Attorney General of the Australian Capital Territory v Commonwealth of Australia [1990] ACTSC 17 (31 May 1990)

SUPREME COURT OF THE ACT

ATTORNEY GENERAL FOR THE AUSTRALIAN CAPITAL TERRITORY v. COMMONWEALTH OF
AUSTRALIA
S.C. No. 237 of 1990
Australian Capital Territory

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Miles C.J.(1)

CATCHWORDS

Australian Capital Territory - control of land consequent upon self-government - ACT (Planning and Land Management Act 1988 (Cwlth) - National Land and Territory Land - s.27(2): meaning of "used by or on behalf of the Commonwealth".

Council of the City of Newcastle v. Royal Newcastle Hospital [1957] HCA 15; (1956-1957) 96 CLR 493 at 509, per Kitto J.

Ryde Municipal Council v. Macquarie University [1978] HCA 58; (1978) 139 CLR 633 at 649, per Stephen J.

George Barkly Knowles v. The Council of the Municipality of Newcastle [1909] HCA 72; (1909) 9 CLR 534 at 545, per Isaacs J.

HEARING

CANBERRA
31:5:1990

Counsel for the plaintiff: Mr T.J. Higgins QC with Mr R. Williams

Solicitors for the plaintiff: ACT Government Law Office

Counsel for the defendant: Mr R. Tracey with Mr C. Erskine

Solicitors for the defendant: Australian Government Solicitor

ORDER

The plaintiff's claim be dismissed.

The notice of motion be dismissed.

There be judgment for the defendant.

DECISION

This case raises a short but important point concerning the control of land in the Australian Capital Territory consequent upon self-government. On 2 March 1989 the Minister of State for Administrative Services, acting for and on behalf of the Minister of State for the Arts and Territories, declared pursuant to sub-s.27(1) of the Australian Capital Territory (Planning and Land Management) Act 1988 (Cwlth) (the Planning and Land Management Act) certain parcels of land to be National Land. Those parcels of land included Block 1 Section 3 Division of Braddon. That land is in Northbourne Avenue. The Gowrie Private Hotel (Gowrie) is built on it. By statement of claim dated 27 April 1990 the Attorney-General for the Australian Capital Territory seeks orders from this Court declaring that the declaration of the Minister on 2 March 1988 is invalid and that the land concerned is Territory Land within the meaning of s.28 of the Planning and Land Management Act.

2. In 1909 the land within the territorial boundary of the Federal Capital Territory, as it was then called, was surrendered by the State of New South Wales to the Commonwealth. The surrender was confirmed by the Seat of Government Surrender Act 1909 (NSW) and by the Seat of Government Acceptance Act 1909 (Commonwealth).

3. On 11 May 1989 (Self-Government Day) s.7 of the Australian Capital Territory (Self-Government) Act 1988 (the Self-Government Act) came into effect. It provides:
"The Australian Capital Territory is established as a

body politic under the Crown by the name of the
Australian Capital Territory."

4. Section 8 of the Self-Government Act provides that there shall be a Legislative Assembly for the Australian Capital Territory, and s.36 provides that there shall be an Australian Capital Territory Executive. The political and constitutional features of the Australian Capital Territory (the ACT) suggest that it is an institution of a type not hitherto commonly encountered. I leave out of consideration any comparison with the Northern Territory, a territory which has nothing to do with the Seat of Government and which may be in a condition of transition towards statehood. If conventional constitutional doctrine applies then it would seem that the legislative power of the ACT is vested in the Legislative Assembly and that the executive power is vested in the ACT Executive. The latter proposition, however, sits oddly with the more basic provision in s.7 that the ACT is "under the Crown". The nature of relationship between the Crown and the ACT Executive, if any, is not spelt out. The nature and exercise of the judicial power of the ACT, if any, lies outside the scope of the issues raised by the present case.

5. The ACT is not a body corporate. The Crown Suits Act 1989 (originally an Ordinance made on 9 May 1989 but to be taken as an enactment of the Assembly by virtue of s.34(4) of the Self-Government Act) came into effect on Self-Government Day. Section 4 provides for suits against the Territory and s.6 provides that suits on behalf of the Territory may be brought in the name of the Territory by the Government Solicitor (cf. ss.56, 61, 67A, 67B of the Judiciary Act 1903 (Cwlth)). The present proceedings have been brought not in the name of the ACT but in the name of the Attorney General of the ACT. However, no point has been taken on that aspect.

6. The land within the geographical confines of the Territory which was vested in the Commonwealth by virtue of the Seat of Government Acceptance Act 1909 remains vested in the Commonwealth. However, the Planning and Land Management Act makes provision for the planning of land use and the management of land by dividing responsibility and power between the Commonwealth and the ACT.

7. The planning of land use and development in the ACT is provided for in Parts III and IV of the Planning and Land Management Act. A body is established by the name of the National Capital Planning Authority, which is authorised and obliged to prepare and administer a National Capital Plan. The object of the Plan is, according to s.9, "to ensure that Canberra and the Territory are planned and developed in accordance with their national significance". Under s.10 the Plan may specify areas of land that have the special characteristics of the National Capital to be Designated Areas. By s.25 the Assembly is authorised and obliged to make laws providing for the establishment of a Territory Planning Authority which is to prepare and administer a plan the object of which is to ensure the planning and development of the Territory to provide the people of the Territory with an attractive, safe and efficient environment in which to live and work and to have their recreation. The plan to be so prepared and administered is not to be inconsistent with the National Plan and the land to which it applies does not include Designated Areas.

8. The system of planning land use and development is to be contrasted with the system of land management provided for in Part V. Section 27 provides as follows:

"National Land
27.(1) The Minister may, by notice published in the
Commonwealth Gazette declare specified areas of land in
the Territory to be National Land.
(2) The Minister shall not declare an area to be
National Land unless the land is, or is intended to be,
used by or on behalf of the Commonwealth.
(3) If an Act vests the management (however
described) of specified land in the Territory in a person
or body, the land is National Land for the purposes of
this Act.
(4) Subsection (3) does not apply to the vesting of
an estate in land."

9. Section 28 provides as follows:

"Territory Land
28. At any time when any land in the Territory is not
National Land, that land is Territory Land for the
purposes of this Act."

10. Section 29 provides as follows:

"Administration of Territory Land
29. (1) The Executive, on behalf of the Commonwealth:
(a) has responsibility for the management of
Territory Land; and
(b) subject to section 9 of the Seat of
Government (Administration) Act 1910, may
grant, dispose of, acquire, hold and
administer estates in Territory Land.
(2) The Executive shall perform its functions under
subsection (1) subject to enactment and in accordance
with the principles:
(a) that new estates in Territory Land shall be
granted only in accordance with procedures
that are notified to the public; and
(b) that appropriate classes of decisions
relating to the administration of estates in Territory be
Land shall subject to just and
timely review without unnecessary formality.
(3) The term of an estate in Territory Land granted
on or after Self-Government Day shall not exceed 99 years
or such longer period as is prescribed, but the estate
may be renewed.
(4) The Authority may intervene in any proceedings
for review of a decision relating to the administration
of an estate in Territory Land."

11. Section 30 provides that in certain instances the liability of the Commonwealth in respect of Territory land is vested in the Territory and ceases to be a liability of the Commonwealth.

12. Section 31 provides, inter alia, that the Commonwealth shall pay to the Territory an amount equal to the reasonable compensation that would be payable to the Territory under the Lands Acquisition Act 1906 where Territory land becomes national land at any time after the first declaration of National Land.

13. Section 27 of the Planning and Land Management Act came into force on 31 January 1989. Sections 28 to 32 and some others came into force on Self-Government Day. When the Minister made the declaration on 2 March 1989 much of the Self-Government Act had not come into force, and the ACT had not yet come into existence as a body politic. Hence, immediately before the declaration the land in question was neither National Land nor Territory Land and there was not yet in existence an Executive which was capable under s.29 of exercising responsibility for the management of Territory land or of granting or otherwise dealing in estates in Territory land. On Self-Government Day land in the Territory which was not National Land became Territory Land subject to the provisions of the Planning and Land Management Act which affected Territory Land.

14. No pleadings have been filed in the present proceedings. The matter first came before the Court by way of interlocutory application and on 27 April 1990 the Commonwealth gave an undertaking to the Court that it would defer selling or otherwise alienating its interest in the land until the hearing and determination of the proceedings. A notice of motion relating to discovery was also adjourned to the hearing of the proceedings.

15. The parties are agreed that the facts are sufficiently set out in a number of affidavits which have been filed and have formulated the following question for the determination of the Court: whether the land identified as Block 1 Section 3 in the Division of Braddon was on 2 March 1989 land which was used by or on behalf of the Commonwealth which the then Minister for Administrative services, acting for the then Minister for the Arts and Territories, was entitled to declare as national land pursuant to s.27 of the ACT (Planning and Land Management) Act 1988.

16. After the hearing commenced the parties conceded that the question could be further refined and that the only real issue was whether on the date of the declaration the land was used by or on behalf of the Commonwealth. It is common ground that no issue arises whether the land was intended to be used by or on behalf of the Commonwealth.

17. The question whether land is "used" is one of fact (Council of the City of Newcastle v. Royal Newcastle Hospital [1957] HCA 15; (1956-1957) 96 CLR 493 at 509, per Kitto J.) or mixed fact and law (Ryde Municipal Council v. Macquarie University [1978] HCA 58; (1978) 139 CLR 633 at 649, per Stephen J.). The factual background may be briefly stated.

18. Soon after the establishment of Canberra as the National Capital, the Commonwealth provided short-term and long-term accommodation for its public servants by the establishment of guest houses. In the early years the construction of conventional housing proceeded slowly. Public servants who transferred to the new capital could be accommodated reasonably cheaply in guest houses constructed and managed by and on behalf of the Commonwealth. The cost of accommodation to those public servants was subsidised, a feature which assisted in the recruitment of new public servants who needed to be attracted from other parts of Australia. Subject to priority being given to Commonwealth servants, guest house accommodation was also available to members of the public. The guest houses were a social and architectural feature of Canberra for many years.

19. On 13 September 1951 Commonwealth Hostels Limited (the company) was incorporated in Victoria limited by both shares and guarantee. The shares were wholly owned by the Commonwealth. It later changed its name to Commonwealth Accommodation and Catering Services Limited. In the 1970's it changed its name to Commonwealth Accommodation and Catering Services Limited. The Commonwealth disposed of its shareholding in the company in July 1988. On 2 May 1989, after the events under consideration in the present case, the company changed its name to Advanced Food Systems International Limited. The company's principal activities as set out in the annual return for 1988 were stated to be "Provision of contract catering services; managers of hotels and guest houses". From the time of its incorporation the company managed many if not all of the guest houses in Canberra as well as other Commonwealth residential institutions elsewhere such as migrant hostels.

20. With the growth of Canberra the need for guest house accommodation declined and their numbers were reduced in the 1970's and 1980's. Those that survived became known as hostels or private hotels. By 1988 Gowrie Private Hotel in Northbourne Avenue and Macquarie Private Hotel in Barton were the only ones remaining. They were promoted by the Commonwealth as budget accommodation for visitors to Canberra as well as for public servants. The occupancy rate was not regarded as high and the proportion of public servants to other guests declined. At the end of 1988 Gowrie had over 500 rooms and a bed capacity of around 550. The average public servant occupancy dwindled to about 100. Macquarie with 500 bedrooms and a bed capacity of around 550 had an average public servant occupancy of around 140. Towards the end of 1988 a view was taken within the Department of Administrative Services, the relevant Commonwealth department, that the demands of all public servants seeking guest house type accommodation in Canberra could be satisfied at Macquarie and that Gowrie could be sold as a going concern and a lease issued over the land on which it was constructed.

21. The evidence does not disclose when exactly Gowrie was constructed and to what use, if any, the land was put before construction. According to the investment report of Jones Lang Wootton of April 1990, the building has "operated as a Commonwealth hostel for over twenty years before being leased to private enterprise". The building complex is described as consisting of two high rise towers comprising 569 single and twin rooms linked together at ground level by a single storey structure. There is also a boiler house and gas storage building included in the complex which is surrounded by car and bus parking areas as well as grassed areas.

22. Against that factual background I turn to a consideration of the applicable law.

23. The word "used" in s.27 of the Planning and Land Management Act is a word in common parlance and its meaning varies according to its context. Many cases were cited in argument but few are of much assistance as most of the cases depend upon the construction of statutory instruments or contracts as well as upon the circumstances of the particular case.

24. However, some principles emerge from the cases. It is well recognized that the terms "use" and "occupation" are not synonymous, and that the former "probably points to utilization in some other way than mere actual occupancy" (George Barkly Knowles v. The Council of the Municipality of Newcastle [1909] HCA 72; (1909) 9 CLR 534 at 545 per Isaacs J.

25. The purpose for which land has been acquired or to which it has been devoted may be relevant to the question whether it is used. In Council of the City of Newcastle v. Royal Newcastle Hospital Taylor J. said at p 515:

"The uses to which property of any description may be put
are manifold and what will constitute "use" will depend
to a great extent upon the purpose for which it has been
acquired or created. Land, it may be said, is no
exception and s.132 itself shows plainly enough that the
"use" of land will vary with the purpose for which it has
been acquired and to which it has been devoted. It may
be used for a public cemetery, for a common, for a public
reserve, in connexion with a church or school and so on.
Each of the forms of user referred to in the section
relate to use by the owner and some of them, no doubt,
contemplate a use which is synonymous with actual
physical occupation and enjoyment. Others contemplate a
use in a less direct form."

26. However, an investigation of the purpose of acquisition by the Commonwealth throws little light on the problem in the present case. The evidence goes no further than to show that the Commonwealth acquired the land as part of the totality of the surrender of the land comprising the Territory by the State of New South Wales in 1909.

27. The fact that land is leased to another does not preclude use by the lessor. Gibbs ACJ, as he then was, said in Ryde Municipal Council v. Macquarie University at pp 638-639.

"A person who owns land may be said to use it for his own
purposes notwithstanding that he permits someone else to
occupy it, even under a lease. That is almost beyond
argument when the owner's purpose is to acquire income.
In the ordinarily accepted meaning of the word
a building is "used" for the purpose of acquiring income
if rents are derived from it, and an owner of premises
who leases them is making use of those premises by
employing or applying them for the purpose of letting:
Commissioner of Income Tax v. Hanover Agencies Ltd (1967)
1 AC 681 at 689. But that is not the only way in which
an owner of land may use it by letting it to someone
else. An employer who provides premises in which he
requires an employee to live so that the employee may
perform more efficiently the duties of his position is,
in my opinion, himself using those premises. That this
is so is clear when the employee occupies them under a
licence rather than under a lease .....
Where use, and not occupation, is in question, I can see
no reason to disregard the indirect use which an employer
makes of a house by providing it as a residence for the
use of his employees. If, for example, a university
considered it desirable in its own interests that the
vice-chancellor should live in particular premises which
the university owned, the university would, in my
opinion, use those premises if it made them available as
a residence for the vice-chancellor and this would be so
whether the premises were let or occupied under licence".

28. The Macquarie University case also indicates that land may be used by more than one person at any time and used for more than one purpose at any time.

29. The words to be construed in s.27 are "is or is intended to be used by or on behalf of the Commonwealth". Taken as a whole the words contemplate that land may at a particular time be not used by the Commonwealth but intended for use by the Commonwealth at a later time. In that regard the expression is consistent with the notion already referred to that occupation or ownership is not in itself sufficient to constitute use. Furthermore, the expression is consistent with the hypothesis that, just as land not used by the Commonwealth may be intended for use by the Commonwealth at a later time, so may land used by the Commonwealth at a particular time be the subject of an intention to no longer use, and of cessation of use at a later time.

30. There is in evidence (exhibit B) a copy of an agreement between the Commonwealth and the company "for provision of accommodation and catering to Commonwealth departments and authorities". The copy in evidence is undated. It includes provisions relating to premises other than Gowrie, but so far as Gowrie is concerned the contract is expressed to commence on 1 July 1985 and end on 30 June 1990. Some of its provisions (and the provisions of a document "Heads of Agreement" which is expressed to be subject to the contract itself) are as follows:

31. Clause 2.2 - The company agrees to provide services in accordance with the terms and conditions contained herein.

32. Clause 2.4.2 - The company is to provide "accommodation in guest houses to a class or classes of persons nominated by the Commonwealth from time to time in preference to any other person and in the order of preference, if any, determined by the Commonwealth".

33. Clause 4.1.2 - The company agrees to pay annual rent in respect of the guest houses according to the figures shown in a schedule.

34. Clause 5.1 - The company agrees to establish "all necessary facilities for the effective conduct of and compliance with all aspects of the Contract".

35. Clause 5.3 - The company is denied "authority to act for or assume any obligation or liability on behalf of the Commonwealth" except as conferred by the contract.

36. Clause 13 - The company agrees to allow the Commonwealth or its officers to enter upon the premises where the company and its sub-contractors are providing the services required under the contract and agrees to permit access to all records and the like for the purpose of verifying amongst other things the company's standard of performance.

37. Clause 14 - The Commonwealth retains property in any item of equipment or real property supplied to the company to enable it to provide services under the contract.

38. Clause 20 - The Commonwealth is given the right to determine the contract upon default by the company.

39. Clause 21.1 - This clause provides that "the contract may not be assigned in whole or in part without the prior consent of the other party. Such consent shall not be unreasonably withheld."

40. Clause 29 - The company is to arrange "to the satisfaction of the Commonwealth for the orderly and efficient transfer of the performance and execution of the services under the contract at the expiration of the term of the Contract" or in the event of its determination.

41. Some of the provisions in the Heads of Agreement are as follows:

42. Recital B - The Commonwealth owns certain land located in the Australian Capital Territory, upon which are erected accommodation guest houses (the guest houses).

43. Recital C - The Commonwealth desires that the guest houses should be managed on its behalf.

44. Recital D - The company has agreed to undertake the management of the guest houses.

45. Clause 1 - The Commonwealth appoints the company to manage the guest houses upon the terms and conditions set out in the heads of agreement.

46. Clause 3.2 - The company is to ensure that satisfactory arrangements are made for the accommodation of the class or classes of person for whom accommodation is required in writing by the Commonwealth.

47. Clause 3.3 - The company is to maintain standards of accommodation and service not inferior to those existing at the date of the commencement of the agreement.

48. Clause 6 - Rent is fixed on an annual basis payable in twelve equal instalments according to the formula set out.

49. Clause 8 - The company agrees to charge and collect tariffs from guests at the rates determined by the Commonwealth which may be varied according to a formula.

50. Clause 9 - The company is to carry out at its own cost all maintenance on the building comprised in the guest houses other than major maintenance.

51. Clause 10 - This clause prohibits the company from subletting, using or causing to be used any part of the guest house for any purpose not consistent with the purpose of the guest house, that is to say, to provide accommodation and meals and to manage the guest house, unless otherwise approved by the Commonwealth.

52. Subject to what is discussed below, there is no evidence of any notice given under clause 3 of the Heads of Agreement expressly directed to "the class or classes of person for whom accommodation is required". However, the unchallenged evidence of Mr P. Gutteridge, Manager of Gowrie, is that Commonwealth public servants have been given preference in accommodation at Gowrie in two ways. They are given priority in the allocation of rooms. They pay a reduced tariff rate upon presentation of a statement from their supervisors confirming that they are employed in the Public Service in a particular classification. The difference between the normal rate and the discounted rate is paid by the Commonwealth. The particular classifications of public servants who were entitled to the discount were reduced over the past three years or so until in 1988 the highest classification entitled to the discount was Administrative Services Officer Class 2.

53. The documents referred to indicate, in my view, an arrangement between the Commonwealth and the company intended to operate primarily as a management agreement whereby the company is to render to the Commonwealth the services of a manager. The agreement may constitute a lease, or at least an agreement for lease, but that point is unnecessary to decide because, as I have already indicated, the granting of a lease over land does not preclude the land from being used by the lessor.

54. I reach the conclusion on the evidence that one of the purposes of the Commonwealth in entering into the agreement was to secure subsidised serviced housing and accommodation for lower paid Commonwealth public servants and further that that purpose was achieved by the Commonwealth and the company carrying out the terms of the agreement. The Commonwealth kept under review the matter of the relationship between the purpose and its practical achievement. The fact that Gowrie has come to be occupied less by public servants and more by members of the public does not obscure that essential point. As late as 26 October 1988 the need to continue the provision of subsidised accommodation for Commonwealth public servants at both Gowrie and Macquarie was called into question within the Department of Administrative Services, the relevant department of the Commonwealth. The possibility of confining such accommodation to Macquarie and selling Gowrie at the end of 1989 was actively canvassed.

55. All this, in my view, points to a clear conclusion that as at 2 March 1989 the land was used by the Commonwealth. The Commonwealth's long recognized interest in providing residential accommodation for its public servants in Canberra was declining, but it nevertheless survived. Whilst it had become less important to the Commonwealth that such accommodation should continue to be secured, the management agreement was and continued to be the vehicle through which that purpose was achieved. Moreover the rents payable were estimated by the Australian Valuation Office to represent 5.8 percent on the capital value of Gowrie which was considered to be "a comfortable but not outstanding dividend for the capital outlay". Although the management agreement may have conferred the right to exclusive possession on the company, the Commonwealth exercised a right of supervision and entry consistent with its interest that the premises be put to an active use during the currency of the management agreement, one purpose of which continued to be the provision of accommodation for Commonwealth public servants. That purpose was shared with the purpose of ensuring that a reasonable return on the Commonwealth's capital investment was received by fixing the rental payable by the company at an appropriate figure.

56. It is true that by March 1988 the land was used not only for the accommodation of public servants but increasingly for the accommodation of members of the public. In this connection it was submitted on behalf of the plaintiff that the Minister was not, prior to Self-Government Day, entitled to declare land to be National Land unless that land was being put or intended to be put to a use which reflected some national feature or Commonwealth function as contrasted with Territory type features or functions. It was submitted that the provision of accommodation for the public was a "Territory type" function without any national features appropriate to any function of the Commonwealth. The submission is, in my view, based on policy considerations. It is sufficient answer to it to say that there is nothing in the Planning and Management Act, even when read in conjunction with the Self-Government Act, to support the submission. Prior to Self-Government Day the powers of the Commonwealth within the Territory were plenary and insofar as they were later restricted by the Self-Government Act it must be recognized that such restriction was not imposed until Self-Government Day. It is perhaps anomalous that after the passage of the Self-Government Act but prior to Self-Government Day the Planning and Land Management Act gave the Minister unilateral power to declare land in the Territory to be National Land, subject only to the restriction that the land be used or intended to be used by or on behalf of the Commonwealth. Nevertheless the decision whether the plaintiff is entitled to the declarations sought depends upon the application of the legislation to the facts and not upon policy considerations. In my view, the land was at the relevant time used by the Commonwealth. It was used for the purpose of providing accommodation to its public servants, for providing accommodation to members of the public and for obtaining a rental return on the capital deemed to be invested in the premises. Further, although the company was not the agent of the Commonwealth, insofar as the company managed Gowrie, it did so on behalf of the Commonwealth. The question posed by the parties is answered in the affirmative. The plaintiff's claim is dismissed. The notice of motion is dismissed. There will be judgment for the defendant. Unless the parties wish to be heard, I propose to order the plaintiff to pay the defendant's costs.