Benmar Properties Pty Ltd v Makucha

[1995] QCA 340

IN THE COURT OF APPEAL	[1995] QCA 340
SUPREME COURT OF QUEENSLAND

Appeal No. 211 of 1993

Brisbane
[Makucha v. Benmar Properties P/L]

BETWEEN:

PAUL MAKUCHA

Appellant

AND:

BENMAR PROPERTIES PTY. LTD.

Respondent

Davies J.A. Ambrose J. Helman J.

Judgment delivered 11/08/1995

Judgment of the Court

APPEAL DISMISSED WITH COSTS.

CATCHWORDS:	LANDLORD AND TENANT - purported termination by lessor of leases, by forfeiture; whether leases void or voidable; whether leases' registration invalid, void and of no effect; whether leases were subdivisions within meaning of Local Government Act 1936; whether breach of s.119 of Real Property Act 1861.
Counsel:	Mr. R. Douglas, with him Mr. E. J. Morzone for the appellant Mr. J. Muir for the respondent
Solicitors:	Kilner & Black for the appellant Barwicks for the respondent
Hearing Date:	13 July 1995

IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND

Appeal No. 211 of 1993

Brisbane

Before Davies J.A. Ambrose J. Helman J.

[Makucha v. Benmar Properties P/L]

BETWEEN:

PAUL MAKUCHA

Appellant

AND:

BENMAR PROPERTIES PTY. LTD.

Respondent

REASONS FOR JUDGMENT - THE COURT

Judgment delivered the 11th day of August 1995

This action and appeal are between a lessor who was the defendant in the action and a lessee who was the plaintiff. In the action the plaintiff/lessee succeeded in obtaining a declaration against the defendant that two leases between them were not terminated by the defendant's purported forfeiture by service on the plaintiff of notices on or about 20 March 1992. The defendant had sought and was refused declarations that each of the leases was invalid, void and of no force and effect and that the registration of the leases was invalid, void and of no effect. He seeks that relief by way of appeal as well as the setting aside of the declaration in favour of the plaintiff. He also seeks an order that the plaintiff do all things and take all steps necessary to rectify the register to remove the leases from it.

The plaintiff became the lessee under the leases, each of which was dated 12 December 1988, from a predecessor in title of the defendant. The leases were registered on 20 December 1989. They were, in each case, for 99 years at a rental of $1.00 a year. They were each in respect of a small parcel of land for the purpose of the installation and maintenance by the lessee of an illuminated display sign. They were each adjacent to the Pacific Highway. The plaintiff held a licence from the Albert Shire Council for display of the signs and, for some time after the defendant first asserted, on 7 December 1990, that the signs could not be lawfully used because they were not permissible in the zone in which each parcel of land was situated, both the Council and the plaintiff assumed that those licences made lawful the installation and display of the signs.

The defendant acquired each of these parcels of land pursuant to a contract dated 28 November 1990 which was completed on 15 November 1991. By the first of those dates the signs had been installed and the plaintiff was earning a substantial income from them. From December 1990 the defendant has engaged in conduct which the learned trial Judge described as a sustained commercial raid with a number of oppressive features. These are set out in the reasons for judgment of the learned trial Judge and it is unnecessary to discuss them further here.

In order to support his contentions, both below and in this Court, that the leases were void or voidable, or that their registration was invalid, void and of no effect, the defendant submitted that the leases were subdivisions within the meaning of the Local Government Act 1936, that s.34(1) prohibited subdivision except in accordance with that Act and that the subdivisions were not in accordance with either sub-ss.(8) or (17) of s.34. Although his Honour held that there were breaches of sub-ss.(8) and (17) he thought that they were trivial, that there had been substantial compliance with those provisions and that therefore the breaches did not render the leases void or voidable or affect their registration.

There was a similar argument below that there were also breaches of s.119 of the Real Property Act 1861 which rendered the leases invalid. It is not clear whether that argument was pursued on appeal but we shall deal with it in any event.

The learned trial judge went on to hold that it was not the statutory intention of s.34(8) or (17) of the Local Government Act to affect the interest of a registered proprietor who became registered in consequence of breaches of those provisions and that consequently the plaintiff's leasehold interest, once registered, was indefeasible. It is convenient to deal with this last question first because if, notwithstanding breaches of s.34, the plaintiff's registered interest was indefeasible, the defendant was not entitled to the declarations which he sought.

It is now beyond argument that the indefeasibility provisions of the Real Property Act have the effect that, upon the registration of a lease, the lessee obtains title to the interest specified in the lease notwithstanding that the instrument by which he or she became registered was void and ineffective. Nevertheless the defendant in the present case sought to argue that, like the provisions of the Industrial Arbitration Act 1940 (N.S.W.) considered by the High Court in Travinto Nominees Pty. Ltd. v. Vlattas (1973) 129 C.L.R. 1, the above provisions of the Local Government Act required a conclusion that he was not bound to accept the indefeasibility of the plaintiff's title as lessee.

The provisions of the Industrial Arbitration Act considered in Travinto Nominees specifically made illegal and void any contract of lease of premises for hairdressing without specific approval. The question in that case which is relevant here concerned the enforceability of an option to renew a registered lease made contrary to that provision. The High Court's decision on this question was obiter. However the Chief Justice, with whom McTiernan and Stephen JJ. agreed, based his conclusion that the option was unenforceable on two premises. The first was that registration of the lease did not ensure the validity of every term and condition in it. His Honour's reasoning in this respect assumed the validity of the title under the lease. The second premise was that the option would have been incapable of specific performance because the provisions of the Industrial Arbitration Act rendered the giving of the option illegal. This had been the ratio of the decision of the New South Wales Court of Appeal in that case ([1972] 1 N.S.W.L.R. 24) and that Court had specifically held that the lessee's title under the lease was valid. Roseville Extended Ltd. v. Lucas (1926) 26 S.R.N.S.W. 402 which had held to the contrary was disapproved by Mason J.A. See also Sutherland Shire Council v. Moir 49 L.G.R.A. 116.

Gibbs J., with whom Stephen J. also agreed, said that the Industrial Arbitration Act provisions were inconsistent with the indefeasibility provisions and, being later provisions, must prevail. This was because his Honour construed the Industrial Arbitration Act provisions as intending to render void not only the instrument of lease but also the leasehold interest thereby created. However his Honour explained that clear language was required to establish such inconsistency and that the two statutes must be incapable of standing together. In doing so his Honour distinguished Breskvar v. Wall (1972) 126 C.L.R. 376 in which the Stamp Act avoided the transfer but the Real Property Act nevertheless had the result that registration of the void transfer was effective to vest title in the registered proprietor.

Even accepting the view of Gibbs J. in Travinto Nominees, to succeed in his argument the defendant must show that the statutory intention of sub-ss.34(8) and (17) was to override inconsistent indefeasibility provisions in the Real Property Act. Of course no such argument could be advanced in respect of s.119 which was plainly not intended to contradict the indefeasibility sections of the same Act. Nor, notwithstanding that these provisions of the Local Government Act were enacted after the relevant provisions of the Real Property Act, can that contention succeed in respect of them.

Sub-section (8) imposes pre-conditions upon subdivision including in para.(d), registration of the plan of subdivision. It says nothing of the interest of a lessee created by a lease which happened also to be a subdivision because of the extended definition of that term in s.3 of the Local Government Act. Nor does it imply anything in respect of such interest, especially after registration.

Sub-section (17) applies to instruments "dealing with land in a subdivision", requiring as a pre-condition of the registration of such instruments the registration of a plan of subdivision bearing the approval of the local authority. It has no application to a lease, to the extent that it is a subdivision within the meaning of that term in s.3 of the Local Government Act; that is not an instrument dealing with land "in a subdivision". In any event, although sub-s.(17) imposes an obligation upon the Registrar of Titles not to register an instrument dealing with land in a subdivision unless the subdivisional plan has been duly registered, it does not purport to affect the consequences, as against subsequent parties, of registration of such an instrument contrary to sub-s.(17).

The plaintiff's title is therefore not defeasible by reason of any failure to comply with s.34(8) or (17) of the Local Government Act, and the learned trial judge was correct in refusing to grant the declarations sought by the defendant.

The defendant's purported forfeiture of the leases by service on the plaintiff of notices on or about 20 March 1992 was in consequence of service on the plaintiff, on 11 December 1991, of forms 10 under the Property Law Act requiring it to remedy breaches of the leases by procuring each parcel to be included in a zone under the town planning scheme in which the land might lawfully be used for the purpose of advertising signs. A letter accompanying those notices indicated that the defendant considered three months to be reasonable notice to remedy the alleged breaches and that, if they were not remedied within that time, he would consider himself as justified in terminating the leases. When rezoning was not obtained within that time the defendant purported to terminate the leases by the notices of 20 March 1992.

We have already mentioned that, for some time, both the plaintiff and the Council assumed that the licences, which the plaintiff had from the Council, made lawful the use of the land for the purpose for which it was being used. However, after obtaining legal advice the plaintiff, on 4 June 1991, applied to the Council for rezoning of the parcels of land to a "special facilities (signage and site hire)" zone. The defendant objected to those applications.

Notwithstanding these objections the Council's Planning and Development Committee resolved on 20 November 1991 to recommend to the Minister approval of the rezoning subject to normal conditions. On the same day the defendant commenced proceedings in the Planning and Environment Court seeking declarations that the applications for rezoning were invalid. The ensuing litigation prevented any prompt rezoning based on that recommendation.

It is unnecessary to describe subsequent events in detail. They included an Order in Council purporting to amend the town plan in order to validate the plaintiff's existing uses, which was subsequently held by this Court to be invalid. What emerges clearly from the above events is that the Council was prepared to propose rezoning of each of the parcels of land or to do whatever was necessary to validate the plaintiff's use of that land; and that the defendant, notwithstanding its plain contractual obligation under the leases to do whatever was necessary on his part to facilitate the legality of those uses, was at all times endeavouring to do whatever he could to prevent that from occurring.

It need hardly be said, in those circumstances, that the plaintiff's failure to obtain rezoning as alleged in the form 10 notice was not a breach of either of the leases by it. On the contrary that failure was more likely to have been caused by breaches by the defendant of the obligation referred to above. Moreover, as the learned trial Judge held, the time allowed by the defendant for the plaintiff to obtain rezoning was unreasonably short.

The learned trial Judge was therefore correct in making the declaration which he did. The appeal should be dismissed with costs.