What difficulties can ensue if client and architect fall out? Christopher Larcos from Moray and Agnew Lawyers has prepared a fascinating case note on a recent court decision that could affect architects who take over mid-project.
Milankov Designs and Project Management Pty Limited v Di Latte  WASC 14
Supreme Court of Western Australia
Di Latte engaged Milankov Designs to design a new residence. Stage one involved design and documentation for council approval, and stage two involved preparing the working drawings and specification.
Milankov completed stage one and Di Latte paid all fees due. Unfortunately, the parties fell out and Di Latte terminated the contract before Milankov had started on stage two. Di Latte then asked for a copy of the CAD drawings but Milankov refused to provide them. He insisted that he retained all intellectual property in the drawings and that they were not to be copied or reproduced in any way without Milankov’s permission.
Di Latte engaged another architect, Scanlan, for Scanlan to continue with stage two of the project. Scanlan prepared the working drawings by starting with a set of drawings prepared by Milankov. Though there were extensive differences between Milankov’s and Scanlan’s drawings to satisfy various engineering, site, and interior design requirements, Scanlan’s drawings were substantially the same as Milankov’s.
Milankov brought a claim against both Di Latte and Scanlan claiming that they had infringed his copyright in the stage one documents.
Milankov Designs held copyright in the stage one documents. Thus, the question for determination is the extent of any implied licence held by Di Latte to use those documents. Typically, where an architect receives payment for drawings, the architect impliedly licences the client to use of those drawings for the purpose for which they were brought into existence. In most cases, that purpose is the construction of a building substantially in accordance with those drawings and, as part of that exercise, the licence extends to preparing any necessary drawings to achieve that outcome.
That said, an implied licence may be excluded by an express provision of a contract, or if it is inconsistent with the terms of the contract. For instance, there would be no implied licence where an architect reserved the right to continue with the subsequent stages of a project.
The contract provided for Milankov to prepare plans ready for council approval in stage one and then, in stage two, Milankov was to prepare working drawings and specifications for construction. Thus, the stage one licence was for a limited purpose: seeking development approval. It was not an implied licence to use the plans to build the house because that was inconsistent with the terms of the contract, which provided for Milankov to prepare the stage two documentation; by using Milankov’s stage one documents for that purpose, Di Latte and Scanlan have breached Milankov’s copyright.
The principal difficulty with this case is that it seems to be inconsistent with the implications drawn from prior case law on the breadth of the implied licence. For instance, in Beck v Montana Constructions Pty Ltd (1963) 80 WN(NSW) 1578, a case involving sketch plans, Jacobs J said at  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 making 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.
Jacobs J went on to say, at  that:
When the 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.
In Blair v Osborne and Tomkins  2 QB 78 and Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd  HCA 55, the courts said that the implied licence typically extends to another architect or a builder such as to enable them to make copies of the plans and to use them for that very building on that site.
Standard form client and architect contracts typically involve the architect completing the work in stages. Prior to the decision in Milankov, it would have been thought that the purpose of the drawings would have been the ultimate construction of the project to which those drawings relate; this would have been true regardless of the stage to which those drawings related. Milankov seems to turn this on its head by suggesting that the purpose of the drawings in each stage does not extend to any purpose beyond that stage.
Thus, the purpose of the concept design or design development drawings is not the ultimate construction of the project but, rather, something less; something such as obtaining the client’s consent to proceed to the next stage, or to submit the drawings for development consent. Any implied licence, therefore, will be limited to those purposes and will not extend to construction. It is not until the construction documentation stage that it can be said that the purpose of those drawings is the construction of the project.
Accordingly, any architect taking over a project that is not yet at construction documentation stage cannot assume that the client holds a licence in the drawings such as to allow the new architect to continue working on the project even if all of the former architect’s fees have been paid. Ideally, in such a situation, the new architect should contact the former architect and obtain that former architect’s (written) consent to develop the drawings and further document the project.
Christopher Larcos is a Special Counsel with Moray & Agnew Lawyers. He is also a registered architect with over 20 years’ experience and an adjudicator for security of payment matters. Prior to his present role, he spent a decade as a front-end construction lawyer at King and Wood Mallesons and Allens Linklaters.