Bethany Aged Christians' Home v The Commissioner of Land Tax
[1996] QLC 68
•29 May 1996
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LAND COURT
BRISBANE
29 May, 1996
Re: Appeal against Land Tax Assessment
A95-96
Bethany Aged Christians’ Home
v.
The Commissioner of Land Tax
D E C I S I O N
The appellant, Bethany Aged Christians’ Home (“Bethany”) has lodged an appeal against Assessment No. 149204 (“the assessment”) by the Commissioner of Land Tax (“the Commissioner”) on land it owned at midnight on 30 June, 1993 and 30 June, 1994. The assessment is in respect of land situated at 227 Manly Road, Manly West and is more properly described as Lot 1 on Registered Plan No. 81821 in the County of Stanley Parish of Tingalpa City of Brisbane. The land comprises 3.673 hectares. The assessment is in respect of a taxable value of $248,586 and issued on 10 August, 1995.
At the hearing of the appeal, Bethany was represented by Mr Robertson of counsel and the Commissioner by Mr Redmond of counsel. Affidavits sworn by Mr Graham Edwin Maynard on 7 May, 1996 and by Mr Bruce John Stewart Wallace, a registered valuer, on 8 May, 1996, and photographs of Janoah Gardens were admitted in evidence on behalf of Bethany. Mr Maynard, who is the chairman of Bethany’s board, also gave oral evidence. An affidavit sworn by Mr Jeffrey George Heslewood on 10 May, 1996 was admitted in evidence on behalf of the Commissioner together with a subpoena issued to the Brisbane City Council on 10 May, 1996. Mr Heslewood, who is a Senior Revenue Officer in the Office of State Revenue, also gave oral evidence.
BACKGROUND
At the conclusion of the hearing, it appeared that there were certain factual matters which were not in dispute between the parties. I will set out those matters together with the findings of fact I have made and the evidence on which I have based those findings.
As Mr Maynard deposed in his affidavit, I find that Bethany is a body corporate incorporated pursuant to the Religious Charitable and Other Institutions Act 1861 with letters patent issued on 13 April, 1978. It is a registered charitable organisation pursuant to the provisions of the Income Tax Assessment Act 1953 (Cth) and donations to it are deductible for the purposes of that Act.
Bethany’s principal sources of funding are recurrent Commonwealth subsidies, contributions from residents and gifts and donations. I find that Bethany is required to comply with certain requirements imposed by the Commonwealth in order to receive continued subsidies. On the basis of both Mr Maynard’s affidavit and oral evidence, I find that none of Bethany’s income is or ever has been used for work other than the purposes for which it exists. 6. Bethany is a non profit organisation whose object, in general terms, is to provide accommodation and other services to elderly residents of facilities it operates at Wynnum Road, Norman Park and also on the land which is the subject of these proceedings at Manly Road, Manly West. Its constitution sets out those objects in more detail (see Exhibit “JGH5” to the affidavit of Mr Heslewood). While they are consistent with the general description I have given of Bethany’s objects, it should also be noted that ........ .
At its meeting on 19 December, 1995, Bethany’s Board passed a resolution that there would be proposed to the Annual General Meeting an amendment to the constitution to the effect
“That no income has been, or will be distributed to Corporation Members during the existence of the Organisation.” (letter written by M.D. Arnold, Administrator of Bethany, Exhibit “JGH6” to Mr Heslewood’s affidavit)
There was no such provision in the constitution at either 30 June, 1993 or 30 June, 1994. This I find on the basis of the constitution exhibited to Mr Heslewood’s affidavit (part of Exhibit “JGH5”) and Mr Maynard’s oral evidence. I also find on the basis of Mr Maynard’s evidence that, even in the absence of an express provision in its constitution to that effect, Bethany has never distributed its income to its members or to any other operation.
Bethany operates a facility on the land which is the subject of these proceedings. It is known as “Janoah Gardens” and is a retirement village registered under the Retirement Villages Act 1988 (“the Retirement Villages Act”). The land described as Lot 1 on Registered Plan No. 81821 County of Stanley Parish of Tingalpa comprises approximately 4.06 hectares. On 9 November, 1987, the Brisbane City Council (“the BCC”) approved an application to develop the land for an institutional residence. The BCC’s approval was conditional upon the transfer of certain parts of the land for the Council’s use. The balance of the land then owned by Bethany after making the necessary transfers was 3.673 hectares. The current zoning of the land is “Particular Development (Retirement Village)”.
Again based on both Mr Maynard’s affidavit and oral evidence, I find that Bethany always intended that the whole of the site at Janoah Gardens would be used for units of one kind or another. Over the years, there have been some modifications to the way in which the concept would be carried out. It was always intended that the units would be built in stages.
The first stage, Stage 1, of Janoah Gardens comprised 48 two bedroom units, a manager’s residence and a community centre. It appears from the letter written on 22 May, 1995 by J.H. Brook, the accountant for Bethany, that a workshop was also constructed at that stage (see part of Exhibit “JGH5” to Mr Heslewood’s affidavit). No reference to the workshop was made in Mr Maynard’s evidence but, in light of his general acceptance of the letter when shown it during cross-examination, I am satisfied that a workshop had also been constructed at the relevant time. 12. I am also satisfied, again on the basis of Mr Maynard’s evidence, that there is no provision at Janoah Gardens itself for the care of the sick, infirm, afflicted or incorrigible persons or of children. I am satisfied that Bethany does provide for the care of those people, or some of them, at its facilities at Norman Park.
As Janoah Gardens is a retirement village, it follows that people who may be described as “aged” live there. They live in independent living units. A manager lives at the retirement village. While I am satisfied that Bethany provides accommodation for the aged, I do not consider that I have sufficient evidence on which to make a finding whether or not Bethany gives care which relates directly to, and is necessary because, they are aged.
Stage 1 was commenced in November, 1989 and completed in approximately September, 1990. Taking into account the living units (4,498 square metres), manager’s residence (125 square metres), community centre (472 square metres), workshop (shed, 39 square metres), driveways, carparks and gardens (22,085 square metres), stage 1 occupied a total of 27,219 square metres of the total 36,730 square metres owned by Bethany. This left a total of 9,511 square metres described in the letter of 22 May, 1995 as “recreational land”.
The Commissioner issued the assessment in respect of that 9,511 square metres. He did so on the basis that the portion of the land used for premises or facilities for residents of the retirement village was exempt from land tax. He then calculated the unimproved value of the 9,511 square metres as a proportion of the total unimproved value of the whole (i.e. ($960,000) by using the following formula:
total area(36,730) - area for premises and facilities(27,219) x $960,000 = $248,586
(total area)36,730Again on the basis of Mr Maynard’s evidence, I find that trees grew on the 9,511 square metres and there were also two or three bores. Bethany used those bores to provide water for irrigation of the land but they provided more water than was needed for that purpose. Water from them had to be diverted to an overflow area on Audell Street. Bethany added top soil to the 9,511 square metres, planted shrubs and grassed it.
At this stage, I will not make any findings as to why the area was planted or grassed but merely set out, in this paragraph and the next, the evidence in this respect. Mr Maynard said that Bethany made these efforts in order to make the area more practical for people to enjoy. Residents used the area for recreational purposes such as walking, he said. Mr Heslewood viewed the area a few days before the hearing i.e. almost two and three years after the relevant dates in this case. He found the undeveloped areas to be quite rough and sparsely grassed. There were a couple of piles of dirt and rocks which could have been available for landscaping. Mr Heslewood acknowledged in cross-examination that a considerable amount of rain had fallen in the two weeks before he viewed the area and that part of the area appeared as if it had been cut up by wheel tracks.
Some of the photographs taken by Mr Heslewood (Exhibit “JGH7” to his affidavit) show areas of land within Janoah Gardens which may be described as rough and sparsely grassed (for example, photographs numbered 5, 7, 8, 9, 10 and 11). The photographs taken by Mr Maynard on 12 May, 1993 show the areas not turfed, landscaped or built upon to be well grassed (but not turfed) and mown. There is a clear demarcation point between the grassed and mown areas and the lawns and garden areas surrounding the buildings.
CONSIDERATION
The structure of the Act
The submissions made by both counsel have led me to consider first the structure of the Land Tax Act 1915 (“the Act”) as it was in force in the relevant periods (i.e. the years ending 30 June, 1993 and 30 June, 1994). Under section 7 of the Act, the legislation applies to all lands within Queensland that have been alienated from the Crown for an estate in fee-simple. Section 8 of the Act provides that:
“Subject to this Act, land tax shall be levied and paid upon the unimproved value of all lands within Queensland which are owned by taxpayers, and which are not exempt from taxation under this Act.”
Section 9 sets out the amounts and rates of land tax while section 9A sets out the rebates to which taxpayers (i.e. in general terms, persons liable to pay land tax - section 3) are entitled where the taxable value of the land is less than a prescribed amount. Sub-section 11(1) goes on to provide that
“Land tax shall be payable by every owner of land upon the taxable value of all the land owned by the owner, and not exempt from taxation under the Act.”
These provisions immediately raise questions as to who is the owner, what is the taxable value of the land and what land is exempt from taxation. There is no question in this case that Bethany, as the owner of the freehold, came within the definition of “owner” as it appeared in section 3 of the Act at the relevant dates in this case.
The “taxable value” of the land is defined in sub-section 11(2) provides that:
“The taxable value of all of the land of an owner is the amount of the unimproved value of such land or, where such land comprises 2 or more parcels, the aggregate of the unimproved values of those parcels respectively less any deduction allowable in accordance with this Act.”
A “parcel” or a “parcel of land” referred to in sub-section 11(2)B:
“means an area of land that is the subject of a separate valuation made by the chief executive under the Valuation of Land Act 1944”. (section 3)
It follows from these provisions that the taxable value upon which land tax is payable does not necessarily equate with the unimproved value of the whole of an area of land valued by the Chief Executive. The taxable value is the unimproved value less any deduction allowable under the Act.
I note that the Act provides for the apportionment of the unimproved value of land comprised in a parcel between the lots comprised in the parcel. That is so in relation to land comprised in, for example, a building units plan. The unimproved value of land comprised in a parcel is apportioned by the Commissioner between the lots comprised in the parcel in proportion to the lot entitlements of the respective lots shown on the registered plan (paragraph 11B(1)(a)). Each lot is deemed to be a separate parcel of land with an unimproved value equal to that apportioned to it under paragraph 11B(1)(a) (paragraph 11B(1)(c)).
What deductions are allowable under the Act? Deductions under the Act may be expressed in terms of actual amounts, as in sub-section 11(4)(ii). Deductions may also be expressed in terms of “an amount equal to the unimproved value of the land, or the part of the land, being used ..” in a specified way. This is the situation under sub-paragraph 11(1)(4)(a)(i) relating to land owned by individuals (other than trustees or absentees) and used, in whole or in part, solely for the business of agriculture, pasturage or dairy farming.
Sections 13 and 14A are concerned with the land exempted from land tax. Of relevance in this case are sub-paragraphs 13(1), (iv), (v) and 13(1)(xvi), which provide that
”Vacant land owned by or held in trust for, an exempt charitable institution at 29 June, 1989;” (paragraph 13(1)(iv))
“All land owned by or in trust for an exempt charitable institution and used predominantly for a qualifying purpose;” (sub-paragraph 13(1)(v))
”Land used for premises or facilities for residents of a retirement village;” (sub-paragraph 13(1)(xvi)
are exempt from taxation under the Act.
An “exempt charitable institution” means any one of a number of bodies specified in sub-section 13(5). Of relevance in this case are the following:
“(c) a public benevolent institution;
(d)an institution the principal object and pursuit of which are -
...
the care of sick, aged, infirm, afflicted or incorrigible persons or of children;
It is not enough that an institution meet the description of “a public benevolent institution” or that it have as its principal object and pursuit one of those listed in paragraph 13(5)(d) unless the institution also meets the requirements of paragraphs 13(5)(g) and (h), which, in so far as they are relevant, provide:
“(g) an institution is not an institution of the kind described in paragraph (c) or (d) unless the constitution, by whatever name called, of that institution provides -
that the income and property of the institution are to be used and applied solely for the promotion of the objects of the institution and that no portion of the income or property will be distributed, paid or transferred by way of dividend, bonus or otherwise among its members; and
...
(h)the care of the sick, aged, infirm, afflicted or incorrigible persons means care which relates directly to and is necessary because of the persons so cared for being sick, aged, infirm, afflicted or incorrigible;”
Is Bethany an exempt charitable institution?
(grounds of appeal (b), (c) and (d))
Mr Robinson argued that the Commissioner has conceded that Bethany is an exempt charitable institution. This concession had been made, he said, in the Commissioner’s letter of 26 October, 1995 disallowing Bethany’s objection to the assessment. In that letter, Mr Heslewood had “... acknowledged that Bethany is an `exempt charitable institution’ for land tax purposes under Sec 13(1)(v) ...”. Mr Robinson supported his argument by reference to the case of Irish Society v Derry ([1845-46] 8 E.R. 1561) which was referred to in Phipson on Evidence (14th edition) to support the proposition that admissions are “... just as admissible against the Crown as against ordinary parties ...” (paragraph 24-02).
While that submission may be so, it is the case that, relying on the judgment of Windeyer J in Brickworks Limited v Warrigal Corporation (1963) 108 CLR 568 at 577, Davies and Gummow JJ said in Formosa v Secretary, Department of Social Security (1988) 81 ALR 687:
“... there was no doubt about the principle that estoppel by representation cannot prevent the performance of a statutory duty or the exercise of a statutory discretion.” (page 695)
A similar view was expressed by Townley J in Roma Electric Light & Power Company Limited v Hair [1955] St.R.Qd 311. Pursuant to legislation, the State Electricity Commission determined the price to be charged for electricity by the plaintiff, the Roma Electric Light & Power Company Limited. The power company had mistakenly and incorrectly calculated the charge and so had grossly undercharged the defendant, Mr Hair. Townley J found that the defendant was precluded by the legislation from setting up an estoppel for the basis of his defence to an action claiming the balance of the price of electricity supplied to him.
Similar conclusions have also been reached in cases concerning private individuals. I will not set them out but refer to, for example, Considine v Citicorp Australia Ltd [1981] 1 NSWLR 657 and Beckford Nominees Pty Ltd v Shell Co of Australia Ltd (1986) 73 ALR 373.
In view of these cases, I consider that Bethany may not claim an estoppel in this case. The Act specifies the criteria an institution must meet in order to be regarded as an “exempt charitable institution”. A finding that an institution is an exempt charitable institution leads to the result that the land it owns is exempt from land tax. To find that the Commissioner is estopped from arguing that Bethany is not an exempt charitable institution would prevent an enquiry as to whether Bethany’s land meets the legislative requirements for exemption. Therefore, the operation of an estoppel in this case would be at odds with the requirements of the legislation and so cannot operate.
Bethany can only be regarded as an exempt charitable institution if it is a public benevolent institution as described in paragraph (c) or if it is an institution whose principal object is listed in paragraph (d) of the definition of “exempt charitable institution” (see paragraph 27 above). The other types of institution included within the definition are not relevant. I do not need to consider whether Bethany fulfils the requirements of paragraphs (c) and (d), however, for it does not meet the strict requirement of paragraph 13(1)(g) which I have set out in paragraph 28 above and which applies to both. This is so because I have already found that its constitution does not provide that its income and property are to be used and applied solely for the promotion of its objects and that no portion of its income or property will be distributed amongst its members (see paragraphs 7 and 8 above).
It is, unfortunately, of no consequence that Bethany may, in other contexts and for the purposes of other legislation to which Mr Robinson referred, be regarded as a charitable institution. It is also of no consequence that the board of Bethany has since passed a resolution to take steps to include an appropriate resolution in its constitution. That had not occurred at 30 June, 1994. It is also of no consequence, in view of the strict requirement in paragraph 13(1)(g), that Bethany does apply its income solely for its objects and does not distribute its income to its members.
As Bethany is not an exempt charitable institution, the land at Janoah Gardens cannot be exempt from land tax under paragraphs 13(1)(iv) and (v). There is no need to go on to consider whether or not Bethany used the land predominantly for a qualifying purpose under paragraph 13(1)(v).
In view of these conclusions, grounds (b), (c) and (d) must fail.
Whether the land was used for premises or facilities for residents of a retirement village
(ground of appeal (e))There was no dispute that Janoah Gardens is a retirement village for the purposes of section 6 of the Retirement Villages Act. Mr Robinson submitted that the term “facilities” used in paragraph 13(1)(xvi) of the Act is not a term of art. It is used in the general community to denote any number of things from en suites in houses to the proximity of real estate from schools and shopping facilities. It is broad enough to incorporate park land comprising mown grass and shade trees. Roads and bores are facilities. The question in this case, Mr Robinson said, is not whether the facilities were used by the residents of Janoah Gardens but whether the land was used for facilities for the residents.
As Mr Redmond submitted, for land to be used it must actually be used and not simply contemplated for a use or intended for a use (see London & South Western Railway Company v Blackmore (1870) L.R. 4 H.L. 610 at 617. This means that I must pay particular regard to the use in respect of which the exemption is granted. Paragraph 13(1)(xvi), which I have already set out (see paragraph 26 above), exempts land used for, among other matters, facilities for residents of a retirement village. It does not include any more stringent requirement that the land is used for facilities which are actually used by those residents. In deciding whether the land in question (i.e. 9,511 square metres clearly not used for premises) is used for facilities for residents, it is first necessary to consider the meaning of the word “facilities”.
The dictionary meanings of the word “facilities” lead to the conclusion that, as Macrossan C.J. said in Walsh v Stay and Play Australia ex parte Walsh [1992] 1 Qd.R. 321, “... the word should include meanings of the character of `amenity’, `opportunities’ and `programmes designed for a purpose’.” (page 324). Similarly, the ordinary meaning of the word would seem to be, as de Jersey J said, “... that which makes easy or easier the performance of something” (at page 328).
Mr Redmond referred to the judgement of Maguire J in Cremations (Newcastle) Pty. Ltd. v Commissioner of Land Tax ([1965] N.S.W.R. 749) where he held that
“... To be exempt, my opinion is that the land must be contiguous to the buildings which are essential or conventionally used for the operation of a crematorium and must be used or occupied in a way directly associated with the primary function of a crematorium. I do not think that land which is used occasionally and more or less haphazardly for purposes ancillary to the crematory itself can properly be regarded as being used or occupied `solely as a site for a crematorium’.” (page 751)
I do not consider that this case assists me greatly in deciding the particular question with which I am concerned. It does serve to illustrate that care must be taken to answer the particular question raised by the Act and that, having done that, the answer then becomes a question of fact.
So what, then, are said to have been the facilities for which the land was used for the residents at the relevant dates? Some emphasis was placed upon the recreational pursuit of walking. I did not have any evidence that anyone ever did actually walk on the land but, as I have already said, that is not the issue. I am satisfied on the basis of Mr Maynard’s evidence and the photographs taken in 1993 that top soil was added to the 9,511 square metres and it was grassed and watered. On the basis of the photographs I also find that the land was not even as could be expected of a turfed area but that it was suitable for walking. This was so at the relevant dates in this case. The photographs taken shortly before the hearing show that the area is now unsuitable for walking but that is not the relevant date at which I must consider the matter. A grassed walking area is a facility for the residents and so the land can be said to be used as a facility for the residents of the retirement village, Janoah Gardens.
The 9,511 square metres were also the location for the two bores. I have already found that the bores were used to provide water to irrigate the whole of the land, including stage 1. Irrigation is, therefore, something which is part of a programme designed for residents of Janoah Gardens. It follows that it is a facility for the residents of Janoah Gardens. It also follows that the land from which the water is drawn for that irrigation is used for a facility for the residents of Janoah Gardens and so of a retirement village.
It follows that, on two bases, I am satisfied that the area of 9,511 square metres was, at the relevant dates, used for facilities for the residents of a retirement village. The fact that the site was earmarked for later stages of building and the site became unavailable or one of more of those facilities does not detract from that finding. It was used for those facilities at the relevant dates even though its use at a later date was to become something different.
For the reasons I have given, I allow ground of appeal (g).
Whether the Commissioner may issue an assessment on part only of the unimproved value as determined by the Chief Executive
(grounds of appeal (a), (f) and (g))Mr Robinson submitted that the Commissioner’s method of assessment was not supported by any legislation. When regard is had to the Valuation of Land Act 1944, the minimum area of land is a parcel. Since 1991, the issue under sub-paragraph 13(1)(v) has been the identification of the predominant use of the land owned by the exempt charitable institution. In considering this issue, it would be unrealistic to consider only the use made of the buildings or even of the buildings and their curtilages. Under BCC zoning requirements, the buildings in a retirement village may not occupy the entirety of the grounds.
The Commissioner has used his knowledge of the construction of later stages after 30 June, 1994 to decide that the exemption under the Act is not extended to land to be used for future stages of the building programme. It could have been that a benevolent owner would not have built upon that land. The Commissioner’s approach has failed to take into account that the land comprising 9,511 square metres was available for use by the residents of stage 1 of Janoah Gardens.
Mr Redmond submitted that the practice of distinguishing exempt and non-exempt areas of land has been sanctioned over many years in cases such as Royal Sydney Golf Club v Federal Commissioner of Taxation (1954-1955) 91 CLR 610, Joyce and Others v Commissioner of Land Tax [1973] 1 NSWLR 402, The Commissioner for Land Tax for the State of New South Wales v Joyce and Others (1973-1974) 132 CLR 22 and Gosford RSL Club Co-operative Ltd v Commissioner of Land Tax (NSW) 11 ATR 805. No part of the exempt land can be included in the taxable land, Mr Redmond submitted, and he referred to the judgement of Rich J in Federal Commissioner of Taxation v Royal Sydney Golf Club (1943) 67 CLR 599 where he said:
“... [I]f land comes within any paragraph of s.13 it is exempt from taxation whether it is part of a parcel or not ... it is immaterial that such land may constitute separate parcels.” (page 612)
Mr Redmond referred also to the provision of an apportionment between lots of the unimproved value of a parcel of land held by home unit companies (sections 11B and 11C of the Act).
I accept that the authorities to which Mr Redmond has referred do distinguish between exempt and non-exempt areas of land. What they do not establish is that the Commissioner may assess the unimproved value of the non-exempt land on the basis of the proportion it bears to the whole of Bethany’s land at Janoah Gardens. Whether the Commissioner may take that approach depends upon the terms of the Act. There is nothing in the Act that supports the correctness of that approach. It allows a proportional approach only in the assessment of the unimproved value of land in very specific cases such as under sections 11B and 11C. It makes no general provision for it. Indeed, section 17 provides that the “... commissioner may, if, as, and when the commissioner thinks fit, make or cause to be made valuations of any land.” There is no suggestion that the land valued or caused to be valued cannot be part only of a taxpayer’s land. This supports a conclusion that the part of the land which is non-exempt land for the purposes of the Act should be separately valued.
Although I do not rely on it, I also refer to the passage from Rich J’s judgement in Federal Commissioner of Taxation v Royal Sydney Golf Club where he highlights the practical reasons why a proportional approach is inappropriate. He said:
“The value of the smaller area cannot be ascertained by deducting from the original valuation a sum determined by taking the proportion of the area of exempt land to the total area. The description of the land in the present case shows that the value of different portions of the land must vary according to frontages and situation, &c. Further, it is apparent that the exclusion of certain land may, by reason of the effects of severance, depreciate the value of the remaining land in a portion much greater than that which is represented by the proportion which the excluded land bears to the whole area.” (page 609)
For these reasons, I allow appeal ground (h).
COSTS
Sub-section 28(2) of the Act provides that:
“If the value of the land as finally fixed by the Court is the value at which it has been entered by the taxpayer in his land tax return or in any objection lodged by him, or is nearer to that value than to the value placed upon it by the Commissioner, costs shall be awarded against the commissioner, otherwise costs shall be awarded against the taxpayer.”
This provision is framed in mandatory terms. Consequently, I must order that the Commissioner pay Bethany’s costs of and incidental to this appeal.
ORDERFor the reasons I have given, I
allow the appeal;
reduce the respondent’s assessment so that the taxable value of the appellant’s land situated at Lot on Registered Plan No. 81821 in the County of Stanley Parish of Tingalpa City of Brisbane is determined to be “nil” under the Land Tax Act 1915 and the land tax payable on that land and under that act is “nil”; and
order that the respondent pay the appellant’s costs of and incidental to this appeal provided that the amount of those costs shall be ascertained and fixed by the proper Costs Taxing Officer of the Supreme Court of Queensland at Brisbane in accordance with the provisions of section 41(9) of the Land Act 1962.
S A FORGIE
MEMBER
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