DINIZ and BE N ME ENTERPRISES PTY LTD
[2006] WASAT 156
•18 MAY 2006
DINIZ and BE N ME ENTERPRISES PTY LTD [2006] WASAT 156
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2006] WASAT 156 | |
| STRATA TITLES ACT 1985 (WA) | |||
| Case No: | CC:2429/2005 | DETERMINED ON THE DOCUMENTS | |
| Coram: | MR M SPILLANE (MEMBER) | 18/05/06 | |
| 14 | Judgment Part: | 1 of 1 | |
| Result: | Preliminary question answered in the affirmative | ||
| B | |||
| PDF Version |
| Parties: | IZAEL FARIA AND CORNELIA PETRORELLA DINIZ BE N ME ENTERPRISES PTY LTD |
Catchwords: | Restriction of use Express terms Construction of written documents |
Legislation: | Commercial tenancy (Retail Shops) Agreements Act 1985 (WA), s 16 |
Case References: | Australian Broadcasting Commission v Australian Performing Right Association Ltd (1973) 129 CLR 99 Spunwill Pty Ltd v Bab Pty Ltd (1994) 36 NSWLR 290 Nil |
Orders | The preliminary question as to whether the agreement dated 31 May 2002 restricts the use of the premises to those expressly stated and no other use is answered in the affirmative. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : STRATA TITLES ACT 1985 (WA) CITATION : DINIZ and BE N ME ENTERPRISES PTY LTD [2006] WASAT 156 MEMBER : MR M SPILLANE (MEMBER) HEARD : DETERMINED ON THE DOCUMENTS DELIVERED : 18 MAY 2006 FILE NO/S : CC 2429 of 2005 BETWEEN : IZAEL FARIA AND CORNELIA PETRORELLA DINIZ
- Applicants
AND
BE N ME ENTERPRISES PTY LTD
Respondent
Catchwords:
Restriction of use - Express terms - Construction of written documents
Legislation:
Commercial tenancy (Retail Shops) Agreements Act 1985 (WA), s 16
Result:
Preliminary question answered in the affirmative
(Page 2)
Category: B
Representation:
Counsel:
Applicants : Ms Carey
Respondent : Mr R Barrett
Solicitors:
Applicants : McDonald Pynt
Respondent : Self-represented
Case(s) referred to in decision(s):
Australian Broadcasting Commission v Australian Performing Right Association Ltd (1973) 129 CLR 99
Spunwill Pty Ltd v Bab Pty Ltd (1994) 36 NSWLR 290
Case(s) also cited:
Nil
(Page 3)
Summary of the Tribunal's decision
1 The matter came before the Tribunal pursuant to s 16 of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) for the determination of a question between the parties.
2 This decision relates to the determination of a preliminary issue as to whether a letter of agreement dated 31 May 2002 restricts the use of the premises to those expressly stated in that agreement, and no other use.
3 The Tribunal found that the natural and ordinary meaning of the words in question was that the use of the premises was restricted to those expressly stated in the agreement.
Facts
4 It is uncontested that the letter of agreement dated 31 May 2002 (agreement) was signed by both parties and has governed the parties' relationship in respect of premises described as Unit 7/71 Winton Road, Joondalup since that time.
5 The applicants describe the document as an "agreement for lease" whereas the respondent describes it variously as an "offer and acceptance" or "agreement".
6 It is also uncontested that the agreement was originally prepared by the respondent who, by letter to the Tribunal dated 6 February 2006, advised that the agreement had been stamped on 6 December 2005, and could therefore be accepted into evidence and a decision prepared.
7 The agreement itself has the date of 31 May 2002 at the top righthand corner, and states:
"Please accept this letter as a formal offer to lease Unit 7 / 71 Winton Road Joondalup for the purpose of opening a Technical Retail store.
The nature of the primary business will be retail sales of Electronic Components, Computers, Home Entertainment.
Additionally the store may support the retail sales off the brochure Concrete Mouldings, Pre Printed Signs and Commercial grade dining chairs.
(Page 4)
- I would like to take this opportunity to outline our understanding of the agreed terms prior to seeking formal legal documents.
• Lease commencement date 15th June 2002[.]
• Lease Period 5 years + 5 year option[.]
• Floor space to be leased 186m2[.]
• Rate reviews on the anniversary of the lease yearly and in line with CPI.
• Bollards to be affixed to common land at the expense of the lessee with the appropriate approval of the local authorities.
• Internal security grills to be affixed to concrete at the expense of the lessee.
• Shop fit out approval is granted to the lessee for the affixing of Internal Cladding / shelving to existing concrete structure.
• Rent to be paid in advance on the 15th of every calender [sic] month $950.00[.]
• Payments to be electronically transferred to Westpac account no. 7360 79561792[.]"
"Pre Lease Agreement
• The lessor grants the lessee prior occupancy from the 1st of June 2002 for a period of 14 days at a rate of $440.00.
The approval is granted for the purpose of demolition works to the existing sales showroom.
Definitions of Outgoings
Council rates
Water Rates
- Land Tax
Strata Levies[.]
- By definition exclusion, water consumption, electricity including external lighting[,] will be at the expense of the lessee.
The contents of this document form the basis of the formal agreement which may from time to time be replaced by further mutually agreed documents between the lessee and lessor."
9 The agreement is then signed and dated by both parties.
10 It is also uncontested that the respondent has been in occupation of the premises and trading from them since the date the agreement allowed occupancy.
Submissions
11 The applicants filed submissions which stated, amongst other things:
"1) … [The] agreement dated 31 May 2002 … constitutes an agreement for a lease.
2) An agreement for a lease is subject to the rules governing contracts generally … Accordingly, the interpretation of the Agreement should be construed in accordance with the principles of interpretation relating to the interpretation of contracts generally.
3) The Agreement was written by the Respondent to the Applicant [sic] as an offer to lease the Premises … The second paragraph is the relevant paragraph for the purposes of the preliminary issue. It provides … :
'The nature of the primary business will be retail sales of Electrical Components, Computers, Home Entertainment.
Additionally the store may support the retail sales off the brochure Concrete Mouldings, Pre Printed Signs and Commercial grade dining chairs.'
4) … It is a statement of what the Premises were to be used for by the Respondent and the Applicants have
- accepted the offer to lease on that basis. Accordingly[,] they are the only uses that the Applicants have agreed that the Respondent can use the Premises for, and it follows that any other use will be a breach of the express terms of the Agreement. This is reinforced by the use of the word 'may' in the second sentence of this paragraph, ie. the Respondent may[,] in addition to the primary business[,] use the store for these other purposes, inferring that it may not use the Premises for other purposes.
- 5) The Applicants' primary submission is[,] therefore[,] that[,] giving the second paragraph of the Agreement its plain and ordinary meaning, uses other than those set out in the second paragraph are prohibited.
6) Alternatively[,] the Applicants' [sic] maintain that a term should be implied in the Agreement, that the respondent will not use the premises for any other purpose without the consent of the Applicants."
13 The respondent also filed lengthy submissions which amongst other things, stated:
"1) The respondent holds true to that No Term in the 'Agreed Terms' Implied or otherwise as to 'Permitted Use' is defined in the Offer or [sic] Acceptance[,] either written, verbally or by the conduct of the parties.
The respondent also holds that there was no intention of either party to restrict the business from trading in any particular goods … following responses to the applicant's [sic] submission …
2) The letter of Offer and Acceptance dated 31st of May 2005 forms part of the 'Agreement'. It was the intention of the parties to form a working contract based on this letter, their conduct prior to the signing and the verbal exchanges during the course of negotiation.
(Page 7)
- 3) An agreement for lease may well be subjected to the rules governing contracts, however it is customary for the courts to take into consideration the Intention of the Parties involved. … At all material times[,] the respondent has held that there was every intention to sell a diverse range of goods as it sore [sic] fit in order to service the agreement.
For approximately three years[,] the applicant[s] has [sic] not had issue with the diverse range of products and services sold by the respondent.
…
4) It is a fact that the respondent was the author[,] so who better to interpret the intention of the agreement[,] or more importantly[,] the wording.
…
When considering this statement, the second paragraph can not be read in isolation, it must be read in the context of which it was written,
(a) First as part of the contract that was formed orally[.]
(b) Secondly as part of the agreement written with the intentions in mind.
(c) Finally the preamble of the agreement that was signed[.]
5) In sentence 3 of paragraph 5[,] the applicant[s] has [sic] conveniently transposed the words and wording of 'Additionally the store may' a concatenating sentence into, 'May in Addition that a primary business', an exclusive sentence.
The applicants' argument is flawed and does not reflect the true wording or intention of the wording in the preamble of the agreement.
…
- Further to this the original text, 'The Preamble' is intended to read as, the Primary focus of the business will be Retail Sales of a diverse range of goods.
There is no synergy between (Electrical Components, Computers, Home Entertainment) and (Concrete Mouldings, Commercial Grade Dinning [sic] Chairs).
The author also referenced this diverse range with the word 'Primary'[,] indicating that other secondary business activities may be pursed [sic].
…
It would be a lengthy document if each item needed to be identified in the contract. The intent of the preamble was to indicate that the factory unit with a showroom, unit 7, 71 Winton Road[,] would be used as a retail shop supporting a diverse and large range of products and services.
- 6) The applicants['] primary submission is flawed as it is based on giving credence to their transposed wording in the submission as opposed to interpreting the original text in its plain and ordinary meaning in the Agreement of May 31st of 2002 and the intention of the two parties.
…
The business has[,] for the past 3 years and from its inception, traded with a broad aspect of goods based on the genre's [sic] of paragraph 1 in the preamble[.]
Paragraph 2 of the preamble was added to include a wider scope of the Primary business focus in the retail products it would supply. Currently no goods are being vended in line with Paragraph 2."
15 In summary, therefore, the applicants describe the words in question as a statement of what the premises were to be used for by the respondent, and that the applicants accepted the offer to lease on that basis. Accordingly, they are the only uses that the applicants have agreed that
(Page 9)
- the respondent can use the premises for, and it follows that any other use will be a breach of the express terms of the agreement.
16 The respondent, on the other hand, describes the words as a preamble which he argues may allow for a secondary and other further possibilities. Furthermore, the preamble was intended to read that the primary focus of the business would be retail sales of a diverse range of goods.
Consideration
17 Having considered all of the submissions made, the Tribunal makes the following comments:
18 In the text Drafting and Negotiating Commercial Leases in Australia by Barrett, at par 3.2, the author states:
"For an agreement for lease to be capable of specific performance, at least all essential terms of the proposed lease must be clearly specified in the agreement. These will include:
a) the parties;
b) an adequate description of the premises;
c) the date of commencement of the lease or some clear machinery for determining the commencement date;
d) the term of the lease, including any options for renewal; and
e) the rent or a formula by which the rent is to be calculated, and the frequency and basis of any rent reviews."
19 The agreement dated 31 May 2002 clearly contains all of those elements, and is capable of specific performance, and is, in fact, the basis on which the respondent currently occupies the premises.
20 What now falls to be determined by the Tribunal, and in respect of which both parties have made detailed submissions is whether that agreement also restricts the use of the premises to those uses expressly stated in the agreement and no other.
21 To do this, the principles to be applied in the construction of written documents need to be examined. A concise summary of those principles
(Page 10)
- is contained at par 6.4 of Bradbrook and Croft Commercial Tenancy Law in Australia 2nd ed, where it states:
" … In Spunwill Pty Ltd v Bab Pty Ltd (1994) 36 NSWLR 290, Santow J provided such a summary … :
1. …
2. A 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 terms appropriate to the transaction and is signed by the parties as the record of their agreement: LG Thorne & Co Pty Ltd v Thomas Borthwick & Sons (Australasia) Ltd [1956] SR (NSW) 81; (1956) 73 WN (NSW) 9. 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. State Rail Authority of NSW v Health Outdoor Pty Ltd(1986) 7 NSWLR 170 at 191. However, where it is determined that the terms of the agreement are wholly contained in writing and are unambiguous or of a plain meaning, extrinsic evidence cannot be admitted to subtract from, add to, vary or contradict the language of the written agreement: Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 347.
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 subjective intentions and expectations is inadmissible for purposes of construction: Codelfa Construction Pty Ltd v State Rail Authority of NSW at 348 and 352; …
4) The language of a term is generally assigned its natural and ordinary meaning, …
- 5) …
6) Every passage of a document must be read as part of the whole instrument. … "
22 The applicants argue that the terms of the agreement are unambiguous and clear, and should be given their plain and ordinary meaning.
23 The respondent, on the other hand, argues that the agreement forms part of an overall agreement, and it was the intention of the parties to, as he states:
"Form a working contract based on this letter, their conduct prior to signing, and the verbal exchanges during the course of negotiation".
24 He accepts that an agreement for lease may well be subjected to the rules governing contracts, however, he argues it is customary for the courts to take into consideration the intention of the parties involved, and to this end, the respondent quotes a passage from Gibbs J, in Australian Broadcasting Commission v Australian Performing Right Association Ltd (1973) 129 CLR 99, part of which states:
"It is trite law that the primary duty of a court in construing a written contract is to endeavor [sic] to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous[,] the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, 'even though the construction adopted is not the most obvious, or the most grammatically accurate', … ."
(Page 12)
25 That passage, in the Tribunal's opinion, sits well with the principles outlined by Santow J in Spunwill Pty Ltd referred to earlier, and is, in fact, referred to at par 5 of that summary.
26 In the Tribunal's view, the law is clear, and the first question that must be asked is "are the words used in the agreement unambiguous?" because if they are, there would be no necessity to look at any extrinsic material such as prior conduct or the intention of the parties as an aid to interpretation.
27 Turning to the agreement itself, we look first at the description of the business to be carried on, which states, "The nature of the primary business will be retail sales of Electronic Components, Computers, Home Entertainment". Additionally, the store may support the retail sales off the brochure Concrete Mouldings, Pre Printed Signs and Commercial grade dining chairs.
28 Looking at the actual words used, it starts with "The nature of the primary business will be". The Shorter Oxford Dictionary 5th ed defines "nature" as meaning "the inherent or essential quality or constitution of a thing". In the present case, therefore, the essential quality of the primary business would be retail sales of electronic components, computers and home entertainment, each of which, although having a wide range of products, is a wellrecognised form of retail business.
29 If the description of the type of business to be carried on stopped there, there may be some argument that other options were available, but it does not. As if to leave no doubt, the agreement goes on to state in the following paragraph: "Additionally, the store may support the retail sales off the brochure Concrete Mouldings, Pre Printed Signs and Commercial grade dining chairs".
30 In using the words "will be" in describing the nature of the retail sales that make up the primary business and the word "may" in respect of retail sales which may be additionally supported, in the Tribunal's view, the agreement is clear and unambiguous in its intention.
31 Two types of retail sales are clearly described. Electronic Components, Computers and Home Entertainment will be the primary business, and off the brochure Concrete Mouldings, Pre Printed signs and Commercial grade dining chairs may be supported in addition to the primary business. Each type is defined exclusively and generically, and does not include words of a general nature.
(Page 13)
32 It should also be noted that the agreement was drafted by the respondent who is the tenant, and who, therefore, had the opportunity to express his intentions clearly.
33 As outlined earlier, a further principle of interpretation is that a clause in a document must not be considered in isolation, but rather in the context of the document as a whole. In the present case, the document sets out all of the required terms to make the agreement workable, and the final paragraph states:
"The contents of this document form the basis of a formal agreement, which may from time to time be replaced by further, mutually agreed documents between the lessee and the lessor."
34 No evidence has been furnished that shows any such further mutually agreed documents being entered into between the parties.
35 In all the circumstances, therefore, the Tribunal is satisfied that the agreement of 31 May 2002 is clear on its face, and contains all the terms appropriate to the transaction and is signed by the parties as a record of their agreement.
36 Furthermore, the Tribunal is satisfied that the terms of the agreement between the parties are wholly contained in writing in that document, are unambiguous, and have a plain meaning, and extrinsic evidence is not necessary to vary or contradict the language of the written agreement.
37 The Tribunal is of the view that the natural and ordinary meaning of the words in question, when read in the light of the document as a whole, is that the business that will be carried on under the terms of the agreement is limited to the retail sales of Electronic Components, Computers and Home Entertainment, and that the retail sales off the brochure Concrete Mouldings, Pre Printed signs and Commercial grade dining chairs may also be undertaken.
Order
38 The preliminary question as to whether the agreement dated 31 May 2002 restricts the use of the premises to those expressly stated and no other use is answered in the affirmative.
(Page 14)
- I certify that this and the preceding [38] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR M SPILLANE, MEMBER
0
4
1