In brief

In Realestate.com.au Pty Ltd v Hardingham [2022] HCA 39 (REA v Hardingham), the High Court confirmed again that the approach to construction of contracts in Australia is that of objectivity, although some finer points of law remain the subject of debate. By three separate judgments, the High Court found that in the oral agreements between a real estate photographer and various real estate agencies, no term was to be understood or implied limiting the licence and sub-licence to use the copyright works only for the purpose and duration of the property marketing campaign. Thus, RP Data (the appellant accused of infringement) was found not to have infringed copyright by maintaining photographs and floor plans on its web platforms following the sale or lease of the relevant properties.

Background

James Hardingham is a professional photographer and the sole director of Real Estate Marketing Australia Pty Ltd (REMA) (together, H/REMA). Since 2009, REMA has been commissioned by various real estate agencies to take photographs and make floor plans of residential properties and supply images in an editable digital form for use in marketing campaigns for the sale or lease of the properties.

The majority of real estate agencies in Australia market online using the realestate.com.au platform operated by Realestate.com.au Pty Ltd (REA). REA then provides the images to RP Data Pty Limited (RP Data), which operates the website www.corelogic.com.au, through which it provides a service called "RP Data Professional", to which real estate agencies subscribe. The images provided by REMA to the agencies would appear on RP Data Professional within a few days of upload to REA’s website and remain on both platforms after the completion of the sale or lease as part of the historical information about the property.

In a letter in January 2014, H/REMA alleged that RP Data had infringed its copyright, including by reproducing its images on RP Data’s website. In response, RP Data refuted the allegations and referred to the terms and conditions of REA’s website, in particular, the grant of an irrevocable, perpetual, worldwide, royalty-free licence from real estate agencies to REA to use images uploaded to the website.

In July 2018, H/REMA brought proceedings in the Federal Court of Australia against RP Data for copyright infringement. The various real estate agencies were not parties to the proceeding. As H/REMA’s claims involved a substantial number of works (i.e. photographs and floor plans), the trial judge ordered, by consent of the parties, that questions of liability for infringement of the copyright in the works relating to 20 properties selected by H/REMA (the Works), be heard and determined separately from and before the determination of questions of infringement of other works and relief.

Thus, the 20 oral contracts between H/REMA and the different real estate agencies for the supply of the Works were in issue. These were entered into on various dates between September 2014 and June 2018, and neither REA nor RP Data was a party to any of these contracts.

There was no dispute between the parties that each of the Works was an original artistic work for the purposes of the Copyright Act 1968 (Cth), and that Mr Hardingham was the author and owner of the copyright in the Works. Nor was it in issue that on each occasion H/REMA was engaged by a real estate agency to supply photographs and floor plans of a property, and that the contract between them granted the agency a licence to reproduce the Works and a right to sub-licence their reproduction (which would include granting a sub-licence to REA and RP Data).

Rather, the sole issue in dispute was the scope of the licence and sub-licence. H/REMA submitted that the licence was subject to the limitation that the Works were to be used only for the purpose of marketing the property and, once the sale or lease of the property was completed, the licence came to an end.

First instance decision

At first instance, Thawley J found that uploading the Works to realestate.com.au was central to the objective of marketing sought to be achieved by the parties. That objective could not have been achieved unless the agencies could grant a licence to REA on the terms and conditions it usually required. His Honour held, therefore, that the objective circumstances were such that H/REMA agreed that the agencies were authorised, by way of licence, to upload images to REA’s platform and to grant to REA a licence in the form required by REA. That sub-licensing arrangement was either: (1) to be inferred from the conduct of H/REMA and the real estate agencies, including their course of dealings; or (2) to be implied into the agreements between them, in order to give business efficacy to those agreements. Thus, copyright was not infringed by RP Data.

Full Court appeal

H/REMA appealed to the Full Court of the Federal Court (Greenwood and Rares JJ, Jackson J dissenting). The majority allowed the appeal on the basis they were not satisfied that a term should be implied or inferred that H/REMA had conferred authority on the agencies to grant sub-licences to REA on REA’s usual terms and conditions. The majority concluded that the contracts contained an express term that a licence and sub-licence to the Works was limited to use for the purposes of the marketing campaign for the sale or lease of the property the subject of the relevant Work. In dissent, Jackson J agreed that the contracts contained an implied term as identified by the primary judge.

Appeal to the High Court

REA and RP Data appealed to the High Court. Kiefel CJ and Gageler J, Gordon J, and Edelman and Steward JJ delivered three separate judgments, all with the same result, allowing the appeal.

The High Court confirmed again that the approach to construction of contracts in Australia is that of objectivity. The actual intentions or subjective views of the parties to a contract are irrelevant. Where the terms between the parties have not been articulated, those terms must be ascertained by reference to the parties’ words and conduct. The relevant question is what a reasonable person would have taken the parties to have agreed by reason of the parties’ words and conduct in light of the surrounding circumstances.

Relevantly, in the present case, both H/REMA and the agencies knew that photographs and floor plans uploaded to REA’s platform were also uploaded to RP Data Professional and remained on both platforms after completion of a sale or lease, as part of the history of the property. REA had done so since the platform came into existence in 2003 and over the course of the dealings between the parties. The commercial reality of marketing on REA’s platforms involved acceptance of REA’s terms and conditions.

The High Court found there was nothing in the dealings between H/REMA and the agencies which could lead a reasonable person to understand that the parties had agreed to a licence, whether express or implied, which was limited in the way contended by H/REMA. To the contrary, a reasonable person would have concluded that H/REMA permitted the agencies to sub-licence the Works to REA in accordance with REA’s terms and conditions.

Each of the judgments also eschewed, in its own way, any clear distinctions to be drawn between 'implied' and 'inferred' terms. Kiefel CJ and Gageler J considered a term could be inferred but there to be a fine line between inference and implication. Gordon J considered any such definitional dispute to be 'wholly unproductive'. Edelman and Steward JJ denied the existence of inferred terms, although this was not to say that inference did not have a part to play in discerning express or implied terms.

Key lessons

• REA v Hardingham is a reminder that the terms of a copyright licence should be clearly articulated to avoid disputes regarding implied terms.
  
  
• Copyright owners creating works and supplying them commercially must have regard to commercial realities such as the terms and conditions of databases and websites on which such works are ordinarily uploaded and published. If the contract does not expressly restrict or prevent such use, a court may well find such a licence, either as an express term or by implying one.
  
  
• Owners of websites and other platforms hosting images provided by others should ensure that their terms and conditions adequately protect them from allegations of copyright infringement (including by obtaining express licences, warranties and/or indemnities).