Toga Pty Ltd v Perpetual Nominees Ltd (RLD)
[2013] NSWADTAP 2
•15 January 2013
Administrative Decisions Tribunal
New South Wales
Medium Neutral Citation: Toga Pty Ltd v Perpetual Nominees Ltd (RLD) [2013] NSWADTAP 2 Hearing dates: 20 September 2012 Decision date: 15 January 2013 Jurisdiction: Appeal Panel - Internal Before: M Chesterman, Deputy President
K Rickards, Judicial Member
T Tyler, Non-judicial MemberDecision: 1. Declare that the Appellant / Cross Respondent is obliged to pay to the Respondents / Cross Appellants the Annual Rent and the Lessee's Contributions from 13 November 2010 to 12 November 2011 under the renewed lease that came into existence upon the exercise by the Appellant / Cross Respondent of the option contained in the registered Sublease AA989655B.
2. The proportion of Annual Rent and Lessee's Contributions held in escrow in the Macquarie Bank Open Legal Investment, Account number 104563, is to be paid to the Respondents / Cross Appellants.
3. Any application by the Respondents / Cross Appellants for the costs of the appeal and cross appeal must be filed and served within 28 days, along with supporting submissions and any additional submissions they may wish to make as to the costs of the Tribunal hearing. Any submissions in reply by the Appellant / Cross Respondent must be filed and served within a further 28 days. These matters of costs will then be determined 'on the papers', pursuant to section 76 of the Administrative Decisions Tribunal Act 1997, unless the Appeal Panel decides that a hearing is required.
4. Liberty to apply within 28 days for clarification and/or amendment of Order 2.
Catchwords: Retail lease - construction - terms of option lease - Tribunal's powers in relation to rectification Legislation Cited: Administrative Decisions Tribunal Act 1997
Retail Leases Act 1994Cases Cited: Ashington Holdings Pty Ltd v Wipema Services Pty Ltd (No 2) (1998) 9 BPR 16,515
Burns Philp Hardware Ltd v Howard Chia Pty Ltd (1987) 8 NSWLR 642
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
Lewis v Stephenson (1898) 67 LJQB 296
Mark Mayne Pty Ltd v Suburban Centres Pty Ltd [1976] 2 NSWLR 67
Phoenix Commercial Enterprises Pty Limited v City of Canada Bay Council [2010] NSW CA 64
Riltang P/L v L P/L [2004] NSWSC 977
Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45; [2002] HCA 5
Showa Shoji Australia Pty Ltd v Oceanic Life Ltd (1994) 34 NSWLR 548
Toga Pty Limited v Perpetual Nominees Limited and CFS Managed Property Limited [2012] NSWADT 80
Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397
Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 233 CLR 528; [2007] HCA 45Texts Cited: Meagher, Gummow and Lehane, Equity: Doctrine and Remedies (Butterworths, 4th edn, 2002) Category: Principal judgment Parties: Toga Pty Ltd (Appellant / Cross Respondent)
Perpetual Nominees Ltd (First Respondent / Cross Appellant)
CFS Managed Property Ltd (Second Respondent / Cross Appellant)Representation: M Leeming SC and S Cirillo (Appellant / Cross Respondent)
J Simpkins SC and M Ellicott (Respondents / Cross Appellants)
Corrs Chambers Westgarth (Appellant / Cross Respondent)
Minter Ellison Lawyers (Respondents / Cross Appellants)
File Number(s): 129010, 129014 Decision under appeal
- Citation:
- Toga Pty Limited v Perpetual Nominees Limited and CFS Managed Property Limited [2012] NSWADT 80
- Date of Decision:
- 2012-04-30 00:00:00
- Before:
- Retail Leases Division
- File Number(s):
- 115048, 115056
decision
Introduction
This decision relates to an appeal and a cross-appeal filed against the decision of the Retail Leases Division of the Tribunal in Toga Pty Limited v Perpetual Nominees Limited and CFS Managed Property Limited [2012] NSWADT 80.
The Appellant / Cross Respondent, Toga Pty Limited ('Toga') was the sublessee under registered Sublease No. AA989655B ('the Sublease') relating to retail shop premises near Central Railway Station, Sydney.
The First Respondent / Cross Appellant, Perpetual Nominees Limited ('Perpetual'), and the Second Respondent / Cross Appellant, CFS Managed Property Limited, were the sublessors.
Perpetual is the trustee of a Managed Investment Scheme called the Colonial Commercial Property Trust. CFS Managed Property Limited is the Responsible Entity and Manager of the Scheme.
In line with the terminology of the Tribunal's decision, we use the term 'Colonial' to describe both sublessors.
It has been common ground throughout that the Sublease was governed by the Retail Leases Act 1994 ('the RL Act'). It had a term of 10 years commencing on 13 November 2000 and terminating on 12 November 2010.
Item 14 in the Reference Table of the Sublease stated that the lessee, Toga, was not required to pay the annual rent or the 'Lessee's Contributions' (i.e., the lessee's contribution to outgoings - hereafter 'the outgoings') for the period up to the first anniversary of the Commencing Date of the Sublease. Item 14 was referred to as a 'Special Covenant'.
The Sublease also contained an option to renew for a further ten years. It was common ground that Toga validly exercised this option, thereby renewing the Sublease for a further term of 10 years commencing on 13 November 2010.
The principal issue in dispute was whether under the Sublease the parties agreed that the Special Covenant was to be included in the sublease (hereafter 'the Option Lease') that came into existence upon exercise of the option to renew.
In its Application, by which these proceedings were instituted, Toga maintained that the Special Covenant was to be included in the Option Lease and that it was therefore not liable to pay the rent and outgoings for the first year of this lease.
In a Cross Application, which was amended with leave at the Tribunal hearing, Colonial maintained that it was entitled to be paid this rent and outgoings.
In its decision, delivered on 30 April 2012, the Tribunal held in favour of Colonial. The reasoning by which it reached this conclusion is outlined below.
The hearing of Toga's appeal and Colonial's cross appeal took place before us on 20 September 2012. Mr Leeming SC addressed us on behalf of Toga and Mr Simpkins SC on behalf of Colonial.
Background
In its decision at [9 - 16], the Tribunal gave the following outline of the principal events leading up to the execution of the Sublease:-
9 In about 1997, Mr Robert Harris an agent with Jones Lang Wootton was retained by the NSW State Government to negotiate the sale of a long term leasehold interest in a 17,000 sq m site on Lee Street, Sydney, close to Central Railway Station which was largely undeveloped (the Site). The Site consisted of a number of unused railway sheds, tracks and a large building. There were no recognised retail activities in the area.
10 Toga and Australand made a joint offer for the Site. Toga entered into a 99 year lease for the former Post Office Building (which was part of the Site). Australand entered into a 99 year lease for the remainder of the Site.
11 Toga subsequently converted the former Post Office Building into a hotel known as 'Medina Central'. As part of this development, Toga provided for 8 specialty retail tenancies on the ground floor facing a plaza now known as the Henry Deane Plaza.
12 As part of the tender process, Australand had agreed to construct a Building called the SRA Building. On the ground floor of the SRA Building was about 585m² of retail space which faced Henry Deane Plaza. After further negotiations with Australand, Toga ended up leasing all the retail space around Henry Deane Plaza. The retail space left unlet was under the SRA Building (SRA Retail Space).
13 Australand engaged Baulderstone to construct the SRA Building and Australand sold that building prior to its construction to Colonial. As part of the sale Australand provided an 18 month rental guarantee to Colonial with respect to the SRA Retail Space.
14 Mr Harris was involved in the negotiations for the sale of the SRA Building to Colonial. Mr Harris sought tenants for the SRA Retail Space and offered the SRA Retail Space to Toga. The parties agreed to proceed.
15 Negotiations on the documentation took place between the solicitors for Colonial, Minter Ellison and solicitors for Toga, Freehills. On 16 November 1999, Toga and Permanent Trustee Australia Limited (the then trustee of the Colonial Commercial Property Trust) (Permanent) executed a deed which attached a proposed Sublease between the parties (Deed of Agreement).
16 Between execution of the Deed of Agreement and execution of the Sublease, Permanent was replaced as Trustee and as Sublessor by Perpetual. The Sublease was executed and dated 5 July 2002.
At [26 - 46], the Tribunal outlined a quantity of evidence relating to the negotiations leading to the execution of the Sublease. So far as is relevant to these appeal proceedings, this evidence was to the following effect.
Mr Allan Vidor, who was the Managing Director of Toga at that time, said that he was concerned about the possibility that the SRA Retail Space would have to be reconfigured after the expiration of the initial term of ten years. He therefore asked the estate agent, Mr Robert Harris, to propose to Colonial that in the event of renewal of the lease, the Option Lease should contain a rent-free year.
Mr Harris, who was called by Toga, testified as follows: (a) he received this request from Mr Vidor; (b) he passed it on to Mr Michael Ganci, who was a senior investment manager with Colonial until a date in 1999, in the course of negotiations about the Sublease; (c) Mr Ganci agreed to it; and (d) on 10 December 1998, Mt Harris sent a letter ('the Harris letter') to Mr Ganci (with copy to Mr Vidor) confirming the terms of the Sublease.
The Harris letter included the following passages of particular importance for these proceedings:-
I have pleasure in confirming that terms have been agreed with the Toga Group for a lease of the above retail tenancy as follows:...
The Agreement is subject to Toga receiving one year's gross rent free to be adjusted in the last month....
The Lease is subject to agreement that the services as attached, marked "A", will be provided. The cost of providing these extra services was quoted by Baulderstone at $57,000.00. It has been agreed between the parties that Colonial will allocate $40,000.00 to all these services and the balance of $17,000.00 will be provided by Australand (the developer) and deducted from the one year's gross rent free allowance, in the last month of that period.
Mr Vidor said that he understood this letter to indicate that Colonial had agreed to the terms that he had discussed with Mr Harris, including the provision of rent-free years at the commencement of both the Sublease and (if the option was exercised) the Option Lease. But in cross-examination, he acknowledged that Toga's contribution of $17,000 to the cost of the 'extra services' to be provided by Baulderstone was to 'come out of' the rent free allowance being granted for the first year of the Sublease.
In cross-examination, Mr Harris, while maintaining that it was Mr Vidor's 'prime concern' to obtain two rent-free periods of one year, conceded that the Harris letter was 'sloppy' and that the intended condition that there should be a rent-free period in the Option Lease as well as the Sublease itself was 'missing'.
Mr Ganci denied having agreed with Mr Harris, or with anyone else representing Toga, that there should be a rent-free period in the Option Lease. In a passage in his affidavit (quoted by the Tribunal at [39]), he said:-
(d) I would not have agreed to grant a rent free period for the first year of an option term commencing in ten years time as this would have been inconsistent with my then commercial practice and approach because:
(i) the inclusion of a term to that effect in the lease would have been a very unusual practice and imprudent;
(ii) I would not have agreed to such a deal because something like that would have been left by me to be negotiated at the time the option was exercised or immediately prior thereof;
(iii) I would have insisted on any term to that effect being expressly documented; and
(iv) it was my usual practice at the time for me to record any arrangements I made in my notebook, which I took with me to meetings, and in a responsive letter to the party with whom the arrangement was made and I did not do that in this case. This would be an even more important consideration if I had agreed to an unusual term such as the grant of a rent free period in the first year of the option term. I have no record in my notebook of having ever discussed or agreed to a rent free period in the first year of an option term.
Mr Nicholas Gray, who was the fund manager of Colonial between 1998 and 2000, also denied having agreed that there should be a rent-free period in the Option Lease. His affidavit included the following passage (quoted by the Tribunal at [41]:-
(15) (i) I understood, at the relevant time, that Toga was to receive one year's gross rent free in the first year of the initial term to be adjusted in the last month;
(ii) The cost of the provision of extra services by Baulderstone (the Builder), in connection with the development, was $57,000.00, of which, Colonial was to pay $40,000.00 and the balance of $17,000.00 was to be provided by Australand and was to be deducted from the gross rent free allowance. This had the result that in the first year of the initial term, Toga paid rent of $17,000.00 to Colonial, putting Colonial in funds to pay Baulderstone.
In my opinion, a rent free concession would not sensibly have been applicable in the first year of any Option Lease because an equivalent service provision by Baulderstone would not have been provided in the first year of any further term. The services payment to Baulderstone specifically related to the initial construction and building of the premises by them.
Mr Geoffrey Cohen, formerly a partner in Minter Ellison, was instructed by Colonial to act for it in the preparation of the Deed of Agreement and the Sublease. Mr Andrews, of Freehills, acted for Toga.
In his affidavit, Mr Cohen referred to a request by Mr Andrews that the market rent review, originally contemplated in the Harris Letter to be on the 5th and 10th anniversary of the commencement date, be moved to the 4th and 9th anniversary of the commencement date. This was to ensure that the rental payable in year 1 of the Option Lease would be known to Toga at the commencement of year 10, before it decided whether or not to exercise the option to renew. Mr Gray, from whom Mr Cohen sought instructions on this matter, indicated that Mr Andrews' request should be granted. The Sublease, as finally executed, made provision accordingly.
Mr Cohen's affidavit included the following observations (quoted by the Tribunal at [45]) on this specific aspect of the Sublease and on Toga's claim that there should be a rent-free period in the Option Lease. We might add that we find nothing surprising in Mr Cohen's comments regarding the unusual nature of such a claim:-
I understand this to mean that the rent payable by Toga in year 1 of any Option Lease would be the market rent determined at the end of year 9 (or at the commencement of year 10) plus a fixed percentage increase of 2.5% provided for in item 16(1) of the Sublease). Had a rent free period in the first year of any Option Lease been in the parties contemplation, the formula described above, would not have been workable or applicable...
Again in my opinion based upon my experience and knowledge of this particular transaction, I am surprised that Toga is now asserting an entitlement to a rent free period in the first year of the Option Lease for the following reasons:
(i) a rent free period in an Option Lease was a very unusual practice and rarely given;
(ii) a gross rent free period (rent and outgoings) was even more unusual and rare;...
Mr Andrews was not called as a witness.
The Sublease
The relevant provisions of the Sublease were as follows. Most of them, but not all, were set out in the Tribunal's decision at [18].
The cover page included the following items:
1.TERM: Ten (10) years
2. COMMENCING DATE: 13 November 2000
3. TERMINATING DATE: 12 November 2010
4. With an OPTION TO RENEW for a period of 10 years set out in Clause 16 of Annexure (sic)
A Reference Table, located after the Table of Contents, included the following items:-
Item 8: Term: 10 years
Item 9: Commencement date: 13 November 2000
Item 10: Termination Date: 12 November 2010
Item 11: Annual Rent:
Annual Rent: Year 1: $520.00 per square metre per annum
Item 12: Rent variation:
(1) Fixed Percentage Increase Rate: 2.5%
(2) Fixed Increase Dates: Each Anniversary of the Commencement Date
(3) Market Review Date:
(i) On the fourth anniversary of the Commencement Date.
(ii) On the ninth anniversary of the Commencement Date.
Item 14: Special Covenants: 1.The Lessee is not obliged to pay the Annual Rent or the Lessee's Contributions for the period up to the first anniversary of the Commencing Date.
Item 15: Option for a Further Term:
Term: 10 years
commencing on:
and terminating on:
Item 16: Rent Variation in Further Term:
(1) Fixed Percentage Increase Rate: 2.5%
(2) Fixed Increase Dates: Each anniversary of the Commencement Date.
(3) Market Review Date: On the 5th anniversary of the Commencement Date of the renewed Term.
Within Annexure A, the following provisions should be quoted:-
2.1 Commencement and termination
The Term commences on the Commencement Date and terminates on the Expiration Date.
13.7 Special Covenants
(a) Subject to clause 13.7(b), the special covenants (if any) specified in Item 14 of the Reference Table bind the parties ('Special Covenants').
(b) If there is an inconsistency between any of the Special Covenants and any other provision of the Lease, the Special Covenants will prevail.
16 OPTION FOR A FURTHER TERM
16.1 Lessee's Notice Requesting Renewed Lease
If the Lessee wishes to take a renewed lease for the further term specified in Item 15 of the Reference Table then the Lessee must give written notice to the Lessor not more than 6 months and not less than 3 months before the Termination Date.
16.2 Terms of Renewed Lease
The Annual Rent to be inserted in Item 11 of the Reference Table will be increased by the percentage specified in Item 16(1) of the Reference Table and the renewed lease:
(a) will exclude this clause 16 and Item 15 and 16 of the Reference Table;
(b) will contain rent variations as specified in Item 16 of the Reference Table.
16.3 Lessor to Grant Further Lease
The Lessor must subject to clause 16.4 grant to the Lessee a lease for the further term of years stated in Item 15 of the Reference Table if:
(a) the Lessee exercises its option of renewal for the further term within the time required under clause 16.1; and
(b) there is no existing breach of the Lease by the Lessee at the Termination Date.
16.4 Lessor's Entitlement to Refuse to Grant Further Term
The Lessor may refuse to grant a lease for the further term if the Lessee ... [the rest of the clause defined breaches by the Lessee of its obligations under the Sublease that would entitle the Lessor to refuse to grant a renewed lease]
21.1 Definitions
....
'Commencement Date' means the date specified in Item 9;...
'Term' means the period specified in Item 8 of the Reference Table commencing on the Commencement Date and expiring at midnight on the Termination Date subject to:
(a) earlier termination under Section 11, and
(b) any period of holding over under clauses 2.2;
'Termination Date' means the date specified in Item 10 of the Reference Table;...
Amongst these provisions, those of prime importance are Items 14 and 16 of the Reference Table and clause 16.2 of Annexure A. In the ensuing discussion, they will be referred to from time to time as the 'contentious' provisions' of the Sublease.
The orders sought by the parties
In its Application to the Tribunal, Toga sought the following orders (reproduced in the Tribunal's decision at [19]):-
(1) An order requiring Perpetual to grant to Toga, and to do all things necessary to bring into effect, a Sublease of the Premises (Option Lease) for a period of 10 years commencing 13 November 2010 on the terms of registered Sublease AA989655B, save that:
(i) the Annual Rent to be inserted in Item 11 be $246,750.00 (GST exclusive);
(ii) Clause 16 be deleted;
(iii) Item 15 of the Reference Table be deleted;
(iv) Item 16 of the Reference Table be deleted;
(v) the Commencement Date in Item 9 of the Reference Table be changed to 13 November 2010;
(vi) the Commencing Date in Item (H)2 on the cover page be changed to 13 November 2010;
(vii) the Termination Date in Item 10 of the Reference Table be changed to 12 November 2020;
(viii) the Terminating Date in Item (H)3 on the cover page be changed to 12 November 2020;
(ix) Item (H)3 on the cover page be deleted;
(x) Item 12 of the Reference Table be replaced with the following:
Item 12: Rent Variation
(1) Fixed Percentage Increase Rate: 2.5%
(2) Fixed Increase Dates: Each anniversary of the Commencement Date
(3) Market Review Date: On the fifth anniversary of the Commencement Date
(2) A declaration that, on the proper construction of the Option Lease, Toga is not obliged to pay the Annual Rent or the Lessee's Contributions (as those expressions are defined in the Option Lease) for the period from 13 November 2010 to 12 November 2011.
(3) Costs
In the Amended Cross Application, Order (2) sought by Colonial was the same as Order (1) in Toga's Application, except that the subparagraphs of this order were labelled differently and an additional subparagraph was included in the following terms:-
That Items 12 and 14 of the Reference Table be deleted;
Colonial also sought the following orders (quoted in the Tribunal's decision at [21]):-
(1) A declaration that Toga is to pay the Annual Rent and the Lessee's Contribution (as those expressions are defined in the Option Lease) for the period from 13 November 2010 to 12 November 2011.
(3) An order that the proportion of Annual Rent held in escrow in the Macquarie Bank Open Legal Investment Account number 104563 be paid to the Cross Applicants.
(4) Further and, in the alternative, an order that the terms of the Sublease be rectified to correctly reflect the common intention of the First Cross Applicant and Cross Respondent, upon execution of the Sublease, that Toga is obliged to pay the Annual Rent and the Lessee's Contributions (as those expressions are defined in the Option Lease) for the period from 13 November 2010 to 12 November 2011 by substituting for Clause 16.2 of the Sublease the following Clause:
16.2 Terms of Renewed Lease
The Annual Rent to be inserted in Item 11 of the Reference Table will be increased by the percentage specified in Item 16(1) of the Reference Table and the renewed lease:
(a) will exclude this clause 16 and Items 12, 14, 15 and 16 of the Reference Table;
(b) will contain rent variations as specified in Item 16 of the Reference Table.
(5) Further and, in the alternative, a declaration that if this Tribunal had the power to order rectification then it would order that based upon the facts determined, the terms of the Sublease be rectified to correctly reflect the common intention of the Cross Applicant and Cross Respondent, upon execution of the Sublease, that Toga is obliged to pay the Annual Rent and the Lessee's Contributions (as those expressions are defined in the Option Lease) for the period from 13 November 2010 to 12 November 2011 by substituting for Clause 16.2 of the Sublease the following Clause:
16.2 Terms of Renewed Lease
The Annual Rent to be inserted in Item 11 of the Reference Table will be increased by the percentage specified in Item 16(1) of the Reference Table and the renewed lease:
(a) will exclude this clause 16 and Items 12, 14, 15 and 16 of the Reference Table;
(b) will contain rent variations as specified in Item 16 of the Reference Table.
(6) Costs.
The addition of Order 5 was the subject of Colonial's application at the Tribunal hearing to amend its Cross Application as originally filed. This application was opposed, but it is to be inferred that the Tribunal granted leave to amend.
The Tribunal's decision
In summary, the principal propositions contained in the Tribunal's decision were as follows:-
1. On its proper construction, the Sublease provided that Item 14 of the Reference Table, exempting Toga from liability to pay rent and outgoings up to the first anniversary of the commencement date of the renewed term, was to be included in the Option Lease if the option was duly exercised.
2. According to the 'common intention' of the parties and the 'bargain' agreed between them, however, Item 14 was to be omitted from the Option Lease. This intention was clearly discernible from the evidence relating to the negotiations between the parties, notably the crucial passages within the Harris letter.
3. An order for rectification of the Sublease, bringing it in line with the bargain that the parties had made, was therefore appropriate in principle.
4. Under section 72(1)(e) of the RL Act, however, the Tribunal has no power to order rectification of a retail shop lease unless the parties consent. Since Toga did not consent, an order of this nature could not be made.
5. Toga's refusal of consent amounted, however, to a breach of a term that is implied into all leases, to the effect that each party is bound to uphold 'the fidelity of the bargain' between them 'for the benefit of the other party'.
6. The Tribunal has a 'mandate' under the RL Act to resolve disputes relating to retail shop leases. Section 72(1)(f)(iii) of this Act confers upon it an express power to declare the rights and liabilities of the parties to such leases. This power was exercisable in the present proceedings.
7. The appropriate order in the proceedings was therefore a declaration that Toga was required to pay rent and outgoings during the first year of the Option Lease. This would give effect to the 'common intention' of the parties and to the 'bargain' that they had made with regard to the question in dispute between them.
Order 2 of the orders made by the Tribunal in its decision, delivered on 30 April 2012, was in the following terms:-
2. The Applicant [Toga] is obliged to pay to the Respondent [Colonial] the Annual Rent and the Lessee's Contributions from 13 November 2010 to 12 November 2011 under the Option Lease that came into existence upon exercise of the option in the Sublease.
Further details of the Tribunal's reasoning are supplied in the ensuing discussion of its decision.
The appeal and cross appeal
These appeal proceedings were initiated in the following manner during 2012. On 25 May, Toga filed a Notice of Appeal. On 14 June, Colonial filed both a Notice of Reply to Appeal and a Cross Appeal. On 28 June, it filed an Amended Cross Appeal. On 26 July, Toga filed a Notice of Reply to Amended Cross Appeal. Within these two sets of documents, the parties joined issue as follows.
Toga sought to support the first and fourth of the seven propositions in the foregoing outline of the Tribunal's reasoning, but claimed that all of the remaining propositions - including in particular the last - were erroneous in law.
Colonial claimed that the first proposition of the Tribunal was erroneous. It sought to support all of the remaining propositions except the fourth, which it did not query.
At the conclusion of its written submissions in chief on the appeal, filed on 3 August 2012, Toga contended that the appeal should be allowed, that Order 2 made by the Tribunal, along with an order giving directions as to costs, should be set aside and that in lieu there should be 'declarations in the terms of paragraphs 1 and 2 of Toga's application'.
We observe in passing that Order (1) of the orders sought by Toga in its Application (see above at [32]) was not a declaration, but an order for specific performance by Colonial of its agreement to grant a renewed lease following exercise of the option. The same general description applies to Order (2) of the orders sought by Colonial in its Cross Application (see [33]).
The documents filed by Colonial before the hearing of the appeal - i.e., the Reply to Appeal, the Cross Appeal, the Amended Cross Appeal and submissions relating to each of these proceedings - did not state whether it sought to sustain Order 2 of the Tribunal (a declaration) or to have it replaced by an order for specific performance, such as Order (2) of the orders that it had claimed in the Cross Application. The Amended Cross Appeal included clauses, not contained in the Cross Appeal, seeking an order that an amount representing the rent and outgoings for the first year of the Option Lease, which had been deposited by Toga into an interest-bearing controlled money account, should be paid out to Colonial.
In determining these appeal proceedings, we have found it convenient at each stage of our reasoning to commence by setting out our conclusions. After doing so, we summarise and comment on the arguments advanced by the parties in their written and oral submissions and the approach adopted by the Tribunal. We have found this somewhat unusual methodology to be convenient in proceedings that comprise both an appeal and a cross appeal and for that reason present the issues to be resolved in a somewhat complicated manner.
The phrases 'Commencement Date', 'Commencing Date' and 'Commencement Date of the renewed Term' in the Sublease
Having considered the wide-ranging submissions put to us, we have concluded that the most important factor influencing the interpretation of what we are calling the 'contentious provisions' of the Lease is the manner of use of the second and third of the above phrases within them.
A prior question, however, is whether the first and second of these three phrases should be interpreted as synonymous with each other. The phrase 'Commencement Date' was both defined and employed in clause 21.1 of the Sublease. It was employed in clause 2.1 and in Items 9, 12(2), 12(3) and 16(2) of the Reference Table. The phrase 'Commencing Date' was employed in Item 2 on the cover page and Item 14 of the Reference Table.
We consider it significant that both the 'Commencement Date' (in Item 9 of the Reference Table) and the 'Commencing Date' (in Item 2 on the cover page) were stated to be 13 November 2000. We discern no indication that the two phrases might nevertheless have different meanings. Our conclusion is that the draftsperson used them interchangeably. This conclusion appears to accord with Toga's submissions on the Cross Appeal: see paras 15 and 18.
We turn now to the two phrases that we have identified as especially significant: 'Commencement Date' and 'Commencement Date of the renewed Term'. These were used in close proximity to each other in Item 16 of the Reference Table, under the heading 'Rent Variation in Further Term'.
The natural implication of their use in this way is that they were intended to have different meanings. To ignore the difference between them would contravene the well-established principle of interpretation that the court or tribunal should 'strive to give meaning to every word of the provision'. In Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 335; [1998] HCA 28 at 382 [71], the High Court referred to this principle in the context of statutory interpretation, but it is equally applicable to the construction of contracts.
If, as would appear incontestable, the 'Commencement Date' of the Sublease is determined by taking account of the definition in clause 21.1 of the Sublease and the provision (Item 9 of the Reference Table) to which this definition referred, the date arrived at is 13 November 2000. To treat this date as the 'Commencement Date' in paragraphs (2), (3)(i) and (3)(ii) of Item 12 of the Reference Table (which deals with rent variation during the term of the Sublease) clearly accords with the intent of these paragraphs.
To identify 13 November 2000 as the 'Commencement Date' where this phrase is used in paragraph (2) of Item appears to accord with the intent of this paragraph also. This paragraph is to be construed as saying that within the 'Further Term' of the Sublease - i.e., the ten-year period from 13 November 2010 to 12 November 2020 - the dates on which the rent is to increase by the fixed percentage rate of 2.5% are to be 'each anniversary' of the 'Commencement Date' of 13 November 2000.
To achieve this result, there is no need to treat 'Commencement Date' as having a different meaning in Item 16(2) to the meaning stipulated by clause 21.1 and Item 9 and operating within Items 12(2) and 12(3).
On the other hand, the phrase 'the Commencement Date of the renewed Term' in paragraph (3) of Item 16 clearly identifies a different date. It means the date (13 November 2010) on which the Option Lease was to commence.
When Item 14 is construed with this differentiation in mind, and on the basis also that 'Commencing Date' and 'Commencement Date' were intended to mean the same thing, the rent (and outgoings) free period for which this Item provides must be taken to begin on 13 November 2000 and to operate until the first anniversary of that date.
To determine otherwise would be to attribute a meaning to 'Commencing Date', as used in Item 14, that is quite different from: (a) the meaning expressly given to this same phrase in Item 2 on the cover page; (b) the meaning expressly given to 'Commencement Date' in clause 21.2 of the Sublease and Item 9 of the Reference Table; and (c) the meaning implicitly given to 'Commencement Date' in Items 12(2), 12(3) and (in our opinion) 16(2) of this Table. It would involve a clear departure from the principle of interpretation that where the same words or phrases (or indistinguishable variants thereof) appear more than once within a single context, they should be given the same meaning throughout, unless the contrary is clearly indicated expressly or by implication.
On this view of the matter, Item 14, by the time of renewal of the Sublease, had become a 'spent' provision (to use a label employed by counsel for Colonial at the appeal hearing). It relieved Toga of its liabilities to pay rent and outgoings during a single, specifically defined period of one year that came to an end well before the time of renewal.
In its decision at [53], the Tribunal summarised in the following terms a submission by Colonial placing emphasis on the distinction that we have just explained:-
Within Items 14 and 16 there is a difference in terminology between "Commencing Date" and "Commencement Date of the renewed Term". If the draftsman had wished Item 14 to apply to the renewed term the draftsman would have added at the end of Item 14 the words "of the renewed Term".
We observe in passing that, in order to achieve the desired aim, the additional words would actually have had to be 'or of the Commencing Date of the renewed Term' (or words to similar effect).
Also at [53], the Tribunal rejected this submission:-
Firstly, there is an internal inconsistency between Items 16(2) and 16(3) for the words "renewed Term" do not appear at the end of Item 16(2) after "Commencement Date" but do appear at the end of Item 16(3) after "Commencement Date". That internal inconsistency is of itself curious. Mr Ellicott draws from Item 16(3) only the additional words "of the renewed Term" and submits that by omission of these words from Item 14 after "Commencing Date", one should assume that this is purposeful and the draftsman meant Item 14 does not apply to the Option Lease (ie. the renewed Term).
I agree that there is an inconsistency in the approach of the draftsman between Items 14 and 16(3), leaving aside the inconsistency within Item 16 itself. However, clause 13.7 of the Sublease is quite specific in its terms. Clause 13.7(a) states that the Special Covenant binds the parties and clause 13.7(b) states that if there is any inconsistency between the Special Covenant and the terms of the Sublease then the Special Covenant will prevail. The inconsistency is the inclusion of the words "of the renewed Term" after "Commencement Date" in Item 16(3) but omission of those words after "Commencing Date" in Item 14. The omission might be suggestive that Item 14 should not be in the Option Lease. If that is an inconsistency in approach by the draftsman, then clauses 13.7(a) and (b) answers that inconsistency in that the Special Covenant and Item 14 are paramount and consequently bind the parties and prevails.
Further, I note that clause 13.7 is not specifically excluded from the Option Lease. The repeat of clause 13.7 in the Option Lease lends weight to the construction that Item 14 is also not specifically excluded from the Option Lease.
We make two comments on this passage. First, as will have become apparent, we treat as a significant indicator of meaning a feature of the wording of Items 16(2) and 16(3) that the Tribunal described as no more than an 'internal inconsistency' and as 'curious'. Secondly, our opinion regarding clause 13.7 is that the effect of the 'paramountcy' that it gives in subclause (b) to the 'Special Covenant' in Item 14 can only be discerned after Item 14 has itself been construed. Clause 13.7(b) does not actually bear on the construction of Item 14 (this being the question of prime importance that we are currently investigating). It operates only if this Item, properly construed, is found to be inconsistent with one or more other provisions of the Sublease.
On both of these issues, we respectfully differ from the opinions stated by the Tribunal. We regard these opinions as erroneous in law.
The operation of clause 16.2 of the Sublease
At this stage of the reasoning, it is important for us to emphasise that despite the occasional suggestion to the contrary in the Tribunal's decision (for example, in a reference at [57] to 'the front cover of the Option Lease'), no written agreement constituting the Option Lease has as yet been executed by the parties. The question to be determined, therefore, is not as to the meaning of any existing document called the Option Lease. It is whether the terms of any future document constituting this Lease should or should not exempt Toga from liability for rent and outgoings with respect to the first year.
If the line of argument set out in the preceding section is correct, the fact that clause 16.2 of the Sublease did not list Item 14 of the Reference Table among the provisions of the Sublease that were to be excluded from the Option Lease is not enough by itself, in our opinion, to make good Toga's claim that by virtue of this Item it is not liable for these amounts of rent and contributions during the first year of the Option Lease.
If this claim by Toga is to succeed, it is insufficient that, on a proper construction of the Sublease, the parties agreed that Item 14 was to be repeated in the Option Lease. It must also be the case that, within the new context of the Option Lease, the interpretation of the phrase 'Commencing Date' in Item 14 differs from the interpretation that we have held to apply to this phrase as used in Item 14 within its original context, i.e., the Reference Table of the Sublease.
We incline to the view that Toga should not succeed on the first of these matters. On the second, we believe that it must fail. We will now give our reasons for these two conclusions.
With reference to the first matter, the primary reason underlying our conclusion is that, in determining which provisions of the Sublease should be expressly identified in clause 16.2 as intended to be excluded from the Option Lease, the draftsperson would appear to have taken the view that 'spent' provisions did not need to be thus identified. In addition to Item 14 (as interpreted by us), the most significant provision that was both 'spent' and omitted from clause 16.2 was Item 12. Having regard to the presence of Item 16, which dealt explicitly with the matter of rent variation during the 'Further Term', the operation of Item 12 was clearly confined to a single specified period of nine years, ending one year before the time of renewal.
It may be argued also that Items 9 and 10, relating respectively to the Commencement Date and the Termination Date of the Sublease, were likewise 'spent' provisions that were omitted from clause 16.2. But their omission is less significant, for the purposes of the present discussion, than the omission of Item 12.
In para 12 of its Submissions on the Cross-Appeal, Toga argued that following its valid exercise of the option of renewal, the terms of the Option Lease were 'defined, entirely mechanically, by reference to the existing terms subject to express amendments set out in cl 16.2'. This, Toga claimed, was the situation in 'the vast majority of options in commercial leases'.
In so arguing, Toga relied on two authorities, Lewis v Stephenson (1898) 67 LJQB 296 and Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397.
In the first of these cases, decided in the Queen's Bench Division, Bruce J held that the phrase 'with an option of renewal' in a lease was of sufficient certainty to confer on the lessee the right to require the granting of a new lease 'for the same period and on the same terms' as the original lease, omitting only that there would be no option for a further renewal.
In the second case, the High Court discussed at some length the phrase 'grant or renew... a lease', in the context of deciding whether the enactment of a provision in the Trade Practices Act (Cth) was within the powers of the Commonwealth Parliament. At 441, Aickin J said:-
The ordinary meaning of the word "renew" in the context of leases is a further grant on the same terms save as to commencing date. This is clearly established in the case of an option to renew, save that the new lease will contain no further option; see Lewis v Stephenson... [His Honour then quoted passages from this case]
An option for a new lease on specified different terms would be valid; such options are sometimes called options to renew but that usage would not be valid.
Relying on these statements of principle, Toga submitted (at para 17) that (a) Item 14 was indeed intended to be reproduced in the Option Lease and (b) if the phrase 'Commencing Date' within it meant 13 November 2000 (as asserted by Colonial), the Option Lease would contain 'a Special Condition that no rent or outgoings are paid in the period a decade prior to its commencement' (emphasis in the original). The upshot would therefore be that this Special Condition would have 'no work to do at all', thereby contravening the principle in Project Blue Sky Inc v Australian Broadcasting Authority (to which we have already referred) that courts should 'strive to give meaning to every word' when interpreting a document.
A significant difficulty with this submission is however that the same argument can be applied to Item 12 of the Reference Table. It is clear that if Item 12 were to be regarded as carried over into the Sublease, it too would have 'no work to do'. This point made by Toga can in fact be invoked in support of the conclusion that we favour on this matter, namely, that the intention of the parties to exclude 'spent' provisions from the Option Lease was left by the draftsperson to be inferred because if these provisions were included they would have 'no work to do'.
According to this reasoning, the absence of Item 14 from the list of provisions expressly excluded by clause 16.2 from the Option Lease does not have the significance urged by Toga. The explanation for this absence is that the draftsperson did not consider it necessary to provide expressly for the exclusion of provisions, such as Items 12 and 14, that according to their own terms would be 'spent' by the time of renewal of the Sublease.
With regard to the second matter, our starting-point is the fact that although, according to clause 16.2(a), Item 16 of the Reference Table was one of the provisions to be excluded from the Option Lease, clause 16.2(b) stipulated that the 'rent variations' set out in this Item were to be included. The purpose of this methodology, whereby Item 16 was first excluded then reinstated in substance, is difficult to discern. But in any event, the reinstated provisions for rent variation (hereafter 'the rent variation clause') would necessarily incorporate the two phrases in Item 16 whose different meanings were discussed above at [49 - 62]. These are 'Commencement Date' in Item 16(2), meaning 13 November 2000, and 'Commencement Date of the renewed Term' in Item 16(3), meaning 13 November 2010.
If, contrary to the view that we have just expressed, the agreement of the parties was that Item 14 was to be repeated in the Option Lease, it would sit alongside a rent variation clause modelled on Item 16. In such event, it could not be correct that while the phrase 'Commencement Date' in the rent variation clause meant 13 November 2000, the phrase 'Commencing Date' in the repeated Item 14 meant 13 November 2010 (i.e. the same date as would be indicated by 'Commencement Date of the renewed Term' in the rent variation clause). This outcome would violate the principle, to which we have already referred, that where the same words or phrases (or indistinguishable variants thereof) appear more than once within a single context, they should be given the same meaning throughout unless the contrary is clearly indicated expressly or by implication.
Para 19 of Toga's Submissions on the Cross-Appeal was in the following terms:-
Colonial submits that the terms of item 16(3) "on the fifth anniversary of the Commencement Date of the renewed Term" is a "critical pointer" supportive of its construction, in that the words "of the renewed Term" are not found in Item 14. But nothing turns on that difference, once it is appreciated that unlike Item 14, the whole of Item 16 is omitted from the Option Lease. The extra words in Item 16(3) are necessary to give content to the operation of cl 16.2(b), and state when the rent variations in the Option Lease will occur. In contrast, Item 14 appears as is in the Option Lease, so that there is no need to (and it would be wrong for it to) include the words "of the renewed Term" because the Option Lease does not itself contain a further option.
The flaw in this contention, in our opinion, is that while paragraph (a) of clause 16(2) of the Sublease provided for 'the whole of Item 16' to be omitted from the Option Lease, the 'reinstatement' effected by paragraph (b) had the consequence that within the Option Lease the crucial distinction between 'Commencement (or Commencing) Date' and 'Commencement Date of the renewed Term' would be retained.
The overall outcome of this reasoning is that, contrary to the conclusion reached by the Tribunal, the Sublease, by virtue of significant indications discernible in the wording of the contentious provisions, did not provide that relief from rent and outgoings such was granted to Toga during the first year of the Sublease should also be granted to it during the first year of the Option Lease.
Relevant case law
In arriving at these conclusions, we have taken account of four authorities on the renewal of leases indicating that, despite the observations by Aickin J in Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397 at 441 as to the meaning of the term 'renew', a renewed lease should not always reproduce word for word all the covenants that were contained in the original lease. These authorities, which we will now describe, were all mentioned in the Tribunal's decision and/or in the parties' submissions.
In Mark Mayne Pty Ltd v Suburban Centres Pty Ltd [1976] 2 NSWLR 67, the clause providing for an option to renew stated that the renewed lease should contain 'the like covenants and provisos as are herein contained with the exception of the present covenant for renewal'. Under a clause in the original lease, the lessee was obliged to pay, in addition to rent, a specified proportion of the amount by which particular outgoings exceeded the amount of such outgoings 'at the commencement of the term of this lease'. At the time of the proceedings, no agreement constituting the renewed lease had apparently been executed. The lessee sought a declaration as to the construction of the renewal clause.
Holland J held that under the renewed lease, the lessee should be required to pay the relevant proportion of the increase in outgoings calculated from the commencement of the original lease, not the commencement of the option lease. In so ruling in favour of the lessor, he stated at p 69 that the 'basic approach' should be 'to endeavour to discover the true intention of the parties'. He observed at p 70 that simply to reproduce in the renewed lease the literal terms of the original lease would produce 'a substantial change in the status quo existing at the expiry of the original term detrimental to one party which would not occur if the covenant in the new lease was expressed in terms which gave it the same meaning and effect as it had in the old lease'. At p 71, he added that in his opinion 'the use of the word "like" permits rather more latitude than might have been permitted if the word "same" had been used'.
In Showa Shoji Australia Pty Ltd v Oceanic Life Ltd (1994) 34 NSWLR 548, a renewal clause stated that any renewed lease should be 'on the same terms and conditions as are herein contained'. At p 570, Giles J held obiter that these words should not be interpreted so as to produce the 'commercially nonsensical and inconvenient' outcome that the initial rent under a renewed lease should be the same as it had been under the original lease, without any intervening adjustments. They were, he said, 'apt to pick up what had occurred in accordance with those terms and conditions during the period of the lease'.
In Ashington Holdings Pty Ltd v Wipema Services Pty Ltd (No 2) (1998) 9 BPR 16,515, the renewal clause stipulated that 'the covenants conditions and restrictions for the said further term shall be same as in this lease...' Citing the two cases that we have just outlined, Young J said at 16,517 that under this clause a renewed lease should not contain 'a literal reproduction of the words of the old lease but rather that their substance should be exactly similar'.
The fourth of these authorities, Riltang P/L v L P/L [2004] NSWSC 977, calls for more extended discussion, for reasons that will become apparent. In this case, the renewal clause (clause 3.7) in a seven-year lease commencing on 13 October 1993 required the lessors, following due exercise of the option, to 'grant the lessee a lease of the premises for the further term of years aforesaid commencing on the date of expiration of the term hereby demised at the rent equal to the rent which would have been payable during such term if this lease had been granted for the aggregate of the term hereof and the term of the further lease granted pursuant to this option and otherwise upon and subject to like covenants terms conditions and restrictions as are contained in this lease except this Clause'. The lease also contained a covenant by the lessee (clause 4.2) in the following terms:-
RATES AND TAXES. To pay twenty five per centum (25%) of all increases in rates taxes and outgoings of the land and on the buildings erected on it (including the premium for the policy of insurance referred to in Clause 13.3) whatsoever now assessed or charged upon the land and or the buildings erected on it or the hotel or upon the lessor on account thereof or upon the lessee.
The lessee, having exercised the option, obtained an order from Davies AJ in the Supreme Court that it be specifically performed. The Court's order included a provision that the lessors should provide to the lessee a new lease, commencing on 13 October 2000, 'with like covenants, terms, conditions and restrictions as contained in the lease...' A new lease provided in compliance with this order accordingly included a clause 4.2 in precisely in the same terms as in the original lease.
In further Supreme Court proceedings before White J, the central question was whether under the new lease the plaintiff was required (as his Honour stated at [7]) to pay '25% of the increases in rates, taxes and outgoings from that payable at the commencement of the term of the new lease, i.e. the increases from 13 October 2000, or... 25% of the increases in the outgoings, rates and taxes from those payable in 1993'. At [9], White J summarised the parties' competing submissions on this question as follows:-
The [lessor] submitted that to give proper effect to Clause 3.7 the new lease should provide, or be construed as providing, that the lessee was required to pay 25% of all increases in rates, taxes and outgoings from those charged at the commencement of the original term, that is, from 1993. They submitted that the word "now" in clause 4.2 of the 2002 lease in which the lessee covenants "to pay 25% of all increases in rates, taxes and outgoings..... now assessed or charged......." was a reference to the commencement of the 1993 lease. [The lessee] submitted that "now assessed or charged" meant assessed or charged at the commencement of the lease, that is, in 2000.
At [13], having cited the three cases that we have just outlined, White J expressed the opinion that 'the expressions "like covenants" and "same terms and conditions" when contained in options for renewal of a lease... do not permit the literal reproduction into the new lease of the terms of a covenant in the old lease if the effect is to change the position of the parties substantively'.
At [14 - 17], he gave consideration to an argument by the lessee that the decision, on broadly similar facts, in Mark Mayne Pty Ltd v Suburban Centres Pty Ltd was distinguishable because unlike the phrase considered in that case ('at the commencement of the term of this lease'), the word 'now' in clause 4.2 of the lease before him connoted 'currency and variability'. At [18 - 19], he rejected this argument, saying (at [18]):-
In my view, clause 3.7 of the original lease contemplated the continuation of the relationship between the lessor and the lessee in substantially the same terms as obtained at the expiry of the original term. The express provision in clause 3.7 in relation to the rent payable on the renewed term is confirmation of that intention. I see no substantial difference between the use of the word "now" in clause 4.2 of the original lease, and the expression "at the commencement of the term of this lease" in Mark Mayne Pty Ltd v Suburban Centres Pty Ltd. At least when construed in the original lease, the word "now" can only mean either at the commencement of the term of the lease or at the time of its execution. It does not by itself connote variability. The word "now" would only have the ambulatory operation which [the lessee] seeks to give it if the option for renewal requires it to be replicated in the new lease. But that is the very question to be decided.
At [21], his Honour spelt out in the following terms the implication of this ruling:-
21 It follows that unless clause 4.2 of the new lease is to be construed as if the word "now" refers to the commencement of the original lease, the parties did not properly comply with the order of Davies AJ made on 17 July 2002 that the defendant, L Pty Ltd, do all that was necessary to be done on its part to provide to the plaintiff's solicitors a lease executed by the lessors which was with "like covenants, terms, conditions and restrictions" as contained in the original lease...
In the next substantial section of his judgment ([24 - 42]), his Honour gave detailed consideration to the question whether clause 4.2 of the new lease could be interpreted as outlined in the paragraph (paragraph [21]) that we have just quoted. He concluded that it could not, because it had 'a plain meaning', being the meaning for which the lessee contended. Accordingly, as the High Court made clear in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, evidence of surrounding circumstances or 'background' could not be admitted to contradict its 'language'. At [43], his Honour observed:-
For these reasons I consider [the lessee's] submission as to the construction of clause 4.2 is correct. I regard this as an entirely reasonable outcome. If the lease had been assigned, could it seriously be contended that the new lessee should assess its liability to contribute to outgoings, not by reference to the lease, but by reference to the option of renewal in the former lease to which it had no need to give any attention?
The next conclusion reached by White J was however that because clause 4.2 had this meaning, its inclusion in the new lease constituted (to use his formulation at [44]) a 'mistaken implementation of Davies AJ's orders'. Following discussion at [45 - 51], he held at [52] that the Court had jurisdiction to make an order designed to 'secure the proper performance of its own orders'. At [57], he made the following observations as to the means of doing so:-
The [lessors] did not put their case as one for rectification for common or unilateral mistake and no evidence was led as to the actual intentions of the parties. However, in my view, no party could be heard to say that it did not intend to act in accordance with the orders of Davies AJ.... Regarded in that light the case could be regarded as a simple one of rectification where the parties by mistake failed to give effect to their common intention to execute a document which conformed with the Court's orders. The result would be the same.
The orders made by White J (at [59]) accordingly included an order in the following terms:-
(3) Order that the [lessors] and the [lessee] execute a variation of lease in registrable form varying the provisions of clause 4.2 of the lease between the cross-claimants and the cross-defendant of the premises... by inserting the words "from 13 October 1993" after the word "increases", by deleting the word "now", and by providing that clause 4.2 as so amended shall be taken to be operative from the commencement of the lease.
These four cases are important in the present proceedings in so far as they illustrate that even when an option to renew stipulates that the renewed lease should contain 'the like' covenants as are contained in the original lease, literal reproduction of those covenants is not appropriate if this (to quote Mark Mayne at p 70) would bring about 'a substantial change in the status quo existing at the expiry of the original term' that was 'detrimental to one party'.
In the renewal clause in the present case - i.e., clause 16 of the Sublease - there was in fact no stipulation of this nature. But by virtue particularly of Aickin J's observations about the term 'renewal' in Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397 at 441, it does not therefore follow that substantial deviations would be permissible in the Option Lease. At most, it can be said the parties should be taken to have agreed that reproduction of the 'substance' of the Sublease should be achieved in the Option Lease even if this involves some significant changes to the wording of the covenants in the Sublease.
For these reasons, the authorities that we have just discussed provide general support to our conclusion that the language of the Sublease, on its proper construction, did not provide that relief from rent and outgoings such as was granted to Toga during the first year of the Sublease should also be granted to it during the first year of the Option Lease.
We would emphasise, however, that the support that these authorities provide is at a general level only. We agree with the following observation of Holland J in Mark Mayne at p 69:-
... I think it is always true to say that decisions in other cases on such questions of construction, based as they nearly always are on different contexts, different collections of words, different circumstances - however minor the differences may happen to be from cases to case - are seldom of decisive assistance in the instant case.
A further reason for taking this view is that in none of these four authorities did a terminological distinction such as we have discerned in the present case play a major role. In Mark Mayne, for instance, the crucial phrase in the original lease - namely 'at the commencement of the term of this lease' - closely resembled one of the key phrases in this case - i.e., 'Commencing Date' in Item 14 of the Reference Table of the Sublease. But in Mark Mayne there was no similar, yet vitally different, phrase that could give a pointer to the meaning of what we have called the 'crucial' phrase. In the present case, as we have held, the phrase 'Commencement Date of the renewed Term' in Item 16 of the Reference Table played this all-important role.
Pursuant to directions given by the Tribunal, the parties have filed submissions relating to the costs of the proceedings at first instance. At a directions hearing concerning the appeal proceedings, the Appeal Panel indicated that it would determine this question after it had delivered its substantive decision. In their appeal submissions, the parties have stated that they wish to be heard on the costs of the appeal proceedings.
We accordingly direct as follows. Any application by the Respondents / Cross Appellants for the costs of the appeal and cross appeal must be filed and served within 28 days, along with supporting submissions and any additional submissions they may wish to make as to the costs of the Tribunal hearing. Any submissions in reply by the Appellant / Cross Respondent must be filed and served within a further 28 days. These matters of costs will then be determined 'on the papers', pursuant to section 76 of the Administrative Decisions Tribunal Act 1997, unless the Appeal Panel decides that a hearing is required.
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Decision last updated: 15 January 2013
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