112 Acland Street Pty Ltd v ANZ Banking Group Lts [2002] VSCA 95

5. The difficulties which have arisen in the present case derive from a form of lease, the 1958 copyright lease, which was adopted by the parties in 1992, and again in 1997, for reasons which were not explained in evidence and which may have seemed satisfactory to the parties at the time. It is more likely than not, although the evidence was not clear on the point, that it was used because the parties entered into the lease by virtue of an option for renewal which may well have required the parties to enter into the lease in that form and which certainly appeared in the two relevant leases, the parties here agreeing that the respondent had been in possession as tenant for at least 25 years. That may explain why the 1958 copyright form was used without significant alteration, but its use posed problems in interpretation in circumstances where it is impossible to state specifically anything about its adoption other that it was executed first for present purposes in 1992. We emphasise these matters, and the absence of any history given in evidence as to the use of the 1958 copyright lease, to explain that what is said by this Court in relation to its interpretation, which others may see as bearing upon the interpretation of similar standard leases, ought to be confined to the language of these specific documents and the particular circumstances, including the relevant legislative regimes, which are directly applicable to them, especially that relating to land tax.

8. The difficulty, as we perceive it, arises out of the use of very simple, if not truncated, language to express the tenant's covenant to pay rates and other charges which was expressed in clause 1(b) in each lease as follows:

"The lessee DOTH HEREBY COVENANT with the lessor:- ... (b) to pay during the term of this lease all municipal and other rates and charges including excess water rates assessed in respect of the demised premises and all telephone, gas and electricity charges and other like outgoings in respect thereof; ...".

12. The respondent has for many years been the tenant of the landlord under leases which have been renewed from time to time in relation to premises occupied by the bank in a shopping centre in Acland Street St. Kilda. Over the years, it seems, land tax has been regularly imposed upon the landlord, as owner of the premises (we were asked to assume) under the Land Tax Act 1958. From year to year the landlord's agent has demanded of the tenant that it pay a proportion of that land tax, calculated by reference to the demised premises (and whether by value, area or otherwise does not presently matter) and the tenant for some time complied with the agent's demands. More recently, it is said by the respondent, it came to appreciate that as tenant it was not liable, either under the terms of the lease or otherwise, for the payment of land tax imposed upon the landlord and so it commenced the proceeding against the appellant in the Magistrates' Court.

15. The tenant's claim was to recover the amounts paid by it for land tax in the years 1992 to 1997, amounts which totalled $28,499.01. Alleging the payments made, the tenant claimed to have paid under a mistaken belief in its obligation to do so under the terms of the leases. (There were two relevant leases, the first made in the year 1992 and the second in 1997, but both were in almost identical terms.) The landlord counterclaimed for $35,961.40, being land tax assessed in respect of the years 1998 and 1999 and which the tenant had refused to pay. The pleadings in the Magistrates' Court raised a number of incidental issues, including a defence based upon the statute of limitations, but the magistrate determined the proceeding in favour of the landlord by reason of one fundamental issue, holding that, on the proper construction of the leases, and in particular clause 1(b) thereof, the tenant was indeed liable to pay the land tax in question. Accordingly the tenant's claim against the landlord to recover payments for land tax was dismissed and on the counterclaim judgment was given against the tenant for the sums claimed by the landlord for land tax, together with interest and costs.

18. Dissatisfied with the magistrate's conclusion that clause 1(b) obliged the tenant to pay, or at least to contribute to, land tax otherwise imposed upon the landlord, the tenant appealed to the Trial Division under s.109 of the Magistrates' Court Act 1989. Such an appeal is permitted only on a question of law and these two points were identified by the Master who made the order which served to institute the appeal:

"(a) Whether on the proper construction of the current lease between the parties dated 10 April 1997, and the preceding lease between the parties dated 4 June 1992, the Appellant [that is to say, the tenant] is (or was in the case of the preceding lease) obliged, pursuant to clause 1(b) of each lease, to pay to the Respondent [that is, the landlord] land tax assessed against the Respondent in respect of the subject premises. (b) if the Appellant is (or was in the case of the preceding lease) so liable, whether the land tax is or was (as the case may be) payable as aforesaid on a single holding basis or on a proportionate basis."

22. After hearing argument, the learned judge concluded in a reasoned judgment that the magistrate was in error in his construction of the lease and that, when properly read and applied, clause 1(b) did not oblige the tenant to pay land tax imposed upon the landlord. Accordingly his Honour allowed the appeal and set aside the orders made below. Because there were other defences raised to the tenant's claim which had not yet been determined, the matter was then remitted to the Magistrates' Court for hearing and determination according to law, in line with his Honour's reasons. Although the authenticated order does not expressly mention the counterclaim, we take it that the orders on the counterclaim were among those set aside and that the counterclaim was part of "the proceeding" remitted for determination; for on the judge's view of clause 1(b) the landlord's claim for any further payments of land tax was bound to fail.

25. It is from the orders made by the learned judge that the landlord now appeals to us seeking to overturn his orders and to have the magistrate's orders restored. In our opinion, however, the decision reached by his Honour on the construction of the lease was correct; for as we see it clause 1(b) did not cast the burden of the landlord's land tax, either wholly or in part, upon the bank as tenant under the leases, and accordingly, subject to the defences otherwise raised against the claim in the Magistrates' Court, the tenant was not obliged to pay the amounts for land tax demanded by the landlord's agent, and otherwise was entitled to recover from the landlord those amounts paid by the tenant and to resist the counterclaim of the landlord for land tax in the later years. It is necessary to examine the arguments in some greater detail.

28. At the outset some problems should be mentioned in relation to the first of the two questions identified by the Master in commencing the appeal to the Trial Division, for it was this first question on which argument focussed both below and on this appeal. There is now no dispute between the parties over the basis of apportionment; the argument before this Court was only over the obligation or not of the tenant to pay any land tax at all. It will be observed, however, that clause 1(b), when it applies, obliges the tenant "to pay" the outgoings mentioned; the obligation is not, at least in terms, expressed as an obligation "to pay to the respondent". It may well be, then, that the obligation, when it attaches, is simply to pay the relevant outgoing to the body demanding its payment, such as the local municipal council. But again that was not an issue between the parties and so the question identified by the Master needed some adjustment if the issue which was being debated was now to be determined. At the very least, the expression "to pay to the respondent" should become "to pay", without identification of the payee or the method of payment.

31. Another like matter, arising out of the formulation of that first question, concerned the land tax which had been assessed. We were shown one of the assessments and a part of another, and it was difficult to see how they related at all to the landlord. They were not in the landlord's name and, when counsel were questioned, it was not clear from the answers given from the Bar table how the matter should be resolved. In the end, however, the parties agreed that the following passage from the reasons given by the magistrate sufficiently described the position upon which the matter proceeded at first instance:

"There is no issue between the parties that the lessee has in fact paid land tax annually from 1992. Neither the fact of payment nor the amount is in dispute. The land tax has been paid by the lessee, on the demand of the lessor, following assessments made against the lessor as owner of the property."

It was not disputed, in addition, that what had been paid by the tenant, on demand of the landlord's agent, was an aliquot portion of the land tax to which the landlord had been assessed and, as already mentioned, the proper calculation of that portion is not now in dispute.

36. After discussing these matters, it was finally agreed by counsel that the question now to be determined is:

"Whether on the proper construction of the lease between the parties dated 10 April 1997, and the preceding lease between the parties dated 4 June 1992, the land tax assessed in the years 1992 to 1999 fell within the words in clause 1(b) "all municipal and other rates and charges including excess water rates assessed in respect of the demised premises."

40. A further matter which can be quickly despatched should also be mentioned at the outset. A question was raised, at one stage in the argument, whether the land tax to which the landlord had been assessed could properly be described as having been "assessed in respect of the demised premises". It was suggested, but faintly we think, that land tax was assessed not in respect of land but in respect of the ownership of the land, and in particular the lessor's ownership of land. That however is plainly inconsistent, we think, with cases such as Centrepoint Custodians Pty. Ltd. v. Lidgerwood Investments Pty. Ltd.[1] and the cases discussed therein. In our view the description in clause 1 (b) of a relevant outgoing as "assessed in respect of the demised premises" is no obstacle to including land tax within clause 1(b).

43. Another question which can be disposed of turns on s.42 of the Land Tax Act. By and large, land tax is assessable on the owner: s.8. However s.42 makes provision for the assessment of the lessee. By s.42(1) the lessee is deemed, save as hereinafter provided, "to be the owner of the fee simple of the land and shall be assessed and liable for land tax accordingly". By s.42(2) where the lessee pays land tax, the owner is entitled to a credit for the amount paid against the tax otherwise payable by him, as owner. By s.42(3):

"Nothing in this section shall operate to relieve the legal owner of the fee-simple from the payment of tax except in so far as in the opinion of the Commissioner his interest in the unimproved value of the land is lessened by the covenants of any lease thereof and in every such case the Commissioner shall determine the amount of the tax payable by the owner and by the person entitled to the leasehold estate respectively."

Subsection (3) has its difficulties but, after hearing argument, we think it fairly clear that it is directed to cases where, by reason of the terms of the lease or the circumstances attending its operation, the very existence of the lease significantly diminishes the value of the owner's interest in the fee simple. A ninety nine year lease for a fixed rent and a lease for a peppercorn rent are examples. They are cases in which, it might be said, the Commissioner could fairly be of the opinion that the lessor's interest in the unimproved value of the land was lessened by the covenants of the lease with the result that s.42(3) might then operate to relieve the legal owner from the payment of tax. But, it was said in Commissioner of Land Tax v. City of Melbourne[2], it was only in such cases that s.42 came into play. Although s.42(1) is expressed in general terms to deem the lessee to be the owner of a fee simple and liable accordingly to be assessed for land tax, both are intended to have operation, according to City of Melbourne, only when called into play by virtue of s.42(3), the earlier two subsections existing, it was held, to give effect to the third. That means that in the instant case, where it was common ground s.42(3) had no room to operate, s.42 was irrelevant, with the result that s.42 did not impose liability upon the tenant to pay land tax. Accordingly the only liability for land tax imposed by the statute itself was to be found in s.8, and that was a liability imposed on the owner of the premises, not the tenant. That is important because it sets the context in which to approach clause 1(b).

48. Turning to matters of more general consequence, the brevity of the covenant might be seen to demonstrate a simplicity conducing to an easy construction of its language. Indeed that would be so if there were consistency elsewhere in the use of words such as "rates" and "charges", but the history of covenants such as the present points to no easy conclusion of that kind. The question posed by the appeal requires only an answer whether land tax as exacted in this State in the relevant years was comprehended by either term, but, though each is capable of being construed widely, neither naturally covers a land tax. No serious argument was directed to bringing such a tax within the term "rates"; rather it was said that "charges" was a word of wide denotation covering every exaction compulsorily imposed on landholdings or landholders: cf Hartly v. Hudson[3]; Emmerton v. Smith[4]; Davison v. Bathurst City Council[5]; and Sunskill Investments Pty. Ltd. v. Townsville Office Services Pty. Ltd.[6]. Nevertheless, although in their particular contexts the judges in each of those decisions were prepared to give a wide reading to the word "charges", none posed a similar question to the present in that none related to land or other taxes exacted by the Parliament, nor did the term appear in a clause similar to the present.[7] Indeed the widest meaning given, in Davison[8], concerned the meaning of "charge" in a statute, namely the New South Wales Local Government Act 1919.[9] In Sunskill Investments each member of the Court acknowledged the possibility that the word was capable of wide application[10], but two members of the Court[11] said it had "no precise legal meaning". McPherson, J. also distinguished that kind of charge which results in a right to enforce by way of sale from that kind of charge which is "the cost or price demanded for services or goods whether or not they are desired by the recipient".[12] The clause considered in Sunskill Investments, however, was very different from that here in question in that rates and taxes were separately dealt with by another covenant.

51. The truth of the matter is that there are considerable inconsistencies between authorities on covenants of the kind here under consideration. Not only is this notorious, but the reasons for it are not hard to discern. The learned author and editors of Foa's General Law of Landlord and Tenant have expressed it in these terms[13]:

"It has frequently been judicially observed that it is quite impossible to reconcile the decisions upon this subject [viz. covenants to pay rates, taxes etc.]; and unfortunately the Court of Appeal[14], while dealing with each case which has come before it on its merits, has shown of late years a strong disinclination to review the early decisions, and down to the present time has uniformly declined to overrule formally any of them."

55. The reason for the uncertainty of interpretation may be seen to flow primarily from two sources, one, the variety of language employed by those drafting covenants for the payment of rates, taxes and the like and, secondly and more importantly, the variety of exactions and legislative schemes which one party or the other has sought to bring within these covenants. It is the latter consideration which, more often than not, may be seen to have led to the former; in other words the nature and variety of methods of raising rates and taxes and the like from landholders has led to those responsible for drafting covenants to express themselves widely or narrowly depending upon the result which they seek to achieve. Unfortunately, also, a blind adherence to conveyancing precedents has not infrequently led to the use of language which has led either to an inappropriate description of the relevant exaction or has resulted in the use of apparently wide language which has a consequence unintended by the parties.

58. These difficulties may be seen from the history of various of these rates, taxes, charges and other outgoings, the manner in which the burden for paying them was stated explicitly or assumed implicitly to lie and the various attempts made by the drafting of covenants to either reinforce or alter the incidence of those rates, taxes and the like. We shall not attempt to outline more than a few aspects of that history, as best we understand it, in order to show why the provisions in other covenants relating to rates, taxes and the like imposed in other jurisdictions or earlier in this State may well be misleading and more than likely be the cause of the confusion to which Foa refers.

61. It is not surprising to learn that from the earliest times one party or the other, normally landlords who have had the relevant economic power, have wished to see themselves saved harmless from the incidence of rates, taxes and the like. In consequence it has been not infrequent for the landlord to stipulate and leases to require that the rental should be paid "clear" or "net" or "free of all taxes": see e.g. Giles v. Hooper decided as early as the second year of the reign of William and Mary (1690).[15] The text of the reporter's summary of the judgment refers to "all land taxes lately imposed by Act of Parliament" but such sources as we have been able to examine state that land tax was first imposed in 1692 in the statute which is Chapter I of 4 William & Mary[16]. Originally the incidence of land tax rested on the landlord but after 1798 it fell for many years in the first place on the tenant.[17] A considerable number of clauses considered by the courts in the eighteenth and nineteenth century acted upon these relevant assumptions, ordinarily to change the incidence in the manner desired by the parties but difficulties of construction arose if general words were used. More often than not, as in Giles, the description "taxes" was held sufficient to cover land tax. Whether or not s.17 of the 1798 Act applied, there were a number of cases dealing with the meaning of the word "taxes" in covenants of the present kind, several of which related to land tax, although the outcome was not infrequently affected by the statutory incidence of land tax.[18] By contrast, most "rates", as commonly understood, fell on the tenant as "occupier", as was also the position in this State until the passing of the Local Government Act 1989, without any statutory or implied right of recoupment from the landlord.[19] What is not insignificant is that the standard textbooks, such as Foa, have dealt both with the statutory and implied obligations to pay rates and taxes as well as with the interpretation of covenants to pay rates, taxes and the like.[20]

64. The wide variety of rates, taxes, charges and the like exigible from the occupiers or owners of land in England over the last two to three centuries has also been reflected in Australia in a similarly wide, though not identical, variety of rates, taxes etc. imposed by the Commonwealth, the several States and Territories and municipal and other semi-governmental bodies. Each legislative scheme has been drafted to achieve particular purposes so that variously the landlord or the tenant has been made primarily liable and, from time to time, the incidence of that liability as between landlord and tenant has been either the subject of specific statutory enactment or, as in the case of certain land taxes, made subject to provisions preventing any alteration of the incidence of the liability imposed. Many of these statutes have led in turn to particular difficulties in the construction of covenants, some drawn very widely which ordinarily give little cause for trouble, and some drawn, in apparent adherence to forms appearing in some well-worn book of precedents, with blithe disregard of the relevant statutory regimes. The latter have led to a considerable number of decisions about the meaning of particular covenants but their present value as authority in this Court is limited.[21]

67. So the legislation in each jurisdiction has exacted imposts on the ownership, use or occupation of land in a variety of ways, each attempting to raise revenue or impose charges in different ways considered to be fair or socially desirable, and also frequently affected by views as to the proper distribution of governmental powers between central, municipal and semi-governmental authorities. Thus in England "taxes" have been treated as comprehending taxes levied by Parliament payable to the Exchequer for general public application, which over the years have included the land tax (now abolished in that country), property taxes such as those imposed under various income tax and revenue Acts, capital gains taxes and, arguably, value added taxes. It has been suggested that the word may also include parochial taxes, that is taxes levied under the authority of Parliament by local authorities such as the former poor rates but also general rates raised over the years under local government Acts and Acts such as the General Rate Act 1967 and the Local Government Finance Act 1992.[22] The extension of the term to include parochial and like taxes seems to depend upon a usage of the word "tax" not found generally to have been adopted in Victoria. Likewise "rates" have comprehended the rates imposed by parochial and other local government bodies, of the kind just referred to, but also land drainage and sewerage rates such as have been imposed under various land drainage acts and water acts. "Charges" may be seen to have been imposed in circumstances not merely when a charge has been imposed on the land but more generally as importing "impositions", such as are made payable by an owner or occupier for the carrying out of works on or near to land.[23] In each case the incidence generally has been of considerable significance in determining the relationship between landlord and tenant as to the obligation to see that the sum has been paid or to indemnify the landlord, usually permitted only by reduction of the rent payable.[24]

70. In Australia, however, and in particular in Victoria, different problems have arisen, not merely because of the characterisation of the various rates, taxes and charges and the like but also by virtue of the variety of provisions, frequently of a quite different kind from those relevant to the leading English authorities, relating to the incidence of those rates, taxes and charges, etc. Thus, both the Residential Tenancy Acts and the Retail Tenancy Acts (each revised significantly at least once) have specific provisions as to incidence, whereas the Land Tax Acts in Victoria before 1968 for many years specifically prevented the landlord from imposing liability for such tax on the tenant. Relevant Acts covering "taxes" applicable in this State still include the Land Tax Act 1958, although the Commonwealth land taxes have now been abolished and there are specific difficult provisions relating to the goods and services tax recently imposed.[25] "Rates" have ordinarily in this country covered those levied by municipal councils, but they ordinarily comprehend also a considerable range of rates imposed by semi-governmental bodies relating to water, sewerage and the like. "Excess water rates", however, comprehend water usage charges or imposts which are normally borne by the tenant and are in fact the subject of specific inclusion in the covenant under consideration. "Charges" can refer to levies and imposts which may result in the charging of land, but again the word is ordinarily taken to cover those charges which consist in an impost for the supply of some benefit to or for the subject premises.

73. The reason for this discursive exercise has been to show how difficult it is to argue from an interpretation given in past years to any collocation of words requiring the payment or bearing of taxes, rates and the like, at least without a full understanding of the legislative regime which lay behind the imposition of those taxes, rates, etc.[26] Indeed, as we have endeavoured to explain, frequently particular taxes and rates fell naturally, by the words of the statute imposing them, on the party, more often than not the tenant, whom the parties intended to bear them, without the need for an explicit covenant to that effect. Sometimes the covenant has been expanded so as to ensure that in fact the party so liable under the statute paid the relevant impost in order to make sure that, by reason of default, liability did not ultimately fall, by virtue of a charge or otherwise, on the other party, usually the landlord, who wished to receive the rent free of any potential liabilities for such rates, taxes and the like. Often the language chosen was apposite to occupation or use, either in its express terms or by virtue of the legislation applicable at the time. What is relatively clear, however, is that, if the parties wished to ensure that the tenant did bear all such rates, taxes, etc., they could, and not infrequently did, say so. In more recent times in Victoria one may look at such covenants, of the kind frequently found in the authorities both in this country and in England, which made their meaning relatively plain or, if not their precise meaning, their general intent. Thus, in the lease considered by the Full Court in FAI Traders Insurance Co. Ltd. v. Savoy Plaza Pty. Ltd.[27] the covenant took essentially this form:

"That the lessee will ... bear pay satisfy and discharge all taxes, rates, sewage rates, duties, charges, assessments, impositions, fees, payments and outgoings whatsoever (save and except lessor's income tax and lessor's proportion of the licence fee ...) whether legislative, municipal, corporative or otherwise which now are or may from time to time or at any time during the continuance of this lease be taxed, rated, charged, levied, assessed, imposed or made payable upon or in respect of the said ... premises or any part thereof or the occupation thereof ... or upon the landlord or tenant in respect thereof ...".

At about the same time in Centrepoint Custodians[28], a somewhat shorter covenant was considered, but to like effect, which required the tenant to pay or reimburse "all municipal rates, water rates, land taxes and other outgoings, charges, impositions and assessments of whatsoever nature ...".

78. The contrast between the language in covenants such as those just quoted and the language in the covenant here being considered is, to say the least, striking. A concatenation of imposts and charges of all kinds "whatsoever" seems, at least at first blush, far removed from the austere language used by those who drafted the 1958 copyright lease. Of course, if the language used is apt to comprehend land tax, then the ultra-caution otherwise employed in drawing covenants to impose similar obligations cannot deny the wide construction for which the landlord here contends. It does, however, suggest at the least that one ought to consider why this covenant used only (relevantly) the words "rates" and "charges".

81. Moreover, the natural and normal meaning of each of these words has not ordinarily been seen to be wide enough to include taxes imposed by Parliament such as land tax. Before examining further what "rates" and "charges" here should be taken to cover, the nature of taxes, in particular land taxes, should first be considered. Although "tax" and "taxes" are not words of "invariable signification"[29], the "usual description" of a tax has been essayed at least once in the High Court, in MacCormick v. Federal Commission of Taxation[30], where Gibbs, C.J., Wilson, Deane and Dawson, JJ. said[31] that the recoupment taxes there considered answered such a description because:

"They are compulsory. They are to raise money for governmental purposes. They do not constitute payment for services rendered ... They are not penalties ... They are not arbitrary. Liability is imposed by reference to criteria which are sufficiently general in their application and which mark out the objects and subject matter of the tax ... ".[32]

As to land taxes, Lord Merrivale on behalf of the Judicial Committee of the Privy Council[33] made these observations in Leventhal v. David Jones:[34]

"What then is a land tax? A yearly impost laid upon real property by parliamentary enactment for the provision of public revenue appears to be within the description. ... `[It is] a tax on land directly imposed by the legislature of the State'."

The latter passage was taken from the judgment of Griffith, C.J. in Solomon v. New South Wales Sports Club[35]. The essence of both decisions, especially that of the Privy Council, was that, although the tax under consideration, in the latter case a special tax on land in municipalities near the centre of Sydney for the purpose of providing funds for the building of the Sydney Harbour Bridge, was confined to a limited area and was to be used for a particular scheme, it nevertheless satisfied the test of a land tax because it was imposed by the legislature for the provision of public revenue. There can ordinarily be no question, in the case of a true tax, of delegating the revenue-raising power to some municipal or other body. Whether or not land tax can properly be described as a "wealth tax", as opposed to a tax on the use of land, does not have to be here resolved, but in this State it is certainly calculated by reference to holdings of land otherwise owned by the taxpayer.

88. It cannot be doubted that the tax exacted by virtue of the Land Tax Act 1958 at the relevant times was a land tax, that it consisted in a tax directly imposed by the legislature for the benefit of the consolidated revenue of this State and that it otherwise satisfied the definition of a tax as laid down by the High Court. The issue essentially, however, is whether it satisfied any part of the description "all municipal and other rates and charges". There being no argument put to this Court that it came within the description "rates", the ultimate issue is therefore whether land tax was a "charge" within the meaning of this covenant.

91. We have already examined[36] briefly the meaning given to the word "charges" in a number of decisions cited to the Court. As already stated, none of them raised the same question and in particular none raised whether land taxes might properly be covered by the word "charges". Of course, it is possible in particular circumstances that the word might cover land taxes but we venture to suggest that in this country, at least in this State, the word does not naturally comprehend a tax of any conventional kind, including a land tax. There are two aspects to the meaning of "charges" which, as already noted, were emphasised by McPherson, J. in Sunskill Investments, the distinction also being drawn in some earlier authorities. In the first place there is that kind of charge which results in the right to enforce a particular obligation by way of sale, as used in the expression "mortgage or other charge". The other meaning is where the term connotes only the price or cost of goods, services or the like which a party is obliged to pay by virtue of the goods or services being provided to it, though this may comprehend also involuntarily incurred obligations such as the cost incurred for the right to use water, sewerage and similar facilities supplied to the community generally or in particular areas.

94. Much weight was placed on the fact that a land tax, if unpaid, can result in the subject land being charged with the obligation to pay the unpaid tax. The same, of course, can be said of virtually all of the compulsory exactions to which we have made earlier reference, whether they be rates or semi-governmental charges. We are not, however, inclined to place much weight on this analysis, for this reason. Although most of the compulsory exactions can in the ordinary course result in the imposition of a charge, that does not necessarily give character to each exaction itself. The charge is an incident, perhaps a "natural" incident, of the particular imposition or exaction inasmuch as each legislative scheme makes provision for recovery by enforcement of a statutory charge of one kind or another. But that kind of statutory incident does not tell us a great deal about the imposition or exaction itself. "Charges" are frequently created in other circumstances by choice of the parties and the creation of such charges results in the liability thereby created being described as a "charge", primarily so that it might be distinguished from other similar liabilities such as mortgages and liens. But the charge is not the primary way of recovery of rates, taxes and the like. The party levied is placed under obligation to make the payment in the ordinary way and, if not, that party may be sued in the conventional way, enforcement of the charge effectively being the last resort remedy available to the authority which has its benefit. In those circumstances we do not think it of consequence that the Land Tax Act makes the obligation to pay that tax a charge on the land. One must look further afield, and in particular at the alternative meaning, to see whether that was intended by those who drafted this covenant.

97. The suggestion made in Sunskill that "charges" may cover the cost or price imposed for goods, services and the like, whether voluntarily or involuntarily imposed, may, in certain circumstances other than the present, be too narrow an alternative. The object in the present case may well have been to cover a wide range of exactions imposed by a variety of bodies in respect of land. Placed in a different order in a list of imposts for which tenant or landlord is made responsible the word might even cover taxes such as land tax, more particularly if it came at the beginning of a collocation of similar words, but it is unnecessary here to decide that. Here we have a group of imposts defined by the expression "all municipal and other rates and charges". A proper reading would make the two adjectives qualify both nouns, in effect so that both "rates" and "charges" are qualified by the words "municipal" and "other". There can be no real difficulty about the concept of municipal rates - those imposed by municipal councils pursuant to the Local Government Act. Nor can there be any real doubt as to the concept of municipal charges - they must include the kind of charges which municipal authorities are entitled to make for various services provided to the land, such as garbage charges and the like.[37] One may doubt that they could cover charges other than those generally imposed pursuant to powers granted by statute, for such services provided by councils could not be charged on a basis that they were "assessed in respect of the demised premises".

100. The potential width of the expression can only arise out of the use of the word "other". Doubtless this could cover every other kind of "charge", if that were what the parties were taken to intend. Conceivably, and consistently with some other authorities dealing with the word in quite different contexts, it might cover a very wide range of impositions. Here it is used in conjunction with "municipal" and we believe one is entitled to look at the phrase "municipal and other" in order to deduce from it an intention to cover municipal rates and charges and only other analogous rates and charges, but not all other rates and charges of whatsoever description. Those experienced in drafting leases would know all too well how to express such a concept, for so many of the well-known authorities, the textbooks and familiar works of precedents have described or contained clauses expressed in terms which would make such a meaning perfectly clear. Here no wide words were adopted and in our opinion the "other" rates and charges described in each lease were those akin to municipal rates but imposed by other semi-governmental authorities, such as those responsible for the provision of water, sewerage and the like. We do not believe that this is an impermissible way of reading the terms of this covenant, for we are convinced that those responsible for drafting the clause had no intention of comprehending within it taxes such as land tax. Such exactions by the Parliament for essentially general purposes are quite different in nature.

103. In our opinion therefore the expression "all municipal and other rates and

charges" in this covenant did not comprehend the land tax imposed on the land from time to time during the relevant period. To that extent we agree with the trial judge but our reasoning, as set out above, is along somewhat different lines.

107. There is only one factor which we should mention in addition. Undoubtedly the covenant had to be read at the time it was entered into, in this case when the two leases were entered into in 1992 and 1997 respectively. One can, however, take a broad view of the nature of the clause which is here under consideration and the fact that it was included with in the 1958 copyright lease. One can be fortified in the view that land tax was not intended to be covered by reason of the fact that in 1958 that would not have been permissible under the relevant Land Tax Act, whether the 1928 or the 1958 Act (the latter, though passed in 1958, only came into operation the following year), for at the time land tax was imposed, as it still is, on the landlord, primarily, and s.69 of the latter Act, and its equivalent in the earlier Act, prohibited any agreement altering the incidence of that tax.[38] These circumstances, though not pertaining in 1992 and 1997, make it less surprising that land tax was omitted from a clause of this kind. However, to our way of thinking, the meaning of the clause is clear and it was not intended to comprehend land tax or any other tax.

110. For these reasons we conclude that the appeal should be dismissed.

115. I have had the advantage of reading in draft the reasons for judgment of Ormiston and Phillips, JJ.A. I agree with their Honours that the appeal should be dismissed.

118. 34 Assuming that land tax, as imposed during the relevant periods, may properly be said to have been "assessed in respect of the demised premises"[39], the critical question is whether that tax comes within the description "all municipal and other rates and charges" in clause 1(b) of the two leases. That is a composite expression in which, when one construes "charges", one is entitled to take into account the words "municipal and other" and the conjunction with rates. One may also take into account the example given of excess water rates and the charges and other outgoings referred to in the second part of the clause.[40]

121. Land tax is not only different but disparate from municipal rates and charges and I do not think that the word "other" was intended to introduce a disparate, as opposed to a similar or analogous, topic. That view is certainly not inconsistent with, and it may to some degree be reinforced by, the express example of excess water rates and the nature of the charges and other outgoings referred to later. Land tax is disparate from all of them.

124. That is so, in my opinion, not only on the ordinary meaning of the words used but also from a purely legal perspective. Land tax is imposed by Parliament, not by a municipal or semi-governmental authority, and it is not a charge for or in respect of goods or services. The fact that it is charged on the land is not to the point, because we are concerned with an obligation to pay all municipal and other rates and charges. That could refer only to a sum of money, not to a right in rem supporting the obligation to pay it. The same might be said of the word "assessed".

[1] [1990] VicRp 36; [1990] V.R. 411.

[2] [1994] VicRp 35; [1994] 1 V.R. 486.

[3] (1879) 4 C.P.D. 367 at 368-369.

[4] (1898) 24 V.L.R. 491 at 496-497.

[5] [1966] 1 N.S.W.R. 61 at 64.

[6] [1991] 2 Qd.R. 210 at 216.

[7] In the first two cases the covenant was expressed to cover "all rates, taxes, charges and assessments whatsoever ...".

[11] McPherson, J. at 216 and Williams, J. at 220.

[13] At p.179 of the 8th ed. 1957 by H. Heathcote-Williams, Q.C.: cf. p.185 of the 5th ed. written by the author.

[14] I.e. the English Court of Appeal at the relevant times.

[15] (1690) Carthew 135; [1741] EngR 136; 90 E.R. 683.

[16] See, e.g. Halsbury's Laws of England 1st ed., (1911) tit. "Land Tax", Vol.18 p.308 para.714(a) and Miller on The Laws Relating to the Land Tax (1849) pp.1-2. It is not possible for the purpose of this judgment to resolve this inconsistency. Suffice it to say that each of the authors states that the land tax was imposed first in 1692 and then by annual Acts of Parliament until 1798 when the Land Tax Perpetuation Act 1798 was passed: 38 Geo.3 c.5. But cf. the Oxford English Dictionary, which shows use of the expression as early as 1689, which may be explained in the extensive discussion by Blackstone: Laws of England (1st ed.) Vol. I pp.298-302.

[17] To add to the confusion, although the 1798 Act placed the liability to pay land tax on the tenant (in the first place), the same section (s.17) gave the tenant the right "to deduct out of the rent so much of the said rate [i.e. of land tax] as ... the landlord should and ought to pay and bear ...".

[18] See generally Foa, 8th ed. pp.188-190.

[19] See Foa, 8th ed. pp.189-193 and cf. at pp.198-200.

[20] See also e.g. Woodfall, Landlord and Tenant, 28th ed. (1978) Vol.1 Chapter 12; and Halsbury, 4th ed. (reissue) (1994) Vol.27(1) paras.420-432.

[21] Even earlier decisions in this State have limited value now because of the changes made to the relevant legislation and, as stated at the outset of our reasons, the present case must be determined in the light of legislation in operation in 1992 and 1997.

[22] See Halsbury (4th ed.) op.cit. para.425.

[23] See Halsbury (4th ed.) op.cit. para.430 fnn.13-15.

[24] See Woodfall, Landlord and Tenant (28th ed.) para.1-1350.

[25] See the discussion in Redfern and Cassidy: Australian Tenancy Practice and Precedents (Looseleaf ed. - Service 46) paras.25331-25334.

[26] Consequently we have chosen not to examine here any other of the reported cases.

[27] [1993] VicRp 76; [1993] 2 V.R. 343 at 344.

[29] Per Isaacs, J. in Attorney-General (N.S.W.) v. Collector of Customs (N.S.W.) [1908] HCA 28; (1908) 5 C.L.R. 818 at 848.

[30] [1984] HCA 20; (1984) 158 C.L.R. 622.

[32] The cases cited for certain of these propositions have been omitted, as well as the particular explanation why the recoupment tax was not a penalty. See also Air Caledonie International v. The Commonwealth (1988) 165 C.L.R. 462 at 466-467 per the Court, Australian Tape Manufactures Association Ltd. v. The Commonwealth (1992) 178 C.L.R. 480 at 521 per Dawson and Toohey, JJ. and Mutual Pools & Staff Pty. Ltd. v. The Commonwealth [1994] HCA 9; (1993) 179 C.L.R. 155 at 202 per Dawson and Toohey, JJ.

[33] Which consisted of Viscount Sumner, Lords Atkin, Thankerton and Russell of Killowen, as well as Lord Merrivale.

[34] [1930] A.C. 259 at 269.

[35] [1915] HCA 31; (1915) 19 C.L.R. 698 esp. at 705, 706.

[37] One may note also the use of the word "charges" in the second part of the covenant where it is used in relation to gas, electricity and telephone "charges", all for goods or services.

[38] It is unnecessary here to examine the full history of the legislation which was discussed in the course of argument. The prohibition on altering the incidence of the tax was repealed in 1968. Section 42, which was discussed in detail, only alters the incidence of land tax in the specific circumstances described in sub-s.(3) of that section.

[39] In addition to Centrepoint Custodians Pty. Ltd. v. Lidgerwood Investments Pty. Ltd. [1990] VicRp 36; [1990] V.R. 411, see Tooth & Co. Ltd. v. Newcastle Developments Ltd. (1966) 116 C.L.R. 167 at 171-172.

[40] Compare Lang v. Asemo Pty. Ltd. [1989] VicRp 67; [1989] V.R. 773 at 779.