In a recent decision of the NSW Court of Appeal (White Rock Windfarm Pty Ltd v Dulhunty), the Court considered whether a provision of a commercial lease limiting the ability of a lessee to grant licences over the leased premises had application to a particular licence purportedly granted by the lessee in the relevant matter.
The proceedings concerned various agreements including leases for the purpose of construction and operation of a wind farm including an electricity substation. Whilst a complex arrangement; for the purpose of this note, the relevant issue was whether a clause prohibiting the lessee from dealing with its interest in the lease or any of its rights and obligations under the lease by way of licence without lessor consent had application to the lessee’s grant of a licence for access to a third-party energy entity.
It involved the careful consideration and interpretation of the clause and it was determined that the grant of the licence to the energy entity would not involve the transfer of any of the lessee’s existing proprietary rights or obligations under the relevant leases. The clause that required lessor consent to granting of licences did not apply to this particular licence.
If as a lessor or lessee you have concerns as to whether the power to grant a licence (with or without consent) exists under a lease, this case serves as a reminder to carefully review the licence clause (and consider the clause in the context of the other lease provisions) and seek legal advice where the position is not clear.
