FEDERAL COURT OF AUSTRALIA

Bowler v Hilda Pty Limited ACN 008 556 616 (in liq) [2001] FCA 342

TRADE PRACTICES - misleading and deceptive conduct - contravention arising from representation that unit purchased by the applicants could be lived in, rented out privately or rented out as a serviced apartment -whether this representation was false because the unit purchased by the applicants could not lawfully be used as a residential unit.

LOCAL GOVERNMENT - town plan - interpretation of registered document of title - whether material extrinsic to register admissible in aid of interpretation of registered units plan

INTERPRETATION - power of court of construction to give effect to intention of parties to registered document of title, not accurately reflected in the express provisions of the document

Unit Titles Act 1970 (ACT)

Land (Planning and Environment) Act 1991 (ACT)

Land Titles (Unit Titles) Act 1970 (ACT)

Land Titles Act 1925 (ACT)

B & B Construction (Aust) Pty Ltd v Brian A Cheeseman & Associates Pty Ltd (1994) 35 NSWLR 227 referred to

Re United Pacific Transport Pty Ltd [1968] Qd R 517 referred to

Fitzgerald v Masters (1956) 95 CLR 420 applied

Gwyn v Neath Canal Co [1868] LR 3 Exch 209 applied

Glynn v Margetson & Co [1893] AC 351 referred to

Consolidated Development Pty Ltd v Holt (1986) 6 NSWLR 607 referred to

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 referred to

K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 referred to

CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 referred to

Watson v Phipps (1985) 63 ALR 321 applied

North Sydney Municipal Council v Sydney Serviced Apartments Pty Ltd (1990) 71 LGRA 432 referred to

Grant v Estill Holdings Pty Ltd (Federal Court of Australia, unreported, 5 February 1990) referred to

Cousin v Grant (1991) 103 FLR 236 referred to

Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 applied

Gange v Sullivan (1966) 116 CLR 418 referred to

Drummoyne Municipal Council v Lebnan (1974) 131 CLR 350 referred to

Morpath Pty Ltd v ACT Youth Accommodation Group Inc (1987) 16 FCR 325 referred to

Bowler v Hilda Pty Ltd [2000] FCA 899 referred to

Sydney Serviced Apartments Pty Ltd v North Sydney Municipal Council (No 2) (1993) 78 LGERA 404 referred to

Winn v Director General of National Parks & Wildlife [2001] NSWCA 17 referred to

Leichhardt Municipal Council v Terminals Pty Ltd (1970) 21 LGRA 44 referred to

The Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 referred to

Beames v Leader [2000] 1 Qd R 347 referred to

The Laws of Australia, Section 25, title “Interpretation”, par 17

Cheshire & Fifoot’s, Law of Contract, 7^th Australian ed, at par 10.12

Equity:  Doctrines and Remedies, 3^rd ed, Meagher, Gummow & Lehane at par 2608

Norton on Deeds, 2^nd ed, at 133

Odgers, The Construction of Deeds and Statutes, 5^th ed, at 98

BRUCE WILLIAM BOWLER AND JANELLE JOY BOWLER v HILDA PTY LIMITED ACN 008 556 616 (IN LIQUIDATION),LEADER REAL ESTATE PTY LIMITED ACN 059 881 597, LEADER HOLDINGS PTY LIMITED ACN 008 567 726, JOHN FREDERICK McDONALD, JENNIFER McDONALD, DEREK WHITCOMBE, REGENCY APARTMENTS PTY LIMITED ACN 061 914 029 AND AUSTRALIAN CAPITAL TERRITORY

A 50 OF 2000

DRUMMOND, DOWSETT AND GYLES JJ

2 APRIL 2001

BRISBANE (HEARD IN CANBERRA) (VIA VIDEO LINK)

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

THE COURT ORDERS THAT:

1.                  The cross-appeal be dismissed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

DRUMMOND J:

1                     The second and third respondents in the action, by cross-appeal, seek an order setting aside the judgment of a judge of the Court of 7 July 2000 for $37,000 in favour of the applicants.  (The applicants’ own appeal against this judgment was withdrawn.)

2                     The second and third respondents can be described as the real estate agents of the first respondent retained to market units in the re-development of a motel property in Canberra city undertaken by the first respondent, which is now in liquidation.  The applicants’ case was that the second and third respondents, as agents for the first respondent, were those primarily liable because they made certain representations in connection with the marketing of the units in the re-development; it was said that this conduct amounted to contraventions of s 52 (and other provisions of) the Trade Practices Act 1974 (Cth) and that the applicants had relied, to their detriment, upon the representations in acquiring unit no 23 in the redevelopment.  The first respondent developer and its directors were sued only on the basis that they were involved in the contraventions of the Trade Practices Act allegedly committed by the second and third respondents.

3                     The action was brought as a class action under Part IVA the Federal Court of Australia Act 1976 (Cth); the purchasers of twenty-nine units in the re-development were named as the group members.  Because of difficulties encountered by the applicants in framing their case, the learned primary judge, in the course of the initial hearing, limited that hearing to the determination of only some of the issues; these included whether the representations pleaded had been made and whether they involved conduct contravening the Trade Practices Act.

4                     It is necessary to refer only to that part of the case based on what his Honour called “the unit use representation”, which he described in this way:

“The substance of the representation said to constitute contravening conduct was that the units, other than units 1 to 19, ‘may be lived in, rented out privately, or rented to management company which will sublet them as serviced apartments’.”

5                     His Honour considered this to be a representation with respect to a future matter; he found that it was made.  However, he held that this did not involve any conduct in contravention of the Trade Practices Act on the part of the second and third respondents because they had reasonable grounds for making the representation at the time they made it.  Accordingly, he dismissed the entire case against all respondents.  The applicants appealed and a Full Court, by a majority, held that, in relation only to the unit use representation, the learned primary judge had erred, concluding that the second and third respondents had no reasonable grounds for making that particular representation.  It was therefore misleading when it was made.  The Full Court allowed the appeal and remitted the matter to the learned primary judge “for further argument on the issue of falsity and any other outstanding issues”.

6                     Having succeeded in the Full Court in establishing that the second and third respondents engaged in misleading conduct by making the unit use representation to the applicants prior to their purchase of unit 23, it remained for the applicants to establish that they had suffered loss as a result of that contravention of the Act.  They sought to do this at the further hearing conducted by his Honour by demonstrating that, having completed their purchase of unit 23, they could not lawfully use it for residential purposes, whether for themselves or for a tenant, because the unit could only lawfully be used as a serviced apartment.  It was only in this sense that the learned primary judge was concerned with the falsity of the representation, ie, with whether it was false at the date of acquisition of title, a point made by Cooper J in his dissenting judgment in the Full Court.  The learned primary judge held that the representation was false and gave the judgment for the applicants now the subject of the cross-appeal.

7                     His Honour arrived at this conclusion by holding that cll 3(c) and (d) of the Schedule of Provisions Covenants and Conditions in the registered unit plan, in so far as they applied to the applicants’ unit no 23, were “patently ambiguous” because of “the quite inappropriate transposition of clause 3(c) and (d) from the covenant in the Crown lease [granted to the first respondent in November 1993] to the covenants prescribed in the Units Plan”, (which was registered in February 1994).  He resolved this ambiguity by referring to the statutory scheme contained in the Unit Titles Act 1970 (ACT) and the Land (Planning and Environment) Act 1991 (ACT) “and to their respective policies and purposes in determining what are, or ought to be, permissible extrinsic materials that can be used in the interpretation of the lease’s covenants”.  He accordingly considered that the lease of the entire parcel to the first respondent granted in November 1993 that was cancelled when the unit plan came into existence upon its registration was itself “admissible in aid of construction of the s 25(1)(b) deemed lease” of each of the sixty-one units in that registered units plan.  His Honour held that cl 3 of the antecedent lease provided “the method for identification of the nineteen residential units” the subject of the registered unit plan because it incorporated approved plans for the erection of those nineteen units that are not, however, incorporated in the registered unit plan.  He concluded from these building plans that the maximum of nineteen one-bedroom units to be constructed on the Regency site as referred to in cl 3(d) to the Schedule of Provisions Covenants and Conditions to the units plan were the units numbered 1 to 19 in Block A in those building plans, with the forty-two serviced apartments being the units comprising Blocks B and C in those plans.

8                     The concept of ambiguity as an impediment to comprehension of a document “is not itself well defined”:  The Laws of Australia, Section 25, title “Interpretation”, par 17.  Ambiguity certainly exists where words have two or more plausible meanings in the particular context:  B & B Construction (Aust) Pty Ltd v Brian A Cheeseman & Associates Pty Ltd (1994) 35 NSWLR 227 at 235.  The language of both sub-clauses 3(c) and (d) is clear.  The lessee of each of the sixty-one units covenants “in respect of his relevant unit” to “use the said parcel [ie, the entire parcel on which those sixty-one units stand] for residential units and serviced apartments” and each unit lessee further covenants “in respect of his relevant unit” that “the buildings on the [entire] parcel shall contain a maximum of nineteen one-bedroom residential units and forty-two serviced apartments”.  But patent ambiguity is sometimes said to extend beyond that to obscurity of meaning or internal contradiction.  See Cheshire & Fifoot’s Law of Contract, 7^th Australian ed, at par 10.12.  If ambiguity extends to the case of words being in conflict with the statutory or contractual context in which they are found, then it may be correct to characterise cl 3(c) and (d) in the Schedule of Provisions Covenants and Conditions to the units plan as ambiguous in this extended sense.

9                     There are, however, difficulties in accepting his Honour’s approach in identifying ambiguity in the covenants in the units plan and in then resolving that ambiguity by reference to materials extrinsic to the registered plan.  In the ACT, a lease from the Crown operates as the grant of an interest in land.  But, by reason of s 175 the Land (Planning and Environment) Act, which makes unlawful the use of land in the Territory other than for the purposes set forth in the lease, the lease also serves to establish the planning restrictions applicable to user of the land the subject of the lease.  Gyles J, in his reasons, points out that upon registration of a unit plan and performance by the Registrar-General of his consequential duty to issue certificates of title for each unit lease, an indefeasible title to each unit is created.  The notion that material extrinsic to the Register can be used to resolve ambiguities in the registered title is therefore difficult to accept as correct.  Further, as Gyles J also points out, the line of authorities dealing with the construction of development consents referred to by learned primary judge in par [38] of his second judgment provides additional reason for not accepting that material extrinsic to the registered unit plan can be used as an aid to the construction of the statement of planning purpose in a lease issued under the ACT leasehold system.

10                  However, if it can be seen that the Schedule of Provisions Covenants and Conditions to the units plan does not accurately state the intention, as objectively ascertained from the terms of that plan, of the Commonwealth as lessor and the first respondent, as the initial lessee of each of the sixty-one separate units in the unit plan, as to the purpose or purposes for which the applicants’ unit 23 can lawfully be used, then the Court can, in principle, give effect to that intention by the process of construing the plan.  Recourse to material extrinsic to the registered unit plan is unnecessary and indeed, not permitted, in such an exercise.

11                  “…  [A]n instrument is to be construed according to the intention of the parties appearing from the whole of its contents and, to that end, corrections may be made which a perusal of the document shows to be necessary”:  Re United Pacific Transport Pty Ltd [1968] Qd R 517 at 523.  In such a case, no question of rectification arises:  “It is simply a matter of the interpretation of the document”.  Ibid.  The dictum in Fitzgerald v Masters (1956) 95 CLR 420 at 426 is a well-known example of the application of this principle by a court of construction to give effect to the objective intention of the parties, so ascertained.  The principle is an old one.  In Gwyn v Neath Canal Co [1868] LR 3 Exch 209, Kelly CB formulated it in this way at 215:

“The result of all the authorities is, that when a court of law can clearly collect from the language within the four corners of a deed, or instrument in writing, the real intentions of the parties, they are bound to give effect to it by supplying anything necessarily to be inferred from the terms used, and by rejecting as superfluous whatever is repugnant to the intention so discerned … On the other hand, it is only when it is impossible upon the face of the deed to collect the true intention, or when something appears showing that it does not truly express that intention, that extrinsic evidence can be resorted to by a court of equity to supply or correct that deficiency [by rectification].”

12                  The principle is not limited in its application to overcoming only minor verbal infelicities.  In Gwyn v Neath Canal Co, the Court was able to construe a defectively drawn deed conveying the fee simple in a canal to a company in consideration of an annual rent payable by the company “to the person … to whom the freehold [in the canal] … should for the time being belong”, as a conveyance of the freehold in the canal by the vendor as life tenant of the fee simple from which the canal freehold was detached by the sale, with an annual payment to the remainder-man (and his heirs and successors).  It arrived at this construction of the deed by having regard to the fact that the rental was expressed in the deed to be payable in perpetuity and that the vendor could not have been seised in fee of the canal property because “if he had been, the purchase money would probably have been payable at once, or if a rent-charge had been created, it would have been payable to [the grantor], his heirs and assigns”.  Another example of the application of the principle is Glynn v Margetson & Co [1893] AC 351 where the Lord Chancellor, at 357, was prepared in construing a bill of lading to ignore a widely framed deviation clause because it was inconsistent with the main purpose of the contract - the carriage of a cargo of oranges from Malaga to Liverpool - even though the clause was clearly expressed and apt to authorise the deviation in fact made by the ship.  Another example is Consolidated Development Pty Ltd v Holt (1986) 6 NSWLR 607; there, a registered lease gave the lessee “the option to purchase the land the subject of this lease by giving to the lessor one month’s notice that it wishes to purchase the said land and upon the lessee paying to the lessor twenty-five times the annual rental”.  Young J concluded, as a matter of construction, that the payment of such a large sum was not an element of the exercise of the option, saying at 618:

“It seems to me that it is very difficult indeed to come to the view that sensible people would have provided for there to be a one month’s notice of exercise of option and also for full payment of the purchase price to be given at the beginning of the month.  This sort of approach is made even more difficult by the view of the Privy Council in Watson v Phipps (1985) 63 ALR 321 that courts should endeavour to construe options to avoid absurdity.”

13                  It is not always easy to determine whether construction or rectification is the appropriate method for dealing with a problem as to the true meaning of an instrument.  The difficulty has been exacerbated by the readiness of courts in modern times to look beyond the four corners of the document to its factual matrix, in order to construe it, even before any question of ambiguity arises.  See B & B Construction at 233 - 236, per Kirby P and at 243 - 247, per Mahoney JA and contrast Mason J’s statements in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352 and in K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 at 315.  The same approach is now accepted as applicable to statutory interpretation:  see CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408.  But, in my opinion, the position is correctly stated in Equity:  Doctrines and Remedies, 3^rd ed, Meagher, Gummow and Lehane at par 2608:  “proceedings for rectification ought not be brought if whatever mistake appearing in the written instrument is of the kind that the true meaning of a document could be ascertained as a matter of construction without recourse to extrinsic evidence”.

14                  Watson v Phipps (1985) 63 ALR 321 provides recent support for this proposition.  Despite the now well-established rule in England that permits recourse to the factual matrix of an instrument as an aid to construction before any question of ambiguity arises, the Privy Council declined to enter into the question of rectification (the relief the appellant had unsuccessfully sought at trial) without first identifying the true construction of the contract.  It reached the result sought by the appellant by approaching the matter as a question of construction and by disregarding all material extrinsic to the lease.  It stated the principle at 324:

“The function of a court of construction is to ascertain what the parties meant by the words which they have used.  For this purpose the grammatical and ordinary sense of the words is to be adhered to, unless they lead to some absurdity or to some repugnance or inconsistency with the rest of the instrument, in which case the grammatical and ordinary sense of the words may be modified so as to avoid that absurdity or inconsistency, but no further.”

15                  The second and third respondents submit that the use or uses to which unit 23 can lawfully be put is defined by cl 3(c) in the Schedule of Provisions Covenants and Conditions to the registered units plan, which is accompanied by the marginal note: “Purpose”.  While acknowledging that it is inappropriate to construe one provision of an instrument in isolation from its context, they say that, according to the respondents’ document of title, that is the sole clause to which regard is to be had in identifying the authorised use of the unit.  They point out that cl 3(d) is not referred to by the same marginal note, but rather by the note: “Single Unit Dwellings”.  They accordingly submit that cl 3(c) in clear terms permits the use of each of the sixty-one units for residential units and serviced apartments.

16                  It is apparent from cl 3(c) that use for “residential units” is a different use, in terms of planning restrictions, from that for “serviced apartments”.  Though the Town Plan defines “residential use”, it does not contain any definition of “residential units” or “serviced apartments”.  In my opinion, both involve use for habitation, but use for residential units comprehends “a significant degree of permanency of habitation or occupancy” while use for “serviced apartments” connotes a significantly lesser degree of permanency of habitation or occupancy.  Cf North Sydney Municipal Council v Sydney Serviced Apartments Pty Ltd (1990) 71 LGRA 432 in which the use of units as serviced apartments was held to be in breach of the development consent permitting the building to be used as a residential flat building.  It was just such a distinction that the appellants submitted to this Court should be drawn between use as a “residential unit” and use as a “serviced apartment”.  Implicit in the respondents’ submission is the proposition that each of the sixty-one units could be lawfully used at any particular time as either a “residential unit” or a “serviced apartment”.

17                  The first flaw in the submission is that the construction contended for results in absurdity of the kind that justifies a court in adopting the remedial approach to construction stated in cases such as Watson v Phipps.  The promise in cl 3(c) “to use the said parcel for residential units and serviced apartments” is given by “the Lessee of each of the Units 1 - 61 … in respect of his relevant unit”:  if the submission is correct, each individual unit holder is exposed by cl 5(a)(ii) of the Schedule of Provisions Covenants and Conditions to the unit plan to termination of his or her unit lease if another unit holder over whom they have no right of control uses their own unit for an unlawful purpose, ie, for a purpose other than residential units or serviced apartments.  I can see no rational justification for that.  Lockhart J, in Grant v Estill Holdings Pty Ltd (Federal Court of Australia, unreported, 5 February 1990) had to deal with a problem of construction of an ACT unit lease created by the same approach of the draftsman to identifying the authorised use of a unit lease that was the subject of the learned primary judge’s criticism here.  His Honour said:

“I cannot conceive that clause 4 is intended to operate other than consistently with s. 25 of the Unit Titles Ordinance 1970 which plainly is intended to create a system of title to units on units plans which embody either horizontal or vertical strata and whereby, after the initial period when the original lessee of the whole of the land disposes of his units, each lessee who acquires title to the unit takes that title as if a separate lease of the unit had been granted to him for the relevant term expressed in the section and subject to the provisions, covenants and conditions set out in the units plan in relation to that unit.  It would be absurd to construe clause 4(a) in any other fashion for otherwise it would mean that the lessee of say unit 3 is at a risk of determination of his lease by reason of the conduct of the lessee of units 1 and 2 over which he may have no control whatever.  It could only be the plainest of language that would lead me to reach such an unsatisfactory and unreal conclusion and I do not think that the words of clause 4, abstruse though they may be, compel such conclusion.”

18                  Miles CJ, in another decision on the same lease, Cousin v Grant (1991) 103 FLR 236 at 246, agreed with Lockhart J’s approach to the construction of this unit lease provision.

19                  Section 175 the Land (Planning and Environment) Act 1991 impliedly requires the lease of each area of land, including that within a unit created by registration of a unit plan, to state the purpose or purposes for which the leased area can lawfully be used.  Section 25(1)(a) the Unit Titles Act provides for determination of the antecedent lease of the entire parcel upon registration of the units plan of subdivision of that parcel and s 25(1)(b) provides that “the person who was, immediately before the registration of the units plan, the lessee of the parcel becomes possessed of an estate of leasehold in each unit … subject to the provisions, covenants and conditions set out in the units plan in relation to that unit as if a separate lease of that unit … had been granted to him or her by the Commonwealth under the Land Act”.  The entries in the Register of Titles with respect to unit 23 under the heading “Restrictions Conditions and Easements” contain the following:  “Purposes Clause - Refer Units Plan”.  It is only from the Schedule of Provisions Covenants and Conditions to the units plan that the authorised user of unit 23 (as well as the user of each of the other sixty units) can be gleaned.  It is apparent from all this that the object intended to be achieved by the Commonwealth and the first respondent as the original parties to all the unit leases, by cl 3(c) of the “Schedule of Provisions Covenants and Conditions Subject To Which Leases Of Units Are Held” in the units plan, in its application to unit 23, is to state the use to which that particular unit can lawfully be put.

20                  The risk of determination of each unit lease that I have referred to is, in my opinion, sufficient to show that the “purpose” clause contained in cl 3(c) in the Schedule of Provisions Covenants and Conditions in the registered unit plan should not be accepted as intended to operate according to its terms.  The absurdity that results from giving cl 3(c) the construction contented for by the respondent of exposing one unit lease to forfeiture because of the conduct of the holder of another unit lease can be avoided by reading cl 3(c) with cl 3(d).  Clause 3(d) is a covenant by the original parties to each of the sixty-one unit leases that nineteen of the sixty-one units in the buildings on the entire parcel are to be residential units while the other forty-two units are to be serviced apartments.  If cl 3(c) is read with cl 3(d) in an endeavour to identify the authorised use to which unit 23 (and each of the other sixty units) can be put in accordance with s 175 the Land (Planning and Environment) Act, it is apparent that the authorised use of nineteen of the units is as residential units and the authorised use of the remaining forty-two units is as serviced apartments.

21                  The respondent submits that such a reading ignores the presence of the word “maximum” in cl 3(d).  That is true.  But if the word “maximum” is allowed any operation, it would result in a reading of cll 3(c) and (d) which would permit any one of the sixty-one units to be used at any time as a residential unit, so long only as no more than eighteen of the other unit lessees were then using their units as residential units rather than as serviced apartments.  The lawful use to which a unit could be put at any particular time would be governed by the uses to which other unit lessees were then putting their own units.  It is irrational, in my opinion, to construe provisions intended to state the authorised use of each unit permitted by s 175 the Land (Planning and Environment) Act in a way which gives those provisions such a variable and uncertain operation:  the owner or occupier, including a prospective new owner or occupier, would not know whether he or she could safely use their unit as a residential unit or as a serviced apartment until he or she had first ascertained what use was being made of other units, a task that may well not be an easy one.  It is therefore permissible for the Court in construing these clauses of the Schedule of Provisions Covenants and Conditions to ignore the word “maximum” in cl 3(d).

22                  The second flaw in the submission is that it pays lip service only to the fundamental rule that:  “… the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another”:  Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109.  The need to have regard to this contextual assistance when seeking the true meaning of a particular clause is emphasised when it is contained in a poorly drafted document like this Schedule of Provisions, Covenants and Conditions to the registered units plan.  There is therefore  no warrant for ignoring cl 3(d) in seeking the meaning of cl 3(c).  Moreover, it is difficult to see what work cl 3(d) would have to do if it is not to be read with cl 3(c) as prescribing the lawful uses to which each of the sixty-one units can be put.  It is a term that is expressed to bind each individual unit lessee “in respect of his relevant unit”.  The limitation that the buildings in the entire parcel shown in sheet 1 of the unit plan must contain no more than sixty-one units in all, is created by the form in which the unit plan is registered.  Clause 3(d) is not necessary to achieve that.  It follows that if cl 3(d) is not directed to fixing the maximum number of units in the buildings but is still to have some operation, it can only be directed to stating the uses to which those sixty-one units can lawfully be put.  And unless cl 3(d) is so read, the deemed lease of each unit will fail to satisfy the requirement of s 175 the Land (Planning and Environment) Act that it state the purpose for which the unit lease can lawfully be read:  cl 3(c) by itself cannot for the reasons given be accepted as sufficient to do that.

23                  The intention of the parties, ie, the Commonwealth as lessor and the first respondent as original lessee of all sixty-one units, as to the lawful uses to which each of the sixty-one units can be put, is clear when cl 3(c) is read with cl 3(d) against the background of s 175 the Land (Planning and Environment) Act and s 25(1) the Unit Titles Act.  Effect can be given to this intention by construction of the unit plan if the nineteen units authorised to be used as residential units and the forty-two authorised to be used as serviced apartments can be identified within the four corners of the unit plan.  It is, in my opinion, possible to do this.

24                  Sheet 1 of the Plan shows units numbered 1 to 19 and 43 and 44 located in one of the three buildings on the parcel subdivided by the Plan, with units numbered 20 to 27 in a second building and the remainder numbered 28 to 42 and 45 to 61 in the third building.  Sheets 3 to 15 of the Unit Plan show that each of units numbered 1 to 19 has a significantly greater unit entitlement and area than units 20 to 26 and a very significantly greater unit entitlement and area than units 27 to 41 and 43 to 61.  Only the very large unit 42 does not share these characteristics of all the other units numbered 20 to 61, which differentiate them from the units 1 to 19.

25                  Once cl 3(c) and (d) are accepted as fixing the lawful use to which each of the sixty-one units can be put and, if it is also accepted, as I think it should be, that a residential unit is intended for long-term habitation while a serviced apartment is intended for short-term occupation only, it can, in my opinion, properly be inferred that the units authorised to be used as residential units are the larger ones, ie, those numbered 1 to 19 and the forty-two units authorised for use as serviced apartments are the smaller ones, ie, those numbered 20 to 41 and 43 to 61, and, in addition, unit 42.  Though unit 42 is much the largest of all the units with a much larger unit entitlement than any of them, Dowsett J, in his reasons, identifies indications in the Unit Plan that justify grouping this unit with the others numbered 20 to 61.

26                  I would dismiss the cross-appeal and uphold the declaration made by the learned primary judge as to the proper construction of Units Plan No 1000, though for different reasons.

Associate:

Dated:              2 April 2001

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

DOWSETT J:

27                  As Gyles J has set out the facts of this case, it is not necessary that I rehearse them.  I agree with what his Honour has written concerning the use of extrinsic evidence as an aid to construction.  However I differ from his Honour as to the purposes for which unit 23 may be used. 

28                  Upon registration of a units plan pursuant to s 24 of the Unit Titles Act 1970 (ACT) (the “Unit Titles Act”) the relevant parcel is sub-divided as prescribed by the plan.  The lessee of the parcel becomes the lessee of each of the units (subs 25(1)).  The “provisions, covenants and conditions” of each lease are as:

… set out in the units plan in relation to that unit as if a separate lease of that unit for that term and subject to those provisions, covenants and conditions had been granted to him or her by the Commonwealth under the Land Act … .

29                  The reference to the “Land Act” is to the Land (Planning and Environment) Act 1991 (ACT) (the “Land (P&E) Act”).  The duration of each lease is as prescribed in subs 25(2).

30                  Pursuant to s 5 of the Unit Titles Act, each units plan contains all the documents referred to in subs 22(1) and endorsed under that section, being documents relating to the subdivision of the relevant parcel.  Subsection 22(1) provides that the following documents may be presented to the Minister for endorsement:

(a)       diagrams showing the subdivision in accordance with the proposals as so approved;

(b)       the schedule of unit entitlement as so approved; and

(c)        schedules in accordance with the schedules forwarded under paragraphs 18(1)(b) and (c);

…

31                  As I understand it, for present purposes the diagrams referred to in par 22(1)(a) are those which appear at AB 89 and 94 - 103.  The schedule of unit entitlement referred to in par 22(1)(b) appears at AB 91 – 93.  The schedules referred to in par 22(1)(c) are the documents which appear at AB 104 – 108 and AB 109 – 111.  The schedule at AB 104 – 108 (the “unit lease schedule”) contains provisions, covenants and conditions which are included in unit leases.  That at AB 109 – 111 deals with the common property and is not presently relevant.  Clause 3 of the unit lease schedule provides as follows:

The Lessees of each of the Units no.s 1-61 inclusive covenants with the Commonwealth of Australia (hereinafter called “the Commonwealth”) in respect of his relevant  unit as follows:

(a)       …

(b)       …

(c)        To use the said parcel for residential units and serviced apartments;

(d)       That the buildings on the said parcels shall contain a maximum of nineteen one bedroom residential units and forty-two serviced apartments;

(e)        …

32                  Subsection 175(1) of the Land (P&E) Act prescribes that:

Territory land in respect of which a lease has been granted, whether before or after the commencement of this Part, shall not be used for any purpose other than a purpose authorized by the lease, subject to this section.

33                  Section 8 of the Land P&E Act (which deals with town planning) prescribes:

The Territory, the Executive, a Minister or a Territory authority shall not do any act, or approve the doing of any act, that is inconsistent with the plan.

34                  The “plan” is the Territory plan in effect from time to time pursuant to the Land (P&E) Act.  (See s 4.)  It follows from s 175 and s 8 that a lease must specify the use to which the subject land is to be put.  This must not be inconsistent with the plan.  The land may only be used for that specific purpose. Presumably, the prescribed purpose may be narrower than any use or uses permitted by the plan.  The term “lease” is defined in subs 159(1) to include a lease granted or arising under the Unit Titles Actand so includes the lease of unit 23.  There may be room for argument about whether the expression “Territory land” in s 175, when used with regard to a lease under the Unit Titles Act, describes the whole parcel which has been sub-divided by registration of a units plan or only the subject matter of a particular unit lease.  The latter is the more likely meaning.  The expression is appropriate to describe a unit.

35                  For present purposes, it is necessary to determine the permitted purposes for which unit 23 may be used pursuant to its lease.  The lessee covenants in respect of his relevant unit to use the said parcel for residential units and serviced apartments.  He or she further covenants in terms of subs 3(d).  As Gyles J has pointed out, it seems that the case has been previously conducted upon the basis that the two uses (residential units and serviced apartments) are capable of precise definition and are mutually exclusive.  The approach taken by the cross-appellants (and apparently accepted by the cross-respondents) appears at par 4.24 of the cross-appellants’ written submissions as follows:

The Leader companies submit that, in the Units Plan, a residential unit is one which the owner may occupy and live in or one which the owner may directly lease out to a tenant for terms which might vary but which are longer than a night, a few days or even a week or two.  A serviced apartment, on the other hand, is a unit which is habitually hired out for short periods (a day, a few days, a week or two) and which is serviced regularly by a manager in a similar fashion to a hotel. 

36                  It is obviously necessary to determine the meaning of the term “the said parcel” as used in subcl 3(c) and subcl 3(d).  When used in subcl 3(d), it clearly describes the parcel which has been subdivided by the units plan.  The word “parcel” is similarly used in subcl 6(e) and subcl 6(i).  It is likely that it is has the same meaning in subcl 3(c).  This conclusion is reinforced when the covenant is read as a whole.  The lessee covenants in respect of his relevant unit to use the parcel for the prescribed purposes.  It is unlikely that the subject matter of the lease (the unit) would have been described in different ways in such close proximity.

37                  Gyles J has pointed to the well-known distinction between land use for planning purposes and building approvals and has suggested that subcl 3(d) says nothing about lawful use or purpose.  However it is an express covenant of the lease, clearly designed, in conjunction with subcl 3(c), to restrict the use of the entire parcel.  It is, in my view, impermissible to treat subcl 3(d) as being of no effect.  As I have said, subs 175(1) implicitly requires that each lease (including a lease created pursuant to the Unit Titles Act) prescribe the purpose for which the land in question may be used.  If each lessee covenants in respect of his (or her) unit in accordance with subcl 3(c) and subcl 3(d), then the use of each unit is restricted to that extent.  If the units plan does not identify the units comprising the class of nineteen restricted units and those comprising the class of forty-two serviced apartments, there is no absolute right to use any unit for either specified purpose, at least in the absence of any legally enforceable arrangement amongst the unit owners as to “allocation” of purposes.  It was at one stage suggested that the developer (and vendor) had the right to assign purposes to units, but I see no basis for that claim.  As far as I are aware, there is no binding arrangement amongst the unit holders concerning this matter. 

38                  The problem may only acquire significance if more than nineteen unit holders seek to use their units as residential units or if more than forty-two unit holders seek to use their units as serviced apartments.  However there will always be a potential risk that such events will occur.  It is in this sense that I conclude that there may be no absolute right to use any unit for either purpose unless the units plan can be so construed as to identify the units to be included in each class.  If it cannot be so construed, then the leasing authority has failed to comply with the implied requirement in subs 175(1) that a lease prescribe a permitted purpose.  To prescribe two permitted purposes for the whole parcel with the numerical limitations prescribed by subcl 3(d), without more, says nothing about the purpose which is permissible for each unit.  Neither purpose would be permissible unless the prescription as to the use of the totality was observed, and that could only be achieved by agreement amongst the unit holders.

39                  It is therefore necessary to determine whether the units plan identifies the two classes of units.  This is not a question of ambiguity, nor is there room for application of the presumption contra proferentem.  Indeed, there is authority for the proposition that when the Crown is the grantor, the presumption does not apply.  See Norton on Deeds 2^nd Edition at 133, and Odgers The Construction of Deeds and Statutes 5^th Edition at 98.  Whatever the historical provenance of the limitations contained in subcl 3(c) and subcl 3(d) it is clear from the various accompanying diagrams which form part of the plan that there are sixty-one units.  Of these, units 1 to 19 and 43 and 44 are in a two-storey brick building (building A); units 20 – 27 are in a single-storey brick building directly opposite it (building B); and units 28 – 42 and 45 – 61 are in another two-storey brick building (building C).  See AB 89.  Units 1 – 9 are on the ground floor of building A, and units 10 – 19 are on the first floor.  Units 43 and 44, very much smaller in size, are also on the ground floor of that building.  Units 28 – 42 are on the ground floor of the third building, and units 45 – 61 are on the first floor.  The following table sets out the floor areas and unit entitlements of each unit.

40                  Units 1 – 19 are located together and described collectively on the site plan (AB 89).  They are larger (and therefore have larger unit entitlements) than the other units, excepting unit 42.  It is the largest unit of all and has six “unit subsidiaries” associated with it.  The term “unit subsidiary” describes any one or more of a number of additional areas which may be included in the various unit leases.  The other units have one, two or three such areas, all of which appear to be car-parking spaces, balconies or yards.  Unit 42 has six subsidiary areas, the first and second of which comprise a yard.  (See AB 97.)  The third and fourth are storerooms on the ground floor of building C.  (See AB 97.)  The fifth is a storeroom on the first floor of building C.  (See AB 101.)  It seems likely that these storerooms were intended for some purpose other than enhancing the benefit incidental to owning unit 42.  The sixth subsidiary area is a parking space.  (See AB 103.)  It will also be seen from the site plan (AB 89) that unit 42 is at ground level and near to McMillan Crescent which appears to be the street from which access is had to the property.  It is likely that this unit was designed to be used for managerial purposes in conjunction with the serviced apartments.  There is an available inference that units 1 – 19, which are located together, described collectively in the site plan and larger than all of the other units (with the exception of unit 42) are the nineteen residential units.  Common sense suggests that permanent residency would require greater area than would short-term occupation. 

41                  If this construction is not adopted, then no purpose has been specified in the lease, contrary to subs 175(1), with the consequence that there is no purpose for which each unit can lawfully be used.  In either case the result is that the present cross-respondent cannot use unit 23 for residential purposes.  In those circumstances, the falsity has been made out.  The cross-appeal must be dismissed.

Associate:        

Dated:              2 April 2001

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT

OF AUSTRALIA

REASONS FOR JUDGMENT

GYLES J:

42                  The issues which lie at the heart of resolving the appeal are short but important for land titles and conveyancing in the Australian Capital Territory (“ACT”).  They involve the principles applicable to construction of the purposes clause in a registered unit lease.

43                  On 24 August 1993 Bruce William Bowler and Janelle Joy Bowler (“the Bowlers”) contracted to purchase from Hilda Pty Limited (“Hilda”) a unit lease of Unit 23 of a proposed development to be constructed upon what was to become Block 10 of Section 84, in the Division of Griffith, ACT, known as the “Regency Units”. 

44                  Prior to the purchase, an agent of Leader Real Estate Pty Limited and Leader Holdings Pty Limited (“the cross appellants”) had, it has been found, represented to the Bowlers that each unit of the Regency Units could be lived in by the purchaser, rented out privately, or rented as serviced apartments, and was therefore an attractive re-sale proposition.

45                  The trial judge found that this was false, firstly because the use of the unit was restricted by the lease which they acquired to a serviced apartment and, secondly, because it was a breach of that restriction for the Bowlers to live in the unit or rent it privately.  It is that finding of falsity which is subject to challenge in the cross appeal, this being the only aspect of the appeal which is now pursued. 

46                  As a result of completing the contract, the Bowlers became registered proprietors of Volume 1368 Folio 33 of the Register maintained pursuant to the combined effect of the Land Titles (Unit Titles) Act 1970 (ACT), and the Land Titles Act 1925 (ACT), being a Crown lease of Unit 23 of Block 10 of Section 84 of the Division of Griffith, identified on Units Plan Registered Number 1000 (the “Units Plan”).  The leasehold commenced on 24 February 1994 and was due to expire on 16 February 2054.  Under the heading “Restrictions, Conditions and Easements” the following words appeared:

“Purposes Clause                               Refer Units Plan”

47                  The Units Plan registered pursuant to the Land Titles (Unit Titles) Act 1970 included a survey plan, a schedule of unit entitlements and a series of diagrams depicting the layout of the units, including their dimensions and location.  Also included was a schedule of provisions, covenants and conditions subject to which leases of units are held by reason of provisions I shall refer to later.  Clause 3 of the schedule was as follows:

“3.      The Lessees of each of the Units No.s 1-61 inclusive covenants with the Commonwealth of Australia (hereinafter called “the Commonwealth”) in respect of his relevant unit as follows:

(a)               to pay to the Territory at Canberra the rent hereinbefore reserved and any other moneys payable under the lease within one month of the date of any demand made by the Territory relating thereto and served on the Lessee;

(b)               …

PURPOSE      (c)        To use the said parcel for residential units and serviced apartments;

SINGLE UNIT

DWELLINGS  (d)       that the buildings on the said land shall contain a maximum of nineteen one-bedroom residential units and forty two serviced apartments;

VEHICLE

ACCESS         (e)        That vehicular access to the adjoining Block 8 Section 84 Griffith shall not be permitted from McMillan Crescent;

                        …”

There then followed a series of other sub-clauses dealing with the topics of:

building height;

landscaping;

car parking;

service areas;

building subject to approval;

repair;

failure to repair;

right of inspection; and

rates and charges.

48                  The trial judge found that although the purposes clause, incorporated by reference into the certificate of title, in its terms permits use for residential units and serviced apartments (which accords with the representation which was made) consideration of sub-clause (d) of cl 3 meant that cl 3(c) is ambiguous and that, in relation to Unit 23, should be read down to mean serviced apartment only, when reference is made to extrinsic material, in particular the original Crown lease to Hilda, which was cancelled upon registration of the Units Plan in question, and certain plans referred to in that lease.  The Bowlers argued below and on appeal that the extrinsic material to which resort could be had to resolve the ambiguity so found was wider than that relied upon in the judgment below. The ACT was a respondent to the application and was represented at the trial and broadly supported the Bowlers, but was not represented on appeal.  It will be bound by the result so that, one way or another, the Bowlers will be protected.

49                  It is argued on behalf of the cross appellants that the purposes clause in the Units Plan, which is incorporated by reference into the certificate of title, in its terms permits use for residential units and serviced apartments (which precisely accords with the representation in issue) and that it is impermissible to create ambiguity and then resolve it, contrary to the language of the purposes clause, by reference to material outside the purposes clause.  It is put that neither cl 3(d) nor any other part of the registered lease, including the Units Plan so far as relevant to Unit 23, creates or involves any ambiguity.

50                  In my opinion, the submissions for the cross appellants are sound, and Volume 1368 Folio 33 and the incorporated Units Plan setting out the terms and conditions of the lease involve no ambiguity as to the identity and contents of the purposes clause – it is cl 3(c) and no other.

51                  One limb of the finding of ambiguity below was as follows:

 “44.    First, because of the quite inappropriate transposition of cl 3(c) and (d) from the covenant in the Crown lease to the covenants prescribed in the Units Plan, those sub-clauses as they apply to the Bowlers’ unit are on their face patently ambiguous.  While together they plainly contemplate that the permitted uses of units subject to the plan (ie residential purposes and serviced apartments) are to be mutually exclusive and that only nineteen units are to be used for the former purpose, they do not in terms specify how any particular unit is to be identified as a residential unit and hence how any particular unit can properly be used.” (emphasis added)

It will be observed that the emphasised words, which commence the reasoning, take into account the contents of the Crown lease to Hilda to create the ambiguity in the relevant instrument, the end result of which was that the contents of the Crown lease to Hilda  were taken into account to resolve the ambiguity so created.  This is, with respect, both circular and contrary to principle.

52                  Another limb of the reasoning was as follows:

 “45.    Secondly, a consequence of what the sub-clauses together plainly contemplate is that it is impermissible to construe each in isolation and by so doing to achieve the outcomes of having cl 3(d) found void for uncertainty and then of having cl 3(c) interpreted in a fashion it manifestly was never intended to have.  Read together with cl 3(d) the “and” in cl 3(c) means “or” in the sense that some units are to be used only for one purpose (ie residential units), the rest for the other (ie serviced apartments).  In other words cl 3(d) is, and was intended as a covenant to be, integral to the definition of the rights of use that a unit holder was to acquire under his or her lease by virtue of cl 3(c): cf Whitlock v Brew (1968) 118 CLR 445 at 461-462;  see also Cheshire and Fifoot, Law of Contract, 7^th Aust ed, para 6.17.  It cannot in my view be severed from cl 3.  Rather, I am of the view that cl 3(c) and (d) must be construed together.  If they cannot be ascribed a certain meaning applying the appropriate rules and techniques of construction, then the question of their severability, or else the validity of the lease itself, will arise.”

53                  I agree that there is a problem with cl 3(d) but I do not agree that the presence of       cl 3(d) leads to any ambiguity in cl 3(c).  Clause 3(d) does not relate to purpose or use in the ordinary sense of the word.  The fact that it may have no sensible application to a lease of an individual unit does not create any ambiguity in relation to cl 3(c).  They each relate to different topics.  The distinction between the form of a building to be erected and land use is well known in planning law (Gange v Sullivan (1966) 116 CLR 418 at 430, 432;  Drummoyne Municipal Council v Lebnan (1974) 131 CLR 350 at 358-359).  Clause 3(c) is clearly identified by the side note as being a purposes clause.  As I mention later, the purposes clause in a Crown lease in the ACT has particular significance.  As noted above, the certificate of title expressly refers to the purposes clause.  This must be a reference only to     cl 3(c), not cl 3(c) and 3(d).  Clause 3(d), as submitted on behalf of the cross appellants, relates to the form of the buildings on the whole area of the Units Plan rather than to the use of any particular unit after completion of the building development.  It could found no basis for an injunction to restrain the use of any individual unit once the development is completed.  It has its own separate sidenote.  The same applies to most of the other clauses.  In short, whatever problem there may be with cl 3(d) should not infect cl 3(c).

54                  The proper construction of cl 3(c) according to its ordinary meaning is that an individual unit may be used as either a residential unit or a serviced apartment at any one time assuming, as appears to have been done below, that those uses are mutually exclusive. 

55                  In my opinion it was erroneous to have regard to the extrinsic material in question in construing the registered unit lease.  To do so detracts from certainty of title in the Land Titles Act 1925.  The Land Titles Act 1925 introduced a Torrens title system in familiar form, with the Register paramount (see, for example, ss 53, 57, 58, 59, 60).  In recognition of the part played by Crown leases in the ACT, Pt IX of the Land Titles Act 1925 provides, inter alia, as follows:

 “Registration of Crown leases

70(1)      The Registrar-General shall register in the Register every Crown lease for a term of not less than 12 months granted by or in the name of the Commonwealth by entering the lease in a folio of the Register.

…

Dealings with Crown leases

71(1)      Every Crown lease, upon registration, shall be subject to the provisions of this Act, and (subject to the provisions of the Act in pursuance of which the Crown lease was granted and to the provisions of the Crown lease) may be transferred, mortgaged and dealt with for the same purposes, and in like manner, as if it had been granted by a proprietor of land under this Act and registered in the Register.

(2)              Any entries which, in the case of a lease granted by a proprietor of land under this Act, would require to be made in the Register shall, in the case of a registered Crown lease, be made in the Register on the folium constituted by the Crown lease.

This is supplemented by the Land Titles (Unit Titles) Act  1970 which is incorporated and to be read as one with the Land Titles Act 1925 (s 6(1)) and provides that:

 “6(2)  A units plan and every other document or instrument lodged with the Registrar-General under this Act shall, for the purposes of the Principal Act, be deemed to be an instrument affecting land.”

Part 2 of the Act deals with registration of units plans and culminates in s 11 as follows:

 “Duties of Registrar-General after registration of units plan

11.              Immediately after the registration of a units plan, the Registrar-General shall –

(a)               cancel the lease of, or certificate of title for, the parcel and the duplicate of that lease or certificate;

(b)               issue, in accordance with Form 8, a certificate of title for each unit to the person who, by force of paragraph (b) of subsection (1) of section 25 of the Unit Titles Act 1970, is the lessee of the unit;

(c)                issue to the relevant corporation a certificate of title for the common property in accordance with Form 9;  and

(d)               enter of each certificate of title so issued a memorial of any mortgage or easement to which, by force of the last preceding section, the lease is subject and, if it is subject to two or more mortgages or easements, enter the memorials in such manner as to preserve their priority.”

56                  The Land Titles (Unit Titles) Act 1970 is, in effect, consequential upon the Unit Titles Act 1970 (ACT) which introduced a scheme akin to a strata title scheme for the ACT.  It provided, inter alia, for the process of subdivision leading to registration of a units plan, the effect of that registration and for a management corporation to administer the plan and, in particular, common property.  The effect of registration, so far as is relevant here, is:

 “Subdivision of parcel made by registration

24.              On and after the registration of the units plan, the parcel is subdivided in the manner specified in the diagrams in the units plan and the boundaries of the units, of the unit subsidiaries (if any) and of the common property shall be ascertained in accordance with those diagrams and with sections 14 and 15 as if a reference in those sections to proposals were a reference to the units plan.

Leases of units and common property

25(1)   On the registration of the units plan –

(a)               the lease of the parcel is determined;

(b)               the person who was, immediately before the registration of the units plan, the lessee of the parcel becomes possessed of an estate of leasehold in each unit for the term fixed under subsection (2) and subject to the provisions, covenants and conditions set out in the units plan in relation to that unit as if a separate lease of that unit for that term and subject to those provisions, covenants and conditions had been granted to him or her by the Commonwealth under the Land Act;  and

(c)                the corporation becomes possessed of an estate of leasehold in the common property for the term fixed under subsection (2) and subject to the provisions, covenants and conditions set out in the units plan in relation to the common property as if a lease of the common property for that term and subject to those provisions, covenants and conditions had been granted to the corporation by the Commonwealth under the Land Act. (emphasis added)

(2)               The term of the lease of a unit and of the lease of the common property commences on the registration of the units plan and expires on the date specified in the units plan, being the date on which, but for the operation of this section, the term of the lease of the parcel would have expired.

(3)               The estate of which a person or the corporation, as the case may be, becomes possessed under this section –

(a)               is subject to any mortgage referred to in section 10 of the Land Titles (Unit Titles) Act 1970;  and

(b)               is subject to, and has appurtenant to it, the easements created by section 27 of this Act and any easement referred to in section 10 of that Act.”

57                  The special position of Crown leases in the ACT is of importance.  Effectively, for relevant purposes, a Crown lease, rather than fee simple, is the root of all title.  Transactions take place in relation to those leases, which are different in function from ordinary inter partes leases.  It is also necessary to appreciate the significance of purposes clauses in Crown leases.  They have traditionally been a principal means of administering planning controls in the ACT (for example, Morpath Pty Ltd v ACT Youth Accommodation Group Inc (1987) 16 FCR 325).  Section 175 of the Land (Planning & Environment) Act 1991 (ACT) makes unlawful the use of land other than for purposes authorised by the lease.  That Act also seeks to ensure harmony between purposes authorised by the Crown lease and the Territory Plan (ss 8 and 65(4)(a)).  In the present case, all of the possible uses covered by the purposes clause are within the Territory Plan as it applied to the land in question.

58                  In this setting, it seems to me that the cross appellants are correct in submitting that the line of cases referred to in par 38 of the judgment below (Bowler v Hilda Pty Ltd [2000] FCA 899), which limit the extrinsic material which can be taken into account in construing statutory planning approvals, provide a useful guide to resolution of the present case and the same reasoning should have been applied here.  These cases (and others including Sydney Serviced Apartments Pty Ltd v North Sydney Municipal Council (No 2) (1993) 78 LGERA 404 at 407, 408) were recently considered and applied by the New South Wales Court of Appeal in Winn v Director General of National Parks & Wildlife [2001] NSWCA 17 (particularly at pars 2-5 and 198-202).  The rationale of these cases appears from the following passage from the judgment of Hope J in Leichhardt Municipal Council v Terminals Pty Ltd (1970) 21 LGRA 44 at 50-51:

 “Whilst it is true that generally speaking regard cannot be had to extrinsic evidence, other than evidence to identify a thing or place referred to, in order to interpret a public document such as a planning approval, reference may be had to documents, the terms of which are incorporated into the public document:  Slough Estates Ltd v Slough Borough Council [No 2] [1970] 2 WLR 1187;  Ryde Municipal Council v The Royal Ryde Homes (1970) 19 LGRA 321.  I say generally, for the basis of this view is that a planning approval operates for the benefit of successors in title to the owner who obtained the approval, and it would be quite inapt to alter the apparent meaning of the approval by reason, for example, of negotiations or correspondence between the original applicant and the council.”

In Winn, Spigelman CJ  noted that a development consent (at par 4):

 “…is also a document intended to be relied upon by many persons dealing with the original grantee or assignees of the grantee, in such contexts as the provision of security.  In some respects it is equivalent to a document of title.  It must be construed in accordance with its enduring functions.”

This passage provides direct support to the argument of the cross appellants here.

59                  His Honour below took a different view “given the contractual character of the lease”.  This was, no doubt, a reference to cases such as The Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17.  There is a question as to whether a lease resulting from the operation of s 25 of the Unit Titles Act 1970 is a contract in any relevant respect but, even if so, this would not in my opinion result in construing a clause or clauses in such a lease by reference to the extrinsic material considered here and would not permit an ambiguity to be created by reference to such extrinsic material.  This is not to suggest that extrinsic evidence as to a registered lease may never be considered.  Evidence, for example, might be relevant to identify the land and the parties or to give context to particular covenants in the ordinary way (Codelfa Constructions Pty Ltd v State Rail Authority (1982) 149 CLR 337).  Issues between original parties involving personal equities or issues arising on rectification of the register may require extrinsic evidence.  However, these are not questions of construction (see, for example, Beames v Leader [2000] 1 Qd R 347).

60                  The particular documents referred to by the judge were the Crown lease to Hilda (registered number Volume 1355 Folio 40) and certain plans and specifications referred to in it, together with an application for approval of those plans.  The Bowlers did not take an assignment of that registered title.  The Crown lease to Hilda was cancelled upon registration of the Units Plan as required by the statute.  In any event, his Honour did not find that the Crown lease to Hilda by itself resolved any ambiguity.  He relied upon the approved plans referred to in that Crown lease which are not and were never registered.  The same applies to the application for approval.  None of these documents were incorporated by reference into the Bowlers’ unit lease.

61                  The position is best viewed by considering what would happen in proceedings for an injunction by the ACT against a registered successor in title of the Bowlers to prevent use as a residential unit.  It would be anomalous in such proceedings to permit construction of the registered unit lease by reference to materials beyond the registered title and that which is expressly incorporated in it.  Matters of history, whether registered dealings or not, should not be relevant.  The Bowlers should be in no different position.  They have a registered title derived by dealing with Hilda not the ACT.

62                  Much material other than that expressly relied upon in the judgment below was tendered in evidence and referred to during the argument on appeal.  It encompassed much of the history of the site and of the proposal to redevelop it.  In my opinion, this was largely irrelevant to the issues in the case.  It may be that consideration of this material indicates that the intentions of some officials in relation to use of Unit 23 were not carried forward into the drafting of the Units Plan.  Whether or not this could have founded an order for rectification against Hilda is not relevant.  It would provide no basis for effecting rectification against a purchaser by a process of construction.

63                  If (contrary to my opinion) there is the ambiguity perceived by the trial judge, but if extrinsic material cannot be relied upon as it was by the trial judge to resolve the ambiguity,  then the inevitable consequence is that cl 3(c) is meaningless.  His Honour did not find that the ambiguity could be resolved by resort to the certificate of title and the incorporated Units Plan alone without extrinsic evidence.  In my opinion, this was plainly correct. When the Units Plan is looked at as a whole, there is nothing in the description, identification or location of the individual lots which earmarks any one of them for any particular use.  None is described as a residential unit, a one-bedroom unit or serviced apartment.  Indeed, it was not argued on the appeal that cl 3(c) was not ambiguous if regard were only had to the certificate of title and the Units Plan.  To come to that view would, in my opinion, be speculation.  It would be anomalous to construe the vital purposes clause which, when considered as such, has meaning and content, as meaningless because of the infelicitous drafting of another and separate clause.  To say the least, it would be an unfortunate result if a registered Crown lease could effectively be rendered nugatory because it permits no use of the subject premises by reason of a court finding ambiguity in a purposes clause after title was acquired.

64                  The appeal by the cross appellants should be allowed, and the proceedings should be dismissed, with the Bowlers to pay the costs of the cross appellants here and below.

Associate:      

Dated:              2 April 2001