Clause 19.1(a)
22 The meaning of the second sentence in cl 19.1(a) was considered by this Court in Charbel. Tobias JA (Mason P and Brownie AJA agreeing) rejected the Owners Corporation's construction that the phrase "owners of the Retail Shops" included, by implication, lessees and occupiers. His Honour observed that to give the clause that construction was not only inconsistent with the drafting of other clauses, but would involve a re-drafting of the clause so that it would read, "The Retail Shops must not be used as a fast food outlet": see [39]-[40]. Rather, as his Honour observed at [41], the drafter of the SMS was
"… using the expression 'owner' as referring to a proprietor of a lot in the Retail Shops and, as such, a proprietor is bound by the SMS as Pt 1(b) provides." (Emphasis added)
23 His Honour observed, at [42], that the first sentence of cl 19.1(a) was an acknowledgement, expressed in passive terms, by each of the residential and retail Owners Corporations that the Retail Shops may be used as restaurants, or for other commercial uses as approved by Manly Council. By contrast, the second sentence of cl 19.1(a) was expressed in the active voice and contained a prohibition directed to specified persons, namely, "the owners of the Retail Shops", from using the premises in a particular way, that is, as a fast food outlet. His Honour continued, at [43], that the drafter of the clause had adopted this particular approach to the second sentence because "it is the owners or proprietors of the relevant lots who have direct control over their use". His Honour continued that it was logical for the obligation not to use the Retail Shops for the proscribed use to be imposed only upon those persons who were in the sole position to exercise control by limiting the use to which the lots could be put. Those persons were, of course, the owners or proprietors of the Retail Shops.
24 It was not submitted that this construction was erroneous or that this Court should revisit the construction of that phrase. Rather, what was in issue in this case was whether, in circumstances where the lessee was using the premises as a fast food outlet, the Owners Corporation was entitled to injunctive relief against the respondents, requiring them to cause the appellant to cease carrying on that use. This question was discussed in Charbel. In order to understand the discussion, it needs to be noted that Charbel was a lessee of one of the shop premises from the original owner of the Retail Shops from which it conducted a fish and chip shop. The appellant here (Idya Pty Ltd) was a lessee of the shop premises within the Retail Shops and was a party to the Charbel proceedings. The then owner of the Retail Shop was the developer. (It is convenient to equate that party with the respondents on this appeal for the purposes of the discussion.)
25 Tobias JA referred to a submission made by Charbel that the owners of the Retail Shops (the respondents), by failing to require the lessee to remedy the breaches of the lease, were thereby in breach of cl 19.1(a) and the Owners Corporation could institute proceedings for an injunction restraining the owners from continuing to permit the Retail Shops to be used by the lessee as a fast food outlet. Charbel had submitted that the prohibition in the second sentence of cl 19.1(a) was one that not only prevented the owners from directly using the Retail Shops themselves for the prohibited purpose, but also prohibited them from "permitting an occupier or lessee" from using the premises for that purpose.
26 The Owners Corporation expressed doubt as to the availability of that approach as the owners of the Retail Shops (the respondents) may well argue that pursuant to the terms of its lease, it had leased the premises only for a use which did not contravene cl 19.1(a). On that argument, it would not have 'permitted' the leased shop to be used as a fast food outlet. Tobias JA commented, at [38], that the Owners Corporation concern overlooked that on the construction he favoured on the meaning of "owners of the Retail Shops" in cl 19.1(a), those owners were "prohibited from permitting those premises to be used as fast food outlets albeit in breach of the leases".
27 In their submissions in these proceedings, the Owners Corporation submitted that the statements of Tobias JA, to which I have just referred and particularly that at [38], constituted part of the ratio decidendi of the decision and accordingly, this Court should apply it.
28 The ratio in a case identifies the reason for decision in that particular case. Its purpose is part of and, indeed, is the fundamental aspect of the system of precedent upon which our judicial system is based. Strictly, the Court of Appeal is not bound by its own decisions: A v State of New South Wales; Floros v A; State of New South Wales v A [2005] NSWCA 292; 63 NSWLR 681. See also Nguyen v Nguyen [1990] HCA 9; (1990) CLR 245 at 269. However, the Court will only depart from principles stated in earlier cases where the earlier decision is wrong: see A v State of New South Wales at [13]. Nor is the Court bound by obiter dicta in earlier decisions, although obiter comments are often treated as persuasive.
29 It is not always easy, however, to determine the ratio decidendi of a case. In Federation Insurance Limited v Wasson [1987] HCA 34; (1987) 163 CLR 303, the High Court affirmed the decision of this Court: Wasson v Commercial & General Acceptance Ltd (1985) 2 NSWLR 206, where McHugh J, at 228, pointed out that "only the reasons for the decision in a case are binding" (original emphasis).
30 In Garcia v National Australia Bank Ltd [1998] HCA 48; 194 CLR 395, Kirby J stated at [56] that
"It is fundamental to the ascertainment of the binding rule of a judicial decision that it should be derived from (1) the reasons of the judges agreeing in the order disposing of the proceedings; (2) upon a matter in issue in the proceedings; (3) upon which a decision is necessary to arrive at that order."
31 His Honour reiterated this approach in D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1, emphasising that the ratio requires "identification of the 'matter which it was necessary to decide and which was actually decided'": see Blair v Curran [1939] HCA 23; (1939) 62 CLR 464 at 532 per Dixon J.
32 I do not understand the statement by Tobias JA in Charbel at [38] that the owners of the Retail Shops were prohibited from permitting those premises to be used as fast food outlets to be part of the ratio decidendi of that case. Rather, it reflected Tobias JA's response to matters that had been raised in argument. From his Honour's viewpoint, the right in the Owners Corporation to require the appellant to cease using the premises as a fast food outlet was a consequence that flowed from the construction he had given to the phrase "owners of the Retail Shops" in the second sentence of cl 19.1(a). That statement was not an essential part of his reasoning as to the meaning of the phrase "owners of the Retail Shops" in the second sentence of cl 19.1(a), nor was it necessary for the disposition of the matter before this Court.
33 Accordingly, it is for this Court to determine the question whether the second sentence of cl 19.1(a) prohibits the owners of the Retail Shops from permitting those premises to be used by any person as a fast food outlet. Having stated this as being the matter that calls for determination, the real question in this case is whether, by permitting the lessees from using the Shops as an Oporto restaurant in contravention of the terms of the lease, the owners are thereby in contravention of cl 19.1(a) so as to be susceptible to injunctive relief at the suit of the Owners Corporation.
34 The word "use" bears various shades of meaning. The meaning of the word in the context of various taxing or rating statutes has been the subject of frequent judicial consideration. In Council of the City of Newcastle v Royal Newcastle Hospital [1957] HCA 15; (1957) 96 CLR 493, Taylor J, in a passage that is often repeated, stated, at 515,
"The word 'used' is, of course, a word of wide import and its meaning in any particular case will depend to a great extent upon the context in which it is employed."