Paul Patrick James Madaffari as trustee for the Tresilico Farm Trust v Farmland Investments Pty Ltd
[2024] WASC 145
•24 APRIL 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: PAUL PATRICK JAMES MADAFFARI as trustee for THE TRESILICO FARM TRUST -v- FARMLAND INVESTMENTS PTY LTD [2024] WASC 145
CORAM: MUSIKANTH J
HEARD: 16 & 24 APRIL 2024
DELIVERED : 24 APRIL 2024
FILE NO/S: CIV 1350 of 2024
BETWEEN: PAUL PATRICK JAMES MADAFFARI as trustee for THE TRESILICO FARM TRUST
First Plaintiff
ESTELLE NICOLE MADAFFARI as trustee for THE TRESILICO FARM TRUST
Second Plaintiff
AND
FARMLAND INVESTMENTS PTY LTD
Defendant
Catchwords:
Equity - Interlocutory injunction - Where plaintiffs assert equitable lease - Written agreement to lease - Objective ascertainment of common intention - Correction of mistake as matter of construction - Grant of right of exclusive possession - Whether serious question to be tried - Balance of convenience - Turns on own facts
Legislation:
Nil
Result:
Interlocutory injunctive relief granted
Category: B
Representation:
Counsel:
| First Plaintiff | : | Mr M N Blandford |
| Second Plaintiff | : | Mr M N Blandford |
| Defendant | : | Mr J R Shepherd |
Solicitors:
| First Plaintiff | : | Granich Partners |
| Second Plaintiff | : | Granich Partners |
| Defendant | : | Blackwall Legal LLP |
Case(s) referred to in decision(s):
Adams v Lambert [2006] HCA 10; (2006) 228 CLR 409
Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99
Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57
Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618
Black Box Control Pty Ltd v TerraVision Pty Ltd [2016] WASCA 219
Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253
Claremont 24-7 Pty Ltd v Invox Pty Ltd [2015] WASC 55
Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 261 CLR 544
Electricity Generation and Retail Corporation trading as Synergy v EIT Kwinana Partner Pty Ltd [2022] WASCA 3
Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420
Gold Valley Iron Pty Ltd (in liq) v OPS Screening & Crushing Equipment Pty Ltd [2022] WASCA 134
JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [No 2] [2020] WASCA 112
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2022] WASCA 162
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104
Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451
Perdaman Chemicals and Fertilisers Pty Ltd v The Griffin Coal Mining Group Pty Ltd [No 7] [2012] WASC 502
Radaich v Smith [1959] HCA 45; (1959) 101 CLR 209
Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) [2019] NSWCA 11; (2019) 99 NSWLR 317
Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80
Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
Warner-Lambert Co LCC v Apotex Pty Ltd [2014] FCAFC 59
MUSIKANTH J:
Introduction
The plaintiffs, a husband and wife, are co-trustees of the Tresilico Farm Trust.
The defendant is, and has at all relevant times been, the registered proprietor of farming land situated at 346 Merridin-Nungarin Road, Merridin, in the State of Western Australia, being the whole of the land in Certificate of Title Volume 2149 Folio 61 (Property).
Since approximately 14 April 2013, the first plaintiff or both plaintiffs have occupied at least 90% of the geographical area of the Property pursuant to the terms of a succession of instruments. Each of those instruments was entitled 'agreement to lease'.[1]
[1] Affidavit of Estelle Nicole Madaffari affirmed 27 March 2024, [43], Annexures 'ENM3', 'ENM18', 'ENM19' and 'ENM20'. The instruments refer to the Property as 'Hillcrest'. They also appear to refer to it, variously, by reference to a location number (ie. '12577') (eg. 'ENM18'), lot and deposited plan numbers (ie.'1' and '19104' respectively) (eg. 'ENM3' and 'ENM20'), or both (eg. 'ENM19').
There were four such instruments. All were executed by the first plaintiff or both plaintiffs (on the one hand) and the late Mr Murray Jarvis (on the other).
Mr Murray Jarvis was at all relevant times the sole director, and company secretary, of the defendant.
The plaintiffs assert a right to remain in occupation until 31 March 2025.
They say they enjoy that right on a proper construction of the terms of the fourth of the instruments referred to in paragraph 4 above; namely, a document entitled 'Agreement to Lease Rural Property' dated 1 March 2019 (Agreement to Lease).
The defendant disagrees, saying the term of the Agreement to Lease expired on 31 March 2024.
Background
On 27 March 2024, the plaintiffs filed a writ of summons seeking among other relief:
(a)a declaration that 'the period of the lease under the [A]greement to [L]ease' ends on 31 March 2025; and
(b)permanent injunctions restraining the defendant from taking possession, or interfering with the plaintiffs' quiet enjoyment, of the Property prior to that date.
Also on 27 March 2024, the plaintiffs filed an application for urgent relief relevantly seeking, pending judgment or further order, interlocutory injunctions restraining the defendant from taking possession, or interfering with their quiet enjoyment of the Property.
The application was listed before me on 28 March 2024.
After hearing from the parties, I made programming orders and adjourned the application for hearing on 16 April 2024.
Those orders were made upon the defendant undertaking to refrain from taking possession of or otherwise interfering with the plaintiffs' quiet enjoyment of the Property until that date.
On 12 April 2024, the plaintiffs filed an amended writ, which relevantly modified their claim such as to exclude the residence and other buildings on the Property from the scope of the relief sought.
Subsequently, the plaintiffs filed a minute of proposed orders varying the scope of the proposed interlocutory injunctive relief to similar effect.
On 16 April 2024, the merits of the application were argued before me.
At the conclusion of the hearing, I indicated that I was satisfied that interlocutory injunctive relief ought to be granted and foreshadowed making orders substantially as proposed by the plaintiffs subject to a particular aspect of concern raised by the defendant being expressly dealt with.
The matter was then adjourned until 24 April 2024, and the defendant's undertaking referred to in paragraph 13 above was extended until the adjourned date.
At the resumed hearing, on 24 April 2024, I heard from the parties as to the appropriate form of orders and made orders accordingly.
These are my reasons for doing so.
The evidence
For the purposes of their application, the plaintiffs relied upon three affidavits: one deposed by each of the plaintiffs on 27 March 2024, and a further affidavit deposed by the first plaintiff on 12 April 2024.
The defendant relied upon two affidavits; one deposed by Brian Edward Jarvis on 7 April 2024, the other by Sultan Djemal on 8 April 2024.
Mr Brian Jarvis is the only child of the late Mr Murray Jarvis. Ms Djemal is Mr Brian Jarvis's partner.
Mr Brian Jarvis and Ms Djemal both became directors of the defendant for the first time on 18 March 2024; nine days before the plaintiffs filed their application.
Legal principles
The principles concerning interlocutory injunctions are well-established. In short, the Court must undertake two enquiries: whether the plaintiff has made out a prima facie case, and whether the balance of convenience favours the grant of the injunction.[2]
[2] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 [87]; Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 [65]; Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618, 618-623.
To make out a prima facie case, it is not necessary for the plaintiff to show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending trial.[3]
[3] Mineralogy Pty Ltd v Sino Iron Pty Ltd[2016] WASCA 105 [87]; Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 [65]; Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618, 620.
How strong the probability needs to be depends upon the nature of the rights the plaintiff asserts and the practical consequences likely to flow from the order they seek.[4]
[4] Australian Broadcasting Corporation v O'Neill [2006] HCA 46 [65]; Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618, 622.
The second inquiry, regarding the balance of convenience, involves consideration as to whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs, or is outweighed by, the injury which the defendant would suffer if an injunction was granted.[5]
[5] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 [87]; Australian Broadcasting Corporation v O'Neill [2006] HCA 46 [65]; Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618, 622-623.
Whether an applicant for an interlocutory injunction has made out a sufficient prima facie case and whether the balance of convenience favours the grant of such relief are related, not independent, questions.[6]
[6] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 [87]; Warner-Lambert Co LCC v Apotex Pty Ltd [2014] FCAFC 59 [70].
Where an injunction is sought in equity's auxiliary jurisdiction, it is necessary to consider whether damages would be an adequate remedy.[7] However, this consideration does not arise where an injunction is sought in equity's exclusive jurisdiction.[8]
[7] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 [131].
[8] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 [131].
In Perdaman Chemicals and Fertilisers Pty Ltd v The Griffin Coal Mining Group Pty Ltd,[9] Edelman J (then of this court) noted there was a line of authority which treated the question of 'adequacy of damages' as a matter relevant to the broader question of the balance of convenience.[10]
[9] Perdaman Chemicals and Fertilisers Pty Ltd v The Griffin Coal Mining Group Pty Ltd [No 7] [2012] WASC 502.
[10] Perdaman Chemicals and Fertilisers Pty Ltd v The Griffin Coal Mining Group Pty Ltd [No 7] [2012] WASC 502 [32].
The approach adopted in both Mineralogy Pty Ltd v Sino Iron Pty Ltd[11] and Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2][12] is consistent with that line of authority.
[11] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 [62] (Newnes JA, Corboy J agreeing).
[12] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 [131].
In the latter case, the Court of Appeal went on to observe that:
… in equity's auxiliary jurisdiction, the question of whether the plaintiff will suffer irreparable injury for which damages will not be adequate compensation involves no more than a consideration of whether the injury cannot properly be compensated in damages, or by an order for accounts or some other interim remedy. The question of whether the injury cannot properly be compensated in damages involves a consideration of whether it is just in all the circumstances that the plaintiff be confined to their remedy in damages…[13] (emphasis added)
[13] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 [131].
Serious question to be tried
As this is an application for interlocutory relief, nothing I say below is intended to reflect an opinion as to the final merits of the plaintiffs' case. My observations are confined to an analysis of whether I consider the plaintiffs have, at this early stage of the proceedings, demonstrated a sufficient likelihood of success to justify the preservation of the status quo.
There were two primary areas of dispute between the parties concerning whether the plaintiffs had shown a serious question to be tried.
The first was the duration of the term of the Agreement to Lease. The second was whether the terms of that instrument gave rise to an equitable lease or only a licence.
Also relevant to the second area of dispute is whether the instrument contemplated the plaintiffs having use of the entirety of the Property (excluding the residence and other buildings), or whether only the 'arable' part of the Property was subject to its operation.[14]
The Agreement to Lease
[14] It was common ground that 312.7 hectares of the 342 hectares (which the plaintiffs said comprised the Property) was 'arable' land.
It is convenient to make some observations about the Agreement to Lease before considering the parties' respective arguments.
First, on its face the Agreement to Lease contemplates use of the subject property for farming purposes.[15]
[15] See for example cl 4 (the words '[a]rable [a]rea'), and cls 8, 9, 10, 11, 13, 18, 19 and 25 (the words 'arable hectares').
Secondly, the subject property is described (relevantly for present purposes):
(a)in cl 3 of the agreement (headed 'THE LAND') as '[t]he property known as "HILLCREST" in the Shire of MERRIDIN comprising a total area of 312.7 hectares… as set out in the schedule below'; and
(b)in the schedule, appearing (in cl 4, headed 'LOCATION NAME AND NUMBERS') immediately below cl 3 as:
Property Name
Location
Nameyear of lease
Lot No.
DP No.
Vol
Fol
Arable Area Ha
HILLCREST
avon loc
2019-2024
1
19104
312.7
Thirdly, in cl 5, which addresses rental payments, the amount of rent payable per acre is specified as:
(a)$20 per acre + GST per annum in 2019;
(b)$26 per acre + GST per annum in 2020 and 2021;
(c)$28 per acre + GST per annum in 2022 and 2023; and
(d)$30 per acre + GST per annum in 2024.
The clause goes on to state that the rent is payable 'as set out in the schedule below'.
The schedule reads:
Fourthly, cl 6, headed 'PERIOD OF LEASE', provides:
The period of the lease shall be 6 years, commencing on [1st] April 2019 and expiring on [31st] March 2024'. (emphasis added)
Fifthly, cl 7, headed 'DOCUMENTS', among other things, provides:
(a)the [lessees] agreed to sign a 'formal lease' to be prepared by the [lessor's] solicitors; and
(b)if the parties mutually agreed, and if either elected not to have 'formal lease documents' prepared or neglected to do so, the instrument would 'if required' be stamped at the [lesssee's] expense and become 'the Lease'.
Sixthly, cl 22, headed 'ACCESS TO PREMISES', provides:
·The [lessees] shall permit the [lessor], or their agent, their consultants or contractors to have access to the land at all reasonable times.
·The [lessees] are granted permission to utilise any buildings (excepting the [lessor's] household) through verbal agreement at first being approved.
·Any utilities costs incurred by the [lessees] shall be remunerated by the [lessees] during use of the premises.
(emphasis added)
Seventhly, cl 23, which immediately follows cl 22 and is headed 'QUIET ENJOYMENT', states:
Provided always that all terms and conditions of the agreement have been complied with, the [lessees] shall be entitled to enjoy the peaceful occupancy of the land.
Eighthly, cl 25 states:
The buyer (sic) hereby acknowledges they have satisfied themselves as to the arable hectares and indemnify the seller (sic) and his agent against any future action regarding the same.
Ninthly, concerning terminology:
(a)the instrument is headed 'Agreement to Lease…';
(b)the word 'lease' is used in various places within it;
(c)the word 'licence' does not appear at all;
(d)the parties are, throughout the instrument, referred to as 'LESSORS' (or 'Lessor'), on the one hand, and 'LESSEES' (or 'Lessee') on the other (except in cl 25); and
(e)the word 'rental' or 'rent' is the term used to describe the relevant consideration.
Construction principles
As was recently observed in Mineralogy Pty Ltd v Sino Iron Pty Ltd,[16] the principles applicable to the construction of written contracts have been established by decisions of the High Court and outlined in many cases in the Court of Appeal.[17]
[16] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2022] WASCA 162 [59].
[17] For example Black Box Control Pty Ltd v TerraVision Pty Ltd [2016] WASCA 219 [42], JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [No 2] [2020] WASCA 112 [67] - [72] and Electricity Generation and Retail Corporation trading as Synergy v EIT Kwinana Partner Pty Ltd [2022] WASCA 3 [230] ‑ [234].
They are, by way of summary:
(1)The construction of a contract involves a determination of the meaning of the words of the contract by reference to its text, context and purpose. The starting point for the proper construction of a clause is the language used in the clause. In particular, one starts by identifying the possible meanings that the words chosen by the parties can bear.
(2)Ascertaining the meaning of terms in an instrument requires a determination of what a reasonable person would have understood those terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract, and the commercial purpose or objects to be secured by the contract.
(3)The instrument must be read as a whole. A construction that makes the various parts of an instrument harmonious is preferable. If possible, each part of an instrument should be construed to have some operation.
(4)The general principle applicable to the construction of commercial contracts is that they should be given a businesslike interpretation. Absent a contrary intention, the court approaches such contracts on the basis that the parties intended to produce a result which makes commercial sense. This requires that the construction placed on the term or terms in question is consistent with the commercial object of the agreement. However, it must also be borne in mind that business common sense may be a topic on which minds may differ.
(5)Definitions do not have substantive effect. A definition is not to be construed in isolation from the operative provision(s) in which the defined term is used. Rather, the operative provision is ordinarily to be read by inserting the definition into it.[18]
[18] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2022] WASCA 162 [59].
Regarding the fourth point, as was noted in JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [No 2]:[19]
(a)although reasonable minds might differ on business common sense, it is nevertheless accepted that if the language is open to two constructions, the preferred construction will be that which 'will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, "even though the construction adopted is not the most obvious, or the most grammatically accurate"';[20] and
(b)where a constructional choice is available it is important to consider what a reasonable business person reading the relevant clause or agreement would understand it to mean.[21] It is from that perspective that the court considers the circumstances surrounding the contract and the commercial purposes and objects to be achieved by it.[22]
[19] JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [No 2] [2020] WASCA 112 [70] - [71] (Buss P & Vaughan JA, Beech JA agreeing at [244]).
[20] Their Honours referring to Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99, 109.
[21] Their Honours referring to Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80 [298].
[22] Their Honours referring to Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 [47] and Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 261 CLR 544 [16].
As has also been observed, '[w]ords may generally be supplied, omitted or corrected, in an instrument, where it is clearly necessary in order to avoid absurdity or inconsistency' (emphasis added);[23] if the error is clear, and it is also clear what a reasonable person would have understood the parties to have meant, then the mistake may be corrected as a matter of construction.[24]
Duration of term under Agreement to Lease
Plaintiffs' argument
[23] Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420, 426 ‑ 427 (Dixon CJ & Fullagar J); Gold Valley Iron Pty Ltd (in liq) v OPS Screening & Crushing Equipment Pty Ltd [2022] WASCA 134 [119] (Buss P & Murphy JA). See also Adams v Lambert [2006] HCA 10; (2006) 228 CLR 409 [21] and Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq)[2019] NSWCA 11; (2019) 99 NSWLR 317 [6] ‑ [10].
[24] Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd [2019] NSWCA 11; (2019) 99 NSWLR 317 [6].
The plaintiffs rely on several features of the Agreement to Lease in support of their contention that the instrument on its proper construction contemplates a term of six, not five, years.
First, cl 5 provides that rental payments fall due on 1 April 2024 and 1 October 2024. Both dates are after 31 March 2024 (being five years after the stated commencement date; 1 April 2019).
According to the plaintiffs, there would have been no need for either of these two payments had the parties mutually intended for the term to be only five years. According to the plaintiffs this provision was, applying a businesslike interpretation, 'strongly probative' of there being a six-year term.
Secondly, cl 5 also provides that the rent in 2024 was to increase to $30 per acre plus GST; up from $28 per acre plus GST in 2022 and 2023.
According to the plaintiffs, if the period contemplated by the Agreement to Lease had, in fact, expired after five years, on 31 March 2024, there would also have been no need for a rental increase after this date.
Thirdly, cl 6 states that '[t]he period of the lease shall be 6 years, commencing on [1st] April 2019' (emphasis added), despite the words 'and expiring on [31st] March 2024' appearing thereafter.
Defendant's argument
According to the defendant, seven 'factors' support a conclusion that the relevant term was to expire on 31 March 2024.
First, the words 'in year 2019 - 2024' appear in cl 3 after 'comprising a total area of 312.7 hectares'.
Secondly, the date range '2019 - 2014' also appears in cl 4; in the column 'year of lease' in the row relating to Hillcrest.
Thirdly, the words 'expiring on [31] March 2024' appear in cl 6.
Fourthly, the plaintiffs' former solicitors provided legal advice to the plaintiffs, on 16 February 2022, to the effect that the relevant term expired on 31 March 2024.
Fifthly, on 6 April 2022 the plaintiffs (evidently by their former solicitors) lodged a caveat in relation to the Property, which also stated that the lease expired on 31 March 2024.[25] (emphasis added)
[25] The words formed part of a phrase appearing next to the words 'Lease term' which, in turn, appear under the heading 'Grounds of Claim'. For completeness, I note that the full entry, against the relevant item in the form, reads '6 Years, Commencing on 1st April 2019 and expiring on 31st March 2024'. (Emphasis added)
Sixthly, in correspondence sent to the former solicitors of Mr Brian Jarvis dated 21 April 2022, the plaintiffs' former solicitors asserted that the 'leasehold is for a fixed term expiring on 31 March 2024'.
Seventhly, the plaintiffs did not 'change their position' with respect to that expiry date until September 2023 (when their current solicitors wrote to the solicitors acting for the then sole director of the defendant and relevantly advised that the end date ought to have read '31st March 2025').
I digress to observe that only the first, second and third 'factors' may be of potential assistance to the Court in forming a prima facie view as to the objectively ascertained common intention of the parties by reference to the text, context and purpose of the Agreement to Lease itself.[26]
Prima facie conclusion - duration of term
[26] Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 [40]; Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253 [98]; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 [46].
In my view, the plaintiffs enjoy a sufficient likelihood of persuading a trial court that, on its proper construction, the Agreement to Lease contemplated a term of six years commencing on 1 April 2019.
I say this for the following reasons.
First, as counsel for the plaintiffs effectively contended, it is reasonable to expect that the financial obligation over the entirety of a relevant term would have been a primary concern of businesspersons entering into a contract such as the Agreement to Lease.
Relevantly, in this regard, cl 5 of the instrument incorporates a table which identifies each of the 12 payments required to be made by the plaintiffs and when each such amount is to be paid.
Secondly, no commercial sense would seem readily apparent in the plaintiffs having agreed to make the payments reflected in the final two rows of the table forming part of cl 5, let alone to any rental increase effective 1 April 2024, if the parties had intended for the relevant term to end on 31 March 2024.
Thirdly, it would to me seem reasonable to expect that businesspersons in the position of the parties at the time would perhaps have focussed more closely on any express statement of the total number of years to which their respective obligations would relate, rather than on a date range, when entering into a written agreement such as the instrument in question.
In this regard, as has been noted, cl 6 makes clear that '[t]he period of the lease shall be 6 years, commencing on [1st] April 2019…'. (emphasis added)
Finally, the defendant's construction would necessarily require not only the final two rows of the table (in cl 5) to be ignored, but also that the words '6 years' (in cl 6) be substituted with '5 years'.
In my preliminary view, there would be considerably less force in a submission that those features of the instrument were 'clear error[s]',[27] than a contention to the effect that the parties must, objectively, have intended '2024' (in cl 6) to have read '2025' given the combined effect of the matters identified in paragraphs 71 to 75 above.
Equitable lease or licence, and the lease area
The parties' arguments
[27] Cf. Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd [2019] NSWCA 11; (2019) 99 NSWLR 317 [6].
As noted earlier, there is also a contest as to whether the Agreement to Lease gave rise to an equitable lease or, simply, a licence and, further, as to whether the instrument contemplated use by the plaintiffs of the entirety of the Property (excluding the residence and other buildings), or only that part of the Property which was 'arable'.
According to the defendant, the Agreement to Lease only gave rise to a licence because the plaintiffs were not granted the right of exclusive possession over the Property.[28]
[28] Cf. Radaich v Smith[1959] HCA 45; (1959) 101 CLR 209, 218.
The defendant relies on the following matters which, it says, 'negative' a right of exclusive possession:
(a)the fact that the area described in the Agreement to Lease is stated as being 312.7 hectares, despite the total area of the Property being just over 342 hectares according to the plaintiffs' evidence; and
(b)clause 22 of the Agreement to Lease which, according to the defendant, on its proper construction contemplates the 'Lessor' having 'unfettered access' to the land the subject of the agreement, and possession of the buildings on the Property.
The defendant says further that the plaintiffs have not, in fact, had 'exclusive possession' of the Property throughout the term of the Agreement to Lease.
That was so, according to the defendant, because:
(a)until 2020, Mr Brian Jarvis lived at the Property with Mr Murray Jarvis and the latter's then spouse;
(b)between 2020 and 2022, Mr Murray Jarvis lived at the residence with his then spouse, and machinery, agricultural equipment and vehicles owned by the defendant (as trustee) were stored in various sheds on the Property; and
(c)Mr Murray Jarvis's former spouse still lives in the residence on the Property.
Despite the above, the plaintiffs no longer contend, for the purposes of this application, that either the residence or any of the other 'buildings'[29] were subject to any equitable lease created in consequence of the Agreement to Lease. Nor do the plaintiffs currently seek any relief relating to any of those structures.
[29] I understood the expression 'buildings' to also include the three sheds identified by the defendant in its submissions.
The defendant also asserts the Agreement to Lease merely provides a right to the plaintiffs to use the 'arable' land for the purposes of the instrument.
The plaintiffs disagree, saying, first, that the Agreement to Lease creates an equitable lease and, secondly, the equitable lease extends over the entirety of the Property (except for the residence and buildings).
With respect to the first point, the plaintiffs accept that the determining factor as to whether they have a lease rather than a license is whether the right granted to them under the instrument is one of exclusive possession.[30]
[30] Cf. Radaich v Smith [1959] HCA 45; (1959) 101 CLR 209, 218.
According to the plaintiffs, the Agreement to Lease confers such a right.
In this regard, the plaintiffs point to cl 22 which, they say, supports such a conclusion. In particular, the plaintiffs invite attention to the first bullet point in the clause which, as noted earlier, states that '[t]he [lessees] shall permit the [lessor], or their agent, their consultants or contractors to have access to the land at all reasonable times'. (emphasis added) The plaintiffs juxtapose the first bullet point with the second bullet point which, in turn, contemplates the [lessor] granting 'permission', to the [lessees], to access the buildings (excluding the residence) by prior 'verbal agreement'. (emphasis added)
I also understood the plaintiffs to rely on cl 23, the clause headed 'QUIET ENJOYMENT' which, as noted, contemplates the lessees being entitled to enjoy 'peaceful occupancy' of the land.
The significance of the plaintiff's second point, that any equitable lease extended over the entirety of the Property (except for the residence and other buildings), is that, according to the plaintiffs, the subject area extended to everything on the Property which was not a 'building'. That is, not merely the 'arable' portions.
In this regard, the plaintiffs contend that the reference to '312.7' hectares, in the Agreement to Lease, is 'merely a descriptor'. The plaintiffs say, further, that cl 22 is, on its proper construction, consistent with the plaintiffs having been granted an (equitable) lease over the Property beyond the 'arable' land, and that cl 22 would have 'no work to do' if it had been intended for only the 'arable' land to be subject to the instrument.
Prima facie conclusion - equitable lease or licence, and the lease area
In my view, the plaintiffs enjoy a sufficient likelihood of persuading a trial court that the Agreement to Lease, on its proper construction, contemplated an equitable lease rather than a licence.
I hold this view having regard to:
(a)the evident commercial object of the instrument, namely use by the plaintiffs of very substantial parts of the Property for farming purposes over several years;
(b)clauses 7, 22 and 23 of the Agreement to Lease; and
(c)the adoption, throughout the instrument, of terminology which on its face appears consistent with an intention to create a leasehold interest, granting a right of exclusive possession over the demised premises, rather than a license (see paragraph 49 above).
To the extent that the defendant relies on assertions to the effect that the plaintiffs have not, in fact, been exercising exclusive possession over the entirety of the Property,[31] it seems to me that what really matters is whether the Agreement to Lease itself granted them such a right.[32]
[31] See paragraphs [81] - [82] above.
[32] Cf. Radaich v Smith [1959] HCA 45; (1959) 101 CLR 209, 218.
For the above reasons I consider that the plaintiffs have demonstrated, on a prima facie basis, that the Agreement to Lease did so.
I also consider that the plaintiffs enjoy a sufficient likelihood of persuading a trial court that the Agreement to Lease, on its proper construction, contemplated that any equitable lease would not be confined only to the 'arable' parts of the Property, but would also include, at least, those other portions of the Property to which the plaintiffs would necessarily require access to carry out their farming operations (eg. verges, paths, the driveway, etc).
In my view, such a construction is supported by the evident commercial purpose of the instrument, and the absence of anything in cl 22 to suggest that the defendant's permission was first required to access such other parts of the Property (unlike, for example, with respect to buildings which is expressly dealt with).
Conclusion - serious question to be tried
In conclusion, for the reasons above, I consider the plaintiffs have shown there is a serious question to be tried; both as to whether the term of the Agreement to Lease extends until 31 March 2025, and also as to whether the instrument gives rise to an equitable lease that extends over the entirety of the Property (except for the residence and other buildings).
In reaching this conclusion, I am mindful of the fact that it is unlikely that any trial would occur before the second half of this year, even if the matter were to be expedited.
In those circumstances, I am also conscious that the practical consequences of any interlocutory injunction would likely include:
(a)the plaintiffs remaining in possession until, quite possibly, close to, if not until, 31 March 2025 in any event; and
(b)the defendant, in the meantime, being unable to commence any crop planting on the Property; let alone during the 2024 growing season.[33]
[33] As to which, see below.
Having said that, and without detracting from the remarks expressed in paragraph 34 above, I confirm that I have reached each of my prima facie conclusions to a 'strong' degree.
Balance of convenience
According to the first plaintiff, the plaintiffs commenced planting serradella and canola in about late March to early April 2022 as part of a three-year double break cropping rotation program at the Property.[34]
[34] Affidavit of Paul Patrick James Madaffari affirmed 27 March 2024 [13].
The first plaintiff effectively deposes that he and the second plaintiff took those steps as they believed they had an agreement to lease the Property until 31 March 2025.[35]
[35] Affidavit of Paul Patrick James Madaffari affirmed 27 March 2024 [17].
The first plaintiff also deposes that:
(a)in addition to undertaking the double break cropping rotation, he had also ordered approximately 15.6 tonnes of phosphorous fertilizer and 10.09 tonnes of the nitrogen fertilizer to be applied to the soil at the Property, totalling a value of approximately $21,564;
(b)from about June 2023, he purchased various chemicals for use at the Property, at a total value of $9,300; and
(c)on or about 29 February 2024, he instructed a farmhand employed by the plaintiffs to spray 113 hectares of the Property for summer weeds in preparation for a wheat crop he intended to grow on the Property, and that the spraying of summer weeds cost him an additional $3,277 in labour and costs.[36]
[36] Affidavit of Paul Patrick James Madaffari affirmed 27 March 2024 [18] - [21].
The first plaintiff says he intended to begin seeding for the wheat crop between 1 and 15 May 2024.[37]
[37] Affidavit of Paul Patrick James Madaffari affirmed 27 March 2024 [24].
The first plaintiff also says that, if the defendant were successful in taking possession of the Property, he would not be able to plant the wheat crop and would therefore stand to lose $186,000 to $279,000 in profit together with the investment he had made since 2022.[38]
[38] Affidavit of Paul Patrick James Madaffari affirmed 27 March 2024 [25].
On the other hand, Mr Brian Jarvis deposes that:
(a)he had negotiated a settlement with a third party in July 2023, on the basis that the defendant 'would be able to recommence farming on the Property on 1 April 2024, at the latest';
(b)the importance of recommencing farming 'in May' was that it was the correct time to get a crop in the ground as it is at the start of the growing season, and the crop 'is then ready to harvest in October or November';
(c)he intended to live in the residence, and to use 'all the [b]uildings', on the Property; and
(d)since 2020, he and Ms Djemal have lived 'with family' in a suburb of Perth, and that he wanted to move into his 'own house' with Ms Djemal to start a family 'and continue the Jarvis farming legacy that's been in the family for over 100 years'.[39]
[39] Affidavit of Brian Edward Jarvis sworn 7 April 2024 [57] - [61].
Mr Brian Jarvis does not identify the kind of crop(s) which the defendant intends growing. Nor does Ms Djemal's affidavit shed further light on this topic.
Further, at the hearing, counsel for the defendant effectively confirmed that the defendant had not taken any positive steps to make good its asserted intention to commence farming operations on the Property aside from applying for a bank loan.[40]
[40] ts 69.
In the circumstances, and given the plaintiffs seek no relief with respect to the residence and other buildings on the Property, I consider the defendant has effectively failed to identify any inconvenience or injury, that might be occasioned by any injunction, other than a need to defer the planting of unspecified crops until the next growing season.
When one considers this position against the evidence set out in paragraphs 102 to 106 above, I consider that the balance of convenience weighs heavily in favour of the plaintiffs.
In my view, this is all the more so in circumstances where it appears:
(a)the defendant was informed of the plaintiffs' position regarding the 'correct' expiry date (31 March 2025) more than six months before the expiry date expressly stated in the Agreement to Lease (31 March 2024);[41] and
(b)despite the plaintiffs' repeated attempts, the defendant failed to engage substantively with the plaintiffs[42] until 22 March 2024;[43] being a mere nine days before 31 March 2024 and only a few days after Mr Brian Jarvis and Ms Djemal had, in any event, become directors of the defendant for the first time.[44]
[41] Affidavit of Estelle Nicole Madaffari affirmed 27 March 2024, annexure “ENM16”, page 100.
[42] Affidavit of Estelle Nicole Madaffari dated affirmed March 2024, annexure “ENM16”, pages 100 - 109.
[43] Affidavit of Mr Brian Jarvis sworn 7 April 2024, annexure “BEJ23” (Letter from Blackwall Legal dated 22 March 2024).
[44] Affidavit of Estelle Nicole Madaffari affirmed 27 March 2024, annexure 'ENM4', pages 48 - 49.
The plaintiffs have also provided undertakings as to damages, in the usual form, and there has been no suggestion that the plaintiffs would be unable to make good on those undertakings should they fail at trial.
Further, in circumstances where the plaintiffs' claim is said to arise in consequence of an equitable lease, and therefore in equity's exclusive jurisdiction, it would to me seem unnecessary to determine whether damages would be an adequate remedy.
Even if that were wrong, I do not in any event consider that it would have been 'just in all the circumstances' for the plaintiffs to have been confined to any remedy of damages.
The plaintiffs have, in my view, made out a strong prima facie case that the Agreement to Lease grants them exclusive possession, and the defendant threatened to take steps to prevent the plaintiffs from accessing the Property if they did not vacate by 1 April 2024 (and to deal with any equipment left behind in accordance with the Disposal of Uncollected Goods Act 1970 (WA)).[45]
[45] Affidavit of Mr Brian Jarvis sworn 7 April 2024, p 130 [4.1] - [4.2], annexure “BEJ23”.
Damages will rarely be an adequate remedy for the invasion of proprietary or possessory rights,[46] including where ongoing exclusion from the relevant premises could be a continuing breach and trespass.[47]
Conclusion - balance of convenience
[46] Claremont 24-7 Pty Ltd v Invox Pty Ltd [2015] WASC 55 [20]; Stageman v St John Ambulance Association in Western Australia Inc [2010] WASC 203 [29]; Beswicke v Alner [1926] VicLawRp 10; [1926] VLR 72, 77.
[47] Stageman v St John Ambulance Association in Western Australia Inc [2010] WASC 203 [28] - [29].
Having regard to the all the above matters, I am comfortably satisfied that the balance of convenience weighs strongly in favour of the plaintiffs.
Disposition
For the above reasons, I granted the orders for injunctive relief pronounced at the hearing on 24 April 2024.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JR
Associate to the Honourable Justice Musikanth
24 APRIL 2024
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