Rudd v Mareeba Shire Council[2021] QSC 200

SUPREME COURT OF QUEENSLAND

1. [1]
   HENRY J:  This application invites consideration of whether the lessee of an aircraft hangar at Mareeba Airport may use it in the various ways an aircraft hangar is ordinarily used or, because the lease describes it as an “aircraft storage hanger”, may only use it to store aircraft.
2. [2]
   The lessor, Mareeba Shire Council, purported to terminate the lease by termination letter, re-entry and changing of the locks on 20 January 2021.  The lessee, 81 year old retiree Richard Rudd, applied pursuant to s 124 Property Law Act 1974 (Qld) for relief from forfeiture of his lease.  Council undertook to take no further action pending the determination of Mr Rudd’s application.
3. [3]
   Council acted to terminate the lease having served Mr Rudd with five notices to remedy breach on 8 December 2020 and thereafter concluded he had not remedied two of those alleged breaches.  The alleged breaches which had been remedied were that he was allegedly using the premises for the storage and maintenance of cars, allowing the flow of grey water from the kitchen inside the hangar to outside and failing to obtain final inspection certificates for all approved plumbing installations in the premises.  The alleged breaches which Council considered had not been remedied, and which the termination letter cited as the basis for termination, were that Mr Rudd was using the premises to conduct maintenance and other works to stored goods and that he was using the premises for residential purposes. 
4. [4]
   The termination letter also made the additional alternative assertion that “Council’s position” was Mr Rudd had consistently failed to comply with the terms of the lease over a prolonged period of time, amounting to a renunciation relied upon by Council in terminating the lease.  The nature of the alleged conduct grounding that assertion was not specified in the letter but the assertion likely relates to Council’s perception Mr Rudd had been using the premises for residential purposes, that alleged conduct also having been the subject of a notice to remedy breach dated 31 August 2020.  In any event, in meeting the present application Council did not contend its recovery of possession was done other than as an exercise of the right of re-entry or forfeiture attracting the potential operation of s 124.
5. [5]
   In an application for relief against forfeiture the court has discretion under s 124(2) to grant or refuse such relief as it thinks fit.  Moreover, the court has discretion under s 124(3) to grant relief without making a final determination as to whether a breach has occurred. 
6. [6]
   The usually relevant issues for consideration were described as follows by Keane JA in Ace Property Holdings Ltd v Australian Postal Corporation [2011] 1 Qd R 504, 554:

“Consideration of the question of relief from forfeiture requires attention to a number of issues: the gravity of the breach or breaches in question, whether the breach was inadvertent or wilful, the damage to the covenantee and the relative loss to the covenantor if relief is not granted.

Sometimes these issues overlap in practice. …”

7. [7]
   As to the latter issues, this is not a case in which it is suggested the alleged breaches resulted in financial loss to Council.  On the other hand, loss of the lease would be a significant loss to Mr Rudd in that the lease will not otherwise expire until 2037.  It was the alleged wilfulness and gravity of the alleged breaches which attracted most attention in argument.  While I do not overlook the remedied three alleged breaches, Council did not argue their nature was such that they ought be influential in my decision.  That is unsurprising for none appear to have been particularly egregious and it is by no means clear that those related to plumbing and grey water were breaches at all.  I turn then to the nature of the two allegedly unremedied breaches.  
8. [8]
   Turning firstly to the allegation Mr Rudd was in breach by using the premises to conduct maintenance; the hangar contains various workbenches and other apparatus as well as aircraft and parts of aircraft consistent with it being used to maintain aircraft and aircraft parts. Video footage taken in the course of a Council inspection makes it obvious Mr Rudd had been and was continuing to use the premises for such maintenance.  But what is wrong with that?  Is not an aircraft hangar of its nature a place where maintenance of aircraft and their parts would be carried out?
9. [9]
   The Council says not.  It argued, inter alia, that the sole purpose for which the hangar can be used under the terms of the lease is for aircraft storage.  That argument must be rejected.  It is premised on the commencing words of clause 2.02 of the lease.  That clause is titled “Use of premises” and commences:

“To use the demised premises for the purpose of construction and use of an aircraft storage hanger for private, non commercial use and not to use the demised premises for any other purposes…”

10. [10]
    Quite apart from its obvious misspelling of the word hangar the clause is not particularly pellucid.  Its reference to construction is however explicable by the fact the hangar was not constructed at the time of the lease.  The hangar was constructed by the original tenant before the lease was assigned to Mr Rudd.
11. [11]
    Setting aside the clause’s reference to the purpose of construction, the nominated purpose still involves multiple references to “use”, viz,  “To use the demised premises for the purpose of … use of an aircraft storage hanger for private, non commercial use”.  It follows from the ordinary meaning of those words that the conditioned use must be use which is private and non-commercial and which is for the purpose of use of an aircraft storage hangar.  There is no issue here regarding the private and non-commercial use of the hangar and the focus of concern is that limb of the clause which conditions the purpose of the use as being the purpose of use of an aircraft storage hangar.
12. [12]
    The language of that limb of the clause does not confine the purpose of use as being storage of aircraft.  Rather it confines the purpose of use of the premises to the purpose of using an aircraft storage hangar.  Council emphasises the clause refers to “an” aircraft storage hangar, not “the” aircraft storage hangar, which supports the interpretation that the purpose of use of the leased premises is intended to be confined to the purpose of its use as an aircraft storage hangar.  I agree.
13. [13]
    The lease does not define the term “aircraft storage hanger” or the purpose of its use.  Clause 2.20.7 was highlighted in argument by Council. It defines “hanger” as being “a building … suited for use as an aircraft storage facility”.  However, that definition is expressly for the purposes of the lease’s construction clause only and, in any event, the undefined meaning of the words “aircraft storage facility” adds nothing material to the undefined meaning of the words “aircraft storage hanger”.
14. [14]
    It is well known that an aircraft hangar is a large building, usually located at an aerodrome, in which aircraft are stored.  That might reasonably be described as its primary purpose and sensibly explains why the words “aircraft storage hanger” may have been adopted in the lease.  However, it is similarly well known that the customary or ordinary use of an aircraft hangar is not confined purely to the act of parking and storing aircraft therein and that its use includes the performance of maintenance and repair work, that is, work performed upon aircraft housed therein, in order to maintain aircraft in or return aircraft to a state of airworthiness.  That might reasonably be described as its secondary purpose.
15. [15]
    Further, because that secondary purpose is potentially time consuming, it may necessitate uses ancillary to that purpose – uses of a kind common to any building where human beings may work for prolonged periods, such as uses of a bathroom, kitchen and rest facilities. 
16. [16]
    The lease’s use of the phrase “aircraft storage hanger” as distinct from “aircraft hanger” ought not be interpreted as confining the relevant purpose of use to that of storage to the exclusion of the aforementioned secondary purpose of maintenance and repair work and uses ancillary thereto.  Such an interpretation would conflict with clear contextual indications to the contrary in the terms of the lease. 
17. [17]
    The terms of the lease identify a leased lot which, on any view of the evidence, is a lot located at Mareeba Airport.  Moreover, the terms of the lease impliedly contemplated that the premises would be accessible to travel at the airport from the airport taxi way and runway.  For example, clause 2.20.9 required the premises be adequately fenced “to prevent the ingress of wild or domesticated animals onto the airport taxi way or runway”.  In short this was a hangar to be constructed and used at an airport, not off at some other location like a storage warehouse unconnected with tarmac and runways.  That context made it inevitable the hangar would be used at the airport by aircraft in which the premise’s tenant had an interest.  It could scarcely be thought such aircraft would not from time to time require maintenance or repair work to ensure or restore their airworthiness or that such work would not be carried out in the tenant’s hangar. 
18. [18]
    Further, the terms of lease clearly contemplated the presence of physical facilities in the hangar which would not be required if its use was solely for aircraft storage.  For example, clause 2.13(c) required that none of the premise’s “water closets, drains lavatories or other water apparatus” would be used for any purpose other than those for which they are intended and that rubbish including “tea-leaves” not be put in water closets, water apparatus or drains.  If the sole purpose of an aircraft storage hangar was storage the lease would not have contemplated that there would be a toilet or that tea leaves might need to be disposed of in the premises.
19. [19]
    In point of fact the constructed premises, the construction plans for which required the Council’s approval per clause 2.20.3 of the lease, contains a bathroom including a shower and toilet, a kitchen with sink, taps and built in cupboards and a mezzanine level too small to store aircraft in.  Counsel for Council emphasised I ought not have regard to a subsequent event such as subsequent construction in interpreting the lease, citing Agricultural and Rural Finance Pty Ltd v Gardiner & Anor (2008) 238 CLR 570, 582 in which the plurality approved the rule in Whitworth (James Miller & Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583).  It is doubtful that the thinking underpinning that rule provides a basis without exception for always precluding reference to the subsequent conduct of the parties in identifying the subject matter of the contract or implying meaning necessary to give business efficacy to it – see the discussion of subsequent conduct in Lewison and Hughes The Interpretation of Contracts in Australia [3.15].  However, I need not venture into subsequent conduct for the meaning in issue is in any event apparent from the above discussed contextual indications in the lease itself.
20. [20]
    In light of those contextual indicators I conclude the use of the word “storage” within the term “aircraft storage hanger” was incidental, a mere descriptor of the primary purpose of an aircraft hangar, rather than a word deployed to confine the meaning of the term to a hangar used solely for aircraft storage.
21. [21]
    It follows from that conclusion that the use of the demised premises contemplated by clause 2.02 was use for the purpose of the ordinary or customary uses of an aircraft hangar, namely storage of aircraft, maintenance and repair of aircraft and uses ancillary to those purposes. 
22. [22]
    This conclusion renders academic an argument that the presence in clause 2.02 of the additional words “and not to use the demised premises for any other purposes” circumscribes the breadth of the preceding text.  If the preceding text carries the meaning I have found as to the purposes of the use then the additional words simply mean the lessee must not use the premises for other purposes.
23. [23]
    The notice to remedy breach relevant to maintenance alleged Mr Rudd was “in breach for the use of the premises for the conduct of maintenance and other work to stored goods”.  It will be recalled another notice related to stored cars, namely a breach by “using the premises for the storage and maintenance of cars”, but that alleged breach was remedied.  Setting aside the stale issue of work to stored cars the only evidence of any on-going maintenance or work to stored goods related to maintenance or repair work of aircraft or their constituent parts.  For the reasons earlier given such work was within a permitted use of the premises.  On the evidence presently before me it was not in breach of the lease.
24. [24]
    Making a virtue of necessity Council mounted another, more nuanced argument as to the limits of the use to which the leased hangar could be put.  It was highlighted that Mr Rudd was present at the hangar for long hours throughout the day and often into the early evening.  Accepting that there might reasonably need to be some human presence within the hangar ancillary to its use, it was submitted the duration of Mr Rudd’s typical daily presence at the hangar far exceeded that need.
25. [25]
    That submission must be rejected.  Once it is accepted that Mr Rudd was entitled to be at the premises to perform maintenance and repair work to aircraft it was a matter for him how long he remained working at the premises for that purpose each day.  True it is he was not entitled to perform such work there commercially but use for commercial purposes is not alleged and it is not inherently implausible that an aviation enthusiast such as Mr Rudd may choose to work long hours for his private purposes on maintenance or repair of aircraft. Moreover, if Mr Rudd was working long hours to that end then using the premises to have a shower, meal or rest break was, for reasons earlier given, an ancillary use well within the meaning of clause 2.02.
26. [26]
    The lease contains no clause which expressly or by implication limits the times during which Mr Rudd can be present at the hangar.  That is unsurprising.  It does contain clauses protecting Council’s position should Mr Rudd’s conduct at the premises cause annoyance, nuisance or inconvenience to nearby occupiers or exceed reasonable behavioural bounds in other ways – see the latter part of clause 2.02 and clause 2.13(a) and (b) – however no such behavioural breach was alleged here.
27. [27]
    Turning to the second allegedly unremedied breach, the relevant notice alleged Mr Rudd was in breach “for the use of the premises for residential purposes”.  Mr Rudd had once resided at the premises but that was before the lease was assigned to him.  Indeed, it was a condition of Council’s acceptance of the assignment that Mr Rudd cease residing there. 
28. [28]
    Mr Rudd asserts he has not resided at the premises since.  Council’s suspicion to the contrary appears to have been provoked not only by the presence of a bed, pillows and at least some form of bed covering in the mezzanine section but also by Mr Rudd’s unwise attempt in June last year to obtain a rates concession by claiming the premises was his residence.  Mr Rudd has explained this was a “try on” to avoid his true financial obligation.  While that dishonest act does him no credit and I bear it in mind in weighing his evidence, including his responses under cross-examination, I do accept it was a false claim upon Council and that in fact, as he deposed and testified, he resided elsewhere.  That he was residing elsewhere was also deposed to by a number of other witnesses who were not required for cross-examination.  Further, Council’s own surveillance monitoring of his movements produced no evidence he was residing at the premises.
29. [29]
    That there was a bed, pillows and some form of bed covering at the mezzanine level of the premises is consistent with the area and the bed being used, as Mr Rudd acknowledged, for work rest or nap breaks during the course of Mr Rudd’s working day.  Such use does not constitute use for a residential purpose.  It is a use ancillary to the aforementioned secondary purpose of performing maintenance or repair work.  Such work rest or nap breaks arise from use of the premises as a place of work, not a place of residence.
30. [30]
    I need not resolve a factual dispute as to whether there was also a bar fridge kept on the mezzanine level for even if there was it would surely be unremarkable that someone working or taking a rest break in an un-airconditioned hangar in the tropics might want refrigerated refreshments.
31. [31]
    Nor do I need to resolve whether the practice of Mr Rudd’s de facto partner occasionally visiting between her restaurant work shifts and taking a nap on the bed would be a breach of the lease.  It does not take the residency allegation anywhere. I express no view as to whether the apparently harmless activity of allowing a loved one who from time to time visits Mr Rudd’s workplace to from time to time take a nap on a bed in a work rest area would be outside the ancillary uses alluded to above.  Such activity was not alleged as a breach per se and I do not regard the notice of alleged breach “for use of the premises for residential purposes” as having given notice that such activity constitutes such a broadly described breach. 
32. [32]
    It follows on the evidence presently before me that Mr Rudd was not, as alleged, using the premises for residential purposes.
33. [33]
    The conclusions I have reached inevitably compel the result that Mr Rudd should have the relief sought, at least to the extent that Council must restore possession of the premises to him. 
34. [34]
    I reject that part of the application which also sought an injunction restraining Council’s interference with Mr Rudd’s quiet enjoyment of the premises.  Council may have lost this application but its decision to terminate and take possession was a product of bona fide error in factual understanding and in interpretation of the lease.  I detect no sign it was driven by malice or was deliberately falsely premised.  I am unpersuaded the Court should assume Council may be so untrustworthy in its future conduct as lessor as to justify the restraint sought.
35. [35]
    If Mr Rudd wishes to safeguard his future position and avoid Council misunderstanding his use of the premises, he may find it helpful to engage in discussion with Council, with the benefit of these reasons, about any lingering areas of doubt as to what is and is not a use for the purposes contemplated by the lease.
36. [36]
    I order:

1. The respondent will forthwith restore possession of the leased premises known as Lease N on SP171528 at Mareeba Airport, along with the keys thereto, to the applicant as the lessee of the premises.

37. [37]
    I anticipate costs should follow the event but will hear the parties as to costs.

…

38. [38]
    I further order:

2. The respondent will pay the applicant’s costs of the application to be assessed on the standard basis if not agreed.