New South Wales Aboriginal Land Council v Chief Commissioner of State Revenue

[2004] NSWADT 58

CITATION:	New South Wales Aboriginal Land Council -v- Chief Commissioner of State Revenue [2004] NSWADT 58
DIVISION:	Revenue Division
PARTIES:	APPLICANT New South Wales Aboriginal Land Council RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	036018
HEARING DATES:	15 & 16/03/2004
SUBMISSIONS CLOSED:	03/16/2004
DATE OF DECISION:	03/25/2004
BEFORE:	Block J - Judicial Member
APPLICATION:	Land tax - ownership - Land tax exemption - land owned by Aboriginal Land Council
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Land Tax Management Act 1956
CASES CITED:	Paliflex Pty Ltd v Chief Commissioner of State Revenue (2003) 202 ALR 376 Oamington Pty Limited (Receiver and Manager Appointed ) and Anor v Commissioner of Land Tax and Anor (unreported and handed down on 30 November 1997) Commissioner of Land Tax v Pacific Acceptance Corporation Ltd (Official Manager Appointed) (1970) 91 W.N. 392 Chief Commissioner v Macary Manufacturing Pty Ltd [1999] NSWCA 471 Union Trustee Company of Australia and the Federal Commissioner of Land Tax 20 C.L.R. 526 Adele Grace Pty Ltd v Commissioner of Land Tax (N.S.W.) 78 ATC 4075
REPRESENTATION:	APPLICANT C J Bevan, barrister RESPONDENT N Sharp, barrister
ORDERS:	The objection decision under review is affirmed.

REASONS FOR DECISION

1 The decision under review in this matter is the disallowance (by letter dated 17 March 2003) of an objection dated 24 February 2003 and referable to land tax assessed against Kestral Properties Pty Ltd (in liquidation) (“Kestral”)

2 The Tribunal had before it the documents lodged pursuant to section 58 of the Administrative Decisions Tribunal Act 1997 and in addition exhibits as follows:

Exhibit A1 is an affidavit by Kerri Ann Wilkinson (“Wilkinson”) dated 11 March 2004; it annexes as annexures A and B lengthy witness statements by her dated 23 October 2003 and 19 December 2003 respectively,

Exhibit A2 is an affidavit by Peter Hillig (“Hillig”) dated 12 March 2004,

Exhibit NSWALC1 is a very large bundle of documents which was exhibited to Wilkinson in connection with her October 2003 statement,

Exhibit NSWALC2 is also a large bundle of documents which was exhibited to Hillig in connection with his witness statement,

Exhibit R1 is an affidavit by Raoul Salpeter dated 5 December 2003,

Exhibit R2 is an affidavit by Wayne Bratby dated 4 December 2003.

3 In addition to the documentation referred to in clause 2 the parties furnished the Tribunal with a number of detailed submissions. Having regard to my belief that it is possible that this decision will be appealed I note that those submissions consist of the following:
Applicant’s Outline of Submissions,

Outline of Applicant’s Submissions in reply,

Summary of the Applicant’s Submissions,

Applicant’s Chronology,

Respondent’s Written Outline of Submissions,

Outline of the Respondent’s First Argument.

4 Each of the parties furnished the Tribunal with a list of cases together with case reports; some only of the cases listed were in fact cited. It is convenient in the first instance to set out the Applicant’s Chronology, referred to in this decision as the “Chronology” (and in which the Applicant is referred to as NSWALC) as follows:
NSWALC v CHIEF COMMISSIONER OF STATE REVENUE

APPLICANT’S CHRONOLOGY

28 May 1999 NSWALC took a registered first mortgage over the land at 23-25 Market Street, Wollongong (‘the subject land’) from Kestral Properties Pty Limited (‘Kestral’) (‘the mortgage’)

January 2001 Kestral defaulted on the mortgage

24 April 2001 NSWALC appointed MJM Smith and Peter Hillig, chartered accountants, as joint receivers of the subject land, who thereupon took possession of it to the exclusion of Kestral, received its rents and profits on behalf of NSWALC, and completed the incomplete townhouse project on the subject land

20 August 2002 The Crown Solicitor informed NSWALC that a caveat on the title to the subject land to secure unpaid land tax would only be removed if all unpaid land tax was paid by NSWALC

3 September 2002 The OSR claimed from NSWALC $98,342 for unpaid land tax as a condition for the removal of its caveat to permit the sale of the subject land

24 September 2002 NSWALC through its solicitors denied liability to pay land tax assessed by Kestral on the subject land

17 October 2002 The OSR claimed a new amount - $105,939 – for land tax as a condition for the removal of its caveat

7 November 2002 The OSR issued to NSWALC a land tax assessment addressed to Kestral for land tax referable to the subject land totalling $98,296

31 December 2002 The OSR issued to NSWALC a final notice and legal notice demanding the payment of land tax assessed to Kestral for $98,261

3 February 2003 NSWALC paid land tax referable to the subject land totalling $98,261. OSR removed its caveat

21 May 2003 The receivers sold the subject land at public auction on behalf of the NSWALC

26 September 2003 The sale of the subject land was completed, NSWALC paid on completion 9 months of the 2003 year land tax as vendor on adjustment with the purchaser

5 It might be thought having regard to the enormous volume of documentation before the Tribunal that this matter involves disputed evidence and a number of difficult questions of fact and/or law. In fact this is not so. There is very little dispute of fact (and so much so that none of the witnesses were required for cross-examination). Such disputes of fact as there are need not be resolved by the Tribunal for the purposes of this decision. This matter does indeed raise questions of law but falling within a comparatively narrow compass.

6 When the Applicant tendered its evidence Ms Sharp objected to a number of statements contained in them and which would suggest or imply that land tax assessments were made or that claims for land tax were made against the Applicant. Mr Bevan consented to the deletion or amendment of a number of such clauses. I do not think that it is necessary for me to detail the precise deletions and amendments in respect of any of the exhibits. In relation to the Respondent’s tenders Mr Bevan indicated that there were some areas of dispute as to the circumstances in which the Applicant came to pay land tax in respect of the subject land (as described in the Chronology and referred to in this decision as the “subject land”) and other real property in Kembla Street Wollongong (referred to in this decision as “the other land”) in respect of the 2000, 2001 and 2002 land tax years.

7 Under the Land Tax Management Act 1956 (the “Act”) a land tax year is the calendar year following the immediately preceding 31 December and at midnight on that date. Land tax is assessed on all property owned by a taxpayer at that time and in respect of the ensuing calendar year and which is the relevant land tax year. References to a year preceded by the number of that year should be construed as a reference to that particular land tax year. It is important to note that this decision relates only to the 2002 year, and in respect of the subject land only. The Applicant does not seek a refund for any preceding year or in relation to the other land. If the Applicant decides to seek a refund of land tax referable to the other land it will be obliged to make a separate application.

8 The evidence indicates that during the period leading up to the date on which the Applicant made payment of land tax, there was correspondence between the parties as to the amount payable. The evidence reveals that the Applicant wished to obtain the release of the Respondent’s caveat so as to be able to complete the transfer of the subject land. The Applicant could have made an application under section 47 (2) of the Act for an apportionment and to enable it to pay tax referable to the subject land only. It did not do so. Mr Bevan indicated to me that during the course of the negotiations in question the Respondent issued a final notice for all of the tax and the Applicant, thinking that it would have to pay the whole amount in order to obtain the removal of the caveat, did so in order to be in a position to transfer the subject land. It is possible then that there is an outstanding dispute of fact as to how and in what circumstances the Applicant came to pay the whole amount demanded; however that dispute, (if dispute there is) is not relevant for the purposes of this decision.

9 I have included the Chronology in this decision, as I have noted, as a matter of convenience and even though it does not appear to me to be wholly accurate. In the first place it contains allegations which would suggest that the Respondent made claims for land tax against the Applicant in respect of Kestral land. The (voluminous) correspondence forming part of the evidence before me indicates that this is not so. Assessments were made against Kestral. Similarly notices were addressed to Kestral. In February 2003 the Applicant paid an amount of $98,261 to the Respondent. The letter under cover of which the cheque was sent made it clear that payment was being made on a without prejudice basis in relation to the other land. No such claim was made in respect of the subject land. Subsequently the Applicant’s solicitors, and in the letter which constituted the objection, noted that the Applicant had become aware after making payment that there was a basis on which it was entitled to a refund for the subject land. The correspondence which preceded the payment indicates some degree of variation as to the amount from time to time required to procure the discharge of the caveat.

10 The objection was disallowed by the Respondent who on 17 March 2003 wrote (relevantly) to the Applicant’s solicitors as follows:

I have considered the reasons for your objection, but unfortunately I have to disallow your objection.

Section 10(1) (f1) of the Land Tax Management Act, 1956 (the “Act”) provides as follows (emphasis added):

(1) Except where otherwise expressly provided in this Act the following lands shall, subject to section 10B, 10D, 10E, 10G and 10P, be exempted from taxation under this Act [sections 10B, 10D, 10E, 10G and 10P have no relevance to subsection (f1)]:

(f1) land owned by the New South Wales Aboriginal Land Council, a Regional Aboriginal Land Council or a Local Aboriginal Land Council constituted under the Aboriginal Land Rights Act 1983.
Section 23 of the Act provides, in part, as follows:

(1) A mortgagee or other person owning any estate or interest in land by way of security for money shall not be liable to land tax in respect of that mortgage, estate or interest:

Provided that a mortgagee in possession of land, or any other person in possession of land by way of security for money shall, so long as such possession continues (though not to the exclusion of the liability of any other person) be deemed to be the owner of the land; and the mortgagor shall be deemed to be the primary taxpayer, the mortgagee in possession to be the secondary taxpayer; and there shall be deducted from the land tax payable by the latter in respect of the land such amount (if any) as is necessary to prevent double taxation:

Provided further that the foregoing proviso shall not apply:

(b) to any mortgagee or person in possession whose possession began on or after the first day of November one thousand nine hundred and fifty-six until a period of three years after he or she has entered into possession.

(2) For the purposes of this section a mortgagee in possession shall include a mortgagee of land who is using such land, or who is in receipt of the rents or profits of such land, or who is in receipt of the income from any business carried on such land, or who has appointed a receiver of the rents or profits of such land.

(3) Nothing in this section affects section 46.

By deduction of the above sections of the Act, the following scenario arises, in respect of Land Council’s liability to land tax: Section 23(1)(b) overrides the definition of “owner” under section 3(1), in respect to a mortgagee in possession: as the Land Council is not an owner of the property for the 2002 tax year, due to the provisions of section 23(1)(b), the exemption afforded under section 10(1)(f1) can not apply to it: similarly, as it is not the owner of the property for the above tax year the property can not be isolated from the assessment, which includes other properties i.e., 8-10 Kembla Street, Wollongong, all of which are owned by Kestral.

Consequently, it is considered that the assessment as issued is correct and is to stand as assessed.

You have requested confirmation that the Land Council will not be liable to pay land tax while it remains in possession of the property in its capacity as mortgagee in possession.

In this respect I draw your attention to the provisions of sections 23 and 25 of the Act.

11 The terms “owner” and “owned” are defined in section 3 (1) of the Act as follows:
"Owned" and similar expressions have a meaning corresponding with that of owner .

"Owner" includes:

(a) in relation to land, every person who jointly or severally, whether at law or in equity:

(i) is entitled to the land for any estate of freehold in possession, or

(ii) is entitled to receive, or is in receipt of, or if the land were let to a tenant would be entitled to receive, the rents and profits thereof, whether as beneficial owner, trustee, mortgagee in possession, or otherwise,

(b)

(c) in relation to any leasehold estate in land, whether legal or equitable (other than under any lease to which section 21C or 21D applies), a person, or a person who is a member of a class or description of persons, prescribed for the purposes of this paragraph, and

(d) a person who, by virtue of this Act, is deemed to be the owner.

12 It is to be noted in particular that para (d) of the definition of “owner” (referred to in this decision as the “definition”) provides that a deemed owner is an owner. Para (c) does not arise because there was no relevant leasehold estate. This matter turns on the manner in which para (a) must be interpreted.

13 Before dealing in terms with the definition it is convenient to deal with other arguments put before me. I refer in this context in the first instance to section 23 of the Act (which contains an express reference to section 46 of the Act) and section 46; those two sections are set out in this decision as follows:

23 Mortgages

(1) A mortgagee or other person owning any estate or interest in land by way of security for money shall not be liable to land tax in respect of that mortgage, estate or interest: Provided that a mortgagee in possession of land, or any other person in possession of land by way of security for money shall, so long as such possession continues (though not to the exclusion of the liability of any other person) be deemed to be the owner of the land; and the mortgagor shall be deemed to be the primary taxpayer, and the mortgagee in possession to be the secondary taxpayer; and there shall be deducted from the land tax payable by the latter in respect of the land such h amount (if any) as is necessary to prevent double taxation: Provided further that the foregoing proviso shall not apply:

(a) to any mortgagee or person in possession whose possession began before the first day of November one thousand nine hundred and fifty-six until a period of three years has elapsed since that date, or

(b) to any mortgagee or person in possession whose possession began on or after the first day of November one thousand nine hundred and fifty-six until a period of three years after he or she has entered into possession.

(2) For the purposes of this section a mortgagee in possession shall include a mortgagee of land who is using such land, or who is in receipt of the rents or profits of such land, or who is in receipt of the income from any business carried on on such land, or who has appointed a receiver of the rents or profits of such land.

(3) Nothing in this section affects section 46

46 Remedy against other persons where taxpayer makes default

(1) Where a taxpayer makes a default in the payment of land tax then, without in any way releasing him or her from his or her liability, the following provisions shall apply as long as the default continues:

(a) If the land tax is payable in respect of land subject to any mortgage or lease or occupied by any person , then the mortgagee , lessee or occupier shall, upon being served with a notice by the Chief Commissioner requiring payment thereof, be responsible for the payment of the land tax , and it may be recovered from him or her as if he or she were the defaulting taxpayer .

(b) All payments made under this section by a mortgagee, lessee or occupier shall be deemed to be made on behalf of the defaulting taxpayer:

Provided that the responsibility of the lessee or occupier under this section shall only be to the extent of any rent or payments due by him or her to the taxpayer at the time of the demand for payment made by the Chief Commissioner, or from time to time accruing due thereafter.

(2) Any payment to the Chief Commissioner under this section shall be a valid discharge to the lessee or occupier for such rent or payment due by the lessee or occupier to the taxpayer as against all other persons whomsoever.

(3) A reference in this section to a mortgagee includes a reference to a person owning an estate or interest in land by way of security for money.

(4) The Chief Commissioner may release a mortgagee, lessee or occupier from a liability under this section on payment of an amount that the Chief Commissioner estimates to be not less than the proportion of the land tax payable by the defaulting taxpayer in respect of the land mortgaged, leased or occupied.

14 Section 23 (1) provides in the first instance that a mortgagee is not liable for land tax. The first proviso sets out that a mortgagee in possession is liable as a deemed owner while the second proviso makes it clear that the first proviso becomes effective only after the expiry of 3 years from possession. Section 23 (3) provides that it does not affect section 46 which by contrast allows the Respondent by notice to require any mortgagee (whether or not in possession) or for that matter any lessee to pay arrear land tax. In fact and in this matter it is common cause that neither applied since no notice under section 46 was sent and in relation to section 23 (3) the Applicant was not in possession for the statutory period of 3 years.

15 Notwithstanding that section 23 did not in its terms apply it is relevant because Ms Sharp contended that it must be interpreted in such manner that it overrides the definition read with section 10 on the basis of the rule of statutory construction that the general yields to the specific. I might here note that under section 10 which provides for exemptions from land tax the Applicant is specifically named as a person who is entitled to an exemption pursuant to section 10 (1) (f1). It will have been noted that it was on this basis that the Respondent disallowed the objection. That contention is in my view without foundation. Section 23 is a section which deals with all mortgagees and all mortgagees in possession, it is not possible to categorise it as a specific provision. If anything, the definition read with section 10 (1) (f1) is specific in that it refers to a named person and being the Applicant.

16 Reference was made during argument to the possible categorisation of sections 23 and 46 as a code governing mortgages and so that a mortgagee can be a deemed owner under para (d) of the definition but not an owner under any other paragraph. In my view any such contention is negated by the specific reference to a mortgagee in possession in para (a). (Before leaving these sections one might note that the interrelation between them is in my view odd; section 23 applies in very specific circumstances while under section 46 the Respondent could require a large variety of persons and including a mere licensee to pay arrear land tax.)

17 The Applicant’s case can be encapsulated thus. It was in relation to the subject land and the 2002 year a mortgagee in possession. This is because (somewhat unusually) the mortgage did not include a clause to the effect that the receivers were the agents of Kestral. The Applicant was thus in possession of the subject land through its agents and accordingly the owner in accordance with para (a) (i) of the definition. The Applicant’s case is founded on one other fundamental proposition and that is that it acknowledges (having regard to the High Court decision in Paliflex Pty Ltd v Chief Commissioner of State Revenue (2003) 202 ALR 376) that is can succeed only if in that year it was the only owner, and so that it must fail if Kestral was also an owner. There is of course no doubt that in relation to any parcel of property there can be more than one owner. In Paliflex the High Court said at p 382:

The term “taxpayer” was defined in s 3 as meaning “any person chargeable with land tax”, and “owner” who so defined as to include “every person” deemed by provisions such as s 32 (dealing with occupation, control or use by non-owners) to be the owner. In respect of the land, there was no third party who could have been classified as a deemed owner. Further, the Commonwealth was not, upon the proper construction of the Management Act by application of the principles referred to in Essendon Corporation, an “owner” or a “taxpayer”. The land was situated in New South Wales within the meaning of s 7 of the Management Act, but it was not “owned” by a “taxpayer” as that section also required.
18 I refer to Oamington Pty Limited (Receiver and Manager Appointed) and Anor v Commissioner of Land Tax and Anor (unreported and handed down on 30 November 1997) precisely because it was cited at length and because it was argued that it is binding on me. In Oamington, Hamilton J was obliged to deal with a number of issues. He dealt with one of them (and being the only one in any way relevant for this purpose) in a short paragraph as follows:
Preliminary Question: Was either Sanwa or ANZ personally liable for Oamington’s land tax?

The only ways in which this could have occurred are, (a) by service of a notice by the Commissioner (s46 of the Act) (which it is agreed has not been done to either Sanwa or ANZ), or, (b) if either of them went into possession as mortgagee and remained in possession for 3 years (s23 (1) of the Act). It was at one stage of the argument suggested that Sanwa was in possession of the Vaucluse land as mortgagor and that this was of significance in the determination of the case and evidence was entered into concerning this; indeed the evidence appeared to establish that it did; it did not, however, establish, and in the end it was not seriously argued, that Sanwa was in possession of the Vaucluse land for 3 years. There was no evidence or suggestion that either Sanwa or ANZ was ever given a notice by the Commissioner requiring payment by it of any land tax. On that basis, neither of them could at any time be characterized as an owner of the Vaucluse land and I find, therefore, that no part of the land tax on Oamington’s land was ever due as a debt from either ANZ or Sanwa to Her Majesty or the Commissioner.

19 In my view Oamington is distinguishable in that the security document involved provided that the receiver was the agent of the mortgagor and not the mortgagee. Indeed it is hard to see how Oamington is of any particular relevance in this matter.

20 Similarly Commissioner of Land Tax v Pacific Acceptance Corporation Ltd (Official Manager Appointed) (1970) 91 W.N. 392 was cited at length. Hope J said at pages 393 and 394:

In order to succeed, the defendant must show firstly that it is necessary on the proper construction of the provision that there should be a completed period of three years before the responsibility arises, and secondly, that two discontinuous periods cannot be added together. I will deal with the second question first. The second proviso exempts a mortgagee from liability which arises under the first proviso unless a period of three years has elapsed from the time when he went into possession. It is true that in terms this does not expressly require continuous possession, but that continuous possession is contemplated and is required becomes apparent by reference to the terms of the first proviso. The first proviso imposes an obligation on mortgagees who are in possession, and so long as such possession continues. Accordingly, it is concerned with a person who is a mortgagee, who goes into possession, and whose possession continues. The second proviso cuts down the apparent liability imposed by the first proviso so as to include mortgagees who have gone into possession only where a period of three years has elapsed after they have gone into possession. But since this second proviso relates to an obligation which only arises so long as possession continues, it seems to me that it must be talking about a continuity of possession. In the result there is a liability imposed on mortgages who have gone into possession, and whose possession has continued for three years, to make returns and perform other acts in relation to the Land Tax Management Act as if they owned the relevant land. I do not think that it is possible to add two or more discontinuous periods together to make up a total of three years to bring the mortgagee within the provisions of the second proviso.

Do then the concluding words of sub-s (1) require that there should be a completed period of three years before the mortgagee in possession can be made responsible for payment? On the submission of the Commissioner it seems to me that the words “during or after the said period of three years” which appear in the relevant part of the provision are to be treated as otiose, or, alternatively, are to be read as if they simply meant “after the mortgagee has gone into possession”.

It seems to me that the Act for some reason exempts mortgagees in possession unless they have been in possession for a continuous period of three years. When they have been in continuous possession for three years, two separate obligations are imposed upon them. One is the obligation thereafter to make returns and otherwise perform the obligations of an owner, and the other is a responsibility – to use the term which the provision uses – to pay tax in respect of which the mortgagor has made default either during that period of three years or after the expiration of that period. If the section were intended to have the meaning which the Commissioner attributes to it, I do not think that the words “during or after the said period of three years” would have been included; either they would have been entirely omitted, as in the case of the analogous provision of the federal Land Tax Assessment Act, which was s. 32, or the provision would have used words such as “after the mortgagee shall have gone into possession” or “while the mortgagee shall be in possession”. I think some meaning must be attributed to these words, and I think in the context of the section, and in particular in the context of the two provisos to the general exclusion of the liability of mortgagees to the payment of land tax, effect can only be given to these words by requiring that there shall be a completed continuous period of three years before the responsibility of the mortgagee in possession arises to pay to the Commissioner land tax in respect of which the mortgagor has made default during or after the period of three years.

21 Again Pacific Acceptance is distinguishable in the main because the judge had noted that “This receiver was in no sense a receiver appointed by the defendant”. And in any event it relates to an aspect of the Act which does not appear to be material in this matter.

22 The judgment of the Appeal Court of New South Wales in Chief Commissioner v Macary Manufacturing Pty Ltd [1999} NSWCA 471 is of greater assistance. The judge at first instance (Black A-J) had held that where a trust vested because the vesting date was advanced the trustee ceased to be an owner with para (a) of the definition. The Court of Appeal accepted the Respondent’s argument that the mere fact that the assets in question were vested did not mean that the trustee was no longer an owner; as an owner even on bare trust he was still in possession but with an obligation in equity to account. I include clauses 52 to 60 of the judgment given by Mason P (noting that in clause 57 he characterised the definition as an extended definition) as follows:

Assuming the Trust vested, was the Trustee the "owner"?

52 It is convenient to proceed first on the assumption that the 1987 resolution validly appointed the Vesting Day as 22 December 1987.

53 Black AJ accepted the Trustee's submission that the Trustee ceased on 22 December 1987 to be the "owner" of the land within s3 (1) of the Management Act, notwithstanding that it remained the registered proprietor of the land. The Trustee had contended that the vesting of corpus meant that thereafter the Trustee held on a bare trust and that the only "owners" were the beneficiaries according to the trust deed. These were Mr and Mrs McCann according to the 1986 resolution, or (in default) the McCanns and their children as the class of "Specified Beneficiaries" entitled under the default provisions of cl 4(2).

54 The Trustee's argument which found favour with the learned judge was that the effect of the 1987 resolution left it as a bare trustee with the sole remaining duty to execute a transfer when called upon to do so by the appropriate beneficiaries. This was said to preclude the Trustee from holding an estate of freehold in possession or from being entitled to the rents and profits.

55 In accepting this submission, Black AJ cited Sully J in Opalfield Pty Ltd v Commissioner of Land Tax (NSW) (1993) 93 ATC 4863. It was noted that the orders made by Sully J had been overturned on appeal Commissioner of Land Tax (NSW) v Opalfield Pty Ltd (1994) 94 ATC 4171). Since however the Court of Appeal did not address Sully J's interpretation of the meaning of "owner", Black AJ followed this interpretation and applied it in the present case, holding that (upon vesting) the Trustee held under the trust deed as a bare trustee with the consequence that it was not the "owner".

56 The appellant challenges this interpretation of "owner" as well as its application to the Trustee (assuming vesting). It is pointed out that the Trustee was at all times the registered proprietor, whereas Opalfield Pty Ltd was not registered proprietor on the relevant taxing date.

57 In my view, the Trustee was the "owner" as defined, under both arms of par (a) of the extended definition.

58 As the registered proprietor of an estate in fee simple the Trustee was, by definition, "at law ... entitled to the land for [an] estate of freehold in possession". The estate was in possession because the registered proprietor had a present right of enjoyment, as distinct from a reversion, remainder or expectancy (Glenn v Federal Commissioner of Land Tax (1915) 20 CLR 490 at 498, 501, 507).

59 The registered proprietor of an estate in fee simple holds (at law) an estate in possession notwithstanding the imposition of a trust requiring the proprietor to hold that estate on behalf of beneficiaries. Nothing turns on whether the trust is active or bare. There will be an equitable estate or interest according to the terms of the trust. However, "an equitable interest is not carved out of a legal estate but impressed upon it" (DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431 at 474 per Brennan J). In other words, the recognition of a trust does not detract from the estate in possession enjoyed by the trustee at common law. Indeed, the full enjoyment of that trust interest depends upon the trustee's capacity to defend against third parties the plenitude of the legal estate vested in the trustee.

60 Hope JA illustrated the distinction in DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510 at 519-520:

... [A]lthough the equitable estate is an interest in property, its essential character still bears the stamp which its origin placed upon it. Where the trustee is the owner of the legal fee simple, the right of the beneficiary, although annexed to the land, is a right to compel the legal owner to hold and use the rights which the law gives him in accordance with the obligations which equity has imposed upon him. The trustee, in such a case, has at law all the rights of the absolute owner in fee simple, but he is not free to use those rights for his own benefit in the way he could if no trust existed. Equitable obligations require him to use them in some particular way for the benefit of other persons. In illustrating his famous aphorism that equity had come not to destroy the law, but to fulfil it, Maitland, [Lectures on Equity, 2nd ed] at p17, said of the relationship between legal and equitable estates in land: "Equity did not say that the cestui que trust was the owner of the land, it said that the trustee was the owner of the land, but added that he was bound to hold the land for the benefit of the cestui que trust. There was no conflict here."

This relationship can, perhaps, be usefully illustrated by reference to the possession, and the right to possession, of land which is held by a trustee subject to a private trust. As a legal owner, and subject to any disposition of the right, such as would occur upon the granting of a lease, the trustee has at law the right to possession of the land and, unless somebody else is in possession, under him or adversely to him, he also has the legal possession of the land. He may maintain trespass against anyone who infringes that possession, and ejectment against any person who, without his consent, takes possession. At law a cestui que trust has no right to possession. He cannot sue the trustee at common law in ejectment ..... If the trustee holds as a bare trustee for a beneficiary absolutely entitled, that beneficiary is, in equity, entitled to put into possession if he so wishes, but he cannot sue the trustee in ejectment. His right can be enforced only by an order made in the exercise of the equitable jurisdiction of the court. If necessary, the court will, upon an appropriate indemnity being given, compel the trustee to allow the beneficiary to use his name to bring ejectment. When placed in possession by the trustee, at law the beneficiary is merely tenant at will of the trustee, the tenancy being determinable at law at any time on demand of possession by the trustee .... As a corollary, the trustee might at law determine the beneficiary's tenancy and recover the land from him in an action for ejectment, and the beneficiary would have no legal defence. He would, of course, have an equitable defence which he has long been able, by statute, to plead in the action at law.

23 Before dealing with the critical question of whether or not Kestral was an owner of the subject land in the 2002 year I note in passing that the written submissions of the parties include references to the possible applications of the doctrine of estoppel and section 25. Neither was argued before me and I need not take them any further.

24 Mr Bevan referred to dictionary meanings to be attributed to the term “owner” and in support of his contention that although the definition is, as the Applicant acknowledged, an extended definition, it in fact covers all of the same ground and so that the definition neither needs nor should have any addition or amplification. I include from Butterworth’s Concise Australian Dictionary its content as to “owner” and “ownership” as follows:

Owner

A person in whom the ownership of property is vested. Rights of ownership include the right to exclude others, to destroy or alter the property, to alienate the property, to maintain it, and to recover possession of it. Rights of ownership are divisible, in that property may be bailed, pledged, hired, mortgaged or partially transferred to another. As a consequence, an owner may not always have a right to possess and may be restricted in exercising rights such as those to alter or destroy the property. Ownership may be equitable, legal, beneficial, joint, several, general or partial. The precise meaning of the term may vary from case to case.

Ownership

The right to the exclusive enjoyment of a thing (Austin). Strictly, it denotes the relation between a person and any right that is vested in him (Salmond). Ownership is absolute or restricted. Absolute ownership involves the right of free as well as exclusive enjoyment, including the right of using, altering, disposing of or destroying the thing owned. Absolute ownership is of indeterminate duration. (Land is in strictness not subject to absolute ownership because it cannot be destroyed, and because of the theory that all land is ultimately held of the Crown). Restricted ownership is ownership limited to some extent; as, for example, where there are several joint owners, or a life tenancy, or where the property is charged with the payment of a sum of money, or subject to an easement. Beneficial ownership is the right to the enjoyment of a thing as contrasted with the legal or nominal ownership. Ownership is always subject to the rule that a man must so use his own property as not to injure his neighbour. See Reputed Ownership.

25 Mr Bevan contended that a registered proprietor who does not have possession or is not entitled to rent and profits is not an owner within (a) of the definition. He contended that the Respondent had raised an argument which was fundamentally different from and indeed the opposite of the argument raised by him in Macary. In my view this matter and the matter in Macary are altogether different. In Macary the judge at first instance accepted that the trustee ceased to be the owner of the assets when the vesting date occurred; the Respondent argued successfully that this was not so. In this matter the Respondent contends that the definition is inclusive only thus leaving room for the inclusion of the registered proprietor.

26 The Land Tax Assessment Act 1910 -1934 (now repealed) (a federal statute) included a definition of “owner” as follows:

Owner” in relation to land, includes every person who jointly or severally, whether at law or in equity-----

(a) is entitled to the land for any estate of freehold in possession; or

(b) is entitled to receive, or is in receiptor, or if the land were let to a tenant would be entitled to receive, the rents and profits thereof, whether as beneficial owner, trustee or mortgagee in possession or otherwise;

and includes every person who by virtue of this Act is deemed to be the owner.

27 It will be noted that the definition in the now repealed Federal statute is (relevantly) in the same terms as the definition. In Union Trustee Company of Australia v Federal Commissioner of Land Tax 20 C.L.R. 526 Griffith C.J said at page 530 “ Although, therefore the language of the definition is in form inclusive, and not exhaustive, it must be read as if the words “besides absolute owners” were inserted after “includes”. So read, the definition is exhaustive, and this we think, is the true construction”

28 In Adele Grace Pty Ltd v Commissioner of Land Tax (NSW) 78 ATC 4075 Shepherd J noted (obiter) that he had some difficulty with the judgment of Griffith C.J. but accepted that it was binding on him. It may be noted that Shepherd J was considering the Act and not the Federal statute. If it was binding on him then likewise it must be binding on me.

29 On reflection there is on a prima facie basis something odd about a suggestion that a registered proprietor is not an owner; there are references in sections 23 (1) and section 25 which incline me to the view that a registered proprietor cannot be regarded otherwise. It is perhaps (marginally) relevant also that although Kestral as registered proprietor of the subject land had lost possession it still retained an equity of redemption and even though that asset appears to have had little, if any, value. I propose to assume for the purposes of this decision that the Applicant was an owner through para (a) (i) of the definition; however the fact that para (a) (ii) contains a reference to a mortgagee in possession and para (a) (i) does not, might have the effect that it is possible to argue that my assumption is incorrect; having come to the conclusion that Kestral was an owner and accepting as I do that the Applicant must fail unless it was the only owner, it is not necessary for me to decide the point.

30 In the circumstances the objection decision under review is affirmed.