Sydney City Council v Ausn Convention & Exhibition Services Pty Ltd

[1999] HCATrans 410

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  Nos S15 and S16 of 1999

B e t w e e n -

SYDNEY CITY COUNCIL

Applicant

and

AUSTRALIAN CONVENTION AND EXHIBITION SERVICES PTY LIMITED

Respondent

Respondent

Applications for special leave to appeal

GAUDRON J
McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 19 NOVEMBER 1999, AT 9.30 AM

Copyright in the High Court of Australia

MR M.H. TOBIAS, QC:   If the Court pleases, I appear with MR B.J. PRESTON, SC for the applicant. (instructed by Dunhill Madden Butler)

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR J.E. ROBSON, for the respondent in each matter. (instructed by Deacons Graham & James)

MR TOBIAS:   Your Honours, there is one housekeeping matter which is referred to at page 34 line 25 of the appeal papers, in that we seek the Court’s leave, under Order 69A rule 3(1), that that rule “be dispensed with and time be extended for a special leave application”, which was filed seven days late.

GAUDRON J:   Well, Mr Tobias, we will hear the application on its merits and then decide what order should be made at the end, if that is appropriate.

MR TOBIAS:   Thank you, your Honour. 

Your Honours, this application seeks leave to challenge the proposition that a private person, who holds Crown land under a contractual licence from the Crown, and who conducts thereon a purely commercial enterprise, for the mutual benefit of that person and the Crown, is exempt from paying local government rates.  It is a proposition that flows from the decision of the Court of Appeal in the present case, but it is a proposition, in our submission, which offends the purpose and policy of the local government rating legislation.  Let me develop that quickly.

As a general rule, the legislation determines exemption from rateability on two criteria:  firstly, the identity of the holder of the relevant land and, secondly, the purpose for which the land is held.  As to that first criterion, the legislation identifies classes of holders who ought, on public policy grounds, be exempt:  the Crown, religious bodies, schools, education authorities, Aboriginal land councils and the like.  But those persons, your Honours, must themselves hold the land, if they are to attract the exemption.  If they permit other persons, who are not themselves within exempt classes of persons, to hold the land then, prima facie, in our submission, there is no warrant for the exemption.  It is for that reason that the legislation excludes from the exemption from rateability, Crown land held by another person under a lease for private purposes, which is the critical provision of the Local Government Act, with which the court was dealing.

The legislature also recognised in this context that land could be held by a person in ways different from the traditional concept of a lease or of a legal estate or interest in the land.  So the legislation provided a wide definition of “lease”, which is relevantly extracted at page 20 of the papers.  It was defined in the Act, in relation to Crown land, to include:

“a licence, permit, permission, occupancy or Authority”, subject –

as his Honour said at that passage –

to certain exclusions not presently relevant.

A person could ‑ ‑ ‑

GAUDRON J:   Well, the question here turns on whether it was held, does it not?

MR TOBIAS:   It does, but, your Honour, the grant of a licence means that the licensee holds the land under the licence.  I do not think - with respect, once one establishes that there is a licence, within the meaning of the definition, then clearly the licensee holds the land in the relevant sense, in our respectful submission.  The issue in the present case did not turn on the question of “hold”; it turned on the question, in this context, of the width of the term “licence” in the extended definition.

As to the second criteria – I will come back to the first – the legislation identifies the purpose for which the land may be held so as to attract rating exemption, either in a positive or a negative way.  Purposes are identified in a positive way where the exempt purposes are nominated.  For example, land held for a religious body for its purposes.  Purposes are identified in a negative way where the non-exempt purposes are identified, such as in the present case of Crown land held under a lease for private purposes.  That defines the field of non-exemption and, hence, by elimination, the field of exemption.

Applying these twin criteria, the question of whether the subject land was exempt from rates was to be determined by asking two questions:  whether the land was held by an exempt class of persons; and, secondly, whether the land was held for a non-exempt purpose?  The respondent was not a member of the exempt class of persons referred to in section 555.  It occupied the land under a contractual licence from the Crown and that really was not in dispute.  What was in dispute ‑ ‑ ‑

GAUDRON J:   Well, that is not right, is it?  There was an agreement with respect to the use of the land.

MR TOBIAS:   There was an agreement in respect of the use of the land and its operation by the respondents and in relation to the control of the land and its occupation.

GAUDRON J:   Well, as to the operations and management to be conducted by the respondents?

MR TOBIAS:   Yes, but for the purpose of being able to conduct its management role, it was required to occupy the land and that was part and parcel, in our respectful submission, of the relevant licence.  What his Honour Mr Justice Handley held was that that licence was not a licence within the meaning of the definition.  He held that the licence had to be a statutory licence for which, in our submission, there is simply no warrant.  If so, one asks the question, “What statute?”  His Honour’s constraints in relation to the definition really pose more problems, with respect, than it solved, and that of itself is a matter of significance in the administration of this provision, by local government authorities.

The Court of Appeal, as I have said, determined that the holding of the land under a contractual licence was not sufficient, although, as I have said, his Honour in the first place suggested that it had to be a statutory licence and, in the second place, then went on to indicate that there may be some unspecified contractual licence:

which might be sufficiently similar to leases to receive the same treatment for rating purposes -

a passage quoted at lines 20 to 22 of page 28.

His Honour’s determination of the width of the term “licence” for this purpose still leaves a great deal of uncertainty in an area of local government administration where certainty, at least in relation to that aspect, is critical.

The respondent, in our submission, held the land under its licence for a non-exempt purpose.  It entered into the licence and conducted its business upon the land for its purposes.

McHUGH J:   But, is this case a suitable vehicle in any event for determining these issues, given the finding at page 26, where the court said:

The decisive factor in my judgment is that the companies are managing and operating the Centre as agents for the Authority.

MR TOBIAS:   Yes, it is, your Honour, for this very reason, because that raises the very issue, and the very issue that it raises is, what his Honour overlooked, at the very least, was that there were two purposes.  There was one purpose being carried on.  It was the purpose of conducting and managing a convention exhibition centre and car park for profit; a commercial activity.  It was being carried on for the benefit of the Authority and it was also being carried on for the benefit of the operator.

GAUDRON J:   But is not the effect of what Justice Handley said is that it was really being carried on by the Authority through its operators and managers?

MR TOBIAS:   That is what he says.

GAUDRON J:   Yes.

MR TOBIAS:   But in our respectful submission, it gives rise to the question; it does not really grapple with the real issue, which is to determine whether or not, assuming there is a licence – one has to make that assumption in this context ‑ ‑ ‑

McHUGH J:   Why?

GAUDRON J:   Why?

MR TOBIAS:   Well, because, in order to get to the second question, you have to assume the licence.  Obviously, if there is no licence, within the meaning of the definition, then you never get to the second question and it does not matter.

McHUGH J:   But you are talking about purposes.

MR TOBIAS:   I am talking about - - -

McHUGH J:   He is not talking in the context of purposes, is he?

MR TOBIAS:   Well, he conflates the two propositions, in our respectful submission.  If one goes to page 28, he deals with “contractual licences”, but between lines 30 and 35 he says, the other issue was:

for private purposes.  This question does not strictly arise.....but the companies do not occupy the Centre for their own private purposes.  They occupy it for the purposes of the Authority so that, through them, it can carry out its statutory functions.

McHUGH J:   But, as I read his Honour’s judgment, he seems to be equating the companies as in no different position to say employees of the Authority; they just happen to be agents.

MR TOBIAS:   He does.  Yes, he refers to Justice Dixon’s judgment in Warner’s Case and Justice Mellor’s judgment, but that, in our submission, is really an irrelevant analogy; those cases dealt with situations - the issue as to whether or not an employee, who was provided with premises by their employer for the purposes of their duties, was a tenant or not.  We are dealing here, not with an employee, but with an independent contractor, who was invited to tender, because of their expertise, to operate a centre pursuant to the deed of management and, for that purpose, that operator carried on the business of conducting convention centres and operating convention centres.  It so happened that that was the desire and the purpose of the Authority in entering into the management agreement, but it does not detract from the proposition that even if his Honour is correct that they were acting as an agent of the Authority to conduct the Authority’s commercial activity, that, at the same time, they were not conducting a business of their own, for profit, namely the payment of the management fee.

GAUDRON J:   But it is whether they were in occupation of the land or the Authority was, and that must depend on the terms of the deed.

MR TOBIAS:   Yes, your Honour, but the purpose of the deed - and it is a fairly common form of management for Crown authorities to have land managed in this way, for a commercial activity – is to avoid, no doubt, the problems with rating, or an attempt to avoid the problems of rating, and the real issue is, whether or not, by adopting this sort of device – and I do not say that in a pejorative way – that is sufficient to extract the land or to permit the prima facie exemption from rating of Crown land to be maintained, and that is the critical issue which raises the question of public importance, in this case.

McHUGH J:   But that is why, it seems to me, that the word “held” is so important in this case.  If they were there as agents or, to take a more extreme example, as employees, they would not hold the land under a lease or licence.  They might be on it, pursuant to a licence, but they would not be holding it.

MR TOBIAS:   Well, your Honour, in our respectful submission, there is no relevant distinction between those things.  If there is a licence, and they are the holder of the licence, they must hold the land pursuant to the licence, otherwise the licence is irrelevant.

McHUGH J:   Well, I do not see that at all.  I mean, there can be plenty of cases where that would be the situation, but if I am given permission to go on to land to do something, I have a licence, but I do not hold the land under the licence.

MR TOBIAS:   But your Honour cannot – but, if you have a licence to – well, that would then assume that the word “hold” - that simply because you have got a licence you do not hold the land, and what meaning is given to the word “hold”?

McHUGH J:   Well, that may be another issue in the case.

MR TOBIAS:   That is an issue that does not seem to have been determined.  The Court of Appeal, as your Honour would know, talks about the land being held, and your Honour dealt with that in the Campbelltown Case.

McHUGH J:   The Equestrian Case.

MR TOBIAS:   Yes,  the Equestrian Case.  But, neither in that case, if I understand correctly, or in any other cases, was any particular emphasis given to the word “hold”, except in the context of determining purpose; not in the context of determining whether the land was held under a licence or not.  So that area ‑ ‑ ‑

GAUDRON J:   But is it not implicit in what Justice Handley held, that there was no holding; they were simply there for and on behalf of the Authority; their occupancy ‑ ‑ ‑

MR TOBIAS:   His Honour held that there was no licence as defined, with respect.

GAUDRON J:   Yes, but implicit in his reasoning, it would seem to me, is the other conclusion.

MR TOBIAS:   Well, we would take issue with that, your Honour. 

If your Honour goes to page 134, we refer to clause 12.5.  In fact, if your Honour goes to page 80, more accurately.  Clause 12.5 of the deed provided that:

Upon expiry or termination of its appointment –

that is appointment as manager –

the Contractor and Manager shall relinquish to the Authority or as the Authority directs, possession, custody and control of the Centre –

The deed clearly contemplated the possession custody and control of the centre would be in the respondents.

McHUGH J:   But Justice Handley’s answer to that is found at page 25, line 38.  He refers to clause 12.5 and said they:

certainly had de-facto possession of the Centre under the Deed, but this was not possession to the exclusion of the Authority, but possession on its behalf.

MR TOBIAS:   But it does not have to be to the exclusion of the Authority.  If it was possession to the exclusion of the Authority, it would be a lease.  A licence does not require exclusive possession.

McHUGH J:   But this seems to all be in the context – although his Honour does not articulate the proposition – that whatever the arrangement, the land is not held by the companies.

MR TOBIAS:   Well, your Honours, firstly, his Honour does not articulate it; secondly, there is nothing in the judgment, in our respectful submission, to get to that point, because what he says is there is no licence therefore he does not have to deal with this issue and, if that is correct, then, where there is a basis, in our submission, for special leave, is to clarify this very issue, of what meaning is to be given to the word “hold” given a situation when there is clearly a licence?

McHUGH J:   But take employees, they have licences to go on the land, but you would not suggest that they held the land, would you?

MR TOBIAS:   No.  But this was a different situation where this defendant operated, over a period of years, was the sole operator, had the sole control and possession of the centre – I do not mean exclusive, I mean sole – in circumstances where it was to conduct a business thereon; maybe a joint business or a business with a joint benefit of both parties, but, nonetheless, the commercial business of the Authority, which was to have such a centre, and the commercial business of the respondent to conduct such a centre.

McHUGH J:   Yes, but that still does not mean it is held under it, even though they are solely there.  I mean, supposing one of BP’s employees is, in effect, given the sole custody of a service station; the service station is not held by the employee, it is held by BP.  And that is what his Honour seems to be saying here.

MR TOBIAS:   Well, I notice the lights are on.

GAUDRON J:   You have got five minutes yet.

McHUGH J:   Three, I think.

MR TOBIAS:   Three.  I do not wish to be repetitive, your Honours.  I accept that there are obviously the cases referred to by Mr Jackson in his submissions, that if you are a cleaner, in one sense, you have a licence, and maybe you have to look at the nature of the licence to see whether it has a degree of transience, on the one hand, or permanence on the other, for a term.  When you do that, in our respectful submission, in a case such as the present in this Deed, being clearly, in our submission, there is a holding, and the position is distinguishable from the case of an employee, because we are an independent contractor, and the fact that his Honour calls you an “agent” really takes it no further, in our submission.

So this type of licence, this type of control, is quite different to that of an employee and quite different to that of a cleaner or a transient type of occupation.  This was not just possession; it was total control and, in our respectful submission, that is capable of amounting to a holding and this is a matter of critical importance, because these sorts of cases, where the Crown enters into these sorts of arrangements, in relation to their commercial activities, which raises itself the problem of whether it is a public purpose which the Crown ordinarily performs – it is not like the Holway Case – then, in our respectful submission, particularly in the context of the Crown seeking to conduct commercial activities, which it tends to do more and more these days, in order to raise money, then, in those circumstances, this matter really needs to be resolved by this Court.  If your Honours please.

GAUDRON J:   Yes, thank you, Mr Tobias.  Yes, we need not trouble you, Mr Jackson.

These applications raise a question of statutory construction in the context of an agreement styled a management deed.  As such, they raise no question of general importance sufficient to attract the grant of special leave. 

The appropriate order is that the applications for extension for time be refused.  Submissions having been made with respect to costs, the applications will be refused with costs.

AT 9.52 AM THE MATTERS WERE CONCLUDED