Pitt v Commissioner of State Revenue
[2020] VSC 362
•19 June 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
Commercial Court
Taxation List
S ECI 2019 04333
| LORNA ELIZABETH PITT | Appellant |
| v | |
| COMMISSIONER OF STATE REVENUE | Respondent |
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JUDGE: | Kennedy J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 26 May 2020 |
DATE OF JUDGMENT: | 19 June 2020 |
CASE MAY BE CITED AS: | Pitt v Commissioner of State Revenue |
MEDIUM NEUTRAL CITATION: | [2020] VSC 362 |
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TAXATION – Appeal under s 148 of Victorian Civil and Administrative Tribunal Act 1998 (Vic) - Principal place of residence (PPR) exemption from land tax – Whether land used solely for the private benefit and enjoyment of the person who uses and occupies the PPR land – Where free and unrestricted access to residents of an eco-village at any time – No error of law in finding exemption not satisfied - Appeal dismissed - Land Tax Act 2005 (Vic) s 54(3).
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APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr D Morgan | David Gibbs & Associates |
| For the Respondent | Ms P Neskovcin QC with Ms K O’Gorman | Solicitor for the Commissioner of State Revenue |
HER HONOUR:
The appellant (Ms Pitt) seeks leave to appeal a decision of the Victorian Civil and Administrative Tribunal (the Tribunal) of 28 August 2019 on a question of law under s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (the VCAT Act).
The relevant decision confirmed land tax reassessments issued in respect of two properties owned by Ms Pitt and located at 490 and 492A Victoria Street, Brunswick West (the relevant properties) for the 2014 to 2018 land tax years.
The question of law identified is as follows:
On the proper construction of s 54(3) of the Land Tax Act2005 (Vic), what constitutes land that is used solely for the private benefit and enjoyment of the person who uses and occupies that land?
Grounds 1 and 2 related to the above question.
The other grounds (grounds 3 and 4) challenged certain findings of fact and did not appear to relate to the question of law as identified. Counsel for Ms Pitt also conceded at the hearing that they were not independent grounds, and would not result in a successful appeal.[1] They will be therefore be dealt with, more shortly, below.
[1]Transcript of proceeding, 26 May 2020, 25 [11]-[12]; see also 22 [12]-[13], 23 [24], 24 [4]-[5], 33 [21]-[23], 39 [3].
Before considering the grounds, it is necessary to deal with a preliminary issue as to the admissibility of a number of witness statements.
Preliminary issue
Ms Pitt objects to the admission of four witness statements[2] (additional statements) in this proceeding which were filed in advance of the hearing at the Tribunal, pursuant to orders made on 12 April 2019 by Deputy President Proctor.[3] Although not completely clear, it appeared that they might have been probative of whether family members and friends of the residents of the relevant ‘eco-village’ used the relevant properties.
[2]Being the witness statements of Hannah Hill, Sophie Rolfe, Hal Hill and Lynn Murrell.
[3]Order 5(a) provided that the applicant should file and serve a statement of evidence of each witness to be called at the hearing.
According to the unchallenged evidence of Ms Pitt’s solicitor, Counsel for Ms Pitt, Mr Morgan, tendered only two witness statements (both of Ms Pitt) at the hearing which were marked as exhibits A1 and A2. The only other exhibit in the proceeding was exhibit R1, which was a folder of 24 ‘T-documents’.
Mr Morgan said that he would not be tendering the additional statements, and the Member did not mark them as exhibits. Further, Counsel for the Commissioner did not object when Mr Morgan said that the additional statements would not be tendered, and did not seek to tender the additional statements himself. No reference was made to the additional statements in oral submission (although they had been referred to in the Commissioner’s legal contentions filed prior to the hearing).
Consistent with this evidence, the Tribunal recorded the following in its reasons for decision:
At the hearing, Ms Pitt was represented by Mr Morgan and the Commissioner was represented by Ms O’Gorman. No witnesses were required for cross-examination, and the documentary evidence relied on by the parties was limited to:
a.the witness statement of Ms Pitt dated 3 June 2019 and relevant attachments (Pitt FWS);
b.the second witness statement of Ms Pitt dated 15 August 2019 (Pitt SWS); and
c.five folders of documents lodged by the Commissioner with the Tribunal under clause 89(1) of Part 19 of Schedule 1 of the Victorian Civil and Administrative Tribunal Act 1998 (T Documents).
Ms Pitt submits that, given the Tribunal has chosen to adopt a procedure for the treatment of the evidence (by the admission of evidence by marked exhibits), it is not for this court to now treat the additional statements as material received into evidence by the Tribunal. There would also be a breach of natural justice given Counsel informed the court that he would have made further submissions as to the factual findings which ought to be made if the additional statements had been part of the evidence before the Tribunal.
The Commissioner submitted that no limitation was imposed on the Tribunal, which was at liberty to consider, and make reference to, any material put before it (citing s 98 of the VCAT Act). He submitted that the crucial material in the case included that laid before, or available to, the Tribunal. Finally, he submitted that there would be a breach of the rules of natural justice if the additional statements were not taken into account in circumstances where they were filed and referred to in the submissions filed in advance of the hearing.
I consider that the additional statements should not be admitted into evidence on this appeal for two reasons.
First, although I accept that the Tribunal was not bound by the rules of evidence or any practice or procedures applicable to courts of record, there was an exception where the Tribunal ‘adopted’ any such rules, practices or procedures (under s 98(1)(b)). In this case, the Tribunal clearly chose to adopt the procedure of taking evidence by way of exhibits,[4] in circumstances where the Commissioner chose not to make any objection to such a course. The result is that the additional statements were clearly excluded from being part of the evidence before the Tribunal. The additional statements should therefore be excluded as being irrelevant to whether the Tribunal made the central alleged error of misconstruction (which should ordinarily be assessed on the basis of the evidence before the decision-maker[5]). There was no suggestion that ‘fresh evidence’ was otherwise relevant to the grounds in this case.
[4]Consistent with the concept of ‘admitting material into evidence’ under ss 98(2) and 98(2A).
[5]Chandra v Webber (2010) 187 FCR 31, 43 [40] (Bromberg J).
Secondly, I am unable to be satisfied there will be a breach of the rules of natural justice if the additional statements are not now adduced on appeal (as alleged by the Commissioner). To the contrary, the Commissioner was given an opportunity to say something about the receipt of this material at the time Mr Morgan announced that it would not be tendered. Having chosen not to object to this course, the Commissioner should be bound by the way the case was run in front of the Tribunal. Rather, there will be a breach of natural justice with respect to Ms Pitt if the statements are treated as evidence given she will have been denied the opportunity to address the merits decision-maker about their weight.
The further witness statements (items 34-37 of the court book) will not be admitted as part of the evidence in this appeal.
Background evidence
As highlighted already, the primary evidence before the Tribunal was that of two witness statements of Ms Pitt (who was not cross examined). Given the significance of this evidence, the key parts will be set out.
Ms Pitt owns, and has had her principal place of residence (PPR) at, unit 4/44A Hunter Street Brunswick West (shown in the site plan annexed to the Tribunal’s reasons and in the Appendix attached to these reasons). She resided there with her partner, Mr Hill, until the time of his death in July 2016.
The relevant properties are vacant land, and are physically separated from each other, and Ms Pitt’s PPR, by another property at 492 Victoria Street (which is owned by a company of which Ms Pitt is the only shareholder and director). However, there are no physical barriers separating the relevant properties from 492 Victoria Street.
Each of the relevant properties, 492 Victoria Street, and the properties at 44 Hunter Street (including Ms Pitt’s PPR) formed part of what was known as the ‘Westwyck eco-village’ development. They are located at the site of the former Brunswick West Primary School, with the old school building located at 492 Victoria Street. They were acquired by interests associated with Ms Pitt between 1994 and 1995 with a view to establishing a communal ‘eco-village’ at the site.
Ms Pitt’s evidence was that the relevant properties, the school building, and the other lots, were treated ‘as a whole and used collectively’. Further, the relevant properties were not fenced off from one another, and anyone could walk freely over all of the lots.
The old school building at 492 Victoria Street had eleven classrooms and a hall, and was initially occupied by members of the Westwyck consortium and renters. According to Ms Pitt, from 1993, Westwyck’s predominant use was shared or ‘communal housing.’ She said that, since 1993, more than eighty people had been part of the ‘communal household’ which included family and visitors, children and pets. She and her husband originally lived in the school household for nearly two decades until 2010 when they moved to the apartment known as 4/44A Hunter Street. She said that they were committed to ‘communal living.’ However, after July 2013, people started leaving the northern part of the school building, following a notice to vacate consequent on the grant of planning approval for further ‘stage two’ developments on the eco-village. Only one person remained in a caretaker role by March 2014.
In terms of the blocks fronting Hunter Street, ‘stage one’ of the development covered this area and involved the construction and sale of five new two storey town houses (marked 8-12 in the site plan in the Appendix), and the conversion and sale of seven warehouse-style apartments of two and three levels (marked 1-7, and at the site of the southern part of the old school building). The twelve properties were within an owners corporation. The common property of the owners corporation (which forms a ‘Y shape’) also touches 492 Victoria Street and the twelve properties. The evidence of Ms Pitt was that, even if these twelve properties were not occupied by family members or existing friends, the owners became friends and members of the community and shared the vision of a sustainable eco-village.
In terms of the relevant properties, her evidence was that:
all of the owners of apartments in the school building itself as well as the owners of the Hunter Street townhouses, have had free and unrestricted access to [the relevant properties] which could be accessed along either the eastern or western boundary of the school itself as well as from either the Hunter Street or Victoria Street frontages.[6]
[6](Emphasis added).
She further stated that the relevant properties were used by her and her partner for a variety of purposes over the years. There was a large storage shed on the east block that they used for storage, as did other occupants of the apartments and townhouses. There were children’s playground equipment, a vegetable garden, a chook house and chooks. She produced a series of photos to show the east and west block ‘being used for (mainly) children’s activities,’ and said that she, her partner, ‘and the occupants of the Hunter Street townhouses and the apartments in the southern part of the school … freely used the [relevant properties] until [she] sold them in 2018.’
She further stated:
The [relevant properties] have never had dwellings on them, although the east block does have a shed. They have been used as communal spaces by residents of the village, particularly the family and friends who have lived in the old school building. The reason why I invited the other residents of the village to use the east and west blocks is because it had always been my intention to have a sustainable, communal village. Westwyck eco-village was developed to follow the principles of One Planet Living, a philosophy that we only have one planet and we have to use it sustainably. In 2013, Westwyck was certified as the first Australian One Planet Living project. Neither I nor Westwyck has ever charged anyone for the use of the east and west blocks.
Legislation
The Land Tax Act 2005 (Vic) (the Act) imposes land tax in respect of each calendar year on all taxable land in Victoria.[7] Under s 8, the owner of that land is liable to pay the land tax.
[7]Land Tax Act 2005 (Vic) s 7; see also s 3 (definition of ‘year’).
Section 36(1) of the Act provides that a taxpayer is to be assessed for land tax on the total taxable value of all taxable land owned by the taxpayer as at midnight on 31 December of the immediately preceding calendar year.
Under s 3, ‘taxable land’ means all land that is not exempt land.
A number of classes of exempt land are created by the Act and contained in Part 4. The relevant exemption in this case is contained in Division 1 of that Part, entitled ‘Principal place of residence’.
Thus, s 54 of the Act provides for an exemption where land is ‘used and occupied’ as a person’s principal place of residence.
Section 54(3) extends that exemption to other connected land as follows:
Principal place of residence exemption
…
(3)In addition to land of an owner that is used and occupied as a person’s principal place of residence (the PPR land), land is also exempt land if it is owned by that owner and –
(a)is contiguous with the PPR land or separated from the PPR land only by a road or railway or other similar area across or around which movement is reasonably possible; and
(b)enhances the PPR land; and
(c)is used solely for the private benefit and enjoyment of the person who uses and occupies the PPR land and has been so used –
(i) since 1 July in the year preceding the tax year; or
(ii)if the owner or trustee became the owner of the land on or after 1 July in the year preceding the tax year, so used and occupied since a later date during that year; and
(d) does not contain a separate residence.
Reasons
Following Ms Pitt’s objection to the reassessments for the 2014 to 2018 years, the Commissioner disallowed the objection by letter dated 14 November 2018. After a request made by Ms Pitt, the Commissioner then referred the matters to the Tribunal on 1 February 2019 under s 106(3) of the Taxation Administration Act 1997 (Vic).
The onus of proof, on the review, was on Ms Pitt.[8]
[8]Taxation Administration Act 1997 (Vic) s 110.
The Tribunal heard the matter on 15 August 2019, and made an order confirming the reassessments on 28 August 2019. Reasons were also delivered that day (the reasons).
After reciting the relevant background, the reasons identified what was in dispute. They recorded that the Commissioner accepted that the relevant properties ‘enhanced’ unit 4/44A (under s 54(3)(b)), and did not contain a separate residence (under s 54(3)(d)). However, in circumstances where the relevant properties were not contiguous with the PPR land in the sense of touching (i.e. they were separated from each other by 492 Victoria Street), the Commissioner, firstly, submitted that 492 Victoria Street did not meet the description of a ‘road or railway or other similar area across or around which movement is reasonably possible’ pursuant to s 54(3)(a) of the Act. Secondly, he submitted that the relevant properties were not used solely for Ms Pitt’s private benefit and enjoyment for the purposes of s 54(3)(c).
The Tribunal rejected the Commissioner’s first submission based on s 54(3)(a), finding that Ms Pitt had an implied licence which made it possible for her to move across and around 492 Victoria Street.
However, the Tribunal went on to find that the relevant properties were not used ‘solely for the private benefit and enjoyment of Ms Pitt,’ such that s 54(3)(c) was not satisfied.
After summarising the submissions from the relevant parties, the material parts of the reasons read as follows:
51I agree with Mr Morgan that section 54(3)(c) of the LT Act cannot be failed simply because a person allows (i.e. by way of licence) another person to enter and enjoy the use of their property (e.g. to come over for a BBQ or even to stay as a guest for a week or two).
52However, in my view, Ms Pitt did not grant a mere licence. Rather, she granted ‘free and unrestricted access’ to all of the residents of the ‘Westwyck eco-village’ to use the Relevant Properties over an extended period and at any time.
53Further, there was nothing to suggest that those rights of ‘free and unrestricted access’ prevented the residents of the ‘Westwyck eco-village’ from themselves inviting others to enter the property, and I infer from the reference to children’s playground equipment that it is quite likely that the children of the residents and their friends (not necessarily restricted to residents) did enter the Relevant Properties from time to time.
54I do not accept that the decision in Wines should be taken to suggest that the reference to ‘solely’ is limited to situations where a property is physically divided. While Ms Pitt could presumably access the Relevant Properties at any time, if they were being used by all of the residents and guests of residents at the one time, her use would have been severely circumscribed.
55I also do not accept that it is necessary for the other usage to be on a commercial basis. However, even if this were necessary, the evidence suggests the communal nature of the ‘Westwyck eco-village’ was a selling point for people that acquired the town houses and apartments, which provides a commercial nexus.
Grounds 1 and 2
Misconstruction of s 54(3)(c) of the Act
Grounds 1 and 2 of the amended notice of appeal read as follows:
1 The Tribunal misconstrued s 54(3)(c) of the Land Tax Act.
2The Tribunal should have found that, on the proper construction of section 54(3)(c), the fact that the Applicant permitted the other residents of the Westwyck eco-village to have access to the land did not prevent the land from being used solely for the Applicant’s private benefit and enjoyment.
Appellant’s submissions
Ms Pitt submitted that the Tribunal erred because it failed to appreciate that where a landowner established a shared, communal, sustainable space with like-minded people, that the sharing of land with those people can still be to the private benefit of the landowner.
Thus the same activity, conducted on land, may be both to the private benefit and enjoyment of the landowner, while also having an independent benefit to a third party. A number of examples were cited for this proposition. These included the scenario in Arifoglou v Commissioner of State Revenue (Taxation),[9] wherein the exemption applied even though an employee, who provided chauffeuring and maintenance services, was permitted to stay at the relevant property. In oral submission, Counsel also relied on a scenario wherein, as children, he and his brother (and, at times, their cousins and friends) would play sport and, inevitably, a ball would travel over the neighbours’ fence. After initially seeking express permission on each occasion, the neighbours eventually said that if they hit the ball over the fence, the children were allowed to ‘jump the fence’ and retrieve it. He highlighted that, on the Commissioner’s construction, the backyard would thereby not be exempt land under the principal place of residence exemption because it was not used solely for the private benefit and enjoyment of the neighbour.
[9][2006] VCAT 2679.
Ms Pitt raised the question rhetorically: what about the presence of other residents of the eco-village on the relevant properties was not to the private benefit and enjoyment of Ms Pitt? He submitted that the Commissioner’s construction was wrong because it failed to take into account that a person’s ‘private’ benefit and enjoyment depends upon the person. The error was therefore constituted by a failure to make allowance for the fact that different people benefit differently from their own land.
Counsel further submitted that one should remove the label ‘communal’, and consider that a restricted number of people were invited to use the relevant properties for a particular purpose i.e. in ways that were consistent with the idea of an eco-village.
Ms Pitt noted that there were two possible extreme cases. On the one hand, there was ‘use’ where no one other than the land owner may have a right to use the land. On the other hand, there was land that was left for the use of the public at large. However, between these extreme cases lay a spectrum of uses as to which land may be put.
Ms Pitt submitted that the expression ‘solely for the private benefit and enjoyment of a person’ was a composite expression, with both subjective and objective elements. However, she accepted that some things could not, objectively, be ‘private’, being public use and commercial use.[10] She also accepted that it was not necessarily the case that any use which was not public or commercial would satisfy the test, since there may be other species of use which would disqualify land from the exemption.[11]
[10]Transcript of proceeding, 26 May 2020, 30 [3]-[9].
[11]Ibid 89 [9]-[12].
There was no ‘bright line’ to divide them and, in particular, there was no ‘magic number’ of people who may have rights to use the land, above which the exemption will not apply. Rather, it was a matter of determining, after considering all of the non de minimis uses to which land is put, whether those uses are all properly understood as being for the private benefit and enjoyment of the landowner. A number of relevant factors would include whether the use that others made of the land was for profit, whether the use that others made of the land was for the private benefit and enjoyment of the landowner, and the degree of connection between what others do on the land and what the landowner does.
In this case, the properties were only available to a closed group of like-minded individuals and it was nowhere near the point where the number of invitees was so large that the land was used ‘publicly.’ This was submitted to be similar to any home owner inviting guests to a barbecue, and even allowing their guests to bring their own friends if they wished.
In terms of ‘solely,’ Counsel submitted that this word modified the ‘private benefit and enjoyment’, not the landowner or person. Thus, if I use my land mostly for my private benefit, but occasionally for commercial gain, the ‘solely’ requirement would not be met. However, as long as land is used for the landowner’s private benefit, and not for any other sort of benefit of the landowner, it does not matter if someone else also obtains a benefit.
Two factual matters were also raised by Ms Pitt.
First, Counsel initially accepted that people, other than residents, may have been invited by Ms Pitt and Mr Hill onto the relevant properties from time to time. However, Counsel subsequently said that the evidence did not say that people who lived in the village could invite their own guests onto the relevant properties. He further rejected that the Tribunal’s statement, that ‘there was nothing to suggest that those rights of ‘free and unrestricted access’ prevented the residents of the Westwyck eco-village from themselves inviting others to enter the property’, constituted a finding of fact. Rather, it was an observation about the state of the evidence.
Counsel also submitted that there was no evidence that Ms Pitt did not have the right to remove others from the land. Further, that the better inference to be drawn was that she could still remove people if she wanted to.
In terms of commercial use, the uncontested evidence of Ms Pitt was that no one was ever charged for using the relevant land. Counsel also highlighted that there was no evidence that Ms Pitt ever gained any commercial benefit.
Respondent’s submissions
The Commissioner responded to the hypothetical question raised by Ms Pitt, submitting that it was not the presence of the other residents on the land, but their use under a lawful right to access the land ‘at any time’, that so disqualified the relevant properties and disentitled Ms Pitt from the exemption. Thus, given the land was used to host a communal village where nearby residents had ‘free and unrestricted access’ to the land, there were two features that disqualified the land from the exemption: first, that the relevant communal properties were not used for the landowner’s ‘private’ benefit and enjoyment; and second, that the properties were not used ‘solely’ for the landowner’s private benefit and enjoyment.
Dealing first with the ‘private’ submission, the Commissioner submitted that when a number of neighbours to land have a right to free and unrestricted access to the land, the land is not used for a private benefit. Even if Ms Pitt, herself, benefited ‘personally’ from the land’s communal use, that personal benefit is not a private one. It was inappropriate to consider whether there was some personal benefit in allowing others to use the property as opposed to whether the land itself was used for a private benefit.
In terms of the ‘spectrum’ contention, the Commissioner submitted that there was a fundamental difference between the way that land is used when hosting guests, and the way that land is used when hosting a commune. Thus, guest use does not circumscribe the landowner’s use of the land, as is the case with a commune. When hosting guests, the land is also used by the guests only through the host as an intermediary. In contrast, when land is used communally, by a group of persons who each have a right of ‘free and unrestricted access’ to use the land ‘at any time’, the commune members have a right to use the land independently of the landowner’s permission, and even in ways that do not contribute to the landowner’s use of the land. In these circumstances, the benefits that the landowner can hope to derive are benefits that came from using the land communally.
This case therefore falls well down the ‘spectrum’ towards the public park extremity, and falls at the same point as the communal gardens used in the UK. Thus, a communal garden is like a public park in terms of the ‘publicness’ of the benefit, being a garden to which no person exercises a right to exclusive possession.
In oral submission, the Commissioner accepted that the land could still be used solely for the private benefit or enjoyment of the owner when another person also uses and enjoys the property. However, it was important to look at the nature of the use, the rights the owner has in relation to the land, and the rights the other person has. This was largely an objective process.
In considering the nature of the use in this case, the use was readily distinguishable from the example of a young neighbour being given permission to collect a ball. Thus, the owner in the ball example retained the right to invite the guest, to ask the guest to leave, and to limit the guest’s use of the land. Nor could the guest invite others or circumscribe the owner’s use and enjoyment of the land. This was distinguishable from the present case given the free and unrestricted access at any time (over a significant period) where the other residents had the right to use the land independently of the landowner. There was also no evidence that they were restricted from inviting others.
The use of the land was therefore not for a private benefit, but, rather, was for a communal benefit (which language was used by Ms Pitt herself).
In terms of the concept of ‘solely’, the land was plainly used for the benefit and enjoyment of each commune member as much as it was used for the benefit and enjoyment of the landowner. When the land is co-used for the equivalent benefit and enjoyment of all the commune members (i.e. where Ms Pitt and the village residents exercised almost identical rights), it cannot be said that it is used ‘solely’ for the private benefit and enjoyment of Ms Pitt.
The Commissioner further noted that the provision concerned the principal place of residence exemption such that its primary focus was on exempting private ownership of land that was used in private and intimate ways. Its focus was not on an exemption for the communal use of land.
Analysis
Legal framework
Whether the facts, as found, answer a statutory description or satisfy statutory criteria will very frequently be, exclusively, a question of law.[12]
[12]Vetter v Lake Macquarie City Council (2001) 202 CLR 439, 450 [24] (Gleeson CJ, Gummow and Callinan JJ), recently cited in Marsh v Transport Accident Commission [2020] VSC 228, [23] (Niall JA).
More particularly, when it is necessary to engage in a process of construction of the meaning of a word in a statute, a question of law will be involved, though that question may be a mixed one of fact and law.[13] Thus:
·insofar as only one conclusion is open, an exclusive question of law arises;[14] and
·where facts are capable of falling within or without the description used in a statute, the decision as to which side of the line they fall will be a decision of fact and not law.[15]
[13]Vetter v Lake Macquarie City Council (2001) 202 CLR 439, 451 [27], citing Hope v Bathurst City Council (1980) 144 CLR 1, 8 (Mason J).
[14]Ibid.
[15]Sharp Corporation of Australia Pty Ltd v Collector of Customs (1995) 59 FCR 6, 16, cited in Marsh v Transport Accident Commission [2020] VSC 228, [24] (Niall JA).
Returning to the question of law raised in this case, the key issue is the proper construction of s 54(3)(c). The relevant principles were recently summarised by Kiefel CJ and Keane J in R v A2.[16] They require consideration by the court of the ordinary and grammatical meaning of the words used, taking into account both context and legislative purpose.
[16](2019) 93 ALJR 1106, cited in State of Victoria v Thompson [2019] VSCA 237, [27]-[28].
Insofar as the context and purpose is concerned, the evident purpose of the provision is to extend the land tax exemption to certain land that is relevantly connected to land that is ‘used and occupied’ as the owner’s principal place of residence.
This focus on the ‘use’ of the land (in ss 54(3)(c) and 54(1)) is consistent with other exemptions in Part 4 of the Act,[17] and suggests that an objective assessment is warranted.
[17]See, e.g., pt 4, div 2: Primary production land at s 65.
The ‘private’ benefit in s 54(3)(c) is also defined by reference to this objective concept of ‘use.’ Thus, the land must be ‘used’ for the ‘private benefit and enjoyment’ of the relevant person. Further, that ‘use’ must be for the benefit and enjoyment of a person who ‘uses and occupies the PPR land.’ A personal benefit of the owner - which is unrelated to the land - is insufficient.
Insofar as the word ‘private’ is concerned, the dictionary meaning varies, but clearly contrasts with something which is public or available for everyone.[18] Further, although the concept of ‘private’ may generally be extended to both individuals and small groups of persons,[19] in s 54(3)(c) the concept is referable to ‘the person’ who uses and occupies the PPR land.
[18]See Macquarie Dictionary (online at 15 June 2020) ‘private’ (def 9); Australian Law Dictionary (3rd ed, 2018) ‘private’.
[19]See Macquarie Dictionary (online at 15 June 2020) ‘private’ (defs 1, 2).
I therefore accept the Commissioner’s submission that the test in s 54(3)(c) is largely objective, and focuses on whether the relevant land is used solely for the private benefit and enjoyment of the person who actually uses and occupies the PPR. I also accept that the benefit needs to be assessed by reference to the land, and whether that land is used for a private benefit, as assessed in relation to the (user and occupier of the) PPR land. The test is not concerned with some subjective personal benefit of the owner unrelated to the relationship with the land. To allow the subjective evidence of a landowner to be the focus could also lead to self-serving statements by taxpayers.[20]
[20]And see CPDV Pty Ltd v Commissioner of State Revenue (2016) 103 ATR 385, 397-8 [35].
However, I also accept the submission of Ms Pitt that the exemption cannot be failed simply because another person may also benefit (as with guests enjoying a dinner party or barbeque).
Except in the most extreme examples (such as a completely public use), the provision therefore poses a question involving a matter of fact and degree with no ‘bright line’ (as Counsel for Ms Pitt suggested).
Consistent with the submissions of both Counsel, the test involves a consideration as to the use of the relevant land in a particular case. In a case of multiple uses, the decision-maker will engage in an evaluation of the nature and extent of the use by the landowner, and any others who use the land. The task should be approached with common sense, and includes consideration as to the extent of any access given (in terms of both ambit and time); whether the landowner imposes any restrictions or controls on another’s use, including by way of exclusion; whether any other use may circumscribe the use by the owner; and whether there is any use for a commercial gain.
Thus, in the simple case of a barbeque invitation, although an invitee may be given access, that person’s rights are usually contained and constrained by reference to a particular period of time, and to a particular part of a property. The ability to entertain people on one’s land on particular occasions may also be readily seen as part of the ‘private’ benefits of owning land, and does not circumscribe the owner’s own use. This may be compared with a situation where land is opened to the public at any time. Even if the landowner subjectively loves having people all over his/her land, such use cannot be solely for the ‘private benefit and enjoyment’ of the landowner in his/her capacity as a user of the PPR land given the unrestricted access. This is consistent with the concession by Ms Pitt that public land would fall outside the exemption.
Application
First, for reasons given above, I am not satisfied that there should be focus on the subjective feelings of Ms Pitt, as she had suggested. Thus, although she appears to have enjoyed sharing the relevant properties in a ‘free and unrestricted’ way, the focus in s 54(3)(c) needs to include an objective analysis of the relevant use.
Equally however, I accept that the test is not failed simply because another person may gain enjoyment of, and access to, the relevant property. However, this is explicitly acknowledged by the Tribunal at paragraph 51 of the reasons which state that the provision ‘cannot be failed simply because a person allows another person to enter and enjoy the use of their property.’
I therefore do not consider that the Tribunal ‘should have found’ that the fact that Ms Pitt permitted other residents to have access to the land did not prevent the applicability of the exemption (ground 2). The ground carries an implication that the Tribunal failed to recognise that the exemption can apply even where access is given to others. This ground is clearly not substantiated given the express finding at paragraph 51.
Moreover, the key unchallenged finding of the Tribunal was that Ms Pitt did not just grant occasional access on limited conditions (as would be consistent with an invitation to a barbeque, or permission given to retrieve a ball). Rather, she granted ‘free and unrestricted access’ … ‘over an extended period and at any time’ (at paragraph 52).
This finding meant that almost identical rights of use were given to the other residents as were retained by Ms Pitt herself. In her own words, those rights were ‘unrestricted’, with no suggestion of exclusion.
It is also not for this court to draw an inference that Ms Pitt could remove others if she wanted to (as was suggested). Ms Pitt (who carried the onus) did not adduce any evidence to suggest that the rights she gave were limited in any way. In any event, the critical issue turns on actual use of the land. There was nothing in the material to suggest that Ms Pitt actually exercised a right of removal during the relevant time, even if such a right existed. Rather, Ms Pitt’s own evidence suggested that the relevant properties were effectively jointly shared with other persons who had their own unconditional and independent rights of access at all relevant times.
In my view, then, the key finding means that it was open to the Tribunal to find that the relevant properties were not used solely for the private benefit and enjoyment of Ms Pitt.
However, some consideration is warranted of two further factual matters raised by Ms Pitt in submissions, as well as two authorities.
First, the Tribunal also found that there was nothing to suggest that the rights of ‘free and unrestricted access’ prevented the other residents from themselves inviting others to enter the property (at paragraph 53). I consider, contrary to Ms Pitt’s submission, that this sentence involves a finding as to the ambit of the rights given to the residents by Ms Pitt. The finding was also not the subject of any challenge in this appeal. Nor was it suggested that the finding was not open.
Secondly, the Tribunal found that, if the relevant properties were being used by all of the residents and guest of residents at the one time, then her use would have been severely circumscribed (at paragraph 54). Again, no challenge was made to this finding which was also open on the evidence of unrestricted ‘communal’ rights of access.
These further findings of the Tribunal fortify the decision made. Thus, the fact that friends of residents may also have entered the property broadened the scope of the use by others (not Ms Pitt). Further, the potential curtailment of Ms Pitt’s own use supports the view that the land was not used solely for Ms Pitt’s private benefit and enjoyment.
Senior Counsel for the Commissioner observed that there were not many authorities on s 54(3)(c), although two decisions of VCAT were referred to, being decisions of Deputy President Macnamara (as his Honour then was) in Wines v Commissioner for State Revenue (Taxation) (‘Wines’)[21] and Arifoglou v Commissioner of State Revenue (‘Arifoglou’).[22]
[21][2011] VCAT 310.
[22][2006] VCAT 2679.
However, having considered these cases I find them both to be distinguishable.
In Wines, the owner had fenced off approximately one third of the contiguous land which was rented to a tenant on commercial terms. He retained the other two thirds as part of the garden for his residence. In such circumstances, the Deputy President was able to easily determine that the requirements of the equivalent provision were not made out since the land was used partly for the private benefit of the owner, but also partly for the benefit of his tenant.[23]
[23]Section 54(3)(d) was inserted after the decision in Wines. It adds the requirement that the land should not contain a separate residence: See State Taxation and Other Acts Amendment Act2012 (Vic) s 5(4)(b).
The case of Wines is distinguishable given that there was a physical division of the land by fencing, and, further, that a commercial benefit was derived (by way of rent). It does not assist either party in the present case.
In Arifoglou, the applicants sought an exemption in respect of a number of properties on Orrong Road, which were used by a large family. The Deputy President decided that the applicants used all of these allotments as an integrated whole and as their family home or an extension of it, and that the claim for exemption under the equivalent provision to s 54(3)(c) was made out. This was despite some evidence about the activities of a Mr Dixon who had been engaged to provide certain home services, including chauffeur services, to the family. Thus, with the applicants’ approval, Mr Dixon was allowed to store property and was asked to give the property a ‘lived in’ appearance (given there had been vandalism). The applicants’ evidence, however, was unclear as to whether Mr Dixon also slept any nights and, if so, how many, on that land.
The Commissioner, in Arifoglou, did not seek to make any point of Mr Dixon’s activities,[24] and in fact appeared to concede that the requirements in s 54(3)(c) were made out.[25] This was appropriate given the rights of Mr Dixon appeared highly circumscribed, to the extent that they were defined at all. There was, further, nothing to suggest that Mr Dixon’s rights interfered with the owner’s rights over the relevant land.
[24]Arifoglou, above n 22, [28].
[25]Ibid [32].
The facts in Arifoglou are readily distinguishable from this case where, critically, Ms Pitt’s own evidence was that there was ‘free and unrestricted access at any time’ given to all of the relevant properties to other persons. The relevant properties were thereby not used solely for the private benefit and enjoyment of Ms Pitt. Rather, they were used co-extensively for the benefit and enjoyment of the other residents, who had their own unconditional and independent rights to benefit and enjoy the relevant properties at the same time.
The unchallenged findings of the Tribunal were, further, that there was nothing to suggest that these rights prevented the residents from inviting others to enter the relevant properties. Further still, that Ms Pitt’s use would be circumscribed if the properties were being used by all of the residents and guests at the one time.
In such circumstances, I consider that, on a proper construction of s 54(3)(c), it was not only open for the Tribunal to find that the relevant properties were not used solely for the private benefit and enjoyment of Ms Pitt, it was also correct.
I am thereby not satisfied that the Tribunal misconstrued s 54(3)(c).
Grounds 1 and 2 are rejected.
Other grounds
As indicated already, Ms Pitt conceded that the other grounds would not result in a successful appeal, and so they will be considered more briefly.
Ground 3 – licence
Ground 3 reads as follows:
The Tribunal erred in finding that the permission granted to the other residents of the Westwyck eco-village was not a licence but was rather some other species of right not known to law.
Ms Pitt submitted that the Tribunal found that she did not grant a mere licence but did not then explain what rights were given. In the absence of any evidence of a proprietary interest that went beyond a ‘mere licence’, the only conclusion that could be reached is that the right possessed by the other members of the village was, at most, a licence. To find otherwise was to overstate the nature of the access that the other members of the village were given to the relevant properties.
In oral submissions, the matter was not strongly advanced. However, it was submitted that if the Member thought that there was something more than a licence, then that may have influenced his thinking.
The finding that Ms Pitt did not grant a ‘mere licence’ was made in a context where the Tribunal was agreeing with the proposition that the exemption cannot be failed simply because a person allows (i.e. ‘by way of licence’) another person to enter and enjoy the use of their property e.g. to come for a barbeque or to stay as a guest for a week or two (at paragraph 51).
In finding that Ms Pitt granted something more than a ‘mere licence’, at paragraph 52, the Tribunal was thereby distinguishing Ms Pitt’s case from the examples cited in the earlier paragraph i.e. the barbeque and guest examples. This was open given the evidence of ‘free and unrestricted access’ in this case.
There was otherwise no obligation on the Tribunal to characterise the precise nature of the rights granted in circumstances where s 54(3)(c) does not raise a common law label for consideration.
Ground 3 is therefore rejected.
Ground 4 – alleged factual error
Ground 4 reads as follows:
The Tribunal erred by drawing two inferences of fact that were not available on the evidence, namely:
(a)the Tribunal erred in finding that it was quite likely that children of friends of residents of the Westwyck eco-village entered onto the relevant properties from time to time; and
(b)the Tribunal erred in finding that the communal nature of the Westwyck eco-village was a selling point for people that acquired town houses and apartments.
4(a) Children entering relevant properties
Ms Pitt submitted that there was no basis for drawing an inference about children, other than one regarding the children of the residents themselves. The effect of the inference was to create the impression that the relevant properties were more heavily used than the evidence disclosed, and that the use was by people more distanced from Ms Pitt.
However, as highlighted by the Commissioner, the relevant evidence before the Tribunal included that: residents had free and unrestricted access; such access was not inhibited by relevant barriers; and that there was play equipment on the relevant properties.
As indicated already, the unchallenged finding of the Tribunal (in paragraph 53) was also that there was no evidence that residents were prevented from inviting others to enter the relevant properties (by notice or otherwise).
In such circumstances, I consider that it was open to find that it was quite likely that children of friends of residents entered onto the relevant properties from time to time.
Ground 4(a) is not sustained.
4(b) Relevant properties as a selling point
Ms Pitt submitted that there was no evidence before the Tribunal of the prices paid for the apartments and townhouses, or of what effect, if any, the presence of the relevant properties had on the prices. The inference that access to the relevant properties was a ‘selling point’ for people who acquired the townhouses and apartments should therefore not have been drawn. In any event, if there was a commercial benefit, it was not to Ms Pitt, but the person who first sold the properties to the other eleven owners.
There did appear to be some generalised evidence in an extract from a website of the ‘fifth estate’ to support the finding that the communal nature of the eco-village was a ‘selling point’ for people who acquired the townhouses and apartments. I am therefore not satisfied that the Tribunal ‘erred’ in making this finding as alleged in ground 4(b).
The real complaint appeared to be that there was no evidence that access to the relevant properties provided any identifiable commercial value or benefit to anyone, including Ms Pitt. There may be merit in such a complaint. However, the Tribunal was correct in finding that it was unnecessary for the ‘other usage’ to be on a commercial basis (at paragraph 55). Having made this finding, the observation about the ‘selling point’ was otherwise immaterial to the Tribunal’s decision (consistent with Ms Pitt’s concession).
Conclusion
In the light of the above reasons I consider that leave to appeal should be granted in respect of grounds 1 and 2, but not in respect of grounds 3 and 4, and that the appeal should be dismissed.
APPENDIX
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