Supreme Court of SA|1996-06-13|Before: Perry J

BRICKWORKS MARKETS P/L v THE CORPORATION OF THE TOWN OF THEBARTON No. SCGRG 94/134 Judgment No. 5655 Number of pages - Local government (1996) 67 SASR 180 [1996] SASC 5655 (13 June 1996)

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA PERRY J

CWDS Local government - ratability of council owned land

A Corporation granted a 99 year lease over land which it owned for purposes of a scheme of development under s382d of the Local Government Act 1934 - the lease contained a covenant that the Corporation would, to the exclusion of the lessee, "pay or discharge all council and municipal rates or taxes assessed" with respect to the leased land - eight years after the grant of the lease, the Corporation asserted that it had no power to waive payment of rates or the liability therefor, and it demanded payment of back rates, which by 1993 amounted to a figure in excess of $480,000 - held, answering points of law ordered to be determined before trial of the remaining issues: (a) that it was not possible to determine on the material before the Court at this stage whether or not the subject land was at the relevant time park lands; (b) but even if it was, and notwithstanding a provision in the against the leasing of park lands for a period in excess of 21 years, the separate provisions of the Act relating to the leasing of lands for the purposes of such a development scheme for a period of up to 99 years were applicable to park lands; and (c) that the inclusion of the covenant in the lease providing that the Corporation would pay or discharge all council and municipal rates did not render the lease void or voidable, as the occupier of council-owned land could not be made liable for payment of rates, although the covenant could be of application if the Corporation was to cease to be the owner of the land. Local Government Act 1914 s5, 164, 214, 249-255, 258, 260, 264, 265, 267a, 2671), 268, 279, 2811), 282, 457; Supreme Court Rules R 75.02, referred to. Keough v Corporation of the City of Burnside (1992)163 LSJS 186; Attorney-General of South Australia v the Corporation of the City of Mitcham ; City of Burnside v Attorney-General of South Australia ; Milne and Ors v Sydney Corporation ; , considered.

HRNG ADELAIDE, 9, 11 April 1996 #DATE 13:6:1996 #ADD 15:10:1996

Counsel for plaintiff: Mr R Ross-Smith with him Mr W Rudd

Counsel for defendant: Ms S Walsh QC with him Mr M Roder

JUDGE1 PERRY J The plaintiff leases an area of land ("the leased land") at South Road, Torrensville, from the defendant, the Corporation of the Town of Thebarton ("the Corporation") on which it conducts a business known as the Brickworks Market. It sues for a declaration that the Corporation is obliged by the terms of the lease "to discharge all council and municipal rates or taxes assessed" with respect to the land during the currency of the lease, and other relief.

In September 1994, a Master ordered that the parties formulate what he described as a "preliminary issue", and at the same time that they prepare an agreed bundle of documents for use at the trial of the preliminary issue.

In compliance with that order, the parties filed a "statement of agreed facts and issues". That document, in turn, annexed a copy of the lease and a copy of a deed ("the Indenture") which was entered into between the Corporation and a predecessor in title of the plaintiff, and which ante-dated the execution of the lease. The parties also reached agreement on a book of documents, tendered by consent, comprising correspondence, applications, regulations and other documents relating to development and planning applications and approvals given by statutory authorities with respect to development of the leased land.

When the matter came before me for trial, I was invited to confine myself to the issues as formulated by the parties, the statement of agreed facts, the agreed documents, and certain additional documents which the Corporation tendered through its counsel. In the event that the trial proceeded on that footing, the parties intimated that they would not need to call any oral evidence.

I pointed out that to proceed in that way might give rise to some complications.

In the first place, if I answered the issues as formulated by the parties, which were put forward as a series of questions as to points of law, depending upon the answers, there might still need to be a further trial of factual issues to enable the litigation ultimately to be resolved. To split the trial in that way could give rise to ultimate findings of fact which might differ from those to which the parties had agreed at this stage of the trial, or which might differ from conclusions of fact which might be drawn from the agreed documents considered in isolation from any other evidence which might subsequently be called.

While no doubt it is common for parties to agree certain facts as the background against which any preliminary point of law is to be determined, I considered that to avoid any problem arising should there be a split trial, the agreed facts or any additional facts determined by the court by reference to the agreed documents should at the outset be accepted as conclusive of the ultimate factual issues to which they related.

Neither the formulation of issues by the parties nor the terms of the order of the Master strictly conformed with the requirements of R 75.02. Pursuant to that rule, the court may order, inter alia, that any point or points of law arising on the pleadings be disposed of before proceeding to trial of the facts.(1) To ensure conformity with the procedure envisaged by the rules, I suggested that the legal "issues" as formulated by the parties should be re-expressed in terms of an order setting out points of law to be disposed of pursuant to R 75.02.

I permitted the case to proceed on the footing that the parties would bring in minutes of an order giving effect to those suggestions.

In the result, the parties agreed to such an order the terms of which were settled by me. At the same time, I was given a somewhat refined re-formulation of the statement of agreed facts in substitution for that which had previously been filed.

My task at this stage is to address the points of law formulated in the order. In addressing those questions, I am conscious of the need to confine myself to the agreed facts, supplemented only by such inferences as may properly be drawn from the agreed documents.

In the events which have happened, it has not been necessary for me to come to any factual findings as to any contentious matter. In the main, reference to the agreed documents has only been necessary to illustrate and explain some of the agreed facts.

By drawing on the agreed facts, I will complete the necessary explanation of the background circumstances before dealing with the points of law.

The leased land is part of a larger area of land which at one time formed part of or adjoined a pughole popularly known as the "Hallett's Brickworks". The larger area of land was acquired by the Corporation in the period from 1967 to 1979 (approximately).

On 17 November 1980, Mr Brian Rule of a company then known as Bohle Industries Pty Ltd forwarded to the Corporation a proposal for the development of the land.(2) Bohle Industries Pty Ltd subsequently became Rule Industries Pty Ltd ("Rule").

The proposal included the suggestion that the Corporation grant a 99 year lease, a condition of which would be- "The Lessor will not charge the Lessee any council rates applying to the leased area for the duration of the lease."(3)

On 21 August 1981, the Corporation and Rule executed the Indenture, which evidenced an agreement between them relating to the proposed development. Provided that certain pre-conditions set out in the Indenture were satisfied, the Corporation covenanted to grant a lease to Rule of part of the land on the terms of a form of lease annexed to the Indenture for a term of 99 years.

The pre-conditions are summarised in the Statement of Agreed Facts as follows: "7. The Indenture, by clauses 1(a)-(c) and 2, had the effect of containing three preconditions to the granting of a lease to Rule. In relation to the requirements of clause 1(a) an exemption from the applicable planning regulations was obtained shortly after the granting of the Indenture and eventually an appropriate rezoning of the land concerned was obtained.

In relation to clause 1(b), Thebarton applied to the State Planning Authority under S. 382d on 20th July 1981. The development detailed in the application was described in plans A812-Cover, A812-S1, A812-S2 to A812-S11 (the "plans"). On 20 August 1981 the State Planning Authority approved a scheme of development of certain parts of Land as set out in the application, pursuant to S. 382d of the Local Government Act (1934-1980).

In relation to clause 1(c) of the Indenture, by Act No 73 of 1981 certain amendments to the Public Parks Act as it then stood, were enacted by assent on 12th November 1981. One amendment contained in the said Act was to add a section 7a which read as follows: '7a. (1) Notwithstanding the provisions of any other Act, but subject to subsection (2), a council may sell or dispose of land- (a) transferred or conveyed to the council under this Act; or (b) in respect of the acquisition, development or improvement of which an advance has been made by the Minister under this Act.

(2) Land shall not be sold or disposed of under this section except upon the authorisation of the Governor."

As to clause 9 of the Statement of Agreed Facts, I should explain that the Indenture provided that the Corporation would use its best endeavours, inter alia, to: "... cause to bring into effect such legislative amendments to existing Acts of the Parliament of South Australia or such new enactments as will then enable the Corporation to enter into a legally binding lease", with respect to a specified portion of the land.(4)

In consequence of action taken by the Corporation pursuant to that clause, the Government of the day was prompted to pass certain amendments to the Public Parks Act 1943, one of the amendments being that referred to in clause 9.

As it turned out, that whole process, at least in its supposed application to the transaction in question, was both otiose and misconceived. It proceeded on the footing that the leased land, or part of it, had been purchased with moneys made available under the Public Parks Act.

It follows that the legitimacy of the actions taken by the Corporation with respect to the leased land fall to be determined by reference to the Corporation's powers without the assistance of the 1981 amendment to the Public Parks Act.

On 22 February 1982, the Corporation and Rule executed the lease in question ("the lease"). It was registered on the various titles pursuant to the Real Property Act. By registered transfer, Rule's interest in the lease was subsequently transferred to the plaintiff.(5)

The development carried out on the land is described in the Statement of Agreed Facts as follows: "14. From approximately February 1982 to date, certain development has occurred on the Land. Such development is in the nature of a market style shopping complex together with amusement and/or entertainment facilities. The market style shopping comprises individual stall holders who occupy the land under licence from the plaintiff. The said development varies from that depicted in the plans submitted to the State Planning Authority for the purposes of the scheme approved under s382d of the Local Government Act. All development applications have been processed and approvals obtained for the development and uses that exist on the subject land." Central to the dispute between the parties is clause 2(2) of the lease, pursuant to which the Corporation, as lessor, covenants: "(2) That the lessor will pay or discharge all Council or Municipal rates or taxes assessed in respect of the said land."

That clause was given effect to in the sense that neither Rule nor the plaintiff was, before 1990, called upon to pay any rates with respect to the demised land.

That situation changed when by letter of 30 April 1990 addressed to the plaintiff,(6) the Corporation stated, inter alia: "The Council has received legal advice that it is not empowered to grant a rate holiday in respect of land at the

Brickworks Markets site. It has been advised that it is only empowered to act in accordance with the Local Government Act and that it has an obligation to collect rates in respect to all ratable property within its area unless it exercises a

discretion given to it by statute which enables it to do otherwise.

The Council is therefore obliged to collect current (sic) all previous years rates on land at the site for which the Council ought to have and has not yet received its income."

It has been agreed between the parties that in consequence of the stand now taken by the Corporation, as expressed in that letter, as at 4 November 1993 rates have been assessed by the Corporation with respect to the leased land in the total sum of $483,252.41. Further rates, not particularised in the papers before me, have been assessed for the period since then.

The first point divides into two questions. It is convenient to deal with them together. "1.1 (a) Whether any or all of the land subject to the lease exhibited in Schedule 3 of the Agreed Facts filed herein ('the said lease') was parklands subject to Section 457 of the Local Government Act at the date of the said lease;

(b) If yes to (a) whether Section 382d empowered the Defendant to lease parklands, for the purpose of an approved scheme, for a period of 99 years, and without a resolution of the ratepayers of Thebarton pursuant to Section 457(4) of the said Act being passed."

I must say that point 1.1(a) is really a mixed question of law and fact. However, as no objection was taken to the court addressing the question as a point of law under R 75.02, I will proceed to deal with it.

At the relevant time, "park lands" were defined in the Local Government Act 1934 ("the Act") as follows: 5(1) ....... 'park lands' means any open or enclosed lands included in or adjoining the area which are declared or set apart for the use and enjoyment of the inhabitants of the area: ..."(7)

In the same section, "area" is defined to mean a "municipality" or "district".

As I have explained, the land referred to in Schedule 1 of the Statement of Agreed Facts is a larger area of land, which comprises the leased land and other land. It follows that the whole of the leased land must be regarded as having been acquired during the period referred to in agreed fact 3, that is, the period from 1967 to 1979, for the purpose therein referred to, namely: "... for the purpose of providing, after certain remedial and/or development works, an open space area for the use and enjoyment of Thebarton ratepayers."

By far the largest part of the land depicted in Schedule 1, indeed, an area comprising most of it, was purchased from Hallett Brick Industries Ltd. I was informed by Mr Walsh QC of counsel for the Corporation during the course of argument(8) that the land so purchased was all of the subject land, other than an area depicted in yellow on Schedule 1 to the statement of agreed facts. Mr Ross-Smith for the plaintiff did not join issue with that assertion. It is unnecessary, therefore, separately to describe the various parcels making up the Hallett's Brickwork's land. The balance of the leased land is dealt with below.

The acquisition of what I have described as the largest part of the land was considered by the Corporation in September 1978.

In the agenda papers for a meeting of the Corporation's Town Planning, Building and Traffic Committee held on 11 October 1978(9), the following item appears under the heading "Proposed purchase of Hallett Brick Industries Ltd": "The Town Clerk advises that at the meeting of Council held on 27 September, 1978, he was authorised to commence negotiations with Hallett Brick Industries Ltd in an attempt to buy the available land situated at the corner of South Road and River Road, Torrensville. ....

The Town Clerk considers that if the Council sincerely wishes to

acquire the area for recreational or green belt purposes, then action should be taken promptly in accordance with Council's solicitor's direction." That committee resolved that it be recommended to the Corporation: "(1) That the Corporation of the Town of Thebarton acquire the whole of Hallett Brick Industries Ltd situated at the corner of South Road and River Road, Torrensville, with the exception of the new show rooms facing South Road.

(2) That the matter of acquisition be referred to the Finance and Administration Committee scheduled for 25 October, 1978.

(3) That Council intends to acquire the area to provide open space facilities for the ratepayers of the municipality."

That recommendation, in those terms, was adopted by resolution of a special meeting of the Council held on 23 October 1978.(10)

The leased land, other than the land referred to in that resolution,(11) is the subject of the following paragraph in the Statement of Agreed Facts: "4. The land comprised in Certificate of Title Register Book Volume 4034 Folio 263 was, pursuant to resolution by Thebarton, followed by a notice in the South Australian Gazette, and pursuant to s453 of the Local Government Act as it has applied at the relevant time, set apart for and dedicated as a recreation reserve for the use and enjoyment of the inhabitants of Thebarton."

Some light is shed on the original purpose for which the whole of the leased land was acquired by the Corporation, and the change in its intentions which caused it subsequently to accede to the proposed development scheme, in a letter from the Corporation to the secretary of the State Planning Authority dated 20 July 1981.(12) That letter explained that the council had resolved to seek the approval of the State Planning Authority for the development scheme in question. The letter reads in part: "The council already owns the land over which the scheme is proposed. However it was purchased on the basis of use as public open space and as such would have been eligible for a Public Parks Subsidy. In such circumstances there would have been no requirement for an approval under s382D (sic). As the land will now be associated with a commercial use for recreation purposes, the original intent of Council has now changed and the Authority's approval under s382D is considered necessary, firstly to account for the changed purpose for which the land was purchased and secondly, for the scheme as submitted."

I return to the definition of park lands as they were defined at the relevant time in s5 of the Act: ".... any open or enclosed lands included in or adjoining the area which are declared or set apart for the use and enjoyment of the inhabitants of the area."

Mr Ross-Smith for the plaintiff put an argument that when that definition is read against the provisions which appear in Part XXII of the Act under the heading "Squares, Park lands and Reserves", and in particular Division I within that Part, the definition of park lands should in some way be read down to apply only to lands other than lands of which the council is the registered proprietor.

If I understand the point correctly, he was suggesting that insofar as s450 of the Act (which is within Part XXII Division 1) places all "park lands and public squares" under the "care control and management" of the council, this was indicative of an intention to confine the definition of park lands to lands not otherwise under the "care control and management" of the council.

There is no warrant for reading down the definition of park lands in that way. But there must, of course, be evidence that the lands said to be park lands have been "declared or set apart for the use and enjoyment of the inhabitants of the area".

It appears from the authorities that a declaring or setting apart of the land for that purpose need not necessarily be by a formal instrument expressed in those terms.

In Keough v Corporation of the City of Burnside(13) Debelle J observed with respect to the land there in question: "Mr Botten, who appeared for the Council, submitted that the failure to comply with the Public Parks Act had the consequence that the land is not park lands. I do not agree. Whatever might be the consequence of the failure to adhere to the procedures prescribed by the Public Parks Act, the land is nevertheless park lands pursuant to the Local Government Act 1934. In 1969, park lands were defined in s5 of the Local Government Act to mean 'any open or enclosed lands included in or adjoining the area which are declared or set apart for the use and enjoyment of the inhabitants of the area'. The words 'the area' were then defined by the Act to mean 'a municipality or district'. Most of the Chambers Gully land is within the area of the District Council of East Torrens which adjoins the Burnside Council area. The rest of the Chambers Gully land is in the Burnside Council area. The effect, therefore, of the resolution carried by the Council on 6 May 1969 that the land 'will be held and used for park and recreation purposes' was to declare the Chambers Gully land to be park lands. That is not only the effect of the words used in the resolution but, I find, it was also the intention of the Council at the time. .... For these reasons, I hold that in consequence of the resolutions carried on 6 May 1969 the Chambers Gully land became park lands within the meaning of the Local Government Act. The resolutions were perfected by the notice in the Government Gazette on 15 May 1969 and not at some future point in time. The words in the resolution 'will be held and used for park and recreation purposes' speak as from the date of the resolution. The land was then suitable for certain recreational uses such as bush walks."(14)

In Attorney-General of South Australia v The Corporation of the City of Mitcham(15), Mayo ACJ held that a by-law which specifically referred to a certain reserve as park lands had the effect of bringing the lands comprised by the reserve within the definition of park lands.(16)

If paragraph 3 of the Statement of Agreed Facts stood alone, I would have some hesitation in accepting the mere description drafted by counsel of the purpose for which the lands was acquired as providing a satisfactory basis for regarding the statutory definition as satisfied. But when that paragraph of the Statement of Agreed Facts is read together with the resolution of the special meeting of the council held on 23 October 1978, and the agreement which finds expression in paragraph 4 of the statement of agreed facts that the balance of the land other than that dealt with in that resolution was "set apart for and dedicated as a Recreation Reserve for the use and enjoyment" of the inhabitants of the Corporation, I am satisfied that the leased land satisfied the definition, at least for the period between its acquisition and the decision of the Corporation to lease it to the plaintiff for the purposes of the scheme of development. If not "declared", it was "set apart" for the use and enjoyment of the inhabitants of the area.

Once the land the subject of the lease is properly characterised as park lands within the meaning of the Act, s457 is of application to it. That section provides: "(1) The council may grant a lease or leases of any portion or portions of the park lands or of any ornamental grounds or reserve for any term not exceeding twenty-one years, to be used for the purpose of sports, games, agricultural shows, or public recreations, or any community facilities and may from time to time renew any such lease or leases for a further term of not exceeding twenty-one years.

(2) No lease of any park lands shall comprise any land exceeding 6 hectares in area unless the Minister has approved in writing of a lease comprising a greater area of land.

(3) Every such lease shall be granted to two or more persons or to an incorporated body, upon such terms as to the erection of booths, pavilions, and other erections on the premises, admission of the public thereto or to any part thereof, and generally subject to such rents, covenants, provisions, and reservations as the council thinks fit.

(4) A lease shall not be granted under this section for a term exceeding three months unless, at a meeting of the ratepayers, a resolution has been passed in favour of a lease being granted of the lands in question under the powers conferred by this section, and, if a poll is demanded, or if a council considers that a poll should be held, until the poll has resulted in favour of the resolution.

(5) The method of demanding such a poll, the voting at the poll, and the manner of conducting any such meeting shall be as provided by Part XLIII."

50. If the matter rested there, the findings which I have made so far would compel an affirmative answer to the question posed in point 1.1(a). In my treatment so far of the matters relevant to that point, I have adopted the approach made by counsel during the course of presentation of the case before me. Neither counsel sought to suggest other than that once what might be described as the historical character of the leased land as park lands or not had been determined, that characterisation would apply to the land at the date of the signing of the lease.

Although for the reasons which I have so far given, the leased land, following its acquisition, was properly defined as park lands, it is at least arguable that its character as such did not survive the execution of the Indenture on 21 August 1981.

Notification of the approval by the State Planning Authority pursuant to s382d of the scheme of development of the leased land was given by the State Planning Authority by letter to the Corporation dated 20 August 1981. The development was a development for commercial purposes, which unquestionably, once implemented, would destroy the character of the leased land as park lands.

The effect of the deed was to commit the Corporation to take the steps necessary to allow the scheme of development to be implemented. It seems to me that, once the Indenture was executed, it is at least arguable that it could no longer be said that the leased land was "declared or set apart for the use and enjoyment of the inhabitants of the area" within the meaning of those words in the definition of park lands. On the contrary, the Corporation had then committed the leased land to its utilisation for the purposes of the approved development scheme.

Just as I have accepted that land may be "declared or set apart" as park lands by informal means, it must follow that the character of land as park lands may be destroyed by informal means. It may well be that the commitment by the Corporation to the use of the leased land for the purposes of the development scheme, which finds expression in the Indenture, had the effect that the land there and then ceased to be park lands.

Putting the matter another way, at the moment the Corporation executed the lease, any previous intention which it had that the leased land be "declared or set apart for the use and enjoyment of the inhabitants of the area" was replaced by an intention that the land be leased for commercial purposes for 99 years to the predecessors in title of the plaintiff.

It must be conceded, I suppose, that not every lease of park lands would be apt to destroy its character as such, or otherwise operate to take the lease out of reach of s457. There are obvious difficulties with the line of reasoning which I have suggested, at least in the case of short term leasing.

Furthermore, the ability of the Corporation to take the lands out of the definition of park lands by deciding upon a use inconsistent with their use as such, may not apply to lands which, as is the case with part of the leased land,(17) were formally dedicated as a recreation reserve.

This aspect of the matter was not the subject of argument by counsel. Furthermore, its resolution may depend on documents not so far referred to by counsel. It is not for me to decide such a difficult question by making my own way through the agreed documents, unassisted by counsel. There may be other documents, apart from the agreed documents, to which regard should be had if that line of enquiry was to be pursued.

I had considered whether I might call the matter on for further argument as to this aspect. However, on reflection, given that there is yet to be a trial of the action, I thought it best to decline to answer point 1.1(a) at this stage, but to answer the remaining questions on the assumption that the leased land was park lands at the time of entry into the lease.

The answers given to the remaining points will apply a fortiori if the land is not to be so characterised.

If the parties still seek an answer to point 1.1(a), it can be given after the trial when all available evidence has been tendered and further submissions made in the light of these reasons.

I proceed then to answer point 1.1(b) on the assumption that at the time the lease was entered into the leased land was park lands.

On that assumption, the question to be addressed is whether s382d empowered the Corporation to lease park lands for a period of 99 years "without a resolution of the ratepayers of Thebarton pursuant to s457(4) of the Act having been passed". Although the question is posed in general terms, it should be answered with respect to the leased land, assuming for this purpose, that the leased land was at the time of the lease, park lands.

S382d was repealed in 1989.(18) At the relevant time, s382d provided: "(1) In this section, unless the contrary intention appears- 'approved scheme' means any scheme for the development of land approved for the purposes of this Act by the State Planning Authority established under the Planning and Development Act, 1966-1967, as amended: 'develop' includes re-develop: 'development' includes re-development: 'land' includes any estate or interest (legal or equitable) in land and any easement, right, power or privilege, in, under, over, affecting, or in connection with land.

(2) The State Planning Authority may in its discretion approve, for the purposes of this Act, any scheme for the development of land.

(3) A council may, with the approval of the Minister, either by agreement or compulsorily, acquire or take land for the purpose of developing it in accordance with an approved scheme.

(4) The Land Acquisition Act, 1967-1973, shall apply in respect of the acquisition of land under this section.

(5) The council may- (a) develop any land so acquired or taken under this section or otherwise vested in the council and render it suitable for the purposes of any approved scheme; (b) lease any such land for a period not exceeding ninety-nine years for the purposes of carrying out any such approved scheme; or (c) sell, exchange or otherwise dispose of any such land for the purposes of carrying out any such approved scheme.

(6) An approved scheme shall be deemed to be permanent works and undertakings within the meaning of and for the purposes of section 424 of this Act." It will immediately be perceived that if s382d was to be of application to park lands, there is the potential for a degree of tension between the operation of that section and the operation of s457. S457(1) contemplates a power to lease park lands for a term not exceeding 21 years, and then only with the approval of a meeting of the ratepayers called pursuant to s457(4). On the other hand, land which is the subject of a scheme approved pursuant to s382d is capable of being made the subject of a lease for a period not exceeding 99 years, without the approval of any meeting of the ratepayers, for the purposes of carrying out a scheme approved pursuant to the section.

In my opinion, that consideration does not provide any warrant for reading down the generality of the definition of "land" where it appears in s382d(1). I see no reason why park lands, if they are otherwise capable of falling within the definition of "land" where it appears in that subsection, should not be capable of being made the subject of an approved development scheme pursuant to the section, and if so, the subject of a lease not exceeding 99 years.

In City of Burnside v Attorney-General of South Australia(19) it was held by a majority of the Full Court (Perry and Duggan JJ) that the fact that the land there in question constituted park lands within the meaning of the Act did not result in the conclusion that the land should, for that reason, be regarded as inalienable.(20)

If park lands are capable of being sold off, for example, to private interests, the lands would then become available for development in accordance with any use to which the lands might then be put pursuant to the relevant planning legislation. Such a use could include a use which would have the result that the lands would cease to be available for the use and enjoyment of the inhabitants of the area.

It follows that a council may alienate park lands with the result that their character as park lands is destroyed. Given that to be the case, I see no reason why, short of alienating park lands, the council might not have been party to a development of park lands approved under s382d, until the section was repealed.

After all, any such development would have required the approval of the State Planning Authority, which authority would no doubt have been well aware of the fact that lands proposed to be made the subject of a scheme of development were park lands. No doubt public interest considerations, including the amenities available to the ratepayers before and after any contemplated scheme of development was implemented, would be a factor to be taken into account by the State Planning Authority in considering whether or not to approve a scheme.

True it is that if a scheme was to be approved pursuant to s382d, the land might then be leased for a period not exceeding 99 years, whereas if it was to be regarded as park lands simpliciter, any lease could not exceed 21 years and furthermore could only be granted after approval by a meeting of ratepayers.

But the two sections must be read together. If the State Planning Authority, asked to approve a scheme under s382d, considered that the public benefit to be derived from he approval of the scheme, notwithstanding that it involved a lease of park lands exceeding 21 years, outweighed the public benefit to be derived from any use confining the land to the uses to which park lands might otherwise be put, I see no reason why effect should not be given to any such view.

If park lands may be alienated so that they may be used other than as park lands, it follows that s457 cannot be regarded as an exhaustive expression of the power of the council to dispose of park lands.

Once it is accepted that park lands may be alienated, there would seem to be no good reason why they should not be capable of being "sold for the purposes of carrying out" an approved scheme pursuant to s382d(5)(c). If that is so, it would be a strange result if park lands could be sold for the purposes of such a scheme, but not leased for 99 years (as opposed to 21 years) for such a purpose under s382d(5)(b).

True it is that s457, and indeed all of the sections in Part XXII dealing with park lands, might properly be regarded as specific provisions in the Act of application to park lands, whereas s382(d) is of more general application. The maxim generalia specialibus non derogant might be thought to be of application so as to assist the construction urged by the Corporation.

But the principle of construction embodied in that maxim is by no means definitive of the approach to be taken with any particular question of construction. The application of the maxim does not oust the overriding principle that sections of an Act must be read together and construed within the context of the Act as a whole, and with a view to achieving its evident purpose.

In any event, for the purpose of considering the application of the maxim, one would have to pose the question, which is the general and which is the specific provision? After all, it might be argued that s382d was introduced into the Act, which already contained provisions relating to park lands.(21) One way of approaching the matter would be to regard s 382d as a specific provision, introduced to provide for development schemes, which should be construed as necessarily amending existing more general provisions, such as those relating to park lands.

I see nothing in the Act to suggest that the benefits to be derived from the utilisation of land for the purposes of an approved scheme under s382d should be denied to the public if the subject land happens to be park lands.

So that, on the assumption that the leased land is park lands, the answer to the question in point 1.1(b) is yes.

On the same assumption, I turn to deal with point 1.2: "1.2 If yes to 1.1(b): (a) Whether the said Lease on its true construction permitted the lessee to use the land only in accordance with the Scheme of development approved pursuant to s382d of the Local Government Act;

(b) If no to (a) hereof, whether s382d empowered the Council to enter into the said lease."

Part of the background to this question is no doubt the fact, as was confirmed on a view of the Brickworks Markets which I was invited to take by the parties, that on the face of it, a number of aspects of the development which finds expression in the plan of development approved under s382d appear not to have been carried out, whereas there appears to be a number of structures constructed on the land which do not accord with the approved plan.

For example, there is nothing on the site resembling what is described in the plan as an indoor sports centre. On the other hand, the car park seems to be slightly larger in extent. Neither did there seem to be anything resembling a so called "adventure playground" as depicted on the plan, comprising a "splashville", a pool, kiosk and a waterslide pool.

There is nothing to be seen now resembling a waterfall and spa pool depicted in the plan on the western side of the site, but there is a play area consisting of a merry-go-round, a large ferris wheel and some other playground amenities in an area which was, according to the plan, to be developed as a waterfall and spa pool.

The plan contains a wine tasting centre, but there does not appear to be anything answering to that description now on site. On the other hand, there is a business not referred to in the plan, trading under the name "Mother Nature's Nursery", selling plants and the like.

There are a number of other apparent departures from the development plan.

Some of the agreed documents refer to fires which destroyed parts of the market complex in 1989. Part of a letter from Bone and Tonkin Planners Pty Ltd acting on behalf of the plaintiff to the town clerk of the Corporation dated 25 September 1989 reads as follows:(22) "We act for Brickworks Markets Pty Ltd, the operators of the Brickworks Markets Complex at the corner of South Road and Ashwin Parade, Torrensville.

Brickworks Markets Pty Ltd purchased the complex from the Rule Group late last Year. Since then trade has been seriously affected by two deliberately lit fires, the first of which destroyed the main market building in January, and the second of which destroyed the produce market building in August. The main market building has been all but reconstructed while work on the produce market building will commence shortly with the aim of having it ready for trading by 21 December 1989.

In addition, the company has applied for consent to:

convert the stage area to stalls;
- erect stalls opposite the Bazaar area of the markets; ....
- erect a rotunda on the Plaza area of the markets.

All of these applications are now with the South Australian Planning Commission for determination, the Commission being the consent authority in this matter through the Council's maintaining an interest in the land."

That letter explains that it was thought desirable in the interests of enhancing the function of the market complex to introduce a number of changes from the original concept.

I note also that in a letter dated 2 February 1989, apparently written between the occurrence of the two fires, the Corporation's town planner advised the secretary of the South Australian Planning Commission:(23) "Subsequent to the major fire at the Brickworks Market the lessees are seeking to reconstruct the buildings lost in the fire. The works covered by this letter and enclosed documentation comprises Stage 2 of the reconstruction.

As Council owns the land and has leased it for a long term it may be deemed that it is a party to development. Under these circumstances the Commission is the planning authority.

Part of the use prior to the fire may have been lawful, there are some other parts which Council alleges were not lawful and the lessee wishes to add to, or alter, those uses. Under these circumstances, and because the lessee wishes to ensure there are valid approvals in place, this application is submitted to the Commission for determination."

The material before the Court does not clearly explain the history of the present state of the site. It may well be that one of the explanations for the present form which the development takes, and the fact that it appears to depart from what originally was conceived, is that changes were made when the site was reinstated after the two fires. However, what is clear is that all constructions subsequent to the entry into the lease were the subject of approval by the Corporation and by the State Planning authorities.

Be that as it may, this question of law must be answered purely as a question of construction of the lease and not by reference to anything which might have occurred on the land since the scheme was approved and the plaintiff was admitted into occupation. If the Corporation and the planning authorities have permitted development to occur other than strictly in accordance with the approved scheme, they have only themselves or their advisers to blame. Any such consideration is irrelevant to the question of the legal validity of the lease.

The starting point for present purposes is s382d(5)(b) which conferred on a council, in the event that a scheme was to be approved pursuant to the section, the power to: "(b) lease any such land for a period not exceeding ninety-nine years for the purposes of carrying out any such approved scheme;"

Generally speaking, the lease in question embodies what might be described as the conventional covenants to be performed by the lessor and the lessee commonly found in a commercial lease.

The covenants to be observed by the lessee include the following: "1. THE LESSEE DOTH HEREBY COVENANT with the lessor in manner following that is to say:

(4) That the Lessee will not use the said land or any premises erected thereon other than for such use as it referred to in use groups 4, 6, 12, 13 and 21 of the use groups referred to in the Third Schedule of the Metropolitan Development Plan Corporation of the Town of Thebarton Planning Regulations - Zoning and all other uses legally permitted at the date of execution of this lease or which may be legally permitted at any time during the said term.

(5) That the Lessee having complied with the terms of a certain Indenture made between the Lessor and the Lessee and dated the -- day of -- 1981 in respect of the erection of certain works on the said land and improvement of the said Land the Lessee will not during the remainder of the said term erect any additional buildings or structures or alter any buildings or structures erected on the said land without the written consent of the Lessor first had and obtained PROVIDED HOWEVER that such consent shall not be unreasonably or capriciously withheld when the erection of such building or structures or alterations to existing building or structures is for the purpose of providing facilities on the said land to be used in accordance with the permitted uses referred to in clause 1(4) of this lease.

(6) ...." Other covenants provide that the lessee will comply with and observe, at its own expense, any legislation affecting the use of the land by the lessee, including a provision that it will carry out any repairs or alterations required by any public authority, and further, that it will keep the buildings and structures "presently erected or proposed to be erected on the said land" in good and tenantable repair (paragraph 1(9)(a)).

Although the lessee's covenant 1(5) refers to an undated indenture, there is no doubt that the indenture referred to is what I have defined as the Indenture.

In effect, the parties to the Indenture undertook in that instrument to clear the way for the scheme to go ahead. It included the giving of an undertaking on the part of the Corporation to use its best endeavours to obtain the approval of the State Planning Authority to the proposed scheme pursuant to s382d of the Act.

The recital to the Indenture provides in part: "Whereas: A. ..... B. ..... C. The Developer has proposed that the whole of the land described in the said First Schedule (hereinafter called the said land) should be developed and improved by the Developer in a manner consistent with plans prepared by the developer's architects which plans (hereinafter called "the development plans") are marked and for the purpose of identification signed by all of the signatories to this Deed and the Corporation is desirous that the said land should be so developed by the Developer." (my emphasis)

As to the effect to be given to a recital, in Milne and Ors v Sydney Corporation.(24) Isaacs J held that although a recital is not prima facie the place where one looks for "binding promises", a recital in a deed may be construed as a covenant or a warranty. He held further that a recital is to be read and construed in conjunction with the remainder of the deed, and regard may be had to it to discern "the whole arrangement and transaction".

Clause 1 of the deed provided in part: "1. The Corporation will forthwith upon execution of this Deed use its best endeavours:- (a) To effect changes to the regulations of the Corporation made pursuant to the Planning and Development Act 1966 as amended to enable the said land to be developed for the uses proposed by the developer namely as a recreation area, aquatic park, sports complex and ancillary facilities or any other use referred to in use grounds 4, 6, 12, 13 and 21 of the use groups referred to in the Third Schedule of the Metropolitan Development Plan Corporation of the Town of Thebarton Planning Regulations - Zoning.

(b) To use its best endeavours to obtain the approval of the State Planning Authority to a scheme of development (being an approved scheme within the meaning of Section 382d of the Local Government Act 1934-1980) of the land described in Item 1 of the First Schedule for the development of such land in accordance with the development plans.

Clauses 3 and 4 provided: "3. (a) As soon as practicable either before or after the commencement date the developer will submit to the Corporation or such other persons or authorities as may be necessary to proceed with the development all such plans and detail to obtain all necessary consents and approvals required pursuant to any Act Regulation By-law or otherwise to proceed with the development in accordance with the development plans or generally detailing works to be completed by the Developer for any of the uses referred to in clause 1(a) hereof and upon all such necessary consents and approvals being obtained the Developer will develop the said land in accordance with such plans but only so that the works to be constructed by the Developer shall be in accordance with the uses referred to in clause 1(a) hereof.

(b) The Developer will prior to proceeding to develop the said land as hereinbefore provided submit to the Corporation for approval details showing the stages of the works to be carried out by the Developer and the proposed completion date for each such stage and the Developer will carry out and complete such stages of the works by such dates as may be mutually agreed upon by the parties provided always that in the event of any delay to the works being caused by strikes unavailability of material inclement weather or any other cause beyond the control of the Developer the Developer shall complete each stage of work at such other date after making due allowance for such delay.

The Developer shall ensure that all works are carried out in accordance with the standards and specifications referred to in all such plans submitted to the Corporation."

The Indenture provided further that once all approvals and other preliminaries had been "legally effected", the parties would execute and cause to be registered over the subject land a lease in the form attached as a second schedule to the deed,(25) being a form of lease corresponding to that which was ultimately executed by the parties on 22 February 1982.

By that date, formal approval had been given by the State Planning Authority to the proposed development. The development the subject of the approval was expressed in documents which make it clear precisely what constructions and improvements were to be effected on the subject land.

No doubt if the lease was to be considered in isolation, it might conceivably permit the lessee to put the land to a use not contemplated by the approved scheme. I have already referred to paragraph 1(4) of the lessee's covenants which appears to contemplate the possibility of a use within certain use groups of the relevant development plan which could clearly be uses outside the approved scheme.

But clause 1(5) of the lease prevents the lessee, "having complied with the terms" of the Indenture in respect of the erection of "certain works" on the said land, during the remainder of the term from erecting "any additional buildings or structures or alter any buildings or structures that are already erected on the land without the written consent of the Lessor first had and obtained".

One cannot give meaning to that provision without having regard to the Indenture to determine what the "certain works" are which are there referred to, and the "terms relating to their erection". For that and other reasons, it follows that the lease cannot be understood without reference to the Indenture. The two documents must be read together. And in the case of the Indenture, its substantive provisions must be read with the recital.

While it is true that there are references in clause 3(a) of the Indenture to "uses referred to in clause 1(a)", reading clauses 1(a) and (b) and clauses 3(a) and 3(b) of the Indenture together, it seems to me that the Indenture did not contemplate development otherwise than in accordance with the development described in the approved scheme.

If I am wrong in that, when the lease is read together with the Indenture, any attempt by the lessee to use the land other than in accordance with the approved scheme, at least when any such use involved the erection of any buildings or structures or alteration of any buildings or structures, could only occur with the written consent of the Corporation.

It seems to me implicit in s382d that it would be unlawful for the Corporation to give its consent to the erection or alteration of any structure on the land which involved a use other than that which conformed with the approved scheme. Furthermore, the State Planning Authority, having approved the scheme pursuant to s382d, would be legally entitled to restrain any use of the land not in conformity with the scheme. If it were otherwise, the clear intent of s382d could easily be thwarted. It follows that refusal of consent by the Corporation on the ground that a proposed erection of or alteration to buildings or structures fell outside the approved scheme could not be regarded as an unreasonable or capricious withholding of consent within the meaning of clause 1(5) of the lease.

In my view, by reason of a combination of implications arising from the terms of s382d of the Act and the fact that the lease must necessarily be read together with the Indenture, it was not open to the plaintiff or its predecessor in title to use the land other than in accordance with the approved scheme of development.

In reaching that view, I acknowledge that it is arguable that, literally, there is a non-compliance with the provision in s382d(5)(b) in that there was not a "lease ... for the purposes of carrying out any such approved scheme". But I do not think that it is necessarily the case that in order to comply with that subsection, the lease must expressly oblige the lessee to confine its use of the land to that purpose. That requirement is sufficiently satisfied if the grant of the lease is on such terms and would operate having regard to the provisions of the Act and any other legally binding documents, such as in this case, the Indenture, to oblige the lessee to confine its use to that envisaged by the approved scheme.

I point out that if, instead of leasing land, the Corporation had chosen to exercise its power under s382d(5)(c) to sell the land "for the purposes of carrying out" the approved scheme, there would not have been a breach of the statutory provisions if there had been a simple conveyance of the fee simple to the purchaser, provided that obligations were imposed upon the purchaser by some other instrument which, read in conjunction with the terms of the section itself, tied the hands of the purchasers to the implementation of the approved scheme.

Before leaving this aspect of the matter, I should refer to Attorney-General of South Australia v Glenelg Corporation,(26) an authority referred to by counsel. That case concerned s382(1) of the Local Government Act as it then stood, the relevant provisions of which were: "'The council may ... let ... any real ... property ... placed under the care of, the council: Provided that- (a) if any property ... is placed under its control for any purpose the property shall be dealt with in a manner consistent with the ... purpose'."

Having regard to the terms of the section, Bray CJ held that the lease of a reserve dedicated "as a reserve for recreation and boat haven purposes" was valid. However, His Honour held that a provision in the lease conferring upon the lessee a right to sell "marine craft of all descriptions" was to be read down to apply only to such sales as were connected with and incidental to the business of boat building or the operation of a boat haven.

That case is authority for confining the construction of a lease of potentially wider ambit to the purpose for which property may have been placed under a council's control.

It does not throw any direct light on the essential question at issue here, namely, whether the lease, on its true construction, permitted the plaintiff to use the land in question only in accordance with the scheme of development approved pursuant to s382d. However, it does tend to support the view that the lease may, within limits, be read down to conform with the lawful ambit of its operation.

A "true construction" of the lease must lead to its construction in conjunction with the Indenture. Furthermore, the lease can only be construed within the context of the implications arising from s382d. It follows that on its true construction, the lease only permitted the lessee to use the land in accordance with the scheme of development, and if it was necessary to address point 1.2(a), it should be answered affirmatively. In those circumstances, it is unnecessary to answer point 1.2(b), or point 1.3 which reads: "If the Council was not empowered to enter into the said Lease, whether the said Lease is void, voidable and/or unenforceable, not taking into account the question of estoppel."

I come to the next two points of law. "1.4 (a) Whether council was empowered to agree to a clause in terms of 2(2) of the said lease; (b) Whether council was empowered to enter into a lease which incorporated clause 2(2) of the said lease.

1.5 If no to 1.4(a) or 1.4(b), whether the said clause and/or lease is accordingly voidable and/or unenforceable not taking into account the question of estoppel."

Clause 2(2) of the lease, which takes the form of a covenant on the part of the lessor, is as follows: "(2) AND THE LESSOR HEREBY COVENANTS WITH THE LESSEE in manner following that is to say: (1) ..... (2) That the Lessor will pay or discharge all Council or Municipal rates or taxes assessed in respect of the said land."

Put shortly, the contention of the Corporation is that it had no power at the time the lease was entered into (or for that matter now) to waive or dispense with payment of rates otherwise due on ratable property within the council area; that once the land was leased to the plaintiff or their predecessors in title, they or their predecessors became liable to pay rates assessed with respect to the leased land; and that the Corporation could not enter into a binding contract to "pay or discharge" any rates so assessed.

Of course, the Corporation could not "pay" rates due to itself. That much is clear.

But for reasons which I will explain, in my opinion, at the relevant time land owned by the Corporation was not ratable property within the meaning of the Local Government Act, or if otherwise ratable property, while owned by the Corporation, it could not be assessed for the payment of rates, even when occupied by a tenant or lessee.

To explain how I reach that conclusion, it is necessary to have regard to the system of assessment and rating provided for in the Act as it stood at the at the time the lease was executed, that is, as at 22 February 1982.

There has been a plethora of amendments to the Act since then. Certain amendments(27) have completely revised the system of assessment, rating and recovery of rates. In the analysis which follows, for convenience I continue to use the present tense. Notwithstanding that, the analysis proceeds on the basis of the Act as it then stood, and does not take account of any subsequent amendments.

An assessment may be based upon annual or capital(28) value of ratable property (Part X Division II) or may be based upon land value (Part X Division III).

Pursuant to the definition contained in s5(1) of the Act, an assessment means an assessment made pursuant to either of those divisions of Part X.

Pursuant to s164, every assessment is to be written in the assessment book, which is to contain various particulars, including the "names of the several owners and occupiers of the ratable property assessed, so far as known" and a short description or reference to the ratable property, together with a statement of the annual, capital or land value, as the case may be, of the ratable property assessed.

Whatever the method of assessment, the council may declare a "general" or "differential" rate for a given financial year ending on 30 June next ensuing after the declaration of the rate.(29)

Separate provisions apply as to the recovery of rates depending upon whether the assessment is based upon annual or capital value on the one hand, or land value on the other. The recovery of rates in the case of assessments based upon annual or capital value is provided for in Part XIII Division I(30) In the case of recovery of rates where the assessment is based upon land value, the relevant provisions are to be found in Part XIII Division II.(31)

In both instances the rates become due and payable as soon as they have been declared, but they are not "recoverable by action or otherwise from any person" until a 60 day written notice has been given to that person, both in the case of assessments based upon annual or capital value pursuant to s250 and in the case of assessments based upon land value pursuant to s254.

Different provisions apply, however, as to the liability for payment of rates as between the two methods of assessment. In the case of assessments based upon annual or capital value "the occupier for the time being of the property rated and also the owner for the time being of the property rates shall be liable for the payment of the rates".(32)

A different provision applies where the assessment is based upon land value. It is found in s255 of the Act: "(1) Any person appearing in the assessment-book as an owner of any ratable property shall pay to the council the rates declared in respect of the property, and shall continue liable for all rates in respect thereof, notwithstanding any change in the ownership thereof, except as to rates declared after he having ceased to be an owner has given written notice to the clerk of that fact, stating who is the person who has become owner.

(2) A person who becomes the owner of any ratable property by reason of being a mortgagee in possession shall not be liable, in respect of that ratable property, to the payment of any rates declared in respect of any financial year previous to the financial year in which he becomes the owner as aforesaid. Nothing in this subsection shall be deemed to limit the powers of the council under Part XIV." (my emphasis)

It is entirely a matter for the Corporation to determine whether it chooses to base its assessments upon annual or capital value on the one hand or land value on the other.

In this case, such of the assessments which have provoked the litigation which have been included in the agreed documents(33) were based upon capital value.

Provisions applicable under either method of assessment are to be found in Part XIII Division III. For example, s258(1) provides: "Rates may be recovered from any person liable to pay them, upon proceedings in the name of the council, or of the treasurer, or of any collector appointed by the council, in any court of competent jurisdiction." Other provisions allow for diversion of any rent payable by the occupier of any property with respect to which rates are in arrears to the council until the arrears are satisfied.(34) In such a case, if the owner is liable "by contract or otherwise" as between himself and his tenant for payment of any rates, and the rates are recovered by the council from the tenant in possession, the tenant may offset the payment of rates against rent otherwise due to the owner, lessor or landlord.(35)

But the diversion of rent by notice given by the clerk, treasurer or collector under s 264 could not be regarded as rendering the occupier liable for payment of rates, in the sense of being liable to receive a rate notice. For example, if land is assessed on land value, for the reasons which I have explained, only the owner is liable to pay rates. The provisions of s264 simply provide machinery for collection of rates in arrears in such a case from an occupier; the section does not create a liability on any such occupier to pay rates as such.

The council may postpone payment of rates "upon application by an owner (being the occupier) of ratable property" subject to fulfilment of the requirements set out in s267a(1). In cases of hardship, the council may remit payment of rates pursuant to the provisions of s267b.

The provisions of s260 are of particular significance: "(1) Until paid, all rates declared pursuant to this Act or any repealed Act, in respect of any ratable property and all fines added thereto or any portion thereof unpaid shall be a charge upon the ratable property notwithstanding any change in the ownership of the property.

(2) Where money is paid to a council in respect of any rates due on any ratable property, the council shall, notwithstanding any direction to the contrary, apply the money for or towards the rates (and any fines added thereto) due on the ratable property in the order in which they became due."

It is important to note that the charge created by s260(1) with respect to unpaid rates arises irrespective of any action or decision of the council concerned, and is not expressed to be subject to any qualification in the case of council-owned land.

The charge created by s260, which is clearly the ultimate sanction for the payment of rates with respect to ratable property, may be enforced by sale pursuant to s268. A council has the right to sell "land being ratable property" where the rates have been due and owing for not less than three years. There are various provisions which condition the exercise of the power of sale, including an obligation "in the case of land under the Real Property Act 1886" to serve on "the person registered as the proprietor in fee simple thereof" a notice in accordance with s269 of the Act.

S279 deals with the application of the proceeds of sale, which after payment of the costs and expenses incidental to the sale, are to be paid in discharge of the rates "and any costs and other moneys (if any) due to the council in respect of the land", next, in discharge of the rates and taxes due to the Crown (whether a charge upon the land or not), then in discharge of any mortgages or other encumbrances or charges and finally "to the registered proprietor or owner in fee simple of the land" or into the Supreme Court under the provisions of s47 of the Trustee Act 1936.

Significantly, in the event that land is offered for sale by auction pursuant to the provisions empowering the council to sell land for non payment of rates, and no bid is made for the land, the council, with the consent of the Minister of Lands, has the power to transfer the fee simple in the land to itself.(36)

S282 provides: "Any sale of land by the council pursuant to this Part or any transfer or conveyance made pursuant to section 281a or 281b shall discharge the land and all owners and occupiers thereof and all previous owners and occupiers thereof from any liability to the council for rates or other moneys due to the council for any purpose which at the time of the sale or transfer or conveyance were a charge upon the said land or which were otherwise recoverable by the council in respect of the said land, whether pursuant to this Act or any other Act." (my emphasis)

In my opinion, the scheme of the Act with respect to assessment and rating of ratable property and the methods provided for in the Act for recovery of rates, makes it clear that land owned by the council could not, at the time the lease was entered into, be ratable property within the meaning of the Act, or if otherwise within the definition of "ratable property", it could not be liable to assessment and recovery of rates.

A proper consideration of the various provisions to which I have referred makes that conclusion inevitable.

In the case of assessments based upon annual or capital value, both the occupier and the owner for the time being of the property are liable to payment of the rates. But in the case of assessments based upon land value, it is only the person appearing in the assessment book as the owner of the ratable property who is liable to pay them.

Two provisions in particular seem to me to put the issue beyond doubt.

In the first place, as I have indicated, the ultimate sanction for the payment of rates is a charge upon the land which may be exercised by sale of the land by the council, which may, pursuant to s281b purchase the land for itself.

Further, there is the provision that rates may be recovered from any person liable to pay them upon proceedings in the name of the council or treasurer or collector appointed by the council.(37)

Clearly, a council cannot pay rates to itself, sue itself for rates or sensibly discharge rates by sale of its own land.

I do not think that the situation can be any different if a council which owns land admits some other person into occupation, whether on the basis of a commercially negotiated lease hold or tenancy or otherwise. True it is that in such a case if the assessment happens to be based upon annual or capital value, s251(1), at least to the extent that it refers to the occupier, might be thought to be of application. But even then, the imposition of a liability for payment of the rates under that section is on the occupier and owner jointly. Furthermore, if the assessment happened to be based upon land value, the only liability is on the owner pursuant to s255.

If a council was the owner of land which it assessed on the basis of land value, it could not impose a liability on any occupier, whatever the basis of occupation, to pay rates, as under s255 it is only the owner of land assessed by reference to land value who is liable to pay the rates.

S264, which allows for rent payable by an occupier to be diverted to the council to satisfy arrears of rates, does not shift the liability for rates; as I have said, it only provides a method of collection which is subsequently to be adjusted between the occupier and the owner, lessor or landlord pursuant to s265.

Taking a broad view of the various provisions relating to the imposition and recovery of rates as it stood at the time the lease was entered into, the scheme of the Act appears to be to impose a liability for rates on either the occupier and owner jointly (in the case of assessments based on annual or capital value),(38) or on the owner alone (in the case of assessments based on land value)(39). It is no part of the legislative scheme that there could ever be a situation in which the occupier to the exclusion of the owner is to be made liable for rates.

In the case of council-owned land, it would be a capricious result (and in my opinion, untenable) to suggest that if it happened to assess the land on an annual or capital basis, it could make the occupier (to the exclusion of itself) liable, but not if it chose to base the assessment on land value.

It is true that in the definition of "ratable property", which appears in s5(1) of the Act, there is no express exclusion relating to land owned by a council.(40) The definition of ratable property is in two parts: the first concerning "any area in which Division III of Part X is not in operation" (that is, land assessed at land value) and the second as to "any area in which Division III of part X is in operation" (that is, assessments based upon land value), neither of which refer to council-owned land. But even though council owned land is not expressly excluded from either limb of the definition, it seems to me that for the reasons which I have given, the various provisions of the Act must lead to the conclusion that the occupier of council owned land is, by necessary implication, excluded from liability for rates.

I add that, quite apart from the other considerations to which I have referred, the fact that the ultimate sanction for payment of rates is that, irrespective of any decision of the council to that end, they become a charge on the land, puts paid to any sensible suggestion that council owned land, whether occupied by another person or not, could be liable to be rated.

This does not mean that the Corporation's coffers need suffer if land owned by it is leased out for commercial purposes. No doubt a commercially negotiated rental struck between parties dealing at arm's length will reflect the fact that the leased property is not subject to payment of rates by the lessee, and will be somewhat higher than would otherwise be the case. Presumably the rent struck in this case reflects that consideration.

I return to the question whether the Corporation "was empowered to agree to a clause in terms of 2(2)" of the lease, and the separate but related question whether the Corporation "was empowered to enter into a lease which incorporated clause 2(2)" of the lease.

The plaintiff conceded that the Corporation could not "pay" any "council or municipal rates or taxes" so long as such rates or taxes were imposed by the Corporation. But Mr Ross-Smith for the plaintiff contended that it could "discharge" any such rates or taxes in the sense that it would not look for payment of them. At a later stage (after I had released these reasons in draft form), he suggested that clause 2(2) had no active work to do while the Corporation was the owner and lessor, other than to immunise the plaintiff from any liability for rates or taxes. He submitted, however, that it had the potential of coming into operation to burden the Corporation rather than the plaintiff with liability for such rates or taxes in the event that the land became part of another local government area by reason of any restructuring of local government areas, or in the event that the Corporation was to sell the land.

But in my view, if the occupier of council-owned land was otherwise liable to pay rates, it would not be open to the Corporation selectively to relieve any such occupier from the obligation to pay rates otherwise assessed on the property, except pursuant to the specific statutory provisions relating to postponement or remission of rates.(41) Putting aside my view as to the special position of council-owned land, it seems to me to be inherent in any scheme of rating such as that which finds expression in the Act that all ratable property is liable to be made the subject of assessment for rates, and must be so assessed unless a specific exception in the Act is of application. It is not possible, in my view, for a council to enter into a contract with an individual ratepayer which would alter the incidence of the liability to pay rates in a manner not expressly provided for in the Act.

But notwithstanding those conclusions, in my view, the land the subject of the lease, so long as it is owned by the Corporation, is not ratable, or if otherwise ratable, cannot be made the subject of assessment and recovery of rates.

I realise that in those circumstances, it might be thought that a covenant to "pay or discharge all council or municipal rates or taxes" assessed in respect of the land is otiose.

BRICKWORKS MARKETS P/L v THE CORPORATION OF THE TOWN OF THEBARTON No. SCGRG 94/134 Judgment No. 5655 Number of pages - Local government

At a glance

Court

Decision date

Before

Source

Judgment (216 paragraphs)

BRICKWORKS MARKETS P/L v THE CORPORATION OF THE TOWN OF THEBARTON No. SCGRG 94/134 Judgment No. 5655 Number of pages - Local government (1996) 67 SASR 180 [1996] SASC 5655 (13 June 1996)

Parties

Legislation Cited (18)

Cases Cited (4)