Heydon v Deputy Federal Commissioner of Land Tax, New South Wales

The case of *Heydon v Deputy Federal Commissioner of Land Tax, New South Wales* concerned an appeal by Louis Francis Heydon against assessments for land tax for the years ending 30 June 1910 and 30 June 1911. Heydon was the lessee of a substantial parcel of land, which he had further subdivided and leased to various sub-tenants. The dispute centred on the method of calculating the unimproved value of Heydon's leasehold estate for the purposes of land tax assessment under the *Land Tax Assessment Act 1910-1911*. The High Court of Australia was required to determine the validity of Regulation 51 of the Land Tax Regulations 1911 and the correct method for assessing the land tax payable by Heydon.

The primary legal issues before the Court were whether Regulation 51 of the Land Tax Regulations 1911 was *ultra vires* and void, and consequently, whether the land tax assessments appealed from should be reduced. Specifically, the appellant contended that the regulation, which prescribed a uniform 4.5% basis for calculating the unimproved value of leasehold estates under leases granted before 17 November 1910, was beyond the scope of the *Land Tax Assessment Act*. He also argued that even if the regulation were valid, the unimproved value of his estate and those of his sub-tenants had not been properly calculated and should be assessed in proportion to their respective interests.

The Court, comprising Griffith C.J., Isaacs J., and Powers J., ultimately found that Regulation 51 was valid. Griffith C.J. explained that Section 28 of the *Land Tax Assessment Act* provided for the assessment of land tax on leasehold interests and that the legislature had authorised the Executive to prescribe tables for the calculation of values. The Court reasoned that a rule was necessary to ensure consistency in assessments, and the prescribed 4.5% basis was a reasonable method for apportioning the unimproved value between the owner, the lessee, and any sub-lessees. Isaacs J. further clarified that the appellant was a legal tenant for life, and the Real Property Act did not prevent the transmission of interests by operation of law, distinguishing this from instruments requiring registration.

The Court answered the first question in the negative, holding that Regulation 51 was not *ultra vires*. Consequently, the second question regarding the reduction of assessments was also answered in the negative, as the assessments had been made in accordance with the established principles and regulations. The Court indicated that the assessments had been made on the correct principle, although a "short cut" may have been employed in the calculation.