Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12
Contract; interpretation of ambiguous term; commercial purpose.
Facts: In 1993, Ecosse became the owner of land that was leased to Gee Dee Nominees (GDN). The lease was originally entered into because the planning restrictions to which the land was subject made a sale impossible. However, to achieve the same effect as a sale, the lease was for 99 years and the payment of the rental took place at the beginning of the lease, a lump sum payment of $70,000. Years later, a dispute arose in relation to a clause in the lease that made the tenant liable for the payment of various taxes and charges.
Issue: Was the tenant (lessee) liable under the disputed clause to pay all the taxes and charges, including those normally payable by the land owner, or only those taxes and charges normally payable by a tenant?
Decision: The clause should be interpreted to make the tenant liable for all the taxes and charges.
Reason: The court found that the clause was ambiguous and the words were used incapable of clear analysis. In interpreting the clause, it was therefore appropriate to take account of the commercial purpose and commercial context of the transaction. In particular, since the very long lease was intended to put the parties in as close a position as possible to a sale of the land, the clause should be interpreted to make the tenant liable for the taxes and charges payable by an owner. This included the charges normally paid by a landlord.