Australian Hotels Association (As Represented BY Act Branch ABN 37 315 422 917) v ACT Planning and Land Authority & Quanton Pty Ltd ACN 167 954 994 (Administrative Review)
[2020] ACAT 98
•1 December 2020
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
AUSTRALIAN HOTELS ASSOCIATION (AS REPRESENTED BY ACT BRANCH ABN 37 315 422 917) v ACT PLANNING AND LAND AUTHORITY & QUANTON PTY LTD ACN 167 954 994 (Administrative Review) [2020] ACAT 98
AT 107/2019
Catchwords: ADMINISTRATIVE REVIEW – controlled activity order – failure to comply with Crown lease – serviced apartments in residential zone – Crown lease permits only ‘multi unit housing’ – is Crown lease interpreted as a statutory instrument or a contract – ‘multi-unit housing’ interpreted to include ‘residential use’ – activity being conducted on the land not ‘residential use’ – exercise of discretion to make a controlled activity order
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 9, 68
Acts Interpretation Act 1901 (Cth)
Australian Capital Territory (Planning and Land Management) Act 1988 (Cth) ss 29, 52
Legislation Act 2003 (Cth)
Legislation Act 2001 ss 13, 14, 43, 46, 50, 138, 139, 140, 148
Planning and Development Act 2007 ss 6, 7, 8, 50, 237, 339, 350, 351, 358, 408A, Sch 2
Cases cited:ACT Planning and Land Authority v 50 Emu Drive Pty Ltd [2019] ACTSC 276
Barton Property Partnership No 2 v Foote & Ors (No 2) [2015] ACTSC 204
Bogiatzis & Ors and Minister for Urban Services & Anor [2002] ACTAAT 21
Bowler v Hilda Pty Ltd [2001] FCA 342
Capital Recycling Solutions Pty Ltd v Planning and Land Authority of the ACT [2019] ACTSC 58
Cherry v Steele-Park [2017] NSWCA 295
Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24
Currumbin Investments Pty Ltd v Body Corp Mitchell Park Parkwood CTS [2012] QCA 9
Griffith University v Tang [2005] HCA 7Haridemos & Ors & ACT Planning and Land Authority [2012] ACAT 74
Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2005] FCA 1812
Peter Kohlsdorf Golf Distributors Pty Limited v Minister for Planning [2003] ACTAAT 29
Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64
Re Page and Minister for the Environment, Land and Planning (1998) 50 ALD 999Springrange Pty Ltd v Australian Capital Territory and Another [2010] ACTCA 17
Supabarn Supermarkets Pty Ltd v Cottrell Pty Ltd (No 3) [2020] ACTSC 53
Westfield Management Limited v Perpetual Trustee Company Limited [2007] HCA 45
List of
Texts/Papers cited: Beazley, Tout and Fitzgerald, Appeals and Appellate Courts in
Australia and New Zealand (LexisNexis Butterworths, 2014)
Macquarie Dictionary
Tribunal: Presidential Member MT Daniel
Member Walter HawkinsDate of Orders: 1 December 2020
Date of Reasons for Decision: 1 December 2020
AUSTRALIAN CAPITAL TERRITORY
CIVIL & ADMINISTRATIVE TRIBUNAL AT 107/2019
BETWEEN:
AUSTRALIAN HOTELS ASSOCIATION
(AS REPRESENTED BY ACT BRANCH
ABN 37 315 422 917)
Applicant
AND:
ACT PLANNING AND LAND AUTHORITY
Respondent
AND:
QUANTON PTY LTD
ACN 167 954 994
Party Joined
TRIBUNAL: Presidential Member MT Daniel
Member Walter Hawkins
DATE:1 December 2020
ORDER
The Tribunal orders that:
1.The Respondent is to give to the Tribunal and each other party by 8 December 2020 a draft controlled activity order to give effect to this decision.
2.The Party Joined and Applicant may give the Tribunal and each other party any submissions in relation to the proposed wording of the controlled activity order by 11 December 2020.
3.The Respondent is to provide submissions in reply by 16 December 2020.
4.The Tribunal will issue orders to give effect to this decision in chambers after 16 December 2020.
…………………………………..
Presidential Member MT Daniel
For and on behalf of the Tribunal
REASONS FOR DECISION
1.In these proceedings the Australian Hotels Association (Applicant) seeks review of a decision by the ACT Planning and Land Authority (Authority) not to issue a controlled activity order to Quanton Pty Ltd (Lessee). On conducting a review of that decision, we are satisfied the correct and preferable decision is to issue a controlled activity order. Our reasons follow.
Background to the proceedings
2.Quanton Pty Ltd is the crown lessee of Block 18 Section 20 Kingston (the land). Under the Territory Plan, the land is situated in the RZ5 zone.
3.The Territory Plan provides that land in an RZ5 zone can be used for specified purposes including residential use, but cannot be used for commercial accommodation which is characterised as a prohibited development in that zone.
4.The Crown lease for the land provides that the Lessee may use the land “for the purpose of multi-unit housing of not less than three (3) and not more than fifty six (56) dwellings.’
5.The Lessee currently conducts an enterprise known as Knightsbridge Furnished Apartments (KFA) on the land. According to its website, KFA provides to members of the public, for a fee, accommodation in the nature of ‘serviced apartments’.
6.On 12 July 2019 the Applicant applied to the Authority for a controlled activity order to be directed to the Lessee in respect of the operation of KFA on the land. The Applicant said that the land was required to be used for residential purposes and was instead being used for commercial accommodation. The specified grounds for the application were three-fold: failure to comply with the Crown lease; undertaking a development without approval; and constructing a building or structure without approval.
7.On 6 September 2019 the Authority gave the Lessee a notice to show cause why a controlled activity order should not be made.
8.On 20 September 2019 the Lessee provided a response to the Authority setting out reasons why, it submitted, a controlled activity order should not be made. The Lessee said that the buildings constructed on the land were in accordance with a development approval, and that the operation of KFA on the land complied with the Crown lease because the land was being used for ‘multi-unit housing’. The Lessee said that the Crown lease itself did not require the land to be used for ‘residential use’ and that this constraint should not be imported from the Territory Plan into the Crown lease.
9.The Lessee submitted that the terms ‘residential use’ and ‘commercial accommodation use’ in the Territory Plan were unclear and, given current trends in land use, not mutually exclusive, and that this lack of definition was fatal to the application for a controlled activity order. Further, the Lessee submitted that the operation of KFA was not offered on an exclusively ‘short term’ basis and was therefore not within the concept of ‘commercial accommodation’ use.
10.On 21 October 2019 the Authority decided not to make a controlled activity order. The Authority was not satisfied that any of the grounds put forward by the Applicant were made out. The Authority was satisfied that the building constructed on the land complied with the development approval and the Crown lease. In relation to the assertion that the land was being used for commercial accommodation, the Authority stated that there was no evidence that the land was being used as a guest house, motel, hotel or tourist resort. Notwithstanding KFA referring to its operations as providing serviced apartments, the Authority stated it could not be satisfied that KFA provided ‘serviced apartments’ as that term is defined in the Territory Plan, because it could not be satisfied that the accommodation being provided on the land was being provided on a ‘short-term’ basis. This was said to be due to the lack of clear and measurable criteria in the Territory Plan for the concept ‘short-term’.
11.On 18 November 2019 the Applicant lodged an application for review of the Authority’s decision. The Lessee was joined as a party to the proceedings.
12.The hearing of the application was held on 11 March 2020. There being no real factual contest there were no witnesses. The evidence before the Tribunal consisted of the following documents:
(a)The Tribunal documents and supplementary Tribunal documents;[1]
(b)Documents evidencing the operation of KFA, including recently issued invoices and the register entry for the ABN;[2]
(c)Attachments to the Applicant’s submissions including information from Google showing that KFA is shown as a result for the search ‘Serviced Apartments Canberra’, information from Tripadvisor and online bookings, and correspondence and documents issued by the Lessee’s parent entity Consolidated Builders Limited;[3]
(d)Annexures to the Lessee’s submissions, including extracts from the Territory Plan and ACTMapi, a table prepared by Knight Frank which was asserted to demonstrate that multiple commercial operations in Canberra are conducted on land where the Crown lease or unit titles plan does not expressly permit commercial accommodation use; and[4]
(e)The constitution of the Applicant[5]
[1] Exhibits R-1 and R-2 respectively
[2] Exhibit JP-1
[3] Exhibit A-1
[4] Exhibit JP-2
[5] Exhibit JP-3
13.Each of the parties filed submissions in advance of the hearing, and the hearing consisted of the Tribunal exploring issues raised with counsel. During the hearing, the Tribunal questioned why the Crown lease was not interpreted as a statutory instrument as required by the Legislation Act 2001 (Legislation Act). The parties were given leave to file further submissions on that point following the hearing. The Authority’s and Lessee’s submissions were received on 27 March and 2 April 2020 respectively. The Applicant did not file any submissions on this point.
14.Just prior to delivery of the decision, counsel for the Lessee drew the Tribunal’s attention to the decision in Supabarn Supermarkets Pty Ltd v Cottrell Pty Ltd(No 3) (Supabarn).[6] The Tribunal invited further submissions from the parties on the relevance of this case; these were provided by Counsel for the Lessee on 25 November 2020. The Authority and the Applicant declined to provide any further submissions.
The applicable law
[6] [2020] ACTSC 53
15.Section 9 of the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act) and section 408A of the Planning and Development Act 2007 (PDA) provide that an application may be made to the Tribunal for review of the Authority’s decision not to make a controlled activity order. Section 68 of the ACAT Act provides that after conducting the review, the Tribunal must by order confirm, vary, set aside and substitute or set aside and remit the original decision. In conducting the review, the Tribunal is commonly described as ‘standing in the shoes of the decision-maker’. Consequently, it is necessary to start with consideration of the legislation under which the Authority operates when considering whether or not to make a controlled activity order.
16.Approaching the relevant provisions for this case, under section 350 of the PDA a person may apply for a controlled activity order directed to the lessee of premises where a controlled activity was, is being, or is to be, conducted. The Authority must then issue a show cause notice to the lessee, as occurred in this case.
17.Section 351 of the PDA then provides that in relation to an application for a controlled activity order, the Authority must consider any reasons given in accordance with the response to the show cause notice and then decide whether or not to make a controlled activity order.
18.If the Authority decides to make a controlled activity order, section 358 of the PDA sets out what the controlled activity order must contain, and the kinds of directions it may contain. Significantly, a controlled activity order may, among other things, require the person to whom it is directed to:
(a)not to begin a development without development approval;
(b)not to carry out a development without development approval;
(c)to comply with a lease provision or development agreement; or
(d)not to do anything that is a controlled activity
19.Central to all of these provisions is the concept of a ‘controlled activity’. In this case, the grounds on which the controlled activity order was sought were failure to comply with the land use provision of the Crown lease, and conducting a development without approval.
20.Section 339 of the PDA defines ‘controlled activity’ and provides that the activities listed in column 2 of Schedule 2 of the PDA are ‘controlled activities’. Items 1 and 3 of Schedule 2 are relevant:
Item
Controlled activities
Penalty
1
failing to comply with—
(a)a provision of a lease, other than—
(i)a building and development provision requiring the commencement of works to take place within a stated time; or
(ii)a building and development provision requiring the completion of works to take place within a stated time if—
(A)the stated time has been extended under div 9.9.3; and
(B)the required fee for the extended time has been paid; and
(C)the extended time has not ended; or
(b)if a lease is granted subject to the lessee entering into a development agreement and the lessee has entered into such an agreement—the development agreement
60 penalty units
2 ….. …. 3
undertaking a development for which development approval is required—
(a)without development approval; or
(b)other than in accordance with the development approval
60 penalty units
21.The words ‘development’ and ‘use’ are defined by sections 7 and 8 of the PDA. ‘Development’ in relation to land includes building on the land, using the land, and using a building on the land. A ‘use’ of land, a building or structure includes beginning a new use, or changing a use, of the land, building or structure.
22.While the Territory Plan provides for certain land use activities to take place in specified zones, this prescription is given effect at a broader planning level. As Counsel for the Lessee pointed out, there is no provision of the PDA, or elsewhere, which requires a crown lessee to comply with the Territory Plan. Instead, the Crown lease is the mechanism by which the right to conduct certain activities upon a particular parcel of land is conferred to the crown lessee.
The issues in the case
23.The issues in this case are:
(a)What use of the land is permitted by the Crown lease?
(b)Is the Lessee using or proposing to use the land in a way not permitted by the Crown lease?
(c)If the answer to b is yes, should a controlled activity order be made?
(d)If a controlled activity order is to be made, what should the content of the order be?
What use of the land is permitted by the Crown lease?
24.The Crown lease was issued on 22 July 2015 after the consolidation of three adjoining blocks, and was registered on 6 August 2015. It is in what appears to be a standard form. Relevant extracts are provided below:
AUSTRALIAN CAPITAL TERRITORY
PLANNING AND DEVELOPMENT ACT 2007
Australian Capital Territory (Planning and Land Management) Act 1988 (Cth) ss 29, 30 & 31
LEASE GRANTED pursuant to the Planning and Development Act 2007 … WHEREBY THE PLANNING AND LAND AUTHORITY … ON BEHALF OF THE COMMONWEALTH OF AUSTRALIA in exercising its functions grants to [the Lessee] … “the land” …to be used by the Lessee for the purpose set out in Clause 3(a) of this lease only …
…
3. THE LESSEE FURTHER COVENANTS WITH THE COMMONWEALTH as follows:
(a) To use the land for the purpose of multi-unit housing of not less than three (3) dwellings and not more than fifty six (56) dwellings; …
25.In section 1 of the Crown lease the following definitions are provided (re-arranged for ease of reading):
(g)“multi-unit housing” means the use of land for more than one dwelling and includes but is not limited to dual occupancy housing;
(e)“dwelling”:
(i) means a class 1 building, or a self-contained part of a class 2 building, that:
(A)includes the following that are accessible from within the building, or the self-contained part of the building:
(1)not more than 2 kitchens;
(2)at least 1 bath or shower;
(3)at least 1 toilet pan; and
(B)does not have access from another building that is either a class 1 building or the self-contained part of a class 2 building; and
(ii) includes any ancillary parts of the building and any class 10a buildings associated with the building;
(d)“dual occupancy housing” means the use of land that was originally used or leased for the purposes of single dwelling housing for two dwellings;
(b)“building” means any building or structure constructed or partially constructed or to be constructed, as the context permits or requires, on or under the land
26.The above definitions are in the same terms as used in the Territory Plan. However, the Territory Plan is a visually hierarchical document. It locates the term ‘multi-unit housing’ under the umbrella term ‘residential use’. The term ‘residential use’ is distinct from the term ‘commercial accommodation use’ which is itself an umbrella term under which activities such as hotels, motels and serviced apartments are located. The terms ‘residential use’ and ‘commercial accommodation use’ are presented in the Territory Plan as separate concepts that do not intersect or overlap.
27.The Applicant submitted that the Crown lease should be read consistently with the Territory Plan, such that the term ‘multi-unit housing’ in Clause 3(a) would bring with it the connotation of, and limitation to, ‘residential use’.
28.The Authority and the Lessee both approached the matter on the basis that in interpreting the Crown lease the Territory Plan should not be referred to at all, and neither should the history of the granting of the Crown lease.
29.The Authority and Lessee submitted that the correct approach was that the Crown lease should be interpreted as a contract, simply applying the ordinary meaning of the words used in the document. However, both submitted that due to its special status in the Torrens title system as a public document on which third parties rely, the rules of contractual construction permitting reference to extrinsic material could not be applied.[7] In particular, the Lessee urged that extrinsic material such as the Territory Plan could be referred to in order to clarify ambiguity in the Crown lease, but not to import ambiguity.[8] The Authority and Lessee submitted that the Tribunal was bound by previous authorities to take this approach.
[7] Westfield Management Limited v Perpetual Trustee Company Limited [2007] HCA 45
[8] Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24
30.There is no doubt that the mechanism by which a Crown lease is granted is contractual, however it is not a contract entered into in a physical or legal vacuum. There are facts and law underpinning the creation of a Crown lease.
31.As mentioned above, at the hearing we raised with the parties whether the Crown lease, being on its face expressed to be issued by the Authority under the PDA,[9] was a statutory instrument and should be interpreted as required by the Legislation Act and principles of statutory interpretation.
[9] See extract of crown lease at paragraph 24
32.The statutory instrument approach might support the interpretation of the Crown lease urged by the Applicant. This is because the Legislation Act[10] requires statutory instruments to be interpreted in a certain way:
(a)section 148 of the Legislation Act provides that terms used in an instrument bear the same meaning as the same terms in the parent Act;
(b)section 43 of the Legislation Act requires a statutory instrument to be interpreted so as not to exceed the powers given by an authorising law, and section 50 of the PDA requires the Authority not to do an act inconsistent with the Territory Plan;
(c)section 139 of the Legislation Act requires a statutory instrument to be interpreted in a way that would best achieve its purpose;
(d)section 140 of the Legislation Act states that in working out the meaning of a statutory instrument it should be read in the context of the Act as a whole.
[10] The following including both determinative provisions which apply unless there is manifest contrary intention, and non-determinative provisions which apply unless there is a contrary intention
33.Is a Crown lease issued under the PDA a statutory instrument for the purposes of the Legislation Act? Sections 13 and 14 of the Legislation Act state:
13Meaning of statutory instrument
(1) A statutory instrument is an instrument (whether or not legislative in nature) made under—
(a)an Act; or
(b)another statutory instrument; or
(c)power given by an Act or statutory instrument and also power given otherwise by law.
(2) A statutory instrument includes a subordinate law, disallowable instrument, notifiable instrument and commencement notice.
(3) A reference to a statutory instrument includes a reference to a provision of a statutory instrument.
14Meaning of instrument
(1) An instrument is any writing or other document.
NoteWriting is defined in the dictionary, pt 1.
(2) A reference to an instrument includes a reference to a provision of an instrument.
34.Both the Authority and the Lessee submitted that the Crown lease was not made ‘under’ the PDA, by drawing an analogy with case law[11] in the area of judicial review of administrative decisions. A distinction is drawn in those authorities between the decision itself, and the legislation giving effect to or implementing the decision. There is some support for this analysis in the larger legislative framework: while the Authority is authorised to grant a lease under section 237 of the PDA this is done on behalf of the Executive, which is empowered to manage Territory land and grant leases on behalf of the Commonwealth by section 29 of the Australian Capital Territory (Planning and Land Management) Act 1988 (Cth) (PALM Act).
[11] See for example Griffith University v Tang (2005) 221 CLR 99
35.We agree that the decision to issue a Crown lease may not be made under the PDA, however that is not the question posed by section 13 of the Legislation Act. Section 13 does not refer to the decision to make an instrument, but the making of the instrument. This requires consideration of whether the document – being the Crown lease itself (not the decision to grant it) - is ‘made under’ the PDA.
36.No party referred to the definition of the word ‘under’ for the Legislation Act:
under, in relation to an Act or statutory instrument, includes the following:
(a)by;
(b)by virtue of;
(c)for or for the purposes of;
(d)in accordance with;
(e)in pursuance of;
(f)pursuant to;
(g)within the meaning of
Note A reference to an Act or statutory instrument includes a reference to a provision of the Act or instrument (see s 7 and s 13).
37.It is clear from the provisions of the PDA and the terms of the Crown lease quoted previously that, consistent with the definition of the term ‘under’, the Crown lease is made by the Authority ‘pursuant to’, ‘in accordance with’ and ‘by virtue of’ the PDA although the ultimate source of authority to decide to grant a lease can be traced back to the PALM Act.[12] This means that the Crown lease satisfies the statutory definition of a statutory instrument and the provisions of the Legislation Act dealing with interpretation of statutory instruments would appear to apply.
[12] For completeness, we note that neither section 13 or the definition of ‘under’ require that the instrument be made solely under statute. An instrument drawing on multiple sources of authority is not excluded from being a statutory instrument.
38.This is not the end of the matter. The Authority pointed out section 52 of the PALM Act which, in relation to the Territory Plan and instruments (such as Crown leases) made under paragraph 29(1)(b) of that Act, clearly disapplies the statutory interpretation provisions of the Acts Interpretation Act 1901 (Cth) and Legislation Act 2003 (Cth). It might seem anomalous, as pointed out by counsel for the Lessee, that a Crown lease issued directly by the Executive under the PALM Act would not attract the Commonwealth statutory interpretation principles, but a Crown lease issued by the Authority under the PDA would attract the Territory’s statutory interpretation principles. However, it may be that this is a deliberate policy approach, consistent with the constraints imposed upon the Authority by section 50 of the PDA. If statutory interpretation of a Crown lease issued under the PDA were not the intended approach, the PDA could easily have contained the equivalent of section 52 of the PALM Act.
39.We have also considered whether section 52 of the PALM Act might be relied upon as a ‘contrary intention’, such that the non-determinative interpretation provisions of the Legislation Act would not apply. We do not think it is, because it is not an expression of the intention of the ACT Legislative Assembly.
40.While a simple application of these legislative provisions leads to the conclusion that the Crown lease is a statutory instrument and must be interpreted as such, we have nonetheless considered the consequences of that approach. There are other provisions of the Legislation Act dealing with statutory instruments which are arguably inconsistent with the concept of a Crown lease as a document of title that cannot be varied at the will of one party.[13] The statutory instrument provisions approach the issuing of a statutory instrument as a unilateral action, whereas despite the reference to a Crown lease being ‘granted’ by the Authority a Crown lease is the product of a bilateral process.
[13] See for example section 46 in relation to repeal or amendment of statutory instrument, although it must be noted that power may only be exercised subject to the same constraints as the original making of the instrument
41.In the end, it seems to us that there is a good argument to be made that a Crown lease issued by the Authority under the PDA is a statutory instrument which should be interpreted according to principles of statutory interpretation and as required by the Legislation Act. However, the consequences of that approach may be such as to displace that interpretation.[14]
[14] Legislation Act section 138
42.Both the Authority and the Lessee urged the Tribunal not to adopt the statutory instrument approach, on the basis that we were bound to follow the authorities.
43.It is worth digressing at this point to refresh our understanding of the doctrine of precedent and clarify what is a binding authority. Although it has become commonplace for oral or written submissions to quote sentences from published decisions of superior courts, drawing attention to phrases that support the case at hand, such a quote is not itself the ratio decidendi of the case and is not in its terms binding. It is the unique combination of material facts, relevant law, and application of principle in the superior court’s decision which constitutes the ratio decidendi binding upon the inferior court or tribunal. As a further refinement, a principle adopted by a superior court without the benefit of submissions may not be binding upon an inferior court or tribunal.[15]
[15] See discussion in Chapter 4 Beazley, Tout and Fitzgerald, Appeals and Appellate Courts in Australia and New Zealand (Lexisnexis Butterworths, 2014)
44.A close reading of the cases to which we were referred reveals that most were cases arising in other jurisdictions, considering different legislation, and in relation to other kinds of registrable instruments. These cases are not binding upon the Tribunal in this matter, although they may be persuasive in relation to the ACT scheme depending upon the similarity of the legislation.
45.Counsel for the Authority referred the Tribunal to the decision in Barton Property Partnership No 2 v Foote (No 2)[16] as particularly relevant in considering the statutory interpretation argument. In that case, which involved an application for an injunction preventing use of premises in breach of a lease, his Honour Mossop AsJ[17] stated:
I have not accepted the submissions of Grace that were based upon the terms of the Territory Plan in its current form. That is because such extrinsic materials are not able to be used to interpret the terms of a lease: Westfield Management Ltd v Perpetual Trustee Company Ltd (2007) 233 CLR 528 at 538-541 [35]-[45]; Springrange Pty Ltd v Australian Capital Territory [2010] ACTCA 17 at [12]-[15].
[16] [2015] ACTSC 204
[17] As his Honour then was
46.It is not clear that the statutory instrument argument we have set out was clearly put to the Supreme Court in that case, and consequently it cannot be relied upon as requiring the Tribunal in this matter to reject that analysis.
47.Counsel for the Authority and Counsel for the Lessee pointed to a raft of ACT cases which, although not dealing with the statutory instrument argument, clearly stated that Crown leases in the ACT should be interpreted as contractual documents, but in a special way that required the exclusion of ‘extrinsic material’. It was submitted that we must follow these authorities by construing the Crown lease as a contract, referring only to the terms of the Crown lease and eschewing any reference to the provisions of the Territory Plan.
48.In the end, in this case, nothing turns upon the distinction between contractual construction and statutory interpretation. This is because we are satisfied that whether viewed as a contract[18] or a statutory instrument, or perhaps a hybrid of the two,[19] in relation to this Crown lease regard must be had to the Territory Plan.
[18] We have not in the reasons below considered all of the doctrines of contract law or remedies which would potentially apply in a case such as this once the crown lease is approached as a contract; for example the effect of the lack of an entire agreement clause, or the severance of a clause which is contrary to law, or an application for rectification brought by one or both parties. The question of application of these doctrines, and availability of such remedies, will no doubt arise in future matters.
[19] It occurs to us that the true nature of the crown lease is as neither a statutory instrument nor a contract, but as a hybrid of the two: see Finn J in Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2005] FCA 1812. This conclusion may be enough to justify, and even make sense of, the development of unique rules of construction/interpretation for crown leases in the ACT.
49.Adopting the contractual construction approach, it is by no means clear that the cases to which we were referred stand for the proposition that the Territory Plan cannot be referred to in the initial construction of a Crown lease. Even without ambiguity or deficiencies in a contract, ordinary principles of contractual construction permit consideration of the objectively ascertainable ‘surrounding circumstances’ within which the contract was formed. The ‘extrinsic material’ referred to in the authorities cited on behalf of the Authority and the Lessee is most commonly evidence of the subjective intentions or understanding of the parties to the contract. Although extrinsic to the Crown lease document, we do not see the provisions of the Territory Plan in relation to the subject land at the time of the grant of the Crown lease, as falling within the same category as evidence of the subjective intention of the parties.
50.The authorities demonstrate a reluctance by the Courts, even in relation to contracts granting indefeasible rights, to entirely abandon the ability to refer at the first stage of construction to objectively ascertainable surrounding circumstances.
51.In Westfield Management Limited v Perpetual Trustee Company Limited[20] the High Court considered an appeal from a decision involving the interpretation of terms of an easement conferring a right of way. The High Court commenced by setting out the legislative framework within which the easement had been granted and registered, noting the significance of public reliance upon the Register. The High Court referred to some instances in which extrinsic evidence had been previously accepted in interpreting an easement, one being evidence to show misdescription of the boundaries comprised in the certificate of title. The High Court in conclusion stated:
It may be accepted, in the absence of contrary argument, that evidence is admissible to make sense of that which the Register identifies by the terms or expressions found therein. An example would be the surveying terms and abbreviations which appear on the plan found in this case on the DP.
But none of the foregoing supports the admission in this case of evidence to establish the intention or contemplation of the parties to the grant of the Easement.[21]
[20] [2007] HCA 45
[21] At paragraphs 44 and 45
52.In Springrange Pty Ltd v Australian Capital Territory and Another (Springrange)[22] the Court of Appeal found it must construe the Crown lease “without the aid of extrinsic materials that might cast light on the intention of the original parties.” After referring to the authorities, the Court of Appeal noted:
that is, of course, not to say that reference may not be had to documents the terms of which are incorporated into the public document. … Nor is it to disagree with the comment of Gyles J in Bowler at [59]: Evidence, for example, might be relevant to identify the land and the parties or to give context to particular covenants in the ordinary way: … [our emphasis]
[22] [2010] ACTCA 17, at paragraphs 12 and 15
53.In Barton Property Partnership No 2 v Foote (No 2) after reaching the conclusion quoted above, the Supreme Court went on to add the qualification:
However it is, in my view, open, when interpreting Crown leases or their equivalent in the Australian Capital Territory, to have regard to the fact that, in a general sense, the terms of lease purpose clauses have been used since very early in the development of the Territory both as a mechanism by which land use is regulated for planning purposes as well as part of the means by which increases in the value of land arising from changes in use may be taxed.[23]
[23] Barton Property Partnership No 2 v Foote & Ors (No 2) [2015] ACTSC 204 at paragraph 45
54.Most recently in Supabarn, the Court was required to determine whether certain clauses in a registered lease had been breached. Her Honour Penfold J undertook a comprehensive review of the cases covering principles for interpretation of contracts generally, commercial contracts, and documents registrable in the Torrens title system and concluded:[24]
[24] At paragraph 157
Having regard to the cases and submissions mentioned above, I propose to deal with the construction of the Lease, being an agreement that creates an interest in land and is registered on a Torrens title register, on the basis that:
(a)Westfield constrains, but does not entirely exclude, the use of extrinsic materials in construing the terms of such an agreement;
(b)the Westfield restrictions on the use of extrinsic materials are not only applicable to the construction of those provisions of an agreement that, if the agreement is registered, have the quality of indefeasibility, because the basis of the restrictions is not indefeasibility as such but the “inherent probabilities of what inquiries a purchaser of the benefit” of the registered agreement is likely to make (Phoenix);
(c)the circumstances relevant to whether extrinsic materials may be taken into account include the intended lifespan of the agreement and whether the agreement contemplates the assignment of a party’s rights under the agreement during that lifespan (Phoenix);
(d)the extrinsic matters that may be considered in construing a registered agreement are limited to “ones that one can know without evidence from outside the terms of the document itself”, also described as “background knowledge that is accessible to all the people who it is reasonably foreseeable might, in the future, need to construe the document” (Phoenix), including:
(i)material identifying the parties, the land subject to the agreement, and “the physical characteristics of the tenements” (Springrange; Sertari);
(ii)material used to explain the meaning (denotation) of non-legal technical terms used in the agreement, for instance surveying terms and abbreviations appearing on the deposited plan, which material may include dictionary definitions, applicable legislative provisions, and possibly previous judicial consideration of the terms in question (Prowse v Johnstone; Currumbin Investments);
(iii)an unregistered instrument, or other information, which is explicitly incorporated into a registered instrument by reference, or to which attention is directed by a term of the registered instrument properly construed, at least if the document or information was and remains publicly available to third parties without unreasonable effort, expense or delay (Currumbin Investments; Suhr).
55.While her Honour did not specifically list the Territory Plan amongst the extrinsic material to which regard might be had, it clearly falls within the category of ‘extrinsic matters’ referenced in subparagraph (d)(i). The objective and publicly accessible nature of the Territory Plan is demonstrated by the simple distinction that a party does not lead evidence of the terms of the Territory Plan, it is not a matter for proof but a matter for submissions.[25]
[25] In this sense, consideration of the legal or planning framework within which a lease is granted could never fall foul of the ‘true rule’ in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 when approached as a rule of admissibility of evidence, rather than use.
56.The substance of the decision in Supabarn reflects reliance upon the provisions of the Territory Plan, because central to the reasoning is the location of the land in a ‘group centre’. Counsel on behalf of the Lessee submitted that the location of the land in a group centre was an ‘unambiguous factual matter’. We do not agree.
57.Counsel for the Lessee also submitted that Penfold J’s judgment in Supabarn confirmed the substance of the submissions made on behalf of the Lessee. We have a different view.
58.The decision in Supabarn we think crystallises the current thinking[26] about the meaning of Westfield and Codelfa. After reviewing the authorities in the light of later judicial reflection, we are satisfied that for a Crown lease issued under the PDA the surrounding circumstances that may be considered as context to give meaning to the Crown lease include the location of the land, and the provisions of the Territory Plan in force at the time of the grant.
[26] See Currumbin Investments Pty Ltd v Body Corp Mitchell Park Parkwood CTS [2012] QCA 9 and more recently Cherry v Steele-Park [2017] NSWCA 295
59.Even if we are wrong in our conclusion that the Territory Plan forms part of the surrounding circumstances for all Crown leases in the ACT, it is inevitable that recourse must be had to the Territory Plan to understand the meaning of this particular Crown lease. This is so, whether a statutory interpretation or contractual construction approach is taken.
60.Both approaches favour an interpretation of the Crown lease which is workable – whether this be called giving business/commercial efficacy to a contract or avoiding an absurd result of interpretation of legislation. In Springrange the Court of Appeal found it was not necessary to look outside the terms of the Crown lease (as the Court below had done) because “it seems to us that the lease, interpreted in the abstract, has a clear and rational operation”.[27] We do not think that the Crown lease under consideration in this matter could be so described.
[27] At paragraph 18
61.As written, the Crown lease allows no activity to be undertaken on the land other than the construction of buildings. This is because the definition of ‘multi-unit housing’ and associated terms in the Crown lease are closed categories, and refer only to the construction of buildings of a certain type. The Crown lease expressly gives permission to construct buildings on the land. The Crown lease does not expressly grant permission to the crown lessee to conduct any activities in the buildings as constructed.[28]
[28] For an exploration of this distinction see Capital Recycling Solutions Pty Ltd v Planning and Land Authority of the ACT [2019] ACTSC 58
62.We are reluctant to accept that this can have been intended to be the meaning of the document, or the meaning ascribed to the document by an objective bystander. From the point of view of a crown lessee, it could not have been intended or expected that the only activity permitted on the land was to construct – but not use – buildings of a specified kind. Such a limited use clause seems absurd and irrational, and would not make any commercial sense.
63.The interpretative or construction choices available might be to imply an additional ‘permitted use’ into Clause 3(a) of the Crown lease, or to interpret the words ‘multi-unit housing’ in Clause 3(a) as including certain activities. Argument before us focussed on the second approach.
64.One might suggest the words ‘multi-unit housing’ import permission to conduct any activity that it is physically possible to carry out upon the land or within the buildings as constructed: this would include activities prohibited in the RZ5 zone such as agriculture, animal care facilities, commercial accommodation units, serviced apartments, motels, hotels, correctional facilities, etc.
65.This ‘includes any activity’ approach would make a nonsense of the planning scheme of granting user rights by way of the Crown lease. It seems to us that this interpretation produces an equally absurd, unreasonable or irrational result as the bare interpretation of ‘no activities’ described in paragraph 61.
66.A third alternative, and the middle road between these two extreme constructions, would be to interpret the word ‘multi-unit housing’ in the Crown lease by reference to the hierarchy of terms contained in the Territory Plan. As outlined above, we think this is permissible at the outset as reference to an objectively available ‘surrounding circumstance’. It might also be considered, in the context of the planning regime in the ACT, to be a technical legal term which brings with it the meaning the term bears in the planning context.[29] Support for this approach is enhanced where, as here, the definitions used in the Crown lease are identical to those occurring in the regulatory scheme. In any event, there can be no question that the legislative scheme within which the parties were contracting may be referred to in order to give business or commercial efficacy to a contract which appears on its face to irrational.
[29] See Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64, generally and at paragraph 166 ff
67.As previously noted, in the legislative scheme ‘multi-unit housing’ falls within the umbrella term ‘residential use’. By reference to this legal context, ‘multi-unit housing’ connotes and thus imports the concept of ‘residential use’ into clause 3(a) of the Crown lease, permitting the land and buildings to be used for that purpose. We are comfortably satisfied that an objective bystander apprised with knowledge of the location of the land and the planning scheme in force at the time of the grant, would interpret the Crown lease to include permission for residential use of the multi-unit housing.
68.In reaching this conclusion, we have not had regard to the extrinsic material relating to the development application or the granting of the Crown lease. We note also that there was no attempt by the Authority or the Lessee to put before the Tribunal any extrinsic material, such as evidence of the precontractual intention of one or other party, which was inconsistent with an interpretation of the Crown lease as permitting residential use.
Is the Lessee using the land in a way not permitted by the Crown lease?
69.The show cause notice relied upon three grounds:
(a)Failure to comply with the Crown lease;
(b)Undertaking a development for which development approval was required, either without approval or otherwise than in accordance with that approval; and
(c)Constructing a building or structure without approval.
70.The third ground was not pressed at hearing. The buildings on the land have been approved as substantially in compliance with the development approval.[30]
[30] Supplementary T-documents development approval at pages 218-221 and certificates of occupancy and use at pages 939-956
71.The first and second grounds are intimately connected. The Applicant’s argument is that if the Crown lease only permits residential use of the land, and the activity conducted by KFA is correctly characterised to be commercial accommodation, then the operation of KFA on the land is both a failure to comply with the Crown lease and the undertaking of a development without approval.
72.To know how to characterise the activity conducted by KFA, it is necessary to understand what the operation involves.
73.From the material before the Tribunal, the Authority’s investigation into the operation of KFA can best be described as minimal. It was left to the Applicant to put to the Tribunal its research into and observations of the conduct of operations by KFA. This included observations that KFA staff could take telephone bookings for one night, and that the KFA website did not permit bookings for longer than seven nights. The Applicant pointed out that KFA had a presence on third-party platforms such as Trivago. The Applicant also noted that a notional rate of 10% GST was charged for bookings.
74.The Lessee submitted that KFA offers a broad range of flexible accommodation options, described as both short and long term accommodation, catering to a variety of people such as government or private sector employees, and seasonal/transient workers such as parliamentarians and their staff.
75.The Lessee submitted that the Tribunal should be cautious to draw any conclusions about the conduct of KFA’s operations on the basis of the material provided by the Applicant. In particular the Lessee submitted longer stays than one week were encouraged and arranged through personal contact with KFA staff; that 38 ‘tenants’ had stayed for a cumulative period of between 91 and 462 days; and 15 ‘tenants’ of KFA had stayed for continuous periods of 90 days or more. Notwithstanding the use of the term ‘tenant’, there was no evidence that KFA enters into residential tenancy agreements with longer-staying guests.[31]
[31] There was also no suggestion such guests would satisfy the requirements for an ‘occupancy agreement’ under the Residential Tenancies Act 1997
76.The Authority, not being in a position to point to any reliable evidence of length or purpose of stays obtained by its own investigation, nonetheless submitted that the Applicant’s evidence regarding the length of stays was lacking and did not demonstrate that short term accommodation was the predominant form of use.
77.The delegate in his original decision and the Authority in these proceedings focused much attention on whether the operation of KFA meant the land was being used for ‘commercial accommodation units’ which is defined by the Territory Plan as being ‘a room or suite of rooms available on a commercial basis for short-term accommodation’. Much time was spent on the meaning of ‘short-term’, which is not itself a defined concept, with the submission being made that this lack of definition was fatal to the application for a controlled activity order. We do not agree. The Territory Plan and associated development codes are littered with concepts both quantitative and qualitative, which the Authority contemplates on a daily basis. The lack of an objectively measurable criteria for the concept of ‘short term’ accommodation may make decision-making more difficult, but not impossible.
78.The Authority submitted that as social and business approaches to land use vary over time, it is possible that persons may live in a commercial accommodation unit on the same basis that a tenant leases premises from a lessor. We agree with this submission. In that situation, the use of that unit would in our view be correctly characterised as residential.
79.We agree with the submission of the Authority that the focus must be on the predominate use of the land, and not upon minor or occasional departures from specified uses. The keeping of backyard chickens does not mean residential land is being used for agricultural or animal husbandry purposes.
80.The question of whether land is being used in a way that does not comply with a Crown lease, or for which a development approval is required, will be a question of fact and degree.
81.The Authority submitted that it is not clear from the Territory Plan that the concepts of ‘residential use’ and ‘commercial accommodation use’ are exclusive. We do not agree. Under the hierarchical framework of the Territory Plan the two concepts are exclusive.
82.As earlier noted, much of the parties’ submissions addressed whether the operation of KFA can be correctly described as ‘short-term’ accommodation, or ‘serviced apartments’. However, we do not think that these are the correct questions to ask. In determining whether the Crown lease is being complied with, we must ask ourselves whether the activity being conducted upon the land is or is not residential use. It would be sufficient answer to the application for a controlled activity order if the use of the land was found to be predominately residential.
83.The term ‘residential’ is not defined in the Territory Plan. According to the Macquarie Dictionary the ordinary Australian English meaning of the word is:
1. Of or relating to residence or residences.
2. Adapted or used for residence: a residential district.
3. (of a hotel, etc.) catering for guests who stay permanently or for extended periods.
84.The word ‘residence’ means:
1.The place, especially the house, in which one resides: dwelling place; dwelling.
2. A large house.
3. The act or fact of residing.
4. The time during which one resides in a place.
85.To ‘reside’ in a place is:
verb(i)(resided, residing)
1.to dwell permanently or for a considerable time; have one's abode for a time: he resided in Box Hill.
Phrase 2. Reside in,
a.(of things, qualities, etc.) to abide, lie, or be present habitually in; exist or be inherent in
b.to rest or be vested in, as powers, rights, etc.
86.A consideration of the ordinary meaning of the word ‘residential’ points to a degree of long-term and permanent habitation. This meaning is enhanced by the structure of the defined terms contained in the Territory Plan, under which residential use is distinct from the more transient or temporary habitation occurring in hotels, motels and serviced apartments listed under the umbrella term of commercial accommodation use.
87.Is the Lessee using the land for predominately residential purposes? Are guests staying permanently or for a considerable time, so as to allow their unit to be described as their residence? It was submitted on behalf of the Lessee that each dwelling on the land is being used by its occupant, from time to time, as an ordinary domestic residence. While this may be the case, in order to fall within the meaning of the term ‘residential’ as conceived in the Territory Plan such occupation must have a degree of permanence to it. In Bowler v Hilda Pty Ltd[32] the concept of residential use was identified as involving a degree of permanent residence or long-term habitation in distinction to the short term occupation of a serviced apartment.
[32] [2001] FCA 342
88.The evidence provided to the Tribunal leads us to be comfortably satisfied of the following facts:
(a)KFA is a business enterprise conducted on the land by the Lessee;
(b)The enterprise advertises itself as providing ‘serviced apartments’;
(c)The building consists of 56 self-contained apartments;
(d)One of the 56 apartments has been repurposed to operate as a reception area;
(e)The building does not contain associated facilities such as a restaurant, bar or functions room;
(f)The minimum length of stay of a guest is one night;
(g)The maximum length of stay is not prescribed;
(h)15 guests have stayed for a continuous period of three or more months;
(i)38 guests have stayed for an interrupted, but cumulative total, of 91 – 462 days;
(j)KFA does not enter into residential tenancy or occupancy agreements with guests in relation to their stay.[33]
[33] In the absence of any evidence that such agreements are routinely entered into, we have inferred that they are routinely not.
89.From these facts, we are satisfied that the use of the land to operate KFA is not a residential use of the land. There is no direct evidence that any guest considered their stay to be in the nature of a more permanent living or ‘home’ arrangement, or that any stay was put on such a legal footing through the parties entering into a residential or occupancy agreement. The highest that the evidence gets is allowing an inference to be drawn, from the length of some stays, that those stays were residential in nature. There is no evidence that such stays were the predominant activity on the land in the past, or will be the predominant activity on the land in the future.
90.The evidence overwhelmingly supports the inference that KFA operates some kind of commercial accommodation enterprise, probably in the nature of serviced apartments, upon the land. The exact nature of that operation need not be determined in these proceedings. It is enough that the use is clearly not predominately residential.
91.This means that the operation of KFA on the land is not in compliance with the Crown lease.
92.Use of the land outside the permission granted by the Crown lease requires development approval, which has not been granted and seems unlikely to be granted.[34]
[34] During the hearing the Authority confirmed that it would not grant approval for the conduct of serviced apartments on the land, as this would be a prohibited development in the relevant zone.
93.The preconditions for the making of a controlled activity order are therefore met. The next question is whether a controlled activity order should be made.
Should a controlled activity order be made?
94.The decision to make a controlled activity order is a discretionary decision.
95.Apart from the requirement in section 351 to consider the reasons given in relation to the show cause notice, the PDA does not provide any guidance on what factors should be considered when exercising the discretion to make, or decline to make, a controlled activity order. In Haridemos & Ors v ACT Planning and Land Authority[35] the task was described as being that the Tribunal should decide whether “on planning grounds and in the public interest” it should order the crown lessee to comply with the provisions of their Crown lease or “accept that there would be no planning purpose or public benefit in doing so”.
[35] [2012] ACAT 74
96.The Lessee and the Authority submitted that consistent with the decision in Haridemos, and previous authorities, the relevant matters to be considered could be distilled into whether the public interest would be supported, or a clear planning objective would be achieved, by the making of an order and whether making the controlled activity order would be a proportionate response.[36]
[36] Peter Kohlsdorf Golf Distributors Pty Limited v Minister for Planning [2003] ACTAAT 29; Re Page and Minister for the Environment, Land and Planning (1998) 50 ALD 999
97.The Authority submitted that when these matters were considered in this case, the Tribunal should be satisfied that the correct and preferable decision was to exercise the discretion so as not to make the controlled activity order.
98.The Applicant submitted that applying the same principles, the Tribunal should conclude that a controlled activity order should be made.
99.Generally speaking, a statutory power is required to be exercised in accordance with the objects or purpose of the legislation under which it is provided. Section 6 of the PDA states:
6Object of Act
The object of this Act is to provide a planning and land system that contributes to the orderly and sustainable development of the ACT—
(a) consistent with the social, environmental and economic aspirations of the people of the ACT; and
(b) in accordance with sound financial principles.
100.As a starting point, making a controlled activity order to prevent a crown lessee contravening their Crown lease is consistent with the objects of the PDA. Requiring a crown lessee to comply with the terms of their Crown lease supports the integrity of the leasehold system and contributes to orderly and sustainable development of the ACT. It seems to us that there is little achieved by prescriptively providing, via the Territory Plan and Crown lease, what activities may be undertaken on land, and then not enforcing compliance with that scheme.
101.The Lessee and Authority each submitted that the activity being conducted on the land does not detract from the RZ5 zone objectives. The RZ5 zone objectives are:
a) Provide for the establishment and maintenance of residential areas where the housing is generally high density in character particularly in areas that have very good access to facilities and services and/ or frequent public transport services
b) Provide opportunities for redevelopment by enabling changes to the original pattern of subdivision and the density of dwellings
c) Provide for a wide range of affordable and sustainable housing choices that meet changing household and community needs
d) Ensure development and redevelopment is carefully managed so that it achieves a high standard of residential amenity, makes a positive contribution to the neighbourhood and landscape character of the area and does not have unreasonable negative impacts on neighbouring properties
e) Provide opportunities for home based employment consistent with residential amenity
f) Provide for a limited range of small-scale facilities to meet local needs consistent with residential amenity
g) Promote good solar access
h) Promote energy efficiency and conservation
i) Promote sustainable water use
j) Promote active living and active travel
k) Encourage an attractive, safe, well-lit and connected pedestrian environment with convenient access to public transport
102.The Authority submitted that the operation of KFA would achieve these objectives by meeting ‘changing household and community needs’, particularly in the Territory where it was asserted there is a need to provide stable but not necessarily ongoing accommodation for professional visitors. There can be no disagreement with the desirability of a range of accommodation options as a general proposition; the question is whether the flexibility to meet changing needs should be provided by way of planning anarchy, or careful management.
103.It is telling that the RZ5 zone objectives include multiple references to the concept of ‘residential amenity’. Counsel for the Lessee submitted that the development on the land had enhanced the locale. We do not question the correctness of this assertion in reference to the buildings constructed. There was no evidence before us, however, on which we could draw the conclusion that the operation of KFA on the land had improved residential amenity. On the whole, we do not consider that the operation of KFA helps achieve the RZ5 zone objectives, on the contrary it is more likely to undermine them.
104.The Authority proposed that in terms of proportionality, there was no suggestion that the operation of KFA was causing a disturbance or nuisance. The Authority pointed out that the only complaint had come from the Applicant, which is the representative of the business competitors of the Lessee. The Authority referred to a previous matter in which this was noted as a factor in the decision to not make a controlled activity order. There are a number of aspects to this submission which we must address.
105.First, we do not consider that the fact that an application for a controlled activity order is brought by a commercial competitor precludes the making of an order.
106.Second, the impact of a contravention is not to be measured only in terms of neighbourhood nuisance or disturbance. All relevant impacts of the contravention, including the economic, environmental, social and financial[37] impacts, whether good or bad, should be considered. In this case, due to the minimal nature of the investigation undertaken by the Authority, there is scant evidence of impacts of the contravention other than that brought by the Applicant. The Lessee submitted that even if a controlled activity order were to be made there would be little practical difference for nearby residents or any appreciable improvement in the amenity of the area.
[37] These being the factors drawn from the object of the PDA
107.Third, we have considered the effect upon the Lessee of a controlled activity order being made. While there was little evidence on this point, it seems fair to assume there will be significant impact upon the Lessee’s operations. It being apparent that the Authority will not grant a variation to the Crown lease to permit commercial accommodation use of the land, the Lessee would need to adapt its operations to ensure the use of the multi-unit housing on the land is clearly predominately residential.
108.In exercising the discretion whether or not to make a controlled activity order for breach of a Crown lease, it is relevant to consider the background of how the Lessee came to be in the awkward position they now find themselves.
109.In this case, a development proposal on behalf of the Lessee was brought to the Authority in 2014. At a meeting on 10 November 2014 of the Major Projects Review Group the development proposal was described as “residential units to be used as Serviced Apartments”. The notes of the meeting record that representatives of the Authority advised the Lessee’s representatives that “Serviced Apartments, which fall under Commercial Accommodation Use definition in the Territory Plan are prohibited under RZ5 High Density Residential Zone. Therefore, the use would be a multi-unit development.”[38]
[38] Supplementary T-documents page 891
110.A development application for 56 self-contained apartments was subsequently made. The documents submitted in support of the development application refer to residential use of the consolidated lease.
111.The decision of the delegate of the Authority in March 2015 was expressed as approving subject to conditions ”…Construction of a multi-unit development comprising 56 residential units…” and “variation to the Crown lease to specify a maximum of 56 dwellings substantially in accordance with the draft lease at attachment 1”. The attached draft Crown lease, however, did not contain any reference to residential use but was in the terms contained at paragraph 24 above.
112.Subsequently, works were undertaken to repurpose one of the ground floor apartments for use as a reception area.
113.As is pointed out by the Applicant, a lease variation charge was later calculated on the basis of a change to the lease to increase the number of dwellings – not a change to permit commercial accommodation – and a lease variation fee so calculated[39] was duly paid. The Applicant also submitted that by virtue of the land being located in the RZ5 zone, rates and other charges are calculated at a residential rate.
[39] Supplementary Tribunal documents page 1058
114.It is not difficult to see why any commercial competitor of the Lessee would be aggrieved by the Lessee being permitted to operate outside the terms of its Crown lease. It has not paid a premium for land which can be used for commercial accommodation purposes. The Applicant argues that as a matter of fairness persons operating in the commercial accommodation industry in the ACT should all be required to comply with the planning and development system. The impact of the Lessee’s unlawful activities on the economic aspirations of the Applicant’s members is a valid consideration.
115.The documents before the Tribunal demonstrate the Lessee had expert assistance in putting forward the development proposal and was clearly on notice as to the planning constraints.
116.It was submitted for the Lessee that this was not an ‘obvious’ case of ‘blatant defiance of an approval properly given’. We agree. It is difficult to avoid the impression that the Lessee has acted to take advantage of a drafting error in the Crown lease issued by the Authority, although we note that if it was an error no action appears to have been taken by the Authority to rectify it. We do not think any criticism can be levelled at the Lessee for acting in its own commercial interests in such a situation. It is also important to confirm that a controlled activity order is not to be made as some sort of punitive response to past events. It should be exercised with an eye to the future, to further the objects of the PDA, and with reference to relevant matters including the public interest and planning objectives.
117.The Lessee provided evidence of many other serviced apartments operating on land which is said to be zoned residential, or where such activity is not clearly permitted by the Crown lease or units plan. This might be described as a ‘but everybody else is doing it’ defence. If the effects and consequences of non-compliance were minor or trivial,[40] this submission might have some force. However, we are not satisfied that the impacts of non-compliance are minor or trivial, so in this case the submission carries little weight. On the contrary, we are satisfied that if indeed ‘everybody else is doing it’, this could be assumed to have a not insignificant cumulative impact on the lawfully operating industry, and as a matter of public policy and to support orderly development in the Territory a controlled activity order should be made.
[40] A de minimus argument, such as that described in Bogiatzis & Ors and Minister for Urban Services & Anor [2002] ACTAAT 21.
118.The Authority submitted that given the potential public policy implications of the outcome in this matter, and the extent of the asserted other non-compliant operations, it might be appropriate to decline to make a controlled activity order and await a policy solution. We are not persuaded by that approach. There is no certainty when, if ever, a policy or legislative solution might be forthcoming. In the meantime, there is a strong public interest in ensuring that crown lessees throughout the Territory are aware that compliance with the scheme for land use in the Territory will be enforced.
119.Overall, when all of the above factors are weighed up we consider on balance the public interest and integrity of the planning system in the ACT both lead to a conclusion that the correct and preferable decision is to make a controlled activity order in the terms sought by the Applicant.
120.We will in due course make orders in chambers to set aside the decision under review and replace it with a decision to make a controlled activity order.
What should the content of the controlled activity order be?
121.Failure to comply with a controlled activity order is an offence under section 361 of the PDA. Consequently, it is important that the terms of the controlled activity order are precisely drafted so that the obligations of the Lessee under the order are clear and compliance with its terms is measurable.
122.Section 358 of the PDA provides:
358Content of controlled activity orders
(1) A controlled activity order must state—
(a)that it is a controlled activity order under this Act made by the planning and land authority; and
(b)each person to whom the order is directed; and
(c)the terms of the order and the premises in relation to which the order applies; and
(d)the grounds on which the order is made; and
(e)when the order takes effect; and
(f)for an order other than an ongoing controlled activity order—if appropriate—
(i)the period for compliance with the order; and
(ii)when the order ends (including, for example, on the happening of an event stated in the order); and
(g)for an ongoing controlled activity order—
(i)when the order ends; and
(ii)that the order cannot be revoked on application.
(2) A controlled activity order must also contain a statement to the effect that the order operates until it is revoked or ends in accordance with the order.
(3) A controlled activity order may direct anyone to whom it is directed to do 1 or more of the following:
(a)not to begin a development without development approval;
(b)not to carry out a development without development approval;
(c)to comply with a lease provision or development agreement;
(d)to restore any land, or a building or structure on the land, that has been altered, damaged or fallen into disrepair in breach of a lease provision or development agreement;
(e)to comply with the terms of a development approval to undertake a development;
(f)to carry out a development in accordance with a condition under the development approval that approved the development;
(g)to demolish a building or structure, or a part of a building or structure, that has been constructed without development approval or permission required under a territory law;
(h)to demolish a building or structure, or a part of a building or structure, that encroaches onto, over or under unleased territory land without approval granted under a territory law;
(i)to restore any land, building or structure that has been altered without development approval or permission required under a territory law;
(j)to replace with an identical building or structure any building or structure that has been demolished without development approval or permission required under a territory law;
(k)to apply for development approval for a building or structure, or part of a building or structure, that has been constructed without development approval;
(l)to clean up a leasehold and keep it clean;
(m)if the person to whom the order is directed is bound by a land management agreement—to comply with the land management agreement;
(n)not to do anything that is a controlled activity whether or not a controlled activity order has been, or could be, made under paragraphs (a) to (m).
123.We will direct the Authority to prepare and circulate to the parties a draft controlled activity order, and give the parties opportunity to make submissions in relation to the wording of the controlled activity order to be issued to give effect to this decision.
124.It seems to us that the order should incorporate a short period of time (perhaps six weeks) during which the Lessee can undertake the steps required to reorganise its operation. Although the Authority has indicated it will not amend the Crown lease to permit commercial accommodation use, there are many other options immediately available to the Lessee. Continuing to breach the Crown lease, however, is not one of them.
…………………………………..
Presidential Member MT Daniel
For and on behalf of the Tribunal
Date(s) of hearing 11 March 2020 Applicant: Mr A. Brierley, authorised representative Counsel for the Respondent: Ms K Musgrove Solicitors for the Respondent: ACT Government Solicitor Counsel for the Party Joined: Mr P Walker SC Solicitors for the Party Joined: Clayton Utz
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