Plaintiffs v Defendants

2 Rule 53.01(1) of the Rules provides:**

[T]his Order applies where the plaintiff claims the recovery of land which is occupied solely by a person or persons who entered into occupation or, having been a licensee or licensees, remained in occupation without the plaintiff's licence or consent or that of any predecessor in title of the plaintiff.

**3 The Land has 12 large horse paddocks, horse stables, a veterinary house, a holiday home known as "the Retreat", a bungalow and a manager's house.

4 The plaintiffs have operated the Business for over 30 years. In early 2008, they decided to appoint a manager to operate the Business. They conducted negotiations with the defendants which eventually resulted in the entering into of a contract between the plaintiffs and one or more of the defendants around June 2008, pursuant to which one or more of the defendants commenced occupying the Land other than the Retreat on 1 July 2008.

5 The affidavits that have been filed on behalf of the plaintiffs and the defendants disclose a serious dispute about what constitutes the contract and who are the parties to it.

6 The plaintiffs assert that the contract is an oral contract pursuant to which the second defendant, Lisa Ritchie, was appointed manager of the Business from 1 July 2008 for a single season ending on 31 January 2009 and was granted a bare licence to occupy the Land other than the Retreat, including living in the manager's house, for the purpose of managing the Business. The plaintiffs allege that it was agreed that they were to have unrestricted access to the Land and exclusive use of the Retreat. They also allege that Lisa Ritchie breached the contract, that on 23 November 2008 they lawfully terminated the contract and her licence to occupy the Land, that she and the other defendants are trespassers and that the plaintiffs are entitled to recover the Land.

7 The precise terms of the oral contract asserted by the plaintiffs are unclear. It is also unclear whether any of its terms are reflected in the correspondence passing between the parties in the lead up to the making of the oral contract. One potentially relevant letter dated 5 May 2008 from the first plaintiff, Garry Donald Byrne ("Don Byrne") to the first defendant, Royce Ritchie, states "Please go ahead with leasing."

8 The defendants assert that the contract comprises the document entitled "Heads of Agreement" between Don Byrne and Lisa Ritchie. On its face, the Heads of Agreement document appears to have been signed on 20 June 2008 by Don Byrne "for [and] on behalf of himself and the owners and operators of the properties and other assets of the stud" and Royce Ritchie "for and on behalf of himself and owners and operators of the bloodstock and the proposed stud". The defendants allege that pursuant to the Heads of Agreement, the plaintiffs agreed to grant to the defendants a lease in respect of the Land other than the Retreat until 30 June 2009 with an option for another three years to 30 June 2012. They deny that they have breached the contract, that there has been a valid termination of the contract and that they are trespassers. They also assert that the plaintiffs have breached the contract.

9 Don Byrne states in his affidavit that he does not recall ever reading or signing what he describes as "the purported Heads of Agreement". He states that he did not agree to its terms.

10 It was common ground before me that the parties conducted their negotiations without the assistance of legal advisers and that the Heads of Agreement document was prepared by Royce Ritchie.

11 Mr Best, who appeared for the plaintiffs, conceded that it is not possible for me, sitting in the Practice Court, to resolve the factual dispute as to what constitutes the contract for the purposes of an application for recovery of land under Order 53. However, he informed me that for the purposes of enabling me to make an order under Order 53, the plaintiffs are prepared to proceed on the basis that the contract comprises the Heads of Agreement document. He submitted that, properly construed, the Heads of Agreement document does not constitute an agreement for a lease but rather is a management agreement incorporating a bare licence to occupy parts of the Land, and that the plaintiffs are entitled to terminate the licence at will and require the defendants to leave the Land even if the termination constitutes a breach of contract which entitles the defendants to damages.

12 Mr Nugent, who appeared for the defendants, informed me that, while the defendants rely on the Heads of Agreement document as constituting the contract between the parties, their position is that the document is not necessarily the exclusive repository of the contract. He submitted that in light of the substantial factual dispute between the parties, including on the key issue of what constitutes the contract, it is inappropriate for the Court to make an order for recovery of the Land pursuant to the summary procedure in Order 53. He submitted that even if the contract is to be found exclusively in the Heads of Agreement document, when one construes that document having regard to the surrounding circumstances that were known by the parties and the fact that it was drafted by a lay person, one can distil the essential elements of an agreement to lease, namely the grant of exclusive possession in respect of the Land other than the Retreat and a right to assign the defendants' interest in the Land. He submitted that there were sufficient acts of part performance to overcome any non-compliance with s 126 of the Instruments Act 1958 (Vic).

13 Mr Nugent also submitted that even if the Heads of Agreement document does not constitute an agreement to lease, it confers on the defendants a licence to use the Land coupled with an interest, namely "the right ... to graze their horses and to remove the pasture growing on the Graydens Road property and to feed it to their livestock [which] is in the nature of a profit a prendre". He also relied on other grounds in resisting an order under Order 53, including that the Court does not have jurisdiction in respect of retail tenancy disputes, proprietary estoppel, unconscionable conduct and relief against forfeiture. In view of the conclusion I have reached, it is not necessary for me to decide the merit of these grounds.

14 The affidavit material reveals that the parties are in dispute about who has breached the contract between them and who owes money to who. It is clear from this material that irrespective of what decision I make in relation to the plaintiffs' application under Order 53, there will be ongoing litigation between the parties in relation to the contract.

15 I have decided to reject the plaintiffs' request that I exercise the summary procedure in Order 53 on the basis of an assumption that the contract comprises the Heads of Agreement document in circumstances where there is a serious unresolved dispute between the parties as to whether the Heads of Agreement document forms part of the contract between them and, if it does, what else forms part of that contract. It is inappropriate to proceed in the manner suggested by the plaintiffs in a case such as this where the plaintiffs do not accept the assumed contract as the contract governing their business relationship with the defendants.

16 An order under Order 53 should not be made lightly and should certainly not be made on the basis of an assumed contract where there is a real prospect that, upon the further hearing of the contractual dispute between the parties, the Court may subsequently decide that the assumed contract was not the contract between the parties or was not the entire contract between the parties. The making of an order under Order 53 at this stage would potentially restrict the Court's power to do justice between the parties once it determines the terms of the contract and what breaches, if any, each party has committed.

17 The procedure in Order 53 is appropriate where it is readily apparent that the defendant does not have a current right to remain on the relevant land, including where any dispute as to the existence of such a right can be promptly and fairly determined summarily.[1] While such an order may be made notwithstanding that there is a factual dispute between the parties, such an order will only be appropriate if the Court is able to satisfy itself as to the material facts that bring the case within Order 53. In this case, I am unable to satisfy myself as to the material facts without a detailed examination of the conflicting evidence which the parties agree I should not undertake in the Practice Court. The plaintiffs are, in effect, requesting the Court to make an order of a serious nature under Order 53 based on hypothetical facts rather than actual findings of fact. That is not something I am prepared to do.

18 In light of the above conclusions, it is inappropriate for me to express any view on any of the issues between the parties. I will, however, make the obvious point that the fact that the plaintiffs have not succeeded in their application does not reflect in any way on the strength or otherwise of their underlying case against the defendants.

19 The plaintiffs' application will be refused. I will hear the parties on whether they seek any orders for the future conduct of the proceeding (including an early mediation) and on the question of costs.**

[1] Palazzo v Pullen (Unreported, Supreme Court of Victoria, Brooking J, 24 July 1992); Melbourne Anglican Trust Corporation v Greentree (Unreported, Supreme Court of Victoria, Vincent J, 29 May 1997); Pappas v Bowmark Pty Ltd (1999) V Conv R 54-594; [1998] VSCA 120, [12]-[13], [17]; Williams v Rampino [2002] VSC 343, [16]; Tolhurst Druce & Emmerson (a firm) v Maryvell Investments Pty Ltd [2007] VSC 271, [189]-[1793], [222].