Minister for Resources v Fortune Island Holding Company Limited
[2024] QLC 10
•7 May 2024 [ex tempore]
LAND COURT OF QUEENSLAND
| CITATION: | Minister for Resources v Fortune Island Holding Company Limited [2024] QLC 10 |
| PARTIES: | Minister for Resources (applicant) |
| v | |
| Fortune Island Holding Company Limited ARBN 163834848 (respondent) | |
| FILE NO: | LAA395-23 |
| DIVISION: | General Division |
| PROCEEDING: | Application for forfeiture of lease under the Land Act 1994 |
| DELIVERED ON: | 7 May 2024 [ex tempore] |
| DELIVERED AT: | Cairns |
| HEARD ON: | 7 May 2024 |
| HEARD AT: | Cairns |
| A/PRESIDENT: | PG Stilgoe OAM |
| ORDER: | 1. The lease of Double Island dated 27 November 1999, that was transferred to Fortune Island Holding Company Limited on 11 April 2013,[1] may be forfeited for breach of the lease conditions. |
| CATCHWORDS: | TORRENS TITLE – LEASES – DETERMINATION – FORFEITURE AND RELIEF OF FORFEITURE – where the respondent is the holder of a state lease over an island in far north Queensland – where the Minister for Resources applied to the Court for a determination that the respondent’s lease may be forfeited for breach of lease conditions – where the lease was required to be used for tourism or tourism purposes – where the applicant contended that the respondent’s use of the leased island is not for tourism or tourism purposes – whether the state lease may be forfeited ACTS OF PARLIAMENT – INTERPRETATION – FUNCTION OF COURT – where the Land Act 1994 allows the Minister for Resources to apply to the Land Court for a declaration that a state lease may be forfeited upon the fulfillment of statutory criteria – where the ultimate discretion to forfeit the lease is conferred upon a designated person – where the respondent contended that the Land Act 1994 confers a discretion upon the Land Court to declare a lease may not be forfeited despite the fulfillment of any statutory criteria for forfeiture – where the respondent alternatively submitted that the Land Court holds a power to provide a recommendation that a lease should not be forfeited despite a finding that it may be forfeited – where no power of recommendation explicitly arises in the Land Act 1994 – where the respondent led no evidence of policy considerations – whether the Land Court holds a discretion to declare that a lease may not be forfeited despite the criteria being fulfilled – whether the Land Court may provide a recommendation that the lease should not be forfeited despite a finding that it may be forfeited ACTS OF PARLIAMENT – INTERPRETATION – PARTICULAR WORDS AND PHRASES – GENERALLY – where the state lease held by the respondent was required to be used for tourism or tourism purposes – where the term tourism purposes is defined within the Land Act 1994 – where the applicant contended that ‘tourism’ should hold its ordinary meaning – where the respondent submitted that the Court should interpret ‘tourism’ broadly and with reference to the history of the leased property –– whether ‘tourism’ should be interpreted broadly Land Act 1910 s 132 Application for Forfeiture – Section 238(1) Land Act 1994 Special Lease 15/52956 [1999] QLC 61, followed |
| APPEARANCES: | J M Horton KC, with Ms S J Marsh (instructed by Clayton Utz) for the applicant D Quayle (instructed by Lanza Legal) for the respondent |
[1]The Order made ex tempore noted the lease as having been transferred on 11 April 2013. However, the date Fortune was registered as a lessee is recorded on the instrument of title as being 17 April 2013.
Double Island, the subject of this proceeding, lies just off the coast of Palm Cove in Far North Queensland. Unfortunately, I was not able to conduct a site inspection of the island. The pictures of the island, however, tendered in evidence, show a dilapidated, uncared for, and, in some places, dangerously decrepit former resort.
Fortune Island Holding Company Limited is the lessee of Double Island. The Minister for Resources wants to cancel or forfeit Fortune’s lease. The Land Act states that before a lease is forfeited, the Minister must refer the matter to the Court to decide whether the lease may be forfeited[2].
[2]Land Act 1994 s 238(2) (‘Land Act’).
When may a lease be cancelled or forfeited?
A lease may be cancelled or forfeited in the event of a breach of a condition of the lease or a failure to comply with a remedial action notice[3].
[3]Ibid ss 213(2) and 234(b)-(c).
Condition A46(2) of the lease provides that:
“In the event of the lessee ceasing to use the land as provided for in condition A46(1) above, the lease may be forfeited or cancelled.”
Condition A46(1) of the lease provides that the lessee shall use the leased land for tourism purposes, namely, a tourism resort.
The Minister submits that Fortune has breached a condition of its lease in that Fortune is not using the leased land for tourism purposes.
Is Double Island being used for tourism purposes or as a tourism resort?
Section 434(1) of the Land Act defines tourism purposes:
“A lease is a lease for tourism purposes if it is a lease for or ancillary to a major tourist facility or a major resort development.”
Fortune submits that because section 434(1) refers to a “major tourist facility or a major resort development”, whereas the lease refers simply to a tourism resort, the definition is opaque and that the term “tourist resort” is an amorphous concept. I do not agree. On the contrary, the definition in the Land Act supports the ordinary definition of tourism purposes and tourism resort.
I accept Mr Horton KC’s submission, adopting the test in Wasaga v Torres Shire Council[4], that a tourism resort requires the availability of overnight accommodation, facilities, such as a food and beverage service, and activities one might expect on a holiday[5]. Double Island has none of these things.
[4][2003] QPELR 191.
[5]Ibid 193-4.
That brings me to Fortune’s second submission. Mr Quayle submits that, because of the island’s history, I should interpret the term ‘tourism purposes’ loosely.
Mr Quayle points out that when Fortune acquired the lease, the island catered primarily for private use, that the cost of booking the island was $30,000 per night, that the island did not have pool safety compliance, that access was difficult, and that most of the island was, to quote, “raw”[6]. Mr Quayle submits that this shows an acceptance by the Minister that Double Island was something less than a tourist resort as that term is commonly understood.
[6]T 1-15, line 36.
Mr Quayle submits that if I accept the loose interpretation of tourism purposes, Fortune is not in breach, particularly as there are, apparently, regular kayak tours to the island.
For several reasons, I do not accept this submission.
Firstly, Mr Wu, a director of Fortune, gave a statutory declaration[7] that, at the time the company acquired the lease, he was aware of the issues which may affect the lease, including the condition of the land and the level of compliance with the lease conditions.
[7]Ex 3, page 5.
Secondly, Mr Quayle pointed to the terms of the contract by which Fortune acquired the lease, which were explicit that the operation of a tourist resort was problematic as further evidence that the expression “tourism purposes” should be read loosely. Again, I disagree. Rather, the terms of the contract clarify that from day 1 in 2012, Mr Wu knew that compliance with the lease conditions was a requirement and in issue.
Thirdly, section 213(4) of the Land Act expressly states:
“To remove any doubt, it is declared that if no action is taken on a breach of condition of the tenure, it is not a waiver of, authorisation of, or excuse, for the breach”
Fourthly, as Mr Horton KC points out, the Act does not permit me to interpret its terms according to the prevailing conditions of a particular lease. The Act must be interpreted objectively. It has general application and must be interpreted and applied consistently to all leases from the State.
Fifthly, the kayak tours are not operated by, or on behalf of, Fortune and there is some suggestion that the tours do not access the leased area. If the tours do access the leased area, the attendees are not provided with accommodation or any facilities such as food and beverage services, or even access to toilet facilities.
There is no dispute that Fortune received a warning of the Minister’s intention to issue a remedial action notice. Although it started to engage contractors to address the notice, even by its own account, Fortune has not remedied the breaches identified in the notice. I am satisfied that Fortune is in breach of its lease and that it has failed to remedy the breach in the face of that warning.
Discretion
Mr Quayle submits that, even if I find that Fortune is in breach of the lease, I have a discretion not to declare that the lease may be forfeited. He referred me to TheKing v Tomkins, in which the head note, repeated in the judgment of Lukin J, contained the following passage:
“Whether or not the lease is liable to forfeiture and in determining that question, it is not only permissible for, but it is the duty of, the Land Court to take into consideration every matter which would be open in an action for the declaration of the rights of the landlord against the tenant as well as those which would be open in an ordinary action at law of ejectment by a landlord claiming possession from his tenant on the grounds of breach of covenant or condition.”[8]
[8][1919] St R Qd 173, 185 (‘Tomkins’).
Mr Quayle also referred me to section 132 of the Land Act as it was in 1919,[9] which tasked the Court with deciding whether a holding is “liable to be forfeited,” and clause 238 of the Land Bill 1994, which refers to whether forfeiture is “warranted.” Further, I was referred to the maxim expressed by Shand J in Tomkins that ‘the law abhors a forfeiture.’[10] These things apparently expand my remit from deciding whether a lease may be forfeited into an exercise of whether a forfeiture is authorised and justified.
[9]Land Act 1910 s 123.
[10]Ibid 196.
Again, I disagree. The present Act does not speak of a lease being “liable to be forfeited” or whether a forfeiture is “warranted.” It is specific in its term, whether a lease may be forfeited in the event of a breach. The language in the Bill did not make its way into the Act. It is clear to me that different language requires a different approach.
The correct approach is the one that the Land Court has adopted in a number of cases since 1919[11].
[11]Application for Forfeiture – Section 238(1) Land Act 1994 Special Lease 15/52956 [1999] QLC 61; Application for Forfeiture – Section 238(1) Land Act 1994 Special Lease 15/53217 [1999] QLC 62; Minister for Natural Resources and Mines v. Matterson [2002] QLC 54; Minister for Natural Resource and Mines v. Rodrigues [2002] QLC 55; Minister for Natural Resources and Mines v. Rouse [2002] QLC 64.
There is a discretion as to whether a lease should be forfeited but that discretion does not lie with this Court. Section 239 of the Land Act gives the discretion to the “designated person”[12] in the event that the Court decides the lease may be forfeited. The way in which that discretion can be exercised is set out in section 239(2) of the Land Act.
[12] Land Act s 239(2).
Mr Quayle invited me to make a recommendation in any event. I do not know enough of the Minister’s position to be able to do so. I do not know what policy considerations lie behind this application. I do not know what environmental issues exist on the island, what endemic flora and fauna exist on the island, or the extent of any consultation with the traditional owners. I would need to have information on all of these matters before I can sensibly make a recommendation.
The role of the Land Court is to determine, in a transparent way, whether the factual basis for forfeiture is made out. I have done that. The exercise of a discretion to forfeit the lease is outside the scope of this proceeding.
Conclusion
The lease of Double Island dated the 27th of November 1999 that was transferred to Fortune Island Holding Company Limited on the 11th of April 2013 may be forfeited for breach of the lease conditions. The costs of this proceeding are dealt with by condition I48 of the lease and I order accordingly.
Order
The lease of Double Island dated 27 November 1999, that was transferred to Fortune Island Holding Company Limited on 11 April 2013,[13] may be forfeited for breach of the lease conditions.1.
[13]The Order made ex tempore noted the lease as having been transferred on 11 April 2013. However, the date Fortune was registered as a lessee is recorded on the instrument of title as being 17 April 2013.
0
4
2