50 One indication that the rate of return was not to be reviewed by this Court is the use of the word "regularly". The Court decides appeals only when they are commenced by applicants. A decision as to when a review should take place cannot be "applied". It is a condition precedent to instigating the carrying out of a review. If the formula is altered by review by the Court rather than by a further report of IPART, then the Court's decision would affect every licence of the same class.
51 Section 39(2) of the Court Act cannot provide a basis for the Court to undertake the review. Other cases such as Codlea Pty Limited v Byron Shire Council [1999] NSWCA 399; (1999) 105 LGERA 370 and others referred to in the Minister's written submissions consider different circumstances.
Finding on threshold issue
52 The conditions of the licence No 318462 of domestic waterfront Crown land adjacent to the Applicant's land provide for the payment of rent as calculated under the terms of the licence and for its redetermination. The Minister administering the CL Act when redetermining that rent as provided for under the terms of the licence must apply the principles specified in s 143(1). If however the Minister applies a recommendation of IPART to the redetermination of rent of any licence under s 143(2) then that recommendation must be applied by the Court in any appeal under s 143(3).
53 The Applicant has appealed to the Court against the Minister's redetermination of rent of domestic waterfront Crown land under s 142(5)(b) of the CL Act. On appeal, the Court may affirm the Minister's redetermination or substitute its own; s 142(6). The Court's jurisdiction to determine this matter on appeal is limited by virtue of s 143(3) because the Minister redetermined the annual rent for the Crown land the subject of the Applicant's licence by applying the rent formula referred to in the 2004 IPART review, as provided for in s 143(2)(a).
54 The Court's power in an appeal is defined by s 39(2) of the Court Act which states that the Court has all the functions and discretions of the person or body appealed against.
55 The terms of the IPART rent formula recommendation applied in the redetermination of the rent in issue are set out above in par 23. The recommendation consists of narrative text and a formula in a box. The issue which arises in this appeal is whether the words "the rate of return should be regularly reviewed" mean that the Minister has the power to review the rate of return of 3.05 per cent identified in the formula. If so, according to the Applicant the Court can exercise that power in this appeal and vary the rate of return if it chooses of 3.05 per cent from that in the formula.
56 The usual rules of statutory construction can be applied to s 143 of the CL Act. A construction which promotes the objects and purpose of the Act whether explicit or implicit should be given effect, as required by s 33 of the Interpretation Act 1987 and numerous authorities, for example Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355. The broad objects of the CL Act are identified in s 10, set out above in par 9. The issues raised in this appeal are not readily resolved by reference to the broad objects of the CL Act. Section 6 provides that Crown land must not be licensed unless authorised by the CL Act. No issue arises in this appeal concerning that section.
57 In relation to the language used in s 143, in Cooper Brookes (Wollongong) Pty Ltd v FCT [1981] HCA 26; (1981) 147 CLR 297 Gibbs CJ at 305 held:
… if the language of a statutory provision is clear and unambiguous, and is consistent and harmonious with the other provisions of the enactment, and can be intelligibly applied to the subject matter with which it deals, it must be given its ordinary and grammatical meaning, even if it leads to a result that may seem inconvenient or unjust. To say this is not to insist on too literal an interpretation, or to deny that the court should seek the real intention of the legislature.
Stephen J at 310, Mason and Wilson JJ at 320, agreed on this point in separate judgments. Aicken J, in dissent, agreed on this point at 336. This passage has been cited in numerous cases before this Court, see for example, Owners Corporation of Strata Plan 30859 v Roads and Traffic Authority of NSW [2009] NSWLEC 135; (2009) 168 LGERA 30 at [50].
58 The ordinary and grammatical meaning of words used in a section can be readily given effect where the drafting is clear. The challenge of construction arises more acutely where the words of a statute are unclear or ambiguous. The wording in s 143(2) and (3) is not unclear or ambiguous in relation to the matters raised by the parties. In particular, the words "recommendation of IPART" can be given their plain and ordinary meaning in order to interpret the subsections.
59 The difficulty in construction arises apart from the terms of s 143(2) and (3) because the recommendation by IPART in question appears in a separate document which is not a statutory instrument or rule. The recommendation appears in the 2004 IPART review, prepared before s 143(2) and (3) were introduced into the CL Act in 2005. The review was undertaken as part of the functions carried out by IPART under s 9 of the IPART Act. Section 143(3) is clear in its terms that the Court's power in this appeal is limited to applying the recommendation of IPART. There is no disagreement between the parties on that point. The issue between them is what part of the recommendation the Court must apply. That requires consideration of the IPART recommendation and its construction. The functions of IPART under the IPART Act to review matters referred to it and in doing so to take into account the wide range of matters referred to in s 15 of the IPART Act do not require it to present its reports in any particular terms.
60 The issue between the parties hinges on whether the reference to the application of the IPART recommendation by the Minister in the Notice of Redetermination of Rent is a reference solely to the formula as identified in the box in the recommendation (which leaves less room for the Court to do much in this appeal) or must include the application of the additional words in the narrative part of the recommendation (set out in par 23 above). If the formula in the box is all that the Court can apply (and is what the LPMA applied in their redetermination), the rate of return is fixed and the Court is not able to vary it by virtue of s 143(3) in this appeal. If the words in the narrative "the rate of return will need to be regularly reviewed" are part of the recommendation, the Applicant argues that the Minister could undertake the necessary review and therefore so can the Court under s 39(2) of the Court Act.
61 At the time the Minister determined the 2009 rent payable by the Applicant no review of the rate of return had been undertaken by the LPMA, the Minister or his delegate. There is evidence of a process of review being commenced by the LPMA through the consultant KPMG in 2009.
62 The fundamental assumption that underpins the Applicant's submissions about the phrase "the rate of return must be regularly reviewed" in the narrative part of the recommendation is that it provides a statutory power under the CL Act to the Minister to undertake the review for the purposes of s 143(2) of the CL Act. The phrase "the rate of return must be regularly reviewed" provides no guidance on frequency of review and does not specify who is to undertake the review. If the Applicant is correct, by virtue of s 143(2) and (3), that general phrase potentially becomes part of the statutory framework for the redetermination of rent under the CL Act.
63 There is no assistance in the IPART recommendation or generally in the 2004 review as to who should undertake the regular review of the rate of return or when that should be done. The Minister's submissions summarised above at par 43-45 refer to parts of the IPART review which discuss the recommendation. To the extent the review can provide context for the recommendation, the description at page 19 par 6 states that the general formula is to align rentals with the market value of the occupancy and maintain this alignment over time. As submitted by the Minister there is no indication in the review of when the review should be undertaken other than regularly. While there is evidence that the two relevant authorities (the LPMA and the Waterways Authority) have thought that was within their area of responsibilities given the statements made in the report of the Auditor-General and the process commenced by KPMG, that is not conclusive of how s 143(2) and (3) of the CL Act are to operate. Given the lack of precision as to implementation of that phrase in the recommendation, it is unlikely that such words would be given statutory force by virtue of the 2005 amendments adding s 143(2) and (3) to the CL Act.
64 The Applicant submitted that because the recommendation does not state that IPART is to undertake the review it must be the Minister as the terms of reference of IPART are directed to providing advice to the two authorities which administer domestic waterfront licences.
65 I agree with the Minister's submissions that the phrase is general and essentially advisory. It cannot provide a basis for a statutory power residing in the Minister, and hence this Court, to apply the recommendation by undertaking a review of the rate of return in the rent formula. As submitted by the Minister's counsel (par 49-50 above), for the Court to apply something, it must be capable of being applied through the use of an existing principle, law or rule. Section 143(3) refers to a function or discretion which depends on an existing test. "Regularly" is imprecise and does not enable the Court to apply a review of the rate of return in this appeal, as the Minister submitted.
66 At the time the IPART review was prepared in 2004 the amendments to the CL Act which give the IPART rent formula recommendation statutory force had not been made. It is a quantum leap in construction to suggest these words provide a basis for the Court to undertake the review of the rate of return under s 143(3). There is no basis for such a leap established by the words of the CL Act or the IPART review itself. That the LPMA (and the Auditor-General) has considered that task sits with it as a matter of policy does not mean that the Minister through his department has a statutory power for the purposes of applying the recommendation under s 143(2) to review the rates of return set by IPART on the basis of the general words that the rate should be reviewed regularly.
67 A further consideration of the application of s 143(3) in this appeal is certainty of application of s 143 as a whole, which on one view aids in the regulation of conditions under which Crown land is licensed and one of the objects of the CL Act specified in s 10(d). Under s 143(1) principles are identified which the Minister and the Court on appeal must apply to any redetermination of rent. The principles do not apply if the IPART rent recommendation is used by the Minister in any redetermination, as he may do under s 143(2). It is in the interests of certainty of application of the CL Act for the Minister to apply an IPART recommendation under s 142(2)(a) so that the application of the recommendation is certain. A construction of the IPART recommendation as confined to the rent formula in the box aids certainty in the application of the CL Act. That formula identifies the rate of return as 3.05 per cent.
68 Under s 143(1) the Minister can adopt a wider approach to the redetermination of market rent of a licence than under s 143(2). That approach allows a case by case analysis of each redetermination of rent. On appeal the Court's powers would also be broader in applying the principles in s 143(1). The application of an IPART recommendation under s 143(2) provides a means for the Minister, and therefore the Court under s 143(3), to adopt a defined, and confined, approach to the redetermination of rent. In this case the application of the IPART recommended rent formula by the Minister results in a similar approach to all rent redeterminations for domestic waterfront licences. If on appeal the rate of return can be varied in every case by the Court, the certainty in applying the formula to any redetermination would be largely lost as the Court would be determining the rate of review anew on a case by case basis.
69 The role of IPART should also be considered as relevant context for considering the recommendation to which s 143(3) applies. As submitted by the Minister the role of IPART identified in the IPART Act is to undertake a broad analysis of a given topic, possibly employing public consultation and including consideration of matters identified in s 15. The 2004 review considered a wide range of public submissions and discusses a range of matters. These matters informed IPART's recommendation for the rent formula. These are considerations and measures beyond those which this Court can undertake in this appeal, which is essentially conducted as a valuation exercise. The Court's role in this appeal is limited to exercising those functions which the Minister exercised. Where the Minister chooses to apply the IPART recommendation, variation of that recommendation in this statutory context lies with IPART not this Court.
70 It is unnecessary for the Court to review the authorities on the operation of s 39(2) of the Court Act such as Codlea for the reasons given by the Minister. Several decisions such as Codlea; Kogarah Municipal Council v Kent (1981) 46 LGRA 334; Strathfield Municipal Council v Drew (1985) 1 NSWLR 338; North Sydney Municipal Council v PD Mayoh Pty Limited (1988) 14 NSWLR 740; Sydney City Council v Claude Neon Limited (1989) 15 NSWLR 724; Shellhabour Municipal Council v Rovili Pty. Limited (1989) 16 NSWLR 104; Sydney City Council v Ipoh Pty Limited [2006] NSWCA 300; (2006) 68 NSWLR 411; Goldberg v Waverly Council [2007] NSWLEC 259; (2007) 156 LGERA 27 have considered the ambit of s 39(2) of the Court Act, as identified in the Minister's submissions.