Caboolture Aero Club (Incorporated), Re [1994] QSC 191 [1995] 1 Qd R 591

IN THE SUPREME COURT OF QUEENSLAND O.S. No. 358 of 1994 Brisbane Before Mr Justice Mackenzie [Re: Caboolture Aero Club] IN THE MATTER OF the Local Government Act 1936 (as amended) AND IN THE MATTER OF the Land Act 1962 (as amended) AND IN THE MATTER OF the Caboolture Aero Club (Incorporated) JUDGMENT - MACKENZIE I. Judgment delivered 29 July 1994 CATCHWORDS: COUNSEL: SOLICITORS: HEARING DATE: R. Litster for Applicant M. Hinson for Respondent Hemming & Hart for Applicant Gail Maskiell & Co. for Respondent 6 June 1994 -- 1 of 9 -- IN THE SUPREME COURT OF QUEENSLAND O.S. No. 358 of 1994 IN THE MATTER OF the Local Government Act 1936 (as amended) AND IN THE MATTER OF the Land Act 1962 (as amended) AND IN THE MATTER OF the Caboolture Aero Club (lncorpora ted) JUDGMENT- MACKENZIE I. Judgment Delivered 29 July 1994 The issue in these proceedings is whether certain land occupied by the applicant is rateable land under and pursuant to the Local Government Act 1936. The applicant is an Incorporated Association which holds a 30 year Special Lease issued under s.203 of the Land Act 1962 over about 60ha of land near Caboolture. The relevant history of the land is that a group of enthusiasts were conducting an airfield on private land close to Caboolture township. When the Caboolture Shire Council asked them about relocating it, negotiations were entered into between them, the Council and the State Government with a view to identifying a suitable site. In the result land was set aside under s.335 of the Land Act for public purposes as a "reserve for Local Government (landing ground) purposes" and placed under the control of the Council as trustee. About a year later a Special Lease was granted to the applicant which had by then been incorporated. -- 2 of 9 -- 2 Section 203(b) permitted the Governor-in-Council to grant a Special Lease over "any land reserved and set apart for public purposes, for any purpose declared by the Governor- in-Council to be not inconsistent with the reservation or this Act." In the lease the "purpose for which granted" is described as "business (aircraft landing area)". A number of conditions were attached to the lease. Without being exhaustive, the lessee was required, within two years, to construct an air strip and to use the land for airstrip purposes only. No structural improvements were to be constructed except such as were necessary for the operation and/or storage and servicing aircraft using the strip. The lessee was at all times to make the air strip available to operators of other aircraft capable of using the strip on reasonable terms and conditions. The lessee was also required to hold the leased land so that it might be used for the public purpose (Local Government (landing ground)) for which it; was reserved without undue interruption or obstruction. Several observations may be made with respect to the lease. Firstly, s.203 required that any special lease of land reserved and set apart for public purposes had to be for a purpose declared by the Governor-in-Council to be not inconsistent with the reservation or the Land Act generally. Secondly, the purpose for· which the special lease was given was described as business (aircraft landing area) (my underlining). Thirdly, the obligation to make the air strip available to "other aircraft" (scil, aircraft not connected with the club) was not absolute. It could be subjected to reasonable terms and conditions. Fourthly, the land was to be used only as an airstrip. It was to be held for that purpose without undue interruption or obstruction to public use. According to the affidavit of Mr Molyneaux, the Secretary of the Applicant, prior to the commencement of the Special Lease discussions were held with the Lands Department regarding the manner in which the applicant could fund the construction and ongoing maintenance of the airstrip. The Lands Department gave "in principle" approval to the -- 3 of 9 -- 3 designation of 57 hangar sites capable of sublease. Fifty of those were to be restricted from any commercial purpose and the other seven were to be used for business associated with the maintenance and repair of aircraft or otherwise related to the use of aircraft and the aircraft industry. Some subleases were entered into with the approval of the Land Administration Commission. Mr Molyneaux's affidavit deposes that the buildings subleased as private hangars contain a clause requiring the sublessee not to use or permit the hangar to be used as other than a private storage hangar. Similarly where commercial activities are carried on the sublease contains a requirement that the sublessee not use or permit the premises to be used except for a business related to the use of aircraft or the aircraft industry. By way of example, one hangar is used for the maintenance and restoration of aircraft. Another is used as a "fuel farm" by the Shell Company for the airport, another is used for the maintenance of aircraft and helicopters using the air strip. Another is used for the temporary storage of visiting aircraft and as an office for a flight training school. Mr Molyneaux deposes that money which becomes available by virtue of the rental charged on the subleases for the hangar sites is used to defray in part the costs of maintaining and improving the air strip. Although the figures are not up to date it appears unlikely that the income would exceed about $25,000 per annum. It is deposed that the maintenance of the airfield requires a substantial input of voluntary labour. The issue for determination is whether the land is not rateable because it falls within one of the exceptions in s.24(l)(i). Those relied on by the applicant are:- 11 {c) land in the occupation of any person or corporation which is used for public purposes ... ; (d) land vested in ... a Local Authority; but this exemption shall not include land leased to any person or corporation by a local authority or its predecessor in ti tie." -- 4 of 9 -- 4 Under the first exception the land must fit the description of "land ... used for public purposes". In Queensland National Association v. Booroodabin Divisional Board (1892) 4 QLJ 151, the Full Court held that under a section in materially identical terms to s.24(l)(c) of the Local Government Act it was necessary to show exclusive use of the land for public purposes. The evidence established that the lands were used "for other than public purposes inasmuch as the hall was let for concerts and the grounds for cricket matches". Reference was also made to the by-laws which entitled members to admission to the annual show which were characterised as benefits to individuals. It was said:- "The exclusive user, which was essential to exemption, excluded anything which was not for the sole benefit of the public." I was referred to several other cases where exemptions from rating in varying forms were examined. For example, in Ryde Municipal Council v. Macquarie University (1978) 139 CLR 633 the relevant words were "used or occupied by the University ... solely for the purposes thereof." In Equestrian Sports Centre v. Campbelltown City Council (1987) 9 NSWLR 126 they were "held under a lease from the Crown by any person for private purposes". In State Government Insurance Office v. City of Perth (1990) 71 LGRA 123 the land was not rateable "if it ... is being used for public purposes". In Sydney City Council v. University of Technology, Sydney (1992) 78 LGERA 200 the exemption applied if the land was "land held under a lease from the Crown by any person for private purposes." Because of the differences both in wording and in statutory context caution must be exercised in applying concepts from those cases to the presents case (cf. Aickin J. in Ryde M.C. 658; Gleeson CJ. in Sydney C.C. 201). I was also referred to Re Queensland Police- Citizens Youth Welfare Association (1984) 1 Qd.R 179 where Derrington J. considered a Brisbane City Council ordinance exempting "land in the occupation of any person which is used for public purposes" and rejected the argument that the land was so used. During the course of his decision he observed that the discretion given to the directors to admit -- 5 of 9 -- 5 persons to membership tended to weigh against the public nature of the Association. He also referred to the possibility that some persons used the sporting facilities for private enjoyment without any considerations involving community benefit which would be a "collateral non-public use rather than one which is ancillary to any public-charitable use." In the end he did not make a finding against the Association on that point although he had "serious disquiet" as to the extent of the element of private recreation. He also referred to an implication to be drawn from the drafting of the Ordinance that the exemption was intended to be limited to activities of official public bodies rather than purely private bodies. (Although it was not critical to the decision, the character of the University as a public institution was referred to in Sydney C.C. 202, in contrasting that l case with Eauestrian Sports Centre). Derrington ] concluded, 190:- "For the reasons set out I find that the Association has not shown that it comes within the qualification that requires its lands be used for public purposes within the true meaning of that term in the Ordinance, and so does not qualify for exemption from rates." For the moment I simply note that the club in this case has no "content of an official nature" in the sense referred to by Derrington ] . In the century since Queensland National Association v. Booroodabin Divisional Board was decided the issue of what sort of use takes land outside an exemption based on the public purpose/private purpose test has been somewhat refined. The Club relied on a passage from the judgment of Franklyn ] . in SGIO v. City of Perth, 135 where he said:- "For a purpose to be a 'public purpose' within the meaning of the section in my view it must be a purpose which relates or pertains to the people of the State or of some particular region or locality as a whole and so relate or pertain in the sense of the provision of some service utility or benefit to the public which would not otherwise be provided and which is not provided with the primary purpose of producing profit, although profitability might well flow from charges or fees imposed or moneys collected or earned in respect of such provision. Such a definition accords with activities which are traditionally the province of government and with the meaning of the word 'public'." -- 6 of 9 -- 6 At 137 Franklyn J ., also said that under the statutory provision:- " ... land need not be exclusively used for a public purpose to attract the exemption but such purpose must be its predominant and primary use." The club also relied on the distinction between commercial activities merely incidental to, wholly ancillary to or which directly facilitated the use for public purposes and uses which are collateral or additional to the public purpose referred to in Ryde M. C., at 380, 385 and 386 and Sydney C.C., at 202 and 204. In those cases it is accepted that if land is used solely or principally for commercial activity designed to raise income for the lessee or in such a way that commercial activity is seen to be one substantial purpose for which the lease was held, it is not held for public purposes. But where income is produced from the use of land in circumstances that are less clear cut, a determination whether on balance the income producing activities are no more than ancillary or incidental to the public purpose of conducting an airstrip or are a collateral activity the profits of which are applied for the purposes of conducting the airstrip must be addressed. It is plain enough that the members of the club derive an outlet for their enthusiasm for aviation by conducting the airstrip. At the time of the hearing there were 137 members and 69 associate members. The club house is situated on the property and while not conceding an obligation to pay rates the club meets service charges, water charges and refuse charges levied by the Council and the State Government Fire Levy. There is evidence that prior to commencement of the special lease, discussions were held with the Lands Department regarding the manner in which the club could fund the construction and ongoing maintenance of the airstrip. Approval for leasing hangars for the private storage of aircraft and for the commercial purposes associated with the aviation industry was given by the Department following those discussions. -- 7 of 9 -- 7 When the development of the airstrip commenced the cost of developing it was $510,000. The State Government provided about $190,000 which were used to "partially defray the costs of the work". The estimated value of labour and equipment provided at no cost by and through club members was estimated to be $320,000. The estimated annual sums for maintenance range from $40,000 to about $75,000 over the four years to 1993. It is true that the businesses which generate income for the club are businesses which are most conveniently carried on at an airfield. It is also true that the income generated is quite small compared to the value of the voluntary contributions by members to maintenance of the airfield. However, the notion of generating income by providing facilities that the aviation community would expect to find at an airfield seems to have been part of the motivation for creating the subleases. In the Ryde M.C. and in the Sydney C.C. the role of the shopping centre and car park respectively as an integrated part of the life of the institution was a significant factor in deciding that the lands were not rateable. While acknowledging that the provision of hangars and the leasing of premises to aviation related industries has a clear connection with the conduct of an airfield, I am unable to conclude on the evidence that the same degree of intimate connection that was found in the two cases cited exists in this case. Although it is not a decisive factor it should not be lost sight of that the lease to the club is described as one for the purpose of "business (aircraft landing area)". A description of the lease in those terms is at least of no assistance to the club. I conclude that the land is not "used for public purposes" within the meaning of s.24{l)(i)(c) of the Local Government Act. -- 8 of 9 -- 8 The club also relies on s.24(l)(i)(d) which excepts from rateability the following:- "Land vested in ... a Local Authority: but this exemption shall not include land leased to any person or corporation by a Local Authority or its predecessor in title ..... " The exclusory words in this provision do not apply in the circumstances of this case. It was submitted for the respondent that if the land was vested in the local authority its predecessor in title was the Crown. As the lease to the Club was granted by the Crown it had been granted by the local authority's predecessor in title. It was submitted that it was immaterial that the lease had been created after the land had been placed under the control of the local authority. That construction is not the true intent of the exception, which is to remove from the exemption land vested in a local authority but leased to a person or corporation by the local authority or by a predecessor in title. The provision refers to a temporal sequence in the sense that if the land is presently vested in the local authority but while vested in its predecessor a lease which still subsists was created by the predecessor in title the exclusion from the exemption applies. It is therefore necessary to consider whether the land is vested in the local auti1ority within the meaning of s. 24(l)(i}(d). The land in question was reserved and set apart for a public purpose under s. 334 of the Land Act and was placed under the control of the local authority as trustee under s. 335. Where this procedure is used no grant is made by the Crown to the trustees of the reserve and no interest in the land is conferred upon them (Giadstone Town Council v. Gladstone Harbour Board (1964) Qd.R 505, 517; BMG Resources Ltd v. Pine Rivers Shire Council (1989) 2 Qd.R. 1, 3). The land is not vested in the local authority in the relevant sense and therefore the exemption does not apply. The application therefore fails. I declare that the land occupied by the applicant is rateable land under and pursuant to the Local Government Act 1936. /iI -- 9 of 9 --