Questa Pty Ltd v Millrock Resources Pty Ltd

[2012] WASC 267

QUESTA PTY LTD -v- MILLROCK RESOURCES PTY LTD [2012] WASC 267

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2012] WASC 267
Case No:	GDA:12/2011	Heard:	26 APRIL 2012
Coram:	PRITCHARD J	Delivered:	27/07/12
No of pages:	18	Judgment Part:	1 of 1
Result:	Appeal allowed
Category:	B
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Parties:	QUESTA PTY LTD MILLROCK RESOURCES PTY LTD
Catchwords:	Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) s 3(1) 'Retail shop lease' Existence of Turns on own facts State Administrative Tribunal Act 2004 (WA) s 105(2) Leave to appeal Questions of fact and law Turns on own facts
Legislation:	Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) Commercial Tenancy (Retail Shops) Agreements Regulations 1985 (WA) State Administrative Tribunal Act 2004 (WA)
Case References:	Chief Executive Officer, Department for Child Protection v Hardingham [2011] WASCA 262 Chin v Legal Practice Board Western Australia [2009] WASCA 117 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Gerraty v McGavin (1914) 18 CLR 152 McCourt v Cranston [2012] WASCA 60 Mustac v Medical Board of Western Australia [2007] WASCA 128 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 Paridis v Settlement Agents Supervisory Board (2007) 33 WAR 361 Secretary to the Department of Premier and Cabinet v Hulls [1999] 3 VR 331 Shire of Derby-West Kimberley v Yungngora Association Inc [2007] WASCA 233 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 Town of Cottesloe v Multiplex (Marine Parade) Pty Ltd [2007] WASCA 113 Vetter v Lake Macquarie City Council (2001) 202 CLR 439 Western Export Services Inc v Jireh International Pty Ltd (2011) 282 ALR 604

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA CITATION : QUESTA PTY LTD -v- MILLROCK RESOURCES PTY LTD [2012] WASC 267 CORAM : PRITCHARD J HEARD : 26 APRIL 2012 DELIVERED : 27 JULY 2012 FILE NO/S : GDA 12 of 2011 BETWEEN : QUESTA PTY LTD

Appellant

AND

MILLROCK RESOURCES PTY LTD
Respondent

ON APPEAL FROM:

Jurisdiction : STATE ADMINISTRATIVE TRIBUNAL OF WESTERN AUSTRALIA

Coram : MS L WARD (MEMBER)

File No : CC 1 of 2011

Catchwords:

Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) s 3(1) - 'Retail shop lease' - Existence of - Turns on own facts

State Administrative Tribunal Act 2004 (WA) s 105(2) - Leave to appeal - Questions of fact and law - Turns on own facts

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Legislation:

Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA)

Commercial Tenancy (Retail Shops) Agreements Regulations 1985 (WA)
State Administrative Tribunal Act 2004 (WA)

Result:

Appeal allowed

Category: B

Representation:

Counsel:

Appellant : Mr A J Aristei
Respondent : Mr L Hager

Solicitors:

Appellant : Irdi Legal
Respondent : Metaxas & Hager

Case(s) referred to in judgment(s):

Chief Executive Officer, Department for Child Protection v Hardingham [2011] WASCA 262
Chin v Legal Practice Board Western Australia [2009] WASCA 117
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Gerraty v McGavin (1914) 18 CLR 152
McCourt v Cranston [2012] WASCA 60
Mustac v Medical Board of Western Australia [2007] WASCA 128
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451
Paridis v Settlement Agents Supervisory Board (2007) 33 WAR 361
Secretary to the Department of Premier and Cabinet v Hulls [1999] 3 VR 331
Shire of Derby-West Kimberley v Yungngora Association Inc [2007] WASCA 233
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
Town of Cottesloe v Multiplex (Marine Parade) Pty Ltd [2007] WASCA 113
Vetter v Lake Macquarie City Council (2001) 202 CLR 439
Western Export Services Inc v Jireh International Pty Ltd (2011) 282 ALR 604
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1 PRITCHARD J: Questa Pty Ltd (Questa) is the owner and registered proprietor of Units 8 and 9 at 86 Erindale Road Balcatta (units 8 and 9).

2 Between 1990 and March 2011, Millrock Resources Pty Ltd (Millrock) leased units 8 and 9 from Questa, and operated a business known as 'BedBarn' (formerly Bedshed) selling beds, bedroom furniture and related accessories from units 8 and 9.

3 A dispute arose between Questa and Millrock as to whether Questa was entitled to charge Millrock management fees in respect of units 8 and 9. Millrock disputed Questa's entitlement to do so and in January 2011 it commenced proceedings in the State Administrative Tribunal (the Tribunal) seeking an order that it was not obliged to pay management fees in respect of units 8 and 9 and an order that Questa reimburse it for the management fees it had already paid (the Application).

4 The Application was made pursuant to the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (the Act). The question of Questa's entitlement to charge management fees in respect of units 8 and 9 (and the Tribunal's jurisdiction to deal with the Application) depended on whether the leasing arrangement for units 8 and 9 constituted a 'retail shop lease' as that term is defined in the Act.

5 Under the Act, if a retail shop lease contains a provision which purports to entitle a landlord to charge management fees in respect of any premises, the landlord is not entitled to recover those fees and the tenant is not obliged to pay those fees: s 12(1f) of the Act. Accordingly, in the Application, Millrock sought to refer two questions for determination by the Tribunal, namely 'whether two (2) separate leases between [Questa and Millrock] relating to Units 8 and 9 … are subject to [the Act]' and 'whether [Millrock] is entitled to the payment by [Questa] of the management fees paid by [Millrock to Questa] in respect of the Leases' (the referred questions).

6 In the course of dealing with the Application, the Tribunal held a hearing on 5 April and 13 June 2011 to determine two preliminary questions: 'whether units 8 and 9 should be treated as a single or joint tenancy' (the first preliminary question) and 'if treated as a joint tenancy, how the total floor space is calculated' (the second preliminary question). It appears that the learned Member and the parties understood that the first preliminary question was ultimately directed to the issue of whether there was one 'retail shop lease' in respect of units 8 and 9 or separate 'retail shop leases' for each unit.

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7 It appears that the learned Member and the parties understood the second preliminary question to be directed to the total retail floor area to which the lease or leases applied. The significance of the second preliminary question fell away as there was ultimately no dispute that the total retail floor area of unit 8 was 488 square metres and the total retail floor area of unit 9 was 558 square metres, so that if units 8 and 9 were the subject of one retail shop lease, the total retail floor area was more than 1,000 square metres (ts 12, 5 April 2011).

8 On 13 June 2011, the learned Member delivered ex tempore reasons for her decision in respect of the preliminary questions. The learned Member held that units 8 and 9 were leased to Millrock pursuant to an agreement set out in an undated document entitled 'Extension of Lease, Units 8 and 9, 86 Erindale Road, Balcatta' (the 2009 Extension) which referred to a further term of lease for three years commencing on 19 June 2009. The learned Member held that although there was one document, there were in fact two demises of land effected in the 2009 Extension, giving rise to two separate leasehold interests - one for unit 8 and one for unit 9 (ts 5, 13 June 2011).

9 Questa now appeals from that decision.

10 Its grounds of appeal are, in summary, that:

(i) The Tribunal erred in law by concluding that units 8 and 9 were subject to two separate 'retail shop leases' and were therefore subject to the Act;

(ii) The Tribunal erred in law by failing to apply the proper legal tests for a 'retail shop lease' under the Act; and

(iii) The Tribunal erred in law by concluding that the Tribunal had jurisdiction to hear and determine the application before it in that the question before it was not a question arising under a 'retail shop lease'.

11 These reasons for decision deal with the following matters:

(a) the factual background to the Application;

(b) how the Tribunal dealt with the preliminary questions;

(c) whether Questa should have leave to appeal; and

(d) whether the grounds of appeal are made out.

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(a) The factual background to the Application

12 Much of the argument before the Tribunal, and on the appeal, dealt with the manner in which Millrock's leasehold interest in units 8 and 9 was granted over the period during which it occupied those premises. I have briefly set out that history below.

13 In 1990, Millrock took up a lease in respect of unit 8 following an assignment by the previous lessee of the unexpired residue of the term of that lease. In a separate assignment of lease document, Millrock also took up a lease in respect of unit 9.

14 On 10 June 1994, Questa and Millrock agreed to an extension of the leases and entered into a single document entitled 'Extension and Variation of Lease' in respect of both units 8 and 9, and in respect of another property described as unit 5, 11 Whipple Street Balcatta (the 1994 Extension). The 1994 Extension provided for an additional term terminating on 18 June 1997, and also provided for an option to extend the lease for a first and second further term of three years each.

15 On 7 April 1998, Millrock sought to exercise its first option to renew, and Questa agreed to this course. The parties entered into a single document entitled 'Deed of Extension and Variation of Lease' which pertained to 'leased premises' defined as 'Units 8 and 9, 86 Erindale Road Balcatta' (the 1998 Extension). In the 1998 Extension, Questa agreed to lease Millrock the 'leased premises' for three years expiring on 18 June 2000.

16 On 24 July 2001, Questa and Millrock agreed to an extension of the lease in respect of units 8 and 9. However, on this occasion, they entered into two separate documents entitled 'Extension of Lease' in respect of units 8 and 9 respectively. In each case, the lease period was for a further term of three years commencing on 19 June 2000, and the lease was varied to provide for a 'further option of renewal' for a further term of three years commencing on 19 June 2003 and terminating on 18 June 2006, followed by a second further term of three years commencing on 19 June 2006 and terminating on 18 June 2009.

17 In approximately 2003, Questa and Millrock agreed to Millrock's exercise of its first option to renew the lease in respect of units 8 and 9. They entered into an undated document entitled 'Extension of Lease Units 8 and 9, Erindale Road, Balcatta' (the 2003 Extension). The 2003 Extension provided that Questa leased 'the Premises', described as 'Units 8 and 9… being more particularly described in the respective

(Page 6)

Leases', to Millrock for a further term of three years commencing on 19 June 2003. In addition, the parties agreed to a variation of the lease to permit a further three year option commencing on 19 June 2009.

18 In approximately 2006, Questa and Millrock agreed to extend the lease for a further three years commencing on 19 June 2006. They entered into an undated document entitled 'Extension of Lease Units 8 and 9, 86 Erindale Road Balcatta' (the 2006 Extension). In that document, 'the Premises' were described as 'units 8 and 9 Erindale Road Balcatta [sic] being more particularly described in the respective Leases'.

19 Finally, in approximately 2009, Questa and Millrock agreed to the extension of the lease for a further three year term commencing on 19 June 2009 and terminating on 18 June 2012, and for that purpose they entered into the 2009 Extension.

(b) How the Tribunal determined the preliminary questions

20 The preliminary questions were directed to determining, in part, whether there existed a 'retail shop lease' as defined in the Act. A 'retail shop lease' is relevantly defined in s 3(1) of the Act to mean:

[A] lease that provides for the occupation of a retail shop other than where -

(a) the total retail floor area to which that lease applies … exceeds 1 000 square metres;

21 However, the preliminary questions did not deal with the entirety of that issue. They were not directed to the question whether the lease (or leases) in respect of units 8 and 9 provided for the occupation of a 'retail shop'. The definition of 'retail shop' under s 3(1) of the Act refers to any premises 'that are used wholly or predominantly for the carrying on of a business'. In the case of premises not situated in a retail shopping centre, as was the case here, the business must be one which involves the sale of goods by retail or be a business prescribed by the Commercial Tenancy (Retail Shops) Agreements Regulations 1985 (WA).

22 At the hearing of the preliminary questions, counsel for Millrock submitted that the business operating from units 8 and 9 involved the sale of goods by retail and therefore would meet the definition of a retail shop (ts 24, 29). He proposed to adduce evidence to support that submission, but ultimately did not do so as the hearing was confined to dealing with the preliminary questions. It appears from the transcript that Questa did not accept that units 8 and 9 were used as a retail shop. Counsel for

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Questa indicated to the Tribunal that it would be necessary to adduce evidence in relation to that question, and that he wished to make further submissions on the question (ts 7 - 8). Accordingly, counsel for Questa submitted that it should simply be assumed for the purposes of the determination of the preliminary questions that units 8 and 9 were used as a retail shop. The Tribunal proceeded on that basis (ts 12).

23 No witnesses were called during the hearing of the preliminary question. The 2009 Extension was tendered in evidence. So too were various documents which set out the history of the leasing arrangements between Questa and Millrock in respect of units 8 and 9, photographs and a plan of units 8 and 9 and documents (such as invoices for rent) which had been created by Questa's managing agents for units 8 and 9, Professionals Davenport Commercial. Counsel for Questa also tendered two statements of evidence, one dated 13 April 2011 prepared by Mr George Costopoulos, a Director of Professionals Davenport Commercial, and one dated 13 April 2011 prepared by Mr Robert Edward Day, a director of Questa. (I will refer to all of this evidence, apart from the 2009 Extension itself, as 'the additional material'.)

24 The primary focus of the hearing before the learned Member concerned the 2009 Extension, but at some points the parties referred to the position under earlier leases over units 8 and 9 (eg ts 4 - 5, 5 April 2011), and counsel appeared to be of the view that insofar as the Application sought an order for the reimbursement of management fees that those would include fees paid under leases prior to the 2009 Extension (ts 7, 13 June 2011). Nevertheless the learned Member's decision and the order she made referred solely to the lease which was in force at the time of the Application, namely the 2009 Extension.

25 As I have already noted, the Tribunal found that the 2009 Extension constituted a grant of two separate leases - one in respect of unit 8 and one in respect of unit 9. The learned Member appears to have reached this conclusion because the 2009 Extension referred to the two original leases pursuant to which Questa first leased unit 8 and unit 9 to Millrock (the original leases). Each of the original leases contained an option to renew in certain circumstances, and the learned Member appears to have concluded that when the parties entered into the 2009 Extension they did so in the exercise of Millrock's option to renew under the original leases. The learned Member concluded that the exercise of that option to renew resulted in a new lease for a further term in respect of each of unit 8 and unit 9 (ts 5, 13 June 2011).

(Page 8)

26 The learned Member then said:

[I]n relation to the first preliminary question, whether there are two separate leases between the respondent as lessor landlord and the applicant as lessee tenant relating to Units 8 and 9, 86 Erindale Road, Balcatta are subject to the Act [sic], the Tribunal finds that the answer is yes (ts 5, 13 June 2011).

27 In answering the first preliminary question in this way, however, the learned Member appears to have conflated the first preliminary question, with which she was dealing, with the first question referred to the Tribunal in the Application. The order made by the learned Member (on 13 June 2011) reflected this approach. That order set out the first question referred to the Tribunal in the Application - namely whether the two leases for units 8 and 9 were subject to the Act - and indicated that the learned Member answered 'yes' to that question.

28 It is not clear from the transcript of the hearing of the preliminary questions why, or on what basis, the learned Member, having reached a particular conclusion on the preliminary question, proceeded to determine the first of the questions referred to the Tribunal in the Application. However, I note that the fact that the learned Member proceeded to answer the first question referred to the Tribunal, rather than to confine herself to answering the preliminary questions, was not the subject of specific complaint by Questa in the course of the appeal. Furthermore, the grounds of appeal filed by Questa relied on the existence (or at least continued to assume the existence) of a retail shop, as that term is defined in the Act.

29 What was disputed by Questa on the appeal was whether there was one lease in respect of units 8 and 9, or separate leases, and whether a 'retail shop lease' as defined in the Act may exist over a portion of a retail shop rather than over the entirety of that shop. Questa's case was that a 'retail shop lease' as defined in the Act may only exist over the entirety of a retail shop (ts 22, 26 April 2012). In the latter sense, the appeal grounds encompassed the finding by the learned Member that there were separate leases in respect of units 8 and 9 and that those leases were 'retail shop leases' for the purposes of the Act.

(c) Leave to appeal

30 An appeal may be brought against a 'decision' of the Tribunal: s 105(1) of the State Administrative Tribunal Act 2004 (WA) (the SAT Act). A 'decision' of the Tribunal includes an order, direction or

(Page 9)

determination of the Tribunal, and can clearly encompass interlocutory orders, directions and determinations: s 3(1) of the SAT Act.

31 An appeal may only be brought with the leave of the Court and may only be brought on a question of law: s 105(1) and (2) of the SAT Act.

32 The distinction between questions of law, questions of fact, and mixed questions of law and fact can be difficult to draw: Shire of Derby-West Kimberley v Yungngora Association Inc[2007] WASCA 233 [38] (Newnes AJA, Buss & Miller JJA agreeing).

33 At first blush, the resolution of the grounds of appeal lies largely in determining the effect of the 2009 Extension. From that perspective, the appeal might be viewed as an appeal on a question of fact, or of mixed fact and law. However, the better view is that the grounds of appeal, when read in conjunction with the reasons for decision of the learned Member, do raise questions of law. As I explain below, at the heart of grounds 1 and 2 is the contention that in concluding that the 2009 Extension gave rise to separate 'retail shop leases' for units 8 and 9, the learned Member misconstrued the definition of 'retail shop lease' in s 3(1) of the Act. That is clearly a question of law. Grounds 1 and 2 also raise the question whether the facts as found by the learned Member meant that the lease (or leases) in respect of units 8 and 9 were capable of meeting the statutory definition for a 'retail shop lease'. Questions of that kind are often questions of law: cf Shire of Derby-West Kimberley v Yungngora Association Inc[38] - [39] (Newnes AJA, Buss & Miller JJA agreeing); Vetter v Lake Macquarie City Council(2001) 202 CLR 439, 450 - 461 [25] (Gleeson CJ, Gummow & Callinan JJ) and the cases cited therein.

34 Ground 3 raises a question of the existence of the Tribunal's jurisdiction under the Act and also involves a question of law.

35 Accordingly, I accept that each of the applicant's grounds of appeal raises a question of law.

36 Once it is determined that an appeal raises a question of law, leave to appeal should be granted if, in all the circumstances, it is in the interests of justice to do so: Chin v Legal Practice Board Western Australia[2009] WASCA 117 [12] (Pullin & Newnes JJA); Paridis v Settlement Agents Supervisory Board(2007) 33 WAR 361, 372 [16] (Buss JA, Wheeler & Pullin JJA agreeing).

(Page 10)

37 Considerations relevant to the grant of leave will include: the importance of the question of law which is the subject of the appeal, either generally or to the applicant for leave; whether there is sufficient doubt about the question of law the subject of the appeal; and whether substantial injustice would be caused if the alleged error of law were allowed to go uncorrected: Paridis(372 - 373) [17] - [18] (Buss JA, Wheeler & Pullin JJA agreeing), citing Secretary to the Department of Premier and Cabinet v Hulls[1999] 3 VR 331 (Phillips JA, Tadgell & Batt JJA agreeing).

38 However, these guidelines are not exhaustive and the overriding consideration remains whether, in all of the circumstances, a grant of leave is in the interests of justice: Town of Cottesloe v Multiplex (Marine Parade) Pty Ltd[2007] WASCA 113 [15] (Buss JA, Steytler P & Roberts-Smith JA agreeing).

39 The same principles apply to the grant of leave where the decision of the Tribunal is an interlocutory decision: Chief Executive Officer, Department for Child Protection v Hardingham[2011] WASCA 262 [44] (Martin CJ, Murphy JA & Allanson J); Mustac v Medical Board of Western Australia[2007] WASCA 128 [63] (Martin CJ, Wheeler & Buss JJA agreeing).

40 If Questa demonstrates that the Tribunal erred in relation to the questions of law the subject of the appeal, the result will be that the Tribunal did not, and would not, have jurisdiction to deal with the Application (at least insofar as it concerned the 2009 Extension). If the Tribunal has erred, the failure to correct that error would result in the parties being put to the expense of continuing the proceedings, when there could be no valid determination of the Application. In that sense, the questions of law raised by the appeal are of significance to the parties, and would cause substantial injustice if the alleged error, if made out, were not corrected. The questions of law raised by the grounds of appeal are arguable. Millrock did not oppose the grant of leave to appeal in this case.

41 Accordingly, in my view, the interests of justice warrant the grant of leave to appeal in this case.

(Page 11)

(d) Whether the grounds of appeal are made out

(i) Grounds 1 and 2

42 It is convenient to deal with grounds 1 and 2 together because there was a substantial degree of overlap between them.

43 Ground 1 contends that the learned Member erred in law by concluding that units 8 and 9 were subject to two separate 'retail shop leases' and were therefore subject to the Act. Questa's case is that the leases provided for the occupation of a single 'premises' and for the occupation of a single 'retail shop', that the 'business' carried on from the retail shop was a single business, and that the occupation of the retail shop exceeded a total retail floor area of 1,000 square metres.

44 Ground 2 contends that the learned Member erred in law by failing to apply the proper legal tests for a 'retail shop lease' when finding that there were two separate retail shops, that the retail floor area of each shop was less than 1,000 square metres, and that these findings were necessitated by the finding that the 2009 Extension constituted two separate leases.

45 Questa's case was, in effect, that the learned Member should have found that there was one lease in respect of units 8 and 9 and that because the total retail floor area to which the lease applied exceeded 1,000 square metres, the lease was not a 'retail shop lease' for the purposes of the Act. There was a further plank to Questa's case, which was effectively run in the alternative, namely that even if there were separate leases in respect of units 8 and 9, those leases did not provide for the occupation of a retail shop, and so were not 'retail shop leases' for the purposes of the Act.

46 As I have already noted, the definition of a 'retail shop lease' (having regard to the circumstances of this case) relevantly required that there exist a 'lease' as defined in the Act, that that lease had to provide for the 'occupation' of a 'retail shop' (as defined in the Act), and that the total retail floor area to which the lease applied did not exceed 1,000 square metres.

47 It is convenient to discuss the grounds of appeal in the context of these requirements for a 'retail shop lease'.

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Did there exist a 'lease' as defined in the Act?

48 The term 'lease' is relevantly defined in s 3(1) of the Act to mean:

[A]ny lease, licence or agreement, whether in writing or not, that provides for the occupation of premises situated within the State whether for a term or by way of a periodic tenancy or at tenancy at will, and whether or not the lease, licence or agreement is entered into outside the State or purports to be governed by any law other than the law of the State.

49 Counsel for Millrock submitted that the 'lease' between Questa and Millrock in respect of units 8 and 9 comprised all of the documents to which I have referred above in setting out the factual background to the Application. I do not accept that submission. By the time the Application was made, all of the leases and extensions of leases to which I have referred in setting out the factual background to the Application, other than the 2009 Extension, had terminated. At the time of the Application, the only document which contained an operative grant of a lease in respect of units 8 and 9 was the 2009 Extension. That document was clearly a 'lease' for the purposes of the Act.

50 However, what was in issue was the meaning of the terms of that lease, and in particular whether the 2009 Extension gave rise to a demise of two leasehold interests or one. The answer to that question emerges from the proper construction of the 2009 Extension.

Principles applicable to the construction of the 2009 Extension

51 In construing the 2009 Extension, as with any written contract, the task is to ascertain what a reasonable person would have understood the parties to the instrument to mean: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd(2004) 219 CLR 165, 179 [40] (Gleeson CJ, Gummow, Hayne, Callinan & Heydon JJ), referring to Pacific Carriers Ltd v BNP Paribas(2004) 218 CLR 451.

52 In order to establish whether there existed one lease or two leases for the purposes of the Act, the parties sought to adduce into evidence, and to rely on, the additional material. Although the Tribunal received the additional material into evidence, the learned Member concluded in her reasons for decision (ts 2, 13 June 2011) that the

lease documents … are determinative of the issues … . The [T]ribunal has looked at all of the other documents and information that has been provided to it by the parties; however, in its view it is not required to have recourse to any of the other documents and attach any great weight to them in considering the matters that are before it.

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53 At least as a starting proposition, in construing the 2009 Extension the learned Member was right to focus on the terms of the 2009 Extension itself. The correctness of that approach flows from established legal principle that evidence of surrounding circumstances is only admissible to assist in the interpretation of a written contract if the language used is ambiguous or susceptible of more than one meaning. Accordingly, evidence of surrounding circumstances will not be admissible if the language of the contract has a plain meaning: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales(1982) 149 CLR 337, 352 (Mason J, Stephen & Wilson JJ agreeing); Western Export Services Inc v Jireh International Pty Ltd(2011) 282 ALR 604, 605 [3] - [5] (Gummow, Heydon & Bell JJ); McCourt v Cranston[2012] WASCA 60 [23] (Pullin JA, Newnes JA agreeing). If evidence of surrounding circumstances is admissible in the construction of a written agreement, that evidence must be confined to objective facts known to both parties: Cranston [24] (Pullin JA, Newnes JA agreeing).

Did the learned Member err in construing the 2009 Extension?

54 The learned Member examined the terms of the 2009 Extension and concluded that the document constituted the exercise of an option to renew the lease in respect of each of units 8 and 9, and that those options to renew derived from the original leases granted in 1984 by Questa to the original lessee in respect of units 8 and 9. I am respectfully unable to agree with that conclusion, for three reasons.

55 First, although cl C of the 2009 Extension (which sets out the 'background' to the operative parts of the document) indicates that 'the Landlord has agreed to grant to the Tenant an extension of the Original Lease for the Further Term on the terms and conditions of this extension of lease', that clause merely records - in a shorthand and imprecise fashion - the fact that the 2009 Extension constituted a continuation of the arrangements which had been in place over many years by which Questa leased units 8 and 9 to Millrock (and the earlier lessee). Clause C did not, itself, contain the grant of the lease (or leases).

56 Furthermore, in so far as cl C referred to the 'original lease' for units 8 and 9, the terms of those leases, and the options to renew contained in them, had long since terminated, and options to renew the lease had been granted in subsequent leases or extensions of lease (to which I have referred above in setting out the background to the Application).

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57 Secondly, even if the 2009 Extension reflected the exercise of an option to renew which had been contained in an earlier lease, a lease obtained by the exercise of an option to renew is itself a new lease: Gerraty v McGavin(1914) 18 CLR 152, 163 (Isaacs J). The terms of that new lease (including whether there was one lease or two separate leases in respect of units 8 and 9) were set out in the 2009 Extension itself.

58 Thirdly, the key operative provision of the 2009 Extension which effected the grant of a lease was cl 2, and the terms on which that lease was granted were set out in cl 3 and following. It was those terms which determined whether the 2009 Extension gave rise to one lease or two separate leases in respect of units 8 and 9.

59 For the reasons set out below, on its proper construction the 2009 Extension constituted a grant of only one lease in respect of both units 8 and 9.

One lease or two leases?

60 I turn then to the proper construction of the 2009 Extension.

61 A number of the terms in the 2009 Extension suggest that the 2009 Extension granted one lease in respect of units 8 and 9.

62 First, the key operative clause in the 2009 Extension is cl 2, which constitutes the grant of the lease itself. That clause indicates that the 2009 Extension effects one lease in respect of the Leased Premises.

63 Secondly, the 'Leased Premises' are defined in Item 3 of the schedule to the 2009 Extension, which refer to 'Units 8 and 9' collectively, rather than individually.

64 Thirdly, cl 2 and cl 4 refer to the payment of 'Rent'. There is no reference in either of those clauses to the payment of rent in respect of each of unit 8 and unit 9 (although the same is not the case in respect of the definition of 'Rent' itself, to which I refer below).

65 Fourthly, the 2009 Extension speaks consistently of there being one 'Lease', or one 'extension of lease': see cl B, cl C, cl 1.1.1, cl 1.3, cl 1.4, cl 2, cl 3, cl 4 and cl 5. However, the strength of this consideration is diminished by the fact that singular words used in the Lease denote the plural, unless the context indicates otherwise: cl 1.2 of the Lease.

66 On the other hand, there are other terms in the 2009 Extension which are ambiguous or capable of more than one meaning, and which would

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lend some support to the conclusion that the 2009 Extension constituted a grant of a separate lease in respect of each of unit 8 and unit 9. The 2009 Extension refers to the extension of the 'Original Lease' (see, for example, cl C and cl 2 and cl 3) yet the 'Original Lease' as described in Item 4 of the schedule refers to the first lease granted in respect of unit 8 and, separately, to the first lease granted in respect of unit 9. In addition, 'Rent' is specified in Item 6 of the schedule to the 2009 Extension by reference to separate sums of rent payable in respect of unit 8 and in respect of unit 9.

67 The existence of this ambiguity permits recourse to the surrounding circumstances of objective facts known to both parties, and which was in evidence before the Tribunal, to assist in the construction of the 2009 Extension.

68 There was evidence before the Tribunal which concerned the physical layout of units 8 and 9. Photographs which were in evidence before the Tribunal show that the dividing wall between units 8 and 9 features a series of archways, and that the two units now comprise one showroom, with no visual or physical separation between units 8 and 9.

69 A related aspect of the surrounding circumstances derives from the concession made by counsel for Millrock that the entirety of units 8 and 9 are used for the one business operated by Millrock (ts 23, 29). This was not, therefore, a situation where a tenant leased two units from a landlord, for the conduct of entirely separate businesses, but where it was convenient for both parties to record their agreement for the occupation of those units in one document.

70 Two other aspects of the surrounding circumstances known to the parties which were in evidence before the Tribunal should be mentioned. The first of these was the history of the leases granted by Questa to Millrock, which I have set out above. It can be seen from that history that separate leases for unit 8 and unit 9 were entered into in 1990 and 2001, but on each other occasion, the parties' agreement in relation to the lease of units 8 and 9 was set out in a single document. The terms of those documents are ambiguous in ways similar to the terms of the 2009 Extension. In my view, little more can be gleaned from this history than that the parties have not dealt with the leasing arrangements for units 8 and 9 in a consistent fashion.

71 Finally, there was some evidence before the Tribunal to the effect that rent in respect of units 8 and 9 had been the subject of separate

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invoices issued by Professionals Davenport Commercial and that separate budgets of outgoings for each of units 8 and 9 had also been prepared by Professionals Davenport Commercial (exhibit 3). However, at the hearing on 13 June 2011, the Tribunal permitted counsel for Questa to put into evidence a number of documents, including a statement dated 13 April 2011 prepared by Mr George Costopoulos, a director of Professionals Davenport Commercial. In that statement, Mr Costopoulos indicated that invoices, budgets and other documents for each unit leased to a tenant were generated by the firm's property management accounting software system. Mr Costopoulos also stated that prior to the use of this accounting system, a number of items of correspondence prepared by his firm referred to units 8 and 9 jointly in relation to expenses including rent and insurance. None of the documents tendered as part of exhibit 3, nor those tendered by counsel for Questa on 13 April 2011, were the subject of any evidence in chief or cross-examination. On its face, this evidence did not constitute evidence of objective facts known to both parties. Accordingly, it could not be relied upon to assist in the construction of the 2009 Extension.

72 Having regard to the aspects of the surrounding circumstances which were in evidence before the Tribunal, particularly the physical layout of units 8 and 9, and the fact that one business operated from units 8 and 9, in my view a reasonable person would have understood the parties to have intended that the 2009 Extension constituted one lease in respect of both units 8 and 9.

73 In my respectful view, the learned Member erred in concluding that units 8 and 9 were subject to two separate 'retail shop leases' and were therefore subject to the Act.

74 The learned Member should have concluded that the 2009 Extension created a single lease for units 8 and 9. However, because the parties agreed that the total retail floor area to which the lease applied exceeded 1,000 square metres, that lease could not constitute a 'retail shop lease' as defined in the Act.

Did the leases the learned Member found to exist provide for the occupation of a retail shop?

75 The alternative argument put by Questa was that even if (as the learned Member found) there were separate leases in respect of units 8 and 9, those leases did not provide for the 'occupation' of a retail shop. Questa's submission was that in order to constitute a 'retail shop lease' for the purposes of the Act, the lease must provide for the occupation of a

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retail shop in its entirety. On the facts found by the learned Member, the leases each provided for the occupation of only part of the one retail shop, namely the BedBarn business operated by Millrock.

76 Having regard to the conclusion I have reached in relation to the proper construction of the 2009 Extension, it is not, strictly speaking, necessary to deal with this alternative argument. However, because the issue may be relevant to other aspects of the dispute between the parties in respect of the charging of management fees under the lease prior to 2009, it is appropriate to briefly deal with it.

77 Millrock submitted that the leases found by the learned Member provided for the occupation of a retail shop, but that there was no requirement that the entirety of the shop fall within the one lease. I do not accept that submission.

78 The word 'occupy' means, relevantly, 'to take up (space, time etc)' (Macquarie Dictionary). In my view, having regard to the meaning of the term 'occupation' and to the statutory context, the proper construction of the definition of 'retail shop lease' is that the retail shop (as defined in the Act) in its entirety should be contained within the area the subject of the lease. This is so for two reasons. First, the definition of a 'retail shop lease' refers to 'a lease' which provides for the occupation of 'a retail shop', and not for part of a retail shop. Secondly, the definition of a 'retail shop' itself (other than in respect of retail shops situated in shopping centres) requires a consideration of whether premises are used wholly or predominantly for carrying on a business involving the sale of goods by retail. The terms of that definition could not readily be applied to a situation where the one premises from which the retail shop operated was the subject of two or more leases.

79 Accordingly, in so far as the learned Member concluded that there were two separate retail shop leases in respect of unit 8 and unit 9, the learned Member erred in that she misconstrued the term 'retail shop lease' in s 3(1) of the Act, or alternatively that she concluded that those separate leases were capable of providing for the occupation of a 'retail shop' and thus meeting the requirements for a 'retail shop lease' as defined in s 3(1) of the Act.

80 It follows that I accept that the appellant has made out grounds 1 and 2 of the appeal.

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(ii) Ground 3

Whether the Tribunal erred in law by concluding that it had jurisdiction to hear and determine the application before it in that the question before it was not a question arising under a 'retail shop lease'

81 Section 16(1) of the Act provides that a party to a retail shop lease may refer to the Tribunal any question between the parties which they believe to be a question arising under the lease and the Tribunal shall determine whether or not the question referred to the Tribunal is a question arising under the lease and if it is such a question, hear and determine it.

82 As I have found that the 2009 Extension did not give rise to a retail shop lease, it follows that, to the extent that the Application pertained to the 2009 Extension, the Tribunal did not have jurisdiction to deal with the Application.

(e) Conclusion

83 The grounds of appeal should be upheld, and the orders made by the Tribunal on 13 June 2011 should be set aside.

84 Given that there may be a question as to whether or not the Application was founded solely on the 2009 Extension, I will hear from the parties as to the orders which should be made to give effect to these reasons.