BCCM Group Pty Ltd v ASAP23 Pty Ltd

Link copied
Case Copied 52 min read

Supreme Court of South Australia

(Court of Appeal: Civil)

BCCM GROUP PTY LTD v ASAP23 PTY LTD

[2022] SASCA 139

Judgment of the Court of Appeal  

(The Honourable President Livesey, the Honourable Justice Doyle and the Honourable Justice Bleby)

21 December 2022

LANDLORD AND TENANT - LEASES AND TENANCY AGREEMENTS - TERM OF LEASE OR TENANCY - DURATION - OTHER MATTERS

LANDLORD AND TENANT - LEASES AND TENANCY AGREEMENTS - CONSTRUCTION AND INTERPRETATION

REAL PROPERTY - TORRENS TITLE - LEASES - DETERMINATION

The appellant is the lessee of premises within a Shopping Centre. 

The respondent became the registered proprietor of the Shopping Centre, and thereby lessor of the premises in November 2019.

The appellant seeks leave to appeal against the dismissal by a single judge of an appeal against orders made by a magistrate that the appellant vacate the premises.

The respondent proposes to demolish the existing car and dog wash and construct a retail fuel outlet with associated amenities. 

The respondent purported to issue a notice to terminate the lease under clause 25 which operates where the respondent lessor has in contemplation development including “reconstruction” that “cannot be carried out practicably without vacant possession of the Premises”.  The central issue on appeal was the breadth of the meaning of the word “reconstruct”.

The Court held (Livesey P and Bleby JA, Doyle JA) dismissing the appeal:

1.The natural and ordinary meaning of the word "reconstruct" when read within the lease as a whole, having regard to the commercial context in which the clause was intended to operate, included the proposed development such that the notice served under clause 25 was valid.

2.There are insufficient indications in the lease or the commercial context more broadly to support circumscription of the ordinary meaning of the word "reconstruct" in clause 25 notwithstanding the absence of the word "demolition" in the same clause.

3.It has not been shown that the appeal judge erred in his approach to the appeal from the decision of the magistrate.  It has not been shown that he made any material error of fact or law.

4.The issues raised by this appeal are of sufficient difficulty and importance to warrant the grant of leave to appeal.

Retail and Commercial Leases Act 1995 (SA) ss 3, 39, 68, referred to.
Agar v Nokes (1905) 93 L.T. 605; Alcatel Australia Ltd v Scarcella (1988) 44 NSWLR 349; Advance Fitness Corp Pty Ltd v Bondi Diggers Memorial & Sporting Club Ltd [1999] NSWSC 264; Australian Mutual Provident Society v 400 St Kilda Road Pty Limited [1990] VR 646; Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99; Ashworth v Gloucester [2002] 1 All ER 377; Bamford v Pozenel [2001] SASC 414; BCCM Group Pty Ltd v ASAP23 Pty Ltd [2022] SASC 141; BCCM Group Pty Ltd v ASAP23 Pty Ltd [2021] SAMC 140; BCCM Group Pty Ltd v ASAP23 Pty Ltd (No 2) [2022] SAMC 17; Bickmore v Dimmer [1903] 1 Ch 158; Birmingham…

CaseChat AU logo

Keep reading for free

Create a free CaseChat account to read BCCM Group Pty Ltd v ASAP23 Pty Ltd and more:

  • Read every judgment in full
  • Ask AI and get answers linked to paragraphs
  • See how each paragraph was cited in later cases
  • Download judgments as PDF or Word
Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details
Case
[2022] SASCA 139
Decision Date

CaseChat Overview and Summary

BCCM Group Pty Ltd (the appellant) and ASAP23 Pty Ltd (the respondent) were parties to a dispute concerning a lease of premises within the Centro Hollywood Shopping Centre. The respondent, as the lessor, proposed a significant redevelopment of the shopping centre, including the demolition of the existing car and dog wash facilities occupied by the appellant and the construction of a retail fuel outlet. The appellant contended that these proposed works fell outside the scope of clause 25 of the lease, which permitted the lessor to undertake works if they could not be carried out practicably without vacant possession. The matter came before the Supreme Court of South Australia.

The central legal issue before the court was the interpretation of the word "reconstruct" as used in clause 25 of the lease. Specifically, the court had to determine whether the respondent's proposed redevelopment, which involved demolishing the existing premises and constructing a substantially different retail fuel outlet, constituted a "reconstruction" within the meaning of the lease. The appellant argued that "reconstruct" was confined to rebuilding that was substantially similar in size and character to the original structure, and therefore the proposed works were not permissible under clause 25.

The court considered the principles of contractual interpretation, noting that the meaning of words like "reconstruct" is context-dependent. Drawing on established authority, the court acknowledged that "reconstruction" can encompass a range of meanings, from adhering closely to the original structure to a more significant departure from the past state of affairs. The court found that the purpose of clause 25, derived from its wording and the surrounding circumstances of the lease, was crucial in determining the scope of "reconstruct." While the court acknowledged potential unfairness to the appellant, particularly regarding the lessor's ability to accommodate the lessee with alternative premises, it concluded that these were matters for equitable relief and not central to the interpretation of the lease clause itself.

Ultimately, the court found no error in the approach taken by the lower courts in their interpretation of clause 25. Leave to appeal was granted due to the importance and difficulty of the issues raised, but the appeal itself was dismissed.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

For the reasons that follow, leave should be granted but the appeal dismissed.Background facts The leased Premises are presently utilised by the appellant as a car and dog wash within the Centro Hollywood Shopping Centre in Salisbury Downs (the Centre). The respondent became the registered proprietor of the Centre, and thereby lessor of the Premises, on 27 November 2019, having acquired its interest from CPT Custodian Pty Ltd (CPT). CPT had initially granted a lease over the Premises to Waywood Pty Ltd (Waywood) for a period of 15 years between 1 December 2005 and 30 November 2020 (the Lease). The Lease contemplated that Waywood would construct, at its own expense, a car wash and reimburse CPT for any necessary works undertaken by CPT to facilitate construction of the car wash (see clause 7A of the Special Covenants). On 7 March 2008 the appellant purchased Waywood’s business. By a Deed of Assignment dated 28 March 2008, the appellant became the lessee under the original Lease. On 12 November 2009, the appellant entered into a Deed of Variation by which it agreed to construct, at its own expense, an additional car wash as well as a dog wash. Having acquired its interest in 2019, the respondent now proposes to undertake a major redevelopment of the Centre, at its own cost, including in the area where the Premises are located. It proposes to demolish the existing car and dog wash and construct a retail fuel outlet comprising a control building with a burger bar, fuel canopy, petrol bowsers and a drive-through. There will be associated car parking and landscaping. Underlying the appellant’s case was the assumption, which the respondent did not contest, that the notice of redevelopment given by the respondent under clause 25 is effective only if what is proposed comes within the words “substantially repair, renovate or reconstruct the building in which the Premises are located” and those works “cannot be carried out practicably without vacant possession”. The appellant submits that the evidence before the magistrate and the appeal judge showed that the proposed redevelopment will include new buildings on the location of the leased Premises as well as a car wash in a different part of the Centre, all of which is said to fall outside the proper scope of clause 25. The terms of the Lease It is first helpful to notice certain provisions of the Lease. By clause 1.2(c), “Interpretation”, headings are included “for ease of reference” but the Lease “will not be construed or interpreted by reference to them”. The following clauses address reservations by the lessee or the lessor in the case of damage to the premises where repair is impracticable, or where repair cannot be undertaken within a reasonable time:12.4If the Lessor notifies the Lessee in writing that the Lessor considers that the damage to the Premises is such as to make its repair impractical or undesirable, the Lessor or the Lessee may terminate this Lease by giving not less than seven (7) days’ notice in writing to the other and no compensation is payable in respect of that termination;12.5If the Lessor fails to repair the damage within a reasonable time after the Lessee requests the Lessor in writing to do so, the Lessee may terminate this Lease by giving not less than seven (7) days’ notice in writing of termination to the Lessor without right or claim for damage by reason of the termination of this Lease …

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The facts of this particular case do suggest an unfairness where it was the lessee who paid for the improvements and where, as the respondent conceded on appeal, it would seem that the lessor could have accommodated the lessee with alternate premises. However, those were matters best suited to evaluation in the context of arguments about equitable or other relief under s 68(2) of the Act and they are not now before this Court. Conclusion It has not been shown that the appeal judge erred in his approach to the appeal from the decision of the magistrate. It has not been shown that he made any material error of fact or law. Whilst the issues raised by this appeal are of sufficient difficulty and importance to warrant the grant of leave, the appeal must be dismissed. DOYLE JA: I adopt the summary of the facts and circumstances giving rise to this application for permission to appeal in the joint reasons of Livesey P and Bleby JA. I also adopt the summary of the relevant provisions of the Lease, and the defined terms, set out in those reasons. I agree generally with the joint reasons, and so propose to confine myself to setting out the essential steps in my reasons for joining in the orders proposed by their Honours. As explained in the joint reasons, the appeal turns on the meaning of the word “reconstruct” in clause 25 of the Lease, and in particular whether it encompasses the respondent’s proposal to demolish the existing car and dog wash, and to construct a retail fuel outlet comprising a control building with a burger bar, fuel canopy, petrol bowsers and a drive-through. The appellant contends that the primary judge and appeal judge erred in construing clause 25 as extending to building works of this nature. As I understand the appellant’s argument, it is that the meaning of “reconstruct” is confined to a rebuilding that is substantially similar in size and general character to the original building. The principles governing the construction of a commercial lease are not in dispute, and have been conveniently summarised in the joint reasons. The words “reconstruct” and “reconstruction” are capable of variable meaning, with their meaning in a particular clause to be informed by the context in which they are used. As Wootten J explained in Fraser v L O’Malley & Son Pty Ltd:[58]The next argument by the defendant was that the application lodged by the plaintiffs was not an application to develop the property by “reconstruction” but was a proposal for development by way of the erection of a different building to that which had previously occupied the site. I have not found the provision easy to construe because the word “reconstruction” is capable of very varying meanings according to the context in which it is used. In some contexts it may import an obligation to adhere as faithfully as possible to the past state of affairs … On the other hand, it may import a desire to get away from the past situation to a considerable degree … Counsel did not seriously suggest that any of the decisions were really in point and, indeed, the cases pointed up the fact that the meaning of the word will depend to a considerable extent on the context in which it is used, including both the purposes of the provision in which the word appears and the words with which it is associated. In the present case I cannot find much assistance by an examination of particular words in conjunction with which the word “reconstruction” is used, and the most relevant consideration in deciding the width of meaning to be accorded the word seems to me to be the purpose of the clause as derived form what it says as a whole against the context of the surrounding circumstances. …[58] Fraser v L O’Malley & Son Pty Ltd (1975) 2 BPR 9133 at 9137-9138 (Wootten J).

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.