LGM Enterprises Pty Ltd v Brisbane City Council
[2008] QLAC 214
•27 November 2008
LAND APPEAL COURT OF QUEENSLAND
CITATION:
LGM Enterprises Pty Ltd v Brisbane City Council [2008] QLAC 0214
PARTIES:
LGM ENTERPRISES PTY LTD (ABN 85 091 649 660)
(claimant/appellant)
v
BRISBANE CITY COUNCIL(respondent)
FILE NO:
LAC2008/0081
DIVISION:
Land Appeal Court of Queensland
PROCEEDING:
Appeal against a decision of the Land Court of Queensland
ORIGINATING COURT:
Land Court of Queensland
DELIVERED ON:
27 November 2008
DELIVERED AT:
Brisbane
HEARD AT:
Brisbane
THE COURT:
White J
Mrs CAC MacDonald, President of the Land CourtMr RS Jones, Member of the Land Court
ORDERS:
1. The appeal is allowed.
2. The decision of the Land Court on the preliminary issue is set aside.
3. The appellant's claim for compensation is remitted to the Land Court for determination.
CATCHWORDS:
REAL PROPERTY – RESUMPTION OR ACQUISITION OF LAND – COMPENSATION – STATUTORY RIGHT TO COMPENSATION – CONSTRUCTION OF STATUTE – the appellant operated a video store on leased premises in a shopping centre – customers accessed the store by using walkways through a garden– land was resumed which included part of the garden and a number of the walkways – whether the walkways are part of the common areas of the shopping centre – whether the appellant’s rights with respect to the walkways are an interest in land under the Acquisition of Land Act 1967 – whether the appellant has a right to claim compensation for the loss of the walkways
Acquisition of Land Act 1967 (Qld), s 2, s 12(5), 18(3)
Acts Interpretation Act 1954 (Qld), s 36Retail Shop Leases Act 1994 (Qld), s 6, s 12, s 20, s 43
Hornsby Council v Roads and Traffic Authority of New South Wales (1977) 41 NSWLR 151, discussed
Marshall v Director-General Department of Transport (2001) 205 CLR 603; [2001] HCA 37, cited
Roads and Traffic Authority of New South Wales v Heawood (2002) 54 NSWLR 289, cited
Sorrento Medical Service Pty Ltd v Chief Executive Department of Main Roads [2007] 2 Qd R 373; [2007] QCA 73, appliedR v Toohey; Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327; [1982] HCA 69, cited
APPEARANCES:
Mr LG McGinn, director of the appellant, for the appellant
Mr M Hinson SC for the respondent
SOLICITORS: Mr LG McGinn, director of the appellant, for the appellant
Mr G Evans of Brisbane City Practice for the respondent
On 5 January 2005 the respondent, pursuant to the Acquisition of Land Act 1967, resumed for road purposes 36m2 of land owned by Australian Property Holdings Ltd. Notice of the resumption was published in the Queensland Government Gazette of 7 January 2005. The resumed land is now described as Lot 1 on SP 172404 and the parent parcel is Lot 2 on RP 117943.
Constructed on the parent parcel of land is a small shopping centre containing a floor area of about 484m2 divided into five tenancies. Australian Property Holdings entered into a lease with Nervana Pty Ltd of an area comprising 240m2 to commence on 1 April 1999 and expiring on 31 March 2005 described as Tenancy 1. The business operated by Nervana at the premises was that of a video store. In 2000 the video store business was purchased by the appellant, LGM Enterprises, and the lease transferred to LGM Enterprises. Pursuant to cl 17 LGM Enterprises exercised its option to renew the lease to 31 March 2011.
As described by the learned Member[1] the parent parcel is located on the south-west corner of the Appleby and Rode Roads with a curved frontage to that intersection. A landscaped garden bed comprising a narrow strip of shrubbery irrigated by a sprinkler system was cultivated between the back of the curb which borders the car park and a low concrete wall bordering the public footpath. Steps are constructed towards the northern end of the garden to allow access to the shops on the parent parcel. These steps were part of the original plan. Pedestrian access may also be obtained via two vehicular entrance/exit driveways. No part of Tenancy 1 or the car park in the shopping centre was included in the resumed land.
[1]Reasons para 17.
Pedestrians seeking access to the shops and, in particular, the video shop operated by LGM Enterprises, rather than using the “planned” entrances, very soon, after the shopping centre opened, would take a “short cut” through the shrubs in the garden. According to Mr McGinn, the sole director of LGM Enterprises, this was particularly the case with people alighting from buses which stopped at a bus stop located on the road adjacent to the garden but well south of the steps giving access to the shops. In response, the landlord placed some pavers on the garden beds, both to facilitate this access and, as accepted by the learned Member, to provide some protection for the plants and the irrigation system. This was the situation when LGM Enterprises bought the video business and took over the lease of Tenancy 1.
In total there were nine such “walkways” through the garden areas. Four of those walkways were located within the resumed area and, according to Mr McGinn, it would now be difficult, if not impossible, to replace the four pedestrian access points taken by the resumption. This is because the works carried out by the respondent make the bank up to the shops too steep to be used by pedestrians. The bus stop which was located adjacent to the eastern boundary of the parent parcel has, as a consequence of the road works, been relocated to the north-western side of the intersection of Maundrell Terrace and Rode Road, quite some distance from the subject land and across a busy road.
LGM Enterprises contends that as a consequence of the resumption and the associated works it has lost and continues to lose custom at its video store to a significant degree.
The issue
On 7 December 2007, the then President of the Land Court, Mr Trickett, directed that a preliminary issue of jurisdiction be determined before the hearing of the application for compensation. The question to be determined was whether LGM Enterprises has a right to claim compensation under the Acquisition of Land Act for the loss of the pedestrian access points. Pursuant to section 12(5) of that Act, from the date of publication of the resumption notice the land shall be vested in the constructing authority:
“…and the estate and interest of every person entitled to the whole or any part of the land shall thereby be converted into a right to claim compensation under this Act...”
“Land” is defined to mean:
“…land, or any estate or interest in land, that is held in fee simple, but does not include a freeholding lease under the Land Act 1994.”[2]
[2]Acquisition of Land Act, s 2.
LGM Enterprises, who was represented below and on appeal by Mr McGinn, contends that the garden areas through which some customers to its business gained access was a part of the common areas of the shopping centre and, accordingly, gave rise to a contractual right under its lease and/or entitlements under the Retail Shop Leases Act 1994 and that right constitutes an estate or interest in the land taken.
The respondent contends that the garden areas are not a part of the common areas of the shopping centre as defined by the lease. It says that the provisions of the Retail Shop Leases Act do not entitle that area to be characterised as part of the common areas of the shopping centre.
The decision of the Land Court
The learned Member concluded that LGM Enterprises had no estate or interest in the resumed land and therefore the Land Court did not have jurisdiction to determine its claim for compensation.[3] Neither party referred the learned Member to the provisions and effect of the Retail Shop Leases Act. On the hearing of this appeal Mr Hinson SC for the respondent acknowledged that it is and was appropriate to take that legislation into account. Without the benefit, then, of that Act the learned Member, not surprisingly, focussed upon the provisions of the lease. He said:[4]
“I think that the central question which arises is whether the landlord may be understood has having intended that the garden area be an area provided for common use…The garden beds apparently serve an ornamental or decorative purpose. There is no provision in the lease relating to the garden area similar to that found in clause 10.2 in which a right or privilege in customers to use the car park is expressed. There is little doubt that the landlord would not have intended the tenants or the customers to have use of the garden area for gardening purposes. Nor do I think that it can be concluded that the garden was intended as a common area for the purpose for access to the shops in the parent parcel, except by way of the steps constructed through a small section of the garden bed. The landlord seems to have tacitly recognised that some shoppers were gaining access to the shops through the gaps between the shrubs in the garden beds and he responded accordingly. At best a licence terminable at will has been created.”
[3]Reasons paras 26 and 27.
[4]Reasons para 23.
The learned Member concluded[5] that the management, maintenance and the destruction of the garden beds were matters completely within the control of the landlord. Since LGM Enterprises had “no right, power or privilege” over the garden bed area which it might enforce or protect under the terms of the lease, the learned Member concluded that it had no estate or interest in the land taken.
[5]Reasons para 26.
The learned Member drew some support for his conclusion from cl 1.2 of the lease which related to “operating expenses” to which the tenants were required to contribute. The definition in the lease includes some 18 different services or expenses provided by or paid by the landlord. The learned member referred to the following:
“(i)any costs of cleaning of the Common Areas and the exterior of the building and all plant rooms, service ducts and pipes in the building;
…
(k)the cost of supplying towels and other toilet requisites in any washrooms in the Common Areas;
…
(m)the cost of maintaining gardens and landscaped areas,”
and thought that the differentiation between the gardens and landscaped areas and the expressed “Common Areas” suggested that the gardens were not included in the common areas. These provisions are, with respect, of little assistance as the definition of “Common Areas” in the lease:[6]
“…means the parts of the Centre provided by the Landlord for common use.”
[6]Clause 1.2.
What (i) and (k) do is identify the places in respect of which the landlord may be expected to incur expense. Another expense not referred to by the learned Member is in (j): “electricity consumed in the Common Areas”. The gardens and landscaped areas are a complete description of those areas. The “cleaning”, “electricity” and “towels” needed to be qualified by reference to “common areas”.
Clause 8 of the lease concerns the tenant’s obligations. By cl 8.1(i) the tenant must:
“keep the Common Areas outside the Premises [the tenancy] clean and tidy.”
Clause 8.3 provides:
“Subject to the Centre Rules, the Tenant and its employees and agents may use the Common Areas for the purposes for which they are intended.”
As at the date of hearing there were no Centre Rules, nor was or is there any plan which depicts the common areas at the shopping centre. Clause 8.4 provides that:
“The Tenant may use that part of the Common Areas immediately outside the Premises for display purposes.”
Clause 9 concerns the landlord’s rights and obligations. By cl 9.5:
“The Landlord may:
(a)close the Common Areas for as along as the Landlord reasonably considers necessary if, except in emergencies, it takes reasonable steps to minimise interference with the Tenant’s Business;
…
(e)change the direction or flow of pedestrian or vehicular traffic into, out of or through the Centre;
…
(g)vary Centre Rules or make Centre Rules which are consistent with this lease in connection with the operation, use and occupation of the Centre.
(h)carry out any works in the Centre or the Premises but must do everything reasonably necessary to minimise interference with the Tenant’s Business.”
The car park is “subject to the Landlord’s exclusive control and management”.[7] By cl 10.2 “the Tenant’s customers in the Centre may use the Car Park for parking motor vehicles”. However, cl 10.3 makes plain that neither the tenant nor the tenant’s employees and agents have a right to park in the car park and may be prevented by the landlord from doing so.
[7]Clause 10.1.
The definitions in the lease provide that “The Act” means the Retail Shop Leases Act 1994 (“the Act”) but apart from a reference to s 22 in cl 20.11[8] there is no other reference to that Act in the lease. Even so, s 12 of the Act applies the Act to all retail shop leases in Queensland and s 20 provides:
“If a provision of this Act is inconsistent with a provision of a retail shop lease, the provision of this Act prevails and the provision of the lease is void to the extent of the inconsistency.”
It is common ground that the parent land is a retail shopping centre for the purposes of the Act.[9]
[8]Acknowledgement of receipt of disclosure documents.
[9]See s 8.
Section 6 of the Act defines “common areas” as:
“(1)…areas in or adjacent to the centre that are used, or are intended for use –
(a) by the public; or
(b)in common by the lessees of the premises in the centre in relation to the conduct of businesses in the premises in the centre.
(2) Common areas include-
(a) stairways, escalators and elevators; and
(b) malls and walkways; and
(c) parking areas; and
(d) toilets and restrooms; and
(e) gardens and fountains; and
(f)information, entertainment, community and leisure facilities.
(3)However, common areas do not include leased areas.”
Mr Hinson contended that the Act conferred no relevant entitlement on LGM Enterprises as tenant. That is too narrow an application of the Act. It applies generally to all retail shop leases. The definition of “common areas” in the lease in respect of LGM Enterprises’ tenancy is, in a practical sense, circular – “the parts of the Centre provided by the Landlord for common use”. Accordingly, the landlord and tenant must look to the Act to assist.
Section 18 of the Act provides:
“If, under this Act, a duty is imposed or an entitlement is conferred on a lessor or lessee under a retail shop lease, the duty or entitlement is taken to be included in the lease.”
What constitute the “common areas” of a tenancy are an aspect of the entitlements and duties of the lessor and the lessee under the lease. The common areas are, relevantly for this appeal, areas “…that are used, or intended for use…by the public…” The walkways between the shrubs in respect of which the landlord provided pavers are (or were) used by the public. Those walkways were a feature of the shopping centre when LGM Enterprises entered into the lease. To the extent that the landlord placed the pavers as access points they can be said to have been “intended for use” by the public. If there were any doubt, s 6.2(b) includes as an example of a common area, “…a walkway”.
So far as the lease is concerned, while the immediate intent of cl 8.3 is directed to use of the common areas by the tenant, its employees and agents, it may, arguably, extend to use of the walkways by customers of the tenant’s business. And cl 9.5(e) permits the landlord to change the direction or flow of pedestrian traffic into and out of or through the shopping centre. These clauses add some support within the lease to the change brought about by the incorporation of the pavers between the shrubs to regulate pedestrian traffic to the various businesses carried on in the shopping centre.
The conclusion is that those walkways are part of the common areas of the shopping centre. The tenants have certain contractual rights under the lease and statutory rights under the Act. The latter prevail where there are inconsistencies with the lease. Section 43 of the Act obliges a lessor to pay reasonable compensation to a lessee where the lessor, inter alia:
“(a)substantially restricts the lessee’s access to the leased shop; or
(b)takes action (other than action under a lawful requirement) that substantially restricts, or alters –
(i) access by customers to the leased shop; or
(ii) the flow of potential customers past the shop”
Accordingly, the learned Member erred when he concluded that the walkways between the shrubs were not part of the common areas of the shopping centre.
The issue then is whether those rights in respect of the walkways through the shrubs may be characterised as an interest in land pursuant to s 12(5) of the Acquisition of Land Act. The Acts Interpretation Act 1954 defines “interest” in relation to land as:
“(a) A legal or equitable estate in the land…; or
(b) A right, power or privilege over or in relation to, the land…”[10]
[10]Section 36.
The Court of Appeal in Sorrento Medical Service Pty Ltd v Chief Executive Department of Main Roads[11] held[12] that this definition of interest in land should be read into s 12(5) of the Acquisition of Land Act and thus provide a much broader description of the nature of the interest in land than the common law would allow.[13] Chesterman J cited[14] the following passage from the judgment of Gaudron J in Marshall v Director-General Department of Transport to support this conclusion:[15]
“It is a basic rule of statutory construction that legislative provisions are to be construed according to their natural and ordinary meaning unless that would lead to a result that the legislature must be taken not to have intended. The rule serves the important purpose of ensuring that those who are subject to the law understand the nature and extent of their rights and obligations. And because it serves that purpose, good reason must be shown before it will be concluded that the legislature did not intend the consequences that would flow if the provision in question were given its natural and ordinary meaning.
Although the rule that legislative provisions are to be construed according to their natural and ordinary meaning is a rule of general application, it is particularly important that it be given its full effect when, to do otherwise, would limit or impair individual rights, particularly property rights. The right to compensation for injurious affection following upon the resumption of land is an important right of that kind and statutory provisions conferring such a right should be construed with all the generality that their words permit. Certainly, such provisions should not be construed on the basis that the right to compensation is subject to limitations or qualifications which are not found in the terms of the statute.”
Her Honour was there construing s 20 of the Acquisition of Land Act (Qld).
[11][2007] QCA 73.
[12]Per the President and Chesterman J; Holmes JA dissenting.
[13]For example, The Queen v Toohey; Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327 per Mason J at 342, cited by Holmes JA in Sorrento at [24].
[14]At [46]. See also the President at [12].
[15](2001) 205 CLR 603 at 623.
In Sorrento the appellant for compensation was the lessee of land on which it operated a medical centre. A term of the lease granted the lessee exclusive rights to certain car parking for the doctors and the right to permit patients and other invitees to use other designated parking areas. The resumption by the constructing authority took part of the car parking in both categories. The licence to occupy the car parks was characterised as a contractual right which was further identified as a personal right of property which was of a proprietary nature.[16] His Honour referred[17] to observations made by Heydon JA (as his Honour then was) in Roads and Traffic Authority of New South Wales v Heawood:[18]
“The natural and ordinary meaning of “loss of access” extends beyond total loss. If a different meaning…were to be selected, there would be a limitation on or impairment of the proprietary rights of persons in the position of the respondents…[T]he right to compensation for impact on access is, depending on its scope, an important right, and hence s 32(2) should be construed with all the generality its words permit, and not by inserting limitations or qualifications by reference to the adjective “total” which is not to be found in s 32(2).”
[16]Per Chesterman J at [44] – [45].
[17]At [47].
[18](2002) 54 NSWLR 289 at 296-7.
In concluding that the definition of “interest” in the Acts Interpretation Act ought be applied to s 12(5) Justice Chesterman found some assistance from s 18(3) of the Acquisition of Land Act which denies compensation, inter alia, to a licensee whose interest continues uninterrupted by the resumption.
His Honour made reference to necessary limits to the ambit of “interest”. He said:[19]
“It may be that to apply the full width of the definition of “interest” found in the Acts Interpretation Act might, in some cases, produce claims for compensation that might properly attract the epithet “absurd”, but the present is not of that kind. One has here a right of property clearly identified, the limits of which are specified and which had a value. The proprietor is identified and the existence of the licence was proved in a document available for public search. In my opinion it is a matter of plain justice, not absurdity, that the proprietor should be compensated when his property is destroyed, for the good of the wider public.”
[19]At [63].
With respect to a similarly expressed entitlement to compensation under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW), Meagher JA drew attention to the need for limits:[20]
[20]Hornsby Council v Roads and Traffic Authority of New South Wales (1997) 41 NSWLR 151 at 155.
“In a sense every member of the public as a “right” over the land in question: he can go on it and have a picnic. But it was hardly intended that he could claim compensation on a resumption. If it were, the machinery of notifying holders of “interest” would extend to infinity. Some limitation must be placed on the words.”
His Honour considered that “interest” must be confined to proprietary or
quasi-proprietary rights, less than a full fledged estate, including licences. Chesterman J took up his Honour’s less than complimentary reference to picnickers explaining:[21]
“The reason why such persons could not claim compensation was that they would have lost nothing by the resumption which could have been valued in money.”
[21]At [68].
LGM Enterprises had a right or privilege in respect of the land resumed. Although this was a preliminary point, Mr McGinn has obtained evidence in the form of data about customer numbers and so on which would suggest, prima facie, that by losing these access points, his business has suffered in a way which can be measured monetarily. Although the interest of LGM Enterprises is not as objectively ascertainable as in Sorrento – it is not precisely identified in the lease – the combination of the terms of the lease, the provisions of the Retail Shop Leases Act and the uncontested evidence of de facto recognition by the landlord of the areas of land on the gardens as walkways to the businesses in the shopping centre, suggests that the interest is not qualitatively different and, by no means, in the “absurd” category.
It follows that the appeal should be allowed.
New evidence
LGM Enterprises sought leave to adduce new evidence in the form of statements from Mr Angelo Russo, the sole director of Australian Property Holdings Pty Ltd, the landlord, and Mr Christopher Huxley of Beacon Real Estate Pty Ltd, the real estate agent who managed the shopping centre for the landlord, and some photographs. The application was opposed by the respondent. This court refused the application at the commencement of the appeal with fuller reasons to be given in these reasons.
Mr McGinn conceded that Mr Huxley could have been called but was not readily available to appear in person on the day of the hearing. There was no impediment seeking to have him give his evidence by telephone or at a different time. His evidence would have supported the use of the access points by members of the public. LGM Enterprises was in dispute with the landlord at the time of the hearing and it would not have been feasible for LGM Enterprises to call him.
The photographs demonstrate that rubbish bins, clearly part of the common areas of the shopping centre, were located in the garden area.
Section 56 of the Land Court Act 2000 provides that an appeal to the Land Appeal Court must be decided on the evidence of the record of the proceeding in which the decision appealed against was made. However, the court may admit new evidence if the court is satisfied admission of further evidence is “necessary to avoid grave injustice”, and the party applying gives the court an adequate reason for the evidence not previously being given, and the application is made before the hearing of the appeal.[22]
[22]Section 56(2).
Mr Hinson accepted that the photographs showed the rubbish bins in the garden areas but did not accept that in some fashion the gardens thereby became common areas. He also accepted that members of the public used the access points between the shrubs to go to the shops in the shopping centre; and that the landlord had placed the pavers between the shrubs to protect the plants and irrigation system as well as to provide pedestrian access to the shops.
Mr McGinn was particularly concerned to address the learned Member’s conclusion that the landlord did not intend the garden areas to be part of the common areas by seeking to put this new evidence before the court.
Mr Huxley’s evidence was available below. Photographs of the rubbish bins could have been placed before the learned Member. It is accepted that Mr Russo’s evidence would not have been available at the hearing. The intention of the landlord may be discerned from the lease, the provisions of the Retail Shop Leases Act and the objective facts such as the landlord placing the pavers and tolerating their use by members of the public to access the shops in the centre over a lengthy period. Mr Russo swearing to his intention now does not advance the applicant’s case.
The admission of the new evidence was not necessary to avoid grave injustice to the appellant.
The orders are:
1. Appeal is allowed.
2. The decision of the Land Court on the preliminary issue is set aside.
3. The appellant's claim for compensation is remitted to the Land Court for determination.
WHITE J
CAC MACDONALD
PRESIDENT OF THE LAND COURT
RS JONES
MEMBER OF THE LAND COURT
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