BCCM Group Pty Ltd v ASAP23 Pty Ltd - [2022] SASC 141

Supreme Court of South Australia
(Magistrates Appeal: Civil)
BCCM GROUP PTY LTD v ASAP23 PTY LTD
[2022] SASC 141
Judgment of the Honourable Chief Justice Kourakis
29 November 2022
LANDLORD AND TENANT - LEASES AND TENANCY AGREEMENTS
This is an appeal from the Magistrates Court against orders of the Magistrate requiring the appellant to yield up vacant possession of the leased premises. The respondent is the owner of Centro Hollywood Shopping Centre. The appellant leases from the respondent a portion of the premises from which it operates a car wash and dog wash.
The primary issue on appeal is whether the respondent validly terminated the lease pursuant to clause 25 of the Lease (as varied). That issue turns on the proper construction of clause 25 and in particular the meaning to be ascribed to the word ‘reconstruction’.
The appellant also appeals on the ground that the Magistrate erred in declining to exercise his discretion pursuant to s 68(2) of the Retail and Commercial Leases Act 1995 (SA) to grant the appellant dispensation or relief against forfeiture.
Held, per Kourakis CJ (dismissing the appeal):
1. Clause 25 of the Lease (as varied) was validly invoked to terminate the lease.
2.The definition of ‘reconstruction’ in clause 25 must be given its ordinary meaning both to advance commercial certainty and because its context does not provide any clear circumscription of its meaning.
3.The decision of the Magistrate that s 68(2) did not extend to granting relief against the operation of a provision of the Retail and Commercial Leases Act1995 itself cannot be upheld in circumstances where the lease was terminated pursuant to clause 25 of the Lease (as varied).
4.The Magistrate did not err in declining to exercise his discretion under s 68(2) to grant dispensation or relief against forfeiture.

Retail and Commercial Leases Act 1995 (SA) ss 3, 39, 68, referred to.

BCCM GROUP PTY LTD v ASAP23 PTY LTD
[2022] SASC 141
Magistrates Appeal: Civil

KOURAKIS CJ: ASAP23 Pty Ltd (ASAP23) is the owner of the Centro Hollywood Shopping Centre (the Shopping Centre) in Salisbury Downs which it purchased from CPT Custodian Pty Ltd (CPT).
The Shopping Centre stands on a triangular block of land, most of which was developed as retail shops. CPT granted a lease over an undeveloped portion of the Shopping Centre (the leased premises) to Waywood Pty Ltd (Waywood) for a period of 15 years from 1 December 2005 to 30 November 2020. The leased premises stands at the apex of the triangular block on the corner of Windzor Street and Martins Road. The written lease between CPT and Waywood (the original lease) contemplated that Waywood would construct a car wash on the leased premises which was then vacant. Clause 7 of the Special Covenants in the first schedule of the original lease provided that Waywood was to carry out that work and build the car wash at its own expense and reimburse CPT for any necessary works undertaken by it to facilitate the construction of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] SASC 141
Decision Date: 29 November 2022

CaseChat Overview and Summary

BCCM Group Pty Ltd (the appellant) appealed against a decision of the Magistrates Court of South Australia, which dismissed their claim for a declaration that the demolition and reconstruction of car and dog wash facilities was not permitted under the terms of their lease. ASAP23 Pty Ltd (the respondent) is the owner of the leased premises and is the defendant in the proceedings. The dispute centres on the interpretation of a clause in the lease agreement that pertains to the redevelopment of the premises by the lessor.

The legal issues that the court had to decide include whether clause 25 of the lease, which provides for the lessor's right to reconstruct the premises, applies to the leased premises in light of the appellant's contention that the leased premises are not entirely within a building, and whether clause 25 applies to the structural elements of the car and dog wash facilities, which the appellant owns. The court also had to consider whether there is any ambiguity in clause 25.1 that would warrant the application of the contra proferentem rule.

The court rejected the appellant's arguments and upheld the Magistrate's decision. The court found that the lease agreement, as executed and assigned, included clause 25 as a term of the lease, and it was intended to apply to the leased premises. The court also rejected the argument that the clause does not apply because the leased premises are not entirely within a building. The court held that it is appropriate to construe clause 25 to read 'in which the premises, or any part of the premises are located' as a matter of commercial efficacy. The court further found that there is no basis on which clause 25 can be read down to exclude from its operation structures which are the property of the appellant.

The appeal was dismissed, and the court will hear the parties as to costs and ancillary orders.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

I would not interfere with the Magistrate’s discretion. I dismiss the appeal on this ground.Conclusion The appeal is dismissed. I will hear the parties as to costs and ancillary orders.

Ratio Decidendi

Legal Principle Established

The Magistrate’s essential and brief reasons for finding that reconstruction was not limited to the erection of a similar building were:[2][170]I do not accept the Applicant’s submission that there is any ambiguity in respect of clause 25.1 of the Original Lease and therefore the contra proferentem rule has no application in this matter.[171]I consider that a reasonable businessperson would understand that the plain and ordinary meaning of clause 25.1 of the Original Lease provides that if the lessor decides to redevelop the Premises, the lessor can give six months’ notice to the lessee to vacate the premises.(Footnotes omitted)[2] [2021] SAMC 140.Consideration The appellant makes the threshold contention that clause 25 of the Lease (as varied) has no application to the leased premises because the entirety of those premises are not within a building. I reject that submission for three reasons. First, CPT and Waywood by execution of the original lease, and BCCM and ASAP23 by taking their respective assignments, subscribed to documents which included clause 25 as a term of the lease. There can be no conclusion other than that they intended it to apply as a term of the lease over the leased premises. The circumstance that the terms of the original lease might be sourced in a template designed for leased premises accommodated entirely within a shopping centre does not result in the deletion of those clauses which may be thought to be more apt to premises of that kind. On the contrary the execution of the original lease and the Lease (as varied) means that work must be found for clause 25. Quite apart from that imperative, it is appropriate to construe clause 25 to read ‘in which the premises, or any part of the premises are located’ as a matter of commercial efficacy. Leased premises may be accommodated in two separate buildings or may include appurtenances such as paved areas, car parks or other open structures. It would be a surprising result if clause 25 was thereby rendered inutile. BCCM also contends that because the plant and equipment of the car and dog washes, including their structural elements, were its property, clause 25 of the Lease (as varied) did not apply to it. That contention too fails to give clause 25 any operation even though it remains a term of the Lease (as varied). The Magistrate found that the structural elements of the car wash were the property of BCCM. That conclusion may be doubted but it is not challenged by way of alternative contention. In any event there is no basis on which clause 25 can be read down to exclude from its operation structures which are the property of BCCM. The principal matter of context which tells against giving ‘reconstruction’ its ordinary meaning is the tension between the grant of exclusive possession for a period of initially 15 years under the original lease, and an option for a further period of 10 years under the Lease (as varied) on the one hand, and the conferral of a unilateral power on the Lessor to terminate the lease on no more than six months’ notice.