Dodd v Levina Office Services Pty Ltd [2017] QDC 262

DISTRICT COURT OF QUEENSLAND CITATION: Dodd & Dodd v Levina Office Services Pty Ltd [2017] QDC 262 PARTIES: JOHN JOSEPH DODD (first plaintiff) and GAIL MAREE DODD (second plaintiff) v LEVINA OFFICE SERVICES PTY LTD (defendant) FILE NO/S: D5 of 2017 DIVISION: Civil PROCEEDING: Trial ORIGINATING COURT: District Court at Bundaberg DELIVERED ON: 24 October 2017 DELIVERED AT: Brisbane HEARING DATE: 30 August 2017 JUDGE: Butler DCJ ORDER: 1. The plaintiffs’ claim is dismissed. 2. No order as to costs. CATCHWORDS: CONTRACT – CONSTRUCTION OF TERMS – Lease – Ambiguity – Recourse to background or surrounding circumstances – whether term commercially absurd COUNSEL: W McMillan for the plaintiff. B Bedford, Director of the defendant appeared on its behalf. SOLICITORS: Dodd Bedford & Associates for the plaintiff. B Bedford, Director of the defendant appeared on its behalf. [1] In early 2014 the plaintiffs purchased a legal practice in Bundaberg from Brian Bedford. The plaintiffs also leased from the defendant company the premises from which Mr Bedford had previously carried on his legal practice. Mr Bedford is the principal of the defendant company, Levina Office Services Pty Ltd. -- 1 of 13 -- 2 [2] This case involves a dispute in relation to that lease. The leased premises are located on the ground floor of a building owned by the defendant, the first floor of which comprises Mr Bedford’s residence. The leased premises comprise only part of the ground floor of the building and the building is situated on a larger area of land which includes a garden, driveways and parking area. [3] The issue to be determined is whether, upon a true construction of the lease, the plaintiffs were liable to pay 100 per cent of the local government charges levied on the whole of the block of land on which the leased premises are situated. The plaintiffs contend that they should only pay rates in the proportion the leased premises bear to the area of the land. The pleadings [4] The plaintiffs’ claim seeks relief by way of a declaration. They assert that on a true construction of the lease they should not be required to pay rates levied on the whole of the lot. In the alternative the equitable remedy of rectification was also sought. The claim for rectification, which was based in mistake, was not pursued at trial. The plaintiffs’ case is now solely directed to the construction it contends should be given to the terms of the lease. [5] Paragraph 3 of the Statement of Claim, which is admitted, reads as follows: “On 24 April, 2014, the plaintiffs agreed to lease (the lease) from the defendant the premises. Material terms of the lease are as follows - (i) the term of the lease was three years; (ii) the commencement date of the lease was 12 May 2014; (iii) the plaintiffs were to pay rent in the sum of $46,560 per annum plus GST (item 1 of the schedule to the lease); (iv) the plaintiffs were to pay outgoings in accordance with clause 4.5 of the lease (item 5 of the schedule to the lease).” [6] The plaintiffs pleaded as follows: “The plaintiffs say that on a true construction of the lease, the defendant is not entitled to payment of the outstanding amount by reason that - (i) the amount payable for outgoings under the lease does not include payment of rates and charges in respect of the whole building; (ii) the only amount payable by the plaintiffs in respect of outgoings under the lease is in respect of the premises leased by them from the defendant.”1 [7] The Defence replied as follows: “5. The defendant denies the allegation in paragraph 7 of the Statement of Claim because on a true construction of the lease the defendant is entitled to payment from the plaintiffs of the sum of $22,396.28 for local government charges in respect of lot 1 on RP181213 County Court Parish Bundaberg title reference 50563367 (as set out in item 2 of the form 7 lease document) which is the whole of the land on which the area leased by the plaintiffs forms a part, and interest. 6. In regard to the denial in paragraph 7 the defendant will rely on the terms of the lease in general, but in particular to - (a) clause 1.1 of the schedule of the lease as to the definitions of ‘outgoings’; 1 Statement of Claim, para 7. -- 2 of 13 -- 3 (b) clause 4.5 of the schedule of the lease as to the obligation of the plaintiffs to pay ‘outgoings’; (c) paragraph 1 of item 5 of the lease particulars which sets out the ‘outgoings payable’ by the plaintiffs; (d) item 2 of the form 7 lease document identifying the land to which the local government charges apply; and (e) paragraph 4.9 of the schedule of the lease as to the obligation of the plaintiffs to pay ‘interest’.”2 [8] The following further matters were pleaded in the Defence: “13. Further in regard to paragraph 12 of the Statement of Claim the defendant alleges that prior to the preparation and execution of the said lease the contract of sale between Brian Leslie Bedford (the sole director of the defendant company) and the plaintiffs (and/or their nominee) for the sale and purchase of the business of Bedford & Associates, solicitors at Bundaberg had been forwarded to the parties herein by the business broker engaged by the defendant to sell the business. 14. The defendant alleges that the contract referred to paragraph 13, (a) contained (in clause 25 thereof) details a new lease (including the term, rent and outgoings) required to be entered into for occupation of the premises from which the said business was located; (b) was executed by the parties on 1 May, 2014; (c) was settled on 12 May, 2014; and (d) further evidences the state of knowledge of the plaintiffs as to their obligation to pay the local government charges for the whole of the land and the expected amount thereof.”3 [9] No reply was filed to the Defence. Plaintiffs’ submissions [10] The plaintiffs submit the case turns on the construction to be given to item 5 of the lease which purports to place on the plaintiffs the burden of paying 100 per cent of the rates levied on the whole of the lot. [11] It is submitted that to expect the plaintiffs to bear a 100 per cent of the rates levied on the lot flouts business common sense. Reliance is placed on the judgment of Lord Diplock in Antaios Compania Naviera S.A. v Salen Rederierna A.B. in support of the proposition that if a detailed examination of words in a commercial contract is going to lead to a conclusion that flouts business common sense it must yield to business common sense.4 [12] The plaintiffs contend that the leased premises comprise 137 m2 which is a mere 16.91 per cent of the area of the 801 m2 lot. Accordingly, it is argued the contract should be construed to require the plaintiffs to pay only 16.91 per cent of the Council rates. 2 Defence paras 5 and 6. 3 Defence, paras 13 and 14. 4 Antaios Compania Naviera S.A. v Salen Rederierna A.B. [1985] 1 AC 191, 201. -- 3 of 13 -- 4 The evidence [13] The matter was listed for trial. On the eve of the trial the plaintiffs advised that they were abandoning the claim for rectification and at trial called no oral evidence, relying only on documents in support of their argument. This course seemed to take the self- represented principal of the defendant by surprise as he had come to court expecting to resist a claim of mistake and intending to testify himself. Mr Bedford, although being a retired solicitor, displayed little knowledge or understanding of civil procedure or the rules of evidence and appeared to be at a disadvantage. The plaintiffs were represented by experienced counsel. [14] The plaintiffs tendered before the court a group of documents described as the Court Book and proceeded to make submissions by reference to it. That document comprised: 1. Lease dated 24 April 2014. 2. Title search and survey plan. 3. Business Information Profile. 4. Sale contract of business. 5. Rates notices and attached invoices. 6. Statement of account from 1 July 2014 to 30 June 2016. 7. Statement of agreed facts. [15] When the defendant commenced to present his case counsel for the plaintiffs surprisingly objected to the admission of the Business Information Profile although he had placed it before the court as part of the court book. [16] It also emerged that the “agreed statement of facts” signed by one of the plaintiffs had been provided to Mr Bedford the night before the trial. He said he was “happy for it to be put in” but made it clear it did not encompass all the evidence he wished to place before the court. [17] Mr Bedford sought to rely on the Business Information Profile. He indicated it was not a document he had seen “other than the other day”5 having been “prepared by a broker and given to Mr and Mrs Dodd based on information that I’d supplied to the broker as my agent to sell the business”.6 Mr Bedford sought to rely upon profit and loss statements in the document, firstly to show the rent and rates he as a solicitor was previously paying to the lessor to occupy the premises leased by the plaintiffs. [18] Mr Bedford also sought to refer to the contract for sale of the business. He submitted it was a document signed on the same day as the lease and that it supported his contention for construction of the lease in that it referred to “lessee to pay outgoings – rates, $1685, half year;”.7 [19] I received the documents objected to by the plaintiffs subject to futher consideration and a ruling on their admissibility. [20] I also received oral evidence from Mr Bedford relating to the use of the residential floor and various areas of the building and land subject to further rulings on admissibility. 5 Transcript, 1-22, l 1. 6 Ibid, 1-22, ll 2-3. 7 Ibid, 1-24, ll 21-24. -- 4 of 13 -- 5 Terms of lease [21] At issue is the construction to be given to the terms of the lease relating to payment of local government fees and rates. [22] Item 8 of the lease states: “The lessor leases the premises in item 5 to the lessee for the terms stated in item 6 subject to the covenants and conditions contained in:- the attached schedule.” [23] The lease was signed by Mr Bedford and by the plaintiffs on 24 April 2014. [24] Item 5 of the lease (form 7) describes the premises being leased as follows: “That part of the ground floor of the building erected on the lot described in item 2 above as marked on the attached survey plan.” [25] Item 2 of the lease sets out the description of the relevant lot as: “Lot 1 on SP181213 County Cook, Parish Bundaberg 50563367”. [26] The survey plan attached to the lease shows lot 1 as being 810 m2. [27] Paragraph 4.5 of the schedule to the lease states: “Outgoings The tenant must pay to the landlord by the respective due dates nominated by the landlord the outgoings and in the tenant’s proportion specified in item 5 of the lease particulars.” [28] The following terms are defined in paragraph 1.1 of the schedule: “‘Outgoings’ includes but is not limited to: Local authority charges; … ‘Premises’ means the premises described in item 5 of the form 7 of this lease and includes the landlord’s property in the premises; ‘Tenant’ means the lessee described in item 3 of the form 7 of this lease; ‘Tenant’s proportion’ means the percentage stated in item 5 of the lease particulars.” [29] Item 5 of the lease particulars reads as follows: Outgoings Tenant’s proportion 1. Local government charges levied by Bundaberg Regional Council on the lot specified in Item 2 of Form 7 payable within 14 days of notice from the landlord. 100% 2. Annual pest control treatment. 50% 3. Security monitoring services contract charges. 100% 4. Fire safety bi-annual servicing fee. 80% -- 5 of 13 -- 6 Discussion [30] The lease (form 7) distinguishes between the premises being leased, described as being part of the ground floor of the building situated on the lot,8 and the lot itself, described as lot 1 on survey plan 181213.9 [31] The definition of “premises” in form 20 confirms this distinction. [32] The lessee was required by paragraph 4.5 of the schedule to pay the outgoings in the proportions specified in item 5 of the lease particulars set out in the schedule. Item 5 specifies outgoings. In respect of local government charges levied on the lot specified in item 2, the tenant’s proportion is stated to be 100 per cent. Other outgoings, namely pest control treatment and fire safety servicing, are to be paid by the tenant in proportions less than 100 per cent. [33] Read together these terms clearly state the charges to be paid by the plaintiffs, namely charges levied on the whole lot and clearly state the proportion to be paid as 100 per cent of those charges. The drafting is precise and there is nothing on the face of it to suggest any error or oversight. On a plain reading of the document the lessees agreed to pay 100 per cent of the Council rates levied on the whole of the lot. I am satisfied there is no ambiguity in the terms of the lease. [34] Mr McMillan for the plaintiffs conceded there was no ambiguity on the face of the contract.10 He submitted, however, that the words of the lease gave rise to a commercially absurd result.11 [35] The plaintiffs’ submission may be summarised thus: “But 100 per cent produces this absurd result of a tenant paying for the whole of a property when clearly a business like attitude would be that, no, it’s got to be relevant to the area occupied …”.12 Principles for construing lease [36] The principles to be applied in the construction of commercial contracts were stated in the judgment of French CJ, Nettle and Gordon JJ in Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited:13 “The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose. In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the 8 Item 5 of the lease. 9 Item 2 of the lease. 10 Transcript 1-9, l 5. 11 Transcript 1-7, ll 10-20. 12 Transcript 1-11, ll 44-47. 13 (2015) 256 CLR 104 at [46]-[52]. -- 6 of 13 -- 7 circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract. Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning. However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding ‘of the genesis of the transaction, the background, the context [and] the market in which the parties are operating’. It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals. Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties’ statements and actions reflecting their actual intentions and expectations. Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption ‘that the parties … intended to produce a commercial result’. Put another way, a commercial contract should be construed so as to avoid it ‘making commercial nonsense or working commercial inconvenience’.” These observations are not intended to state any departure from the law as set out in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales and Electricity Generation Corporation v Woodside Energy Ltd. We agree with the observations of Kiefel and Keane JJ with respect to Western Export Services Inc v Jireh International Pty Ltd.” (citations omitted) [37] The judgment in Mount Bruce Mining did not resolve how to determine when recourse to information external to the terms of the contract may be had. As was observed by Kiefel and Keane JJ in Mount Bruce Mining: “The ‘ambiguity’ which Mason J said may need to be resolved arises when the words are ‘susceptible of more than one meaning.’ His Honour did not say -- 7 of 13 -- 8 how such an ambiguity might be identified. His Honour’s reasons in Codelfa are directed to how an ambiguity might be resolved.”14 [38] In Mount Bruce Mining the parties agreed that ambiguity arose from the terms of the contract, therefore the question as to what might constitute a sufficient ambiguity did not arise in that case.15 [39] In the more recent decision of Ecosse Property Holdings Pty Ltd v GEE DEE Nominees Pty Ltd the joint judgment of Kiefel, Bell and Gordon JJ provided further guidance on the construction of a commercial contract in circumstances where it is not disputed the relevant contractual clause was ambiguous: “It was not disputed in the Court of Appeal that cl 4, as settled by the parties, is ambiguous and argument in this Court proceeded upon that acceptance. And it was not disputed that in the circumstances it is open to the court to take account of the words crossed out of the standard form as an aid to the proper construction of the clause. The deletions do not evidence a prior intent, which could have changed, but rather they identify a matter which, on the face of the document, was rejected by both parties. The respondent’s argument draws on the structure and language of cl 4. The words ‘Landlord’ and ‘tenant’ in the unamended text are not found elsewhere in the lease. Their employment here is suggested to reflect the function of the clause in allocating liability for such enforceable obligations as arise independently of the lease to the lessor and lessee in their respective capacities as landlord and tenant.”16 (citations omitted) “It is well established that the terms of a commercial contract are to be understood objectively, by what a reasonable businessperson would have understood them to mean, rather than by reference to the subjectively stated intentions of the parties to the contract. In a practical sense, this requires that the reasonable businessperson be placed in the position of the parties. It is from that perspective that the court considers the circumstances surrounding the contract and the commercial purpose and objects to be achieved by it. Clause 4 is to be construed by reference to the commercial purpose sought to be achieved by the terms of the lease. It follows, as was pointed out in the joint judgment in Electricity Generation Corporation v Woodside Energy Ltd, that the court is entitled to approach the task of construction of the clause on the basis that the parties intended to produce a commercial result, one which makes commercial sense. It goes without saying that this requires that the construction placed upon cl 4 be consistent with the commercial object of the agreement.” (citations omitted) Commercial absurdity – the cases [40] As explained in Mount Bruce Mining, ordinarily the process of construction of a commercial contract is possible by reference to the contract alone. This will be so if an expression in a contract is unambiguous or susceptible of only one meaning. However, 14 (2015) 256 CLR 104 at [110]. 15 (2015) 256 CLR 104 at [113] per Kiefel and Keane JJ; and [120] per Bell and Gageler JJ. 16 [2017] HCA 12, [16]-[17]. -- 8 of 13 -- 9 as stated earlier, the High Court decisions appear to have left unanswered what might amount to an ambiguity requiring recourse to information external to the terms of the contract. The plaintiffs relied upon a number of earlier Appeal Court decisions and English decisions for the proposition that if a literal interpretation results in a commercially absurd result the court is justified in reading the contract so as to give it a meaning consistent with business common sense. [41] The plaintiffs placed reliance upon the decision of the Full Court of the Supreme Court of South Australia in Dockside Holdings Pty Ltd v Rakio Pty Ltd17 where the judgment of Lord Hoffmann in Investors Compensation Scheme Limited v West Bromwich Building Society18 was cited with approval. Lord Hoffmann said: “The ‘rule’ that words should be given their ‘natural and ordinary meaning’ reflects the common sense proposition that we do not easily accept that people had made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania Naviera SA v Salen Rederierna AB: 19 ‘If detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense’.” [42] In Dockside the plaintiff contended that although a literal reading could be given to the lease, that reading would create such as absurdity as to require the court to adopt a construction favourable to the plaintiff. The Full Court ultimately concluded that the drafter of the lease had “managed to muddle up the syntax” so as to in one expression attempt to achieve two purposes and in the result producing “a nonsense”. In deciding for the plaintiffs the court followed the reasoning of the New South Wales Court of Appeal in Westpac Banking Corporation v Tanzone Pty Ltd.20 [43] Tanzone was a case in which a literal reading of the lease would require regular massive increases in rental. In the result, the court read the document by altering the formula in relation to review dates. The court said that the modification it applied avoided “the absurdity of the rent review clause and properly reflects the intention of the parties to be gathered objectively from the whole context of the lease”. As commented in Dockside, the case was treated as one of obvious mistake made by the draftsperson. The lead judgment in Dockside concluded: “In construing the document (without an order for rectification) ‘as if it said’ something different, I am following the course adopted by the New South Wales Court of Appeal in Tanzone. The present case (like Tanzone) involves an extreme set of facts upon which it is evident that something must have gone wrong in the drafting (cf per Lord Hoffmann in ICS at 912). The literal approach for which the landlord contends produces a ridiculous commercial result based upon a review process which flouts common sense. The nature of the mistake and what was 17 [2001] SASC 78. 18 [1998] 1 WLR 896 at 912-913. 19 [1985] AC 191, 201. 20 [2000] NSWCA 25. -- 9 of 13 -- 10 intended is sufficiently clear as to justify the court in reading the document ‘as if’ the appropriate language had been used to reflect the intentions of the parties.”21 [44] It is not clear from the recent High Court decisions whether the authorities of Tanzone and Dockside continue to be good law. However, they are decisions of intermediate Australian appeal courts and in the absence of clear direction from the High Court I am obliged to follow them. I turn now to consider the present case in light of those decisions. Consideration [45] The plaintiffs presented their case by reference to the lease document and minimal agreed facts. The latter relevantly related to the proportion the leased area was of the total area of the lot. This court is therefore asked to conclude that the terms of the lease are commercially absurd without the benefit of any evidence as to what might be commercially appropriate. When counsel for the plaintiffs was questioned as to how the court could determine that objectively a business person would conclude the terms to be absurd without reference to evidence extraneous to the written agreement, Mr McMillan responded: “[T]he courts normally do not take evidence on this point; they look at the clause, and they, as it were, become arbiters of what is – a business person would take as reasonable in the context of the lease. And that – you don’t need evidence to support that. It’s like the reasonable person in a negligence case: what would a reasonable person do in discharge of their duty of care? So the court is able to make that decision themselves.”22 [46] It is true that in an appropriate case the court may conclude that the terms of the contract lack commercial common sense. Westpac Banking Corporation v Tanzone Pty Ltd23 and Dockside Holdings Pty Ltd v Rakio Pty Ltd24 were such cases. Those cases involved situations where, although on their face the words were clear, it was “evident that something must have gone wrong in the drafting”. In Tanzone the effect of a literal reading of the words of the lease resulted in rental increases so massive as to be clearly a drafting mistake. In Dockside a literal reading resulted in what the court described as “a nonsense” or “a ridiculous commercial result”.25 The literal reading so offended common sense that it was “evident that something must have gone wrong in the drafting”.26 [47] The terms of the lease in this case, viewed from the point of view of a reasonable business person, do not give rise to an absurd result in the sense described in Tanzone or Dockside. The plaintiffs submit that the court should conclude from the mere fact that the terms of the lease required them to pay all the Council rates on the lot upon which the leased premises were located that those terms were necessarily commercially absurd. That submission must be rejected. 21 Dockside Holdings Pty Ltd v Rakio Pty Ltd [2001] SASC 78 at [51]. 22 Transcript 1-12, ll 29-34. 23 [2000] NSWCA 25. 24 [2001] SASC 78. 25 Ibid, at [8]. 26 Ibid, at [43]. -- 10 of 13 -- 11 [48] It is correct that common sense dictates that a lessee would be concerned about the total cost of occupying leased premises. But that cost is comprised of at least two components, being the rental and the outgoings. One can conceive that in negotiating a lease a lessor might agree to be responsible for all of the Council rates in circumstances where rental is set at a level which would compensate him or her for accepting that cost. So too, it may be conceived that a lessee might be willing to agree to meet the rates over all of the land area upon which his business is to be conducted if the rental is set at a level which makes the combined cost commercially acceptable. Whether the terms of the contract read as a whole are commercially reasonable would depend amongst other things upon an assessment of the market rates for rental of comparable properties in that location. There is no evidence before the court to allow such an assessment. [49] The plaintiffs having discarded their claim for rectification have advanced no evidence indicating mistake on the part of one or both the parties. Furthermore an assessment of the words of the contract does not expose a drafting error that resulted in an outcome contrary to the intention of the parties. Notwithstanding the absence of any evidence of mistake, the plaintiffs submit that the court should substitute for the agreement actually reached in the concluded contract the court’s own assessment of what the bargain should have been. The plaintiffs contend the court should adopt an apportionment based on the proportion of the land area taken up by the leased premises. Why this option should be preferred to other possibilities is not clear. Why not calculate the rates based on a proportion of the building in which the leased premises were located, given that all tenants of the building would presumably enjoy some benefit from the outside areas of garden, driveways and parking? Such questions merely highlight the difficulty the plaintiffs face in contending the court should alter the clear words of the contract in the absence of any evidence as to commercial considerations relevant to the contested contractual term. [50] In the absence of any evidence establishing the commercial context in which the agreement may be assessed, I am not satisfied the plaintiffs have established the terms of the contract are commercially absurd. [51] The plaintiffs referred to the decision of Mansfield CJ in Shannon v Apex Hotels Pty Ltd,27a case involving the lease of part of a building. A term of the lease required the lessees to pay “all rates …which may be levied …upon the demised lands and premises or any part thereof …”. It was contended by the lessor that the lessees were liable to pay all the rates on the whole of the land of which the demised premises formed only a part. Mansfield CJ found for the lessees upon a construction of the words of the lease. His Honour held that the words created an obligation to pay only those rates levied on the “demised lands and premises” and no other lands or premises. This decision turned on a construction of the words of the lease. The result reached by the court was fairly open upon the terms of the lease. It can have no consequence for the issue to be determined here where the plain words of the lease permit of only one meaning. [52] The application for declaratory relief must be denied. Evidentiary rulings [53] The defendant sought to rely on the Business Information Profile in the Court Book and in particular profit and loss statements in that document in order to show the rent 27 (1964) QWN 7. -- 11 of 13 -- 12 and rates he, as a solicitor, previously paid to the lessor company to occupy the premises now leased by the plaintiffs. I understood this was to demonstrate that the contested term in the current lease is consistent with the previous arrangement. As recounted in Ecosse Property Holdings the terms of a commercial contract are to be construed objectively, not by reference to the subjectively stated intentions of the parties to the contract. This evidence falls in the latter category and should therefore not be admitted. [54] I also received oral evidence from Mr Bedford relating to the council classification of the residential floor and describing the various areas of the building and the lot and the use of those areas. I reserved decision on its admissibility. I do not consider the council classification restricting use of the residential area is relevant to matters under consideration and I therefore rule it to be inadmissible. [55] As explained in Mount Bruce Mining it is permissible in construing a contract to refer to “events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating.”28In my view the nature and use of the areas of the relevant lot, including the building on that lot, is objective information providing background and context to the transaction entered into and is therefore admissible. [56] Mr Bedford also sought to refer to the contract for sale of the solicitor’s business. He submitted it was a document signed on the same day as the lease and that it supported the construction he sought to place on the lease. I also reserved decision on the admissibility of this document. [57] The contract for sale of the business included terms relating to a lease of the premises. The contract was conditional upon a lease satisfactory to the buyers being entered into. The terms of the lease are described in the contract as being for 3 years at rent of $3,880 per month plus GST. In addition a special condition is described in the following terms: “Lessee to pay outgoings:- rates $4,685 half year, annual pest control treatment, monthly security services fees, bi-annual fire safety checks. Shared facilities apply to part of the rented area. 2 partly covered parking bays available on site.” [58] The charges levied by the defendant under the lease for council rates and fees roughly accord with the amount shown in the contract for sale of the business. The defendant’s invoice of 12 August, 2014 claimed $4,933.44. Mr Bedford explained the difference as being due to increases in the rates each year.29 It is clear that the terms of the contract for sale of the business envisioned a lease with a condition for the payment of rates in an amount that accorded closely with the amount being levied by the council on the whole lot. [59] In my view, the contract for sale of the business is admissible for the purpose of construing the terms of the lease. It is objective information in the knowledge of the parties to the lease which provides the context in which the lease was negotiated. It meets the test described in Mount Bruce Mining. I also note that in Royal Botanical Gardens and Domain Trust v South Sydney City Council various drafts of a deed were considered by the High Court to fall within such objective evidence in construing the 28 (2015) 256 CLR 104, [50]. 29 Transcript 1- 24, l 40. -- 12 of 13 -- 13 executed deed.30 As outlined earlier in this judgement I have found it unnecessary to refer to this additional evidence in order to determine the claim. However, I consider that reference to the terms of the contract for sale of the business supports the conclusion I earlier reached. Orders [60] The orders of the court will be: 1. The plaintiffs’ claim is dismissed. 2. No order as to costs. 30 (2002) 240 CLR 45, [26], [30]. -- 13 of 13 --