Legal Research
Cases
Perpetual Ltd v Myer Pty Ltd

Perpetual Ltd v Myer Pty Ltd

Link copied

Case Copied 7 May 2019 78 min read

Contents

On this page

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2018 0033

PERPETUAL LIMITED (ACN 000 431 827) (and others according to the attached schedule)	Applicants
v
MYER PTY LTD (ACN 004 143 239)	Respondent

---

JUDGES:	WHELAN, NIALL and HARGRAVE JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	30 January 2019
DATE OF JUDGMENT:	7 May 2019
MEDIUM NEUTRAL CITATION:	[2019] VSCA 98
JUDGMENT APPEALED FROM:	[2018] VSC 2 (Croft J)

---

LEASES – Rectification – Long-term commercial lease to anchor tenant in shopping centre – Formula for calculating tenant’s contribution to increases in variable outgoings contains alleged mistake – Applicants contend common intention evident from earlier draft heads of agreement – Where draft heads of agreement one step in continuing negotiation process – Applicants unable to provide alternative formulation which reflects alleged common intention – Necessary to prove true intention not merely that some mistake has been made – Energy World Corporation Ltd v Maurice Hayes & Associates Pty Ltd [2007] FCAFC 34 applied – No convincing proof provided to prove alleged common intention – Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603 applied.

LEASES – Construction – Where the tenant’s bargaining position was strong – Where formula as written leads to peculiar result but unambiguous and capable of sensible operation – Alleged mistake not noticed for 12 years or acted upon for 16 years – Lease negotiated over long period by well-represented parties – Court not satisfied formula absurd or mistaken – Westpac Banking Corporation v Tanzone Pty Ltd [2000] NSWCA 25 considered – Seymour White Constructions Pty Ltd v Oswald Bros Pty Ltd (in liq) [2019] NSWCA 11; Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633 applied.

---

APPEARANCES:	Counsel	Solicitors
For the Applicants	Mr C M Scerri QC with Mr R M Peters	Gadens
For the Respondent	Mr I G Waller QC with Mr P S Noonan	Clayton Utz

TABLE OF CONTENTS

The course of the negotiations
Subsequent conduct: The owners take 12 years to appreciate the alleged mistake
Relevant lease provisions
Grounds of appeal
Judge’s reasons: construction grounds
Judge’s reasons: rectification ground
Rectification: Was it the common intention of the parties that the increases would be calculated from the base year?
Construction: Was the agreed commercial purpose to calculate increases from the base year?
Construction: Is the fourth schedule commercially absurd?

Applicable legal principles
Owners’ contentions
Judge’s reasons on the absurdity contention

Analysis

Notice of contention: Did the subsequent conduct create a defence of account stated?
Summary of conclusions
ANNEXURE A: FOURTH SCHEDULE
ANNEXURE B: PROPOSED AMENDMENTS TO FOURTH SCHEDULE
ANNEXURE C: KEY TERMS OF THE LEASE
SCHEDULE OF PARTIES

WHELAN JA
NIALL JA
HARGRAVE JA:

This case concerns whether the provisions of a commercial lease, which state the amount of the tenant’s contributions to the landlord’s increases in variable outgoings, contain a mistake. If they do, can they be construed in a different…

Grounds of appeal

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

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

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

Consideration

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

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

Keep reading for free

Create a free CaseChat account to read Perpetual Ltd v Myer Pty Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2019] VSCA 98
Decision Date: 7 May 2019

CaseChat Overview and Summary

Perpetual Ltd sought to have the court rectify a long-term commercial lease in which they were the anchor tenant at a shopping centre owned by Myer Pty Ltd. The dispute centred on a formula used to calculate the tenant’s contribution to increases in variable outgoings, which Perpetual argued contained a mistake. They contended that the common intention of the parties was evident from an earlier draft of the heads of agreement. The case was heard in the Supreme Court of New South Wales.

The legal issues the court had to address were whether the common intention of the parties could be established to rectify the lease and whether the formula for calculating the tenant’s contribution contained a mistake. The court needed to determine if there was convincing evidence of the alleged common intention, and whether the formula was absurd or mistaken. The applicants had to demonstrate that the true intention of the parties was reflected in an alternative formulation, rather than merely pointing to an alleged mistake.

The court held that the applicants could not provide convincing proof of the alleged common intention. The draft heads of agreement were merely one step in the continuing negotiation process, and the applicants were unable to present an alternative formulation that reflected their claimed common intention. The court emphasised that it was necessary to prove the true intention, not just that a mistake had been made. The applicants had not demonstrated that the formula was absurd or mistaken, and it was capable of sensible operation. The court found that the peculiar result of the formula did not render it absurd or mistaken, particularly given the strong bargaining position of the tenant and the long period over which the lease was negotiated by well-represented parties.

The court dismissed the application for rectification, affirming the lease as it stood. The applicants were not satisfied that the formula contained a mistake, and the court found no convincing proof of the alleged common intention. The peculiar result of the formula did not render it absurd or mistaken, and the lease was enforceable as written.

Orders