Module 5 - Crown Leasehold PDF

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Introduction into Crown Leasehold (Property Law) Queensland Australia...

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Module 5 – Crown leasehold

Module 5 – Crown Leasehold Introduction The Crown in right of the State has the power to grant fee simple or leasehold interests in Queensland land under the Land Act 1994 (Qld) whilst this has the same year and a similar title to, it is not the same as, the Land Title Act 1994 (Qld). Most urban land in Australia (with the exception of Canberra) has been granted to individuals by freehold tenure. Although the Crown retains a reversionary interest in such land, that interest is, for all practical purposes, virtually nominal and the fee simple owner may properly be regarded as having an absolute interest in the land. If a fee simple owner dies without a valid will or next of kin, the fee simple interest in the land will pass to the Crown as bona vacantia in all jurisdictions except Western Australia. In contrast, much rural land, particularly pastoral lands, is held on lease or licence or is reserved for public purposes, including conservation purposes (national parks or public parks and gardens) and government activities and infrastructure (schools, hospitals and roads). Freehold land in Queensland constitutes approximately 20% of the State’s total land area, while around 70% of the land is leased by the Crown to companies or individuals (the remaining 10% consists of roads, reserves and other similar uses). This means that significant tracts of land in Queensland are occupied under Crown leasehold tenure. The Land Act 1994 (Qld) establishes the system of Crown/State leasehold which is the basic tenure of many of the significant pastoral properties in Queensland. There is nothing in the history of English law which corresponds to the Australian system of Crown leasehold.

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Module 5 – Crown leasehold

Learning resources Text Wallace Ch. 2

5.1 Crown land According to the common law doctrine of tenure, all land in Australia that has been granted by the Crown, even land granted in fee simple, is held by tenure rather than absolute ownership. As you know from previous modules, the Crown is the ultimate source of all tenure and theoretically retains absolute title to all freehold and nonfreehold tenures, while the grantee or tenant holds land ‘of’ or ‘from’ the Crown. The premise of the doctrine of tenure is that all land holders in Australia hold a tenure from the Crown. The term ‘tenure’ signifies the relationship between the Crown and the holder of the Crown grant. The only exception to this is land held under native title as native title rights do not derive from any Crown grant: Mabo v Queensland (No 2) (1992) 175 CLR 1 at 59-60 per Brennan J.

5.1.1 Radical title In Mabo v Queensland (No 2) (1992) 175 CLR 1, although the High Court endorsed the ‘skeletal’ principles of feudal tenure, it concluded that upon settlement, the Crown did not acquire absolute title over all lands but rather acquired ‘radical title’ to the lands and sovereign power to regulate those lands. According to Brennan J, ‘[t]he doctrine of tenure applies to every Crown grant of an interest in land, but not to rights and interests which do not owe their existence to a Crown grant’: Mabo v Queensland (No 2) (1992) 175 CLR 1 at 48-9. Radical title could be burdened by native title where an indigenous group could prove a continuing relationship with the land. However, where the Crown’s sovereign power had been exercised and a Crown tenure granted over

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land which was subject to native title rights, the native title rights could be extinguished and the Crown could, in such a situation, assume the position of paramount owner. The Crown can exercise the radical title that arises from its sovereign power in relation to land in the State of Queensland in two ways: ●

to grant interests in fee simple in the land; or

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to appropriate to itself ownership of parcels of the land: Mabo v Queensland (No 2) (1992) 175 CLR 1 at 50 per Brennan J.

5.1.2 Forms of crown grants Under Crown land statutes, the Crown may issue a range of different forms of Crown grants and holdings. A reference to ‘Crown land’ is a reference to any land which, pursuant to legislative enactment, is the property of the Crown in right of the Commonwealth, a State or a Territory. Each jurisdiction in Australia has legislation regulating its dealings with and management of Crown land. Statutory definitions of Crown land differ between the jurisdictions, but generally provide that land constitutes Crown land where it is the property of the Commonwealth, a State or a Territory, whether or not the land is reserved or dedicated for any public use. Crown land that has not yet been alienated, even if it is currently occupied by a tenant under a lease, licence or other right, remains Crown land unless it has been dedicated for a particular public purpose. In Queensland, the relevant legislation is the Land Act 1994 (Qld), which refers to ‘unallocated State land’ rather than ‘Crown land’. Section 14 of the Land Act 1994 (Qld) acknowledges the Crown’s powers to allocate unallocated State land, which is defined in the Schedule 6 Dictionary as follows: unallocated State land means all land that is not— (a) freehold land, or land contracted to be granted in fee simple by the State; or

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(b) a road or reserve, including a national park, conservation park, State forest or timber reserve; or (c) subject to a lease, licence or permit issued by or for the State, other than a permit to occupy under this Act issued by the chief executive. Other statutes can also regulate dealings with specific aspects of Crown land in each jurisdiction such as, for example, the acquisition of lands, protection of rural lands and irrigation on Crown lands.

5.1.3 Public land Crown legislation can reserve land for a large variety of different ‘public purposes’. So, for example, the relevant Victorian legislation sets out many of the public purposes for which land can be reserved, including ports, wharves and docks; roads, car parks and railways; public parks, gardens and other public recreation areas; wildlife reserves; reservoirs, aqueducts and waterways; camping grounds; drainage and sewerage works; and public swimming pools: s 4 Crown Land (Reserves) Act 1978 (Vic). Although public land may be formally dedicated to particular purposes such as roads, national parks and recreation areas, the Crown remains the nominal and beneficial owner of that land. While members of the public may have the right to access and use the land and to pass freely through it to the extent of the provisions creating the public purpose for the land, they do not acquire any rights or interests arising from their access to or use of the public land: Stow v Mineral Holdings (Australia) Pty Ltd (1977) 180 CLR 295. Where land has been reserved from alienation and dedicated to a particular public purpose, it is removed from Crown control. This means that the land cannot be alienated by way of sale, lease or licence unless the public purpose reservation is revoked. Any attempt to alienate it will be void against the Crown and all other

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persons. Land reserved for public purposes is also generally exempted from the payment of municipal rates. Where an estate or interest in land has been alienated, it does not constitute Crown land, although if the Crown issues a lease holding it may retain a reversion expectant over the land. Where there is a public right of passage on a dedicated road over Crown land, this right of public access is not considered to be a property right or a form of tenure and so does not detract from the Crown’s absolute ownership of the land.

5.1.4 Forms of tenure In the past, forms of tenure of Crown land varied widely, as colonial administrators were forced to introduce specific statutory grants capable of accommodating detailed provisions for the regulation and management of large areas of harsh uncultivated land. Indeed, one of the primary characteristics of the Australian tenure system was the proliferation of diverse forms of statutory tenures across each of the States and Territories, with more than 70 different tenures administered across the jurisdictions. Current Crown land legislation passed in each jurisdiction was intended to simplify the complex forms of tenure granted over Crown land. In Queensland, as Thomas Fry has noted, the ‘undoubted constitutional right of the Queensland Parliament to create whatever tenures it [thought] fit and to attach to them whatever incidents it [thought] fit, [was] exercised actively’, resulting in ‘a bewildering multiplicity of tenures’, many of which evinced only minute differences in their form or conditions.1 In 1990, a Review into Land Policy and Administration was carried out, chaired by Ms Patsy Wolfe (now Chief Judge Wolfe of the District Court).

The review made

recommendations with respect to certain matters relating to leasehold land and the

1 Thomas Penberthy Fry, Freehold and Leasehold Tenancies of Queensland Land (1946), University of Queensland Press, at 29.

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administration of State lands in Queensland. Its findings were published as a report, now commonly known as the ‘Wolfe Report’. Following this review, the Land Act 1994 (Qld) was passed, considerably simplifying the various forms of Crown leasehold tenure by reducing them to two principal tenures: perpetual leases and term leases. It should also be noted that s 7 of the Land Act 1994 (Qld) states that nothing in the Act affects the operation of the Native Title (Queensland) Act 1993 (Qld). Sections 27 and 28 provide that any dealings with Crown land under the Act must not be inconsistent with the Native Title Act 1993 (Cth) or the Native Title (Queensland) Act 1993 (Qld) and that native title may still exist over land which is dealt with under the Land Act 1994 (Qld). Section 18A allows for unallocated State land to be granted or leased in exchange for the surrender of native title rights over an area of land in accordance with an indigenous land use agreement.

5.2 Crown leases In addition to granting freehold estates in land and appropriating land for public purposes, the Crown can also grant leasehold interests in land to approved lessees. Most rural land in Australia, particularly pastoral land, is held under one of the various classes of Crown leases that are regulated by the Crown lands statutes in the States and Territories. By granting Crown leases rather than freehold title to rural land, State and Territory governments are able to exercise greater control over land use management in rural areas. They do this by imposing conditions which are either specified in the terms of the lease or under relevant Crown lands legislation. In Queensland, the Crown in right of the State (in other words, the State government) may grant a variety of Crown leases for rural purposes, including leases in perpetuity or for a term of years. These leases may only be used for the specified purposes for

Module 5 – Crown leasehold

which the lease is issued and the purposes must be stated in the lease: ss 15, 153 Land Act 1994 (Qld). A Crown lease can be granted on a variety of terms. All leases contain conditions and impose general obligations on the lessee. There are other statutory obligations imposed on Crown lessees. Chapter 5 Part 2 of the Land Act 1994 (Qld), for example, sets out general mandatory conditions applicable to Crown leases, licences or permits. These include conditions requiring the lessee: ●

to exercise a duty of care for the land: s 199;

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to use the land only for the purpose for the tenure was issued: s 199A;

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to keep noxious plants under control: s 200;

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to provide information about the lease to the Minister when requested: s 201;

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where the lease is a pastoral lease, not to undertake improvements or to carry out development work for two years after the expiry of the lease without the Minister’s written approval: see s 202 Land Act 1994 (Qld);

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take certain steps if the land is subject to an indigenous cultural interest s 202AA(+)

One common condition attaching to a Crown grant was that of residency, where the grantee was required to reside continuously on the property as his or her habitual place of abode. This condition was particularly common during early colonisation, when governments were attempting to encourage widespread settlement in remote areas of the country. If the holder of a Crown grant breaches any of the attached conditions, Crown land statutes generally provide for the forfeiture of the holding: Ch 5 Part 4 Land Act 1994 (Qld). Generally, if it has been proved that the holder has failed to comply with the conditions attached to the Crown grant, the relevant Minister is required to give the holder a reasonable opportunity to be heard. If the Minister remains satisfied that the breach

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has occurred, he or she may at his or her discretion declare the grant to be forfeited in the Government Gazette. Forfeiture may be declared for the breach of any condition or covenant attached to the land, provided that the Minister is satisfied, in his or her discretion, that there are no special or mitigating circumstances to explain the breach. Where the enforcement of a right to forfeit would be inequitable or unconscionable in the circumstances, a court may grant relief against forfeiture. When a forfeiture is declared, the holding generally vests in the Crown and all money paid to the Crown in respect of the holding is forfeited. The land remains reserved land or becomes unallocated State land. In Queensland, the Minister may reinstate a lease if the lease was forfeited for nonpayment of moneys owing under the lease and the lessee makes payment of all money owing and the Minister is satisfied that the lessee had a reasonable excuse for not complying with the payment. At common law, both a fee simple and a leasehold interest conferred a right of occupation on the interest holder, although a lease differed from a fee simple estate by being for a limited number of years. The fact that many Crown leases were granted in perpetuity effectively called into question this key difference: see Nolan v Wilambong SC (1939) 14 LGR (NSW) 89 per Roper J. However, in Fisher v Deputy Federal Commissioner of Land Tax (NSW) (1915) 20 CLR 242 and Hawkins v Minister for Lands (1949) 78 CLR 479, the High Court emphasised that there were fundamental differences between a freehold and a leasehold (even a perpetual leasehold) interest. Some of these differences are primarily theoretical, while others are practical differences relating to the nature of the interest and the ways it may be dealt with. These include the control placed on the rights of Crown leaseholders by requiring that they may only assign their interest in the lease with the consent of the relevant Minister. Another is the requirement that leaseholders pay rent under the terms of the

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lease.

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Other differences are the management conditions imposed on Crown

leaseholders, which were originally intended to ensure that the land was developed but today may be directed more towards responsible land conservation and management. Nonetheless, the penalty of forfeiture of the lease for breach of any of the lease conditions provides an additional element of control over the use of the leasehold land. The differences between the nature and conditions of fee simple and leasehold interests, and their respective effects on native title, were considered in Wik v Queensland (1996) 187 CLR 1. The majority of the High Court held that the Crown leases granted under Queensland legislation did not grant a right to exclusive possession, conferring instead a lesser interest which was more similar to grazing rights and so did not exhaust the potential uses of the land. In that sense, the Crown leases were held not to be leases in the common law sense and so common law principles in relation to leaseholdings did not apply to them; rather, they were instruments of statute whose terms were dictated by the enabling legislation.

5.3 Types of leases Under previous legislation in Queensland, there were many types of leases. However, the process of simplifying the forms of tenure resulted in two main types of lease which can be issued under the Land Act 1994 (Qld): ●

perpetual leases;

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term leases.

5.3.1 Perpetual leases A perpetual lease is a lease held in perpetuity by the lessee for grazing or agricultural purposes and subject to the performance of specific statutory conditions, such as the payment of rent and the agricultural cultivation of the leased land. These leases were

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formerly grazing homestead perpetual leases under the previous legislation. Although there is no provision for the issuing of new perpetual leases in Queensland, existing grazing homestead perpetual leases and non-competitive leases may continue under the current legislation: ss 468-471 Land Act 1994 (Qld). A perpetual lease confers rights upon a holder which are virtually tantamount to a fee simple, in that the lessee retains exclusive possession of the land in perpetuity. However, a perpetual lease can be distinguished from a fee simple because it does not constitute an absolute right but is rather a statutory right which exists in perpetuity as long as the conditions specifically attached to it are complied with and the prescribed statutory requirements for its creation have been established: Fisher v Deputy Federal Commissioner of Land Tax (NSW) (1915) 20 CLR 242. A lessee under a perpetual lease is also subject to permanent rental reviews at specified intervals in the lease. In some circumstances, the lessee can apply to convert a perpetual lease into a fee simple estate by paying a lump sum purchase price or converting the tenure into an incomplete conditional purchase with the price being paid off in instalments: see the cases of Gilbert v Western Australia (1962) 107 CLR 494; Harrington v Keene (1974) 11 SASR 361. In Queensland, s 166 of the Land Act 1994 (Qld) allows the lessee to apply to convert the leasehold interest to freehold.

5.3.2 Term leases A term lease is simply a lease for a specified period of time (the ‘term’ of the lease). The Crown may issue a term lease in circumstances where it does not grant a perpetual lease or a conditional purchase tenure. Term leases are commonly provided for under Crown land statutes in the different jurisdictions. In Queensland, ss 472-9 of the Land Act 1994 (Qld) set out the principal provisions in relation to term leases. Examples of term leases include special leases

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for irrigation purposes, wharves and jetties, common reserves, agricultural and stock purposes and shack sites: see ss 472 and 476 Land Act 1994 (Qld) pertaining to pastoral leases and special and development leases respectively. The period of time granted under a term lease must be certain and definite and upon its conclusion the lease should automatically expire: Flower v Darby (1786) 99 ER 1029. In some States, Crown land legislation specifically allows for the creation of a term lease by limiting the duration for which a Crown lease may be granted. Section 155 of the Land Act 1994 (Qld) sets out different durations of term leases granted over different types of land, although the terms may be extended. A term lease for rural leasehold land must not exceed 30 years, although an extension may be granted in certain circumstances. A term lease for land other than rural leasehold land must not exceed 50 years, althou...