Did the Respondent Deal with Its Interest?
21 His Honour held, on the proper interpretation of the Agreement, that the entry into the call option component of the Put and Call Option Deed was not a dealing with an interest within the meaning of cl 9(a).
22 His Honour upheld the Respondents' submission that only transactions which amounted to an alienation fell within the definition of dealing within the Agreement. His Honour said:
"[49] I agree with the second of GPT's and Westfield's submissions, that it is only transactions which amount to an alienation of the whole or part of an owner's Interest which falls within the definition of ' deal with' . Leaving aside for the moment the 'assumption of obligations' it can be readily seen that each of the transactions, whether sale, assignment, transfer, disposition, or declaration of trust would be an alienation of the legal or beneficial ownership in the property.
[50] I accept that the phrase, 'assumption of obligations', refers to an assumption of obligations by the Owner amounting to a parting with a proprietary interest in the Property. The phrase 'assumption of obligations' is apt to refer to an owner making a contract in respect of its Interest and thereby assuming an obligation to a third party as to how it will deal with its interest. However, the definition assumes that the 'assumption of obligations' will form part of the genus of transactions which amount to an alienation. Not all contracts with respect to land amount to a disposal, or parting with, of interest in the land, although some may. In my view, a contractual dealing only amounts to a dealing in the defined sense if it is a disposition of, or a parting with, an interest in the Property. Such a dealing is an alienation."
23 His Honour referred to authorities which establish that Westfield acquired an equitable interest in the property and noted the difficulties posed by this line of authority with respect to the issue of whether or not a contingent equitable interest was such that GPT could be said to have disposed of, or part of, an interest in the property. He noted:
"[58] The definition of ' deal with' in clause 19(k) refers to a present disposition or alienation, not a mere potential future disposition or alienation."
24 His Honour concluded that the contractual promise, enforceable by injunction, whereby the First Respondent had agreed not to deal with this property in a way inconsistent with the Option, did not mean that it had disposed of or alienated a part of its interest. Nor did it mean that it had given up any part of its beneficial interest. (See [60].) His Honour concluded:
"[62] … Accepting, as I must, that Westfield has acquired a contingent equitable interest, its equitable interest is imposed on, not carved out of, the legal estate. ( DKLR Holding Co. (No. 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510 at 518-520; Re Transphere Pty Ltd (1986) 5 NSWLR 309 at 311). GPT remains the owner of its Interest. It has not parted with the beneficial ownership. Such contingent equitable interest as Westfield has is commensurate with its right, which equity will protect, to compel GPT to honour its contract. It operates as an imposition on GPT's title, not as a subtraction from it.
[63] In my view, GPT has not parted with an interest in the Property. That is, it has not disposed of or parted with part of its Interest. Whilst GPT assumed obligations to Westfield in respect of its Interest by entering into the Put and Call Option Deed, it did not thereby alienate or dispose of the whole or part of its Interest. Accordingly, I do not consider that it has breached clause 9(a)."
25 His Honour rejected one aspect of the Respondents' submissions which is raised by the Respondents by way of Notice of Contention when his Honour said:
"[41] I would have no difficulty in saying that by entering into the Put and Call Option Deed, even though its performance was subject to the Conditions Precedent, GPT dealt with its interests in the Property according to the ordinary conception of dealing, which includes bargains or arrangements for mutual advantage. (Macquarie Dictionary; Re Stayte [1997] 1 Qd R 99 at 101)."
26 His Honour considered an alternative submission that a number of GPT's "interest, rights and benefits", as owner of the property were dealt with in the Option in a way not dependent on Lend Lease waiving its pre-emptive rights. Those provisions were identified as cl 2.3(e), cl 8.2, cl 23.1(b) and cl 23.1(c), together with cl 2.2(b) of the Deed of Variation. His Honour concluded in this respect:
"[65] For the reasons I have given, an assumption of obligations to Westfield, not amounting to an alienation, does not constitute a 'dealing' for the purposes of clause 9(a). I do not consider that the obligations GPT assumed to Westfield amounted to the alienation of its rights under the Joint Ownership Agreement. Assuming that its rights under the Joint Ownership Agreement are part of its Interest, GPT did not assign its rights, or any of them, to Westfield, by making a contract as to how it would exercise those rights.
[66] In any event, in my view, GPT's rights under the Joint Ownership Agreement were not part of its 'Interest'. The definition of ' Interests' in clause 2 refers to the Owners' ' interest, rights and benefits in the Property' . The expression " Property " extends to rights and obligations arising under or pursuant to agreements relating to the land or the improvements contemplated by clause 1. I do not consider that the reference in the definition of Property to agreements attaching or relating to the land included the Joint Ownership Agreement itself. The Joint Ownership Agreement regulates the parties' rights as owners of the Property, and this expression extends to other agreements which may be entered into. It would not make sense to say that the Owners hold their interest, rights and benefits under the Joint Ownership Agreement, which consist of the choses in action each has against the other Owner and against AFM, in the proportions of 50% each.
[67] Nor are GPT's or Lend Lease's rights under clause 9 an interest or rights 'in' the Property. The pre-emptive rights exist in relation to the Property. …"
27 As Mr M Pembroke SC, who appeared for GPT, submitted, the commercial purposes of cl 9(a) was to preserve the pre-emptive rights of the co-owner. The clause commences with the words: "Unless otherwise agreed", the very redundancy of which serves to emphasise the commercial purpose identified. Furthermore, cl 9(a) does not impose a dual obligation: first, a prohibition against dealing and, secondly, provision for a mechanism for doing so. Clause 9(a) has a singular purport: no dealing "other than as provided in this clause 9", with an additional obligation of strict compliance.
28 In the light of this commercial purpose, I agree with White J that the definition of "deal with" in cl 19(k) is intended to apply only to transactions which constitute an alienation. To repeat the operative part of the definition:
" 'deal' with means any sale, assignment, transfer, disposition, declaration of trust assumption of obligations or other alienation … or granting other like rights."
29 The drafter has manifested a concern to comprehensively cover a wide field by employing a range of words that frequently overlap - "sale, assignment, transfer, disposition, declaration of trust" - to which was added the catch-all "other like rights". In between appear the words "assumption of obligations or other alienation", upon which primary reliance is placed. In their context, in my opinion, the drafter intended to ensure that the words of potentially broad application - "assumption of obligations" - are to be read down by the immediate qualificatory words - "or other alienation" - to cover the same kind of dealing identified in each of the other, overlapping, words. The concern was, as White J found, "alienation", in whatever manner that may occur.
30 The general principle of the law of interpretation that the meaning of a word can be gathered from its associated words - noscitur a sociis - has a number of specific sub-principles with respect to the immediate textual context. The most frequently cited such sub-principle is the ejusdem generis rule. The relevant sub-principle for the present case is the maxim propounded by Lord Bacon: copulatio verborum indicat acceptationem in eodem sensu - the linking of words indicates that they should be understood in the same sense. As Lord Kenyon CJ once put it, where a word "stands with" other words it "must mean something analogous to them". (Evans v Stevens (1791) 4 TR 224; 100 ER 986 at 987. See also W J Byrne (ed) Broomes Legal Maxim (9th ed) Sweet and Maxwell, London (1924) pp373-374.)
31 However, as Lord Diplock put it in Letang v Cooper [1965] 1 QB 232 at 247:
"The maxim noscitur a sociis is always a treacherous one unless you know the sosietas to which the socii belong."
32 There is no such difficulty here. Unless the expression "assumption of obligations" is confined to "alienation", most of the adjoining words would be otiose. The reading down of general words is one of the most common mechanisms applied in the course of legal interpretation. The Court should not give one word in an interrelated, overlapping list of expressions a meaning that is so broad as to be inconsistent with adjoining words or that renders those words irrelevant.
33 The closest case to the present is Jonmenjoy Coondoo v Watson (1884) 9 App Cas 561, where the Privy Council had to determine whether a pledge of promissory notes fell within the scope of dealing permitted under a power of attorney which extended to a power to negotiate, sell, indorse, dispose of, assign or transfer. After referring expressly to the copulatio verborum principle at 569, their Lordships concluded at 570:
"The appellant's counsel relied mainly upon the word 'negotiate', and also upon 'dispose of'. In order to see what was intended by these words, they must be looked at in connection with the context, as well as with the general object of the power. This appears to their Lordships to have been to sell or purchase for Watson government promissory notes and other securities, not to borrow or lend money upon them. If the word 'negotiate' had stood alone, its meaning might have been doubtful, though, when applied to a bill of exchange or ordinary promissory note, it would probably be generally understood to mean to sell or discount, and not to pledge it. Here it does not stand alone, and, looking at the words with which it is coupled, their Lordships are of opinion that it cannot have the effect which the appellant gives to it, and, for the same reason, 'dispose of' cannot have that effect."
34 The same analysis should be applied to the words "assumption of obligations" which is the broadest term used in the definition under consideration.
35 The Option created an equitable interest enforceable by specific performance, at the very least, to prevent any other dealing. (See Chan v Cresdon (1989) 168 CLR 242 at 252-253.) I agree with White J that the creation of such an interest, the fulfillment of which is subject to a condition precedent of a waiver by Lend Lease of its pre-emptive right, is not an "alienation" and, accordingly, is not a 'dealing' within cl 9(a). For the same reasons, the specific restrictions in the Option Deed - against giving a security (cl 8.2) and against assignment or variation of any lease on the property (cl 2.3) - do not involve anything in the nature of an alienation.
36 In this respect, the appeal should be dismissed.