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Contract – informal agreements

High Court casenotes

In Realestate.com.au Pty Ltd v Hardingham [2022] HCA 39 (14 December 2022), the High Court was required to determine the terms of an informal licence – in particular, whether the licence gave the licensee a right to grant a sub-licence.

Mr Hardingham is a professional photographer and the sole director of Real Estate Marketing Australia Pty Ltd (REMA). Since REMA’s incorporation, the company has been commissioned by various real estate agencies (agencies) to produce photographs and floor plans of properties (works) for use in marketing campaigns, for the sale or lease of those properties.

The agreements between Mr Hardingham and REMA (H/REMA) and the various agencies were unwritten and informal. H/REMA knew that the agencies who engaged him uploaded the works onto websites and/or other electronic platforms that hosted real estate listings. One of the most popular platforms, realestate.com.au (the platform), was operated by Realestate.com.au Pty Ltd (Realestate.com.au).

H/REMA knew that to use the platform, the agencies would have to accept Realestate.com.au’s terms and conditions. These terms and conditions required the agencies to grant to Realestate.com.au an irrevocable, perpetual, worldwide licence to use the material posted on the platform and the right to licence other persons.

H/REMA also knew that Realestate.com.au and RP Data Pty Ltd (RP Data) had an agreement in which RP Data was able to harvest the material posted on the platform for its website, www.corelogic.com.au, which provided properties’ market history to subscribers. 

H/REMA commenced proceedings against RP Data alleging an infringment of its copyright in a number of its works. RP Data joined Realestate.com.au as a third party to the proceeding, asserting that Realestate.com.au was liable to indemnify RP Data in respect of any loss or damage if copyright had been infringed.

H/REMA failed at first instance. The trial judge (Thawley J), having made the findings of fact outlined above, held that H/REMA had permitted the agencies to sub-license the copyright in the works to Realestate.com.au on its usual terms and conditions (which entitled it to grant a sub-licence to RP Data).

Thawley J found the sub-licencing arrangement could be inferred from the conduct of the parties, including their course of dealings, or it was implied into the parties’ agreements in order to give business efficacy to those agreements. H/REMA appealed successfully to the Full Court of the Federal Court (Greenwood and Rares JJ, Jackson J dissenting).

Greenwood and Rares JJ held that the agreements between H/REMA and the agencies contained an express term that a licence, and any sub-licence, to use the works was limited for the duration of the sales campaign. Their Honours did not consider that the requirements for the implication of a term, of the kind found below, were satisfied.

Realestate.com.au and RP Data appealed and the High Court allowed both appeals. Several justices of the High Court noted that H/REMA bore the onus of establishing the infringement of its copyright by RP Data, which depended on whether the licence given to the agencies was limited in the way H/REMA contended: Kiefel CJ and Gageler J (at [26]) and Gordon J (at [40]).

In identifying the terms of the licence, their Honours explained that this was to be determined objectively by considering what reasonable people, with knowledge of the background circumstances then known to the parties, would have understood to have been agreed by the words and conduct of the parties: Kiefel CJ and Gageler J at [15], Gordon J at [42] and Edelman and Steward JJ at [83].

As to the inference versus the implication of terms, their Honours considered that the distinction was unhelpful and/or a distraction from the ultimate inquiry as to the rights and liabilities of the parties: Kiefel CJ and Gageler J at [22], Gordon at [73] and Edelman and Steward JJ at [84].

But, their Honours (while noting that with informal contracts, the distinction can be a fine one) described inferred terms being the identification of the terms of an oral contract, and implied terms being those terms that meet the criteria set out in BP Refinery (Westernport) Pty Ltd Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283: Kiefel CJ and Gageler J at [21], Gordon J at [75] and Edelman and Steward JJ at [85] – the application of that criteria being applied flexibly: Gordon J at [50] and Edelman and Steward JJ at [114].

Ultimately, the High Court considered that, because the agencies had no choice but to accept Realestate.com.au’s terms to upload the work on the platform, the agreements between H/REMA and the agencies contained a term granting the agencies a licence to the work, and a right to sub-licence, beyond the sales campaign: Kiefel CJ and Gageler J at [31], Gordon J at [69]-[70] and Edelman and Steward JJ at [134].

Dr Michelle Sharpe is a Victorian barrister practising in general commercial, real property, disciplinary and regulatory law, 03 9225 8722, email msharpe@vicbar.com.au. The full version of these judgments can be found at austlii.edu.au.

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