Dennis Robert Hulm v Howard Charles Grant; John Whitton Haslem; Cecil John Louttit and Laurus Vant Westende [1990] ACTSC 29 (7 August 1990)

SUPREME COURT OF THE ACT

DENNIS ROBERT HULM v. HOWARD CHARLES GRANT; JOHN WHITTON HASLEM; CECIL JOHN
LOUTTIT and LAURUS VANT WESTENDE
S.C. No. 520 of 1990
Leases

COURT

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

CATCHWORDS

Leases - Whether land used for an unauthorized purpose in contravention of s. 9A of City Area Leases Ordinance 1936 (A.C.T.) - dismissal of proceeding for abuse of process - whether grant of a lease for the sole use of a particular organization is a grant for a purpose within the meaning of s. 5 - whether the mere grant of an easement would of itself constitute use for an unauthorised purpose.

City Area Leases Ordinance 1936 (A.C.T.): ss. 5, 8, 8A, 9A, 9B(b)

HEARING

SYDNEY
7:8:1990

Counsel for the Plaintiff: Mr. R. McKeand

Solicitors for the Plaintiff: Vandenberg Reid Pappas and Nac

Counsel for the Defendants: Mr A. Shand QC and Mr. Walker

Solicitors for the Defendants: Crossin Power Haslem

ORDER

The action is dismissed.

The plaintiff pay the costs of the defendant of the action, including any reserved costs, on an indemnity basis.

DECISION

This case is part of a saga concerning a building in Canberra known as "Deakin House" at the corner or Geils Court and Denison Street, Deakin. There are two units (numbered 1 and 2) on the ground floor and the remaining five units (numbered 3, 4, 5, 6 and 7) are on the first floor.

2. By agreement in writing dated 18 July 1986 the defendants agreed to sell to Estill Holdings Pty. Limited ("Estill") for the price of $500,000 the unexpired residue of a registered lease in respect of unit 3 in Units Plan No. 451 in the Australian Capital Territory. Unit 3 is one of the five units on the first floor of Deakin House. Estill refused to complete the agreement and the defendants instituted a suit for specific performance against it which led in due course to my giving judgment on 5 February 1990 in which I in substance found for the defendants. Following the bringing in of short minutes on 19 February 1990 I made orders for specific performance of the agreement.

3. A problem arose in giving effect to the orders for specific performance, namely, whether Special Condition 31 of the agreement entitled Estill to an easement over what is known as the Function Room on the ground floor being part of unit 1 in the Units Plan.

4. On 26 July 1990 I gave judgment and found that it was intended by the defendants and Estill by the agreement for sale that the rights to be conferred by that Special Condition were more than a mere personal licence of Estill and that Estill should be granted a right which had all the requisite characteristics of an easement.

5. This appeared to remove the last barrier to a long overdue settlement of the sale, but on 20 August 1990 this action was commenced by Mr. Hulm against the defendants in which he asserts that the grant of the easement by the defendants to Estill over the Function Room would place the defendants in breach of clauses 4(a) and (c) of the lease from the Commonwealth as lessor to the defendants as lessee. Clause 4 relevantly provides as follows:
"4. It is mutually covenanted and agreed as follows:

(a) Subject to sub-clause (c) of this clause to
use the premises only for any one or more of the
following purposes:
i) Units 1-2 to be used solely by the Liberal
Party of Australia Australian Capital Territory Division;
ii) Units 3-7 to be used for offices
BUT not for retail or wholesale trading;
...
(c) That not less than fifty per centum of the
gross floor area of the building shall be used and
occupied only by the Liberal Party of Australia
Australian Capital Territory Division;"

6. The action is brought by Mr. Hulm for an order under s. 9A of the City Area Leases Ordinance 1936 of the Australian Capital Territory ("the Ordinance") which provides:

"Where the lessee or sub-lessee of land uses the
land, or permits the land to be used, for an
unauthorized purpose, the Supreme Court may, by
order, direct the lessee or sub-lessee, as the case
may be, not to use the land, or permit the land to be
used, for that purpose."

7. The right of Mr. Hulm to apply is conferred by s. 9B(b) of the Ordinance in these terms:

"9B. An application for an order under section 9A
may be made -
(a) by the Minister; or
(b) by a person who is a resident of, or the lessee
or sub-lessee of land or premises in, the Territory."

8. The right of a person who is merely a resident of the Australian Capital Territory to bring an application for an order under s. 9A is a public interest provision akin to, for example, the right of "any ... person" to bring proceedings for injunctive relief pursuant to s. 80 of the Trade Practices Act 1974.

9. The action came before me for hearing on 24 August 1990 by way of an amended notice of motion for interlocutory injunctive relief to restrain the grant by the defendants to Estill of the easement over the Function Room. During the course of the hearing, at my suggestion and with the agreement of Mr. Hulm and the defendants, the hearing was converted into the final hearing of the action. Evidence was given and brief submissions given orally by counsel for Mr. Hulm. Pursuant to my directions written submissions were then made by counsel for both parties.

10. I did not direct that Estill be made a party to the action because no party requested it; there is doubt if it could be made a party to an action brought, as this action is, pursuant to s. 9A of the Ordinance (a point which it is not necessary to decide); and there is evidence that Estill is well aware of the action having been brought and of this hearing, though not on a final basis.

11. Mr. Hulm brings this action pursuant to s. 9B(b) of the Ordinance and not in vindication of any private interest. The fact that he brings the action in a sense in the public interest does not alter the fact that the grant of relief by the Court is nevertheless discretionary both on general principles and because the power to restrain use of land for unauthorised purposes conferred by s. 9A of the Ordinance is of an enabling, not mandatory, kind (see the use of the word "may" in s. 9A).

12. Mr. Hulm was cross examined. He lives a long way from Deakin House (about 17 or 18 kilometres distant). He denied any suggestion that he brought this case other than in his own right or at the instigation or request or on behalf of any other person; that an arrangement of any kind had been made or suggested to him as to his costs or any costs which he might have to pay if unsuccessful in these proceedings, and that anyone had offered him gain, benefit or advantage of any kind by bringing and prosecuting this action. His cross-examination established, however, a number of matters which are more than curious coincidences, namely, that he has met at least one of the directors and shareholders of Estill (Mr. Robb); that after he met Mr. Robb he visited unit No. 3 the subject of the proceedings between the defendants and Estill for specific performance; that he works as a cleaner for Canberra Tradesmen Union Club; and that the solicitors for that organisation are Estill's solicitors of whom Mr. Robb is a partner. Mr. Hulm is a man of limited means.

13. Having heard Mr. Hulm's evidence and seen him in the witness box and considered it in the light of the probabilities I have reached the conclusion that he is not to be believed when he said that he brought the proceeding of his own initiative and not at the behest of any other person and that no-one will indemnify him or reimburse him in respect of his own costs or any costs which he may be ordered to pay if unsuccessful in these proceedings. It strains credulity too much to accept his evidence.

14. I am satisfied that Mr. Hulm has brought this proceeding at the behest of Estill or at least one of its directors and that he has allowed himself to be used as a tool for the purpose of using these proceedings to avoid Estill's obligation to complete the purchase of Unit 3 in Deakin House. In my opinion the proceeding is an abuse of process and must be dismissed. There are many authorities which support the dismissal of proceedings which have been brought for improper or collateral purposes or otherwise as constituting an abuse of process of the Court. It is sufficient to refer to Packer v Meagher (1984) 3 NSWLR 486 and Attorney-General for New South Wales v Solomon (1987) 8 NSWLR 667.

15. I shall nevertheless examine the issues raised in the case. The power of the responsible Minister to grant leases of land within the Australian Capital Territory is conferred by s. 5 as a power to grant such leases for business or residential purposes or both business and residential purposes. The expressions "business" and "residential" are not defined in the Ordinance. The power to grant leases is expressed by s. 5 to be subject to the Ordinance which includes, for examples, ss. 8 and 8A. Section 8 provides that a lease granted for business purposes or for business and residential purposes may specify the particular class or classes of business for which the land included in the lease may be used. This therefore permits a grant of what has been described as categories and "particular sub-categories": see Guneris Pty. Limited v Moglia Holdings Pty. Limited, judgment of Miles C.J., 8 December 1988, unreported at 6.

16. It is a debatable question whether the power conferred by s. 5 on the Minister to grant leases for business or residential purposes or for both such purposes conferred by is exhaustive. Miles C.J. in Guneris said that there were provisions in the Ordinance (in particular s. 8A) which suggests that the term "purposes" is not restricted to the categories mentioned in s. 5, but his Honour did not reach a concluded view on the question. Although it is not ultimately necessary for me to reach a final view on the question, as at present advised in my opinion s. 5 does define exhaustively the ambit of the Minister's power under the Ordinance to grant leases of land within the Australian Capital Territory. The power to grant leases for business purposes is for any purposes which are encompassed by the notion of a business. A business means, according to the ordinary and natural meaning of "business", an industrial, commercial or professional operation. Hence, industrial purposes are a sub-category of the category business purposes. So s. 8A is readily encompassed within the power of the Minister to grant leases for business purposes conferred by s. 5.

17. The control of land use in the Australian Capital Territory by what was described by Miles C.J. in Guneris as "the device" of purposes clauses as "a rudimentary form of town planning" is a description with which I agree.

18. When one turns to the lease of Deakin House, in particular to clauses 4(a) and (c) with which this case is concerned they do not in my opinion answer the description of "business purposes" within the meaning of the Ordinance. The Minister's power to grant leases of land in the Australian Capital Territory for business or residential purposes or for both such purposes is to enable the Minister to control land use within the Capital Territory by determining which premises may be used, for example, for light industry or as premises for retail shopping or as wholesale distribution centres or for storage purposes or as professional consulting rooms, to mention but a few of the large number of available purposes. The requirement in clause 4(a)(ii) of the lease that units 3 to 7 be used for offices, but not for retail or wholesale trading seems to me to answer the description of the grant of a lease for business purposes within the meaning of the Ordinance; but I cannot read clause 4(a)(i) (which provides that units 1 and 2 are to be used solely by the Liberal Party of the Australian Capital Territory Division) as such a purpose. The terms of the clause suggest that units 1 and 2 may be used by the Liberal Party for any purpose which it wishes provided perhaps that it is within its own powers under its charter. The requirement in a lease that premises be used solely by a particular organisation may perhaps in some circumstances, depending on the nature of the organisation and its powers, answer the description of a purpose within s. 5 of the Ordinance, a matter on which I express no opinion, but I cannot define such a purpose in the lease in question here in clause 4(a)(i). Purpose is essentially to stipulate the purpose of a town planning nature and I do not see how the mere requirement that a political party must use certain premises answers that description.

19. Clause 4(c) of the lease is in my view even more plainly not a purpose within the meaning of the Ordinance. To require that not less than 50 percent of the gross floor area of Deakin House shall be used and occupied only by the Liberal Party, whatever else that requirement may be, is certainly not a purpose within the meaning of the Ordinance.

20. Accordingly I reject the argument of counsel for Mr. Hulm that clauses 4(a) and (c) of the lease define purposes for which the Function Room on the ground floor of Deakin House may be used. This in itself disposes of the case but I shall nevertheless consider the other issues that arise.

21. Assuming, contrary to my findings, that clauses 4(a) or (c) of the lease do answer the description of the grant of a lease for business purposes within the meaning of the Ordinance, the question arises whether the land is being used or is being permitted to be used for an unauthorised purpose within the meaning of s. 9A of the Ordinance.

22. The expression "unauthorised purpose" is defined in s. 9(b) in relation to land as meaning "a purpose for which the use of the land is not authorised by or under the lease of the land". This means in my view that, if a lease specifies the purpose (business or residential or both) for which the land may be used (see s. 5) then the land cannot be used for a contrary purpose, otherwise it will be an unauthorised purpose. If, however, a lease is granted of land which does not specify any purpose then use of the land for some purpose will obviously not be an unauthorised purpose. In other words an unauthorised purpose is a purpose which is contrary to any specific purpose for which the Minister has seen fit to grant leases of land within the Australian Capital Territory.

23. Assuming then that clauses 4(a) and (c) of the lease are purpose clauses within the meaning of the Ordinance, will the grant of the easement by the defendants to Estill result in the use of the land or permission being given for the land to be used for an unauthorised purpose within s. 9A?

24. In my view an application under s. 9A can succeed only where it is established that at the time of the institution of the proceedings or the hearing of the proceedings the relevant land is being used or is being permitted to be used for an unauthorized purpose. Possibly the section extends to allow the grant of an injunction of a quia timet nature, but this does not arise in the present case because if the easement is granted it does not follow that Estill will make any use of the Function Room at all. Nor does it follow that by the grant of the easement by the defendants to Estill that itself constitutes an act of permitting the use of the land for unauthorised purpose within the meaning of s. 9A.

25. Further, if in fact Estill does enjoy the easement what this means in fact is that it will have made arrangements with the lessee of unit 1 in which the Function Room is contained to use it for some reasonable time without charge to Estill other than the reimbursement of charges for power, cleaning, breakages and repairs. I am far from persuaded that such a periodic and probably sporadic use of the Function Room, a use permitted by the lessee of the Function Room itself which is presently the defendant, is a use which would fall foul of clauses 4(a) or (c) of the lease. A lessee of premises obviously will invite people on to its premises from time to time and some may come there by legal right not just by invitation. This is an ordinary incident of occupation. It does not follow from such use of a lessee's premises that the lessee is not the person solely using or occupying them. This highlights the point that the mere grant of the easement in this case does not necessarily result in the creation of a factual matrix which would contravene clauses 4(a) and (c) of the lease even if they be interpreted as purpose clauses within the meaning of the Ordinance.

26. For these reasons I would dismiss the action.

27. As to costs the defendants seek an order that the plaintiff pay their costs upon an indemnity basis. As I am dismissing the proceedings on a number of grounds but initially because they constitute an abuse of process, it is well established that in these circumstances an order for costs on an indemnity basis is appropriate. I propose to award costs on this basis.

28. The action is dismissed. The Court orders the plaintiff to pay the costs of the defendant of the action including reserved costs, if any, on an indemnity basis.