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Trencrom Investments Pty Ltd v Caltex Petroleum Pty Ltd

 

[2011] QSC 160

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

Trencrom Investments Pty Ltd v Caltex Petroleum Pty Ltd [2011] QSC 160

PARTIES:

TRENCROM INVESTMENTS PTY LTD
ACN 010 814 276
(applicant)
v
CALTEX PETROLEUM PTY LTD
ACN 000 007 876
(respondent)

FILE NO:

12779 of 2010

DIVISION:

Trial Division

PROCEEDING:

Originating Application

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

10 June 2011

DELIVERED AT:

Brisbane 

HEARING DATE:

6 June 2011

JUDGE:

Applegarth J

ORDER:

Paragraphs 3 and 4 of the Amended Originating Application are adjourned to a date to be fixed.

CATCHWORDS:

LANDLORD AND TENANT – RENT – PROVISIONS AS TO RENT IN AGREEMENT FOR LEASE OR LEASE – RENT REVIEW CLAUSES – DETERMINATION BY THIRD PARTY – where property leased for use as a service station – where lease amended to change lessee – where rent review clause provided for each party to obtain a valuation of market rent – where clause provided for appointment of umpire in the event that the two valuations differed by more than three per cent of their aggregate – where clause required valuers to disregard “Lessee’s fittings” and any refurbishment or upgrade carried out by the lessee – where valuations differed substantially – where parties in dispute as to whether umpire’s determination is required to disregard lessee’s improvements – where umpire not yet appointed – where applicant sought declarations as to proper construction of the lease in relation to the definition of lessee’s fittings and whether “lessee” included the previous lessee that carried out the upgrade of premises – whether declaration should be made

PROCEDURE – MISCELLANEOUS PROCEDURAL MATTERS – DECLARATIONS – APPROPRIATE FORM OF RELIEF – DISCRETION OF COURT – OTHER CASES where rent review clause in lease provided for valuation criteria and for appointment of umpire to resolve valuation dispute – where each party disputes the other’s valuation on basis of wrongly applied criteria – where applicant seeks declarations as to proper construction of valuation criteria in rent review clause – where umpire not yet appointed – whether declaration would be of utility when umpire yet to be appointed and will be required to address numerous issues in making determination – whether Court should intervene before the dispute resolution process under the lease has been completed

Alcatel Australia Ltd v Scarcella [2001] NSWCA 401 cited

Bank of South Australia v South Australian Health Commission (1996) 65 SASR 409 cited

British Airways PLC v Heathrow Airport Ltd [1992] 1 EGLR 141 cited

Commonwealth v Wawbe Pty Ltd (1999) ANZ Conv R 596; [1998] VSC 82 cited

Eureka Funds Management Ltd v Freehills Services Pty Ltd (2007) V Conv R 54-732; [2006] VSC 461 cited

Fisons Pty Ltd v Rostinga Pty Ltd (1989) NSW Conv R 55-489 followed

Legal and General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314 cited

Nuttall v S4U Pty Ltd [2010] QSC 191 followed

Programme Holdings Pty Ltd v Van Gogh Holdings Pty Ltd [2009] WASC 79 cited

Ross Cook and Brett Cook Pty Ltd v Australian Sugar Cane Feeds Pty Ltd [2009] QSC 178 followed

COUNSEL:

P Dunning SC, with P Franco, for the applicant

R Lilley SC, with D de Jersey, for the respondent

SOLICITORS:

Frampton Legal for the applicant

Norton Rose Australia for the respondent

  1. The applicant owns real property at Shailer Park upon which a service station is built (“the premises”).  The respondent leases the premises pursuant to a lease that commenced on 22 June 2000 (“the lease”).  The parties are in dispute over a market rent review.  The applicant sought six declarations in its Amended Originating Application.  I determined four of these in ex tempore reasons on 6 June 2011.  The remaining declarations relate, in general terms, to whether certain improvements to the premises undertaken by the lessee should be taken into account in determining the market rent.
  1. The respondent (“Caltex”) submits that the Court should decline to make the declarations, at least at this stage of the agreed rent review process. Alternatively, it submits that the construction of the lease for which the applicant contends should not be accepted.

Background

  1. The service station was constructed between 1989 and 1990. The applicant and Caltex Australia Petroleum Pty Ltd (“Caltex Australia”) entered into a lease that commenced on 21 June 1990 and terminated on 21 June 2000.  On 20 March 2000 a new lease, commencing 22 June 2000, was entered into between the same parties.  It provided in cl 7.6 for alterations to the premises, and for “the Lessee” to effect and pay for the works, save for certain works that enlarged the premises (“the Lessor’s Works”).  The applicant was to reimburse to the Lessee the cost of the Lessor’s works, to a sum not in excess of $75,000.
  1. The works were undertaken by Caltex Australia and were completed by the end of January 2001.
  1. Caltex Australia assigned its interest in the lease to Caltex, effective 30 April 2004. 
  1. The lease was amended on or about 26 November 2008 to substitute Caltex as lessee and to extend the term until 21 June 2020. The amendment also provided for a market review for the lease year commencing 21 June 2010. The lease and the amendment have been registered.
  1. Clause 4.4 of the lease provides for a market review of rent. Clause 4.5 of the lease makes detailed provision in the event that the parties are unable to agree an assessment of the market rent that is to apply from a particular review date. In general terms, it provides for each party to obtain an assessment by a valuer nominated by it. If the difference between the respective assessments exceeds three per cent of their aggregate, the valuers agree on and appoint an umpire. Failing such agreement, an umpire is appointed by the President of the State Division of the Australian Institute of Valuers and Land Economists. If it becomes necessary for the umpire to determine the current market rent, his or her determination will be final and binding on the parties.
  1. The applicant obtained a valuation from Martin Hurry of CB Richard Ellis, dated 14 September 2010, which assessed the market rent for the premises at $625,000 per annum.  Caltex obtained a valuation from Allen Crawford of Chesterton International Property Consultants, dated 30 September 2010, which assessed the market rent for the premises at $390,000 per annum.  Because the difference between their valuations is greater than three per cent of the aggregate of their assessments, it will be necessary for an umpire to be appointed pursuant to cl 4.5(f) of the lease.  However, an umpire has yet to be appointed.

Disputes between the parties

  1. Both the applicant and Caltex have contended that the assessment carried out by the other party’s valuer does not comply with cl 4.5(g) of the lease. That clause provides:

“(g)In determining the current market rent each Valuer (including the Umpire) shall be taken to be acting as an expert and not as an arbitrator, and shall assess and determine respectively the current market rent for the Premises as at the particular Review Date having regard to this Lease and shall:

(i)disregard:

(A)the value of any goodwill of the Lessee’s Business, the Lessee’s Fittings and any other interest in the Premises created by this Lease;

(B)any impaired condition of the Premises if that condition results from any work effected or not carried out on the Premises by the Lessee or from any breach under this Lease by the Lessee;  and

(C)any sublease or other sub-tenancy agreement or occupational arrangement in respect of any party of the Land and any rental, fees or money payable under any of them; and

(D)any refurbishment or upgrade of the Premises carried out by the Lessee with the consent of the Lessor or otherwise permitted by this Lease, with the intent of both the Lessee and the Lessor being that in determining the then current market rent the Valuer shall exclude any factor arising from the enhanced value and amenity of the Premises which have resulted from the Lessee’s own expenditure or work.  The Lessee and the Lessor must provide to any Valuer any drawings plans photographs or specifications of any nature relating to the Premises either before or after such refurbishment or upgrade has been completed to enable the Valuer to give effect to this sub-clause, and

(ii)consider the Premises as available for use for any purpose for which the Premises may be used in accordance with this Lease;

(iii)consider the sales information made available pursuant to clause 22.”

  1. It is unnecessary to canvass the contentions that preceded the filing of the Originating Application. One issue arose which relates to the fact that the business that is operated from the premises is a Woolworths Redemption Site. In paragraph 2 of its Originating Application the applicant sought:

“2.A declaration that upon the proper construction of cl 4.5(g) of the Lease, in determining the current market rent for the Premises each valuer appointed by the applicant and the respondent, and any umpire appointed pursuant to cl 4.5 of the Lease, is bound in assessing and determining the current market rent to disregard, or not to have regard to, the fact that the business operated from the Premises is as a Woolworths Redemption Site.”

It proved unnecessary to make a declaration in those terms because both parties have agreed that this is the effect of cl 4.5(g).  However, the parties are in dispute about whether the other party’s valuation did in fact disregard, or not have regard to, the fact that the business that is operated from the premises is a Woolworths Redemption Site.  Caltex says that the requirement for that fact to be disregarded does not mean that it is “irrelevant and immaterial”, as stated in paragraph 1.5 of Mr Hurry’s valuation.  Instead, it contends that the effect of cl 4.5(g) is that the valuation must be undertaken as though the site is not a Woolworths Redemption Site.  In any event, the manner in which each appointed valuer disregarded, or otherwise had regard to, the fact that the site is a Woolworths Redemption Site may explain, in part, the substantial difference between their valuations.  Another possible explanation is the extent to which they had regard to the improvements made by Caltex Australia.  In that respect, Mr Crawford assessed the market rent for the premises at $390,000 per annum after applying cl 4.5(g)(i)(D) and cl 7.6.2.  He did so on the basis that the added value of the upgrade should effectively be proportioned between the Lessor and Lessee in the same proportion as their respective expenditure.  Had there not been an exclusion for the Lessee’s Works, Mr Crawford would have assessed the market rent at $433,000 rather than $390,000.  This difference serves to highlight the significance of the operation of these clauses in respect of the upgrade of the premises that was carried out by Caltex Australia.  It is to this issue that the remaining two paragraphs of the Amended Originating Application are directed.

  1. The applicant seeks the following declarations in paragraphs 3 and 4 of the Amended Originating Application:

“3.A declaration that upon the proper construction of cl 4.5(g)(i)(D) of the Lease the expression “refurbishment or upgrade of the Premises” does not include “Lessee’s Fittings” as that expression is defined in cl 1.1 of the Lease.

  1. A declaration that upon the proper construction of clauses 1.2(f) and 4.5(g)(i)(D) of the Lease, the expressions “Lessee” and “Lessee’s” in cl 4.5(g)(i)(D) does not include any predecessor in title to the respondent.”

A summary of the parties’ contentions on the issues of construction

  1. It is appropriate to summarise the parties’ contentions in relation to the proper construction of the lease in connection with the expression “refurbishment or upgrade of the Premises” in cl 4.5(g)(i)(D) and the term “Lessee’s Fittings” as defined in cl 1.1 of the Lease and whether the expressions “Lessee” and “Lessee’s” in cl 4.5(g)(i)(D) include Caltex’s predecessor in title, Caltex Australia.
  1. The applicant submits that the critical fact in determining the issue of construction is that the lease was amended on or about 26 November 2008 to remove references to Caltex Australia and to identify Caltex as the lessee (and also to increase the term of the lease by 10 years). It submits that while Caltex may simply have been the assignee of Caltex Australia between 31 March 2004 and 26 November 2008, this was not the case as at the review date of 22 June 2010.  As a result, the improvements that were made in 2001 are not the “Lessee’s Fittings” and do not fall to be disregarded in accordance with cl 4.5(g)(i)(D).
  1. According to the applicant, as at 22 June 2010:

(a)the “Lessee” was Caltex;

(b)cl 1.2(f) provided that “[a] reference to any party to this Lease or any other agreement or document includes the party’s successors and substitutes or assigns”;

(c)there was no provision which expressly or impliedly defined Lessee to include a predecessor in title;

(d)cl 4.5(g)(i)(D) of the lease only obliged the valuers and the umpire to disregard “any refurbishment or upgrade of the Premises carried out by the Lessee”.  There was a similar proscription in cl 4.5(g)(i)(A) in relation to “Lessee’s Fittings”; and

(e)such words plainly do not encompass improvements effected by Caltex Australia.

  1. The applicant submits that if the parties wished to exclude improvements effected by Caltex Australia in any rent review, a clause to this effect could easily have been included as one of the amendments made on 26 November 2008.  It submits that effect should be given to the natural and ordinary meaning of the words used and that, as a consequence, cl 4.5(g)(i) does not require the valuer or the umpire to disregard improvements effected by Caltex Australia.
  1. Leaving aside its principal submission that I should not exercise the discretion to make declarations in relation to the proper construction of these provisions, Caltex submits that the applicant’s construction is erroneous and that the clear intent of cl 4.5(g)(i)(D) was to ensure that the Lessee was not to be prejudiced by an increase in rent because its own expenditure enhanced the value of the applicant’s premises.  It submits that it is erroneous to consider whether the present Lessee is entitled to the benefits granted to the initial Lessee under the lease before assignment.  This is because the present Lessee is the named Lessee in the lease, and its entitlements do not flow from any assignment by the first Lessee in time, but rather from a registered amendment of the lease which was effected in October 2008.
  1. Caltex refers to the terms of cl 7.6.2, which defines those parts of the works that will be “Lessor’s Works”, with the obvious conclusion that the remainder of the works are “Lessee’s Works”. It points to the definition of “Lessee’s Fittings”, which includes:

“all fixtures, fittings, plant, equipment, partitions or other articles and chattels of all kinds (excluding stock-in-trade) which are not owned by the Lessor and at any time are in the Premises including the items specified in the Schedule of Lessee’s Fittings.”

Caltex submits that two things should be noted about this definition:

(a)first, while the defined term is “Lessee’s Fittings” nevertheless it includes “fixtures... not owned by the Lessor”;

(b)second, and most importantly, it operates by reference to what the lessor does not own rather than by reference to what the lessee does own.

  1. A number of arguments are advanced by Caltex based upon the terms of the lease in support of the submission that the increase in market value of the demised premises attributable to costs incurred by a Lessee in complying with its obligations under cl 7.6.2 is to be disregarded in terms of cl 4.5(g)(i)(D).  These include the submission that cl 4.5(g)(i)(D):

(a)applies to refurbishments or upgrades “carried out by the Lessee with the consent of the Lessor or otherwise permitted by this Lease”; and

(b)requires the valuer or umpire to exclude “any factor arising from the enhanced value and amenity of the Premises which have resulted form the Lessee’s own expenditure or work” (emphasis added).

  1. Finally, Caltex submits that to restrict the operation of the rent review clause so as to exclude its benefits from the current Lessee appears to fly in the face of the parties’ commercial intention as to the operation of the lease and in particular cl 7.6.2. 

Should the discretion to grant declarations be exercised at this stage?

Caltex’s submissions

  1. Caltex submits that the applicant seeks judicial intervention in the rent review process agreed by the parties and that the Court should be reticent to exercise its discretion to intervene in such a case. It submits that:

(a)The Court will not intervene to direct an appointed valuer how to undertake his or her task where the valuer has yet to complete that task.  That would defeat the purpose of the parties’ appointing an expert to determine the dispute between them.  In the present case an umpire has yet to be appointed, so the agreed mechanism for valuing rent has yet to be completed.

(b)Where, as here, a valuer or umpire has not approached the Court for directions or assistance, the Court will not ordinarily intervene to direct the valuer how to undertake his or her task. 

(c)The Court should not entertain a course that may give rise to a multiplicity of actions, as can happen when there is intervention in an incomplete agreed valuation procedure.  In the present case there is potential for further applications before an umpire is appointed, while the umpire is undertaking his or her task and after the umpire’s task is complete.  Deciding the present application will not necessarily end disputes between the parties.

  1. It relies upon a number of authorities in support of such an approach, including the recent decisions of this Court in Ross Cook and Brett Cook Pty Ltd v Australian Sugar Cane Feeds Pty Ltd[1] and Nuttall v S4U Pty Ltd.[2]  Caltex places particular reliance upon the decision of Bryson J in Fisons Pty Ltd v Rostinga Pty Ltd.[3]  In that case a party sought declarations concerning the true construction of a registered lease when appointed valuers had failed to agree on the proper minimum rent.  The plaintiff contended that the dispute rested upon a question of law and not of valuation, and previewed an application for declaratory relief.  The defendant did not consent to the submission of the matter to the Supreme Court for determination.  Justice Bryson stated:

“In understanding the rent review provisions I should have in mind throughout that what the parties have agreed to be bound by is not the proper minimum rent referred to in cl. 14.1 or 14.2, but the proper minimum rent as determined by the process specified in the lease.  If a Judge or a jury were to determine on proper directions on the law and on the construction of the deed what as an objective fact is the proper minimum rent with the qualifications found in the lease it would not be an enforcement of the parties’ agreement to make the plaintiff pay that and the defendant accept it.  The process for determining the amount of the proper minimum rent is as much a part of the parties’ agreement as the covenant to pay that rent, and the covenant to pay rent and the provisions stating the principles for reviewing rent cannot finally be separated and enforced independently of other provisions of the same lease which contain machinery for its ascertainment.”[4]

After considering the complicated provisions of the lease and the contentions of the parties concerning its proper interpretation, Bryson J declined to grant declaratory relief.  His Honour concluded:

“It does seem to me to be most inexpedient that I should make any of the declarations claimed.  They would lack utility.  I would be acting in the dark as I do not really see the significance which the declarations would have in relation to valuation exercises which I am not asked to perform.  There is no consent from the lessor to my undertaking the valuing task, or to my undertaking any part of it, or coming to any conclusion on any question of law or the construction of documents or any other questions.  If all parties joined in asking the Court to establish some matter which related to a rent review, my approach might be different, but that did not happen.  The lack of the lessor’s consent is not entirely conclusive against declaratory relief, which conceivably might be granted even where there were a provision for expert determination such as here if the relevance of the question asked and the expediency of answering it appeared sufficiently clearly.  In this case and in my opinion they do not.  The parties are parties to a lease with complicated and obscure provisions which contains its own mechanism for resolving their difficulties, and that mechanism has been partly employed, without result, and remains to be completed, with the advantage of relative immunity from further review.”[5]

In reliance upon this and other authorities Caltex submits that there are two situations in which the Court will intervene:

(a)before the expert determination, where the expert is in doubt as to the proper construction of a clause relevant to the expert’s task, then, having received submissions from both parties, it would be open for the expert to request assistance from the Court; or

(b)after the expert determination, should the expert err in principle in some serious way in the determination, it may be that the determination will be adjudged by the Court to be invalid.  If there is no serious error, what must ordinarily be shown to attract judicial intervention is either fraud or collusion.[6]

  1. Caltex relies upon the fact that neither of those circumstances has arisen in this case. An umpire has yet to be appointed. Caltex offered to adjourn the application to a date to be fixed following the appointment of any umpire if the umpire sought assistance from the Court as to the questions of construction. In the circumstances, Caltex contends that the application for declarations is premature and declarations should not be made because they concern the construction of a lease which contains a mechanism for the appointment of valuers and, ultimately, an umpire to determine the rent. This mechanism has yet to run its course.

The applicant’s submissions on the issue of discretion

  1. The applicant advances five submissions as to why the Court should exercise its wide discretion to grant declaratory relief in the present circumstances. The first is that there is plainly a dispute between the parties as to the proper construction of a lease. Secondly, it submits that the dispute is one which, if not decided now, will almost inevitably come back before the Court. This is because the umpire needs to decide, among other things, whether to include the Caltex Australia improvements in the assessment of the rent. The umpire is therefore likely either to:

(a)require the parties to obtain a declaration as to the proper construction of the lease before embarking upon his assessment; or

(b)adopt, as part of his determination, an assessment of the rent with which one party will disagree.

  1. The applicant’s third submission is that if the issue was to come back before the Court in the latter situation, then it would carry with it an additional layer of argument and complexity in that a party to such an application would contend that the determination was final and binding and not open to challenge.[7]  It submits that although there is reason to doubt the correctness of such an approach in the context of paragraphs 3 and 4 of the application, it is preferable to avoid the argument altogether.
  1. The applicant’s fourth submission is that the declarations sought in paragraphs
    3 and 4 of the application concern a pure issue of law that falls within the province of a lawyer, rather than an expert valuer.  They do not presume to tell the expert how to do his or her job but are said to facilitate the expert in doing his or her job by seeking an authoritative determination as to what the lease means.  Finally, the applicant submits that the issues in question are of importance to the parties, as reflected in the difference in the rental assessed by the parties’ respective valuers, and the fact that Mr Crawford’s assessment would have been $43,000 higher if he had taken into account the improvements made by Caltex Australia. 
  1. The applicant submits that this case is distinguishable from others in which there has been a discretionary dismissal of an application for declaratory relief. This case is said to involve a pure question of law, and particular reliance is placed upon the statement of Olsson J in Bank of South Australia v South Australian Health Commission[8] that:

“there is a very clear distinction to be made between an attempt to have a court dictate to an independent expert as to technical and factual aspects going to the professional valuation process, on the one hand, and to ask it to determine fundamental questions of law as to the proper construction of the relevant contract, on the other.”

In summary, the applicant submits that while it is valid to consider whether a declaration would inappropriately intrude into an expert determination process, one should not assume that an application for declaratory relief in the context of a rent review process should prima facie be dismissed on discretionary grounds.  It submits that the discretion to give or withhold such relief is wide and that it should be exercised in the circumstances of this case.

Conclusion on the exercise of the discretion to grant declaratory relief

  1. I accept the applicant’s submission that the issues about which declarations are sought are essentially questions of law. They do not trespass into the territory of the valuer by giving directions as to the factors that should be taken into account and the weight that should be attached to those factors in arriving at a determination of the market rent.[9]  I also accept that it is probable that the issue of construction will come back before the Court.  The issue of construction, however, is only one of many questions that will be addressed by the umpire, once appointed.  The umpire will need to consider factual issues concerning the items that constitute the “Lessee’s Fittings” and their value.  He or she will be required to consider whatever evidence is submitted by the valuers and the parties as to their assessments of the current market rent, and in arriving at his or her determination of the current market rent to disregard, or not have regard to, the fact that the business operated from the premises is a Woolworths Redemption Site.  The manner in which the umpire goes about these and other tasks in the process of determining the current market rent is not a matter in respect of which the Court should lightly intervene, particularly in a piecemeal fashion.  This would only serve to delay the umpire completing his or her task.  This is not a case in which the umpire seeks assistance from the Court or one in which the parties join in seeking a declaration as to the proper construction of the rent review clause.[10]
  1. The issue of construction that divides the parties may not present the same “maze of problems” that Bryson J considered in Fisons Pty Ltd.  Yet, the point of principle stated by his Honour in that case explains why a court should be cautious in intruding into agreed valuation procedures.  His Honour referred to the fact that the parties, in their wisdom, chose “a means for resolving differences which kept them in the hands of an expert who was to do nothing but make a determination as an expert, and kept them out of the judicial system with its lengthy hearings, long statements of reasons and chain of appeals”.[11] 
  1. In this case the parties agreed to be bound by the umpire’s determination of the current market rent, and this entailed the umpire’s determination of the proper construction of the lease, questions of fact and the weight that should be attached to relevant factors in arriving at an expert determination of the current market rent. I acknowledge that the parties, in agreeing to be bound by the mechanism for expert determination of the current market rent, also must be taken to have agreed that the process might include intervention by the Court to give proper directions on the law. However, I do not consider that it is an appropriate exercise of my discretion to determine the issues of construction at this stage. Such a course will not necessarily resolve the dispute between the parties. It may delay and complicate the determination which the parties agreed should be entrusted to an expert. The preferred course, at least at this stage, is to allow the agreed mechanism for determination of the current market rent to proceed and to permit any appointed umpire to decide all questions entrusted by the parties to his or her determination.
  1. If I was to determine the issues of construction raised in paragraphs 3 and 4 of the Amended Originating Application there is a high probability that the unsuccessful party would appeal my decision. The completion of the rent review process would be delayed. Depending upon the matters that are submitted to the umpire, further issues may arise in which either the umpire or the parties seek declarations. A multiplicity of proceedings and appeals should be avoided, if possible. The agreed process for an umpire to determine the current market rent should proceed. The umpire will have the benefit of the submissions made in this application concerning issues of construction and might seek legal advice in relation to them. If the umpire seeks direction from the Court on the issue of construction then at that stage the Court can consider the appropriate exercise of its discretion to intervene in relation to that issue, and any other issues that may be ripe for judicial determination. However, in the absence of the consent of the parties, or a request from the umpire for the assistance of the Court as to the proper construction of relevant provisions of the lease, the agreed procedure should run its course.
  1. The course that it runs depends upon the yet-to-be appointed umpire, the submissions of the parties to the umpire and the terms of the lease insofar as they control the process. One possibility is that the umpire’s determination will disclose what his or her assessment of market rent would be if the applicant’s construction of the relevant terms of the lease was adopted, and what it would be if Caltex’s construction was adopted, followed by the umpire’s actual determination, based upon the construction adopted by the umpire and findings of fact about a variety of matters including what constitutes the “Lessee’s Fittings”, their value, the “refurbishment or upgrade of the premises” and the “Lessor’s Works”. The precise form in which the umpire provides the determination is a matter for the umpire, subject to the terms of the lease. There is an attraction in having the umpire decide all questions of fact and law entrusted to him or her as soon as possible, subject to a request by the umpire and the parties for the court to intervene. One possibility is that the umpire’s determination will disclose the difference between acceptance of the applicant’s contentions and acceptance of Caltex’s contentions on the disputed issue of construction. Whether it does so, and the form in which it does so, is a matter for the umpire.
  1. If, after the umpire has made a determination, a party seeks to challenge it, then it will be necessary for the Court to consider whether the determination is final and binding, or whether an alleged error by the umpire in the construction of the lease leaves the determination open to challenge. The applicant says that this prospect carries an additional layer or argument and complexity. However, any such additional layer of argument or complexity is a function of the fact that the parties, by their agreement, decided that the umpire’s determination would be final and binding on them. I should not assume that the umpire will fall into error in some serious way in making the determination, or that one of the parties will wish to challenge the umpire’s determination on the grounds that it is invalid. If, however, a party wishes to challenge the determination of the umpire then any challenge should include all permissible grounds of challenge so that there is one proceeding which addresses alleged errors that are of a kind that justify judicial intervention. In circumstances in which the umpire will be required to decide a number of issues, I am not persuaded that it is an appropriate exercise of discretion to decide the questions of law raised in paragraphs 3 and 4 of the Amended Originating Application. Such a course is unlikely to resolve the dispute between the parties. It is apt to delay its resolution and the determination of the current market rent by the process agreed by the parties.
  1. I decline to decide the issues raised in paragraphs 3 and 4 of the Amended Originating Application at this stage. The possibility exists that the umpire or the parties together will seek a judicial determination of those issues. If that occurs, it would be wasteful of costs to require new proceedings to be filed. Caltex offered to consent to an order that the proceedings be adjourned to a date to be fixed, pending the appointment of an umpire and a request by the umpire. The offer was declined. Rather than dismiss the application for relief sought in paragraphs 3 and 4 of the Amended Originating Application, I will adjourn that part of the application to a date to be fixed. The reason I adjourn that part of the application, rather than dismiss it, is to avoid the costs that would be occasioned by filing a new application and fresh affidavits in the event that the umpire, once appointed, requests the assistance of the Court, or the parties agree at some later date that the issues are appropriate for judicial determination.

Orders

  1. In addition to the orders made by me on 6 June 2011 I order that paragraphs 3 and 4 of the Amended Originating Application be adjourned to a date to be fixed. I will hear the parties in relation to the issue of costs.

Footnotes

[1] [2009] QSC 178 at [16]-[18].

[2] [2010] QSC 191 at [26]-[27].

[3] (1989) NSW Conv R 55-489.

[4] Fisons Pty Ltd v Rostinga Pty Ltd (1989) NSW Conv R 55-489 at 58,555.

[5] Ibid. at 58,559.

[6] Ross Cook and Brett Cook Pty Ltd v Australian Sugar Cane Feeds Pty Ltd [2009] QSC 178 at [17]; Legal and General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314 at 331 and 336; Eureka Funds Management Ltd v Freehills Services Pty Ltd (2007) V Conv R 54-732, [2006] VSC 461 at [7]-[8].

[7] cf Legal and General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314; Commonwealth v Wawbe Pty Ltd (1999) ANZ Conv R 596, [1998] VSC 82.

[8] (1996) 65 SASR 409 at 415.

[9] British Airways PLC v Heathrow Airport Ltd [1992] 1 EGLR 141 at 144, cited with approval in Alcatel Australia Ltd v Scarcella [2001] NSWCA 401 at [42]-[45] and by the Chief Justice in Ross Cook and Brett Cook Pty Ltd v Australian Sugar Cane Feeds Pty Ltd [2009] QSC 178 at [16].

[10] cf Programme Holdings Pty Ltd v Van Gogh Holdings Pty Ltd [2009] WASC 79 at [24].

[11] Fisons Pty Ltd v Rostinga Pty Ltd (1989) NSW Conv R 55-489 at 58,556.

Close

Editorial Notes

  • Published Case Name:

    Trencrom Investments Pty Ltd v Caltex Petroleum Pty Ltd

  • Shortened Case Name:

    Trencrom Investments Pty Ltd v Caltex Petroleum Pty Ltd

  • MNC:

    [2011] QSC 160

  • Court:

    QSC

  • Judge(s):

    Applegarth J

  • Date:

    10 Jun 2011

Litigation History

No Litigation History

Appeal Status

No Status