Penola & District RATEPAYERS' & RESIDENTS' Asscn Inc v Wattle Range Council
[2011] SASCFC 62
•1 July 2011
SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
PENOLA & DISTRICT RATEPAYERS' & RESIDENTS' ASSCN INC & ANOR v WATTLE RANGE COUNCIL
[2011] SASCFC 62
Judgment of The Full Court
(The Honourable Justice Nyland, The Honourable Justice White and The Honourable Justice David)
1 July 2011
LOCAL GOVERNMENT - POWERS, FUNCTIONS AND DUTIES OF COUNCILS GENERALLY - PARTICULAR POWERS AND FUNCTIONS - POWERS OVER LAND - WHERE LAND HELD AS TRUSTEE - POWERS GENERALLY
LOCAL GOVERNMENT - POWERS, FUNCTIONS AND DUTIES OF COUNCILS GENERALLY - PARTICULAR POWERS AND FUNCTIONS - POWERS OVER LAND - CLASSIFICATION OF LAND
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - POWERS OF COURT - OTHER MATTERS
The respondent Council owns land known as the "Penola Commonage Land" on trust - the Council proposes constructing a bypass road around the township of Penola, part of which would traverse the Commonage - a Judge of this Court upheld the validity of a resolution of the Council declaring the relevant portion of the Commonage to be a public road and a later resolution inviting, in effect, the Commissioner of Highways to acquire compulsorily that portion of the land.
Appellants appeal against that decision - whether the construction of the bypass road on a portion of the Commonage is permitted by the terms of the Trust itself - whether the declaration of Trust had the effect of precluding the Council from exercising in relation to the Commonage its statutory powers with respect to road making - whether the declaration of Trust was invalid to the extent that it constituted a self-imposed fetter on the future exercise by the Council of its statutory powers and discretions - whether the appellants' delay in bringing the primary action and in prosecuting the appeal should by itself lead to the refusal of the declarations which they seek.
Held (dismissing the appeal): the construction of a public road such as the bypass was not one of the uses of the Commonage permitted by the Trust itself - however, on its proper construction, the Trust did not preclude the exercise by the Council of its statutory powers with respect to road making - if the Trust did have that effect, it would have been invalid, at least to that extent, as an infringement of the principle of executive necessity - the lapse of time would not have disentitled the appellants to the grant of declaratory relief if they had otherwise been entitled to it.
Local Government Act 1999 (SA) s 193, s 194, s 195, s 208, s 210; Local Government Act 1934 (SA) s 5A, s 7, s 35, s 35A, s 36, s 166, s 305, s 459A, s 668; Roads (Opening and Closing) Act 1991 (SA) Pt 3, Pt 4, Pt 25; Highways Act 1926 (SA) s 20; Supreme Court Civil Rules 2006 (SA) r 200, referred to.
Re Gulbenkian's Settlement Trusts [1970] AC 508; Ansett Transport Industries (Operations) Pty Ltd (1977) 139 CLR 54; City of Subiaco v Heytesbury Properties Pty Ltd [2001] 24 WAR 146, applied.
Penola & District Ratepayers and Residents Association Inc & Butler v Wattle Range Council [2010] SASC 218, discussed.
Penola & District Ratepayers and Residents Association Inc & Anor v Wattle Range Council & Anor [2011] SASC 77; New Plymouth District Council v Waitara Leaseholders Association Inc [2007] NZCA 80; Nick Krithas Holdings Pty Ltd (in liq) v Gatsios Holdings Pty Ltd (2001) 38 ACSR 57; Mettoy Pension Trustees Ltd v Evans (1990) 1 WLR 1587; Commissioners for Special Purpose Income Tax v Pemsel [1891] AC 531; Bathurst City Council v PWC Properties Pty Ltd [1998] 195 CLR 566; Harrison v Brisbane City Council (1990) 1 Qd R 129; Inland Revenue Commissioners v Baddeley [1955] AC 5723; Attorney-General for the Northern Territory v Hand (1991) 172 CLR 185; Chiropractors Association v WorkCover Corporation (1999) 75 SASR 374; Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513; Ayr Harbour Trustees v Oswald [1883] 8 AC 623, considered.
PENOLA & DISTRICT RATEPAYERS' & RESIDENTS' ASSCN INC & ANOR v WATTLE RANGE COUNCIL
[2011] SASCFC 62FULL COURT: Nyland, White and David JJ
NYLAND J: I agree that the appeal should be dismissed for the reasons expressed by White J. I have nothing to add.
WHITE J. The Wattle Range Council (the Council) wishes to construct a bypass road around the town of Penola, which is in its Council area. A section of the proposed bypass will traverse land known as the Penola Commonage Land (the Commonage) of which the Council is the registered proprietor.
The Council holds the Commonage subject to a declaration of trust executed by it on 6 May 1998 (the Trust). By the Trust, the Council declared that it held the Commonage (apart from an area of 2.461 hectares) “for the public use of the residents of the former District Council of Penola … for sporting, agricultural, educational, recreational, community or like purposes” and subject to some specified conditions.
The appellants are opposed to the construction of the bypass road, at least in its presently proposed location. They brought proceedings seeking declarations that decisions made by the Council to enable the bypass road to traverse the Commonage were invalid and of no effect. Their principal contentions were that the resolutions were in breach of the Trust, and in breach of provisions in the Local Government Act 1999 (SA) (the LGA) relating to land held by a Council on trust.
A Judge of this Court rejected most of the appellants’ claims and, with one exception, refused to make the declarations.[1] The appellants now appeal against that decision.
[1] Penola & District Ratepayers & Residents Association Inc & Butler v Wattle Range Council [2010] SASC 218.
The Council has raised two issues by notice of alternative contention. First, it contends that, in addition to the grounds relied upon by the Judge, his decision should be upheld because the Trust, on its ordinary construction, permits the use of the Commonage for “the purpose of the provision of a public road for use by, inter alia, the residents of the former District Council of Penola”.
The Council raises, secondly, the considerable delay by the appellants in setting the appeal down for hearing. The circumstances of the delay are set out in an earlier decision of this Court.[2] The Council contends that that delay, coupled with the lapse of time before the appellants commenced the originating proceedings, should disentitle the appellants to declaratory relief, even if this Court finds that the appeal should otherwise succeed.
[2] Penola & District Ratepayers & Residents Association Inc & Anor v Wattle Range Council & Anor [2011] SASC 77.
Background Circumstances
The whole of the evidence at trial was documentary and there was little dispute about the events and circumstances giving rise to the appellants’ claims (as opposed to their legal effect).
The Council was formed on 1 July 1997 by the amalgamation of the District Councils of Beachport, Millicent and Penola. Before the amalgamation the Commonage was owned by the District Council of Penola and, by reason of the amalgamation, the Council became its registered proprietor.[3] The Commonage comprises some 250 hectares to the immediate south of the town of Penola. Although its boundaries are irregular, it has an elongated shape, measuring about 2.9km on its north-south axis and with an average width of about 800m. The Riddoch Highway (the main thoroughfare between Keith to the north and Mt Gambier to the south) traverses the Commonage in one place, and forms part of its eastern boundary in another.
[3] Section 7(7) of the Local Government Act 1934 (SA), which was in force at the time of the amalgamation, provided:
(7)Where two or more councils are amalgamated under this section so as to form a single council, the assets, rights and liabilities of the councils subject to the amalgamation are, on the amalgamation, vested in or attached to the council formed by the amalgamation.
It seems that the Council executed the Trust on 6 May 1998 in order to ensure that the Commonage would continue to be available for the public use of the residents of the former District Council of Penola, even though it was no longer under the control of that Council. The Declaration of Trust provides (relevantly):
[The Council]…declares that it holds the land referred to in Item 1 of the Schedule upon and subject to the trust created by this instrument referred to in Item 2 of the Schedule but subject nevertheless to the further conditions specified in Item 3 of the Schedule ….
Schedule
Item 1 – The Land …
Item 2 – The Trust
To hold the Subject Land for the public use of the residents of the former District Council of Penola (in its configuration as at 30 June 1997) for sporting, agricultural, educational, recreational, community or like purposed (sic) but subject to the conditions specified in or contemplated by this instrument.
Item 3 – Further Conditions
3.1 Use or access to the Subject Land by any person shall be subject to:
(i) such restrictions, regulations or prohibitions as the Council (or its successors) may apply from time to time to such use or access consistent with achieving an appropriate level, type and mix of uses of the Subject Land and, specifically, to avoid or otherwise best manage conflicting uses of the Subject Land;
(ii)the continuation of the existing licensed use on the Subject Land for the disposal of septic tank effluent;
(iii)Such other by-laws and regulations as the Council (or its successors) may legally make for the proper management of the Subject Land.
3.2 The Council shall take such steps as may be reasonably available to it in order to obtain a freehold title to the Subject Land (whether together with or separate from the Excluded Land).
By 2006 the Council had developed a proposal for a bypass to allow traffic to travel on the Riddoch Highway without having to travel through the Penola township. It proposed that part of the bypass would traverse part of the Commonage. The portion of the Commonage involved is 2.5 hectares, ie, less than 1 per cent of the total area of the Commonage.
By virtue of s 193(1) of the LGA, all land owned by a Council is, with certain exceptions, taken to have been classified as “community land”. The Council proceeded on the basis that the Commonage was community land, and it has not been suggested that it was in error in doing so.
The Council initially set out on a course of action to exclude the relevant portion of the Commonage from classification as community land and then, under s 208 of the LGA to declare that portion to be a public road. Sections 193(1) and (2) of the LGA contemplate that a Council may resolve to exclude land from classification as community land, and s 194 stipulates the procedure which a Council must follow in order to do so.[4] That procedure requires the preparation of a written report concerning the proposal, public consultation and the submission of the proposal to the relevant Minister for approval.
[4] Section 193(1) and (2) provide as follows:
By s 194(1) of the LGA, certain kinds of Council owned or managed land cannot be excluded as community land. Of relevance for present purposes is s 194(1)(b) which provides:
The classification of land as community land cannot be revoked if the land is required to be held for the benefit of the community under Schedule 8, under a special Act of Parliament relating to the land, or under an instrument of trust.
Section 195 of the LGA provides for the effect of a revocation of classification of land as community land. It provides:
(1)The revocation of the classification of land as community land frees the land from a dedication, reservation or trust affecting the land, other than a dedication, reservation or trust under the Crown Lands Act 1929.
(2)If it appears from the Register Book that the land is subject to a dedication, reservation or trust, other than a dedication reservation or trust under the Crown Lands Act 1929, the council must, immediately after the revocation of the classification of land as community land, give notice of the revocation to the Registrar-General in a manner and form approved by the Registrar-General (and the Registrar-General must then make appropriate amendments to any relevant instrument of title or other public record).
It was not suggested that the exception arising from a dedication, reservation or trust under the now repealed Crown Lands Act 1929 (SA) to which subs (1) refers had any relevance in the present case.
The Council embarked upon the procedure contemplated by s 194 for the revocation of the relevant portion of the Commonage as community land. On 7 November 2006 it resolved to submit the revocation proposal to the Minister and, on 5 March 2007, the Minister gave her approval to that revocation. On 10 April 2007, and purporting to act under s 194(3)(b) of the LGA, the Council then resolved to revoke from classification as community land the portion of the Commonage required for the bypass.
Next, and purporting to act under s 208 of the LGA, the Council on 8 May 2007 declared the relevant portion of the land to be a public road. Section 208 provides:
(1)All public roads in the area of a council are vested in the council in fee simple under the Real Property Act 1886 (and any land so vested that has not been previously brought under that Act is automatically brought under that Act without further application).
(2)When land vests in a council as a public road under this or another Act, the land is discharged from all mortgages, charges, easements and other encumbrances, and all other rights, privileges, trusts, limitations or restrictions (unless provided otherwise by this or another Act).
(3)Subsection (2) does not operate so as to discharge any easement that the council resolves to preserve under this subsection.
(4)A council must cause a copy of a resolution declaring a road or land to be a public road, or preserving an easement under subsection (3), to be published in the Gazette.
(5)A resolution declaring a road or land to be a public road will not take effect until publication under subsection (4).
By subs (2) the vesting in a council of land as a public road has the effect of discharging the land from, amongst other things, all trusts affecting that land.
Notice of the Council’s declaration of the relevant portion as a public road was published in the Government Gazette on 17 May 2007. The Council had also published the revocation of the classification of the land as community land in the Gazette on 19 April 2007.
At the trial, the appellants challenged first the validity of the resolutions of 10 April 2007 and 8 May 2007. In relation to the former, they focussed on the words “under an instrument of trust” in s 194(1)(b), contending that by reason of the declaration of trust by the Council on 6 May 1998, the Commonage was subject to such an instrument and therefore could not be excluded as community land. As will be seen, the trial Judge accepted that contention. However, the Judge rejected the challenge to the validity of the resolution of 8 May 2007.
The Roads (Opening and Closing) Act 1991 (SA) (the Roads Act) contains a separate procedure by which a road may be opened or closed by an authority such as the Council. A road may be opened by a “Road Process Order” made by a Council, confirmed by the Minister and notified in the Gazette in accordance with the Roads Act. Part 3 of the Roads Act prescribes “the road process” which a Council must follow in order to open a road under that Act.
On 9 July 2008 the Council resolved to commence the process for making a Road Process Order in respect of the various pieces of land, including the portion of the Commonage, which make up the whole of the proposed bypass road. By adopting this course of action it seems that the Council had decided not to act on its public road declaration of 8 May 2007.
However, on 21 October 2008 the appellants’ solicitors suggested that use of a portion of the Commonage for the bypass road would be a breach of the Trust. This seemed to prompt the Council to adopt a different strategy again. Section 20(1)(a) of the Highways Act 1926 (SA) (“the Highways Act”) empowers the Commissioner of Highways (the Commissioner), subject to the approval of the Minister, to acquire by agreement or compulsory process any land or interest in land for the purposes of present or future roadwork or other purposes connected with the Highways Act. On 9 December 2008 the Council resolved to approach the Minister for Transport with a request that the Commissioner acquire the relevant portion of the Commonage pursuant to s 20(1)(a), and on 11 December 2008 the Council made such a request. To date, neither the Minister nor the Commissioner have acted on the Council’s request.
The appellants contended that the resolution of 9 December 2008 was invalid because it was a breach of the Trust.
In summary, at the trial the appellants sought declarations of invalidity in relation to each of the Council resolutions of 10 April 2007, 8 May 2007 and 9 December 2008 and an injunction restraining the Council from acting in accordance with those resolutions.
The Decision at First Instance
The trial Judge held that if the declaration of trust of 6 May 1998 was valid and effective, the resolution of 10 April 2007 contravened s 194(1)(b) and accordingly was not authorised by the LGA.[5] His Honour considered it far from clear that the Council was empowered to make the Trust, but neither party had put in issue its authority to do so. Accordingly, the Judge proceeded on the basis that the Council did have the requisite power.[6] This meant that the resolution of 10 April 2007 was invalid and the Judge made a declaration to that effect. The Council has not filed any cross-appeal against that declaration.
[5] Penola & District Ratepayers & Residents Association Inc & Butler v Wattle Range Council [2010] SASC 218 at [28].
[6] Ibid at [59].
The Judge concluded, however, that by executing the declaration of trust, the Council had neither expressly nor impliedly agreed to restrict its powers in relation to the declaration or making of public roads and accordingly held that the resolution of 8 May 2007 was valid.[7] His Honour went on to hold that if the Trust did, on its proper construction, restrict the Council’s power to declare land to be a public road, then it would have been ineffective to the extent that it purported to deprive the Council of its statutory powers in relation to planning in general and to road opening in particular.[8] In this respect, the Judge applied the principle that a public authority such as the Council may not preclude itself from exercising its statutory powers nor abdicate its statutory duties.
[7] Ibid at [63]-[65].
[8] Ibid at [69].
Next, the Judge held that the Council’s resolution of 9 December 2008 to approach the Minister with a request that the Commissioner acquire the relevant portions of the Commonage was within its powers and, that even if the Council was bound by the Trust, the resolution did not constitute a breach of it.[9]
[9] Ibid at [54].
Finally, the Judge held that the lapse of time between the resolution of 10 April 2007, on the one hand, and the commencement on 18 March 2009 of the proceedings for the declarations, on the other, did not disentitle the appellants to a declaration of invalidity in respect of that resolution.
The effect was that the Judge made a declaration that the Council’s resolution of 10 April 2007 was invalid, a declaration that the exercise of the Council’s statutory powers as a road authority in relation to the proposed bypass was not fettered by the Trust, and declarations that the resolutions of 8 May 2007 and 9 December 2008 were valid. His Honour also held that the Council’s request to the Commissioner of Highways did not amount to a breach of trust and dismissed the appellants’ claims for injunctions.
Issues on Appeal
The grounds of appeal and the Council’s notice of alternative contention give rise to a number of issues concerning the validity of the Council’s public road declaration of 8 May 2007:
1.Do the uses of the Commonage permitted by the Trust include the construction of a public road for use by the residents of the former District Council of Penola?
2.If so, is the proposed bypass such a use?
3.On the basis that the declaration of trust on 6 May 1998 was valid, does the Trust have the effect that the Council did not have power to declare the relevant portions of the Commonage to be a public road? Put slightly differently, on the assumed basis, was the Council’s resolution of 8 May 2007 validly made? There are two aspects to this issue. One involves consideration of the Council’s powers under the LGA. The second involves a construction of the Trust: does it expressly or impliedly exclude, in relation to the Commonage, the exercise by the Council of the statutory powers which would otherwise be available to it?
4.If the effect of the Trust is to preclude the exercise by the Council of the powers otherwise available to it in relation to the Commonage, is it, at least to that extent, invalid because it amounts to a self-imposed fetter on the exercise by the Council of its statutory functions and responsibilities?
In relation to the Council’s resolution of 9 December 2008 that the Commissioner be requested to acquire the relevant portion of the Commonage, similar issues arise, namely:
5.Did the Council resolution of 8 December 2008 constitute a breach of the Trust?
6.If so, is the declaration of Trust on 6 May 1998 invalid to the extent that its effect is to fetter unlawfully the future exercise of the Council’s powers?
In relation to the resolutions of both 8 May 2007 and 9 December 2008, there is a further issue arising from the appellants’ delay in bringing the summons seeking declaratory relief and their delay in prosecuting the appeal. The Council contends that even if the appellants are otherwise entitled to relief, their delay should have the effect that this Court should refuse, in the exercise of its discretion, to grant the declaratory relief they seek.
I will consider these issues in turn.
The Trust and Use of the Commonage for a Public Road
The Council contended that the Trust, on its proper construction, permitted the use of the Commonage for a public road such as the proposed bypass. The submission focussed on the expression “community or like purposes” in the Trust. The Council submitted that a broad and liberal approach should be taken to identifying such purposes and that the construction of a road was within those purposes.
The Judge rejected the Council’s submission on this topic at trial, saying:
It is true that community purposes cover a wide range of activities, but this description is to be read in conjunction with the descriptions of the other activities included as objects of the Trust. Whereas the activities referred to are diverse, they are stated to be for the public use of the land by the residents in the enjoyment of the land. The Trust contemplates that the activities identified will take place on the land. In my view the “community” purpose contemplated would involve activities of a communal nature associated with the use of the land by the residents.
The bypass road might be said to be for the benefit of the community, but the fact that a section of it traverses the relevant portions of the Commonage Land is not something which comes within the description of the public use by residents of the land for a community or like purpose.[10]
In short, the Judge held that although the proposed bypass may benefit the community, it was not for an activity of a communal kind. Accordingly, his Honour held that the Trust did not, on its own terms, authorise the use of a portion of the Commonage for construction of the bypass.
[10] Ibid at [43]-[44].
On the appeal, the Council renewed its submissions concerning the uses of the land permitted by the Trust itself. The submissions concerning this aspect of the construction of the Trust were separate from its submission (to be considered later) that the Trust did not in any event preclude the Council exercising its statutory powers and responsibilities.
In construing the Trust, the Court should endeavour to give a reasonable meaning to the language used in it, having regard to the context and circumstances in which the Council made the declaration. In Re Gulbenkian’s Settlement Trusts[11] Lord Upjohn spoke of the Court’s task in the following passage:
The Court, whose task it is to discover that intention, starts by applying the usual cannons of construction; words must be given their usual meaning, the clause should be read literally and in accordance with the ordinary rules of grammar. But very frequently, whether it be in wills, settlements or commercial agreements, the application of such fundamental cannons leads nowhere, the draftsman has used words wrongly, his sentences border on the illiterate and his grammar may be appalling. It is then the duty of the Court by the exercise of its judicial knowledge and experience in the relevant matter, innate commonsense and desire to make sense of the settlor’s and parties’ expressed intentions, however obscure and ambiguous the language that may have been used, to give a reasonable meaning to that language if it can do so without doing complete violence to it.[12]
It has also been said that the Court’s approach to construction of trusts “should be practical and purposive rather than detached and literal”.[13]
[11] [1970] AC 508.
[12] Ibid at 522.
[13] Nick Krithas Holdings Pty Ltd (in liq) v Gatsios Holdings Pty Ltd [2001] NSWSC 343 at [18]; (2001) 38 ACSR 57, citing Mettoy Pension Trustees Ltd v Evans (1990) 1 WLR 1587 at 1610; [1991] 2 All ER 513.
It seemed to be common ground that the use of the Commonage had not, prior to the amalgamation of the Councils, been subject to any trust or to any formal restriction. Apart from one passing reference in a letter, the parties did not lead evidence at trial of the history of the Commonage or of the way by which it had come to be owned by the former Council, or of any circumstances which led to the declaration of trust on 6 May 1998. Assistance in construing the Trust cannot therefore be obtained from a consideration of surrounding circumstances of that kind. I note, however, that a solicitor’s letter suggested that the Commonage may have been left to the former Council many years previously by a prominent local resident.
The statutory context in which the Council operates is pertinent. At the time of the declaration of the Trust on 6 May 1998, the Local Government Act 1934 (SA) (the 1934 Act) was in force. That Act has since been substantially, but not completely, superseded by the LGA. Counsel submitted that in making the declaration of Trust the Council was exercising the powers vested in it by s 36(3)(c)(i) and (d) of the 1934 Act which provide:
36(3) A council –
…
(c) subject to this or any other Act –
(i)may acquire, deal with and dispose of real and personal property (wherever situated), and rights in relation to real and personal property;
…
(d)has power to do anything else necessary or convenient for, or incidental to, the exercise, performance or discharge of its powers, functions or duties under this or any other Act.
Like the trial Judge, I consider it far from clear that these provisions did authorise the declaration of trust, but neither party on the appeal impugned the Council’s authority in that respect.
Section 5A of the 1934 Act stated the objects of local government as follows:
(a)to provide a representative, informed and responsible decision-maker in the interests of developing the community and its resources in a socially just and environmentally sustainable manner; and
(b)to ensure a responsive and effective provider and co-ordinator of public services and facilities at the local level; and
(c)to provide an initiator and promoter of effort within a local community; and
(d)to represent the interests of a local community to the wider community.
By s 35, a council’s responsibilities were stated in the following terms:
(a) the management of the affairs of the area in relation to which it is constituted; and
(b)the exercise, performance and discharge of the powers, functions and duties of local government conferred on the council by this or any other Act in, and in relation to, the area for which it is constituted.
Finally, s 35A of the 1934 Act, which concerned the general management, functions and objectives of a council is pertinent:
(1) The functions of a council include the following:
(a) to determine policies (not inconsistent with this Act or any other applicable law) to be applied by the council in exercising its discretionary powers;
(b) to determine the type, range and scope of projects to be undertaken by the council;
and
(c) to develop comprehensive management plans, budgets, financial controls and performance objectives and indicators for the operations of the council.
(2) The operations and affairs of the council should be managed—
(a) in a manner which emphasises the importance of service to the community;
(b) so as to enable decisions to be made, and action taken, efficiently and effectively through clear division of administrative responsibilities, delegation of authority where appropriate, and flexible and responsive deployment of resources;
and
(c)with the goal of continued improvement in efficiency and effectiveness.
In general, it can be said that the Council had responsibilities under the 1934 Act to promote and develop infrastructure and services for the betterment of the communities in its area. Those responsibilities included the construction and maintenance of streets and roads.
As will be seen, I consider that the fact that the Commonage was in 1998 already owned in fee simple by the Council to be a relevant circumstance. This is not a case in which a council came to hold the land only by its acceptance of a trust. This means that the Trust has the effect of a self-imposed fetter by the Council on its existing powers in relation to the Commonage. I also consider that the circumstances in which the Council may declare land it already owns to be a public road to be important.
On its face, the Trust is a charitable Trust of the fourth kind described by Lord Macnaghten in Commissioners for Special Purposes of Income Tax v Pemsel,[14] namely, a trust for purposes beneficial to the community which is not a Trust for the relief of poverty, the advancement of education or the advancement of religion.[15] The Trust is intended to benefit the residents from time to time in the area of the former District Council of Penola. It is a purpose trust with the purpose first being stated at a level of considerable generality (“for the public use”) and then somewhat more specifically, although still at a level of generality, by the descriptive words (“for sporting, agricultural, educational, recreational, community or like purposes”). The latter statement of purposes appears to qualify and confine the former.
[14] [1891] AC 531.
[15] Ibid at 583.
The expression “public use” has a broad, if not entirely certain, meaning. The High Court has said in the context of local government legislation that the phrase “for a public purpose” is a wide phrase which should not be read narrowly.[16] In the context of the Trust, the expression seems to have the same meaning as “public purpose” or “public benefit”.[17]
[16] Bathurst City Council v PWC Properties Pty Ltd [1998] HCA 59 at [48]; (1998) 195 CLR 566 at 586.
[17] Cf Harrison v Brisbane City Council (1990) 1 Qd R 129 at 132, 134.
At the outset it can be said that the expression “public use” serves to indicate that the land is reserved for public, as opposed to private, purposes. That is to say, it contemplates use by the residents in the area of the former District Council of Penola, or at least a portion of such residents, in a way to which residents generally have access, as opposed to use of a private or individual kind.
The construction of a road for use by the general public and not just the select few is undoubtedly a public use or a public purpose in the same way as is a bridge or other item of infrastructure available for use by all. In Inland Revenue Commissioners v Baddeley[18] Viscount Simonds said, in relation to the public purposes which may be the subject of a charitable trust:
[A] bridge which is available for all the public may undoubtedly be a charity and it is indifferent how many people use it. But confine its use to a selected number of persons, however numerous and important: it is then clearly then not a charity. It is a not a general public utility: for it does not serve the public purpose which its nature qualifies it to serve.
If it were not for the confining effect of the descriptive words which follow, it would be plain that the construction of a public road on part of the Commonage could be a kind of public use.
[18] [1955] AC 5723 at 592.
This meaning of the expression “public use” in the Trust is supported by the fact that it was used by a council exercising powers under a predecessor of the LGA. As noted earlier, the objects of local government are in a general sense the promotion of the interests of local communities and the provision of services to them. The declaration of the Trust on 6 May 1998 should be understood as being consistent with the discharge by the Council of those responsibilities.
The broad scope of purposes which the Trust would otherwise have is, however, confined to some extent by the descriptive words (“sporting, agricultural, educational, recreational, community or like purposes”). If it were otherwise, those descriptive words would have little content. In my opinion, the Council’s use of the descriptive words in the declaration of Trust indicates that it intended that the Commonage should be used only for particular kinds of public purposes.
The Council submitted that the word “community” in the descriptive words should be given the full meaning which it is capable of bearing and, in particular, that it contemplates a permitted use of the land which is separate and distinct from the uses contemplated by the other descriptive words. The Council then submitted that use of the land for a road was a community purpose.
I agree that each of the descriptive words, including the word “community” should be given their full effect. There is no reason to construe any of those words narrowly. The very nature of the Trust, the descriptive words and the concluding words “or like purposes”, indicate that this is an appropriate construction. I also agree that a proposed use need be like only one of the specified purposes in order to be permitted by the Trust.
There are difficulties, however, in identifying the proper meaning of the expression “community purpose” in the context of the Trust. There are two particular difficulties. First, it is reasonable to suppose that the expression “community purpose” is not used with the same meaning as “public use” or “public purpose”. If it was otherwise, the word would not serve to confine the purposes to which the Commonage may be put, even though that is the apparent intention of the descriptive words. This suggests that the Trust contemplates that there may be some uses which will be encompassed by the expression “public use” but not by the expression “community purposes”.
Secondly, as I have already indicated, it is reasonable to suppose that the expression “community purposes” is intended to refer to purposes other than those of a sporting, agricultural, educational or recreational kind. If it did not, the word “community” would have no additional effect. That is not to suggest that there may not be some overlapping of the uses contemplated by the descriptive words.
It is pertinent, in my opinion, that the descriptive words refer to “purposes” and not “activities”. The Trust should not therefore be construed as excluding the possibility of the use of the Commonage for some static purpose.
The first three, and possibly four, of the descriptive words appear to refer to activities for which the land may be used, as opposed to use of some static kind. By their nature, most sporting, agricultural and educational uses of land involve an activity of one kind or another. The same will be true of many recreational uses but not necessarily all. For example, a rest area may be a recreational use but involve scarcely any activity. However, a community purpose may not involve any activity at all. For example, the preservation of the Commonage as an open space, or as an area of native vegetation, or a wetland may serve a community purpose, but involve scarcely any human activity. Understood in this way, the Trust may permit the construction of some forms of static infrastructure on the Commonage, providing that that infrastructure is for a community purpose.
Each of the descriptive words would seem to exclude commercial use of the land, except to the extent that the commercial activity may be incidental to one or more of the specified activities. For example, the payment of a fee for entrance to a sporting event or for an educational course conducted on the Commonage would have a commercial element and be permissible, but activities of a purely commercial kind would not.
The expression “community purpose” was discussed in Attorney-General for the Northern Territory v Hand[19] in the context of Aboriginal Land Rights legislation. The High Court held that the word “community” suggests persons who are gathered in a particular locality and involved a level of cohesiveness in the persons said to constitute the group.[20]
[19] (1991) 172 CLR 185.
[20] Ibid at 191.
In my opinion, the juxtaposition of “public use” and “community purpose” in the Trust is important. That juxtaposition, and the notion that a community comprises persons gathered in a particular place and linked in some way suggests that the expression “community purposes” in the Trust should be understood as referring to the communal activities or purposes of a cohesive group of residents in the area of the former District Council of Penola. It is not easy to identify the outer limits of the meaning of the expression when understood in this way but, as I say, it does at the least refer to activities and purposes of a general communal, but not commercial, kind.
The resolution of the question of whether the construction of a public road is a community purpose of this kind remains difficult. Residents may make common use of a road, but in general parlance one does not speak of a communal use of a road. Persons using roads generally do so as individuals, and not as part of any communal activity. On the other hand, as I have noted, the Trust refers to community purposes rather than activities and the construction of a public road, other than a specific purpose road, is almost invariably for a community purpose.
There is another feature of the statutory context, namely, the Council’s powers with respect to the establishment of new roads, which makes it unnecessary in my opinion to reach a concluded view about these matters. The Council is vested with such powers under both the LGA and the Roads Act. As will be seen, the power under the former is found in the definition of “public road” in s 4(1) and is recognised in s 208. Under the LGA the Council may declare land it already owns to be a public road, and under the Roads Act, the Council must engage in a Road Process Order if it wishes to open a new road.
The effect of a declaration of land as a public road under the LGA and of the making of a Road Process Order under the Roads Act is relevantly the same: the land vests in the Council in fee simple and it is discharged (relevantly) from all interests, including trusts, affecting it – see s 208(1) and (2) of the LGA quoted earlier in these reasons and s 25(1) of the Roads Act.[21] Hence, to construe the expression “community purpose” in the Trust as permitting the construction of a public road under those provisions would mean that the Trust contemplates uses of the Commonage which will result in it, or part of it, ceasing to be subject to the Trust altogether. In my opinion, this is an improbable construction. The uses of the Commonage contemplated by the Trust are uses while it continues to be subject to the Trust.
[21] Section 25(1) of the Roads Act provides:
(1)Where a road process order for a road opening is confirmed by the Minister, then, on publication in the Gazette of notice of the order and its confirmation—
(a) land not owned by the council over which the road is opened vests in the council for an estate in fee simple; and
(b) any interest in the land over which the road is opened that existed immediately before publication of the notice is extinguished.
Accordingly, whatever be the reach of the expression “community purposes”, the use for such a purpose would not seem to permit the Council to discharge the relevant portions of the land from the Trust. I am not willing to impute such an intended consequence to the Council as the Trust maker.
In reaching this conclusion, I have referred only to the LGA. As noted earlier, it was the 1934 Act which was in force at the time of the declaration of the Trust and it could be said that it is that Act to which reference should be made for present purposes. However, consideration of the 1934 Act produces the same result, as s 305(2a) of that Act provided that upon the vesting of any road or land in fee simple in the Council all rights, including trusts, over the land were discharged.
I conclude, therefore, that the uses of the Commonage contemplated by the Trust itself do not include the construction of a public road. This conclusion should not be understood as precluding the construction of an internal or like road on the Commonage to facilitate its use for one of the purposes nominated in the Trust. The Council may be able to construct such a road without having to make a public road declaration under s 208 or to engage in a road process under the Roads Act.
I also emphasise that my conclusion on this issue concerns only one of the issues of construction which arise. I will address later whether the Trust also operates to exclude the exercise by the Council of its statutory powers.
Issue Two – Is the Bypass Road a Contemplated Use?
My conclusion on the first issue means that this issue does not arise. However, a conclusion that a public road may be a community purpose within the meaning of the Trust, would not determine the question of whether the proposed bypass road is permitted by the Trust. There would still be a question as to whether that particular kind of public road is a community purpose of the kind contemplated by the Trust. In particular, there would remain an issue as to whether the proposed bypass is a community purpose of the residents in the area of the former District Council of Penola?
This question is essentially a question of fact. It requires consideration of the purposes for which the bypass is proposed and its likely usage in the event that it is constructed.
The trial Judge did not address this issue as, on the view of the Trust which he considered appropriate, it did not arise. I take the same view. However, in case this matter goes further, I will state my conclusion.
An affidavit of Mr Brennan, the Council’s Chief Executive Officer, was tendered at the trial. Mr Brennan deposed to the expected use of the bypass and to the Council’s purpose in constructing it. This evidence was supported by a report, exhibited to Mr Brennan’s affidavit, prepared for the South East Freight Logistics Task Force established by the Department of Transport, Energy and Infrastructure.
The Task Force report indicated that it was expected that by 2010 about 2,500 vehicles per day would use the bypass. Of these, approximately 520 (about 20 per cent) would be commercial vehicles and the balance the vehicles of residents and travellers. It is reasonable to assume that the majority, if not all, of these residents would be persons residing within the area of the former District Council of Penola. It also seems probable that many of the commercial vehicles would be owned or driven by residents in the same area, and carrying goods or produce to or from the same area. In addition, the bypass will facilitate access by residents living north of the township of Penola to employment centres to the south, and vice versa.
Mr Brennan said that the principal motivation for the construction of the bypass was the desire to remove heavy vehicles from the township of Penola, thereby improving vehicle and pedestrian safety.[22] In this way there would be indirect benefits to the community of Penola from the bypass.
[22] Strictly speaking it is the proposed use of the bypass, rather than the Council’s motivation for constructing it, which is the relevant matter: Attorney-General v Cooma Municipal Council (1962) 63 SR (NSW) 287.
Mr Brennan’s evidence was uncontradicted and there is no reason for this Court not to regard it as reliable.
In summary, Mr Brennan’s evidence indicates that the proposed bypass is likely to benefit the community of Penola. This benefit will be both direct (the facilitating of access by residents) and indirect (avoiding the detriments resulting from heavy traffic flows through Penola’s main street). It is plain that residents in the area of the former District Council of Penola will not be the only users of the bypass and that the usage by non-residents will be significant. Despite this, I consider that Mr Brennan’s evidence indicates that if the proposed bypass was otherwise permitted by the Trust, it would be for a community purpose of residents of the former District Council of Penola.
However, for the reasons given earlier I consider that the construction of the proposed bypass over part of the Commonage is not a use permitted by the terms of the Trust.
Did the Council have Power on 8 May 2007 to Declare Portion of the Commonage to be a Public Road?
In some respects it could be said that the issue of the Council’s power to declare relevant portions of the Commonage to be a public road has become academic. The Council has not purported, since 8 May 2007, to act on its declaration of the relevant portion of the Commonage as a public road. The Council considered instead invoking the Roads Act, and later still, having the Commissioner acquire the relevant portion of the Commonage under s 20(1)(a) of the Highways Act. Further, the evidence did not indicate any current intention of the Council to act on the resolution of 8 May 2007.
Nevertheless, the resolution still stands and may yet be acted upon by the Council. The trial Judge did make a declaration as to its validity and that declaration is the subject of appeal. Further, the issues arising under this ground are pertinent to the issue to be considered next, namely, whether it was open to the Council in 1998 to fetter its public road declaration powers by the declaration of a trust.
I propose to consider first the Council’s powers under the LGA to declare land which it already owns to be a public road, and the impact of the Trust, on the assumption that it has the effect for which the appellants contend, on the exercise of those powers.
I will then consider whether the Trust does have the assumed effect.
The Council’s Powers under the LGA
The LGA does not contain an express grant of power to a council to declare land which it already owns to be a public road. Section 210(1) does expressly authorise a council to declare a private road (ie, a road in private ownership[23]) to be a public road but there is no counterpart in respect of council owned land.
[23] See the definition of “private road” in s 4(1) of the LGA.
However, the LGA does contemplate that a declaration of council owned land as a public road may be made. Section 208(4) (quoted earlier in these reasons) requires a council to cause a copy of the resolution declaring a road or land to be a public road to be published in the Gazette, and subs (5) provides that the resolution will not take effect until publication in the Gazette has occurred. More pertinently, the definition of “public road” in s 4(1) of the LGA provides (relevantly):
Public road means –
(a) …
(b) any road –
(i) that is vested in a council under this or another Act; or
(ii)that is placed under a council’s care, control and management as a public road after the commencement of this Act,
but not including an alley, a laneway, a walkway or other similar thoroughfare vested in a council; or
(c) any road or land owned by a council, or transferred or surrendered to a council, and which, subject to this Act is declared by the council to be a public road; or
….
It can be seen that par (c) refers to land owned by a council which is declared by that council to be a public road.
The trial Judge held that a council’s power to declare land which it already owns to be a public road is implicit in par (c) of this definition. I agree. Paragraph (c) specifically contemplates two forms of land being declared to be a public road: land already owned by a council and land transferred or surrendered to a council. I also agree with the Council’s submission that s 208 appears to relate to land of the former kind, and s 210 to the latter.
It is unusual for a grant of power to be found in a definition provision, but not unknown. See for example Chiropractors Association v WorkCover Corporation[24] in which the power of WorkCover to “recognise” a medical expert as a “recognised medical expert” was found in the definition of that expression.
[24] [1999] SASC 470 at [5]; (1999) 75 SASR 374 at 377.
Paragraph (c) provides expressly that the power of a council to declare any road or land already owned by it to be a public road is subject to the LGA itself. The words “subject to this Act” in par (c) indicate that the power is qualified by the other provisions in the LGA, or at least by those provisions which are not themselves made subject to par (c).[25] In my opinion, these words indicate that a council may not contravene other provisions of the LGA when making a declaration of a public road. They also indicate that a council must comply with the procedural requirements of the LGA in relation to the making of a declaration. Subsections 208(4) and (5) appear to be provisions of this kind.
[25] Cf the discussion by McHugh J of the expression “subject to this Constitution” in Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513 at 577.
In my opinion, ss 193 and 194 of the LGA contain qualifications of a substantive kind on a council’s power to declare land to be a public road. As noted earlier, s 193(1) provides that all local government land, except roads, is to be taken to have been classified as community land. Section 194 contains a detailed procedure for the revocation of the classification of land as community land, and provides specifically that such a revocation cannot be made in respect of land required to be held by a council for the benefit of the community under an instrument of trust (subs (1)(b)).
A declaration (and its subsequent gazettal) that community land is a public road would, on its face, be inconsistent with these limitations. Once the declaration became effective, the land would cease to be community land, because community land does not include roads (s 193(1)). Thus, the gazettal of a declaration of the land as a public road would in effect be a revocation of the classification of the land as community land. This would occur without any compliance at all with the detailed procedures contained in s 194 for such a revocation. When, as in the present case, the land in question may be required by an instrument of trust to be held for the benefit of the community, that revocation would occur despite the express prohibition contained in s 194(1)(b).
The words “subject to this Act” in the implicit grant of power in par (c) remove the potential for these inconsistent outcomes. Their effect is to indicate that the power in par (c) may be exercised only in a way which is consistent with the limitations which would otherwise apply to a council’s conduct.
In the present case, the requirement that the public road declaration power be exercised “subject to this Act” means that the Council could not, by declaring the relevant portion of the Commonage to be a public road, revoke the classification of that land as community land. Further, if the declaration of trust of 6 May 1998 was valid and has the effect for which the appellants contend, it was not open to the Council, by a simple resolution made under par (c) of the definition of “public road”, and the subsequent gazettal of that resolution, to sidestep the limitation imposed on it by s 194(1)(b).
For these reasons, I consider that the trial Judge was correct in concluding that, if the Council had fettered its public road declaration powers by the declaration of trust, it was not authorised to make and gazette the resolution of 8 May 2007. That conclusion gives rise naturally to the next issue, namely, whether the Trust is to be construed as expressly or impliedly excluding the Council exercising, in relation to the Commonage, the statutory powers which would otherwise be available to it.
Does the Trust Expressly or Impliedly Exclude the Exercise of the Council’s Statutory Powers in Relation to Roads?
This issue concerning the construction of the Trust differs from the issue first considered. That issue concerned the uses of the Commonage contemplated by the terms of the Trust itself. The present issue requires consideration of whether the Trust, as well as not authorising on its own terms the construction of the public road, also operates to exclude the exercise in relation to the Commonage of the powers which would otherwise be available to the Council under the LGA.
Before addressing the parties’ submissions, it is appropriate to refer to the principle of executive necessity. This is the general principle, described by Mason J in Ansett Transport Industries (Operations) Pty Ltd,[26] “that a public authority cannot exclude itself from exercising important discretionary powers or performing public duties by incompatible contractual or other undertakings”.[27] Mason J went on to say:
[T]he public interest requires that neither the Government nor a public authority can by a contract disable itself or its officer from performing a statutory duty or from exercising a discretionary power conferred by or under a statute by binding itself or its officer not to perform the duty or to exercise the discretion in a particular way in the future.
…
It has been held that a resolution or undertaking by trustees that they will never in the future exercise powers in relation to certain land, powers which under the statute they might exercise at any time in the future, was incompatible with the statutory purpose for which the land was acquired and was therefore not binding on the trustees … It was with respect to cases of this class that Lord Birkenhead said in Birkdale District Electric Supply Co Ltd v Southport Corporation: “if a person or public body is entrusted by the Legislature with certain powers and duties expressly or impliedly for public purposes, those persons or bodies cannot divest themselves of these powers and duties. They cannot enter into any contract or take any action incompatible with the due exercise of their powers or the discharge of their duties.”
Furthermore it has been decided in town planning cases that a local or planning authority cannot by contract fetter in an anticipatory way its future discretion to approve or reject applications after proper consideration in accordance with the prescribed procedure …[28]
(Citations omitted)
[26] (1977) 139 CLR 54 at 74.
[27] Mason J cited Ayr Harbour Trustees v Oswald [1883] 8 AC 623.
[28] Ibid at 74-5. See also Brennan J in A v Hayden (1984) 156 CLR 532 at 587.
In some circumstances, the limitation or fettering of the future exercise of an executive discretion may be authorised by the statute. Mason J referred to such circumstances in Ansett Transport Industries[29] and Aickin J, in the same case, said:
I do not consider that an agreement authorised by statute, as these Agreements are, can be said to impose some impermissible restraint on the executive power.[30]
[29] Ibid at 77-8.
[30] Ibid at 113.
In City of Subiaco v Heytesbury Properties Pty Ltd,[31] the Court of Appeal in Western Australia considered whether leases of council owned land contained an implied term that the council would permit the lessee to use the demised premises for manufacturing and like purposes, which the Council had breached by procuring a change to the zoning of the land. In rejecting the lessee’s argument for the presence of such terms, Ipp J, with whom Malcolm CJ and Wallwark J agreed, referred to the principle of executive necessity. Ipp J said:
The rule of executive necessity is of application in the present case as, at the relevant times, by s 7 of the Town Planning and Development Act 1928 (WA), the City had the power, to be exercised in the public good, to make or amend a town planning scheme, and the term contended for by Heytesbury and upheld by White J would impinge on the City’s freedom of action in so exercising its powers. That is to say, were the leases to be construed so as to contain a promise by the City that the lessee would have the quiet enjoyment of the leased premises for the purpose of conducting a manufacturing business thereon, the City would have committed a breach of contract by procuring the enactment of the Town Planning Amendment.[32]
[31] [2001] WASCA 140; (2001) 24 WAR 146.
[32] Ibid at [44]-[46], 157.
In the present case, the Judge noted that the Trust did not specifically prevent the Council exercising its statutory powers in relation to the Commonage and he was not prepared to read into it an implied undertaking by the Council to fetter its powers in this way. The Judge referred to the important nature of the Council’s planning and road-making powers, and to the principle of executive necessity as articulated by Mason J, and as applied by Ipp J, in the passages just referred to. The Judge referred in addition to the observation of Ipp J in City of Subiaco v Heytesbury Holdings Pty Ltd[33] that any contractual fetter or limitation on the exercise of executive discretion should be clearly and expressly stated before a court will construe the contract as qualifying freedom of executive action. His Honour considered that that principle should also be applied to the construction of the Trust.
[33] [2001] WASCA 140 at [55]; (2001) 24 WAR 146 at 160.
The Judge also rejected an argument that the limitation on the Council’s powers by the execution of the Trust was authorised by the 1934 Act. His Honour observed that if the power of the Council to execute the Trust in May 1998 derived from s 36(3)(d) of the 1934 Act, it could hardly be said that a fetter on the Council’s statutory powers was, using the words of s 36(3)(d), “necessary or convenient for, or incidental to, the exercise, performance or discharge of its powers, functions or duties under this or any other Act”.[34]
[34] Penola and District Ratepayers and Residents Association Inc & Butler v Wattle Range Council [2010] SASC 218 at [65].
The appellants submitted that these conclusions were wrong. First, they contended that the Judge had erred in principle in his approach to this aspect of the construction of the Trust. The error was said to be in the Judge’s reasoning that the Council could exercise its statutory powers in relation to the Commonage unless there was to be found in the Trust an express or implied prohibition on it doing so. The appellant submitted that the only question of construction which arose was that of whether the use of the Commonage for a bypass was a use permitted by the Trust itself.
I would reject this submission. It overlooks that there are, as noted earlier, two aspects to the proper construction of the Trust: do the uses of the Commonage contemplated by the Trust itself include the construction of the bypass and, if not, does the Trust preclude the Council exercising its other statutory powers? The resolution of the former does not conclude the latter.
Next, the appellants submitted that the Judge had been wrong to rely on a passage in the reasons of Ipp J in City of Subiaco v Heytesbury Properties Pty Ltd to the effect that any contractual fetter or limitation of any kind upon executive discretion be clearly and expressly stated before a court would construe a contract as qualifying freedom of executive action.[35] They submitted that Ipp J had been referring only to commercial contracts and that the implication of terms in commercial contracts and charitable trusts involves different considerations. This submission was not developed in any detail. In particular, the appellants’ submissions did not identify any reason in principle for distinguishing between commercial contracts, on the one hand, and charitable trusts, on the other, when considering the operation of the principle of executive necessity. In my opinion, such differences as may exist between the approach to the construction of commercial contracts and charitable trusts do not assist the appellants in the present context.
[35] [2001] WASCA 140 at [55]; (2001) 24 WAR 146 at 160.
Some of the appellants’ submissions proceeded on the assumption that what was in issue was the implication of a term into the Trust. In my opinion, this was a misunderstanding, as the present issue, as the trial Judge recognised, is one of the proper construction of the Trust, rather than the implication of a term.
The appellants referred to other provisions in the 1934 Act which contemplated councils owning property on trust. These included ss 166, 459A and 668(3). The last of these is particularly significant because it provides that any bylaw made a council which is inconsistent with any trust applicable to the property does not, to the extent of the inconsistency, apply in relation to that property. This indicated, the appellants submitted, that legislative action by a council was to be subject to any applicable trust. On its face, this is an important consideration.
However, in my opinion, s 668(3) does not speak at all to a council’s powers to impose voluntarily limitations upon the exercise of its statutory powers. Property owned by a council may be subject to a trust of a statutory kind, for example, of the kind considered in New Plymouth District Council v Waitara Leaseholders Association Inc[36] or to a trust which was a condition of the gift of the property to the council.[37] Section 668(3) may be understood as referring to trusts of this kind. It should not, in my opinion, be understood as indicating, implicitly, the power of councils to fetter their own future action by the declaration of trust in respect of property they already own.
[36] [2007] NZCA 80.
[37] Section 166 of the 1934 Act contemplated trusts of this kind.
Next, the appellants submitted that at the time of the declaration of the Trust, the 1934 Act did not vest in councils a power to declare land they already owned to be a public road. The public road declaration power contained in s 303 of the 1934 Act was, in effect, limited to land which was already being used as a street, road or pathway. That being so, the appellants submitted that it could not be inferred that the Council had any intention at all with respect to non-existent powers.
I accept this submission so far as it goes. However, in 1998 councils did have powers with respect to road-making arising under the Roads Act. Those powers could be exercised as much in relation to council owned land as in relation to other land. The appellants’ submissions acknowledged this. They submitted, however, that the powers under the Roads Act were not pertinent for present purposes because the Council was not now purporting to exercise those powers. I would reject that submission. It is the existence of those powers, rather than the Council’s present intentions concerning their exercise, which is pertinent to the construction of the Trust. For the Trust to have the effect for which the appellants contend, this Court would have to conclude that, by its execution of the Trust in 1998, the Council did intend to fetter the exercise of the road-making powers which were then available to it.
In my opinion, in the absence of express words to the contrary, there is no difficulty in imputing to the Council an intention, when it made the declaration of trust, not to fetter the exercise of its statutory powers and responsibilities. One would not readily impute such an intention to the Council. It already owned the Commonage and the declaration of Trust was a voluntary action on its part. There is no suggestion that the Council was acting under some external constraint, or that it made the declaration in order to honour some pre-existing commitment.
Practical considerations point in the same direction. In 1998 the Riddoch Highway already intersected the Commonage in one place and formed part of its boundary in another. The Council must have intended that the Commonage should co‑exist with that Highway. It would be unreasonable to impute to the Council an intention to preclude itself from engaging in the development of the Riddoch Highway in any way which impacted upon the Commonage, for example, by road widening.
I respectfully agree with the Judge that the imposition of such a fetter could not reasonably be regarded as authorised by s 36(3)(d) of the 1934 Act. This is not a case, in other words, in which it may be said that the imposition of a self-imposed fetter was authorised by the 1934 Act.
In my opinion, it is appropriate therefore to construe the Trust as being intended to operate in the context of, and subject to, the Council’s statutory powers and duties concerning planning and road making. The practical effect is that on its proper construction the Trust does not require the Council to continue to hold the land comprising the Commonage subject to the terms of the Trust if it is required for road making purposes. The Trust should be regarded as containing an implicit qualification to this effect.
Accordingly, I consider that the Judge was correct to hold that the declaration of 8 July 2007 was valid.
On an Alternative Construction the Trust would be Ineffective
If, contrary to the conclusion I have reached on the last issue, the Trust is to be construed as impliedly excluding, in relation to the Commonage, the exercise by the Council of its powers with respect to road declaration, I would conclude that the Trust is, to that extent, invalid. That is to say, it was not open to the Council, by its voluntary declaration of trust in respect of land it already owned, to fetter the future exercise of its road-making powers. As indicated above, those powers in 1998 were to be found in the Roads Act.
I reach this conclusion by reference to the principle of executive necessity, to which I referred earlier.
The Council did not lodge any cross-appeal against the Judge’s declaration of validity of the resolution of 10 April 2007 by which the Council revoked from classification as community land the relevant portions of the Commonage required for the bypass road. Having regard to my conclusion about the effect of the Trust, on its proper construction, on the exercise of the Council’s statutory powers, it may be that the appropriateness of that declaration should be revisited. It would be inappropriate for there to be inconsistent declarations by this Court. I would give the parties an opportunity to be heard on this topic.
Did the Council Resolution of 8 December 2008 Constitute a Breach of the Trust?
The appellants submitted that the invitation, in effect, to the Commissioner of Highways to acquire by compulsory process the relevant portion of the Commonage was a breach of the Trust. They referred to the duty of trustees to adhere rigidly to the terms of their trust and to protect trust property. The application of that duty in the present case precluded the Council, the appellants submitted, from seeking the removal of the relevant portion of the Commonage from the Trust.
The Judge rejected this submission. He referred to New Plymouth District Council v Waitara Leaseholders Association Inc[38] in which the Court of Appeal in New Zealand considered a proposed sale by a local council to the Crown of land which was subject to a statutory trust. One of the terms of the proposed sale was that the Crown would legislate to provide that the land be set free of all statutory trusts. The Court rejected a contention that the sale on these terms was contrary to the terms of the statutory trust, saying:
Taking the harbour improvement land as an example, the Council held that land under statutory restrictions. The Council was also the principal organ of local government in the district. It was entitled to seek the removal of the statutory restrictions for what it perceived to be the broader good of the community. Ultimately it would be up to Parliament to determine whether the restrictions should be removed. If they were not, the Council would be obliged to deal with the land in terms of the 1940 Act. But there is no requirement that the Council act within the framework of the 1940 Act when it seeks to have the restrictions imposed by that Act removed.[39]
[38] [2007] NZCA 80.
[39] Ibid at [66].
The Judge considered that the reasoning adopted in the New Plymouth District Council case could be applied by analogy in the present circumstances.[40]
[40] Penola and District Ratepayers and Residents Association Inc & Butler v Wattle Range Council [2010] SASC 218 at [54].
On the proper construction of the Trust as outlined above, the Council’s powers with respect to road-making over land forming part of the Commonage were preserved. There is no difficulty, in my opinion, in concluding that those powers included negotiating with the Commissioner for a compulsory acquisition of that part of the Commonage required for a highway.
Further, I respectfully agree with the Judge that, having regard to the other statutory functions and responsibilities of the Council, the Trust did not preclude it from making the approach which it did to the Minister concerning acquisition by the Commissioner. As well as acting as trustee of the Commonage, the Council had to exercise its statutory functions in relation to the whole of its community. For these reasons, the appellants’ claim that the Council was in breach of a statutory duty should fail.
I add that there would, in any event, be little point to a declaration of invalidity of the resolution of 9 December 2008. Such a declaration would not affect at all the Commissioner’s powers of compulsory acquisition.
If, contrary to my conclusion on this issue, the Trust did have the effect of inhibiting the Council’s power to seek a compulsory acquisition of a portion of the Commonage, then the Trust would, for the reasons given above, be invalid to that extent.
The Effect of the Appellants’ Delay
The Council submitted that the appellants’ delay, including the delay in setting the appeal down for hearing, should of itself result in an exercise of the discretion against granting the relief which the appellants seek. On the view of the matter which I take, it is not strictly necessary to consider this submission. I will, however, state my view briefly.
The appellants commenced the primary proceedings on 18 March 2009, just on two years after the passing of the resolutions of 10 April 2007 and 8 May 2007 and some three months after the resolution of 9 December 2008 by which the Council sought, in effect, to have the Commissioner acquire the relevant portion of the Commonage.
The Council did not submit that the appellants had delayed unduly the institution of the proceedings in respect of the latter resolution. Further, as the Council did not lodge any cross-appeal in relation to the declaration that the resolution of 10 April 2007 was invalid, no issue of delay arises in that case. Accordingly, the Council’s present submission concerns only the lapse of time between the resolution of 8 May 2008 and the commencement of the action on 18 March 2009. If the submission was upheld, it would mean that the elapse of time is sufficient to defeat the appellants’ claims in respect of the resolution of 8 May 2007, but not their claim in respect of the earlier resolution of 10 April. This would be an incongruous result.
The decision of the Judge was delivered on 21 July 2010 and the final orders made on 3 August 2010.
The appellants commenced their appeal on 24 August 2010 but did not set the appeal down for hearing within the required time.[41] As the appeal was not set down for hearing within six months of its commencement, the Rules provided that it was to be taken to have been discontinued and to have lapsed.[42] However, on 3 May 2011, the Chief Justice made an order reinstating the appeal.[43] The circumstances of the appellant’s delay in setting the appeal down for hearing are set out in the reasons of the Chief Justice and it is not necessary to repeat them. In the main, those circumstances involved inattention and inactivity by the appellants’ solicitors, rather than by the appellants themselves.
[41] Supreme Court Civil Rules 2006 r 296.
[42] Rule 296(2).
[43] Penola & District Ratepayers & Residents Association Inc & Anor v Wattle Range Council & Anor [2011] SASC 77.
The Council made the point that the construction of the bypass is a major piece of infrastructure in which the Council and the Commissioner of Highways are collaborating. The construction of the bypass will involve the expenditure of substantial sums of public money and it is undesirable in the public interest that there should be continuing uncertainty about the fate of the proposal.
The Council also made the submission that, although framed as proceedings seeking declaratory relief, the appellants in effect seek judicial review of its resolutions and that a time limit of six months applies to proceedings of that kind.[44] However, the Council did not contend that either the primary proceedings or the appeal were an abuse of process. Nor did the Council contend that the appellants should not be permitted, in effect, to circumvent the six month time limit. The submission seemed to be only that the lapse of time should, as a discretionary consideration, preclude the grant of declaratory relief if the appeal otherwise succeeded.
[44] Supreme Court Civil Rules 2006 r 200.
The Judge rejected the submission to this effect at trial. His Honour accepted that the course of action taken by the Council may well have been confusing to a lay person outside the Council, especially as the Council had over time adopted different strategies. Further, the Mayor of the Council had, as late as October and November 2008, made public statements which suggested that there had not then been a final determination to proceed with the construction of the bypass. By implication, the Judge considered that the uncertainty as to whether the Council would proceed was pertinent to the appellants’ decision to commence proceedings. Further, the evidence did not indicate when the appellants had first become aware of the resolution of 8 May 2007, but it did appear that they may not have appreciated the possible implications of the Trust until shortly before mid-October 2008. In these circumstances, I respectfully agree with the Judge’s conclusions concerning the lapse of time which occurred before the commencement of the primary proceedings.
The delay by the appellants in prosecuting the appeal is regrettable but, in my opinion, insufficient to warrant the refusal of declaratory relief if the appellants had been otherwise entitled to it. I note that the Council did not take any action, as it could, to have the appeal dismissed when the appellants did not have their appeal set down for hearing in a timely way. I agree that the continuing uncertainty about the construction of the bypass is undesirable but, as I have said, insufficient to indicate by itself that the appellants should be refused relief.
Conclusion
For the reasons given above, I would dismiss the appeal. I would, however, hear from the parties as to whether, in the light of these reasons, some revision of the declaration of invalidity of the resolution of 10 April 2007 is appropriate.
DAVID J: I would dismiss the appeal for the reasons given by Justice White. I agree with the orders he proposes.
(1)All local government land (except roads) that is owned by a council or under a council's care, control and management at the commencement of this section (the commencement date) is taken to have been classified as community land unless—
(a) the council resolves to exclude the land from classification as community land within three years after the commencement date; and
(b) the land is unaffected by provisions of a reservation, dedication, trust or other instrument that would prevent or restrict its alienation.
(2)Before the council resolves to exclude land from classification as community land under subsection (1)(a), it must follow the relevant steps set out in its public consultation policy.
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