Gorza v Australian Cruising Yacht Co Pty Ltd
[2005] WASC 191
•26 AUGUST 2005
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: GORZA -v- AUSTRALIAN CRUISING YACHT CO PTY LTD [2005] WASC 191
CORAM: HASLUCK J
HEARD: 3 AUGUST 2005
DELIVERED : 26 AUGUST 2005
FILE NO/S: CIV 1700 of 2005
BETWEEN: MARK GORZA
Plaintiff
AND
AUSTRALIAN CRUISING YACHT CO PTY LTD (ACN 065 652 744)
Defendant
Catchwords:
Real property - Boat building site - Grant of a licence to occupy a portion of the site - Whether licence included condition forbidding revocation until boat completed - Whether licence subject to implied term to similar effect - Whether licence terminated by assignment of the licensor's leasehold estate - Application to restrain revocation of licence by assignee - application of rules concerning privity of contract and assignment - Application for an interim injunction refused
Legislation:
Nil
Result:
Application dismissed
Category: B
Representation:
Counsel:
Plaintiff: Mr C P Stokes
Defendant: Mr A J Prentice
Solicitors:
Plaintiff: Chris Stokes & Associates
Defendant: Mossensons
Case(s) referred to in judgment(s):
Cowell v Rosehill Racecourse Pty Ltd (1937) 56 CLR 605
Graham H Roberts Pty Ltd v Maubeth Investments Pty Ltd [1974] 1 NSWLR 93
Case(s) also cited:
American Cyanamid Co v Ethicon Ltd [1975] AC 396
Hurst v Picture Theatres Ltd [1915] 1 KB 1
J C Williamson v Lukey (1931) 45 CLR 282
London & Blackwall Railway Co v Cross (1885) 31 Ch D 354
Minister of Health v Bellotti [1944] KB 298
Thomas v Sorrell 124 ER 1098
Voskuilen v Morisset Mega-Market Pty Ltd [2002] NSWSC 63
HASLUCK J: The plaintiff, Mark Gorza, is an amateur boat builder. He has commenced legal proceedings in which he pleads at par 3 of the statement of claim that he was granted a licence to occupy a site at certain premises used for boat building for a term commencing in or about 1997 and concluding on the construction by the plaintiff of his vessel.
He has applied for an interim injunction restraining the defendant company during the term of the licence from terminating the licence or interfering in any manner with the plaintiff's rights as licensee until the trial of the action or further order.
The plaintiff relies upon an affidavit sworn 15 June 2005 and a further affidavit sworn 27 July 2005. In opposing the application for an injunction the defendant relies upon the affidavit of Arno Dawson, who is the sole director of the defendant company, sworn 30 June 2005 and a further affidavit sworn 27 July 2005. I will draw upon the statement of claim and these affidavits in setting out the background to the dispute.
I pause at this point to note that the plaintiff's application for an interim injunction was heard in conjunction with a similar application made by another boat builder at the subject boat building premises, David Ashton. The issues thrown up by both applications were similar. I have used the Ashton application as a vehicle for a full discussion about the issues and the legal principles bearing upon an application of this kind.
I will not repeat everything I said in regard to the Ashton application and will proceed upon the basis that the judgment in respect of the Ashton application is to be read in conjunction with the judgment concerning this matter. I am of the view that the legal principles referred to in the Ashton judgment apply to the circumstances of the present case. Accordingly, the judgment in the present case will be confined to a comparatively short review of the evidence and a summary of the principal findings.
Background
It emerges from the first Gorza affidavit that in 1987 the State Planning Commission leased the site known as the Maylands Boat Yard to Tranby Quay Pty Ltd. The head lease made provision for the boat yard to be occupied by licensees building, repairing or maintaining amateur water craft.
In 1991 or 1992 Mr Gorza entered into a licence with Tranby for the use of a water pen for a boat that he was refitting. That licence terminated in 1996 when he sold his boat.
Between 1994 and 1998 Mr Gorza was working as a contract manager for Tranby due to his background in boat building. In 1997 he purchased a steel ketch and spoke to a director of Tranby, Chris Dodd, about storing his boat on the undercover hardstand area. Chris Dodd agreed that he could have a licence to store his boat in that area until he had completed the refit and construction of his boat and with the licence fee that otherwise would have been payable being considered as part of his salary package. No written licence agreement form was signed.
On 30 October 1998 Tranby sold the business and assigned the lease to Maylands Boat Yard Pty Ltd. Mr Gorza then ceased working as a contract manager at the boat yard but continued to regularly attend the boat yard to continue with refit and construction of his boat. He paid a monthly licence fee to the new lessee.
On 30 January 2002 Mr Gorza received a letter from Allan Dufty of Maylands Boat Yard Pty Ltd stating that once his boat was ready to go in the water there would be a pen available, and that the pen lease would be for a fixed term of 12 months with an option to renew provided the boat was being worked on.
Mr Gorza said in his first affidavit that he has continued to work on his boat continuously since 1997 and it remains unfinished up to the present time. It is very close to being put into the water as a bare hull in about August/September this year. After that it will still need some fit out and rigging, which will take potentially another 18 months.
In November 2004 Mr Gorza received a letter from Allan Dufty stating that the business would be sold on 31 December 2004 at which time the leasehold interest under the head lease would be assigned.
In December 2004 Mr Gorza received a letter from Arno Dawson to the effect that the defendant company would be taking over the lease as of 1 January 2005 and that the new manager would be Mr Dawson. The letter stated that "existing tenant licence agreements will remain in force, however tenant licence agreements in the name of Australian Cruising Yacht Co Pty Ltd trading as The Boat Building Yard will be required to be signed in the new year".
The defendant's role
Mr Gorza said in his affidavit that on 5 February 2005 he met Arno Dawson to pay his January 2005 licence fee. They had a cordial discussion. Dawson said that the boat was quite fine where it was and he was agreeable to it being launched at the end of winter provided he received two to three months warning.
Mr Gorza said that by letter dated 20 February 2005 Mr Dawson stated that the Gorza licence agreement was terminated effective on 28 March 2005 and required Mr Gorza to move his vessel from its current undercover location at The Boat Building Yard by that day. He said also that $231 was owed by way of outstanding rent for February 2005.
Mr Gorza was surprised by these events. He had never been offered a new licence agreement and had previously paid his rent for January 2005 on 5 February 2005. However, when he telephoned Mr Dawson the latter simply said that he was moving Mr Gorza on and the only option was for Mr Gorza to move his boat to another position designated by Mr Dawson. This would have to be done at Mr Gorza's cost. Mr Gorza formed a view that Mr Dawson's decision to issue a notice of termination was due to Mr Gorza's position as Chairman of the Maylands Amateur Boat Owners Association Inc. This Association had been formed in January 2001 to ensure that licensees had security of tenure until completion of their boats.
These events were followed by various acrimonious exchanges between the parties. These exchanges may have led the defendant to believe that an issue might arise as to whether the Planning Commission had approved the assignment in favour of the defendant. In any event, on 30 May 2005 the defendant's solicitors directed a letter to Mr Gorza referring to an enclosed notice to quit and notice of abandonment. On 2 June 2005 Mr Gorza was served by post with an additional notice to quit and notice of abandonment.
I note in passing that, as in the Ashton matter, the 30 May notice contains a recital referring to a written licence agreement entered into between Tranby and Mark Gorza whereby the licensor agreed to licence the use of an undercover area at the Maylands Boat Yard "for an indefinite term". The recital goes on to refer to the assignments from Tranby to Maylands and from Maylands to the defendant. It says further in par D that the licence provided at cl 3.1 that either the licensor or the licensee could terminate the licence by giving to the other of them not less than 7 days notice in writing to that effect.
The stance of Mr Gorza is that the grounds on which his licence is being terminated have not been specified. It is said in his affidavit that his boat is a 20 tonne yacht located in an undercover hardstand area. To move the boat will require him to book the heavy haulage contractor on site and a crane driver. The crane driver must slip the boat onto the truck. Mr Gorza will then be required to locate alternative premises.
Mr Gorza estimates the costs of moving the vessel at no less than $3000. His boat in its current condition is said to be conservatively worth $80,000 and will be worth $200,000 eventually upon completion of the refit.
Mr Gorza said in his affidavit that he has paid all monthly licence fee invoices rendered to him and remains prepared to make all necessary monthly payments.
Mr Dawson's affidavit
In his first affidavit Mr Dawson referred to the commencement of his relationship with the Maylands Boat Yard in July 1998 when he entered into a written licence agreement with Tranby for use of an undercover area in order to build a boat. He said that the boat yard business was sold to his company by Maylands Boat Yard Pty Ltd on 31 December 2004 as a consequence of which the subject lease was assigned to the defendant subject to approval by the Planning Commission.
According to Mr Dawson, the required approval was effected at a meeting of the Planning Commission on 18 January 2005. On 10 February 2005 the Planning Commission executed the deed. This meant that the defendant company can properly be characterised as the current lessee of the boat yard.
Mr Dawson said that when he became the lessee he arranged for the standard licence agreement terms and conditions to be slightly varied and it is this agreement which he is endeavouring to have people at the boat yard sign. At this stage he has secured 30 signed licence agreements but has ceased to pursue further signatures pending the outcome of the applications for an injunction made by Mr Ashton and Mr Gorza.
Mr Dawson went on to say that the notice to quit directed to Mr Gorza was issued because the defendant required his undercover area to store various items. He offered to Mr Gorza another hardstand area suitable for his vessel. He asserted that the cost of moving the Gorza vessel would be less than the sum of $2000 to $3000 suggested by Mr Gorza. He disputed that the Gorza boat was worth $80,000. Exhibited to Mr Dawson's affidavit is a valuation assessing the value of the boat at $40,000.
Mr Dawson said that the steps he took represented an attempt to have all licensees sign the standard licence agreement so that there was uniformity in the terms and conditions observed by all licensees in the boat yard. The Planning Commission's intention, as explained in the head lease, is that the yard is to be used by amateur boat builders. The conduct of Mr Gorza in refusing to abide by the same rules as everybody else meant that the Planning Commission's intention was thrown into disarray. Other boat builders are being denied an opportunity to use the boat yard.
Responsive affidavits
The further affidavit of Mr Gorza sworn 27 July 2005 said that he was not aware of one amateur boat builder having been the subject of a termination of licence for no cause. The length of time a water pen is available to amateur boat builders should be determined by the amount of work to be done on the boat and not by an arbitrary time limit fixed by the lessee. He said that since taking over the boat yard Mr Dawson had created a hostile environment that had effectively stopped him working on his boat.
Mr Gorza agreed that Mr Dawson did say that he would need some warning should Mr Gorza require a water pen. This showed Mr Dawson knew of Mr Gorza's intention to launch his boat in the near future. According to Mr Gorza the only persons who have received notices of termination are committee members of the Maylands Amateur Boat Owners Association Inc.
Mr Gorza referred also to certain matters bearing on the acrimonious exchanges between the parties. He said further that Mr Dawson had not taken into account the complexity of moving an incomplete vessel and the movement of all materials and equipment associated with Mr Gorza's project. There was no other amateur boat building facility available to him within Western Australia. He disputed the valuation obtained by Mr Dawson on the grounds that no complete internal inspection of the boat had been undertaken.
Mr Gorza said that the only rule that he was refusing to comply with was the rule that Mr Dawson could evict him at any time without reason. On his observation Mr Dawson allows other vessels to use pens as a marina facility, and for commercial vessels to be moored and worked on. He has also seen a number of boat owners at the boat yard who use their vessel as a residential alternative, which is denying other boat builders the use of those licensed areas. Mr Gorza said that his only motive in staying at the boat yard was in order to complete his boat.
In his further affidavit sworn 29 July 2005 Mr Dawson said that he did not know what Mr Gorza's intention was with respect to launching the subject boat in the near future or at all. He said that two other parties had been sent notices of termination, neither of whom were members of the Association. He said also that he was aware that amateur boats are currently under construction at a number of sites around the metropolitan area including most yacht clubs, Hillarys Boat Harbour, Yanchep Marina, Cruising Yacht Club (WA) at Rockingham as well as any number of industrial/commercial sites and some residential backyards.
Mr Dawson denied attempting to evict Mr Gorza. Mr Dawson's letter to him offered an alternative site at the yard which Mr Gorza refused to acknowledge or make use of. Mr Dawson said that the alternative site is now no longer available as the boat yard is fully occupied.
The plaintiff's case
It was apparent from the matters raised at the hearing before me that Mr Gorza's case in support of the application for an injunction resembles Mr Ashton's case which is described at some length in the Ashton judgment. In essence, Mr Gorza asserts that as a consequence of a conversation between himself and Mr Chris Ashton, on behalf of Tranby, a verbal licence agreement was entered into containing the alleged par 4 condition whereby the plaintiff was granted a licence to use the subject area until completion of his boat.
I pause here to say that, on one view of the matter, Mr Gorza's position concerning the making of this verbal agreement might be thought to be marginally stronger than Mr Ashton's position. The defendant does not appear to dispute on this occasion that Mr Chris Dodd was a director of Tranby and the affidavit evidence bearing upon the relevant plea (at par 9 of the first Gorza affidavit) speaks simply of Chris Dodd agreeing that Mr Gorza could have a licence to store his boat on the undercover hardstand area until he had completed the refit and construction of his boat.
However, again, as in the Ashton matter, there is an absence of any documentary evidence bearing upon the making of a licence agreement which included the alleged par 4 condition. Further, the duration of the licence agreement appears to be linked to Tranby's proprietorship of the boat yard because the licence fee was to be covered by Mr Gorza's salary package.
The plaintiff's case, as in the Ashton matter, is advanced upon the basis that the verbal licence agreement allegedly entered into with Tranby became binding upon or was otherwise adopted by the defendant company when the defendant took an assignment of the leasehold estate. The plaintiff's case is that the alleged par 4 condition should be characterised as a negative stipulation the breach or threatened breach of which provides the basis for the grant of an injunction to restrain such wrongful conduct having regard to the reasoning of Helsham J in Graham H Roberts Pty Ltd v Maubeth Investments Pty Ltd [1974] 1 NSWLR 93 and other decided cases.
On the plaintiff's case the balance of convenience favours the grant of an injunction having regard to the cost associated with moving the boat, the absence of alternative facilities, and the fact that the boat is close to being put in the water. The plaintiff says that an injunction should be granted in his favour to preserve the status quo until the evidence bearing upon the disputed issues can be fully considered at trial.
The defendant's case
The defendant submitted that there was no serious issue to be tried because the evidence is inconclusive as to whether the arrangements made between Tranby and the plaintiff included the alleged par 4 condition. Further, the original licence, whatever the terms of that might have been, was terminated by the assignment of the leasehold interest.
The defendant submitted that a licence confers no proprietary rights on the licensee, merely contractual rights against the licensor. The licensor in this case was alleged to have been Tranby, not the defendant. The defendant did not contract directly with the plaintiff or undertake any binding commitment to observe the alleged par 4 condition or par 5 implied term. Moreover, having regard to decided cases such as Cowell v Rosehill Racecourse Pty Ltd (1937) 56 CLR 605 the defendant is entitled to revoke the licence at any time, even if that is wrongful or in breach of contract. A breach of contract may entitle the plaintiff to claim damages, but it does not provide a basis for the plaintiff to apply for injunctive relief.
The defendant submitted further that if there is a serious question to be tried (which is disputed) the plaintiff has not established that damages would be an inadequate remedy, especially given the modest quantum of those damages.
It is said the balance of convenience favours dismissal of the application. If the application for an injunction is unsuccessful, then only the plaintiff will be affected and he can simply move his boat to another location to complete construction. If an injunction is granted, however, it will prevent the defendant from storing boat yard equipment in an undercover area immediately adjacent to the boat yard office.
Findings
As to this matter (unlike the Ashton matter) I am prepared to accept that there is a serious issue to be tried as to whether the original licence agreement allegedly made between the plaintiff and Tranby included the alleged par 4 condition. Mr Gorza, by his affidavit, has asserted that an agreement was made with a director of Tranby in those terms and it seems to me that this is a matter which should be dealt with at the trial of the action having regard to the evidence as a whole. This makes it unnecessary to determine whether, in the circumstances of this case, the contract was subject to the alleged par 5 implied term, although, for the reasons given previously in the Ashton matter, I am inclined to doubt that an implied term of that kind can be substantiated.
However, when I turn to the question of whether the alleged par 4 condition is binding upon the defendant different considerations apply. For the reasons given in the Ashton matter, I am of the view that the rules concerning privity of contract and assignment of the burden of a contract preclude the plaintiff from asserting that the defendant is bound by the alleged par 4 condition.
There is no evidence that the defendant contracted directly with the plaintiff to assume such a liability. The plaintiff's assignment of licence plea and fresh licence plea is not a sufficient basis for liability to be imposed upon the defendant having regard to the matters and considerations set out in the Ashton judgment. Accordingly, I am not persuaded that there is a serious issue to be tried that the defendant is bound by the alleged par 4 condition, even if it be established that such a condition formed part of the licence granted by Tranby originally.
Put shortly, any such licence was brought to an end when Tranby ceased to hold an interest in the subject boat yard, having assigned its leasehold interest in the same to Maylands Boat Yard Pty Ltd.
Further, and in any event, even if it be held that there is a serious issue to be tried of the kind contended for by the plaintiff, I consider that the balance of convenience weighs against the grant of an injunction in the circumstances of the present case. I arrive at this conclusion for the reasons as set out in the Ashton judgment. I consider that damages will be a sufficient remedy in the event of a breach of the subject contractual provision being established.
Summary
This judgment is to be read in conjunction with the Ashton judgment. The plaintiff's application for an injunction is refused. I will hear from the parties as to whether any further orders are required including orders for costs.
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