DHBC Pty Ltd & Fitzroy Island - [2006] QSC 98

SUPREME COURT OF QUEENSLAND

CITATION:

DHBC Pty Ltd & Fitzroy Island [2006] QSC 098

PARTIES:

DHBC PTY LTD ACN 102 662 279
(Plaintiff)
v
FITZROY ISLAND PTY LTD ACN 089 188 901
(Defendant)

FILE NO/S:

389 of 2005

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court, Cairns

DELIVERED ON:

3 April 2006

DELIVERED AT:

Cairns

HEARING DATE:

1 February 2006

JUDGE:

Jones J

ORDER:

1. On its true construction, clause 5 of the Licence Agreement dated 17 February 2000, does not entitle the plaintiff to an extension of the term of the Licence Agreement for a further period of five years but in accordance with its admission, the defendant is obliged to negotiate in good faith with the plaintiff to extend the licence granted in the Licence Agreement:
(a) after expiration of the term (being a five year term commencing on 17 February 2000 and ending on 17 February 2005);
(b) for an additional term (defined in clause 1 of the Licence Agreement as five years); and
(c) provided the plaintiff had, during the term, fully performed its obligations under the Licence Agreement and had given the defendant six months’ written notice of the plaintiff’s desire to renew the Licence Agreement prior to expiration of the term (on 17 February 2005).

2. The plaintiff’s claim is dismissed.

3. The plaintiff pay the defendant’s costs of and incidental to the applications filed 29 November 2005 and 23 January 2006 and the proceeding on the standard basis.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – OFFER AND ACCEPTANCE – MATTERS NOT GIVING RISE TO BINDING CONTRACT – VAGUENESS AND UNCERTAINTY – AGREEMENT SUBJECT TO FURTHER AGREEMENT OR ARRANGEMENT – where Licence Agreement contemplated an additional term of a lease – where Licence Agreement directed that parties negotiate in good faith to extend the licence – whether Licence Agreement entitled plaintiff to an extension of the terms of the licence agreement as of right – whether undertaking to negotiate in good faith enforceable

Rule 483(1) Uniform Civil Procedure Rules

Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104
Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600
Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1
Demtear Pty Ltd v Abelian Pty Ltd (2004) QSC 103
Godecke v Kirwan (1973) 129 CLR 629
Hillas v Co Ltd v Arcos Ltd (1932) All ER 494
Placer Development v The Commonwealth (1969) 121 CLR 353
Thorley v Goldberg (1964) 112 CLR 597
Walford v Miles (1992) 2 AC 128

COUNSEL:

Mr A Philp SC, with him Mr Jonsson for the applicant/plaintiff
Mr D Morzone for the respondent/defendant

SOLICITORS:

Gadens Lawyers for the applicant/plaintiff
Miller Harris Lawyers for the respondent/defendant

The plaintiff company carries on a business which conducts diving, snorkelling and related activities at the tourist resort on Fitzroy Island, located off the coast of Cairns in the State of Queensland. The business is conducted pursuant to a Licence Agreement with the defendant…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2006] QSC 98
Decision Date: 3 April 2006

CaseChat Overview and Summary

The dispute between DHBC Pty Ltd and Fitzroy Island involved the interpretation of a Licence Agreement dated 17 February 2000. The plaintiff, DHBC Pty Ltd, sought an extension of the Licence Agreement for an additional five-year term, while the defendant, Fitzroy Island, argued that the agreement only obligated the parties to negotiate in good faith should the plaintiff wish to extend the licence. The case was heard in the Supreme Court of Queensland.

The central legal issue was whether the Licence Agreement entitled the plaintiff to an extension of the licence as of right or if the obligation to negotiate in good faith was enforceable. The court had to determine the true construction of clause 5 of the Licence Agreement, which directed the parties to negotiate in good faith if the plaintiff wished to extend the licence after fulfilling certain conditions. The court also had to ascertain if the agreement was sufficiently certain to be enforceable.

The Supreme Court concluded that clause 5 did not entitle the plaintiff to an extension of the licence as of right. Instead, it found that the defendant was obliged to negotiate in good faith with the plaintiff under specific conditions, including the plaintiff's full performance of its obligations and a six months' written notice of its desire to renew the licence. The court found the agreement sufficiently certain to enforce the obligation to negotiate in good faith. Consequently, the plaintiff's claim was dismissed, and it was ordered to pay the defendant's costs.

Orders

Orders of the court

1. On its true construction, clause 5 of the Licence Agreement dated 17 February 2000, does not entitle the plaintiff to an extension of the term of the Licence Agreement for a further period of five years but in accordance with its admission, the defendant is obliged to negotiate in good faith with the plaintiff to extend the licence granted in the Licence Agreement:

(a) after expiration of the term (being a five year term commencing on 17 February 2000 and ending on 17 February 2005);

(b) for an additional term (defined in clause 1 of the Licence Agreement as five years); and

(c) provided the plaintiff had, during the term, fully performed its obligations under the Licence Agreement and had given the defendant six months’ written notice of the plaintiff’s desire to renew the Licence Agreement prior to expiration of the term (on 17 February 2005).

2. The plaintiff’s claim is dismissed.

3. The plaintiff pay the defendant’s costs of and incidental to the applications filed 29 November 2005 and 23 January 2006 and the proceeding on the standard basis.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	DHBC Pty Ltd & Fitzroy Island [2006] QSC 098
PARTIES:	DHBC PTY LTD ACN 102 662 279 (Plaintiff) v FITZROY ISLAND PTY LTD ACN 089 188 901 (Defendant)
FILE NO/S:	389 of 2005
DIVISION:	Trial
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court, Cairns
DELIVERED ON:	3 April 2006
DELIVERED AT:	Cairns
HEARING DATE:	1 February 2006
JUDGE:	Jones J
ORDER:	1. On its true construction, clause 5 of the Licence Agreement dated 17 February 2000, does not entitle the plaintiff to an extension of the term of the Licence Agreement for a further period of five years but in accordance with its admission, the defendant is obliged to negotiate in good faith with the plaintiff to extend the licence granted in the Licence Agreement: *(a) after expiration of the term* (being a five year term commencing on 17 February 2000 and ending on 17 February 2005); (b) for an additional term (defined in clause 1 of the Licence Agreement as five years); and** (c) provided the plaintiff had, during the term, fully performed its obligations under the Licence Agreement and had given the defendant six months’ written notice of the plaintiff’s desire to renew the Licence Agreement prior to expiration of the term (on 17 February 2005). 2. The plaintiff’s claim is dismissed. 3. The plaintiff pay the defendant’s costs of and incidental to the applications filed 29 November 2005 and 23 January 2006 and the proceeding on the standard basis.
CATCHWORDS:	CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – OFFER AND ACCEPTANCE – MATTERS NOT GIVING RISE TO BINDING CONTRACT – VAGUENESS AND UNCERTAINTY – AGREEMENT SUBJECT TO FURTHER AGREEMENT OR ARRANGEMENT – where Licence Agreement contemplated an additional term of a lease – where Licence Agreement directed that parties negotiate in good faith to extend the licence – whether Licence Agreement entitled plaintiff to an extension of the terms of the licence agreement as of right – whether undertaking to negotiate in good faith enforceable Rule 483(1) Uniform Civil Procedure Rules Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104 Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600 Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1 Demtear Pty Ltd v Abelian Pty Ltd (2004) QSC 103 Godecke v Kirwan (1973) 129 CLR 629 Hillas v Co Ltd v Arcos Ltd (1932) All ER 494 Placer Development v The Commonwealth (1969) 121 CLR 353 Thorley v Goldberg (1964) 112 CLR 597 Walford v Miles (1992) 2 AC 128
COUNSEL:	Mr A Philp SC, with him Mr Jonsson for the applicant/plaintiff Mr D Morzone for the respondent/defendant
SOLICITORS:	Gadens Lawyers for the applicant/plaintiff Miller Harris Lawyers for the respondent/defendant