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Cite as: [2003] ScotCS 313

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OUTER HOUSE, COURT OF SESSION

OPINION OF LORD KINGARTH

in the cause

MUIR DORRANS

Pursuer;

against

THE SHAND PARTNERSHIP AND OTHERS

Defenders:

________________

Pursuer: Higgins; Simpson & Marwick, W.S.

Defenders: Logan; Russel & Aitken

16 December 2003

[1] The pursuer is an architect. In this action he seeks, inter alia, damages against a number of defenders for breach of copyright in certain drawings (consisting of a set of plans and elevation drawings) prepared by him relative to the development of a site at 12 Westgate, Crail, Fife.

He avers (in Condescendence II) that in or about 1997 he became aware of the site, which he considered to be suitable for development. The site was owned by a Mr Hastie. The pursuer approached the directors of a local development company, Fraser Gray Holdings Limited ("FGH"), in order to ascertain whether they were interested in developing the site. FGH were interested in redeveloping the site for residential use. They approached Mr Hastie with a view to purchasing the site from him. FGH thereafter entered into an agreement with Mr Hastie, in terms of which a purchase price was agreed for the site, the said price being conditional upon the grant of planning permission for the construction of nine residential units on the site. FGH instructed the pursuer to prepare plans to be submitted to Fife Council Planning Department in support of the proposed planning application. The pursuer entered into an agreement in this regard with FGH in terms of letters dated 1 July 1997, 29 April 1998, 5 May 1998 and the R.I.B.A. Standard Form of Agreement for the Appointment of an Architect (SFA/92). It is averred that approval was obtained for a scheme in accordance with the pursuer's drawings. The pursuer admits that he invoiced FGH for the preparation of the plans and the planning consent, and that he was paid in full. Notwithstanding this, following the grant of planning permission, FGH withdrew from the agreement to purchase the site and the development was not proceeded with. Further it is averred that although in or about September 2000 the pursuer received an offer from Mr James Ryce, acting on behalf of Southglen Developments Limited, who were then proposing to develop the site in accordance with the planning permission, in the sum of £1,225 plus VAT (later increased to £1,500) for his copyright in the drawings, this offer was not accepted.

In Condescendence III the pursuer claims that his copyright in the drawings has been breached. In particular he avers that he ascertained that a planning application in respect of the site was submitted in or about March 2001 and that proposals were underway to develop the site. Large scale plans showing the proposed new development were placed in the windows of disused garage premises. The pursuer inspected the drawings relative to an application for amendment of planning permission. He avers that these drawings represented substantial copies of his drawings. It is said that the local authority planning department have indicated to him that the new development was to be constructed in accordance with the plans submitted by the pursuer and using the original planning permission obtained in or about November 1998. The third defenders are said to be a property development company who instructed the first defenders, who are architects, to prepare the new drawings, and to submit them in support of the revised planning permission. The fourth defenders, it is averred, were contractors instructed by the third defenders to construct buildings on the site in accordance with the new drawings. The fifth defenders are said to be selling-estate agents for the new development who prepared and issued to the public particulars showing elevations of the buildings identical to those shown on the pursuer's drawings.

In these circumstances it is averred that each of these defenders have infringed the pursuer's copyright. In particular it is averred, in Condescendence IV, that

"By making copies of the drawings the first defenders have infringed the pursuer's copyright therein. By authorising or instructing the first defenders to copy the drawings, the third defenders have infringed the pursuer's copyright therein. By constructing buildings on the site in accordance with the drawings the fourth defenders have infringed the pursuer's copyright in the drawings. By preparing and issuing to the public, possessing and exhibiting in public the said particulars, the fifth defenders have infringed the pursuer's copyright in the drawings."

It is, in particular, averred that no person has been given permission either by the pursuer or by FGH to use the planning permission or to use the designs and layouts that were used to obtain that planning permission. Although the first, third, fourth and fifth defenders aver in answer that Mr Hastie sold the property with planning consent to Thomas Mitchell Homes Limited; that Thomas Mitchell Homes Limited sold the property to the third defenders and that FGH gave certain plans to Mr Hastie or to Mr Ryce and that copies of these plans were subsequently provided, either by Mr Ryce or Thomas Mitchell Homes Limited, to the third defenders, the accuracy of these averments is said by the pursuer to be not known and not admitted.

[5] The pursuer concludes for damages of £10,000 against each of the first, third, fourth and fifth defenders. It is said that these sums "represent the licence fee which the respective defenders would have required to pay to the pursuer for the use of the drawings made by each of them". Further, having regard to "the whole circumstances, and in particular the flagrancy of the infringement and benefits accruing to the first ... defenders by reason thereof", the pursuer seeks additional damages against the first defenders. The sum sought by way of additional damages is £5,000.

The action came before me on procedure roll. Counsel acting on behalf of the first, third, fourth and fifth defenders sought dismissal. Two main arguments were presented. First, it was submitted that there were no relevant averments of breach of copyright, the pursuer, in the circumstances, having impliedly licensed the third defenders, and those instructed by them, to use the drawings (in which the pursuer admittedly had copyright) in relation to the site. Secondly, there were, it was argued, no relevant or sufficiently specific averments to support any of the damages claims or the claim for additional damages against the first defenders.

I propose to deal with the question of implied licence first.

The argument advanced in this respect was based on the proposition that when an architect was engaged to prepare, and was paid a commercial rate for the preparation of, plans for the purpose of obtaining planning permission in respect of a property, he impliedly licensed any proprietor of that property, present or subsequent, in the event that planning permission was obtained in accordance with his plans, to use those plans in relation to the development of the property - unless such a licence was expressly excluded in the contract made by the architect when engaged.

This proposition, it was argued, could in all material respects be derived from Blair v Osborne & Tompkins &c 1971 2 Q.B. 78 - a decision of the Court of Appeal which, it was said, was very much in point, both on the facts and the law. Counsel sought to derive assistance, in particular, from the opinion of Lord Denning M.R., and in particular from a passage at page 85 where he said:-

"Those illustrations show, to my mind, that when the owner of a building plot employs an architect to prepare plans for a house on that site, the architect impliedly promises that, in return for his fee, he will give a licence to the owner to use the plans for the building on that site. The copyright remains in the architect, so that he can stop anyone else copying his plans, or making a house from them; but he cannot stop the owner, who employed him, from doing work on that very site in accordance with the plans. If the owner employs a builder or another architect, the implied licence extends so as to enable them to make copies of the plans and to use them for that very building on that site: but for no other purpose. If the owner should sell the site, the implied licence extends to as to avail the purchaser also.

There is no authority in this country on this subject. But I am glad to find that there is a case in the Supreme Court of New South Wales. It is Beck v Montana Constructions Pty Ltd [1964-65] N.S.W.R. 229. I find the reasoning of Jacobs J. very convincing. He said, at p. 235:

'... the payment for sketch plans includes a permission or consent to use those sketch plans for the purpose for which they were brought into existence, namely, for the purpose of building a building in substantial accordance with them and for the purpose of preparing any necessary drawings as part of the task of building the building.'

I entirely agree."

[10] Counsel also referred to the full opinion of Jacobs J. in Beck v Montana Constructions Pty Limited. Matters might be different if the architect was paid only a nominal fee to prepare drawings for the purpose of attempting to obtain planning permission. Reference in that connection was made to Stovin-Bradford v Volpoint Properties Limited &c 1971 3 All E.R. 570. Blair v Osborne & Tompkins had been referred to with approval in Robin Ray v Classic F.M. Plc 1998 FSR 622 and in the Sheriff Court in Scotland in Robert Allan & Partners v Scottish Ideal Homes 1972 S.L.T. Sh. Ct. 32. Although it had been referred to also in Pasterfield v Denham &c 1999 F.S.R. 168, the facts of that case were less obviously in point.

Counsel accepted that the terms of the pursuer's engagement in this case were said to be covered by the 1992 R.I.B.A. Standard Form Conditions of Appointment and that Clauses 1.7.1 and 2.3.1 were of potential significance. Clause 1.7.1 provided that:

"Copyright in all documents and drawings prepared by the Architect and in any way executed from those documents and drawings shall remain the property of the Architect."

Clause 2.3.1 provided that:-

"Notwithstanding the provisions of Condition 1.7.1 the Client shall be entitled to reproduce the Architect's design by proceeding to execute the Project provided that ... the entitlement applies only to the site or part of the site to which the design relates, and the Architect has completed a scheme design or has provided detailed design and production information, and any fees, expenses and disbursements due to the Architect have been paid."

[12] Counsel argued - consistent with the defenders' position on Record, - that since the pursuer knew that FGH was not the proprietor and that it was likely that other parties such as the proprietor would make use of the plans, it was, in the circumstances, an implied condition of the contract between the pursuer and FGH that "the Client" in Clause 2.3.1 included the heritable proprietor of the site as the beneficiary of the planning consent, and any heritable successors - such as the third defenders. It was reasonably implicit in the pursuer's pleadings that they accepted that the third defenders were proprietors or at least that they were acting on behalf of whoever was. In the alternative, counsel submitted that in any event a licence fell to be implied from the contract in favour of any successor to the benefit of the planning consent. The fact that there was no connection between the pursuer and the defenders was of no consequence. Nor did it matter that there was no connection between FGH and the defenders. The purpose of the engagement was to obtain planning permission. It was known that planning permission would run with the land, and reasonable to suppose that any licence which FGH had would also be available to any owner of the property.

Counsel for the pursuer submitted that the defenders' argument was misconceived. Ordinarily it would be for defenders to aver and establish any copyright licence. Reference was made to Noah v Shuba 1991 F.S.R. 622. It was wrong to suggest that it was clear from the pursuer's averments that an implied licence had been granted to the defenders. The pursuer's engagement was covered by the express terms of the 1992 Conditions. In addition to those Clauses referred to by the defenders, it was provided by Clause 1.4.1 that "Neither the Architect nor the Client shall assign the whole or any part of the benefit or in any way transfer the obligation of the Appointment without the consent in writing of the other". Looking to the Conditions as a whole it was not possible to suggest that "the Client" could be taken to mean anything other than the party appointing the architect. Further, the question of licence having been expressly dealt with, there was no room for the implication any further licence in favour of others, particularly one which would be inconsistent with the terms of Clauses 1.7.1 and 2.3.1 taken together. Reference was made to Devefi Pty Limited v Mateffy Pearl Nagy Pty Limited 1993 R.P.C. 493, a decision, on appeal, of the Federal Court of Australia.

It was, in any event, wrong to suggest that any general principle could be taken from the case of Blair v Osborne & Tompkins. Rather the decision in that case was an application to particular facts of a general principle referred to in Beck v Montana Construction Property Limited. That general principle, expressed in favour of the person "giving the engagement", could not help the defenders, who not only did not employ the pursuer but had no connection with the party who did, FGH. FGH were not then, and never became, proprietors. It was clear in terms of Condition 1.7.1 that they could not have assigned the benefit of such licence as they had without the consent of the pursuer. By contrast, the licence given by the architect to his clients, who were heritable proprietors, in Beck v Montana Construction was held to be assignable on transfer of the property. Before it could be said that a licence to use drawings, the subjects of copyright, was implied, it would have to be clear, at least, that such implication was necessary to give the contract business efficacy. Reference was made to Stovin-Bradford v Volpoint Properties Limited and Robin Ray v Classic F.M. Plc. Further any implied licence could only be the minimum required to secure the benefit which the parties to the contract must have intended to confer (reference again being made to Robin Ray v Classic F.M. Plc). The defenders could not meet these tests. The absence of any connection between the pursuer, or FGH, and the defenders was fatal to the defenders' contention. Reference was made to De Garis &c v Neville Jeffress Pidler Pty Limited 1990 I.P.R 292. It was one thing to say that planning permission ran with the land; it was quite another to say that the right to use plans in which there was copyright ran with the lands in respect of which planning permission was granted.

I have come to the clear view that the pursuer's arguments on this matter fall to be preferred.

Very considerable reliance was placed by counsel for the defenders on Blair v Osborne & Tompkins &c, a decision which, it was said, was directly in point. There are, however, significant differences between the facts of that case and the facts of the present as averred by the pursuer. In Blair one significant difference is that it was clear that the 1962 R.I.B.A. Conditions, which applied, were silent on the question of licence to use the architect's drawings, and that the decision of the court was given on the basis of what could, in those circumstances, be implied. In the present case the question of licence was expressly dealt with by Condition 2.3.1. By virtue of that Clause licence was expressly granted in favour of "the Client", provided only that certain conditions were met. In addition, by virtue of Clause 1.4.1 that licence was not, it seems clear, assignable by the Client without the consent in writing of the architect. Looking to the whole terms of the Conditions it seems absolutely plain, notwithstanding the absence of any definition clause, that the expression "the Client" could only mean the person appointing the architect. The argument advanced by counsel for the defenders that it could, at least in Clause 2.3.1, be given a wider significance is, in my view, untenable. Further, where the restricted ambit of the licence and the terms on which it could be assigned were expressly provided for, there is, in my view, no scope for the implication of any further licence in favour of others. As was said in Devefi Pty Limited v Mateffy Pearl Nagy Pty Limited, where a contract with similar express provisions was under consideration, "any term which otherwise might be implied by law was superseded or supplanted" (page 510).

A further significant difference between the present case and the facts of Blair v Osborne & Tompkins is that the parties said to have had the right to use the drawings in Blair were parties to whom the original proprietors, who engaged the architect , sold the land in question. Even if the decision of the court is to be understood as being to the effect (as counsel for the defenders contended) that there was, at the time of the original engagement, an implied licence in favour of such subsequent proprietors, this derived from application, to the particular facts of the case, of a general principle, taken from Beck v Montana Construction Property Limited, which would not, I consider, assist the defenders in the present case. As is plain from the opinion of Widgery L.J., the general principle upon which the court proceeded was taken from the decision of Jacobs J. in Beck at page 235 where it was said,

"The question raised is quite a broad one because it applies not only to architects but would apply for instance to artists who are engaged to prepare a particular work which would of its nature be reproduced, for instance a cartoon for a tapestry or a mosaic, or which would apply to persons who prepared written material with the intention that if should be used in a particular manner, and it seems to me that the principle involved is this; that the engagement for reward of a person to produce material of a nature which is capable of being the subject of copyright implies a permission, or consent, or licence in the person giving the engagement to use the material in the manner and for the purpose in which and for which it was contemplated between the parties that it would be used at the time of the engagement. It seems to me that this must be regarded as a principle of general application. It seems to me that it was the principle applied in the cases to which I was referred by Mr Hutley, Cooper v Stephens, [1895] 1 Ch 567 and Marshall v Bull (1901), 85 L.T. 77.

I think it is a principle which can be found to be applied in a number of cases. It relates to permission or consent to what must have been taken to have been within the contemplation of the parties at the time of the engagement. After all it must be borne in mind that it is the engagement which brings the copyright material into existence.

When that principle is applied in the present case it seems to me to be inevitable that one should conclude that the payment for sketch plans includes a permission or consent to use those sketch plans for the purpose for which they were brought into existence, namely for the purpose of building a building in substantial accordance with them and for the purpose of preparing any necessary drawings as part of the task of building the building."

[18] It is plain from that passage that the general principle in question is one conceived in favour of "the person giving the engagement", and that the third paragraph of it (part of which was quoted by Lord Denning M.R.) was understood to be subject to that. In these circumstances it is not surprising that Lord Widgery, at page 86, in Blair said,

"That the architect retains the copyright is beyond dispute. He needs it for many good reasons. He needs it to protect himself against the possibility of his plans being used by others who have paid him no fee, or being used for purposes other than the specific building which was contemplated. However, it is common ground between counsel that though the architect retains the copyright, and though the use of the plans would prima facie be a breach of copyright, yet there was in this agreement an implied licence enabling the client to use the plans to some extent. The issue between the parties before us is: what is the extent of that licence, or what is the extent to which the client is impliedly authorised to use the plans?"

In this passage his Lordship was, it seems to me, clearly expressing his own opinion rather than (as was suggested) rehearsing the arguments of counsel.

[19] In the present case there is nothing in the pursuer's pleadings to suggest any connection between FGH and the defenders. On the contrary, it is averred that no permission was given by the pursuer or FGH to any of the defenders to use the drawings. Counsel for the defenders was unable to produce any authority in which an implied licence was held to extend, in similar circumstances, to any proprietor or future proprietor who happened to want to use the plans. No authority was referred to me which the obtaining of planning permission was held to be, as the defenders argued, the critical factor. It is further, in my view, quite impossible to say that to imply a term of the kind suggested by the defenders would be necessary to give the contract between the pursuer and FGH business efficacy, or that it would meet any of the other well known tests for the implication of a contractual term such as are, for example, usefully rehearsed by Mr Justice Lightman in Robin Ray v Classic F.M. Plc at page 641.

Further, it is not at all clear to me that Blair v Osborne & Tompkins was in fact decided on the basis that there was implied, at the time of the architect's engagement, a licence in favour of future proprietors. Instead it seems more likely that in so far as it was decided that the licence, which did fall to be implied at the time of the contract in favour of the original clients, could be taken to "avail the purchaser also", this was because the court considered that the original licence was assignable and had been assigned when the land was sold (as was decided in Beck v Montana Construction Party Limited). In the present case counsel for the defenders' argument depended entirely on the proposition that there was implied, at the time of and from the contract between the pursuer and FGH, a licence in favour of future proprietors. He did not submit and could not submit that his argument proceeded on the basis that the licence in favour of FGH was assignable. Quite apart from the restrictions imposed by Clause 1.4.1 of the Conditions, there were no averments by the pursuer to suggest any assignation by FGH to the defenders.

I turn now to deal with the question of damages.

Counsel for the defenders submitted that there were no relevant or sufficiently specific averments to support the claims for damages against any of the first, third, fourth and fifth defenders. In particular it was submitted that there were no averments which indicated upon what basis it could be said that the sums concluded for represented the licence fee which the respective defenders would have been required to pay. Such specification was particularly necessary where the pursuer admitted that he had been willing to sell the copyright at one stage for £2,500 to Mr Ryce of Southglen Developments Limited and, further, in circumstances where the defenders had averred that the fee for all work in respect of which copyright was asserted had been £3,200, only part of which would have represented what could be described as the profit element. It was not enough simply to aver that the sums claimed represented the licence fee which would have been required. Reference in that connection was made to Robert Allan & Partners v Scottish Ideal Homes. Further there were no relevant averments to support the conclusions against the first, fourth and fifth defenders. On the face of it, any licence would have been with the third defenders only, all as the defenders averred. In addition, there were no relevant averments to support the claim for additional damages against the first defenders purportedly made under section 97(2) of the Copyright Designs & Patents Act 1988. The claim was made "in particular" having regard to "the flagrancy" of the infringement. There were no averments to support that claim. There was, in particular, no averment that the first defenders were or ought to have been aware that they had no right to use the plans in question, they having been instructed by the third defenders. Finally, it was also, albeit faintly, suggested that since there were no averments that the defenders or any of them knew or had reason to believe that copyright existed in the drawings, claims for damages were not open to the pursuer at all, by reason of section 97(1) of the 1988 Act.

In response, counsel for the pursuer submitted that in averring that the sums concluded for represented the licence fee which the respective defenders would have required to pay for the use made by each of them of the pursuer's drawings (averments which it was said were based on clear information to that effect), the pursuer had averred enough to give notice of the basis on which damages were claimed. A notional licence fee was a recognised way of measuring damages. Reference was made to Chabot v Davies 1936 3 All E.R. 221. If anything certain observations in the case of Robert Allan & Partners v Scottish Ideal Homes supported the adequacy of the pursuer's averments. Whether the pursuer would establish damages to the extent sought in any proof before answer was, it was readily accepted, a different matter. It had not been suggested that the actions of the first, fourth and fifth defenders could not be said to amount to separate infringements of copyright. The sums sought were said to represent the notional licence fees which would have been chargeable in respect of their actings looked at separately. Although the pursuer had admitted an earlier readiness to sell the copyright for £2,500 this was under explanation that he would have retained certain rights in the drawings. In any event the pursuer would be entitled to claim nominal damages against all the defenders (although counsel sought the opportunity to advance further argument on this, if necessary, at a later date). It was for the defenders to make averments, if they could, in relation to section 97(1). It could not be said from the pursuer's averments that the defenders did not know or have reason to believe that copyright existed in the drawings to which this action related. As to the claim for additional damages, it would ultimately be a matter for proof as to whether the pursuer could establish, as he claimed, that "having regard to the whole circumstances" such additional damages should be awarded. The pursuer had averred that the first defenders were architects and that they copied drawings which were not theirs. Reference was made to the opinion of Laddie J. in Cala Homes (South) Limited &c v Alfred McAlpine Homes East Limited 1995 FSR 818 at page 838 where, in relation to section 97(2), he said:

"It should be noticed that although the court must have regard to the flagrancy of the infringement and the benefit accruing to the defendant by reason of the infringement, there is no requirement that both or indeed either of these features be present."

[24] Save for the arguments in relation to the claim for additional damages, I have again come to the view that the submissions for the pursuer should be preferred. Although having some sympathy for the defenders' position in respect of the relevance and specification of the damages claims, I consider that by offering to prove that the sums claimed represented the licence fee which the respective defenders would have required to pay for the use of the drawings made by each of them, the pursuer has averred enough as a matter of fair notice to entitle him to a proof before answer. Whether the pursuer will succeed to the extent claimed is of course entirely another matter. Counsel for the defenders did not argue that the pursuer was wrong to treat the averred actings of each defender as being infringements when they occurred. He did not suggest that the pursuer should have had a joint and several conclusion directed against all. Although it is not necessary to go further, there are, in any event, some indications in the case of Blair v Osborne & Tompkins Limited (upon which the defenders strongly founded for other reasons) supportive of the pursuer's claim to be entitled to nominal damages against each alleged infringer. Lastly, the defenders' argument based on section 97(1) is, I consider, (and, I sensed, was ultimately accepted to be) misconceived, for the reasons advanced by counsel for the pursuer.

By contrast, in my view, there is no sufficient basis averred for the additional damages claim made against the first defenders.

"The court may in an action for infringement of copyright having regard to all the circumstances, and in particular to -

(a) the flagrancy of the infringement, and

(b) any benefit accruing to the defendant by reason of the infringement,

award such additional damages as the justice of the case may require."

[27] Whereas it is no doubt right to observe that there is no requirement that both or indeed either of the specific features referred to be present, and whereas it is possible to envisage cases where the court would be prepared to award additional damages where the infringer had gained no particular benefit from his infringement if the infringement was flagrant, nevertheless, as Laddie J. himself went on to observe in Cala Homes (South) Limited v Alfred McAlpine Homes East Limited at page 838:

"It is somewhat more difficult to envisage cases where there has been no flagrancy and the court would be prepared to exercise its discretion to award damages under the section".

It is therefore perhaps not surprising to find that the pursuer makes the claim for additional damages in this case "having regard in particular to the flagrancy of the infringement". In Ravenscroft v Herbert 1980 F.B.C. 193 Brightman J. said:

"Flagrancy in my view implies the existence of scandalous conduct, deceit and such like: it includes deliberate and calculated copyright infringements."

This was approved in Noah v Shuba. It was flagrancy of this type which Laddie J. found, after consideration of certain detailed evidence, in Cala Homes (South) Limited &c v Alfred McAlpine Homes East Limited.

[28] In the present case there are, I consider, no averments which give fair notice to the first defenders of the basis upon which the pursuer seeks to establish against them - as opposed to any other of the defenders - that their averred breach of copyright was flagrant. It is not enough, in my view, to aver that they were architects copying drawings which were not theirs. The pursuer accepts that what they did was on the instructions of the third defenders, and there is no averment to suggest, for example, that they knew or had reason to believe that copyright would thereby be infringed. There is, in particular, no averment that they knew or must have known that the third defenders had no licence to use the drawings in question. Instead, the defenders' averment that the first defenders were provided with drawings which did not contain a materials key or the name of the architect is said by the pursuer to be not known and not admitted. In short, in circumstances where the pursuer is making serious allegations against fellow professionals, the first defenders, they are entitled as a matter of fair notice to clear and specific notice of the basis upon which that allegation is being made; notice which, in my view, they have not been given.

In the whole circumstances I shall sustain the first, third, fourth and fifth defenders' seventh plea-in-law, and repel the pursuer's seventh plea-in-law, but quoad ultra I shall allow a proof before answer.

I add, for completeness only, that although on 20 June 2003 the pursuer was allowed to abandon the action as laid against the second and sixth defenders, and was granted warrant to serve a copy of the Closed Record upon new sixth defenders, it was, I was informed, no longer his intention to serve the action on these new defenders. The only remaining defenders in this action, therefore, are those who were represented before me.