SMS Rental (WA) Pty Ltd v Cahma Life Nominees Pty Ltd - [2009] WASC 359

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: SMS RENTAL (WA) PTY LTD -v- CAHMA LIFE NOMINEES PTY LTD [2009] WASC 359

CORAM: MURPHY J

HEARD: 27 NOVEMBER 2009

DELIVERED : 30 NOVEMBER 2009

FILE NO/S: CIV 2783 of 2009

BETWEEN: SMS RENTAL (WA) PTY LTD (ACN 127 583 933)
Plaintiff
AND
CAHMA LIFE NOMINEES PTY LTD (ACN 108 875 001)
Defendant

Catchwords:

Interlocutory injunction - Purported sublease - Tenancy in common in equity - Contractual licence - Implied negative covenant

Legislation:

Trade Practices Act 1974 (Cth), s 52, s 87

Result:

Interlocutory injunction granted in limited terms

Category: B

Representation:

Counsel:

Plaintiff: Mr G D Cobby
Defendant: Mr D S Ellis

Solicitors:

Plaintiff: Brickhills
Defendant: Lawfield Legal Practice

Case(s) referred to in judgment(s):

Ashton v Australian Cruising Yacht Co Pty Ltd [2005] WASC 192
Burrell v Duncan [1957] St R Qd 52
Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592
Evans Marshall & Co Ltd v Bertola SA [1973] 1 WLR 349
Federal Commissioner of Taxation v G J Coles & Co Ltd (No 2) (1974) 4 ALR 163
G J Coles & Co Ltd v Federal Commissioner of Taxation (1975) 132 CLR 242
Heavener v Loomes (1924) 34 CLR 306
Inn Leisure Industries Pty Ltd v DF McCloy Pty Ltd (No 1) (1991) 100 ALR 447
Milmo v Carreras [1946] KB 306
Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] HCA 30; (1998) 195 CLR 1
Playgoers' Co-operative Theatres Ltd v Workers Educational Association (NSW) (1955) 72 WN (NSW) 374
R v Macfarlane; Ex parte O'Flanagan & O'Kelly (1923) 32 CLR 518
Soiland Pty Ltd v Ridgepoint Corporation Pty Ltd [2005] WASC 124
Streatfield v Winchcombe Carson Trustee Co (Canberra) Ltd [1981] 1 NSWLR 519
The State of Western Australia v Ward [2002] HCA 28; (2002) 213 CLR 1
Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110

MURPHY J:

Introduction

This is an application for an injunction by the plaintiff to restrain the defendant from evicting or attempting to remove the plaintiff from its occupancy of certain property located at Pinnacles Street, Wedgefield, Western Australia being the whole of the land comprised within certificate of title vol 491 folio 93A (the property).
The property is owned by Purcell Nominees Pty Ltd. Historically, the property was physically divided by a fence into two separate areas. One was an area which Coates Hire used to occupy, and which Coates Hire vacated in late 2006. The parties have referred to this as the 'ex‑Coates Hire yard'. The other part of the property had been occupied by the defendant since 2002, and is referred to as the 'Dieselmech yard'. Dieselmech is the trading name of the defendant.
On 11 September 2007 the defendant executed an agreement to lease the area of the property known as the Dieselmech yard, and another agreement to lease the area of the property known as the ex‑Coates Hire yard. The owner of the property executed both of those agreements to lease on 23 February 2008. Accordingly, since that time at least, the defendant has been the lessee, under the agreements to lease, of the whole of the property.
This dispute concerns whether the plaintiff too has an entitlement to possess and/or occupy the whole of the property. The background to the dispute is contained in the affidavits filed by the plaintiff and defendant. Having regard to the interlocutory nature of these proceedings it is inappropriate to attempt to resolve any factual issues on the affidavits.

Background

In July 2007 Mr Sweeney on behalf of the plaintiff says he was looking to rent premises in Port Hedland. He says that on or about 24 July 2007 he met with Mr Sweetman of the defendant at the Dieselmech yard. Mr Sweeney says that there was an oral agreement that day to the effect that, with the owner's approval, Mr Sweeney's company (ie the plaintiff - although then not incorporated) would lease the whole of the property together with the defendant, so that as long as the defendant occupied the property, the plaintiff would have 'a 50% interest in the lease' on the basis that the two companies would share the rent and outgoings and share the workshops and offices on the whole of the property. Mr Sweeney says that Mr Sweetman told him of the rent the owner 'would be charging' in terms of an amount per square metre, but he cannot recall the details. Mr Sweeney says that Mr Sweetman then telephoned the owner and spoke to him about the proposals. Mr Sweetman told Mr Sweeney that the owner had said that he understood that the defendant could not afford to pay rent for both yards, and that the owner had no problems with the defendant giving the plaintiff a 50% interest in the lease, and that the lease would contain options. The plaintiff refers to this as the 'July 2007 agreement'.
Mr Sweetman on behalf of the defendant denies certain material parts of this conversation. Mr Sweetman says that during 2007 the defendant had its business up for sale. He says that Mr Sweeney contacted him around August 2007 and said that he knew that the business was for sale. Mr Sweetman says that following a telephone conversation, Mr Sweeney flew to Port Hedland and looked at the premises. Mr Sweetman says that at that stage, he had intended to release his interest in the Dieselmech yard. Mr Sweetman says that at the meeting with the plaintiff on 18 August 2007 there was some discussion about a lease of the property with a sharing of rent and the sharing of workshops, accommodation and offices. He said that he told Mr Sweeney that he had the idea that there should be a 'one‑stop shop' where the plaintiff could set out equipment for hire and if the plaintiff liked the look of the business, it could buy it.
According to the defendant's evidence, Mr and Ms Sweetman on behalf of the defendant then visited Mr and Ms Sweeney on behalf of the plaintiff in Perth. The defendant says there was a discussion about the possible sale of the Dieselmech business by the defendant to the plaintiff. The defendant also says that there was a discussion about a lease of both parts of the property on the basis that the plaintiff would rent 50% of both properties and all outgoings would be shared 50% each.
The defendant says that after that meeting, it sought advice from its accountant who advised that, in effect, the defendant should avoid entering into arrangements which could be construed as setting up a partnership with the plaintiff. The accountant advised the defendant that any lease should be on the basis that the defendant held the main lease of the property, and the defendant should enter a sublease with the plaintiff.
On 29 August 2007 Ms Sweetman of the defendant emailed Mr Sweeney and advised in effect that the accountant said that the only way to proceed was by way of a sublease document so that the plaintiff and defendant could still trade as separate entities and not be regarded as a partnership. Around this time the defendant was in contact with the owner's agent regarding the terms of a lease and by 11 September 2007 it appears that the material terms had been agreed with the owner.
On 11 September 2007 Ms Sweetman on behalf of the defendant sent an email to Mr Sweeney on behalf of the plaintiff asking which entity would hold the sublease.
On 11 September 2007 Ms Sweetman on behalf of the defendant sent a facsimile to Mr Sweeney on behalf of the plaintiff attaching four standard form REIWA lease agreements. Two were headleases. One was for the Dieselmech yard and the other was for the ex-Coates Hire yard. In each the defendant was described as lessee, the owner as lessor. Mr and Ms Sweetman signed each as guarantors. The third and fourth documents were each described as a 'sublease'. One was in respect of 50% of the property known as the ex‑Coates Hire yard and the other was in respect of 50% of the property known as the Dieselmech yard. In both these documents the defendant was described as the lessor. The name of the lessee had not been inserted, although there was a reference to the lessee trading as SMS Rental (a business name of another entity associated with Mr and Ms Sweeney). The provisions for guarantees in the 'subleases' were left blank. All the documents provided for a one year term, with two options of consecutive three year periods. The covering facsimile asked Mr Sweeney to check the documents to make sure that nothing had been forgotten. It concluded by saying that once Mr Sweeney was happy with the documents, the 'appropriate ones' would be on‑forwarded to the owner's agent.
On 17 September 2007 the plaintiff was incorporated.
By email dated 19 September 2007, Mr Sweeney on behalf of the plaintiff informed Ms Sweetman on behalf of the defendant that the plaintiff's solicitors had advised that there should be changes to the lease. The email enclosed a letter from Hewett & Lovitt, solicitors, dated 18 September 2007. The solicitors advised numerous changes and clarifications to the proposed documentation, including advice to the effect that the sublease should really only deal with the land and buildings that the plaintiff was to have exclusive use of and, if the intention were to share access to the same buildings, then that should be dealt with by a separate licence, and not in the sublease.
Mr Sweeney says that he did not receive a response to his email of 19 September 2007. He said he regarded the matters raised by his solicitors 'as mechanical matters' and in late September 2007 he completed the details of the newly incorporated plaintiff as lessee on both draft sublease documents, signed them and posted them to the defendant. (I will refer to these documents said to have been signed by Mr Sweeney as the 'September Subleases'.) The plaintiff has not been able to locate a copy of the September Subleases. The defendant denies having received them. For the purposes of this application, on the basis of Mr Sweeney's sworn evidence, and its subsequent conduct including the notice of exercise of option referred to below, I accept that there is a serious issue to be tried with respect to the execution and return of the September Subleases by the plaintiff. The defendant's counsel acknowledged that I should proceed on that basis.
There is evidence from the defendant that on 5 October 2007 Ms Sweetman on behalf of the defendant sent a facsimile to Ms Sweeney on behalf of the plaintiff. The fax enclosed a memorandum setting out the defendant's response to various queries or issues in relation to the operation of the proposed lease and subleases. In relation to the latter, the memorandum attached a copy of the conditions that the defendant said would need to be attached to the 'lease' between the defendant and the plaintiff. It went on to say that once the plaintiff was happy, the defendant would send the 'lease' between the defendant and the plaintiff through to the plaintiff for Mr and Ms Sweetman to sign.
By email dated 29 October 2007 Ms Sweetman on behalf of the defendant advised the plaintiff of various practical matters which related to the 'lease' and 'sublease' of the property. Ms Sweetman also said that she would fax through to the plaintiff the 'leases' between the defendant and the plaintiff and requested that the plaintiff sign them and send them back in the mail. Ms Sweetman also advised the plaintiff that she would send to the plaintiff a copy of the original lease once she had received it back from the real estate agents. Ms Sweetman of the defendant says that she faxed further versions of the subleases on 29 October 2007, but the plaintiff denies receiving the documents.
The plaintiff says that it began occupying the property with the defendant in October 2007, and that the fence between the Dieselmech yard and ex‑Coates Hire yard was removed at around that time. The defendant on the other hand says that the plaintiff occupied the property from about December 2007, and that the fence was removed in about January 2008.
The plaintiff commenced paying rent for the ex‑Coates Hire yard in October 2007 and commenced paying rent for the Dieselmech yard in December 2007.
On 21 December 2007 Ms Sweetman on behalf of the defendant says that she had a telephone conversation with Ms Sweeney on behalf of the plaintiff in which Ms Sweeney raised some queries regarding the special conditions. She then received, via facsimile from the plaintiff, certain pages from the lease documentation with comments, including comments indicating that certain terms were not acceptable.
Mr Sweeney of the plaintiff says that any communication between Ms Sweeney and Ms Sweetman occurred after Mr Sweeney had signed and returned the September Subleases, and that he was the officer of the plaintiff responsible for decision‑making.
According to Ms Sweetman of the defendant, she telephoned Ms Sweeney of the plaintiff in late January or early February 2008 enquiring whether the 'leases' had been signed. She says that Ms Sweeney told her that Mr Sweeney had signed the 'leases' and she thought that they had been sent back to the defendant.
The plaintiff says that in or about April 2008, it spent over $100,000 to transport and construct, refit and renovate accommodation units on the property. The units were located on the Dieselmech yard. The plaintiff also says that it paid over $5,000 by way of a 50% contribution to redesigning the sewerage system to allow sewerage access to all the accommodation units within the Dieselmech yard.
On 30 June 2008 the plaintiff instructed its accountant Mr Izzard to send a notice of exercise of option with respect to the September Subleases. By letter dated 30 June 2008, a notice was sent by the plaintiff's accountant to the owner's agent, the owner and the defendant. The form of the notice was addressed to the defendant, and described the defendant as the landlord and the plaintiff as the tenant. The covering letter requested the defendant to 'do all which is necessary as the Lessee of the property and to also inform the owners and property agent as to the notices'. Ms Sweetman says she received the notice on 1 July 2008, but did nothing about it at that time.
According to Ms Sweetman of the defendant, there was a meeting between the plaintiff and the defendant on 24 May 2008. She said minutes of the meeting showed that practical matters regarding the sharing of the workshop and yard space and accommodation on the property were addressed. The minutes indicate that the defendant alleged that the plaintiff was slow in paying invoices and the plaintiff alleged that some invoices were incorrect and required adjustment. The plaintiff in effect disputes Ms Sweetman's evidence.
According to Ms Sweetman, on 11 July 2008 there was a meeting between representatives of the plaintiff and representatives of the defendant. The parties expressed discontent at the way the relationship between them was working. Mr Izzard said that the plaintiff wanted to take up the option in the lease to renew it for the next three years. The notes of the meeting, recorded by Ms Sweetman, concluded by saying that the parties agreed that there would be a period of six weeks to see if the issue at hand and relationships could be repaired and that the next meeting would be held on 22 August 2008.
The plaintiff says, on the other hand, that two meetings were scheduled, one for 14 August and the other for 18 August, and that both were cancelled by the defendant.
On 24 July 2008, Ms Sweetman of the defendant sent an email to the agent of the owner, advising 'that we would like to take up the next lease renewal option of a further three years for the above two properties that we are currently leasing which would take us through until 2011'. The email was acknowledged by the owner's agent.
On 29 January 2009 Mr Sweetman of the defendant sent an email to Mr Sweeney of the plaintiff. The email said that the defendant had issues concerning accounts outstanding and a dispute regarding the wash‑pad. The email stated that the defendant understood that the plaintiff had no interest in purchasing the defendant and that in that case, there would need to be mutual agreement on the split of the blocks to allow both parties to operate without restriction. The email suggested that a meeting be held. On 31 January 2009 Mr Sweetman on behalf of the defendant sent Mr Sweeney on behalf of the plaintiff a further email indicating that he would be available for a meeting on 4 February 2009. The email referred to the resolution of disputes and, inter alia, splitting the property on a 50/50 basis with the same main road frontage each.
In April 2009 Mr Sweeney telephoned Mr Purcell of the owner, who confirmed that the defendant had renewed the headleases.
On 30 May 2009 a meeting was held between the plaintiff and the defendant. The plaintiff says that there was an agreement to build a new permanent office for the plaintiff to use and that the defendant would meet the costs of the new office, except for freight, and that the plaintiff would rent it from the defendant. Other factors relating to the joint use of the property were also said to be discussed. The defendant denies that there was any agreement to meet the costs of the new office. The defendant says that it agreed to the location of the office, subject to the plaintiff obtaining local government approval, and seeing a site plan.
On 16 July 2009, according to Mr Sweetman of the defendant, Mr Frank Sweeney on behalf of the plaintiff placed partitioning in the office and disconnected and moved the defendant's office equipment to one side.
On 20 July 2009 the defendant's solicitor sent an email to the plaintiff saying that the defendant had not received an executed sublease. The defendant attached two sublease documents for the plaintiff to execute. The plaintiff says that it did not execute the documents because it did not contain provisions for options and that it contained new special conditions, beyond those agreed in the September Subleases.
On 24 July 2009 the plaintiff's solicitors wrote to the defendant's solicitors attaching a freshly executed copy of the September Subleases. The documents included execution by Mr Sweeney as guarantor. The letter stated that an executed version had previously been sent in December 2007.
On 4 August 2009 the defendant's solicitors wrote to the plaintiff's solicitors denying that the September Subleases were ever executed. They said that the defendant required execution of the current draft subleases as there were material differences relating to the rent review clause and the special conditions.
On 24 August 2009 the defendant conducted earthworks behind the plaintiff's office without notice to the plaintiff.
On 1 September 2009 the defendant's solicitors wrote to the plaintiff and said that as the current version of the subleases had not been executed, the defendant wished to bring the current arrangements to an end within one month.
On 23 September 2009 the defendant issued what was said to be a default notice to the plaintiff in relation to alleged unpaid invoices. The defendant undertook not to evict the plaintiff from the premises before 17 October 2009.
On 30 September 2009 the plaintiff's solicitors wrote to the defendant's solicitors and indicated that the plaintiff was not in default, and in any event enclosed payment of the invoices said by the defendant to be outstanding.
On 7 October 2009 the defendant issued a further 'default notice' to the plaintiff regarding the erection of the transportable office without the defendant's consent and without the local authority's approval. The defendant then undertook not to evict the plaintiff from the premises before 31 October 2009.
On 14 October 2009 the plaintiff filed its writ of summons.
On 23 October 2009 the plaintiff filed this chamber summons for an interlocutory injunction.

On 26 October 2009 the defendant served a notice of termination of the alleged sublease on the basis that the plaintiff had failed to remedy default regarding the approval for the office. The defendant required the plaintiff to vacate in one month and agreed not to evict the plaintiff before 1 December 2009, upon seven days notice.

The legal principles for the grant of an interlocutory injunction

The legal principles for the grant of an interlocutory judgment were summarised by Beech J in Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 [7] ‑ [13]. In substance:
(a)the plaintiff must show that:
(i)there is a serious question to be tried, or that the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is, there is a probability that at the trial of the action a plaintiff will be held entitled to relief;
(ii)it will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted (in equity's auxiliary or concurrent jurisdiction); and
(iii)the balance of convenience favours the granting of an injunction,
(b)the phrase 'prima facie case' does not mean that the plaintiff must show that it is more probable than not, that at trial the plaintiff will succeed. 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 orders that the plaintiff seeks;
(c)the grant of an injunction involves balancing the injustice which might be suffered by the defendant if the injunction is granted, and the plaintiff later fails at trial, against the injustice which might be suffered by the plaintiff if the injunction is not granted, and the plaintiff later succeeds at trial;
(d)in some cases, an interlocutory mandatory injunction should be granted only if the court has a high degree of assurance that the plaintiff will succeed at trial, however, ultimately the question is as to the balance of the risk of an injustice.
Questions of degree rather than absolute restrictions upon the scope of curial relief are always involved, and the concept of 'constant supervision by the court' is, by itself, no longer an effective or useful criterion for refusing a degree of specific performance or other mandatory orders: Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] HCA 30; (1998) 195 CLR 1 [78] ‑ [80].
The requirement that in the exercise of the court's auxiliary jurisdiction, irreparable injury would result if the injunction were not granted, is 'no more than another way of saying that damages must be shown to be inadequate as a remedy': Meagher RP, Heydon JD & Leeming MJ, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (4^th ed, 2002) [21‑040]. In other words, the question is whether damages would provide adequate compensation in all the circumstances: R v Macfarlane; Ex parte O'Flanagan & O'Kelly (1923) 32 CLR 518, 550; Heavener v Loomes (1924) 34 CLR 306, 325 ‑ 326; Soiland Pty Ltd v Ridgepoint Corporation Pty Ltd [2005] WASC 124 [24]. Great difficulty in estimating damages and the creation of certain areas of damage which cannot be taken into monetary account in a common law action for breach of contract, such as loss of goodwill and trade reputation, are factors which may be taken into account in assessing whether damages are an adequate remedy: Evans Marshall & Co Ltd v Bertola SA [1973] 1 WLR 349, 380.

Serious question to be tried

The plaintiff's starting point is that it says it does not have valid subleases at law because the September Subleases do not identify any particular area in respect of which the plaintiff is to have exclusive possession: Streatfield v Winchcombe Carson Trustee Co (Canberra) Ltd [1981] 1 NSWLR 519, 529. It says that despite it having no rights as sublessee, the events in question may nevertheless be characterised so as to give the plaintiff possessory or occupancy rights vis-à-vis the defendant.
The first issue raised by the plaintiff is its contention that the July 2007 agreement was a binding agreement that the parties would lease the property in equal shares on terms that:
(a)each would pay half the rent and outgoings for the property;
(b)each was to enjoy the benefit of the whole of the leased premises;
(c)the arrangement would continue for as long as the defendant leased the premises.
As to that submission, in my view, there is no seriously arguable case that the parties entered into a binding agreement in terms of the July 2007 agreement as alleged. Although Mr Sweetman purportedly said what the rent 'would' be, objectively it could not be regarded as a firm price whilst other terms remained unexplored. There was, moreover, no agreement between the parties as to the term of the lease or the number and period of the options. These matters, involving uncertainty as to price and lack of agreement as to term were, objectively, material to the completeness of any agreement between the plaintiff and the defendant to enter into a lease jointly with the owner. In my view there was, on the plaintiff's evidence, no more than a non‑binding arrangement by which the parties agreed that the defendant should deal with the owner, on behalf of the plaintiff and defendant, with a view to negotiating a lease with the owner on terms which would ultimately need to be acceptable to the plaintiff. Even if it were a binding agreement, it is not clear to me, from the plaintiff's arguments, whether, and if so how, it was said to be specifically enforceable. Even if the agreement were specifically enforceable, it is not clear how that agreement could create a 50% interest in the headleases actually granted. I am unable to accept that the plaintiff's first contention raises a prima facie case.
Next, with respect to a triable issue, the plaintiff contends that the September Subleases effected an assignment of half an interest in each of the headleases to the plaintiff.
In support of this proposition the plaintiff relies on the well‑recognised principle that despite the form of the transaction, if a tenant purports to grant a sublease for a term equal to or larger than the term vested in the tenant, it necessarily results in an assignment because the tenant is left without reversion: Milmo v Carreras [1946] KB 306; Burrell v Duncan [1957] St R Qd 52. In such a case the tenant has entirely divested itself of the whole estate and hence there is no privity of estate that could arguably continue to subsist between the tenant and the so‑called sublessee.
In this case the defendant has not divested itself of the whole estate and the principle, in its usual application, has no direct prima facie application to the facts of this case.
The plaintiff says, however, that the principle applies also to a 'sublease' for the whole of the term of part only of the premises. As to that submission, it may be accepted that a tenant who purportedly 'subleases' a definable and defined part of the premises for the term of the lease or longer, effectively assigns that part of the premises to the so‑called sublessee: see Federal Commissioner of Taxation v G J Coles & Co Ltd (No 2) (1974) 4 ALR 163, 179; G J Coles & Co Ltd v Federal Commissioner of Taxation (1975) 132 CLR 242, 252; Heathcote‑Williams H, et al, Foa's General Law of Landlord & Tenant (8th ed, 1957), 420; Megarry & Wade, The Law of Real Property, (5th ed, 1984), 749.
The principle in that form also has no direct prima facie application to the facts here, because there is no specified portion of the premises to which the assignment could apply. The plaintiff's case is that it has a right to possession or occupation of the whole of the premises. The plaintiff has not, in my view, demonstrated a prima facie case with respect to this argument.
That finding does not necessarily preclude a further argument also made to the following effect. By September 2007, arguably, a headlease with certainty as to price, term, and options had been agreed in principle with the owner. In the context of the discussions in July 2007, and other surrounding circumstances, by the defendant's facsimile of 11 September 2007, and the plaintiff's subsequent execution and return of the September Subleases, there was arguably an agreement by which, in effect, in consideration for the plaintiff entering into the September Subleases and, on their proper construction, incurring obligations to pay to or at the direction of the defendant 50% of the defendant's financial obligations under the proposed headleases, and by necessary implication not to do anything which would put the defendant in breach of the proposed headleases, the defendant agreed to enter into the proposed headleases and hold them on trust for the plaintiff and defendant as tenants in common in equal shares. Such an agreement is, in the circumstances, at least arguably sufficiently supported by acts of part performance. Once the owner entered into the headleases, the defendant arguably held the headleases on constructive trust for the plaintiff and defendant as tenants in common in equal shares. See Ford & Lee, Principles of the Law of Trusts, (vol 1) [3200], [6010]. Such a claim would be in the court's exclusive jurisdiction rather than in its auxiliary equitable jurisdiction. Any difficulties which might arise if there were a dispute between the beneficiaries of such a trust as to whether the headleases should be renewed, and the trustee's proper exercise of power with respect to the exercise of the options, do not arise on the facts at present as the headleases were extended for the first option period.
The next point relied on by the plaintiff is that of promissory estoppel. It says that the plaintiff, in the circumstances, assumed that it would have 'the benefit of the half interest in the headleases'. It says that the defendant's communications and conduct induced that assumption, and that it acted in reliance on it in sharing the cost of rent, sharing the cost of fit‑out and other works, and incurring the other expenditure, and that it would be unconscionable for the defendant to depart from the assumption so created. The estoppel argument, as formulated, in a sense begs the question as to what, precisely, was the assumed legal relationship which then existed or which the plaintiff expected would exist, for the purposes of giving effect to the estoppel. If, at law or in equity, there is no legal relationship capable of creating rights in the plaintiff, the estoppel point does not advance the plaintiff's case. On the other hand, if there were arguably such a legal relationship, the matters of assumption, reliance and detriment are sufficiently disclosed by the evidence so as to raise a prima facie case of estoppel.
The next point relied on by the plaintiff is that it says that the September Subleases constituted a contractual licence to occupy the property, with rights of occupation coextensive with the occupancy right of a tenant in common in equal shares with the defendant. It says that the licence is supported by consideration and is for a definite period, and that an injunction may lie to restrain the breach of the contractual licence: The State of Western Australia v Ward [2002] HCA 28; (2002) 213 CLR 1 [504] ‑ [505]. A bare contractual licence does not give rise to a proprietary interest in the land and may effectively be revoked by the grantor at law in breach of contract, whereupon the licensee becomes a trespasser. The licensee may nevertheless obtain an injunction in equity to restrain the unlawful revocation in certain circumstances: Ashton v Australian Cruising Yacht Co Pty Ltd [2005] WASC 192 [100] ‑ [105]. The defendant accepted that the September Subleases arguably created contractual licences. However it argued that the licence was terminable on reasonable notice.
In Playgoers' Co-operative Theatres Ltd v Workers Educational Association (NSW) (1955) 72 WN (NSW) 374, 379 Myers J said of the contractual licence in that case:
I have come to the conclusion that there should be implied in this contract a condition that the defendant will not, so long as the plaintiff performs its obligations, revoke the licence during the continuance of the term for which it is granted. It is to be observed that the licence … is in law revocable at any time by the defendant. The revocation might be wrongful, but would be none the less effective. I think in those circumstances that the parties must have intended and must have meant, by agreeing to a licence for a term, that it would not be revoked during that period by the defendant so long as the plaintiff was not itself in breach under the contract. It is only by the implication of such a term that this contract could be given efficacy, and in view of the nature of the undertaking upon which the plaintiff was to embark in faith of the licence, I do not think that the parties could ever have contemplated but that there was to be no right in the defendant to revoke the licence, and it must be taken to have promised not to do so during the term.
I accept that the September Subleases arguably created a contractual licence in favour of the plaintiff with an implied covenant of the kind described in Playgoers' Co-operative Theatres v Workers Educational Association. If then becomes necessary to consider whether, in this case, the default notices provide proper grounds for termination.
The notice of default dated 7 October 2009 referred to a breach by reason of the plaintiff's erection of the transportable office and without local authority approval.
The defendant relies on cl 9 of the September Subleases which requires the 'sublessee' to obtain the defendants prior written consent before making structural alterations. As to that, the plaintiff's evidence is that the defendant, in effect, agreed to pay certain costs in relation to the transportable office and to rent it back to the plaintiff, and that the defendant also agreed to the location of the office. On that evidence, the defendant arguably waived any insistence on the provision of its prior written consent. Also, it is not clear at this stage that the transportable office is a structural alteration for the purposes of cl 9.
The defendant also relies on cl 11 of the September Subleases which provides as follows:
The nature of the business will be earthmoving mechanical repairs/mine equipment rental and the use of the premises will be for purposes conforming to all State and/or Local Authority laws … or requirements …
As to this, it is arguable that cl 11 requires that the premises be used for the business stated in accordance with the laws and regulations relating to the carrying on of a business of that kind. It is not, arguably, directed to the nature of the premises from which the business is carried out. Further, whilst the defendant said that it relied on the Town of Port Hedland Town Planning Scheme No 5, it did not point to any particular provisions which deal with the legality of the transportable office being located on the property.
In these circumstances, there is a prima facie case that the defendant, in purporting to rely upon the notice of 7 October 2009, and the consequent notice of 26 October 2009, is purporting to terminate the alleged contractual licence in breach of contract.
Insofar as the defendant may be regarded as holding the headleases on trust for the plaintiff and the defendant as tenants in common in equal shares, even if there were a breach by the plaintiff, there would be a serious issue to be tried as to whether the plaintiff was entitled, at the least, to an interlocutory injunction on principles concerning, or analogous to, relief against forfeiture.
The final point relied on by the plaintiff is an allegation that the defendant engaged in contravention of s 52 of the Trade Practices Act 1974 (Cth), by its email dated 29 August 2007. It is alleged that the defendant thereby represented, contrary to the fact, that the 'only' way to give effect to the July 2007 agreement was to proceed by way of sublease. As to this, the defendant says that the defendant was a mere conduit for the accountant's advice, and that in any event, it was a representation of law the falsity of which could only be ascribed to the defendant if Ms Sweetman did not honestly believe the statement to be true. For the latter propositions, the defendant relies on Inn Leisure Industries Pty Ltd v DF McCloy Pty Ltd (No 1) (1991) 100 ALR 447, 463 ‑ 464. The defendant also denies that there could be any relevant inducement, having regard to the fact that the plaintiff thereafter took legal advice. In response to this last point, the plaintiff says that it continued to be misled because its legal advice was, in effect, negligent and failed to correct the alleged misapprehension the plaintiff was under. With respect to the 'conduit' point, the plaintiff says that the defendant was no mere conduit of the accountant's advice, but, in effect, positively adopted it: cf Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592. In my view the s 52 claim is not unarguable on the evidence, although it could not be regarded, at this point, as particularly strong. If the s 52 case were established, a variety of orders could be available under s 87 of the Trade Practices Act.
In summary, it seems to me that there is a prima facie case (as that term is understood in the context of an interlocutory injunction), to the effect that the defendant holds, or is estopped from denying that it holds, the headleases on trust for the plaintiff and the defendant as tenants in common in equal shares. It also has a prima facie case to the effect that, at least, it has a contractual licence to occupy the property in terms of the September Subleases and, that the defendant is threatening to terminate the licence in breach of contract. The s 52 claim adds some weight to the question of the existence of a prima facie case. The claims in the exercise of the court's auxiliary jurisdiction are of a kind for which, in the circumstances, I would not see damages as being an adequate remedy.
On any basis, however, the nature of the plaintiff's alleged rights involve it occupying, along with the defendant, of the whole of the property. That raises a further issue.
The evidence discloses that there has been friction in the current arrangements, and that the sharing of the whole property has involved a degree of ill‑will and allegations, and cross‑allegations, of interference by one party with the other's business. These matters assume particular significance if the plaintiff is no more than a contractual licensee.
The grant of an injunction to restrain the wrongful revocation of a contractual licence can, depending on the circumstances, raise issues concerning whether the order would in substance involve the specific performance of the licence, and the court becoming involved in the supervision of the performance of the licence: see Meagher, Heydon & Leeming, Equity: Doctrines and Remedies [21‑240] ‑ [21‑275]. Those possibilities arise in this case, as the plaintiff seeks various ancillary orders in connection with the defendant's conduct at site and the defendant seeks orders regarding the plaintiff's conduct at site as a term of any injunction granted.
These matters require further consideration in the context of the balance of convenience, to which I now turn.

Balance of convenience

In relation to the balance of convenience, the plaintiff's evidence is to the following effect. It estimates the cost to the plaintiff of setting up a hire yard on a vacant block to be $790,000. It says that the relocation of the plaintiff's business to a vacant lot would take about 6 ‑ 12 months to complete, and that relocation to a lot with no onsite accommodation would add about $22,000 to the plaintiff's ongoing monthly costs. The plaintiff has not been able to locate a suitable alternative property to lease in Port Hedland and the properties identified by the defendant as potential sites for relocation of the plaintiff's business do not meet the commercial needs of the plaintiff's business. The plaintiff says it has had to satisfy some of its clients that it is a 'substantial operation' and the plaintiff believes that it must consistently provide timely, professional service to these clients in order to retain them as clients. The plaintiff also says it has been informed by the owner that the owner does not object to the plaintiff's occupation of the property.

The defendant's evidence relating to the balance of convenience is to the effect that the plaintiff's equipment can be readily transported to another location, which would result in the plaintiff retaining the benefits of some of its establishment costs. It says some of the plaintiff's staff have behaved aggressively towards some of the defendant's staff and customers, which has impacted on the defendant's ability to retain staff and customers. It also says that the plaintiff and the defendant disagree on the day‑to‑day practical issues that arise in occupying the property simultaneously and the relationship is strained. It says that by erecting its new office, the plaintiff has blocked the defendant's office staff's view of the yard and removed a chain and sign which restricted the general public's access to the yard, and that this presents a risk of injury or damage to equipment by strangers, and that the office creates parking difficulties for customers and staff. It also says the plaintiff's employees are behaving inappropriately onsite, considering the nature of the site and that the plaintiff has used the onsite facilities inappropriately and its employees are moving vehicles without notice to the defendant's employees, which creates hazards on the work site. The defendant says there are other yards for lease which would suit the plaintiff - although I note that there is no evidence from leasing agents to that effect. The defendant also points to the fact that it is endeavouring to sell its business, that the plaintiff is carrying out mechanical repair work in direct competition with the defendant, and that the plaintiff has not obtained local government approval for its new office.
In deciding where the balance of convenience presently lies, in my view the following points are of particular significance:
•the defendant intends to evict the plaintiff from the property if the injunction is not granted;
•the plaintiff has conducted a not insubstantial business from the property for approximately two years, and has contributed to half the rent;
•there is no cogent evidence that an alternative suitable property is presently available for lease to the plaintiff;
•the plaintiff incurred significant costs in establishing its business in Port Hedland and would incur further costs if forced to relocate;
•there is some evidence that any interruption to the conduct of the plaintiff's business is likely to result in a financial loss to the plaintiff including, particularly, a loss of goodwill;
•the defendant's business is currently for sale, however, it has been for sale for over two years and there is no suggestion that there is presently a buyer on the horizon;
•the current lack of communication and poor working relationship between the parties may well have resulted in a reduction in safety standards on the property, and some loss of goodwill and custom for the defendant with some negative impact on its business;
•the owner does not object to the plaintiff's occupation of the property.
On balance, it seems to me that the plaintiff will suffer greater detriment if the application for interlocutory injunction is refused than would be suffered by the defendant if an injunction were granted. If an injunction is refused, the plaintiff will lose possession or occupancy of the property. If granted, the defendant's right to evict the plaintiff will not be lost, but will be deferred for determination at trial. If the plaintiff fails at trial, the defendant will be indemnified by the plaintiff's undertaking to pay any damages assessed. The plaintiff's balance sheet is in evidence, and it has substantial net assets. The current lack of communication and poor working relationship is a matter to which I have given careful consideration. I am not satisfied, on the evidence at this stage, that the parties, by exercising some common sense, could not at least grudgingly exercise a workable degree of cooperation. If subsequently, however, there is evidence that the plaintiff (or indeed either party) is behaving oppressively in connection with the shared use, the matter may require review under the liberty to apply: cf Patrick Stevedores Operations v Maritime Union of Australia [80].

Conclusion

In all the circumstances, it seems to me that an interlocutory injunction should be granted, but be confined to the minimum relief necessary to address the current dispute, namely to prevent reliance on any existing notices of purported termination. Accordingly, the interlocutory injunction should be limited to restraining the defendant from taking any action based on the notices of 7 and 26 October 2009, and for the avoidance of doubt, the earlier notice.
Accordingly, I would order that the defendant its servants and agents be restrained until trial or further order from taking any action in relation to the plaintiff based upon the notices dated 23 September 2009, 7 October 2009 and 26 October 2009 addressed by the defendant to the plaintiff in connection with the property.
There should be liberty to apply on two days notice.
The litigation should move swiftly. I will hear the parties concerning orders for pleadings and discovery being completed in the very near future.