Twenty Four Outdoor Australia Pty Ltd v J and H West Nominees Pty Ltd
[2020] VCC 1676
•10 November 2020
(
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
| GENERAL LIST |
Case No. CI-19-04011
| TWENTY FOUR OUTDOOR AUSTRALIA PTY LTD (ACN 140 586 554) | Plaintiff/Defendant by Counterclaim |
| v | |
| J & H WEST NOMINEES PTY LTD (ACN 005 138 705) | Defendant/Plaintiff by Counterclaim |
---
JUDGE: | HER HONOUR JUDGE A RYAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 27 and 28 May 2020 and written submissions dated 4, 12 and 19 June 2020 | |
DATE OF JUDGMENT: | 10 November 2020 | |
CASE MAY BE CITED AS: | Twenty Four Outdoor Australia Pty Ltd v J & H West Nominees Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2020] VCC 1676 | |
REASONS FOR JUDGMENT
---
Subject: LANDLORD AND TENANT
Catchwords: Agreement signed by the parties for the right to display advertising signs on a commercial building – whether binding agreement for lease or licence – lease proffered but not signed by the defendant – whether plaintiff entitled to an order for specific performance
Legislation Cited: Transfer of Land Act 1958 (Vic), s66 and s42(2)(e)
Cases Cited:Masters v Cameron (1954) 91 CLR 353; The Edge Development Group Pty Ltd v Jack Road Investments Pty Ltd [2019] VSCA 91; G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631; Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] 256 CLR 104; Siemens Gamesa Renewable Energy Pty Limited v Bulgana Wind Farm Pty Ltd [2020] VSC 126; Brunswick Developments Pty Ltd v Shock Records Pty Ltd, Falvo, McGee & Williams [1996] FCA 1024; (1996) V ConvR 54-604; FAI Traders Insurance Company Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343; Harvey v Pratt [1965] 2 All ER 786; Claude Neon Ltd v Melbourne & Metropolitan Board of Works (1969) 118 CLR 678; (1969) 43 ALJR 69; York Air Conditioning and Refrigeration (A/sia) Pty Ltd v The Commonwealth (1949) 80 CLR 11; Radaich v Smith (1959) 101 CLR 209
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R Hay QC and Mr L E Hawas | Tisher Liner FC Law |
| For the Defendant | Mr S Wotherspoon | Aitken Partners |
INDEX
Introduction and summary............................................................................................................. 1
Procedural history......................................................................................................................... 2
Objections to evidence........................................................................................................... 3
Background........................................................................................................................................ 6
Issues for determination............................................................................................................... 16
(a) Is the agreement an immediately binding agreement?.............................................. 16
Analysis........................................................................................................................... 24
(b) Is the agreement an enforceable agreement for lease?............................................ 26
Area of demise............................................................................................................... 27
Commencement date.................................................................................................... 30
(c) Alternatively, is the agreement a licence?.................................................................... 31
Conclusion....................................................................................................................................... 32
HER HONOUR:
Introduction and summary
1 The principal issue for determination in this proceeding is whether a document dated 10 August 2016 and signed by both parties (“the agreement”) is an enforceable agreement for lease. The resolution of this issue turns upon the construction of the wording used in the agreement.
2 The plaintiff contends the agreement is a presently binding agreement for lease. If the Court makes a finding to that effect, the plaintiff seeks specific performance of the agreement and an order compelling the defendant to grant a lease to the plaintiff.
3 The plaintiff submits that a lease provided by the defendant to the plaintiff on 16 August 2018, which the plaintiff signed and returned on 5 September 2018, contained all the terms of the agreement for lease. The defendant has not pleaded nor established any grounds upon which the Court should not order the defendant to perform the agreement for lease by signing that lease and returning it to the plaintiff. In the alternative, the Court should order the defendant to sign the Deed of Lease sent under cover of the plaintiff’s open offer to settle the proceeding dated 12 May 2020.
4 The defendant denies the agreement is a binding agreement for lease. The defendant relies upon various construction arguments in support of its defence that the agreement is not an immediately binding agreement for lease. The defendant contends the agreement is a mere licence. The reasons for that contention are two-fold. The first is that the agreement did not grant exclusive possession, as the demised area lacks geographic specificity, and, secondly, the commencement date is uncertain.
5 For the following reasons, I find the agreement is a binding agreement for lease and the plaintiff is entitled to an order for specific performance.
Procedural history
6 The plaintiff’s claim is set out in its second further amended statement of claim dated 12 May 2020. The trial proceeded on the plaintiff’s entitlement to the relief sought in paragraphs A to C and G of its prayer for relief, pursuant to an order made by Judicial Registrar Tran (as Her Honour then was) on 12 May 2020. The effect of the order was that the hearing was restricted to liability only. Any claim for damages, in lieu of or in addition to specific performance, is to be listed for trial on a date to be fixed after judgment is delivered on liability.
7 The relief sought at the liability trial was specific performance of the agreement and an order that the defendant sign a lease which the defendant forwarded to the plaintiff on 16 August 2018. Alternatively, an order that the defendant sign a lease in the terms of the agreement or in such other terms as the Court shall determine and provide a copy of the signed lease to the plaintiff.
8 The defendant relied upon its defence and counterclaim dated 14 May 2020. The counterclaim sought a declaration that the agreement is a licence. In response, the plaintiff filed a second reply and defence to counterclaim dated 19 May 2020.
9 The matter proceeded by way of a virtual hearing on 27 and 28 May 2020. Each of the parties filed extensive written opening submissions. It was agreed the parties would file written submissions after the evidence was concluded. The defendant filed closing submissions on 4 June 2020. The plaintiff’s closing submissions were filed on 12 June 2020. I gave leave to the defendant to provide a further submission in reply which is dated 16 June 2020. The plaintiff then filed a further submission in response by email dated 19 June 2020, which I allowed. Each party provided voluminous numbers of authorities and textbook extracts. The Court was assisted by the comprehensive submissions provided by both parties.
10 The evidence at trial was given by affidavit in accordance with the orders made on 12 May 2020. The plaintiff relied upon an affidavit sworn by Mr Ross Eden-Smith, the sole director of the plaintiff, dated 22 May 2020 which superseded an earlier version dated 19 May 2020. The later version was identical, save that it incorporated page references to documents in the Court Book.
11 The defendant relied upon the following:
(1)an affidavit of Mr George Harris, property agent, dated 6 April 2020;
(2)an affidavit of Mr Ian Redvers Maclaine Morrison, solicitor, dated 20 May 2020; and
(3)an expert witness report from Mr Paul Nunan, solicitor, dated 7 February 2020.
12 The only witnesses who were cross examined were Mr Eden-Smith and Mr Harris.
Objections to evidence
13 The plaintiff objected to the receipt of Mr Nunan’s expert report into evidence on the basis that it was irrelevant to the issues in dispute. It was agreed the objections raised about his report could be dealt with in my reasons for judgment.
14 Mr Nunan is a solicitor and an accredited specialist in the field of commercial tenancy law. The defendant’s solicitors sought his expert opinion on three questions:
(a) The first question was whether, following execution of the agreement, could an application for registration in the approved form have been maintained in the Land Titles Office;
(b) The second question asked what other terms a reasonably prudent landlord in the position of the defendant would seek to include in a lease by reference to several matters which are then listed;
(c) The third question is what further and additional terms the defendant should seek (as opposed to a hypothetical landlord) regarding the term dealing with costs set out on page 2 of the agreement.
15 Mr Nunan’s report was objected to on the basis that the fact that a solicitor may require more terms in a lease than appeared in the agreement had no bearing on the dispute.
16 Paragraph 18 of the defendant’s closing submissions referred to Mr Nunan’s report and his evidence regarding the formalities for a lease to be registered at the Titles Office under s66 of the Transfer of Land Act 1958 (“the TLA”). Being out of possession, it was said that s43(2)(e) of the TLA did not assist the plaintiff. Mr Nunan’s opinion was that an application for registration of the agreement would not be maintainable because of the absence of a defined commencement date. The defendant said Mr Nunan’s evidence had not been challenged or controverted.
17 Mr Nunan’s report was referred to in paragraph 19 of the plaintiff’s closing submissions. The plaintiff pointed out that there was no obligation to register leases in Victoria under s66 of the TLA and the usual practice in Victoria is not to register leases.[1] Whether a lease is registrable does not inform its enforceability. The option to register a lease has no bearing upon whether an enforceable agreement for lease has been made. Similarly, s42(2)(e) of the TLA did not inform whether a binding agreement for lease came into effect. Consequently, it was said that Mr Nunan’s report was irrelevant to the issues in dispute and the Court should have no regard to it.
[1]Croft, Hay and Virgona, Commercial Tenancy Law; 4th ed, LexisNexis, 2018, [1.6], p31; Duncan and Christensen, Commercial Tenancy Law in Australia, 8th ed, Lawbook Co 2017, [10.4500] p45
18 In my view, the report of Mr Nunan is not relevant to the issues the Court must decide, in particular, whether the agreement as a matter of construction is an enforceable agreement for lease. Self-evidently, the agreement is not a lease and could not have been registered as such. As the plaintiff points out, registration of leases in Victoria is optional. Section 66 of the TLA has no application to the issue of enforceability of an agreement for lease. The hypothetical questions posed about what terms might be included in a subsequent lease by a reasonably prudent landlord or by the defendant regarding the costs clause again provide no assistance to the resolution of the issues before the Court. The plaintiff’s objection to the receipt of Mr Nunan’s report into evidence is upheld. I rule that the report is inadmissible on the grounds of irrelevancy.
19 The plaintiff also raised objections to certain parts of the affidavit of Mr Harris. Objections were raised to paragraphs 2 to 25, 34, 52 to 56 and 58 to 70. It was put that much of the affidavit was inadmissible because in the absence of ambiguity, background facts cannot be admitted when construing an agreement. The agreement is a formal written document which makes it clear that it is binding on the parties. This is not a case where the Court has the task of determining whether an oral agreement has been concluded. Actions of the parties after the signing of an agreement cannot be used to ascertain the meaning of terms in the agreement. It was also said that any reference to events before the signing of the agreement were not relevant. None of the events referred to were relevant as to whether the agreement was a binding agreement for lease. It was accepted that some of the events after the signing of the agreement were relevant as to how the plaintiff came to execute the lease prepared by the defendant’s former lawyers, Burke & Associates.
20 There were objections to paragraphs 11, 21 to 23 and 32 on the grounds of hearsay. These related to capacity issues affecting Mr West, the former director of the defendant, and where Mr Harris expressed his opinion about Mr West’s attitude to proposals made by Mr Eden-Smith. Again, it was agreed these objections could be dealt with in the reasons for judgment.
21 Paragraphs 2 to 25 deal with the historical dealings between the parties commencing in 2011. Whilst the earlier dealings are quite removed from the agreement reached in 2016, I will allow those paragraphs as forming part of the background narrative or surrounding circumstances leading up to the execution of the agreement. Similarly, the paragraphs dealing with the negotiations regarding the preparation of the lease in 2018 and the subsequent dealings with the lawyers also form part of the factual background. Much of that material is also referred to by Mr Eden-Smith in his affidavit. Whilst the fundamental issue is the construction of the agreement, the dispute cannot be dealt with solely in a vacuum. There was heated debate between the parties about the extent to which the surrounding circumstances can be examined when determining the construction of the agreement. The relevant legal principles on this topic are referred to later in these reasons. Again, I take the view that the evidence is admissible because it goes to the context of the background dealings between the parties. The plaintiff’s objections to Mr Harris’ affidavit are overruled.
Background
22 The defendant is the registered proprietor of premises located at 6-10 Chapel Street, Windsor, Victoria[2] (“the property”). There is a three-storey building on the property which is rated for commercial purposes. The tenants include a medical group, a dentist and a telecommunications company.
[2]more particularly described in Certificates of Title Volume 9119 Folio 566 and Volume 10342 Folio 126
23 The plaintiff conducts a business of leasing billboard advertising space to outdoor media companies. The business involves locating appropriate spaces to accommodate the billboards; negotiating lease agreements with owners of the proposed sites, together with arranging all necessary permits and other documentation. The plaintiff also project manages the construction and delivery of billboards and entering into agreements with media companies for advertising to be displayed on the billboards.
24 Mr Eden-Smith, the plaintiff’s director, initially approached Mr Joseph West, the then director of the defendant, in early 2011 regarding a proposal to fix two advertising signs on the roof of the property. Mr George Harris of Ryder Commercial Pty Ltd is a real estate agent and property manager acting on behalf of Mr West. He managed the property, being one of many in Mr West’s extensive property portfolio. Mr Harris deposes that Mr West wanted to pursue the plaintiff’s proposal because it would generate somewhere between $40,000 to $60,000 in annual income, depending on the size and number of signs to be installed, on what would otherwise be unproductive roof space. Mr Harris had some dealings thereafter with Mr Eden-Smith regarding the number of potential signs and the estimated timeline for the project.
25 Mr Eden‑Smith met Mr West at a café in about November 2011. Mr Harris was also present. It was discussed during the meeting where the signs could be located on the property and Mr West’s need to get approval from the other tenants who occupied the property before going ahead. Mr Eden‑Smith had no further direct dealings with Mr West after this meeting but continued to deal with Mr Harris. After this initial contact, there was a lengthy hiatus in the negotiations for the reasons explained in paragraphs 10 to 23 of Mr Harris’ affidavit. The negotiations did not resume in earnest until March 2016.
26 Mr Eden-Smith wrote to Mr Harris on 21 March 2016 regarding a proposal for the display of a single sign on the east-facing wall of the property for a ten-year term with two further five-year options. Mr Eden-Smith said he would prepare a heads of agreement pursuant to confirmation from Mr Harris.
27 On 23 June 2016, Mr Eden-Smith emailed a document to Mr Harris for review, which he described as “heads of agreement” in the covering email. This document is in similar terms to the agreement which was ultimately signed by the parties. After this, there was some further negotiation about the length of the option terms available.
28 On 7 August 2016, Mr Eden‑Smith received an email from Mr Harris in which Mr Harris said, “Mr West will agree to proceed with the 10 year lease term along with an option period of 8 years. Would you like to amend and resubmit the offer document?”
29 On 10 August 2016, Mr Eden‑Smith sent an email to Mr Harris attaching the amended agreement providing for a term of ten years with a further option term of eight years. Mr Eden-Smith drew to Mr Harris’ attention an alteration he had made, being the insertion of a new clause 1(g) on page 2. Mr Eden-Smith sent a further version later that day correcting a typographical error.
30 On 7 September 2016, Mr Eden‑Smith received an email from Mr Harris attaching the agreement dated 10 August 2016 signed by Mr West on behalf of the defendant. Mr Eden‑Smith signed the agreement on behalf of the plaintiff on 27 September 2016. He emailed the signed version[3] to Mr Harris the following day.
[3]CB 194-196
31 The defendant admits executing the agreement on or about 7 September 2016 in its defence but pleads that Mr West did not know and appreciate the date under his name was incorrectly recorded as 3 August 2016. In the particulars to paragraph 3(a) of the defence, it is stated that Mr West was then 97 years old and suffering from various disorders and disabilities. Mr Harris deposes that he was responsible for putting the wrong date on the agreement. It was no part of the defendant’s case at trial that Mr West lacked capacity to sign the agreement as director of the defendant and no challenge was made to the validity of the agreement on that basis.
32 The written terms of the agreement included the following:
(a)the defendant is defined as the lessor and the plaintiff as lessee;
(b)the lessor hereby agrees to lease the premises to the plaintiff on the following terms and conditions for the purpose of the Sign (Agreement to Lease);
(c)the premises are defined as:
“That part of the roof, east facing wall and airspace on the Property being used for the Sign, the support/attachment of the Sign and its supporting structure or electrical /data connections.”
(d)Property is defined as 6-10 Chapel Street, Windsor and the title details are listed;
(e)Sign is defined as:
“One exclusive illuminated promotional advertising sign and supporting structure measuring approximately 19m wide x 4.6m high or smaller at 24 Outdoor’s discretion as approximately shown in the attached photo montage … .”
(f)the term is ten years;
(g)the option term is eight years;
(h)the commencement date is defined as:
“The date the installation and display of commercial advertising on the Sign is completed.”
(i)the plaintiff would pay the defendant rent of $42,800 (excluding GST) per annum;
(j)the rent would be adjusted annually with reference to movement in the Consumer Price Index;
(k)the plaintiff would be responsible for the supply and cost of electricity to the sign in the demised area;
(l)the plaintiff would install a separate electricity sub-meter for the demised area;
(m)the plaintiff would be responsible for all town-planning requirements and associated costs during the term of the lease;
(n)each party was to pay their own costs in relation to the preparation of the lease. The plaintiff was required to pay the stamp duty on the lease if required.
(o)sub-paragraph (f) on page 2 provided:
“24 Outdoor shall be at liberty to assign this agreement and subsequent lease. This agreement and subsequent lease shall be binding on their respective heirs and assigns.”
(p)the agreement for lease was stated to be legally binding as follows:
“This agreement shall be legally binding and governed by the law in force in Victoria, Australia. … .”
(q) the agreement concludes with the statement:
“Both parties hereby acknowledge and agree to the terms and conditions contained in this agreement.”
33 On 28 September 2016, Mr Eden‑Smith received an email from Mr Harris in which he acknowledged receipt of the fully executed agreement that Mr Eden‑Smith had emailed earlier that day.
34 After receiving the signed agreement, Mr Eden‑Smith set about taking steps to enable the defendant to obtain confirmation from Optus that the sign the plaintiff proposed constructing would not interfere with the operation of Optus’ mobile phone antennae on the roof of the property. He also took steps to obtain planning approval for the construction and installation of the sign. Throughout this time, he communicated with Mr Harris and provided updates in relation to the progress of these matters.
35 On 10 October 2016, Mr Anthony Burke, a solicitor from Burke & Associates, was appointed as the administrator of Mr West’s affairs pursuant to an order of VCAT. Mr West ceased holding office as a director of the defendant on 19 October 2016 and was replaced by Mr Burke.
36 On 6 November 2017, Mr Eden‑Smith spoke with Mr Harris and said he would be providing the defendant with the plaintiff’s draft lease as provided for in the agreement. Mr Harris informed Mr Eden‑Smith that the defendant already had a lease for outdoor advertising signs it had previously prepared. Mr Harris said that the plaintiff should proceed with that lease which would be modified to reflect the terms of the agreement for lease rather than using the plaintiff’s form of lease. Mr Eden‑Smith agreed to this and asked Mr Harris to send him the lease so that he could review and return it. Mr Eden-Smith sent an email that day referring to their earlier discussion and asked Mr Harris to send him over the lawyers’ standard lease as discussed.
37 Optus has a lease for telecommunications masts on the roof of the property. Sub-paragraph (b) on page two of the agreement provided that the plaintiff’s sign would not interfere with the operation of the mobile antennas on the roof of the property. At the plaintiff’s request, Mr Harris sought approval from Optus in respect of the plaintiff’s sign, which was forthcoming. On 31 January 2018, an Optus representative advised the plaintiff that the plaintiff’s signage proposal would not adversely impact the electromagnetic fields generated by the Optus masts. Mr Eden-Smith forwarded the written confirmation received from Optus to Mr Harris on 7 February 2018. The plaintiff subsequently informed Optus of an amendment to the plans of the sign. Optus confirmed by email dated 14 May 2018 that given these were only minor modifications, the proposed sign remained clear of RF/EME hazards.
38 There was some delay in the defendant providing a lease agreement to the plaintiff. Mr Harris sent an email to Mr Eden‑Smith on 8 February 2018 stating that he had already requested Burke & Associates to draft the lease document. On 13 February 2018, Mr Eden‑Smith received an email from Mr Harris attaching a draft lease provided by the defendant’s solicitor.
39 On 30 May 2018, Mr Eden‑Smith received an email from Mr Harris asking if there was any progress in relation to the matter as the defendant’s lawyers were chasing him for an update. Later that day, Mr Eden‑Smith sent an email to Mr Harris informing him that the planning application had been prepared and was being lodged with Stonnington City Council the following week. He also stated:
“We have also reviewed the long form lease and will come back to you on that next week too.
All looking good.”
40 On 7 June 2018, Mr Eden‑Smith sent Mr Harris an email attaching the draft lease with his suggested changes marked up. On 8 July 2018, Mr Harris emailed Mr Eden‑Smith attaching the most recent and updated draft lease received from Burke & Associates for his consideration. After reviewing the proposed changes, Mr Eden‑Smith accepted almost all of them and made some further minor changes. On 27 July 2018, Mr Eden‑Smith sent an email to Mr Harris attaching a revised version of the lease and setting out his further minor changes in the covering email. Mr Harris subsequently informed Mr Eden‑Smith that the defendant had agreed to his suggested changes.
41 On 17 August 2018, Mr Eden‑Smith collected a hard copy of the lease from the offices of Ryder Commercial Pty Ltd. This had been left for him by Mr Harris at reception, as well as a covering letter. Mr Harris’s covering letter dated 16 August 2018 provided:
“We refer to the above matter and attach lease documents in duplicate for your attention.
We ask that you sign and return both documents to our office at your convenience.
If you have any queries, please do not hesitate to contact me.”
42 Mr Ian Morrison, solicitor, replaced Mr Burke as administrator of Mr West’s affairs by order of VCAT made on 8 August 2018 with effect from 21 August 2018. Mr Morrison was also appointed a director of the defendant.
43 On or around 14 August 2018, a notice advising of the plaintiff’s application for planning permission was displayed on the ground floor of the property.
44 The managing director of the medical group at the property wrote an email to Mr Harris on 22 August 2018 expressing concerns about the nature of any advertising on the proposed signage. She requested details of the signage company’s details so that the tenants could discuss directly what the proposed advertising would represent. The managing director concluded her letter by saying:
“We appreciate that this signage will provide additional income to the Landlord of 6 – 10 Chapel Street, Windsor, however we are appalled that no consideration has been given to the long standing medical professionals who work in the building.”
45 Mr Harris sent an email to Mr Eden-Smith on 23 August 2018 informing him that the signs had caused a storm and there was a revolt happening. He said the tenants had asked for the plaintiff’s details, but he had refused to provide this as he did not see the point in Mr Eden-Smith debating the issue with them unless he felt otherwise. Mr Eden-Smith replied to Mr Harris on 23 August 2018 agreeing there was no need to pass on his details. He noted the tenants could go through the official channel by lodging objections with the council but hopefully, it was a storm in a teacup.
46 Mr Eden‑Smith signed both copies of the lease on behalf of the plaintiff on 27 August 2018 and returned them to Mr Harris by express post. On 5 September 2018, Mr Eden‑Smith sent an email to Mr Harris attaching a soft copy of the signed lease and confirming that he had returned both originals to him by express post.
47 On 3 September 2018, the manager of the medical group at the property wrote a letter to Mr Harris complaining about Mr Eden-Smith’s alleged behaviour during a meeting at the property on 29 August 2018.
48 Mr Harris sent the manager’s letter on to Mr Eden-Smith and asked him for his explanation of events in an email dated 5 September 2018. He informed him that Mr Burke had been replaced as administrator and he would advise him of the new administrator shortly. The last sentence of his email read:
“… Both Mr West and his daughter who are effectively in control are extremely upset and are even threatening not to allow the new administrator to sign the lease.”
49 Mr Eden-Smith replied to Mr Harris by letter dated 8 September 2018 giving his version of events. He wrote that he had left the meeting feeling it had been a good and productive discussion with the manager. It is unnecessary for me to make any findings of fact about what transpired at this meeting but simply note that there was clearly some misunderstanding.
50 Mr Eden‑Smith subsequently followed Mr Harris up regarding the lease and left several messages for him and sent various emails. On 18 November 2018, Mr Eden‑Smith received an email from Mr Harris in which he stated that he had been asked to provide him with Mr Ian Morrison’s details, who was now Mr West’s new administrator and who would provide him with further information.
51 Mr Eden‑Smith forwarded emails to Mr Morrison enquiring about the timeframe when he could expect to receive the signed lease. He did not receive a response from Mr Morrison. But on 11 December 2018, Mr Eden‑Smith received a letter from Aitken Partners, solicitors for the defendant, alleging for the first time that the agreement was not binding. The reason articulated in the solicitors’ letter was that Mr West lacked capacity at the time he signed the agreement as a director on behalf of the defendant. Despite this, the defendant’s solicitors stated that Mr Morrison was willing to let the defendant enter a lease with the plaintiff for a term ending in 2027, a period of some eight years. This term was shorter than the ten-year term set out in the agreement. No option to renew was offered whereas the agreement had provided for one option of eight years.
52 The plaintiff engaged Tisher Liner FC Law lawyers to act on its behalf. This firm responded to Aitken Partners’ letter on 18 December 2018. Further correspondence ensued between the lawyers for the parties. It is common ground that the defendant continues to refuse to sign and grant the lease executed and returned by the plaintiff in September 2018 or let the plaintiff into possession of the property.
53 Mr Eden‑Smith deposes that the plaintiff is ready, willing and able to perform all of the terms of the agreement for lease. The plaintiff is also prepared to perform the terms of the lease which was provided by Mr Harris on 17 August 2018.
54 On 3 April 2019, the City of Stonnington issued a planning permit allowing the plaintiff to erect and display the proposed sign on the demised area at the property. The permit allowed a single electronic sign on the east-facing wall of the property measuring 12 metres x 4 metres and 1-metre deep in accordance with the plans provided and Council date stamped 5 June 2018. The permit allowed for one sign only with four additional smaller LED panels within the original design not being permitted. The planning permit was granted despite eight objections having been lodged, including six from tenants or occupiers of the property.
55 The plaintiff issued a writ in the Supreme Court on 16 April 2019. The proceeding was transferred to the County Court by consent on 19 August 2019.
56 Under cover of a letter dated 12 May 2020, Tisher Liner forwarded a Deed of Lease to Aitken Partners as part of an open offer to settle the proceeding. The Deed of Lease enclosed with the letter excluded the incidental terms negotiated in the lease which the plaintiff had received and returned to Mr Harris in August 2018. The defendant has declined to sign this Deed of Lease and did not respond to the offer made in Tisher Liner’s letter. The plaintiff is also ready, willing and able to sign this Deed of Lease and perform its terms.
57 The defendant’s defence did not plead any discretionary factors, such as laches which might preclude an order for specific performance being made. At a directions hearing before the trial, counsel for the defendant acknowledged there was no impediment to the making of an order for specific performance if the Court determined to do so. Similarly, at trial, counsel for the defendant confirmed there were no discretionary factors which would bar the Court from ordering specific performance.[4]
[4]T61
Issues for determination
58 The issues to be determined are:
(a) whether the agreement is an immediately binding agreement as a matter of construction;
(b) if the agreement is immediately binding, does it satisfy the requirements for an enforceable agreement for lease;
(b) alternatively, is the agreement merely a licence.
(a) Is the agreement an immediately binding agreement?
59 In Masters v Cameron,[5] the High Court discussed the principles to be considered in determining whether parties intended to enter a binding contract in circumstances where a subsequent contract is contemplated:
“The question depends upon the intention disclosed by the language the parties have employed, and no special form of words is essential to be used in order that there shall be no contract binding upon the parties before the execution of their agreement in its ultimate shape : Farmer v Honan (1919) 26 CLR 183.
Nor is any formula, such as ‘subject to contract’, so intractable as always and necessarily to produce that result: cf. Filby v Hounsell. But the natural sense of such words was shown by the language of Lord Westbury when he said in Chinnock v Marchioness of Ely : ‘if to a proposal or offer an assent be given subject to a provision as to a contract, then the stipulation as to the contract is a term of the assent, and there is no agreement independent of that stipulation’. Again, Sir George Jessel M.R. said in Crossley v Maycock : ‘if the agreement is made subject to certain conditions then specified or to be specified by the party making it, or by his solicitor, then, until those conditions are accepted, there is no final agreement such as the Court will enforce’.
This being the natural meaning of ‘subject to contract’, ‘subject to the preparation of a formal contract’, and expressions of similar import, it has been recognized throughout the cases on the topic that such words prima facie create an overriding condition, so that what has been agreed upon must be regarded as the intended basis for a future contract and not as constituting a contract. Indeed, Lord Greene M.R. remarked during the argument in Eccles v Bryant and Pollock that when the expression ‘subject to contract’ was used he had never known a case in which it had been suggested, much less held, that this did not import that there was nothing binding till the exchange of parts of the formal contract was made. The effect of the early cases on the subject was stated by Sir George Jessel M.R. in Winn v Bull when he said in a passage which has become well-known : ‘It comes, therefore, to this, that where you have a proposal or agreement made in writing expressed to be subject to a formal contract being prepared, it means what it says; it is subject to and is dependent upon a formal contract being prepared. When it is not expressly stated to be subject to a formal contract it becomes a question of construction, whether the parties intended that the terms agreed on should merely be put into form, or whether they should be subject to a new agreement the terms of which are not expressed in detail.’”
[5](1954) 91 CLR 353 at 362-363
60 In The Edge Development Group Pty Ltd v Jack Road Investments Pty Ltd,[6] the Court of Appeal said, at paragraph [46]:
“… where the issue is not the meaning of a term but whether the parties intended that the document in which it appears should be a binding contract, the issue is ‘to be determined, objectively, from the text of the document, construed in the context of the circumstances in which it came into being’. Again, it is relevant to take into account the commercial context and surrounding circumstances of the parties’ dealings. … .”
[6][2019] VSCA 91
61 In G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd,[7] McHugh JA (with whom Kirby P and Glass JA agreed) stated, at 634:
“… the decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances … If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction.”
[7](1986) 40 NSWLR 631
62 The parties referred to the well-known categories described by the High Court in Masters v Cameron,[8] wherein Dixon CJ, McTiernan and Kitto JJ stated, at paragraph [9]:
“Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three cases. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.”
[8](Supra) at 360
63 It has been recognised judicially that there is indeed a fourth category.[9] This was referred to by McLelland J in Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd & Ors,[10] where his Honour said:
“… There is in reality a fourth class of case additional to the three mentioned in Masters v Cameron, as recognised by Knox CJ and Rich J and Dixon J in Sinclair, Scott & Co v Naughton (1929) 43 CLR 310 at 317, namely, ‘one in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms.’ Their Honours refer to the speech of Lord Loreburn in Love & Stewart v S Instone & Co (1917) 33 TLR 475 at 476, where his Lordship said that:
‘It was quite lawful to make a bargain containing certain terms with which one was content with, dealing with what one regarded as essentials, and at the same time to say that one would have a formal document drawn up with the full expectation that one would by consent insert in it a number of further terms. If that were the intention of the parties, then a bargain had been made, none the less that both parties felt quite sure that the formal document could comprise more than was contained in the preliminary bargain.’”
[9]The Edge Development Group Pty Ltd v Jack Road Investments Pty Ltd (supra) at paragraph [22]
[10](1986) 40 NSWLR 622 at 628
64 The plaintiff says that an agreement for lease often falls into the fourth category as it always remains open to the parties to vary the terms of the agreement for lease in the formal lease. However, the fact that the document refers to that possibility does not detract from the binding effect of the agreement.
65 As a matter of construction, the plaintiff submits that whether the parties to a written agreement intended to be bound must be determined objectively. This means what would a reasonable businessperson understand the terms to mean. This enquiry will involve consideration of the language used, the circumstances addressed in the contract and the commercial purpose or object to be secured by the contract.[11]
[11]Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] 256 CLR 104 at paragraph [47]
66 The plaintiff pointed to the well-known contractual construction principles; namely, the evidence of the circumstances to the agreement cannot be used to construe it unless the language used in the agreement was ambiguous and susceptible of more than one meaning. If such evidence is admitted, it is limited to evidence of mutually-known background circumstances that may assist in identifying the purpose or object of the transaction, which may include its history, background, context and the market in which the properties were operating. Evidence of a party’s subjective intention or expectation is inadmissible for the purpose of construing an agreement. It is only where no formal agreement exists that the evidence of the parties’ post-contractual conduct is admissible for the purposes of determining whether the contract was formed, who the parties to the contract were and whether the particular terms should be inferred.[12]
[12]See paragraph [12] of the plaintiff’s written opening submissions and the cases referred to therein
67 The principles relating to the construction of contracts were helpfully summarised by Riordan J in the recent decision of Siemens Gamesa Renewable Energy Pty Limited v Bulgana Wind Farm Pty Ltd.[13] The principles are well established.
[13][2020] VSC 126 at paragraphs [87] to [109]
68 A similar issue arose in Brunswick Developments Pty Ltd v Shock Records Pty Ltd, Falvo, McGee & Williams,[14] where the parties had signed a written offer of document recording the terms upon which the landlord would lease the premises to the tenant. The Court had to decide whether, by the offer document, the parties intended to be immediately bound or bound only upon signing the formal lease. In finding the former, Sundberg J stated:[15]
“… The intention of the parties is to be ascertained on an objective basis: Encino Plaza Pty Ltd v Wilson International Pty Ltd (1988) V ConvR 63,908.
In my view the parties intended to be bound upon the signing of the Offer document. The document is expressed with some formality and precision. It has a distinct legal flavour. It uses the language of offer and acceptance. It provides for payment of two months rental as a deposit. Shock's common seal was to be affixed. … The fact that the parties contemplated the execution of a formal lease does not of itself mean they did not intend then and there to be bound. In Masters v Cameron, speaking of the first class of case, the Court said at 360-361:
‘Throughout the decisions on this branch of the law the proposition is insisted upon which Lord Blackburn expressed in Rossiter v Miller (1878) 3 App Cas 1124 when he said that the mere fact that the parties have expressly stipulated that there shall afterwards be a formal agreement prepared, embodying the terms, which shall be signed by the parties does not, by itself, show that they continue merely in negotiation.”
[14][1996] FCA 1024; (1996) V ConvR 54-604
[15](Ibid) at [67-268]
69 Applying the principles identified, the plaintiff submits the agreement has sufficient formality and precision. The use is identified on the top of the document. The parties are addressed respectively as the “lessor” and the “lessee”. It is noted that “The lessor hereby agrees to Lease the Premises to 24 Outdoor on the following terms and conditions for the purposes of the Sign”.[16] The document is referred to in that phrase as “the Agreement to Lease”. The words used are of an immediate demise of a term to commence in the future.
[16]Court Book (“CB”) 84
70 It was submitted the Court should be slow to depart from the express and clear intention of the parties. This is particularly where the agreement was signed as an agreement for lease which it was said reveals an intention by the landlord to grant the tenant a lease rather than personal rights under a licence.[17]
[17](Ibid)
71 Any reliance by the defendant upon any conduct after the parties signed the terms of the agreement should not be permitted as an aid to construction. It said that such evidence is inadmissible for that purpose.[18]
[18]See FAI Traders Insurance Company Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343 at paragraph [50]; Siemens Gamesa Renewable Energy Pty Ltd v Bulgana Wind Farm Pty Ltd (supra) at paragraph [82] per Riordan J
72 The plaintiff also points to other terms and conditions which it says supports its case that the document is immediately binding. One of these is the fact that the plaintiff was at liberty to assign the agreement and subsequent lease. It said this agreement and subsequent lease should be binding on the respective heirs and assignees. The plaintiff says this statement amounts to an acknowledgement by the parties that they consider the agreement to be immediately binding upon them.
73 Furthermore, the term of the agreement states as follows:
“Legally Binding: This agreement shall be legally binding and governed by the law in force in Victoria, Australia. Both parties acknowledge that this document may be executed and delivered in facsimile or electronic mail form and agree to accept the signed faxed or electronic mail agreement as the original valid and binding agreement upon us.”[19]
[19]CB 81-82
74 The plaintiff submits it is difficult to imagine a more clear and unambiguous intent to be bound. The process had a ring of legal formality, particularly given the formal process of signing and delivery of the document to each other.
75 The agreement concludes with the statement:
“Both parties hereby acknowledge and agree to the terms and conditions contained in this agreement:”[20]
[20]CB 82
76 Having regard to these matters, the plaintiff submits that the agreement falls within either the first or fourth category identified in Masters v Cameron.[21] It said that the words are unambiguous and that the Court should not stray beyond the words of the document to construe the objective intentions of the parties.
[21]Supra
77 The defendant’s case is that the agreement is not immediately binding, and it falls within the third Masters v Cameron[22] category. The agreement contained only a record of major leasing terms as a basis for future negotiation that was stipulated to be made subject to the parties agreeing to the terms of the lease. The defendant contends the agreement is one which is subject to contract.
[22]Supra
78 The basis upon which the defendant argued the agreement to lease was not immediately binding revolved upon three statements in the document:
(a) The first being the clause relating to costs that each party would pay its own costs in relation to the preparation, negotiation and execution of the lease;
(b) The second being a reference on the final page of the document to the plaintiff providing its standard lease document to the defendant;
(c) The third matter being the clause that the agreement for lease and lease could be assigned.
79 The plaintiff argued in response that the agreement did not say that it was subject to the parties agreeing the terms of the lease. In fact, the document provided to the contrary. The plaintiff argued it recorded the essential terms of the lease and provided expressly that the agreement was binding. There were no words in it to suggest that the agreement was conditional.
80 The plaintiff says that the provision that the plaintiff was to give the defendant a standard lease document is no more than the obvious recognition that the parties had to perfect the conveyance of an interest in land, the essential terms of which had already been agreed, in a formal lease document. The plaintiff disputes that this renders the agreement conditional in any way. After the agreement was signed, the parties agreed to proceed on the lease prepared by the defendant. The fact that a lease has to be given by the plaintiff to the defendant, namely its standard lease document, did not render the agreement conditional in any way.
81 In terms of the reliance upon the reference to negotiating costs, the plaintiff said that this statement simply provided that it would be a term of the lease that the parties would pay their own costs associated with the lease. It submitted such terms are common in leases. Even if that were to be relied upon, reference to the costs of negotiating the lease had, at most, the effect of placing the agreement into the fourth category of Masters v Cameron.[23]
[23]Supra
82 As for the reference to the assignment clause, the plaintiff noted that it not only referred to a lease but also to this agreement, being the agreement for lease. It provided the parties can assign the agreement which would be binding on the assignee. The plaintiff submits that this clause assists the plaintiff more than it does the defendant.
Analysis
83 In my view, the agreement is a binding agreement as it manifests a clear consensus between the parties to be contractually bound. Upon signing, an agreement came into being that the defendant would grant a lease of the property on the terms of the agreement. I consider the position is not dissimilar to the Brunswick[24] decision. The agreement under consideration here is also expressed with some formality and precision and has a distinct legal flavour. Proper weight should be given to the clear import of the words used that the agreement was expressed to be legally binding.[25]
[24]Brunswick Developments Pty Ltd v Shock Records Pty Ltd, Falvo, McGee & Williams (supra)
[25]cf McClelland J in Baulkham at 628
84 I consider the objective intention shows that the parties intended to be immediately bound upon signing this document. The document refers to the demise of the property by use of the words “hereby agrees to lease” which means what it says, an immediate agreement. The fact that it could be assigned by the plaintiff supports a finding that the agreement was intended to be presently binding, otherwise there could be nothing capable of being assigned.
85 I reject the defendant’s submissions that the agreement was subject to a condition that a further agreement would be signed and therefore, it fell within the third category referred to in Masters v Cameron.[26] The agreement itself did not use the express words “subject to contract”, although that is not necessarily decisive.
[26]Supra
86 I was not persuaded that the costs clause referred to by the defendant, supported a finding that the agreement was not immediately binding. This was simply a term to be agreed upon in fuller terms in the lease. Similarly, the fact that a form of lease was to be provided by the plaintiff and then later agreed to be in the form supplied by the defendant is not supportive of a finding that the agreement was not immediately binding. Self-evidently, negotiations relating to terms in a long form lease are to be expected when dealing with agreements for lease. I do not accept the defendant’s argument that the steps the plaintiff was required to take in order to get approval for the sign, including planning permission, meant that there was no enforceable agreement.
87 The objective circumstances here show that the defendant, a commercial landlord, was desirous of entering into a long-term arrangement with the plaintiff to permit the plaintiff to display an advertising sign on the defendant’s building for financial reward. The objective intention of the parties, viewed in the context of their negotiations, supports a finding that they were to be immediately bound but that the terms of their bargain were to be restated in a fuller or more precise way but no different in effect.
88 In his oral opening, Counsel for the defendant submitted the agreement was ambiguous on its face and because of earlier documents. Further, it was said that the negotiation of a long form lease amounted to an admission against interest; namely, the plaintiff’s case that the rights it obtained in 2016 prevailed.
89 The issue of ambiguity or uncertainty was not specifically pleaded nor was it really developed in the subsequent written submissions by the defendant other than in a footnote. It is correct to say that the covering emails sent by the plaintiff to Mr Harris in 2016 described the agreement and earlier versions of it as “heads of agreement”. The name the parties accorded the document does not, of course, determine the true nature of the document properly construed. The parties’ subjective intentions are, of course, irrelevant. I am not persuaded that the agreement is ambiguous on its face. Nor am I persuaded that earlier incantations of the agreement can be relied upon to introduce some alleged ambiguity. As the plaintiff points out correctly, surrounding circumstances cannot be introduced to try and create some ambiguity when none exists, citing Riordan J in Siemens Gamesa Renewable Energy Pty Limited v Bulgana Wind Farm.[27]
[27](Supra) at paragraphs [98] to [102]
90 As to the negotiation of the long form lease in 2018, this is entirely consistent with what would occur in a contract falling within the first or fourth Masters v Cameron[28] categories. As the plaintiff notes, it is axiomatic in a case involving an agreement for lease that the parties will further negotiate and agree upon the terms of a formal lease. I reject the defendant’s submission that negotiating the long form lease in 2018 amounts to an admission against interest on the part of the plaintiff.
[28]Supra
91 The agreement provided that the terms would be restated in a formal lease which would be the subject of further negotiation but not different in effect. The nature of the agreement therefore fell into either the first or more likely the fourth category of Masters v Cameron[29] and consequently, I find the agreement is immediately binding.
(b) Is the agreement an enforceable agreement for lease?
[29]Supra
92 As the defendant noted in its opening submissions, an agreement for lease is a specie of contract to grant exclusive possession of demised premises at some time in the future. The defendant acknowledged there was no conceptual impediment in the granting of a lease in respect of airspace and outer surfaces of a building used for the purposes of erecting billboard signs.[30]
[30]See paragraph 5 of the defendant’s opening submissions and the cases referred to therein
93 An agreement for lease and a lease are distinguishable. As the authors of Commercial Tenancy Law note at [4.1], p91:
“An agreement for lease must be distinguished from a lease. The former is a contract whereby the parties bind themselves to give and take respectively a lease at some time in the future. The latter contains words of present demise, which may be express or implied; a lease is a specie of conveyance, and the question is whether the parties intend that an estate in land shall be force of their agreement be conveyed by one to the other, If they do so intend, there is a lease. An agreement for lease contemplates that an estate will be conveyed by some further act at some time. This is not to say that the term of a lease must commence as soon as the lease is granted. The term may be made to commence in the future, in the past or at the present.”
94 The parties agreed there are four certainties required to form the essential elements of an agreement to lease;[31] namely:
(i)term;
(ii)area of demise;
(iii)commencement date; and
(iv)rent.
[31]Harvey v Pratt [1965] 2 All ER 786 per Lord Denning MR at 1026
95 There is no dispute that the rent is specified in the agreement, as is the length of the term. The controversy relates to the remaining elements; namely, whether the area of the demise and the commencement date of the term are sufficiently certain.
96 The defendant contends the agreement fails to specify a certain commencement date and, secondly, the geographic area to be demised is uncertain, with the effect that it is impossible to make a grant of exclusive possession.
Area of demise
97 The premises are defined as:
“That part of the roof, east facing wall and airspace on the Property being used for the Sign, the support/attachment of the Sign and its supporting structure or electrical/data connections.”
98 The Sign is defined as:
“One exclusive illuminated promotional advertising sign and supporting structure measuring approximately 19m wide x 4.6m high or smaller at 24 Outdoor’s discretion as approximately shown in the attached photo montage. … .”
99 Both parties referred to the well-known case of Claude Neon Ltd v Melbourne & Metropolitan Board of Works.[32] In that case, the High Court found that a document that leased “all that portion of the said building comprising the roof and parapets thereof for the purpose of constructing an electric sign thereon” constituted a lease.[33] The issue was whether the tenant was entitled to receive compensation when the premises had been compulsorily acquired. The defendant sought to distinguish this case, because the sign under consideration in the High Court was already in situ, unlike the position here. The defendant relied upon the dissenting judgments of Kitto and Windeyer JJ, who expressed doubt that premises could be effectively leased for the “purpose” of a sign.
[32](1969) 118 CLR 678; (1969) 43 ALJR 69
[33](Ibid) at paragraphs [69]-[70], per Barwick CJ, McTiernan and Menzies JJ
100 The plaintiff disagrees with the submission put by the defendant that the agreement did not provide for exclusive possession of any defined geographic area. It says the size and dimensions of the sign were defined, the area was 19 metres wide and 4.6 metres high or smaller at the plaintiff’s discretion. It said that an agreement is not uncertain because a term is left to one of the parties to determine.
101 In York Air Conditioning and Refrigeration (A/sia) Pty Ltd v The Commonwealth,[34] Williams J said:
“… there is no reason why the parties to a contract should not agree that the determination of some of the incidents of the contract should be left to the decision of a third party or to one of themselves. … There is nothing in these provisions to make the contracts too uncertain to be enforced.”[35]
[34](1949) 80 CLR 11
[35](Ibid) at paragraph [29]
102 The plaintiff submits that the demised area is clearly described with the assistance of a photograph. The use of the area is described as an “exclusive sign”. Under the agreement, the defendant agreed to grant the plaintiff the exclusive right to possess exclusively (not just use) the area on the roof and east-facing wall of the building as described in the agreement.
103 The plaintiff contended that the word “approximately” before the word “photo montage” did not render the term uncertain. The plaintiff placed reliance upon the following passage from Woodfall: Landlord and Tenant:
“It is not necessary for the parties to specify the precise area of property to be demised. So where the parties entered into an agreement for lease of ‘approximately’ 100 square feet car parking facilities in a development yet to be constructed, it was held that the word ‘approximately’ did not make the agreement uncertain and the car parking facilities had to be reasonable: Ashburn Antsalt v Arnold [1988] Ch 1; cf Edwards v Skyways [1964] 1 W.L.R. 349.”[36]
[36]Vol 1, Ch 4 at 4.016
104 The defendant argued that the plaintiff had not exercised its discretion about the size of the sign and, not having done so, a lease could not come into effect. Counsel for the defendant cross-examined Mr Eden-Smith on this topic. The planning permit granted is for a sign of smaller dimensions than the dimensions set out in the agreement, but the plaintiff did have the discretion to select a smaller size. To the extent that it might be said the plaintiff has not “exercised its discretion”, the reason for that is that the defendant prevented the plaintiff from doing so by breaching the agreement and refusing to sign a lease.
105 Mr Eden-Smith was also cross-examined about his understanding of the word “exclusive”. He considered it to mean that the defendant would be unable to put up any signs which would interfere with the plaintiff’s sign. As can been seen from the principles referred to above about construing contracts, Mr Eden-Smith’s subjective view is irrelevant. The task is what does this term mean in the context of a lessee obtaining exclusive possession, being the hallmark of a lease as opposed to a licence.
106 In my view, the area of the premises to be leased for the sign to be displayed is sufficiently certain. The dimensions are recorded, and the approximate area is depicted in the photo montage. The fact that the plaintiff could choose an area smaller than that provided for, does not render the clause uncertain. I consider the area is sufficiently defined such that exclusive possession can be granted to the plaintiff, as is contemplated by the agreement. I do not consider the use of the word “approximately” before the word “photo montage” renders the clause uncertain. Similarly, the dissenting judges’ observations in the Claude Neon[37] case do not assist in circumstances where the majority had no difficulty in accepting the sign in that case was the subject of a valid lease. The issue of whether the sign is in situ or not does not inform the issue of whether the demised premises in this case is the subject of an exclusive grant of possession. I find that the demised area is sufficiently certain to enable a grant of exclusive possession.
[37]Supra
Commencement date
107 The other aspect raised by the defendant is the allegation that the agreement did not provide for a commencement date. The plaintiff says the term of the lease was to commence on the date the installation of the display of the sign is completed. It submits this is sufficiently certain to identify the commencement date.
108 The plaintiff submits an agreement for lease need not identify a certain commencement date for the commencement of the lease term provided that the commencement date will become certain before the lease takes effect. A lease commencing when the construction of a building is completed or when a lessor takes possession is sufficiently certain. As the authors of Commercial Tenancy Law[38] say:
“It is sufficient if the commencement date becomes certain by the time when the lease is to take effect in possession, and accordingly, the term may be made to commence upon the happening of an uncertain event … .”
[38]Croft, Robert Hay QC and Luke Virgona, Commercial Tenancy Law (LexisNexis Butterworths, Australia, 2018) 1.5 at p20
109 I prefer the plaintiff’s submissions on this point and find that the term in the agreement relating to the commencement date is sufficiently certain.
110 The defendant also argued that the words “display of commercial advertising” is inherently uncertain. I disagree and find the term does not lead to any uncertainty and is capable of being readily understood.
(c) Alternatively, is the agreement a licence?
111 The principal test for determining whether a document is a lease or a licence, is whether a document provides exclusive possession of premises or part of premises.[39] Again, it is a matter for construction as to whether the document in question is to be treated as a lease or a licence.
[39]Radaich v Smith (1959) 101 CLR 209 at 223
112 The defendant claims that the agreement was an immediately binding licence agreement rather than an agreement for lease. The licence provided was narrow and only conferred certain permissions to the plaintiff and its contractors, such as the right to enter the building to conduct investigations for the future construction and installation of the sign and to seek town planning and mobile antennae permission. The defendant relies upon these terms giving permission to the plaintiff in isolation without having regard to the document as a whole.
113 The plaintiff submits that the document itself does not refer to any licence. It expressly refers to the parties as lessor and lessee. The document is described as an agreement for lease, although clearly the name ascribed to the document does not resolve the issue as a matter of law.
114 I consider the defendant’s submission that the agreement is a narrow licence has no substance. The agreement makes no reference to it being a licence at all. By contrast, the agreement is described as an agreement to lease and refers to the parties as lessor and lessee repeatedly. On a plain reading it cannot possibly be construed as a licence, and I reject the defendant’s submissions on this point. I am satisfied, for the reasons already identified, that the agreement is an enforceable agreement for lease.
Conclusion
115 For the reasons given above, I find the agreement is a binding agreement for lease and that the plaintiff is entitled to have the agreement specifically performed. I will make orders that the defendant specifically perform the agreement and the counterclaim be dismissed.
116 The plaintiff submitted that if the Court found in the plaintiff’s favour, it should order the defendant perform the agreement by signing the long form lease executed by the plaintiff in August 2018,[40] or the Deed of Lease[41] proffered in May 2020. The latter dealt only with the terms in the agreement and excluded the incidental and more extensive terms negotiated in the 2018 lease.
[40]CB 496
[41]CB 637
117 The plaintiff said it was open for the Court to find the agreement constituted a binding agreement for lease and to stand the matter down for a short period to allow the parties to sign a lease or agree a formal order to give effect to the Court’s judgment. If the parties did not sign a lease or agree a form of orders, the Court could then make formal orders, including an order for specific performance in one of the ways set out above. The plaintiff submitted this was the usual course in claims relating to an agreement for lease. I will give the parties an opportunity to discuss whether agreement can be reached on the form of lease to be signed by the defendant.
118 The parties are directed to confer and provide consent orders to give effect to these reasons or if they are unable to reach agreement on the form of orders to be made, including costs, to file and serve submissions by 4.00pm on 17 November 2020. I will also give leave to the parties to file and serve any reply submissions by 4.00pm on 20 November 2020. Unless I determine a hearing is required, final orders will then be made on the papers.
- - -
Certificate
I certify that these 33 pages are a true copy of the Reasons for Judgment of Her Honour Judge A Ryan delivered on 10 November 2020.
Dated: 10 November 2020
Associate to Her Honour Judge A Ryan
12
0