White City Tennis Club Ltd v John Alexander's Clubs Pty Ltd & 2 ors - [2007] NSWSC 1210

No judgment structure available for this case.

CITATION: White City Tennis Club Ltd v John Alexander's Clubs Pty Ltd & 2 ors [2007] NSWSC 1210

HEARING DATE(S): 22 October 2007

JUDGMENT DATE :
29 October 2007

JURISDICTION: Equity Division
Duty Judge List

JUDGMENT OF: Brereton J

DECISION: Interlocutory injunction granted to restrain interference with contractual right to use by plaintiff of some but not other parts of real property under licence.

CATCHWORDS: REAL PROPERTY – Co-ownership – tenancy-in-common – whether one of several tenants in common entitled to grant licence irrevocable by others – whether licence reasonably incidental to grantor’s use and does not unreasonable interfere with rights of others to possession use and enjoyment - TORT – Intentional interference with contractual relations – contractual licence to use real property

CASES CITED: Bull v Bull [1955] 1 QB 334
Catanzariti v Whitehouse (1981) 55 FLR 426
Hong v Choo [2004] HKCFI 24
Hong v Choo [2005] 3 HKLRD 811, [2005] HKEC 1156
DC Thomson & Co Ltd v Deakin [1952] Ch 646
Robson-Paul v Farrugia (1969) 20 P & CR 820
State of New South Wales v Koumdjiev (2005) 63 NSWLR 353
U-Needa Laundry Ltd v Hill [2000] 2 NZLR 308
Wallace v Love (1922) 31 CLR 156
Text:
Meagher Gummow & Lehane, Equity Doctrines & Remedies, 4th edition

PARTIES: White City Tennis Club Ltd (plaintiff)
John Alexander's Clubs Pty Ltd (first defendant)
Poplar Holdings Pty Limited (second defendant)
Sydney Maccabi Tennis Club Ltd (third defendant)

FILE NUMBER(S): SC 3359/07

COUNSEL: S T White SC w N J Kidd (plaintiff)
J M Ireland QC w J S Cooke (first & second defendants)

SOLICITORS: Kemp Strang (plaintiff)
Thompson Eslick (first & second defendants)
Leslie Caplan & Grunstein (third defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
DUTY JUDGE LIST

BRERETON J

Monday, 29 October 2007

3359/07 White City Tennis Club Ltd v John Alexander’s Clubs Pty Ltd & 2 ors

JUDGMENT

1 HIS HONOUR: For many years the land and improvements known as White City at Rushcutters Bay, owned by the New South Wales Tennis Association ("Tennis NSW"), has been the home of tennis in New South Wales. The plaintiff White City Tennis Club Ltd ("the Club") has operated a tennis club at White City, most recently under a lease for a term of 25 years from 1 October 1995 of the whole of the first floor and part of the ground floor of the building under the Northern Stand. On or about 10 January 2004, Tennis NSW granted the Club an option to purchase part of White City for $5.8 million, exercisable by 30 September 2004 and subject to development approval. In February 2004, the first defendant John Alexander's Clubs Pty Limited ("JACS") made a proposal to the Club intended to enable the Club to continue its traditional activities while securing its future through joining with JACS in a redevelopment of White City. A revised proposal, which would have involved the Club assigning the benefit of the option to JACS, on the basis that JACS would (1) exercise the option for the benefit of a new club in which A class shares would be acquired by foundation members of the Club and B class shares by other members of the Club and members of the public, and (2) construct a new five-star tennis and health club facility, ensuring that members of the Club could continue to enjoy the benefits of the redeveloped club, was accepted by the Club on 16 June 2004. However, the conditions of the option were not satisfied, and it lapsed on 30 September 2004.

2 Subsequently, Tennis NSW resolved to offer White City for sale by tender. On 28 February 2005, the Club and JACS entered into a written Memorandum of Understanding relating to the proposed purchase and redevelopment of White City. The MOU recited that JACS was negotiating with a third party – since identified as the trustees of the Sydney Grammar School (“Grammar”) – with a view to entering into an agreement with the third party that would include terms whereby the third party and JACS would prepare and lodge a tender for the purchase by the third party of White City from Tennis NSW, and the third party would grant JACS, on behalf of White City Holdings Ltd (a company to be incorporated to establish and operate a new club at the redeveloped White City, the A class shares which would be available for purchase only by persons who were members of the Club), an option to purchase part of the land from the third party [Clauses 1.8, 5.2]. The parties acknowledged that it was fundamental that those members of the Club who became members of the new club – called Foundation Members – would obtain certain minimum benefits and entitlements from the implementation of the project [Clause 3.5].

3 The MOU envisaged that JACS would exercise the option, if at all, not for its own benefit but on behalf of White City Holdings, and that if it did not exercise the option on behalf of White City Holdings, there would be an alternative mechanism by which the Club could acquire the land if JACS on behalf of the Club did not do so [Clause 3.7]:

3.7 JACS agrees that it will seek to obtain an option to purchase the Land or part of it from TNSW or the third party and in the event it obtains the option from TNSW or the third party referred to in Clause 1.8 herein or any right to purchase the Land or any part of it then:

3.7.2 JACS will seek to procure in favour of WCTC a further option to purchase the Land or part of it exercisable by WCTC within 90 days of expiry of the Option Period in the event that JACS is unable to or fails to exercise the option from TNSW or the third party in accordance with its terms;

3.7.3 in the event that JACS is unable to procure the further option referred to in Clause 3.7.2 herein and JACS has not exercised the option from TNSW or the third party 30 days prior to the expiration of the Option Period, then upon WCTC giving written notice to JACS that WCTC requires JACS to exercise the option on behalf of WCTC, that JACS will proceed to exercise the option from TNSW or the third party on behalf of WCTC.

4 Following an invitation to submit tenders, Grammar (in the agreement called SGS), the third defendant Sydney Maccabi Tennis Club Ltd ("Maccabi"), JACS and the Club (called WCTC) on 29 June 2005 entered into an agreement ("the White City Agreement") that provided as follows:

2. The parties agree that use of the Land be allocated between the parties as set out and further detailed in this agreement and the attached plans, being briefly that:

a. SGS will develop and use the area north of the stormwater channel for additional playing fields and parking and will have access to that parking from the Alma Street entrance.
b. Maccabi will use its area south of the stormwater channel for 8 tennis courts, a club house and parking.

c. WCTC will be lessee and WCTC and JACS will use the whole of the land (other than the parking area north of the stormwater channel) to undertake (in accordance with their agreement dated 18 June 2005) until 30 June 2006 the operations currently carried on by WCTC.

d. After 1 July 2006, SGS will construct its new playing fields north of the stormwater channel and until 30 September 2007 WCTC and JACS will continue (in accordance with their agreement dated 18 June 2005) the operations currently carried on by WCTC on the area south of the stormwater channel.

e. JACS has an option at any time before 30 June 2007 to acquire from the SGS the area south of the stormwater channel, other than the area allocated to Maccabi, without affecting SGS's access to its car park north of the stormwater channel. If JACS exercises this option it will construct new sporting facilities, gymnasium and club house on that part of the land. If JACS does not exercise its option, WCTC has an option to acquire the land between 1 July and 30 September 2007,

f. If neither JACS nor WCTC exercises the option, the land south of the stormwater channel other than the Maccabi Land will remain under SGS's ownership.

3. Each party will do all things necessary and desirable to give effect to their own and each others' intentions and that each party will co-operate fully with the others with the aim of giving effect to and fully supporting those intentions.

Land Allocation

4. On completion of the purchase of the Land ( 'Settlement'), subject to survey, the entitlements in respect of the Land as between the parties will be as set out in the attached plans, briefly described below, in these percentages: Maccabi 15%; Option Land 50.2%; and SGS Land 34.8%, allocated as specifically set out in this agreement.

5. The 'Maccabi Land' comprises:

a. 8 synthetic grass tennis courts, with minimum size of 115ft x 54ft, plus a one metre walkway on the southern, western and northern boundaries ( 'Maccabi Courts' ). These tennis courts will be on the south eastern portion of the Land, roughly where the 6 synthetic courts are currently and in due course including part of the land where the eastern stand is currently situated,

b. 30 car parking spaces for its members, and other users of the Maccabi Courts, and subject to availability, additional spaces will be made available on an agreed commercial basis. All of these spaces will be in the car park south of the storm water channel, either in the existing car park constructed south of the stormwater channel or in the new car park constructed by JACS or WCTC,

c. a 300m2 clubhouse including changing facilities ( 'Maccabi Clubhouse' ), as further described in paragraphs 10 and 11 below, and

d. access between the car park, the Maccabi Courts and Maccabi Clubhouse, including the areas marked on the diagram in orange as 'Maccabi occupancy'.
6. If Maccabi wishes to do any work on the Maccabi Courts during its 2 year lease of the Maccabi Courts to WCTC, it will not start that work in the 1 January 2007. WCTC will allow Maccabi possession and access for this purpose from that date.

5 Despite references in the White City Agreement to an attached diagram, none was attached. However, an understanding of the layout of the land is aided by the plan attached to this judgment.

6 Clause 7 of the White City Agreement defined “the SGS Land” as comprising the area north of the stormwater channel, and the land (called "the Option Land") south of the stormwater channel other than the Maccabi land, unless JACS or the Club exercised the option, granted in Clause 8, to buy the Option Land, in the following terms:

8. Subject to Settlement, SGS and Maccabi ( 'Grantors' ) grant the following rights, referred to as the 'Option' :

a. to JACS an option to acquire the Option Land for the Option Amount payable solely by JACS, exercisable by JACS giving written notice to the Grantors and paying the Option Amount at any time from completion of the purchase of the Land until 30 June 2007, but

7 It is uncontentious that the option contained in Clause 8a is an option of the type contemplated by Clause 3.7.1 of the MOU, and that contained in Clause 8b is one of the type contemplated by Clause 3.7.2 of the MOU.

8 By Clause 9, the Option Amount was $6.33 million (subject to certain adjustments), and the party that exercised the Option became "the Option Land Owner". By Clause 10b, if either JACS or the Club exercised the Option, and the land had not then been subdivided, the Option Land Owner would own 50.2% of the land as tenant-in-common with Grammar (34.8%) and Maccabi (15%), or if the land had been subdivided to create a separate title for the SGS Land (north of the stormwater drain), but the Maccabi Land and the Option Land (south of the stormwater drain) was still on one title, then the Option Land Owner and Maccabi would own, as tenants-in-common, 77% and 23% respectively of the combined area of the Option Land and the Maccabi Land.

9 Clause 10c provided:

c. The Option Land Owner will, subject to funding and development approval:

1. construct and maintain on the Option Land at its cost, a club including tennis courts and sports and recreational facilities, plus a car park for at least 300 cars, and
2. construct the Maccabi Clubhouse at reasonable cost, currently circa $800-$1000 per m2 (to be borne by Maccabi who will also be responsible for and bear the fit out cost), either as a separate facility or as part of the Option Land Owner's facilities, in a position convenient to the Maccabi Courts.

10 Clause 11 provided that in the event that neither JACS nor the Club exercised the option, the Maccabi Clubhouse would be located under the eastern centre court stand, or in any other location agreed between Grammar and Maccabi, but Grammar would be under no obligation to demolish the eastern stand and Maccabi would bear any cost of fit out, demolition and reconstruction. Clauses 12 and following were relevantly as follows:

12. Maccabi will have unfettered access to and ownership of the Maccabi Clubhouse to the fullest extent possible at law and a 99 year lease at a peppercorn rent if required by Maccabi (unless it is recognised as part of the Maccabi Land in any subdivision). Unless and until exercise of the Option, no party may begin work on the Option Land without SGS's prior written consent.

Maccabi Clubhouse and Courts

13. From expiry of the Lease of the Maccabi Courts, the Maccabi Clubhouse will be under the eastern stand unless and until demolished by the Option Land Owner and may be shared between Maccabi and the Option Land Owner.

14. From the date of the demolition, the Option Land Owner will grant Maccabi full use of equivalent facilities until the Maccabi Clubhouse is completed. If, within 18 months after the eastern stand is demolished Maccabi has not been provided with a permanent Maccabi Clubhouse, Maccabi will be allocated at least 300m2 of land adjoining and convenient to the Maccabi Courts for its sole use on which to build the Maccabi Clubhouse at its cost, marked on the attached plan as 'Maccabi Default Occupancy Area'. Maccabi will continue to enjoy full use of other appropriate facilities until Maccabi has managed to complete building such facilities.

11 Clauses 16 and following relevantly provide that Grammar and Maccabi as joint owners of the land will grant the Club a lease, commencing on the date of settlement, to be documented by an amended lease, of the whole of White City from 1 July 2005 to 30 June 2006, and of the Option Land from 1 July 2006 to 30 September 2007 unless and until JACS or the Club exercises the option; if JACS or the Club exercises the option then the Lease will expire on the date of exercise in respect of the SGS Land, and on 30 September 2007 in respect of the Maccabi land; and if neither exercises the option then on 30 September 2007. By Clause 21, the Club agreed to surrender any rights which it otherwise would have had in relation to White City under its former arrangements with Tennis NSW (in the agreement called TNSW), and that from 30 September 2007 Maccabi would have full and unfettered rights in respect of the Maccabi land. Clause 22 provided:

22. Each of the parties will have a stand alone, independent facility on its part of the Land with the exception of the Maccabi Clubhouse which will be built on the Option Land. Each party will bear all costs of maintaining in good repair the facilities on its Land and will bear all liabilities attaching to its Land, including work required by statutory notices.

12 By Clause 27, each party as occupant of a part of the land in accordance with the agreement agreed, in respect of that part of the land it occupied, that it did so at its own risk, and released the land owner from and indemnified the land owner in respect of any liability to the occupant in relation to that part. Clause 29 and following are relevantly as follows:

29. SGS and Maccabi will enter into an agreement under which SGS will sell Maccabi the Maccabi Land, for a purchase price of $3.3m. Maccabi’s purchase of the Maccabi Land will complete contemporaneously with settlement ... . As a result Maccabi will own 15% of the land as tenant in common with SGS. SGS and Maccabi will, if required by either of them enter into a co-ownership deed reflecting more fully the matters referred to in this agreement.

...

33. The parties intend to apply to subdivide the Land and will use best efforts to ensure that any application to subdivide the Land is successful and accurately reflects each party's entitlement as set out in this agreement and will collaborate with Woolahra [sic] Council in relation to the subdivision to maximize the benefit for all parties. Each party agrees to execute transfers and other documentation as required to resolve the parties' ownership of the Land in accordance with this agreement. ...

34. If the subdivision results in the area south of the stormwater channel being on a single title, so that the Maccabi Land and the Option Land remain on a single title, then SGS (or the Option Land Owner after exercise of the Option) and Maccabi will own the Land south of the stormwater channel as tenants in common as to 77% and 23% respectively. SGS (or the Option Land Owner if the subdivision occurs after exercise of the Option) and Maccabi will if required by either of them, enter into a co-ownership deed reflecting more fully the matters referred to in this deed. That deed will be assigned to the Option Land Owner on exercise of the Option, if it is entered into before exercise of the Option.

35. Until the subdivision is complete, no party may encumber any part of the Land, without approval of the other parties. Each party may lodge a caveat in respect of its interest in the Land, but must sign all documents necessary to give effect to the subdivision(s) and not rely on its caveat to affect the progress of the subdivision in any way.

36. If a party intends to sell its part of the Land ( ‘Selling Portion’ ), it must offer to sell the Selling Portion to each of the other parties subject to the terms of this Agreement (unless the Option has expired without being exercised, in which case the parties having the benefit of the Option do not have the benefit of this pre-emptive right ( ‘Offeree’ ) and must not sell the Selling Portion to any third person on any terms more favourable than those offered to the Offeree without first giving the Offeree 30 days in which to exercise its pre-emptive right to buy the Selling Portion on those terms. …

...

41. This agreement binds the parties, their successors and assigns. ...

42. WCTC and JACS agree that their MOU dated 28 February 2005 and their agreement dated 18 June 2005 continue in accordance with their terms and each agrees to carry out its obligations under this agreement in accordance with those agreements.

43. To the extent of any inconsistency between this agreement and any other agreement between any of the parties, this agreement will prevail, unless specifically stated. …
44. The parties must ensure that any successors and assigns become parties to this agreement by appropriate documentation.

13 Grammar completed the purchase of White City from Tennis NSW on about 1 July 2005, whereupon Maccabi completed the purchase of the Maccabi Land from Grammar. Grammar and Maccabi as lessors and the Club as lessee entered into a variation of lease dated 6 April 2006 to give effect to the surrender by the Club of its rights, as contemplated by Clause 21 of the White City Agreement, and the granting of an interim lease as contemplated by Clauses 16 – 20 of the White City Agreement, the result of which was that the Club surrendered 13 years of its leasehold estate and its licence to manage and conduct tennis activities on White City.

14 Within one week of that surrender being formalised, JACS, on 12 April 2006, purported to terminate the MOU for alleged repudiation by the Club. The Club denies the alleged repudiation and disputes the validity of the purported termination. However, on 27 June 2007, JACS’ nominee, the second defendant Poplar Holdings Pty Limited (“Poplar”), purported to exercise the Clause 8a option under the White City Agreement and to purchase the Option Land, on its own behalf. In late June 2007, the Club commenced these proceedings, in which it denies that it repudiated the MOU and disputes that the MOU has been validly terminated; and further alleges that the exercise of the option by JACS’ nominee Poplar otherwise than on behalf of White City Holdings or the Club was in breach of fiduciary and /or contractual obligations owed by JACS to the Club, by reason of which it is said that Poplar holds the Option Land on trust for the Club. The Club seeks an order that JACS transfer the Option Land to the Club, upon the Club paying the option amount to Poplar.

15 White City has been subdivided into two lots – one comprising the SGS Land north of the stormwater drain, and the other comprising the Maccabi Land and the Option Land south of the drain. Maccabi, Poplar and Grammar are now the registered proprietors as tenants in common of the two lots in the proportions 15:50.2:34.8 respectively.

The issues

16 The clubhouse that the Club currently occupies under the northern centre court stand is situated on the Option Land. If the Club is, as it contends, entitled in equity to the Option Land, that would include its current clubhouse under the northern stand. Poplar contends the Club's lease of the Option Land terminated on 27 June 2007 upon exercise of the option, and that since then the Club has been holding over under the lease.

17 The Club, wishing to maintain its ability to operate a tennis club at White City pending the final determination of these proceedings, negotiated with Maccabi which, by a deed of licence dated 19 September 2007, granted to the Club a licence to use certain parts of the Maccabi land – namely, the six existing Maccabi tennis courts, the interim Maccabi clubhouse under the eastern stand, and the two additional courts – for a term of six months from 1 October 2007 to 31 March 2008.

18 On 26 September 2007, Poplar served notice to quit on the Club, requiring possession of the Option Land, including the clubhouse under the northern stand, by 31 October 2007. On 19 October 2007, Poplar's solicitor, by letter to the Club’s solicitors and without prejudice to the contention that the Maccabi Licence was not an effective grant of a licence to the Club, purported to revoke the licence.

19 The Club claims an interlocutory injunction restraining JACS and Poplar (1) from interfering with its enjoyment of its rights under the Maccabi Licence, and in particular its use of the interim Maccabi clubhouse under the eastern stand and the two additional courts; and alternatively (2) from interfering with its use and occupation of its existing clubhouse under the northern stand. The basis of the final relief in aid of which the first claimed injunction is sought is the restraint of an apprehended tort, namely interference with the Club’s contractual rights under the Maccabi licence. The basis of the final relief in aid of which the alternative claimed injunction is sought is restraint of interference with the Club’s claimed beneficial proprietary entitlement to the Option Land, on which the northern stand is situated; in effect it impugns Poplar's entitlement to give the notice to quit.

20 On an application such as the present for an interlocutory injunction, the test is whether the plaintiff has established a sufficiently seriously arguable case for a final injunction as to justify the grant of interlocutory relief, having regard to the balance of convenience. The two elements of "seriously arguable case" and "balance of convenience" are interrelated, in that the stronger the apparent case for final relief, the less will be required to tip the balance of convenience in favour of the grant of an injunction, and the disparity of convenience and inconvenience resulting from the grant or withholding of an injunction will affect how strong a case is required to justify an interlocutory injunction. However, where the decisive issue is a question of law, the Court should ordinarily endeavour, where it is possible to do so, to determine the question of law, rather than only to consider whether it is sufficiently arguable. Ultimately, the decisive issues in this application are such questions, and it is possible to determine them.

The contractual claim – the Maccabi Licence

21 Poplar has written to Maccabi and the Club, asserting that Maccabi has no right to grant the licence, at least so far as it relates to the interim Maccabi clubhouse and the two additional courts, and has attempted to lock the Club out from the interim Maccabi clubhouse. It is not entirely clear whether Poplar objects to the licence in respect of the six existing Maccabi courts, Poplar’s submissions on the application indicate that it does so object; but a letter dated 9 October 2007 from Gayle Meredith & Associates (for JACS) to Leslie Caplan and Grunstein (for Maccabi) indicates otherwise.

22 The Club contends that these acts of Poplar constitute the tort of intentional interference with contractual relations. That tort is committed when the defendant (JACS and/or Poplar) intentionally interferes with the performance by a third party (Maccabi) of a contract (the Maccabi Licence) between that third party and the plaintiff (the Club). Direct persuasion or procurement or inducement of the other contracting party by the defendant is sufficient to constitute the tort [DC Thomson & Co Ltd v Deakin [1952] Ch 646, 681 (Evershed MR), 694 (Jenkins LJ)].

23 There is at least a reasonable apprehension that Poplar will, if not restrained, procure – either by persuasion of Maccabi, or by itself effecting a lockout – an interference with the Club’s enjoyment of the benefits purportedly conferred on it by the Maccabi Licence. JACS and Poplar did not contend otherwise. The gravamen of their case was that there was no valid contract: JACS and Poplar contend that Maccabi, as one of several tenants in common, was not entitled to grant a licence to the Club, and alternatively that if Maccabi could grant a licence, it could be revoked by any other of the tenants in common, and has been revoked by Poplar. Accordingly, the substantial issues are:

· Was Maccabi entitled to grant the Maccabi Licence to the Club?
· If so, was Poplar entitled to revoke the Maccabi Licence?

24 Was Maccabi entitled to grant the Maccabi Licence to the Club? Although there is authority elsewhere that one of several tenants-in-common may grant a licence which is not revocable by the others without the consent of the grantor [Chin Lan Hong v Cheung Poh Choo [2005] 3 HKLRD 811, [2005] HKEC 1156, [35] (HKCA)] (just as one of several tenants-in-common may grant a lease [see Catanzariti v Whitehouse (1981) 55 FLR 426; U-Needa Laundry Ltd v Hill [2000] 2 NZLR 308]), for the purposes of this Court, the right of one of several tenants in common of property to grant a licence was authoritatively determined in State of New South Wales v Koumdjiev (2005) 63 NSWLR 353, holding that a tenant in common of a property, although able to transfer or lease its interest to a stranger, cannot short of such transfer or lease grant a licence to a stranger which is irrevocable by other tenants in common if that licence is of a kind which goes beyond what is reasonable or incidental to the grantor's possession and use and enjoyment of the property, enjoyment in common with the other tenants in common, and which interferes with the possession and use and enjoyment of the property by other tenants in common (per Hodgson JA at [40]; Beazley JA and Hislop J concurring). Hodgson JA continued to explain:

41 For example, suppose there are two tenants in common of a small house, and one of them purports to grant a licence to twenty people to live in the house. If this amounted to excluding the other from possession, it would be a trespass; but if it fell short of excluding the other person, but was substantially detrimental to the other tenant in common's use and enjoyment of the property, in my opinion such a licence could be terminated by the other tenant in common, assuming that it went beyond what was reasonable and incidental to the grantor's possession and use and enjoyment of the property. That is, in my opinion, any licence in excess of the what is reasonable and incidental to one tenant in common's possession and use and enjoyment of the property, and which prejudices the other tenant in common's possession and use and enjoyment of the property, is a licence terminable by the other tenant in common. Otherwise, in my opinion, there can be no reasonable reconciliation of the rights of both tenants in common to have possession and use and enjoyment of the property.

42 On that basis, the result in Robson-Paul is correct. If there was a licence to use the premises to the exclusion of the plaintiff, that was clearly a licence that could not be granted; but if the licence fell short of that, but was a licence to continue for an indefinite period to exercise all the rights of one tenant in common, without a transfer or lease, it would be a licence going beyond what was reasonable and incidental to the grantor's possession and use and enjoyment of the property in common with the plaintiff, and so was terminable by the plaintiff.

43 In my opinion, the result in Annen v Rattee is probably correct on the same basis. In my opinion, that case was wrong in so far as it applied to cases concerning periodic tenancies granted by joint tenants, and insofar as it suggested a licence granted by one tenant in common, it could always be terminated by another. But it was open to conclude that the licence granted in that case was so extensive as to be terminable by the other tenant in common.

44 In my opinion, the result in Hong v Choo was also correct. The tenant in common was dead, and the administrators of his estate wished to have a representative occupying the property, and they authorised the family member who had lived in the house with the other family members to stay in the house pending the sale. In my opinion, that was reasonably incidental to that tenant in common's right to possession and use and enjoyment of the property, and was in so terminable by other tenants in common.

45 Applying this approach to the entrance foyer of an apartment block, and subject to any by-laws of a relevant strata scheme, this would mean that, if one unit owner gives a licence to an acquaintance to enter the common property in order to visit the unit owner's unit, that licence could not be revoked by another unit owner.

25 The rationale for the different position in respect of a licence and a lease is that the lease of one tenant-in-common’s share effectively substitute’s the lessee’s rights for those of the lessor, so that the burden is not increased, and the lessee has a right of possession to the exclusion of the lessor but together with the other tenants-in-common, whereas in the case of a licence the licensee’s right of occupation is not exclusive of that of the licensor and does not carry a right to possession, so that the total burden is increased, as is illustrated by the example given by Hodgson JA in Koumdjiev, in the passage cited above, at [41].

26 Although the proposition was doubted by the Court of Appeal in Robson-Paul v Farrugia (1969) 20 P & CR 820, the predominant view is that one of several tenants in common can grant a licence to enter on to the property [Bull v Bull [1955] 1 QB 334, 237; Hong v Choo [2004] HKCFI 24; affirmed [2005] HKEC 1156; New South Wales v Koumdjiev].

27 Mr Ireland QC submitted that Maccabi was not entitled to grant a licence in the particular context of the White City Agreement, because the White City agreement did not confer on the Club any rights of use or occupation of any part of White City after expiry of the lease, and provided that after the expiry of the lease only the co-owners – Poplar, Grammar and Maccabi – had rights of use and occupation. While it is correct that the White City agreement does not confer on the Club any rights of use or occupation after expiry of the lease, that is irrelevant to the Club’s contractual claim, which does not involve reliance on any rights conferred on the Club by the White City agreement. It is not correct that the White City Agreement provides that only Poplar, Grammar and Maccabi have rights of use and occupation of the land: while it makes provision for the use and occupation of the land by them, it contains no provision inconsistent with any one of them being entitled to grant licences to others in respect of those parts of the land which that co-owner is entitled to use and occupy. In the absence of provision to the contrary, a contractual right to use real property is, like any other contractual right, assignable in equity [cf Meagher Gummow & Lehane, Equity Doctrines & Remedies, 4th edition, [6-010]]. Maccabi was entitled to grant a licence to the Club, unless some provision in the White City Agreement prevented it. The White City Agreement contains no such provision; indeed it contains, in Clauses 41 and 44, affirmative indicia of assignability. Clause 36 also recognises that a party may assign its interest in White City, albeit subject to rights of pre-emption. Clause 5b contemplates that persons other than Maccabi's members may be permitted to use Maccabi’s Courts, and thus the car parking spaces. While Clause 35 provides that until subdivision is complete "no party may encumber any part of the land without approval of the other parties", the grant of a licence is not an encumbrance, not being a claim, lien or liability attached to property [Wallace v Love (1922) 31 CLR 156, 172 (Higgins J)].

28 Indeed, the White City agreement necessarily contemplates that each co-owner will be entitled to permit others to enter upon and use parts of their land from time to time. Sydney Grammar School’s apparent purpose in acquiring the land was to expand its playing fields from the existing neighbouring Weigall Oval. The new fields would obviously be used not only by the trustees of the school (the co-owners), but also by pupils (who are separate legal entities from the Trustees), and by visiting teams from competing schools. Maccabi, a corporation, would permit its members (different legal entities) – and presumably their guests – to use the Maccabi facilities. And at the time the White City agreement was made, it was contemplated that if JACS exercised the option it would do so on behalf of White City Holdings, which in turn would permit its members to enjoy the facilities of a tennis club on the land. All these arrangements would involve sub-licences.

29 Accordingly, there is nothing in the White City Agreement that detracts from the prima facie position that Maccabi as one of several joint tenants can grant a licence.

30 Was Poplar entitled to revoke the Maccabi Licence? The answer to this question, according to New South Wales v Koumdjiev, depends on whether the licence exceeds what is reasonable and incidental to Maccabi's possession and use and enjoyment of the property in common with Grammar and Poplar, and interferes with the possession and use and enjoyment of the property by Grammar and Poplar. If so, the licence was revocable by Poplar.

31 This requires consideration of the rights of Maccabi to the possession, use and enjoyment of White City. In this case, exceptionally, the rights of each of the tenants-in-common are regulated to a substantial extent by the White City Agreement, and must be viewed in that light. Relevantly, Maccabi's rights under the White City Agreement presently include the following:

· legal title as tenant-in-common (as to 15%) with Grammar (as to 35%) and Poplar (as to 50%) of both the lots;

· a beneficial entitlement to the Maccabi Land, corresponding to a 23% interest in the land south of the stormwater drain unless and until it is subdivided (but no beneficial entitlement in the land north of the drain). Although Maccabi, Poplar and Grammar are legal tenants in common in the specified shares, those shares are "allocated as specifically set out in this agreement" [Clause 4]. The agreement recognises that each party has its own "part of the land" [Clauses 22, 26, 27] and provides for Maccabi to acquire the Maccabi Land [Clause 29];

· use and occupation of the six existing Maccabi courts;

· use of 30 car parking spaces, and the future Maccabi Clubhouse when erected, to be situated in part or whole on the option land [Clauses 5(b), (c), 10 (c) (ii), 11 (c), 12, 22];

· use of two additional courts of its own choice on the Option Land, until it had constructed two additional Maccabi Courts in the Maccabi area;
· use and occupation, in common with Poplar, of the interim Maccabi Clubhouse in the eastern stand. Although at first I wondered whether Clause 12, which confers on Maccabi “unfettered access to and ownership of the Maccabi clubhouse to the fullest extent possible at law”, was of ambulatory effect so that it applied to the interim clubhouse as well as the future clubhouse, I have concluded that it is not, and operates in respect of the future clubhouse only. This conclusion is dictated by Clause 13, which provides that use of the interim clubhouse may be shared between Maccabi and JACS. I am unable to construe Clause 13 as conferring on Maccabi a discretion to share the interim clubhouse with JACS if it wishes but not otherwise; if Clause 12 applied to the interim clubhouse then there was no need to additionally confer any such discretion. The purpose of the reference to “sharing” in Clause 13 is to distinguish the rights in respect of the interim clubhouse from those in respect of the future clubhouse, and to clarify that Maccabi’s rights to the interim clubhouse were not exclusive; it was inserted for the benefit of JACS, rather than for the benefit of Maccabi. This conclusion is reinforced by Clause 14, which confers a right to “full use” – as distinct from shared use – of equivalent facilities, after demolition of the eastern stand clubhouse. Accordingly, in my opinion, the White City Agreement does not give Maccabi use to the exclusion of Poplar of the eastern stand clubhouse.

32 On behalf of Poplar it was submitted that the licence went beyond what was reasonable and incidental to Maccabi’s rights, and interfered with the rights of the other tenants in common in several respects:

· It was said that it encumbered parts of the land, in contravention of Clause 35 of the White City agreement. However, a lease is not an encumbrance.

· It was said that it permitted Maccabi to charge and receive a licence fee without accounting to the co-owners. While this is true, there would be no liability to account if the licence related only to parts of the land that Maccabi was entitled to use exclusively. And even if Maccabi were liable to account to its co-owners, that would not of itself show that the licence unreasonably interfered with the rights of the co-owners.

· It licenses to the Club the use and occupation of the Maccabi clubhouse and two additional courts, when those areas may only be occupied and used by Poplar and Maccabi. Save for the issues concerning the clubhouse to which I shall come, this depends on the proposition that the White City Agreement limits use of those areas to the co-owners and does not permit any one of them to allow others to use them; for reasons already advanced I reject this argument.

33 But for Clause 13, the position would have been clear. The Maccabi licence conferred on the Club rights in respect of the Maccabi Courts and the car parking spaces which Maccabi had under the White City Agreement to the exclusion of the other tenants-in-common, and it did not in those respects interfere with the possession, use and enjoyment of the property by the other tenants-in-common, having regard to the terms of the White City Agreement. The grant of access between the car parking spaces and courts was reasonably incidental to that use. Save in respect of the interim Clubhouse, the Maccabi licence does not confer on the Club any larger rights than those to which Maccabi is, in any event, exclusively entitled under the White City Agreement; and – because Maccabi is exclusively entitled to those rights, which distinguishes the case from many of those referred to by Hodgson JA in Koumdjiev – the corollary is that it does not impinge on the rights of the other tenants-in-common.

34 The difficulty arises because, on the construction of Clauses 12 and 13 which I favour, Maccabi is not entitled to use of the interim clubhouse to the exclusion of Poplar, although it is entitled to use it in common with Poplar. Use by the Club of the interim Maccabi clubhouse will result in an increase in the intensity of its use, which may reduce its amenity to the other joint tenants. If the context were that of tenants in common unregulated by agreement as to their respective rights to various parts of the land, that would be an unreasonable interference with use and enjoyment of the property by Poplar: it is analogous to the example given by Hodgson JA in Koumdjiev, at [41].

35 I do not think that the White City Agreement alters this position. While the intent of the White City Agreement was that Maccabi ultimately have a clubhouse which would be entirely under its ownership and control, it was not entitled to exclude the Option Land Owner from the interim clubhouse under the eastern stand, which was to remain a shared facility. In those circumstances, a licence to a third party which would involve user of that clubhouse by that third party as well as by Maccabi and the Option Land Owner, in a manner not associated with Maccabi’s occupation (such as use by Maccabi’s own members or guests would be), would not be reasonably incidental to Maccabi’s user, and would unreasonably interfere with the rights of the Option Land Owner, Poplar. Accordingly, such a licence would be revocable by Poplar.

36 It follows that in my opinion the Maccabi Licence, insofar as it confers rights on the Club in respect of the eastern stand clubhouse, was revocable by Poplar, and has been revoked. The Club does not have a sufficiently seriously arguable case for a final injunction restraining JACS and Poplar from interfering with its contractual rights under the Maccabi Licence, I respect of the eastern stand clubhouse, though it does with respect to the other aspects of the licence.

The proprietary claim

37 That conclusion makes it necessary to consider the alternative basis on which the Club puts its case, namely that it is entitled in equity to the Option Land by reason of JACS having exercised the option for its own benefit (it being uncontroversial that Poplar is an associated company of JACS), when it was bound to do so if at all for the benefit of White City Holdings and, if not, for the Club.

38 The original proposal by JACS to the Club described what was proposed as a “Joint Venture”. However, the revised proposal did not use that terminology, and the MOU expressly provided (by Clause 7.1) that nothing in the MOU shall be taken to constitute the parties as partners or as joint venturers for any purpose whatsoever. This creates a significant obstacle to the super-imposition generally of the fiduciary obligations of joint venturers on the contractual relationship between the parties, and tends to show that they did not intend that their relationship be attended by such fiduciary obligations.

39 However, under Clause 3.7.1 of the MOU, the Club had a contractual right to insist that JACS exercise the Clause 8a option under the White City Agreement, if at all, on behalf of White City Holdings; and under Clause 3.7.2 itself to exercise the Clause 8b option if JACS did not so exercise the Clause 8a option. Clause 3.7.3 is not engaged in the events which have happened, but confirms that it was the common intention of the Club and JACS that, if JACS did not exercise the option on behalf of White City Holdings, then there was to be an opportunity for the Club to do so on its own behalf. Moreover, the other parties to the White City Agreement were on notice of the arrangements between JACS and the Club, and contracted on the basis that JACS and the Club would perform those arrangements [see Clause 42].

40 Accordingly, it was never contemplated or intended that JACS might exercise the option on its own behalf: if it did not do so on behalf of White City Holdings, the Club would have the opportunity of exercising the option, and if the Club did not do so, the option would lapse. It may be assumed that the Club and JACS are not to be regarded as joint venturers, but in respect of the exercise of the option JACS was not entitled to act on its own behalf. By reason of the MOU, it was bound to afford the Club an opportunity to exercise the option if it did not itself do so on behalf of White City Holdings, which so far as the evidence reveals has never been incorporated.

41 Although JACS asserts that it has terminated the MOU for repudiation, that is disputed by the Club, and no evidence has been adduced on this application sufficient to permit a conclusion that it was no longer reasonably arguable that there remains on foot a binding and enforceable contract in terms of the MOU. Assuming that the contract remains on foot, however, it does not follow that the Club has a beneficial interest in the Option Land. It was White City Holdings, not the Club, that was to be beneficially entitled upon exercise of the Clause 8a option, and although it was intended that White City Holdings would include certain members of the Club and preserve their enjoyment of the facilities, it was also to include other interests, and is not possible to treat the Club as entitled in place of White City Holdings under Clause 8a. This does not deny the Club’s standing to claim a remedy: it matters not for that purpose that the beneficiary was to be White City Holdings, not the Club, because the Club as a contracting party is entitled to insist on the performance by JACS of its contractual obligations. And it may well be that the Club has some equitable remedy in respect of the purported exercise of the Clause 8a option – but it is not a beneficial entitlement to the Option Land in place of White City Holdings.

42 So far as Clause 8b is concerned, while the intent was that in default of exercise of the Clause 8a option, the Club was to have the Clause 8b option, it would only become beneficially entitled to the Option Land upon valid exercise of that option, and there is no evidence that that has ever occurred. If the Clause 8a option was not validly exercised, then the apparent position would be that, neither JACS nor the Club having exercised the option, neither has any further right to occupy or have any interest in the land [Clause 11]. Accordingly, if exercise by JACS of the Clause 8a option were declared void, the result would not be to resurrect any option that the Club might have had but did not exercise.

43 Nor does the Club have any further rights under the Lease, which on any basis expired on 30 September 2007 [Clauses 17a, 19, 20].

44 Accordingly, although there is a seriously arguable case that JACS was not entitled to exercise the Clause 8a option in the manner in which it has purported to do so, I cannot see any basis upon which the Club is entitled to remain in occupation of the Option Land after 31 October 2007.

The balance of convenience

45 As to the balance of convenience, if an injunction is not granted, the Club will have no clubhouse at White City, will be unable to continue to operate a tennis club there, may be unable to remain registered as a club if it has no premises from which to operate, and may well suffer cancellation of memberships by some members. These detriments to the Club will not readily be capable of remedy, if at all, in the event that it ultimately succeeds.

46 No prejudice or inconvenience to Poplar from an interlocutory injunction has been identified. There is evidence that the Option Land – which is three times the size of the Maccabi Land – includes other clubhouse facilities (including, at least, the clubhouse under the northern stand) which JACS will exclusively be entitled to use if the Club quits it. There is no evidence of what are the activities of JACS, and there is no evidence as that user by the Club of the interim Maccabi clubhouse – or the rest of the Maccabi Land – would prejudice JACS or Poplar, having regard to the terms of the White City agreement.

47 The balance of convenience strongly favours the grant rather than the withholding of interlocutory relief.

Conclusion and orders

48 Although this is an interlocutory application, the decisive issues are not questions of contested fact but questions of law. The Court should, if it can, determine those questions. Although I have taken into account that the balance of convenience strongly favours the grant rather than the withholding of interlocutory relief, a circumstance that can potentially lower the threshold for the “seriously arguable case” requirement, it does not do so where the decisive issue is a question of law that the court is able to determine on the interlocutory application.

49 Under the White City Agreement, Maccabi is not entitled to use and occupation of the eastern stand clubhouse to the exclusion of the Option Land Owner, Poplar. By granting the Club a licence to use the eastern stand clubhouse, but not otherwise, the Maccabi Licence exceeds what is reasonable and incidental to Maccabi’s possession, use and enjoyment of the property in common with Poplar, and unreasonably interferes with Poplar’s possession, use and enjoyment of the property. Accordingly, to that extent, the Maccabi Licence was revocable by Poplar, and has been revoked. The Club does not have a sufficiently seriously arguable case for a final injunction restraining JACS and Poplar from interfering with its contractual rights under the Maccabi Licence in respect of the eastern stand clubhouse, though it does with respect to the other aspects of the licence.

50 Although there is a seriously arguable case that JACS was not entitled to exercise the Clause 8a option in the manner in which it has purported to do so, that does not found any entitlement of the Club to remain in occupation of the Option Land after 31 October 2007. Nor does the Club have any further right to do so under the Lease, which on any basis expired on 30 September 2007.

51 My orders are:

1.1 the six synthetic courts on the south eastern portion of the land in Folio Identifier 3/234605 allocated to Maccabi pursuant to Clause 5a of the White City Agreement;

1.3 access between those car parking spaces and courts (but not the said clubhouse) as referred to in Clause 5d of the White City Agreement.

2. Order that costs of the interlocutory application be costs in the proceedings.

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Citations

White City Tennis Club Ltd v John Alexander's Clubs Pty Ltd & 2 ors [2007] NSWSC 1210

Most Recent Citation

White City Tennis Club Ltd v John Alexander's Clubs Pty Ltd [2007] NSWSC 1430

Cases Citing This Decision

3

Hinkley v Star City Pty Ltd [2010] NSWSC 1389

White City Tennis Club Ltd v John Alexander's Clubs Pty Ltd [2008] NSWSC 1225

White City Tennis Club Ltd v John Alexander's Clubs Pty Ltd [2007] NSWSC 1430

Cases Cited

4

Statutory Material Cited

0

Catanzariti v Whitehouse [1981] FCA 157

New South Wales v Koumdjiev [2005] NSWCA 247

Catanzariti v Whitehouse [1981] FCA 157

CITATION:	White City Tennis Club Ltd v John Alexander's Clubs Pty Ltd & 2 ors [2007] NSWSC 1210
HEARING DATE(S):	22 October 2007
JUDGMENT DATE :	29 October 2007
JURISDICTION:	Equity Division Duty Judge List
JUDGMENT OF:	Brereton J
DECISION:	Interlocutory injunction granted to restrain interference with contractual right to use by plaintiff of some but not other parts of real property under licence.
CATCHWORDS:	REAL PROPERTY – Co-ownership – tenancy-in-common – whether one of several tenants in common entitled to grant licence irrevocable by others – whether licence reasonably incidental to grantor’s use and does not unreasonable interfere with rights of others to possession use and enjoyment - TORT – Intentional interference with contractual relations – contractual licence to use real property
CASES CITED:	Bull v Bull [1955] 1 QB 334 Catanzariti v Whitehouse (1981) 55 FLR 426 Hong v Choo [2004] HKCFI 24 Hong v Choo [2005] 3 HKLRD 811, [2005] HKEC 1156 DC Thomson & Co Ltd v Deakin [1952] Ch 646 Robson-Paul v Farrugia (1969) 20 P & CR 820 State of New South Wales v Koumdjiev (2005) 63 NSWLR 353 U-Needa Laundry Ltd v Hill [2000] 2 NZLR 308 Wallace v Love (1922) 31 CLR 156 Text: Meagher Gummow & Lehane, Equity Doctrines & Remedies, 4th edition
PARTIES:	White City Tennis Club Ltd (plaintiff) John Alexander's Clubs Pty Ltd (first defendant) Poplar Holdings Pty Limited (second defendant) Sydney Maccabi Tennis Club Ltd (third defendant)
FILE NUMBER(S):	SC 3359/07
COUNSEL:	S T White SC w N J Kidd (plaintiff) J M Ireland QC w J S Cooke (first & second defendants)
SOLICITORS:	Kemp Strang (plaintiff) Thompson Eslick (first & second defendants) Leslie Caplan & Grunstein (third defendant)