Netupsky et al. v. Dominion Bridge Co. Ltd., [1972] SCR 368

Supreme Court of Canada

Netupsky et al. v. Dominion Bridge Co. Ltd., [1972] S.C.R. 368

Date: 1971-10-05

Boris Netupsky and Netupsky Engineering Company Limited (Plaintiffs) Appellants;

and

Dominion Bridge Company Limited (Defendant) Respondent.

1971: May 25, 26; 1971: October 5.

Present: Martland, Judson, Hall, Spence and Laskin JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR BRITISH COLUMBIA

Copyright—Contract for structural design plans—Changes in plans contemplated—Contract repudiated by structural engineer—Owner and, through it, subcontractor licensee of engineer for construction of work—Subcontractor altering and reproducing plans—Changes made with implied consent or licence of engineer—No infringement.

The individual appellant N, a professional engineer, agreed with H to provide the plans for the structural design of the Ottawa Civic Centre. H, the architect for the project, was acting for the owner, the City of Ottawa. The respondent was the steel fabricator and it redesigned to some extent, without affecting the artistic character and design, the construction of the work for the purpose of saving costs, and made copies of the plans necessary for its part in the construction.

An action was commenced, claiming that N had a copyright in the design involved and that the respondent had infringed the copyright by using his plans without permission.

The trial judge held that the physical changes complained of resulted from a change in the method of construction used to bring about the same shape, and this was not infringement in his opinion. The trial judge was also of the opinion that, in any event, the respondent had the right to make substantial changes in the structure, this right being implied from the contract between N and H.

On appeal, the Court of Appeal reversed the trial decision in finding that N had a copyright in his

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structural design plans which were reproduced by the respondent, and this constituted infringement as the reproduction was made without the consent of N. There was a damage award of $1,000 and an injunction restraining any further reproduction.

N appealed from this decision, seeking an increase in the damage award, delivery up of all infringing copies and an injunction in broader terms. The respondent cross-appealed on the ground that it had the permission or right to use and alter the plans and accordingly there had been no infringement.

The respondent having admitted in argument before this Court that N was the owner of the copyright as alleged, the only point in issue was whether the respondent had the authority to alter and reproduce the plans.

Held: The appeal should be dismissed and the cross-appeal allowed.

The plans had been prepared and paid for pursuant to the agreement between H and N. This agreement provided for changes and the basis of payment for them. According to the judgment of the British Columbia Court of Appeal and of this Court in Netupsky v. Hamilton, [1970] S.C.R. 203, N in refusing to make the changes sought was in breach of his contract and became obligated to pay any extra costs for changes over and above the price stipulated for his personal performance of the changes.

In the circumstances, it was clear that the changes or modifications not only were not forbidden but were in contemplation at the time when the City of Ottawa and, through it, the respondent, its subcontractor, became the licensee of N for the construction of its civic centre. Such a licence carried with it an implied consent to make the changes which N should have made and refused to make, and also, an implied consent to reproduce the plans in as many copies as might be necessary for the construction of the work.

Beck v. Montana Constructions Pty. Ltd. (1963), 5 F.L.R. 298, considered; Blair v. Osborne and Tomkins, [1971] 2 W.L.R. 503; Frisby v. British Broadcasting Corporation, [1967] 1 Ch. 932, referred to.

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APPEAL and CROSS-APPEAL from a judgment of the Court of Appeal for British Columbia[1], allowing ah appeal from a judgment of Dohm J. Appeal dismissed and cross‑appeal allowed.

M.B. Netupsky appeared in person for the plaintiffs, appellants.

Joan Clark and M.E. McLeod, for the defendant, respondent.

The judgment of the Court was delivered by

JUDSON J.—This is an appeal by Boris Netupsky and Netupsky Engineering Company Limited from a judgment of the British Columbia Court of Appeal, which awarded $1,000 as damages for infringement of copyright. The appellant seeks a substantial increase in the award of damages, damages for conversion of his plans, delivery up of all infringing copies of his work and an extension of an injunction granted by the Court of Appeal. The trial judge had dismissed the appellant’s action.

Dominion Bridge Company Limited was the steel fabricator for the erection of the Ottawa Civic Centre. Netupsky was the author of the plans for this work. The question at issue is whether Dominion Bridge was liable for an unauthorized use or conversion of Netupsky’s plans when it redesigned to some extent, without affecting the artistic character and design, the construction of the work for the purpose of saving costs, and made copies of the plans necessary for its part in the construction. In my opinion, one should infer, in the circumstances of this case, that there was a licence to make whatever changes were thought necessary and to reproduce the plans in as many copies as were necessary to construct the work.

Netupsky came into this matter as a result of the activities of Gerald Hamilton, a Vancouver architect, who conceived the idea of combining an arena with a stadium by means of a triangular frame with a cantilever roof. Early in 1965,

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Hamilton consulted Netupsky, a professional engineer, who produced plans which satisfied Hamilton that the idea was practical. The two were at first thinking of projects in Vancouver and Burnaby, but in June of 1965 they became interested in the proposed Ottawa Civic Centre and on August 6, 1965, entered into a written contract (which modified a previous contract as to quantum). It provided for a fee of $45,000 to be paid to Netupsky and for additional pay for any subsequent alterations in these terms:

1350 West Pender St.,
Vancouver 5, B.C.
MUtual 4-4218/4219

                                                                                                                         August 6, 1965.

Netupsky Engineering Ltd.
660 Howe Street
Vancouver, B.C.

Attention: Mr. B. Netupsky

Re: Ottawa Civic Centre

Dear Mr. Netupsky:

Further to our agreement of May 26th, 1965, you have made representations that the final design problems as have become apparent since that date have demanded a larger extent of professional services than you anticipated at that time. The following alterations to our contract of May 26th, 1965 are, therefore, agreed on:

1. In consideration of the further services that you are rendering the fee now will read $45,000. (Forty-Five Thousand Dollars) in lieu of $37,500. (Thirty-Seven Thousand Five Hundred Dollars). This will still contain complete design, working drawings, specifications and such supervision as is necessary at your discretion.

2. This lump sum fee represents all information that has been given to you at the moment and as will be given to you up to and including August 18th, 1965 when you should have decided on your final design.

3. This design will be considered to be the extent of your obligation for the above fee. If written instruction is given to you after that date to change such a design by virtue of the client’s instructions or ours, you will bill us on an hourly basis in accordance with the minimum hourly rates

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set forth by the Ontario Association of Architects. In fact, your charges will be on an equal basis with ours and we will make available to you photostat copy of our arrangements with the City as far as those hourly rates are concerned.

4. We understand that you are not making any disbursements to J. Adjeleian out of this fee and we will make separate arrangements with Craig and Kohler which will contain separate arrangements with Mr. Adjeleian. It is understood, however, that you will cooperate with Mr. Adjeleian to the fullest and do hereby undertake to avoid any disagreements with him in the best harmonious interest of the project. We will make it clear to Craig and Kohler that as designing Engineer you are responsible for design and Mr. Adjeleian’s role will be to see that your design is carried out. Mr. Adjeleian will be given a chance to voice any objections in writing and these will be dealt with in a sensible manner. Failing such disagreements Mr. Adjeleian will be expected to be agreeable to fulfill your requirements.

5. Your name will appear on the project as Structural Engineer.

6. The above fees are inclusive of all expenses such as printing, specifications, travel, telephone, telegrams.

This Agreement nullifies your letter of July 22nd, 1965, with the exception of Item #3.

Yours very truly,

                                                                                                               “G. HAMILTON”

                                                                                                               Gerald Hamilton

                                                                                                               Architect.

                                                                                                               “Witness

                                                                                                               Monica Palfrey

                                                                                                               1350 W. Pender”

                                                                                                               “Agreed

                                                                                                               Netupsky Eng. Co. Ltd.

                                                                                                               Boris Netupsky”

P.S. It is still understood that both our work is done on spec. until a contract is signed with the City of Ottawa.

                                                                                                    “G. HAMILTON”

“Witness	“Agreed
Monica Palfrey 1350 W. Pender”	Netupsky Eng. Co. Ltd. Boris Netupsky”

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Hamilton won the competition for the Ottawa Civic Centre and, with Craig & Kohler of Ottawa, became the architect for the project. Then bids for the steel work were requested and made on the basis of Netupsky’s preliminary plans SK-1 and SK-2, dated August 9, 1965.

In litigation between Netupsky and Hamilton, which ultimately reached this Court[2], it was conclusively determined that Netupsky had repudiated his contract of August 6, 1965. The judgment of the Court of Appeal dismissed Netupsky’s action and directed a reference to the Registrar to determine:

A. What Hamilton actually and properly paid after March 10, 1966, to change the design by virtue of the owners’ requirements.

B. What Netupsky would have been entitled to receive under his contract with Hamilton to complete the same changes of the plans.

This Court adopted the reasons of an unanimous British Columbia Court of Appeal and dismissed the appeal.

There can, therefore, be no doubt that the contract between Netupsky and Hamilton contemplated changes to be made and the price to be paid for those changes, and that Netupsky repudiated his obligations under that contract. The basis of his action against Dominion Bridge is that he and he alone could make changes and that they made unauthorized copies of his plans, which means that the project would have had to come to an end except on his terms.

The circumstances in which Dominion Bridge made its successful bid for the steel work require further elaboration. The instructions to bid contained the following paragraphs:

4. The architects for the work are Gerald Hamilton of Vancouver and Craig & Kohler of Ottawa. The structural engineers are Netupsky Engineering Co. Ltd. of Vancouver, and John Adjeleian and Associates of Ottawa,

and “Form of Contract”:

a) The successful contractor will be required to enter into a contract with the City of Ottawa on

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Canadian Standard Form of Construction Contract Document 4, for Stipulated Unit Prices.

b) When the structural working drawings are completed a lump sum will be agreed based on the unit prices and the steel contractor will be required to enter into a normal subcontractors agreement with the general contractor.

Based on Netupsky’s preliminary plans SK-1 and SK-2, dated August 9, 1965, Dominion Bridge’s tender, on the unit price basis, totalled approximately $1,600,000. Netupsky later made changes in his preliminary plans, necessitated in part by a decision to erect the building in two stages, which would allow the use of the turf at Lansdowne Park for the 1966 football season. These altered plans, S1 to S5, were dated December 10, 1965. Dominion Bridge then stated that their lump sum would be $1,985,000, due to the two-stage erection and increased weight and complexity of the design. A meeting was held on January 12, 1966, at Dominion Bridge’s offices in Montreal, with a view to decreasing the costs for structural steel. Netupsky was present at that meeting but left after a dispute with Chamberlain, manager of Dominion Bridge, over the proposed making of further alterations in the plans.

Dominion Bridge then prepared further plans from Netupsky’s S1 to S5 drawings, on the architects’ instructions, incorporating cost-saving changes. The alterations were sent by Hamilton to Netupsky in February 1966, and after negotiations between the parties in which Netupsky continued to object to any redesign of the structure, he wrote to Hamilton on March 8, stating:

Pleased be advised that we are not prepared to redesign or review the submitted redesign of the steel superstructure without coming to a mutually agreeable arrangement as to our fee for this work, as well as for the work of re-appraising the sub‑structure and the pre-stressed concrete elements.

Craig & Kohler and Hamilton immediately replaced Netupsky as consulting engineer with Adjeleian. All shop plans produced by Dominion

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Bridge were submitted to Adjeleian from that point on, including the final plans E1 to E8 and E100, which were based on Netupsky’s plans with Dominion Bridge’s modifications added.

Experts indicated at trial that a layman would be unable to discern any difference between a structure built according to the final plans and one constructed from Netupsky’s plans. It is clear that Dominion Bridge engineers have never denied that credit for the design should go to Netupsky.

The present action was commenced, claiming that Netupsky had a copyright in the design involved and that Dominion Bridge had infringed the copyright by using his plans without permission.

The trial judge held that the physical changes complained of resulted from a change in the method of construction used to bring about the same shape, and this was not infringement in his opinion. Dohm J. was also of the opinion that, in any event, Dominion Bridge had the right to make substantial changes in the structure, this right being implied from the contract between Netupsky and Hamilton.

The Court of Appeal for British Columbia reversed this decision in finding that Netupsky had a copyright in his structural design plans which were reproduced by Dominion Bridge, and this constituted infringement as the reproduction was made without the consent of Netupsky. There was a damage award of $1,000 and an injunction restraining any further reproduction.

Netupsky appeals from this decision, seeking an increase in the damage award, delivery up of all infringing copies and an injunction in broader terms. Dominion Bridge cross-appeals on the ground that it had the permission or right to use and alter the plans and accordingly there has been no infringement. In my opinion, the cross-appeal succeeds, and accordingly, the appeal must fail.

Dominion Bridge admitted in argument before this Court that Netupsky was the owner of the

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copyright as alleged, and the appeal was argued on the basis of this admission. The similarity between the final plans and Netupsky’s earlier drawings is manifest on the evidence and Dominion Bridge admits that it used plans S1 to S5 in preparing their plans, the reproduction of which would constitute infringement if made without the consent, permission or licence, express or implied, of Netupsky. The only point in issue is whether Dominion Bridge had the authority to alter and reproduce the plans.

The Court of Appeal expressed the following opinion on this point:

It was only after the failure of Hamilton and the appellants to reach agreement on the additional fee that the respondent tendered its infringing plans for the necessary approvals to other than the appellants, and then only on the instructions of the owner and the architects. It is therefore clear that the respondent had no illusions that it had any right, by virtue of any consent, permission, licence, or leave given to it by the appellants, to reproduce with substantial changes of its own making the appellants’ copyrighted plans. The most that it can say is that it received instructions for, and approval of, those actions from others than the appellants, and that it assumed such instructions were given with the authority express or implied, of the appelants. In the circumstances, the respondent might well be forgiven for making such an assumption, but, unfortunately for it, there is just no basis in fact to support a view that such an authority from the appellants was, or should be inferred to have been given to the owner, the architects, the resident Ottawa structural engineers or the contractor. In my view, the evidence and exhibits indicate quite clearly the contrary. The appellants refused to consider or approve the unauthorized modifications made to its plans, without being instructed to do so in writing with commensurate remuneration and after doing a complete mathematical and geometrical recalculation of the structural design concepts incorporated in the respondent’s plans. Desirable as it might be in the interests of carrying through the construction of a major project (involving many outstanding contractual obligations) to imply a permission or licence to use copyrighted drawings for redesign and thereby avoid the chaos likely to arise by the appellants’ deliberate failure (whether contractually justified or not) to cooperate in the area in which it had the

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control, I cannot find that any consent, permission, licence, leave or dispensation, express or implied, of the appellants to produce or reproduce (as I found was done by the respondent) the appellants’ structural design plans SK-1 and SK-2 and S1 to S5, was given to the respondent either directly or indirectly, or through the owner or its representatives and agents, and whether by virtue of the appellants’ contractual engagements with the architect or outside that contract.

I cannot agree with this opinion. The plans had been prepared and paid for pursuant to the agreement between Hamilton and Netupsky. This agreement provided for changes and the basis of payment for them. According to the judgment of the British Columbia Court of Appeal and of this Court in the Netupsky v. Hamilton action, Netupsky in refusing to make the changes sought was in breach of his contract and became obligated to pay any extra costs for changes over and above the price stipulated for his personal performance of the changes.

In the circumstances of this case, it is clear that the changes or modifications not only were not forbidden but were in contemplation at the time when the City of Ottawa and, through it, Dominion Bridge, its subcontractor, became the licensee of Netupsky for the construction of its Civic Centre. Such a licence carries with it an implied consent to make the changes which Netupsky should have made and refused to make, and also, an implied consent to reproduce the plans in as many copies as might be necessary for the construction of the work.

Judicial consideration of the precise point in issue in this appeal has not been extensive. I adopt the statement of principle of the Supreme Court of New South Wales in Beck v. Montana Constructions Pty. Ltd.[3], at p. 304-5:

…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 en-

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gagement 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.

And further:

…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.

* * *

There then remains the question whether there should be any implied right to transfer it and here I think that it must inevitably be implied that the owner, having commissioned the sketch plan and having obtained the right to use it for the purpose of erecting on that site a building in substantial accordance with it, should have the right to transfer that right to a new owner of the land.

The Beck case has been followed in a recent decision of the English Court of Appeal, Blair v. Osborne and Tomkins[4].

Netupsky agreed with Hamilton to provide the plans for the structural design of the Ottawa Civic Centre. Hamilton, the architect for the project, was acting for the owner, the City of Ottawa, in his dealings with Netupsky. The plans SK-1 and SK-2 and S1 to S5 became the property of the owner to use for the purpose of erecting the intended structure in substantial accordance with those plans. Dominion Bridge, the successful bidder for the steelwork, used the plans for this purpose, and their authority was derived from the City of Ottawa, which held an implied licence to the copyright.

The extent to which the copyright material may be altered is not unfettered, however. The Court may imply terms limiting that right, or the contract may expressly or impliedly forbid any alterations: Frisby v. British Broadcasting Corporation[5]. There was no refusal by Dominion Bridge to give credit to Netupsky for the structural design. The final plans, though modified, described a structure which, to the layman would be identical in ap-

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pearance to a structure built in accordance with Netupsky’s plans. Netupsky himself had made various changes to his SK-1 and SK-2 drawings to prepare the plans S1 to S5. These changes were at least a partial cause of further changes being required to decrease the cost involved, and all changes were authorized by the City of Ottawa. In my opinion, the alterations made by Dominion Bridge were within the limits which should be considered acceptable.

There was included in the agreement between Netupsky and Hamilton, the following provision:

3. This design will be considered to be the extent of your obligation for the above fee. If written instruction is given to you after that date to change such a design by virtue of the client’s instructions or ours, you will bill us on an hourly basis in accordance with the minimum hourly rates set forth by the Ontario Association of Architects. In fact, your charges will be on an equal basis with ours and we will make available to you the photostat copy of our arrangements with the City as far as those hourly rates are concerned.

Even if this clause can be construed as reserving to Netupsky the right to make changes, he cannot contend that this precluded such alterations. He repudiated that contract, and the repudiation was accepted as decided by an earlier decision of the Court of Appeal for British Columbia and affirmed by this Court on October 21, 1969.

In the result, there has been no infringement as the alterations were made with the implied consent or licence of Netupsky. The appeal is dismissed and the cross-appeal allowed, the whole with costs both here and in the Courts below.

Appeal dismissed and cross-appeal allowed, with costs.

Solicitors for the defendant, respondent: Ladner, Downs, Ladner, Locke, Clark & Lenox, Vancouver.