JustCo (Australia Onshore) Pty Ltd v CPB Contractors Pty Limited
[2021] VCC 1870
•25 November 2021
| IN THE COUNTY COURT OF VICTORIA AT Melbourne COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
General List
Case No. CI-20-02184
| JustCo (Australia Onshore) Pty Ltd (ACN 629 427 774) | Plaintiff |
| v | |
| CPB Contractors Pty Limited (ACN 000 893 667) | Defendant |
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JUDGE: | Her Honour Judge Brimer | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 19, 20, 21 & 24 May, 9, 21 & 22 June, 20 August 2021 | |
DATE OF JUDGMENT: | 25 November 2021 | |
CASE MAY BE CITED AS: | JustCo (Australia Onshore) Pty Ltd v CPB Contractors Pty Limited | |
MEDIUM NEUTRAL CITATION: | [2021] VCC 1870 | |
REASONS FOR JUDGMENT
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Subject:CONTRACT
Catchwords: MEMBERSHIP AGREEMENT – licence agreement – co-working office space provider – consortium tendering for government project – contractual interpretation – whether plaintiff obliged to provide secure and exclusive access to office space such that it was quarantined from others
EXPRESS TERMS – textual reference – meaning of “agreed specifications” – meaning of “supplied test-fit floor plan” – effect of the words “and as per” – original proposal superseded – inconsistency between term contended for and nature of licence agreement – reasonable business person – sophisticated commercial parties –agreement reviewed by lawyers
ENTIRE AGREEMENT CLAUSE – no effect
IMPLIED TERMS – probity and confidentiality requirements imposed by government – exercise of rights in good faith, reasonably and not capriciously or for some extraneous purpose
MISLEADING OR DECEPTIVE CONDUCT – contravention of Australian Consumer Law – whether ordinary and reasonable person in position of representee may have been led into error – consideration of representations in entire context – whether misleading or deceptive conduct could constitute breach of membership agreement
BREACH OF CONTRACT – breaches in relation to access – alleged failure to provide “exclusive use” – alleged failure to use due care and skill to perform the services to a reasonable standard – alleged failure to re-fit the space to the “agreed specifications and as per the supplied test-fit floor plan” – alleged failure to provide secured access as an “additional service” – other breaches – alleged failure to clean the office space – alleged failure to provide 24 hour access to the office space – alleged failure to provide air-conditioning during office hours – no breaches established
AFFIRMATION OF AGREEMENT – defendant aware of breaches – defendant elected to affirm agreement
TERMINATION – breaches were minor, trivial and inconsequential – breaches not ongoing at time of purported termination
RELIEF – unpaid membership fees – interest – rubbish removal charges – reinstatement fee – return of security deposit
Legislation Cited: Australian Consumer Law
Cases Cited:BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266; Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; Caratti Holdings Co Pty Ltd v Coventry Group Ltd [2014] WASC 403; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; Esso Australia Resources Pty Ltd v Southern Pacific Petroleum NL [2005] VSCA 228; Fitzgerald v Masters [2014] NSWCA 150; Grocon Constructors (Victoria) Pty Ltd v APN DP2 Project 2 Pty Ltd [2015] VSCA 190; Kewside Pty Ltd v Warman International Ltd [1990] FCA 7; Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191; Ryde Municipal Council v Macquarie University (1978) 139 CLR 633; Wik Peoples v Queensland (1996) 187 CLR 1; Specialist Diagnostic Services Pty Ltd v Healthscope Ltd (2012) 41 VR 1; Thiess Contractors Pty Ltd v Placer (Granny Smith) Pty Ltd [1999] WASC 1046; Vouzas v Bleake House Pty Ltd [2013] VSC 534; Weatherbeeta Ltd v Hammersmith Nominees Pty Ltd [2019] VSC 559; Western Australia v Ward; Attorney-General (NT) v Ward; Ningarmara v Northern Territory; Ward v Crosswalk Pty Ltd (2002) 213 CLR 1
Judgment: For the plaintiff
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S Freire | Chris Goddard Solicitors |
| For the Defendant | Dr K Weston-Scheuber | Corrs Chambers Westgarth |
HER HONOUR:
Introduction
1This case concerns a Membership Agreement between the plaintiff, JustCo (Australia Onshore) Pty Ltd (JustCo) and the defendant, CPB Contractors Pty Limited (CPB) made on 3 October 2019 (the Agreement).[1]
[1] CB 530–534.
2JustCo carries on the business of providing co-working spaces together with ancillary services to business clients. JustCo’s portfolio includes Levels 17–20, 15 William Street, Melbourne (the Premises).
3In 2019, CPB was part of a consortium named ‘OneLink’ who were tendering for the Victorian Government North East Link (NEL) project. CPB required office space for OneLink members working on the NEL tender.
4JustCo and CPB entered into the Agreement to occupy Level 17 of the Premises. The commencement date of the Agreement was 30 September 2019.[2] The service term was one year.
[2] CB 530.
5JustCo fitted out Level 17 for CPB. The chronology of the fit-out of Level 17 and CPB’s progressive move onto the floor is set out below.
6On 27 February 2020, CPB wrote to JustCo purporting to terminate the Agreement “on the grounds that JustCo breached the terms of the Membership Agreement by not properly securing the 17th floor despite repeated requests” (CPB Termination Notice).[3] CPB relied on clause 12(b)(i) of the Agreement which states CPB “may immediately terminate this Agreement by written notice where [JustCo] has breached a term of this Agreement”.[4] By letter dated 23 March 2020, CPB asserted that “security was a fundamental requirement and term of the Membership Agreement.”[5]
[3] CB 1355.
[4] CB 532.
[5] CB 1411–1413.
7On 21 April 2020, JustCo sent CPB a termination notice with immediate effect on the basis of CPB’s failure to pay JustCo outstanding amounts including the membership fees for March and April 2020 when due (JustCo Termination Notice).[6] JustCo relied on clause 12(a)(i) of the Agreement which states JustCo “may immediately terminate this Agreement by written notice and apply the Security Deposit where the Fees and/or any other charges payable by [CPB] under this Agreement is in arrears and remains unpaid”.[7]
[6] CB 1435–1437.
[7] CB 532.
8By Statement of Claim dated 15 May 2020, JustCo claimed CPB had no right to serve the CPB Termination Notice, CPB breached the Agreement, and upon service of the JustCo Termination Notice CPB became indebted to JustCo in the sum of $990,590.62 plus interest.
9By Defence and Counterclaim dated 6 July 2020, CPB denied it had no right to serve the CPB Termination Notice and claimed that JustCo breached the Agreement.
Issues for determination
10The many issues to be determined are attached as Appendix 1: Amended Summary of Key Issues for Trial.[8] The heart of the dispute however, is whether JustCo was obliged to provide secure and exclusive access to Level 17 such that it was quarantined from other members of the Premises as contended for by CPB.
[8] See pages 98–102 below.
11For the reasons set out below, I find for JustCo. CPB was not entitled to terminate the Agreement, either in reliance on the alleged breach of the Agreement asserted in CPB’s notice or in reliance on other alleged breaches. Instead, the Agreement was terminated by JustCo upon service of its notice of termination on CPB on 21 April 2020.
Background
JustCo’s business model
12JustCo leases commercial premises from which it provides co-working spaces. Under JustCo’s co-working concept, its clients become ‘members’ and are part of a community using JustCo’s shared services. Under a membership agreement, and for a specified membership fee, JustCo provides the member with space for a specified period, services related to use of the space, and other specified services as agreed with the member.
13JustCo fits out the spaces it leases with a combination of lockable offices or suites, collaboration and recreation spaces and open plan ‘hot desking’ spaces which can be changed depending on members’ requirements. There is a reception where a JustCo receptionist greets visitors until collected by members.
Levels 17–20, 15 William Street
14An understanding of the layout of the Premises is helpful to understanding the issues in dispute.
15Levels 17–20 are contiguous levels within JustCo’s 15 William Street tenancy. Level 19 is the reception level. The four levels are connected by an internal staircase. The stairwell is open to a recreation and collaboration space on each level. Each level has two large glass sliding doors which separate the stairwell and the recreation and collaboration spaces from the rest of the floor (the glass doors).[9]
[9] Highlighted in yellow.
16Figure 1 on the following page is the proposed floor plan of Level 17, as at 16 September 2019:
17The floorplan for Level 17 as delivered by JustCo, included large lockable suites (known as enterprise suites), meeting rooms, a dedicated server room, a large open plan area, break out areas, bathrooms and a kitchen.
18There were two types of access passes issued to CPB:
(a) JustCo / black access passes, which allowed access to JustCo facilities including the meeting rooms on Level 17 (the JustCo passes); and
(b) building / white access passes, which allowed access to 15 William Street and the elevators to Level 17 (the building passes).
Chronology
19On 14 June 2019, Jarrod Neilson (Mr Neilson), CPB’s Technical Director for the NEL tender inspected the premises accompanied by Sheree McIntyre (Ms McIntyre), General Manager of JustCo[10] and Will Dungey (Mr Dungey), commercial real estate agent of CBRE (the first inspection). At that time, the fit-out of Levels 19 and 20 was almost completed. Levels 17 and 18 were still construction sites. The discussions at this inspection are disputed and are dealt with below.
[10] Between 25 February 2019 and 22 March 2021.
20On 18 June 2019 at 11.00am, Ms McIntyre emailed Mr Dungey:
“Please see attached proposal and floor plan for CPB.”[11]
[11] CB 169.
The body of Ms McIntyre’s email contained:[12]
(a) a table which states “2000sqm — private space — secured with exclusive access to CPB teams only — floor plan following” (the Statement); and
(b) a floor plan which states “Floor Plan has been manipulated to indicate potential open plan layout” (18 June 2019 floor plan).
[12] CB 170.
21Attached to Ms McIntyre’s email was an eight page document,[13] which contained on two separate pages:
(a) the above table with an added heading “A proposal just for CPB Contractors”;[14] and
(b) the above floor plan.[15]
[13] CB 172–180.
[14] CB 178.
[15] CB 179.
22On the same day at 1.57pm, Mr Dungey forwarded Ms McIntyre’s email (including the attached document) to Mr Neilson.[16]
[16] CB 169.
23On 24 June 2019, Mr Neilson inspected Levels 17–19 accompanied by Ms McIntyre and Mr Dungey (the second inspection). The discussions at this inspection are disputed and are considered below.
24On the same day at 10.47am, Ms McIntyre emailed a second proposal to Mr Dungey:
“Attached is the proposal for the 4 suites on Level 20. Let me know if you have any questions or concerns. It’s going to be tricky to get an approximate cost for alterations on Level 17 quickly, I will try and get something from Amicus asap.”[17]
The body of Ms McIntyre’s email contained:
(a) a table which states “4 x private office suites for up to 155pax in total — secured with exclusive access to CPB team only — floor plan following”;[18] and
(b) a floor plan marked-up to show the four suites.[19]
[17] CB 189.
[18] CB 189.
[19] CB 190.
25On 26 June 2019 at 5.04pm, Ms McIntyre emailed a third proposal to Mr Dungey with pricing for two options:
“Please see below two options for CPB contractors.
Option One – Level 17 - 418 workstations - $182,860 PM
$10,000 per wall for demolition of internal plaster walls (glass paneling cannot be removed), this price includes make good, walls marked below as an example …
Option Two – Level 17 & 18, 440 workstations - $170,000 PM
Level 17 and Level 18 as shown below with stairs and elevators connecting the floors …”[20]
The body of Ms McIntyre’s email contained:
(a) a floor plan of Level 17 marked-up to show which walls would be demolished;[21] and
(b) floor plans for Level 17 and 18 each marked-up to show “220 Workstations”.[22]
[20] CB 218–220 (emphasis in original).
[21] CB 219.
[22] CB 220.
26On 10 July 2019 at 11.07am, Ms McIntyre emailed Mr Dungey an updated proposal for CPB’s use of the whole of Level 17 at a reduced price:
“Please see below updated option for CPB contractors based on our conversation yesterday. As agreed if we can secure this opportunity JustCo would be happy to provide a 15% commission to yourself.
Option One – Level 17 - 418 workstations - $175,000 PM
JustCo will absorb the costs for partial wall removal of 10 walls, walls for removal to be chosen by JustCo and CPB in unison (internal plaster walls only, glass paneling cannot be removed) …”[23]
[23] CB 222 (emphasis in original).
27On 12 July 2019, Mr Neilson, Gavan Williams (Mr Williams), CPB’s Project Director for the NEL tender and other OneLink consortium members inspected Levels 17–19 accompanied by Ms McIntyre (the third inspection). The discussions at this inspection are disputed and are dealt with below.
28On the same day at 4.48pm, Mr Neilson emailed Ms McIntyre regarding the open plan arrangement proposal:
“… As discussed, we are keen to explore the impact on the open plan arrangement as per the attached (Slide 8 of 9). I am happy for you to discuss this with your team to try and optimise the layout and minimise cost/disruption etc whilst still achieving as much open space as reasonably practicable. If this is an option, I suggest you table this layout with me first before providing any details on pricing to avoid any wasted effort.
We will also need the IT people to touch base and let you know of any impacts our IT needs may have. I suspect it will be minimal but it needs to be understood …”[24]
[24] CB 230–231.
29At 5.08pm, Ms McIntyre replied to Mr Neilson:
“I have passed Stefan’s contact details on to Jeremy our IT Manager at JustCo, Jeremy will be in touch with Stefan on Monday morning.
I have spoken to my manager and discussed providing a mock up incorporating more open plan space than currently exists and that is compliant allowing for egress, engineering, fire and safety constitutes. We can then look at pricing including make good for you …”[25]
Attached to Ms McIntyre’s email was another floorplan for Level 17.[26]
[25] CB 230.
[26] CB 232.
30On 24 July 2019, following a discussion with Mr Neilson, Ms McIntyre emailed Mr Neilson a fourth proposal for Level 17 and Level 17/18:
“Thank you for your time on the phone today, as per our discussion please see the below preliminary options and pricing for further discussion and approval.
”[27]
Attached to Ms McIntyre’s email were two draft floor plans, one for each option.[28]
[27] CB 262.
[28] CB 263–264.
31On 25 July 2019 at 8.47am, Mr Neilson emailed Ms McIntyre:
“Can you please confirm the following;
·The rates provided are all inclusive (ie no other hidden costs)
·The floor plan looks fine (in terms of leaving some small offices in a corner) however it is hard now for me to confirm that we will be able to accommodate the team (300 people). Is it possible for you to get your team to prepare the final floor plan? I will need to see this to make sure it will work …”[29]
[29] CB 267–268.
32Later that day at 2.19pm, Ms McIntyre replied to Mr Neilson:
“… As per our original proposal the rates indicated are inclusive of the following but are exclusive of gst.
Furniture • 24-hour access • reception services on level 19 • cleaning • electricity (aircon & heater) • fully stocked kitchen • facilities management • events and member perks • reciprocal rights to all JustCo locations • end of trip facilities • 800sqm of collaboration lounge usage & games area on level 19
A security deposit of 2 months rent is required to secure the tenancy along with the signed agreement. 350 x 24/7 office access cards are supplied. 150 x 24/7 building access cards will be supplied, if you require more, this can be arranged at an extra cost.
I am in the process of having two test fit plans completed by our design team, apart from the open plan areas discussed are there any other must haves? Example 1 x 6 pax meeting room etc …”[30]
[30] CB 266–267 (emphasis in original).
33At 4.21pm, Mr Neilson responded:
“This is all sounding positive.
From a floor plan perspective, there are no real “must haves” although having a large meeting room (boardroom) would be beneficial (ie 20 to 30 people). This isn’t critical though as we could potentially use the boardroom in our head office or possibly one of the other floors (if you have one). When do you think the floor plan will be available?”[31]
[31] CB 265–266.
34On 25 July 2019, Ms McIntyre responded “I hope to have the test fit plans by cob Monday.”[32]
[32] CB 272.
35On 26 July 2019 at 10.29am, Ms McIntyre emailed Sylvia Bay YuMin of JustCo’s Design Team in Singapore:
“The client is trying to keep the construction cost at a minimum and is therefore only concerned about ensuring there is room for 300pax with an emphasis on security and privacy…”[33]
[33] CB 1562–1563.
36On 30 July 2019 at 4.12pm, Ms McIntyre emailed Mr Neilson:
“... Please see Level 17 floor plan, accommodating 300pax …”[34]
Attached to Ms McIntyre’s email was a floor plan for Level 17 to accommodate 300 people.[35]
[34] CB 277.
[35] CB 278.
37On 31 July 2019 at 7.12pm, Ms McIntyre emailed Mr Neilson another proposal for CPB’s use of the whole of Level 17 with an open plan design to accommodate 350 people:
“… We all agree that CPB Contractors would make the perfect anchor tenant for our site at 15 William street, and in many ways invaluable for our business as a whole in Australia. Based on those facts, we have come up with an option that we hope will position JustCo as the preferred option for CPB Contractors.
Furniture • reception services on level 19 • cleaning • electricity (aircon & heating) • fully stocked kitchen • facilities management • events and member perks • reciprocal rights at all JustCo locations • 800sqm of collaboration lounge usage & games area on level 19 • end of trip facilities ...”[36]
[36] CB 279–280 (emphasis in original).
38On 1 August 2019 at 7.16am, Mr Neilson emailed Ms McIntyre:
“… I have discussed this with management and they are happy with the offer as outlined below however seek one additional inclusion.
As a bid, we remain somewhat unclear on what the project scope will include and therefore the resource demands we may need to satisfy. Whilst we are extremely confident that 330 should be a maximum peak load…..there may be a period of time (one or two months at worst) where this is exceeded. Our consortia requests that JustCo provide an option that allows us to occupy a small area of another floor within 15 Williams St using the same rate per person per month….”[37]
[37] CB 284–285.
39At 8.32am, Mr Neilson sent a further email to Ms McIntyre:
“Further to my email below, can you please urgently confirm; …
2.Please refer to the attached mark up of the latest floor plan. In order to provide additional lay down area for plans, drawings etc, additional desks are required. Whilst the attached is indicative only, please confirm that as part of the finalisation of the office fitout, additional desks can be provided from Day 1. I am also assuming that additional datapoints and power will be able to be added throughout the office if the staff numbers increase above 300.”[38]
[38] CB 284.
40At 10.02am, Ms McIntyre replied to Mr Neilson:
“I’m happy to confirm;
·We can commit to a cost of $550 per workstation for extra space that maybe required by CPB on other JustCo levels at 15 William Street for the term of your agreement…
·We are amending the fit out plan to increase the workstations to 330 and will return it as soon as possible.
·I can confirm the additional desks, datapoints and power will be added and included …”[39]
[39] CB 288–289.
41On 2 August 2019 at 8.49am, Mr Neilson emailed Ms McIntyre regarding CPB having short term access to JustCo internet:
“I am just preparing all of the internal paperwork now, preparing budgets etc, but can you please confirm we will have access to the JustCo Internet for up to 3 months? My understanding is that this has previously been agreed however we need to make sure. Our IT team believe On-Net may take between 6 and 8 weeks…”[40]
[40] CB 292–293.
42At 9.50am, Ms McIntyre replied to Mr Neilson attaching a blank copy of JustCo’s membership agreement:
“I am happy to confirm that CPB will have access to JustCo Internet whilst your own IT is being set up.
I’ve attached a blank copy of our membership agreement, it is a basic 4 page document that is used globally with flexible workspace providers.
I’m keen to get this signed asap so that we can begin the necessary changes to Level 17 with the goal of being ready to go 1st September. To have a good chance of achieving this we will need to begin asap.
As mentioned before Level 20 is ready to go as a temporary option, however I’m sure both CPB and JustCo would prefer option 1.”[41]
Attached to Ms McIntyre’s email was a blank version of JustCo’s membership agreement.[42]
[41] CB 292.
[42] CB 298–301.
43At 1.57pm, Mr Neilson wrote:
“I have flicked this over to our lawyers for quick review and will get back to you as soon as I can.
Stefan (our IT guy) is very keen to make sure everything is aligned so I might organise a meeting for early next week …”[43]
[43] CB 303.
44On 4 August 2019 at 4pm, Ms McIntyre emailed Mr Neilson regarding a further amended floor plan and asking whether there were any concerns with the licence agreement:
“Please find attached amended Level 17 floor plan, now accommodating 330pax.
Please let me know if there are any queries or concerns with our licence agreement when you can.”[44]
Attached to Ms McIntyre’s email was a floor plan for Level 17 to accommodate 330 people.[45]
[44] CB 304.
[45] CB 305.
45On 5 August 2019 at 8.13am, Mr Neilson emailed Ms McIntyre:
“Our IT group have prepared the attached which outlines the locations of printers and plotters. As previously discussed, we will require to bring our own for the bid due to the highly sensitive nature of the information we need to prepare, let me know if this is an issue. The attached also suggests we may need to remove a wall for the plotter. I am not convinced this is the perfect location…but we can discuss this later in the week. Our plan will be to not have staff in any of the small office rooms but to use these as meeting rooms. If we hit a peak during the bid then we can potentially convert one or two of the rooms as necessary. We will still need data points (a few per office if possible) just in case.
With regards to the licence agreement, I am chasing Legal now to ensure we can get it signed and back to you as soon as possible. Hopefully today.”[46]
Attached to Mr Neilson’s email was the floor plan for Level 17 to accommodate 330 people, marked-up to show “Proposed Printer & Plotter Locations”.[47]
[46] CB 314.
[47] CB 316.
46That same morning at 8.40am, Mr Neilson emailed Ms McIntyre regarding CPB’s in-house lawyers comments on the agreement:
“I have just got off the phone to our lawyer and we have the following minor comments on the membership Agreement;
·Can you please provide us with an electronic copy of the agreement to allow us to complete the form
·Can you please provide us with all of JustCo Company details (ie ACN, ABN, names, phone etc) which will allow us to complete the form.
·Can you please provide us with a copy of the “House Rules”
·Can you please provide us with a copy of the “Privacy Policy”
·Clause 3(b)(ii) of the Agreement is unacceptable to us and needs to be struck out. Our investment in this bid is significant and we cannot afford for this to be impacted by an unreasonable adjustment of Services at the sole discretion of the Company.
·Clause 4(d) of the Agreement is unacceptable to us and needs to be struck out. Relocating potentially 330 people during a major tender is not feasible.
·Clause 18(d) of the Agreement refers to NSW. This should be corrected to reference Victoria.
Let me know if any of these are an issue. In parallel we are arranging for all of our signatures to be ready to go once the document is ready.”[48]
[48] CB 318.
47On 5 August 2019 at 2.10pm, Mr Neilson sent an email to Michael McConnell of Leighton Property (an entity within the CPB group) regarding time pressure for signing the agreement:
“I have had a go at completing the Request for Premises Form and Dave H has started the DEA. Are you able to review the attached and let me know whether you need any changes or more information.
Robert Gallardo (EGM) has approved the recommendation (via SteerCo). We are incredibly time poor. We need to sign the Membership Form ASAP to allow JustCo to finalise the minor modifications to the fit out. We need to move in on 1st September. We have reviewed the attached agreement and have gone back with a couple of minor comments. I am hoping to hear back from them in the next day or so. In essence, subject to our corporate approvals, we should be ready to sign by mid this week.
Can you please let me know what the process is from here? What are the mechanisms for us to accelerate the approval?”[49]
[49] CB 328.
48On 6 August 2019 at 2.42pm, Ms McIntyre emailed Mr Neilson:
“… Please find below responses to your concerns, let me know if these are acceptable. “3(b)(ii) the availability and scope of the additional services offered by the Company (excluding the Services) that the Company, or any Group Company, provide under the Membership are subject to change from time to time at the sole discretion of the Company; and”
To further clarify on Clause 3(b)(ii). The core services associated with the allocated space ( e.g. office furniture , utility, aircon during office hours etc) will not be changed however we can add in the word additional?
Additional services refers to other non-core services including but not limited to courier services , catering etc (we can either change the service providers and or remove the services due to low utilisation rate etc) . These additional service will not affect the day to day business of the members.
Clause 4d of the Agreement shall be amended to read as follows:- The Company shall not change the Allocated Office Space during the Term unless for reasons outside the reasonable control of the Company or due to the occurrence of a situation which may affect health and safety.
Clause 18d Can be changed to Victoria”[50]
[50] CB 352–353 (emphasis in original).
49On 7 August 2019 at 12.25pm, Mr Neilson emailed Ms McIntyre:
“… The proposed modifications to the Agreement are acceptable.”[51]
[51] CB 366.
50On 12 August 2019, Mr Neilson and an IT person from CPB inspected Level 17 accompanied by Ms McIntyre and Jeremy Hsieh (Mr Hsieh), IT Manager of JustCo[52] (the fourth inspection). The discussions at this inspection are disputed and are dealt with below.
[52] From March 2019 onwards.
51On 14 August 2019 at 9.00am, Mr Neilson emailed Ms McIntyre regarding some proposed modifications to the layout:
“Thanks for your time on Monday, Level 17 is coming along nicely.
Where are we at with the Membership Agreement? Is it nearly ready?
As discussed, we will need a conventional Boardroom for the bid (as well as a room to house a large plotter). To achieve this, I have proposed some minor modifications to the layout, please refer attached.
Can you please confirm you are okay with this?
The Boardroom will need Video Conference capability so will need the relevant cabling. Are you able to discuss this with your contractor that is carrying out the final modifications to the layout? Clearly, we are happy to pay for the minor modifications (and make good if required) but it may make more sense to use your contractor for the works. Let me know what you think.”[53]
Attached to Mr Neilson’s email was a floorplan for Level 17 to accommodate “330 PAX WORKSTATIONS”, marked-up to show the proposed “Boardroom”.[54]
[53] CB 431.
[54] CB 439.
52That same morning at 10.04am, Ms McIntyre emailed Mr Neilson regarding access for CPB to another floor during September, if needed:
“Please find attached first version of the agreement, at this stage I have indicated the start date to be 1st October, however we are still waiting for our contractor to confirm how long the demolition/construction work will take once the site is handed over.
Please let me know if you have any concerns/queries.
Please advise if you still wish to access Level 20 during the month of September and for how many people and I will complete a separate agreement for this requirement.
I am having a meeting with our contractor to discuss your other requirements and will request a separate quote for this, along with make good and IT works costs, I will forward on as soon as possible.”[55]
Attached to Ms McIntyre’s email was a draft version of JustCo’s membership agreement,[56] with an Appendix stating:
“To further clarify on Clause 3(b)(ii). The core services associated with the allocated space ( e.g. office furniture , utility, aircon during office hours etc) will not be changed however we can add in the word additional? Additional services refers to other non-core services including but not limited to courier services , catering etc . These additional services will not affect the day to day business of the members.
Clause 4d of the Agreement shall be amended to read as follows:- The Company shall not change the Allocated Office Space during the Term unless for reasons outside the reasonable control of the Company or due to the occurrence of a situation which may affect health and safety.
Clause 18d should read 'Victoria' instead of New South Wales.”[57]
[55] CB 406.
[56] CB 414–417.
[57] CB 418.
53Later that afternoon at 1.16pm, Mr Neilson replied noting they would review the draft agreement:
“Thanks for this. We will review now.
Our bid will formally start in September so Level 17 needs to be available 16th September at the latest. If this is not going to be achieved then we need to have another conversation.
Please confirm that Level 17 will be available by this date or earlier at your earliest convenience”[58]
[58] CB 441.
54Mr Neilson then emailed Ms McIntyre:
“Despite my email below, I have had a conversation with Gavan and we are happy to leave it at October mobilisation date for now.”[59]
[59] CB 440–441.
55On 15 August 2019 at 1.16pm, Mr Neilson emailed Ms McIntyre regarding CPB’s legal team’s review of the draft membership agreement:
“Our legal team have reviewed the Membership Agreement and have provided the following comments;
The Membership Agreement does not appear to reflect the changes proposed and agreed between CPB and JustCo.
While the Appendix proposes to clarify 3(b)(ii) it does not amend the agreement as previously agreed. Further, while the proposed changes to clauses 4(d) and 18(d) are noted, it is unclear whether the Appendix actually supersedes the standard terms (there is no order of precedence).
Can you please ask that they update the Membership Agreement to reflect the previously agreed positions by updating the terms and conditions directly so that there is no confusion as to the changes agreed? Or alternatively, provide us with the form so that we can insert the details from the email below.
Further, the Appendix does not appear to capture all of the services provided or the potential flexibility of use of interim/additional space. As previously discussed, I recommend that the Membership Agreement (either on the cover page or in the Appendix) reflects the scope of the services being provided (e.g. internet/IT etc) and the potential flexibility in the number of offices (e.g. rate and use for interim/additional offices etc). If JustCo provides the form, we can write these in. Alternatively, we could write these for them, send it to them and check once inserted. Finally, if the services are adequately captured in the cover page or Appendix, there will be no need for additional/separate agreements (which will separately require approval and cause delay).”[60]
[60] CB 440 (emphasis in original).
56On 10 September 2019 at 9.09am, Ms McIntyre emailed Mr Neilson:
“Just confirming the 2nd October start date still suits you? …”[61]
[61] CB 512.
57At 11.46am, Mr Neilson replied to Ms McIntyre:
“Yep, the 2nd October is still the proposed start date.”[62]
[62] CB 511–512.
58At 6.23pm, Mr Neilson wrote to Mr McIntyre regarding use of facilities, including on Level 19.[63]
[63] CB 511.
59On 11 September 2019 at 9.31am, Ms McIntyre emailed Mr Neilson:
“Yes we can help you with a boardroom facility on Tuesday on Level 19, happy to provide this facility complimentary.
Please advise if you will require catering and/or presentation equipment?
Level 17 is completed with the large open plan suites ready for occupancy, de-construction can begin on the other half of level 17 once we have finalised your agreement with a start date of Monday 30th September.
If you or any parties of the consortia would like to view level 17, please let me know, I’d be happy to show you through.”[64]
[64] CB 510–511.
60At 10.09am, Mr Neilson replied to Ms McIntyre:
“Can we please lock in;
·Tuesday 17th (Level 19 boardroom) for 15 people between 1pm and 4pm. No food but a projector will be required.
·Tuesday and Wednesday 17/18th (Level 17?) – 2 x full days for 30 people. I will confirm the need for food. A projector will also be required …”[65]
[65] CB 510.
61On 16 September 2019 at 2.36pm, Ms McIntyre emailed Mr Neilson regarding finalising the membership agreement:
“We have now finalised your licence agreement with a start date of Monday 30th September and have covered the points of concern you previously mentioned, you will receive it shortly via DocuSign.
Attached is our schedule of optional services and costs, which you may or may not need to use, and the floorplan to which we are re-modelling Level 17.
Please note this plan does not include the wall removal between suites highlighted in yellow below which you requested to be removed. The removal of this wall will be included in the re-modelling of Level 17 at no cost to CPB Contractors.”[66]
Attached to Ms McIntyre’s email was:
(a) a floorplan for Level 17 to accommodate 330 people;[67] and
(b) JustCo’s Service Price Guide.[68]
[66] CB 517–518.
[67] CB 519.
[68] CB 520.
62On 3 October 2019, Mr Neilson executed the Agreement on behalf of CPB.[69] In the Appendix to the Agreement, the following wording appears:
“[JustCo] will re-fit Level 17 to the agreed specifications and as per the supplied test-fit floor plan.”
[69] CB 530–534.
63On 7 October 2019, Ms McIntyre, Mr Neilson and other OneLink members met at Level 17.
64On 8 October 2019, 15 OneLink members commenced using privates suites until Level 17 was ready.
65On 14 October 2019, CPB commenced using the boardroom on Level 19 every Monday.
66On 15 October 2019 at 4.13pm, Mr Neilson emailed Ms McIntyre:
“… the Construction team … plan on mobilising on Level 17 this Friday [18 October 2019] and will use mobile 4G hotspot for IT. Up until roughly the end of next week, we will only require the large suite (capacity for roughly 75 people) however will roll out into the adjacent suite once it is complete …”[70]
[70] CB 689.
67On 18 October 2019, CPB’s Construction Team (approximately 20 people) moved onto Level 17, to commence working there on 21 October 2019.
68Between 18 October and 20 December 2019, emails were exchanged between CPB and JustCo regarding issues including access cards, air-conditioning and other facilities related issues which are dealt with below.
69On 24 October 2019 at 8.17am, Julie Bourke (Ms Bourke), CPB’s Officer Manager for the NEL tender emailed Stephen Gwilliam (Mr Gwilliam), Community Manager of JustCo [71]:
“A couple of more questions to be added to the below
·How do we arrange for our floor to be secure. The large sliding glass doors near the stairs need to be closed if other floors come down here via the stairs …”[72]
[71] Mr Gwilliam shared this role with Mr Bakker “from about September, August or September 2019 through
mid-November”. T 268.26–29.
[72] CB 749.
70At 9.39am, Alexander Bakker (Mr Bakker), Community Manager of JustCo[73] responded to Ms Bourke on Mr Gwilliam’s behalf:
“… The glass sliding doors near the stairs are automated fire doors and only close in case of an emergence / fire alarm. As these doors are fire doors Building Management does not allow us to permanently secure these doors for safety reasons …”[74] (sic)
[73] Between July 2019 and 2 April 2021.
[74] CB 748–749.
71The issue of securing the glass doors was raised in a number of emails between 24 October and 18 December 2019. The emails relied on are set out below in respect of the relevant issues to be determined.
72By 11 November 2019, the works in the open plan area of Level 17 were substantially completed.
73On 18 November 2019, JustCo handed over Level 17 to CPB, with some activities remaining to be completed as part of the final fit-out.
74On 20 December 2019, a news article titled “Building consortium set to withdraw bid for North East Link” was published in The Age.[75] The article states that “Multiple sources close to the OneLink consortium… say they have told the government they are pulling out” and “OneLink consortium's main player is CPB Contractors…”[76]
[75] CB 1126–1129.
[76] CB 1126.
75By 6 January 2020, CPB and consortium members had redeployed most staff from Level 17.[77]
[77] CB 1574–1576. T 496.26–31.
76On 6 January 2020 at 2.44pm, Mr Neilson emailed JustCo Services and Mr Bakker to “cancel ALL bookings” made for “the Level 19 Boardroom”.[78]
[78] CB 1131.
77In the morning of 8 January 2020, a conversation took place between Allon Goldberg (Mr Goldberg), Project Manager/Office Space Manager of Justco[79] and Mr Neilson on Level 17. The parties agree that a meeting took place, however the substance of the discussion is in dispute. Following the conversation, Mr Goldberg emailed Ms McIntyre:
“This is a casual meeting summary 8-1-2020 15 William st. L17 I had with Jarrod Neilson CPB 09:45.
To my question - when are all the designers/engineers coming back to work, he replied: that at this stage CPB have decided to pull out of the tender process, and decided to send all the designers/engineers back home or to their other jobs.
To my question – are we going to see people back next week , he replied: at this stage no
To my question – is this final, he replied : nothing is final in this business, and there are high level negotiations with the government.”[80]
[79] Between 14 October 2019 and 31 December 2020.
[80] CB 1134.
78On 6 February 2020, CPB vacated Level 17.[81] On this day at 2.28pm, Mr Neilson emailed Ms McIntyre asking her if she would be available for a catch up on Monday, as he was “keen to give [her] a brief update on where things are at.”[82]
[81] CB 1202–1203.
[82] CB 1201.
79On 7 February 2020 at 5.29am, Adam Felton (Mr Felton), CPB’s Finance Manager emailed Louis Nel (Mr Nel), CPB’s Support Services Manager for the NEL tender:
“We are just about completely finished on the North East Link tender and are meeting with JustCo on Monday to let them know we wish to break our lease.
Can you please send me any correspondence you have with JustCo (both your sent items and their responses) in relation to requests for the door at the lunch room to be fixed, the air conditioner to be turned on, and any other issues we had with the toilets, the coffee machine, the milk supply etc”[83]
Mr Nel then forwarded a series of emails to Mr Felton.[84]
[83] CB 1287.
[84] CB 1287, CB 1109, CB 1221–1286.
80On 10 February 2020, Ms McIntyre, Mr Neilson and Mr Felton met at 15 William Street. The parties agree that a meeting took place, however the substance of the conversation is in dispute and is dealt with below.
81On 11 February 2020, CPB advised the OneLink consortium that CPB had withdrawn from the NEL tender.[85]
[85] CB 1315.
82On 14 February 2020 at 3.30pm, Mr Neilson emailed Ms McIntyre asking her whether there was “any update from our conversation on Monday afternoon?”[86]
[86] CB 1329.
83On 19 February 2020, Mr McIntyre replied to Mr Neilson:
“Your request has certainly thrown HQ in a spin, senior management are discussing and will come back to me soon.
I’ll update you as soon as I can, please understand this is a highly unusual request.”[87]
[87] CB 1329.
84On the same day, the OneLink consortium withdrew from the NEL tender.[88]
[88] CB 1341.
85On 27 February 2020, the CPB Termination Notice was sent.
86On 28 February 2020, JustCo sent a letter to CPB denying any breach and stating that CPB was not entitled to terminate the Membership Agreement.[89]
[89] CB 1357–1358.
87On 23 March 2020, CPB wrote to JustCo asserting that:[90]
(a) the proposal provided by JustCo on 18 June 2019 for Level 17 stated: “2000sqm — private space — secured with exclusive access to CPB teams only”;[91]
(b) “Security was a fundamental requirement and term of the Membership Agreement”;
(c) the Agreement provided that JustCo would re-fit Level 17 “to agreed specifications and as per the supplied test-fit floor plan”;
(d) under the Agreement, JustCo was obliged to provide “secure and exclusive access to CPB only” and to “secure the 17" floor and failed to do so”; and
(e) by reason of the breach alleged by JustCo on 27 February 2020, CPB was entitled to, and did, terminate the Agreement under clause 12(b)(i).
[90] CB 1409–1413.
[91] CB 169–70.
88On 21 April 2020, the JustCo Termination Notice was sent.
89On 24 April 2020, CPB sent a letter to JustCo which amongst other things, demanded return of the security deposit by 27 April 2020.[92]
[92] CB 1451, 1455.
90On 6 May 2020, JustCo sent a letter to CPB demanding payment of the sum of $991,627.47 (inclusive of GST) within 7 days.[93]
[93] CB 1456–1458.
91On 20 May 2020, CPB returned 150 building cards and 150 office cards to JustCo.[94]
[94] CB 1459.
92On 30 June 2020, CPB returned a further 273 building cards and 361 office cards to JustCo.[95]
[95] CB 1524.
Issues for determination
Express terms
Issue 1: Whether, as CPB contends, the statement ‘2000sqm – private space – secured with exclusive access to CPB teams only’ in the JustCo proposal of June 2019 was:
(a)‘an agreed specification’ to which JustCo would re-fit Level 17 of the Premises, as referred to in the Appendix to the Agreement;
(b)included on ‘the supplied test-fit floor plan’, as referred to in the Appendix to the Agreement.
Issue
93Issue 1 turns on the proper construction of the Agreement. The parties are in dispute as to whether the statement “2000sqm – private space – secured with exclusive access to CPB teams only” (the Statement) in JustCo’s proposal of 18 June 2019 (initial proposal) is a term of the Agreement.
94In summary, CPB contends:
(a) reference to “agreed specifications” in the following wording of the Appendix, is a textual reference to the Statement:
“[JustCo] will re-fit Level 17 to the agreed specifications and as per the supplied test-fit floor plan” (textual reference).
(b) the Statement was included on “the supplied test-fit floor plan”.
(c) the term required JustCo to secure access to Level 17 including by securing the glass doors such that Level 17 was quarantined from access via the internal stair case.
JustCo’s submissions
95On a proper construction of the Agreement, the Statement is not a term of the Agreement either on the basis that those words are an “agreed specification” or that they are included on “the supplied test-fit floor plan”. In summary:
(a) the words are not embodied in the Agreement. Whilst the words appeared in the initial proposal, they do not appear in any subsequent proposal provided by JustCo to CPB in relation to Level 17;
(b) an obligation to secure Level 17 in the manner contended for is incompatible with the commercial context; the nature of CPB’s rights under the Agreement and the overall structure and nature of the Agreement;
(c) the words are inconsistent with express terms of the Agreement; and
(d) for the purpose of construing the Agreement, it is permissible to take into account things external to the contract which are known to the parties. It was commonly known to both parties that the glass doors were not secured and that Level 17 was not otherwise secured.
96JustCo submitted that the “agreed specifications” are the specifications constituted by the layout set out in the floor plan Ms McIntyre emailed to Mr Neilson on 16 September 2019.[96] The email states that the floor plan was “the floorplan to which [JustCo] are remodelling Level 17.”[97]
[96] CB 517–519.
[97] CB 517.
97This construction sits congruently with the concept of a ‘specification’, which means “a detailed description of the dimensions, construction, workmanship, materials, etc of work done or to be done, prepared by an architect, engineer, etc.”[98] In accordance with those specifications, JustCo removed several walls, supplied furniture and installed IT cabling.
[98] Shorter Oxford English Dictionary (6th ed, vol 2) 2944.
98The “supplied test-fit floor plan” is the floor plan Ms McIntyre emailed to Mr Neilson on 16 September 2019.[99] The test-fit floor plan referred to in the Appendix was not brought into existence until late July 2019.
[99] CB 519.
99The words “and as per” are words which connect the concept of “agreed specifications” to “the supplied test-fit floor plan”. These words require that the test-fit floor plan be read together with the Agreement.
100CPB’s case is an attempt at ex post facto justification of its purported termination of the Agreement.
CPB’s submissions
101CPB submitted that the construction of “agreed specifications” cannot be determined simply by looking at the Agreement. It is necessary to refer to extraneous material in order to determine what “agreed specifications” are. The background chronology and meetings interspersed with documents, support CPB’s interpretation of “agreed specifications”; the Statement was an “agreed specification”.
102Along with wall removal, furniture and IT equipment, the precise requirement that was identified in discussions between Mr Neilson and Ms McIntyre was the need for the entirety of Level 17 to be a “private space secured with exclusive access to CPB teams only.”
103The Appendix refers to “agreed specifications” (plural) — not a single specification, “technical specification” or “architectural specification”. There is no evidence that the floor plan supplied on 16 September 2019 was prepared by an architect or an engineer, and it does not contain any of the details that would ordinarily be seen on a floor plan of this type. As such, “specifications” does not bear a technical meaning in the context of the Agreement.
104In the context of the initial proposal, which formed the basis of the discussions which followed, and correspondence that took place between Mr Neilson and Ms McIntyre prior to entry into the Agreement, a reasonable person would interpret “agreed specifications” to include the reference to the floor being secured with exclusive access to CPB teams only.
105JustCo’s knowledge of the significance to CPB of privacy and security is relevant to the construction of the term “agreed specifications”. The need for a secure space was “vital” in light of the probity and confidentiality requirements and this was communicated to and understood by JustCo.
106The “supplied test-fit floor plan” is the initial floor plan Ms McIntyre emailed to Mr Dungey on 18 June 2019. Two documents were attached to Ms McIntyre’s email — a “floor plan” and a “proposal”. The Statement was part of the supplied test-fit floor plan as it appears on the same page.
107The test-fit floor plan attached to Ms McIntyre’s email of 16 September 2019 cannot be both the “agreed specifications” and the “supplied test-fit floor plan”, as the reference to both in the Appendix would be superfluous.
Legal principles
108The general principles which apply to the construction of commercial contracts are well understood. In Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd,[100] the High Court said:
“The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.
In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.
Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.
However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”. It may be necessary in determining the proper construction where there is a constructional choice. ...
Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties’ statements and actions reflecting their actual intentions and expectations.
Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption “that the parties ... intended to produce a commercial result”. Put another way, a commercial contract should be construed so as to avoid it “making commercial nonsense or working commercial inconvenience.”
[100] (2015) 256 CLR 104, 116–7 [46]–[51] (citations omitted).
Conclusion and analysis
109On a proper construction of the Agreement, I do not consider that a reasonable business person in the position of the parties would understand the Statement to be:
(a) an “agreed specification” to which JustCo would re-fit Level 17; and/or
(b) included on “the supplied test-fit floor plan”.
110The better view is that:
(a) the “agreed specifications” are the specifications constituted by the layout set out in the floor plan Ms McIntyre emailed to Mr Neilson on 16 September 2019; and
(b) the “supplied test-fit floor plan” referred to in the textual reference is the floor plan Ms McIntyre emailed to Mr Neilson on 16 September 2019.
111Accordingly, the Statement is not a term of the Agreement.
Text
112The expression “agreed specifications” has no clear meaning on its own; it is not defined in the Agreement. The ordinary meaning of specification is “a detailed description of the dimensions, construction, workmanship, materials, etc of work done or to be done, prepared by an architect, engineer etc.”[101]
[101] Shorter Oxford English Dictionary (6th ed, vol 2) 2944.
113Similarly, the expression “supplied test-fit floor plan” lacks specificity. For example, there is no date associated with the “supplied test-fit floor plan”, nor is the “supplied test floor plan” annexed to the Agreement.[102]
[102] For the reasons set out below at paragraphs 147–150, I find that the floor plan emailed to Mr Neilson
by Ms McIntyre on 16 September 2019 is the “test-fit floor plan” referred to in the Appendix.
114The Agreement must be construed as a whole. To the extent that the context in which the words “agreed specifications” and “supplied test-fit floor plan” appear in the Appendix to the Agreement shed light on the subject matter of those words, they support a construction which focuses on “agreed specifications” being constituted by the layout in the “supplied test-fit floor plan”. The textual reference appears under the heading “Other” as the second of two dot points. The first dot point reads:
“If during the Term [CPB] requires additional workstations, [JustCo] will lease to [CPB] at a cost of $550.00 per pax per month on levels 18, 19 & 20 at 15 William Street, subject to availability…”
115The focus on workstations tends to support an interpretation of “re-fit Level 17 to agreed specifications” in the textual reference that is consistent with matters such as workstations and other items of fit-out which are shown on the floor plan, the floor plan being the graphic representation of the “agreed specifications” to which JustCo would re-fit Level 17.
116In my view, the expression “agreed specifications” is given meaning when it is taken with the expression “supplied test-fit floor plan”. The words “and as per” connect the concepts of “agreed specifications” and “supplied test-fit floor plan”. In my view, use of the word “and” does not suggest a reference to something other than the supplied test-fit floor plan, rather, the supplied test-fit floor plan is a graphic representation of the “agreed specifications”. Such an interpretation is consistent with the ordinary meaning of specification.
117In my view, the floor plan Ms McIntyre supplied on 16 September 2019 and which was prepared by JustCo’s design team, falls within the ordinary meaning of specification.[103] I do not accept CPB’s submission that the floor plan attached to the email of 16 September is not a technical document and as such does not constitute a specification, as it was not prepared by an architect of engineer and it does not contain any indication as to locks, security passes or anything of that nature. For the reasons given below in paragraphs 147 to 150, I find that the floor plan attached to Ms McIntyre’s email of 16 September 2019 is the “supplied test fit floor plan” and does not include the Statement.
[103] The definition relied upon by JustCo is not restrictive: “prepared by an architect, engineer, etc”.
Context
118The overall structure and nature of the Agreement is incompatible with CPB’s contention that the Statement (and thereby the obligation to secure Level 17 as contended for by CPB) is an “agreed specification”:
(a) Viewed objectively, and in its commercial context, the rights conferred on CPB under the Agreement are in the nature of a licence, not a lease. JustCo granted CPB a contractual right to occupy the premises in return for a fee.
(b) Consistent with that:
(i)Clause 3(b)(i) of the Agreement states:
“[CPB] acknowledges and agrees that the Membership does not confer upon [CPB] a lease or tenancy or any right of exclusive possession or any ownership of any part of… [Level 17]”[104]
(ii)Clause 17(d)(i)(A) of the Agreement states:
“[JustCo] takes no responsibility for and [CPB] releases [JustCo] from any liability arising out of or in relation to any interruption, disruption or cessation in [CPB]’s use of… [Level 17].”[105]
(iii)Clause 17(d)(ii) of the Agreement states:
“[JustCo] does not represent, warrant or guarantee the condition of title, quiet enjoyment, quiet possession, correspondence to description or non-infringement.”[106]
[104] CB 531.
[105] CB 533.
[106] CB 533.
(c) An obligation on JustCo to secure Level 17 in the manner contended for by CPB is more in the nature of a lease, with a right to possession of the premises to the exclusion of third parties,[107] a right to control access to the premises[108] and the covenant of quiet enjoyment, rather than a licence in the context of the JustCo co-working business model.
[107] Which in the present circumstances, extends to other JustCo members: Ryde Municipal Council v
Macquarie University (1978) 139 CLR 633; Wik Peoples v Queensland (1996) 187 CLR 1.
[108] See Western Australia v Ward; Attorney-General (NT) v Ward; Ningarmara v Northern Territory; Ward
v Crosswalk Pty Ltd (2002) 213 CLR 1, [932] (Callinan J).
119I agree with JustCo that objectively, clause 17(d), taken as a whole is incompatible with the notion that JustCo was obliged to provide secure and exclusive access to Level 17 such that it was quarantined from other JustCo members. There is nothing in the Agreement that reflects a grant of exclusive possession. Clause 3(b)(i) is an express rejection in substance of the term contended for by CPB.
120An obligation on JustCo to secure Level 17 in the way contended for by CPB is also incompatible with clause 17(a) of the Agreement, which states:
“[JustCo]… provides the Services on an “as is” basis and to the maximum extent permitted by law, excludes any representation, warranty, condition, guarantee or understanding that would be implied into this Agreement.”[109]
[109] CB 533.
121Use of Level 17 is one of “the Services” JustCo agreed to provide CPB. The words “as is” refer to the condition of the premises and are consistent with CPB taking Level 17 in the condition in which it appeared at the time of entry into the Agreement. As at 3 October 2019, the glass doors were not secured such that Level 17 was quarantined from other members. So much was obvious on inspection. It was apparent that the recreation and collaboration spaces were open to the stairwell and were not secure.
122CPB contended that it was understood that the glass doors would be made secure once construction was completed. The “as is” was subject to the fit-out being completed to CPB’s “agreed specifications and as per the supplied test-fit floor plan”. As set out below, I find that CPB’s understanding that the glass doors would be made secure once construction was complete was an uncommunicated assumption made by Mr Neilson. Even having regard to the surrounding circumstances relied upon by CPB, in my view, on a proper construction of the Agreement, the Statement is not an “agreed specification”.
Purpose
123CPB contended that the purpose of the Agreement was to provide it with a private space so that it could undertake work in a manner that complied with probity and confidentiality restrictions imposed on it by the Victorian Government. For the reasons set out below I find that a reasonable business person would not have understood JustCo was under an obligation to ensure that Level 17 was suitable for that purpose.
Events, circumstances and things external to the contract
124CPB contended that identifying the precise subject matter of “agreed specifications” and “supplied test-fit floor plan” is facilitated by an understanding of the background and context. In my view, the textual reference is not unambiguously clear; the words are susceptible of more than one meaning.[110]
[110] JustCo contended the context in which the words “agreed specifications” appear in the Agreement
affords limited assistance to the identification of the subject matter of those words.
125To understand what a reasonable business person would have understood those words to mean requires consideration of the surrounding circumstances known to the parties.[111] This includes only objectively known facts, not evidence of the parties’ subjective intentions. Evidence of prior negotiations may be admitted as part of the surrounding circumstances in a general and object sense, not for the purpose of proving the subjective intentions and expectations of the parties.[112]
[111] Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640, [35].
[112] Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, 352.
126In my view, consideration of the surrounding circumstances known to the parties supports the construction of “agreed specifications” and “supplied test-fit floor plan” contended for by JustCo.
“Agreed specifications”
127In my view, a reasonable business person would not consider the Statement was intended to form part of a concluded bargain that bound the parties in circumstances where it was superseded by a number of subsequent proposals involving changes to the floor layout:
(a) The Statement was contained in the initial proposal JustCo sent to CPB on 18 June 2019. This was provided to CPB in the early stages of negotiation. It was not a final proposed layout of the floor. Even the fourth proposal on 24 July 2019 was described as a “preliminary option”.[113]
(b) Consistent with the proposal of 18 June 2019 being an initial concept:
(i)there is a notation at the bottom of the proposal in bold:
“Terms & Conditions: This proposal is strictly confidential and valid for 7 days. Subject to contract and availability. All rates and services are subject to 10% GST…”
(ii)the following words appear on the floor plan:
“Floor plan has been manipulated to indicate potential open plan layout”.
[113] CB 262.
(c) Numerous proposals were exchanged after 18 June 2019 reflecting the evolving layout of Level 17 and alternative proposals involving the use of other levels. The contemporaneous documents record that CPB's focus during the negotiation process was on floor size, the number of people who could be accommodated, price and options for overflow if needed, and that CPB wanted a floor that it could reconfigure to its own needs.
128The timing of the inclusion of the textual reference; “re-fit Level 17 to agreed specifications and as per the supplied test-fit floor plan” supports JustCo’s construction. The Agreement was subject to scrutiny by in-house counsel with no clear reference to the “vital”, “fundamental” term now contended for:
(a) On 2 August 2019, JustCo sent a “blank copy of [its] membership agreement” to CPB.[114] CPB’s lawyers reviewed the blank copy and suggested amendments, none of which related to security.[115]
(b) On 14 August 2019, JustCo sent the “first version of the agreement” to CPB.[116] The brief appendix attached to the first version did not include the textual reference.[117] The first version was also reviewed by CPB’s lawyers, who made no suggestions regarding security terms.[118]
(c) On 15 August 2019, Mr Neilson provided Ms McIntyre with the second round of comments from CPB’s lawyers on the proposed agreement.[119] Again, CPB did not seek to include “secured access” or “exclusive access” or equivalent concepts as a term of the agreement.
(d) The phrase “agreed specifications and as per the supplied test-fit floor plan” appeared only in the final version of the agreement, which Ms McIntyre sent to Mr Neilson for execution via DocuSign on 16 September 2019 after the draft had been through two rounds of comments.[120] Had it been the intention of the parties to include the security term contended for, in my view it would have been expressly referenced, rather than as a cryptic part of “agreed specifications” as per the “supplied test-fit floor plan”.
[114] CB 292, CB 298–301.
[115] CB 318.
[116] CB 406, CB 414–418.
[117] CB 418.
[118] CB 440.
[119] CB 419.
[120] CB 517–518.
129As to the meaning of the Statement, in my view, a reasonable business person in the position of the parties would have understood the Statement in the context of the JustCo business model. That is, it related to Level 17 being allocated to CPB’s exclusive use, including with lockable private offices with ‘four walls and a door’ with access cards programmed to unlock the door,[121] lifts programmable so that only people with access cards for Level 17 could access the floor and the general public could not walk into the building and get to Level 17. The glass doors and internal staircase were not a natural point of ingress.
[121] As was the case with the two enterprise suites on Level 17. T 321.10–12.
130CPB contended that the Statement reflects the discussion that Ms McIntyre and Mr Neilson had on 14 June 2019 during which CPB’s needs from a security and confidentiality perspective were made clear to Ms McIntyre and that only CPB could have access to the floor.[122] There could have been no other reason for Ms McIntyre to record the Statement at the head of the proposal. The Statement continued to form the basis of the discussions between the parties. There could have been no other reason for Ms McIntyre to note in her email dated 26 June 2019 to JustCo’s design team, that CPB had an “emphasis on security and privacy.”[123]
[122] T 394.26–396.14. Ms McIntyre’s evidence was the Mr Neilson did not tell her about the need for CPB’s
teams to have secure access to the space they would be occupying. In cross-examination, Mr Neilson agreed that he never said to Ms McIntyre that CPB needed to comply with Victorian Government confidentiality and security requirements. T 449. For the reasons set out below, I prefer the evidence of Ms McIntyre.
[123] CB 1562–1563. I do not agree with CPB’s submission that Ms McIntyre was not forthcoming in her
recollection. Ms McIntyre’s evidence of her use of “privacy” and “security” from her point of view was to the effect set out above in paragraph 129. Although not admissible for the purpose of construing the Agreement, it is consistent with what I consider a reasonable business person would have understood those words to mean at that point in time in evolving negotiations and is not unexpected in the context of the JustCo business model. T 169.27–30; T 172.12–173.2
131I do not consider that the Statement or Ms McIntyre’s use of the expression “with an emphasis on security and privacy” in the email to JustCo’s design team,[124] supports CPB’s contention regarding the meaning to be attributed to the Statement and that it was an “agreed specification”. I agree with Mr Freire’s submission that the meaning and content to be attributed to those words is shaped by subjective points of view and does not translate into an obligation on JustCo to secure the floor in the way contended for.
[124] Ibid.
132CPB contended it is clear that the objective meaning of the statement “2000m2” — the entirety of Level 17 — is the “private space” that was to be secured for the exclusive access of CPB teams, not simply the offices in that space.[125] I do not agree. The whole of Level 17 included the recreation space and the collaboration spaces. These spaces were open to the internal staircase and could not have been secured with exclusive access so as to exclude other JustCo members, even if the glass doors were secured.
[125] CPB contended that the ‘Allocated Office Space’ was the entire floor of Level 17. There was no evidence
as to the meaning of ‘S17001’ in the ‘Key Details’ of the Agreement: CB 530. In final address, Mr Freire accepted that in opening he said that the ‘Allocated Office Space’ meant the whole of the floor, there was no evidence of that. I have proceeded on the basis of CPB’s position that the ‘Allocated Office Space’ was the entirely of the floor.
133One proposal repeated (part of) the Statement. On 24 June 2019, Ms McIntyre sent a proposal to Mr Dungey for Level 20 which stated:
“4 x private office suites for up to 155pax in total – secured with exclusive access to CPB teams only”.[126]
[126] CB 200–202.
134CPB pointed to this repetition as evidence of security or exclusive access being the basis of on-going discussions and an “agreed specification”. Rather than supporting CPB’s contention, I consider it highlights that a reasonable business person would have understood that concepts of security and exclusive access related to offices or office suites with lockable doors and programmed access cards, consistent with Ms McIntyre’s evidence and JustCo’s business model.
135CPB relied on the evidence of Mr Neilson and Mr Williams as to what was allegedly said at the various inspections to support its contention that CPB’s need to have secure and exclusive access including by securing the glass doors was clearly understood by JustCo to be an “agreed specification” and was therefore captured by the textual reference.[127]
[127] And accordingly, the Statement, and the attendant obligation to secure Level 17 including by securing
the glass doors, was an “agreed specification”.
136To the extent that CPB relies on Mr Neilson’s evidence, rather than supporting CPB’s contention, I consider it supports a conclusion that Mr Neilson made a subjective, uncommunicated assumption that the glass doors would be secured:
(a) Mr Neilson gave evidence that he discussed the need for swipe card access with Ms McIntyre at the base of the stairs in the context of seeing a gap in the plaster with white cables hanging out. He could not recall which meeting that discussion occurred at.[128] He asked Ms McIntyre when she believed the security would be completed for the floor and she replied that because there were so many trades running through the floor, it was impractical for them to have the door locked or secure.[129] Mr Neilson said that Ms McIntyre had made it ‘quite clear’ that the elevator would be programmed so that only CPB members could gain access via the lifts.[130]
(b) Ms McIntyre denied that Mr Neilson spoke to her about the need for security at the point where the glass doors were located. In cross-examination, she denied that she told Mr Neilson that the security would be finalised at the glass doors “at back end of the fit-out”.
(c) In cross-examination, Mr Neilson agreed that Ms McIntyre never said expressly that card readers would be installed at the stairwell area, nor did she say that no one could access Level 17 via the internal stairwell area and through the glass doors. He agreed that they are assumptions he made.[131] He made no enquiries of Ms McIntyre to confirm the accuracy of his assumption. He made no enquiries of Ms McIntyre as to how access via the internal stairwell area and through the glass doors might be secured. He assumed card readers would be installed and agreed he did not communicate that assumption to Ms McIntyre. Mr Neilson agreed that Ms McIntyre said to him that lift access to Level 17 would be by swipe card programmed for CPB team access only.
(d) The highest Mr Neilson’s evidence went was in re-examination, when he said Ms McIntyre had the opportunity to inform him that a swipe card was not going to be provided.[132]
[128] Although it appears Mr Neilson was referring to the second inspection (12 July 2019), Mr Neilson
also gave evidence that at the third inspection on 12 July 2019, no concerns were raised with Ms
McIntyre about the internal stairs or the glass doors. They used the internal stairs to move between the floors. T 456.6–19.
[129] T 401.8–26.
[130] T 221.21–31, T 404.27–405.20, T 455.20–22.
[131] T 457.8–458.16.
[132] Contrary to particulars provided by CPB and which are address below.
137To the extent of any inconsistency between Ms McIntyre and Mr Neilson, I prefer the evidence of Ms McIntyre.
(a) Ms McIntyre’s denial that she said the doors would be secured “at the back end of fit-out”[133] is consistent with her evidence of her understanding of the way the glass doors were to operate.
(i)As at 14 June 2019, Ms McIntyre understood[134] that once the fit-out was finished, for the doors to open, it was either press the green button or walk towards the door and they would automatically open. She agreed that anyone in the recreation room would be able to push the button and go through the sliding doors. It was put to Ms McIntyre by counsel for CPB that she understood as at 14 June 2019 anyone entering Level 17 from the recreation room would not need an access pass to get out onto Level 17. Ms McIntyre agreed she understood that they would not need an access pass.
(ii)In that context, it is unlikely that Ms McIntyre would have said to Mr Neilson a month later that security at the glass doors would be finalised “at the back end of the fit-out”,[135] if her understanding a month earlier was that a person who needed to go through the doors would push a button or walk towards them and they would open. At that early stage, she appreciated, as was put to her in cross-examination, that a person wouldn’t need an access pass to go through the doors.
(iii)Despite Mr Neilson’s evidence of the emphasis he said he placed on security in discussions with Ms McIntyre, the emails, in particular those of 25 July 2019 and 1 August 2019 support Ms McIntyre’s evidence that Mr Neilson’s emphasis was on how many people could be accommodated on the floor, price and options for overflow.
[133] As was put to her in cross-examination. T 226.27–28.
[134] In cross-examination at T 159.
[135] Or that it was impractical for them to have the doors locked or secure because there were so many
trades running through the floor.
138Mr Neilson did not have a good recollection of the discussions generally:
(a) He said he could not recall any specific conversations during the meeting of 24 June 2019. Although he recalled a conversation with Ms McIntyre regarding the security access at the base of the stairs, Mr Neilson couldn’t recall whether it was at the meeting of 12 July 2019. He gave evidence he could not recall any other specific conversations with anyone during that meeting.[136]
(b) In respect of the 12 August 2019 meeting, Mr Neilson said he could not recall what was discussed at that meeting. He then gave evidence of what ‘would have been’ the situation. About the glass doors, he said “My recollection is it would’ve been the same… there were still plenty of trades people walking through…”. He answered emphatically that the doors were open, but also said “I don’t actually know whether the doors were there, um but they were definitely open if they were.”[137]
(c) In respect of the meeting on 7 October 2019, Mr Neilson said he could not recall who was present at the meeting nor could he recall the purpose of the meeting. When shown a calendar invitation, he recalled it was to work out when “we could mobilise a part of the floor”. He said he could not recall anything that was discussed during that meeting.[138]
[136] T402.13–26. Although, Mr Neilson then gave evidence of a discussion regarding IT: T 405.
[137] T413.11–16.
[138] T420-421.
139To the extent CPB relied upon Mr Williams’ evidence, in my view Mr Williams was reconstructing what he considered would or should have been said rather than recollecting what was actually said:
(a) Mr Williams said that at the inspection he attended,[139] they[140] congregated around the central internal staircase and there was a concern about the area being secured. He said that it was Mr Neilson that made the reference to Ms McIntyre about the floor needing to be secured with exclusive access to the CPB team:
[139] Mr Williams said he attended one inspection only which was in mid-July.
[140] Ms McIntyre, Mr Neilson, Hyunsuck Shin, Noel Phelan, Dan Clifford and Clinton Olgiers.
“This is where it was raised about the exclusive use and making sure that we could secure the floor… particularly to make sure that people couldn’t come in from, from the higher levels… It was predominantly Jarrod doing the talking and… Sheree wasn’t pushing back with that dialogue with that request.”[141]
There was nothing further mentioned at that meeting.[142]
(b) The substance of Mr Williams’ account was not put to Ms McIntyre in cross-examination. It was not reflected in CPB’s case as pleaded or particularised. It does not accord with Mr Neilson’s recollection of the second inspection.
(c) Despite giving evidence that the internal staircase area was a concern and that it was critical that the ingress and egress points be secured, Mr Williams agreed nothing was recorded in writing about that to JustCo. Mr Williams agreed he simply assumed it would be understood.[143]
(d) Mr Williams’ version of the discussion around IT requirements at the third inspection is not supported by emails sent in the weeks following:
(i)Mr Williams gave evidence that at the third inspection, Ms McIntyre offered Wi-Fi, but their intention was to run their own secure network to ensure documents could be secured. He said:
“Um, in terms of the IT, it was - there was an offer of Wi-Fi being supplied by, um, JustCo as a bit of a sweetener, but that really meant nothing to us because of, um, the requirement to secure our network…
… Sharee raised the, um, prospect of the Wi-Fi as part of the deal. Um, and Jarrod - ah, Jarrod Neilson at the time made it clear that as much as that was a, you know, a nice gesture, we had to have a secure network and we - our intention was to run our own network …to ensure that we had, um - our documents could be secured and not subject to, um, you know, being hacked.”
(ii)On 2 August 2019, Mr Neilson emailed Ms McIntyre asking her to confirm that CPB would have access to the JustCo Internet for up to three months.[144] In reply she wrote, “I am happy to confirm[145] that CPB will have access to JustCo Internet whilst your own IT is being set up” to which Mr Neilson replied, “Stefan (our IT guy) is very keen to make sure everything is aligned so I might organise a meeting for early next week.” Had Mr Neilson said what was attributed to him at the meeting by Mr Williams, one would have expected Mr Neilson’s response to have been to the effect of reminding Ms McIntyre of CPB’s inability to use JustCo’s Wi-Fi for security reasons.[146]
[294] CB 925.
(c) Email from Mr Nel to Mr Bakker on 19 November 2019:
“Also, as discussed. Unlock all meeting room (only) doors on level 17 immediately – no time limits required . Please confirm that you have discussed this with Andrew and he has actioned it today…”[295]
[295] CB 959.
(d) Email from Ms Bourke to Mr Bakker on 21 November 2019 at 7.20am:
“… I notice that the meeting rooms are still locked. Can you please explain why this is. We need these meeting rooms to be unlocked at all times…”[296]
[296] CB 994.
Mr Bakker replied:
“… With reference to the meeting room doors, as the requested setting for these doors deviates from the standard settings we require the assistance from an outside contractor to adjust the programming. We have organised for this to be completed by the end of this morning…”[297]
(e) Email from Mr Nel to Mr Bakker on 25 November 2019:
“… not very happy as the meeting rooms are still locked and we can’t make use of them.
Please let me know what is being done and when it will be fixed. We don’t have any cards that can open the doors…”[298]
Mr Bakker replied:
“… With reference to the meeting room doors, our vendor ran into issues with re-setting the locks and please know our colleague Andrew, our IT Manager is on this case.
While the requested settings deviate from the standard we sincerely regret the delay and the resulting discomfort. We will circle back with you once Andrew has confirmed this matter has been resolved…”[299]
(f) Email from Ms Tan to Ms Bourke and Mr Nel on 2 December 2019:
“With regards to securing meeting room doors for your level, please accept our sincere apologies for the delay in this matter. Please rest assured that our IT Manager, Andrew is working on a solution for this matter and we will keep you updated on the progress.”[300]
[297] CB 993.
[298] CB 992–993 (emphasis in original).
[299] CB 992.
[300] CB 1240–1241.
234Keeping the meeting rooms on Level 17 unsecure was raised as a “temporary fix” in November, and was neither the intended arrangement with the doors, nor a long term solution. The issue with the incorrect coding of passes was ongoing and remained unresolved as at early December 2019.
JusCo’s submissions
Access passes
235CPB accepts that there was a delay in the delivery of both JustCo and building access passes. This meant that, for a time, there were not sufficient cards available for all OneLink members working on Level 17.
236The issuing of building access passes was the responsibility of Building Management. JustCo pressed Building Management for delivery of sufficient building access cards to meet CPB’s needs.
237By early December 2019, JustCo and building access passes were issued for all OneLink members who had requested them.
Access to meeting rooms
238JustCo contended that during the first two weeks of CPB occupying Level 17, CPB sent JustCo conflicting messages regarding the issue of access to meeting rooms. These communications ranged from wanting the doors locked at all times, to wanting the meeting rooms accessible 24 hours, and to having them open during business hours. This issue had been resolved by late November 2019.
Conclusion and analysis
Access passes and access to meeting rooms
239When the circumstances in which CPB’s occupation of Level 17 occurred and the chronology of correspondence are considered in their entirety, I am not satisfied that JustCo breached the agreement to provide the “Services” because of issues with the provision of access passes and access to meeting rooms. As at 18 October 2019, when CPB started to move onto Level 17:
(a) it was still undergoing fit-out works;
(b) within a couple of months, over 300 people started using the floor;
(c) the access pass and meeting room issues were rectified.
240As I have already found, the obligation to provide these services was qualified by clause 17(d); that JustCo would “use due care and skill required to perform the Services to a reasonable standard”. The issues were acknowledged and rectified by mid December 2019. The lack of assertion by CPB that the service issues constituted a breach of the agreement at the time tends to support my view that in the context of the circumstances as a whole, the parties worked together to resolve what Mr Williams described as “teething issues” and as such, JustCo used due care and skill in working towards a resolution.
Issue 10(c): Whether, in breach of cl 3(a) of the Agreement, JustCo failed to provide air-conditioning during office hours.
Defendant’s submissions
241CPB submitted that its occupation of the floor commenced on 30 September 2019 according to the Membership Agreement,[301] however air-conditioning was not made operational until the end of October.[302] This is evidenced by the following emails:
[301] The commencement date of the Agreement was 30 September 2021. CB 530. CPB did not start using
Level 17 until 23 October 2019.
[302] T 279.28–280.10. The Appendix to the Agreement identifies “Electricity (aircon & heating)” as one of
the Services JustCo must provide. CB 533.
(a) Email from Mr Gwilliam to Ms Bourke on 18 October 2019:
“The 17th floor has not been officially signed off so Building Management will not unlock the lifts for Level 17 or programme the Air Conditioning until this happens.
I have escalated this higher to get the required documents over to building management so both these things can happen.”[303]
(b) Email from Ms Bourke to Mr Gwilliam on 23 October 2019:
“… It is very hot and stuffy here. I have been asked by our Bid Director, what the reason is for no air con and when it will be sorted. I will leave out all the other words he through in.”[304]
Mr Gwilliam replied:
“… Re Aircon, we managed to get the fire warden in here yesterday to do to the final walk around so we are just awaiting the paperwork to then be able to send to building management to get that all going for you. We were hoping for this to be finalised yesterday, so are pressuring them to get this through asap today….”[305]
(c) Email from Ms Bourke to Mr Gwilliam on 24 October 2019:
“What is the situation with the air con? It got very hot yesterday and our Director and Managers are not hoppy…
The air con is the most urgent at the moment”[306]
[303] CB 721.
[304] CB 726–727.
[305] CB 726.
[306] CB 749–750 (emphasis in original).
242Thereafter, CPB experienced problems with air-conditioning regularly. This is evidenced by:
(a) Mr Nel’s evidence that:
“… And in terms of the air conditioning, on how many occasions did you observe an issue with the adequacy of the air conditioning?---Um regularly, but I can recall three or four occasions where it affected myself.”[307]
(b) Email from Ms Bourke to Mr Goldberg on 17 December 2019:
“There is also an issue with our meeting room 2, which is an official JustCo meeting room with the air conditioner. The room is very warm and stuffy.”[308]
[307] T 696.16–19.
[308] CB 1112.
JustCo’s submissions
243JustCo submitted that issues with the air-conditioning cannot constitute a breach of the Agreement. To the extent there were any issues, they were minimal or trivial — confined to one meeting room on one day.
244Building Management would not program the air-conditioning for Level 17 until it received the Certificate of Final Completion. JustCo provided the Certificate to Building Management on 23 October 2019 and received confirmation that air-conditioning was programmed from 24 October 2019 onwards.
245Thereafter, save for a complaint on 17 December 2019 that one of the meeting rooms on Level 17 was “stuffy”,[309] the contemporaneous documents do not record any complaints about air-conditioning. This is supported by Ms Bourke’s evidence:
“What about the issue with the air-conditioners? You were shown an issue about the air-conditioning on 17 December 2019, and you were also shown an email about the air-conditioning on 23 October 2019. Are those the only occasions you recall the issue about the air-conditioning occurring?---My recollection, that's all I remember.
Yes, and so you don't remember any issues with the
air-conditioning after 17 December 2019?---No.”[310]
[309] CB 1112.
[310] T 638.27–T639.3.
Conclusion and analysis
246On Friday 18 October 2019, CPB’s Construction Team (approximately 20 people) moved onto Level 17, to commence work on Monday 21 October 2019.[311] On this day, JustCo notified CPB that Level 17 had not been signed off yet so Building Management could not programme the air-conditioning.[312] At this point in time, some works in the open plan area of Level 17 remained outstanding.
[311] Although the Agreement commenced on 30 September 2019, CPB knew that Level 17 was still under
construction and therefore utilised other levels of 15 William Street.
[312] CB 721.
247On Wednesday 23 October 2019, JustCo sent the Certificate of Final Completion to Building Management. On Thursday 24 October 2019, at approximately 5.00am, Building Management turned on the air-conditioning.[313]
[313] CB 742.
248I do not consider that JustCo breached the Agreement by failing to provide air-conditioning prior to 5.00am on 24 October 2019. CPB signed the Agreement knowing that Level 17 would be under construction as at the commencement date. A reasonable business person would understand that services like air-conditioning may be affected by works being undertaken on the floor.
249Further, JustCo informed CPB that they were awaiting the Certificate necessary for Building Management to turn on the air-conditioning on 18 October 2019. Nevertheless CPB’s Construction Team commenced work on the floor on 21 October 2019.
250In any event, the lack of air-conditioning was short-lived — Building Management turned the air-conditioning on within three days of CPB moving onto Level 17. In light of this, I consider CPB’s complaint now to be trivial.
251Documents support that air-conditioning was an issue on one occasion after 24 October 2019, being 7 December 2019. Mr Nel’s evidence is not borne out by the contemporaneous documents, and Ms Bourke could not recall any other occasions where the air-conditioning on Level 17 was not working.
252In my view, the air-conditioning issue on 7 December 2019 does not constitute a breach of the Agreement. The issue was confined to a single meeting room on Level 17 (as opposed to the whole floor). Furthermore, the issue appears to have been resolved within a day as there is no other correspondence following Ms Bourke’s email. No reasonable commercial party could have contemplated a minor issue such as this would constitute a breach of contract.
Affirmation by CPB
Issue 11: If JustCo breached the Agreement in the manner identified in issue 9 above, whether, on the basis that CPB knew that the glass doors on Level 17 of the Premises were not secured, and that Level 17 was not secured by the lift lobby doors, at all relevant times from 1 October 2019, CPB affirmed the agreement by its conduct following such knowledge such that it lost any right to terminate it.
253Given my findings above, this issue does not need to be determined. Had I determined JustCo breached the Agreement as alleged by CPB above, I would have found, for the reasons contended for by JustCo, that CPB lost any right to terminate on the ground of affirmation by its election to continue to use the services and make the monthly payments.
(a) on 14 January and then again on 26 February 2020, CPB paid JustCo’s tax invoice for the January 2020 membership fees and other services, without demur;
(b) the breaches now relied upon were not pressed after December 2019. By January 2020, CPB had taken steps to withdraw from the government tender and demobilised its personnel from Level 17, packed up its IT equipment and disconnected cables in the server room.
254CPB contended that it was not until January 2020 that it became apparent that the issues were not going to be resolved. It could not be said, therefore, that it affirmed JustCo’s breach of the Agreement. By that time, however, CPB had effectively ceased to use the Services. I am satisfied that this was because it no longer had use for the Services, as it was taking steps to withdraw from the NEL tender process.
Issue 12: If any of the alleged breaches referred to in issues 8(b) and/or 10 above entitled CPB to terminate the Agreement, whether, with knowledge of those breaches, CPB elected to affirm the Agreement such that it lost any right to terminate it.
255Given my findings above, this issue does not need to be determined. Had I determined JustCo breached the Agreement as alleged by CPB above, I would have found, for the reasons contended for by JustCo, that CPB lost any right to terminate on the ground of affirmation by its election to continue to use the services and make the monthly payments.
Termination
Alleged Access Representations and access breaches
Issue 13: If JustCo breached the Agreement in the manner identified in issues 8(b) and/or 9 above, whether any such breaches entitled CPB to serve the CPB Termination Notice pursuant to cl 12(b)(i) of the Agreement so as to terminate it.
256Clause 12 of the Agreement provides:
“12. Termination
…
(b)The Member may immediately terminate this Agreement by written notice where:
(i) the Company has breached a term of this Agreement…”[314]
[314] CB 532.
257In light of my findings, CPB was not entitled to serve the CPB Termination Notice pursuant to clause 12(b)(i) of the Agreement.
Other alleged breaches
Issue 14(a): If JustCo breached the Agreement in the manner referred to in issue 10, whether any such breaches were minor or inconsequential, such as to disentitle CPB from terminating the Agreement immediately.
258Given my findings above, CPB was not entitled to serve the CPB Termination Notice pursuant to clause 12(b)(i) of the Agreement.
Issue 14(b): If JustCo breached the Agreement in the manner referred to in issue 10, whether any such breaches were not ongoing as at the time that CPB served the CPB Termination Notice, such as to disentitle CPB from terminating the Agreement immediately.
259I accept JustCo’s contention that none of the alternative grounds for termination relied on, based on the service complaints, were extant as at 27 February 2020. The issues were de minimus or trivial, confined both in extent and temporally.
260In light of my findings, CPB was not entitled to serve the CPB Termination Notice pursuant to clause 12(b)(i) of the Agreement
CPB Termination Notice
Issue 15: Whether, as JustCo contends, in issuing the CPB Termination Notice, CPB breached the implied term or acted unconscientiously, such that the CPB Termination Notice is invalid and of no effect.
261It is not necessary to determine this issue.
JustCo Termination Notice
Issue 16: If the Agreement was not validly terminated by CPB, whether it was instead terminated by JustCo’s notice dated 21 April 2020.
262For the reasons set out above, I find that the Agreement was not validly terminated by CPB. CPB accepts that in these circumstances, the Agreement was validly terminated by the JustCo Termination Notice.
Relief
JustCo
Issue 17/18: If the Agreement was not validly terminated by CPB, but instead was terminated by JustCo’s notice dated 21 April 2020, whether the consequences pleaded in paragraphs 14, 15 and 18 of the statement of claim (including application of the Security Deposit) follow.
263CPB accepted that if CPB did not validly terminate the Agreement and the Agreement was terminated by JustCo, as I have found, then JustCo is entitled to some, but not all of the damages claimed as follows:
Amount (ex. GST) Amount (incl. GST) CPB Membership Fees for March and April 2020 $330,000.00 $363,000.00 Accepted Administrative Services for March 2020 (rubbish removal on 30 October 2019) $182.60 $200.86 Denied Meeting room use on 6 January 2020 (x2), 6 January 2020 (x10), 13 January 2020 (x10) and 20 January 2020 (x10)
less credit for meeting room use on 6 January 2020
$2,240.00
($1,400.00)
$2,464.00
($1,540.00)
Accepted AV equipment excluding installation $13,000.00 $14,300.00 Accepted (if delivered) Interest accrued on the Fees outstanding for March and April 2020 (calculated at the date of 2% per month from the date that the relevant invoice became overdue) $7,110.76 $7,110.76 Accepted Membership Fees for May to
September 2020$825,000.00 $907,500.00 Accepted Reinstatement fee for cleaning and repainting the Allocated Office Space $25,050.00 $27,555.00 Denied Access cards not returned to JustCo Accepted less Security Deposit ($330,000.00) ($330,000.00) $871,183.36 $990,590.62 264In relation to the disputed amounts:
(a) I accept JustCo’s submissions regarding rubbish removal;[315] and
(b) I accept CPB’s submission that there is no evidence that CPB left the floor in a state other than the state it was delivered to CPB in, in light of Ms Bourke’s evidence that everything was removed and the office itself was clean.
[315] T 269.1–20, CB 1070–1071, CB 1069–1070, CB 1069.
CPB
Issue 19(a): Whether CPB is entitled to the return of the Security Deposit ($330,000) pursuant to the Agreement.
265Given my findings above, CPB is not entitled to return of the security deposit.
Issue 19(b): Whether CPB is entitled to alternatively, payment of $330,000 as loss and damage for breaches of the Agreement or for contraventions of s 18 of the Australian Consumer Law.
266Given my findings above, CPB is not entitled to damages.
Conclusion
267Accordingly, I order that there is judgment for the plaintiff together with interest on that sum.
268Subject to any matters that the parties bring to my attention on the question of costs, I propose to order that the defendant pay the plaintiff’s costs of the proceeding (including reserved costs) on the standard basis, in default of agreement.
269I invite the parties to prepare draft orders to give effect to these reasons.
- - -
Certificate
I certify that these 269 paragraphs are a true copy of the judgment of Her Honour Judge Brimer delivered on 25 November 2021.
Dated: 25 November 2021
Taylah Stretton
Associate to Her Honour Judge Brimer
Appendix 1: Amended Summary of Key Issues for Trial
IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CI-20-02184
COMMERCIAL Division
GENERAL List
BETWEEN
JUSTCO (AUSTRALIA ONSHORE) PTY LTD (aCn 629 427 774)
Plaintiff
and
CPB CONTRACTORS PTY LIMITED (ACN 000 893 667)
Defendant
AMENDED SUMMARY OF KEY ISSUES FOR TRIAL
| ISSUE | PAGE NO |
| What are the express terms of the Membership Agreement and how are they to be construed? 1. Whether, as CPB contends, the statement ‘2000sqm – private space – secured with exclusive access to CPB teams only’ in the JustCo proposal of June 2019 was: (a) ‘an agreed specification’ to which JustCo would re-fit Level 17 of the Premises, as referred to in the Appendix to the agreement; (b) included on ‘the supplied test-fit floor plan’, as referred to in the Appendix to the agreement. | 25 |
| 2. Whether, on the proper construction of the Membership Agreement, JustCo’s obligations to provide the Services (as defined) carried with it an obligation to provide secure and exclusive access to Level 17, or to secure Level 17, such that the Allocated Office Space was quarantined from other members of the Premises. | 55 |
| 3. Whether, on the proper construction of the Membership Agreement, the provision of secured access to the Allocated Office Space was an ‘additional service’ (within the meaning of that term as described in cl. 4(b)(vi) of the Membership Agreement) which JustCo was obliged to provide to CPB. | 57 |
| What is the effect of cl. 18(a) of the Membership Agreement? 4. Whether the entire agreement clause in cl. 18(a) of the agreement operated to exclude the terms sought to be contended for by CPB as a term of the Membership Agreement as referred to in paragraph 1 above. | 61 |
| Are there any terms to be implied in the Membership Agreement? 5. Whether, as CPB contends, there was an implied term in the Membership Agreement that the Allocated Office Space would be fit for use by CPB to undertake work in a manner that complied with probity, and confidentiality restrictions, imposed by the Victorian Government. | 62 |
| 6. Whether, as JustCo contends, there was an implied term in the Membership Agreement that CPB would exercise its rights under the agreement in good faith, reasonably and not capriciously or for some extraneous purpose. | 66 |
| Were the Access Representations made? 7. Whether JustCo made the Access Representations pleaded in paragraph 25 of CPB’s defence and counterclaim. | 66 |
| If the Access Representations were made, were they misleading or deceptive or in breach of the Membership Agreement? 8. If the Access Representations were made, whether the representations: (a) were misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the Australian Consumer Law; (b) constituted a breach of cll. 10 and 17(d) of the Membership Agreement. | 71 |
| Did JustCo breach any of the terms of the Membership Agreement? 9. Whether JustCo failed to: (a) provide ‘exclusive use’ of the Allocated Office Space, in breach of cl. 4(b)(i) of the Membership Agreement; (b) use due care and skill to perform the Services to a reasonable standard, in breach of cl. 17(d) of the Membership Agreement; (c) re-fit Level 17 to the ‘agreed specifications and as per the supplied test-fit floor plan’, in breach of the Appendix to the Membership Agreement; (d) alternatively to (c), provide secured access to the Allocated Office Space as an ‘additional service’, in breach of cl. 4(b)(vi) of the Membership Agreement; (e) ensure the Allocated Office Space was fit for purpose by quarantining it from other members of the Premises to protect CPB’s confidentiality, in breach of the implied term alleged by CPB. | 74
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| 10. Whether, in breach of cl. 3(a) of the Membership Agreement, JustCo failed to: (a) clean the Allocated Office Space; (b) provide 24 hour access to the Allocated Office Space; (c) provide air-conditioning during office hours. | 78 82 88 |
| If JustCo did breach any of the terms of the Membership Agreement, did CPB affirm the agreement? 11. If JustCo breached the Membership Agreement in the manner identified in paragraph 9 above, whether, on the basis that CPB knew that the glass doors on Level 17 of the Premises were not secured, and that Level 17 was not secured by the lift lobby doors, at all relevant times from 1 October 2019, CPB affirmed the agreement by its conduct following such knowledge such that it lost any right to terminate it. | 92 |
| 12. If any of the alleged breaches referred to in paragraphs 8(b) and/or 10 above entitled CPB to terminate the Membership Agreement, whether, with knowledge of those breaches, CPB elected to affirm the agreement such that it lost any right to terminate it. | 93 |
| Was either CPB or JustCo entitled to terminate the Membership Agreement for the other’s breach? 13. If JustCo breached the Membership Agreement in the manner identified in paragraph 8(b) and/or 9 above, whether any such breaches entitled CPB to serve the CPB Termination Notice pursuant to cl. 12(b)(i) of the agreement so as to terminate it. | 93 |
| 14. If JustCo breached the Membership Agreement in the manner referred to in paragraph 10, whether any such breaches: (a) were minor or inconsequential; (b) not ongoing as at the time that CPB served the CPB Termination Notice, such as to disentitle CPB from terminating the agreement immediately. | 93 94 |
| 15. Whether, as JustCo contends, in issuing the CPB Termination Notice, CPB breached the implied term or acted unconscientiously, such that the CPB Termination Notice is invalid and of no effect. | 94 |
| 16. If the Membership Agreement was not validly terminated by CPB, whether it was instead terminated by JustCo’s notice dated 21 April 2020. | 94 |
| To what relief, if any, is either JustCo or CPB entitled? 17. If the Membership Agreement was not validly terminated by CPB, but instead was terminated by JustCo’s notice dated 21 April 2020, whether the consequences pleaded in paragraphs 14, 15 and 18 of the statement of claim (including application of the Security Deposit) follow. | 95 |
| 18. Whether CPB is liable to JustCo in respect of: (a) the membership fees under the Membership Agreement from 1 March 2020 to 30 September 2020; (b) interest at the contracted rate of 2% per month on the outstanding membership fees under the Membership Agreement; (c) the rubbish removal charges for 30 October 2019; (d) the use of meeting rooms on 6 January 2020 [this is conceded]; (e) the AV equipment; (f) the reinstatement fee for cleaning and repainting the Allocated Office Space (including whether this was a term of the Contract at all or whether any such entitlement had been waived); (g) any Access Cards that were not returned to JustCo upon termination of the Membership Agreement. | 95 95 95 95 95 95 |
| 19. Whether CPB is entitled to: (a) the return of the Security Deposit ($330,000) pursuant to the Membership Agreement; (b) alternatively, payment of $330,000 as loss and damage for breaches of the Membership Agreement or for contraventions of s 18 of the Australian Consumer Law. | 96 96 |
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