Living and Leisure Australia Ltd v Commissioner of State Revenue

[2017] VSC 675

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL COURT
TAXATION LIST

S CI 2016 05187
S CI 2016 05189
S CI 2016 05190
S CI 2016 05191
S CI 2016 05192
S CI 2016 05193

LIVING AND LEISURE AUSTRALIA LTD	Appellant
v
COMMISSIONER OF STATE REVENUE	Respondent

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JUDGE:	CROFT J
WHERE HELD:	Melbourne
DATE OF HEARING:	24 October 2017
DATE OF JUDGMENT:	1 December 2017
CASE MAY BE CITED AS:	Living and Leisure Australia Ltd v Commissioner of State Revenue
MEDIUM NEUTRAL CITATION:	[2017] VSC 675

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TAXATION AND REVENUE – Land tax – Whether agreements pertaining to ski fields including significant reservations gave rise to leases or licences – Land Tax Act 2005, ss 10(1)(b), 79(2)(a).

LANDLORD AND TENANT – Lease or licence – Test – Right to exclusive possession – Relationship between reservations and exclusive possession – Lightwood’s Treatise on Possession of Land – Lewis v Bell (1985) 1 NSWLR 731 – Swan v Uecker (2016) 50 VR 74 – Radaich v Smith (1959) 101 CLR 209 – Wik Peoples v State of Queensland (1996) 187 CLR 1 – Western Australia v Ward (2002) 213 CLR 1 – Western Australia v Brown (2014) 253 CLR 507 – Tonks v Mayor of Wellington (1908) 10 GLR 579.

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APPEARANCES:	Counsel	Solicitors
For the Appellant	S H Steward QC with C J Furnell	PricewaterhouseCoopers
For the Respondent	C J Horan QC with F Cameron	Solicitor for the Commissioner of State Revenue

HIS HONOUR:

1. The issue for determination in these proceedings is whether the Plaintiff, Living and Leisure Australia Ltd (“the Taxpayer”), is liable to pay the land tax assessed to be payable under the Land Tax Act 2005 (“the LTA”) by the Respondent, the Commissioner of State Revenue (“the Commissioner”), in respect of the Taxpayer’s interest, the nature of which is agreed to be determinative of the Taxpayer’s liability, in two parcels of Crown land for the 2010 to 2015 tax years. The Taxpayer appeals pursuant to s 106 of the Taxation Administration Act 1997 from the Commissioner’s determination of its objections to assessments under the LTA (“the Assessments”). The Assessments concern the land tax payable in respect of Crown lands within the alpine resorts at Falls Creek and Mount Hotham which were used and occupied by wholly-owned subsidiaries of the Taxpayer pursuant to two separate agreements expressed as leases and purportedly granted under s 28 of the Alpine Resorts Act 1983 (“the 1983 Act”).

1. The Commissioner assessed the Taxpayer to land tax on the basis that, as at the relevant date in each tax year, the Crown lands in question were leased to a related company of the Taxpayer.  Thus, the issue is quite a narrow one in that the outcome of this Appeal is agreed to be wholly dependent on the characterisation of the Taxpayer’s interest in the subject land: if that interest is a leasehold interest then the Taxpayer accepts that tax is payable, while if that interest is a mere licence the Commissioner accepts that tax is not payable.[1] It is helpful to set out the provisions of the LTA which establish this position:

   [1]Transcript (24 October 2017), 2–3.

3        Definitions

(1)       In this Act—

…

taxable land means land that is not exempt land;

…

7        General imposition of land tax

Land tax is imposed in respect of each year on all taxable land in Victoria.

8        Who is liable for land tax?

The owner of taxable land is liable to pay land tax on the land.

…

10       Who is the owner of land?

(1)The following persons are owners of land for the purposes of this Act—

…

(b) a person entitled to land under a lease of Crown land;

…

…

79Crown land

(1)Land is exempt land if it is—

(a) the property of the Crown in right of Victoria; or

(b) vested in a Victorian Minister.

(2)Subsection (1) does not apply to land that is held by—

(a)a person who is entitled to the land under a lease of Crown land…

…

1. For the purposes of s 47 of the LTA, the Taxpayer is, and has at all relevant times been, a related corporation of Falls Creek Ski Lifts Pty Ltd (“FC Lifts”) and Mount Hotham Skiing Company Pty Ltd (“MH Skiing”) (collectively, “the Grantees”), amongst others.[2] Pursuant to s 50 of the LTA, the Commissioner elected, with respect to each of the 2010 to 2015 tax years, to treat the Taxpayer and the Grantees (and certain others) as a single corporation for the purposes of the LTA.[3]

   [2]Statement of Agreed Facts (1 August 2017), [1].

   [3]Statement of Agreed Facts (1 August 2017), [2]–[3].

Background

1. In 1985, Crown lands at Falls Creek and Mount Hotham were declared to be alpine resorts pursuant to s 19 of the 1983 Act, and at all relevant times for the purposes of these proceedings the lands in question comprised parts of the resulting alpine resorts.[4]  The agreements which were entered into regarding each of these areas are quite similar in substance,[5] though there are sufficient differences to warrant their individual consideration on certain issues.

   [4]Statement of Agreed Facts (1 August 2017), [20], [24].

   [5]Transcript (24 October 2017), 6–7.

1. In October 1965 an “exclusive permit” was granted—which FC Lifts subsequently acquired—in respect of a designated area of land known as the Falls Creek Tourist Area.[6]  Following a proposal by the Victorian Government to consolidate part of the land included in that permit (approximately 842 hectares out of 1,317 hectares) into a “new consolidated Crown Lease”, the Governor of Victoria and FC Lifts agreed “to consolidate their respective rights, interests or legitimate expectations”.[7] Hence on 7 May 1991, relying upon the power conferred by s 28 of the 1983 Act, the Governor of Victoria as “lessor” and FC Lifts as “lessee” entered into an agreement in respect of land including ski fields within the Falls Creek Alpine Resort,[8] “down to a depth of 15.24 metres together with the improvements (if any) erected thereon” for a term of 50 years commencing on 1 January 1991 (“the Falls Creek Agreement”).[9]  FC Lifts was permitted to use the land for a number of specified purposes,[10] which were broadly comprised of all activities which would be thought to be necessary for a ski resort, and which are now commonly known by Victorians to be conducted at Falls Creek.

   [6]Documents Filed Pursuant to Rule 7.06(d) of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2008 (20 December 2016), tab 5 (“the Falls Creek Agreement”), Recitals A–D.

   [7]Falls Creek Agreement, Recitals E–F.

   [8]Statement of Agreed Facts (1 August 2017), [11].

   [9]Falls Creek Agreement.

   [10]Falls Creek Agreement, cl 5.1.

1. Though the genesis of the agreement in respect of the Mount Hotham ski fields is different, this is not said to be of any consequence.  MH Skiing had previously been granted “Crown Lease Volume 1211 Folio 122” on 1 January 1981 for a term of 70 years.[11]  The Alpine Resorts Commission (“the ARC”) “requested the Lessee to enter into a new Crown Lease with amended terms and conditions” to give effect to, among other things, the “alteration of the demised land to include all improvements erected by or on behalf of the Lessee within the Mount Hotham Alpine Resort” and the “inclusion within the demised land of the ski slopes which are associated with the Lessee’s ski lifts and tows”.[12] Thus, on 22 December 1992, relying upon the power conferred by s 28 of the 1983 Act, the Governor of Victoria as “lessor” and MH Skiing as “lessee” entered into a “lease” in respect of land including ski fields within the Mount Hotham Alpine Resort “down to the depth of fifteen meters below the surface” for a term of 65 years (from 22 December 1992) (“the Mount Hotham Agreement”).[13]  Again, MH Skiing was permitted to use the land for a number of specified purposes,[14] which broadly covered all activities which would be thought to be necessary for a ski resort, and which are now commonly known by Victorians to be conducted at Mount Hotham.

   [11]Documents Filed Pursuant to Rule 7.06(d) of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2008 (20 December 2016), tab 10 (“the Mount Hotham Agreement”), Recitals.

   [12]Mount Hotham Agreement, Recitals.

   [13]Mount Hotham Agreement, cl 1.

   [14]Mount Hotham Agreement, cl 1.

1. For completeness, I note that the Falls Creek Agreement and the Mount Hotham Agreement (collectively, “the Agreements”) have been immaterially affected by subsequent instruments as set out in the Statement of Agreed Facts:[15]

   [15]Statement of Agreed Facts (1 August 2017), [11], [13].

11.The land described… as the Falls Creek Lands comprises land the subject of an agreement made by FC Lifts and His Excellency the Governor of Victoria dated 7 May 1991, as amended by deed dated 18 March 1999 and to the extent affected by side letters dated 7 May 1991 and 6 August 1991.

…

13.The land described… as the Mount Hotham Land comprises land the subject of an agreement made by MH Skiing (formerly Ski Tows Pty Ltd) and His Excellency the Governor of Victoria dated 22 December 1992 as amended by deed dated 24 February 1997 and by deed dated 24 June 2003.

[references omitted]

1. The lands that are the subject of the Falls Creek Agreement and the Mount Hotham Agreement (“the Falls Creek Lands”, “the Mount Hotham Lands”, and collectively, “the Lands”) are Crown lands permanently reserved for public purposes as alpine resorts under s 4(1) of the Crown Land (Reserves) Act 1978. For context, it bears recalling that the Lands are largely open, including in their unfenced perimeters alpine scrub; woods and clearings; ski fields and ski lifts; as well as buildings providing for accommodation, education and refreshment.[16]  The Agreements include significant reservations, the details of which are set out below, but which broadly provide for extensive control and management of the Lands by the Crown and for public access insofar as it does not interfere with the operations of the Grantees.

   [16]See also Affidavit of Ian Robert Grant (11 August 2017); Affidavit of Colin Richard Hackworth (14 August 2017).

1. The essence of the argument of the Taxpayer that the leases are not what they purport to be is that three aspects of the Agreements—either individually or collectively—entail that a right of exclusive possession was not granted, being the control over the land exhibited by the State through the ARC, the reservations, and the regulatory regime.[17]  Before turning to examine each of these aspects in detail, it is necessary to consider what distinguishes leases and licences in broad terms.

   [17]Transcript (24 October 2017), 48.

Distinction between leases and licences

1. The general nature of the distinction between leases and licences was not the subject of dispute, and in this respect reference was made to Swan v Uecker,[18] where I found:[19]

   [18](2016) 50 VR 74.

   [19]Swan v Uecker (2016) 50 VR 74 at 85–6 [31]–[32].

31.It is well accepted that, as a matter of law, the test to be applied to distinguish between a lease and a licence is whether or not what is granted is exclusive possession.[20]  Thus, in Lewis v Bell,[21] Mahoney JA said:[22]

[20]Radaich v Smith (1959) 101 CLR 209; KJRR Pty Ltd v Commissioner of State Revenue [1999] VSCA 2; Lewis v Bell (1985) 1 NSWLR 731; Rental Bond Board v Bayman Development Pty Ltd (1985) 3 BPR 97,237. See also Janusauskas v Director of Housing [2014] VSC 650, referred to in Swan v Uecker (Residential Tenancies) [2016] VCAT 483 (24 March 2016) [37]–[38].

[21](1985) 1 NSWLR 731.

[22](1985) 1 NSWLR 731 at 734–5.

In the present case, it was accepted, or at least assumed, that the test is that of exclusive possession.  That, in my opinion, is correct. It is the test which was adopted by at least the majority of their Honours in Radaich v Smith.[23]  That that is, at least initially, the test, was affirmed by Mason J in Goldsworthy Mining Ltd v Federal Commissioner of .[24]

[23](1959) 101 CLR 209 at 214, 217–20, 223.

[24](1973) 128 CLR 199 at 212; affirmed (1975) 132 CLR 463.

It is not necessary to analyse the precise nature of the right to exclusive possession which is here in question.  It is, for present purposes, sufficient to say that it involves that the lessee have the general right to exclude others, including the lessor, from the premises, subject at least to such specific provisions for entry as may be particularly provided for in the document: cf the rights reserved in the Glenwood Lumber case.[25]

[25]Glenwood Lumber Co Ltd v Phillips [1904] AC 405 at 408.

…

But there are cases in which it is not clear from the terms of the grant, construed in the light of the whole agreement and its context, what it is that is being granted by them.  In such cases, it is necessary to determine what is granted by looking at other aspects of the transaction.  Thus, a grant may not be in terms of “possession” but of something else.  It may be the grant of a right to occupy premises;[26] the right to “carry on a business on” the premises;[27] or, as in the present case, the right “to use” the premises either generally or in a particular way.  In such cases, the court must, by the process of construction, determine whether what is granted is mere occupation or use, or is possession in the relevant sense.  And where what is granted is possession, it still, in principle, may remain to be decided whether what is granted is exclusive possession.  But it is not necessary to consider, in this case, whether there can be a distinction between possession and exclusive possession and (if there can) what distinctions there may be between possession and exclusive possession in this context.

[26]Cf O’Keefe v Malone [1903] AC 365 at 377; Landale v Menzies (1909) 9 CLR 89 at 91, 100–1.

[27]Cf Radaich v Smith (1959) 101 CLR 209 at 210.

In deciding, in such cases, whether what has been granted is the right to exclusive possession, the court, in the process of construction, has in practice looked, inter alia, to two things: the nature of the rights which, in terms, have been granted; and the intention of the parties.

Party intention in this context is to be determined objectively on the basis of the terms of the particular agreement under consideration and having regard to surrounding circumstances to the extent that is permissible according to the ordinary rules of construction.[28]  Reference is made by the Respondents to a number of passages in the judgment of Windeyer J in Radaich v Smith, particularly the following:[29]

[28]See National Outdoor Advertising Pty Ltd v Wavon Pty Ltd (1988) 4 BPR 97,322.

[29](1959) 101 CLR 209 at 221–3 (Respondents’ emphasis).

Whether when one man is allowed to enter upon the land of another pursuant to a contract he does so as licensee or as tenant must, it has been said, “be in the last resort a question of intention”, per Lord Greene M.R. in Booker v Palmer (1942) 2 All ER 674, at p 676. But intention to do what?—Not to give the transaction one label rather than another.—Not to escape the legal consequences of one relationship by professing that it is another. Whether the transaction creates a lease or a licence depends upon intention, only in the sense that it depends upon the nature of the right which the parties intend the person entering upon the land shall have in relation to the land …

And how is it to be ascertained whether such an interest in land has been given?  By seeing whether the grantee was given a legal right of exclusive possession of the land for a term or from year to year or for a life or lives.  If he was, he is a tenant.  And he cannot be other than a tenant, because a legal right of exclusive possession is a tenancy and the creation of such a right is a demise.

…

And the proper touchstone still is: did it give the so-called licensee a legal right to the exclusive possession of the premises during the term?  The question must of course, be resolved by considering the terms of the deed.  But they are to be read in relation to the relevant surrounding circumstances, in particular the nature of the premises; for this deed, like any other instrument, is to be interpreted having regard to its subject matter.

32.On the basis of these and similar passages, the Respondents stress intention and the “legal right” to exclusive possession as being of critical importance, the latter leading into submissions with respect to the remedies available to tenants and licensees respectively as, as I understand the submissions, some indicia of the nature of the particular occupation.  However, for the reasons which follow, I am of the opinion that this is rather to put the cart before the horse in that the first task is the proper characterisation of a particular legal relationship as a lease or a licence and issues with respect to the nature of available remedies naturally follow from that characterisation.  In any event, these and similar passages, as far as they go to intention, do not, in my view, detract from the position I have indicated and would not, on any basis, countenance reference to self-serving subjective statements.  The position with respect to intention is, as I have indicated, to be determined objectively having regard to the terms of the relevant agreement and the surrounding circumstances according to the general rules for the admission of extrinsic evidence,[30] rather than as an exception to those rules.

[30]See Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337.

1. Despite general agreement that the above extract from Swan v Uecker correctly summarised the law,[31] Senior Counsel for both the Taxpayer and the Commissioner both proposed a different gloss on the process of ascertaining whether a particular instrument gave rise to a lease or a licence.  Before coming to these differences in detail, it is helpful to summarise the issues before the Court in the following terms:

   [31]Transcript (24 October 2017), 1; see also at 59, 73, 77.

(a)   whether the finding of a right of exclusive possession is conceptually antecedent or subsequent to the finding of a lease;

(b)  to what extent the nomenclature employed by parties in their agreement is relevant;

(c)   is the absence of an express grant of exclusive possession or of a covenant for quiet enjoyment significant;

(d)  whether a reservation simpliciter is indicative of a lease or a licence;

(e)   whether a reservation enabling access by third parties precludes the implication of the right of exclusive possession; and

(f)    whether an alignment between the purpose for which a reservation is granted and the purpose of the lease affects whether the reservation is incompatible with exclusive possession.

1. The Commissioner drew on the statement in Swan v Uecker,[32] which is extracted above, that “the first task is the proper characterisation of a particular legal relationship” to suggest that the determination of whether or not an agreement gives rise to a lease is logically prior to the question of whether or not exclusive possession is conferred.[33] To do otherwise, it is said, would “put the cart before the horse”, yet as is clear from the paragraph upon which the Commissioner relies, it is only the issue of the nature of available remedies which must be subsequent to the characterisation of the relationship—not the issue of whether or not the right of exclusive possession is conferred. The test is that of exclusive possession,[34] and thus as any test must be applied before its outcome is determined, the question of exclusive possession is antecedent to the characterisation of the agreement.[35]  In a similar vein, whether or not the Grantees could maintain an ejectment is not a helpful enquiry because it entirely depends upon the outcome of the present analysis.

   [32]Swan v Uecker (2016) 50 VR 74 at 86–7 [32].

   [33]Respondent’s Written Submissions (13 October 2017), [4(b)]; cf Transcript (24 October 2017), 29.

   [34]Lewis v Bell (1985) 1 NSWLR 731 at 734–5.

   [35]Western Australia v Ward (2002) 213 CLR 1 at 128–9 [186].

1. In relation to the precise significance of terms such as “lease” and “demise”, the Commissioner suggested that technical language may be relevant to the proper characterisation of an agreement, and that “[i]n some cases, it may be appropriate to proceed on the basis that such terms were intended to be used in their technical sense”.[36]  By contrast, the Taxpayer submitted, and in my view correctly, that the existence of the right is not determined by the nomenclature employed in the instrument.[37]  Rather, it is said, the determinative consideration is the parties’ intention, as ascertained from objective consideration of the particular agreement, having regard to the surrounding circumstances to the extent permissible under the ordinary rules of construction.[38]  Thus in Western Australia v Brown (“WA v Brown”) the High Court made clear that the label employed by the parties or the legislature is not determinative:[39]

[L]ike any mineral lease granted under the Mining Act 1904, ML 235 was described as a kind of lease: a “mineral lease”. The instrument used the term “demise”. It granted and demised identified land as well as mines, veins, seams, lodes and deposits of a mineral in, on or under that land. As with the mining leases considered in Ward, the rights and obligations of the joint venturers are not to be determined by fastening upon the use of the words “lease” or “demise”, or by noticing that there was a demise of land as well as mines.[40] As Toohey J said[41] in Wik Peoples v Queensland, “[a] closer examination is required”. It is necessary to identify the rights which are actually conferred upon the joint venturers.

[36]Respondent’s Written Submissions (13 October 2017), [4(c)], [69].

[37]Appellant’s Outline of Submissions (22 September 2017), [8], citing Uren v Commonwealth of Australia(No 2) [2017] FCA 759, [35]; Street v Mountford [1985] AC 809, 819; KJRR Pty Ltd v Commissioner of State Revenue [1999] 2 VR 174, [4]; Western Australia v Brown (2014) 253 CLR 507 at 524 [43]; Janusauskas v Director of Housing [2014] VSC 650, [50]; Swan v Uecker (2016) 50 VR 74 at 91 [40]; see also Wik Peoples v Queensland (1996) 187 CLR 1 at 75, 117, 152, 195.

[38]Ray Mullins and Sons Pty Ltd v Skycorp Investments Pty Ltd [2011] WASCA 49, [67]; KJRR Pty Ltd v Commissioner of State Revenue [1999] 2 VR 174, [5]; Swan v Uecker (2016) 50 VR 74 at 85–6 [31].

[39]Western Australia v Brown (2014) 253 CLR 507 at 524 [43].

[40]Ward (2002) 213 CLR 1 at 158 [284]–[287]; Wik Peoples v Queensland (1996) 187 CLR 1 at 117 per Toohey J. See also Wade v NSW Rutile Mining Co Pty Ltd (1969) 121 CLR 177 at 192–193 per Windeyer J; Goldsworthy Mining Ltd v Federal Commissioner of Taxation (1973) 128 CLR 199 at 212–219; O’Keefe v Malone [1903] AC 365 at 377.

[41](1996) 187 CLR 1 at 117.

1. While it is indisputable that nomenclature will not of itself be determinative, this does not resolve whether it will have any relevance at all in the process of objective consideration of the particular agreement.  It may be that the significance of a label will be different in a private agreement as opposed to the position in legislation.  However, even if that were the case, the conclusion reached in the passage of Lewis v Bell on which the Commissioner relies seems to be to similar effect:[42]

First, if the right to exclusive possession is the test, then, in determining whether the grantee has been given the right of exclusive possession, the court must go initially to the terms of the grant: see Radaich v Smith (at 223) per Windeyer J. The grant of a right to exclusive possession, in terms, is of course prima facie sufficient. But the use, in the operative part of the document, of words such as “lease” or “devise” will ordinarily be understood to involve the grant of such a right. Conversely, if what is granted is not in terms exclusive possession or if the words used in the grant are not words understood to convey the right of exclusive possession, then (subject to what I shall say) the transaction is prima facie not one of lease. Thus, if that which is granted is not of its nature the right to possession or exclusive possession but, eg, the right to use the premises only for a defined and particular purpose, there will prima facie be no lease.

[emphasis added]

As extensive discussion is often conducted as to whether an agreement expressly provides for a right of exclusive possession,[43] it might be thought that the use of the term “lease”—which is well understood by lawyers to entail the existence of a right of exclusive possession—would be given some weight.

[42]See Lewis v Bell (1985) 1 NSWLR 731 at 735; see Transcript (24 October 2017), 77–8.

[43]See e.g. Western Australia v Brown (2014) 253 CLR 507 at 524–5 [45].

1. I accept, that technical language, while far from determinative, may be a relevant consideration, especially where the circumstances of the creation of the lease reveal that the parties are sophisticated.  However, the significance of the use of terms such as “lease” must be limited to the extent to which they operate to confer what they purport to confer.  Put another way, it is only where the use of “lease” rather than a generic or contradictory label—such as “contract” and “licence” respectively—for the relevant agreement would lead to a different construction of the relevant agreement, that the particular expressions employed may be determinative.  Inevitably, the process of construction is one of substance which requires a consideration of the nature and extent of the rights that were intended to be conferred on the parties.[44]

   [44]See Wilson v Anderson (2002) 213 CLR 401 at 435 [61]; Western Australia v Ward (2002) 213 CLR 1 at 128 [186].

1. It is also important to note that the absence of any express provision in the Agreements or in the 1983 Act conferring exclusive possession, or expressly providing for a holder of a lease to bring an action for removal of persons in unlawful occupation of some part of the land, does not determine the character of the Agreements.[45]  The contrary position would, as I said in Swan v Uecker, “put the cart before the horse in that the first task is the proper characterisation of a particular legal relationship as a lease or a licence and issues with respect to the nature of available remedies naturally follow from that characterisation”.[46]  As Young J stated in National Outdoor Advertising Pty Ltd v Wavon Pty Ltd,[47] “one does not merely look to see whether the magic words ‘exclusive possession’ have been used in the document”—rather, one looks at the whole of the document and, in cases of ambiguity, at the surrounding circumstances.

   [45]Cf Appellant’s Outline of Submissions (22 September 2017), [14]–[15], [26].

   [46]Swan v Uecker (2016) 50 VR 74 at 86–7 [32], extracted above, [10].

   [47](1988) 4 BPR 97322 at 9733, cited in Swan v Uecker (2016) 50 VR 74.

Relevance of surrounding circumstances

1. The Taxpayer sought to rely on four circumstances surrounding the conclusion of the Agreements to support construing the Agreements as licences as opposed to leases.  The requisite ambiguity for such a course to be pursued is said to arise out of the juxtaposition of the words “lease” and “demise” in the Agreements with the reservations and control by the ARC.  The four circumstances are the state and nature of the land as an alpine resort, which permitted the free coming and going of members of the public; the regulatory regime; the ability to use the instruments as a means to preclude competition;[48] and, in the case of the Falls Creek Lease but not the Mount Hotham Lease, the desire that FC Lifts be able to undertake summer slope grooming to its satisfaction.[49]  Even putting aside the issue of ambiguity, it is clear that regard may be had to these matters as they are “events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating”.[50]

   [48]See Affidavit of David Bruce Osborn (10 August 2017), [21]; Affidavit of John Leslie Butchart (13 October 2017), [10].

   [49]See Affidavit of David Bruce Osborn (10 August 2017), [11]–[13].

   [50]Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at 117 [50]; see also Transcript (24 October 2017), 91–2.

Covenant for quiet enjoyment

1. The Taxpayer emphasised that neither of the Agreements contain a covenant for quiet enjoyment and that this should militate in favour of a finding that the Agreements give rise to licences only.[51]  Reference was made to cl 5.25 of the Falls Creek Agreement, which is extracted below,[52] which it is said may operate to prevent the implication of such a covenant in that agreement.  By contrast, cl 4(e) of the Mount Hotham Agreement seems to imply a covenant for quiet enjoyment, providing that the Lessee will permit the Lessor to enter upon the demised land but the Lessee shall be entitled to compensation in respect of such entry “if and so long as the use and enjoyment of the remainder of the demised land is thereby materially interfered with…”.

   [51]Transcript (24 October 2017), 7.

   [52]See below, [36].

1. While the absence of a covenant for quiet enjoyment does tend to support a construction as a licence, it cannot be given determinative weight.  As the Commissioner contended, relying on the dissenting judgment of McHugh J in Western Australia v Ward,[53] the covenant for quiet enjoyment could be thought to be indispensable to a lease qua lease and therefore unaffected by cl 5.25 of the Falls Creek Agreement.  Such a view may well explain why the covenant was present in some of the instruments which the Agreements replaced.  In the circumstances, I do not think it is necessary to express a view on this issue.  The approach to construction, which is substantially agreed between the parties, is to focus on the substance of the agreement as manifested in the Agreements.  Just as the terms of “lease” and “demise” cannot be determinative, neither can the absence or presence of a particular covenant.

   [53]Western Australia v Ward (2002) 213 CLR 1 at 221 [499], 226–7 [512]–[513].

Reservations

1. It is well established that a right of exclusive possession is one which affords to its holder a general right to exclude others, including the grantor, from the subject property, subject to such specific provisions for entry as may be provided in the lease.[54]  In respect of the significance of reservations, the Taxpayer placed reliance on the following statement of the High Court in WA v Brown:[55]

   [54]Lewis v Bell (1985) 1 NSWLR 731 at 734, extracted above, [10].

   [55]Western Australia v Brown (2014) 253 CLR 507 at 522 [36], citing Fejo v Northern Territory (1998) 195 CLR 96 at 128 [47].

… [A] right of exclusive possession affords the holder the right to ‘use the land as he or she sees fit and [to] exclude any and everyone from access to the land (emphasis added)’. The grant of a right to exclude any and everyone from access to the land for any reason or no reason… .

This position was reiterated in Queensland v Congoo where French CJ and Keane J said:[56]

A “right of exclusive possession”[57] in relation to fee simple grants and leases, as discussed by this Court in Fejo v Northern Territory[58]  and Western Australia v Brown,[59] involves the right to exclude anyone and everyone from the land for any reason or no reason at all. However, as appears below, the statutory powers conferred upon the Commonwealth as an incident of the grant of “possession” under the military orders were not unqualified merely because that word was used. Broad as they were, they were to be exercised in accordance with the scope, subject matter and purpose of the NSA and the regulations made under it.

[56](2015) 256 CLR 239 at 254 [8]; see also at 282 [91], 296 [144].

[57]See generally Hill, “The Proprietary Character of Possession”, in Cooke (ed), Modern Studies in Property Law, Volume 1: Property 2000 (2001) 21, at pp 26-30.

[58](1998) 195 CLR 96 at 128 [47].

[59](2014) 253 CLR 507 at 522 [36].

1. While these cases set out the content of the unfettered grant of exclusive possession, their Honours clearly did not intend to say that a grant of exclusive possession which was subject to any reservation at all would necessarily fail.  As the Commissioner submits “something less than a right to exclude any and everyone from land for any reason or no reason may constitute a right of exclusive possession”.[60]  This much is obvious, both from the validity of reservations and the various legislative limits on the reasons for which a person may be excluded from land.  Just as a leasehold may be encumbered by reservations, a freehold may be encumbered by servitudes, though of course the permissible extent of such encumbrances may be different.

   [60]Appellant’s Reply Submissions (18 October 2017), [2]–[3]; see also Respondent’s Written Submissions (13 October 2017), [4(a)], [64]; Transcript (24 October 2017), 41.

1. It was put by the Taxpayer that “if an instrument contains a reservation which denies or precludes a grant of exclusive possession it is not a lease; it is a licence”.[61]  By contrast, the Commissioner notes that “[f]ar from detracting from the legal right of exclusive possession, such reservations or exceptions can often be taken as implicit confirmation of the conferral of such a right”.[62]  In this respect, the parties’ submissions are consistent, at least in general terms.  The Commissioner’s position is illustrated by the following passage from the dissent of McHugh J in Western Australia v Ward (“WA v Ward”):[63]

No doubt then, and certainly now, few leases drawn by conveyancers did not contain one or more reservations and exceptions.  But as Glenwood Lumber Co v Phillips,[64] Dalton v Eaton,[65] Whangarei Harbour Board v Nelson,[66] Goldsworthy Mining Ltd v Federal Commissioner of Taxation[67] and numerous other cases show, the reservation of a right of entry to the grantor or others is not only consistent with, but indicative of, the grantee having the legal right to exclusive possession.  To reject that proposition would be to deny the efficacy of the work of generations of conveyancers who have never doubted that they were creating leases although the instrument of grant contained extensive reservations and exceptions in favour of others.  Exceptions and reservations are not inconsistent with the right of the grantee to exclude any person who does not come within an exception or reservation.  They are not inconsistent with the right of the grantee to bring ejectment or sue for damages for trespass to land.  Exceptions and reservations do not put the grantee in the position of a licensee who, by definition, cannot bring an action for ejectment or trespass to land but must depend on his or her contractual rights.

In this way a reservation can be seen as the manifestation of an intention that but for the reservation, the grantor would not have the rights which are conferred by the reservation, which may well, depending on the terms of the reservation, be indicative of a lease.

[61]Transcript (24 October 2017), 30; see also Appellant’s Outline of Submissions (22 September 2017), [7(a)], citing Goldsworthy Mining Ltd v Commissioner of Taxation (Cth) (1973) 128 CLR 199.

[62]Respondent’s Written Submissions (13 October 2017), [4(a)]; see also [62]–[64]; Transcript (24 October 2017), 60–1.

[63](2002) 213 CLR 1 at 237–8 [551], see also at 304–8 [704]–[707], 315–6 [733], 322 [757]; Wilson v Anderson (2002) 213 CLR 401 at 480–1 [202]–[203].

[64][1904] AC 405.

[65][1924] 1 DLR 493.

[66][1930] NZLR 554.

[67](1973) 128 CLR 199.

1. On the other hand, it is true that if purported reservations are too extensive, they will be inconsistent with the right of exclusive possession and the attempted grant of a leasehold interest will fail.  It is this to which Windeyer J referred in Radaich v Smith:[68]

A right of exclusive possession is secured by the right of a lessee to maintain ejectment and, after his entry, trespass.  A reservation to the landlord, either by contract or statute, of a limited right of entry, as for example to view or repair, is, of course, not inconsistent with a grant of exclusive possession.  Subject to such reservations, a tenant for a term or from year to year or for a life or lives can exclude his landlord as well as strangers from the demised premises. All this is long-established law: see Cole on Ejectment (1857) pp. 72, 73, 287, 458.

[emphasis added]

In the present context it is at least unhelpful, if not absurd to think that “limited” could mean “not unlimited”, and the submissions of the Commissioner in this respect must be rejected.[69]  As has already been discussed, exclusive possession is the touchstone of a lease at common law.  If the sole criterion for the validity of a reservation was whether it was not unlimited, a lease could be found even where the right of exclusive possession would be rendered nugatory by the reservation.

[68](1959) 101 CLR 209 at 222.

[69]Cf Transcript (24 October 2017), 66.

1. The Taxpayer says further and more specifically that where reservations enable access by third parties they will preclude the finding of an implied right to exclusive possession even if the access does not cause undue interference with the putative lessor’s use of the land.[70]  In this respect, reference was made to WA v Brown where the High Court said:[71]

   [70]Appellant’s Reply Submission (18 October 2017), [6].

   [71](2014) 253 CLR 507 at 524–5 [45].

… [T]he third point to be made is that neither the instrument itself nor the State Agreement provided expressly that the joint venturers were not only to have possession of the land which was the subject of the mineral lease for the purposes which have been described but also to have the right to exclude any and everyone from that land for any reason or no reason at all. On the contrary, as already noted, the State Agreement provided expressly that the joint venturers must allow not only the State but also third parties to have access over the land the subject of the mineral lease, provided that the access did not “unduly prejudice or interfere with” the joint venturers’ operations. This express provision precludes construing the leases as impliedly providing a right of exclusive possession.

[emphasis added]

This position was reached in respect of a right of access which required the grantee to:[72]

[A]llow the State and third parties to have access (with or without stock vehicles and rolling stock) over the mineral lease (by separate route road or railway) PROVIDED THAT such access over shall not unduly prejudice or interfere with the Joint Venturers’ operations [under the State Agreement].

Thus it is suggested by the Taxpayer that insofar as reservations may be made having a similarly broad effect, they will preclude the grant of exclusive possession.

[72]Western Australia v Brown (2014) 253 CLR 507 at 516 [8].

1. The effect of these principles was said to be illustrated in Hamilton Island Enterprises Ltd v Croycom Pty Ltd,[73] where a grant of a bundle of rights in relation to land was expressed to be a licence, and included the right to conduct a prescribed business on certain premises.  The instrument reserved in favour of the grantor a range of rights, controlling, for example, signage, opening times and what could be sold on the premises.  There was also a broad right of entry for inspection or any other purpose connected with the licence and the instrument contained an acknowledgment by the grantee that it did not have exclusive possession.  Thomas J said of this instrument:[74]

The various provisions in the present document which permit the grantor to retake possession or interfere with that of the concessionaire are considerably more extensive than the reservation of a right of inspection or right to repair. Inter alia they give [the grantor] the right to enter upon the premises to supervise the conduct of [the grantee’s] business, and also confer on [the grantor] what has been described above as a virtually open-ended right to rebuild or alter the premises. The document as a whole seems more consistent with a limited right of user, namely a right of occupation subject to conditions rather than a right of exclusive possession.

…

Concisely stated, [the grantee’s] submissions are that the rights expressly granted to [the grantor] are not sufficient to alter the character of the possession granted to [the grantee] which was intended to run the business of a general store that could not conveniently be conducted in the absence of a right to exclusive possession. However in my view the powers and rights of inclusion and control possessed by [the grantor] contradict that submission. Additionally, the grant is only prima facie with respect to these particular premises. Article 17 entitles [the grantor] to require [the grantee] to relocate during the term of the licence. An ambulatory right of occupation which creates no continuing right to any particular parcel of land can hardly be said to be a demise of a leasehold estate in land.

In the same vein, the Taxpayer says that the extent of reservations in the present case are such as to prevent a finding that exclusive possession was granted.

[73][1998] ANZ ConvR 615.

[74]Hamilton Island Enterprises Ltd v Croycom Pty Ltd [1998] ANZ ConvR 615 at 621–2.

1. Reference was also made by the Taxpayer to the conclusion of a majority of the High Court in WA v Ward that an instrument expressed to be a pastoral lease did not confer a right of exclusive possession given the breadth of the reservation:[75]

On no view did a pastoral lease granted under the provisions examined so far, give the holder a right to exclusive possession of the land. There were extensive reservations permitting entry not only on behalf of the Crown but also by others in many different circumstances and for many different purposes. It is enough to notice the widest of these, reserving a right to any person “to enter, pass over, through, and out of any [unenclosed or enclosed but otherwise unimproved part of the land] while passing from one part of the country to another, with or without horses, stock, teams, or other conveyances, on all necessary occasions”.[76]

[emphasis in original]

[75]Western Australia v Ward (2002) 213 CLR 1 at 126 [178]; see also Wik Peoples v Queensland (1996) 187 CLR 1 at 122.

[76]Land Act 1898, 24th Sched.

1. However, it is important to note that in WA v Ward the High Court reached differing conclusions in relation to the various leases and other interests under consideration.  While the majority concluded that the pastoral leases granted under the Western Australian legislation did not confer a right of exclusive possession,[77] they reached a different conclusion in relation to “special leases” granted under Part 7 of the Land Act 1933 (WA),[78] and regarding leases of reserves granted under s 32 of the Land Act 1933 (WA) the majority said:[79]

   [77](2002) 213 CLR 1 at 124 [171], 126–8 [177]–[184].

   [78](2002) 213 CLR 1 at 178–80 [351]–[357].

   [79](2002) 213 CLR 1 at 181–2 [367]–[369].

367.It is convenient to deal first with the lease of part of Reserves 1061, 1164 and 18810 to Ivanhoe.

368.… The lease provided that the Crown might resume and enter upon possession of part of the lands for various purposes in the nature of public works.  Power was given to the Crown to take timber, quarry, search for minerals and the like. Minerals and petroleum were reserved to the Crown. There was a proviso for re-entry. The lease recorded that it was issued subject to the condition that the public should have “free and uninterrupted use of the roads or tracks” on the land and that the lessee not destroy timber or scrub”.

369.The lease that was granted was not a statutory interest in land.  The features of the interest granted were not prescribed by the Act but were determined by the nature of the agreement reached and the grant made.  The rights thus granted to [the lessee] were, therefore, rights as lessee of the land, as that term is understood in the general law.  [The lessee] was thus granted a right of exclusive possession of the land.

In relation to pastoral leases, it was of central importance that a pastoral lease was “a creature of statute or regulation” and not the common law, and that the relevant legislation provided for several forms of interest in land not all of which found “close analogy with interests that could be created at common law”.[80]

[80](2002) 213 CLR 1 at 127 [180].

1. The significance of the plurality judgment in WA v Ward to the present case is the distinction which emerges between a statutory “lease” which is indistinct from its legislative genesis, and a statutory power to grant a lease which will then be governed by the terms of the agreement and the common law.[81]  This is consistent with the decision in Wik Peoples v Queensland, in which each of the majority judges emphasised that the pastoral tenures considered in that case were “a creature of statute”, that they were “not the creations of the common law” but were “entirely anchored in statute”, that they were “sui generis interests” created under statute, “statutory devices” or a “peculiar statutory interest”.[82]  By contrast, the Agreements are leases either granted or entered into under a statutory power, but otherwise completely governed by their respective terms, rather than by the provisions of the statute.  Of course, the reservations in the present case are more extensive than those dealt with in the extract of WA v Ward just considered, and in this sense it might be thought to be consistent with WA v Ward to find that the reservations in the Agreements are not “limited” within the meaning of the test posited by Windeyer J in Radaich v Smith.[83]  In this way, WA v Ward is a source of relevant principles but, for these reasons, is not of itself determinative.

   [81]See also Wilson v Anderson (2002) 213 CLR 401 at 421–2 [18]–[19].

   [82]Wik Peoples v Queensland (1996) 187 CLR 1 at 115, 149, 152, 176, 246.

   [83](1959) 101 CLR 209 at 222; see above, [23].

1. Another matter which distinguishes the present case from cases such as Wik Peoples v Queensland, WA v Ward and WA v Brown is the relevance of the alleged reservations in favour of third parties to the agreed use of the land.  It is apparent from the statements of the High Court in WA v Brown that the reservations in these cases allowing access to land by third parties were not conducive to the purposes of the respective leases:[84]

In this respect, the mineral leases were no different from the pastoral leases considered in Wik, the mining leases considered in Ward or the Argyle mining lease also considered in Ward. The mineral leases did not give the joint venturers the right to exclude any and everyone from any and all parts of the land for any reason or no reason. The joint venturers were given more limited rights: to carry out mining and associated works anywhere on the land without interference by others. Those more limited rights were not, and are not, inconsistent with the coexistence of the claimed native title rights and interests over the land. … That the rights were not inconsistent can readily be demonstrated by considering the position which would have obtained on the day following the grant of the first of the mineral leases. On that day, the native title holders could have exercised all of the rights that now are claimed anywhere on the land without any breach of any right which had been granted to the joint venturers. That being so, there was not then, and is not now, any inconsistency between the rights granted to the joint venturers and the claimed native title rights and interests.

[84]Western Australia v Brown (2014) 253 CLR 507 at 528–9 [57].

1. By contrast, in the present case, the absence of a general right to exclude the public does not undermine the purpose of either of the purported leases, and indeed, the actual exclusion of the public would be antithetical to this purpose.  The reservations under the Agreements are conducive to the commercial success of the usage of the Lands which is permitted by each of the purported leases; indeed, it was said by Senior Counsel for the Taxpayer that the reservation in favour of the public was “hardly surprising” given the nature and function of an alpine resort.[85]  Importantly, this distinction is not based on confining cases such as Western Australia v Brown to the native title context,[86] which is not possible because the statements in these cases were necessarily made in relation to the distinction between leases and licences generally.  Rather, the focus is on the relationship between the reservations and the purpose of the lease: there is less of a derogation from exclusive possession if the same use would have occurred in the absence of their formal recognition in reservations.  In this sense, the Agreements may be said to be analogous to an individual shop lease in a shopping centre where the lessee is commonly obliged to trade, ensure that the shop is presentable and allow access by the public during certain hours, because rent is partially comprised of a percentage of turnover.  There, as in this case, both parties want to bring the public in to maximise utility; being revenue for the Grantees and public enjoyment for the Crown.  Of course, this distinction does not of itself entail that the Agreements give rise to leases as opposed to licences—it is still prima facie necessary to examine the extent of the purported reservations to determine if they are so broad as to negate an intention to confer exclusive possession.

   [85]Transcript (24 October 2017), 40.

   [86]Cf Respondent’s Outline of Submissions (13 October 2017), [77].

1. It is true that, as Hasluck J found in City of Rockingham v PMR Quarries Pty Ltd,[87] an exclusive right to conduct a certain business may not—and indeed does not in the case of the mining with which that case was concerned—amount to or require exclusive possession.  And it is true that in the present case, a right of exclusive possession is not necessary for the conduct of the Taxpayer’s business, save in respect of buildings and for the advantage such a right brings in terms of security of tenure.  Yet this does not grapple with the present position where the exercise of a right to exclude all others is incompatible with the commercial purpose of either of the purported leases.

   [87](2001) 118 LGERA 93.

1. The nature of possession arises in a variety of contexts.  In the course of a discussion of the nature of possession which would amount to the exercise of acts of ownership of land, Lightwood, in his Treatise on Possession of Land, having considered the position with respect to leases and licences, observes:[88]

   [88]John Mason Lightwood, A Treatise on Possession of Land: with a Chapter on the Real Property Limitation Acts, 1833 and 1874 (1894, Stevens and Sons Limited, 2017 reprint) 20.

(ii.) Exclusion of Others.

…

Exclusion need not always be absolute

But the requirement of absence of interference on the part of strangers is not to be pushed to an unreasonable extent, and in some cases, particularly in those relating to possession of foreshore, it is recognized that really exclusive possession is not in practice attainable.  “In estimating,” said Lord Watson, in Lord Advocate v. Young (1887, 12 App. Cas. 544), “the character and extent of [a riparian proprietor’s] possession, it must always be kept in view that possession of the foreshore, in its natural state, can never be, in the strict sense of the term, exclusive. The proprietor cannot exclude the public from it at any time, and it is practically impossible to prevent occasional encroachments on his right, because the cost of preventive measures would be altogether disproportionate to the value of the right.”

This passage serves to emphasise the position made clear in the authorities to which reference has been made that the question whether or not exclusive possession has been granted in any particular case depends on the nature of the subject matter with respect to which this question is raised.

1. In the present case, significant reservations were made in favour of the Crown as grantor.  It is said by the Taxpayer that these reservations are so broad as to be incompatible with the grant of exclusive possession, and that the Grantees had to “share possession of the land with the public and the Commission”.[89]  Nevertheless, critical, in this regard, is the absence of any positive and superior right vested in the public to access the land.

   [89]Transcript (24 October 2017), 48.

1. This conclusion is entirely compatible with the New Zealand case of Tonks v Mayor of Wellington,[90] where public access was guaranteed by statute.  In this case Cooper J said:[91]

In the present case the appellant was not in exclusive occupation. The instrument, though in terms a lease and containing the usual words of demise, shows clearly that it was not the intention of the parties that exclusive occupation should be given, but that the appellant’s occupation was subject to the superior right of the inhabitants of the City of Wellington to enter at all times during the day and for the purposes of recreation and exercise to walk over any part of the land included in the instrument. Such an instrument containing such a reservation is not a lease: per Williams, J. Solicitor General ex relatione Wilson, ex parte the Mayor of Wellington (21 N.Z.L.R., C.A., 1, p. 7) It is a license to occupy, not exclusively, but subject to the superior right of other people to enter upon the land and use it for certain limited purposes, the land purporting to have been demised.

[90](1908) 10 GLR 579.

[91]Tonks v Mayor of Wellington (1908) 10 GLR 579 at 580.

1. The distinction between Tonks v Mayor of Wellington and the present case may be illustrated by the comments of Ostlee J in Whangeri Harbour Board v Nelson:[92]

There is a clear distinction between this case and such cases as Mayor of Christchurch v. Pyne, Gould, Guinness, Ltd., Tonks v. Mayor of Wellington, and Solicitor-General v. Mayor of Wellington. In these cases the grant was made subject to a superior and pre-existing statutory or other right in the public. That is not the case here. In this case the public have no specific rights over the property apart from the document itself. The document itself confers upon the public no rights which any member thereof could enforce.

[citations omitted]

Consequently, the lessee in Tonks v Mayor of Wellington was unable to enjoy a right of exclusive possession because there was a superior right in the public to use the land.

[92][1930] NZLR 554 at 560.

Extent of reservations

1. The Taxpayer says that the terms of both the Falls Creek Agreement and the Mount Hotham Agreement show that the parties did not intend that either of the Grantees would have a right of exclusive possession, and that implying such a right would be inconsistent with the terms of the Agreements.[93]  Specifically, and conceding that some other reservations within the Falls Creek Agreement are compatible with a grant of exclusive possession,[94] the Taxpayer relies upon the following terms of the Falls Creek Agreement:[95]

   [93]Appellant’s Outline of Submissions (22 September 2017), [11], [15]–[16].

   [94]Specifically, cll 2.1 (a)–(i) of the Falls Creek Agreement, see Transcript (24 October 2017), 38.

   [95]Falls Creek Agreement cll 2.1 (j)–(k), 5.24.

EXCEPTIONS/RESERVATIONS

2.1The following shall be excepted and reserved unto the Lessor out of the demised land:

…

(j)right and authority for the Lessor, its servants, agents, contractors, licensees or grantees of authorities under the Act to enter and remain upon the demised land for so long as is necessary or desirable for the purpose of exercising or enjoying any right, entitlement, interest or legitimate expectation bestowed given or granted to such person by the Lessor (or for the purpose of undertaking any duty or obligation) whether of a contractual or statutory nature on the demised land;

(k) free liberty and authority for all members of the public, including visitors and skiers to enter upon use and enjoy the demised land including rights of access for the public to any community facility whether located within the demised land or not provided that such access shall not unreasonably obstruct or interfere with the permitted uses of the demised land pursuant to the provisions of this Lease.

…

Access for Public:

5.24The Lessee shall allow the public (save for persons seeking to use the demised land for commercial gain) to have access to all parts of the demised land (excluding buildings and improvements) which are used and enjoyed by the public except insofar as such access might prevent the Lessee from providing reasonable protection to buildings equipment services and facilities for the time being on the demised land or which might prevent the Lessee from ensuring the safety and good behaviour of persons using such buildings, equipment, services and facilities on the demised land generally.

Importantly, the duties and obligations referred to in cl 2.1(j) include those set out in s 8 of the 1983 Act which are extensive.[96]  The above terms of the Falls Creek Agreement are substantially reproduced in cll (1)(j)–(k) and 5(e) of the Mount Hotham Agreement and no distinction is sought to be made between the two Agreements in this respect.  Indeed, it is agreed between the parties that the Agreements have very similar clauses throughout.[97]  As such, it is sufficient to consider them together, subject to specific differences to which reference was made.  A significant distinction is that the following term appears only in the Falls Creek Agreement:[98]

Sole Repository, Rights, Easements, Etc:

5.25 The only rights granted to the Lessee are those expressly set out in this Lease and the Lessee acknowledges and agrees that this Lease is the sole repository of the rights of the Lessee against the Lessor (save and except for any “side letter” marked as “side letter” to this Lease) and that any right interest or legitimate expectation of the Lessee not contained in this Lease (or “side letter”) is hereby deemed to be merged, abandoned or surrendered and, without limitation, the Lessee shall not by virtue of this Lease be deemed to have acquired, or be entitled by any means whatsoever to any easement, right of access from, over or affecting any other land now or at any time hereafter belonging to the Lessor and not comprised in this Lease.

[96]See below, [47].

[97]Transcript (24 October 2017), 50, 123.

[98]Transcript (24 October 2017), 49.

1. The conclusion for which the Taxpayer contends, that there was an intention that FC Lifts have no capacity to exclude people from or otherwise control access to the relevant land, is said to be reinforced by the provisions of the Falls Creek Agreement that variously limit the use by FC Lifts of the land, impose obligations upon FC Lifts to do certain things and entitle the State to do certain things upon the land.  In this respect it is convenient to summarise a number of provisions of the Falls Creek Agreement, omitting those which are immaterial because they are not supportive of either construction.  Briefly, the enjoyment by FC Lifts of the land is limited in that it is prevented from:

(a)   permitting conduct or business on the land which amounts to a nuisance;[99]

[99]Falls Creek Agreement, cl 5.5.

(b)  permitting improper or unlawful conduct on the land;[100]

[100]Falls Creek Agreement, cll 5.6–7.

(c)   allowing the land to be polluted;[101]

[101]Falls Creek Agreement, cl 5.9.

(d)  advertising on the land or displaying signs other than for directions and the promotion of safe use of the land;[102]

[102]Falls Creek Agreement, cll 5.10, 5.16.

(e)   allowing domestic animals or non-indigenous plants on the land without written consent;[103]

[103]Falls Creek Agreement, cll 5.12–3.

(f)    interfering with living trees, plants or vegetation on the lands without written consent;[104]

[104]Falls Creek Agreement, cl 5.14.

(g)  fencing the lands without authorisation;[105]

[105]Falls Creek Agreement, cl 5.15.

(h)  providing accommodation otherwise than as permitted under the lease;[106]

[106]Falls Creek Agreement, cl 5.20.

(i)     allowing the excessive amplification of sound;[107]

[107]Falls Creek Agreement, cl 5.21.

(j)     if so directed by the ARC, displaying any lighting which can be seen from outside the land;[108]

[108]Falls Creek Agreement, cl 13.3.

(k)  denying temporary shelter to the public in emergency circumstances;[109]

[109]Falls Creek Agreement, cl 5.22; see also cl 12.6.

(l)     using oversnow vehicles other than on the authorised areas;[110]

(m)             servicing ski lifts and snow making facilities otherwise than via approved access routes;[111] and

(n)  selling or hiring goods from its ski shop other than those specified.[112]

[110]Falls Creek Agreement, cl 5.23.

[111]Falls Creek Agreement, cl 12.3.

[112]Falls Creek Agreement, cl 14.2.

1. A number of positive obligations are also imposed by the terms of the Fall Creek Agreement.  Particularly, FC Lifts must:

(a)   keep the land clean, tidy and in good repair, both generally and in particular respects as required;[113]

[113]Falls Creek Agreement, cll 6.1–2, 17.2.

(b)  provide a forward development plan and revisions thereto outlining planned works on the land;[114]

[114]Falls Creek Agreement, cl 16.

(c)   carry out at its own cost summer slope development in accordance with the reasonable requirements of the Minister;[115]

[115]Falls Creek Agreement, cl 17.1.

(d)  comply with reasonable directions regarding the movement of vehicles in out and around the lands;[116]

[116]Falls Creek Agreement, cl 5.19.

(e)   comply with reasonable directions in respect of the use of ski lifts, including as to queuing;[117]

[117]Falls Creek Agreement, cl 12.1

(f)    operate ski lifts as well as the nearby public toilets and restaurant at the assigned times;[118]

[118]Falls Creek Agreement, cll 12.4, 13.6.

(g)  operate the ski shop and ensure it is attractively dressed as suitable to a high class ski shop;[119]

[119]Falls Creek Agreement, cl 14.

(h)  operate a ski school, with specific provision that:[120]

[120]Falls Creek Agreement, cl 15.

(i)     instruction be of the highest standard;

(ii)  extra assistance be provided to disabled ski students without additional charge;

(iii)             timetables be structured to minimise congestion on the ski lifts;

(iv)             approval be sought before creating any training or race course;

(i)     have regard to the representations of the State in relation to the treatment of tickets;[121] and

(j)     meet the reasonable requirements of the skiing public with respect to the supply of lifts and suitable alpine skiing terrain on the land, provided that to do so would not be uneconomic.[122]

[121]Falls Creek Agreement, cl 12.11.

[122]Falls Creek Agreement, cl 12.13.

1. Further, the State maintains a measure of control through its entitlement to:

(a)   construct and maintain necessary public or community services on the land;[123]

(b)  install and maintain inter alia walking trails and roads on the relevant land, with the State thereafter owning such trails and roads;[124] and

(c)   unless otherwise agreed, carry out ski patrol on the land as part of its administration control and management of the alpine resort, for which FC Lifts is required to pay a substantial separate sum.[125]

[123]Falls Creek Agreement, cl 2.1(h).

[124]Falls Creek Agreement, cl 2.1(i).

[125]Falls Creek Agreement, cl 18.

1. In support of the same conclusion with respect to the Mount Hotham Lands, particular emphasis is placed upon certain provisions of the Mount Hotham Agreement which are conveniently summarised in the following terms:[126]

a.Clauses 1.1(h) and 3(f) which, in general terms, entitle the State to construct and maintain necessary public or community services on the relevant land.

b.Clause 1.1(i) which entitles the State to install and maintain walking trails and roads on the relevant land, with the State thereafter owning such trails and roads.

c.Clause 5(b) which leaves to the State sole responsibility for the use of the ski slopes within the Mt Hotham Land to ensure public safety, including the opening and closure of ski slopes.

d.Clause 4(c) which prohibits MH Skiing from erecting any fencing on the relevant land without consent.

[126]Appellant’s Outline of Submissions (22 September 2017), [17].

1. One matter which supports construing the Agreements as leases is their commercial purposes, specifically the prevention of competition in the provision of ski lifts.  While the terms of the Agreements would prevent competition from all third parties if it is construed as a licence, it is only if the Agreements are construed as leases that the Grantees would be able to prevent the government or the ARC from building a competing ski lift.

1. Also of moment is the substance of several obligations on the Grantees, referred to in paragraphs 37–38 (similar obligations also appear in the Mount Hotham Agreement),[127] by which the Grantees are obliged to allow or not to permit certain behaviour.  Such provisions entail that the Grantees are empowered to prevent the behaviour in question, which is practically impossible in the absence of a leasehold interest.  If the Agreements give rise to mere licences, the Grantees and members of the public are on similar footing and this would frustrate those provisions of the Agreements.  It is no answer to this problem to say that the public may be controlled by the terms and conditions of tickets for use of the ski lifts: the Grantees would need a broader power, to exclude, for example, members of the public who had deliberately caused safety issues in the past and who sought to use the Lands without contracting with the Grantees.  On this basis, and having regard to the legislative environment which is discussed below,[128] I think it clear that the parties manifested an intention to demise a leasehold interest to each of the Grantees.  However, it does not necessarily follow that this intention was consummated as ultimately documented.

   [127]See e.g. Mount Hotham Agreement, cll 4(i), 5(e).

   [128]See below, [45] et seq.

1. The power of cancellation which the Agreements grant to the State is said by the Taxpayer to render the tenure precarious and thereby indicate an absence of an intention to confer a right of exclusive possession. It was, however, accepted by Senior Counsel for the Taxpayer that such powers of cancellation are common in Crown leases,[129] and they are of less significance when, as in this case, they are combined with a right in the grantee to compensation.[130]

   [129]Transcript (24 October 2017), 23.

   [130]See Falls Creek Agreement, cl 10.5; Mount Hotham Agreement, cl 3(d); Alpine Resorts Act 1983 ss 28(4), 29(2).

1. Importantly, while the public access facilitated by the reservations is not unlimited, it is extensive.  In the case of the Falls Creek Lands it must not unreasonably obstruct or interfere with the permitted uses;[131] and in the case of the Mount Hotham Lands it must not prevent the reasonable protection of buildings, equipment, services and facilities or the maintenance of safety and good behaviour of persons using the same.[132]  The reservations set out in cll 2(i), (j) and 5.24 of the Falls Creek Agreement, which are mirrored in the Mount Hotham Agreement, effectively allow the State to enter to do anything which it is proper for the State to do.  However, having regard to the nature of the purported demise, in the manner indicated in the authorities to which reference has been made, I am of the view that the reservations must be regarded as “limited” in the sense employed by Windeyer J in Radaich and, as such, compatible with the grant of exclusive possession to the Grantees.

   [131]Falls Creek Agreement, cl 5.24.

   [132]Mount Hotham Agreement, cl 5(e).

Legislative environment

1. In construing a contract, it is permissible to have regard to any statutory provision to which reference is made in the text of that contract.  As a majority of the High Court found in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd:[133]

The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.

[citations omitted]

[133](2015) 256 CLR 104 at 116 [46].

1. The Agreements both made reference to s 28 of the 1983 Act, which relevantly provides:

Leases etc. of land in alpine resorts

(1)Crown lands within alpine resorts shall not be leased or otherwise dealt with except as provided in this Act.

(2)The Governor in Council or… the Commission, may grant or renew leases of land in alpine resorts…

…

(4)A lease under this section shall be subject to such terms and conditions as are prescribed and to such other covenants, exceptions, reservations and conditions as the Commission thinks fit and may be subject to a condition that the lease may be cancelled if the land the subject of the lease is reasonably required by the Commission for the improvement of the alpine resort.

(5)A lessee of land within an alpine resort shall not transfer, assign or mortgage his interest in the land or any part of his interest in the land without the written consent of the Commission.

The 1983 Act was replaced by the Alpine Resorts (Management) Act 1997, but the former Act remains relevant for the present exercise of ascertaining the intention of the counterparties to the Agreements—the relevance of legislation to the process of construction is, in this context, limited to assisting in the determination of the intention of the parties as manifested.

1. Sections 8 and 9 of the 1983 Act, which are made relevant to the construction of the Agreements by s 28(1) of that Act,[134] permit the grant of licences:[135]

   [134]See also, Falls Creek Agreement, cl 10.1; Mount Hotham Agreement, cl 3(a).

   [135]Alpine Resorts Act 1983 ss 8(1), 9(b), (f).

8.        Objects of Commission

(1)Subject to the direction and control of the Minister the objects of the Commission shall be—

(a) to plan the proper establishment, development, promotion and use of alpine resorts having regard to environmental ecological and safety considerations and so as to encourage their use in all seasons of the year;

(b)to undertake the orderly establishment, continuation and development of—

(i)        alpine resorts;

(ii)a range of tourist accommodation and other facilities and services for tourists which will encourage all persons irrespective of their income to use and enjoy alpine resorts; and

(iii)facilities and services for persons who live or work in alpine resorts; and

(c)       to control and mange alpine resorts and their use; and

…

…

9.        Powers of Commission for certain purposes

The Commission shall have power to do all things necessary or convenient to be done for or in connexion with carrying out its objects under this Act and in particular, without in any way limiting or derogating from the generality of the foregoing provisions of this section may—

…

(b)control by the issue of leases and permits the nature and extent of development in alpine resorts and the conduct of business undertakings therein;

…

(f)provide information and assistance to the public regarding the proper safe and beneficial use of alpine resorts…

…

1. The Taxpayer suggests that the true source of the power to enter into the Agreements was sub-s 9(b) of the 1983 Act.[136] This is somewhat problematic, given that the Agreements were entered into by the Governor in Council and s 9(b) only empowers the ARC, unlike s 28 which does empower the Governor in Council. Further, it does not seem that sub-s 28(2) is mere machinery: sub-s 28(3) states that “a lease shall not be granted under subsection (2)”. Yet it is not the actual source of the power to contract which is relevant, but the section on which the counterparties to the Agreements relied, namely s 28. As s 28 expressly empowers the Governor in Council to grant leases, and only impliedly permits the grant of licences through the phrase “as otherwise provided by this Act” in sub-s 28(1), this supports the finding of an objective intention to create a lease rather than a licence. However, this is of little moment, given that it is obvious from the terms of the Agreements that the parties intended to create a “lease” and the present enquiry is directed to whether the Agreements as made did in fact grant a right of exclusive possession. It is salient to note that the Agreements, whether giving rise to leases or licences, were authorised by ss 8, 9 and 28 of the 1983 Act, and therefore the Crown Land (Reserves) Act would not prevent them from having effect for want of statutory authority.[137]

   [136]Transcript (24 October 2017), 15–6.

   [137]See Transcript (24 October 2017), 19–20; Eastern Health Pty Ltd v MIA Victoria Pty Ltd (2009) 22 VR 502 at 518–9 [81]–[82].

1. The Taxpayer says that in the context of ss 8 and 9 of the Alpine Resorts Act 1983, s 28 of that Act confers a power to grant “leases” where to do so is consistent with the objects, powers and responsibilities of the ARC. In this vein, it is said that while it would not be inconsistent with the Act to grant a right of exclusive possession in relation to a lodging, in the case of a ski field the grant of exclusive possession over such a large area to a third party would be inconsistent with the Act. In the submission of the Taxpayer, this is supported by s 28(4) of the Act, which is set out above.[138]  Yet this is simply not borne out by the facts: there is no reason why the grant of a leasehold interest, heavily encumbered by significant reservations to which reference has been made,[139] is any less consistent with the legislative foundation for the ARC than a licence given on similar terms.  In my view, the critical question remains whether the extent of the reservations is compatible with the grant of exclusive possession.

   [138]See above, [46].

   [139]See above, [36]–[39].

1. In the absence of any indication to the contrary, it might be thought that the term “leases of land” in s 28(2) of the 1983 Act was intended to refer to common law leases, that is, a lease conferring on the tenant a right of exclusive possession and an interest in the land.[140]  However, as the Taxpayer submits,[141] the authorities make clear that the use of the term “lease” in s 28(2) of the Act is not conclusive.[142]

   [140]American Dairy Queen (Qld) Pty Ltd v Blue Rio Pty Ltd (1981) 147 CLR 677 at 682–3, 686; Wik Peoples v Queensland (1996) 187 CLR 1 at 76–7, 118, 151, 203, 245.

   [141]Appellant’s Outline of Submissions (22 September 2017), [20].

   [142]See e.g. TEC Desert Pty Ltd v Commissioner of State Revenue (WA) (2010) 241 CLR 576 at 583 [14], addressing the question whether mining leases amounted to a demise of land; Western Australia v Ward (2002) 213 CLR 1 at 127 [180]; see also Wilson v Anderson (2002) 213 CLR 401 at 419 [12], 422 [21], 434 [59], 462–3 [155], 477–8 [194]; Wik Peoples v State of Queensland (1996) 187 CLR 1.

1. The Taxpayer further submits that the extent of the power conferred upon the ARC by sub-s 28(4) to grant a very limited right with respect to land practically confers upon the ARC the power to grant a licence at will.[143] Such a construction does violence to the distinction between leases and licences: a licence is not a lease subject to significant reservations. Where reservations are so broad as to undermine the grant of exclusive possession, the lease and the corresponding reservations fail. Though the terms of the resulting licence will be informed by the terms of the attempted reservation, the power to grant a lease subject to reservations is entirely distinct from a power to grant a licence, and the latter does not arise from s 28(2) of the 1983 Act.

   [143]Transcript (24 October 2017), 23–4.

1. Further, the 1983 Act contains provisions which provide contextual support for a construction of “leases of land” in s 28(2) as referring to a lease as that term is understood at common law. In particular, s 28(5) of the 1983 Act prevents a lessee of land from transferring, assigning or mortgaging his “interest in land” without the written consent of the Commission. Several provisions of the 1983 Act also suggest that Parliament was conscious of the distinction between a “lease” on the one hand, and a “licence”, “permit” or “authority” on the other hand,[144] and provisions of the 1983 Act dealt specifically with the removal of lessee’s improvements at the expiry of a lease of land in an alpine resort.[145] And most critically, while s 28(1) refers to “leased or otherwise dealt with”, s 28(2), which gives authority to grant a lease, does not include an equivalent phrase to “otherwise dealt with”. Consequently, it is inescapable that “leases of land” in s 28(2) of the 1983 Act does refer to common law leases of land, though this is only tangentially relevant to determining the intention of the parties as manifested.

   [144]See e.g. Alpine Resorts Act 1983 ss 24(11), 24(12), 33(2)(d), 39(2)(c), 39(3)(d), 39(5), 42(1)(l).

   [145]Alpine Resorts Act 1983 s 29.

Compatibility of legislative environment with grant of exclusive possession

1. The fact that the ARC, through its officers, was able to require people to leave the Lands is of no moment, and neither is a number of other regulatory powers to which the interests of the Grantees under the Agreements were subject:[146]

a.The Commission’s authority was required before any person could establish a business in an alpine resort.

b.The Commission’s concurrence was, as a general rule, required before services could be supplied or works undertaken in an alpine resort by anyone otherwise having authority to do so.

c.Officers appointed by the Commission could require skiers to leave ski areas and direct drivers on roads or tracks as to speed and movement.[147]

d.People could reside overnight in an alpine area only in camping zones designated by the Commission or in buildings erected for that purpose.[148]

e.Land in an alpine resort could not be accessed by a vehicle unless the Commission had been paid a fee or granted a permit.[149]

[146]Appellant’s Outline of Submissions (22 September 2017), [28]; see also Transcript (24 October 2017), 19–20.

[147]Alpine Resorts (General) Regulations 1985 regs 18, 22.

[148]Alpine Resorts (General) Regulations 1985 reg 9.

[149]Alpine Resorts (Entry) Regulations 1985 reg 4.

1. There are a number of other regulations empowered by s 42 of the 1983 Act which provides for the making of regulations for the “establishment, development, protection, improvement, management and control of alpine resorts”.  The Taxpayer makes extensive reference to these regulations to highlight the extent of the “interference” by the State with the enjoyment by the Grantees and indeed the public of the Lands.[150]  Indeed, and perhaps unfortunately, the regulations seem to go so far as banning the conduct of snowball fights, a much enjoyed feature of many a family snow trip:[151]

   [150]Transcript (24 October 2017), 25 et seq.

   [151]Alpine Resorts (General) Regulations 1985 reg 4.

4.        A person shall not in an alpine resort—

…

(c)       roll or throw a stone or other substance or missile;

…

Penalty: 5 Penalty Units

1. Yet on the basis of the authorities to which reference has been made, and the emphasis provided by the passage of Lightwood’s Treatise on Possession of Land,[152] the significant powers of management and control retained by the Crown as grantor are inconsequential for present purposes.  The right of exclusive possession is conferred by the Agreements, and, as can be seen from their terms and the legislation, the public enjoy, though have no positive and superior right to, access and then only through the State; and as such may be excluded.  The regulatory provisions would not prevent the exercise by the Grantees of their rights as lessees against third parties.  Were the Grantees conferred with a licence, they would have no direct means of regulating the conduct of the public on the Lands, which would be antithetical to the arrangement by which significant responsibility for the Lands was sought to be devolved to the Grantees, albeit with the ARC’s substantial involvement continuing.

   [152]See above, [32].

1. Further, it bears recalling that the Parliament of Victoria has plenary legislative power and this power may be exercised to significantly impede the enjoyment of an interest in land without negating or affecting the nature of the interest in question.  Indeed, this is implicit in the continuing position that all land is—in a sense—ultimately vested in the Crown.  In this respect, the fact that the grantor who maintains the supervision, management and control over the Lands is the State rather than a citizen or a corporate citizen, and specifically that the State does so by means of legislation, is a critical distinction from cases such as Hamilton Island Enterprises Ltd v Croycom Pty Ltd,[153] where the extent of control by the grantor was found to be incompatible with a demise.  Thus, the derogation through legislation by the State from the grant of a lease will not be relevant for the purpose of construing a grant as a lease or a licence, so long as it is in fact a lease which is granted.  Of course, a distinction must be drawn between reservations in the contract and legislative intervention: it is only the latter which may perhaps not affect the construction.  It is helpful to recall the limited nature of property rights enjoyed by citizens and corporate citizens—as Megarry and Wade state in relation to fee simple estates:[154]

The largest estate in land, the fee simple, has come more and more to resemble absolute ownership, and its proprietor is commonly called the owner of the land.  This is because the tenurial relationship is now so slender that it can be ignored for practical purposes.  However, even today, it is in one sense true to say that all land in England is vested in the Crown.

Crucially, the legislation enabling control by the ARC derogates from the enjoyment by the Grantees’ of their respective leases rather than affecting the Grantees’ interest to such an extent that it would follow that no lease is granted.[155]

[153][1998] ANZ ConvR 615.

[154]Charles Harpum, Stuart Bridge and Martin Dixon, Megarry and Wade’s The Law of Real Property (Sweet & Maxwell, 2012, 8th ed) 24 [2-005].  But the doctrine of tenure was not universally applied in England from the time of the Conquest in 1066, as allodial landholding (landholding in which the land was held of no superior lord) continued in various parts of the kingdom: see Ulla Secher, Aboriginal Customary Law: A Source of Common Law Title To Land (Hart, 2014) 21–4; F W Maitland, Domesday Book and Beyond: Three Essays in the Early History of England (Cambridge University Press, 1921) 153–4; and see Mabo v Queensland[No 2] (1992) 175 CLR 1 at 46–52 (Brennan J).

[155]Cf Wik Peoples v Queensland (1996) 187 CLR 1; Western Australia v Ward (2002) 213 CLR 1.

1. Alternatively, in my view there is nothing inherent in or consequential upon any of the legislative powers or the grant of exclusive possession subject to the reservations in the Agreements which so detracts from the position that the State both granted a lease and maintained a significant degree of control over the land.  Extensive regulation of land is a feature of the modern regulatory state.[156]  Were it is possible to grant leases in the terms set out in the Agreements, such a lease would effect the intention of the ARC just as well as a licence in similar terms.

   [156]See e.g. Building Act 1993; Liquor Control Reform Act 1998; and regulations thereunder.

1. The intent of the 1983 Act that the ARC control and manage the alpine resorts is apparent from the Second Reading Speech:[157]

   [157]Victoria, Parliamentary Debates, Victorian Legislative Assembly, 31 May 1983, 4726–33 (Mr Cathie, Minister for Economic Development).

Its purpose is to give effect to the Government’s policy to establish co-ordinated control and management of all alpine resorts in Victoria.  In implementing this policy, the Government is pursuing two related objectives.  First, the proper development and use of Victoria’s most important natural tourist attraction.  Secondly, making the experience of alpine areas and environments and the pursuit of alpine sports and recreation available to all Victorians regardless of their income.

…

…The Government is, therefore, firmly convinced that the current fragmented approach to the management and development of existing and future alpine resorts must cease. In its place a single body, backed by strong legislative powers, with a single purpose and philosophy must be created to control, manage and develop alpine resorts in the State.

…

One of the principal ways in which the commission will exercise day-to-day control over resorts, is to appoint authorized officers to enforce the provisions of the Bill and any regulations made under it.

Again, this intent is entirely compatible with the grant of a lease such as those purported to have been granted because these leases include significant reservations which facilitate the ARC’s continued control and management.[158]  This is especially so given the express provisions providing that the Agreements remain subject to the provisions of the 1983 Act and any applicable regulations as in force from time to time.[159]

[158]Cf Appellant’s Outline of Submissions (22 September 2017), [29].

[159]Falls Creek Agreement, cl 10.1; Mount Hotham Agreement, cll 2(g), 3(a).

1. As I have found, the reservations are not so significant as to prevent the effective grant of exclusive possession, hence the grant of a lease.  This is consistent with, what is yet a separate issue to the question of intention; and the Second Reading Speech gives some indication regarding the latter question of why a lease, rather than a licence may have been intended:[160]

The final technique through which the commission will be able to control development in resorts is by its power to grant leases of Crown land in resorts pursuant to clause 28.  This clause provides that Crown land in resorts may only be leased or dealt with under the Bill.

Leases may be granted for periods of up to 50 years for ski lodges and for up to 99 years in the case of commercial developments. In addition, leases may be granted to public authorities for terms of up to 50 years to provide sites for work places. Subclause (2) empowers the Governor in Council to prescribe values of proposed improvements and terms of years above which leases will be granted by the Governor in Council rather than the commission. The reason for this is that the Government believes that private sector operators intending to inject very large sums may regard a lease granted by the Governor in Council as affording a more secure tenure than a lease granted by a commission.

[emphasis added]

[160]Victoria, Parliamentary Debates, Legislative Assembly, 31 May 1983, 4732 (Mr Cathie, Minister for Economic Development).

1. Contrary to the submission of the Taxpayer that the grant of a general right to exclude others would not serve to enhance security of the operator’s investment when the operator relies upon public access as a necessary component of its business, the grant of a mere licence without such a right would give even less security.  Save for the absence of a covenant for quiet enjoyment which was found in one prior agreement, an issue which has been discussed above,[161] nothing in the background or commercial objects of either of the Agreements is inconsistent with the respective intentions to grant a lease, subject to the exceptions and reservations specified by the terms and conditions.  In so far as public access to the land was necessary for the business of the Grantees, or to fulfil the statutory objectives of the ARC, reservations were included in order to preserve such public access subject to defined limits.  The grant of a lease gives the Grantees an interest in land that provides both security of tenure and protection from all competition, including from government.  A right to exclude others need not be exercised, and is in any event significantly curtailed in the present circumstances by the reservations to which reference has been made.

   [161]See above, [18]–[19].

Conclusion

1. For the preceding reasons, as the regulation and reservations applicable to each of the Lands are not so extensive as to negate the manifest intention to grant leases, having regard to the purpose of the reservations, the Grantees enjoyed exclusive possession of the Mount Hotham Lands and the Falls Creek Lands respectively.  The Taxpayer is accordingly entitled to land under a lease of Crown land and obliged to pay land tax in respect of the 2010 to 2015 tax years for which it has been assessed.

1. Parties are to bring in Orders to give effect to these reasons.  I otherwise reserve the question of costs and will hear the parties further on this issue.