Pacific Mirage Limited v Chief Executive, Department of Natural Resources

[1997] QLAC 116

[1997] QLAC 116

 

  LAND APPEAL COURT

BRISBANE

Re:Appeal from the decision of the Land Court pursuant

to s.235A of the Land Act 1962 categorising

Lease NCL 06/2508/A  (VC95-131)

BETWEEN:
  Pacific Mirage Limited
  Appellant

and

Chief Executive, Department of Natural Resources
  Respondent

J U D G M E N T - HELMAN J.

Delivered this First day of August 1997

I have had the advantage of reading the reasons for judgment prepared by the other members of the Court.  I do not wish to add anything to their recital of the facts.  I agree with their conclusions. 
           The word "lease" was used somewhat loosely in s.12A(1) of the Land Regulation 1988 - which has lapsed by operation of s.524 of the Land Act 1994 - to refer to the land the subject of a lease, as the other members of the Court have pointed out.
           The expression "residential purposes" in s.12A(1) was a broad one, not qualified in any way.  In my view it was not confined to referring to instances of permanent residence.  In ordinary language residence may be either permanent or temporary.  A house or flat may be used as someone's permanent residence - although the adjective "permanent" in this context does not usually truly refer to a residence which lasts, or is intended to last, indefinitely - but will not cease to be used for residential purposes if it is let out to a tenant, even for a short time.  The house or flat remains in ordinary language a residence -  a place where the occupant eats, drinks, and sleeps: Rex v. Inhabitants of North Curry (1825) 4 B. & C. 953; 107 E.R. 1313 at p.959; 1315 per Bayley J. The expression "residential purposes" referred to that use of land, which may be contrasted with the commercial and industrial activities carried on in an office, a warehouse, a shop, or a factory. It is true that commercial activity may result in someone's occupying a building as a residence, permanent or temporary, as when a real estate agent finds a purchaser or tenant for a house. But then the house does not lose its character as a residence or become in any relevant sense a place where commercial activity is carried on.
           My conclusion as to the ordinary meaning of the expression "residential purposes" is, I believe, consistent with observations in Owen v. Elliott [1990] Ch. 786. The Court of Appeal was required to consider the construction to be put upon the words "let by him as residential accommodation" in s.80(1) of the Finance Act 1980 in a case concerning an assessment of capital gains tax on the sale by a taxpayer of a private hotel and boarding house.  Considering the provision in the context of the capital gains legislation and the exemption provisions for private residences, the judge at first instance had taken the view that the question depended on the quality of the letting by the owner of the premises and that the proper construction to be placed upon the provision was that the letting must be "in effect for the purposes of a home for the person to whom the letting was made".  The judge concluded:

"If the accommodation was let as residential accommodation to persons who by and large were likely to take advantage of it for that purpose, then it will qualify:  if not, it will not.  In order to obtain the relief the taxpayer must establish that the kind of letting in which he was engaged was a letting to people who would be likely to use it as their home.  The relief would normally be available to the home owner who provides lodgings for university students or accommodation for hospital nurses, or who takes in lodgers from time to time, but not to someone who is simply carrying on an hotel or boarding house business."  (p.789)

The appeal was allowed because it was held that there was nothing in the words in s.80(1), construed in the context I have mentioned, that required the ordinary meaning of the words in question to be displaced.  It was held that the ordinary meaning of the words included short-term lettings of rooms.  Leggatt L.J. observed:

"In my judgment the expression `residential accommodation' does not directly or by association mean premises likely to be occupied as a home.  It means living accommodation, by contrast, for example, with office accommodation.  I regard as wholly artificial attempts to distinguish between a letting by the owner and a letting to the occupant; and between letting to a lodger and letting to a guest in a boarding house; and between a letting that is likely to be used by the occupant as his home and one that is not.

It is difficult to see either the merit or the application of the Crown's test, adopted by the judge, of `likely to be used as a home.'  That is not something that can be gauged objectively from the nature of the letting without regard to the occupant.  There is, in my judgment, no justification for excluding hotels from the scope of the exemption from tax unless a test for distinguishing between hotels and other forms of residential accommodation can properly be derived from the use of that expression in section 80 of the Finance Act 1980.  None can.  No relevant distinction can be drawn between a letting to an undergraduate or nurse or lodger, such as the judge thought would be entitled to relief, and a letting to anyone else.  All are lettings of residential accommodation indistinguishable from that which is provided by boarding or guest houses or indeed by hotels, and all are conducted on what the judge called `a commercial basis.'  They differ from each other, if at all, only in the average length of letting, but it is accepted on behalf of the Crown that the length of the letting is not determinative." (pp.791-792)

In the present case in my view all fifty-four home units retained their residential character whether they were occupied by the sub-lessees or by the sub-lessees' tenants and so the land in question was, with respect to the opinion of the learned member, used solely for residential purposes.  Furthermore the documents in evidence show that, for all practical purposes, it might be used only for such purposes.  I agree with the other members on the matters of cleaning and maintenance.
           I should add that s.12A(1) did not provide an exhaustive definition of a category 3 lease:  it provided that certain leases - those that might be used and were used solely for residential purposes - were category 3 leases.  On its face it admitted of the existence of other category 3 leases which fell short of that description.  It could be thought for instance that land of which the dominant use was residential could have qualified.  It is not necessary however for me to pursue that line of reasoning because I am satisfied that the description in s.12A(1), properly understood, applied to the land in question. 
           I agree therefore that the appeal should be allowed, the decision of the Land Court set aside, and the lease designated a category 3 lease.

(J.W.B. Helman)
  Judge of the Supreme Court.