But if I change the plans by 10% that’s ok, isn’t it?

You’d be surprised how often we are confronted with a homeowner who, having obtained a set of plans from one homebuilder,[1] then wants to use those plans with another homebuilder.

When such people are met with advice to the effect that:

• The homebuilder may have copyright in the plans which they prepared;
• The homeowner may not be able to use the plans without the approval of (and often payment to) the homebuilder;
• The use of the plans could expose the homeowner to significant civil liability (including urgent injunctions, damages, and Court orders requiring the homeowner to make, expensive physical changes to the home ‘post construction’[2]);
• In one case, we are aware that the original homebuilder reported the use of such plans as a theft, which resulted in police executing a search warrant,

they often utter the immortal words:

But if I change the plans by 10% that’s ok, isn’t it?

Met with a fairly stiff ‘no’ in response, such homeowners are usually adamant that ‘Uncle Kevin’ or ‘Bill from down the street, who is a law student/architect’ has assured them that the above is correct.

Whilst we cannot say from whence the 10% rule came from, with respect; it is not correct. Like the Loch Ness Monster, it’s a myth.  As the homeowners recently discovered in Look Design and Development Pty Ltd v Edge Developments Pty Ltd & Flaton [2022] QDC 116(‘Look Design’).

Now, the damages in the case were not, in the big scheme of things, significant (particularly by comparison with other cases where plans have been misused) but for the homeowners (and the homebuilder who ultimately constructed the home, and who became the first defendants in the proceeding), the unrecoverable costs incurred in defending the matter would have been significant.  This leaves aside simply the stress of being involved in litigation for a long period (the proceeding was commenced in 2017, the trial was in August 2020, and judgment was handed down in May 2022).

Had the homeowners been properly advised, they would have known:

• That the person who prepares plans often (not always, but often) retains copyright in those plans;
• That using plans in which another person owns the copyright without permission, can lead to liabilities;
• If there is a dispute, the Court will perform a ‘qualitative’ not a ‘quantitative’ analysis of the plans. In determining whether one plan is a ‘copy’ of another, the Court will often evaluate whether the ‘copy’ adopts (or takes) the ‘heart’ of the original.

So what should the homeowners have done?

• First, when the homeowners engaged the original homebuilder to draw the original plans, they should have addressed their right to use the plans in the original contract (noting that most homebuilders have homeowners sign an ‘early works’ style agreement which deals with issues such as the drawing of plans, taking soil samples etc), for example they might have sought legal advice, and then negotiated with the homebuilder to pay a licence fee for the plans, allowing them to use the plans even if the homeowners chose to engage another homebuilder to complete construction;
• Second, when the homeowners decided to engage a different homebuilder than the one who had prepared the original plans, they should have sought legal advice and they should have:
  • Sought to negotiate a licence fee with the original homebuilder to allow the use of the plans (perhaps upon terms which would have required the second homebuilder to destroy copies of the original plans etc after the design process); or
  • Sought to negotiate with the original homebuilder with respect to a regime whereby:
    • The original homebuilder allowed the original plans to be provided to the new homebuilder;
    • The new homebuilder would design a set of plans;
    • A licence fee would be agreed for us of the new plans;
  • Third, not used the original plans and/or sought legal advice and an independent review of any new plans to ensure that they did not infringe on the original homebuilder’s copyright.

Equally, Look Design contains a warning for homebuilders and those who prepare plans (such as architects).  Ideally, your design agreement should deal with issues of copyright and breaches of same (including potentially consent injunctions and agreed damages clauses).  If your contract does not deal with these issues, then you will need to take a commercial approach to such disputes, noting that the damages which were awarded against the homeowners in Look Design would have been dwarfed by the unrecoverable costs associated with the litigation.

Cornwalls Building and Construction Team act for industry stakeholders across the breadth of the construction industry, including principals (such as homeowners), builders and building designers (such as architects and engineers) and they have relevant experience in proactively resolving issues of the type which occurred in Look Design.

[1] Or, perhaps, an architect.

[2] For example see Coles v Dormer and Ors [2015] QSC 224 https://archive.sclqld.org.au/qjudgment/2015/QSC15-224.pdf

Queries

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Disclaimer

This information and the contents of this publication, current as at the date of publication, is general in nature to offer assistance to Cornwalls’ clients, prospective clients and stakeholders, and is for reference purposes only. It does not constitute legal or financial advice. If you are concerned about any topic covered, we recommend that you seek your own specific legal and financial advice before taking any action.