Mirania Holdings P/L T/as Mudgee Aviation Services v Mudgee Aero Club Inc [2005] NSWSC 165

New South Wales Supreme Court

CITATION : Mirania Holdings P/L T/as Mudgee Aviation Services v Mudgee Aero Club Inc [2005] NSWSC 165

HEARING DATE(S) : 24/02/05

JUDGMENT DATE : 24 February 2005

JUDGMENT OF : White J

DECISION : See paragraphs 34-37, 40-42.

CATCHWORDS : LICENSEE & LICENSOR - Option to renew licence - whether validly exercised - Construction of correspondence between the parties - Contra proferentam principles not to apply on the facts.

Mark Mayne Pty Ltd v Suburban Centres Pty Ltd [1976] 2 NSWLR 67 Showa Shoji Australia Pty Ltd v Oceanic Life Ltd (1994) 34 NSWLR 548 CASES CITED : North v Marina [2003] NSWSC 64 Shearer v Wilding (1915) 15 SR NSW 283 Farrands; The Law of Options pp 67-69

Mirania Holdings Pty Limited T/as mudgee Aviation Services PARTIES : v Mudgee Aero Club

FILE NUMBER(S) : SC 3386/04

Plaintiff: G McNally & L Chan COUNSEL : Defendant: A Gelbart

Plaintiff: Barry F Cosier & Associates SOLICITORS : Defendant: Peter Prior & Co

LOWER COURT JURISDICTION :

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION ONE DAY LIST

WHITE J

Thursday, 24 February 2005

3386/04 MIRANIA HOLDINGS PTY LIMITED T/AS MUDGEE AVIATION SERVICES v MUDGEE AERO CLUB INC JUDGMENT 1 HIS HONOUR: The principal issue in these proceedings is whether the plaintiff has validly exercised an option to renew a contractual licence for it to occupy certain parts of the Mudgee Aerodrome. 2 The resolution of that issue turns on whether it was a condition of the option that it be exercised by notice in writing not less than three months before the expiry of the term of the licence. 3 The plaintiff carries on business, amongst other things, of operating a flying training school and an air charter business at the Mudgee Aerodrome from premises which it has occupied from about 1987. On 11 April 1988 the plaintiff entered into a licence agreement with a Mr Nelson and a Mr Kellett who were described as, and doubtless were, trustees of the Mudgee Aero Club. The agreement recited that the licensee, meaning the Mudgee Aero Club, and the trustees for the time being thereof, was entitled to occupy certain identified premises within the Mudgee Aerodrome and had agreed to give a sub-licence to the plaintiff for it to use the premises on the conditions set out in the agreement. 4 Although what was granted was expressed to be a sub-licence, it was described in the agreement as a licence and I shall continue to refer to it as such. 5 The licence was for a term of five years. It commenced from the date of the agreement, that is 11 April 1988. The plaintiff was permitted to use the premises for the purpose of conducting its business of aircraft maintenance, fuel distribution and flying school. The licence fee was $1,500 per annum. In addition, the plaintiff was required to pay moneys referable to increases in insurance premiums payable by the lessor and any moneys which might become payable by the lessor to the Council for the use of the premises. 6 The licence was expressed to be personal to the licensee and not to create or confer on the plaintiff any tenancy or estate or interest in any part of the premises. The case was argued before me on the basis that the rights granted to the plaintiff were contractual rights as a licensee and, as cl 11 said, did not create any estate in the land. 7 The critical clause of the agreement was cl 13. It provided as follows: "The licensor grants to the licensee an option for renewal of this licence for a further five (5) year term provided that the licensee has duly and punctually paid the licence fees and other moneys payable pursuant to this agreement and shall have duly performed and observed on its part all the terms and conditions of this agreement up to the expiration of the term and shall have given to the licensor notice in writing of its wishes to take a renewal of the licence not less than three (3) months prior to the expiration of the term. The licence fee payable during the renewal term will be the sum of one thousand five hundred dollars ($1,500.00) per annum increased by the rise in the Consumer Price Index (All Groups) Sydney between the quarter immediately preceding the commencement of this licence and the quarter immediately preceding the expiry of the term of this licence and if this increased fee cannot be determined for whatever reason then the fee payable in the renewal term shall be two thousand five hundred dollars ($2,500.00) per annum and the licence shall be subject to all other conditions as are contained in this agreement with the exception of this clause."