White City Tennis Club Ltd v John Alexander's Clubs Pty Ltd & 2 ors

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

[10]

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].

[35]

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.

[51]

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.

[58]

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)].

[66]

· 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 was said that it licensed the occupation and use of areas within the Option Land - including the Maccabi Clubhouse, the two additional courts and the thirty car spaces - for a specified term, without regard to Poplar's obligations under the White City Agreement to commence developing the Option Land. However, what the licence permits the Club to do on the Option Land is no more than what Maccabi is itself entitled to do under the White City Agreement. The Maccabi Licence does not constrain Poplar's ability to perform its obligations, any more than they are already constrained by Maccabi's own rights. · 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. · It licenses the use and occupation of the Maccabi Courts and car spaces, when in accordance with the White City Agreement they may only be used and occupied by Maccabi. Again, this depends on the proposition that the White City Agreement denies Maccabi the ability to license or sub-license the use of its facilities, which I have already rejected. 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.

At a glance

Court

Decision date

Before

Source

Judgment (87 paragraphs)

Parties

Cases Cited (3)