Hawkesdale Asset Pty Ltd v Bennett [2023] VSC 409

Nikki Miller   |  Michael Lo  |  Millie Lewis

Key takeout

It may be unreasonable to withhold consent to an assignment of a licence where:

• the licensor is offered materially better terms than an existing agreement;
• and where it would entirely defeat, or render valueless the licensee’s right to assign. 

Facts

Mr Bennett and Technology Management Engineering Services Pty Ltd were parties to a licence agreement which permitted the licensee to construct and maintain wind turbines on Mr Bennett’s property.

The licence agreement provided that it could not be assigned or transferred without Mr Bennett’s prior written consent, and that consent could not be unreasonably withheld.

Mr Bennett’s consent to assign the licence agreement had been requested on two previous occasions, and Mr Bennett did not raise any objections to either of those previous assignments.

Following an internal restructure in about November 2020, the current licensee, Ryan Corner Development Pty Ltd sought consent from Mr Bennett to assign the licence agreement to a related company, Hawkesdale Asset Pty Ltd.

By about May 2021, communications between Mr Bennett and Hawkesdale had broken down.  Mr Bennett had not provided his consent to the assignment and ceased to engage with Hawkesdale.

The issue before the court was whether Mr Bennett had withheld his consent unreasonably.

Decision

The court found that Mr Bennett had unreasonably withheld consent to the assignment in circumstances where:

• the purpose of the assignment was to give effect to the internal restructure;
• the predecessor licensees had complied with all relevant obligations under the licence agreement, including the payment of the licence fees;
• Mr Bennett was under an obligation to do all things necessary to give effect to the licence agreement;
• Ryan Corner Development Pty Ltd was willing to guarantee the performance of Hawkesdale’s obligations under the licence agreement; and
• Hawkesdale had made an offer to enter into another agreement on terms materially more favourable to Mr Bennett.

The purpose of the right to withhold consent to an assignment was to protect Mr Bennett from having the land used or occupied in an undesirable way, or by an undesirable assignee. 

The reason why Mr Bennett withheld his consent was because he no longer wished to have wind turbines constructed on his land.  However, the court held that this was a matter that was extraneous to the purpose for which the right to withhold consent was granted and it would entirely defeat, or render valueless the licensee’s right to assign if Mr Bennett could refuse an assignment in those circumstances.