Fitzpatrick Investments Pty Ltd v DXC Technology Australia Pty Ltd
[2018] VSC 290
•29 June 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL DIVISION
COMMERCIAL LIST
S CI 2017 01066
| FITZPATRICK INVESTMENTS PTY LTD (ACN 001 662 862) | Plaintiff |
| v | |
| DXC TECHNOLOGY AUSTRALIA PTY LTD (ACN 008 476 944) | Defendant |
and
| DXC TECHNOLOGY AUSTRALIA PTY LTD (ACN 008 476 944) | Plaintiff by Counterclaim |
| v | |
| FITZPATRICK INVESTMENTS PTY LTD (ACN 001 662 862) | First Defendant to Counterclaim |
| BISHOPS REAL ESTATE PTY LTD (ACN 003 505 333) | Second Defendant to Counterclaim |
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JUDGE: | CROFT J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 28 May 2018 |
DATE OF JUDGMENT: | 29 June 2018 |
CASE MAY BE CITED AS: | Fitzpatrick Investments Pty Ltd v DXC Technology Australia Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2018] VSC 290 |
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TAXATION AND REVENUE – Congestion Levy – Whether s 34 is a transitional provision – Whether congestion Levy can be recovered under s 34 of the Congestion Levy Act 2005 by former owner – Definition of “owner” under s 3 of the Congestion Levy Act 2005 – Definition of “reviewed” under s 34(7)(b) of the Congestion Levy Act 2005 – Pasen v Buy-Rite Discounts Pty Ltd (1992) V ConvR 54-431 – Whether s 34 of the Congestion Levy Act 2005 allows for double recovery – Indian Farmers Fertiliser Cooperative Ltd v Gutnick (2015) 304 FLR 199 - Congestion Levy Act 2005, ss 3, 34.
LEASES AND TENANCIES – Outgoings – Whether congestion Levy is an outgoing – Whether congestion Levy can be recovered as an outgoing by a former landlord – Meaning of “payable” under s 14 of the Taxation Administration Act 1997 – Taxation Administration Act 1997, s 14 – Congestion Levy Act 2005, s 34(4).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff/Defendants to Counterclaim | Mr B J Sullivan SC Mr D J McInerney | Clark McNamara Lawyers |
| For the Defendant/Plaintiff by Counterclaim | Mr T M Grace | Page Seager Lawyers |
HIS HONOUR:
Fitzpatrick Investments Pty Ltd (“the Plaintiff”) was liable for and paid a congestion Levy in respect of private car parking spaces it leased to DXC Technology Australia Pty Ltd (“the Defendant”)[1] between 2010 and 2015. The question for determination is this: can the Levy, which was only assessed and paid after the Plaintiff ceased to own those car parking spaces, now be recovered from the Defendant?
[1]At the hearing on 28 May 2018, I granted Orders sought by the consent of the parties that the name of the Defendant/Plaintiff by Counterclaim be amended to DXC Technology Australia Pty Ltd, to reflect its change of name from CSC Australia Pty Ltd: Minute of Order by Consent (28 May 2018); Transcript, 7–8.
The parties relied on an agreed set of facts,[2] which are briefly outlined here. The Plaintiff is a property developer based in Sydney, and the Defendant is a technology services company. In or around 2008 the Plaintiff became the registered proprietor of the land located at 380 Docklands Drive, Docklands, Victoria, where it constructed a commercial office building, including car parking spaces (“the Property”).[3] On 24 February 2010 the Plaintiff, as lessor, and the Defendant, as lessee, entered into a lease of levels 1, 2, 3 and 4 of the Property (“the Lease”).[4] As an ancillary right in the Lease, the Plaintiff granted and the Defendant accepted a licence for the use of 122 car parking spaces in the basement of the Property (“the relevant car parking spaces”).[5] The Defendant sold the Property and settlement took place on 16 December 2015.[6] During the course of the sale, the Defendant became aware of its obligations under the Congestion Levy Act 2005 (“the Act”) in respect of the 219 leviable parking spaces at the Property, including the relevant car parking spaces.[7] The Defendant disclosed its failure to pay any congestion Levy in each calendar year of 2011, 2012, 2013, 2014 and 2015 (“the relevant years”) to the State Revenue Office of Victoria (“the SRO”).[8] Upon review the SRO levied $1,047,444.64 in respect of the 219 leviable parking spaces at the Property, which the Plaintiff paid on 21 March 2016.[9]
[2]Statement of Agreed Facts (23 May 2018).
[3]Statement of Agreed Facts (23 May 2018), [1].
[4]Statement of Agreed Facts (23 May 2018), [2]; Exhibit commencing at BERC–1–1 to Affidavit of Bentley Edward Russell Cottle (24 April 2018) (“Lease (24 February 2010)”).
[5]Lease (24 February 2010), clause 11; item 13 to the Reference Schedule.
[6]Statement of Agreed Facts (23 May 2018), [17]–[20].
[7]Statement of Agreed Facts (23 May 2018), [18].
[8]Statement of Agreed Facts (23 May 2018), [21].
[9]Statement of Agreed Facts (23 May 2018), [22], [29]; see also [23]–[28].
On 2 June 2016, the Plaintiff provided the Notices of Assessment issued by the SRO to the Defendant and requested payment in respect of the relevant car parking spaces, being a total sum of $625,684.32 plus GST (“the claimed levy”).[10] On 16 June 2016, the Defendant replied, denying liability for payment of the claimed levy.[11] On 30 June 2016, the solicitors for the Plaintiff again sent a letter of demand.[12] On 10 November 2016, Bishops Real Estate (“Bishops”), the Plaintiff’s agent, sent documents purporting to be both amended statements of outgoings and statements of the Defendant’s percentages of outgoings, referent to the claimed levy in respect of the relevant car parking spaces, for payment by the Defendant.[13]
[10]Statement of Agreed Facts (23 May 2018), [30]–[31].
[11]Statement of Agreed Facts (23 May 2018), [32].
[12]Statement of Agreed Facts (23 May 2018), [33].
[13]Statement of Agreed Facts (23 May 2018), [34].
On each of 1 December 2016 and 3 April 2017, the Defendant made an electronic payment of $348,457.83 to Bishops, the total sum being $696,915.66 (“the Payments”).[14] The parties agree that the Payments were made in error.[15] Nevertheless, the Plaintiff has retained the Payments,[16] in anticipation of their being set off against its successful claim in these proceedings. By its Writ dated 15 December 2016, the Plaintiff seeks payment of $625,684.32 plus GST by the Defendant. Restitution of the Payments forms the sole subject matter of the Counterclaim, dated 13 June 2017, by which the Defendant added Bishops to these proceedings.[17]
[14]Statement of Agreed Facts (23 May 2018), [35]–[36], [38].
[15]Statement of Agreed Facts (23 May 2018), [35]–[36], [38].
[16]Statement of Agreed Facts (23 May 2018), [37].
[17]Amended Notice of Defence Notice on Counterclaim Where Defendant New Party Pursuant to the Orders of Judicial Registrar Matthews of 6 June 2017 (13 June 2017).
The Plaintiff submits that it can recover from the Defendant the claimed levy paid in respect of the relevant car parking spaces for the period they were leased to the Defendant.[18] The Plaintiff bases this submission on s 34 of the Act, and in the alternative, on the outgoings clauses in the Lease.[19] The Defendant submits that the Plaintiff was no longer the owner, for the purposes of the Act, or the lessor, under the Lease, at any point in time that would entitle the Plaintiff to recover the claimed levy on either basis.[20] The Defendant further submits that s 34 is a transitional provision, which does not apply to leases entered into after the commencement of the Act on 1 January 2006.[21]
[18]Transcript, 8.
[19]Transcript, 8.
[20]Transcript, 54–6.
[21]Transcript, 56.
In my view, the Plaintiff is entitled to recover the claimed levy from the Defendant under either s 34 of the Act or the Lease itself. The plain meaning of the words in both the Act and the Lease support this conclusion.
Recovery under the Act
The primary submission of the Plaintiff is that it is entitled to recover the claimed levy under s 34 of the Act,[22] which provides:[23]
[22]Plaintiff’s Outline of Argument (18 May 2018), [25].
[23]Congestion Levy Act 2005, s 34.
34 Private car parks—obligation of lessees, licensees etc.
(1) This section applies to a parking space in a private car park.
(2)A person who uses a parking space that is a leviable parking space for a levy year under an agreement with the owner of the parking space must pay to the owner—
(a) the amount of the levy for that levy year in respect of that parking space; and
(b)the amount of any GST payable in respect of the amount referred to in paragraph (a).
(3)If a parking space referred to in subsection (2) is used by the person for only part of the year, the amount to be paid by the person is to be reduced proportionately.
(4)The person must pay the amount required by this section at or before the time that the owner is required to pay the levy.
Note
The owner is required to pay the levy by the day specified in the notice of assessment under section 14 of the Taxation Administration Act 1997.
(5)The owner must, on request, provide the person with a copy of the notice of assessment of the levy.
(6)If a person does not pay an amount as required by this section, the owner may recover the amount as a debt in a court of competent jurisdiction.
(7)This section has effect despite the terms of any lease, licence or other agreement, but only until the earlier of the following—
(a)the parties to the lease, licence or agreement expressly agree that this section is not to apply; or
(b)the rental, licence fee, or other amount payable under the agreement by the person who uses the parking space is or could be reviewed, or the lease, licence or agreement could be terminated, by either party.
(8)In this section—
agreement includes a lease, licence, management agreement and any other kind of agreement or arrangement.
It is not in dispute that the relevant car parking spaces are leviable parking spaces[24] in a private car park,[25] subject to no exemption under the Act.[26] The Defendant makes three submissions: firstly, it is said that s 34 never applied to the Lease;[27] and, in the alternative, it is said that the right of recovery is extinguished either because the Plaintiff was no longer an owner at any relevant time,[28] or because s 34(7)(b) has been engaged.[29]
[24]Congestion Levy Act 2005, s 3: “leviable parking space means a parking space in a car park that is not an exempt parking space”.
[25]Congestion Levy Act 2005, s 3: “private car park means a car park or part of a car park that is not a public car park; public car park means a car park the predominant number of parking spaces in which are set aside for, or used by, the general public…”.
[26]Congestion Levy Act 2005, s 3: “exempt parking space means a parking space declared by or under Part 4 to be an exempt parking space”; see also Part 4 – Exemptions and Concessions of the Congestion Levy Act 2005.
[27]Submissions of the Defendant/Plaintiff by Counterclaim (18 May 2018), [7]–[12].
[28]Submissions of the Defendant/Plaintiff by Counterclaim (18 May 2018), [13]–[18].
[29]Submissions of the Defendant/Plaintiff by Counterclaim (18 May 2018), [19]–[26].
When does s 34 apply?
The terms of s 34 are broad and general. The provision does not appear by its language in any way to be limited to some agreements and not to others. The provision appears in “Part 6 – General” within the scheme of the Act, which—though not always well expressed—is fairly simple and effected by a plain meaning interpretation of the words.
Further provisions relevant to the dispute are extracted here:[30]
[30]Congestion Levy Act 2005, ss 1, 2, 3, 8, 9, 13, 31, 32, 39.
1 Purpose
The purpose of this Act is to impose a levy on parking spaces in the central business district and inner Melbourne to reduce traffic congestion and to amend the Taxation Administration Act 1997.
2 Commencement
This Act comes into operation on 1 January 2006.
3 Definitions
…
owner of premises means –
(a)a person who holds a freehold interest in the land on which the premises are situated;
…
…
…
8 Levy imposed
This Act imposes a levy each year in respect of each leviable parking space.
9 Who is liable for levy?
(1)The owner of premises is liable to pay the levy imposed on leviable parking spaces on the premises.
…
…
13 How is levy assessed?
(1)An owner of premises on 1 January in a year is to be assessed for the levy for that year on each space on that premises that existed as a leviable parking space at any time in the previous year.
(2) Subsection (1) applies–
(a)whether or not the space exists as a leviable parking space on 1 January in the levy year;
(b)whether or not the owner was the owner of the premises at the time the space existed as a leviable parking space.
…
…
31 Annual Return
(1)A person who is liable to pay the levy for a year must lodge a return in respect of that year with the Commissioner on or before 21 January in that year.
…
(3)The return is to be in the form, and contain the information, determined by the Commissioner.
Part 6 – General
32 Levy is a charge on land
An unpaid Levy is a charge on the land on which the leviable parking space in respect of which the levy is payable is or was situated.
…
Part 8 – Transitional provisions
…
39State Taxation and Accident Compensation Acts Amendment Act 2007 – agreement to use leviable parking space
(1)Section 34(2), as substituted by section 6 of the State Taxation and Accident Compensation Acts Amendment Act 2007, applies, and is taken to always have applied, to any person who uses a leviable parking space on or after 1 January 2006.
…
…
Both parties made submissions with respect to the purpose of the Act.[31] To this end, the parties provided conflicting accounts of how the purpose of the Act and its apparent contradictions, could be resolved by reference to the Second Reading Speech and the Explanatory Memorandum.[32] Statutory interpretation begins with the language of the act itself:[33] “the surest guide to legislative intention”.[34] In the course of the submissions made by both parties, I was not convinced of any good reason why the plain meaning of the language employed in s 34 should be departed from.[35]
[31]Interpretation of Legislation Act 1984, s 35(a).
[32]Interpretation of Legislation Act 1984, s 35(b)(ii), (iii).
[33]Interpretation of Legislation Act 1984, s 35(b)(i).
[34]Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 47 [47] and cases cited there; see also Federal Commissioner of Taxation vConsolidated Media Holdings Ltd (2012) 250 CLR 503 at 519 [39].
[35]Cf Cooper Brookes (Woollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 320–1.
The right of recovery is ideally effected as a matter of course from one Levy year to the next:[36]
[36]Congestion Levy Act 2005, s 34(2).
(2)A person who uses a parking space that is a leviable parking space for a levy year under an agreement with the owner of the parking space must pay to the owner—
(a) the amount of the levy for that levy year in respect of that parking space; and
(b)the amount of any GST payable in respect of the amount referred to in paragraph (a).
Where the Levy is not paid, a right of recovery arises:[37]
(6)If a person does not pay an amount as required by this section, the owner may recover the amount as a debt in a court of competent jurisdiction.
[37]Congestion Levy Act 2005, s 34(6).
In the submissions of the Defendant, however, statutory recovery under s 34 was only given to protect a narrow subset of owners at a particular point in time:[38]
Section 34(2), however, was included, and was intended, as a mere transitional provision when the Congestion Levy Act 2005 was first introduced. The provision was introduced to ensure that landlords who had leases that were ‘on foot’ at the time of the introduction of this new tax were not prejudiced, or ‘hamstrung’, by an inability to pass on this new tax under their ‘pre-CongestionLevy Act’ leases.
[citations omitted]
[38]Submissions of the Defendant/Plaintiff by Counterclaim (18 May 2018), [7]. See also Transcript, 63–6.
This statutory right of recovery undoubtedly assisted landlords bound by fixed outgoings or “grossed up” leases entered into prior to the Act.[39] Without s 34 those landlords would be unexpectedly liable for paying the Levy, and may, depending on the terms of their leases, be left without the ability to pass it on to the end user of the car park. This is particularly relevant because of the intended purpose of the Act, as illuminated in the following extracts of the Second Reading Speech:[40]
[39]See Transcript, 63–4.
[40]Victoria, Parliamentary Debates, Legislative Assembly, 5 October 2005 at 1259–60 (R Hulls).
…
The levy is about reducing congestion, not raising revenue.
…
The levy implementation strategy reflected in the provisions of the bill is consistent with the government’s objective of ensuring the levy is easy to understand, simple to administer and that the impact flows through to those contributing to congestion.
…
Existing tenancy arrangements
Car park owners have identified that in some circumstances they will not be able to pass the cost of the levy through to their lessees. For instance, where a lessee has an agreement to pay the lessor an annual fixed amount.
Given that an aim is to provide a disincentive for long-stay car park users, there should be a capacity for the levy to be passed through to end users. To ensure this, it is proposed to adopt the approach followed in New South Wales — lessors will be able to obtain payment of the levy directly from their lessees where pass-through is not provided for in current contractual arrangements.
This measure will apply until owners and lessees have had an opportunity to restructure their arrangements to take into account the impact of the levy. If the lessee does not pay the levy to the lessor, the lessor will be entitled to recover the levy amount as a debt from the lessee.
…
The Plaintiff emphasises the legislative intention that the Levy reduce congestion and “flow through to those” causing it.[41] The Defendant relied on the section of the Second Reading Speech entitled “Existing tenancy arrangements” to the effect that lessors will only be able to obtain payment of the Levy directly from their lessees where pass-through is not provided for in current contractual arrangements.[42] In the submission of the Defendant, this interpretation is supported by s 34(7) of the Act which provides:
(7)This section has effect despite the terms of any lease, licence or other agreement, but only until the earlier of the following—
(a)the parties to the lease, licence or agreement expressly agree that this section is not to apply; or
(b)the rental, licence fee, or other amount payable under the agreement by the person who uses the parking space is or could be reviewed, or the lease, licence or agreement could be terminated, by either party.
[41]Transcript, 12–3.
[42]Transcript, 63–6. See also Submissions of the Defendant/Plaintiff by Counterclaim (18 May 2018), [7] n 13.
The Defendant submits that the purpose of the Act must take into account both the right of recovery against a car park user under ss 34(2) and (6) and the automatic reversal of that right at the point of review at s 34(7)(b).[43] This subsection may seem at odds with the purpose of the Act, as described by the Plaintiff,[44] of ensuring it is the end user, the person using the car park and adding to congestion, who bears the burden of the Levy.[45] In the submission of the Defendant, s 34(7)(b) apparently contradicts this purpose by facilitating the reversal of the “passing through” effect of ss 34(2) and (6). This contradiction is said to demonstrate why s 34 only makes sense if it is interpreted as a transitional provision applicable only to leases entered in to prior to the Act coming in to force.[46] And it is also said by the Defendant that a merely transitional effect of s 34 recovery is supported by s 34(7)(b) and also accords with the section on “existing tenancy agreements” in the Second Reading Speech.[47]
[43]Transcript, 66-7.
[44]See Transcript, 74.
[45]See, for example, Transcript, 13, 92.
[46]Transcript, 71–2.
[47]Transcript, 65–6.
According to the Defendant, s 34(7)(b) implicitly recognises the first opportunity at which a landlord can take into account the impact of the Levy, supported by reference to the Second Reading Speech.[48] This implicit purpose, says the Defendant, is meaningless in the context of leases entered in to after the commencement of the Act, at which point the parties have an opportunity to take the Act into account when they are negotiating the terms of the lease in the first place.[49] I do not accept the contention of the Defendant that the whole purpose of the provision can only be explained by assuming that the landlord had no opportunity to take the Levy into account when negotiating the terms of the lease. While it might not seem sensible to the Defendant,[50] the Act does set up the following scenario: in respect of leases entered in to after 1 January 2006, if a landlord and tenant fail to take account of the Levy in the lease provisions, the landlord will be able to pass on to or recovery from the tenant the Levy until there is a rent review, at which point it is assumed that the Levy is taken into account in the reviewed rent. Although it may be an unusual way to effect the purpose of making end users liable for the Levy with a view to easing congestion, this is an outcome effected by the section. Had the legislature intended a different outcome, it could have so provided. In the submission of the Defendant, consistency demands that s 34(7)(b) be interpreted to the effect that the right of recovery under s 34 is only a transitional right.[51] For these and the following reasons, I cannot accept that submission.
[48]Transcript, 70.
[49]Transcript, 70–1.
[50]Transcript, 71.
[51]Transcript, 71–2.
While pre-Act landlords with “grossed up” leases or fixed outgoings may, but depending on the terms of the lease, be especially assisted by s 34 recovery, there is nothing in the words of the Act to suggest that the right of recovery is limited to pre-Act landlords only. References to pre-Act leases in material extrinsic to the Act are not exhaustive and do not at all militate for a narrow interpretation of the broad and general ambit of the language of s 34 itself. To draw any other conclusion is speculative at best[52] and, in my view, would be to ignore the language of the Act itself.
[52]Transcript, 65.
I remain of this view, even taking into account the relevant section of the Explanatory Memorandum,[53] which was also relied upon by the Defendant:[54]
[53]Explanatory Memorandum, Congestion Levy Bill 2005 12.
[54]Submissions of the Defendant/Plaintiff by Counterclaim (18 May 2018), [7], n 13.
Clause 34applies to private car parks only and enables the owner of each parking space to pass the levy onto the user of the parking space despite there being an existing agreement between the owner and the user (eg. a monthly or annual agreement) which would prevent the owner passing on the levy.
Sub-clause (3) provides that if a person used the parking space for only part of the year, the amount of levy to be paid will be reduced proportionately.
Sub-clause (4) provides that the user of the parking space must pay the amount of the levy required at or before the time the owner is required to pay (this being the date set out on the notice of assessment that will be issued by the State Revenue Office).
Sub-clause (5) requires the owner to provide the user with a copy of the assessment.
Sub-clause (6) enables the owner to recover any amount unpaid by the user as a debt in a court of competent jurisdiction.
Sub-clause (7) stipulates that this clause has effect despite the terms of any lease, licence or agreement but only until the earlier of there being any express agreement between the owner and the user or the lease, licence or agreement could be reviewed or terminated.
In my view, the reference in the first paragraph cited here, to an “existing agreement between the owner and the user…which would prevent the owner passing on the levy” addresses a particular situation. It does not follow that such a reference is indicative of an intention to limit the operation of the section to such a situation, much less such a situation where the lease is only a lease which existed prior to the commencement of the Act. This reference, in the extrinsic material, does not and cannot limit the clearly broad and general words of the Act.
Consequently, I accept the submission of the Plaintiff, that:[55]
[T]here is no language which expresses a limitation in relation to the operation of that provision to agreements entered into before the commencement of the Act … it applies to agreements whenever they are entered into.
[55]Transcript, 14; see also 15.
While neither of the parties made submissions directly reliant on this point,[56] it should be observed that the Act does expressly provide transitional provisions which were added in an amendment in 2007;[57] which also saw the amendment of s 34(2).[58] In the amendment, “Part 8 – Transitional Provisions” was added to the Act. In that part, s 39 confirms that s 34(2), just like the rest of the Act, is effective from 1 January 2006.[59] Section 34(2) itself was amended to include s 34(2)(b).[60] The Defendant correctly submits that a provision may be transitional by its effect, irrespective of the way in which it is headed or otherwise described in the relevant Act.[61] However in respect of this particular Act, the legislature could have indicated the ambit of s 34 in terms of pre and post-Act leases, either when the legislation was first drafted, or when the Act was amended with particular reference to both s 34(2) and to transitional provisions. It did not. I am persuaded by the submission of the Plaintiff that such a significant limitation would be expected to have found expression in the language of the provision.[62] Had the legislature intended the statutory right of the owner to recover the Levy from the user to apply only in respect of agreements entered into prior to the Act coming in to force, this could have been made express and clear in the words of the provision; if not at the time of original drafting, then at the time the legislature amended the Act. Moreover, it is significant that the legislature evidently did consider s 34 in terms of transitional provisions added in the 2007 amendments.
[56]See Transcript, 73.
[57]State Taxation and Accident Compensation Acts Amendment Act 2007.
[58]State Taxation and Accident Compensation Acts Amendment Act 2007, s 6.
[59]State Taxation and Accident Compensation Acts Amendment Act 2007, s 7; see also Congestion Levy Act 2005 s 39.
[60]When originally enacted, s 34(2) itself included the words of what became subsection 2(a).
[61]Transcript, 73.
[62]Transcript, 15.
For these reasons, I am satisfied that s 34(6) applies in the context of the present Lease; on the basis of the plain meaning of the words of the Act, and its purpose.
Is the Plaintiff an owner?
The Plaintiff submits that the owner on 1 January of each year is liable to pay the Levy, and is thereafter entitled to recover the Levy from the user under s 34.[63] In the submission of the Plaintiff, it would be an absurd result if the owner were unable to recover the Levy once the parking spaces had been sold.[64]
[63]Transcript, 10.
[64]Transcript, 28–9.
The Defendant contends to the contrary on the basis of the definition of “owner” within the Act as, “a person who holds a freehold interest in the land on which the premises are situated”.[65]
[65]Transcript, 60, 75, 77; Congestion Levy Act 2005, s 3.
As the Defendant observes,[66] the verb “to hold” is in the present tense: “a person who holds”. The Defendant further submits that the definition of “owner” does not expressly include a “former owner”.[67] But the Act does include an important temporal qualification. The Levy is assessed in respect of “an owner of premises on 1 January in a year”.[68] The Plaintiff was the owner, in the present tense, on 1 January of each of the relevant years, and was liable to pay the Levy,[69] which it did.[70] I accept the submission of the Plaintiff that there is no requirement expressed in the language of s 34(2) that the owner must be the owner at the time Notices of Assessment are issued,[71] or at the time that recovery proceedings are commenced, contrary to the submissions of the Defendant.[72]
[66]Transcript, 60; Submissions of the Defendant/Plaintiff by Counterclaim (18 May 2018), [13].
[67]Transcript, 77–8, 81–2; Submissions of the Defendant/Plaintiff by Counterclaim (18 May 2018), [18].
[68]Congestion Levy Act 2005, s 13(1).
[69]Congestion Levy Act 2005, s 9(1).
[70]Statement of Agreed Facts (23 May 2018), [29].
[71]Transcript, 27.
[72]Submissions of the Defendant/Plaintiff by Counterclaim (18 May 2018), [17].
The Act itself supports the construction argued for by the Plaintiff. In sections 9 and 13, owners are liable for the Levy,[73] which is assessed against “[an] owner of premises on 1 January…whether or not the owner was the owner at the time the spaces existed as a leviable parking space”.[74] Under s 34 the owner referred to is the owner “required to pay the levy”[75] and the owner who “may recover the amount as a debt”.[76] As a matter of ordinary statutory interpretation, in the absence of any contrary indication, it must follow that the reference to “owner” in ss 9, 13 and s 34(2), (4) and (6), is to the same “owner”. I accept the submission of the Plaintiff that it would be both absurd and at odds with the structure and context of these provisions if the “owner” referred to in s 34(2) were not the “owner” of the leviable parking spaces for the relevant Levy year or years.[77] If the right of recovery is extinguished when the “owner” in a leviable year ceases to own the car park, this would provide a windfall to car park users, as the Plaintiff observed.[78] Moreover, there is no basis in these or any other provisions of the Act which provides any support for the view that the legislature would have intended this outcome.
[73]Congestion Levy Act 2005, s 9(1).
[74]Congestion Levy Act 2005, ss 13(1) and (2)(b). Cf Submissions of the Defendant/Plaintiff by Counterclaim (18 May 2018), [14].
[75]Congestion Levy Act 2005, note to s 34(4).
[76]Congestion Levy Act 2005, s 34(6).
[77]Transcript, 26–9.
[78]Transcript, 29.
For these reasons, I do not accept the submission of the Defendant that the interpretation contended for by the Plaintiff requires that the word “former” be read into the Act as a reference or descriptor of “owner”; particularly at s 34(6).[79]
[79]Transcript, 77–8, 81–2; Submissions of the Defendant/Plaintiff by Counterclaim (18 May 2018), [18].
Nor is this view displaced by the fact that late reporting under the Act can result in civil penalties (relevantly, under ss 27(1) and 30).[80] The Act does not state or imply that the incurring of such a penalty by a person would interfere with the right of that person to recovery under s 34. In any case, no evidence was adduced nor was any mention made of the Plaintiff having incurred any such penalty as a result of its belated discovery that the Act existed. To return to the Second Reading Speech, “[t]he levy is about reducing congestion, not raising revenue”.[81] It is presumably also not about punishing those attempting to pay the Levy.
[80]Submissions of the Defendant/Plaintiff by Counterclaim (18 May 2018), [13]. The Defendant, in the course of these proceedings, also made many references to the failure by the Plaintiff to discover the application and operation of the Act sooner, to register and lodge annual returns in respect of the leviable car parking spaces at the Property, and generally to exercise “due diligence”: see Transcript, 55, 56, 57, 60, 62, 75–6. It should be noted that there is nothing in the provisions of the Act or the Lease which prevents an owner which is delayed in passing on the Levy from being able to recover such an outgoing from the tenant (see further at [48]).
[81]Victoria, Parliamentary Debates, Legislative Assembly, 5 October 2005 at 1259 (R Hulls).
Moreover, I am not persuaded by the Defendant’s submission that the obligation of the owner to provide a “notice” of assessment (singular) to the user under s 34(5), implies that s 34 will not allow for recovery where notices (plural) are provided, as they were on these facts.[82]
[82]Submissions of the Defendant/Plaintiff by Counterclaim (18 May 2018), [16].
This concludes the analysis in respect of the submissions of the Defendant, which I do not accept, that s 34 does not apply to either this Lease or the Plaintiff as the “owner”. At this juncture it is useful to outline my reasons in this respect more generally. Although perhaps not well expressed, the scheme of the Act is fairly simple and its result is, as indicated previously, effected by the plain meaning of the words used by the legislature. In summary:
(a) The Levy is imposed or fixes on 1 January each year and the owner of the land must pay it (though when it must pay is another matter).
(b) Section 34 applies to all leases, which means:
(i) The owner may recover under its statutory right conferred by s 34(2);
(ii) The owner may recover under an express agreement to pay which is contained in the lease — but cannot sue on these lease provisions and recover, and also sue on s 34(6) and recover (as this would be impermissible double recovery);[83]
[83]See Indian Farmers Fertiliser Cooperative Ltd v Gutnick (2015) 304 FLR 199.
(iii) It follows that unless an express agreement to pay which is contained in the lease excludes the operation of s 34 expressly there may be two avenues for recovery — under the lease provisions and under s 34(2) (but again, no double recovery);
(iv)The right to recover under ss 34(2) and (6) is lost on the advent of an open rent review — open in the sense that it is possible to accommodate the obligation to pay the Levy in the rent review process and its outcome.
(c) For all these reasons there is no basis to construe the ambit of the operation of s 34 as being limited other than as provided for in s 34(7) nor to limit its application to leases entered into prior to the commencement of the Act. For the sake of completeness, I should add that the references in these reasons to a lease or leases should — in terms of the operation of the Act more generally and beyond the particular circumstances of these proceedings — be taken to include a reference to all the elements of “agreement” as defined in s 34(8) of the Act.
The potential for double recovery, that is, the potential to recover both under s 34 of the Act and under an outgoings or other provisions of the relevant lease, was not addressed squarely by the parties in their submissions. It might seem that the potential for double recovery poses issues with respect to the interpretation of s 34 and supports the argument that it is to be construed as a transitional provision applying only to pre-Act leases. This, of course, presupposes that the pre-Act lease provisions were not sufficiently broad to accommodate recovery of the Levy. With commonly broadly drawn lease outgoings provisions there may well be many instances where this is not the position. Thus, even on a transitional view of the operation of s 34 there may well be the potential for recovery by the dual pathways — under the Act and under lease provisions. Where these dual pathways exist, the owner has a choice — but cannot pursue both.[84] Consequently, any attempt to construe s 34 on the supposition that its intended effect cannot produce a potential double recovery situation is misconceived and merely distorts the process of statutory interpretation as its plain words are departed from.
[84]See Indian Farmers Fertiliser Cooperative Ltd v Gutnick (2015) 304 FLR 199, upheld on appeal: Gutnick v Indian Farmers Fertiliser Cooperative (2016) 49 VR 732.
Has s 34(7)(b) been engaged?
This subsection has already been addressed with respect to its effect on the purpose of the Act. However, the Defendant submits, on a final and alternative basis, that a review for the purposes of s 34(7)(b) took place in February 2011, the percentage review on the first anniversary of the lease,[85] and therefore the Plaintiff has no right now to recover the claimed levy under the statutory provisions.[86] For convenience, the subsection is again set out in full for the purposes of considering this issue:
(7)This section has effect despite the terms of any lease, licence or other agreement, but only until the earlier of the following—
(a)the parties to the lease, licence or agreement expressly agree that this section is not to apply; or
(b)the rental, licence fee, or other amount payable under the agreement by the person who uses the parking space is or could be reviewed, or the lease, licence or agreement could be terminated, by either party.
The Defendant submits that the meaning of “review” in the phrase “the rental … is or could be reviewed”, should be determined by reference to the lease or particular agreement, and not by reference to “any other asserted meaning of ‘review’”.[87] I do not accept this position.
[85]Lease (24 February 2010), Reference Schedule, item 7(a).
[86]Submissions of the Defendant/Plaintiff by Counterclaim (18 May 2018), [19].
[87]Submissions of the Defendant/Plaintiff by Counterclaim (18 May 2018), [20].
“Rent” is defined in the Lease as follows:[88]
1.2.31“Rent” means the Initial Yearly Amount specified in Item 4 together with and including any increases thereto in accordance with the provisions of clause 4.3.
The “Initial Yearly Amount” is “$2,626,180 per annum … plus GST”.[89] Clause 4.3 of the Lease provides:
[88]Lease (24 February 2010), clause 1.2.31.
[89]Lease (24 February 2010), Reference Schedule, item 4.
Rent Review
4.3The Lessee hereby acknowledges and agrees that the Rent shall be reviewed on each of the Review Dates in the following manner:
4.3.1 On each Review Date nominated in Item 7 as a Percentage Review the Rent shall be reviewed in accordance with clause 1 of the Rent Review Schedule.
4.3.2On each Review Date nominated in Item 7 as a Market Review the Rent shall be reviewed in accordance with clause 2 of the Rent Review Schedule.
…
…
The Defendant emphasises that the words “shall be reviewed” are used in relation to both Percentage Review and Market Review, and submits that this means either Percentage or Market Reviews are “reviews” under the Lease and for the purposes of s 34(7)(b).[90] I do not accept this submission. The word “review” in the phrase “is or could be reviewed” in s 34(7)(b) is properly interpreted as a review which enables the parties to revisit their financial relationship. It would be at odds with the scheme, language and purpose of s 34, whether in respect of a pre- or post-Act lease, if a s 34(7)(b) review saw the statutory right to recover the Levy extinguished absent an opportunity, effectively, to renegotiate or revise at the hands of the valuer the rental obligations under the lease.
[90]Submissions of the Defendant/Plaintiff by Counterclaim (18 May 2018), [20].
In order to determine whether or when review of this Lease this took place and the nature of any such review, it is necessary to look at the Lease provisions more closely. The Lease provides for “Percentage Review” on each of the first to the eighth “anniversary of the Commencement Date”.[91] On the ninth anniversary there will be a “Market Review or Percentage Review (whichever is greater)”.[92] The Lease will not reach its ninth anniversary until February 2019.
[91]Lease (24 February 2010), Reference Schedule, items 7(a)-(h).
[92]Lease (24 February 2010), Reference Schedule, items 7(i).
“Percentage Review” is defined in the Lease:
RENT REVIEW SCHEDULE
1 PERCENTAGE REVIEW
1.1The Rent payable immediately prior to the relevant Review Date shall automatically be increased by an amount equal to the percentage of that Rent specified in Item 8.
…
Item 8 of the Reference Schedule to the Lease provides:
ITEM 8 – PERCENTAGE REIVEW (Rent review schedule, clause 1)
3.5%
“Market Review” is provided for in extensive and detailed provisions.[93] Those provisions require that at any time in the six months preceding the relevant review date, the Lessor notify the Lessee of what the Lessor assesses to be the current market value of the Property.[94] There is then provision for the Lessee to dispute the Lessor’s assessment,[95] and for the position to be resolved if necessary by the determination of a valuer.[96]
[93]Lease (24 February 2010), Rent Review Schedule, clause 2.
[94]Lease (24 February 2010), Rent Review Schedule, clause 2.1.
[95]Lease (24 February 2010), Rent Review Schedule, clause 2.2.
[96]Lease (24 February 2010), Rent Review Schedule, clause 2.2.3 – 2.2.6.
The Plaintiff accepts that the labels, “percentage review” and “market review” used by the parties in the Lease do not determine what is a review for the purposes of s 32(7)(b).[97] In this respect, the judgment of Brooking J in Pasen v Buy-Rite Discounts Pty Ltd (“Pasen”) provides significant guidance:[98]
In my view, a lease which fixed the rent for the whole of the term by enabling the rent throughout the term to be ascertained from within the four corners of the lease does not, according to the ordinary use of language, provide for a review of the rent if it provides for an increase or increases or decrease or decreases in the rent in the course of the term, whether by way of simply stating the new amount or amounts or by way of requiring a calculation to arrive at the new amount or amounts. The rent is fixed by the lease itself throughout the term and the lease in fixing different amounts is not providing for a review of the rent: it is simply fixing a rent which is not uniform throughout the term. This was the view taken by Coldrey J.
Agreeing with the decision of Coldrey J in GLG Nominees Pty Ltd v JR Prowse & Co Pty Ltd,[99] Brooking J held that where the rent payable for the relevant term of a lease could be determined from the outset of that lease, albeit as a result of recalculations at various points, then the lease was not subject to a process of rent review or re-negotiation during that term. In other words, if the bargain between landlord and tenant as to rent is fixed at the time the lease is entered into with no provision for revisiting in renegotiation or at the hands of a valuer — both processes whereby changed circumstances might be accommodated — there is no rent review in ordinary parlance.
[97]Transcript, 31; Australian Mutual Provident Society v Chaplin (1978) 18 ALR 385 at 388.
[98](1992) V ConvR 54-431 at 65.091, with Marks and Smith JJ agreeing at 65.093.
[99](1991) V ConvR 54-410.
Under the terms of the Lease, there is no provision for rent review in ordinary parlance as discussed by Brooking J in Pasen until 2019. There is provision for percentage increases in the rent, but, as discussed in Pasen, these provisions are properly characterised as rent adjustment rather than rent review provisions. For these reasons, it cannot be said that on any anniversary of the commencement of the Lease in the years 2011 to 2015, any review opportunity envisaged in s 34(7)(b) arose. It follows that the operation of s 34 of the Act has not been terminated by the operation of s 34(7) and so the statutory right to recover the claimed levy under its provisions remains extant.
Recovery under the Lease
In the alternative, the Plaintiff submits that it is entitled to recover the claimed levy as an outgoing.[100] Under the Lease, the Defendant agreed to pay outgoings in accordance with the following terms:[101]
[100]Transcript, 39.
[101]Lease (24 February 2010), clauses 6.1, 6.2, 6.10.
PART 6. OUTGOINGS
Payment of Outgoings
6.1The Lessee covenants with the Lessor to pay to the Lessor on and from the Commencement Date of this Lease and throughout the Term the Lessee's Percentage of Outgoings set out in Item 10.
6.2For the purpose of this clause 6 a reference to a year in this Part shall mean a period of 12 months commencing on the same day as the Term or such other date as the Lessor may at any time elect (acting reasonably).
…
Non Merger
6.10The liability of the Lessee to pay the Lessee’s Percentage of Outgoings shall not be determined or otherwise prejudiced by the prior expiry of the Term or other determination of this Lease and this Part shall continue in full force and effect for the purpose of making any balancing adjustment in the payment of Outgoings.
…
Item 10 of the Reference Schedule of the Lease, referred to in clause 6.1, states:
ITEM 10 – LESSEE’S PERCENTAGE OF OUTGOINGS (clause 6.1)
The percentage equivalent to the proportion which the Nett Lettable Area of the Premises bears to the Nett Lettable Area of the Building.
The Plaintiff, in turn, agreed to the following in relation to outgoings:[102]
[102]Lease (24 February 2010), clauses 6.6, 6.7, 16.5, 16.10.
PART 6. OUTGOINGS
…
Statement of Actual Outgoings
6.6As soon as practicable after the end of each year during the Term and in the event that the Term expires or is determined during the course of a year immediately after such expiration or determination (or as soon as is practicable thereafter) the Lessor shall furnish to the Lessee an audited statement giving reasonable details of the total of the actual Outgoings for that year (or in the event that the year to which such statement relates is partly outside the Term such amount of the actual Outgoings as is attributable to that part of the year within the Term) and also showing the amount due to the Lessor or the Lessee (as the case may require after taking account of any payments by the Lessee pursuant to an Estimate). Except in the case of manifest error notified by either party to the other within 28 days of the service of such statement on the Lessee such statement shall be prima facie evidence of the matters stated therein.
Payment of Outgoings
6.7 If any amount is due to the Lessor for payment of the actual Outgoings, such amount shall be paid by the Lessee to the Lessor within 21 days of receipt of the statement referred to in clause 6.6. Any excess payment of the Lessee for Outgoings shall be credited to the Lessor who shall deduct the same from the next ensuing monthly payment on account of the Estimate of Outgoings, or, at the expiration of this Lease, refunded to the Lessee within 21 days.
…
…
PART 16. – LESSOR’S COVENANTS
The Lessor hereby covenants with the Lessee as follows:-
…
Assessments
16.5The Lessor will pay on time all taxes, rates and assessments whatsoever whether Municipal, Local Government, Parliamentary or otherwise including land tax and taxes for local improvements or works assessed upon the property benefited thereby which are at any time charged upon the Premises or upon the Lessor on account thereof. This clause does not limit or negate the obligations of the Lessee under Part 6 of this Lease.
…
Outgoings
16.10Without limiting the Lessor’s rights of recovery under this Lease, and except where directly payable by the Lessee or any other lessee or occupant of the Lessor and the Building, the Lessor shall pay all Outgoings promptly and, where applicable, by any due date for payment.
…
…
The Parties agree that from 24 February 2010, when the Lease was entered into, until the sale of the Property on 16 December 2015, the Defendant paid the rent pursuant to the Lease, and outgoings pursuant to the invoices issued for the Property.[103] These invoices did not include any amount for the claimed levy.[104]
[103]Statement of Agreed Facts (23 May 2018), [16].
[104]Statement of Agreed Facts (23 May 2018), [16].
The Plaintiff submits that the claimed levy falls within the broad definition of outgoings, to which the parties agreed. The Plaintiff submits that it fulfilled the notification requirements both under the Lease[105] and under the Act[106] by providing a statement of actual outgoings to the Defendant, in its agent, Bishops’, letter of 21 November 2016, enclosing the Notices of Assessment, and a revised statement and percentage of outgoings.[107]
[105]Lease (24 February 2010), clauses 6.6 and 6.7.
[106]Congestion Levy Act 2005, s 34(5).
[107]Transcript, 41; it is agreed between the parties that the Notices of Assessment and (purported) amended statements and percentages of outgoings were provided to the Plaintiff by Bishops on 10 November 2016: Statement of Agreed Facts (23 May 2018), [34].
The Defendant accepts that the Levy falls within the broad definition of outgoings.[108] In this most important respect, the Lease provides as follows:[109]
[108]Transcript, 63, 66.
[109]Lease (24 February 2010), clauses 1.2.26 and 1.2.26.1
1.2.26“Outgoings” means all costs, charges, expenses, fees and other outgoings which are reasonably and properly incurred and paid or payable by the Lessor in owning, holding, managing, supervising, maintaining and keeping secure the Land and Building including in particular, the following outgoings relating to the Land and Building, but excluding the cost of capital or structural works and replacement costs, and excluding any amount payable by the Lessee pursuant to the provisions of this Lease and another tenant or occupant of the Building (except as a contribution to Outgoings):
1.2.26.1 all rates, taxes (including land tax on the basis that the Land is the only land owned by the Lessor), charges (including water and sewerage usage charges), assessments, impositions, duties and fees of any public, municipal, governmental or semi-governmental body, authority or department levied, assessed or charged in respect of the Building or the Land (irrespective of the ownership thereof) but excluding the Lessor’s income tax and capital gains tax.
…
…
It is plain that the words of the outgoings definition encompass the claimed levy by including in the definition: “all … taxes … assessments, impositions [and] duties … of any governmental … body, authority or department levied, assessed or charged in respect of the Building or the Land”.[110] It is clear that the claimed levy falls within the definition of “outgoings” which the parties agreed that the Defendant could repay.
[110]Lease (24 February 2010), clauses 1.2.26.1.
The Defendant’s submissions focus on the qualification in clause 1.2.26, that the outgoings must be “incurred and paid or payable by the Lessor”.[111] It is uncontroversial that the claimed levy was paid by the Plaintiff on 21 March 2016, by which time the Plaintiff had ceased to be the landlord and owner of the property.[112] But, as discussed previously, the claimed levy was payable by the Plaintiff and incurred and paid by the Plaintiff because it had been the “owner” in the relevant years. The Plaintiff contends that it is entitled to recover outgoings from the Defendant, the liability for which accrued during the term of the Lease.
[111]Transcript, 80.
[112]Statement of Agreed Facts (23 May 2018), [19], [29].
The Plaintiff argues that the Levy was “incurred and payable” on 1 January of each relevant year, in the sense that the “owner” was liable to pay the Levy from that date onwards, with the date for payment only later accruing.[113] In support of this position, reference was made to s 13(1) of the Act, which refers to liability arising on 1 January of each relevant year, and s 32 which provides than an unpaid Levy is a charge over the land.[114]
[113]Transcript, 39–40; Congestion Levy Act 2005, s 13(1).
[114]Transcript, 40.
In respect of when the claimed levy was incurred, the Defendant relies on two English cases which deal with s 20B of the Landlord and Tenant Act 1985 (Eng),[115] a provision which protects domestic tenants from stale claims, greater than 18 months old, for service charges being brought against them by their landlords. In neither case was the landlord’s claim (for water and gas respectively) found to be stale. In the opinion of Dyson MR, “as a matter of ordinary language, a liability must crystallise before it becomes a cost”.[116] Both cases determined that “relevant costs” (a term defined in the relevant act) accrued as a liability at the time of supply but were incurred some time later, when demand for payment was made by the supplier.[117] This determination turned on the words of the Landlord and Tenant Act 1985 (Eng). This Court is not assisted in construing the present Lease in respect of a congestion Levy by reference to the interpretation by the Upper Tribunal (Lands Chamber) of the Landlord and Tenant Act 1985 (Eng) in respect of service charges for water and gas.[118]
[115]Ground Rents (Regisport) Limited v Dowlen [2014] UKUT 0144; Burr v OM Property Management Ltd [2013] 1 WLR 3071.
[116]Burr v OM Property Management Ltd [2013] 1 WLR 3071 at 3077 [11].
[117]See Burr v OM Property Management Ltd [2013] 1 WLR 3071 at 3077 [12]; Ground Rents (Regisport) Limited v Dowlen [2014] UKUT 0144 [24].
[118]Transcript, 87.
In respect of when the claimed levy was payable, the Defendant relied on s 14(3) of the Taxation Administration Act 1997.[119] Section 14 is expressly referred to in s 34(4) of the Act, and relevantly provides:[120]
[119]Transcript, 44–5.
[120]Taxation Administration Act 1997 s 14(3).
14 Notice of assessment or withdrawal of assessment
…
(3)An amount of tax assessed in a notice of assessment is payable on or before the day specified by the Commissioner in the notice of assessment.
The Defendant submits that the words “payable on or before the day specified” mean the assessment is payable on the date specified. The Defendant draws a distinction between a tax liability that is due and owing, and one that becomes payable only upon the issue of the assessment.[121] In support of this interpretation, the Defendant cites Gibbs J in Re Mendonca:[122]
It is now settled that the effect of these and similar provisions is that the liability to income tax is imposed by the statute itself and that assessment is only a method of ascertaining the extent of the liability, so that the tax is a debt due and owing, although not payable, notwithstanding that no assessment has been made…
The Plaintiff, in support of its contention that liability was incurred prior to assessment, referred to North West Melbourne Recycling Pty Ltd v Commissioner of State Revenue, where the Court, relying on this statement of Gibbs J in Re Mendonca, found that — although notices of assessment cannot, of course, be paid or are not able to be paid until they are issued — prior to assessment a tax can still be “due and owing”.[123] Thus, the Plaintiff submits that the relevant outgoing must be regarded as having been “incurred, paid or payable” for the purposes of the Lease outgoings definition.[124]
[121]Transcript, 49.
[122]Re Mendonca; ex parte Federal Commissioner of Taxation (1969) 15 FLR 256 at 259.
[123]North West Melbourne Recycling Pty Ltd v Commissioner of State Revenue [2017] VSC 647 at [5]; Transcript, 11–2.
[124]Transcript, 39–40.
In my view, it follows on the basis of the matters raised in the Plaintiff’s submissions that the Lease outgoings definition encompasses amounts levied under the Congestion Levy Act 2005 and that the Levy was relevantly incurred at 12:01am on 1 January on each of the relevant years. From that time, a Levy in respect of the relevant car parking spaces became a charge on the land under s 32(1) of the Act, the Levy being unpaid, and the liability of the Plaintiff to pay the Levy crystallised. Adopting the words of Gibbs J, a tax was due and owing, if not yet payable.
The Defendant brought to the attention of the Court the Review of the Administration of the Congestion Levy conducted by the Department of Treasury and Finance in 2007.[125] The Defendant cited this passage:[126]
[125]Transcript, 85–6.
[126]Department of Treasury and Finance, State Revenue Office, Review of the Administration of the Congestion Levy, Final Report (2007) 20–1.
11.2 Allocation of Levy Liability
…
As noted by Wilson Parking, ‘[n]ow that the congestion levy is in force, liability for the Levy is one of the things to be negotiated and agreed when a car park is to be released.’ Disputes between owners and operators over the allocation of the Levy liability are therefore unlikely in the case of agreements finalised or reviewed subsequent to the announcement of the Levy in 2005.
The Plaintiff observes that Wilson Parking’s submissions are not directly relevant, having been made in respect of commercial, and not private, car parks.[127] The Defendant concedes that it cannot rely on the passage directly in respect of statutory interpretation.[128] In my view, the passage demonstrates what has occurred on the present facts: an outgoings clause drafted after the commencement of the Act is likely to be — and in the present Lease is — broad enough to encompass the claimed levy. This, if anything, supports the submissions of the Plaintiff.
[127]Transcript, 86.
[128]Transcript, 85.
Finally, there is the question of whether the Plaintiff is limited to recourse to the outgoings provisions of the Lease for recovery of the claimed levy only while the Plaintiff remained the owner of the Property. Taking this issue step by step, if the Plaintiff had become aware of the Levy other than in the course of the sale, or had received and duly passed on the Notices of Assessment before settlement took place, the Defendant would have no argument against its liability to pay. The Defendant accepts this hypothetically:[129]
Consider the following example: Council rates assessments had been issued to [the Plaintiff] on 1 December 2015; the council rates had been paid by [the Plaintiff] on 14 December 2015, but [the Plaintiff] had not on-charged these council rates as ‘outgoings’ to [the Defendant] until 1 July 2016. In that situation, [the Plaintiff] could still sue [the Defendant] for recovery of those council rates – because the liability to pay these rates arose during the relevant term of the lease (ie, the rates were ‘incurred’, and paid, by the entity while it was the ‘Lessor’ (and in its capacity as Lessor)). In these circumstances, council rates so incurred and so paid by [the Plaintiff] would have fallen within the definition of ‘Outgoings’ – and could have been recovered by [the Plaintiff] in a claim under contract. This is because of the privity of contract between [the Plaintiff] and [the Defendant] in respect of this rates liability. But no such privity exists as between [the Plaintiff] and [the Defendant] in relation to these congestion levy liabilities incurred and paid in February/March of 2016 (or in respect of any other taxes, or liabilities, that [the Plaintiff] might incur years after it has sold the land, not acting as the ‘Lessor’).
The Defendant is correct: failure to “on-charge” council rates would not affect the right to recover them from the Defendant. The same is true of the claimed levy on the present facts. I cannot accept the final sentence of the Defendant’s submission quoted above. The claimed levy is not, as the Defendant describes it, one of “any other taxes, or liabilities, that [the Plaintiff] might incur years after it has sold the land, not acting as the ‘Lessor’”. Indeed, both the claimed levy and the hypothetical council rates certainly were incurred by the Plaintiff acting as the Lessor. Both are recoverable from the Defendant.
[129]Submissions of the Plaintiff/Defendant by Counterclaim (18 May 2018), [33].
Conclusion
For the preceding reasons, the Plaintiff is entitled to recover the claimed levy from the Defendant — either under s 34 of the Act or under the outgoings provisions of the Lease. The Defendant has accepted that if it is not successful in respect of the claim, there is no counterclaim for the Plaintiff to answer.
The parties are to bring in orders to give effect to these reasons — and to accommodate their previous agreed position in respect of the counterclaim.
I otherwise reserve the question of costs and will hear the parties further on this issue.
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