Moreton Bay Regional Council v Mekpine Pty Ltd

[2015] HCATrans 323

[2015] HCATrans 323

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B60 of 2015

B e t w e e n -

MORETON BAY REGIONAL COUNCIL

Appellant

and

MEKPINE PTY LTD

Respondent

FRENCH CJ
KIEFEL J
BELL J
GAGELER J
NETTLE J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 8 DECEMBER 2015, AT 10.14 AM

Copyright in the High Court of Australia

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR A.N.S. SKOIEN, for the appellant.  (instructed by Moreton Bay Regional Council)

MR G.W. DIEHM, QC:   May it please the Court, I appear with my learned friend, MR P.D. HAY, for the respondent.  (instructed Hillhouse Burrough McKeown Pty Ltd)

FRENCH CJ:   Yes, Mr Jackson.

MR JACKSON: Thank you, your Honours. Your Honours, the starting point of the case is found in two provisions which is probably sufficient to mention. One is section 12(5) of the Acquisition of Land Act 1967 (Qld) which provides that where land is compulsorily acquired:

the estate and interest of every person entitled to the whole or any part of the land shall thereby be converted into a right to claim compensation ‑

The second provision is the meaning attributed to “interest” by section 36 of Acts Interpretation Act 1954. Your Honours, I will come to the underlying facts in just a moment if I may, but as is apparent from the materials, the appeal turns ultimately on the resolution of two issues, namely, first, the operation of the Land Title Act 1994 and, on the other hand, section 6 of the Retail Shop Leases Act 1994.

Your Honours, may I come to the underlying facts, and these may be stated shortly.  They are summarised in our written submissions in paragraphs 8 to 13.  Your Honours they are these:  the respondent was the lessee of land at Murrumba Downs in Brisbane.  The lease was entered into on 1 March 1999 for a term of 10 years.  Your Honours will see that referred to in the appeal book at page 57 in paragraph 25 of Mr Crowley’s affidavit.  Your Honours, as he says – if I could take your Honours again to page 57 “The leased area comprised part of . . . Lot 6” on the registered plan, the number of which he there sets out.

Your Honours will see that that plan is at page 137 of the appeal book.  If I could take your Honours to that for a moment?  Your Honours will see Lot 6 being very clearly marked at page 137.  You will see that it has metes and bounds which can be very clearly identified.  The shop area leased is shown hatched with the number “1” in the diagram and then to the south‑west corner, if I can put it that way, of the page you will see an enlargement of that.  Now, your Honours, that is the area that is actually leased – that is subject to the lease.

FRENCH CJ:   That is described as part of the ground for a building, et cetera, in the lease document itself?

MR JACKSON:   Yes, your Honour.  Your Honour, the term “Common Areas” was defined in clause 1.2 at page 114, about line 43.  I will take your Honours to the lease now.  “Common Areas” is defined in clause 1.2.  Your Honours will see it:

means those areas of the Building or the Land which have not been leased or licensed by the Lessor. 

The term “Land” is defined on the same page, about line 52, your Honours will see, as meaning:

the lot described in Item 2 of the Form 7 in this lease –

What is meant by that one can see at page 111, about line 25.  Your Honours will see item 2, Lot 6 on that number, and at the top of the page, in the top left‑hand corner, about line 5, it is a reference to form 7.  Your Honours, the common areas under the lease thus go to but not beyond the boundaries of Lot 6.  The rights of the respondent in relation to those common areas may be seen at page 130 in clause 15, commencing about line 38:

The Lessee acknowledges that:-

(a)       the Common Areas:-

(i)are the property of the Lessor; and

(ii)may be used, controlled, managed –

Your Honours will see the remaining words and also paragraphs (b) and (c).

Your Honours, if I could then go to the plan at page 137, in the corner, the northwest corner of Lot 6, you will see Lot 1 adjacent to it.  It is a small lot on the corner of Ogg Road and Dohles Rocks Road and your Honours will see that part of that Lot 1 sticks out, as it were, into the latter road and, your Honours, that is the part which was resumed.  I will show your Honours that in just a moment.

Now, on 27 September 2007, the two lots there, 6 and 1, were amalgamated and the description allocated to the amalgamated title was Lot 1 on SP 184746 and you will see that referred to at page 93 where there is the plan of the two amalgamated lots, two lots as amalgamated and your Honours will see that the part ultimately resumed still sticks out into Dohles Rocks Road.  Your Honours, the lease was registered on the amalgamated title as an existing lease allocation.  Now, your Honours will see that referred ‑ ‑ ‑

FRENCH CJ:   When you say registered, it was noted on the survey plan, was it?

MR JACKSON:   Well, noted on the title, your Honour.  Your Honour in fact will see that on the next page, 94.  You will see the heading “Existing Lease Allocations” ‑ ‑ ‑

FRENCH CJ:   I see, yes.

MR JACKSON:   ‑ ‑ ‑ and then the first non‑crossed out one, 705, et cetera, is the lease.

FRENCH CJ:   Right.

MR JACKSON:   Now, your Honours, I was going to say where one finds the reference to join those things together is in the affidavit of Mr Crowley at page 57 and in paragraphs 27a and 28.  Your Honours will see at the end of 27a the number that I just referred to is the number of the lease.

Now, your Honours, there was no change to the lease itself.  The events to which I have referred were followed on 14 November 2008 by the resumption.  The resumption was of land forming part of the amalgamated parcel, the new Lot 1, and none of the land compulsorily acquired had been part of the former Lot 6.  Your Honours will see that the President referred to that in her reasons at page 448, paragraph [6] and your Honours will see the last couple of lines:

and was entirely in the area included in the old Lot 1 and wholly outside the old Lot 6 to which the lease referred.

Your Honours can also see in a series of maps which appears at pages 271 – maps or diagrams at 271 to 274, where the land compulsorily acquired – where the resumed land is shown and various developments in the general area.  If I could just go for a moment to page 271, your Honours will see in the middle of the photograph the words “resumed area” and an arrow pointing to what I described as the part that was sticking out into the road.

Now, your Honours, despite the fact that none of the land compulsorily acquired had been part of the former Lot 6, there were two bases on which the Court of Appeal, or the majority of the Court of Appeal, held that the respondent was entitled to compensation.  One was that the amalgamation of the two parcels of land by the lessor increased the common areas to which the respondent had rights.  The other was that the relevant common area was that which was provided for in the definition of that term in the Retail Shop Leases Act rather than that in the lease itself.  Your Honours, may I deal with them in that order?

Your Honours, I will come to the provisions of the Land Title Act itself in just a moment, if I may, but may we just say this first?  The common areas over which the respondent as lessee was given rights extended to the boundaries of Lot 6.  The majority in the Court of Appeal held that they extended after the amalgamation of the titles to the boundary of the former Lot 1 as well, and that amoeba‑like extension of the rights occurred without any amendment of the lease; indeed, notwithstanding the fact that the lease was recorded on the amalgamated title as “existing lease allocation”.  It depends which way one emphasises the three words, I suppose, but “existing lease” is certainly there.  Thirdly, your Honours, notwithstanding that the Land Title Act contemplates that there may be leases of parts of titles.

Could I come then, your Honours, to the terms of the Land Title Act itself?  Our summary of its provisions your Honours will see in our written submissions commencing around paragraph 20.  Your Honours, the Act provides, in section 27, for there to be a freehold land register.  In the register are to be recorded the particulars which appear in section 28, and they include particulars necessary to identify 28(1)(b) – “every interest registered in the register” – and 28(1)(e) – “all instruments registered” and when they were lodged and registered.

The title, your Honours, created on registration is indefeasible. Your Honours will see that in sections 37 and 38. The Act also recognises that leases may be registered – and this is a matter of some importance – for part of a lot and that the part of the lot, so leased, may be identified by a drawing. If I could take your Honours first to section 64, your Honours will see that section 64 says:

A lot or part of a lot may be leased by registering an instrument of lease for the lot or part.

Then section 65(1) says:

An instrument of lease for a lot or part of a lot must –

 . . . 

(b)include a description sufficient to identify the lot or part of the lot to be leased; and

Subsection (2):

If the instrument of lease is for part of the lot, the instrument must also include—

(a)a sketch plan identifying the part of the lot drawn to a standard to the registrar’s satisfaction –

In paragraph (b), obtain a survey if required. Your Honours will see the dispensing power provided for by section 65(3). Could we take your Honours also to section 67 which, in subsection (2), provides that:

A registered lease may be amended by registering an instrument of amendment of the lease.

But the instrument of amendment – subsection (3) – must not:

increase or decrease the area leased –

Your Honours, Part 9 of the Act commences with section 173.  It deals, in Division 1, with registration of instruments and, in Division 2, with the consequences of registration.  Could I take your Honours to Division 1 first, and section 175.  It says:

A registered instrument forms part of the freehold land register from when it is lodged.

Could I just say that the lease did not somehow disappear on registration of the amalgamation of the freehold titles.  In that regard ‑ and I will come to this in a little more detail in a moment ‑ it may have been a different situation if there had been no recording of the lease on the amalgamated title.  But at the time of the amalgamation the lease over part of the title was one that was recognised in the register.  If one goes then to section 179, your Honours will see that it says:

the particulars of a registered instrument recorded in the freehold land register are conclusive evidence of –

 . . . 

(b)      the contents of the instrument –

and your Honours will see also paragraph (c).

FRENCH CJ:   Of course, the logically anterior question is the construction of the common area use rights in the lease itself, is it not?

MR JACKSON:   Yes, your Honour.

FRENCH CJ:   And the effect or the interaction between that and the enlargement of the area of the lot?

MR JACKSON:   Your Honour, the short position was that the lease provided for there to be a lease of the shop itself and rights in relation to common areas, which rights could be taken away under the terms of the lease.

FRENCH CJ:   Yes.

MR JACKSON:   And they extended to the land – the land was the land which was formerly Lot 6.  It is defined by “metes and bounds”, as I referred your Honours to before.  It may be that the name “Lot 6” has lost some of its immediate relevance but, at the same time, the area that is the subject of the lease – absolutely nothing happened to the lease.  It was not changed in any way.

Our learned friends’ argument describes it as a question of construction, but that is a way really, your Honours, of putting to the side, with respect, the way in which the majority in the Court of Appeal arrived at their conclusion, because their conclusion was that the term “land” in the lease itself should be treated as expanded by the operation of the amalgamation, the effect of which turned on the Act and nothing else.

Your Honours, if one remains with section 179 for a moment, the particulars of the registered lease were conclusive evidence as to its terms and one asks initially, hypothetically:  how could it expand?  And, your Honours, expand it must on the respondent’s argument because, as I submitted a moment ago, the common area was defined as going to the boundaries of the land and “land” was defined as only Lot 6.

Your Honours, the answer given to that question, “How could it expand in that sense?” by the majority in the Court of Appeal was by the operation of section 182. If I could take your Honours to section 182 for a moment, your Honours will see that it said:

On registration of an instrument that is expressed to transfer or create an interest in a lot, the interest –

(a)is transferred or created in accordance with the instrument ‑

Your Honours, if the instrument should be treated as the survey plan effecting the amalgamation and one treats also the interest of the lessee as in some way created at that stage, what one sees is that what was created in respect of the lease was the existing lease allocation, nothing more, and one identified what that related to by reference to the metes and bounds shown as representing the original Lot 6.

KIEFEL J:   The President identified the instrument as a survey plan, did she not?

MR JACKSON:   Yes, your Honour.  Your Honours, could I say ‑ I am going to come to the detail of the Court of Appeal majority of reasons in a moment, your Honours ‑ may I just say this, that prior to the judgment of the Court of Appeal, both the Land Court and the Land Appeal Court, on appeal from the Land Court, had rejected the contention which the majority accepted.  Could I take your Honours to the heart of the reasoning of both those courts?

In the Land Court, the members’ reasons are at page 367 and, your Honours, fundamentally paragraphs [24] through to paragraph [26], your Honours will see in paragraph [24] a discussion of the history, in effect, and then you will see the last sentence in paragraph [24], a matter to which I took your Honours earlier, and then in paragraph [25] a member said:

The lease being notated on dealing 711039151 was not accompanied by any activity between the lessor and lessee to vary the description of the land from Lot 6 on RP 809722 . . . to Lot 1 on SP 184746.  It is worth considering for a moment how this could have been achieved ‑

and then he refers to section 67.  He then goes on to say at the top of the next page:

This indicates that the lease could have been amended to reflect its place within “Land” being Lot 1 . . . This, of course, did not occur –

and your Honours will see the remainder of the paragraph.  And then his summary in paragraph [26], your Honours, I refer particularly to the second sentence:

Although the lease was registered over the expanded land . . . the lease was not amended in any way and still refers only to the area that was formerly Lot 6 –

and your Honours will see the remainder of the paragraph where he sets out some considerations which your Honours might well think are germane. In the Land Appeal Court, your Honours, the present respondent placed some reliance on section 182. Your Honours will see that at page 429 in paragraphs [48] and [49] but the Land Appeal Court disagreed and the core parts of the Land Appeal Court’s reasoning may be seen in paragraphs [52] to [57] commencing at page 430 and your Honours will see particularly paragraph [53], we agree with the appellant’s submissions:

Whilst Mekpine’s interests under its lease were registered on the title to Lot 1, those interests remain interests in accordance with the terms of the lease.

Your Honours, if one goes then to paragraph [56]:

In this case, the “Land” the subject of the lease is identified in the lease instrument as Lot 6.  There is nothing in the registration process which changes that lot description.

Your Honours will see then the conclusion in the remainder of that paragraph and paragraph [57].  We would submit, with respect, that the views adopted in those two Tribunals are entirely orthodox and when one goes to the majority in the Court of Appeal they differ from that, if I may put it this way, description.  Could I go first to the President’s reasons at page 451?  The relevant parts, your Honours, are in paragraphs [18] to [22] and we have referred to these in our submissions in‑chief in paragraph 35, and may I take your Honours to that?

Your Honours, dealing first with paragraph [18], as we say in paragraph 35, one can accept that in one sense the old Lot 6 ceased to exist on the amalgamation.  It may have ceased to exist as such, but it does not follow that the terms ceased to be those applying to the position as between lessor and lessee.  I do not want simply to read out the criticisms that we made in paragraph 35, but could we just perhaps emphasise that surely the term “existing” in “existing lease allocation” is to be given some meaning.  Your Honours, the conclusion in the last sentence of paragraph [18], it is very difficult to see why the fact that:

the old Lot 6 ceased to exist . . . the reference to “Land” . . . then became a reference to the land in the new, amalgamated Lot 1 ‑ ‑ ‑

NETTLE J:   Is it not in paragraph [19], the last couple of sentences that it is a necessary implication of the language of the lease that it was to be including the land as it might be expanded or reduced from time to time?

MR JACKSON:   Well, your Honour, if one goes to paragraph [19], it is no doubt correct to say in terms of, say, the third sentence of paragraph [19]:

In describing the land on which the leased premises were located –

the original description of land was intended.  But, your Honour, it is probably true also to say that if the land were to be amalgamated, then the lease would be a lease over the amalgamated land, but that does not determine over what part of the amalgamated land it was to be the lease.  Our learned friends say in their outline of submissions that this is a question of the intention of the parties.

NETTLE J:   Yes.

MR JACKSON:   But, your Honour, there was simply no evidence about the intention of the parties and if your Honours were to look at paragraph [19], this is simply saying what is the effect of amalgamation under the Act.

NETTLE J:   But they mean the intention objectively discerned from the language of the lease, do they not?

MR JACKSON:   Your Honour, insofar as one could see the intention of the parties at the time of entry into the lease, it is obvious enough that they were intending that it be common areas going to the boundary of Lot 6.  When one comes to the effect of amalgamation, we would submit that where nothing is said about it, apart from the same lease being registered, it does not follow at all that there was any common intention that the common areas would be extended beyond those previously existing; true it is that the lease would be a lease which would be over the amalgamated land.  But, as your Honours have seen, the Act contemplates that there can be leases over part of the land and it is very difficult to see why one would take the view that the lease itself, in terms of the areas to which it related, expanded.  I do not know that I can take that further.

Could I just say this though?  Our learned friends in their outline of submissions say that that has not been appealed from, but if your Honours look at paragraph [19] and also look at the terms of the notice of appeal, you will see the notice of appeal is at page 484, and paragraph 2(a) speaks of the effect of “registration of a plan of survey”.  Paragraph [19] is based entirely on the effect of registration.

NETTLE J:   I am sorry, Mr Jackson, just to pause there.  You gave an answer earlier on to one of the Chief Justice’s questions in which you said the only basis on which the Court of Appeal decided the matter was that by reason of the registration of the plan of survey the land was eo instanti expanded into the new Lot 1.  That is to say, is it, that it is not in issue in this appeal that by reason of necessary implication arising out of the language of the lease the land, although described by reference to the old Lot 6, includes expansion or reduction from time to time?  We just do not have to deal with that question?

MR JACKSON:   Your Honour, perhaps I need to deal with it a little more fully in that regard.  Our learned friend’s argument is that this issue is just one of construction, really.  What does the lease mean from time to time?  Your Honour, we submit that is not correct.  If one looks at the terms of the lease it gives fundamentally two rights.  One is the lease over the shop itself.  The other is some rights to use the common areas, and the rights in relation to the common areas are ones that are capable of being taken away in large measure by the lessor in the exercise of various powers.

Your Honour, where one goes from that is, in our submission, to say the events which took place are events which simply amount to an amalgamation, the amalgamation of two titles and the registration on the new title of the existence of an existing lease.  The existing lease contains particular terms, in spatial terms, and that is where the matter stands.  I am not sure if that has answered what your Honour was asking me, but I do not know that I can take it much further.

NETTLE J:   Thank you.

MR JACKSON:   Your Honours, could I then come to paragraph –

KIEFEL J:   Just before you do, Mr Jackson, are the President’s reasons in paragraphs [18] and [19] separate references to the effect of amalgamation and construction or were they somehow – I am just having difficulty determining how her Honour was approaching it.  We have contractual rights dealt with in [19], apparently, about the effects of amalgamation in [18].  I assume that they are meant to work together because her Honour, at the end, says:

This construction also sits comfortably with the . . . principle of indefeasibility of title.

But I am not quite sure what that means.

MR JACKSON:   Your Honour, we have, with some vigour, if I may say so, with respect, criticised the President’s reasons as not having much logic in relation to them.  They do seem to be framed in different ways.  First of all, paragraph [18] seems to be based on the effect of amalgamation.  If your Honours look at about line 34, on page 451, you will see that her Honour says:

I consider the better view in applying s 182 to the present facts is that ‑

Your Honours will see, she says:

s 182 has the effect -

et cetera.  That seems to be a question of construction but of the Act – the operation of the Act.  If one then goes to paragraph [19], she adopts that construction in the first sentence, then says:

Nor is it inconsistent with the objective intention of the parties when they entered into the lease.

That seems to be, I suppose, construction of the lease but saying – and, your Honour, it is no doubt, with respect, half true as to the position at the time when the lease was entered into.  But one does have the second ascription of intention where she says:

If the land were to be amalgamated with other land and re‑registered, the parties intended that the leased premises would be described by reference to -

and your Honours will see the remainder of it.  Now, your Honours, where that comes from, with respect, is very difficult to see.

KIEFEL J:   Is this the first time the question of construction, so‑called, was raised, because in the courts below did it not turn upon the effect of amalgamation – the arguments advanced?

MR JACKSON:   The construction issue, I think it is right to say, if raised in the two courts below – and I cannot say definitively that it was not raised, but I could check that, your Honours – it certainly emerged as a significant feature in paragraph [19].  It has blossomed somewhat since then in our learned friends’ submissions in the appeal.  Your Honours, I was going to go on to paragraph [20] ‑ ‑ ‑

FRENCH CJ:   “Common areas” does not have some sort of ambulatory operation looking prospectively to amalgamations and so forth.  It all depends on the statute.

MR JACKSON:   Of course, your Honour.

FRENCH CJ:   So the anterior question of construction answered in your favour would then just leave the argument to the question of the statute ‑ ‑ ‑

MR JACKSON:   Your Honour, we say that this is a case where you simply have the basic documents, if I can put it that way – a lease over land in Lot 6 giving some rise to the edge of Lot 6.  That property is amalgamated with the one next door.  The lease is recorded as existing lease allocation and, in our submission, nothing has changed.

KIEFEL J:   The interests in the lease remain those as originally registered.

MR JACKSON:   Yes, your Honour.  Your Honours, could we in relation to paragraph [20] of her Honour’s reasons refer your Honours to paragraph 37 of our written submissions?  I do not think I need to repeat that.  Could we say, your Honours, as to paragraph [21], your Honours will see that at the top of page 452 her Honour has said that assuming:

no new leasehold interest was created, under s 182, the registration of the survey plan transferred the applicant’s leasehold interest over the old Lot 6 to the new, amalgamated Lot 1, with the effect that the reference to “Land” . . . was to the new, amalgamated Lot 1.

May we say, with respect, your Honours, it is absolutely clear from sections 64 and 65 that a lease may be, and may be described as, a lease over part of the one title and why, we would submit, should a different situation obtain when the underlying title is amalgamated with another? Could I say in relation to paragraph [22] of her Honour’s reasons, they follow on from her earlier observations, and I would refer particularly to the first sentence of paragraph [22].

Your Honours, could we just say this in relation to the question of construction again, and that is our learned friend’s submissions seek to describe the approach of the majority as simply one of construction.  We would submit, with respect, that is an inadequate description of it.  The majority’s conclusion that the amalgamated title was the land for the purposes of the lease was entirely dependent on its view of the operation of the Act.

NETTLE J:   Well, if you win that point you must win then you say it matters not about proper construction of the lease.  If you win that point about the effect of the Act, you are there?

MR JACKSON:   Yes, your Honour, that is right.  We are there.  There is the other argument, of course, on the Retail Shop Leases Act to be dealt with.  Your Honours, could I come then to Justice Morrison’s reasons, the other member of the majority?  Your Honours will see that his Honour’s reasons commence at page 465.  They are from paragraphs [81] to [113].  They are similar to those of the President. 

Could I go first to the summary of his Honour’s reasoning which your Honours will see at page 473 in paragraph [131]?  Your Honours, could we say in relation to the first sentence of paragraph [131] in one sense one agrees with it, but only in the sense that the parcel of land over which the lease existed was the amalgamated Lot 1.  But why was the actual land over which it was granted to be treated as the whole of Lot 1?

As to the second sentence which commences, “Lot 6 ceased to exist”, we agree as such.  As to the next sentence, “Further, the interest of the applicant”, again one agrees, but what was the new interest that was created?  The register described the new interest as an existing lease allocation.  So it may be new in that sense, but the area over which it extended was the old area.

KIEFEL J:   It is not an allocation, is it?  It is a notation of the former registered interests on the title.

MR JACKSON:   Yes, that is so, your Honour.  Your Honour, the word “allocation” has its unusual features but it does seem to be simply the registration of the existing lease.  And, your Honours, as to the fourth and fifth sentences of that paragraph, the one commencing:

That process involved –

and then the next one –

That was signified –

we just say, there was a difference of view which, your Honours, it seems quite unnecessary for the Court to enter into about whether there was or was not consent, but accepting that there was consent for the registration, so what?  What was registered was the existing lease.

BELL J:   This was the inference to be drawn from the requirement for consent by the lessee to a plan of subdivision.  Is that –

MR JACKSON:   Yes.

BELL J:   Yes.

MR JACKSON:   That is so, your Honour, yes, but subdivision including amalgamation.  Your Honours, as to the remainder of paragraph [131], we would submit, it just does not follow from what has gone before and, in particular, your Honours, the concluding matters, the last three lines:

when title to Lot 6 was extinguished, and the new title to the physical land was created as new Lot 1, the definition of “Land” necessarily changed to refer to new Lot 1, even if the lease itself was not amended.

Well, your Honour, an existing, unamended lease, the rights in relation to it, extended over a greater area of land.  Your Honours, I referred to his Honour’s summary in paragraph [131].  Could I go back to ‑ and I will do so as quickly as I can ‑ several passages in his reasoning which lead to those conclusions.  In paragraphs [81], commencing on page 465 through to paragraph [90], his Honour sets out a number of, I think, relatively uncontroversial matters but they lead in to paragraph [91] and the passages in paragraphs [91] to [95] on page 467.  You will see there, your Honours, that he sets out a history of the lease and the amalgamation and goes on to say in the concluding sentence of paragraph [94] and also in paragraph [95] that on the amalgamation and consequent cancellation of Lot 6:

There was at that point no definable lot confirming to Lot 6 –

and in paragraph [95] his Honour said that:

The registration system does not contemplate that Lot 6 or old Lot 1 could continue to exist in some way under or in parallel with new Lot 1.

Well, your Honours, those views, with respect, seem to give again little weight to section 64 and 65 which contemplate that there may be registration of a lease for part of a lot. The instrument has to include a description sufficient to identify the part of the land leased and, your Honours, the lease at pages 111 and 137 does seem to identify very clearly where the land that was Lot 6 was and, in our submission, it is very difficult to see, with respect, how the conclusion that his Honour draws at page 468 in paragraph [98], could be drawn.

FRENCH CJ:   The land referred to in the lease instrument itself, as the land over which the lease is granted, is one thing.  The land over which the lease is registered and takes effect as an instrument is another.

MR JACKSON:   Yes, your Honour.

FRENCH CJ:   And the registration over the latter being the expanded lot does not affect the construction of the first.

MR JACKSON:   That is so, your Honour.  And inherent in the notion that there can be a lease over part of a lot is the notion, as the Act itself says, that you have to identify it.  Now, if you have to identify this lease, if you go to page 137 and put a surveyor and a chain person –

FRENCH CJ:   It is the same problem with both “land” and “common area” terms, whether they have some kind of prospective ambulatory operation which is enlivened upon an amalgamation and enlargement.  I understand you to say that is not the case.  I am just trying to see how the logic of it works.

MR JACKSON:   No, your Honour, but it would ‑ one might think that if you had a lease, unlike this one, where there was an obligation to pay for outgoings that the lessee might be quite surprised to find they are paying for outgoings and land that was not the subject of the lease – originally the subject of the lease, for example.

Your Honours, could I go then to his Honour’s reasons at paragraphs [132] to [135] and your Honours will see those at page 473 and following.  His Honour was rejecting the contention which we had made in paragraph [132].  Your Honours will see that he referred then to a kind of converse case where he said the land might be subdivided and the lease not noted on one of the resultant lots.  Your Honours, that scenario that his Honour posited, with respect, has some difficulties that, in our submission, would make it an unsound basis for interpretation of the effect of amalgamation.

Your Honours, in the first place, one might accept that in a competition between a new registered proprietor of part of the land and what was now an unregistered lease on that assumption, the lessee’s rights would abate pro tanto but it would not be simply because of a change of lot number.  In the particular case one might or might not have particular provisions.  If one took this lease it would be because the lessor, arguably, would say that the lessor was entitled to reduce the common area under the provisions of the lease.  Could I take your Honours for a moment to page 130, clause 15(a)(ii).  If one went over to 15(b) and also to clause 16.4, which your Honours will see on page 131 – that is, in the particular case. 

But if one left aside provisions of that kind, the lessee’s position, if that occurred, would be protected by a combination of provisions.  First, fresh titles would have to issue.  That comes from a combination of sections 41 and 60(2) of the Act.  Secondly, a plan of subdivision would be necessary.  That is section 49 and section 49A(2).  The plan of subdivision would require the consent of the lessee, section 50(1)(j), and that is required.  In that regard, if one looks at the definitions of “proprietor” and “registered proprietor” it makes it clear that it includes the lessee.  If there had been fraud by the new proprietor in procuring registration without notation of the lease there are the remedies provided under section 187.  If the fraud was by the vendor proprietor then there is the right to compensation under section 188(1).

Your Honours, the point we would make about all that is that to deal with the issue of subdivision as something leading to the conclusion that his Honour arrived at was to adopt an insecure base, in our submission. Your Honours, on this question, the first issue, our submission is that the better view of the operation of the Act was that adopted in the Court of Appeal by Justice Holmes in dissent. May I take your Honours to the relevant parts of her Honour’s reasons? First, at page 458 your Honours will see paragraphs [43] through to [45]. Your Honours particularly will see in paragraph [45] that the reason for her conclusion that section 182 did not apply in the way suggested was that:

the provision deals with the effect of registration on an interest which the relevant instrument is “expressed to transfer or create”.

Your Honours will see the remainder of that paragraph. That is dealing with section 182. You will see at paragraph [52] on page 460 a reference to section 67 and dealing with amending of registered lease and saying:

In light of that bar, it seems improbable that the Act contemplates the expansion of areas to which a lease relates simply by reason of the registration of the lessee’s interest against a different lot.

Finally, your Honours will see paragraphs [53] through to [55], particularly paragraph [54].  In our submission, her Honour’s views are the better view of the operation of the legislation.

NETTLE J:   It does not make any difference to your case, Mr Jackson, but is the last sentence of paragraph [55] strictly correct?  Surely not.

MR JACKSON: Well, I think what her Honour is saying is I think this, that the interest – in the first sentence, the interest created was not the lease for the interest in the new Lot 1 and it is in that sense I think that her Honour is saying that section 182 ‑ ‑ ‑

KIEFEL J:   I think her Honour has dealt with – is probably restating what she says more fully in paragraph [45].  The lease interest has not been created.  It had already been created by registration.  It was just incumbent on Lot 1.

MR JACKSON:   Yes, your Honour, thank you.  Your Honours, those are the submissions we wanted to make in relation to that part of the case.  May I turn now to the Retail Shop Leases Act? This issue concerns the operation to be attributed to sections 6 and 20 of the Retail Shop Leases Act 1994. Section 6 is one of the definition sections of the Act and it is a definition of the term “common areas”. Your Honours, I will come back to its detail shortly. Section 20 is one of, to put it shortly, a trilogy of provisions – 18, 19 and 20 – and section 20 says:

If a provision of this Act is inconsistent with a provision of a retail shop lease, the provision of this Act prevails and the provision of the lease is void to the extent of the inconsistency.

Now, your Honours, the majority in the Court of Appeal held that because there were some differences between the definition of “common areas” in the lease and the definition of the term in section 6 of the Act, the definition in the Act was to be treated as the definition in the lease. The nature of the issue that was involved was put shortly and, with respect, clearly by Justice Morrison at page 475, paragraph [142]. May we make a couple of preliminary comments relating to the concept of inconsistency as used in section 20?

FRENCH CJ:   This was just – so the reasoning in the Court of Appeal was just a plugging in of the definition as distinct from any operative provision of the Act, was it?

MR JACKSON:   Yes.  Well, it is pulling the plug out and putting a new one in, if I can put it that way, your Honour.

FRENCH CJ:   Yes.

MR JACKSON: I will come back to the relationship between 18, 19 and 20 in a moment, if I may, but section 20 has, as one can see, its obvious origins. What I was going to say, your Honours, about this is that the inconsistency which is contemplated by section 20 is inconsistency between a provision of the Act and a provision of the lease.

FRENCH CJ:   By which you mean an operative provision of the Act.

MR JACKSON:   Well, an operative provision of the Act, that is what we –

FRENCH CJ:  ‑ ‑ ‑ distinct from a definitional provision?

MR JACKSON: Yes. Your Honour, that is what we say but could we also say that in the first place, the answer to whether section 20 has any application must, and I am speaking at a high level, if I may, for just a moment, depend on the one hand, what are the provisions of the Act that are relied on, and on the other hand, what are the provisions of the particular lease and this aspect of the matter has some relevance because the reasons of the majority do treat the issue in a rather abstract way.

Could I, in that regard, your Honours, mention in particular some observations of Justice Morrison at page 478?  You will see, your Honours, that in paragraph [158] in the last sentence, he said:

The definition of common areas has substantive operation beyond its use in the definition of “retail shopping centre” in three areas.

When one goes to the first of those, in paragraph [159], he said its reference, the:

common areas are relevant to the determination of the lessor’s outgoings.

But this was a case, your Honours, where the lessee had no liability for outgoings and you will see that that was the case from clause 4.1 at page 120 and your Honours will see, 4.1:

The Lessee is not required to pay or contribute to the outgoings.

The term “outgoings” was defined at page 115 and your Honours will see the very wide definition goes on throughout the page and your Honours will see it goes over the page into:

“Outgoings” does not include:-

this and that and, your Honours, the definition is at least as wide as the definition of “outgoings” that is provided for in section 7 of the Act and what we would say, your Honours, in passing is this. To rely on a non‑existent obligation as a basis for finding inconsistency between the lease in which it does not appear and the Act is, with respect, a novel approach and for similar reasons, your Honours, so too is the second aspect referred to at page 478 in paragraph [160] because there is no obligation to pay part of the outgoings. This was not a lease of a nature to which he is referring.

Again, your Honours, if one goes to paragraph [161], it talks about sinking funds, there is provision in the Act for sinking funds.  There is no provision in the lease for there to be contributions to a sinking fund and finally, your Honours, on this aspect, there is the matter referred to at the top of page 478 where his Honour said:

Indeed, in many cases, as here, a component of the rent will be based on the lessee’s turnover.

Well, your Honours, if one looks at the provision referred to as being as here, it is clause 3.2(a) which is at page 119 and you will see that it applied only:

For the first six (6) months of the Term –

of the lease and, your Honours, after that the rents were fixed and not containing any provision for turnover.  Now, the point we would seek to make about it, your Honours, is that the period where turnover was germane to rent was a period that had expired long before the two leases – sorry, long before the two blocks of land were amalgamated in the first place.  But, having said that, your Honours, what emerges, we would say, from those three or perhaps four things, is that the comparison which his Honour was making in order to arrive at his conclusion of inconsistency involved the assumption of a lease, the terms of which were theoretical.  Your Honours, that is the first observation we make, with respect, about inconsistency.

The second is this that if one goes to section 20, for section 20, in our submission, to have effect there has to be some inconsistency between the operation of the Act and the operation of the lease provisions. Merely to point to a difference in the definitions of defined terms is insufficient unless there is something more made of them. Could I in that regard, your Honours, start with the place of section 20 in the Act? Your Honours will see that it is found in Part 4, which is headed “Operation of Act and former Act”. One can see in sections 10, 11 and 12, provisions dealing with the actual operation of the Act, so too with sections 13 to 15.

When one comes to sections 18, 19 and 20, we would submit they perform these functions.  First of all, section 18 deals with duties and entitlements.  It has the effect that they can be enforced or taken advantage of as terms of a lease.  Such statutory remedies as might otherwise exist are not the only remedies.  Remedies in contract, to put it shortly, are available.  But, your Honours, duties and entitlements are not abstract things; duties are imposed by provisions.  Entitlements are conferred by provisions.  Your Honours, if I could move then to section 19, section 19 deals with cases where:

A provision of a retail shop lease is void if it purports to exclude the application of a provision of this Act that applies to the lease.

It is concerned, as your Honours will see, with the application of a provision, a concept which carries with it the notion that the provision has an operation in relation to the lease. Then when one comes to section 20, it deals with cases where the Act, to put it very shortly, says one thing, but the lease says another. Now, no doubt there may be, as in other contexts of inconsistency, a direct inconsistency. No doubt the provisions of the Act may be regarded as covering a relevant field, or there may be cases where the operation of the Act and the lease would be - consist of a kind of operational inconsistency.

But, in our submission, your Honours, it must be at least in some way that the operation of the statutory provision – I am sorry, I will start again, your Honours.  In our submission, it must be the operation of the statutory provisions that gives rise to the inconsistency.  It is not sufficient, we would submit, that there are definitions each for the purposes of its own instrument which differ.  Your Honours, could I go now – and I will do so as briefly as I can – to the two definitions and their functions?  The definition in the lease, as the Court will recall, is at page 114.  You will see “Common Areas”, about line 42:

means those areas of the Building or the Land which have not been leased or licensed by the Lessor ‑

The lessee’s entitlements in respect of those common areas are those set out in clause 6.8 at page 123 where it is said:

The Lessee and the Lessee’s Employees may use the Common Areas but must obey all reasonable directions and rules given by the Lessor relating to their use.  The Lessee must not obstruct the Common Areas or Car Park.

And clause 15 at page 130 to which I took your Honours earlier. The Act definition your Honours will see in section 6. Section 6(1) describes what are the common areas of a retail shopping centre. They must be areas:

in or adjacent to the centre that are used, or intended for use –

(a)      by the public; or

(b)      in common by the lessees –

in the circumstances set out in section 6(1)(b). Leased areas are excluded – section 6(3). Your Honours, if one goes then to the place which the definition in section 6(1) plays in the Act, your Honours will see that section 6 is in Part 3 of the Act which commences with section 5. Part 3 is headed “Interpretation”. It has three divisions all dealing with that topic. Divisions 1 and 2 relate respectively to standard definitions and extended definitions. Division 1 consists of section 5. It refers to a dictionary and the dictionary follows section 135.

Your Honours, we would submit that it seems clear, if we may so, with respect, that section 6 is, and unless more were to appear, no more than a definition of a term used in the Act. If one goes to the dictionary following section 135, what one sees ‑ section 5 says that the dictionary “defines particular words used in this Act”. If one goes then to the dictionary it actually defines “Common areas”. It says “common areas see section 6”.

Your Honours, a similar drafting technique may be seen in many terms listed in the dictionary.  I have mentioned, just to pick a few, defective statement, dispute notice, enforcement order, retail shopping centres.  There are many others.  Some are in Division 2 of Part 3 under the heading “Extended definitions”.  Some are elsewhere.

Your Honours, the reason for the use of the term “Extended” in “Extended definitions” is not clear. It is not elaborated upon in the explanatory materials or in the second reading speech. We have not been able to find a real reason why the draftsman uses the expression. The definitions in the dictionary vary in length but in general do not seem to be as long as any of the four extended definitions in sections 6, 7, 8 and 9. Perhaps, as Justice Holmes said at page 461, paragraph [57], the reference to extended definitions means simply that they are long ones.

But, your Honours, what does seem clear, moving over that debate, is that whether the definitions are standard definitions or extended definitions, one thing they are is definitions. And that is apparent, your Honours, at section 5 that I took your Honours to a moment ago. It defines particular words. The dictionary defines “common areas” by saying section 6 and section 6 commences with the words, or has the heading “Meaning of”. Now, your Honour, I referred to the heading of Part 3 – headings of divisions of Part 3, the heading for section 6. That is permitted by sections 14(1) and 14(2)(a) of the Acts Interpretation Act 1954. I mention that in passing.

But, your Honours, if one goes then to the actual use of the definition in section 6, the only uses of the definition of “common areas” in the Act are found in two places. One is the definition of “retail shop lease” in the dictionary; if I could go to that for a moment. If one goes to the definition of “retail shop lease” it excludes, in paragraphs (a) to (f), various leases and those excluded include those in paragraph (f). You will see that in paragraph (f) it refers to:

(f)premises that, if the premises were not leased, would be premises within a common area of a retail shopping centre, but only if the premises are used for 1 or more of the following ‑

That is one usage of it. The other usage, your Honour, is in the definition of “retail shopping centre” in section 8(1). Your Honours will see that it speaks of a retail shopping centre being “a cluster of premises having all of the following attributes” referred to in paragraphs (a) to (d) of section 8(1). They relate to usage, section 8(1)(a); ownership, section 8(1)(b); and then location of buildings, section 8(1)(c). That is where “common areas” is used, if your Honours look at subparagraph (B) and (C). Your Honours, then one goes to paragraph (d) where the attribute is one of promotion of or the reputation of the cluster of premises.

The two references to common areas in 8(1)(c)(ii)(B) and 8(1)(c)(ii)(C) do no more than form part of the criteria determining when a cluster of buildings constitutes a retail shopping centre.  Your Honours, that takes one, in our submission, to the approach to be taken to provisions which are statutory definitions and we would submit that the appropriate approach is that taken by the Court in Gibb v Federal Commissioner of Taxation (1966) 118 CLR 628 at 635. There is a long paragraph commencing in the third line on page 635, but the most relevant part of it is two‑thirds of the way through that paragraph where their Honours say:

The function of a definition clause in a statute is merely to indicate that when particular words or expressions the subject of definition, are found in the substantive part of the statute under consideration, they are to be understood in the defined sense ‑

and so on.  I do not think I need ‑

FRENCH CJ:   It is not rocket science, as they say.

MR JACKSON:   I think your Honours are familiar, if I might say so.  Of course, there can be occasions where the use of a definition can be murky but this is not one, your Honours.  It is a very simple case where you have got a definition forming part of what is a retail shopping centre.

Your Honours, if one looks to see why the members of the majority in the Court of Appeal gave a substantive operation, if I could go first to the definition. Could I go first to the reasons of the President at page 457 and paragraph [37]? Your Honours will see her Honour thought there was a “clear contrary legislative intent” and that the legislative intent was that the section 6 definition was to be treated as incorporated into leases.

Now, may I deal with her reasons for that conclusion in the order in which they appear in paragraph [37]?  Your Honours, her Honour first refers to the scheme of the Act.  We have submitted this is a term which is intended to be introductory.  Our learned friend’s submissions, in paragraph 42(a) say that the:

Examination of the context in which provisions appear is an essential part of construing a statute –

and your Honours ‑ so it may be, but the result of the examination has to be something relevant.  And, your Honours, in that regard, if the broad legislative intent is that which is set out ‑ if I could go for a moment to our learned friend’s written submissions in paragraph 42(a).  If it is said, your Honours, that:

The summary of the scheme . . . supports a broad legislative intent to impose mandatory protections and minimum standards for the benefit of those with inferior bargaining power –

Why is it necessary to attain that object, to treat the definition of common areas in section 6 as itself having substantive operation? Returning to the ‑ ‑ ‑

GAGELER J:   Mr Jackson, you might be coming to this, but what is it factually that was said to engage the definition in section 6? What is it that made the resumed land answer that description?

MR JACKSON: Well, that is the difficulty, your Honour, identifying the answer to that question, with respect, because what you see is that the majority appear to have adopted the course of saying, this is what the Act says. It would be ‑ and I do not mean this in an offensive way ‑ it would be a good idea if the definitions in leases of this kind were the same as the definition in the Act, presumably because you will have a situation where people are moving in a milieu where they are being governed by two different things, as it were, two different regimes, and therefore the regime of the Act should, because of section 20, prevail.

Your Honour, I think that is all I can say, but when one came to look at how that was done, for example, by Justice Morrison in the passages to which I took your Honour, he was talking about a theoretical lease, not this lease containing these provisions, if I can put it that way.

I am having difficulty answering your Honour’s question because our submission is that that question was not really answered.  Your Honours, could I just go back, if I may, to page 457, paragraph [37], where her Honour refers to the inclusion of the definition of “common areas” in the extended definitions rather than the standard definitions?

Now, your Honours, there are, with respect, difficulties with that view. First of all, the definition of section 6 is itself picked up in the dictionary in section 5. Secondly, it is really quite unclear why the status of a definition as such is changed, enhanced or in some way downgraded because it is in a group of definitions described as extended definitions rather than standard definitions. One thing that is common about them is that they remain definitions.

Your Honours, our learned friend’s response to that in paragraph 42(b) is to say that the extended definitions refer to key concepts such as common areas, but the provisions of the Act simply do not treat common areas as having that quality.  They simply go to define when an agglomeration – part of the definition of when an agglomeration is a retail shopping centre.  Justice McMurdo next in paragraph [37] refers to:

the object of the Act and how it is to be achieved –

Your Honours, the object of the Act is set out in section 3, and section 3 says:

The object of this Act is to promote efficiency and equity in the conduct of certain retail businesses in Queensland.

The way in which that object is to be achieved is set out in section 4.  It refers to:

mandatory minimum standards for retail shop leases –

Those are provided for by Part 6.  It refers to:

a low cost dispute resolution process for retail tenancy disputes.

That is dealt with by Part 8 of the Act.  But, your Honours, so far as either of those matters is concerned, we would submit it is difficult to see how efficiency and equity in respect of the section 3 matters is affected one way or the other by the adoption of the majority’s approach, nor do the matters in section 4 touch upon it.  Then one comes to Justice McMurdo’s reference to:

the intended wide application of the Act –

and in support of that proposition footnote 67 refers to sections 12 and 13(1).  If you look at those provisions, all that section 12 says is that:

This Act applies to all retail shop leases of premises in Queensland –

and section 13(1) says that it applies whether they are entered into or renewed before or after the day on which the substantive provisions of the Act came into effect.

Your Honours, there is then a reference in paragraph [37] to “the implication of the Act’s provisions in all retail shop leases”. It is obviously, as footnote 68 indicates, a reference to section 18, but section 18 does not really have that function. Rather it is concerned with, as I have referred to before, a duty which is imposed under the Act, or an entitlement conferred under the Act and neither section 6 nor section 8 does either of those things.

Your Honours, then there is the reference to the prohibition on contracting out of the Act, and I have taken your Honours to section 19, and if one asks what is the part of the lease in this case that purports to say that section 6 does not apply, or that section 8 incorporating the definition in section 6 is inapplicable - there is no provision. The fact of the matter, in our submission, is that section 6 is simply a provision used to define retail shop leases and retail shopping centres.

Your Honours, finally in relation to what is said in paragraph [37], her Honour refers to the fact that the Act prevails in the event of an inconsistency with a lease but, your Honours, even speaking broadly, what is the inconsistency? For the purpose of determining whether a shopping centre falls within a section 8 definition, section 6 applies and, your Honours, that is as far as it goes.

Your Honours, our learned friends’ submissions say in paragraph 43 that one should look to what was said by Justice Morrison in this regard at paragraphs [148] and following, there at page 476. Now, your Honours, if one goes to the bracket of reasoning by his Honour in paragraphs [148] to [151], it simply demonstrates, hardly surprisingly, that differing definitions of the same term will have differing results in differing contexts. But, your Honours, where does that give rise to any relevant inconsistency in terms of section 20? The judge seems to have recognised in paragraph [152] on page 477 that something more was required.

Your Honours, if one goes to look to see the “something more”, paragraph [155] really tells you no more than what happens in common areas and that common areas may be important.  But the issue is one of legal inconsistency and, for the reasons we submitted earlier, the example which she gives in paragraph [155] on the top of the next page is one which is inapposite to the particular case.  Your Honours, if one goes then to paragraphs [156] and [157], all that really emerges is that the two definitions are different.

Finally, your Honours, if one goes to paragraphs [157] through to [161], it may be accepted that section 6 is in one sense a provision of the Act but the question is not one of existence of different provisions but of inconsistency between them. His Honour, in the last sentence of paragraph [158], appears to recognise the need to see a substantive operation of the provisions, but the only ones to which he was able to refer in [159] to [160] were ones which in any event were not apposite to the particular case.

FRENCH CJ:   It sounds improbable in practice, but I suppose one could test it by asking whether a lease which had a definition of small “t” common areas along the lines of this lease and rights attached to that might also include, for the purposes, if it had them, provisions relating to outgoings and turnover and so forth, a definition of statutory common areas and then simply apply those substantive provisions consistently with the Act in relation to that definition.

MR JACKSON:   Yes, your Honour.

FRENCH CJ:   There is a small “c” definition that could stand consistently with the operation of the Act.

MR JACKSON:   That is so, your Honour.  I agree with what your Honour is putting to me.  In the present case, one needs to deal with it really at two levels.  One is the present case.  The lease does not contain the provisions he thought were important.  That is the first thing.  If one deals with it at a slightly higher level, your Honour, one still has to see that there is some inconsistency between having a definition for one purpose and a definition for another.  Unless something turns on the operation of the definition, what is the point of saying the two are inconsistent?  In particular, if you simply took the case where there is a power, in a case where there was an ability to get a proportion of outgoings, it would be a strange thing, really, if a person who was liable only for a small proportion of the outgoings, because of the area in a lease, was then liable for a lot more simply because there was an amalgamation and the amalgamation had the effect of giving a larger shopping centre.

GAGELER J:   Mr Jackson, this may be just asking the same question I asked before, but if you were to take the view there is an inconsistency and you were to take the view then that under section 20 of the Act you are required to read the statutory definition of common areas into this lease, so you do that and you find that common areas are areas adjacent to the centre that are used or intended for use et cetera, how do you identify what those areas are?

MR JACKSON:   I take the easy way out by saying it is a question of fact, I suppose, which would only arise in relation to a number of issues such as this, or would arise in relation to, I think, section 47 – one of the provisions of the Act that says the entitlement to recover damages or compensation if there were blockages in access to premises and things of that kind.

GAGELER J:   I suppose what I am asking is:  is there some relevant finding of fact that I am missing?

MR JACKSON:   I think not, your Honour.  There is a finding which we have not challenged that in fact people walked across the area that was resumed in order to get to the shopping centre.

FRENCH CJ:   Is there a bit of car parking on it as well?

MR JACKSON:   Some people park cars there, too.  Your Honours may have seen, it was a condition of the amalgamation that this area to be resumed was not built on.

KIEFEL J:   Mr Jackson, if one did apply the definition of “common areas” in the Act, does it follow that there is a right or interest given for the purpose of the Land Acquisition Act?

MR JACKSON:   Your Honour, that is what I am about to come to. I was going to say these things, your Honour. Your Honours will see in our outline of submissions – I think the particular matter your Honour is raising with me is in paragraph 14 of our outline of submissions. In our submission, if one looks at the reasoning of the majority, none of it demonstrates how the Act would create an interest in land for the purposes of section 12(5).

Your Honours, could we also say that in our submission, the reasoning of Justice Holmes at page 461 in paragraphs [57] and [59] was the better view of section 20. Your Honours will see in paragraph [57] that her Honour said – in our submission, correctly – that:

A difference in definition . . . does not, without more, create an inconsistency for the purposes of s 20 . . . In my view, the definition in s 6 does no more than explain what is meant by “common areas” when the expression is used in the s 8 definition . . . It says nothing as to rights or obligations; indeed the Act as a whole attaches no consequence to “common areas” by reason of their definition as such.

Could we refer also to paragraph [59]?  Your Honours, I will not read it out, but we would submit that was correct.  The Land Appeal Court adopted a similar view.  Could I take the Court to the Land Appeal Court’s reasons at page 401?  Your Honours, it is paragraphs [62] through to [68], and you will see in paragraph [63] the reference to the function of a statutory definition being:

to assist in the interpretation of the RSLA wherever that term is used . . . A difference in the definition of a term found in both the lease and the RSLA does not, of itself, have that effect; and no provision of the lease was identified which might be said to exclude the application of a provision of the RSLA.

Your Honours will see that elaborated on through that paragraph.  I will not go through the detail of those paragraphs, but we would submit that is a correct view of the provisions.  Your Honours, those are our submissions.  We rely, of course, on our written submissions in‑chief and in reply, and we would seek the orders set out in the notice of appeal at page 485 if we were successful in the matter.

FRENCH CJ:   Thank you, Mr Jackson.  Yes, Mr Diehm.

MR DIEHM: Your Honours, adopting the order followed by our learned friends we deal also, if we may, with the first ground of appeal expressed in paragraph 2 of the notice of appeal. As our learned friends have observed the ultimate issue in these proceedings is whether or not the respondent had a relevant interest for the purposes of section 12(5). We have laid some emphasis in our written outline upon the circumstance that the interest in land that was being claimed here was not an interest in the form of the premises that were the subject of the lease itself, but rather with respect to a right that arose by virtue of the terms contained in the annexure to the lease that we will come to in a moment.

In that regard, the case is analogous with that which was considered by the Court of Appeal in Sorrento where the court was concerned with a claim for compensation arising from a resumption of part of a car park that was the subject of a licence granted pursuant to or ancillary to a lease of commercial premises to medical practitioners.  Whilst, as our learned friends have fairly said in their reply submissions, that the nature of the interest claimed is not the subject of dispute, it remains, in our respectful submission, of some importance to note that distinction because very often language that is used, including in, for instance, the appellant’s primary written submissions, speaks of amendment of the lease and speaks of expansion of the area that was leased, when in fact not on the respondent’s case nor on the judgment of the majority of the Court of Appeal was there any determination of there being a change in the area that was in fact leased.

There was merely a change temporal subject to the control that could be exercised by the lessor in any case of the area of - common area that may have been used non‑exclusively by the respondent.  We draw the Court’s attention in that regard to the decision in Sorrento Medical Services v Chief Executive, Department of Main Roads [2007] 2 Qd R 373 to the judgment of Justice Chesterman in paragraphs [29], [30] and [35]. His Honour concluded the effect of what had been discussed in those paragraphs in paragraph [35] by saying that:

What the appellant had, pursuant to cll. 42 and 43, was a licence to occupy the land designated on the plan as car parking lots.  The licence was conferred by contract and was granted for a valuable consideration, the entry into the lease.

So, it is with that caution that we submit that the Court needs to be considering expressions such as whether or not the area, the subject of the lease, was expanded.

BELL J:   But in Sorrento, am I right in understanding that the lease identified the area by reference to a marking as “Doctor Parking”?

MR DIEHM:   It did, yes.

BELL J:   Yes.  Well, now, here the lease identified the common areas, the subject of the rights conferred on the lessee by reference to the land in Lot 6 which had a metes and bounds description.  What point is being made by reference to Sorrento?

MR DIEHM:   The point that is being made is the nature of the right, not the extent of it and what your Honour ‑ ‑ ‑

BELL J:   The nature of the right was a right in relation to common areas, “common areas” being defined by reference to the physical area marked on the map that was annexed to the lease.

MR DIEHM:   Yes, your Honour, and we are not seeking to submit otherwise.  The intent of referring to Sorrento is to refer to the nature of the right as distinct from a right under a lease.  Now, the subject of that right in Sorrento was, with respect, to clearly demarcate it land and here it was too, and, in our submission, it remains so, that is within the metes and bounds of the old Lot 6, until such time as there was a change of circumstance that, as a matter of construction, called for the interpretation of what was the boundaries for the purposes of common areas to be extended to the area of the amalgamated lot.

KIEFEL J:   But in relation to the original lease, would you not describe the shop premises together with the common areas, as the land the subject of the lease?

MR DIEHM:   Well, no, in our submission, your Honour, you would not and that comes from an examination of the lease itself. 

NETTLE J:   The lease is over the premises and the rest is contractual licence to wander at large, subject to control of the landlord.  Is that it?

MR DIEHM:   Thank you, your Honour, yes.  That is the point that we make.

KIEFEL J:   That is all that Sorrento is saying.

MR DIEHM:   Yes, quite so.

KIEFEL J:   So, on that view, the licence, does that convert into an interest that is subject to compensation?

MR DIEHM:   In accordance with Sorrento, yes, and that conclusion is not the subject of dispute in this appeal.

NETTLE J: Although it seems that it is in the paragraph in the reply - outline of oral submission, paragraph 14, not in the notice of appeal, but it seems to be put there.

BELL J:   Was not the contractual licence a contractual licence with respect to the area that was described by reference to the metes and bounds of Lot 6?

MR DIEHM:   That was certainly the case until the time of the resumption but our submission is that what the conclusion of the Court of Appeal was, that as a matter of construction when there was an amalgamation so as that there was an enlargement of the land that the lease was registered over, the proper interpretation of what was meant by “the land” became what the new description was, not the old.

BELL J:   So what was the effect of the registration of the lease?  That remained and that defined not only the premises the subject of the lease, but defined the area of the contractual licence the subject of the rights respecting the common areas.

MR DIEHM:   Yes, your Honour, and then it was a matter of interpretation when the circumstances had changed as to whether or not the parties’ intention formed at the time that the contract was entered into meant that the meaning of “the land” needed to be read more broadly.

BELL J:   Where do we get the analysis of the basis for a conclusion that objectively the intention of the parties was as you put it?

MR DIEHM:   This, if I may say, refers back to something that Justice Kiefel raised with our learned friend, Mr Jackson, earlier about whether the reasoning of the Court of Appeal, and in particular in the President’s reasoning, intended to separate, as it were, the conclusion about the effect of the statute from the then expressed conclusion about the intention of the parties.  Our submission is that as it is expressed they are separate but nevertheless related conclusions, that is, they are expressed to arise independently, but then they are acknowledged as being of course consistent.

In our submission, for reasons that we will come to shortly, the circumstance that it was the inevitable consequence if there was an amalgamation that this lease would become registered against the enlarged parcel is of itself a reason why the parties would be taken to have had the intention that if that circumstance occurred their contract, that is, their lease and their contract, would be interpreted in that way.  In the end, it was an inevitable consequence that the lease came to be registered against the new title.

NETTLE J:   Is it just that, just that it was expected that there would have to be a new title, that gives rise to the implication that the land includes expanded land, or is there something else?

MR DIEHM:   Well, it is expressed as being an independent conclusion.  There is nothing else that we can point to that is referred to apart from the court’s analysis about the history of the matter and the terms of the lease and the contractual terms that go with it, bearing in mind of course that, as clause 15 provided - Mr Jackson took your Honours to that – it was open to the lessor to unilaterally alter the area that was the common area.  So from that point of view the conduct here of the lessor, if it be whether it be unilaterally or consensually, in altering the area of land that comprised the shopping centre, could be said to be altering the area that constituted common area.

KIEFEL J:   Would not clause 15 be somewhat against a construction that it could have been intended to expand the interests of the lessee by an action outside the control of the lessor?

MR DIEHM:   Our submission is that it is consistent with it, if your Honour will bear with me.

NETTLE J:   Why, because altered could include increased as well as reduced?

MR DIEHM:   Yes, your Honour.

NETTLE J:   But that is still all within the old Lot 6, is it not, at least on the express words of the lease.  How do you get it outside to the added on piece after the consolidation?

MR DIEHM:   Because here this was an amalgamation, of course, that was for the purposes of expanding the area of the shopping centre.  The consequence of the construction that is put upon these events by the appellant and adopted by the Land Appeal Court and by Justice Holmes is that the shopping centre expands but some imaginary line is to be construed as being the bounds of the common areas for the purposes of the lessee, the lessee’s customers and the lessee’s employees.  They are all supposed to be now, presumably, denied access to the area that might otherwise be sensibly regarded as the common areas within the shopping centre.  So that is part of the factual matrix with respect to the circumstances in which this lease was entered into that allow for the interpretation of the events which occurred and the interpretation of the intention of the parties at the time the lease was entered into.

BELL J:   Was this the way the matter was considered before the Land Court?  You talk of the factual matrix; what material was there concerning that?  The amalgamation came about because you had the same owner of old Lot 1 and Lot 6 and it was a requirement that the lots be amalgamated.  Is that right?

MR DIEHM:   That is so, your Honour, yes.

BELL J:   Had something happened shortly after the execution of this lease and before the requirement for amalgamation?

MR DIEHM:   No, that is not what I intended to convey by that reference to the circumstances.

BELL J:   So the parties agreed to a lease, which defined the area of the contractual right to the common areas by reference to Lot 6?

MR DIEHM:   Yes, your Honour.

BELL J:   And, presumably, at that time the old Lot 1 was an area with car parking and ‑ ‑ ‑

MR DIEHM:   It was a house on a block of land, yes.  So it was not part of the shopping centre.

BELL J:   Was all this explored in the Land Court?

MR DIEHM:   No, it was not.

BELL J:   Because it was not treated as an issue in the way it is now being framed?

MR DIEHM:   The question of construction of the agreement between the parties was an issue that was raised at each step of this litigation.  So in the Land Court there was a reference your Honours will find in the judgment, at AB 361, about line 5, where the amended originating applications summarised the point that is made in them.  Your Honours will see that it refers there to the right arising:

By virtue of the provisions of the Lease -

Now, when the matter then came before the Land Appeal Court there was a notice of contention, which is at AB 385.

NETTLE J:   Just pausing there, you have taken us to 361 and following.  There is reference there at page 364, 365, et cetera, to various provisions of the lease, including 6.13, 6.14 and so on.  There is nowhere, is there, in the reasons of the Land Court or the Court of Appeal Land Court which analyses those provisions as giving rise to this implication for which you contend?

MR DIEHM:   No, there is not.

NETTLE J:   So Mr Jackson was right, and I have no doubt he was, when he said before that this way of approaching the matter really has not been gone into before.  The only way it has been approached thus far is by force of the amalgamation?

MR DIEHM:   Yes, that is so.

NETTLE J:   If that is so, and he seemed to submit that it was, it follows, does it not, that it is not for us now to go back into the interstices of 6.13, 6.14, 8.6 and so on to see if we can derive an implication about land, including something beyond the bounds of Lot 6?

MR DIEHM:   Save that the Court of Appeal, having made reference to the various provisions in the lease, did make reference to the intention of the parties.

KIEFEL J:   I think in context, having reread it after I asked Mr Jackson about it, paragraphs [18] and [19] of the President’s reasons, paragraph [19] commences:

This construction is not inconsistent with . . . the objective intention of the parties –

The construction to which her Honour is referring is the construction of section 182. So her Honour’s reasoning appears to be that the amalgamation and the provisions of section 182 have this particular effect, and then in paragraph [19] her Honour goes on to say that this result is not inconsistent with the parties’ intentions. That, I think, appears to be –

MR DIEHM:   It.

KIEFEL J:   The highest it is put, the question.

MR DIEHM:   Yes.

KIEFEL J:   Her Honour somehow sees the contractual position as supporting the position of the amalgamation.  Whether that legally follows is another question, but that appears to be the highest point.

MR DIEHM:   Yes, there is certainly no reasoning that seeks to analyse or draw support from other objective circumstances that might sometimes be seen in contractual disputes about the intention of the parties.  We accept that, and we accept that there is a degree of ambiguity in the way in which that is developed, hence why we say or have submitted that they are not unrelated conclusions that have been reached by the court in that regard.  They come down, nevertheless, to an intention of the parties that is inferred at the time they entered into the contract as to what their expectation was.

GAGELER J:   Do you mean anything other than the proper construction of the lease instrument when you say that?

MR DIEHM:   No, I do not mean anything other that.

GAGELER J:   Are we actually going to get to the terms of the lease and how you say it works or not?

MR DIEHM:   Yes.  What we wish to do, if we may, is to first spend some time looking at the reasoning of the majority as well as Justice Holmes with a view to discerning what the point of difference is and what the significance of the point of difference in the conclusions is because it ultimately bears upon, in our submission, that question as to what would be expected.

KIEFEL J:   This is on the question of construction, Mr Diehm?

MR DIEHM:   On the question of construction.

KIEFEL J:   Would it not be perhaps more efficient to actually look at the terms of the lease itself before we have a look at how their Honours described it because, as you say, it is not – the reason is not really fully developed?

MR DIEHM:   Yes.  Your Honours, if we may start at the form 7 at AB 111.  Item 8 at about line 45 describes what is leased by its reference to the lessor leasing the premises.  The premises themselves in turn are defined in item 5, as the Chief Justice noted earlier, by reference to that description in “part of the ground floor of the building” and our learned friends took your Honours to the sketch that is attached to the lease that shows the building as opposed to the balance of Lot 6 and as well also shows the delineation of Lot 1 as it then was.  Your Honours will have seen the reference then in item 2 to the description of the lot.  Your Honours will have noted that in item 8 it refers to the lease being:

subject to the covenants and conditions contained in the attached schedule.

The premises themselves are defined in that schedule separately, though not inconsistently, at item 3 on AB 113 as referring to the shop number with the common address.  Then over at AB 114 relevantly - again mostly our learned friends took your Honours to these definitions – the definition of “Building” and “Common Areas” and “Land”, with the building being the building that the premises were part of, and the land being the reference back to item 2.  “Premises” themselves were defined at AB 116 as meaning:

the premises described in Item 3 of the Reference Schedule –

So that is by reference to the shop number with the common address.  Then there was also a definition of “Shopping Centre”, with the shopping centre being the building comprising the group of shops and the associated facilities:

forming part of the land and known as Castle Hill Shopping Court -

The balance of the relevant terms our learned friends have taken you to.  They include clause 6.8 on AB 123 and clause 15 that each deal with common areas, but seeing that there is an intention for there to be a lease with contractual rights appending thereto concerning the use of common areas of land that comprises the Castle Hill Shopping Centre.

FRENCH CJ:   Well, it is a permission to use them, I suppose, subject to whatever else the lessor might want to do with them.

MR DIEHM:   It is, quite so, and non‑exclusive permission in that sense as well.

BELL J:   And question whether it is to use the Castle Hill Shopping Centre or whether one reads in the definition of “shopping centre” the preceding words which refer to land which, of course, is defined by reference to the physical area of then Lot 6.

MR DIEHM:   That is so.

BELL J:   That is the issue, is it, whether one ‑

MR DIEHM:   It is.  So whether in the circumstances of an amalgamation by virtue of the effect of the Act with respect to what is to occur on an amalgamation with respect to the lease whether that results in, because of the party’s presumed intention, a reinterpretation of what is meant by “the land”.

NETTLE J:   I see at clause 6.3(i) there is a prohibition on soliciting “for business in Common Areas”.  Do you say that applies to the expanded common area after the acquisition of the additional piece of land?

MR DIEHM:   Yes, anything that applied to the common areas beforehand would apply in the situation afterwards as well.

NETTLE J:   That is true, is it, of all of these other provisions:  6.8 and 6.13, the car parking, with the liquidated damages of $100 a day ‑ if you parked on that newly acquired piece of land you would be liable for $100 a day that 6.13 provides for?

MR DIEHM:   That is so, yes.  What the Court of Appeal concluded was that ‑ in a finding which our learned friends have expressed agreement with was that, in describing the land as it was in the lot, it was the intention of the parties to use the real property description.  To make sure that I put this fairly as well as accurately, we refer the Court to the conclusions of the President where her Honour said – sorry, your Honours, I am just turning the particular phrase that was referred to.  I will come back to that; I am sorry, your Honour.

BELL J:   Just staying with the lease for the moment, the definition in the lease of “Common Areas” was those areas of the building or the land which had not been leased or licensed by the lessor.  By reference to the definition of “Shopping Centre” with its reference to facilities “forming part of the land and known as Castle Hill Shopping Court”, do you say that one would infer an objective intention that any increase in the land held by the lessor upon which shops may have been constructed or other facilities associated the Castle Hill Shopping Centre would form part of the common areas?

MR DIEHM:   Anything that fitted within the definition of “common areas”, within the expanded area, yes.  So, it would only be those parts of the additional area that were not leased or otherwise by that definition excluded.

BELL J:   So any increase in the landholding of the lessor contiguous to the land upon which the shopping centre was located would, on this analysis, be subject to the contractual right.

MR DIEHM:   We would express it slightly differently, your Honour.  It would be any increase in the land comprised by the lot that the lease was registered against.  Your Honour used the expression “increase in the landholding contiguous with”, which may or may not have necessarily meant confined within the one real property description.

BELL J:   What is the significance in terms of the parties’ presumed intention of an increase that occurs by reason of an amalgamation?  What is the significance of the lot, in other words, as distinct from the area that the lot is shown to comprise, by reference to a metes and bounds description on the plan?

MR DIEHM:   Because the parties intended to describe the land as being the lot.

KIEFEL J:   Where do we derive that intention from? 

MR DIEHM:   The intention, as it existed as at the time of the formation of the contract, is apparent from the circumstance, of course, that they did.  In terms of the intention that if there be a change in the real property description, it is an objective intention to be drawn from the presumed known circumstance that the parties, that is the respondent’s interest, would come to be registered against a new lot number.

NETTLE J:   So that is really it.  Because they described the lease in terms of a Real Property Act description of the land on which it was constructed, it is to be inferred as a matter of necessary implication that when and if that lot were changed by a new subdivision or amalgamation, the definition of “land” would change accordingly?

MR DIEHM:   Yes, so if the change came about because of a clerical change in the Titles Office or a change under legislation in the way in which real property descriptions were to be assigned to even the same parcel of land, the intention of the parties to be viewed objectively at the time of entering into the contract would be that they would have the land described as “the lot” that existed at the time being considered.

NETTLE J:   Thank you.

FRENCH CJ:   If that does not work then ‑ ‑ ‑

NETTLE J:   That is it.

FRENCH CJ:   ‑ ‑ ‑ by operation of law, namely, the Retail Shop Leases Act, if the size of the retail shopping centre is expanded then the common area to which the lease is addressed expands as well?

MR DIEHM:   That is so, yes.

KIEFEL J:   The point raised against you, of course, is that the lease itself never changes.

MR DIEHM:   The lease does not change, but it is open for the description of the land, the definition of the land, which is not what is leased to change.

KIEFEL J:   So you say the lease is subject to amendment or rectification?

MR DIEHM:   No, it is a matter of interpretation consistent with the parties’ presumed intention.

FRENCH CJ:   You have to give it some ambulatory content, do you not?

MR DIEHM:   Yes, that the parties would regard the definition of “land” in the agreement between them to reflect the real property description that the lease was registered against.

KIEFEL J:   This is a “the parties must have intended if they had known what was going to happen” argument.

MR DIEHM:   It does not depend upon that ultimately, your Honour, with respect, because the circumstances in which there could have been a change in real property description were many.  It could have happened as later did come to happen when the resumption occurred.  The occurrence of the resumption resulted in a further subdivision of the by then amalgamated and expanded land.  That resulted in changes in real property descriptions as well.  So that is one circumstance.  Clerical or legal changes that we have mentioned is another; amalgamation or subdivision and no doubt others. 

The question is not whether the parties anticipated this precise event occurring, of course, but rather whether they are to be taken to have intended to be using the real property description that applied to the parcel of land that the lease was to be registered against temporarily, as it were, that is, what is the real property description at the time at which it occurred? Now, section 65(2) of the Land Title Act ‑ ‑ ‑

FRENCH CJ:   You do not say incidentally, do you, that that prospective ambulatory construction is necessary for the commercial efficacy of the lease?

MR DIEHM: No. I should have said section 65(1) of the Land Title Act, of course, requires the instrument of lease for a lot, or part of a lot, to, as (b) says:

include a description sufficient to identify the lot or part of the lot to be leased –

So that is, from a statutory point of view, one of the purposes of the description of the lot as it appears in item 2.  One of the features of this case is, in our respectful submission, this.  The Land Court concluded that the effect of the amalgamation or the result of the amalgamation was that this lease came to be registered against the new amalgamated and expanded lot.  That conclusion appears at page 368 of the appeal book at about line 20 where the member observed that that was the outcome despite the fact that the lease was not amended in any way and still referred only to the area that was formerly Lot 6.

That conclusion was also reached by the Land Appeal Court at page 399 of the record.  That is at paragraph [53] and it is also said in paragraph [52] at about line 20.  The conclusion was joined in by each of the judges, including Justice Holmes in the Court of Appeal, and we refer to her Honour’s reasons ‑ ‑ ‑

BELL J:   What significance do you place on the recognition that the lease was noted in relation to amalgamated Lot 1 as an existing lease?  That does not seem to be in controversy.  What are you ‑ ‑ ‑

MR DIEHM:   It is not.  With respect, your Honour, is perfectly right.  The point that we want to make is that not only has this been uniformly defining, it is also borne out by the evidence by the title extract.

BELL J:   But what significance do you attach to it?  As Mr Jackson has drawn our attention to on more than one occasion, the scheme of the Act contemplates that an instrument of lease for a lot or for part of a lot may be registered.

MR DIEHM:   There are several things that we observe about it.  The first one is that whilst it has been accepted by all of the other members of the courts who have considered this matter and whilst it is conceded by our learned friends to be the case, apart from the majority in the Court of Appeal there is no exposition of the way in which that came about.

We will refer in due course to what Justice Holmes had to say about the matter but, with respect, her Honour’s reasons are more about why it did not come about because of section 182 than how it did come about. But the ultimate point that we make is that how it came about is really perhaps of no consequence because what every member of the Bench that has considered the matter has concluded is that it did come about and what goes with that is that it was inevitable that it would come about, that is to say ‑ ‑ ‑

GAGELER J:   Sorry, what are you saying came about?

MR DIEHM:   That on an amalgamation, the lease would come to be registered against the new lot.

GAGELER J:   Yes, and it takes us to the terms of the ‑ ‑ ‑

MR DIEHM:   That takes us to the question about the presumed intention of the parties.  If the parties start, as seems to be uncontroversial, with the notion at the time of entering into their agreement, with the intention that they want the description or definition of land to reflect the real property description over which the lease will be registered, it is an easy conclusion to reach, the right conclusion to reach, with respect, that the parties would have the intention that if the real property description was to change, that is the real property description over which the lease was to be registered was to be changed, the parties intended for the meaning of “land” in their agreement to change with it.

NETTLE J:   What if the acquisition had been, say, of 1,000 acres and the landlord had constructed on the other 500 acres, or 800 acres, a second shopping centre, albeit on the same title, why would you say that the common areas of that should be included within the common areas of the first shopping centre, just because they are all on the one title?

MR DIEHM:   I am sorry, I take your Honour’s point about the acquisition being by the landlord.  Well, because the parties would be presumed to have an intention that would create the benefits that would flow from the same definition of land, that is to say, the expectation is that land is to be defined by reference to the metes and bounds of the parcel upon which the lease is to be registered.

NETTLE J:   Well, you say that, but why would you infer that?  He might want an upmarket, classier one on the 800 acres that he puts up and leave the little one that you are in there in its present standard, without any intersection between the two of them.

MR DIEHM:   Two things; if that is what the lessor’s intention is, then it is within his or her power to include a term in the contract to that effect.  Secondly, to an extent, perhaps it might be said the lessor here did, because of the provisions of clause 15 which mean that if the lessor does not want any part of those extra common areas to be included in the common areas available for the lessee, then it is within the lessor’s power to say so.

So, it again remains an easy construction of the parties’ intention to say, presume this and, of course, if the lessor is not satisfied with that, then the lessor can change that.

KIEFEL J:   But, as against that, why would one necessarily infer that the lessor intends to grant even a right by way of licence over a greater piece of land, that is the first question, and Mr Jackson’s point was that in many leases in retail shop leases, one sees provisions for outgoings in relation to common areas.  On your argument, the tenant would be saddled with much greater outgoings, without any choice.

MR DIEHM:   Well, that presumes that that may be so.  It is a presumption that is perhaps more hypothetical than real.  If there is to be an expansion of the shopping centre, then there is likely to be an expansion of contributions that may be made with respect to the outgoings that are to be incurred, and it may also depend upon, bearing in mind, of course, to say, as Mr Jackson pointed out, that outgoings are not payable under this lease, so as a matter of construction, to borrow our learned friend’s argument, that example does not arise here and perhaps should not be taken into account in terms of what the parties themselves intended under this particular agreement.

But in any case it would require an examination of what the Retail Shop Leases Act permitted.  I cannot give your Honours an answer about that at the moment, but it obviously contains constraints and formulas about the way in which outgoings are to be taken into account.  But the short answer is once it did not apply here it is not to be taken into account in the construction.

GAGELER J:   Does section 182 of the Land Title Act play any part in your argument?

MR DIEHM: Your Honours, it is open to construe section 182, as the majority did, as being the means by which the outcome of registration of the lease came to be. There are difficulties with it and our learned friends have pointed to some of those and the majority seem to have been conscious of them. But ultimately it seems that it could only have been the case that the lease came to be registered – it would be anticipated as coming to be registered by virtue of the operation of section 182 or perhaps by a combination of the effect of sections 175 and 179.

What appears to have been commonly accepted in each of the courts below as well as by our learned friends is that the act that saw the lease come to be registered against this new title was the lodging of the survey plan.  On that understanding, if the survey plan came to be lodged then under section 175 it may be taken to form:

part of the freehold land register from when it is lodged -

and by section 179, as our learned friends pointed to, the particulars of the instrument recorded in it a conclusive evidence, but that would require its reference as an existing lease allocation, as it is described in the survey plan, as picking up the reference to the original lease document, which is noted on the back of that survey plan.

Our learned friend took your Honours to the survey plan during the course of the appellant’s submissions.  If we can take your Honours back to page 94 - it is a two‑page document.  Page 93 is the first page, showing the sketch plan, and page 94 appears to be the other side of the same document.  Our learned friends referred to it as the title but it is in fact part of the survey plan.  So that is the document that is lodged and it is the one that refers to existing lease allocations.

GAGELER J:   Can I just understand?  It is the instrument that creates Lot 1.  It brings Lot 1 into being.

MR DIEHM:   That is so.

NETTLE J:   Actually, it is registration, surely – not the instrument but the registration of the instrument?

MR DIEHM: I am sorry; yes, it is, your Honour. I stand corrected. Justice Holmes referred, as your Honours may recall, in her reasons to the interest, as it were, that came to be registered, that is, the lease interests that came to be registered against the new Lot 1 as being as a result of an encumbrance, as it were. Her Honour makes reference to that in paragraph [45] of the reasons at page 459 – her Honour’s principal reason in rejecting that section 182 had the effect that was suggested. Her Honour noted there:

The survey plan . . . was expressed to create Lot 1 from the existing Lots 6 and 1.  It was not expressed to create the lease increase – which had already been created by registration – but to encumber it on Lot 1.

Now, “encumber” is not in that sense a term that is used in the Land Title Act.  It, or derivatives of it, come to be referred to in a couple of provisions of the Act, but they are not provisions that have any particular bearing upon the circumstances that are involved here.

KIEFEL J:   But her Honour means only that the new Lot 1 is subject to the lease which remains registered as a lease, according to its terms.

MR DIEHM:   Quite so, and that is an uncontroversial conclusion amongst all of the judges in particular in the Court of Appeal.  What her Honour does not explain in arriving at that conclusion is what is the mechanism under the Act by which that occurs?  With respect, our learned friends do not address it.

In our submission, in the end, whether it be by virtue of the approach taken with respect to section 182 by the majority or whether it be by sections 175 and 179 in combination, in circumstances which have not been described by any of the judges in any of the courts, that seems to be about the only alternative means by which it occurred.

GAGELER J:   So if we take the section 182 route, looking at the language of section 182, what is the instrument? Is it the instrument at page 94?

MR DIEHM:   Yes, that would be so.

GAGELER J:   And the interest is the lease?

MR DIEHM:   And the interest is the lease.

GAGELER J:   Where do we go from there?

MR DIEHM: It is transferred in accordance with the instrument, and by transferred here, to read the section in that way, in our submission, one must distinguish a situation from a transfer between transferor and transferee as section 11 of the Act contemplates, something that Justice Holmes drew upon as part of the reason for rejecting section 182, and give it a broader meaning as including, as occurred here, a transfer from one title to another title.

FRENCH CJ:   All of this begs the question what is in the lease, does it not, what is the interest, which depends upon the construction of the lease?

MR DIEHM:   That is so, yes.

FRENCH CJ:   So your argument on this limb, putting to one side the Retail Shop Leases Act, depends critically upon acceptance of the construction of the lease which encompasses, as I put it to you before, a sort of prospectively ambulatory notion of land and common area?

MR DIEHM:   It does.

FRENCH CJ:   The way you get to that, you sort of invoked intentions which seemed to descend from the sky upon this document but, as I understand it, you are saying, all right, well, at all times – you have not said this expressly but I am trying to understand the logic – at all times there is a possibility - when the lease was entered into there was the possibility of an amalgamation of the leased lot into a larger lot that could occur under the Land Title Act and the possibility associated with that of registration of the lease on that larger lot which might encompass additional area which could fall within a definition of “common area”, and that that possibility existing, there must therefore be read into the lease a construction that will deal with that possibility in the way that you have put, namely, that there is this ambulatory notion of land and common area that will accommodate that change?  Is that a fair description?

MR DIEHM:   If I may put one alteration upon that, with respect, your Honour.

FRENCH CJ:   Yes.

MR DIEHM:   And that is this, that our argument about construction is not confined to an assumption that the change in title comes about because of an amalgamation creating a larger lot.  It could be any change, whether it be a reduction, an increase or just a renumbering of the lot.

FRENCH CJ:   All right.  But you accept, as I put to you before, I think, that it is not a commercial necessity.  The lease worked perfectly well without that construction?

MR DIEHM:   That is so, yes.

FRENCH CJ:   But why should we construe it that way?

MR DIEHM:   If I may put it this way.  There remains advantage in the lease being construed in that way because of the primary function of the description of the land in the lease being to identify, as Justice Morrison said, the designation given to it by the Land Titles Office under the Act for the purposes of registration.

FRENCH CJ:   That might be a convenient moment, Mr Diehm.

AT 12.44 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.13 PM:

FRENCH CJ:   Yes, Mr Diehm.

MR DIEHM:   Thank you, your Honours.  Just picking up on the interchange between myself and the Chief Justice before the lunch break when I raised some practicality issues, if they stand distinct – and perhaps they do not properly stand distinct from commercial considerations in the construction issue – there are a couple of practicality or, if they be properly described as such, commercial considerations that we do wish to refer the Court to, one of which is one that I had already adverted to earlier in the submissions.  Another one draws upon observations made by Justice Morrison in particular in the judgment.

Starting with respect to Justice Morrison in that regard, his Honour gave an example at paragraph [139] of the judgment - if we can take your Honours to that, at appeal book 474?  I invite your Honours to read that passage.

So, your Honours, the Zacsam lease, and I will come in a moment to a similar example that one could come up with concerning the respondent in a hypothetical sense, but the Zacsam lease was entered into over the new Lot 1, as it is referred to in the judgments, and then the resumption happened and a portion of that land was resumed.  Well, assuming the same factual scenario here in terms of the rights under the lease, assuming that they were to apply, the argument on behalf of the appellant would have it as a consequence that the lessee would still have the supposed rights with respect to the land that had been resumed and would not be confined, as it would if your Honours were to accept the respondent’s argument, to the land as it is now constituted and as it is now represented in the registration under the Land Title Act.

The same would apply if here, even after the amalgamation, there was a resumption that took part of the old Lot 6.  The appellant would have the Court conclude that the respondent, whilst not having rights to any land that had become part of the amalgamated parcel that it did not formally have under its lease, would have rights with respect to land that was no longer part of the registered title of the lessor.  We do refer back because our learned friends challenged it to ‑ ‑ ‑

BELL J:   I am sorry, but why would that follow?  If the land is resumed and the lessee no longer has title to the land and the land is now the subject of the resumption, why would one say that the contractual licence relating to that part of the land that had been resumed persisted?

MR DIEHM:   It is an impractical conclusion, we accept that.

BELL J:   But no one would suggest it, surely?  What is the ‑ ‑ ‑

MR DIEHM:   The contract, it would be said, should still be read as if that right existed – that it existed to the bounds of the old Lot 6, even though the old Lot 6 in its entirety is no longer in.

KIEFEL J:   But all your rights, after resumption, are converted into a right to compensation and no longer exist in relation to the land?

MR DIEHM:   That is so, yes.

BELL J:   It is not an apt analogy.

MR DIEHM:   Can we take your Honours then to the analogy in paragraph [133] that his Honour referred to because, in our submission, it is an apt analogy.  The contention or the proposition advanced there turns upon a circumstance not involving a resumption but, of course, a subdivision.  In the circumstance described by his Honour, of course the subdivision could occur under the lease, leaving the leasehold interest within the entirety of one of the parcels of land so subdivided.

That would operate effectively, potentially, at a practical level at least, whilesoever the land remained in the title of both owners, though it would involve the curiosity that there were now two separate titles, but if one of those parcels was to be sold, which would involve no wrongdoing on the part of the lessor in doing that, in our submission it gives rise to any of the considerations referred to by our learned friend.

KIEFEL J:   Are you going to get a subdivision if you have a lease registered as an encumbrance over one of the lots, in a practical sense?

MR DIEHM:   Well, the leasehold interest is entirely within one of the lots and so the leasehold interest would not stand in the way, in our submission, with respect to the registration of the subdivision. 

NETTLE J:   Mr Diehm, can I just ask you, is the point of all this that because it is a necessary conclusion that when land is subdivided that the tenant loses rights of passage over the common areas of so much as is subdivided off, what, by parity of reasoning, it should be concluded that when land is added on he acquires additional rights over so much of the common areas as might be said to be in the bit that is added on?  Is that the argument?

MR DIEHM:   It is, your Honour, yes.

NETTLE J:   Thank you.

MR DIEHM:   The other point of it though was to indicate that there would be some impracticality if the – so in other words, if I may stand back a moment, taking up your question your Honour Justice Nettle, that is the answer to the problem from the point of view of the respondent, that that is the way in which the difficulty is dealt with.  With respect to the argument of the appellant though, it is our submission that it would result in some impractical consequences, so the argument of the appellant means that problems with respect to the rights of the parties are not solved but are compounded.

NETTLE J:   I am not sure that the appellant would say this, but I think that what they would say is your rights, however they might be described, are confined to the bounds of the old Lot 6.  If some of that gets excised off by way of subdivision, so be it.  You are still confined within Lot 6 but it by no means follows logically or otherwise that if something is added to the landlord’s landholding outside Lot 6 you magically acquire rights in respect of what is added.

MR DIEHM:   That may be their answer.  I am not so certain that that has been articulated to date, but if it is, in our submission, it is an inconsistent approach with respect to the way in which the agreement between the parties should be interpreted and that a court would prefer an approach that was consistent between the two different examples that are raised.

NETTLE J:   Yes.

MR DIEHM:   The other matter that we refer to in terms of practicality concerns the imaginary line notion, and that is to say this, that if in the event that the appellant’s argument is to be accepted as correct, then despite the fact that there is a leasehold interest that is registered over the whole of the lot, there is an imaginary line that affects the interpretation of common areas that has to be observed by not only the lessee but by the customers and in turn by the staff of the lessee as to what are common areas and what are not and from a practical point of view that would be a somewhat surprising outcome.

FRENCH CJ:   That of course can occur under the existing terms of the lease because the lessor can close off any part of a common area to access by the lessee.

MR DIEHM:   Yes, although similarly in circumstances making it clear that that is the case, that these are areas that cannot be accessed and these are areas that can be, whereas here there is going to be a line that is not necessarily so demarcated where pedestrians may no longer walk by way of example. 

So from a commercial point of view, it is our submission that even if it is not impossible to construe the intention of the parties as contemplating that that would be the outcome in circumstances where there had been an expansion, whether it be by way of amalgamation or boundary realignment or any other kind of change in the parameters of the property, it is not impossible for that to have been the intending outcome. 

The clear and preferable commercial outcome would be one that accepted that where there was to be a change that would in fact in the registration of the property – registration of the lease result in a lease being registered against a new title, the parties would practically be seeking the same outcome in terms of the interpretation of land for the purposes of their agreement and in particular with respect to common areas.

NETTLE J:   That sounds like it is getting perilously close to business necessity of the kind eschewed before lunch.

MR DIEHM:   That is why I referred to the practicality issue, which I had identified before lunch, to Chief Justice French. I accept that I had eschewed that, but I would resile, if I may with leave, from that to the extent of those particular points, which are points that were the subject of the submission already and points that are the subject of the judgment to the extent that I have referred to Justice Morrison’s reasoning in that regard.

NETTLE J:   Does it go as high, do you say, as it being necessary so to construe it in order to give the lease efficacy?  If not then how can you ask us to do it, to depart from the natural and ordinary meaning of the words of the ‑ ‑ ‑

MR DIEHM:   From the point of view of the position with respect to the practicality concerning the imaginary line, in our submission, yes, it really does rise to the level of the business efficacy test.  It creates such difficulties with respect to the operation of a retail shopping centre that the parties would not be assumed to have intended that to be the outcome.

KIEFEL J:   Can I just take up the point you made before on how pedestrians would be affected?  Members of the public using public areas would not be affected by any of this, would they?  They cannot be.

MR DIEHM:   They presumably would have their own licence with respect to that.

KIEFEL J:   They are public areas.

MR DIEHM:   Yes, quite so.

KIEFEL J:   That is the only place that you would expect them to be attending.  They are not going to be affected; it is only tenants who are going to be affected by a demarcation between common areas and not, and that is not such an unusual circumstance, is it, in relation to shopping centres?

MR DIEHM:   With respect, your Honour, the lease in terms of the right to use common areas is one that purports to extend the right to not only the tenants and the tenants’ employees but in fact to the customers.  It does that by a rather curious means, one might have thought.  If your Honours see at appeal book 123, clause 6.8, it speaks of the use of common areas.  It says:

The Lessee and the Lessee’s Employees may use the Common Areas –

“Lessee’s employees” is a defined term which your Honours will find ‑ ‑ ‑

FRENCH CJ:   Your point is that it picks up customers, does it not?

MR DIEHM:   It does pick up customers.

BELL J:   It is page 116, line 40.

MR DIEHM:   Thank you, your Honour.  It picks up customers, which might not be otherwise the natural meaning of that expression.  By doing so it seems to be conferring and considering necessary to confer, we would submit, that there is some advantage in that permission being given, that licence being given to customers of the lessees with respect to what are common areas, if they are to be distinguished in that regard from public areas.

FRENCH CJ:   Well, people would walk across this area to get into the shopping centre, would they not?

MR DIEHM:   Yes, and that ‑ ‑ ‑

FRENCH CJ:   Not specifically this particular tenant’s premises, but anybody’s.

MR DIEHM:   Though there was a finding in the Land Court that that precisely had occurred, so ‑ ‑ ‑

FRENCH CJ:   That what had occurred?

MR DIEHM:   That the customers of the respondent had been accessing what were otherwise to be regarded as common areas on the added land by the amalgamation.

NETTLE J:   They had been parking on it, parking their cars on it.

MR DIEHM:   In both ‑ ‑ ‑

NETTLE J:   If they were not common areas, you would be liable for $100 a day liquidated damages for each one of them did under clause 6.13, but you have to pay ‑ ‑ ‑

MR DIEHM:   Yes.  Your Honour, that was the subject of consideration by the court below, the primary court, with respect to motor vehicles parking on that area and the distinctions between it.  For present purposes, the relevant finding from the court below was that pedestrians were using it and that that constituted the area as common areas for the purposes of the lease.

Your Honours, I had intended to refer the Court earlier in my submissions to a passage in the judgment of the President that went to the question of what the intention of the parties was.  If I can take the Court to that now, it is at AB 451, and in paragraph [19] in the third sentence where her Honour said:

In describing the land on which the leased premises were located, it is clear the parties intended to give the land its registered description which, at that time, was part of the old Lot 6.  If the land were to be amalgamated with other land and re‑registered, the parties intended that the leased premises would be described by reference to the registered description of any new, amalgamated lot on which its lease was endorsed.

KIEFEL J:   It is a bit difficult to know how else you are supposed to refer to land that is the subject of a register other than by its registered description, so what do you infer about intention from that fact?

MR DIEHM:   Well, with respect, your Honour, adopting the difficulty is what informs the intention in that respect.  The parties necessarily had to choose a description of the land that reflected its real property description.  Now, that point was taken up by Justice Morrison at paragraph [131] on page 473 and, indeed, I should take your Honours firstly to page 472, paragraph [125], because it is really a related if not the same point where his Honour said:

The lease therefore defines the “Land”, not by reference to a physical thing, but by reference to something created by the land title register.

That goes back to one of the observations made by Justice Bell in an interchange with me earlier today that, yes, there is the sketch plan, though the sketch plan itself is not what defines the boundaries.  That is defined in the schedule, whether the sketch plan aligns with that or otherwise.  But the definition of “land” is by reference to the real property description.

That is what the parties intended the definition to be and it is a natural conclusion, given the observation just made by Justice Kiefel, that they must necessarily expect that if the real property description changes the land must change with it. 

BELL J:   Well, the definition is land means the lot described in item 2 and item 2 gives you the lot number and then it becomes a question of whether one determines that to say the land described in the lot is the physical area of land or the notion of that which is comprised in the lot and that is the distinction, is it not? 

I suppose if one is looking at practicalities, one might consider that at the time the lease was entered it was the intention of the parties that the common areas would be all that part of the land that was the subject of Lot 6 on which there were no other leasehold interest, and if there was a contiguous lot on which there was located a house, one would not necessarily think the parties would have had a common intention that if in the future the lessor was to obtain that additional parcel of land and be required by the Registrar‑General to amalgamate the lots, that that would then become part of the common property for the shopping centre.

MR DIEHM:   The conclusion of the majority in the Court of Appeal, especially highlighted by the passage from Justice Morrison that we have just taken your Honours to, was that the intention of the parties was to define the land by reference to its real property description, not by reference to its physical boundaries.

BELL J:   I understand that, Mr Diehm.  There are, as it were, two possible views one could take.  As a matter of practicality, why would you not think that the view that the objective intention of the parties was to confer a licence interest in the common areas as defined in the land that was the subject of consideration at the time of the lease, namely the land comprised in Lot 6, as distinct from the notion of the registered interest?

MR DIEHM:   Yes.  We have referred in our submissions today to the circumstance that the description of the land and the boundaries of it could change by any one of a number of different means.  They could reduce the size of it, they could increase the size of it, each one of them bearing upon the use to which the land might be made.  In our submission, it is an unremarkable conclusion to think that parties entering into the lease that have chosen to use the real property description intend that to reflect or to be reflected in the real property description that comes from time to time.

But our ultimate point about that is to say, as we have said in our outline, that that conclusion has not been appealed from, and the attack that is made by the notice of appeal is upon a conclusion that by the registration of the plan of survey there was a variation of the respondent’s lease over just one of the existing allotments to include a leasehold interest over all of the new amalgamated lot. 

So our submission is that that is misconceived in the sense that the findings do not depend upon any construction that there was a variation.  And, in any case, it is common ground that it was quite right – the inevitable consequence of the operation of the Act, that the leasehold interest would be over the new amalgamated lot and that has occurred.

GAGELER J:   Mr Diehm, Lot 6, using the definition in the schedule to the Land Title Act, was a separate, distinct parcel of land created on the registration?

MR DIEHM:   Yes.

GAGELER J:   What happened to Lot 6 as a separate, distinct parcel of land upon the registration of the additional plan of subdivision?

MR DIEHM:   The findings of each of the courts below was that the real property description was cancelled, that that title was cancelled, and that there was a new title issued for Lot 6 and the old Lot 1 together as the new Lot 1.

GAGELER J:   As a new, distinct parcel of land, created by that registration?

MR DIEHM:   Yes.

GAGELER J:   So how does the existing lease apply, other than through the instrument that we see at page 94?

MR DIEHM:   It must have come to be that it came to apply because that instrument was lodged, resulting in the registration of the interests recorded in it.

GAGELER J: One very simple reading of what the majority in the Court of Appeal has done here is to take the instrument that appears at page 94 and say that, when it refers to this existing lease and the lot to be encumbered, being Lot 1, it causes you, in accordance with section 182, to read the description of the lot as being the new Lot 1.

MR DIEHM:   Yes.

GAGELER J:   That may be too simplistic, but that appears to be what has been done.  And what is wrong with it?

MR DIEHM:   There is nothing wrong with it, in our submission.  Your Honours, if we may, those are our submissions on the primary point but if there is something else ‑ ‑ ‑

BELL J:   Perhaps you might just address the point relating to the endorsement on the instrument of what is described as the existing lease.  Does that direct you to the registered lease?

MR DIEHM:   It does direct you to that document, yes.

BELL J:   And, to the extent that that document defines the land and annexes a plan, that does not include a part of the lot being Lot 1 – that is, the amalgamated lot – what do you say has happened?

MR DIEHM:   We say what has happened is that there is, on a proper construction of the lease, as the majority found, an interpretation of the definition of land in that document as now meaning the new title, the new Lot 1.

BELL J:   That is your construction argument?

MR DIEHM:   Yes.

KIEFEL J:   And you have to resort to the construction argument because the lease remains registered and in existence in its terms, save for the fact that it has now been noted as an encumbrance on the new Lot 1?

MR DIEHM:   Well, it is not noted as an encumbrance on the new Lot 1.

KIEFEL J:   Well, it is allocated.  It is shown as an existing lease.  The point being, it remains on the register.  Nothing has happened with respect to the lease.

MR DIEHM:   That is right, the document is not amended.  The document still exists as it was and so, yes, the construction point is an important point.

KIEFEL J:   It is not just the document.  The entry in the register remains there.

MR DIEHM:   Yes.

KIEFEL J:   That is the critical factor.

MR DIEHM:   Of course, your Honour, yes, indeed.  It is to be borne in mind in that regard here that what is being interpreted, of course, is the interest under the licence conferred by contract rather than the interest ‑ ‑ ‑

KIEFEL J:   I think we have understood your submission, Mr Diehm.

MR DIEHM:   Of course, your Honour.  So with respect ‑ ‑ ‑

NETTLE J:   Just before you depart, Mr Diehm, thus far in support of what I now take you to contend is a necessary implication giving rise to the correct construction of the word “land” in the lease, you rely upon the fact that the parties describe the land by reference to Real Property Act designation, you relied on clauses 6.3, 6.4, is that it?

MR DIEHM:   And the impracticality issue with respect to the imaginary line argument.

NETTLE J:   Thank you.

MR DIEHM:   With respect to the retail shop leases ground of appeal, with the benefit of the submissions of our learned friends, our submission is that the ultimate question that was being dealt with by the court below necessarily involved a two‑step process, that is, firstly, was there a demonstrated legislative intent that the extended definition of “common areas”, amongst other extended definitions provided for in the Act, operated outside of the mere interpretation of the Act and extended to be implied, as it were, into the lease in preference to another definition that existed there.

Secondly, if the answer to that is yes, because if the answer to it is no there is nothing further to be considered, if the answer to it is yes, then it becomes a question as to whether or not there is a relevant duty or entitlement or whether or not there is a relevant inconsistency for the purposes of section 20 and that those two steps need to be considered separately to allow for the proper consideration of the issue.

What goes with what we have just outlined is that it is not satisfactory to simply look at section 6 in isolation. One must of course look at the argument as to hold good the operation of the other extended definitions and their interrelationship with other provisions in the Act that may affect the leasehold interests under retail shop leases.

In that regard, we would address firstly the definition of “outgoings” in section 7. We say this acknowledging that under this lease there was no obligation for the lessee to pay outgoings but nevertheless, for the reasons we have outlined, it is necessary to consider it to understand the operation of the Act.

Section 7 provides for a definition of “outgoings”, though an examination of the section shows that it does not seek to put in definitive terms what may amount to outgoings for a retail shop lease, but rather defines categories of what might be outgoings for the purposes of such a lease, and also specifies some things that may not be considered as outgoings in subsection (3). Elsewhere in the Act there are specific provisions that deal with specific types of outgoings and how they may be dealt with.

FRENCH CJ:   Accept the proposition that you could have a lease of a retail shopping centre which contained provisions applying the statutory definition of “common areas” in circumstances in which that statutory definition is relevant, namely, outgoings and so forth, and that you can have other rights untouched by the Retail Shop Leases Act relating to small “c” common areas as defined in this lease.

MR DIEHM:   Yes, your Honour, that could occur.

FRENCH CJ:   So it really boils down to the question whether the term “common areas” in this lease is used in any way that is operatively in conflict with a provision of the Retail Shop Leases Act.  It surely cannot turn on just the definitional difference.

MR DIEHM:   It does not turn on just the definition.  It is necessary to consider it in the context of other provisions in the Act.

FRENCH CJ:   But which have no purchase, it seems, on the lease itself.

MR DIEHM:   Well, they do.  If we can take your Honours to - the critical part, as our learned friends observed, of the Act is Part 6, Division 7, because it is the source of the imposition of duties in the granting of entitlements to the parties and most particularly, to cut to the chase, as it were – I should have said that Part 6 generally is what gives rise to those obligations and duties.  Part 6, Division 7 is one though that carries a particular significance for the point concerning the definition of “common areas” and the definition of “retail shopping centres”.

The first observation is section 42, perhaps unnecessarily if it is doing something different than what section 18 would have required but, in any case, in clear enough terms subsection (1) says that:

A retail shop lease is taken to include –

the following three sections.  Those following three sections deal with rights and extent of compensation that may be payable by a lessor to a lessee and the sections which, as section 42 says, become part of the lease itself refer to “retail shopping centre” in a number of instances; for instance, in 43(1)(d)(ii) and again in subparagraph (e), and they are particularly pertinent examples for the point here.

Because, as has been identified by our learned friends, “retail shopping centre” is virtually – there is one more example they have been able to identify, but from an operative point of view within the Act, these provisions are the few examples of where “retail shopping centre” and, as a result, “common areas” are brought into the operative provisions of the Act.

“Common areas” necessarily becomes, in our submission, part of the fabric of the lease in the sense that retail shopping centres are defined by reference to common areas as including common areas.  When a lease provides, as subparagraph (d)(ii) would say, that there is a right to compensation in certain circumstances where a defect is not rectified, where the defect is in a retail shopping centre, that necessarily means that it can be a defect in a common area. 

So there is, in effect, a provision in the lease that says that if a defect in a common area is not rectified as soon as is practicable, and so on, on other terms, there can be a right to compensation on the part of the lessee.  That, in our submission, is a circumstance that shows that both “retail shopping centre” and “common area”, as defined by the extended definitions, are imported into the lease.

FRENCH CJ:   They are imported into the lease, on your submission, in relation to that statutorily imported liability?

MR DIEHM:   Yes, that is so.  That leaves the question as to whether or not there can be a definition of “common area” that survives ‑ ‑ ‑

FRENCH CJ:   For other purposes.

MR DIEHM:   ‑ ‑ ‑ for other purposes under the lease. Our submission is that it would be a rather curious state of affairs that a lessee was entitled to compensation for failure to maintain, or for failure to rectify defects in common areas that it had no entitlement to the benefit of. If that was the way the lease was to be construed, that would involve a conflict of the kind that would be struck down by section 20 because there would be a true incongruity that would require a construction to read down the contractual definition in favour of the statutory one.

Your Honours, there are other examples with respect to “outgoings” as they are dealt with in section 37, “retail shopping centre” as it is dealt with also in section 37, and indeed, in the sections through to section 41 that involve the importing of duties – in particular, on the part of lessors, that section 18, in our submission, shows that the importation of those duties means that the meanings have an operative effect outside of the mere assistance in the interpretation of the statute.

Similarly, it might be said with respect to the provisions in sections 25 and 26 that deal with turnover, and this was a lease that involved some element of rent calculated by reference to turnover, as appears - we will not take your Honours to it - but it appears at AB 119.  We make those points without spending any more time on them but they show a consistency between the idea, as demonstrated by the exercise that we have just taken your Honours to, that addresses both the first and second steps that I mentioned at the outset of our submissions about the intended extra statutory operation of those particular definitions.

I should say that the point that we have just made about section 42 and section 43 is a different point than the one that was rejected by her Honour the President at paragraph [38] of her reasons. Her Honour dealt with an argument that was advanced below about section 43 of itself conferring a right that was a relevant right for the purposes of section 12(5) of the Acquisition of Land Act based on an earlier decision of the Land Appeal Court, referred to as LGM in the judgment. 

This is not a re‑enlivening of any such argument on that.  This rather is an example of what was being dealt with by her Honour earlier in paragraph [37] where just after footnote 70 on page 457, her Honour referred to:

The definition of “common areas” under the Act is embedded in the legislation through its incorporation in the extended definition of the fundamental concept in the Act of “retail shopping centre”.

So, that is the point we aim to make of it, not the other point that was rejected by the majority, as well as by Justice Holmes.

GAGELER J:   I might be misunderstanding you but are you saying that the definition of “retail shopping centre” picks up all common areas as part of the retail shopping centre.

MR DIEHM: What we are submitting is that the definition of “retail shopping centre” does itself pick up the definition of “common areas”. So, in section 8(c)(ii)(B) and (C) ‑ ‑ ‑

GAGELER J:   I see that.  Do you say that that makes those common areas part of the retail shopping centre?  It seems to be the premise of your submissions about section 43.

MR DIEHM:   Well, it is, yes, your Honour.

GAGELER J:   Is that a correct construction?

FRENCH CJ:   I suppose the definition of “common areas”, which speaks of common areas of a retail shopping centre, might import that notion ‑ ‑ ‑

MR DIEHM:   It does.

FRENCH CJ:   ‑ ‑ ‑ albeit a little obliquely but ‑ ‑ ‑

MR DIEHM: It does, because section 6(1) refers to common areas of a retail shopping centre that, by implication, must mean that common areas are regarded, when they are part of a retail shopping centre, as part of the centre itself.

FRENCH CJ:   They are in or adjacent to the centre.

MR DIEHM:   Yes, well ‑ ‑ ‑

FRENCH CJ:   It is two bob each way really.

MR DIEHM:   Yes, perhaps it is.

GAGELER J:   The centre refers to premises.  Naturally one would read “premises” as meaning buildings.  That seems to be the way in which the definition is structured.  You can have common areas within a building or you can have common areas outside or between buildings which fits with the definition of “common areas”, meaning areas in or adjacent to a centre.  It is just not abundantly clear that a common area is necessarily part of a shopping centre, that is all.

MR DIEHM: Thank you. Your Honour, if the Court’s attention could be drawn to the introductory words in section 8(1), which speaks of a retail shopping centre being “a cluster of premises”. Now, it is our submission that in common parlance retail shopping centres would certainly be regarded as including common areas and that it is readily read into the reference to a cluster of premises that it includes not only the buildings themselves that make up the premises but the connecting space between them. That can sit then conformably with the reference in section 6(1) to areas in the centre as being common areas.

NETTLE J:   Mr Diehm, just to clarify that for my own clarification.  It means, does it, that if the common areas as originally defined in the lease are expanded in the sense that there is added land over which customers and the public are allowed to wander, in a sense which is consistent with a common area within the definition of “retail shopping centre” in 8, then the common area for the purpose of the lease must be taken to be that expanded common area?

MR DIEHM:   Yes, your Honour.

NETTLE J:   Otherwise there would be inconsistency between, amongst other things, 43(1)(d) and (e) and the notion of common area as defined originally in the lease?

MR DIEHM:   Yes.

NETTLE J:   Thanks.

MR DIEHM:   Your Honours, it is our submission that the drafting technique that has been used in Part 3, Divisions 1 and 2, that distinguishes between the definitions in section 5, which are expressly said by it to define particular words used in this Act – the use of that device as opposed to then the separated extended definitions has to be given some meaning.  There must be some consequence for it, or some reason for it.

Her Honour Justice Holmes endeavoured to identify a reason rejecting the arguments being advanced on behalf of the now respondent and our learned friends have adopted those observations by her Honour.  They appear at AB 461 in paragraph [57] where in the fourth line in her Honour said that she drew:

from the fact that it appears in a division of the Act headed “Extended Definitions” only that the definition goes beyond what might ordinarily be regarded as encompassed in the term “common areas” and is too lengthy practically to be included in a schedule.

As we have observed in our outline, the definition of “common areas” contains 97 words.  The definition of “retail shop lease” which appears in the schedule pursuant to section 5 contains 187 words.  So, with respect, it simply cannot be right that that is the reason for it, is that they are too lengthy to be included in the schedule.

With regard to the other observation, there is nothing in particular that shows that the definitions in section 6 to 9 in any particular way distinguish themselves from, for instance, the definition of retail shop lease as being outside of the range of what one might have ordinarily expected to be the meaning assigned to those particular words.  Her Honour did not attempt to elucidate that and our learned friends have not either.

The notion of an extended definition is not one that is foreign to legislation.  Your Honours have probably seen occasions where legislation refers to it but we are not able to identify, looking at a number of examples, anything in particular that emerges from different ways in which they are used in different Acts that suggest it reflects some particular drafting purpose.  So one does have to look, as perhaps one ought anyway, to this Act and this Act alone as to what the effect of the reference to the extended definition is.

Our learned friends point out that if one goes to the definitions in the schedule drawn in by section 5, for each one of these terms defined in section 6 to 9 they are picked up in the schedule and one is immediately referred back to these particular sections.  That, however, cannot mean that their inclusion as extended definitions is not meant to have any particular

significance, as opposed to the other definitions, because if that were the case why bother.  Why would there be the inclusion of extended definitions?  Why not just put them all in the schedule?

The incorporation of them through the section 5 definitions simply reinforces that they are definitions for the purposes of the interpretation of this Act internally, but it does nothing to take away from the submission that they should be regarded as definitions of key concepts having particular significance in the operation of operative provisions of the Act which impose themselves into the lease between the parties and otherwise into the duties of the parties that are inferred to them and to the entitlements that are conferred upon them.

That, in our submission, appears to be the only purpose that is served by them.  In doing that, the legislature can be taken to have been aiding the object of the Act with respect to efficiency and equity.  Our learned friends referred the Court to sections 3 and 4 of the Act that set out the objects and the means by which those objects are achieved, and that is efficiency and equity, relevantly here, by positing minimum standards, and those particularly are picked up in Part 6 of the Act.

And as part of the imposition of minimum standards, there needed to be established, in our submission, a common meaning between those key terms, both within the lease and within the Act, and giving those definitions an extended effect has that effect, in our submission.  Those are our submissions.

FRENCH CJ:   Thank, you, Mr Diehm.  Yes, Mr Jackson.

MR JACKSON:   Your Honours, may I deal first with the question of the Land Title Act, then move on to the other Act.  First, in that regard, reference was made to the definition of “Shopping Centre” in the lease at page 116, about line 38.  Your Honours will see that the definition speaks of:

the building forming a group of shops of which the Premises constitutes one shop together with all parking areas and other associated facilities erected on and/or forming part of the land and known as Castle Hill Shopping Court ‑

True it is that “land” does not have a capital ‑ about the only time in the lease, your Honours, but it means, in our submission, land as defined on page 114, meaning “the lot described in Item 2 of the Form 7 in this Lease” and item 2 of form 7, at page 11, says:

LOT 6 ON RP ‑

et cetera.  And, your Honours, one should not forget that as well, when one is speaking about the land, that is actually described in the diagram on page 137.

Your Honour Justice Nettle referred to the provision, I think, in clause 6.13 dealing with the car parking area.  That is at the bottom of page 123.  Your Honours will see that:

The Lessee must not park or permit the Lessee’s Employees to park motor vehicles in the Car Parking Area ‑

et cetera.  If one looks at the definition of “Car Parking Area”, which is at page 114, about line 37 or 38, it means:

that part of the Land sealed –

et cetera.  So it is speaking about that same concept:  the land described at page 137 and being part of Lot 6.  Your Honours, the next matter to which I wish to refer was this.  Our learned friends have referred to the presumed intention of the parties when entering into the lease.  Could we just say this, your Honours?  The presumed intention derives entirely from the conduct that took place.  The conduct that took place was entering into a lease which described the land in which the lease was found, and described the rights in relation to the common areas which extended to the boundaries of that lease.

If one is talking about the common intention in respect of the period after that and upon amalgamation, it can only depend upon the effect of the amalgamation and the notation of the lease upon the amalgamated title.  The lease, as noted on the title, was one in completely unchanged terms and perfectly capable of conveying the boundaries of the area to which the common areas extended.

Your Honours, one has to bear in mind that if speaking about common intention, the basis for so doing rather tends to fall away if one had circumstances – not here, I accept – where one or both of the parties to the lease had changed between the time when it was entered into, and the time when the amalgamation took place.  To ascribe to them a common intention that the lease should have the characteristics our learned friend refers to, or have the moving characteristics our learned friend refers to, does appear to be purely the act of ascribing to people something that they do not in fact have or think about at the time.  There was no evidence as to actual intention.

Our learned friend referred to a number of commercial considerations.  One was the reference to paragraph [138] in the Court of Appeal at page 474 and the case of Zacsam. The short position would be, as one of your Honours referred to in the course of argument, that if there was a resumption of Lot 11, as it became, the position would be that there was no entitlement because of the fact of resumption. Your Honours, that appears from the actual wording of section 12(5) of the Acquisition of Land Act which says:

from the date of the publication of the gazette resumption notice the land thereby taken shall be vested . . . as provided by the foregoing provisions of this section absolutely freed and discharged from all trusts, obligations . . . or interest of what kind soever –

The short position would be that there is the operation of the statute and the action taken under the statute on the situation.  Your Honours, our learned friend referred also to paragraph [133] of the Court of Appeal’s reasons which your Honours will see at page 473.  Could we refer in that regard simply to two things?  The first of them I mentioned in‑chief, and that is that a plan of subdivision would require consent by the lessee.  That is section 50(1)(j) and that would be an obstacle in the way of the theory advanced by our learned friends.

The second feature, your Honours, is if one goes to the lease clause 16.4, and that is at page 131, the relationship between the lessor and lessee was the lessor might subdivide the land, and your Honours will see the remainder of that provision set out there. 

Our learned friends referred to the great difficulty of there being an imaginary line.  Well, no doubt if you build over it it might cause some difficulty, but at the time when these events took place, one can see from page 271 in the air photograph that is there there is not too much difficulty in working out where the boundaries of Lot 1 and Lot 6 are to be found.  The island which formed Lot 1 looks as though it was fenced and it looks as though it has some trees on the boundary of it.  Your Honours, it is not, in our submission, too imaginary.

Our learned friend refers also to the conclusion about the imputed intention as something that is not appealed from and, your Honours, the reality is – I am talking about the terms of our notice of appeal.  What happened was a variation of the terms of the lease because it extended the area in relation to which there were common areas, in our submission.

Could I come then, your Honours, to our learned friend’s submissions about the Retail Shop Leases Act?  The first thing, your Honours, is that our learned friend referred to section 43.  Section 43 is a provision which one sees in a slightly different but sometimes similar form in similar legislation in the States.  What your Honours will see is that if one goes to section 43 it says, and section 42(1) says this, that the lease is taken to include provisions along the lines, the same terms, as section 43.

If one goes then to section 43 itself, you will see the reference to “retail shopping centre” in 43(1)(d)(ii). You will see, similarly, in (1)(e) “retail shopping centre”. No doubt the definition of “retail shopping centre” as contemplated there is the one that is referred to in section 8 of the Act. That is because that definition is the definition for the purposes of the Act and it would seem curious if a provision in terms of the Act was put into the lease but it had a meaning different from that which it bore in the terms of the statute.

But if one goes then to the definition of “retail shopping centre”, all that one sees is that it is speaking of a cluster of premises. The premises have to be buildings or in buildings. That is because of section 8(1)(c). Your Honours will see that the provisions of section 8(1) are cumulative. The premises have to be located in one building or two or more buildings, and then your Honours will see the references to “common areas”. The only time it is used is in paragraphs (B) and (C).

Now, that describes what is a retail shopping centre.  Your Honours, it may be that if one looks at section 43 and reads it with the definition of “common areas” and insofar as it is imported into the definition of “retail shopping centre” that there are circumstances in which there would be some right to compensation created in a lessee if some conduct took place in areas that were common areas by virtue of the definition, but were not common areas otherwise under the lease.

But all that one is saying is that some of the provisions of the Act operate because they are incorporated into the lease, operate using the definition of “common areas” that is provided for in the Act.  There is nothing to say that the common areas, other various purposes of the lease, are common areas which give rise to an entitlement deriving from the Act itself in relation to an entitlement which is one capable of being dealt with by way of compensation.

Could I just say one further thing in relation to that? Your Honour Justice Nettle said earlier today, I think in relation to paragraph 14 of our outline of submissions that it seemed to be raising the question of whether there was an interest in land, an issue that had not been raised before. Your Honour will see that paragraph 14 – and perhaps it could be put a little more clearly – was a reference to the effect of the Retail Shop Leases Act, not the position under the Land Transfer Act, and that is what it is referring to.  Could we, your Honours, refer in particular to the paragraphs that we

have in paragraphs 10 to 15 of our submissions in reply.  Your Honours, those are our submissions.

FRENCH CJ:   Yes, thank you, Mr Jackson.  The Court will reserve its decision.  The Court will adjourn until 10.15 tomorrow morning.

AT 3.19 PM THE MATTER WAS ADJOURNED