Commissioner of State Taxation v Takhar - [2021] SASCA 58

SUPREME COURT OF SOUTH AUSTRALIA
(Court of Appeal: Civil)
COMMISSIONER OF STATE TAXATION v TAKHAR & ANOR
[2021] SASCA 58
Judgment of the Court of Appeal
(The Honourable Justice Doyle, the Honourable Justice Livesey and the Honourable Justice Bleby)
10 June 2021

TAXES AND DUTIES - LAND TAX - OBJECTIONS AND APPEALS
TAXES AND DUTIES - LAND TAX - EXEMPTIONS - PRIMARY PRODUCTION LAND
Appeal against a judgment of the Supreme Court which determined an appeal against an assessment of land tax made by the Commissioner of State Taxation.
The respondents lodged an objection against an assessment of land tax issued by the appellant in respect of land in Lewiston and Burton. The Treasurer and Minister for Finance confirmed the appellant’s assessment.
The respondents then successfully appealed against the Minister’s determination in the Supreme Court. The primary judge determined that the respondents were entitled to exemptions under ss 4(1)(l) and 5(10)(g) of the Land Tax Act 1936 (SA) ("Land Tax Act") in relation to the Lewiston and Burton land, respectively.
The appellant now appeals against the primary judge’s decision in relation to the Burton land. The appeal concerns the scope of the "defined rural area" land tax exemption available for land used for the business of primary production pursuant to s 5(10)(g) of the Land Tax Act.
Held (by the Court), refusing permission to amend the Notice of Appeal and dismissing the appeal:
1. The phrase, "the business of primary production" in s 2 of the Land Tax Act is capable of referring to a broad business of primary production carried across several parcels of land. Acts done and the intention held with respect to the land are both relevant objects of inquiry. Where the inquiry is as to the use of the land for the business of primary production, it is appropriate to consider the deployment of the land in that broader context.
2. The primary judge did not err in his conclusion that the Burton land was used for the business of primary production as at 30 June 2013.
3. It was open to the primary judge to characterise the arrangement between the respondents and Mr Krieg, who had provided all of the services, paid the expenses and made the decisions with respect to cropping the Burton land as a joint venture.
4. The primary judge did not err in his construction of the definition of ‘relevant business’ in s 5(13) of the Land Tax Act.
Land Tax Act 1936 (SA) ss 2(1), 4(1), 4(3), 5(1), 5(3) 5(5), 5(10), 5(13), 14, 16; Environment Protection Act 1993 (SA) Sch 1 cl 3(3); Land Acquisition Act 1969 (SA); Land Tax Management Act 1956 (NSW) s 10(1), 10AA(2)-(3); Local Government Act 1919 (NSW), referred to.
Takhar v Commissioner of State Taxation [2020] SASC 119, discussed.
Kalomel Nominees v Commissioner of State Taxation (2012) 87 ATR 88; Redman v Return to Work Corporation of South Australia [2021] SASCA 25; K-Generation Pty Ltd v Liquor Licensing Court (2009) 237 CLR 501; Saville v Commissioner of Land Tax (1980) 12 ATR 7; Commissioner of State Revenue v Metricon Qld Pty Ltd (2017) 105 ATR 11; Hope v Bathurst City Council (1980) 144 CLR 1; Commissioner of State Taxation v T & S Liapis Pty Ltd (2015) 102 ATR 1; Vartuli & Anor v Commissioner of State Revenue (2014) 98 ATR 545, considered.

COMMISSIONER OF STATE TAXATION v TAKHAR & ANOR
[2021] SASCA 58

Court of Appeal – Civil: Doyle, Livesey & Bleby JJA

THE COURT: This appeal concerns the scope of the “defined rural area” land tax exemption available for land used for the business of primary production pursuant to s 5(10)(g) of the Land Tax Act 1936 (SA) (“Land Tax Act”).
In September 2014, the Commissioner of State Taxation wrote to the respondents, Bhupinder Takhar and Jaswinder Takhar, enclosing a Notice of Assessment of land tax in respect of land owned jointly by the Takhars at Lewiston and Burton. The assessments in respect of the Lewiston land were for the financial years from 2009/2010 through to 2013/2014. The assessment in respect of the Burton land was for the 2013/2014 financial year.
The Takhars lodged an objection against the assessment with the Treasurer and Minister for Finance, claiming that they were entitled to exemptions under ss 4(1)(l) and 5(10)(g) of the Land Tax Act in relation to the Lewiston and Burton land, respectively. The Minister confirmed the Commissioner’s assessment.
The Takhars successfully appealed against the Minister’s determination.[1] The primary judge, Blue J, determined that the exemption under s 4(1)(l) (the “primary production exception”) applied in respect of parts of the Lewiston land, and the exemption under s 5(10)(g) (the “DRA primary production exemption”) applied in respect of the whole of the Burton land.
[1] Takhar v Commissioner of State Taxation [2020] SASC 119.
In this appeal, the Commissioner challenges Blue J’s conclusion that the Takhars had established an entitlement to the DRA primary production exemption in respect of the Burton land. This raises questions of construction of the relevant provisions of the Land Tax Act, in particular s 5(10)(g)(ii). The challenge extends to certain findings made by Blue J. There is a further issue as to whether the Commissioner should be given permission to amend her Notice of Appeal to include a further ground alleging error underpinning the determination by Blue J.
Background
Bhupinder Takhar and Jaswinder Takhar were born in India and emigrated to Australia in 1964. From 1972, they acquired parcels of land for the purpose of various farming activities, including cropping, orchid production, chicken meat production and egg production. They coordinated their business activities in a partnership. Bhupinder was responsible for the partnership’s operations in South Australia, while Jaswinder was responsible for its operations in Queensland. The Queensland operations are not relevant to these proceedings.
In South Australia, the Takhars owned land at Gawler, Mallala, Angle Vale, Lewiston and Burton. The land at Gawler comprised two parcels, primarily used to raise chickens for meat. The land at Angle Vale was used to mix chicken feed and the land at Mallala was used for broad acre cropping. The Gawler and Mallala land had always been treated as exempt from land tax under the primary production exception. The land at Angle Vale had been subject to the DRA primary production exemption from 2004. Justice Blue described the history of the Burton land as follows:[2]
In December 1991 the Takhars purchased the Burton land at 35-57 Heaslip Road Burton (21 hectares). They purchased it with the intention of raising chickens because it was across the road from land owned by John Manos of Manos Poultry, who was planning to expand his poultry activities. The Burton land had previously been used for grazing sheep and some cropping. At that time, all of the land on the same side, and most of the land on the other side, of Heaslip Road was used for primary production. However, the Takhars subsequently discovered that chicken farming was not permitted by the zoning of the land.
[2] Takhar v Commissioner of State Taxation [2020] SASC 119 at [27].
The evidence at trial showed the Burton land to have been treated as exempt from land tax as at 2001. The trial judge inferred that it had been so treated from its date of acquisition by the Takhars in 1991.
The Takhars conducted cropping on their South Australian properties through a share-farming arrangement. That arrangement was originally with Dean Modra. Mr Modra was later replaced by Robin Krieg, who has since undertaken cropping on all of the Takhars’ properties, with the exception of Angle Vale.
In April 2004, the Takhars applied for a primary production exemption in respect of the Burton land. In October 2004, the Commissioner granted a DRA primary production exemption.
In October 2007, the City of Salisbury (“the Council”) informed Bhupinder that it was investigating compulsorily acquiring part of the Burton land as part of a drainage scheme in the area. In about 2009, the Council offered to pay $33 per square metre as compensation for the land sought to be acquired.
The Takhars sought advice from Bernold Glaser, a business consultant, about the proposed acquisition. Mr Glaser made enquiries about the sale price of land in the area, and advised the Takhars that the Council’s offer was inadequate. The Takhars decided to lodge an application for development approval to subdivide the Burton land. At the trial, the Commissioner contended that the purpose of this application was to proceed with a subdivision of the land. However, the judge accepted Bhupinder’s evidence that the subdivision was for the purpose of increasing the compensation payable by the Council, by providing a basis for a hypothetical development valuation of the land. The Takhars did not have the funds actually to develop it.[3]
[3] Takhar v Commissioner of State Taxation [2020] SASC 119 at [129], [301]-[302].
At around this time, Bhupinder advertised in The Advertiser newspaper seeking clean soil. Between July 2009 and April 2010, approximately 50,000 cubic metres of soil was deposited in the north-western corner of the Burton land. Bhupinder gave evidence that he had observed a neighbour procure soil to fill a low-lying area of their farm and grow vegetables on the filled area. In the same way, he procured the soil to enhance the use of the land for primary production. The Commissioner contended that the purpose of procuring the soil was to prepare the land to be subdivided. Justice Blue accepted Bhupinder’s evidence in this respect.[4]
[4] Takhar v Commissioner of State Taxation [2020] SASC 119 at [130], [310]-[312].
The soil was mainly comprised of material excavated for the construction of swimming pools. On 15 April 2010, representatives of the Environment Protection Agency (“EPA”) happened to observe the soil on the Burton land, and formed the view that the Takhars were illegally conducting a depot for the disposal of waste within the meaning of clause 3(3) of Schedule 1 to the Environment Protection Act 1993 (SA). On 27 May 2010, the EPA issued an Environment Protection Order (“EPO”) requiring the Takhars to cease receipt of waste and remove all waste from the site to an authorised facility.
The Takhars obtained legal advice in relation to the EPO. This resulted in the EPA varying the EPO such that the Takhars were not required to remove the waste, but were required to engage a site contamination consultant to assess the site, report on the assessment and implement an environment management plan approved by the EPA. In the event, the soil was found to contain approximately five cubic metres of waste materials like concrete and plastics, out of a total of 50,000 cubic metres deposited. Justice Blue found that this contamination was as a result of illegal dumping and was unintended by Bhupinder.[5]
[5] Takhar v Commissioner of State Taxation [2020] SASC 119 at [311].
In November 2010, the Council issued a notice of intention to acquire part of the Burton land pursuant to the Land Acquisition Act 1969 (SA). The Takhars continued to disagree with the Council’s valuation of the land for some years, but ultimately accepted compensation of $638,000, plus $30,000 for disturbance.
In August 2013, the Commissioner decided to remove the DRA primary production exemption in respect of the Burton land.
The land tax assessment
On 18 October 2013, the Commissioner issued to the Takhars a Notice of Assessment of land tax for the 2013/14 assessment year, being for $19,606 in respect of the Lewiston land and $143,094 in respect of the Burton land. On 13 November 2013, Mr Glaser wrote to the Commissioner’s office, contending that the Lewiston and Burton land were used for primary production and were eligible for land tax exemptions. On 4 June 2014, Bhupinder lodged an application for a primary production exemption for the Burton land.
On 16 July 2014, the Commissioner issued a Substitute Notice of Assessment of land tax, revising the figures to $19,538 for Lewiston and $142,597 for Burton. Then in September of the same year, the Commissioner wrote to Mr Glaser, notifying him that the Burton land had not been granted a primary production exemption, and attaching the July 2014 Notice of Assessment.
On 27 November 2014, Bhupinder lodged a Notice of Objection. On 2 September 2015, the Minister disallowed the Takhars’ objection and confirmed the Commission’s decision. On 1 September 2016, the Takhars filed an appeal against the Minister’s decision in the Supreme Court.
Exemptions from land tax
The Land Tax Act provides for the imposition of taxes on all land in South Australia, subject to exceptions. Section 14 of the Act provides that the owner of land is liable for tax in respect of that land.[6] Section 16 provides that where there are two or more taxpayers in respect of the same land, they are jointly and severally liable to pay tax in respect of that land.[7]
[6] Land Tax Act 1936 (SA) s 14(1).
[7] Land Tax Act 1936 (SA) s 16.
Land tax for a financial year is calculated as at midnight on 30 June immediately preceding that financial year, on the basis of circumstances then existing.[8] However, as Blue J noted:[9]
It is common ground that, at least where the imposition of land tax depends on whether the land is used wholly or mainly for the business of primary production, regard is not confined to use of the land on 30 June but is to be had to use before and after that date.
[8] Land Tax Act 1936 (SA) s 4(3). See Kalomel Nominees v Commissioner of State Taxation (2012) 87 ATR 88 at [45] (Gray J).
[9] Takhar v Commissioner of State Taxation [2020] SASC 119 at [176].
Sub-sections 4(1)(a)-(m) of the Land Tax Act identify land that is excepted from the imposition of land tax, by reference to the land being owned by specified bodies or used for specified purposes. Section 4(1)(n) then provides that further exceptions apply to “land that is wholly exempt from land tax under section 5”.
Sub-sections 5(1)-(3) and (5) provide:
(1)     Land is wholly exempt from land tax under this section if—
(a)     proper grounds for the exemption exist; and
(b)     such an exemption has been granted, and remains in force, under this section.
(2) Land is partially exempt from land tax under this section if—
(a)     proper grounds for the partial exemption exist; and
(b)     a partial exemption has been granted, and remains in force, under this section.
(3) An owner of land may apply, in a form approved by the Commissioner, for an exemption or partial exemption from land tax.
…
(5) The Commissioner may, if satisfied that proper grounds exist for doing so, wholly or partially exempt land from land tax (whether or not an application for exemption has been made).
The DRA primary production exemption from land tax
Section 5(10) then lists 15 categories which provide “proper grounds” for exempting land from land tax. Relevantly, s 5(10)(g)(ii) provides what is generally known as the DRA primary production exemption, for land owned jointly or in common by two or more natural persons:
(10) Proper grounds for exempting land from land tax under this section exist as follows:
…
(g) land used for primary production that is situated within a defined rural area may be wholly exempted from land tax if—
…
(ii) the land is owned jointly or in common by 2 or more natural persons at least 1 of whom is engaged on a substantially full-time basis (either on his or her own behalf or as an employee) in a relevant business and any other owner who is not so engaged is a relative of an owner so engaged;
Other sections of the Land Tax Act then populate the terms used in s 5(10)(g)(ii). Section 2(1) defines “land used for primary production” as follows:
(1) In this Act, unless the contrary intention appears—
…
land used for primary production means land of not less than 0.8 hectare in area as to which the Commissioner is satisfied that the land is used wholly or mainly for the business of primary production;
Section 5(13) defines “relevant business” as follows:
(13) In this section—
…
relevant business—a business is a relevant business in relation to land used for primary production that is situated within a defined rural area if—
(a) the business is a business of primary production of the type for which the land is used or a business of processing or marketing primary produce; and
(b) the land or produce of the land is used to a significant extent for the purposes of that business;
The DRA primary production exemption in s 5(1)(g)(ii) operates as a more restricted exemption than the general primary production exception in s 4(1)(l), which simply exempts “land used for primary production other than such land that is situated within a defined rural area”. Both exemptions are directed at “land used for primary production” which, as noted above, is defined as “land of not less than 0.8 hectare in area as to which the Commissioner is satisfied that the land is used wholly or mainly for the business of primary production”.
The mischief addressed by the DRA primary production exemption
What then is the purpose behind creating a more restrictive exemption in the case of a defined rural area? A “defined rural area” is declared to be so by the Governor by proclamation: s 2(1). As proclaimed, it essentially covers the greater metropolitan areas of Adelaide and Mt Gambier. There was no dispute that the Burton land is within a defined rural area. The Commissioner helpfully traced the history of the DRA primary production exemption with reference to the explanation given for amendments to the Land Tax Act in 1975. This explanation identified the mischief being addressed by the more restrictive exemption in respect of a defined rural area:[10]
The extension of the concession for primary-production land has necessitated some tightening of its application. The existing definition enables the concessions to be applied to high value land in areas within and adjacent to the metropolitan area, where the land is not owned by people deriving their main livelihood from primary production or an associated business…
It is obviously undesirable that a land speculator who purchases land in rural areas that are ripe for urban subdivision should be able to obtain the benefit of the major statutory exemption proposed for genuine primary producers by the Bill. Accordingly, the new definition provides that, where land is in a “defined rural area”, that land will not qualify for the exemption unless the principal business of the taxpayer consists of primary production or some related industry.
[10] Hansard, March 25 1975, pp 3127-3128 (LC).
From 1975, this exemption required all owners of the land in question to demonstrate that their principal business was primary production. In 2005, the criteria for eligibility for the exemption were broadened, to allow it to be claimed even where a co-owning relative was deriving significant income from some other source. The Second Reading Speech to the Statutes Amendment (Budget 2005) Bill identified that this broader eligibility envisaged situations where such land was co-owned by a spouse who had their own job, giving the unimaginative examples of a teacher or a nurse.[11]
[11] Hansard, 27 June 2005, p 2158 (LC).
It appears then that Parliament’s purpose in creating the defined rural area exemption was to close off the risk of an exemption being claimed where land was being banked for speculative purposes, even if primary production activities were being carried out on the land in the meantime.

In Redman v Return to Work Corporation of South Australia,[12] this Court reviewed the authorities on the use to which extrinsic materials, in particular the Second Reading Speech may, at common law, be put. In K-Generation Pty Ltd v Liquor Licensing Court, French CJ said:[13]
The question whether extrinsic materials may be considered in South Australia and in what circumstances they may be considered as an aid to statutory interpretation is to be answered by the common law. The answer at common law is that such materials can be considered to determine, inter alia, the mischief to which an Act is directed. This Court has referred to Hansard in aid of its interpretation of South Australian statutes. In 1996 the Full Court of the Supreme Court of South Australia referred to a minister's Second Reading Speech in order to identify the purpose of a statutory provision.
At common law it is not necessary before entering upon a consideration of such material to surmount a threshold of ambiguity, obscurity or possible absurdity. Statutory interpretation requires the court to have regard to the context in which the words to be interpreted arise and also their statutory purpose. Context includes "the existing state of the law and the mischief which, by legitimate means ... one may discern the statute was intended to remedy".
The relevant extrinsic material is the Attorney-General's Second Reading Speech introducing the amendments which led to the enactment of s 28A. This material may be considered to determine the purpose of the section as an aid to its construction. That does not mean that the words of the Attorney-General can be substituted for its text. That caution is apposite in the present case.
(Footnotes omitted)
[12] Redman v Return to Work Corporation of South Australia [2021] SASCA 25.
[13] K-Generation Pty Ltd v Liquor Licensing Court (2009) 237 CLR 501, [51]-[53].
On the appeal, the Commissioner did not challenge the conclusion of Blue J that the Takhars, at the relevant date, did not intend to subdivide the land for development purposes. Neither is there any case prosecuted on appeal to the effect that the Takhars had been land banking the Burton land for future development purposes.
The decision at first instance
Justice Blue identified five elements necessary to establish the applicability of the DRA primary production exemption to the Burton land:
1.     the land is at least 0.8 hectare in area;
2.     the land is within a defined rural area;
3.     the land is used wholly or mainly for the business of primary production;
4.one owner is engaged on a substantially full-time basis in a relevant business; and
5.     the other owner is a relative of the first owner.
Justice Blue found, and there was no dispute, that elements 1, 2 and 5 were established. The dispute therefore revolved around (1) whether the Burton land was used wholly or mainly for the business of primary production as at 30 June 2013, and (2) whether one of the Takhars was engaged on a substantially full-time basis in a relevant business as defined in s 5(13).
Justice Blue determined these issues in favour of the Takhars. He concluded that the Takhars had established an entitlement to the DRA primary production exemption in respect of the Burton land for the 2013/14 assessment year. Consequently, he allowed the appeal and revoked the Commissioner’s assessment.
Was the Burton land used for primary production as at 30 June 2013?
Justice Blue found that the Burton land was, as at the relevant date, used solely for the business of primary production:[14]
For the same reasons as in respect of lot 53 at Lewiston, the Takhars managed the Burton land as an integral parcel of five properties in South Australia on which they conducted a business of primary production. There is no doubt, and no contest, that the Takhars were and are engaged in the business of primary production as a whole. The use of the Burton land was as at the relevant date an integral part of that business of primary production…
For the same reasons as in respect of lot 53 at Lewiston, even if regard were confined to the Takhars’ cropping activities, there is no doubt that they comprised and comprise a business of primary production considered in themselves. The use of the Burton land was an integral part of that business of primary production. As at the relevant date, the Burton land was used for the business of primary production.
[14] Takhar v Commissioner of State Taxation [2020] SASC 119 at [348]-[349].
The challenge to the finding that the Burton land was used for primary production as at 30 June 2013 attacked both Blue J’s findings of fact and his construction of the section creating the exemption.
Justice Blue’s findings and the evidence
Before coming to the questions of construction, it is useful to start with his Honour’s findings of fact as to what the Takhars were doing (to use a neutral expression) with respect to the Burton land on and around 30 June 2013.
His Honour made the following general factual findings in respect of the Burton land:[15]
[15] Takhar v Commissioner of State Taxation [2020] SASC 119 at [292]-[327].
·The Takhars acquired the Burton land for the purpose of using it for primary production. It transpired that the land could not be used for egg production, so Bhupinder asked Mr Krieg to include the Burton land in the cropping that he was undertaking pursuant to their share-farming arrangement.
·For the great majority of the period between 1991 and 2010, the land was not cropped due to access issues to the property prior to the development of the Northern Expressway.
·The Takhars applied for development approval to subdivide the Burton land in September 2010. This was for the purpose of increasing the compensation payable by the Council by providing a basis for a hypothetical development valuation of the land. The Takhars had no present intention of undertaking a subdivision development.
·The Takhars procured the soil deposited on a low-lying section of the land between July 2009 and April 2010 in order to enhance the use of the land for primary production.
·In May or June 2010, when Bhupinder received the order from the EPA, he instructed Mr Krieg not to crop the land until the EPA issue was resolved. He was concerned that if the soil was discovered to be contaminated, the contaminants might have affected the surrounding land or groundwater. Mr Krieg would have otherwise included the land as part of the Takhars’ land he intended to crop.
·Bhupinder instructed Mr Krieg to resume farming in 2013, once he was confident that the soil would be retained on the land.
·In the interim, Mr Krieg left the land fallow, but continued to manage it. It was his general practice to visit all land under his management once a month, and he sprayed weeds on the Burton land during one or two of the years between 2010 and 2012.
·Mr Krieg sprayed weeds and ploughed the land in 2013 in preparation for sowing a crop the following year.
·Mr Krieg sowed a barley crop on the land in 2014.
Justice Blue then proceeded to consider whether the Burton land was used wholly or mainly for the business of primary production as at 30 June 2013. He made the following findings to this end:[16]
·It was the intention of the Takhars and Mr Krieg to commence regular cropping of the land in 2010 and thereafter. It was only the intervention of the EPO in May 2010 that resulted in Bhupinder directing Mr Krieg not to crop the land.
·In 2013, Bhupinder lifted the suspension of cropping on the Burton land and Mr Krieg undertook management of the land including spraying and ploughing in preparation for sowing a crop in succeeding years.
·As at 30 June 2013, it was the intention and expectation of the Takhars to crop the Burton land regularly.
·As at 30 June 2013, the Takhars had no intention of subdividing the Burton land or of using it for any purpose other than primary production. As at the relevant date, the Burton land was used for primary production.
[16] Takhar v Commissioner of State Taxation [2020] SASC 119 at [342]-[346].
Justice Blue accepted the Takhars to have been honest witnesses. His Honour’s acceptance of the evidence of Mr Krieg, that he had sprayed and ploughed the Burton land in 2013, and sowed it in 2014, was central to the findings as to what had been done to the land at this time. Mr Krieg further gave evidence that he had managed the property for crop production in 2015, and had sowed a durum wheat crop, but he did not harvest it because the ground was too dry. In 2016, he again managed the property for crop production but had not, in the event, sown a crop that year.
Both parties adduced other evidence going to the questions of when the land was under management or when a crop had been sown. This included experts who relied on Nearmap and Google Earth images, as well as some landscape photographs and Google Street view images. Justice Blue found this material and the consequent opinion evidence to be considerably limited in its usefulness. Further, both experts assumed that if the land had been sown, the images would have shown furrows left by a seeder. However, Mr Krieg’s evidence was that he used a sprayer, rather than a seeder, to distribute seeds on the land.
The Commissioner called a number of non-expert witnesses who had had cause to view the land at the relevant times. Justice Blue found, broadly, that the evidence of these witnesses’ observations at the various times they were made was either consistent with Mr Krieg’s evidence, or to the extent that they were inconsistent, were also inconsistent with accepted events, such as there being a crop sown in 2015. Importantly for the Commissioner’s case, however, a Mr Wilson, a Property Valuer employed by the State Valuation Office, was able to give evidence of the state of the land close to the relevant date. As Blue J summarised this evidence:[17]
Mr Wilson gave evidence that he made a kerbside inspection of the Burton land on 14 August 2013 and there was no sign that the property was used for primary production purposes (cereals or livestock). His evidence is consistent with Mr Krieg having ploughed and sprayed the property in 2013 after that date.
[17] Takhar v Commissioner of State Taxation [2020] SASC 119 at [164].
As the Commissioner submitted, it was a necessary incident of reconciling the evidence of Mr Krieg and Mr Wilson that Mr Krieg must have sprayed and ploughed sometime after 14 August 2013.
In a similar vein, an environmental auditor, Mr Kirsanovs, who attended at the Burton land on 4 June 2012, 20 June 2014 and 2 May 2017, gave evidence that he did not observe any primary production on the land on those occasions. Mr Krieg had given evidence that he did not crop the land in 2012. 20 June 2014 was likely prior to when Mr Krieg had sowed the land: a separate email in evidence indicated that cropping had not occurred before 23 May 2014.[18] As to 2017, the judge found it was likely that Mr Krieg did not sow a crop until sometime after May 2017.
[18] Exhibit Appeal Book Vol.2, p 1434.
Consistently with this, Mr Krieg accepted in cross examination, in answer to a question from his Honour, that given he had sown barley in 2014, the spraying and ploughing could even have occurred earlier in 2014.[19] Thus, on appeal, the Commissioner did not look to put too much weight on the evidence of the other witnesses, notwithstanding that the Notice of Appeal complained that Blue J’s findings were against the weight of the evidence that included these witnesses’ accounts. The positive evidence as to activity on the land, when combined with accounts by others that Blue J found to be reliable, effectively drew a line as to when the land must have been first under active management after a considerable period of years. That was not before August 2013, with a crop not being sown until sometime in the second half of 2014.
[19] Trial Transcript 254.30-37.
With respect to the period prior to this, Mr Krieg’s evidence went no further than to say that in the period following Bhupinder’s direction not to crop the land on account of the EPO, he probably would have sprayed it for weeds in one or two of the years between 2010 and 2013. The Commissioner submitted that this was consistent with the land not being used for primary production, but just being maintained as vacant land.
The challenge to the conclusion that the Burton land was, at the relevant date, used for primary production
The Commissioner submitted that the option to use the Burton land for cropping only arose with the advent of the Northern Expressway in 2009/10. Then, however, the EPO intervened and Mr Takhar gave Mr Krieg the instruction not to proceed. Bhupinder only lifted that direction in 2013; the events described above then followed. There was no intermittent use prior to 2013 and no interruption of what had otherwise been cropping activities. Prior to the activities which commenced in the second half of 2013, the land had not been subject to any use.
Critically, in the Commissioner’s submission, this was still the case prior to 30 June 2013. The only way to identify the change from “non-use” to use for primary production was to identify when activity directed towards primary production began. This may have been as late as the first half of 2014. It was an important part of the Commissioner’s submission that it was insufficient to impute an intention as at 30 June 2013 to use the land for primary production; there must, as at that date, have been some physical activity on the land to qualify as being used in the statutory sense. The spraying that likely occurred in one or two of the previous few years could not properly be characterised as establishing such a use.
The Commissioner placed some reliance, to this end, on Saville v Commissioner of Land Tax (“Saville”).[20] In that case, Roden J considered the exemption in what was then s 10(1)(p) of the Land Tax Management Act 1956 (NSW), which applied where land was, at the relevant time, used for primary production. Justice Roden discussed the relevance of the land owner’s intention to the question of whether land is used for primary production, particularly when, at the relevant date, there was no activity on the land:[21]
Basically, what is to be determined is the actual use of the land, and this of course may be quite different from any intention that the owners may have as to its later or ultimate use, or indeed any wish that the owners might have as to its use at that particular time. Nevertheless, it having been stated that, even where there is only a single use of the land, that fact alone does not necessarily establish that the land is used primarily for that purpose, I believe that intention is a matter to which regard can properly be had as a matter capable of characterising a use of the land in a manner which may not emerge from a consideration simply of the rate of activity or the area of the land actually used or the period for which it is used.
… If, upon the relevant date, there is no activity relating to any use or claimed use of the land, it is clearly appropriate to look both to the period prior to that date and to the period subsequent to it in order to determine the nature of the use of the land during that hiatus period, as it has been termed. Such a period can arise in any of a number of different circumstances. If land is allowed to lie fallow before and after periods of cultivation, that clearly, it seems, does not represent an interruption of the use of the land for the purpose of that cultivation, and the land can properly be said at that time to be being used for that purpose.
There can be a chance occurrence which causes the land to be unused in the sense that there is no relevant activity going on at any particular time. Such occurrence could be the disposal of the owner’s entire stock which is being replaced, with the replacement stock not yet arrived. In such a case, again it seems clear that it would be proper to say that during that hiatus period the land was being used for that purpose.
The third situation in which there would be no activity is one in which a person gives up a particular use of the land for a period for a reason, with the intention of resuming it at a later date. If that were done it seems to me that, irrespective of the intention of the owner, it would be difficult to say that the land was being used for the purpose during that period of discontinuance.
Because of the different circumstances in which there may be a cessation of activity on land, it appears that whenever there is a cessation of activity, and whenever there is a claim that that represents an hiatus period, it would be appropriate to have regard to the intention of the owner or person in occupation of the land as to its future use.
(Emphasis added)
[20] (1980) 12 ATR 7.
[21] Saville v Commissioner of Land Tax (1980) 12 ATR 7 at 11.
The first observation to be drawn from this is the statement of principle that in the event of inactivity on the land (described by Roden J in terms of hiatus), it is appropriate to look to intention in the context of what has occurred in the periods before and after the relevant date. Secondly, while the section as in force was not reproduced in the judgment, it appears that the exemption was simply concerned with the use of the land. There was no overlaying concept of use for the “business” of primary production. It will be necessary to return to this difference.
By 2017, the Land Tax Management Act 1956 (NSW) had been considerably updated. The primary production exemption was now expressed in s 10AA(2), posing the question whether the land was “land used for primary production”. That term was defined in s 10AA(3):
For the purposes of this section, land used for primary production means land the dominant use of which is for—
(a)   cultivation, for the purpose of selling the produce of the cultivation, or
(b)   the maintenance of animals (including birds), whether wild or domesticated, for the purpose of selling them or their natural increase or bodily produce, or
(c)   commercial fishing (including preparation for that fishing and the storage or preparation of fish or fishing gear) or the commercial farming of fish, molluscs, crustaceans or other aquatic animals, or
(d)   the keeping of bees, for the purpose of selling their honey, or
(e)   a commercial plant nursery, but not a nursery at which the principal cultivation is the maintenance of plants pending their sale to the general public, or
(f)   the propagation for sale of mushrooms, orchids or flowers.
It can be immediately seen that there was now an overlay of commercial purpose to the variously described primary production activities for the exemption to apply. In Commissioner of State Revenue v Metricon Qld Pty Ltd (“Metricon”),[22] the New South Wales Court of Appeal considered the relevance of purpose or intention with respect to the land where the land was not being used physically for such an end at the relevant date:[23]
...I do not intend to suggest that “use” in the s 10AA sense does not sometimes include inactivity… land which is, for the time being, left fallow as part of a crop rotation cycle is “used” for agriculture despite the current absence of inactivity on it. The deliberate maintenance of a state of inactivity is, of itself, the implementation of a purpose “for” which the land is used, that is, the purpose of agriculture including by allowing time for soil regeneration…
Purpose is a concept necessarily at work in s 10AA(3). Each of the six activities in paras (a) to (f) has a purpose or objective of commercial gain. There is a distinction, however, between the purpose for which land is acquired, on the one hand, and the purpose for which it is currently being devoted to use, on the other. This point is particularly important when considering any competing use under s 10AA(3). The purpose of acquisition may or may not correspond with the purpose of current use. Land acquired specifically for the sowing of crops may be put to either that use or some other use, such as cattle grazing or residential subdivision development. The inquiry directed by s 10AA(3) is as to current tangible and physical development and its purpose, not the purpose of acquisition.
Little is likely to turn on subjective purpose or intention. The question is not what an owner, lessee or other person able to do so decides is to happen in relation to the land. The task is, rather, to determine whether, as an objective matter, the things that that person causes to happen – no doubt in pursuance of the person’s purpose or intention – constitute “use” and, if so, whether (and to what extent) that “use” is a use described in paras (a) to (f) of s 10AA(3). Relevant purposes and intentions are principally those already executed, although the complexion of things already done may be coloured by whatever the relevant purpose or intention envisages for the future.
(Footnotes omitted)
[22] (2017) 105 ATR 11.
[23] Commissioner of State Revenue v Metricon Qld Pty Ltd (2017) 105 ATR 11 at [57]-[60] (Barrett AJA, MacFarlan JA and Ward JA agreeing).

These cases provide some assistance by way of analogous reasoning. It is important, however, not to elide the differences between the exemption regimes when drawing conclusions.
The present question is whether the land was, at the relevant date, used wholly or mainly for the business of primary production. There is potentially a meaningful difference between this characterisation and that required by the version of the Land Tax Administration Act 1956 (NSW) as in force in Saville.
The Takhars placed weight, in addressing this question, on the fact that their use of the land was not within the mischief contemplated by the DRA primary production exemption, discussed above. However, that observation does not assist with determining whether the Burton land was “land used for primary production”, as defined in s 2(1). That term is common to the exemptions in both ss 4(1)(l) and 5(1)(g)(ii). Understanding the mischief that s 5(1)(g)(ii) addresses may assist in the construction of those parts of the subsection peculiar to it. It is less useful on this initial inquiry.
The Takhars emphasised that making the business the purpose of the use introduced a focus not simply on the physical use of the land. It allows for business decisions about the use of the land, which may potentially expand the possible uses of the land when not actually producing crops or stock beyond the hiatus purposes as contemplated in Saville. Circumstances might warrant the conclusion that land not being immediately productive is still used wholly or mainly for the business of primary production, even if it is not, for example, lying fallow for regenerative purposes.
Rather than attempting an abstract description of the outer limits of this phrasing, it is more helpful to examine it in the context of the Takhars’ concrete submission about the Burton land. It was uncontroversial that it was permissible to look at activity (or inactivity) both before and after the relevant date.
Land used “wholly or mainly for the business of primary production”
Critical to Blue J’s conclusion was the uncontested fact that the Takhars were engaged in the business of primary production as a whole. However, the Commissioner submitted that where an enterprise owned different parcels of land, it was necessary to evaluate the parcels individually to see whether the separate activities on each amounted to a business, albeit with “due regard” to the contribution of the business on that land to the business of primary production as a whole. She submitted that it was not permissible simply to evaluate the whole enterprise without consideration of the individual activities on the separate parcels of land. To do so would raise the prospect of unproductive land being “submerged or obscured” within a larger land holding.
The consequence of that submission for this appeal would be that the relevant “business of primary production” that applied to the Burton land (subject to further challenges, considered below) was cropping, rather than a broader primary production enterprise that included cropping amongst other activities, predominantly poultry farming.
What constitutes a business has been the subject of considerable judicial consideration in different contexts. In Hope v Bathurst City Council,[24] Mason J construed a provision in the Local Government Act 1919 (NSW) which defined “rural land” as including land of a certain size, “and which is wholly or mainly used for the time being by the occupier for carrying on one or more of the businesses or industries of grazing, dairying … [etc]”. Justice Mason said of the included phrase, “carrying on the business of grazing”:
It denotes grazing activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis”.
[24] (1980) 144 CLR 1.
Thus, it is established that primary production activity that amounts to a hobby can be distinguished from that of a business. In Commissioner of State Taxation v T & S Liapis Pty Ltd, this Court said:[25]
…the question of whether an activity amounts to a business is a question of fact and degree. Relevant factors include: a purpose of making a profit; repetition and continuity; the activity being conducted in an organised, businesslike or systematic manner; the size of the operation; and the activity being conducted in the same manner as recognised businesses. It is to be noted that the authorities cited by the Judge do not support the proposition that the “prospect” of making a profit is an indicia of a business. On the appeal, this Court was not taken to any other authorities that supported the proposition. It may be observed that a prospect of making a profit is an indicia of a good or successful business, rather than an indica [sic] of a business simpliciter.
(Footnotes omitted)
[25] Commissioner of State Taxation v T & S Liapis Pty Ltd (2015) 102 ATR 1 at [36] (Gray J, Sulan and Stanley JJ agreeing).
The Land Tax Act speaks only of “the business of primary production”. It does not identify separate businesses of, for example, grazing, dairying, poultry production or cropping. Rather, the definition of business of primary production in s 2(1) deploys terms sufficiently broad to cover more than one type of primary production within a single business:
business of primary production means the business of agriculture, pasturage, horticulture, viticulture, apiculture, poultry farming, dairy farming, forestry or any other business consisting of the cultivation of soils, the gathering in of crops, the rearing of livestock or the propagation and harvesting of fish or other aquatic organisms and including the intensive agistment of declared livestock;
The risk apprehended by the Commissioner that unproductive land could be obscured by focusing on the broader enterprise is overstated. The threshold question is whether the land is “used wholly or mainly for” the business of primary production. If one parcel of land among several is being used wholly or mainly for some purpose other than the business of primary production to which the other parcels are devoted, or is not being used at all, the Act will operate accordingly. That will be a question of fact in any given case.
There is therefore no purposive reason to limit the definitional phrase in s 2(1), “the land is used wholly or mainly for the business of primary production”, as requiring an analysis that is limited to the activities on the particular parcel of land alone. The phrase, “the business of primary production” is capable of referring to a business being carried out entirely on one discrete parcel of land but also, equally, to a broader business of primary production carried across several parcels of land. The Act does not deny either approach.
This conclusion then provides a reference point for interrogating the use of the land as at the relevant date, and points up the potential difference with a legislative regime that focuses only on the narrow question of whether the land is used for primary production. Once a business of primary production is identified, the section then requires an interrogation into whether the land was being used for that business.
Here, the starting point is the conclusion that the Takhars were operating a business of primary production, within the meaning of the Act, that had a number of different elements including, over time, chicken farming, orchid production and cropping, across a number of parcels of land.
Intention and action on the Burton land
Within that framework of reference, acts done and the intention held with respect to the land are both relevant objects of inquiry. Thus, consistently with Saville, if the land was one of a number of parcels held for a business of primary production, and was deliberately left fallow for regenerative purposes for a year or two, it would be a simple conclusion that the land was being used for the business of primary production.
There will inevitably be questions of fact and degree. Here, the analysis is more difficult, because the connection between intention and action is, on its face at least, more remote. The judge found that the Burton land was purchased in 1991 for the purpose of primary production. That purpose was not fulfilled for a considerable period of time, as external zoning and geographical factors rendered it unsuitable. Consistently with Metricon, the Takhars’ purpose on acquisition of the Burton land is, by itself, relevant but of little moment in the circumstances of the case.
However, the advent of the Northern Expressway presented a new opportunity. The Takhars intended to commence cropping in 2010 and thereafter.
That intention, together with the actions that were taken, existed as incidents of the Takhars’ business of primary production. The Takhars had caused the fill to be deposited on the Burton land in 2009/2010 for this purpose. Justice Blue found that it was only the intervention of the EPO in May 2010 that caused Bhupinder to direct Mr Krieg not to crop the land. Sometime after August 2013, Bhupinder lifted the suspension of cropping and Mr Krieg commenced the activities described above.
The emphasis given by the Commissioner to the absence of activity having been commenced by 30 June 2013 might be insurmountable under the kind of regime considered in Saville, where the inquiry concerned the physical use of the land. Post-2010, the Burton land was not physically used for primary production prior to August 2013 at the earliest. This was not a case of regenerative hiatus.
Where the inquiry is as to the use of the land for the business of primary production, it is appropriate to consider the deployment of the land in that broader context. The Takhars acted to improve the land in 2009 and 2010 to make it more suitable for cropping. The EPO then thwarted them from giving effect to that established intention which had, to some extent, been acted upon. The EPO originally required them to remove all the waste to an authorised facility. In June 2010, the EPA varied the EPO, deleting the requirement to remove the waste. Instead, the EPO now required the Takhars to engage a qualified site contamination consultant to assess the site, report on the assessment, prepare and submit an Environmental Management Plan and, following EPA approval, implement the management plan.
At some time in 2013, Bhupinder determined that the EPO no longer constituted a bar to giving effect to his intention to crop the land. Justice Blue held that, as at 30 June 2013, it was the intention and expectation of the Takhars to crop the land regularly.[26] They took the next physical steps sometime after August 2013.
[26] Takhar v Commissioner of State Taxation [2020] SASC 119 at [344].
Any business of primary production may encounter obstacles to the exploitation of the land under its management. At times, land used for that business may contribute more or less effectively to that business. It is an integral part of any business to comply with statutory obligations. This is not least, in the case of primary production businesses, environmental obligations. Operators of the business will have to make decisions about how that is best done. The Takhars had improved the land in 2009-2010 in order to render it more suitable for cropping. There is no reason why regard should not be given to that improvement activity: they intended from that time to crop the land. They then made the decision in 2010 not to commence cropping, because of the EPO. They were using the Burton land to its best effect in pursuit of their business of primary production, notwithstanding that they could not sow a crop in the years between 2009 and 2013.
The exigencies of primary production businesses include environmental obligations with respect to land. Responsible and lawful management of a primary production business may well require or recommend remedial environmental activity, prior to giving effect to an objectively established intention to produce crops or stock on the land. That does not necessarily mean that the land is not being used for a business of primary production in such a situation. Indeed, absent some further disqualifying factor (such as an absence of intention to then farm the land directly or inutile delay in the remediation project) it would seem artificial to excise such activity from the statutory description.
While it is not necessary to decide, that kind of activity might not satisfy the test articulated in Saville. The present analysis places a considerable emphasis on the intention of the operator of the business, where the burden of proof lies with the taxpayer. It recognises a potentially broader class of physical activity or inactivity on land not immediately productive of crops or stock as nonetheless permitting a description of the land as being used for the business of primary production.
As indicated above, this is not an occasion to hypothesise about the limits of this test of purpose. If land is not being deployed physically for the production of crops or stock but is nonetheless held by operators of a business of primary production, the burden on the taxpayer to demonstrate that the land is being used for that business will be, in practical terms, all the greater.
In its application to the present case, this analysis is not limited to identifying the precise dates in 2013 and 2014 when certain actions were taken on the land, although it remains important to identify when activity on the land commenced by reference to 30 June of the relevant year. Rather, once Bhupinder was satisfied that the EPO no longer constituted a bar to cropping, the Takhars commenced the necessary physical activity to grow crops, in this case, preparation of the land. The overarching picture from 2009/2010 onwards when they deposited fill to improve the land for cropping purposes, is one of continued use of the land for their business of primary production. This was insofar as external exigencies, including the environmental obligations of the business with respect to the land, allowed. The use of the land for their business of primary production included taking steps to comply with the EPO that applied to the land.
The Commissioner further contended, on appeal, that the primary production activity on the Burton Land was so token as to be de minimis and not qualify for the DRA primary production exemption.[27]
[27] Vartuli & Anor v Commissioner of State Revenue (2014) 98 ATR 545 at [133]-[142] (White J).
The Commissioner did not contend so much that what was occurring on the Burton land was a hobby activity. Rather, having regard to the activity being undertaken prior to 2013, its use for primary production as at the relevant assessment date was de minimis. However, this contention is answered by the particular factual matrix that attended on the Burton land from 2009 onwards, considered above. The land was unproductive during this period. However, the events that occurred in relation to the land in this time and the Takhars’ response to those events deny the conclusion that the use of the land for the business of primary production was de minimis.
It follows that notwithstanding that physical activity directed towards actual cropping did not occur on the Burton land until August 2013 at the earliest, Blue J did not err in his conclusion that the Burton land was used for the business of primary production as at 30 June 2013.
Whether one of the Takhars was engaged on a substantially full-time basis in a relevant business
The further requirement imposed, relevantly, by s 5(10)(g)(ii) in respect of land within the defined rural area for it to qualify for the DRA primary production exemption is that:
the land is owned jointly or in common by 2 or more natural persons at least 1 of whom is engaged on a substantially full-time basis (either on his or her own behalf or as an employee) in a relevant business and any other owner who is not so engaged is a relative of an owner so engaged; …
It is helpful here to restate the definition of “relevant business”, which is contained in s 5(13):
(13) In this section—
relevant business—a business is a relevant business in relation to land used for primary production that is situated within a defined rural area if—
(a) the business is a business of primary production of the type for which the land is used or a business of processing or marketing primary produce; and
(b) the land or produce of the land is used to a significant extent for the purposes of that business;
It is this further requirement that gives effect to the identified mischief of ensuring that the DRA primary production exemption is not available in respect of land banking or other speculative activities in the defined rural area.
The Commissioner raised a number of challenges to Blue J’s conclusion that, for the purpose of this exemption, Bhupinder Takhar was engaged on a substantially full-time basis in a relevant business.
Did Blue J err in characterising the arrangement between the Takhars and Mr Kreig as a joint venture?
The Commissioner had contended at trial that in circumstances where Mr Krieg had provided all of the services, paid for all of the expenses and made all of the decisions associated with the cropping of the Takhars’ land in South Australia, what was in place was in truth an outsourcing agreement. It followed, in her submission, that the business being conducted on the Burton land was not the Takhars’ business of primary production, in which Bhupinder was engaged in full-time. If anything, it was Mr Krieg’s business.
Justice Blue rejected this contention. He observed that under a share farming agreement, subject to issues of scale and continuity, each of the share farmer and the owner of the land are likely to be characterised as carrying on a business of primary production. He observed that such an arrangement is likely to be characterised as a joint venture and that for the purpose of characterising the activity as a business or a hobby, it was necessary to have regard to the entire activities of the joint venture. That one joint venture party might have a minority interest by reference to revenue entitlement did not stand in the way of the conclusion that they were carrying on a business of primary production: it was necessary to have regard to the entire business.[28]
[28] Takhar v Commissioner of State Taxation [2020] SASC 119 at [353].
His Honour went on to hold, however, that in any event, even if consideration were confined to the Takhars’ interest in the farming activities on the Burton land, they nonetheless formed an integral part of their overall primary production activities on the five parcels of land in South Australia on which they undertook primary production and grew crops. The prominent role of Mr Krieg in the decision-making for, and operation of, the Burton land did not detract from that conclusion.[29]
[29] Takhar v Commissioner of State Taxation [2020] SASC 119 at [355]-[356].
The Commissioner challenges the finding that the relationship between Mr Krieg and the Takhars was that of a joint venture, in that no party had contended for such a finding or led evidence to support such a finding, and the Takhars had, at trial, eschewed such a finding. It is from that finding that the Commissioner understood Blue J to have proceeded to the conclusion that the actions of Mr Krieg were attributable to the Takhars, and in particular to Bhupinder, being the brother who was engaged full-time in the South Australian primary production business.
The Commissioner pointed to the Takhars’ submissions at trial, where they had submitted that Mr Krieg was a contractor. This was first put in contradistinction from Mr Krieg having been in an employment relationship.[30] Counsel expressly submitted that it was not a partnership, as there was no sharing of gross proceeds.[31] Justice Blue then asked counsel to assume that, while not a partnership, it was a joint venture. Counsel denied that it was. His Honour pressed him to make the assumption for the purpose of characterising what the consequences would be. This led to the following exchange:
Dr Walrut:If it’s a joint venture then I would say it’s still our business because joint venturers come together to receive gross. It’s not a common business. This leads us into that horrible distinction between businesses and partnerships. You can have an –
His Honour: So both venturers are carrying on their own business, but collectively.
Dr Walrut:Yes, yes.
His Honour: All right.
[30] Trial Transcript 585.16-20.
[31] Trial Transcript 586.10.

The Commissioner does not appear to have taken up this issue in submissions in response. She maintained that the Takhars conducted a poultry production business and that the cropping business was outsourced to Mr Krieg. She denied that there was a unity in the overall business.[32] These submissions are particularly relevant to the next issue to be determined. For present purposes, however, she was not denied the opportunity to address whether it was a joint venture. It was open to Blue J to find that the arrangement between the Takhars and Mr Krieg was a joint venture.
Was the Burton land used to a significant extent for the purposes of the Takhars’ primary production business?
[32] Trial Transcript 619.3-14; 620.4-11.
The Commissioner’s next challenge was to Blue J’s conclusion that the Burton land was “used to a significant extent” for the purpose of the relevant business.
Justice Blue determined this question on the premise that the “relevant business” was the broad primary production business of the Takhars. That premise is challenged by Proposed Ground 4, which is the subject of an application for permission to amend the Notice of Appeal, considered below.
Justice Blue held:[33]
The reference to “extent” which is required to be significant is the use of the land (or produce of the land) for the purposes of the business of production, processing or marketing of primary produce in which the co-owner is engaged. This calls for an evaluation of the extent to which the land is used for the purposes of that business as opposed to being used for any other purpose. It does not call for an evaluation of the extent to which the land is used for the purposes of the business as opposed to all other inputs.
This is clear from the text and plain grammatical meaning of paragraph (b) of the definition. This is also clear from the context. The business in question might be a processing or marketing business. There might be a few properties, or very many properties, supplying the primary produce the subject of that business: this is simply not relevant to the definition of a relevant business. This element is satisfied.
[33] Takhar v Commissioner of State Taxation [2020] SASC 119 at [364]-[365].
It was on this basis that his Honour concluded that the Burton land was used to a significant extent for the purposes of the Takhars’ primary production business.
The Commissioner submitted that by contrast, the test was an objective one, having regard to the contribution of the individual parcel of land to the identified business of primary production, and if there was more than one parcel, having regard to the respective uses of the various parcels. That is, it has to contribute to the business to a significant extent. In support of this submission, she submitted that the interpretation preferred by Blue J meant that the phrase, “used to a significant extent for the purpose of the business” gave the criterion little, if any, further work to do, given that the requirement of “used wholly or mainly for the business of primary production” must already have been met.
There is some force in this last submission. The Takhars’ response was to the effect that this further criterion nonetheless introduced a further, qualitative assessment. These submissions did not flesh out what the concrete manifestations of this additional criterion might be.
Nevertheless, there are two considerations that recommend the interpretation adopted by Blue J.
First, the “significant extent” element appears as the second of two elements of the definition of “relevant business” for the purposes of the DRA primary production exemption. A relevant business in a given case might be the very same business by which the land has qualified as land used for primary production, via the definition of that term in s 2(1). In that case, the extra work to be done by the words “used to a significant extent” is somewhat obscure, other than to place, in a somewhat roundabout way, that same business within the full-time occupation of only one of a number of joint owners. If that is its function, the exemption might have been drafted differently, but it is not without utility.
However, the point of the insertion of the concept of “relevant business” as a full-time occupation of one of a number of joint owners in this exemption is not only to refer back to the very business that qualifies the land as land used for primary production in the first place. The concept of a “relevant business” as a full-time occupation of one joint owner extends further, to encompass businesses of processing and marketing primary produce.
To come within s 5(10)(g) at all, the land must already have been determined as being used wholly or mainly for the business of primary production. It is to be recalled that the phrase, “the business of primary production” is capable of referring to a business being carried out entirely on one discrete parcel of land but also, equally, to a broader business of primary production carried over several parcels of land if the facts admit of such a business.
The section contemplates that there will be cases, unlike the present case, where the relevant joint owner of the land is engaged on a substantially full-time business, including as an employee, in a business of processing or marketing primary produce. That kind of business is not a business of primary production within the definition in s 2(1) of the Act. In such a case, whether the land is used to a significant extent for the purposes of that business is a different question from whether the land is wholly or mainly used in the business of primary production.
Thus, while the present case illustrates the potential for a substantial overlap between the separate qualifying concepts within the exemption of “used wholly or mainly for the business of primary production” and “used to a significant extent for the purposes of that business”, the “significant extent” qualification nonetheless has work to do. The terms will not always be referring to the same business.
Secondly, as Blue J observed, the construction advocated for by the Commissioner would run into difficulty in the case of a single business that operates a large number of parcels of land. The more parcels that require assessment, the less “significant” each would be to the business as a whole, potentially disqualifying them from the DRA primary production exemption, contrary to its clear intent.
Justice Blue concluded that the Burton land was used to a significant extent for the purposes of the Takhars’ primary production business, as it was used for no other purpose than the purpose of that business. This finding illustrates the definitional overlap about which the Commissioner complains. However, for the reasons set out above, his Honour did not err in his construction of this second limb of “relevant business”.
Was the “relevant business” a cropping business or the broad business of primary production conducted by the Takhars?
In concluding that the DRA primary production exemption applied, Blue J expressed a finding that the relevant business for the purposes of the exemption was the broader business of primary production carried on by the Takhars.[34] The Commissioner seeks permission to amend the Notice of Appeal to include the following ground:
4.     The learned trial judge erred in fact and law in:
(a)   finding (at [367]) that “Bhupinder was at the relevant time engaged on a substantially full-time basis in a relevant business”, when the “relevant business” for which he had found the Burton Land was used, was a cropping business, and BS Takhar could not have been involved on a substantially full-time basis in that type of business of primary production carried on by the Respondents; and/or
(b)   wrongly proceeding on the basis that the “relevant business” for the purposes of section 5(g)(ii) of the LTA was an amalgamation of all of the types of the primary production businesses carried on by the Takhars; thus failing to observe the essential linkage between:
(i)the requirement for an owner of the particular land to be engaged on a substantially full-time basis in the “relevant business” under section 5(g)(ii); and
(ii)the requirement that such “relevant business”, as defined under section 5(13) of the LTA, must be a business of the “type” for which the land was used, which for the Burton Land was the business of “cropping”.
[34] Takhar v Commissioner of State Taxation [2020] SASC 119 at [367].
The Takhars opposed the Commissioner being given permission to insert this ground. The essence of their opposition was that for the purpose of the definition of “relevant business” in s 5(13), the argument that the business of primary production of the type for which the Burton land was used was cropping, rather than the broad business of primary production, had not been in issue in the trial.
The Commissioner accepted that if this had not been placed in issue in the trial, she would be facing considerable difficulty in attempting to mount the argument on appeal. The Court received written submissions on the topic of permission. The Takhars submitted that this raised a mixed question of fact and law, and outlined the type of evidence they submitted that they might have called at trial or how they might have otherwise conducted their case.
The Commissioner pointed to passages in the Takhars’ Statement of Facts, Issues and Contentions and the Commissioner’s response, the Commissioner’s Outline of Argument before Blue J and submissions recorded in transcript, to show that the issue had been raised. In response, the Takhars disputed that the various references relied on were anything other than equivocal, and that the case was plainly conducted on the basis that the relevant business was a business of mixed primary production.
The various passages the Commissioner relied upon did not engage directly with the statutory concept of the “type” of business for the purpose of the definition of “relevant business”. Nevertheless, the Commissioner submitted that all of the requirements for satisfaction of the exemption had been put in issue. The clearest example she pointed to as showing that the “type” of business for the purpose of this limb of the exemption was in issue was in two tranches of her submissions in closing. These focused on the proposition that the only business being conducted on the Burton land was a cropping business being conducted by Mr Krieg:[35]
This is the problem again with the idea of the unity of this overall business. We have poultry production for meat and eggs occurring and we have some cropping occurring. The land we’re talking about doesn’t involve any poultry production and there’s no crossover at all between the two. But he goes further than that. The first appellant devotes in my submission 99.99% of his time and energy to that poultry business and that’s because what he has decided to do with respect to cropping is to outsource it to somebody else, and that’s been done by a share farming arrangement.
[35] Trial Transcript 619.3-14.
It is important at this point to interpolate the conclusion that Blue J did not err in rejecting the submission that what had been in place was an outsourcing agreement with Mr Krieg, and that there had been a joint venture arrangement. This was the critical element of the Commissioner’s submission in support of the non-application of the section: that the Takhars had effectively hived off the land from their business of primary production and outsourced it to someone who was conducting their own business on the land.
To this end, the submission continued:[36]
So in my submission the problem here is that effectively the licensing, informal licensing of the land for this purpose, is not actually a relevant business and further that the first appellant is not engaged in a substantially fulltime basis with respect to that business even if it is considered to be a relevant business, because it’s all outsourced in the circumstances is the point.
[36] Trial Transcript 620.4-11.
We interpret the Commissioner to have been submitting unequivocally to the effect that the relevant business for the purpose of the exemption was the business of cropping. However, that submission was not directed to the narrow question of what the “type” of business was for the purpose of the first limb in paragraph (a) of the definition of “relevant business” and the issue of construction that this would then raise. Rather, it was made in furtherance of the Commissioner’s case that the Takhars had outsourced all activity on the Burton land and were not conducting a business on that land at all.
We have already concluded that Blue J was entitled to find that the cropping on the Burton land was done as a joint venture between the Takhars and Mr Krieg. This entails rejecting the Commissioner’s argument that the activity on the Burton land had been entirely outsourced to Mr Krieg. For the reasons given above, we would also uphold his Honour’s conclusion that the Takhars were conducting a business of mixed primary production across a number of parcels of land, including the Burton land.
Bearing in mind those conclusions, the word “type” does not impose any particular constraint requiring that the “relevant business” be identified only by reference to what was occurring on the land in question. There is no textual, contextual or purposive reason why a “type” of business for this purpose would not extend, in these circumstances, to a mixed business of primary production to which a single-use parcel of land contributed. Indeed, to restrict the meaning of “type” in such a way would not further the apparent purpose of this restricted exemption.
Consistently with this, the Commissioner’s submissions before Blue J had understandably concentrated on the proposition that what had actually occurred with respect to the Burton land was a complete outsourcing. Once that argument is rejected, when construing the definition of “relevant business” there is no basis to limit the phrase, “a business of primary production of the type for which the land is used” to a notional business of cropping, on the basis that this was the farming activity being carried out on the Burton land.
It is then an inescapable conclusion that the Takhars’ mixed business of primary production was the type of business of primary production for which the Burton land was used, within the meaning of the definition of “relevant business”.
As with the second limb of the definition of “relevant business” requiring the land to be used “to a significant extent” for the purposes of the business, it may be that there is a degree of redundancy built into this limb of the definition where, on the facts of a given case, the “relevant business” is necessarily the business of primary production that qualifies the land as “land used for primary production” and thereby engages s 5(10)(g) in the first place. Again, however, that will not always be so. It is possible that to some extent, other, less roundabout drafting options might have been deployed. The ultimate focus, however, is upon who owns the land and the nature of their engagement with it.
Where, in a given case, the business by reference to which land can be said to be land used for primary production is the same as the relevant business for the purposes of s 5(10)(g)(ii), it cannot be said that there is any compromise to the integrity of the exemption by reference to its purpose.
For these reasons, the issue raised by Proposed Ground 4 was raised before Blue J, but only as an element of the Commissioner’s argument that the Burton land was outsourced entirely to Mr Krieg and was not part of any business operated by the Takhars. That argument having been rejected, it is not tenable to argue that the “type” of business for which the land was used for the purpose of the definition of “relevant business” was the business of cropping, in exclusion of the Takhars’ broader business of primary production.
The Commissioner’s case before Blue J as to whether Bhupinder was engaged on a substantially full-time basis in a relevant business is reflected in Ground 1.1 of the Notice of Appeal. This complains that Blue J wrongly found that the taxpayers operated a “relevant business” within the meaning of s 5(13) of the Land Tax Act. It manifestly covers the Commissioner’s case that the Burton land had been outsourced, and that in consequence, the “relevant business” was, at best, the business of cropping. Once the “outsourcing” case is rejected, there is no tenable argument of construction that would permit the conclusion that the “relevant business” was confined to cropping. We refuse permission to amend the Notice of Appeal to incorporate Proposed Ground 4.
Conclusion
We refuse permission to amend the Notice of Appeal to include Proposed Ground 4. We dismiss the appeal.