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  • Unreported Judgment

Gympie Regional Council v Kemp

 

[2020] QSC 169

SUPREME COURT OF QUEENSLAND

CITATION:

Gympie Regional Council v Kemp & Anor [2020] QSC 169

PARTIES:

GYMPIE REGIONAL COUNCIL

(plaintiff by counterclaim)

v

RICHARD KEMP

(first defendant by counterclaim)

EMMA NOBLE

(second defendant by counterclaim)

FILE NO:

4281 of 2018

DIVISION:

Trial

PROCEEDING:

Trial

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

11 June 2020

DELIVERED AT:

Brisbane

HEARING DATES:

21, 22 and 26 May 2020

JUDGE:

Flanagan J

ORDER:

The Court declares, pursuant to s 10(2) of the Civil Proceedings Act 2011 (Qld), that with respect to a lease entered into between the plaintiff by counterclaim and the first and second defendants by counterclaim on 26 March 2012 over land described as 1 Jane Street, Gympie in the State of Queensland, more particularly described as Lot 200 on Crown Plan MCH3583 (the Lease), the plaintiff by counterclaim is entitled, as at the date of this order, to either:

  1. 1.
    cancel the Lease, pursuant to s 65 of the Land Act 1994 (Qld); or
  2. 2.
    terminate the Lease, pursuant to clause 11.3(2)(b) of the Gympie Regional Council Standard Terms for a Trustee Lease. 

The Court also orders that:

  1. 3.
    the first and second defendants pay the plaintiff’s costs of the:
  1. (a)
    Originating Application filed in the District Court of Queensland Reference BD 186/18, and which was transferred to the Supreme Court of Queensland by order of Douglas J dated 4 May 2018; and
  2. (b)
    first and second defendant’s claim; and
  3. (c)
    plaintiff’s counterclaim,

including all reserved costs of those proceedings.

CATCHWORDS:

REAL PROPERTY – CROWN LANDS – QUEENSLAND – GENERALLY – where the defendants were the lessees of trust land on which a caravan park was operated – where the lease obliged the defendants to make certain improvements to the caravan park – where the plaintiff argued that the defendants failed to make the improvements required by the lease – whether the plaintiff was entitled to cancel the lease pursuant to s 65 of the Land Act 1994 (Qld)

LANDLORD AND TENANT – TERMINATION OF THE TENANCY – FORFEITURE – GENERALLY – where the defendants were the lessees of trust land on which a caravan park was operated – where the lease obliged the defendants to make certain improvements to the caravan park – where the plaintiff argued that the defendants failed to make the improvements required by the lease – whether the plaintiff was entitled to terminate the lease under the terms of the lease

Land Act 1994 (Qld), s 65

COUNSEL:

E J Morzone, with him K W Wylie for the plaintiff by counterclaim

Richard Kemp, self-represented, for the first defendant by counterclaim

Richard Kemp, self-represented, for the second defendant by counterclaim

SOLICITORS:

Baldwins Lawyers for the plaintiff by counterclaim

  1. [1]
    On 26 March 2012, the plaintiff by counterclaim, Gympie Regional Council, entered into a lease with the defendants by counterclaim, Richard Kemp and Emma Noble.  The lease is over land at Gympie, on which the Gympie Caravan Park is operated.
  2. [2]
    The issue in these proceedings is whether the plaintiff, as lessor, is entitled to either cancel the lease pursuant to s 65 of the Land Act 1994 (Qld) or terminate the lease under the terms of the lease.  The plaintiff seeks declaratory relief to this effect.
  3. [3]
    The plaintiff alleges that it is entitled to this relief because of numerous breaches of the terms of the lease by the defendants, primarily in relation to the failure to construct and install new infrastructure at the caravan park.
  4. [4]
    For the reasons which follow, the plaintiff should be granted the declaratory relief sought.

Background

  1. [5]
    The land the subject of the lease is trust land as that term is defined in Schedule 6 of the Land Act 1994 (Qld).  It comprises a reserve for the purpose of Camping (caravan park).  The trust land has been placed under the control and management of the plaintiff as trustee.[1]
  2. [6]
    The land is located at 1 Jane Street, Gympie and is more particularly described as Lot 200 on Crown Plan MCH3583.  The lease was granted pursuant to s 57 of the Land Act 1994 (Qld) for a period of 30 years commencing on 23 February 2012, and was registered on 30 April 2012. 
  3. [7]
    The lease followed a public call by the plaintiff for tenders for the grant of the lease.  The tender for the lease of the Gympie Caravan Park is exhibited to a certificate of Bernard Smith, the Chief Executive Officer of the plaintiff.[2]  In Part 2 of the tender, the plaintiff identified the following objectives:

“Council seeks to develop the Gympie Caravan Park into a modern well equipped caravan park providing comfortable high standard accommodation, shower, toilet and washing facilities, and multiple recreation facilities for patrons at a price to patrons consistent with that offered in the private sector for such facilities. … The lease will incorporate those terms of the successful tender which provide for rental and the creation of improvements and infrastructure, as those terms are explained in the Tender Response form.”

  1. [8]
    The tender referred to the infrastructure and improvements contemplated by the lease which the plaintiff required as a minimum:[3]

“● Upgrade of internal roadways;

 Upgrade of electrical facilities in accordance with current legislation, including the provision of underground power;

 Upgrade of sewer infrastructure in accordance with current legislation;

 Upgrade of reticulated water services in accordance with current legislation;

 Demolition and rebuilding of amenities block in accordance with current legislation including asbestos issues (Asbestos Report attached);”

  1. [9]
    Tenderers were advised by the plaintiff that it would be conducting regular onsite inspections to monitor operation of the caravan park and compliance against the Infrastructure and Improvement Schedule.  The tender required tenderers to provide an infrastructure proposal to indicate what infrastructure the tenderer proposed to deliver to the site of the leased premises during the 30 year term of the lease and a timetable for construction and maintenance.[4]
  2. [10]
    The defendants provided a tender submission to the plaintiff dated 21 June 2011.[5]  In the submission, the defendants referred to themselves as having “extensive experience in running and managing a Caravan Park having been actively employed at the Gympie Caravan Park since 2005.”[6]  The submission stated that the first defendant left the Gympie Caravan Park in September 2010 and that the second defendant was still employed at the park.  The defendants provided infrastructure and improvements proposals setting out the infrastructure improvements required by the plaintiff and dates by which those infrastructure improvements would be completed.[7]
  3. [11]
    The defendants were the successful tenderers and entered into the lease.

Terms of the Lease

  1. [12]
    The terms of the Lease are comprised in: the schedule attached to the Lease (“Schedule Terms”); the mandatory standard terms for a trustee lease Dealing No 711732933 (“State Terms”); and the plaintiff’s standard terms for a trustee lease Dealing No 7130730520 (“Council Terms”).
  2. [13]
    Relevantly, the terms of the lease include the following:
    1. (a)
      by clause 6 of the Schedule Terms:

6. PROVISION OF INFRASTRUCTURE AND IMPROVEMENTS

Without derogating from the Trustee Lessee’s obligations under clause 5 the Trustee Lessee agrees and acknowledges that it shall provide such infrastructure and improvements as is detailed in schedule A to this Lease, such infrastructure and improvements to be effected at the time so specified in the schedule. Failure to provide such improvements or infrastructure without the consent in writing of the Trustee, or failure to provide the same within the time frame specified unless an extension of time in writing is agreed to by the Trustee shall be deemed to be in breach of an essential condition of this Lease by the Trustee Lessee.”

  1. (b)
    by Schedule A of the Schedule Terms:

“SCHEDULE ‘A’ IMPROVEMENTS AND INFRASTRUCTURE

All works herein described are to be provided in accordance with the Infrastructure Proposals (section 3.2E) and Improvements Proposals (Section 3.2F) and concept plans, submitted by the Lessee as part of its Tender Response Documents and to comply with relevant building standards and have such permits and approvals as required by the local authority.

The Trustee Lessee shall upgrade sewerage, electrics, plumbing, drains, concrete, kerbing etc associated with the required works detailed herein in accordance with the timetable set for those works.

Proposed Works

To Be

Completed By

Upgrade internal roadways

January 2013

Toilets and Laundry

January 2013

Build new house and office

January 2014

Upgrade of reticulated water services

January 2015

Build new camp kitchen

January 2015

...

...

Build new power room

January 2019

 

Achieve 4 star plus rating on completion of shop, with courtyard to serve light meals

January 2019

Upgrading of roads and kerbs for shop and courtyard area

January 2019

Cabins at the top of the park to be replaced with new 1 and 2 bedroom cabins

January 2019

3 cabins closest to the shop to be upgraded to have disabled access

January 2019

Build 9 one bedroom cabins

January 2019

Pool to be replaced with lagoon style pool

January 2019

 

Build dedicated toilet and shower block for permanent residents

January 2019

 

  1. (c)
    by clause 11 of the Schedule Terms:

11. COMPLIANCE WITH LEGISLATION

The Trustee Lessee shall at all times comply at its own cost with the provisions of any Act, Regulation or local law applying with respect to the operation of a caravan park business on the premises.”

  1. (d)
    by clause 6 of the State Terms:

“6.1 The Trustee Lessee may only use or development the Premises:

  1. (a)
    according to all relevant laws including, without limitation, any planning and environmental laws and any local laws;
  1. (b)
    where an Approval of any entity is required to undertake or carry out a use or development of the Premises, with the prior Approval of the relevant entity and according to that Approval; …

6.3 In clause 6.1, ‘develop’ includes the construction of Improvements on the Premises. …”

  1. (e)
    by clause 4.9 of the Council Terms:

4.9 Compliance with Statutory Requirements

The Trustee Lessee must discharge promptly, at its own expense (where applicable), the requirements of:

  1. (1)
    all Acts relating to the Land and Improvements; and
  1. (2)
    all notices, orders, requisitions and requirements (whether directed to the Trustee, the Trustee Lessee or both of them) issued with respect to the Land and Improvements by any lawful authority.”
  1. (f)
    by clause 5 of the Schedule Terms:

5. MAINTENANCE RESPONSIBILITIES AND REPAIR

Notwithstanding any other provision of this lease the Trustee Lessee agrees that it will be responsible for the repair of, or maintenance to, or any necessary replacement of any of the infrastructure under or on the premises pertaining to the enjoyment of the premises and any improvements upon the premises notwithstanding that the same may be the property of the Trustee, and releases the Trustee from any obligation to either repair maintain or replace the same. Infrastructure shall not be restricted to, but shall include; taps, pipes, plumbing, conduits, drains, cables, wiring, electrical equipment pertaining to the supply of electricity, electronic equipment and cabling, concrete pads, sealed or unsealed roads, driveways or pathways, gates and fencing. …”

  1. (g)
    by clause 5.2 of the Council Terms:

5.2 Maintenance and Repair (General)

The Trustee Lessee must maintain the Land and Improvements, including all fixtures and fittings, in good repair, working order and condition, save where maintenance is necessitated by the Trustee’s negligence.”

  1. (h)
    by clause 6 of the Council Terms:

6.1 Alterations / Additions by Trustee Lessee

  1. (1)
    Unless otherwise permitted or required by this Lease, the Trustee Lessee must not make any improvements, alterations, or additions to the Land and Improvements, or allow them to be made, without the Trustee’s written permission.
  1. (2)
    In any event, the Trustee Lessee must ensure that all improvements, alterations and additions it makes or allows to be made to the Land and Improvements are made:
  1. (a)
    competently;
  1. (b)
    in conformity with plans approved by the Trustee in its capacity as Trustee of the Trust Land;
  1. (c)
    in conformity with the conditions of the relevant Development Permit;
  1. (d)
    using quality materials; and
  1. (e)
    to the satisfaction, and subject to the directions, of the Trustee.

6.4 Maintenance and Repair of Trustee Lessee Improvements

The Trustee Lessee must Maintain the improvements, alterations, or additions it makes to the Land and Improvements, save where maintenance is necessitated by the Trustee negligence.”

  1. (i)
    by part 11 of the Council Terms:

11.1 Default and Cancellation

  1. (1)
    Subject to the provisions of Section 65 of the Act, the Trustee may cancel this Lease if default is made by the Trustee Lessee in the performance or observance of any covenant or conditions of this Lease, including, where such default is capable of remedy, such default is not remedied within twenty-one (21) days (or such other time as the Trustee may allow after taking into account what needs to be done and the time required to remedy the default) after notice in writing specifying such default and requiring the Lessee to remedy the same has been given by the Trustee to the Trustee Lessee whereupon the Trustee shall be entitled to re-enter the land and improvements.

11.2 Events of Default

  1. (1)
    The Trustee Lessee will be in default under this Lease if:
  1. (a)
    it fails to discharge an obligation the Lease imposes on it;

11.3 Remedies Upon Default

  1. (2)
    Subject to Section 124 of the Property Law Act 1974, if the Trustee Lessee is in default under the Lease, the Trustee also may:
  1. (a)
    terminate the Lease by re-possessing the Land and Improvements at any time, with or without notice;
  1. (b)
    otherwise terminate the Lease,

without prejudicing the entitlements that have accrued to it for any earlier default by the Trustee Lessee.”

Notice to remedy breach – s 124 of the Property Law Act 1974 (Qld)

  1. [14]
    Approximately five and a half years after entering into the lease, the defendants were served with a notice to remedy breach of covenant pursuant to s 124 of the Property Law Act 1974 (Qld).  The s 124 notice is dated 30 November 2017.  Annexure A to the notice identifies 16 alleged breaches of the lease.  The plaintiff, as part of its written submissions, has compiled a document entitled “Schedule of Breaches”.  This schedule summarises the 16 breaches notified in the s 124 notice and a further eight breaches which were not the subject of any notice.  For the purposes of determining whether the plaintiff is entitled to the declaratory relief sought, it is sufficient to consider seven of the primary breaches identified in the s 124 notice, namely:
    1. (a)
      failure to construct a new male toilet facility and a new female toilet facility;
    2. (b)
      failure to construct a new camp kitchen;
    3. (c)
      failure to upgrade reticulated water services;
    4. (d)
      failure to upgrade internal roadways;
    5. (e)
      poor workmanship in the existing female toilet facility;
    6. (f)
      poor maintenance of the existing male toilet facility; and
    7. (g)
      poor maintenance of the existing camp kitchen.
  2. [15]
    The breaches in the Schedule of Breaches which are not the subject of the s 124 notice are breaches which have occurred since the proceedings were commenced.  The plaintiff only relies upon these additional breaches if necessary, to demonstrate repudiation of the lease by the defendants.  In my view, the seven primary breaches identified in the s 124 notice, if established, are sufficient to warrant the grant of declaratory relief.  It is therefore unnecessary for the Court to consider the additional breaches not notified in the s 124 notice or the issue of repudiation.
  3. [16]
    In considering the seven breaches identified in (a) to (g) above, the plaintiff identifies two issues in dispute:
  1. (i)
    in respect of the breaches, other than upgrading of the internal roadway and upgrading the reticulated water services, whether the defendants have “completed the [alleged works constituting the breaches] as per the time requirements”; and
  1. (ii)
    in respect of the upgrade of the internal roadway and upgrade of the reticulated water services, whether the defendants have complied with the lease “in so much as it has been able to” but have been unable to complete those works by reason of the plaintiff’s failure “to work cooperatively”, in particular “to provide plans which show the position of the services with the roadways” and “electrical and reticulated water plans”.[8]
  1. [17]
    For the purposes of establishing the alleged breaches in (a) to (g) above, the plaintiff called two experts and a qualified building certifier employed by the plaintiff.  Mr Grehan is a building surveyor accredited by the Royal Institution of Chartered Surveyors.  He provided a report in relation to the caravan park after an inspection conducted on 15 November 2018.[9]  Mr Grehan conducted a further inspection on 28 April 2020 and provided an update report.[10]  Mr Hage has been a licensed plumber and drainer for 50 years and is also a licensed hydraulic and fire services design consultant.  Mr Hage provided two reports.[11]  The first was based on an inspection of the caravan park on 15 November 2018 and the second report was compiled after a second inspection conducted on 28 April 2020.  Mr Hage’s expert evidence was relevant to the breaches concerning water reticulation services.  Mr Prout is a qualified building certifier employed by the plaintiff since 29 January 2013 as the Manager, Building and Plumbing Services.  He has conducted a number of inspections of the caravan park over the years.  He provided a report to the plaintiff in 2018 which is annexed to his Statement of Evidence.  More recently, Mr Prout inspected the caravan park on 28 April 2020.[12]  Mr Grehan, Mr Hage and Mr Prout gave oral evidence and were crossexamined by the first defendant, Mr Kemp.  Each of them were credible witnesses and I accept their evidence.
  2. [18]
    For the defendants, an affidavit of the first defendant, Mr Kemp, sworn 18 January 2018 was tendered.[13]  A further document headed “Plaintiffs submission on hearing 21st May 2020” compiled by the defendants was also tendered, together with a number of documents.[14]  The defendants also tendered a chronology[15] and Mr Kemp gave oral evidence.  I consider the evidence called by the plaintiff and by the defendants in analysing each separate alleged breach below.
  3. [19]
    I note that these proceedings are only concerned with the plaintiff’s counterclaim.  The defendants had initially brought proceedings seeking declarations as to the validity of the s 124 notice, together with injunctive relief to restrain the plaintiff from terminating the lease.  In the alternative, the defendants sought relief against forfeiture and damages in the sum of $1 million for breach of the lease by the plaintiff.  On 22 April 2020, Boddice J granted the defendants leave to discontinue the whole of their claim against the plaintiff.  A notice of discontinuance has been filed.  The effect of the defendants discontinuing their claim is that they no longer challenge the validity of the s 124 notice.  The factual inquiry is therefore narrow, namely whether the defendants were in breach of the lease as alleged.

The Breaches

(a) Failure to construct a new male and female toilet facility on or before January 2013

  1. [20]
    Clause 6 and Schedule A of the Schedule Terms required the defendants, on or before January 2013, to provide improvements described in Schedule A as “toilets and laundry”.  The obligation was to construct a new male and female toilet facility.  This was because Schedule A provides that the works described are to be provided in accordance with, inter alia, the Infrastructure Proposals (s 3.2E) and Improvements Proposals (s 3.2F) submitted by the defendants as part of their tender response documents.  The obligation therefore required the demolition and rebuilding of the toilet amenities in accordance with current legislation, including asbestos issues.
  2. [21]
    The evidence establishes that the defendants have failed to construct a new male and female toilet facility.  This is evident from the photographs taken by both Mr Hage and Mr Prout and exhibited to their reports.[16]  Works did commence under this requirement in that a development permit 2013-0314 for building work was issued, and foundations and support bearers were constructed in 2013 adjoining the western boundary of the caravan park.[17]  Those works were never completed and were subsequently abandoned.
  3. [22]
    Mr Kemp explained why the toilet facilities were abandoned:

“Work commenced by [J and R Builders] where a sub contractor mentioned to me the work seemed to be sub standard ,I engaged a solicitor to investigate this matter ,where an engineer was engaged ,which in turn led to the BSA (building services authority) issuing a stop work directive ,on the amenities block ,house and office.”[18]

  1. [23]
    Annexure C to Exhibit 9 which was tendered by Mr Kemp is a Resolution Services Initial Inspection Report by the Building Services Authority.  An inspection was conducted by the Building Services Authority on 24 October 2013.  The inspection appears to relate to alleged defective work which had been resolved.  The document states:

“● All parties onsite were in agreement the defective building work previously described to the amenities block have been resolved with Richard Kemp being satisfied with the completed work at this stage.

In conclusion:

It should be noted that Richard Kemp will not allow access to the licensee to complete any other work and has terminated the contract to the construction of the combined office and house building reference to a subsequent complaint with BSA file reference 3-3520-13. 

The item of concern has been investigated and identified as being rectified; therefore BSA proposes to take no further action on this matter.”

  1. [24]
    There is no evidence that the plaintiff was involved in any dispute between the defendants and their builder, J and R Builders, in relation to the construction of new toilet facilities.  In any event, no such dispute would relieve the defendants of their obligation under the lease to construct a new male and female toilet facility on or before January 2013.
  2. [25]
    The evidence reveals that the defendants commenced a renovation of the existing female toilets.  This renovation did not, however, involve a demolition and construction of a new female facility.  In evidence, Mr Kemp referred to the renovations to the existing female toilets as constituting a “full refurbishment”.[19]  He referred to demolishing the “whole building, bar the bricks”.[20]  The refurbishment, however, is not complete.  The relevant evidence in this regard is considered below in respect of breach (e).
  3. [26]
    In relation to the new male toilet facility, there is simply no rebuilding or renovation, nor any commencement of a renovation.  Mr Kemp’s evidence was that the only works done towards this requirement was the drawing of plans.[21]  I accept the plaintiff’s submission that it is incontrovertible that the requirement for making these improvements has not been fulfilled.[22]  The plaintiff has established that the defendants have breached the lease in what may be considered a significant respect.  Clause 6 of the Schedule Terms (as quoted above) states that failure to provide such improvements or infrastructure without the consent in writing of the trustee, or failure to provide the same within the timeframe specified unless an extension of time in writing is agreed to by the trustee, shall be deemed to be in breach of an essential condition of the lease.[23]

(b) Failure to construct a new camp kitchen

  1. [27]
    Clause 6 and Schedule A of the Schedule Terms of the lease required the defendants to construct a new camp kitchen on or before January 2015.  The obligation was to demolish and rebuild a new camp kitchen.  In his affidavit, Mr Kemp affirms that except for the upgrade of the internal roadways and reticulated water services, he has completed all of the Works in Schedule A of the Lease, as per the time requirements.[24]  I do not accept this evidence.  A new camp kitchen has not been constructed and it cannot be said on the evidence that the existing camp kitchen has been demolished and rebuilt.  Mr Kemp suggests that the rebuilding of the new camp kitchen is 90% complete.  He has undertaken some renovation of the existing camp kitchen, but this does not constitute the demolition and construction of a new camp kitchen. 
  2. [28]
    Mr Grehan, in relation to the existing camp kitchen, noted on his first inspection that the internal ceiling lining of the camp kitchen building had been removed but not replaced.  As a consequence, the roof and ceiling framing were left exposed causing an environment where dust and vermin could accumulate or reside over and above cooking facilities or areas for the consumption of food.  He also noted that the external fascia boards exhibited signs of significant weathering and in some places decay, and were in need of replacement.[25]  When Mr Grehan conducted his more recent inspection on 28 April 2020 he did not notice any change of significance, however, he observed that the area of the existing camp kitchen was “substantially cleaner”.[26]  Mr Prout, from his inspection of 28 April 2020, noted that there has been no construction of a new camp kitchen and that the existing camp kitchen remains in a very poor state of repair.[27]
  3. [29]
    Mr Kemp, having been shown the photographs of the existing camp kitchen, suggested that those photographs did not show a barbeque, a table and a bench seat, which evidenced that the camp kitchen had been “renovated”.  These renovations included “new walls” and a “nice stainless steel bench”.[28]  Even if it is accepted that certain renovations have been carried out in relation to the existing camp kitchen, the defendants’ obligation under the lease was to demolish and reconstruct.  Mr Kemp accepted that the existing ceiling lining and external soffits have been removed, and not replaced.[29]  Mr Grehan’s evidence was that the timber fascia exterior to the kitchen is in a degraded and poor condition, and there are leaks in the guttering causing water damage.[30]
  4. [30]
    Even if it is accepted that some renovations have been carried out to the existing camp kitchen, the defendants’ obligation under clause 6 and Schedule A of the Schedule Terms of the lease was to construct a new camp kitchen on or before January 2015.  They have failed to do so and are, therefore, in breach of the lease.

(c) Failure to upgrade reticulated water services

  1. [31]
    The obligation under clause 6 and Schedule A of the Schedule Terms required the defendants to upgrade the site’s reticulated water services on or before January 2015. 
  2. [32]
    Mr Kemp accepts that the upgrade of the reticulated water services has not been completed.  His evidence is that:

“(t)he existing amenities block upgrade was 80% completed by Cameron Stanton (plumber) who did not return to finish the work ,we then tried to engage three different plumbers to finish this work, all three plumbers contacted council and said council would either not cooperate or stated there was no approval, bearing in mind Cameron Stanton had already performed said work and stated council had inspected the work .I asked Richard Prout in court on the 21st May whether council had been interfering with approvals on the amenities block ,to which he replied there will be no one blocking you from finishing this work … which is contrary to the attached letters from plumbers…”[31]

  1. [33]
    By reference to certain correspondence from plumbers,[32] the defendants seek to establish that the reason for their failure to upgrade the reticulated water services was a lack of cooperation by the plaintiff.  However, an examination of the relevant correspondence does not support the defendants’ contention.  The first piece of correspondence is from a plumber named Ian Bradford, in an email dated 30 January 2019.  It reads:

“I received your message.  Not sure what plans you’re after but have attached what I have.  The female amenities was all fully documented but when I look on file nothing was done on the male amenities.  From memory we stopped work on it as you were working through issues with council.  Did you want us to do anything on it?”

  1. [34]
    The second is an email dated 5 May 2020 addressed to “whom it may concern”.  The email appears to be from Andrew Newcombe, Director Newk’s Plumbing, and states:

“We were asked by Richard from the Gympie Caravan Park to do plumbing on his toilet block.  When we approached the Council to see if it had a permit to do work, we were told there was no permit for this job.  Without this permit, we could not do plumbing to this toilet block as it is illegal.”

  1. [35]
    It is not evident from this email which toilet block is referred to.  All it states is that a permit was required to carry out the work.  The evidence of Mr Prout is that a plumbing permit already existed, having been issued on 21 March 2017.[33]  The plaintiff had also conducted two inspections of the relevant plumbing work.[34]  None of the authors of the emails in Annexure B to Exhibit 9 were called to give evidence.  The emails are therefore secondary evidence and of little weight.  In any event, Mr Prout’s evidence was that a plumbing permit was in place and that all the plaintiff would require was notification that the defendants were engaging a new plumber.[35]  I accept the evidence of Mr Hage[36] and Mr Prout[37] that there has been no observable upgrade to reticulated water services, with only “minimal work” having been carried out.[38]  Mr Prout’s evidence was that the only lawful reticulations work undertaken on the site related to the connection of some new cabins to the existing water supply and some works partly undertaken within the existing female toilet facility.[39]  Mr Hage’s conclusion was as follows:

“Generally most plumbing and drainage was non-conforming and illegal which leaves me to believe most work or installations were not carried out by a licenced plumber or a licenced drainer.”[40]

  1. [36]
    Mr Hage’s observation in his supplementary report[41] is even more stark:

“During my inspection, I identified that no rectification work had been undertaken with respect to the dangerous and non-compliant plumbing and drainage described in the Previous Report.

Further, on my previous inspection, I did not have the ability to access the existing female amenities building (as opposed to the temporary female amenity building being utilised).  However, in my recent inspection, I was able to access these amenities, and in my opinion they are not useable as the plumbing work has not been completed.”

  1. [37]
    Mr Hage explained in oral evidence why he used the word “dangerous”:

“I used it in the context that it’s – it is dangerous because that exposed pipework, and particular black poly pipe, absorbs heat very quickly.  And what it does is it will heat the cold water in the – within the pipe, and the temperatures in that pipe could get up to above 50 degrees, in my opinion.  I did try a hose tap that was connected off one of the pipes there, and very, very hot and, I think, above 50 degrees … It’s also dangerous in so much as water temperatures above 20 degrees is going to breed Legionella.  That is why it needs to be insulated or buried in the ground.”[42]

  1. [38]
    Mr Hage identified the unsafe works in relation to water reticulation in that the use of the above-ground PE pipe is non-compliant and with exposure to the sun results in leeching of contaminants from the pipe into the water, risk of scalding and injury and an environment that promotes the rapid growth of Legionella and other microorganisms and bacteria.[43]
  2. [39]
    Mr Kemp accepted that the water reticulation infrastructure shown in the various photographs taken by Mr Hage is what exists.[44]  Mr Kemp stated that all the water reticulation work had been undertaken by Cameron Stanton, who was a professional plumber.  I accept the plaintiff’s submission that the fact that the work was undertaken by a plumber engaged on behalf of the defendants does not relieve them of responsibility for breach under the lease.[45]
  3. [40]
    There was a suggestion made by Mr Kemp in cross-examination to Mr Hage that some of the work pre-existed the defendants’ lease and was never disclosed.[46]  I observe, however, that both defendants were familiar with the caravan park, as is evident from their Tender Submission.  Further, the tendered documents made it apparent that the lease was based upon “the need for updating and creation of new infrastructure” and the upgrading of reticulated water services in accordance with current legislation.[47]
  4. [41]
    While there appears to have been some dispute between the defendants and the former plumber Mr Stanton, it remains the case that the defendants are in breach of the obligation under the lease to upgrade reticulated water services on or before January 2015.

(d) Failure to upgrade internal roadways

  1. [42]
    Clause 6 required the defendants to upgrade the site’s internal roadways on or before January 2013.  Mr Grehan in his first report, by reference to his inspection carried out on 15 November 2018 and to four photographs taken at that time, opined:

“No evidence of any significant upgrade to the Caravan Park internal roadways was noted at the time of my site inspection.  While noting my qualification do not included Civil Engineering it seems evident that resurfacing of the roadway and the installation of a drainage system to address water runoff form hard stand areas would be required.”[48]

  1. [43]
    In his subsequent report, Mr Grehan noted that no upgrades of the internal roadways were apparent.  He did, however, note that some resurfacing work may have been undertaken outside of the manager’s residence since his last inspection on 15 November 2018.[49]
  2. [44]
    Similarly Mr Prout, on his recent inspection of the caravan park on 28 April 2020, did not observe any upgrade to any of the caravan park’s internal roadways, apart from some crusher dust that was set down in some of the many potholes throughout the park about a year ago, which had since been washed away.  He considered that the internal roadways were in a very poor state of repair “as there is no kerb and channelling throughout the site, there are numerous pot holes in the existing bitumen roads, the bitumen is crumbling and failing at the edges and at the lower part of the site the roadways have almost completely failed.”[50]
  3. [45]
    Mr Kemp, by reference to an invoice for $13,750 from NRS Construction Pty Ltd, suggests that the upgrade of internal roadways in the caravan park has been completed.[51]  This invoice does not prove this contention.  The uncontroverted evidence of Mr Grehan and Mr Prout is that there are no observable upgrades to any of the caravan park’s internal roadways.  Further Mr Kemp, in his affidavit sworn 18 January 2018, states that the internal road upgrade had not been done at that date because, “I do not have the electrical infrastructure and reticulated water services plans … which should be held on the Council’s asset register and should have been given to me at the time of entering the lease.”[52]  He states that he could not engage the appropriate tradesmen to complete the works because the electrical infrastructure and reticulated water service might be located beneath the internal roadways.
  4. [46]
    As to the invoice from NRS Construction Pty Ltd, this may evidence some work but it is not clear on the evidence whether those works were for the resurfacing observed by Mr Grehan that had been undertaken outside the manager’s residence since his last inspection on 15 November 2018.  The invoice from NRS Construction Pty Ltd is dated 13 March 2019, which is after Mr Grehan’s first inspection on 15 November 2018.  The invoice, however, does not contain any detail as to the nature of the work that was undertaken.
  5. [47]
    There is no evidence before the Court that the defendants have been unable to comply with their obligation to upgrade the internal roadways on or before January 2013 because the Council has not supplied plans which prevented such works from being done.
  6. [48]
    I find that the defendants are in breach of their obligation under the lease to upgrade the internal roadways of the caravan park on or before January 2013.

(e) Poor workmanship in existing female toilet facility

  1. [49]
    Clause 5.2 of the Council Terms requires the defendants to maintain the Land and Improvements, including all fixtures and fittings, in good repair, working order and condition.  Further, clause 6.1(2) of the Council Terms requires the defendants to undertake all improvements, alterations and additions competently, and using quality materials.  The evidence of both Mr Grehan and Mr Prout is that the renovation of the existing female toilet facilities is incomplete.[53]  Mr Grehan is of the opinion that the standard of completed work observed appeared less than would ordinarily be expected from an appropriately qualified tradesperson exercising reasonable skill and care.  Mr Grehan identified the incomplete nature of the work as follows:
    1. (a)
      the grade of the recently installed floor tiles was such that it appears the floor will no longer fall to the floor waste without ponding of water;
    2. (b)
      a number of the drainage outlets and plumbing installations were no longer accessible due to the installation of the floor tiles over the penetrations; and
    3. (c)
      the ramp for access for persons with a disability does not comply with the requirements of the approval or with the relevant Australian Standard in that complying continuous grab rails and kerb rails have not been provided and the requisite tactile ground surface indicators and braille signage has not been provided.[54]
  2. [50]
    Mr Grehan’s evidence was that a “substantial amount of work” was required to bring the work into compliance.[55]
  3. [51]
    The evidence establishes that the defendants are in breach of clause 5.2 and clause 6.1(2) of the Council Terms.  This breach is continuing.

(f) Poor maintenance of the existing male toilet facility

  1. [52]
    The plaintiff relies on a breach of the same terms as the breach in (e) above, namely clauses 5.2 and 6.1(2) of the Council Terms.  I accept that the photographs in Mr Grehan’s reports establish that the existing male toilet facility is in a state of disrepair in that paint is peeling off the walls; a number of closet pans are inoperative; the urinal is inoperative; a toilet is leaking; and a number of wall tiles are held onto the wall by tape.[56]
  2. [53]
    Mr Kemp accepted that the male toilets were in the state of disrepair as evidenced in the photographs but suggested that the defendants were ready to refurbish them and that they had plans in place.[57]  He further suggested that any delay in refurbishing the male toilets was due to the plaintiff.[58]  There is no evidence to support this allegation.  He accepted that the male urinal was still barricaded. 
  3. [54]
    The evidence therefore shows that the defendants are in breach of clauses 5.2 and 6.1(2) of the Council Terms in that they have failed to maintain the existing male toilet facility in good repair, working order and condition.

(g) Poor maintenance of the existing camp kitchen

  1. [55]
    I have already dealt with this issue in [27] to [28] above.  The evidence, including the photographic evidence of Mr Grehan, establishes that the camp kitchen is in disrepair.  This breach is also continuing.

Consideration

  1. [56]
    It is apparent that the defendants are in breach of the terms of the lease, as outlined above.  The defendants have failed to comply with the requirements for remedying these breaches in accordance with the s 124 notice dated 30 November 2017.  The validity of this notice is not challenged.  A number of the breaches relate to infrastructure improvements that were to be made by the defendants as early as January 2013 or before January 2015. 
  2. [57]
    The defendants have failed and continue to fail to remedy these breaches.  The breaches in relation to upgrading infrastructure constitute breaches of essential terms of the lease.
  3. [58]
    The plaintiff does not seek recovery of possession, but only declaratory relief that it is entitled to cancel the lease pursuant to s 65 of the Land Act 1994 (Qld) or terminate the lease pursuant to clause 11.3(2)(b) of the Council Terms of the lease.  Section 65 of the Land Act 1994 (Qld) deals with cancellation of a trustee lease.  The present lease is a trustee lease for the purposes of the Land Act 1994 (Qld)Section 65 provides:

“(1) A trustee may cancel a trustee lease or trustee permit if the lessee or permittee does not comply with the conditions of the lease or permit.

  1. (2)
    The Minister may also cancel a trustee lease or trustee permit if –
  1. (a)
    the lessee or permittee does not comply with the conditions of the lease or permit; or
  1. (b)
    the Minister is satisfied cancellation would be in the public interest.
  1. (3)
    If a trustee lease or trustee permit is cancelled, no person has a right to a claim for compensation.
  1. (4)
    Every cancellation of a trustee lease or trustee permit must be registered in the appropriate register.”
  1. [59]
    The trust land constituting the Gympie Caravan Park has been placed under the control and management of the plaintiff as trustee.  The plaintiff is therefore entitled to cancel the lease if the lessees do not comply with the conditions of the lease.  Having established to the Court’s satisfaction each of the seven breaches above, it may be accepted that the defendants, as lessees, have not complied with the conditions of the trustee lease.  The plaintiff is therefore entitled under s 65(1) to cancel the lease and it is appropriate for a declaration to be made in those terms.
  2. [60]
    Clause 11.3 of the Council Terms of the lease deals with remedies upon default.  Clause 11.3(2) provides:

“Subject to Section 124 of the Property Law Act 1974, if the Trustee Lessee is in default under the Lease, the Trustee also may:

  1. (a)
    terminate the lease by re-possessing the Land and Improvements at any time, with or without notice;
  1. (b)
    otherwise terminate the Lease,

without prejudicing the entitlements that have accrued to it for any earlier default by the Trustee Lessee.”

  1. [61]
    Clause 11.3(2) is made subject to s 124 of the Property Law Act 1974 (Qld).  In the present case, a notice under that section was given to the defendants on 30 November 2017.  There is no challenge to the validity of this notice.  Having given the s 124 notice, the plaintiff, as trustee, is entitled to terminate the lease if the defendants, as trustee lessees, are in default under the lease.  Having established the seven breaches of the lease, it may be accepted that the defendants are in default under the lease.  A declaration should therefore be made that the plaintiff is entitled to terminate the lease pursuant to clause 11.3(2)(b) of the Council Terms of the lease.

Costs

  1. [62]
    The plaintiff seeks its costs of the defendants’ Originating Application filed in the District Court of Queensland, Reference BD186/18, which was transferred to this Court.  The plaintiff also seeks the costs of the defendants’ claim and the plaintiff’s counterclaim, including all reserved costs of these proceedings. 
  2. [63]
    The defendants seek an order that the plaintiff pay their costs of the proceedings.  The basis for the defendants seeking such an order, in circumstances where they have filed a notice of discontinuance in relation to their own claim and costs would ordinarily follow the event in relation to the plaintiff’s counterclaim, is an allegation that the plaintiff forced the defendants into legal action “because Council got a lawyer … before there was any shape or form of mediation”.[59]
  3. [64]
    It remains the case, however, that it was the defendants who were granted leave to discontinue their claim and filed a notice of discontinuance.  Rule 307(2) provides that if a party discontinues or withdraws with the Court’s leave, the Court may make the order for costs it considers appropriate.  In granting the defendants leave to file a notice of discontinuance, Boddice J reserved the question of costs.  Rule 681 of the UCPR contains the general rule about costs and provides:

“Costs of a proceeding, including an application in a proceeding, are in the discretion of the court but follow the event, unless the court orders otherwise.”

  1. [65]
    The defendants having discontinued their claim and the plaintiff having succeeded in obtaining the declaratory relief sought in the counterclaim, costs should follow the event.  The defendants have not identified an appropriate basis for the Court to make any other order.

Disposition

  1. [66]
    The Court declares, pursuant to s 10(2) of the Civil Proceedings Act 2011 (Qld), that with respect to a lease entered into between the plaintiff by counterclaim and the first and second defendants by counterclaim on 26 March 2012 over land described as 1 Jane Street, Gympie in the State of Queensland, more particularly described as Lot 200 on Crown Plan MCH3583 (the Lease), the plaintiff by counterclaim is entitled, as at the date of this order, to either:
  1. cancel the Lease, pursuant to s 65 of the Land Act 1994 (Qld); or
  1. terminate the Lease, pursuant to clause 11.3(2)(b) of the Gympie Regional Council Standard Terms for a Trustee Lease. 
  1. [67]
    The Court also orders that:
  1. the first and second defendants pay the plaintiff’s costs of the:
  1. (a)
    Originating Application filed in the District Court of Queensland Reference BD 186/18, and which was transferred to the Supreme Court of Queensland by order of Douglas J dated 4 May 2018; and
  1. (b)
    first and second defendant’s claim; and
  1. (c)
    plaintiff’s counterclaim,

including all reserved costs of those proceedings.

Footnotes

[1]Order in Council published in the Queensland Government Gazette on 11 July 1997 at pages 1163‑1170 and pursuant to the provisions of the Local Government Reform Implementation Regulation 2008 (Qld).

[2]Exhibit 1, pages 3-29.

[3]Exhibit 1, page 17.

[4]Exhibit 1, page 27.

[5]Exhibit 1, pages 30-90.

[6]Exhibit 1, page 48.

[7]Exhibit 1, pages 73-77.

[8]Plaintiff’s Closing Submissions, paragraph 8.

[9]Exhibit 2.

[10]Exhibit 3.

[11]Exhibits 4 and 5.

[12]Exhibit 6, in particular paragraphs 13-19.

[13]Exhibit 8.

[14]Exhibits 9 and 11.

[15]Exhibit 10.

[16]Exhibit 5, pages 4, 6, 9, 12-15 and 17-19; Exhibit 6, Document 4, pages 6-7.

[17]Exhibit 1, pages 193 and 212.

[18]Exhibit 11, paragraph 1.

[19]T 4-15, line 43.

[20]T 4-15, lines 46-47.

[21]T 4-19, lines 37-43 and T 4-22, line 12.

[22]Plaintiff’s Closing Submissions, paragraph 16.

[23]Certificate of the Chief Executive Officer of Gympie Regional Council, Exhibit 1, page 95, clause 6.

[24]Exhibit 8, paragraph 7.

[25]Exhibit 2, page 5, paragraph [4](i) and (ii).

[26]Exhibit 3, page 3, paragraph [4].

[27]Exhibit 6, page 9, (f).

[28]T 4-25, lines 17-22.

[29]T 4-27, line 10.

[30]Exhibit 2, page 5, paragraph 7(4).

[31]Exhibit 11, page 1.

[32]Exhibit 9, Annexure B.

[33]T 3-52, lines 14-15; T 3-56, lines 11-12; T 3-57, lines 11-13.

[34]T 3-52, line 15.

[35]T 3-57, lines 10-24.

[36]Exhibit 4, page 22.

[37]T 3-56, line 39; Exhibit 6, page 9, paragraph 19(e).

[38]T 3-56, line 39.

[39]T 3-55, lines 20-46.

[40]Exhibit 4, page 22.

[41]Exhibit 5, page 2.

[42]T 3-46, lines 9-18.

[43]Exhibit 4, pages 6-12; (b) Failure to properly insulate exposed hot water services; (c) The absence of temperature limiting valves which create a risk of scalding; (d) The absence of or incorrectly fitted backflow check valves; and (e) underground leakage.

[44]T 4-23 to T 4-24.

[45]Plaintiff’s Closing Submissions, paragraph 29.

[46]T 3-41, lines 4-24.

[47]Exhibit 1, pages 15 and 17.

[48]Exhibit 2, page 3, paragraph 7(1).

[49]Exhibit 3, page 3, paragraph 1.

[50]Exhibit 6, page 8, paragraph 19(a).

[51]Exhibit 9, Annexure A.

[52]Exhibit 8, page 3.

[53]Exhibit 2, page 3; Exhibit 6, page 8, paragraph 19(c).

[54]Exhibit 2, pages 3-4.

[55]T 3-28, line 40.

[56]Exhibit 2, page 5, paragraph 7(3); T 3-37, line 21 to T3-38, line 4.

[57]T 4-22, lines 10-14.

[58]T 4-22, lines 13-14.

[59]T 5-11, lines 35-37.

Close

Editorial Notes

  • Published Case Name:

    Gympie Regional Council v Kemp & Anor

  • Shortened Case Name:

    Gympie Regional Council v Kemp

  • MNC:

    [2020] QSC 169

  • Court:

    QSC

  • Judge(s):

    Flanagan J

  • Date:

    11 Jun 2020

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.
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