Having applied for and been granted a substitute lease under Part IV of the Land (Ownership of Freeholds) Act, what exactly do you hold? Sections 23 and 24 answer it.
Section 23 — term, rent and conditions
(2) Until varied by or under an Act to which the section applies, the term of a substitute lease is 99 years.
(3) Subject to any such Act, rent is not payable on a substitute lease.
(4) The reservations, covenants and improvement and other conditions of a substitute lease are as determined by or under an Act to which the section applies.
Two of these are unusually favourable, and they reflect what the lease is replacing.
- Ninety-nine years is the maximum available for most State lease types, and here it is the default rather than a ceiling the Minister may choose to apply.
- No rent — the same position as a mission lease under section 98 of the Land Act, and as a special agricultural and business lease under section 102(5). The lessee is not being granted new land; they are exchanging an interest they already owned.
All three are expressed to be subject to variation by or under an Act. The 99-year term and the rent-free position are defaults that legislation can alter, and the conditions are determined by that legislation rather than stated in this Act. Check the current position before relying on any of them.
Note also the conditions the Minister may impose under section 18(2) when approving the application — including conditions adjusting rights between persons interested in the land. Those are specific to your grant.
Section 24 — the effect of the substitute lease
(1) A substitute lease commences on the date of publication of the relevant notice under section 22.
(2) On commencement —
(a) the absolute ownership of the land vests in the State;
(b) the substitute lease is deemed to be a State lease granted under the Land Act, and the provisions of that Act applying generally to State leases apply accordingly; and
(c) all other rights, titles and interests in, over or in connection with the land take effect so far as they are capable of doing so in relation to the substitute lease.
Paragraph (a) is the substantive change: freehold ownership ends and the State becomes the owner. Paragraph (b) then plugs the lease into the ordinary leasehold regime.
From commencement, the Land Act 1996 applies as it does to any State lease:
- the section 82 implied reservations of minerals, petroleum and helium, and the bona fide purpose condition;
- approval of controlled dealings under Part XVII — a transfer is void without it;
- forfeiture under Part XV for breach of condition;
- subdivision and consolidation under Parts XVIII and XIX; and
- registration in the Register of State Leases under the Land Registration Act.
Paragraph (c) carries existing encumbrances across — mortgages, leases, easements — so far as they are capable of taking effect against a leasehold rather than a freehold.
Section 24(3) — section 53 is preserved
This Part is not intended to affect the operation of section 53 of the Constitution (protection from unjust deprivation of property) — and for the purposes of section 53(2) the State is deemed to be the expropriating authority in relation to any interest (other than a frustrated right) adversely affected by the operation of this Part.
This is an important safeguard. Conversion vests absolute ownership in the State, and other people may hold interests in the land that are adversely affected. Section 24(3) treats the State as the expropriating authority for those interests, which engages the section 53(2) requirement of just compensation on just terms.
The exclusion of a frustrated right is logical: that is a right which, by definition, could never have been completed because of section 56(1)(b), so its conversion into a substitute lease is a benefit rather than a deprivation.
Section 26 — ancillary transactions
Section 26 provides that transactions necessary or convenient to comply with conditions of an approval of the kind referred to in section 18(3) — that is, conditions adjusting rights between persons interested in the land — attract relief from stamp duty.
The point is sensible: where the Minister or the National Court requires interests to be rearranged as a condition of conversion, the parties should not be taxed on transactions they were directed to make. See the stamp duty series for the general position.
Section 25 — not an acquisition from the State
The grant of a substitute lease is not an acquisition of land from the State within the meaning of section 3(2) of the Lands Acquisition (Development Purposes) Act. A technical but useful clarification: conversion is an exchange, not a fresh acquisition of State land.
Section 27 — the National Court’s anti-evasion power
The National Court has all jurisdiction and powers necessary to allow it to make whatever orders appear to it to be desirable to prevent or to nullify an attempted evasion of section 56(1)(b) of the Constitution.
An unusually open-ended remedial power, and it complements section 4, under which ownership of an indirect interest counts as freehold ownership. Section 4 catches the structure; section 27 gives the Court whatever powers it needs to unwind it.
Section 28 then allows regulations to be made — expressly notwithstanding anything in the Land Registration Act — about the manner of registration of anything necessary to give effect to the Act.
Sources
- Land (Ownership of Freeholds) Act (Chapter 359) — ss 16–28; Parts IV and V
- Constitution — ss 53, 56
- Land Act 1996 — ss 82, 98, 102, 122, 127–131
- Land Registration Act (Chapter 191) — Part IV
- Lands Acquisition (Development Purposes) Act — PacLII 1986 Revised Edition
Before relying on anything here, read the current text of the Land Act 1996 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.