Tah Land Pty Ltd v Subway Realty Pty Ltd [No 2] - [2023] WADC 108

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION:   PERTH
CITATION:   TAH LAND PTY LTD -v- SUBWAY REALTY PTY LTD [No 2] [2023] WADC 108
CORAM:   PALMER DCJ
HEARD:   17 AUGUST 2023
DELIVERED          :   18 SEPTEMBER 2023
FILE NO/S:   CIV 5041 of 2022
BETWEEN:   TAH LAND PTY LTD
Plaintiff
AND
SUBWAY REALTY PTY LTD
First Defendant
D I BRITZ PTY LTD
Second Defendant
WESTERN AUSTRALIAN PLANNING COMMISSION
Third Defendant
DAVID IAN BRITZ
Third Party

Catchwords:

Appeal from registrar - Summary judgment - Where question of construction is involved - Proper construction of limitation of liability provision

Legislation:

District Court Rules 2005 (WA)
Rules of the Supreme Court 1971 (WA)

Result:

Appeal allowed
Summary judgment granted

Representation:

Counsel:

Plaintiff	:	Mr N W Kalmund
First Defendant	:	Mr T C Russell
Second Defendant	:	No appearance
Third Defendant	:	No appearance
Third Party	:	No appearance

Solicitors:

Plaintiff	:	Hotchkin Hanly
First Defendant	:	Minter Ellison
Second Defendant	:	Not applicable
Third Defendant	:	State Solicitor's Office
Third Party	:	Robson Legal

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

Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219
Casella v Hewitt [2008] WASCA 13; (2008) 36 WAR 1
Cheney v Moore [2020] WASC 227
Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640
Hazart Pty Ltd v Rademaker (1993) 11 WAR 26
Kezic v St John of God Health Care Inc [2015] WASCA 220
NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2020] WASCA 107
Radiant Nominees Pty Ltd v Australian Crane and Machinery Pty Ltd [2019] WADC 112
SMEC Australia Pty Ltd v Valentine Falls Estate Pty Ltd [2011] WASCA 138
Tah Land Pty Ltd v Subway Realty Pty Ltd [2023] WADC 44
Thomas v Balanced Securities Ltd [2011] QCA 258; [2012] 2 Qd R 482
ThoughtWare Australia Pty Ltd v IonMy Pty Ltd [2023] FCA 906
Westport Insurance Corporation v Gordian Runoff Ltd [2011] HCA 37; (2011) 244 CLR 239
Zaghloul v Bayly [2021] WASCA 125

PALMER DCJ:

Introduction

The Plaintiff (Tah Land) appeals from a decision made by Registrar Jeyamohan on 22 March 2023 to dismiss its application for summary judgment against the First Defendant (Subway). Tah Land also appeals from the learned registrar's decision to order Tah Land to pay Subway's costs of the application.
Until 7 December 2022, Tah Land was the registered proprietor of the land on which Kingsway City Shopping Centre in Kingsway is located.[1] For almost 12 years from about 16 September 2004 to 7 December 2022, Subway leased Shop B2 in Kingsway City Shopping Centre (the Premises) from Tah Land.[2] The Second Defendant subleased the Premises from Subway.
[1] Amended Statement of Claim dated 3 August 2023 (Statement of Claim), pars 1, 5 and 13.
[2] Statement of Claim, pars 5 and 13.
In these proceedings Tah Land seeks to recover the sum of $120,863.23 plus interest that it alleges is due to it from Subway[3] pursuant to a lease[4] of the Premises between Subway and it.[5]
[3] Statement of Claim, par 19.
[4] Statement of Claim, pars 6(f) and 19.
[5] Statement of Claim, par 5; Plaintiff's Written Outline of Submissions in Support of Appeal from Decision of Registrar Jeyamohan dated 3 August 2023 (Tah Land's Submissions).
Before Registrar Jeyamohan, Subway argued that there were two issues that required trial. The first concerned whether Tah Land remained the registered proprietor of the Premises for the entirety of the period for which it was claiming rent. It was alleged that this was in doubt because of the effect of a taking order made by the Third Defendant under the Land Administration Act 1997 (WA) (Land Administration Act). At the time, the taking order was yet to be registered. The second issue concerned the proper construction of a limitation of liability provision in the lease.[6]
[6] Affidavit of Raymond Jin Wen Tan sworn 20 December 2022 (Tan Affidavit); Tah Land's Submissions, par 3.
The taking order was registered on 7 December 2022,[7] after the learned registrar dismissed the summary judgment application but before I heard this appeal. The registration of the taking order resolved the first issue before the learned registrar. Subway now admits liability under the lease but maintains that that liability is capped at $40,000.[8] Therefore, the proper construction of the limitation of liability provision was the sole issue before me at the hearing of the appeal.
[7] Statement of Claim, par 13.
[8] Subway's Outline of Submission dated 10 August 2023 (Subway's Submissions), par 3; Amended Defence dated 10 August 2023 (Amended Defence), par 18.
At that hearing, counsel for Subway tendered a receipt indicating that it had paid the $40,000 it accepts it must pay under the lease. Consequently, the amount remaining in issue in the proceedings has been reduced to about $80,000 plus costs and interest.

The factual background

Tah Land and Subway first executed a lease of the premises on 16 September 2004 (the Original Lease). This lease was for a term of five years.[9] The initial Base Rent under the Original Lease was $48,000 plus GST[10] but this was subject to review.[11]
[9] Tan Affidavit, par 11 and 'RJT-5'.
[10] Tan Affidavit, page 143.
[11] Tan Affidavit, cl 7, pages 90 - 97.
Following the commencement of the Original Lease on 16 September 2004, Tah Land became aware that Subway had subleased the Premises to a franchisee (as it was entitled to do under the Original Lease).[12]
[12] Tan Affidavit, par 12.
The Original Lease included a term that Subway had an option to renew the lease for a further term on the terms of the Original Lease (but without a further option of renewal).[13]
[13] Tan Affidavit, cl 49, pages 128 - 129.
On or about 14 December 2009, Tah Land and Subway entered into a deed of extension of lease by which Subway agreed to lease the Premises for an extended term of five years commencing on 16 September 2009 and expiring on 15 September 2014.[14] By cl 3 of that deed the parties agreed that the terms of the Original Lease would continue to apply, subject to certain other terms set out in the deed.[15] The parties agreed that the rent would start at $59,522.48 per annum plus GST[16] and would be reviewed.[17]
[14] Tan Affidavit, par 13 and 'RJT-6', pages 156 - 166.
[15] Tan Affidavit, cl 3, page 160.
[16] Tan Affidavit, Schedule, Item 7, page 165.
[17] Tan Affidavit, cl 4, page 160.
On or about 8 May 2013, Tah Land received a letter stating that the sublessee of the Premises was selling their business assets including the sublease to the Second Defendant and that settlement was scheduled to occur on 21 May 2013.[18] Tah Land subsequently became aware that the Second Defendant was trading from the Premises.[19]
[18] Tan Affidavit, par 14.
[19] Tan Affidavit, par 15.
On or about 30 September 2014, Tah Land and Subway entered into a further deed of extension of lease by which Subway agreed to lease the Premises for an extended term of a further six years, seven months and 13 days commencing on 16 September 2014 and expiring on 29 April 2021.[20] By cl 3 of that deed, the parties again agreed that the terms of the Original Lease would continue to apply, subject to certain other terms set out in the deed.[21]
[20] Tan Affidavit, par 16 and 'RJT-8', pages 168 - 179.
[21] Tan Affidavit, cl 3, page 172.
The parties agreed that the rent would now start at $75,100 per annum plus GST, being $6,258.33 plus GST per month[22] and would be reviewed.[23] The evidence suggests that by November 2021 the rent had increased to $7,918.79 plus GST ($8,710.67 inclusive of GST) with statutory outgoings of $1,280.92,[24] or a total of around $10,000 per month.
[22] Tan Affidavit, Schedule, Item 7, page 178.
[23] Tan Affidavit, cl 4, page 172.
[24] Tan Affidavit, pages 208, 229 - 230.
After the lease expired on 29 April 2021, Subway remained in possession of the Premises. Tah Land did not object to Subway remaining in possession of the Premises and continued to invoice Subway for rent and other money payable under the lease.[25]
[25] Tan Affidavit, par 17.
From about 1 November 2021, Subway ceased paying rent and other money payable under the lease to Tah Land.[26]
[26] Tan Affidavit, par 24.
Lawyers acting for Tah Land issued various notices of demand and corresponded with the lawyers acting for Subway but the money due remained outstanding.[27] By the time these proceedings were issued, Tah Land claimed that Subway was indebted to it in the sum of $120,863.23 inclusive of GST in respect of unpaid rent, outgoings and other money payable under the lease.[28]
[27] Tan Affidavit, pars 25 - 31.
[28] Tan Affidavit, par 33.

The relevant terms of the lease

Holding over

Although the term of the second extension of the lease expired on 29 April 2021, it was common ground before me that the terms of the Original Lease continued to apply.[29] This is because the second extension applied the terms of the Original Lease[30] and cl 50 of the Original Lease provided that the terms of the Original Lease continued to apply if there was holding over.
[29] Although the parties disagreed about the precise nature of the lease created by cl 50.
[30] Tan Affidavit, cl 3, page 160.
Clause 50 of the Original Lease[31] was titled 'Holding Over' and provided as follows:
[31] Tan Affidavit, page 129.
If the Lessee remains in possession of the Premises after expiry of the Term with the consent of the Lessor, the Lessee will remain a tenant of the Lessor at a rent equivalent to:
(a)the Base Rent for the period immediately preceding expiry of the Term increased by 20%; and
(b)the Lessee's Proportion of the Rates and Taxes and Insurance Costs (if applicable); and
(c)the Money Payable;
(i)which would have been payable by the Lessee if a Further Term had been granted at expiry of the Term;
(ii)and otherwise on the same terms and conditions as this Deed but so that the Lessee must quit and deliver up possession of the Premises to the Lessor at the expiration of 1 month from the date on which either Party gives notice to the other of them that it terminates the tenancy the subject of this clause such notice being able to be given by the Lessor to the Lessee or by the Lessee to the Lessor (as the case may be) at any time after the expiry of the Term whilst the Lessee remains in occupation of the Premises.
For the purposes of this clause 'month' means 30 days.

The limitation of liability provision

The limitation of liability clause which is central to the resolution of this case is located in Item 23 in the Schedule to the Original Lease. Item 23 is titled 'additional terms covenants and conditions' and contains 31 clauses. Clause 4 is titled 'limitations of liability clause' (Clause 4). The full text of Clause 4 is at [123] below.
The Original Lease also contained a term limiting Tah Land's liability.[32]

The term

[32] Tan Affidavit, cl 40, page 121.

The initial term of the Original Lease was to be five years commencing on 16 September 2004.[33] Subway could exercise an option to extend the lease for a further term of five years.[34] Although the Original Lease only provided for one option to renew, as mentioned, the parties entered into a second extension of lease.

Rent and outgoings

[33] See generally the Original Lease which is attachment 'RJT-5' to the Tan Affidavit, page 60ff. See also Items 1, 3 and 4 of the Schedule to the Original Lease; Tan Affidavit, page 143.

[34] Clause 49 of the Original Lease and Item 5 of the Schedule to that lease.

By cl 6.1 of the Original Lease and Item 6(a) of the Schedule to that lease, Subway was obliged to pay Tah Land the Base Rent of $48,000 plus GST per annum from the commencement date by calendar monthly instalments of $4,000 plus GST on the first day of each month.[35] Subway was also obliged to pay Tah Land a proportion of rates and taxes[36] and a proportion of insurance costs.[37]
[35] Tan Affidavit, pages 88 and 143.
[36] Clause 9 of the Original Lease and Item 9 of the Schedule to that lease; Tan Affidavit, pages 98 and 144.
[37] Clause 10 of the Original Lease and Item 10 of the Schedule to that lease; Tan Affidavit, pages 99 - 101 and 144.
Clause 7 of the Original Lease provided for the Base Rent to be reviewed. It would increase by 4% on each anniversary of 16 September 2004 excluding any Current Market Rent Review Dates.[38] It was also to be reviewed so it was equal to the Current Market Rent on the commencement date of each Further Term.[39]
[38] Clause 7.2 of the Original Lease and Item 7 of the Schedule to that lease; Tan Affidavit, pages 95 and 143.
[39] Clause 7.3 of the Original Lease and Item 8 of the Schedule to that lease; Tan Affidavit, pages 95 and 144.
The amount of rent to be paid by Subway increased over the nearly 12 years that Subway leased the Premises. At the time the parties entered into the first deed of extension of lease, on or about 14 December 2009, they agreed that the rent would start at $59,522.48 per annum plus GST.[40] By the time they executed the second deed of extension of lease, on or about 30 September 2014, the rent started at $75,100 per annum plus GST.[41] By November 2021, the rent had increased to $95,025.48 per annum plus GST.
[40] Tan Affidavit, Schedule, Item 7, page 165.
[41] Tan Affidavit, Schedule, Item 7, page 178.
By cl 14 of the Original Lease[42] and Item 13 of the Schedule to that lease,[43] Subway agreed to pay interest on any money payable which is unpaid for five business days at a rate of 4% above the Westpac indicator lending rate published by the Westpac Banking Corporation from time to time.
[42] Tan Affidavit, page 102.
[43] Tan Affidavit, page 144.
By cl 13.2(a)(iii) of the Original Lease[44] and Item 13 of the Schedule to that lease,[45] Subway was obliged to pay all costs, outgoings, fees, Legal Fees, disbursements and payments which Tah Land paid or was liable to pay in connection with or incidental to any breach of the 'Lessee's Covenants'.

Subway's other obligations

[44] Tan Affidavit, page 101.

[45] Tan Affidavit, page 144.

By clause 18 of the Original Lease[46] Subway was required to maintain the Premises in good condition except in respect of:
(a)fair wear and tear;
(b)structural damage not caused by an act or omission of Subway or a Permitted Person; and
(c)damage caused by an event which is the subject of an Insured Risk except if and to the extent that payment of insurance money under Tah Land^'s insurance policy in respect of that damage is refused, withheld or reduced by reason of an act or omission of Tah Land or a Permitted Person.
[46] Tan Affidavit, page 105.
Clause 18 also provided that Subway's obligation under the clause is diminished if and to the extent that payment of insurance money under Tah Land^'s insurance policy in respect of that obligation.
By cl 27 of the Original Lease[47] Subway was obliged not to do any act or thing which might result in overloading any part of the floor of the Premises.
[47] Tan Affidavit, page 111.
By cl 28 of the Original Lease[48] Subway was required not to use or store any chemical or inflammable substance within the Premises, except for reasonable quantities for normal applications in connection with the use of the Premises permitted by Tah Land.
[48] Tan Affidavit, page 111.
Clause 37 of the Original Lease[49] required Subway to obtain insurance. This included public liability insurance in the name of Subway and Tah Land.[50]
[49] Tan Affidavit, pages 118 - 119.
[50] Tan Affidavit, cl 37.2, page 118.
By cl 37.8(a) of the Original Lease[51] Subway agreed to not do or omit to do any act or thing or bring or keep anything in the Lot 158 Complex which might render the insurance on the Lot 158 Complex void or voidable.
[51] Tan Affidavit, page 119.
By cl 38.4 of the Original Lease,[52] Subway agreed, subject to cl 38.6, to indemnify Tah Land against all losses for which Tah Land becomes liable in respect of loss or damage to property or death or injury of any nature or kind and however or wherever sustained:
(a)caused or contributed to by the use or occupancy of the Premises except to the extent caused or contributed to by the act or omission of Tah Land;
(b)resulting from an act or omission of Subway or a Permitted Person; or
(c)resulting from a notice, claim or demand to pay, do or perform any act or thing to be paid, done or performed by Subway under this Deed except to the extent that Tah Land is obliged under the provisions of this Deed to pay for or contribute to that cost.
[52] Tan Affidavit, pages 119 - 121.
By cl 38.5[53] Subway agreed, again subject to clause 38.6 that it would indemnify Tah Land against all losses for which Tah Land becomes liable in respect of:
[53] Tan Affidavit, page 120.
(a)any overflow or leakage of water or other fluids in or from the Premises;
(b)the cost of repair or replacement of any Plant and Equipment or Facility within the Premises if:
(i)it is damaged; and
(ii)that damage is caused or contributed to by any act or omission of the Lessee or a Permitted Person; and
(c)the cost of repair or replacement in respect of any damage caused to:
(i)any part of the Lot 158 Complex;
(ii)any item of Plant and Equipment; or
(iii)any Facility;
outside the Premises if that damage is caused by misuse by Subway or a Permitted Person.
Clause 38.5 provided that Subway's obligations under cl 38.4 and cl 38.5 are relieved to the extent that payment of insurance money under Tah Land's insurance policy is received or refused or reduced by reason of an act or default of Tah Land.

Events of Default

Clause 1 defines 'Event of Default' to mean an event specified in cl 47.2.[54]
[54] Tan Affidavit, page 79.
Clause 47.2 is titled 'Events of Default'. That clause provides that an 'Event of Default' occurs if various matters identified in that paragraph occur. They include if any rent is unpaid for seven days after becoming due, whether or not demand for payment is made.[55]
[55] Tan Affidavit, cl 47.2(a), page 124.
It also includes if Subway is in breach of any of the 'Lessee's Covenants' other than covenants to pay Rent for 14 days after notice has been given to Subway.[56] 'Lessee's Covenants' is defined in cl 1 of the Deed to mean the covenants, agreements and obligations contained or implied in the Original Lease, or any other document made between Tah Land and Subway, with reference to the Premises or imposed by law on Subway.[57]
[56] Tan Affidavit, cl 47.2(b), page 124.
[57] Tan Affidavit, page 80.
Clause 47.2 also provides that other matters unrelated to a breach of the Lessee's Covenants are an 'Event of Default' including matters, such as the appointment of a controller[58] or winding up.[59]
[58] Tan Affidavit, cl 47.2(e), page 124.
[59] Tan Affidavit, cl 47.2(c), page 124.
Clause 47.3 provides that after an Event of Default has occurred and without any notice or demand, Tah Land may at any time enter the Premises and on re-entry the Term will immediately determine without affecting any of the Lessor's Rights.[60]
[60] Tan Affidavit, cl 47.3, page 125.
Clause 47.7[61] identifies various terms as essential terms, including cl 6.1, cl 6.2, cl 6.3 and cl 37.
[61] Tan Affidavit, page 126.
Clause 47.8 provides that:[62]
[62] Tan Affidavit, pages 126 - 127.
In addition to any other remedy or entitlement of the Lessor including the right to terminate the estate granted by this Deed:
(a)the Lessee must compensate the Lessor in respect of any breach of an essential term;
(b)the Lessor is entitled to recover damages from the Lessee in respect of such breaches; and
(c)the Lessee covenants with the Lessor, which covenant will survive the Termination or any deemed surrender at law of the estate granted by this Deed, that if the Term is determined:
(i)for breach of an essential term by the acceptance by the Lessor of a repudiation of this Deed by the Lessee; or
(ii)following the failure by the Lessee to comply with a notice given to the Lessee to remedy any default;
the Lessee must pay to the Lessor on demand the total of:
(iii)the Rent then payable under this Deed
(iv)the Lessor's reasonable estimate of the Rates and Taxes and Insurance Costs (if applicable) which would have been payable by the Lessee
for the unexpired balance of the Term if the Term had expired by effluxion of time; and
(v)Losses incurred or reasonably expected to be incurred by the Lessor as a result of that early determination including, but not limited to, all costs of reletting or attempting to relet the Premises;
less the rent and other money which the Lessor reasonably expects to obtain by reletting the Premises between the date of Termination and the date on which the Term would have expired by effluxion of time; but the Lessor:
(vi)must take reasonable steps to mitigate its Losses and endeavour to relet the Premises at a reasonable rent and on reasonable terms; and
(vii)is not required to offer or accept rent or terms which are the same or similar to the rent or terms contained or implied in this Deed.

Clause 47.9 of the Original Lease provides that a certificate given to Subway by Tah Land of the amount of Rent, Rates and Taxes and Insurance Costs (if applicable) under cl 47.8(c) will be conclusive as between the parties except in the case of manifest error.[63]

Assignment

[63] Tan Affidavit, page 127.

Clause 55.1 of the Original Lease provides that the Lessee must not assign the Premises without the consent of Tah Land.[64]
[64] Tan Affidavit, page 134.
Clause 5 of Item 23 of Schedule 1 to the Original Lease provides that notwithstanding any other provision contained in the Original Lease, whilst the Lessee is Subway, Subway may assign the lease or sublet the whole of the Premises to any bona fide Subway licensee/franchisee without the prior consent of Tah Land.[65]
[65] Tan Affidavit, page 147.
Clause 10 of Item 23 of Schedule 1 provides that Tah Land acknowledges that if Subway notifies Tah Land in writing that part or all of the money payable shall be paid by an assignee or sub-lessee of Subway and the notice stipulates the amount or proportion of the money payable that will be paid by that party, then Tah Land shall accept payment of that amount or proportion from that party.[66]

Notification of default

[66] Tan Affidavit, page 147.

Clause 13 of Item 23 of Schedule 1 provides that Tah Land and Subway acknowledge and agree:[67]
13.1that it is extremely important that rent be paid in a timely manner as required by this Lease;
13.2the Lessee may sublet the Premises to a licensee/franchisee of SUBWAY® Systems Australia Pty Ltd and the licensee/franchisee may pay rent directly to the Lessor pursuant to special condition 10;
13.3the Lessee may not know if rent has been paid by that licensee/franchisee,
and the Lessor agrees to give written notice to the Lessee of any default committed under this Lease by a sublessee or assignee of the Lessee …
[67] Tan Affidavit, page 148.
Clause 13 then proceeds to set out the detail of how notice is to be given.[68]
[68] Tan Affidavit, page 148.

Tah Land's claim and Subway's defence

In these proceedings, Tah Land relies on cl 50 of the Original Lease to say that as Subway remained in possession of the Premises after the expiry of the term of the second extension of lease, Subway was liable to pay rent and outgoings under cl 50 of the Original Lease.[69] Tah Land claims a sum of $120,863.23 that is set out in a schedule to the Amended Statement of Claim for rent, outgoings, interest and legal fees for a default notice that Tah Land says are due to it under the terms of the lease.[70]
[69] Statement of Claim, pars 6(f), 17 and 19.
[70] Statement of Claim, par 19.
In par 18 of its Amended Defence Subway pleads that pursuant to the lease its liability to pay the money sought by Tah Land is limited to $40,000. The particulars to that paragraph refer to Clause 4.

The summary judgment application

Given that the appeal is a hearing de novo the court is not required to enquire into whether the learned registrar erred (see below). Nevertheless, it is useful to understand the learned registrar's reasons.[71]
[71] Radiant Nominees Pty Ltd v Australian Crane and Machinery Pty Ltd [2019] WADC 112 [8] (Glancy DCJ).
Registrar Jeyamohan gave ex tempore reasons for dismissing the application for summary judgment and those reasons were edited from the transcript and published.[72]
[72] Tah Land Pty Ltd v Subway Realty Pty Ltd [2023] WADC 44 (Tah Land).
The learned registrar noted the issues that had been raised before her regarding the effect of the taking order.[73] She noted that there remained a live question concerning whether the taking order takes effect from the date of issue, or the date of registration. She considered that those were matters which required submissions and consideration of the effect of s 179 of the Land Administration Act.[74] She also noted that there was also the separate matter of the proper construction of Clause 4.[75]
[73] Tah Land [18] - [20].
[74] Tah Land [24].
[75] Tah Land [26].
The learned registrar concluded that on her analysis there remained live issues regarding which party is liable to pay the arrears of rent and to the extent they were found to be liable, in what amount. She considered that the question of the amount of arrears payable can only be informed by matters of construction of Clause 4. She considered these are all matters which require proper consideration and determination.[76]
[76] Tah Land [28].
The learned registrar observed that while it was not appropriate for her to express a view on the merits, on the evidence before her, there was a dispute about the amount, manner and timing of the claimed arrears. She considered therefore that the existence and extent of any obligation should be a matter for a trial judge.[77]
[77] Tah Land [29].
The learned registrar observed that to oppose the summary judgment application, Subway need only to have demonstrated that its defence is not obviously untenable and that its version of the facts is not inherently incredible.[78]
[78] Tah Land [30].

The nature of the Appeal

Rule 15(6) of the District Court Rules 2005 (WA) provides that an appeal from a registrar is to be by way of a new hearing of the matter that was before the registrar.
A new hearing means that the judge hearing the appeal must treat the application as if it was before the court for the first time.[79] The appellant is not required to show that the learned registrar made an error in the decision appealed.[80]
[79] Kezic v St John of God Health Care Inc [2015] WASCA 220 [42].
[80] Cheney vMoore [2020] WASC 227 [9].
The court may rely upon additional evidence on the hearing of an appeal by way of a new hearing, subject to the court having a discretion to exclude such evidence.[81]
[81] Hazart Pty Ltd v Rademaker (1993) 11 WAR 26, 28.
In effect, therefore, it is necessary for me to determine the summary judgment application on the basis of the evidence now before me.

Summary judgment

Tah Land applies for summary judgment pursuant to O 14 r 1 of the Rules of the Supreme Court 1971 (WA) (RSC) which provides:
Where in an action to which this Order applies a statement of claim has been served on a defendant and that defendant has entered an appearance, the plaintiff may, on the ground that that defendant has no defence to a claim included in the writ, or to a particular part of such claim, or has no defence to such a claim or part except as to the amount of any damages claimed, within 21 days after appearance or at any later time by leave of the Court, apply to the Court for judgment against that defendant.
Order 14 r 2 RSC provides that an application under O 14 r 1 shall be made by summons supported by an affidavit verifying the facts on which the claim or the part of the claim to which the application relates is based, and stating that in the deponent's belief there is no defence to that claim or part thereof, as the case may be, or no defence except as to the amount of any damages claimed.
The principles to be applied in determining an application for summary judgment are well established and were summarised by the Court of Appeal in Zaghloul v Bayly[82] as follows:[83]
116The principles to be applied on an application for summary judgment are well established. The critical issue is whether it is clear that there is no real question to be tried. The issue is framed in this manner as it is only in the clearest of cases, where there is a high degree of certainty about the outcome if the proceedings were allowed to go trial, that summary judgment ought properly to be granted. The exercise of powers to summarily terminate proceedings must always be attended with caution.
117There are cases where the court has considered it appropriate to determine questions of law on a summary judgment application. There should be summary judgment if the facts are undisputed and the law is clear. In general, however, an application for summary judgment is not the occasion to dispose of difficult or substantial questions of law which cannot be determined without full argument. It will usually be appropriate to leave the determination of such questions for trial.
(footnotes omitted)
[82] Zaghloul v Bayly [2021] WASCA 125 (Zaghloul).
[83] Zaghloul [116] - [117].

Tah Land's submissions

Tah Land submitted that the onus is on a plaintiff to persuade the court that any case is an appropriate case to award summary judgment under O 14 RSC. It was submitted that once a plaintiff has established a prima facie right to judgment, the onus is on the defendant to satisfy the court why judgment should not be given.[84]
[84] Tah Land's Submissions, par 11 and authorities referred to therein.
Tah Land submitted that summary judgment is not only given where a case is so hopeless as to not require argument. It was contended that extensive argument may sometimes be necessary to demonstrate that there is no question which ought to be tried.[85]
[85] Tah Land's Submissions, par 12 and authorities referred to therein.
Tah Land submitted that in the context of O 14 r 3 and r 4 RSC, it is not open to the court on an application for summary judgment to finally determine the resolution of the case in favour of Subway.[86]
[86] ts 53 - ts 61.
Tah Land submitted that by the Tan Affidavit it has proven that:
(a)between 1 November 2021 and 30 November 2022, Subway leased the Premises from Tah Land pursuant to the terms of the lease (including the holding over provisions);
(b)Subway became indebted to Tah Land for amounts due and owing under the lease and referable to that period in the sum of $120,863.23, and
(c)Subway has failed or refused to pay that amount to Tah Land, despite demand.[87]
[87] Tah Land's Submissions, par 13.
It was submitted that Tah Land has therefore established a prima facie right to judgment and the onus is on Subway to satisfy the court why judgment should not be given.[88]
[88] Tah Land's Submissions, par 14.
Tah Land submitted that it was evident from Subway's submissions that in relying upon Clause 4, Subway does not assert there are triable issues of fact that cannot be determined on the materials before the court.[89] At the hearing of the appeal, counsel for Tah Land confirmed that there was no contested matter of fact that needed to be resolved in order to resolve the question of the proper construction of Clause 4.[90]
[89] Tah Land's Submissions, par 15.
[90] ts 54 - ts 55.
With regard to the proper construction of Clause 4, Tah Land submitted that there is no foundation for Subway's construction in the plain words of the provision and it would produce a result that makes far less commercial sense than the construction argued by Tah Land.[91]
[91] Tah Land's Submissions, par 16.
Tah Land submitted that the text of the relevant provision limits Subway's total liability in respect of 'a default'. It was said that each of the instances in which Subway failed to pay rent or other charges due to Tah Land under the lease constituted 'a default'. It was contended that none of those discrete and separate instances of default involved a failure to pay Tah Land $40,000 or more and therefore Clause 4 did not afford Subway any defence.[92]
[92] Tah Land's Submissions, par 19.
In oral submissions, counsel for Tah Land drew attention to the words 'if there is a default' in Clause 4 which he described as the trigger or proviso. It was said that these words informed the reasonable businessperson of the subject matter of the total liability that is being limited. It was submitted that if one was to ask, 'for what does the provision limit the lessee's total liability?' the answer is clear from the preceding words, 'a default'.[93]
[93] ts 67.
In oral submissions, counsel for Tah Land drew attention to Clause 4's use of the words 'the total liability of the Lessee shall be limited to an amount not to exceed'. Counsel said that the use of the singular 'amount' was a textual indicator that supported Tah Land's construction.[94]
[94] ts 70.
Tah Land submitted that the construction argued by Subway requires a fundamental departure from the plain and ordinary meaning of the text of the provision.[95]
[95] Tah Land's Submissions, par 20.
In oral submissions, counsel for Tah Land submitted that Subway's construction of Clause 4 involved reading words into the clause that were not present. It was also said that Subway's construction created ambiguity because the present lease was a monthly lease.[96]
[96] ts 70 - ts 71.
Tah Land submitted that Clause 4 would still have work to do on its construction. It was submitted that damages for failure to pay rent may not necessarily be limited to the amount which Subway refused or failed to pay.[97] Tah Land also drew attention to Subway's other obligations under the lease, the breach of which could entitle Tah Land to damages. Tah Land gave the following examples:
(a)a default of the obligation in cl 18.1 to maintain the Premises in good condition;
(b)a default of the restriction in cl 21.1 on alterations, additions, and demolition of the Premises;
(c)a default of the obligation in cl 22 to conduct the Lessee's Business in a proper, orderly, and businesslike manner; and
(d)a default of the prohibition on storing goods other than those permitted by cl 26.4.[98]
[97] Tah Land's Submissions, pars 21 - 22.
[98] Tah Land's Submissions, par 23. See also ts 71 - ts 73.
Tah Land submitted that any single default of these or other obligations under the lease might result in Tah Land suffering loss and damage in excess of $40,000.[99]
[99] Tah Land's Submissions, par 24.
Counsel for Tah Land also argued that Subway was a monthly tenant holding over. It was submitted that a new lease arose each month. It was submitted that to the extent that Subway contended that Clause 4 applied to all defaults under the lease, questions arose as to the definition of lease which was not a defined term.[100]
[100] ts 70.
Tah Land submitted that Subway's construction must also be rejected because it produces the absurd result of entitling Subway to lease the Premises rent free, and without obligation to pay rent, as soon as the total amount due and owing exceeds $40,000. It was said that it is no answer to say that Tah Land is entitled to terminate the lease, because that strikes at the very heart of the commercial transaction between the parties. It was submitted that it would be commercially nonsensical to conclude that the parties struck such a bargain.[101]
[101] Tah Land's Submissions, par 25.
Clause 4 identifies two possible caps on Subway's liability and provides for the lesser amount to apply. The first cap is calculated by reference to the amount of Base Rent, GST and other monies payable under the Lease for the 12-month period commencing on the date of default. The second cap is $40,000.
I raised with counsel for Tah Land that on both constructions of Clause 4, the first cap would seem to have no work to do. By 2022 the monthly rent and outgoings was about $10,000, or about $100,000 per annum.[102] Thus, the second $40,000 cap would always be lower and apply.
[102] Tan Affidavit, pages 208, 229 - 230.
Counsel for Tah Land submitted that the first cap might still conceivably have work to do as it was possible that the rent could be reduced on a rent review to below $40,000.[103]
[103] ts 66, ts 76 and ts 92.
I also raised with Counsel for Tah Land that part of the money claimed by Tah Land seemed to be for legal fees. Counsel submitted that Subway was obliged to pay those fees by cl 13 of the Original Lease.[104]
[104] ts 63.

Subway's submissions

Counsel for Subway confirmed that there was no factual question to be determined to permit the question of contractual construction to be resolved.[105]
[105] ts 117.
Subway's argument (based on the text of the lease read in the context of what it maintained was the commercial purpose evident from the lease) was that the natural and ordinary meaning of Clause 4 is that Subway's liability for all breaches of the lease is limited to the total amount set out in Clause 4, not that its liability is so limited for each breach.
Subway submitted that the facts of this matter show that one of the commercial risks of Subway's business model is that it may become liable for unpaid rent under a head lease as a result of the default of a franchisee. It was contended that Clause 4 addresses this risk.[106]
[106] Subway's Submissions, par 4.9. See also ts 81 - ts 82.
Subway submitted that it was significant that Clause 4 only applies while Subway is the lessee of the Premises.[107] It was said that this was the context in which the balance of the clause needed to be understood.[108] It was submitted that Subway operates as a franchise business in which it subleases premises to franchisees for them to operate a Subway restaurant.
[107] Subway's Submissions, par 4.5; ts 91.
[108] ts 90 - ts 91 and ts 94.
It was contended that it is clear from the text of the Original Lease that Tah Land and Subway understood that this was the commercial purpose of the Original Lease. Subway referred to Item 23, cl 5 of the Schedule to the Original Lease by way of example.[109] That clause gives Subway the right to assign the lease or sublet the Premises to 'any bona-fide Subway licensee/franchisee' without the prior consent of Tah Land. In oral submissions, counsel for Subway also drew attention to cl 13.2 and cl 13.3 of Item 23 of Schedule 1.[110]
[109] Subway's Submissions, par 4.6. See also ts 81.
[110] ts 81 - ts 82.
Subway submitted that the following can be drawn from the language of Clause 4:
(a)the clause operates to limit the 'total liability' of Subway for a default;
(b)the first mechanism for calculating the limit on liability is by reference to the Base Rent payable, GST and other monies payable under the lease for a period of 12 months from the date of the default;
(c)the second mechanism for calculating the limit on liability is a cap of $40,000; and
(d)part of the purpose of Clause 4 was to protect Subway from a defaulting sublessee/franchisee of the Premises.[111]
[111] Subway's Submissions, par 4.10.
Subway also drew attention to the final sentence of Clause 4 which refers to termination. It was submitted that this reveals that it was in contemplation of the parties that there might be re-entry and termination.[112]
[112] ts 94.
Counsel for Subway accepted that Clause 4 used the words 'a default' but submitted that the plain meaning of the clause was that it applied to every default and it covered all defaults. It was submitted that once there is a default, the total liability is limited to the amounts that are then specified in the balance of the clause.[113] It was said that the 'total' in 'total liability' means the sum of all the liability under the lease.[114] Subway submitted that if Tah Land's construction is what had been intended, the clause would (and should) have referred to the total liability for 'each default' or 'that default'.[115]
[113] ts 92.
[114] ts 98, ts 102.
[115] Subway's Submissions, par 4.13.
Subway submitted that further support for its construction can be taken from the first mechanism for determining the cap on liability - the amount of Base Rent, GST and other monies payable under the lease for the 12‑month period commencing on the date of default.[116] It was contended that the fact that this limit was to be calculated in this manner suggests that it was intended to cover continuing rental default.[117]
[116] Subway's Submissions, par 4.14.
[117] Subway's Submissions, par 4.16. See also ts 93 - ts 94.
Subway submitted that it would not make commercial sense for the parties to agree that the limitation should be calculated by reference to rent but then to place the limit so far above the monthly rental payment that it would never in practice apply to a breach of the obligation to pay rent.[118] It was also submitted that it was significant that this calculation was forward looking and this indicated it was addressing a continuing default.[119]
[118] Subway's Submissions, par 4.16. See also ts 93 - ts 94.
[119] ts 93 and ts 105.

With regard to whether the first mechanism had any useful role to play, Subway agreed with Tah Land's submission that it might have a role to play if the rent was reviewed down.[120]
[120] ts 92.
Subway submitted that given the normal operation of a commercial lease, it is unrealistic to suggest that the commercial object of two commercial parties, with legal representation, is that there be a limit on liability for those events referred to by Tah Land but not to the situation where Subway was in default of its obligation to pay rent.[121] It was said that such a position cannot sensibly be said to reflect the commercial objects of the lease given that the most likely form of default by a lessee is the non-payment of rent.[122]
[121] Subway's Submissions, par 4.21.
[122] Subway's Submissions, par 4.22.
Subway submitted that Clause 4 must be considered in the context in which it was originally drafted in 2004. It was submitted that at that time, pursuant to Item 6(a) of the Schedule to the Original Lease, the Base Rent was $48,000 per annum, payable by instalments of $4,000 per month meaning $40,000 was equal to 10 months' rent under the Original Lease.[123] It was said that this afforded Tah Land 'significant protection'.[124] It was noted that the lease had been extended twice but it was submitted that if Tah Land was concerned that Clause 4 no longer made commercial sense, it had the opportunity to renegotiate it.[125]
[123] Subway's Submissions, par 4.4; ts 80, ts 92.
[124] Subway's Submissions, par 4.31.
[125] Subway's Submissions, par 4.34.
During the course of counsel for Subway's oral submissions, I put to counsel that the fact that the sum had not been adjusted upwards might be considered a point that supported Tah Land's construction, as it might be expected that the sum would have increased as the rent did. The increase of rent over time meant that $40,000 was now only equivalent to four month's rent and outgoings.[126]
[126] ts 95 - ts 96.
Counsel for Subway said that he could not indicate why there had been no increase but he reiterated that there had been an opportunity to renegotiate. It was submitted that the cap would still not engage before there were a series of defaults.[127]
[127] ts 96 - ts 97.
With regard to Tah Land's submission that Subway's construction results in a 'commercially nonsensical' outcome, Subway drew attention to the fact that Clause 4 does not seek to diminish, or in any way alter the effect of Tah Land's right to terminate the Lease.[128] It was submitted that in this case Tah Land could have terminated for non‑payment of rent but elected not to do so.[129]
[128] Subway's Submissions, pars 4.25 - 4.28.
[129] Subway's Submissions, par 4.29.
In oral submissions, counsel for Subway also referred to cl 47.2(a) and cl 47.2(b) that address when an 'Event of Default' occurs. Counsel noted that cl 47.2(a) provided that 'an Event of Default' occurs in respect of rent, if it is unpaid for seven days while cl 47.2(b) provided that 'an Event of Default' occurs in respect of breach of the Lessee's Covenants (other than the covenant to pay rent) if the lessee remains in breach 14 days after notice is given.[130] Counsel said that Tah Land had contended that Clause 4 would be engaged if there was any event of default under any of the covenants of the lease. Counsel submitted that this was not correct because a notice still needed to be issued.[131]
[130] ts 82 - ts 82.
[131] ts 83.
I put to counsel for Subway that cl 47.2 used the singular 'default' and it appeared from the balance of the clause that the use of the singular was intended to refer to a single default, rather than more than one default. Counsel accepted that cl 47.2 was intended to refer to single events of default.[132]
[132] ts 85.
Counsel also drew attention to cl 47.3 and submitted that Tah Land had powerful rights to re-enter the premises where there has been an Event of Default.[133] In the context of this discussion, I drew counsel's attention to cl 47.8 and that on any construction of Clause 4, Subway might be relieved from the full effect of that clause.[134] Counsel for Subway accepted that Clause 4 had work to do other than in relation to rent.[135]
[133] ts 86.
[134] ts 87 - ts 88.
[135] ts 88.
Counsel for Subway disputed Tah Land's assertion that Subway's lease was monthly because it was holding over. Counsel referred to cl 50 of the lease and submitted that when the terms of that lease were considered, the term of the lease was five years as had been the case under the Original Lease.[136]
[136] ts 105 - ts 107.

Disposition

Whether a contractual construction dispute necessarily requires a trial

By the time of the hearing of the appeal, the summary judgment application was a different application to that before the learned registrar. The issue associated with the taking order had fallen away. The sole issue remaining was the proper construction of Clause 4 and (as discussed further below) both parties were pressing for that to be resolved. The quantum of the claim had also been reduced to $80,000 plus interest and costs.
The determination of a summary judgment application ultimately involves an assessment by the judge of the claim's prospects of success if it went to a trial in the ordinary way. Where the claim turns on the proper construction of a contract, that involves consideration of the merits of the respective constructions advanced. In some cases, where it has been necessary to make a constructional choice, the question of the proper construction of the contract has been left to trial.
In NRW Contracting Pty Ltd vCliffs Asia Pacific Iron Ore Pty Ltd,[137] the Court of Appeal (Murphy, Beech & Vaughan JJA) considered an appeal from a refusal of defendant's summary judgment where it was alleged that the primary judge made an error of law in finding that the proper construction of an exclusion clause should be determined at trial. In that case Murphy JA considered some of the authorities concerning the approach to be taken to a summary judgment application where the outcome turns upon a question of contractual construction. Murphy JA said:
[137] NRW Contracting Pty LtdvCliffs Asia Pacific Iron Ore Pty Ltd [2020] WASCA 107 [53] (NRW).
46In Dey v Victorian Railways Commissioners, Dixon J said that '[a] case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury'. In General Steel Industries Inc v Commissioner for Railways (NSW) and Ors, Barwick CJ stated that the jurisdiction to terminate an action '… is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion' (emphasis added).
47Both of those authorities dealt with the exercise of a power of summary dismissal of a plaintiff's claim. Nevertheless, in Theseus Exploration NL v Foyster, which concerned an application for summary judgment, Barwick CJ said:
'Perhaps the summary intervention to prevent the continuance of a plaintiff's action ought to be much rarer than the giving of summary judgment but there is sufficient correspondence in the two situations to make apposite to this case much of what I said in General Steel Industries v Commissioner for Railways (NSW)[.]'
48Theseus was a case in which the plaintiff company sued on a contract under which the defendant agreed to apply for 20 cent shares in the company on the basis that 5 cents would be payable on application and 15 cents would be payable on the company's listing. The company was listed and the plaintiff sued for the 15 cents tranche of the consideration. The defendant alleged that the claim was prevented by s 320 of the Companies Act 1961 - 1964 (Qld). The plaintiff brought a summary judgment application. There was no issue of fact to be tried. The application was dismissed by the primary judge without reasons, although Barwick CJ considered it 'evident that the judge was satisfied that there was a question in dispute with respect to the [plaintiff's] claim which ought to be tried'. The High Court found, in effect, that the defendant's defence had no validity.
49Barwick CJ said:
'Although I have reached a clear conclusion as to the lack of validity in the [defendant's] submission that the [plaintiff] was unable to recover the amount claimed, I would not be prepared to hold that the judge erred in the course he took. Equally, however, I would not have thought him in error if he had granted the [plaintiff's] application for summary judgment. The case was one which, in my opinion, could have been disposed of upon legal argument upon the application. But it was for the judge to be satisfied that there was a matter to be tried. Whilst there were no facts to be decided, it was open to the judge, in my opinion, to take the view that the extent and complexity of the matters of law and of argument thereon warranted a hearing.
However, we have now heard a full argument on the substance of the matter from both [plaintiff] and [defendant]. I am convinced that the suggested defence fails and that the [plaintiff] is entitled to judgment in the action. Thus, although I would not hold the dismissal of the summons for summary judgment to be erroneous, I would allow the appeal and now grant that application.'
50Gibbs J said:
'No doubt the remarks in [earlier] cases were not intended to preclude the exercise of some discretion by a judge to whom application for summary judgment is made in deciding whether the question of law raised is so difficult that it ought not to be decided summarily, and no doubt also sometimes some explanation or reference to authorities will be necessary to enable a judge to decide whether a question is really unarguable. However, in the present case the questions were serious and disputable and, assuming that the learned primary judge had a discretion, it was entirely proper for him to decline to dispose of them in chambers.
Logically it should follow that the appeal should be dismissed. However, we have heard full argument on the questions upon which the fate of the action depends and have reached the conclusion that the defence raised by the [defendant] must fail. No fact is in dispute. It has not been suggested that there is any other matter on which argument could usefully be advanced. If the action is sent to trial the court will be bound to apply our statement of the law and the [plaintiff] must succeed. In these circumstances it would be absurd to give the [defendant] leave to defend the action. Justice therefore requires us to take the anomalous course of allowing an appeal from a judgment which was correct; but in the circumstances it would not in my opinion be right to allow the [plaintiff] the costs of the appeal.'
(footnotes omitted)
Ground 1 of the appeal in NRW alleged that the primary judge erred in law by failing to engage with and resolve on a summary dismissal basis the constructional question as to whether the loss of profit claim advanced was barred by a term of the contract.[138]
[138] NRW [24].
Murphy JA considered that Ground 1 had no merit. He considered that the appellant in that case had misconstrued the primary judge's reasons. Murphy JA observed that the primary judge correctly recognised that there was a decision for her to make - whether it was appropriate to determine the question of law involved in finally determining the proper construction of the relevant clause. He said that when the primary decision is read as a whole, the judge was saying that there were a number of constructional choices which were fairly available as to the proper construction of the clause and that accordingly, she was not satisfied that the suggested construction was so clearly untenable that it could not possibly succeed at trial.[139]
[139] NRW [58].
In SMEC Australia Pty Ltd vValentine Falls Estate Pty Ltd,[140] the Court of Appeal (Pullin, Newnes & Murphy JJA) considered an appeal from a decision to refuse a defendant's application for summary judgment where the plaintiff's claim turned on the proper construction of a clause in an agreement. The Court of Appeal considered that in that case, the proper construction of the clause was not an appropriate matter for determination on a summary judgment application.[141] In that case it was suggested that evidence would be led of the surrounding circumstances relevant to the proper construction and the court considered that there were matters of fact that might have required determination.[142]
[140] SMEC Australia Pty Ltd vValentine Falls Estate Pty Ltd [2011] WASCA 138 (SMEC).
[141] SMEC [23].
[142] SMEC [24].
I do not understand the Court of Appeal in either NRW or SMEC to have decided that the mere fact that there is a dispute about the proper construction of a contract, necessarily means that there is a triable issue and summary judgment must be refused. As I understand the position, in an appropriate case, a judicial officer may properly be persuaded to enter summary judgment, even though there is a dispute about the proper construction of the contract.
In the extract of NRW quoted above, Murphy JA referred to the decision of Barwick CJ in Theseus (discussed in [106] above) where the Chief Justice observed that he would not have considered the judge in that case to have erred if he had granted the application for summary judgment. He observed that that case could have appropriately been disposed of by legal argument upon the application.
In Casella vHewitt,[143] the Court of Appeal considered an appeal from a decision of the master to grant summary judgment where the sole matter in issue was the proper construction of a contract. The master had resolved the application by determining the question of construction. The majority of the Court of Appeal (Buss JA (as he then was) & Heenan AJA, McLure P dissenting) dismissed the appeal. Buss JA considered the proper construction of the contract and concluded that the master had not erred in concluding that the respondents did not have a reasonably arguable defence.[144] Heenan AJA observed that the case before the court is an example of the situation described in Theseus where, notwithstanding that an issue of law involved some complexities and difficulties and might well have justified a hearing at a trial, it was determined on summary judgment.[145]
[143] Casella vHewitt [2008] WASCA 13; (2008) 36 WAR 1 (Casella).
[144] Casella [88].
[145] Casella [92].
In Thomas vBalanced Securities Ltd,[146] the Court of Appeal of Queensland (White JA (Margaret Wilson AJA & Martin J agreeing)) observed (in the context of an appeal from a judge to enter summary judgment):
[146] Thomas vBalanced Securities Ltd [2011] QCA 258; [2012] 2 Qd R 482 (Thomas).
68His Honour could have declined to grant summary judgment in light of the complexity of the issues to be determined but having embarked upon a consideration of the very full written arguments advanced by counsel and, being pressed by the parties' representatives to do so, it was open to him to proceed to dispose of the claim and in a summary way [Theseus Exploration NL v Foyster (1972) 126 CLR 507]. In Australian CanCo Pty Ltd v Levin & Co Pty Ltd[1947] VLR 332 (as quoted by Stephen J in Theseus Exploration [At 523]) the Court said:
'… We think this Court being clear as to the meaning of the contract is not so helpless that it cannot prevent the absurdity of remitting the case to a single judge for trial because before full argument there might have been some uncertainty as to the meaning of the document.' [At 338]
Similarly, a judge hearing a summary judgment application may be prepared to tackle a legally difficult analysis without being in error in doing so.
69The approach to r 292 and its corollary for a defendant, r 293, is as 25 enunciated in Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232 and confirmed and elaborated in Coldham-Fussell v Commissioner of Taxation [2011] QCA 45 at [97] and following. In the latter decision it was noted that rr 292 and 293 must be applied in the context of the overriding purpose of the UCPR to 'facilitate the just and expeditious resolution' of the matter in dispute. [At 467 [101] per White JA with whom the Chief Justice and the President agreed]
70While the primary judge could have declined to embark on the applications, no error has been demonstrated in him having done so.
(footnotes cited in square brackets)
More recently, in ThoughtWare Australia Pty Ltdv IonMy Pty Ltd[147] Derrington J in the Federal Court gave summary judgment in an application that involved the proper construction of a contract. Before referring to the decision in Thomas, he observed:[148]
… merely because there may exist some complexity in the underlying issues, courts should not shy away from granting summary judgment when, after a consideration of the facts and law, the outcome of the disputation is clear. If it is apparent that the result will not be altered by the holding of a trial, it is antithetical to the proper administration of justice to require the parties to be put to the effort and expense of conducting a full hearing: Theseus Exploration NL v Foyster (1972) 126 CLR 507; see also Federal Court Act ss 37M and 37N. …
[147] ThoughtWare Australia Pty Ltdv IonMy Pty Ltd [2023] FCA 906 (ThoughtWare).
[148] Thomas [53].
In Thomas and ThoughtWare reference was made to relevant legislation and rules that mandated the just and efficient resolution of disputes. Order 1 r 4B RSC provides for the management of cases in accordance with a system of positive case flow management with the object of:
(a)disposing efficiently of the business of the court;[149]
(b)facilitating the timely disposal of business;[150]
(c)ensuring the procedure applicable, and the costs of the procedure to the parties and the State, are proportionate to the value, importance and complexity of the subject matter in dispute;[151] and
(d)that the procedure applicable, and the costs of the procedure to the parties, are proportionate to the financial position of each party.[152]
[149] Order 1 r 4B(1)(b) RSC.
[150] Order 1 r 4B(1)(d) RSC.
[151] Order 1 r 4B(1)(e) RSC.
[152] Order 1 r 4B(1)(f) RSC.
Having made an assessment of the prospects of the competing constructions of Clause 4 advanced by the parties, I consider this to be a case that is amenable to summary judgment. Both parties confirmed at the hearing of the appeal that there was no matter of fact that needed to be resolved in order to resolve the question of the proper construction of Clause 4.[153] The proper construction of Clause 4 is a question of law[154] and the construction of that clause was fully argued before me. In this case, I do not consider the resolution of that question involved a level of complexity that made the application unsuitable for summary judgment.
[153] ts 54 - ts 55 and ts 117.
[154] Westport Insurance Corporation vGordian Runoff Ltd [2011] HCA 37; (2011) 244 CLR 239, 279 - 280 [82]; ThoughtWare [62].
In my view, as in Thomas and ThoughtWare, the summary resolution of this case is consistent with principles of good case management (and in this case the requirements of O 1 r 4B RSC).
Following the payment made by Subway, the principal amount in issue in this case is only just within the lower threshold of this court's monetary jurisdiction. The procedure adopted should be proportionate to the value, importance and complexity of the subject matter in dispute.
Further, both parties urged me to resolve the current dispute on the basis of the materials before the court without further delay. The day before the hearing of the appeal the parties sought orders from me that these proceedings be listed for trial at the time the appeal had been listed, with the trial to be conducted without cross‑examination of witnesses, on the basis of the affidavits and submissions that had been filed. I understood that the parties sought such unusual orders because they wished to avoid further delay or expense. I understood them to be concerned that I might conclude that summary judgment should not be entered because the existence of different constructions of Clause 4 meant there was an issue that required trial.

In my view, Subway was right to accept that even on Tah Land's construction, Clause 4 would still have meaningful work to do in limiting Subway's liability for breaches of its obligations other than the payment of rent. A breach of some of those obligations could expose Subway to liability well in excess of $40,000. Examples include:
(a)cl 18 that required Subway to maintain the Premises in good condition;
(b)cl 27 which obliged Subway not to do any act or thing which might result in overloading any part of the floor of the Premises;
(c)cl 28 which required Subway, not to use or store excessive amounts of chemicals or inflammable substances within the Premises;
(d)cl 37 which required Subway to obtain public liability insurance and not do anything that might void that insurance; and
(e)cl 38.4(b) which required Subway to indemnify Tah Land against all losses for which Tah Land becomes liable in respect of loss or damage to property or death or injury resulting from an act or omission of Subway (subject to certain exceptions).
Further, by cl 47.8(c) where the lease was terminated for breach of an essential term (including the non-payment of rent) Subway was obligated to pay Tah Land the total rent and outgoings for the balance of the term of the lease, less the rent and other outgoings that Tah Land reasonably expected to obtain by reletting the Premises. Thus, if there was re-entry following a default in the payment of rent, Clause 4 could have effect in limiting the amount that Subway might otherwise have to pay for future rent and outgoings.

Conclusion on construction

Ultimately, it seems to me that the plain and ordinary meaning of Clause 4 is that it caps liability for the consequences of each default of the lease (as Tah Land argued), rather than all defaults under the lease (as Subway argued). For the reasons I have given, I do not consider that Subway's construction fits well with the plain and ordinary meaning of the words used.
While I agree that there are some matters of context that assist Subway, there are others that do not. I consider that the fact that the monthly rent and outgoings was about $10,000 and the cap engaged at only $40,000 is a significant matter of context. In my view, reading Clause 4 in context and in light of the purposes of the parties evident from the lease does not result in a construction of Clause 4 that is any different to the plain and ordinary meaning of the clause.
Therefore, once Clause 4 is properly construed, it may be seen that Subway's construction cannot be supported and must be rejected.

Conclusion

I accept Tah Land's submission that the evidence that it relies upon establishes a prima facie case for summary judgment. Given my conclusion about the proper construction of Clause 4, I am therefore inclined to grant Tah Land's application for summary judgment.
As the pleadings and the summary judgment application presently stand, however, the amount claimed by Tah Land does not take into account the payment made by Subway. Granting summary judgment in the full amount sought might therefore result in Subway receiving an overpayment. It may be that Tah Land will wish to amend its pleadings to reflect the payment made and move for orders in different terms to those presently sought.
I will hear from the parties about the orders appropriate to give effect to these reasons and on the question of costs.
Finally, I should note that given the conclusion I have reached about the proper construction of Clause 4, it has not been necessary for me to consider whether the lease created by cl 50 had a term of five years as Subway argued, as opposed to a term of only one month as Tah Land argued. It should not be assumed that I accept Subway's construction of cl 50.
On the contrary, I have some reservations about the correctness of that argument. Subway's argument that a term of five years was created seemed to depend on cl 50(c)(ii) using the words 'and otherwise on the same terms and conditions as this Deed'. But those words are used in the context of describing the 'Money Payable'. Further, it seems unlikely to me that the parties intended to create a term of five years by cl 50(c)(ii) given the same clause says that the lease may be terminated on one month's notice. Even if cl 50(c)(ii) had the effect of importing the other terms and conditions of the Original Lease, effect must be given to cl 50(c)(ii). In the case of inconsistency primacy must be given to cl 50(c)(ii). A term of five years would appear to be inconsistent with cl 50(c)(ii).

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
FN
Associate to Judge Palmer
18 SEPTEMBER 2023