The importance of careful drafting & consistency in legal documents
Careful and meticulous drafting in legal documents is crucial to prevent disputes and helps avoid ambiguities that could lead to different interpretations and potential conflict.
Case
A recent Court of Appeal decision, White Rock Wind Farm v Dulhunty [2024] NSWCA 202, examined whether a sub-clause in the lease between White Rock Wind Farm Pty Ltd as the lessee (White Rock) and several landowners as the lessors (Landowner) restricted White Rock’s ability to deal with its interest. The issue specifically concerned a proposed licence granting TransGrid access to the substation without the Landowners' consent.
The court was tasked with determining three core issues:
whether the restriction in the lease applied to the licence deed which granted TransGrid access to the substation;
if the restriction was not applicable, could White Rock grant a licence to TransGrid under the lease; and
if the restriction was applicable, did the Landowner unreasonably withhold their consent.
Findings
The court found that the restriction did not apply to the licence deed because the purpose of the clause was intended to prevent circumvention of assignment restrictions, not to cover the granting of access rights to third parties such as TransGrid.
The court also concluded that White Rock could not grant TransGrid access to the substation without involving the Landowners, as the original agreements anticipated access would be managed through easements, which required the Landowners' participation.
The Court further held that even if the restriction applied, the Landowner’s refusal to consent was not unreasonable. The decision was based on the context of the agreements, which included shared use of the land and the expectation that White Rock would exercise its options to secure easements. The Landowner’s demand for additional consideration was deemed reasonable given White Rock's failure to exercise the options and the need to protect their interests in shared land use.
Consequently, the appeal was dismissed, and White Rock was ordered to pay half of the Landowner’s costs.
Key Takeaway
The case underscores the critical need for precise and thorough drafting to ensure a legal document accurately reflects the parties' intentions.
Additionally, the case emphasises the importance of maintaining consistency across all documents agreed upon by the parties, as courts will evaluate the documents collectively.
For more information about how the recent decision may apply to your circumstances, please contact one of our people.
Ron Zucker 0410 590 111
Eollyn Cortes 0478 727 395
Sagang Chung 0431 435 333
Julia Zou 0426 670 202
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