Grant v Molyneux [2007] NSWSC 1453

New South Wales Supreme Court

CITATION : Grant v Molyneux [2007] NSWSC 1453 This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S) : 11 and 12 December 2007

JUDGMENT DATE : 12 December 2007

JURISDICTION : Equity Division

JUDGMENT OF : Windeyer J at 1

DECISION : Declaration that withholding of consent unreasonable.

CATCHWORDS : LANDLORD AND TENANT - assignment of lease - refusal of landlord to consent to assignment - whether withholding of consent unreasonable

LEGISLATION CITED : Conveyancing Act 1919

Michael Peter Stephen Grant (First Plaintiff) PARTIES : Lynette Anne Grant (Second Plaintiff) Clarinda Eleanor Molyneux, Philip Gregory Molyneux and Alan Francis Molyneux as Executors of the Estate of the late Patricia Margaret Molyneux (Defendant)

FILE NUMBER(S) : SC 5772 of 2007

COUNSEL : Dr C Birch SC (Plaintiffs) Mr J Ireland QC (Defendant)

SOLICITORS : Deutsch Partners Lawyers Pty Ltd (Plaintiffs) McGirr James Hall & Associates (Defendant)

- 7 - IN SUPREME THE COURT OF NEW SOUTH WALES EQUITY DIVISION

WINDEYER J

WEDNESDAY 12 DECEMBER 2007

5772/07 - MICHAEL PETER STEPHEN GRANT & ANOR v CLARINDA ELEANOR MOLYNEUX, PHILIP GREGORY MOLYNEUX & ALAN FRANCIS MOLYNEUX AS EXECUTORS OF THE ESTATE OF THE LATE PATRICIA MOLYNEUX

JUDGMENT

1 HIS HONOUR: The plaintiffs are tenants from the estate of Patricia Margaret Molyneux of the Post Office Hotel at Forbes. They have entered into a contract dated 27 September 2007 for the sale of the hotel premises to Craig Anthony Parsons and Rachel Kay Parsons. The contract is subject to the lessees obtaining the landlord's consent to the assignment of the lease. 2 The lease is for a term of eight years commencing on 1 July 2005 and ending on 30 June 2013. It is not necessary to go into the terms of the lease other than to say that clause 2.7, in somewhat strange terms, forbids transfer or parting with possession of the hotel without the prior written consent of the lessor having been obtained. This provision, of course, activates section 133B of the Conveyancing Act 1919 so that is it is subject to a proviso that consent is not to be unreasonably withheld. 3 The lessor died after the negotiations for consent were first entered into. The defendants have obtained a grant of probate of the will of Mrs Molyneux in Victoria and have applied for reseal in New South Wales. An order has been made with their consent that they be joined to represent the estate of Mrs Molyneux. 4 The amended summons seeks declarations that the lessor has unreasonably refused consent to the assignment and that the plaintiffs are thus free to assign without consent without breach of covenant. The amended summons also seeks an order that the lessors stamp the lease with the plaintiffs paying the stamp duty but not any fine or interest and that the lessor register the lease. There is no argument about this now. The lease should have been stamped and registered long ago. No sensible reason has been given for that not having been done. I point out that if the plaintiffs are successful in the action, then it would be essential to register the lease prior to registration of any transmission application of the land into the names of the executors. 5 I turn to the question of whether consent has been unreasonably withheld. Here the onus is on the plaintiffs. Mr and Mrs Parsons were both members of the Police Force. Mr Parsons retired sick about two years ago and is in receipt of a pension, which apparently varies but will continue to be paid whether or not he gets back into the workforce. The pension is about $450 net per week. Mrs Parsons resigned from the Police Force about the time the contract for purchase of the business was entered into, so that her only income at the present time is from casual work while learning the operations of the hotel. Both purchasers had good careers in the Police Force; both have lived at Forbes for some years and were stationed or worked there. There is no suggestion that they are not of good character. I am satisfied that although they have not had previous hotel experience, they are competent to manage the hotel, and it is not suggested otherwise. 6 The only question at issue in these proceedings, as it has been argued, is the financial capacity of the proposed assignees and whether the defendants are acting reasonably on the basis of fears that the assignees might default in their obligations under the lease. Miss Molyneux, the first defendant, has had the conduct of negotiations on behalf of her mother and later for the estate. It is fair to say that things did not get off to a good start with a letter from the plaintiffs' solicitors to the lessor and Miss Molyneux suggesting that there was some doubt under clause 2.7 of the lease whether consent was required. While the letter was not helpful, I do not think there was any reason for Miss Molyneux to take the attitude that she seemed to take, from her evidence in the witness box, namely, the landlord could only look forward to conflict about assignment. 7 The financial position of the proposed assignees is as follows: