Informal contracts and lessons in construction

The High Court’s recent decision in v Hardingham[1] has reversed the Full Court’s majority decision[2] and, in doing so, highlighted the importance of ensuring agreements are reflected in writing.

Hardingham and his company Real Estate Marketing Australia Pty Ltd (Hardingham) were engaged by real estate agencies over the phone to take photographs and produce floor plans of properties (Content). The terms of engagement were never detailed in writing.

The agencies uploaded the Content to the website (RE Website), operated by Pty Ltd (REA). The agencies had to agree to REA’s terms and conditions to do so, which relevantly granted REA the right to perpetually use the Content and provide it to third parties.

REA had a commercial arrangement with RP Data Pty Limited (RP data) under which REA would supply RP Data with the Content and RP Data would publish it on its own website (Core Logic Website) where it would also remain indefinitely.

Hardingham argued that the original licence he had granted the agencies was limited, only allowing the Content to be used for marketing purposes. On that basis, any use of the Content after the sale or lease of the relevant property would fall outside the scope of the licence. Accordingly, Hardingham argued that RP Data and REA’s use of the Content after the sale or lease of the relevant property constituted copyright infringement.

Recap of previous decisions

At first instance, Justice Thawley found that RP Data had not infringed Hardingham’s copyright because Hardingham knew how the agencies used the Content and had acquiesced to that use. In those circumstances, Justice Thawley held that it could be inferred that the agreements between Hardingham and the agencies granted the agencies the right to sub-licence the Content on REA’s terms or, alternatively, that such a term should be implied into the agreements. On appeal, the majority of the Full Federal Court overturned the first instance decision by finding that the licence to use the Content was limited to only allowing it to be used for marketing purposes.

High Court Decision

The High Court confirmed that, in cases where the terms of an agreement have not been articulated, the terms will ultimately be determined by reference to what a reasonable person would consider the parties to have agreed to, in light of their words and actions.

In this case, the Court considered that Hardingham knew how the Content was being used by the agencies and, in the face of that knowledge, took no action. As a result of that inaction, Chief Justice Kiefel, Justice Gageler, and Justice Gordon – in a separate judgment  –  inferred that the parties agreed to allow the agencies to sub-licence the Content on REA’s terms and conditions. Justices Edelman and Steward also found that an implied term existed in the agreements which granted the agencies the right to sub-licence the Content on REA’s terms and conditions.

Key Lessons

Licence agreements should be prepared in writing. Doing so allows licensors to better manage how their intellectual property is used and avoid, as much as possible, a dispute arising regarding the scope of the licence granted. Additionally, Licensors should proactively enforce their rights under any licence agreement.

Melissa Wingard | Special Counsel

Daniel Kieltyka | Lawyer

[1] [2022] HCA 39

[2] Hardingham v RP Data Pty Limited [2021] FCAFC 148

Melissa Wingard - Special Counsel

Melissa Wingard, Former POF Attorney

BA(Eng&Hist) LLB(Hons) GradDipLegPrac GradDipAppFin&Inv MCyberSecOps

Melissa Wingard is a senior commercial technology lawyer, with over 15 years’ experience, assisting software, cybersecurity, and technology companies, across the Asia Pacific region, grow their business and meet strategic aims, whilst managing risk and regulatory compliance.