PARTIES:	PENINSULA GROUP PTY LTD
		(ACN 009 601 987)
		v

		REGISTRAR-GENERAL FOR THE 		NORTHERN TERRITORY

TITLE OF COURT:	SUPREME COURT OF THE 
		NORTHERN TERRITORY

JURISDICTION:	SUPREME COURT EXERCISING 		TERRITORY JURISDICTION

FILE NO:	214 of 1996

DELIVERED:	26 November 1996

HEARING DATES:	21 and 25 November 1996

JUDGMENT OF:	Kearney J

CATCHWORDS:

Landlord and Tenant - Lease - Strata title - Registered proprietor
cannot lease out common property except where an estate development duly authorised

Statutes - Interpretation - Purposive approach - Legislature’s
intention clear from context - When Court may legitimately remedy legislative inadvertence flowing from drafting error

Statutes - Interpretation - Particular statutes - Unit Titles Act 1976 (NT) 
- Meaning of “sub-let” in the Act - Whether on its proper construction “sub-let” should be read as “leased” - Unit Titles Act s24(2)

Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1980-81) 147 CLR 297, applied
Mills v Meeking (1989-90) 169 CLR 214, followed
Tokyo Mart Pty Ltd v Campbell (1988) 15 NSWLR 275, applied
Lincoln College’s Case (1595) 3 Co Rep 58b; 76 ER 764, applied

REPRESENTATION:

Counsel:

	Plaintiff:	S R Southwood, with him 
		G S C Buckley

	Defendant:	E D Hutton

Solicitors:

	Plaintiff:	Messrs Morgan Buckley
	Defendant:	Solicitor for the Northern Territory

Judgment category classification:	
Judgment ID Number:	kea96031
Number of pages:	15

kea96031

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

No. 214 of 1996

		BETWEEN:

		PENINSULA GROUP PTY LTD 			(ACN 009 601 987)
			Plaintiff

		AND:

		REGISTRAR-GENERAL FOR THE 		NORTHERN TERRITORY
			Defendant

CORAM:	KEARNEY J

REASONS FOR DECISION

(Delivered 26 November 1996)

The application
	By summons of 31 October 1996, the plaintiff seeks declarations that:

(a)	on its true construction subsection 24(2) of the 
Unit Titles Act (NT) does not prohibit a body corporate constituted under section 27 of that Act from leasing its common property; and

(b)	the Registrar-General could not refuse to register a lease of common 
property as is contemplated by clause 8.3 of the Memorandum of Lease between the plaintiff and Trans Metro Corporation Limited, on the sole ground that subsection 24(2) of that Act prohibits a body corporate from leasing its common property.

	The application was argued before me on 21 November; yesterday I refused to make the declarations sought, for reasons which I now publish.

Background

	Mr Southwood of counsel for the plaintiff relied in particular on the affidavit of Mr Buckley of 30 October 1996.  This discloses that the plaintiff is the registered proprietor of Lot 3995 Town of Darwin.  It had leased that land for a period of 5 years to Trans Metro Corporation Ltd by a registered lease dated 7 March 1994.  At that time the plaintiff already contemplated that it might seek under s10 of the Act to ‘strata title’ the motel units already on the land, and Clause 8 of the lease was framed to meet that possibility.  Such a proposal would subdivide Lot 3995 into units and common property; see s10(2) of the Act.  The plaintiff duly applied for the issue of strata titles pursuant to the Act; initially, at least, it will be the registered proprietor of all strata titles which issue, and thus constitute the sole member of the body corporate - see ss27 and 28 of the Act.  

	In its application, the plaintiff proposed to lease to Trans Metro Corporation Ltd what would then become the ‘common property’ within Lot 3995.  The ‘common property’ would be so much of Lot 3995 as is not within one of the ‘units’ as defined in the Act; see s4(1).  However, the Registrar-General considers that s24(2) of the Act prohibits the granting of any lease of the common property.  It was to decide the proper construction of s24(2) of the Act that the plaintiff made this application.

	Section 24 of the Act provides:
“(1)	The corporation shall hold the common property in trust for the persons who are for the time being the members of the corporation as tenants in common in undivided shares proportional to the unit entitlements of their respective units, and (subject to Part IV B) shall afford those persons opportunity for the reasonable use and enjoyment of the common property.

(2)	Subject to Part IIIA, the estate in the common property held by the corporation (other than common property in an estate development, which common property may, in accordance with a special resolution at a general meeting of the estate management corporation, be leased out) is not capable, either at law or in equity, of being transferred, assigned, sub-let or mortgaged.”  (emphasis added)

The words emphasized were added by amendment in 1993.

The plaintiff’s submissions
	Mr Southwood submits that the wording of s24(2) is clear on its face and the word ‘sub-let’ therein bears its usual meaning; in particular, the words ‘not capable - - of being -- sub-let’ do not mean ‘not capable - - of being - - leased’.  He submits that there is no prohibition in s24(2), or elsewhere in the Act, on the body corporate leasing the common property.  

	I accept that the Act, passed in 1976, is closely modelled on corresponding legislation in the Australian Capital Territory, the Unit Titles Ordinance 1970.  Section 24, as it stood before the addition in 1993 of the words emphasised, is identical with s26 of the A.C.T. Ordinance except that s26(2) of the Ordinance commences “The estate in the lease of the common property ...” (emphasis added).  The title to all land in the ACT was leasehold.  In the Northern Territory, land was held under both freehold and leasehold title; see s10(1) of the Act.  Section 23 of the Act from its inception in 1976 provided in effect that on the registration of the unit plan, and whether or not the land was leasehold, the body corporate constituted under s27 became “possessed of an estate in fee simple in the common property.”  In the ACT the body corporate became “possessed of an estate of leasehold in the common property”; see s25(1)(c) of the Ordinance.  This accounts for the use of the word “sub-let” in s26(2) of the Ordinance, which is entirely appropriate in the context of leasehold common property.  Clearly, the word “sub-let” was simply carried across to s24(2) of the Act without consideration being given to the fact that it did not accord with the fact that the body corporate holds a fee simple, not a leasehold, in the common property in the Northern Territory.

	Mr Southwood observed that s34(a) of the Act provided that the body corporate constituted under s27 - that is, “The Proprietors - Units Plan No -” - was responsible, inter alia, for ‘the control, management and administration of the common property’. In that connexion he noted that at common law trustees with active powers of management could lease for short periods, and were not necessarily in breach of trust if they leased for a term of years.  Accordingly, he submitted that the fact that s24(1) of the Act constituted the body corporate a trustee of the common property did not prevent it from leasing that common property, unless the Act prohibited it from doing so.

	He submitted that there was no ambiguity in the wording of s24(2); accordingly, it should be construed literally with the object of achieving certainty; that is, “sub-let” means sub-let.  To adopt this approach means that there is no express prohibition on leasing in s24(2); nor is any such prohibition elsewhere in the Act.  Mr Southwood rightly conceded that this may have come about through a drafting error, by the simple adoption of the A.C.T. s26(2); I consider that it is quite clear that this was the reason for it.

	As to the proper approach to statutory construction, Mr Southwood relied on Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1980-81) 147 CLR 297 at pp304-5, per Gibbs CJ:

“It is an elementary and fundamental principle that the object of the court, in interpreting a statute, ‘is to see what is the intention expressed by the words used’:  River Wear Commissioners v Adamson (1887) 2 App Cas 743 at 763.  It is only by considering the meaning of the words used by the legislature that the court can ascertain its intention.  And it is not unduly pedantic to begin with the assumption that words mean what they say;  cf.  Cody v J. H. Nelson Pty. Ltd. (1947) CLR 629 at 648.  Of course, no part of a statute can be considered in isolation from its context - the whole must be considered.  If, when the section in question is read as part of the whole instrument, its meaning is clear and unambiguous, generally speaking ‘nothing remains but to give effect to the unqualified, words’:  Metropolitan Gas Co v Federated Gas Employees’ Industrial Union (1925) 35 CLR 449 at 455.  There are cases where the result of giving words their ordinary meaning may be so irrational that the court is forced to the conclusion that the draftsman has made a mistake, and the canons of construction are not so rigid as to prevent a realistic solution in such a case:  see per Lord Reid in Connaught Fur Trimmings Ltd. v Cramas Properties Ltd. [1965] 1 WLR 892 at 899; [1965] 2 All ER 382 at 386.  Examples of that sort of case may be found in Maxwell on the Interpretation of Statutes, 12th ed, (1969), at p228 et seq., and Craies on Statute Law, 7th ed., (1971) at p520 et seq.  However, if the language of a statutory provision is clear and unambiguous, and is consistent and harmonious with the other provisions of the enactment, and can be intelligibly applied to the subject matter with which it deals, it must be given its ordinary and grammatical meaning, even if it leads to a result that may seem inconvenient or unjust.  To say this is not to insist on too literal an interpretation of the legislature.  The danger that lies in departing from the ordinary meaning of unambiguous provisions is that ‘it may degrade into mere judicial criticism of the propriety of the acts of the Legislature’, as Lord Moulton said in Vacher & Sons Ltd. v London Society of Compositors [1913] AC 107 at 130; it may lead judges to put their own ideas of justice or social policy in place of the words of the statute.  On the other hand, if two constructions are open, the court will obviously prefer that which will avoid what it considers to be inconvenience or injustice.  Since language, read in its context, very often proves to be ambiguous, this last mentioned rule is one that not infrequently falls to be applied.”  (emphasis added)

As to this approach, I respectfully agree with the observation by Dawson J in Mills v Meeking (1989-90) 169 CLR 214 at 234 that the passage emphasised “perhaps .. give insufficient emphasis to the purpose of the legislation ...”.  I respectfully adopt the approach to construction by Mason and Wilson JJ at pp319-321 of Cooper Brookes (supra); at p320 their Honours said:

“...there are cases in which inconvenience of result or improbability of result assists the court in concluding that an alternative construction which is reasonably open is to be preferred to the literal meaning because the alternative interpretation more closely conforms to the legislative intent discernible from other provisions in the statute.

...

The fundamental object of statutory construction in every case is to ascertain the legislative intention by reference to the language of the instrument viewed as a whole.  But in performing that task the courts look to the operation of the statute according to its terms and to legitimate aids to construction.”

At p321 their Honours said:

“Quite obviously questions of degree arise.  If the choice is between two strongly competing interpretations, as we have said, the advantage may lie with that which produces the fairer and more convenient operation so long as it conforms to the legislative intention.  If, however, one interpretation has a powerful advantage in ordinary meaning and grammatical sense, it will only be displaced if its operation is perceived to be unintended.”

See also Mills v Meeking (supra) for an examination of the circumstances in which departures from the literal meaning of a statute are permissible. 

The defendant’s submissions
	Mr Hutton of counsel for the defendant submitted as follows.  On its proper construction ‘sub-let’ in s24(2) means ‘leased’.  The use of the word ‘sub-let’ in s24(2) was a patently obvious error, and ‘leased’ was intended.  To give ‘sub-let’ its literal meaning would be inconsistent with the legislative intention, derived from the Act read as a whole.  Various provisions of the Act supported this proposition, especially ss21E, 24(1), 27, 42, 42A, 44(1) and 79A(c).  Section 42 provided inter alia for alienation by the body corporate of the common property; it was restricted to granting an easement over it.  Section 44(1) provided for the circumstances in which the body corporate could grant a privilege of enjoyment of part of the common property to a member, but significantly this extended to the grant of a lease only when there was an ‘estate development’.  There is no question here of an ‘estate development’.  The body corporate did not have the power of a trustee at common law to lease; its powers were limited by s30(2) to those vested in it by the Act - see s33.  The effect of s24(2) was to protect the common property from any form of alienation by the body corporate (other than an easement under s42).  The words of s24(2) emphasised on p3 were added in 1993 to provide that common property in an estate development could in certain circumstances “be leased out”; that addition would have been quite unnecessary if there was already power under s24(2) to lease.

	Mr Hutton referred me to numerous authorities.  I note for example Adler v George [1964] 2 QB 7 where the words “in the vicinity of” were construed as meaning “in or in the vicinity of” in the Official Secrets Act 1920 (U.K.), Lord Parker CJ relying on the “absurdity” which would otherwise result.

	Mr Hutton further submitted that a ‘purposive’ approach to s24(2) should be adopted.  As to the ‘purposive’ approach to statutory interpretation, I note that the Territory now stands alone in Australia in its lack of a statutory ‘purposive interpretation’ provision akin to s15AA of the Acts Interpretation Act 1901 (C’wlth) in the Territory.  The significance of the purposive approach to statutory interpretation is wholly a matter of common law in the Territory.  I consider that it is arguable at common law, as it now stands, that a purposive approach may be adopted even where the meaning of the words in the statute appears clear on their face; that is, the common law may have reached the point now enshrined in modern statutory provisions such as s15AA as understood in, for example, Mills v Meeking (supra) at pp30-31 per 
Dawson J.  

Conclusions
	In general terms, the essence of ‘strata titling’ under the Act is a strata subdividing of the land and the buildings on it, into units and common property.  The units are capable of separate ownership, their owners having the beneficial ownership and use in common of the common property.  The Act is clearly primarily directed at individual ownership of residential apartments, but the concept of strata titling is increasingly sought to be utilized for commercial industrial and retail premises.  Not surprisingly, the Act designed for another purpose does not adequately cater for commercial reality and necessity.  For example, in the case of commercial strata subdivisions, bodies corporate in general need to be able to operate profit-making facilities on common property; see the barrier in s39 of the Act.  These would normally entail leasing parts of the common property.  

	Again, speaking generally, the essential characteristic of a ‘unit’ under the Act is that it is one of several distinct and separately occupied portions of a building or buildings on one area of land, defined parts of which - the ‘common property’ - may lawfully be used in common by the occupants of the units.  The most important feature of a ‘unit’ in this context is the beneficial right of its occupants to the “reasonable use and enjoyment of the common property” (s24(1)), in common with the occupants of the other units.

	I note that Article 2(4)(a) of the standard Articles of the body corporate in the Schedule to the Act, contemplates that the members of the body corporate will have the “use and enjoyment of the common property”.  A lease of the common property would involve exclusive possession of it by the lessee, for the term of the lease; see Radaich v Smith (1959) 101 CLR 209.  This would be inconsistent with Article 2(4)(a).  

	Leases of the common property are specifically provided for in the strata title legislation of some of the States; see, for example, s19(2) of the Strata Titles Act 1985 (WA), and s25(1) of the Strata Titles Act 1973 (NSW).  There is a separate enactment in New South Wales providing in detail for the strata titling of leasehold land - the Strata Titles (Leaseholds) Act 1986; s23 provides for the body corporate to hold the leasehold estate in the common property as agent for the lessees, and s29(1) (which corresponds to s25(1) of the 1973 Act) enables the body corporate to grant a sublease of part thereof.  Specific legislation setting out strict conditions on leasing is to be expected, since the common property is the body corporate’s most valuable asset.  See also to the same effect ss27(3), 37(1)(a) and 46 of the Building Units and Group Titles Act 1980 (Qld).

	I note in passing that the Act will have to be amended from time to time (as it already has been) to meet new developments; see, for example, the review of developments to 25 November 1992 by the responsible Minister, at Hansard pp7098-9.

	Turning to the question in issue, I note that as is frequently the case in matters of statutory construction, the principles applicable are clear, but differing conclusions may be reached when they are applied.  Four hundred years ago, the Court of Common Pleas said in Lincoln College’s Case (1595) 3 Co Rep 58b at 59b; 76 ER 764 at 767, that “the office of a good expositor of an Act of Parliament is to make construction on all the parts together, and not of one part only by itself”.  That remains the duty of the courts today; see K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 59 ALJR 658 at 659, 660-1, and 663.  The question is one of ascertaining the meaning of words, in their context.  

	I consider that the proper approach to statutory construction is as set out in the headnote to K.P. Welding Construction Pty Ltd v Herbert (1994-95) 102 NTR 20, viz:

The fundamental object of statutory construction in every case [is] to ascertain the legislative intention by reference to the language of the instrument viewed as a whole.  If the choice [is] between two strongly competing interpretations, the advantage might lie with that which produce[s] the fairer and more convenient operation so long as it conform[s] to the legislative intention.  If, however, one interpretation ha[s] a powerful advantage in ordinary meaning and grammatical sense, it [will] only be displaced if its operation [is] perceived to be unintended.

These are really the words of Mason and Wilson JJ in Cooper Brookes (supra) at pp320-1.  See also Mason CJ in Babaniaris v Lutony Fashions Pty Ltd (1987) 71 ALR 225 at p232, to the same effect.  His Honour put his view very explicitly, though extra-judicially, in an article ‘Changing the Law in a Changing Society’ (1993) 67 ALJ 568 at p569:-

“No one would suggest nowadays that statutory interpretation is merely an exercise in ascertaining the literal meaning of words.  Statutory interpretation calls for reference not only to the context, scope and purpose of the statute but also to antecedent history and policy as well as community values.”

	It is sufficient to say that applying those principles I consider that the legislative intention disclosed by the Act is very clear and that s24(2), understood in the light of that legislative intention, was intended to prohibit the body corporate, inter alia, from leasing out the common property except (since 1993) in the case of an estate development.  In s24(2) the legislative draftsman considered what should be provided for as regards the prohibition on dealing with the common property, and sought to provide for it, but did not do so in words appropriate to give effect to the prohibition clearly intended by the Legislative Assembly.  I consider that the use of the word ‘sub-let’ in s24(2) was a simple drafting error; the draftsman used “sub-let” inadvertently, by overlooking the different context of the A.C.T. precedent.  The Legislative Assembly’s clear intention to prohibit the leasing of the freehold common property is fulfilled if ‘sub-let’ is construed as ‘leased’.  This amounts to modifying the meaning of ‘sub-let’ in s24(2) to ‘leased’; that is a precisely identifiable modification necessary to effectuate the purposes of the Act in relation to ‘common property’.  In such a situation the court may legitimately remedy what amounts to a legislative inadvertence flowing from a drafting error - see Tokyo Mart Pty Ltd v Campbell (1988) 15 NSWLR 275 at p283, per Mahoney JA.  In doing so the court’s function remains one of construing the Act.

	It should be presumed that the Legislative Assembly intended that the Act would operate conveniently and sensibly; hence the consequences of adopting the different constructions suggested may be considered - see Regional Director of Education v International Grammar School Sydney Ltd (1986) 7 NSWLR 302 at p314, per Kirby P.  I consider that the Legislative Assembly could not have intended that the Act have the operation which would result, if “sub-let” in s24(2) were given its literal meaning; such a result, I consider, would be inconvenient, improbable, irrational and absurd.  In no meaningful way can the holder of an estate in fee simple ‘sub-let’ property.  To give a literal meaning to “sub-let” in s24(2) is not consistent or harmonious with the other provisions of the Act; it does not have a powerful advantage in ordinary meaning and grammatical sense.  The consequences of adopting such a construction, so as to permit a lease of the common property, are so undesirable that the Legislative Assembly cannot have intended them, in its manifest desire to protect the beneficial interests of the proprietors of units in the common property.  

	The proper construction of “sub-let” in s24(2) is perhaps best indicated by the approach of Jordan CJ in Hall v Jones (1942) 42 SR (NSW) 203 at p208:

“... a Court is entitled to pay the not excessive compliment of assuming that [the Parliament] intended to enact sense and not nonsense.”

Reading “leased” for “sub-let” produces a fairer and more convenient operation of the Act.  I need labour the matter no longer.

	As to the relief sought in par (b) at p1, it is clear that the Registrar-General may refuse to register the contemplated lease of the common property, on the basis that such a lease is prohibited by s24(2); see The King v Registrar of Titles for Victoria; ex parte The Commonwealth (1915) 20 CLR 379 at p402 and Templeton v The Leviathan Pty Ltd (1921) 30 CLR 34 at p53 and 63-4.

	During the course of the hearing on 21 November, I made the preliminary orders sought in par 1 of the summons of 31 October 1996.  These are the reasons for the refusal yesterday to make the declarations sought at (a) and (b) on p1.

	By consent, there will be no order as to costs.

	Orders accordingly.

____________________