Queensland Court of Appeal decides landlords may recover land tax under leases entered into before 30 June 2009

By Margaret Miller • In Commercial Law, Dispute Resolution, Property LawComments Off on Queensland Court of Appeal decides landlords may recover land tax under leases entered into before 30 June 2009

On 6 September 2016 the Queensland Court of Appeal in Vikpro Pty Ltd v Wyuna Court Pty Ltd [2016] QCA 225 dismissed an appeal and upheld the original decision of the Supreme Court in Wyuna Court Pty Ltd v Vikpro Pty Ltd [2015] QSC 216.

A landlord under a commercial lease entered into before 30 June 2009 may now be able to require a tenant to pay or reimburse land tax imposed on or after 30 June 2010. At the time those leases were entered into, recovery of land tax from tenants was unenforceable because of the now repealed Land Tax Act 1915 (Qld).

In the case before the Court, a sublease required the tenant to pay “all rates taxes and other outgoings relating to the lease premises”. Despite this clause, the tenant was not liable to pay land tax because section 44A of the 1915 Act made such clauses unenforceable. An amendment to the 1915 Act in 2009 resulted in section 44A continuing to apply to leases entered into before 30 June 2009, including any renewal, assignment or transfer of those leases.

The 1915 Act was repealed and replaced in 2010 by the Land Tax Act 2010 (Qld). The 2010 Act allows a landlord to require tenants to pay land tax and does not include a specific provision that section 44A of the 1915 Act continues to apply to leases entered into before 30 June 2009.

The landlord claimed that, because the 2010 Act was silent about whether section 44A of the 1915 Act applied to leases entered into before 30 June 2009, the landlord could require the tenant to pay land tax. The tenant claimed that section 44A of the 1915 Act continued to apply to the sublease.

The Supreme Court in Wyuna Court Pty Ltd v Vikpro Pty Ltd [2015] QSC 216 rejected the tenant’s argument and found that the legislation deliberately excluded the specific provision which preserved the application of section 44A of the 1915 Act to leases entered into before 30 June 2009. The Court of Appeal confirmed that decision in Vikpro Pty Ltd v Wyuna Court Pty Ltd [2016] QCA 225.

A landlord may now require the tenant to pay land tax imposed on or after 30 June 2010 provided the lease is a commercial lease, i.e. not a retail or residential lease, entered into before 30 June 2009 where the lease includes a clause requiring the tenant to pay or reimburse taxes, even if land tax is not specifically mentioned.

As a result of this decision, landlords should review commercial leases entered into before 30 June 2009.

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