It may not always be clear whether parties have entered into a lease or a licence agreement when that instrument contains significant public access or other reservations. This issue was clarified in the Court of Appeal of the Supreme Court of Victoria in Living and Leisure Australia Ltd v Commissioner of State Revenue  VSCA 237 (Living and Leisure).
The issue in Living and Leisure
The issue before the Court of Appeal was whether Living and Leisure Australia Ltd (LLA) had the use of and access to Crown land under a lease and was therefore subject to land tax, or under a mere licence, in which case no land tax was chargeable to LLA.
LLA and the Crown entered into two agreements pursuant to s.28(2) of the Alpine Resorts Act 1983 (Vic), which gave LLA the right to establish and operate ski lifts and associated infrastructure on two parcels of land at the summits of Mount Hothman and Falls Creek, to the exclusion of other parties with commercial interests and for a 50 year term. The instruments also contained reservations for public access, provided it did not interfere with LLA’s operations.
The Commissioner of State Revenue assessed LLA for land tax for the 2010 to 2015 tax years on the basis that it was an ‘owner’ of the two parcels of land. The assessments were premised on LLA holding the land as lessee under two leases from the Crown.
At first instance
LLA appealed the land tax assessments to the Trial Division of the Supreme Court of Victoria. At first instance Justice Croft held that the instruments were leases of Crown land and that the land tax was correctly levied on LLA. His Honour dismissed the appeals and confirmed the assessments.
LLA appealed to the Court of Appeal of the Supreme Court of Victoria.
Court of Appeal
The Full Court of the Court of Appeal (comprising Ferguson CJ, Whelan and Niall JJA) noted that the ultimate issue was whether the two instruments under which LLA held the land are leases, and that question turned on whether each instrument gave LLA exclusive possession of the land to which it relates. This comes down to an assessment of the significance of the public access provisions of the instruments.
Held to be a lease by the majority of the Full Court
The majority of the Full Court (Ferguson CJ and Whelan JA) held that the instruments confer exclusive possession of the demised land and are leases, having regard to the following factors:
- The terminology employed in the instruments, such as ‘lease’, ‘demise’, ‘rent’, ‘lessor’, and ‘lessee’, is the terminology of a lease, and it is for a term of 50 years. Other provisions recognise expressly that what is conveyed is an interest in the land, and the lessee covenants to ‘deliver up the demised land’ at the expiration of the lease. These matters are not determinative, but they are relevant.
- The reservations requiring public access are obstacles to the conclusion that LLA had exclusive possession, however the terms of the particular restrictions must be read in the context of the land, the nature of the premises, the use to which they are put, and other provisions of the instrument.
- While the reservations are wide, the access they provide for has limitations. Access was confined to individuals or groups entering in a private capacity, and only for recreational use. The areas the public can access are restricted by the requirement there be no interference with the ski operators’ activities, facilities, or equipment. LLA can conduct their activities and position their facilities anywhere they chose on the demised land.
- The instruments required LLA to control the conduct of the public on the land, including an obligation not to ‘permit or suffer’ conduct which is riotous, disorderly, offensive, or illegal on the demised land. This is consistent only with LLA having control over who may remain on the land. LLA has a level of control consistent with the right of exclusive possession, including in relation to members of the public to whom the public access provisions apply.
- The majority of the Full Court drew support from Radaich v Smith (1959) 101 CLR 209 for the conclusion that the instruments are leases. In that case an instrument granting what was described as a ‘licence’ to supply refreshments to the public in a shop and to carry on the business of a milk bar in that shop was held to grant exclusive possession and create a leasehold interest. In substance, the Court in Radaich reached that conclusion because exclusive possession was necessary in order to carry on the licensed business.
- LLA did not need exclusive possession of all the land, but they did need exclusive possession of those parts upon which their buildings, infrastructure, and equipment were situated. The business provided for by the instruments could not be reasonably carried on without exclusive possession of those critical parts, and those critical parts are not fixed or delineated, and could be anywhere on the demised land and may change from time to time. Regulation of potential competition was also important. The instruments addressed both issues by leasing the whole of the demised land.
- The fact that the ski lift businesses do require exclusive possession of areas of the demised land which were not fixed or delineated, and which might be positioned anywhere in the demised land, does support a conclusion that exclusive possession over the demised land was conferred.
- The public access provisions assume the existence of the right to exclude and are explicable by the relationship between the operators and the land. The nature of the occupation and permitted use is such while LLA must have exclusive possession of critical parts of the land they can accommodate public access to other parts for non-commercial use and enjoyment.
High Court Cases Distinguished
The majority of the Full Court observed that their conclusion may be seen not to sit comfortably with aspects of the High Court judgements in the native title cases, particularly Wik Peoples v The State of Queensland (1996) 187 CLR 1, Western Australia v Ward (2002) 213 CLR 1, and also Western Australia v Brown (2014) 253 CLR 507.
Ferguson CJ and Whelan JA distinguished these cases as dealing with particular kinds of leasing arrangements having particular characteristics.
Wik Peoples and Ward dealt with statutory leases referable to the circumstances of early development of agriculture and mining in remote parts of Australia, while Brown dealt with a somewhat unusual type of lease being a mining lease.
Justice Niall in Dissent
Justice Niall (in a lengthy dissenting judgement) held that LLA did not hold the land under leases from the Crown, and was not therefore an ‘owner’ of the land for the purposes of the Land Tax Act 2005 (Vic).
Justice Niall took the view that the extensive reservations in the lease in favour of the public were not capable of being reconciled with a finding of exclusive possession, and were inconsistent with a general right to exclude. Niall JA also took the view that exclusive possession is not necessary to preclude commercial competition.
The (Victorian) Living and Leisure case is not binding on Western Australian Courts but may be persuasive. The majority of the Full Court clarified that a land tenure agreement that contains significant public access and other reservations may, in particular circumstances, still confer exclusive possession and be a lease.
The information published in this paper is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.