AUSTRALIAN FAST FOODS PTY LTD and TAH LAND PTY LTD
[2008] WASAT 185
•11 AUGUST 2008 (EDITED REASONS DELIVERED ORALLY )
AUSTRALIAN FAST FOODS PTY LTD and TAH LAND PTY LTD [2008] WASAT 185
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2008] WASAT 185 | |
| COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA) | |||
| Case No: | CC:531/2008 | 21 JULY 2008 AND 11 AUGUST 2008 | |
| Coram: | MS J HAWKINS (MEMBER) | 11/08/08 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Application not successful | ||
| B | |||
| PDF Version |
| Parties: | AUSTRALIAN FAST FOODS PTY LTD TAH LAND PTY LTD |
Catchwords: | Question referred Meaning to be given to clause in lease Whether landlord prevented from leasing premises within the relevant shopping centre to another retailer of cooked chicken products Meaning to be given to the term "same" Whether term "same" ambiguous Use of extrinsic evidence Comparison of cooking processes used by tenant at commencement of lease and those of prospective tenant Landlord not prevented from leasing to another retailer of cooked chicken products |
Legislation: | Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 16, s 26 State Administrative Tribunal Act 2004 (WA), s 32(2) |
Case References: | Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Kingsbury v Martin (1901) 1 SR (NSW) 279 Spunwill Pty Ltd v Bab Pty Ltd (1994) 36 NSWLR 290 |
Orders | Clause 23.11 of the lease between the applicant and the respondent does not preclude the respondent from granting a lease of any premises within the centre for use as a Nando's Takeaway Chicken Restaurant prior to the 15th anniversary of the date of commencement of the lease. |
Summary | This was an application seeking a determination as to the meaning of a clause of the lease between the applicant and the respondent. The relevant clause of the lease was cl 23.11. ,The applicant maintained that the clause prevented the respondent from granting a lease within the relevant shopping centre to another retailer of cooked chicken products.,In dispute was whether Nando's Takeaway Chicken Restaurant chicken products were derived from the same processes as those used by the applicant at the date of commencement of the lease. At the date of commencement of the lease, the applicant operated a Chicken Treat store from the relevant premises.,The Tribunal found that the term "same", when used in cl 23.11(b) of the lease, was not ambiguous and, in context, did not mean "identical" but, rather, meant "similar". It also found that for the clause to have effect, the processes used by the applicant and the prospective tenant must have a high degree of similarity.,The Tribunal did not consider in the circumstances there was a high degree of similarity between those used by Chicken Treat and those used by Nando's Takeaway Chicken Restaurant. It further held that, in construing the meaning of cl 23.11 of the lease, it did not need to have regard to evidence of the circumstances existing during the negotiation of the clause. The Tribunal found that the respondent was not precluded by cl 23.11 from granting a lease of any premises within the centre for use as a Nando's Takeaway Chicken Restaurant prior to the 15th anniversary of the date of commencement of the lease. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA) CITATION : AUSTRALIAN FAST FOODS PTY LTD and TAH LAND PTY LTD [2008] WASAT 185 MEMBER : MS J HAWKINS (MEMBER) HEARD : 21 JULY 2008 AND 11 AUGUST 2008 DELIVERED : EDITED REASONS DELIVERED ORALLY ON
11 AUGUST 2008 FILE NO/S : CC 531 of 2008 BETWEEN : AUSTRALIAN FAST FOODS PTY LTD
- Applicant
AND
TAH LAND PTY LTD
Respondent
Catchwords:
Question referred - Meaning to be given to clause in lease - Whether landlord prevented from leasing premises within the relevant shopping centre to another retailer of cooked chicken products - Meaning to be given to the term "same" - Whether term "same" ambiguous - Use of extrinsic evidence - Comparison of cooking processes used by tenant at commencement of lease and those of prospective tenant - Landlord not prevented from leasing to another retailer of cooked chicken products
(Page 2)
Legislation:
Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 16, s 26
State Administrative Tribunal Act 2004 (WA), s 32(2)
Result:
Application not successful
Category: B
Representation:
Counsel:
Applicant : Mr B Dingli
Respondent : Mr A Throssell
Solicitors:
Applicant : In House Counsel
Respondent : Hotchkin Hanly
Case(s) referred to in decision(s):
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Kingsbury v Martin (1901) 1 SR (NSW) 279
Spunwill Pty Ltd v Bab Pty Ltd (1994) 36 NSWLR 290
(Page 3)
Summary of Tribunal's decision
1 This was an application seeking a determination as to the meaning of a clause of the lease between the applicant and the respondent. The relevant clause of the lease was cl 23.11.
2 The applicant maintained that the clause prevented the respondent from granting a lease within the relevant shopping centre to another retailer of cooked chicken products.
3 In dispute was whether Nando's Takeaway Chicken Restaurant chicken products were derived from the same processes as those used by the applicant at the date of commencement of the lease. At the date of commencement of the lease, the applicant operated a Chicken Treat store from the relevant premises.
4 The Tribunal found that the term "same", when used in cl 23.11(b) of the lease, was not ambiguous and, in context, did not mean "identical" but, rather, meant "similar". It also found that for the clause to have effect, the processes used by the applicant and the prospective tenant must have a high degree of similarity.
5 The Tribunal did not consider in the circumstances there was a high degree of similarity between those used by Chicken Treat and those used by Nando's Takeaway Chicken Restaurant. It further held that, in construing the meaning of cl 23.11 of the lease, it did not need to have regard to evidence of the circumstances existing during the negotiation of the clause. The Tribunal found that the respondent was not precluded by cl 23.11 from granting a lease of any premises within the centre for use as a Nando's Takeaway Chicken Restaurant prior to the 15th anniversary of the date of commencement of the lease.
Background
6 This is an application pursuant to the Commercial Tenancy (Retail Shops) Agreements Act1985 (WA) (the Act) between the lessee and the lessor of the retail shop. There is no dispute between the parties that the Act applies in this matter. The dispute concerns the interpretation of a provision of the lease entered into by the parties and dated 7 March 2000.
7 The premises in question are now used by the applicant/lessee as a Red Rooster store and form part of the Kingsway Shopping Centre. The premises are used for the preparation, cooking and sale of chicken products to the
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- public. The applicant seeks a determination of the meaning of a clause in the lease concerning a covenant made by the lessor. The relevant clause is cl 23.11 of the lease (cl 23.11). That provides as follows:
The lessor covenants that no lease will be granted before the date being the FIFTEENTH (15th) anniversary of the Date of Commencement to a tenant in the Centre where:
(a) the primary purpose of the tenancy is the retail sale of cooked chicken products; and
(b) those products are derived from the same processes as those used by the Lessee at the Date of Commencement.
9 The applicant seeks an order pursuant to s 26 of the Act, restraining the respondent from granting any lease in the centre for use by Nando's before the 15th anniversary of the date of commencement of the lease. The date of commencement of the lease is defined to be the date specified in item 4 of the schedule of the lease. That date is 11 November 1997.
10 The applicant maintains that the meaning to be attributed to cl 23.11 is one that precludes the respondent lessor from leasing any premises within the Kingsway Shopping Centre to Nando's. There is no dispute between the parties that the prime purpose of any premises to be used by Nando's would be for the retail sale of cooked chicken products as set out in cl 23.11(a).
11 What is in dispute is whether Nando's products are derived from the same processes as those used by the lessee at the date of commencement. There is no dispute that at the date of commencement, the lessee operated a Chicken Treat store from the premises. The parties agree, therefore, that when interpreting the relevant clause, regard must be paid to the processes used by Chicken Treat, despite the fact that currently the lessee runs a Red Rooster store from the premises.
(Page 5)
Evidence and submissions
12 Neither party led oral evidence at the hearing; rather the parties simply relied upon the documents each had filed. Both provided evidence of the processes used by Chicken Treat and Nando's. There is also evidence of the processes used by Red Rooster. Further, the parties provided evidence from Mr Romano (for the applicant) and Mr Tan (for the respondent) concerning the circumstances in relation to the inclusion of cl 23.11 when negotiations were being undertaken.
13 Mr Romano stated at [4] of his affidavit as follows:
Prior to finalising the terms and conditions of the Lease I recall negotiating inclusion of the exclusivity clause with representatives of the Respondent. During the course of those negotiations it was intended that the primary purpose of the inclusion of the exclusivity clause would be to preclude other tenancies whose primary purpose was the retail sale of cooked chicken products (but specifically excluding style products). It was my understanding that clause 23(11) was included in the lease for that specific purpose.
14 Mr Tan's affidavit was more detailed and, in particular, reading from [4] to [7], he states as follows:
I recall having discussions with Mr Romano concerning including in the lease a restriction on Tah Land letting premises in the centre to Red Rooster. At the time those negotiations occurred, Australian Fast Foods Pty Ltd operated a chain of stores under the name "Chicken Treat". At that time, Red Rooster was not owned by Australian Fast Foods Pty Ltd, and Mr Romano said words to me to the effect: "I do not want you leasing premises to Red Rooster."
We discussed the type of restriction that would be acceptable to both of us. I said words to the effect, "I do not want a restriction which covers any cooked chicken whatsoever. I want to be able to lease to someone selling a different style of chicken." I recall that KFC or Kentucky Fried Chicken was mentioned as an example of a different style. Nandos, and the style of chicken cooked by Nandos was not discussed in these negotiations, either as falling within or outside the potential restriction.
At the time of those negotiations, I did not consider Nandos as a potential lessee of the premises at Kingsway. I was not aware of Nandos as a restaurant chain at that time.
I approved the final written terms of the lease on behalf of Tah Land Pty Ltd. I agreed to clause 23.11 of the Lease as it limited the restriction on leasing premises to those selling cooked chicken "derived from the same processes" as Chicken Treat. I considered that this left Tah Land Pty Ltd
(Page 6)
- with the freedom to lease premises to a tenant selling cooked chicken prepared in a different way.
15 That constituted the information placed before the Tribunal by the parties. Neither party referred to any case law or specific dictionary definition as to the meaning of the term "same".
16 The applicant's counsel maintained that the word "same" should not be interpreted in a strict sense, meaning identical, because, as such, the clause would be of no effect. Rather, to have any effect, the term should be interpreted in a general sense as meaning sufficiently similar, and that such a meaning accorded with the intentions of the parties when viewed objectively and when regard is given to the affidavits of Mr Romano and Mr Tan.
17 The respondent maintained that Mr Romano's statement of what the parties intended cl 23.11 to mean is inadmissible, as it does not comply with the established rules set out in the decision of Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 (Codelfa).
18 The respondent argued that the evidence of Mr Romano and Mr Tan was only relevant in establishing background facts of what Mr Romano and Mr Tan were aware of at the time of the negotiations, namely that Red Rooster existed, KFC or Kentucky Fried Chicken existed and that neither party brought to the attention of the other the existence of Nando's. The respondent submitted that cl 23.11(b) was not ambiguous in its meaning, that the words in that clause have a clear meaning and at its narrowest "same" means identical and at its widest means very similar, almost identical.
19 In respect to the processes used, the applicant summarised the following processes as being sufficiently similar, that is, both used fresh, not frozen chicken; both identified the importance of checking the chickens for freshness; both trimmed the fat off the chickens prior to cooking and in readiness for cooking, the chickens are placed in a cool room and when required, both are cooked in an oven.
20 In contrast, the respondent points to what were described as substantial or non-immaterial differences in the processes applied by each. In essence, the respondent pointed to the flame grilling, marinating and butterfly cutting of the chicken in the Nando's process, to suggest that these were steps that showed the processes were not substantially similar and definitely not the same as those used by Chicken Treat.
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Consideration
21 The first issue I must decide then in this matter is the meaning to be given to the term "same" when used in cl 23.11(b). It is useful at this point, in my view, to refer to general principles of construction. Such principles are contained at [6.4] of Bradbrook and Croft, Commercial Tenancy Law in Australia,(Butterworths 2nd edition, 1997)where it repeats the summary by Santow J in Spunwill Pty Ltd v Bab Pty Ltd (1994) 36 NSWLR 290. At [2], [3], [4] and [5] of that summary, it states as follows:
2. The presumption that the parties intended a written document to be the sole and exclusive repository of their agreement arises where the document is clear on its face, contains all the terms appropriate to the transaction and is signed by the parties as the record of their agreement. L G Thorne & Co Pt Ltd v Thomas Borthwick & Sons (Australasia) Ltd [1956) SR (NSW) 81.
Extrinsic evidence is available to show that a document ostensibly the entire and final contract does not contain all the terms of the agreement but may, for example, be partly oral and written or in more than one document. However, where it is determined that the terms of the agreement are wholly contained in writing and are unambiguous or of plain meaning, extrinsic evidence cannot be admitted to subtract from, add to, vary or contradict the language of written agreements. …
3 In construing a written document, the object is to discover and give effect to the contractual obligations that reasonable persons in the position of the parties would objectively have intended the document's language to create. The emphasis is thus on giving effect to the apparent intention of the parties and direct evidence of the parties' actual and subjective intentions and expectations is inadmissible for the purpose of construction. Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 347. …
4. The language of the term is generally assigned its natural and ordinary meaning read in light of the contract as a whole, but where it is ambiguous, surrounding circumstances may be taken into account into assigning the presumed meaning. The surrounding circumstances include the matrix of mutually known facts and the background, object, context and commercial purpose of the transaction in the objective sense of what reasonable persons in the position of the parties would have in mind. …
5. The consequences of alternative interpretations are not immaterial and where the meaning of language in a contract is ambiguous, that interpretation will be preferred which avoids consequences which are in the circumstances capricious, unreasonable, unjust or not consonant with business efficacy. …
22 The term "same" has not been defined in the lease or within cl 23.11. There are several meanings given to the word "same" in various dictionary definitions. The third edition of the Australian Macquarie Dictionary defines the term "same" to mean "identical". In Webster's Third International Dictionary, the term "same" is given the meaning of "similar or analogous".
23 In the decision of Kingsbury v Martin (1901) 1 SR (NSW) 279, the court had to consider the meaning of the term "same". In that case, Owen J stated:
The word same has two meanings. One meaning no doubt is identical, but the other meaning is corresponding to, similar to.
24 In the same case, Stephen J stated as follows:
That the word same can have that meaning as similar or analogous is not clear only from decided cases, but also from the definition of the word as given in Webster's Dictionary.
25 Further, the context within which the term "same" appears in cl 23.11 can assist in the construction. In this case, cl 23.11(a) prevents the respondent from granting another lease to a prospective tenant within the relevant period if the prime purpose of the tenancy is for the retail sale of cooked chicken products.
26 Clause 23.11(b) sets out a further qualification. That qualification is that the proposed tenancy must not only be intended to be used for the retail sale of cooked chicken, but that the cooked chicken is derived from the same processes as those used by the lessee at the date of commencement of the lease. In this case, that means that the same processes are used as those used by Chicken Treat.
27 This restriction applies for 15 years from the date of the lease. If the respondent's strict interpretation is taken to its fullest and the term "same" means "identical", then the restrictions could only safely be applied to other Chicken Treat stores, as it is highly likely that there would always be small differences in the processes used by any other cooked chicken retailer, and, so their processes would never be identical. This would therefore make the restraint of no effect.
(Page 9)
28 Given that the dictionary definition of the word "same" can mean "similar". Further, given the context in which the term "same" appears, and the concession made by the respondent at the hearing that at its widest, the term means "very similar", I do not consider that the term "same" means "identical", but rather means "similar".
29 However, cl 23.11(b) does provide a qualification to cl 23.11(a). I am mindful that the word "same" has been used and not the word "similar". So although I consider that in its context the word "same" cannot be "identical", but can have the meaning "similar", the use of the word "same" does suggest there must be a high degree of similarity between the processes used; in this case between those used by Chicken Treat and those used by Nando's.
30 Given those findings, I do not consider that the meaning of the word "same" when judged in its context is ambiguous. I do not therefore consider it necessary to have regard to the evidence of Mr Romano, Mr Tan and Mr King. However, if I did consider it necessary to have regard to their evidence, I do not consider it would have assisted for the following reasons.
31 In respect to the use of the evidence of Mr Romano and Mr Tan to assist in the construction, I note the comments of Mason J in Codelfa at page 352, where he states as follows:
It is clear that a difficulty arises with respect to the evidence of prior negotiation. Obviously, the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have that tendency, they are admissible, but insofar as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations, they are not receivable. …
32 He also states:
The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning, but it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking, facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction unless they were known to both parties. …
33 Finally, he states:
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- When the issue is which of the two or more possible meanings is to be given to a contractual provision, we look not to the actual intention, aspirations or expectations of the parties before or at the time of the contract, except insofar as they are expressed in the contract, but for the objective framework of facts within which the contract came into existence and to the parties' presumed intention in setting. …
34 Pursuant to s 32(2) of the State Administrative Tribunal Act 2004 (WA) (SAT Act) the strict rules of evidence are not applied in this Tribunal. Accordingly, this enables Mr Romano's affidavit and Mr Tan's affidavit to be placed before this Tribunal. However, the rules of construction applied in the High Court decision of Codelfa to which I just referred, do apply. I consider that Mr Romano's and Mr Tan's affidavits largely referred to their actual intentions and expectations. Accordingly, if I considered there was need to have regard to their evidence to assist in the construction of cl 23.11, I would have given their evidence no weight.
35 Similarly, I would have given Mr King's evidence no weight. It attached the processes of Red Rooster and was relied upon by the applicant, as Mr Tan had indicated, Mr Romano had wanted to ensure Red Rooster was excluded as a competitor. As this is not confirmed by Mr Romano, as required in accordance with the principles in Codelfa, it is not clear if this was known to both parties and so would be irrelevant. Further, I am not asked to determine whether the processes used by Red Rooster and Chicken Treat are the same and therefore, any reference to Red Rooster's processes, in my view would have been irrelevant.
36 Moving then to a comparison of the two processes in question, those of Nando's and Chicken Treat. Both have similarities, in that the chicken is received in a raw state, both involve preparation to the chicken prior to cooking and both involve the use of ovens in the cooking process.
37 However, there are also differences, such as Nando's butterfly cut their chicken before cooking, whereas Chicken Treat cook their chickens whole. Nando's chickens are marinated with internal chicken brine and dipped in periperi marinade, whereas Chicken Treat do not use the marinade. Further, Chicken Treat chickens are spitted and rotisserie cooked and that constitutes the entire process, whereas Nando's chickens are precooked on grids in an oven and later flame grilled.
38 So although some of the Chicken Treat's processes are similar to those used by Nando's, there is not in my view a high degree of similarity between the two processes that would be required in this case. Accordingly, in answer to the question raised by the applicant, I find that cl 23.11 of the lease between the applicant and the respondent does
(Page 11)
- not preclude the respondent from granting a lease of any premises within the centre for use as a Nando's Takeaway Chicken Restaurant prior to 15th anniversary of the date of commencement of the lease.
Order
1. Clause 23.11 of the lease between the applicant and the respondent does not preclude the respondent from granting a lease of any premises within the centre for use as a Nando's Takeaway Chicken Restaurant prior to the 15th anniversary of the date of commencement of the lease.
I certify that this and the preceding [38] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MS J HAWKINS, MEMBER
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