Acker & Ors v Whitsunday Regional Council [2010] QPEC 95 (2010) 181 LGERA 1

PLANNING & ENVIRONMENT COURT OF QUEENSLAND CITATION: Acker & Ors v Whitsunday Regional Council [2010] QPEC 95 PARTIES: FRED ACKER, GERILYN POLANSKI AND CARMICHAEL CONSULTING PTY LTD (appellants) v WHITSUNDAY REGIONAL COUNCIL formerly BOWEN SHIRE COUNCIL (respondent) FILE NO/S: 2374/09 DIVISION: Planning and Environment PROCEEDING: Originating application ORIGINATING COURT: Planning and Environment Court, Brisbane DELIVERED ON: 1 October 2010 DELIVERED AT: Brisbane HEARING DATE: 14 April 2010, last submission received 24 April 2010 JUDGE: Judge Rackemann ORDER: That the appeal is dismissed. CATCHWORDS: PLANNING AND ENVIRONMENT Appeal from the Building and Development Tribunal – enforcement notice issued pursuant to Section 248 Building Act (1975) for demolition of a fire damaged house – whether the appellants are owners of the property within the meaning of the Act – where owners defined as the persons entitled to receive the rent - where subject property sold to purchasers who had paid for the property and received an executed transfer - the transfer not yet registered – where vendor bare trustee of the legal estate – where reversionary estate passes in equity – Section 117 Property Law Act (1974) Building Act (1975) Integrated Planning Act (1997) Land Title Act (1994) Property Law Act (1974) Bunny Industries Ltd v FSW Enterprises Pty Ltd [1982] Qd R -- 1 of 9 -- 2 712 Chang v Registrar of Titles (1976) 137 CLR 177 Grzegolec v Grzegolec [2007] QSC 296 Kern Corporation v Walter Reid Trading Pty Ltd (1987) 163 CLR 164 Road Australia Pty Ltd v Commissioner of Stamp Duties [2001] 1 Qd R 327 Re F.A.I Leasing Pty Ltd [1994] 2 Qd R 482 Re Partnership Pacific Securities Ltd [1994] 1 Qd R 410 Stern v McArthur (1988) 165 CLR 489 Schalit v Joseph Nadler Ltd [1933] 2 KB 79 Tara Shire Council v Garner & Ors [2003] 1 Qd R 556 COUNSEL: Mr T Matthews for the appellants Mr S Malcolmson for the respondent SOLICITORS: Cusak Galvin and James Solicitors for the appellants Groves and Clark Solicitors for the respondent [1] On 29 March 2006 a building situated at 14 Carpet Street Collinsville was extensively damaged by fire. It has remained in a derelict state since. The local government formed the opinion that it was in a dangerous state and, understandably, wishes it to be demolished and removed from the site. To that end it issued enforcement notices under Section 248(1) of the Building Act (1975), which provides as follows: “248 Enforcement notices (1) A local government may give a notice (an enforcement notice) to the owner of a building, structure or building work if the local government reasonably believes the building, structure or building work- (a) was built before the commencement of this section without, or not in accordance with, the approval of the local government; or (b) is dangerous; or (c) is in a dilapidated condition; or (d) is unfit for use or occupation; or (e) is filthy, infected with disease or infected with vermin.” -- 2 of 9 -- 3 [2] Pursuant to Section 249 of the Building Act (1975), an enforcement notice may require a person, amongst other things: “(a) to apply for a development permit; … (g) to demolish or remove the building or structure.” In this case the notices were said to require the owner to “demolish and remove the dwelling by lodging a development application.” The wording is clumsy, but was obviously intended to require the owner to demolish and remove the dwelling and to obtain the necessary permit in order to do so. Failure to comply with an enforcement notice constitutes an offence. [3] The appellants were issued with a notice, although similar notices had previously been issued to at least one other person. As can be seen from Section 248 of the Building Act (1975), such a notice may only be given to “the owner.” The appellants deny that they were, or have since become, the owners, within the meaning of that expression for the purposes of the Building Act (1975). That is the sole issue in this appeal. [4] The appellants unsuccessfully appealed, against the issue of the enforcement notice, to the Building and Development Tribunal (“the Tribunal”). They now seek to appeal the decision of that tribunal. Such an appeal is limited to errors of law or want of jurisdiction.1 The subject appeal raises an issue of law as to whether, properly construed, the expression extends to the appellants, given the uncontested factual circumstances. [5] “Owner,” for the purposes of the Building Act (1975), is defined in the Act by reference to a number of circumstances specified in subparagraphs (a) to (h) of the definition, none of which are applicable here. Of relevance in this case, however, is sub-paragraph (i), which is as follows: (i) if paragraphs (a) to (h) do not apply - the person for the time being entitled to receive the rent for the building or structure or would be entitled to receive the rent for the building or structure if the building or structure were let to a tenant at a rent.” [6] The subject enforcement notice was issued on 2 August 2007. At that time, and at all other material times, the registered proprietor of the land was, and remains, Mr Kable. That provides the cornerstone for the appellants’ contention that they were not, and are not, the owners. [7] In September 2004 the appellants entered into an agreement to purchase a large number of properties from Mr Kable. At that time Mr Kable was indebted to a company by the name of Atlantic Funds Management Ltd (AFML). By the contract with Mr Kable, the appellants agreed to discharge Mr Kable’s indebtedness to AFML, to assume all rates and land tax liabilities in respect of the properties and to pay him a sum of $135,000 for the properties listed in a schedule to the contract. The schedule was not before the Tribunal. The evidence was that the subject 1 Section 4.1.37 Integrated Planning Act (1997). -- 3 of 9 -- 4 property was not listed in the schedule, although it is said that there was an oral agreement for the subject property to be transferred as if it was. [8] Mr Kable executed an instrument of transfer of the subject land on 23 September 2004 and the appellants’ solicitor executed the same transfer, on their behalf, in early 2005. The transfer recorded the consideration for the transfer as $9,000. It is unnecessary for me to pause on the contractual position further. The Tribunal determined the matter on the basis that the appellants purchased the subject land pursuant to the agreement of 23 September 2004, and that was not challenged on appeal. Indeed the appellants’ outline of argument records, as one of the ‘background’ facts, that: “The appellants, as purchasers, are entitled to be registered as proprietors of the land pursuant to a contract dated 3 September 2004 with one Glenn Barrie Kable as vendor (“Kable”).” I take the reference to a contract dated 3 September 2004 to be an erroneous reference to the one dated 23 September 2004. It was also common ground that Mr Kable was a paid vendor and should be regarded as a trustee of the legal title.2 [9] The appellants tried to register the transfer, but were unsuccessful. That was because a certificate of title had been issued and was being held by a solicitor who had done work for both Mr Kable and for the appellants. That solicitor refused to lodge the duplicate to enable the transfer to be registered, because he was purporting to exercise a lien for unpaid fees. Indeed, both Mr Kable and the appellants were in dispute with the same solicitor regarding fees. No formal steps have been taken to resolve that issue. The appellants however: (i) lodged a caveat claiming “a legal and beneficial interest in fee simple in the property pursuant to a settled contract of sale between the caveators as transferees and the caveatee as transferor of the property…;” and (ii) entered into an instalment contract to sell the property for $30,000. That contract was dated 22 January 2005, but was subsequently terminated on 27 September 2006. [10] The local government initially issued an enforcement notice to the registered proprietor and, indeed, prosecuted him for failing to comply with the notice. When the matter came before the court, however, it offered no evidence and the complaint was dismissed. [11] The local government was also in correspondence with the purchaser under the instalment contract. That person had insured the property and it was hoped that the cost of demolition and removal would be covered by that insurance. The insurer, however, declined insurance, for reasons which are not presently relevant. The local government now looks to the appellants. [12] The appellants were initially prepared to comply and, indeed, made a development application. However, their enthusiasm waned once it was realised that they would be stuck with substantial demolition and removal costs, which would not be met by 2 See T1-7, line 52, T1-26. -- 4 of 9 -- 5 any insurer. They would then have to resolve the issue which was delaying the registration of the transfer, before selling the property. [13] The right to receipt of the rent passes with the reversionary estate. At least by the time the transfer is registered, a purchaser of the fee simple becomes so entitled. That is so even where there was no privity of contract between the new owner and the tenant. So much is provided for by Section 117 of the Property Law Act (1974) which provides, in part, as follows (my underlining): “(1) Rent reserved by a lease, and the benefit of every covenant, obligation, or provision contained in the lease, touching and concerning the land, and on the lessee’s part to be observed or performed, and every condition of re-entry and other condition contained in the lease, shall be annexed and incident to and shall go with the reversionary estate in the land, or in any part of the reversionary estate, immediately expectant on the term granted by the lease, despite severance of that reversionary estate, and without prejudice to any liability affecting a covenantor or the covenantor’s estate. (2) Any such rent, covenant, obligation, or provision shall be capable of being recovered, received, enforced, and taken advantage of, by the person from time to time entitled, subject to the term, to the income of the whole or any part, as the case may require, of the land leased.” [14] The equivalent of that provision has been in the statute books in England since 1540. It is concerned with the rights of the assignee of the reversionary estate to rent (and the benefit of other covenants, obligations or provisions which touch and concern the land). Subsection (2) is a procedural provision, which permits such a person to enforce those rights, in their own name. It does not confer substantive rights on others. For that reason, it cannot be availed of by, for example, a mortgagee in possession3or the beneficiary of a trustee or a sub-lessor.4 I do not accept the submission, on behalf of the appellants, that the formulation in subparagraph (i) of the definition of “owner” was intended to catch a mortgagee in possession, in addition to a registered proprietor. [15] Here, the transaction has settled, in the sense that the vendor has been paid and has handed over a transfer in registrable form, but the transfer has not yet been registered. The legal title to the reversionary estate has not yet passed to the appellants. The vendor retains an indefeasible legal title,5 subject to certain exceptions.6 It was submitted, on behalf of the respondent, however, that the position in equity is different, that the reversionary estate has passed in equity to the appellants and that they are therefore entitled to possession and to the receipt of the rent, notwithstanding that legal title has yet to pass. 3 Re Partnership Pacific Securities Ltd [1994] 1 Qd R 410, Re F.A.I Leasing Pty Ltd [1994] 2 Qd R 482. 4Schalit v Joseph Nadler Ltd [1933] 2 KB 79. 5 Section 184 Land Title Act (1994). 6 Section 185 Land Title Act (1994). -- 5 of 9 -- 6 [16] In accepting the respondent’s contention at first instance, the tribunal placed weight upon the claims made by the appellants in the caveat and on their conduct in entering into an instalment contract to on-sell the property. Those matters are however, neither here not there. What matters, for the purposes of deciding whether the respondent had the power to issue the enforcement notice, is whether the appellants were indeed the “owners,” not whether the appellants claimed an interest or whether they acted as if they were the owners. [17] While legal title does not pass until registration of the transfer, rights and interests are created from the time the vendor and the purchaser enter into the agreement for sale. From that time they have, for example, rights to enforce obligations under the contract. Further, the purchaser has an insurable interest in the building or structures on the property. Absent any particular provision (and there is none here), the purchaser is ordinarily obliged to complete the transaction even if a building on the land is burned down in the meantime. None of this, however, means that the reversionary estate has passed in equity. [18] While an unpaid vendor under a contract for sale has sometimes been described as a trustee, that is so only in a limited or modified sense. In Chang v Registrar of Titles,7 Jacobs J said: “Moreover, it is doubtful whether a vendor under a contract of sale can properly be described as a trustee within the meaning of the Trustee Act unless settlement has taken place and all that remains to be done is to transfer or convey an outstanding legal estate. It is true that a vendor at the stage of contract where the contract is enforceable by specific performance has at times been described as a trustee: see eg. Shaw v Foster; Lysaght v Edward; and if by that no more is meant that that the purchaser is regarded by equity as the beneficial owner of the estate of which the vendor is the legal owner then there is no difficulty in describing the vendor as trustee. However, if by such a description it is sought to transpose into the law of vendor and purchaser the law governing the rights and duties of trustees, statutory or otherwise, considerable difficulties arise. The present case is an example of the confusion which can arise from giving this description to a party to a contract for the sale of land assumed to be capable of specific performance simply because he has the obligation under the contract to transfer the property to the other as beneficial owner. Where there are rights outstanding on both sides, the description of the vendor as a trustee tends to conceal the essentially contractual relationship which, rather than the relationship of trustee and beneficiary, governs the rights and duties of the respective parties.” [19] In Kern Corporation v Walter Reid Trading Pty Ltd8 it was said by Deane J: “For limited purposes, the distinction between legal title and beneficial ownership may provide a useful reference point in describing the position of the ordinary unpaid vendor of land under an uncompleted contract of sale. However, and with due respect to some past statements of high authority to the contrary, it is wrong to characterise the position of such a vendor as that of a trustee. True it is that, pending payment of the purchase 7 (1976) 137 CLR 177 at 189-190. 8 (1987) 163 CLR 164 at 191-192. -- 6 of 9 -- 7 price, the purchaser has an equitable interest in the land which reflects the extent to which equitable remedies are available to protect his contractual rights and that the vendor is under obligations in equity which attach to the land. None the less, the vendor himself retains a continuing beneficial estate in the land which transcends any “lien” for unpaid purchase money to which he may be entitled in equity after completion. Pending completion, he is beneficially entitled to possession and use. Pending completion, he is beneficially entitled to the rents and profits. If the purchaser enters upon the land without the vendor’s permission and without authority under the contract, the vendor can maintain, for his own benefit, an action for trespass against the purchaser. While the practical significance of those continuing beneficial rights of the vendor may vary according to particular circumstances (eg whether completion is already overdue or is not due for some lengthy period), it is both inaccurate and misleading to speak of the unpaid vendor under an uncompleted contract as a trustee for the purchaser.” [20] Similarly, in Stern v McArthur9 Deane and Dawson JJ said: “It has been said in a variety of ways that a vendor under a valid contract for the sale of land holds the land as trustee for the purchaser. He is, however, a trustee only in a qualified sense and the qualifications are such as to rob the proposition of much of its significance or, for some purposes, its validity… the vendor retains a substantial interest in the property until the whole of the purchase money is paid. He is entitled, subject to the contract, to possession and to the rents and profits in addition to a lien on the land as security for any amount outstanding. Any right to equitable ownership on the part of the purchase is contingent only… it is not really possible with accuracy to go further than to say that the purchaser acquires an equitable interest in the land sold and to that extent the beneficial interest of the vendor in the land is diminished.” [21] Whatever rights were acquired by the appellants upon entering into the agreement to purchase the property, those rights did not constitute full beneficial ownership. Further, to the extent that the vendor could then be described as a trustee (if at all), he was not a bare trustee. Absent express provision to the contrary (and there was none here), the appellants did not get an immediate right to possession, because a beneficiary is entitled to the possession of trust assets if the trust is a ‘bare trust,’ but not otherwise.10 Similarly, the rights to receipt of the rent did not then pass. [22] In Road Australia Pty Ltd v Commissioner of Stamp Duties,11 the Court of Appeal, after reviewing the authorities, including Kern Corporation Ltd v Walter Reid Trading Pty Ltd12 and Stern v McArthur,13 held: “There being no decision requiring us to hold that the beneficial interest in land sold passes in it entirety, on the making of the contract, to the purchaser, we would not accept that proposition. It can only be true if it is 9 (1988) 165 CLR 489 at 521-522. 10 Jacobs’ Law of Trusts in Australia (7 th Edition) [315]. 11 [2001] 1 Qd R 327 at 34. 12 (1987) 163 CLR 164. 13 (1988) 165 CLR 489. -- 7 of 9 -- 8 correct that there can be a holder of the entire beneficial interest in a piece of land who has not right to enter upon it, to take possession of it, to use it or to receive rents from it.” [23] As at the time the enforcement notice was issued, however, Mr Kable was a paid vendor. The standard QLS/REIQ contract for the sale of land makes express provision that the buyer is entitled to rent after the settlement date, but there was no such express provision in the agreement between Mr Kable and the appellants. Nevertheless, it has been recognised that a paid vendor becomes a bare trustee of the legal estate, pending its transfer. This is an illustration of the maxim that equity looks on that as done which ought to be done. [24] In Chang v Registrar of Titles,14 Mason J said: “It is enough to say that is has been accepted in decisions in England and Australia that at least when the purchaser has paid the purchase money the vendor becomes a constructive trustee of the property sold and that he is a trustee of property within the meaning of the provisions of the Trustee Act relating to vesting orders.” [25] Similarly, Jacobs J15 referred to payment of the purchase price on a settlement “after which the vendor has no right of his own outstanding but is the bare trustee of the legal estate.” [26] As regards as the transformation of a vendor to a bare trustee, upon payment of the purchase price, Connolly J said in Bunny Industries Ltd v F.S.W Enterprises Pty Ltd:16 “On the execution of the contract the vendor becomes a trustee for the purchaser. He is not however a bare trustee for he has a personal and substantial interest to the extent of the unpaid purchase moneys. He is “in progress towards” bare trusteeship and finally becomes such when the whole of the purchase moneys are paid and he is bound to convey.” [27] This was further examined by the Court of Appeal in Tara Shire Council v Garner & Ors17 where it was said (my underlining): “Counsel for the applicant disputed the concept that the vendor under an executed contract is a trustee for the purchaser. He referred to the discussion by Deane J in Kern Corporation v Walter Reid Trading Pty Ltd, in which his Honour held that an unpaid vendor cannot be characterised as a trustee for the purchaser. Deane J emphasised that an unpaid vendor continues to have rights over the property, including the right to receive rent, and to maintain an action for trespass. However, Deane J’s dictum did not relate to the situation where, as here, the vendor has been paid. In his judgment, Connolly J draws a distinction between paid and unpaid vendors, noting that an unpaid vendor continues to have “a personal and substantial interest to the extent of the unpaid 14 (1976) 137 CLR 177 at 185. 15 At 189. 16 [1982] Qd R 712 at 715. 17 [2003] 1 Qd R 556 at 573-574, see also Grzegolec v Grzegolec & Anor [2007] QSC 296 at [11]. -- 8 of 9 -- 9 purchase moneys.” However, once the purchase price is paid the position of the vendor progresses to a bare trusteeship, under which the only obligation is to convey the land. It may therefore be concluded that, whatever the position of an unpaid vendor, a paid vendor holds the land on bare trust for the purchaser. This analysis is consistent with the view expressed by Thomas J in Clark v Raymor (Brisbane) Pty Limited [No 2]: “… it is not correct to say that the purchaser’s interest never changed after entering into the contract. The rights of the parties certainly alter upon the payment of the purchase price upon a settlement, after which the vendor has no rights of his own outstanding, but is the bare holder of the legal estate (Chang v Registrar of Titles (1976) 137 CLR 177 at 189).” In the present case, if follows that the Garners must be deemed to have held Lot 3 on a bare trust from the time when the purchase price was paid. This is a resulting trust arising from operation of law.” [28] It was pointed out, on behalf of the appellants, that the vendor has not done all that he is required to do, in that he has not had the certificate of title lodged with the titles office. That is not an obligation which arose expressly under the contract, but Section 167 of the Land Titles Act (1994) requires the vendor to do all things necessary to give effect to the terms to the instrument of transfer and, more specifically, Section 61 of the Property Law Act (1974) provides that, under a contract for the sale of registered land, the purchaser is entitled, at the cost of the vendor, to have the relevant certificate of title lodged by the vendor. That this obligation has yet to be performed, however, is not inconsistent with the existence (or nature) of the bare trust, under which the vendor has the obligation to effect the transfer of title. [29] A bare trustee is one who has no interest in the trust assets other than that existing by reason of the office of trustee and the holding of the legal title, pending registration of the transfer.18 Other than for effecting the transfer, the paid registered proprietor has no active duty to perform. The position of such a trustee is to be contrasted with a trustee who holds legal title for the purposes of using and profiting from the land for the financial benefit of a beneficiary. The role of the bare trustee is much more limited. Such a trustee would not ordinarily be at liberty to demolish buildings or structures on the land, as the enforcement notice directs. The full equitable title in the reversionary estate passed to the appellants. With that passed the right to possession and to receipt of the rent. They were, at the relevant time, the owners, for the purposes of sub-paragraph (i) of the definition in the Building Act (1975). [30] I have reached the same conclusion as did the tribunal, on the issue of ownership, albeit for somewhat different reasons. [31] The appeal is dismissed. 18 Jacobs’ Law of Trusts in Australia (7 th Edition) [315]. -- 9 of 9 --