Chief Commissioner of State Revenue v Timbs

[2006] NSWADTAP 25

Appeal Panel - Internal

CITATION:	Chief Commissioner of State Revenue v Timbs (RD) [2006] NSWADTAP 25
PARTIES:	APPELLANT Chief Commissioner of State Revenue RESPONDENT John Andrew Timbs
FILE NUMBER:	059062
HEARING DATES:	6/12/2006
SUBMISSIONS CLOSED:	12/06/2005
DATE OF DECISION:	05/18/2006
BEFORE:	Needham J SC - Judicial Member at 1; Verick A - Judicial Member at 38; Bennett C - Non Judicial Member at 1
CATCHWORDS:	statutory interpretation
MATTER FOR DECISION:	Principal matter
FILE NUMBER UNDER APPEAL:	046043
DATE OF DECISION UNDER APPEAL:	08/02/2005
LEGISLATION CITED:	Income Tax Assessment Act 1936 (Cth) Interpretation Act 1987 Land Tax Management Act 1956 Motor Accidents Act 1988 Strata Schemes (Freehold Development) Act 1973 Strata Schemes (Leasehold Development) Act 1986
CASES CITED:	Blue Metal Industries Ltd v. Dilley (1969) 117 CLR 651 CIC Insurance Ltd v. Bankstown Football Club Ltd (1997) 187 CLR 384 Cooper Brookes (Wollongong) Pty Ltd v. FCT (1981) 147 CLR 297 Federal Commissioner of Taxation v. Top of the Cross Pty Ltd (1981) 81 TC 4563 at 4571 Hepples v Commissioner of Taxation (1991-1992) 173 CLR 492 McMillan v. Commissioner of Land Tax [1972] 1 NSWLR 545 Mills v Meeking (1990) 169 CLR 214 Penrith Rugby League Club Ltd v. Commissioner of Land Tax (1983) 2 NSWLR 616 Promenade Investments Pty Ltd v New South Wales (1991) 26 NSWLR 203 Ross Forsyth v Deputy Commissioner of Taxation [2004] NSWCA 474 Ryan v. Commissioner of Land Tax [1982] 1 NSWLR 305 Sin Poh Amalgamated (HK) Ltd v Attorney-General of Hong Kong (1965) 1 WLR 62 Southgate v Waterford (1990) 21 NSWLR 427
REPRESENTATION:	APPELLANT I Mescher, counsel RESPONDENT R Hamilton, counsel
ORDERS:	1. Appeal dismissed; 2. Leave granted to parties to relist matter within 28 days of the publication of this decision; otherwise, no order as to costs.

REASONS FOR DECISION - Deputy President Needham and Non-Judicial Member C. Bennett

1 John Andrew Timbs, the respondent, is the owner of two strata title properties located in a building named “Edgewater” at 901 and 902 40 Refinery Drive, Pyrmont. He also (relevantly) owns property at Bundeena. This appeal relates to the respondent’s liability for land tax under the Land Tax Management Act 1956 (“the Act”) for the 2004 Tax Year.

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.
3 The evidence, which was uncontested, was that both apartments were used for the residential purposes of the respondent and his wife. For example, the applicant used a bathroom and dressing area in one unit and his wife in the other unit, although they shared a bedroom in one unit. When they have guests, they tend to confine themselves to one unit. The studies in each unit are used by each of them respectively as an office.

4 Prior to the 2004 tax year, the respondent claimed the Bundeena property as his principal place of residence. In 2003 the respondent named the two Edgewater units as his principal place of residence since 11 July 2003 and sought the exemption from land tax in respect of both of those properties on the basis that together they formed his principal place of residence.

5 The land tax notice of assessment issued to the respondent, which was Exhibit A-1 before the Appeal Panel, included land tax assessed on unit 902. The respondent objected to the assessment on the basis that unit 902 was part of his principal place of residence. That objection was disallowed and the respondent sought a review of that decision to this Tribunal on 5 October 2004. Judicial Member Ms Hole, OAM found in favour of the respondent on 2 August 2005, and the appellant, the Chief Commissioner of State Revenue, appeals to this Appeal Panel on the basis of a number of errors of law which are set out in a document filed with the Notice of Appeal on 30 August 2005.

The decision under appeal

6 The decision appealed from recites the facts and summarises the submissions of the parties. The learned Tribunal member applied the decision in Ryan v. Commissioner of Land Tax [1982] 1 NSWLR 305 in that the relevant unities of title, use and occupation of the two apartments were satisfied, and sought assistance from the Interpretation Act1987 in interpreting the “principal place of residence” exemption under the Act and in finding that “the whole of Units 901 and 902 are used as one principal place of residence”.

7 The learned Tribunal member found that there was no policy reason why the legislature should require that one lot of a strata title property only could qualify for the principal place of residence exemption, that the expression “a lot” could, with the assistance of the Interpretation Act 1987, encompass “one or more lots”, and found in favour of the respondent.

Issues of Law

8 The main issue in this appeal is whether the provisions of s 10(1)(r) and cl 2(1)(b)(ii) in Schedule 1A of the Act “extend the principal place of residence exemption to land consisting of two or more lots under the Strata Schemes (Freehold Development) Act 1973 or the Strata Schemes (Leasehold Development) Act 1986 (“the strata title legislation”)” (see Appellant’s Written Submissions filed 4 October 2005, par 1).

9 Section 10 of the Act reads, relevantly:-

“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) land that is exempt from taxation under the principal place of residence exemption, as provided for by Schedule 1A”.

10 Clause 2 of Schedule 1A to the Act provides:-
“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 1 January 2005 or any succeeding year, if the land is:

(a) a parcel of residential land, or

(b) a lot under the Strata Schemes (Freehold Development) Act 1973 or a lot under the Strata Schemes (Leasehold Development) Act 1986. (emphasis added)

(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 person’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.”

The appeal

11 The Appellant, the Chief Commissioner of State Revenue, set out a number of what were contended to be appellable errors of law. There was no appeal, as there could not be, from the finding that the respondent in fact used both of the units as his principal place of residence, that finding being a finding of fact. Grounds 1 and 2 arise from the finding of the learned Tribunal member that the principal place of residence exemption encompasses strata land consisting of one or more lots, and that both of the respondent’s units attract the exemption. If the learned member was wrong in so finding, then the appeal must succeed. Accordingly, the first step is to construe the relevant parts of the Act according to proper principles and to determine whether the words “a lot” may mean “two or more lots” in the circumstances applying to the respondent. The other grounds would only need to be considered if the appellant were not successful on these primary points of appeal.

12 The appellant put the issue before the Appeal Panel as being that “as a matter of law, a person can only obtain the exemption for one strata lot whereas the Respondent submits that the principal place of residence exemption can extend to two or more strata lots under the strata title legislation” (see par 2, Appellant’s Written Submissions). There were a number of bases upon which the appellant argued the contention that the legislation would authorise an exemption only in relation to one strata lot, which are dealt with below. As matters of background, reliance was placed by the appellant on the legislative history of the principal place of residence exemption, and the submission was made that “Parliament carefully chose its wording so as to differentiate between, on the one hand, land not subject to strata title (eg, Torrens title, old system title) and, on the other hand, land subject to strata title legislation”. The appellant submitted that … “Parliament always intended to ensure that more than one lot would be the subject of the principal place of residence exemption as the legislation consistently used such phrases as “parcel of residential land. Parliament intended to restrict the principal place of residence exemption in the case of strata title land to one lot as the legislation consistently used phrases such as “a strata lot” as opposed to “a parcel” (all quotes in this paragraph from par 26, Appellant’s Written Submissions). In making submission, the appellant pointed to the decision in McMillan v. Commissioner of Land Tax [1972] 1 NSWLR 545, in which Isaacs J held that more than one title of Torrens land can be the subject of a relevant exemption under the then applicable legislation, a fact which presumably was known to Parliament when the later amendments were made to the Land Tax Management Act 1956 culminating in the present wording.

13 In further support of the appellant’s main contention, the appellant relied upon a number of principles of statutory construction.

14 The first principle so relied upon was that of “ordinary grammatical meaning”, in that the words “a lot” in clause 2(1)(b)(ii) of Schedule 1A of the Act must mean one, and only one, lot. The appellant submitted that the words “a lot” were not ambiguous or uncertain, and that this Appeal Panel should be cautious of subjecting words in legislation that have “an ordinary everyday meaning to intensive analysis: Pearce and Geddes, Statutory Interpretation in Australia, 5th ed, Butterworths, at [4.6]” (see par 38, Appellant’s Written Submissions). The appellant urged upon the Appeal Panel that the ordinary grammatical meaning should be preferred even if such an interpretation leads to inconvenient or unjust results (see Cooper Brookes (Wollongong) Pty Ltd v. FCT (1981) 147 CLR 297 at 305 per Gibbs CJ). On this basis alone, the appellant submitted, the appeal should succeed as the ordinary interpretation of the words “a lot” admits only of the singular and not of the plural.

15 In answer to this submission, the respondent relied upon the general rule that statutes imposing taxes or other fiscal obligations required that the legislation clearly identify those persons or bodies who fall within the impost, and cited Pearce and Geddes (supra) at 9.25.

16 The respondent agreed with the principles of construction put forward by the appellant, while contesting the conclusions which should be drawn from those principles. In relation to the question of the meaning of the words “a lot”, the respondent submitted that there was an ambiguity in those words, in that that “a” may mean “any” as well as importing only a singular meaning, as contended by the appellant. The respondent called in aid the Oxford English Dictionary definition, being:-

“One, some, any: the oneness, or indefiniteness, being implied rather than asserted …”
(see par 15, Respondent’s Written Submissions).

The respondent submitted that the ordinary, everyday meaning of “a” included “any”, and therefore the Appeal Panel could go beyond accepting that “a” means “one” and nothing else, and examine whether more than one strata unit could fall within the definition in the Schedule.

17 The Appeal Panel does not consider that there is any basis for reading the word “a” as importing only the singular, with no scope for further investigation into its meaning on the basis that the ordinary grammatical meaning is the only one available. The indefinite article is not confined to the meaning “one, and only one”. In Southgate v Waterford (1990) 21 NSWLR 427, the Court of Appeal (Gleeson CJ, Kirby P and Meagher JA) considered the meaning of the indefinite article "a" in the phrase "a most extreme case", and found that it did not require that the particular case be "the" most extreme case before the maximum amount of damages able to be awarded under s 79(3) of the Motor Accidents Act 1988 was applicable. It is clear that the word “a” is not a word of such a fixed meaning as the appellant would contend, and that in construing the provision, the Appeal Panel may go further than merely accepting the meaning contended for by the appellant.

18 The respondent submitted that the literal meaning of “a lot” as being only “one lot” would result in an unjust or capricious result, in that strata owners would be restricted to an exemption in relation to only one lot whereas Torrens and other owners would be entitled to seek the exemption in relation to a “parcel”. The appellant submits that no such injustice or caprice arises, because Parliament intended the dichotomy and that there were sufficient reasons for it to do so.

19 The respondent further relied upon the provisions of the Interpretation Act 1987, in particular s 8(b). That section provides:-

“In any Act or instrument:

…

(b) a reference to a word or expression in the singular form includes a reference to the word or expression in the plural form …”

Section 5(2) of the Interpretation Act 1987 provides:-
“(2) This Act applies to an Act or instrument except in so far as the contrary intention appears in this Act or in the Act or instrument concerned.”
20 In Ross Forsyth v Deputy Commissioner of Taxation [2004] NSWCA 474, Spigelman CJ (with whom the other members of the Court of Appeal agreed) said:-
“In Promenade Investments Pty Ltd v New South Wales (1991) 26 NSWLR 203 at 223–224, Sheller JA adopted a passage from para 6.19 of Pearce & Geddes Statutory Interpretation in Australia (5th ed) that a contrary intention “will need to be spelled out”. I do not, however, understand his Honour to say that a contrary intention must always be express. Pursuant to s 5(2) of the Interpretation Act, s 68 applies unless “the contrary intention appears … in the Act or instrument concerned”. Such a contrary intention may appear from the scope, nature and subject matter of legislation. It does not necessarily require express words.

Nevertheless, s 68 [of the Income Tax Assessment Act 1936 (Cth)] serves an important function in an era in which legislative change is frequent and interconnection between Acts is not always the subject of express consideration by drafters of legislation, not least by reason of the almost exponential growth in the quantity of legislation over the course of the last century. The courts should be slow to find a contrary intention with respect to this particular section of the Interpretation Act 1987.”

21 If s 8(b) of the Interpretation Act 1987 applied to the construction of the words “a lot” where they appear in the relevant legislation, the expression would include the plural, so that the term could be read “a lot or lots ” and thus the respondent’s two strata lots could be eligible for the principal place of residence exemption. The learned Member in the Tribunal below dealt with this submission by finding that:
“The context of the clause does not disclose a requirement that would dictate that the provisions of s 8(b) should not be applied. If there was a possibility of ambiguity then the modern approach would be to consider the word in context and give it the widest possible meaning: CIC Insurance Ltd v. Bankstown Football Club Ltd (1997) 187 CLR 384.”
22 What then is the “scope, nature and subject matter” of the legislation from which such a contrary intention may be found? The appellant relies upon the legislative intent which, it is submitted, is clear from the use of the word “parcel” (which includes one or more land titles) in relation to non-strata land, and “lot” (in the singular) in relation to strata land. While game attempts were made to justify the Parliamentary use of “a lot” to show that “Parliament intended to restrict the principal place of residence exemption in the case of strata title land to one lot as the legislation consistently used phrases such as “a strata lot” as opposed to “a parcel” (see par 26, Respondent’s Written Submissions), no compelling arguments for such a conclusion were proposed. In fact, the appellant’s reasoning was somewhat circular; that the intention to exclude the operation of s 8(b) could be found from the use of the singular in “a lot”. Without any helpful assistance from Hansard (see par 23, Respondent’s Written Submissions; see also par 27, Appellant’s Written Submissions) or from any other references in the Act which may assist in reaching such a conclusion, it was difficult for counsel appearing for the appellant to give any other basis for the application of s 5(2). It appears more likely that the splitting of the exemption into strata and non-strata sub-sections in Schedule 1A arose from the differences in terminology when referring to strata and non-strata land, rather from some Parliamentary intention which is not spelled out elsewhere.

23 The respondent, in meeting the appellant’s argument, relied on the Privy Council decision of Blue Metal Industries Ltd v. Dilley (1969) 117 CLR 651 at 656, where the forerunner of s 8(b) of the Interpretation Act was considered and their Lordships (Lord Morris Of Borth-y-Gest, Lord Pearce, Lord Wilberforce, Lord Pearson and Lord Diplock) said:-

“By s 21 of the Interpretation Act , 1897 (NSW) it is enacted that in all Acts, unless the contrary intention appears, words in the singular shall include the plural and words in the plural shall include the singular. Such a provision is of manifest advantage. It assists the legislature to avoid cumbersome and over-elaborate wording. Prima facie it can be assumed that in the processes which lead to an enactment both draughtsman and legislators have such a provision in mind. It follows that the mere fact that the reading of words in a section suggests an emphasis on singularity as opposed to plurality is not enough to exclude plurality. Words in the singular will include the plural unless the contrary intention appears. But in considering whether a contrary intention appears there need by no confinement of attention to any one particular section of an Act. It must be appropriate to consider the section in its setting in the legislation and furthermore to consider the substance and tenor of the legislation as a whole. (See Sin Poh Amalgamated (HK) Ltd v Attorney-General of Hong Kong (1965) 1 WLR 62.) In that case a test was indicated which often may be helpful. In the judgment of the Board delivered by Lord Pearce it was said: “The Interpretation Ordinance was intended to avoid multiplicity of verbiage and to make the plural cover the singular except in such cases as one finds in the context of the legislation reason to suppose that the legislature, if offered such amendment to the bill, would have rejected it.”
24 The respondent further relied upon the argument that there would be no rational basis for applying a different principle to strata and non-strata land, particularly in the light of the expert evidence from Mr Moses that it is common for a residence to comprise more than one strata lot (see statement Neville James Moses, whose evidence was accepted by the learned Tribunal member).

25 While, in the Blue Metal Industries case, the words “a company” were construed only to mean a single company, the above extract itself well poses the relevant question. Did Parliament intend the words to be read as “a lot or lots” but phrased the term as “a lot” because it was aware that the Interpretation Act 1987 would not exclude taxpayers such as the respondent by allowing “a lot” to be read in the plural, or did it specifically intend that one, and only one, strata lot be subject to the principal place of residence exemption despite the fact that more than one non-strata lots have the benefit of the exemption in proper circumstances? It appears to us that in the absence of a compelling reason for the latter to be the case, and without any express or implied material from which to extrapolate an intention to exclude the plural, the provisions of s 8(b) of the Interpretation Act 1987 must apply.

26 Accordingly, the words “a lot” in the principal place of residence exemption may refer to more than one strata lot by reason of the application of the provisions of the Interpretation Act 1987, and accordingly there was no error of law in the conclusion of the learned Tribunal member in the decision below.

Finding on whether more than one strata lot used as a principal place of residence may attract the relevant exemption

27 As a result of this finding, and given that the evidence was not contested, including the fact that the respondent and his wife use both units 901 and 902 as their principal place of residence, the appeal as set out in Grounds 1 and 2 must fail.

Other grounds of appeal

28 The appellant relied upon a number of other grounds. Some of them (ground 3, 4, and 6) follow on from the findings in relation to grounds 1 and 2, and cannot have a life of their own. Ground 3 is an appeal from the comment of the learned Tribunal member that there would be an oppressive result for other taxpayers if the respondent’s arguments as to the exemption applying to more than one strata lot were successful, as taxpayers seeking to gain the exemption in relation to multiple lots would be required to consolidate their strata holdings (see par 22 of the decision). It seems to us that this is an extrapolation from the learned Tribunal member’s decision and not a finding germane to the decision in its own right. Ground 4 refers to an observation by the learned Tribunal member as to utility lots or carspaces (see par 22 of the decision). That statement was clearly obiter and, again, follows the decision on the substantive question. Ground 6 takes issue with the use of the words “clear and consistent use of more than one lot” (see par 25 of the decision) and appears to be an illustrative gloss on the legislative provisions. Again, its fate is that of the main point.

29 Ground number 5, however, reads:-

“Judicial Member Hole erred in finding that, for the purposes of clause 2(1)(b)(ii) of Schedule 1A and s 10(1)(r) of the Land Tax Management Act , there exists a unity of title, use and occupation test (par 23 of the decision)”.
30 This ground of appeal refers to the test articulated in Ryan v. Commissioner of Land Tax [1982] 1 NSWLR 305 that contiguous blocks of land can comprise a “parcel of residential land” within s 10(1)(r)(ii) of the Act only where they are undivided, not only by physical separation, but also in use, occupation and title” (see headnote). The appellant submitted that the Member erred in finding that units 901 and 902 were not undivided in a physical sense; that is, that there was a wall between them. The appellant submitted that the layout of the unit is such that access between the units is required to be through common property, notwithstanding that the common property is “dedicated to the exclusive use of the respondent until each of the [two] lots ceases to be in common ownership” (see par 59, Appellant’s Written Submissions).

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.

33 If we are wrong in this, it seems to us that the appellant is further precluded from raising this ground of appeal given the finding of facts by the learned Tribunal member and that this ground is not a question of law.

Finding as to other grounds of appeal

34 Grounds 3, 4, 5 and 6 should also be dismissed.

Costs

35 The respondent wishes to be heard on costs. Section 88(1) of the Administrative Decisions Tribunal Act 1977 provides:-

“(1) Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that there are special circumstances warranting an award of costs.”
36 There have been a number of cases dealing with what comprises “special circumstances”. In Gizah Pty Ltd v AXA Trustees Ltd (No 2) [2001] NSWADT 164, they were held (in a case dealing with the Retail Leases Act ) “circumstances that are out of the ordinary, but without having to be extraordinary or exceptional”. In other Appeal Panel proceedings, costs were warranted where “an appeal was dismissed as disclosing no sufficiently arguable questions of law” (see Citadin Pty Ltd (No 2) v. Eddie Azzi Australia Pty Ltd, and General Pants Co Pty Ltd [2001] NSWADTAP 31 at [23]). In Petria Pty Ltd v Makhoul [2005] NSWADTAP 12, it was said that:-
“It is also recognised that, in cases brought under this Act, “special circumstances” may be constituted by the unreasonable rejection of an offer of compromise that was less advantageous to the offering party than the result at the hearing (see eg Irresistible Frocks Salon Pty Ltd v Sparbac Pty Ltd and Roche Group Pty Ltd (No 2) [2004] NSWADT 72) or by behaviour of a party causing the proceedings to be unnecessarily protracted.”
37 The Appeal Panel will, if requested, hear argument on whether there are “special circumstances” which would justify an order for costs in this case. If no application for relisting is made within 28 days of the publication of the reasons for decision in this matter, there will be no order as to costs.

REASONS FOR DECISION - Judicial Member A. Verick

38 This appeal relates to the proper interpretation and application of the provisions of Clause 2(1)(b)(ii) of Schedule 1A and s 10(1)(r) of the Land Tax Management Act 1956 (the Act) which deal with the principal place of residence exemption from land tax. Factually, the issue before the Appeal Panel is whether “two contiguous strata units held by the same owner and found to be used and occupied by him and his wife as the one place of residence are both exempt from land tax” under these provisions.

39 The facts are quite unusual but are not in dispute. At the relevant time the Respondent owned several properties. In addition to Units 901 and 902 located at Pyrmont, which are the subject of this appeal, he owned a property at Centennial Park and a unit at Darling Point. He also jointly owned a property at Bundeena with Alecris Pty Ltd. On 17 July 2003 the Respondent sought by way of a variation return to change his principal place of residence from the Bundeena property to the Pyrmont units. The units occupy the whole of the ninth floor of a building in Pyrmont. The only reason given for this variation by the Tribunal was because the Bundeena “property is partially owned by a corporation, the Applicant is no longer able to claim the principal place of residence”.

40 In respect of the 2004 tax year, the Appellant treated Unit 901 as being exempt but included Unit 902 as being an assessable to land tax property in the land tax assessment for the 2004 tax year. An objection lodged by the Respondent against the assessment was disallowed and the matter was taken to the Tribunal for a review of the objection decision made by the Appellant.

41 The Tribunal took the view that that the real issue that was relevant was the factual “use and occupation of the premises and not its potential use” and concluded as follows:

“The unity of title, use and occupation test, in this instance, does not fail because of the separate titles. The use and occupation of the two units described as a matter of fact is that the two units are used by the Applicant and his wife in an overlapping and interdependent manner not just a convenient use and, on occasions a supportive use, to that of the use, to that of the use of the unit generally used and occupied by the Applicant. The whole of Units 901 and 902 are used as one principal place of residence.”
42 In taking this view reliance was placed by the Tribunal on the decision of Ryan v. Commissioner of Land Tax [1982] 1 NSWLR 305 and the Interpretation Act 1987.

43 The appeal to the Appeal Panel was essentially on the basis that, “as a matter of law, a person can only obtain the exemption for one strata lot” and that the Tribunal’s finding “constitutes an error in law in construing the provisions of Clause 2(1)(b)(ii) Schedule 1A LTMA which deals with the principal place of residence exemption in respect of land under the strata titles legislation”.

Outline of Relevant Legislative Provisions

44 Under s 8 of the Act, land tax is charged on land owned as at midnight on 31 December immediately preceding the year for which the land tax is levied and under s 9(1) is payable by the owner of the land on the taxable value of all land owned by the owner which is not exempt from taxation under the Act.

45 Section 10 of the Act sets out various categories of land that enjoy exemption from land tax under the Act. Section 10, so far as it is relevant in relation to the “principal place of residence exemption”, provides as follows:

“ 10 Land exempted from tax
(1) Except where otherwise expressly provided in the Act the

following lands shall, subject to sections 10B, 10D, 10E, 10G 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.”
46 Clause 2 of Schedule 1A of the Act at the relevant time provided as follows:
“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 1973 or a lot under the Strata Schemes (leasehold Development) Act 1986.

(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 person’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.”

47 “Residential land” is defined in Clause 3(1)(a) of Schedule 1A to mean “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 adopted for residential purposes” but excludes, inter alia, a building or buildings “comprised of lots within a strata plan or residential units”.

48 The term “lot” used in Clause 2(1) of Schedule is defined in s 5(1) of the Strata Schemes (Freehold Development) Act 1973 to mean, inter alia, one or more cubic spaces forming part of the parcel to which a strata scheme relates, the base of each such cubic space being designated as one lot or part of one lot on the floor plan forming part of the strata plan, a strata plan of subdivision or a strata plan of consolidation to which that strata scheme relates, being in each case a cubic space the base of whose vertical boundaries is as delineated on a sheet of that floor plan and which has horizontal boundaries as ascertained on a sheet of that floor plan and which has horizontal boundaries as ascertained under subsection (2).

49 “Principal place of residence” of a person is defined in s 3(1) of the Act as “the one place of residence that is, among one or more places of residence of the person within or outside Australia, the principal place of residence of the person”. Clause 12 of Schedule 1A restricts the principal place of residence exemption to only one place of residence for all members of the same family.

Submissions

50 The Appellant’s basic argument was that the “ordinary grammatical meaning” should be given to the words “a lot” found in Clause 2(1)(b)(ii) of Schedule IA of the Act. The Appellant’s case before the Appeal Panel was that the words “a lot” found in the subparagraph must mean, in ordinary usage, a single lot and no more and relied on the following written submissions:

“38. Courts should be cautious of subjecting words in legislation that have an ordinary meaning to intensive analysis: Perace and Geddes, Statutory Interpretation in Australia , 5th edition, Butterworths at para [4.6]. In the end the conclusion must depend upon one’s own understanding of the sense in which the words are currently used: NSW Associated Blue-Metal Quarries Limited v. FCT (1956) 94 CLR 509 at 594. If the language is not ambiguous or uncertain, the Court will apply its ordinary grammatical meaning unless to do so will give the statute an operation which obviously was not intended: Mills v. Meeking (1990) 169 CLR 214 at 223 per Mason CJ and Toohey J; at 234 per Dawson J. Such an ordinary and grammatical meaning should be preferred even if it leads to a result that may seem inconvenient or unjust: Cooper Brookes (Wollongong) Pty Limited v. FCT (1981) 147 CLR 297 at 305 per Gibbs CJ. Such grammatical and ordinary meaning is to be adhered to unless the result would lead to some absurdity or repugnance or inconsistency with the rest of the instrument: Grey v. Pearson (1857) 6 H.L.C. 60; Corporate Affairs Commission (NSW) v. Yuill (1991) 172 CLR 319 at 340 per Gaudron J.

39. The Appellant submits that the above ordinary and grammatical meaning to the words ‘a lot’ in Clause 2(1)(b)(ii) Schedule 1A LTMA should be applied. In light of the intention of Parliament as submitted in paragraphs 26-28 above, the restriction of the principal place of residence exemption to one strata lot (in the case of strata title land) does not result in any absurdity, repugnance or inconsistency nor does it result in an operation which was not intended. The operation or restriction to one single strata lot was intended and was to be contrasted with the exemption that was conferred by Parliament on ‘non strata title land’.

40. Upon the application of the ordinary grammatical meaning to the words found in Clause 2(1)(b)(ii) Schedule 1A LTMA, the construction reached at paragraphs 25 and 26 of the Decision must be erroneous. On this ground alone, the Appeal should therefore be allowed.”

51 The Respondent agreed, “with the principles of construction outlined in the Appellant’s submissions” but contested “the conclusions derived from them in relation to the construction of the relevant provisions”. In addition, the Respondent submitted that in construing a statute “the language in a statute which produces an unjust or capricious result is to be avoided” and that in construing taxation legislation the “literal construction” rule has a “corollary” - “a person is only to be taxed if falling clearly within the words of the statute”.

52 The Appellant next dealt with the provisions of s 8(b) of the Interpretation Act 1987, reliance on which was placed by the Tribunal, to support the conclusion that in construing the words “a lot” a plural meaning could be given to these words as well. Section 8(b) provides that in any Act or instrument a reference to a word or expression in the singular form includes a reference to the word or expression in the plural form “except in so far as the contrary intention appears … in the Act … concerned”. (s 5(2) of the Interpretation Act 1987)

53 The Appellant submitted that the words “a lot” found in the provisions of Clause 2(1)(b)(ii) Schedule 1A “indicate a contrary intention for the purpose of s.5 (2) Interpretation Act 1987 such that the provisions of s.8 (b) Interpretation Act 1987 do not apply” and relied on the following reasons.

54 On the basis of what was said by the NSW Court of Appeal in Forsyth v Deputy Commissioner of Taxation (2004) 62 NSWLR 132 (per Spigelman CJ at p 138), the Appellant argued that the presence of the indefinite article “a” in the legislation was an express direction that “a lot” in Clause 2(1)(b)(ii) Schedule 1A be restricted to a single lot and thus established a “contrary intention” for purposes of s 5(2) of the Interpretation Act 1987. The Appellant also relied on the decision of the Privy Council in Blue Metal Industries Limited v Dilley (1969) 117 CLR 651and submitted that in that case “it was neither suggested nor contended that the words ‘a company’ in the opening words of s.185 Companies Act (1961) (NSW) could or should be pluralised”. In addition, the Appellant cited cases, which considered legislation where the presence of the indefinite article “a” was held to indicate a contrary intention for purposes of the equivalent to s 5(2) of the Interpretation Act 1987. Secondly, it was submitted that the various changes to the relevant land tax legislation over the years supported the submission that the principal place of residence exemption was “intended by the legislature to be restricted to a single lot”. Thirdly, it was argued that when the strata title principal place of residence exemption was inserted by the Land Tax (Amendment) Act 1973, the decision in McMillan v Commissioner of Land Tax [1972] 1 NSWLR 545 had already been handed down and it can be assumed that Parliament was aware of the decision in McMillan which held that the term “land” is the equivalent to “a parcel of land” and could include two or more lots of land.

55 The Respondent, in answer to the above arguments, submitted that taxation legislation “requires clear expression of a contrary intention that the singular does not include the plural” and that s 8(b) of the Interpretation Act 1987 “embodies a presumption which applies unless a contrary intention is discerned”. The Respondent also submitted that the “legislature is assumed to be aware of the law and the application of the presumption acknowledged by s. 8 of the Interpretation Act 1987 that words in the singular include the plural and vice versa” and in support cited the case of Blue Metal Industries Ltd v. (1969) 117 CLR 651 where the Privy Council (Lord Morris of Borth-y-Gest, Lord Pearce, Lord Wilberforce, Lord Pearson and Lord Diplock) in considering a similar provision in an earlier New South Wales Interpretation Act had observed (p 656) as follows:

“By s 21 of the Interpretation Act , 1897 (NSW) it is enacted that in all Acts, unless the contrary intention appears, words in the singular shall include the plural and words in the plural include the singular. Such a provision is of manifest advantage. It assists the legislature to avoid cumbersome and over-elaborate wording. Prima facie it can be assumed that in the processes which lead to an enactment both draughtsman and legislators have such a provision in mind. It follows that the mere fact that the reading of words in a section suggests an emphasis on singularity as opposed to plurality is not enough to exclude plurality. Words in the singular will include the plural unless the contrary intention appears. But in considering whether a contrary intention appears there need be no confinement of attention to any one particular section of an Act. It must be appropriate to consider the section in its setting in the legislation and furthermore to consider the substance and tenor of the legislation as a whole.”
56 It was also submitted by the Respondent that there was nothing in the history of the relevant legislation and Parliamentary Debates to suggest that Parliament intended to distinguish strata title land from other forms of tenure.

Reasons for Decision

57 The issue in this matter is whether the principal place of residence exemption as set out in Clause 2 of Schedule 1A of the Act refers exclusively to a single lot under the strata schemes legislation or to two or more strata lots where it can be established as a matter of fact that they are used as a principal place of residence of the owner. The determination of this issue depends entirely on the interpretation of the terms of Clause 2.

58 There are essentially two tests in Clause 2 that need to be satisfied before an owner enjoys the exemption of a property under section 10 of the Act. Section 10(1)(r) merely provides that land is exempted from taxation under the Act if the land is exempt from taxation under the principal place of residence exemption as provided for by Schedule 1A. The exemption under Clause 2 of Schedule 1A is available if (1) the land is “a parcel of residential land, or a lot under the Strata Schemes (Freehold Development) Act 1973 or a lot under the Strata Schemes (Leasehold Development) Act 1986” and (2) the land is used and occupied as the principal of residence of a person.

59 The Tribunal, on the facts before it, concluded that, in relation to the two units because there was “unity of title, use and occupation”, the exemption applied. The Tribunal concluded that the provisions of the Interpretation Act 1987 applied “to Part 2, Clause 2 of Schedule 1A of the Land Tax Management Act 1956, where the facts support the clear and consistent use of the whole of more than one lot (under Strata Schemes Provisions) as a principal place of residence results in those lots comprising the land to be subject of the exemption”. The Tribunal in reaching this conclusion was largely influenced that the issue that was “relevant is the fact of use and occupation of the premises not its potential use”.

60 There was some dispute among the parties as to the ordinary grammatical meaning of the words “a lot” found in Clause 2 of Schedule 1A. The Respondent placed a great deal of reliance on a dictionary definition of the word “a” and contended that the word could be construed as “one” or “any” as a matter of ordinary grammar. The respondent submitted that accordingly the ordinary grammatical meaning of the expression “a lot” was ambiguous.

61 The courts have made it quite clear that the first step in any process of statutory construction is to determine the ordinary and grammatical meaning of the language used. It is only necessary to depart from the literal or grammatical meaning where that meaning does not conform to the legislative intent as ascertained from looking at the various provisions of the statute including the policy which can be discerned from the relevant provisions of the statute. (See: Mills v Meeking (1990) 169 CLR 214, per Mason CJ and Toohey J at 223, Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (1981) 147 CLR 297, per Gibbs CJ at 304-305, Mason and Wilson JJ at 320-321 and Hepples v Commissioner of Taxation (1991-1992) 173 CLR 492 per McHugh J).

62 In this matter, the first step is to look at the actual words used in the legislation and ascertain their ordinary meaning. The words “a lot” are fairly simple words. The ordinary grammatical meaning of the words must mean “one” or “a single lot”. There is no suggestion in the language used that the legislature had anything else in mind. I do not think there is any merit in the Respondent’s argument that the words “a lot” are ambiguous. Nor can it be said that their ordinary and grammatical interpretation would produce an absurd or repugnant or unjust result. On the contrary if the words were given the interpretation suggested by the Tribunal, an inequity could arise in the application of the exemption. Whilst the majority of taxpayers would only be entitled to their single lot exemption, a few who have the means to convert whole floors of a strata building or a whole strata building into a place of personal residence would be entitled to a very generous exemption with the full tax burden borne by the other taxpayers.

63 It was not suggested by the Respondent, nor did the Tribunal consider, that the meaning of the words “a lot’ should be the subject of a purposive approach as mandated by section 34 of the Interpretation Act 1987. Reliance was only placed on s 8 of the Interpretation Act 1987.

64 The parties were clearly in disagreement as to whether the language used in Clause 2 warrants reliance on s 8 of the Interpretation Act 1987 to allow the reference to the words “a lot” to include the expression in the plural form. The Appellant’s case was that the provisions of Clause 2 and other provisions of the Act suggested strongly a “contrary intention” thus negating the application of the assumption as required by the provisions of section 5 (2) of the Interpretation Act 1987.

65 The real legal issue in this matter is whether there is a “contrary intention” to restrict the words “a lot’ to their singular grammatical meaning in Clause 2. In Blue Metal Industries Ltd v Dilley (1969) 117 CLR 652 the Privy Council in the course of its judgment advised that “in considering whether a contrary intention appears there need be no confinement of attention to any one particular section of an Act” and that it is “appropriate to consider the substance and tenor of the legislation as a whole”.

66 The Tribunal was largely influenced by the decisions in McMillan v. Commissioner of Land Tax (1972) NSWLR 545 and Ryan v. Commissioner of Land Tax (1982) NSWLR 305 in concluding that to determine whether Units 901 and 902 could fall within the exemption provided by Clause 2, one had to consider the “unity of title, use and occupation test”.

67 McMillan was a test case to decide whether an area of land comprising of two allotments in a subdivision held under one title with a dwelling house only on one lot constituted “land” for purposes of obtaining deductions under s 9(3)(e) of the Land Tax Act 1956 from the unimproved capital value before tax was levied. Section 9(3)(e) which was subsequently replaced by s 10(1)(r)(ii) allowed as a deduction in respect of “land owned by a person … used and occupied by that person solely as the site of a single dwelling-house … “ The deduction provisions did not apply to land owned by a person who owned other land. His Honour, Isaacs J held that because the lots were “not separated by physical severance nor in title nor use nor occupation” the lots in law and fact were one parcel of land with the consequence that taxpayers owned no other land and so were not excluded from the deduction provisions.

68 In Ryan, Hunt J had to consider whether two contiguous blocks of land used and occupied for residential purposes constituted a “parcel of residential land” for purposes of s 10(1)(r)(ii) of Land Tax Management Act 1956 as it stood at the relevant time. His Honour observed that the expression “land” in the old s 9(3)(e) was changed to a “parcel of residential land” in s 10(1)(r)(ii) in “recognition by the legislature of the argument accepted by Issacs J in McMillan’s case.” His Honour held 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 use, occupation and title”.

69 Both McMillan and Ryan are helpful authorities to determine when a particular property constitutes “a parcel of residential land”. The cases, however, offer little or no assistance in determining whether two units can constitute “a strata lot” for purposes of Clause 2, nor do these authorities assist in suggesting that in construing “a lot” the words can be read to include the plural. The cases merely advance a test to determine when two or more blocks of land can constitute “a parcel of residential land”. The decisions on the other hand assist the Appellant’s case to establish the presence of a “contrary intention” in the construction of the terms of Clause 2(1)(b). The meaning of the words “a parcel of residential land” as settled by these cases was known to the draftsman who drafted Clause 2(1)(b) as extending to two or more blocks of land in certain circumstances and it would appear that the words “a lot under the Strata Schemes (Freehold Development) Act 1973 or a lot under the Strata Schemes (Leasehold Development) Act 1986” were quite intentionally inserted in the singular. Two blocks of land in certain circumstances can constitute “a parcel of residential land” but the exemption clearly does not extend to situations where there are plural number of parcels of residential land. If a singular meaning has to be given to “a parcel of residential land” it would be contrary to the intention of the legislation to extend the meaning of “a lot” to two or more lots.

70 The Tribunal erred in applying “a parcel of residential land” test to find that the exemption under Clause 2 extended to two or more strata lots. The Tribunal considered the provisions of Clause 2 in a “composite” manner. In a sense it used the test for the second requirement to determine the first requirement of the exemption. The two tests are independent tests. Firstly, the person claiming the exemption has to establish that the person is the owner of “a parcel of residential land” or “a lot” under the Strata Schemes. Having established this requirement, the person needs to satisfy the second requirement found in Clause 2(2) that the “parcel of residential land” or the “lot under the Strata Scheme” is used and occupied as the principal place of residence of the person. The use and occupation test is in my view an independent test and does not help to determine what “a lot” under the Strata Schemes is. Both the Respondent and the Tribunal unfortunately placed a great deal of emphasis on the actual use and occupation test to determine the first requirement.

71 It is also important to note that the word “lot” under the Strata Schemes is a defined technical term. The definition of the word “lot” is found in s 5 (1) of the Strata Schemes (Freehold Development) Act 1973. In the case of the words “a parcel of residential land”, the words are not defined in the Act and these words take their ordinary meaning. When dealing with a defined term and words that have an ordinary meaning, the legislation would have clearly indicated if the plural is to be included in the case of a “lot” but not in the case of the words “a parcel of residential land”. The history of the various amendments to deal with the treatment of a person’s principal place of residence also support the conclusion that I have reached to confine the singular interpretation to the words “a lot” when used in Clause 2. These arguments further fortify my view that there is a contrary intention to depart from the requirements of s 8(b) of the Interpretation Act 1987.

72 The Appellant had advanced four other grounds of appeal, which were essentially responses to certain obiter observations made by the Tribunal. As the Appellant succeeds on his basic and principal grounds I need not consider the other grounds.

73 I would allow the Appellant’s appeal.