Supabarn Supermarkets Pty Ltd v Cottrell Pty Ltd (No 3) [2020] ACTSC 53 (10 March 2020)

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Supabarn Supermarkets Pty Ltd v Cotrell Pty Ltd (No 3)

[2020] ACTSC 53

16, 17, 18, 19 September, 23, 24, 25, 26 September, 1, 2, 3,4 October, 12, 13, 14 November 2013, 10 June, 14, 15 July 2014

1. Judgment for the plaintiff in the amount of $20.00 in respect of the defendant's breach of the cleaning obligation under the Lease.
2. The parties will be heard as to costs.

CONTRACT - Construction and Interpretation of Contracts- Where clause makes no express reference to refurbishment or improved tenancy mix - whether contemporaneous documents admissible in construction - whether extrinsic materials available in construing a Torrens title registered instrument - whether contractual terms are non-legal technical terms - whether expert evidence admissible to construe non-legal technical terms - whether construction accords to business common sense and reflects a common commercial purpose - whether construction produces uncommercial or absurd result

CONTRACT - where plaintiff attributed changes in supermarket revenue to defendant's breach - whether changes constituted losses - whether changes reflected loss of revenue that should have been achieved - where multiple causes identified for changes in revenue - where difficulty in estimating loss from breach - whether defendant liable for all loss if plaintiff shows breach caused some loss - nature of burden on defendant who asserts loss was unrelated to breach

ESTOPPEL - deed between two proprietary companies -representatives of first company formed understanding based on actions of representatives of second company about how term of deed to be implemented - representatives of second company participated in implementation by first company in accordance with that understanding - after implementation second company sought further action under term of deed - detriment to first company if second company permitted to enforce term of deed - no challenge to authority of either company's representatives - whether estoppel required action or understanding by particular senior figure in each company

Australian Capital Territory (Planning and Land Management) Act 1988 (Cth), s 10(2)(b)

Evidence Act 2011 (ACT), s 144

Interim Planning Act 1990 (ACT)

Land (Planning and Environment) Act 1991 (ACT) (repealed)

Land Titles Act 1925 (ACT)

Leases (Commercial and Retail) Act 2001 (ACT), s 81

Planning and Development Act 2007 (ACT)

3143 Victoria Street Doncaster Pty Ltd v Retirement Services Australia Pty Ltd [2010] VSC 317

Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310

Association of British Travel Agents Ltd v British Airways PLC [2000] 2 Lloyd's LR 209

Bale v Mills [2011] NSWCA 226; 81 NSWLR 498

Chaplin v Hicks [1911] UKLawRpKQB 104; [1911] 2 KB 786

Chapmans Ltd v Australian Stock Exchange Ltd (1996) 67 FCR 402

Chappel v Hart [1998] HCA 55; 195 CLR 232

Charrington & Co Ltd v Wooder [1914] AC 7

Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337

Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389

Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64

Currumbin Investments Pty Ltd v Body Corp Mitchell Park Parkwood CTS [2012] QCA 9; 2 Qd R 511

Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640

Fightvision Pty Ltd v Onisforou [1999] NSWCA 323; 47 NSWLR 473

Fink v Fink [1946] HCA 54; (1946) 74 CLR 127

Fiona Trust & Holding Corp v Privalov [2007] UKHL 40

Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; 76 NSWLR 603

Gerraty v McGavin [1914] HCA 23; (1914) 18 CLR 152

Henville v Walker [2001] HCA 52; 206 CLR 459

Houghton v Immer (No 155) Pty Ltd [1997] NSWSC 608; (1997) 44 NSWLR 46

Howe v Teefy [1927] NSWStRp 41; (1927) 27 SR (NSW) 301

International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; 234 CLR 151

Jireh International Pty Ltd v Western Export Services Inc [2011] NSWCA 137

John Holland Construction & Engineering Pty Ltd v Kvaerner R J Brown Pty Ltd (1996) 8 VR 681

Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298

Jones v Schiffmann [1971] HCA 52; (1971) 124 CLR 303

Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd [2008] NSWCA 5

Lanteri Nominees v Fishers Stores [2005] VSC 336

Liangis Investments Pty Ltd v Ipex ITG Pty Ltd [2005] ACTCA 2

Longden v Kenalda Nominees Pty Ltd [2003] VSCA 128

Maggbury Pty Ltd v Hafele Aus Pty Ltd [2001] HCA 70; 210 CLR 181

Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184; 89 NSWLR 633

Malec v JC Hutton Pty Ltd (1990) 169 CLR 638

Mallett v McMonagle [1970] AC 166

Manchester, Sheffield and Lincolnshire Railway Company v Brown (1883) 8 APP Cas 703

March v E & M H Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506

Max Cooper & Sons Pty Ltd v Sydney City Council (1980) 54 ALJR 234

McRae v Commonwealth Disposals Commission [1951] HCA 79; (1951) 84 CLR 377

Meehan v Jones [1982] HCA 52; (1982) 149 CLR 571

Miramar Maritime Corp v Holborn Oil Trading Ltd [1984] AC 676

National Roads & Motorists Association v Whitlam [2007] NSWCA 81; 25 ACLC 688

Nilon v Bezzina [1988] 2 Qd R 420

State of NSW v Moss [2000] NSWCA 133; 54 NSWLR 536

Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64

Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10; 77 ALJR 768

Prowse v Johnstone [2012] VSC 4

Rava v Logan Wines [2007] NSWCA 62

Retirement Services Australia Pty Ltd v 3143 Victoria St Doncaster Pty Ltd [2012] VSCA 134; 37 VR 486

Robinson v Harman [1848] EngR 135; (1848) 154 ER 363

Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; 240 CLR 45

Ryledar Pty Ltd v Euphoric Pty Limited [2007] NSWCA 65; 69 NSWLR 603

Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451

Purkess v Crittenden [1965] HCA 34; (1965) 114 CLR 164

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Springrange Pty Ltd v Australian Capital Territory [2010] ACTCA 17

Suhr v Michelmore [2013] VSC 284

Supabarn Supermarkets Pty Ltd v Cotrell Pty Ltd (No 1) [2014] ACTSC 11

Transfield Shipping Inc v Mercator Shipping Inc [2008] UKHL 48; [2009] AC 61

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Vetter v Lake Macquarie City Council [2001] HCA 12; 202 CLR 439

Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387

Watts v Rake [1960] HCA 58; (1960) 108 CLR 158

Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; 86 ALJR 1

Westfield Management Ltd v Perpetual Trustee Company Ltd [2007] HCA 45; 233 CLR 528

Wiki v Atlantis Relocations (NSW) Pty Ltd [2004] NSWCA 174; 60 NSWLR 127

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A J Bradbrook, C E Croft and R S Hay, Commercial Tenancy Law (LexisNexis Butterworths, 3rd ed, 2009)

H McGregor, McGregor on Damages (Sweet & Maxwell, 16th ed, 1997)

K Lewison and D Hughes, The Interpretation of Contracts in Australia (Thomson Reuters (Professional) Australia, 2012)

1. The plaintiff, Supabarn Supermarkets Pty Ltd (Supabarn), leased supermarket space, under a lease entered into in 2001 (the Lease), in a shopping centre in the Canberra suburb of Kaleen (known at the time of the trial as Kaleen Plaza). When the Lease was entered into, Supabarn and the shopping centre owner Cotrell Pty Ltd (Cotrell) also entered into a deed (the Supplemental Deed) relating among other things to air conditioning in the shopping centre.

2. Supabarn took action against Cotrell for breach of contract (relying on the Lease and the Supplemental Deed), and also under s 81 of the Leases (Commercial and Retail) Act 2001 (ACT) (the Leases Act). In summary, Supabarn claimed that Cotrell had breached its obligations under the Lease in two important respects, and under the Lease and the Supplemental Deed in several other less significant respects. Substantial damages were claimed in respect of the two significant breaches of the Lease.

3. The two significant breaches alleged are breaches of clauses 10.7 and 10.13 of the Lease (the disputed clauses). The dispute about these breaches is fundamentally a dispute about the meaning of the two clauses; if the construction advanced by Supabarn is accepted, there would be no substantial dispute about whether those clauses were breached, although there would remain a dispute about the nature and extent of the breaches and the impact of those breaches in damages.

4. The claim that the Supplemental Deed has been breached also involves a dispute about the meaning of a clause of that deed, as well as about whether the clause has been breached.

5. By the Second Amended Statement of Claim, filed shortly before the trial began, Supabarn claimed:

(a) a declaration that the defendant had failed to fulfil its obligations under the Lease and the Supplemental Deed;

(c) compensation for breach of statutory duty under the Leases Act; and

6. The damages claimed by Supabarn represent what it says is lost profit resulting from the breaches of the disputed clauses of the Lease. In short, Supabarn says that if Cotrell had complied with what Supabarn says were its obligations under those clauses, then Supabarn would have made additional net profits of nearly $8 million between 2005 and 2012.

7. Supabarn's case has changed over time since it was begun in the Magistrates Court in 2009, and indeed since the hearing started in September 2013. Among other things, a claim for an order for specific performance of provisions of the Lease was abandoned in the Second Amended Statement of Claim.

8. In closing submissions in 2014, counsel for Supabarn indicated:

(a) that the claim for substantial damages is now confined to the asserted breaches of the disputed clauses;

(b) that if those breaches cannot be established, then Supabarn can also not succeed in its claim under s 81 of the Leases Act;

(c) that even if the breaches of the disputed clauses are established, Supabarn will not do any better under the s 81 claim;

(d) that the s 81 claim is not abandoned, but is recognised as "forensically neutral"; and

(e) that the claims for breaches of other clauses, being:

if established, would not entitle Supabarn to anything other than nominal damages, but still need to be determined.

(a) that the disputed clauses in the Lease obliged Cotrell to undertake a substantial refurbishment of Kaleen Plaza and to upgrade its tenancy mix;

(b) that by the end of 2004, Cotrell was in breach of that obligation;

(c) that if such refurbishment had been undertaken, and the tenancy mix had been improved, the Supabarn supermarket would thereafter have been more competitive with the supermarkets in new or improved shopping centres in surrounding areas (including in particular the Jamison shopping centre); and

(d) that the supermarket would accordingly have been significantly more profitable over the following few years than it actually was.

10. I note that, despite some earlier uncertainty about the matter, there is no current claim that cl 10.7 obliged Cotrell to expand Kaleen Plaza.

11. The issues arising in this case can be summarised as follows:

(a) Construction issues: What material is admissible in construing the disputed clauses of the Lease, and what do those clauses, and cl 8.1 of the Supplemental Deed, mean?

(b) Breach issues: Has Cotrell breached any of the obligations set out in those or other relevant clauses of the Lease or the Supplemental Deed as construed?

(c) Damages issues: If so, did any breach of any of those obligations cause loss to Supabarn and if so, what was the amount of the loss, and to what damages is Supabarn entitled?

(a) that the construction of the disputed clauses advanced by Supabarn is not available;

(b) that cl 8.1 of the Supplemental Deed does not have the meaning advanced by either party, but a different meaning again;

(c) that Cotrell has breached one of the clauses of the Lease, in relation to its obligation to provide cleaning services at Kaleen Plaza; and

(d) that Supabarn is entitled to an award of nominal damages in respect of that breach.

13. A more detailed summary of my conclusions is at [1052] below.

14. The Lease was entered into between Supabarn and Cotrell on 7 September 2001; it was for a term of seven years and two months, being the remainder of the period of 10 years covered by an earlier lease (the original lease, entered into on 1 February 1999) that was replaced by the Lease. The Lease provided for two renewals for 10 years each. In connection with entry into the Lease, the parties entered into the Supplemental Deed, also dated 7 September 2001.

15. Reference is also made in this matter to an earlier deed (the Development Deed), entered into on 10 February 1999, which refers to an earlier Letter of Intent setting out "the procedure for the ultimate acquisition" by Supabarn of the supermarket in Cotrell's building (then operated as a Jewel supermarket), and the details of the lease to be granted to Supabarn by Cotrell. This deed recited that the "Developer" (a company with links to Supabarn, or possibly an earlier incarnation of Supabarn) had negotiated to acquire the supermarket from the previous tenant, and intended to carry out at its own expense certain works in the shopping centre on behalf of Cotrell, such "investment" to be recovered by the Developer within 10 years after completion of the works, under the terms of a varied lease.

16. Although the Development Deed was executed nine days after the original lease, the terms of the lease variation seem to have been incorporated in the original lease before it was signed. I accept that the Development Deed was "contemporaneous" with the original lease; it is not clear that it was contemporaneous with the Lease, which was signed more than two years later, but this may not matter if its real significance is only to explain uncontroversial aspects of the original lease which may be available in construing the Lease.

17. As mentioned, the case largely turns on the meaning of the disputed clauses of the Lease, which are as follows:

Management of Centre

10.7 The Landlord must conduct, manage and operate the Centre as a high quality retail shopping centre and in an efficient manner at all times.

Landlord's obligations

10.13 The Landlord acknowledges that when anything is required to be done in relation to the Centre or the Premises for the essential operation of a retail shopping centre which is not expressly or by necessary implication the responsibility of the Tenant under this Lease but is the responsibility of the Landlord, then such thing must be done by and at the cost of the Landlord.

18. As well, Supabarn asserted breaches of several other clauses of the Lease, and of a clause of the Supplemental Deed, as follows:

Services

10.5 The Landlord must keep all services in the Centre operating during the Centre Trading Hours breakdowns or unavoidable delays excepted.

Maintenance of Common Areas

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

Structural Works

10.9

(a) The Landlord must at its own cost keep the Centre in a sound structural condition.

(b) Without limiting paragraph (a) the Landlord must:

(i) carry out any structural repairs, alterations or improvements to the Premises or the Common Areas as required:

(A) to maintain and keep the Premises and the Centre in good and substantial repair, working order and condition; or

(B) by any Authority;

(ii) maintain and keep the roof and exterior walls of the Premises and all gutters and downpipes in a good state of repair and condition.

(c) The Landlord must carry out any work required pursuant to this clause promptly and in a proper and workmanlike manner.

(d) The provisions of this clause are subject to the provisions of clauses 6.2, 7.1 and 7.3.

Common Area Air Conditioning and Air Lock

8.1 The Owner covenants and agrees with the Tenant to install an air conditioning system in the common area of the Centre. Such system shall be installed in accordance with the recommendations and specifications of a Consultant engaged by the Owner. If the Owner and the Tenant engage separate Consultants in respect of their respective air conditioning installations then both parties shall take such reasonable steps to ensure, via their respective Consultant's [sic], that both air conditioning systems to be installed shall be compatible. The Owner in addition covenants and agrees with the Tenant to provide and install an air lock to the main entry.

(Emphasis in original.)

19. Other provisions of the Lease are said to be significant in construing the various clauses. Relevant definitions from the Lease include the following:

Centre means:

(a) the Land and any other land which the Landlord uses with the Land for a shopping centre and a carparking area or other undertakings relating to a shopping centre;

(b) all improvements on the Land and the other land; and

(c) all plant, equipment, fittings, fixtures, furniture and furnishings of the Landlord for use in the Centre.

Common Areas means those parts of the Centre intended by the Landlord for common use. They include parking areas, driveways, walkways, docks, stairs, escalators, lifts and toilets.

Land means the land described on the cover sheet on which the Premises are situated.

20. The cover sheet referred to in the definition of "Land" specifies the land as block 10 of section 88 in the district or division of Kaleen, identified in Vol 1541, Folio 75.

21. Other relevant provisions of the Lease include the following:

1.3 Headings are for convenience only and do not affect interpretation.

Conduct of business

6.5 The Tenant must operate the Tenant's business in the Premises in good faith and in a reputable manner and in keeping with the operation of the Centre as a high quality retail shopping centre and will not commit or suffer or knowingly permit any illegal or unlawful act to be committed or performed or done on the Premises.

Tenant amenities

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

(a) reduce the visibility of the shop front of the Premises or the Tenant's external signage to potential customers inside and outside the Centre, the Landlord acknowledging that maximum visibility in this regard is beneficial to the Tenant in the conduct of its business; or

(b) reduce the means of access to or from the Centre's carparks or the Premises except to undertake maintenance or repair (after providing prior reasonable written notice to the Tenant); or

(c) interfere with the efficient operation of any parcel pick-up facilities from time to time serving the Premises.

(d) reduce the accessibility of the Premises to customers and potential customers within the Common Areas adjacent to the Premises including without limitation by locating lifts, escalators, malls and pedestrian walkways and the location of kiosks and specialty shops in the vicinity of the premises except to undertake maintenance or repair (after providing prior reasonable written notice to the Tenant); or

(e) reduce vehicular access to the Centre or to the carparking areas from the roadways adjacent to the Centre except to undertake maintenance or repair (after providing prior reasonable written notice to the Tenant); or

(f) alter the size or location of any pylons or signs carrying the name or logo of the Tenant.

If the Landlord breaches its obligations under this clause, then, in addition to any remedy which the Tenant may have in law or in equity, the Landlord must pay reasonable compensation to the tenant for (but not limited to) loss of profits which are proven to be caused by the Landlords' [sic] actions. The amount of compensation will be assessed by an auditor appointed at the request of either party by the President of the Australian Institute of Chartered Accountants (or his nominee) who in making the assessment will act as an expert and not an arbitrator. The certificate of the auditor as to the amount of the loss of profits will be binding on the parties.

22. Part 18 of the Lease provided for a total term of up to 27 years, extendable after the first 7 years for two further 10-year terms, all at the option of Supabarn. The Landlord had no capacity to extend the term of the Lease at its own option.

23. However, if the Landlord wished to sell the Centre, Pt 19 of the Lease gave Supabarn a "right of first refusal", under which the Landlord was obliged to give Supabarn notice of the wish to sell, accompanied by a contract for sale that was irrevocable for 21 days after receipt by Supabarn.

24. Part 8 of the Lease permitted Supabarn to assign the Lease, with the Landlord's consent, which could only be refused if Supabarn had committed a substantial breach of the Lease or, in general terms, if the proposed assignee was not a suitable person to take on the Lease.

25. The Lease was renewed under Pt 18 in 2009. Cotrell pointed out that the pleadings related only to a breach of the Lease that expired in 2009. Given the conclusions I have reached, the significance of this fact did not need to be considered.

26. There were six sets of written submissions and related documents before me. Supabarn provided five of them, totalling nearly 270 pages:

(b) Amended Plaintiff's Submissions in Reply, undated but filed on 2 July 2014 and responding to the Defendant's Outline of Closing Submissions;

(c) Plaintiff's Supplementary Submissions: Management Reports - Evidence as to High Quality Tenants, dated 2 July 2014;

(d) Mr Leyshon ("PL") - Critical Evidence, printed on 13 July 2014 and provided in court on 14 July 2014; and

(e) Amended Plaintiff's Submissions in Reply to the Defendant's Oral Submissions pursuant to Leave granted on 15 July 2014, undated but filed on 1 August 2014.

27. Supabarn's submissions were repetitive and occasionally misleading and, while apparently carefully structured, were "organised" in ways that tended to obscure rather than to illuminate the issues and the arguments.[1]

28. Cotrell provided the Defendant's Outline of Closing Submissions (90 pages), filed on 17 June 2014.

29. Kaleen Plaza was located in the Kaleen group centre. The ACT planning hierarchy, and the place of group centres in that hierarchy, are important parts of the background to Supabarn's claims.

30. Under s 10(2)(b) of the Australian Capital Territory (Planning and Land Management) Act 1988 (Cth), the National Capital Plan is, among other things, to "set out the general policies to be implemented throughout the Territory" in relation to land use and the planning of road systems.

31. The National Capital Plan broadly defines land use for Canberra and the Territory, and adopts seven major categories for land use. Since 1990 and until 2014, Chapter 4 (dealing with urban areas) relevantly provided, under the heading "Centres":

One of the key principles of Canberra's urban structure has been that a hierarchy of centres has been developed, with each town having a centre acting as a focal point for higher order retail functions, commercial services, office and community facilities.

This hierarchical principle, at the metropolitan level, means that:

Canberra Central continues to be the main location of metropolitan employment

Civic has been encouraged to develop as the most specialised retail, commercial, cultural, entertainment and tourist centre

town centres provide retail, commercial, cultural, entertainment and other facilities to meet community needs, and serve also as locations for office-based employment.

Centres at each level in the hierarchy form the focus of a range of retail, commercial and community facilities and services, in which specialisation increases at successively higher levels.

The integrity of the hierarchy of centres has broadly been maintained with the levels of [sic] fulfilling distinct but complementary functions.

32. The requirement to prepare a Territory Plan was set out in the Interim Planning Act 1990 (ACT) and continued by the Land (Planning and Environment) Act 1991 (ACT). The Plan seems to have been first consolidated in 2008 after the commencement of the Planning and Development Act 2007 (ACT).

33. In 1998, Part A2 of the Territory Plan dealing with "Principles and Policies" explained the role of group centres as follows:

2.4 Group Centres will continue to provide the opportunity for major weekly shopping and other retail and personal services primarily to serve the needs of their respective catchments. They will generally be smaller than the nearby town centre and larger than local centres.

34. Several expert witnesses referred to the planning assumption or expectation that people would do their "weekly shop" or "major shop" at a group centre, but it is not clear that this expectation continued throughout the period to which Supabarn's case relates. Part 4.4 of the consolidated Territory Plan as in force between 2008 and 2012, entitled "Group Centres Precinct Code", set out the following overview of group centres in the planning context:

Group centres are larger shopping centres throughout Canberra that serve groups of nearby suburbs. They incorporate a wide range of shopping, community, recreation and business facilities. As well as providing for major food retailing, they also offer opportunities for speciality shops, non-retail commercial uses such as banks, and residential development. Planning policies for group centres seek to retain relatively relaxed, low-key character with mainly low-rise development, promote competition and investment, and support improved facilities for the community.

35. In March 2008 there were 17 group centres designated in the Group Centres Precinct Code, being Calwell, Charnwood, Chisholm, Conder, Curtin, Dickson, Erindale, Hawker, Jamison, Kaleen, Kambah, Kingston, Kippax, Manuka, Mawson, Wanniassa and Weston. Land within a designated group centre fell into one of three commercial zones, CZ1 (Core Zone), CZ2 (Business Zone) and CZ3 (Services Zone). Not all group centres contained land in each zone. The Kaleen Group Centre contained only a CZ1 zone.

36. Nevertheless, Supabarn's arguments relied heavily on the planning expectation that people will do their "weekly shop" at a group centre, and also on the further assumption (apparently based on the theory of "retail gravitation", at [840] below) that, all things being equal, it will be their nearest group centre.

37. A plan of the Kaleen Group Centre is at Appendix A: Kaleen Group Centre - Core Zone (CZ1).

38. The building owned by Cotrell that is the subject of this dispute was built in 1988. It is the building in the middle of the designated area that, on the plan, contains the letters CZ1 and the number 88 (Kaleen Plaza). Cotrell's building does not include:

(a) the roughly rectangular building at the south-west end of Kaleen Plaza, beside which the word "Georgina" identifies the adjoining street, and which has no internal access to Kaleen Plaza; or

(b) the two smaller buildings at the north-east end of Kaleen Plaza, between which runs a strip providing access from Georgina Crescent into the Plaza.

39. Those three buildings house other businesses and, at least in the case of the two smaller buildings, would appear to the casual observer to be part of Kaleen Plaza.

40. The areas to the north-west and the south-east of Kaleen Plaza, which were at the relevant times car parks, have direct access to the Plaza from doors roughly in the middle of each long wall.

41. Thus, Kaleen Plaza is the largest building in the area designated as the Kaleen Group Centre, but it is not the only building, and it is not the only building housing retail businesses. Nor does it include Georgina Crescent itself, or the car parks, albeit that some of the external areas are included in the Lease's definition of "Centre" (at [19] above).

42. Supabarn is associated with, or perhaps owned by, the Koundouris Group. Various members of the Koundouris family, and possibly other entities under the Koundouris Group umbrella, have from time to time acted on behalf of Supabarn. However, there has been no explicit suggestion that anything in this case turns on the nature or scope of relationships or authority within the Koundouris Group or the Koundouris family; no information about such matters was in evidence, although the evidence did suggest that Erik Koundouris had a senior position within the family and the Koundouris Group.

43. Cotrell was owned by a Dr Solomon, who took a close interest in the operations of the company from his base overseas. Kaleen Plaza was managed on his behalf by Jones Lang Lasalle (JLL), and it seems that, for any matters that could not be handled by JLL staff within their authority, those staff dealt directly with Dr Solomon himself.

44. Late in the period for which Supabarn claims substantial damages, the owners of a small supermarket in the Kaleen local centre (at the other end of the suburb from Kaleen Plaza) made an agreement with Supabarn as a result of which the small supermarket was, in mid- 2012, rebranded as a SupaExpress, with a Supabarn logo and with the staff wearing Supabarn-branded uniforms. Points on a Supabarn loyalty card could be earned through spending at the SupaExpress, but could only be redeemed at the Supabarn supermarket.

Terminology: Kaleen Plaza, Kaleen shopping centre, Kaleen Group Centre, and "the Centre"

45. The name "Kaleen Plaza" refers to the building owned by Cotrell, and does not include the shops to the south-west and north-east of Cotrell's building (at [38] above)]. Cotrell's building was "re-branded" as Kaleen Plaza at some point after the building was acquired by Cotrell; James Koundouris gave evidence that this was effected by the building managers, JLL, and that the change involved "signage above the doors with a logo which says 'Kaleen Plaza'".

46. In this matter, there are various points at which it may be significant to distinguish between:

(a) the middle building (Kaleen Plaza), which was owned by Cotrell and in which the Supabarn supermarket was located;

(b) the larger complex, sometimes referred to as the shopping centre, that included some or all of the buildings adjoining each end of Kaleen Plaza as well as Kaleen Plaza itself;

(c) the "Centre", as defined in the Lease (at [19] above);

(d) the Kaleen group centre, which included, as well as the shopping centre, at least Georgina Crescent, the car parks around the shopping centre, and several other businesses.

47. Some of the evidence given and indeed some of the material in submissions has not been rigorous in observing those distinctions. In particular, evidence and submissions often refer to the "Centre", sometimes referring to the shopping centre operating in the Kaleen group centre and sometimes referring, quite deliberately, only to the Centre as defined in the Lease (being the building and some of the surrounding land, as well as some improvements and other physical items used in Kaleen Plaza). On the other hand, the expression "shopping centre" is sometimes used to refer only to those parts of the complex located in Cotrell's building. At other points, "shopping centre" and "group centre" seem to be used interchangeably, although in some important respects they are not interchangeable. Mostly this has not caused any particular confusion, but on occasions evidence or submissions have been ambiguous and have required interpretation (and see [50] and [51] below).

Terminology: group centres, shopping centres and supermarkets

48. Although Kaleen Plaza and most of the other shopping centres and supermarkets mentioned in this matter are located in group centres in the ACT, the significant issues arise in relation to the shopping centres in those group centres and the supermarkets located within those shopping centres.

49. To the extent that other aspects of a group centre are mentioned in connection with the quality or attractiveness of a shopping centre, one must keep in mind that such aspects are not within the control of a shopping centre owner, and would not generally be relevant in assessing the obligations of the owner or the entitlements of a tenant operating a supermarket within the shopping centre.

50. For this reason, and also because of the lack of consistency in terminology mentioned above, some references in evidence to locations identified by the name of the group centre have had to be treated as references to the shopping centre concerned, and some general references to group centres have also had to be treated as references to the shopping centres in the group centres concerned. Some references to the shopping centre at the Kaleen group centre must be treated as references to Kaleen Plaza rather than the shopping centre as a whole.

51. Much of Supabarn's argument about the meaning of the disputed provisions of the Lease relied on the use, in the Lease, of the expression "Centre" (at [19] above) to describe not only Cotrell's land, all improvements on the land, and all Cotrell's plant, equipment, fittings, fixtures, furniture and furnishings used in the Centre, but also other land (some not covered by the Crown lease) that is used by Cotrell, including the car parks on either side of the building. Some references in evidence and submissions to "the Centre" were clearly, or possibly, intended to invoke the Lease definition, while others were not.

52. The evidence before me included references to the floor areas of several of the shopping centres and supermarkets mentioned. Different descriptions were used for what was being measured, including "gross floor area" (GFA), "gross lettable area" (GLA), and "retail floor space". No technical explanation of the various terms was given. It is likely that the terms have slightly different meanings, but I am satisfied that for present purposes they can be accepted as roughly equivalent, such that the following figures extracted from the evidence may not be exactly comparable but are adequate to give an idea of the relative scale of the various premises described:

Terminology: other group centre shopping centres

53. Most of the other group centre shopping centres referred to in this judgment also have particular names. For instance, the Jamison shopping centre was known as the Jamison Centre (but might have acquired a new title since its 2007 upgrade), the Kippax shopping centre was known as Kippax Fair, and the Chisholm shopping centre was known as Chisholm Village. The names are not necessarily used consistently throughout the evidence and the submissions. However, there is only one "shopping centre" in each group centre (although there may be other retail space in the group centre, for instance in Erindale), so any use of a group centre name in reference to a shopping centre can be assumed to refer to the only "shopping centre" in that group centre.

54. Although both of the disputed clauses refer to a "retail shopping centre", most of the references in evidence and submissions have been to a shopping centre or shopping centres without mention of "retail", while a few references have been to a retail centre without mention of "shopping". I cannot see that in the current context the inclusion or omission of "retail" has any significance; certainly there was no issue arising from any comparison between "retail" shopping centres and any other kinds of shopping centres, whatever they might be. Nor was any reference to "retail centre" confusing in the current context.

Terminology: refurbishments, upgrades and expansions

55. It was clear from the evidence that although refurbishments and expansions commonly took place together, they were distinct activities, in that a refurbishment involved changes to the existing physical qualities of the shopping centre while an expansion of a shopping centre enabled either or both of an increase in the size of some tenancies (often the supermarket anchor tenant) and an increase in the total number and therefore variety of tenants.

56. Some witnesses referred at times to "upgrades", including some who, by using both "refurbishment" and "upgrade" in the same context, seemed to imply that an upgrade was different from a refurbishment, but no evidence was given indicating that the words "refurbishment" and "upgrade" were technical terms describing different matters.

57. Accordingly, I have used the terms used by the witnesses concerned where relevant. In my own discussion of matters, I have generally used "refurbishment" (the term mainly used in Supabarn's case) rather than "upgrade". At some points it has seemed appropriate to use both terms, but I have not treated the evidence as making any distinction between "refurbishment" and "upgrade", and nor have I intended any distinction in my own use of the terms.

58. In relation to tenancy mix, there are references in evidence and submissions to "upgrading" and "improving", but no apparent difference in the intended meanings.

59. Supabarn called a number of witnesses, including several witnesses said to be experts in various relevant fields and several members of the Koundouris family (at least one of whom gave evidence as an expert witness).

60. Cotrell called two witnesses to give evidence about the management of Kaleen Plaza, and three others to give evidence as experts.

61. Brief comments can be made at this stage about the witnesses, but their detailed evidence is more usefully considered in the contexts to which it is relevant.

62. Aristidis Eric Koundouris (Eric Koundouris) had sworn two affidavits, dated 20 April 2009 and 6 August 2013, and gave oral evidence on 18 September 2013. Several significant paragraphs of the earlier affidavit were excluded in a preliminary hearing (see Supabarn Supermarkets Pty Ltd v Cotrell Pty Ltd (No 1) [2014] ACTSC 11), and other aspects were excluded for other reasons. Eric Koundouris gave brief evidence about breach issues and damages issues.

63. Dimitrios Aristidis (James) Koundouris (James Koundouris) swore two affidavits, and gave oral evidence on 19 September 2013.

64. James Koundouris had not been involved in negotiations with the defendant about the supermarket lease, but had been involved with the operation of the supermarket from when Supabarn first took it over, initially as the weekend manager.

65. James Koundouris had had some experience overseeing tenancy mix in shopping centres, specifically at the Centrepoint and Homeworld shopping centres in Canberra during the 1990s. He said that he would be undertaking a similar role in relation to the SupaExpress shopping centre at the Crace local centre, which was due to open shortly.

66. James Koundouris's evidence related to the breach issues and the damages issues.

67. Theodoros Aristidis Koundouris (Theo Koundouris) gave evidence as an expert witness. He was the managing director of the plaintiff, held an accounting qualification, and had previously worked for Price Waterhouse Coopers for four years.[2] Theo Koundouris gave evidence about the damages issues.

68. Paul Powderly was a Certified Practising Valuer and a member of the Australian Property Institute. He was authorised under NSW law to practice as a valuer and property consultant, and had more than 10 years of continuous experience in valuing property of the relevant kind. He had prepared three reports.

69. Mr Powderly had inspected Kaleen Plaza in order to report on its condition on several occasions in 2006, 2007 and 2012. He had also spent some time with colleagues who lived in Kaleen, and "frequented it quite regularly and used the centre" for some years before first inspecting the centre in a professional capacity; some of his views reflected his personal observations of the centre over time.

70. Mr Powderly gave evidence relevant to the construction issues and the breach issues.

71. Jeremy McKinnon was the National Director of Consultancy at Colliers International; his particular area of expertise was research and analysis specialising in retail economics, demographic modelling, forecasting customer analytics of shopping centres, location analysis and sales forecasting. Mr McKinnon conceded that he was not an expert in the day-to-day management of shopping centres.

72. Mr McKinnon gave evidence relevant to the construction issues, the breach issues, and the damages issues. He had prepared two reports, dated 2 April 2013 and 4 July 2013 (the Supplementary Report), providing an assessment of whether Kaleen Plaza was a "high quality retail shopping centre" and an estimate of loss to Supabarn said to have been caused by Cotrell's conduct of Kaleen Plaza. The reports involved "benchmarking", which required Mr McKinnon to identify a group of other shopping centres against which to assess Kaleen Plaza, and a group of other supermarkets in relevant shopping centres against which to assess Supabarn's performance.

73. Christine Purdon was a qualified town planner, with a Master's degree in Town and Country Planning from the University of Sydney. In her curriculum vitae she claimed skills including:

conceptualisation of issues

analysis of quantitative and qualitative data

report writing

provision of objective advice

In her capacity advising the private sector she has undertaken feasibility studies for development projects, negotiated development applications and land grants, liaised with community organisations, other professionals and government representatives.

She has undertaken evaluations of major State and Commonwealth programs, community consultations and a range of issues, many of which have been sensitive and more recently controversial.

More recently Chris has undertaken a number of planning studies for major developments in both the ACT and NSW.

75. Ms Purdon said that as a planner, she had skill in assessing whether a centre is meeting needs, for instance whether it is "legible" (which among urban planners seemed to refer to the ease with which an area is "understood") and easy to get to, whether it has active frontages, and whether people want to spend time in "the public realm", noting that retailers need to get people "coming and staying".

76. Ms Purdon's evidence related to the breach issues and the damages issues.

77. Before giving oral evidence, Ms Purdon had prepared:

(a) a report about Kaleen Plaza, dated 19 October 2012, in which she answered a series of questions put on behalf of Supabarn;

(b) a report, dated 2 April 2013, responding to expert reports prepared by witnesses called by Cotrell, Peter Haley and Peter Leyshon; and

(c) a supplementary expert statement dated 15 August 2013.

78. At the beginning of her oral evidence, Ms Purdon qualified her first report to the effect that she could not in fact comment on whether Kaleen Plaza shopping centre had operated as a high quality retail centre operated efficiently, but that her observations in the report had been made from an urban planning or urban design perspective. She also said that her references to "high quality" should be read as references to "higher quality".

79. In the supplementary expert statement, Ms Purdon provided a summary of the process she had undertaken in assessing the expected performance of the Supabarn supermarket "in terms of earning sales revenue".

80. The weight that I was willing to give to Ms Purdon's evidence was affected both by the content of some of that evidence and by her manner of giving it. First, several aspects of her evidence, while convincing as such (for instance, her evidence about the impact of competition faced by Kaleen Plaza, about the mobility of the ACT population, and about planning approaches in the ACT), did not seem to support her conclusions about the impact of Cotrell's failure to refurbish Kaleen Plaza or to improve the tenancy mix. Other matters detracted in other ways from the credibility, or at least the reliability, of those conclusions.

81. The weaknesses in Ms Purdon's evidence included:

(a) her reliance on the role of the group centre as the place where people do their "major shop", despite her recognition of the significance and strength of competition in the relevant market for supermarket sales, and of the high level of "mobility" in the Canberra market (that is, that people will travel beyond the closest group centre if it doesn't meet their needs);

(b) her inability to explain the source of some of the raw information she had used, or how it had been processed to provide figures then relied on for further conclusions, as well as general confusion in some of her explanations;

(c) her inability to provide information relevant to assessing the value of some of the information she had relied on;

(d) the need while giving oral evidence for Ms Purdon to replace two tables in her first report with corrected versions containing significantly different figures and outcomes.

82. Ms Purdon's report and oral evidence suggested to me a somewhat cavalier approach to the significance of facts and in particular of statistics: for instance, in one of her calculations, she had relied on a figure of 47% provided by an ACT Planning and Land Authority report, but rounded it up to 50%, which resulted in a conclusion more favourable to Supabarn; in cross-examination, Ms Purdon explained that she had done this because 50% was "the nearest number".

83. Luka Vulic was an air-conditioning design consultant. He had an Associate Diploma of Mechanical Engineering, and had experience in designing air-conditioning capacity systems. Mr Vulic had done air-conditioning design work for the Koundourises; in the previous five years he had done work for them on the air-conditioning designs for Supabarn supermarkets in two Sydney suburbs. His evidence related to the construction issues and the breach issues.

84. Mark Sukroo had known Dr Solomon, the owner of Cotrell, since that company bought the shopping centre in 1994. From 1998 to 2003 Mr Sukroo was the property manager responsible for the operation of Kaleen Plaza. He had also managed the shopping centres in Erindale and Chisholm which are also group centres, and had managed some premises in Manuka.

85. Around February 2003, Mr Sukroo had hired Kevin Armstead as a senior property manager, and Mr Armstead took over as the property manager for Kaleen Plaza. Mr Armstead did not always show Mr Sukroo his communications with either Supabarn or Dr Solomon.

86. Mr Sukroo was cross-examined at length. Much of the cross-examination seemed to be addressed to his credibility; at times in the witness box he could have been seen as somewhat evasive, although this might simply have reflected counsel's repeated attempts to pin him down to a degree of specificity, and precision in the use of language, that was unfamiliar to him in the context of his professional activities. As it turned out, much of the cross-examination concerned matters that were not in fact particularly significant, while those parts of Mr Sukroo's evidence that emerged as both relevant and significant seemed to be largely uncontroversial, and mostly supported by documentary evidence.

87. Counsel for Supabarn also submitted that Mr Sukroo in giving evidence had revealed himself as partial rather than disinterested, by giving the following evidence, in cross-examination, about the failure to build an air lock as required by cl 8.1 of the Supplementary Deed:

And the understanding that you refer to rests upon the documents - is this right - that you've referred to in your affidavit?‑‑‑Yes, it wouldn't have been in our interests, or in our client's interests, to build a structure that wasn't required by‑ ‑ ‑

I didn't ask you by‑ ‑ ‑?‑‑‑Koundouris.

88. Counsel for Supabarn submitted that in this evidence Mr Sukroo had shown that he had aligned his interests with those of Dr Solomon. What was not clear was exactly why this answer had driven counsel to make this submission. In complaining that the answer was "non-responsive", counsel was presumably suggesting that Mr Sukroo had volunteered the answer in the hope of advancing Cotrell's interests, but in oral submissions counsel also said that he believed that Mr Sukroo's reference to "our interests" meant that his interests were Cotrell's interests.

89. Mr Sukroo's answer may have been technically non-responsive, although it was quite possibly the beginning of an attempt to explain why he had focussed on what he thought Mr Koundouris's documents had indicated (attempts by lay witnesses under cross-examination to explain themselves are hardly uncommon, and in my experience are rarely sinister). His reference to "our interests, or ... our client's interests" need not have revealed anything more than that, in relation to JLL's role in managing Cotrell's investment, JLL and Cotrell had interests in common (relevantly, that Cotrell did not want JLL committing it to unnecessary expenditure and JLL did not want to be seen to be committing Cotrell to unnecessary expenditure).

90. As already noted, Mr Sukroo's credibility was not in the end particularly significant, but it is fair to point out that despite Supabarn's submissions, I made no adverse finding about Mr Sukroo's credibility.

91. Mr Sukroo gave evidence about the breach issues and the damages issues.

92. Adrian Purnell was a principal of Northrop Consultancy, and had been involved in designing a shopping centre at the Calwell shops, where there was a Woolworths extension. He had a degree in Mechanical Engineering, was a Chartered Member of the Australian Institute of Engineers, and had particular expertise in refrigeration, air conditioning and heating. He gave evidence relevant to the asserted breach of cl 8.1 of the Supplemental Deed.

93. Peter Haley was a chartered accountant and director of Vincents Chartered Accountants. He prepared four reports about the assessment of loss suffered by Supabarn as a result of Cotrell's alleged breaches of the Lease.

94. Michael Armstrong had been a shopping centre consultant since 2011, with experience managing shopping centres and as a real estate agent specialising in shopping centres. Before that he had worked for Mirvac, where he managed leasing in new and existing shopping centres, and dealt with "financially disastrous shopping centre assets" (acquired by the Domain Property Fund, which had itself been acquired by Mirvac). While working with Mirvac, he had been involved in the expansion and refurbishment of the Cooleman Court shopping centre.

95. Mr Armstrong gave evidence relevant to the construction issues, the breach issues, and the damages issues.

96. Peter Leyshon was a research analyst and consulting town planner. He had a Bachelor of Arts degree and a Graduate Diploma of Urban and Regional Planning, and had worked in the National Capital Development Commission and the Department of Territories in economics and public policy areas. Since 1985 he had worked in the private sector, initially advising on investment in shopping centres by reference to such things as shopping centre trade areas and the assessment of market share available. In 1987 he formed his own firm, and advised about retail development in one form or another.

97. Affidavits and expert reports prepared by various witnesses were admitted into evidence; they are dealt with in discussion of the relevant issues.

98. There was a substantial volume of other documentary evidence, including the various contracts on which Supabarn's claims were based, plans drawn up for changes at Kaleen Plaza, management reports provided by JLL to Cotrell, and correspondence (letters, faxes and emails) between representatives of the parties, including several of the Koundourises, Dr Solomon, and employees of JLL. This material is discussed as necessary at relevant points in these reasons.

99. There was also a large bundle of photographs taken at Kaleen Plaza at various times over several years. Few of the photographs were referred to in oral evidence or indeed in submissions. With one exception (at [584] below), there was no argument about what the photographs showed.

100. On 26 September 2013, the Court undertook a view of Kaleen Plaza and several other shopping centres, mostly located in group centres. Representatives of the parties attended.

101. It is unnecessary to go into great detail about the results of the view, especially since most of my observations reflected matters that are not in dispute between the parties. However, some comments are usefully made at this point.

102. The view was conducted over a single day (much of which was spent driving between the various shopping centres, which turned out to be located in two parts of Canberra relatively distant from each other - six in or near the southernmost area of Canberra, known as Tuggeranong, and five in a north-western area known as Belconnen, two of which were in Kaleen itself). The shopping centres visited were:

Belconnen: Hawker, Jamison, Kaleen Local Centre, Kaleen Plaza, Kippax

Tuggeranong: Calwell, Chisholm, Erindale, Kambah, Mawson and Wanniassa

103. All of the shopping centres except the SupaExpress in Kaleen were in group centres, and the view confirmed what had been assumed throughout the hearing, being that both the Kaleen group centre and the Kaleen Plaza shopping centre were small or very small compared with the other viewed group centres and shopping centres. Details about the size of the shopping centres and supermarkets were not obtained during the view, but for convenience these details have been included in the following material where available from other evidence.

104. The fact that Kaleen Plaza was a small shopping centre in a small group centre seemed to put it at a double disadvantage, in that quite apart from the size of a shopping centre itself, the size of the group centre affected the number of businesses and services located in the vicinity of the shopping centre, and must have an effect on the shopping centre's capacity to attract potential customers. For instance, the Calwell group centre had a medium-sized shopping centre anchored by a very large and recently renovated Woolworths supermarket and including around 14 specialty stores and a medical centre. In the vicinity of the shopping centre were a club, a service station, a car wash and a tavern.

105. The Kaleen group centre had a small shopping centre (with a gross floor area of 3,280m2) anchored by a medium-sized Supabarn supermarket (2,244m2) and including 11 specialty shops. In buildings adjacent to the shopping centre were ACTTAB, BWS, LJ Hooker and a medical practice. Beyond the group of buildings housing Kaleen Plaza and the four other businesses mentioned, there were a sports centre and a tavern.

106. The arcade in Kaleen Plaza (referred to at some points in evidence and submissions as the mall or the common areas) is in the shape of an irregular but right-angled cross, with a shorter corridor running directly between the main entrance and the rear entrance (both of which lead to car parks) and intersecting with a longer corridor running between the entrance to the Supabarn supermarket and the third entry to Kaleen Plaza, which is reached from the car parks along a passage between two smaller buildings each housing another business. All the businesses in Kaleen Plaza open into one of those corridors (together, the arcade) and, with the possible exception of the restaurant, did not seem to be accessible from outside the building. The building has little natural light, although there are some skylights. The Supabarn supermarket can only be reached by walking from any of the three entrances into the centre of the arcade and then, past three other shops, to the end of the Supabarn corridor.

107. The Kaleen SupaExpress was considerably smaller than the Supabarn, and carried a far smaller range of items, although its range went well beyond the "milk and bread" often mentioned in the context of "convenience" or "top up" stores. Its particular advantage over Supabarn was that it opened directly onto the local centre's small car park, and offered a much briefer shopping trip for any shopper for whom that narrower range of items would be adequate.

108. The Wanniassa group centre contained the only other shopping centre anchored by a Supabarn supermarket (1,550m2). The shopping centre was also relatively small, including around 10 specialty shops as well as businesses such as a gym and a bank, but the group centre seemed to be larger, and included a tavern, a fast food restaurant, a service station and a Kmart Tyre and Auto Service. Mr Leyshon estimated that the Wanniassa group centre contained around 5,100m2 of retail floor space in total, not including the tavern.

109. The shopping centre was set out in the manner described by Mr Leyshon as "open plan", in that most of its shops opened to the outside of the shopping centre and faced a large car park.

110. At one end of the strip of shops opening towards the car park, there was a building consisting of a small arcade into which opened a butchery, chemist, newsagent, Australia Post, and the Supabarn supermarket. The supermarket was immediately inside the arcade, so reaching it required only a very short walk from the shopping centre entrance. A photograph of the arcade (taken several days before the view) showed that it received some natural light from at least one end of the arcade.

111. Next to that building, a strip of small shops (including a "pizza-café") occupied the rest of that edge of the carpark, all with external access directly from the carpark (and also access to natural light) but no internal access to the supermarket arcade. A photograph of the café taken during the view showed that it did not belong to any "national specialty retailer" chain of cafés, and that there was nothing in terms of its cosmetic appearance that in my view could be described as "high quality"; on the other hand the chairs and tables outside the café (in the open air, but some or all of them sheltered by an awning), while undistinguished in their appearance, provided what might well have been a pleasant place to have a coffee in most weather conditions.

112. The Chisholm group centre was also "open plan" according to Mr Leyshon's description, in that most of its shops opened to the outside of the shopping centre rather than to an internal arcade.

113. The Erindale group centre had a medium-sized shopping centre (with 5,000m2 of retail floor space) anchored by a large Woolworths supermarket (2,930m2) and including at least 15 specialty stores. Around the shopping centre but within the group centre was further retail space of around 2,800m2, including a number of takeaway shops, fast food chains (including McDonald's) and restaurants, as well as a library, college, swimming pool, gym and local club.

114. The Jamison group centre, the group centre closest to Kaleen during the period in question, had a medium-large shopping centre (with 9,557m2 of retail floor space) anchored by a large Coles supermarket (roughly 4,000m2) but also including an Aldi supermarket (around 1,400m2), as well as at least 17 specialty shops. There were also a number of other businesses within the group centre.

THE CONSTRUCTION ISSUES

Applicable legal principles

115. The parties have made submissions about legal principles applicable in the construction of the disputed clauses and other relevant contractual provisions, including specific principles applicable to instruments registered under a Torrens title system, as well as about the applicable burdens of proof in this case. These are dealt with below.

116. Supabarn made a number of submissions about the general principles of construction that it said should be applied in construing the disputed provisions in the Lease and the Supplemental Deed. Cotrell disputed some of those submissions, or at least the relevant implications of them, as indicated below.

117. Counsel for Supabarn submitted (citing The Interpretation of Contracts in Australia, K Lewison and D Hughes, Thomson Reuters (Professional) Australia, 2012, at [3.03]) that:

A document executed contemporaneously with, or shortly after, the primary document to be construed may be relied upon as an aid to construction, if it forms part of the same transaction as the primary document.

Well-settled principles for the construction of commercial instruments

118. Counsel for Supabarn said that the Lease is a commercial instrument and is to be construed in accordance with well-settled principles for the construction of commercial contracts, citing Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; 240 CLR 45 (Royal Botanic Gardens) in which Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ said at [9] and [10]:

9. In his judgment, Fitzgerald JA referred to well-known passages in the judgment of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW respecting the admissibility of evidence of surrounding circumstances to assist in the interpretation of a written contract if the language be ambiguous or susceptible of more than one meaning. In the present case, the difficulty concerns the phrase in para (iv) of cl 4(b) "the Trustees may have regard to additional costs and expenses". Does this mean that the Trustees, in making a determination, cannot have regard to matters other than those additional costs and expenses? If the Trustees may have regard to other matters, what are they? In a context such as cl 4(b), to specify a particular matter to which a party may have regard without expressly stating either that it is the only such matter or, to the contrary, that the specification does not limit the generality of the matters to which regard may be had is likely to result in ambiguity. It does so in the present case. The resolution of the ambiguity requires the application of settled principles of construction.

10. In Codelfa, Mason J (with whose judgment Stephen J and Wilson J agreed) referred to authorities which indicated that, even in respect of agreements under seal, it is appropriate to have regard to more than internal linguistic considerations and to consider the circumstances with reference to which the words in question were used and, from those circumstances, to discern the objective which the parties had in view. In particular, an appreciation of the commercial purpose of a contract:

"presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating."

Such statements exemplify the point made by Brennan J in his judgment in Codelfa:

"The meaning of a written contract may be illuminated by evidence of facts to which the writing refers, for the symbols of language convey meaning according to the circumstances in which they are used."

(Citations omitted.)

119. Counsel for Cotrell pointed to Mason J's summary in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 (Codelfa) at 352, that:

The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.

120. Counsel for Cotrell also noted that in Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; 86 ALJR 1 at [3] and [4], Gummow, Heydon and Bell JJ, refusing a special leave application, said:

3. Acceptance of the applicant's submission, clearly would require reconsideration by this Court of what was said in Codelfa Construction Pty Ltd v State Rail Authority of NSW by Mason J, with the concurrence of Stephen J and Wilson J, to be the "true rule" as to the admission of evidence of surrounding circumstances. Until this Court embarks upon that exercise and disapproves or revises what was said in Codelfa, intermediate appellate courts are bound to follow that precedent. The same is true of primary judges, notwithstanding what may appear to have been said by intermediate appellate courts.

4. The position of Codelfa, as a binding authority, was made clear in the joint reasons of five Justices in Royal Botanic Gardens and Domain Trust v South Sydney City Council and it should not have been necessary to reiterate the point here.

(Citations omitted.)

121. Counsel drew particular attention to Mason J's comment in Codelfa that although evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning:

it is not admissible to contradict the language of the contract when it has a plain meaning.

122. Counsel for Cotrell also pointed to the comments of Barwick CJ (McTiernan, Kitto and Windeyer JJ agreeing) in Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429 (Upper Hunter County) at 437, contrasting ambiguity with uncertainty about the denotation of a word:

I do not think there is any uncertainty or for that matter ambiguity in the expression "supplier's costs" in cl 5, however wide may be the area of possible disagreement as to its denotation in a particular case. A contract to build a bridge at cost could not, in my opinion, be held void for uncertainty: it could not properly, in my opinion, be said to be meaningless: nor is it, in my opinion, ambiguous. Endless might be the arguments pro and con as to whether or not in marginal cases some item of expenditure is as claimed a cost, or as to how much of an expenditure is a cost, of the particular activity. But to my mind, generally speaking, the concept of a cost of doing something is certain in the sense that it provides a criterion by reference to which the rights of the parties may ultimately and logically be worked out, if not by the parties then by the courts.

Objective determination of meaning from perspective of reasonable person

123. Counsel for Supabarn said that the meaning of a commercial contract is to be determined objectively by what a reasonable person in the position of a relevant party would have understood it to mean. In Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451 at [22], the High Court said:

That requires consideration, not only of the text of the documents, but also the surrounding circumstances known to [the parties], and the purpose and object of the transaction.

124. Counsel for Supabarn next submitted that the object of a contract is to be identified by determining "the purpose of reasonable persons in the position of" the parties (Zhu v Treasurer of the State of New South Wales [2004] HCA 56; 218 CLR 530 (Zhu) at [82]; Ryledar Pty Ltd v Euphoric Pty Limited [2007] NSWCA 65; 69 NSWLR 603 at [264], Campbell JA), and that determining the purpose of reasonable persons in the position of the parties requires an understanding of the context in which the contract was formed. In International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; 234 CLR 151 at [8], Gleeson CJ said:

In giving a commercial contract businesslike interpretation, it is necessary to consider the language used by the parties, the circumstances addressed by the contract and the objects which it is intended to secure. An appreciation of the commercial purpose of a contract calls for an understanding of the genesis of the transaction, the background, and the market.

(Citations omitted.)

Avoidance of commercial nonsense, commercial inconvenience, unlikely or uncommercial interpretations, and absurd results

125. Counsel for Supabarn further submitted that commercial contracts are to be construed to avoid a result which would involve a commercial nonsense, or work commercial inconvenience. In support of this proposition, counsel relied on the following matters:

(a) In Zhu at [82] the High Court approved a statement quoted at [81] from the judgment of Sheller JA in the Court of Appeal in Sydney Organising Committee for the Olympic Games v Zhu [2002] NSWCA 380 at [173], where his Honour said:

While courts should give the words of a written agreement the natural meaning that they bear, in giving meaning to the words of an agreement between commercial parties, courts will endeavour to avoid a construction which makes commercial nonsense.

It was necessary to construe the Deed Poll so as to avoid it making commercial nonsense or working commercial inconvenience. Its commercial purpose - the purpose of reasonable persons in the position of TOC and the plaintiff - was relevant. That, in turn, required attention to "the genesis of the transaction, the background, the context, the market" in which the parties were operating, as known to both parties.

(Citations omitted.)

(c) In Fiona Trust & Holding Corp v Privalov [2007] UKHL 40 at [5], Lord Hoffmann said:

Businessmen in particular are assumed to have entered into agreements to achieve some rational commercial purpose and an understanding of this purpose will influence the way in which one interprets their language.

126. Furthermore, counsel for Supabarn said, courts prefer a commercial interpretation to an uncommercial interpretation which conforms more strictly with the language of the contract, citing Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; 76 NSWLR 603 (Franklins v Metcash), in which Allsop P noted at [19]:

a requirement not to approach words in a business contract pedantically or in a manner prone to defeat the evident commercial purpose.

127. The comment made by Allsop P was, however, made in the course of a longer discussion about the construction of commercial contracts, as follows:

The essential character of the task of construction of commercial contracts can be seen in a number of authoritative decisions of the High Court, and of other courts authoritatively endorsed by the High Court. A commercial contract should be given a businesslike interpretation. Thus, the nature and extent of the commercial aims and purposes of the agreement or parts thereof are part of the essential background circumstances: "the genesis of the transaction, the background, the context, the market in which the parties are operating_"_ The need for a businesslike construction not only informs the nature and extent of the extrinsic material legitimately of assistance, but it also directs the approach to be taken to the ascription of meaning to the words used by the parties. The words should be given a construction so as "to avoid ... [making] commercial nonsense or is shown to be commercially inconvenient" This is not only a reflection of the place of the informing surrounding circumstances, it is also a requirement not to approach words in a business contract pedantically or in a manner prone to defeat the evident commercial purpose. They should be read "fairly and broadly, without [the court] being too astute or subtle in finding defects". Similar expressions of the correct approach eschewing detailed semantic and syntactical analysis to lead to a construction contrary to business commonsense can be seen in what Lord Diplock said in Miramar Maritime Corporation v Holborn Oil Trading Ltd and Antaios Compania Naviera SA v Salen Rederierna AB. As Gleeson CJ, Gummow J and Hayne J said in Maggbury ... what is "business commonsense" is an objectively ascertained matter and thus referable to the evidence, and a matter about which there may be dispute.

(Citations omitted.)

128. His Honour did not, however, at any point in the lengthy paragraph from which counsel for Supabarn quoted, draw a conclusion in the form asserted by Supabarn: rather, he referred to "the evident commercial purpose", and also pointed out that:

what is "business commonsense" is an objectively ascertained matter and thus referable to the evidence, and a matter about which there may be dispute.

129. Counsel for Supabarn also noted that there is a well-established principle of construction by which a commercial document that is elliptical or ambiguous should not be given a construction that is commercially unlikely (National Roads & Motorists Association v Whitlam [2007] NSWCA 81; 25 ACLC 688 at [58], Campbell JA).

130. Finally in this context, counsel for Supabarn pointed out that if, after considering a contract as a whole and the background circumstances known to both parties, a court concludes that the language of the contract is unambiguous, the court must give effect to that language unless to do so would give the contract an absurd operation (Jireh International Pty Ltd v Western Export Services Inc [2011] NSWCA 137 at [55], Macfarlan JA).

131. Cotrell did not dispute Supabarn's propositions generally, but noted that a contract can only be interpreted to achieve its commercial purpose if the court can be satisfied of what its commercial purpose was.

132. Furthermore, counsel for Cotrell said, the courts are reluctant to impose their views of what constitutes good commercial judgment by a party to a contract (Manchester, Sheffield and Lincolnshire Railway Company v Brown (1883) 8 APP Cas 703 at 716; Skanska Rashleigh Weatherfoil Ltd v Somerfield Stores Ltd [2006] EWCA Civ 1732 at [22]). Cotrell referred to Maggbury Pty Ltd v Hafele Aust Pty Ltd [2001] HCA 70; 210 CLR 181 at [43], in which Gleeson CJ, Gummow and Hayne JJ pointed out:

It was said by Lord Diplock that:

"if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense."

Of course, what in respect of a particular contract comprises "business commonsense", as an apparently objectively ascertained matter, may itself be a topic upon which minds may differ and in respect of which an imputed consensus is impossible.

(Citations omitted.)

133. Counsel for Cotrell also quoted Basten JA (Giles and Tobias JJA agreeing) in Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd [2008] NSWCA 5 at [27], where his Honour introduced the remarks by Gleeson CJ, Gummow and Hayne JJ quoted at [132] above by saying:

In support of that approach, his Honour referred to the principle articulated by Lord Diplock in Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 at 201 to the effect that "if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense". Although this principle has often been repeated, it should not be seen as permission for judicial rewriting of contractual provisions to accord with the result said by one party to accord with "commercial reality", namely its financial interests.

134. Counsel for Cotrell submitted that preferring a commercial interpretation to an uncommercial one is about avoiding what is commercially nonsensical by favouring commercial common sense, and referred in support of this proposition to comments of Campbell JA, who said in Rava v Logan Wines [2007] NSWCA 62:

54. Further, [the contra proferentem rule] is to be used along with other aids that the law recognises for the construction of a document. Other such aids for construction of a document include the one that says that a contract that has been entered in a business context and is elliptical or ambiguous should be not read in a way that is commercially unlikely to be what the parties intended. Closely allied principles are ones whereby a construction should be avoided if it leads to a capricious and unreasonable result and whereby if a contract is open to two constructions it will receive that construction which will avoid consequences that are capricious, unreasonable, unjust or inconvenient.

(Citations omitted.)

135. Counsel for Supabarn pointed out that, where headings to provisions in a document are said to be inserted for convenience only, they should be ignored in the construction of the provisions (Franklins v Metcash at [348], Campbell JA).

136. Counsel for Supabarn noted that a document must be construed as a whole and so as to give effect to each part of the document, and that a court will strain against interpreting a contract so that a particular clause is nugatory or ineffective, particularly if a meaning can be given to the clause consonant with the other provisions in the contract (relying on Chapmans Ltd v Australian Stock Exchange Ltd (1996) 67 FCR 402 at 411, Lockhart and Hill JJ).

137. Finally, Supabarn noted, the courts will admit evidence as to the meaning of non-legal technical terms. In Max Cooper & Sons Pty Ltd v Sydney City Council (1980) 54 ALJR 234 at 239, Lord Diplock admitted evidence about the expression "pay loadings", which was not an expression used in ordinary speech but a technical expression used in a particular industry. In Association of British Travel Agents Ltd v British Airways PLC [2000] 2 Lloyd's LR 209 at 213, the UK Court of Appeal had regard to a glossary of commonly used terms in the airline industry to give content to the word "fare".

138. In final written submissions, counsel for Supabarn summarised the relevant principles of construction as follows:

Meaning is to be determined by what a reasonable person would have understood the contractual language to mean taking into account three matters:

(a) the text (language) used,

(b) the surrounding circumstances known to the parties, and

(c) the purpose and object of the contract, which requires an understanding of the genesis of the transaction, the background and the market.

139. In doing so, counsel noted that these "well-settled principles of construction" had recently been confirmed by the High Court in Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640 (Electricity Generation Corporation) at [35], where the majority (French CJ, Hayne, Crennan and Kiefel JJ) said:

35. Both Verve and the Sellers recognised that this Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. 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".

(Citations omitted.)

Principles of construction - Torrens title registered instruments

140. It seems that the Lease (a sublease granted by Cotrell as the lessee from the Crown) was registered under the Land Titles Act 1925 (ACT), which permits the registration of some subleases. The Land Titles Act establishes a form of "Torrens title" registration, and provides protection for registered documents (s 53). The Lease was assignable by the tenant (Pt 8), while the landlord's right to sell the premises was limited only by a "right of first refusal" granted to the tenant for the first five years of the Lease (Pt 19).

141. Accordingly, it is necessary to consider the particular principles of construction said to apply to documents registered under a Torrens title system.

142. In Westfield Management Ltd v Perpetual Trustee Company Ltd [2007] HCA 45; 233 CLR 528 (Westfield), the High Court considered the admission of extrinsic evidence as part of the factual matrix available in construing an easement registered under a Torrens title system, and concluded that extrinsic evidence of surrounding circumstances known to the parties (being in that case the existence of a preceding oral agreement between the parties) was not admissible in the construction of such registered dealings, saying 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.

(Citations omitted.)

143. Submissions made by counsel for Supabarn about the significance of the Lease being a registered instrument were generally to the effect:

(a) uncontroversially, that Westfield does not entirely exclude consideration of extrinsic materials in interpreting a registered interest under a registration scheme in the nature of a Torrens title scheme; and

(b) that subsequent Australian consideration of the Westfield decision, in particular Currumbin Investments Pty Ltd v Body Corp Mitchell Park Parkwood CTS [2012] QCA 9; 2 Qd R 511 (Currumbin Investments), permits the consideration in the current case, for the purpose of construing the disputed clauses, of a relatively wide variety of more or less contentious items of extrinsic evidence (at [160] below).

144. In oral submissions, counsel for Supabarn dismissed Westfield by saying:

Westfield was concerned with an easement, not a lease, and has been confined in subsequent cases to the construction of provisions which confer an interest in property.

145. Counsel for Cotrell submitted that the effect of Westfield was not confined to the provisions of a registered document that confers an indefeasible property interest, while agreeing that Westfield permitted consideration of material identifying "objective matters such as boundaries and the land to which a description refers".

146. Consideration of the scope of the Westfield decision in various Australian courts, often but not only in cases involving the construction of easements, has led me to believe that the Westfield decision cannot be dismissed in this case as easily as counsel for Supabarn suggested.

147. In Sertari Pty Ltd v Nirimba Developments Pty Ltd [2007] NSWCA 324 (Sertari), involving construction of an easement, Handley AJA, with whom Tobias JA and McColl JA agreed, said:

15. Windeyer J rejected the town planner's report and the terms of the development consent as irrelevant to the construction of the grant. He also held that the physical characteristics of the tenements and the activities being conducted on the dominant tenement at the time of the grant could not cut down its plain words. The appellant again sought to rely on this extrinsic material but the decision in Westfield Management Ltd v Perpetual Trustee Company Ltd [2007] HCA 45 has since confirmed that extrinsic material[,] apart from the physical characteristics of the tenements, is not relevant to the construction of instruments registered under the Real Property Act 1900: paras [5], [37]-[41].

16. This Court is therefore limited to the material in the folio identifiers, the registered instrument, the deposited plans, and the physical characteristics of the tenements. ...

148. In Springrange Pty Ltd v Australian Capital Territory [2010] ACTCA 17 (Springrange) at [12], the ACT Court of Appeal noted by reference to Westfield that the terms of "a registered lease under the Torrens titles system ... fall to be construed without the aid of extrinsic materials that might cast light on the intention of the original parties" (at [12]), while recognising (at [15]) exceptions to that proposition relating to matters such as "documents the terms of which are incorporated into the public document", and evidence "relevant to identify the land and the parties or to give context to particular covenants".

149. In Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64 (Phoenix) (involving construction of a covenant included in a registered lease but not itself having the benefit of indefeasibility), Campbell JA (with whom Spigelman CJ and Handley AJA agreed), noting first that "[t]he ordinary principles of contract law apply to leases", said:

150. ... This suggests that the construction of a lease should be carried out in accordance with the same principles as those applicable to any other written agreement. In Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; 76 ALJR 436 Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ at [10]-[12] accepted the applicability to a registered lease of the principles of construction of a contract by reference to surrounding circumstances, that had been outlined by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337.

151. However, the way those principles come to be applied to a particular contract can be affected by aspects of the contract such as whether it is assignable, whether it will endure for a longer time rather than a shorter time, and whether the provision that is in question is one to which indefeasibility attaches by virtue of the contract being embodied in an instrument that is registered on a Torrens title register. All these are matters that would be taken into account by the reasonable person seeking to understand what the words of the document conveyed. That is because the reasonable person seeking to understand what the words convey would understand that the meaning of the words of the document does not change with time or with the identity of the person who happens to be seeking to understand the document. That reasonable person would therefore understand that the sort of background knowledge that is able to be used as an aid to construction, has to be background knowledge that is accessible to all the people who it is reasonably foreseeable might, in the future, need to construe the document.

[the decision in Westfield] is not dependent upon any considerations of the extent of indefeasibility, but rather on the inherent probabilities concerning the inquiries that a purchaser of Torrens title land will make. ... The inherent probabilities of what inquiries a purchaser of the benefit of the leases in the present case are [sic] likely to make are not changed by the particular covenant in [the contractual provision concerned] not having the benefit of indefeasibility.

(b) at [163], that the leases concerned did not prohibit, and indeed contemplated, their assignment.

151. Accordingly, his Honour concluded at [166] that in the case before him, in which, among other things, the leases concerned contemplated their future assignment:

the surrounding circumstances that can be used as an aid to construction of [the provision concerned] are limited to ones that one can know without evidence from outside the terms of the document itself.

152. Campbell JA also concluded (at [178] and [179]) that one admissible matter was the use of a relevant phrase in legislation applicable to the circumstances of the agreement, and that the meaning of that phrase in the legislation could be taken into account.

153. In Prowse v Johnstone [2012] VSC 4 (involving construction of a restrictive covenant), Cavanough J said:

57. ... my own research suggests that the extent to which background material may be taken into account to construe restrictive covenants affecting Torrens system land may be more limited than in the case of contracts generally. In Westfield Management Limited v Perpetual Trustee Company Limited, a decision of the High Court on appeal from New South Wales concerning the construction of an easement set out in a registered instrument, it was held that the easement should be construed in accordance with its terms; that the rules of evidence assisting the construction of contracts inter partes, of the nature explained by Codelfa, did not apply to the construction of the easement; and that establishing the intention or contemplation of the parties to an instrument registered under the Real Property Act 1900 (NSW) by reference to material extrinsic to the instrument would be contrary to the principles of the Torrens system. It is true that Westfield related to an easement rather than a restrictive covenant; that the High Court did not expressly refer to restrictive covenants; that there are considerable differences between the two; and that there are differences between the relevant Torrens system provisions of New South Wales and of Victoria. However, the High Court's reasoning was not expressly confined to the case of easements under the Torrens legislation of New South Wales. Indeed the Court referred to "fundamental considerations" concerning the operation of the Torrens system of title by registration, being considerations which involved "the maintenance of a publicly accessible register containing the terms of the dealings with land under that system". ... The full implications of Westfield are still being worked out. However Westfield has been recognised as a significant case not only for New South Wales, but also for the ACT, Tasmania, Queensland, and Western Australia. In , Black J of the Supreme Court of New South Wales treated it as applicable to restrictive covenants. In , the Court of Appeal of New Zealand referred to Westfield as a case relating to both easements and restrictive covenants, although the Court said that it was open to question whether Westfield should be followed at all in New Zealand. Until now, no Victorian case has addressed its possible significance for the interpretation of restrictive covenants affecting Torrens system land in Victoria. The point is not squarely addressed by Bradbrook and MacCallum, nor in the recent final report (2010) of the Victorian Law Reform Commission on Easements and Covenants. Neither side made any reference to in the present case.

154. In Currumbin Investments, also involving construction of an easement, the Queensland Court of Appeal (Fryberg J, with whom McMurdo P and Fraser JA agreed) said:

46. The words emphasised are important. The High Court [in Westfield] was not saying that a third party who inspects the register never needs to look further. It was not saying that extrinsic evidence of facts and circumstances existing at the time of the creation of the easement must always be disregarded. On the contrary, it referred to situations where extrinsic evidence might be taken into account. What the court held was to be disregarded was evidence which not only established facts and circumstances at the time of the creation of the registered dealing but which also placed the third party in the situation of the grantee (or for that matter, the grantor - the reasoning would be the same). That was the reason for the court's emphasis on disregarding "evidence to establish the intention or contemplation of the parties to the grant of the Easement".

47. That is consistent with the High Court's approval of the closing remarks in the judgment of Hodgson JA in the Court of Appeal to which reference has already been made. His Honour referred to "the error resulting from a preparedness to look for the intention or contemplation of the parties outside what was manifested by the grant itself, construed in the circumstances ...".

48. Earlier in his reasons for judgment, Hodgson JA had indicated two matters which he would have included in the material circumstances: "the physical circumstances of the dominant and servient tenements and the use actually being made of them at the time of the grant." The High Court did not comment on that part of his Honour's judgment. It did however refer without disapproval to the acceptance in Powell v Langdon of a statement made by Sir George Jessel MR in Cannon v Villars, which it paraphrased thus:

"40 ... This was that the content of the bare grant of a right of way per se was to be ascertained by looking to the circumstances surrounding the execution of the instrument, including the nature of the surface over which the grant applied."

The New South Wales Court of Appeal in Sertari Pty Ltd v Nirimba Developments Pty Ltd, took this passage as establishing an exception to the rule that extrinsic material was not relevant to the construction of registered instruments, the exception being the physical characteristics of the tenements. It did not suggest that the admissibility of that evidence was limited to the case of bare easements. Nothing in suggests that the Master of the Rolls intended to limit what he said to the case of bare grants, although obviously, extrinsic evidence is more likely to be helpful in such cases than in cases where the ambit of the rights granted is carefully delineated in the Deed of Grant. Where the matter in issue is dealt with expressly, as his Lordship put it, "there is nothing to argue".

155. In Currumbin Investments, Fryberg J went on to construe the words "drainage" by reference to:

(b) a United Kingdom case about the meanings of "drain" and "sewer" (at [64]);

(c) applicable legislative provisions about sewerage, including a requirement that sewage and stormwater were to be kept separate (at [65]-[67]).

156. In Suhr v Michelmore [2013] VSC 284 (Suhr), which involved construction of a restrictive covenant), Pagone J said:

8. Significance was also placed by the plaintiffs upon the way in which the Court in Westfield referred to an earlier decision of the Equity Division of the New South Wales Supreme Court. The passage from Westfield first quoted above (emphasising the importance that a third party inspecting the Register need not look beyond the Register to extrinsic material) was followed by a footnote with a citation preceded by "cf". The use of "cf" was said in Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council to be an indication of the kind of evidence that the Court in Westfield had in mind as "unlikely to be sought out by someone searching the Register".

9. The case referred to in the footnote in Westfield was Proprietors Strata Plan No 9,968 v Proprietors Strata Plan No 11,173 which had considered a right of way that had been registered on title. The plaintiffs in that case had sought to rely upon surrounding circumstances to establish that the strip of land in question was to be used only as a footway. It was evidence of the circumstances at the time the right of way was created which was said in Phoenix Commercial Enterprises to be of the kind that the High Court in Westfield had in mind as "unlikely to be sought out by someone searching the Register". However, neither the reference to Proprietors Strata Plan 9,968 in Westfield, nor the decision in Westfield itself, nor the observation in Phoenix Commercial Enterprises require the conclusion that extrinsic evidence may not be relevant to a properly construed term which upon its proper construction directs attention to something outside of the Register - even in the case of an easement. Indeed, in Phoenix Commercial Enterprises Campbell JA observed that Westfield had made clear that the unavailability of extrinsic evidence to construe even a grant of an easement was not complete. Surveying terms and abbreviations were examples of the kind of extrinsic evidence that may be taken into account to make sense of what the Register had itself identified. The critical task is to construe "that which the Register identifies by the terms or expressions found therein". That task requires a reading of the Register without reference to extrinsic evidence; the Register so read may put the reader on notice of having to look elsewhere to give effect to what the Register notified.

157. Having regard to the cases and submissions mentioned above, I propose to deal with the construction of the Lease, being an agreement that creates an interest in land and is registered on a Torrens title register, on the basis that:

(a) Westfield constrains, but does not entirely exclude, the use of extrinsic materials in construing the terms of such an agreement;

(b) the Westfield restrictions on the use of extrinsic materials are not only applicable to the construction of those provisions of an agreement that, if the agreement is registered, have the quality of indefeasibility, because the basis of the restrictions is not indefeasibility as such but the "inherent probabilities of what inquiries a purchaser of the benefit" of the registered agreement is likely to make (Phoenix);

(c) the circumstances relevant to whether extrinsic materials may be taken into account include the intended lifespan of the agreement and whether the agreement contemplates the assignment of a party's rights under the agreement during that lifespan (Phoenix);

(d) the extrinsic matters that may be considered in construing a registered agreement are limited to "ones that one can know without evidence from outside the terms of the document itself", also described as "background knowledge that is accessible to all the people who it is reasonably foreseeable might, in the future, need to construe the document" (Phoenix), including:

(i) material identifying the parties, the land subject to the agreement, and "the physical characteristics of the tenements" (Springrange; Sertari);

(ii) material used to explain the meaning (denotation) of non-legal technical terms used in the agreement, for instance surveying terms and abbreviations appearing on the deposited plan, which material may include dictionary definitions, applicable legislative provisions, and possibly previous judicial consideration of the terms in question (Prowse v Johnstone; Currumbin Investments);

(iii) an unregistered instrument, or other information, which is explicitly incorporated into a registered instrument by reference, or to which attention is directed by a term of the registered instrument properly construed, at least if the document or information was and remains publicly available to third parties without unreasonable effort, expense or delay (Currumbin Investments; Suhr).

Extrinsic material available in construction of Lease

158. In written submissions, counsel for Supabarn asserted that on a broad view of the available extrinsic material, the matters that could be taken into account in construing the Lease included the following:

(a) that the parties to the Lease knew "that over time competitive centres would be improved and upgraded to achieve a high quality status";

(b) that the supermarket would be upgraded to "a very high quality";

(c) that each party conducting the operation of the Centre "as a high quality centre would benefit both parties";

(d) that "[t]he greater the supermarket sales, the greater the landlord's rent", both from Supabarn and other tenants "attracted to the Centre by its high quality";

(e) that Supabarn's work "would substantially improve the quality of the Centre";

(f) that "expenditure would contribute to the success of the Centre by attracting customers to a new high quality supermarket competitive with Coles and Woolworths";

(h) that upgrades of retail shopping centres "were necessary periodically to ensure [that] they were able to compete with other retail shopping centres";

(i) that the Centre "was to be operated to a high quality";

(j) that upgrading or refurbishing the Centre "would become essential over time to achieve and maintain that feature of high quality".

159. In the event that the extrinsic materials available were confined by the principles enunciated in Westfield, counsel for Supabarn submitted that the following were the matters apparent from the "four corners of the Lease, and the physical characteristics of the tenement that is the supermarket premises":

(a) The Centre was built in 1988, or alternatively existed at the date of the Crown Lease [which was granted on 18 December 1998].

(b) The lease was for a long term, potentially 27 years.

(c) Clauses 10.7 and 10.13 have a different field of operation than the repairs and maintenance obligations and obligation to provide services and a sound structure.

(d) The premises involved a substantial supermarket, which itself is of high quality.

(e) The Centre included the structure, fittings, the physical aspect of the structure and its cosmetic characteristics. They all contribute to the feel and amenity of the Centre which attract customers.

(f) A high quality retail shopping centre connotes one which is superior to the average Group Centre.

(g) As other Group Centres are refurbished, if the Centre is inferior to those refurbished centres, then the centre lacks the feature of high quality and Cotrell is obliged to meet that standard by refurbishing to achieve the required quality at all times.

160. As well, counsel concluded his discussion of Currumbin Investments by noting that the judgments contained no mention of Phoenix, and submitted that the Court in Currumbin Investments took a different and broader approach to the use of extrinsic evidence than that taken in Phoenix. Counsel for Supabarn said that, under the approach taken in Currumbin Investments, admissible extrinsic evidence would include:

• was a Group Centre under the Territory Plan;
• located in a suburb of the ACT;
• facing competition from other shopping centres;
• included a full line supermarket as the anchor tenant;
• the supermarket had been substantially refurbished when the Lease was granted. Examination of the land titles register would show that it was granted for a larger area, replacing other tenants' area (the fruit and vegetable shop) and at a higher rent;
• so much would be obvious from an inspection of the Centre.

...

the fact within the retail shopping centre market that the physical amenity, appearance and "feel" of a shopping centre is important because by its physical attractiveness, a centre seeks to attract custom and secure a competitive advantage.

161. Cotrell noted that matters such as the location of the Centre, that the Lease "is in a shopping centre", and that the lessee is a supermarket operator, "are truly objective", and may be taken into account in construing the Lease, while rejecting Supabarn's attempt to rely on "[m]ixed questions of fact and opinion about the state of the Centre in 2001", which are not objective.

162. In separate submissions, counsel for Supabarn said that documents executed contemporaneously with, or shortly after, the Lease were available in construing the Lease if they formed part of the same transaction, and suggested that these included the Development Deed and the Supplemental Deed. Counsel for Cotrell did not explicitly respond to these submissions, but said that Cotrell's position on the existence of the refurbishment obligation was supported by both the Supplemental Deed, and a Letter of Intent executed by Eric Koundouris and Dr Solomon on 10 March 1998 which appears to foreshadow the Development Deed and the original lease. Counsel for Cotrell noted:

(a) that the Letter of Intent provided for Supabarn to recover its investment in the expansion and refurbishment of the supermarket, over a period of 10 years, by way of rent relief, and accordingly provided no support for Supabarn's claim that Supabarn and Cotrell had a mutual obligation to refurbish; and

(b) that the Supplemental Deed, referring only to Supabarn undertaking capital works, showed that "the parties, having directed their attention to refurbishment, created an obligation on the plaintiff only".

163. The Development Deed was signed 30 months before the Lease, and I am not convinced that it counts as "contemporaneous" with the Lease, although the two agreements were clearly related. Furthermore, unless the Development Deed was registered, it would not seem to be available for the reasons set out at [157(d)] above. The Supplemental Deed, signed on the same day as the Lease, was certainly contemporaneous with, and referred to, the Lease, but was not referred to in the Lease and was also apparently not registered. The Letter of Intent was even further from contemporaneous with the Lease, and was not relied on by Supabarn.

164. I note at this point that in early submissions, counsel for Supabarn asserted that the information relating to the Development Deed and the Supplemental Deed (being at least their respective execution dates and possibly their contents) "would appear from an examination of the ACT Land Register", but I am not aware of any evidence to the effect that either of the deeds was in fact registered.

Conclusions - available and unavailable material

165. Having regard to the principles established in Westfield and subsequent cases as summarised at [157] above, I considered that the following material was usefully available to me in construing the Lease and in particular the disputed clauses:

(a) The date of construction of the Centre, being 1988.

(b) The physical location of the Centre (in the suburb of Kaleen, in the Belconnen area of the ACT, and close to the border of the recently established area of Gungahlin in the ACT), that it was a retail shopping centre, that the premises subject to the Lease were in the shopping centre, and that the tenant, Supabarn, operated a supermarket in those premises.

(c) That the Centre was located in an area designated under ACT planning arrangements as a group centre, that there were a number of other designated group centres in the ACT, that most other designated group centres contained at least one major supermarket, but that there was considerable variation in the size of designated group centres.

(d) Matters apparent from the previous registered lease for Supabarn's tenancy in the shopping centre (being the original lease), which showed that while that original lease was in force, the area of the supermarket within the Centre had been smaller than the area occupied by Supabarn under the Lease.

(e) That the Crown lease granted to Cotrell in December 1998, which included the area sublet to Supabarn by the Lease, applied to an area totalling 5,161m2, but limited the "gross floor area" of the building (defined so as to refer only to the area subject to specific tenancies) to 2,800 m2.

(f) That as a result of a variation of the Crown lease, the "gross floor area" of Cotrell's building was increased to 3,280 m2.

166. Expert evidence about the meanings of terms used in the disputed clauses may be available if I conclude that the terms are "non-legal technical terms" and that the evidence would have amounted to background knowledge that would have been accessible to all the people who it was reasonably foreseeable might, in the future, have needed to construe the Lease (at [157] above).

167. Also available was the fact that the Lease included:

(a) provision for the payment of a fixed amount of rent (the base rent), which was substantially more than the base rent provided for in the original lease (cl 2); and

(b) provision for the payment of turnover rent, the effect of which was to increase the rent payable to Cotrell above the base rent if Supabarn's turnover, calculated by reference to the Lease provisions, increased beyond a threshold amount, also calculated by reference only to the Lease provisions (cl 3).

168. Other agreements between or involving the parties that are neither registered under the Land Titles Act nor referred to in the Lease were not available.

169. I also considered that it would not be appropriate to take account of any material enabling an estimate of the effect of the turnover rent provision of the Lease on the rent likely to be received, such as information about the relationship between that threshold amount and the turnover amounts in the period before the Lease was executed, or about the likelihood of the threshold amount being exceeded over time (some of which could be found in the evidence before me relevant to the damages claimed by Supabarn for loss of profits). Nor would any material about possible benefits to Cotrell (the landlord) under leases with other tenants of the Centre (mentioned by Supabarn in submissions at [158(d)] above) have appropriately been considered.

170. As well, much of the extrinsic material asserted by Supabarn to be available in the construction task (at [158]-[160] above) is not available to me, to the extent that it amounts to:

(a) expressions of subjective opinion that could not properly be described as expert evidence of the meaning of non-legal technical terms (eg that the Centre was in poor condition);

(b) claims (some made in evidence but many emerging only in submissions) that are correct to the extent that they amount to trite statements of the obvious (eg that high quality things are generally more attractive than low quality things, that buildings deteriorate with age unless properly maintained, that customer expectations change over time) but contentious to the extent that they seem to assert matters intended to establish, and confine, the content of what is referred to elsewhere as "business common sense" (eg that "within the retail shopping centre market ... the physical amenity, appearance and 'feel' of a shopping centre is important because by its physical attractiveness, a centre seeks to attract custom and secure a competitive advantage"); and

(c) argumentative or question-begging assertions (eg that "the parties ... knew" that over time competing centres "would be improved and upgraded to achieve a high quality status"; that the disputed clauses had a field of operation different from that of other specific clauses in the Lease; and that Cotrell was obliged to meet the high quality standard by refurbishing to achieve the required quality at all times - this last being the core issue in dispute rather than evidence available to enable resolution of the dispute).

171. Before addressing the submissions of the parties about the disputed clauses, it is convenient to set out the clauses again, and make some preliminary comments:

Management of Centre

10.7 The Landlord must conduct, manage and operate the Centre as a high quality retail shopping centre and in an efficient manner at all times.

Landlord's obligations

10.13 The Landlord acknowledges that when anything is required to be done in relation to the Centre or the Premises for the essential operation of a retail shopping centre which is not expressly or by necessary implication the responsibility of the Tenant under this Lease but is the responsibility of the Landlord, then such thing must be done by and at the cost of the Landlord.

172. The constructions proposed by Supabarn for these clauses (at [9] above) are not immediately obvious from an inspection of the words of the clauses. Neither of the clauses mentions refurbishment. Neither of them mentions the tenancy mix of the shopping centre (although the plain words of cl 10.7 do seem to include tenancy management).

173. Clause 10.7 on its face appears to require Cotrell to take action (in general terms, running the Centre) "as" a shopping centre of a specified quality and "in an efficient manner". That is, the action required by Cotrell is to be taken in a particular way, identified by reference to shopping centres of the specified quality, and "in an efficient manner". The exact meaning intended to be conveyed by "as a high quality retail shopping centre" is not clear, but on its face the phrase is an adverbial phrase (like the later reference to acting "in an efficient manner") and as such is intended to set a quality standard for the activities required by the clause.

174. The only submission I have identified about "as" in cl 10.7 was made by Supabarn, and suggested that "as" in cl 10.7 meant "with the qualities and features of" such a centre. The Macquarie Dictionary Online (2019, ) (the Macquarie Dictionary) explains "as", when used to join a verb and a noun, to mean "in the role, function, status or manner of". On that basis, the phrase "as a high quality retail shopping centre" could appropriately be expanded into a phrase such as "in the manner of a high quality retail shopping centre", "as befits a high quality retail shopping centre" or "as if it were a high quality retail shopping centre" (each of which qualifies the obligation imposed by the verbs). Whether the phrase could appropriately be interpreted, as suggested by Supabarn, to qualify the nature of the object of that obligation so as then to give a significantly extended meaning to the verbs concerned is a more complicated question.

175. What is not obvious from the words of cl 10.7 is an intention to go beyond requiring the specified actions in relation to the Centre to be done to specified standards and to require also (or instead) that the Centre be, or have, a particular quality.

176. Clause 10.13 on its face is an acknowledgement by the Landlord of its obligation to do and, perhaps significantly, pay for certain matters that it is otherwise obliged to do. The words of cl 10.13 do not appear to impose the relevant obligations (to do and to pay) except in relation to things that are already the Landlord's responsibility: the reference to things that are "the responsibility of the Landlord" is not apt of itself to render anything the responsibility of the Landlord. However, there is no hint of how the Landlord would acquire such obligations other than under the Lease.

177. The words of cl 10.13 identify the obligations acknowledged by the Landlord by reference to a generic retail shopping centre, not one of any particular quality. This seems to makes sense given that the clause relates to the "essential operation" of a shopping centre, which one might imagine would not differ significantly (if at all) between basic and high quality shopping centres - for instance, light, power and functioning plumbing would seem to be essential to the operation of both kinds of shopping centre, but a modern colour scheme would not be essential at either kind of shopping centre.

178. I am satisfied that cl 10.7's requirement that the shopping centre be, in general terms, run "as" something that, according to the evidence, it did not appear to be, is a curiosity sufficient to raise any ambiguity that is necessary to permit consideration of matters outside the four corners of the Lease (to the extent that they are otherwise available for such a purpose, as to which see [165] and [166] above). Clause 10.13 is also arguably "ambiguous" to the extent that it seems to be no more than an acknowledgment of already existing obligations.

179. The general effect of Supabarn's submissions seems to be that clauses 10.7 and 10.13 of the Lease (read in the context of the rest of the Lease and having regard to such extrinsic evidence as is admissible for the purpose) should be construed as requiring the "cosmetic appearance" of "the Centre", being the "structure, fittings, fixtures and furnishings which constitute the physical structure and amenity of the Centre", and the tenancy mix at the Centre, to be those of a high quality retail shopping centre and therefore as having obliged Cotrell to ensure:

(a) that the Centre was brought up to the physical standard of a high quality retail shopping centre via an early and substantial refurbishment of the physical structure (the refurbishment obligation); and

(b) that the tenancy mix should also have been improved (the tenancy mix obligation).

180. I note at this point that most of Supabarn's submissions focussed on refurbishment, and only at certain points mentioned tenancy mix at all.

181. This seemed to be partly because of counsel's focus on establishing that the cosmetic aspects of the shopping centre were of fundamental importance in attracting customers (despite evidence from several witnesses to the effect that tenancy mix might in fact be more important for that purpose).

182. It might also have reflected the fact that, while the parties seemed to accept that any refurbishment of the kind sought by Supabarn (even if repeated at later points during the term of the Lease) would be a one-off event that was obviously distinct from ongoing maintenance work of the kind apparently provided by Cotrell over the relevant years, there seemed to be no common assumption about what Cotrell would have had to do, beyond ongoing tenancy management, to satisfy the asserted obligation to improve the tenancy mix to the standard of a high quality retail shopping centre.

183. The absence of any such common assumption was not in my view surprising. While refurbishing a shopping centre might involve some logistical challenges and some negotiations with individual tenants, it is essentially a one-off task to be performed by or on behalf of the building owner. In contrast, the tenancy mix at a shopping centre involves not just the building owner but other players, specifically existing and potential tenants. Existing tenants have rights under their leases, while potential tenants owe nothing to a landlord who might like them to move into the shopping centre. Mr Armstrong said:

It must be remembered that the landlord is 'selling' the space to tenants and therefore does not have control over whether they 'buy' the space. The tenants hold the ultimate responsibility for choosing locations that suit their business. Chain tenants may look more to where a centre sits in the hierarchy of centres in the region when choosing locations, and may therefore be attracted to centres with a larger grouping of major tenants, or major tenants and centres with higher turnovers.

184. In short, not only is improving the tenancy mix a more nebulous goal than refurbishing the shopping centre building, it is something that is only partly within the power of the building owner (even a building owner for whom money is no object).

185. Several witnesses gave examples of the kinds of tenants that might be expected in a high quality retail shopping centre, all of which sold food (fast food or bakery products) or coffee or both (at [508] below); some mentioned existing or previous tenants of Kaleen Plaza that were not seen as belonging in a high quality retail shopping centre (at [498] and [499] below); but no-one offered criteria for determining whether at any point the shopping centre had the required quality and mix of tenants. Nor did anyone give evidence that a shopping centre owner willing to provide a sufficient incentive could secure any tenant that it wanted, however high quality the tenant.

186. None of Supabarn's submissions helped in this respect. In particular they did not address the question whether the asserted obligation was to succeed in upgrading the tenancy mix or, for instance, to take reasonable steps or to make a reasonable effort towards that (undefined) goal.

187. Accordingly, in the following discussion I mention the improved tenancy mix only where its separate aspects need to be mentioned specifically.

188. The case was conducted on the basis that the early and substantial refurbishment said to be required by cl 10.7 (and the tenancy mix improvement) should have been completed by the end of 2004. This approach relied on the proposition that if the refurbishment demanded by Supabarn by two letters to Cotrell dated 4 February 2003 and 29 August 2003 had been undertaken as demanded, it would have been completed by the end of 2004. That is, Supabarn did not say that cl 10.7 implied a specific deadline for the refurbishment; rather, it said that the clause implied a refurbishment early enough in the term of the Lease to justify the making of Supabarn's demand in 2003 and to require that Cotrell comply with that demand.

189. Cotrell said that cl 10.7 had a plain meaning and that the plain meaning did not include the imposition of any obligation to refurbish, only an obligation to "conduct, manage and operate". Cotrell said that these are ordinary English words denoting "a sense of ongoing, continuous and recurrent operation rather than specific and considerable capital improvements", and that cl 10.7 is properly read as imposing an obligation on Cotrell only in relation to the "ongoing, continuing, day to day running of the Centre", being an obligation to perform its tasks (conducting, managing and operating the Centre on a day to day basis, presumably including tenancy management) in a professional way, as distinct from performing them either:

(a) "as well as the 'best' shopping centre in the ACT"; or

190. As to cl 10.13, Cotrell said that it did not impose any obligation on the Landlord to undertake "some open-ended category of actions which may be classified as for the 'essential operation of a retail shopping centre'", but merely recorded the Landlord's acknowledgement that if something is "required" to be done for the "essential operation" of the shopping centre and that thing is the responsibility of the Landlord, then it must be done, and at the Landlord's cost.

191. Supabarn criticised Cotrell's suggested interpretation of cl 10.7 on the basis that it required extra words (such as "day to day") to be read into the clause. However, I understood Cotrell to have used words such as "day to day" to describe the connotations it said are carried by words such as "conduct, manage and operate", especially when combined. Cotrell did not say that the clause ought to be read as if the words "day to day" had been included, but that it ought to be read on the basis that the words "conduct, manage and operate" connote activities performed on a repeated, continuing or "day to day" basis. This is, strictly, construing (giving meaning to) the words of the text, not attempting to rewrite that text.

192. In its three sets of general written submissions, and in oral argument, Supabarn made numerous separate (but often repetitive) submissions, involving reference to legal principles set out at [116]-[133] above, apparently uncontroversial comments on particular parts of the Lease or available extrinsic materials, controversial but rational propositions about the terms of the Lease or the Deeds, and controversial and less rational, or at least unconvincing, assertions about what the Lease must have meant.

193. Cotrell responded to many of those specific submissions, and also made substantive submissions identifying reasons why Supabarn's claims should not be accepted. In summary, Cotrell's response was that Supabarn's construction of cl 10.7 was a far more unlikely interpretation of the clause than that obtained by focusing on the natural meaning of the words, and was a construction that would produce capricious results.

194. Those submissions are discussed at greater length below.

195. I accept the submission of counsel for Supabarn that the heading to cl 10.7, "Management of Centre" should be ignored, because cl 1.3 of the Lease says that the headings are inserted for convenience only (Franklins v Metcash at [348]).

196. Supabarn noted the following matters, all of which seem to be relatively uncontroversial but not obviously of any particular significance:

(a) That the Macquarie Dictionary defines "shopping centre" as "a group of many shops and associated facilities within a single architectural plan" (I note that this is in fact the Macquarie Dictionary definition of "shopping complex", which is pointed to as a second meaning for "shopping centre"; the primary definition of "shopping centre" is "that part of a town or suburb where shops are most densely concentrated").

(b) That a group centre is a shopping facility established under the relevant ACT Territory Plan (at [32]-[34] above), which came into effect in October 1993, having been prepared under the Land (Planning and Environment) Act 1991 (ACT) (since repealed).

(c) That a shopping centre is a "physical facility" which "facilitates the retailing function", that a tenant buys "the right to occupy that facility with its amenities and physical characteristics", and that shopping centres are "of different qualities".

197. The textual argument made by counsel for Supabarn in relation to cl 10.7, although explained at considerable length, seemed to have very few steps, being the following:

(a) The obligation in cl 10.7 to conduct, manage and operate the Centre "as a high quality retail shopping centre" means that the conduct, management and operation are to be carried out "at the standard of a high quality retail shopping centre".

(b) This means that the Centre's physical characteristics, the "structures, fittings, fixtures and finishes", must have a particular quality, and must maintain that high quality character over the nearly 30 years during which the Lease might remain effective.

(c) This continuing obligation to keep the Centre's physical characteristics at a particular quality may require frequent upgrades, or refurbishments, by the Landlord over the total term of the Lease.

198. These steps emerge from submissions in which counsel for Supabarn said that the Centre was required to be operated, or carried on, "at a particular standard, being that of a high quality retail shopping centre" and that this gave rise to three questions, identified and then answered as follows:

138. ... First, what is the Centre? Second, what does the Centre provide to tenants? Third, what are the features of a high quality retail shopping centre?

139. The answer to the first question is that the Centre comprises land, a structure, fittings, fixtures and furnishings; together they comprise the retail shopping centre. All those elements will have a particular quality. Together they will constitute a shopping centre of a particular quality.

140. The answer to the second question is that the Centre provides a place where tenants may carry on their retail businesses, a place where shoppers come. The Centre, as a place, provides certain features, or qualities, designed to attract customers. The extent to which it succeeds in attracting shoppers depends on its attractiveness, which depends, in part, on its physical qualities. A higher quality centre will attract more customers than a centre which is not high quality; and no doubt a higher rental return from the tenants. The tenant purchases the legal right to occupy the Centre and have its customers use and enjoy its amenities; and features.

141. Use of the words "conduct and operate" include [sic] the concept of operating and carrying on the Centre at a particular quality. The Centre includes the physical characteristics of its structure, appointments and amenities. The obligation requires the structures, fittings, fixtures and finishes, to have a particular quality. Given that the Lease may be in existence from 2001 to 2029, and given that the Centre must throughout that period, maintain the standard of a high quality retail shopping centre, the elements comprising the Centre have to possess that high quality character over nearly 30 years. This continuing obligation may require frequent upgrades over the term (see paragraph 98 [which includes the following: "Shopping centres are regularly refurbished. Mr Leyshon says that large shopping centres are refurbished every 7-10 years"]).

...

148. [As to the third question:] What is, or is not, high quality will change over time. What was high quality in 1988, may not be in 2001.

199. Those answers do not seem to advance matters.

200. The answer to the first question, in effect, restates the definition of "Centre", and makes the fairly obvious statement that the quality of the components of an entity feeds into the overall quality of the entity.

201. The answer to the second question makes the fairly obvious point that the purpose of a shopping centre is to attract customers; the somewhat tendentious point that a shopping centre's physical qualities are significant in attracting customers; and the even more tendentious point that a centre with better physical qualities will attract higher rents from tenants. The effective conclusion of this rhetoric (at [141] of the submissions quoted) was, in effect, a restatement of the proposition that Supabarn needed to establish:

The obligation requires the structures, fittings, fixtures and finishes, to have a [high] quality [and] to possess that high quality character over nearly 30 years.

202. The answer to the third question was again a statement of the obvious.

203. What these answers did reveal was the apparent absence of any sound textual basis for asserting the proposition on which Supabarn relied.

204. That proposition was that the obligation to carry out the actions required by cl 10.7 at the standard of a high quality retail shopping centre meant that the Centre must have the quality of such a shopping centre, that is, that "as" should be read as meaning, in effect "in a manner befitting a high quality retail shopping centre, having first turned the Centre into a high quality retail shopping centre".

205. As already noted, whether this proposition was correct was the central issue in construing cl 10.7, but it could not be established simply by stating it, and counsel for Supabarn made a number of other relatively obscure text-based submissions in support of the proposition. These are dealt with below.

206. As for cl 10.13, counsel's submission is usefully quoted in full:

152. Clause 10.13 is to be read harmoniously with clause 10.7. The "retail shopping centre" referred to in the second line is to be read as referring to a high quality retail shopping centre. The Centre referred to in the second line, is the Centre complying with clause 10.7. That is the Centre operated as a high quality retail shopping centre. Any other construction would be inconsistent with the operation of clause 10.7. That is because the Centre which clause 10.7 speaks of, is a high quality retail centre. The Centre referred to in the second line of clause 10.13, is the Centre operated in accordance with clause 10.7. The obligation in clause 10.13 was to do all things for the essential operation of the retail shopping centre the subject of this Lease - a high quality retail shopping centre. It directs attention to what is essential for the operation of a high quality retail shopping centre.

207. The effect of Supabarn's submission was that the proper reading of cl 10.13 would be as follows:

10.13 The Landlord acknowledges that when anything is required to be done in relation to the Centre operated as a high quality retail shopping centre or the Premises for the essential operation of the Centre as a high quality retail shopping centre which is not expressly or by necessary implication the responsibility of the Tenant under this Lease but is the responsibility of the Landlord, then such thing must be done by and at a cost of the Landlord.

208. There were many flaws in counsel's submission.

209. Reading two clauses "harmoniously" does not of itself require or permit replacing a phrase used in one clause with a similar (but not identical) phrase used in the other clause.[3] It does not require or permit a defined term used in one clause to be replaced with an expanded version of the defined term said to be found in the other clause.[4] It does not require or permit the words of a phrase used in either clause to be rearranged so as to carry a different meaning.[5] It does not require or permit the reading of one clause to be based on a question-begging assertion about the other clause.[6]

210. Furthermore, despite counsel's emphasis at other points on the significance of the defined term "Centre", his submissions at this point dealt quite cavalierly with the "Centre" as used in cl 10.13: each reference to the "Centre" is said to mean "high quality retail shopping centre", even though the definition of "Centre" makes no reference to quality.

211. As well, the obligation imposed by cl 10.13 was to do, for the Centre, all things required "for the essential operation of a retail shopping centre"; it was not to do all things required "for the essential operation of the retail shopping centre the subject of the Lease" or all things "essential for the operation of a high quality retail shopping centre".

212. Finally, counsel's submission that "[a]ny other construction would be inconsistent with the operation of clause 10.7" missed (at least) the point that a defined term (relevantly, "Centre") has a defined meaning and, generally, maintains that defined meaning throughout the document concerned - a definition as used in a document does not (over time, or as one reads further into the document) also accrue all the other obligations or entitlements imposed or conferred by the document by reference to the defined term.

213. I note in passing that cl 10.13 is somewhat odd to the extent that it records the Landlord acknowledging an obligation to do and pay for things that by definition are the Landlord's responsibility. It may be, however, that confining the clause to things described as "required to be done ... for the essential operation of a retail shopping centre" limits the scope for dispute between the parties, and such an outcome would in my view be enhanced by the fact that the clause refers to a generic retail shopping centre (of no specific quality) rather than to the particular shopping centre to which the Lease applies.

214. There is then the question of what Supabarn's claims about cl 10.13 would add to counsel's submissions about the meaning to be given to cl 10.7.

170. Given that the object of clauses 6.7 and 10.7 is to ensure that Centre and the supermarket premises are to be conducted as a high quality retail shopping centre, clause 10.13 is to be read as identifying what is essential for the Centre to be conducted to this standard.

171. There is no commercial rationale to reading clause 10.13 as referring to any different centre, which is the instruction given to Mr Leyshon, which is fundamental to his opinion. That is "essentiality" means something which must be done to allow the Centre, or the Premises, to practically operate to an undefined standard. Did the parties intend that Cotrell be required to do what was essential for a poor quality, or mediocre centre? That is an improbable view of their expressed intentions.

216. Again, this was a flawed submission, which misrepresented cl 10.13 in two respects.

217. What cl 10.13 does in so many words is to record an acknowledgement that certain things must be done by the Landlord and at the Landlord's expense. To the extent that cl 10.13 identifies those things, it does so by referring to things required "for the essential operation" of a generic "retail shopping centre". I accept that if cl 10.13 required the Landlord to do something, cl 10.7 would require the thing to be done at a standard appropriate to a high quality retail shopping centre (provided of course that doing the thing could be brought within the meaning of "conduct, manage and operate"). However, this does not mean that as well as requiring the Landlord to do everything (within its responsibility) that is required to permit the shopping centre to operate as a shopping centre, cl 10.13 also requires the Landlord to do everything that would be required to permit the shopping centre to operate as a centre of a particular quality.

218. The proposition that Supabarn said was improbable, that the parties intended that Cotrell be required to do what was essential for a poor quality or mediocre centre, also misrepresented cl 10.13. The clause did not refer to poor quality or mediocre centres, but, in effect, to all retail shopping centres, and to what would affect the "essential operation" of any such shopping centre. There is nothing obviously improbable about the parties recognising that, quite apart from any particular quality standards that might be set by other clauses of the Lease (as is done in this case by cl 10.7), there was a benefit in recording the parties' obligations about the things that were necessary to permit the shopping centre to operate at all.

219. Supabarn's rejection of Cotrell's submission that cl 10.7 had a plain meaning (summarised at [189] above) relied heavily on the definition of "Centre" as:

(a) the Land and any other land which the Landlord uses with the Land for a shopping centre and a carparking area or other undertakings relating to a shopping centre:

(b) all improvements on the Land and the other land; and

(c) all plant, equipment, fittings, fixtures, furniture and furnishings of the Landlord for use in the Centre.

220. In its first written submissions, Supabarn said:

144. The correct construction of clause 10.7 is that the Landlord would direct or cause the Centre to be carried on at a specified quality. The structure, fittings and furnishings internal and external are part of the definition of Centre; and in a commercial sense an important part of the bargain; what the tenant purchases by paying rent. Those physical characteristics cannot be ignored in the construction of clause 10.7; as Cotrell's construction does. Cotrell submits that the obligation is to conduct the day to day running of the Centre as a high quality shopping centre, irrespective of whether the physical characteristics of the Centre are high quality. Cotrell's construction is that the Centre can be operated in its day to day running as a high quality centre; even though its physical characteristics are a low quality, slum.

221. In its second written submissions, Supabarn asserted several errors in Cotrell's construction of cl 10.7, two relating to Cotrell's approach to the text of the clause, as follows:

(a) First, [Cotrell's approach] narrows the generality of the language "conduct manage and operate the Centre". It adopts a number of different formulations of that narrowed obligation; Compare DS para 27 - the verbs in clause 10.7 refer to the ongoing continuing day to day running of the Centre (DS paras 51 - "operational matters", 59 - clause 6.5 is directed to "the day to day operation" and 79 - "day to [day] running"), with the clause requires [sic] the Centre to be conducted[,] managed and operated in a "professional way in the prevailing circumstances". It is the management of the Centre which is determinative (DS para 89). This narrowed meaning is the result of what the Plaintiff [sic] submits is the controlling effect of the verbs, "conduct, manage and operate", without analysing how the separate meanings of those verbs apply to the elements of the Centre, their subject [sic]. One can operate a fitting, furniture and furnishings at the standard of those of a high quality retail shopping centre. But it is not an apt use of English that one can manage fittings and furniture at that standard.

(b) ...

(c) Third, [Cotrell's approach] does not give full effect to the entire text of clause 10.7 by ignoring that, the Centre, is a defined term, comprising a number of elements (see SS Section 6). Critical significance was placed by the majority of the High Court in Electricity Generation (below) on a failure to give effect to the entire text of the contractual language (para 56 below). It is the defined elements which have to be conducted managed and operated as a high quality retail shopping centre. It is essential to have regard to the defined Centre because, as Lord Hoffman [sic] pointed out in Charter Reinsurance Co Ltd v Fagan [1997] AC 313 at 391, meaning is sensitive to syntax and context. The centre, apart from the defined Centre, has no meaning in clause 10.7.

222. In oral submissions, counsel for Supabarn again attempted to explain the process by which cl 10.7 should be read so as to yield the construction advanced by Supabarn, saying:

First is the language to be construed as a compound expression. The meaning of the verbs "conduct", "manage" and "operate" can't be determined, divorced from their object, "the Centre". One will see in the defendant's submissions a series of dictionary definitions of what those verbs mean. That is not the correct approach to construction. Those verbs have a particular meaning in the context of the particular clause. Nor can they be divorced from the requirement that the Centre be of a particular quality, namely a high quality retail shopping centre. That's because meaning is sensitive to syntax and context, as Hoffmann LJ points out in Charter Reinsurance.

The second point is that the requirement for the Centre, which is a group centre, [to] be conducted, managed and operated as a high quality retail shopping centre involves a comparison between the Centre, as defined, and an agreed comparator, as to quality - a high quality retail shopping centre. ...

The third point is that the clause uses three verbs, having different shades of meaning and that the object was to ensure that all elements of the centre in their conduct, management and operation have the stated quality. Now, your Honour put to me before lunch those words - conduct, management and operation - can't all aptly apply to every element of the Centre ... but that argument involves, with respect, a non sequitur. Because you can't manage the structure doesn't mean that you can't conduct the structure as a high quality retail shopping centre. And what I'm putting for your Honour's consideration is [that] the verbs have different roles to play, in relation to each element. It would not be apt language to say that one can manage a fixture, such as a communal seating in a common area as one finds seating in a high quality retail shopping centre. But one can manage the letting of shops to tenants to ensure that tenants are of a high quality ....

The verb "manage" has a narrower and separate operation than "operate and conduct" and there are rules which govern the role of the manager ...

223. I have not found these submissions particularly illuminating. What I think counsel for Supabarn was trying to say was that counsel for Cotrell was wrong to submit that the three verbs can be interpreted as, in effect, supporting each other in indicating that the clause is about actions that are to happen over time (as described by the references to "day to day"). Rather, counsel seemed to be saying, the fact that none of the three verbs could sensibly be applied to every element of the defined "Centre" meant that the three of them taken together must have "a particular meaning in the context of the particular clause" which "cannot be divorced from their object, the Centre" and, significantly, which cannot be "divorced from the requirement that the Centre be of a particular quality, namely a high quality retail shopping centre".

224. Counsel for Supabarn explained that this was "because meaning is sensitive to syntax and context, as Hoffmann LJ points out in Charter Reinsurance". Hoffmann LJ's remark was clearly correct - but his comment provides no explanation of why, in the current case, syntax and context could require (or even permit) the three verbs to be read as imposing "the requirement that the Centre be of a particular quality, namely a high quality retail shopping centre".

225. The real problem with counsel's submission, however, was that it was another example of question-begging: whether cl 10.7 required the Centre to be of a particular quality was the core issue in the construction argument; if that requirement were established, it would go a long way to establishing the refurbishment obligation, but until it was established it could not be relied on to prove anything.

226. As already outlined at [173] above, cl 10.7 seems to have an adequate natural meaning, which can be articulated with no "verbal manipulation", if the three verbs are given their ordinary meanings and if the reference to the Centre is seen as extending beyond the mere existence of the physical entities to those entities as, in combination, they provide the venue for a functioning shopping centre. That adequate meaning is, at its simplest, that Cotrell was obliged to run the shopping centre in a high quality way.

227. Furthermore, the fact that none of the three verbs can sensibly be applied to every element of the defined "Centre" suggests to me not that "conduct, manage and operate", all active verbs, were intended as code for something completely different but that they were intended to convey a general message that the clause related to day to day action (rather than to the day to day, passive, condition of the Centre) while ensuring (in the best traditions of 19th century legal drafting) that no intended kind of action was overlooked.

228. There is a further problem for Supabarn in this attempt to confine or manipulate the ordinary meaning of the three verbs in reliance on the fact that, strictly, "the Centre" consists only of physical entities: to the extent that this attempt is successful, the other obligations more obviously cast on Cotrell by those ordinary meanings would seem to slip away. For instance, if what the three verbs (having regard to context and syntax) really require is that the physical entities making up "the Centre" must be cosmetically "high quality", there would seem to be no scope for the verbs also to be read as requiring for instance that, on a day by day basis, power and water are reliably provided, the entrances to the Centre are reliably opened each morning and secured each evening, and the tenants and their activities are properly managed as befits a high quality retail shopping centre. This is because none of those activities would seem to have any direct impact on the cosmetic status of the Centre.

229. Counsel for Supabarn also criticised the approach of counsel for Cotrell to the text of cl 10.7 that was made by reference to Electricity Generation Corporation. The disputed clause in that case was set out at [17] as follows:

(a) If in accordance with Clause 9 ('Nominations') the Buyer's nomination for a Day exceeds the MDQ, the Sellers must use reasonable endeavours to make available for delivery up to an additional 30TJ/Day of Gas in excess of MDQ ('Supplemental Maximum Daily Quantity' or 'SMDQ').

(b) In determining whether they are able to supply SMDQ on a Day, the Sellers may take into account all relevant commercial, economic and operational matters and, without limiting those matters, it is acknowledged and agreed by the Buyer that nothing in paragraph (a) requires the Sellers to make available for delivery any quantity by which a nomination for a Day exceeds MDQ where any of the following circumstances exist in relation to that quantity:

(i) the Sellers form the reasonable view that there is insufficient capacity available throughout the Sellers' Facilities (having regard to all existing and likely commitments of each Seller and each Seller's obligations regarding maintenance, replacement, safety and integrity of the Sellers' Facilities) to make that quantity available for delivery;

(ii) the Sellers form the reasonable view that there has been insufficient notice of the requirement for that quantity to undertake all necessary procedures to ensure that capacity is available throughout the Sellers' Facilities to make that quantity available for delivery; or

(iii) where the Sellers have any obligation to make available for delivery quantities of Natural Gas to other customers, which obligations may conflict with the scheduling of delivery of that quantity to the Buyer.

(c) The Sellers have no obligation to supply and deliver Gas on a Day in excess of their obligations set out in Clauses 3.2 and 3.3 in respect of MDQ and SMDQ respectively.

230. At [47], French CJ, Hayne, Crennan and Kiefel JJ said:

Taken as a whole, cl 3.3 provides for a balancing of interests if the business interests of the parties in respect of the supply of SMDQ do not entirely coincide, or if they conflict. What is a "reasonable" standard of endeavours obliged by cl 3.3(a) is conditioned both by the Sellers' responsibilities to Verve in respect of SMDQ and by the Sellers' express entitlement to take into account "relevant commercial, economic and operational matters" when determining whether they are "able" to supply SMDQ. Compendiously, the expression "commercial, economic and operational matters" refers to matters affecting the Sellers' business interests. The relevant ability to supply is thus qualified, in part, by reference to the constraints imposed by commercial and economic considerations. The non-exhaustive examples of circumstances in which the Sellers will not breach the obligation to use reasonable endeavours to supply SMDQ, found in cl 3.3(b)(i), (ii) and (iii), are not confined to "capacity" (or capacity constraints). The effect of cl 3.3(b) is that the Sellers are not obliged to forgo or sacrifice their business interests when using reasonable endeavours to make SMDQ available for delivery. Verve's submission that "able" should be construed narrowly, so as to refer only to the Sellers' capacity to supply, fails to give full effect to the entire text of cl 3.3(b) and must be rejected. The word "able" in cl 3.3(b) relates to the Sellers' ability, having regard to their capacity and their business interests, to supply SMDQ. This is the interpretation which should be given to cl 3.3.

(Emphasis added.)

231. That is, their Honours identified that most of cl 3.3(b) (specifically, the part that entitled the respondent sellers to take into account "relevant commercial, economic and operational matters" in determining whether they were "able" to supply gas on a particular day) had been ignored in the interpretation of the clause advanced by the appellant buyers under the contract.

232. The submission made on behalf of Supabarn fairly summarised their Honours' comments as focusing on the buyer's "failure to give effect to the entire text of the contractual language", but counsel's attempt to draw a parallel with Cotrell's approach to cl 10.7 was obscure. In particular, counsel for Supabarn did not identify that part of the text of the Lease that he said Cotrell had failed to account for in its suggested construction of cl 10.7. Cotrell's proposed construction of cl 10.7, for the reasons pointed out above, gives an appropriate meaning to "conduct, manage and operate" and, if anything, gives a broader meaning to "Centre" (and therefore a more substantial operation to the clause) than would be required by the focus on "Centre" as a description solely of the physical dimension of the shopping centre.

233. What Cotrell's construction did not do was what was rejected in Electricity Generation Corporation, namely ignoring an express qualification on the contractual obligation imposed on the respondent sellers (at [231] above). In the current case, in contrast, the clause does not create any explicit obligation of the kind asserted, and Cotrell's construction simply rejects the proposition that the asserted obligation can be inferred from words that, on their face, say nothing of the sort.

234. The Electricity Generation Corporation case relied on by counsel for Supabarn did not in my view cast any doubts on the interpretation proposed by counsel for Cotrell. Rather, the essence of counsel's complaint was that counsel for Cotrell, in construing the "entire text", had reached a conclusion that did not suit Supabarn's argument.

235. Counsel for Supabarn cited Chapmans Ltd v Australian Stock Exchange Ltd (1996) 67 FCR 402 at 411 in support of the proposition that since cl 10.7 as interpreted by Cotrell does no more than is already effected by clauses 10.5, 10.6 and 10.9, a further and distinct meaning needs to be found for cl 10.7.

236. I agree with Supabarn's submission that the Lease must be construed as a whole, and so as not to render any particular clause nugatory or ineffective, but I am not convinced that this means that there can be no scope for overlap, or for general and specific provisions dealing with some of the same material, in a commercial document.

237. Clauses 10.5 (Services), 10.6 (Maintenance of Common Areas) and 10.9 (Structural Works) are set out at [21] above.

238. As far as I can see there is no definition of "services" in the Lease to give specific content to cl 10.5, although the definition of "Minimum Services" as "Centre services operating outside of the Tenant's Minimum Trading Hours limited to Common Areas lighting adjacent to the Premises" suggests that "services" (as distinct from "Minimum Services") includes more than merely lighting; however, it does not define the outer limits of the expression.

239. The expression used in cl 10.6, "Common Areas", is defined to mean:

those parts of the Centre intended by the Landlord for common use. They include parking areas, driveways, walkways, docks, stairs, escalators, lifts and toilets.

240. Clause 10.9 relates to the structural condition of the Centre.

241. It is not clear to me that clauses 10.5, 10.6 and 10.9 cover the entire area of activity that is addressed in cl 10.7 as construed by Cotrell. For instance, they do not seem to mention any form of tenancy management or security provision. Furthermore, although clauses 10.6 and 10.9 do impose basic quality standards for the performance of the required obligations (for instance, that work required by cl 10.9(b) is to be performed "promptly and in a proper and workmanlike manner"), none of the three clauses referred to the standards that might be expected for work done in a high quality retail shopping centre. To that extent, cl 10.7 can be given some effect additional to that of the three clauses, even if it only applies to obligations already existing under those clauses.

242. However, while there may be some overlap between cl 10.7 and the other clauses relied on by Supabarn, there is no basis for concluding that the overlap is complete, and no need to construe the clause as imposing obligations "distinct from" (and presumably additional to) "obligations to maintain services, ... common premises and the structural integrity of the Centre".

243. Accordingly, I reject the argument that, in effect, cl 10.7 had no operation unless it was interpreted as imposing a refurbishment obligation.

244. Counsel for Supabarn said that the expressions "high quality retail shopping centre" (cl 10.7) and things "required to be done ... for the essential operation of a retail shopping centre" (cl 10.13) are not "ordinary English words with a settled meaning", so evidence should be admitted as to the meaning of those words as "technical expression[s] ... used in a particular industry" (at [137] above). I agree that the two phrases do not have any particular settled meaning in ordinary usage, although they certainly consist of "ordinary English words", and that there may accordingly, for certain purposes, be scope for receiving evidence about the meanings given in the relevant industry to those phrases.

245. That evidence is usefully set out at this point.

Meaning of "technical" terms: high quality retail shopping centre (cl 10.7)

246. Evidence about the meaning to be given to "high quality retail shopping centre" was given by Mr McKinnon, Mr Powderly, Mr Leyshon and Mr Armstrong.

(a) that to his knowledge, "there's no formal classification system for retail grading within the ACT or nationally within Australia" and accordingly, "shopping centre grading or classification for quality purposes is an inherently subjective task."

(b) agreeing with Mr Leyshon that "shopping centre gradings are inherently subjective", and explaining this by saying:

In this context, "inherently subjective" simply means that, with the lack of formal classification system guiding the definition of a high quality shopping centre, that, you know, in the process of consideration of that, there are likely to be variations in one's methodology to derive that outcome.

(c) that at Colliers he kept an "in-house retail database" with a classification system, in which he registered all shopping centres in Australia, and that there are other organisations also using "retail quality classifications";

(d) that he was aware that JLL prepares a document called "Australian Shopping Centre Investment Review Outlook", which uses quality classifications relating to asset performance and yields;

(e) that in his opinion, in the absence of a formal grading system, there were five key categories to consider, being:

Centre Exposure

Centre Access/Car parking

Centre Amenity

Internal Layout/Design

Tenancy Mix/Retail Offering

(f) that a high quality retail shopping centre is one that exhibits strong results across key characteristics within those five key categories, as follows:

a) Centre Exposure

- Well positioned on major road

- High visibility from the road

- High quality centre signage

- Sufficient quantity of centre signage and exposure to passing traffic

- Adequate external tenant exposure

b) Centre Access/Car Parking

- Easy and convenient ingress/egress

- Easily navigable car park

- High quality/amenity of car park

- High accessibility to centre entrance from car park (distance)

- Sufficient separation of truck servicing/loading

c) Centre Amenity

- High quality climate control and air conditioning

- High quality and effective lighting

- High level of centre cleanliness

- Centre has a 'modern' feel

- High quality façade/external entry statement

d) Internal Layout/Design

- High quality public rest/common areas

- High quality and quantity internal signage/information

- High level of internal tenant visibility/continuity

- High levels and use of natural light

- Appropriate position of major(s)/anchors

e) Tenancy Mix/Retail Offering

- High level of occupancy

- High quality anchor tenant

- High quality mix of specialities

- High quality tenant fit out

- High proportion of 'national'/major franchise tenancies

248. In re-examination, in relation to the grading system that he had provided in his report and oral evidence, Mr McKinnon gave evidence to the effect that:

(a) he didn't think that there would be any debate, from other people involved in the analysis, valuation or management of centres, about the five key categories identified at [247(e)] above, which he said were not "subjective";

(b) that there might be "some subjectiveness and variability" in identifying the sub-categories reflected at [247(f)] above; but

(c) he thought that the "end results ... would not differ across those core elements".

249. Mr Powderly said that there was no formal classification of shopping centres that included a category of "high quality retail shopping centre", but that the description "goes to the condition of a centre and the way in which it is run", and the expression "is commonly used to describe retail assets by those that value or lease such property". He said that a centre described as high quality retail shopping centre would satisfy the following description:

• A centre in good condition that is well maintained.
• A modern well presented centre that is regularly upgraded to keep up with retail trends.
• Being visible, accessible and has adequate parking.
• A modern, viable supermarket which is self-supporting without other traders.
• A range of specialty traders who are substantially self supporting and operate in a viable manner by complementing each other.
• A centre with a strong control over the standard of fitout and to achieve this outcome, it will have strict design guidelines for fitouts for new tenancies and upgrades of existing tenancies.
• A car park that not only has sufficient spaces to meet the needs at all times but provides good ingress and egress.
• Management that undertakes constant maintenance of all services and conditions.
• Capital works program and ongoing review of design issues to best determine how the centre will be upgraded.
• Proactive marketing program involving tenant participation.
• Tenant support in training.

250. Mr Powderly said that any kind of shopping centre could be high quality, that in assessing whether a centre was high quality he would not make allowances for its size, but that in assessing a centre's marketing he would take account of how much the centre could afford to spend on marketing.

251. Mr Armstrong agreed that Mirvac used the expression "high quality retail shopping centre" in its public documents, but said that this had "lots of meanings" to people working in the relevant fields, and he preferred to use words like "good" or "high performing". From his perspective, he said, the characteristic of a high quality centre was trading success, that is, "dollars through the till", regardless of the contributing factors to that success, and successful shopping centres often "dominate their market". In particular, he noted that Cooleman Court was a high quality retail shopping centre because "it trades really well. ... It has a lot of people who live very close to it. And not much competition." Accordingly, he said, it "dominates" its market. In the context in which Mr Armstrong used the term and the specifics of his evidence, whether a shopping centre "dominates its market" seemed to relate to the state of that market (for instance, the number of competing shopping centres in the area from which the shopping centre was likely to draw its customers) rather than to any characteristics of the shopping centre itself (other than its location).

252. Mr Armstrong said that the physical qualities of a centre, including such things as lighting, tiles, common area furnishings and colour design, may be of good or lesser quality, or may be dated. However, he said, in negotiating rents, all that tenants care about is the turnover of the centre, not the state of its amenities; rent is a function of turnover, not of a centre's physical aspects. He gave the following evidence in cross-examination:

Now, a tenant contemplating acquiring space in that physical facility would generally pay - I appreciate this is a broad proposition - more rent the better those amenities?---No. I tell you, retail tenants want to know one thing which is what their turnover is going to be. That is all they care about. And if they're in a shopping centre where their turnover is huge and the staff have to go to the toilet in the loading dock, they really don't care.

As a general proposition, I'm putting to you that the better the quality of the physical aspect of the centre, the higher the rent the landlord will be able to charge?---No.

No?---It's all about turnover. The rent is a function of the turnover. So - - -

And the turnover is a function of the ability of the centre to attract customers, correct?---Correct.

And the greater the amenity and the better the quality of the centre, the more likely it can attract customers, correct?---Well, I'll go back to what I said before. The number one issue is - - -

I didn't ask you about the number one issue. I'm putting to you this simple proposition: the better the quality of the structure and the amenities and the feel of the centre, the more likely it is to attract customers, correct?---Look, you know, when you're talking a couple of per cent, yes, that's correct.

253. Mr Armstrong said that when Cooleman Court had been expanded and refurbished, the aim was to enable Aldi to move in, and the refurbishment to make the centre look more contemporary was part of the strategy, but less important.

254. Mr Leyshon said there was "no technical agreed meaning" for "high quality retail shopping centre", that it was not a phrase that was used day to day, but that people used words like "impressive", "comprehensive" or "large". He conceded that the features mentioned by Mr McKinnon (at [247(e)] above) might well be considered by "insiders" in relation to the quality of shopping centres, but he didn't know if they would agree that those were the "core features of a high quality retail shopping centre".

Meaning of "technical" terms: essential operation of shopping centre

255. Before outlining the evidence relevant to the meaning of the phrase "essential operation of a retail shopping centre", I note that some of the "expert evidence" given about this topic was given in answer to an effectively irrelevant question arising from a misstatement of cl 10.13 in letters of instruction to the expert witnesses concerned. Both Mr McKinnon and Mr Powderly were asked about "matters essential for the operation of a retail centre by the landlord", rather than about things required to be done "for the essential operation of a retail shopping centre". There were thus two problems with the letters of instruction:

(a) First, they misdescribed the matters to be identified as being those "essential for the operation of" a shopping centre rather than "for the essential operation of" a shopping centre.

(b) Secondly, they misdescribed the matters to be identified as those essential for the operation of the shopping centre by the landlord. The clause is not about those things that a landlord needs to do, but those things that are required "for the essential operation of" the shopping centre. What the clause says is that a subset of those things (being those that, under the Lease, are not expressly or by necessary implication the responsibility of the tenant but are the responsibility of the landlord) must be done and paid for by the landlord.

256. That is, by providing a list of the things essential for the operation of the shopping centre by the landlord, the witnesses have provided effectively irrelevant answers to a question that must, in the current case, be answered by reference to the provisions of the Lease and the explicit or implicit effect of those provisions, not by reference to what must be addressed by a landlord who wants to run a satisfactory shopping centre.

257. It is worth noting that, as is made clear in cl 10.13, the things that are the responsibility of the landlord do not constitute a residual category containing everything required for the essential operation of the centre that is not the tenant's responsibility. Some of the things required for the essential operation of a shopping centre may not be the responsibility of either the tenant or the landlord. For instance, providing access to the centre by staff and customers would seem to be required for a centre's essential operation, but might be prevented by such events as bushfires, floods, civil disturbance or police operations in the surrounding area; I am not convinced that under the Lease, addressing such problems would be the responsibility of either the tenant or the landlord.

258. Supabarn however asserted that it was Cotrell's witnesses who had "proceeded on an incorrect construction of the clause 10.13 obligation", claiming that the proper question to be asked about cl 10.13 was "what was essential to be done to ensure that the Centre was high quality in its cosmetic respects?" Not only was counsel's assertion based on the proposition that cl 10.7 required the Centre to be high quality in its cosmetic aspects (which remains the core question in Supabarn's case, not the accepted premise of that case), but it also involved rewriting the relevant part of cl 10.13 (discussed at [206]-[212] above), which does not refer to things essential to be done to achieve any particular objective chosen by counsel (being "to ensure that the Centre was high quality in its cosmetic respects") but to things "required to be done for the essential operation of a retail shopping centre". Counsel's attempt to turn the process of construing a legal document into some kind of Scrabble game in which players rearrange words rather than letters was unconvincing.

259. While bearing in mind the fact that the two witnesses were answering the wrong question, it is nevertheless useful at this stage to record the matters they identified as "essential for the operation of a retail centre by the landlord".

260. Mr McKinnon, drawing on his experience, identified the following matters as "essential for the operation of a retail centre by the landlord":

(a) Structural integrity and safe access;

(b) Understanding trade area dynamics;

(c) The attraction and screening of tenants;

(d) Tenancy/rent roll management;

(e) Centre marketing and the attraction of shoppers;

(f) Lease management and enforcement;

(g) Sublets and assignment management;

(h) Common area management;

(i) Management of lease renewals;

(j) Repairs and Maintenance;

(k) Management of OHAS and environmental issues;

(l) Contractor management;

(m) Centre risk management;

(n) Refurbishment and continued improvement;

(o) Crime and security.

261. The matters identified by Mr Powderly in his report as "essential for the operation of a retail shopping centre by the landlord" included both the skills and experience required by the landlord and the duties that needed to be undertaken by the landlord, as follows:

• - Must have retail experience or appoint manager with retail experience. They will need to manage tenancies, lease renewals, lease management and manage common areas.
• - Establish marketing plan that incorporates input from tenants. This involves understanding the trading areas, demographics.
• - Manage tenancy mix to ensure that the centre has the appropriate tenants for the demographic of the catchment area.
• - Implement refurbishment and capital works program to keep centre at a standard to attract patrons. This includes ensuring shopfronts are upgraded.
• - Maintenance program and presentation of centre. This includes management of OH&S and Environmental issues.
• - Contractor and Risk Management.

262. When Mr Powderly gave oral evidence, he was asked about the difference between the question he answered in his report and the question actually arising under the Lease. Mr Powderly agreed that his answers to the two questions might have been different, saying that in answer to the correct question he might have weighted some criteria slightly differently in addressing "whether they were desirable or whether they were absolutely essential". Consistently with this evidence, he said that while some kinds of maintenance failures could stop a shopping centre operating and require it to be evacuated, other kinds of failures by the landlord do not have the same effect. He agreed that a failure to refurbish, a failure to address the shopping centre's "visual attraction and ... ambience" or its tenancy mix, or a failure to have a marketing plan would not stop Kaleen Plaza trading in the short term, but over the longer term it "would ultimately work to the prejudice of the centre". He also noted that a lack of retail experience on the part of the landlord or centre manager might have a prejudicial effect on the centre in the shorter or medium term.

263. Mr Armstrong was asked the correct question, about matters "required to be done ... for the essential operation of a shopping centre". His answer (albeit reframed to refer to "essential matters") was that "the essential matters required to be done in relation to the Kaleen Plaza Shopping Centre" included the following:

A. The Centre should be presented in a clean and tidy manner.

B. The car-parks and external areas need to facilitate the easy arrival and departure of customers, noting that many will be with trolleys.

C. The safety of Staff and Customers is to be maintained.

D. Essential services are in place, and

E. Repairs and Maintenance up to date.

264. He said that in his view, the lists of "essential matters" provided by Mr McKinnon and Mr Powderly extended well beyond what would be essential for the operation of a retail centre and into:

a broader category of some of the strategies and tactics that shopping centre owners and managers would [or could] use to maximise their long term financial returns and profitability from a shopping centre investment.

265. In oral evidence, Mr Armstrong said that for the purposes of his report he had defined "essential" as referring to matters the absence of which would have an adverse effect on the performance of the tenants or would stop customers coming to the centre.

266. Mr Leyshon in his report said that he was not aware that either of the expressions "essential operation of a retail shopping centre" or "anything required to be done ... for the essential operation of a retail shopping centre" had any agreed definition within the retail industry. He had been advised "to assume that [the expressions mean] necessary, in the sense that the Centre or the Premises could not practically operate without that thing being done". In oral evidence Mr Leyshon confirmed that he had used that approach, and said that he had not assumed that "essential" meant what was necessary to ensure that the shopping centre was high quality in its cosmetic respects.

267. In his report, Mr Leyshon identified activities and services that he considered necessary or essential to enable a shopping centre to operate, as follows:

• appropriately experienced owner or centre manager
• maintenance of structural integrity and safe access
• maintenance of adequate lighting in public areas and within tenancies
• provision, where appropriate, of effective air-conditioning to public areas and tenancies
• adequate cleaning of public spaces and in particular public amenities
• timely repair of critical services such as air-conditioning, water supply, electrical supply etc
• maintenance of fire safety equipment and fire exits.

268. Mr Leyshon also provided a list of activities and services which he considered to be desirable but not strictly necessary for the operation of a shopping centre, as follows:

• ensuring tenants are open and trading at least for the specified core trading hours
• adequate external signage particularly signage of entrance and exit points
• detailed cleaning of ceilings and windows et cetera
• repair of cosmetic damage to the centre
• maintenance of external landscaping
• maintenance of a high standard of tenant fit out
• regular refurbishment and repainting of public areas
• installation of security systems to prevent break-ins et cetera
• painting of car parking bays
• understanding of trade area dynamics
• appropriate marketing
• limiting vacancies and tenancy roll management
• a detailed capital works program for improving the centre.

269. Mr Leyshon said that in an ACT group centre, the cosmetic aspects of the group centre are relevant to the extent to which shoppers will visit, but that it is less of an issue in relation to smaller centres like Kaleen Plaza, because of the "basic convenience role" of such centres, and that refurbishment should be done at a level appropriate to the shopping centre concerned. He agreed that neglect of tenancy management (such as managing the tenants' opening and closing hours, and ensuring that tenants maintain their fitout) might have long-term negative consequences for the quality of a centre, but said that the quality of tenants as such is not part of the quality of the centre. Mr Leyshon also agreed that most shopping centre owners would want to improve the quality of their tenants over time, and that "the quality of the tenants bears upon the quality of the centre".

270. The meanings of the two phrases, "high quality retail shopping centre" and things "required to be done ... for the essential operation of a retail shopping centre" are significant for two different reasons:

(a) first, it seems that the inclusion of the phrases is relied on to justify the reading of clauses 10.7 and 10.13 as imposing on Cotrell obligations in relation to refurbishment and tenancy mix;

(b) secondly, the meaning of the phrases is relevant to whether either or both of the disputed clauses have been breached (dealt with from [437] below).

271. For the first purpose, and given the submissions by counsel for Supabarn about how these two clauses should be read to include the obligations Supabarn asserts, I did not see that it was necessary in determining their impact to go beyond the fact of the phrases, in their meanings as normal English words, being used in the clauses. The real issue at this point seemed to be whether the reference to a shopping centre of a particular quality was intended to set a standard for the running of the centre (as Cotrell asserted) or to set a standard for the ongoing condition of the centre (as Supabarn said). A conclusion that Kaleen Plaza was not, at the time the Lease was signed or at any of the points when Supabarn complained about the condition of Kaleen Plaza, a centre of the stated quality (a conclusion which is not excluded by the evidence) may add some minor weight to Supabarn's argument but did not seem to me to be vital. This is because, if the clause had really been intended to impose a refurbishment obligation, it would have been just as significant (especially over the potential 27 year term of the Lease) if Kaleen Plaza had already been a high quality retail shopping centre, in which case the intended effect of the clause would have been to require Kaleen Plaza to be maintained to the standard that it met at the beginning of the Lease.

272. The obligation imposed by cl 10.7 is described by reference to a high quality retail shopping centre, not an average or low quality retail shopping centre, and it is that fact, not the exact details of "high quality" in the context, that is relevant in determining what cl 10.7 means. Similarly, "essential" in relation to the operation of a retail shopping centre has significance to the meaning of cl 10.13 without any specification of exactly which matters are "essential": what matters is that the clause is dealing with the "essential operation" rather than anything else that might be required.

273. Furthermore, on the basis that the Lease was registered under a Torrens title system (at [157] above), and despite Currumbin Investments, I am not convinced that evidence about what exactly is meant, in the industry, by "high quality" or "things required to be done ... for the essential operation" could be admissible for the purpose of construing the document.

274. Counsel for Supabarn submitted that "there is no doubt that the expression 'high quality shopping centre' is commonly used by shopping centre investors, ... managers and valuers", pointing to Mr McKinnon's evidence that "there is agreement on the core elements of the expression", although what Mr McKinnon actually said (at [248] above) was rather more nuanced.

275. Mr Leyshon, on the other hand, at [254] above, said that he was not aware of an agreed meaning or a single meaning for the phrase, and that there were likely to be differences of opinion among "industry insiders" about what the expression means.

276. Mr Armstrong's evidence (at [251] above) was that in his part of the industry, where shopping centres were assessed as investments, the expression referred to criteria such as likely returns on investment rather than physical or other similar attributes of shopping centre premises.

277. There was even more disagreement among the various witnesses about the meaning of the reference in cl 10.13 to things "required to be done ... for the essential operation of a retail shopping centre", not helped by Supabarn's apparent unwillingness even to treat the plain words of the clause as the starting point in construing it (at [258] above).

278. Because the witnesses called by Supabarn were answering a question that misstated the effect of cl 10.13, their evidence about the meaning of the expression concerned differed significantly from that given by witnesses called by Cotrell.

279. Expert evidence about the meaning of either of the two phrases could only fall within the category of matters described at [157(d)] that might be available for consideration in determining the meaning of a registered instrument if it were evidence about the meaning of a non-legal technical term, and it is apparent from the evidence that has been tendered in this case about the meanings to be given to the two phrases (at [246]-[269] above):

(a) that neither of them is a "technical term", and that there is no definitive industry meaning for either phrase; and

(b) in relation to "high quality" as applied to shopping centres:

(i) that there are at least two different kinds of meaning depending on which part of the industry is using the expression (the phrase might be used by shopping centre owners or tenants, in conjunction with matters such as the cosmetic appearance, tenancy mix, or other attributes of a centre, or by investors in shopping centres, in relation to the level of financial return likely to be generated by a centre); and

(ii) that there is no basis in that evidence for determining which of those meanings was intended by the disputed clauses.

280. Thus, neither the conclusions advanced by counsel for Supabarn by a selective approach to the evidence of the various witnesses, nor any other conclusions that could emerge from selecting other parts of the evidence, could be described, as required by [157(d)] above, as:

background knowledge that is accessible to all the people who it is reasonably foreseeable might, in the future, need to construe [the Lease].

281. Accordingly, I am satisfied, on the basis of the Lease's registration under the Land Titles Act and its assignability (at [140] above) that, in construing the Lease, I should disregard the evidence of the various expert witnesses about the specific meanings to be given to the two phrases.

282. Cotrell submitted that refurbishment, specifically the Tenant's right to refurbish the leased premises, is in fact mentioned in cl 7.5 of the Lease, and that this tells against inferring another refurbishment obligation elsewhere in the Lease.

283. Supabarn responded that the explicit reference to refurbishment does not mean that no other clause in the Lease could be interpreted as referring to refurbishment. This proposition is correct as far as it goes, although the explicit reference to refurbishment elsewhere in the Lease indicates that the possibility of some refurbishments was contemplated when the Lease was negotiated and this, in my view, does increase the difficulty of establishing that another refurbishment, by the Landlord, was intended to be addressed by a provision that does not mention refurbishment.

284. More to the point, the fact that refurbishment is mentioned in cl 7.5 and is not mentioned in cl 10.7 may not preclude cl 10.7 being interpreted as including a reference to refurbishment, but it does not go any way to establishing that cl 10.7 was intended to require Cottrell to refurbish the Centre.

285. Clauses 10.14 and 10.15 of the Lease are quoted at [21] above. Clause 10.14 protects "Tenant amenities", and cl 10.15 makes provision for "Landlord's works".

286. Cottrell said that cl 10.14 prevents the Landlord from doing anything to interfere with the normal conduct of Supabarn's business in and from the leased premises "except to undertake maintenance or repair", and that its capacity to undertake refurbishment works "would be substantially impeded by clause 10.14". Cotrell noted that cl 10.15 protects Supabarn if Cotrell chooses to do certain works, but does not entitle Cotrell to do anything prohibited by other parts of the Lease.

287. Supabarn correctly pointed out that cl 10.15 confers an express right to undertake "Landlord's works", subject to certain requirements such as giving adequate and detailed notice to Supabarn and consulting it about the timing of the works so as to minimise disruption to Supabarn (cl 10.15(a) and (b)).

288. I accept that clauses 10.14 and 10.15 impose some restrictions on Cotrell's capacity to do capital works in the Centre. However, if cl 10.7 could on other grounds be found to impose a meaningful refurbishment obligation on Cottrell, it would make sense that addressing Cotrell's capacity to conduct that refurbishment without breaching other provisions of the Lease would be included in that meaningful obligation, along with basic substantive details of the refurbishment itself. I do not see that cl 10.14, with or without cl 10.15, is as such an obstacle to Supabarn's reading of cl 10.7. On the other hand, the conclusion that clauses 10.14 and 10.15 do not prevent Cotrell refurbishing the Centre does not establish, or even provide positive support for, the proposition that cl 10.7 requires such a refurbishment.

289. For similar reasons, I also do not consider that the possible impact of a refurbishment on other tenants is as such an obstacle to Supabarn's preferred interpretation of cl 10.7, although I accept Cotrell's point that cl 10.15 is no answer to the question of the impact on other tenants.

290. Cottrell said that clauses 7.1 and 7.9 of the Lease, which relate to the Tenant's obligation to keep the leased Premises in good condition, and to hand them back at the end of the tenancy in good condition (having regard to their condition at the start of the tenancy), suggest that no refurbishment is contemplated by the other provisions of the Lease.

291. However, I did not understand Supabarn to say that the required refurbishment would encompass the supermarket premises (or other tenancies) as such; accordingly, Supabarn's obligations in relation to returning the supermarket premises to Cotrell at the end of the tenancy do not seem to be directly relevant to the refurbishment obligation asserted by Supabarn in relation to the Centre.

292. Cotrell submitted that the vagueness of the obligation that Supabarn sought to infer from cl 10.7 (as distinct from any uncertainty in the words of the clause) told against the availability of the proposed inference. Cotrell noted:

(a) that there is no such thing as a "generic" shopping centre refurbishment, but a range of options in relation to many aspects such as the extent, timing and nature of the refurbishment, including matters of detail such as finishes, and that these need to be specified somewhere;

(b) that it would be necessary to provide for dispute resolution in relation to the details and implementation of the refurbishment;

(c) that these issues would be further complicated by the vagueness of the expression "high quality retail shopping centre", which would need to be clarified before a complying refurbishment could be identified; and

(d) that an agreement about a refurbishment would also need to address matters such as how long the refurbishment would take, the disruptions that might be caused to tenants and customers, the obligations to be imposed on the tenants, and dispute resolution arrangements to deal with those matters.

293. Counsel for Cotrell also submitted that Supabarn's abandonment of its claim for specific performance (at [7] above) was a tacit admission that if cl 10.7 were found to contain the refurbishment obligation, no-one would know what it required, and the court would not be able to make an order for specific performance. Counsel for Supabarn responded to this as if it were a comment suggesting that "high quality retail centre" was an uncertain expression, referring to its submission that an obligation that could not be addressed with an order for specific performance was not necessarily unable to be enforced by an action for damages. This response, however, seemed to have missed the point of the submission made by counsel for Cotrell, which was explicitly to the effect that what was "ill-defined" was the asserted refurbishment obligation, not the phrase "high quality retail centre". Counsel for Supabarn accordingly provided no useful refutation of the comment made by counsel for Cotrell about the significance of Supabarn's abandonment of the specific performance claim.

294. In response to Cotrell's claim of vagueness, Supabarn said that the words claimed to impose the refurbishment obligation are not "so vague as to be uncertain" even though there may be considerable scope for debate as to what is included, and referred to Upper Hunter County at 436-437, where (before making the remarks quoted at [122] above), Barwick CJ said:

But a contract of which there can be more than one possible meaning or which when construed can produce in its application more than one result is not therefore void for uncertainty. As long as it is capable of a meaning, it will ultimately bear that meaning which the courts, or in an appropriate case, an arbitrator, decides is its proper construction: and the court or arbitrator will decide its application. The question becomes one of construction, of ascertaining the intention of the parties, and of applying it. Lord Tomlin's words in this connexion in Hillas & Co Ltd v Arcos Ltd ought to be kept in mind. So long as the language employed by the parties, to use Lord Wright's words in G Scammell & Nephew Ltd v Ouston is not "so obscure and so incapable of any definite or precise meaning that the Court is unable to attribute to the parties any particular contractual intention", the contract cannot be held to be void or uncertain or meaningless. In the search for that intention, no narrow or pedantic approach is warranted, particularly in the case of commercial arrangements. Thus will uncertainty of meaning, as distinct from absence of meaning or of intention, be resolved.

(Citations omitted.)

295. While conceding that the Lease "does not identify the characteristics of a high quality retail shopping centre", counsel for Supabarn further said that Cotrell had not pleaded that "the obligation is uncertain, or is so obscure as to be incapable of any definite meaning". Accordingly, counsel said, the meaning of "high quality retail shopping centre", and the particular features of such a shopping centre, are questions of fact for the court, and:

it is for the Court to determine what are the features of a high quality retail shopping centre, and the meaning of that expression; taking into account the surrounding circumstances and expert evidence.

296. Counsel for Supabarn said that it would be impractical in a lease of "potentially 30 years" to agree on the detail of any particular refurbishment in negotiating the original lease.

297. Counsel for Cotrell responded by pointing out:

(a) that Cotrell does not claim that the obligation under cl 10.7 is uncertain, only that it does not include a refurbishment obligation; but

(b) that if the clause did include that obligation, it would be void for uncertainty.

298. Counsel for Cotrell also noted Meehan v Jones [1982] HCA 52; (1982) 149 CLR 571, in which Gibbs CJ at 578 said: "It is only if the court is unable to put any definite meaning on the contract that it can be said to be uncertain" and Mason J at 589 referred to "the traditional doctrine that courts should be astute to adopt a construction which will preserve the validity of the contract."

299. The approach taken in Upper Hunter County provides a useful contrast with the current case. The phrase in question in that case was "supplier's costs", and the court rejected the proposition that the clause in which this phrase was used was void for uncertainty, noting:

(a) that there was neither uncertainty nor ambiguity in that expression, "however wide may be the area of possible disagreement as to its denotation in a particular case" (Barwick CJ at 437); and

(b) that the costs referred to "are necessarily [the supplier's] cost of carrying out the contract on its part, and are capable of ascertainment by an application of ordinary business concepts" (Kitto J at 439).

300. It is clear that "supplier's costs" and "high quality retail shopping centre" are relevantly different kinds of expressions for present purposes. In Upper Hunter County, the dispute was about what costs were covered by the reference to "supplier's costs"; to repeat what Barwick CJ said at 437:

Endless might be the arguments pro and con as to whether or not in marginal cases some item of expenditure is as claimed a cost, or as to how much of an expenditure is a cost, of the particular activity. But to my mind, generally speaking, the concept of a cost of doing something is certain in the sense that it provides a criterion by reference to which the rights of the parties may ultimately and logically be worked out, if not by the parties then by the courts.

301. In the current case, while the meaning of "retail shopping centre" is unlikely to cause any significant argument, "high quality" is an entirely subjective expression which does not necessarily mean the same thing to any two people and which may be impossible for anyone, including a court, to articulate in such a way as to guarantee that all relevant parties understand it to mean the same thing and to require the same outcome. This may be a relatively minor problem in relation to a management obligation of the kind imposed by cl 10.7, as to which it may generally be enough to be able to distinguish between "high quality" and "not high quality", but the suggested refurbishment obligation raises far more difficult questions. For instance, it is hard to see how a court could describe a "high quality" colour scheme in terms that went beyond finding synonyms for "high quality", and nor would any such attempt seem to provide criteria by reference to which the appropriate colours to be used in each part of the Centre could "ultimately and logically be worked out".

302. Some of Cotrell's suggested areas of vagueness (at [292] above) do not seem to me to be significant. For instance, it seems likely that any inconvenience caused to other tenants of the Centre by a required refurbishment of the common areas of the Centre would be addressed by or under provisions in the leases held by those other tenants (whether specific provisions along the lines of clauses 10.14 and 10.15 of Supabarn's lease or otherwise), or perhaps under applicable legislation.

303. However, the specific characteristics of the refurbishment itself that are identified by Cotrell as vague or uncertain do seem to me to be significant in identifying an obligation that could be enforced by a court. Supabarn's suggestion that a court might be expected (or indeed permitted) to "determine the nature of the refurbishment", presumably by designing the appropriate refurbishment for the particular shopping centre, including details of such things as colour schemes, the nature and quality of fixtures and fittings, and so on, and potentially, if Supabarn's other arguments were accepted, to do so several times over the remaining term of the Lease, verges on the bizarre.

304. Supabarn's suggestion that it would be impractical in a lease of "potentially 30 years" to agree on the detail of any refurbishment in negotiating the first term of such a lease was curious. Supabarn's claim (that the Lease contemplated a refurbishment, or at least a first refurbishment, fairly shortly after it was signed) implied that, when the Lease was negotiated, the parties recognised that a refurbishment would be required not at some point within the following 30 years but quite soon: in that case, the impracticality asserted by Supabarn, of providing even for the first refurbishment, or for negotiations about that refurbishment, would seem to disappear.

305. On the other hand, Supabarn's statement, quoted at [198] above, that the continuing obligation that it says is imposed by cl 10.7 "may require frequent upgrades over the term [of the Lease, of nearly 30 years]" underlines the problem in reading cl 10.7 as imposing more than just a day to day obligation to run the Centre in a particular way (which day to day obligation imposes a clear burden on the Landlord, even though the actual content of "high quality" might change over three decades). Supabarn's submission amounted to a claim that the clause imposed an obligation, over that period, to undertake an unspecified number of refurbishments of an unspecified nature (possibly involving a court as the designer) based on subjective assessments of the condition of the Centre from time to time, and in the absence (among other things) of any indication of whose subjective assessments will be determinative and how conflicting assessments by the parties to the Lease might be reconciled.

306. I note also that, in contrast to the "subject to finance" clauses discussed in Meehan v Jones, the current case involves an attempt to give a clause of the Lease an uncertain meaning, instead of the adequately certain meaning that a reliance on the plain words of the clause would produce.

307. In referring above to giving cl 10.7 an "adequately certain meaning", I do not ignore the possibility that there would be questions about whether particular activities fall under any of the three verbs used in cl 10.7 (or indeed under those three verbs used as a composite expression) and about how any relevant activities needed to be undertaken in order to satisfy the requirement that the Centre be dealt with as "a high quality retail shopping centre". For instance, I do not think there would be any dispute that cl 10.7 obliges Cotrell to provide cleaning or rubbish disposal services in the Centre, although there may well be room for argument, probably able to be resolved with the help of evidence of more or less specific industry standards, about how often different aspects of the Centre building and surrounds need to be cleaned, and how often and in what manner rubbish is removed, in order to satisfy the requirement that the Centre is being run "as a high quality retail shopping centre".

308. This is not a case in which, as Kitto J said in Upper Hunter County, the scope and content of the phrase concerned ("supplier's costs" in that case) were "capable of ascertainment by an application of ordinary business concepts". There is no part of cl 10.7 that, by the application of "ordinary business concepts", can be given the additional and effectively unrelated meaning that Supabarn sought to find in it.

309. In reaching these conclusions, I have taken account of the evidence and other matters set out at [165]-[170] above. I note at this point that none of the expert evidence I heard in this trial indicated even that a conclave of the experts concerned would be able to agree on the scope and details of the required refurbishment.

310. I consider that a court would not be able to put any definite meaning on cl 10.7 to the extent that it was found to carry a refurbishment obligation.

311. Counsel for Supabarn also drew attention to the scope for identifying the specific matters that might be covered by relatively general words. Counsel relied on 3143 Victoria Street Doncaster Pty Ltd v Retirement Services Australia Pty Ltd [2010] VSC 317 (3143 Victoria Street) for the proposition that the fact that refurbishment is not mentioned does not mean that in particular circumstances the clause could not create a requirement to refurbish. Rather, Supabarn says, cl 10.7 is expressed in general words that are capable of extending to a variety of matters deliberately not spelt out in exhaustive detail.

312. In 3143 Victoria Street, Pagone J said at [8]:

Darnley sought to rely upon evidence that the parties, when formulating their agreement in 2000, intended that RSA would provide a qualified nurse to staff a nursing station and reception area and provide respite services as part of the obligations which found expression in clause 7(a) of the Management Agreement. The Management Agreement should be construed to give effect to the commercial purpose it was designed to achieve. In that task it is permissible to have regard to the surrounding circumstances known to the parties and to the purpose and object of the transaction. In Toll (FGCT) Pty Limited v Alphapharm Pty Limited it was said in the joint judgment of the High Court:

This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction. (footnotes omitted)

RSA's obligation under clause 7(a) was to provide "Management Services" (as defined) "to a high standard". That provision was part of the broader obligation to conduct, manage and administer the operation of the retirement village "as a first class retirement village". "Management Services" was defined in the Management Agreement as the management of the day to day operations of the retirement village and defined to include, without being limited to, a number of specified services as well as "other services as necessary for the care and benefit" of the residents. The obligation thus recorded and described in clause 7(a) is in general terms and is necessarily capable of covering much detail. The precise content of the obligation in clause 7(a) is not spelt out with exhaustive specificity but for something to be an express provision it is not always necessary that it should be specially mentioned: it will depend upon the whole of the terms in the context in which the agreement was made. What the parties expressed was a broad obligation which they intended would be given detailed content in the context of their undertaking. In this case the context was a retirement village for people to live in a community and who might from time to time require assistance. The commercial purpose of Darnley and RSA was to create such a facility which would attract people seeking to retire in the comfortable surroundings of a community. In the context of this agreement that included the presence of a person with nursing qualifications and the active marketing of the respite units: both are but instances of the obligations expressly found in clause 7(a) to conduct, manage and administer the operation of the retirement village as "a first class retirement village" and to provide services at and from the premises "to a high standard".

313. That is, his Honour found that the particular services that were the subject of the dispute were simply examples of the services required to be provided by the obligation to conduct, manage and administer the operation of the retirement village as "a first class retirement village". It is equivalent to finding in the current case that the requirement to "conduct, manage and operate" the premises "as a high quality retail shopping centre" included an obligation to provide high quality cleaning services at the shopping centre; his Honour's approach would not justify the conclusion in this case that the requirement also included regular capital works in the shopping centre.

314. Supabarn conceded that the decision in 3143 Victoria Street had been overturned on appeal (Retirement Services Australia Pty Ltd v 3143 Victoria St Doncaster Pty Ltd [2012] VSCA 134; 37 VR 486), but said that this was "on other grounds, not affecting the correctness of [Pagone J's] observation".

315. This statement is correct up to a point, in that one of the grounds on which the Victorian Court of Appeal upheld the appeal, at [63], was that his Honour had taken account of evidence of negotiations between the parties, and post-contract conduct, that should not have been considered in construing the contract. However, the Court also concluded that the provisions in question could not be read as referring to certain specific activities that were not obviously included in the words of the provisions concerned, saying:

122. The problem remains that some meaning must be given to the contractual obligation, placed by cl 7(a) upon RSA, to provide such "high standard" services to the residents of The Domaine as will ensure that that facility meets the description of "a first class retirement village". RSA accepts as much. But it also argues that, as cl 4(k) of the joint venture agreement makes plain, the first class retirement village is not to equate to a first class health service establishment; and, likewise, the high standard services are not to equate to those required of the latter facility.

123. We agree with RSA. We also accept the argument put by RSA that, when the management agreement, taken together with the provisions of both the joint venture agreement and the service agreements, are read as a whole, it can be seen that RSA is obliged to provide neither the nursing services nor the respite care for which Darnley contends.

124. It is the management agreement itself which identifies and defines the management services which RSA must provide at its own cost - the funds for which will doubtless be largely if not wholly derived from the fees paid to RSA by the residents. Those services, as so identified and defined, do not include the provision of a full-time on-site nurse, or indeed any on-site nurse at all. Clause 7(b)(iii) does, however, provide that, if a resident reasonably requires specialised nursing care, and the resident's doctor joins in the request, RSA is bound to provide that service at the resident's expense.

125. The word "specialised" might be thought to leave room for an obligation upon RSA, albeit not one explicitly imposed by any written contractual term, to provide general nursing care at the expense of RSA. That this conclusion is not open is in our opinion a consequence not only of the failure of any written term to impose the obligation for which Darnley contends, but also from the fact that The Domaine is not, and is not to be, a health service establishment. As explained in [6] above, assistance of the kind which nurses or nursing aides commonly provide - for example, supervision in dispensing medicine, or with bathing, showering or personal hygiene and toileting - are integral to the services which health service establishments make available. The Domaine not being a health service establishment, and non-specialised nursing assistance of this kind not being included in the definition of "management services" in the management agreement, such assistance is, it seems to us, implicitly excluded from the services which RSA is required to provide. Moreover, because such assistance can be distinguished from specialised nursing care, it also provides an explanation for the use of the latter expression in cl 7(b)(iii).

316. On appeal, the Court focussed on the definition of "management services" in relation to the retirement village; that definition was, largely as a result of textual analysis, held not to include "non-specialised nursing services". The case, as dealt with on appeal, provides no support for the proposition that general terms used in an agreement may be treated as extending to matters not naturally falling within the scope of those general terms, and especially no support for an argument to the effect that a provision that in terms required certain activities relating to the operations of premises could also be read as requiring refurbishment of those premises.

317. I accept that general terms are often used in drafting agreements and other legal documents, and detailed content is given to those general terms in the implementation or application of such documents. I also accept that cl 10.7 is such a provision, and that the words "conduct, manage and operate ... as a high quality retail shopping centre" covered a variety of particular obligations, or obligations in relation to particular activities, that were not specified. However, recognising that general words may be capable of extending to a variety of matters not spelled out does not mean that there is no matter that cannot be brought within such words.

318. Supabarn submits that the Lease, when entered into in 2001, was potentially a very long lease, the maximum term of which, from when it was executed in 2001, was 27 years and 2 months (representing the remaining 7 years and 2 months of the original lease, signed in February 1999, and two renewals, at the option of Supabarn, each for 10 years). Presumably because the total period of Supabarn's tenancy of the premises under the Lease and its predecessor could be 30 years, the maximum term of the Lease is often referred to in Supabarn submissions as 30 years; however, I consider that for the purposes of construing the agreement made in 2001, when the maximum remaining term was 27 years, it is appropriate to treat the Lease as having a possible maximum term of 27 years rather than 30 years. On the other hand, the difference between 27 and 30 years is not significant given the kinds of submissions made about the term of the Lease.

319. Supabarn submitted that the significance of the total possible term of the Lease was:

(a) that under the Lease, Cotrell was committed to the Lease for 30 years;

(b) that Cotrell obviously regarded Supabarn as an attractive tenant;

(c) that when the Lease was entered into, in 2001, the Centre needed upgrading;

(d) that Supabarn was prepared to upgrade the supermarket premises in return for the long lease offered by Cotrell;

(e) that Supabarn's competitive position in the long term depended on the quality of the Centre;

(f) that cl 10.7 was intended to protect Supabarn against competitors by requiring the Centre "to be high quality", and as such it justified Supabarn's commitment "to redevelop the supermarket in return for a right to a long term lease"

(g) that a long term lease would only be attractive to Supabarn if it required Cotrell to maintain the Centre at a high quality ("because shopping centres become tired and uncompetitive over time"); and

(h) that in entering a lease that might have operated for such a long period, the parties must have contemplated that there would be refurbishments during its term.

(a) that the Lease entered into in 2001 was not a lease for 30 years, or even 27 years, but a lease for 7 years and 2 months, with two options to renew, each for 10 years;

(b) that it was Supabarn which held the options to renew, and Supabarn was not obliged to renew the Lease at either point;

(c) that from Cotrell's point of view, the only guaranteed lease period was 7 years and 2 months; and

(d) that this relatively short term tells against any inference that the Lease itself contained an implicit refurbishment obligation in general or, in particular, one requiring a refurbishment by late 2004 (by which point there would have been little more than four years left of the guaranteed term of the Lease).

321. I note first that most of Supabarn's submissions summarised at [319] above were potentially controversial, and were either not the subject of any evidence, or not the subject of evidence that was available to me for the purpose of construing the Lease (at [168] and [170] above).

322. I accept Cotrell's submission that for Cotrell the only guaranteed lease period was 7 years and 2 months, and that the refurbishment obligation advanced by Supabarn could have left Cotrell in the position of having completed a refurbishment little more than four years before its major tenant would be able to vacate the centre without penalty if it chose not to renew the Lease.

323. Counsel for Supabarn may have been correct in submitting that, in entering a lease that could last for such a long term, the parties must have contemplated that there would be refurbishments during that term; however, the conclusion that provision for such refurbishments must therefore be inferred from cl 10.7 is in my view less readily available than either:

(a) the conclusion that such refurbishments would be undertaken when they appeared to make commercial sense to Cotrell, as the owner of the property; or

(b) the conclusion that the parties left future refurbishments (including the details of any such refurbishment) to be the subject of further negotiations.

324. Supabarn made a variety of submissions to the general effect that the parties must be assumed to have had a common and mutually beneficial commercial purpose in entering the Lease; that the nature and content of that common purpose as indicated in the Lease included that the Centre was, in Supabarn's words, "to operate as a high quality one, including its physical characteristics"; that effecting that common purpose required, among other things, an early refurbishment of the Centre; and, accordingly, that cl 10.7 should be read as making the necessary provision for that event.

325. Claims made by counsel for Supabarn of a common commercial purpose were based on a number of propositions, most of which emerged from the evidence of expert witnesses and were advanced by counsel as either "objective background facts known to both parties" or facts "notorious within the retail shopping centre industry in September 2001" which would therefore have been known by any supermarket operator or landlord of a retail shopping centre. Although I have determined that most of that evidence is not admissible in construing the disputed clauses (at [168]-[170] above), it is necessary to refer briefly to the propositions concerned in explaining and dealing with submissions about the purpose of the Lease. Those propositions included the following:

(a) That "[h]igh quality Group Centres have a competitive advantage over lesser quality centres" and attract more customers, and that a modern up-to-date centre is more popular than an older centre which has not been refurbished.

(b) That over time, shopping centres become tired and are less attractive when compared to competing shopping centres; accordingly, they need to be refurbished periodically to maintain attractiveness to customers and competitiveness with other shopping centres;

(c) That maintaining a shopping centre at high quality is "a means of attempting to control the risk, posed by competitive centres".

(d) That refurbishment may be aimed at protecting market share or responding to a competitor's refurbishment or improvement.

(e) That refurbishment and continued improvement are critical for both large and small shopping centres to ensure that they stay attractive to customers and relevant to customer demand.

326. Against that background (the significance of which is addressed at [406] below), counsel for Supabarn submitted (somewhat repetitively):

(a) that cl 6.5, which requires Supabarn to conduct its business "in keeping with the operation of the Centre as a high quality retail shopping centre", together with clause 10.7, "give effect to the parties' common intention that the Centre would be operated as a high quality retail shopping centre"; and

(b) that the parties' "evident purpose was to ensure that the Centre was operated as a high quality retail shopping centre, for the benefit of both parties".

Both parties had a direct financial interest in maximising the turnover of the supermarket. Clauses 10.7 and 6.9 give effect to maximising that turnover by ensuring that the Landlord operated the Centre at a standard which parties to shopping centre leases in September 2001 knew would maximise revenue viz. a high quality retail shopping centre ...

The common purpose and object was to require both the Centre and the Supermarket within the Centre to be managed and operated at a high quality. That purpose extends beyond refurbishment but includes it, if refurbishment is necessary to ensure that the Centre maintains the contractual standard, viz. high quality.

the primary purpose of the Lease was for profit - turnover to the Tenant and increased rent, dependent on turnover, to the Landlord.

[t]he primary purpose and object of the Lease [was] to lease the Premises for profit to the Landlord (from Base Rent and Turnover Rent) and to the Tenant from Turnover. A related purpose, was to ensure that the Centre was operated as a high quality retail centre, and the Supermarket "in keeping" with the Centre, being operated in this way. ... When determining what the scope of the high quality obligation was, the Court adopts a construction which advances the parties' common purpose, viz. to maximise turnover in the Supermarket.

the refurbishment obligation is objectively in the Landlord's commercial interests .... Refurbishment increases the capital value of the Defendant's asset, and will increase the attraction of customers and turnover.

327. These submissions, to the extent that they rely on the intention that the Centre be operated as a high quality retail shopping centre, simply restate the plain words of cl 10.7, which requires the Centre to be (among other things) operated "as a high quality retail shopping centre". The statement that the clause requires the Centre to be "operated at a high quality" does not seem to add anything.

328. The statement that the common purpose includes refurbishment "if that is necessary to ensure that the Centre maintains the contractual standard, viz. high quality" simply restates the core proposition in Supabarn's case (that cl 10.7 required the Centre to be a high quality retail shopping centre), rather than making any contribution to establishing it.

329. More relevant but also more controversial aspects of the submissions summarised at [326] are the claims that the parties' "evident purpose" (of having the centre operated as a high quality retail shopping centre) was "for the benefit of both parties"; and that the "common commercial purpose" of the Lease was to maintain a high quality Centre, so as to attract more customers, so as to provide more revenue to Supabarn and higher rents to the Landlord.

330. Cotrell criticised the "common purpose" identified by Supabarn as "a simplistic assertion [that] is unproven and unsound", and referred to the many different commercial considerations affecting the commercial interests of the parties to the Lease, saying:

68. ... Obviously many factors are at play when a party decides what is in its commercial interests. If it was as simple as the plaintiff asserts, this case would not exist. Refurbishment is not a mono-dimensional decision. There can be many different views about whether, and what, refurbishment is needed or wise. There are questions of the extent of refurbishment, the costs and disruption, the possible returns and the risks associated with it. These are all examples of valid "commercial" considerations.

69. The plaintiff is trying to achieve its commercial interests under the guise of that being a "commercial construction" of the lease. In [145] of its submissions it refers to construing the lease by the need to ensure that "the Centre is high quality" omitting the words, "conduct, manage and operate". This is a need of the plaintiff's own creation to suit its own interests.

(Emphasis in original.)

331. In considering the existence and content of any common commercial purpose justifying the inference of the refurbishment obligation, I note first that the submission - that the common purpose of the parties to the Lease was to increase custom at the centre, and thereby to increase revenue (particularly in the supermarket but also to the Landlord) - rests on two unstated assumptions that are necessary to make sense of the assertion that the Lease required a refurbishment of the Centre in order to fulfil its shared purpose. Those further assumptions are:

(a) that the desired increase in custom was expected to be achieved by a refurbishment improving the physical aspects of the Centre; and

(i) that the net benefits of any increase in custom would flow equally to the two parties; or

(ii) that each party was committed to achieving the increase in custom irrespective of how evenly the expected benefits would accrue to the parties.

332. Without at this stage going into the detail of the evidence that has been tendered about the significance of cosmetic appearance or the impact of a shopping centre refurbishment in attracting customers (discussed in the context of whether Cotrell had breached the Lease, whether Supabarn had suffered loss as a result and whether Supabarn was entitled to any damages), I note only that there are various views about such issues, and no uncontroversial proposition that could be described as "information ... to which attention is directed by a term of the registered instrument properly construed" that "was [at the time the Lease was executed or registered] and remains publicly available to third parties without unreasonable effort, expense or delay" (at [157(d)(iii)] above).

333. As to whether, in identifying a common commercial purpose, either of the assumptions set out at [331(b)] above can be accepted as uncontroversial background information, it is first useful to consider the provisions of the Lease that link the rent payable to Cotrell with Supabarn's turnover. The obligation to pay Turnover Rent is found in cl 3.1 of the Lease:

3.1 In addition to Base Rent, the Tenant must pay to the Landlord the Turnover Rent in respect of each Percentage Period.

334. Expressions used in cl 3.1 are defined in cl 1 as follows:

Base Rent means the yearly amount in Item 1 as varied under this Lease.

Turnover Rent means the amount by which:

(a) the Turnover Rent Percentage in each Percentage Period exceeds the Base Rent payable for that Percentage Period;[7]

which sum must be paid to the Landlord, in addition to the Base Rent, pursuant to clause 3.2.

Turnover Rent Percentage means the amount being the percentage of the Turnover specified in Item 3(a) [of the Reference Schedule].

335. The Percentage Period is, generally, a financial year (1 July to 30 June). Base Rent is set out in Item 1 of the Reference Schedule as $484,000 per annum ($40,333.33 per calendar month).

336. The Turnover Rent Percentage (in Item 3(a) of the Reference Schedule) is "1½% of Turnover". The Base Rent of $484,000 represents the Turnover Rent Percentage of a turnover of $32,266,667.

337. The effect of the Lease provisions is that in each year in which 1.5% of Supabarn's turnover as defined exceeds the Base Rent (that is, each year in which Supabarn's turnover exceeds $32,266,667), Cotrell is entitled to receive, as part of its rent, the amount of that excess over the base rent. If Turnover Rent is payable at all, then for every extra $1,000,000 in turnover achieved by Supabarn beyond $32,266,667:

(a) Cotrell would be entitled to $15,000 in extra rent, on top of the base rent of $484,000 a year; and

(b) Supabarn would benefit by an amount equal to the net profit generated by an extra $1,000,000 in turnover, less the $15,000 required to be paid to Cotrell as extra rent.

338. That is, if Supabarn's marginal net profit on turnover to the extent that it exceeded $32,266,667 was 3% (before accounting for the turnover rent), it would obtain the same benefit as Cotrell from an increase in turnover ($30,000 for each extra $1,000,000 of turnover, of which $15,000 would be payable to Cotrell). If the marginal profit was less than 3%, then Supabarn would obtain less benefit than Cotrell from an increase in turnover. On the other hand, if Supabarn's marginal profit on increased turnover was more than 3% of the increase in turnover, then the net benefit to Supabarn, even accounting for the Turnover Rent, would be greater than the turnover rent payable to Cotrell.

339. This of course is not the whole story in relation to a refurbishment-generated increase in Supabarn's turnover. There is nothing in the Lease (nor in Supabarn's submissions) suggesting that Supabarn might have been expected to contribute to the costs of refurbishment, so it must be assumed that the refurbishment and the resulting increase in turnover would have come at no direct cost to Supabarn, although of course the increased turnover would come with its own costs and only a proportion of that increased turnover would amount to net profits. On the other hand, any increase in the rent payable to Cotrell would have come at the cost of the refurbishment paid for by Cotrell. Counsel for Supabarn noted that any refurbishment would increase the value of Cotrell's asset, but did not submit that it would do so on an ongoing basis (in contrast, for instance, to an expansion of the Centre); to the contrary, Supabarn's submissions (see, for instance, at [325] above) were to the effect that over time, a refurbishment of a shopping centre loses its impact (including, presumably, its impact on the value of the asset) and another refurbishment is necessary.

340. Unsurprisingly (since there has been no attempt to detail, or cost, the refurbishment said to be required by cl 10.7), counsel for Supabarn did not suggest that there was anything in the Lease, or anything in the available evidence, that would justify a conclusion that the rent increases flowing to Cotrell that might arise from a refurbishment-generated increase in Supabarn's turnover during the life of the refurbishment would match, let alone exceed, the net cost of the refurbishment.

341. Supabarn's claim that the primary purpose of the Lease was for profit generated directly or indirectly by Supabarn's turnover has some validity having regard to the Lease provisions about turnover rent. However, it is also apparent from the Lease that a large part of the rent payable to Cotrell does not depend on Supabarn's turnover, and that the net benefits of any refurbishment at Cotrell's expense could flow disproportionately (or perhaps entirely) to Supabarn.

342. I consider it is legitimate to assume that, as for most commercial arrangements, the Lease was seen by each party as beneficial to it. However, this does not mean that any particular interpretation of a disputed aspect of a commercial arrangement is necessarily to the benefit of both parties. While all parties to a commercial agreement might routinely be assumed to have a purpose of financial gain, it is by no means clear that the financial gains to be achieved from the agreement will be realised by each party in the same way and from the same operation of the agreement. In general, it might be at least as likely that any financial gains will accrue to each party from a different aspect of the agreement, and even that some of the financial gains to one party will accrue as a result of, or in connection with, financial losses, or costs incurred, by the other party.

343. Furthermore, I do not accept that a lease of commercial premises needs a "common commercial purpose" beyond the obvious one of satisfying the landlord's wish to receive an income from the premises and the tenant's wish to be able to use the premises for its commercial activities. The fact that different lease provisions that could be negotiated between the parties might increase or reduce the rent paid to the landlord, or the tenant's cost of doing business, does not exclude the existence, while the lease is being negotiated, of a common commercial purpose properly so called.

344. Two other matters were raised by Supabarn's reliance on "business common sense" and the assumption that the parties had a common commercial purpose.

345. First, counsel for Cotrell said (at [330] above) that Supabarn, in asserting that refurbishment would have been in the Landlord's interest as well as in Supabarn's interests and therefore that refurbishment must have been the common purpose of the parties to the Lease, "is trying to achieve its own commercial interests under the guise of that being a 'commercial construction' of the lease". Counsel for Cotrell relied on submissions summarised at [131]-[134] above to the general effects that:

(a) a contract can only be construed by reference to its commercial purpose if the court can be satisfied of what that commercial purpose was;

(b) the courts are reluctant to impose their views of what constitutes good commercial judgment by a party to a contract;

(c) what is "business common sense" in relation to a particular contract is a topic upon which minds may differ and in respect of which an imputed consensus may be impossible;

(d) reliance on business common sense should not be seen as permission for judicial rewriting of contractual provisions to accord with the result said by one party to accord with "commercial reality", namely its financial interests; and

(e) the aim of construction is relevantly about avoiding what is commercially nonsensical by favouring commercial common sense.

346. Supabarn's response to those submissions was somewhat obscure. Counsel for Supabarn repeated his assertion that reading the words of cl 10.7 as limited to the day to day running of the Centre was "commercially unlikely", and the question-begging claim that this reading of cl 10.7 "does not advance the primary purposes of the contract". These submissions have already been dealt with.

347. Counsel for Cotrell also drew attention to the case of Miramar Maritime Corp v Holborn Oil Trading Ltd [1984] AC 676 (Miramar) in which Lord Diplock (with whom the other Law Lords agreed) said at 682:

There must be ascribed to the words a meaning that would make good commercial sense if the Exxonvoy bill of lading were issued in any of these situations, and not some meaning that imposed upon a transferee to whom the bill of lading for goods afloat was negotiated, a financial liability of unknown extent that no business man in his senses would be willing to incur.

348. Counsel for Supabarn responded to this submission by quoting a further extract from Miramar at 685 as follows:

... no business man who had not taken leave of his senses would intentionally enter into a contract which exposed him to a potential liability of this kind; and this, in itself, I find to be an overwhelming reason for not indulging in verbal manipulation of the actual contractual words used in the charter-party so as to give to them this effect when they are treated as incorporated in the bill of lading.

[In Miramar] the plain words of the contract required "verbal manipulation" for the argument to succeed. The uncommerciality of the result was a reason not to depart from the ordinary meaning of the words.

The construction of clause 10.7 does not present problems of the kind Lord Diplock mentioned:

(a) First, there is no need here (to find for the Plaintiff) to read the words of the clause in any other than their ordinary English meaning, giving effect to the verbs, "conduct manage and operate" applying to their subject, elements of the defined term, "the Centre". There is no need for "verbal manipulation".

(b) Secondly, the construction contended for, is not one no reasonable businessman in the Landlord's position, would agree to. To the contrary, the refurbishment obligation is objectively in the Landlord's commercial interests.

This is for the reasons given ... above. Refurbishment increases the capital value of the Defendant's asset, and will increase the attraction of customers and turnover.

(c) Thirdly, the Defendant accepted that it may refurbish the Centre and obtained contractual rights on that basis in the Supplemental Deed .... The foundational premise of the Defendant's submission, that no reasonable Landlord would agree to an obligation to refurbish, cannot be accepted given what is recorded in para 3.3 second dot point of that Deed.

350. I have already indicated (at [223]-[233] above) my difficulties with Supabarn's submission about how to read the three verbs in conjunction with the meaning of the defined term "Centre" so as to conjure a refurbishment obligation from cl 10.7. I reject the submission that the natural meaning of the clause, without verbal manipulation, requires a refurbishment of the Centre. I also reject the proposition, in para (c) of the quoted submission, to the effect that acceptance by Cotrell that it might refurbish the Centre (as shown by a reference in the Supplemental Deed to "any proposed upgrades [by Cotrell] as discussed with [Supabarn]") would have made it reasonable for it to accept in the Lease a non-specific but contractual obligation to refurbish. As I understand its position, Cotrell did not dispute that a refurbishment might have been appropriate at some point after the Lease took effect: what it disputed was that cl 10.7 included a non-specific but binding obligation to refurbish as required by Supabarn.

351. The submission made by counsel for Cotrell might have involved some exaggeration if it was intended to suggest that "no business man in his senses would be willing to incur" a refurbishment obligation as proposed by Supabarn. However, in my view it is finding that obligation in cl 10.7, rather than excluding it, that requires "verbal manipulation" of the text. If that is correct, it does not seem to matter whether accepting an unspecified refurbishment obligation would necessarily be the act of a completely senseless businessman or might in some cases be explicable. Either way, reference to the comments in Miramar did not seem to advance Supabarn's claim for this court to engage in verbal manipulation of cl 10.7.

352. The second matter arose from Supabarn's submission that:

market participants, including the parties to the Lease, knew that [high quality physical attractiveness and tenancy mix] attracted customers and turnover ... It is for [Cotrell] to point to, and explain, a common commercial purpose which limits the meaning of the language used.

(Emphasis in original.)

353. I have already rejected (at [329]-[332] above) the submission that in construing the Lease I could take account of the proposition that the physical attractiveness and tenancy mix of a high quality retail shopping centre would attract customers and increase turnover.

354. Even less convincing was Supabarn's claim that Cotrell must identify and explain "a common commercial purpose which limits the meaning of the language used". The problem with this claim is that the language used in the Lease does not plainly require an early refurbishment of the Centre; it is Supabarn which seeks to extend the meaning of the language in the Lease, beyond the obvious meanings of conducting, managing and operating the Centre, to include a refurbishment obligation, not Cotrell who seeks to limit what the clause clearly says. Since I have already identified an obvious common commercial purpose for a lease, and have rejected Supabarn's attempts to establish a more one-sided "common commercial purpose" in this case (at [340]-[343] above), there is nothing for Cotrell to address in this respect.

355. Finally, in support of its basic proposition that its preferred construction of cl 10.7 would give effect to the intentions of the parties, and that Cotrell's construction is "commercially unlikely", counsel for Supabarn cited further comments of Gageler J (noting that he was in dissent but not as to principle) in Electricity Generation Corporation at [53]:

53. Commercial parties contracting at arm's length are free to agree on terms each considers to be to its own commercial advantage. The terms of their agreement, however, are construed by a court to mean what reasonable commercial parties in their position can be taken together to have meant.

356. Counsel for Supabarn also, however, relied on other comments made by his Honour in Electricity Generation Corporation, as follows:

59. The fundamental difficulty that I have with the construction of cl 3.3(b) of the GSA now advanced by the Sellers is that I am unable to see how reasonable commercial parties in the position of the Sellers and the Buyer, having agreed in cl 6.1(d) on a fixed price for such gas as may be delivered daily by the Sellers in excess of MDQ and having agreed in cl 3.3(a) that the Sellers must use reasonable endeavours to make gas nominated by the Buyer available for delivery up to SMDQ, can be taken to have meant by cl 3.3(b) to give the Sellers a discretion not to make gas available for delivery up to SMDQ merely because market circumstances present an opportunity for the Sellers to demand a substantially higher price for that gas than the price fixed by cl 6.1(d).

60. The Sellers' construction is one which renders the obligation to use reasonable endeavours imposed on the Sellers by cl 3.3(a) of the GSA elusive, if not illusory, and which renders the price fixed by cl 6.1(d) of the GSA a price which is meaningful only if and when the Sellers consider it to their commercial advantage to accept it. The construction would, in commercial terms, eliminate the distinction carefully drawn in cl 3.3 between delivery of nominated gas in excess of MDQ up to SMDQ, in respect of which the Sellers are subjected to an obligation by cl 3.3(a), and the delivery of gas in excess of MDQ and SMDQ, in respect of which cl 3.3(c) makes clear that the Sellers are subjected to no obligation.

357. Two points may be made about counsel's reliance on these comments.

358. First, as conceded by counsel for Supabarn, Gageler J was in dissent in finding for the appellant buyers when, in his interpretation of the disputed provisions, he rejected what he saw as a commercially unlikely interpretation of the plain words of the provisions concerned.

359. Secondly, Gageler J's dissenting conclusion was nevertheless firmly based in the specific words of the disputed contract: his Honour considered that the question whether the respondent sellers were "able" to supply gas on any day related to whether they had the "ability or capacity" to supply, not to whether they were "willing" to supply in the face of an opportunity to sell the gas elsewhere at a higher price. In other words, his Honour went no further in pursuit of what "reasonable commercial parties" would have intended than to give a narrower (but clearly available) meaning to the word "able" as used in the contract than was given by the majority of the Court.

360. I cannot see that Gageler J's approach provides any support to Supabarn's argument about the construction of the Lease. If anything, his Honour focussed more strictly on the specific words of the provision than did the other judges.

361. In submissions about the construction of the disputed clauses of the Lease, counsel for Supabarn mentioned several other documents involving the parties, including in particular the original lease executed in 1999, the Development Deed, a variation of the Crown lease granted to Cotrell which allowed the expansion of the supermarket in the shopping centre, and the Supplemental Deed. These documents were apparently seen as significant to the extent that they drew attention to Supabarn's contribution to Kaleen Plaza through its extension and upgrade of the supermarket, so as to establish a mutual obligation to ensure that "the Centre was high quality". Counsel for Supabarn also said:

When the Lease was granted, the parties knew that the Supermarket Premises were to be substantially upgraded. Cotrell agreed to the new Lease on that basis.

362. Cotrell said that Supabarn's planned upgrade of the supermarket was necessary for Supabarn's own purpose, that is, so that it could operate the supermarket as it wanted to, and as such gave rise to no inference that the Lease obliged Cotrell to upgrade the rest of the Centre.

363. The original lease appears to have been registered under the Land Titles Act, and was accordingly available to be compared with the 2001 Lease. That comparison shows that the area leased by Supabarn was described differently in the two leases (each lease specified a different unit on a different subleasing plan), and that the base rent payable by Supabarn increased substantially in 2001 (from $280,000 per annum in 1999 to $484,000 per annum in 2001). Both leases provided for extra rent to be paid if Supabarn's turnover increased beyond a specified threshold, although the turnover threshold is defined differently in the two leases (while apparently bearing the same relationship to the base rent in each case). The difference in the base rent might be explained entirely by the difference in the area leased, and permits no inference that Cotrell had undertaken extra obligations not identifiable from a comparison of the terms of the two leases. I note also that clauses 10.7 and 10.13 are in identical terms in each lease.

364. The variation of the Crown lease was also registered, but since its purpose was to enable Supabarn to use a larger area for the supermarket, the variation did not suggest that Cotrell was undertaking any other new or greater obligation.

365. The Development Deed and the Supplemental Deed related to Supabarn's agreement to upgrade the supermarket area in the Centre. Neither of those deeds appeared to have been registered under the Land Titles Act and neither of them was referred to in either of the leases. As such, I cannot see that either of them is available to be considered in construing the Lease.

366. In case I am wrong about whether the deeds were registered, I note that Supabarn's upgrade of the supermarket premises (as dealt with in the two deeds) would not have been inconsistent with a common intention on the part of Supabarn and Cottrell that the rest of the Centre would at some point be refurbished. However, I agree with Cotrell's submission that neither the supermarket upgrade, nor its treatment in either of the deeds, of itself tends to establish that any equivalent obligation was imposed on Cotrell by the Lease or otherwise.

367. In short, even if all of the documents relied on by Supabarn were available in construing the registered Lease (as to which see [165]-[170] above), I am satisfied that they would not have helped Supabarn's case in any direct way.

Whether Lease permitted Centre and supermarket to be low quality slums

144. The correct construction of clause 10.7 is that the Landlord would direct or cause the Centre to be carried on at a specified quality. The structure, fittings and furnishings internal and external are part of the definition of Centre; and in a commercial sense an important part of the bargain; what the tenant purchases by paying rent. Those physical characteristics cannot be ignored in the construction of clause 10.7; as Cottrell's construction does. Cottrell submits that the obligation is to conduct the day to day running of the Centre as a high quality shopping centre, irrespective of whether the physical characteristics of the Centre are high quality. Cottrell's construction is that the Centre can be operated in its day to day running as a high quality centre; even though its physical characteristics are a low quality, slum.

369. In this context counsel for Supabarn pointed to cl 6.5 of the Lease (at [21] above), which obliges it, as the Lessee, to "operate [its] business ... in keeping with the operation of the Centre as a high quality retail shopping centre", and said that clauses 6.5 and 10.7 are directed to the same object - being to ensure that the Centre and the Supabarn supermarket are operated respectively as a high quality centre and a high quality supermarket.

370. If Cotrell's interpretation of cl 10.7 was correct, counsel for Supabarn said, cl 6.5 would have permitted Supabarn to operate the supermarket with "poor quality shelving, freezers, lighting, layout and checkout facilities". However, counsel said:

That construction appears improbable. When the Lease was granted, the parties knew that the Supermarket Premises were to be substantially upgraded. Cotrell agreed to the new Lease on that basis. It may readily be inferred that Cotrell granted the new Lease because Supabarn had bound itself to upgrade nearly 70% of the Centre to a high quality.

371. I note first that the assertion of improbability does not appear to be based on anything in particular. Certainly some high-performing organisations are found in high quality accommodation, but I do not consider it to be a matter of common knowledge that there is any direct causal connection (in either direction) between the quality of an organisation's performance and the quality of its accommodation. Indeed it is easy to think of examples to refute such a proposition: farmers' markets, not-for-profit organisations, and Berkshire Hathaway come to mind immediately as organisations in which the quality of accommodation may be irrelevant to the quality of the organisation's performance.

372. Counsel for Supabarn also submitted that it was necessary to give clauses 6.5 and 10.7 an "harmonious operation", because they impose similar obligations on each of the tenant and the landlord "for their mutual benefit", and that there is "a common commercial purpose or object" of the parties, noting:

It is in the interests of the Landlord to maintain the Centre at a high quality. By doing so, more customers will be attracted. Tenants will derive greater revenue with greater custom. The Landlord will derive higher rents if the tenants' turnovers are higher. It is in the interests of Supabarn, as the anchor tenant occupying 70% of the Centre, that the Centre be high quality so as to attract more custom; than if it was of poor or mediocre quality.

373. In short, counsel said, the purpose of the parties was "ensuring that the Centre was high quality", and that Cotrell's construction of cl 10.7 "defeats that purpose and is contrary to the ordinary meaning of the clause".

374. I accept that clauses 6.5 and 10.7 of the Lease should be given an "harmonious operation". However, harmony between the two clauses is easily achieved by reading:

(a) the reference in cl 6.5 to operating the supermarket "in keeping with the operation of the Centre as a high quality retail shopping centre"; and

(b) the reference in cl 10.7 to operating the Centre "as a high quality retail shopping centre";

as, for instance, each setting a standard (indeed, the same standard) for the day to day operations of the business concerned.

375. I also accept that clauses 6.5 and 10.7 are generally directed to equivalent objects, being to ensure that the Centre and the Supabarn supermarket are operated respectively as a high quality centre and a high quality supermarket. This does not, however, go anywhere towards establishing the core issue in Supabarn's claim, namely that an obligation to operate the Centre as a high quality centre includes an obligation to ensure that the Centre is, physically and in its tenancy mix, a high quality centre.

376. In attempting to give cl 10.7 a particular meaning, counsel for Supabarn asserted, reasonably, that an expression used in cl 10.7 (referring to the operation of the Centre as a high quality retail shopping centre) should be read to mean the same thing as the same expression when used in cl 6.5. However, the meaning of the expression as used in cl 6.5 has not been established, and Supabarn's best argument for the meaning it wishes to ascribe to the expression in cl 6.5 seems to be simply that the alternative meaning "appears improbable" (at [370] above). In fact, what the expression means in cl 6.5 is just another form of the question of what the expression means in cl 10.7, and asserting a particular meaning for cl 6.5 simply by reference to the improbability of another meaning (and for the same reasons as that other meaning is rejected for cl 10.7) is an unconvincing way to establish the meaning of cl 10.7.

377. As to whether the meaning of cl 10.7 asserted by Cotrell is really "improbable", I note Supabarn's claim that it "may readily be inferred that Cotrell granted the new Lease because Supabarn had bound itself to upgrade nearly 70% of the Centre to a high quality" (quoted at [370] above). In the context that the parties were already bound by a lease with some seven years still to run, but that the new lease substantially increased the base rent payable to Cotrell, I cannot see why Cotrell would have needed any particular encouragement to grant the new lease. However, even if it could be inferred that Supabarn had obtained the new lease by binding itself to upgrade its premises within the Centre (by the Development Deed), then the inference that the new lease imposed a similar obligation on Cotrell is, if anything, less readily available than the inference that the absence of any such express obligation on Cotrell reflected, at least, the absence of any agreement between the parties that Cotrell should carry such an obligation.

378. Counsel for Supabarn summarised one of the submissions made by counsel for Cotrell as being that:

clause 10.7 is an improbable vehicle for imposing an obligation to incur capital funds on refurbishment; if refurbishment was intended, it would have been spelled out in detail.

379. Counsel for Supabarn responded to this general proposition - that an inference could be drawn from the absence of a relevant provision - by noting that the question of why a matter has not been mentioned in a disputed agreement:

is one rejected by courts of construction. Lord Dunedin did so in the House of Lords nearly 100 years ago; and courts of high authority have done so consistently thereafter.

380. In Charrington & Co Ltd v Wooder [1914] AC 7 at 82, Lord Dunedin said:

I cannot agree with the view that the term "market" has any fixed legal significance, and yet that I think is the view on which the judgment of the Court of Appeal, following the authority of Russell v Crawford, really depends. I do not think it rests with either party to say to the other, "If the meaning is as you contend, why did you not express it otherwise?" Both contentions as to the true meaning can be expressed by a gloss. The appellants say a fair market price means such a price as persons in your situation are ordinarily charged. The respondent says it means the average price at which a man who is not tied can get his beer. If either of these glosses had been expressed there would be no possibility of dispute. It therefore comes back to the question, What is the true interpretation of the expression in the contract?

(Citations omitted.)

381. That case involved the construction of a phrase which turned out to have two possible, but relevantly different, meanings within the industry concerned. Lord Dunedin's view was that in such circumstances, neither party could properly assert that the other party should have ensured that the phrase was expanded in the contract so as to exclude any dispute about which meaning was intended. Lord Dunedin's proposition would be relevant in the current case if Supabarn could assert that clause 10.7 was ambiguous in the sense of having two different meanings each of which could easily have been intended by the words used; it is less significant where Supabarn's claim, that the words of cl 10.7 do or could incorporate a refurbishment obligation, is not apparently grounded in the plain words of the clause but in the proposition that as a matter of business common sense the words must have been intended to include such an obligation.

382. Counsel for Supabarn also mentioned Transfield Shipping Inc v Mercator Shipping Inc [2008] UKHL 48; [2009] AC 61 (Transfield Shipping), in which Lord Hoffmann said at [26]:

26. The owners say that the parties are entirely at liberty to insert an express term excluding consequential loss if they want to do so. Some standard forms of charter do. I suppose it can be said of many disputes over interpretation, especially over implied terms, that the parties could have used express words or at any rate expressed themselves more clearly than they have done. But, as I have indicated, the implication of a term as a matter of construction of the contract as a whole in its commercial context and the implication of the limits of damages liability seem to me to involve the application of essentially the same techniques of interpretation. In both cases, the court is engaged in construing the agreement to reflect the liabilities which the parties may reasonably be expected to have assumed and paid for. It cannot decline this task on the ground that the parties could have spared it the trouble by using clearer language.

383. Lord Hoffmann's comment that the court cannot decline the task of construing an agreement "on the ground that the parties could have spared it the trouble by using clearer language" may be readily accepted. However, this does not in my view exclude a submission that one of two proposed constructions of a provision is less likely than the other, especially where one of the possible constructions seems to have a much closer relationship than the other with the plain words of the provision concerned.

By reference to evidence available in construing registered instruments

384. Articulating the proposition that cl 10.7 requires the Centre to be a high quality retail shopping centre provides a clue to the kind of reading of cl 10.7 that would be required to support Supabarn's claim of breach and resulting loss. The clause would need to be construed to add an obligation on the Landlord to turn the Centre into a high quality retail shopping centre with a high quality tenancy mix, but (presumably) without losing what appears to be the current obligation to conduct, manage and operate the Centre at a high standard. That is, for Supabarn's purposes the clause needs to be read as imposing two quite different obligations, one of which involved a refurbishment obligation and a tenancy mix obligation) and the other of which could be described as a management obligation. A reading along the following lines would achieve Supabarn's aim:

10.7 The Landlord must ensure that the Centre is a high quality retail shopping centre with a high quality tenancy mix, and must also conduct, manage and operate the Centre as a high quality retail shopping centre and in an efficient manner at all times.

385. As already noted at [207] above, the reading that counsel for Supabarn sought to give to cl 10.13 was as follows:

10.13 The Landlord acknowledges that when anything is required to be done in relation to the Centre operated as a high quality retail shopping centre or the Premises for the essential operation of the Centre as a high quality retail shopping centre which is not expressly or by necessary implication the responsibility of the Tenant under this Lease but is the responsibility of the Landlord, then such thing must be done by and at the cost of the Landlord.

386. That is, to reach the desired construction of the Lease, Supabarn needed to establish at least:

(a) that cl 10.7 should be read in a way that goes beyond a simple clarification of the obligation imposed by its words; and

(b) that it should be read as imposing a new and separate obligation from that indicated by those existing words;

as well as, possibly, that cl 10.13 should be read as if one of the key concepts in the clause had been heavily qualified and another one had been replaced with a concept with quite a different significance, effectively altering the whole import of the clause.

387. I note at this point that it was fundamental to Supabarn's claim that cl 10.7 must have included the asserted refurbishment obligation that, at the time the Lease was signed, Kaleen Plaza was not a high quality retail shopping centre. There was evidence to the effect that Kaleen Plaza was not a high quality retail shopping centre, and no evidence (nor any claim in Cotrell's submissions) that Kaleen Plaza was high quality. However, as explained at [170] and [281] above, I did not regard evidence of that sort as available in the construction process, which in turn meant that to this point there has been no need to determine whether Kaleen Plaza was in fact high quality in its cosmetic aspects or its tenancy mix.

(a) first, that the Lease is not "uncertain", and that clauses 10.7 in particular and 10.13 to the extent necessary can be given meanings;

(b) secondly, that it may not be possible in advance to identify the exact scope of those clauses (in terms of the activities to which they apply and the standards to which obligations must be performed); and

(c) thirdly, that giving the clauses a meaning may, in the event of a dispute about the effect of a clause, require a court:

(i) to determine whether any particular activity in relation to the Centre is required of Cotrell; and

(ii) to determine in relation to that activity the content of the applicable quality standard.

389. I consider that the meaning to be given to cl 10.7, read in the light of all the other provisions of the Lease including those specifically relied on by Supabarn, is that it required the Centre to be run by Cotrell, day to day on a continuing basis, and including maintenance, repair and at least some aspects of tenancy management, in a manner, or at a standard, appropriate to a high quality retail shopping centre. I do not understand this proposition to be disputed as far as it goes.

390. However, for the reasons set out above in response to the various submissions made on behalf of Supabarn, I have not been convinced by Supabarn's claim that cl 10.7 (whether or not read in conjunction with cl 10.13) also required the Centre to be a high quality retail shopping centre, and accordingly imposed on Cotrell:

(a) an obligation to undertake a refurbishment that would turn the Centre, in its "cosmetic aspects", into a high quality retail shopping centre; and

(b) an obligation to achieve a high quality tenancy mix in the Centre.

391. I can see nothing in the language of cl 10.7:

(b) in the context of the Lease as a whole (and noting cl 10.13 in particular); or

(c) in the context of the Lease and other material available in construing the Lease as a registered instrument (at [165]-[170] above);

that would require, or permit, such a construction of cl 10.7.

392. I note, however, that tenancy management with the aim of achieving a high quality tenancy mix (as distinct from necessarily achieving a high quality tenancy mix) might in fact be part of managing tenancies as if Kaleen Plaza were a high quality retail shopping centre, and therefore within the plain words of cl 10.7.

(a) that the clause, or the Lease as a whole, demonstrated a "common commercial purpose" of or including the conversion of the Centre into a high quality retail shopping centre (either with a view to increasing turnover for Supabarn and rent for Cotrell, or for more complex or obscure reasons); or

(b) that the Lease, absent the refurbishment obligation or the tenancy mix obligation said to be imposed by cl 10.7, would fall short of what commercial or business common sense would require, or would be commercially nonsensical.

394. Finally, despite Supabarn's submissions (at [352] above), I consider that it was Supabarn which, to make out its claim, was obliged to "identify a common commercial purpose" that required the substantial extension of the language in the Lease that was advanced on behalf of Supabarn. Supabarn has not done so.

395. As to cl 10.13, which (despite Supabarn's submissions discussed at [258] above) refers only to things that need to be done "for the essential operation of a retail shopping centre", I am satisfied that it refers to a limited class of "things" that need to be done to enable any kind of shopping centre to operate day to day. At this point there is no need to make a finding about what things are properly described as "required for the essential operation of a retail shopping centre", so (in the absence of relevant submissions) I merely note that the description would cover, at least, things that ensure:

(a) basic services such as protection from the elements (perhaps including air conditioning), electricity, light, water and toilet facilities;

396. Some of the other matters mentioned in the lists set out at [263] and [267] above of the requirements for "essential operation" might also be relevant, but there is no need to consider that question further.

397. I also consider that the reference to the "essential operation" of a retail shopping centre is intended to limit rather than to extend the scope of the clause, by excluding matters not necessary for a centre's basic operation. In particular, I cannot see that cl 10.13 has any part to play in imposing an obligation to refurbish the shopping centre (as distinct from, for instance, an obligation to rebuild a wall that has been demolished by a falling tree) or to improve the tenancy mix.

By reference to other evidence - Supplemental Deed

398. The Supplemental Deed does not appear to be available in construing the Lease (at [168] above). However, in case I am wrong about whether the Supplemental Deed was registered, or indeed about whether it would be available even if not registered, I consider next whether, if available, the Supplemental Deed would have helped Supabarn's case.

399. The Supplemental Deed recited the implementation of various agreements set out in the Development Deed, the making of further agreements between the parties about Supabarn's proposals for the supermarket and the need for further changes to the original lease, and the parties' wish to record those agreements in a deed varying the Development Deed.

400. Clause 3.3 of the Supplemental Deed required Cotrell to approve Supabarn's plans and specifications for the supermarket refurbishment, provided among other things that:

the schedule of finishes consists of quality materials and finishes and is sympathetic and in keeping with the existing finishes in the Centre, including any proposed upgrades as discussed with [Supabarn]

401. Supabarn says that this establishes that when they executed the Lease, the parties had in mind the possibility of upgrades to the Centre.

402. It may well be true that when the Supplemental Deed was entered into between the parties in September 2001, they had in mind the possibility of upgrades to the Centre. Indeed, it might be more surprising if the parties had not been aware of such a possibility and had not accounted for it in dealing with Supabarn's planned refurbishment of the supermarket. However, the fact that future upgrades of the Centre were a possibility of which the parties were aware does not establish that an upgrade was already contemplated by the parties and considered necessary in the short term, let alone that it was dealt with by a provision in the Lease that makes no explicit or implicit reference to upgrades or refurbishments. If anything, the fact that future upgrades of the Centre were mentioned in the Supplemental Deed but that no future upgrade of the Centre was explicitly addressed in the Lease supports the proposition that the Lease did not reflect any agreement that there would be any particular future upgrade.

By reference to other evidence - background facts and circumstances

403. At [158]-[160] above, I have summarised the other "background facts and circumstances" that counsel for Supabarn said should be admitted for the purpose of construing the Lease. Given the conclusions I have reached about that material (at [406] below), I do not propose to refer further to the evidence concerned at this stage; some of it may become relevant in my consideration of whether Cotrell has breached either the Lease or the Supplemental Deed, or of any damages that would have been payable if there had been such a breach.

(a) to review any other material that might have been available in construing the Lease if the Lease had not been registered under the Land Titles Act and if it had satisfied the other requirements for the admission of evidence of background facts and circumstances; or

(b) to try to separate what might in other circumstances have been regarded as genuine background facts and circumstances known to both parties from what were clearly no more than expressions of opinion or submissions.

405. This is because none of that material would have made a difference to my conclusions as set out at [387]-[397] above. In particular, none of it would have altered my conclusion that "business common sense" did not require a finding that the Lease must have provided for a refurbishment of the Centre and that cl 10.7 must have been where such a provision was made.

406. Even if all of the matters relied on by Supabarn, relating to:

(a) the age and condition of the Centre at the time the Lease was signed;

(b) the significance of the physical condition of a shopping centre to its ability to attract customers and tenants;

(c) Supabarn's expenditure on upgrading the supermarket;

(d) Supabarn's operation of a full-line supermarket in direct competition with, and "the equal of", Woolworths and Coles;

(e) the predictable risks to the Centre and Supabarn posed by future upgrades of other group centres and their supermarkets and the opening of other convenient supermarkets; and

(f) implicitly, the significant improvement in trade at the Centre that would have resulted from a refurbishment of the Centre;

could have been established as objective facts or unqualified truths, they would have gone no further than to establish that the parties might sensibly have contemplated an early refurbishment of the Centre. They could not establish that, for both of the parties, the only sensible response to the circumstances described above would have been an early refurbishment of the Centre. They could certainly not establish that the parties had agreed on such a refurbishment, let alone that they had both intended cl 10.7, in context, to provide for that refurbishment.

407. Although framed as an attempt to have cl 10.7 read with cl 10.13 construed so as to include a refurbishment obligation, Supabarn's approach may in reality have been closer to an attempt to persuade the court to imply a term into the Lease, although it is obvious that a claim framed in that way would have been unsuccessful.

408. In Codelfa, several members of the Court _(_Mason J at [9] with Stephen J agreeing, and Brennan J at [20]) referred to BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 (BP Refinery) in which a majority of the Privy Council said at 282-283:

Their Lordships do not think it necessary to review exhaustively the authorities on the implication of a term in a contract which the parties have not thought fit to express. In their view, for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.

409. The kind of term that, if implied, would have resolved Supabarn's dissatisfaction with the Lease as it stood might not have satisfied any of the conditions set out by their Lordships in BP Refinery. In my view, it would not have satisfied, at least, condition (2) or (3). It was therefore unsurprising that Supabarn had not framed its case as requiring a term to be implied into the Lease.

410. The Supplemental Deed contains undertakings by each party about air conditioning relevant parts of the Centre, as follows:

7. Supermarket Air Conditioning

7.1 As part of the Works the Tenant shall air condition the Supermarket premises by installing an air conditioning system of a size and otherwise in accordance with recommendations and directions of the Tenants' [sic] Consultant. During the currency of the Supermarket Lease the air conditioning system shall be a Tenant's fixture with the Tenant to be solely responsible for the maintenance, repair, insurance and replacement thereof. The system, once installed, shall not be removed from the Supermarket Premises, other than for replacement, and on expiry of the Supermarket Lease or earlier termination the air conditioning system will be transferred to the Owner for a consideration of $1.

...

8. Common Area Air Conditioning and Air Lock

8.1 The Owner covenants and agrees with the Tenant to install an air conditioning system in the common area of the Centre. Such system shall be installed in accordance with the recommendations and specifications of a Consultant engaged by the Owner. If the Owner and the Tenant engage separate Consultants in respect of their respective air conditioning installations then both parties shall take reasonable steps to ensure, via their respective Consultant's [sic], that both air conditioning systems to be installed shall be compatible. The Owner in addition covenants and agrees with the Tenant to provide and install an air lock to the main entry.

411. Each party to the deed engaged Norman Disney Young (NDY) as its air conditioning consultant. It seems that during 2002 some work was done on behalf of Cotrell in relation to the air conditioning of the common areas, although the evidence is unclear and in some respects apparently inconsistent about whether the work involved an upgrade of an existing installation or something more substantial.

412. By 2004, Supabarn had become dissatisfied with the outcome of the air conditioning work done on behalf of Cotrell. As a result, it asserted that Cotrell had breached cl 8.1 of the Supplemental Deed, in that Cotrell had not taken "reasonable steps to ensure ... that both air conditioning systems ... shall be compatible".

413. Supabarn also complained, and Cotrell did not dispute this, that Cotrell did not install an air lock to the main entry.

414. Supabarn's claim in relation to air conditioning requires construction of two particular aspects of cl 8.1, being:

(a) the provision giving rise to the obligation to take reasonable steps to ensure that the air conditioning systems installed were compatible; and

(b) the reference to the air conditioning systems being "compatible".

415. There is no dispute about the meaning of the requirement to install an air lock, only about whether Supabarn is estopped from complaining about the admitted failure to install it.

416. Counsel for Supabarn said in relation to cl 8.1:

Upon the proper construction of [cl 8.1], Cotrell as owner, was obliged to ensure that its airconditioning of the common areas of the Centre was compatible with that of the tenants.

417. The "proper construction" advanced on behalf of Supabarn was that the clause provided:

that where the owner and the tenant use the same airconditioning consultant, that they shall take reasonable steps to ensure that the systems installed are compatible.

418. This assertion was of course directly contrary to the words of the clause, which mentions the reasonable steps obligation only in the context of "separate" consultants being engaged: it is possible that counsel for Supabarn had a submission to make about why the clause should be read as having the different, or additional, effect asserted on behalf of Supabarn, but this did not become apparent.

(a) that because the temperature ranges that the two air conditioning systems were designed to achieve were different, there would be inconsistent temperatures between the mall and the supermarket; and

(b) therefore, that the systems were inconsistent and the inconsistency was a breach of cl 8.1.

420. It was implicit in these submissions that inconsistency and incompatibility, at least in the context of air conditioning systems, were the same thing, and for the purposes of cl 8.1 described, at least, cases where air conditioning systems are set to produce different temperature ranges.

421. Cotrell said that the reference in cl 8.1 to the engagement of separate consultants was not satisfied in this case, because both parties engaged the same consultant (NDY), and therefore the obligation to take reasonable steps to ensure that the systems were compatible did not arise.

422. Cotrell also said that there was no reason to equate compatibility with equality, and "lots of reasons not to do so", and that Supabarn was wrong to apply the requirement for compatibility, or equality, to the temperatures rather than to the designs.

423. Cotrell also said, presumably in response to Supabarn's claim that cl 8.1 obliged Cotrell to ensure that the common areas' air conditioning was compatible with that of "the tenants", that different tenants might have different required air temperatures having regard to the nature of their respective businesses, and therefore consistency between the common area air conditioning and that of all the tenants might not be achievable. Whether or not this was correct did not seem to matter, because cl 8.1 clearly applied only as between Supabarn and Cotrell.

424. Supabarn's submission that cl 8.1 imposed a general requirement for compatibility between the two air conditioning systems described what might have been a rational approach to the issue, but not one that can be extracted from the clause, which in so many words restricts the "reasonable steps" obligation to the case in which the parties engage "separate" consultants. Accordingly, the scope of the "reasonable steps" obligation depends on the meaning of "engage separate Consultants".

425. In my view, the words "engage separate Consultants" in cl 8.1 are intended to mean "separately engage consultants" or "engage consultants under separate consultancies"; the risk being addressed is not that the parties engage different consultants as such but that they engage consultants under different briefs that do not ensure a compatible outcome.

426. The risk of incompatible systems being installed arises whether the parties engage the same firm of consultants under two separate consultancies (even where the same member of the firm is working on each consultancy) or engage two different consultants with no knowledge of each other. The risk arises because each consultancy contract would have its own content and its own statement of the objects to be achieved, and unless specifically addressed, would not necessarily include the object of compatibility with another air conditioning system to be installed in an adjoining area. The contracts may even carry confidentiality provisions preventing the consultants raising the contents of one client's brief with another client.

427. Clause 8.1 attempts to deal with that risk by requiring that each party "take reasonable steps to ensure, via their respective Consultant's [sic], that both air conditioning systems to be installed shall be compatible". This requirement, that compatibility is to be made an object of the consultancy agreement, makes just as much sense where both consultancies are with the same firm as it does when the "separate" consultants are entirely independent of each other.

428. I note also that "separate" is a word that applies more appropriately to consultancies than to consultants; as a matter of language, two consultants would more elegantly be described as "different" consultants rather than as "separate" consultants.

429. The meaning to be given to "compatible" is more problematic. I note first that cl 8.1 applies the compatibility requirement to the air conditioning systems, not to the designs (referred to by Cotrell) or to the temperature settings (relied on by Supabarn) of those systems.

430. Cotrell's submission (at [422] above) about the requirements of other tenants seems to me to be beside the point, because the Supplemental Deed was made between Supabarn and Cotrell, it did not involve any of the other tenants, and it does not require compatibility between Cotrell's air conditioning system and that of all the tenants.

431. It might be that "compatible" when used in relation to air conditioning is a non-legal technical term, such that expert evidence of its meaning would be receivable for construction purposes (at [137] above). However, neither of the air conditioning experts who gave evidence identified "compatibility" as having a technical meaning in relation to air conditioning systems, although Mr Purnell did explain the matters he considered relevant when using the expression in relation to separate systems (at [616] below).

432. Although not mentioned by either party, I note that the Macquarie Dictionary gives the following apparently relevant meanings for "compatible":

1. capable of existing together in harmony.

2. capable of orderly, efficient integration with other elements in a system.

433. I also note that cl 8.1 refers to the installation of an air conditioning system by Cotrell, and it is that system in respect of which the primary obligation was imposed, although the second part of cl 8.1, relating to the need for compatibility, also imposed an obligation on Supabarn in respect of the system that Supabarn was, by cl 7.1 of the Supplemental Deed, required to install in the supermarket premises.

434. I am satisfied that, unless the parties, in complying with their installation obligations under clauses 7.1 and 8.1 respectively, engaged an air conditioning consultant under a single, joint, consultancy, cl 8.1 obliged each party to take "reasonable steps" to ensure that the two air conditioning systems were compatible; this would have required each party, at least, instructing or advising its consultant of the need for compatibility with the other system and providing any information or authority that the consultant needed to enable cooperation with the other party's consultant.

435. In the absence of evidence that "compatible" had a technical meaning in the context of air conditioning systems, I propose to treat the word as an ordinary English word without a recognised technical meaning in this context, albeit a word whose application in the current context would be determined among other things having regard to the evidence of witnesses who are experts in the relevant context.

436. Finally I note that cl 8.1 imposes the "reasonable steps" obligation on both parties: a conclusion that the air conditioning systems were not in fact "compatible" would not necessarily establish that Cotrell had breached the obligation, but would raise the question whether either (or both) of the parties had breached that obligation.

THE BREACH ISSUES

Has Cottrell breached the terms of the Lease or Supplemental Deed?

437. Supabarn asserted breaches of various provisions of the Lease and the Supplemental Deed. The asserted breaches that need to be considered are as follows:

(a) breaches of the refurbishment obligation and the tenancy mix obligation that Supabarn said were imposed by clauses 10.7 and 10.13 of the Lease;

(b) breaches of other obligations imposed by clauses 10.7 and 10.13 of the Lease, specifically involving breaches of clauses 10.6 and 10.9 of the Lease;

(c) breaches of the obligations imposed by cl 8.1 of the Supplemental Deed relating to air conditioning and the air lock;

(d) breaches of the obligations imposed by s 81 of the Leases Act.

438. If any breach were to be found, it would also be necessary to consider the timing of the breach.

Breaches: clauses 10.7 and 10.13 as construed by Supabarn

439. Supabarn says that the clauses 10.7 and 10.13, properly construed, together required that within a fairly short period after the Lease was signed in 2001, and at the latest by the end of 2004, the Centre would have been refurbished to turn it into a high quality retail shopping centre and that the tenancy mix would have been upgraded to the standard of the tenancy mix that would be expected in a high quality retail shopping centre.

440. In these proceedings, counsel for Supabarn did not articulate any details of the particular kind of refurbishment that Supabarn said was required. Instead, counsel said:

What is a high quality shopping centre, and what are its features, are questions of fact to be determined by the Court. What is necessary to be done by way of refurbishment is either agreed by the parties, or determined by the Court. It is not necessary to agree on the detail of any refurbishment. And this would be impractical in a lease of potentially 30 years, where high quality features change over time. As Barwick CJ pointed out in Upper Hunter ... the expression "suppliers' costs" was not so vague as to be uncertain, even though there was considerable scope for debate as to what costs were included.

441. I have already suggested that the idea of the Court taking on a role as a designer of high quality shopping centres "verges on the bizarre" (at [303] above). However, there was evidence of the kinds of work sought by Supabarn from 2002 until 2004, and evidence from other witnesses that suggested matters that might have been addressed in such a refurbishment. There was also some evidence about tenancy mix.

442. Identifying in general terms the possible refurbishment and tenancy mix improvement is useful because, in assessing the damages for which Cotrell could have been liable (which I must do in case I am wrong and the Lease did in fact require a refurbishment and an improved tenancy mix by the end of 2004), it will be necessary to test the claims of loss resulting from the breach of that requirement against the hypothetical refurbishment and tenancy mix improvement.

443. On 3 February 2003, Eric Koundouris wrote to Dr Solomon to record his "frustration at [Dr Solomon's] indecisiveness and lack of performance regarding several outstanding matters (some serious) regarding" Kaleen Plaza. Among other things, Eric Koundouris said that "the supermarket is a new well fitted out store and the rest of the Centre is very tired and looking neglected". The letter went on to demand the installation of the "air lock", and urged the completion of a number of "essential repairs", relating to leaks in the skylight roof, painting, lighting, cleaning, and the maintenance of the public carpark, walkways and the building exterior. It concluded with an assertion that Cotrell "is now obliged to significantly upgrade the Centre, the minimum works of which having already been outlined".

444. On 29 August 2003, Eric Koundouris wrote again to Dr Solomon, mentioning the failure to install the "air lock" and his disappointment that the roof leaks "have only been cosmetically addressed". He also made the following comments:

• Painting of the outside gutters (using a colour so similar to the existing colour) is unnoticeable and again only a cosmetic attempt at revitalizing or giving the Centre a real facelift.
• Painting inside the common areas as per the colour board that was prepared by our interior designer free of charge to you has been ignored and as yet this painting has not commenced.
• Additional lighting for the arcade has not been installed.
• Proper cleaning of the public carpark and walkways has not eventuated.
• Proper servicing and maintenance of the exterior of the building and carpark lighting again has not improved.

445. On 18 September 2003, Mr Armstead of JLL wrote a letter to the Koundouris Group, marked for the attention of Eric Koundouris, referring to the 29 August letter and stating that:

To date the following matters have been addressed or are in the final stage of completion:

• Installation of Common area air conditioning
• Internal & External painting
• Installation of front entrance
• ...

446. Also on 18 September 2003, Mr Armstead advised Dr Solomon that:

there is a need to complete the physical upgrading of the internal/external environment of the centre to meet customer expectation, which will be raised by good marketing. For example the toilet facilities, internal seating & signage, uneven pavers and gardens still require attention.

447. On 8 July 2004, in an email primarily about the air lock, James Koundouris told Mr Armstead that the centre required an upgrade, and that the following items were seen as essential to any upgrade or refurbishment:

• Floor tiling
• External entrances
• External rendering and painting in a new colour scheme
• New internal colour scheme
• New lighting plan
• Air conditioning system functioning correctly
• New shopfronts to all premises
• Shop fitouts to be reviewed

448. In a letter to Cotrell on 13 May 2005, James Koundouris set out the following aspects of "a substantial architectural designed upgrade of the Centre" demanded by Supabarn (possibly with the support of some of the other Kaleen Plaza tenants). The upgrade was said to include, but not be limited to:

• Internal floor coverings
• Painting
• External render and paint
• Entrances
• Signage
• Lighting internal and external
• Air conditioning

449. Several witnesses criticised the colour scheme, tiling, lighting and facilities of the Centre:

(a) James Koundouris said that both in 1988 when the Centre was built and in 2013 when he gave evidence, it had 1970s colour schemes, although there had been some repainting, and an original colour scheme including internal cream walls with touches of brown had been replaced with some "baby blue". James Koundouris said that to his knowledge, the tiles had never been replaced, and the building still featured the original tiles.

(b) Mr Powderly said that the tiles "just don't look modern": the colour (light brown) is old-fashioned, and the tiles are smaller than modern tiles. He noted that chipped ones should be repaired, which counsel conceded on behalf of Cotrell. Mr Powderly said that the floor covering at the Kippax shopping centre was "more modern and more contemporary", and "certainly better quality" than a tiled floor. He also said that the floor outside the Supabarn entrance at the Wanniassa shopping centre was "marginally better" than the tiles at Kaleen Plaza, but that he didn't like the tiles at the Calwell shopping centre (which are similar to the Kaleen Plaza tiles) either.

(c) Mr Powderly explained that his view about what constituted "higher quality" came from the current trends he saw when viewing retail properties. He said that tiled floors are an "older style", and polished concrete is more modern.

(d) Mr Sukroo did not agree that in July 2004, it would have been desirable in the interests of improving Kaleen Plaza's competitive position to refurbish or upgrade the floor tiling; he agreed in 2013 that the tiles "look a bit dated now", but was not sure that they looked quite as dated in 2004. Mr Sukroo agreed that shopping centre toilets need to be functional, clean, presentable and workable, and that renovation of the toilets would have been desirable, but said that improvements in the toilets would not necessarily have increased patronage of the Centre.

(e) James Koundouris said that when the light globes were not working, the lighting was inadequate.

(f) Mr Sukroo said there had been internal and external repainting. He agreed that it would have been nice to upgrade the external rendering and painting and to have a new colour scheme, but he was not sure whether that would necessarily increase the amount of traffic through the shopping centre. He noted that at some point there had been a new internal colour scheme applied, but he was not sure of the timing.

450. Evidence was given about the treatment of entrances to the Centre:

(a) James Koundouris said that highlighting entrances was a feature of a quality shopping centre, and the entrance should be fairly obvious. He had no complaint about the north entrance to Kaleen Plaza except that there was no air lock. The other two entrances, he said, were not clearly identified.

(b) Mr Sukroo did not accept that in July 2004 it was desirable to upgrade the external entrances to Kaleen Plaza to improve the competitive position of the Centre, because at that point the external entrances had just been upgraded.

451. Ms Purdon criticised the signs used at Kaleen Plaza, noting that there was no consistency in their use, and that:

the signs create a sense of chaos and do not enhance the centre. ... A sign that is stuck with masking tape to the wall is generally not something that people would think as a good centre, you know, that combined with some of the other sort of signage. There is no theme about what the centre is on about in the signs.

452. Witnesses noted that there was no consistency in the standard of tenancy fitout at the Centre:

(a) Mr Powderly said that there should be standards for the shopfronts in a shopping centre, but that they don't have to involve a "common theme", and don't need to be "super modern". He noted that the shops in the Calwell shopping centre generally had a better standard of fitout and more consistency, and the shopfronts at Kippax were better quality, than those at Kaleen Plaza. Mr Powderly also said that the shopfront at the butchery at Wanniassa shopping centre looked a bit more modern than the other shopfronts, but that Wanniassa shopping centre was not high quality.

(b) Ms Purdon noted that the shop fronts in Kaleen Plaza did not have a consistent design, that in a high quality shopping centre tenants would be required (or even forced) to spend on shopfront presentations, and that it appeared that at Kaleen Plaza there was no requirement to refurbish fitouts even when leases were renewed.

(c) Mr Sukroo agreed that upgrading a centre with new shopfronts to all premises might be desirable, but said that it is very difficult, even physically impossible, to implement new shopfronts in all businesses in a trading shopping centre. However, he agreed that it was a fairly standard clause of shopping centre leases that the landlord could require tenants to upgrade their shopfronts.

453. Mr Powderly said that there were some seats in the mall at Kaleen Plaza, but that it would be better if there were more seats there.

454. There was criticism of the general appearance of the Centre:

(a) James Koundouris said that there had been no significant change in terms of aesthetic appearance at Kaleen Plaza.

(b) In assessing Kaleen Plaza on "Centre Amenity" (lighting, appearance, whether the shopping centre had a "modern" feel, facade and entry, layout, design and facilities), Mr McKinnon had rated it as not having a "modern feel" (notably, in contrast to Wanniassa, which he had scored as a "4" for having a "modern feel" and had rated as high quality overall); he said in a written report that:

[Kaleen Plaza] in general appears tired, and does not portray a modern feel expected of a high quality centre.

(c) Ms Purdon said that the lack of consistency in the shop fronts in Kaleen Plaza had "an adverse effect on the overall image and appearance of the Centre". In explaining the significance of competition on the performance of the Kaleen Supabarn, she said that:

the Centre has not been maintained as a modern contemporary centre that accommodates changing trends and meets customer expectations. The Centre is old and tired and cannot compete with a modern and attractive Centre. Kaleen Centre will not be able to compete effectively until it is at least refurbished and possibly expanded.

(d) Ms Purdon said that the "public realm", being "the external areas of the centre and the internal or common areas defined by the shop fronts", should "offer a pleasant environment where people want to be". However, she said, at Kaleen Plaza, both the external and internal parts of the public realm are dated and require upgrading, do not encourage people to enter, do not enhance the shopping experience, do not have a high quality design, do not create the impression of a high quality retail centre, and "are unlikely to encourage people to visit or to stay longer in the Centre".

455. In his letter of 29 August 2003 (at [444] above), Eric Koundouris complained that:

the quality and standard of some of [Cotrell's] tenants is disgraceful. They are poor traders and do nothing to assist the rest of us to increase turnover in this centre, and your unwillingness to spend the necessary funds to give the centre a lift, coupled with the competition from Gungahlin Town Centre, only a few kilometres away, will result in a serious down turn in the centre's trading.

In my view cosmetic repairs, cosmetic refurbishment and ordinary marketing will not solve the looming very serious problem to be faced by the tenants of this centre and indirectly of course by you as the owner over the next year or two. ...

Unless you establish new retail standards within the centre and spend the necessary capital to bring the centre to the year 2003, there is no doubt we will all suffer the consequences.

457. Most of the management reports provided by JLL to Cotrell in the period from 2003 to 2010 were in evidence. Supabarn's claim was that the tenancy mix upgrade should have been completed by the end of 2004. [AFS [17]]

458. Supabarn in written submissions summarised the key aspects of those reports. Most of the matters pointed to by Supabarn related to JLL's management of the existing tenants, many of whom were apparently struggling; throughout the period covered by the reports, there were always several tenants in arrears with their rent (not always the same ones), and the reports evidenced numerous efforts by JLL (not always successfully) to persuade tenants to clear their rent arrears.

459. The reports made it clear that filling empty spaces at the shopping centre was not easy, while also possibly indicating that JLL's efforts might not always have been as energetic as either Supabarn or Cotrell might have liked: for instance, there were many months over the eight years in which JLL had nothing to report in relation to leasing, and many cases in which an action proposed in one month was then mentioned in the same form in one or more subsequent monthly reports without any apparent progress having been made.

460. However, the reports did describe various attempts by JLL to fill existing vacancies, and attempts to improve the quality of particular tenancies, either by requiring some kind of upgrade as a condition of extending or renewing a lease or by attempts to find better tenants as the expiry of particular leases approached. Some of those attempts were successful (although in some cases the success was short-lived). Many of those attempts required extended negotiations, some of which were unsuccessful for reasons apparently unrelated to JLL's efforts or to the condition or operation of Kaleen Plaza.

461. The lease of the bakery (Shop 6A) was to expire in August 2004, so in March 2004 JLL told the tenants that a full refit of the premises would be required if the lease was to be renewed; JLL also "forwarded" property information to Brumby's Bakery and Bakers Delight, and in April 2004 JLL noted an intention to follow this up. Counsel for Supabarn described the provision of the property information as JLL "seeking to secure" one of those businesses as tenants, but this might suggest an unduly optimistic view of the level of interest from either business.

462. In July 2004 the bakery lease was extended to August 2009. This suggests that the apparently unsolicited provision of information to the two "national" bakeries had not generated any useful level of interest from either of them.

463. In April 2005, JLL sent information about the vacant shops in Kaleen Plaza to "several parties", including an unidentified coffee shop operator.

464. Over several months in mid-2005, JLL sought with limited success to persuade the owner of the fast food/takeaway business to relocate within Kaleen Plaza and to upgrade the shop, and by December 2005 it was decided that lease would be renewed on the basis of an expansion in the area leased.

465. In February 2006, the management report noted that, with two shops vacant and no apparent interest from anyone in leasing them, JLL had recommended reducing the rent sought. However, JLL also noted that they were "close to finalising a deal for Shop 1" (which would involve a rent-free period) and that Bakers Delight "has expressed an interest in Shop 8".

We are close to finalising a deal for Shop 1. Shop 1 has been vacant for six years and is difficult to market being at the quiet end of the centre. A sports nutrition shop is interested in a rent-free deal for one year during which they will pay a full outgoings contribution. We believe this is an advantageous proposal despite the lack of rent and should lead to a full rent deal after 12 months.

467. The interest from Bakers Delight was also mentioned in the March 2006 report, but the April 2006 report contained no mention of Bakers Delight.

The deal for Shop 1 has been finalised subject to documentation. Planet Max is a local sports supplies and nutrition outlet with two other shops, one in Civic and the other at Tuggeranong. They also have a gym with a small retail outlet at Weston Creek. We are hoping that their presence in the centre will lift the profile of the centre with 20-35 year olds as it will be the only Planet Max shop on the north side of Canberra.

469. In May 2007, JLL reported under "Leasing" that "several inquiries" were being followed up.

470. The August 2007 report mentioned leasing inquires including from a real estate agent.

471. The November 2007 report noted that the "leasing department" was negotiating with "several parties"; that comment was repeated in December 2007, and also in January, February, March, April, May, June, July, August and September 2008.

472. The March, July and August 2008 reports mentioned Supabarn's expressed interest in setting up a café within the supermarket premises.

473. In November 2008, JLL reported that there were several "interested parties" for Shop 10B, "but not until [2009]".

474. Several existing leases were extended over the next few months.

475. In February 2009, a deal was "finalised" for a Turkish pide takeaway and coffee shop in the vacant Shop 10C.

476. In April 2009, the negotiations for the Turkish pide shop in Shop 10C were terminated "due to ill health" (presumably that of the prospective tenant rather than the JLL negotiators).

477. In June 2009, JLL reported that leasing enquiries were quiet but there was some "renewed interest" which was to be followed up as a matter of urgency.

478. In July 2009, Shop 10C was still vacant, and it had emerged that the lack of a grease trap or grease arrestor was the "main problem"; such an item had not been required when Kaleen Plaza was built, but requirements had changed and the relevant authorities now expected them to be installed within a period of three to five years. The required installation had been costed at $25-35 thousand.

479. In November 2009, negotiations were underway to lease Shop 10B for a discount store, and by May 2010 fitout of the shop was underway. The shop opened in June 2010.

480. In March 2010, JLL reported that "health issues" were affecting the prospective café operator.

481. In May 2010, the bakery lease was extended for two years, but Planet Max had decided not to renew its lease, citing concerns about the possible opening of Woolworths in Giralang.

482. Later in 2010, JLL reported that although the dry-cleaning business had been trading satisfactorily, the operator had suffered health problems and had abandoned the business, leaving JLL to organise regaining possession of the shop.

483. The information provided in the management reports, considered in the light of other evidence and in particular that given by Mr Powderly at [495], indicates that JLL was making efforts to improve the tenancy mix. It also suggests that JLL's failure to entice a "national" tenant into Kaleen Plaza did not reflect any particular failure by JLL on behalf of Cotrell, but reflected the difficulty of the task, arising from the size and location of Kaleen Plaza and possibly the demographics of its main trade area.

484. Counsel for Supabarn said that Cotrell could have called Mr Armstead to explain the failure to attract a "national" tenant. Counsel may be right that in the absence of Mr Armstead, I should not infer from JLL's failure that the task was impossible. On the other hand, this does not oblige me to treat the evidence before me as proving on the balance of probabilities that JLL was not making reasonable efforts to improve the tenancy mix at Kaleen Plaza.

485. There were various comments, mainly critical, about the tenancy mix, and tenancy management, in Kaleen Plaza.

486. James Koundouris referred to his experience in tenancy management for the Centrepoint shopping centre in Civic, where there had been some "national" tenancies (American Express and two shoe shops, being Joshua's Shoes, which he described as "the Joshua Berger label", and La Cobbler Shoes, which had stores in Wagga Wagga and regional centres). He said initially that the tenancy mix at Kaleen Plaza hadn't changed since 2009, but then conceded that a number of minor changes had recently been made to the centre, including the renovation of the pharmacy.

487. James Koundouris also said that he was not aware of Cotrell making any efforts to attract a "national" tenant, specifically a food retail franchise such as Subway, Ali Baba or Domino's. He said that when there were vacancies within the Centre generally, he hadn't seen Cotrell or the managing agent doing anything except putting a "for lease" sign on the door of vacant shopfronts; he had not seen them trying to "chase tenants". In cross-examination he answered a question about whether it was better in a shopping centre to have a poor tenant or an empty shop with "preferably neither". James Koundouris said that, in the week before he gave evidence in mid-September 2013, he had been approached by a franchisor of a "strong local chain", Coffee Guru, who was "looking to go national". The man, Dean (James Koundouris couldn't remember his surname), had approached him about "do[ing] a concept within [Kaleen Supabarn]" because, he said, "I'm not getting the ... feedback from JLLs into offering me any other shops".

488. Mr McKinnon explained that in his benchmarking exercise, two of the matters depriving Kaleen Plaza of a "high quality" score were its tenancy mix and tenancy management. He explained that this related both to the type of tenant and to the quality of particular tenants, but agreed that the Centre's mix of tenancy types was appropriate, with the possible exception of Butts N Brew. He indicated that "national" tenants were likely to "have more customer pulling power", including because of their "presentation, ... budgets, quality of fitout, marketing". Mr McKinnon believed that there would be a strong interest, in "an appropriate centre", from tenants such as Brumby's, Bakers Delight or Michel's Patisserie. Pressed about the scope for bringing one of those tenancies into Kaleen Plaza, Mr McKinnon declined to "advocate the removal of long-standing family [bakeries]", but said that "a range of tenancy mix strategies would produce increased sales at the subject centre".

489. Mr McKinnon mentioned the desirability of "a mix with more depth", but said that a "tenant optimisation strategy" looks at "the centre as a whole", that a tenancy mix strategy for Kaleen Plaza would take three to five years, or maybe longer, to get right, and would have "a whole range of elements". The only specific approach that he mentioned, however, focussed on which tenants were "weak tenants" and could usefully be removed.

490. Mr McKinnon explained that in his benchmarking exercise, Kaleen Plaza had received a lower rating than the benchmark for "quality of the major tenant" because Supabarn was the major tenant, and it did not have the "depth" of a "full-line major supermarket such as a Woolworths or a Coles". He said that Supabarn could have improved its ranking by building "more shops nationally and improve their internal exposure" at Kaleen. He did note, however, that the assessment of the quality of Supabarn as the major tenant did not relate to its fitout at the shopping centre concerned.

491. He considered Butts N Brew a weak tenant, at least for a corner tenancy with high exposure, but conceded that it had a good quality internal fitout.

492. Mr McKinnon said that Kaleen Plaza had been assessed on the basis that two tenancies were vacant and two were closed at the time of inspection, their operational status being unknown - if there was only one vacant shop, he said, Kaleen Plaza would have received a 4 rating, or possibly a 5 if it was a small tenancy, but he had not considered or accounted for the size of the vacant tenancies when he did the inspection.

493. Mr McKinnon said that, in the benchmarking, Wanniassa shopping centre had been rated 4 for its proportion of "national" tenancies, which apart from Supabarn were "possibly" BWS and Civic Video; he had not, however, included the Kaleen BWS and Civic Video stores in his ratings, because they occupied buildings that were adjacent to Kaleen Plaza but not owned by Cotrell, and accordingly were not "an internal part of the Plaza".

It is appreciated that the strength of the supermarket in the product range offered by the supermarket restricts the ability of small traders to operate. This places a much greater emphasis on the landlord to proactively support the smaller traders with design and financial assistance.

495. Mr Powderly also noted in that report that the Centre did not "have any of the National specialty retailers" that he expected in a high quality retail shopping centre. In oral evidence, he identified Brumby's, Bakers Delight, "Guru Coffee" [sic] and Coffee Club as examples of national specialty retailers that he would have expected. However, he agreed that such retailers had criteria for the centres in which they would operate, including in relation to a minimum level of passing trade and the quality of a centre, that "they are looking for the better quality centres", and that they will "look for a centre that has the right turnover and demographics". Mr Powderly could not think of any similar-sized group centre, or any group centre with a smaller retail space than Kaleen, that had a Bakers Delight, a Brumby's or a Coffee Club.

496. Mr Powderly suggested that a kiosk of some sort (perhaps a phone or key shop) could be put in the "cross-roads" in the centre of the mall.

497. Mr Powderly said that it was good practice to require at least a minimum refurbishment when a tenancy was renewed. He noted that most of Kaleen Plaza's specialty tenants (11 out of 12) were long-standing, and that most of them had had some refurbishment. He agreed that the pharmacy had been "tidied up" since he inspected it in October 2012. He also noted that they seemed to be "viable", but that didn't mean that they were necessarily "commensurate" with what you would expect in a high quality retail shopping centre. Asked to explain "viable", Mr Powderly said that it described something more than a business simply paying its bills and making a profit, and extended to a business that was sustainable, provided goods that were needed, and complied with its lease obligations, including by doing upgrades if directed and spending money on fitout.

The takeaway or dine in facilities within the Centre are uninviting and do not provide incentive for customers to stay in the Centre any longer than is absolutely necessary. The tenancy mix also incorporates some shops which give the impression that the Centre is willing to take anyone. These include the tobacconist/beer products shop and the martial arts trader.

499. In oral evidence Mr Powderly agreed that there was nothing particularly unattractive about the Kaleen Butts N Brew, but said that it was:

the type of tenant that I wouldn't associate with a high quality retail centre [but with a] medium to average standard centre, and it certainly has appeared in a few centres where ... they are not necessarily heading for a high benchmark of quality.

500. Mr Powderly also said that whether customers wanted to "stay" in a shopping centre was relevant to specialty stores rather than to a "grocery shop".

501. Ms Purdon said that at Kaleen Plaza, the mix of retail uses was not complementary, and did not reflect the role of the shopping centre in a group centre. Asked to explain this comment she said:

You have a - in that centre, there is a mix of things, for example, the - that don't necessarily appeal to the - that aren't targeted, for want of a better word, at the group centre catchment in the group of suburbs, that could in fact appeal to a wider group and are - are there because it's convenient to be there. So the Butts N Brew is - is - would - is a moderately specialised type of a - an outlet that, sure, it can locate there, but it would have a - a - potentially could have a wider - much wider audience, but that space is available. The $2 shop doesn't promote the image of the centre as the, sort of, a place where people, you know, want to necessarily be. It's - it's - and there are - and some - there are also some gaps in what you might expect in a centre of that sort as well, in terms of both food offerings, such as, for example, the delicatessen. I take your point, but the delicatessen, a health food shop. Green grocers don't seem to do terribly well in - in - as free-standing shops. Certainly you've got the - the butcher. There are - so they're - there's no café, where, again, you might expect there to be somewhere where you can have a - a good cup of coffee and feel that you want to sit down. So it's that sort of mix of places that you would expect would be a - a range of uses that would be complementary within a group centre.

502. I did not find this explanation particularly helpful.

503. In Mr Sukroo's evidence it emerged that in 2013, five of the Kaleen Plaza tenants had rental arrears in excess of 120 days, the arrears totalling $124,000.

504. Several of the witnesses who were critical of aspects of Kaleen Plaza's appearance and operation said that expansion of the Centre would have been the best way to improve its operations: an expansion would presumably have provided an incentive and an opportunity for a cosmetic refurbishment of Kaleen Plaza, and it would have been even more important in providing a capacity for an enhanced tenancy mix. Some witnesses gave the impression that there was little scope for Kaleen Plaza to become high quality without expansion:

(a) Mr Powderly in his report said that "the Centre was badly in need of modernisation" and that "[m]ajor refurbishment should be considered, especially if certain external shops can be acquired". He noted that Jamison, Kippax and Erindale shopping centres had been substantially upgraded, and the supermarkets in Jamison and Kippax had increased in size. In oral evidence he said that "it is now at the Centre's point in life where it should look to be refurbished and expanded", and mentioned the inclusion of Aldi in some other shopping centres.

(b) Pressed on whether expansion was necessary for Kaleen Plaza to become a high quality retail shopping centre, Mr Powderly said that expansion was not necessary, but was "probably just more recommended as part of doing a major upgrade"; he also said that if expansion wasn't an option, the best way to get a high quality retail shopping centre was to "get the tenancy mix right, refurbish the shopping centre and have it trading at its optimum".

(c) Ms Purdon said that the Kaleen centre would not be able to compete effectively until it was at least refurbished and possibly expanded.

(d) Mr Sukroo agreed that in discussion with Dr Solomon, he had told Dr Solomon that it was desirable "to upgrade the centre so as to make it more attractive to customers and thereby make the centre more competitive". He was not sure what he had had in mind when he gave that advice, but said that "certainly a major refurbishment and expansion would increase the centre turnover". Mr Sukroo noted that the most desirable refurbishment would have involved a substantial expansion, but said that expansion had not been permitted under the Crown lease.

505. The evidence relevant to Kaleen Plaza's cosmetic appearance (and therefore to the proposed refurbishment) can be summarised as follows:

(a) The Centre was seen as "tired", not "contemporary, and without a "modern feel"; this was generally attributed to the colour schemes and the use of tiles in the building, and the fact that sometimes the light globes did not work.

(b) Two of the three entrances to Kaleen Plaza were not "highlighted", and the signs used in the centre "create a sense of chaos".

(c) There was no consistency in the tenant fitout at Kaleen Plaza, and apparently no requirement for tenants to upgrade their fitout even when leases were renewed.

(e) The key to Kaleen Plaza becoming a high quality retail shopping centre was expansion, and in the absence of expansion of the shopping centre there was limited scope for it becoming competitive with high quality retail shopping centres.

506. Thus, the evidence suggested that a refurbishment of Kaleen Plaza (without any expansion) would have involved some or all of repainting inside and out (possibly after the outside walls were rendered) using a new colour scheme, new flooring, new lighting (ideally more reliable but also providing more light overall), the highlighting of two of the three entrances to Kaleen Plaza (one of which was in fact at the end of a corridor running from the street to Kaleen Plaza between two of the buildings not owned by Cotrell), new signs, the installation of some more seating in the mall, renovation of the toilets, and possibly some change to the air conditioning system used in the mall.

507. While it seemed likely that Cotrell would have had a basic level of control over the standard of shopfronts and shop fitouts, there was no evidence suggesting that Cotrell would have been responsible for undertaking any required upgrades, or that it had any contractual power to enforce such upgrades (other than in the context of a lease renewal).

508. As to tenancies and tenancy management, I note first that, in relation to the scope for attracting "national" tenants, witnesses mentioned the following businesses as the kinds of businesses expected in a high quality retail shopping centre:

509. There was evidence that Brumby's Bakery and Bakers Delight had been provided with relevant information by JLL in March 2004, and that in February 2006, Baker's Delight had expressed interest in Shop 8, but that this interest seemed to have evaporated by April 2006.

510. James Koundouris' evidence (at [487]) that in September 2013 he had been approached by "Dean", a franchisor of a "strong local chain", Coffee Guru, who was "looking to go national", but whose full name he did not know, appeared to be aimed only at suggesting that JLL's tenant management was poor; there was no suggestion that he proposed to pursue the possibility of bringing Coffee Guru into the Supabarn. Nor was Mr Sukroo cross-examined about the claim that JLL had not responded to Dean's approach.

511. Furthermore, the difficulty that JLL clearly had in finding satisfactory new tenants for Kaleen Plaza cast substantial doubt on the implication of Supabarn's submissions that if Cotrell (via JLL) had really wanted good, or "national" tenants, it would have been possible to find them and sign them up.

512. There were hints in the evidence and submissions that the tenancy mix upgrade said to be required by the Lease obliged Cotrell to get better tenants whatever the cost - in effect, that if the requisite "national" tenants did not see Kaleen Plaza as a viable location for their businesses, it was up to Cotrell to provide sufficient incentives to make the location viable. In my view, that would have been an unlikely interpretation even of an explicit obligation to improve the tenancy mix, and I was quite unconvinced by any suggestion that the obligation inferred by Supabarn from the combination of clauses 10.7 and 10.13 could have required not just active tenancy management but, if necessary, paying tenants (not just via a one-off rent-free period but on an ongoing basis) to operate in Kaleen Plaza rather than vice versa.

513. One interesting aspect of Supabarn's case in relation to tenancy mix was that there was evidence before me, first, to the effect that in a shopping centre, it was the role of the anchor or major tenant (here, Supabarn) to attract custom that would benefit the other tenants, rather than that it was the role of the other tenants to bring in custom for the major tenant, but secondly that Supabarn as the major tenant was not necessarily as attractive to customers of the shopping centre as Coles or Woolworths: see for instance:

(a) Mr McKinnon's evidence (at [490] above) that he had not rated Supabarn as highly as Woolworths and Coles when scoring various shopping centres on the quality of their major tenant;

(b) Mr Powderly's comment in his first report (at [494] above) about the impact of a strong supermarket on the smaller traders in a shopping centre and his evidence (at [500] above) that whether customers wanted to stay in a shopping centre was more relevant to the specialty tenants than to the anchor tenant;

(c) Mr Leyshon's evidence (at [922(c)] below) that the reasons for Kaleen Plaza's competitive disadvantage included its size and that its major tenant was Supabarn;

(d) Mr Armstrong's evidence (at [929] below) that in small shopping centres, the major tenant is the most important in terms of bringing customers into the shopping centre.

(a) Mr Powderly's statement that Kaleen Plaza "is not a centre that customers want to sit and enjoy", for instance by having a cup of coffee, in context implied that Supabarn was disadvantaged by Kaleen Plaza not having an attractive venue for coffee; and

(b) in August 2003 Eric Koundouris had written to Dr Solomon complaining, among other things, that:

the quality and standard of some of [Cotrell's] tenants is disgraceful. They are poor traders and do nothing to assist the rest of us to increase turnover in this centre

515. The relevant evidence can be summarised as follows:

(a) There were two "national" tenants in the buildings immediately adjacent to Kaleen Plaza.

(b) Apart from Supabarn, Kaleen Plaza had no "national" tenants, but it would have been difficult for Cotrell to attract the kinds of more desirable tenants identified by witnesses; this was because Kaleen Plaza, located in one of the smallest group centres in the ACT, would have struggled to satisfy the criteria applied by such retailers, which involved matters such as minimum levels of passing trade and whether the shopping centre had "the right turnover and demographics".

(c) Most of the Centre's tenants were long-standing and apparently "viable", but not necessarily "commensurate" with a high quality retail shopping centre, and several of them were apparently struggling to keep up with their rent payments.

(d) Tenancy mix was important to encouraging people to spend more time in the shopping centre, but that whether people spent more time in the shopping centre was more significant for other tenants rather than for the supermarket (albeit referred to by Mr Powderly as the "grocery store").

(e) That the quality of the major or anchor tenant in a shopping centre was important to the other tenants, and that Supabarn was not necessarily as attractive a major tenant as Coles or Woolworths.

(f) There was evidence of JLL undertaking a variety of tenancy management tasks over the years to which the management reports related, evidence that a number of tenants were behind in their rent, evidence that it was difficult to find tenants for vacant premises (which perhaps explained why there seemed to have been no serious attempt to evict tenants whose rent was seriously in arrears), and evidence that incentives were necessary to secure some potential tenants.

(g) None of the witnesses suggested that a cosmetic upgrade of the existing premises, of itself, would be sufficient to attract a better quality of tenant.

516. In summary, the evidence suggested that the Kaleen Plaza tenants apart from Supabarn were not generally appropriate for a high quality shopping centre, that some of them were struggling, and that it would be difficult to attract higher quality tenants to Kaleen Plaza without at least a significant expansion of the shopping centre (and possibly a change in local demographics, to attract certain "national" chains).

517. Cotrell did not claim to have done anything more to the Centre since 2001 than repairs and maintenance, although that seems to have involved at least some repainting and repair of broken tiles. Specifically, Cotrell did not claim to have refurbished the Centre at any point.

518. If the Lease included an obligation to refurbish the Centre by the end of 2004, then Cottrell had breached the Lease in that respect.

519. As to the asserted tenancy mix obligation, Cotrell did not claim to have attracted new tenants of the kind that, according to some of the witnesses, might be expected in a high quality retail shopping centre. Accordingly, if the Lease included an obligation to achieve an improved tenancy mix of the Centre so that it reflected the kinds of tenancies that, according to the evidence, were likely to be found in a high quality retail shopping centre, then Cotrell had breached the Lease in that respect as well: the evidence is clear that the tenancy mix at Kaleen Plaza had not been improved in any identifiable way between 2001 and at least 2009.

520. If the Lease required only reasonable efforts to achieve an improved tenancy mix, the matter is more complicated. There was evidence of some efforts made by JLL to improve the tenancy mix. There was also evidence to suggest that, absent the capacity to expand Kaleen Plaza, Cotrell would have found it difficult if not impossible to upgrade the tenancy mix, in the kinds of ways suggested by some witnesses, without significantly increasing the passing traffic within the Centre or providing substantial and ongoing financial incentives to a desirable tenant (although there is no evidence that "national" tenants, who presumably had their own reputations to consider, would have been susceptible to such offers). If the asserted tenancy mix obligation was only to make reasonable efforts to improve the tenancy mix, I would not have been convinced to the necessary standard that Cotrell had breached the obligation.

Breaches: clauses 10.7 and 10.13 as imposing day to day obligations

521. As indicated at [389] and [395] above, I have concluded:

(a) that cl 10.7 required the Centre to be run by Cotrell, day to day on a continuing basis, and including maintenance and repair as well as tenancy management, in a manner, or at a standard, appropriate to a high quality retail shopping centre; and

(b) that cl 10.13 is an acknowledgement by Cotrell of its obligation to do, and pay for, a limited class of things that need to be done to enable the Centre to operate day to day, including at least things that ensure safe and easy access for customers and staff, the safety of customers and staff (including fire safety), cleanliness, and the provision of basic services such as electricity, light, water, toilet facilities and protection from the elements (possibly including air conditioning).

522. Counsel for Supabarn said that, even if the Lease did not include a refurbishment obligation or an obligation to ensure that the tenancy mix was that of a high quality retail shopping centre, the obligation under cl 10.7 to conduct, manage and operate the Centre as a high quality retail shopping centre had been breached by Cotrell by:

(a) its failure to perform its obligations under clauses 10.6 and 10.9 in a manner appropriate to a high quality retail shopping centre, as demonstrated by a history of water leaks in Kaleen Plaza; and

(b) its failure to perform its obligations under cl 10.6 in a manner appropriate to a high quality retail shopping centre, by failing to provide adequate cleaning services and failing to keep the Centre clean and in good repair.

523. Supabarn pointed to evidence that from at least April 2002 the roof of the Centre leaked, that there were repeated complaints made to the managing agents, generally through Kevin Armstead but occasionally addressed to Dr Solomon, and repeated attempts to repair the roof, but that the problems continued until at least February 2008.

524. There is no doubt that between 2002 and 2008 the roof of Kaleen Plaza leaked a number of times, including within the supermarket, and on a couple of occasions the outcomes were dramatic. There is documentary evidence of repeated complaints about water leaks made by Supabarn from April 2002 until February 2008, but also of a number of attempts made on behalf of Cotrell to resolve the problems.

525. Mr Sukroo sent a fax to Dr Solomon attaching what he described as "Eric's wish list for Kaleen Village". This included a quote for the replacement of the "roof windows", which noted that "at present all windows are leaking and showing water damage to ceilings".

526. Paul Lee, who prepared the quote of $62,700, diagnosed the problem as follows:

Windows have been installed below the roof line in segments with edges. Because they have been installed this way the water is collecting in pools at the bottom edge of each segment. This causes the water to seep into ceiling space.

527. On 3 February 2003, Eric Koundouris wrote to Dr Solomon with various complaints; among other things he quoted at length from Mr Lee's explanation of the roof and skylight problem and asserted that a watermark above the shop bulkheads evidences that "the roof ... has been leaking for sometime".

528. On 4 February 2003, Dr Solomon faxed to Mr Armstead a page from this note, indicating that he wanted to discuss the matter.

529. On 14 February 2003, Mr Armstead sent a fax to Mr Lee telling him that the original quoted price "was beyond the financial restrictions of our budget" but that he would like to meet Mr Lee to discuss the original proposals and "any other options".

530. Counsel for Supabarn in submissions said that in February 2003, "a roofing contractor was engaged to replace the existing skylights", but the document in evidence does not appear to go beyond a request to the contractor for a discussion about options "in order that we can provide a recommendation to the property owner", which contained a reference to an earlier quote, and a copy of a quote dated 14 March 2002 which specified "Remove old windows, frame up for new skylights".

531. On 13 March 2003, Mr Armstead wrote to Eric Koundouris:

The cause of the leaks occurring in the vicinity of the skylights has been identified and action taken to prevent further leakage. In addition, the ceiling lining damaged by the water will be replaced.

We confirm that the leak at the front right hand side of the Supabarn Supermarket has been attended to ... we ... will maintain follow up on this matter until we are satisfied that it is 100% water tight.

532. On 14 March 2003, Mr Armstead sent a fax to Dr Solomon reporting on the leak near Supabarn, and also stating:

The leaks around the skylights have been identified and corrected. The ceiling lining will now be repaired ready for painting.

533. No details were given in the fax of how the leaks had been corrected. Counsel for Supabarn in written submissions simply said: "They were not".

534. On 20 May 2003, Eric Koundouris wrote to Dr Solomon saying that further to Supabarn's letter dated 16 May 2003, "the roof above checkout number one ... is still leaking as of Monday 19 May 2003". Rectification was sought urgently.

535. On 21 May 2003, Mr Armstead sent a fax to Eric Koundouris reporting that the roof repair was scheduled for the following day (22 May 2003), that "a new length of specially fabricated box gutter" would be installed, and that the interior ceiling lining would be repaired at a time to be arranged with the Store Manager.

536. This leak appears to have continued from 16 May until 19 May 2003, and possibly for several days longer, rather than since Incident 2 (February - March 2003) as implied by Supabarn's submission. As well, it is not clear that the leak above checkout number one was in any way related to the skylight problems.

537. On 7 July 2003, Mr Armstead emailed John Bray:

Supabarn advised that the standard of repair to the ceiling were [sic] it had leaked was lousy. James Candours [sic] stated that if it was one of their sub-contractors he would not be paying the bill! ...

There was also a roof leak above the beauty salon last weekend which the plumber was taking care of - he coated it but gutter replacement will be necessary.

538. The roof leak mentioned was not one reported by Supabarn.

539. On 29 August 2003, Eric Koundouris wrote to Dr Solomon, saying:

Repairs to the leaking roof, which will continue to be a significant problem, to my understanding have only been cosmetically addressed.

540. Supabarn's description of this as a complaint "about the roof leaking" may be strictly accurate, but the letter does not seem to refer to any particular incident of the roof leaking.

541. On 20 January 2005 at 2.34 PM, James Koundouris emailed Mr Armstead:

KALEEN IS LEAKING AGAIN - URGENT ... Water is going everywhere, could you please let me know what is being done about this as it happen [sic] every time it rains???

542. At 3.47 PM on the same day, Mr Armstead asked a JLL colleague (Ms Eagle) to contact "Twin City", who "did some work there just recently".

543. At 4.34 PM that day, Ms Eagle emailed James Koundouris, saying:

Kevin is currently at Kaleen Village and it is still raining. He has inspected and walked through the whole of the centre numerous times and has not found evidence of a water leak.

544. Although in submissions counsel for Supabarn said that "the leaks continued in January 2005", the exchange of emails casts some doubt on the nature and extent of the claimed leak.

545. On 14 October 2005 at 9.14 AM, an email from "Kaleen Supabarn" to James Koundouris reported a major water leak from the roof on the previous evening:

Water was coming in from everywhere [some through a light fitting], forcing me to close four registers during heavy trade.

546. At 9.19 AM, the email was forwarded to Mr Armstead.

547. At 11.13 AM, Mr Armstead emailed James Koundouris:

The plumber, who has maintained the services at Kaleen over a long period of time has been asked to go to Kaleen immediately you called [sic].

In addition, we have contacted a roofing expert and asked them to check out the roof today and provide us with a recommendation.

548. At 4.10 PM, Mr Armstead emailed James Koundouris:

The cause of the leakage in Kaleen last night was that the severe hailstorm that accompanied the rain blocked all the gutters. The structural integrity of the building appears good for its age etc but the current gutter design does not cope with this situation. So once the downpipe outlets are blocked the water backs up and overflows into the roof cavity. We are getting some advice to see if any additional overflow devices can be installed and will keep you informed.

549. By an email on 8 December 2005, the store manager at Kaleen Supabarn reported to James Koundouris that on 26 November, the supermarket had "experienced a torrent of water entering the store from the ceiling above the register area and over the freezers in isle [sic] one".

550. On 27 November 2005, a firm of hydraulic consultants reported to the Koundourises that:

the gutters and down pipes were not coping with the excess water demand. This in turn was causing water to overflow into the eaves and over the gutters where it could cause water damage to the building.

Normal ageing of any building will incur some type of maintenance from time to time. In this case it is the condition of the gutter and down pipes. We have noticed that the brackets of the gutters seem to be losing their shape, which is causing ponding or water to sit in the gutter for long periods of time. This is adding excess weight to the gutter making it not perform under normal conditions.

The down pipes over time as well, have distorted and seem to be leaking in areas.

Both these issues combined, are restricting the normal flow of rainwater from leaving the Gutters/Down pipes.

...

We have concluded that replacing the existing gutters & down pipes to their correct grade (fall) & profile would eliminate these issues.

551. On 28 November 2005 at 2.10 PM, James Koundouris emailed Mr Armstead, confirming that on 26 November (the day of the "torrent of water") the roof had collapsed "within the supermarket premises". He said that the shop had been closed for around four hours while there were attempts to patch the problem. A JLL representative (Mr Butt) had attended the premises (apparently on the day of the roof collapse).

552. On 28 November 2005 at 3.29 PM, Mr Armstead emailed James Koundouris:

As you know Mr Butt arranged contractors ... to ensure that the area was safe, however it is appropriate that the area stays cordoned off from public access. Others from our firm including myself, have inspected the damage but the consensus of opinion was that little could be done today while it was still wet. A contractor has been engaged and we are expecting a verbal estimate this afternoon so that we can give them approval to proceed tomorrow or Wednesday, if it is convenient for the supermarket.

There is nothing fundamentally wrong with the gutters at Kaleen; the various tradespeople that we have already sought advice from believe it is impossible to prevent hail from blocking gutters in such severe conditions. So at this stage we do not know what can be done to prevent future flooding under similar conditions but hope that by engaging a consulting engineer a solution can be found.

I will contact you as soon as we have further information.

553. A report dated 6 December 2005 from consultant engineers, who had inspected "Kaleen Supermarket" to determine the cause of flooding that occurred (via the roof and box gutters) "during a severe storm Saturday 26 November 2005", concluded:

The flooding has occurred due to hail building up in the box gutters and roof trays causing blockages impeding the water flow of the unusual heavy rains that followed. The base gutters are relatively shallow by today's standards, and the flooding occurred because water overcharged the gutter due to the hail blockages.

Additional overflows would improve the performance of the box gutters in the event of partial blockages.

End caps fitted to the ends of the ribs of the steel deck roofing would eliminate the chance of rainwater blowing in past the edge of the box gutter & roof overlap, in areas where a soaker flashing is not installed.

555. On 25 July 2006 at 8.49 AM, Karyn Fenton from the Koundouris Group emailed Mr Armstead:

Please be advised that water is leaking into the Supabarn Supermarket at Kaleen in the usual spots.

556. Counsel for Supabarn said in submissions that "[i]n July 2006 the roof leaks continued", but this leak might more accurately and less tendentiously have been reported as that there was another water leak in July 2006, almost exactly eight months after the previous leak.

557. On 7 July 2006, James Koundouris emailed Mr Armstead:

With the wet weather season starting shortly could you please confirm that the roof leak is now rectified?

558. On 28 February 2007 at 8.44 AM, James Koundouris emailed Mr Armstead:

We experienced flooding at Supabarn Kaleen last night during the storm. It occurred because the gutters were blocked with leaves.

559. At 9.32 AM on the same day, Mr Armstead emailed James Koundouris:

[A] purchase order was given last week to check the roof because we realised some of the veranda gutters were blocked - the plumber came back and said the roof was clear. I will check personally today and take the appropriate action.

560. Shortly after at 9.46 AM, Mr Armstead emailed "athomebuilders" about Kaleen Plaza:

Rick,

There are several areas of the building that continually have roof leaks and I think it is time a fresh pair of eyes had a look at the situation.

1. above the beauty salon (facing main carpark)
2. above Della Rocca (facing rear carpark)
3. above Supabarn - two areas, the first along the side facing the main carpark and second the area overlooking the LJ Hooker and Video 2000.

561. On 12 February 2008, James Koundouris emailed Mr Armstead:

There is a water leak at the front end registers of our tenancy. Could you please send someone out to repair.

562. Counsel for Supabarn submitted that Cotrell "failed to keep the gutters free of leaves", referring to a number of photographs showing leaves in gutters.

563. Mr Sukroo in cross-examination said that "there has been ongoing issues with water leaks at Kaleen ... water leaks in the roof" and that attempts to repair them were not completely successful, although he thought some of the water leaks had been repaired. He said that there might have been a problem with the capacity of the gutters and downpipes in heavy downpours.

564. In reviewing the evidence summarised at [523]-[562] above, counsel for Supabarn pointed to Incident 8, in particular the report provided to the Koundourises on 27 November 2005, as evidence of breaches of clauses 10.6 (Maintenance of Common Areas) and 10.9 (Structural Works).

565. Counsel for Supabarn made submissions about the skylight leaks, which may have been the leaks originally identified as involving the "roof windows" in April 2002 but were first attributed to "skylight" problems in February 2003. The submissions can be summarised as follows:

(a) If a roof leaks through the skylights, the skylights have not been kept in repair.

(c) The obligation to repair arose when the first leak occurred, on 5 April 2002.

(e) It can be inferred that the leaks resulted from a failure to repair the skylights.

566. Some of these propositions may be readily accepted, for instance that a leaking skylight calls for repair, and that the obligation to repair arises when the first leak occurs. Others are not so obvious: a leaking skylight may reflect a failure to keep the skylights in repair, or a design fault in the skylights. The leaks from the skylight might in fact have continued into August 2003, but that is not what Eric Koundouris said in his letter; rather, he expressed concern about whether repairs, which he implied had been done, would turn out to have been effective.

567. Counsel for Cotrell said that "[i]f the landlord, when notified of a leak, acted reasonably then there is no breach". Counsel went on to say that the evidence showed that each complaint was responded to appropriately (referring in particular to Incidents 2, 3, 6, 7 and 8) and that no breach of Cotrell's obligations under the Lease, nor any loss, had been shown by Supabarn.

568. In written submissions, counsel for Supabarn took issue with Cotrell's claim about the significance of a reasonable response, saying it was "plainly wrong", and criticising counsel for Cotrell for citing no authority and for giving no reason for Cotrell's claim. Counsel for Supabarn, however, also failed to provide any basis for its assertion that Cotrell's proposition was "plainly wrong".

569. Other aspects of the submissions made on behalf of Supabarn were entirely unhelpful: for instance, counsel for Cotrell used the phrase "No evidence of breach or loss" in response to three of the leak incidents reported by Supabarn, but counsel for Supabarn responded that the assertion "No evidence" is incorrect, because the correspondence recorded reports of roof leaks. This misstatement of Cotrell's submission (which, as noted, referred to the absence of evidence of breach or loss, not an absence of evidence of any leak as such) is unfortunately typical of the approach of counsel for Supabarn, but no less irritating for that.

570. I am satisfied that there were a number of water leaks affecting Kaleen Plaza between 2002 and 2008, and that the evidence showed that on at least one occasion, the water leaks disrupted business in the shopping centre in a way that customers might not expect in a high quality retail shopping centre, or one that was run in a manner appropriate to a high quality retail shopping centre.

571. The evidence suggested that the leaks did not have a single cause or source, but were at different times caused by:

(b) inadequacies in the design or size of the guttering, and the ageing of the guttering and its brackets, such that the guttering did "not perform under normal conditions", leading in turn to blockages and back-ups of water during hailstorms;

572. The evidence also established that JLL staff on behalf of Cotrell were generally responsive when immediate problems were advised to them, and on several occasions took steps on their own initiative to identify longer-term solutions. There were, however, a number of gaps in the evidence that leave me unable to reach any conclusion about the outcomes of various investigations and reports on structural solutions to the water leaks. There are indications in the evidence that Cotrell was not keen to spend large sums of money on the Centre, but except in relation to the proposed works quoted for in April 2002, there is nothing from which I could infer that particular suggested solutions had been rejected by Cotrell. To the contrary, the 14 March 2003 fax to Dr Solomon stating that "[t]he leaks around the skylights have been identified and corrected" does not appear to be challenged by Supabarn.

573. That is, the evidence does not establish that Cotrell had failed to take steps aimed at solving the building faults revealed by particular leaks, or had by an ongoing failure to maintain and repair the building allowed it to deteriorate to a state of disrepair that was responsible for any or all of the leaks. It establishes that there may have been design flaws and other inadequacies in the building itself that left it susceptible to leaks, especially during unusual weather events such as the severe hail storms in October and November 2005. It also shows that there had been various attempts to identify solutions for those problems, but it is unclear whether any of the suggested solutions had been implemented.

574. Supabarn's submission that water leaks prove that a building has not been kept in repair overlooked at least two matters. One is that a building may have a design or construction fault such that, although kept in perfect repair, it leaks whenever there is rain, whenever there is rain of a certain volume, intensity or duration, or whenever there is some other weather event that challenges the building as designed (for instance, hail sufficient to block gutters followed immediately by heavy rain). I do not see that a failure to repair a design or other fault that had not come to Cotrell's attention could be a breach of an obligation to keep in good repair.

575. The other matter overlooked by Supabarn is that a fault in a building rendering it susceptible to water leaks in particular circumstances (whether the fault is in its design or construction) may not come to the knowledge of the owner at all until there is a relevant weather event. In a city regularly affected by more or less severe droughts, this may not happen quickly.

576. I cannot see that leaks from the skylights of the building in 2002 and 2003, or the fact that the gutters were said to have inadequate capacity in 2005 (although there was no suggestion that the guttering did not comply with relevant standards when the building was erected in 1988), established that the building had not been kept in adequate repair.

577. On the other hand, I accept that the non-performing gutters and distorted downpipes were identified in November 2005 and that from then on there was an obligation to repair them. It is not clear when or if the gutters and downpipes were repaired or replaced, and there is evidence that further roof leaks were reported in July 2006, February 2007 and February 2008. However, the February 2007 leak was attributed by James Koundouris to leaves in the gutters, and counsel for Supabarn pointed to other evidence that from time to time the gutters were full of leaves. The focus from February 2007 on leaves in gutters (rather than structural inadequacies or disrepair) as a source of leaks would allow (although not require) an inference that the repairs proposed in the report obtained by the Koundourises in November 2005 had been carried out.

578. As to the dispute between the parties about whether the landlord's obligation goes beyond responding reasonably to any notified leak, I note only that, having rejected the proposition that every leak proves a failure to keep in repair, there is no obvious reason to read a contractual provision, presumably reflecting "business common sense", as rendering a building owner immediately liable even where the owner could not have known that there was any relevant problem that needed to be addressed, and even where the owner could be shown to have run an apparently adequate continuing maintenance program.

579. In the current case, there is no evidence either way about routine as distinct from ad hoc maintenance, but there is evidence that Cotrell's agents JLL responded appropriately to initial reports of leaks, evidence that solutions were sought to the roof leak problems, evidence that some proposed solutions were implemented and evidence suggesting that some attempted solutions were unsuccessful. It was not clear to me that Cotrell was correct in saying that loss would need to be proved to establish a breach of the relevant Lease provisions, but it did seem that unless loss was proved, proving a breach would generally seem to be pointless. In this case, I am not satisfied to the necessary standard that Cotrell breached either of clauses 10.6 and 10.9 of the Lease in its approach to keeping Kaleen Plaza appropriately waterproof, even when the obligations were imposed by those clauses in the context of an obligation to run the Centre "as a high quality retail shopping centre".

580. The failure to keep the gutters free of leaves is dealt with in the context of complaints about cleaning.

581. There is documentary evidence dating back to early 2003 of repeated complaints by Supabarn about the cleaning of the shopping centre, and repeated approaches by JLL to the cleaning contractors, culminating in a demand in 2004 that the individual employed to clean the shopping centre be transferred from Kaleen Plaza. There is no need to review all the complaints, but I note by way of example that:

(a) In March 2003 Mr Armstead wrote to The Pickwick Group Pty Limited (Pickwick) as follows:

Currently there are several aspects in which centre standards might be regarded as unacceptable, or acceptable but unexceptional and these are currently being addressed. The standard of cleaning standard [sic] is one [of] the latter, because although generally "clean" there is a general lack of attention to detail, evident in things like the build up of dirt in corners and accumulation of dust & cobwebs on fixtures and fittings.

(b) In July 2008 Mr Armstead wrote to Pickwick as follows:

There are small issues ... nothing significant just detail and mostly repeats of items mentioned many times before that we expect you have already picked up during your inspections. For instance, at Kaleen removal of posters, notices and ensuring that fire exits are not blocked by displays, plants or any other items require ongoing focus.

Greater concerns at Kaleen are:

1. The external areas are neglected - with the time Pickwick is on site they should be spotless.
2. Regular shift attendance may be a problem - I have noticed that the staff for one shift will go before the next person arrives and therefore if the next person is delayed or does not show the centre is exposed. I have observed this several times recently but cannot quantify however am concerned that may happen more often and for longer than either of us would like to believe.

582. Also, in May 2005 James Koundouris had complained to Mr Armstead about the fact that Dr Solomon was a director of the cleaning company that was engaged in September 2003,[8] suggesting that this matter had required "material disclosure to the tenants under the Leases (Commercial and Retail) Act 2001".

583. James Koundouris gave evidence that by the time of the trial, there was a cleaner on duty at Kaleen Plaza all the time it was open, but said that there had been times when no one was on duty.

584. Mr Powderly said that during each of his 2006, 2007 and 2012 inspections of Kaleen Plaza, he had observed, by reference to the outside of the building, the gutters, and the cleanliness of the toilets, that cleaning and maintenance at Kaleen Plaza were "below a reasonable standard". He had included in his report a bundle of photographs said to show poor maintenance of part of the shopping centre, but it emerged that the photographs related to other properties in the group centre, and did not show property owned by Cotrell.

585. Mr Sukroo had provided an affidavit about aspects of JLL's management of Kaleen Plaza, which gave a generally positive picture of cleaning arrangements at Kaleen Plaza, but Mr Sukroo conceded that it did not mention facts of which he had been aware at the time, including:

(a) that there had been a number of complaints about the quality of cleaning at Kaleen Plaza, including about individual contractors and staff, and that JLL had "changed contractors in 2004";

(b) that there had been numerous complaints by Supabarn to Mr Armstead that the cleaners were not on the premises for the hours they should have been;

(c) that Mr Armstead had investigated the complaints, and had written to the cleaning company in October 2004 asking that the cleaner be transferred (referred to in some evidence as Mr Armstead "sacking" a cleaner).

586. Although Mr Sukroo's evidence that JLL "changed contractors in 2004" was not challenged, the documentary evidence indicates that cleaning services were provided by Pickwick Group Pty Ltd as at March 2003, that it was the Pickwick Group that was asked to transfer the cleaner in October 2004, and that JLL was still dealing with the Pickwick Group about cleaning problems in 2008, when he advised that the cleaning contract would soon go to tender.

587. Mr Sukroo said that from time to time when he visited Kaleen Plaza he had observed a lack of attention to detail in the cleaning of the shopping centre, and he agreed that the standard of cleanliness was crucial to the way in which customers, business owners and retail staff perceived the centre. He accepted that there had been a serious failure on the part of the cleaners amounting to a breach of contract on their part, which had justified the removal of "the delinquent cleaner".

588. Mr Sukroo said that he nevertheless stood by the statement in his affidavit that "cleaning issues are usually identified quickly and where possible, resolved promptly", and that his claim in the affidavit that "the cleaners have been working on site at all times" reflected the fact that the centre managers had had a cleaning contractor engaged for the relevant hours.

589. Counsel for Supabarn put to him that in preparing his affidavit he was trying to obscure some of the picture about cleaning. Mr Sukroo denied trying to downplay the cleaning problems, saying:

issues with the cleaners [are] one of those things that happen in a shopping centre. It was nothing particularly out of the ordinary.

... This is part of what we do. We manage contracts. We manage contractors. If they don't perform, we make arrangements. That's part of our professional - ......

590. Mr Sukroo had been aware of the letter complaining about Dr Solomon's involvement with the cleaning contractor (at [582] above).

591. There was photographic evidence adduced by Supabarn of cleaning failures said to have extended for months or even years at a time. The bundle of photographs was also said to evidence other kinds of failure to comply with cl 10.6, but Supabarn's submissions relate largely if not entirely to cleaning failures. Supabarn's table setting out the various complaints (cleaning and other failures), and their asserted timeframes, can be summarised as follows:

(a) The defendant failed to remove the graffiti from an electrical box (November 2008 - February 2009; January - April 2013); failed to clean the graffiti (November 2008 - February 2009); failed to remove the graffiti from the awnings (November 2008 - February 2009); failed to remove the graffiti from the hopper (December 2008 - April 2010); failed to remove other graffiti (October 2012, January - April 2013).

(b) The defendant failed to ensure that the area behind the hopper was free of rubbish (December 2008 - November 2009); failed to remove the rubbish dumped on the roof of the shed (November 2008 - March 2009); failed to remove the large blue object dumped on the meter box (December 2008 - March 2009).