DIVAL NOMINEES PTY LTD and COMMISSIONER OF STATE REVENUE

[2005] WASAT 342

DIVAL NOMINEES PTY LTD and COMMISSIONER OF STATE REVENUE [2005] WASAT 342

Jurisdiction:	STATE ADMINISTRATIVE TRIBUNAL	Citation No:	[2005] WASAT 342
Act:	TAXATION ADMINISTRATION ACT 2003 (WA)
Case No:	CC:2256/2005	Heard:	2 NOVEMBER 2005
Coram:	JUSTICE M L BARKER (PRESIDENT)	Delivered:	19/12/05
No of pages:	24	Judgment Part:	1 of 1
Result:	Commissioner's decision affirmed and matter referred back to the Commissioner for reconsideration according to law
Category:	B
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Parties:	DIVAL NOMINEES PTY LTD COMMISSIONER OF STATE REVENUE
Catchwords:	Land tax – Notice of assessment – Exemption denied by Commissioner – Consideration of s 29(1) of the Land Tax Assessment Act 2002 – Use of land at midnight 30 June in year preceding assessment – Whether land used solely or principally for purpose stated in s 29(1) – Decision of Commissioner affirmed
Legislation:	Interpretation Act 1984 (WA), s 19(1)(a) Land Tax Assessment Act 1976 (WA), s 13, s 14, s 15, s 15(1), s 21, s 21(1), Schedule, Pt 1, Schedule cl 12(b), Schedule Pt 1, cl 9(a)(ii) Land Tax Assessment Act 2002 (WA), s 7, s 7(1), s 15, s 15(1), s 15(3)(b), s 29, s 29(1), s 29(3), s 29(4), s 29(4)(b), s 32(5), s 34(6). Land Tax Assessment Bill 2001 (WA) State Administrative Tribunal Act 2004 (WA), s 27 Tax Administration Act 2003 (WA), s 37(1), s 37(2), s 40(1)
Case References:	Browne v Commissioner of State Revenue (2001) 27 SR (WA 249) Eaton & Sons Pty Ltd v Warringah Shire Council (1972) 129 CLR 270 ouncil of the City of Newcastle v Royal Newcastle Hospital (1957) 96 CLR 493; (1959) 100 CLR 1 Parramatta City Council v Brickworks Ltd (1972) 128 CLR 1 Re Australian Football League and Commissioner of State Revenue [2004] VCAT 1882 Rosenblum v Brisbane City Council (1957) 98 CLR 35 Commonwealth v Baume (1905) 2 CLR 405 KWA v Commissioner of State Revenue 28 SR (WA) 158 Metropolitan Gas Co v Federated Gas Employees Industrial Union (1924) 35 CLR 449 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 Re Australian Football League and Commissioner of State Revenue 57 ATR 306 Winkley v Paton (1943) 60 WN (NSW) 162
Orders	The parties agreed that should the Tribunal uphold the Commissioner's contention the appropriate order should be that the matter be referred back to the Commissioner for further consideration according to law.,Accordingly, the Tribunal orders:,1. The Commissioner's decision made to disallow the applicant's objection is affirmed.,2. The matter is to be referred back to the Commissioner for reconsideration according to law.

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : TAXATION ADMINISTRATION ACT 2003 (WA) CITATION : DIVAL NOMINEES PTY LTD and COMMISSIONER OF STATE REVENUE [2005] WASAT 342 MEMBER : JUSTICE M L BARKER (PRESIDENT) HEARD : 2 NOVEMBER 2005 DELIVERED : 19 DECEMBER 2005 FILE NO/S : CC 2256 of 2005 BETWEEN : DIVAL NOMINEES PTY LTD

Applicant

AND

COMMISSIONER OF STATE REVENUE
Respondent

Catchwords:

Land tax – Notice of assessment – Exemption denied by Commissioner – Consideration of s 29(1) of the Land Tax Assessment Act 2002 – Use of land at midnight 30 June in year preceding assessment – Whether land used solely or principally for purpose stated in s 29(1) – Decision of Commissioner affirmed

Legislation:

Interpretation Act 1984 (WA), s 19(1)(a)

Land Tax Assessment Act 1976 (WA), s 13, s 14, s 15, s 15(1), s 21, s 21(1),
Schedule, Pt 1, Schedule cl 12(b), Schedule Pt 1, cl 9(a)(ii)


(Page 2)

Land Tax Assessment Act 2002 (WA), s 7, s 7(1), s 15, s 15(1), s 15(3)(b), s 29, s 29(1), s 29(3), s 29(4), s 29(4)(b), s 32(5), s 34(6).
Land Tax Assessment Bill 2001(WA)
State Administrative Tribunal Act 2004 (WA), s 27
Tax Administration Act 2003 (WA), s 37(1), s 37(2), s 40(1)

Result:

Commissioner's decision affirmed and matter referred back to the Commissioner for reconsideration according to law

Category: B

Representation:

Counsel:

Applicant : Ms K Hart and Mr J Dival (Directors)
Respondent : Mr R Panetta

Solicitors:

Applicant : Self-represented
Respondent : State Solicitor's Office

Case(s) referred to in decision(s):

Browne v Commissioner of State Revenue (2001) 27 SR (WA 249)
Eaton & Sons Pty Ltd v Warringah Shire Council (1972) 129 CLR 270
ouncil of the City of Newcastle v Royal Newcastle Hospital (1957) 96 CLR 493; (1959) 100 CLR 1
Parramatta City Council v Brickworks Ltd (1972) 128 CLR 1
Re Australian Football League and Commissioner of State Revenue [2004] VCAT 1882
Rosenblum v Brisbane City Council (1957) 98 CLR 35

Case(s) also cited:

Commonwealth v Baume (1905) 2 CLR 405


(Page 3)

KWA v Commissioner of State Revenue 28 SR (WA) 158
Metropolitan Gas Co v Federated Gas Employees Industrial Union (1924) 35 CLR 449
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355
Re Australian Football League and Commissioner of State Revenue 57 ATR 306
Winkley v Paton (1943) 60 WN (NSW) 162


(Page 4)

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's Decision

1 The Tribunal was called upon to determine whether the applicant's land, which it was in the course of sub-dividing into special rural lots, was exempt from land tax pursuant to s 29(1) of the Land Tax Assessment Act 2002 (WA).

2 The Tribunal ruled that under s 29(1) it is relevant to ascertain whether land is or was used for the purpose of a rural business as at midnight of 30 June in the previous financial year in order to decide if an exemption applied. It was not open to argue that the exemption is available if the land were used for the purpose of a rural business at some time prior to midnight 30 June, if it were not also used for that purpose as at midnight 30 June in the previous financial year.

3 The Tribunal upheld the Commissioner's contention that the equivalent provisions of the Land Tax Assessment Act 1976 (WA) had the same operation of assessment and liability as is currently provided for under the Land Tax Assessment Act 2002.

4 The Tribunal found that at material times it could not be said that the applicant's land "is or was used solely or principally on a commercial basis to produce income to the user from the sale of produce or stock in the course of carrying out…a grazing business". The Tribunal found that the land could not be said to be used for no purpose at all as physical sub-division work was being carried out on the land at the material time. However, on the evidence the Tribunal was unable to conclude that the sole or principal use to which the land was being put, at the material time, was for the purpose of the exemption.

5 In these circumstances, the Tribunal held that the applicant's application for review of the Commissioner's refusal to uphold the applicant's objection to its assessment of land tax for the 2004/2005 financial year must fail.

6 The Tribunal ordered:

(1) The Commissioner's decision made to disallow the applicant's objection is affirmed.

(2) The matter is to be referred back to the Commissioner for reconsideration according to law.

(Page 5)

Decision under review

7 On or about 23 September 2004 the Commissioner of State Revenue issued a land tax notice of assessment to the applicant based on land owned as at 30 June for the assessment period 2004/2005.

8 By letter dated 19 September 2004 the applicant wrote to the Commissioner submitting that the lots fell within the exemption prescribed by s 29 of the Land Tax Assessment Act 2002 (WA) in relation to land used solely or principally for a rural business.

9 By letter dated 1 October 2004 the Commissioner denied the applicant's application for the exemption.

10 On or about 2 December 2004 the Commissioner issued a land tax notice of assessment for the assessment periods: 2000/2001, 2001/2002, 2002/2003, 2003/2004 and 2004/2005.

11 By letter dated 17 January 2005 the applicant objected to the Commissioner's decision not to apply the exemption to the lots for the 2004/2005 year of assessment.

12 By a letter dated 27 January 2005 the respondent acknowledged receipt of the objection and informed the applicant that a compliance officer would be conducting an inspection of the lots on behalf of the Commissioner.

13 On 8 February 2005 Mr Jonathan Raven, Senior Inspector of the Office of State Revenue on behalf of the Commissioner, attended the lots and conducted an inspection of the lots in the presence of Mr John Dival and Ms Kathryn Hart, who are directors of the company, on behalf of the applicant.

14 On or about 8 February 2005 and as a result of the inspection, Mr Raven produced a document entitled "Compliance Report (Land Tax)".

15 By letter dated 10 February 2005 the respondent notified the applicant of the respondent's decision to disallow the objection.

16 On 8 April 2005 the applicant filed an application in the State Administrative Tribunal pursuant to s 40(1) of the Tax Administration Act 2003 (WA) for review of the Commissioner's decision to disallow the objection.

(Page 6)

Background to decision under review

17 The applicant company is the trustee for the John Dival Family Trust and its principal business activities are beef cattle production, property investment and land development.

18 In 1994 the company purchased rural land at Bakers Hill, Western Australia, which was suitable for grazing cattle and also had potential for future sub-division into Special Rural lots.

19 On 7 May 1997 the applicant received conditional approval (first conditional approval) from the Western Australian Planning Commission (WAPC) to sub-divide the Bakers Hill property in accordance with the submitted plan and some of the Bakers Hill property was sub-divided and sold.

20 In May 2000 the first conditional approval expired.

21 On 23 May 2001 a second conditional approval was issued by the WAPC and included the land the subject of these proceedings, being the land on Deposited Plan 39591 and comprising some 35 lots.

22 Prior to October 2003 the applicant grazed approximately 60 cattle on the subject land which cattle were moved to other properties to graze from time to time.

23 In or about October 2003 the applicant caused the cattle that had been grazing on the subject land to be moved to a property located in Toodyay, Western Australia, not far from the subject land.

24 In January 2004 the applicant instructed the land agents to present the subject land for sale "off the plan" and subject to the issue of title, the provision of services and the fencing at the time of settlement of the lots.

25 On or about 26 May 2004 the WAPC approved the sub-division of the subject land as shown on Deposited Plan 39591.

26 As at midnight on 30 June 2004:

(a) the applicant was the registered proprietor of the lots.

(b) the lots were located in a Special Rural Zone as indicated on the Shire of Northam Rate Notice, dated 18 August 2004; and

(Page 7)

(c) contracts for the sale of land by offer and acceptance had been executed in respect of some of the lots.

27 On 16 March 2004 the applicant entered into a contract for the sale of land by offer and acceptance in respect of the proposed lot 280.

28 On 22 June 2004 the applicant entered into a contract for the sale of land by offer and acceptance in respect of lot 278.

29 On 6 July 2004 certificates of title in respect of the lots were issued.

The Issues

30 The primary issue in this proceeding is whether the subject land is exempt for the assessment year 2004/2005 pursuant to s 29(1) of the Land Tax Assessment Act 2002. However, there are three sub-issues identified by the parties, which have to do with the proper interpretation of s 29(1) and the facts relevant to the exemption application.

31 To understand these issues, it is necessary to appreciate the precise terms of s 29(1) of the Land Tax Assessment Act 2002:

"29. Land used solely or principally for a rural business

(1) Land (except land in a non-rural zone) is exempt for an assessment year if, at midnight on 30 June in the previous financial year, it is or was used solely or principally on a commercial basis to produce income to the user from the sale of produce or stock in the course of carrying out one or more of the following kinds of rural business ¾

(a) an agricultural business, silvicultural business or reafforestation business;

(b) a grazing business, horse-breeding business, horticultural business, viticultural business, apicultural business, pig-raising business or poultry farming business."

32 The three sub-issues are:

(1) that identified by the Commissioner, namely whether the inclusion of the words "or was" in s 29(1) means that it is sufficient if it is established that a person was using the land

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in question solely or principally on a commercial basis to produce income to the user from the sale of produce or stock in the course of carrying out, in this case, a grazing business, at any time during the previous financial year and not necessarily at midnight on 30 June of the previous financial year. The applicant is in general agreement with this statement of the first sub-issue;

(2) that stated by the Commissioner, namely whether the equivalent provisions of the Land Tax Assessment Act 1976 (WA) rendered it sufficient for the land to be used for equivalent purposes at any time during the previous financial year and not necessarily at midnight on 30 June of the previous financial year. The applicant is in general agreement with this statement of the second sub-issue; and

(3) That stated by the applicant, namely, whether the removal of cattle in October 2003 from the subject land comprised of Deposited Land 39591 resulted in the land being abandoned as land used in a grazing business.

The first sub-issue - the proper interpretation of s 29(1)

Contentions of the Commissioner:

33 Section 29(1) of the Land Tax Assessment Act 2002 very clearly provides that land (except land in a non-rural zone) is exempt for an assessment year "if, at midnight on 30 June in the previous financial year, it is or was" used solely or principally on a commercial basis to produce income to the user from the sale of produce or stock in the course of carrying out, amongst other businesses, a grazing business.

34 The Commissioner contends that the use of the words "at midnight at 30 June in the previous financial year" refers the reader to a particular time/reference point at which to ascertain the use of the land for the purpose of the exemption.

35 The Commissioner points to the use of this same particular time/reference point in other provisions of the Act, for example s 7(1) which provides that land tax payable on land for an assessment year is payable by the person who "is or was the owner of the land at midnight on 30 June in the previous financial year".

(Page 9)

36 The Commissioner contends that by the inclusion of the words "at midnight on 30 June" it is clear that land tax liability for an assessment year is assessed in relation to a particular point in time, that is, midnight on 30 June of the previous financial year. Therefore, land tax liability is not assessed by reference to the previous financial year as a whole; only by reference to midnight on 30 June of the previous financial year.

37 The Commissioner further contends that the inclusion of the word "at" in s 29(1) makes it clear that the relevant usage must have been occurring at midnight on 30 June of the previous financial year, and that it is insufficient and/or irrelevant that the usage occurred on any other day other than at midnight on 30 June of the previous financial year.

38 The Commissioner says that the use of the word "is" in s 29(1) was intended to cater for situations where the reader reads the provision on or before 30 June of the previous financial year or a day prior to 30 June when applying their mind to the coming assessment year.

39 The Commissioner says, as a result, the use of the word "was" in s 29(1) was intended to cater for situations where the reader reads the provision on a day after 30 June of the previous financial year when applying their mind to the assessment year in hand.

40 Consequently, the Commissioner says the word "is" is used to indicate the present; whereas in the second case the word "was" is used to indicate the past.

41 The Commissioner notes that in s 29(4) only the word "is" is used in providing that:

"(4) However, even if subsection (3) does not apply to land in a non-rural zone used for a silvicultural business or reafforestation business or both, the land is exempt for an assessment year if ¾

(a) it is at least 100 hectares in area; and


(b) at midnight on 30 June in the previous financial year it is fully stocked for the purposes of the business or businesses."

42 The Commissioner contends this is a simple drafting error that may effectively be ignored for the purpose of interpreting s 29(1).
(Page 10)

43 The Commissioner further says that should there be any ambiguity about the proper way to interpret s 29(1) the explanatory memorandum of the Land Tax Assessment Bill 2001 (WA) supports the Commissioner's interpretation that midnight on 30 June of the previous financial year is the reference point by which the land tax liability is assessed.

44 The explanatory memorandum explains s 29(1) in the following terms:

"Subclause (1) provides an exemption for land in a rural zone. The land is exempt if it is used, at midnight on 30 June in the financial year prior to an assessment year, solely or principally for one or more of the following types of rural business..." (emphasis added).

45 Accordingly, the Commissioner contends that the inclusion of the words "or was" does not mean that it is sufficient if it is established that a person was using the land in question solely or principally on a commercial basis etc., at any time during the previous financial year and not necessarily at midnight on 30 June of the previous financial year.

Contentions of the applicant:

46 The applicant joins issue. The applicant says the contention that the words used in s 29(1) and s 29(4) are identical is not correct. The applicant says that s 29(1) includes the qualification "except land in a non-rural zone". It says this qualification draws a clear distinction between land that has a rural zoning (s 29(1)) and land that has a non-rural zoning (s 29(4)).

47 As to the use of the similar expression in s 7, the applicant says this establishes who is liable as the owner to pay land tax in an assessment year. That is, the person is required to place themselves in the assessment year and look back to 30 June in the previous financial year in order to establish ownership and therefore liability. This requires the use of "was" in s 7 in the event that the current owner was not the owner at 30 June. The applicant says similar usage of the word "was" is required by the wording of s 32(5) and s 34(6).

48 In relation to the second reading speech, the applicant suggests that the error may lie in the explanatory memorandum.

49 The applicant contends that the use of the words "is or was" in s 29(1), applying to land with a rural zoning, and "is" in s 29(4) applying

(Page 11)

to land with a non-rural zoning, exemplifies a deliberate distinction in the Act between the treatment of rural and non-rural land. It says this is further evidenced in s 15 of the Land Tax Assessment Act 2002 which deals with a newly subdivided rural business land. Rural business land can either have a rural zoning or a non-rural zoning. Section 15(1) requires land tax to be paid if rural business land is subdivided and was previously exempt under s 29. Since s 29 deals with both rural and non-rural zonings, s 15(1) is also concerned with both rural and non-rural zonings. Section 15(3)(b) distinguishes between land with a rural zoning and non-rural zoning and exempts (subject to size qualifications) the land zoned for rural purposes from the taxable portion of the land without the need to demonstrate any rural business activity.

50 The applicant contends that these propositions dispel the Commissioner's contention that the sole use of the word "is" in s 29(4) is either a typographical error or sloppy drafting. The applicant says that the distinction is deliberately drawn so that in non-rural zonings, where the Act is particular about the activities occurring at midnight, it uses the word "is" (as in s 29(4) to prescribe that the property is fully stocked at midnight). Where the Act is recognising the intermittent nature of primary production in rural zonings the Act uses the phrase "is or was", as in s 29(1).

Consideration of the first sub-issue:

51 In the end, I am satisfied that the interpretation of s 29(1) contended for by the Commissioner is correct. While it is possible to compare and contrast various provisions of the Land Tax Assessment Act 2002 where the expression "is" and "is or was" are used or not used, it does not provide a particularly satisfying means of resolving the question of interpretation that arises in relation to s 29(1).

52 As to s 29(4), which provides in (b) the expression "at midnight on 30 June in the previous financial year it is fully stocked ...", that subsection cannot be read without reading subsection (3). I tend to think that the Commissioner is right to suggest that the words "or was" do not appear after the word "is" through inadvertence.

53 The difficulty with the interpretation of s 29(1) that the applicant contends for, is that it fails to have any regard to the composite expression in s 29(1) "if, at midnight on 30 June in the previous financial year, it is or was used ...". As a matter of grammar, the words "it is or was used" are referable to the words "at midnight on 30 June in the previous financial year".

(Page 12)

54 In other words, the clear and ordinary meaning of the provision is that relevant land is exempt for an assessment year if it is or was used in the relevant way "at midnight on 30 June in the previous financial year".

55 If s 29(1) had merely provided that relevant land is exempt for an assessment year "if it is or was used" for a relevant purpose, then it would have begged the question as to whether or not there was any temporal limit as to the period of past use. Would the exemption apply if the past use were 50 years ago? This question does not arise because the parliament has made it quite clear that the exemption applies if, "at midnight on 30 June of the previous financial year, it is or was used" for the relevant purpose.

56 I consider that the ordinary meaning of s 29(1) is that the relevant land will be exempt for an assessment year if, at midnight on 30 June in the previous financial year, it is or was used for the relevant purpose. It is not open to argue that the exemption is available if the land were used for the relevant purpose at some time prior to midnight 30 June, if it were not also used for that purpose at midnight on 30 June in the previous financial year.

57 To the extent that it is necessary to do so, the explanatory memorandum of the Land Tax Assessment Bill 2001 referred to earlier tends to confirm this ordinary meaning of the provision I have set out. Section 19(1)(a) of the Interpretation Act 1984 (WA) permits the use of the explanatory memorandum to this end.

58 I might add, that while it was not raised as an explanation for the use of the word "was" in s 29(1), it may well be that the word "was" was inserted to cover the situation where, since 30 June in the previous financial year, land has ceased to be used solely or principally for the relevant purpose.

The second sub-issue

Contentions of the Commissioner:

59 The Commissioner contends that the equivalent provisions of the Land Tax Assessment Act 1976 had the same operation of assessment and liability as is currently provided for under the Land Tax Assessment Act 2002 especially as the latter was intended as a re-write of the former.

60 Section 14 of the Land Tax Assessment Act 1976 identified the reference point for assessment of land tax liability as "midnight on the

(Page 13)

30 June immediately preceding the year of assessment for which the tax is levied". The Commissioner says this is equivalent to the language appearing in s 7 of the Land Tax Assessment Act 2002.

61 The Commissioner says s 15 of the Land Tax Assessment Act 1976 identified the person liable to pay the land tax as the owner of the land. Section 21 of the Land Tax Assessment Act 1976 specified that the types of land that may be exempt from land liability were those referred to in Pt 1 of the Schedule. Clause 12(b) of the Schedule is the former version of the current s 29 of the Land Tax Assessment Act 2002. It only specified the land type and did not provide dates.

62 The Commissioner contends that due to the rule of statutory interpretation requiring an Act to be read as a whole (as to which see Pearce DC & Geddes RS, Statutory Interpretation In Australia, 5th Edition, Butterworths, 2001, p 88), it is clear that the stated usage must be present at midnight on 30 June of the previous financial year.

63 Therefore, the Commissioner contends, the equivalent provisions of the Land Tax Assessment Act 1976 did not render it sufficient for the land to be used for equivalent purposes at any time during the previous financial year and not necessarily at midnight on 30 June of the previous financial year.

Contentions of applicant:

64 The applicant refers to some difference in the approach between cl 12 of the Schedule of the 1976 Act and s 29(1) of the 2002 Act, in that the exemption under s 29 of the Land Tax Assessment Act 2002 applies where the relevant land is or was used to produce income "from the sale of stock" in the course of carrying out a grazing business, whereas the cl 12 provision allows the exemption in respect of relevant land if it produced income on a commercial basis from the sale of stock and, prior to midnight on 30 June, was used in a grazing business.

65 The applicant submits that s 29(1) of the Land Tax Assessment Act 2002 is drafted very specifically to retain and in fact clarify the application of the primary production exemption to reflect the intermittent nature of the type of rural businesses as referred to in s 29(1).

Consideration of second sub-issue:

66 I consider the interpretation of the Land Tax Assessment Act 1976 contended for by the Commissioner to be correct and preferable.

(Page 14)

67 The relevance of making an assessment of the application of a prescribed exemption as at 30 June seems to have been generally accepted. In Browne v Commissioner of State Revenue (2001) 27 SR (WA 249), the former Land Valuation Tribunal of Western Australia dealt with a claim for a residential exemption. The exemption was claimable in the following circumstances. Under s 13 of the Land Tax Assessment Act 1976, land tax was payable on the unimproved value of all land in the state that was not exempt land. The land tax was charged on land owned at midnight on 30 June of the preceding year of assessment for which the tax is levied (s 14) and was payable by the owner of the land (s 15(1)). The appellants claimed a residential exemption pursuant to s 21(1) and cl 9(a)(ii) of Pt 1 of the Schedule to the Land Tax Assessment Act 1976, which provided an exemption from assessment and taxation in respect of any lot or parcel, not exceeding 2.0234 hectares in area on which a dwelling- house was constructed, the owners of which being natural persons all of whom used the land solely or principally as their sole or principal place of residence. The former Tribunal had no hesitation in saying the key issue in the appeal before them was whether, at 30 June 2000, the subject property was the appellant's sole or principal place of residence.

68 It follows in my view that the relevant issue in relation to the assessment periods falling under the operation of the 1976 Act was whether the relevant use could be demonstrated as at midnight 30 June immediately preceding the relevant year of assessment.

69 This conclusion serves to confirm the interpretation arrived at in the course of dealing with sub-issue 1.

The third sub-issue

70 Even though I have found against the applicant on the question of the interpretation of s 29(1) of the Land Tax Assessment Act 2002 and the Land Tax Assessment Act 1976, a question remains whether, as at midnight on 30 June 2004, the subject land "is or was used solely or principally on a commercial basis to produce income to the user from the sale of produce or stock in the course of carrying out ... a grazing business".

71 It is common ground between the applicant and the Commissioner that at material times prior to midnight on 30 June 2004, or at least prior to October 2003, the subject land was used solely or principally for the purpose stated. That was not an issue in the hearing before me. Rather,

(Page 15)

the issue was whether that use could be demonstrated as at midnight on 30 June 2004.

72 The facts agreed between the parties were, in most respects, not in dispute. The subject land had been used in the prescribed manner for grazing purposes at least until October 2003 when the applicant moved some 60 head of cattle from the subject land to the applicant's farm at Toodyay. After October 2003 no cattle grazed on the subject land and the applicant was actively engaged in gaining subdivision approval so that the land could be subdivided and the lots used for Special Rural purposes.

73 At the hearing, Mr Dival, a Director of the applicant, was cross-examined by Counsel for the Commissioner and provided further evidence in re-examination additional to the evidence and information received by the Tribunal in a written form.

74 Mr Dival confirmed that between October 2003 and about 30 June 2004 work was carried out on the subject land with a view to facilitating the subdivision of the land into some 35 lots with Special Rural zoning. The subdivision was called "Koojedda Hills – Stage 3 Bakers Hill". The subdivisional works required included the making of a main trunk road through the middle of the subdivision (Jose Road) and two small cul-de-sacs (called respectively, Green Gage Place and Tamarillo Court). At material times between October 2003 and 30 June 2004 Mr Dival said the base course of Jose Road was constructed. However, this road was not bituminised until after 30 June 2004, probably in about January 2005.

75 In the period October 2003 to 30 June 2004, trenching work was also done alongside Jose Road, a distance of about 1.8 kilometres. He agreed that this was at a width and depth that would make it difficult for cattle to traverse and that if cattle were grazing on the subject land, care would need to be taken to prevent them from wandering into the trench and suffering injury.

76 Mr Dival confirmed that in this same period the road survey had been completed and Jose Road was "trafficable" for at least trucks and four wheel drives.

77 In the same period the applicant was in the process of having main services in relation to water, power and telephone installed on the subject land so that those services could be articulated to each of the proposed lots within the subdivision. He noted that the lot marked lot 245 on the

(Page 16)

subdivision plan had a transformer and water meter installed during the period in question.

78 Mr Dival said, however, that there were no fences around the proposed lots, only a perimeter fence around the whole of the subject land. That perimeter fence was made of ring-lock and barbed wire. Later, after 30 June 2004, ring-lock fences were installed around each of the 35 lots.

79 Mr Dival said no particular earthworks were carried out in the period in question on the subject land at any of the 35 lots. The subject land had, at material times, prior to October 2003, been lightly treed and vegetated and at no material time after that, up until 30 June 2004 had there been any clearing of substance.

80 What appears clear, however, is that at material times between October 2003, when the cattle were transferred to the Toodyay farm from the subject land, and 30 June 2005, the applicant was proceeding diligently to carry out the subdivisional works necessary to obtain an unconditional subdivision approval, the approval to deal with the 35 new lots and the new titles to the lots so that settlements of contracts of sale of lots could be effected quickly when the titles issued.

81 On 26 May 2004 the WAPC approved Deposited Plan 39591 in order for dealings. The first settlements of contracts of sale of lots occurred on about 14 July 2004.

82 The applicant contends on these facts that at no time had the applicant abandoned the option of using the subject land for grazing purposes, notwithstanding it was taking all necessary steps to subdivide the land in accordance with the WAPC approval earlier given. That it was acting in this way was not disputed by Mr Dival on behalf of the applicant. The fact that it was acting in this way was confirmed by all the evidence and the fact that soon after 30 June 2004, the settlements of contracts of sale of some lots took place. Mr Dival noted that the market was improving in the latter half of 2004 although it had been a good market before then as well.

83 The applicant's case was that although it was taking all appropriate steps to bring about the early subdivision of the subject land, at all times it maintained the option of using the subject land for grazing purposes. Mr Dival explained that the reason that the option had not been taken up at any time between October 2003 and midnight on 30 June 2004, was that the pasture available at the Toodyay farm was sufficient and there

(Page 17)

was no need to transfer the cattle to pasture on the subject land. He said that in a grazing business one takes into account the sufficiency of feed at a particular location, the state of the animals - including the fact that these animals had been calving into April and it was best not to move them - and the fact that there was "more feed at home than there". He also pointed out that it was very wet right through that year and there was a lot of low lying land (?feed) on the subject land. All in all, Mr Dival said that he decided that he did not wish to ship the cattle back from the Toodyay farm to the subject land.

84 Accordingly, the applicant maintained through Mr Dival that at no relevant time up to and including midnight on 30 June 2004, did the applicant "abandon" the subject land as an available grazing property and that the applicant maintained the option of using it for the grazing property notwithstanding that steps were actively being taken to subdivide the land into lots ready for sale as soon as it reasonably could.

85 Mr Dival explained that even though Jose Road was being prepared and a trench ran alongside it that would make it difficult for cattle to traverse the whole of the subject land, if necessary the applicant could have put in place cattle management measures, such as fencing, to prevent cattle falling into it and suffering injury.

86 Mr Dival also emphasised that the level of physical development on the subject land was minimal, especially as at material times before 1 July 2004 the proposed individual lots were not fenced and the existing vegetation had not been altered in any significant way since October 2003.

87 Mr Dival went further and said that, even if some lots were sold following the issue of titles, he felt confident he would have been able to enter into arrangements with the new registered proprietors to graze his cattle on those lots. Owners of such rural properties he said, are attracted to the idea of cattle "coming out of the mist" of a morning.

88 While Mr Dival avowed the applicant's intention to keep using the subject land for grazing purposes as at midnight 30 June 2004, Counsel for the Commissioner submitted that, taken as a whole, the evidence adduced suggested that this intention was not reasonably held, or, to put it another way, in light of all the facts adduced it could not be said that the land as at midnight on 30 June 2004, was used "solely or principally on a commercial basis to produce an income to the user from the sale of produce or stock in the course of carrying out a 'grazing business'". As to

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the latter point, Counsel submitted that the sole or principal use at that material time was the carrying out of work to permit the subdivision of the land; or that the land was not relevantly used at all.

89 In the written submissions of the parties, reference was made to some legal authorities that bear on the question of "use" of land in a statutory context. It is usual to say of course, that the meaning given to particular words that appear in a statute must always be approached with caution taking into account the statutory context in which that interpretation was made. Nonetheless, a number of general principles have been laid down about the meaning of "use" in relation to land in the context of land use planning or development legislation.

90 In Rosenblum v Brisbane City Council (1957) 98 CLR 35, the High Court had to decide whether a purchaser of a building had a continuing or existing use right notwithstanding that the zoning ordinance affecting the land had changed. The relevant city ordinance provided that upon the change "nothing herein contained shall prevent the use of any land or building or part of a building for the purpose for which such land or building or part of a building was used at the date of the coming into force of this chapter...". "The chapter came into force on 3 December 1955."

91 Mr Rosenblum purchased the affected property which had previously been used for social functions. He then considered uses for it. He consulted an architect and made an application to the council for permission to use the site for the purpose of a catering establishment for weddings and social functions. Nothing occurred on the premises for about a year, when the question was raised in the Queensland Supreme Court whether Mr Rosenblum was continuing an existing use. The Supreme Court found against him. His appeal to the High Court failed.

92 In the course of refusing the appeal, the High Court (Dixon CJ, McTiernan, Williams, Webb & Kitto JJ) at 45 said:

"It is not difficult to agree that the use of premises for a given purpose is not necessarily interrupted whenever activities for that purpose are temporarily stopped. When such an ordinance as is here in question refers to the purpose for which land or a building “was used” on a given day, it calls for an inquiry, not limited to the physical activities which might have been observed on the land or in the building on that day, but taking account of any course of user which may fairly be regarded as

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having been current on that day. Most forms of user of land or buildings involve not continuous activity but recurring activities. There is no inaccuracy in describing a grocer’s shop as being used as such on every day of the period in which the grocer has his business there, notwithstanding that on Sundays and holidays it is locked up and no activity of any sort occurs. Whether an interruption of activity puts an end to the user must always be a question of fact, and in resolving the question in each case that arises the circumstances of that case must necessarily be considered as a whole."

93 The court then considered the case as a whole. It noted that it was not possible to point to anyone who was using the premises as a catering lounge on 3 December 1955, the relevant date in question. Mr Rosenblum saw the opportunity to establish a company and set up a new enterprise in order to make profits for the new company. He was not in fact using the premises as a catering lounge on the relevant date, and though he had paid three months rent he had not entered into possession or taken any overt steps except to have the architect's sketch prepared. The court noted, at 46, that:

"There is no reason to doubt that Rosenblum was genuinely considering ways and means of using the premises for the purposes of a catering establishment, but it would be impossible to make a finding that he had already commenced to use them for those purposes."

94 In those circumstances, the court held that as at 3 December 1955 the former user had come to an end months before and that:

"Hopes for a similar, though not identical, user had persisted in the minds of some and were still alive in the mind of Rosenblum. But the conclusion is simply not open that the premises were the subject of any current use. They were, in plain fact, unused for any purpose whatever."

95 In Eaton & Sons Pty Ltd v Warringah Shire Council (1972) 129 CLR 270 the High Court (Barwick CJ, McTiernan, Walsh, Gibbs & Stephen JJ dissenting) held that the whole of subject land was used as a timber reselling yard which was an existing use the appellant was entitled to continue under the local government's planning scheme ordinance.

96 In the course of his dissenting judgment, Stephen J dealt with a number of general propositions concerning the "use" issue, which appear

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to be generally accepted. Stephen J at 285 said five propositions appeared to be of importance in considering the "existing use" argument:

(1) What the ordinance protects is confined to the particular purpose for which the land was used during a particular period, namely the period "immediately before the appointed day"; neither the purpose of initial acquisition of land nor the purpose for which land has been used before or since the particular period is controlling, although both may be of evidentiary value in determining what was the purpose of the use during a particular period.

(2) The noun "use" in the ordinance must involve a present use not a contemplated or intended use: see Parramatta City Council v Brickworks Ltd (1972) 128 CLR 1 per Gibbs J thus the holding of unused land for future business use, whether because no business has yet been commenced or because the existing business has not yet been commenced or because the existing business has not yet increased sufficiently to justify expansion onto an extended site is not, "use" for the purpose of the ordinance. In that regard, Stephen J referred to Rosenblum v Brisbane City Council.

(3) Present "use" is not limited to actual, physical use - per Gibbs J in the Parramatta City Council v Brickworks Ltd case; there may be passive use as well as active use. An instance of land being passively used is supplied by Council of the City of Newcastle v Royal Newcastle Hospital (1957) 96 CLR 493; (1959) 100 CLR 1.

(4) The particular use claimed will be of great significant [sic] in determining whether or not apparently unused land is in fact being used. As a result what may appear at first sight to be only an infrequent and intermittent use, abandoned prior to the relevant period, "immediately before the appointed day", may, once the purpose of use is properly identified and understood, be seen to be a continuous use. Stephen J had in mind such purposes as use for the purpose of the seasonal storage of primary products, the use of land for the purpose of a country racecourse having an annual programme of only one or two meetings a year or the use of paddocks to the rear of bathing beaches as caravan parks during holiday periods. So too a particular type of business may have inherently

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fluctuating demands for space and may only occasionally physically use the whole of its site for … its business...

(5) "Land" when used in the ordinance in the relevant definition is not necessarily concerned with notions of title boundaries or lot boundaries.

97 These principles have been observed and applied depending on particular statutory and factual circumstances in many cases. See, for example, Re Australian Football League and Commissioner of State Revenue [2004] VCAT 1882 per Morris J (President), especially at [33 - 44].

98 It is then clear that when one comes to the land tax exemption provision found in s 29(1) of the Land Tax Assessment Act 2002, it is to the use of the land at midnight on 30 June 2004, that one must direct the inquiry. However, it may not be surprising that there is no "actual" use to be observed at that time of the night when the inquiry is made. (This may well be contrasted with the requirements for the exemption under s 29(4)). It may be necessary to have regard to the actual use to which the land was being put at an earlier time, including during the course of the preceding financial year, in order to determine for what purpose it was being used as at the time stated in the Act. As Stephen J observed in Eaton & Sons Pty Ltd v Warringah Shire Council, those acts of prior use may be of evidentiary value in deciding how the land was being used at the relevant time.

99 Further, it may be that there has been some interruption to an earlier use which does not detract from a finding that the land is or was being used for a relevant purpose at the relevant time. However, as pointed out by the High Court in Rosenblum v Brisbane City Council, it is ultimately a question of fact whether land is or was used for the relevant purpose described in the statute.

100 In this case, s 37(2) of the Tax Administration Act 2003 provides that the onus of establishing that an assessment or decision to which an objection relates is invalid or correct lies on the taxpayer. That section appears in Div 2 of Pt 4 of the Act, which applies to the Commissioner's consideration of an objection, not in Div 3 which deals with reviews and stated cases including reviews to the State Administrative Tribunal. It appears designed to ensure, along with s 37(1), that the Commissioner has the full opportunity to consider all issues of relevance to the taxpayer at that point. The Tribunal necessarily conducts a review of the

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Commissioner's decision on an objection on the basis of s 27 of the State Administrative Tribunal Act 2004, as a hearing de novo, where the purpose is to make the correct and preferable decision at the time of the decision upon review. While there is no formal "onus" imposed on any party under the State Administrative Tribunal Act 2004, in a practical sense any party seeking review must produce all relevant material and information to the Tribunal to assist it in making the correct and preferable decision.

101 In all the circumstances, I consider that the correct and preferable decision is that made by the Commissioner. While it may be said by the applicant that, at no time, did it rule out the option of using the subject land for the purpose of grazing cattle, and in that sense did not "abandon" that use of the land, the objective facts of the case show that in October 2003 sixty head of cattle then grazing on the subject land were moved to the applicant's Toodyay farm. Further, between October 2003 and 30 June 2004, the applicant was actively taking steps to implement the subdivision of the subject land. That subdivision was the subject of the second conditional approval on 23 May 2001. The fact that those steps were actively being undertaken is confirmed by the grant of the final subdivision approval by the WAPC on 26 May 2004. Soon after that, on 14 July 2005, the first settlements of earlier contracts of sale occurred. At material times in the period October 2003 to 30 June 2004 the applicant carried out physical subdivisional works on the subject land, including the laying of Jose Road, the main arterial road through the subdivision, a road some 1.8 kilometre in length. Along the length of that road was installed a trench. Work was also commenced within the subdivision for the provision of water, power and telephone services to the proposed subdivisional lots.

102 While the applicant, through Mr Dival, said that any time it would have been open to the applicant to return cattle to the subject land to graze, he accepted that the trench along Jose Road would have presented something of an obstacle to the easy grazing of cattle on the whole of the subject land. He suggested that cattle management techniques, including possibly the erection of a fence might have been necessary to prevent cattle falling into the trench and suffering injury. While Mr Dival also said that cattle often graze in inhospitable country, that is no reason to think he would necessarily have exposed his cattle to the type of risk presented by the open trench on the subject land.

103 In all, having regard to the actual physical development of the subject land for subdivisional purposes between October 2003 and

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30 June 2004, and the fact that cattle were not in fact grazed on the land, and I am not satisfied that it can truly be said that the subject land, as at midnight on 30 June 2004, is or was used solely or principally on a commercial basis to produce income to the user from the sale of produce or stock in the course of carrying out a grazing business.

104 I accept that the applicant may have considered, at relevant times, that it had the option, if required, of using the subject land for grazing purposes for its cattle if it could properly manage cattle grazing on the subject land at that point, but the maintenance of that belief or intention is not enough on its own to enable me to draw the conclusion that the land was still used for the relevant statutory purpose at the relevant time and date.

105 Rather, I am inclined to accept the submission made on behalf of the Commissioner that the facts show that the land, as at midnight on 30 June 2004, is or was not used solely or principally for the purpose stated in s 29(1), but was used perhaps partly for a grazing business but more particularly as a site upon which subdivisional development was occurring in order to enable the applicant to implement its proposed subdivision. I would prefer not to say that the land is or was being used for no purpose at all, because I accept on the evidence that physical subdivision work was being carried out. In my view that was the particular use to which the land was being put, whether or not it was the sole or principal use to which the land was being put. As a result, I am unable to conclude that the sole or principal use to which the land was being put, at the material time, was, on a commercial basis, to produce income to the user from the sale of produce or stock in the course of carrying out a grazing business.

106 In these circumstances, the applicant's application for review of the Commissioner's refusal to uphold the applicants' objection to its assessment of land tax for the 2004/2005 financial year must fail.

Order

107 The parties agreed that should the Tribunal uphold the Commissioner's contention the appropriate order should be that the matter be referred back to the Commissioner for further consideration according to law.

108 Accordingly, the Tribunal orders:

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(1) The Commissioner's decision made to disallow the applicant's objection is affirmed.

(2) The matter is to be referred back to the Commissioner for reconsideration according to law.

I certify that this and the preceding [108] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

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JUSTICE M L BARKER, PRESIDENT