Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd and Anor

In considering the interests of justice, it must also be borne in mind that resolution of a separate question in a proceeding, unless it will or is likely to lead to overall resolution of the proceedings however answered, may delay the further conduct of the proceeding whilst the parties pursue appeal rights and including in some instances an application for special leave to appeal, and if leave is granted, an appeal to the High Court.'

8 As highlighted by Finn J in Village Building Co Limited v Canberra International Airport Pty Limited (2003) FCA 1195, the ultimate issue is therefore whether it is just and convenient for the order to be made: Reading Australia, at [9], and that particular regard should be had to 'efficient case management': Olbers v Commonwealth of Australia (No 3) [2003] FCA 651 at [8].

The respondents'/cross-claimant's motion and submissions on the issue of separate questions 9 On the issue of separate questions, the respondents/cross-claimant sought the following orders: '1. An order that this honourable court determine as a separate question in accordance with the provisions of Order 29 Rule 2, whether or not it is a condition precedent to the success of the Applicant in these proceedings to demonstrate to the satisfaction of the Court that: (a) the terms of the Supreme Court order, dated 12 December 2002, which appoints the trustees for sale of the property known as 5 Laman Street Nelson Bay, conferred upon the trustees a licence to use and / or assign the copyright in the plans and drawings the subject of these proceedings as being property within the statutory trust for sale; and (b) the Contract for the Sale of Land dated 7 August 2003 between the trustees as Vendors and the Applicant as Purchaser assigned or otherwise operated to transfer the said license to use the copyright in the plans and drawing the subject of these proceedings. 2. If this honourable court determines the matters in paragraph 1 above in the affirmative, an order that the court then proceed to determine: (a) whether the order for appointment of the trustees for sale 'of the property known as 5 Laman Street Nelson Bay NSW and being the whole of the land contained in Folio Identifier 1/921463 vested in the trustee a license to use and/or assign the copyright in the plans and drawings the subject of these proceedings; and (b) whether the Contract itself between the trustees and the applicants effected an assignment of the said license to use the copyright. 3. Should this honourable court determine paragraphs a. and/or b. of order 2 above in the negative, then an order in accordance with the provisions of Order 29 Rule 4, that the proceedings commenced by the Applicant be dismissed and that judgement be entered for the Respondents and Cross-Claimant on their Defence and Cross-Claim. 4. Should this honourable court determine paragraphs a. and/or b. of order 2 above in the positive, then a direction or order that issues arising from any proposed sale to the date of the appointment of the trustees, by predecessors in title to the trustees, of the property 5 Laman Street Nelson Bay, to any entity not being a party to these proceedings, is an irrelevant matter for purposes of issues arising in these proceedings.' 10 For the purposes of the above orders sought, and in particular paragraph 3, it is convenient to observe here that Order 29 Rule 4 gives the court power to 'dismiss the proceeding or the whole or any part of any claim for relief in the proceeding', where the resolution of an issue arising under Order 29 'substantially disposes of the proceeding or of the whole or any part of any claim', or 'renders unnecessary any trial or further trial in the proceeding'. The substance and reality of the present application was in effect to bring the present proceedings to a conclusion in favour of the respondents, or virtually so, rather than merely to contribute to the saving and cost of the proceedings by narrowing the issues for trial. 11 In support of their application for the resolution of these separate questions, the respondents/cross-claimant provided the following written submissions under the heading of 'Nature and reasons for the separate questions': '2. In order for the applicant to succeed in the present case it must establish that it is the holder of an implied licence to use the plans and drawings for the purpose of undertaking the development. (Statement of Claim, paragraph 13). 3. The respondent contends that on brief evidence that is documentary, it can be established that the applicant could not be the assignee of any implied licence. If this position is established in the respondents' favour they are entitled to have the proceedings dismissed without the need to investigate any further issues. 4. The argument consists of the following steps: - (a) The applicant acquired the land upon which it proposes to undertake the development by a contract of sale dated 7 August 2003 from Stanislaus Anthony Carroll and Ross McDonald who were trustees for the sale of the property appointed by the Supreme Court of New South Wales. (b) Any interest the applicant holds in regard to copyright was acquired pursuant to that contract whether by its express terms or by implication. (c) The applicant cannot acquire any interests in regard to the property other than those that were vested in Mr Carroll and Mr McDonald pursuant to the orders constituting them trustees for sale. The extent of all interests they had to convey in the development (if any) are thus determined by the proper construction of the orders appointing them trustees for sale and the extent to which such orders vest the development (if any) in them. (d) The order of the Supreme Court made 12 December 2002 appointed Mr Carroll and Mr McDonald pursuant to Order 1 as: - "Stanislaus Anthony Carroll, solicitor of Level 19, 111 Elizabeth Street, Sydney, NSW and Ross McDonald, solicitor of Level 23, MLC Centre, 19 Martin Place, Sydney, NSW be appointed trustees of the property known as 5 Laman Street, Nelson Bay, NSW and being the whole of the land contained in the Folio Identifier 1/92/1463". (e) The orders proceeded to vest the property in the trustees in the following terms: - "The said land be vested in such trustees subject to any encumbrances affecting the entirety of the said land but free from encumbrances (if any) affecting any undivided share or shares therein to be held by the said trustees upon statutory trust for sale under Division 6 Part 4 of the Conveyancing Act 1919". (f) The Court by its order did not vest in the trustees anything other than the land described in the orders and in particular did not purport to vest in the trustees the business undertaking or venture that had been conducted by the joint venture constituted by Toyama and Landmark. (g) It follows from the terms of the order that no interest in an implied licence to use the plans was vested in the trustee for sale. Such interest, along with other interests in the joint venture other than real property, were retained by the venture partners (to the extent it be established that the venture held a licence from the copyright holder). 5. It follows from the above premises that the trustees had no title to any implied licence to convey to the applicant and the applicant thereby gained no implied licence. 6. It could not be contended that there is any estoppel or that there was any representation to which either the respondents, joint venturers, or trustees were partly concerning the plans, in light of Special Condition 7 of the Contract of Sale. 7. The case is on all fours with the decision of the New South Wales Court of Appeal in Torbey Vander Have Pty Limited v Mass Constructions Pty Limited (2002) 55 IPR 542 per Spiegleman CJ at paragraph 30 - 32, per Young CJ in Eq paragraph 83 to 98 and Foster AJA paragraphs 131 - 132. 12 Subsequently in oral submissions presented at the hearing of the application, senior counsel for the respondents/cross-claimant, asserted that the adoption of such a course by the Court would 'bring about a substantial saving… to the parties and the use of court time'. Although it was accepted that a heavy onus lay on the respondents/cross-claimant in seeking the determination of these questions in advance of the final hearing already fixed, it was further submitted by him that the Court ought not to be deterred in principle from determining a separate question if a succinct legal question can be resolved within a narrow compass and which will dispose of the litigation, or substantially. If the Court was minded to determine the present notice of motion, there would be avoided the need for, to cite senior counsel's precise submission: '… a factual inquiry as to whether, and if so, the terms upon which the joint venturers were licensed to use the plans and designs. These arrangements were made orally and it is expected that witnesses will be called on each side and that there will be a necessity for cross-examination and findings on credit.' 13 It may be seen from the submissions of the respondents/cross-claimant that they have interpreted Concrete's statement of claim, and in particular paragraph 13 thereof, as being solely concerned with the question of whether or not an implied licence to use plans and designs for the construction of a building on realty is capable of being transferred by a vendor to a purchaser of that realty, in circumstances where the payment of fees for architectural services relating to that construction remains outstanding to the prosecutor of the proceedings. This, it submits, is akin to the situation in Torbey Vander Have, where the NSW Court of Appeal unanimously held, in the context of a mortgagee exercising its powers of sale, that '[w]hether or not a mortgagee had a right to use the plans depends on whether or not the licence fell within the property subject of the mortgage' (per Spigelman CJ at [32]). 14 Although senior counsel for the respondents/cross-claimant invited me to draw an inference that the architectural plans the subject of the Torbey Vander Have dispute formed part of the a development application notwithstanding that the report makes no direct reference to any such circumstance, I do not think that it is open to me, on my reading of the report case, so to do. The submissions of Concrete on the issue of separate questions 15 The principal thrust of Concrete's contention in these proceedings is that it has an implied licence to use the plans and drawings for the purpose of undertaking development of the property (see Statement of Claim, paragraph 13) in accordance with the approval given to those plans and drawing by the local Council pursuant to its town planning and building powers and authorities conferred by statute. In his oral submissions at the hearing of the motion, senior counsel for Concrete submitted the respondents/cross-claimant had not appreciated the significance of that: '…my learned friend says well, you must have got your licence from the statutory trustees for sale. That is a possibility but a more likely possibility is that we got it directly from him because he not only gave… a licence to his client, but because it was used in a development application with his knowledge he gave it to anybody who would own the land, we submit, for as long as the development consent enured, existed and subsisted. … What we have said is we had an implied licence in our statement of claim. My learned friends say "well you must mean from the statutory trustees for sale". Well, we may have one on that view of the matter, but a better view may very well be that we got it directly from him.' 16 In the context of that proposition (which was also raised in paragraph 9 of Concrete's written submissions), my attention was drawn by Concrete to the judgment of Else-Mitchell J in Ryde Municipal Council v The Royal Ryde Homes and another (1970) 91 W.N. 440. In discussing the nature or incidents of a development consent, his Honour stated (at 443) as follows: 'It must not be overlooked that a consent to the development of land under a prescribed planning scheme is not personal to the applicant but enures for the benefit of subsequent owners and occupiers, and in some respects a consent is equivalent to a document of title.' 17 In further support of that apparent principle, senior counsel for Concrete referred to the following passage from the minority subsequent judgment of Stephen J (with whom McTierman J agreed) in Eaton & Sons Pty Ltd v Warringah Shire Council (1972) 129 CLR 270 at 293: '… although a consent will no doubt result from an application by an individual it is essentially impersonal in the sense that it does not concern itself with and is not limited to the applicant but is a consent to the world at large in relation to the land which is its subject. Once granted it makes lawful, in a town planning context, what would otherwise be unlawful but does so by reference to the acts done and not to the identity of the actor; I would think that a mere trespasser could justify his use of land in terms of town planning controls by reference to some prior consent successfully applied for by a prior lawful occupier.' The majority of the High Court in Eaton did not find it necessary to address that subject. 18 If the principles enunciated in Royal Ryde Homes and Eaton still operate in the present town planning legislation, it is not easy to envisage how the respondents/cross-claimant can succeed in principle in obtaining the relief sought in their notice of motion. Plainly further research is required by counsel for the parties in that regard. Presumably the plans etc the subject of the present copyright claims were the subject of the town planning and/or building approvals obtained by Concrete or its predecessors in title.

Conclusion to the issue of separate questions 19 As can be clearly seen from the above, the primary arguments of the respective parties do not intersect. I am therefore of the opinion, without presently determining the copyright issue propounded by the respondents/cross-claimant, that given that the development/building plans for which copyright is claimed by the respondents/cross-claimant relevantly or sufficiently resemble those the subject of a prior development or building approval in relation to the subject realty, it is at least reasonably arguable that Concrete acquired an interest relevantly in that copyright upon its purchase of the freehold title to the subject property. That issue should be left for final resolution at the hearing of the proceedings shortly to take place. 20 Furthermore I bear in mind the observations in Griffiths that the resolution of that question at the present point in time may lead to a real possibility of delay through appeals to higher courts. The need for final resolution of the present proceedings in all of its aspects is necessary, at least for the reason that Concrete is said to be currently paying mortgage interest in excess of $4,000 per week on the purchase price outlaid for this development site. Security for costs 21 The respondents/cross-claimant have additionally brought an application for security for costs as follows: '6. Without limiting the rights of the parties to make further applications for security for costs, an order in accordance with Order 28 Rule 2, that: (a) the applicant provide security for costs in the sum of $57,035 should these proceedings be listed for 2 hearing days, and a further $8,000 for every additional hearing day that these proceedings are listed. (b) the security for costs be paid by the applicant into the trust account of their solicitor, Costa & Associates, within 7 days. (c) the applicant's solicitor will inform the Respondents' solicitor upon receipt of the security amount. (d) these proceedings be stayed in the event that the applicant is in default of this order. (e) the proceedings commenced by the applicant be dismissed and that judgement be entered for the Respondents and Cross-Clamant on their Defence and Cross-Claim.' 22 Section 56 of the Federal Court of Australia Act 1976 (Cth)confers a discretionary jurisdiction on the Court to make orders for security for costs. Section 56(1) and (2) provide as follows: '1. The Court or a Judge may order an applicant in a proceeding in the Court or an appellant in an appeal to the Court to give security for the payment of costs that may be awarded against him or her. 2. The security shall be of such amount, and given at such time and in such manner and form, as the Court of Judge directs. 23 The amount presently requested by the respondents/cross-claimant is the sum of $57,035.00. Earlier at a directions hearing on 29 October 2003, Concrete agreed to provide security for costs in the sum of $12,000.00, and that agreement was subsequently performed 'without admission of the appropriateness or otherwise of any order for security'. 24 It was submitted by Concrete that the present proceedings are properly to be characterised as 'defensive in nature', the same being based (as earlier indicated) upon s 202 of the Copyright Act 1968 (Cth), and that the true 'attacker', to refer to the expression adopted by Wilcox J in Amalgamated Mining Services Pty Ltd v Warman International Limited (1988) 19 FCR 324 (at 325-6), are the respondents/cross-claimants (see also Avel Pty Limited v Multicoin Amusements Pty Ltd (1990) 171 CLR 88 at 94 (Mason CJ, Deane and Gaudron JJ) and at 118-119 (McHugh J). The submission of Concrete is in my opinion correct. 25 I am clearly of the view, particularly in the light of the pending final hearing shortly to take place, when all outstanding issues between the parties should be resolved, that the present applications must be dismissed (Chippendale Printing Co Pty Ltd v Commonwealth (1995) 17 ACSR 328 at 33 (Lindgren J). I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti.

Associate: Dated: 19 March 2004 Counsel for the Applicant: B W Rayment QC and D T Kell

Counsel for the Respondent: C J Birch SC and T A Hall