Architect has construction halted

Frequently, a project under construction by one contractor is taken over by another contractor, such as after a bankruptcy of the original contractor. The new contractor then takes over the contract with the client (provided the client agrees) and the new contractor contracts with subcontractors and suppliers.

The original consultants, subcontractors and suppliers "slip in" if they have performed work or supplied materials up to the date of bankruptcy for which payment has not yet been made. That claim for unpaid work/materials may be filed with the bankruptcy trustee, but it often does not come to payment.

Recovery of materials by suppliers has limited success, for example, if a retention of title has been agreed upon. However, consultants, such as an architect, have a power tool, according to a recent case in the North Holland District Court, among others.

The case study

When the VBK Group went bankrupt in October 2015, contractor Bot Bouw saw its opportunity to take over a number of ongoing projects, including the De Groene Linten project in Haarlem. In addition to execution, VBK's responsibilities included design work. It had those design activities performed by Klous + Brandjes Architects, under the applicability of the DNR (De Nieuwe Regeling).

When VBK Group failed, the architect had not yet been paid in full for the work performed. The architect could submit that claim for verification to the receiver, but as a concurrent creditor would presumably miss the boat.

However, the architect did not leave it at that. The architect invoked his copyright on the design he had made and requested Bot Bouw not to continue building, since Bot Bouw was carrying out the construction work based on the architect's design, without the architect's permission. The architect offered Bot Bouw the opportunity to still use the architect's design, provided Bot Bouw would pay the outstanding bill, plus compensation for expenses incurred.

Enforce construction freeze

Because the architect and Bot Bouw could not reach an agreement, the architect initiated summary proceedings to enforce a construction stop. The August 31 ruling in the summary proceedings established that the architect's design is a "work" within the meaning of the Copyright Act, to which copyright protection is due. All drawings required for the realization of the designed project are covered by this copyright.

Finishing the work in accordance with these drawings is considered, according to the preliminary injunction judge, to be making the design public and reproducing it. That right belongs only to the person who holds the copyright. The architect had given VBK permission, through a license, to use the design so that VBK could make working drawings and build the work.

The interim relief judge ruled that the license is transferable by nature, but in this case something else was agreed upon between the architect and VBK. The Interim Injunction Judge ruled that there was a cross-project collaboration between the architect and VBK and the license was related to personal properties of VBK.

Non-transferable

Thus, the license here was not transferable to a third party, such as Bot Bouw, without the architect's consent. Agreements between the trustee of the bankrupt VBK and Bot Bouw on taking over work in progress do not bind the architect.

By nevertheless continuing to build on the basis of the architect's design, Bot Bouw committed copyright infringement, according to the Court in preliminary relief proceedings, and that is unlawful. Bot Bouw subsequently argued that it had a very great interest, including financial interest, in the smooth continuation of the project. However, the Court in preliminary relief proceedings considered that a balancing of interests cannot legitimize copyright infringement. Bot Bouw, the Preliminary Relief Judge concluded, may only use the design if it pays the architect's unpaid bill, plus all costs.

Conclusion

Copyright is a strong right. A design may not simply be used, copied, altered, etc. Permission from the architect is principle necessary; his design is sacred.

Anyone taking over a project in progress, whether or not after bankruptcy, would do well to pay attention to the rights and obligations of all parties involved, i.e. those of the client, subcontractors, suppliers and consultants. The copyright of the architect should certainly be included!