Allen and Ors v Commissioner of State Revenu

[2002] VSC 67

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 8818 of 2001

LESLIE ALLEN, ROBERT ALLEN, GWENDA SHAW AND JOAN TALBOT	Appellants
v.
COMMISSIONER OF STATE REVENUE	Respondent

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JUDGE:	PAGONE, J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	15 MARCH 2002
DATE OF JUDGMENT:	15 MARCH 2002
CASE MAY BE CITED AS:	ALLEN & ORS. v. COMMISSIONER OF STATE REVENUE
MEDIUM NEUTRAL CITATION:	[2002] VSC 67

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CATCHWORDS:      Special Land Tax – Exemption "ceases to apply" – Land Tax Act 1958, s.10(1).

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APPEARANCES:	Counsel	Solicitors
For the Appellants	Mr. J.L. Evans	Voitin, Walker, Davis
For the Respondent	Mr. C.M. Caleo	Solicitor for the Commissioner of State Revenue

HIS HONOUR:

1. The issue in this proceeding is the meaning and effect of s.10(1) of the Land Tax Act 1958. The particular issue in the dispute between the parties is whether the section can apply where the contemplated basis for exemption from land tax has ceased but the land remains exempt from land tax for some other reason.

1. The appellants in this case were the owners of certain land in Narre Warren South until 18 August 1999. Until that date the land was used for primary production and qualified for land tax exemption under s.9(1)(ha) of the Act ("the primary production exemption"). On 18 August 1999 the appellants transferred the land to the Minister for Eduction at which time the land ceased to qualify for the primary production exemption under s.9(1)(ha) of the Act. The Commissioner contends that the land became subject to special land tax under s.10(1) upon it ceasing to qualify for the primary production exemption. The appellants contend that the requirements for assessment under s.10(1) have not arisen because the land continues to be exempt under s.9(a) notwithstanding that the primary production exemption has ceased to operate. It is common ground between the parties that the only issue in this proceeding is whether s.10 can operate in circumstances where a specified exemption has ceased to operate but another exemption applies to the land.

1. Section 10(1) provides:

"Where any land which is exempt from land tax by the operation of paragraphs (b), (g), (h), (ha) or (i) or sub-section (1) of section 9 ceases to be exempt from land tax (otherwise than by reason of the coming into operation of section 9) a special land tax at the rate of 5 cents for each dollar of the unimproved value of the land or that portion of the land which has so ceased to be exempt, as the case may be, shall be payable to Her Majesty –

(a)in the case of land which ceases to be exempt immediately or within 60 days after a change of ownership, by the person who was the owner thereof immediately before such change of ownership;  and

(b)in any other case, by the person who is the owner immediately after it ceases to be so exempt."

The construction of this section urged by the appellants is that it cannot apply where a specified exemption ceases to operate but a non-specified exemption comes into operation or continues to operate.  The appellant's construction is open on a literal reading of the section, but I do not consider it to be correct.  The task of statutory interpretation is fundamentally that of determining the meaning which was intended by the legislature.  The construction advanced by the appellants may be open on the words of the section but I think it neither to be the one intended by the legislature nor that which should be adopted. 

1. The particular situation which arose in this proceeding was not expressly contemplated by those drafting the provision. The ordinary situation which was doubtlessly in mind was that of a change from a specified exemption to no exemption at all. The question in this case requires a construction of the section, not in the ordinary case contemplated, but rather in the case where there is a cessation of the exempting provision. Section 10(1) seeks to impose a special land tax in those specific circumstances where a specified exemption has ceased to operate. A condition for the application of the section is that the land is exempt from land tax by operation of only some of the many exemptions created in s.9(1). That was not quite so when the provision was originally introduced in 1970. The 1970 version of s.9(1) listed nine exemptions of which eight were referred to in s.10(1). The one exemption from liability under s.9(1) which was not subject to the special tax under s.10(1) was were the land had been owned by the Crown. It would have been pointless for a special tax to be levied under s.10(1) when the exemption of s.9(1)(a) ceased to operate because it would otherwise have resulted in the Crown paying the special tax to itself. However, a consideration of those matters does not enlighten the reader about what must have been within the contemplation of the legislator concerning the effect of a cessation of an operative exemption. In my view the enactment of s.10(1) reflects an intention to enliven a liability for land tax upon the cessation of a use. The specified exemptions in s.10(1) now are fundamentally concerned with particular uses of land and it makes sense for s.10(1) to become operative where those uses (and therefore the exemptions granted by reference to those uses) cease to apply. In my opinion the words "ceases to be exempt" necessarily contemplate a cessation of the exemption specifically contemplated in the preceding words of the sub-section. This may give rise to some situations that may arguably be anomalous; for example where the owner of land alters its use for one of the exemption purposes contemplated by s.10(1) to another of those purposes. However, those apparent anomalies may lose their quality as such if the purpose of s.10(1) is to enliven a liability upon the cessation of an exempting provision. In any event, the alternative construction of the provision urged upon me is not free from results that some might fairly be described as anomalous.

1. The view I take about the construction of the provision makes it unnecessary for me to have regard to extraneous material.  I think that little can be gained from a consideration of the Second Reading speech introducing the provision in 1970 because the provision now has about it some important differences from those in 1970.  However, if it were necessary to do so, I note that the view of the provision which I adopt is supported by the second reading speech of the then Premier and Treasurer during the passage of the Bill through the Legislative Assembly on 19 November 1970.  The Honourable Sir Henry Bolte said[1]:

"Secondly, the owners of land which is exempt will become liable for a special land tax when that land ceases to be used for the exempt purpose.  …  So long as the exempt use continues, there will be no liability for land tax, but when the exempt use ceases, the special land tax will become payable in the year of cessation."

This passage revealed the purpose of the provision now found in s.10(1) as being to impose a special land tax when specified exempt purposes ceased. That objective would be defeated by a construction of s.10(1) which prevented a special land tax from being levied where the specified exempting purpose ceased to have operation.

[1]Hansard, p.2203

1. Accordingly, I dismiss the appeal, affirm the assessments and, having heard counsel on costs, order that the appellant pay the costs of the respondent.

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