CIVIL LAW CASES (Vol. XXXII 2011 CLC 1538 [Karachi] Before Munib Akhtar, J BURMA OIL MILLS LIMITED----Plaintiff versus TRUSTEES OF THE PORT OF KARACHI through Chairman----Defendant : Suit No.1813 and C.M.A. No.12049 of 2010, decided on 21st April,’ 2011. . (a) Interpretation of documents--- Proper meaning and interpretation of a term used in contract being a question of law would be decided by court. [p. 1541] A (b) Interpretation of documents--- Words used in a contract could not be interpreted in isolation from words immediately preceding them---Ilustration. [p. 1541] B (c) Interpretation of documents--- --Words used in a contract regarding -immovable property--- Determination of proper _ meaning---Principle—-Any antecedent agreement(s)/deed(s) between parties on same subject-matter could, in appropriate circumstances, shed light (by forming part of relevant factual background) on proper meaning of words used in such ‘contract. [p. 1542] C (d) Interpretation of documents--- 2.--Words used in a contract~-Meaning---Determination---Duty of court stated. Modern principles of construction require the Court to have regard to the commercial background, the context of the contract and the circumstances of the parties, and to consider whether against that background and in that context, to give the words a particular ‘or restricted meaning would lead to an apparently unreasonable and unfair result, [p.. 1543] D .Cargill International SA vy. Bangladesh Sugar and Food} Industries Corporation, [1997] EWCA Civ 2757; [1998] 1. WLR 461 fol. am But Arshad] Ghulam Date of MUNIB injunctive relief. F a registered lea OF plaintiff as tena leased is’ an are Ein the Boat Bui ‘Fait property v / leases/agreemer y period of 10 3 F although KPT 1 Deed was actu . presently becor | proper interpre which sets for terms:-—- “The 1 buildin Pumpi use the and oth respect buildin conver in writ the Bo as req to min 2. The ci construction (j approval by K 17-11-2009, a with direction Karachi Build applied. to thy acte (211) Burma Oil Mills Limited-v. Trustees of the Port of 1539 Karachi (Munib Akhtar, J) Arshad M. Tayebaly and Amel Khan Kansi for Plaintiff. Ghulam Hyder Sheikh for Defendant. Date of hearing: 31st March, 2011: (Vol. XXXII: tiff JUDGMENT MUNIB AKHTAR, J.--- The present application, for. interim wt injunctive relief, has been filed in a suit that arises out of a dispute about a registered lease deed dated 10-5-2010 ("Lease Deed") between the plaintiff as tenant and the defendant ("KPT") as landlord. The property I cased is an area measuring about 2007 sq. meters at Plots Nos.1 and 2 in the Boat Building Yard Area West Wharf ("the suit property"). The suit property was earlier leased out to the plaintiff under different leases/agreements of varying periods, and the present lease is for a petiod of 10 years, from 20-5-2009 to 19-5-2019.. (It appears that } although KPT had agreed to renew the lease on 23-7-2009, the Lease Deed was actually executed sometime later, as noted above.) As will presently become clear, the dispute beeen the parties centers on the proper interpretation and application of Clause (4) of the Lease Deed, which sets forth’ the purpose of the lease, and is in the following terms:--- 2d on 2ist April, in contract being A 1 in isolation from | 1541] B “The Tenants shall at their own expenses complete: and finish buildings fit for accommodation of Water Tank Machinery For Pumping And Filling Water And Storage Facilities and shall use the said buildings with all required and proper walls drains and other conveniences thereto so that the same may be in every respect in accordance with the terms of this Deed so that the said buildings and they will not add to or alter the said building and converfiences either externally or internally without the consent in writing of the Deputy Chief Engineer/Executive Engineer of the Board herein after referred to as the Executive Engineer and as required under.clause (5) next following. This will not apply to minor alterations in decorative features not requiring the prior permission of the City Distt. Government Karachi, Karachi Building Control Authority or other Competent Authorities." {emphasis in original] wable property | Any antecedent ¥* ct-matter could, in | } part of relevant rds used in such | tion--Duty of court the Court to have the contract and the inst that! ra patil et 2 ‘The case of the plaintiff is that it had filed its building plans for : construction (including that of storage facilities) at the suit property for sasonable and unfit i roval by KPT. ‘That approval was accorded by the latter on or about 17-11-2009, and communicated to the plaintiff on or about 24-11-2009, with directions that the latter obtain the necessary approval from the Karachi Buildiig Control Authority ("KBCA"). The plaintiff thereafter applied. to the latter. It appears that some correspondence was. also Sugar and Foo! 7; [1998] 1 WLRs ac1540 CIVIL LAW CASES [Vol. XXXII: 4 Town Planning Section of KBCA accorded its no objection to the —plans’'] submitted for approval, subject to fulfilment of certain conditions as specified. Eventually, KBCA by its letter dated 29-1-2011, granted its aporoval for the construction on the suit property in accordance with the: approved plan. It appears that the plan was approved as submitted by the plaintiff, i.e., as duly approved by KPT. 3. "In the meanwhile -- ard this led to the filing of the present suit Gn 26-11-2010 --- the plaintiff was served with a notice on 21-10-2010; by KPT. By means of the impugned notice, KPT has purported to cancel its approval for the building plans that had earlier been granted by it on 17-11-2009. The reason for cancellation is stated in the impugned notice as follows : “It has been observed that you are not carrying out construction work at site for the purpose of Water Tank Machinery for puinping and filling water and storage facilities. Instead of storage of water facilities you are violating the lease purpose and doing construction work for storage other than water." This issue constitutes the heart of the dispute between the parties. It appears that thereafter, the. parties entered into some correspondence, and also held certain meetings. The plaintiff's stand was, and is, that it was acting properly, and within the scope of the Lease Deed. KPT on the other hand, contended, and contends, that the cénstruction of storage facilities for storing something other than water at the suit’ property is outside the scope of the Lease Deed. In addition, KPT also (subsequently) took the objection that the plaintiff had started construction even prior to the permission required to be obtained from KBCA. 4, Learned counsel for the plaintiff narrated the facts as above, and contended that the plaintiff was engaged in the business, inter alia, of storing and warehousing agro-based and other. temperature ‘sensitive produce for import and export, and it was for this purpose that the * storage facilities were being built on the suit property. He submitted that one essential element. of the temperature control system was water, which required the construction. of a large water tank, and in fact,.a water tank having a capacity of around 55,000 gallons had already been constructed on the suit property. His case was that the storage facilities as above -were well within the scope of the purpose of the Lease Deed (Clause 4), and the specifications for the building as per Appendix "A" to the Lease Deed. He submitted that KPT itself had accorded approval for the building plans, and had also corresponded positively in this regard with KBCA. cue (tort Burma ; jlearned counsel - theing ascribed to th “itself had also grant of the construction that the plaintiff ha specialized machine [storage facilities. H © elsewhere at Karac the Government an and consignments 1 environment. He s interim relief exist application be allow 3, Learned co } interim relief. He Deed was clear, an facilities only. The beyond the scope o counsel’ submitted computed and were the intent ‘been to something other -t (higher) “rental “r plaintiff had started in place. 6. ‘T have hea: tecord with their as require attention an meaning of the pu thereof, and has th the scope of, such fact that the approv 29-1-2011, whereat property prior to t order. 7. The terms reproduced above. a.contract is, ulti For this purpose, t interpretation, and requires an applic: - order to ascertain difference between ae¥ [Vol. XXXII | Dn 27-5-2010, the 2ction to the plans tain conditions as -2011, granted its scordance with the s submitted by the of the present suit ice on 21-10-2010 urported to cancel granted by it on e impugned notice ig out construction ak Machinery for ilities. Instead of lease purpose and | water." pute between the atered into some § e plaintiff's stand { the scope of the ‘f. contends, that the { ‘aintiff had started be obtained from 4 i ‘acts as above, and ess, inter alia, of perature sensitive purpose that the it property. He nperature control "4 tion. of a large | apacity of around 4 suit property. His | > well within the J use 4), and the! 2 the Lease Deed.-:! | for the building: gard with KBCA, : 2011) Burma Oil Mills Limited v. Trustees of the Port of 1541 . Karachi (Munib Akhtar, J) Learned counsel contended that the meaning and interpretation now being ascribed to the Lease Deed by KPT was clearly erroneous. KBCA itself had also granted approval, and thus there was no hurdle in the way of the construction going ahead as planned and approved. ‘He submitted that the plaintiff had already made a huge investment, and had imported specialized machinery worth tens of lacs of rupees for the purpose of the sterage facilities. He also submitted that such facilities were not available elsewhere at Karachi port, and the project was fully supported both by the Government and also by the. importers and exporters whose goods and consignments required storage in a controlled, temperature sensitive environment. He. submitted that all the ingredients for the grant of interim relief existed in favour of the plaintiff, and prayed that the application be allowed. 5: Learned counsel for the défendant KPT opposed the grant of any interim relief. He submitted that the scope and purpose of the Lease Deed was clear, and it was confined to the construction of water storage facilities only. The construction now underway at the suit property was beyond the scope of the Lease Deed, and hence impermissible. Learned counsel submitted that the rental rates for the suit property had been computed and were being charged by KPT on the foregoing basis; had the intent been to allow the plaintiff to.use the facilities for storing something other than water, KPT would have charged a different (higher) “rental rate. Learned. counsel also submitted that the plaintiff had started construction without any approval from KBCA beirig in place. 6. I have heard learned counsel for the parties, .and-examined the \ tecord with their assistance, There appear to be two issues that presently require attention and determination. Firstly, what is the proper scope and meaning of the purpose of the Lease Deed, as set forth in clause. (4) thereof, and has the plaintiff acted in a manner contrary to, or beyond the scope of, such purpose? Secondly, what is the effect, if any, of the fact that the approval for the building plans was accorded by KBCA on 29-1-2011, whereas the plaintiff started construction activities on the suit property prior to that date? I take up these questions in the foregoing order. 7. The terms of Clause (4) of the Lease Deed have already been reproduced above. The proper interpretation and meaning of the terms of contract is, ultimately, a question of law to be decided by the court. For this purpose, the courts have developed certain well-known rules of interpretation, and the first issue that has been raised in the present case tequires an application of those rules’ and principles to Clause (4) in order to ascertain its true and proper meaning. As is obvious, the key difference between the parties lies in the meaning to be ascribed to the ac \ai 1542 CIVIL LAW CASES {Vol. XXXill;) words “and storage facilities". According to learned. counsel ‘for the defendant, the proper meaning of these words is they are limited) to the storage of water. On the other hand, according to learned counsel| for the plaintiff, these words have a broader mening, and apply to storage facilities designed to store goods or commodities other than{ water. These words cannot however, be regarded in isolation from the words immediately preceding them. The purpose of the Lease ‘Deed is stated-in the entire phrase, "Water ‘Tank Machinery For Pumping And Filling Water And Storage Facilities", and it is’ the ‘meaning of this | phrase that has to be ascertained. In my view, there is an ambiguity with | regard to this phrase, and it is: not immediately obvious or cleat | that it has the meaning put forward by learned counsel for the deferidant. Had that been so, the phrase could have been worded along some such lines as follows: "Machinery For Pumping~ And Filling Water’ And Storage Facilities for Water Tank", but that obviously is not the case. The correct legal meaning of the phrase therefore requires to: be ascertained. 7 permissible activity « and operation of a ‘ancillary to the plait that situation is no written. statement, i Property"), that "Plc ‘not used for Oil Fac Factory in'past", an executed. 10. In my view, the antecedent agre doubt that the reasc has undergone a chi the purpose of the s than an adjunct to situation, there ther why the purpose o operation: of a wate longer exists, The ~ Deed) has been dec business sense now Jimited as. before? operating a water t plaintiff. The wate purpose of, som International SA v [1997] EWCA Cir Appeal observed a: 8. “As noted above, the Lease Deed presently under consideration was preceded by a number of other agrcements/lease deeds between the Parties. In my view, any antecedent agreement(s) between the parties on! the same subject-matter can, in appropriate circumstances, shed light (by forming part of the relevant factual background) on the proper meaning] of the words used in the contract actually urider consideration. This is all the moreso when the subject-matter of the contract is immovable Property. The defendant has, in its written’ statement, reproduced the purposes of the leases/agreements between the parties that were entered into prior to the Lease Deed, It appears that the relationship between the Parties ‘in this regard dates back to 1968. Originally, the purpose for which the suit property was leased to the plaintiff .was "Water Tanks open storage for feeding main Plant on Plot No.13,:West Wharf". It appears that the plaintiff:had taken Plot 13 on lease.as well (which, it 4 "On the c seems, is across the road from the suit property), and was cartying on its the Court business activities on that plot. Shortly after the initial lease, the purpose context of of the lease was modified, and became: “Water Tanks Machineries for to conside pumping and Feeding Water and Storage area for feeding the main Plant to give th on Plot No.13 Industrial Area at West Wharf", Thereafter, in the to an apr subsequent lease deeds, this langiage was modified slightly from time to L) time, but in substance remained the same as above. Thus, in the lease ' y deed last preceding the Lease Deed, the purpose of the lease (which ran ah consideration, the the Lease Deed is limited to the stor -of commodities a1 term used. in Cla from 20-5-1999 to 19-5-2009) was stated as "Water Tank Machinery for . pumping and filling Water and Storage for feeding on Plot No.13 Industrial Area at West Wharf". : %. It will be seen fromthe foregoing that the purpose for which the auc2011) Burma Oil Mills Limited v. Trustees of the Port of 1543 4 Karachi (Munib Akhtar, J) suit property was leased: prior to the Lease Deed was firmly tied E110 Flot No.13. ‘There could be no doubt in that situation hat the “permissible activity on the suit property was limited to the construction’ and operation of a water tank (and support machinery) that was ancillary to the plaintiff's business activities on Plot No.13. However, that’ situation is no longer applicable. It is expressly noted in the written. statement, in para 7 (in the section titled "Facts of the Suit Property"), that "Plot No. 13 (locatéd in front of Plots Nos.1 and 2) was not used for Oil Factory/Oil Plant where Water was feeding for the Oil Factory in'past", and this was the situation in which the Lease Deed was executed. ‘ned. counsel ‘for the| is they are limited]? ag to learned counsel ening, and_apply-to| imodities other than in isolation from the|af: if the Lease Deed is|4 -y For Pumping And’ the ‘meaning of this is an ambiguity with y obvious .or cleat; ee defendant. 10. In my view, when the foregoing background factual matrix (i.e., Fi eevee such. the: antecedent agreements/leases) is kept in mind, there. can be little illing Water And #: doubt that the reasonable interpretation is that the purpose of the lease asly is not the case. J has undergone a change from the position previously prevailing, Earlier, ‘ore requires to be ME the purpose of the suit property appears to have been to serve as no more than an adjunct to the: business activity on Plot No.13. In the earlier gituation, there therefore appeared to be a commercial or business reason why the purpose of the lease was to be limited to the construction and operation of a water tank and allied facilities. That nexus however, no longer exists, The purpose of the suit property (and thus, the Lease Deed) has been decoupled from Plot No.13. What therefore would:be the business sense now of regarding the purpose of the Lease Deed being limited as. before? it is obvious that constructing, maintaining and operating a water tank is not in and of itself one of the businesses of the plaintiff. The water tank has. always been-ancillary to, and serves the purpose of, some business activity of the plaintiff. In Cargill International SA v. Bangladesh’ Sugar and Food Industries Corporation [1997] EWCA Civ 2757; [1998] .1 WLR 461, the (English) Court of Appeal observed as follow: under consideration] € deeds between the| tween the parties on| ances, shed light (by|' the proper meaning] 4 ideration. This is all tract is immovable 4 ent, reproduced the ‘ es that were entered ° tionship between the ly, the: purpose for was "Water Tanks 3, West Wharf". It; as well (which, it ’ { was carrying on its ] il lease, the purpose | "On the other hand, modern principles of construction require the Court to have regard to: the commercial background, the context of the contract and the circumstances of the parties, and to consider whether, against that background and in that context, to give the words a pafticular or restricted meaning would lead to an apparently unreasonable and unfair result." (per Potter, Ly) In my view, when all the foregoing factors are taken into consideration, the reagonable and proper interpretation of Clause (4) of the Lease Deed is that the "storage facilities" referred to therein are not limited to the storage of water, but include also facilities for. the storage .of commodities and goods other than water. It is also to be noted that the term used in Clause (4) is "water tank". A certain storage capacity is Thereafter, in the | lightly from time to ‘Thus, in the lease if he lease (which ran‘ Tank Machinery for ng on Plot No.3: rpose for which the ac