Beauchum Pty Ltd (ACN 063 095 689) as Trustee for Taylor Thomas Trust v Garland 204 Pty Ltd

Is occupancy the same as occupation? 19In the Macquarie Dictionary 3rd edition defines occupancy as follows: "occupancy 1. The fact or condition of being an occupant. 2. The act of taking possession.3. actual possession.4. the term during which one is an occupant. 5 Also, occupation. The exercise of dominion over a thing which has no owner so as to become the legal owner. 6. The rate of use, as of a telephone system. 7. The use to which a building is put: zoned for commercial occupancy" 20"occupation" is defined, inter alia as : "possession of a place, occupancy, the act of occupying, the state of being occupied" 21The Oxford Dictionary of English 2nd edition defines occupancy as: "the action or fact of occupying a place". 22Occupation is defined, inter alia, as: "The action of entering and taking control of a building; the action of living in or using a building or other place." 23In my opinion, "occupancy" and "occupation" in the context of these facts have the same meaning. 24Both parties agree.

What then is the dispute between the parties? 25The Plaintiff says that issue of the interim occupation certificate on 13th July 2009 satisfies the requirement in the agreement for the issue of an "occupancy certificate" the 26In my opinion, "occupancy certificate" in the agreement means "occupation certificate", a term that is used without definition in the DA to which reference has already been made. 27An occupation certificate issued. In my opinion, that is what the agreement referred to when it used the words "occupancy certificate". 28In my opinion, the contract was perfectly clear. The money was repayable 3 months after the issue of the "occupancy certificate". That certificate did issue and the money plus interest has been payable from the 13th December 2009. 29The defendant has argued that there is no ambiguity, but says that "occupancy certificate" refers not to the occupation certificate issued on 13th July 2009 to permit occupation of the home units known as the Lofts Apartments, but to an occupation certificate for the whole of the building. If this submission were correct, the loan would not be repayable for some time yet, since the retail areas are not constructed and will be constructed, according to the evidence of Mr Bartlett only when finance has been approved and the necessary building work carried out. 30The plaintiff has argued that there is no ambiguity and that "occupancy certificate" means the interim occupation certificate issued on 13th December 2009. However, if there is ambiguity then evidence of the surrounding circumstances identify "occupancy certificate" as meaning the occupation certificate issued on 13th July 2009. 31In Codelfa v State Rail Authority of New South Wales (1981-2) 149 CLR 337 (at 352) Mason J said: "21. In D.T.R. Nominees Pty. Ltd. v. Mona Homes Pty. Ltd. [1978] HCA 12; (1978) 138 CLR 423, at p 429, Stephen and Jacobs JJ. and I, following Prenn, in a joint judgment said: "A court may admit evidence of surrounding circumstances in the form of 'mutually known facts' 'to identify the meaning of a descriptive term' and it may admit evidence of the 'genesis' and objectively the 'aim' of a transaction to show that the attribution of a strict legal meaning would 'make the transaction futile' . . . " (at 351) And in Secured Income Real Estate (Australia) Ltd. v. St. Martins Investments Pty. Ltd. [1979] HCA 51; [1979] HCA 51; (1979) 144 CLR 596, at pp 605-606 in a judgment concurred in by other members of the Court I not only accepted and applied the statement in the majority judgment in B.P. Refinery [1977] HCA 40; (1977) 52 ALJR 20 of the conditions necessary to support the implication of a term, but I also accepted and applied Lord Wilberforce's different treatment, for the purpose of construing a contract, of evidence of surrounding circumstances on the one hand and of the parties' intentions on the other hand. Having considered the topic in more detail on this occasion I see no reason to qualify what I then said. (at p352) The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed. (at p352) It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification. (at p352) Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract. (at p352)" 32In Western export services Inc and others v Jireh International proprietary Limited [2011] HCA 45, the High Court of Australia in refusing special leave made it plain (see paragraphs 3-5) that the Courts of Australia were to follow this construction. 33In the present case, in my opinion, the objective framework of facts within which the contract came into existence included the fact that only the units had been erected and it was only the units that could in the context of the discussions before this agreement have been intended to be occupied. 34Furthermore, the loan was made to the trustee of the trust that owned the home units. That is specifically mentioned in the agreement. In my opinion, the presumed intention was to enable the defendant as the trustee for the home unit trust to use those funds for the purposes of that trust. 35The interest rate of 20% was unusually high and the agreement provided for its capitalisation. In my opinion the presumed intention of the parties was that the funds be used for the purpose of getting occupation certificate granted to enable the units to be occupied and thus to lessen the mortgage liabilities of the defendant as soon as possible. To adopt the construction suggested by the defendant would be to impute to the parties and intention to make a loan that might not be discharged for many years since the retail units had not been built and even as at today they still have not been built. 36Courts must attempt to give commercial contracts a sensible interpretation that would accord with commercial reality. In my opinion the defendant's construction would not accord with commercial reality. 37The agreement was drawn up by the lawyers retained by the defendant. If the meaning of 'occupancy certificate is ambiguous, then it should be construed contra proferentem and on that basis, the construction contended for by the plaintiff must be preferred (See Cheshire and Fifoot 10th Australian edition para 10.33 and the cases cited in footnote 302; para 10.74 and the footnotes therein). 38Another principle of importance in construing a commercial contract is to prefer the construction, if two are possible, that will avoid consequences that "appear capricious, unreasonable, inconvenient or unjust" (See Australian Broadcasting Commission v Australasian Performing Rights Association Ltd (1997) 129 CLR 99-109 per Gibbs J). 39The words of the agreement in my opinion are perfectly clear-the loan was repayable three months after the granting of the occupation certificate. Such a certificate was obtained, the home units were occupied and in my opinion the defendant is obliged to pay the sum claimed by the plaintiff plus interest. 40There will be judgment for the plaintiff in the sum claimed. 41I will hear the parties on costs.

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