Posted on August 20, 2015 by Megan Hawley
Retail Lease of a Public Road?
In my recent blog Is a public car park a public road? I discussed the case of Cavric v Willoughby City Council  NSWCA (Cavric) in which the Court of Appeal set out the proper approach to determining whether land (in that case a car park) is a public road.
That case has now been applied in a retail leasing context, in a decision which confirms that an arrangement by a council with a third party under the Roads Act 1993 (Roads Act) to operate restaurants or shops on roads or footways is not subject to the Retail Leases Act 1994 (RL Act), and that councils have limited powers to grant occupation rights over public roads to private entities.
In MH Investments Aust Pty Ltd v Hurstville City Council  NSWCATAP 180, the Civil and Administrative Tribunal Appeal Panel was determining whether an agreement between Council and Moochi Operations (Moochi) under which Moochi occupied part of Memorial Square in Hurstville for a frozen yoghurt shop was subject to the RL Act.
The Appeal Panel said that whether Memorial Square was a public road was a key issue, because, if it was, then the RL Act would not apply.
Section 138 of the Roads Act enables a roads authority to approve of the erection of structures on public roads, and s139A permits the roads authority, as a condition of that approval, to impose a condition allowing the selling of articles and the payment of rent.
The agreement with Moochi approved in principle the erection of a structure on Memorial Square, and required the payment of rent.
The Appeal Panel referred to the decision of the Court of Appeal in Manly Council v Malouf  NSWCA 299 in which the Court held that an approval under s125 of the Roads Act to operate a restaurant on a footway adjacent to a public road was not subject to the RL Act, and held that that case applied equally to s139A of the Roads Act.
The Appeal Panel accepted the Council’s submission that ‘Manly Council v Malouf is authority for the proposition that the RL Act does not apply to the grant of approval under s125 of the Roads Act or a grant of consent under s139A of that Act.’
Furthermore, in Manly Council v Malouf, Tobias JA held that ‘except to the limited extent permitted by Division 2 of Part 10 of the Roads Act, in my opinion a council has no power to grant a lease or licence to permit the private use of occupation of any part of a public road of which it is the roads authority. The Roads Act exclusively governs its powers with respect to such roads. Although it is empowered to grant an approval or consent pursuant and subject to s125 and s139A respectively, that is the extent of its power to grant rights of private occupation of any part of a public road.’
The Appeal Panel then went on to find, according to the principles set out in Cavric that on the balance of probabilities, Memorial Square was not a public road. Therefore the RL Act did have some application.
The case is important for councils and roads authorities.
It confirms that councils’ and roads authorities’ only power to enter into arrangements in respect of the occupation of public roads is under s125 and 139A of the Roads Act. Furthermore, no such arrangement will be subject to the RL Act.
The RL Act is directed at ensuring uniformity in retail leases, incorporates numerous provisions into such leases, many for the protection of lessees, and overrides the express provisions of such leases.
Councils and roads authorities should be aware that if they have arrangements in respect of their public roads, those provisions of the RL Act will not apply to those arrangements. Councils should deal with the people with whom it has such arrangements only in accordance with the terms of the arrangement, and not in accordance with the RL Act.
If councils and roads authorities have entered into leases in respect of public roads which are not of a type authorised under the Roads Act, then there might also be some doubt regarding the enforceability of such leases.
In addition, if there are provisions of the RL Act to councils’ benefit, then in the future councils should include any such requirements in its conditions of approval under s125 and 139A (to the extent permitted by the Roads Act).
The decision of the Appeal Panel can be found here.