ISSUE 6 – ADDITIONAL DAMAGES?

Primary judge’s reasons

199    The primary judge dealt with the issue of additional damages under s 115(4) of the Copyright Act at [266] to [275] of the principal judgment.

200    Section 115(4) provides as follows:

(4) Where, in an action under this section:

(a) an infringement of copyright is established; and

(b) the court is satisfied that it is proper to do so, having regard to:

(i) the flagrancy of the infringement; and

(ia) the need to deter similar infringements of copyright; and

(ib) the conduct of the defendant after the act constituting the infringement or, if relevant, after the defendant was informed that the defendant had allegedly infringed the plaintiff’s copyright; and

(ii) whether the infringement involved the conversion of a work or other subject matter from hardcopy or analog form into a digital or other electronic machine readable form; and

(iii) any benefit shown to have accrued to the defendant by reason of the infringement; and

(iv) all other relevant matters;

the court may, in assessing damages for the infringement, award such additional damages as it considers appropriate in the circumstances.

201    The primary judge referred to Futuretronics.com.au Pty Limited v Graphix Labels Pty Ltd (No 2) (2008) 76 IPR 763; [2008] FCA 746 at [268] in these terms:

The section entitles the copyright owner to damages for “flagrant” infringement. In considering s 115(4) in Futuretronics.com.au Pty Limited v Graphix Labels Pty Ltd (No 2) (2008) 76 IPR 763; [2008] FCA 746, Besanko J observed:

[19] The meaning of “the flagrancy of the infringement” has been described in various ways. In Ravenscroft v Herbert and New English Library Limited [1980] RPC 193 Brightman J referred to it as “scandalous conduct, deceit and such like; it includes deliberate and calculated copyright infringement”; in Prior v Lansdowne Press Pty Ltd [1977] VR 65 at 70, Gowans J (at 70) referred to it as a “calculated disregard of the plaintiff’s rights, or cynical pursuit of benefit”; and in Raben Footwear Pty Ltd v Polygram Records Inc (1997) 75 FCR 88 at 103 flagrancy was said to connote conduct which could probably be described as “glaring, notorious, scandalous” or “blatant”. In Polygram at 461-462 Lockhart J said that flagrancy did not include mere mistakes or carelessness and that if the infringer mistakenly believed that he or she owned the relevant copyright, or acted in the bona fide belief that no copyright subsisted in the plaintiff’s work then the conduct was not flagrant.

202    Thereafter, the primary judge concluded that the evidence did not support a conclusion that Habitare, Peter O’Mara or Mr Johnson should be liable for additional damages under s 115(4) for the following reasons:

272 In relation to Habitare, I accept Mr Musgrave’s submission that the Habitare executives, in particular Mr Speer, having perceived there to be a copyright issue concerning the Tamawood drawings, sought to address that issue by arranging for new plans to be drawn. While there is also evidence that Habitare had indicated to Mondo that Habitare had resolved any outstanding issues with Tamawood concerning the Tamawood drawings and the project sites (when in fact such resolution had not occurred), I am not persuaded that the facts support a finding of flagrant infringement of copyright.

273 In relation to Mondo, I consider its actions were predicated upon at least two false assumptions, namely:

•    its belief that Tamawood had in fact used Mondo’s plans (particularly in relation to the Torrington drawings); and

•    its belief that Habitare had resolved outstanding issues with Tamawood.

274 While these issues could possibly have been, in turn, resolved by actions and inquiries from Mondo, such a conclusion is speculative. I am not persuaded that the events involving Mondo are supportive of a finding of a calculated disregard of Tamawood’s rights by Mondo, or scandalous or deceitful conduct.

Tamawood’s submissions

203    Tamawood submitted that:

Where infringement is established the Court may award additional damages, if satisfied it should having regard to flagrancy and other matters referred to in s 115(4): Aristocrat Technologies v DAP Services (2007) 157 FCR 64 per Black CJ and Jacobson J at [40]. Flagrancy is not a prerequisite for an award of additional damages: ibid at [41]. Deterrence and the benefit which accrued to the infringer are relevant factor: ibid at [43] and [44].

The Habitare companies, the directors and Mondo had knowledge of Tamawood’s copyright in the drawings but nevertheless proceeded on a path fraught with risk (ie making drawings “Generally in Accordance” with Tamawood’s drawings).

Competing submissions

204    Mondo stressed that there was no error in the primary judge limiting her consideration to the issue of flagrancy because Tamawood pleaded an entitlement to additional damages based solely on the flagrancy of the conduct said to constitute the infringements.

205    Peter O’Mara relied on the same submissions that had been put in support of his defence of the primary judge’s finding of lack of authorisation.

Discussion

206    Tamawood’s contentions of error by the primary judge should be rejected. It is true that flagrancy is not a pre-condition to a conclusion that additional damages should be awarded under s 115(4). Tamawood, however, pleaded a case for additional damages principally based on the conduct being flagrant. The primary judge reasonably concluded that the conduct resulting in the infringements was not flagrant. The primary judge cannot properly be criticised for her focus on flagrancy in circumstances where such a characterisation was a critical component of the way in which Tamawood pleaded its case.

207    For these reasons ground 4 of Tamawood’s appeal should be dismissed.

ISSUE 7 – BLOOMER PARTIES – INNOCENT INFRINGERS?

Primary judge’s reasons

208    The primary judge, having identified the terms of s 115(3) of the Copyright Act (set out above), summarised the applicable principles in these terms:

258 Section 115(3) provides for relief in the form of an account of profits only in circumstances of innocent infringement. It has been the subject of considerable previous judicial analysis (I note in particular the list of cases identified by Gordon J in Krueger Transport Equipment Pty Ltd v Glen Cameron Storage & Distribution Pty Ltd (No 2) [2008] FCA 1493 at [10]).

259 In Milwell Pty Ltd v Olympic Amusements Pty Ltd (1999) 85 FCR 436 the Full Court of the Federal Court observed at [52] that:

To obtain the protection of s 115(3) a defendant must establish (i) an active subjective lack of awareness that the act constituting the infringement was an infringement of the copyright, and (ii) that, objectively considered, he or she had no reasonable grounds for suspecting that the act constituted an infringement.

260 Similarly in Golden Editions Pty Ltd v Polygram Pty Ltd (1996) 61 FCR 479 Burchett and Tamberlin JJ said at 480:

But in general the question is not whether the defendant knew the identity of the owner of the copyright, but whether the defendant has established a lack of awareness, and of reasonable grounds for suspecting, that the relevant act was an infringement of the copyright which was infringed, in whomsoever that copyright might be vested.

(Emphasis added.)

261 A deliberate choice not to inquire, in such circumstances, may enable a further finding, since it may suggest a mind in which real suspicion resided: Golden Editions at 488.

209    Insofar as the Bloomer parties are concerned, the primary judge said:

263 Bloomer Constructions has substantiated its defence of innocent infringement of copyright under s 115(3) in respect of the Tamawood drawings. I so find because:

•    Bloomer Constructions had no involvement in the original process whereby development approval was obtained in relation to the Calamvale and Brackenridge sites.

•    I am satisfied that Bloomer Constructions (and in particular Mr Bloomer) was unaware of any potential infringement of Tamawood’s copyright in relation to the plans prepared by Mondo (or Caprice Group) and which were the basis of the construction of dwellings at the Calamvale and Brackenridge sites.

•    There was no reference to Tamawood on the Mondo (or Caprice Group) plans relating to the Calamvale and Brackenridge sites.

•    While it is clear from the development approvals that Habitare had engaged Tamawood earlier in the development process, this does not, of itself, create grounds for suspicion in a builder that subsequent plans drawn by reputable firms (Caprice Group and Mondo) had infringed copyright in Tamawood plans. The Court is able, in my view, to draw the inference that the engagement of successive architects during a development process is not in itself unusual or controversial. Certainly in cross-examination Mr Sweeney commented on situations where clients, who had already consulted other architects, sought to consult him (Sweeney 20/9/2011 affidavit paras 25-26). Similarly, creation by third parties of designs “generally in accordance” with already approved plans prepared by someone else was not cause for comment as unusual by any expert in these proceedings.

•    Indeed, at the time of engagement of Bloomer Constructions it appears that civil work had already been undertaken at the Brackenridge site by Caprice Group. In my view a reasonable inference capable of being drawn from this fact by Mr Bloomer and Bloomer Constructions was that Caprice Group, if not the original architect in relation to at least some of the plans, had provided new plans to Habitare for development purposes superseding plans originally provided by Tamawood.

Tamawood’s submissions

210    Tamawood said this in support of its contention of error by the primary judge:

In Golden Editions Pty Ltd v Polygram Pty Ltd (1996) 61 FCR 479 at 480 Burchett and Tamberlin JJ made the following observations in relation to section 115(3):

In para 308 of the [Spicer Committee] report, which plainly lead to the current provision, the concern expressed is that there should be protection for a person who has taken ‘every step possible to ensure that he obtained a license from the proper person yet, through no fault of his own, and despite searching inquiry, he could be in error (emphasis added).

Tamawood submits that Bloomer Constructions and Mr Bloomer did not take “every step possible”, make “searching inquiry” or infringe “through no fault of [their] own”.

The evidence showed that Bloomer Constructions was the builder and that a condition of the DA was that a full copy of the DA, including (Tamawood’s Tamawood-branded) plans the subject of the approval were to be kept on site, inter alia, by the builder. Bloomer Constructions did not do so. The DA was annexed to the construction contracts (including the Harvey Developments site plan but apparently without Tamawood’s plans)… The evidence also showed that Mr Bloomer, the controlling mind of Bloomer Constructions, took note of Tamawood’s house names on the site plans (but did not know these were Tamawood names)… Nevertheless, those names were different to the Mondo named houses on the construction drawings.

Had Mr Bloomer reviewed the DA approvals and/or retained a copy of them then it would have enlivened them to the fact that Tamawood had been involved in the project. Bloomer Constructions cannot rely on its own non-compliance to establish that it took “every step possible”, made “searching inquiry” or infringed “through no fault of [its] own”.

Bloomer parties’ submissions    

211    The Bloomer parties noted that the statement from Golden Editions which Tamawood cited excluded the relevant statement of principle (at 480) which is in these terms:

But in general the question is not whether the defendant knew the identity of the owner of the copyright, but whether the defendant has established a lack of awareness, and of reasonable grounds for suspecting, that the relevant act was an infringement of the copyright which was infringed, in whomsoever that copyright might be vested.

212    They also stressed that the primary judge’s findings were reasonably open on the evidence and disclosed no error given the evidence that:

(a) Bloomer Constructions had no knowledge that Tamawood had ever been involved in the preparation of any plans or drawings.

(b) Bloomer Constructions was engaged when the building construction work at the Calamvale and Bracken Ridge sites had already commenced. The engagement of Bloomer Constructions occurred following the insolvency of the original builder the Caprice Group.

(c) Bloomer was aware from the approved building plans that Caprice Homes was identified on the plans and made enquiries to ensure that there were no copyright issues in relation to the Caprice Group plans.

(d) Neither Bloomer Constructions nor Bloomer were ever provided with any document that contained any reference to Tamawood or to any of its associated entities.

Discussion

213    The submissions for the Bloomer parties should be accepted. The primary judge’s analysis of the evidence relevant to the issue of the application of s 115(3) was orthodox. The submissions of Tamawood seek a different factual conclusion without establishing any error on the part of the primary judge. On the evidence the primary judge was entitled to find (and, indeed, it is the better view) that the Bloomer parties had no awareness of anything to do with Tamawood and had no reason for suspecting any infringement of copyright.

214    Tamawood’s counsel of perfection, that the Bloomer parties were required to have a copy of the development approval on site during construction and, had they done so would have become aware of Tamawood’s involvement, does not make their conduct unreasonable. Nor does it establish the existence of any reasonable ground for suspecting any infringement of copyright. That fact is simply insufficient to take the Bloomer parties outside the scope of s 115(3).

215    Tamawood’s appeal grounds 5 and 6 must be dismissed for these reasons.

ISSUE 8 – BLOOMER PARTIES COSTS’ ORDERS

216    The primary judge made the following orders consequential upon her costs judgment:

Tamawood Limited ACN 010 954 499 pay the costs of Bloomer Constructions (Qld) Pty Ltd ACN 071 344 100 and Wayne Norman Bloomer:

•    incurred prior to 2 September 2011 of and incidental to these proceedings on a party and party basis;

•    incurred on or after 2 September 2011 of and incidental to these proceedings on an indemnity basis;

such costs to be taxed if not otherwise agreed.

217    We are satisfied that the primary judge’s exercise of discretion in respect of costs miscarried in the sense required for appellate intervention (House v The King (1936) 55 CLR 499 at 504-505).

218    First, the inescapable fact is that the Bloomer parties infringed Tamawood’s copyright. That s 115(3) applied merely protected the Bloomer parties from a claim for damages and rendered them liable only to an account of profits.

219    Second, that the Bloomer parties had put Tamawood on notice that it had not made any relevant profits does not change the fact that they infringed Tamawood’s copyright. The primary judge declared that such an infringement by the Bloomer parties had occurred on 26 November 2013, albeit that the infringement was identified as “innocent” in the declaration. There is no reasonable basis upon which the obtaining of this declaration can be overlooked as part of the relevant “event” for the purposes of the exercise of any discretion on costs. It is trite that the discretion, while wide, is not unconfined and must be exercised judicially. Failing to give any material weight to the fact that Tamawood succeeded in proving that the Bloomer parties had infringed its copyright involves an error of principle.

220    Third, the above conclusions are reinforced by the fact that the Bloomer parties put Tamawood to proof on the whole of its case. They did not merely plead that they had the benefit of s 115(3). They did not admit that the works in suit were copyright works. They did not admit that Tamawood owned the copyright in those works. They did not admit any infringement of copyright. The fact that other parties also put Tamawood to proof is not to the point. As between Tamawood and the Bloomer parties, to succeed, Tamawood had to make good its case on all substantive points. Tamawood did so. This too is a necessary relevant consideration to the proper characterisation of the event for the purposes of determining the appropriate order as to costs. To give weight to the success of the Bloomer parties in invoking s 115(3), at the expense of a consideration of these factors, as the primary judge must be inferred to have done from the result, involves an error of principle.

221    In these circumstances it was not reasonably open to conclude that Tamawood should pay the costs of the Bloomer parties. The reasons given by the primary judge for so concluding, in effect that Tamawood had pursued the Bloomer parties with “little result” (at [8]), misconceives the nature of the proceeding and the outcome in fact reached. Tamawood succeeded in its essential case against the Bloomer parties for infringement of copyright. A declaration was made vindicating Tamawood’s rights in this regard. Bloomer established that it was entitled to the limited protection afforded by s 115(3). It established also that no pecuniary remedy was available because no profits had been made. The fundamental compensatory purpose of costs orders in civil proceedings effectively demanded that the starting point be the usual order for costs be made in favour of Tamawood and against the Bloomer parties. The circumstances identified by the primary judge would have permitted departure from this order, including an exercise of the costs discretion so as to make each party as between Tamawood and the Bloomer parties pay its own costs. Ordering Tamawood to pay the costs of the Bloomer parties, however, was not reasonably open.

222    It also follows from this that there was no basis upon which, by reason of the letters of offer to settle the proceedings which the Bloomer parties made (in effect, that the parties each pay their own costs and walk away from the proceedings on that basis), orders for indemnity costs could be made. Tamawood should not have been exposed to any orders for costs in favour of the Bloomer parties, let alone orders for indemnity costs for any part of the proceedings.

223    For these reasons, irrespective of the fact that the primary judge ought to have found infringement of Tamawood’s copyright in the Dunkeld in addition to the Torrington, the costs orders made on 26 November 2013 must be set aside. Tamawood properly acknowledged that it would not be an inappropriate exercise of the costs discretion for each of Tamawood and the Bloomer parties to pay its own costs of the proceeding below. In the circumstances, that is the appropriate order to make.

ISSUE 9 – MISLEADING CONDUCT BY SHANE O’MARA

224    Shane O’Mara appealed against the primary judge’s conclusion that, as Mondo contended, he had engaged in misleading and deceptive conduct.

225    The primary judge found that:

    “Mr Sweeney [of Mondo] was insistent, both in his affidavit evidence and in cross examination, that he had specifically asked Mr Speer and Mr O’Mara [of Habitare] about Mondo preparing plans “generally in accordance” with the plans already approved. In cross-examination Mr Speer and Mr O’Mara conceded that Mr Sweeney had raised this issue with them, and that they had assured him that there was no problem” (at [293]).

    “Mondo would never have entered a contract with Habitare to produce drawings for the developments of the Calamvale and Brackenridge sites had Mr Speer and Mr O’Mara, on behalf of Habitare, not assured Mr Sweeney that there were no outstanding issues with Tamawood” (at [295]).

    “…in informing Mr Sweeney on 21 June 2006 that there were no outstanding issues between Habitare and Tamawood concerning the use of the Tamawood drawings, that this was a representation which was misleading and deceptive within the meaning of s 52” (at [297]).

Her Honour was “not persuaded that Mr Speer and Mr Shane O’Mara did not appreciate the misleading nature of the representation they had made to Mr Sweeney on 21 June 2006”. Further, her Honour held that “this claim was based on an optimistic (and baseless) appraisal of the facts existing at that time rather than a realistic assessment of the history of negotiations between Tamawood and Habitare”, there being “no foundation upon which Mr Speer or Mr Shane O’Mara could reach such a conclusion”. Accordingly, Shane O’Mara was “knowingly concerned in the conduct of Habitare within the meaning of s 75B of the Trade Practices Act” (at [298]).

226    Shane O’Mara submitted that the conclusion of his knowing involvement in Habitare’s misleading and deceptive conduct should be set aside because the primary judge’s reasons for attributing knowledge of the falsity of the representation to Shane O’Mara were perfunctory and detailed reasons were called for given the fact of the lengthy delay between the hearing and the delivery of the principal judgment (by reason of matters, it should be said, wholly outside the control of the primary judge). The following observations from Expectation Pty Ltd v PRD Realty Pty Ltd (2004) 140 FCR 17; [2004] FCAFC 189; were relied on to support this submission:

[71] In the normal course, statements made by a trial judge of a general assertive character can be accepted as encompassing a detailed consideration of the evidence. However, where there is significant delay, such statements should be treated with some reserve. After a significant delay, a more comprehensive statement of the relevant evidence than would normally be required should be provided by the trial judge in order to make manifest, to the parties and the public, that the delay has not affected the decision.

[72] In cases not affected by delay, an appellate court is entitled to assume that the mere failure to refer to evidence does not mean that it has been overlooked or that other forms of error have occurred. However, where there is significant delay, no favourable assumptions can be made. In such circumstances, it is up to the trial judge to put beyond question any suggestion that he or she has lost an understanding of the issues. Where there is significant delay, it is incumbent upon a trial judge to inform the parties of the reasons why the evidence of a particular witness has been rejected. It is necessary for the trial judge to say why he or she prefers the evidence of one witness over the evidence of other witnesses (Hadid v Redpath (2001) 35 MVR 152 at [34] and [53]).

[73] Of course, where the trial judge, notwithstanding significant delay, demonstrates by his or her reasons that full consideration has been given to all of the evidence, the parties and the public may be satisfied that the delay has not affected the decision. More specifically, if the reasons demonstrate that the delay has not weakened the trial judge’s advantage, confidence will be maintained in the decision. For example, it would be open to a trial judge to explain in the course of giving reasons that contemporaneous notes were made of impressions formed as evidence was given by witnesses of importance (see R v Maxwell (unreported, New South Wales Court of Criminal Appeal, Spigelman CJ, Sperling and Hidden JJ, 23 December 1998)).

227    The circumstances beyond the primary judge’s control did result in a substantial delay between the hearing and the delivery of the principal judgment (some 18 months). However, nothing in the primary judge’s treatment of this issue suggests any failure to consider relevant evidence or lack of understanding of what had to be determined.

228    As Mondo put it in response, the primary judge was satisfied that Shane O’Mara knew the representation (that there was no problem by reason of Tamawood’s copyright in the Tamawood plans) was false (at [298]). Mondo said this, which should be accepted:

…in the cross examination of Mr O’Mara by Mr Cobden SC, the following appears:

Now, the position, then, in relation to Hamish Street was that the DA came out. You had spoken to Mondo – to Mr Sweeney. Your view was that you couldn’t use the Tamawood plans, and so things needed to put back together again so that you could proceed with the development, did they not? – Yes.

And that was at least a fairly concerning event that you couldn’t use Tamawood. You didn’t have a builder, and you didn’t have plans. That was of some concern to you? – Yes

An understanding by Mr O’Mara that Habitare could not use Tamawood’s plans and therefore did not have plans is irreconcilable with a representation that there were no outstanding issues between Tamawood and Habitare and that everything was resolved with Tamawood so that Habitare could go ahead and use the development approval (which was based on the Tamawood plans).

229    Insofar as the submissions for Shane O’Mara depended on a challenge to the primary judge’s finding that Mr Sweeney was a witness of credit, the submissions for Mondo in answer may be adopted. Mondo said:

Plainly her Honour’s findings depended upon an assessment of the credibility of the witnesses, given that there were competing accounts of the relevant conversation.

In order to overturn the finding on appeal, the appellant must show that the learned trial judge failed to use or palpably misused her advantage or acted on evidence which was inconsistent with facts incontrovertibly established by the evidence or which was glaringly improbable. (Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479; Fox v Percy (2003) 214 CLR 118).

230    Mondo’s overall submission in response to Shane O’Mara’s appeal in this respect may also be adopted. The submission was in these terms:

The case of the appellant below was that Mr Speer and Mr O’Mara for Habitare believed that they could not use the Tamawood plans, and told Mr Sweeney that that was the case. The learned trial judge rejected the evidence that they told Mr Sweeney they could not use the Tamawood plans. What remains, and what is avoided in the appellant’s submissions, is the underlying proposition that Mr Speer and Mr O’Mara knew that they could not use the Tamawood plans.

It is unsurprising, given the way in which the case was conducted that the learned primary judge felt able to give brief reasons for the finding that Mr O’Mara was a person knowingly concerned in the making of the representation.

231    For these reasons grounds 2 to 7 of Shane O’Mara’s appeal should be dismissed.

Conclusions

232    For the reasons set out above Tamawood’s appeal should be allowed in part (excluding its case that the primary judge erred in finding the Bloomer parties to be within the scope of s 115(3) of the Copyright Act). Mondo’s appeal should be dismissed, as should the appeal of Shane O’Mara.

233    The parties should confer and submit within 14 days agreed or competing proposed orders reflecting these reasons for judgment, including with respect to costs.

Associate:

Dated:    15 May 2015