White Rock Wind Farm Pty Ltd v Dulhunty

Court of Appeal (NSW)|2024-06-14|Before: Ward P, Adamson JA, Robb J

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] The proceedings concern various agreements, including Leases, primarily between White Rock Wind Farm Pty Ltd (White Rock) and each of the five respondents, namely Mr Dulhunty, Mr Wood, John Wood (Harvesting) Pty Ltd (JWH), Mr Cameron and Mr Nugent (the Landowners), for the purpose of the construction and operation of a wind farm, including an electricity substation. The infrastructure most relevant to these proceedings was the access road from the Gwydir Highway to the electricity substation, which was ultimately built on Mr Wood's land (the access road). On 16 September 2014, White Rock entered into a suite of agreements with the Landowners, including: (1) An agreement to lease entered into between White Rock and each of the Landowners. Annexed to those agreements were the terms of a draft lease, rent agreement and royalty payment deed. (2) Two option agreements to purchase land on which the substation might be located, entered into between White Rock and each of Mr Wood and JWH. (3) Three option agreements for the transfer of easements entered into between White Rock and each of Mr Wood, JWH and Mr Nugent for the grant of two easements: one for the high voltage transmission line and the other for access to the substation from the Gwydir Highway. On 10 July 2015, White Rock entered into a project agreement with the Electricity Transmission Ministerial Holding Corporation (TransGrid). Under that agreement White Rock was obliged to ensure that title to the substation land passed to TransGrid and that easements for access to the substation and over the transmission line were granted to TransGrid. White Rock issued notices to proceed under each of the agreements to lease and the Leases were subsequently executed on 11 April 2016. On 10 July 2017, all the option agreements expired without White Rock having exercised any of them. White Rock provided no explanation as to why the options were allowed to expire, which consequently created the need for TransGrid to be granted access to the substation some other way. White Rock sought to do so by seeking consent from the Landowners under cl 8.5 of the Leases to enter into a non-exclusive licence with TransGrid for a right of access over the access road to the substation. The Landowners declined to do so and instead expressed their willingness to grant an access easement to TransGrid in return for additional payment. The case below was conducted and determined on the basis of whether the Landowners were obliged, under cl 8.5 of the Leases, without the payment of additional consideration, to consent to White Rock entering into the proposed licence deed with TransGrid. On appeal, however, the primary position of all parties was that cl 8.5 of the Leases had no application to the proposed draft licence deed. On appeal, the principal issues were: (i) Did cl 8.5 of the Leases apply to the draft licence deed? (ii) If cl 8.5 was not applicable, was White Rock permitted under the Leases to grant a licence to TransGrid to access the substation? (iii) If cl 8.5 was applicable, did the Landowners unreasonably withhold their consent under that clause? The Court (Griffiths AJA, Ward P and Adamson JA agreeing) held, dismissing the appeal: As to issue (i): (1) The object of cl 8.5 was to prevent White Rock from circumventing the restrictions in cl 8 as to assignment of the Leases without the Landowners' consent, by entering into an arrangement akin to an assignment, in the sense of transferring an existing proprietary right to an assignee: at [135]. Clause 8.5 had no application to the grant of the licence deed to TransGrid because this would not involve the transfer of any of White Rock's existing proprietary rights or obligations under the Leases: at [134], [138]. As to issue (ii): (2) White Rock could not validly grant TransGrid access to the substation, as proposed in the draft licence deed. Any such access arrangement or agreement had to involve the Landowners: at [152]. Objectively viewed, it could not have been the intention of the parties that the negotiated balance between their competing rights and interests reflected in the option agreements could effectively be circumvented in the way proposed by White Rock: at [151]. As to issue (iii): (3) The primary judge did not err in concluding that the Landowners' refusal to consent to the proposed licence deed was not unreasonable: at [154].

JUDGMENT

WARD P: I agree with Griffiths AJA.
ADAMSON JA: I agree with Griffiths AJA.
GRIFFITHS AJA: This appeal is from a judgment of Robb J dated 30 November 2023 and consequential orders dated 20 December 2023: see respectively White Rock Wind Farm Pty Ltd v Dulhunty [2023] NSWSC 1464 (the primary judgment or PJ) and White Rock Wind Farm Pty Ltd v Dulhunty (No 2) [2023] NSWSC 1631 (PJ2).
The proceedings concern various agreements, including Leases, primarily between White Rock Wind Farm Pty Ltd (White Rock) and each of the five respondents, namely Robert Dulhunty, John Wood, John Wood (Harvesting) Pty Ltd (JWH), William Cameron and James Nugent (collectively, the Landowners) for the purpose of the construction and operation of a wind farm.
In the proceedings below, White Rock's primary claim was that the Landowners were obliged under cl 8.5 of each of the Leases, without the payment of additional consideration, to consent to it entering into a proposed licence deed with Electricity Transmission Ministerial Holding Corporation (TransGrid), granting TransGrid rights of access to an electricity substation (by then owned by TransGrid). The Landowners contended that it was reasonable for them to require TransGrid to negotiate and conclude an access easement and that additional consideration be paid to them for that easement (PJ[19]-[20], [23]). The case below was therefore conducted and determined on the basis of whether or not consent had been unreasonably refused under cl 8.5 of the Leases. This necessarily assumed that this clause was applicable to the proposed licence.
On appeal, however, the case was conducted on a very different primary basis. That is because the primary position of all parties in the appeal (as reflected in both ground 7 of the notice of appeal and the notice of contention) was that cl 8.5 of each of the Leases had no application to the proposed licence deed. White Rock's primary position on appeal was that it was entitled under the Leases to grant a licence to TransGrid under which it could access the substation, without being obliged to pay any additional consideration to the Landholders or obtain the Landowners' consent. The parties made alternative submissions in the event that the Court determined that cl 8.5 did apply to the draft licence deed.
Three core issues require determination: 1. (1) Does cl 8.5 of the Leases apply to the draft licence deed? 2. (2) If cl 8.5 is not applicable, is White Rock permitted under the Leases to grant a licence to TransGrid to access the substation? 3. (3) If cl 8.5 is applicable, did the Landowners unreasonably withhold their consent under that clause?
These reasons for judgment are structured as follows: 1. (a) Background facts and agreements summarised. 2. (b) The primary judgment summarised. 3. (c) The grounds of appeal and notice of contention. 4. (d) Consideration and determination. 5. (e) Conclusion.

(a) Background facts and agreements summarised

The Landowners' properties are near to each other. They are collectively adjacent to both the Gwydir Highway and a trunk high voltage transmission line owned and operated by TransGrid.
The proposed wind farm would involve approximately 70 wind turbines, an electricity substation, overhead transmission lines to connect the substation with the trunk high voltage transmission line, underground power lines to connect the wind turbines to the substation, access roads and associated infrastructure. The infrastructure that is most relevant to these proceedings is the access road from the public highway (Gwydir Highway) to the substation (the access road) (PJ[8]).
On 16 September 2014, White Rock entered into a suite of agreements with the Landowners, including: 1. An agreement to lease entered into between White Rock and each of the Landowners. Annexed to those agreements were the terms of a draft lease, rent agreement and royalty payment deed. 2. Two option agreements to purchase land on which the electricity substation might be located. These agreements were between White Rock and each of Mr Wood and JWH, which gave White Rock the right to purchase a separate lot located on their respective land. 3. Three option agreements for the grant of easements entered into between White Rock and each of Mr Wood, JWH and Mr Nugent. White Rock had the option to require those Landowners to grant two easements: one for the high voltage transmission line that was proposed to be constructed to join the substation with the trunk high voltage transmission line (the powerline easement), and the other for access to the substation from the Gwydir Highway (the access easement). Mr Dulhunty and Mr Cameron did not grant White Rock an option concerning the access road because, at that time, the proposed access road did not traverse their land. It may also be interpolated here that if the options had been exercised, the issue of access would presumably have been resolved. But, for reasons which it never explained, White Rock allowed the option agreements to expire, thereby creating a need to achieve access to the substation some other way. It sought to do so by a draft licence deed with TransGrid (see further below).
White Rock issued notices to proceed under the agreements to lease to each of the Landowners. The Leases were subsequently executed on 11 April 2016.
It is necessary to summarise the relevant agreements.

(A) Agreements to lease

Each Landowner agreed, subject to the satisfaction of certain conditions precedent, to grant White Rock "a lease of the Land" simultaneously upon entry into a rent agreement and royalty deed, which were each to commence on the date stated in a notice to proceed served by White Rock (see cll 2.1 and 3.2 respectively).
"Land" was defined to mean "the whole allotment(s) described in Annexure 1" (cl 1). Annexure 1 listed the land title lot numbers for the whole of the property owned by the particular Landowner. "Site" was defined to mean "the land upon which the parties agree the Development may be carried out, subject to the terms of this Agreement and the Lease, being all of the Land (if there are no Excluded Areas), or that part of the Land other than any Excluded Area" (cl 1).
The term of the Leases would be for 30 years, with a single right of renewal for a further 30 years (cl 2.1(b)) and was to be otherwise governed by the terms and conditions contained in the annexed draft lease (annexure 3), rent agreement (annexure 4) and royalty deed (annexure 5).
There was a regime for interim payments (cl 3.1). It was a condition precedent that White Rock had made all such payments (cl 3.2(a)).
The creation of binding Leases was subject to White Rock issuing notices to proceed on or before 10 July 2017 (i.e. the same date upon which the options would expire) and the conditions precedent being satisfied (cl 2.4). One condition precedent was that White Rock had issued such notices upon all the landowners with whom it had entered into agreements to lease, including the five Landowners involved in the proceedings (cl 3.2(f)).
The layout of the proposed wind farm was addressed in various clauses in the agreements to lease. An "Indicative Layout" was included as annexure 2. It identified the total number of planned turbines on the leased land and included a plan showing the proposed location of the turbines, the substation, Excluded Areas and route of the high voltage transmission line and access tracks, including the access road (PJ[41]). "Indicative Layout" was defined in cl 1 to mean (emphasis added): plan showing the Land, any Excluded Areas, and also showing the indicative locations on the Site of all the Wind Turbines, access tracks (including the approximate extent of any new (single or double) fenced portions), Transmission Lines, any Wind Monitoring Mast, any temporary construction compound, any collector substation, and any operations and maintenance compound or other infrastructure associated with the proposed Wind Farm anticipated or potentially planned at the time of entering into this Agreement and prior to detailed design and planning.
Curiously, the "access tracks" shown on the Indicative Layout did not connect the substation to the Gwydir Highway.
"Excluded Areas" were defined as "those areas of the Land (if any) upon which the Lessee must not carry out the Development, as indicated on the Indicative Layout and stated alternatively, means those parts of the Land outside the Site" (cl 1). White Rock was permitted to use the Excluded Areas for "Exceptional Purposes", namely any Wind Farm Activities (as defined at [32] below) in relation to the Site for which use of the area was reasonably required temporarily and for a stated, limited purpose (e.g. soil tests, biodiversity surveys and temporary wind monitoring) so as adequately to assess the feasibility or monitor the effect and efficiency of Wind Farm Activities on the Site (cl 12(b)). This use was subject to White Rock obtaining prior written consent of the Landowners, which was not unreasonably to be withheld (cl 12(a)).
It was a condition precedent that, prior to the lodgement of any application to amend the project approval, White Rock had to provide a revised Indicative Layout to the affected Landowner, to consult with such Landowner and take into account and adequately address all reasonable concerns (cl 3.2(b)).
It was a further condition precedent that White Rock serve a draft Final Layout on the Landowner at least three months prior to issuing a notice to proceed (cl 3.2(c)). This had to take into account and adequately address all reasonable concerns of the Landowner, including compliance with matters listed in cl 3.3 (see [25] below). "Final Layout" had the same meaning as in the draft lease, namely "the plan of the Land and any Excluded Areas and the Final Layout of all Accessways and Apparatus to be erected on the Site".
White Rock was required to serve the Final Layout on the Landowner on or before the date it served the notice to proceed (cl 3.2(d)).
The matters which the Final Layout had to address included a requirement that it (emphasis added): … (f) clearly show the location of all infrastructure to be constructed on the Land including but not limited to Turbines, wind monitoring masts, temporary construction compounds, collector substations, Transmission Lines, Operations and Maintenance Compounds, Cabling, accessways and so forth, which must not be altered from that shown on the Indicative Layout without consulting with and addressing all reasonable concerns of the Lessor; … (cl 3.3)
"Accessways" was not defined in the agreements to lease. Counsel for White Rock contended on the appeal that the definition in Item 1 of Sch 1 of the Lease should be read into the agreements to lease, namely "any vehicular and other access tracks and roads on the Site or to be constructed on the Site for access to and from the Site or Apparatus as shown on the Final Layout".
White Rock was granted "free access" to the Site for the term of the agreement for the purposes of assessing the potential for the development of a wind farm and related electricity transmission infrastructure, and installing, maintaining, operating and removing any wind monitoring equipment, subject to providing the respective Landowner with at least one day's written notice (cl 11).
Certain protections were afforded to the Landowner in respect of such temporary access. First, White Rock was required to hold public liability and risk insurance not less than $20,000,000 (cl 11(f)). Secondly, White Rock was liable promptly to reimburse any Landowner for any increase in insurance premiums payable by them as a result of White Rock's activities (cl 11(g)). Thirdly, during all visits to the Land, White Rock was required to: … leave all gates as found, refrain from interfering with livestock or any farming operations, not damage any roads, paths, fences or any other infrastructure erected on the Land, not bring any explosive or flammable or corrosive liquids or chemicals upon the Land, not interfere with any drains, water supply, gas, electric, plumbing or other services on the Land, not bring any noxious weeds onto the Land, not bring any firearms or dogs or other animals onto the Land and will make good promptly, at its own expense, all and any damage caused to the Land or any surrounding areas or any infrastructure erected thereon. (cl 11(e))

(B) The Leases

The Leases ultimately executed by the parties in April 2016 were substantially similar to the draft leases in annexure 3 to the agreements to lease (PJ[42]). It is sufficient to summarise the Lease with JWH, which is representative.
White Rock was permitted to use the Site twenty-four hours a day from the date of commencement of the Lease so as to conduct "Wind Farm Activities" for the wind farm (cl 3.1). As under the agreements to lease, White Rock was permitted to use Excluded Areas only for Exceptional Purposes (which expression was defined similarly to that in the agreements to lease (see [21] above)), subject to obtaining written consent of the Landowner, not to be unreasonably withheld (cl 3.1(b)).
The definition of "Site" was also substantially similar to that in the agreements to lease. It was defined to mean: the land upon which [White Rock] may carry out Wind Farm Activities, subject to the terms of this Lease, being all of the Land (if there are no Excluded Areas), or that part of the Land other than any Excluded Area (if there is one or more Excluded Areas).
"Wind Farm Activities" was defined to include: "Design and Planning Activities", "Construction Activities", "Operating Activities" and "Decommissioning Activities" (cl 3.2).
"Construction Activities" was defined to mean specified activities "performed by, on behalf of or for the Lessee in relation to the Wind Farm on the Site as set out in the Final Layout", which activities relevantly included in cl 3.7 (emphasis added): (a) Installing, constructing and/or erecting: (i) Wind Turbines and related buildings, structures or installations required for the Wind Farm (including… electricity substations) (ii) overhead Transmission Lines, underground Cabling and any other buildings, structures or installations required for the transmission of electricity within, to and from the Wind Farm, and … (iv) fences or other physical boundaries (v) access roads, tracks or paths across the Site… … (c) Enabling members of the public at their own risk to enter on the Site to inspect the Wind Farm for education purposes…. Provided that the Lessor has consented to such inspection in writing and has been given at least three (3) days' prior notice thereof, such consent not to be unreasonably withheld.
"Operating Activities" was defined to mean the "following activities performed by, on behalf of or for the Lessee in relation to the Wind Farm on the Site", which included (cl 3.8): (a) maintaining, repairing, operating, using, replacing, continuing and/or upgrading the things referred to in clause 3.7(a); (b) where required for use and maintenance of the Wind Farm removing, lopping, cutting, pruning or clearing any shrubs, trees, plants, crops or pasture to allow access to any part of the Site or where necessary for the Wind Farm, subject to: (i) the Lessor's prior written consent (such consent not to be unreasonably withheld); and (ii) any restrictions under any law or under this Lease; … (d) any other activities reasonably necessary for the operation and maintenance of the Wind Farm and previously approved in writing by the Lessor such approval not to be unreasonably withheld.
The term "Lessee's Licensees" was used in various clauses and was defined relevantly to include: "any agent, employee, officer, invitees, contractor, sub-contractor or consultant of the Lessee or the Lessee's builder or any of those persons" and "such other persons authorised by the Lessee to come onto the Site or Land for any purpose directly or indirectly relating to the Wind Farm" (Sch 1).
For example, the clause dealing with risk provided (emphasis added): (a) The Lessee (and the Lessee's Licensees) uses the Site at its own risk and the Lessor accepts no responsibility for any loss or Damage to the Lessee's Property except to the extent caused by the wilful or negligent act or omission of the Lessor. (b) To the maximum extent permitted by law, the Lessee releases the Lessor from any Claim, Damages or liability which the Lessee or the Lessee's Licensees suffers or incurs or is liable for arising directly or indirectly from or in connection with: (i) any loss or damage to the Lessee's Property, the Accessways or the Apparatus; (ii) any loss or damage resulting from the Lessee's (or Lessee's Licensees) use of or access to the Land, the Accessways or the Apparatus; (iii) the death of, or injury to, any person who is on or about the Land or the Accessways. (c) The release in this clause 3.12 does not apply to the extent to which any liability arises from a wilful or negligent act or omission of the Lessor. (cl 3.12)
White Rock indemnified the Landowner from all liability, damages and claims made against or suffered or incurred by it in connection with, relevantly (emphasis added): … (b) any breach of any covenant or agreement made by the Lessee in or pursuant to this Lease; (c) any negligent act or omission, or unlawful act or omission, of the Lessee or any of the Lessee's Licensees, in connection with this Lease, the Lessee's obligations under this Lease, or in connection with the operation of the Wind Farm on the Land or any other land forming part of the Wind Farm; or (d) the death of or injury to any person or loss of or damage to the property of any person (including the Lessor) arising from or out of the Lessee's or the Lessee's Licensees' use of the Land or any part of it or any other land forming part of the Wind Farm, subject to clause 14.3. (cl 14.1)
Unlike a conventional lease, the Landowner was granted significant rights of access under the Lease. During the construction phase, the Landowner was permitted to exercise "all rights of access" to areas of the Site not temporarily fenced off "for all purposes", to the extent that such access did not materially adversely affect White Rock's use, rights and liberties under the Lease (cl 3.14(a)(i)). White Rock was obliged to propose fencing and gate details to the Landowner and take into account all its reasonable requests in finalising those details (cl 3.14(a)(v)).
After the practical operation date (i.e. when the wind farm was permitted to commence operations for the export of electricity), the Landowner was permitted to use the Site (including the Accessways) for "all reasonable purposes not inconsistent with Wind Farm Activities" (cl 3.14(b)). That clause further provided "[t]he parties will seek to manage the Site with frequent consultation such that, subject to not unreasonably interfering with the Lessee's Wind Farm Activities, the Lessor can use as much of the Site as is practicable, and for as long as is practicable".
The Landowner was entitled under the Lease to still use the Land for a wide range of activities provided they did not substantially interfere with or impact upon the Wind Farm Activities or White Rock's property on the Site. Thus, the Landowner (or any person permitted on the Land by the Landowner) could: (i) enter and reside on the Land; (ii) use the Land for the grazing of sheep, cattle and other livestock; (iii) grow pasture, crops, shrubs, trees and other vegetation on the Land subject to clause 5.2 [which provided any such vegetation planted must not exceed 5 metres in height]; (iv) erect buildings, structures, fences and improvements on the Land in replacement of existing ones in same location or close proximity thereto or otherwise with the consent of the Lessee; (v) use the Land for all usual activities incidental to primary production and residence; and (vi) use the Land for any other purpose with the consent of the Lessee, which consent must not be unreasonably withheld. (cl 5.1(a))
White Rock could not withhold its consent under cll 5.1(a)(iv) or (v) unless it believed that the proposed use would interfere with the Wind Farm Activities or would materially impede the free and unobstructed flow of wind over the Land for the purposes of the wind farm (cl 5.3).
The Lease also contained clauses which conferred protection on the Landowner and its ongoing use of the Land. For example, White Rock was required, at its own cost, to repair and make good all damage to the Land and any property of the Landowner arising directly or indirectly as a result of the Wind Farm Activities promptly upon completion of each part of such Wind Farm Activities as set out in cl 3.2 (see [32] above) (cl 3.15).
White Rock was required to use "reasonable endeavours" to ensure the Wind Farm Activities did not cause substantial disruption to the Landowners' use of the land nor damage the Site, beyond what was reasonably necessary for the efficient performance of the Wind Farm Activities (cl 4.1(a)). White Rock was obliged to repair at its own cost any damage it caused to the Land to the reasonable satisfaction of the Landowner within a "reasonable time" of the damage occurring (cl 4.1(b)).
White Rock was required to provide the Landowner with at least twenty-four hours written notice of its intended access to the Site during Operational Activities and endeavour to give longer notice to allow the Landowner as much time as possible to move stock or make other land use adjustments (cl 4.18).
White Rock was required to have public risk insurance for an amount not less than $20 million (cl 10.1).
The Lease included various provisions concerning the layout of the wind farm. The Final Layout was Sch 3 to the Lease. "Accessways" (see at [26] above), "Apparatus" and "Temporary Infrastructure" were required to be constructed and installed "strictly only in accordance with the Final Layout", subject to White Rock's right to move their locations up to 100 metres from that shown in the Final Layout (cl 4.13(a) and (c)).
There was provision for amendments to be made to the Final Layout during the term of the Lease (cl 4.13(b)). White Rock was required to provide a draft of any amendment to the Landowner, consult with that Landowner, act on all its reasonable requests and pay any additional rent, if applicable, in accordance with the terms of the rent agreement. The amended Final Layout was to be served on the Landowner and, amongst other conditions, was required to (emphasis added): Clearly show the location of all infrastructure to be constructed on the Land including but not limited to Turbines, wind monitoring masts, temporary construction compounds, collector substations, Transmission Lines, Operations and Maintenance Compounds, Cabling, accessways and so forth, which must not be altered from that shown on the Indicative Layout without consulting with and addressing all reasonable concerns of the Lessor. (cl 4.13(b)(vi))
On the completion of construction works, White Rock was required to provide an "as-constructed layout of the Site showing the precise location of all Apparatus on the Site… and of all Accessways" (cl 3.19).
White Rock was required to pay the rent to the Landowner in accordance with the rent agreement, which was set out in annexure 4 to the Lease (cl 6.1).
The Landowner was obliged to provide assistance to White Rock in relation to the matters set out in cl 7.1, which relevantly provided: Where reasonably required by the Lessee, the Lessor at the cost of the Lessee must do all things reasonably necessary to assist the Lessee in: … (c) granting or seeking any necessary easements or covenants over neighbouring land (and such as building restrictions) for the purposes of the Wind Farm (including without limitation, signing any documents which it is reasonably necessary for the Lessor to sign). However, and for the avoidance of doubt, nothing in this clause 7.1(c) will require the Lessor to negotiate any such easements or covenants on behalf of the Lessee or to draft any documents relating to such easements or covenants, and the Lessee must reimburse the Lessor for any reasonable expenses incurred in providing assistance under this clause 7.1(c) and pay adequate and fair compensation for the granting of any such easement or covenant.
Clause 8 was headed "Assignment" (noting, that Item 2 in Sch 1 stated that headings are for convenience only and do not form part of the Lease). White Rock was permitted to assign the Lease with the Landowners' consent, which could only be withheld in the circumstances set out in cl 8.3. It provided: (a) the Lessor has reasonable grounds for believing that the proposed assignee does not have the financial resources or standing to pay any monies that may become due under the Lease or Rent Agreement after the date of the proposed assignment or the proposed assignee is unwilling or unable to provide a guarantee of its financial obligations satisfactory to the Lessor (acting reasonably); or (b) the Lessor has reasonable grounds for believing that the proposed assignee does not have the necessary experience to operate the Wind Farm. (c) the Lessee is in default under the Lease or Rent Agreement or has breached any terms of the Lease or Rent Agreement at least twice in the immediately preceding year.
White Rock was required to make any request for assignment in writing, to provide the name of the proposed assignee and detailed information regarding their financial resources, financial standing, and relevant business experience (cl 8.2(a)). The assignee was required to execute a deed of assignment, under which it covenanted to observe White Rock's obligations under the Lease (cl 8.2(b)).
Clause 8.5 (which was at the heart of the case as conducted by the parties below) stated: 8.5 Restrictions on Lessee The Lessee, other than in accordance with clauses 8.1 to 8.4 shall not, deal with its interest in the Lease or any of its rights and obligations under the Lease, for example, by subleasing, sharing or licensing such rights and obligations to a third party, without the Lessor's written consent, not to be unreasonably withheld.
By giving written notice to the Landowner, White Rock was permitted to assign by way of mortgage, charge or other security its rights under the Lease as security under a loan or facility agreement which it entered into for the purpose of financing the wind farm (cl 8.6).
Any transfer by White Rock of an underlying interest greater than 10% in any 12 month period was deemed to be "an assignment" for the purposes of cl 8 (cl 8.7).

White Rock entered into two option agreements to purchase the Substation Land, with Mr Wood and JWH respectively. This reflected the fact that there were two alternative sites for the proposed substation. A decision was still to be made as to which site was preferable (PJ[43]).
White Rock was granted an exclusive and irrevocable option to purchase the Substation Land on the terms and conditions specified in the draft contract for sale, as set out in annexure 1 (cl 2.1).
White Rock was obliged to pay only nominal consideration for the grant of the option (a fee of $1 plus GST was payable immediately and thereafter annually on each anniversary of the commencement date until the option was either exercised or expired on 10 July 2017) (cl 2.3).
The Substation Land was identified by land title lot references in Sch 1 to the option agreement and its location was indicated in the diagram set out in Sch 3. Such land was to be subdivided from the land owned by the Landowner for the purpose of the construction of the substation (cl 3(b)(i) and special condition 17).
Provided that the Substation Land had been subdivided, White Rock was entitled to exercise the option at any time prior to the expiry date (i.e. 5pm on 10 July 2017). The option would lapse if not exercised by such date (cl 2.2(b)).
If the option was exercised, there was to be a binding agreement for the sale of the Substation Land for the price of $100,000 per hectare plus GST (a minimum of $100,000 was payable) (cl 3(a), Item 8 of Sch 1).
White Rock was permitted to assign its rights and/or novate its obligations under the option agreement "to any responsible and solvent person who is capable of fulfilling [its] obligations" under such agreement, without the consent of the Landowner (cl 5).
The parties acknowledged the need to obtain both planning approval and registration of a subdivision so that the substation lot could be created and that the consideration to the Landowner for "granting any such right of way and/or covenant will be the benefit arising from the subdivision" (special condition 17.1). In the event that the subdivision was refused, the parties agreed that White Rock may secure land tenure for the construction, operation and maintenance of the substation by way of easement (special condition 17.2). There was no evidence about any subdivision process (PJ[46]).
White Rock had limited rights to vary the location of the Substation Land under the option agreement. The Landowner was required not to unreasonably refuse any written request by White Rock to vary such location, provided it was "in reasonably close proximity" to that identified in Sch 3 or caused the Landowner no unreasonable additional inconvenience or loss of amenity (special condition 17.3). If the location was so amended, no additional consideration was payable by White Rock.

(D) Option agreements for the grant of the powerline and access easements

As matters transpired, the substation was built on Mr Wood's land. It is appropriate therefore to focus on the option agreement relating to his land.
White Rock had "an exclusive and irrevocable option to acquire the Powerline Easement and the Access Easement over the Easement Land" (cl 1.1). The option was required to be exercised for the grant of both easements (i.e. it could not be exercised for only one such easement) by 5pm on the expiry date, which was also 10 July 2017 (cl 1.2).
The term "Easement Land" was identified as the land title lot reference numbers of the servient tenement (Reference Schedule, Item 2).
"Powerline Easement" was defined as "the powerline easement over the Corridor Land on the terms and conditions of the Powerline Easement Document". The term "Access Easement" was defined as "the easement for access over the Corridor Land on the terms and conditions of the Access Easement Document". The Power Easement Document and Access Easement Document were respectively annexures 2 and 4.
"Corridor Land" was identified as that part of the Easement Land indicated on the Corridor Land Plan in annexure 1 to the option agreement, which comprised a diagram that indicated the locations of the Corridor Land with respect to both the powerline and access easements, relative to the land across which they traversed, and the substation (Reference Schedule, Item 3).
If the option was exercised by White Rock, there would be constituted a binding agreement for the grant by the Landowner of the powerline and access easements to White Rock, who would both be bound by the terms and conditions of the Powerline Easement Document and the Access Easement Document from the date of exercise (cl 2(a)(ii)).
Only nominal consideration was payable by White Rock for both the grant of the option and the creation of the binding agreement for the grant of the powerline and access easements if the option was exercised. An "Option Fee" of $1 plus GST was payable initially and annually thereafter until the option was exercised or expired (cl 1.3(b)). An "Easement Payment" of $1 plus GST was payable by White Rock to the Landowner within 30 days of the date of exercise of the option (cl 1.3(c)).
Access to the Easement Land during the term of the option agreement was governed by cl 3, which provided that the Landowner agreed to give White Rock and its employees, agents, contractors and consultants a "non-exclusive licence to enter the Easement Land (on 24 hours… notice to the Landowner)". In exercising those access rights, White Rock was obliged to take all reasonable care, remediate any damage caused and indemnify the Landowner in respect of any claims, losses, costs, expenses and damages they received as a result of such access.
White Rock had no right under the option agreement to substantially relocate the Corridor Land. The Landowner could not, however, unreasonably refuse any request in writing by White Rock to vary the location of the Corridor Land by not more than 100 metres. No additional consideration was payable with respect to any such amendment (cl 4).
White Rock was permitted to assign some or all of its rights under the option agreement, with the consent of the Landowner, not to be unreasonably withheld (cl 6).
The primary judge considered that had the option agreements been exercised and an access easement been granted to White Rock over the access road, the Landowners would have had the benefit of White Rock's obligation to repair the access road and an entitlement to damages caused by any failure to repair (PJ[85]).

(i) Draft powerline easement (annexure 2)

The powerline easement was in the form of the Powerline Easement Document. The details of this document need not be summarised.

(ii) Draft access easement (annexure 4)

The access easement was in the form of the Access Easement Document.
Mr Wood was named as the Transferor. The document stated that the Transferee would be either White Rock or the "Owner of turbine land".
The term "turbine land" was not defined in the option agreement or anywhere else in the suite of agreements entered into on 16 September 2014. Counsel for the Landowners contended, correctly, that it meant the Substation Land by reference to the dominant tenement box stating: "inset [sic] (at the time the option is exercised) either: 1. Registered lease no.; 2. Lot and DP no. of turbine land".
The "Description of Easement" provided: "Easement for Access 20 wide the location of which is shown as 'Proposed Easement for Access' on the attached Plan and the terms of which are set out in Annexure A". The reference to the "attached Plan" seems to refer to a document styled "Plan of Easement" but it did not show any plan. Rather it simply stated: "When the easement instrument is prepared after the exercise of the option, a plan of the Easement Site in registrable form will be annexed or referred to in the Transfer Granting Easement".
There was no term relating to the payment of any consideration for the transfer and use of the access easement.
The Transferee and its "Permitted Users" (i.e. its employees, agents, workers, contractors and other persons authorised by any of them or by the Transferee) were permitted to enter in and upon the "Easement Site" at any time to: (a) pass and repass either with or without plant, machines, vehicles (including heavy duty or oversized vehicles), equipment or material though (sic), over and along the Easement Site; (b) create access tracks along the Easement Site for vehicular or other access; and (c) clear and keep the Easement Site free of anything including, without limitation, any structures, vegetation or natural materials, which may obstruct the rights conferred by this Transfer Granting Easement (annexure A, cl 1)
"Easement Site" was defined to mean "the part of the Dominant Tenement shown as the site for the easement for access on the attached Plan" (annexure A, cl 12).
The Transferor was entitled to various benefits and protections. For example, the Transferee was obliged to "take reasonable precautions to": (a) cause little inconvenience to the owner and any occupier of the Servient Tenement; (b) do as little damage to the Servient Tenement; and (c) only remove the minimum amount of vegetation necessary for access along the Easement Site to avoid erosion and problems occurring by such erosion, as is reasonably practicable. (annexure A, cl 2)
The Transferor was permitted to use the Easement Site, so long as such use did not or was unlikely to interfere with the Transferee's rights, or breach the Transferor's covenant not to construct or erect any permanent structure on the Easement Site or plant trees or shrubs, without the consent of the Transferee not to be unreasonably withheld (annexure A, cll 3(a) and 4).
The Transferee's rights to amend the site of the access easement were limited to varying the borders by no more than 100 metres of the location shown on the attached plan (annexure A, cl 5).

(E) TransGrid project agreement

On 10 July 2015 (which was 10 months after White Rock entered into the suite of agreements with the Landowners described above), White Rock entered into a project agreement with TransGrid for the purpose of constructing infrastructure that was necessary for the operation of the wind farm, including a transmission line, substation and upstream works between the wind farm and TransGrid's trunk high voltage transmission network.
Most of the terms of the project agreement were conditional upon White Rock providing a notice to proceed to TransGrid (cl 2.1).
It is notable that White Rock became obliged to secure TransGrid's access to inter alia the "Substation Site". Clause 13.1 relevantly provided: (a) Subject to clause 13.1(b), and without limiting TransGrid's other rights of access under this agreement, the Customer will provide TransGrid (and its servants, agents and contractors) during the Term with clear, unhindered and safe access to and over the Substation Site, Transmission Line Route, the Land and its associated access roads for the purpose of undertaking the Connection Work and for any related purpose. (b) TransGrid acknowledges and agrees that its right of access or use under clause 13.1(a): (i) may not be exercised in a manner which: A. prevents the other party from performing its obligations under this agreement or carrying out its normal operations; or B. is inconsistent with any Applicable Laws, Authorisations or requirements of any Authority. …
Clause 13.2 provided: (a) Except where access is required in cases of emergency, or as otherwise provided for under this clause, any right of access conferred on TransGrid by this clause 13 must be exercised as follows: (i) where it is reasonably practicable to do so, TransGrid must provide to the Customer reasonable notice that it will be exercising its right of access and set out in the notice the purpose of that access; and (ii) TransGrid must cause as little inconvenience to the Customer as is practicable and must observe any reasonable access and safety procedures specified by the Customer (to the extent they are applicable) at all times. (b) The right of access conferred on a party by clause 13 will be in addition to any right of access and either party may have under the Electricity Supply Act 1995 (NSW) or the Rules.
Clause 13.3 provided that "[t]itle to and risk in the Assets rests with TransGrid at all times." "Assets" was defined to mean "the Substation and the Transmission Line" (cl 1.1).
Clause 24 required that White Rock ensure that both legal and beneficial title to the Substation Site was transferred to TransGrid and that easements for access to the substation and over the transmission line were granted to TransGrid. It relevantly provided: 24. Transfer of Ownership of the Substation Site and other property interests 24.1 Substation Site The Customer must, no later than the Date of Practical Completion (provided the Customer receives, a reasonable time before this date, the survey plans and other documents to be provided by TransGrid which are reasonably required for the Customer to do so), at its own cost execute any document and do any act reasonably required by TransGrid (including the payment of any applicable stamp duty, charge or impost), to ensure that legal and beneficial title to the Substation Site is transferred to TransGrid free and clear of any Security Interest. The Substation Site shall be of sufficient size as determined by TransGrid including a 20m buffer zone. Failure to comply with this clause 24 shall be deemed a Default for the purpose of clause 16. 24.2 TransGrid Easements (a) On or before the Date of Practical Completion (provided the Customer receives, a reasonable time before this date, the survey plans and other documents to be provided by TransGrid which are reasonably required for the Customer to do so), the Customer must at its own cost and at no cost to TransGrid grant to TransGrid (or must do all thing (sic) necessary to ensure that the following Easements are granted to TransGrid): (i) a 45m wide Easement for the final Transmission Line Route (i.e. the Transmission Line set out in the Scope of Works); (ii) a 10 metre wide Easement from the proposed Substation Site to the nearest public road for the purpose of accessing the Substation Site (which access route will be agreed between the parties prior to commencing the Connection Work at the Substation Site); … 24.3 Access Right On and from the Commencement Date and during the Term, the Customer must ensure TransGrid is granted any Easement which is required by TransGrid for securing a permanent right to access the Substation Site and Transmission Line Route. The Easements granted under this clause 24.3 will identify the access route agreed between the parties and be otherwise on terms reasonably acceptable to TransGrid. … 24.7 Substation Site and Easement Acquisition Deed … (b) TransGrid acknowledges that, as at the Commencement Date, the Customer holds options to acquire the Substation Site and be granted the Easements, but may not be the owner of the Substation Site or beneficiary of the Easements. …

(i) Location of the Substation and Accessways

There was no direct evidence as to the manner in which the parties engaged in the process required by the agreements to lease and the Leases to determine the final route of the access road from the Gwydir Highway to the substation (PJ[123]).
On 23 December 2015, Ms Squires sent an email on behalf of White Rock to the solicitor for the Landowners concerning the satisfaction of the conditions precedent for the issue of notices to proceed by White Rock. At this time, the parties were engaged in negotiations as to adjustments that needed to be made before the Landowners were satisfied that White Rock was entitled to issue notices to proceed (PJ[124]). The email included the following assurances from White Rock addressing the Landowners' concerns about their rights of way to access the Gwydir Highway: 3. Right of Way a. we agree to undertake to survey and create an easement to accommodate the re-alignment of the right of way to allow for the access tracks to cross the boundaries of Wood, Nugent, Dulhunty and Cameron to the Gwydir Highway; b. we agree to provide a double fence, either new or through a combination of new and existing fencing, on the re-aligned road;
The primary judge found that it must have been understood by the parties, no later than 23 December 2015, that the access road would ultimately be constructed over part of the land of all five Landowners (PJ[124]). This finding was not challenged in the appeal.

(ii) Events following entry into the Leases

On 10 July 2017, the two options for the purchase of the Substation Land and the three options for the grant of the powerline easement and access easement expired, without any of those options having been exercised by White Rock. White Rock did not explain why it allowed the options to expire (PJ[127]).
Construction of the wind farm commenced in late 2016 and was completed in about July 2018 (PJ[128]).
On 23 May 2018, White Rock sought the grant of three "Transfers Granting Easements", which apparently consolidated both the powerline and access easements, from the three Landowners who had entered into the option agreements (Mr Wood, JWH and Mr Nugent) (PJ[131]).
The Landowners' solicitors advised by email on 24 September 2018 of their clients' instructions to press for payment in respect of the grant of access over the proposed access road. They requested that the draft transfers also be provided to Mr Dulhunty and Mr Cameron on the basis that the proposed access road passed over their land (PJ[132]). White Rock's response, communicated by email on its behalf on 26 September 2018, was that it was unwilling to make any additional payment beyond what was set out in the rent agreement in respect of the proposed access easement on the basis that any additional payment was beyond the commercial bargain struck between the parties.
A further email sent on behalf of White Rock on 17 October 2018 attached amended draft transfers for the grant of an easement, which included only the powerline easement. White Rock also sought consent in that email from the Landowners to enter into a non-exclusive licence with TransGrid over the access road under cl 8.5 of the Leases. Self-evidently, at this time (as noted above), White Rock believed that cl 8.5 was applicable to any such licence and this was the basis upon which it (and the Landowners) conducted the proceedings below (PJ[135]).

(F) Deed of release

During the course of construction of the wind farm, significant disputes arose between the parties as to White Rock's compliance with its obligations under the Leases (PJ[15]).
On 19 November 2018, 24 separate landowners, including the five Landowners, compromised their dispute with White Rock by entering into a deed of release. Relevantly (see PJ[16]): 1. Mr Wood agreed to enter into and complete a contract for the sale of the Substation Land on the terms and conditions in annexure 1 of the option agreement to purchase Substation Land, subject to White Rock (or its nominee purchaser, which, as matters transpired, turned out to be TransGrid) granting to Mr Wood a perpetual access easement over the Substation Land. 2. Mr Wood, JWH and Mr Nugent agreed to grant a powerline easement directly to TransGrid.
The deed of release did not deal with the grant of an access easement by the Landowners over whose land the access road had already been constructed. That matter remained the subject of dispute (PJ[147]).

(G) Draft licence deed

On 3 April 2019, White Rock provided to the Landowners' solicitor a final draft version of the licence deed. It proposed to grant to TransGrid a non-exclusive right of access over the "Access Track" (PJ[148]). White Rock asked the Landowners to give their consent to the draft licence deed under cl 8.5 of the Leases. The Landowners declined to do so, by letter dated 23 May 2019. Instead, they expressed their willingness to grant an access easement to TransGrid in return for payment, on the same terms and conditions as that granted to other third parties, such as White Rock Solar Farm, which was a related company to White Rock (PJ[154]-[163]).
The draft licence deed provided that TransGrid would be permitted to use the Access Track for the purpose of passing and repassing with or without "plant, machines, vehicles (including heavy duty or oversized vehicles), equipment or material through, over and along the Access Track" (cl 2.1, Sch 1 Item 7).
The term "Access Track" was defined to mean "the section of the Land marked B on the Plan" (cl 1.1). That plan was included in Sch 2 to the draft licence deed, by reference to a plan which was admitted into evidence below as Exhibit DP2. The Access Track was depicted as a solid line from Gwydir Highway to the Substation Land on Mr Wood's property and was described as: "B PROPOSED EASEMENT FOR ACCESS 10 WIDE CENTERLINE OVER EXISTING TRACK SHOWN THUS".
TransGrid was required by White Rock (as licensor) to observe and perform some specified terms of the Leases (see cl 3.2). The specified terms included some, but not all, of the provisions in the Leases which were plainly intended to protect the Landowners' rights and interests (bearing in mind the extent to which the Land the subject of the Leases would be shared: see [38] to [41] above). Notably, however, there are some significant omissions from the draft licence deed. For example, it was not proposed in that document to oblige TransGrid to comply with cl 3.12 of the Leases, which deals with the allocation of risk (see at [36] above).
TransGrid was required to comply with some general obligations listed in cl 3.3, including to repair or replace anything within the Access Track or on the Land which it damages or destroys. It was also obliged not to cause any obstruction to the Access Track, nor engage in activities which are dangerous or likely to cause damage, nor bring any materials which are dangerous, hazardous, explosive or could increase the risk of fire onto the Access Track or the Land. Most of these general obligations were expressed in terms which indicate that the obligations were owed to White Rock as licensor, as opposed to the Landowners directly.

(b) The primary judgment summarised

In the proceedings below White Rock sought declarations inter alia that (PJ[21]): 1. contrary to cl 8.5 of the Leases, the Landowners had unreasonably withheld their consent to White Rock granting to TransGrid a non-exclusive licence to use the Access Track from the Gwydir Highway to the substation to permit TransGrid access to the substation for repair or maintenance in connection with White Rock's wind farm activities conducted from the Site; and 2. the Landowners must give their written consent to White Rock granting such a licence to TransGrid.
The relief sought plainly reflected White Rock's position at that time that cl 8.5 was at the heart of the parties' dispute.
The primary judge accepted that, had White Rock exercised the options for the grant of the powerline and access easements and the wind farm had been constructed as contemplated by the suite of agreements entered into on 16 September 2014, the Landowners would not have been entitled to receive any separate or additional consideration for the grant of the access easement.
White Rock claimed that the sole or predominant reason for the Landowners' refusal of consent was to acquire additional payment for the grant of an easement.
The primary judge acknowledged that cases such as Fulham Partners LLC v National Australia Bank Ltd [2013] NSWCA 296, International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] Ch 513 and Construction Technologies Australia Pty Ltd v Doueihi (No 5) [2018] NSWSC 294, supported the proposition that the reason for a landlord's refusal to consent must be something affecting the subject matter of the contract which forms the relationship between the landlord and the tenant. However, his Honour noted that the relationship between the parties here was not a conventional one of landlord and tenant under a lease with the right to exclusive possession. The Landowners were entitled under the terms of the Leases to share the occupation and use of the Land with White Rock. His Honour considered that this meant that the Landowners "could properly take into account a greater range of issues relevant to the preservation of their own interests, including the preservation of the utility of their own right to use their land", in deciding whether or not to grant their consent under cl 8.5 (PJ[169]).
The primary judge made an unequivocal finding that use of the access road by TransGrid was "essential to the operation of the Wind Farm" and noted that there was no claim that that use would subject the Landowners to any risk (PJ[175]). Read in context, the reference to "risk" refers to a situation where a lessor demands additional rent as a condition to it consenting to an assignment of a lease. The primary judge observed at PJ[175] that this would usually be viewed as an extraneous condition on the consent, at least where the demanded rent increase could not be justified by a heightened risk that the proposed assignee would not pay the rent or would breach the terms of the assigned lease.
After stating at PJ[177] that the Leases did not preserve each Landowner's right to access from his or its land, to the Gwydir highway, the primary judge said that "[e]nforcement of the agreement made by White Rock was… necessary to preserve that access" and "[i]t was not unreasonable for the Landowners to prevent White Rock from using the access road in a way that suited White Rock, while White Rock refused to honour its agreement in a way that was necessary to enable the Landowners to reinstate their rights of way in an effective and legally binding manner". I view those observations as highlighting the significant difference between an easement granted by the Landowners which they could enforce to protect their rights and interests as opposed to a licence to which they are not a party and cannot enforce.
White Rock challenges the primary judge's reasoning at PJ[177] by ground 3 of the notice of appeal.
Another part of the primary judge's reasoning as to why consent had not unreasonably been withheld under cl 8.5 was the Landowners' reasonable expectation that they would have the benefit of formal access easements, with particular reference to the need for some of them to access the Gwydir Highway by means of the access road. It is desirable to set out his Honour's reasoning on this matter at PJ[191], which is challenged by grounds 5 and 6 of the notice of appeal: I appreciate that, in a strict sense, the Landowners had no right to compel White Rock to exercise any of the Options, and that they took the risk that White Rock would not do so. However, common sense establishes that it would have been the reasonable expectation of the Landowners that, if White Rock issued Notices to Proceed under the Agreements to Lease before 10 July 2017, it would also have exercised the Options necessary to satisfy its obligations to TransGrid. In my view, the Landowners had reasonable grounds to expect that, as the access road was expected to traverse the Land of three of the Landowners, the Landowners would have the benefit of formal access easements, including that the access road would be required to be repaired by White Rock. That expectation was reinforced by the fact that the access of some of the Landowners to the Gwydir Highway would be by means of rights of way over the access road (although this expectation was complicated by the realisation that the route of the access road would diverge from that of the existing access road, which led to White Rock's agreement of 23 December 2015).
In the appeal, senior counsel for the Landowners relied heavily on the primary judge's earlier observations at PJ[94]-[95] concerning the parties' expectation that the options would be exercised and create easements which would protect the Landowners' rights and interests: [94] There was no evidence of the circumstances that led White Rock to enter into the Option Agreements, or why the Option Agreements were entered into before the TransGrid agreement. Given the complex and sophisticated nature of the arrangements that were required to enable White Rock to construct and operate the wind farm, I infer that White Rock and the solicitors for the parties were experienced in the issues that needed to be addressed in the suite of agreements that would be required, and that the Option Agreements were entered into in the correct anticipation that TransGrid would require to be granted the rights that were ultimately the subject of clause 24 of the TransGrid Agreement. [95] Even though, strictly, the Landowners who granted the various Options had no means to compel White Rock to exercise the Options, I infer that, as a matter of practical reality at the time the Options were granted, both White Rock and the Landowners anticipated that if White Rock decided to proceed with the wind farm project and issued Notices to Proceed under the Agreements to Lease, then it would follow that White Rock would also exercise the necessary Options.
The primary judge emphasised that White Rock had failed to exercise any of the options. Their exercise would have permitted White Rock to secure its desired outcome (PJ[179]-[180]). In other words, White Rock had through its own inaction lost its legal right to compel the Landowners to do what was necessary to satisfy its obligations to TransGrid under the project agreement. In such circumstances, the primary judge considered the Landowners were free to negotiate for additional consideration from White Rock in return for it being put in a position to meet its obligations to TransGrid (PJ[189]).
With respect to the access road, it may be noted that the primary judge stated at PJ[184] that White Rock had a right to possession of the access road under the Leases and "so was legally able to grant a licence to TransGrid to use the access road, subject only to TransGrid being content with that arrangement, and White Rock being able to compel the consent of the Landowners under clause 8.5 of the Leases". Those observations reflect the way the case was conducted below. The focus was on whether cl 8.5 had been breached. No issue was raised as to whether White Rock was legally able to grant a licence to TransGrid to use the access road, which is the issue now squarely raised by the notice of contention.
The primary judge explained why he considered that, after the Landowners agreed to the deed of release, they were not acting unreasonably in withholding their consent under cl 8.5 to the proposed licence deed: [190] I do not accept that the Landowners lost the commercial advantage of their ability to negotiate the payment of an additional consideration by White Rock by reason of their obligation under clause 8.5 of the Leases to act reasonably in withholding the consent to the grant of a licence to use the access road to TransGrid, after they had exhausted their unconstrained bargaining power by entering into the Deed of Release, on terms satisfactory to White Rock, in a manner that enabled White Rock to satisfy its obligations to TransGrid.
This reasoning, together with the related reasoning at PJ[187]-[189], is challenged by ground 4 of the notice of appeal.
The primary judge therefore refused to grant any of the declaratory relief sought by White Rock (PJ[193]).

White Rock appeals on seven grounds. One of those grounds, namely ground 7, reflects its primary case on the appeal that cl 8.5 of the Leases did not apply and White Rock is permitted to grant a licence to TransGrid under the Leases. As has been emphasised, this contradicts the basis upon which the proceedings were conducted below.
On the appeal, by their notice of contention, the Landowners also changed their primary position and argued that cl 8.5 did not apply. They submitted that the parties contemplated when the agreements were executed on 16 September 2014 that access to the Substation Land would only be by way of an easement. The Landowners' "fall back position" on the appeal was that, if cl 8.5 applied, the primary judge did not err in concluding that consent had not unreasonably been withheld.
The other six grounds of appeal (grounds 1 to 6) relate to White Rock's alternative and secondary case, namely that, if cl 8.5 did apply, the primary judge erred in rejecting White Rock's claim that the Landowners were obliged to give their consent under that provision in relation to its proposed licence deed with TransGrid. 1. Ground 1 contends that the primary judge ought to have held the Landowners unreasonably withheld consent under cl 8.5 on the basis that additional consideration for access was required, whether by easement or otherwise, because that condition cut across and denied White Rock the full benefit of the commercial bargain represented by the Leases. 2. Ground 2 contends that the primary judge erred in attaching significance at PJ[179] to White Rock's failure to exercise the options to secure easements in favour of TransGrid. 3. Ground 3 contends that the primary judge erred in holding at PJ[177] that it was reasonable for the Landowners to decline consent because there was on foot a separate dispute in respect of the Landowners' rights of way over each other's land, where the Leases made no provision for the rights of way. 4. Ground 4 contends that the primary judge erred in reasoning at PJ[187]-[190] that because the Landowners had been free to negotiate additional consideration from White Rock as part of agreeing to enter into the deed of release, they thereafter remained able to negotiate such additional consideration under the Leases. 5. Ground 5 contends that the primary judge erred in holding at PJ[191] that the Landowners had reasonable grounds to expect that the easements the subject of the options would be in place for the operation of the wind farm. 6. Ground 6 contends that the primary judge erred in taking into account at PJ[191] the fact that an easement, if granted, would have obliged White Rock to repair the access road in circumstances where the Leases did not give the Landowners a right to an easement and, in any event, the condition sought to be imposed did not relate to repair.

(d) Consideration and determination

I shall address in turn each of the three core issues as identified at [7] above.

(1) Does cl 8.5 of the Leases apply to the draft licence deed?

White Rock contended that its proposal to grant a licence to TransGrid did not attract the operation of cl 8.5 of the Leases because that proposal did not constitute a dealing with its interest in the Leases or with any of its rights or obligations under the Leases. Rather, it contended that the proposal should be viewed simply as part of its operation of the wind farm. It contended that cl 8.5 was not directed to a contractual right to use, exploit or take the benefit of its rights regarding the wind farm. It claimed that the proposed licence deed with TransGrid was no different to White Rock licensing a third party, such as Telstra, to enter the Land on an ad hoc basis to carry out repairs or maintenance on, for example, telecommunications equipment.
White Rock described the purpose of cl 8.5 as preventing it from circumventing the restrictions on assignment expressly imposed by cll 8.1 to 8.4 of the Leases, by, for example, it entering into a sublease or joint venture agreement with a third party so as to achieve a similar outcome as an assignment.
White Rock also relied upon the fact that provisions in the Leases relating to Construction Activities and Operating Activities (see cll 3.7(c) and 3.8(b) and (d) respectively) included independent requirements for the Landowners to give consent. It claimed that this did not fit comfortably with a construction of cl 8.5 as imposing an overarching requirement of consent in the case of the proposed licence deed.
As mentioned, on the appeal, the Landowners also changed the position they had adopted below. They did not contest the proposition that cl 8.5 had no application to the draft licence deed.
The issue turns on the proper construction of cl 8.5. In my view, both the terms of cl 8.5 and considerations of context support the parties' primary position on the appeal that cl 8.5 has no application in the circumstances here.
The terms of the provision indicate that the object of cl 8.5 is to prevent White Rock from circumventing restrictions contained elsewhere in cl 8 on White Rock assigning the Leases without the Landowners' consent. The language of cl 8.5 may leave something to be desired in terms of clarity, but it is significant that the restrictions it imposes relate to White Rock dealing with its interest in the Lease or any of its rights and obligations under the Lease. The first two of the examples given in cl 8.5 to White Rock dealing with its interest in the Lease or its rights and obligations under the Lease are subleasing or sharing. Those are two ways in which White Rock could achieve an outcome which is akin to an assignment, in the sense of transferring an existing proprietary right to an assignee (see Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 26; [1963] HCA 21 per Windeyer J).
The third example, namely "licensing such rights and obligations to a third party" is, on its face, more problematic. In oral address on the appeal, Ward P observed that, if cl 8.5 did not apply to the grant of a licence to a third party to use the access road because that involved the exercise of White Rock's rights under the Leases and not a dealing with those rights, why did cl 8.5 include an express example of "licensing such rights and obligations to a third party".
The response by White Rock's counsel was that the third example refers to a licence which enables a third party to acquire or share White Rock's rights and obligations under the Lease. This is to be contrasted with a licence which grants a third party access to the land upon which the Wind Farm Activities are being conducted. Such a licence involves White Rock exercising or utilising its rights and obligations as opposed to relinquishing those rights and obligations to a third party. Counsel submitted that: … White Rock is not licensing its rights to a third party when it permits them to access the site. What it is doing is granting a permission to do that which is otherwise unlawful, namely the trespass, and we call that a license. But the two are distinct, they're distinct concepts, and the licensing rights and obligations is not that.
These submissions should be accepted. The grant of the proposed licence to TransGrid would not involve the transfer of any of White Rock's existing proprietary rights or obligations under the Leases.
This construction of cl 8.5 is also supported by considerations of context. They include the fact that other sub-clauses in cl 8 expressly address White Rock's rights to assign the Lease (including but not limited to, by way of mortgage, charge, or other security). Assignment is used in cl 8.5 in the sense of transferring White Rock's proprietary rights or obligations to a third party.
A second aspect of context which supports this construction of cl 8.5 is the presence of other provisions in the Lease which address access to the Site. For example, members of the public may access the Site for education purposes (cl 3.7(c)). Similarly, access may be granted for other purposes necessary for the operation and maintenance of the wind farm (see cl 3.8(d)). Both these provisions contain their own express requirements that the Landowner consent or approve such access, which is not to be unreasonably withheld. I accept White Rock's submission that, in these circumstances, it would be odd to adopt a construction of cl 8.5 which duplicated the requirement of consent. Clause 8.5 should be construed harmoniously with other relevant provisions in the Leases addressing access.
The position would be different if the proposed licence deed with TransGrid went further than merely permitting TransGrid to access its substation and conferred upon it White Rock's right as lessee to determine who should be permitted access to the relevant land. That would amount to the transfer of White Rock's proprietary rights and obligations under the Leases.

(2) If cl 8.5 is not applicable, is White Rock permitted under the Leases to grant a licence to TransGrid to access the substation?

As noted above, on the appeal, the Landowners' primary position was that cl 8.5 did not apply, but access to the substation could not be achieved by White Rock granting a licence to TransGrid as proposed under the draft licence deed. They contended that this necessarily flowed from the fact that the agreements for lease and options for the purchase of Substation Land and grant of the easements were executed at the same time and constituted "a suite of agreements". They contended that the documents must be considered and interpreted together and harmoniously, citing HP Mercantile Pty Ltd v Hartnett [2016] NSWCA 342 at [136]. They claimed that the parties envisaged that access would be dealt with by an easement in which the Landowners would necessarily have to be a party, and not by a licence between White Rock and a third party such as TransGrid.
The Landowners relied upon the objective theory of contract, the key elements of which are reflected in the following observations by Bathurst CJ in Central Coast Council v Norcross Pictorial Calendars Pty Ltd [2021] NSWCA 75 at [55]: … The contract is to be construed by what a reasonable business person would understand it to mean. That requires consideration of the language used by the parties, the surrounding circumstances known to them, and the commercial purpose or objects to be secured by the contract…
Noting that the draft leases were annexed to the agreements to lease, the Landowners submitted that the parties agreed to the form of the Leases, including cl 8.5, when the suite of agreements was executed in September 2014. Consequently, the Leases should be interpreted as part of an overall transaction, which included the options to purchase the Substation Land and related powerline and access easements. They also emphasised that, as was reflected in the plan of the Indicative Layout of the Land, it was contemplated at that time that the Substation Land, although located within the Landowners' land, was excluded from the grant of the Lease, which was consistent with the expectation that the Substation Land would be sold to TransGrid.
The Landowners acknowledged that, by the suite of agreements, White Rock did not obtain any immediate rights over the Land. Rather, by the options, it was granted enforceable rights at its own election. They added, however, that this was not inconsistent with their position that, if White Rock allowed the options to lapse, the Landowners had to be involved in any alternative arrangement or agreement under which TransGrid would be granted a right of access to the substation.
The Landowners adopted the primary judge's findings at PJ[94] and [95] to the effect that, objectively viewed, the parties intended that if the wind farm proceeded, White Rock would exercise the necessary options for the purchase of the Substation Land and grant of the easements. They also emphasised that the parties contemplated in September 2014 that TransGrid would become the owner of the Substation Land and obtain the benefit of the powerline and access easements over the relevant land.
In opposing the notice of contention, White Rock contended that there was no support for a construction which would exclude TransGrid alone from the class of persons to whom White Rock could grant access to the Land. White Rock described the Landowners' position as involving a "startling construction" which turned exclusively on the fact that ultimately White Rock did not execute the option agreements for the grant of easements in favour of TransGrid.
Significantly, and correctly, White Rock did not contest the Landowners' core contention to the effect that the Leases had to be construed in the context of the overall transaction, including the suite of agreements executed in September 2014. White Rock submitted, however, that the regime agreed to by the parties readily accommodated access by TransGrid, whether by a licence or easement. It submitted that the regime adequately dealt with the issues raised by shared use of the Land and access to the substation. It submitted that, under the Leases, it was permitted to grant access to third parties, including TransGrid, to access and use the Land for "Wind Farm Activities" without always having to obtain the Landowners' consent. Counsel for White Rock placed emphasis on the reference to activities "performed by, on behalf of or for the Lessee" at the beginning of cll 3.7 and 3.8 and the use of the term "lessee's licensees" throughout the Leases (see [33]-[37] above). Accordingly, White Rock submitted that the draft licence deed was valid.
For the following reasons, the Landowners' position should be upheld, at least in part. First, it is evident from the suite of agreements which were executed in September 2014 that the arrangements were, as the primary judge described them at PJ[94], "complex and sophisticated". The suite of agreements reflected the parties' anticipation that TransGrid could acquire ownership of the Substation Land and would require an effective right of access over the relevant land. These matters were subsequently taken up in cl 24 of the project agreement. But they were also reflected in relevant parts of the suite of agreements executed in September 2014, with particular reference to the option agreements for powerline and access easements and the relevant provisions therein permitting assignment.
Secondly, the primary judge was correct to infer at PJ[95] that, although White Rock was under no legal obligation to exercise the options, "as a matter of practical reality at the time the Options were granted, both White Rock and the Landowners anticipated that if White Rock decided to proceed with the wind farm project and issued Notices to Proceed under the Agreements to Lease, then it would follow that White Rock would also exercise the necessary Options".
Thirdly, the bargain which was struck between the parties in the September 2014 suite of agreements reflected the fact that access to many parts of the Land would be shared between, on the one hand, White Rock and any assignee, and, on the other hand, any affected Landowner. Such a Landowner had a natural interest and concern in having its rights and interests protected in any enduring access arrangement with a third party such as TransGrid.
I do not accept White Rock's submission that the Leases alone afforded the Landowners sufficient protection of their rights and interests with respect to the issues likely to be created by shared use of the Land and long term access to the electricity substation by TransGrid. That access is of a very different nature to the ad hoc access to parts of the Land by third parties, such as Telstra, or access by the persons identified in cll 3.7(c) and 3.8(b) of the Leases. In addition, I strongly doubt the correctness of White Rock's submission that the provisions in the Leases dealing with access and use of the Land by third parties for "Wind Farm Activities" apply to the draft licence deed. In particular, it is difficult to see how access by TransGrid to its own electricity substation falls within the definition of "Operating Activities" in cl 3.8 of the Leases (see at [34] above). Such access by TransGrid is hardly an activity performed by, on behalf of or for White Rock (as Lessee) in relation to the wind farm on the Site.
Fourthly, objectively viewed, it is difficult to understand why the relevant agreements should be construed in a way which would permit circumvention of the negotiated balance between the competing rights and interests of the parties which was reflected in the option agreements. Acceptance of White Rock's position would mean that it could have bypassed the option agreements altogether at any time prior to their expiry dates by simply granting a licence to TransGrid. That could scarcely have been the intention of the parties, viewed objectively. It would make a nonsense of the fact that the option agreements were created at all.
For all these reasons I consider that White Rock could not validly grant TransGrid access to the substation as proposed in the draft licence deed. Any such access arrangement or agreement had to involve the Landowners.
I consider that it is unnecessary and inappropriate for the Court to prescribe the precise form or content of any such arrangement or agreement. It could take the form of an easement in which the Landowners are parties along the lines of the access easement document, which was annexure 4 to the option agreements dated 16 September 2014. If the relevant parties cannot agree an easement, an application could be made under s 88K of the Conveyancing Act 1919 (NSW), which would include a determination of any compensation for the grant of such an easement. Another possibility is that the relevant parties might be able to agree a suitable covenant.

(3) If cl 8.5 is applicable, did the Landowners unreasonably withhold their consent under that clause?

Assuming, contrary to the above, cl 8.5 applies, I do not accept that the primary judge erred in concluding that the Landowners' refusal to consent to the draft licence deed was not unreasonable. My reasons for this conclusion substantially reflect those of the primary judge.
In my respectful view, the primary judge correctly recognised and gave effect to three relevant legal principles or matters in concluding that the refusal of consent was not unreasonable. The first is that construction of the scope of cl 8.5 and the concept of unreasonableness therein falls to be determined at the time the suite of agreements was created in September 2014, taking into account the parties' expectations at that time, objectively viewed, as to what was likely to occur if the proposed developed proceeded. The second is that the issue of whether consent was unreasonably withheld fell to be determined as at May 2019, when the Landowners refused their consent.
The third matter is the significance of the fact that the Leases are different from a traditional single lease between a landlord and a tenant under which the tenant has exclusive possession. Here the Leases form a part of a suite of agreements under which, significantly, there would be shared use of most of the Land.
With those general matters in mind, I shall now explain why grounds 1 to 6 should be rejected.
I accept the Landowners' submission that ground 1 ignores the importance of the suite of agreements executed in September 2014, of which the agreements to lease formed only one part. The significance of the options, with particular reference to the access easement, must also be taken into account. They provide essential context and also highlight the parties' acknowledgment that shared use of the Land required an appropriate balance to be struck between competing rights and interests.
Ground 2, which challenges the primary judge's reasoning at PJ[179], should be rejected for similar reasons. It fails to recognise the relevance and significance of the context of all the agreements entered into by the parties in assessing the reasonableness of consent being withheld to the draft licence deed. Bearing in mind the relevant date for determining the issue of unreasonableness, the primary judge did not err in taking into account as a relevant consideration White Rock's unexplained failure to exercise the options.
As to ground 3, I do not accept that the primary judge erred in taking into account White Rock's assurances in December 2015 that it would create rights of way for the Landowners.
As the Landowners pointed out, the issues relating to their rights of way were only relevant during the period when White Rock refused to honour the December 2015 assurances, as the primary judge emphasised at PJ[177].
Ground 4 should also be rejected. No appellable error has been demonstrated in the primary judge's reasoning at PJ[187]-[190] to the effect that, because the Landowners were free to negotiate additional consideration as part of the terms of the deed of release dated 19 November 2018, this did not make their subsequent position unreasonable when they demanded additional consideration for TransGrid's access to the electricity substation.
Grounds 5 and 6 should also be rejected. No error has been established in the primary judge's reasoning at PJ[191]. That passage correctly recognises the need to take into account the suite of agreements and the parties' objectively reasonable expectations at that time, together with the events which subsequently ensued, in assessing the reasonableness of their refusal to give consent.

(e) Conclusion

For all these reasons, I propose that the appeal be dismissed. I understood the parties to agree that, if the notice of contention was upheld, the Court's reasons would be sufficient for their purposes and there was no need to grant declaratory relief.
Having regard to the parties' conduct of the proceedings both below and on appeal, I consider that the appellant should pay half the respondents' costs of the appeal.

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