Wright v Hamilton Island Enterprises Limited
[2001] QSC 172
•30 May 2001
SUPREME COURT OF QUEENSLAND
CITATION: Wright v Hamilton Island Enterprises Limited [2001] QSC 172
ACN 055 389 725 Pty Ltd v Hamilton Island Enterprises Limited [2001] QSCPARTIES: JACKI WRIGHT
(first plaintiff/respondent)
and
PLANLEY PTY LTD
(second plaintiff)
v
HAMILTON ISLAND ENTERPRISES LIMITED (ACN 009 946 909)
(defendant/applicant)ACN 055 389 725 PTY LTD (ACN 055 389 725)
(first plaintiff/first respondent)
and
LOUIS PHERHAD
(second plaintiff/second respondent)
and
VIVIENNE PHERHAD
(third plaintiff)
and
WINSTREAM PTY LTD
(fourth plaintiff)
v
HAMILTON ISLAND ENTERPRISES LIMITED
(ACN 009 946 909)
(defendant/applicant)FILE NO/S: 8981 of 1996
8982 of 1996DIVISION: Trial Division DELIVERED ON: 30 May 2001 DELIVERED AT: Brisbane HEARING DATE: 1 May 2001 JUDGE: Mullins J ORDER: In action 8981 of 1996:
1. Leave is given to the defendant to amend the defence by deleting paragraphs 7, 8, 9 and 10 of the defence.
2. The application for leave to amend the defence and counterclaim is otherwise dismissed.
In action 8982 of 1996:
1. Leave is given to the defendant to amend the defence by deleting paragraphs 8, 9, 10, 11 and 12 of the defence.
2. The application for leave to amend the defence and counterclaim is otherwise dismissed.CATCHWORDS: PROCEDURE – application to amend defence and counterclaim – amendments consequential upon declaratory orders made disposing of action – not appropriate to amend after declaratory orders made.
Australian Energy Limited v Lennard Oil NL (No 2) [1988] 2 QdR 230
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589COUNSEL: DM Logan for the applicant
PR Murphy (solicitor) for the respondentsSOLICITORS: Gadens Lawyers for the applicant
O'Shea Corser and Wadley for the respondents
MULLINS J: Action number 8981 of 1996 ("the Wright action") and action number 8982 of 1996 ("the Pherhad action") are supervised cases. On 15 August 1997 Moynihan SJA ordered that the trial of liability issues be heard separately from trial of quantum issues. On 19 December 1997 Thomas J (as he then was) declared that the question as to which form of relief should be granted (that is estoppel or minimum equity by way of damages) was an issue to be determined at the quantum trial. The trial of liability in these two actions together with action number 8976 of 1996 took place over 15 days in February 1998. Thomas J delivered reasons for judgment in each action on 17 March 1998, but pages 1 to 35 of the reasons for judgment in action 8976 of 1996 apply also to the Wright action and Pherhad action.
A subsequent hearing was held before Thomas J on 31 March 1998 in relation to the form of orders which should be made, as a result of the reasons for judgment. In the course of that hearing the following exchange took place:
"MR HAMPSON: Before Your Honour goes on to the formal orders, might I do two things: one ask Your Honour's leave to appeal against Your Honour's orders for costs because if that isn't done at this stage there is going to be some difficulty, and the other thing was about the formal orders, Your Honour, Your Honour intimated a preference for the order of the plaintiffs, I have got the Wright order in front of me, the one that we handed up where it says the plaintiff personally makes written application to the defendant to have the licence so renewed provided the first plaintiff is not in breach of the licence, and Your Honour said you preferred the term 'elect', the word 'elect'. I wasn't actually heard on that, but I would like to make this submission, Your Honour, that where you are dealing with natural persons, and that is in the Wright action, there doesn't seem a difficulty using the word 'elect' or going away from the idea of personally making an application. However, it does seem significant in the cases where the plaintiffs are corporations.
HIS HONOUR: Why?
MR HAMPSON: And the question is, so far as Your Honour's estoppel is concerned, whether that is to the person who, as it were, set up the estoppel, whether it is a life interest, as it were, that that person has to continue to elect or whether it is something that the corporation has irrespective of who are the persons who come in the future to be directing the corporation.
HIS HONOUR: The election surely is the party's right and the contractual position between the parties may mean that rights are lost if the natural person ceases to be a resident of the Island or some other contingency occurs.
MR HAMPSON: Or dies.
HIS HONOUR: But I don't see the particular difficulty about the corporate plaintiff electing.
MR HAMPSON: No, but the question is really, Your Honour, and this is not really a debating exercise, it is a (sic) important conveyancing point, as Your Honour will appreciate, for the number of these licences that there are on the Island, is that then a limitation – really this is what we respectfully submit should shine through from your order quite clearly, that is, it is a limitation personally to the person who had the estoppel who gave up his business or something like Mr Pherhad and went to the Island, and therefore it lasts as long as he lives, or is it something which by this time he has now passed on to his company and is going to continue no matter to whom the shares in the company belong in the future.
So, in other words, in perpetuity, the corporation having no natural life, the right of election will continue, and I respectfully submit the order should make it clear what Your Honour intends for, among other things, it is not going to be easy to prepare for the next stage of the matter, the discretionary defences and things of that kind, unless it is clear to the parties what Your Honour's judgment really encompasses.
HIS HONOUR: I understand what you have submitted, but I don't subscribe to it and don't really see any difficulty in the form of order that I am proposing to make which gives the party which has the licence the right to indicate when a renewal – whether or not a renewal is desired. I think my reason for judgment already indicates the non-perpetuity or my rejection of the arguments which suggest that it is a perpetual right.
MR HAMPSON: With respect, Your Honour, it seems unseemingly to debate the matter, I am not trying to debate, I am just trying to understand quite clearly what the position is as it goes into the order. In short therefore, the perpetuity would therefore be the life of the person concerned and questions arising under the licence of continued residence on the Island and so forth as Your Honour has already said.
HIS HONOUR: There are certain conditions in the licence itself which require a natural person to reside there, et cetera. If those are breached then there is a breach which would enable the licence to be terminated.
MR HAMPSON: That's correct.
HIS HONOUR: It is as simple as that, provided that those matters still continue, and that, of course, will be, I assume limited to the life of the person designated. Renewals can be sought every five years so long as the licence is not breached.
MR HAMPSON: There is nothing further that I can say, Your Honour."
The reference by Thomas J in this exchange to his reasons for judgment rejecting arguments that it is a perpetual right of renewal must be a reference to the following passages under the heading "Further defence submissions" found at pp 31-32 of the reasons for judgment:
"It was then submitted that the representations were no more than 'statements providing a measure of comfort to licensees concerning the present intention of HIE management' and that they were not intended to affect any legal relationship. The submission continues that the plaintiffs could not have understood and the defendant should not be taken to have intended the plaintiffs to understand that such statements would bind HIE indefinitely or even for ever. Having regard to the personal residence requirements for individual concessionaries, and similar requirements from designated persons in the case of a company concessionaire, the outer limit of tenure would seem to be measured by a life rather than eternity, and of course such licences could always be brought to an end if a breach could be established. I do not find the above submissions persuasive."
Orders were made on 31 March 1998 in each of the Wright action and the Pherhad action. In each action order 1 was a declaration of rights, order 2 was an interlocutory injunction and order 3 was declaratory about the operation of order 2. These three orders made in the Wright action are set out below in the proposed amendments to the defence and counterclaim. These orders were in similar terms for both actions.
In addition, in the Wright action, it was ordered that the second plaintiff's action be dismissed and the defendant's counterclaim be dismissed. In the Pherhad action it was also ordered that the third and fourth plaintiffs' action be dismissed and the defendant's counterclaim be dismissed.
The parties have differing views on what the first three orders made in each action on 31 March 1998 mean and how the orders operate in the context of the existing licence agreement in favour of the first plaintiff in each action. It is apparent that this has been one of the impediments to the finalisation of these actions. One of the purposes in the application which is now brought by the defendant to amend its defence and counterclaim in each action is to agitate some of these differences which have arisen between the parties since the making of the orders by Thomas J.
The proposed amendments in the Wright action include the deletion of paragraphs 7, 8, 9 and 10 of the defence. Corresponding amendments are proposed to paragraphs 8, 9, 10, 11 and 12 of the Pherhad action. Some of those amendments are strictly not necessary as they delete parts of the pleading which raise issues which have been determined by Thomas J. There is no opposition to those amendments. The plaintiffs in both actions who are still active parties (the first plaintiff in the Wright action and the first and second plaintiffs in the Pherhad action) oppose the amendments which seek to raise the issues arising from the orders made by Thomas J.
The affidavit of Mr KW Rose sworn on 30 April 2001 in support of the defendant's application and filed in the Wright action exhibits as "KWR5" the proposed amended defence and counterclaim in that action. The defendant seeks to make similar amendments to the corresponding pleading in the Pherhad action. The proposed amendments set out for the defence and counterclaim in the Wright action which are opposed by the plaintiff are:
"12A.The Honourable Justice Thomas (as he then was) on 31 March 1998 ordered (inter alia) herein that:
'1. It be declared that:
(a)there exists a collateral contract between the first plaintiff and the defendant, collateral to the written licence agreement dated the 20th March 1992, whereby in consideration of the first plaintiff entering into the written licence agreement the defendant promised that it would renew the licence granted to the first plaintiff for further periods of five years from the expiry of the term of the licence on the 31st December 1995 for so long as the first plaintiff elects to have the licence so renewed provided that the first plaintiff was not in breach of the licence at the time of each such renewal;
(b)the defendant is estopped from denying the existence of an agreement between it and the first and second plaintiffs for renewal of the licence granted by the defendant to the first plaintiff by the licence agreement for further periods of five years from the expiry of the term of the licence on the 31st December 1995 for so long as the first plaintiff elects to have the licence so renewed, provided that the first plaintiff is not in breach of the licence at the time of each such renewal.
2.Until further or earlier order the defendant whether by itself, its servants, or agents, or otherwise be restrained from interfering with the conduct of the first plaintiffs business as described in the said licence agreement between the first plaintiff and the defendant, or the use by the first plaintiff in conjunction with the conduct of that business of the premises described in the said licence agreement.
3.The order in paragraph 2 does not prevent the defendant acting in accordance with the licence agreement save for terms thereof providing for termination of the licence on 31 December 1996.'
(collectively called herein 'the orders')
12B. Subject to the defendant's right to appeal against the orders:
(a) the defendant admits that:
(i)there exists a collateral contract between the first plaintiff and the defendant, collateral to the licence agreement, whereby in consideration of the first plaintiff entering into the licence agreement the defendant promised that it would renew the licence granted to the first plaintiff for further periods of five years from the expiry of the term of the licence on the 31st December 1996 for so long as the first plaintiff elects to have the licence so renewed, provided that the first plaintiff was not in breach of the licence at the time of each such renewal;
(ii)the defendant is estopped from denying the existence of an agreement between it and the first and second plaintiffs for renewal of the licence granted by the defendant to the first plaintiff by the licence agreement for further periods of five years from the expiry of the term of the licence on the 31st December 1996 for so long as the first plaintiff elects to have the licence so renewed, provided that the first plaintiff is not in breach of the licence at the time of each such renewal;
(b)the defendant says that upon the proper construction of the licence agreement, the collateral contract and agreement conferring the said rights of renewal provide that such rights of renewal:
(i)may only be exercised by the first plaintiff while the first plaintiff continues to be personally involved in the supervision and conduct of the first plaintiffs business (a defined in the licence agreement), in accordance with the requirements of cl.# of the licence agreement;
(ii) subsist only during the life of the first plaintiff;
(iii)continue to exist only while the first plaintiff remains a permanent resident of Hamilton Island, in accordance with the requirement of cl.# of the licence agreement.
(iv)are subject to the entitlement of the defendant as licensor to require the first plaintiff to enter into the standard form of the defendant's written licence agreement current at the date of renewal;
(v)are personal and not assignable;
(vi)alternatively to subparagraph (v), if (which is denied) the said rights of renewal are assignable, the right of any assignee to elect to renew the licence is subject to the conditions set out in subparagraphs (i) to (iv) hereof (inclusive).
12C.On or about 22 June 2000, the defendant's solicitors, Gadens Lawyers, forwarded to the plaintiffs solicitors a letter dated 22 June 2000 which relevantly stated:
'Effect of the judgment
As presently advised and from our review of the judgment to date, it is considered that the following is the correct analysis of the judgment:
1.The estoppel and collateral contracts found in your clients' favour by Justice Thomas are personal to the individuals who were the recipients of those representations as found.
2.Accordingly, the benefit of any estoppel and/or collateral contract is limited to those individuals or companies with which they are associated and continues only so long as those individuals continue to conduct the relevant business.
3.On this basis any parties entitled to the benefit of the estoppel and/or collateral contract now found in your clients' favour can only transfer to a third party the remaining term of any existing licence period. This, of course, assumes in your clients' favour an entitlement to the relevant extension since the original expiry in circumstances where there has been no breach (an issue which is, of course, still alive and to be determined at least in relation to the Health & Racquet Club in the current litigation).
4.Alternatively, if the rights are transferable by your clients to third parties then they are still subject to a limitation of the life of the relevant individual who was the recipient of the representation and held it on his or her own behalf or on behalf of their associated company as concessionaire.'
12D.On 6 July 2000, the plaintiffs' solicitors forwarded to the defendant's solicitors a facsimile transmission in response dated 6 July 2000, which relevantly included the following passage:
'(iii)At the top of page 4 you assert that the 'estoppel and collateral contacts found in (our) clients' favour by Justice Thomas are personal to the individuals who were the recipients of those representations as found'.
This is not so. We refer you in particular to pages 40 – 43 of the Grace Reasons for Judgment, pages 4-7 in the Wright Reasons and pages 5 onwards in the ACN/Pherhad Reasons respectively.
The benefit of each judgment and consequential orders are in favour of the respective plaintiffs in each action.
Moreover, we refer you to pages 31 and 32 of His Honour's Reasons in the Grace action where His Honour was not impressed by submissions on behalf of HIE, inter alia, to the effect that the plaintiffs 'could not have understood and the defendant should not have been taken to have intended the plaintiffs to understand that such statements would bind HIE indefinitely or even for ever' His Honour made specific reference, inter alia, to the licence agreements between the parties including rights of assignment of those licenses both in the case of individual as well as corporate concessionaires. There are also other provisions in the licence, including residential and management obligations, standards of operation of the concessions, breach provisions, etc, all of which may be of direct relevance to the ongoing nature of the concessions and renewals for further terms;(iv)You also assert in page 4 of your letter, inter alia, that 'any parties entitled to the benefit of the estoppel and/or collateral contract now found in (our) clients favour can only transfer to a third party the remaining term of any existing licence period.' Our clients reject that assertion, including on the basis of the findings and reasons given by Thomas J. in each action, including at page 42 of the Grace action as follows:
'There is no difficulty in upholding the benefit of an estoppel in favour of a party who stands in the shoes of someone who would have been entitled to assert the estoppel'
12E.In these premises, there is presently a dispute between the parties as to whether the said collateral contract and agreement conferring the said rights of renewal provides as alleged in paragraph 12B(b) hereof."
The defendant also seeks to amend the relief claimed by counterclaim by the addition of the following:
"(v)a declaration that, upon the proper construction of the licence agreement, the said collateral contract and agreement conferring the said rights of renewal provide that such rights of renewal:
(A)may only be exercised by the first plaintiff while the first plaintiff continues to be personally involved in the supervision and conduct of the first plaintiffs business (as defined in the licence agreement), in accordance with the requirements of cl.# of the licence agreement;
(B) subsist only during the life of the first plaintiff;
(C)continue to exist only while the first plaintiff remains a permanent resident of Hamilton Island, in accordance with the requirements of cl.# of the licence agreement;
(D)are subject to the entitlement of the defendant as licensor to require the first plaintiff to enter into the standard form of the defendant's written licence agreement current at the date of renewal;
(E) are personal and not assignable;
(F)alternatively to subparagraph (E), if the said rights of renewal are assignable the right of any assignee to elect to renew the licence is subject to the conditions set out in subparagraphs (A) to (D) hereof (inclusive);"
The nub of the defendant's proposed amendments is that it seeks to add detail to the declaration made in respect of the collateral contract and estoppel in each proceeding, as set out in the proposed paragraph 12B(b) of the amendments proposed in the Wright action.
The defendant argues that each plaintiff only has the benefit of an interlocutory injunction and "mere" declarations as to the rights of the parties and before any binding orders can be made which carry those declarations into effect, the issues raised by the proposed amendments should be resolved. It is submitted on behalf of the defendant that these matters go to each plaintiff's asserted entitlement to, and nature of, the final relief still sought by the plaintiff and are relevant to the exercise of the court's discretion in determining what precisely is the appropriate relief to which each plaintiff is entitled and are therefore matters of defence to each plaintiff's claims. It is also submitted that how these issues raised by the proposed amendments were dealt with by Thomas J was "attended by considerable uncertainty".
Another reason for the defendant pursuing the proposed amendments is that it is concerned that if these matters relating to the relief claimed are not raised in these proceedings, the defendant may subsequently be met by a defence of estoppel based on Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, 602, 604.
In the written submissions relied on by the defendant on the hearing of this application, it was submitted that the plaintiff in each proceeding was on the current pleading still seeking the relief of:
(a) rectification;
(b) specific performance of the collateral contract;
(c) a permanent injunction;
(d) further and alternatively, compensatory damages by reason of the estoppel;
(e) further and alternatively, damages for breach of contract.
Mr Logan of Counsel on behalf of the defendant submitted that Thomas J had "indicated his views about rectification", but that form of relief had not been formally abandoned by the plaintiffs in each action. The issue of rectification was dealt with in the reasons for judgment of Thomas J. In each action Thomas J was satisfied that rectification was not an appropriate remedy, but that in each action the case of collateral contract had been made out. The declaration as to the existence of the collateral contract disposed of the claim for rectification.
It appears that the question of whether an order for specific performance of the collateral contract is ordered in each action and on what terms remains outstanding.
The declaration made in each action as to the existence of the collateral contract and the estoppel against the defendant in respect of the agreement for renewal of the licence on the terms set out in paragraph 1(b) of the order in each action made on 31 March 1998 was final relief. Apart from the alternative claims for damages made in each statement of claim, the issue of final relief by way of injunction and/or specific performance order remains to be determined in each action.
Consistent with the order made on 19 December 1997, Thomas J stated in each of the reasons for judgment that:
"There remains however (for determination if necessary in the trial of the so-called 'quantum' issues) the question whether the 'minimum equity' needed to avoid the relevant detriment will be by continuation of an injunction, or by the payment of damages."
One of the proposed amendments to each of the defences is that the defendant's allegation that "Damages or equitable compensation is the minimum equity needed to reverse the claimed detriment and do justice between the parties" is deleted. The effect of this is that the question of whether the appropriate relief in support of the declared rights in the context of what is the minimum equity needed to avoid the relevant detriment is the continuation of the injunction or the payment of damages is no longer required to be determined.
The plaintiffs submit that the defendant's proposed amendments raise questions about the interpretation of the declarations made by Thomas J, but there is no dispute to be determined by the court on the facts pleaded and tried. It was also submitted on behalf of the plaintiffs that the defendant does not allege in respect of either action that the first plaintiff has attempted to assign the licence, or the relevant person has died, or the first plaintiff has breached any relevant condition of the licence agreement, so that the questions that the defendant seeks to raise are hypothetical and it is not proper to request the court to expand and prolong the existing actions to consider them.
In relation to the disputed amendments, the question that has to be determined on this application is whether it is possible or appropriate that the defendant be allowed to pursue the issues raised by the proposed amendments by amending its defence and counterclaim in each action.
It is trite but it needs to be expressed that it does not follow from the fact that the respective solicitors for the parties are unable to agree on the interpretation or application of the orders made by Thomas J on 31 March 1998 those orders are not capable of precise interpretation or application. The orders must be interpreted in context and against the background of the pleadings and reasons for judgment in each action. See Australian Energy Limited v Lennard Oil NL (No 2) [1988] 2 QdR 230, 232, 243-244.
Although there are issues of final relief to be determined in each action, the factual matters raised on the pleadings in each action have been disposed of by the findings made by Thomas J. In particular, the defendant's case that the respective representations were too uncertain to ground an estoppel and that the representations were inconsistent with the existing licence agreement were rejected by Thomas J. It was apparent from the exchange between Thomas J and Senior Counsel for the defendant on 31 March 1998 that Thomas J considered that the issue of tenure and operation of the collateral contract in conjunction with the terms of the existing licence agreement had been disposed of by his foreshadowed declarations of rights and reasons for judgment. The issues now sought to be raised by the defendant may (but not necessarily will) arise in the framing of the final relief sought by the plaintiff in each action to the extent that an interpretation of Thomas J's orders is required. If the form of declaration were challenged on appeal by the defendant, that challenge may be affected by the interpretation of the relevant orders. It is also possible that the interpretation and application of the orders made by Thomas J may become relevant in any subsequent proceedings taken when circumstances arise such as those foreshadowed by the defendant as the proposed assignment of one of the licence agreements.
It is neither proper nor appropriate in these proceedings for the defendant to seek to amend its defence, in order to raise matters which have as their starting point an admission of the matters disposed of by the declarations made by Thomas J on 31 March 1998. The defendant is not using a pleading to raise facts in issue between the parties. It is simply an attempt by the defendant to air its concerns about the interpretation and application of the orders made by Thomas J.
The defendant's submission based on wishing to avoid an Anshun estoppel is misconceived, when the very matters which the defendant seeks to raise only follow from the final determination by Thomas J of the matters in issue which were resolved by the declaration as to rights made in each action.
I have deliberately refrained from expressing any views in these reasons on the interpretation of Thomas J's orders, as I have not heard full submissions from both parties on this aspect and it was not necessary to form any views in order to dispose of this application.
There are other courses which the defendant can follow in order to agitate the difficulties in application which it foresees with the interpretation of the orders made by Thomas J.
The orders which I will make are:
In action 8981 of 1996:
1.Leave is given to the defendant to amend the defence by deleting paragraphs 7, 8, 9 and 10 of the defence.
2.The application for leave to amend the defence and counterclaim is otherwise dismissed.
In action 8982 of 1996:
1.Leave is given to the defendant to amend the defence by deleting paragraphs 8, 9, 10, 11 and 12 of the defence.
2.The application for leave to amend the defence and counterclaim is otherwise dismissed.
As the plaintiffs have been successful in their opposition of the disputed amendments proposed by the defendant to its defence and counterclaim in each action, it follows that the plaintiffs should have the costs of the application in each action. I will hear submissions from the parties, if contrary submissions on costs are sought to be made.
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