ABBEY BEACH RESORT MANAGEMENT LTD and WATER CORPORATION

[2006] WASAT 231

ABBEY BEACH RESORT MANAGEMENT LTD and WATER CORPORATION [2006] WASAT 231

Link to Appeal : [2007] WASC 268

Jurisdiction:	STATE ADMINISTRATIVE TRIBUNAL	Citation No:	[2006] WASAT 231
Act:	COUNTRY TOWNS SEWERAGE ACT 1948 (WA)
Case No:	CC:317/2006	Heard:	24 JULY 2006
Coram:	MR P McNAB (MEMBER)	Delivered:	24/07/06
No of pages:	8	Judgment Part:	1 of 1
Result:	The application for review is dismissed The decision under review is affirmed
Category:	B
PDF Version

Parties:	ABBEY BEACH RESORT MANAGEMENT LTD WATER CORPORATION
Catchwords:	Rating – Classification of land – Managed investment – Holiday resort – Unit entitlement – Sewerage charges – Whether land used for residential or commercial purposes – Unit owners could temporarily reside in their property – Resort operated as a commercial undertaking – Tribunal held land used for commercial or business purposes – Land could not be considered residential as the owners could and did not treat their property as a settled place of abode – Words and phrases: "Commercial or business" "Residential"
Legislation:	Country Towns Sewerage Act 1948 (WA), s 62 Water Agencies (Powers) Act 1984 (WA), s 69A, s 69A(1)(e) Water Agencies (Charges) By-laws 1987 (WA), by­law 2, by­law 5, by­law 13(1)(c), by­law 23(2), by­law 23(2)(b), Sch 3, item 5
Case References:	Derring Lane Proprietary Limited v Port Phillip City Council (No 2) [1999] VSC 269 Maunder-Hartigan v Hamilton (1984) 8 ACLR 937 Nil
Orders	1. That the application for review be dismissed.,2. That the decision under review be affirmed.

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : COUNTRY TOWNS SEWERAGE ACT 1948 (WA) CITATION : ABBEY BEACH RESORT MANAGEMENT LTD and WATER CORPORATION [2006] WASAT 231 MEMBER : MR P McNAB (MEMBER) HEARD : 24 JULY 2006 DELIVERED : Edited reasons delivered extemporaneously on 24 JULY 2006 FILE NO/S : CC 317 of 2006 BETWEEN : ABBEY BEACH RESORT MANAGEMENT LTD

Applicant

AND

WATER CORPORATION
Respondent

Catchwords:

Rating – Classification of land – Managed investment – Holiday resort – Unit entitlement – Sewerage charges – Whether land used for residential or commercial purposes – Unit owners could temporarily reside in their property – Resort operated as a commercial undertaking – Tribunal held land used for commercial or business purposes – Land could not be considered residential as the owners could and did not treat their property as a settled place of abode – Words and phrases: "Commercial or business" "Residential"

(Page 2)

Legislation:

Country Towns Sewerage Act 1948 (WA), s 62

Water Agencies (Powers) Act 1984 (WA), s 69A, s 69A(1)(e)
Water Agencies (Charges) By-laws 1987 (WA), by­law 2, by­law 5, by­law 13(1)(c), by­law 23(2), by­law 23(2)(b), Sch 3, item 5

Result:

The application for review is dismissed

The decision under review is affirmed

Category: B

Representation:

Counsel:

Applicant : Mr ME Herron
Respondent : Mr H Hughes (Acting as Agent)

Solicitors:

Applicant : Abbey Beach Resort
Respondent : Water Corporation

Case(s) referred to in decision(s):

Derring Lane Proprietary Limited v Port Phillip City Council (No 2) [1999] VSC 269
Maunder-Hartigan v Hamilton (1984) 8 ACLR 937

Case(s) also cited:

Nil

(Page 3)

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

1 This matter was a review of the decision of the Water Corporation to classify the Abbey Beach Resort at Busselton as "commercial" rather than "residential" in respect of certain sewerage charges.

2 Generally speaking, such a classification would lead to higher sewerage charges by the Water Corporation.

3 The Abbey Beach Resort was run for profit as a managed investment involving a syndicate of individual investors who could reside in their investment units for up to three months per year. At other times, their investment property formed part of the tourist/resort accommodation market in the Busselton area.

4 The Tribunal rejected the applicant's arguments that the land should be classified as "residential". The Tribunal found that the Abbey Beach Resort's land was being used for business or commercial purposes.

5 Further, the Tribunal concluded that the occasional use of the properties by each owner/investor did not convert any of the properties into the settled or usual place of abode of those owners. Thus, the land could not be classified as "residential".

6 The application for review was therefore dismissed.

Introduction

7 This matter comes to the Tribunal by way of a referral of an objection to an entry in the records of the respondent Water Corporation. See s 62 of the Country Towns Sewerage Act 1948 (WA), read with s 69A of the Water Agencies (Powers) Act 1984 (WA) (WAP Act) dealing with rating records.

The rating entry and classification

8 Three observations may be made about the entry objected to.

9 First, the entry concerns the Abbey Beach Resort at Busselton. (The actual land is that shown on strata plan 20084.) Secondly, the entry is for 2005/2006. Thirdly, all of the unit lots comprised in that strata plan are classified as commercial. (See also the wide definition of "land" in the WAP Act.)

(Page 4)

10 Such a classification is authorised under s 69A(1)(e) of the WAP Act and is effected by by-law 23(2) of the Water Agencies (Charges) By-laws 1987 (WA) (WAC by-laws). By-law 23(2) refers to three categories: "Residential"; "country Commercial/Industrial property", and "Vacant Land". None of those terms are relevantly defined, apart from one associated term which we will return to below. It is convenient to set out the three categories in full (emphasis added):

"(a) Residential, if the land is used wholly or primarily for the purpose of providing the owner or occupier of the land with a residence for himself, his family or servants, or any of them;

(b) country Commercial/Industrial property, if the land is in a country sewerage area and is used for business, professional or commercial purposes or for manufacturing or processing;

(c) Vacant Land, if there is no building on the land."

11 It is common ground between the parties that the third category (vacant land) does not apply here and that the land is either to be classified as "residential" or "commercial". (That "commercial" is a separate category and not "commercial/industrial", as it is drafted, as a combined class is indicated or confirmed by item 5 in Sch 3 of the WAC by-laws.)

12 The classification affects the level of charges for sewerage services. Generally speaking, the Abbey Beach Resort and its individual unit holders will pay less in relation to sewerage charges, if their property is classified as residential. See also the effect of by-law 5. The consequences of the correct classification are not, however, a matter presently before this Tribunal.

Abbey Beach Resort

13 The Abbey Beach Resort is a managed investment regulated under Commonwealth law. It operates by way of a syndicate of 193 individual investors, and the resort is managed as a serviced strata scheme by Abbey Beach Resort Management Limited, who is the applicant in this review.

14 Generally speaking, all of the accommodation at the Abbey Beach Resort is owned by individual investors and is available for letting. This

(Page 5)

includes hotel rooms, as well as the holiday apartments on the seaward side of the resort. Importantly, owners are barred from spending any more than three months in their investment properties. One of the principal purposes of the scheme is set out in recital "E" to the constating instrument of the syndicate, which provides as follows:

"The Unit Leases bring each of the [193] Strata Lots comprising the Strata Plan together under common management to enable each lot to be operated as part of the Resort when not occupied by the respective Owner, his family or his guests."

Used for business or commercial purposes?

15 The Abbey Beach Resort, run according to these arrangements – including the marketing of the operation – is conducted, without any doubt, as a commercial operation or business. Compare, for example, Maunder-Hartigan v Hamilton (1984) 8 ACLR 937 where Wallace J said that a unit investor who leased their unit as part of a holiday resort was part of a "financial or business undertaking or scheme" (at 953).

16 The question then is whether this necessarily makes the subject land "used" for business or commercial purposes within the meaning of by-law 23(2)(b). In the Tribunal's view, the land is being used, and was being used, at the material time for business or commercial purposes.

17 The reasons for this conclusion may be briefly stated.

18 In the Tribunal's view, the essential facts (summarised above) show, first, that the land is used as a managed investment and makes a return to syndicate members. Secondly, the land is used in the sense that it is advertised and marketed as a resort, making it indistinguishable from its commercial competitors. Thirdly, the Abbey Beach Resort is, for all intents and purposes, carried on as a business undertaking trading for profit in the commercial hotel and resort accommodation market in Busselton and its surrounds, and the land is used for that purpose.

19 The fact that "lifting the veil" of the Abbey Beach Resort reveals various otherwise unconnected individuals to be, by way of unit entitlement, the ultimate beneficiaries of these syndicated arrangements does not mean that they are somehow to be regarded as "individual landlords", each with a property to let (it being conceded by the respondent that generally such persons are not treated by it as running a business). The analogy to this effect offered by the applicant through its representative, Mr Hughes, of a real estate agency and its clients, is, with

(Page 6)

respect to Mr Hughes, quite artificial and not apt in the circumstances that have been referred to.

20 Nor does the occasional personal use of their land by such unit holders destroy the characterisation of a commercial or business use of the land, any more than, to take an example and speaking very generally, some personal use necessarily destroys the business deductibility of certain items for taxation purposes.

21 The mention of both "strata lots" in Sch 3 dealing with sewerage charges and "holiday accommodation" as a commercial use (for water charges in by-law 13(1)(c)), when considered together, tend to strengthen the conclusion reached above. "Holiday accommodation" is defined in by-law 2, to mean:

"accommodation which, at any time during the year for which a charge is to be assessed –

(a) is held out by the owner or occupier of the land on which the accommodation is situated as being available; or

(b) is made available by that owner or occupier, for occupation for holiday purposes by persons other than that owner or occupier unless, in the opinion of the Corporation, the accommodation is not so held out or made available substantially by way of trade or business or for the purpose of any trade or business; …"

22 The definition there seems an apt description of the operation of Abbey Beach Resort.

Residential classification not applicable

23 By-law 23(2) seems to give the classifier no option but to select one of the two classifications. Strictly speaking, the Tribunal, having concluded that commercial is the relevant applicable classification, need not go on to consider the other classification. But if the Tribunal were found to be wrong in respect of that matter, the Tribunal should state its conclusions on the residential classification question.

24 Now, as mentioned, "residential" is not directly defined, but "residence" and "residential property are". These definitions are as follows:

(Page 7)

" 'residence' means a private dwelling house, home unit, or flat, and includes any yard, garden, outhouse, or appurtenance belonging thereto or usually enjoyed therewith;

'residential property', in relation to a charge, means a piece of land classified for the purposes of the Part or Division under which that charge is made as Residential that, in accordance with by-law 5, is the subject of a separate assessment of a charge; …"

25 Mr Hughes, for the applicant, submits that just as an occupier of an hotel room can be regarded as a resident, so it is the case that such a short-term stayer at the Abbey Beach Resort, whether the owner, or a guest, or a paying guest, can also be regarded as relevantly residing, thus, attracting the first category and rendering the second category superfluous in the circumstances.

26 The Tribunal does not agree. The intention of the drafter of the by-law was to create a dichotomy between commercial and non-commercial or private use, reflected, additionally, in the ordinary English language use of words indicating residing and residential purposes.

27 Residential and its associated forms are ordinary, non-technical words and the Tribunal gratefully adopts the dictionary meanings and judicial exegesis collected by Balmford J in Derring Lane Proprietary Limited v Port Phillip City Council (No 2) [1999] VSC 269 at [12] - [15]. This is a case helpfully cited by Mr Herron for the respondent.

28 The thrust of those authorities is that residence denotes physical presence at and an intention to treat the subject place as a settled or usual place of abode, as regards the alleged occupier or owner. Here, syndicate members may have an occasional physical presence on the land, but, by no stretch of the imagination would their investment properties be ordinarily regarded as their settled or usual place of abode. A fortiori, for paying guests. Thus, the land is not "being used wholly or primarily for the purpose of providing the owner or occupier of the land with a residence for himself, his family or servants, or any of them".

Conclusions and orders

29 Thus the correct classification, in the Tribunal's view, is that reached by the respondent, namely that of commercial and, for the reasons just given, the Tribunal makes the following orders:

(Page 8)

1. That the application for review be dismissed

2. That the decision under review be affirmed.

I certify that this and the preceding [29] paragraphs comprise the reasons for decision of the State Administrative Tribunal.


___________________________________

MR P McNAB, MEMBER