Central Coast Aquatic Club Incorporated, Re [1997] QLC 105

LAND COURT BRISBANE 21 July 1997 Re: Liability to Forfeiture of Special Lease 35/47424, Rockhampton District - Lessee: Central Coast Aquatic Club Incorporated. D E C I S I O N (Hearing at Rockhampton) Background: The above matter came before the Court at Rockhampton on 19 June 1997, in response to a notice of referral of 27 August 1996, from the Minister of Lands in pursuance of the provisions of section 153 of the Land Act 1994. The grounds of the notice establish that the lessee had failed to comply with the following conditions: "The lessee shall use the leased land for the purposes incidental to water skiing and for no other purpose. " The land, the subject of Special Lease 35/47424, is described as Lot 76 on Plan LN1524 and has an area of 182 square metres. The lease originally issued under the provisions of section 203 of the Land Act of 1962 as Special Lease No 29133 on 1 April 1965, for a term of 20 years in the name of Wilfred Bannerman Kennedy, Lyle Leslie Hodda and Vincent Charles Murphy as Trustees of Central Coast Water Ski Club. The purpose of the Special Lease was for a clubhouse, with special conditions that within twelve (12) months improvements were to be erected with the value not less than $800, and the leased area to be used for purposes incidental to water skiing. It is noted that in 1975 improvements included the club lease and retaining wall. On 1 October 1985, a further special lease (Special Lease No 35/47424) was issued for the site for a further period of 20 years for the purpose of Recreation (Ski Club) with the special condition that the leased land be used for purposes incidental to water skiing. On 18 October 1992, the Central Coast Aquatic Club Incorporated, through the then Secretary Mrs Beverley Marsh, agreed to be bound by the terms and conditions of the lease, which was subsequently transferred to that body for the continuation of the lease period. Following an extended period of activities which were in breach of the lease [1997] QLC 105 -- 1 of 7 -- 2 conditions, the Chief Executive has sought the direction of the Court to determine whether the lease should be forfeited to the State in terms of section 234 of the Land Act 1994. The Chief Executive, Department of Natural Resources, was represented by Mr J Thomas, Senior Valuer. There was no appearance by the lessee, although Mrs Beverley Marsh had forwarded a facsimile advice to the Department on Wednesday, 18 June 1997, advising that she no longer had any interest in the property. A copy of that letter was provided to the Court. Following this discussion with Mr Thomas, it was agreed to continue hearing the forfeiture evidence in her absence, to ensure that any rights of Mrs Marsh were given full consideration, although Mrs Marsh did not resist the forfeiture. In this respect it was noted that in her letter of 18 June 1997, Mrs Marsh had reflected some on-going interest in the lease only in as much as she noted: "Should there be any possibility of reimbursement, I originally spent about $25,000 for and on the property. " Evidence was provided by Mr Thomas that this lease had been the subject of considerable concern in that it had a long history of non-compliance with the lease conditions. There had been representations from the community for the lease to be withdrawn in view of its use by commercial-type activities, and complaints from the local Council and local residents in respect of activities on the lease. The Departmental file ROC 216 had been the subject of a Freedom of Information request in respect of activities upon the lease area. The lease has now been abandoned, and photographic evidence of 10 June 1997 showed the building in a state of disrepair with broken windows, and internal sheeting badly damaged. The internal timbers are infected with white ants. The original lease was set up for a club-oriented purpose for water skiing on the causeway waters adjoining the lease. Subsequently the causeway has silted up and is no longer appropriate for skiing. The water ski club relocated to the Fitzroy River, upstream of the City of Rockhampton. Reasons given for the relocation were: (1)Silting of lake to such extent that only 1 metre depth may be recorded at high tide. (2)Greater usage of lake by families seeking safe and sheltered recreational area - thus creating a conflict of over-lapping usage and possible problem/serious accidents occurring. It was understood that Mrs Marsh later purchased the lease with the intention of running a commercial enterprise, and in fact had allowed to be operated, under an agreement with other parties, a jet ski hire business from the premises. By direction -- 2 of 7 -- 3 from the Chief Executive this was terminated on 14 February 1996, following complaints. In support of the history of problems associated with the lease, Mr Thomas provided the following chronology of events: •01.04.1965Special Lease 29133. Term 20 years from 1 April 1965. Trustees of Central Coast Water Ski Club. Purpose - Club house. Conditions - Twelve months erect improvements to value not less than $800. Use lease area for purposes incidental to water skiing. • 01.10.1985Special Lease 35/47424. Term 20 years from 1 October 1985. Purpose - Recreation (Ski Club). Conditions - Use leased land for purposes incidental to water skiing. •15.11.1988Application to sub-lease whole area not allowed. •16.08.1989Club advised unable to use area. •19.08.1989Inspection report that subject area no longer used for any purposes - club relocated to Fitzroy River - reasons - silting of causeway - conflict of over-lapping uses. •22.02.1990Concerns by Jim Pearce MLA re sale or re-leasing of subject. Transfer to Les Doblo refused. •14.11.1990Application by Naval Reserve Cadets for Livingstone Shire to acquire lease, subject to further application for additional area. •04.04.1991Propose transfer Trustees of Central Coast Water Ski Club to Naval Reserve Cadets. •03.08.1991Newspaper advertisement re official opening 2/8/91 of Jetski Hire on Causeway Lake. •07.10.1992Telephone complaints of people living on the subject. • 09.10.1992Inspection of site: •Victor John Werne and Paul Williams plan to sub-lease off Beverley Marsh. •Proposal to use for Jetski hire. •Currently residing in building. •Being used as Jetski hire for past 18 months. -- 3 of 7 -- 4 •Paying Ski Club $100 per week for use. • 12.10.1992Report of Illegal Usage prepared. •18.12.1992Central Coast Aquatic Club Incorporated agree to be bound by the conditions of the lease. •05.07.1993Proposed transfer to Central Coast Aquatic Club. •05.01.1995Complaint by Barry Slattery that person is living in the building. • 09.02.1995Lessee advised to remove occupants within 14 days. • 22.03.1995Complaints from Council and local residents regarding caretaker and guard dogs. •18.04.1995Request from Ringwood Security Services requesting caretaker approval. • 03.05.1995Complaint from Council re caretaker and dogs. • 21.08.1995Inspected site and found no evidence of use. • 22.08.1995Advice from Mrs Marsh that she has a person interested in buying the clubhouse. • 04.08.1995Letter of agreement between Beverley Marsh and Walter Pedron. • 23.10.1995Complaint from Barry Slattery that Jetski hire business now operating. • 09.12.1995Letter of complaint from Barry Slattery to four Departments. • 12.12.1995Lands Department seeks views from Council, DPI, Fisheries and Harbours and Marine (Transport) re future use for commercial purposes. • 19.12.1995Letter from Barry Slattery seeking advice on what is being considered. •08.01.1996Request from Barry Slattery for further information. •04.01.1996Letter of interest from Rick Nagle re purchase of lease or freeholding and operation of a business. • 07.02.1996Request by Barry Slattery for access to file ROC 216 under -- 4 of 7 -- 5 FOI. • 14.02.1996Letter to Beverley Marsh confirming that subject not to be used for commercial activity. • 29.01.1996Enquiry from Morris English re information about subject which is up for sale. • 05.02.1996Memo to Livingstone Shire re English's proposal for boat hire from the subject. • 04.03.1996Barry Slattery has access to file under FOI. • 05.03.1996Letter to Slattery advising Department of Natural Resources is commencing forfeiture action for non-compliance with the conditions of the lease. From the evidence of Mr Thomas it would appear that the Department has had little success in obtaining written responses from Mrs Marsh. On 17 June 1997, the day before the hearing, Mr Thomas had telephoned Mrs Marsh to determine if there were any matters for discussion prior to the hearing. Mrs Marsh had responded that she had not received any correspondence from the Court in respect of the hearing, and that she had no intention of attending the hearing. The Court noted that the notice of hearing had not been returned to the Court by Australia Post, and there was no reason to explain why the court notice had not been received. Subsequent to Mr Thomas' discussion with Mrs Marsh, she forwarded a letter by facsimile to the Department as noted earlier. In respect of the use of the premises for commercial purposes, Mr Thomas noted that on at least two occasions the Department has had to remove residents from the building for non-compliance, and also had to cease commercial usage because it was contrary to the purpose of the lease. The Department did consider whether it was appropriate to amend the lease to a commercial operation, but this was not agreed to by the Livingstone Shire Council, because all other commercial operations for the causeway are on the northern side of the causeway. In respect of the breach of the lease conditions, Mr Thomas gave evidence that, under section 234 of the Land Act 1994, a lease may be forfeited: (a)if the lessee defaults in the payment of an amount payable to the State under this Act for the lease; or (b)if the lessee breaches a condition of the lease; or (c)if the lessee contravenes a provision of this Act in relation to the lease; or (d)if the lessee acquired the lease by fraud. -- 5 of 7 -- 6 In respect of the current lease on SL 35/47424, Mr Thomas advised that the lessee was in fact in breach of section 234(a), (b) and (c). In particular, in respect of section 234(a), he noted that the lessee was at this time in arrears for a total of $455.75. As the annual rent is currently $194 per year, this represents approximately two years in arrears. Under section 196 of the Act, the Minister may exercise the following actions where the lessee has not paid the rent within the prescribed time, or as extended by the Minister: (a)take action in a court of competent jurisdiction to recover the rent or instalments and penalty interest owing; or (b)forfeit the lease under Chapter 5, Part IV; or (c)cancel the licence or permit. The Minister has now referred the matter to the Court for forfeiture under section 238(1). In examining the evidence of Mr Thomas and the chronology of events leading up to this time, there is no doubt that the lessee has had a history of non-compliance with the conditions of the lease. Certainly, in its early years of development, the building was used as a water ski club, but with the effluxion of time, the silting up of the causeway has forced the original lessees to relocate to more suitable premises. The evidence that the Livingstone Shire Council would not support a commercial boat operation on the southern bank of the causeway, would appear to be for sound planning purposes, as it seeks to group commercial activities to the north side of the causeway. I accept Mr Thomas' comments that Mrs Marsh may well have been under the impression that she could use the lease for a commercial purpose at the time of her acquiring the lease in 1992. Certainly, if she considered the weekly rental agreement of $100 per week that she had arranged with Messrs Werne and Williams, in the light of her annual rent to the Department of $194 per year, she could have seen that as an attractive arrangement, albeit she had apparently invested, by her letter of 18 June 1997, an amount of $25,000 for the lease and buildings. However, the terms of the lease are very explicit and she could not have misinterpreted their intentions. In the matter of Mrs Marsh's comments in respect of any possible reimbursement to her, I accept Mr Thomas' advice that in the normal course of re-arranging the future use of the subject, should the forfeiture proceed, there may be some future use of the building which could warrant some reimbursement to the former lessee subject to section 243 of the Act. However, that would be entirely a matter for the Department at a future time. Mr Thomas assured the Court that was -- 6 of 7 -- 7 the purpose of Mrs Marsh including the statement of her costs in her letter of 18 June 1997. In respect of action for forfeiture of a lease, under section 238(1) the Minister must refer the matter to the Court to decide whether the lease may be forfeited, and under section 238(3) state the grounds upon which the lease may be forfeited. Details of this intention must also be served on the lessee (section 238(2)), and a copy of that notice filed with the Court (section 238(4)). In this matter the requirements of the Act have been complied with. I note also that under section 297 of the Land Act 1962, under which the original lease was granted, the power of the Minister to refer the matter to the Court for forfeiture covered non-compliance with conditions of the lease, but excluded the non-payment of rents. Forfeiture under section 196 of the Land Act 1994 is an action at the discretion of the Minister under Part 4 of Chapter 5 of that Act. For whatever reasons I find that there has been a breach of the conditions of the lease on several occasions, and that the lease rent is now at least two years in arrears. The Department of Natural Resources would appear to have afforded the lessee ample opportunity to conform to the conditions, and has in fact responded to community pressure to refuse activities on the subject which are contrary to the lease. This being the case, I determine that the liability of SL35/47424, Rockhampton District, to forfeiture by reason of the failure of the lessee to comply with the conditions under section 234(b), is established. (NG Divett) Member of the Land Court -- 7 of 7 --