Pacific Mirage Limited v Chief Executive, Department of Natural Resources
[1997] QLAC 117
•1 August 1997
|
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 - RE WENCK AND RP SCOTT
Delivered this First day of August 1997
The appellant in this matter, Pacific Mirage Limited (Pacific Mirage) is the lessee of Lease NCL 06/2508/A. The terms of the lease include the following list of conditions:
"The Lessee shall use the leased land for Business (Condominium and associated facilities) purposes.
No buildings erected on the leased land shall be permitted to exceed three (3) stories in height above ground level.
Buildings to be erected on the leased land shall not cover a greater proportion of the lease area than forty percent (40%).
The Lessee shall comply with any lawful requirements of the Council of the City of Gold Coast.The Lessee shall maintain the leased land free from noxious plants."
The appeal is against the decision of the Land Court in respect of the categorisation of the lease by the respondent as category 4 rather than category 3 as the lessee submitted.
The Land Act 1962 (the Act) was amended by the Lands Legislation Amendment Act 1991 which included, in respect of leases granted under the Act, a scheme whereby rent payable became assessable in accordance with the category to which an individual lease belonged. In a lease of the type in this appeal, s.210 of the Act was amended to include ss.(4) which provides that the annual rent of such a lease is to be calculated in accordance with s.212. Section 212 provides that the annual rent for each rental period is calculated by reference to the prescribed rate which applies to the relevant category of lease.
The Land Regulations 1988 (the regulations) were amended in 1993 to include a total of 13 categories of lease granted under the Land Act including the division of tourism into mainland and island categories. Each category has a prescribed rate which applies to it and in 1993 the rates ranged between 1% and 6%.The categories with which we are concerned in this appeal are category 3 “Residential and Rural Residential” and category 4 "Commercial and Industrial". We take the "and" in each of these categories to be disjunctive not conjunctive, thus we are concerned in this appeal with whether the subject lease should be considered as "residential" or "commercial".
Section 12A(1) of the Regulations is concerned with category 3 leases and it provides:
[Residential Purposes] "A lease that may be used, and is used, solely for residential purposes is a category 3 lease."
In addition to the provisions of s.12A(1), it is possible for a lease to satisfy the requirements of category 3 if it accords with the requirements of s.12A(2), however, that provision is not relevant to present purposes as it appears to be concerned with the "rural residential" component of the category.
The "Commercial and Industrial" category, that is category 4, is not defined or explained further in the Regulations. It follows that a lease which is said to fall into the commercial category is one which would be aptly so described where the use of the lease would, according to the normal use of language, be described as "commercial". For our part, we are of the view that leased land which is used as shops or office, by way of example, would properly be categorised as "commercial".
Before the learned Member at first instance there was no dispute between the parties as to the facts and that position remained so before us. In addition to evidence contained in the record, we were provided with a certified copy of the instrument of lease, and a copy of the letter sent to the lessee advising the Chief Executive's decision appealed from. That decision related to an objection to the categorisation of the lease by the Chief Executive for the rental period commencing 1 July 1993. A condominium building containing 54 self-contained residential units has been built on the land over which the lease was granted. Each of these units is "owned" by a person (or persons) who is a shareholder of Pacific Mirage and a sub-lessee of the leased land, each sub-lease being for a term of 99 years at an annual rental of $1 payable only upon written demand by Pacific Mirage. Each sub-lessee pays a contribution to Pacific Mirage towards its outgoings in respect of maintenance and associated expenses.
Pursuant to subclause 3(d) of the sub-lease, each sub-lessee covenants with Pacific Mirage: "that he will use and permit to be used the Suite for residential purposes and not otherwise without the prior written consent of the Minister for Lands and the sublessor;".
Pursuant to subclause 3(l) of the sub-lease, each sub-lessee covenants with Pacific Mirage: "that he will not except on a casual or temporary or holiday letting basis sublet the suite except on the same conditions as relate to an assignment of this sub-lease as set out in clause 3(e) hereof;".
Approximately 22 of the units are owner-occupied and the remaining 32 sub-lessees have entered into a Management Services Agreement with Mirage Resorts Holdings Pty Ltd (Mirage Resorts) which owns the Sheraton Mirage and Gold Coast Hotel (Sheraton Mirage). The Sheraton Mirage is operated by Sheraton Pacific Hotels Pty Ltd (Sheraton Pacific). There is no common ownership between Pacific Mirage, Mirage Resorts and Sheraton Pacific.
An individual unit owner can enter into a Management Services Agreement with Mirage Resorts. This agreement entitles the owner to avail himself of the restaurants, bars and other facilities and services of the hotel to the same extent and on the same basis as a paying guest. In addition, the agreement entitles the owner to include his unit within the letting pool established by Mirage Resorts and managed by Sheraton Pacific. The Management Services Agreement also provides for Mirage Resorts to tend to any broken windows, faulty water or malfunctioning electrical appliances, and so on, within the relevant unit. That is, maintenance internal to such units is carried out.
Owners of individual units covered by the Management Services Agreement may specify those periods during which the unit will be available for letting. Some are available for letting during the greater part of the year, some during periods other than holidays and some only spasmodically. The terms for which the units are let within those periods is entirely within the discretion of Sheraton Pacific. They could be let for a single night, a week or for any other period.
In addition to the Management Services Agreement, there is an Agreement for Services and Maintenance which is an agreement between Pacific Mirage and Mirage Resorts. This provides for the provision of maintenance and security services by Mirage Resorts to the common areas of the building and grounds of the condominium building. Pacific Mirage is free to negotiate agreements for maintenance and service with any entity it desires and has in the past sought tenders from contractors other than Mirage Resorts.
We come now to the central question in this appeal and that is to consider the meaning of s.12A(1) of the Regulations. One of the first things to note in a consideration of the Regulations overall, is the difference in terminology between the various sections regarding the requirements for a particular lease to be characterised as belonging to one category or another. For example, in s.12E, where the categorisation of tourism leases is dealt with, the regulation provides that a lease is in a tourism category "if and only if" it satisfies the requirements set out therein. In contrast, a category 8 lease ("public utilities") may be categorised as such "only if" it satisfies the prescribed requirements. No such limiting words appear in s.12A(1).
The formulation of words in s.12A(1) concerning category 3 leases is such that on a grammatical construction and, having regard to the form of words in the sections concerned with other categories, it is arguable that a lease may be categorised as a category 3 lease having regard to matters other than those set out in s.12A(1). Nevertheless, it seems clear to us that the provision in s.12A(1) for a lease to be used solely for residential purposes, is a requirement which could, for practical purposes, not be ignored if one were attempting to determine whether a lease was a category 3 lease, having regard to matters other than those set out in s.12A(1). In short, then, it is the wording in s.12A(1) alone to which we have referred in this matter. It will be noticed that s.12A(1) requires that for a lease to be a category 3 lease:
·the lease may be used for residential purposes
·is so used, and
·that use must be the sole use.
An important rule of statutory interpretation is that a statute must be read as a whole (The Metropolitan Gas Co v. The Federated Gas Employees’ Industrial Union (1924) 35 CLR 449). We are of the view that in considering the question of the meaning and extent of any category, it is important to consider the categories as a whole, particularly because the intellectual process of allocating leases to one category or another would need to be done in a consistent way. Having regard to the question of the construction of s.12A(1) we make the observation that the categories described in the Regulations are either broad rather than narrow in nature or are supported with more particular requirements. For example, it might be noted that the "Commercial and Industrial" category is not described further whereas in the "intensive farming or primary production" category (category 2) the regulation descends into the detail of providing that the definition supplied by s.17(2) of the Valuation of Land Act 1944 is to apply. In s.12A(1) there is a broad category of "residential purposes" with no sub-categories being described and no detailed definition of residential use or purposes being provided. In particular, no distinction is
made between a lease which is owner occupied or let out in some way and whether any letting should be on a short or long-term basis. The context within which the questions raised in this appeal arises, therefore, is not one where we are required to embark upon an inquiry as to whether within any particular category the lease might be further described as a subcategory of some sort or whether a definition of "residential use" supplied by the regulations is satisfied. With regard to s.12A(1), the inquiry must be whether the lease is residential in contrast with the other categories provided for in the Regulations and not whether the use of the land satisfies some particular and narrow meaning of "residential”. We therefore see the initial question as being one which requires us to consider simply whether the land is used for residential purposes: and here we emphasise the word "used". We are talking of the actual observable use on the leased land, viewed through the eyes, if you like, of the objective passerby. We should then ask whether any such residential usage is "sole".
Before considering these questions, we should dispose of one matter. We observe that s.12A(1) refers to the use of a “lease”. The term "lease" is used in a variety of senses throughout the Land Act; however, in a general sense is taken to refer to a grant of occupation or possession of land subject to any conditions in the grant. In s.12A(1) we understand the term to be used somewhat loosely to refer to the land which is subject to the grant of occupation or possession. In the instant case the lessee does not make use of the land which is subject to the lease in the sense that we have understood the word "used". Accommodation units in the condominium building are sub-leased and it is the sub-tenants who use the units which are owner-occupied; and the paying visitors who use the units which are let through the letting pool arrangement.
Neither in the Land Court, nor before us, did argument from either side focus upon the use which may be made of the lease, for each hearing proceeded on the basis that the lease may be used for residential purposes. The question is whether it is used for residential purposes and whether that is the sole use.
The learned Member at first instance concluded that the words "residential purposes" mean purposes which may be described as "for or connected with a person’s permanent place of abode". Some of the units were occupied or capable of being occupied through the letting pool, "for short or transitory periods". The Member found that such occupation could not be regarded as "equating with residence" nor that those units could be regarded as "the occupant’s usual or permanent place of abode", and thus were not used by their occupants for "residential purposes". Given that finding it followed that the lease was not being used solely for residential purposes and could not therefore be a category 3 lease.
The Member’s finding was in accord with the submissions of the respondent in the Land Court and before us.
The appellant’s submission before us was that the Member’s interpretation of "residential purposes" was erroneous and that "the proper construction of the expression is not limited in that way but extends to residential purposes in a wide sense". It should not be based on the narrower and "ordinary meaning of 'residence' as a place of permanent abode". It was submitted that the word "residential" in s.12A(1) has a meaning not in the sense of a building which constitutes a person’s permanent abode, but one "suitable for or characterised by occupation and habitation for living purposes as opposed to a place of work or entertainment or commercial activity". Further, in s.12A(1) "residential" is "not descriptive of the legal notion of the act of residence in a particular place, nor is it descriptive of the premises within which residence in that legal sense exists. It is descriptive of the purposes for which a lease may be and is used".
Now we doubt that we need to list the types of activity which would be taken to be usual in a residential unit, however, it was said in Stoke-on-Trent Borough Council v. Cheshire County Council [1915] 3 KB 699 at 706
"The place of residence of a person is the place where he eats, drinks, and sleeps". (per Ridley J)
In other words if one eats, drinks and sleeps or carries out similar activities on a piece of land, for whatever period, that is a residential usage. Such activities may not be characterised as any other type of usage, in particular, as commercial. More importantly, we see no reason to apply a narrower sense to the term "residential"; indeed, if the Parliamentary draftsman had wished the term to be read narrowly as, say, a home, or a principal place of residence, then he would have used such language. We have already noted that greater detail was provided in the case of the word "farming" in category 2. In the instant case, we are therefore not concerned with the difference in the term of usage between, say, an owner-occupier on the one hand and an overnight occupant on the other, for each is putting the land to a residential usage in our view. We note in passing that s.11(1) of the Land Regulations 1995 provides a different formulation for a category 3 lease than the one we are considering:
"A lease is a category 3 lease if, under its conditions it may be used solely for, and it is being used solely for, a single dwelling house."
This formulation would, it seems, be read narrowly in contrast with s.12A(1) of the 1988
Regulations.
It is often the case that in the construction of a particular statute reference to cases where a similar term in another statute was considered is of little assistance. We are in our consideration of this appeal comforted, however, by reference to the decision of the English Court of Appeal in Owen v. Elliott (Inspector of Taxes) (1990) 1 Ch. 786. In that case the landholders used a large part of the relevant premises to let out to guests who stayed for various periods. The question which the Court had to consider was whether such lettings constituted a letting of "residential accommodation". At first instance the Judge had found that the phrase meant a letting to persons making their home in the premises as opposed to paying guests staying there overnight or on holiday. The Court of Appeal held, however, that there was nothing in the legislation requiring the ordinary meaning of "residential accommodation" to be displaced. In the words of Parker LJ:
"... if one supposes further that somebody went in from the street and was offered that which is described in the stated case, it is to my mind unthinkable that he could turn round and say, 'you are not offering me residential accommodation.'" (p.791)
Similarly we say that a paying guest using one of the units in the condominium building either on a short or long-term basis is using the unit for residential purposes. We need to now consider whether the letting of some of the residential units by way of the pool arrangement with Mirage Resorts (the Management Services Agreement) has an impact on the residential usage to the extent that such residential usage becomes one of a dual usage and therefore not a "sole" usage, as is required in s.12A(1). Here we consider that the question which ought to be asked is whether those activities of Mirage Resorts (through Sheraton Pacific), which are clearly commercial in character, intrude in any way and impact upon the residential usage of the subject land. If it is appropriate to say that the commercial activities of Mirage Resorts constitute a use of the subject land, then quite clearly the residential usage is not "sole". A use of land involves that land being applied to, employed for some purpose, put into service, turned to account (Macquarie Dictionary 1st Ed). That is, there must be some actual observable use: an activity. The activities of Mirage Resorts as letting agents, though they would involve commercial activities such as the advertising and letting out of units in the condominium erected on the leased land, are not actually carried out on the leased land and therefore do not constitute a use of that land.
Mirage Resorts does, however, carry out certain activities on the leased land. These include certain activities required by the Management Services Agreement and others pursuant to
the Agreement for Services and Maintenance. We have referred to two authorities to assist in our consideration of these matters:
In Council of the Municipality of Randwick v. Rutledge (1959) 102 CLR 54 the following words appear at pp.93-94:
"The words 'exclusively' and 'solely' are familiar in fiscal and rating law. Where an exemption from rating depends upon the use of land exclusively for a particular stated purpose, then the use must be for that purpose only (Nunawading Shire v. Adult Deaf and Dumb Society of Victoria (1921) 29 C.L.R. 98). The question arises, for example, when part of the subject land is used for the relevant purpose and another part for a different purpose (Sisters of Mercy Property Association v. Newtown and Chilwell Corporation (1944) 69 C.L.R. 369). The presence of 'exclusively', 'solely', or 'only' always adds emphasis; and is not to be disregarded (Reg. v. Cockburn (1852) 16 Q.B. 480, at p.491 [117 E.R. 962, at p.967]). When such words are present, it is a question of fact whether the land is being used for any purpose outside the stipulated purpose (cf. Trustees of Victorian Rifle Association v. Mayor of Williamstown (1890) 16 V.L.R. 251; Down v. Attorney-General of Queensland (1905) 2 C.L.R. 639). As Kitto J. said in Lloyd v. Federal Commissioner of Taxation (1955) 93 C.L.R. 645, at p.671, such words confine the use of the property to the purpose stipulated and prevent any use of it for any purpose, however minor in importance, which is collateral or independent, as distinguished from incidental to the stipulated use." (Per Windeyer J). (emphasis added)
In WH Bowden against determination of Valuer-General, Shire of Pine Rivers, (1980-81) 7 QLCR, the Land Appeal Court had to consider the question of whether land was "exclusively used ... for purposes of the business of primary production ...". The following quotation is taken from pp.142-143:
" Mr Jones submits that whilst much of Mr Bowden’s business activities on 'Warner Hill' fall within the definition of the business of primary production, (namely the business of the rearing of livestock) such business does not include the preparation of the training of horses for, and taking part in, competitive events or sport. He maintains such activities are collateral to the business of a stud. He emphasises the trend for Appaloosas and Quarter Horses in Australia to take part in racing.
On the evidence as a whole we find that Mr Bowden’s activities on 'Warner Hill' constitute a business of primary production in that he is in the course of establishing a viable horse stud - a business of rearing of livestock. We note according to the Concise Oxford Dictionary (3rd edition) that the meaning of the word 'rear' is 'raise, bring up, breed, foster, nourish, educate, cultivate, grow (cattle, game, children, crops, etc.)'
We consider that the activities subsequent to breeding namely handling, training, showing and competing in competitions are essentially an integral part of such business and are undertaken to enhance the reputation or credentials of the stud - a necessary part of the processing of the animals for market. If their
qualities are so demonstrated, a higher price may be commanded when they are sold.
On the evidence before us, we regard all these subsequent activities in the subject case as incidental to the business of the stud and not collateral or independent thereof." (emphasis added)
Having regard to the reasoning in these two cases, we hold that the activities of cleaning, servicing and maintenance of units pursuant to the Management Services Agreement are not commercial in nature but are incidental to, indeed facilitate, the residential usage of the units which are let out. The arrangement under which Mirage Resorts (or any other entity) provides cleaning and maintenance services to the subject land (that is under the Agreement for Services and Maintenance) is clearly incidental to the residential usage of long-term owners and tenants and cannot be described as a collateral commercial usage.
There is no evidence of any other commercial activity such as the selling of services or produce or the conduct of a business occurring on the subject land, therefore the only use, or the "sole" use, which is present on the land is residential.
We hold, therefore, that the subject lease may be used, and is used solely for residential purposes and is a "category 3" lease. The appeal should be allowed. The decision of the Land Court should be set aside and the lease should be designated as a "category 3" lease.
RE WENCK MEMBER OF THE LAND COURT
RP SCOTT MEMBER OF THE LAND COURT
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