Queensland Local Government Superannuation Board v Pennisi

[1994] QCA 487

IN THE COURT OF APPEAL	[1994] QCA 487
SUPREME COURT OF QUEENSLAND

Appeal No. 157 of 1994.

Brisbane

[Pennisi v. Qld Local Government Superannuation Board]

BETWEEN:

ANTHONY ANGELO PENNISI, ANN MARIA PENNISI

and GREGORY ROSS PENNISI

(Applicants) Respondents

AND:

QUEENSLAND LOCAL GOVERNMENT SUPERANNUATION

BOARD

(Respondent) Appellant

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Macrossan C.J.
Pincus J.A.

Davies J.A.

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_____

Judgment delivered 21/11/1994

Judgment of the Court
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APPEAL DISMISSED, WITH COSTS TO BE TAXED
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CATCHWORDS:	LANDLORD AND TENANT - Lease - construction - landlord of shopping centre required tenants to assign lease in accordance with terms of lease - lease required notice of assignment to provide details of compulsory acquisition price - notice stipulated "price" to be that agreed between the parties, or failing agreement, as determined by independent valuer - whether "price" within definition in lease or merely means of ascertaining price.
Counsel:	Mr D Murphy for the appellant. Mr A Lyons for the respondent.
Solicitors:	King and Co. for the appellant. John P Kelly & Co. for the respondent.

Hearing date: 09/11/1994
IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 157 of 1994.

Brisbane

[Pennisi v. Qld Local Government Superannuation Board]

Before	Macrossan C.J. Pincus J.A. Davies J.A.
BETWEEN:

ANTHONY ANGELO PENNISI, ANN MARIA PENNISI

and GREGORY ROSS PENNISI

(Applicants) Respondents

AND:

QUEENSLAND LOCAL GOVERNMENT SUPERANNUATION

BOARD

(Respondent) Appellant

REASONS FOR JUDGMENT - THE COURT

Judgment delivered 21/11/1994

This appeal raises questions with respect to the construction of a lease and the application of the terms of the lease to steps taken to require the tenants to assign their interest. The appellant landlord and the respondent tenants were parties to proceedings in the Supreme Court which resulted in a declaration in favour of the tenants and the landlord appeals against that declaration.

On 1 October 1993 a company called Bonniebrook Pty Limited and the tenants entered into an agreement for lease in relation to the premises in question in the suit, being one of the shops in a shopping complex at Deception Bay. Clause 3 of the agreement provided that the lessor should grant to the lessee and the lessee take from the lessor a lease for a stipulated term at a stipulated rent "and upon the terms and conditions set out in the Lease commencing on and from the Date of Commencement". The agreement defined the expression "lease" to mean a formal lease comprising annexure "A", and under cl. 4.2 it was agreed, in substance, that a lease in that form would be executed within 14 days after its submission by the lessor to the lessee. Clause 4.4 provided that from the date of commencement of the lease and until its execution "the lessee shall be bound by the covenants and provisions of the lease as if the lease had been duly executed and delivered as aforesaid".

The date of commencement was 23 November 1993 and so, although as it happened a lease in the form of annexure "A" was never executed by the tenants, as from that date they became bound by the terms of annexure "A". The appellant landlord acquired the reversion from Bonniebrook Pty Limited and the present dispute arises from an attempt it has made to force the tenants to assign their interest under cl. 22 of annexure "A". The earlier provisions of that clause empower the landlord, in certain circumstances, to require by notice in writing that the tenants assign their interest to a party nominated by the landlord. Clause 22.4 requires that the written notice given by the landlord under the relevant clause (22.2):

"provide full details of the landlord's
calculation pursuant to clause 22.3;
provide full details of the nominated assignee,
and
provide full details of the landlord's proposed
terms (including price) for the assignment".

The calculation pursuant to cl. 22.3 was one intended to demonstrate that the condition relating to the performance of the tenant's business, on which the right to require an assignment of the tenant's interest arose, had been satisfied. Clause 22.5 is as follows:

"If the landlord and tenant are unable to agree on the terms of the compulsory assignment within 14 days of the date of giving of notice pursuant to clause 22.2, the terms shall be determined by an independent person appointed for that purpose by the president for the time being of the Queensland Law Society Incorporated, whose determination shall be final and binding on the landlord and the tenant".

The first point in the case, being the only one the primary judge decided, has to do with the form of a notice given by the landlord under cl. 22.2. The notice contemplated that there would be an assignment for a consideration consisting in the market value of the lease as agreed between the parties or, if they could not agree, as determined by a valuer.

The primary judge held that such a notice was not one complying with cl. 22 because it specified neither an amount nor a precise formula for ascertainment of the price. The judge rejected the landlord's contention that it is enough if the notice specifies a mechanism for the ascertainment of the price on the ground that cl. 22.5 does not sit comfortably with that contention.

One starts with the ordinary meaning of the simple word "price". It is true that in some contexts a "price" may be said to be provided or specified if all that is done is to say that the parties must try to agree on price and if they cannot, accept the opinion of a valuer. But such a formula is hardly the ordinary acceptation of the word "price". One would say of such a contract that it does not specify a price but provides a means for ascertaining one.

If the word "price" in cl. 22.4 is potentially wide enough in meaning to embrace such a provision as that devised by the landlord, then the terms of cl. 22.5 would discourage the thought that such a broad meaning was truly intended here, for it says in effect that if the parties cannot agree on the terms of the assignment they are to be determined by an independent person. It seems hardly likely that the parties intended the specification of the terms in the landlord's notice requiring assignment to depend upon a mechanism similar to that set out in cl. 22.5.

In our opinion the notice did not comply with cl. 22.4, in that it did not provide full details of the price, nor provide the price. The primary judge's view was correct and the appeal should be dismissed with costs.