In brief
A decision of a single judge of the Supreme Court of Queensland has concluded that landlords of pre-30 June 2009 commercial leases in Queensland are entitled to recover land tax from tenants from 30 June 2010, despite earlier legislation which purported to restrict such recovery. Partner John Beckinsale considers the implications of the decision for landlords and tenants of pre-30 June 2009 commercial leases in Queensland.
Introduction
The decision in Wyuna Court Pty Ltd v Vikpro Pty Ltd [2015] QSC 216 means that tenants with pre-30 June 2009 commercial leases that allow for the recovery of land tax by the landlord (or renewals, assignments or transfers of such leases) may now be obliged to reimburse their landlords for land tax imposed from 30 June 2010, as long as this decision is not reversed on appeal, and the government does not legislate to remove the effect of the decision. The decision has no impact on the recovery of land tax in Queensland under residential leases, or under retail leases subject to the Retail Shop Leases Act 1994 (Qld).
The facts
Under section 44A of the Land Tax Act 1915 (Qld), now repealed, a provision in a lease entered into after 1 January 1992 requiring a tenant to pay land tax, or to reimburse the landlord for land tax, was unenforceable.
This restriction in section 44A was repealed by amendments to the Land Tax Act 1915 (Qld), which were introduced in 2009 (2009 Amendments), and which had the following effects:
- From 30 June 2009, a non-residential and non-retail lease in Queensland could allow the landlord to seek reimbursement for land tax from the tenant.
- A transitional provision in the 2009 Amendments expressly provided that the prohibition on landlords passing land tax on to tenants continued to apply to leases that were in existence immediately before 30 June 2009, and to renewals, assignments and transfers of those leases.
A new Land Tax Act 2010 (Qld) (the Replacement Act) subsequently came into force from 30 June 2010. The Replacement Act effectively rewrote the entire Land Tax Act 1915 so that it accorded with 'contemporary drafting practices'. Part 10 of the Replacement Act contained transitional provisions, but there was no transitional provision equivalent to the 2009 Amendment transitional provision that expressly provided that the prohibition on landlords passing land tax on to tenants continued to apply to leases in existence prior to 30 June 2009.
The landlord of a pre-30 June 2009 lease sought to recover land tax from the tenant under the lease for a period after 30 June 2010.
The decision
The court allowed the landlord to recover the land tax.
As part of the decision, Justice Dalton decided that the repeal of the Land Tax Act 1915 by the Replacement Act, together with what his Honour regarded as the deliberate failure of the Replacement Act to re-enact an equivalent transitional provision to the transitional provision appearing in the 2009 Amendments, showed a clear Parliamentary intention that the previous prohibition on recovery of land tax would not continue from the passing of the Replacement Act.
As a consequence, his Honour decided that the effect of the Replacement Act was that the previous restriction on recovery of land tax under leases entered into before 30 June 2009 (which restriction had been originally imposed on 1 January 1992, and preserved for pre-30 June 2009 leases by the 2009 Amendments) was now removed from 30 June 2010.
In arguing that land tax should not be payable even though the Replacement Act did not expressly include the same transitional provision as the 2009 Amendments, the tenant relied on sections 20(2)(b) and (c) of the Acts Interpretation Act 1954 (Qld) which provide as follows:
- The repeal or amendment of an Act does not –
- affect the previous operation of the Act or anything suffered, done or begun under the Act; or
- affect a right, privilege or liability acquired, accrued or incurred under the Act; or
…
The application of this provision would mean that even though there was no express transitional provision in the Replacement Act, the previous operation of the 2009 Amendments that did include the transitional provision would not be affected by the repeal of the Land Tax Act 1915.
His Honour noted however that by section 4 of the Acts Interpretation Act, that Act may be 'displaced, wholly or partly, by a contrary intention appearing in any Act'. In his Honour's view, the repeal of the Land Tax Act 1915, together with the deliberate failure to re-enact an equivalent transitional provision, showed a clear Parliamentary intention that the prohibition was not to continue, and that such matters displaced any operation which s 20(2) could otherwise have had.
Implications of the decision
Although we have seen arguments raised since the Replacement Act commenced about the precise implications of the Replacement Act being repealed, a number of advisers had concluded that ss 20(2)(b) and (c) of the Acts Interpretation Act did have the impact argued (unsuccessfully) by the tenant in this case.
If Parliament did deliberately intend to remove the restriction in 2010 by repealing the Land Tax Act 1915, it did so very quietly. The government made it quite clear in making the 2009 Amendments that the previous restrictions would continue to apply to pre-30 June 2009 leases. The Queensland Property Council at the time was disappointed that the legislation did not go one step further and remove the restriction completely from all leases.
We are not aware of any comments by the government at the time the Replacement Act was introduced that noted that the position it had preserved less than a year earlier was now being reversed. While Justice Dalton considered that the failure of the Replacement Act to expressly repeat an earlier transitional provision constituted a strong indication that the restriction was to no longer apply, if the intention was to remove the restriction it would presumably have been a simple matter to expressly say so in the Replacement Act, instead of leaving that matter to be decided by the courts based on an interpretation of the Acts Interpretation Act.
If the case is not reversed on appeal, and the government does not reverse the impacts of the decision by legislation, then a number of landlords with pre-30 June 2009 leases that permit the recovery of land tax may seek to recover amounts from tenants that they previously did not seek to recover.