Living and Leisure Australia Ltd v Commissioner of State Revenue [2019] HCATrans 56 (22 March 2019)

Last Updated: 26 March 2019

[2019] HCATrans 056

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Melbourne No M157 of 2018

B e t w e e n -

LIVING AND LEISURE AUSTRALIA LTD (ACN 107863 445)

Applicant

and

COMMISSIONER OF STATE REVENUE

Respondent

Application for special leave to appeal

KEANE J
GORDON J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 22 MARCH 2019, AT 10.16 AM

Copyright in the High Court of Australia
MR D.J. BATT, QC: May it please the Court, I appear with MS S. GORY, for the applicant. (instructed by PricewaterhouseCoopers)

MR C.J. HORAN, QC: May it please the Court, I appear with MS K.A. O’GORMAN, for the respondent. (instructed by Solicitor for the Commissioner of State Revenue)

KEANE J: Yes, Mr Batt.

MR BATT: This matter raises important questions of law as to the extent of the reservations upon grant which will be sufficient to mean that an instrument does not give a right of exclusive possession and thus is not a lease in the eyes of the law. Of course, your Honours, at the highest level of generality it is well established that the grant of a right of exclusive possession is the touchstone of a lease and equally broadly it is generally recognised that that right may to some degree be qualified. However, the authorities, we submit, are undeveloped and unclear as to the fundamental matters of what degree of qualification is permissible and as to the approach or considerations that apply to determining whether in any given case the line has been crossed.

GORDON J: Is it not casespecific?

MR BATT: We submit not, your Honour. Of course, the reservations of the given matter will be a central question but in the circumstances where, as we would submit, the authorities go no more than really to identify the ultimate question without giving guidance as to the extent of the grant, the extent of the qualification necessary, how that is to be evaluated, what really is meant by exclusive possession in this context where one has on the one hand the Fejo dictum – your Honour will be familiar with from the papers which if I can put it is an absolute dictum. It is treated as good law in cases such as Brown. At the same time the authorities made clear, including Brown itself, that some degree of qualification is permissible.

All these we say are questions of law that arise, that are important and that ought be determined and as part of that, your Honour, the question which my learned friends raised in response to the application as to the relevance, the applicability of the decisions of this Court in cases such as Brown, Ward and Wik which arise in particular statutory contexts or in respect of instruments granted pursuant to statute, we submit the law is in an unfair state, certainly as put against us, in relation to those matters.

GORDON J: Can I raise a question about the grant here, and I use “grant” in a neutral way. The grants made under section 28 of the Alpine Resorts Act, it is a grant to your client of an interest in land to conduct a business undertaking, a business undertaking which includes according to the grant of the deed which describes it as a lease but put that to one side – in clause 5.1, to conduct businesses which include ski lifts, ski shops. Are not the reservations that you rely upon to take it outside of the exclusive possession rubric the very things you need to conduct your business?

MR BATT: No, your Honour. Can I take your Honour to the reservations themselves to answer that question with more specificity? Your Honour will find the reservations in the application book starting at page 14, but particularly at page 17, line 21, the most central of the reservations to which your Honour is alluding , I apprehend.

GORDON J: So it is 2.1(k) and 5.24?

MR BATT: Yes, your Honour, I am looking at (k). What one observes is that the grant is that of:

free liberty and authority for all members of the public, including visitors and skiers to enter upon use and enjoy the demised land

GORDON J: The last time I looked, you needed the skiers and the public to use your ski lifts.

MR BATT: Yes, your Honour, it includes no doubt customers or potential customers but it manifestly, we submit, goes markedly beyond the ambit of customers or potential customers, and we say that is an important point.

GORDON J: It is like a shopping centre.

MR BATT: I beg your Honour’s pardon?

GORDON J: It is the same as a shopping centre, is it not?

MR BATT: No, we would draw a distinction between the two, your Honour. For example, here one posits hikers, mountain bike riders, those who, as the inclusion in line 4 of (k) plainly is picking up those who cross the land for no purpose connected to skiing but to access other facilities.

GORDON J: This is the problem. Clause 5.1(f) says food outlets and public restaurants. The hikers might want to have a cup of coffee.

MR BATT: That inclusion in line four, your Honour, we submit is picking up those who cross the land to use facilities outside it. We accept, your Honour, that the uses to which clause 5 alludes, for which it provides, whilst essentially related to the provision of ski lift operations, have a wide range of ancillary operations. But that in no way founds the conclusion that clause 2.1(k) deals only with those who are customers or even potential customers of the ski life company. In fact – and this was a matter we accept that it weighed on the judge at first instance and arose at appeal. We submit, if anything, the breadth of the right is to some degree necessarily antithetical to the easy operation of the downhill lift operations because in effect, what (k) provides for is a right of general public access to and across the land, save only so far as constrained by the proviso and as such

GORDON J: The proviso is pretty good. It says:

shall not unreasonably obstruct or interfere with the permitted uses –

The permitted use is to conduct your business undertaking.

MR BATT: We submit not, your Honour, because if one breaks down the character of (k), constitutes a general grant, we submit, of public access, there are some specific inclusions which serve only to amplify its breadth. Then one has the proviso. The proviso, perhaps contrary to some references in the majority below, is not a proviso relating to who may enter the land or where they may go or what activities they may undertake. It is only a proviso as to the effect. It does not stand to be engaged until a person who comes onto the land pursuant to the grant commences to undertake an activity which not just obstructs or interferes, but unreasonably does so.

We submit that his Honour Justice Niall in dissent below was right to categorise the proviso as a limited restriction on the amplitude of the grant and that his Honour was correct to characterise it as he did as a general right of public access antithetical to the control or exclusivity which is the essence of a right of exclusive possession. Your Honour, if I could give some examples, and bear in mind that – I will avoid bringing to bear personal resort experience, but this is a provision which of course, trite it is to say, obtains across the course of the calendar year. It has force at all times. The lift operations are only during the snow season.

With this clause as it is, a group of persons could come upon the land, set up camp at any point upon it in summer, autumn or spring and camp for as long as they might wish. They could indeed camp in winter time provided that they did it in a way that did not unreasonably obstruct lift operations. The recitals made it clear, although there is no map in evidence, your Honour, that the area of the resort, or the demised land, the leased area as it is termed, is 842 hectares, some 2,000 acres.

The agreed position at all levels below has been that the facilities constitute only a very small proportion of the area. So even in winter there is a very great scope, pursuant to (k), for persons to come upon it and use the land without any right in our client to deal with them. Then one can posit groups crossing the land on commercial hiking tours. One can posit other sports activities. I do not need to go on, your Honour. The short point is we submit that 2.1(k) goes markedly beyond that which assists the conduct of the business, although it contains an element of it and by its nature is necessarily antithetical to the exclusivity of possession that denotes the lease.

GORDON J: Exclusivity of possession to conduct a business undertaking on the land?

MR BATT: Well, the person ultimately, looking at the instrument in its context, is the grantee by the instrument provided with a legal right of exclusive possession. The cases made clear that, whilst there can be qualifications upon a grant which do not preclude the conclusion of exclusivity, there comes a point where the exclusions and the reservations are so great that one cannot conclude that the touchstone for the existence of a lease has been satisfied. We say here, your Honour, that the exclusions and reservations in (k) – and we rely upon (j) as well if we need, but particularly (k) are manifestly wide enough to cross that line wherever on a proper elucidation of principle it is to be drawn.

As part of that, your Honour, we submit that on any view the reservation in (k) is as wide as that in Brown and wider than that in Ward. In Ward there was a right to cross the land as a drover or the like. In Brown there was a reservation whilst analogies must be undertaken with some care of course – but there was a reservation in very similar terms with a proviso in the same terms and that led to a very clear holding that there was not in existence pursuant to such provisions or granted the right of exclusive possession needed to create the instrument of lease. We say here it is all the stronger.

So we say this matter raises squarely for consideration the underlying aspects of principle which are little developed and unclear. This matter would be the first occasion when those issues have arisen for the Full Court of this Court in the context of a nonstatutory instrument outside the particular native title context. We say too, your Honours, that there is a compelling warrant to revisit the decision of the majority below. I will come very shortly to the particular errors, but in light of those errors and if we may say, with respect, as the careful dissenting judgment demonstrates, the decision below of the majority proceeds upon an erroneous path of analysis and is incompatible with, cannot sit with, the decisions of this Court in Brown and Ward, as I just remarked upon. We say as such, unless revisited, on the current undeveloped state of authority the majority decision will be apt to cause uncertainty, difficulty, potentially error in later cases. Now, all that of course

KEANE J: Why is that so? The Court of Appeal was concerned with the grant of a lease under section 28 of the Alpine Resorts Act.

MR BATT: Yes, your Honour, if I could just pick up the section 28 reference and then address your Honour more precisely or more particularly. There is no doubt on the instrument that the drafters have proceeded on the basis that section 28 provides power. Whether or not the document is a lease may bear on whether in fact section 28 was a source of power. There are other sources of power under the Act so nothing turns on that. But the point I seek to draw from those remarks is that the instrument is a lease of general law, not a statutory instrument, albeit that the authorising power for the entry into it by the lessor – the grantor, perhaps better put – is a statutory provision. So we have a general law lease

GORDON J: Not only that, it identifies the extent to which the power can be exercised. There is a limited grant given under 28 for the grant of leases.

MR BATT: Yes, your Honour, we say that the terms of section 28 could not, as the authorities make clear, determine the question of whether the instrument in the terms in which it was executed served or did not serve to grant a right of exclusive possession, just as its own terms – although we do not submit they are irrelevant – also may not do so. Indeed, as the majority judgment in Ward at paragraph 186 makes clear, the first step – contrast perhaps to some of the older cases such as Goldsworthy – the first step is to look at the grant and the reservations upon it and analyse that which is granted and that which is withheld, rather than to construe the document

GORDON J: Do you say the Court of Appeal in the majority did that, or the minority?

MR BATT: Your Honour, we say in this matter that the Court of Appeal proceeded first and unsoundly to deal with all questions other than the reservations and their effect, reached the conclusion that overwhelmingly the document looked like a lease and then, with respect, asked itself whether the reservations were sufficient, as it were, to displace that a priori conclusion. We say that is not right. That is not what Ward did. That is not what the Court did in Brown. The first port of call is what has been granted and what has been reserved from the grant. And here of course one, we accept, construes the matter in context and against the whole of the instrument, but here we say that a proper understanding of 2.1(k) produces the outcome by parity of reasoning with Brown but also simply upon principle that there has not been the grant of exclusivity of possession sufficient to warrant the conclusion that the document is a lease.

KEANE J: Do you accept that the grant made under section 28(2) is of an interest in land capable of supporting a caveat?

MR BATT: It depends upon that which is granted, your Honour. It depends upon the instrument.

KEANE J: Yes. Do you accept that the instrument made pursuant to section 28(2) creates an interest in land sufficient to support a caveat?

MR BATT: Only if the instrument upon its terms would have that effect.

KEANE J: Well, that is what I am asking you.

GORDON J: Here in this case, what appears at paragraph

MR BATT: I am sorry, your Honour. I do beg your pardon. I thought your Honour meant at large. No, we would not, your Honour, because say it passes no estate, no interest in the land, for the very reason that it does not grant and provide the grantee with exclusivity of possession in the eyes of the law. Really, that is the first question that one must grapple with and answer.

KEANE J: So you say it does not create an interest in land?

MR BATT: Yes, your Honour, for the very reason that

KEANE J: Creates what, a licence?

MR BATT: Yes, your Honour.

KEANE J: Where is the statutory authority to do that?

MR BATT: Section 9 of the Act would permit it, your Honour.

KEANE J: What does it provide?

MR BATT: It is a broad suite of powers to the Commission in aid of its

GORDON J: I was going to say:

control by the issue of leases and permits the nature and extent of development in alpine resorts and the conduct of business undertakings therein;

MR BATT: Yes, your Honour, we reply upon that. But we do submit that whatever may

GORDON J: Does not section 28 then go on to say that they cannot “be leased or otherwise dealt with except as provided in this Act”?

MR BATT: It does, your Honour. But we do urge on the Court this proposition, namely, that whether or not the instrument entered has been efficaciously entered pursuant to section 28 has no bearing upon the present question which is whether that instrument, analysed on its terms and in context, grants exclusive possession or not. One starts with the instrument and one analyses it and, as I submitted earlier, the more pervasive underlying error in the approach of the majority was not through that, but could I come to the errors on which we rely more particularly. If your Honours could take out the majority judgment which commences at application book 154 and turn please to paragraph 14, application book 157. One sees here and in the related paragraphs the fundamental error in the majority’s reasoning.

As your Honours will see, recognising that clause 2.1(k) is an obstacle to a conclusion of exclusivity of possession and recognising that the reservation in that provision is at least as wide as those in Wik, Ward and Brown, their Honours rest their conclusion on four reasons set out in the following paragraphs. We say in short compass these things about the approach there. First, on any view, the reservation here is wider than that in Ward and Wik.

Secondly, in Ward and Brown the reservations there in question were not just significant, but were dispositive. So the premise of the analysis of the Court of Appeal is unsound in that it proceeds on the basis that the four reasons which it then goes on to consider might warrant the conclusion that it then reaches, whereas we would submit that the decisions this Court referred to really preclude that decision. In any event, the four reasons are then dealt with in paragraphs 15 and following, and treating them seriatim, dealing only with the most significant of the difficulties as to them, we submit as follows, your Honours. Ultimately, none of the four together or individually provides a basis for the conclusion with validity in any respect.

The first reason is the majority’s interpretation or view of clause 2.1(k). We submit that that is an unduly narrow reading of the clause. In particular, it does not by its terms constrain the places to which access may go. It does not in its terms include any reference to commercial uses and we in order to convey this in a shorter fashion really adopt, as it were, the analysis that the dissenting judge took of the provisions and the breadth he identified.

The next reason given is at paragraph 16 which is to rely upon obligations later in the lease and to set up the proposition that those obligations could only be given effect if the document is a lease. That is plainly impermissible reasoning. It is back to front, it subverts the inquiry, and there are numerous observations to that effect in the cases.

Thirdly, their Honours at paragraph 17 and following rely upon Radaich v Smith. We submit that that could on no possible view give support to the conclusion the majority reached, most fundamentally because it was not a case about reservations upon a grant and their effect. It was a case about a document styled a licence which dealt with, unlike here, the entirety of the subject land and in that decision the Justices in their differing judgments analysed what ought be concluded to be the objective effect of the document. It bears no resemblance to the present matter and indeed in its facts, as the appellate majority itself recognises at paragraph 19 at application book 160, it is neither directly analogous – indeed, it is significantly distinct. The final matter relied upon – this is paragraphs 20 and following at application book 160, your Honours

KEANE J: Mr Batt, given it is the final matter you are relying upon, you might bear in mind that the red light is on.

MR BATT: Thank you, your Honour, I will sit down. We conclude with the proposition that Goldsworthy’s Case has entirely different reservations and also provides no assistance. If your Honours please.

KEANE J: We do not need to trouble you, Mr Horan.

The appeal foreshadowed by the application for special leave to appeal does not enjoy sufficient prospects of success to warrant the grant of special leave to appeal. The application for special leave to appeal is refused.

MR HORAN: If your Honours please, we seek costs of the application.

KEANE J: Yes, Mr Batt?

MR BATT: We do not oppose that, your Honour.

KEANE J: The application for special leave is refused with costs.

AT 10.38 AM THE MATTER WAS CONCLUDED