Victoria Park Golf Club Inc v Brisbane City Council
[2001] QCA 528
To print this judgment please return to the case and click on the PDF icon
next to the
case name. For court use, a full PDF copy is required or preferred.
Exit Distraction Free Reading Mode
Please Note: You are about to print a copy of the onscreen
version of
this judgment. For court use, a full PDF copy of the judgment is required or preferred. Please
return to
the case for PDF printing options.
- Unreported Judgment
- Appeal Determined (QCA)
- Victoria Park Golf Club Inc v Brisbane City Council[2001] QCA 528
- Add to List
Victoria Park Golf Club Inc v Brisbane City Council[2001] QCA 528
Victoria Park Golf Club Inc v Brisbane City Council[2001] QCA 528
SUPREME COURT OF QUEENSLAND
CITATION: | Victoria Park Golf Club Inc v Brisbane City Council [2001] QCA 528 |
PARTIES: | VICTORIA PARK GOLF CLUB INC (plaintiff/appellant) v BRISBANE CITY COUNCIL (defendant/respondent) |
FILE NO/S: | Appeal No 6705 of 2001 SC No 5853 of 2000 |
DIVISION: | Court of Appeal |
PROCEEDING: | General Civil Appeal |
ORIGINATING COURT: | Supreme Court at Brisbane |
DELIVERED ON: | 30 November 2001 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 12 November 2001 |
JUDGES: | McMurdo P, McPherson JA and Mackenzie J Separate reasons for judgment of each member of the Court, each concurring as to the order made |
ORDER: | Appeal dismissed with costs |
CATCHWORDS: | LOCAL GOVERNMENT – REGULATION AND ADMINISTRATION – CONTRACTS – AUTHORITY TO BIND COUNCIL – whether the Director, or Manager, of Major Venues had authority to enter into a contract binding on the Brisbane City Council to grant a lease LOCAL GOVERNMENT – POWERS, FUNCTIONS AND DUTIES OF COUNCILS GENERALLY – POWERS IN GENERAL – DELEGATION OF – whether the Brisbane City Council had delegated its power to enter into contracts CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – MATTERS NOT GIVING RISE TO BINDING CONTRACT – VAGUENESS AND UNCERTAINTY – LEASES – whether the agreement was unenforceable by reason of s 57(1) Land Act 1994 (Qld) City of Brisbane Act 1924 (Qld), s 5(1), s 6, s 6A, s 39B(1), s 40 Land Act 1994 (Qld), s 57(1) Bonanza Creek Gold Mining Company v The King [1916] 1 AC 566, considered Coogee Esplanade Surf Motel Pty Ltd v The Commonwealth (1983) 50 ALR 363, distinguished Doe d Pennington v Taniere (1848) 12 QB 998; (1848) 116 ER 1144, considered Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, distinguished Groves v BMW Finance Ltd [2001] QCA 16, Appeal No 3316 of 2000, 9 February 2001, considered Mayor of Ludlow v Charlton (1840) 6 M & W 815; (1840) 151 ER 642, considered Northern Territory of Australia v Skywest Airlines Pty Ltd (1987) 48 NTR 20, distinguished Queensland Television Limited v Commissioner of Taxation (1969) 119 CLR 167, distinguished |
COUNSEL: | M Conrick for the appellant M Hinson SC for the respondent |
SOLICITORS: | Windsor Craig for the appellant Brisbane City Legal Practice for the respondent |
- McMURDO P: I agree with the reasons for judgment of McPherson JA and would only add the following brief comment.
- In my view, no binding agreement was intended to be reached between the parties in the letter of 3 September 1999 because the rent was to be determined by reference to "the attached schedule" when no schedule was attached to the letter. That conclusion is supported by this Court's decision in Groves v BMW Finance Ltd.[1]
- But in any case, for the reasons given by McPherson JA, the appellant has not established that Mr Sharry had express, implied or ostensible authority to bind the Brisbane City Council in any agreement for lease with the appellant.
- I agree with McPherson JA that the appeal must be dismissed with costs.
- McPHERSON JA: The Victoria Park Golf course is laid out on land at Herston held by the defendant Brisbane City Council under the terms of a deed of grant in trust from the Crown under the Land Act 1910. It was opened in 1931 as a golf course for use by the public; but members of the plaintiff Club, which was then an association that has since been incorporated, had specific playing rights on the course. At the golf course the Club occupied a clubhouse, which had a liquor licence and conducted a bar and functions sharing the bar revenue with the Council.
- There was no formal lease between the Club and the Council, but at most only some form of periodic tenancy by implication. However, on 15 April 1996, the Establishment and Co-ordination Committee of the Council (“the E & C Committee”) decided to redevelop the site. A recommendation was approved that negotiations be carried on with the Club for what was described as a Category “A” Sporting Association lease for a 30 year term providing catering, a function room, bar, club office and locker room. There was to be a separate playing agreement covering playing rights and subscriptions of Club members.
- The Club was informed of this decision by letter dated 7 April 1996 from the Council. Thereafter negotiations proceeded between the Club, by its then President Mr English, and a Council officer Mr Sharry, who occupied the position of Director, or later Manager, of Major Venues. A draft lease and agreement were prepared by solicitors for the parties and certain interim arrangements were set in place pending execution of the formal instruments. Eventually, terms were agreed between representatives of the Club, including Mr English of the Club, and Mr Sharry of the Council, which were recorded in a written document in the form of a letter dated 3 September 1999 (ex 1/35) and signed by Mr English for the Club’s management committee and by Mr Sharry as Director Major Venues.
- In June 2000 the Council repudiated the agreement, and on 25 September 2000 the Club instituted proceedings against it claiming specific performance of the agreement. After a trial in the Supreme Court lasting two days or a little more, the trial judge delivered reasons dismissing the plaintiff’s claim with costs. There were essentially two grounds for the decision. One was that the plaintiff had failed to establish that Mr Sharry had the authority to enter into a contract binding on the Council to grant a lease; the other that the agreement dated 3 September 1999 was incomplete or uncertain. This is the Club’s appeal against that decision.
- For a corporation to do an act such as making a binding contract, the common law regards three things as necessary. In the first place, the corporation needs to have power to do the act in question. Next, the corporation has to reach a decision to do the act. Finally, it must do it with the requisite formalities. In the present case, the first requirement presents no difficulty. By s 6 of the City of Brisbane Act 1924, the Council is constituted a body corporate with perpetual succession and a common seal. A corporation formed by or under a statute is ordinarily restricted to exercising powers conferred on it expressly or impliedly by statute. In the case of the Council, s 6A(1) invests it with such powers as are conferred “under this or any other Act”. However, within those limits, the Council has by s 6A(2) of the Act “for or in connection with the performance of its functions, all the powers of an individual, and may for example -
“(a) enter into contracts with any party; and
- … dispose of and deal with property; and;
- appoint agents and attorneys; …”
The effect of saying that, in connection with the performance of its functions, the Council has “all the powers of an individual” is to place it on a footing similar to that of a corporation formed by or under the authority of a charter or letters patent. To such a corporation “the doctrine of ultra vires has no real application in the absence of statutory restrictions added to what is written in the charter. Such a company has the capacity of a natural person …”. See Bonanza Creek Gold Mining Company v The King [1916] 1 AC 566, 583. Within the limits imposed by s 6A of the Act, the Council is in a similar position. No question has been raised about its power to enter into the agreement comprised in ex 1.
- The substantial question in this case concerns the second of the matters mentioned above; but I will deal first with the third, which is less contentious. The common law rule is that a corporation is, subject to recognised exceptions, incapable of contracting or doing any other act except by or under its common seal. See Mayor of Ludlow v Charlton (1840) 6 M & W 815, 817-8, 151 ER 642, 643, where Parke B said:
“I doubt whether any case has gone so far as to shew that a corporation can bind itself by such a contract as this, not under seal. The old cases permitted as to certain small things, which must of necessity be done without that formality, and this exception has been extended by the modern cases to things which the corporation, by the nature of its constitution, must do to carry on its concerns: but that principle does not apply to the case of a municipal corporation; it cannot be necessary for the purposes of its constitution, that it should part with so much of its property.”
None of those exceptions are applicable or relevant in this case. The rule that the common seal must be used was applied in A R Wright & Son Ltd v Romford Borough Council [1957] 1 QB 431. As a consequence, Parliament in England passed the Corporate Bodies Contract Act 1960, which abolished the requirement of sealing in the case of contracts of corporations. In Queensland, the matter was formerly governed by s 19(1) of the Local Government Act 1936; but specifically in the case of the Brisbane City Council, s 40 of the City of Brisbane Act 1924 now provides:
“40(1) Formalities of making etc of contracts. For the purpose of the formalities of making, varying or discharging contracts, a delegate or other person acting with the authority of the council may make, vary or discharge a contract in the name of, or on behalf of, the council in the same way as if the contract was made, varied or discharged by an individual.
- The making, varying or discharging of a contract under subsection (1) is effective in law and binds the council and other parties to the contract.
- This section does not affect the operation of any law that requires –
- a consent or sanction to be obtained; or
- a procedure to be complied with in relation to the making, varying or discharging of a contract.”
It will be seen that s 40 does not expressly abolish the need for contracts by the Council to be sealed, and, indeed, subsection (3) of s 40 provides that the Council is not prevented from making, etc a contract under seal. What subsection (1) does is to provide that “a delegate or other person acting with the authority of the Council” may make a contract in the name of or on behalf of the Council “in the same way as if the contract were made ... by an individual”. Abolition of the common law requirement that a corporate act by the Council is to be done under its seal is confined in s 40(1) to the case of a contract made by a delegate or other person “acting with the authority of the Council”.
- At common law the requirement of sealing extends to appointing an agent of the corporation. Now, however, s 39B(1) of the City of Brisbane Act provides the Council may by resolution delegate its powers to, among others “(c) an officer or employee of the Council”. Section 39B(1)(c) appears to be facultative rather than prescriptive or exhaustive, and the Club contends that, even without such a resolution, Mr Sharry was, within the meaning of s 40(1) of the Act, a person “acting with the authority of the Council”. Since actual or implied authority to enter into a contract of this kind must rest either in the use of the common seal of the Council or in a resolution of the Council delegating its powers under s 39B(1), there can be little scope for applying the doctrine of implied authority to a person in the position of Mr Sharry. In several Australian decisions, it has been held that the office of mayor does not carry with it the power to bind a municipal corporation. See Hanson v Corporation of Adelaide (1870) 4 SALR 35, 38. Hayes v Mayor and Councillors of Subiaco (1899) 2 WALR 2, 3. Porter v Newcastle Municipal Corporation (1914) 2 LGR (NSW) 55, 57. In North West Leicestershire District Council v East Midlands Housing Association Ltd [1981] 1 WLR 1396, 1401, the clerk to the local Council was held not to have implied authority to vary a contract into which the council had resolved to enter.
- In the ordinary way, authority may take the form of actual authority, which may be conferred expressly or impliedly, or it may be ostensible authority. There is no evidence that the Council by resolution or otherwise expressly invested Mr Sharry with actual authority to make a contract with the Club in the form of ex 1/35. Reliance was, however, placed on what is claimed to be his implied authority, deriving, it was submitted, from the fact that he occupied the position of Director Major Venues. Precisely what the functions of that office are or were do not with any real clarity appear from the evidence; but Mr Sharry said that, when he left the employment of the Council in or after 1999, there was an administrative unit or division called City Businesses, which had under its management major venues, like the ANZ stadium, Sleeman Sports Complex, St Lucia golf course, Victoria Park golf course, 18 swimming pool complexes, netball facilities, and so on. He was the Director, or later, the Manager of those venues, and as such reported directly to the Senior Executive Officer of the Council, whose position or office was formerly known as Town Clerk.
- There is nothing in this to suggest that Mr Sharry had authority express or implied to bind the Council to a contract in the form of ex 1/35 providing for a lease for a 30 year term. It may fairly be inferred that he had power to licence the use of the venues in question for particular sporting or other events, and perhaps even to lease them for somewhat longer periods of time; but that does not establish that he had the authority of the Council to lease the Victoria Park golf course, which was held by the Council on trust, for a term as long as 30 years. Mr Sharry’s impression was that only the Council could do so. The fact that he negotiated the terms of an agreement with the Club does not mean that he had the power to conclude a contract on those terms that was binding on the Council. At the trial and on appeal, the Club relied on the decision of the Court of Appeal in New South Wales in Coogee Esplanade Surf Motel Pty Ltd v The Commonwealth (1983) 50 ALR 363, in which Hutley JA said (at 379):
“… I am unable to see why any doubt could be entertained that so senior an officer entitled to negotiate all the terms of a contract could not also make it. It is impossible, in my opinion, without express limitation to be found in some Act or Regulation, to assume that the Commonwealth intended to require ministerial making or express ministerial delegation to the making, of every contract for the sale or purchase of land. It would be quite impracticable for the affairs of the Commonwealth to be carried on with such limitations.
Though it is not necessary to decide, I am of the opinion that it is to misunderstand the whole position to approach the problem in terms of delegation. All that the appellant had to do was to prove that the transaction was one with which the department was concerned, which it did, and that the officer with whom it purported to contract was an officer of that department, purportedly acting on departmental business. In other words, that the English decisions, Carltona Ltd v Works Commissioners [1943] 2 All ER 560; Lewisham Borough Council v Roberts [1949] 2 KB 608; and R v Skinner [1968] 2 QB 700, state the true doctrine.”
Moffitt P agreed. Glass JA said (at 383) that the authority of a particular officer to bind the Crown by a contract made in the ordinary course of government business “may be inferred from the nature of his office (New South Wales v Bardolph (1934) 52 CLR 455, at 502-503) and requires no statutory foundation.” See also Northern Territory of Australia v Skywest Airlines Pty Ltd (1987) 48 NTR 20, where the New South Wales decision was followed by the Full Court of the Northern Territory.
- These decisions, however, concerned departments of the Crown in right of either the Commonwealth, State or Territory governments. The arrangement of government departments in each of those cases was and is, by its nature, different from that of the Council. Under the system of responsible government that prevails at each of those levels, Ministers are commissioned by the Crown represented by the Governor‑General, the Governor or the Administrator to conduct the affairs of a particular office or department of government on behalf of the Crown. It is to some extent still a mystery of constitutional government in Australia exactly what is meant by Crown. See Sue v Hill (1999) 199 CLR 462, 493-502. No such difficulty exists in the case of the body corporate that constitutes the Brisbane City Council. The Act of 1924 contains references to the Establishment and Co-ordination Committee, which, in connection with appeals by officers concerning promotions and disciplinary action, is defined in s 29(1) of Schedule 3 to the Act, as the Committee of the Council constituted pursuant to Chapter 59 of the Council ordinances published in the Gazette of 1 March 1940. Because that chapter, which is entitled Administrative Arrangements of the Council, may not be readily accessible to all, I include in full the text of the relevant provisions. Having in ordinance 1 of Chapter 59 first provided that there shall be five standing committees of the Council, which are called the Establishment and the Co-ordination Committee, Finance Committee, Works Committee, Health Committee and Transport Committee, ordinances 8, 9 and 10 of Chapter 59 provide as follows:
Establishment and Co-ordination Committee
“8. The Council hereby delegates to, and the powers and duties hereinafter mentioned are hereby conferred on, the Establishment and Co-ordination Committee.
9. Such committee shall be responsible for the supervision and control of the Department of City Administration, and in addition the powers and duties of such committee shall include-
(i) The consideration and determination of the recommendations of the Town Clerk and City Administrator made in pursuance of the provisions of the Ordinances relating to the appointment, promotion, training, and discipline of officers of the Council;
(ii) (a) The consideration and examination of every suggested new policy or alteration or extension of existing policy and whether it will have any substantial effect on and require alteration of any previous proposal of policy, whether such policy has been considered by a standing committee or not;
(b) The instruction of standing committees in which cooperation appears to be desirable;
(c) Acting as an advisory committee to any standing committee consulting them, or to the Council on any matter, whether specially referred for examination or not;
(d) The consideration and examination of any report of the Town Clerk and City Administrator on any matter of organisation or policy, whether on his own initiative or at the request of the committee.
10. Subject to confirmation by the Council, such committee shall act for and on behalf of the Council during any recess of the Council or in any case of an extraordinary or emergent nature between any meetings of the Council or any standing committee of the Council."
- Apart from ordinance 10, all of these provisions are concerned with administration policy and advice. Section 5(1) of the Act itself provides that the City is to be governed by a Council composed of 27 councillors and consisting of the Mayor and 26 councillors. They attain office by popular election, which in fact proceeds on political party lines. We were informed that, in relation to the administration of the City, the E & C Committee functions very like State Cabinet, and indeed there are references to the “City Cabinet” in some of the evidence in this case. Extending that analogy would place the Committee in much the same relation to the City Council as is occupied by State Cabinet in relation to the Governor in Council. The analogy is, however, by no means perfect. The Governor in Council are not a body corporate; they comprise the Governor and a minimum of two other members of Cabinet, who are Ministers of the Crown in the incumbent State government. The Governor in Council have no direct, as distinct from delegated, legislative powers but are restricted to an executive role, in which they act on the advice of State Cabinet. Their function is therefore largely, but not entirely, to provide formal confirmation of decisions arrived at by Cabinet, in the deliberations of which the Governor has no part. Unless a proposed action is illegal, the Governor is rarely, if at all, entitled to act contrary to the advice tendered to him or her, which by constitutional convention the Governor is bound to accept.
- The position of the Brisbane City Council is very different. Not only is it a body corporate consisting of 27 individuals who in practice are drawn from different political parties, but it is also a legislative body. Whether that body will in fact carry out policies formulated by the E & C Committee depends on the extent to which that Committee exercises effective control or influence over the majority of members, which in practice it almost invariably does. At common law, bodies corporate act by the decision of the majority of corporators present and voting at a meeting of corporators acting in that capacity, which is the second of the three requirements mentioned earlier. In doing so, their act, says Grant on The Law of Corporations, at 48 (1850), “is in general the act of the corporation”. At common law, the seal was both required and functioned as authenticating the concurrence of the whole body corporate; it was the “only authentic evidence of what the corporation has done or agreed to do”: see Mayor of Ludlow v Charlton (1840) 6 M & W 815, 823; 151 ER 642, 645. That remains the law in the case of the Brisbane City Council, except to the extent that the Council has, by resolution in accordance with s 39B(1) of the Act or some other statutory provision, delegated its powers to the mayor, a committee, or an officer or employee of the Council. For all these reasons, it is in my opinion not possible simply to transpose and apply decisions about governments at Federal and State level to the structure and power of particular officers of the Brisbane City Council.
- On this aspect of the case, all that remains is the question of ostensible authority. The learned trial judge rejected the contention that Mr Sharry had apparent authority to enter into a contract in the form of ex 1(35) on behalf of the Council, and the point was not, in the oral submissions on appeal, addressed separately from that of implied authority, with which it largely overlaps here. The case is not one involving an office like that of managing director of a trading company in Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, of which the incidents and powers are well known. The position of Manager of Major Venues is not one widely known or understood to import authority on behalf of the Council to conclude contracts on terms or for the duration of those contained in ex 1(35). In any event, the case is not, like that referred to, one in which there was a defect in appointment to the office. Mr Sharry was no doubt held out as occupying the position of Manager Major Venues; but that position is, or was in 1998, not shown to carry authority to make such a contract.
- The real problem for the Club is that there is no proof of a resolution of the Council in terms of s 39B(1) of a delegation to or the conferring on Mr Sharry of power to make the alleged contract. In Doe d Pennington v Taniere (1848) 12 QB 998, 1013‑4; 116 ER 1144, 1150, Lord Denman CJ said that where a corporation had acted on an executed contract -
“it is to be presumed against them that everything has been done that was necessary to make it a binding contract upon both parties, they having had all the advantage they would have had if the contract had been regularly made. This is by no means inconsistent with the rule that, in general, a corporation can only contract by deed: it is merely raising a presumption against them, from their acts, that they have contracted in such a manner as to be binding on them, whether by deed or otherwise.”
It is, however, quite clear from the passage in the judgment of the Chief Justice that he was not referring to an executory contract or agreement like ex 1/35; and also that the presumption, as it was described, arose from the acts of the corporation. The case was one of a yearly tenancy arising from payment and acceptance of rent in the past. Here there were no acts by the Council capable of giving rise to any presumption that Mr Sharry had been authorised to conclude what is a wholly executory contract on its behalf. He was not held out as having authority to do so. See also North West Leicestershire District Council v East Midlands Housing Association Ltd [1981] 1 WLR 1396, 1401.
- As to the other points in the appeal, the agreement ex 1/35 was quite detailed in its terms and provisions. The only deficiency in it is said to be in cl 2, as follows:
"2. Rent
The Club will pay, for the leased premises, the greater, of a base rent of $20,000 per annum or 10% of bar and food sales per annum. The base rent to be subject to an upward movement in the Consumer Price Index (all groups) for the City of Brisbane together with commercial outgoings specified in the attached schedule (ie proportionate use of course and premises subject to rents and other charges). The rent is to be exclusive of GST. A suitable GST clause".
No schedule was in fact attached to ex 1/35. In a series of decisions over the years, a definite meaning has been ascribed to the words rates and taxes as well as charges: see Sunskill Investments Pty Ltd v Townsville Office Services Ltd [1991] 2 Qd R 210, 213‑217. “Outgoings” is another term which has received a measure of judicial exegesis. Here, however, it is the word "commercial" qualifying outgoings that creates difficulty, coupled with the fact that in ex 1/35 the outgoings were said to be specified in an accompanying schedule that was not in fact attached. The learned trial judge considered this to be one of several indications that the agreement ex 1/35 was not quite complete. Without that schedule, it is difficult to identify the range of items potentially covered by the expression "commercial outgoings", some of which might be quite considerable in amount, or to know which of them it was intended to specify. For that reason among others, I agree with the trial judge that there are indications that the parties intended that the agreement would not be binding until a formal contract was prepared and approved or authorised by the Council
- The final question is whether the agreement was unenforceable by reason of s 57(1) of the Land Act 1994. In relation to land like this granted in trust by the Governor in Council, s 57(1) provides that a trustee may lease the trust land "if the trustee first obtains the Minister's 'in principle' approval to the lease". No such approval was obtained to the agreement ex 1/35 before it was signed. In Queensland Television Limited v Commissioner of Taxation (1969) 119 CLR 167, 175, Kitto J held that a somewhat similar provision in s 32(4) of the Local Government Act 1936 had the effect of preventing the grant without Executive approval of a lease of land held on trust for public purposes. However, on behalf of the Club in this case, Mr Conrick of counsel submitted that ex 1/35 was not being relied on as a lease as such, but simply an agreement for a lease which, if declared to be specifically enforceable, would be subject to ministerial approval to be obtained before the formal instrument of lease was in fact executed. See Egan v Ross (1928) 29 SR(NSW) 382 and McWilliam v McWilliam Wines Pty Ltd (1964) 114 CLR 656, 661, 663. The agreement in the present case expressly provides that the formal lease is subject to the prior approval of the Minister in terms of the Land Act 1994, and so does not offend s 57(1).
- Although in that particular respect, the Club's submission is, I consider, correct, the appeal fails for the other reasons given here, and must be dismissed with costs.
- MACKENZIE J: I agree that the appeal should be dismissed with costs for the reasons given by McPherson JA.
Footnotes
[1] [2001] QCA 16, Appeal No. 3316 of 2000, 9 February 2001.