Minister for Transport, Infrastructure & Local Government v New Wave Aerospace Pty Ltd
[2020] SASC 146
•10 August 2020
SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
MINISTER FOR TRANSPORT, INFRASTRUCTURE & LOCAL GOVERNMENT v NEW WAVE AEROSPACE PTY LTD
[2020] SASC 146
Judgment of The Honourable Justice Kelly
10 August 2020
REAL PROPERTY - FIXTURES TO LAND - WHAT ARE FIXTURES
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS
An interlocutory application brought by two underlessees at Marina St Vincent (‘the interested parties’), on 24 April 2020, seeking a freezing order against the respondent in these proceedings, in favour of the plaintiffs in a District Court action, concerning the marina infrastructure at Marina St Vincent including all floating pontoons and walkways and the access ramps including the security gates (‘the marina infrastructure’) or, in the alternative, an injunction restraining the respondent from dealing with or removing the marina infrastructure until further order.
In February 2020, Kelly J made an order that the respondent ‘must remove all of its chattels from the premises…’. In making this application, the interested parties seek, in particular, clarification as to whether the order allowing the respondent to remove its chattels was intended to encompass the marina infrastructure.
The sole director of the respondent, in affidavit material, referred to a sale contract, for the acquisition of the leasehold interest of the marina, as evidence of the acquisition by the respondent of the berths and the moorings.
Held:
1. The essential facilities including the berths, moorings, gangways, walkways and access ramps including security gates are not chattels (at [48]).
2. The essential facilities including the berths, moorings, gangways, walkways and access ramps including security gates are not the property of the respondent (at [48]).
3. The respondent is not to remove any of the disputed property from the marina (at [48]).
Supreme Court Civil Rules 2006 (SA) r 247, referred to.
Gadd v New Wave Aerospace Pty Ltd [2020] SADC 7; National Australia Bank Pty Ltd v Blacker (2000) 104 FCR 288; TEC Desert Pty Ltd v Commissioner of State Revenue (Western Australia) (2010) 241 CLR 576, considered.
MINISTER FOR TRANSPORT, INFRASTRUCTURE & LOCAL GOVERNMENT v NEW WAVE AEROSPACE PTY LTD
[2020] SASC 146Civil: Application
KELLY J.
Introduction
On 24 April 2020, Mr Trevor Wesley Gadd and Ms Sally Anne Wiadrowski, underlessees at Marina St Vincent (‘the interested parties’), applied for the following orders:
1.That a freezing order pursuant to r 247 of the Supreme Court Civil Rules 2006 (SA) be made against the respondent in these proceedings, New Wave Aerospace Pty Ltd, in favour of the plaintiffs in respect of the District Court Action No. 365 of 2017,[1] concerning the marina infrastructure at Marina St Vincent including all floating pontoons and walkways and the access ramps including the security gates (hereinafter referred to as ‘the marina infrastructure’).
2.Alternatively, the interested parties sought an injunction restraining the respondent from dealing with or removing the marina infrastructure until further order.
[1] The respondent is also the defendant in District Court Action No. 365 of 2017.
Background
After hearing argument, on 28 February 2020, I made orders in this action in the following terms:
1.The defendant, New Wave Aerospace Pty Ltd 151 617 524 gives the plaintiff possession by 5.00pm on 13 March 2020 the land subject to the Memorandum of Lease, Registered No. 8441283, and the Deed of Consent and Assignment dated 29 August 2014 being:
(1) the land at allotment 1 deposited plan 47460 and allotment 7 filed plan 218633, in the area named Wirrina Cove, out of the hundreds (Barker) and hundred of Yankalilla;
(2) Certificates of Title Register Book 6198 Folio 120 and Volume 6152 Folio 506 (the premises).
2.The defendant, on or before 31 March 2020, must remove all of its chattels from the premises and for that purpose the plaintiff must give reasonable access to the defendant.
3.The defendant must not remove any chattels from the premises that it does not own.
4.The defendant must provide the details to the plaintiff of the ownership of any chattels referred to in order 3 above by 5.00pm on 13 March 2020.
5.The defendant, by 5.00pm on 13 March 2020, must remove any security it installed since it has been in possession of the premises and must deliver up to the plaintiff all keys, swipe cards, and access codes relating to any other security system installed at the premises.
6.The defendant, by 5.00pm on 13 March 2020, must deliver up to the plaintiff a copy of all records relating to the underlessees maintained by the defendant since 1 October 2014.
7.The defendant, by 5.00pm on 13 March 2020, must provide to the plaintiff a copy of the MMS accounting system maintained by the defendant.
8.The remaining funds held in the Bank SA account BSB 105 010, Account 127 …, to be transferred to the Supreme Court’s suitors’ fund.
9.The defendant, by 5.00pm on 13 March 2020, account to the plaintiff in relation to all outgoings held by the defendant in relation to the current financial year in respect of outgoings received by the defendant from the underlessees.
10.In lieu of personal service of this order on the defendant there be substituted service of it by emailing a copy of this order to the defendant to the email address: [email protected].
11.Costs reserved.
12.Liberty to apply at short notice.
Subsequently, the matter came on before Lovell J on 20 March 2020, who varied the order made by me on 28 February 2020 as follows:
The Court makes the following variations to the orders of the Honourable Justice Kelly made on 28 February 2020;
1.The Defendant, New Wave Aerospace Pty Ltd 151 617 524 gives the Plaintiff possession by 2:00pm on Monday 30 March 2020 the land subject to the Memorandum of Lease, Registered No. 8441283, and the Deed of Consent and Assignment dated 29 August 2014 being:
(1) the land at allotment 1 deposited plan 47460 and allotment 7 filed plan 218633, in the area named Wirrina Cove, out of the hundreds (Barker) and hundred of Yankalilla;
(2) Certificates of Title Register Book 6198 Folio 120 and Volume 6152 Folio 506 (the premises).
2.The Defendant, on or before 5:00pm on Monday 20 April 2020, must remove all of its chattels from the premises and for that purpose the Plaintiff must give reasonable access to the Defendant.
3.The Defendant must not remove any chattels from the premises that it does not own.
4.The Defendant must provide the details to the Plaintiff of the ownership of any chattels referred to in order 3 above by 2:00pm on Monday 30 March 2020.
5.The Defendant, by 2:00pm on Monday 30 March 2020, must remove any security it installed since it has been in possession of the premises and must deliver up to the Plaintiff all keys, swipe cards, and access codes relating to any other security system installed at the premises.
6.The Defendant, by 2:00pm on Monday 30 March 2020, must deliver up to the Plaintiff a copy of all records relating to the underlessees maintained by the Defendant since 1 October 2014.
7.The Defendant, by 2:00pm on Monday 30 March 2020, must provide to the Plaintiff a copy of the MMS accounting system maintained by the Defendant.
8.The Defendant, by 2:00pm on Monday 30 March 2020, account to the Plaintiff in relation to all outgoings held by the Defendant in relation to the current financial year in respect of outgoings received by the Defendant from the underlessees.
9.In lieu of personal service of this order on the Defendant there be substituted service of it by emailing a copy of this order to the Defendant to the email address: [email protected].
10.Costs of the Action reserved.
The Court further orders and directs that:
1.The Defendant’s interlocutory application dated 12 March 2020 is dismissed.
2.Any application brought by the Plaintiff for enforcement of these orders be made specially returnable to the Honourable Justice Lovell.
3.The Defendant is to pay the costs of the Plaintiff and the Interested Parties in respect of the interlocutory application dated 12 March 2020 to be agreed or taxed.
Note: If the Defendant does not give possession of the premises referred to in this Order by the time specified in this Order, the Defendant and any of its officers, agents and employees may be forcibly ejected from the premises by the Sheriff.
In making this application, the interested parties seek clarification of the orders made on 28 February 2020, and varied on 20 March 2020, in particular, clarification as to whether the order allowing the respondent to remove its chattels from the premises was intended to encompass the marina infrastructure.
The rationale for the application was explained in affidavit material filed in this Court by the interested parties’ solicitor, Mr Peter Pedler.
Mr Pedler asserts that the respondent now claims to be the owner of all the marina infrastructure and has demanded that the Minister for Transport, Infrastructure and Local Government (‘the Minister’) allow the respondent immediate access to the marina to enable the respondent to attend at the marina with cranes and other heavy equipment so that the respondent can remove all of the marina infrastructure.
The interested parties and others obtained a judgment in the District Court[2] against the respondent and are concerned that if the marina infrastructure is removed they will never be able to obtain damages pursuant to the judgment obtained in the District Court.
[2] Gadd v New Wave Aerospace Pty Ltd [2020] SADC 7.
The interested parties claim to have suffered loss, as a consequence of the respondent’s breach of lease, in excess of $1.2 million and are concerned that, if the marina infrastructure is removed, the marina would cease to have any utility whatsoever as a marina and consequently would be valueless.
The matter came on before a different Judge of this Court and the interested parties ultimately accepted an undertaking given by the respondent’s solicitor not to remove any of the marina infrastructure until the outcome of the dispute as to what constituted the infrastructure was clarified.
The interested parties seek clarification of what is included in the orders made on 28 February 2020, in particular, as to which chattels were encompassed by Order 2 made on 28 February 2020, providing for the removal of chattels from the premises.
The interested parties put two alternative arguments in support of the submission that the items of marina infrastructure the subject of the current dispute were not included in the order made on 28 February 2020. In a nutshell, the interested parties argue that the various pontoons, walkways, access ramps and security gates are fixtures by reason of the fact that they are actually attached into the land through the concrete, driven into the seabed and then otherwise attached in a way to indicate a degree of permanence, which would require considerable work to remove any of it from the position they are currently in.
The interested parties argue, in the alternative, that ultimately the matter is to be answered by reference to the construction of the lease and associated contractual documentation. Both the interested parties and the Minister submit that it is plain from the Master Agreement dated 16 September 1996 (‘the Master Agreement’) that it was the intention of the parties that the disputed infrastructure would remain at the conclusion of the lease.
In identifying the subject matter of the current dispute, I gratefully adopt Judge O’Sullivan’s description of the marina infrastructure as follows:[3]
Terminology and Marina Construction
[154]Various terms were used to describe the floating parts of the Marina Infrastructure. For consistency, I adopt the following terms. The Gangways connect the marina berths to the shoreline. Mr Gadd described the gangways as an aluminium structure fixed at the shore end and able to slide backwards and forwards across the floating pontoon to which it connects at the other end. There are three gangways which are not labelled on the Google Maps Photograph, but can be seen leading from the shore to the marina berths. There is a locked gate restricting access to the berths on each of the three gangways.
[155]Each of the gangways leads to a floating pontoon, identified in the Google Maps Photograph as “mooring fingers A-E”. I refer to those floating pontoons as “mooring arms” A-E.
[156]Off each mooring arm are smaller floating pontoons which give access to the berths. I refer to these smaller floating pontoons as “fingers”. Each finger services two berths ie one each side of the finger.
[157]The mooring arms and fingers are constructed of concrete boxes which are filled with polystyrene foam. The concrete boxes are connected to each other by long wooden planks. Threaded Rods (or “through rods”) pass through these planks, through each concrete box and are secured by a nut at each end. Attached to the outside of each of the wooden planks connecting the concrete boxes is another piece of timber, known as a waler. Each waler is approximately 35mm wide and 150mm deep.
[158]The fingers are attached to the mooring arms by a steel, triangular bracket, approximately 6mm thick, 1200mm long and 700mm wide. Each of the triangular brackets fits either side of each finger and is bolted back onto the timber walers on the mooring arms. At the locations on the mooring arms where the fingers join the mooring arm, there is a post that contains water supply and an electrical supply, referred to as a “service bulb” or “pedestal”.
[Footnotes omitted]
[3] Gadd v New Wave Aerospace Pty Ltd [2020] SADC 7 at [154]-[158].
General principles which apply
During argument, I was referred to two helpful academic texts concerning the general principles which apply to determine whether an item is a fixture or a chattel. In Halsbury’s Laws of Australia, the learned author stated the relevant test in this way:[4]
The general rule regarding the transfer of property in fixtures is expressed in the common law maxim quicquid plantatur solo, solo cedit (whatever is annexed to the realty becomes part of it). Differences of opinion have been expressed regarding the exact meaning and operation of this maxim. Primarily, the maxim is applied to determine the rights of a landowner over things attached to or embedded in the land. A chattel that is brought onto the land, once affixed to the land in accordance with established legal principles, by implication of law becomes part of the property of the owner of the land. This principle applies even if the chattel is subject to a right or belongs to a person other than the one who attached it to the land. At common law, the freeholder has no obligation to compensate the fixer for the loss of chattel, except where the landowner is estopped by his or her conduct from asserting title to the fixture; the principles of unjust enrichment do not apply in this regard.
The legal presumption that chattels once affixed become part of the property of the landowner, is rebuttable. Parties may expressly agree that whoever attached the fixtures retains ownership of them. The right to remove fixtures may also be granted by statute. In addition, at common law, it is implied that a tenant has a right to remove certain fixtures (‘tenant’s fixtures’) which the tenant attached to the land. However, fixtures though removable, unless and until actually severed from the realty, remain part of it. The mere intention of the parties concerned to remove fixtures from the land at some future time does not transform them into chattels.
…
The question whether an item has lost its character as a chattel and has become a fixture depends on the intention of the person placing it upon the land. The intention of affixing the object is determined from all relevant circumstances of the case, in particular, the degree of annexation and object of annexation. In recent years, the courts have emphasised that there is no single principle or test which is adequate to determine whether an item of property is a fixture or chattel. Although the mode of annexation and the purpose of annexation remain important considerations, neither is conclusive. For example, there are instances where an object securely affixed to the land has been held not to be a fixture. Conversely, in some cases objects attached to land merely by their own weight have been held to be fixtures. Each case depends on its own facts.
…
For an item to be a fixture, it must to some extent, even by reason of its own weight, be attached to the premises to which it is claimed to form part of. The degree of annexation refers to the extent to which an object is physically attached to land. If an object is fixed to land to any extent by any means other than by its own weight, then prima facie it is a fixture, and the onus of proof is upon any one who asserts that it is not. The slightest fixing to the land is sufficient to raise the presumption that an object is a fixture and shift the onus of proof upon whoever claims it is not. On the other hand, an object standing merely by its own weight will ordinarily not be regarded as a fixture unless the contrary is proved. The greater the degree of annexation, the more likely that the object was intended to be a fixture. For example, where a thing has been securely fixed, and in particular if it has been so fixed that it cannot be detached without substantial damage to the thing itself or to that which it is attached, this provides strong, though not necessarily conclusive evidence, that it was intended to be a fixture. The greater the likely damage to the item or the land, the stronger the possibility that it was attached with the intention for it to become part of the land. In contrast, where the object is only connected in a slight or flimsy fashion, this may support the inference that the person who attached it had no intention for it to become a fixture. Similarly, if an object though firmly attached could easily be removed, this may also support the inference that it was not intended to become a fixture. However, each case depends on its own facts.
[Footnotes omitted]
[4] LexisNexis, Halsbury’s Laws of Australia (at 21 September 2015) 355 Real Property [355-2365], [355-2375], [355-2380].
In Butt’s Land Law, the learned author expressed the test as follows:[5]
Under the present rule, whether an item has become a fixture depends primarily on the intention with which the affixer put the item in place.[6] The degree of annexation remains a factor, but chiefly as a pointer to the relevant intention.[7] The High Court has cited with approval the following statement of the law:
Whether an item has become a fixture depends essentially upon the objective intention with which the item was put in place. The two considerations which are commonly regarded as relevant to determining the intention with which an item has been fixed to the land are first, the degree of annexation, and secondly, the object of annexation. [8]
[Footnotes in original]
[5] Brendan Edgeworth, Butt’s Land Law (Law Book Co, 7th ed, 2017) at 75.
[6] The former rule has been considered to be product of ‘ruder or simpler times’: Leigh v Taylor [1902] AC 157 at 162 per Lord Mcnaghten; Palumberi v Palumberi (1986) 4 BPR 9106 at 9110 per Kearney J.
[7] Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700 at 712-713; Botham v TSB Bank Plc (1996) 73 P & CR D1; B Collier, ‘Distinguishing Chattels and Fixtures: Intention and Annexation’ (1994) 2 APLJ 189.
[8] National Australia Bank Ltd v Blacker [2000] 104 FCR 288 at [10] per Conti J, cited in TEC Desert Pty Ltd v Commissioner of State Revenue (Western Australia) (2010) 241 CLR 576 at [24].
An item is more likely to be a fixture if the affixer’s intention was the better use or enjoyment of the land. Conversely, if the intention was the better use or enjoyment of the item itself, then it is more likely to be a chattel.[9] Butt’s Land Law gives the following examples:[10]
… an anchor supporting a suspension bridge would be a fixture, but a ship’s anchor, firmly embedded in the ground to hold the ship steady in port, would remain a chattel.
In line with this reasoning, looms attached to the floor of a mill by nails driven through holes in their feet, easily removable and attached in this manner to keep them steady in use, were held to be fixtures because their purpose was to enhance the mill’s value and usefulness.[11]
[Footnote in original]
[9] Brendan Edgeworth, Butt’s Land Law (Law Book Co, 7th ed, 2017) at 75.
[10] Brendan Edgeworth, Butt’s Land Law (Law Book Co, 7th ed, 2017) at 76.
[11] Holland v Hodgson (1872) LR 7 CP 328 at 339.
The High Court has cited with approval the following statement:[12]
Whether an item has become a fixture depends essentially upon the objective intention with which the item was put in place. The two considerations which are commonly regarded as relevant to determining the intention with which an item has been fixed to the land are first, the degree of annexation, and second, the object of annexation.
[12] National Australia Bank Ltd v Blacker (2000) 104 FCR 288 at [10] (Conti J), cited in TEC Desert Pty Ltd v Commissioner of State Revenue (Western Australia) (2010) 241 CLR 576 at [24].
Discussion
Applying these principles, the starting point for consideration is the terms of the Master Agreement and the lease document dated 29 January 1998 (‘the Lease’) between the Minister and MBfI Resorts Pty Ltd (‘MBfI’) which relevantly provide the following definitions. In the Master Agreement are the following definitions:
1. Interpretation
1.1 In the construction of this Agreement the following expressions shall have the meaning set opposite them respectively:
“the Concept Plan” means the concept plan for the development and construction of the Marina (including all on and off shore facilities) comprising Schedule 1;
“the Marina” means the marina to be developed and constructed by MBfI on the Marina Site in accordance with the Concept Plan and includes the Marina Infrastructure, the Essential Facilities and all other associated facilities (both on shore and off shore) to be developed for the purpose of operating a marina on the Marina Site;
“the Marina Infrastructure” means that part of the works for the construction of the Marina comprising the construction of breakwaters and the excavation of the Marina Basin;
“the Marina Basin” means that part of the Marina Infrastructure as is identified as “Marina Basin” on the Concept Plan;
“the Marina Site” means the area at Wirrina Cove identified as 1, 2, 3 and 5 on the Plan comprising Schedule 2;
“the Essential Facilities” means those facilities to be incorporated into the design of the Marina and identified on the Concept Plan as:
● navigational aids,
● safety aids and equipment,
● boat ramp (minimum 2 lanes),
● car and trailer park for a minimum of 20 cars and 60 car/trailers,
● toilets.
● washdown areas,
● waste disposal and pump-out station.
● refuelling depot
● minimum of 200 serviced berths comprising
* 170 private berths
* 30 berths for public use
● fire services facility
In the Lease, the following definitions appear:
“the Concept plan” means the Concept Plan for the development and construction of the Marina (including all on and off shore facilities) comprising Schedule 1 to the Master Agreement;
...
“the Marina” means the marina to be developed and constructed by the Lessee on the Premises in accordance with the Concept Plan and includes the Marina Infrastructure, the Essential Facilities (both as defined in the Master Agreement) and all other associated facilities (both on shore and off shore) to be developed for the purpose of operating a marina on the Premises;
…
The ‘Marina Infrastructure’ and the ‘Essential Facilities’ in the Lease are given the same meaning as in the Master Agreement (see above [18]).
As the Master Agreement shows, it called for MBfI to construct a marina on land leased to it. The process was governed by the Master Agreement.
Clause 5 of the Master Agreement required MBfI to develop and construct the marina at its cost. As can be seen above, the marina infrastructure and the essential facilities are both defined in the contract. The marina infrastructure means ‘that part of the works for the construction of the Marina comprising the construction of breakwaters and the excavation of the Marina Basin’. The essential facilities includes the berths.
The Minister contributed $8.5 million towards the marina infrastructure[13] as well as other costs.
[13] See definition of ‘Minister’s Budget’ in cl 1.1 and cl 6.4.4 of the Master Agreement.
The Lease governed the relationship between MBfI as lessee and the Minister as lessor for the lease of the marina, once it was built.
Clauses 2.8 and 2.9 of the Lease deal with what happens upon the expiry or sooner termination of the Lease or decommissioning of the marina respectively. Those two clauses deal with two quite different scenarios.
Clause 2.8 states:
The Lessee will at the expiration or sooner termination of this lease:
2.8.1peaceably and quietly yield and deliver up the Premises to the Lessor in as good and substantial state of serviceable repair and operating condition as the same were in at the Date of Practical Completion subject only to such changes in condition as results from the Lessee’s compliance with its obligations pursuant to subclause 2.9, and
2.8.2ensure that the depth of water within the Marina and the approaches to the Marina is no less than the Declared Depth as at the date of such expiration or sooner termination of this lease.
Clause 2.9 states:
The Lessee will at its own expense prior to the expiration of this lease if the Lessor gives written notice to the Lessee no later than eighteen (18) calendar months prior to such expiration of the lease, remove all such buildings, fixtures, fittings, plant, equipment and facilities with the exception of the Marina Infrastructure (which shall remain) erected or installed by it on the Premises pursuant to subclause 2.4 for the purposes of developing the Premises as a marina as shall be specified in such written notice given by the Lessor to the Lessee. …
The first scenario in cl 2.8 concerns the expiration or sooner termination of the Lease. It requires the tenant to deliver up the ‘Premises’ to the lessor in as ‘good and substantial state of serviceable repair and operating condition as the same were in at the Date of Practical Completion …’.
The ‘Premises’ is defined as:
… the land more particularly described on page 1 hereof in the panel entitled “Certificates of Title being leased” together with the buildings and other fixed improvements (if any) for the time being thereon;
The reference in cl 2.8.1 to the delivering up of the premises in as ‘good and substantial state of serviceable repair and operating condition as the same were in at the Date of Practical Completion’ can only be properly understood if the subject of what the ‘Date of Practical Completion’ is identified. It is clear that the subject of the date of practical completion included the essential facilities and thus the marina berths.
On that basis, I find that on a proper construction of cl 2.8 of the Lease, and substituting defined terms with their definition, cl 2.8.1 reads:
2.8.1peaceably and quietly yield and deliver up the [land … together with the buildings and other fixed improvements (if any) for the time being thereon] to the Lessor in as good and substantial state of serviceable repair and operating condition as the same were in at the Date of Practical Completion [of both the marina infrastructure and the essential facilities] subject only to such changes in condition as results from the Lessee’s compliance with its obligations pursuant to subclause 2.9, …
[Emphasis added]
The second scenario dealt with by cl 2.9 is decommissioning. That is an entirely different concept to that which has been considered here. Decommissioning occurs when the Minister, the lessor, gives not less than 18 months’ notice to the lessee that it is to ‘remove all such buildings, fixtures, fittings, plant, equipment and facilities…’.
The Minister did not give any written notice pursuant to cl 2.9.
The fact that the lessor could give notice to the lessee to remove fixtures and fittings, when read against the provisions which apply on expiration or sooner termination, makes it clear that the marina berths are to remain and to be delivered up in as good a condition as they were at the date of practical completion unless the lessee has been directed to remove them.
On that basis, the marina berths, by which term I include the associated infrastructure, are to remain in-situ upon the expiry or sooner termination of the Lease.
The sequence of events which led to the acquiring of the lease by the respondent was described in the District Court judgment as follows:[14]
[18]In 2002, ICA Australia Pty Ltd (“ICA”) took an assignment of lease from MBfI. During the period 12 March 2003 - 13 April 2011 a controller and then administrators were appointed. Between 3 April 2014 - 23 December 2015 a liquidator was appointed. During the period 24 October 2011 - 1 May 2015 a receiver was appointed, from 25 October 2016 - 12 June 2016 a controller was appointed and from 28 October 2011 – 14 March 2014 a Receiver Manager was appointed.
[19]The name “Marina St Vincent” has been a registered business name at various points in time. During the period 2001-2004 the business name was owned by ICA (South Australia) Pty Ltd. Between 20 July 2007 and 21 May 2010, the business name was owned by ICA (Wirrina Assets) Pty Ltd. Between 18 December 2013 and 20 December 2015 the business was owned by a Wirrina Corporation Pty Ltd. The defendant is currently using the business name and continues to do so. It is an agreed fact that since 2001 the Marina has been known as Marina St Vincent on a continual basis.
[20]The defendant is the current lessee of the Marina and became the lessee pursuant to a Memorandum of Transfer by Mortgagee exercising power of sale on 30 September 2014.
[21]The transfer by mortgagee was for the whole of the Land in Certificate of Title Register Book Volume 6098 Folio 809. That Certificate of Title subsequently became Volume 6152 Folio 505 and Volume 6155 Folio 853 and then Volume 6156 Folio 218.
[22]The Underleases were transferred either on that date or within a short time thereafter.
[Footnotes omitted]
[14] Gadd v New Wave Aerospace Pty Ltd [2020] SADC 7 at [18]-[22].
It does not follow from the assignment of the lease to the respondent, including the underleases, that the respondent, without more, became the owner of the disputed property.
Mr Stephen Marks, as the sole director of the respondent, in affidavit material referred to a contract, between Wirrina Corporation Pty Ltd as mortgagee exercising power of sale pursuant to its mortgage and the respondent as purchaser dated 9 April 2014 (‘the Sale Contract’), as evidence of the acquisition by the respondent of the berths and the moorings.
In fact, the Sale Contract was for the acquisition by the respondent of the leasehold interest of the vendor pursuant to the lease including the ‘Included Property’ referred to in Item 4 of the Schedule to the Sale Contract and the ‘Included Chattels’ referred to in Item 5 of the Schedule as set out in the interested parties’ written submissions:
24.1.The Included Property is defined by reference to the definition of “Property”.
24.2.The definition of “Property” on page 4 of the Special Conditions means insofar as it is relevant to this issue:
24.2.1. The Improvements (to the extent it is owned by ICA);
24.2.2. The Plant and Equipment (if any); and
24.2.3. The Chattels (if any).
24.3.There is a separate definition of “Improvements” which refers to the buildings and other improvements constructed or placed on the Land, but does not refer to the Essential Facilities or the berths or moorings.
24.4.The definition of “Plant and Equipment” refers to all fixed items of plant and equipment with examples and to Annexure 5.
24.5.The examples of plant and equipment referred to in the definition do not include the berths and moorings. Annexure 5 sets out a list of items that are clearly chattels
There is nowhere in the Sale Contract any reference to the essential facilities or the berths or the moorings as either included in property or chattels.
I accept the submission made by the interested parties that had the vendor intended the sale of the leasehold interest to include any of the essential facilities including the berths and moorings, it might be expected that there would have been reference made to that in the Sale Contract. There was none.
As noted earlier, the Minister contributed $8.5 million towards the marina infrastructure as well as other costs. In addition, I note that the agreed rental for the first three years of the lease agreement was to be determined in an ascending order. The rent period for the first year being $1, the second year being $20,000 and the third year being $30,000. Thereafter the annual rent was to be $74,000. The rhetorical question might be asked why would the Minister spend substantial monies on the marina if it was not its intention to preserve its interest in the marina after the date of practical completion?
Another factor which points to the same conclusion is the fact that in the Sale Contract between the Minister and the respondent to purchase the lease, the agreed price was the sum of $160,000. I consider that, given the relatively diminutive amount of money involved, an inference can be drawn that the infrastructure was not intended to be transferred with it.
For these reasons, after analysis of the Master Agreement, the Lease and the Sale Contract, I consider that it is plain that the essential facilities are not chattels and are not the property of the respondent. Accordingly, in my view, the respondent has no right to remove the marina berths and associated infrastructure from the marina, which necessarily includes the floating pontoons and walkways and the access ramps including the security gates identified by the interested parties. I accept the submission made that removing them would effectively mean there is no operating marina.
Although I determined to admit the affidavit of Katerina Constantinides affirmed on 23 July 2020 and an affidavit of John Robert Spragg from a company called Bellingham Marine Australia Pty Ltd sworn on 26 July 2020, I have not found either affidavit to be of assistance in determining the proper construction of the contractual arrangements. Bellingham Marine Australia Pty Ltd was not a party to the contractual arrangements. In any event, the subjective opinions of a person who was not a party to a contract cannot be of assistance in construing the contractual arrangements.
The reference by the respondent in the written submissions before me to ‘floating chattels’ to describe the disputed items is nothing more than an assumption in light of the definitions contained in the Lease and Sale Contract. The assertion by the respondent that the subject matter of this dispute was ‘subsequently sold to the Respondent under the Contract’ does not identify what it was that was sold. The reference in the Sale Contract to property which belongs to the respondent does not specify what property is referred to therein.
For these reasons, I find that the essential facilities are not chattels, the essential facilities are not the property of the respondent and the respondent is not to remove any of the disputed property from the marina.
Accordingly, I order that:
1.the essential facilities including the berths, moorings, gangways, walkways and access ramps including security gates are not chattels;
2.the essential facilities including the berths, moorings, gangways, walkways and access ramps including security gates are not the property of the respondent; and
3.the respondent is not to remove any of the disputed property from the marina.
I give the parties 14 days from today, being 10 August 2020, in which to make any submissions as to the costs of this application.
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