J & H West Nominees Pty Ltd v Twenty Four Outdoor Australia Pty Ltd
[2021] VSCA 337
•3 December 2021
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S EAPCI 2021 0017
| J & H WEST NOMINEES PTY LTD (ACN 005 138 705) | Applicant |
| v | |
| TWENTY FOUR OUTDOOR AUSTRALIA PTY LTD (ACN 140 586 554) | Respondent |
---
| JUDGES: | KYROU, McLEISH and SIFRIS JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 4 November 2021 |
| DATE OF JUDGMENT: | 3 December 2021 |
| MEDIUM NEUTRAL CITATION: | [2021] VSCA 337 |
| JUDGMENT APPEALED FROM: | [2020] VCC 1676; [2020] VCC 1938 (Judge A Ryan) |
---
CONTRACT — Agreement for lease — Premises to be leased for display of sign — Premises defined as the part of roof, wall and airspace used for the sign, attachments and support structures — Whether judge erred in finding that premises described with sufficient certainty — Leased premises need not be described with absolute precision — No error shown — Appeal dismissed — York Air Conditioning and Refrigeration (A/sia) Pty Ltd v Commonwealth (1949) 80 CLR 11, Jenkins v Green (1858) 27 Beav 437, Ashburn Anstalt v Arnold [1989] Ch 1, Nashvying Pty Ltd v Giacomi [2007] QSC 257, considered.
---
| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr D G Collins QC with Mr S Wotherspoon | Piper Alderman |
| For the Respondent | Mr R Hay QC with Mr L Hawas | Tisher Liner FC Law |
KYROU JA
McLEISH JA
SIFRIS JA:
Introduction
The critical issue in this application for leave to appeal is whether premises to be leased for a sign on the exterior wall and roof of a building are described with sufficient certainty. The premises are described in an agreement entered into by the applicant as lessor and the respondent as lessee, including a photo montage attached to the agreement. The trial judge held that the premises were described in the agreement with sufficient certainty.[1] The applicant seeks leave to appeal from that decision.[2]
[1]Twenty Four Outdoor Australia Pty Ltd v J & H West Nominees Pty Ltd [2020] VCC 1676 (‘Reasons’).
[2]There were various other issues dealt with by the judge including a contention by the applicant that the agreement did not intend to create binding legal relations between the parties and in any event only created a licence and not a leasehold interest. There is no challenge to the judge’s finding that the parties did intend to create a binding agreement, with immediate effect, in relation to a leasehold interest.
For the reasons that follow, leave to appeal will be granted but the appeal will be dismissed. In our opinion, the judge was correct in finding that the premises are described in the agreement with sufficient certainty.
Relevant facts
The applicant is the registered proprietor of land located at 6–10 Chapel Street, Windsor. The land is on two titles. The land on the first title comprises a three-storey commercial building and is tenanted by a medical group, a dentist and a telecommunications company. The land on the second title abuts the first and comprises car parking and roadways.
The respondent conducts a business of leasing billboard advertising space to outdoor media companies. The business involves locating appropriate spaces to accommodate the billboards, negotiating lease agreements between it and owners of the proposed sites, and arranging all necessary permits and other documentation. The respondent also project manages the construction and delivery of billboards and manages agreements with media companies for advertising to be displayed on the billboards.
In February 2011, the respondent’s director Mr Ross Eden-Smith approached Mr Joseph West, the then director of the applicant, regarding a proposal to fix two advertising signs on the roof of the applicant’s building.
Many years later, in March 2016, Mr George Harris (a real estate agent and property manager who acted on Mr West’s behalf) had some dealings with Mr Eden-Smith. On 21 March 2016, Mr Eden-Smith wrote to Mr Harris regarding a proposal for the display of a single sign on the east-facing wall of the building. Mr Eden-Smith said he would prepare heads of agreement.
On 23 June 2016, Mr Eden-Smith emailed a document to Mr Harris for his review. In the email, the document is described as a heads of agreement. The document is on the respondent’s letterhead and is three pages long. On the first page, it is identified as an ‘Agreement to Lease’. It contains provisions of a contractual nature, with execution clauses on the third page together with a photo montage depicting a billboard sign on the east-facing wall of the applicant’s building on the first property referred to in para [3] above.
Further negotiations took place. An agreement, dated 10 August 2016, was subsequently executed and exchanged by the parties (the ‘Agreement to Lease’).
The Agreement to Lease relevantly provides:
Twenty Four Outdoor Australia Pty Limited ACN 140 586 554 (24 Outdoor)
J. & H. West Nominees Pty Limited ABN 48 200 524 132 (Lessor)
6-10 Chapel Street, Windsor, VIC 3181, Australia – Volume 9119 Folio 566 and Volume 10342 Folio 126 (Property)
One exclusive illuminated promotional advertising sign and supporting structure measuring approximately 19m wide x 4.6m high or smaller at 24 Outdoor’s discretion as approximately shown in the attached photo montage (Sign).
Further to our recent discussions, it is confirmed that the Lessor hereby agrees to Lease the Premises to 24 Outdoor on the following terms and conditions for the purposes of the Sign (Agreement to Lease):
…
Premises:That part of the roof, east facing wall and airspace on the Property being used for the Sign, the support/attachment of the Sign and its supporting structure or electrical/data connections.
Commencement Date: The date the installation and display of commercial advertising on the Sign is completed.
Term:Ten (10) years.
Option Term: One further term of Eight (8) years.
…
Other Terms and Conditions: (a) The Lessor acknowledges that it will comply with 24 Outdoor’s reasonable requirements in order for the Sign to be installed, erected and to provide 24 Outdoor and its contractors with reasonable access to Sign at all times during the Term and Option Terms;
(b) The Sign shall not interfere with the operation of the mobile phone antennae’s [sic] on the roof of the Property;
(c) The Sign shall not cover or obstruct any existing windows on the Property.[3]
[3]Emphasis in original.
The photo montage attached to the Agreement to Lease shows a sign displayed on the east-facing wall of the building. It appears that the sign extends above the height of the east-facing wall. The photo montage does not show the location of the sign in terms of the distance of the sign from the external surface of the east-facing wall, or the dimensions, configuration or location of the sign and its supporting structure.
The parties set about taking steps to obtain confirmation from the telecommunications company that the sign the respondent proposed constructing would not interfere with the operation of its mobile phone antennae on the roof of the building. The respondent obtained written confirmation from the telecommunications company to that effect on two separate occasions, in January 2018 and May 2018. The respondent did not obtain approval or confirmation from the telecommunications company in relation to the council-approved plans. Steps were also taken to obtain planning approval for the construction and installation of the proposed sign, including the required advertising of the proposed sign on the premises.
On 10 October 2016, Mr Anthony Burke, a solicitor from Burke & Associates, was appointed as administrator of Mr West’s affairs pursuant to an order of the Victorian Civil and Administrative Tribunal (‘VCAT’). Mr West ceased holding office as sole director of the applicant on 19 October 2016 and was replaced by Mr Burke.
On 6 November 2017, Mr Eden-Smith spoke with Mr Harris and said he would be providing the applicant with the respondent’s draft lease as provided for in the Agreement to Lease. Mr Harris informed Mr Eden-Smith that the applicant already had a lease for outdoor advertising signs it had previously prepared. Mr Harris said that the respondent should proceed with that lease which would be modified to reflect the terms of the Agreement to Lease rather than using the respondent’s form of lease.
On 17 August 2018, Mr Eden-Smith collected a hard copy of the lease from Mr Harris’ office. Mr Eden-Smith signed both copies of the lease on behalf of the respondent on 27 August 2018 and returned them to Mr Harris by express post. On 5 September 2018, Mr Eden-Smith sent an email to Mr Harris attaching a soft copy of the signed lease and confirming that he had returned both originals to him by express post.
From 21 August 2018, Mr Ian Morrison, solicitor, replaced Mr Burke by order of VCAT made on 8 August 2018. Mr Morrison was appointed as sole director of the applicant on 20 August 2018 in Mr Burke’s stead. Mr Morrison declined to execute the lease relating to the sign prepared by Mr Burke’s office. The respondent has not made any claim relating to the lease.
Subsequent to the Agreement to Lease, the respondent made a town planning application. The application had drawings and precise dimensions of a proposed sign which included the necessary structures and attachments. The applicant approved the application. The town planning application was approved by the Stonnington Council on 3 April 2019.
On 11 December 2018, Mr Eden-Smith received a letter from Aitken Partners. The letter stated that Mr Morrison was willing to let the applicant enter a lease with the respondent on the same terms as the lease signed by the respondent except that the lease would terminate on 31 January 2027 with no further options. There was no mention, then or indeed at any stage, of any uncertainty in relation to the description of the premises.
The proceeding
On 16 April 2019, the respondent commenced a proceeding in the Supreme Court of Victoria seeking specific performance of the Agreement to Lease. The respondent also pleaded claims based on estoppel and unconscionability and sought damages in addition to specific performance. On 12 July 2019, the respondent filed an amended statement of claim, which included additional claims for equitable relief.[4]
[4]The estoppel and unconscionability claims and additional claims for equitable relief were abandoned.
By its defence and counterclaim, the applicant denied that the Agreement to Lease took effect as an agreement for lease, in that it did not grant a right of exclusive possession to any part of the applicant’s land and did not specify a certain commencement date of the proposed lease. The applicant sought a declaration that the Agreement to Lease was, on its proper construction, a licence.
In relation to the definition of the ‘Premises’ in the Agreement to Lease — upon which the respondent relied — the applicant pleaded that the Agreement to Lease ‘did not grant to the [respondent] exclusive possession of any geographically specific part or section of the Building’s roof or east facing wall or the Land’s appurtenant airspace’.[5]
[5]From a review of the proceeding and the conduct of the trial, it appears that the pleading was directed to one of the main contentions of the applicant, namely, that the Agreement to Lease was no more than a licence and did not create any leasehold interest. However, during the course of the trial and before us greater focus was placed on uncertainty as an independent basis for challenging the enforceability of the Agreement to Lease. The nature and extent of the suggested uncertainty evolved during the course of the trial and the application for leave to appeal.
On 21 August 2019, the proceeding was transferred to the County Court of Victoria.
On 23 January 2020, the respondent filed a further amended statement of claim seeking damages in lieu of specific performance. On 20 March 2020, the applicant filed a summons seeking an order that the question of the applicant’s liability and the respondent’s entitlement to equitable relief be determined in advance of damages. The respondent consented to the applicant’s application to split the damages claim from liability and orders to that effect were made on 12 May 2020.
On 27 May 2020, the trial commenced before Judge A Ryan. The judge recorded the issues for determination as follows:
(a)whether the agreement is an immediately binding agreement as a matter of construction;
(b)if the agreement is immediately binding, does it satisfy the requirements for an enforceable agreement for lease;
[(c)] alternatively, is the agreement merely a licence.[6]
[6]Reasons [58].
Under issue (b), the judge dealt with the area of the demise and the commencement date. In dealing with the area of the demise, the judge addressed the certainty issue, as pleaded and articulated, concluding that the description of the premises in the Agreement to Lease was sufficiently certain.
The respondent’s opening written submissions on this point were as follows:
[The applicant] argues that under the [Agreement to Lease] [the applicant] did not grant (or agree to grant) [the respondent] exclusive possession of any defined geographic area. Accordingly, it is said that [the respondent’s] claim of a binding Agreement for Lease must fail.
[The applicant’s] argument runs contrary to the express intention of the parties as described in the words of the [Agreement to Lease]. [T]he document employs the strong language of a lease — the parties described themselves as lessor and lessee, stated that [the applicant] agreed to grant [the respondent] a lease, and they described their agreement as an Agreement for Lease. The demised area is clearly described with the assistance of a photograph. The use of the area is described as an ‘exclusive’ sign. Under the Agreement for Lease, [the applicant] plainly agreed to grant [the respondent] the exclusive right to possess exclusively (not just use) the area on the roof and east facing wall of the building as described in the agreement.
The size and dimensions of the sign were defined — the area was 19m wide and 4.6m high or smaller at [the respondent’s] discretion. An agreement is not uncertain because a term is left to one of the parties to determine[7]. In York Air [C]onditioning and Refrigeration (A/sia) Pty Ltd,[8] Williams J said:
there is no reason why the parties to a contract should not agree that the determination of some of the incidents of the contract should be left to the decision of a third party or to one of themselves ... there is nothing in these provisions to make the contracts too uncertain to be enforced.[9]
[7]York Air Conditioning and Refrigeration (A/sia) Pty Ltd v Commonwealth (‘York Air Conditioning’) (1949) 80 CLR 11; [1949] HCA 23; Thorby v Goldberg (1964) 112 CLR 597; [1964] HCA 41; Godecke v Kirwan (1973) 129 CLR 629; [1973] HCA 38.
[8](1949) 80 CLR 11; [1949] HCA 23.
[9]Ibid 29.
The respondent submitted further in relation to the commencement date of the lease:
An agreement for lease (or lease) need not identify a certain commencement date for the commencement of the lease term provided that the commencement date will become certain before the lease takes effect. A lease to commence when construction of a building is completed or when a lessor takes possession is sufficiently certain …
Here, the parties agreed that the term of the lease was to commence on the date the installation and display of the Sign is completed. That is sufficiently certain to identify the commencement date.[10]
[10]Citations omitted.
The respondent’s closing written submissions included the following:
Properly construed, the area [the applicant] agreed to lease [the respondent] under the [Agreement to Lease] was the part of the roof and the east facing wall on the Property upon which [the respondent] chose to erect the Sign once it had decided on its size. It was upon the erection of the Sign and the display of commercial advertising on the Sign that the term of the lease would commence.
By that description of the demised area, the parties agreed that [the respondent] would have the right or power to select the area to be demised under the lease before the lease term would commence. [The respondent] would select the demised area once it determined the size of the Sign and erected it on the roof and east facing wall of the Property before the lease term commences.
So by the time the lease term commences, (i.e. upon the erection of the Sign and the display of commercial advertising on the Sign) all the terms of the agreement will have become certain. Such an agreement over the area to be demised under the lease is sufficiently certain to constitute a binding agreement for lease.
The applicant’s opening written submissions on the certainty issue included the following:
[A]n agreement for lease must contain the substantive requirements of a lease, namely a certain commencing time, a certain term, a geographically specific area the subject of exclusive possession and a rent. The need for a geographically specific area the subject of exclusive possession was emphasised by Kitto J in the Claude Neon case (at 71). Windeyer J agreed with Kitto J (at 71-72). The law regards each requirement as essential to the enforceability of an agreement for lease. And to be binding as a contract, the agreement for lease must be complete, clear and final.
…
Like a lease, an agreement for lease must specify the demised premises with certainty. The 2016 letter agreement lacks any semblance of geographic specificity. There are no plans, reports or drawings associated with [the respondent’s] proposed installation. There is no way of identifying the volumetric dimensions of the premises proposed to be demised. The discretion reserved to [the respondent] with respect to width and height dimensions of the proposed sign underscores the uncertainty.
Further, there is a chronological curiosity with respect to the area to be let. The 2016 letter agreement describes the area to be leased by reference to that part of the roof, wall and airspace ‘being used’ by the (yet to be built and installed) ‘Sign’ together with ‘the support/attachment of the sign and its supporting structure or electrical/data connections’. It is not to be supposed that [the applicant], in signing the August 2016 letter agreement, intended to deny itself all means of participating in the positioning and fixing of a substantial digital sign on the roof and east facing wall of its own building.[11]
[11]Citations omitted.
The applicant’s closing written submissions on the certainty issue included the following:
Without exercising a discretion as to the proposed sign’s dimensions, it was not possible for the [applicant] to know what area was to be the subject of the [respondent’s] exclusive possession. In August 2016, it could not be known what area the intended sign would occupy. This strongly points to the [Agreement to Lease] being a licence rather than an equitable lease and thus incapable of an order for specific performance.
…
In the present case one cannot determine from the photo montage attached to the [Agreement to Lease] the precise area which was intended to be the subject of a grant. It was impossible to know the precise area at the time the [Agreement to Lease] was made. Planning and building permissions had not been sought. There is nothing to save the supposed grant from being void for uncertainty. After the necessary permissions had been granted, Mr Eden Smith believed the [Agreement to Lease] permitted the [respondent] to make changes or additions to any sign (even though a sign would then be in situ) over the duration of the term ... These are factors which strongly suggest the [Agreement to Lease] was a licence rather than an equitable lease.
…
The area that constitutes the Premises will only become certain when a sign has actually been installed and that part of the roof, east facing wall and airspace being used for such a sign becomes apparent. The same can be said for the sign’s supporting structure and electrical/data connections. Only when the property is being used in the manner contemplated will the area be defined. The equivocal definition of Premises in the [Agreement to Lease] militates against an equitable lease being created following execution of the [Agreement to Lease].[12]
[12]Citations omitted, emphasis in original.
On 10 November 2020, reasons for judgment were delivered. The judge held that the Agreement to Lease was binding and that the respondent was entitled to an order for specific performance. The parties were directed to confer and provide consent orders giving effect to the reasons. If they were unable to reach agreement, the parties were directed to file submissions. The parties did not reach agreement and written submissions were filed.
On 16 December 2020, the trial judge gave further reasons in relation to applications made by the parties in the submissions filed following the delivery of reasons for judgment.[13]
[13]Twenty Four Outdoor Australia Pty Ltd v J & H West Nominees Pty Ltd [No 2] [2020] VCC 1938 (‘Second Reasons’). The Second Reasons deal, amongst other things, with the applicant’s unsuccessful attempt to re-argue the certainty point.
Authenticated orders were made on 16 December 2020 giving effect to the judge’s reasons.
The judge declared that:
The agreement dated 10 August 2016 and executed by the parties constitutes a binding and enforceable agreement for lease.
Order 1, made by the judge, is in the following terms:
[The applicant] is ordered to specifically perform the agreement for lease by executing a deed of lease in the form of Annexure ‘A’ … in counterpart and to deliver one part to the [respondent] by 4:00pm on 20 January 2021.
Pursuant to order 1, a deed of lease was executed by the applicant in counterpart, with one part being delivered to the respondent by 20 January 2021. A deed of lease executed by the respondent was delivered to the applicant’s solicitors on 8 February 2021.
The order for specific performance adopted the definition of premises in the Agreement to Lease as set out above at para [9].
The issue for determination by this Court is whether the judge erred in finding that the part of the roof, east-facing wall and airspace on the property which was to be leased was sufficiently certain so that the Agreement to Lease is valid and enforceable. There are other minor issues as referred to below.
Judge’s reasons
As mentioned above, the judge considered three issues, namely whether the Agreement to Lease was an immediately binding agreement, whether the Agreement to Lease was an enforceable agreement for lease, and alternatively whether the Agreement to Lease was a licence.
The part of the Reasons relevant to this application for leave to appeal, concerning the certainty of the area of the premises to be leased, commences at para 92.
The judge began by noting that an agreement to lease is a species of contract to grant exclusive possession of demised premises at some time in the future, and that the area of demise is one of four certainties required to form the essential elements of an agreement to lease.[14] The applicant does not challenge these legal principles.
[14]Harvey v Pratt [1965] 1 WLR 1025, 1027 (Lord Denning MR); [1965] 2 All ER 786, 788.
The judge then set out the parties’ submissions and referred to Claude Neon Ltd v Melbourne & Metropolitan Board of Works.[15] In that case, the High Court found by majority that a document that leased ‘all that portion of the said building comprising the roof and parapets thereof … for the purpose of constructing an electric sign thereon’ constituted a lease.[16] The sign under consideration in that matter was already in situ.
[15](1969) 118 CLR 678; (1969) 43 ALJR 69 (‘Claude Neon’).
[16]Ibid 69–70 (Barwick CJ, McTiernan and Menzies JJ).
The judge then cited a passage from the judgment of Williams J in York Air Conditioning as follows:
… there is no reason why the parties to a contract should not agree that the determination of some of the incidents of the contract should be left to the decision of a third party or to one of themselves. … There is nothing in these provisions to make the contracts too uncertain to be enforced.[17]
[17](1949) 80 CLR 11, 29; [1949] HCA 23.
The judge referred to the respondent’s contention about the significance of the word ‘approximately’ in the description of the sign, in the following terms:[18]
The [respondent] contended that the word ‘approximately’ before the word ‘photomontage’ did not render the term uncertain. The [respondent] placed reliance upon the following passage from Woodfall: Landlord and Tenant:
It is not necessary for the parties to specify the precise area of property to be demised. So where the parties entered into an agreement for lease of ‘approximately’ 100 square feet [sic] with car parking facilities in a development yet to be constructed, it was held that the word ‘approximately’ did not make the agreement uncertain and the car parking facilities had to be reasonable: Ashburn [Anstalt] v Arnold [1989] Ch 1; cf Edwards v Skyways [1964] 1 W.L.R. 349.[19]
[18]Reasons [103] (citations omitted).
[19]See Lord Justice Lewison et al, Sweet & Maxwell, Woodfall’s Landlord & Tenant [4.016].
The judge then concluded on this point:
In my view, the area of the premises to be leased for the sign to be displayed is sufficiently certain. The dimensions are recorded, and the approximate area is depicted in the photo montage. The fact that the [respondent] could choose an area smaller than that provided for, does not render the clause uncertain. I consider the area is sufficiently defined such that exclusive possession can be granted to the [respondent], as is contemplated by the agreement. I do not consider the use of the word ‘approximately’ before the word ‘photo montage’ renders the clause uncertain. Similarly, the dissenting judges’ observations in the Claude Neon case do not assist in circumstances where the majority had no difficulty in accepting the sign in that case was the subject of a valid lease. The issue of whether the sign is in situ or not does not inform the issue of whether the demised premises in this case is the subject of an exclusive grant of possession. I find that the demised area is sufficiently certain to enable a grant of exclusive possession.[20]
[20]Reasons [106].
In the result, as referred to above, the judge found that the Agreement to Lease was binding and the respondent was entitled to have the Agreement to Lease specifically performed.
In the Second Reasons, the judge dealt with an attempt by the applicant to reargue the certainty point. The judge said:
There are a number of matters to be noted regarding this application by the [applicant]. The first is that it was made without leave and no leave has been sought. The second is that the [applicant] is now attempting to reargue matters which were determined adversely against it at trial. The third is that the [applicant] is trying to introduce, through the backdoor, fresh arguments not previously raised.
Contrary to the [applicant’s] assertion that the Court made findings without consideration, the Court did consider the parties’ submissions as to whether the demised area was sufficiently certain as a matter of construction. The Court accepted the submissions made by the [respondent] on this point and concluded that the demised area was sufficiently defined in the agreement, contrary to submissions made by the [applicant]. Should the [applicant] wish to challenge that finding or any other finding, it can do so on appeal.[21]
[21]Second Reasons [6]–[7].
Proposed ground of appeal
The applicant’s sole proposed ground of appeal is as follows:
The Trial Judge erred in finding that the part of the roof, east facing wall and air space on the Property which was to be leased was sufficiently certain.
Submissions
The applicant submitted that the Agreement to Lease does not provide any mechanism by which the relevant part of the roof, the east-facing wall and air space on the property is to be determined, and therefore the area to be leased is uncertain.
The applicant submitted that if the sign existed in situ, the definition of the premises in the Agreement to Lease would be sufficiently certain. Similarly, the applicant submitted that if the design specifications and dimensions of the sign and its location (including the support/attachment of the sign and its supporting structure or electrical connection) had been the subject of agreement, the definition would be sufficiently certain.
The applicant submitted further that there is nothing in the Agreement to Lease, and no findings were made by the judge, concerning:
(a) the location and area of the roof which is the subject of the lease;
(b) the area and location of the east-facing wall which is the subject of the lease;
(c) the dimensions, configuration and boundaries of the air space which is the subject of the lease, save for the dimensions and approximate location of the eastern boundary of the airspace.
It was submitted by the applicant that the judge erred in relying on no more than the height and width of the sign and its approximate location as depicted on the photo montage.
In response, the respondent submitted that the demised area is not relevantly uncertain. The respondent contended that the uncertainty argument runs contrary to the express intention of the parties as described in the words of the Agreement to Lease. Further, the respondent contended that the applicant was never unclear or uncertain about the area it had agreed to lease to the respondent. The respondent pointed to the ‘long form’ lease the applicant sent to the respondent for execution on 16 August 2018 which contained the same description, and the offer by the applicant in December 2018 to lease the same demised area. It was submitted that the applicant did not refuse to sign the longer form lease because of any uncertainty over the demised area but rather because of the capacity of its director, and that arguments raised subsequently did not include that the area was too uncertain for any lease to be enforced. According to the respondent, the applicant did not raise uncertainty until trial and even then did not argue it clearly.
The respondent submitted further that if and insofar as the area to be leased lacked precision or was unclear, that is not fatal to the enforceability of the Agreement to Lease as an agreement for lease. The respondent emphasised the phrase ‘… and airspace on the Property being used for the Sign’ in the definition of premises in the Agreement to Lease. The respondent submitted that once it designed and erected the sign on the roof and east-facing wall according to the parameters set out in the Agreement to Lease, the part of the roof and east-facing wall and airspace the applicant agreed to lease under the document would be identified with precision. That is, the Agreement to Lease gave the respondent the discretion to select the area to be demised under the lease before its term commenced. It was therefore not necessary for the Agreement to Lease to identify exactly the location where the sign would be fixed and it was not necessary for the judge to make findings about those matters.
During the course of the application for leave to appeal, this submission was referred to as the alternative argument. The submission was objected to by the applicant on the basis that it had not been pleaded and was not sufficiently raised at trial — although, as noted at [27] above, it was clearly raised in the closing submission of the respondent. The applicant submitted that the judge made no finding on this argument and the respondent did not file a notice of contention supporting the decision based on the alternative argument. Consequently, the applicant accepted that, if the demise as defined in the Agreement to Lease is certain, as found by the judge, the applicant cannot succeed on appeal. If, however, the demise, as defined, was uncertain the applicant submitted that it must succeed on appeal because such uncertainty could not be cured by any later certainty. This alternative argument is mentioned further below.
Analysis
In Jenkins v Green,[22] a landlord agreed to grant a lease of his property less 37 acres thereof. The 37 acres were not identified. It was held that the agreement was not uncertain because the landlord was entitled to select the acres to be excluded before the lease was executed. Specific performance was ordered of the agreement to lease.
[22](1858) 27 Beav 437; 54 ER 172 (‘Ashburn Anstalt’). This case is also cited in Woodfall’s: Landlord and Tenant.
In Ashburn Anstalt v Arnold,[23] a case cited in the passage from Woodfall: Landlord and Tenant referred to by the judge at [43] above, the premises were described in an agreement for lease in relation to a project yet to be constructed, as ‘a shop in a prime position at the development with an area available for trading of approximately 1000 square feet and with car parking facilities’. It was held that the use of the expressions ‘prime position’ and ‘carparking facilities’ and the word ‘approximately’ did not make the agreement uncertain.
[23][1989] Ch 1.
In Nashvying Pty Ltd v Giacomi,[24] a demise was expressed as ‘all the quarries and beds of granite with quartz veins locally covered, altered and weathered and other rocks and minerals suitable for general construction purposes including road making materials … within or under the lands more particularly referred to in the first schedule hereto’.
[24][2007] QSC 257.
The landlord contended that the subject matter of the demise was not ascertainable with sufficient certainty so as to give the tenant exclusive possession of a part of the land. The submission was rejected. Jones J said:
Ultimately the question as to whether there is a lease is to be found in the expressed intention of the parties. That intention is divined by taking into account the circumstances surrounding its making. Thus the expected terms of an agreement to lease the land for the purpose of establishing a quarry (which necessitates obtaining local authority permits and proving a winnable product) is quite different to those in a retail shop lease. The manner in which a lease is distinguishable from a licence is the fact that the former creates an interest in land which entitles the lessee to exclusive possession. See Radaich v Smith.
I am satisfied that the subject agreement is in fact a lease. It does have the benefit [of] indefeasibility provisions as set out in the Land Title Act 1994. What has been demised is land which is adequately identified within the terms of the agreement and to which exclusive possession has been granted to the lessee. The term of the lease is fixed by express terms. The rent in the form [of] royalty is ascertainable. The parties’ intention to create the lease is manifested by the preparation of formal documents and its registration. I am satisfied that the defendant expected to be bound by those terms. In fact the defendant’s cooperative response to Yousefpour’s complaint about part of the area being fenced off, again demonstrates this intention.[25]
[25]Ibid [27]–[28] (citations omitted).
These cases show that absolute precision is not required in the description of premises to be leased, in order for an agreement to lease (or a lease) to be effective and support an order for specific performance. The description needs only to be sufficient to convey with reasonable clarity, as a matter of construction of the agreement, the subject matter of the demise.
The Agreement to Lease uses and defines the terms ‘Property’, ‘Premises’ and ‘Sign’. ‘Property’ is defined as the Chapel Street address. ‘Premises’ is defined as part of the roof, east-facing wall and airspace of the Property, the support attachment and the support structure being used for the ‘Sign.’ Consequently, the demise relates only to that part of the east-facing wall that is used for the ‘Sign.’ But which part of the east-facing wall? The applicant submits that the failure to identify the precise part of the wall renders the demise uncertain. The submission is without merit. The ‘Sign’ is defined as ‘measuring approximately 19m wide x 4.6m high or smaller at [the respondent’s] discretion as approximately shown in the attached photo montage’. The respondent could therefore use any part of the wall as shown in the photo montage with a maximum coverage of 19 metres wide by 4.6 metres high. The Agreement to Lease is not uncertain because an approximate location is given and the respondent has the ability to select the precise location and dimensions (subject to a maximum) of the Sign.[26] The location of the Sign identified in the Agreement to Lease is far more specific than that held to suffice in Ashburn Anstalt, for example. Further, any selection is constrained and regulated by other provisions of the Agreement to Lease. Clauses (b) and (c) of ‘Other Terms and Conditions’ provide for non-interference with the ‘mobile phone antennae’s [sic] on the roof’ and ‘the existing windows on the Property’ respectively.
[26]See the cases referred to at [55]–[59] above, and York Air Conditioning (1949) 80 CLR 11, 29; [1949] HCA 23. See also the passage from Woodfall’s: Landlord and Tenant cited by the judge at Reasons [103].
During oral submissions, senior counsel for the applicant, in further unfolding and developing the uncertainty point, emphasised that the relevant uncertainty relates to the absence of the specific dimensions of the supporting structure, the attachment structure and the airspace. Although the definition of Premises includes the ‘attachment of the Sign and its supporting structure’ and ‘the airspace’, it does not specify the dimensions. There could be no certainty, it was contended, unless the area of the demise, which exceeded the dimensions of the Sign, were known. This related to both the horizontal and vertical axes.
In relation to the horizontal axis it was submitted that in the absence of dimensions it is not known how far, or to what extent, the Sign projects into the airspace to the east of the wall and ‘whether it’s 50 centimetres, a metre, a metre and a half or 2 metres affects the dimensions of the land’. This ‘unspecified and unascertainable distance into that eastern airspace’ is, it was submitted, uncertain. It was also contended that the area to be occupied by the support structure was uncertain. Counsel said no specifications or details are provided.
In relation to the vertical axis it was submitted that the relevant uncertainty relates to how far above the parapet the structure could extend.
In our opinion, the absence of specific dimensions relating to the attachment and support structure and the airspace does not create any relevant uncertainty. Whatever the precise dimensions, they are sufficiently described and form part of the demised Premises. The specific reference to and identification of the attachment and support structure and the airspace within the definition of Premises is sufficient to make it clear that the lease will include the land on or above which the necessary support structure, as well as the Sign, will be located.
The attachment of the Sign to the east-facing wall and the extent to which the Sign abuts the wall inevitably leaves a space between the Sign and the wall. But the Premises are not rendered uncertain because the dimensions of the gap are not specified.[27] The parties knew that there would be an attachment and some gap between the east wall and the Sign. The size of that gap was not an essential matter that the parties were required to determine in order for the Agreement to Lease to be certain.
[27]The applicant referred to the drawings attached to the town planning applications in order to demonstrate that a substantial structure was contemplated. However, the drawings and approved plans, as contemplated in the Agreement to Lease, contain all of the precise, relevant dimensions including the absent dimensions the subject of the applicant’s criticism. In any event, they do not assist in construing the Agreement to Lease.
Similarly, from the photo montage and the dimensions of the Sign it is apparent that the Sign may extend above the parapet. Again, the absence of precise specification of the amount of that extension did not make the overall description of the Premises uncertain.
There is therefore sufficient certainty in the definition or description of the Premises. In any event, the submissions relating to the horizontal axis and the vertical axis, as developed and articulated before us, were not sufficiently raised at trial. They represent an attempt to create uncertainty where there is none.[28] The critical point is that the definition of the Premises is sufficiently certain — not made certain in the future — if the description conveys the location or boundaries of the demised area with reasonable clarity. Absolute precision in the description is not required.[29]
[28]The applicant submits that in determining certainty, the judge only had regard to the height, width and approximate location of the Sign. To the extent that this is so, and we do not accept that this is the case, the findings are responsive to the way in which uncertainty was argued by the applicant.
[29]Goldsworthy Mining Ltd v Federal Commissioner of Taxation (1973) 128 CLR 199, 211–12 (Mason J); [1973] HCA 7.
We are supported in our view by the fact that, at all relevant times, the parties themselves have had no difficulty with the description of the premises as recorded in the Agreement to Lease. They intended to be bound by that agreement. The lease provided by the applicant to the respondent on 16 August 2018 included the same description of the Premises as that contained in the Agreement to Lease. The applicant did not refuse to execute the lease because of any uncertainty but for other reasons. Beyond the general assertion contained in the pleading, uncertainty was only developed during the course of the trial, and further before us. Further, on 11 December 2018 the applicant offered the respondent a lease for a term of nine years. The demised area is recorded in the same way as the Agreement to Lease. The point is that both parties understood and were in agreement about the area of the demise. This, although not determinative, tells against any uncertainty.
The courts will endeavour to uphold the bargain the parties have struck, particularly where parties by their conduct believe they are in agreement.
As Latham CJ said in York Air Conditioning:
When the parties have shown by their conduct that they understand and can apply the terms of a contract without difficulty, a court should be very reluctant indeed to pay no attention to such conduct by holding that the terms of the contract are unintelligible by reason of uncertainty.[30]
[30](1949) 80 CLR 11, 53; [1949] HCA 23.
In Macdonald v Australian Wool Innovation Ltd,[31] Weinberg J referred to the passage from YorkAir Conditioning, cited above, and said:
[31][2005] FCA 105.
There are many cases in which agreements that are much less certain than the present have been upheld. For example, in Ipex Software Services Pty Ltd v Hosking [2000] VSCA 239, an agreement to acquire ‘5% equity in a group of eight companies’ was held to be enforceable. Eames JA, with whom Batt JA agreed, concluded that the trial judge had correctly found that there had been an intention to enter a binding agreement. He added, at [56]:
Where there is such an intention between parties to an agreement the court will, if possible, give effect to that intention by overcoming difficulties said to arise from uncertainty or incompleteness. Where businesspeople have reached agreement between themselves the courts should be slow to conclude that the words they have used, ‘considered however broadly and untechnically and with due regard to all the just implications, fail to evince any definite meaning on which the court can safely act’. The mere fact that the person seeking to enforce the agreement may have been improvident in the terms in which he permitted the agreement to be couched, and that the form of words adopted may allow the other party a latitude of choice as to the manner in which the stipulation will be carried into effect does not render the agreement void. Nor does the fact that there may be more than one interpretation of what was meant render the agreement void for uncertainty; so long as the relevant term is capable of being assigned a meaning then the meaning is that which the court so assigns it. The task of the court is to ascertain the intention of the parties and in so doing ‘no narrow or pedantic approach is warranted, particularly in the case of commercial arrangements’. (footnotes omitted)
Even Callaway JA, who dissented, accepted that an agreement in the form ‘I shall pay $50,000 for a 5% interest in your business, leaving it to you how the 5% interest is structured’ could be enforced notwithstanding the latitude it gave the vendor. The deal reached on 27 August 2002 was obviously far more detailed and precise than his Honour’s example.
The cases on certainty reveal a tension between two competing principles. The courts are reluctant to strike down bargains that individuals have made in good faith. On the other hand, the parties themselves must determine their rights and obligations, and it is not for the Court to write their agreements for them. The authors of Cheshire and Fifoot suggest at [6.3] that courts, at least in modern times, do their utmost to resolve this dilemma in favour of upholding bargains, particularly when the parties have acted on the basis of the agreement: Upper Hunter County at 436–7 per Barwick CJ, and York Air Conditioning and Refrigeration (A/sia.) Pty Ltd v The Commonwealth (1949) 80 CLR 11 at 53 per Latham CJ.[32]
[32]Ibid [225]–[227].
Given the conclusion we have reached it is not necessary to deal with the alternative argument. A fair reading of the Reasons and the Second Reasons is that the judge did not decide that certainty would only be achieved upon erection of the Sign and that unless and until this was done there would be no certainty. Rather, the judge decided that the definition of Premises — in the Agreement to Lease and in the proposed lease — was sufficiently certain.
Although not necessary to determine, we consider that there is merit in the alternative argument. This argument was pressed by the respondent over the applicant’s objection, in the absence of a notice of contention. If there is uncertainty in the definition of Premises, as contended by the applicant, but not accepted by the respondent and the judge, it is plainly arguable that the erection of the Sign in accordance with the necessary plans, permits, safeguards and limited discretion to the respondent, would provide the necessary certainty in the definition of Premises. The applicant submitted, however, that it was not in a position to address the alternative argument. In the circumstances, we do not need to decide whether the respondent should be permitted to advance it, or to address the argument more fully.
Disposition
As the sole ground was arguable, leave to appeal will be granted. However, the appeal will be dismissed.
---
9
0