Rakus v Energy Australia

LEGAL REPRESENTATIVES: RESPONDENT: Mr I J Hemmings (barrister) SOLICITORS: James Helman

JUDGMENT:

• 12 - IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

JUDGMENT Introduction 1 The applicant, Mr Karol Rakus, occupied an area of Crown land under a permissive occupancy. The respondent, Energy Australia, subsequently acquired part of that land by way of compulsory acquisition. The applicant seeks compensation under s 39 of the Land Acquisition (Just Terms Compensation) Act 1991 ("the Just Terms Act") in relation to other land, which he owns, adjoining the land that was acquired by the respondent. The respondent raises two preliminary questions of law for consideration. These are: (1) Does the applicant have an interest in the acquired land (Lot 3541 in Deposited Plan 1044499) that was divested, extinguished or diminished by the acquisition notice? (2) If the answer to question (1) is "no", should these proceedings be dismissed? Facts 2 The applicant is the registered proprietor of Lot 3551 and Lot 3552 in Deposited Plan 622263 at Nelson Bay. In 1965, the applicant was granted a Crown Special Lease (No. 1965/46) over Lot 354 in Deposited Plan 752204 at Nelson Bay, which adjoins Lot 3551. In 1986, that lease expired. From that time until the date of acquisition, the applicant occupied Lot 354 under a permissive occupancy (No. 1986/83) granted under s 136K of the Crown Lands Consolidation Act 1913. Although that Act was repealed, the operation of that provision was saved by the Crown Lands Act 1989 Sch 8 cl 33 and the Crown Lands (Continued Tenures) Act 1989 s 11 and Sch 2 Pt 6. That permissive occupancy was subject to certain standard conditions, which relevantly state:

1. The rent for each year shall be paid in advance to the Under Secretary for Lands, Sydney.
2. The Minister, upon giving at least three (3) months notice to the tenant, may review and alter the amount of the rental.
3. The Permissive Occupancy is terminable at will by the Minister.
4. Upon termination of the Permissive Occupancy by the Minister all improvements on the land shall become the property of the Crown, and no compensation shall be payable therefor: Provided that on application within one month after such termination, the Minister may permit the former tenant to remove from such land any movable improvements effected by him or at his expense…
5. The tenant shall pay all rates and taxes and all fees and charges under the Local Government Act, 1919, as amended by subsequent Acts, upon the premises during the currency of the Permissive Occupancy.
6. The tenant shall not sublet or part with possession of the premises, or any part thereof, or sell or transfer the Permissive Occupancy herein referred to, without the consent of the Minister for Lands having first been obtained. On termination of the Permissive Occupancy the tenant shall deliver up quiet and peaceable possession of the premises.
7. …
8. All rights conferred upon the public in the terms of any reservation in regard to the premises are reserved.
9. The tenant shall not interfere with the rights of the public to the use of any roads, streets, lanes or tracks within the premises.
10. Mining operations may be carried on upon and in the lands below the premises and upon and in the lands adjoining the premises and the lands below the same and metals and minerals may be removed therefrom and Her Majesty the Queen and the Government of New South Wales and any lessee or lessees under any Mining Act or Acts of the said State shall not be subject to any proceedings by way of injunction or otherwise… … 20. All persons duly authorized shall have full right to enter upon the land at any time within reasonable hours, for the purpose of cutting and removing timber or products without interference, and the tenant shall, if fencing the boundaries, provide convenient gateways or openings where required for this purpose, or where directed by the Forestry Commission or by any other officer authorized by the Commission in this behalf, and shall, if required, permit such persons to operate and store their equipment upon the area occupied for such time as may be allowed. … 31. If the former tenant shall fail to remove any structure or material as directed and within the time specified in condition 4 hereof the Minister shall have the right to carry out or have carried out such removal and thereafter to recover from the former tenant all costs and expenses incurred thereby by deduction from any security held by him or by action at law. 32. The tenant shall throughout the currency of the occupancy effectually destroy or cause to be destroyed all or any of the following on the land occupied, viz. Bathurst burr, noogoora burr, African boxthorn, Mexican poppy, prickly-pear, lantana, blackberry, wild tobacco, fireweed, crofton weed, mint weed, St John's wort, serrated tussock, briars, and all scrub (except edible scrub), undergrowth, and such plants or weeds as are, or may from time to time be declared noxious under the Local Government Act, 1919, as amended by subsequent Acts, in all municipalities and shires, or in the particular municipality or shire in which the land occupied, or any part of it, is situated. 33. The tenant shall take effective steps to keep the land free from foxes, rabbits, and other noxious animals during the currency of the occupancy. 3 Additionally, the permissive occupancy was subject to the following special conditions: e) The land occupied may be cultivated to the extent necessary for the growth and spread of pasture grasses but not further. … z) If the tenant shall fail to remove any structure or material as directed and within the time specified in condition 4 hereof the Minister shall have the right to carry out or have carried out such removal and thereafter to recover from the former tenant all costs and expenses incurred thereby by deduction from any security held by him or by action at law. 4 The respondent compulsorily acquired part of Lot 354, pursuant to the Electricity Supply Act 1995, which became known as Lot 3541 in Deposited Plan 1044499 ("the land"). Up until the date of acquisition, the applicant enjoyed permissive occupancy of the land and paid the annual rent on or before the due date. 5 The Second Schedule to a title search of Lot 354, conducted prior to the date of acquisition, states that the land is subject to reservations and conditions in favour of the Crown as set out in Memorandum S700000C: 1. The reservation and exception to the Crown of:- (a) all minerals which the said land contains. (b) all such parts and so much of the land as may thereafter be required for public ways in over and through the same by the Crown with full power for the Crown and such person or persons as shall be duly authorised in that behalf to make and conduct all such public ways and the right of full and free ingress egress and regress into out of and upon the land for the purpose aforesaid. ….. Parties' submissions 6 Ms S A Duggan, appearing for the applicant, relies upon the following submissions. (a) The permissive occupancy is a tenancy at will, or alternatively, a licence. If characterised as a tenancy at will, the permissive occupancy is a legal or equitable interest in the land. If characterised as a licence, the permissive occupancy is a right, power or privilege over or in connection with the land, and is therefore an interest in the land for the purposes of the Just Terms Act . (b) An interest in land under par (a) of the definition in the Just Terms Act must be an interest in land, that is, one that constitutes a right in rem . (c) However, an interest in land under par (b) of the definition in the Just Terms Act need not be a right in rem . 7 Mr I J Hemmings, appearing for the respondent, relies upon the following submissions. (a) The applicant did not have an interest in the land within the meaning of the Just Terms Act at the date of its acquisition. Rather, the applicant merely had a personal right for which compensation is not payable. (b) The permissive occupancy does not fall within par (a) of the definition of "interest in land" in the Just Terms Act as it does not grant exclusive possession to the occupant. (c) An interest in land under par (b) of the definition in the Just Terms Act must be an interest in the land or a proprietary or quasi-proprietary right. The permissive occupancy was only a personal licence not a licence coupled with another interest, and characterised as such, does not constitute a proprietary or quasi-proprietary right ( Hornsby v RTA (1997) 41 NSWLR 151 at 155). Consideration 8 Section 37 of the Just Terms Act grants a right to compensation for the acquisition of land and states: An owner of an interest in land which is divested, extinguished or diminished by an acquisition notice is entitled to be paid compensation in accordance with this Part by the authority of the State which acquired the land. 9 Section 4 of that Act provides the following relevant definitions: interest in land means: (a) a legal or equitable estate or interest in the land, or (b) an easement, right, charge, power or privilege over, or in connection with, the land. land includes any interest in land. owner of land means any person who has an interest in the land. 10 I shall consider pars (a) and (b) of the definition of "interest" in turn. Was the permissive occupancy a legal or equitable interest in the land? 11 I have noted Ms Duggan's submission that the permissive occupancy constituted a tenancy at will and thereby was a leasehold interest in the land. The test to be applied in determining whether a lease exists is whether exclusive possession is conferred on the purported lessee (Radaich v Smith (1959) 101 CLR 209 at 214). The applicant did not have exclusive possession of the land under the permissive occupancy. Condition 9 conferred a right upon the public to use any roads, streets, lanes or tracks within the premises. Condition 10 provided that mining operations could be carried out on the land and condition 20 permitted duly authorized persons to enter upon the land to cut and remove timber. Notwithstanding that none of those conditions were invoked during the applicant's occupation of the land, they nevertheless indicate that the permissive occupancy did not confer exclusive possession on the applicant. Furthermore, the land was the subject of a reservation to the Crown of all minerals contained on the land and all parts of the land that may be required for public ways. Condition 8 reserves all rights conferred upon the public in the terms of such a reservation. Those reservations precluded a conferral of exclusive occupation upon the applicant. It follows that the applicant's permissive occupancy did not amount to a leasehold interest in the land. Accordingly, the applicant did not have a legal or equitable interest in the land at the date of acquisition within the meaning of par (a) of the definition. Was the permissive occupancy a right, power or privilege over or in connection with the land? 12 The Court of Appeal considered the par (b) definition of "interest" in Hornsby v RTA (1997) 41 NSWLR 151. In that case the council argued that it had an interest in a public reserve and sought compensation for its acquisition. Meagher JA considered the definition of "interest" in s 4 of the Just Terms Act and stated (at 155): Mr Tobias QC, learned senior counsel for the appellant, submitted that the words of par (b) were extraordinarily wide and should be interpreted literally. However, this could not possibly be correct. In a sense every member of the public has a "right" over the land in question: he can go on it and have a picnic. But it was hardly intended that he could claim compensation on a resumption. If it were, the machinery of notifying holders of "interests" would extend to infinity. Some limitation must be placed on the words. Whilst the rights which fall within par (b) must be wider than the rights which fall within par (a), I feel that they must be limited to jura in re aliena, proprietary or quasi-proprietary rights less than a fully-fledged estate, that is, easements, charges, profits à prendre, profits à rendre, licences coupled with interests, etc. 13 In dismissing the council's submissions, Mason P also considered the statutory definition of "interest" (at 152): It is true that the definition of "interest" is liberal, especially in its second part. But, as Meagher JA demonstrates, a literal interpretation produces absurdity, and the words cannot be construed out of context. (As to the significance of context in statutory interpretation, see CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 71 ALJR 312 at 324.) Part of that context is the colour which each part of the overlapping definition takes from its associates. Even more critical to that context is the reference to ownership of an interest in s 37 of the Land Acquisition (Just Terms Compensation) Act . 14 These passages demonstrate that the definition may be limited to remove any absurdity that would result from a literal interpretation. That case, however, differs significantly from the facts in these proceedings. Hornsby involved the public's purported interest in a reserve, whereas the applicant submits that he has a personal interest in the land over and above the public through the permissive occupancy. Clearly, the definition of par (b) would be absurd if it entitled the public at large to assert an interest in, and claim compensation for the acquisition of, a public reserve. The limitation imposed by Meagher JA removed that absurdity in the specific circumstances of that case. That limitation, however, need not be applied to other factual circumstances where such absurdity would not result. Rather, the statutory definition must first be considered according to the ordinary meaning of the words. Only if an absurdity then arises in its application, should a limitation be placed upon the definition. The Court of Appeal acknowledged the specific application of such a limitation in Minister for Education and Training v Tanner (2001) 128 LGERA 281 in which Brownie A-JA (Beazley and Santow JJA concurring) considered Meagher JA's judgment and stated (at 284): What Meagher JA said in Hornsby was apt to resolve the issue posed in that case, but of course his Honour's words ought not to be treated as a substitute for or a restatement of the words of the legislation, and they need to be read in their context. 15 Brownie A-JA also adopted the comments of Gaudron J in Marshall v Director General, Department of Transport (2001) 205 CLR 603 in which her Honour stated (at 623): It is a basic rule of statutory construction that legislative provisions are to be construed according to their natural and ordinary meaning unless that would lead to a result that the legislature must be taken not to have intended. The rule serves the important purpose of ensuring that those who are subject to the law understand the nature and extent of their rights and obligations. And because it serves that purpose, good reason must be shown before if will be concluded that the legislature did not intend the consequences that would flow if the provision in question were given its natural and ordinary meaning. Although the rule that legislative provisions are to be construed according to their natural and ordinary meaning is a rule of general application, it is particularly important that it be given its full effect when, to be otherwise, would limit or impair individual rights, particularly property rights. The right to compensation for injurious affection following upon the resumption of land is an important right of that kind and statutory provisions conferring such a right should be construed with all the generality that their words permit. Certainly, such provisions should not be construed on the basis that the right to compensation is subject to limitations or qualifications which are not found in the terms of the statute. [Footnotes omitted.] 16 Applying these passages to these proceedings, the primary task is to consider the natural and ordinary meaning of the words in par (b). In her submissions, Ms Duggan relied upon definitions of "right", "power" and "privilege" (as used in par (b)) from the Shorter Oxford Dictionary. However, in Provincial Insurance Australia Pty Ltd v Consolidated Wood Products Pty Ltd (1991) 25 NSWLR 541 at 553, Kirby P stated that due to the nuances of language the Macquarie Dictionary is the preferred dictionary for providing meaning to words used in this country: see also Mahoney JA at 560-561 and Mason P in House of Peace Pty Ltd v Bankstown City Council (2000) 48 NSWLR 498 at 504-505. Accordingly, it is appropriate to look to that dictionary for assistance in determining the natural and ordinary meanings of "right", "power" and "privilege". The Macquarie Dictionary (3rd ed.) provides the following definitions: r ight … 18. a just claim or title, whether legal, prescriptive, or moral. 19. that which is due to anyone by just claim: to give one his or her rights … power … 1. ability to do or act; capability of doing or effecting something. … 5. the possession of control or command over others; dominion; authority; ascendancy or influence… privilege … 1. a right or immunity enjoyed by a person or persons beyond the common advantages of others… 17 To determine whether the permissive occupancy falls within the natural and ordinary meaning of those words, it is necessary to examine the nature of the occupancy and the powers and obligations that arise from it. The applicant had a right to occupy the land, although not exclusively. Condition 4 and special condition (z) granted the applicant the right to erect structures, including fixtures, upon the land. The applicant also had a right to cultivate the land for the growth and spread of pasture grasses (special condition (e)). Under the permissive occupancy, the applicant had power to improve the land and to use the land for his benefit. Under condition 6, the applicant also had the right to assign or transfer the permissive occupancy with the consent of the Minister. Accordingly, the permissive occupancy gave the applicant the ability to affect the land through occupation and use of the premises. The applicant was also able to exert control over the land through the way in which he occupied and used the premises. Additionally, the applicant possessed the ability to effect the transfer of the permissive occupancy. The applicant, therefore, had power over and in connection with the land. Furthermore, the applicant possessed these powers over and above those of the general public. As such, the permissive occupancy also constituted a privilege over and in connection with the land. 18 The terms of the permissive occupancy also placed certain obligations upon the applicant, including the obligation to pay rent, rates, taxes, fees and charges (conditions 5 and 7) and the obligation to control vermin and noxious vegetation on the premises (conditions 32 and 33). The applicant thus had a contractual claim to occupy the land provided he met such obligations. This amounted to a contractual right, albeit terminable at will, over and in connection with the land. 19 Mr Hemmings submits that the permissive occupancy can only amount to a bare licence, personal licence, or a contractual right, and therefore, cannot be an interest under s 37 of the Just Terms Act. In particular Mr Hemmings relies upon Minister for Natural Resources v New South Wales Aboriginal Land Council (1987) 9 NSWLR 154 at 161, Minister for Land and Water Conservation v NTL Australia Pty Ltd (2002) 122 LGERA 53 at 58, and Southern Estates Pty Ltd v New South Wales Aboriginal Land Council (1991) 24 NSWLR 320 at 323-324. None of those cases, however, consider whether a permissive occupancy is an interest within the definition of par (b). Whether the permissive occupancy is characterised as a personal licence or a contractual right, it nevertheless still falls within the natural and ordinary meaning of the words in par (b). No absurdity results from the application of the definition in this way. Unlike in Hornsby, the applicant's interest is an interest over the property of another, it is confined to one person and it does not extend to the public at large. The extent of the applicant's interest thus differs from that in Hornsby. As noted in Mooliang Pty Ltd v Shoalhaven City Council (2001) 114 LGERA 45 at 55: In that case it was decided that a council which had mere rights of management over the land in question was not entitled to claim compensation. The case can be distinguished from [ West v Roads and Traffic Authority of NSW (1995) 88 LGERA 266] and from the present case on the basis that the claimant council had no right of occupancy over the land. 20 The applicant's permissive occupancy grants him the right of occupancy over the land, as opposed to mere management of the land. Although Mooliang and West involved a right of occupancy on a more secure footing than a common licence, that does not mean that a personal licence or a contractual right to occupy land cannot be a right, power or privilege over, or in connection with, the land. As I noted in par [14] above, the limitation imposed by Meagher JA in Hornsby was specific to the circumstances of that case, was required to avoid an absurdity in the literal application of the definition, and does not apply here: see also Mooliang at 55 [44]. For the reasons already stated, I am satisfied that the permissive occupancy amounted to a right, privilege or power over, or in connection with, the land. 21 Moreover, the applicant's permissive occupancy also falls within the limitation posed by Meagher JA as a jura in re aliena, that is, a right in the property of another. The applicant's right to occupy and use the land under the permissive occupancy was a right to occupy and use the property of another. Meagher JA gives examples of interests falling within the limitation, namely a licence coupled with an interest. However, his Honour's suggested list of jura in re aliena, proprietary or quasi-proprietary rights is not exhaustive, as evidenced by his use of the abbreviation "etc" at the end of the sentence. An interest in the property of another need not be confined to the examples given and so need not be as much as a licence coupled with an interest. I am satisfied, therefore, that the applicant's permissive occupancy would constitute an interest in land under par (b) even if the limitation in Hornsby v RTA was to be applied. Conclusion and Orders 22 The applicant's permissive occupancy constituted an interest within par (b) of the definition provided in s 4 of the Just Terms Act. The applicant was an owner of an interest in the land that was extinguished at the date of acquisition within the meaning of s 37 of the Just Terms Act. Accordingly, Question 1 is answered yes and Question 2 does not arise for consideration. 23 The applicant seeks the costs of the preliminary point of law hearing. It is yet to be determined whether the applicant is entitled to any compensation at all for the acquisition of his interest in the land. It is not yet known, of course, whether the applicant will be successful in the final hearing of his claim. If he were to fail in the final hearing it would not be appropriate that he recover the costs of this interlocutory hearing. Equally, if the respondent is the successful party in the final hearing, having failed in this interlocutory hearing, it should not be entitled to recover costs in respect of the interlocutory hearing. Accordingly, the costs of this interlocutory hearing should be the applicant's costs in the proceedings (Edenmead v Commonwealth (1984) 4 FCR 348, 59 ALR 359; Coote v Howlett (1987) 3 WN(NSW) 135; Rajski v Computer Manufacture and Design Pty Ltd [1982] 2 NSWLR 443). 24 I make the following orders. The Court orders that: (1) The question, does the applicant have an interest in the acquired land (Lot 3541 in Deposited Plan 1044499) that was divested, extinguished or diminished by the acquisition notice? Be answered: Yes. (2) The costs of the hearing of two preliminary questions of law are to be the applicant's costs in the proceedings. (3) The exhibits, except for Exhibit 2, may be returned. I hereby certify that the preceding 24 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd.

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