Plaintiff v Defendant

1 This proceeding concerns a lease of premises known as the Cranbourne Home Improvement Store ("the Lease"). The present parties to the Lease are Aventus Cranbourne Thompsons Road Pty Ltd (ACN 155 857 426) ("Aventus") as Landlord and Masters Home Improvement Australia Pty Ltd (ACN 066 891 307) ("Masters") as Tenant. The Cranbourne Home Improvement Store ("the Premises") was constructed specifically for and to meet the requirements of Masters, which was then opening a network of, what might be described generally, as home improvement and hardware stores throughout Australia. These stores, commonly referred to as "big box" or large format retail stores, were broadly similar to the Bunnings "big box" network of stores also established throughout Australia.

2 The Masters national store networking venture was driven by Woolworths Limited ("Woolworths"). Consequently, it is no surprise to find that Woolworths is the guarantor of the obligations of Masters under the Lease.

3 This proceeding comes to Court as a result of Masters, which is no longer trading, seeking to sublease part of the Premises and to make various alterations in circumstances where Aventus has not provided this consent. Masters claims that Aventus is unreasonably withholding its consent in breach of its obligations under the Lease.

4 More specifically, Masters seeks orders from the Court by way of declarations that Aventus is in breach of cl 8.2(b)(iii) of the Lease, a covenant which Masters contends is a covenant not to unreasonably withhold or delay its consent to the sublease of part of the Premises by Masters to Amart Furniture Pty Ltd ("Amart"). Masters also seeks an order that Aventus execute such documents or assurances as may reasonably be required to provide its consent to various alterations proposed and to the sublease from Masters to Amart of part of the Premises.

5 Additionally, Masters seeks damages for breaches of the Lease, together with costs and interest. Assuming that the question of damages, costs and interest arises, and that there is some basis under the provisions of the Lease for such a claim or claims, the parties have agreed to place the question of damages "on hold" pending the decision of the Court on whether Aventus is in breach of cl 8.2(b)(iii) of the Lease. The parties agree that if Masters is successful, the issue of damages can be assessed by an Associate Justice.

6 In support of its position, Masters makes reference to, what it says, is the acceptance by Aventus that Amart is a suitable tenant at the Cranbourne Home Centre.[1] Thus, it is said that Aventus must show a strong reason for withholding its consent.[2] However, as is discussed further in the reasons which follow, the position of Aventus in this respect is that it does want Amart as a tenant at the Cranbourne Home Centre, but on vacant land in that Centre, and not in the Premises.[3]

7 Moreover, it is contended by Masters that Aventus has not acted on the basis of matters the subject of the Lease in refusing its consent to the sublease. Rather, it is said that Aventus is acting on the basis of matters extraneous to the Lease and matters extraneous to the relationship of landlord and tenant and is, therefore, acting unreasonably. These extraneous matters are said by Masters to be evident in the conduct of Aventus since 20 November 2018 and its broader commercial objectives, which include those of its ultimate shareholder and related corporations within the Aventus Group.

8 Another, or more particular, aspect of these extraneous considerations are said, by Masters, to be the application of a "guiding principle" by Aventus that does not allow it to consent to any scenario where Masters subleases the Premises as Aventus loses "control" in those circumstances. Aventus, with some exceptions such as medical centres in pharmacy leases, does not generally allow subleases at its centres on the basis that maintenance of the direct landlord and tenant relationship enables it to control tenancy mix, rents and incentives and the management of the centre, and thereby enhance and deepen tenant relationships because of the direct relationship, rather than through an agent or through a tenant with a sub-tenancy.[4] Aventus described this approach as not a policy across the whole group of Aventus, but, rather, "... a guiding principle, and that's part of why we're able to achieve strong returns for our unitholders".[5] Nevertheless, it was conceded that Aventus would "consider" subleasing the Masters box to a single anchor tenant, but that this would be "not ideal".[6]

9 The Premises are described in the Reference Schedule to the Lease as being "that part of the Centre identified on the Plan as the [Masters Home Improvement Store]".[7]

10 The land on which the Premises is situated includes, in addition to the Premises, land which is described as "Surplus Land" which is owned by Aventus and currently partly leased to Bliss Early Learning Centre. The land on which the Premises is situated and which also includes the Surplus Land is contained in three titles,[8] with the remainder of the Centre, to the west and south-west of this land comprised of a strip of tenancies south of land - a "big box" - leased by Bunnings. This part of the Centre - the remainder, which does not include the Premises or the Surplus Land - is contained in two Certificates of Title, the registered proprietor of each being Aventus Cranbourne Pty Ltd,[9] a different but related corporation to Aventus. Apart from the Bunnings store, which is located in reasonably close proximity to the Premises, the evidence is that it would take approximately ten minutes to walk from the Premises - the Masters "big box" from the southernmost point of the remainder of the Centre.

11 At the time of execution of the Agreement for Lease ("the AFL") in relation to the Premises on 6 May 2013, and during the negotiation of the terms of the Lease, the Premises was owned by Barbara and John Dunscombe. Aventus did not become the registered proprietor of the freehold of the Premises until 9 March 2015. The remainder of the Centre, which does not include the Premises or the Surplus Land, was transferred to Aventus Cranbourne Pty Ltd after the date that company was incorporated, namely, after 8 September 2015 and by 29 November 2016.

12 The AFL in relation to the Premises included as parties Barbara Annie Dunscombe and John Francis Dunscombe as landlords, Masters, as tenant, and Woolworths Limited as the guarantor. The AFL annexed the Lease to be entered into between Aventus, then known as BBJ Thompsons Road Pty Ltd, as trustee for the BBJ Thompsons Road Unit Trust, as landlord, Masters, as tenant, and Woolworths Limited, as guarantor.

13 It is common ground between the parties that cl 10.3 of the AFL operates so that from the Commencement Date of the Lease, the landlord and the tenant are bound by it even where the Lease is not executed by either the landlord or the tenant. Thus, the Lease is the written agreement which governs the landlord and tenant relationship between the parties with respect to the Premises.

14 The Commencement Date of the Lease was 1 October 2015 and the demise was of a term of 15 years from the Commencement Date - that is, from 1 October 2015 to 30 September 2030, with options for renewal for up to four further terms (the first renewed term being ten years and the three remaining possible renewed terms of five years each). On any view, these are long-term leasing arrangements and they reflect a substantial commitment by the parties; particularly as the Premises were built for Masters during 2014 and up to September 2015 pursuant to the AFL, according to the Masters' specifications and for a sum in the vicinity of $27 million.

15 On 9 March 2015, Aventus became the registered proprietor of the Land of which the Premises is a part and, consequently, became the Landlord under the terms of the Lease.

16 Masters began trading from the Premises in October 2015 but, in January 2016, Woolworths announced that it would be selling or closing the Masters Home Improvement chain. As a result, Masters ceased trading from the Premises in December 2016 and the Premises have been empty ever since.

17 In October 2017, Home Investment Consortium Company Pty Ltd ("Home Co") acquired Masters' parent company, Hydrox Holdings Limited, from Woolworths. Home Co is now the ultimate parent company of Masters.

18 In spite of having ceased trading, Masters has continued to comply with its rental obligations under the Lease. Masters currently pays substantial rent to Aventus under the Lease. Additionally, Masters pays utility charges in relation to the Premises.

19 In mid-2018, Masters entered into negotiations with Amart for Amart to sublease part of the Premises from Masters.

20 It is common ground that Amart is a suitable tenant and that Aventus is not concerned with Amart competing with other retail tenants at the Centre.[10] The difference between the parties with respect to Amart is where that tenancy should be located and whether or not the tenancy is within the control of Aventus in the sense of Amart being Aventus' direct tenant, rather than a sub-tenant, according to its guiding principle to which reference has already been made. Mr Holland's evidence at trial was that Amart would "add to the tenancy mix and they wouldn't actually impact existing tenants within the centre".[11] This evidence was, Masters contends, inconsistent with Mr Holland's first witness statement, where he stated, as a matter said to give rise to adverse economic and commercial consequences for Aventus and/or the Aventus Group, that "if granted the Proposed Sublease, Amart would be competing with other tenants in the Cranbourne Home Centre, including future tenants of the Surplus Land".[12] Moreover, Masters submits that, following its approach to Amart, Aventus approached Amart as a "defensive measure"[13] to propose a lease between Amart and Aventus for a newly built store on a portion of the Surplus Land.[14] It is not entirely clear whether Masters, in putting this, is seeking to imply a strategy on the part of Aventus to deprive Masters of a possible sub-tenant or that this approach by Aventus is merely consistent with the position that Amart is not an unsuitable tenant for the Centre, but that Aventus seeks, consistently with its guiding principle, to control the location and relationship with tenants in the Centre on a direct - landlord and tenant, rather than landlord and sub-tenant relationship.

21 As the freehold and leasehold ownership and arrangements with respect to the Cranbourne Home Centre indicate, Aventus is the only company which has undertaken any obligations to Masters. Neither Aventus Cranbourne Pty Ltd, the listed Aventus Group, nor any other Aventus Group entity has undertaken any obligations to Masters under the Lease. The Aventus Property Group - which charges leasing, management and other fees to Aventus[15] - the transient shareholding and unitholding population of Aventus Group have different interests and Aventus, as landlord, has distinct and different interests to others in the Aventus Group, even though many interests would be likely to coincide. The ongoing fees payable by members of the Fund are payable to Aventus Funds Management Pty Ltd ("the Manager") and Aventus Property Management Pty Ltd ("the Property Manager"). These companies are part of the Aventus Property Group which, after the restructure of 2018, was controlled by Aventus Holdings Limited ("AHL"). After the 2018 restructure, AHL controlled the Aventus Property Group. Shares in AHL were "stapled" to units in the Fund.[16] Interests of landlords, including Aventus, differ and may possibly conflict with those of the Aventus Property Group.[17]

Initial Request for Consent for Amart sublease

22 On 20 November 2018, Mr Andrew Selim, General Counsel and Company Secretary of Home Co, sent a letter to the Directors of Aventus seeking the written consent of Aventus ("the Request for Consent") for a proposed sublease of part of the Premises to Amart ("the proposed Sublease") and for alterations to the Premises ("the Alterations) in order to create the sublet premises.[18]

23 The Request for Consent to sublease was sent pursuant to cl 8.2(b)(iii) of the Lease and the request for consent to Alterations to create the sublet premises pursuant to cl 7.6(b) of the Lease.[19] The Alterations sought to create the sublet premises were set out in Attachment 2 to the 20 November 2018 letter.[20] Shortly following the Request for Consent, on 23 November 2018, Masters and Amart, together with BBQSAM Holdings Pty Ltd (as guarantor), entered into an Agreement for Sublease ("the Amart AFL").[21]

24 By the Amart AFL, Masters seeks to sublease approximately 6000m2 of the currently vacant Premises for a term of ten years with options to renew. The Amart AFL contains the following provisions as to timing:

(a) An Estimated Completion Date of 1 April 2019[22] extended to 1 July 2019.[23] This date relates to completion of the works required to make the Alterations;[24]

(b) A sunset date for approval (consent) to the Sublease of nine months after the date of the Amart AFL - i.e. by 23 August 2019;[25]; and

(c) A sunset date for completion of the works required to make the Alterations of nine months after the date of the Amart AFL - i.e. by 23 August 2019.[26]

25 From the date of the Request for Consent, the parties have corresponded.[27] Correspondence relevant to the Request for Consent to the proposed Sublease, is outlined in Mr Selim's affidavit dated 8 March 2019.[28] From the date of the Request for Consent - 20 November 2018 to 8 February 2019 - no formal position has been communicated by Aventus to Masters as to whether or not it would consent to the proposed Sublease. Rather, Aventus sought information.[29]

26 Aventus contends that its seeking of information was entirely appropriate and necessary for it to consider the Request for Consent. On the other hand, Masters contends that when this correspondence is reviewed, a pattern is quickly identified whereby Aventus initially focused on various technical aspects of the proposed Alterations in order to create the sublet premises. Moreover, it says that each of the technical issues raised by Aventus have now fallen away and that some issues, despite being pushed by Aventus in early correspondence, were not relied on in the pleadings by Aventus in these proceedings. In this respect, Masters says that, by way of example, the correspondence from Aventus prior to the issue of proceedings focused on objection to the proposed Amart signage and painting of the exterior of the building, stating:

The proposed external signage distracts from the previous quality and visual amenity of the building and [Aventus] notes in particular that the repainting of the exterior of the building in a bright blue colour is visually very different from the previous colour of exterior of the premises.[30]

It was, Masters says, only after commencement of the proceedings that Aventus discovered documents revealing its own attempts, in early 2019, to acquire Amart as a tenant of the Surplus Land, employing very similar signage and the same, bright blue, Amart exterior.[31] Aventus does not now rely on the signage and painting of the exterior to the building as a basis for withholding consent.

27 More generally, in response to the Request for Consent of 20 November 2018, Aventus raised a number of issues which have been the subject of correspondence between the parties between December 2018 and May 2019. On 7 December 2018, Aventus made numerous requests for further information, including in relation to details of any planning advice or approvals obtained by Masters, an estimation of make good costs, a complete schedule of works (including structural drawings, fit out plans, engineering and traffic advice), and signage plans.[32] Masters responded to each request, and also the subsequent follow-up requests, on multiple occasions from December 2018 to May 2019 by providing further explanation and, where requested, plans, reports and assessments prepared by the relevant consultants.[33] However, in its Amended Defence filed on 3 May 2019, Aventus raised new concerns in relation to the necessary approvals required, the proposed structural works and traffic assessments provided by Masters.

28 Whilst Masters did not accept that any of the issues raised were a reasonable basis to withhold consent, between 6 May and 27 May 2019, the parties negotiated a form of undertaking to be provided by Masters to both Aventus and the Court to resolve the outstanding issues relating to the Alterations and ultimately remove them as matters in issue from the current proceedings.[34]

29 The undertaking relates to Masters obligations concerning the necessary approvals for the Alterations, its make good obligations, compliance with the Building Code of Australia, and traffic and OH&S requirements. The undertaking was executed by Mr David Di Pilla and Mr Andrew Selim as Director and Company Secretary of Masters respectively, and a copy of the signed undertaking was emailed to the Court on 3 June 2019. The undertaking states that:

(a) Masters will not commence the Alterations until the McKenzie Group has assessed the entire Premises for compliance with the Building Code of Australia (BCA);

(b) Masters will comply, at its cost, with any recommendations made by the McKenzie Group to bring the Premises into compliance with the BCA:

(c) Masters will, when the Lease ends, return the Premises to the same layout and condition as they were in at the date of the undertaking including repairing any damage to the Premises caused by the removal of the Alterations and reinstating the Premises to the same layout and condition as they were in at the date of the undertaking;

(d) Masters undertakes that it will not commence the Alterations until Presna Pty Ltd is engaged by Masters to undertake a risk assessment for the purposes of compliance with the Occupational Health and Safety Act 2004 regarding the use of the service vehicle area as a goods received loading area and a customer collection point in relation to the health and safety of any person entering or leaving the Premises or using the service vehicle car park or service vehicle area.

(e) In the event that the risk assessment referred to above identifies a risk that is not sufficiently controlled, Masters must identify and implement any additional risk controls necessary to eliminate or reduce these risks so far as reasonable practicable prior to commencing the Alterations; and

(f) If consent for the Sub-Lease and Alterations are given by the defendant (either voluntarily or upon order by the Court), Masters will not commence the Alterations until it has obtained all relevant Authority approvals.

30 At the conclusion of the hearing in these proceedings, Senior Counsel for Masters specifically reaffirmed this undertaking at the request of Aventus.

Aventus' Shopping Centre Performance and Strategy

31 The evidence appears to indicate the Aventus Group shopping centres are performing well. On 14 February 2019, Aventus Group publicly announced its half year result to 31 December 2018.[35] Key achievements included:

• "revaluation gains of $26m [on its portfolio of properties] driven by income growth".
• "Consistently high occupancy of 98.5% including 16 of 20 centres at 100% occupancy.

• Strong leasing demand with 81 leases negotiated across 74,000sqm of GLA achieving positive leasing spreads and with low incentives.

• High exposure to national tenants, comprising 86% of the portfolio by GLA.
• Diversifying tenancy mix with 37% of the portfolio in the Everyday-Needs category".

Additionally, in this public announcement, Aventus told the market that:

Active Portfolio Management

Aventus continues to enhance the customer experience in its centres. Opportunities to improve and increase the range of offerings for customers through tenant remixing resulted in the negotiation of 81 leases covering 74,000sqm and these leases were achieved with positive leasing spreads and low incentives. Strong like-for-like NPI growth 3.3% continued for the 2018 calendar year and the portfolio has an occupancy rate of 98.5%.

In introducing new tenants, the focus has been on the Everyday-Needs category which includes products and services such as food, health and well-being, services and childcare. These tenants contribute to increased weekday traffic and improved customer linger time, and accounted for more than 50% of our new leasing deals in the last 12 months.[36]

32 The Aventus website describes the Cranbourne Home Centre as benefitting from "a high profile corner location ... [and] includes a vacant development site adjoining Bunnings which could increase the size of the centre to over 60,000sqm, making it one of the largest LFR [Large Format Retail] centres in Australia".

33 On 14 February 2019, Mr Holland, as the Chief Executive Officer and Managing Director of Aventus, briefed the market and investors and referred to various slides in a brochure entitled "FY19 Half Year Results Aventus Group 14 February 2019".[37] During that briefing, Mr Holland referred to a document - identified as slide 7[38] - which outlined the portfolio highlights as follows:

... the standout metric on this slide is the record leasing deals negotiated during the half, which underlines strong demand from tenants. Tenants are attracted to our centres for a range of reasons including the continual rollout of listed large format retailers such as Baby Bunting, Beacon Lighting and Nick Scali. Additionally, the migration of every needs, or non-household, tenants particularly in services, health and wellbeing continued to seek the affordable rent and the convenience of on-ground car parking that our centres offer.

Mr Holland noted that leasing deals had increased from 38,000sqm [FY18 second half] to 74,000sqm [FY19 first half].[39] Mr Holland later said:

Our largest single category and one that we continue to evolve is what we are now calling the everyday needs category. It was called non household but the increase in prevalence of food and services to this mix have led to the description everyday needs. These uses account for 37% of the income, well above the industry average and 273 tenancies - it's actually about 50% of the portfolio by number of tenancies. The description everyday needs also better accounts for the way in which these tenants drive recurring weekday traffic, boost linger time and are complementary but unrelated to household goods retail.[40]

Mr Holland continued: "The biggest increases in new stores added to the portfolio in this category during the half have been in the health and wellbeing sector, followed by food and services".[41] Mr Holland then referred to "sales growth" and said "we are seeing sales growth in manchester and everyday needs category. Specifically, pets, food, leisure and sports. Categories that are moderated or reduced during the period have been furniture, bedding and home appliances".[42] Shortly thereafter, Mr Holland said "Aventus continues to stand apart from the national average in achieving high occupancy and therefore low vacancy rates".[43] Mr Holland later said:

Our focus is to continue to actively diversify our tenant base with a priority on everyday needs to continue to drive weekday traffic and importantly energise our centres. And we'll also continue to invest in the expansion and development of the portfolio to enhance the shopper experience and to capitalise on attractive development terms.[44]

34 It is clear from these statements that there is strong tenant demand for properties at Aventus Home Centres. Moreover, under cross-examination, Mr Holland accepted the following with respect to tenant demand at the Cranbourne Home Centre, namely, that it is "100 per cent leased",[45] and that there is evidence of strong demand for space at the Centre.[46] These statements also reveal that the Aventus Group is expanding into the Everyday Needs category, which is distinct from the Permitted Use under the Lease to Masters - or, for that matter, the proposed Sublease to Amart.[47] Mr Holland accepted this under cross-examination.[48]

Aventus' position with respect to the Masters site

35 Aventus has indicated its position regarding the Masters site - the Premises - since Masters ceased to trade. Its attitude to Masters' parent company, Home Co, is set out in the valuation of Savills of 31 December 2017 under the heading "Risk Assessment". Without breaching confidentiality, it may be noted that comment is made in that report that:

Being a competitor to Aventus, the landlord will not allow any lease assignment or works deed for Home Co to take possession of the premises for conversion. The lease income is guaranteed by Woolworths Limited which mitigates any income risk.

36 Documents discovered by Aventus in the week prior to the hearing in these proceedings revealed dealings between Aventus and Bunnings. Aventus' documents also reveal enquiries from various entities regarding the possibility of those retailers moving into the Premises. Under cross-examination, Mr Holland accepted that Aventus has been thinking about a long-term solution for the Masters box for a few years.[49] Mr Holland also accepted under cross-examination that an option that has been pursued by Aventus is to "put Bunnings in the Masters box" and that "those plans involve expanding the Masters box from 13,000 square metres to 17,000 square metres ... if planning allows".[50]

37 It is clear that control of the Cranbourne Home Centre is important to Aventus and the Aventus Group. Part of Aventus' plan for the Masters premises requires Aventus to have control of it in order to develop it. Under cross-examination, Mr Holland accepted: "that's the intention, yes".[51] Mr Holland accepted the following with respect to the Masters premises: "Control is our preference. However, there is a long-term lease in place which has a guarantee by Woolworths".[52] Mr Holland also said under cross-examination: "we're obviously generating stronger demand for our real estate than the general market industry is, and part of that's because we control the real estate. We don't have sub-tenants, we don't have leaseholds...".[53]

38 As might be expected, Aventus has been considering and testing its options with respect to the Masters site. This is clear from Mr Holland's evidence, and is particularly illustrated in the following evidence he gave in cross-examination:[54]

Right. And part of that plan is you've got to have control of that site, obviously to develop it?---That's the intention, yes.

That's the intention; correct?---To develop a site, you ideally have control of the real estate, yes.

I was talking to you about the Cranbourne centre?---Yes.

Yes. The intention is to get control of the site at Cranbourne. It's obvious isn't it?---Control is our preference. However, there's a long-term lease in place which has a guarantee by Woolworths.

I'll come to that, but we're in agreement. Control of the site at Cranbourne is your preference, rather than Masters having a tenancy there?---Rather than Masters creating a centre within a centre that's going to compete with our existing centre and impact, um, the development of the vacant land.

HIS HONOUR: Yes, could you answer the question?---Yes. In that context, yes.

Yes. That's what this case is all about, isn't it, as a businessman?---This case is about protecting, our rights as a landowner. Control is an aspect of that. There's a - value concerns. There's a whole lot of concerns that I've mentioned in all three of my witness statements about the grave concerns we've got if this sublease is, in fact, approved. They'll be creating a multi-tenanted centre and being a de facto landlord on our land.

Can we agree about this: you want Amart as a tenant of the Cranbourne Home Centre somewhere?---We only approached Amart - - -

Can you just answer my question. Yes or no. Do you want Amart as a tenant at the Cranbourne Home Centre?---On the vacant land, yes. Not in the Masters premises.

And they would be a first class addition to the tenancy mix at the Cranbourne Home Centre, wouldn't they?---I wouldn't say first class. They're a - they're a good tenant. They're not a Bunnings. They're not a - they're not a Masters. They're not a single large anchor tenant.

39 Control of premises developed and leased by Aventus and/or the Aventus Group is, as the evidence indicates, a fundamental part of its business model and, it is claimed, its success.[55] In addition to the material to which reference has already been made, it is helpful to have regard to further evidence with respect to this aspect given by Mr Holland, again in cross-examination:[56]

Yes. Yes?---But demand is not the only solve, because you can see demand is - um, we're obviously generating stronger demand for our real estate than the general market industry is, and part of that's because we control the real estate. We don't have sub-tenants, we don't have leaseholds; we own 100 per cent of all of the 20 centres.

All right?---And that's part of what drives the strong occupancy.

Mr Peters.

WITNESS: Thank you.

MR PETERS: Did you just say you don't have sub-tenants?---To the best of my knowledge, we don't have approved sub-tenants.

Anywhere?---My understanding is, um - and I asked the question of my team this morning 'cause, um - other than, um, ah, medical centres - ah, sorry - um, chemists often have medical centres that are sub-tenants. That's standard practice. We've only got a couple of examples of those, but to the best of my knowledge, out of the 584 leases, there's no sub-tenants. We've got direct relationships with all of those tenants.

And that is an attractive feature of the portfolio of the Aventus Group, as you see it?---It's - ah, yes, it is. It's part of being able to control the real estate.

Can you explain to His Honour why it's attractive from a control point of view?---You get to control tenancy mix. You get to control, um, who goes in, what rents they pay, the incentives that are actually paid. You get to control the management. You get to, um, manage and enhance and deepen tenant relationships because you have direct relationships rather than through an agent or through another sub-tenant, and you get to manage and market to those individual tenants.

And that's a - I take it that's a policy across the whole group of Aventus?

---Yes.

And that policy continues to this day?---It's not - it's not so much a policy. It's a - it's a- it's a principle. Um, it's not a formal written policy but it's a - it's a guiding principle, and that's part of why we're able to achieve strong returns for our unit holders.

That guiding principle continues to this day?---Yes, it does.

And it's applied to all the decisions you make across the group?---Yes.

Including the facts of this case?---Absolutely

Right. And that's a primary principle?---It's not primary. It's just one of the many principles of managing retail real estate.

And it's a principle that enables the Aventus Group to manage all of its portfolio as a whole for the benefit of its shareholders - unit holders?---Its individual assets plus the portfolio, yes.

Well, let me take you up on that. The individual assets are owned by individual companies, aren't they?---The individual assets are owned by the Aventus Group, ultimately.

That's how you view it?---Yes.

So you had no regard to the leases of the individual landlords within the group?---Well, the landlords all form part of the Aventus Group.

I take that as you've had no regard to the leases of the individual companies of the landlord - as landlords in the Aventus Group?---That's not correct. We do have regard to all of our leases. They're - they're important. They're - that's - they're income-producing, um, leases so we know all of the - the leases. They're important to us. My point is, um, there's 584-odd leases and they sit between centres.

You view Home Co as a competitor to Aventus?---At Cranbourne, yes.

Generally in the market. Large format retail?---They're in large format retail, yep.

40 Masters accepts that Home Co's general strategy with respect to the former Masters premises is expressed accurately in the presentation dated 10 October 2016.[57] The following text from this presentation was quoted in Aventus' opening submissions as follows:[58]

The strategic plan of the Home Consortium is to repurpose the former Masters sites into vibrant 'value for money' destination shopping precincts... [and] to ensure that each of the centres is repurposed to create an attractive, purpose designed retail environment.

In what was characterised by Masters as a "glaring omission", this passage in the Aventus opening omitted the final four words of that statement as presented in the Home Co proposal, which read: "subject to required consents". In this respect, the evidence of Mr Selim was clear and consistent that, despite whatever aspirations Home Co may have for the Masters site - the Premises - including with respect to keeping all options open, testing the market and accepting all inquiries, this occurs in a context of Masters "knowing full well, ultimately, it's subject to the landlord's consent if those discussions evolve into a real live heads of agreement down the track".[59]

41 In this context, Aventus contends that it is entitled to have regard to the prospect that Masters will seek to repurpose the box - the Premises - as a retail destination or retail precinct.[60] In other words, a shopping centre within Aventus' shopping centre. Examples of other such repurposing by Masters were referred to and it would be reasonable to conclude that Masters may, in due course, seek to achieve a similar arrangement for the Premises. At this point, the future in this respect is uncertain, though the evidence does, as Aventus contends, support this view.[61] However, Aventus currently must consider the Masters Request for Consent - for the single, Amart, proposed Sublease. What may or may not happen in the future is a matter Aventus will need to consider at the relevant time when any further request or requests are made by Masters.

42 Moreover, Aventus has been informed by Masters repeatedly that whatever aspirations it may have for the Premises, these plans remain subject to the Permitted Use clause under the Lease and Aventus' consent.[62] Masters says that Aventus, therefore, misstates the practical reality when referring to its concern - or suspicion[63] - that Masters intends to open a multi-tenant, multi-use retail centre within the Premises. Indeed, Mr Holland accepted in cross-examination that any plan Masters had for the Premises would need to accommodate any consents required of the landlord.[64] When I asked Mr Holland to clarify whether it was his evidence that Masters has to ask Aventus each time it wants to create a sublease, Mr Holland said:

They have to ask us, but I'm - I'm very...concerned and very suspicious that if - the unlikely event the sub-lease is approved to Amart, they will just sub-divide the balance of the seven and a half thousand square metres create more supply_._[65]

I accept the submissions of Masters with respect to this evidence of Mr Holland that it cannot be reconciled with his evidence that each time Masters wished to create a sublease, it would require Aventus' consent. Moreover, I accept that the fact that Masters, Home Co or their agents have been in discussion with a number of parties to test the market is not inconsistent with the acknowledgment that Masters remains bound by the terms of the Lease and accepts this position.

43 The following questions of construction with respect to the provisions of the Lease arise in this proceeding:

(1) Whether the use of the Premises under the Proposed Sublease is inconsistent with the permitted use under the Lease.[66]

(2) Whether clauses 6.3 and 8.2 of the Lease are interdependent, and, if so, whether that means that the effect of Masters not trading at the Premises is that there is no "trading area" to sublease under clause 8.2(b).[67]

(3) Whether the fact that Masters is in breach of clause 6.3 of the Lease means that Aventus does not have to consider the Request for Consent at all;

(4) Whether clause 8.2(b) of the Lease is to be interpreted restrictively to the exclusion of clause 8.2(a) because clause 8.2(a) is "totally obliterated"[68] with no work to do; and

(5) Whether the Lease affords Masters the right to licence certain areas of the Premises to allow Amart to operate its business and whether the Lease allows for the Fit-out Works to be undertaken by Amart.[69]

Before turning to these questions of construction, which are discussed, in turn, in the reasons which follow, it is helpful to make some reference to the principles of construction of a commercial contract such as the Lease; though reasonably briefly, as the principles themselves are not in controversy between the parties, though that does not necessarily apply to their application.

44 It is trite that the Lease is, in this context, a commercial contract and is to be construed accordingly. In construing such a contract, the Court is required to ascertain the meaning which the words of the contract would convey to a reasonable businessperson with the knowledge of the contracting parties.[70] That process involves identifying the meaning of the words used and then giving effect to that meaning within the context of the contract construed as a whole.[71] It is clear from the authorities that in doing so, the Court is to take a common-sense approach.[72] Moreover, in striving to give the contract an interpretation that avoids absurdity, the Court must strive to give all the parts of the contract effect in a way so that they can operate harmoniously together.[73]

45 It is clear that the Court's task is to ascertain the objective intention of the parties to the contract, an intention which is discoverable partly by reference to the genesis, aim and background of the transaction - as well as any common assumption - but which must always yield to the actual words the parties chose to express their intention.[74] The meaning of a commercial contract is to be construed objectively by reference to what it conveys to a reasonable person. This normally requires consideration not only of the text of the relevant document or documents, but also the surrounding circumstances known to the parties, and the purpose and object of the transaction.[75]

46 A commercial contract must be read in a manner that gives each word of the contract meaningful work to do and in a manner that is consistent with the commercial purpose and objects of the contract.[76] Surrounding circumstances can be assessed to confirm, inform, or illuminate the interpretation of a contract, however, the primacy of interpretation is with regard to the text and the internal context of the contact.[77] Whilst dictionaries can be used as an aide in identifying the conventional meaning of a word, they are no substitute for the interpretative process.[78]

47 The primary duty of the Court in construing a contract is to discover the intention of the parties from the words of the instrument in which the contract is embodied. The whole of the instrument has to be considered since the meaning of any one part of it may be revealed by other parts and the words of every clause must, if possible, be construed so as to render them all harmonious with one another.[79]

48 Applying these authorities,[80] Palmer J, in Euphoric Pty Ltd v Ryledar Pty Ltd,[81] provided a statement of the process of construction to be applied by the courts:

1. The Court does not, therefore, need to find that the language of a contract is ambiguous before considering its meaning as it may be revealed in the commonly known context and purpose of the transaction.
2. However, that does not mean that when the Court begins the task of construction it puts the words of the document aside and endeavours first to ascertain the commonly known factual context and purpose of the transaction, often only by resolving a strenuous contest between the parties. The Court does not, once it has found the commonly known factual context and purpose, then look at the words of the contract and, if they do not readily accommodate the context and purpose so found, force them to do so by a process of interpretation.
3. When the Court is construing a commercial contract, it begins with the words of the document: there it often finds expressed the factual context known to both parties and the common purpose and object of the transaction. But the Court is alive to the possibility that what seems clear by reference only to the words on the printed page may not be so clear when one takes into account as well what was known to both parties but does not appear in the document. When that is taken into account, the words in the contract may legitimately have one or more of a number of possible meanings. It is then that the Court's task to identify which of the possible meanings represents the parties' contractual intention.
4. However, when a party to a contract argues that the known context and common purpose of the transaction gives the words of the contract a meaning which, by no stretch of language or syntax they will bear then, in truth, one has a rectification suit, not a construction suit.

As is made clear in the concluding paragraph of this statement, a distinction is to be drawn between the process of construction of a commercial contract and a rectification suit. Masters contends that rectification is the very thing which Aventus seeks to do in these proceedings. Aventus rejects this contention and argues its position on the basis of what it says is the proper construction of the Lease provisions.

49 As the authorities to which reference has been made indicate, the surrounding circumstances known to the parties may well be matters to which the Court should have regard in order to ascertain the objective intention of the parties by reference to the genesis, aim and background of the transaction, as well as any common assumption - perhaps more generally put as part of the process of ascertaining the purpose and object of the transaction. Indeed, that is clearly the position with respect to a commercial contract such as the Lease. Nevertheless, as has also been discussed, the authorities emphasise the primary weight that must be given to the words of the contract.

50 Prior to 2011, the Cranbourne Home Centre development was confined to the land abutting the South Gippsland Highway and Thompsons Road, Cranbourne. In other words, it did not include the land upon which the Premises is situated.[82]

51 The then Cranbourne Home Centre was part of a portfolio of large format retail centres owned and operated by BB Retail Capital Pty Ltd ("BB Retail Capital"). In 2001, after Woolworths had announced "Masters" as the brand name for its joint venture with Lowe's - a large and well-known US retailer - in the Australian home improvement sector, BB Retail Capital negotiated the acquisition of the land upon which the Premises is situated from the Dunscombe family and, at the same time, negotiated with Woolworths and Masters for the construction and lease of the building on that land. In the result, this land was acquired by a company which represented a joint venture between BB Retail Capital and the Dunscombe family.[83] That company was then called BBJ Thompsons Road Pty Ltd and held this land as trustee for the BBJ Thompsons Road Unit Trust.[84] As has already been observed, that company changed its name to Aventus Cranbourne Thompsons Road Pty Ltd, the defendant in this proceeding - Aventus.

52 On 18 May 2011, Woolworths provided the terms upon which it would be prepared to lease the Premises to be constructed on this land "within an area identified for expansion of the Cranbourne Home Maker Centre".[85] As recorded in the Heads of Agreement,[86] the key aspects of the proposed deal were that:

(a) the Masters hardware store would be a long-term anchor tenant of an expanded Cranbourne Home Centre on a lease term of up to 35 years (being an initial term of 15 years and two 10 year options);

(b) the Masters store would become the single largest tenancy in the expanded Cranbourne Home Centre, comprising a GLA of 13,909sqm on a site area of approximately 37,214sqm;

(c) the Masters store would be approximately 20% of the GLA of the entire expanded Cranbourne Home Centre;

(d) the Masters store would be purpose-built to Woolworths' specifications in accordance with a design brief; and

(e) Woolworths acknowledged that BB Retail Capital had the right to develop the Cranbourne Home Centre (referred to in the Heads of Agreement as "the estate" in a pre-determined, orderly manner).[87]

Mr Holland's evidence is that he decided that proceeding with a Masters tenancy and expanding the Cranbourne Home Centre, rather than adopting other options available, was the most attractive option for BB Retail Capital because it enabled the Aventus interests to control the land upon which the Premises is now constructed, land which includes the Surplus Land. Moreover, the Masters tenancy, he said, provided a long-term income stream and avoided "leakage" from the Cranbourne Home Centre that would have resulted if Masters opened a store in the vicinity of the Centre. This, Mr Holland considered, was a real possibility if Masters did not secure premises in the Cranbourne Home Centre.[88]

53 As part of the process of bringing the proposed deal to fruition, attention was directed to the drafting and negotiation of the Lease. In the present context, attention is given to the drafting and negotiation of clause 8.2 with respect to subletting, licences and concessions. Aventus placed particular reliance upon this process of drafting and negotiation as going to the proper construction of the provisions of the Lease.

54 In the first draft of the Lease - which was distributed by Allens Arthur Robinson ("AAR"), solicitors for Masters, to Craig Hailes, for Aventus, and Russell Kennedy for the Dunscombes, on 26 July 2011 - clause 8.2, in relation to the right of Masters to sublease the Masters Premises, took the following form:[89]

The Tenant may without the Landlord's consent:

(a) sublet, or grant licences to any person for the occupation or use of, the whole of any part of the Premises; and

(b) grant concessions to any person for the use of any part or parts of the Premises.

55 On 6 September 2011, Mr Hailes responded to AAR stating, among other things, that the proposed form of clause 8 was unacceptable and that BB Retail Capital required that the clause be amended to make any sublease or licence of the Premises conditional on the Landlord's consent.[90] On 14 September 2011, AAR responded rejecting BB Retail Capital's proposed amendment to clause 8.2.[91] On 27 September 2011, Mr Hailes responded to AAR.[92] In relation to clause 8.2 he said that his clients, the landlord, required the ability to know who is trading from the Cranbourne Home Centre and asked AAR to amend the sublease clause. On 4 October 2011, following further email correspondence regarding the negotiations, AAR wrote asking to meet with Mr Hailes and his client to finalise the AFL and Lease.[93] In relation to clause 8.2, AAR rejected his request for an amendment to the clause to ensure that the Landlord knew the identity of any sub-lessee or licensee.

56 On 19 October 2011, Mr Hailes replied to AAR and attached a table detailing his client's instructions in relation to the outstanding matters in the draft documents.[94] In relation to clause 8.2, he wrote:

The Tenant will not require consent to sub-lease or license an area greater than 5% of the Premises. However, this proviso is based on such occupants not placing the Landlord in breach of any of its leases with other tenants in the centre whom enjoy exclusivity. Details to be provided

This item in the table was amended at the meeting of 27 October 2011, where it is said that the parties agreed that the word "not" was to be deleted.[95]

57 In its submissions, Aventus makes reference to the 27 October 2011 meeting in the following terms:[96]

On 27 October 2011, Mr Holland attended a meeting in Melbourne with Mr Holland and representatives of Masters and AAR at which negotiations continued regarding the terms of the AFL and the Lease.[97] Clause 8.2 was discussed at this meeting. Mr Holland recollects that the Masters representatives at the meeting said Masters had or proposed to have arrangements with certain traders under which the traders were or would be permitted to trade from 5 or more Masters' premises in Australia. He recollects that McDonalds was an example of such a proposal at the time.[98]

58 Mr Holland's oral evidence concerning the negotiations which took place at that 27 October 2011 meeting included the following:[99]

Mark Delaney [Woolworths' representative] was talking about that clause that got constructed as the sub-lease and concession clause and licensing clause relating to a store within a store, like the DJs or the Myers example, where you have concessions. And we said, 'What's an example of that?'. And he gave the example of McDonald's and he said, 'We're attempting to roll out McDonald's across all of our Masters stores', and that's an example of a store within a store. The other examples might be trade suppliers or a - there might be a Makita with a concession store, and to the naked eye of the customer you don't know that that's a concession store ‑... just like if you go in to David Jones or Myers.

59 Following the 27 October 2011 meeting, AAR circulated a revised draft of the Lease on 3 November 2011 which amended clause 8.2 (as track changed) to read as follows:[100]

...

(a) The Subject to paragraph (b), the Tenant may without the Landlord's consent:

1. sublet, or grant licences to any person for the occupation or use of, the whole or any part of the Premises; and
2. grant concessions to any person for the use of any part or parts of the Premises.

(ii) Despite paragraph (a), the Tenant may not without the Landlord's prior written consent (which consent must not be unreasonably withheld or delayed), sublet, grant licences or concessions which (in aggregate) exceed:

1. 5% of the trading area of the Premises where the sub-leases, licensees or concessions do not form part of a sub-lease, licence or concession programme conducted by the Tenant with respect to 5 or more home improvement stores operating under the same trading name in Australia;
2. 15% of the trading area of the Premises where the sub-leases, licences, or concessions form part of a sub-lease, licence or concession programme conducted by the Tenant with respect to 5 or more home improvement stores operating under the same trading name in Australia; and
3. 20% of the trading area of the Premises in total.

BB Retail Capital agreed to the amendments.[101]

60 In its final form, following the conclusion of negotiations, clause 8.2 of the Lease was settled and agreed in the form set out below, in the context of the relevant provisions of the Lease.[102]

61 Masters, on the other hand, contends that Aventus' evidence of the parties' negotiations ought to be rejected. It is submitted that this evidence is not admissible to construe the Lease. Alternatively, it is said, if the evidence is led to establish the surrounding circumstances, in the sense of objective facts known to both contracting parties and therefore being capable of bearing upon the meaning of the words contained in the contract, it fails to do so. It is relied upon by Aventus to evidence the genesis, aim and background of clause 8.2. Nevertheless, Masters contends that this does not assist the Court. For the reasons which follow, I am of the opinion that this evidence does not assist the Court other than, perhaps, in the most general sense of reaffirming the intention of the parties to provide for the construction of a purpose-built Masters store, built to the specifications of Woolworths, in accordance with a design brief. The motivations of Aventus with respect to the securing of a Masters tenancy on land which it owned and controlled is a subjective matter which does not aid the construction and process. None of these subjective matters are in the nature of objective surrounding circumstances.

62 More particularly, the evidence of the pre-contract negotiations does, as Masters submits, "boil[s] down" to Mr Holland's recollection of a meeting which took place in Melbourne over eight years ago - Aventus having decided not to call Mr Hailes. There are no file notes or any other written documents in evidence which record the negotiations. According to the few short sentences dedicated to it in Mr Holland's witness statement, the meeting took place on 27 October 2011, "in Melbourne".[103] Under cross-examination, the following became clear. Mr Holland could not recall what year the meeting was, let alone what date.[104] He could not recall where the meeting took place.[105] He could not recall which firm of solicitors was present acting for Masters.[106] Whilst Mr Holland recalled talking about "a range of issues",[107] surprisingly, Mr Holland specifically recalled the "clause around licenses - licensing and concessions",[108] whilst not clearly remembering any of the other clauses being discussed.[109] Moreover, Mr Holland could not recall the individual names of attendees present at the negotiations;[110] how many attendees were present at the negotiations;[111] or the precise length of the negotiations.[112]

63 Consequently, I accept the submission on the part of Masters that this evidence is vague and unreliable. It is in conclusionary form which could not reflect the actual words used. Importantly, the owners of the land upon which the Premises are situated in 2011 and 2012 - who had not yet transferred that land to Aventus - were not included in the discussions. There is no reference to the Dunscombes or any solicitor acting for them. As I have indicated, this evidence does not and ought not inform the Court's interpretation of the Lease for all these reasons.

Terms of the Lease relevant to the construction questions

64 As indicated previously, the Lease is for an initial term of 15 years, with further terms totalling another 25 years in aggregate. I turn now to the provisions of the Lease which are of particular relevance to the construction questions.

65 The Lease contains a "whole agreement" clause at clause 13.3 which provides:

The provisions contained in this Lease and the Agreement for Lease comprise the whole of the agreement between the parties in respect of the Premises. No other provisions, whether in respect of the Premises or otherwise, will be implied or arise between the parties by way of collateral or other agreement made by or on behalf of the parties on or before or after the execution of this Lease

66 Clause 1.2 of the Lease sets out rules of interpretation, including the following:

(a) The singular includes the plural and conversely;

...

Unless stated otherwise, one word or provision does not limit the effect of another;

...

(j) Reference to the whole includes part;

...

(o) Include (in any form) when introducing a list of items does not limit the meaning of the words to which the list relates to those items or to items of a similar kind.

Each of these rules does, as Masters contends, guide the reader towards an expansive and not a restrictive interpretation of the Lease.

67 Clause 6.1 of the Lease is entitled "Use of Premises" and provides:

The Tenant must not use the Premises for any use other than the Permitted Use, unless the Landlord consents to another use.

68 Clause 6.3 of the Lease is entitled "Trading Hours" and provides:

The Tenant ... must open for business during the hours of 9 am to 5 pm 7 days per week ....

69 By clause 7.2 of the Lease is entitled "Structural Work" and provides:

Subject to clause 7.5(b) [which is not presently relevant], nothing in this Lease imposes any obligation on the Tenant to do any Structural Work or to make any alterations or additions to the Premises whether required by any Authority or for any other reason. The Landlord is responsible for carrying out any such work at its own cost.

The expression "Structural Work" is defined in clause 1.1 of the Lease as meaning, inter alia, any works to the structure of any of the Landlord's Property.[113]

70 Clause 8.2 of the Lease is entitled "Subletting, Licences and Concessions", and provides as follows:

(a) Subject to paragraph (b), the Tenant may without the Landlord's consent:

(i) sublet, or grant licences to any person for the occupation or use of, the whole or any part of the Premises; and

(ii) grant concessions to any person for the use of any part or parts of the Premises.

The Tenant must provide the Landlord with a list of the names of all sub-tenants, licensees and concessionaires occupying or using the Premises promptly upon request, together with a description of the part of the Premises being occupied or used by each sub-tenant, licensee and concessionaire. The Landlord must not request a list under this clause more than once in any 12 month period.

(b) Despite paragraph (a), the Tenant may not without the Landlord's prior written consent (which consent must not be unreasonably withheld or delayed), sublet, grant licences or concessions which (in aggregate) exceed:

(i) 5% of the trading area of the Premises where the sub-leases, licenses or concessions do not form part of a sub-lease, licence or concession programme conducted by the Tenant with respect to 5 or more home improvement stores operating under the same trading name in Australia;

(ii) 15% of the trading area of the Premises where the sub-leases, licences or concessions form part of a sub-lease, licence or concession programme conducted by the tenant with respect to 5 or more home improvement stores operating under the same trading name in Australia; and

(iii) 20% of the trading area of the Premises in total.

71 The permitted use for the Premises as stated in the Reference Schedule to the Lease is as follows:

Permitted Use Home Improvement Store allowing for retail, wholesale and bulk sale and display of goods, materials, products, merchandise and items of any description (including home improvements including household goods and appliances, building, hardware, timber and nursery products or materials) associated café or restaurant and any other ancillary or associate use permitted by Law.

Application of the principles of construction to the Lease

72 As indicated, it is helpful in the present context to consider the construction issues with reference to the construction questions arising in this proceeding, as set out previously.[114]

Construction Question 1 - Permitted Use of the Premises

73 Aventus alleges that Masters aims to subdivide the Premises into separate areas with diverse retail uses in circumstances where, to the knowledge of the parties to the AFL and the Lease, the Premises were originally constructed, and it was _"_always known and contemplated", that the Premises would be used as a single Masters store with Sub-leases, licences or concessions within that single Masters store in furtherance of the permitted use in the Lease under the Masters brand.[115] Masters responds that this is a fundamental misconception with respect to the Masters request, which, it emphasises, seeks only to create one sub-tenancy. Masters readily concedes that any further request to sublease would be subject to the Permitted Use and subject to the consent of Aventus. Neither does Masters seek to vary the permitted use of the Premises for the purpose of its present request for consent to sublease. Consequently, Masters contends that the only relevant question is whether the use of the Premises under the Proposed Sublease is consistent with the permitted use under the Lease.[116]

74 Aventus, on the other hand, says that whilst the parties to the Lease remain the same today as they were when the Lease was consummated, the economic and commercial reality with respect to Masters has significantly altered. When the Lease was entered into, it says, Masters was in the business of trading home improvement stores and was controlled by two retailing giants - Woolworths and Lowe's. Aventus further observes that, today, Masters is a vastly different business and controlled by Home Co which, through Masters, is in the business of repurposing real estate into large format retail shopping centres and, as part of that business, leasing premises to retail tenants for diverse uses. It is conceded that whilst it may have been in contemplation of the parties at the time of entering into the Lease that parts of the trading area of the Premises may be sublet, licenced or concessioned in the course of Masters' home improvement trade at the Premises, it could never have been contemplated by the parties at that time that the ownership of Masters would change in a fundamental way, or that the Premises would be structurally subdivided into parts for subleasing, licencing or concessioning to other tenants to ply their trade separately from the Masters home improvement store. Still less, it is said, would it have been contemplated by the parties that trading from the Premises would cease within the space of one year and that the Premises would be structurally subdivided into parts for subleasing, licencing or concessioning to diverse tenants. There appears to be little doubt that it is the position that the parties did not contemplate the closure, much less the imminent closure, of the Masters home improvement stores in Australia when the Lease was entered into. However, the reality is that this is exactly what did occur and, accordingly, absent any claim that the Lease has thereby been frustrated, its provisions, properly construed, must be applied to the present reality.

75 A further matter raised by Aventus goes to possible future use of remaining areas of the Premises, not the subject of the proposed Sublease. Aventus contends that the evidence puts beyond doubt that the proposed Sublease is the first step in the Masters and Home Co strategy of structurally partitioning the Premises and repurposing them as a large format retail shopping centre consisting of several retail tenancies for sublease.[117] Moreover, Aventus submits that such a structural partitioning of the Premises by the Tenant into separate premises for separate tenancies is not permissible under the Lease. It says that on a fair reading of clause 8.2(b) of the Lease, it does not contemplate the physical/structural partitioning of the Premises, let alone the trading area of the Premises, into several different premises for subleasing, licensing or concessioning into different tenancies and uses. There is evidence of repurposing of former Masters' stores at other shopping centres in a manner which Aventus contends is the Home Co plan for the Premises. Nevertheless, it should be stressed that the proposed Sublease and the Request for Consent to the proposed Sublease is confined to the subleasing of one part only of the Premises.

76 Aventus seeks to read down the Permitted Use under the Lease to a single home improvement store, with any allowable subleases, licences or concessions being confined to subleases, licences or concessions by Masters of areas within the overall, single, Masters home improvement store. As to this, Masters contends that, in the words of Palmer J in Euphoric, to do so would be more rectification than construction.[118] Moreover, Masters makes the point that, during negotiations for the AFL and the Lease, the parties were represented by experienced legal advisors.[119] Thus, it is said, it would not be unrealistic to expect that if the parties contemplated such a specific restriction on the right to sublease so that the Premises could only be let by a single home improvement store, then the Permitted Use of the Premises, clause 8.2 of the Lease, would have accurately and specifically reflected this. Aventus contends, however, that these provisions only contemplated the subleasing, licencing or concessioning of the "trading area" of the Premises, and always in aid of carrying on the Permitted Use of a Home Improvement Store within that store. The parties are at odds as to whether the express words of the Lease, or textual indications in the language of the Lease, are inconsistent or consistent with such an intention. Moreover, Masters makes the point that it was also always open to Aventus to negotiate to have a "no sublease" clause in the Lease, or to make express reference to Masters in the Permitted Use clause, or to limit Masters' ability to deal with third parties to concessionaires only. It did none of these things.

77 Masters contends that clause 8.2 of the Lease, on its face, clearly allows subleasing or the granting of licences to any person for the occupation or use of, the whole or any part of the Premises. Clause 8.2(a) contemplates the provision to the landlord of a list of the names of all sub-tenants, licensees and concessionaries occupying or using the Premises every 12 months. A sublease involves a grant of exclusive possession of the subleased part of the Premises. It is of importance to note that in order to grant exclusive possession to a sublessee physical works are required. To that end, Mr Brown, Aventus' expert, in re-examination gave evidence that in order to sublease, physical works to the Premises would be required as "You couldn't have half a dozen tenants locate in open space".[120] However, as Masters observes, the structure of clause 8.2(a) clearly distinguishes between subleases and licences (at (i)) and then concessions (at (ii)).

78 Aventus contends that the Permitted Use under the Lease is inconsistent with the permitted use proposed under the Sublease.[121] That proposed use is as follows:[122]

Display, sale and warehousing of furniture and furnishings, generally but not limited to, furniture, homewares, flooring products, blinds and other window dressing, manchester and ancillary office space furnishings, together with any other use permitted by law subject to the Landlord's consent (not to be unreasonably withheld).

This permitted use provision should be contrasted with the Permitted Use of the Premises as provided for in the Lease, the text of which is set out in the immediately preceding paragraphs in these reasons.[123] In my view, for the reasons which follow, there are no relevant inconsistencies and the Permitted Use under the Lease does accommodate the permitted use under the proposed Sublease. In any event, cl 29.1 of the proposed Sublease specifically requires consent for any matter for which the consent of Aventus is required under the Lease (the "headlease" to Masters).[124]

79 More particularly, Aventus submits that there are clear indications in the AFL and the Lease that it was objectively intended that the Premises would be used as a single home improvement store. In this respect, Aventus makes reference to the following provisions:

(a) the AFL defines "Premises" as "the home improvement store building";

(b) the Lease defines "Premises" as "That part of the Centre identified on the Plan as the [Masters Home Improvement Store]"; and

(c) the Permitted Use is defined as "Home Improvement Store allowing for...".

Moreover, Aventus contends, in its opening submissions, that Masters misconstrues the Permitted Use clause by minimising the significance of the opening words "Home Improvement Store" and seeking to elevate the "allowed" uses within that Home Improvement Store.[125]

80 Aventus also contends that the "Permitted Use" provisions of the Lease must be interpreted in the context of the facts known to both parties at the time it was entered into. Those facts are said to include the following:[126]

(a) Masters' media release of 2 May 2011:[127]

(i) "NEW BRAND, NEW ERA IN HOME IMPROVEMENT ...;

(ii) "Masters first store [will include] a separate trade-only area dedicated to the building and professional industries";

(iii) "this brand will become a very familiar one for Australian DIY'ers";

(iv) "a huge range of more than 35,000 products";

(v) Masters "will ensure Australians will eventually come to know and trust us for all their home improvement needs";

(vi) "We hope that [Masters] will inspire our customers to master whatever job they are doing in their home";

(vii) "Masters' vast range of product categories will include lighting, paint, flooring, kitchens, outdoor furniture, appliances, gardens, walls and windows, power tools, storage, plumbing and bathrooms. Products will include many not previously available in a single location in the Australian market".

(a) Heads of Agreement dated 18 May 2011.[128] "Permitted Use: Home improvement store allowing for the retail, wholesale and bulk sale and display of goods, materials, products, merchandise and items of any description (including home improvements, including household goods and appliances, hardware, timber and nursery products or materials)".

(b) This definition was repeated in the Lease with the addition at the end of the words: "associated café or restaurant and any other ancillary or associated use permitted by law".

(c) Building a Master Brand dated 27 June 2012:[129]

(i) "Masters is a new DIY retail concept launched into the Australian market on 2 May 2011";

(ii) "Masters offers a range of over 35,000 home improvement products to trade and retail customers include lighting, paint, flooring, kitchens, outdoor furniture, appliances, gardens, walls and windows, power tools, storage, plumbing and bathrooms ...";

(iii) "In a market dominated by competitor brand, Bunnings, Masters needed ...";

(iv) "The solution for the name, 'Masters', came from a simple insight. If you want to build or renovate your home or business, who do you trust to do the job? Answer: the master builder; the master painter; the master craftsman";

(v) "'masters' of customer service and their DIY projects";

I accept that these matters go to the factual matrix in which the Lease was negotiated and entered into, but they are not determinative with respect to the proper construction of the provisions of the Lease in the face of the language the parties have chosen - as discussed in this context. Moreover, having regard to the actual language of the Lease, I am of the opinion that these aspects of the factual matrix support the position of Masters, rather than Aventus.

81 Continuing, Aventus submits that, notwithstanding clause 2.1(a) of the Lease providing "unless the context requires otherwise (a) the singular includes the plural ...", here the context does not permit reading the definition of Premises and Permitted Use - "Home Improvement Store" - as "Home Improvement Stores". Additionally, it is submitted that where the Lease intended the plural with respect to stores, it said so. The example given is clause 8.2(b)(i) and (ii), which refer to a "programme conducted by the Tenant with respect to 5 or more home improvement stores". Aventus also says that, granted that the Lease provided for the subletting, licencing or concessioning of the whole or part of "the trading area of the Premises", it should be taken that the ability to sublease or grant a licence or concession to the "the trading area" was objectively intended to be available within the confines of a single trading home improvement store only.

82 Aventus also calls in aid the express use of the words "trading area of the Premises" in each part of clause 8.2(b), submitting that this is decisive. The natural and ordinary meaning of those words, it is said, would be understood by a reasonable businessperson to mean, the area of the Premises on which the Masters trade occurs. It is suggested that they cannot bear any other meaning. The Macquarie Dictionary (9th Edition) defines "trade" as: "1. 'the buying and selling, or exchanging of commodities, either by wholesale or retail, within a country or between countries' 2. 'a purchase, sale or exchange'."

83 The phrase "trading area of the Premises" is not defined either in the AFL or the Lease. However, it is contended that a consideration of the extensive use of the word "Area" or "area", either alone or together with another word or words in the Lease, demonstrates that "trading area of the Premises" is the area where the trade - ie the buying and selling - occurs. The Lease, in clause 1.1, contains specific definitions of Common Areas, Lettable Areas, Lettable Area of the Centre, Lettable Area of the Premises, Lettable Area of the Separate Tenancies, Licenced Areas, Separate Tenancy Car Parking Area, and Sidewalk Sales Area, amongst other terms. Each of these terms is defined by reference to a described "area" or "areas" and similar definitions also appear in the AFL in clause 1.1. Thus, Aventus submits, it is clear that none of these "areas" in the definitions equates the "trading area of the Premises". Thus, for example, the "Lettable Area of the Premises" is larger than the trading area of the Premises. It is noted that the "Premises", as defined in the AFL and the Lease, is the building - that is, the "Masters Home Improvement Store". The Premises comprise various areas, some of which are defined whilst others are not. Aventus has made reference to the defined areas to which reference has been made, but the Lease also refers to "area" or "areas", which are not defined. The examples given are "parking areas", "mezzanine area ... or similar area", "car parking areas", "turning area" and, of course, "trading area".[130] The same usage of the word "area" or "areas" also appears in the AFL.[131]

84 Thus, concluding on this point, Aventus submits that the uniform usage in the AFL and the Lease of the word "Area" or "area", in the singular or plural, and whether defined or not, manifestly signifies the space within the Premises intended to be impinged by the rights and obligations under the Lease. This, it is said, leaves no room for doubt that the objective intention of the parties was to expressly confine clause 8.2(b) to subleases, licences and concessions of that space of the Premises where "trading" - ie, buying and selling - occurred. Such, it is contended, was the extremity or boundaries of the clause by dint of the express words used by the parties, giving the words their ordinary and natural meaning.[132]

85 Aventus also makes submissions with respect to the nature of "subletting" contemplated by clause 8.2(b) of the Lease which, it says, can be discerned from the composite phrase "sublet, grant licences or concessions". In construing clause 8.2(b), it is said that Masters seeks to emphasise the word "sublease" and its conventional meaning as conveying a grant of exclusive possession.[133] It is conceded that whilst it is well established that, as a matter of law, the traditional test to be applied to distinguish between a lease and a licence is whether there is a grant of exclusive possession,[134] it cannot and does not follow from the reference to "sublease" that the parties contemplated the structural partitioning or carving up of the Premises to isolate a sublet area or areas. Rather, it is said that what was contemplated by the use of the term "sublease" in clause 8.2(b) is to be determined as a matter of construction of the particular lease in question, with the clause to be construed in the light of the whole agreement and its context.[135] In this respect, reference is made to Swan v Uecker,[136] a case addressing the question whether a tenant who put leased premises on AirBnB had granted a sublease or licence. In that case, I held that the nature of the right granted always turns on a construction of the particular lease and a discernment of the objective intention of the parties. I referred in that case to the judgment of Tadgell JA in KJRR Pty Ltd v Commissioner of State Revenue in the context of discussing the High Court's decision in Raidach v Smith:

The agreement [in Raidach] described itself as a licence but the High Court decided that it fell to be classified as a lease in the light of the true nature of the grant, having regard not only to the written terms of the agreement but to the relevant surrounding circumstances, including in particular the nature of the premises and the purpose for which the grant was given and taken. In effect it was held, for it was obvious as a matter of common-sense, that the grantee could make use of the premises only if she had the exclusive right to use them as a shop.[137]

86 On this basis, Aventus contends that, as with the grant of a licence or concession of part of the trading area, which could not involve a structural partitioning of the Premises, so also the subletting of part of the trading area could not involve the structural partitioning of the trading area of the Premises. The word "sublease" or "sublet" do not appear in the Lease divorced from their companion words "grant licence(s) or concession(s)". The collocation of "sublease" with the words "licence or concession" would, it is said, be understood by the reasonable businessperson to signify an intention that any sublease, as with any licence or concession, would be confined to the trading area of the Premises and not confer a distinct and separate right to structurally partition the Premises in connection with a sublease in circumstances where that same right does not attach with respect to a licence or concession. Thus, it is submitted, the composite phrase is to be read as a whole and construed consistently with the word "sublease" in clause 8.2(b) deriving its meaning in the context of its linkage with licence or concession, which leads to the conclusion that the nature of the "subletting" contemplated by clause 8.2(b) is confined in the same manner as the grant of a "licence" or "concession" under that same provision.[138]

87 Masters submits that although Aventus focuses on the on the singularity of the words "Home Improvement Store" in the Permitted Use clause, the provisions of clause 8.2 of the Lease clearly allow for multiple stores and the Permitted Use clause ought not to be read as limiting the use of the Premises to a single store. Moreover, the point is made, and in my view with some force, that at the time the Lease was entered into, Masters was a new market entrant, with all the associated risks that carries with it, and therefore it should not be assumed, in the absence of express words, that the Lease only permitted Masters, and no other entity, to trade from the Premises. Apart from the force of this submission as a general proposition, clause 8.2 expressly provides for a sublease by Masters of the "whole" of the Premises. It must follow then, that it was clearly in the contemplation of the parties that an entity other than Masters could trade from the Premises during the term of the Lease. Moreover, Masters submits that even if the Court accepted the evidence of Aventus as to the pre-contractual intentions and negotiations of the parties, that evidence must yield to the actual words the parties chose to express their intention, which is that the whole of the Premises could be sublet.[139] In my view, as indicated elsewhere in these reasons, the evidence relied upon as to pre-contractual intentions and negotiations do not detract from this proposition and, to the extent that they might be thought to do so, must yield to these clear provisions of clause 8.2.

88 Additionally, as Masters contends, clause 8.2 of the Lease also clearly provides for parts of the Premises to be sublet. This is clear from the language of both sub-clause 8.2(a) and sub-clause 8.2(b). This does, in my view, favour a construction that there is scope within the Lease for multiple sub-tenancies, each with exclusive possession, a position for which Masters contends. I also accept its contention that to employ a contrary interpretation - that only the entirety of the Premises could ever be sublet to a single home improvement store tenant, or that subleases could only be granted within the four walls of a single, trading, Masters store - would mean that Masters, no longer trading, could never sublease the Premises or would only ever hope to secure the consent of Aventus for a sublease to a single home improvement retailer willing to lease in excess of 13,000m2 of store area. Such an interpretation would, as further contended, be antithetic to the very concept of a sublease, which involves the granting of a right to exclusive possession.[140] Additionally, the practical reality is that there will be very few such tenants in the market, if any, other than Bunnings;[141] though it was suggested during the trial that a large Mitre 10 store may also be a possibility.

89 The language of clause 8.2 of the Lease does also accommodate multiple sub-tenancies of the kind proposed by the Sublease, as Masters contends. That these provisions accommodate such tenancies is indicated by the following terms in sub-clause 8.2(a): "sublet ... to any person for the occupation ... the whole or any part of the Premises", the requirement to "provide a list of the names of all sub-tenants", and the cascading percentages specified in sub-clause 8.2(b) with reference to "sublet...which (in aggregate) exceeds" those percentages. In my view, it is the position that to construe clause 8.2 as being limited to a single store sublease would mean that these words have no work to do and are rendered entirely superfluous. Clearly, such a construction would not give all the words of the Lease meaning and would lead to the provisions of the Lease operating in disharmony.

90 The Permitted Use provided for in the Lease is, as Masters contends, broad and includes the sale/display of "items of any description" followed by the word "including". As clause 1.2 of the Lease provides, the use of the word "including" does not limit the meaning of the words to which the general words might otherwise apply.[142] The categories of goods to be sold are expanded by the use of the words "including household goods and appliances". In my view, the Permitted Use provided for in the Sublease clearly falls within the Permitted Use of the Premises, namely the display, sale and warehousing of furniture and furnishings, homewares, flooring products, blinds et cetera, as Masters contends. These items are clearly "household goods". Moreover, Mr Holland, in cross-examination, referred to Aventus' business - though more accurately, the Aventus Group businesses - being comprised of "everyday needs" - or what used to be called "non-household goods" and "household goods",[143] and that everyday needs comprised "food and beverage, supermarkets, liquor and convenience services, health and wellbeing, automotive, office supplies, discount variety, pets".[144] Therefore, it seems clear that the furniture stores operating within the Aventus centres are considered to come within the "household goods" category. Under cross-examination, Mr Holland also referred to Bunnings as selling household goods, and accepted, at least in general terms, that items such as outdoor furniture, tables and chairs, which are sold at Amart, are sold at Bunnings.[145]

91 As observed by Masters in its submissions, Aventus, in its solicitor's letter to Masters dated 8 February 2019,[146] sought comfort from the dictionary definition of "home improvement":[147]

The activity of improving houses or apartments by doing work on them, or the changes that you make.

I do, however, accept that it is not necessary to have regard to dictionary definitions when the parties have themselves, in the Lease, provided at least a partial definition of "home improvement" - specifically defining it to include "household goods and appliances". Moreover, whilst dictionaries can be used as an aid to identifying the conventional meaning of a word, they are no substitute for the interpretative process having regard to the language and structure of the instrument in which they appear.[148]

92 In any event, it is obvious, in my view, that "changes that you make" when engaging in the "activity of improving houses or apartments by doing work on them" includes the purchase of new or replacement furniture or furnishings, homewares, flooring, blinds and other window dressing and/or manchester as referred to in the proposed use under the Sublease.[149]

93 Reference has already been made to submissions by Aventus with respect to the "trading area" of the Premises in sub-clause 8.2(b) and the possible effect of these references to the nature of permissible subleasing under the terms of the Lease. For the reasons indicated, I am of the opinion that the provisions with respect to "trading area" in subclause 8.2(b) do not, as Aventus would have it, have any significance in relation to the proper construction of the Permitted Use provisions of the Lease or the nature of any proposed sublease or permitted uses under that Lease, subject to those uses being within the scope of the Permitted Use under the Lease. It is quite clear, in my view, that the sublease of part of the Premises is within the contemplation of the clause 8.2 provisions and there is nothing to suggest any such sublease should have any different attributes in terms of securing exclusive possession, by partitions or otherwise, as distinct from any other lease or sublease. It may be the case that the parties contemplated a particular look and get-up of the premises when it was thought, that the tenant, Masters, would operate a single retail store in the "big box". However, as observed, the Masters venture was a new business venture and there is no reason to suppose that any contemplated or actual state of affairs would necessarily continue for the term of the Lease and any renewals which extend over a considerable period of time. In any event, it was open to the parties to make provision for the matters now canvassed, and this they did not choose to do. Moreover, the references to "trading area" in clause 8.2 of the Lease do not, in my view, as Aventus would have it, provide any restriction or limitation on the right of Masters to sublease the whole or any part of the Premises in accordance with clause 8.2 without regard to what might formally have been or might be said to be defined or ascertainable as the "trading area" of the Premises. Other implications of Aventus' position with respect to the effect of references to the "trading area" in clause 8.2 are also discussed further in the reasons which follow.

Construction Question 2 - "trading area" and the interdependence of clauses 6.3 and 8.2

94 Aventus alleges that, on its proper construction, Masters' right to sublet can only be exercised when it is trading at the Premises and using the Premises for the Permitted Use.[150] As the submissions of the parties indicate, there are two aspects arising out of the reference to "trading area" in sub-clause 8.2(b); particularly in the present context where Masters has ceased to trade at the Premises, a position at odds with the trading requirements of clause 6.3 of the Lease. The first issue that arises is the operation of clause 8.2(b) with respect to "trading area" in circumstances where no trade is being carried on; and the second, whether clauses 6.3 and 8.2(b) of the Lease are interdependent and ought to be read such that breach of the fundamental obligation to trade, reflected in clause 6.3, renders clause 8.2(b) spent as there is no "trading area" to sublease.

95 Taking the interdependence issue first, it must be observed that there is no reference to a right of the landlord in clause 8.2 to refuse consent if Masters were in breach of the Lease, for example, by ceasing to trade. As submitted by Masters, Aventus is obliged to act reasonably in all the circumstances; circumstances which include the acceptance of rent and the reliance on the Woolworths guarantee by Aventus since December 2016. In terms of the Lease provisions, the position under clause 8.2 may be contrasted with the provisions of clause 8.1 in relation to assignment, where there is no right to assign if the tenant is in Substantial Breach of the Lease.

96 In considering whether clauses 6.3 and 8.2 of the Lease are interdependent or concurrent such that they ought to be read in the restrictive manner for which Aventus contends, the Court must consider the factors relevant to determining the objective intention of the parties as set out in Highfield Property Investments Pty Ltd v Commercial & Residential Developments (SA) Pty Ltd, where Blue J said:[151]

1. The question whether obligations are independent, dependent or interdependent depends on the (objective) intention of the parties, ie the proper construction of the contract.[152] While there was originally a tendency in the eighteenth century to construe obligations as independent,[153] the modern tendency is towards construing them as being dependent and often interdependent.[154] Typical examples of interdependent obligations are in contracts for the sale of land or goods in which title is exchanged for price.[155]
2. The factors relevant to determining the intention of the parties in this respect include:
   1. the evident purpose of obligation A;
   2. the degree of inherent inter-connectedness between the obligations;
   3. the degree of importance of obligation A;
   4. whether obligation A is the whole, substantial part or only a minor part of the overall consideration;
   5. whether breach of obligation A may be adequately compensated by damages;
   6. what provisions are made by the contract in terms of interconnectedness;
   7. whether the provisions are put in different documents.[156]

97 In relation to these factors, Masters submits that these include:[157]

(a) The evident purpose of obligation A. Here, Aventus would read that to be the obligation to trade (Masters accepts there is such an obligation).

(b) The degree of inherent inter-connectedness between the obligations. Here, Aventus concentrates on the undefined term, "trading area", to connect clauses 6.3 and 8.2(b). The term is descriptive of the area to be calculated in determining whether a minimum threshold has been exceeded for the requirement of consent (i.e. 5%, 15% and 20%). The clause does not purport to define the area to be subleased. Mr Holland used the phrase "trading area" during his cross-examination when talking about the Masters tenancy even though no trading was occurring.[158] The two clauses are not interconnected. As for clause 8.2, on its face, continuing to trade is not a precondition to consent. Further, clause 1.2(i) steers the interpretation of the Lease away from interconnectedness, providing as a rule of interpretation that "Unless stated otherwise, one word or provision does not limit the effect of the other". Clause 6.3 deals specifically with the obligation to keep certain trading hours.

(c) The degree of importance of obligation A. Here, whilst Masters accepts the importance of the obligation to trade, it repeats that the parties expressly contemplated in the Lease a scenario where Masters was not trading by allowing for a sublease of the whole of the premises in clause 8.2(a)).

(d) Whether obligation A is the whole, substantial part or only a minor part of the overall consideration. Here, it is arguable that the obligation to trade forms no part of the actual consideration for the Lease.

(e) Whether breach of obligation A may be adequately compensated by damages. Here, there is no suggestion it could not and no such claim has been made.

(f) What provisions are made by the contract in terms of interconnectedness. Here, Masters refers again to clause 1.2(i) of the Lease.

(g) Whether the provisions are put in different documents. This is not applicable here.

98 Masters ceased trading at the Premises in December 2016, but Aventus has continued to accept rent from Masters. It appears to be uncontroversial that the rent has been paid on time and in full every month since December 2016. Moreover, Aventus has not sought to terminate the Lease and nor has it sent a breach notice in this respect. Additionally, the market was informed by Aventus Group's ASX Release dated 13 March 2019 that:

...The proceedings do not impact the Head Lease which remains on foot, including the guarantee by Woolworths Limited for the performance by the Tenant of its obligations under the Head Lease.

99 On these bases, Masters submits that the evidence reveals that the allegation by Aventus of interdependence between clauses 6.3 and 8.2 of the Lease is reflective of the desire of Aventus to keep the Premises empty, retain its rent and keep its options open to terminate the Lease in the future.[159] That desire, Masters says, is no reasonable answer to a request by Masters to sublease to a suitable tenant.

100 Aventus, in its submissions, also addresses the other aspect of this issue, namely, whether clause 8.2 of the Lease - particularly sub-clause 8.2(b) - of the Lease can operate in any meaningful way, or at all, in the absence of trading by Masters at the Premises; hence, it is said, in the absence of any "trading area". Thus, it made submissions as follows (though also directed to the question whether structural partitioning, hence subleasing, as contemplated is permissible).[160]

1. Fourth, having ceased to trade from the Premises, there was, after such cessation, no "trading area of the Premises" capable of being the subject of subletting or granting of a licence or concession. Clause 8.2(b) clearly contemplates that such subletting or granting of a licence or concession will occur whilst Masters is trading at the Premises. This is supported by the connection of the subletting, licensing or concessioning to a "programme conducted by the Tenant with respect to 5 or more home improvement stores operating under the same trading name in Australia". It is also evident from the requirement in clause 8.2 that:

"The Tenant must provide the Landlord with a list of the names of all sub-tenants, licensees and concessionaires occupying or using the Premises promptly upon request, together with a description of the part of the Premises being occupied or used by each sub-tenant, licensee and concessionaire. The Landlord must not request a list under this clause more than once in any 12 month period."

This provision contemplates that the Tenant and its subtenants, licensees or concessionaires would be occupying or using the Premises for trade and that such subtenants, licensees or concessionaires may change from year to year - a clear indication that it was not intended that the Premises would be structurally partitioned from time to time.

...

1. This evidence and Mr Holland's recollection of the discussions are supported by the documentary evidence. The evidence establishes the following background facts which support Aventus' contention that clause 8.2 only ever contemplated subleasing, licensing and concessioning of the "trading area" of the Premises to an entity carrying on the Permitted Use of a Home Improvement Store on the Premises:

(a) the negotiations in relation to clause 8.2 proceeded on the assumption that any sublease, licence or concession of the trading area of the Premises would occur whilst Masters was trading as a home improvement store;

(b) the purpose and object of the tiered approach to clause 8.2 was in contemplation of the sublease, licence or concession being in respect of the trading area of the Masters home improvement store to a third party trading within the broader Masters store;

(c) the distinction drawn between those sublessees, licensees or concessionaires who form part of a programme in other Masters stores (also known as a 'Framework Agreement'), and those which do not, recognised that (as was mutually known to the parties) Masters had or proposed to have arrangements with certain traders across multiple of its stores (the example discussed, and known to both parties at that time, being McDonalds restaurants) through which part of the Masters trading floor would be sublet, licensed or concessioned.

1. Seventh, it is no answer to contend, as Masters does in its written opening submissions, that the Lease "contemplates the creation of multiple sub-tenancies". Aventus does not cavil with that proposition so far as it goes. But it is the nature of the permissible subtenancy or subtenancies which is critical, including whether they can be accommodated through the structural subdivision of the Premises. For the reasons set out, those subtenancies must be of the trading area, where the buying and the selling occurs. The fact that the Lease contemplated multiple subtenancies does not provide a warrant to ignore the plain words of clause 8.2 and to read into that sub-clause a broader right than the language used by the parties bears. Further, whatever subtenancies, licences or concessions may be granted, the Lease does not sanction their creation through the structural subdivision of the Premises, let alone the trading area of the Premises.

101 As, on the basis of the matters put by Masters and as indicated in the preceding reasons, I am of the view that clauses 6.3 and 8.2 of the Lease are independent provisions, some meaning and operation must be given to the provisions of clause 8.2, even though Masters has ceased to trade at the Premises and, consequently, there is no area or areas within the Premises upon which trading is actually taking place and hence which might be described as "trading area". The Aventus submissions, particularly those set out in the immediately preceding paragraph, do not accommodate clause 8.2 operating in such a way as to give work to all its provisions - particularly those in sub-clause 8.2(b).

102 Aventus makes further submissions with respect to the contemplation of the parties to the AFL and the Lease and Mr Holland's recollection of discussion in the course of negotiations. Mr Holland's recollection in relation to discussions and negotiations must be treated with some care, as his evidence in cross-examination indicated incomplete and generalised recollection at best.[161] However, in the present circumstances, references in this respect are to a position which is clear on the documentary evidence and the provisions of the AFL and the Lease itself - namely that the parties did contemplate Masters occupying and using the Premises as a single Masters store, though there may have been a variety of concessions and even subleasing within that store; such as to McDonald's or Makita.[162]

103 In spite of these matters and the current position with respect to trading, clause 8.2 of the Lease, as an independent provision, must, applying the principles of construction of commercial contracts to which reference has been made, be given some operation. Clear though it may be that the parties contemplated a "big box" Masters Home Improvement store being conducted at the Premises and it might, given the backing of Woolworths, be a venture thought likely to be successful, commercial parties, well advised as they were, should not, in my view, be taken to have been blind to the possibility that the Masters venture may not be successful or that Masters or Woolworths may not, in the future - particularly given the long-term nature of the Lease and options for renewal - decide to vary the model. Moreover, though "trading area" is not defined and there is no evidence as to what that area may be, save that Masters submitted that it would exclude office space and utilities areas. It might be said that the "trading area" as it existed historically when Masters was trading, could now be determined; but there is no evidence in this respect. In any event, this is a long-term lease and the actual "trading area" may vary from time to time if, for example, it was simply viewed as to the display area for various goods on a shelving system such as most people are familiar with at, for example, Bunnings stores. Consequently, given the lack of evidence and the likely inutility of historical information as to where "trading" had occurred in the context of a significantly long-term lease and renewals, a reasonable construction is that the trading area is the area of the Premises simply excluding office areas and utilities areas. On this basis, there is no difficulty in subclause 8.2(b) of the Lease operating, at least with respect to subletting. Thus, in summary, the currently relevant effect of sub-clauses 8.2(a) and (b) is that Masters "... may not without the Landlord's prior written consent (which consent must not be unreasonably withheld or delayed), sublet ..." an area exceeding "20% of the trading area of the Premises in total", with particular reference to paragraph 8.2(b)(iii) of the Lease.

Construction Question 3 - does the breach of clause 6.3 mean Aventus need not consider the Request for Consent?

104 Aventus contends that by closing the doors of its premises in December 2016 and ceasing to open for business and trade, Masters is in breach of clause 6.3(b) of the Lease. By letter dated 2 December 2016, Masters requested Aventus "to waive the trading covenant in clause 6.3(b)".[163] This request was declined by letter from Herbert Smith Freehills to Masters of the same date.[164] As a consequence, Aventus submits, Masters is and continues to be in breach of a "most fundamental term" of the Lease.[165] In those circumstances, Aventus says that it is relieved from any obligation otherwise existing under the Lease to consider the request by Masters to consent to the proposed Sublease. Aventus does, however, maintain the alternative position that its refusal to consent to the proposed Sublease was reasonable.

105 In support of its position, Aventus also submits that upon a proper construction of the Lease, clause 6.3(b) and clause 8.2(b) are interdependent or concurrent provisions.[166] However, having regard to my finding that these are not interdependent or concurrent provisions and so an argument based on their interdependency or concurrency does not assist Aventus in support of a proposition that a breach of clause 6.3 of the Lease means that it need not consider the Request for Consent. Moreover, as Masters observes in the present context, unlike clause 8.1 of the Lease, which addresses assignment, clause 8.2 contains no precondition to consent which is dependent on the tenant not being in breach of the Lease. Nevertheless, the position put by Aventus in this respect is significantly reliant upon the proposition that Masters is, in any event, in breach of a fundamental obligation under the Lease, and it is to these submissions that I now direct attention.

106 Aventus contends that the obligation for Masters to trade from the Premises as a home improvement store is fundamental, a position which it says is plain from the text of the Lease. In addition to the obligation on Masters to open for business seven days per week, the Lease provides, in clause 6.1, that Masters is to use the Premises for, and only for, the Permitted Use as a home improvement store. Moreover, Aventus submits that the genesis, purpose and object of the transaction was for Aventus to construct a purpose-built premises from which Masters would trade as an anchor tenant within the Cranbourne Home Centre.[167] It is said that it was always contemplated that Masters would continue to trade as a home improvement store for the duration of the term, a position reflected in clause 6.3 of the Lease. As discussed previously in these reasons, there seems little controversy in the proposition that this was the position the parties anticipated but, as discussed previously, it does not follow, in my view, that the parties were oblivious to the possibility of Masters, as a new venture, being unsuccessful or, alternatively, the model changing. Indeed, the taking of a guarantee from Woolworths does lend some support to the view that the parties did not necessarily see Masters trading as anticipated as something necessarily "cast in stone" for the term of the Lease and any renewals.

107 Properly construed, the right to sublease is, Aventus contends, qualified by or conditional on due observance of the fundamental obligations of the Lease, including the obligations to continue to trade under clause 6.3(b) and to use the Premises as, and only as, a home improvement store under clause 6.1. Again, this is to revisit old ground and to ignore the position that clause 8.2, unlike clause 8.1 with respect to assignment, contains no provisions imposing any precondition of this nature. Again, harking back to a position which was no doubt anticipated by the parties initially, Aventus submits that the raison d'être of clause 8.2(b) was to permit Masters to sublease or grant licences or concessions of the trading area of the Premises, without consent in certain circumstances and subject to consent in other circumstances. Thus it is said it would be incongruous if that permission with respect to subleasing, licencing or concessioning the trading area could continue to be extant when Masters ceases to trade from the Premises as required by, and in breach of, clause 6.3(b). These matters have already been addressed in these reasons and, in my view, these submissions take matters no further.

108 Reference was made in relation to the previous construction question to submissions by Masters with respect to the motives of Aventus in allowing the Premises to remain empty and not to terminate the Lease on the basis of a breach of clause 6.3. That is a different issue from the question whether Masters would be correct in its contention that Aventus has affirmed the Lease and thereby waived its right to rely on the breach of clause 6.3. In any event, Aventus submits that such a contention must be rejected. It does, however, accept that the Lease is still on foot, but says this is so by reason of the nature of the Lease, and not because of any "affirmation", so called. Aventus says that there has been no waiver by Aventus of the trading covenant because for an election to amount to waiver or affirmation, there must be unequivocal conduct by which a person abandons a right by acting in a manner inconsistent with that right.[168] In this case, it says, rent continues to be received, being rent to which Aventus is entitled under the Lease. But, it is contended, receipt of the rent does not constitute unequivocal conduct consistent only with abandonment of Aventus' rights under clause 6.3 of the Lease. On the contrary, Aventus says that it has carefully and deliberately reserved its rights with respect to Masters' breach of clause 6.3, including by confirming in correspondence with Masters, on multiple occasions, that it did not consent to Masters having ceased trading from the Premises and that ceasing to trade constitutes a breach of clause 6.3(b) of the Lease.[169] Moreover, it is said that the ASX announcement relied upon by Masters[170] merely reflects the reality that the Lease "remains on foot", Aventus having expressly reserved its rights with respect to Masters' breach of clause 6.3.

109 Further, and in any event, Aventus contends that Masters' breach of clause 6.3 constitutes a continuing breach of the Lease such that Aventus retains its rights springing from such a breach for as long as the breach continues. The distinction between a continuing breach and a "once and for all breach" was explained by Dixon J in Larking v Great Western (Nepean) Gravel Ltd (in liq).[171] A continuing breach occurs where a party has promised to "maintain a state or condition of affairs and fails to do so".[172] Accordingly, Aventus says that it is not precluded from enforcing its rights under the Lease based on Masters' continuing breach of the covenant to trade from the Premises.

110 The position of Masters has already been indicated, both with respect to the independence of the obligations under clause 6.3 and 8.2 of the Lease and in relation to the construction issues impinging upon the present question, including the observation that there is no specific provision in similar form to that contained in clause 8.1 with respect to assignment that Masters not be in breach or "Substantial Breach" of the Lease as a precondition to invoking provisions of clause 8.2.

111 Moreover, Masters submits that the breach of ceasing to trade is capable of being remedied. Thus, in Batson v De Carvalho, Sugarman J said:[173]

To "remedy" a breach is not to perform the impossible task of wiping it out - of producing the same condition of affairs as if the breach had never occurred. It is to set things right for the future, and that may be done even though they have for some period not been right, and even though that may have caused some damage to the lessor.... A breach may be remedied... even though the time for doing the thing under the covenant may have passed...

Thus, Masters contends that the breach of clause 6.3 of the Lease will be remedied by the Proposed Sublease, if consent is granted.

112 For the preceding reasons, I am of the opinion that the breach of clause 6.3 of the Lease does not mean that Aventus need not consider the Request for Consent. Additionally, I accept, as Masters submits, that it is unreasonable for Aventus to accept Masters' rent each month in full knowledge of the fact that Masters is not trading at the Premises, but then refuse consent to the very thing that would cure that lack of trading - because the sublease will see trading recommence at the Premises - on the ground that consenting to the sublease might deprive Aventus of the right to terminate the Lease in the future for breach of the clause which requires Masters to trade at the Premises.

Construction Question 4 - whether clause 8.2(a) is "totally obliterated"?

113 Aventus contends that because clause 8.2(a) of the Lease is expressed to apply subject to clause 8.2(b) and because clause 8.2(b) is expressed to apply despite clause 8.2(a), clause 8.2(b) is the dominant provision and, consequently, clause 8.2(a) is "totally obliterated"[174] with no work to do. However, as Aventus then accepts,[175] "the part of clause 8.2(a) concerning the list of sub-tenants, licensees and concessionaries, applies only to the names of sub-tenants, licensees and concessionaires falling within clause 8.2(b)". It follows that Aventus accepts immediately therefore that clause 8.2(a) and 8.2(b) have work to do together. In my view, this is the position and that the principles applicable to the construction of commercial contracts to which reference has been made would require a very strong indication in the words of the Lease that a provision such as clause 8.2(a) of the Lease should be treated as having no work to do. This would, of course, be at odds with the fundamental principle of construction that a commercial contract should, where possible, be construed so that all of its provisions have work to do and operate harmoniously.

114 Thus, as Masters submits, the list of names referred to in clause 8.2(a) is a "list of the names of all sub-tenants, licensees and concessionaires occupying or using the Premises". It is clause 8.2(a) that provides the right to "sublet" to "any person for the occupation or use of, the whole or any part of the Premises". The part of clause 8.2(a) (list of names) which Aventus says applies only to the names of sub-tenants (etc) falling within clause 8.2(b) itself refers to those sub-tenants (etc) as "occupying or using the Premises". Clause 8.2(b) sets out no such express reference to occupation or use of the Premises. Thus clause 8.2(a) and 8.2(b) must be read together to make any sense. They both have work to do. Moreover, the two sub-clauses expressly refer to one another. They each have work to do and, read in a common-sense manner, clause 8.2(a) provides the overall right to sublease without the Landlord's consent. Having set up that right, clause 8.2(b) works to limit the right by setting out the circumstances where the Landlord's consent will be required (but not be unreasonably withheld). Additionally, if clause 8.2(a) is "totally obliterated with no work to do", one must rhetorically ask; what do the words "Despite paragraph (a)..." in clause 8.2(b) do?

115 Finally, clause 13.8 of the Lease obliges Aventus to "do anything necessary or desirable (including executing agreements and documents) to give full effect to this Lease and the transactions contemplated by it". One such category of transaction contemplated by the Lease is the subleasing provided for in clause 8.2.

Construction Question 5 - Right to Licence and Fit-out Works

116 Aventus alleges[176] that the provisions of the AFL and the Sublease purport to grant to Amart a licence to use certain areas, which licence, upon the proper construction of the Lease, does not fall within the meaning of licences in clause 8.2 of the Lease. Aventus argues further that the Lease does not otherwise permit the grant of these licences. Aventus concludes that, as a result, Masters is unable to enter the proposed Sublease, and that to do so would be a breach of the Lease. Consequently, it is said that Aventus was under no obligation to consider the Request for Consent or, alternatively, its refusal to consent was reasonable on this basis.

117 More specifically in this context, Aventus reaffirms its position that clause 8.2(b) of the Lease contemplates the ability to sublease or grant a licence or concession of "the trading area" of the Premises only. The proposed Sublease, Aventus observes, includes non-trading areas of the Premises.[177] Thus it is said that the proposed Sublease falls outside the scope of clause 8.2(b) - irrespective of the construction arguments Aventus otherwise relies upon - as it involves the grant to Amart of a licence to use the Common Areas, the Car Park and the Loading Zone Area. Additionally, the Amart AFL and the proposed Sublease purport to grant to Amart and its contractors a licence to have access to the Premises to carry out and complete the Fit-out Works. In this respect, Aventus further alleges[178] that the proposed "Fit-Out Works" are not permitted to be carried out under the Lease and, as a result, Masters is unable to enter the proposed Sublease or to do so would be a breach of the Lease. Thus, Aventus alleges that, as a result, it was under no obligation to consider the Request for Consent or, alternatively, its refusal to consent was reasonable.

118 The following provisions of the Lease are relevant in the present context:

(a) Carpark[179] means those parts of the Centre used for the passage and parking of motor vehicles including service vehicles, and for landscaping.

(b) Common Areas[180] means those parts of the Centre intended for common use, including parking areas, driveways, walkways, docks, stairs and toilets but excludes the Premises and the Separate Tenancies and any part of the Separate Tenancy Car Parking Area and Pad Site that are not intended for common use.

(c) Licenced Areas[181] means those areas identified as such in the Reference Schedule and shown on the Site Plan.

119 Clause 10.5 of the Lease relates to "Common Areas". It states:

(a) The Landlord must keep the Common Areas in good repair, clean and adequately lit.

(b) Lighting in the car parking areas and other Common Areas must comply with the standard indicated on the Site Plan.

(c) The Landlord must not allow the Common Areas to be used for the purpose of a flea market, or any similar activity, at any time when, or during the 1 hour before or the 1 hour after, the Tenant is open for business.

120 The only restrictions on the Common Areas are imposed on the Landlord, Aventus, not on the Tenant, Masters; apart from clause 16.1, the licence grant, by which the Tenant is required to keep Licensed Areas tidy.

121 Clause 10.7 of the Lease relates to "Access and Car Parking". It states:

(a) The Tenant, its employees, agents and contractors have the use of and access to the Premises and the Common Areas at all times.

(b) The Tenant's customers are entitled to access to and use of the Common Areas during the hours when the Tenant is open for business, and for a reasonable time before and after those hours. In particular, the Landlord grants to the Tenant the right for the Tenant's customers (in common with others authorised by the Landlord) while shopping in the Centre to use the car parks for the parking and passage of motor vehicles with the first 3 hours to be free of charge and time restrictions.

(c) The Landlord must allocate an adequate part of the carparks for car parking by the Tenant's employees at no cost to the Tenant or its employees.

122 Clause 10.12 of the Lease relates to "Tenant's Amenities". It includes (among other favourable provisions to the conduct of the Tenant's business in and from the Premises) the following restrictions on the Landlord:

(a) The Landlord must not do anything which would in any manner interfere with the normal conduct of the Tenant's business in and from the Premises. In particular, the Landlord must not make any alteration or addition to the Centre which would:

(i) subject to clause 10.16, reduce the level of lighting in the Carpark from that shown on the Site Plan; or

(ii) reduce the ratio of car parking spaces in the Centre (excluding the Future Development Zone) to the Lettable Area of the Centre below 97.5% of the Commencing Carpark Ratio; or

...

(vi) alter the means of access between the Carpark Control Zone and the Premises as shown on the Site Plan; or

...

(ix) reduce the level of lighting in the Carpark from that shown on the Site Plan; or

(x) reduce the width, height or area of any Common Areas leading to the Premises; or

(xi) reduce access to or from, or otherwise interfere with the efficient operation of the loading docks servicing the Premises or any Licensed Area; or...

123 Although the matters the subject of clause 10.12 go to physical enjoyment of the Premises, it is, in my view, clear from clause 10.12 that Aventus has only restricted rights to affect Masters' enjoyment of the Licenced Area and Common Areas, particularly as those restrictions affect conduct of the Tenant's business in and from the Premises.

124 Clause 16.1 of the Lease relates to "Grant of Licence" and states:

(a) During the Term the Landlord grants to the Tenant and others authorised by the Tenant the right to use each Licensed Area for its Licensed Purpose as stated in the Reference Schedule.

(b) The Tenant may erect in the Licensed Areas No Standing signs or other similar or identification signs.

(c) The Landlord may not determine the licence granted by this clause whilst this Lease remains in force.

(d) The Tenant must:

(i) keep and maintain the Licensed Areas in a clean and tidy condition;

(ii) indemnify the Landlord in respect of all claims for loss or damage arising out of the use of the Licensed Areas by the persons authorised by this clause;

(iii) generally occupy and use the Licensed Areas as if they were part of the Premises and subject to the terms of this Lease (but the Licensed Areas are not to be taken to be part of the Lettable Area of the Premises).

125 It is important to distinguish the nature, attributes and consequences of the grant of a sublease as distinct from the granting of a licence. A sublease involves the conveyance from the sublessor to the sublessee of an interest in the land the subject of a lease. The granting of a licence, however, does not constitute a sublease.[182] A licence is an agreement by which the grantor confers on the licensee permission to enter the land for specific purposes which would otherwise be unlawful or constitute a trespass.[183] A licence differs from a lease in that, unlike a lease, a licence[184] does not confer on the licensee any interest in the land, does not confer on the licensee a right of exclusive possession of the land, and the grantor retains a right of entry to the land. Additionally, a licence cannot, subject to contrary agreement, be transferred or be granted in perpetuity. It is revoked upon the death (personal or corporate) of either party or where the grantor is no longer entitled to exclusive possession of the land the subject of the licence.[185] It follows that, due to the different characteristics of a lease and a licence, the grant of a licence to a person by the lessee is not a breach of a covenant in a lease relating to assignment, subleasing[186] or the transfer of land.

126 Nonetheless, giving access to a licenced area may be reasonably necessary to give effect to the lease. A lease generally contains an implied term that both parties must abstain from any act that would deprive the lease of its efficacy.[187] In Australia, terms have been implied at law in relation to the use of common areas which are under the control of the landlord on the basis of the rule in Wheeldon v Burrows.[188] The effect of this rule is that rights in the nature of a quasi-easement could be implied in circumstances where they are "continuous and apparent" and are needed or required for "the reasonable enjoyment of the property granted".[189] This rule has been explained more recently in Kent v Kavanagh as follows:[190]

The two propositions which, together, comprise the rule (or rules) in Wheeldon v Burrows are confined, in their application, to cases in which, by reason of the conveyance (or lease), land formerly in common ownership ceases to be owned by the same person. It is in cases of that nature that, in order to give effect to what must be taken to be the common intention of the grantor and the grantee, the conveyance (or lease) will operate as a grant (for the benefit of the land conveyed) of such easements over the land retained by the grantor as are necessary to the reasonable enjoyment of the land conveyed. But, because the principle is founded on the common intention of the parties, the easements necessary to the reasonable enjoyment of the land conveyed are those which reflect (and, following separation of ownership, are needed to give effect to) the use and enjoyment of the land conveyed at the time of the conveyance and while that land and the retained land were in the common ownership of the grantor. [Emphasis added by Masters]

127 Also, in Wilcox v Richardson,[191] a lessee was granted implied "ancillary" rights to use common property under the control of the landlord outside the leased area to conduct a fish shop so that he could take full benefit of the grant made by the lease. This decision was applied in similar circumstances in Nguyen v Perri,[192] where terms were implied via an interpretation of the express terms of the lease and subjecting them to the rule that there is an implied term in leases that both parties must abstain from any act that would deprive the lease of its efficacy. They were, according to Handley JA, more particularly described as "a rule of intention, based on the proposition that a man may not derogate from his grant".[193] Several Australian decisions, including the decision in Wilcox,[194] have relied on the New Zealand High Court decision in Nordern v Blueport Enterprises Ltd[195] to suggest that derogation exists only in extreme cases, particularly for retail leases. In Norden, the High Court of New Zealand held:[196]

(a) If land is leased for a particular purpose, the lessor comes under an obligation not to use land retained by it so as to render the leased land unfit, or materially less fit, for that purpose;

(b) The presence of that obligation does not depend on any specific covenant in the lease and is not ousted by the presence of a covenant for quiet enjoyment;

(c) The lease disclaimed any warranty that the premises were suitable for the lessee's purposes; but this provision was not to be construed to permit derogation from the grant;

(d) A lessee who wished to restrict a lessor's ability to use or lease the remaining premises owned by the lessor would normally have to seek an express provision in the lease to this effect. The normal rule is displaced when the use of the remaining premises amounts to derogation from the grant; and

(e) For derogation from the grant to occur, it is not necessary that the lessor physically interfere with the lessee's use of the premises. Inconsistent use by the lessor will amount to derogation if it substantially interferes with the use for which the premises were leased.

128 Returning to the provisions of the Lease, the expression "Licensed Areas" in the Lease and in the Reference Schedule to the Lease, comprised the use of the car park, truck manoeuvring area, flat dock, trolley corrals and the sidewalk sales area. Under the Lease, in clause 16.1, Aventus granted to Masters, and others authorised by Masters, the right to use each Licenced Area for its Licenced Purposes as stated in the Reference Schedule. Under the Lease, under clause 10.7, Masters and its employees, agents and contractors have the use of and access to the Premises and the Common Areas "at all times". Thus Masters contends, and in my view correctly, if the proposed Sublease were consented to, then Amart would be authorised by Masters to use each of the Licenced Areas and would be in a contractual relationship with Masters, as a contractor. Pursuant to clause 10.7 of the Lease, Amart would be entitled to have the use of and access to the Premises and the Common Areas at all times. Thus, on its proper construction, the proposed Licences fall within the expression of "licence" in clause 8.2 of the Lease.

129 For the preceding reasons, it follows, in my view, that on its proper construction, including by reference to clause 13.8 of the Lease - the further assurances clause - the right to sublet the Premises includes a right to grant a licence to the sublessee necessary or desirable for the operation of the sublessee's business. Mr Holland did accept in cross-examination that when Aventus leased premises to its tenants, it was necessary and desirable for those tenants to be able to use common areas such as carparks, walkways, loading areas, driveways and toilets.[197] Mr Holland accepted that these things were all "part and parcel of the tenant doing business".[198] For these reasons, I reject the contention to the contrary by Aventus which, as its submissions make clear, are based on the proposition that the proposed licences do not come within the licences contemplated by clause 8.2(b) of the Lease because they are not licences of the trading area of the Premises.[199] It is unnecessary, having regard to the position I have reached with respect to the grant of licences, to imply a term in the Lease to the effect that the right to sublease or sublicence includes the right to licence the subtenant to use such areas as is reasonably necessary for the conduct of its business. However, for the preceding reasons and on the basis of the authorities to which reference has been made, I would have no difficulty in implying such a term, were that necessary.

130 For similar reasons to those I have expressed with respect to licences more generally, I am of the opinion that Aventus' "Fit-Out Works" argument so far as it concerns Amart having a licence to carry out the "Fit-Out Works", must fail. Moreover, on its proper construction, the Lease provides for the "Fit-Out Works" to be carried out. In addition to the licences granted in favour of Masters and its agents and contractors to which reference has been made, clause 7.6 of the Lease grants Masters an express right to alter or refurbish the Premises.[200]

131 A helpful place to begin a review of the authorities is International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd,[201] where Balcombe LJ (with whom Mustill and Fox LJJ agreed) distilled seven general principles as to the reasonableness or otherwise of consent in this context. They are as follows:[202]

During the course of argument many cases were cited to us, as they were to the judge. I do not propose to set them out in detail here; many of the older cases were considered in the full judgment of the Court of Appeal in Pimms Ltd v Tallow Chandlers Company [1964] 2 QB 547. From the authorities I deduce the following propositions of law.

(1) The purpose of a covenant against assignment without the consent of the landlord, such consent not to be unreasonably withheld, is to protect the lessor from having his premises used or occupied in an undesirable way, or by an undesirable tenant or assignee: per A.L. Smith LJ in Bates v Donaldson [1896] 2 QB 241, 247, approved by all the members of the Court of Appeal in Houlder Brothers & Co Ltd v Gibbs [1925] Ch 575.

(2) As a corollary to the first proposition, a landlord is not entitled to refuse his consent to an assignment on grounds which have nothing whatever to do with the relationship of landlord and tenant in regard to the subject matter of the lease: see Houlder Brothers & Co Ltd v Gibbs, a decision which (despite some criticism) is binding on this court: Bickel v Duke of Westminster [1977] QB 517. A recent example of a case where the landlord's consent was unreasonably withheld because the refusal was designed to achieve a collateral purpose unconnected with the terms of the lease is Bromley Park Garden Estates Ltd v Moss [1982] 1 WLR 1019.

(3) The onus of proving that consent has been unreasonably withheld is on the tenant: see Shanly v Ward (1913) 29 TLR 714 and Pimms Ltd v Tallow Chandlers Company [1964] 2 QB 547, 564.

(4) It is not necessary for the landlord to prove that the conclusions which led him to refuse consent were justified, if they were conclusions which might be reached by a reasonable man in the circumstances: Pimms Ltd v Tallow Chandlers Company [1964] 2 QB 547, 564.

(5) It may be reasonable for the landlord to refuse his consent to an assignment on the ground of the purpose for which the proposed assignee intends to use the premises, even though that purpose is not forbidden by the lease: see Bates v Donaldson [1986] 2 QB 241, 244.

(6) There is a divergence of authority on the question, in considering whether the landlord's refusal of consent is reasonable, whether it is permissible to have regard to the consequences to the tenant if consent to the proposed assignment is withheld. In an early case at first instance Sheppard v Hongkong and Shanghae Banking Corporation (1872) 20 WR 459, 460, Malins V-C said that by withholding their consent the lessors threw a very heavy burden on the lessees and they therefore ought to show good grounds for refusing it. In Houlder Brothers & Co Ltd v Gibbs [1925] Ch 575, 584, Warrington L.J. said:

"An act must be regarded as reasonable or unreasonable in reference to the circumstances under which it is committed, and when the question arises on the construction of a contract the outstanding circumstances to be considered are the nature of the contract to be construed, and the relations between the parties resulting from it."

In a recent decision of this court, Leeward Securities Ltd v Lilyheath Properties Ltd (1983) 271 EG 279 concerning a sub-letting which would attract the protection of the Rent Act, both Oliver LJ and O'Connor LJ made it clear in their judgments that they could envisage circumstances in which it might be unreasonable to refuse consent to an underletting, if the result would be that there was no way in which the tenant (the sub-landlord) could reasonably exploit the premises except by creating a tenancy to which the Rent Act protection would apply, and which inevitably would affect the value of the landlord's reversion. O'Connor LJ said, at p 283:

"It must not be thought that, because the introduction of a Rent Act tenant inevitably has an adverse effect upon the value of the reversion, that that is a sufficient ground for the landlords to say that they can withhold consent and that the court will hold that that is reasonable."

To the opposite effect are the dicta, obiter but nevertheless weighty, of Viscount Dunedin and Lord Phillimore in Viscount Tredegar v Harwood [1929] AC 72, 78, 82. There are numerous other dicta to the effect that a landlord need consider only his own interests: see, e.g., West Layton Ltd v Ford [1979] EWCA Civ 1; [1979] QB 593, 605, and Bromley Park Garden Estates Ltd v Moss [1982] 1 WLR 1019, 1027. Those dicta must be qualified, since a landlord's interests, collateral to the purposes of the lease, are in any event ineligible for consideration: see proposition (2) above. But in my judgment a proper reconciliation of those two streams of authority can be achieved by saying that while a landlord need usually only consider his own relevant interests, there may be cases where there is such a disproportion between the benefit to the landlord and the detriment to the tenant if the landlord withholds his consent to an assignment that it is unreasonable for the landlord to refuse consent.

(7) Subject to the propositions set out above, it is in each case a question of fact, depending upon all the circumstances, whether the landlord's consent to an assignment is being unreasonably withheld: see Bickel v Duke of Westminster [1977] QB 517, 524, and West Layton Ltd v Ford [1979] EWCA Civ 1; [1979] QB 593, 604, 606-607.

132 It is the task of the Court to discern the real and true reason for a landlord's refusal of consent.[203] If the landlord's main aim is to obtain some collateral advantage, for example the surrender of the lease, then refusal of consent is unreasonable.[204]

133 Reasonableness is judged on an objective basis and confined to issues arising under the lease.[205] A landlord may, in some circumstances, be entitled to take into account whether a proposed transaction may affect his or her property interests where a reasonable person would reach such a view.[206] However, any refusal has to be associated to or connected with the bargain made between the landlord and the tenant under the Lease.[207] The landlord is not entitled to refuse consent on grounds that have nothing to do with the relationship of landlord and tenant.[208] It follows that the landlord is not, at will, able to decide what is reasonable or not.

134 The grounds upon which the landlord's refusal of consent may be based must be concerned with either the character and personality of the proposed assignee or with matters affecting the use or occupation of the premises which may result from the proposed assignment. Nevertheless, the reason for refusal must be something affecting the subject matter of the contract which formed the relationship between the landlord and the tenant, the Lease, and not something extraneous and disassociated from the subject matter of the contract.[209]

135 Although the landlord usually need only consider its own relevant interests, it is unreasonable for it to refuse consent if the detriment to the tenant of the refusal is extreme and disproportionate to the benefit to the landlord.[210] Thus, in International Drilling, the Court stated,[211] relying on the decisions of Sheppard v Hong Kong and Shanghai Banking Corp,[212] and Leeward Securities Ltd v Lilyheath Properties Ltd:[213]

It is permissible to have regard to the consequences to the tenant if consent is withheld.

...

The refusal of consent was unreasonable because its purpose was to achieve a collateral advantage for the landlords by preventing a use which was permitted by the lease.

136 In Sheppard, the Court, in determining that consent was withheld unreasonably, referred to the fact that "by withholding their consent the plaintiffs threw a very heavy burden of rent on the lessees and they therefore ought to show good strong grounds for refusing it". In International Drilling,[214] the Court referred with approval to Leeward Securities stating that the Court there:

... could envisage circumstances in which it might be unreasonable to refuse consent to an underletting, if the result would be that there was no way in which the tenant (the sublandlord) could reasonably exploit the premises except by creating 'the' tenancy.

Although he [the trial judge] in Leeward Securities did not expressly mention the disproportionate harm to the tenant if the landlord were entitled to refuse consent to the assignment, compared with the minimum disadvantage which he clearly considered the landlord would suffer by a diminution in the paper value of the reversion' - "paper value" because he was satisfied there was no prospect of the landlord wishing to realise the reversion he clearly recognised the curious results to which the landlord's arguments, based solely upon a consideration of his own interests, could lead.

137 In Cathedral Place Pty Ltd v Hyatt of Australia Ltd,[216] Nettle J cited International Drilling in the following statement:[217]

1. As a matter of principle, and as a matter of authority, Hyatt may have regard to the question of whether the proposed purchaser is a suitable substitute - able to go the distance, and also to the possibility of detriment to any other proprietary and financial interests to which Hyatt may be entitled. Accordingly, Hyatt is entitled to resist the creation of a relationship between itself and the new owner which differs from that created under the original agreement,[218] and Hyatt is entitled to withhold consent to an assignment which might trench upon rights accrued under the Hotel Management Agreement and perhaps even rights arising out of the Hotel Management Agreement.[219] The refusal to consent for either reason would be no more than necessary to ensure that Hyatt continued to enjoy the rights for which it contracted. But as a matter of principle and according to the authorities, Hyatt would not be entitled to refuse consent in order only to acquire rights or benefits to which it was not entitled under or arising out of, or at least contemplated by the agreement.[220] As a matter of principle and as a matter of authority, the refusal of consent for those purposes would operate to deprive the Owner of a benefit for which the Owner had contracted, namely, the right to assign to a suitable substitute consistently with the rights and interests of Hyatt. To adopt and adapt the terms employed by Mason J in Secured Income, it would breach the obligation implicit in the agreement to do all such things as are necessary on Hyatt's part to enable the Owner to have the benefit of the contract.

Both Masters and Aventus focus on this paragraph in the judgment of Nettle J in Cathedral Place. Masters focuses on the passage:

... as a matter of principle and according to the authorities, Hyatt would not be entitled to refuse consent in order only to acquire rights or benefits to which it was not entitled under or arising out of, or at least contemplated by the agreement.

As a matter of principle, and as a matter of authority, Hyatt may have regard to the question of whether the proposed purchaser is a suitable substitute - able to go the distance, and also to the possibility of detriment to any other proprietary and financial interests to which Hyatt may be entitled.

138 Cathedral Place and other Australian authority focuses on the importance of reading the relevant contract and understanding the rights afforded under the contract, to whom those rights are afforded, and with respect to what premises. These authorities do, in my view, stand for the principle that considerations extraneous to these matters are unreasonable considerations.

139 In Secured Income Real Estate (Australia) Ltd v St Martin's Investments Pty Ltd,[221] the High Court said:

Approaching the contract in the present case in the light of these observations I conclude that the respondent was not entitled to refuse to grant a lease to the appellant so as to deprive the appellant of a benefit which would otherwise accrue to it under the contract. A refusal on that ground would be capricious and arbitrary.

Secured Income was also applied by Nettle J in Cathedral Place, as is clear from the following statement:[222]

As a matter of principle, the question is one of contract and therefore the terms of the contract must always be determinative. It is just that while in one set of circumstances fear of a particular consequence may be seen as falling short of the sort of danger against which the lessee contracted to allow the lessor to protect, in another set of circumstances fear of a similar danger may well be a reasonable basis for the lessor to withhold consent.

140 In developing its submission with respect to a landlord having regard to possible detriment to other proprietary and financial interests to which it may be entitled - to which reference is made in the passage on the judgment of Nettle J in Cathedral Place upon which Aventus placed reliance - reference is made by Aventus to Sportoffer Ltd v Erewash Borough Council.[223] In that case, the permitted use of the premises as a squash club was encroached upon by the tenant over time by the addition of a gymnasium at the expense of one or more squash courts. The tenant subsequently sought the landlord's consent to proposals involving the closure of three of the six squash courts and the creation of a "leisure-type" swimming pool. Relevantly, the defendant landlord, the local council, was the owner of an adjoining swimming pool complex and an additional leisure centre within half a mile of the squash club.

141 In Lloyd J's judgment in Sportoffer, his Lordship said that the tenant's proposals "would involve a material change in the use of the premises - a change in kind", to which consent was required. "Accordingly, the question is whether that consent has been refused unreasonably".[224] Relying on the second proposition propounded by Balcombe LJ in International Drilling that "a landlord is not entitled to refuse his consent to an assignment on grounds which have nothing whatever to do with the relationship of landlord and tenant in regard to the subject-matter of the lease", the tenant argued that the landlord's refusal to consent, based on the effect of the changed use on property other than the demised premises, was unreasonable. Lloyd J rejected this argument, relying upon Whiteminster Estates Ltd v Hodges Menswear Ltd.[225] His Lordship said:[226]

I would find it surprising if a landlord could not reasonably take into account the circumstances of other property of his own, whether let or in hand, when considering an application for a consent to change of use under a lease. A shopping centre is an obvious example, but not the only case, where estate management considerations may suggest that one type of use be allowed under a lease but others not, because of the circumstances of other adjoining property.

I find nothing in Balcombe LJ's judgment, nor in the cases cited by him in relation to the proposition that I have mentioned, which suggests that this is not legitimate or that Sir John Pennycuick's decision in Whiteminster Estate Ltd is wrong. I therefore hold that, following Sir John's decision, a landlord can legitimately take into account considerations relating to adjoining property of his own, whether let or not.

Lloyd J then referred to Balcombe LJ's sixth proposition to the effect that:[227]

There is a divergence of authority on the question, in considering whether the landlord's refusal of consent is reasonable, whether it is permissible to have regard to the consequences to the tenant if consent to the proposed assignment is withheld. In an early case at first instance, Sheppard v Hong Kong & Shanghai Banking Corporation (1872) 20 WR 459, 460, Sir Richard Malins V-C said that, by withholding their consent, the lessors threw a very heavy burden on the lessees and they therefore ought to show good grounds for refusing it. In Houlder Brothers v Gibbs [1925] Ch 575, Lord Justice Warrington said:

An act must be regarded as reasonable or unreasonable in reference to the circumstances under which it is committed, and when the question arises on the construction of a contract the outstanding circumstances to be considered are the nature of the contract to be construed, and the relations between the parties resulting from it.

His Lordship then considered opposing judicial views on this proposition, saying that:[228]

There are numerous other dicta to the effect that a landlord need consider only his own interests ... Those dicta must be qualified, since a landlord's interests collateral to the purposes of the lease are in any event ineligible for consideration ... But in my judgment, a proper reconciliation of those two streams of authority can be achieved by saying that, while a landlord need usually only consider his own relevant interests, there may be cases where there is such a disproportion between the benefit to the landlord and the detriment to the tenant if the landlord withholds his consent to an assignment that it is unreasonable for the landlord to refuse consent."

In conclusion, his Lordship held it was reasonable for the landlord, in withholding consent, to take into account the effect that the proposed changed use might have on its other properties:[229]

In my judgment, the landlords can reasonably limit their consideration to their own interest and, in doing so, they can legitimately come to the conclusion that they have and can therefore reasonably withhold consent, as they have.

142 As is clear from the facts in Sportoffer, the extent to which the court found that the landlord might properly have regard to "any other proprietary and financial interests" was confined to "it's other properties". The decision is not a warrant which enables landlords to have regard to possible financial and commercial interests however distant, as the authorities indicate. Indeed, this is made clear in the judgment of Nettle J in Cathedral Place (and in the passage to which reference has previously been made):[230]

...as a matter of principle and according to the authorities, Hyatt would not be entitled to refuse consent in order only to acquire rights or benefits to which it was not entitled under or arising out of, or at least contemplated by the agreement.

143 In Allmere Pty Ltd v Burbank Trading Pty Ltd,[231] it was found that Burbank was not entitled to unfairly prevent Allmere from having the benefit of the shareholder's agreement as the real reason for Burbank's refusal lay not in any of the reasons or concerns it asserted, but in its strategy to try to engineer a situation where it was the only purchaser of the shares and could therefore acquire those shares at an undervalue. A similarly restrictive view was taken by the Queensland Court of Appeal in Boss v Hamilton Island Enterprises Ltd,[232] where it cited with approval the principle expressed by Balcombe LJ in International Drilling and as referred to in Secured Income and other authorities, including Cathedral Place, that:[233]

A landlord is not entitled to refuse his consent to an assignment on grounds which have nothing whatever to do with the relationship of landlord and tenant in regard to the subject matter of the lease.

In Boss, the Queensland Court of Appeal approved the trial judge's position that a landlord was not entitled to refuse consent for the purpose of acquiring a commercial benefit by replacing the lease with alternative contractual arrangements more advantageous to the landlord, even if to do so would be in accordance with "good estate management".[234]

144 Similarly, in the Western Australia Supreme Court in St Barbara v Hockley [No.2], Beech J, referring to the decision of Buss JA in EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd, said:[235]

In summary, Buss JA said that the non-assigning participant is entitled to take into account how the proposed change will affect the pursuit or fulfilment of the objects of the contract, and how the change will affect its rights, benefits or obligations under the contract. The party is not entitled to take into account broader commercial factors which are extraneous or unrelated to the objects of the contract or to the rights, benefits or obligations of the affected participant or the other participant.

If the concern regarding the assignment which the non-assigning party holds is reasonable in itself, refusal of consent based on that concern may nevertheless be unreasonable if the concern is one capable of being remedied by the assignor or assignee, and the non-assigning party does not disclose that concern or permit an opportunity for that concern to be remedied."[237]

145 Additionally, refusal would be unreasonable if, in the circumstances, refusal amounts to a derogation from the grant comprised by the lease and an arbitrary and capricious attempt to deprive the tenant of a benefit under the lease.[238]

146 It is, however, clear, that in considering whether to consent to a sublease - accepting that similar considerations apply with respect to consent to an assignment of a lease - a landlord is entitled to have regard to its property interests. Nevertheless, as the authorities indicate, these interests must have some more immediate connection with the lease in question and do not include extraneous broader commercial factors. Thus, in Commercial Tenancy Law, it is said that:[239]

The court will not interfere if a reasonable person in the lessor's position might have regarded the proposed transaction as damaging to his or her own property interests, even though some persons might take a different view ... Consequently, the lessor is entitled to consider the effect which the assignment may have on other premises owned by him or her ... including the effect the use to which the proposed assignee or sublessee would put the property would have on the commercial well-being of the lessor's other properties, particularly other leased properties in the same shopping mall. [Case references omitted.]

147 This principle is seen to be applied in Re Town Investments Underlease[240] as is illustrated by the following statement of Danckwerts J in that case:[241]

The case [referring to Premier Confectionary (London) Co Ltd v London Commercial Salerooms Ltd [1933] Ch 904] is authority for the proposition that, in considering whether to give or withhold consent, the landlords were entitled to consider the effect which the transactions might have upon their ability in the future to let satisfactorily the different parts of their property, particularly in case of default on the part of their tenant in performing his obligations.

As the cases show, a landlord may properly have regard to a variety of matters as legitimate aspects for consideration in terms of its property interests, as Re Town Investments Underlease illustrates. Moreover, in relation to the effect of increased competition, it has been held that it is reasonable for a landlord who is a trader to refuse consent to an assignment to a business rival;[242] for a landlord of a shopping centre to refuse to consent to an assignment to a person who would compete with existing tenants in the centre;[243] and a landlord may reasonably refuse consent where it reasonably fears that the assignment will result in diminution in the rental value of the property or other property belonging to it.[244] Nevertheless, although these cases support the general proposition that a landlord may properly have regard to its property interests, the thread which runs through all these decisions is that they must be immediate factors affecting that particular landlord and its interests, and do not extend to broader commercial factors which are extraneous to that particular landlord and its property.

148 Another aspect of refusal of consent is that it would be unreasonable if, in the circumstances, the refusal amounts to a derogation from the grant comprised by the lease and an arbitrary and capricious attempt to deprive the tenant of a benefit under the lease.[245] Intrinsic to a lease is an implied term of cooperation and the implied obligation on the landlord not to derogate from the grant of the demise.[246] The relevant question with respect to the obligation not to derogate from grant is whether the effect of the act disturbs or interferes with the tenant's occupation.[247] There is also an implied obligation on each party to a lease to do all that is reasonably necessary to secure performance of the lease.[248]

149 In two cases, which I accept are analogous to the present proceedings, involving consideration of a tenant's Request for Consent to extend trading hours from the premises requiring development application and approval where the landlord refused to agree to the amendment, it was held that such refusal was a derogation from grant. These cases are CF & SP Pty Ltd v FAI General Insurance Co Limited[249] and Dogrow Pty Ltd v Teakdale Pty Ltd,[250] a decision in which reference is made to CF & SP v FAI.

150 In Dogrow, the tenant sought the landlord's consent to lodge an application seeking the continuation for a further five years of 24-hour trading at premises. The lease in that case included a clause 6.01, which imposed a limited permitted use clause on the tenant constraining the tenant's use of the premises (which could not alter without the landlord's consent); a clause 6.13, which imposed a positive covenant and obligation on the tenant to keep all relevant permits to allow trade from the premises; and a clause 13.05, which provided the landlord's consent was not to be unreasonably withheld or delayed. In that case, the tenant contended that the landlord was required to consent to the application by reason of an implied term of the lease: either an implied term of co-operation, or an implied term that the lessor would not act in derogation of the grant. In this respect, White J held:[251]

In my view the present case is stronger than that dealt with by Bryson J because of the obligations imposed on the lessee by clauses 6.01 and 6.13. In the present case the lessor's consent to the development application was essential to the performance of the lessee's obligations. But I also consider, for the reasons given by Bryson J, that the defendant's refusal to consent to the development application was both a derogation from the grant and a breach of an implied obligation, that I think is manifested from the terms of the lease itself, to allow the lessee to have the benefit of trading to such hours.

Application of legal principles to Aventus' refusal of consent

151 Aventus contends that Mr Holland's evidence in cross-examination encapsulated the essence of the reasons Aventus has withheld its consent to the proposed Sublease. Aventus contends that his evidence also demonstrates why that withholding of consent is reasonable. Moreover, Aventus submits that it is important to recall that, while the question of reasonableness is an objective one, it falls to be addressed from the perspective of the circumstances particular to the landlord - in this case, Aventus. Mr Holland addressed those circumstances in his evidence, circumstances which include the following:

(a) Aventus spent and invested $27 million in this store developing [the Premises] specifically for Woolworths' needs as a single anchor home improvement store; [252]

(b) Aventus designed the Premises, and agreed to lease the Premises to Masters, as a single anchor tenancy;[253]

(c) never was it Aventus' intention to be diluted down; that is, have the Premises structurally partitioned into multiple separate subtenancies and for Aventus to lose control over those subtenancies;[254] and

(d) control of its large format retail centres, and the premises and tenancies within those centres, is of critical importance to Aventus. Mr Holland described the benefits of control as follows:

You get to control tenancy mix. You get to control who goes in, what rents they pay, the incentives that are actually paid. You get to control the management. You get to manage and enhance and deepen tenant relationships because you have direct relationships rather than through an agent or through another sub-tenant, and you get to manage and market to those individual tenants.[255]

152 Aventus contends that this evidence provides important context when it comes to evaluating the reasons identified by it for withholding its consent to the proposed Sublease. In summary, Aventus' reasons for withholding its consent - which it contends were, in all the circumstances, reasonable - are as follows:[256]

(a) the proposed Sublease will have adverse effects on Aventus' commercial and property interests in the Premises and in the development of, and leasing of premises on, the Surplus Land;

(b) it is legitimate for Aventus, in considering whether to consent to the proposed Sublease, to consider the interests of the Aventus Group as a whole, and of Aventus Cranbourne, a member of the Group;

(c) there is no doubt that the proposed Sublease is but the first step in Masters'/Home Co's repurposing of the whole site into several tenancies, and the marketing of the site to tenants who are either potential tenants of Aventus or existing tenants of Aventus Cranbourne;

(d) in the context of the matters noted in (a) to (c), the proposed Sublease is likely to adversely affect the legitimate interests of Aventus, Aventus Cranbourne and the Aventus Group, in that:

(i) Aventus will lose the benefit of the control over that portion of the Cranbourne Home Centre registered to it, and Aventus, Aventus Cranbourne and/or Aventus Group will lose the benefit of the control over the Cranbourne Home Centre;

(ii) the loss of control will result in Aventus losing control of the tenancy mix in that portion of the Cranbourne Home Centre registered to it, and Aventus, Aventus Cranbourne and/or the Aventus Group will lose control of the tenancy mix in the Cranbourne Home Centre;

(iii) Masters/Home Co, as de facto landlord, will be competing with Aventus for future tenants on the Surplus Land;

(iv) Masters/Home Co will be competing with Aventus, Aventus Cranbourne and/or Aventus Group, as de facto landlord, for tenants within the Cranbourne Home Centre;

(v) the Masters/Home Co proposal for the Premises will increase the supply of available tenancies both in the Cranbourne Home Centre as a whole and in the portion of the Cranbourne Home Centre registered to Aventus, which will or may place downward pressure on rents in the Cranbourne Home Centre and potential rents in the portion of the Centre registered to Aventus;

(vi) the incentives offered by Masters/Home Co to Amart, and likely to be offered by them to other subtenants, will or may exacerbate the pressure on rents in the Cranbourne Home Centre and potential rents in the portion of the Centre registered to Aventus;

(vii) valuation of the Cranbourne Home Centre, including valuation of the portion registered to Aventus, will or may be negatively impacted;

(e) the contemplated use under the proposed Sublease falls outside the Permitted Use under the Lease;

(f) consenting to the proposed Sublease may prejudice Aventus' ability to exercise its rights under the Lease in the future, including to terminate pursuant to clause 6.3(b) or to withhold consent to a future sublease that provides for a different use to that permitted by the Lease;

(g) Aventus has not been told the full nature of Home Co's proposals for the Premises;

(h) Aventus has been marketing space in the Premises in varying sizes and for diverse uses outside the Permitted Use under the Lease;

(i) there is no disproportion between the detriment to Masters and the benefit to Aventus in the proposed Sublease not proceeding; and

(j) Aventus has acted with reasonable expedition in responding to Masters' request for consent [the Request for Consent] having regard to the inadequacy of the supporting information which accompanied that request.

Aventus also raised the prospect of prejudice in terms of a negative effect on the market value of the Centre, relying on Mr Brown's report.[257] However, as Mr Brown's opinion is based on his understanding of both the extent of the Centre and characterisation of Masters as a "competing landlord", a position and characterisation which I have, as indicated in these reasons, rejected, this opinion does not, in my view, have any significant weight.

153 Aventus seeks to draw attention to what it says are fundamental concepts in the operation and management of shopping centres. It does so in the present context because it says that the entry of Home Co as de facto landlord in the Cranbourne Home Centre will break the management of that shopping centre by the landlord as a unit, particularly in circumstances where the Premises constitutes Aventus says, 24% of the Cranbourne Home Centre. This is, Aventus submits, at odds with market practice in relation to which it says it is accepted that a shopping centre is invariably owned and managed by or on behalf of the one landlord as a unit.[258] There are, however, issues in relation to the extent of the Centre for the purposes of these proceedings; but these matters have been addressed elsewhere in these reasons.[259]

154 It would hardly be doubted that the success of a shopping centre depends to a significant extent upon the way it is managed. Management, Aventus submits, is concerned with the control of the centre. In this respect it says that an important element in a successful shopping centre is the personal engagement between representatives of the owner or manager of the centre and the retailers at the centre.[260] Thus it is important for the owner of the shopping centre to engage closely with the retailers at the centre to gain insights into how their businesses operate, and to understand what changes or disruptors they are facing or could encounter in the future.[261] Importantly, in this respect, Aventus says that this engagement will not be present between the sublessees of the Masters repurposed premises and Aventus' representatives.

155 Moreover, Aventus contends that, as a matter of principle and practice, the concept of control is fundamental to the successful operation of a shopping centre.[262] In cross-examination, the expert valuer called by Masters, Mr Schuh, accepted the following established principles as a matter of valuation practice:

(a) A shopping centre is a group of commercial establishments that are planned, developed, owned and managed as a unit and are related in terms of location, size and the type of shops to the trade area served by the unit.[263]

(b) The anchor tenant of a shopping centre is the key tenant or tenants, the one that gives the centre its stability and drawing power, and a solid anchor tenant can often mean the difference between success and failure of a shopping centre.[264]

(c) It is an 'absolute truth' that the managers of a shopping centre are concerned with control of the centre, and that the continuing success of a shopping centre depends to a significant extent upon the way in which it is managed.[265] Mr Schuh also observed in his report that the overall returns from retail property are the sum of the actions of the investment manager in controlling what occurs on their property, plus market forces; and good managers respond to and manage the effects of market forces as they occur.[266]

(d) Marketing of a shopping centre, which is a function of the manager, is a key function in the successful operation of any shopping centre.[267]

(e) It is very important that the shopping centre owner or manager keep close relationships with its retail tenants, including so that they can understand their businesses and identify any disruptors which they can ameliorate.[268]

156 Given the requisite control, Aventus also contends that the tenancy mix, and hence a landlords' ability to control the tenancy mix, is the most important factor affecting the performance of a shopping centre;[269] and an important aspect of the valuation of shopping centres.[270] According to Pyhrr, the most effective internal control technique available to the shopping centre owner is the tenant mix selection.[271] Mr Schuh also observes in his report that the concepts of "offer" and "agglomeration" are fundamental to the operation of shopping centres.[272] Mr Schuh also confirmed in cross-examination that it is for the owner/manager of the shopping centre to make decisions about what to offer and how to agglomerate at the centre; and that a good owner/manager successfully achieves these objectives by obtaining and maintaining the right tenancy mix.[273] It is in this context that Aventus says that the entry of Home Co as de facto landlord of subtenants within the Premises will deprive Aventus of the ability to wholly determine the appropriate tenancy mix.

157 Thus, Aventus contends that these matters are consistent with and inform the evidence of Mr Holland as to the concerns he holds regarding the impact of the Proposed Sublease and the introduction of Home Co as, from his perspective, 'a competing quasi landlord intending to establish a centre within the Cranbourne Home Centre'.[274]

158 In this context, Aventus also makes reference to the decision of the New South Wales Supreme Court in Tamsco Ltd v Franklins Ltd,[275] where Young CJ in Eq held that the owner of a shopping centre acted reasonably in withholding consent to an assignment and sublease, and in so doing recognised that: [276]

... it is a very real concern for the operation of shopping centres that they be properly balanced, that there be anchor tenants which will attract business to the centre and that there be available specialty shops and one has to be very careful about the way in which assignments are considered.

In that case, Young CJ in Eq held even if there was a "collateral purpose" involved on the part of the landlord, being its concern for the operation of the shopping centre, it was connected with the terms of the lease and therefore not unreasonable.[277] In relation to "collateral purpose", his Honour observed:[278]

[53] (1) There is ... no independent rule that a collateral purpose necessarily makes the refusal of the consent unreasonable. Indeed, Balcombe LJ puts it merely as an illustration of his rule 2.

(2) A collateral purpose connected with the terms of the lease is, in any event, not necessarily bad, ...

(3) Just as it would be wrong of a lease to trespass on the general concept of unreasonableness in a s 133B of the Conveyancing Act, so would also the adoption of any other special factor, such as debilitating collateral purpose.

[54] Accordingly, although the court has to work out what was the real and true reasons for the refusal of consent, the mere fact that the landlord has in mind some collateral purpose or some back-up scheme, which is outside what is contemplated by the tenant of the assignment, does not necessarily mean that the refusal of consent will be unreasonable.

[55] If the consent is based on the area of concern that is legitimate for the landlord to take into account, the mere fact that that may involve a motive or a collateral purpose will not be enough for the tenant to succeed in showing that the landlord's refusal was unreasonable.

Similar statements were made by Lloyd J in Sportoffer Ltd v Erewash Borough Council.[279] In the same vein, in Coopers & Lybrand v William Schwartz Construction Co, Egbert J said:[280]

Secondly, the defendant submits that a Super S type of operation on the demised premises could have adverse effects on the Forest Lane Mall as a whole thus affecting the well-being of the defendant's entire holding. Schwartz stated that several stores could be forced out of business because of the competition which they would face from Super S. If such were to occur, the defendant's interest in the entire mall could, and probably would, be adversely affected. This submission is also, in my opinion, valid.

159 Aventus is the registered proprietor of the Premises and the Surplus Land. As indicated previously, Aventus submits that it is entitled to have regard to its commercial and economic interests in those properties and how they will or may be adversely affected by the proposed Sublease, even when considered through that narrow prism. However, Aventus also contends that it is legitimate, in considering whether to consent to the proposed Sublease, to consider the interests of the Aventus Group as a whole, and of Aventus Cranbourne, a member of the Group.

160 From an economic or commercial perspective, the owners of the assets of the Aventus Group are, Aventus submits, the security holders in the Group, as represented by Aventus Holdings Ltd. It says that they are the stakeholders. These assets include the Cranbourne Home Centre as a whole and the parcels of land on which it sits. As a member of the Group, Aventus says it is justified in acting for the benefit of the Group and considering the Group's interests.

161 The structure of the Aventus Group is set out in the Notice of Meeting and Explanatory Memorandum issued by Aventus Capital Ltd as responsible entity of the Aventus Retail Property Fund ("the Fund") dated 25 September 2018:[281]

Aventus contends that this diagram demonstrates there is no meaningful distinction, in substance, between the interests of the defendant Aventus, Aventus Cranbourne or the Aventus Group. The corporate structure of the Aventus Group is such that the income received from rents generated by each of Aventus' large format retail assets, held by sub-trusts within the Fund, all flow to the ultimate benefit of the Aventus Group's security holders.[282] Aventus says that the following features of the structure of the Aventus Group should be noted:[283]

(a) Aventus Holdings Ltd ("AHL") owns 100% of the shares in the responsible entity of the Fund, Aventus Capital Ltd ("ACL");[284]

(b) AHL listed on the ASX in October 2018 and issued shares to each unitholder in the Fund so that each unitholder held one AHL share for each existing unit held in the Fund;[285]

(c) the constitutions of the Fund and AHL provide that that the two securities must trade together as a single "stapled" security;[286]

(d) the boards of AHL and ACL are identical;[287]

(e) AHL owns 100% of the shares in Aventus Property Group Pty Ltd, which provides management services to the Fund through its wholly owned subsidiaries Aventus Services Pty Ltd, Aventus Property Management Pty Ltd and Aventus Funds Management Pty Ltd;

(f) ACL owns 100% of the shares in the corporate trustees which are the registered proprietors of the land on which the LFR assets stand, such as Aventus and Aventus Cranbourne;[288] and

(g) debt facilities are provided to the Aventus Group by the Fund's bankers and all the Fund's properties form part of the security pool.[289]

162 Aventus says that since the establishment of AHL in October 2018, investors have owned both the LFR assets and the entities which manage those assets (i.e. the Aventus Property Group Pty Ltd and its subsidiaries); and the fees payable under the management agreements are payable within the stapled structure owned by investors.[290] Mr Holland's evidence was that, as Managing Director and Chief Executive Officer of the Aventus Group - and a director of each of Aventus and Aventus Cranbourne - he regards the interests of the various entities within the corporate group as being one and the same and, therefore, in addressing the adverse impacts of the proposed Sublease, Mr Holland uses the term "Aventus" to refer interchangeably to the interests of the defendant, Aventus Cranbourne and the Aventus Group.[291] This, Aventus says, reflects the development in the authorities in the context of directors' duties which recognise that corporate groups are a commercial commonplace and that the traditional approach of focusing on the particular company in a group, as contrasted with the group as a whole, does not adequately account for commercial reality.[292] Thus Aventus contends, the commercial or economic reality in this case is that the commercial interests of the defendant, Aventus, are intertwined with, and for present purposes indistinguishable from, the other companies in the Aventus Group - including Aventus Cranbourne - a matter which is also demonstrated by the fact that the Group prepares its financial accounts on a consolidated basis, presenting all subsidiaries as a single economic entity.[293]

163 In this respect, Aventus makes reference to the cross-examination of Mr Holland on the corporate structure of the Aventus Group and the interests of the individual entities within that Group, both in terms of the predecessor entities and following formation of the Group through corporate restructures. In relation to that cross-examination, Aventus says that if it was intended to demonstrate that Mr Holland, as Chief Executive Officer of the Aventus Group and director of all entities within that Group, had failed to have regard to individual interests of subsidiary companies,[294] including the defendant, Aventus, and Aventus Cranbourne, it miscarried. Aventus submits that, rather the principal duty Mr Holland owes as a director of each individual company, including the defendant, Aventus, and Aventus Cranbourne, is to act for the benefit of all shareholders in those individual companies. It observes that Aventus Capital Ltd is the sole shareholder of each entity,[295] and that entity is, in turn, owned by the security holders of the Aventus Group. This, it is said, underscores the propriety of Mr Holland's whole of group approach and, as he said in giving evidence, "managing the real estate as one big intertwined set of interests".[296]

164 From a broad commercial perspective, it might be thought that these propositions are uncontroversial and, indeed, Aventus makes reference to the evidence of Mr Selim, who it is said accepted that through his legal and commercial experience had knowledge of how corporate groups operate. Mr Selim acknowledged:

(a) where numerous subsidiaries are organised as a group, the interests of the numerous subsidiaries are commercially or economically normally regarded as being one and the same as the interests of the group;[297]

(b) it is reasonable for a company in a group to conduct its affairs for the benefit of the group;[298] and

(c) any benefit that Masters may derive from obtaining consent to the Proposed Sublease to Amart will accrue for the benefit of the Home Co Group.[299]

165 Moreover, Aventus contends that the ownership structure of the Cranbourne Home Centre reflects the predominant model of ownership of retail shopping centres in Australia. Mr Schuh accepted that, as recorded in the Productivity Commission's Inquiry Report into the Market for Retail Tenancy Leases in Australia,[300] the prevailing model of ownership of retail shopping centres is that the landlords are institutional and company investors and that, accordingly, the "owners" of many of Australia's shopping centres (particularly the larger centres) can be considered to be the millions of individuals who indirectly invest in shopping centres via numerous trusts and funds, or own shares in public companies that directly invest in centres.[301] Mr Schuh also agreed that shopping centres that are owned by large corporations or institutions tend to be either managed internally by a related entity or else by separate specialist corporations or institutions engaged as managers.[302]

166 However much it may be the commercial position and commercial practice in relation to the operation and broad commercial interests of a group of companies, the fact remains that Aventus is, as a matter of law, a separate legal entity. Having regard to the authorities with respect to the applicable legal principles in this context, I am of the view that Aventus may only take into account its interests in the subject matter of the Lease and, perhaps, any adjoining property which it owns. Aventus cites no authority that would invite a broader assessment of its interests as including its related companies, its controllers or, indeed, owners of its parents group's stapled securities listed on the ASX. In my view, this is not surprising, because, were it able to have regard to the broader assessment of its interests, it would both turn on its head the idea of a limited liability company and also make great inroads into the existing law with respect to the bases upon which a landlord may refuse consent of a sublease - and, for that matter, an assignment of lease - because of the breadth of matters which could then be taken into account as the basis of reasonable refusal of consent. This would follow because the result would be an ill-defined and virtually unlimited range of commercial interests upon which a landlord could call upon as a basis for refusal of consent; particularly where the landlord is part of a large corporate group. I accept that the only basis upon which such interests could be relevant and taken into account by Aventus in the present circumstances would be if the Lease with Masters expressly permitted regard to be had to those interests. It does not do so.

167 It appears clear from the evidence of Mr Holland that he does not, in the present context, distinguish between the interests of the Aventus Group and the various entities operating within it - particularly, the defendant, Aventus. Nevertheless, under cross-examination he did accept that, in many respects, the various entities within the Aventus Group do operate quite distinctly. Moreover, under cross-examination, Mr Holland accepted that the land owned by Aventus was held in a unit trust;[303] the Dunscombes had interests in that trust;[304] the Dunscombes did not have an interest in the trust under which the land next door, along South Gippsland Highway, was held;[305] each trust had separate trustees;[306] before the Aventus Retail Property Fund was launched, there was a broad group of interests which differed from property to property that Mr Holland or Mr Blundy were interested in in large format retail centres;[307] Mr Holland and Mr Blundy managed the interests through separate corporations which charged management and leasing fees but which the landowners had no interest in;[308] the corporations which owned the separate parcels of land had separate contracts, separate leases with tenants;[309] there were different ownership structures for the different individual assets;[310] each landowner had its own separate group of creditors;[311] each landowner had to prepare its own accounts and tax returns;[312] each bank had its own mortgage over each relevant property;[313] there was a separate trust for each landowning company to hold each property;[314] each sub-trust had a separate trust deed;[315] in the Aventus Group PDS, the defendant's land was varied and dealt with separately from the land owned by Aventus Cranbourne Pty Ltd;[316] each parcel of land was valued separately because they were separate properties;[317] the Aventus Property Group is a different company to the listed company, Aventus;[318] the Aventus Property Group had separate agreements with each of the landlords;[319] the Aventus Groups' governance committee was set up to make sure the fees charged between the two members of the Aventus Group were reasonable;[320] there could be different interests within the Group which is why there is a compliance committee;[321] the Aventus Property Group provides the development, leasing, management services to other members of the Group;[322] the Aventus Property Group has its own employees and must prepare its own accounts;[323] each company in the Group prepares its own accounts because each company is a separate entity and has its own accounts;[324] each property has different Certificates of Title and each property was held on trust for a different unit trust, with its own unit trust deed;[325] the Aventus Retail Property Fund has its own responsible entity, Aventus Capital Limited, which is a separate company;[326] Aventus Holdings Limited, which is not a responsible entity of a managed investment scheme, has a different set of corporate interests to Aventus Capital Limited;[327] and investors with interest in the Fund, and a stapled share in the property management group, come and go.[328]

168 In spite of these matters which, in my view, go to indicate that the various entities which operate within the Aventus Group are structured distinctly, Mr Holland's evidence is that so far as the Request for Consent was concerned, as Chief Executive Officer, he looked at the problem as a whole - that is, he looked at the Aventus Group as one large intertwined set of interests which you cannot separate one from the other, saying: "that's the way we managed the real estate".[329] Clearly, this goes to the concept of and the exercise of "control" or "total control" in management of the entire Aventus Group portfolio. This portfolio is managed by the Property Group.[330]

169 Moving now to more particular matters. First, it is clear that there is no issue with Amart being an undesirable tenant, given Aventus has sought to offer Amart a lease on the Surplus Land.[331] Secondly, in refusing consent, Aventus seeks to advance the commercial and property interests of its parent in the Aventus Group, the Group itself and, also, its sister company Aventus Cranbourne. However neither Aventus Cranbourne, nor their entities within the Aventus Group - apart from Aventus - are a party or parties to the Lease and none undertakes any obligation to Masters under the Lease.

170 Aventus, as a separate corporate entity, has adduced no evidence with respect to its decision to refuse consent to the Sublease. All the evidence in this regard contemplates the decision of the broader Aventus Group and considerations of its interests, not those of Aventus. Mr Holland's evidence was clear that the Request for Consent has been considered only with respect to the interests of the Aventus Group and not with respect to the interests of Aventus.[332] That approach is antithetic to fundamental principles of corporate law - that the interests of shareholders and creditors are to be assessed separately in respect of each company within a corporate group.[333] Moreover, as Ford, Austin and Ramsay observe in Principles of Corporations Law:[334]

It may seem commercially unrealistic to refuse to treat the group as a single financial entity. But until such time as the law is changed so that each member of a group is made liable for the debts of another member, each member of the group must be treated as a separate estate.

171 Aventus argues that because Aventus and Aventus Cranbourne are trustee companies which hold their relevant legal interests in the Premises and the Cranbourne Home Centre beneficially for other members of the Aventus Group, the interests of those members of the Group can be taken into account, collectively. There are, in my view, at least two major difficulties with this approach. The first that to do so is to take into account the interests of strangers to the Lease, which considerations are extraneous and unrelated to the subject matter of the Lease and the relationship of landlord and tenant. As discussed previously, the authorities do not support this approach as being legitimate. Secondly, there are issues with respect to the time at which various interests were created and I turn now to those matters.

172 At the time that the AFL was entered into in 2013:

(a) the only relevant trust that existed was the BBJ Thompsons Road Unit Trust (now the Aventus Thompson Road Unit Trust).

(b) The AFL was entered into with Mr and Mrs Dunscombe as Landlords but with the annexed Lease providing that the Landlord would be BBJ Thompsons Road Pty Ltd (now Aventus Cranbourne Thompsons Road Pty Ltd) as trustee of the BBJ Thompsons Road Unit Trust.[335]

(d) the Aventus Cranbourne Unit Trust did not exist at that time;[339]

(e) the Aventus Retail Property Fund did not exist at that time - that Fund was established as at 28 July 2015;[340] and

(f) Aventus Holdings Ltd did not exist at that time - that did not exist until October 2018.[341]

173 At the time the Lease commenced, on 1 October 2015:

(a) BBJ Thompson's Road Unit Trust (now the Aventus Thompson Road Unit Trust) was not part of the Aventus Retail Property Fund.[342] Also, it is clear that as at 30 September 2015 (the date of the Produce Disclosure Statement) that Cranbourne is not one of the sets of units owned by the Fund;[343]

(b) the Aventus Cranbourne Unit Trust did not exist at that time;[344] and

(c) Aventus Holdings Ltd did not exist at that time - it did not exist until October 2018.[345]

174 The Aventus Retail Property Fund continues to add properties and sub-trusts. The diagram of the entities and interests in the Fund shows 16 sub-trusts and 14 properties at the time of listing.[346] However, the Aventus 2018 Annual Report shows 30 sub-trusts - some of which are holding trusts but there are 24 identified as property investment trusts - and Aventus owns 20 LFR centres.[347] It follows, as Masters submits, that if Aventus is correct that it is entitled to take into account the property and commercial interests of the Aventus Retail Property Fund and Aventus Holdings Ltd (even though those entities did not exist at the time of the AFL), then the property and commercial interests that Aventus are entitled to consider are very broad and constantly changing. Aventus has chosen to structure these sub-trusts as separate trusts. It has chosen to structure them in a way whereby each trustee owns its own property. To allow the beneficial effects of its company structure to be negatively visited upon Masters, is unreasonable.[348] This is especially so when the interests undertake no obligations to the tenant, Masters.

175 In my view, the fact that the income received from all the different trusts all flow to the ultimate benefit of the security holders[349] does not result in Aventus being entitled to take into the account the interests of those security holders. I accept that the perverse result of this proposition is illustrated in the following hypothetical examples which are provided by Masters:[350]

1. First, if a landlord company has a shareholder, which owns a house, which is next door to the premises where Masters wants to sublease, this would mean, on Aventus' case, that in the landlord deciding whether to give consent it could take into account the potential impact of that sublease on the property of the shareholder.
2. Second, entities owned by Darren Holland and Brett Blundy held, at the listing of the Aventus Group, 34% of the units in the Group.[351] On Aventus' case, it would also be entitled to take into account Mr Holland's and Mr Blundy's own commercial and property interests in considering a request to consent to the sublease.

176 Of the lay witnesses relied upon, Mr Selim, Home Co's General Counsel, and Mr Holland, the Chief Executive Officer and Managing Director of the Aventus Group, only Mr Holland had what might be described as "on the ground" experience of owning and managing shopping centres. In addition to these lay witnesses, expert reports and oral evidence was given by Mr Michael Schuh,[352] in support of the Masters position, and Mr Les Brown,[353] in support of the position of Aventus.

177 Reference has already been made in these reasons to a number of aspects of the lay and expert evidence relied upon, but in the present context it is useful to make some further comments in relation to the lay and expert evidence and, in particular, in relation to aspects of that evidence, including the underlying assumptions, which go to the particular issue now under consideration.

178 In relation to Mr Selim's evidence, it was observed that he was an agreeable witness who accepted the correctness of the majority of propositions put to him. But, Aventus says, he did, on occasion, display a propensity to embellish his answers, or refuse to acknowledge the obvious, which, it is submitted, can and should be viewed as a misguided attempt to advance what he perceived to be the interests of Masters and Home Co, rather than attend to the question and answer it on its merits. In this respect, wo examples were cited, namely, his evidence in relation to corporate groups and, secondly, in relation to incentives offered to Amart. In my view, the latter criticism is not justified and I am of the opinion that Mr Selim was seeking to assist the Court. Aventus criticised his evidence in relation to corporate groups on the basis that it was inherently hypocritical having regard to the fact that Mr Selim accepted that Home Co, itself a corporate group, is the ultimate beneficiary of any benefit which may flow to Masters from the litigation but at the same time refusing to accept that the same should apply in respect of the Aventus Group and its wholly-owned subsidiary, Aventus. As indicated in these reasons, this is, in my view, a gloss on the present position of the law with respect to landlords' consent issues in the present context. There is nothing inconsistent with conceding the obvious that benefits derived by subsidiary corporations in a corporate group would be expected to flow through the group as a whole. Indeed, why else would the group be pursuing the trading activities of those subsidiaries? It does not follow, however, that the commercial realities of a corporate group are at odds with the position at law that the issue of landlord's consent and benefit and detriment focus on the particular corporate landlord and not the group as a whole.

179 The criticism in relation to incentives offered to Amart and other tenants and whether they were unusually large or not is, of course, very much a matter of opinion but, in any event, the evidence in this respect was provided as requested by Mr Selim in written form, and made available to Aventus. Ultimately, however, as indicated in these reasons, these matters do not assist Aventus in any event.

180 The second lay witness, Mr Holland, was, as was Mr Selim, an impressive witness, but also a person with very considerable experience in the management of large format retail centres. As Chief Executive Officer of one of the largest fully integrated groups in the sector, Mr Holland is well placed to speak to the issues confronting shopping centre owners and managers. He is, indeed, in a position where he might be said to be "uniquely placed" to speak to the issues confronting Aventus with respect to the Cranbourne Home Centre and the issues which it says would arise in the event that Masters produced a situation of creating a "competing centre" within that Centre". The difficulty, however, with Mr Holland's evidence, and this is not a criticism, is that it is given from a commercial perspective. Moreover, however colloquially, generally or commercially the Cranbourne Home Centre is referred to by Mr Holland or Mr Selim or the expert witnesses as (or implying that it is) one centre, the position from a landlord's consent perspective is, as a matter of law, that it is not one centre but, rather, two centres; each owned by separate corporations in the Aventus Group. In my view, the effect of this position is to render the lay and expert evidence that relies upon the assumption that there is only one Centre largely irrelevant and, in any event, without any significant weight; a position not enhanced by Mr Brown's brief reference in his Report to the position with respect to Aventus as a separate entity.[354]

181 On this basis, I turn now to the expert evidence of Mr Schuh and Mr Brown. Mr Schuh's evidence was criticised by Aventus, generally on the basis that it is said that he presented as an advocate on behalf of Masters and would not, for example accept that a reasonable expert could have arrived at different answers to the ones he arrived at and sought to downplay the significance of judgment in the valuation process. In any event, Mr Schuh ultimately agreed that, as a matter of practice, valuation involves matters of judgment and that reasonable valuers may come to different conclusions.[355] Mr Schuh agreed with the observations of Croft J (unaware when those observations were being put to him that I was also the judge in that case) in Challenger Property Asset Management Pty Ltd v Stonnington City Council,[356] including that valuation practice is principally an art rather than a science, and is an art that continues to evolve.[357] Continuing, Aventus submits that in those circumstances, the fact that Mr Brown and Mr Schuh have come to different conclusions about the probable effects of the Sublease on Aventus' commercial and economic interests is unremarkable. Certainly, Aventus contends, this does not establish that its withholding of consent was unreasonable. In this regard, reference is made to the statement of principle in Commercial Tenancy Law:[358]

The court will not interfere if a reasonable person in the lessor's position might have regarded the proposed transaction as damaging to his or her own property interests, even though some persons might take a different view.

It is, of course, as indicated elsewhere in these reasons, a different matter if the landlord regards the proposed transaction as damaging to the property interests of other corporations not its own property interests.

182 In any event, returning to Mr Schuh and the criticisms of his evidence, the second point raised against his evidence by Aventus is as follows:[359]

Second, Mr Schuh was instructed to proceed on the erroneous basis that the Masters Premises did not form part of the Cranbourne Home Centre.[360] Instead, based on the instructions given to him,[361] Mr Schuh divided the Cranbourne Home Centre into several different components. As explained above, the fact that the Masters Premises is part and parcel of the Cranbourne Home Centre is beyond dispute, and is confirmed by all of the evidence in the case, including that of Mr Selim[362] (and was also ultimately accepted by Mr Schuh himself[363]). Mr Schuh acknowledged that the division of the Cranbourne Home Centre into separate areas was an important element in the approach he adopted, and had consequences for the opinions expressed in his report.[364] As explained further below, Mr Schuh's failure to consider the Cranbourne Home Centre as a single retail shopping centre seriously undermines the opinions expressed in his report, including because the report fails to properly assess the adverse effects on Aventus' commercial interests.

It will, however, be appreciated that, having regard to the present state of the law with respect to the property interests to which a landlord may have regard for the purpose of granting or withholding consent, I do not regard these matters as a criticism of Mr Schuh's evidence. Quite the contrary, in my opinion, he has properly distinguished between the parcels of land owned by Aventus and the parcels of land owned by Aventus Cranbourne for the purpose of expressing his opinion. That being the case, the other criticisms fall away, either in substance or significance. Moreover, it matters not that Mr Schuh was not given a copy of Mr Holland's witness statement and thereby "deprived" of information about the structure of the Aventus Group.[365]

183 Mr Brown, who has had extensive experience as a valuer in the retail property sector, clearly did his best to assist the Court and made appropriate concessions and demonstrated a detailed understanding of the large format retail sector. Mr Brown was, as the following passage in his evidence indicates, cognisant of the fact that his expertise is in valuation and that he has never owned or operated a shopping centre:[366]

I guess the issue is, um, getting the right tenancy mix - - - in the centre, and that's not an easy thing. And I'm not a shopping centre manager. I'm a valuer. I have an understanding of the concepts, but I don't do it. But I think it's important to understand that you don't just fill space with a tenant to fill the space because that may actually be detrimental to your other tenants and may be detrimental to your long-term cash flow.

Aventus concludes its written submissions in relation to Mr Brown's evidence with the comment that there was no serious challenge made to his opinions in cross-examination and no reason why his conclusions should not be accepted. This is, of course, a fair comment as far as it goes. The problem is that, as I have already indicated, Mr Brown's evidence is founded on the erroneous proposition that the issues upon which he was asked to opine lie in the context of one single shopping centre in the hands, effectively, of a single landlord. As a result, Mr Brown's evidence must be regarded as largely irrelevant and unhelpful, save for the general comments such as those contained in the just quoted passage from his oral evidence.

184 In spite of the difficulties with the expert evidence to which reference has been made, there are, particularly as submitted by Masters, a number of matters that do emerge from it, and it is to these that I now turn.

185 Mr Schuh's evidence as to the effect of granting the sub-lease to Amart on the commercial and property interests of Aventus and Aventus Cranbourne is to the effect that if the sub-lease were granted: the rental return for Aventus would be unchanged; the vacancy risk at the conclusion of the Lease would be reduced; the renewal prospect at the expiry of the Lease would be increased; there would be a capital value benefit to Aventus in not having a vacant "box"; Amart would form a potential anchor tenant for the Premises; Amart would form a potential anchor tenant for the leasing of tenancies on the Surplus Land, which tenancies being smaller in size to Amart attracted higher returns such as the potential lease to Officeworks at the rate of $265sqm; and Amart would improve the total offer for the Cranbourne Home Centre was not seriously challenged in cross-examination.

186 In relation to Mr Brown's evidence, Masters contends that it is not relevant as he was not instructed with the following: he was not instructed as to Aventus' guiding principles about sub-leasing properties;[367] he did not have any instructions as to the actual level of demand for premises at the property;[368] as to the Surplus Land he could not indicate an actual start date of the delay and end date to any development of the Surplus Land;[369] he was not instructed that the Aventus Group were wanting to take back the Premises for itself, including by doing a deal with Bunnings; and he was not told of the percentage of incentives given to all tenants at the Cranbourne Home Centre. Whether, in fact, the evidence could be taken to indicate that the Aventus Group were wanting to take back the Premises for itself, including by doing a deal with Bunnings, is a matter on which it is not necessary to form any concluded view - though the evidence indicates this as a possibility. In any event, I accept that the other matters raised do detract from the force of Mr Brown's evidence, as indicated.

187 Mr Brown did, however, concede or acknowledge a number of other matters, to which Masters directs attention: one of the consents that Masters would need to repurpose the former Masters sites would be the consent of the landlord;[370] the subletting clause in the Lease was subject to the consent of Aventus, such that Masters could not do whatever it liked with the Premises,[371] whereas Aventus could put whoever it liked into the Centre and there was a comparative disadvantage between the two parties;[372] he conceded that not all tenants would have the benefit of negotiating with two competing landlords as Masters was at a competitive disadvantage and he did not take that into account;[373] notwithstanding that he had the various leases to other tenants, which contained subleasing clauses, he did not mention that in his report in respect of legal monopoly;[374] he conceded that Masters is not really a "quasi" landlord as it still needed to obtain the consent of Aventus,[375] and that Masters and Aventus were not competing on an equal footing;[376] he conceded that Masters and Aventus are not competing on an equal footing but that in reaching his view he had undertaken no analysis of the permitted use clause and the types of tenants they would be competing for;[377] Amart would be a suitable tenant for the centre and would fall within the landlord's tenancy mix;[378] and he conceded that apart from the Amart proposal he had not conducted any analysis of the incentive levels at the centre and that to determine the dilutive effect on rental levels you would need to undertake a quantitative analysis.[379] He could not give a quantitative range of incentives;[380] his report was pure speculation as to what one particular tenant may or may not do;[381] there was no increase in supply by virtue of a tenant wanting to sub-lease;[382] the fact that premises are vacant, notwithstanding rent is being paid, was not a positive factor on the capitalisation rate and does not drive foot traffic;[383] as to the valuation of land at 1280 Thompsons Road, Cranbourne for mortgage purposes, he agreed that it was a vague proposition and that an analysis of all the factors of the centre would need to be undertaken including, how the centre is run, what its rental incentives are, the demand for the centre, what the tenant mix was and the level of vacancies;[384] the Masters box being empty and not driving foot traffic would be viewed by a valuer as a negative;[385] the vacant Masters box would not attract tenants to the Surplus Land;[386] the Masters box, if half or roughly half full, would be a positive in drawing foot traffic[387] and in attracting tenants to the Surplus Land;[388] Amart taking 6000 metres in the Masters box would be an option to drive foot traffic;[389] an owner/landlord is not competing with the tenant on an equal footing as the landlord can put in whoever it wants but a tenant is stuck with the terms of the lease;[390] demand for tenancies at the Cranbourne Home Centre would be "reasonably high"[391] although, aside from one proposed but unidentified deal at 1,751 sqm, he was not aware of any interest. He was not aware of interest from Nick Scali, Fernwood Gym, RSEA, and TK Maxx.[392] He was aware of interest from the medical centre from across the road but did not take that into account in his report;[393] he did not include in his report matters relating to Bunnings wanting to expand even though it came up in a conversation;[394] he did not investigate the level of incentives offered recently by Aventus at the Cranbourne Home Centre. He gave evidence that there had not been any recent deals, namely within the last 18 months to two years done at the centre[395], notwithstanding that he was instructed with the tenancy schedule which clearly stated that a number of leases have recently been entered into; and he agreed that a number of retailers who compete with each other had co-located to the Cranbourne Home Centre and that it is attractive to a tenant who might compete with other tenants to add to the offer at a centre.[396]

188 Moreover, it is also the case that, notwithstanding that Mr Brown had seen other leases for the Cranbourne Home Centre, he made no comment about the other subleasing clauses.[397] The evidence is, however, that some other tenants have the ability to sublease a proportion of their premises without the need for consent from Aventus Cranbourne and these are other tenants with leases which included preconditions to any subleasing. Mr Brown made no comment in his report about the ability of a landlord to include preconditions to consent to sublease clauses.

189 In light of the evidence and matters considered thus far, I turn to the ten reasons which Aventus says demonstrate that the proposed Sublease has adverse consequences for Aventus, Aventus Cranbourne and the Aventus Group. Each of these is now addressed in turn.

190 First, Aventus states that it will lose the benefit of the control over that portion of the Cranbourne Home Centre registered to it, and Aventus, Aventus Cranbourne and/or Aventus Group will lose the benefit of the control over the Cranbourne Home Centre.

191 Second, Aventus states it will lose control of the tenancy mix in that portion of the Cranbourne Home Centre registered to it, and Aventus, Aventus Cranbourne and/or Aventus Group will lose control of the tenancy mix in the Cranbourne Home Centre.

192 In my opinion, there is no reasonable basis for any of these contentions and, consequently, they are unreasonable considerations. Control by Aventus is, as Masters contends, maintained by clause 8.2 of the Lease and, more particularly, the Permitted Use clause. Indeed, it is the position that Aventus has been informed by Masters that it cannot put a sub-tenant in the Premises without Aventus' consent.[398] This position was accepted by Mr Holland in cross-examination.[399] Moreover, Aventus remains the head landlord of the Premises. Aventus Cranbourne -considerations of whose interests is extraneous to the Lease - remains the landlord of the other premises in the Cranbourne Home Centre, each of which is leased pursuant to leases which themselves contain subleasing and permitted use provisions which afford Aventus Cranbourne the same level of control that it would have irrespective of the decision on the Amart sublease. In any event, as indicated previously, the Aventus Group consider the Request for Consent from the point of view of the Aventus Group as a whole and the whole of its property portfolio. This is misconceived and is to misconstrue its position. Rather, as indicated previously, the Request for Consent must be looked at from the perspective of Aventus itself in the context of the terms of the Lease.

193 In any event, control is subject to many outside factors. As Mr Schuh said in his evidence:[400] "The owners of the SG Centre do not have 'total control' of tenancy mix and income as they are not in control of market forces ...". In terms of market forces, the evidence shows there is or could be a high level of interest in the Premises, with retailers showing interest in leasing in excess of 27,500sqm of land.[401]

194 Third, Aventus states that Masters/Home Co, as a de facto landlord, will be competing with Aventus for future tenants on the Surplus Land.

195 Fourth, Aventus states that Masters/Home Co, as a de facto landlord, will be competing with Aventus, Aventus Cranbourne and/or the Aventus Group for tenants within the Cranbourne Home Centre.[402]

196 In my view, there was no reasonable basis for these considerations and, consequently, they are unreasonable considerations. Aventus - a landlord - and Masters - a tenant - are not in competition for the reasons previously set out. Masters cannot demand that Aventus act outside the terms of the Lease and Aventus is free to pursue any tenants it wishes - such as everyday needs tenants. Masters is, however, restricted by the terms of the Lease. Moreover, Masters is not a de facto landlord, it is a mere tenant with a right to sublease which is subject to the consent of Aventus as landlord. Additionally, it has only asked for consent for Amart and, to the extent it might be thought that it might seek consent for other sub-tenants, that is a matter for the future and is not a factor which is relevant in Amart's consideration of the Request for Consent to a sublease to Amart.

197 I also accept that any competitive effect of the Proposed Sublease ought not to be given so much weight as to prevail over the clear right to sublease granted to Masters under clause 8.2 of the Lease. As submitted by Masters, if this contention were reasonable, Aventus could reject every request to sublease on the basis of some competitive effect, thereby rendering clause 8.2 and the right to sublease worthless. In this context, Masters also makes reference to Mr Holland's evidence that Aventus has a "guiding principle" not to consent to subleases - although there may be a contractual right to do so in its leases. I do not, however, regard this evidence as critical in the context of these particular issues as I think the "guiding principle" was raised by Mr Holland in the context of maintenance of the relationship between the particular Aventus Group shopping centre landlord/owner and the tenants in that shopping centre, though, it follows, also being an aspect of the maintenance of overall control of the centre.

198 Additionally, to the extent that Aventus relies on authorities in support of its position as to its entitlement to consider the competitive effect of the proposed new tenant's business, these authorities are, rather, concerned with the competitive effect of the proposed new tenant's business and not competition between landlords. Any purported competitive issues between Aventus Group and Home Co/Masters in the broader Australian market are irrelevant. Competitive concerns are only relevant to the extent that the landlord and tenant are themselves carrying on business within the subject tenancies - which is not the case here.

199 Fifth, Aventus states that the Masters/Home Co proposal will increase the supply of available tenancies both in the Cranbourne Centre as a whole and in the portion of the Cranbourne Home Centre registered to Aventus.

200 Sixth, Aventus states that the increase in supply will or may place downward pressure on rents in the Cranbourne Home Centre and potential rents in the portion of the Centre registered to Aventus.

201 There is, in my view, no reasonable basis for these considerations and, consequently, these considerations are unreasonable. Aventus has been telling the market that: the Cranbourne Home Centre is fully let;[403] Aventus as a group is experiencing strong leasing demand;[404] Aventus as a group is actively diversifying its tenancy mix to a more profitable use of products and services including food, health and wellbeing services and childcare, pets, leisure and sports;[405] Aventus has been in discussions with such tenants in the Cranbourne area recently; and in any event, there is no "increase in supply" as Masters is seeking to sublease existing space.[406] Further, the evidence shows that Aventus has been in discussions with parties that were interested in leasing a substantial area at the Premises, the Surplus Land and the Cranbourne Home Centre. Masters notes that the total combined square meterage of the Masters site, the Bunnings site and the Surplus Land is approximately 29,000sqm.

202 In any event, the point should be made, again, that the "Masters/Home Co proposal" is subject to the requirement to obtain Aventus' consent and is subject to the Permitted Use clause contained the Lease.

203 Masters also makes reference to the "agglomeration" principle referred to in Mr Schuh's report - accepted by Mr Holland as "precincting"[407] - and Mr Schuh's expert report where he states:

Based on my analysis ... I do not consider it is likely that the Amart sublease could damage or have an adverse affect on the income of the SG Centre, the Premises or the Surplus Land...

The Brown report does not provide a comparative analysis of how the Amart Sublease could of itself create a threat now or in the future...

Mr Brown also conceded that people like choice and that businesses co-located to accommodate that choice.[408]

204 Seventh, Aventus states that the incentives offered by Masters/Home Co to Amart, and likely to be offered to other subtenants, will or may exacerbate the pressure on rents in the Cranbourne Home Centre and potential rents in the portion of the Centre registered to Aventus.

205 Mr Holland was, however, unable to indicate an acceptable range for incentives of this kind; though it may be that it is difficult to do so with a degree of generality. Mr Brown, as an experienced retail valuer, was also unable to provide any acceptable range for incentives.

206 The evidence shows that Aventus is also prepared to give incentives. In my view, any concerns expressed by Aventus as to incentives leaking out to the market would equally apply to the incentives which Aventus Cranbourne has recently provided which are more relevant to the other tenancies in the Cranbourne Home Centre, as the tenancy sizes are more similar than the size of the Amart sub-tenancy. Moreover, Mr Schuh's analysis is that there is not likely to be an impact on rents in either the Premises or the Cranbourne Home Centre. Other matters already discussed with respect to the fifth and sixth claimed adverse consequences are also applicable.

207 Eighth, Aventus states that the increase in supply will or may negatively impact Aventus' investment in, and ability to develop, the Surplus Land and the return on that investment.

208 Other matters already discussed with respect to the fifth and sixth claimed adverse consequences are also applicable.

209 Additionally, Aventus adduced no evidence as to its plans to develop the Surplus Land, aside from taking "defensive measures" to approach Amart after it learned that Masters and Amart were in negotiations and, more recently, the negotiations with Officeworks. There has been no discovery by, nor any evidence from, Aventus of its plans to develop the Surplus Land from 2015 to 2018 or, for that matter, into the future. Nor is there any evidence as to the timing of any development of the Surplus Land, no feasibility study has been produced, there are no plans. Thus, it certainly appears that Aventus is not ready to develop the Surplus Land just yet. Amart said that Aventus' offer with respect to the Surplus Land was too high, in particular the outgoings were too high. Thus, the position is that Aventus refuses to consent to the Sublease whilst it considers its options and plans to develop the Surplus Land without a starting date, details of tenants it intends to attract, or any other plans which must be finalised. In my view, it is not reasonable to adopt such an approach in the present circumstances. At least it is, I accept, wholly disproportionate when taking into account the detriment to Masters of the refusal and to the benefit to Aventus. Perhaps, as suggested by Masters, Aventus in reality construes the right to sublease contained in the Lease as being subject to a condition precedent, namely, subject to Aventus having developed the Surplus Land, as and when it chooses. If this were the case, this cannot be a reasonable basis for withholding consent, as Aventus may never develop the Surplus Land. In any event, the evidence of Mr Brown was that if the Sublease were granted and Amart was in possession of approximately half of the Masters premises, this would be a positive to drawing foot traffic.

210 As considered in detail in the preceding reasons, Masters is, under the terms of the Lease, able to sublease the Premises subject to the consent of Aventus, not to be unreasonably withheld. Clearly Masters - and Woolworths as guarantor - took the risk in entering into the Lease that they may not be able to obtain such consent and to sublet. Masters will suffer a real detriment in loss of rent from the proposed Sublease. It is, in my view, no answer to this position, as Aventus would have it, that "Properly analysed, the 'detriment' relied on by Masters arises not from the withholding of consent, but from its decision to cease trading from the Premises. Moreover, Home Co is far from destitute and nor will it be placed under undue financial strain in meeting its obligations under the Lease".[409] The first point made ignores what is, in my view, the proper construction of the Lease provisions, particularly clause 8.2. The second point is, in the context of the present circumstances and the terms of the Lease, not a decisive consideration.

211 Ninth, Aventus states that the valuation of the Cranbourne Home Centre, including valuation of the portion registered to Aventus, will or may be negatively impacted.

212 In this respect, the matters discussed with respect to the fifth and sixth reasons advanced by Aventus are also applicable. Moreover, it should be emphasised again that the interests of Aventus Cranbourne and the Aventus Group are extraneous to the Lease as those entities are strangers to the Lease. Thus, the effect of the granting of the Proposed Sublease on their property interests is not a relevant consideration.

213 In any event, Mr Schuh concluded that Aventus' and Aventus Cranbourne's prospects of attracting and retaining retail tenants and thus charging higher rents for the Surplus Land and the Cranbourne Home Centre, respectively, are not likely to be adversely affected by the presence of a trading tenant at the Premises.[410] Moreover, Mr Holland accepted in cross-examination that foot traffic is not increased where vacant premises are located.[411] As stated by Mr Schuh in his report and conceded by Mr Brown in cross-examination,[412] having a vacant box is not viewed by the valuers as a positive but rather a negative. Consequently, I do not accept there is likely to be a detrimental impact on Aventus Cranbourne or the Aventus Group's interests in the balance of the premises at the Cranbourne Home Centre.[413] But even if there were, these interests and these considerations are unrelated to the character and personality of the proposed subtenant and are extraneous and disassociated from the subject matter of the Lease. As such, they are unreasonable considerations.

214 Tenth, Aventus states that the use to which the Premises are proposed to be put is contrary to the Permitted Use in the Lease, including the use as a retail centre.

215 These matters have been considered in the preceding reasons and, as indicated, I do not accept that this is the position.

216 Aventus also raises the prospect of the potential prejudice that it says may flow to it with respect to the exercise by Aventus of its rights in the future. Thus, it says that by reason of Masters' breach of clause 6.3(b) of the Lease, Aventus possesses a right at any time whilst this breach persists, to terminate the Lease. For example, it says, should Aventus find an anchor tenant which fits within the desired tenant mix of the Cranbourne Home Centre, Aventus may wish to terminate the Lease. Thus, it says that were it now to consent to Masters' Request for Consent to the Amart sublease, it might lose, by waiver or estoppel, the right to terminate the Lease and the opportunity to re-let the Premises to such an anchor tenant. Further, it says that if it were now to consent to the Proposed Sublease, it may also be faced with an argument in the future that it is estopped from objecting to other subleases that provide for a different use to that permitted by the Lease given the current Proposed Sublease, it says, falls outside the terms of the Permitted Use.

217 In my view, none of these matters provides a reasonable basis for Aventus now to refuse its consent to the Sublease. In relation to the Permitted Use, I have already found that the permitted use specified in the Amart Sublease is within the Permitted Use provisions under the Lease. Consequently, nothing flows from this. Additionally, the current position is that Aventus has not chosen to exercise whatever rights it may or may not have to terminate the Lease and, consequently, it is bound to consider the Request for Consent while the Lease subsists. Moreover, the possibility that Masters may seek consent to further sub-tenancies within the Premises is a matter which Aventus will need to consider on a proper basis in due course, if and when such an eventuality occurs. Similarly, there is no basis for Aventus' allegations that Masters has refused to inform it of its intentions regarding the repurposing, subdivision and/or use of the balance of the Premises.[414] In my view, this allegation is misconceived. Masters has not "refused to inform". The evidence indicates that it does not currently know what options may be available for the balance of the Premises, as this is dependent on both Aventus' consent and an agreement being reached with another subtenant. Moreover, Masters cannot sublet the Premises in a manner inconsistent with the Lease and the Permitted Use. On 14 February 2019, Masters informed Aventus with respect to this issue that:

To the text that your client's "concern" is based on the reference to a car yard in a plan, we confirm that this is a historic and indicative reference and that a car yard is not presently under consideration for the future use of the Premises

We can see no relevance of the proposed use of the balance of the Premises to your client's decision in relation to our requests for consent (relating to each of the Sublease and the Alterations) that have been sought, particularly given that:

(i) our client will remain liable to fulfil all of its obligations under the Lease;

(ii) the Landlord has the benefit of the Woolworths guarantee in relation to those obligations; and

(iii) any use of the balance of the Premises will be subject to the Permitted Use specified in the Lease"[415]

There are no current offers, agreements or negotiations with respect to the balance of the Premises, particularly given your client's position in relation to the current Sublease is preventing our client from entering into any such negotiations, and any references in any of the documents to the proposed use of the remainder of the Premises is historic, not current". [416]

218 It is clear that Masters accepts that any future sublease for the balance of the Premises would require Aventus' consent. As with the proposed Sublease, that consent would, necessarily, be dependent upon Masters reasonably satisfying Aventus that the proposed subtenant and the proposed use of the Premises was consistent with the Permitted Use under the Lease. This was accepted by both Mr Holland and Mr Brown in cross-examination.[417]

219 Finally, it should be noted that Masters did not press at trial the allegation that Aventus unreasonably delayed in responding to the Request for Consent.[418] Accordingly, it is not necessary to take this aspect further.

220 For the preceding reasons, I am of the opinion that Aventus' refusal to consent to the Sublease is unreasonable in all the circumstances and that Masters is entitled to the declaratory relief it seeks and an order that Aventus execute such documents or assurances as may reasonably be required to provide its consent to the Alterations and the proposed Sublease from Masters to Amart of part of the Premises; the matters the subject of the Request for Consent.

221 Masters also seeks relief by way of damages for breach of covenant arising out of the refusal by Aventus to consent to the proposed Sublease. This is not a matter which has been argued at trial thus far, but it was, at the commencement of the trial, agreed between the parties that any damages issues would be matters for resolution by an Associate Justice. Having regard to this position, the issues to be referred to an Associate Justice will also include the question whether there is any basis for an entitlement to damages on the part of Masters in any event.

222 The parties are to bring in orders to give effect to these reasons, including the reference of outstanding issues to an Associate Justice. I otherwise reserve the question of costs and will hear the parties further on this issue.

[1] Transcript (Wednesday 5 June 2019), 341.

[2] Bates v Donaldson [1896] 2 QB 241 at 244 (CA).

[3] Transcript (Wednesday 5 June 2019), 341.

[4] Transcript (Wednesday 5 June 2019), 355-356.

[5] Transcript (Wednesday 5 June 2019), 356.

[6] Transcript (Thursday 6 June 2019), 428-429.

[7] Agreement for Lease (6 May 2013), Reference Schedule, 49.

[8] Certificates of Title, volume 11837, folios 314, 315 and 316 (the registered proprietor of each being Aventus Cranbourne Thompsons Road Pty Ltd - i.e. Aventus, the defendant in these proceedings).

[9] Certificate of Title, volume 11838, folio 321 and volume 10694, folio 223.

[10] Transcript (Thursday 6 June 2019), 374.

[11] Transcript (Thursday 6 June 2019), 374.

[12] Witness Statement of Darren Andrew Holland (8 May 2019), 20 [77(d)] ('Holland Witness Statement').

[13] Transcript (Thursday 6 June 2019), 457.

[14] Transcript (Thursday 6 June 2019), 373 and 418.

[15] Aventus Retail Property Fund, Product Disclosure Statement, 243_,_ 245-249, 249-252.

[16] Transcript (Wednesday 5 June 2019), 331-334, 339 - 340; 345-350.

[17] Transcript (Wednesday 5 June 2019), 349-350.

[18] Affidavit of Andrew Nabil Selim (Sworn 8 March 2019) 3 [13] ('Selim Affidavit').

[19] Letter from Home Consortium to Aventus Cranbourne Thompsons Road Pty Ltd (20 November 2018).

[22] Amart AFL (23 November 2018), 28, Item 5.

[23] Amart AFL (23 November 2018), 10 [3.4].

[24] Amart AFL (23 November 2018), 10 [3.4].

[25] Amart AFL (23 November 2018), Schedule 2, Reference Schedule 1, Item 11.

[26] Amart AFL (23 November 2018), Schedule 2, Reference Schedule 1, Item 12.

[27] Letter from Herbert Smith Freehills to Masters Home Improvement Australia Pty Ltd (3 December 2018).

[28] See Amart AFL (23 November 2018) and Exhibit AS-4 to the Selim Affidavit.

[30] Letter from Herbert Smith Freehills to Baker & McKenzie (6 March 2019).

[31] See Transcript (Wednesday 5 June 2019), 341-342; Transcript (Thursday 6 June 2019), 373-374.

[32] Letter from Herbert Smith Freehills to Masters Home Improvement Australia Pty Ltd (7 December 2018).

[33] Letter from Masters Home Improvement Australia Pty Ltd to Herbert Smith Freehills (12 December 2018); Letter from Baker & McKenzie to Herbert Smith Freehills (14 February 2019); Letter from Baker & McKenzie to Herbert Smith Freehills (17 April 2019); Letter from H&H Consulting Engineers Pty Ltd to Masters Home Improvement Australia Pty Ltd (9 May 2019).

[34] Letter from Herbert Smith Freehills to Baker & McKenzie (21 May 2019); Letter from Baker & McKenzie to Herbert Smith Freehills (24 May 2019);Letter from Baker & McKenzie to Herbert Smith Freehills (27 May 2019); Letter from Herbert Smith Freehills to Baker & McKenzie (27 May 2019).

[35] Aventus Group, 'Aventus Delivers Strong Half Year Results' (14 February 2019).

[36] Aventus Group, 'Aventus Delivers Strong Half Year Results' (14 February 2019).

[37] Aventus Group, 'FY19 Half Year Results Aventus Group' (14 February 2019).

[38] Aventus Group, 'Aventus Retail Property Fund (AVN) - Aventus Group - Feb 2019 Half Year Results Conference Call' (Transcript of Audio), 2.

[39] Aventus Group, 'Aventus Retail Property Fund (AVN) - Aventus Group - Feb 2019 Half Year Results Conference Call' (Transcript of Audio), 2.

[40] Aventus Group, 'Aventus Retail Property Fund (AVN) - Aventus Group - Feb 2019 Half Year Results Conference Call' (Transcript of Audio), 3.

[41] Aventus Group, 'Aventus Retail Property Fund (AVN) - Aventus Group - Feb 2019 Half Year Results Conference Call' (Transcript of Audio), 3.

[42] Aventus Group, 'Aventus Retail Property Fund (AVN) - Aventus Group - Feb 2019 Half Year Results Conference Call' (Transcript of Audio), 4.

[43] Aventus Group, 'Aventus Retail Property Fund (AVN) - Aventus Group - Feb 2019 Half Year Results Conference Call' (Transcript of Audio), 4.

[44] Aventus Group, 'Aventus Retail Property Fund (AVN) - Aventus Group - Feb 2019 Half Year Results Conference Call' (Transcript of Audio), 7.

[45] Transcript (Thursday 6 June 2019), 396.

[46] Transcript (Thursday 6 June 2019), 396 and 450.

[47] Transcript (Wednesday 5 June 2019), 315; Transcript (Thursday 6 June 2019), 393-396, 398.

[48] Transcript (Wednesday 5 June 2019), 309, 315, 353.

[49] Transcript (Wednesday 5 June 2019), 336.

[50] Transcript (Wednesday 5 June 2019), 338.

[51] Transcript (Wednesday 5 June 2019), 340.

[52] Transcript (Wednesday 5 June 2019), 341.

[53] Transcript (Wednesday 5 June 2019), 355.

[54] Transcript (Wednesday 5 June 2019), 340-342.

[55] Transcript (Wednesday 5 June 2019), 355-356.

[56] Transcript (Wednesday 5 June 2019), 355-357.

[57] Defendant's Opening Submissions (29 May 2019), [19].

[58] Defendant's Opening Submissions (29 May 2019), [19].

[59] Transcript (Monday 3 June 2019), 102.

[60] Defendant's Closing Submissions (11 June 2019), [108]-[120].

[61] See particularly the evidence of Mr Selim, General Counsel of Home Co, which is referred to and discussed in Defendant's Closing Submissions (11 June 2019), [109], [110].

[62] See, for example, the correspondence from Baker & McKenzie to Herbert Smith Freehills on 14 February 2019 and 10 April 2019.

[63] Holland Witness Statement, 25 [89].

[64] Transcript (Thursday 6 June 2019), 403, 408.

[65] Transcript (Thursday 6 June 2019), 409.

[66] Further Amended Defence, [29(b)(i)]. Masters notes that the Further Amended Defence, [29(b)(ia)] alleges that the Sublease will create a division of the Premises into separate areas with multiple tenancies which is outside the Permitted Use. This is not a question to be determined in this proceeding as the Request for Consent is a request for consent to one sublease to one tenant and not multiple tenancies.

[67] Defendant's Opening Submissions (29 May 2019), [61]-[62].

[68] Defendant's Opening Submissions (29 May 2019), [85].

[70] Pacific Carriers v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451, [22] ('Pacific Carriers').

[71] Australian Broadcasting Corporation v Australasian Performing Rights Association [1973] HCA 36; (1973) 129 CLR 99, 109 ('ABC v APRA').

[72] Gollin & Co Limited v Carenlee Nominees Pty Ltd [1983] HCA 38; (1983) 153 CLR 455, 464 ('Gollin').

[73] Gollin [1983] HCA 38; (1983) 153 CLR 455, 464.

[74] Franklins Pty Ltd v Metcash Trading [2009] NSWCA 407; (2009) 76 NSWLR 603, [19]-[23].

[75] Pacific Carriers [2004] HCA 35; (2004) 218 CLR 451, [22]; see also Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165, [40].

[76] McDougall, R, 'Construction of Contracts: The High Court's Approach': Paper delivered at the Commercial Law Association Judges' Series on 26 June 2015, Sydney NSW.

[77] Electricity Generation Corporation v Woodside Energy Limited [2014] HCA 7; (2014) 251 CLR 640; Westfield Management Limited v AMP Capital Property Nominees Limited [2012] HCA 54; (2012) 247 CLR 129.

[78] House of Peace Pty Ltd v Bankstown City Council ([2000] NSWCA 44; 2000) 48 NSWLR 498, [28].

[79] ABC v APRA (1973) 129 CLR 114 [109].

[80] See also the discussion of the authorities by Finn J in Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2000] FCA 1812, [78]-[79].

[81] [2006] NSWSC 2, [30]-[33]. The decision of Palmer J in Euphoric was endorsed by the New South Wales Court of Appeal (Tobias JA) at [108] and [109]). Euphoric has also been cited with approval by the Western Australian Supreme Court of Appeal (Newnes J, Murphy JA, Beach J) in Blackbox Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 2019 at [fn 57] and by Edelman J in Minerology Pty Ltd v Sino Iron Pty Ltd [2013] WASC 194 at [fn 39].

[82] Defendant's Closing Submissions (11 June 2019), Annexure A, [1]-[3].

[83] Holland Witness Statement, 15-16 [56]-[59].

[84] Holland Witness Statement, 16 [59].

[85] Letter from Woolworths Limited to Darren Holland (18 May 2011).

[86] Letter from Woolworths Limited to Darren Holland (18 May 2011).

[87] Holland Witness Statement, 11 [44].

[88] Holland Witness Statement, 12 [45]-[47].

[89] Draft Lease Agreement (BB Retail Capital Pty Limited, Coloskye Pty Limited and Masters Home Improvement Australia Pty Ltd) (26 July 2011), [8.2].

[90] Email from Craig Hailes to Alanah Barham (6 September 2011).

[91] Email from Michael Graves to Craig Hailes (14 September 2011).

[92] Email from Craig Hailes to Michael Graves (27 September 2011).

[93] Email from Michael Graves to Craig Hailes (4 October 2011).

[94] Email from Craig Hailes to Michael Graves (19 October 2011).

[95] See the version of Lease circulated following the meeting by AAR on 3 November 2011 which stated that the Landlord's consent was required to sublet, licence or concession in the manner set out in clause 8.2(b) (ie, the Tenant could not without the Landlord's consent so sublease, licence or concession).

[96] Defendant's Closing Submissions (11 June 2019), Annexure A, [13].

[97] Holland Witness Statement (8 May 2019) [50].

[98] Holland Witness Statement (8 May 2019) [50].

[99] Transcript (Thursday 6 June 2019), 389.

[100] Revised Draft Lease (BB Retail Capital Pty Limited, Coloskye Pty Limited and Masters Home Improvement Australia Pty Ltd) (3 November 2011), [8.2].

[101] Table of Amendments to Revised Draft Lease (As at 15 November 2011),

[103] Holland Witness Statement, [50].

[104] Transcript (Thursday 6 June 2019), 385-387.

[105] Transcript (Thursday 6 June 2019), 386.

[106] Transcript (Thursday 6 June 2019), 386.

[107] Transcript (Thursday 6 June 2019), 387.

[108] Transcript (Thursday 6 June 2019), 388.

[109] Transcript (Thursday 6 June 2019), 388.

[110] Transcript (Thursday 6 June 2019), 386.

[111] Transcript (Thursday 6 June 2019), 387.

[112] Transcript (Thursday 6 June 2019), 387.

[113] Paragraph (h) of the "Structural Work" definition in clause 1.1 of the Lease.

[115] Further Amended Defence, [29(b)(ii)].

[116] Further Amended Defence, [29(b)(i)].

[117] Defendant's Closing Submissions (11 June 2019), [151]-[158].

[119] Holland Witness Statement, 13 [48].

[120] Transcript (Thursday 6 June 2019), 504-505.

[121] Defendant's Closing Submissions (11 June 2019), [151]-[158].

[122] Amart AFL (23 November 2018), Schedule 2, Reference Schedule 1, Item 14.

[124] See Proposed Sublease at Exhibit AS-4 to Selim Affidavit, [29.1].

[125] Plaintiff's Opening Submissions (29 May 2019), [83].

[126] Defendant's Closing Submissions (11 June 2019), [155].

[127] Masters Home Improvement 'NEW BRAND, NEW ERA IN HOME IMPROVEMENT' (Media Release dated 2 May 2011).

[128] Heads of Agreement (18 May 2011) between Woolworths Limited, BB Retail Capital Pty Limited and Coloskye Pty Ltd, [8].

[129] Marketing Magazine 'Building a Master Brand' (www.marketingmag.com.au/hubs-c/building-a-master-brand) (dated 27 June 2012).

[130] See clauses 1.1, 10.5(b), 10.12(a)(xiii), and the definition of "Truck Manoeuvring Area".

[131] See, eg, clause 1.1, Reference Schedule, item 3.

[132] See Southern Cross Assurance Co Ltd v Australian Provincial Assurance Association Ltd (1935) 53 CLR 618, 636 (Rich, Dixon, Evatt and McTiernan JJ).

[133] Plaintiff's Opening Submissions (29 May 2019), [81] and [85].

1. [134] Swan v Uecker [2016] VSC 313 [31] ("Swan") citing, among other cases, Radaich v Smith [1959] HCA 45; (1959) 101 CLR 209 ("Radaich") and Lewis v Bell (1985) 1 NSWLR 731, 734-5.

[135] Lewis v Bell (1985) 1 NSWLR 731, 734-5.

[136] (2016) VSC 313.

[137] KJRR Pty Ltd v Commissioner of State Revenue [1999] VSCA 2; [1999] 2 VR 174, 177 [6].

[138] See Agtan Pty Ltd v Caltex Australia Petroleum Pty Ltd [2018] VSCA 169 [90]-[94].

[139] Franklins Pty Ltd v Metcash Trading [2009] NSWCA 407; (2009) 76 NSWLR 603 [19]-[23].

[140] Radaich v Smith [1959] HCA 45; (1959) 101 CLR 209, 222-223; 217-220 (Taylor J), and 220 (Menzies J).

[141] Transcript (Thursday 6 June 2019) 422-423.

[143] Transcript (Thursday 6 June 2019) 394.

[144] Transcript (Thursday 6 June 2019) 394.

[145] Transcript (Wednesday 5 June 2019), 319; Transcript (Wednesday 5 June 2019), 353.

[146] Selim Affidavit, [28]; Letter from Herbert Smith Freehills to Masters Home Improvement Australia Pty Ltd (8 February 2019).

[147] Letter from Herbert Smith Freehills to Masters Home Improvement Australia Pty Ltd (8 February 2019), Sub-paragraph (c).

[148] House of Peace Pty Ltd v Bankstown City Council [2000] NSWCA 44; (2000) 48 NSWLR 498, [28].

[149] Letter from Baker McKenzie to Herbert Smith Freehills (14 February 2019).

[150] Further Amended Defence, [29B] and [29C]; and see Defendant's Closing Submissions (11 June 2019), [22]-[23]. See also [14]-[18].

[151] [2012] SASC 165, [212]-[213].

1. [152] Huntoon Co v Kolynos (Inc) [1930] 1 Ch 528 at 548-549 (Lord Hanworth MR), 557-559 (Lawrence LJ), 563-564 (Romer LJ); Newcombe v Newcombe [1934] NSWStRp 44; (1934) 34 SR (NSW) 446, 550 (Jordan CJ).

[153] See for example Pordage v Cole (1669) 1 Wms Saund 319; 85 ER 449.

[154] See for example Automatic Fire Sprinklers Pty Ltd v Watson [1946] HCA 25; (1946) 72 CLR 435, 463-465 (Dixon J).

[155] See for example Green v Summerville [1979] HCA 60; (1979) 141 CLR 594, 609 (Mason J); Sale of Goods Act 1895 (SA), s 28.

[156] See generally Huntoon Co v Kolynos (Inc) [1930] 1 Ch 528, 548-549 (Lord Hanworth MR), 557-559 (Lawrence LJ), 563-564 (Romer LJ); Gator Shipping Co v Trans-Asiatic Oil Ltd SA (the Odenfeld) [1978] 2 Lloyd's Rep 357, 370-371 (Kerr J); Geraldton Building Co Pty Ltd v Christmas Island Resort Pty Ltd (1992) 11 WAR 40, 51 (Ipp J) (Pidgeon ACJ and Franklyn J agreeing).

[157] Plaintiff's Closing Submissions (11 June 2019), [124].

[158] Transcript (Thursday 6 June 2019), 409 and 419.

[159] See, for example, Transcript (Wednesday 5 June 2019), 356 in relation to Aventus' "Guiding Principle" not to consent to requests to sublease, and Aventus' negotiations with Bunnings regarding relocation to the former Masters premises at Transcript (Thursday 6 June 2019), 424-425.

[160] Defendant's Closing Submissions (11 June 2019), [22], [25] and [26].

[162] See Transcript, (Thursday 6 June 2019), 389.

[163] Letter from Masters Home Improvement to Aventus Cranbourne Thompsons Road Pty Ltd (2 December 2016).

[164] Letter from Herbert Smith Freehills to Masters Home Improvement (5 December 2016).

[165] Defendant's Closing Submissions (11 June 2019), [35].

[166] Defendant's Closing Submissions (11 June 2019), [36].

[167] Transcript (Thursday 6 June 2019), 422-423.

[168] Craine v Colonial Mutual Fire Insurance Co Ltd [1920] HCA 64; (1920) 28 CLR 305, 326; Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641, 658; United Petroleum Pty Ltd v Bonnie View Petroleum Pty Ltd (In Liq) [2017] VSC 185, [210] (Kennedy J).

[169] Letter from Herbert Smith Freehills to Masters Home Improvement Australia Pty Ltd (2 December 2016) and Letter from Herbert Smith Freehills to Masters Home Improvement Australia Pty Ltd (14 December 2016).

[171] [1940] HCA 37; (1940) 64 CLR 221, 236.

[172] Larking v Great Western (Nepean) Gravel Ltd (in liq) [1940] HCA 37; (1940) 64 CLR 221, 236 (Dixon J). See Gumland v Duffy [2006] NSWSC 10, [122]-[123] (appealed in [2007] NSWCA 7 and [2008] HCA 10; (2008) 234 CLR 237, but not on this point), where it was held that breach of covenant to occupy and carry on business from the tenanted property was a continuing breach and no acceptance of rent could waive the new rights to terminate that continued thereafter. See also Justice Clyde Croft, Robert Hay and Luke Virgona, Commercial Tenancy Law (LexisNexis Butterworths, 4th ed, 2018), [17.18].

[173] [1948] NSWStRp 21; (1948) 48 SR (NSW) 417, 427.

[174] Defendant's Opening Submissions (29 May 2019), [85].

[175] Defendant's Opening Submissions (29 May 2019), [85].

[176] Further Amended Defence, [29E].

[177] See Defendant's Closing Submissions (11 June 2019), [29] and [30].

[178] Further Amended Defence, [29F] .

[179] Agreement for Lease (6 May 2013), [1.1].

[180] Agreement for Lease (6 May 2013), [1.1].

[181] Agreement for Lease (6 May 2013), [1.1].

[182] Copley v Newmark [1950] VicLawRp 5; [1950] VLR 17. As to the nature of the interest created under a sublease see Caratti v Mammoth Investments Pty Ltd (2016) 50 WAR 84; 309 FLR 1; [2016] WASCA 84.

[183] Radaich v Smith [1959] HCA 45; (1959) 101 CLR 209, 221-222 (Windeyer J); Cody v Martyr (1954) 71 WN (NSW) 109, Sinclair v Judge [1930] St R Qd 220.

[184] Radaich [1959] HCA 45; (1959) 101 CLR 209, Commissioner of Stamp Duties (NSW) v Yeend [1929] HCA 39; (1929) 43 CLR 235.

[185] Radaich [1959] HCA 45; (1959) 101 CLR 209 at 221 (Windeyer J); Mellor v Watkins (1874) LR 9 QB 400, R v Toohey; Ex parte Meneling Station Pty Ltd [1982] HCA 69; (1982) 158 CLR 327, 352; Terunnanse v Terunnanse [1968] AC 1086, 1095, 1096 (Lord Devlin).

[186] Stoyles v Job (1954) 73 WN (NSW) 41; General Discounts Pty Ltd v Crosbie [1968] Qd R 418; Evanel Pty Ltd v Stellar Mining NL [1982] 1 NSWLR 380, 385 (Wootten J); Chalmers v Pardoe [1963] 3 All ER 552; [1963] 1 WLR 677.

[187] Trego v Hunt [1896] AC 7, 25.

[188] (1879) 12 ChD 31.

[189] Wheeldon v Burrows (1879) 12 ChD 31, 49.

[190] [2007] Ch 1, 21; and see, similarly, Nguyen v Perri (2000) 9 BRP 17, 237; Vzckery v Jenner (1986) 17 NSWLR (L) 438; and Dikstein v Kanevsky [1947] VicLawRp 29; [1947] VLR 216.

[191] (1997) 43 NSWLR 4.

[193] Wilcox v Richardson (1997) 43 NSWLR 4, 14 (Handley JA).

[194] Wilcox v Richardson (1997) 43 NSWLR 4, 18 (Handley JA); Carpet Fashion Pty Ltd v Forma Holdings [2004] NSWCA 150, [3] (Santow JA), [15] (Stein AJA); Project Blue Moon Pty Ltd v Fairway Trading Pty Ltd [2000] FCA 127, [10].

[195] [1996] 3 NZLR 450. In this case, the court had found that the situation in which the defendant had been placed was intolerable; that it was totally impossible for it to operate from its premises; that the interference with its business went beyond interference with convenience, amenity or privacy and was of such a serious nature as to frustrate the use of the business premises; and that it was not possible for a respectable commercial tenant to operate a business in the area that was leased.

[196] [1996] 3 NZLR 450.

[197] Transcript (Thursday 6 June 2019), 452.

[198] Transcript (Thursday 6 June 2019), 452.

[199] Defendant's Closing Submissions (11 June 2019), [34].

[200] In any event, Masters has offered to carry out the Fit-Out Works itself (and Amart has accepted) if consent to the Sublease is granted as it is entitled to do (without Aventus' consent) under clause 7.6 of the Lease. There was, apparently, no recognition of this offer by Aventus.

[203] Tamsco Ltd v Franklins Ltd [2001] NSWSC 1205; [2002] ANZ Conv R 491, [54].

[204] Bates v Donaldson [1896] 2 QB 241.

[205] Eddadock Pty Limited v Denning Properties Pty Limited [2002] NSWSC 208, [54].

[206] Re Town Investments Ltd Underlease [1054] 1 Ch 301, 314; Pimms Ltd v Tallow Chandlers Company [1964] 2 QB 547 (CA), 570; and J A McBeath Nominees Pty Ltd v Jenkins Development Corporation Pty Ltd [1992] 2 QD R 121 (FC), 130.

[207] Eddadock [2002] NSWSC 208, [66].

[208] Eddadock [2002] NSWSC 208, [57].

[209] Secured Income Real Estate (Australia) Ltd v St Martin's Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, 609-610 citing Colvin v Brown (1958) 75 WN (NSW) 262, 264.

[210] International Drilling [1986] 1 Ch 513, 522 was followed by Nettle J in Cathedral Place [2003] VSC 385 (and see below, [137]).

[212] (1872) 20 WR 459.

[215] International Drilling [1986] 1 Ch 513, 521.

[216] [2003] VSC 385.

[217] [2003] VSC 385, [29].

[218] British Gas Trading Ltd v Eastern Electricity plc [1996] EWCA 1239; Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1 at 4 at p 21; Secured Income [1979] HCA 51; (1979) 144 CLR 596, 610.

[219] Tattersalls Hotel Penrith v Permanent Trustee Co of NSW Ltd [1942] NSWStRp 12; [1942] 42 SR (NSW) 104.

[220] International Drilling [1986] 1 Ch 513; British Gas [1996] EWCA 1239.

[221] Secured Income Real Estate (Australia) Ltd v St Martin's Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, 610 ('Secured Income').

[222] [2003] VSC 385, [27].

[223] [1999] 3 EGLR 136 ('Sportoffer').

[224] Sportoffer [1999] 3 EGLR 136, 141.

[226] Sportoffer [1999] 3 EGLR 136, 142.

[227] Sportoffer [1999] 3 EGLR 136, 142.

[228] Sportoffer [1999] 3 EGLR 136, 142-143.

[229] Sportoffer [1999] 3 EGLR 136, 144.

[230] [2003] VSC 385, [29]; and see above, [137].

[231] [2008] VSC 139, [298].

[232] [2009] QCA 229.

[233] [2009] QCA 229, [9].

[234] [2009] QCA 229, [14]; citing Bromley Park Garden Estates Ltd v Moss [1982] 1 WLR 1019.

[235] [2013] WASC 358, [154]; and see EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78.

[236] [2013] WASC 358, [157].

[237] See also St Hilliers [2002] NSWSC 524, [45].

[238] Eddadock [2002] NSWSC 208, [56].

[239] Justice Clyde Croft, Robert Hay and Luke Virgona, Commercial Tenancy Law (LexisNexis Butterworths, 4th ed, 2018), [15.14].

[240] [1954] 1 Ch 301.

[241] [1954] 1 Ch 301, 314.

[242] Whiteminster (1974) 232 EG 715, 715-6.

[243] Coopers & Lybrand v Schwartz (William) Construction Co (1980) 116 DLR (3d) 450.

[244] FW Woolworth v Charlwood Alliance Properties [1987] 1 EGLR 53 (FW Woolworth); NCR v Riverland Portfolio No 1 (No 2) [2005] EG 134; see also Re Town Investments Underlease [1954] Ch 301.

[245] Eddadock [2002] NSWSC 208, [56].

[246] Butt v McDonald (1896) 7 QcJ 68, 70-71 (Griffith CJ); Secured Income [1979] HCA 51; (1979) 144 CLR 596, 607 (Mason J); Dogrow Pty Ltd v Teakdale Pty Ltd [2013] NSWSC 1380, [43]-[44], (White J).

[247] Aussie Traveller v Marklea Pty Ltd [1996] 1 Qd R 1.

[248] Secured Income [1979] HCA 51; (1979) 144 CLR 596, 607 (Mason J).

[249] Supreme Court of New South Wales, 17 December 1998, unreported (Bryson J).

[250] [2013] NSWSC 1380 (White J).

[251] [2013] NSWSC 1380, [46].

[252] Transcript (Thursday 6 June 2019), 422.

[253] Transcript (Thursday 6 June 2019), 422.

[254] Transcript (Thursday 6 June 2019), 422.

[255] Transcript (Wednesday 5 June 2019), 356.

[256] Defendant's Closing Submissions (11 June 2019), [66]; and see Defendant's Closing Submissions (11 June 2019), [121]-[150].

[257] Defendant's Closing Submissions (11 June 2019), [148], [149] referring to Brown Report, [154]-[157].

[258] Valuation: Principles and Practice (Australian Property Institute, 2nd ed, 2007), 217.

[259] See [10], [11] and [180] and following.

[260] 'CEO Outlook' Shopping Centre News (Volume 34: 1) 2016, 28; Transcript (Tuesday 4 June 2019), 182.

[261] 'CEO Outlook' Shopping Centre News (Volume 34: 1) 2016, 32; Transcript (Tuesday 4 June 2019), 181.

[262] See Mr Brown's explanation of the concept of control at Transcript (Thursday 5 June 2019), 488.

[263] Transcript (Tuesday 4 June 2019), 160. See also Pyhrr, Real Estate Investment: Strategies, Analysis, Decisions (Wiley 2nd ed, 1989), 768 ('Pyhrr').

[264] Transcript (Tuesday 4 June 2019), 163; Pyhrr, 769.

[265] Transcript (Tuesday 4 June 2019), 166. See also Rost & Collins, Land Valuation and Compensation in Australia (3rd ed, 1996), 406 ('Rost & Collins').

[266] Transcript (Tuesday 4 June 2019), 180. See also Valuation: Principles and Practice (Australian Property Institute, 2nd ed, 2007), 219.

[267] Expert Report of Michael John Schuh (21 May 2019), 19 [57] ('Schuh Expert Report'); Transcript (Wednesday 5 June 2019), 272-273; Transcript (Thursday 6 June 2019), 473-475.

[268] Transcript (Tuesday 4 June 2019), 181.

[269] Transcript (Tuesday 4 June 2019), 174. Valuation: Principles and Practice (Australian Property Institute, 2nd ed, 2007), 217 - 218 .

[270] Transcript (Tuesday 4 June 2019), 176.

[271] Pyhrr, Real Estate Investment: Strategies, Analysis, Decisions (Wiley 2nd ed, 1989), 780.

[272] Schuh Expert Report, 15 [30]-[33].

[273] Transcript (Wednesday 5 June 2019), 267.

[274] Defendant's Closing Submissions (11 June 2019) [69].

[275] [2001] NSWSC 1205.

[276] [2001] NSWSC 1205, [64]; Cited with approval in Justice Clyde Croft, Robert Hay and Luke Virgona, Commercial Tenancy Law (LexisNexis Butterworths, 4th ed, 2018), [15.12].

[277] [2001] NSWSC 1205, [63]. Cited with approval in Justice Clyde Croft, Robert Hay and Luke Virgona, Commercial Tenancy Law (LexisNexis Butterworths, 4th ed, 2018), [15.13].

[278] [2001] NSWSC 1205 [53]-[55].

[279] Sportoffer [1999] 3 EGLR 136, [142].

[280] (1980) 116 DLR (3d) 450 (SC, Alberta), [22].

[281] Aventus Capital Limited, 'Notice of Meeting and Explanatory Memorandum' (25 September 2018), 37.

[282] Holland Witness Statement, [84]-[85]; Reply Witness Statement of Darren Andrew Holland (20 May 2019), [13] ('Holland Reply Statement').

[283] At section D of Annexure A of these submissions are the relevant facts concerning the corporate structure of Aventus, and its development over time.

[284] Aventus Capital Limited, 'Notice of Meeting and Explanatory Memorandum' (25 September 2018), 37.

[285] Aventus Capital Limited, 'Notice of Meeting and Explanatory Memorandum' (25 September 2018), 37.

[286] Aventus Holdings Limited, 'Aventus Holdings Limited Share Distribution and Issue: Prospectus' (25 September 2018), 28.

[287] Aventus Holdings Limited, 'Aventus Holdings Limited Share Distribution and Issue: Prospectus' (25 September 2018), 28.

[288] See for example ASIC company searches for Aventus and Aventus Cranbourne showing that its share capital is owned by ACL.

[289] Aventus Capital Limited, 'Notice of Meeting and Explanatory Memorandum' (25 September 2018), 51.

[290] Aventus Capital Limited, 'Notice of Meeting and Explanatory Memorandum' (25 September 2018), 114.

[291] Holland Reply Statement, [14]-[15]; Holland Witness Statement, [85].

[292] See Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50, 98 (Kirby P); Westpac Banking Corporation v The Bell Group (No 3) [2012] WASCA 157; (2012) 44 WAR 1, [2875] (Carr AJA).

[293] See Aventus Capital Limited, '2018 Financial Year Annual Report', 23-27, 29 and 48. Australian Accounting Standards Board (AASB) 10 "Consolidated Financial Statements" (AASB 10) defines consolidated financial accounts as "the financial statements of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as a single economic entity".

1. [294] For example, it was put to Mr Holland that the "the individual assets are owned by individual companies" and that he had "no regard to the leases of the individual landlords within the group": Transcript (Wednesday 5 June 2019), 357.

[295] See ASIC Search for Aventus Cranbourne Thompsons Road Pty Ltd (20 May 2019); Aventus Holdings Limited, 'Aventus Holdings Limited Share Distribution and Issue: Prospectus' (25 September 2018).

[296] Transcript (Wednesday 5 June 2019), 349.

[297] Transcript (Monday 3 June 2019), 75-80.

[298] Transcript (Monday 3 June 2019), 77.

[299] Transcript (Monday 3 June 2019), 78.

[300] Productivity Commission Inquiry Report (No. 43) 'The Market for Retail Tenancy Leases in Australia' (31 March 2008).

[301] Transcript (Tuesday 4 June 2019), 182-183.

[302] Transcript (Tuesday 4 June 2019), 182-183.

[303] Transcript (Wednesday 5 June 2019), 305.

[304] Transcript (Wednesday 5 June 2019), 305.

[305] Transcript (Wednesday 5 June 2019), 305-306.

[306] Transcript (Wednesday 5 June 2019), 306.

[307] Transcript (Wednesday 5 June 2019), 306.

[308] Transcript (Wednesday 5 June 2019), 306, 307.

[309] Transcript (Wednesday 5 June 2019), 307.

[310] Transcript (Wednesday 5 June 2019), 307.

[311] Transcript (Wednesday 5 June 2019), 308.

[312] Transcript (Wednesday 5 June 2019), 308.

[313] Transcript (Wednesday 5 June 2019), 309.

[314] Transcript (Wednesday 5 June 2019), 313.

[315] Transcript (Wednesday 5 June 2019), 313.

[316] Transcript (Wednesday 5 June 2019), 327.

[317] Transcript (Wednesday 5 June 2019), 327-328.

[318] Transcript (Wednesday 5 June 2019), 339.

[319] Transcript (Wednesday 5 June 2019), 339.

[320] Transcript (Wednesday 5 June 2019), 340.

[321] Transcript (Wednesday 5 June 2019), 340.

[322] Transcript (Wednesday 5 June 2019), 346.

[323] Transcript (Wednesday 5 June 2019), 346.

[324] Transcript (Wednesday 5 June 2019), 346-347.

[325] Transcript (Wednesday 5 June 2019), 348.

[326] Transcript (Wednesday 5 June 2019), 348.

[327] Transcript (Wednesday 5 June 2019), 349.

[328] Transcript (Wednesday 5 June 2019), 350.

[329] Transcript (Wednesday 5 June 2019), 349, 350.

[330] Transcript (Wednesday 5 June 2019), 346.

[331] Transcript (Wednesday 5 June 2019), 341, 342; Transcript (Thursday 6 June 2019), 373, 374.

[332] Transcript (Wednesday 5 June 2019), 349, 357.

[333] Walker v Winborne [1976] HCA 7; (1976) 137 CLR 1, 6-7 (Mason J); see also Industrial Equity Ltd v Blackburn [1977] HCA 59; (1977) 137 CLR 567, 577.

[334] Ford, Austin and Ramsay, Principles of Corporations Law (LexisNexis Butterworths 17th ed, 2018), [8.140].

[335] Agreement for Lease (6 May 2013), 1.

[336] Holland Witness Statement, [79].

[339] Holland Witness Statement, [79(c)] which says it occurred on listing of the Fund (i.e. 16 October 2015); see Holland Witness Statement, [11].

[340] Holland Witness Statement, [11].

[341] Holland Witness Statement, [82].

[342] Holland Witness Statement, [79(a)] which says that occurred on listing of the Fund (i.e. 16 October 2015); see also Holland Witness Statement, [11].

[343] Aventus Property Group, 'Aventus Retail Property Fund: Product Disclosure Statement', 11.

[344] See Holland Witness Statement, [79 (c)] which says it occurred on listing (i.e. 16 October 2015); see also Holland Witness Statement, [11].

[345] Holland Witness Statement, [82].

[347] Holland Witness Statement, [25].

[348] Industrial Equity v Blackburn [1977] HCA 59; (1977) 137 CLR 567 at 577-578 (Mason J), Qintex Australia Finance Ltd v Schroders Australia Ltd (1990) 3 ACSR 267 at 269 (Rogers CJ).

[349] Holland Reply Statement, [13].

[350] Plaintiff's Closing Submissions (11 June 2019), [294] and [295].

[351] Holland Witness Statement, [80].

[353] Expert Report of Les Brown (May 2019).

[354] Expert Report of Les Brown (May 2019), [158]-[163].

[355] Transcript (Tuesday 4 June 2019), 152. See also Transcript, (Tuesday 4 June 2019), 156-158.

[356] [2011] VSC 184; (2011) 34 VR 445, [24].

[357] Transcript (Tuesday 4 June 2019), 151.

[358] Justice Clyde Croft, Robert Hay and Luke Virgona, Commercial Tenancy Law (LexisNexis Butterworths, 4th ed, 2018), [15.14].

[359] Defendant's Closing Submissions (11 June 2019), [84].

[360] Transcript (Wednesday 5 June 2019), 255-256.

[361] Letter from Baker & McKenzie to Michael Schuh (17 May 2019). See also Transcript (Wednesday 5 June 2019), 256-257, 260-261.

[362] Transcript (Monday 3 June 2019), 55.

[363] Transcript (Wednesday 5 June 2019), 263-264.

[364] Transcript (Wednesday 5 June 2019), 261 and 266.

[365] See Defendant's Closing Submissions (11 June 2019), [86].

[366] Transcript (Thursday 6 June 2019), 472-473.

[367] Transcript (Thursday 6 June 2019), 488-489.

[368] Transcript (Thursday 6 June 2019), 498-499.

[369] Transcript (Thursday 6 June 2019), 499-500.

[370] Transcript (Thursday 6 June 2019), 483-484.

[371] Transcript (Thursday 6 June 2019), 484-485.

[372] Transcript (Thursday 6 June 2019), 484-485.

[373] Transcript (Thursday 6 June 2019) 490.

[374] Transcript (Thursday 6 June 2019), 490-491.

[375] Transcript (Thursday 6 June 2019), 492.

[376] Transcript (Thursday 6 June 2019), 492-493.

[377] Transcript (Thursday 6 June 2019), 494.

[378] Transcript (Thursday 6 June 2019), 494.

[379] Transcript (Thursday 6 June 2019), 495.

[380] Transcript (Thursday 6 June 2019), 479.

[381] Transcript (Thursday 6 June 2019), 497.

[382] Transcript (Thursday 6 June 2019), 494.

[383] Transcript (Thursday 6 June 2019), 501.

[384] Transcript (Thursday 6 June 2019), 501-502.

[385] Transcript (Thursday 6 June 2019) 470.

[386] Transcript (Thursday 6 June 2019) 470.

[387] Transcript (Thursday 6 June 2019), 470-471.

[388] Transcript (Thursday 6 June 2019), 471.

[389] Transcript (Thursday 6 June 2019), 471-472.

[390] Transcript (Thursday 6 June 2019), 473.

[391] Transcript (Thursday 6 June 2019), 475.

[392] Transcript (Thursday 6 June 2019), 478.

[393] Transcript (Thursday 6 June 2019), 478.

[394] Transcript (Thursday 6 June 2019), 476-477.

[395] Transcript (Thursday 6 June 2019), 479, 480.

[396] Transcript (Thursday 6 June 2019), 480-482.

[397] Transcript (Thursday 6 June 2019), 474.

[398] Letter from Baker & McKenzie to Herbert Smith Freehills (14 February 2019).

[399] Transcript (Thursday 6 June 2019), 416, 454.

[401] Plaintiff's Closing Submissions (11 June 2019), [309].

[402] See Defendant's Closing Submissions (11 June 2019), [108]-[149].

[403] Aventus Retail Property Fund, Annual Report 2018, 6.

[404] Aventus Group, 'Aventus Retail Property Fund (AVN) - Aventus Group - Feb 2019 Half Year Results Conference Call' (Transcript of Audio), 1; Aventus Group, 'FY19 Half Year Results Aventus Group' (14 February 2019), 7; Aventus Group, 'Aventus Delivers Strong Half Year Results' (14 February 2019).

[405] Aventus Group, 'Aventus Retail Property Fund (AVN) - Aventus Group - Feb 2019 Half Year Results Conference Call' (Transcript of Audio), 4; and Aventus Group, 'Aventus Delivers Strong Half Year Results' (14 February 2019).

[406] Transcript (Thursday 6 June 2019), 460-461.

[407] Transcript (Thursday 6 June 2019), 372.

[408] Transcript (Thursday 6 June 2019), 480-482.

[409] Defendant's Closing Submissions (11 June 2019), [167]; and see also [164]-[168].

[410] Schuh Expert Report, 34-36 [129]-[137].

[411] Transcript (Wednesday 5 June 2019), 310.

[412] Transcript (Thursday 6 June 2019), 470.

[413] Schuh Expert Report, 35-37 [135]-[137].

[414] Further Amended Defence, [29(b)(vi)].

[415] Letter from Masters Home Improvement Australia Pty Ltd to Herbert Smith Freehills, (14 January 2019).

[416] Second Witness Statement of Andrew Nabil Selim (20 May 2019) ('Selim Reply Statement'), [3]; Letter from Baker & McKenzie to Herbert Smith Freehills (10 April 2019), 3.

[417] Transcript (Thursday 6 June 2019), 402, 407-409.

[418] See Defendant's Closing Submissions (11 June 2019), [169]-[174].