Wright v Hamilton Island Enterprises Limited (No 2) [2001] QSC 424; ACN 055 389 725 Pty Ltd v Hamilton Island Enterprises Limited (No 2)

Case •

[2001] QSC 424

•

15 November 2001

SUPREME COURT OF QUEENSLAND

CITATION: Wright v Hamilton Island Enterprises Limited (No 2) [2001] QSC 424
ACN 055 389 725 Pty Ltd v Hamilton Island Enterprises Limited (No 2) [2001] QSC 424
PARTIES:

JACKI WRIGHT
(first plaintiff)
v
HAMILTON ISLAND ENTERPRISES LIMITED (ACN 009 946 909)
(defendant)

ACN 055 389 725 PTY LTD (ACN 055 389 725)
(first plaintiff)
and
LOUIS PHERHAD
(second plaintiff)
v
HAMILTON ISLAND ENTERPRISES LIMITED
(ACN 009 946 909)
(defendant)
FILE NO/S: S8981 of 1996
S8982 of 1996
DIVISION: Trial Division
DELIVERED ON: 15 November 2001
DELIVERED AT: Brisbane
HEARING DATE: 30 October 2001
JUDGE: Mullins J
ORDER:

In action number 8981 of 1996:

(1)   The interlocutory injunction ordered on 31 March 1998 be discharged.

(2)   The defendant pay the first plaintiff’s reserved costs of and incidental to this proceeding and counterclaim up to 31 March 1998 to be assessed on the standard basis.

(3)   The defendant pay the first plaintiff’s costs, including reserved costs, of and incidental to this proceeding from 31 March 1998 to, but excluding, the hearing on 30 October 2001 to be assessed on the standard basis.

In action number 8982 of 1996:

(1)   The interlocutory injunction ordered on 31 March 1998 be discharged.

(2)   The defendant pay the first and second plaintiffs’ reserved costs of and incidental to this proceeding and counterclaim up to 31 March 1998 to be assessed on the standard basis.

(3)   The defendant pay the first and second plaintiffs’ costs, including reserved costs, of and incidental to this proceeding in respect of the period 31 March 1998 to, but excluding, the hearing on 30 October 2001 to be assessed on the standard basis.
CATCHWORDS:

PROCEDURE – form of orders for final relief – declaration of rights made after trial – further orders by way of final relief deferred until after further hearing – whether assignability of right of renewal of licence agreement disposed of by declaration of rights – whether terms of renewed licence disposed of by declaration of rights – whether permanent injunction necessary

Royal Insurance Co Ltd v Mylius (1926) 38 CLR 477
COUNSEL: MD Hinson SC for the plaintiffs
PA Keane QC and DM Logan for the defendant
SOLICITORS: O’Shea Corser & Wadley for the plaintiffs
Gadens Lawyers for the defendant

  1. MULLINS J:  I refer to the history of action number 8981 of 1996 (“the Wright action”) and action number 8982 of 1996 (“the Pherhad action”) which is set out in my reasons for judgment in both matters delivered on 30 May 2001. 

  1. Orders 1, 2 and 3 made by Thomas J in each action on 31 March 1998 were in similar terms.  It is therefore sufficient to set out those three orders made in the Wright action:

“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 plaintiff for renewal of the licence granted by the defendant to the first plaintiff by a written licence agreement dated the 20th March 1992 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 plaintiff’s 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 1995.”

  1. I will refer to Ms Wright who is described as the first plaintiff in the Wright action as the plaintiff in that action.  Although Mr Pherhad who is the second plaintiff in the Pherhad action was also found to have standing to enforce the rights of renewal of the licence agreement held by the first plaintiff in that action, for ease of reference I will refer to the first plaintiff in that action as the plaintiff in that action.

  1. The actions were listed for hearing on 30 October 2001 to enable submissions to be made as to the form of orders which should be made by way of final relief in the actions in addition to the declaration of rights made by Thomas J in each action on 31 March 1998. 

  1. Each of the parties provided drafts of proposed orders prior to the hearing.  A comparison of those draft orders indicates what remains in issue between the parties.  That was also clarified by the oral submissions made at the hearing on 30 October 2001. 

  1. As the issues which remain outstanding in each action are virtually identical, it is sufficient to set out the draft orders proposed by the parties in the Wright action. 

  1. The orders proposed by the plaintiff in the Wright action are:

“1.The defendant, whether by itself, its servants or agents or otherwise, be restrained from interfering with the conduct of the first plaintiff’s business as described in the written licence agreement between the first plaintiff and the defendant dated 20 March 1992, or the use by the first plaintiff in conjunction with the conduct of that business of the premises described in the said licence agreement.

2.The order in paragraph 1 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 1995.

3.The defendant pay the first plaintiff’s reserved costs of and incidental to the action and counterclaim up to 31 March 1998 to be assessed on the standard basis.

4.The defendant pay the first plaintiff’s costs including reserved costs of and incidental to the action since 31 March 1998 to be assessed on the standard basis.”

  1. The orders proposed by the defendant in the Wright action are:

“1.If, in accordance with the rights declared herein by the Honourable Mr. Justice Thomas (as he then was) on 31 March 1998, the first plaintiff intends to exercise her right to have the licence renewed for a period following 31 December 1995, she shall provide to the defendant written notice of such election within fourteen (14) days after the date hereof.

2.In the event the first plaintiff so elects to renew the licence:

(a)the defendant, whether by itself, its servants or agents or otherwise, be restrained from interfering with the conduct of the first plaintiff’s business described in the written licence agreement between the first plaintiff and the defendant dated 20 March 1992, or the use by the first plaintiff in conjunction with the conduct of that business of the premises described in the said licence agreement;

(b)the renewed licence agreement in respect of the said renewed term, and any subsequent renewed term, is to be in the standard form of the defendant’s written licence agreement current at the date of the relevant election by the first plaintiff.

3.The order in paragraph 2(a) 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 1995, subject to the condition that nothing herein contained prevents the defendant from refusing to renew the licence and recovering possession of the said premises:

(a)if at the time the first plaintiff purports to elect to have the licence renewed:

(i)the first plaintiff has ceased to be personally involved in the direct supervision and conduct of the first plaintiff’s business (as defined in the licence agreement), in accordance with the requirements of clause 18.6 of the licence agreement; or

(ii)the first plaintiff is dead; or

(iii)the first plaintiff is no longer a permanent resident of Hamilton Island, in accordance with the requirements of clause 18.6 of the licence agreement;

(b)if a person other than the first plaintiff who claims to be an assignee of the first plaintiff, purports to elect to have the licence renewed in accordance with the rights of renewal declared herein by the Honourable Mr. Justice Thomas (as he then was) on 31 March 1998, in that:

(i)the first plaintiff may only assign the benefit of any current licence agreement and the balance of the term of the licence provided thereby;

(ii)the said rights of renewal are personal and not assignable;

(iii)alternatively to subparagraph (ii), if the said rights of renewal are assignable, the right of any assignee to elect to renew the licence is subject to the provisions of subparagraph (a) hereof.

4.The defendant pay the first plaintiff’s reserved costs of and incidental to this proceeding and counterclaim up to 31 March 1998, to be assessed on the standard basis.

5.The defendant pay the first plaintiff’s costs including reserved costs of and incidental to this proceeding in respect of the period 31 March 1998 to and including 31 May 2001, to be assessed on the standard basis.

6.The first plaintiff pay the defendant’s costs of and incidental to this proceeding from 30 May 2001 to # October 2001 to be assessed on the standard basis.”

  1. Orders 1 and 2 proposed by each plaintiff seek to make permanent the interlocutory injunction ordered by Thomas J on 31 March 1998.  The defendant submits that a permanent injunction is neither warranted nor necessary.  The defendant also seeks to have matters clarified which it asserts are in issue between the parties (although that is disputed by each of the plaintiffs), so that the final orders are workable.  One of these issues is formalising the position in relation to the exercise of the right of renewal of each licence prior to the date when the final orders are made and dealing with the means of future exercises of the right of renewal of each licence.  The defendant submits that the issues of whether or not the rights found by Thomas J are personal to each licensee, the terms of the renewed licence and the tenure and operation of the rights of renewal should also be resolved by the final orders. 

Nature of the process of framing final relief

  1. At the time that Thomas J made the orders on 31 March 1998, both the court and the parties contemplated that there would be a further substantial hearing involving evidence relating to the issues left outstanding after the trial before Thomas J, such as whether damages would be an adequate remedy in lieu of the continuation of the injunction or an order for specific performance.  That was one of the reasons why the injunctions that were ordered on 31 March 1998 were interlocutory. 

  1. After the parties abandoned pursuit of those issues which would have required further evidence before the making of additional final orders, the making of those final orders has devolved to an exercise of determining what orders should be made, having regard to the determination of issues made by Thomas J which can be gleaned from the orders made by Thomas J in each action on 31 March 1998 against the background of the pleadings and reasons for judgment in each action. 

  1. At the hearing on 30 October 2001, the defendant did rely on some further evidence which was not before Thomas J which showed the inability of the parties to agree on the terms of the final orders and the forms of concessionaire licence which have been utilised on Hamilton Island between 1990 and 2001. 

  1. In each action the declaration which was paragraph 1 of the order made by Thomas J on 31 March 1998 about the existence of the collateral contract and an estoppel against the defendant from denying the existence of that collateral contract was itself final relief.  My task is to determine what additional orders should be made by way of final relief to give effect to the determination of issues made by Thomas J.        

Exercise of right of renewal

  1. Each of the actions was commenced because of the conduct on behalf of the defendant in or around August 1996 which indicated an intention not to renew the existing licence agreements which was expressly pleaded in paragraph 19 of the amended statement of claim in the Wright action and paragraph 20 of the further amended statement of claim in the Pherhad action.  The licence agreement in the Wright action had expired on 31 December 1995 and the licence agreement in the Pherhad action was due to expire on 31 December 1996. If there had been no underlying intention of each plaintiff to renew her or its licence agreement there would have been no point in that plaintiff’s seeking the declaration of rights made by Thomas J in the action on 31 March 1998 about the existence of the right to renew. 

  1. It has taken an inordinate amount of time for each action to reach the stage when submissions could be heard as to the form of final relief.  This has been partly due to the defendant’s changing solicitors in June 2000.  It is apparent that in the meantime the business permitted by the relevant licence agreement has continued to be conducted from each premises.

  1. The submission is made by the defendant in the outline of submissions filed on 31 July 2001 that each plaintiff presently has no licence agreement or contractual licence pursuant to which the plaintiff remains in occupation of the subject premises.  It is submitted that each plaintiff has the benefit of a declaration supported by an interlocutory injunction made by Thomas J on 31 March 1998.  It is also submitted that since those orders were made, neither plaintiff has elected to renew the licence, no renewal has been effected and no renewed licence agreement has yet been executed by the parties.  These submissions were in the nature of assertions, rather than being made by reference to or analysis of any relevant authority. 

  1. The plaintiffs responded in their outline of submissions filed on 4 September 2001 that each plaintiff’s conduct in remaining in occupation of the premises and conducting the business is an election to have the licence renewed.

  1. It was not an issue on the pleadings in either action or one which required determination in the course of the trial before Thomas J, as to whether or not the plaintiff had elected to renew upon the expiry of the licence agreement. 

  1. It is not appropriate in a hearing to determine the form of final orders, based on the findings made by the trial judge, that an issue be addressed which was not an issue in the actions.

  1. The harshness of the position adopted by the defendants in the outline of submissions on this aspect that there has been no election by either plaintiff to have the licence renewed is ameliorated by the proposal in paragraph 1 of the draft order for each action that if the plaintiff intends to exercise the right to have the licence renewed for a period following the expiry on 31 December 1995 (in the case of Wright) or the period following 31 December 1996 (in the case of Pherhad), the plaintiff shall provide to the defendant written notice of such election within 14 days after the date of the final orders.  I have inferred from the terms of paragraph 1 of the defendant’s draft order and the defendant’s submissions on this issue that it is intended that paragraph 1 of the draft order relate to exercises of the right to renew following the expiry of the licence agreement up until the date the final orders are made. 

  1. During the hearing of submissions as to the form of the final orders, Mr Hinson of Senior Counsel on behalf of the plaintiffs conceded that in relation to paragraph 1 of the draft order submitted by the defendant in each action, he did not have any difficulty with a machinery order of that type which sought to regularise both past events and future events in terms of providing some mechanism for the giving of notice.

  1. Because of the attitude adopted by the defendant in its written submissions and because there is no opposition by the plaintiffs to the orders incorporating the means by which elections to renew in respect of past periods can be effected or confirmed, I was inclined to consider that, even though it did not arise from the determinations of Thomas J, it may facilitate the effectiveness of the final relief, if an order similar in terms to paragraph 1 of the draft orders proposed by the defendant were made.

  1. On further reflection, however, I do not consider it appropriate to make an order in terms of paragraph 1 of the defendant’s draft orders, because paragraph 1 proceeds on the assumption that there has not been an election to exercise the right of renewal which may not, in fact, be the case.  During the hearing on 30 October 2001, I expressly indicated that I would not be determining whether there had been an election or elections by each plaintiff to renew the licence agreement prior to the making of the final orders.  It would be inconsistent with that approach to adopt paragraph 1 of the defendant’s draft orders.  As the result of this litigation is that it is likely that the parties will continue to have a business relationship, they will need to be able to resolve these issues themselves.  If not, they can always seek the assistance of the court, when another dispute emerges.     

Whether the right of renewal is personal or assignable

  1. The issue of whether the right to renew was personal to the respective plaintiffs in each action or was capable of assignment did not arise expressly on the pleadings. 

  1. One of the defence submissions at the trial was that the representations relied on by each plaintiff as to the renewability of the licence agreement was that they were no more than statements providing a measure of comfort to licensees concerning the present intention of the management of the defendant, they were not intended to affect any legal relationship and they could not have been understood by the plaintiffs that such statements would bind the defendant indefinitely.

  1. Thomas J disposed of that submission at pp 31-32 of the reasons for judgment delivered on 17 March 1998 which I set out in para [3] of my reasons for judgment delivered on 30 May 2001. 

  1. In rejecting those submissions Thomas J determined “the outer limit to tenure would seem to be measured by a life rather than eternity” and referred to the provisions in the licences for bringing them to an end, if a breach were established. 

  1. This matter arose during submissions on the form of orders made before Thomas J on 31 March 1998 and the relevant exchange is set out in para [2] of my reasons for judgment dated 30 May 2001.  I refer to the observation which I made in respect of this exchange in para [21] of my reasons for judgment dated 30 May 2001. 

  1. Each of the licence agreements referred to in para [1] of the orders made by Thomas J on 31 March 1998 contains provisions permitting assignment of the licence on certain terms and conditions.  In each action the plaintiff has been successful in establishing a representation which is the subject of a collateral contract and an estoppel in respect of the right to renew that licence agreement for further periods of five years.  It obviously makes a difference to the extent of the interest of each plaintiff in the licence agreement whether the rights of renewal are personal to the plaintiff in each action or can be assigned, if the licence agreement were to be assigned. 

  1. The plaintiffs oppose any order being made on this aspect, on the basis that there is no present suggestion of any intended assignment of the licences and that, in the absence of an actual dispute about whether or not there can be an assignment of the licence agreement including the rights of renewal, it requires consideration and determination of a hypothetical question. 

  1. Because it is critical to the interest of each plaintiff in the rights of renewal to know whether they are personal or assignable, that issue must have been disposed of in one way or another as a result of the findings of Thomas J.  The declaration made by Thomas J in each action on 31 March 1998 reflects the rights determined by Thomas J in each action as a result of the respective findings as to the representation made on behalf of the defendant to the relevant plaintiff.

  1. Because the form of declaration made by Thomas J in each action is final relief, there is no jurisdiction to re-visit and tinker with the wording of that declaration which is, in substance, what the defendant is seeking in order to have this issue of assignability clarified.

Terms of the renewed licence

  1. The plaintiffs submit that the orders made on 31 March 1998 are clear that the right of renewal is a right of renewal of the licence granted by the written licence agreement bearing the date specified in each order.  The defendant submits that it ought not to be assumed that any renewed licence is to be on precisely the same terms as that being renewed and it is submitted that the orders made on 31 March 1998 are not inconsistent with that conclusion. 

  1. On the basis of the representations found by Thomas J to have been proved in each action, it is clear that this matter has been resolved by the declaration of rights made by Thomas J on 31 March 1998.  What is able to be renewed in the Wright action is the written licence agreement dated 3 April 1992.  Similarly, what is able to be renewed in the Pherhad action is the written licence agreement dated 20 March 1992.  In the absence of express provisions dealing with the terms of the renewed licence, it is implicit from the nature of a right of renewal that what is being renewed is that which exists. 

  1. This aspect of the matter has been covered by the existing declaration of  rights.    

Tenure and operation of rights of renewal

  1. This relates to paragraph 3(a) of each of the defendant’s draft orders.  The reference in para 3(a)(ii) to the first plaintiff’s being dead in the Wright action and to Mr and Mrs Pherhad’s being dead in the Pherhad action relates to the issue of assignability which I have dealt with above.

  1. The provision in paragraph 3(a) of the defendant’s draft orders in relation to the personal involvement of the plaintiff in the Wright action in the plaintiff’s business and the requirement that the plaintiff in the Wright action be a permanent resident of Hamilton Island merely reflects the operation of clause 18.3 of the licence agreement dated 20 March 1992 which will continue to apply to the licence agreement for any renewed term, as a result of the exercise of the right of renewal identified in the declaration as to rights made by Thomas J on 31 March 1998.  The same can be said of the similar provisions sought to be included in paragraph 3(a) of the defendant’s draft orders for the Pherhad action. 

  1. As submitted by the plaintiffs, paragraph 3(a) of each of the defendant’s draft orders in referring to existing provisions of each licence agreement is unnecessary.  

Whether permanent injunction is necessary                   

  1. The threats which were made on behalf of the defendant in or about August 1996 were made as a result of the defendant’s refusal to accept or recognise that each plaintiff had a right to renew the relevant licence agreement.  The basis for those threats was removed by the declaration of rights made by Thomas J on 31 March 1998.  In support of those declarations, the plaintiffs have also had the benefit of interlocutory injunctions. 

  1. The attitude of the defendant is that expressed in its solicitors’ letter dated 22 October 2001 to the plaintiffs’ solicitors:  

“Our client’s position is that unless and until the declaration of Justice Thomas made on 31 March 1998 is overturned on appeal, or unless and until our client obtains a declaration that your clients were not entitled to and have not validly elected to exercise the right of renewal contemplated by that declaration, then our client will respect your client’s ongoing conduct of the business and possession of the respective premises in accordance with the previous written licence terms and subject to compliance with those terms.  A permanent injunction is therefore neither warranted nor necessary.”

  1. It should be noted that the draft orders proposed by the defendant did incorporate a form of perpetual injunction.  As is apparent from the defendant’s solicitors’ letter dated 22 October 2001, that position had been abandoned by the time of the hearing on 30 October 2001.

  1. In the absence of an undertaking on behalf of the defendant in terms similar to that of the existing interlocutory injunction, each plaintiff seeks a perpetual injunction to support the existing declaration. 

  1. The existing interlocutory injunction is broad in its terms.  It is not limited to restraining conduct of the defendant which is in defiance of the right of renewal.  The perpetual injunction proposed by each plaintiff is also general in its terms.  It does not seek to identify specific conduct which is sought to be restrained.  In view of the resolution of what was in dispute between the parties by the declarations of rights, there is a real issue as to whether a perpetual injunction is warranted. 

  1. If a perpetual injunction were not ordered, each plaintiff is not without a remedy if the defendant were to threaten to act or did act in defiance of the declaration as to rights.  In Royal Insurance Co Ltd v Mylius (1926) 38 CLR 477 Isaac J stated at 497:

“Every order for declaration of right carries with it liberty to apply, and, if the defendant acts contrary to it, the Court on a proper application, and on proper notice may enforce it (per Lord Macnaghten in Fischer v Secretary for India (1898) LR 26 Ind App 16 at p29).”

  1. Notwithstanding the contents of the correspondence from the defendant’s solicitors which forms part of Exhibit 1 at the hearing on 30 October 2001 which indicates that there may be differences between the parties in the future as to how the rights of renewal operate, the fact remains that there is no current threat by the defendant not to observe the rights which have been declared by Thomas J to exist in favour of each plaintiff in respect of the renewal of the relevant licence agreement. 

  1. The parties in each action have the declaration of rights made by Thomas J to regulate their future relationship.

  1. I am satisfied that the declaration as to rights made in each action on 31 March 1998 is sufficient remedy in respect of the matters that were in issue between the parties in each action. 

  1. It follows that the interlocutory injunction made in each action on 31 March 1998 should therefore be discharged.         

Costs

  1. One issue of costs that was not determined by Thomas J was the  reserved costs of each action until 31 March 1998.  The parties are agreed that in each action the defendant will pay the reserved costs until 31 March 1998. 

  1. The defendant did not oppose an order for costs in favour of the plaintiffs in respect of the costs since 31 March 1998 to, but excluding, the hearing on 30 October 2001.  Even if there had not been that concession, I consider that was the appropriate costs order to make in respect of that period.

  1. The only matter that remains outstanding is the costs of the hearing on 30 October 2001 and receiving judgment.

  1. Although the defendant has been successful in obtaining the discharge of the interlocutory injunction without a perpetual injunction being imposed, that possibility was raised by the defendant when the hearing on 30 October 2001 was imminent.  The hearing on 30 October 2001 was substantially concerned with the additional matters in respect of which the defendant unsuccessfully sought further orders.  Subject to any further submissions, I consider that the defendant should also bear each plaintiff’s costs of the hearing on 30 October 2001 and receiving judgment.  I will, however, receive further submissions from the parties on this aspect of the costs orders, before making any order.

Orders

  1. The orders which I make are:   

In action number 8981 of 1996:

(1)         The interlocutory injunction ordered on 31 March 1998 be discharged.

(2)The defendant pay the first plaintiff’s reserved costs of and incidental to this proceeding and counterclaim up to 31 March 1998 to be assessed on the standard basis.

(3)The defendant pay the first plaintiff’s costs, including reserved costs, of and incidental to this proceeding from 31 March 1998 to, but excluding, the hearing on 30 October 2001 to be assessed on the standard basis.

In action number 8982 of 1996:

(1)         The interlocutory injunction ordered on 31 March 1998 be discharged.

(2)The defendant pay the first and second plaintiffs’ reserved costs of and incidental to this proceeding and counterclaim up to 31 March 1998 to be assessed on the standard basis.

(3)The defendant pay the first and second plaintiffs’ costs, including reserved costs, of and incidental to this proceeding in respect of the period 31 March 1998 to, but excluding, the hearing on 30 October 2001 to be assessed on the standard basis.

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