Hilton v Minister

[2009] NSWSC 613

CITATION:	Hilton v Minister [2009] NSWSC 613
HEARING DATE(S):	25/06/09
JUDGMENT DATE :	7 July 2009
JUDGMENT OF:	Forster J at 1
DECISION:	See paragraph 65 of judgment.
CATCHWORDS:	LICENCES - Licence to occupy cabin in Royal National Park - multiple licensees - construction of Licence - whether one licensee can terminate his rights and obligations under the Licence without affecting other licensees' rights and obligations.
CATEGORY:	Principal judgment
CASES CITED:	Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 Tcaoucis v Gallipoli Memorial Club Ltd (1998) 9 BPR 16,265 Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165
TEXTS CITED:	Glanville Williams, Joint obligations(1949) Butterworth & Co.
PARTIES:	Plaintiff-Warwick James Hilton Defendant-Minister Administering the National Parks and Wildlife Act (1974)
FILE NUMBER(S):	SC 1672/09
COUNSEL:	Plaintiff- A.G.Bell SC; C.N.Bova Defendant- Dr J.G.Renwick; Dr H. Bennett
SOLICITORS:	Plaintiff-S.Titus, Carneys Lawyers Defendant- R.Verzosa, Legal Services Branch, Department of Environment and Climate Change

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

FORSTER J

TUESDAY 7 JULY 2009

1672/2009 WARWICK JAMES HILTON & 4 ORS v MINISTER ADMINISTERING THE NATIONAL PARKS AND WILDLIFE ACT 1974 (NSW)

JUDGMENT

The facts

1 HIS HONOUR: The facts in this case are not in dispute.

2 In 1937, the first plaintiff, to whom I shall refer as “Mr Hilton”, built a cabin at Era Beach in the Royal National Park south of Sydney, and has been paying a licence fee since that time to the owner of the land on which the cabin is located. Since 1979, the owner of the land has been the National Parks and Wildlife Service (“the Service”), which is administered by the defendant in these proceedings. The cabin is identified as Cabin 72, and is referred to in this judgment as “the Cabin”.

3 In about 2005, disputes arose between the defendant on the one hand and the licensees of a large number of such cabins, situated at various locations in the Royal National Park. The disputes related to the ownership of the various cabins and the terms of the licences which were proposed to be offered by the Service to the various licensees.

4 Mr Hilton was one of those licensees.

5 As a consequence of those disputes, a large number of such licensees together commenced proceedings against the defendant in the Land and Environment Court. The parties ultimately proceeded to mediation, which resulted in an agreement being reached between the Service and the licensees, including Mr Hilton.

6 It was a term of that agreement (“the Agreement”) that the defendant would grant licences to each of the parties to the Agreement in a specified form, which licences would include a provision to the following effect:

“The terms of the Agreement under which this Licence has been granted…are incorporated herein. In the case of any inconsistency between its terms and the terms of this Licence the terms of the Agreement shall prevail to the extent of the inconsistency.”

7 Pursuant to the Agreement, on 24 April 2007, the defendant entered a Deed of Licence with Mr Hilton and the second, third and fourth plaintiffs (“the Licence”).

8 The inclusion of the second, third and fourth plaintiffs as parties to the Licence came about as a result of Mr Hilton nominating those plaintiffs pursuant to the provisions of clause 4.2 of the Agreement, which was in the following terms:

“4.2 In the case of each cabin site, the licence will initially be issued in the name of each person listed in Schedule 1 together with such other persons who are nominated in accordance with clause 4.3. The persons so appearing on the initial licence are called the ‘Initial Licensees ’”.

9 Clause 4.3 of the Agreement provided as follows:

“4.3 During the life of the licence or any renewal thereof a licensee may nominate other individuals to become licensees provided that there may not ever be more than four licensees at any one time”.

10 On 15 May 2007, Mr Hilton wrote to the relevant manager of the Service in the following terms:

“In accordance with clause 4.3 of the agreement attached to the licence document I no longer wish to be a licencee and nominate my daughter Jill Bartlett of 10 Boyce Ave Austinmer NSW 2515 Phone No 02 42673169 to be a licencee. She will also be the contact person. The other three licencees support this nomination.”

11 Jill Bartlett is the fifth plaintiff in these proceedings.

12 The Service declined to give effect to the correspondence and disputed Mr Hilton’s right to take the course he proposed. There then followed an exchange of correspondence between Mr Hilton and the Service by their respective legal advisors, and on 13 February 2008 a document, signed by Mr Hilton and the second, third and fourth plaintiffs, was sent to the defendant in the following terms:

“We the undersigned are licensees of Cabin 72 South Era, Royal National Park.
In accordance with clause 4.3 of the agreement attached to the licence we wish to nominate Jill Bartlett of 10 Boyce Ave Austinmer to be a licensee of the abovementioned Cabin 72.

As this will result in there being more than four persons nominated, in accordance with clause 4.5 we have unanimously resolved this anomaly by agreeing that the four licensees will be:-
Sue Hilton
Daniel Bartlett
Jodie Saville
Jill Bartlett
This request has previously been made to the National Parks and Wildlife Service but was rejected despite an undertaking having been given by an officer of that organisation that this would be possible.
[see copy of letter attached]”

13 The parties not having been able to resolve their differences, the plaintiffs instituted these proceedings.

The issues raised in the proceedings

14 By Summons filed on 25 February 2009, the plaintiffs sought the following substantive declarations:

“1. A declaration that on the proper construction of the Deed of Licence between the First, Second, Third and Fourth Plaintiffs and the Defendant dated 24 April 2007 (“Licence”), during the term of the Licence, a co-licensee may relinquish his or her interest in the Licence with the effect that the Licence continues for the benefit of the remaining co-licensees.

2. A declaration that on the proper construction of the Licence, upon a co-licensee relinquishing his or her interest in the Licence, the remaining co-licensees may nominate another person to be a co-licensee, provided that:


(a) One of the Initial Licensees (as defined in the Licence) is still a co-licensee; and

(b) There are not more than four co-licensees at any one time.


3. A declaration that in the events that have happened, the First Plaintiff has relinquished his interest as a co-licensee of the Licence.

4. A declaration that in the events that have happened, the Second, Third and Fourth Plaintiffs have validly nominated the Fifth Plaintiff as a co-licensee of the Licence.

5. A declaration that in the events that have happened, the Second, Third, Fourth and Fifth Plaintiffs are entitled to be co-licensees of the Licence.”

15 They also sought orders for interest and costs.

16 In support of the relief claimed, the plaintiffs read an affidavit sworn by Mr Hilton on 24 February 2009 and tendered an agreed bundle of documents.

17 The uncontested evidence before me is that Mr Hilton is currently 88 years of age. As the Cabin is about a two to three kilometre downhill walk from the car park at the top of the headland, or about a one to two kilometre walk around the rocks of Garie Beach, Mr Hilton’s health is such that he is no longer able to visit the Cabin, and he is concerned that as a consequence, he is not able to fulfil his responsibilities and obligations under the Licence. In the circumstances, Mr Hilton would like his daughter, the fifth plaintiff, to be a co-licensee in his place.

18 When the matter came before me for hearing, Mr A. G. Bell S.C., who appeared with Mr C. N. Bova for the plaintiffs, indicated that he no longer seeks the declarations contained in paragraphs 3, 4 and 5 of the Summons, and now only pursues the declarations set out in paragraphs 1 and 2, together with interest and costs.

19 For completeness, I should note that at the end of his submissions, Dr J. Renwick, who appeared with Dr. H. Bennett for the defendant, sought leave to file a cross claim seeking an as yet unformulated form of negative declaration. Mr Bell opposed such leave being granted and sought an opportunity to support his opposition with further written submissions. I granted Mr Bell leave to file any written submissions once Dr Renwick had provided a draft of his proposed cross claim. However, Dr Renwick subsequently informed my Associate that he no longer seeks leave to file such a cross claim, and accordingly this issue no longer arises.

Mr Hilton’s Submissions

20 Counsel for Mr Hilton provided me with a written outline of submissions dated 18 June 2009 and a written outline of submissions in reply dated 24 June 2009. As I indicated in the course of the hearing before me, I found those outlines to be very helpful and I was further assisted by Mr Bell’s careful oral submissions.

21 I hope I will be forgiven for attempting to summarise the plaintiffs’ principal submissions and I hope I do them no disservice by doing so.

22 Mr Bell submitted that the two declarations pursued by the plaintiffs should be considered as raising not one, but two separate issues. This was because the two alleged rights which are respectively the subject of those two declarations are separate rights capable of being exercised at different times, and need not necessarily be exercised at the same time or with the exercise of one closely following the exercise of the other.

23 Dealing first with the first declaration, namely a declaration to the effect that any one of a number of co-licensees has the right to relinquish his or her interest in the Licence, Counsel for Mr Hilton acknowledged the existence of clause 5 of the Agreement, as well as the existence of clause 4.1 of the Licence, which provisions respectively provide as follows:

“5 [of the Agreement] The licenses will not be transferable.”

“4.1 [of the Licence] This Licence is personal to the Licensee and the Licence may not be transferred or assigned to any other person.”

24 Nevertheless, he submitted that those provisions should be read subject to clause 4 of the Agreement, or alternatively as being a reference to the transfer of the Licence as a whole. The reference to clause 4 of the Agreement is in particular a reference to the following further provisions of clause 4:

“4.4 If any licensee dies during the term of the licence then the remaining licensee or licensees may, if unanimous, nominate a replacement licensee.
…
4.6 The right to nominate a licensee under clause 4.3 or replace a licensee under clause 4.4 may only be exercised so long as one of the Initial Licensees is still a licensee (except in respect of any nomination of Initial Licensees in accordance with clause 4.2).
…
4.8 Each person named on the licence will be jointly and severally liable to comply with the licence conditions”.

25 Reliance was also placed on clause 4.3 of the Agreement the terms of which I have already set out above.

26 He submitted that the general provisions prohibiting the transfer or assignment of the Licence do not prohibit any transaction which comes within clause 4.4 of the Agreement. He submitted that the purpose of the prohibition on transfer or assignment was to ensure that at least one Initial Licensee (as that term is defined in the Licence) always remained as a licensee, and that in the present case, that requirement would be satisfied.

27 He noted that there could be numerous reasons, including but not limited to old age and physical illness, that might prevent a licensee from complying with his obligations under the terms of the Licence, and that the parties must objectively be found to have intended, and the Licence should be read as providing, that a person in such circumstances would be entitled to relinquish his rights (and presumably be released from his obligations) under the Licence. He submitted that on the evidence, Mr Hilton was in just such a position.

28 Reference was also made by Mr Bell to provisions such as clauses 6.2 to 6.4 of the Licence, which entitles the Licensor to terminate “this Licence” in certain specified circumstances, such as where “the Licensee” commits, permits or suffers certain breaches of the provisions of the Licence or where “the Licensee” becomes bankrupt or commits an act of bankruptcy. In those circumstances, it was submitted, it would be unreasonable to construe the Licence in any manner other than as permitting the Licensor to terminate only that one offending licensee’s rights under the Licence, rather than terminating the rights of all licensees thereunder.

29 He submitted that upon its true construction, clause 6.1 of the Licence permitted each licensee to relinquish his separate interest under the Licence at any time. So far as it is relevant, clause 6.1 of the Licence provided as follows:

“6.1 The Licensee may terminate the Licence at any time by giving to the Licensor one (1) month’s notice”.

30 In support of that submission, Counsel for Mr Hilton prayed in aid the following provisions of the Licence:

“1.2 Interpretation
In this Deed unless the context otherwise requires:
…
1.2.6 reference to any thing (including any amount) is a reference to the whole and each part of it and a reference to a group of persons is a reference to all of them collectively, to any two or more of them collectively and to each of them individually.
…
1.3 Joint and Several Liability
In this Licence, an agreement, covenant, representation or warranty on the part of or in favour of two or more persons shall be deemed to bind them or be in favour of them jointly and each of them severally”

31 He also referred to the work of Dr Glanville L. Williams’ “Joint Obligations” (1949), particularly at pages 34-35 where the following paragraph appears:

“Intermediate between cumulative several promises and joint promises come joint and several promises. These are like joint promises in that they are non-cumulative: the ‘performance is due only once, and each promisor undertakes that the whole performance will be rendered. But they are like cumulative several promises in that they are free from most of the other rules governing joint promises. The nature of a joint and several obligation was expounded by a judge famous for his learning in the common law as follows. ‘A joint and several bond, …though on one piece of parchment or paper, in effect comprises the joint bond of all, and the several bonds of each of the obligors, and gives different remedies to the obligee’.”

32 In the alternative, it was submitted that if, contrary to the above submission, clause 6.1 of the Licence did not, on its true construction, provide an express right for a licensee to terminate his (but only his) interest under the Licence, then the Court should imply a term to that effect on the basis that such a term met all of the conditions referred to in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 347 to the following effect:

“The conditions necessary to ground the implication of a term were summarized by the majority in B.P. Refinery (Westernport) Pty. Ltd. v. Hastings Shire Council, at p. 26: "(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that `it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract."

33 So far as clause 4.4 of the Agreement is concerned, Mr Bell submitted that the said clause does not purport exhaustively to state the circumstances in which the remaining licensee or licensees may nominate a replacement licensee. He submitted that the death of a licensee is but one of the circumstances which gives rise to the right to nominate a replacement licensee. The relinquishment by a licensee of his rights under the license was submitted to be another such circumstance.

34 Finally, Mr Bell submitted that if the Court accepted his submission that one of a number of co-licensees was entitled to relinquish his own interest in the Licence without causing the interest of all other co-licensees to forfeit theirs, it followed in the present case that clause 4.3 of the Agreement permitted the three remaining Initial Licensees, namely the second, third and fourth plaintiffs, to nominate the fifth plaintiff as a replacement licensee.

The Defendant’s Submissions

35 As with the submissions made on behalf of the plaintiff, I found the submissions (both written and oral) made on behalf of the defendant to be very helpful. Again I will attempt to summarise the main points.

36 The principal thrust of those submissions was based on clause 4.1 of the Agreement which provides as follows:

“4.1 Each cabin site will be the subject of a single licence”.

37 Dr Renwick submitted that it followed that the Licence granted was one undivided licence, as distinct from separate licences for each individual licensee. He submitted that the said clause 4.1, being a provision contained in the Agreement, prevailed over clause 1.3 of the Licence, by reason of clause 10 of the Licence which is in the terms set out in paragraph 6 above. Further, it was put that in any event, even if clause 4.1 of the Agreement was held not to prevail over clause 1.3 of the Licence, then in any event, upon its true construction, clause 1.3 of the Licence did not assist the plaintiffs because its ambit was in any event restricted to “this Licence”, which necessarily meant the single undivided licence.

38 He noted that provisions such as those contained in clauses 6.2 to 6.4 of the Licence entitled the Licensor to terminate the Licence, but did not automatically terminate it. It was a matter for the Licensor to decide whether or not it would do so.

39 It was further submitted on behalf of the defendant that upon its true construction, any one of a number of co-licensees could bring the Licence to an end pursuant to clause 6.1, and that this construction was supported by clause 1.2.6 of the Licence. Counsel also submitted that this construction was further supported by what he referred to as the “ephemeral nature” of the interest the subject of the Licence, namely that it was merely a licence for 5 years to occupy a nominated space in the Royal National Park.

40 This particular submission met firm resistance in reply on behalf of the plaintiffs. Counsel for the plaintiffs submitted that contrary to the submissions of the defendant, the plaintiffs’ rights under the Licence were not at all just “ephemeral rights”. Reference was made to Recital B of the Licence which is in the following terms:

“WHEREAS…
B The Licensee claims that it is the owner of the Cabin described in Schedule 1 herein, which is erected on the Cabin Site and, for the purposes of entry into this deed only, the Licensor does not dispute that the Licensee owns the Cabin, being the materials which constitute the structure comprising the Cabin; “

41 In that context, reference was also made to clause 6.7 of the Licence which is to the following effect:

“6.7 On the termination or expiry of this License whether for breach of otherwise (and in the absence of licence renewal), and in consideration of the grant of this Licence, the Licensee acknowledges that all right, title and interest in the structure comprising the Cabin is vested in the Licensor and the Licensee irrevocably relinquishes and waives all claims to any such right, title or interest in the structure comprising the Cabin.”

42 It was therefore submitted that far from affecting merely ephemeral rights, the termination of the Licence would affect rights of property. While the Licence remains on foot, the Licensor does not dispute the Licensee’s ownership of the Cabin, being the materials which constitute its structure, whereas upon termination or expiry of the Licence, the Licensee irrevocably relinquishes and waives all claims to any right, title or interest in such structure.

43 Returning to Dr Renwick’s submissions, he disputed that there was an express right to relinquish the rights of one only of multiple co-licensees, and submitted that the conditions for implying a term conferring such a right had not been satisfied.

44 Finally, he submitted that the evidence before the Court established that the true nature of what the plaintiffs were in fact attempting to do was to transfer or assign Mr Hilton’s interest in the Licence to the fifth plaintiff, contrary to the express provisions of clause 5 of the Agreement and clause 4.1 of the Licence. It was submitted that in those circumstances, the court should, for that reason alone, decline to make the declarations sought in paragraphs 1 and 2 of the Summons, as those paragraphs raised only hypothetical issues in the factual context of these proceedings.

Discussion

45 There was real dispute between the parties as to the principles to be applied in the construction of the Agreement and the Licence. Mr Bell in his written submissions referred, inter alia, to the decision of the High Court in Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 at 179 where the following was said:

“This court, in Pacific Carriers Ltd v BNP Paribas 6. , has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.”

46 Having considered the careful and detailed submissions made on behalf of both parties, I have come to the conclusion that on the proper construction of the Licence, it is not open to any one of the co-licensees to relinquish his or her interest in the Licence in such manner as to nevertheless permit the Licence to continue on foot for the benefit of the remaining co-licensees. Accordingly, it is not open to the remaining co-licensees to nominate another person in the outgoing co-licensee’s place except in circumstances where such co-licensee dies. Applying the foregoing to the facts before me, I am of the view that Mr Hilton is not entitled to relinquish his interest under the Licence while at the same time keeping the Licence on foot for the second, third and fourth plaintiffs, and that those plaintiffs are not entitled to nominate the fifth plaintiff as an additional co-licensee.

47 I have reached this conclusion for the following, albeit somewhat overlapping, reasons.

, it seems to me that upon its true construction, and upon the true construction of the Agreement, the Licence is a single, undivided licence granted pursuant to clause 1 of the Agreement to each of those members of the group of cabin owners as ratified that Agreement. Mr Hilton was one of those cabin owners. This conclusion is supported by clause 4.1 of the Agreement whose terms I have set out above, but which is sufficiently important to bear repetition:

“4.1 Each cabin site will be the subject of a single licence.”

49 I also note that the reference in each of clauses 4.2 to 4.5, as well as in clauses 4.8 and 4.9 of the Agreement is to “the licence” in the singular. The reference in clause 5 to the “the licenses” in the plural is consistent with the use of that term in clause 1 of the Agreement, reflecting the fact that there might be as many as 120 separate licences issued pursuant to the Agreement to as many members of the group in question.

50 Nor do I consider that clause 1.2.6 of the Licence, to which I have already referred, assists the plaintiffs’ case to any substantial extent. It needs to be kept in mind that the said clause 1.2.6 is prefaced by the words:

“In this Deed unless the context otherwise requires”.

51 Nor do I consider that clause 1.3 of the Licence, which I have also set out above, significantly advances the contention put forward on behalf of the plaintiffs. True it is that clause 1.3 (unlike clause 1.2.6) is not made expressly subject to the context in which it appears, but it is limited in its application to the provisions of the Licence, and has no application to the Agreement. Further, it is a general provision which, albeit of some force, must be read in the context of the whole of the Licence, particularly where there are specific provisions suggesting the contrary. In any event, I do not consider that the right given to “the Licensee” to terminate the Licence, insofar as it is “deemed…to be in favour of [two of more persons] jointly and each of them severally” does any more than to entitle any one of the co-licensees to terminate “the Licence”. It does not go so far as to entitle any one of the co-licensees to terminate only his or her entitlements and obligations under the Licence.

52 Secondly, I note the clear expression contained both in the Agreement at clause 5 and in the Licence at clause 4.1 to the effect that the Licence may not be transferred or assigned. That restraint, though subject to specific qualifications contained in clauses such as clause 4.3 of the Agreement, demonstrates that a reasonable person in the position described in Toll would have understood that it was the intention of the parties not to permit such licences to be capable of transfer or assignment other than by means of the limited exceptions specifically provided.

53 Yet if one is to accept as correct the construction contended for by the plaintiffs, it would clearly make possible, by a series of otherwise permissible transactions, to circumvent the clearly intended prohibition on transfer and assignment.

54 The hypothetical example that I gave in the course of submissions serves to demonstrate the foregoing. Let it be assumed that a licence has been issued to four people, to whom I shall refer as “A1”, “A2”, “A3”, and “A4”. Let it also be assumed that they wish to transfer their interests to a person, to whom I will refer as “B”.

55 On the construction contended for by the plaintiffs, A1 could relinquish his interest under the licence (just as Mr Hilton has purported to do) and A2, A3 and A4 could thereafter nominate B as a replacement licensee (just as the second to fourth plaintiff purported to nominate the fifth plaintiff). Thereafter, each of A2, A3 and A4 could “relinquish” his or her respective interest in the subject licence, the parties thereby having achieved indirectly that which they were prohibited from doing directly.

56 Yet it seems to me that if the construction contended for by the plaintiff is accepted, it would be open to licensees, including the plaintiffs in the present case, to avoid what I consider to be a fundamental provision of the Agreement and of the License.

57 Thirdly, it is clear that the various obligations imposed under the Licence are imposed on all of the persons named in the Licence as “the Licensee”. The said term is defined to mean the first to fourth plaintiffs. Clause 1.3 of the Licence makes it clear that any “agreement” on the part of two or more persons (in this case the first to fourth plaintiffs) is to be deemed to bind them jointly and each of them severally. Such agreements in the present context include obligations to pay the Annual Licence Fee, together with all rates, taxes, assessments, fees and charges referred to in clause 3 of the Licence, obligations to observe various mainly negative obligations imposed by clause 4 of the Licence, as well as an obligation to indemnify and keep indemnified various persons, including the plaintiff, from any loss, damage or injury of the kind referred to in clause 5.3.

58 The foregoing proposition is also supported also by clause 4.8 of the Agreement which, as I have previously noted, provides that:

“4.8 Each person named on the licence will be jointly and severally liable to comply with the licence conditions.”

59 If the construction for which the plaintiffs contend were to be accepted, any co-licensee, such as Mr Hilton, could by an act of relinquishment thereafter cease to be subject to the various liabilities imposed by the Agreement and by the Licence. While it may be true that such relinquishment would not discharge him or her from any pre-existing liability, it would nevertheless deprive the Licensor of the right thereafter to rely upon the performance by that particular co-licensee of his obligations under the Licence.

60 Fourthly, I see nothing unusual or surprising to find that a commercial agreement permits one co-licensee to terminate a licence on behalf of all licensees, or that it permits (albeit not requires) a licensor to terminate a licence by reason of the conduct or bankruptcy of just one of a number of co-licensees. Indeed, it would be surprising if it were otherwise. For example, if one of a number of co-licensees were repeatedly to commit breaches of the covenants, obligations and provisions of the Licence, one would expect the Licensor to be able to bring the Licence to an end. Thus, where a co-licensee repeatedly used a cabin for purposes other than casual recreational use (in breach of clause B or clauses 4.6 and 4.7 of the Licence) or where, contrary to the provisions of clause 4.5 of the Licence, he or she permanently refuses to permit the Licensor or his servants or agents to enter and inspect the Cabin, such breaches, would reasonably be expected to entitle the Licensor to exercise his or her rights not only against that co-licensee, but against all co-licensees.

61 Given that the person named in the Agreement (in the present case, Mr Hilton) nominated all other Initial Licensees and, in the event of the death of a co-licensee, it is the then existing Initial Licensees who nominate his or her replacement, the responsibility for ensuring that the person or persons so nominated will comply with the provisions of the Licence rests with the person so nominating, knowing that if his or her nominee or nominees fail to comply with the obligations imposed by the Licence, the interest of the person involved in the process of nomination is similarly at risk.

62 Fifthly, the option contained in clause 7 of the Licence provides an option to “the Licensee”. That term is defined to mean, in the present case, all of the first to fourth plaintiffs. It does not provide for a separate option for each of them. By analogy to co-lessees, presumably such option would have to be exercised by all of the co-licensees, or be ineffective: see Tcaoucis v Gallipoli Memorial Club Ltd (1998) 9 BPR 16,265. Were the construction contended for by the plaintiffs to be accepted, one could expect a situation where, at the expiry of a term of the Licence, one only of the co-licensees may purport to exercise his or her option. That would mean that in those circumstances, the Licensor would have only one licensee to whom he or she could look to perform all of the obligations under the Licence. That one licensee may be a man (or woman) of straw. It would also raise the issue of whether the one licensee exercising the option would be entitled to an exclusive licence to the Cabin, or whether the Licensor could grant concurrent licenses to three other persons.

, I should add that even if contrary to the views I have expressed above, it is possible on the true construction of the Agreement and the Licence for just one of a number of licensees (such as Mr Hilton) to relinquish his or her interest under the Licence without disturbing the rights of the other licensees, I do not consider that it follows that the remaining licensees, even if they are “Initial Licensees” within the meaning of clause 4.2 of the Agreement, could in the present case nominate a replacement licensee. It seems to me that clause 4.4 of the Agreement clearly limits the circumstances in which such replacement can be nominated to where the licensee dies during the term of the Licence. If it were intended also to operate outside that limited situation, clause 4.4 could have provided for example:

“If any licensee dies or otherwise ceases to be a licensee…”

64 Alternatively, the Licence might have provided that the power under clause 4.4 could also be exercised in other specified circumstances, such for example, as where a licensee “relinquishes his interest” in the Licence. However, clause 4.4 uses no formula of that kind. On the contrary, by its terms it is limited to a situation involving the death of a licensee. One can readily understand that while agreeing not to provide for any general right to transfer or assign the licence, the parties have agreed to provide a limited exception in a case where a co-licensee dies, confident in the belief that the provision will not be abused by the parties intentionally taking steps to enliven that provision.

Conclusion

65 Accordingly, I consider that the plaintiffs are not entitled to the relief they seek. In the circumstances, I order that the Summons be dismissed with costs.

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