Castle v Chief Commissioner of State Revenue

[2007] NSWADT 242

CITATION:	Castle v Chief Commissioner of State Revenue [2007] NSWADT 242
DIVISION:	Revenue Division
PARTIES:	APPLICANT Robert and Kayleen Castle RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	076021 and 076100
HEARING DATES:	2 October 2007
SUBMISSIONS CLOSED:	2 October 2007
DATE OF DECISION:	5 October 2007
BEFORE:	Block J - ADCJ (Judicial Member)
CATCHWORDS:	Land tax exemption - principal place of residence
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Land Tax Management Act 1956
CASES CITED:	Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP 19 Chief Commissioner of State Revenue v Timbs [2006] NSWADTAP 25 Commissioner of State Revenue v De Campo 2007 WASCA136 Kinging and anor v Chief Commissioner of State Revenue [2005] NSWADT 239 Patullo v The Council of the Municipality of Condobolin (1918) 18 SR (NSW) 297 Penrith Rugby League Club Ltd v Commissioner of Land Tax [1983] 2 NSWLR 616 Ryan v. Commissioner of Land Tax [1982] 1 NSWLR 305
REPRESENTATION:	APPLICANT In person RESPONDENT H El-Hage, solicitor
ORDERS:	The decisions under review are affirmed

Part A. Background and preliminary.

1 There are two decisions which are under review and which, by consent, were heard together. Matter number 076021 relates to the land tax years 2002 to 2006 (both years inclusive) whereas matter number 076100 relates to the 2007 land tax year. The term "relevant years" relates to the land tax years 2002 to 2007 (both years inclusive). In respect of both matters the decisions under review are decisions by the Respondent requiring the Applicants to pay land tax under the Land Tax Management Act 1956 ("the LTM Act") in respect of the property situated at 6 Knox Place, Normanhurst (referred to as "6 Knox Place" or "Knox")

2 The Tribunal had before it the documents lodged pursuant to section 58 of the Administrative Decisions Tribunal Act 1997. The Tribunal also had before it a set of documents produced by the Applicants and purporting to have been filed pursuant to section 58 of the Administrative Decisions Tribunal Act. At the hearing, the Applicants produced another volume of documents and including a number of photographs.

3 The Tribunal is required to decide whether the principal place of residence ("PPR”) exemption was available in respect of Knox during the relevant years. This question in turn depends upon whether or not during the relevant years Knox was physically separate from the property situated at 7 Hammond Ave, Normanhurst (referred to in the reasons as "7 Hammond Ave" or " Hammond")

4 The Respondent furnished written submissions dated 18 July 2007; those submissions contained a section (clauses 3 to 16) entitled "Background". Save as expressly set out in these reasons that content is not in dispute and it is included (but without footnotes) as follows: --

3. The general background to this matter may be summarised as follows.

4. 6 Knox Place is vacant land. It is situated at the rear of the land at 7 Hammond Avenue, Normanhurst ("7 Hammond Avenue"). The Applicants' residence is located on the land at 7 Hammond Avenue.

5. In 1995, when the Applicants purchased 7 Hammond Avenue, the two lots were not separate, i.e., the property at 7 Hammond Avenue included the land at, what is now, 6 Knox Place.'

6. In 1998, the Applicants applied to Hornsby Shire Council to sub-divide the original property. This was done on the basis that the sub-division would increase the value of the lot that is now 6 Knox Place.

7. The sub-division was finalised in September 2001. At that time, an existing metal fence facing Knox Place was demolished to give a plumber access to move sewer pipes and install storm water pipes. A replacement wire fence was then constructed on the land facing Knox Place.

8. The Applicants state that the wire fence was not adequate to keep their dog from escaping. They constructed a new wooden fence across the boundary between the two sub-divided lot: (" the wooden fence'').

9. According to the Applicants, the wooden fence has never been complete. A gap in the middle of the fence has existed from the time it was constructed (it is not clear when precisely this was the case). The Applicants assert that palings have never been attached to the part of the wooden fence where the gap exists.

10. The Applicants state that they have access to the land at 6 Knox Place through the gap in the wooden fence. To prevent their dog from straying, they would place a temporary wooden door barrier "to close the opening in the fence".

11. The Applicants live in the house at 7 Hammond Avenue. They assert that they use the land at 6 Knox Place for various activities, including the following:

Mr Castle practising his golf shots;

As a holding area for Louise Castle's building materials;

For obedience training of their dog;

For reading by Kayleen Castle.

12. On 7 September 2006, the Chief Commissioner issued a Land Tax Notice of Assessment, requiring the Applicants to pay land tax in the amount of $25,103.93 (including interest) with respect to the land at 6 Knox Place for the 2002-2006 land tax years.' The Chief Commissioner granted the principal place of residence exemption for the land at 7 Hammond Avenue.

13. As part of the assessment process, officers from the Office of State Revenue attended at 7 Hammond Avenue and 6 Knox Place on 7 September 2006 and prepared a Field Investigation Report.

14. On 6 November 2006, the Applicants objected to the Chief Commissioner's assessment.

15. On 11 December 2006, the Chief Commissioner disallowed the Applicants' objection

16. On 6 February 2007, the Applicants filed an Application for Review with the Tribunal. In accordance with s. 100(3) of the Taxation Administration Act 1996 (NSW) ("TA Act"), the Applicants have the onus of proving their case in these proceedings.

5 Although the provisions of the preceding clause are contained in submissions referable to matter number 076021 they apply also to matter number 076100. Moreover terms and phrases defined in that context have the same meanings when used in these reasons.

6 The documentation before the Tribunal includes a large number of photographs of Knox and/or Hammond many of which were of marginal, if any, relevance. The residence of the Applicants is situated on Hammond whereas Knox is used for recreational purposes. It is clear however that Hammond and Knox are adjoining properties comprising in aggregate 929 square metres; the area of each of Knox and Hammond is approximately one half of the aggregate area of both.

7 Between Knox and Hammond and along the whole length of the boundary between them, but excluding only a gap in the middle, there is a wooden fence which is about 2 metres in height. The gap in the middle is about 1 2/3 metres. The wooden fence on either side of the gap is joined by a wooden bar which confers a degree of support on the fence on either side of it. A person wishing to go through the gap must go under or over the bar although, as I understood the Applicants, going under the bar is generally the course adopted. To close the gap is comparatively easy; it is achieved by placing an old door (and also a wheely-bin) in the gap. The gap is often closed so as to ensure that the Applicants’ dog cannot gain access to Knox and thence to Knox Street where there is a significant risk of his being run over. Mention was made during the hearing of the fact that the Applicants received a warning as to a danger of this nature and indeed mention was also made of the fact that a dog belonging to them was run over in similar circumstances in the past.

8 Although the "Background" quoted earlier in these reasons indicates a degree of imprecision as to precisely when the wooden fence was constructed, Mrs. Castle said during the hearing that it occurred in late 2001 at or about the time when the subdivision was finalised. There was in effect no real dispute of fact between the parties and the only question before the Tribunal is as to whether the wooden fence is such that, having regard to the judgement in Ryan's case, (referred to more fully below) Knox and Hammond are physically separate.

Part B. The legislation

9 The legislation is summarised under the head of “Legislation” in the Respondent's submissions; it is again convenient to include (but without footnotes) its content under this head; (clauses 17 to 25) read as follows: -

17. Pursuant to ss. 7, 8 and 9 of the LT Management Act, land tax is chargeable on the taxable value of land at 6 Knox Place and 7 Hammond Avenue for the 2002, 2003, 2004, 2005 and 2006 land tax years based on the ownership of that land as at midnight on 31 December of 2001, 2002, 2003, 2004 and 2005 respectively. As at each of those dates, the land at 6 Knox Place and 7 Hammond Avenue was owned by the Applicants. As such, the Applicants are prima facie liable for land tax in respect of the 2002, 2003, 2004, 2005 and 2006 tax years year based on the taxable value of the land at 6 Knox Place and 7 Hammond Avenue, except to the extent it can be shown that the land was exempt from land tax.

18. The Applicants object to the land tax payable with respect to the land at 6 Knox Place. They rely on the principal place of residence exemption. As far as the Respondent is aware, the Applicants do not object to the land tax payable with respect to the land at 1 Judson Road, Thornleigh.

19. Between 2002 and 2006, a number of amendments were made to the relevant sections of the LT Management Act providing for the principal place of residence exemption. In particular, it is necessary to distinguish between the form of the legislation which applied for the 2002 and 2003 land tax years and that which applied for the 2004, 2005 and 2006 land tax years.

20. As at 31 December 2001, the taxing date for the 2002 land tax year, s. 10 of the LT Management Act relevantly provided:

"10 Land exempted from tax

(1) Except where otherwise expressly provided in this Act the following lands shall, subject to sections 10B, 10D, 10E, 10G and 10P, be exempted from taxation under this Act:

(r} with respect to taxation leviable or payable in respect of the year commencing on 1 January 1998 or any succeeding year, land that has a land value in respect of the year of less than the premium tax threshold and that is used and occupied as the principal place of residence of the owner of the land (or, if there are joint owners, as the principal place of residence of one or more of them) and for no other purpose (except as provided by subparagraph (iii)), being:

(i) a strata lot, or

(ii) a parcel of residential land, or

(iii) a parcel of residential land on which there is also one of the residential occupancies referred to in subsection (ID) (b) (ii) (A)—(F),

unless the owner or all of the joint owners who so used and occupied the lot or parcel (as appropriate) is such an owner by reason only of being a trustee,

(1D) In paragraph (r) of subsection (1) residential land means land that is used and occupied for residential purposes and for no other purpose, that use and occupation being use and occupation of a building or buildings designed, constructed or adapted for residential purposes:

(a) not being land that:

(i) is owned by a company,

(ii) is owned by or on behalf of a company and is land of which a mortgagee or person by way of security for money is in possession,

(iii) is held by a trustee for or on behalf of a company, or

(iv)in respect of which a company is jointly assessed with any other person, and

(b) not being a building or buildings:

(i) comprised of lots within a strata plan or residential units,

(ii) containing (out of the total of all rooms in the building or buildings) occupancies other than that of the owner and any one of the following residential occupancies:

(A) one room,

(B) one suite of rooms (not being a flat) each room of which all occupants of the suite are entitled to occupy,

(C) one flat,

(D) one suite of rooms (not being a flat) each room of which all occupants of the suite are entitled to occupy, and one room,

(E) one flat and one room,

(F) 2 rooms, each of which is separately occupied, or

(iii) from any part of which income is derived otherwise than as the consideration for one (but not more than one) of the residential occupancies referred to in subparagraph (ii) (A)­(F)."

21 Section 3 of the LT Management Act, as it applied for the 2002 land tax year (ie, as at 31 December 2001), relevantly provided:
"(1) In this Act, unless the context or subject-matter otherwise indicates or requires:

…

principal place of residence of a person means the one place of residence that is, among the one or more places of residence of the person within and outside Australia, the principal place of residence of the person.

(3) For the purposes of this Act, in respect of any year in respect of which taxation is leviable or payable, land or a flat is not used or occupied as the principal place of residence of a person unless:

(a) that land or flat and no other land or flat has, since before the first day of July that last preceded the commencement of that year, been continuously used and occupied by that person for residential purposes and for no other purpose, or

(b) in any other case, the Chief Commissioner is satisfied that the land or flat is used and occupied by that person as the person's principal place of residence."

22 Although some amendments were made after 31 December 2001 affecting the provisions set out above, for present purposes, no relevant changes were made until the State Revenue Legislation Further Amendment Act 2003 took effect on 31December 2003. The amendments which took effect on that date included transferring the substantive provisions dealing with the principal place of residence exemption from s. 10(1)(r) to a new Sch. 1A. For the purposes of the 2004 land tax year, s. 10(1) relevantly provided as at 31 December 2003:
"10 Land exempted from tax

(1) Except where otherwise expressly provided in this Act the following lands shall, subject to sections 105, 10D, 10E, 10 and 10P, be exempted from taxation under this Act:

(r) land that is exempt from taxation under the principal place of residence exemption, as provided for by Schedule 1A,"

23 As at 31 December 2003, Sch. 1A of the LT Management Act relevantly provided as follows:
" Schedule 1A Principal place of residence exemption

Part 1 Preliminary

1 Definitions

(1) In this Schedule:

principal place of residence exemption—see clause 2. residential land—see clause 3.

taxing date—means midnight on the thirty-first day of December.

(2) For the purposes of this Schedule, a reference to the owner of land includes, if there are joint owners, any one or more of those joint owners.

Part 2 Principal place of residence exemption

2 Principal place of residence exemption

(1) Land used and occupied by the owner as the principal place of residence of the owner of the land, and for no other purpose, is exempt from taxation under this Act, in respect of the year commencing on 1 January 2004 or any succeeding year, if:

a) the land has a land value in respect of the year of less than the premium tax threshold, and

b) the land is:

i) a parcel of residential land, or

(ii) a lot under the Strata Schemes (Freehold Development) Act 9973 or a lot under the Strata Schemes (Leasehold Development) Act 9980.

(2) Land is not used and occupied as the principal place of residence of a person unless:

a) the land, and no other land, has been continuously used and occupied by the person for residential purposes and for no other purposes since 1 July in the year preceding the tax year in which land tax is levied, or

b) in any other case, the Chief Commissioner is satisfied that the land is used and occupied by the person as the per en's principal place of residence.

(3) If the owner of land is entitled to the exemption conferred by this clause, no other person is liable to be assessed for taxation under this Act in respect of the land during the period of the owner's entitlement to the exemption.

(4) The exemption conferred by this clause is referred to as the principal place of residence exemption.

3 Residential land - meaning

(1) In this Schedule, residential land means land that is used and occupied for residential purposes and for no other purpose, that use and occupation being use and occupation of a building or buildings designed, constructed or adapted for residential purposes, other than a building or buildings:

a) comprised of lots within a strata plan or residential units, or

b) containing (out of the total of all rooms in the building or buildings) occupancies other than that of the owner, or

c) from any part of which income is derived.

(2) Land does not cease to be used and occupied as provided by subclause (1) by reason of there being on that land any building or improvement that is used or occupied for a purpose ancillary to the purposes for which the building is, or the buildings are, designed, constructed or adapted.

Note. Clause 4 allows one residential occupancy to be disregarded in applying the principal place of residence exemption. Clause 5 allows the use of land for purposes ancillary to a business conducted at a different place to be disregarded in certain circumstances."

10 Section 3 relevantly provided as at 31 December 2003:

“Definitions

(1) In this Act, unless the context or subject-matter otherwise indicates or requires:

principal place of residence of a person means the one place of residence that is, among the one or more places of residence of the person within and outside Australia, the principal place of residence of the person.”

11 There were minor amendments made to Sch. 1A to the Land Tax Management Act during the 2005 and 2006 land tax years, primarily relating to the change in dates. The amendments are of no significance for present purposes.

12 The legislation referred to in the preceding clause appears in the Respondent's submissions in relation to all of the relevant years other than the last of them but applies equally to the 2007 land tax year in the manner which was applicable to the 2006 (and other) land tax years.

Part C. Ryan's case. (Ryan v. Commissioner of Land Tax [1982] 1 NSWLR 305)

13 It was always clear that the decision in this case will depend on the judgement in Ryan which is binding on this Tribunal. In Kinging and anor v Chief Commissioner of State Revenue [2005] NSWADT 239 I referred at some length to the decision of Hunt J. in Ryan in clauses 11 to 15 as follows:

11 At the very heart of this matter is the judgment of Hunt J. in Ryan’s case. If Ryan is binding on me (because it is not distinguishable), then the Applicants must fail (leaving aside for the moment separate contentions by them as to the 2004 year).

12 The facts in Ryan are analogous to the facts in this case. Hunt J. commenced by reciting the facts in Ryan at page 306 as follows:

In 1964, Mr and Mrs Ryan jointly purchased a block of land known as No 1 Baden Road, Kurraba Point. At the same time, and in his own name only, Mr Ryan purchased the contiguous block of land known as No 3 Baden Road, although completion of this purchase was delayed until 1966. The vendor in each case was the same, and one purchase price was paid for the two blocks. In 1965, a large house was constructed upon the land at No 1 Baden Road which, together with a garage, poolhouse, swimming pool and associated facilities, virtually fills the whole of that land. There is no physical separation between the two blocks of land. Number 3 Baden Road is used and occupied by Mr and Mrs Ryan as a garden entertainment and recreation area; gardens have been laid and a barbecue built. The only other building constructed upon the land at No 3 Baden Road consists of stone steps which commence on the land at No 1 Baden Road next to the house and cross the boundary into No 3 Baden Road. Mr Ryan says, and I accept, that both blocks of land have been used and occupied together at all times as the one residential area.

13 Hunt J then went on at pages 307 and 308 to define the issues in the following terms:

The issue between the parties is this. If the two blocks used as the one residential area are identified as together comprising one “parcel of residential land”, the Commissioner concedes that Mr Ryan is entitled to his exemption pursuant to s 10(1)(r)(ii). If, however, each block is identified individually as a “parcel of residential land”, Mr Ryan concedes that, in relation to the land known as No 3 Baden Road, he does not on that block use and occupy a building designed and constructed for residential purposes, and thus is not entitled to an exemption in relation to that block: s 10(1D). The matter which I have to resolve, therefore, is the meaning of the word “parcel” in the context of the phrase “parcel of residential land”. Mr Ryan submits that the ordinary English usage of the word, as described for example in the new Macquarie Dictionary, gives “parcel” the meaning of a separable, separate or distinct part or portion or section of land, and that in such sense this single residential area consisting of both blocks is properly termed a parcel of residential land. The Commissioner, on the other hand, argues that contiguous blocks of land can properly be termed a parcel of land only where they are undivided not only by physical separation but also in use, occupation and title. At the relevant time, No 1 Baden Road was in the name of Mr and Mrs Ryan and No 3 Baden Road was in the name of Mr Ryan only; therefore, the Commissioner says, the single residential area which both blocks comprise cannot properly be termed a parcel of land.

14 Hunt J. then proceeded to consider (in some detail) the meaning to be attributed to the word “parcel” in the following terms:

The word “parcel” is not defined in the Land Tax Management Act. It is used in s 9(2), in the phrase “each parcel of the land”, which phrase is used in contradistinction to the phrase “all the land”. It is also used in s 28 (in the phrase “separate parcels of land”) which deals with different blocks of land owned individually by different members of a partnership. Neither immediate context in which the word “parcel” is used is by itself of any significant assistance in the resolution of this particular dispute as to its interpretation, although its meaning in s 9 (2) is, as will shortly be seen, of substantial importance when seen in its wider context. Otherwise, the word “parcel” is used in this Act only in relation to those categories of land exempted from taxation because the land is used and occupied as the owner's principal place of residence (ss 10(1)(r)(ii) and 10(1)(u)), together with the definition section relevant to those two categories (s 10(1D)) and the pro rata taxing provisions relating thereto: s 10(4), s 10(5). The basic argument of the Commissioner is that both in the ordinary usage of the word in the general law and in the statutory context in which the Land Tax Management Act operates, the word “parcel” has been interpreted in the sense for which he contends. I have already referred to the incorporation within the valuation provisions of that Act of the valuations prepared pursuant to the Valuation of Land Act and the Local Government Act. The word “parcel” is used in both these other statutes in relation to the bases upon which such valuations are prepared, although it is not defined in either statute: see Valuation of Land Act, ss 19, 26; Local Government Act, ss 134, 136, 139. The Local Government Act, s 134(3), provides that any parcel of land separately valued under the Valuation of Land Act is to constitute a separate parcel for the purposes of the Local Government Act as well. The word “parcel” has been interpreted in this statutory context in the sense for which the Commissioner now contends. The predecessor to the Local Government Act, s 139(3) — the Local Government Act, 1906, s 136 — was so interpreted in accordance with the ordinary usage of the word in the general law by the Full Court in Patullo v Municipality of Condobolin (1918) 18 SR (NSW) 297, at p 301; 35 WN 100, at p 101, as was s 139(3) of the current Act in Halloran & Co v Municipality of Queanbeyan (1926) 26 SR (NSW) 50, at pp 52, 53; 43 WN 33, at p 34; see also Taree Municipal Council v Clerke (1936) 53 WN (NSW) 189, at p 190; 37 LGR 37, at p 38, per Owen AJ. In McMillan v Commissioner of Land Tax [1972] 1 NSWLR 545, Isaacs J held (at p 554) that the “close connection, inter-connection and interrelationship” between these particular provisions of the three statutes make these decisions in relation to the Local Government Act “highly persuasive” in the interpretation of the Land Tax Management Act. I agree. In McMillan's case, Isaacs J, was concerned with the construction of the Land Tax Management Act, s 9(3)(e) — since replaced by s 10(1)(r)(ii) — which allowed as a deduction: “land owned by a person ¼ used and occupied by that person solely as the site of a single dwelling-house. ¼” The word “land” was said by the Commissioner to be used in the same sense as the phrase “parcel of the land” to be found in s 9(2). His Honour (at p 555) adopted the earlier decisions in construing “parcel of the land” in s 9(2), and thus “land” in s 9(3)(e), in the way for which the Commissioner now contends. In 1973, s 9(3) (e) was, as I have said, replaced by s 10(1) (r) (ii). There are, however, some differences between the two provisions: (1). The deduction previously allowed has now become an exemption. Whether or not a deduction is and was allowed by s 9 depends primarily upon the use to which the land is or was put; whether or not an exemption is granted by s 10 depends, as I have also said, primarily upon the identity of the owner of the land, although use is relevant as well to some categories of land which are exempted, including the category with which I am presently concerned. (2) Strata lands are now exempted; previously no deduction was allowed. This appears to do no more than remedy an earlier oversight. (3) There is now a limitation upon the area of the land which is exempted. This limitation was imposed following the decision of Else-Mitchell J in Richmond v Commissioner of Land Tax (1973) 3 ATR 664, from which an appeal by the Commissioner was pending at the time when the amending Act was passed. (The appeal was subsequently dismissed: Commissioner of Land Tax v Christie [1973] 2 NSWLR 526.) It was no doubt imposed at the instance of the Commissioner to overcome what he considered to be the undesirable effect of that decision upon the revenue: D R Fraser and Co Ltd v Minister of National Revenue [1949] AC 24, at pp 33, 34. (4) The change in expression from “land” in s 9(3)(e) to a “parcel of residential land” in s 10(1)(r)(ii) appears to be a recognition by the legislature of the argument accepted by Isaacs J in McMillan's case, that the word “land” in s 9(3)(e) was used in the same sense as the phrase “parcel of the land” to be found in s 9(2). A further amendment was made in 1975 which restricted the exemption granted by s 10(1) (r) (ii) to land used as the owner's principal place of residence. This amendment followed the decision of Waddell J in Buckley v Commissioner of Land Tax [1975] 1 NSWLR 189, and was no doubt intended to overcome the effect of that decision. Both provisions, however, relate to what may compendiously be called a man's home, or to the land he owns upon which his home is constructed. The change from deduction to exemption, with its corresponding change in emphasis from use to ownership, serves only to assist the Commissioner’s claim that the earlier interpretation of the expression “land” in s 9(3) (e) and of “parcel of the land” in s 9(2) should be applied also to “parcel of residential land” in s 10(1) (r) (ii). In the absence of any context indicating a contrary intention, it is a sound rule of statutory construction to presume that the legislature intended to attach the same meaning to the same words both in different parts of the same statute and in different statutes in pair materia in statutes dealing with the same general subject matter: Court auld v Leigh (1869) LR 4 Exch 126, at p 130; Lennon v Gibson and Hows Ltd [1919] AC 709, at pp 711, 712; Bemean v ARTS Ltd [1949] 1 KB 550, at p 567. There does not seem to me to be any apparent context surrounding s 10(1) (r) (ii) which gives such an indication to the contrary.

15 Hunt J. concluded by determining the issue (page 310) in the following terms:

It follows, in my view, that contiguous blocks of land can comprise a “parcel of residential land” within s 10(1) (r) (ii) only where they are undivided not only by physical separation but also in use, occupation and title – (Emphasis added by the Tribunal)

14 It is also clear that in respect of the tests set out in Ryan the only question is that related to physical separation. The other tests as to unity of title, unity of use, and unity of possession are satisfied.

15 The Tribunal is called upon accordingly to determine in the light of the facts in this case, whether Knox and Hammond are physically separate. This concept is dealt with in somewhat brief terms in Ryan where in particular there was no attempt (or need) to define the concept with precision and so they had these words must therefore be interpreted in accordance with their ordinary meaning.

Part D. Other case law.

16 The Applicants referred at some length to a judgement of the Court of Appeal of the Supreme Court of Western Australia in Commissioner of State Revenue v De Campo 2007 WASCA136. It is unnecessary for me to deal with it simply because it was decided in relation to a different statute and where the statutory language is different from the relevant provisions of the LTM Act. The judgement in De Campo did not refer to Ryan or any of the cases before this Tribunal in which the judgement in Ryan has required careful consideration.

17 The decision of the Appeal Panel of this Tribunal in Timbs (Chief Commissioner of State Revenue v Timbs [2006] NSWADTAP 25) was, so it was submitted by the Applicants, of assistance to them. The relevant facts in that case are summarised in clause 2 of that decision as follows:

2. There is little factual dispute in this matter. The Respondent and his wife reside in the units at Edgewater. The layout of the apartments is set out in the statement of the Respondent before the learned Tribunal member as is as follows:-
“Each of (units 901 and 902) is located on, and forms the entirety of, the ninth level of “Edgewater” and comprises a unit containing two bedrooms, a study, two bathrooms, a kitchen, open dining and lounge room and living area. The units are contiguous, separated by a common wall. Each opens onto a common foyer which, although part of the common property of the Strata Plan, is dedicated to the exclusive use of (units 901 and 902) for so long as each of those lots is in common ownership”.

There are car and storage spaces which are appurtenant to the units, and contained on the same title as the units.

18 It is important to note that Timbs related not, as is the case in this instance to a parcel of residential land, but rather to a strata lot.

19 The Appeal Panel in Timbs considered that a degree of physical separation is not necessarily fatal; it referred in particular in this context to the judgement of Hunt J. in Penrith Rugby League Club Ltd v Commissioner of Land Tax [1983] 2 NSWLR 616; see in particular clauses 31 and 32 of the Appeal Panel decision as follows::

31 The Respondent sought to meet this argument by reference to cases where some degree of physical separation was not fatal to an application of the Ryan test, such as Penrith Rugby League Club Ltd v. Commissioner of Land Tax (1983) 2 NSWLR 616 at 622-3), where a rugby league club was located across the aptly named League Street from a car park owned and used by the club. Justice Hunt, who also decided Ryan , held that the “clear unity” in the use of the land necessitated the application of an exemption (albeit the exemption in s 10(1)(g)(iii) rather than the exemption under consideration). His Honour said:-
“The intention [of the exemption] is clearly enough not to raise revenue; rather it is to release certain community groups from the burden of land tax upon the land used and occupied by them. Such an exemption should not be construed narrowly: Federal Commissioner of Taxation v. Top of the Cross Pty Ltd (1981) 81 TC 4563 at 4571. It is only by the narrowest and most pedantic of constructions that the car park in question in this appeal can be excluded from that exemption”.
32 We would respectfully adopt his Honour’s characterisation of the argument that the wall between the units and the necessity to enter each of them from the common area may not be determinative of a lack of physical unity. The two units take up the entirety of the ninth floor and the only persons to have access via the lifts to the ninth floor are the Respondent, his wife and their invitees. They do, in fact, use both units on a daily basis and there was evidence that they left the doors to the common area open to facilitate access between the units. In those circumstances, there seem no grounds, taking into account the decision in Penrith Rugby League Club Ltd , to say that the test in Ryan has not been met.

20 I do not consider that the Appeal Panel decision in Timbs is binding on the Tribunal in this case, in the first instance because it dealt with a different exempting provision, and in the second place and perhaps more importantly because it is distinguishable on its facts.

21 Hunt J. in Ryan referred to a number of cases and including in particular Patullo v The Council of the Municipality of Condobolin (1918) 18 SR (NSW) 297. It is important to note that Pattullo was decided in relation to a valuation statute and not to the LTM Act. In that case the Chief Justice said in the third sentence of the first paragraph of his judgement: “the unsold lots in each section were contiguous, vacant untenanted and physically undivided, according to the words of the special case.” The Chief Justice concluded his judgement with the following words: “The separation by sale or by construction of streets or other physical barrier makes such a difference…”

22 Coleman & anor v Chief Commissioner of State Revenue [2005] NSWADT 236 was decided by me at first instance in favour of the Respondent. I indicated in Coleman that Ryan was binding on the Tribunal and that it appeared that strict compliance with the Ryan tests was required. That decision was reversed by the Appeal Panel but reinstated by the New South Wales Supreme Court, reported as Chief Commissioner of State Revenue v Coleman [2007] NSWSC 625; clauses 19 to 22 of the latter judgement read as follows:

19. The Respondent meets the appellants’ argument as to the proper construction of Ryan’s Case by noting that the test set out therein is a “clear test for determining when multiple lots of land can be treated as constituting a single parcel of residential land” for the purposes of the exemption. The use to which the blocks in this case were put, the Respondent submitted, differs from that in Ryan’s Case. It was submitted that the treatment of the test by the learned Tribunal member was appropriate, and that to note that the tests need to be met “precisely” in no way indicates a falling into error. Rather, the Tribunal member, it was submitted, concluded that there was a material difference in the way the two lots were used and occupied.

20 On the question of how the use of the lots should be evaluated, the Respondent noted that cl 2 of Sch 1A of the Act provides that land that is “used and occupied by the owner as the principal place of residence of the owner of the land, and for no other purpose” is exempt from land tax if the land is a “parcel of residential land”. “Residential land” is defined in cl 3(1) as meaning “land that is used and occupied for residential purposes and for no other purpose, that use and occupation being use and occupation of a building or buildings designed, constructed or adapted for residential purposes …”. On that basis, it was submitted that if the building being constructed on the Gunyah block was, say, a garage or a greenhouse that was to be used for ancillary purposes to the main residence, the construction could properly be characterised as being an extension of the existing use of the property and thus exempt.

21 Accordingly, it was submitted that it was proper for the Tribunal to take into account the character of the completed building as at the taxing date of 31 December 2004. It was not a building to be used in conjunction with the old house on Redgum, but a new and separate dwelling which would not be used for the same (exempt) residential purposes. The finding was, it was submitted, that Gunyah was being used for two purposes; recreation, and the construction of the new house, and thus the land was not being used “as the principal place of residence … and for no other purpose”.

22 On the question of the test in Ryan’s Case¸ the Respondent submitted that it was necessary only to identify the purposes for which each lot was used and to determine whether they were the same. It was submitted that Gunyah was used for recreation and construction, whereas Redgum was used for residential purposes. Once that finding had been made, there was no room to find, in accordance with Ryan’s Case¸ that the uses were the same, and no need to enter into an exercise of determining fact or degree of the uses. It was submitted that the mere fact that the construction activity was occurring meant that the uses were different and the Ryan’s Case requirement of “no division” between the uses of the two lots meant that the exception could not apply. Secondly, it was submitted that the exception requires use of the land for “residential purposes and for no other purpose”.

23 I have come to the conclusion that the wooden fence was of such a nature that it had the effect that Knox and Hammond were at all relevant times physically separate. The wooden fence was constructed by the Applicants in order to achieve a physical separation between Knox and Hammond and so as to prevent the Applicants’ dog from unrestricted access to Knox and thence to the street. The fact that there was a gap (apparently) easy, at least for human beings, to gain access from Hammond to Knox does not in my view have the effect that there was not the necessary degree of physical separation. That gap could be and was closed when access to Knox was not required and so as to prevent the dog from getting in to Knox; this aspect tends to reinforce the view which I have taken. Put in other words the Applicants by their own actions took steps to ensure that the two properties were physically separated. That they did so for good and proper reasons cannot be doubted but that factor is not to the point. The fact moreover that to obtain a PPR exemption in the future for Knox Street would require only the removal of the wooden fence is also not to the point.

24 I note that I attempted a search of the words " physical separation"; as one might expect it resulted in a large number of entries mainly referable to marriage breakdowns but did not offer any significant guidance in this particular regard to the Tribunal. If it could be said that the wooden fence was in fact properly to be categorised as de minimis, a different view might perhaps be tenable but such a description would not be apt.

25 Interest was charged at the market rate only and in respect of all of the relevant years excepting only the 2007 year when no interest at all was charged. Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP 19 is authority for the proposition that interest at the market rate will not be reduced unless the Respondent was at fault, and which is not the case in this instance.

26 This decision is, it might be thought, somewhat harsh but the binding nature of the judgement in Ryan has the effect that in my view it is the correct and indeed the only possible decision. At the risk of repeating myself the question before me is as to whether the two properties are physically separate and the plain fact is that, regrettably, they are.

27 In the circumstances of the decisions under review must be affirmed.