Rial v Gray

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION

PROPERTY LIST

S ECI 2023 01252

BETWEEN:

ANDREW LESLIE RIAL	Plaintiff
v
JAMES MARTIN GRAY and GABRIELLE ALEXANDRA GRAY	Defendants

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JUDGE:	Daly AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	22 and 29 May 2023
DATE OF JUDGMENT:	6 June 2023 (revised 7 June 2023)
CASE MAY BE CITED AS:	Rial v Gray
MEDIUM NEUTRAL CITATION:	[2023] VSC 302

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SUMMARY RECOVERY OF LAND — Application under Order 53 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) — Framlingham Aboriginal Trust v McGuinness and Chatfield [2014] VSC 241 referred to —Where owner claims licence agreement ended on the date a contract of sale for the defendants to purchase the property was terminated— Proper construction of licence agreement — Whether land occupied by licence or lease — Relevant considerations as to lease or licence — Radaich v Smith (1959) 101 CLR 209 referred to - Held that property occupied pursuant to a licence agreement not a lease —Jurisdiction pursuant to Order 53 enlivened — Construction of the licence agreement — Whether licence agreement terminated by the plaintiff in breach of contract — Williams and Nyrogen Pty Ltd v Rampino [2002] VSC 343 referred to and distinguished — Whether defendants had breached the licence agreement — Whether injunctive relief available to the defendants to restrain the premature revocation of the licence — Injunction would not be granted where damages would be an adequate remedy and there is limited utility in granting the injunction.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr W F Gillies	Keating Avery Solicitors
The Defendants in person

HER HONOUR:

Introduction and background

These reasons concern an application by originating motion dated 28 March 2023 for the recovery of land pursuant to Order 53 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’). The land concerned is a hundred acre cattle grazing property situated in Huon, Victoria (‘property’). The plaintiff is the sole registered proprietor of the property.

The defendants, Mr James Gray and Ms Gabrielle Gray (collectively, ‘defendants’), operate a construction business, and have occupied the property under an agreement titled “Licence Agreement”, which commenced on 20 December 2021 (‘licence agreement’).

The licence agreement provides for the use of the property for “residential purposes and to sublicense to JR & GM Holdings Pty Ltd … trading as Gray Building and Construction to operate as a construction depot”. The licence agreement was entered into by the parties in the context of negotiations from around August 2021 for the defendants to purchase the property from the plaintiff.

A contract of sale of the property was prepared by the plaintiff’s solicitors and signed by the parties on 30 May 2022 (‘contract of sale’). The purchase price of the property under the contract of sale was $2,400,000, with a settlement date of 29 September 2022 or earlier by agreement between the parties. The contract of sale was subject to the defendants obtaining suitable finance.

The defendants failed to obtain finance by the date specified in the contract of sale, but multiple extensions to enable the defendants to obtain finance were negotiated between the parties. On 3 October 2022, the defendants’ solicitor notified the plaintiff’s solicitors that the defendants had failed to obtain finance.

The defendants terminated the contract of sale on 5 October 2022[1], and the deposit was returned to the defendants on 12 October 2022.
[1]The defendants say that the contract of sale was terminated by the plaintiff, but having reviewed the correspondence in evidence, I agree that the better view is that the contract of sale was terminated by the defendants relying upon the “subject to finance” clause.

On 12 October 2022, the defendants’ solicitor told the plaintiff’s solicitor that the defendants did not propose to vacate the property until the earlier of August 2023 or the settlement of the sale of the property.

On 21 October 2022, the plaintiff’s solicitors wrote to the defendants’ solicitors stating that as there was no extant contract of sale, the licence agreement was terminated, and if the property was not vacated by 5 November 2022, they would seek instructions from their client to make an application under Order 53 of the Rules.

However, the defendants say that contrary to the above, the plaintiff continued to negotiate with them with a view to entering into a new contract of sale, and took no steps to force them to vacate the property.

On 24 January 2023, the plaintiff’s solicitors sent a new contract of sale for the property to the defendants’ solicitors. The settlement date in the proposed contract of sale was scheduled to be 14 days after the defendants notified the plaintiff that lease agreements had been entered into for commercial properties owned by them.[2] In response to the defendants’ request for certain changes to be made to the proposed contract of sale on 9 February 2023, the plaintiff’s solicitor told the defendants’ solicitor that the plaintiff no longer wished to proceed with the sale of the property to the defendants, and demanded that the defendants vacate the property by 5:00pm on 26 February 2023. It seems that the sticking point between the parties was a demand by the plaintiff that the defendants pay the holding costs incurred by the plaintiff associated with the delay in the sale of the property.
[2]Being the condition upon which the defendants could obtain suitable finance.

On 15 March 2023, the plaintiff’s solicitors sent an email to the defendants’ solicitors (’15 March email’). The 15 March email provides as follows:

Hi Andrew
We are instructed that our client has settled the most recent rates instalment for the property. Please see attached rates notice and confirmation of payment. Our client anticipates that your clients will attend to settling at their soonest convenience, despite the fact that the Licence Agreement is now at an end.
We are further instructed that your clients’ have erected an electric fence at the property, without our client’s consent, which impedes the movement of his livestock. Please note that it is our client’s intention to remove this fence, should your clients fail to do so themselves. Our client has advised your client James Gray of the issues that this fence presents. For you [sic] reference, the fence is contained in the below picture.
…
Further, our client noted during his recent inspection that your clients have made a number of alterations/disturbances to the property. They are as follows:-
1.   inside the house, several alterations and additions have been made. These include televisions hanging on walls, brackets and shelving added to the walls along with water damage to the ceiling in the lounge area. The carpets carry several stains since they were professionally cleaned prior to the handover;
2.   several ornamental trees have been removed, alongside the cutting of the fence lines protecting other ornamental trees. Damage has been sustained by several other ornamental trees from your clients’ livestock’-; and
3.   lawn has been removed at the rear of the house and gravel base added so that the cars can park at the rear door, despite there being a carport downstairs with a solid stone base area.
It is not clear when these alterations/disturbances took place. If it is found that they took place following the termination of the Licence Agreement on 5 October 2022, then your clients are liable to make good those alterations.
Most importantly, our client notes there is water damage to the ceiling. Please advise your clients to immediately take steps to engage a competent tradesperson to make good that damage. We will await your confirmation that has taken place.
For the avoidance of doubt, it is our client’s position that the Licence Agreement is at an end. However, as your clients continue to maintain that it is still on foot, please take this correspondence as a reasonable request under clause 6.1(b) for your clients to immediately cease any alterations/disturbances to the property, unless agreed to in writing by our client. Please confirm that your clients will abide by this request.
We await your further contact on these matters.

The defendants say that they have paid all monies owing under the licence agreement, save for the rates in the amount of $861.40, which they say has not been paid as a tax invoice has not been provided to them.[3]
[3]However, a copy of the rates notice was attached to the 15 March email.

The defendants erected an electric fence at the property in late 2022. The plaintiff claims that the electric fence impedes the movement of his livestock on the property.

The defendants say that the electric fence was erected after the plaintiff told them that they were able to make any modifications and changes to the property. The defendants say that the electric fence does not impede the operation of the plaintiff’s cattle business, and that they have made the property available and accessible to the plaintiff at his request at all times.

The licence agreement

The recitals to the licence agreement provide as follows:

A.The Licensor is the registered proprietor of the Property, of which the Licensed Premises form the whole of the Property, excluding the agreed part of land in which the Licensor may continue to occupy to continue his farming enterprise.
B.The Licensor has agreed to sell, and the Licensee has agreed to purchase the Property to the Licensee in accordance with the terms of Purchase as set out in Annexure B.
C.The Licensee wishes to licence and use the Licensed Premises identified herein, from the Commencement Date, and the Licensor has agreed to grant a licence of the Licensed Premises to the Licensee, for the period including up to settlement of the Purchase.

Clause 1.1 of the licence agreement, includes, among other things, the following definitions:

Commencement Date means the date as specified in Item 4 of the Schedule, or any other date as agreed by the Licensor and Licensee in writing.

…
Licence Period means the period set out in clause 2.1(c).
…
Licenced Premises means the premies shown on Lot 1 on Plan of Subdivison 12057 and is annexed hereto as Annexure A.
Propertymeans the land situated at Mintarra, Part 2581 Murray Valley Highway, Huon, Victoria 3695 and move particularly described in Certificate of Title Volume 9195 Folio 825.
Purchasemeans the purchase of the Property in accordance with the terms as set out in Annexure B.

…
Termination Date means the date on which this agreement terminates in accordance with the provisions contained herein.

…
Terms of Purchase means the Terms outlined in Annexure B.

Clause 2.1 of the licence agreement provides as follows:

2.1 Grant of Licence
(a) The Licensor grants to the Licensee an exclusive Licence to occupy and use the Licensed Premises for the Licensed Use for the Licence Period upon the terms and conditions herein provided.
(b) The exclusive Licence is subject to the Licensor continuing to operate the farming business of herding cattle on the Property but so as not to interfere with the use and occupation of the Licensee and Sub-Licensee and subject to 3.2.
(c) The Licence period starts on the Commencement Date and ends on the settlement of a contract incorporating the Terms of Purchase, whereby a new licence agreement will be entered into.

Clause 3 of the licence agreement provides as follows:

3. Nature of Licence

3.1 Right to use
The Licencee’s right to use the Licenced Premises during the Licence Period under the Licence:
(a) are contractual rights only; and
(b)are personal to the Licensee and may not be assigned, novated or transferred in any way, other than to the Sub Licensee.

3.2 Licensor’s Rights
Despite any provision of this agreement, the Licensor (including its employees, agents and contractors) may enter the Property, or any part, at any time upon giving the Licensee prior reasonable notice (except in an emergency) to:
(a)continue to operate the Licensor’s farming business of herding cattle;
(b)access one of the four sheds on the property for storage purposes;
(c)examine and view the state and condition of the Licenced Premises or the goods and chattels on the Licensed Premises; and

(d) exercise any right under this agreement.

Clause 6 of the licence agreement provides as follows:

6.1 Use of Licensed Premises
The Licensee shall:
(a)conduct itself and cause the Licensee’s Agents to the Licensed Premises to use the Licensed Premises in such a matter so as to not to cause any nuisance to occupants of adjoining properties;
(b)cause itself and cause the Licensee’s Agents to the Licenced Premises to abide by whatever reasonable request as may be stipulated by the Licensor from time to time; and
(c)occupy the Licensed Premises in such a manner which will not affect any insurance obtained in respect of the Licenced Premises and the Property.

6.2 Special Conditions
The Licensee covenants that they will:
(a)comply with all Laws in relation to the use of the Licensed Premises;
(b)take out in the name of the Licensee and noting the respective interests of the Licensor, a public risk insurance policy with a reputable insurer in respect of liability of death, personal injury and property damage arising out of the use of the Licensed Premises by the Licensee and the Licensee’s Agents which:
(i)is extended to expressly cover the Licensee’s liability under this Licence including the indemnities given by the Licensee to the Licensor; and
(ii)is in the sum of $20,000,000 in respect of a single accident or event;

(c)not allow any of the Licensee’s Agents to breach any of the Licensee’s obligations under this License;
(d)indemnify the Licensor in relation to the Works and the actions of the Sub-Licensee;
(e)indemnify the Licensor from the negligence of the Licensee resulting in the loss or damage to the Licensor’s property, including the cattle, on the Licenced Premises, excluding all events that are out of the Licensee’s control; and
(f)pay all expenses and outgoings connected with the Licensee’s use of the Licensed Premises.

The Licensor covenants that it will:
(g)not object to the Licensee and or Sub- Licensee performing earthworks and site preparations to move a portable building and 2 (two shipping containers onto the property;
(h)provide the Licensee with the right to enjoy use of the water tanks, bore water and solar panel system installed on the residential premises as well as 3 (three) of the 4 (four) sheds located on the property;
(i)provide the Licensee and Sub-Licensee with the right to undertake any Works and make any alterations or additions to the Licenced Premises; and
(j)permit the Licensee to remove any goods, fixtures or fittings owned by the Licensor, which are located on or attached to the Property, excluding the goods, fixtures or fittings associated with the Licensor’s farming business or goods, fixtures or fittings located in the shed in which the Licensor uses to store his personal property.

Clause 7 of the licence agreement provides as follows:

7. Termination
7.1 Breach
If and whenever there shall be a breach of any of the covenants, terms and conditions contained in this agreement by either of the parties, the defaulting party shall have 14 days following the date of receipt of a notice from the non-defaulting party setting out the particulars of the defaults to rectify the default.

Annexure B of the licence agreement set out the following “Terms of Purchase”:

1.

Property:

Mintarra, Part 2581 Murray Valley Highway, Huon 3695

2.

Vendor:

Andrew Rial

3.

Purchaser:

James and Gabrielle Gray and or nominee

4.

Title Particulars:

Vol 9195 Fol 825

Lot 1 on Plan of Subdivision 120257

5.

Agreed Purchase Price:

$2,400,000 inclusive of GST (if applicable)

6.

Subject to Finance:

Yes, to the satisfaction of the Purchaser

7.

Terms:

3 payments:

1)   Deposit payable on day of signing the contract of sale;

2)   August 2022; and

3)   To be determined and agreed upon by both parties in writing, no later than August 2023.

The evidence

The plaintiff relied on an affidavit sworn by him on 24 March 2023, in which he deposed as to the parties’ entry into the contract of sale and the correspondence between the solicitors for the parties in September and October 2022 regarding the defendants’ requests for extensions of time to secure finance to complete the purchase of the property. The plaintiff’s affidavit exhibited that correspondence, and further correspondence between the solicitors in January and February 2023, along with the contract of sale and the licence agreement.

The plaintiff also relied upon an affidavit affirmed by his solicitor, Mr Thomas Reilly, on 19 May 2023. Mr Reilly exhibited the 15 March email, and deposed that:

(a) the defendants have failed to reimburse the plaintiff for the rates;

(b) the defendants have failed to remove the electric fence; and

(c) the defendants have failed to rectify the ‘alterations and disturbances’ referred to in the 15 March email.

Mr Reilly went on to depose as follows:
As a consequence of the Contract of Sale for the property being rescinded, the Plaintiff has engaged a selling agent, Kerrie Pollock of Rise Real Estate, to market the property for sale. In order to assist with marketing of the property, the Plaintiff has personally notified Defendants of his need for the property to be maintained in a neat and tidy condition. An example of this is a text message by the Plaintiff to both Defendants on 6 April 2023 at 5:08pm where it was asked that "I [expect] adequate accessibility and reasonable condition of the house and property for my agent to show her through on this date and any further inspection dates". ...
More recently, a text message was sent by the Plaintiff to the Defendants on 16 May 2023 at 3:59pm which notified them that "I am try[ing] to sell my property, which as you both are aware, is very messy and unkept. I want immediate action from you to clean up the garden area and remove mess". …
So far, the Defendants have failed or refused to make the property neat and tidy as requested by the Plaintiff. ... By failing to remove wood piles and other debris around the shed as evidenced in the photographs on pages 10 to 13, I am instructed the Plaintiff is unable to drive a livestock truck through the property and out to sale.
I am further instructed that by reason of the matters set out herein, and the Defendants [sic] continued occupation, the Plaintiff is facing difficulty in marketing the property.
The defendants relied upon an affidavit sworn by the second defendant, Ms Gabrielle Gray, on 18 May 2023. Ms Gray deposed that she lives at the property with her husband, the first defendant, and their children aged 15, 7 and 5, and that the defendants operate their construction business from the property.

Ms Gray deposed in some detail as to the circumstances in which the licence agreement came to be executed, and the parties’ entry into the contract of sale. It is not necessary to recount those details further for present purposes. She also deposed as to the further negotiations between the parties in January and February 2023. Ms Gray deposed as follows:
During the period of re-negotiation from September 2022 until February 2023, and in fact until today, Mr. Rial has continued to act in a manner consistent with the position of licensor and despite repeatedly stating the licence was not in play, acted and negotiated contrary to that statement by continuing to negotiate a new contract until February 2023. He has continued to demand and accept all monies paid to him under the licence agreement and has continued to provide advanced notice of his attendance at the property to exercise his usage rights as the licensor. Between January 2022 and January 2023, Mr. Rial sent me text messages almost weekly seeking my permission to enter the property (see exhibit GG:10). He has also instructed his agents to give the same notice when accessing the property.
…
My husband, James Gray, and I have paid all monies due under the licence agreement. GG:12 shows all transactions to date.
My husband, James Gray, and I have complied with all of our obligations under the terms of the licence agreement, we have at no time been in breach of our obligations nor has Mr. Rial ever served on us a formal breach notice.
Throughout our engagement with Mr. Rial, we have been transparent, provided all information requested of us, and continued to navigate Mr. Rial providing us with contradictory information, and in this ambiguous environment we have relied exclusively on what was specified in the executed licence agreement, despite it being vague and brief in regard to termination.
Finally, at the first point that it definitively was made evident by Mr. Rial that under no circumstance would he re-negotiate a contract or sell the property to my husband and I, when we were served with supreme court documents in May 2023, we commenced investigations into seeking alternative accommodation for both our family and business, with a view that the licence would ultimately expire in August 2023 given Mr. Rial's refusal to accept settlement in the interim.
At the time of swearing this affidavit we have secured alternative accommodation for our business but not for our family. We are continuing to make inquiries with a view to being out no later than 31^st August 2023, at the time the licence expires.
The parties’ submissions

The plaintiff filed written submissions on 19 May 2023 and 22 May 2023. The second defendant made oral submissions on behalf of the defendants at the hearing. Further, as can be seen from the extract from her affidavit above, the second defendant’s affidavit includes both evidence and submissions.

The plaintiff in his written submissions dated 19 May 2023 submitted, in summary, as follows:

(a) the termination date in the licence agreement is defined as the date on which the agreement terminates or if there is a breach of any of the covenants of the licence, with the defaulting party being given 14 days’ notice to rectify the default;

(b) the licence agreement is, by its nature, able to be revoked with notice, and as notice has been provided by the 15 March email, the defendants are not entitled to remain at the property;

(c) alternatively, the licence agreement may be terminated in accordance with clause 7.1 of the licence agreement, with 14 days’ notice. The contract of sale and settlement of the property was a fundamental condition of the licence agreement and the fact that the contract of sale has been abandoned means that there has been a breach of the licence agreement;

(d) referring to the decision of Nettle J in Williams and Nyrogen Pty Ltd v Rampino[4] (‘Williams’), the licence agreement stands apart from the contract of sale allowing termination of the licence agreement when the event contemplated by the licence agreement, being the entry into and the settlement of the contract of sale, did not occur; and

(e) the only sensible construction of the licence agreement is that on the termination of the contract of sale, the licence agreement came to an end.

[4][2002] VSC 343 (‘Williams’).

In his written submissions dated 22 May 2023, the plaintiff submitted further that:

(a) contrary to the assertions made by the second defendant in her affidavit, the defendants, not the plaintiff, terminated the contract of sale;

(b) there have been numerous breaches of the licence agreement, including the failure to pay rates, and the failure to remove an electric fence constructed by the defendants; and

(c) the defendants have been provided with time to make arrangements to vacate the property and have refused to do so.

The defendants submitted, in summary, as follows:

(a) the licence agreement contemplated a settlement date of 31 August 2023, and that this was understood by the parties to be the end date of the licence agreement;

(b) despite the plaintiff’s submission that the licence agreement was terminated on the date the contract of sale was terminated (being 5 October 2022), the plaintiff continued to negotiate with the defendants regarding the sale of the property and a further contract of sale after this date, so that the contract of sale referred to in the licence agreement was still to come into existence and the licence agreement remained in force;

(c) the defendants have paid all money owing under the licence agreement. They have not paid the rates as they have not been provided with a tax invoice;

(d) the electric fence constructed at the property has not obstructed the plaintiff from moving livestock around the property; and

(e) the defendants hold a reasonable belief that they are permitted to remain on the property until 31 August 2023, and have at all times acted and negotiated in good faith.

Counsel for the plaintiff submitted that, should I grant the plaintiff’s application, the defendants should leave the property within 14 days. The defendants said that they would request until 30 June 2023 to vacate the property should the plaintiff succeed in his application.

Order 53 – relevant legal principles

Order 53 of the Rules creates a special procedure for the summary recovery of land. Order 53 was enacted to facilitate the efficient recovery of land by a person entitled to possession of the land.[5]
[5]Super Jacobs Pty Ltd (as trustee for Team Jacobs Self-managed Superannuation Fund) v Faalogo [2019] VSC 778.

Rule 53.01 of the Rules provides as follows:

… this Order applies where the plaintiff claims the recovery of land which is occupied solely by a person or persons who entered into occupation or, having been a licensee or licensees, remained in occupation without the plaintiff’s licence or consent or that of any predecessor in title of the plaintiff.

The principles governing applications pursuant to Order 53 have been summarised by Derham AsJ in Framlingham Aboriginal Trust v McGuiness and Chatfield[6]:
[6][2014] VSC 241 [34]-[45]; upheld on appeal in Framlingham Aboriginal Trust v McGuiness and Chatfield [2014] VSC 354; see also Tajon Pty Ltd v Arvanitis [2017] VSC 130 [27]-[34].

(a)It is intended to enable a speedy resolution in favour of the proprietor of land of a dispute whereby trespassers are keeping the proprietor out;
(b)It is intended to apply only in clear cases where there is no question to try;
(c)The existence of a factual dispute does not deny the applicability of Order 53 where it is possible to resolve the dispute readily and fairly;
(d)While an order for possession may be made notwithstanding that there is a factual dispute between the parties, such an order will only be appropriate if the Court is able to satisfy itself as to the material facts that bring the case within O 53;

(e) The jurisdiction should be exercised with great care;
(f)Where an issue does emerge, the judge has discretion whether simply to dismiss the proceeding, to determine the issue or cause the issue to be subsequently tried. This includes giving directions as to the further conduct of the proceeding or ordering the proceeding to continue as if begun by writ pursuant to Rule 4.07 of the Rules; and
(g)Where the Court gives judgment for possession under Order 53, it may grant a stay of execution.

The power to give summary judgment for possession is similar in nature to the power to give summary final judgment under Rule 22.02 of the Rules. That power should be exercised with great care and should never be exercised unless it is clear that there is no question to be tried. The need for exceptional caution in exercising the power is the subject of numerous observations of courts in this country.[7]

[7]Ibid [41]-[42].

Setting aside for the moment the dispute between the parties as to whether the defendants have breached the licence agreement, I agree that, while care needs to be taken when exercising the Court’s summary jurisdiction under Order 53, when the critical dispute involves a question of contractual construction which can be resolved without further evidence, the Court is not precluded from dealing with an application of the current kind on a summary basis.

The jurisdictional issue

A further issue arose after the hearing of the application while judgment was reserved. In the course of considering the issues in the application and preparing my reasons, I had cause to consider whether the licence agreement was truly an agreement to confer a licence upon the defendants, or should be properly characterised as an agreement for a lease.

Two features of the licence agreement in particular caused me to question whether the licence agreement was truly a lease. First, the reference in clause 2.1 to the grant of “an exclusive licence to occupy and use the Licensed Premises for the licenced use“ raised the possibility that the licence agreement confers exclusive possession of the property, or part of the property, upon the defendants. The right to exclusive possession is of course a fundamental feature of a lease. Further, the payment of a licence fee on a periodic basis is arguably more consistent with a lease, not a licence. The authorities make it clear that while the use of the descriptor “licence” in a document such as the licence agreement is relevant to the determination of the question of whether the relevant agreement confers a licence or a lease, it is not determinative.[8] That is, substance overrides form.
[8]Radaich v Smith (1959) 101 CLR 209, 214, 217.

A finding that the licence agreement is really an agreement for a lease would be fatal to the plaintiff’s application in this proceeding, as the Court’s jurisdiction to make orders under Order 53 is not enlivened where the occupier of the relevant property is or was a tenant, as opposed to a licensee, a former licensee or a trespasser. Further, given that the jurisdiction is a summary jurisdiction, if further evidence was required in order to determine that question, it would ordinarily be appropriate to dismiss the application and order that the proceeding proceed as if commenced by writ. However, given that the defendants accept that they are required to vacate the property by 31 August 2023, such a course of action is unlikely to be a cost effective use of the parties’ and the Court’s resources. Further, the resolution of the question of the proper characterisation of the licence agreement is fundamentally a matter of the proper construction of the licence agreement.

Given that the issue of whether the licence agreement was a licence or a lease was, unsurprisingly, not raised by either party in their submissions (the defendants being self-represented), but is fundamental to the question of jurisdiction, I requested that the parties attend a further hearing and make further submissions on the issue, and they did.

On the morning of the resumed hearing on 29 May 2023, the plaintiff filed a further affidavit affirmed by Mr Reilly. In that affidavit, Mr Reilly deposed, in summary, as follows:

(a) as to the purpose of the licence agreement and its purported effect;

(b) that at no time did the plaintiff contemplate that the defendants’ right to occupy the property could be transferrable to a third party, or that the defendants would continue to occupy the property in the event that they failed to complete the purchase of the property;

(c) the plaintiff has continued to operate his beef cattle business from the property throughout the period in which the defendants have occupied the property, and has attended the property on a regular basis, often without the express consent of the defendants. Mr Reilly identified 23 dates between 14 December 2022 and 26 May 2023 as being “instances of intended or actual entry without consent”; and

(d) Mr Reilly deposed as follows:

Despite, the terms of clause 2 of the Licence Agreement, the Plaintiff has continued to exercise exclusive control over around 50% of the Property for the purpose of his Business. He has also continued to improve the portion of the Property where the Business takes place by constructing and improving fencing, removing trees and dead wood, improving pasture and other such tasks associated with the Business.
The Plaintiff has engaged a licensed real estate agent, Kerrie Pollock of Rise Real Estate (Ms Pollock), to market the Property for sale. I am instructed that Ms Pollock has a spare key for the residence on the Property and on a number of occasions, she has used that key to gain entrance to the residence to show prospective purchasers around. I am further instructed that on most, if not all of those occasions, the Defendants have failed to return Ms Pollocks telephone calls or text messages advising them of her intended presence on the Property. As a result, they have failed to assert any purported exclusive possession of the Property by rejecting her presence at the Property. Instead, they have consented in accordance with clause 3.2 of the Licence Agreement to her presence at the Property.

Mr Reilly exhibited to his affidavits copies of text messages between the plaintiff and the first defendant between 14 December 2022 and 15 May 2023. These text messages were relied upon to support the plaintiff’s contention that as the plaintiff gained access to the property to attend to his cattle without requiring or seeking the consent of the defendants, the defendants did not have exclusive possession of the property. In the text messages, the plaintiff simply informed the first defendant that he would be attending the property on a certain day or days.

However, there is a material difference between these text messages and the text messages annexed to the second defendant’s affidavit. The relevant text messages were from the period 10 March 2022 and 6 June 2022, that is, before the parties were in dispute. In these text messages, the plaintiff uses words to the effect “Morning Gabby, I might call into Huon today if that is ok with you?” As the text messages exhibited to Mr Reilly’s affidavit all post–date the time at which the plaintiff, through his solicitors, had asserted that the licence agreement had come to an end, I consider that the communications between the parties prior to the dispute better reflect how the parties conducted themselves, although, strictly speaking, the parties’ post-contractual conduct is of limited utility for the purpose of contractual construction.

Given the timing of the filing and service of this affidavit, I asked the second defendant at the further hearing some questions about the way the property was laid out, and how the plaintiff used the property. Essentially, the plaintiff operates his cattle raising business from two paddocks at the rear of the property (totalling approximately 50 acres) which are fenced and locked, and a shed which is locked. He accesses these paddocks via a road through the front of the property, passing through the part of the property occupied by the defendants. He usually asks for permission to attend the property, which was generally, but not always forthcoming.[9] The real estate agent has not shown any potential buyers of the property through the house on the property in the absence of the defendants or either of them.
[9]It was rare for the defendants to refuse to consent to the plaintiff coming onto the property: by way of example, the second defendant said that she did so on one occasion when her children were going to be alone in the house on the property.

The plaintiff submitted that the plaintiff’s use of the property for raising his cattle was inconsistent with the defendants enjoying exclusive possession of the property. Further, it was noted that the defendants had never asserted that the licence agreement was really a lease, noting that the licence agreement was drawn up by the defendants’ solicitors, not the plaintiff.[10]
[10]However, I note that clause 1.2(i) of the licence agreement provides that “[i]n the interpretation of this agreement, no rule of construction applies to the disadvantage of one party on the basis that it put forward this agreement or any part of it.”

The defendants submitted that both the terms of the licence agreement and the conduct of the parties were consistent with the plaintiff having exclusive possession of his portion of the property, and the defendants having exclusive possession of the balance. They submitted that while both parties operated their businesses from the property, the plaintiff and the defendants occupied separate parts of the property. The defendants have no access to the land occupied by the plaintiff’s cattle, as required by bio-security regulations, or to the shed used by the plaintiff, which is locked. Similarly, the plaintiff did not access the part of the property used by the defendants for their construction business, which again is governed by occupational health and safety regulations.

Discussion
The issues

The plaintiff’s position is that the licence agreement is truly a licence agreement, not an agreement for a lease, and the licence was determined when the contract of sale was terminated in October 2022, as there was no longer a contract of sale on foot which would define the period of the licence agreement. Alternatively, if, contrary to the plaintiff’s submissions, the licence agreement remained on foot after the termination of the contract of sale, then the licence agreement has been validly terminated for breach, such breaches having been notified to the defendants’ former solicitors by the 15 March email.

The defendants’ position is that they have exclusive possession of their part of the property, and are entitled to occupy the property until 31 August 2023, being the date scheduled for the final payment under the contract of sale referred to in Annexure B of the licence agreement. Further, they say that the plaintiff has acquiesced in them remaining on the property, taking no steps to remove them from the property for many months after the contract of sale was terminated while negotiations for a new contract of sale were ongoing.[11] Further, they deny that they were in breach of the licence agreement, as the plaintiff told them they could do anything they wanted with the property, and the electric fences have been in place for many months without there having been any complaint by the plaintiff. They would be happy to pay the outstanding rates upon receipt of a tax invoice.
[11]However, the defendants accept that upon the issue of this proceeding, the period of acquiescence came to an end.

Accordingly, the following issues arise in the current application:

(a) whether the licence agreement is truly a licence or a lease;

(b) if the licence agreement confers only a licence on the defendants, whether the licence agreement came to an end when the contract of sale was terminated (as contended for by the plaintiff) or whether the parties agreed that the licence agreement would terminate no later than 31 August 2023 (as contended for by the defendants);

(c) if the licence agreement remains on foot, whether the defendants have breached the licence agreement; and

(d) if the licence agreement remains on foot, whether the defendants would have grounds to seek injunctive relief to restrain the plaintiff from revoking the licence, regardless of whether or not the defendants have breached the licence agreement.

The determination of these issues commences with establishing the proper construction of the licence agreement.

A succinct summary of the principles of contractual construction is to be found in the following passage from the authors of ‘Interpretation and Use of Legal Sources’ (omitting citations):

The interpretation of a written contract involves the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge known to the parties in the situation in which they were at the time of the contract.The object of construing a written contract is to determine and give effect to the presumed common intention of the parties ascertained from the words of the contract. That intention is not determined by considering the parties’ subjective intentions, aspirations or expectations. Instead, the common law adopts an objective approach to contract construction: the common intention is ascertained by reference to what a reasonable person in the position of the parties would understand by the language by which the parties have expressed in their agreement. According to the High Court, this task “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.”[12]

[12]Perry Herzfeld, Thomas Prince and Stephen Tully, Interpretation and Use of Legal Sources — The Laws of Australia (Thomas Reuters, 2013), [25.3.620].

The principles outlined above apply to agreements for leases and licences as they do to any other type of contract.

In the current case, there is some extrinsic evidence regarding the negotiations between the parties leading up to the execution of the licence agreement and the contract of sale, and, as previously noted, the conduct of the parties after the defendants commenced occupying the property. The evidence regarding the conduct of the parties after the commencement of the licence agreement is largely irrelevant to the process of construction of the licence agreement, save and insofar as it sheds light upon the commercial purpose of the licence agreement and the commercial context in which the licence agreement was executed.

A licence or a lease?

If the licence agreement can be truly characterised as granting the defendants a licence rather than a lease, then the Court’s jurisdiction to make an order under Order 53 is properly invoked. Further, the prima face position is that a licence to enter or remain on a property may be revoked by the party granting the licence, even the revocation of the licence would be a breach of contract.[13] In those circumstances, the licensee is usually left to their remedy to claim damages from the licensor, and would not be able to continue to occupy the property, save in circumstances where they could obtain an injunction to restrain a threatened revocation which would also be a breach of contract.[14] In the current case, the revocation of the licence would only be a breach of contract if the defendants’ position that the term of the licence agreement does not expire until 31 August 2023 is accepted.
[13]Cowell v Rosehill Racecourse Co Ltd (1937) 56 CLR 605.
[14]Western Australia v Ward (2002) 213 CLR 1 [505]. See also Murray Robson Wines Pty Ltd v Oakdale Wineries Pty Ltd (1990) NSW Conv R 55-508.

In Swan v Uecker[15], in the context of determining whether an occupier who had booked a short stay apartment via the Airbnb platform was a tenant or licensee, Croft J surveyed the authorities relevant to the determination of this issue. I gratefully adopt the following summary (citations omitted):
[15](2016) 50 VR 74.
Having regard to the matters raised by and the subject of submissions in the three questions posed by the Amended Notice of Appeal and the grounds relied upon in that Notice, it is helpful to preface the treatment of these questions with discussion of the authorities with respect to the characterisation, more generally, of leases and licences.
It is well accepted that, as a matter of law, the test to be applied to distinguish between a lease and a licence is whether or not what is granted is exclusive possession. Thus, in Lewis v Bell, Mahoney JA said:
In the present case, it was accepted, or at least assumed, that the test is that of exclusive possession. That, in my opinion, is correct. It is the test which was adopted by at least the majority of their Honours in Radaich v Smith. That that is, at least initially, the test, was affirmed by Mason J in Goldsworthy Mining Ltd v Federal Commissioner of Taxation.
It is not necessary to analyse the precise nature of the right to exclusive possession which is here in question. It is, for present purposes, sufficient to say that it involves that the lessee have the general right to exclude others, including the lessor, from the premises, subject at .least to such specific provisions for entry as may be particularly provided for in the document: cf the rights reserved in the Glenwood Lumber case.
...
But there are cases in which it is not clear from the terms of the grant, construed in the light of the whole agreement and its context, what it is that is being granted by them. In such cases, it is necessary to determine what is granted by looking at other aspects of the transaction. Thus, a grant may not be in terms of “possession” but of something else. It may be the grant of a right to occupy premises; the right to “carry on a business on” the premises; or, as in the present case, the right “to use” the premises either generally or in a particular way. In such cases, the court must, by the process of construction, determine whether what is granted is mere occupation or use, or is possession in the relevant sense. And where what is granted is possession, it still, in principle, may remain to be decided whether what is granted is exclusive possession. But it is not necessary to consider, in this case, whether there can be a distinction between possession and exclusive possession and (if there can) what distinctions there may be between possession and exclusive possession in this context.
In deciding, in such cases, whether what has been granted is the right to exclusive possession, the court, in the process of construction, has in practice looked, inter alia, to two things: the nature of the rights which, in terms, have been granted; and the intention of the parties.
Party intention in this context is to be determined objectively on the basis of the terms of the particular agreement under consideration and having regard to surrounding circumstances to the extent that is permissible according to the ordinary rules of construction. Reference is made by the Respondents to a number of passages in the judgment of Windeyer J in Radaich v Smith, particularly the following:
Whether when one man is allowed to enter upon the land of another pursuant to a contract he does so as licensee or as tenant must, it has been said, “be in the last resort a question of intention”, per Lord Greene M.R. in Booker v Palmer (1942) 2 All ER 674, at p 676. But intention to do what? – Not to give the transaction one label rather than another. – Not to escape the legal consequences of one relationship by professing that it is another. Whether the transaction creates a lease or a licence depends upon intention, only in the sense that it depends upon the nature of the right which the parties intend the person entering upon the land shall have in relation to the land ...
And how is it to be ascertained whether such an interest in land has been given? By seeing whether the grantee was given a legal right of exclusive possession of the land for a term or from year to year or for a life or lives. If he was, he is a tenant. And he cannot be other than a tenant, because a legal right of exclusive possession is a tenancy and the creation of such a right is a demise.
...
And the proper touchstone still is: did it give the so-called licensee a legal right to the exclusive possession of the premises during the term? The question must of course, be resolved by considering the terms of the deed. But they are to be read in relation to the relevant surrounding circumstances, in particular the nature of the premises; for this deed, like any other instrument, is to be interpreted having regard to its subject matter.[16]
[16]Ibid [30]–[31].
Having regard to the above, I now turn to the terms of the licence agreement itself in order to determine whether the defendants have exclusive possession of that part of the property not occupied by the plaintiff’s cattle herd.

It is common ground that the parties share occupation of the property, with the plaintiff using the back half of the property to raise his cattle, and the defendants occupying the front half of the property (that is, the half with highway access), upon which there is a house (where they live), a construction depot (including a concrete pad constructed by the defendants) and some paddocks from which they run some cattle. Clause 3.2 of the licence agreement provides that the plaintiff may enter the property, or any part of the property, at any time upon giving the licensee prior reasonable notice, for certain specified purposes. The question in this proceeding is whether the plaintiff’s confined (and exclusive) use of the rear paddocks, combined with the right of the plaintiff to have access to the balance of the property (the part of the property occupied by the defendants) means that the defendants do not have exclusive possession of the property.

The licence agreement is somewhat ambiguous as to what land is the subject of the licence agreement. The licence agreement refers to both the “Property” and the “Licensed Premises”. The “Property” is defined by the address and the Certificate of Title reference for the property, and in the balance of the licence agreement, the word is sometimes capitalised, and sometimes not. I shall assume that where the word is not capitalised, the drafter intended that it be capitalised, as there seems to be no reason why a reference to “property” should not be considered to be a reference to the “Property”.

The Licensed Premises is defined by reference to the Plan of Subdivision, a copy of which was annexed to the licence agreement. It seems from the contract of sale that the Property and the Licensed Premises are one and the same, as the particulars to the contract of sale refer to both the Certificate of Title reference and the Plan of Subdivision.

However, Recital A of the licence agreement says that “the Licensor is the registered proprietor of the Property, of which the Licensed Premises form the whole of the Property, excluding the agreed part of [the] land in which the Licensor may continue to occupy to continue his farming enterprise.” This formulation is, with respect, very confusing, and is inconsistent with the definition of “Property” and “Licensed Premises” in the main body of the agreement. While the recitals to the licence agreement may be used as an aid to construe the licence agreement, they do not form part of it. However, the formulation in Recital A does suggest that the parties may have intended to carve out part of the property from the licence agreement, being the part of the property being used for the plaintiff’s cattle business. After all, if the “Licensed Premises” and the “Property” were intended to be one and the same, there would be no need for there to be two separate defined terms in the licence agreement, but there are. While the area being used for the plaintiff’s cattle was not defined in the licence agreement, it is capable of being readily ascertained.

Other clauses of the licence agreement, which refer to the defendants being required to pay the outgoings for and maintain insurance upon the “Licensed Premises”, and permitting the defendants to carry out works and make additions to the “Licensed Premises”[17], support the proposition that the property subject to the licence agreement was intended to be a portion of the property, not the whole of the property. While the licence agreement did not expressly provide for the plaintiff to obtain the defendants’ consent before coming onto the property, it did limit the purposes for which he could do so, and in any event, the fact that the licence agreement permits the plaintiff to have access to the property for certain purposes is not fatal to any claim that the licence agreement is truly a lease.[18]
[17]Noting that what is permitted by clause 6.2(i) is inconsistent with the definition of “Works” referred to earlier in these reasons.
[18]Radaich v Smith (1959) 101 CLR 209, 222.

I also agree that the operation of a construction depot on the property was inconsistent with the plaintiff having free access to any part of the property, and the clause of the agreement that gave the defendants wide latitude to carry out works at the property is more consistent with a lease than a licence. One might expect that the entitlement of the defendants to carry out works on the property to facilitate the operation of their business to carry with it in an intention on the part of the parties that the defendants would have greater security of tenure than that provided by a mere licence. Further, the terms of the licence for the payment of a periodic “licence fee”, insurance, and other outgoings for the property look a lot like terms that would ordinarily be included in a lease. Accordingly, if the definitions of the “Property” and the “Licensed Premises” in the licence agreement were not the same, or if there was no reference to the ”Property” in the licence agreement, I doubt that I would have had any great difficulty in forming the conclusion that the better view is that the licence agreement is truly a lease, albeit a lease of part of the property.

However, it is impossible to reconcile those parts of the licence agreement which support that contention with the express definitions of “Property” and “Licensed Premises” in clause 1 of the licence agreement, and the diagram in Annexure A to the licence agreement, which shows the whole of the property. Those definitions, even if included by mistake (and there is no evidence of that) are in my view fatal to the contention that the defendants have exclusive possession of a defined part of the property, as it is common ground that both the plaintiff and the defendants use the property as a whole for their businesses.

The carve out foreshadowed by Recital A is not reflected in the definition of “Licensed Premises” in the licence agreement. Further, the balance of the licence agreement is inconsistent with there being such a carve out. Despite the different ways in which the “Property” and the “Licensed Premises” were defined in the licence agreement, it is tolerably clear that they both refer to the same parcel of land. Further, the licence agreement defines “Works” as being any works associated with the “Property”, that is, the licence agreement permits the defendants to carry out works anywhere upon the property, which by definition includes the part of the property used by the plaintiff, provided of course that those works do not impede the plaintiff’s cattle business. While I doubt that the parties actually contemplated the defendants carrying out works on the part of the property occupied by the plaintiff’s cattle, that term is inconsistent with the defendants having exclusive possession of part of the property, and the plaintiff having exclusive possession of the other part of the property, coupled with a mere right of access to the defendants’ part of the property.

Of course, even if the definitions of the “Property” and the “Licensed Premises” were framed in such a way as to delineate the parts of the property which were to be used by the plaintiff and which were to be used by the defendants, that would not necessarily provide conclusive support for the proposition that the licence agreement is truly a lease. After all, the plaintiff did have a right to access the property upon certain conditions, and for certain purposes, and did so. Further, while the use of the terms “Licence Agreement”, “Licensed Premises” and “Licence Fee” in the licence agreement are not conclusive, they are relevant to the task of contractual construction as being reflective of the parties’ intentions, there being no suggestion that the licence agreement documents a sham transaction.[19] Further, the nature of the property, being a large rural property, is not such that it should necessarily be found that the parties must have intended that the defendants would have exclusive possession of the property, or part of the property.[20]
[19]Chaka Holdings Pty Ltd v Sunsim Pty Ltd (1987) 10 BPR 97837, 18, 175 where Young J said “…the fact that the parties have called the document a licence agreement is to be given great weight.”
[20]Cf Radaich v Smith (1989) 101 CLR 209, 223, where the fact that the “licensee” was operating a milk bar from the premises lent support to the Court’s conclusion that she had exclusive possession of the premises.

However, while there are terms in the licence agreement and matters relevant to the commercial context which point both ways, given that the “Property” and the “Licensed Premises” are defined in the licence agreement as being one and the same, I cannot find that the defendants have exclusive possession of the part of the property actually occupied by them. Accordingly, the jurisdiction to make an order for possession in favour of the plaintiff is enlivened. The question remains as to whether it should be exercised.

The term of the licence agreement

As for the question of the duration of the licence agreement, and whether it was inextricably linked to the fate of the contract of sale, there are a number of difficulties with the licence agreement from the plaintiff’s perspective. The main difficulty is that, while it is tolerably clear that the purpose of the licence agreement is to provide the defendants with a right of occupancy until settlement of the sale of the property to them, the licence agreement is silent as to what would occur should any contract of sale between the parties subsequent to their entry into the licence agreement be terminated for any reason, which is what in fact happened. Apart from the unhelpfully vague definition of “Termination Date” in the definition clause, there is no other reference to a termination date in the agreement.

Accordingly, the plaintiff in this proceeding is in a less favourable position than the applicant in Williams[21], which was also a case where the contract of sale had fallen over and the registered proprietor of the property had sought to revoke a licence agreement with the prospective purchaser. In Williams[22] not only was there a clause of the agreement which specified that the licensor may terminate the licence at any time after the settlement date of the contract of sale had passed upon giving two days written notice, there was also a further clause which provided that in the event that the licence was terminated other than by the settlement of the contract of sale, the licensee was obliged to pay the costs and expenses associated with restoring the premises to their original condition. It was this clause which Nettle J found to be of “greatest significance”, going on to say:

It indicates to me an intention that the licence stand separate and apart from the contract of sale, and thus be capable of termination otherwise than by completion or rescission of the contract of sale. On a broader view of the matter, too, it is understandable that the mechanism of the licence agreement was invoked to enable ejectment of the licensee, untrammelled by considerations which might govern the recovery of land from a purchaser who had entered into possession under an uncompleted contract of sale.[23]

[21][2002] VSC 343.

[22]Ibid.

[23]Ibid [18].

In contrast, there is nothing in the licence agreement which contemplates the termination of the licence agreement other than upon the settlement of a contract of sale, or, at least arguably, for breach.

Further, it is important to note that at the time the parties in this proceeding entered into the licence agreement, there was no contract of sale on foot. Indeed, negotiations regarding the terms of the contract of sale did not commence until about six months after the defendants took possession of the property pursuant to the licence agreement. The terms of contract of sale were ultimately quite different to the Terms of Purchase in Annexure B. It is not clear why that is the case, and the difference is not particularly relevant for present purposes, save that the discrepancy further undermines the plaintiff’s contention that the term of the licence agreement was inextricably linked with the contract of sale, the latter not being in existence at the time the parties executed the licence agreement, and where the contract of sale ultimately executed by the parties was in quite different terms to what was contemplated by the licence agreement.

As discussed earlier in these reasons, the process of contractual construction involves ascertaining the mutual intention of the parties. That is a somewhat artificial exercise in cases such as the present, where it is tolerably clear from the terms of the licence agreement that the parties completely failed to turn their minds to what would occur in the event that the contract of sale failed to result in the transfer of the property to the defendants. This is particularly unfortunate in circumstances where the contract of sale ultimately entered into by the parties was not unconditional, being subject to the defendants obtaining suitable finance, and in circumstances where the defendants were permitted by the licence agreement to carry out extensive (and no doubt expensive) works on the property to accommodate the needs of their business.

Essentially, in determining whether, and if so when, the plaintiff is currently entitled to possession of the property, I am required to determine whether the parties intended (or an intention can be imputed to the parties) that the licence agreement would terminate:

(a) upon the termination of the contract sale, as contended for by the plaintiff;

(b) at the end of August 2023, being the contemplated date of settlement for a contract of sale at the time that the parties entered into the licence agreement; or

(c) some other date?

When determining this issue, it is important to consider the nature of a licence. Unlike a lease, it creates no proprietary interest in the property concerned, and is afforded none of the statutory and equitable protections afforded to lease holders (such as relief against forfeiture), or at least certain classes of lease holders. Essentially, a licence confers permission on a person to do something which would otherwise be unlawful. In circumstances where the licence was granted in contemplation of, and pending the settlement of a contract of sale, it would be unreasonable in the extreme to attribute an intention to the parties to the effect that, if the sale didn’t proceed, the defendants could stay there indefinitely, subject to the payment of a modest licence fee.

However, I consider that the plaintiff’s submission to the effect that the duration of the licence was in some way tethered to the contract of sale (being the actual contract of sale entered into by the parties, as opposed to any contract of sale) is incorrect. At the time the licence agreement was entered into, the contract of sale did not exist. This further distinguishes the facts of this case from the facts in Williams.[24] Indeed, the terms of the contract of sale were quite different (in terms of the payment schedule) than that contemplated by the licence agreement. Notwithstanding the fact that the contract of sale was terminated, it seems to me that there was nothing to stop the parties from entering into a further contract of sale, on the terms set out in the licence agreement or otherwise at any time prior to August 2023, and indeed, there were further negotiations to that end in January and February 2023. In my view, in the absence of any express term of the licence agreement permitting the licence agreement to be terminated by the parties, or either of them, at or about or shortly after the contract of sale contemplated by the licence agreement, or any other contract of sale, came to an end, the licence agreement remained on foot as at October 2022.
[24]Ibid.

Finally, I do not accept that it could be said that the licence agreement was “frustrated” by the failure of the defendants to complete the purchase of the property. Certainly, what has happened was not what the parties intended, or expected. However, the failure to complete the purchase does not preclude the parties from complying with their obligations under the licence agreement. Both parties continue to benefit from the licence agreement in some respects, and be disadvantaged by it in other respects. However, just because the licence agreement might be seen by the plaintiff in hindsight to be a poor commercial bargain does not mean that its performance has been frustrated.

Accordingly, having determined that the licence agreement did not come to an end upon the termination of the contract of sale, the real issue is the date when the licence agreement did (or should) come to an end. Is it 31 August 2023 (or some other date in August), as contended for by the defendants? Or was it 9 February 2023, when the plaintiff’s solicitors informed the defendants’ solicitor that the plaintiff did not wish to proceed with the sale of the property?

It seems to me that it is at least arguable that on 9 February 2023, when the plaintiff conveyed to the defendants that he did not intend to sell the property to the defendants, the licence agreement did come to an end, because there was no realistic prospect of the parties entering into a contract of sale with a settlement date on or before 31 August 2023. Indeed, in her affidavit, the second defendant said that it was evident to the defendants that under no circumstances would the plaintiff sell the property to them in May 2023 when they were served with the Court documents in this proceeding. It may well be that the relationship between the parties has soured to such an extent that it is highly unlikely that a sale would occur. But is it impossible? The plaintiff may not wish to sell the property to the defendants on the terms provided for by the contract of sale, or on the terms being discussed in January and February, but what if the defendants increased their offer price by a substantial amount? Or tendered cash, or settlement within 7 days? Or offered him a licence to continue using part of the property for his cattle business at a peppercorn rent for a lengthy period of time?

None of the above may be likely, or even feasible, but I do not consider, having found that the termination of the contract of sale did not bring the licence agreement to an end, that it would be impossible for the parties to enter into a mutually agreeable contract of sale for the purchase of the property by the defendants, with a settlement date on or before 31 August 2023, such that the licence agreement has been irrevocably frustrated by the termination of the contract of sale.

However, in some respects the discussion above is somewhat academic, in that it is settled law that a licensor may revoke a licence to occupy property, even when doing so will amount to a breach of contract.[25]
[25]Cowell v Rosehill Racecourse Co Ltd (1937) 56 CLR 605. See also Porter v Hannah Builders Pty Ltd [1969] VR 673, 678.

However, as discussed later in these reasons, there are circumstances in which a licensee may be able to obtain injunctive relief to restrain an actual or threatened revocation of a licence, where that revocation is, or arguably is, a breach of contract.

Did the defendants breach the licence agreement?

The plaintiff contends that the defendants have breached their obligations under the licence agreement. Setting aside for the moment the issue of the reimbursement of rates, in the 15 March email, the plaintiff’s solicitors make a number of complaints about the state of the property, including the construction of an electric fence.

In the 15 March email, the plaintiff’s solicitor said that the electric fence was constructed without the plaintiff’s consent, and impedes the movement of his cattle. The defendants say that the plaintiff knew about the electric fence, made no protest at the time it was constructed, and the fence does not impede the plaintiff’s cattle raising operations.

The difficulty facing the plaintiff with respect to the electric fence (and other works carried out by the defendants at the property) is that clause 6.2 of the licence agreement provides that the plaintiff will “provide the [defendants] with the right to undertake any Works and make any alterations or additions to the [property].” “Works” are defined as “any works associated with improving, repairing, removing or altering any part of the Property including but not limited to any renovation works.” While clause 6.2(d) of the licence agreement provides that the defendants must indemnify the plaintiff with respect to the Works, and clause 6.2(e) requires the defendants to indemnify the plaintiff for any negligence on their part which causes loss or damage to the plaintiff’s property (including his cattle), there is no “make good” clause in the licence agreement, and the licence agreement provided the defendants with a wide degree of latitude to do as they wished with the property, no doubt in contemplation of the property being transferred to the defendants at the end of the licence agreement.

While I agree that the term of the licence agreement which permits the plaintiff continuing to operate his cattle business on the property probably carries with it an implied obligation not to interfere with that business, the question of whether the construction of the electric fence impedes the plaintiff’s cattle business is a factual dispute which cannot be resolved in the context of the current application. Given that, and the wide latitude given to the defendants to carry out works under the licence agreement, it seems to me that there is a real dispute as to whether the 15 March email is a valid notice for the purpose of clause 7 of the licence agreement. That said, asking the defendants to remedy water damage, and to cease carrying out further works at the property was probably a reasonable request within the meaning of clause 6.1(b) of the licence agreement. But having the grounds for making a reasonable request does not of itself mean that the defendants have committed an actionable breach of the licence agreement.

Another difficulty for the plaintiff in asserting a right to terminate the licence agreement for breach is that clause 7.1 of the licence agreement does not specify the consequences of failing to rectify any default, although the heading “Termination” does indicate that the consequence of failing to rectify any breach could well be termination of the licence agreement.[26] However, I am not satisfied that, apart from the failure to pay rates, that the defendants have actually breached the licence agreement, at least for the purposes of granting relief on a summary basis. I also have some concerns about the form of the breach notice (the 15 March email), as it fails to make any request that the breaches (if they were in fact breaches) be remedied within 14 days, or warn of the consequences of failing to remedy the alleged breaches.
[26]But I note clause 1.2 (c ), which states ‘Headings are for convenience only, should not be used to construe the meaning of any provision and do not form part of this agreement’.

As for the issue of the non-payment of rates, it seems to me to have been not unreasonable for the defendants to require an invoice from the plaintiff prior to making payment, although given that they were provided with a rates notice their conduct does seem a little petty. However, there could well be an argument about what amounts to a “notice” for the purpose of clause 5.1 of the licence agreement, which obliges the defendants to pay or reimburse to the plaintiff within 14 days of receipt of notice “all associated outgoings” for the property “from the Commencement Date to and including the settlement date of a contract incorporating Terms of Purchase”.

Of course, the question of whether a licensor is permitted to terminate a licence for breach is somewhat academic, given the clear line of authority which provides that a licence is revocable at any time, even if the revocation is of itself a breach of contract.

If the licence agreement was indeed a lease, then if the plaintiff had terminated the lease on the basis of the defendants’ failure to reimburse the plaintiff for the rates, then the defendants would have been in a strong position to rely upon the equitable doctrine of relief against forfeiture.

Given that the licence agreement is not a lease, it is not necessary for me to canvass the circumstances in which a tenant may obtain relief against forfeiture, given that relief against forfeiture was not traditionally available to licensees. However, the position has altered somewhat since the decision of the High Court in Legione v Hateley.[27] The current position was summarised by Young J of the New South Wales Supreme Court in Chaka Holdings Pty Ltd v Sunsim Pty Ltd[28] as follows:

I turn now to the question as to whether relief against forfeiture can be given in respect of a contractual licence. It would seem to me that as a result of decisions such as Legione v Hateley (1983) 152 CLR 406 I can do this though it would only be in exceptional cases that I would in fact do it, those cases involving situations where there was a trivial breach but great prejudice to the person seeking relief: see eg at 449 per Mason and Deane JJ: see also Shiloh Spinners Ltd v Harding [1973] AC 691. Not only does the making of such an order seem open as a matter of principle, but, in this court, Hodgson J has already held in Proctor v Milton (1987) NSW Conv R 55-321 at 56,965 that this court can give such relief against forfeiture. His Honour said at that page that “relief will generally be granted only where the conduct of the party effecting the forfeiture can be described as unconscionable”.

[27](1983) 152 CLR 406.

[28](1987) 10 BPR 97837, 18, 171. See also Macarthur v Stern (1986) 5 NSWLR 538, 554 and Proctor v Milton (1987) NSW Conv R 55-321.

Accordingly, if the only breach the plaintiff could rely upon was the non-payment of rates, which is the only real breach that could be established by the evidence in this application, it seems to me to be at least arguable that, at least as at 15 March 2023, the prejudice to the defendants of an early termination of the licence agreement would have been out of all proportion to the seriousness of the breach.

The availability of injunctive relief

The potential availability to the defendants of a remedy akin to relief against forfeiture sits somewhat uncomfortably with the general principle that a licence is revocable at the discretion of the licensor, even in circumstances where that revocation would be a breach of contract, with the only remedy available to the licensees being a claim for damages.

Ultimately, the question of whether the plaintiff is entitled to terminate the licence prior to the expiration of the term of the licence agreement for the purposes of the current application is tied up with the question of whether the defendants would or may be entitled to an interlocutory injunction restraining the plaintiff from revoking the licence conferred under the licence agreement. The plaintiff noted that the defendants have taken no such action. That may be so, but, as the plaintiff is seeking possession of the property on a summary basis, I consider that I am obliged to consider any defence the defendants may have, even those defences not expressly raised by them, particularly given the defendants are self-represented.

Essentially, in order for the defendants to be granted injunctive relief, they would need to establish a good arguable case that the revocation of the licence was a breach of contract; that damages would be an inadequate remedy for the breach; and that the balance of convenience favours granting injunctive relief.[29]
[29]Murray Robson Wines Pty Ltd v Oakdale Vineyards Pty Ltd (1990) NSW Conv R 55-508.

Applying those principles to the facts and circumstances of the current case, it could be said that the defendants have a good arguable case that by revoking or threatening to revoke the licence before 31 August 2023, the plaintiff is in breach of the licence agreement. However, notwithstanding the inconvenience to the defendants of having to vacate the property earlier than they planned, it could not be said that the damages would not be an adequate remedy. If the plaintiff’s revocation of the licence is indeed a breach of the licence agreement, then the defendants may have a claim for the additional costs incurred by them as a consequence of being forced to vacate the property prematurely. But that is an issue for another day.

As for the balance of convenience, given that 31 August 2023 is less than three months away, there would be limited utility in granting an injunction for such a short period of time.[30] The position may have been different had the defendants applied for an injunction at the time the plaintiff first asserted that the licence agreement was at an end. However, given that there is no contract of sale on foot, and the presence of the defendants on the property is impeding the ability of the plaintiff to sell the property, I consider that the balance of convenience would favour allowing the plaintiff to take possession of the property.
[30]Ibid, where Young J noted that in the case of leases where the claimant only had a relatively short time left before the end of the lease, equity would only grant an injunction in special circumstances, such as in cases involving the hire of special purpose venues, where damages would not be an adequate remedy for the tenant.

To summarise my conclusions:

(a) the licence agreement is a licence, not a lease, as on the proper construction of the licence agreement, the licence agreement did not confer exclusive possession of the property upon the defendants;

(b) the term of the licence agreement extended to the later of 31 August 2023 or the date of settlement of any contract of sale between the plaintiff and defendants;

(c) the only breach of licence agreement established by the evidence in this application is the defendants’ failure to reimburse the plaintiff for the rates, which would likely be considered to be a relatively trivial breach not of itself justifying termination of the licence agreement;

(d) however, as the licensor is permitted to revoke the licence granted pursuant to the licence agreement, even where such revocation would be a breach of contract, in order to prevent the plaintiff from taking possession of the property, the defendants would need to establish that they had a real prospect of obtaining an interlocutory injunction;

(e) the defendants would be unlikely to be in a position to obtain injunctive relief, as damages would be an adequate remedy for any breach by the plaintiff, and given the relatively short period of time between the hearing of this application and the last date for the expiry of the licence agreement; and

(f) however, the particular circumstances of this case are relevant to the exercise of my discretion as to the length and terms of any stay I would impose upon any order made pursuant to Order 53 of the Rules, and may well be relevant to the question of costs.

Accordingly, I conclude that the defendants do not have any viable defences to the plaintiff’s claim. I have reached that conclusion after a reasonably exhaustive analysis of the relevant authorities, the licence agreement and the surrounding circumstances. That this was necessary does raise the question of whether this matter is appropriate for summary disposition, given that the summary jurisdiction should be exercised with great care, and where there is no question to be tried. However, in the particular circumstances of this case, I formed the view that there was unlikely to be any evidence which would emerge which would alter the final result, and further, the obligations imposed upon me by the Civil Procedure Act 2010 (Vic) to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute favoured the prompt resolution of the somewhat complex issues which emerged from a poorly drafted licence agreement.

I will hear further from the parties on the form of order, including the length of any stay granted to enable the defendants to vacate the property in an orderly fashion, and the question of costs. My preliminary view is that the defendants should have no more than 30 days to vacate the property, but not significantly less than that either, and that I should defer hearing submissions on the question of costs until after the parties have had an opportunity to consider these reasons.

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1.	Property:	Mintarra, Part 2581 Murray Valley Highway, Huon 3695
2.	Vendor:	Andrew Rial
3.	Purchaser:	James and Gabrielle Gray and or nominee
4.	Title Particulars:	Vol 9195 Fol 825 Lot 1 on Plan of Subdivision 120257
5.	Agreed Purchase Price:	$2,400,000 inclusive of GST (if applicable)
6.	Subject to Finance:	Yes, to the satisfaction of the Purchaser
7.	Terms:	3 payments: 1) Deposit payable on day of signing the contract of sale; 2) August 2022; and 3) To be determined and agreed upon by both parties in writing, no later than August 2023.

[2023] VSC 302

6 June 2023 (revised 7 June 2023)