Leisure Resort Holdings Pty Ltd v Leisure Resort Group Pty Ltd & Ors [1994] QCA 324

The question with which we are concerned is the liability to pay certain contributions to the body corporate of "Lauders by the Sea". The liability to pay those contributions has its source in resolutions of the body corporate, that an administrative fund in the sum of $25,560 (being $1,420 per entitlement per annum), be levied for the period 1 July 1993 to 30 June 1994 and that a sinking fund in the sum of $28,800 (being $1,600 per entitlement per annum) be levied for the same period.

It does not appear to be necessary to explain the scheme of the relevant legislation fully, as the structure of it is familiar enough. Under s. 38(1) of the Act a body corporate is obliged to establish and maintain an administrative fund, and under s. 38(4) it is required to establish and maintain a sinking fund. The purposes of these funds are, in effect, defined by s. 38A of the Act. This section gives the body corporate power to determine "the amounts which are reasonable and necessary to be raised by contributions" for various purposes set out in the section. We do not set those purposes out in full, but note that s. 38A(1) contemplates that the administrative fund will be used for maintenance and repair costs, as well as insurance premiums; under s. 38A(2), the sinking fund is to be used for such purposes as painting the common property, making improvements to it, and renewing or replacing parts of the common property. It appears to us that some of the liabilities mentioned in s. 38A might be said to be of a revenue kind, others of a capital kind.

Section 38B empowers the body corporate from time to time to levy on each person liable therefor a contribution to raise the amounts referred to in s. 38A(1), (2) and (3); it is not necessary to say anything about s. 38A(3). Section 32 provides among other things that the body corporate may levy the contributions determined by it in accordance with s. 38A(1) and (2) by serving on the proprietors notice in writing of the contributions payable by them in respect of their respective lots. Under s. 32(2) those contributions are to be levied:

"...in respect of each lot and shall be payable, subject to this section, by the proprietors in shares proportional to the lot entitlements of their respective lots".

The concept of a lot entitlement is dealt with in s. 19, which requires that every plan lodged for registration have endorsed on it a schedule specifying the lot entitlement of each lot, which determines among other things "the proportion payable by each proprietor of contributions levied pursuant to s. 32".

The scheme, then, is that when the body corporate levies contributions under s. 38B they must be paid by the proprietors of the lots in proportion to their respective lot entitlements. The primary judge held that the contributions in issue here fell upon the lessee, under the lease.

Clause 2.03(c) is the clause of the lease which is immediately in question, but since it was suggested in argument that its meaning may be affected by the context, it is desirable to set out the whole of the clause. It is grammatically connected with cl. 1, being one of the covenants of the lease mentioned in that clause.

(a) all charges for all services, including garbage clearances, cleansing, water, telephone, power, heating, gas electricity and all other utilities and services used in or charged against or in respect of the demised premises;

(b) all licence fees and other assessments in respect of the business carried on by the Lessee;

(c) and discharge without exception (unless otherwise expressly provided herein) all rates, taxes, charges, assessments, outgoings and impositions whatsoever whether parliamentary, municipal or otherwise and whether assessed, charged or imposed by or under Federal or State Law and whether on a capital or revenue value or any other basis and even though of a novel character and whether or not of a kind which are not payable at the commencement date but which may at any time during the term hereof be assessed, charged or imposed upon or in respect of the demised premises and whether assessed against the Lessor or directly against the Lessee and in respect of any such sums assessed directly against the Lessee to pay the same to the assessing authority not later than the due date for the payment thereof;"

It was contended by counsel for the appellant that the expression "upon or in respect of the demised premises" in cl. 2.03(c) should be read in such as way as to exclude liability for contributions levied in the circumstances which have been mentioned above. The contention appeared to be that, although it is the ownership of the "demised premises" - an expression which includes all the lessor's rights as registered proprietor of a lot - which immediately gives rise to the liability to pay the contributions in question, those contributions are properly characterised as being in respect of the common property, not in respect of the demised premises. This is so, the argument ran, because the purposes of raising the money have to do wholly or essentially with the common property.

The argument may go so far as to assert that charges payable by the lessee under cl. 2.03(c) cannot include any moneys intended to raise a fund to discharge liabilities incurred in respect of matters other than the lots owned by the proprietors. But this cannot be accepted; rates and taxes levied in respect of the demised premises are clearly caught, and it is improbable that they would be intended to be spent on the lots. It appears to us not to be possible to construe cl. 2.03(c) as restricting the lessee's liability under it to charges intended to raise a fund to be spent on lots, or indeed for any particular purpose.

There are other difficulties about the construction suggested by the appellant of which only one, we think, requires to be mentioned. "Outgoings" is not defined, but the word "outgoing" is defined in cl. 6.12(o) of the lease so as to include, among other things:

"...all contributions, levies and other moneys payable in respect of the demised premises to the Body Corporate".

It is true that some provisions of the Act allow for the levy of contributions for certain purposes - s. 124 is an example - other than those mentioned in s. 38A. But to read the reference to "contributions...payable in respect of the demised premises to the Body Corporate" as excluding contributions having their source in determinations under s. 38A would leave that expression with little practical operation. It is unlikely that the drafter would use the expression "all contributions..." intending to exclude the ordinary contributions which are routinely payable, and to include only certain contributions of rare and special kinds.

To return to the central question, it is our opinion that in this context "upon or in respect of the demised premises" should be read as covering outgoings on the basis of lot entitlement assessed against the proprietor of the lot the subject of the lease. So far from assisting the appellant, the context, in referring to rates and taxes, supports the notion that the words "in respect of" connote just the sort of connection which one finds here between the charge and the lot.

We therefore agree with the conclusion at which the primary judge arrived. The appeal will be dismissed with costs.