ALEM GROUP PTY LTD and SANUR PTY LTD
[2016] WASAT 16
•1 MARCH 2016
ALEM GROUP PTY LTD and SANUR PTY LTD [2016] WASAT 16
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2016] WASAT 16 | |
| COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA) | |||
| Case No: | CC:1455/2015 | 25 NOVEMBER 2015 | |
| Coram: | JUSTICE J C CURTHOYS (PRESIDENT) | 1/03/16 | |
| 18 | Judgment Part: | 1 of 1 | |
| Result: | Rent payable determined at the amount of $124,500 per annum | ||
| B | |||
| PDF Version |
| Parties: | ALEM GROUP PTY LTD SANUR PTY LTD |
Catchwords: | Commercial contract Additional terms and conditions of lease Lessor's letter giving notice of development approval of premises and inviting lessee's interest in either relocating to new premises or remaining at existing premises Effect of lessee's selection of option to remain on premises on amount of rent to be paid Proper construction of conditions of lease to determine amount of rent payable Meaning of 'deemed' used in commercial documents |
Legislation: | Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) |
Case References: | Duro Felguera Australia Pty Ltd v Samsung C&T Corporation [2015] WASC 484 Hunter Douglas Australia Pty Ltd v Perma Blinds (1970) 122 CLR 49 Macquarie Bank Ltd v Fociri Pty Ltd (1992) 7 ACSR 553 Muller v Dalgety & Co Ltd (1909) 9 CLR 693 Quigley v Slater (1985) 2 MVR 411 R v Bilick & Starke (1984) 36 SASR 321 Wainer v Rippon [1980] VR 129 |
Orders | 1. On a proper construction of the lease, the proper amount of rent payable by Alem Group Pty Ltd to Sanur Pty Ltd from 1 February 2015 is the sum of $124,500 per annum, being the Second Fixed Increase Amount. |
Summary | On 29 November 2011, Sanur Pty Ltd entered into a lease of premises in Hay Street, Subiaco with Alem Group Pty Ltd. Additional terms and conditions were incorporated into the lease which provided an option to Alem Group Pty Ltd to renew or relocate to 'new premises' as part of a proposed development by Sanur Pty Ltd in Seddon Street, Subiaco.,The development in Seddon Street required approval from the Metro West Joint Development Assessment Panel. Notice of approval for the development of Seddon Street was given on 16 April 2014. On 31 July 2014, Sanur Pty Ltd sent a letter requesting Alem Group Pty Ltd to indicate its intention either to move to new premises in the Seddon Street development (Option A) or to remain at the premises in Hay Street (Option B). Alem Group Pty Ltd signed Option B on the letter and returned it to Sanur Pty Ltd.,The Tribunal was required to determine the effect of Alem Group Pty Ltd indicating Option B and returning and signing the letter on the amount of rent Alem Group Pty Ltd was required to pay for the premises. ,Following its consideration of the construction of commercial contracts and the meaning of the word 'deemed' in commercial documents, the Tribunal determined that the rent payable by Alem Group Pty Ltd was $124,500 per annum. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL ACT : COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA) CITATION : ALEM GROUP PTY LTD and SANUR PTY LTD [2016] WASAT 16 MEMBER : JUSTICE J C CURTHOYS (PRESIDENT) HEARD : 25 NOVEMBER 2015 DELIVERED : 1 MARCH 2016 FILE NO/S : CC 1455 of 2015 BETWEEN : ALEM GROUP PTY LTD
- Applicant
AND
SANUR PTY LTD
Respondent
Catchwords:
Commercial contract - Additional terms and conditions of lease - Lessor's letter giving notice of development approval of premises and inviting lessee's interest in either relocating to new premises or remaining at existing premises - Effect of lessee's selection of option to remain on premises on amount of rent to be paid - Proper construction of conditions of lease to determine amount of rent payable - Meaning of 'deemed' used in commercial documents
Legislation:
Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA)
Result:
Rent payable determined at the amount of $124,500 per annum
Summary of Tribunal's decision:
On 29 November 2011, Sanur Pty Ltd entered into a lease of premises in Hay Street, Subiaco with Alem Group Pty Ltd. Additional terms and conditions were incorporated into the lease which provided an option to Alem Group Pty Ltd to renew or relocate to 'new premises' as part of a proposed development by Sanur Pty Ltd in Seddon Street, Subiaco.
The development in Seddon Street required approval from the Metro West Joint Development Assessment Panel. Notice of approval for the development of Seddon Street was given on 16 April 2014. On 31 July 2014, Sanur Pty Ltd sent a letter requesting Alem Group Pty Ltd to indicate its intention either to move to new premises in the Seddon Street development (Option A) or to remain at the premises in Hay Street (Option B). Alem Group Pty Ltd signed Option B on the letter and returned it to Sanur Pty Ltd.
The Tribunal was required to determine the effect of Alem Group Pty Ltd indicating Option B and returning and signing the letter on the amount of rent Alem Group Pty Ltd was required to pay for the premises.
Following its consideration of the construction of commercial contracts and the meaning of the word 'deemed' in commercial documents, the Tribunal determined that the rent payable by Alem Group Pty Ltd was $124,500 per annum.
Category: B
Representation:
Counsel:
Applicant : Mr DB Shaw
Respondent : Mr J Skinner
Solicitors:
Applicant : DLA Piper Australia
Respondent : Jackson McDonald
Case(s) referred to in decision(s):
Duro Felguera Australia Pty Ltd v Samsung C&T Corporation [2015] WASC 484
Hunter Douglas Australia Pty Ltd v Perma Blinds (1970) 122 CLR 49
Macquarie Bank Ltd v Fociri Pty Ltd (1992) 7 ACSR 553
Muller v Dalgety & Co Ltd (1909) 9 CLR 693
Quigley v Slater (1985) 2 MVR 411
R v Bilick & Starke (1984) 36 SASR 321
Wainer v Rippon [1980] VR 129
Introduction
1 On 29 November 2011, Sanur Pty Ltd (Sanur) entered into a lease of premises with Alem Group Pty Ltd (Alem) (the Lease). The premises were at Shop 1, 424436 Hay Street, Subiaco (the Premises) (Exhibit A Annexure A).
2 Alem opened a restaurant at the Premises.
3 Clause 13.18 of the Lease provided:
Any additional terms and conditions are to be incorporated in and read as part of this lease.
4 Item 15 of the Second Schedule to the Lease, incorporated into the Lease by virtue of clause 13.18, provided an option to Alem to renew or relocate to 'new premises' as part of a development by Sanur in Seddon Street, Subiaco.
5 The development in Seddon Street required approval from the Metro West Joint Development Assessment Panel (JDAP). JDAP notified its approval for the development of Seddon Street on 16 April 2014 (the JDAP Approval) (Exhibit A, Annexure B).
6 On 31 July 2014, Sanur wrote to Alem giving Alem two options, Option A or Option B (the Option Letter).
7 Option A was for Alem to move to new premises in the Seddon Street development. Option B was for Alem to stay at the Premises in Hay Street (Exhibit A Attachment 1).
8 Alem signed Option B and returned the Option Letter to Sanur; that is, Alem decided to stay.
9 This application requires the Tribunal to determine the effect of Alem signing and returning the Option Letter relating to Option B on the level of rent Alem is required to pay for the Premises. Is it $207,000 per annum as Sanur submits or $124,500 per annum as Alem submits?
Some development and geographical background
10 The JDAP Approval described the proposed development as:
Demolition of the existing building and construct an 8 storey building comprising shops, offices and restaurant uses at 1 Seddon Street and construction of a PopUp arts venue at the rear of the existing building at 424436 Hay Street, Subiaco.
(the Seddon Street Development)
11 As noted, the Premises are situated in Hay Street. It is apparent from the plan attached to the JDAP Approval that the Seddon Street Development is immediately across the rightofway at the rear of the Premises.
Construction of commercial contracts
12 In Duro Felguera Australia Pty Ltd v Samsung C&T Corporation [2015] WASC 484 (Duro), Le Miere J stated:
[23] In Electricity Generation Corp v Woodside Energy Ltd [2004] HCA 7; (2014) 251 CLR 640, the High Court reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. French GJ, Hayne, Crennan and Kiefel JJ said at [35]:
The meaning of the terms of a commercial contract is to be determined by what a reasonable business person would have understood those terms to mean ... It will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating' ... unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption 'that the parties ... intended to produce a commercial result'. A commercial contract is to be construed so as to avoid it 'making commercial nonsense or working commercial inconvenience' [35].
[24] A commercial interpretation is to be preferred to an uncommercial interpretation that conforms more strictly with the language of the contract. In interpreting a commercial contract no narrow or pedantic approach is warranted. Words in a business contract are not to be approached pedantically or in a manner prone to defeat the evident commercial purpose. In Re Sigma Finance Corp [2010] 1 All ER 571, Lord Collins said:
An over-literal interpretation of one provision without regard to the whole may distort or frustrate the commercial purpose. This is one of those too frequent cases where a document has been subject to the type of textual analysis more appropriate to the interpretation of tax legislation which has been the subject of detailed scrutiny at all committee stages than to an instrument securing commercial obligations [35].
13 Item 15.1 of the Lease provided for the development of Seddon Street. It read:
15.1 Option to renew or relocate to New Premises
a) If the Lessor obtains the Development Approval, the Lessor must give notice to the Lessee:
i) disclosing that the Lessor has obtained the Development Approval; and
ii) inviting the Lessee to specify the size of the premises in square metres (and being between 200 and 300 square metres) that the Lessee requires in the Seddon Street Development,
within 3 months of the Lessor obtaining the Development Approval.
b) Upon receipt of a notice in accordance with Item 15.1(a), the Lessee may specify the size of the premises in square metres (being between 200 and 300 square metres) that the Lessee requires in the Seddon Street Development.
c) Notwithstanding item 15.1(b) the Lessor is not obliged to proceed with the Seddon Street Development until the Lessor gives a notice to the Lessee in accordance with clause 15.1(d).
d) If during the initial 5 year Term the Lessor
i) elects to proceed with the Seddon Street Development; and
ii) the Development Works are approved by the Council and any other relevant Authority;
then the Lessor must offer the Lessee a New Lease in the Seddon Street Development.
e) The Lessor must offer the Lessee a New Lease in the Seddon Street Development by providing the Lessee with:
i) an unexecuted Agreement for Lease; and
ii) an unexecuted Deed of Surrender of Hay Street Lease,
within 3 calendar months of the date of commencement of the Development Works.
f) If the Lessee:
i) executes both the Agreement for Lease and the Deed of Surrender of Hay Street Lease; and
ii) provides both executed documents to the Lessor's solicitor,
within 2 calendar months of receipt of the documents under Item 15.1(e), then:
iii) subject to Item 15.1(g), this Lease will be surrendered on the Surrender Date;
iv) the Lessee authorises the Lessor's solicitor to insert the Surrender Date in the Surrender of Hay Street Lease document once the Surrender Date is known; and
v) the Lessor's solicitor may provide the Surrender of Hay Street Lease to the Lessor for execution contemporaneously with the execution of the New Lease.
…
h) If the Lessee does not accept the Lessor's offer in accordance with Item 15.1(f), then:
i) the Lessor's offer is automatically withdrawn;
ii) the Lessor is not required to offer the Lessee a New Lease in the Seddon Street Development;
iii) this Lease will continue in full force and effect; and
iv) the Rent payable under this Lease will be reviewed to the Fixed Increase Amount specified for the 'Third Review' in Item 8 [$207,500 per annum exclusive of GST] on the date which is the later of:
(1) 2 calendar months after the Lessor's offer in accordance with Item 15.1(e); and
(2) the Third Anniversary of the Commencement Date.
…
ii) 'Development Approval' means any approval required by the Lessor from any Authority in relation to the Seddon Street Development and the Development Works on terms and conditions acceptable to the Lessor in its absolute discretion.
iii) 'Development Works' means the building works comprising the Seddon Street Development;
…
ii) 'Seddon Street Development'; means the office and retail development on the Seddon Street Land and the demolition of any existing structures on the Seddon Street Land[.]
…
15.2 Lessee's acknowledgement
a) The Lessee acknowledges that:
i) during the Term and Further Term the Seddon Street Development may occur on the Seddon Street Land;
ii) the Development Works may disturb the Lessee's use and occupation of the Premises;
iii) the Rent payable by the Lessee under this Lease has been reduced to reflect these circumstances.
…
14 It is important to note that Item 15.2 expressly states that:
a) the development of Seddon Street might disturb the use of the Premises by Alem; and
b) the rent payable by Alem had been reduced accordingly.
15 Item 15.2 sets out the commercial purpose or object of Item 15. The Option Letter which relates to Item 15.1 is to be interpreted having regard to Item 15.1 and the purpose or object stated in Item 15.2.
16 The commercial purpose of Item 15.1 is to reduce Alem's rent during a period related to the Development Works. The reduction in the rent is, in effect, a tradeoff for the possible disruption caused to the restaurant at Premises by the demolition and building works associated with the Seddon Street Development.
The JDAP Approval
17 Sanur gave notice to Alem of the JDAP Approval in the Option Letter.
18 Sanur contended that the JDAP Approval constitutes a Development Approval for the purposes of item 15.1(a) of the Lease.
19 Alem conceded, for the purposes of these proceedings, that the JDAP Approval was relevantly a Development Approval under Item 15(1)(a).
The letter of 31 July 2014 - the Option Letter
20 The Option Letter stated:
Option to relocate to Seddon Street Development
We are pleased to confirm that we have received a development approval with respect to our proposed Seddon Street development.
The proposed development is an 8 storey mixed use building comprising offices, shops and a restaurant.
At this stage, the proposed plans provide for a restaurant tenancy of the ground floor of the building of approximately 220 m².
The purpose of this letter is to invite you to express your interest in relocating to the Seddon Street building upon completion of the development.
Notice to Alem Group Pty Ltd pursuant to special condition 15.1(a)(ii) of your lease:
In accordance with special condition 15.1(a)(ii) of your lease, we invite you to specify the size of the premises (being between 200 and 300 square metres) that you require in the Seddon Street building. Our preferred premises size is approximately 220 m².
Response from Alem Group Pty Ltd:
If you would like to relocate to the new Seddon Street building then we request that you respond by completing Option A of this letter below and then return the same to us.
If you do not want to relocate to the new Seddon Street building then we request that you respond by completion Option B of this letter below and then return the same to us.
Please provide a response by 14th August 2014 at the latest.
Option A - Complete this box if you want to relocate:
Alem Group Pty Ltd confirms that:
1. Alem Group Pty Ltd wishes to relocate to the new Seddon Street building upon completion of the development; and
2. Alem Group Pty Ltd requires _________________________ square metres of space in the completed Seddon Street building. (Note: this figure must be between 200 and 300 square metres).
Signed for and on behalf of Alem Group Pty Ltd by Alain Rene Fabregues:
______________________________
Signature of Alain Rene Fabregues
Option B - Complete this box if you do not want to relocate:
Alem Group Pty Ltd confirms that:
1. Alem Group Pty Ltd does not wish to relocate to the new Seddon Street building upon completion of the development;
2. Alem Group Pty Ltd does not require Sanur Pty Ltd to make a formal offer to take a lease in the Seddon Street building (in accordance with special condition 15.1(e) of the lease) and an offer (in accordance with special condition 15.1(e) of the lease) is deemed to have been made by Sanur Pty Ltd and rejected by Alem Group Pty Ltd.
Signed for and on behalf of Alem Group Pty Ltd by Alain Rene Fabregues:
_________signed______________
Signature of Alain Rene Fabregues
Date: 22-8-14
21 Alem completed and signed Option B; that is, it opted not to relocate.
The purpose of the Option Letter
22 Significantly, the stated purpose of the Option Letter is for Alem to express its interest in relocating or not relocating to the Seddon Street Development.
23 It is a reasonable inference that as at 31 July 2014, Sanur wished to know whether, or not, Alem intended to relocate to new premises in the Seddon Street Development for the purpose of Sanur's planning. Sanur doubtless wished to secure as many agreements to lease as possible, even before development works commenced.
24 It can be inferred that Sanur did not wish to be in a position where Alem later changed its mind and wished to relocate.
25 Alem completed and signed Option B; that is, it opted not to relocate.
The issue
26 This matter essentially concerns the construction of Item 15.1 of the Lease and the effect of the Option letter.
27 In its application to the Tribunal, Alem submitted that the question between the parties was:
On a proper construction of the Lease, is the proper amount of rent payable by [Alem] to [Sanur] from 1 February 2015 the sum of $207,000 per annum (being the Third Fixed Increase Amount) or is it the sum of $124,500 per annum (being the Second Fixed Increase Amount)?
28 Alem argued that until Developmental Works had been approved by the City of Subiaco, the Option Letter did not have any effect; that is, that the rent review provide by Item 15.1(h) did not come into effect.
29 Sanur argued that the Option Letter took effect from its date so that the rent review mechanism provided by Item 15.1(h) operated from the date of the Option Letter; that is, 31 July 2014.
30 The parties accepted that the amount payable was either Sanur's $207,000 or Alem's $124,000 per annum.
Item 15.1 of the Lease specifying the size of the premises
31 Item 15.1 provided, by a series of steps, for Sanur to give Alem an option to relocate to new premises in the Seddon Street Development.
32 The first step was that, in the event that Sanur obtained the Development Approval (that is, the JDAP Approval), it was obliged within three months to give notice to Alem and invite Alem to identify the size of the premises it required in the Seddon Street Development: Item 15.1(a). Sanur gave notice by the Option Letter.
33 The second step was that, upon receipt of an Item 15.1(a) notice, Alem might specify the size of the premises it required in the Seddon Street Development: Item 15.1(b). Had Alem selected Option A and returned the Option Letter, it would have given notice under Item 15.1(b).
34 One might have expected that at this point there would have been a clause requiring Alem to advise whether or not it intended to relocate at all. However, there is no clause in Item 15.1 that corresponds to Option B in the Option Letter.
35 Even had Alem specified a square metreage (that is, Option A), Sanur was not obliged to proceed with the Seddon Street Development: Item 15.1(c).
36 In particular, Sanur might, or might not, desire to proceed with the Seddon Street Development. In the event that the Seddon Street Development proceeded, Alem might, or might not, decide to take up new premises.
37 Had Alem given notice under 15.1(b), (that is, had Alem selected Option A), the rent payable by it during the relevant period would have been $124,500 per annum.
Item 15.1 of the Lease - deciding to move to new premises
38 The third step was that, if, during the initial five year term of the Lease:
1)Sanur elected to proceed with the Seddon Street Development; and
2) the Development Works (ie, the relevant building and demolition works) were approved by the City of Subiaco Council and any other relevant authority,
- then Sanur must offer Alem a New Lease in the Seddon Street Development: item 15.1(d) and (e).
39 Once Alem was offered a new lease, it had two options:
a) to accept the offer to relocate; or
b) to decide to stay in the Premises.
40 The fourth step was that Alem might:
a) accept the offer of a New Lease by executing a new agreement for lease and a deed of surrender of the existing lease: Item 15.1(f); or,
b) not accept the offer and continue with the Lease: Item 15.1(h).
41 If Alem did not accept the offer and decided to continue with the Lease, then the rent payable under the Lease was to increase to the Fixed Increase Amount specified for the Third Review in Item 8 of the lease (that is, $207,000) on the date which was the later of two calendar months after Sanur's offer in accordance with Item 15.1(e) and the Third Anniversary of the Commencement Date: Item 15.1(h)(iv).
What was the effect of Alem selecting Option B
42 Sanur relied on the word 'deemed' in Option B to support its submission that the rent payable was $207,000 per annum from the date of the Option Letter (that is, 31 July 2014).
43 Sanur submitted that:
11. The ordinary meaning of the term 'deemed' is 'believe, consider, judge, or count to be' (The New Shorter Oxford English Dictionary).
12. This ordinary meaning is consistent with the judicial interpretation of the term, usually in the context of its appearance in legislation, as being commonly (although not always) used for the purpose of creating a statutory fiction, requiring acceptance of an event or a state of affairs, irrespective of reality or that would be otherwise if not so required (see for example Muller v Dalgety & Co Ltd (1909) 9 CLR 693, at 696 per Griffith CJ; Wainer v Rippon [1980] VR 129 at 135 per O'Bryan J; R v Bilick & Starke (1984) 36 SASR 321).
13. As a matter of ordinary meaning, and in the absence of any qualification or proviso, it follows that if an offer in accordance with Item 15.1(e) is 'deemed to have been made' then not only is the offer itself taken to have been made (even though in fact it has not been), but any steps, requirements or preconditions that are specified for the making of the offer are also taken to have been satisfied (even though in fact they have not been). Otherwise, the offer would not be 'deemed to have been made' but would be 'deemed to be made once requirements X and Y have been satisfied'.
44 Sanur's submissions rely heavily on the word 'deemed' having the width Sanur contends for in paragraph 13 of its submissions above.
45 In Mullerv Dalgety & Co Ltd (1909) 9 CLR 693 at 696, Griffith CJ noted that the word 'deemed' may be used in a variety of senses (see also Quigley v Slater (1985) 2 MVR 411 at 413 per Kennedy J; Wainer v Rippon [1980] VR 129 at 135 per O'Bryan J and Hunter Douglas Australia Pty Ltd v Perma Blinds (1970) 122 CLR 49 per Windeyer J at 55).
46 Similarly, in R v Bilick & Starke (1984) 36 SASR 321 at 328, King CJ stated:
The word 'deemed' is used in statutes in more than one sense. In the subsection under consideration it is used to create a rebuttable statutory presumption of the existence of a fact irrespective of the existence of that fact in reality. The result may be a statutory fiction. In construing a provision of that kind, 'it is very important to consider the purpose for which the statutory fiction is introduced': Muller v. Dalgety & Co. Ltd., per Griffith C.J. at p. 696; In re Coal Economising Gas Company (Gover's Case); Beale on Cardinal Rules of Statutory Interpretation, 3rd ed. p. 479. Where, as here, the fact which is deemed to exist, is a criminal state of mind, it is particularly necessary, in my view, to ascertain the purpose for which the presumption is created, and to construe the statutory provision in a way which confines the operation of the presumption, to the attainment of that purpose.
47 In Macquarie Bank Ltd v Fociri Pty Ltd (1992) 7 ACSR 553 at 557, Gleeson CJ (Cripps JA agreeing) stated:
In considering these competing views concerning the operation of s 553(2) as a deeming provision, it is important not to confuse two different questions. One is a question as to the meaning of the word 'deemed'. The other is a question as to the statutory purpose for which, in a given case, that word is used. As Windeyer J pointed out in Hunter Douglas Australia Pty Ltd v Perma Blinds (1970) 122 CLR 49 at 65: 'to deem means simply to judge or reach a conclusion about something'.
That is the meaning assigned to the word in dictionaries such as the Macquarie Dictionary ('to form or have an opinion; judge') or the Shorter Oxford English Dictionary ('to judge … to decree; to decide; … to conclude, consider, hold').
It commonly happens that, because legislation contains a deeming provision, there may arise a question of construction which turns, not so much upon the meaning of the word “deemed”, as upon a view concerning the statutory purpose for which it has been used. Such a question may turn, for example, upon whether the legislature is intending to create a statutory fiction or whether, on the other hand, it is merely making a provision for the removal of doubt which might otherwise exist: see, for example, Muller v Dalgety & Co Ltd (1909) 9 CLR 693 at 696 per Griffiths CJ.
There is another issue that sometimes arises where Parliament has enacted a deeming provision. In some cases a court may conclude, as a matter of construction, that the consequence which is deemed to follow is only in the nature of a rebuttable presumption; a certain state of affairs will be presumed unless and until the contrary is proved. (See, for example, Consolidated School District of St Leon Village No 1425 v Roncaray (1960) 23 DLR (2d) 32; Credit Foncier Franco- Canadian v Bennett (1963) 43 WWR (NS) 545). Where such a conclusion is reached, however, it does not necessarily follow that it works both ways. In the present case, for example, it would be one thing to conclude that a defendant in civil proceedings, or an accused person, could call evidence to rebut a statutory presumption created by s 553(2) (if that be all that it is); it would not necessarily follow, even if that were accepted, that a plaintiff, or a prosecutor, could ignore s 553(2). In this case it is not necessary to decide whether a defendant or an accused can go behind the deeming provision. The issue we have to decide is whether a plaintiff can ignore it. Those two issues may have some similarities, but they are not identical.
(See also Kirby P at 575576)
48 The great majority of cases relating to the use of the word 'deemed' relate to the use of the word in criminal statutes. One needs to be cautious in applying the interpretation of the word 'deemed' in criminal cases to commercial cases. However, what is clear from the use of the word 'deemed' in criminal statutes is that the word 'deemed' simply means to judge or reach a conclusion about something and that the real question is the purpose for which the word is used. That purpose is to be determined in the context of the statute. In essence, the proper question is what is it that is 'deemed'?
49 Those principles apply equally for the use of the word in commercial documents. In this case, the Lease and the Option Letter are commercial documents. That determination is to be made on the basis of the principles stated by Le Miere J in Duro.
50 Sanur further submitted that:
17. This overall process as provided for in item 15.1 makes sense if [Alem] does wish to relocate to the Seddon Street Development. Steps 1 and 2 result in [Alem] specifying at an early stage the size of premises required (with the implication that, at least at that early stage, [Alem] wishes to relocate), which is of assistance to [Sanur] but binds neither [Alem[ or [Sanur]. Steps 3 and 4 then give [Alem] an option, at a later time, to finally decide whether or not to proceed with the relocation by accepting or rejecting the offer of the New Lease, with a rent review being one of the consequences of not proceeding.
18. The overall process still makes sense, but makes less sense, if [Alem] in fact does not wish to relocate to the Seddon Street Development, particularly if that decision has been made at the early stage of Steps 1 and 2. In the absence of any arrangement to the contrary, Steps 3 and 4 would still have to be carried out, despite [Alem] not wishing to relocate, but would lead inevitably to the rent review upon rejection of the offer of the New Lease. In this context, Statement 2 of the August Letter simply short-circuits the second part of this process in circumstances where [Alem] has confirmed by Statement 1 that it does not wish to relocate upon completion of the Seddon Street Development.
51 The Tribunal readily accepts that the effect of Alem selecting Option A is that once the triggering event in Item 15.1(a) occurs, Sanur is not obliged to offer a New Lease and that there is a deemed nonacceptance under Item 15.1(h).
52 However, it does not follow from this conclusion that the effect of Alem selecting Option A is that Alem is, in effect, agreeing to the fiction that the Development Works had commenced.
Some observations about the Option Letter
53 The Option Letter made no mention about whether Sanur had elected to proceed with the Seddon Street Development or whether the Development Works had been approved by the Council and any other relevant authority (Item 15.1(d).
54 Option B said nothing about Item 15.1(d), including whether the triggering events had, or had not occurred, or were assumed to have occurred.
55 Sanur would be on stronger ground if Option B referred to the triggering event in Item 15.1(d), but it does not.
56 As Alem submitted, there is an obvious contrast between the express way in which the Option Letter dealt with Item 15.1(a) and notification of Development Approval, on the one hand, and the absence of any reference at all to Item 15.1(d) and the approval of Development Works.
The progress of the Development Works
57 There is no evidence that Sanur had, as at 31 July 2014, elected to proceed with the Seddon Street Development or that the Development Works have been approved by the Council and any other relevant authority.
58 The Development Works would still cause disruption and the rent should still remain at the reduced rate so as to meet the commercial purpose stated in Item 15.2.
Conclusion
59 The Tribunal accepts that the dispensation and deeming expressly stated in Option B had the effect that if and when Sanur decided to proceed, Sanur was not obliged to make an offer for a new lease to Alem. The intention of Option B was no more than to spare Sanur the trouble of sending an offer if and when Item 15.1(d) was triggered.
60 In essence, Sanur's submission is that Alem, by selecting Option B, incurred an immediate obligation to pay the increased rent, when under the terms of Item 15.1 Alem was under no obligation to do so until the triggering event in Item 15.1(d) occurred.
61 The Tribunal accepts that the Option Letter invited Alem to express its interest in relocating to the new development 'upon completion of the development'. That phrase did no more than describe a future possible event. It did not suggest that the event would occur. It did not imply that Sanur had decided to proceed with the proposed development. It did not mean that approvals for the Development Works from the Council and any other relevant authority had in fact been obtained.
62 It is only when those conditions stated in Item 15.1(d) have occurred that events can take place under the Lease which can lead to the Third Review coming into operation. Those conditions had not occurred.
63 The Tribunal finds that the word 'deemed' does not have the meanings contended for by Sanur. The word 'deemed' must be seen in the commercial context in which it was used. The reduction of rent arose because of the disruption. If the threat of disruption is not removed, then a reasonable business person would have understood Alem to have agreed to the rent increasing when the triggering event occurred.
64 Given the purpose of Item 15, expressed in Item 15.2, unless Sanur had decided not to proceed with the Seddon Street Development, thus avoiding disruption to the Premises, it is difficult to accept that the Option Letter could have had any purpose beyond that expressly stated in the Option Letter.
65 The Tribunal finds that the rent payable is as submitted by Alem; that is, $124,500 per annum for the relevant period.
Order
1. On a proper construction of the lease, the proper amount of rent payable by Alem Group Pty Ltd to Sanur Pty Ltd from 1 February 2015 is the sum of $124,500 per annum, being the Second Fixed Increase Amount.
I certify that this and the preceding [65] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUSTICE J C CURTHOYS, PRESIDENT
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