Royal Botanic Gardens & Domain Trust v South Sydney City Council

[2001] HCATrans 315

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S263 of 2000

B e t w e e n -

ROYAL BOTANIC GARDENS AND DOMAIN TRUST

Appellant

and

SOUTH SYDNEY CITY COUNCIL

Respondent

GLEESON CJ
GAUDRON J

McHUGH J
GUMMOW J
KIRBY J
HAYNE J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 7 SEPTEMBER 2001, AT 10.16 AM

(Continued from 6/9/01)

Copyright in the High Court of Australia

GLEESON CJ:   Yes, Mr Jackson.

MR JACKSON:   Your Honours, I was dealing with the terms of the lease and I have dealt with the terms to which I wish to refer other than the provisions about rent.  May I come to those now.  They commence at volume 3 page 615 and clause 1.  What I am seeking to do is to deal with the relationship between clauses 1 and 4 and in particular with the functions to be performed by the several parts of those two clauses.  This is a matter dealt with in our written submissions commencing in paragraph 12.

Could I go to page 615.  Your Honours will see that what clause 1 first does is to fix the rent for the first three years of the term at a yearly rent of $2,000.  That is about line 35.  The second thing is that it then divides up the remaining term of the lease into 15 three‑year periods and a final two‑year period.  That is immediately following.  In respect of the periods other than the first three years, it provides that the rent is to be a yearly rent, and your Honours will see that at about line 45.  One then sees that the lessor, the trustees, as it is there put, is to determine in respect of each three‑year or the last two‑year period a yearly rent.

Now, your Honours, the lessor, in making that determination is obliged – and your Honours will see the words – to do so in accordance with clause 4(b).  Your Honours will see that from the words:

which shall be determined . . . as is hereinafter in Clause 4(b) provided –

May I pass over the last provision on that page in clause 1 and come back to it in combination with clause 4 in just a moment.  May I take your Honours then to clause 4(b) which your Honours will see clause 4 commencing on page 620.  If one goes to clause 4(b) on page 621, the first thing one sees is that it provides for the determination of the yearly rent for each ensuing period.  Your Honours will see the words:

the yearly rent payable . . . may be determined by the Trustees at the commencement –

et cetera.  Now, it indicates that the rent so determined is payable for each of the three years in question.  Your Honours will see the words:

and the yearly rent so determined shall be payable during and in respect of the then succeeding three years of the term –

The clause requires in subclause (i) that:

the Trustees shall notify the Lessee of the yearly rent as so determined as soon as practicable after the commencement of –

the relevant three‑year period.  It then goes on to provide in subclause (ii) for:

any necessary adjustment of rent shall be made . . . on the next day for payment of rent following such notification –

of the new rent.  That ties up with the concluding words of clause 1 at page 615, at the bottom of the page, because the rents are payable:

in advance on the first day of May in each and every year –

and it may be that the adjustment has to be made because the new rent is not fixed until a time after that, although in respect of that year.

Then, your Honours, clause 4(b)(iii) on page 622 says that the lessor is to have a minimum rental and the figure of “$2,000.00”, and finally, your Honours, it sets out in clause 4(b)(iv), in our submission, the matters to which the lessor is permitted to have regard in determining the rent for each three‑year period.  Your Honours, we would say simply that when one goes to clause 4(b)(iv) and it says, “in making any such determination”, that being the determination contemplated by clause 1, what it is saying is these are the matters to which the lessor is permitted to have regard.  Now, your Honours, that is the essence of what we say on the question of construction and an argument which, in our submission, is perfectly open.

McHUGH J:   Your argument – you do not need to worry about surrounding facts or background or anything.  It is just a matter of straight construction.

MR JACKSON:   Indeed, your Honour, and that is why our submission is really that our learned friend’s argument fails in a sense in limine because applying what has been described as the ordinary canons of construction, the construction for which they propound is one which is not, in our submission, the proper construction.

KIRBY J:   I take the force of that, but when one looks at the lease, it does appear to contemplate by its detailed provisions a substantive determination and not the rather nominal rent that was provided at the beginning.  In other words, it is apt for a substantive determination from time to time at the rests which are provided and requiring the trustees to perform their functions faithfully and appropriately according to law.

MR JACKSON:   Your Honour, what I was going to say in response to that is we would accept the proposition that if one looks at clause 1 what it says is that the rent is to be determined by the trustee.  The trustee has to make a determination in respect of each period.  Now, in respect of each of those periods, the determination is to be – and this is where the trustee is instructed by clause 1 – the trustee is to determine it as is hereinafter in clause 4(b) provided.  Now, the trustee is not given an absolute power, one unlimited, it is as in clause 4(b) provided.  When one goes to clause 4(b), your Honours will see that in terms of the substance of the determination, apart from, in effect, the minimal ratchet clause in 4(b)(iii), that what is said in relation to how the determination has been made is this, in making the determination, the trustee may have regard to additional costs and expenses.  Now, your Honour ‑ ‑ ‑

McHUGH J:   It means, on your argument, does it not, that the lease assumes that the trustees will incur no expenses, what I might describe as internal expenses, because these only occur in regard to the surface of the Domain?

MR JACKSON:   Yes.

McHUGH J:   Now, is it your submission that under the lease, such things as repairs, maintenance, everything of that nature is the burden of the lessee?

MR JACKSON:   Everything.  I went through the clauses yesterday, but, your Honours, there is nothing that the trustee has to pay for ‑ ‑ ‑

McHUGH J:   Yes.

MR JACKSON:   ‑ ‑ ‑ nothing identified, and perhaps they have to pay for the salary of someone who deposits the cheque we give them, but it would not be a lot more than that.

CALLINAN J:   Mr Jackson, I suppose you say that those cases that are referred to by the appellants in paragraph 29 of the submission, Hillas and QEGB, they support your case rather than are authorities to the contrary, because the courts found a degree of certainty in them sufficient to support the contract, in the same way as you say there is sufficient certainty and clarity here.

MR JACKSON:   Yes, your Honour.  The point I will seek to make just a little later concerning the implication of terms is that one does not imply terms across the board, as it were; one is looking for a circumstance in which the issue of implying the term arises.  Now, if one takes the types of case to which your Honour was referring, one can see that the usual circumstance in which one is then looking to imply a term is to give certainty to a contract that might otherwise be void for uncertainty.

The approach that has been taken in that regard – and I will give your Honours a reference shortly – is to say that a contract will not be held to be uncertain in relation to the absence of an otherwise essential term if what can be seen is that there is (a) a standard or (b) a means by which that certainty can be rectified and, your Honour, I do not – supplied, I should say rather than rectified.

CALLINAN J:   But QEGB - a case with which you and I are both familiar ‑ the Privy Council there was in no doubt that there was sufficient certainty, and the question of an implication of a term never arose. 

MR JACKSON:   Did not arise, your Honour, because there was an arbitrator.  Apart from anything else, there was an arbitrator, and what one might imply ‑ ‑ ‑

CALLINAN J:   That is why I asked Mr Gleeson about the significance, if any, of the absence of an arbitration clause. 

MR JACKSON:   Yes.  Your Honour, may I come back to that in just a moment.  Our submission, if I could put it broadly, for the moment, is that absent a means or a standard provided for by the contract, then one does have a situation in relation to rent that, if no provision is made about rent, and the issue is whether the contract is void for uncertainty, the contract will be.  We have given your Honours some references in our written submissions and I will come to those in a moment.  But a different situation can arise where what one has is a case like this, where no one suggests that the contract is not good; it is a question of what the contract means. 

GLEESON CJ:   But there is an ambiguity, is there not?  To say:  when you exercise a certain power you may have regard to this factor, raises a question - which is:  may I have regard to anything else?  I would have thought that if, instead of the amount of $2,000, you had had an amount of $100,000, then it might have been very easy to give an answer to the question of the kind for which your opponents contend. 

MR JACKSON:   It would be easier, I would accept that, but what one sees if one takes the agreement as it is in the first place and if one looks at that, one does see something starting off with a nominal rental, and then if one looks to the provisions for increase of the rental, the item that is specified is one that has an apt relationship with the $2,000.

McHUGH J:   What seems to add great force to your submissions is the use of the word “additional”.  It is additional costs and expenses, which seems to assume, in effect, that what has gone before the costs and expenses and you may have – involved in the $2,000‑odd dollars and you have may have regard to this and, of course, once you look at the surrounding circumstances, it becomes very plain.

MR JACKSON:   Your Honours, could I conclude on this issue by saying one further thing, and that is that our submission is that the lease construed as we submit it should be works perfectly well.  If I could just refer your Honours to what was said by Justice Gibbs in AustralianBroadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109, your Honours will see the passage really commences at the start of the new paragraph on the page, but the particular point to which I wanted to refer was halfway through that paragraph; the reference to “consequences which appear to be capricious” et cetera.

Your Honours, our submission is that there is nothing, to use his Honour’s words, “capricious, unreasonable, inconvenient or unjust” about the construction for which we contend.  If one looks at the terms of the lease, I indicated to your Honours yesterday that really no expenditure is involved on the part of the trustees and in those circumstances it is very difficult, in our submission, to submit that the – I am sorry, ‑ no expense incurred by the trustees apart from making the grass grow and the trees grow, I suppose, and the additional costs of doing that are provided for by the lease.

GLEESON CJ:   But, to take up a point that was raised by Justice Hayne yesterday in relation to what appears at the beginning of that paragraph on page 109, this expression “discovering the intention of the parties” is the sort of thing that is sometimes called a construct, is it not?  It does not mean that the object of the exercise is to discover what Roy Mervyn Watts intended or what Lawrence Alexander Sidney Johnson thought about this issue, because it is at least possible that they never had any intention at all about this matter.

MR JACKSON:   Your Honour, what they intended to do was to enter into this lease.

GLEESON CJ:   It is a formula.  That expression “discovering the intention of the parties to a contract” is a formula that is used to explain the way the law approaches the question of the meaning of “meaning”.

MR JACKSON:   It is a description in a sense of both a task and the aim sought to be achieved by performing the task, but the way in which it is put also carries with it an unstated obverse, and that is that it is saying one is not looking to see subjective intention but intention as disclosed from things other than subjective intention.

KIRBY J:   But once it is accepted that it is objective, looked at with the eyes of the time when the lease was executed, it may not have been unjust because there is a hidden premise between government and public benefits; we do not make profits.  But looked at with today’s eyes, it does seem unjust to at least the appellant, and no doubt to others, to the primary judge, that they should be fixed in a lease which contemplated rests and reconsideration with rental which is so trivial and in circumstances where you have paid off the capital works and are making pure profit.

MR JACKSON:   Your Honour, it is apparent from the material that the funds were borrowed funds, that the £1 million that it was estimated to cost was borrowed funds.  We had to pay interest on that.  Now we have reached the point where we are making a profit.  We are faced with the costs of maintaining the place.

KIRBY J:   Let that all be.  Of course there are costs but there is a very, very large element of sheer profit, and in economic terms it is not distributed to the benefit of one party to the lease but only to you.

MR JACKSON:   Your Honour, may I say two things in relation to that.  What the effect of the lease did, and bearing in mind these are two statutory bodies, what the lease did was to take out of the control of the Trust for a period of 50 years, or fewer if it be that the Minister brought it to an end, was to take out of their control this asset, if you like, for which something might be given.  They do not have the opportunity.  It has been given, in effect, by government – and I use that term loosely, of course – taken it from them and given to us.  We, your Honours, represent – and again I use the term loosely – all the persons who are in the South Sydney ‑ ‑ ‑

McHUGH J:   Your opportunity costs, really.  It is not pure profit.  You have an opportunity cost here and it is the millions that you have invested in this place which could be used for other purposes to receiving a return.

MR JACKSON:   And the prospect, your Honour, that it may be that we are required to demolish the whole thing and take it away.

KIRBY J:   Yes, but had it been, as you contend, the logic of your submission is that it would have been fixed at 2,000 for the whole period of 50 years but that is not what the lease provided.  It provided for review at rests.

MR JACKSON:   Yes, your Honour.

KIRBY J:   That is what enlivens, if there is a principle of fairness and bona fide exercise of the power, the obligation to look with today’s eyes at today’s facts.

MR JACKSON:   And today’s facts, your Honour, are those contemplated by clause 4(b)(iv).  What I mean by that is that when one is looking at the terms of clause 4(b)(iv) it does operate in an ambulatory fashion, but it operates in an ambulatory fashion in relation to the increases in costs in relation to the only matter where the trustees might have to expend expenditure, that is, the additional costs brought about by the fact that the government – and again I use the term loosely – has determined that so far as the allocation of State resources are concerned, these ones are to be ours for 50 years or less.  If they were less, fewer if they choose to change them.

Now, your Honour, one is not really speaking about relative merits.  One is speaking about a situation where you have these two bodies and it is the determination as to which of them is the one which will bear the costs, as it were, one the body more directly related to the larger government; one, the smaller one which has to get its funds from ratepayers and others.

GLEESON CJ:   Did I understand from what you said yesterday that you and Mr Gleeson are in a heated agreement about this implied term?

MR JACKSON:   Your Honour, the answer is yes.  Yes, in the sense that if we fail on the construction issues, either construction as I have dealt with it so far or construction taking into account the facts, then the order that they seek in those circumstances, that is, to restore the judgment of the primary judge, is one with which we are in agreement.

GLEESON CJ:   Yes, but as a matter of logic, the implied term only comes into operation if he is right and you are wrong on the construction argument.

MR JACKSON:   Quite, your Honour, yes.

GLEESON CJ:   Understandably, from his point of view, it sweetens the construction argument that he wants to advance to have the implied term there coming into operation if he is correct and from your point of view, as a practical matter, it makes you feel more comfortable to have the implied term there if you are wrong.

MR JACKSON:   We would rather have the flavoured asprin rather than the one that is not.

GLEESON CJ:   But in terms of a piece of litigation that raises the issue about good faith and implied terms in the law of contract we have here something of a boat race.

MR JACKSON:   Yes.  Your Honour, it is a case in which that issue is not ultimately one  in contest and that is why we say in our written submissions that ultimately this is no more than a case about the construction of a contract.

HAYNE J:   Just to go back a moment to this question of fairness, injustice and the like, at least as I understood the argument by Mr Gleeson, it was first the lessor could have made a transaction with a commercial, as distinct from a government enterprise, to which I would understood your answer to be simply they did not, and at the moment at least we have not entered the question of could they, and, second, that the lessor could have, whether with a commercial enterprise or with a non‑commercial enterprise, have exacted a commercial rent.  Again, I would understand the answer you make to that to be simply they did not.

MR JACKSON:   They did not, your Honour, yes.

HAYNE J:   But do I capture the argument?

MR JACKSON:   So far, your Honour, yes.

HAYNE J:   Yes.

MR JACKSON:   As to the question of their powers may I come to that a little later?

HAYNE J:   Yes.

MR JACKSON:   We will endeavour to give your Honours a document which summarises the legislation as it is gone through but it is debateable, in our submission, whether they would have the ability to grant a lease for a car park, at least other than to us, in respect of this area.  Could I go on, then, to the question of implication?  The first thing I would seek to say about that is this that the lease, we have submitted, works perfectly well on the construction we have advanced.  The need to imply the restriction for which they contend only arises if one does not give effect to the restriction provided for expressly, namely by clause 4(b)(iv).

Could I come then, your Honours, to the question of implication?  I do not intend to go through our written submissions paragraph by paragraph but may I seek to make a number of points arising from them.  The first concerns our written submissions, paragraph 24, and matters related to that.  It gives rise to a matter that your Honour Justice Callinan raised with me and it is this.  One does need to bear in mind that the question whether a term as to reasonableness or fairness, et cetera, should be attributed to a contract can arise in a number of contracts.  One is where what is in question is a power to terminate the contract or to take some measure of a similar kind.

Now, your Honours, it may be a reflection or perhaps a development of notions such as those in Mackay v Dick and Secured Income Real Estate that each party is under an obligation not to prevent performance of the contract, an obligation variously expressed in various cases.  Your Honours, that is what that may mean, development or perhaps reflection of that.  But more often, the end in mind will be to save a contract from being void for uncertainty.  Your Honours, in those circumstances, what will save it from uncertainty is the means or standard.  Your Honours can see that referred in a short passage in a decision of the Privy Council, Cudgen Rutile (No 2) Pty Ltd v Chalk [1975] AC 520 at pages 536 and 537 per Lord Wilberforce.

KIRBY J:   What is this point going to?

MR JACKSON:   I am sorry, your Honour, I am simply seeking to indicate that the question of implication of terms is not one that arises, in effect, across the board, it is something that tends to arise in particular contexts.  I was seeking to say that the context in which it very frequently arises is not where there is something that undoubtedly is a contract, but rather where the question is whether the implication of the term is necessary to prevent there not being a contract.  Your Honours can see at page 536 in the paragraph commencing in the middle of the page that there was an argument put to the effect that the agreement did not have the “essential terms” and then your Honours will see a reference to the argument that there was “no effective contract”.  A few lines further down, after the reference to Justice Windeyer in Placer, his Lordship said:

Their Lordships consider that, in modern times, the courts are readier to find an obligation which can be enforced, even though apparent certainty may be lacking as regards some term such as the price, provided that some means or standard by which that term can be fixed can be found –

and then your Honours will see the reference to means or standard, and in the next paragraph:

Further, if the contract is one made with a public body, with a duty to act and decide according to a recognisable principle, the court may be willing to find an obligation which requires that body to reach a decision, in accordance with that principle . . . and so find an enforceable contract where one might not be found as between private parties –

Now, your Honours one sees similar concepts referred to in the case to which my learned friends referred yesterday, again in the Privy Council in Queensland Electricity Generating Board v New Hope Collieries [1989] 1 Lloyd’s Rep 205 and your Honours, at the top of page 210, have seen the passage yesterday.

Your Honours, where there is a means provided, for example, as by arbitration or the appointment of a third party so that there is no uncertainty because there is a means provided, but where there is an absence of specification of any standard to be applied by that person, then, in the ordinary course of events, one would expect the contract to be treated as requiring the arbitrator or third person to arrive at a result which, in the context of the contract, could be regarded as fair and reasonable or perhaps reasonable is a simpler description of it.  Your Honours, in cases where, absent a provision for a third party but there is no contest – a third party to determine the effect of the term, absent such a provision, there may be no disagreement about the contract being binding, although lacking in specificity.  In circumstances of that kind, then one would expect that the standard which a court would apply would be one which would be a standard of reasonableness.

Your Honours, if I could go then to what is dealt with in paragraphs 25 to 27 of our written submissions, in our submission one would only imply the term sought if the express terms of the lease did not contain a restriction on the power to determine the rent.  One does have to start with the lease and it does provide the restriction.  If I could refer your Honours to the last sentence of our paragraph 25, the first task, in our submission, is to construe the express terms of the lease, otherwise one cannot sensibly ask whether the implied term would contradict any express term or, indeed, if it is necessary to give efficacy to the contract.

Your Honours, could I refer also to paragraph 28 of our written submissions and also to paragraph 29.  We accept, as your Honours will see in paragraph 29, that the lessor is to act bona fide, fairly and reasonably in determining the rent, but it is the ambit of the matters to be dealt with in making that determination that is the matter that is in question.  Your Honours will see also paragraph 30.

Could I come then, your Honours, to the question of extrinsic evidence.  Our position in the first place if we are not correct on the construction issue that we have dealt with so far, is that, if I could use the language of Justice Mason in Codelfa 149 CLR 337 at 352 – may I take your Honours to that, the first new paragraph on that page. Our submission is that the language of the lease, if one comes to this point, “is ambiguous”. Your Honours will see that his Honour said “ambiguous or susceptible of more than one meaning”.

Now, he may have been using the expression “or susceptible of more than one meaning” as either a synonym for “ambiguous” or as a second category.  If I may say so, with respect, one could say, I suppose, that his language in that regard is either “ambiguous or susceptible of more than one meaning”, but certainly the concept to which he refers is that the language is “susceptible of more than one meaning”.  Your Honours, that usage, “susceptible of more than one meaning”, does not derive from this case.  One sees it referred to much earlier in the Court.

I have endeavoured to have put together a document which has a heading “Ambiguous or Susceptible of more than one Meaning” and your Honours will see, if one looks, for example, at the second case there, Justice Latham is there quoting a much earlier decision of Justice Isaacs, but it is legitimate to adduce extrinsic evidence of the surrounding circumstances in order to prove that words “susceptible of more than one meaning” are applicable to one only of those meanings, the earlier decision being in Bacchus Marsh in 1919.

Your Honours will see also, if I could give your Honours one reference, for example, on the second page, the second case, a decision of the Full Court in Queensland, Australian Energy v Lennard Oil NL where Justice Thomas said:

It is not strictly accurate to say that the language of the document . . . is “ambiguous”, but it is certainly “susceptible of more than one meaning”.

And your Honours will see some other references dealing with the concept of what is meant by “ambiguity”.

So, your Honours, if one takes what was said in Codelfa, either “ambiguous” means susceptible of more than one meaning or one of the tests is whether it is susceptible of more than one meaning.  This, on present assumption, would be a case satisfying this test.  I will come to the evidence in a moment, and I will endeavour to do so briefly, but may I return to Codelfa for just one other purpose, and that is to seek to identify the purposes for which evidence may be admitted.  People tend to deal with Codelfa by starting with the passage to which I referred a moment ago ‑ that is the first new paragraph on page 352 – and then to go on to the next paragraph, where his Honour dealt with evidence of prior negotiations.  One sees in that paragraph that what his Honour said, in the second line, was: 

Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. 

What his Honour does not there say is “objective facts as to what?”, or “objective facts identifying what?”  It is not correct, in our submission, to treat the ultimate test in relation to the types of objective facts referred to in the case as being simply as expressed in that sentence, because if one goes to what his Honour said at the bottom of page 351 and the top of page 352 ‑ and may I start by going to the last part of that, it is the third line on page 352.  His Honour said: 

Having considered the topic in more detail on this occasion I see no reason to qualify what I then said. 

What he is there talking about is, for example, DTR Nominees, on page 351, where he referred to the quotation: 

“A court may admit evidence of surrounding circumstances in the form of ‘mutually known facts’ ‘to identify the meaning of a descriptive term’ and it may admit evidence of the ‘genesis’ and objectively the ‘aim’ of a transaction to show that the attribution of a strict legal meaning would ‘make the transaction futile’…” 

Your Honours will see, too, at the bottom of page 351, his Honour said that he “also accepted and applied Lord Wilberforce’s different treatment” of “evidence of surrounding circumstances” and so on, and “of the parties’ intentions”.  That seems to be a reference back to the first half, in effect, of page 351, and could I invite your Honours to note, if one goes to the quotation at the top of page 351, that when one speaks of extrinsic facts within the knowledge of both parties, Lord Wilberforce makes it apparent that he is speaking of matters which “reasonable people” would have had in mind. 

It is with that background, in our submission, that one goes to the circumstances here.  We seek to say that the material demonstrates the genesis and the aims of the transaction, including the aim of providing recompense of the nature in question to the trustees.  Your Honours, it appears from a band of material, which is in volume 2 – it starts at page 405, goes through to page 445.  May I take your Honours to the core parts of that. 

CALLINAN J:   Mr Jackson, this may have been one of the few ways of using the Domain without in any way interfering with its use as a public recreation area, on the surface. 

MR JACKSON:   Yes. 

CALLINAN J:   It may also be a relevant matter. 

MR JACKSON:   Your Honour will see from the, for example, Domain Leasing Act, that the subterranean parts of it were also used as a very large fuel storage place for the Navy, and a large void under parts of it there, so there are a number of uses and in that regard ‑ ‑ ‑

KIRBY J:   Was the lease in respect of that in evidence?

MR JACKSON:   No.  Your Honour, if one looks at the second part of section 3(1) of the Domain Leasing Act, and also section 4 of the Domain Leasing Act, both refer to those installations.

KIRBY J:   Yes, I remember seeing it, but I did not know what the terms – whether the Commonwealth pays a large amount, or whether it has a similar peppercorn arrangement.

MR JACKSON:   I do not think the terms are in the agreement, your Honour.  The peppercorn is not to be consumed.

KIRBY J:   I wondered if you would stumble over that.

MR JACKSON:   Yes.  Your Honour, if I may, if I can trip and stumble over the peppercorn and put it in a kind of a halting way, that what is contemplated here is reimbursement, not tokenism.  Could I go to page 405 in volume 2.  Your Honours will see at the bottom of page 405 in handwriting in brackets:

(copies subsequently forwarded to the Trustee – Messrs Roper & Anderson)

Your Honours will see the text of the letter and that, in a sense, is the Minister not quite starting the matter off, but starting the matter off in its present form.  If one goes from that to pages 406 and 407, 407 being attached to 406, one sees that there was a meeting and it was agreed:

That the period of the lease be for fifty (50) years, at a rental to be fixed – it being suggested that the rental be a nominal one.

At paragraph 4 we have to:

provide a new surface of soil re-turfed on the roof of the parking station.

The contemplation of the parties at that stage was that there would be a parking station which we would provide at a nominal rent.  One goes then, your Honours, to page 409.  Page 409 is a document which is attached to 408.

GLEESON CJ:   Now, that tells you how they got to the figure of $2,000.

MR JACKSON:   Yes, it does, your Honour, and that is where that comes from at page 409, paragraph 2.  Your Honours, that letter went to the trustees.  That that is so appears at page 411.  Your Honours will see at the top of that page that is an extract from the minutes of the meeting of trustees and halfway through the large paragraph is Mr Anderson’s statement.

KIRBY J:   I take the significance of this, assuming it is available, but may one say that the criterion was “the additional expense to which our Department will be committed”, and if one applies that as the principle, that the additional expense is not purely the out‑of‑pocket expense but in economic terms is the opportunity cost that is foregone by failing to procure an appropriate rental?

MR JACKSON:   I am sorry, I missed the first half of what your Honour said.

KIRBY J:   Page 409 refers to “additional expense”.  One way to interpret that, if that be the principle, is out‑of‑pocket expense, but another way to interpret it is out‑of‑pocket expense plus the opportunity cost that is foregone by failing to procure an appropriate, fair, reasonable rental.

MR JACKSON:   Your Honour, as to the first of those, the first thing I would say is if one looks at line 35 on page 409, having discussed it he says:

We will therefore be involved in extra expense of at least £1,000 per year and this should be recoverable in rent.

That seems to be referring to outgoings rather than opportunity costs.  In relation to opportunity costs, I say, of course, what I submitted earlier, that it is really a concept that is not very apposite, in our submission, in a case of this kind.

GLEESON CJ:   Suppose there had been a recital in this lease which said, “And whereas the additional expense to which the department or the trustees will be committed by reason of this arrangement is at present of the order of $2,000 per annum”.  That recital, it might be thought, would have had a fairly strong bearing on the question of construction with which we are concerned.

MR JACKSON:   Indeed.  That would say in effect the very thing that the document to which I was just referring says.

GLEESON CJ:   Well, it tells you what the $2,000 is.  It is not a figure plucked out of the air.

MR JACKSON:   No, your Honour, one sees exactly where it came from:  extra costs.  A question was asked yesterday about was the excavation done by us, in effect.  Your Honours will see at page 412 where we had asked, as your Honours will see from the first paragraph, that the trustees:

approve of space being made available . . . for the erection of a building in connection with the work of the excavation of the site and also the subsequent work of the construction of the Parking Station, also as a working and materials storage area –

One can see the fact that we were responsible for construction at pages 392 to 393 and also a little later at page 420.  I will not take your Honours to them.

At page 403 one sees the undersecretary of the Department of Agriculture writing to the Council saying in the last paragraph of that letter that the:

Colonial Treasurer has concurred in the proposal of the Trustees to charge a rental sufficient to cover any additional expenditure incurred by this Department –

I think there was a finding somewhere that the trustees’ activities were conducted in large measure by the department.

GLEESON CJ:   I am sorry, whereabouts is that?

MR JACKSON:   Page 413.  I am sorry.  Did I say 403?  Page 413, the last paragraph.

GLEESON CJ:   What was the source of the obligation, if any, to get the concurrence of the Colonial Treasurer?

MR JACKSON:   I do not think there was any legal reason for doing it.

KIRBY J:   Is it not odd that the Premier was still called the Colonial Treasurer in 1955?  It does not matter.  It is just odd.

MR JACKSON:   Your Honour, no one has chipped the “Colonial Secretary’s Office” title from the building he then occupied yet, as far as I am aware.  Could I go then to page 414 . Now, that was a conference held between the parties and your Honours will see under the heading “Rental” Mr Anderson, who was one of the trustees:

considered that rental should be £1,000 per year.  This figure, he explained, was based upon additional costs which would be incurred by the Trust and was made up as follows –

and your Honours will see that set out in the next paragraph and then the last paragraph under that heading:

It was agreed that the rental be £1,000 per year, subject to review each 5 years –

it was then –

on the basis of rise and fall in costs of the component parts stated by Mr Anderson, which were to be included in the Agreement.  (The period of 5 years would be subject to approval by the Colonial Treasurer who had expressed an opinion that a review should be held every 2 years.)

Now, your Honours will see on page 415 other features that were referred to at the meeting and then finally, at the conclusion of the meeting, page 416:

The Town Clerk stressed the urgency of the matter and explained that Council had received permission to call tenders.  He had done so but did not have permission to proceed with the work; and asked that a letter be forwarded . . . to allow Council to proceed with the work and that the Form of Lease embodying the terms discussed be subsequently prepared by the Crown Solicitor.

Now, your Honours, one sees then page 417, which was a letter to the undersecretary of the Premier’s Department from the undersecretary of the Agriculture Department with, your Honours will see at the bottom of the page, a copy forwarded for the information of Mr Noble, who was the chief botanist and curator of the Domain.  Your Honours will see at the first paragraph of it:

Discussions have been held between representatives of the City Council and officers of this Department –

Then to perhaps the fifth paragraph on the page:

Copy of the draft letter is enclosed.  Attention is directed particularly to paragraph 5 of the proposed terms and conditions, in which the terms of the lease are to be reviewed at five instead of two year intervals.  This suggestion for a five year review was made by Council and it will be noted is a variation of that previously suggested by the Trustees and approved by the Premier and Colonial Treasurer, which provided for a review at two year intervals.

KIRBY J:   Does that not tend to suggest a vigilance to ensuring an appropriate rental?  I accept that you say yes, but as for the expenses.

MR JACKSON:   Yes, exactly what they had agreed.  Your Honour, that is what they had agreed and I am in no doubt our side, or Sydney Council as it was then, was saying five years, but the ‑ ‑ ‑

KIRBY J:   But the curiosity of this is if it is such a trivial amount the urgency of having a two year rather than a five year revision of it seems peculiar.  Why have it in 50 years if it is always going to be this trivial sum.

MR JACKSON:   Well, your Honour, it was a sum to cover particular things and there were periods of considerable inflation and no doubt it was thought that the costs should be reimbursed and that is what it was.  Your Honours will see, then, at page 419 that there is a letter then on behalf of the trustees addressed to the Council saying that they:

desire to advise that they consent to your proceeding with the construction of a car parking station in the Domain and they will, upon the completion thereof, grant to the Council a lease of the site for a term of 50 years . . . I hope to submit the same for your Council’s consideration –

Page 420, the second paragraph:

the Council has accepted a tender for the excavation work as a preliminary to the erection of a Parking Station -

Page 422 the Council was advised about the decision as to the frequency for reviews and – I am sorry, your Honours.  What was said at page 422 in the second last paragraph:

the Treasury has been approached in respect to your suggestion that the rental be assessed on a 5 year interval instead of a 2 year interval.

The result, your Honours, appears on the next page, I am sorry, page 423, where it was said to be, “3 years”.  Your Honours will see that was said:

having regard to the circumstances of the case, the view is held that the intervals between each review should not be longer than 3 years.

Then, importantly, there comes the offer which was accepted.  The offer is at page 424.  Your Honours will see in the third line:

I now desire to submit on behalf of the Trustees of the Domain their offer as to terms and conditions of an agreement –

Your Honours will see the remaining words of that paragraph.  I do not need to refer to the rest of page 424.  At page 425, paragraph 3(b)(i) your Honours will see the provision for resurfacing and new footpaths and so on. Then, paragraph 5 on the same page, they are to:

grant to the Council a lease of the site on which the Station is erected excluding the turfed portion immediately above the Station.

And, on page 426 ‑ ‑ ‑

McHUGH J:   That is the critical paragraph on 426.  That is your case, is it not?

MR JACKSON:   Yes.

GLEESON CJ:   That might be a very good example of the sort of thing that you cannot call in aid, might it not?  That is a splendid example of plus ca change, plus c’est la meme chose approach to the construction of contracts because what appears on page 426 is precisely what they did not say in the lease, so, who knows whether the difference between what appears on page 426 and what appears in the lease is explained by the fact that the drafter of the lease did not think there was a material difference or is explained by the fact that the drafter of the lease did not like what he saw on page 426?  How would you know?

MR JACKSON:   Well, your Honour, one cannot say precisely, but if one is looking to see what the lease was intended to achieve – and could I just say in relation to this, this is not just a matter of an offer, in a sense.  This is something that was accepted and the acceptance of it was validated by section 4 of the Domain Leasing Act.  So that you have this being part of the background of it and the lease that was to come into effect was a lease to bring into being these provisions, in effect.

GLEESON CJ:   Is that not just what Lord Wilberforce was talking about in Prenn v Simmonds when he said matter of this kind is not referred to because it is simply not helpful.

MR JACKSON:   Well, with respect, your Honour, sometimes it is and sometimes it is not.  Now, one can see, in our submission, if one is looking to see what was the genesis, what was the aim of the ‑ ‑ ‑

GLEESON CJ:   I would have thought that that is helpful in so far as it re‑enforces the explanation of where the figure of $2,000 came from, but what it is not helpful for is the way in which it paraphrases the agreement between the parties.

MR JACKSON:   Your Honour, could I say in relation to it, what it is helpful for undoubtedly is the £1000, but it also has another aspect to it too, and that is that it indicates that whatever might be the precise drafting of a clause that might emerge, the increases in rent were to be increases related to the additional costs of the trustees in consequence of the construction of the parking station.  Your Honour, that is the point we would seek to make about it.  Your Honours will see at page 427, about line 25, the three‑year provision again and from there one sees that offer being accepted.  The acceptance is contained in a number of pieces of correspondence.

GAUDRON J:   Did the trustees at the time of these letters have power to agree in terms of the letter there set out?

MR JACKSON:   I am sorry, did your Honour saying the Council or the Trust?

GAUDRON J:   The trustees.

MR JACKSON:   Well, your Honour, that was the debatable question; probably the answer was no.

GAUDRON J:   Does that mean that no agreement ever came into effect then ‑ ‑ ‑

MR JACKSON:   No, it does not, your Honour.

GAUDRON J:   ‑ ‑ ‑ and it would be prior to 1961?

MR JACKSON:   Well, that may be.  It may well be, in fact.  A difficult question would then have arisen, I suppose, about whether the effect of construction of the car park on the land gave rise to any equitable right in the Council in relation to the land, but it does not really matter very much because in 1961 one had the Domain Leasing Act which, retrospectively validated what had gone on before by section 4.

HAYNE J:   But assuming, Mr Jackson, as I do, that at 431 we have a counteroffer and at 432 we have an acceptance of the counteroffer in terms that incorporate this paragraph at 426.  So you end up with an agreement to the term described at 426, do you not?

MR JACKSON:   Yes.

HAYNE J:   Well, that is not the agreement on which suit is brought, is it?

MR JACKSON:   No, your Honour.  There are differences, I accept that.

HAYNE J:   Therefore, what do you say we get out of the fact that there was an earlier agreement?

MR JACKSON:   Your Honour, one gets out of it a couple of things.  One is that the agreement that was arrived at was one that demonstrated, I think, the two things that I was referring to in answer to the Chief Justice ‑ ‑ ‑

HAYNE J:   $2,000 in its origin, that I understand.  Anything more you get out of it?

MR JACKSON:   Yes, two other things, your Honour.  The first of those two is that one gets out of it the purpose of the escalation, that is, to cover additional costs, additional costs brought about by the operation of the car park.  The third thing, your Honours, is that the agreement that was to come into being was to be one which was to bring into effect the agreement that had earlier been arrived at.  Your Honours will see that the agreement contemplated that there would be a formal lease and your Honours will see that at the end of page 427 and there a couple of other references which indicate that that was so and a lease which was to cover those terms.  So that if one looks at those matters and sees that when one is speaking about clause 4(b)(iv), what is contemplated is that it is a method of bringing into effect the concept at least that had earlier been contemplated, but that was the aim of it.

GLEESON CJ:   But when you say it was the purpose to cover additional costs, you have only to read 4(b)(iv) to see that it was “a” purpose.  What the case is about is whether it was “the” purpose. 

MR JACKSON:   Yes, your Honour, well, one sees it is “a” purpose, but it really comes down in the end to a question of:  is clause 4(b)(iv) saying that those are the matters which the Council is permitted to take into account, or are they only matters which the Council may take into account?  Our submission is that to the extent to which one is entitled to look at the earlier matters, they indicate that the former view is the correct one.

Could I go very briefly to a couple of other pages.  I have taken your Honours to page 431.  Could I refer your Honours also to pages 432 to 433, where the drafting of the agreement was requested and then page 444 where your Honours will see in the first paragraph:

approval to the enactment of enabling legislation to give the Trustees statutory authority to grant the Council a lease upon the terms and conditions which have been agreed upon –

and the rental of £1,000 is referred to in the next paragraph.  At page 445 your Honours will see that the money was, hardly surprisingly, sought.

Your Honours, the Domain Leasing Act in section 4 - that is a document that is attached to the appellant’s submissions - in section 4(a) says that:

shall be deemed always to have been within the power of the trustees to grant or give such leases, authorities, consents, licenses or rights of occupancy as have been granted or given by them before the commencement of this Act ‑

and then (a):

to the Council for or in connection with the connection, operation and maintenance –

et cetera, and then the concluding words:

and all leases, authorities, consents, licenses or rights of occupancy so granted or given and all conditions, including payment of rental, subject to which such leases, authorities . . . given are hereby validated.

Your Honours, those conditions so validated included conditions that there was to be a formal lease which reflected the terms of the agreement and there is no reason, in our submission, why those facts, including the statutory provisions, should not be taken into account in determining the end to which clause 4(b)(iv) was directed.

Your Honours, may I deal with a couple of further matters.  In our submission, it is a little difficult to see, at least in a case like this, that the later agreement could operate to discharge, in the sense of making completely irrelevant to construction, the earlier agreement.  The first thing is that the earlier agreement was statutorily validated.  There is nothing in section 3 of the Domain Leasing Act which empowers entry into an agreement which does not give effect to section 4.

Your Honours, on a broader plane, in our submission, the suggested rule that one cannot take into account the previous agreement is one which, in our submission, should not be adopted.  It is perfectly understandable that where one written agreement replaces another and is intended to be the complete charter for the future, that the earlier one is discharged, the new one applies, but when one is talking about construction of the later agreement there is no reason, in our submission, why the earlier agreement is excluded from the extrinsic evidence otherwise capable of being considered.  Your Honours, it is really, in a sense, in many ways the best evidence of what is known to the parties and of what the contract was to achieve.

If one takes the common case of heads of agreement, themselves intended to have legal effect but contemplating that a formal contract give effect to them – be brought into being, in our submission, there is no reason why a principle should be adopted which would prevent the heads of agreement being looked at to resolve a difference of meaning.  Your Honours, if one took, for example, a sole distributorship contract for something, say Assam tea, the earlier heads of agreement making it clear that the distributorship related only to loose tea and, for example, not to tea in the form of tea bags, the distributor claiming that it is entitled to distribute tea bags, it would be a curious thing, in our submission, if one could not look at the heads of agreement.

Your Honours, in our submission also, the position in Australia is clear, that antecedent negotiations may be looked at, for various purposes, of course.  That is clear from the passage in Codelfa to which I referred earlier.  It is also referred to specifically in White v Australian and New Zealand Theatres Ltd (1943) 67 CLR 266, the passage at the bottom of page 270. This is a passage to which I referred briefly this morning. It should be in a loose copy we have given your Honours. Your Honours will see a reference by Chief Justice Latham to what had been said by Justice Isaacs in the Bacchus Marsh Case.  He refers to that.  Then at the top of page 271, in the third line, says:

Further, for the purpose of identifying the subject of the contract, prior negotiations are available just as any other circumstance would be.  But the prior negotiations cannot be used for the purpose of importing additional or different terms ‑

Your Honours, could we say we rely otherwise on our written submissions.  One adopts ultimately Lord Hoffmann’s approach and qualifies it by the fact that in Australia it seems established that one could refer to prior negotiations.

GLEESON CJ:   Well, to treat these as rules of admissibility of evidence rather than as dictates of logical relevance exposes the problem that all you have to do is mount a claim for rectification and you are going to get them in, even if your claim is pretty hopeless.  So they are there.  They are in front of the judge.  Ultimately then, what you are looking at is not a question of admissibility of evidence.  You are looking at a question of logical processes of reasoning.

MR JACKSON:   Yes.  Your Honour, I accept that and it does seem a very curious thing if, assuming that it is possible to look to material extrinsic to the contract for some purposes of construction, to leave out of account the circumstances which are most likely to provide the contemporaneous evidence of what the intentions should be treated as having been because they would mostly be contained, or are very likely to be contained, in contemporaneous negotiations.  One cannot, of course, call someone to say, “This is what I intended”.  That is a different thing from evidence of what took place.

HAYNE J:   But that proposition is that the content of the obligation stipulated for in a written agreement is to be ascertained from the use by the parties of different words on an earlier occasion.

MR JACKSON:   They may not be ‑ ‑ ‑

HAYNE J:   If the words are identical you have advanced nowhere.

MR JACKSON:   No, your Honour, but it is not really a question, with respect, with the words being different.  One starts with the position that the contract contains words, of course.  What one is seeing, from looking at what has gone before, not necessarily different words, ex hypothesi they will be differently expressed, but what one is looking to see is from whatever words we use, whether one can identify one of the permitted things.

I am sorry.  Your Honours, I said I would give your Honours something in relation to the trustees’ powers.  We have given your Honours a document which is headed “FURTHER CHRONOLOGY OF DOMAIN TRUSTEE POWERS”.  I do not particularly want to refer to it otherwise.  Your Honours, those are our submissions.

GLEESON CJ:   Thank you, Mr Jackson.  Yes, Mr Gleeson.

MR GLEESON:   Your Honours, if I could confine myself to about four or five points in reply.  The first concerns the word “additional” in clause 4(b)(iv).  Justice McHugh asked this morning whether that has a relevance in the sense that the trustees could not incur costs in respect of the strata itself.

In our submission, there are a range of costs in respect to the strata itself which may arise from this lease which are not covered by clause 4(b)(iv).  They can be broadly described as costs in the nature of considering and granting consents under the lease and general administration costs.  If I could identify the clauses that deal with those or create the potential for those extra costs.  They are clause 2(c) where the trustees may need to consent to an expansion of purposes under the lease; clause 2(e) consents to new structures; clause 2(f) consent to new excavation; clause 2(j) consent to subleasing; clause 2(o) consent to advertising signs.  If the Council’s contention is correct, the costs incurred in respect of those matters can never be taken into account in fixing a rent.

Apart from those consent costs, there are other administration costs.  For example, under clause 2(l), the trustees have a power to enter the premises, inspect the condition of them, and give notices - and costs would arise there.  The second matter flows from that, and it ‑ ‑ ‑

GUMMOW J:   But it could be a condition of the giving of the consent, could it not? 

MR GLEESON:   That is the second matter I wish to come to, that ‑ ‑ ‑

GUMMOW J:   That the relevant fees be paid. 

MR GLEESON:   If the Council’s contention is correct, and the Trust wishes to say, at a three-yearly rest:  we wish to set a rent of X dollars, and we wish to set ‑ ‑ ‑

GUMMOW J:   No, on each occasion when the consent is sought. 

MR GLEESON:   Yes.  What I seek to put is that, on our construction, it would be proper for the trustees, every three years when they set a rent, to say “the rent will be X dollars”, and that takes into account a number of factors, including prospective costs we are likely to incur in respect to administration of the lease and the strata over that three-year period.  Operating prospectively in that fashion, we submit that is within the clause.  Could I add to that, this:  that take the case of sub-leasing referred to yesterday.  If there is a sub-leasing for a purely commercial purpose, obviously enough, the trustees would wish to recover additional rent with respect to that.  If the Council’s contention is correct, it may well be argued against the Trust that they cannot do that by way of condition imposition, because the clause has said in advance what rent is about.  Rent is about additional costs, in a particular sense, so that sub-leasing cannot lead to an increase in rent. 

The third matter I wished to mention was the question of nominal rent.  We submit that this was not a nominal rent, ever, and if it was, one would not expect the elaborate provisions which the lease contains for notification of rent increase, adjustment, and indeed, the very formal right of re-entry, under clause 4(a), for non-payment of rent suggests that this is more than a nominal rent. 

The fourth matter is, even assuming one knows why $2,000 was originally set, in our submission that does not answer the construction question; it does not answer the question whether in 1976 the parties were intending to make that a factor or the factor.

Your Honours, the final matter is this:  this case ultimately comes down to competing contentions as to the manner in which the trustees exercised the power under section 3(1) of the Domain Leasing Act. Each of the contentions put forward would have been within the power. The difference between us is that on the Council’s case the trustees made a once‑and‑for‑all decision in 1976, effective for the full 50 year lease, that the only matter that they could recover by way of rent would be the additional cost factors. If that be right it creates a very real possibility that the trustees would be hindered or disadvantaged in carrying out their purposes of public recreation over the point of this lease and, in our submission, the ultimate constraints that clause 4(b) were intended to create were these: that the trustees would determine their rent, faithfully each three years, having regard to their purpose of advancing public recreation, and the circumstances of advancing that purpose may be different at different three-yearly intervals. The second ultimate matter is this, they could never set a rent which prevented the Council from achieving the purpose of the Council which was specified in the lease, which was to manage and conduct a parking station in accordance with section 270J of the Local Government Act.

GUMMOW J:   But these were not ordinary trustees, you see.  The provision in section 3 for the consent of the Minister injects an element of political responsibility for what might be seen as any trenching upon public rights.

MR GLEESON:   The section both created the duty on the trustees to actively consider what was proper for advancing public recreation and also created the Minister’s ultimate degree of control.

McHUGH J:   But you seem to want to regard the power to set rent as a charter for you to exploit the lessee.  One of the functions of the law of contract is to deter people from behaving opportunistically towards the other party to the contract.  That is why, for example, “best efforts” clauses are implied into contracts.  It seems a strange doctrine that you can set your rent having regard to the public park and other purposes that you have in mind.  Does it mean that if you develop your recreational facilities that you can take that into account?

MR GLEESON:   All I would seek to put, your Honour, is that that created an outer boundary, as I said in answer to Justice Hayne yesterday, on any rent and I was referring to an extra boundary which was that the rent could not be set in a manner which prevented the Council from fulfilling its purpose of operating and managing a parking station.  In that respect we would rely upon Secured Income v St Martin Investments 144 CLR 596. Within those bounds we submit that it is not exploitation for a provision to be made in a contract pursuant to an Act whereby there may be an ability to recover by way of rent some part of the operating surplus of the facility over a 50‑year period.

Whether that would be necessary or proper to take into account would depend upon some of the matters I have mentioned.  But we submit that it is a strange interpretation of the language and to hold to a view that the trustees have bound themselves in 1976 never to be able to move beyond the limited factors in clause 4(b)(iv).  One then ultimately comes back to the language itself, and on the argument we have put in terms of the text and the structure, it should be interpreted in the way we contend and that can only be tested, really, by the way Mr Jackson rephrased the clause this morning, he had to do considerable violence to it to come up with his construction for the language.

CALLINAN J:   Mr Gleeson, can I draw your attention to one matter?  Justice Fitzgerald at pages 1089 and 1090 refers to the surrounding circumstances that his Honour thought relevant, do you see that?  It seems to me that some of them are not really surrounding circumstances, they are matters to be found in the document itself.

GLEESON CJ:   Certainly that is so in respect to (a), your Honour.

CALLINAN J:   It is certainly in respect of (a).  It is arguably right in respect of (b) and I say only “arguably” because there is provision for a public footway and that certainly conveys a notion to me of a public facility, but I say only arguably ‑ ‑ ‑

GLEESON CJ:   Your Honour, there is also a difficulty with the last three words of (b) because that cannot be found from the lease itself.

CALLINAN J:   Quite, quite.  Then (c) is clearly apparent on the face of the lease because if you look at the recital at page 629 it refers to the fact that the station has been constructed by then and obviously, it would have been at substantial cost.

GLEESON CJ:   We have no difficulty with (c).  With (d) the difficulty we have is that it assumes a particular view as to whether, over 50 years, the operation of that parking station will never interfere with the primary object of recreation.  Now, that could be wrong in two senses:  one is that the trustees may wish to have a different form of parkland moving down there, so that the parking station interferes with that; the second is that because of the covenant of “quiet enjoyment”, the trustees can never recover any money, other than the additional costs, which I have submitted are not their complete costs over that 50-year period and that is the very matter which may well impede their ability to achieve public recreation.

CALLINAN J:   But an underground public recreational facility just does seem a little unlikely even over 50 years, does it not?

MR GLEESON:   In terms of the legal rights which we are governing it by, because of the covenant of quiet enjoyment they have forsaken that opportunity for the full period of 50 years.

CALLINAN J:   I understand that but within the parties’ contemplation in 1976 it would be unlikely - an underground public recreational facility would have seemed rather unlikely.

KIRBY J:   There is an underground swimming pool, is there not, not very far away?

MR GLEESON:   Yes, Cook and Phillip is partly underground and one of the things about the Domain is that, yes, there is an oval on the top there but that has severely constrained it to that particular form of use because the structure is in fact not entirely underground, it is partly above ground at the bottom end.  So, we would not accept that (d) comes from the lease, and, (e), most particularly – we say had (e) been a recital, yes, we would have had to confront (e), but (e) is not a recital, (e) is really a conclusion as to subjective intent and we make a similar submission in respect to (f).

So, your Honours, we do contend that those paragraphs, in part, trespass beyond the lease and in part trespass beyond the Codelfa principle.  May it please the Court.

GLEESON CJ:   Thank you, Mr Gleeson.  We will reserve our decision in this matter.  We will adjourn to reconstitute and sit in the next case in Court No 2.

AT 11.39 AM THE MATTER WAS ADJOURNED