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 findings of the Supreme Court in Wyuna Court Pty Ltd v Vikpro Pty Ltd [2015] QSC 216.

Why is this decision important to landlords and tenants?

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At the time those leases were entered into, recovery of land tax from tenants was unenforceable by operation of the now repealed Land Tax Act 1915 (Qld) ("1915 Act").

Facts of the case

  • A sublease required the tenant to pay "all rates taxes and other outgoings relating to the lease premises".
  • Despite this clause in the sublease, the tenant was not liable to pay land tax due to the operation of section 44A of the 1915 Act; which rendered such clauses unenforceable.
  • After an amendment to the 1915 Act in 2009, section 44A continued to apply to leases entered into before 30 June 2009 (including any renewal, assignment or transfer of those leases).
  • The 1915 Act was ultimately repealed and replaced in 2010 by the Land Tax Act 2010 (Qld) ("2010 Act").
  • The 2010 Act:
    • allows a landlord to require tenants to pay land tax;
    • does not include an express provision that section 44A of the 1915 Act continues to apply to leases entered into before 30 June 2009.

The landlord asserted that because the 2010 Act was silent about whether or not section 44A of the 1915 Act continued to apply to leases entered into before 30 June 2009, the landlord could seek to require the tenant to pay land tax.

The tenant asserted that section 44A of the 1915 Act continued to apply to the sublease even under the 'silent' 2010 Act.

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

What does this mean for pre-30 June 2009 commercial leases?

A landlord may now require the tenant to pay land tax imposed on or after 30 June 2010 provided:

  1. The lease is a commercial lease (i.e. not a retail or residential lease) entered into before 30 June 2009; and
  2. The lease includes a clause requiring the tenant to pay or reimburse taxes (even if land tax is not specifically mentioned).

This is a landmark decision that should have landlords reaching to review commercial leases entered into before 30 June 2009.

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