(6) Relevant consent was not obtained from Asia Pacific but was only obtained in respect of Rockwall.
37 However, when counsel for the plaintiffs commenced his final address the case was presented quite differently. Counsel went back to ss 20 and 21 of the Strata Schemes (Freehold Development) Act 1973, and argued that in "the real world of this building", to use his words, the rights to use exclusive use area (b) flowed from this Act. He further put that the Act gave only very limited powers to authorise use of common property, that was partly carried out by by-law 41 but there could be no rights created in the common property other than in accordance with the Act. He then put that the whole licence agreement really should be considered to be void.
38 This is rather odd for a number of reasons, one is that there is not a slightest mention of it in the summons, though Mr de Robillard says that para 2, the declaration that the plaintiffs are entitled to the exclusive use and enjoyment of exclusive use area (b) comprehends it. Even if this is literally true, such an argument after all the evidence is put up would only be available if it was fairly flagged beforehand so that necessary evidence and submissions could be put.
39 Secondly, the argument runs contrary to what was decided by Smart AJ whose declaration that I have set out earlier is predicated on the basis that the licence agreement is valid.
40 The second way the plaintiffs' counsel has put this argument is that this Court could not for policy and discretionary reasons enforce a scheme that overcomes the policy of the strata titles legislation. Again, it seems to me that that matter was never raised before Smart AJ and his Honour has treated the contract and the licence agreement as the governing documents.
41 There was argument presented by both sides as to what was the true nature of the right of exclusive use. I was referred to the decision of the Court of Appeal in Owners - Strata Plan 43551 v Walter Construction Group Limited (2004) 62 NSWLR 169 in which Spigelman CJ discusses the cases to that date. Also, there is the decision of Santow J in Young v Owners - Strata Plan No 3529 (2001) 54 NSWLR 60 and a decision on the previous Act of Rath J in North Wind Pty Ltd v Proprietors - Strata Plan 3143 [1981] 2 NSWLR 809.
42 Although Rath J in the last mentioned case considered that the rights flowed from a by-law such as 41 were probably contractual, I agree with Mr Reuben that the same is not necessarily the case under the present Act. The rights under the present Act appear to be statutory, and I believe - I would not like to be held to this in subsequent proceedings - that the rights are probably proprietary sui generis, rather like the proprietary right that was referred to by the High Court of Australia in North Shore Gas Company Limited v Commissioner of Main Roads (1967) 120 CLR 118. However, the problem with ascribing a contractual character to the right is that that would make it a chose in action, and the better view appears to be that one cannot at law deal with or assign a chose in action otherwise than transferring it in whole: see for instance Tolhurst, The Assignment of Contractual Rights (Oxford, 2006) at p 48.
43 There can only be partial assignments of a chose in action in equity. However, if the matter is treated as a proprietary right, then there would seem to be no difficulty in granting licences or sub-licences. But it is significant that the only textbook on licences of which I am aware, namely Dawson and Pearce, Licences Relating to the Occupation or Use of Land (Butterworths, London, 1979) makes no mention at all of sub-licences.
44 However, for the purpose of the present case, it seems to me that at least because of the way in which Smart AJ dealt with the matter, one must treat the licence agreement of 14 April 2003 as giving rights to the defendant over the area in question. If there can be a licence, then other interests can also be carved out so that sub-licences would, subject to the matter of there being consent, be also in order.
45 It follows from what I have just said that I do not consider that the arguments put, based on the Strata Schemes (Freehold Development) Act as to the validity of the licence can affect the reasons of this case. Accordingly, I turn to the question as to whether the licence agreement has been terminated because of repudiation.
46 The law as to repudiation is relatively clear, though usually the difficulty is deciding whether as a matter of fact there has been repudiation. In Ross T Smyth & Co Ltd v T D Bailey Son & Co [1940] 3 All ER 60 at 71, Lord Wright said that repudiation was not to be lightly inferred. That reference was approved by Wilson J in the High Court of Australia in Shevill v Builders Licensing Board (1982) 149 CLR 620 at 633. It is interesting to note that in the Shevill case, the mere fact that the tenant had been in substantial arrears of rent for a substantial period was not enough to constitute repudiation of a lease.
47 More recently, in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 82 ALJR 345 at 355, four Justices of the High Court said that repudiation was a term that could be used in different senses. Their Honours went on to say at 355 [44]:
"First, it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a matter substantially inconsistent with the party's obligations. It may be termed renunciation. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it."
48 It seems to me that this is the sense in which I have to judge repudiation in the instant case.
49 Accordingly, I need to turn to the various heads that were outlined in the particulars, both individually and together.
50 As to (1) and (2), Mr de Robillard kept saying that there had been no consent to the various sub-licences. However, that is not quite what clause 6.1 of the licence agreement refers to. It says that the licensee cannot dispose of or deal with this licence without the licensor's consent. It then says that such consent is not to be unreasonably withheld. There are of course difficulties in the words "dispose of or deal with". One would have thought that disposition means a transfer of the whole interest and that just as a sub-lease is not a disposition under the classic cases of landlord and tenant law, so a sub-licence would not be a disposition within the meaning of clause 6.1.
51 Mr Reuben says that one must construe the words "deal with" ejusdem generis with "disposition". This is really where one starts to tackle the nature of the licence because the creation of a new interest, especially a new interest in equity, is quite a different concept to disposing. I do not consider that I need to decide this matter because I have already set out the requests for consent and how they were responded to. The clause doesn't affect a licensee if the consent is unreasonably withheld. "Withheld" means, according to cases such as Lewis & Allenby (1909) Ltd v Pegge [1914] 1 Ch 782, 787 and Provident Capital Ltd v Zone Development Pty Ltd (2001) 10 BPR 19,133, that the consent is not in fact given within a reasonable time of the request and the furnishing of information.
52 Accordingly, if a licensor or landlord does not indicate his or her consent within a reasonable time, then the consent is taken to have been withheld.
53 The question as to whether the withholding of consent is reasonable or not is a question of fact. The onus of proving that the consent has been unreasonably withheld is upon the licensee or tenant: see the Provident Capital case. In the instant case I consider that one has to look at the whole situation in the light of the circumstances that existed between the parties as held by Smart AJ.
54 Smart AJ held effectively that although the plaintiffs remain the registered proprietors in the fee simple of lot 3 and although by-law 41 refers to the use of exclusive use area (b) in connection with lot 3, the contractual arrangement between the parties expressed in both the contract for sale (many of the provisions of which survived completion) and the licence agreement was that as between themselves the parties were to treat the defendant and not the plaintiffs as the beneficial owner of exclusive use area (b). On this basis the material that was sent in response to the request for consent was not objectively a reasonable response.
55 Furthermore, the request was made in the case of the Rockwall (Asia Pacific) lease by the plaintiffs' solicitor that there be a tripartite agreement. A draft was sent but then nothing happened within a reasonable time or at all. I do not consider that there has been established any breach in respect of the first two matters referred to by Mr de Robillard.
56 As to (3), Mr de Robillard put that the defendant had placed itself in a position where it would become a straw entity. The evidence clearly is that the defendant is a trustee company. As such, it has on its balance sheet no assets. However, it has the legal interest in the property concerned and it also has the right of indemnity against the trust assets. Mr de Robillard did show in his cross-examination that there was some fuzziness, to use a relatively neutral word, about the beneficial interests. It would also seem that some of the beneficial interests are held by companies incorporated outside of Australia. Notwithstanding that, the assets are in New South Wales and the right of indemnity is against the assets in New South Wales. Furthermore, at all times right from the beginning, the defendant has been in this position. It has not been demonstrated that it is a straw entity unable to perform its obligations. There is no history of default of obligations or that the rights which it has against the trust property are not adequate. Accordingly, I cannot see how the third matter is established.
57 As to (4) and( 5), that is that the defendant has the intention to take steps to operate a cafe in the area other than in conjunction with lot 3, again it has not - apart from what happened immediately before the scuffle in March 2008 - actually done anything. Secondly, the argument depends on reading by-law 41.1(d) on the basis that the plaintiffs have the legal right to lot 3 and therefore the right to control. This completely ignores the other documents in the case and any equitable rights.
58 Finally, as to (6), that the consent was asked for in respect of Rockwall and not Asia Pacific, the letters that I have already set out show that in the process of asking for consent, it was pointed out that the identity of the licensee was changing to a company which had the same directors as the one previously named. It is not at all unusual in commercial life that separate companies with the same parties be formed to operate particular enterprises and so, again, I cannot see anything in this point.
59 Accordingly, when one looks at the matters that have been raised individually, there is nothing in them which would justify the final steps of a repudiation, and it must follow that no different result flows from considering all the matters together.
60 The plaintiffs' case essentially omits the vital circumstances that the parties agreed back in 2003, that although the rights at law to exclusive use area (b) would pass to the plaintiffs on the transfer to them of the fee simple in lot 3, the process would be put in train to amend the by-laws so that that area would become attached to lot 4. It was never intended between the parties that the plaintiffs would ever have any beneficial interest in exclusive use area (b) and this is reinforced by Smart AJ's finding, particularly at para 33.
61 The plaintiffs' case proceeds basically on the false assumption that they have that right at law and that the defendant's sole rights come under the licence agreement. Thus they falsely think that if there is a fundamental breach of the licence agreement, then their right to use the area revived. This is quite incorrect but even if it was correct, I do not find any repudiation. Accordingly, in my view the plaintiffs' case must fail.
62 So far as the cross-claim is concerned, it seems to me that from what Smart AJ said and from what I have just said, the defendant/cross-claimant is entitled to the relief which it seeks. It seems to me that the rights of the parties as found by Smart AJ and myself require that the plaintiffs do everything in their power to bring about the alteration of by-law 41. That includes giving consent under s 52(1) of the Strata Schemes Management Act and not soliciting other members of the building to vote against that particular resolution. It may be that a meeting is held to deal with a series of resolutions, and it may be as was suggested in this case that the plaintiffs are very anxious to solicit proxies against some of the other resolutions, and there is no problem about doing that, but where there is a problem is getting a proxy which is so wide that it enables the plaintiffs to vote against the resolution in the name of another unit holder.
63 A submission was made by Mr de Robillard that s 52(1) means that whenever a resolution is put up which affects the common property, there must be the written consent of every owner. He puts that under s 20 of the Strata Schemes (Freehold Development) Act, the Owners Corporation is the agent for each owner. It was put that each owner has some sort of proprietary interest in the common property, and accordingly they need to give their written consent. Whilst semantically one can just make out that argument, in my view s 52(1) applies so that only the written consent of the lot or lots concerned is required, namely the lots in which special privileges relate to under the by-law, and in this case of course that means lot 3.
64 Finally, the question arises as to damages. According to MI 17, the defendant claims, on the basis of its loss of rent since 18 April 2008 a total of $28,620, this includes an amount for a locksmith of $649, which I do not think is appropriate. The debt would carry interest at the court rate of 10 percent which for the period is something like $580. It would seem that the appropriate amount of damages is $28,551. Mr de Robillard says that there is not sufficient evidence of this. The only evidence is in the most recent affidavits and statements of Mr Rohan Youngman where there is no contrary evidence. The evidence seems consistent with the other material that I have and accordingly I am satisfied that that is the appropriate amount.
65 I have not dealt with every submission made. However, I believe that I have fully dealt with all the matters on which the submissions focussed.
66 One further matter was that Mr Reuben said that if he was successful he should get costs on the indemnity basis. The reason for this was, he put, that when the case was examined it was completely hopeless. Furthermore, the grounds of the case kept switching. In addition, it can be seen that the plaintiffs had already lost on some of the arguments before Smart AJ and were re-litigating it when they were perhaps lucky that there wasn't just a motion for attachment after the last judgment. Mr de Robillard put that that was very harsh, that the case was arguable as shown by material in the cross-examination and that no such order should be made. However, in my view, this is one of the cases where the case put up by the plaintiffs was so hopeless that there should be an order for indemnity costs.
67 Accordingly, I turn to the pleadings, the summons of 28 March 2008 is thus dismissed with costs. On the cross-claim I make orders 1 to 4. I order that the plaintiffs/cross-defendants pay to the defendant/cross-claimant damages in the amount of $28,551. I reserve further consideration. I order that the plaintiffs/cross-defendants pay the costs of the proceedings on the indemnity basis. The exhibits should remain with the exhibits clerk for 28 days and then be handed out.