Tullamarine Pty Ltd v Chief Executive, Department of Lands

[1995] QLC 71

[1995] QLC 71

 

  LAND COURT

BRISBANE

1 SEPTEMBER 1995

Re:     Appeal against a categorisation under
  the provisions of the Land Act 1962.
  Valuation Roll No.: 1472
  Local Government:           Redland
  (VC94-162)

Tullamarine Pty Ltd
  v.
  Chief Executive, Department of Lands

(Hearing at Brisbane)

D E C I S I O N

This appeal was instituted in accordance with section 235A(6) of the Land Act 1962 which provides for the appeal against the decision of the Chief Executive, Department of Lands, in respect of the categorisation of a lease issued under the Act.  The level of rent which is to be calculated for the lease is dependent upon the category into which the lease is placed.  The lease in question here is a Special Lease whose rent is determined in accordance with section 204B of the Act.  In the instant case, the Chief Executive has placed the subject lease into Category 4 "Commercial and Industrial" as provided for in section 10(1) of the Land Regulations 1988. 
           The Notice of Appeal says that the subject lease ought to be in Category 8 ("Public Utilities") or Category 9.2 ("Tourism (Island)") or Category 10.3 ("Sporting and Recreation (Non-Gaming, Non-Liquor)").  The Land Regulations 1988 provide in sections 12D, 12E and 12F as follows with respect to the categories referred to by the appellant:

Category 8 leases

12D.A lease is a category 8 lease only if it provides benefit to the community or the public free of charge or at nominal cost.

Category 9.1, 9.2 leases

12E.A lease is a category 9.1 or category 9.2 lease if and only if it is a lease for the purposes of a major tourist facility or a major resort development or is a lease ancillary to either of those purposes.

Category 10.1, 10.2, 10.3 leases

12F.A lease that is not a category 6 lease is a category 10.1, 10.2 or 10.3 lease if and only if the lessee is a sporting or recreational organisation within the meaning of section 204B(16)(c) or 212(15)(c) of the Act.

One of the current lessees, Mr Trevor Harold Walton, appeared and gave evidence.  Whilst the appeal as originally expressed was not amended in any way, Mr Walton's evidence and argument was clearly directed towards the proposition that the subject lease ought to be included in Category 9.2 "Tourism (Island)".
           The task which this appeal poses for me, apart from that of statutory interpretation, is to ascertain the category which the lease ought to be allocated to, having regard to the use permissible under the lease and the highest and best use of the land.  See, for example, Cyril AH Mogridge v. Chief Executive, Department of Lands (unreported) 24 June 1994.  It is therefore useful to understand something about the nature of the lease and the land in question.  Special Lease 33643 comprises an area of about 148.115 hectares and is located on North Stradbroke Island.  The lease is for a period of 30 years, commencing 1 October 1969, expiring 30 September 1999 and was issued for Business (Aircraft Landing Area) Purposes.  The lease document, which was tendered in evidence, includes a number of conditions, one of which provides, "The lessee shall at all times make the airstrip available to the operations of other aircraft capable of using the strip, on reasonable terms and conditions".  It seems as though the reference to "other aircraft" was included to refer to aircraft in addition to those of the original lessee, Stradbroke Gardens Air-Charter Pty ltd, a company formed for the purpose, amongst others, of carrying on the business of an air-charter company and otherwise providing air services of all kinds. 
           Mr Walton gave evidence that there were one to five flights per week using the airstrip, together with the Flying Doctor who was allowed to use the facility without charge.  Flights other than those of the lessee or of the Flying Doctor were charged $20 per landing, however, Mr Walton said that it was difficult to collect this fee and, more often than not, users had come and departed before he was able to extract the charge.  He was of the view that use of the leased area solely for aircraft landing purposes was not viable commercially and, therefore, had applied to the Department of Lands to have the purpose of the lease broadened to accommodate, amongst other things, the current ancillary use of the leased area for trail riding purposes.  That application has not yet been finalised.  In cross-examination Mr Walton said that he had considered extending the current use of the lease to include such activities as joy flights, ultra-light flights, gliding and parachuting, as well as developing and utilising the potential that the lease has as a gateway to the tourist destinations on the island.  Mr Walton fairly conceded that the subject lease has a commercial potential, though it was not totally clear to him that even developing this potential would allow the lease to pay its own way and that, in any event, development of this potential to the full would involve a substantial capital investment which would be unlikely to be made, given that the lease has four years only to run.  The term of the lease is not a matter, however, which I can take into account in considering the question of categorisation firstly because, as I have said, it is a question essentially of determining the highest and best use of the land subject to the purpose and conditions of the lease and, secondly, because as I read the relevant regulations they contemplate a categorisation based on objective classification.  Moreover, were the remaining term of a lease a relevant consideration, it would make the process of finding a category in the instant case and in many cases all but an impossibility.
           Evidence from the Chief Executive was given through Peter David Brown, a registered valuer employed by the Department of Lands.  He provided evidence relating to the description of the land in question and provided a copy of the lease document which sets out the purpose and conditions of the lease.  Mr Brown is of the view that the subject lease ought to be classified as Category 4, both because the lease does not satisfy any of the other categories, therefore by a process of exclusion Category 4 is arrived at and, secondly, because the activity which can be carried on on the leased land is of a commercial nature.  This is a proposition with which I agree.  A commercial use contemplates the participation in trade or commerce and, whilst it would usually be carried out with the intention of making a profit, the risk that a profit might not be achieved or the fact that it has not in the past does not discount the commerciality of the use.  I turn now to the categories contended for by the appellant.
           The lease cannot be classified in Category 8 "Public Utilities".  As I read Regulation 12D, it is not intended to encompass the incidental supply of a free of charge or a nominal charge service to an organisation such as is supplied to the Flying Doctor in this case.  I also note that Land Regulation 12G provides that such a lease would attract a rent of 1% of the applicable value:  a rate concerned with a lease which has as its sole purpose the provision of a benefit to the community at large at a nil or nominal cost. 
           The lease in question is not a Category 10.3 "Sporting and Recreation (Non-Gaming, Non-Liquor)" as, quite clearly, the provisions of section 12F of the Regulation are not satisfied.  This section requires the lessee to be a sporting or recreational organisation within the meaning of section 204B(16)(c), or 212(15)(c) of the Act.  These sections each repeat that the lessee must be a sporting or recreational organisation.  The lessee is not.
The appellant argued that the lease should be included in Category 9.2 "Tourism (Island)". It appears as though this argument was based very largely on the desire that the lessee has to have the lease varied or replaced to allow the trail riding business to continue lawfully on the leased land and for other possible tourist-associated purposes. I do not, however, see that the current lease nor the intended lease would comfortably fit within Category 9.2. The lease in question issued under the provisions of section 203 of the Land Act, which was the case in the matter of Geoffrey C and Norma D Hannant v. Chief Executive, Department of Lands (unreported) 12 August 1994, where the learned President said, "On reading the Act and the definition of Category 9 leases, it seems to me that this category is designed to include those leases of land which are costly to develop, for example, a lease under section 210."
           Not only would I adopt this reasoning, but I would also say that it would be difficult for the current use or any intended use referred to in evidence to be described as "major".
           I find that the correct category applicable to the subject lease is Category 4 "Commercial and Industrial".  Accordingly, the appeal is dismissed and the determination of category made by the Chief Executive is affirmed.

RP SCOTT
  MEMBER OF THE LAND COURT