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ORDER

Judges: Gray P, Penfold and Buchanan JJ

Date: 20 August 2010

Place: Canberra

THE COURT ORDERS THAT:

1. The appeal be dismissed.

2. The appellant pay the respondent’s costs.

IN THE SUPREME COURT OF THE )

)

AUSTRALIAN CAPITAL TERRITORY ) No. ACTCA 6 – 2009

) No. SC 777 of 2008

COURT OF APPEAL )

ON APPEAL FROM THE MASTER OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN: SPRINGRANGE PTY LTD

Appellant

AND: AUSTRALIAN CAPITAL TERRITORY

First Respondent

AND: ACT PLANNING AND LAND AUTHORITY

Second Respondent

Judges: Gray P, Penfold and Buchanan JJ

Date: 20 August 2010

Place: Canberra

REASONS FOR JUDGMENT

GRAY P and PENFOLD J:

Introduction

1. The appellant, Springrange Pty Ltd (Springrange) is the lessee, under a Crown Lease, of a block of land in Tuggeranong in the ACT. At all relevant times, there was one building on the block, with a gross lettable area of 4,558 m². Springrange sought a declaration from the Supreme Court about the meaning of a provision in that Crown Lease. The interpretation of the provision is significant to the assessment of a change of use charge which would be payable if the land is redeveloped. Springrange has now appealed against the decision of the Master to dismiss its application for the declaration that it sought.

The registered lease

2. The Commonwealth of Australia granted a lease of the block of land to Max Profit Pty Limited on 31 May 2002 for a term of 99 years. The lease was granted under the City Area Leases Ordinance 1936 (ACT) as applied by the National Land Ordinance 1989 (ACT). The lease was registered by the Registrar General on 12 June 2002. The lease was transferred to Springrange as lessee in October 2006.

3. At the relevant times, the Land (Planning and Environment) Act 1991 (ACT) (now repealed) (the Planning and Environment Act) applied to the lease. Section 187A of the Planning and Environment Act provided for the calculation of a change of use charge payable by a Crown lessee if a leased block is subdivided; the amount payable is a percentage of the change in value following the subdivision. It was accepted by the Master that the change in value would reflect not just the subdivision, but also any change of purpose.

4. In May 2007, Springrange lodged a development application for subdivision of the block into two parcels, including the grant of two new leases to replace the original lease. The proposed subdivision would leave the existing building in one of the new blocks and the other new block would be vacant.

5. While this application was being considered, valuations were obtained for the “before” and “after” values of the land.

6. The ACT Land and Planning Authority (ACTPLA), the second respondent, obtained a valuation based on the assumption, set out in the Australian Valuation Office’s Valuation Report dated 4 December 2007 at page 5, that: Under the requirements of the Crown lease the subject property is considered to be fully developed and no additional development rights accrue to the property.

7. This in turn reflected an assumption that the total permissible floor area of all buildings on the block was 4,800 m², and that having regard to the floor area of the existing building, this meant that no additional buildings could be built on the block. The subdivision, which was intended to provide an upper limit of 32,000 m² gross floor area for buildings on the proposed vacant block, would therefore substantially increase the total floor area able to be put onto the original block. This was reflected in the valuation, which showed a “before” value of $7,100,000 and an “after” value of $18,600,000. Thus, the change of use charge would be calculated by reference to an increase in value of $11,500,000.

8. Springrange obtained its own valuation, based on a letter from ACTPLA addressed to McCann Property and Planning in August 2003 (before Springrange became the lessee) passing on advice from the ACT Government Solicitor’s Office that “the Land could be used for multiple buildings, each with a gross floor area of not more than 4,800 square metres”. On this basis, there was plenty of scope for further development of the existing block without any subdivision. The valuation proposed on this assumption reflected the insignificant effect of the subdivision proposal; it set out a “before” value of $14,930,000 and an “after” value of $15,000,000. ACTPLA presumably has resiled from this advice despite Springrange relying upon it for the purpose of obtaining its valuation.

9. It is apparent that the two valuations were based on different interpretations of the provision in cl 3(b) in the Crown Lease which provides: That the total gross floor area of a Building erected on the Land shall not exceed 4,800 square metres.

10. The valuation obtained by Springrange assumed that buildings could be erected on the land but not so as to exceed a gross floor area of 4,800 m² in respect of any individual building. The valuation obtained by ACTPLA assumed that the single building on the land and the maximum gross floor area of 4,800 m2 meant that the block was fully developed.

11. The declaration sought by Springrange is a declaration that the provision in cl 3(b) of the Crown Lease: ... is to be interpreted as meaning that the limitation of 4,800 square metres of gross floor area applies to each individual building on the land and not to the totality of all buildings that may be erected on the land. Construction of registered Torrens title lease

12. Because the lease is a registered lease under the Torrens titles system, its terms fall to be construed without the aid of extrinsic materials that might cast light on the intention of the original parties. In construing an easement created over Torrens title land, the High Court (Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ) in Westfield Management Limited v Perpetual Trustee Company Limited (2007) 233 CLR 528 at [37] observed: However, in the course of oral argument in this Court it became apparent that what was engaged by the submissions respecting the use of extrinsic evidence of any of those descriptions, as an aid in construction of the terms of the grant, were more fundamental considerations. These concern the operation of the Torrens system of title by registration, with the maintenance of a publicly accessible register containing the terms of the dealings with land under that system. To put the matter shortly, rules of evidence assisting the construction of contracts inter partes, of the nature explained by authorities such as Codelfa Construction Pty Ltd v State Rail Authority (NSW) [(1982) 149 CLR 337 at 350-352], did not apply to the construction of the Easement.

13. The reason for this approach is explained at [39]: The third party who inspects the Register cannot be expected, consistently with the scheme of the Torrens system, to look further for extrinsic material which might establish facts or circumstances existing at the time of the creation of the registered dealing and placing the third party (or any court later seized of a dispute) in the situation of the grantee [cf Proprietors of Strata Plan 9968 v Proprietors Strata Plan No 11173 [1979] 2 NSWLR 605 at 610-612].

14. In Bowler v Hilda Pty Limited (in liq) (2001) 112 FCR 59, Drummond J at [10] found it difficult to accept the notion that materials extrinsic to the Register could be used to resolve ambiguities in the registered title. Gyles J at [59] would also not permit an ambiguity to be created by the use of extrinsic materials.

15. That is, of course, not to say that reference may not be had to documents the terms of which are incorporated into the public document (see Leichhardt Municipal Council v Terminals Pty Ltd (1970) 21 LGRA 44 at 50-51, Hope J citing Slough Estates Ltd v Slough Borough Council [No. 2] [1970] 2 WLR 1187 and Ryde Municipal Council v The Royal Ryde Homes (1970) 19 LGRA 321. Nor is it to disagree with the comment of Gyles J in Bowler v Hilda at [59]: Evidence, for example, might be relevant to identify the land and the parties or to give context to particular covenants in the ordinary way: Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337; 41 ALR 367. Construction of template documents

16. The lease in this case is, however, not only a registered lease under the Torrens title system but also, apparently, a lease based on a template document. That fact also requires a particular approach to be taken to its interpretation. While it could be thought that a lease for a property that, in 2007, was valued at roughly $15 to $18 million when fully developed might deserve some customisation, there may equally be good reasons for an administrative practice of relying on standard documents for all leases of a particular kind irrespective of the values of the properties involved.

17. Standard or template documents are commonly used in commercial transactions, especially when a contracting party engages in many similar transactions with different parties. The fact that the standard or template document expressly addresses possibilities that are not relevant in a particular contract would not generally found an argument that the document must to that extent involve errors. It seems to us that standard or template documents must be interpreted in the abstract before any conclusion can be drawn that such a document reveals drafting flaws when it appears to operate in a particular case to produce a result that a party would prefer to avoid.

18. The lease in this case, even approached as a standard or template document, is not an outstandingly clear or straightforward document and there are certainly provisions of the document that could be improved. Nevertheless, it seems to us that the lease, interpreted in the abstract, has a clear and rational operation. The relevant provisions of the lease

19. Clause 2 of the lease contains the covenants for the rent and manner of payment.

20. Clause 3 provides: THE LESSEE FURTHER COVENANTS WITH THE COMMONWEALTH as follows:- PURPOSE (a) subject to subclause 3(aa), to use the premises for offices and store and purposes ancillary thereto; (aa) The use of the premises for store is permitted only for the purposes of the National Archives of Australia, the body established by section 5 of the Archives Act 1983 (Cth) or any body substituted therefore [sic] from time to time; GROSS FLOOR (b) That the total gross floor area of a Building AREA erected on the Land shall not exceed 4,800 square metres; CAR PARKING (c) That the lessee shall provide and maintain a minimum of 14 hard-standing car parking spaces on the Land to the satisfaction of the Commonwealth, but if any development is carried out on the Land, car parking shall be provided and maintained to the satisfaction of the Commonwealth in accordance with the standards of the Territory in force at the time of seeking development approval under this lease or any applicable legislation; PAVING (d) ... LIGHTING (e) ... SIGNS (f) That the Lessee shall not display or permit to be displayed on the premises any advertisement sign or hoarding without the previous consent in writing of the Commonwealth; SERVICE AREAS (g) That the Lessee shall screen and keep screened all services to the satisfaction of the Commonwealth and shall ensure that all plant and machinery contained within the premises is suitably screened from public view; BUILDING (h) That the Lessee shall not without the previous consent SUBJECT TO in writing of the Commonwealth erect any Building APPROVAL on the Land or make any external structural alterations to the premises; While the Land is National Land, the Commonwealth will not give its consent under sub-clause 3(h) unless it is satisfied that the proposed development conforms with the requirements of the Territory Plan as it exists from time to time and, where the Commonwealth requires a Development Control Plan for the Land, the requirements of the Development Control Plan; ACCESS (i) ... INDEMNITY (j) ... REPAIR (k) That the Lessee shall at all times during the said term maintain repair and keep in repair the premises to the satisfaction of the Commonwealth; FAILURE TO (l) If and when the Lessee is in breach of the of REPAIR the Lessee’s obligations to maintain repair and keep in repair the premises the Commonwealth may by notice in writing to the Lessee specifying the repairs and maintenance needed require the Lessee to effect the necessary work in accordance with the notice. If the Commonwealth is of the opinion that a building or some other improvement on the Land is beyond reasonable repair the Commonwealth may by notice in writing to the Lessee require the Lessee to remove the building or improvement and may require the Lessee to construct a new building or improvement in place of that removed within the time specified in the notice. If the Lessee does not carry out the required work within the time specified by the Commonwealth any person or persons duly authorised by the Commonwealth with such equipment as is necessary may enter the premises and carry out the necessary work and all costs and expenses incurred by the Commonwealth in carrying out the work shall be paid by the Lessee to the Commonwealth on demand and from the date of such demand until paid shall for all purposes of this lease be a debt due and payable to the Commonwealth by the Lessee; RIGHT OF (m) Subject to the provisions of the City Area INSPECTION Leases Ordinance, to permit any person or persons authorised by the Commonwealth to enter and inspect the premises at all reasonable times and in any reasonable manner; RATES AND (n) ... CHARGES

21. For the purpose of interpreting these covenants, the relevant interpretation provisions are as follows: 1. INTERPRETATION 1.1 In this Lease, unless the contrary intention appears: (a) ancillary means associated with and directly related to, but incidental and subordinate to the predominant land use; (b) Building means the existing building or buildings constructed on the Land or any building or buildings constructed on the Land to replace the same in accordance with the covenants of this lease together with all fixtures fittings (including floor coverings) plant amenities and appurtenances thereof and therein contained or thereon affixed or if the context so admits any part thereof owned by the Lessee; (c) City Area Leases Ordinance means the City Area Leases Ordinance 1936 as applied by the National Land Ordinance 1989; (d) Commonwealth means the Commonwealth of Australia but if the Land becomes Territory Land, shall, as from the date when the Land becomes Territory Land, mean the Australian Capital Territory Executive on behalf of the Commonwealth; (e) gross floor area means the sum of all the areas of all floors of the building or buildings measured from the external faces of the exterior walls or from the centre lines of walls separating the building from any other building but excluding an area used solely for rooftop fixed mechanical plant and or basement car parking. (f) ... (g) ... (h) National Land has the meaning given to that term by the Australian Capital Territory (Planning and Land Management) Act 1988 (Cth); (i) office means the use of land used for the purpose of administration, clerical, technical, professional or like business activities, including a government office, which does not include dealing with members of the public on a direct and regular basis except where this is ancillary to the main purpose of the office; (j) premises means the Land, Building and all other improvements on the Land; (k) store means the use of land for the storage, whether permanent or temporary, of goods (not including motor vehicles or obsolete machinery) within or upon which no trade (whether retail or wholesale) or industry is carried on; (l) ... (m) Territory Land has the meaning given to that term by the Australian Capital Territory (Planning and Land Management) Act 1988 (Cth); and (n) Territory Plan means the plan made under the Land (Planning and Environment) Act 1991 (ACT) or any instrument substituted therefor. 1.2 If the Land becomes Territory Land, any reference in this lease to the City Area Leases Ordinance shall, as from the date when the Land becomes Territory Land, be taken to be a reference to the Land (Planning and Environment) Act 1991 (ACT) or any Statute or Ordinance substituted therefor. The interpretation arguments The significant provisions of the lease

22. Each party founds its argument on a particular interpretation of a small number of words in the lease; specifically, the argument is over the meaning of the covenant in cl 3(b): That the total gross floor area of a Building erected on the Land shall not exceed 4,800 square metres;

23. The two key concepts in that clause, “Building” and “gross floor area”, are defined in cl 1.1 (see [21] above). The appellant’s argument

24. The appellant says that even before the development approval, there was scope for constructing further buildings on the land, subject only to a maximum total floor area imposed for each building on the land, such that the development approval has had only a negligible effect on the value of the land (thus rendering the appellant liable only to a very small change of use charge).

25. Counsel for the appellant based his entire argument on the proposition that cl 3(b), which applies the 4,800 m² limit to “total gross floor area”, applies separately to each building constructed on the land because the clause refers to “a Building” rather than “the Building”. On this basis, the argument seemed to be, the lease had always permitted the construction of multiple buildings, each with a maximum gross floor area of 4,800 m² but with a much higher maximum total gross floor area, dependent only on the number of buildings that could be squeezed onto the land. This in turn meant that the development approval had made little difference to the underlying value of the lease. Counsel submitted that the apparent difficulty with his argument arising from the fact that the defined term “Building” is expressed to cover only existing and replacement buildings and not additional buildings was not a real difficulty because, he submitted, the reference to replacement buildings should be read as including any new buildings as long as they were built in accordance with the permitted use of the land and, in what seems to us to be a question-begging submission, in accordance with the permitted total gross floor area. The respondent’s argument

26. The respondent says that before the development approval, the land was close to fully developed, and that the development approval, by substantially increasing the maximum total floor area of the buildings that can be constructed on the land, has substantially increased the value of the land (thus enabling the imposition of a substantial change of use charge on the appellant).

27. Counsel for the respondent proposed that the defined term “Building” should be read, despite its plain words, as applying not only to existing and replacement buildings but also to new buildings that are neither existing nor replacements of existing buildings. The purpose of that proposition was to ensure that “Building” encompassed all buildings that could be built on the land as well as all existing buildings, such that the total gross floor area limit applied in cl 3(b) to “a Building” applied to the gross floor areas of all those buildings in total, rather than applying separately to each building as contended by the appellant. Interpretation of the lease Operation of cl 3(b)

28. We are satisfied that the argument put on behalf of each party depends on an unjustified misinterpretation of a provision in a lease that has an entirely rational operation when properly interpreted, including, as already mentioned, taking account of the fact that it is a template document.

29. A definitions or interpretation clause is often the place to look for the significant concepts in a legal document, and in this lease one of the most significant concepts is “Building”, singular and capitalised, defined as set out at [21] above. The effect of that definition is, significantly, that the word “Building” encompasses all the identified buildings on a particular piece of land, and is not correctly used to refer to each or any of those buildings individually.

30. The lease defines the “premises” as “the Land, Building and all other improvements” (cl 1.1(j)). This defined term is used in the purpose clauses (cl 3(a) and (aa)), which specify the purposes for which the premises may be used, and in cl 3(k), which requires the Lessee to keep the premises in repair. It is also used in covenants restricting the display of advertisements, signs or hoardings (cl 3(f)) and requiring the screening of plant and machinery contained within the premises (cl 3(g)); see [20] and [21] for the lease provisions mentioned.

31. The other concept that is important in this lease is that of “gross floor area” (set out at [21] above) which means, relevantly, “the sum of all the areas of all floors of the building or buildings”, measured as described in the definition. As already mentioned, the concept of “gross floor area” is important in this lease because it is used in the covenant specified at cl 3(b), that “the total gross floor area of a Building erected on the Land shall not exceed 4,800 square metres”.

32. We agree with the submission of counsel for the appellant that cl 3(b), if it is intended to set a limit on the total gross floor area of all buildings covered by the defined term “Building”, would more grammatically refer to “the total gross floor area of the Building”. We do not agree that the inelegant use of “a” instead of “the” should be “corrected” by, in effect, treating the use of the defined term “Building” in that clause as a mistake and assuming that the intention was to use the undefined term “building”, so as to render the clause applicable separately to each building or proposed building.

33. It is also true that the phrase “total gross floor area” used in cl 3(b) seems odd when the definition of “gross floor area” is examined, and we suspect there is a minor drafting error involved. The oddity arises from the use in the definition of “gross floor area” of the words “the sum of all the areas of all floors of the building or buildings” (emphasis added). The reference to “or buildings” suggests that the defined term requires the measurement as specified of all the floors in each building and then the totalling up of all those areas in all the buildings to provide the sum. If this is what “gross floor area” means, then it is true that adding “total” before “gross floor area” in cl 3(b) does not seem to achieve anything. In our view, however, the words “or buildings” are surplus in the definition of “gross floor area”; perhaps they date back to an earlier draft of the definition that was intended to do the job finally given to “total gross floor area”, but in any case, those words are ignored in the rest of the definition, as shown in the reference to measuring from “the centre lines of walls separating the building from any other building” (emphasis added).

34. Counsel for the appellant submitted that “total” in fact was doing the job that we consider is being done by “gross”, namely requiring the adding up of all the floor areas in a particular building; this interpretation is necessary for his argument that “total gross floor area” applies building by building rather than to all the buildings covered by the defined term “Building”. Given the clear reference to working out “the sum of all the areas of all floors of the building”, we cannot see any basis for accepting that there is no requirement in these provisions to add up all the areas in a particular building until one gets to the point of working out a “total” for the Building for the purposes of cl 3(b).

35. It probably doesn’t matter whether the real drafting error that causes an odd interaction between cl 3(b) and the definition of “gross floor area” is the inclusion of “or buildings” in the definition of “gross floor area”. If the real drafting error is in fact the use of the word “total” in cl 3(b), the position is only that a concept has been repeated unnecessarily; neither diagnosis of the problem entitles the reader to interpret cl 3(b) as applying to anything other than the total gross floor area of whatever is meant by the word “Building” in that clause.

36. Several other provisions of the lease should be noted at this point.

37. The lease contains a general prohibition on erecting any “Building” without Commonwealth consent (cl 3(h)). That prohibition applies also to “any external structural alterations to the premises”.

38. Clauses 3(b) and (h) are the only lease provisions that rely directly on the defined term “Building” to cover at once all the original and replacement buildings on the land, but that meaning is also relied on in the various provisions that depend on the defined term “premises” (mentioned in [30] above).

39. Other provisions use the words “building or buildings” where the provision needs to be able to apply to each building separately. The most obvious example is cl 3(l) (Failure to repair) which may, for instance, authorise the Commonwealth to require the Lessee to repair or replace a building but would not authorise requiring the Lessee to repair or replace the Building (that is, all the original or replacement buildings) simply because there is a problem with one of those buildings.

40. We are satisfied that on the plain words of the lease, and accepting that there are two respects in which the key provisions could have been more carefully drafted, the lease permits the buildings existing at the time of the lease, and any replacement buildings, to have, taken altogether, a maximum total floor area (measured as provided for in the definition of “gross floor area”) of 4,800 m². Furthermore, while there is no requirement for replacement buildings to be identical in any respect to the buildings that they are replacing (nor, probably, for them to be only “first generation” replacements), we consider it to be clear on the face of the lease that replacement buildings would not include additional buildings that cannot be identified in any way as replacing any building or buildings originally on the Land at the time of the lease. More particularly, we can see no basis to accept the argument that “Building” not only refers to existing and replacement buildings but must also be read as including any additional buildings that could otherwise be constructed.

41. The lease provisions appear to create a template for a rational scheme for dealing with the building or buildings that are on a leased block of land at the time of the lease and any replacement buildings. There is nothing in the provisions discussed that supports a claim that there is a mistake of any substance in the lease provisions as they stand, and we have already rejected the argument that the minor drafting oddities mentioned at [32] to [34] above require the lease to be re-interpreted in any significant way. Among other things, we consider that those provisions are effective in this case to ensure that the maximum total gross floor area of original or replacement buildings on the land in question is 4,800 m².

42. This disposes directly of the arguments of each counsel, but we do not think it disposes of the more substantial question in this case, which is the operation of the lease in relation to what we have referred to as additional buildings. This requires consideration of the provisions of the lease more broadly. Provisions relating to construction of additional buildings

43. The outstanding question seems to us to be whether the template lease can be interpreted as permitting not just the replacement of any existing building on relevant land but also the construction of other buildings. This question was identified in argument on the appeal by Buchanan J but not pursued by counsel for the appellant (although he did recognise that it might be answered in a way that would suit his client). It was addressed, in effect, on behalf of the respondent by the submission mentioned earlier that there should be read into the definition of “Building” a reference to additional, non-replacement buildings constructed on the land in the future. As we have already indicated at [40], we cannot accept that approach to the interpretation of the definition.

44. However, we are satisfied that, read as a whole, the lease does not permit the construction of any buildings that are not replacements for the original building (and therefore does not permit the construction of buildings that would take the total gross floor area on the block over the 4,800 m² limit).

45. As already canvassed, the lease makes specific provision for various matters of detail in relation to the existing or replacement buildings, and includes a prohibition on the construction of any such building on the land without Commonwealth consent. Taken at face value, there is no basis that we can see for interpreting the template lease as operating to apply significant restrictions on the use of the leased land and buildings (covering matters such as the purposes for which the land may be used, the size of the buildings, the need for Commonwealth consent for building work, the obligations to keep in repair and the display of advertisements and signs) only in relation to existing or replacement buildings on the land, while leaving the Lessee completely free to make whatever use it wishes of the rest of the land without even a requirement for Commonwealth consent. There is nothing on the face of the lease to require such an interpretation, and such an interpretation would make nonsense of the whole lease. Since the provision requiring Commonwealth consent applies to the Building (not to any building), it is no answer to that proposition to say that any desired restrictions on new buildings could be handled through the consent process.

46. Except as noted in relation to counsel for the appellant at [43] above, both parties seemed to assume for the purpose of their arguments that the lease must contemplate the construction on the land of buildings that are not replacements for the original building. It is not clear to us why that assumption was made, but we note, in case it is relevant, that on a proper interpretation of the lease the land does not in fact seem to be fully developed in terms of the value that could be extracted from the block within the current provisions of the lease. The lease seems to leave open (subject to the requirement for consent among other things) the possibility of limited redevelopment if at some point the National Archives of Australia has no further need for the storage provided by the original building. In such a case, the lease would seem to permit the demolition of the original building and its replacement by, for instance, one or more office buildings within the total gross floor area limit, together with whatever extra car parking spaces would be required by cl 3(c); it is however relevant both to that comment, and to the submission of counsel for the respondent that “Building” included non-replacement buildings also within the 4,800 m² limit, to note that the limit of 4,800 m² would permit only a fairly small office block (for instance, a four-storey block in which each floor measured 30 m x 40 m).

47. We note also that although the presence of the existing building was not information available in the interpretation of the lease, the fact of that existing building, combined with the floor area limit contained in the lease, may have left the drafter of the lease with a belief that there was no need to prohibit expressly the construction of additional buildings on the land. However, as discussed above, we have found that prohibition to be an implication of other provisions of the lease and not a necessary result of the 4,800 m² floor area limit; an express prohibition on additional buildings, or an express reference to such in the definition of “Building”, would have made the lease much clearer. Conclusions

48. We are satisfied, however: (a) that although the lease contains two unfortunate pieces of drafting (which we identify as the use of “a Building” rather than “the Building” in the definition of “total gross floor area” and the inclusion of “or buildings” in the definition of “gross floor area”), neither of them requires the lease to be interpreted in the way contended for on behalf of the appellant; (b) that despite the submissions on behalf of the respondent, the definition of “Building” cannot be read as including a reference to additional as well as replacement buildings; and (c) finally, that the lease cannot be read as making detailed rules restricting construction on the land of buildings to replace existing buildings, and imposing various obligations and limits on the Lessee in respect of those replacement or the existing buildings, while leaving entirely unrestricted (even as to purpose and the requirement for consent) the scope for constructing additional buildings on the land.

49. Accordingly, we would not make the declaration sought by the appellant, and so we would dismiss the appeal with costs. I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment herein of their Honours, President Gray and Justice Penfold.

Associate:

Date: 20 August 2010

BUCHANAN J:

50. On 11 September 2008 the appellant sought a declaration about the interpretation of a provision of a Crown lease. The declaration sought was in the following terms: A declaration that clause 3(b) of the Crown Lease granted on 31 May 2002 in respect of Block 5 Section 13 Greenway is to be interpreted as meaning that the limitation of 4,800 square metres of gross floor area applies to each individual building on the land and not to the totality of all buildings that may be erected on the land.

51. Few areas of disagreement arose on the pleadings. The Commonwealth granted a lease on 31 May 2002 to Max Profit Pty Limited over the land referred to in the proposed declaration. Clause 3(b) of the lease is a covenant which states: That the total gross floor area of a Building erected on the Land shall not exceed 4,800 square metres.

52. In 2006 Max Profit transferred its interest in the lease to the appellant which, the following year, on 16 May 2007, lodged a development application with the second respondent. The development application was approved on 15 November 2007 but a determination was subsequently made in May or June 2008 that a change of use charge was applicable in the sum of $8.625m. The calculation of the charge was materially affected by the interpretation given to cl 3(b). The appellant sought the declaration earlier referred to in order to displace the interpretation from which the proposed charge proceeded.

53. In the proceedings below the respondents asserted: that upon its proper construction the limitation of 4,800 square metres of gross floor area in the Crown lease is a limit upon the total gross floor area of all buildings on the land taken together.

54. The interpretation clause (cl 1) assigns the following meanings: 1. INTERPRETATION 1.1 In this Lease, unless the contrary intention appears: … (b) Building means the existing building or buildings constructed on the Land or any building or buildings constructed on the Land to replace the same in accordance with the covenants of this lease together with all fixtures fittings (including floor coverings) plant amenities and appurtenances thereof and therein contained or thereon affixed or if the context so admits any part thereof owned by the Lessee; … (e) gross floor area means the sum of all the areas of all floors of the building or buildings measured from the external faces of the exterior walls or from the centre lines of walls separating the building from any other building but excluding an area used solely for rooftop fixed mechanical plant and or basement car parking; … (Emphasis added)

55. As will be seen, in my view the issues of construction which must be resolved are as follows: (1) What are the various categories referred to in the definition of “Building”? (2) Does the reference to replacement buildings mean that additional buildings, which are not replacement buildings, fall apparently outside the definition of “Building”, if the definition is construed strictly and only by reference to its own terms? (3) Is the term “Building” used in its defined sense in cl 3(b)? (4) Having regard to the overall construction of the lease, including the apparently intended operation of cl 3(b) and other clauses, should the definition of “Building” be construed more broadly than might be the case if it was considered in isolation?

56. At the hearing below attention was focussed on the operation of cl 3(b). It appeared to be assumed that it would apply, in one way or another, to any new building constructed within the lease area, regardless of whether it replaced an existing building. However, on the appeal the assumption that the definition of “Building” extended to any building which might be constructed was questioned. Attention was drawn to the reference to replacement of buildings. One issue thereby exposed was whether the definition, if construed strictly and by reference only to its own terms, referred only to any existing building and replacements thereof, and did not extend to new buildings which were not replacement buildings – e.g. additional buildings. The appellant accepted such a construction of the definition was open and relied upon it if necessary. The respondent rejected it. The respondent’s submissions on that issue raised the next issue for attention. However, it is important to emphasise that the debate at this point was generated by attention only to the language of the definition. As will be seen, that focus itself requires justification.

57. On one view of the definition (focusing only upon its terms for the moment) it identifies two groups of buildings as follows: - the existing building or buildings constructed on the land; - any building or buildings constructed on the land to replace the same.

58. The respondent argued that the definition identifies not two, but three, groups of buildings as follows: - the existing building; - buildings thereafter constructed on the land; - any building or buildings constructed on the land to replace the same (i.e. to replace an existing or other building).

59. In my view the respondent’s suggested construction should not be accepted, as a matter of ordinary language. Apart from the fact, as mentioned again in a moment, that there was only one building on the land at the time of the lease, the definition appears to me to make a simple distinction between a present and a future situation.

60. It is common ground that there was only one building on the land when the lease was executed and it remains the only building. The land which is subject to the lease is identified by reference to a Deposited Plan. That plan shows the position of the single building on the land. The factual position, therefore, renders otiose the reference to “or buildings” in the first of the two groups identified by the construction which I favour at this point in the discussion. That particular difficulty would be removed by the construction urged by the respondent. However, the definition bears all the hallmarks of a template. The looseness of language which would arise on the construction which I favour, when compared to the actual facts pertaining to this one lease, may in my view, be more readily accommodated than the alternative urged by the respondent, if regard is paid only to the terms of the definition in a narrow way. Accordingly, in my view, the definition should be regarded as referring to two, not three, groups of buildings. Furthermore, prima facie, it does not extend to additional buildings which are not replacement buildings. As already indicated, that last premise requires further examination. However, the matters so far discussed provide a necessary, and convenient, starting point.

61. The respondent also argued that to confine the operation of cl 3(b) to the two groups of buildings earlier mentioned (excluding those which are not replacements) would produce a result unlikely to have been intended, namely the exclusion of additional buildings from a floor area limitation otherwise applying to existing and replacement buildings. The contention requires attention at two levels. Does it provide a reason not to import into cl 3(b) the defined meaning of “Building”, bearing in mind that the definitions apply only unless the context indicates otherwise? Does it provide a further reason to construe the definition itself in some different way? As will be seen, in my view the first question should be answered “No” and the second question “Yes”.

62. The defined term “Building” is used in only three clauses. Apart from cl 3(b) itself the other two are the covenant in cl 3(h): (h) That the Lessee shall not without the previous consent in writing of the Commonwealth erect any Building on the Land or make any external structural alterations to the premises; While the Land is National Land, the Commonwealth will not give its consent under sub-clause 3(h) unless it is satisfied that the proposed development conforms with the requirements of the Territory Plan as it exists from time to time and, where the Commonwealth requires a Development Control Plan for the Land, the requirements of the Development Control Plan; and the definition of “premises” in cl 1(j): premises means the Land, Building and all other improvements on the Land;

63. Two important clauses where the term “premises” is used are the covenants in cl 3(k): (k) That the Lessee shall at all times during the said term maintain repair and keep in repair the premises to the satisfaction of the Commonwealth. and cl 3(m): (m) Subject to the provisions of the City Area Leases Ordinance, to permit any person or persons authorised by the Commonwealth to enter and inspect the premises at all reasonable times and in any reasonable manner.

64. It might be thought that a restrictive meaning (if that is the effect of the definition of “Building”), excluding some buildings from the operation of these clauses, might have not been intended in those other provisions of the lease either. I see no reason to suppose that a “contrary intention” might appear only in relation to cl 3(b) but not the other clauses. However, to give effect to a view that the term “Building” was not used in its defined sense in either cl 3(b) or in those other clauses would remove the definition from effective operation altogether.

65. Furthermore, it appears as though the draftsman has made a choice to use the defined meaning in some clauses and not in others. For example, cl 3(l) uses the ordinary sense of the word “building”. It provides: (l) If and when the Lessee is in breach of the Lessee’s obligations to maintain repair and keep in repair the premises the Commonwealth may by notice in writing to the Lessee specifying the repairs and maintenance needed require the Lessee to effect the necessary work in accordance with the notice. If the Commonwealth is of the opinion that a building or some other improvement on the Land is beyond reasonable repair the Commonwealth may by notice in writing to the Lessee require the Lessee to remove the building or improvement and may require the Lessee to construct a new building or improvement and may require the Lessee to construct a new building or improvement in place of that removed within the time specified in the notice. If the Lessee does not carry out the required work within the time specified by the Commonwealth any person or persons duly authorised by the Commonwealth with such equipment as is necessary may enter the premises and carry out the necessary work and all costs and expenses incurred by the Commonwealth in carrying out the work shall be paid by the Lessee to the Commonwealth on demand and from the date of such demand until paid shall for all purposes of this lease be a debt due and payable to the Commonwealth by the Lessee.

66. Where the draftsman has used the term “Building” in an operative clause (and there are only two such clauses – cl 3(b) and cl 3(h)) it should be taken that the defined, and not some other, meaning has been used. To disregard the defined meaning on the ground of inconvenience, so far as cl 3(b) was concerned, would have the consequence, as a matter of consistency of construction, that it could not be used in the defined sense anywhere in the lease for the same reason of inconvenient outcome.

67. I am satisfied, therefore, that the term “Building” should be given the defined meaning in cl 3(b). Nevertheless, reference to the other places in the lease where the term “Building” is used exposes the necessity to attribute a conceptual operation to the language in the definition which is harmonious with the apparently intended operation of the lease as a whole. The restrictive meaning earlier discussed which postulated that additional, non-replacement buildings were not included in the definition, needs therefore to be re-examined.

68. The lease is a 99 year lease. Its terms should be given meanings which are capable of contemporaneous operation. They may not speak only at the time of execution, although they must certainly do that as well. The definition of “Building” expressly refers to both existing and future circumstances. It is not possible to construe it simply as one referring to buildings constructed on the land “from time to time” because some account must be taken of the notion of “replacement” which is reflected in the definition. Nevertheless, the idea that any new, but not replacement, buildings fall outside the definition, and therefore the operation of each covenant and provision where the definition issued, is such a challenging one that it may not be readily accepted unless no respectable alternative consonant with commercial reality is available.

69. In my view the definition is underpinned by an unstated, or barely stated, assumption that the lease as a whole, and the covenants it contains, deal with overall use of the leased land. That is to say, the notion of replacement is subsidiary to the premise that at any one time the buildings on the land will constitute a form of structural occupancy or use which must, in its entirety, be accommodated to the covenants and other provisions of the lease. For example, it is not satisfactory to postulate that any additional building would be free from the lessor’s right of inspection or the lessee’s obligation to maintain, yet that would be the result if the definition was given a meaning simply in accordance with its own terms and without regard to the nature of its operation in the provisions it informs and in the lease as a whole.

70. Consequently, I am satisfied that the definition of “Building” refers to two groups of buildings in the following sense. They are, firstly, the existing building or buildings which, at any particular time, constitute the structural use or occupancy of the land (i.e. which are constructed on the land) and, secondly, buildings which may replace them in that capacity. It does not exclude any new buildings. That conclusion accords with the shared assumption on which the proceedings below were conducted, although perhaps not the reasons for it.

71. In that context, it is important to bear in mind, in my view, that the definition of “Building” expressly contemplates that any “replacement” of the original structural use or occupancy of the land is to occur in accordance with the covenants in the lease, including cl 3(b).

72. Finally, it is necessary to return to the fact that cl 3(b) refers to “a Building” and to an argument by the appellant that the use of the singular article indicates, in cl 3(b) at least, that the limitation to 4,800 square metres applies only to individual buildings and not to the totality of buildings on the site.

73. There is no doubt that cl 3(b) would be more clearly expressed if it referred to “the Building” rather than “a Building”. However, the defined term “Building” is, as I have discussed, a composite and all-inclusive one. The intended operation of cl 3(b) as an overall limit is emphasised by its incorporation of the defined term “gross floor area”, which itself is the sum of all calculated floor areas in all relevant buildings, and the (probably unnecessary) use of the term “total” with reference to the gross floor area.

74. In my view Master Harper’s conclusion was correct and the declaration was rightly refused. The appeal should be dismissed. I certify that the preceding paragraphs numbered fifty (50) to seventy-four (74) are a true copy of the Reasons for Judgment herein of his Honour, Justice Buchanan.

Associate:

Date: 20 August 2010

Counsel for the Appellant: Mr C Erskine SC

Solicitor for the Appellant: DibbsBarker

Counsel for the Respondent: Dr J Griffiths SC and Mr DJC Mossop

Solicitor for the Respondent: ACT Government Solicitor

Date of hearing: 12 August 2009

Date of judgment: 20 August 2010

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