64 The defendant's construction of clause 4(b) shifted somewhat during the course of argument. The defendant initially argued that when construed by reference to relevant extrinsic evidence, clause 4(b) conferred an entitlement only to nominate a single person for a ski season without reward. Ultimately, however, Mr Hayes, senior counsel for the defendant, did not press the argument that clause 4(b) permitted the nomination of only one person for each ski season. He effectively conceded that the clause permitted the nomination of multiple persons, but argued that in accordance with the spirit of the agreement, such multiple nominees should, at most, be limited to family and friends of the holder.
65 Mr Hayes made plain that the question of multiple nominations was subsidiary to the defendant's principal submission that clause 4(b) precluded commercial exploitation of the nomination right on a scale sufficient to compete with the defendant. He conceded that a "one off" payment to cover administration costs might be permissible. The defendant's fundamental concern was not the number of nominations, but the orange pass holders' repeated receipt of money in return for nomination, in circumstances where the defendant itself conducted the ski lift business and incurred the related costs. The defendant argued that, in such a context, irrespective of the number of nominations permitted pursuant to clause 4(b), nominations for reward should not be permitted, or at least, not permitted on such a scale and with sufficient regularity as to constitute a business. Mr Hayes argued that because clause 4(b) did not positively state that multiple nominations for reward in the nature of carrying on a business could be made, it was ambiguous. It was silent on the critical distinction between, on the one hand, the exercise of a right of nomination and, on the other hand, the use of the right of the nomination in order to carry on a business. The defendant argued the grant of the entitlement to conduct a business was so significant that it would require clear words, in the absence of which clause 4(b) should be construed as providing merely personal skiing privileges.
66 Mr Hayes conceded that there was "no magic" in the concept of carrying on a business, which, in the present case, was a mere "label" for an unrestricted right to make multiple nominations for reward.
APPLICATION
Construction of Clause 4(b)
67 Clause 4(b) contains no statement, in terms, that the holder is entitled to nominate multiple persons. In my opinion, however, the language of clause 4(b), in permitting the holder to nominate "any person ... for any period of time as allowed by the holder" indicates, according to its ordinary meaning, an entitlement successively to nominate a number of different persons for such periods of time within the ski season as the holder specifies. There is no express or implied limitation to any particular number, or to any particular class, of persons. If only one person could be nominated for each season, as initially asserted by the defendant, the reference to "for any period of time as allowed by the Holder" would have little purpose. Further, clause 4(h) refers to non-compliance by "the Holder or any of its Nominees (in respect of any orange passes held by the Holder) with regulations during the validity of the annual Orange Passes", thus also contemplating the possibility of more than one nominee in respect of each orange pass during a single ski season. Clause 4(c) refers to "the Holder or its Nominee from time to time" apparently contemplating multiple nominees throughout each ski season. Further, the language of clause 4(d) provides no basis for a requirement that nominees (whatever the permitted number) be "family and friends" of the holder. As Mr Collins pointed out, corporate holders, such as the plaintiff in the present case, would have no "family and friends".
68 According to the Oxford English Dictionary,[15] "nominate" relevantly signifies "to name", "fix", "appoint" or "specify".
69 The holder's right to nominate in clause 4(b) therefore literally indicates a right to appoint or to specify another in the holder's place to enjoy the holder's rights pursuant to "this clause". The holder's rights pursuant to "this clause" are the rights pursuant to clause 4 in its entirety, including the holder's rights under clause 4(b) itself. The holder's rights pursuant to clause 4(b) are subject to the proviso in clause 4(b) and to any other "terms and conditions prescribed by this clause", that is, clause 4 as a whole.
70 The holder's right to nominate (that is, to appoint or specify another to enjoy the rights of the holder in the holder's place) is unqualified in the principal, introductory part of clause 4(b). It is silent as to any terms or conditions which apply to the nomination, and hence, implicitly, to the right to nominate itself. Read literally, then, the principal, introductory part of clause 4(b) grants the holder an unrestricted right to name, specify or appoint nominees, whether for reward or otherwise. It is not limited to a right to nominate for which no reward, payment or consideration may be sought or exacted.
71 The holder's rights under clause 4(b) are, however, subject to the proviso in clause 4(b) and to any other relevant terms and conditions prescribed by clause 4.
72 The proviso in clause 4(b) imposes a limitation on the holder's right to appoint. While in terms the proviso appears to restrict the rights of the nominee, as no nominee is party to, or has rights under, the agreement, the proviso in fact functions to limit the rights of the holder granted under clause 4(b), by restricting the terms on which it can nominate. Absent the proviso, the holder could grant the nominee rights identical to the holder's own entitlement, including the right to nominate other persons to enjoy such identical rights. The proviso, however, expressly provides that the nominee will have no right of nomination for reward or for any consideration whatsoever or of transfer to any other person of the rights of the holder. The holder has the right to transfer the orange pass set out in clause 4(a). In my view, the holder also has a right to nominate for reward pursuant to the literal terms of the introductory part of clause 4(b). The more limited rights of the nominee under the proviso are in contrast to the greater rights of the holder itself.
73 The proviso in clause 4(b) performs the usual function of a proviso, in reducing or qualifying the preceding subject matter. The fact that the proviso expressly excludes the right to nominate "for reward or any consideration whatsoever" indicates that the term "nominate", when used by itself in clause 4(b), bears its ordinary meaning. It does not signify any restriction on the terms on which the holder must deal with the nominee. It is not, in my opinion, subject to a gloss or qualification to its literal meaning which restricts nomination only to nomination which is not for reward or any consideration. Were that the case, it would have been unnecessary for the drafter of clause 4(b) to exclude nomination for reward or for consideration from those holder's rights which are to be enjoyed by the nominee. The express exclusion of nomination for reward, or any consideration, in the proviso to clause 4(b), indicates that, absent such an express exclusion, the term "nomination" in clause 4(b) refers to the act of appointment or specification of a person to enjoy the holder's rights and encompasses an entitlement to do so on any lawful terms, including for reward or other consideration.
74 On the defendant's construction, the term "nominate" would bear two inconsistent meanings in the context of the same clause. In the principal part of clause 4(b), which grants the entitlement to the holder, it would not bear its literal meaning of "to name, appoint or specify", but an artificially narrow meaning, of "to name, appoint or specify but not for reward or consideration". In the proviso to clause 4(b), however, the term "nominate" would bear its ordinary literal meaning of "to name, appoint or specify", thus rendering it necessary expressly to exclude appointment for reward or consideration.
75 Clause 4(b) as a whole operates rationally on the basis that "nominate" bears its ordinary literal meaning consistently throughout, with the proviso functioning expressly to exclude rights which would otherwise apply.
76 In my opinion, the literal meaning of clause 4(b) construed as a whole, in the context of the clause 4 and the agreement in its entirety, is clear and unambiguous, and would be understood by reasonable commercial persons to incorporate the right to nominate multiple persons for reward.
77 The defendant's assertion of ambiguity assumes that the grant of the right to do or enjoy a particular specified act or privilege, without more, neither implicitly incorporates nor precludes the right to do so on all lawful terms, but is necessarily ambiguous, justifying reference to extrinsic evidence in order to determine the legitimate scope of the grant. On that approach, only those terms of usage which are expressly set out would unequivocally attach to a right literally granted in general terms. That approach, if correct, would render ineffectual the use of general comprehensive terms in the context of grants, necessitating voluminous drafting and creating significant uncertainty.
78 Mr Hayes argued that where a right was granted in general terms, the grantee, as a principle of construction, bore the burden of establishing that particular usages were encompassed by the generality of its terms.
79 In my opinion, where general terms are employed to describe a right or privilege their generality should prima facie be given effect. The grantor would, in the ordinary case, bear the onus of establishing that the literal generality was subject to any particular restriction.
80 Further, in the present case, Clause 4 commences with a statement that the parties agree that orange passes will "confer rights and be subject to the terms and conditions prescribed by this clause". That statement fortifies the view that a general statement of a right attached to the orange passes would grant an unrestricted right, save as prescribed by Clause 4. The fact that the parties entered the agreement with an unresolved dispute over the right to nominate for reward, also supports that conclusion. The terms of clause 4 are in marked contrast to clause 3 of the draft offer prepared by the defendant in October 1994, which clearly specified the restrictions applicable to the right to nominate.
Relevance of Factual Matrix
81 The defendant, having asserted ambiguity, relied upon the background knowledge reasonably available to the parties at the date of execution of the agreement, including the commercial purpose, in order to resolve the alleged ambiguity in its favour and to support its contention that the plaintiff's construction is "capricious, unreasonable, inconvenient and unjust".
82 It also relied on the same background matters to support its alternative argument that the agreement contains an implied term that the plaintiff would not use the orange passes to carry on the business of trading nominations for reward, on the basis of the principles of BP Refinery (Western Port) Pty Ltd v Shire of Hastings.[16]
83 Although I have concluded there is no ambiguity, in deference to the arguments of counsel, I now consider the matters advanced in support of the defendant's contention that the relevant extrinsic evidence indicated that clause 4(b) does not confer a right to nominate for reward.
84 The defendant, in its written submissions, relied on the following five factors (set out in sub-paragraphs (i) - (v) below) known to the parties at the date of entry into the agreement.