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Emaaas Pty Ltd v McDonald's Australia Ltd[2015] QCATA 83

Emaaas Pty Ltd v McDonald's Australia Ltd[2015] QCATA 83

CITATION:

Emaaas Pty Ltd v McDonald’s Australia Limited [2015] QCATA 83

PARTIES:

Emaaas Pty Ltd

(Appellant)

v

McDonald’s Australia Limited

(Respondent)

APPLICATION NUMBER:

APL218-14

MATTER TYPE:

Appeals

HEARING DATE:

14 May 2015

HEARD AT:

Brisbane

DECISION OF:

Senior Member Stilgoe OAM

Member Hughes

DELIVERED ON:

11 June 2015

DELIVERED AT:

Brisbane

ORDERS MADE:

The appeal is dismissed.

CATCHWORDS:

APPEAL – RETAIL SHOP LEASE – MEANING OF ‘RATE’ AND ‘CHARGE’ – whether lessor or lessee liable to pay waste collection charge – whether waste collection service was ‘rate’ or ‘charge’ – where waste collection service requested by Lessee for its almost exclusive use – where waste collection service supplied to ‘the said land’ as defined in the Lease – whether waste collection service was ‘special additional or unusual’ service – where waste collection service within presumed intentions of parties from framework within which Lease came into existence – where no evidence of ‘usual’ waste collection service or how requested service is more than, or superior to, original service – where ‘special or unusual’ means service not ordinarily provided for that type of Lessee – where charge not ‘additional or unusual’ as based on entire cost of service – where that charge reduced – whether waste collection service was ‘other service to or from the demised premises’ – where waste collection service not supplied to ‘demised premises’ as defined in the Lease – where Lease did not expressly provide for waste collection to be payable by Lessee – where liability for charge determined objectively based on actual language of instrument and purpose of transaction

Local Government Act 1993, ss 91, 92, 973

Local Government Regulation 2012, s 99

Queensland Civil and Administrative Tribunal Act 2009 (Qld), ss 3, 142, 146

Allum & Anor v. Dickinson (1882) 9 QBD 632

Brett v. Rogers [1897] 1 QB 525

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

Hampshire v. Wickens (1878) 7 Ch D 555

Hume Steel Limited v. The Attorney-General for Victoria (1927) 39 CLR 455

In re Jose [1941] SASR 26

Pacific Carriers Ltd v. BNP Paribas (2004) 218 CLR 451

Secured Income Real Estate (Australia) Ltd v. St Martins Investments Pty Ltd (1979) 144 CLR 596

Smith v. Smith [1939] All ER 312

Stockdale v. Ascherberg [1904] 1 KB 447

Sunskill Investments Pty Ltd v. Townsville Office Services Pty Ltd [1991] 2 QdR 210

Western Export Services Inc. & Ors v. Jireh International Pty Ltd (2011) 282 ALR 604

APPEARANCES:

 

APPELLANT:

Mr AJH Morris of Queen’s Counsel with Mr PW Hackett of Counsel instructed by H Drakos & Co, Solicitors

RESPONDENT:

Mr D Kelly of Queen’s Counsel with Mr D Butler of Counsel instructed by Cooper Grace Ward, Lawyers 

REASONS FOR DECISION

What is this appeal about?

  1. [1]
    Emaaas Pty Ltd leases premises at Surfers Paradise to McDonald’s Australia Ltd. Emaaas and McDonald’s disagree on who is responsible to pay for waste collection charges.
  2. [2]
    The Tribunal below determined that, upon a true construction of the lease, McDonald’s is not required to pay Emaaas any amount for waste collection charges.
  3. [3]
    Emaaas has appealed that decision on the grounds that the Tribunal below erred in law in construing clauses 2.6 and 2.10 of the Lease and in particular, in failing to find that upon the proper construction of those clauses that McDonald’s was required to pay waste collection charges to Emaaas.
  4. [4]
    Because this is an appeal on a question of law, leave is not required.[1]

What are Emaaas’ concerns about the original Tribunal’s reasons?

  1. [5]
    Emaaas submitted that the Tribunal below disregarded:
    1. (a)
      the words ‘assessed or chargeable in respect of the said Land’ in clause 7.2 of the Lease, insofar as those words affect the meaning of the expression ‘all rates taxes charges assessments and other outgoings’; and
    2. (b)
      the decision of the Full Court in Sunskill Investments Pty Ltd v. Townsville Office Services Pty Ltd.[2]

What is the true construction of the Lease?

  1. [6]
    The answer to this question involves consideration of discrete questions.

What is the effect of the words ‘assessed or chargeable in respect of the said Land’ in clause 7.2?

  1. [7]
    Clause 7.2 reads:

The Lessor shall promptly pay or cause to be paid promptly as and when they fall due all rates taxes charges assessments and other outgoings assessed or chargeable in respect of the said Land except so far as this Lease shall otherwise provide.

  1. [8]
    The Tribunal below determined that the charge for waste collection was imposed on Emaaas as owner of the land.[3] It therefore found that the charges fell within clause 7.2 of the lease as either a ‘rate’ or ‘charge’ and is ‘chargeable in respect of the said land’.[4] 
  2. [9]
    In Sunskill, the Court found that the focus of a ‘rate’ was to defray the cost of local government expenses across all property owners, based on values of land, rather than the cost of supplying services to the particular premises.[5] Emaaas submits, and we accept, that McDonald’s requested the waste collection service for its almost exclusive use.[6] We are therefore satisfied the charge for that waste collection service is not a ‘rate’ payable by Emaaas.
  3. [10]
    However, clause 7.2 also refers to the Lessor paying ‘charges... chargeable in respect of the said land...’. The waste collection service is supplied to ‘the said Land’.[7]
  4. [11]
    In Sunskill, the preferred meaning of ‘charges’ was derived from its context to mean the cost or price demanded by the supplier of goods or services supplied to, and so chargeable against the premises, whether or not they are desired by the recipient.[8]
  5. [12]
    Whether the Lessor or the Lessee requested the service is not material to determining whether it is a ‘charge’ under clause 7.2. A charge made or imposed upon any person in respect of ‘the said land’ is sufficient to come within the meaning of ‘in respect of the said land’.[9] Although it may differ from a ‘rate’ in how it is calculated,[10] the waste collection service is still ‘in respect of the said land’. It is a personal demand on the owner, which may be enforced on its land.[11] 
  6. [13]
    If there is any ambiguity, we consider the rule of construction that the words of an instrument shall be construed most strongly against the party employing them, applies.[12] Any ambiguity is therefore to be construed against Emaaas as Lessor. 
  7. [14]
    The charge here is for the supplied waste collection service, levied as council considers appropriate[13]  - whether or not they are requested by McDonald’s is irrelevant. This interpretation is consistent with the meaning of ‘charges’ in the Local Government Act 1993.[14]
  8. [15]
    We are therefore satisfied that the refuse service is ‘charges… in respect of the said land’. This means the Tribunal was correct in its interpretation that Emaaas is responsible to pay for the refuse service under clause 7.2 ‘except as this Lease shall otherwise provide’.
  9. [16]
    Emaaas contends that the Lease does ‘otherwise provide’ in either clauses 2.10 or 2.6.

Does Clause 2.10 ‘otherwise provide’ for McDonald’s to pay for waste collection?

  1. [17]
    Clause 2.10 reads:

The Lessee shall pay to the Lessor upon demand by the Lessor the amount of any additional or unusual costs charges and expenses incurred by the Lessor at the request of the Lessee in providing any special additional or unusual services for the Lessee.

  1. [18]
    Emaaas submitted that, by its very nature, the refuse service is ‘additional or unusual’ because it is more than the usual “wheelie” bin service provided for by Council. Emaaas contended that the critical word is ‘additional’, meaning a service expressly requested by the tenant in addition to services normally provided, or alternatively, a service that is superior in any way.
  2. [19]
    In our view, clause 2.10 has three limbs (with our emphasis):
  • Additional or unusual costs charges and expenses incurred by the Lessor
  • At the request of the Lessee
  • For any special additional or unusual services for the Lessee
  1. [20]
    We are satisfied that McDonald’s requested the waste collection service, thereby satisfying the second limb.[15] However, two limbs remain. This suggests more than a request alone is required for the waste collection service to be an ‘additional or unusual cost charge and expense’ for any ‘special additional or unusual service’.
  2. [21]
    We do not consider the waste collection service provided is in addition to or superior in any way to the service normally provided for the Lessee. The permitted use of the premises is “retail and / or commercial purposes”.[16] Part of the surrounding circumstances known to both parties[17] is that the Lessee is McDonald’s, a well-established fast food chain. Although the amount of waste collection and its cost might be substantial, it cannot be considered as unusual having regard to the nature of the Lessee’s business as a well-known fast food outlet.
  3. [22]
    Within this setting, it cannot be said to be outside the presumed intentions of the parties that the Lessee would generate substantial levels of waste that would incur charges - that is the objective framework within which the Lease came into existence.[18]
  4. [23]
    Moreover, no evidence was adduced of what a ‘usual’ waste collection service would be for this type of business, to establish a baseline from which to assess whether the waste collection service supplied is in addition to or superior to that baseline service.
  5. [24]
    The evidence suggests that eight or nine 240 litre bins were replaced with one 3000 litre bin and one 2000 litre bin, serviced less frequently.[19] This means that although the current waste collection service entailed collecting larger bins, they were being collected less often. No evidence was adduced of how this requested service is more than, or superior to, the original service.  
  6. [25]
    Emaaas further contended that ‘unusual’ is to be construed as something different from services usually provided by the Council. We do not consider the words ‘special or unusual’ extend to a waste collection service simply because it is different from the normal “wheelie” bin service. We consider the words ‘special or unusual’ mean a service peculiar for the particular lessee[20] – that is, a class of service is ‘special or unusual’ if it is a service not ordinarily provided for that type of lessee. The character or nature of bulk waste collection is not ‘special’ or ‘unusual’, because it is a service provided for most commercial premises and is expressly contemplated elsewhere in the Lease.[21]
  7. [26]
    We also do not consider the charge for the requested waste collection to be an additional or unusual cost or charge.  This is because the actual charge sought to be passed on by Emaaas to McDonald’s appears to be the cost of the entire service, rather than any putative difference between the original service and the current service.[22] The actual cost also appears to have reduced because of the change to the service.[23]
  8. [27]
    This means the Tribunal was correct in its interpretation that the refuse service does not fall within clause 2.10 as a “special additional or unusual” service for the Lessee or an “additional or unusual cost charge and expense” incurred by the Lessor.

Does Clause 2.6 ‘otherwise provide’ for McDonald’s to pay for waste collection?

  1. [28]
    Clause 2.6 reads:

The Lessee will on demand pay the amount or amounts from time to time during the whole of the term representing all accounts for the supply of all electricity, gas, water, oil, telephone and other services to or from the demised premises.

  1. [29]
    We do not consider that the waste collection service falls within ‘other services to or from the demised premises’ in clause 2.6. This is because the waste collection service is not provided ‘to or from’ the ‘demised premises’, defined as ‘the leased area hatched on the annexed Plan’,[24] but to a separate ‘Garbage Area’ licensed by Emaaas to McDonald’s. 
  2. [30]
    Emaaas contended that the intermediate storage point for the waste is irrelevant. However, in our view, the obligation to pay for a particular service cannot become payable by the Lessee without express words.[25] Clause 2.6 specifically identifies the services payable by the Lessee. Waste collection is not one of these.
  3. [31]
    Waste storage and disposal is expressly referred to elsewhere in the Lease.[26] Had the parties wished to make waste collection specifically payable by the Lessee, they could have done so by expressly providing for ‘waste storage and disposal’, ‘trade waste charges’ or a similar express descriptor, as payable by the Lessee. They did not - unlike clause 8.3 in Sunskill.
  4. [32]
    We therefore consider that the Tribunal below was correct in its interpretation that clause 2.6 does not expressly refer to waste collection and that the terminology of clause 2.6 does not apply to waste collection to or from a licensed area. We therefore do not consider clause 2.6 requires McDonald’s to pay for the waste collection charges.

How does Sunskill Investments Pty Ltd v. Townsville Office Services Pty Ltd apply?

  1. [33]
    In Sunskill, the Full Court of the Supreme Court of Queensland determined which of the lessor or the lessee was liable for rates and other imposts payable to the Townsville City Council.
  2. [34]
    In determining that the lessor was obliged to pay these imposts, the Court considered the following clauses of that lease:

10.2  That the Lessor will duly and punctually pay all rates and taxes payable in respect of the demised premises during or in respect of the said term but subject to the provisions of Section 3.3 and Section 8.3 hereof.

3.3 [The Lessee] to pay in addition to the rent all gas and electricity charges and any and all other charges (other than excess water and trade wastes) made by any utility or authority against the demised premises and all charges from time to time made by the cleaning service contractor designated by the Lessor to clean the demised premises.

8.3  [The Lessee] to allow the Lessor to instal (sic) upon the demised premises if the Lessor shall see fit a water meter to record the consumption of water on the demised premises and to pay to the Lessor upon demand from time to time at the rate fixed for the time being by the Townsville City Council for excess water consumption the amount calculated at such rate for all water consumed on the demised premises and so recorded and if no water meter shall be installed to record the consumption of water on the demised premises to pay to the Lessor upon demand in each half-year ending 30th June and 31st December during the said term such amount (if any) determined by the Lessor to be a fair contribution by the Lessee in respect of excess water charges assessed by the Local Authority with relation to the Building and Arcade and also to pay to the Lessor upon demand in each half-year ending 30th June and 31st December, during the said term such amount (if any) determined by the Lessor to be a fair contribution by the Lessee to in respect of any trade waste charges assessed by the Local Authority with relation to the Building and Arcade.

  1. [35]
    The Court therefore determined what constituted a ‘rate’ and what constituted a ‘charge’ within the context of those particular clauses. None of those clauses is identical to any of the current clauses under consideration. 
  2. [36]
    Emaaas seeks to rely upon the following passages from Sunskill:

Textbooks and judgments are notably reticent about defining the term “rate” or “tax”; but the underlying conception is of a levy to defray the expenses of local government imposed on all owners or occupiers of property in a particular area. Its essence is that it is calculated according to values of land or buildings in the locality rather than the cost of supplying the service to particular premises, so that each owner or occupier bears his rateable share of those expenses. Hence the word “rate”.[27]

In any event, the term “charge” is a word having no fixed or definite meaning independently of its context. In Hartley v. Hudson (1879) 4 C.P.D. 367, a lessee’s covenant to pay “all rates, taxes, charges and assessments… charged upon the premises or upon a person in respect thereof” was held to attract liability for the cost of street work imposed by statute; but that was because it arose from non-compliance with a notice to do the work, after which the expense of doing it became a charge “on the person in respect of the premises”. Having regard to that decision, the Court of Appeal in Davidson v. Bathurst City Council [1966] 1 N.S.W.R. 61 held that, while the word “charge” means “liability to pay”, and is frequently laid on real property, there was a cognate but distinct meaning of the word in the sense of the cost or price demanded for services or goods whether or not they are desired by the recipient.[28] 

  1. [37]
    In the current application, the Tribunal determined whether Emaaas as Lessor or McDonald’s as Lessee was required to pay for the waste collection service. To do so, the Tribunal was determined whether the refuse service is a ‘rate’ or ‘charge’. The Full Court of the Supreme Court in Sunskill also considered the meaning of those terms.
  2. [38]
    We have applied the Full Court’s reasoning to the limited extent that it applies to the meaning of those terms in the current Lease. However, unlike Sunskill, the Lease here does not contain an equivalent to clause 8.3 that expressly addresses trade waste charges, by requiring the tenant to pay them.
  3. [39]
    The application of Sunskill has therefore not changed the true construction of the Lease to make McDonald’s liable to pay Emaaas for any waste collection charges.

Conclusion

  1. [40]
    Emaaas contended that a reasonable Lessor would not have contemplated paying a charge for a service requested by the Lessee to conduct its business that is potentially more than the entire rent. However, evidence of Emaaas’s subjective intentions and expectations is not admissible in determining the construction of the contract.[29] 
  2. [41]
    Emaaas also contended that requiring it to pay for the Lessee to comply with its contractual obligation to keep the premises clean[30] would amount to the Lessee being unjustly enriched. However, the liability for a charge does not depend on whether its cost can be limited, or its financial impact on the parties, but is determined objectively based on the actual language of the instrument and the purpose of the transaction.[31]
  3. [42]
    The question is whether the Lessor or the Lessee has bound itself by the contract to accept that liability, whatever its amount.[32] In answering this question, we do not consider the actual intentions, aspirations or expectations of the parties before or at the time of the contract - except in so far as they are expressed in the contract.[33]  
  4. [43]
    The original Lessor agreed in clear language to pay for ‘charges in respect of the land’. The plain meaning of words is not to be cut down by reference to the supposed contemplation of the parties.[34] It is not for the Tribunal to limit the meaning of those ‘charges’, based on whether the amount of those charges is reasonable for the Lessor. Nothing in the subject matter or the context of the clause “cuts down irresistibly”[35] the plain meaning of the words ‘charges’.
  5. [44]
    The Tribunal should not disregard clear language simply because the lease would have a more commercial operation for one party if an alternative interpretation were adopted.[36]
  6. [45]
    We therefore agree with the Tribunal below that the true construction of the Lease is that McDonald’s Australia Limited is not required to pay to Emaaas Pty Ltd any amount for waste collection charges.

What is the appropriate Order?

  1. [46]
    Because this is an appeal on a question of law, the Appeal Tribunal may make any order it considers appropriate,[37] including to confirm the decision[38] or set aside the decision and substitute its own decision.[39]
  2. [47]
    We do not consider the application of Sunskill operates to vary the orders of the Tribunal below.
  3. [48]
    Having considered the Sunskill decision and how the words ‘assessed or chargeable in respect of the said Land’ in clause 7.2 of the Lease, affect the meaning of the expression ‘all rates taxes charges assessments and other outgoings’, the Appeals Tribunal is satisfied that upon a true construction of the lease, McDonald’s Australia Limited is not required to pay to Emaaas Pty Ltd any amount for waste collection charges.
  4. [49]
    The appropriate Order therefore is that the appeal is dismissed.

Footnotes

[1] Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 142.

[2]  [1991] 2 QdR 210.

[3] McDonald’s Australia Limited v. Emaaas Pty Ltd, 09/05/14 unreported at [12].

[4]  Ibid.

[5] Sunskill Investments Pty Ltd v. Townsville Office Services Pty Ltd [1991] 2 QdR 210 at 216.

[6]  Emails between Nicola Cooper, Asset Manager – QLD / NT, McDonald’s Australia Ltd  and Erika Pianta, Senior Technical Officer, Waste and Resource Management, Gold Coast City Council dated 18 March 2013, 27 March 2013, 17 April 2013 and 26 April 2013.

[7]  Defined as Lot 1 on RP 52952 – Lease, clause 1.8 and Item 2.

[8] Sunskill Investments Pty Ltd v. Townsville Office Services Pty Ltd, [1991] 2 QdR 210 at 216.

[9] Brett v. Rogers [1897] 1 QB 525 at 529.

[10] Local Government Regulation 2012 s 99.

[11] Allum & Anor v. Dickinson (1882) 9 QBD 632 at 635.

[12] Hume Steel Limited v. The Attorney-General for Victoria (1927) 39 CLR 455, per Higgins J at 465.

[13] Local Government Act 1993 s 973(4) and Local Government Regulation 2012 s 99.

[14] Local Government Act 1993 ss 91(2) and 92.

[15]  Emails between Nicola Cooper, Asset Manager – QLD / NT, McDonald’s Australia Ltd  and Erika Pianta, Senior Technical Officer, Waste and Resource Management, Gold Coast City Council dated 18 March 2013, 27 March 2013, 17 April 2013 and 26 April 2013.

[16]  Lease, clause 3.1.

[17] Codelfa Construction Pty Ltd v. State Rail Authority of NSW (1982) 149 CLR 337 at 352.

[18]  Ibid.

[19]  Emails between Ari Stav and Erika Pianta, Senior Technical Officer, Waste and Resource Management, Gold Coast City Council dated 30 September 2011 and 7 December 2011 and emails between Nicola Cooper, Asset Manager – QLD / NT, McDonald’s Australia Ltd and Erika Pianta, Senior Technical Officer, Waste and Resource Management, Gold Coast City Council dated 18 March 2013, 27 March 2013, 17 April 2013 and 26 April 2013.

[20] Hampshire v. Wickens (1878) 7 Ch D 555 at 561.

[21]  Clauses 3.14 and 15.6.

[22]  Emaaas Invoices to McDonald’s for 1/1/13 to 30/6/13.

[23]  Ibid.

[24]  Lease, clause 1.9.

[25] In re Jose [1941] SASR 26 at 30.

[26]  Clauses 3.14 and 15.6.

[27]  [1991] 2 QdR 210 at 216.

[28]  Ibid.

[29] Secured Income Real Estate (Australia) Ltd v. St Martins Investments Pty Ltd (1979) 144 CLR 596, per Mason J (as His Honour then was) at 606.

[30]  Lease, clause 3.14.

[31] Pacific Carriers Ltd v. BNP Paribas (2004) 218 CLR 451 at 461-2.

[32] Stockdale v. Ascherberg [1904] 1 KB 447 at 449.

[33] Codelfa Construction Pty Ltd v. State Rail Authority of NSW (1982) 149 CLR 337 at 352.

[34] Smith v. Smith [1939] All ER 312 at 317.

[35] Hume Steel Limited v. The Attorney-General for Victoria (1927) 39 CLR 455, per Isaacs J at 462.

[36] Western Export Services Inc. & Ors v. Jireh International Pty Ltd (2011) 282 ALR 604 at 605, citing the leading judgement of the NSW Court of Appeal; Secured Income Real Estate (Australia) Ltd v. St Martins Investments Pty Ltd (1979) 144 CLR 596, per Mason J (as His Honour then was) at 605.

[37] Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 146(d).

[38]  Ibid, s 146(a).

[39]  Ibid, s 146(b).

Close

Editorial Notes

  • Published Case Name:

    Emaaas Pty Ltd v McDonald's Australia Ltd

  • Shortened Case Name:

    Emaaas Pty Ltd v McDonald's Australia Ltd

  • MNC:

    [2015] QCATA 83

  • Court:

    QCATA

  • Judge(s):

    Senior Member Stilgoe

  • Date:

    11 Jun 2015

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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