Validity of Transfer to Northern Territory - The Nature of the Territory's Tenure
42 The proposition that the Crown in right of the Northern Territory, or otherwise, can hold an interest in land granted by itself is inconsistent with the common law doctrine of tenure. Under the common law all lands and tenements in England were ultimately held from the Crown. The doctrine, which derived from the time of the Norman Conquest, relied upon the "fundamental maxim and necessary principle (although in reality a mere fiction)…that the King is the universal lord and original proprietor of all the land in his kingdom" - Blackstone Comm. II c.4. p 51. Statutory reforms in England, many of them mirrored in Australia, have substantially suppressed the practical consequences of tenure but they have not struck at the root of the theory of tenure itself - Megarry and Wade, The Law of Real Property 4th Edition (1975) p 38. It was a corollary of the basic doctrine that the Crown could not hold an interest from itself::
" the King in this sense cannot be said to be a tenant because he hath no Superior but God Almighty" - Coke, Commentaries upon Littleton at 1b.
McNeil put it thus:-
"At common law, when the Crown had an estate in fee simple, or indeed any estate, it was necessarily lordless. Accordingly, an estate can exist without being held in tenure" - Common Law Aboriginal Title (Clarendon 1989) p 149.
That an estate is an estate in fee simple indicates the quantum of the estate and not feudal tenure - Commonwealth v Anderson (1960) 105 CLR 303 at 325 (Windeyer J); Commonwealth v New South Wales (1923) 33 CLR 1 at 42 and 45 (Isaacs J), see also Pollock and Maitland, The History of English Law Bk 2 Ch 1 p 213.
43 The basic principles of tenure, including the proposition that the Crown cannot hold as "tenant" an interest from itself, are not, in the Australian context, constitutional in character. They may be displaced or modified in content or application by statute. The prerogatives of the Crown which, at common law, enabled it to grant and acquire interests, including absolute beneficial interests in Crown land, were displaced by what Gummow J has called "the constitutional settlement of the mid-nineteenth century". This term was a reference to the power given to the Australian colonies by Imperial enactments, mostly in the 1850's, to regulate the disposal of the waste lands of the Crown - Wik Peoples v Queensland (1996) 187 CLR 1 at 188-189. That power was given on the basis that it was to be exercised under statutory authority - eg Waste Lands (Australia) Acts Repeal Act 13 and 14 Vic c 55 ss 4, 5 and 7. In the States the Crown is only authorised to dispose of Crown lands in accordance with statutory authority, Commonwealth v State of Western Australia (1999) 160 ALR 638 at 666 (Gummow J) and cases there cited. See also De Britt v Carr (1911) 13 CLR 114 at 122 (Griffith CJ). The Territories derive their power from ordinances and statutes made pursuant to statutory authority conferred by laws of the Commonwealth made pursuant to s 122 of the Constitution. The authorities so granted did not confine the nature of the interests which could be created or granted to established categories of real property at common law. Moreover, rights can be created under statute, in relation to Crown land, which do not create an estate or interest in the land - R v Toohey; Ex parte Meneling Station Pty Ltd(1982) 158 CLR 327 at 332, 344, 352 and 364. Relevantly for this case there is no reason why a statute may not provide, in effect, for the creation, by the Crown, of an interest in land or rights in relation to landwhich can be held as a discrete interest or bundle of rights by the Crown. The Crown Lands Act has done as much in expressly providing that the power to grant an estate in fee simple extends to the power to create such an estate to be held by the Territory itself (s 9(2)). The present case raises the question whether the same result applies to pastoral leases as a matter of implication from the statutory scheme. The central issue is therefore one of statutory construction. But statutes operate in a milieu of common law principle. It is necessary here to consider the impact of the common law and its relationship to the statutes which provide for the creation and disposition of interests in Crown lands. The proposition was initially advanced by the applicants, in their written submissions, that the Northern Territory could not acquire a pastoral lease and then transfer it to the NTLC because the lease would have been destroyed by merger with the radical title of the Territory. Although not maintained as a submission, it illuminates the question we have to decide.
44 The application of land tenure principles as against allodial ownership in the Australian colonies was asserted in Attorney General (NSW) v Brown (1847) 1 Legge 312. It was supported by the proposition that the Crown acquired absolute ownership of all lands in the colony when it acquired sovereignty. That proposition was rejected in Mabo v Queensland (1992) 175 CLR 1. The title of the Crown, upon acquisition of sovereignty in the colonies, was characterised as a "radical title" which, burdened or qualified by indigenous rights and interests, could not expand into full beneficial ownership without some further step on the part of the Crown. It has been observed subsequently, in the light of Mabo that territorial sovereignty may not equate, even under the common law doctrine of tenure, to absolute beneficial ownership, the latter concept being arguably alien to the medieval cast of mind - Gray, Elements of Land Law, (Butterworths, 2nd Edition 1993) p 52, referring to A W B Simpson, A History of the Land Law (2nd Edition, Oxford 1986) p 47f.
45 Radical title was described in Amodu Tijani v Secretary, Southern Nigeria [1921] 2 AC 399 as "a pure legal estate, to which beneficial rights may or may not be attached". It was in that case, found to be burdened or qualified by an indigenous community's usufructuary title. It was of variable scope depending on the impact of the indigenous title. The concept of a radical title of variable scope was to some degree reflected in the judgments of the majority in Mabo.
46 In Mabo, Brennan J, with whom Mason CJ and McHugh J agreed, accepted the proposition that the doctrine of tenure applied in Australia but did not accept that it was necessary to that doctrine that the Crown acquired full beneficial ownership in the land upon acquisition of sovereignty. Rather, as in Amodu Tijani and Nireaha Tamaki v Baker [1901] AC 561 the Crown was to be treated as having the radical title to all the land in the territory over which it had acquired sovereignty. His Honour explained radical title thus at 48:-
"The radical title is a postulate of the doctrine of tenure and a concomitant of sovereignty. As a sovereign enjoys supreme legal authority in and over a territory, the sovereign has power to prescribe what parcels of land and what interests in those parcels should be enjoyed by others and what parcels of land should be kept as the sovereign's beneficial demesne."
The attribution of radical title to the Crown enabled the grant of interests in land to be held of the Crown and the acquisition of land for the Crown's demesne. It enabled the Crown to become "Paramount Lord" of all who hold a tenure granted by the Crown and to become absolute beneficial owner of unalienated land required for the Crown's purpose. Only if the land were desert and uninhabited would the Crown take an absolute beneficial title because there would be no other proprietor. His Honour said:
"Recognition of the radical title of the Crown is quite consistent with recognition of native title to land, for the radical title, without more, is merely a logical postulate required to support the doctrine of tenure (when the Crown has exercised its sovereign power to grant an interest in land) and to support the plenary title of the Crown (when the Crown has exercised its sovereign power to appropriate to itself ownership of parcels of land within the Crown's territory)."
Deane and Gaudron JJ at 80 described as "the underlying thesis of the English law of real property" that the "radical title to (or ultimate ownership of) all land was in the Crown …" They held that the practical effect of the vesting of radical title in the Crown was merely to enable the English system of private ownership of estates held of the Crown to be observed in the colony. If there were lands within the colony in relation to which there were no pre-existing native title, the radical title of the Crown carried with it a full and unfettered proprietary estate (at p 86). Mabo therefore left open the possibility that beneficial interests might be attached to the "pure legal estate" comprising the radical title of the Crown as did some dicta in Wik. (Wik at 127 per Toohey J, citing Amodju Tijani). But Wik rejected the notion that the grant of a statutory "lease" on Crown land involved the creation of a beneficial reversionary interest in the Crown (129 per Toohey J, 155 per Gaudron J, 189 per Gummow J, 234-235 per Kirby J). Also rejected was the proposition that the mere exercise of sovereignty over the land by the Crown would somehow expand radical title into a beneficial interest.
47 In the end the concept of radical title has little if any relevance to the grant of interests in land in post-federation Australia. Indeed it has little relevance to the grant of interests in any of the self-governing colonies prior to federation. It was invoked in Mabo to support the conclusion of the majority that the assumption of sovereignty by the Crown upon its annexation of the various Australian colonies did not give rise to an absolute beneficial ownership in the land inconsistent with indigenous rights which ownership would extinguish native title. But the authority of the colonies, when they became self-governing, to make laws relating to the disposal of Crown lands, was derived from Imperial statutes and was not an incident of the radical title of the Crown therein. That authority in the case of New South Wales and Victoria was initially conferred by the Imperial statutes which authorised the enactments of their Constitution Acts of 1855. At the same time the Imperial Parliament passed the Waste Lands (Australia) Acts Repeal Act 1855 (18 and 19 Vic c.56) which, inter alia, authorised the legislatures of South Australia and Tasmania "to regulate the sale and other disposal of the waste lands of the Crown…" (s V).
48 Prior to 1 January 1911 the Northern Territory was part of the colony of South Australia. It was then surrendered to the Commonwealth as a territory of the Commonwealth. Thereafter all pre-existing estates and interests in the Territory were "to be held from the Commonwealth on the same terms and conditions as they were held from the State" - Northern Territory Acceptance Act 1910 (Cth) (s 10). The Governor-General was empowered to make ordinances having the force of law in the Territory - Northern Territory Administration Act 1910 (Cth) (s 13). Ordinances so made included the Crown Lands Ordinance 1931. With the coming of self-government in 1978 the Northern Territory was established as "a body politic under the Crown by the name of the Northern Territory of Australia" - Northern Territory (Self Government) Act 1978 (s 5). The Legislative Assembly was empowered to make laws for the peace, order and good government of the Territory (s 6). The Crown Lands Act 1979, the Crown Lands Act 1992 and the Pastoral Land Act 1992 are such laws. By s 69(2) of the Northern Territory (Self Government) Act all but certain interests in land in the Territory which were held from the Commonwealth were, by force of the Act, to be held from the Territory (s 69(4)). In the Northern Territory, as in the States of Australia, "the Crown cannot contract for the disposal of any interest in Crown lands unless under and in accordance with power to that effect conferred by statute" - Cudgen Rutile (No 2) Pty Ltd v Chalk [1975] AC 520 at 533. Nor can the Crown dispose of any interest in Crown lands except under statutory power. The constitutional supremacy of Australian Parliaments and the Crown over all Australian lands, as much as the feudal doctrines of the common law, is the origin of most of the incidents of Australian land tenure - Fry, "Land Tenures in Australian Law", Res Judicatae vol 3 (1947) 158 at 160-161, cited with approval by Toohey J in Wik at 111, see also Gummow J at 188-189.
49 Against this background of statutory and quasi constitutional provisions for dealing in Crown lands the concept of the merger of a statutory interest with the radical title of the Crown, as first propounded by the applicants, seems far fetched. So too, does its statutory preemption in s 9(2) of the Crown Lands Act 1992. Merger occurs where a greater and lesser estate in land vest in the same person in the same right without any intervening estate. The estates merge. Effectively, the lesser estate ceases to exist - Bradbrook, McCallum, Moore, Australian Real Property Law (2nd Edition LBC 1997) par 16.88. The doctrine operates in respect of leases so that if a lessor becomes lessee (eg by assignment) the lease merges in the reversion. In the absence of evidence as to intention, there is a presumption at equity that merger is not intended if this will not be in the party's interest or if the party has only acted consistently with a duty. If there be no evidence of intention or of the necessary interest, then merger occurs unless the union was not due to a party's own acts - Halsburys Laws of Australia par 245-4250. The equitable principle is now embodied in property statutes of all States and Territories.
50 In the case of the grant of a Crown lease under statute however, there is no basis for the operation of the doctrine of merger with "radical title". Radical title does not of itself have the character of the greater beneficial estate with which a lesser estate will merge, albeit in some cases such an interest may attach to the radical title - see the discussion on this point in Mabo and Wik.
51 In the case of an interest in unalienated Crown land created by statute, the necessary substratum for the operation of the doctrine, the subsistence of a reversionary interest in the Crown, does not exist. And even if it did, the question of contrary intention would still have to be addressed by reference to the statute giving rise to the interest. In the case of the Pastoral Land Act a lease granted under the Act can be forfeited for exceeding the maximum holdings limit or for breach of condition (s 35(10) and s 40(6)). Forfeiture "has the same effect as a re-entry and recovery of possession by or on behalf of the Territory". It extinguishes the statutory interest. So too does "surrender", whether in exchange for a perpetual pastoral lease (s 62) or for the grant of a consolidated lease (s 64). The effect of forfeiture is the same in this case as its effect under s 135 of the Land Act 1910 (Qld) considered in Wik. That provision established a kind of statutory reversion, whereby forfeited land would "revert to His Majesty and become Crown land, able to be dealt with by [the] Act accordingly". Its effect was to assimilate previously alienated land to land in respect of which the Crown had radical title. It did not assimilate it to any beneficially owned estate (at 156 per Gaudron J, see also 199-200 per Gummow J).
52 Given the character of a pastoral lease under the Pastoral Land Act as a statutory lease, analogous to those considered in Wik, and given the statutory provisions for forfeiture and surrender, and of course the simple termination of the interest by expiry of the term, there is no basis or necessity for importing into the statute common law doctrines of reversion or merger. There is nothing in the nature of a pastoral lease granted under the Act that requires the application of that doctrine. Nor is there any necessary implication from the provisions of the Act that requires the extinguishment of a lease upon its acquisition by the Crown in right of the Northern Territory.
53 In Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (1986) 42 NTR 1, O'Leary CJ, with whom Rice and Asche JJ agreed, held in relation to Crown leases that upon their grant "…the radical title of the land remains in the Crown; the Crown is still the legal owner of the reversion". The reference to the "reversion" is, with respect, of questionable authority in the light of the judgments in Wik, which have already been mentioned. The Jennings' case was concerned with whether land, the subject of a Crown lease, was nevertheless still "vested in the Crown" for the purposes of exemption from workmens' liens under the Workmens' Liens Act (NT).
54 There is another consideration against the operation of merger or any statutory analogue requiring extinguishment of the interest upon its acquisition by the Territory. That is the dependence of legal title to land upon registration under the Torrens Title System for which the Real Property Act provides. There is powerful authority for the proposition that the Torrens Title System is inconsistent with the doctrine of merger. So in the case of a mortgage, nothing in the Real Property Act 1886 (SA) supports the idea that when the proprietor of an estate in fee simple becomes registered proprietor of a mortgage or encumbrance over the land, it is thereby sunk and merged in the estate of that proprietor - English Scottish and Australian Bank Ltd v Phillips (1937) 57 CLR 302 at 322-323. On similar reasoning the view was favoured, though not finally adopted, as it was unnecessary to do so, in Cooper v Federal Commissioner of Taxation (1958) 100 CLR 131 at 142 that "…a registered leasehold interest does not merge at law so long as it remains registered as a separate estate or interest". That view, assumed to be correct for the purposes of that case, was said "to conform better with the Torrens System". In Shell Co of Australia Ltd v Zanelli (1973) 1 NSWLR 216 at 221, Jacobs P (Hardie and Reynolds JJ agreeing) held that as long as a lease remained on a title as a distinct interest, it must be regarded as a separate interest under the Real Property Act 1900 (NSW). His Honour said:
"There is no more reason why unity of title should destroy it on a transfer to the lessee of the fee simple than should unity of title in the case of a mortgagee…or unity of title by transfer of a lease to the registered proprietor in fee… Particularly is this so when it is borne in mind that, though unity of title would result in merger at common law, it would by no means necessarily do so in equity. Intention, actual or presumed, was the test in equity. So long as the interest remained on the title it could not be assumed from the unity of title that there had been a merger."
See Post Investments Pty Ltd v Wilson (1990) 26 NSWLR 598, with respect to non-extinguishment of a registered restrictive covenant when dominant and servient tenements come into single ownership and possession and also Sandhurst Trustees Ltd v 72 Seventh Street Nominees Pty Ltd (In Liq) (1998) 45 NSWLR 556 at 566-567.
55 The Pastoral Land Act is to be read within the general framework for title by registration created by the Real Property Act. There is nothing in the Pastoral Land Act to require that a pastoral lease held by the Northern Territory be extinguished. The registration provisions of the Torrens Title System in operation under the Real Property Act, in my opinion, have the effect that the registration of a transfer to the Northern Territory does not effect extinguishment of the title thereby conferred. The express provision made in the Crown Lands Act 1992 for the Territory to hold an estate in fee simple, does not indicate a contrary intention in relation to leases created under the Pastoral Land Act. The estate in fee simple is an estate well known to the common law which, it might have been thought, could attract some version of the common law doctrine of merger. That concern is, in my opinion, misplaced. But whether it is misplaced or not, the statutory leases granted under the Pastoral Land Act are not creatures of common law descent. They are, as is apparent from the provisions of the Act, sui generis statutory creations. They are not carved out of any larger title and their transfer could not attract the kind of apprehension that seems to have misinformed the drafting of s 9(2) of the Crown Lands Act.
56 There is a distinct argument that the Pastoral Land Act does not authorise the transfer of a pastoral lease from a lessee to the Northern Territory. In this connection reference was made to the requirement for ministerial consent to the transfer of leases under s 67 as well as the obligations of lessees to the Crown to comply with the conditions of their leases upon pain of forfeiture. These provisions and the scheme of the Act generally were said to exclude the possibility of a transfer to the Crown itself. It is true that these provisions may have little if any work to do in the case of a transfer of a lease to the Crown. But that does not of itself prevent the Crown from acquiring, by transfer or otherwise, the interests comprised in a pastoral lease. Indeed considerations of practical convenience may make the capacity of the Crown to hold such leases useful. There is nothing which offends any fundamental principle in so concluding. The Crown in right of the Territory could, consistently with the concept of radical title, in the exercise of its sovereignty under statutory powers create for itself a bundle of rights and interests comprising a pastoral lease.
57 In the reasons for judgment of Sackville J, which I have had the opportunity of reading in draft, his Honour suggests that the want of any explicit provision for transfer of leases under the Pastoral Land Act reflects a legislative intention that the transfer of such interests be effected under the Real Property Act which provides for such transfers to be effective by virtue of their registration. I agree with his Honour that this is the most plausible explanation of the relationship between the two statutes so that the special provisions of the Pastoral Land Act are seen to be integrated into the general system of title by registration for which the Real Property Act provides. That integration also provides an answer to the argument, based upon s 95 of the Real Property Act, that that Act could not be relied upon as a source of power for the transfer of PPL 1069 to or from the Northern Territory. To apply the transfer provisions of the Real Property Act to the transfer of pastoral leases, assuming them to be Crown leases for the purposes of that section, does not "give any greater effect or different construction" to the leases, contrary to s 95, than if the Real Property Act had not been passed. The fact that a statutory lease can be transferred pursuant to a statutory provision goes neither to its effect nor to its construction.
58 Concluding as I do, that the Northern Territory was empowered to take a transfer of PPL 1069 and to hold the lease, there is no need to resort to the indefeasibility provisions of the Real Property Act to support its title.
Validity of the Transfer of PPL 1069 to the Northern Territory Land Corporation
59 The applicants submitted that the NTLC was not empowered by its Act to acquire an interest in land from the Crown. Alternatively it was said that the scheme of the Pastoral Land Act did not provide for a transfer by the Crown of any crown land to a third person.
60 The NTLC was initially established as the Northern Territory Development Land Corporation pursuant to the Territory Development Act. It was continued by the Northern Territory Land Corporation Act. By s 4(2) of that Act:
"4(2) The Corporation is -
(a) a body corporate with perpetual succession and a common seal; and
(b) capable, in its corporate name, of -
(i) subject to this Act, acquiring, holding and disposing of real (including leasehold) and personal property; and
(ii) suing and being sued."
The Corporation is not an authority or instrumentality of the Crown and is not subject to the control and direction of a Minister of the Crown (s 6). Its function is described in s 15 thus:
"15(1) The function of the Corporation is to acquire (by agreement or otherwise), hold and dispose of real property (including an estate or interest in real property) in accordance with this Act and it may acquire and hold such property notwithstanding any other law in force in the Territory which would restrict or otherwise limit the capacity of the Corporation to acquire and hold it.
(2) The Corporation has power to do all things necessary or convenient to be done for or in connection with or incidental to the carrying out of its function.
(3) Moneys payable by the Corporation for or incidental to the acquisition of an estate or interest in real property may be advanced by the Territory on such terms and conditions as the Treasurer thinks fit.
(4) Moneys payable to the Corporation in respect of an estate or interest in real property held or disposed of by the Corporation shall be paid to the Territory, whose receipt shall be a sufficient discharge therefor, and moneys payable by the Corporation in respect of an estate or interest in real property held by the Corporation may be paid by the Territory.
.
.
.
(6) The Corporation may enter into such arrangements as it thinks fit with the Territory or any other person in relation to the care, control and management of land or an interest in land held by the Corporation.
(7) Subject to subsection (6), the Minister has the care, control and management of all land and interests in land held by the Corporation."
The Administrator is empowered to declare any land in respect of which all the right title and interest is vested in the Territory or where no person other than the Territory or the Corporation holds a right, title or interest, to be vested in the Corporation (s 16(1)). Application of such a notice vests in the Corporation all right, title and interest legal and beneficial in respect of the land as though the notice were an alienation in fee from the Crown by way of grant to the Corporation (s 16(2)). There is also provision for registration of such a notice as though it were an instrument of transfer or conveyance to the Corporation (s 16(3)).
61 There can be no doubting the power of the Northern Territory Land Corporation, under its Act, to take a transfer of a pastoral lease from the lessee thereof. What is said in this case is that the transfer of PPL 1069 to the Corporation was not in accordance with the only permitted processes, set out in ss 15 and 16, by which it could acquire interests in land. The function of the Corporation to acquire interests in real property under s 15, it was submitted, was limited by the words "by agreement or otherwise" which appear in parentheses in that section. Those words were said to confine the modes of acquisition permitted under s 15 to acquisition by purchase from a third party. Alternatively it was said the process under s 16, of vesting land or interests in land in the Corporation, was available but was not followed. In my opinion this argument is untenable. The provisions of s 15 are facultative and allow for acquisition by "agreement or otherwise". The words "or otherwise" allow for any mode of lawful acquisition. Transfer from the Territory is one of those modes. The transfer of the lease to the Corporation was therefore valid.
62 I also agree, for the reasons given by Sackville J, that the necessary consent to the transfer of PPL 1069 to the Northern Territory Land Corporation had been given.
The Effect of Registration of the Transfer under the Real Property Act
63 Having regard to the conclusions I have already reached, it is unnecessary to consider the operation of the indefeasibility provisions of the Real Property Act upon the registration of the transfer of PPL 1069 to the Territory and the Corporation respectively. In the event, however, that my primary conclusions are wrong, I agree with Sackville J in relation to the operation and effect of the indefeasibility provisions.