Springrange Pty Limited v ACT & ACT Planning and Land Authority [2009] ACTSC 18 (6 March 2009)

Last Updated: 16 March 2009

SPRINGRANGE PTY LIMITED v AUSTRALIAN CAPITAL TERRITORY & ACT PLANNING AND LAND AUTHORITY

[2009] ACTSC 18 (6 March 2009)

REAL PROPERTY – Torrens system – Crown Lease of land for office and store purposes – restriction on gross floor area – whether applicable to each building on the land or to the floor area of all buildings – construction of clause – whether court may have regard to Territory Plan – whether court may have regard to other extrinsic material

City Area Leases Ordinance 1936

National Land Ordinance 1989

Australian Capital Territory (Planning and Land Management) Act 1988 (Cth)

Land (Planning and Environment) Act 1991 (repealed), s 4, Div 5.5, s 187A, ss 222, 230, 245

Bowler v Hilda Pty Limited [2001] FCA 342; (2001) 112 FCR 59

Westfield Management Limited v Perpetual Trustee Company Limited [2007] HCA 45; (2007) 233 CLR 528 Codelfa Construction Pty Limited v State Rail Authority (NSW) (1981) 149 CLR 337

Peter Kohlsdorf Golf Distributors Pty Limited v Minister for Planning [2003] ACTAAT 29

No. SC 777 of 2008

Judge: Master Harper

Supreme Court of the ACT

Date: 6 March 2009

IN THE SUPREME COURT OF THE )

) No. SC 777 of 2008

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: SPRINGRANGE PTY LIMITED

Plaintiff

AND: AUSTRALIAN CAPITAL TERRITORY

First defendant

AND: ACT PLANNING AND LAND AUTHORITY

Second defendant

ORDER

Judge: Master Harper

Date: 6 March 2009

Place: Canberra

THE COURT ORDERS THAT:

1. Judgment be entered for the defendants.

1. This is a claim by the Crown lessee of a block of land at the Tuggeranong Town Centre for a declaration as to the meaning of a provision in the Crown Lease. The construction of the provision has significance for the assessment of a change of use charge which will be payable if the plaintiff is to proceed with its intention to redevelop the site.

The factual background

2. The block in question has frontages to Athllon Drive and Rowland Rees Crescent, Greenway, at the south-eastern junction of those two streets. The land has an area of 2.604 hectares. The only improvement on the land is a single-storey galvanised iron building subleased to the National Archives of Australia for storage. The building has been there since 1990 or earlier. It has a gross lettable area of 4,558 m². The building is sited in the south-eastern corner of the block.

3. On 12 June 2002 a lease of the block was registered by the Registrar-General. The lease had been granted on 31 May 2002 and its 99-year term commenced on that date. The lease was granted to Max Profit Pty Limited. That company transferred its interest as lessee to the plaintiff in October 2006. The covenant by the lessee contained in the Crown Lease included:

PURPOSE

(a) subject to subclause 3(aa), to use the premises for offices and store and purposes ancillary thereto;

(aa) the use of the premises for store is permitted only for the purposes of the National Archives of Australia, the body established by section 5 of the Archives Act 1983 (Cth) or any body substituted therefore [sic] from time to time;

GROSS FLOOR AREA

(b) that the total gross floor area of a Building erected on the Land shall not exceed 4,800 square metres;

CAR PARKING

(c) that the lessee shall provide and maintain a minimum of 14 hard-standing car parking spaces on the Land to the satisfaction of the Commonwealth, but if any development is carried out on the Land, car parking shall be provided and maintained to the satisfaction of the Commonwealth in accordance with the standards of the Territory in force at the time of seeking development approval under this lease or any applicable legislation;

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

BUILDING SUBJECT TO APPROVAL

(h) that the Lessee shall not without the previous consent in writing of the Commonwealth erect any Building on the Land or make any external structural alterations to the premises;

while the Land is National Land, the Commonwealth will not give its consent under subclause 3(h) unless it is satisfied that the proposed development conforms with the requirements of the Territory Plan as it exists from time to time and, where the Commonwealth requires a Development Control Plan for the Land, the requirements of the Development Control Plan;

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4. The lease is expressed to have been “granted pursuant to the City Area Leases Ordinance 1936 and the Regulations there under as applied to National Land by the National Land Ordinance 1989”. The lease relevantly includes the following interpretation provisions:

1.1 In this Lease, unless the contrary intention appears:

(a) ancillary means associated with and directly related to, but incidental and subordinate to the predominant land use;

(b) Building means the existing building or buildings constructed on the Land or any building or buildings constructed on the Land to replace the same in accordance with the covenants of this lease together with all fixtures fittings (including floor coverings) plant amenities and appurtenances thereof and therein contained or thereon affixed or if the context so admits any part thereof owned by the Lessee;

(c) City Area Leases Ordinance means the City Area Leases Ordinance 1936 as applied by the National Land Ordinance 1989;

(d) Commonwealth means the Commonwealth of Australia but if the Land becomes Territory Land, shall, as from the date when the Land becomes Territory Land, mean the Australian Capital Territory Executive on behalf of the Commonwealth;

(e) gross floor area means the sum of all the areas of all floors of the building or buildings measured from the external faces of the exterior walls or from the centre lines of walls separating the building from any other building but excluding an area used solely for rooftop fixed mechanical plant and or basement car parking;

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(h) National Land has the meaning given to that term by the Australian Capital Territory (Planning and Land Management) Act 1988 (Cth);

(i) office means the use of land used for the purpose of administration, clerical, technical, professional or like business activities, including a government office, which does not include dealing with members of the public on a direct and regular basis except where this is ancillary to the main purpose of the office;

(j) premises means the Land, Building and all other improvements on the Land;

(k) store means the use of land for the storage, whether permanent or temporary, of goods (not including motor vehicles or obsolete machinery) within or upon which no trade (whether retail or wholesale) or industry is carried on;

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(m) Territory Land has the meaning given to that term by the Australian Capital Territory (Planning and Land Management) Act 1988 (Cth); and

(n) Territory Plan means the plan made under the Land (Planning and Environment) Act 1991 (ACT) or any instrument substituted therefore.

1.2 If the Land becomes Territory Land, any reference in the lease to the City Area Leases Ordinance shall, as from the date when the Land becomes Territory Land, be taken to be a reference to the Land (Planning and Environment) Act 1991 (ACT) or any Statute or Ordinance substituted therefor.

5. It is common ground that the block has been Territory Land within the meaning of the Australian Capital Territory (Planning and Land Management) Act 1988 (Cth) since 6 November 2002. The effect of clause 1.2 of the interpretation provisions in the lease is that from that date, the lease must be taken to have been granted pursuant to the Land (Planning and Environment) Act 1991.

6. That Act includes a section in the following terms:

8 Effect of plan

The Territory, the Executive, a Minister or a Territory authority must not do any act, or approve the doing of any act, that is inconsistent with the plan.

7. The plan is the Territory Plan: section 4 of the same Act. The plan is a lengthy and detailed piece of delegated legislation under the same Act.

8. Division 5.5, and in particular section 187A, of that Act prescribes a formula for the calculation of a change of use charge payable by a Crown lessee in the event of a subdivision of a leased block. In simple terms, the charge is equal to 75% of the value of the block prior to subdivision and its value following subdivision. Although it is not spelt out in Division 5.5, it was accepted by counsel for all parties that the legislation requires the Minister to determine the charge taking account not merely of the fact of subdivision but also of any change of purpose.

9. In May 2007 the plaintiff lodged with the second defendant a development application seeking approval of the subdivision of the block into two parcels, with a surrender of the existing lease and grants of two new leases. The application sought removal of the requirement for a limit of 4,800 m² as the gross floor area limit “to each building” and approval to an upper limit of 32,000 m² gross floor area for what would become the vacant block. The proposal was that the existing block be divided by a line at right angles to Athllon Drive, about halfway along the Athllon Drive frontage, placing the existing building on a south-eastern block of 1.181 hectares, and leaving a rectangular north-western block of 1.424 hectares available for the development of an office block of something approaching 32,000 m² in gross floor area. Evidence was given that Centrelink, an instrumentality of the Commonwealth government, had advertised for proposals for the design, construction and lease of a building which would house its national support office. Proposals are required to be lodged by 8 April 2009. I infer from the evidence that the proposed north-western block would be, at least in the opinion of the plaintiff’s directors, suitable in area and location for such a development.

10. The second defendant is the body with authority to determine such a development application, pursuant to section 222 of the Land (Planning and Environment) Act. On 15 November 2007, the second defendant pursuant to section 230 of the Act approved the application, subject to conditions imposed under section 245. The second defendant considered the proposal to be consistent with the Territory Plan. The conditions imposed included the submission by the plaintiff of “an updated valuation report to reflect the change in maximum permissible gross floor area”, and payment by the applicant within 28 days of notification of any change of use charge found to be payable. Draft Crown leases for the two blocks following the proposed subdivision were attached to the notification of the decision.

11. It appears that notwithstanding the imposition of the condition that the applicant obtain a fresh valuation report, ACTPLA gave instructions to the Australian Valuation Office, an instrumentality of the Commonwealth, to prepare “a full valuation report addressing the change of use charge . . . and providing before and after values . . . as required under the Land (Planning and Environment) Act 1991”. The valuation was carried out on 4 December 2007. It was conducted on the assumption that the existing block was “considered to be fully developed and no additional development rights accrue to the property”. That is to say, the valuation was based on an interpretation of the purpose clause which would limit the gross floor area of all buildings on the land to 4,800 m². On this basis the Australian Valuation Office arrived at a “before” value of $7,100,000.00 and an “after” value of $18,600,000.00.

12. Immediately before lodging the development application the applicant had obtained before and after valuations from Mr RJ Swinbourne of Egan National Valuers. I infer that Mr Swinbourne was provided by the plaintiff with a copy of a letter from the ACT Planning and Land Authority dated 12 August 2003, in response to an enquiry as to whether the Crown Lease permitted more than one building to be constructed on the property. ACTPLA said in the letter “we have received advice from the ACT Government Solicitors office that . . . the Land could be used for multiple buildings, each with a gross floor area of not more than 4,800 m²”.

13. Mr Swinbourne prepared his valuation on the basis that this was the correct interpretation of the purpose clause. He arrived at a before value of $14,930,000.00 and an after value of $15,000,000.00.

14. If the defendants had accepted that valuation, the change of use charge would have been a relatively modest $52,500.00.

15. On 21 May 2008, the second defendant wrote to the plaintiff’s agent requiring payment within 28 days of a change of use charge calculated in accordance with the AVO valuation, of $8,625,000.00. The plaintiff has since appealed to the Administrative Appeals Tribunal for review of the second defendant’s decision in respect of the change of use charge. The appeal has not yet been determined.

The competing submissions

16. The issue before me is the correct construction of clause 3(b) of the Crown Lease: that “the total gross floor area of a Building erected on the Land shall not exceed 4,800 m²”. Does this mean that the total gross floor area of all buildings erected on the land may not exceed that figure, or does it mean that the gross floor area of each building must not exceed that figure? If the latter interpretation is correct, the number of buildings permissible on the land would be governed by other considerations such as prescribed setbacks and distances between buildings.

17. Senior counsel for the plaintiff submits that the second of these interpretations was intended by the drafter of the document. He points to clauses 3(c) and (h), which contemplate development on the land and the erection of buildings. He makes the point that it would have been a simple matter for the drafter, if this had been the intention, to provide that the total gross floor area of all buildings erected on the land was not to exceed the set area. He relies also on the definition of Building, “the existing building or buildings constructed on the land or any building or buildings constructed on the land to replace the same . . . ”. The word Building, senior counsel for the plaintiff submits, despite its ordinary meaning, has been defined by the drafter so as to include, potentially, more than one building. If clause 3(b) were not to be read in that way, the result would be that no further development would be permitted on the land whilst the existing building, the National Archives store building, remained there. Having regard to the size of the block and the relatively small part of it occupied by the archives building, this could not have been the intention of the drafter, bearing in mind that the block is located in the Tuggeranong Town Centre. To leave the land underdeveloped to that extent would be inconsistent with the Town Centres (Commercial B) land use policies contained in Part B2B of the Territory Plan. It is clear from the map of the Tuggeranong Town Centre at figure 2 to Part B2B that the block is contained in a portion of the town centre designated a business area, “zoned” for many land use policies, including office use but interestingly not including “store” use, which is permitted only in those portions of the town centre designated for Mixed Services.

18. Counsel for the plaintiff submits that I should, in interpreting the clause, take account of the objectives of the Town Centres (Commercial B) land use policies, which include providing opportunities for business investment and employment whilst facilitating the decentralisation of employment from the Central National Area; and encouraging a mix of land uses which contribute to an active and diverse character.

19. Part B2B of the Territory Plan also sets out at paragraph 4.2 certain objectives for business areas within Town Centres, relevantly including provision for offices and business services within planned commercial centres; provision for a wide range of office accommodation sizes and locations in the Town Centres; and provision for “Commonwealth government departments to efficiently consolidate in town centres”. An interpretation which would frustrate those objectives is unlikely to have been intended.

20. Senior Counsel for the defendants submits that the preferable interpretation of clause 3(b) is that it is intended to limit the total gross floor area of all buildings erected on the land to 4,800 m². Reliance for this submission is placed on the definition of Building to include, potentially, more than one building. Counsel submits that the Crown Lease must be read as an entire document. It is consistent with the terms of the Crown Lease that the intention was to limit development on the block to the existing building whilst it remained in place and whilst it was used for storage for the purposes of the National Archives.

Applicable authorities

21. I was referred by counsel to three authorities during argument. Bowler v Hilda Pty Limited [2001] FCA 342; (2001) 112 FCR 59 is authority for the proposition that extrinsic material cannot be used as an aid to the construction of a statement of planning purpose in an ACT lease. A similar principle emerges from Westfield Management Limited v Perpetual Trustee Company Limited [2007] HCA 45; (2007) 233 CLR 528, in which the High Court (Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ) confirmed that to seek to establish the intention of contemplation of the parties to an instrument registered under the Torrens system by reference to material extrinsic to the instrument would be contrary to the principles of the system. Rules of evidence assisting the construction of contracts inter partes, of the nature explained by Codelfa Construction Pty Limited v State Rail Authority (NSW) (1981) 149 CLR 337, do not apply to the construction of such a registered instrument. The rationale for the principle is that persons not party to the original instrument should be able to rely on an inspection of the register and should not be expected to look further for extrinsic material which might establish facts or circumstances existing at the time of the creation of the registered dealing and which might be argued to be relevant to its construction. The principle is clearly applicable to the Crown Lease in the present case. Such persons as subsequent purchasers and mortgagees must be able to rely on the terms of the Crown Lease itself.

22. It does not seem to me inconsistent with this principle that the Crown Lease should be interpreted consistently with the Territory Plan. The Territory Plan has the status of delegated legislation and is publicly available. The decision of President Peedom in Peter Kohlsdorf Golf Distributors Pty Limited v Minister for Planning [2003] ACTAAT 29 at para 49 to that effect was in my opinion correct.

Analysis

23. It seems to me inherently unlikely that the drafter of the Crown Lease, in drafting clause 3(b), intended to permit, consistently with the purpose clause, the construction of as many buildings as could reasonably be fitted onto the block conformably with other planning requirements, provided that each such building had a gross floor area not exceeding 4,800 m². What would be the rationale for such a restriction? Whilst it might lead to development of the block by construction of a number of separate multi-storey small-footprint office buildings, it is hard to imagine that the drafter saw some merit in such a restriction, as opposed to permitting the construction of a single office building which might be regarded as otherwise appropriate for the size of the block and for the location.

24. It appears to me far more likely that the intention of the drafter was that the block not be further developed whilst the Crown Lease remained in effect, and whilst the National Archives building remained there and was used for national archives storage purposes. One can imagine that the Crown lessor saw an opportunity to raise a capital sum as a premium for the Crown Lease whilst preserving the right of the National Archives to continue to use its presumably purpose-built storage building, interposing a private-sector landlord. One can reasonably infer that such a premium would have been calculated by reference, at least to some extent, to the rent being paid by the National Archives, if perhaps also with an eye to the possibility of further development on the block.

25. I am influenced also, as was submitted by senior counsel for the defendants, to the view that the drafter adopted the word “total” in the clause to make it clear that the gross floor area limit was intended to apply to all buildings on the land. This might have become relevant if at some time in the future it became necessary to replace the archives building: it could be replaced by another building, or more than one building provided that the gross floor area was not exceeded.

26. I am satisfied that clause 3(b) is ambiguous. This is regrettable: it would after all have been, as senior counsel for the plaintiff suggested, a simple matter for the clause to have made it clear that the limit applied to the total gross floor area of all buildings on the land. Nevertheless I am of the view that the construction of clause 3(b) contended for by the defendants is the preferable construction. In these circumstances the plaintiff has failed to make out its claim for the declaratory relief sought.

27. The defendants do not seek a declaration. In the circumstances my provisional view is that judgment should be entered for the defendants, with costs following the event. I shall hear the parties as to the appropriate orders, and as to whether there is any reason why some different order should be made about costs.

I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Master.

Associate:

Date: 6 March 2009

Counsel for the plaintiff: Mr CM Erskine SC

Solicitors for the plaintiff: Dibbs Abbott Stillman

Counsel for the defendants: Dr JE Griffiths SC with Mr DJC Mossop

Solicitor for the defendants: ACT Government Solicitor

Date of hearing: 2 March 2009

Date of judgment: 6 March 2009