S & K INVESTMENTS PTY LTD -v- CERINI [2016] WASC 233 (2 August 2016)

3 Since that time, the City of Vincent has granted renewed approval for differing terms which has enabled the continuing use of the site for the display of billboards. The most recent approval was granted by the City for a term of five years commencing on 14 November 2014.

4 In June 2007, S & K and Mr Cerini entered into a written agreement described as a lease of the site.[2] In 2015 a dispute arose as to whether S & K continues to have the right to utilise the site pursuant to that agreement, which S & K now asserts should be augmented by the oral agreement to which I have referred. S & K asserts that the written and oral agreements to which I have referred confer upon it the right to utilise the site until the expiry of the current approval from the City of Vincent on 13 November 2019. Mr Cerini asserts that the 2007 lease requires S & K and Mr Cerini to enter into further agreements with respect to:

and further asserts that with effect from not later than 1 July 2016, there is no agreement between the parties with respect to either the renewed term of the lease or the rental payable under the lease.

5 For the reasons which follow, I accept the arguments advanced on behalf of Mr Cerini and have concluded that the lease agreement does not provide S & K with the right to utilise the site beyond 30 June 2016 at the latest. Accordingly, S & K's claim must be dismissed.

6 In the result, the facts were not contentious and were established by the tender of a bundle of documents by consent, and through the evidence of Mr Robinson in the form of a witness statement which he affirmed, and upon which he was not crossexamined. The facts established by that evidence, and which I find, are as follows.

7 In about 1998 Mr Cerini and Mr Robinson met at the site and discussed the possibility of using the site to generate revenue from the erection of billboards. Mr Cerini told Mr Robinson that part of the original parcel of land had been resumed when Loftus Street had been widened, with the result that there was no driveway access to the site, and the City of Vincent would neither allow driveway access to the site, nor would it resume the site. At that time the site contained a house which was unoccupied.

8 Thereafter unsuccessful applications were made to the City for approval to demolish the house and use the site for the erection and display of two large billboards. However, by an approval issued on 10 March 2004, the City granted the approval sought on certain conditions, including the condition that:

(xix) this approval for billboards (signage) is for a period of 3 years only and should the applicant wish to continue the use after that period, it shall be necessary to reapply to and obtain approval from the Town prior to the continuation of use ...

9 At some time not identified by the evidence, Mr Robinson and Mr Cerini entered into an oral agreement concerning the use of the site. In his witness statement, Mr Robinson describes the agreement in these terms:

... [t]he agreement WA Billboards reached with [Mr Cerini] was that he would provide the land, and WA Billboards would provide the infrastructure and expertise, develop, manage and market the site. Instead of [Mr Cerini] receiving 33 per cent of the NMR, WA Billboards agreed that it would be split 50/50 between him and WA Billboards.

10 'NMR' is apparently an acronym for 'net media revenue', which is the amount actually received by WA Billboards after various deductions pursuant to the commercial arrangements entered into by WA Billboards and the advertising agencies which use its sites.

11 The passage I have set out above is the full extent of the evidence given by Mr Robinson with respect to the oral agreement reached with Mr Cerini.

12 In about April 2004, S & K entered into a written agreement with oOh! Media Assets Pty Ltd (OMA)[3] for the lease of the billboards on the site with effect from 1 July 2004 for a term of three years with two options to renew the lease each for a term of three years. The rental payable pursuant to the agreement between S & K and OMA was $80,000 per year, augmented by a provision to the effect that OMA and S & K would equally share any revenue in excess of $120,000 per annum generated by use of the billboards.

13 By an approval issued on 15 August 2006, the City renewed its approval to use the site for the display of billboards for a further period of three years from that date, pursuant to a condition expressed in terms identical to the relevant condition in the original approval, which I have set out above.

14 In 2007, Mr Robinson and Mr Cerini agreed to commit the agreement between Mr Cerini and S & K to writing. Mr Robinson prepared a form of lease based on the standard format lease document which S & K were using at the time. As the proper construction and effect of this agreement lies at the heart of the issues raised in these proceedings, it is necessary to set out its terms in some detail.

15 The lease agreement is dated 18 June 2007 and is between Mr Cerini as lessor, and S & K as lessee. By cl 1.1 of the lease, the lessor agrees to lease and the lessee agrees to take the land described in item 3 of the schedule to the lease (being the site) for the purpose of erecting and exhibiting an advertising sign or signs as described in item 4 of the schedule to the lease. The term of the lease is specified in item 7 of the schedule, and the rental specified in item 8 of the schedule is payable at the times and in the manner also specified in item 8 of the schedule. Clause 1.1 impliedly defines the rental specified in item 8 of the schedule as the 'Rental'. Clause 2.1 of the lease contains a covenant on the part of the lessee to 'punctually pay the Rental to the Lessor at the times and in the manner specified in Item 8 of the Schedule'.

16 Clause 5.1 of the lease provides that it is not to be 'valid and binding upon the parties unless the Lessee has obtained written approval for the erection and display of the Sign from the relevant local government' on or before the commencement date of the lease. As I have noted, that condition had been satisfied at least by the renewal of approval from the City in August 2006.

17 Clause 5.2 of the printed form of the lease used by Mr Robinson contains provisions conferring an option of renewal upon the lessee. That clause was deleted by scoring a line through its terms and the addition of the word 'deleted' in manuscript. However, the heading 'Option for renewal' remained, adjacent to which was written, in manuscript, the words '- see schedule - item 9'.

18 Items 7 - 10 of the schedule to the lease are in the following terms:

Item 7 Terms

Concurrent with the existing Town of Vincent Planning Approvals.

Item 8 Rental

See Item 10.

Item 9 Further Term

Concurrent with any future Town Planning Approval granted by the Town of Vincent at the expiration of the current approval - subject to mutual agreement by the Lessor + Lessee.

Item 10 Rental and Special Clauses

1. The rental payable shall be in accordance with the rental agreement agreed upon by both parties from time to time.
2. A copy of the rental agreement shall be attached to this lease and a copy provided to each party.
3. WA Billboards shall act in all matters pertaining to the rental agreements with third parties and shall communicate such details as requested by the Lessor prior to entering into any marketing agreements with any third party.

19 The words 'the existing' in item 7, and the words 'subject to mutual agreement by the Lessor + Lessee' in item 9, have been added by manuscript.

20 On 8 March 2010 the City issued a further approval permitting continued use of the site for the display of billboards. That approval contained a condition limiting the approval to a period of five years from the date of issue, expressed in similar terms to the condition imposed upon earlier approvals.

21 Although there is no direct evidence on the question, it seems that OMA exercised the options of renewal contained in its earlier agreement with S & K, thereby extending the term of that agreement until 2013. Mr Robinson's evidence is to the effect that Mr Cerini asked him if he thought more could be obtained from OMA and he responded that he would try. After further negotiation with OMA, Mr Robinson secured its agreement to pay $257,781.48 per annum, exclusive of GST, fixed for the first two years of a threeyear term, and in the third year, an amount calculated adjusting that sum by reference to changes in the Consumer Price Index. According to Mr Robinson, when he told Mr Cerini about the amended offer, Mr Cerini responded with words to the effect that it was a 'pretty good outcome'. The agreement between S & K and OMA was reduced to writing in a document dated 16 September 2013. The term of that agreement was a period of three years from 1 July 2013. There were no options of renewal. Accordingly, the agreement expired on 30 June 2016.

22 Mr Robinson's evidence is to the effect that he obtained Mr Cerini's approval to the agreement before he concluded the deal with OMA and executed the written agreement with a representative of that company.

23 Following conclusion of the agreement with OMA, payments were made to S & K pursuant to its terms. S & K paid Mr Cerini amounts equal to half the amount received from OMA.

24 As I have noted, the approval granted by the City in 2010 was due to expire in March 2015. In or about July 2014, Mr Robinson prepared another application to the City for approval to continue using the site for the display of billboards. The application was made on a form promulgated for use with respect to development subject to control under the Metropolitan Region Scheme and required the signature of the owner of the land. Mr Robinson met Mr Cerini and presented the form to him for his signature. Mr Cerini signed and dated the form in Mr Robinson's presence. The form was dated '08.07.2014'. According to Mr Robinson, at the same meeting he signed a form required by the City and entitled a 'Consent and Indemnity Form'. He dated that form '7/8/14'. Mr Robinson believes that both forms were signed on 7 August 2014, and that Mr Cerini inadvertently transposed the numbers of the day and the month on the form which he signed. Although nothing turns on the question of whether that belief is correct or not, it is supported by the fact that the documents were lodged with the City under cover of a letter from Mr Robinson dated 5 August 2014, which was presumably written shortly before his meeting with Mr Cerini.

25 In that letter, Mr Robinson requested that the new approval not have a time restriction, and advanced various arguments in support of the proposition that WA Billboards should not be required to reapply for approval at regular intervals. Consistently with that approach, the forms presented to the City did not specify any period in respect of which approval to use the site for the display of billboards was sought.

26 Mr Robinson does not assert in his evidence that he discussed any aspect of the temporal operation of the approval with Mr Cerini at the meeting at which he obtained Mr Cerini's signature on the application form.

27 The application was considered by the council of the City at its meeting on 21 October 2014. It resolved to grant approval 'valid for a period of five (5) years from the date of issue of' the approval. As the approval was issued on 14 November 2014, it remains in force until 14 November 2019.

28 In early 2015, Mr Cerini told Mr Robinson that he was unhappy with the return he was receiving from the site, and he wanted to revisit the arrangements. It is unnecessary to recount Mr Robinson's evidence with respect to the nature of the disagreement which developed, as it is irrelevant to the issues which have to be resolved by the court. It is sufficient to record that after the rental payable by OMA to S & K was adjusted in line with increases in the Consumer Price Index with effect from 1 July 2015, Mr Cerini purported to reject his share of the increased rental, and sent cheques to Mr Robinson for the amount of his share of the increase. Mr Robinson did not bank those cheques. By letter dated 1 September 2015, Mr Cerini purported to terminate the lease on the basis that there would be in its place a lease from month to month, and further gave notice that he intended to retake possession of the site on 1 November 2015. That letter triggered the commencement of these proceedings. An application for an interlocutory injunction restraining Mr Cerini from retaking possession was resolved on the basis of an undertaking proffered by Mr Cerini to the effect that he would not attempt to retake possession until these proceedings were concluded, or until further order of the court. That undertaking remains in force. Although the evidence on this point is not entirely clear, it seems a fair inference that Mr Cerini has continued to receive a share of the rental paid by OMA to S & K.

29 Mr Robinson has been negotiating with OMA with respect to a renewal of the agreement for OMA's use of the site. He has concluded an agreement with OMA with respect to the terms upon which that arrangement would be renewed, subject to resolution of these proceedings in favour of S & K. That agreement would cover the period from 1 July 2016 until the expiry of the current approval from the City on 13 November 2019.

30 It is unnecessary to analyse the pleadings in any detail, as the positions adopted by the parties can be expressed quite simply. S & K contends that its agreement with Mr Cerini entitles it to continuing utilisation of the site until the expiry of the current approval on 13 November 2019. Mr Cerini contends that he is entitled to retake exclusive possession of the site because the lease agreement requires the parties to reach further agreement with respect to both the rental and any renewed term of the lease and that, at least from 1 July 2016, there is no agreement between the parties with respect to either the term of the lease or the rental to be paid by S & K. Although Mr Cerini makes no concessions with respect to the enforceability of the lease up to and including 30 June 2016, he does not seek any relief by way of counterclaim in respect of that period, and is content to confine his case to the assertion that S & K has no entitlement to utilise the site as and from 1 July 2016.

31 S & K responds to Mr Cerini's assertions by contending that the lease agreement with Mr Cerini is partly oral and partly in writing. It contends that the oral component comprises the agreement for the equal division of the net proceeds derived from marketing agreements with advertising agencies for their use of the billboards on the site. S & K contends that this agreement continues to apply and satisfies the requirement for agreement between the parties with respect to the rental payable under the lease. S & K accepts that the written component of the agreement comprises the lease document executed in 2007. It accepts that the written agreement requires the parties to agree with respect to any extension of the term of the lease beyond the term of the approval in place at the time the agreement was executed, but contends that Mr Cerini's execution of the form by which further approval was sought from the City in August 2014 constitutes an agreement between the parties to the effect that the term would be extended for whatever period was in fact approved by the City.

32 There was no dispute between the parties with respect to the legal principles properly applied to the construction of their contractual arrangements. As I have observed before, those principles are now so well established that it is unnecessary to regurgitate them every time an issue of contractual construction arises.[4] For present purposes, adoption of the succinct statement of those principles by the High Court in Electricity Generation Corporation v Woodside Energy Ltd[5] will suffice:

The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'. As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption 'that the parties ... intended to produce a commercial result'. A commercial contract is to be construed so as to avoid it 'making commercial nonsense or working commercial inconvenience'. (footnotes omitted)

33 Unless the material terms of the contract are certain, the contract is void and unenforceable.[6] However, ambiguity or disagreement with respect to the proper construction and effect of a contract is not to be equated with uncertainty.[7]

34 Irrespective of whether the agreement between Mr Cerini and S & K is properly characterised as a lease or a licence, in order to be enforceable, it must contain terms which are certain with respect to the rental or licence fee payable by S & K, and the period over which S & K has the right to use the site to derive revenue from the display of billboards. If the arrangements between the parties can be put no higher than an agreement to agree on those matters in the future, the agreement is not enforceable.[8]

Is the lease partly oral and partly in writing?

35 Because of the way in which S & K ultimately presented its case, it is necessary to first determine whether the relevant agreement between the parties is, as S & K contends, partly oral and partly in writing. In the circumstances of this case, that issue essentially comes down to the question of whether the oral agreement made between Mr Robinson as agent for S & K and Mr Cerini was superseded by the written agreement into which they entered in 2007.[9]

36 There is no evidence to the effect that there has ever been any express communication between the parties on the question of whether their written agreement was to supersede their previous oral arrangements. Mr Robinson does not state in evidence that the topic was ever discussed with Mr Cerini, and the written agreement does not contain an 'entire agreement' clause. Nor does S & K contend that the conduct of the parties manifests a common intention to the effect that the preceding oral agreement was to survive the written agreement and form part of the complete agreement between the parties, which included their written agreement. Rather, S & K contend that because the written agreement, on its proper construction, contained no term with respect to the rental payable by S & K to Mr Cerini, it is to be inferred that the objective intention of the parties was that their written agreement would be augmented by their earlier oral agreement to the effect that the net proceeds derived from the display of billboards on the site would be divided equally between them or, put another way, that the rental payable by S & K under the agreement would be an amount equal to half the net proceeds which it derived from the use of the site. Accordingly, in the circumstances of this case, the resolution of this issue turns upon the objective intention properly attributed to the parties as a result of the words they have used in the written agreement, assessed in the context of the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract.

37 In a case such as this, where parties to an oral commercial agreement have agreed to reduce the terms of their agreement to writing, in the absence of any indication to the contrary, it is reasonable to infer that they intended their written agreement to embody and record all the terms of their agreement.[10] This position has been described as an implication or presumption that is 'very strong' although rebuttable.[11] In such a case it is reasonable to infer that the parties wish to achieve the commercial objective of securing a comprehensive written record of the continuing terms of their agreement in the absence of some indication to the contrary. The commercial advantages of that objective would be largely defeated if the written record of the agreement was incomplete and the rights and obligations of the parties continued to be governed by terms not reduced to writing. So, in this case, the fact that the parties decided to record the terms of their agreement in a document in and of itself supports an inference that they intended the written agreement to supersede and take the place of their preceding oral agreement.

38 In this case that inference is supported by the terms of the written agreement which on their face appear to be comprehensive and to cover all the material terms of the agreement between the parties. The agreement identifies the lessor, the lessee, the site, the signs to be erected on the site, the term of the agreement, the rental to be paid, and the mutual rights and obligations of the parties with respect to such things as the installation of equipment associated with the billboards, access to electricity supply, repairs and maintenance, insurance and so on. Subject to S & K's contention with respect to the proper construction of item 10 of the schedule, there is no apparent omission or deficiency in the terms of the written agreement which could sustain an inference to the effect that the parties did not intend the document to be a comprehensive record of their agreement.

39 As I have noted, S & K contend, in effect, that the written agreement contains no provision relating to the rental payable by it to Mr Cerini, which gives rise to the inference that it was the intention of the parties that their preceding oral agreement continue to apply. As best as I am able to understand the contention advanced, it is to the effect that the paragraph numbered 1 in item 10 of the schedule is to be construed as providing that the rental payable by S & K is to 'be in accordance with' marketing agreements into which S & K enters with advertising agencies from time to time. S & K further contends that the only way meaning can be given to the expression 'in accordance with' in this context is by applying the earlier oral agreement of the parties to the effect that S & K would pay Mr Cerini rental equivalent to half the net proceeds derived from the use of the site.

40 S & K accepts that in order to sustain this contention it is necessary to read the words 'rental agreement' in the first numbered paragraph under item 10 of the schedule as meaning any marketing agreements which S & K might reach with third parties, and that it is also necessary to construe the words 'both parties' in that item as not referring to S & K and Mr Cerini, but as referring to S & K and the advertising agencies with which it might enter into marketing agreements. S & K supports these contentions by referring to the fact that the parties have used the expression 'rental agreements' in the third numbered paragraph of item 10 of the schedule to describe agreements between S & K and third parties.

41 These contentions must be rejected, essentially because they are entirely inconsistent with the natural and ordinary meaning of the words used by the parties in their agreement, which natural and ordinary meaning provides a sensible commercial result.

42 It should first be noted that S & K's contention accepts that paragraph 1 of item 10 of the schedule refers to the rental payable by S & K to Mr Cerini under the written agreement. Once that is accepted, the natural and ordinary meaning of the other expressions used in that paragraph is pellucidly clear. The 'rental agreement agreed upon by both parties from time to time' can only be read as a reference to an agreement made between S & K and Mr Cerini, from time to time, with respect to the rental payable by S & K to Mr Cerini. That view of the paragraph provides a sensible commercial result, viewed in a context in which the parties expressly contemplated (by par 3 of item 10) that in the future S & K would enter into marketing agreements with third parties from time to time, the terms of which were not then known and could not be anticipated at the time the 2007 agreement was executed, and which could have an impact upon the amount appropriately paid by S & K to Mr Cerini.

43 Paragraph 3 of item 10 of the schedule provides no support for S & K's contention for a number of reasons. First, par 3 does not use the same expression as par 1. Paragraph 3 does not refer to 'the rental agreement agreed upon by both parties' (being a singular agreement), but rather refers to 'the rental agreements with third parties', plainly connoting potentially more than one agreement, being agreements between S & K and other unknown parties. Second, in the latter part of par 3 of item 10, the agreements to which it refers are described in different terminology to that used in par 1 - namely, as 'marketing agreements with any third party'. For both of those reasons, S & K's contention that the 'rental agreement' to which reference is made in par 1 of item 10 must be construed as bearing the same meaning as the agreements to which reference is made in par 3 of that item must be rejected.

44 That conclusion is further reinforced by the fact that par 3 of item 10 expressly provides that S & K is to have authority to enter into marketing agreements with any third party, subject only to the obligation to communicate such details as might be requested by Mr Cerini prior to entering into such agreements. By contrast, the agreement to which reference is made in par 1 of item 10 must be agreed upon 'by both parties', which is plainly and obviously a reference to each of the parties to the lease agreement, namely, S & K and Mr Cerini.

45 It follows from the natural and ordinary meaning of the words used in item 10 of the schedule that the lease agreement requires the parties to that agreement to agree upon the rental payable from time to time. It follows that S & K's contention to the effect that there is a gap or deficiency in the lease agreement is correct in a sense, the sense being that the lease agreement is, in effect, an agreement to agree in the future with respect to the rental payable, which does not become enforceable unless and until the parties reach an agreement on that subject. However, it does not follow that it should be concluded that the parties intended that gap to be filled by the earlier oral agreement, or that such an agreement was to bind the parties throughout the entire term of the lease.

46 That conclusion does not follow for a number of reasons. First, the terms of item 10 of the schedule clearly contemplate an agreement between the parties subsequent to the written agreement, not antecedent to it. Second, it is clear from par 2 of item 10 that the parties contemplated that their subsequent agreement with respect to rental would also be reduced to writing and attached to the lease. That paragraph is fundamentally inconsistent with the attribution of any intention to the parties to the effect that their antecedent oral agreement should continue to govern their arrangements throughout the term of the lease. Third, par 1 of item 10 specifically refers to the rental agreement agreed upon by both parties 'from time to time', which is only consistent with an intention that it would be open to the parties to vary their agreement with respect to the rental payable. Fourth, the oral agreement to which Mr Robinson referred in his evidence was not expressed to endure for the entire term of the lease, including all periods over which the lease was renewed.

47 For these various reasons, S & K's contention that the agreement between the parties is partly oral and partly in writing must be rejected. It follows that S & K's contention to the effect that there is a continuing term of the agreement between the parties to the effect that the rental payable by S & K is always to be an amount equal to 50% of the net proceeds derived from the use of the site must also be rejected.

48 It does not necessarily follow that the parties to the lease agreement have not entered into an agreement with respect to the rental payable pursuant to its terms, being an agreement made subsequent to the lease agreement. Although not developed by S & K in the form of submission or argument, there would appear to be a cogent argument to the effect that Mr Cerini's receipt of rental equal to half the net proceeds derived by S & K from its use of the site provides clear evidence of an agreement between the parties to that effect. Further and more specifically, although again not developed by S & K in written submissions or argument, there would appear to be a cogent argument to the effect that Mr Cerini's agreement to and acceptance of the revised terms proposed by OMA in 2013 in a context in which it was the clear understanding of both S & K and Mr Cerini that Mr Cerini would receive rental equal to half the net proceeds of those revised terms, and the subsequent tender and acceptance of rent calculated in that way, provides clear evidence of an agreement with respect to the rental payable.

49 However, assuming that S & K should be taken as advancing a contention to this effect, the critical question is whether the actions of the parties, and in particular Mr Cerini's actions in approving S & K's entry into the 2013 agreement with OMA and his acceptance of half of the rental calculated in accordance with its terms, provides evidence of an agreement extending beyond the period of that 2013 OMA agreement, which expired on 30 June 2016. In response to that question, I am unable to see any basis upon which an inference of agreement with respect to the rental payable beyond the term of S & K's 2013 agreement with OMA can be drawn from the actions of the parties.

50 It should first be noted that par 1 of item 10 of the schedule does not contemplate a rental agreement binding the parties for the entirety of the term of the lease, but expressly contemplates that the parties will reach such an agreement 'from time to time'. In that context, in the absence of evidence to the contrary, any rental agreement to be attributed to the parties by inference should be of the kind contemplated by their lease agreement - that is, an agreement having the character of being limited in point of time.

51 Second, Mr Cerini's agreement to and acceptance of the terms of the 2013 agreement with OMA is a critical step in the process of inferring an agreement with respect to the rent payable by S & K to Mr Cerini under the lease agreement. The term of the 2013 OMA agreement, being a term of three years expiring on 30 June 2016, was known to all parties. It follows that while Mr Cerini's conduct could give rise to an inference of agreement with respect to the rental payable during the term of the 2013 OMA agreement, it is incapable of giving rise to any inference of an agreement with respect to the rental payable following the expiry of that agreement, especially given that Mr Cerini had no way of knowing what proceeds might be derived from the use of the site after the expiry of the 2013 OMA agreement, and therefore had no way of knowing or being able to agree to accept an amount equal to 50% of those proceeds as rental for the site.

52 For these reasons, while there would appear to be a cogent argument to the effect that the parties did agree with respect to the rental payable under the lease agreement during the period prior to the expiry of the 2013 OMA agreement on 30 June 2016, there is no basis upon which any agreement between the parties with respect to the rental payable after that date can be inferred. In the absence of any agreement between the parties with respect to the rental payable after 30 June 2016, the lease agreement is not enforceable.

53 Although that conclusion is, of itself, sufficient to lead to the dismissal of S & K's claim, it is nevertheless appropriate to determine the issue raised with respect to the lack of agreement relating to the extended term of the lease.

Did the parties agree to extend the term of their lease?

54 As I have noted, the parties deleted from their agreement a clause which provided the lessee with an option of renewal and instead included item 9 in the schedule, which provides that the further term of the lease should be concurrent with any future town planning approval granted by the City at the expiration of the current approval. Prior to execution of the agreement, the parties added to that item of the schedule, in manuscript, the words 'subject to mutual agreement by the Lessor + Lessee'. S & K accepts, and it could not seriously be contended otherwise, that those additional words have the effect that the term of the lease is not automatically extended upon the grant of further approval by the City, but only upon agreement between the parties with respect to the extended term. In the result, the position adopted by S & K with respect to the proper construction and effect of item 9 of the schedule was not materially different to the position advanced by counsel for Mr Cerini - namely, while the extension of the City's approval to the use of the site for the display of billboards was a necessary requirement for any extension of the term of the lease, it was not, of itself, sufficient to result in an extension.

55 It follows that the construction which both parties attributed to item 9 of the schedule, being the construction which accords with its natural and ordinary meaning, has the consequence that the term of the lease was only extended beyond the term of the approval granted by the City current at the time the lease agreement was executed (ie. a term which expired on 14 August 2009) if and to the extent that the parties agreed upon the extension of such a term. So, like item 10 of the schedule, item 9 is essentially a provision requiring future agreement between the parties and which can therefore only operate if and to the extent that such an agreement is established by the evidence.

56 When pressed to identify precisely what evidence was said to establish an agreement between the parties to the effect that the term of the lease would be extended until 13 November 2019, counsel for S & K relied only upon Mr Cerini's execution of the application for continuing approval in August 2014. Although in the course of opening counsel for S & K also placed reliance upon evidence foreshadowed with respect to discussions which took place between Mr Robinson and Mr Cerini prior to execution of the application by Mr Cerini, in the result no relevant or admissible evidence of such discussions was tendered or received in evidence. Accordingly, S & K's argument on this aspect of the case relied entirely upon an agreement said to be inferred from Mr Cerini's execution of the form of application for further approval.

57 That fact alone is quite incapable of supporting an inference to the effect that Mr Cerini had agreed to extend the term of the lease for a period of five years, subject to the approval of the City. As I have noted, there is nothing on the form to indicate the length of the period of approval sought, nor is there any evidence to the effect that the length of any particular period of further approval was discussed or agreed between Mr Robinson and Mr Cerini prior to the submission of the form. Further, the evidence is entirely inconsistent with any agreement between the two as to the period over which approval was to be sought, as the forms were presented to the City by Mr Robinson under cover of a letter which he appears to have prepared two days prior to Mr Cerini's execution of the form in which he sought approval unlimited in point of time. Although there is no evidence to the effect that Mr Cerini was aware of the terms of that letter, the fact that Mr Robinson had prepared a letter in those terms, and later presented it to the City, is entirely inconsistent with any agreement between Mr Robinson and Mr Cerini as to the period in respect of which approval would be sought from the City or with respect to the term for which the lease would be extended in the event that the City granted its approval.

58 In an attempt to circumvent the lack of any evidence with respect to the identification of any extended term over which approval was to be sought or likely to be obtained from the City, counsel for S & K submitted, in effect, that by signing the application form, Mr Cerini should be taken to have agreed to extend the term of the lease for any and whatever period over which the City extended its approval. That submission must be rejected for a number of reasons.

59 First, it is reasonable to infer that at the time the parties executed the lease agreement, they should be taken to have known that it was necessary for Mr Cerini to sign any application for development approval lodged with the City. That inference is properly drawn from the evidence to the effect that a number of such applications had been submitted on various occasions prior to approval being granted in 2004. For the same reason, it can be inferred that the parties would also have known that the term of any extended approval granted by the City would be a matter for it to determine as and when each application was approved. In those circumstances, item 9 of the schedule, and in particular the words in manuscript added by the parties prior to execution of the agreement, must be read as requiring something more than mere endorsement of an application for approval for an unidentified term, and in particular, as requiring the agreement of the parties as to the term for which the lease would be extended if and when the City agreed to extend its approval.

60 Second, Mr Cerini's action in signing the application form was a necessary step along the path towards satisfaction of a necessary condition of any extension of the term of the lease - namely, obtaining the grant of approval from the City for an extended period. However, in the context of item 9 of the schedule, that necessary act cannot, of itself, be construed as satisfying the further requirement to the effect that the parties agree upon the term for which the lease was to be extended.

61 Third, in the absence of any evidence, it is entirely speculative to attribute to Mr Cerini an intention that the term of the lease would be extended for whatever period for which the City extended its approval, merely by his act of signing the form of application. As I have noted, there is no evidence of Mr Cerini having any knowledge or contemplation of the term for which approval was sought or likely to be obtained. Although, as I have noted, there is no evidence that Mr Cerini knew that Mr Robinson was pressing for the grant of approval which was unlimited in point of time, on S & K's case, Mr Cerini's act of signing the form should be taken as an agreement to extend the term of the lease indefinitely if, in fact, the City had acquiesced in Mr Robinson's request for the grant of approval unlimited in point of time. It is not plausible or commercially realistic to attribute (objectively) such an intention to Mr Cerini.

62 For these various reasons, S & K's contention that an agreement for the extension of the term of the lease until 13 November 2019 can be inferred from Mr Cerini's execution of the application to the City for approval in August 2014 must be rejected.

63 However, although not specifically advanced by S & K in the course of argument, this is not to say that there are no other actions of Mr Cerini which might be said to provide evidence of an agreement between the parties to extend the term of the lease. More specifically, it seems to me to be cogently arguable that Mr Cerini's agreement to the renewal of S & K's agreement with OMA for a term of three years commencing on 1 July 2013, and his acceptance of rent calculated by reference to the revenue derived by S & K pursuant to that renewed agreement, provides evidence of an agreement to extend the term of the lease until 30 June 2016, essentially for the reasons I have already enunciated with respect to the inference of an agreement as to the rental payable under the lease over the same period. However, it does not appear to me to be possible to infer from those facts any agreement to extend the term of the lease beyond the term of the 2013 agreement with OMA, essentially for the reasons I have already enunciated in relation to the inference of an agreement with respect to the rental payable.

64 The lease agreement executed by the parties in 2007 requires, on its proper construction, the parties to agree, from time to time, upon the rental payable under the lease, and also requires the parties to agree upon any extension of the term of the lease. Because the parties have not agreed upon either the rental payable or for the extension of the term of the lease beyond 30 June 2016, at least after that date S & K has no right to continued occupation or use of the site and its claim must be dismissed. As S & K has in fact enjoyed occupation and use of the site up to and including 30 June 2016, and Mr Cerini seeks no relief by way of counterclaim in respect of that use and occupation, it is unnecessary to determine in these proceedings whether the lease continued in operation up to and including that date.

[1] During some of the period covered by the evidence, the City was known as the Town of Vincent. However, it is convenient to describe the City by its current title in these reasons.

[2] It may be that the agreement is properly characterised as a licence rather than a lease on the basis that it does not confer a right of exclusive possession. However, nothing turns upon that distinction and it is convenient to use the terminology used by the parties.

[3] Apparently being the business name under which Outdoor Network Australia Pty Ltd trades.

[4] See Primewest (Mandurah) Pty Ltd v Ryom Pty Ltd [2014] WASCA 28 [55].

[5] Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35] (French CJ, Hayne, Crennan & Kiefel JJ).

[6] Bearing in mind the two 'limbs' of uncertainty applicable to essential terms of a contract, namely (1) irremediable obscurity; and (2) incompleteness. See generally Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 [6] (McLure JA), [52] (Pullin JA), [137] - [144] (Buss JA); Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] VicRp 55; [1994] 2 VR 106, 130 (Brooking J), 200 - 201 (JD Phillips J).

[7] The Council of the Upper Hunter County District v Australian Chilling and Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429, 436 - 437 (Barwick CJ, McTiernan, Kitto & Windeyer JJ agreeing).

[8] Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd [1982] HCA 53; (1982) 149 CLR 600, 604 (Gibbs CJ, Murphy & Wilson JJ).

[9] Or, in the language used by the author of Carter on Contract, whether the antecedent oral agreement merged into and became 'integrated' within the written agreement: see J W Carter, LexisNexis, Carter on Contract (at 2 August 2016) [13-030]. See also footnote 10 below.

[10] Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234 [90] (Campbell JA, Allsop P & Basten JA agreeing).

[11] Lord Russell of Killowen CJ in Gillespie Brothers & Co v Cheney Eggar & Co [1896] 2 QB 59, 62.