Frontlink Pty Ltd v Commissioner of State Revenue
[2017] VSC 121
•27 March 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
TAXATION LIST
S CI 2016 03624
| FRONTLINK PTY LTD (ACN 074 034 496) | Plaintiff |
| v | |
| COMMISSIONER OF STATE REVENUE | Defendant |
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JUDGE: | Kennedy J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 23 and 24 February 2017 |
DATE OF JUDGMENT: | 27 March 2017 |
CASE MAY BE CITED AS: | Frontlink Pty Ltd v Commissioner of State Revenue |
MEDIUM NEUTRAL CITATION: | [2017] VSC 121 |
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TAXATION – Decision of VCAT – Application to appeal on questions of law – Determination by Commissioner on objection that exemption for primary production allowed in part – Decision by VCAT to vary Commissioner’s determination so that no part of land entitled to exemption – whether jurisdiction to make decision in circumstances where taxpayer no longer dissatisfied with Commissioner’s determination – onus of proof – whether any other errors of law – Land Tax Act 2005 (Vic) ss 65, 66, 68 - Taxation Administration Act 1997 (Vic) Part 10 – Victorian Civil and Administrative Tribunal Act1998 (Vic) s 148
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Korman | Belleli King & Associates |
| For the Defendant | Mr D J Williams QC with Mr N A Kotros | State Revenue Office of Victoria |
HER HONOUR:
This is an application for leave to appeal, pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (VCAT Act), from the orders of the Victorian Civil and Administrative Tribunal (the Tribunal) constituted by Member Dr John Glover made on 9 August 2016 in five sets of review proceedings.
The proposed ten questions of law and associated grounds generally raise discrete issues for consideration, save that the first four are related. They turn on the legality of the Tribunal’s approach in making a decision (to disallow an exemption) which was at variance with the objection decision previously made by the Commissioner of State Revenue (Commissioner) (to allow an exemption in part).
For reasons given below, I would grant leave to appeal in relation to these first four grounds but dismiss the appeal.
The other grounds are largely concerned with immaterial factual findings and are generally without merit. I have refused leave to appeal in relation to these grounds.
BACKGROUND[1]
[1]This is based on the Parties’ “Agreed Proposed Neutral Introduction”, helpfully provided on 28 February 2017.
The Tribunal in each review proceeding was concerned with various land tax assessments issued by the Commissioner in relation to several properties owned by the plaintiff taxpayer (Frontlink). At issue before this Court is whether the Tribunal erred in law in determining that Frontlink was not relevantly entitled to an exemption from land tax, in whole or part, pursuant to the “primary production” provisions of the Land Tax Act 2005 (Vic) (LTA).
Four “parcels” of land, comprising five separate titles, are in issue. They are:
(a) the land at 875, 885 and 885A Thompsons Road, Lyndhurst (Thompsons Road Land);
(b) the land at 181 Grices Road, Clyde North (Grices Road Land) and at 1275 Pound Road, Clyde North (Pound Road Land). The Grices Road Land and Pound Road Land are contiguous. It was common ground between the parties at the Tribunal, and in this Court, that they formed a single “parcel” of land (together, Grices and Pound Road Land) for land tax purposes;
(c) the land at 490 Soldiers Road, Clyde North (Soldiers Road Land); and
(d) the land at 90 Shepparton-Zeerust Road, Shepparton North (Shepparton Land).
All of these parcels, apart from the Shepparton Land, are situated within the Greater Melbourne area, towards the south-eastern fringe of that area. The Shepparton Land is rural.
In relation to the Thompsons Road Land, the assessments for the years 2010-2014 were in issue before the Tribunal. Only the assessments for the years 2010 and 2012 were in issue in this Court.
(a) In 2010, the Commissioner initially assessed the entire Thompsons Road Land for land tax. Frontlink objected on the basis that the land was being primarily used for primary production (LTA s 66). The exempt use was said to comprise the grazing of cattle by a Ms Waterston on 73% of the land (approximately 110 acres of the 150 acres which comprise the Thompsons Road Land), while 27% of the land (40 acres) was said to have been used by a Mr Pope. The Commissioner partially allowed the objection, determining that 73% of the land was exempt and 27% was taxable. Frontlink was dissatisfied with this determination, seeking a 100% exemption, and the matter was referred to the Tribunal for review. By the time the matter came on for hearing at the Tribunal, the parties’ positions had changed. This followed a determination by the Tribunal in relation to a proceeding concerning the 2009 year wherein the Tribunal rejected Ms Waterson’s evidence and concluded that the land was not being used for primary production at all. The Commissioner thereafter invited the Tribunal to find that none of the land was exempt. Frontlink invited the Tribunal to confirm the determination that 73% of the land was exempt. The Tribunal rejected the exemption for 2010 in its entirety and Frontlink appeals against that rejection raising the first four proposed grounds.
(b) In 2012, Frontlink asserted that the Thompsons Road Land was exempt from land tax on the basis that it was being prepared for primary production (LTA s 68). The preparation works relied upon were said to have been undertaken by a Mr Willmott. The Tribunal rejected the exemption for the 2012 year. Frontlink appeals against that rejection.
In relation to the Grices Road and Pound Road Land, and the Soldiers Road Land, only the 2011 assessments were in issue in the Tribunal and this Court. In each case, Frontlink’s assertion of a s 66 exemption for 2011, based on grazing of cattle by Frontlink, and/or by Mr Murray, was rejected by the Tribunal. Frontlink appeals against those rejections.
In relation to the Shepparton land, the assessments for the years 2013 and 2014 were in issue before the Tribunal. Frontlink asserted a s 65 exemption for each of the years 2013 and 2014, arising from the growing of oats by a Dr Vasey for use in feeding to his lambs. The Tribunal granted that exemption for 2014, but rejected it for 2013. Frontlink appeals against that rejection.
General principles – VCAT Act s 148
Under s 148(1)(b) of the VCAT Act, a party to a proceeding, may, by leave, appeal on a question of law to a judge of the Supreme Court from an order of a member of the Tribunal in a proceeding.
In the recent decision of the Court of Appeal in Patsuris v Gippsland and Southern Rural Water Corporation (Patsuris),[2] the Court highlighted the limited nature of appeals under s 148. Section 148 does not confer a general right of appeal on the merits of a case. If no threshold question of law can be identified the case is not suitable for the type of restricted appeal that s 148 provides. The Court stated:[3]
The ‘question of law’ requirement in s 148 confers a limited capacity on the Court to review findings of fact made by a Tribunal member. The requirement in s 148 to state a question of law is germane to the capacity of the Court to review findings of fact made by a Tribunal member. The identification of a question of law is not merely a precondition to the exercise of a right to appeal, but the subject matter of the appeal itself. It is not sufficient for the parties to identify a point of law between them on appeal that was not raised before the Tribunal.
[2][2016] VSCA 109.
[3]Ibid [44]
In hearing an appeal courts are also to be concerned to respect the role of the Tribunal and not to seek out error. In particular, a court should avoid an “overly pernickety” or “over-legalistic” examination of the reasons.[4]
[4]Higgins Nine Group Pty Ltd v Ladro Greville St Pty Ltd [2016] VSC 244, [10] citing also Roncevich v Repatriation Commission (2005) 222 CLR 115, 136 [64]; Vegas Nominees Pty Ltd v Werribee Sports & Community Club Inc (Unreported, Supreme Court of Victoria, Ashley J, 21 December 1994) [13].
Additionally, “[o]n appeal this Court must recognise the forensic realities of the way in which the case was put to the tribunal. It is these realities to which a tribunal must respond in its reasons”.[5]
[5]The Gombac Group Pty Ltd v Vero Insurance Ltd [2005] VSC 442, [59].
Statutory Framework
LTA 2006 (Vic)
Pursuant to s 36 of the LTA a taxpayer is to be assessed for land tax on all taxable land of which the taxpayer was the owner at midnight on 31 December immediately preceding that tax year.
Thus, s 36(1) provides:
(1) Subject to this Act, a taxpayer is to be assessed for land tax on land for a tax year on the total taxable value of all taxable land of which the taxpayer was the owner at midnight on 31 December immediately preceding that tax year.
‘‘Taxable land’’ is land that is not “exempt land”,[6] while “exempt land” is land declared by or under the Act to be exempt. This includes land falling within Division 2 of Part 4, headed “Primary production land”. This category includes two scenarios: land that is “used primarily for primary production”,[7] and land that is “being prepared for use primarily for primary production”.[8]
[6]Land Tax Act 2005 (Vic) s 3(1).
[7]Ibid ss 65(1), 66(c).
[8]Ibid s 68.
The provisions read as follows:
PART 4 – EXEMPTIONS AND CONCESSIONS
Division 2 – Primary production land
64 Definitions
(1) In this Division –
Primary production means
(a) cultivation for the purpose of selling the produce of cultivation (whether in a natural, processed or converted state);
(b) the maintenance of animals or poultry for the purpose of selling them or their natural increase or bodily produce…
65 Exemption of primary production land outside greater Melbourne
(1) Land outside greater Melbourne that is used primarily for primary production is exempt land.
66 Exemption of primary production land in greater Melbourne but not in an urban zone
Land is exempt land if the Commissioner determines that the land comprises one parcel –
(a) that is wholly or partly in greater Melbourne; and
(b) none of which is within an urban zone; and
(c) that is used primarily for primary production.
68 Exemption of land being prepared for use for primary production
(1) Land is exempt land for a tax year if the Commissioner is satisfied that –
(a) the land is being prepared for use primarily for primary production; and
(b) the land will become exempt land under section 65, 66 or 67 within 12 months after the day on which the preparation referred to in paragraph (a) commenced.
(2) The Commissioner may extend the period referred to in subsection (1)(b) by a further period of 12 months.
Taxation Administration Act 1997 (Vic) (TAA)
Given the questions raise issues concerning the jurisdiction of the Tribunal in conducting the review, it is also necessary to set out the relevant provisions of the TAA.
Part 10 of the TAA deals with Objections, reviews and appeals. Pursuant to s 96 a taxpayer may lodge a written objection with the Commissioner if the taxpayer is dissatisfied with:
(a) an assessment, other than a compromise assessment; or
(ca) a valuation made for or on behalf of the Commissioner under s 21(1)(b) of the LTA by the Valuer-General or a valuer nominated by the Valuer-General that is used by the Commissioner in an assessment of land tax; or
(d) a decision of the Commissioner under the Payroll Tax Act2007.
Pursuant to s 97, the grounds for the objection must be stated fully and in detail, and must be in writing. Further, pursuant to s 98, the objector has the onus of proving the objector’s case.
Pursuant to s 101, the Commissioner is obliged to consider an objection and is to allow the objection, in whole or in part, or disallow it. Pursuant to s 103, the Commissioner must also give notice of the determination and give reasons for his decision.
Division 2 then deals with Reviews and Appeals.
The material parts of s 106 provide:
1) If—
a) a taxpayer is dissatisfied with the Commissioner's determination of the taxpayer's objection; or
b) 90 days (not including any period of suspension under section 102) have passed since a taxpayer's objection was received by the Commissioner and the Commissioner has not determined the objection—
the taxpayer, in writing, may request the Commissioner to refer the matter to the Tribunal or to treat the objection as an appeal and cause it to be set down for hearing at the next sittings of the Supreme Court…
3) Subject to section 107, within 60 days after the request, the Commissioner must refer the matter for review or cause the objection to be set down for hearing accordingly.
Section 109 deals with grounds of review or appeal and provides:
On a review or an appeal—
(a) the taxpayer's case is limited to the grounds of the objection; and
(b) the Commissioner's case is limited to the grounds on which the objection was disallowed—
unless the Tribunal or Court otherwise orders.
Section 110 then provides that on a review or appeal “the taxpayer has the onus of proving the taxpayer's case“.
The material parts of s 111 then provide:
1) The Tribunal must review a matter referred to it and, subject to subsection (2), may confirm, reduce, increase or vary the assessment or decision.
2) If the taxpayer does not appear before the Tribunal, the Tribunal must confirm the assessment or decision. However, if good cause is shown, the Tribunal, within the time prescribed by the regulations, may re-open and review the matter.
QUESTIONS OF LAW & PROPOSED GROUNDS OF APPEAL
GROUNDS 1-4 (Thompsons Road Land Lyndhurst, 2010 land tax year)
The primary case of Frontlink was that the Tribunal had no jurisdiction to vary the Commissioner’s determination (that 73% of the land was exempt) given it was not dissatisfied with that determination. Further, that it did not bear the onus of proving that the Commissioner’s determination was correct.
The first four questions of law were as follows:
(1) Whether the Tribunal has jurisdiction to hear and determine a review coming before it pursuant to Division 2 of Part 10 of the TAA, in circumstances where the taxpayer is not dissatisfied with the Commissioner’s determination of the taxpayer’s objection, as required by s106(1)(a) of TAA.
(2) Whether, pursuant to s 111(2) of the TAA, the Tribunal:
(a)must confirm the Commissioner’s assessment or decision when the taxpayer physically appeared at the review hearing but did not contest the matter; or, alternatively,
(b) must take account of the fact that the taxpayer physically appeared at the review hearing but did not contest the matter in determining whether it should exercise its discretion pursuant to s 111(1) to vary the Commissioner’s assessment or decision.
(3) Whether the Tribunal ignored relevant considerations and/or made a manifestly irrational finding.
(4) Whether the Tribunal misconstrued s 110 of the TAA.
The proposed grounds were as follows:
(1) The Tribunal erred in hearing and determining the review of the Commissioner’s determination of the taxpayer’s objection in circumstances where the defendant told the Tribunal and Commissioner that he was not dissatisfied with the Commissioner’s determination and no longer sought to challenge it.
(2) The Tribunal erred in varying rather than confirming the Commissioner’s determination of the defendant’s objection, in circumstances where the defendant did not contest the determination and physically appeared through its counsel but only to argue other applications that were before the Tribunal at the same time.
(3) The Tribunal erred in:
(a) ignoring the fact that it would have been more efficient, cheaper and quicker for the Commissioner to issue a reassessment; or
(b) finding that the current application was already before the Tribunal when the decision in Frontlink Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2014] VCAT 1213 was handed down, in circumstances where that decision was handed down on 30 September 2014, the current application came before the Tribunal on 1 October 2015, and these dates were known to the Tribunal; and
(c) ignoring the fact that the Commissioner was using the Tribunal’s process for the improper purpose of performing an administrative task.
(4) The Tribunal erred in construing s 110 of the TAA to:
(a) place the onus of proof on the taxpayer in circumstances where the taxpayer no longer contested the matter on review; and/or
(b) place the onus of proving the Commissioner’s case on the taxpayer.
In order to consider these grounds an examination of the Tribunal’s decision in context is necessary.
Tribunal’s decision in context
On 31 December 2008, Frontlink alleged that Ms Waterson had been using the land for cattle grazing so as to give rise to a primary production exemption The matter was the subject of determination in the 2009 land tax proceeding (2009 Matter).
On 5 February 2010, an initial assessment for 2010 (land tax year) occurred. The entire Thompsons Road land was assessed as taxable land.
On 8 April 2010, there was an objection by Frontlink to the initial assessment for 2010. The objection stated:
Same objection from 2009 - refer to Frontlink’s objection for 2009 on the basis all the land under the assessment has been and still being used for primary production …
On 18 May 2012, the Determination of the Commissioner for 2010 was made, allowing the objection in part on the basis that a 73% exemption applied. In so doing the Commissioner accepted that 110 acres was used by Sharon Waterson for cattle and 40 acres was used by Neil Pope for horse agistment and other recreational purposes.
On 12 June 2012, a request was made by Frontlink for the Commissioner to refer the matter to the Tribunal for determination. It was again alleged that the property “has been and still is being” used for primary production and that “nothing on the property has changed”.
On 3 March 2014, a Reassessment was issued for 2010 which assessed the Thompsons Road Land as 73% exempt (in accordance with the 18 May 2012 determination).
On 30 September 2014, the Tribunal handed down its decision in the 2009 Matter. The Tribunal found, inter alia, that as at 31 December 2008 there were only seven cattle on the whole of the land. The land was otherwise used for a variety of purposes including the agistment of horses. The land was not being used for primary production.
On 21 August 2015, the Commissioner advised Frontlink of his revised position that no exemption applied to the Thompsons Road Land for 2010. The Commissioner stated:
Please be advised that the Commissioner, in his submissions, will seek leave pursuant to s 109 of the Taxation Administration Act 1997 to amend his ground of disallowance to argue that the whole of Thompsons Road Property should be levied for land tax. This decision is, amongst other reasons, based on the new evidence given at the hearing in Frontlink Pty Ltd v Commissioner of State Revenue (Legal Services) [2014] VCAT in which the Tribunal found that the land was not primarily used for primary production.
Frontlink did not reply.
On 1 October 2015, the Commissioner referred the 2010 matter to the Tribunal.
Meanwhile, on 12 November 2015, Senior Member Davis made an order that the proceeding would stand struck out unless the filing fee was paid on or before 10 December 2015.
On 13 November 2015, the Commissioner again wrote to Frontlink confirming that the Commissioner would seek leave pursuant to s 109 to argue that the whole of Thompsons Road should be levied for land tax; noting that the filing fee had apparently not been paid; and inquiring whether Frontlink wished to proceed with the VCAT proceeding.
Frontlink again did not respond.
By email of 1 December 2015 the Commissioner wrote to Frontlink (referring to an earlier telephone call) as follows:
In light of the fact that Frontlink has not paid the filing fee, I requested that you confirm whether it was Frontlink’s intention to proceed with that matter, and for the avoidance of any doubt, I advised that the Commissioner would seek to reassess Thompsons Road if it was not contested. In that regard, you said it was likely that the matter will be progressed at VCAT.
As you’re aware the filing fee for that matter needs to be paid by 10 December 2015.
Frontlink did not reply. However, given the proceeding was not struck out, it appears that the filing fee was paid on or before 10 December 2015.[9]
[9]See Order of tribunal of 12 November 2015 which provided that unless the filing fee was paid by 10 December the proceeding would stand struck out
On 24 March 2016, Frontlink sought consent to orders confirming the 73% re- assessment.
By correspondence of 31 March 2016, the Commissioner declined but advised Frontlink that it would be content to sign consent orders giving the applicant leave to withdraw the VCAT proceeding.
Frontlink again did not reply nor did it make any application for leave to withdraw the proceeding. However, on 30 May 2016 in Reply submissions Frontlink indicated that it “does not challenge” the Commissioner’s most recent assessment (issued 3 March 2014) of Thompsons Road for 2010.
On 6, 10 and 16 June 2016, the hearing before Tribunal occurred.
In written Closing submissions Frontlink stated that, as a matter of practice, the taxpayer was “not presenting a case” in relation to 2010 and that it now accepted the Commissioner’s objection decision. Further, that it was the Commissioner who asserted that his recent decision was incorrectly made. It otherwise did not call relevant evidence, including from Ms Waterson. Rather, its case was that the Tribunal could not or should not depart from the Commissioner’s reassessment.
On 9 August 2016, the Tribunal decision was handed down and the following orders were made:
1. Pursuant to s 109 of the Taxation Administration Act 1997, the Commissioner have leave to expand its case to include the ground that the Thompsons road land was taxable land in 2010.
…
3. Relative to application Z757/2015, the Commissioner’s 2010 assessment is varied to the extent that no part of the land at 875, 885 and 885A Thompsons Road Lyndhurst is exempt from land tax.
…
In relation to the order under s 109, Frontlink accepted that leave was effectively granted by consent.[10]
[10]Transcript of Proceedings (Supreme Court of Victoria, Kennedy J, 23 February 2017) 21.
In finding that no exemption was applicable, the Tribunal noted that the 2012 determination had accepted that Ms Waterson was using 110 acres for primary production purposes on 31 December 2009. However, that subsequently the 2009 Decision found that she conducted no, or insufficient, grazing activity.
The Tribunal went on to observe that Ms Waterson had not been called in support of the 2010 application, nor was any other evidence led by the taxpayer in respect of the Thompsons Road land. Instead, the taxpayer sought to retain the partial primary production exemption allowed by the Commissioner.
Further, that the taxpayer sought to resist the Commissioner’s position on two bases: first that the Tribunal had no power to vary an assessment in the absence of evidence that the assessment was wrong; second that it would be unfair to allow the Commissioner to contend for a result inconsistent with its own amended assessment.
However, the Tribunal concluded as follows:
I think that it is appropriate that the Tribunal should confirm the original land 2010 tax assessment of the Thompsons Road land. No primary production exemption will be allowed in the absence of evidence that the Thompsons Road land was used primarily for primary production. The Tribunal has power under s 111 of the Taxation Administration Act 1997 to reach this decision. There was no unfairness. The taxpayer was on notice that the Commissioner would contend that the land was not exempt and elected not to lead any evidence on the point.[11]
[11] Frontlink Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2016] VCAT 1339, [40] (Tribunal’s Reasons).
Turning then to the grounds, I will focus on Ground 1 before turning to Ground 4 -which was given significant emphasis by Frontlink.
Ground 1
In written submissions, Frontlink submitted that one of the preconditions to jurisdiction was that the taxpayer be “dissatisfied” with the Commissioner’s determination under s 106. However, given Frontlink effectively advised the Tribunal that it was no longer dissatisfied in its Reply of 31 May 2016 it followed that the Tribunal no longer had power to hear the matter.
In oral submissions this ground was not developed although it was repeated that Frontlink was no longer “dissatisfied” by the time the matter came on for hearing.
Resolution
The state of “dissatisfaction” by the taxpayer is one of the preconditions for the taxpayer to exercise an option under s 106(1). That option is to request the Commissioner to refer the “matter” (the disputed objection) to the Tribunal or to treat the objection as an appeal and have it set down for hearing in this Court.
The jurisdiction of the Tribunal, by way of contrast, depends on the referral of the matter for review pursuant to s 106(3). Once referred, the Tribunal “must” review the matter pursuant to s 111(2) subject only to its powers under the VCAT Act. Relevantly, this includes a power to give leave to an applicant to withdraw an application or referral under s 74.
There was no suggestion that Frontlink sought leave to withdraw notwithstanding the Commissioner’s invitation for it to do so.
However, in the absence of such a withdrawal, the Tribunal was bound to review the matter and there was no requirement for ongoing “dissatisfaction” by the taxpayer insofar as the jurisdiction of the Tribunal is concerned.
The Tribunal was properly seized of jurisdiction regardless of whether the taxpayer continued to be satisfied and no error was made as alleged.
Ground 4
In written submissions, Frontlink submitted that the taxpayer had no “case” on review such that s 110 could not apply. In oral submissions, it was emphasised that initially the “taxpayer’s case” was that the Commissioner’s objection decision was wrong to the extent that 27% of the land was not exempt. However, after Reply the taxpayer should be taken to have effectively accepted that 27% should be exempt such that it had “no case” in opposition to the determination decision.
It was further highlighted that to find otherwise would emasculate the procedural fairness provisions of s 103(2), which required the Commissioner to give reasons in his Notice of determination for disallowing an objection. The effect of the Tribunal’s approach was that the Commissioner could effectively issue a new objection decision without the need to provide any reasons at all.
Finally, it was emphasised that the subject of the review was the Commissioner’s “decision” of 18 May 2012 rather than the underlying original “assessment” for the purposes of s 111(1). This apparently strengthened Frontlink’s contention that it had no case to advance given it was not opposing the determination decision.
Resolution
Contrary to the position of Frontlink, it did have a case. Initially that case, as set out in the objection, was that “all the land“ was used for primary production. By the time of the hearing this was altered (and part of the objection effectively abandoned) to a case that the land was 73% exempt. Although no formal order was sought by the taxpayer to alter its case, such an analysis is generally consistent with s 109 which defines the “taxpayer’s case” as referable to the objection. In any event, given it still pursued its objection (to the extent of the 73%) and given it was the taxpayer, it carried the onus under s 110.
Importantly, there is no provision imposing any corresponding onus on the Commissioner as regards its case, or otherwise. Moreover, by the time of the hearing there was no doubt that the Commissioner’s case in opposition had been expanded (to allege no exemption) given the order made under s 109.
Frontlink hence carried the onus to support the existence of an exemption (consistent with the Commissioner’s original determination, or otherwise).
I also do not consider that this approach “emasculates” procedural fairness. The taxpayer was provided with ample notice of the Commissioner’s position. Frontlink was well placed to call appropriate evidence had it wished to do so and which only it would be in a position to adduce.[12] The giving of formal reasons would also add little in a case such as this given the nature of the objection which was the “[s]ame objection [as] from 2009”. Given the publication of the 2009 Tribunal decision the taxpayer was well placed to understand the Commissioner’s position. In any event, it effectively elected not to obtain a reassessment despite being given opportunity to ask for one.
[12]This is consistent with LTA s 69 which provides that the owner of land must apply for an exemption and give the Commissioner any information requested for the purpose of enabling the Commissioner to determine whether the land is exempt.
Frontlink further sought to justify its position by suggesting that the subject of the appeal was the Commissioner’s determination. It submitted that the language in s 111(1) reflected the scenarios provided for in s 106. Thus, where there was dissatisfaction with the Commissioner’s determination, the Tribunal would be concerned with a “decision” (s 106(1)(a)). This would be in contrast to the position wherein the Commissioner had not determined the objection (s 106(1)(b)), wherein the Tribunal would review the assessment. Given the Tribunal was reviewing a determination in this case it followed that the Tribunal was concerned with the Commissioner’s determination.
Firstly, even if the subject of the appeal was the Commissioner’s determination this does not assist the taxpayer or avoid the ordinary language of s 110 that it must prove its case. There is no presumption in favour of the determination and the Tribunal is not restricted to a consideration of whether the relevant decision was infected with error. Instead, s 111(1) makes provision for the Tribunal to review a matter for itself with ample powers to confirm, reduce, increase or vary the relevant assessment or decision. Given such ample de novo powers it is inconsequential whether the provision is directed to the assessment or the (objection) decision.
In any event, I do not accept the taxpayer’s construction. Section 106 merely provides for the precondition for referral or appeal. It says nothing about which decision is to be confirmed or varied under s 111(1). The concept of “assessment or decision” is also used elsewhere inconsistently with the taxpayer’s construction. Such references suggest that the expression is intended to refer to the original “assessment or decision” the subject of the original objection under s 96(1).[13] It would follow that, in the present case, the Tribunal was concerned with the original assessment.
[13]See, eg, TAA ss 96(2), 99(1), 115(2). See also D C Pearce and R S Geddes, Statutory Interpretation in Australia (LexisNexis, 8th ed, 2014) 150 [4.6].
I am therefore satisfied that Frontlink carried the onus of proof and there was no error in the Tribunal’s approach in misconstruing s 110. In particular, there was no error in finding that no exemption would be allowed “in the absence of evidence” that the land was used for primary production.
It is unnecessary to consider the Commissioner’s submission that any onus he had was discharged given there was evidence adduced from Mr Mondous to the effect that the work done to make Thompson’s Road suitable for farming was not undertaken until too late in April or May 2010.
It is sufficient to say that the Tribunal was correct to find that there was an absence of evidence that the land was used primarily for primary production.
The Tribunal did not misconstrue s 110 and Ground 4 is not established.
Ground 2
In written submissions Frontlink alleged that, although the taxpayer’s Counsel was physically present, he should be taken to have not appeared given he did not contest the determination of the Commissioner. It would otherwise work an unjust result given it would have been better had he not been present at all (at which point the Tribunal would have been required to confirm the Commissioner’s decision under s 111(2)).
In oral submissions, it was emphasised that to “appear” should mean to argue the merits of the case. Further, that the merits of the case were not argued in the present case given the taxpayer “withdrew” its challenge to the Commissioner’s decision on the objection.
Resolution
According to the Australian Law Dictionary to “appear” means:
To attend at court in person, or as counsel to represent a client. Expressed as appearing as plaintiff or defendant or, in the case of counsel, appearing for or on behalf of the plaintiff or defendant.[14]
[14]Trischa Mann (ed), Australian Law Dictionary (Oxford University Press, 2nd ed, 2013).
According to the Shorter Oxford English Dictionary to “appear” includes to:
Present oneself formally before an authority; come before a court etc. Also, act as legal representative for someone.[15]
[15]Shorter Oxford English Dictionary (Oxford University Press, 6th ed, 2007).
There is no doubt that Frontlink “appeared” within the above meanings and as that concept should be ordinarily understood. Not only did Mr Korman physically appear but he also made detailed submissions to the effect that the Tribunal should confirm the reassessment in the absence of evidence. He clearly thereby attended to represent his client.
Section 111(2) appears designed to provide for an expeditious summary resolution of the proceeding where there is no physical appearance by, or on behalf of, a taxpayer. There is no justification for some artificial construction of the concept of “appear” in this provision different to that denoted by its ordinary meaning.
It is unnecessary in such circumstances to consider what the position would be if Mr Korman had not appeared. Given that “assessment” includes a “reassessment” under s 3(1) the taxpayer might have been “better off” as alleged, ie the Tribunal would have confirmed the Commissioner’s re-assessment absent an appearance. However, consistent with the use of the expression elsewhere (as referred to above) the better view appears to be that the reference to an “assessment” in s 111(2) is a reference to the original assessment the subject of the objection under s 96. It would thereby follow that it would be the original assessment which would be confirmed in the absence of an appearance.
In any event, the ground fails since there was clearly an appearance.
Ground 3
In written submissions, Frontlink submitted that the Tribunal erred in failing to deny relief on review given it was more efficient, cheap and quicker for the Commissioner to reassess the land for the 2010 year. In oral submissions, it was emphasised that the process adopted avoided the obligation to give reasons for the Commissioner’s position. Further, that it was “speculation” as to what would have followed from reissuing a reassessment as compared with the time and costs expended at the Tribunal.
It was accepted that the Tribunal did give the question of a reassessment consideration. However, it recorded the response from Counsel as follows:
In response to the Tribunal’s question, counsel for the Commissioner said a new assessment had not been raised because the present application was already before the Tribunal when Mr Davis’s [2009] Frontlink decision was handed down.
This was said to be plainly wrong given the Tribunal’s 2009 decision was made on 30 September 2014 and the referral only took place later on 1 October 2015.
Finally, it was said that the Tribunal should have concluded that the review process was being used for an alien purpose: to perform an administrative task of issuing an amended assessment. Further, that the Tribunal ought to have taken this matter into consideration in the exercise of its discretion .
Resolution
Even if it was more “efficient” to issue a re-assessment it was not demonstrated that this could ground any error of law. Firstly, there is no discretion at stake here.[16] Secondly, Frontlink identified no submission, nor did it point to any evidence adduced at the Tribunal, to support the exercise of any such discretion.
[16]Mould v Commissioner of State Revenue (2014) 98 ATR 579, [47].
In any event, no “fact” was established that a re-assessment would have been more efficient. One way of approaching the matter (which was adopted) was to consider whether the taxpayer was entitled to the exemption for 2010 within the existing tribunal proceeding which concerned overlapping properties and witnesses and similar exemptions. The other was to issue a reassessment with the possibility of a further objection and, possibly, a second tribunal proceeding (with the risk of duplication of witnesses and further costs).
I accept that this Court should not “speculate”. However, it is Frontlink who seeks to allege a “fact” without substantiation. It is by no means obvious that a re-assessment would be more efficient in these circumstances.
In relation to the response of Counsel, an examination of the transcript suggests that Counsel may have been providing a response as to why the Commissioner did not issue a reassessment “now” (which was that the matter was before the Tribunal and it was not appropriate as a matter of courtesy).[17] In any event, this does not found any error of law. The reasons why a reassessment was not pursued does not in any way vitiate the Tribunal’s decision.
[17]Transcript of Proceedings (VCAT, Z757 of 2015, J Glover (Member), 9 June 2016) 411.
Finally, I am a unable to be satisfied that any “alien purpose” was adopted. As indicated already, the course taken was open. Notice was given of it and the taxpayer chose not to take up the offer of a reassessment. The absence of reasons was also not significant in this case for reasons already given.
No error of law is established.
OTHER GROUNDS
Grounds 5 & 6 (Pound Road Land and Grices Road Land, 2011 land tax year)
The questions of law raised were as follows:
(5) Whether the Tribunal, in relation to both the Pound Road Land and Grices Road Land:
(a) made erroneous findings where it was manifestly irrational to do so; and
(b) made findings of fact for which there was no evidence.
(6) Whether the Tribunal, in relation to the Grices Road Land only:
(a) made erroneous findings where it was manifestly irrational to do so; and
(b) made findings of fact for which there was no evidence.
The following grounds were advanced:
(5) The Tribunal erred finding that the Pound Road Land and Grices Road Land comprised two separate parcels of land, where:
(a) the Commissioner and taxpayer contended the Lands comprised a single parcel of land and there was photographic evidence establishing that the Lands were contiguous; and
(b) there was no evidence before the Tribunal that the Lands were two separate parcels of land.
(6) The Tribunal erred in finding that there was a water-supply trench along the entire Grices Road boundary and there was photographic evidence of a competing use on that land, where:
(a) there was photographic evidence establishing that there was no such pipeline and there was no photographic evidence of a competing use on the Grices Road Land; and
(b) there was no evidence before the Tribunal of a water-supply trench along the Grices Road boundary.
Tribunal’s Reasons
The taxpayer relied upon a share farming agreement with a Geoff Murray which it claimed was entered into after it took repossession of the land from Derek Feldman and sold his 25 remaining cattle (Mr Feldman had previously grazed cattle on the land but had died in October 2010). Mr Murray was not called as a witness. However, an agreement was produced which was purportedly dated 1 February 2011 though endorsed at the foot of each page was the handwritten logo “26.11.11 G Murray”.
Other evidence before the Tribunal included a Project Delivery Agreement with Australand Industrial No 156 Pty Ltd entered into in 2007 which recited that the taxpayer wished to develop and sell the land.
Mr Mondous did give evidence but the Tribunal found him to be evasive and made various criticisms of his evidence. These included criticisms of his evidence about whether the properties were adjoining; his failure to disclose the existence of other users; and the fact that he had previously concealed parts of the Delivery agreement.
The Tribunal made reference to the handwritten date on the agreement of 26 November 2011 and noted that Mr Mondous could not explain this date. It considered that the time of commencement of primary production activity on Grices Road and Pound Road Land “remained in doubt”. It then concluded:
I am not satisfied by the applicant’s evidence that the primary production activity of grazing cattle was conducted on the Grice’s road and Pound road lands during the relevant time. The Tribunal has weighed testimonial evidence led on behalf of the applicant against the inconsistent objective data which exists and unexplained indications that non-exemptive residential and agistment activities were conducted on the land in 2011.[18]
Ground 5
[18]Tribunal’s Reasons [83] (emphasis added).
In relation to Ground Five, the taxpayer put emphasis on paragraph 79 of the Tribunal’s Reasons as follows:
In relevant cross-examination, Mr Sam Mondous was evasive and at one point hostile. Mr Mondous was driven to accept that the Grice’s road and Pound road lands were not really adjoining, but separated by a roadway and about 200-400 meters of land owned by a Christian College. Photographs of the lands were shown to Mr Sam Mondous and he was asked why he had not disclosed the existence of several houses and a disused swimming pool once occupied by Mr Feldman.
Frontlink submitted that the above paragraph suggested that the Tribunal found that Grices Road Land and Pound Road Land were separate parcels. This was not correct since, while the Pound Road Land and Grices Road Land constituted a single parcel of land, the Soldiers Road Land was close but not adjoining. Further, the Christian College separated Pound and Soldiers roads rather than Pound and Grices roads.
This was significant given the identity of the land for the purposes of assessing whether the exemption applied under s 66 was a jurisdictional fact.[19]
Resolution
The Commissioner accepted that there would be an error of law if the Tribunal had approached its task on the basis that the two properties did not amount to one parcel.[20] However, that paragraph 79 was not speaking of how the Tribunal member approached the treatment of the land; rather it was a comment on Mr Mondous’s quality as a witness.
[20] Transcript of Proceedings (Supreme Court of Victoria, Kennedy J, 24 February 2017) 165.
I accept this submission. Thus the error clearly arose in the context of a criticism of the evidence of Mr Mondous. He had originally maintained that all three were joined. However, he then appeared to accept under cross-examination that the Pound Road Land was actually separated by the Christian College from the Soldiers Road Land. The error in paragraph 79 hence appears to be a mis-description only since it should have read that he was “driven to accept that Soldiers road and Pound road were not really adjoining”.
There is nothing anywhere else to suggest that the Tribunal treated the Grices Road and Pound Road lands as separate in performing its task. The treatment in the Tribunal’s Reasons suggests the exact opposite as there are numerous instances wherein the Pound and Grice lands are generally considered together.[21]
[21]See, eg, Tribunal’s Reasons at [71], [72], [74], [76]-[83], the headings immediately preceding [76] and [84], and the separate treatment of Soldiers land in [84]-[90].
I am therefore not satisfied that, merely by reason of a slip, any error of law can be established.
There is an additional reason to reject this ground given the conclusion of the Tribunal was that no primary production at all was conducted on the two properties. In such circumstances, it was immaterial whether the lands were treated separately or not. Thus, as extracted above, the Tribunal was not satisfied that the primary production “activity” of grazing cattle was conducted during the relevant time. Given the reference to “the activity”, the natural reading of this sentence is that no cattle farming (characterised as primary production) was being carried on at the relevant time by Mr Murray or anyone else. Such a finding was clearly open and is not the subject of any challenge.
The references in the next sentence to other activities are also directed to the deficiencies in Mr Mondous’ testimony and do not, in my view, detract from the critical finding of dissatisfaction that there was any relevant activity at all.
Ground 6
Frontlink relied upon paragraph 88 of the Tribunal’s Reasons which stated as follows:
There is also evidence (including photographs) of a competing use in respect of the Grice’s road land. In or about 2011 Melbourne Water excavated a water-supply trench several meters wide inside the allotment along the entire Grice’s road boundary.
In fact, the trench was not located on the Grices Road Land but on the Pound Road Land.
However, the error is one of fact only and has played no part in the critical finding (already referred to) that no relevant cattle activity at all was conducted on the Grices Road Land. This is strengthened given the reference was placed within a section regarding the Soldiers Road Land.
Grounds 5 and 6 are concerned with complaints of immaterial factual error and slips and do not ground any error of law.
Ground 7 (Soldiers Road Land, 2011 land tax year)
The question of law identified was whether the Tribunal took account of an irrelevant matter.
The following ground was advanced in support:
The Tribunal erred in taking account of the fact that the taxpayer’s director had no demonstrated skill or experience in primary production activities.
Tribunal’s Reasons
In regard to the Soldiers Road Land, Mr Mondous alleged that the taxpayer used a “broker” to put the taxpayer’s own cattle on the land though the broker was not called, nor was any documentary evidence adduced. Insofar as the taxpayer relied on Mr Murray, he also was not called.
In this context the Tribunal stated as follows:
I do not accept that the taxpayer has made any more than a minimal use of the Soldier’s road for the primary production activity of grazing cattle. Mr Mondous indicated (without corroboration) that the cattle taken to and from the Soldier’s land in 2011 were moved by a “broker”. The only other grazing activity was alleged by Geoff Murray, whose statement I do not accept in the absence of corroboration or cross-examination.
Hence it cannot be said that the Soldier’s road land had the character of land used for primary production as a consequence of what the taxpayer did. For the purposes of this finding, I note that the taxpayer’s cattle grazing activities were apparently controlled by a person who had no demonstrated skill or experience in doing what she did.[22]
Frontlink submissions
[22]Tribunal’s Reasons [89]-[90] (emphasis added).
The taxpayer highlighted the emphasised passage above and submitted that the experience or skill of the director (which was Mr Mondous’ daughter, Natalie Mondous) was irrelevant. In particular, it was submitted that landowners do not have to be primary producers and that they could delegate such activates.
In oral submissions, it was emphasised that the factor played a role in the decision given the reference to “For the purposes of this finding” above.
Resolution
There is no error made out here. Given the Tribunal was dissatisfied with evidence about the “broker” and about Mr Murray, it was open for it to consider what the taxpayer did. Given the taxpayer’s own case was that the taxpayer’s affairs were “controlled” by Natalie Mondous, it was further open for the Tribunal to consider her knowledge of farming. No issue of delegation arose on the case as put by the taxpayer. Rather, the problem was that there was insufficient grazing activity overall.
The complaint is without merit. The Tribunal did not take account of an irrelevant matter.
Ground 8 (Thompsons Road Land, 2012 land tax year)
The question of law raised was:
(8) Whether the Tribunal:
(a) ignored a relevant matter; and
(b) asked itself the wrong questions in relation to the application of s 68(1)(b) of the Act.
The following ground was advanced:
(8) The Tribunal erred in:
(a)ignoring the use to which the Thompsons Road Land was put on or after midnight, 31 December 2011, in determining whether it was being prepared for use primarily for primary production for the 2012 land tax year; and
(b) asking itself whether the Thompsons Road Land:
(i)had been used for primary production on 31 December 2011, or within a reasonable time or period of 6 months before or after that time; and/or
(ii)became exempt within 24 months after the day on which preparation commenced.
Tribunal’s Reasons
In regard to the Thompsons Road Land, 2012 land tax year, the taxpayer alleged that the land came within s 68 on the basis that the land was being prepared for use primarily in primary production.
The evidence of Mr Mondous was that after Ms Waterson’s agreement expired in May 2010 the property was run down and needed work to bring it up to a farming standard. However, he alleged that Mr Willmott was engaged to prepare the land for cattle farming between June 2010 and June 2012.
The Tribunal noted that Mr Mondous relied on an oral agreement with Mr Willmott but could not remember how much Mr Willmott was paid, by whom or when. The Tribunal did not find the evidence of Mr Mondous to be persuasive or reliable.
Mr Willmott also gave evidence, alleging in his statement that he met with the Mondous’s in around September 2012 and signed a licence agreement in December 2012. However, under cross-examination, he added the detail that he had also spoken to Mr Mondous as early as 2010 though he could not explain why this detail was omitted from his statement. The Tribunal further highlighted other difficulties with his evidence and found Mr Willmott to be an unpersuasive witness who could not be relied upon.
By way of conclusion the Tribunal recorded:
For the purposes of LTA s68’s the first condition in s-s(1)(a), I am not satisfied that the Thompsons Road land was being prepared for use primarily in primary production either during the 31 December 2010 to 31 December 2011 period. Nor am I satisfied that the land was being so prepared between 1 June 2010 and 31 December 2011.[23]
[23]Tribunal’s Reasons [50].
It then went on to consider s 68(1)(b).
Frontlink submissions
The key criticism by the taxpayer was that the Tribunal did not have regard to the period after 31 December 2011 at all. This was said to be in breach of the principles in Longford Investments Pty Ltd v Commissioner of Land Tax (NSW) (Longford)[24] and Rainn Pty Ltd v Commissioner of State Revenue (Rainn)[25] that it was appropriate to have regard to whether relevant activities were conducted during periods some months before the end of the relevant year and ending some months into the tax year.
[24](1978) 8 ATR 656.
[25][2016] VSCA 338.
In oral submissions, Counsel drew attention to certain evidence of Mr Willmott that he began working on the property in late 2011 for 12 months, before the cattle came in late 2012.
Resolution
The Commissioner did not defend the Tribunal’s approach on the second limb of s 68 (in s 68(1)(b)) such that the only issues between the parties was the first limb.[26]
[26]Transcript of Proceedings (Supreme Court of Victoria, Kennedy J, 24 February 2017) 180.
In Rainn the applicant submitted that, in circumstances where the s 66 exemption was in issue, the question of the use of the land was to be determined not as at the assessment date but on the basis of what occurred over the 12 months of the tax year which followed.[27] The applicant also submitted that the concept of “is used” in s 66(c) connoted a continuous process of use seeking support in other provisions of the Act.
[27]Rainn [2016] VSCA 338, [6]
The Court of Appeal rejected the submissions about the concept of “use”. More significantly, the Court concluded that the language of s 36(1) was “unambiguously clear” with the subject matter of the tax being taxable land owned by the taxpayer on the relevant date. The question to be determined by the Commissioner is therefore whether, as at the relevant date, the land in question was taxable or exempt.[28]
[28]Ibid [21]
Similarly, then, the question of whether the land was “being prepared for use” pursuant to the s 68 exemption in the present case should be determined as at 31 December 2011.
In relation to consideration of matters before and after the relevant date, this may be appropriate though the key question remained what was occurring as at the relevant date. Thus, the Court stated:[29]
Depending on the state of the evidence, that question may be able to be answered simply by looking at what was occurring on the land on the date in question. Alternatively, the ascertainment of the use at that date may depend on additional evidence about what was happening on the land shortly before and/or shortly after the date in question.
[29]Ibid [17] citing Longford (1978) 8 ATR 656, 660.
Turning then to the evidence of Mr Willmott in this case, the following was highlighted:
Well, if we take your evidence yesterday that you were working on it for 12 months before the cattle came on, that would suggest that you began working on it in late 2011 for 12 months and then the cattle came in late 2012? --- Correct.
Is that correct? --- Mm.
That is correct? --- I wasn’t thinking of putting cattle on it.
But that is correct, in terms of the timeline, is it? --- Yes. We put – the actual cattle went on in 2012.[30]
[30]Transcript of Proceedings (VCAT, Z757 of 2015, J Glover (Member), 7 June 2016) 140.
Insofar as Mr Willmott might be taken to suggest that there was relevant preparation (which is not even clear), the tenor of this evidence was that the work he was talking about commenced in 2011. Although he did later suggest that there was “more” of this work in 2012, there was also no suggestion of any material alteration in 2012. Rather he agreed that “significant work” happened in 2011.[31]
[31]Transcript of Proceedings (VCAT, Z757 of 2015, J Glover (Member), 7 June 2016) 141.
The Tribunal rejected the evidence of Mr Willmott and found that it could not rely on his evidence at all. It further was not satisfied that the Thompsons Road Land was being relevantly prepared as at 31 December 2011. This finding (which was not challenged) must be taken to be a rejection of Mr Willmott’s evidence that such activity had in fact commenced at the relevant time. In such circumstances, his evidence of subsequent works (even if accepted) would be of no consequence. As Rainn makes clear, the relevant inquiry is as to what occurred in December 2011.
There is no merit in Ground 8 which appears to misconceive the effect of Rainn.
Grounds 9 & 10 (Shepparton Land, 2013 land tax year)
The following questions were identified:
9) Whether the Tribunal misconstrued section 65 of the Act.
10) Whether the Tribunal:
a) took account of an irrelevant consideration; and
b) reached manifestly irrational conclusions.
The following grounds were advanced:
9) The Tribunal:
a)erred in finding that the Shepparton Land was not exempt because it was unused on or about 31 December 2012, in circumstances where it had been allocated to the planting of winter crops at the time and winter crops could not be sown at that time; and
b)ought to have found that the Shepparton Land was exempt because it was temporarily unused at the relevant time as a necessary incident of it being allocated to the planting of winter crops.
10) The Tribunal erred in:
a)taking account of the fact that the occupant of the Shepparton Land was uncertain when he signed the lease for that land, in circumstances where he was certain that he signed it before 1 December of that year preceding the land tax year; and
b)reached the manifestly unreasonable conclusion that Dr Elizabeth Vasey’s evidence was not persuasive because she was not cross examined, in circumstances where the Commissioner expressly advised the Tribunal that he did not wish to cross examine her and would accept her evidence without cross examination; and
c)reached the manifestly unreasonable conclusion that Dr Elizabeth Vasey’s evidence was not persuasive because it was presented in “standard form”.
Tribunal’s Reasons
In regard to the Shepparton Land, 2013 land tax year, the Tribunal recorded that the species of primary production relied upon was “cultivation for the purpose of selling the produce of cultivation” pursuant to s 64(1)(a) above.
The taxpayer further relied on use made by a Dr Vasey who cultivated oats for feeding to lambs which he brought in from another property. An undated licence agreement was exhibited to a statement from Dr Vasey in circumstances where no oats were sown until March-April 2013. The document contained a longhand entry of “Dec 1 2012 to Jan 31 2016” beside the words “occupation date”.
Dr Vasey was called. He had provided a witness statement alleging that he had leased the property “since 1 December 2012”. However, in oral evidence he was unable to say when the agreement was actually signed. His evidence was also that oats were not sown for the first time until March-April 2013 and that oats were a “winter crop”.
Dr Elizabeth Vasey also provided a witness statement which will be referred to below.
The Tribunal concluded:
The taxpayer application for a primary production exemption the Shepparton-Zeerust land in the 2013 year is refused. For much of that year and no part of the preceding year, the land was not shown to have the “character” of land used for primary production. Relevant cultivation did not begin until several months after 31 December 2012. Additionally, there is the uncertainty of when the “Licence Agreement” with Dr Vasey was actually signed. His oral evidence was not definite. Evidence of Dr Elizabeth Vasey on the point was unpersuasive, being in a standard form and untested by cross-examination.[32]
Frontlink submissions
[32]Tribunal’s Reasons [100].
Frontlink alleged that the Tribunal ought to have found that the land was “temporarily unused”, citing Saville v Commissioner of Land Tax (Saville) and Rainn in particular.[33] It was submitted that, although the land was unused as at 31 December 2012, the Tribunal wrongly failed to take into account that this was a necessary incident of it being allocated to the growing of oats which were a winter crop.
[33]Saville v Commissioner of Land Tax (1980) 12 ATR 7; Rainn [2016] VSCA 338.
Then, in oral (reply) submissions, three factors were identified: the licence agreement; the stated subjective intention to use (i.e. Dr Vasey gave evidence that at the time he entered into the lease he intended to grow the oats); and the actual sowing of the oats. It was further emphasised that all three should be considered cumulatively as establishing a relevant connection to “use” for primary production (which was cultivation in this case).
In relation to the evidence of the Vaseys, it was highlighted that the Tribunal accepted the evidence of Dr Vasey “about his entry into the Licence Agreement”.[34] It was also said that there was no uncertainty about the date given Dr Vasey’s evidence was that he was certain that it was signed before 1 December 2012.
[34]Tribunal’s Reasons [101].
Finally, in relation to Dr Elizabeth Vasey, particular criticism was levied against the reference to her evidence being “untested by cross-examination” given Counsel for the Commissioner had expressly advised the Tribunal that he did not wish to cross examine her. Complaint was also made about the reference to a “standard form”.
Resolution
In relation to the first point, the Court of Appeal in Rainn rejected a similar submission. Thus it had been submitted before the Tribunal in that case (also citing Saville[35]) that land was lying “fallow prior to a period of cultivation”. The Vice President rejected this submission finding that the concept could only be appropriately used where a fallow period occurred between 2 continuous periods of exempt land use.
[35]Saville (1980) 12 ATR 7, 11.
The Court of Appeal upheld this approach and rejected a submission that what the tribunal had said about the word “fallow” involved error of law. The Court stated that it was possible that a condition of inactivity might be connected to any prior or subsequent activity such that the land could be said to be “in use” as at the assessment date. As indicated in Saville, such a connection might be established if the state of non-use was shown to be part of a cycle of cultivation. However, these principles did not apply in Rainn given the land was simply unused.[36]
[36]Rainn [2016] VSCA 338, [35]–[36].
As indicated already, the taxpayer sought to suggest that such a “connection” was supplied by the three factors cited. However, these factors were evidence of intention only. The subjective intention of Dr Vasey was clearly evidence of intention alone. The subsequent planting of the oats, also takes the matter no further. In terms of the licence agreement, it provided for the Licensee to be “entitled” to occupy the land to conduct agriculture and or grazing management of livestock (at cl 1). In other words, it was permissive only and merely corroborated intention.
The taxpayer in Rainn again made a similar submission which was also rejected. The Court stated that that mere intention on the date in question to use land for primary production in the future cannot suffice. Rather, the section is directed to actual use.[37]
[37]Ibid [38].
Similarly in this case, then, the land was simply unused as at December 2011 and there was no connection between this disuse and the subsequent use of the property for oats production.
There was therefore no error in identifying that relevant cultivation did not begin until several months after 31 December 2012, nor should the Tribunal have found that the land was “temporarily unused” in circumstances where the relevant activity had not even commenced. The allegation that the Tribunal misconstrued s 65 is not maintainable.
In relation to Dr Vasey, his evidence was as follows:
You’ll see that the – have you got the document in front of you, the lease document? You’ll see it’s not dated, except that on the last page it’s got, “Occupation date, 1 December 2012.” Do you see that? --- Correct. Yes.
In terms of when you actually signed the document, have you got any memory of that, one way or the other? --- It would be obviously prior to that date, I would assume, yes.[38]
[38]Transcript of Proceedings (VCAT, Z757 of 2015, J Glover (Member), 6 June 2016) 197.
In the light of this evidence there is no error in the Tribunal suggesting that there was “uncertainty” as to when Dr Vasey actually signed the agreement given his evidence was only that he “assumed” it was on a particular date. Such treatment did not conflict with the Tribunal’s overall position that Dr Vasey entered the Agreement; rather the Tribunal was unconvinced that the evidence established a clear date of signing. There is no error in this approach and certainly no error of law.
Finally in relation to Dr Elizabeth Vasey, her statement read as follows:
Since 1 December 2012, my husband has leased the property at 90 Shepparton-Zeerust Road Shepparton.
The statement was thereby conclusory and unhelpful. It was also unclear precisely how Dr Elizabeth Vasey would have any direct knowledge as to the date of signing of the agreement. She does not say, for example, that she was a witness to the execution or otherwise was present at the signing. She does not even say when the document was actually signed at all.
In such circumstances, it was hardly surprising that the Tribunal described her evidence as “unpersuasive”.
The reference to a “standard form” is a little unclear but, the form of her conclusions does appear to duplicate the summary form contained in her husband’s witness statement. The reference is unexceptional in the circumstances.
Finally, the absence of cross-examination in this case simply meant that Dr Elizabeth Vasey’s evidence was never elaborated upon or developed beyond her conclusory assertions. Although it might have been better to have said that her evidence was “not added to” by reason of any cross-examination (rather than that it was “untested”) the reference is explicable.
The treatment of Dr Elizabeth Vasey’s witness statement is therefore not “manifestly irrational” and there is certainly no error of law in the Tribunal’s finding.
CONCLUSION
There will be leave to appeal given in relation to Grounds 1-4 but the appeal will be dismissed in relation to each of these grounds.
The application for leave to appeal is refused in relation to Grounds 5-10.
(a) contiguous or separated only by a road, railway or other similar area across or around which movement is reasonably possible; and
(b) owned by the same person”.
1
5
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