Britcourt P/L as Trustee for HP Clegg Superannuation Benefit Fund v Curlew Apartments P/L; Morris & Ors v Curlew Apartments P/L; Griffiths & Anor v Curlew Apartments [2005] QSC 234 [2006] 1 Qd R 101

SUPREME COURT OF QUEENSLAND CITATION: Britcourt P/L as Trustee for HP Clegg Superannuation Benefit Fund v Curlew Apartments P/L; Morris & Ors v Curlew Apartments P/L; Griffiths & Anor v Curlew Apartments P/L [2005] QSC 234 PARTIES: BRITCOURT PTY LTD as TRUSTEE FOR HP CLEGG SUPERANNUATION BENEFIT FUND ACN 003 473 587 (plaintiff) v CURLEW APARTMENTS PTY LTD ACN 098 009 619 (defendant) BARBARA MORRIS, GARY KLEYN and DARREN MORRIS (plaintiffs) v CURLEW APARTMENTS PTY LTD ACN 098 009 619 (defendant) KIM GRIFFITHS and DEBORAH GRIFFITHS (plaintiffs) v CURLEW APARTMENTS PTY LTD ACN 098 009 619 (defendant) FILE NO/S: BS 3380 of 2005 BS 3381 of 2005 BS 3382 of 2005 DIVISION: Trial Division PROCEEDING: Hearing ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 30 August 2005 DELIVERED AT: Brisbane HEARING DATE: 15 August 2005 JUDGE: McMurdo J ORDER: In each proceeding, it will be declared that the contract between the parties is not one to which s 8 of the Land Sales Act 1984 (Qld) applies CATCHWORDS: ENVIRONMENTAL PLANNING – DEVELOPMENT CONTROL – CONTROL OF PARTICULAR MATTERS – SUBDIVISION – TERMINOLOGY – ALLOTMENT – where defendant held subleases from lessee of Hamilton -- 1 of 6 -- 2 Island – where defendant proposed to surrender subleases to enable redevelopment of land into eight units, with each new unit to be the subject of new sublease – where plaintiffs had purchased proposed units – where s 8(1A) of the Land Sales Act 1984 (Qld) provides that a person may sell a “proposed allotment” of State leasehold land only if the lessee has the Minister’s approval, under the Land Act 1994 (Qld), to subdivide the land – whether proposed subleases are “proposed allotments” ENVIRONMENTAL PLANNING – DEVELOPMENT CONTROL – CONTROL OF PARTICULAR MATTERS – SUBDIVISION – WHAT CONSTITUTES SUBDIVISION – OTHER STATES – whether proposed subleasing arrangement is a “subdivision” requiring Ministerial approval under s 351 of the Land Act 1994 (Qld) Land Act 1994 (Qld), s322, s 327, s 328, s 332, s 335, s 340, s 351, s 354 Land Sales Act 1984 (Qld), s 8(1A), s 8(2) COUNSEL: K S Howe, with P Franco, for the plaintiffs A M Daubney SC for the defendant SOLICITORS: William R Wilson & Associates as Town Agents for Astley Thompson Cox (Penrith, NSW) for the plaintiffs Tucker & Cowen for the defendant [1] McMURDO J: Hamilton Island is leased from the Crown by Hamilton Island Enterprises Pty Ltd. The lease is a perpetual lease and is taken to have been granted under the Land Act 1994 (Qld).1 [2] The defendant in these three cases, Curlew Apartments Pty Ltd, holds some ten subleases from Hamilton Island Enterprises. It proposes to redevelop that land (and it seems some other land) by the construction of eight units within four duplex dwellings. The defendant’s present subleases are to be surrendered, and each of the new units is to be the subject of a sublease from Hamilton Island Enterprises to the defendant. [3] Each of the plaintiffs is a purchaser of a proposed unit, under a contract made with the defendant. The contracts are in substantially identical terms. They define the property to be sold as a proposed lot, as shown on an attached plan, together with shares in a company which is to manage the common property of this development. The lot is to be sold by a transfer by the defendant of the relevant new sublease, a draft of which is incorporated in the contract. In each case, the proposed term of the sublease would expire in 2078 with an option to renew for a further 78 years. 1 The lease was granted in 1981 under the now repealed Land Act 1962 (Qld), but continues in force as if under the Land Act 1994 by s 508 of that Act -- 2 of 6 -- 3 The issue [4] The defendant now refuses to perform these contracts, upon the basis that they were made by it in contravention of s 8(1A) of the Land Sales Act 1984 (Qld), so that according to s 8(2), each contract is void. The plaintiffs say that s 8(1A) does not apply to their contracts, and that they should have specific performance. Alternatively, they allege that if their contracts were within s 8(1A), they are entitled to relief under the Trade Practices Act 1974 (Cth) on the basis that they were misled or deceived into believing that their contracts were effective. [5] The parties agreed that I should determine first the question of whether s 8(1A) does apply. They also agree that if it does not apply, there is no basis for the defendant to refuse to perform, and that orders for specific performance would be appropriate. Land Sales Act [6] The Act regulates a sale of what it calls a proposed allotment or a proposed lot. Under the Act, a lot is a piece of property which exists through the operation of the Building Units and Group Titles Act 1980 (Qld), the South Bank Corporation Act 1989 (Qld), or the Body Corporate and Community Management Act 1997 (Qld), none of which is relevant to the present cases. The term “proposed allotment” is defined to mean: “a single parcel of land, other than a lot within the meaning of this Act, the boundaries of which are shown, or to be shown, on a plan of survey that is to be registered under the Land Act 1994 or Land Title Act 1994.” [7] Part 2 regulates the sale of proposed allotments. It includes s 8 which provides as follows: “8 Restriction on selling (1) A person may sell a proposed allotment of freehold land only if, when the purchaser enters upon the purchase of the allotment – (a) if there is no operational work for the proposed allotment – there is an effective development permit for reconfiguring a lot for the allotment; or (b) if paragraph (a) does not apply – there is an effective development permit for the operational work associated with reconfiguring a lot for the allotment. Maximum penalty – 200 penalty units or 1 year’s imprisonment. (1A) A person may sell a proposed allotment of State leasehold land only if, when the purchaser enters upon the purchase of the allotment, the lessee has the Minister’s approval, under the Land Act 1994, to subdivide the land. -- 3 of 6 -- 4 Maximum penalty – 200 penalty units or 1 year’s imprisonment. (2) An agreement made in contravention of this section is void and any person who had paid money thereunder shall be entitled to recover the amount thereof, together with the amount of interest (if any) that has accrued in respect of that amount since the money was so paid, by action as for a debt due and owing to the person by the person to whom the money was paid.” By s 6, the term “sell” includes “agree to sell”, and “State leasehold land” includes land leased under the Land Act. [8] The defendant says that the subject matter of each of these contracts, which is a proposed sublease from Hamilton Island Enterprises, is a proposed allotment. The plaintiffs deny this but in any case they say that the proposed subleasing is not a subdivision, so that the Minister’s approval under the Land Act to subdivide the land is not required. The defendant argues that the subleasing proposed in these cases does require approval as a subdivision under the Land Act. Land Act [9] Part 4 of the Land Act is headed “Dealings affecting land”. It regulates dealings of various kinds including surrenders, subleases and subdivisions. The surrender of a lease is regulated by s 327 and the surrender of a sublease by s 328. Insofar as the proposed development involves the surrender of the existing subleases held by the defendant, it is s 328 which applies. That section does not require the Minister’s approval of the surrender. [10] Division 3 of Part 4 regulates subleases. By its s 332, it requires the Minister’s approval of a sublease (which includes in this context a “sub-sublease”). As the defendant accepts, s 332 requires the Minister’s approval of the new subleases it proposes to take from Hamilton Island Enterprises. [11] Division 5 of Part 4 is headed “Subdividing leases”. Its s 351 requires the Minister’s approval for a subdivision in these terms: “351 Minister’s approval required for subdivision (1) A lease may be subdivided only if the Minister has given written approval to the subdivision. (2) The Minister's approval may be given on the conditions the Minister states in the approval. (3) A condition may be that a plan of survey approved by the Minister and capable of registration be lodged in the land registry.” [12] The defendant argues that s 351 is a further requirement for the Minister’s approval to the proposed subleases. It says that the proposal involves both subleases within Division 3 and a subdivision within Division 5. Its argument accepts that s 351 must apply in order for s 8(1A) of the Land Sales Act to apply. That is because s 8(1A) operates only where the Ministerial approval which is required is of the subdivision of the land. -- 4 of 6 -- 5 [13] Is the proposed subletting a subdivision within s 351? The term “subdivide” is not defined for the purposes of the Land Act or the Land Sales Act. The defendant argues that the very lengthy term of the proposed subleases, especially having regard to the option to renew, makes them something equivalent to a subdivision and which should be regarded as such for the operation of these provisions. [14] That argument cannot be accepted. The distinction between a subletting and a subdivision, according to the law of real property, is clear and it is employed in the drafting of the Land Act. A subdivision within s 351 is a dealing which results in the division of one parcel of land into a number of parcels and the replacement of one lease by a number of leases. Upon the subdivision, the lease which is subdivided ceases to exist. Under a subletting, the grant of the subleases does not put paid to the head lease, and the land demised by the head lease remains as a single parcel of land, amenable to the same title description. [15] Nor does the defendant’s proposal involve the subdivision of the land of an existing sublease. The area the subject of any two or more of the proposed subleases would not be that of the area the subject of any existing sublease. The proposed development uses the combined areas of the existing subleases but there is no subdivision of the area of any existing sublease into distinct areas each to be that of a new sublease. Moreover, s 351 regulates the subdivision of leases, as distinct from subleases. The defendant argues that a sublease is “a lease” for the purposes of s 351(1). But the Act distinguishes between the two in several respects, such as the surrender of leases and subleases which, as I have mentioned, is regulated by, respectively, s 327 and s 328. In the same way, the term sublease is used distinctly from lease in relation to transfers (s 322) and mortgages (s 340). That is also confirmed by s 354 which provides as follows: “354 Conditions of new leases (1) The conditions of a new lease are the conditions agreed between the Minister and the lessee. (2) If the subdivided lease was a term lease, the term of each new lease is the term agreed between the Minister and the lessee. (3) However, if the term of a new lease is longer than the remaining term of the subdivided lease, the Minister must still consider the issues in chapter 4, part 3, division 2 before the new lease is issued.” Consistently with the defendant’s argument as to a lease including a sublease for the purposes of s 351, the defendant would have to argue that “the lessee” in s 354(1) is the sublessee. That provision assumes an agreement as to the conditions of a “new lease” between the Minister and the lessee. As the Minister would not be a party to that sublease, it is difficult to see how that assumption could be made about a sublease. A similar point applies to s 354(2), which is in terms which are apt only in the context of a new lease or leases from the Crown and not in the context of subleases. The notion of a subdivision of the estate or interest of a sublessee is difficult to accept. A subdivision, in its ordinary sense, refers to the substitution for one grant from the Crown (whether freehold or leasehold) of several grants from the Crown. For example in the case of freehold land, the division of the right to possession of the grant of several leases would not be regarded as a subdivision, absent the application of a relevant statute deeming it to be such for a -- 5 of 6 -- 6 particular purpose. The reference in s 351 to a lease, but not to a sublease, is consistent with that ordinary meaning of subdivision. [16] Accordingly, s 351 does not apply to this proposal. The Minister’s approval is required, not by s 351 but by s 332. In terms of s 8(1A) of the Land Sales Act, the approval which is required is not an approval to subdivide the land. At least for this reason, s 8(1A) does not apply to these contracts. [17] The plaintiffs also argue that the property the subject of their contracts is not a “proposed allotment” under the Land Sales Act, because the parcel of land would not be defined “on a plan of survey that is to be registered under the Land Act 1994”. Absent a specific request from the chief executive, a sublease may be created without a plan of survey identifying the land being subleased. In the present cases, the defendant has identified the land on a plan of survey. The evidence does not demonstrate whether the chief executive has required that plan of survey. But the definition of “proposed allotment” is not in terms of a plan of survey being required. It refers to land the boundaries of which are to be shown upon a plan of survey to be registered. The subleases must be registered (s 335) and the proposal seems to be to have a plan of survey within the registered sublease. There is, however, another reason for questioning whether these proposed subleases involve “proposed allotments” which is that they would not create any new “parcel of land”. In the context of this Act, it appears that a “single parcel of land” must be one which separately exists by the terms of the relevant grant from the Crown. That would be consistent with the use of the term in the context of a subdivision in s 8. Conclusion [18] In each proceeding, it will be declared that the contract between the parties is not one to which s 8 of the Land Sales Act 1984 (Qld) applies. I will hear the parties as to what further relief should be granted and as to costs. -- 6 of 6 --