Total Destination Marketing Pty Limited v Horizons Snowy Mountains Pty Ltd

Proper Construction 7The first and most obvious difficulty with the plaintiff's contentions is that clause 21.5 expressly, and without qualification, provides that the landlord shall be entitled to inspect and audit "records" of Gross Rooms Revenue. 8It does not expressly impose any limitation on the words "the records". There is no definition of "records" in the lease. Records is a word of wide import commonly used and well understood. It is not readily susceptible to obvious limitation unless the construction compels it. I do not think that there is any reasonable process of construction by which clause 21.6 can be regarded as serving the purpose of some sort of dictionary so as to limit the meaning of the word "records" in clause 21.5. 9The second difficulty with the plaintiff's case is that the submissions on its behalf indicate that the plaintiff has no objection to the provision to the defendant of source documents which are outside the records recorded in the computer software package known as Room Master. The real complaint by the plaintiff seems to be about whether all source documents (outside the software package known as Room Master) should be produced or only some of those source documents. 10The evident commercial purpose of clause 21.5 is to enable the landlord to verify, check and corroborate whether the Gross Rooms Revenue disclosed by the tenant is accurate. One would naturally expect the party entitled to carry out such an inspection and audit to have access to all of the documents which are fairly relevant to the process of verification and corroboration. Mr Boundie, a chartered accountant who gave evidence on behalf of the plaintiff, explained that in addition to the Room Master computer system the plaintiff keeps a general ledger under a separate software package known as QuickBooks, which in effect collects all the accommodation revenue. It is not my function in this case to determine, nor am I being asked to determine, what further source documents are caught by the expression "the records". But it is difficult to see why the general ledger kept pursuant to this separate computer accounting package would not satisfy that description. There may also be other documents which satisfy the description of the records to which the landlord is entitled pursuant to clause 21.5. 11The essential legal difficulty with the construction for which the plaintiff contends is twofold: (a) The first, which I have already explained, is that clause 21.6 is an insufficient platform on which to base a submission about the meaning of clause 21.5. It simply does not read as if it were fulfilling the purpose of defining the "records" intended to be covered by the right to inspect and audit under clause 21.5. It is no more than a statement of an obligation by the tenant to maintain a computer software package for the purpose of recording, among other things, Gross Rooms Revenue. It says nothing about what other methods of recording may be kept by the tenant or what other documents might be in existence which might fairly be relevant to the process of inspection and audit so as to enable the landlord to verify and corroborate the accuracy of the revenue information revealed by the tenant. (b) The second aspect which causes a difficulty is that I am unwilling as a matter of principle, and unable as a matter of linguistic analysis, to import into clause 21.5 any limitation on the ordinary and natural meaning of its words. I see no justification for doing so. For my part I do not see any ambiguity in the word "records" where appearing in clause 21.5 which would justify a search for some indication of meaning in the surrounding circumstances. In any event, the plaintiff does not seek to take me on that route. Its case is dependent on the effect which it says flows from the language of clause 21.6. 12The importance of adopting a principled approach to the construction of commercial contracts is well understood. Commercial contracts should be construed according to the language adopted by the parties. It may be that from time to time, parties use language which on reflection is not as precise as they might have wished. But it is not the Court's role, except in a claim for rectification, or where there has been transparent error and the intended words or numbers are obvious, to endeavour to cure the unintended consequences of imprecision in the language chosen by the parties. Contractual language that is unambiguous should be applied in accordance with its terms and not by reference to subsequent attempts to impose a qualification which is not dictated by the language, by the syntax and by the linguistic context. 13This is the approach sanctioned by the High Court of Australia. In Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45, the court found no reason for granting special leave to appeal from a decision of the New South Wales Court of Appeal which turned in part on the following statement in that court by Macfarlan JA, which I respectfully adopt: A court is not justified in disregarding unambiguous language simply because the contract would have a more commercial and businesslike operation if an interpretation different to that dictated by the language were adopted.

Conclusion 14For those reasons I determine the separate question in favour of the defendant and order the plaintiff to pay the defendant's costs of the hearing today. The parties should bring in Short Minutes. o0o DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 November 2011