TANDOU LTD v WESTERN LANDS COMMISSIONER SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL GLEESON CJ KIRBY P MEAGHER JA 15 September 1994, 13 October 1994 [1994] NSWCA 303 WESTERN LANDS ACT — Redetermination of rental for leases in perpetuity. HELD — dismissing the appeal — the amendments to the Western Lands Act in 1989, upon their true construction, had retrospective application and produced the result that, where the subject land, although only set apart for grazing, could be used for grazing and agriculture, the provisions previously applicable to redetermining rent for land set apart for grazing and agriculture would apply. STATUTES — INTERPRETATION HELD — (per Gleeson CJ, Kirby P and Meagher JA agreeing). The rule referred to in Maxwell v Murphy (1957) 96 CLR 216, concerning avoiding constructions which give statutes retrospective operation, and the subordinate rule referred to in Lauri vy Renad [1892] 3 Ch 402 at 421, must yield to s33 of the Interpretation Act 1987. ORDERS Appeal dismissed with costs. Gleeson CJ This is an appeal, by leave, from a judgment of Bignold J in the Land and Environment Court resolving a point of law which the parties agreed would decide the result of the proceedings in that court. Those proceedings in turn involved an appeal to the Land and Environment Court from a decision of the Local Land Board at Broken Hill redetermining the rent of certain land at Menindee held under the Western Lands Act 1901. The point of law concerns the effect upon such a redetermination of amendments that were made to the Western Lands Act in 1989. The land in question is held by the appellant under four leases in perpetuity. The leases were granted at different dates, two of them in 1936, one in 1945, and one in 1947. Nothing turns upon the precise dates. The scheme of the Act provides for rental under such leases to be redetermined every ten years. For reasons that are explained in the judgment of Bignold J, and do not require detailed examination, the rental under two of the leases became due for redetermination on 12 October 1984, the rental under one of the leases became due for redetermination on 26 November 1985, and the rental under the remaining lease became due for redetermination on 28 September 1987. In the ordinary course, a redetermination of rent for the ten-year period is initiated by the Western Lands Commissioner, although, no doubt, a land holder aggrieved by a delay in obtaining a redetermination could take the initiative. For reasons that are unexplained, and that have been treated by both parties as presently immaterial, there was considerable delay in seeking the rental determinations mentioned above. The matter ultimately went to the Local Land Board in 1991, apparently on the basis that the Board's redeterminations, when made, would operate as from the dates upon which redeterminations were due. The point of law that was argued on behalf of the appellant before Bignold J, and in this appeal, was not raised before the Local Land Board. 2 UNREPORTED JUDGMENTS The issue now raised arises out of the circumstance that, during 1973, the relevant leases were amended to change the purposes for which the subject land could be used. When the leases were originally granted the land had been set apart, under the provisions of the Western Lands Act, for grazing. It was common ground that the lands remained set apart for grazing at all times material to this appeal. However, in June 1973 the terms of the leases were varied pursuant to s18J of the Act, to produce the result that the permitted use of the land under the leases changed from grazing to grazing and cultivation. It was explained in the course of argument that parts of the subject lands are situated on the lake bed at Menindee and have for many years been used by the appellant for agricultural purposes. The remainder of the land has been used for grazing purposes. The 1989 amendments to the Act contained certain provisions relating to the way in which rent was to be redetermined where there had been a change in permitted user. The dispute concerns the application of those provisions to the circumstances of the present case. It is necessary to say only a little more about the facts. Before doing so, however, it is convenient to refer to the relevant legislation, including the 1989 amendments. Between the time the leases were granted and 1989 the provisions of the Act which governed the way in which rent was to be determined were s19B and s19C, which were enacted by Act No 12 of 1934. Those sections were in the following terms: "19B (1) The rent of any lease extended under the provisions of s17C of this Act shall be determined by the local land board for each separate period of ten years commencing from the first day of July, one thousand nine hundred and forty three: Provided that where the unexpired portion of the term of any lease is, at the commencement of any such period, less than twenty years, the rent shall be determined for such unexpired portion. (2)(a) The rent of any lease applied for after the commencement of the Western Lands (Amendment) Act, 1934, in respect of land set apart from grazing shall be as determined by the local land board. (b) The rent of any lease (other than a lease in perpetuity) applied for after the commencement of the Western Lands (Amendment) Act, 1934, in respect of lands set apart for grazing shall be determined by the local land board for each separate period of ten years: Provided that where - (i) the term of the lease is less than fifteen years, the rent shall be determined for the full period of the lease; or (ii) the unexpired portion of the term of the lease is at the commencement of any such period less than twenty years, the rent shall be determined for such unexpired portion. (3) The rate of rent shall not, in any case, exceed the rate of seven pence per sheep on the fair average carrying capacity of the land when reasonably improved as estimated on a sheep basis by the local land board, and the rent for any period shall not on any determination, under this section be increased or decreased more than twenty-rive per centum above or below the rent payable immediately prior to such determination. The provisions of this subsection shall not apply to any determination of rent where the land within the lease has any special value other than for grazing. URJ TANDOU LTD v WESTERN LANDS COMMISSIONER (Gleeson CJ) 3 (4) The rent of every lease granted or brought under this Act, whether before or after the commencement of the Western Lands (Amendment) Act, 1934, shall be paid annually in advance on the recurring date of the commencement of the lease or on such other date as may be prescribed. 19C(1) The rent of any lease applied for after the commencement of the Western Lands (Amendment) Act, 1934, in respect of land set apart for agriculture or for agriculture and grazing combined or for mixed farming of for any similar purpose or purposes, shall be two and one-half per centum of the capital value as determined by the local land board. Such capital value shall be the value according to the capabilities and situation of the land and irrespective of any improvements thereon, but such capital value shall include any enhanced value in the land arising from or created by such improvements. (2) During the first five years of any such lease the holder may in lieu of paying rent expend a sum not less than the rent for such period in effecting on the land within the lease improvements of a permanent, fixed and substantial character, the same (except boundary fencing) being in addition to the improvements which may be otherwise required to be effected under the conditions attaching to the lease. (3) The provisions of subsection two of this section shall extend and be deemed to have extended to a lease granted before the commencement of the Western Lands (Amendment) Act, 1934, in respect of land which has been declared open for lease for agriculture, or for agriculture and grazing combined, or which as been granted for any such purpose, or for mixed farming or similar purpose or purposes; and any moneys credited as rent in respect of the first five years of such lease shall be applied towards the rent for the succeeding years of the lease." It is conceded by the respondent that at all material times the whole of the subject land was set apart for grazing within the meaning of s19B(2). This concession proceeds upon the basis that there is a material distinction between the concept of land being set apart for a certain purpose, and land the subject of a lease being permitted to be used for a certain purpose. From June 1973, or not long thereafter, the land the subject of the leases was in fact used for what is described in s19C as agriculture and grazing combined, but it is conceded that the land was not at any relevant time land that was set apart for agriculture and grazing combined within the meaning of s19C. It will be observed that there are important differences between the way in which rent is determined under s19B (in respect of land set apart for grazing) and under s19C (in respect of land set apart for agriculture and grazing combined). In essence, the issue in this appeal is whether the effect of the 1989 amendments was to make s19C applicable for the purposes of the redeterminations being conducted by the Local Land Board in 1991. The Board made its redeterminations on that basis, and produced figures for rent which were substantially higher than would have resulted if the provisions of s19B had been applicable. It seems that, over the years prior to 1989, an administrative practice had developed of ignoring the distinction, noted above, between land which was set apart for a particular purpose and land which was permitted to be used for a particular purpose. Notwithstanding that distinction, rents were apparently, on occasion, redetermined under s19C, on the basis that there had been a change of 4 UNREPORTED JUDGMENTS permitted user of land, where, legally, they should have been determined under s19B, on the basis that, notwithstanding such change in permitted user, the land was still land set apart for grazing. In the case of each of the four leases presently in question there had been a redetermination of rent in between the change of permitted user in 1973 and the occasion for the further determinations which were being dealt with by the Board in 1991. There was no information before Bignold J, or this court, as to the basis upon which those redeterminations proceeded. They never gave rise to any dispute, and it may be that they were the result of some kind of negotiated settlement. However that may be, it is of importance to one of the arguments advanced on behalf of the appellant that such redeterminations had occurred. The redeterminations that were being undertaken in 1991 were not the first redeterminations following the change of permitted user in 1973. The amendments of 1989 appear to have been aimed, in part, at altering, for the future, the basis of rental determinations and, in addition, making some retrospective provision to validate what had occurred in the past. This appeal is concerned with what were described as transitional provisions, including provisions directed to past events. It suffices to say that, as to the future, the scheme of the legislation turned, not upon the purposes for which land was set apart, but upon the purpose for which land was held. Act No 18 of 1989, called the Western Lands (Amendment) Act 1989, was assented to on 20 April 1989. S4 of the Act, and Schedule 7, commenced on 20 April 1989, the date of assent. The other relevant provisions commenced on 1 September 1989. S4 merely provided that Schedule 7 had effect. Thus, Schedule 7 had effect from 20 April 1989. Schedule 3, which had effect from 1 September 1989, amended the rent provisions of the Act, and included the following provision, said to be a transitional provision for leases granted before 1989. S19B provided: "19B (1) This section applies to a lease that, immediately before the commencement of this section, was - (a) a lease in perpetuity or (b) a lease for a term extending past that commencement. (2) If a redetermination of the rent of a lease to which this section applies - (a) was due before the commencement of this section; and (b) was still pending immediately before that commencement, the redetermination shall be made under this Act as in force immediately before that commencement and this section applies in relation to the lease as if the pending redetermination had been made on the date on which it was due. (3) The first redetermination after the commencement of this section of the rent of a lease to which this section applies (not being a redetermination referred to in subs(2)) shall be as determined by the local land board under this Part - (a) as if the lease had been granted to take effect immediately after the end of the period for which it had last been redetermined before the commencement of this section; and (b) unless the lease is a lease in perpetuity - as if it were for a term the same as so much of its original term as was unexpired at the end of that period. (4) In this section - 'commencement', in relation to this section, means the insertion of this section by the Western Lands (Amendment) Act 1989." URJ TANDOU LTD v WESTERN LANDS COMMISSIONER (Gleeson CJ) 5 That section applied to the leases the subject of this appeal. On its own, however, it did not apply to them in a manner adverse to the appellant. The sting, so far as the appellant is concerned, lies in what is said to be the effect of Schedule 7. It is, in my view, clear that, for whatever its effect might be, Schedule 7 was part of the Act as in force immediately before the commencement of s19B. As was noted, s19B commenced on 1 September 1989, and Schedule 7 took effect from 20 April 1989. It follows, therefore, that where s19B directed that a redetermination was to be made under the Act as in force immediately before the commencement of s19B, it produced the consequence that the redetermination was to be made under the Act including Schedule 7. The critical question concerns the effect of Schedule 7. That Schedule is relatively brief, and its terms are as follows: "Definition 1. In this Schedule - 'Principal Act' means the Western Lands Act 1901. Validation 2 If, before the date of assent to this Act, the rent of a lease under the Principal Act of land set apart for grazing had, following a change of purpose under s18J of the Principal Act, been redetermined as if the land had been set apart for the new purpose, the redetermination is validated. Transitional provision 3 (1) This clause applies to a lease if - (a) before the date of assent to this Act, the purpose of the lease was changed under s18J of the Principal Act and a redetermination of the rent of the lease following the change had not been finalised; or (b) on or after the date of assent to this Act and before the next succeeding date for redetermination of the rent of the lease, the purpose of the lease is changed under s18J of the Principal Act. (2) If this clause applies to a lease, a redetermination resulting from the change of purpose shall be made on the basis prescribed by the Principal Act, as in force at the time of the change, for land set apart or held for the new purpose. The argument of the respondent, which was not disputed before the Local Land Board, and which was held by Bignold J to be correct, is that Schedule 7 produces the consequence that the 1991 redeterminations (being those which were originally called for on dates in 1984, 1985 and 1987) were to be made on the basis prescribed by the Act for land set apart for agriculture and grazing combined. In other words, they were to be made under s19C. According to the respondent, this follows from CL3(2) of Schedule 7. There had been a change of purpose in 1973. The change of purpose, pursuant to s18J, was a change from the purpose of grazing to the purpose of grazing and cultivation. It is not suggested that there is any material difference between cultivation and agriculture. On the basis that the redeterminations being undertaken in 1991 fell within the opening words of CL3(2) of Schedule 7, then they were to be made on the basis prescribed by the Act as in force in 1973, for land set apart for the new purpose, ie agriculture and grazing combined. That basis was prescribed in sl9C. It was noted above that one of the purposes of the 1989 amendments was to validate past irregularities. 6 UNREPORTED JUDGMENTS This is the explanation of CL2 of Schedule 2. When the legislation was introduced the Minister in his Second Reading Speech said (Hansard 4 April 1989 p5712): "Under s18J of the Act, the conditions or purpose of a lease may be altered with the consent of the lessee. When these provisions were introduced in 1934 and 1949 no parallel provisions were enacted to establish the basis for determination of rentals for leases whose purpose was altered. This deficiency was pointed out in a recent legal advising which questions the validity of the basis for rental determinations which has been applied to a number of leases which were subject to a change in purpose from grazing to agriculture or mixed farming. As it is both logical and equitable that such leases be subject to the same rental basis as other leases used for the identical purpose, this bill, in Schedule 7, CL2 and CL3, validates any determinations made on the basis of 2.5 percent of capital value and it is beyond doubt that this method of rental determination applies whether or not the rent was originally set apart for agriculture or a similar purpose. " As the appellant points out, there are a number of infelicities in the drafting of the provisions of Schedule 7. CL3(2) speaks of a redetermination resulting from a change of purpose. This would be understandable if there were some provisions in the Act to the effect that, following a change in purpose, there should be a redetermination, or that a redetermination must take into account a change in purpose. There was, however, no such provision. Redeterminations do not "result" from changes of purpose. In order to make sense of the language of CL3(2) it is necessary to read the words "a redetermination resulting from the change of purpose" as meaning, in effect, "the redetermination hereinbefore mentioned". This does not involve undue violence to the statutory language, and I can think of no other meaning that the words in question could sensibly be given. I accept the submission of counsel for the respondent to the effect that, if CL3 applies to the leases in question, and if the 1991 redeterminations were redeterminations of the kind mentioned in CL3(1)(a), then the result for which the respondent contends follows. On this hypothesis, the 1991 redeterminations were to be made on the basis prescribed by the Act, as in force in 1973, for land set apart for agriculture and grazing purposes (ie the basis set out in s19C). The critical question, as it seems to me, is whether the leases presently in question are leases to which CL3 applies. That involves a consideration of CL3(1)(a). Here the argument turns upon a narrow point. The appellant observes that there had been redeterminations of rent under all four leases following the 1973 change of purpose. The appellant argues that CL3(1)(a), on its true construction, only applies to cases where, before 20 April 1989, there had been a change of purpose under s18J, but no rent redetermination. In other words, the provision was to deal with unresolved questions at the time of the enactment of the 1989 amendments, in circumstances where there had been a change of purpose but no subsequent redetermination of rent. The respondent, on the other hand, submits that the literal words apply to the present case, and there is no occasion to read them down. On the respondent's argument there had been a change, under s18J, of the purpose of the leases before 20 April 1989, and there was a redetermination of rent under the leases, following the change, which had not been finalised. That argument, of course, involves treating the word "following" as simply meaning URJ TANDOU LTD v WESTERN LANDS COMMISSIONER (Gleeson CJ) 7 "after", and the reference to a redetermination that had not been finalised as including a reference to any redetermination that had, for whatever reason, not taken effect. The appellant points out that the consequence of the respondent's submission is that the appellant has suffered a financial disadvantage by reason of delay on the part of the respondent in arranging for the relevant redeterminations to take place. The rents assessed under s19C are substantially greater than those assessed under s19B. If the redeterminations for the relevant ten year periods had taken place promptly in 1984, 1984 and 1987 respectively, then no one would suggest that the provisions of Schedule 7 would apply. The appellant would, for each of the ten year periods in question, have been paying rent under s19B, although, of course, when the next lot of redeterminations came up, the 1989 amendments would alter the situation for the future. The appellant calls in aid the principle of construction stated by Dixon CJ in Maxwell v Murphy (1957) 96 CLR 261 at 267, to the effect that a statute changing the law, ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occurred, in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to past events. We are, of course, here dealing with legislation which is, without question, aimed at past events and circumstances, and the issue is as to the reach of such legislation, Even so, the principle has been said to be accompanied by a subordinate rule. In Lauri v Renad [1892] 3 Ch 402 at 421, Lindley LJ said: "Tt is a fundamental rule of English law that no statute shall be construed so as to have a retrospective operation unless its language is such as plainly to require such a construction; and the same rule involves another and subordinate tule to the effect that a statute is not to be construed so as to have a greater retrospective operation than its language renders necessary". What Lindley LJ called the fundamental rule has no application to the present case. We are dealing with legislation which is plainly retrospective. It is what was called the subordinate rule that could be in point. However, that rule must yield to s33 of the Interpretation Act 1987, which requires this court to prefer a construction that would promote the purpose or object underlying the 1989 legislation to a construction that would not promote that purpose. The effect of s33 is that, if there can be discerned a presently relevant purpose, the duty of the court is to prefer a construction (assuming it is otherwise available having regard to the language of the statute) which promotes that purpose, even if it is not a construction which the language renders necessary. In considering the purpose of Schedule 7, CL2 is of importance. That clause uses the same language as that which gives rise to the ambiguity in CL3. It refers to redetermination of rents "following a change of purpose under s18J". We know from the Minister's Second Reading Speech that, in some cases, there would have been a number of such redeterminations for successive ten-year periods in respect of the same land. Clearly, it was intended that all such redeterminations be validated, and not merely the first redetermination occurring after the change of purpose. This throws light upon the purpose of CL3. The reference in CL3(1)(a) to a redetermination of the rent of the lease following a change of purpose can hardly be understood as a reference only to the first redetermination that fell due after the change. I would infer that, as in the case of CL2, it was intended to refer to 8 UNREPORTED JUDGMENTS any later redetermination which had become due but had not been made. CL2 and CL3 thus work in harmony. CL2 applies to all redeterminations that had been made on the basis of the change of purpose, even though they had been made on an erroneous basis. CL3(i)(a) provides that, if a later redetermination had become due but had not been made, it should be made on the basis of the change of purpose, consistently with the redeterminations that had been validated by CL2. The construction for which the respondent contends is that which gives effect to the purpose of Schedule 7, and for that reason it is to be preferred. The appeal should be dismissed with costs. Kirby P I agree with Gleeson CJ. Meagher JA I agree with the Chief Justice. Appeal dismissed with costs. Counsel: APPELLANT: R Bainton QC/McEwen RESPONDENT: N Burns Solicitors: APPELLANT: Bruce Stewart and Turton RESPONDENT: H K Roberts