Prior v Blue Mountains City Council

[2009] NSWLEC 1351

Land and Environment Court

of New South Wales

CITATION:	Prior v Blue Mountains City Council [2009] NSWLEC 1351
PARTIES:	APPLICANT T Prior RESPONDENT Blue Mountains City Council
FILE NUMBER(S):	30249 of 2009
CORAM:	Moore SC
KEY ISSUES:	CONSTRUCTION AND INTERPRETATION - RATING - LOCAL GOVERNMENT :-
LEGISLATION CITED:	Local Government Act 1993
CASES CITED:	McKenzie v Randwick City Council [1996] NSWLEC 42 Taylor v Lismore City Council [2005] NSWLEC 146 Jakd Pty Limited v Randwick City Council (unreported)(Bignold J - !996)
DATES OF HEARING:	9 September 2009
EX TEMPORE JUDGMENT DATE:	9 September 2009
LEGAL REPRESENTATIVES:	APPLICANT Mr J Doyle, barrister INSTRUCTED BY Thomson Playford Cutlers RESPONDENT Mr T Cork, solicitor McPhee Kelshaw

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

MOORE SC

09/30249 - PRIOR v BLUE MOUNTAINS CITY COUNCIL

This decision was given as an extemporaneous decision. It has been revised and edited prior to publication.

JUDGMENT

1 SENIOR COMMISSIONER: At the top of the hill as one approaches Wentworth Falls from the east, on one’s right is located a commercial nursery that forms part of a property owned by Mr Prior - the applicant in these proceedings. The property, which is three separate allotments, totals in area nearly 22,000 sq m. It is agreed by the parties that I should treat the three parcels as having been valued as a single parcel of land pursuant to the Valuation of Land Act 1916 and therefore to consider that land as a single parcel of land for the purposes of rating characterisation pursuant to Part 3 of the Local Government Act 1993 (the Act).

2 The history of the matter is that the land has been rated, in the past (for some time), as farmland pursuant to s 515 of the Act and, in 2007, Mr Prior was written to by Blue Mountains City Council (the council) indicating that the council was reviewing the rating of his land and requiring him to fill in a form if he wished to retain the farmland rating from the end of that rating year onward.

3 In 2008, the council wrote a further letter to Mr Prior, a letter which Mr Prior denies receiving, indicating that the farmland rated land was in the process of having its review finalised and inviting him to complete a further form for his continuation to be rated as farmland if he wished to retain it – the default position from the earlier letter being that if he did not complete such a form he would be rated as residential.

4 On 6 January 2009, the council wrote to Mr Prior and informed him that, from 1 July 2008, that is more than six months earlier than the date of the letter, the designation of his land, that is its categorisation for the purposes of Part 3 of the Act, had been changed from farmland to business. That change resulted in a significant increase in rates for the 2008-2009 financial year. Mr Prior wrote a letter of objection to that, seeking a review of that decision. On 24 March 2009, the council wrote indicating that the business categorisation was to be maintained. At no time, prior to January 2009, had Mr Prior been given any intimation of the intention of the council to categorise his land as being for business purposes.

5 The scheme in Part 3 of categorisation of land in the Act includes provisions relating to all four of the categories within which land can be declared for rating purposes. Those categories are: farmland, residential, mining and business. A series of tests are set out in the Act for categorisation as farmland, residential or mining with there being, in s 518, a default provision that says if it is not fitted within one of those three earlier categories land defaults to being categorised as business.

6 Mr Prior has appealed against that declaration pursuant to s 526 of the Act. Section 526 provides for two separate forms of appeal, that being an appeal against the date of operation of a declaration or, secondly, an appeal against the nature of the declaration. In these proceedings, Mr Doyle, who appears as counsel for Mr Prior, has pressed appeals on both bases and it falls to me to determine both how Mr Prior’s land should be categorised and what effective date such new categorisation should take effect.

7 The relevant contest in this case is whether the land is to be categorised as residential or not, it not being pressed that the land should be categorised as mining or as farmland. The relevant test in this case is the first of the three alternatives contained in s 516 of the Act. If it does not satisfy that test then the land is to be categorised as business from a date that falls to me to determine.

8 There are a number of matters arising out of the comparatively limited range of authorities to which I have been taken and to which I should have regard.

9 The first case to which I have been taken is the decision of the former Chief Judge of the court, Pearlman CJ, in McKenzie v Randwick City Council [1996] NSWLEC 42, a case that dealt with how premises that were used partly as a doctor’s surgery and partly for residential purposes should be categorised.

10 I have also been provided with other decisions, one being the case of Taylor v Lismore City Council [2005] NSWLEC 146, a decision of Nott C, and the decision in Jakd Pty Limited v Randwick City Council being an unreported decision of Bignold J in March 1996.

11 In each of those cases, an assessment of the facts and circumstances of the particular case was necessary to work out what was the dominant use of the land, it being necessary in these proceedings, for Mr Prior to be successful, for me to conclude that the dominant use of the land is for residential accommodation for it to fall within the categorisation of residential.

12 In each of the three cases to which I have been taken a number of factors were considered. In each of the cases, apportionment has played a significant but not solely determinative role – the proportion of the property in the Jakd Pty Limited v Randwick City Council case; the proportion of the building as proportion of the land that was subject to the rating in both Taylor v Lismore City Council and McKenzie v Randwick City Council.

13 In this case, it seems to me that I need have regard to the three matters that were discussed by Pearlman CJ in McKenzie v Randwick City Council where, toward the conclusion of her decision, she assessed the principal use of the premises (in that case against the tests of space occupied, time spent in occupation and layout). Whilst the present appeal is not immediately amenable to such precise characterisation, the matters assessed provide a useful guide to the range of matters that I need to consider when determining what is the dominant use of these parcels of land. To do that I should return to a more complete description of the land itself.

14 The land is located to the north of the Great Western Highway and it falls from its south-western corner downwards toward the north-east. The small frontage of the land within the generally sloping allotment has a frontage to the rail corridor of the Great Western Railway line serving the Blue Mountains. Some hundreds of metres of frontage of the property, as shown in an aerial photograph of it, is a frontage to the Great Western Highway as one travels up Boddington Hill (with the vegetated area on one’s right being RTA owned corridor – beyond which glimpses of the property and the residence could be seen). At the top of the hill is the entrance to the commercially operated nursery that forms the smaller element of this parcel of land. The ratio of the area of the nursery to the remainder of the land is a ratio of approximately 9:1.

15 On the larger portion of the land is located Mr Prior’s residence together with landscaped gardens that, at least at some time in the past, have been open to the public as part of the Australian Broadcasting Commission’s Open Garden Program. It was Mr Prior’s uncontradicted evidence during the course of the conciliation conference that took place on 19 June, the contents of which were agreed by the parties to be carried forward by me into the determinative process I am undertaking pursuant to s 34(4) of the Land and Environment Court Act 1979 in these proceedings, that, in addition to using the immediate curtilage of his house as part of his residence, he also used the gardens for recreational purposes, both for quiet enjoyment and for the exercising of his dogs. The land - showing all three allotments – is in the air photo below:

16 I am satisfied for the purposes, therefore, that I should regard the use of the whole of that nearly 20,000 m sq or so of the property upon which his house is located as being used for the purposes of residential accommodation or activities necessarily ancillary to or linked to that use as residential accommodation and therefore forming part of that use.

17 I am equally satisfied that the remainder of the property, some 2,000 m sq or so in area, is used for the purposes of the intensive use as a nursery. The permitted use of that element of the site, pursuant to the commercial lease entered into by Mr Prior with the company that is the proprietor of the nursery, is for its use as a garden centre for the supply of greenstock, associated garden dry goods and hardware, furniture sales, sales of giftware, conducting gardening classes and related functions.

18 In resisting the proposition that the land should be regarded as having its dominant use as being for residential accommodation, Mr Cork, solicitor on behalf of the council, has in the council’s Statement of Facts and Contentions in Reply particularised a number of matters upon which the council relies. These are set out below.

(a) The road frontage of the land presents as commercial premises. A large advertising structure and carpark dominate the road frontage;
(b) The road frontage of the land is fenced and landscaped. The major entrance to the land is through the Longview Garden Centre sales area, located in a substantial building at the road frontage;
(c) The dwelling house on the land is not visible from the highway;
(d) Within the commercial nursery, the premises include displays of plants and garden related products, within a highly developed and landscaped setting;
(e) The nursery includes a building known as the "barn" within which items, including furniture, are offered for sale;
(f) The nursery is currently the subject of registered commercial Lease AD518022A (relating to part Lot 101) under which a rental in excess of $43,800. 00 per annum is payable by the lessee to the Applicant, and which confers upon the lessee the option to take up two further leases for successive 5 year terms, giving a potential lease term of 15 years;
(g) The area of the land occupied by the commercial nursery exceeds the area of land occupied by the residence, including the landscaped yard and garden of the residence;
(h) The nursery operates 7 days per week, between the hours of 9am and 5pm;
(i) The permitted use of the nursery under the lease is: "Garden Centre for the supply of greenstock, associated garden dry goods and hardware, furniture sales, sale of giftware, conducting gardening classes and related functions."
(j) The majority of the land within Lots I and 2 is natural bushland, in an undeveloped state.

19 There are a number of matters put contra to that by Mr Doyle on behalf of the applicant. The first is the issue of the ratio of the uses one to the other. The second is the question of the appearance of the property from the public road, a matter to which I will return. The third is the question of two valuations which have been provided that indicate that the residential portion of the property has had, at two times in the past, significantly higher value than the value ascribed to the nursery element of the property and, finally, that there would be the opportunity on the two undeveloped lots, being lots 1 and 2 in Deposited Plan 1275506, of constructing residences on those allotments at some time in the future. I will conveniently deal with the latter two of those matters first.

20 The fact that at some stage in the future the two vacant allotments which I have held to be the subject of a present residential accommodation use might have separate residences constructed on them at some time in the future is not in my view a matter of import in these proceedings as I am dealing with the question of the present categorisation of the land rather than what might be some future categorisation of it. It is, however, a matter that has some potential impact in the nature of the orders that I might frame to give effect to my decision so as to ensure that any categorisation I might make would be subject to some future review by the council if the use were to change in some fashion or if the land were to be divided in some form.

21 The second matter is that I receive little assistance, in my view, from the question of the valuation. The earlier decisions have not taken regard to valuation information, they have had in at least one instance some regard to economic activity levels but certainly I do not have any indication that there has been such valuation material provided – in any event, at least one of the valuations was for a purpose unrelated to a conventional valuation (dealing with a compulsory acquisition of portion of the land for road widening). I have found them of very little assistance.

22 However, I return to the matters that were dealt with by Pearlman CJ in McKenzie. The three matters that she dealt with are: space occupied, time spent in occupation and layout.

23 There is no doubt, as it is agreed on the evidence, that the ratio of space occupied – one use to the other – is nine in favour of residential as opposed to one in favour of the business occupation. In each of McKenzie, Jakd and Taylor the decision appears to have been in favour of the significantly proportionate larger use (in both Taylor and McKenzie as to the area of land occupied and in Jakd as to the proportion of the building occupied). That, in my view, is a significant factor in favour of Mr Prior’s contention – setting aside questions of time operation of any decision on characterisation.

24 I am satisfied on the question of time spent in occupation that there is a significant time in occupation and activity of the business, it operating seven days a week from 9 to 5, whilst obviously Mr Prior occupies his premises on a full-time basis. I am, therefore, satisfied that on the question of time spent in occupation that factor is entirely neutral.

25 As to layout, it is difficult to quite understand what her Honour might have meant, although it would appear that the surgery in that case had a frontage to the street and that the residential premises were at the rear. However, in this case both elements of the property have a frontage to the street. The residential element also has a significant viewing opportunity from the public domain of the railway line.

26 I am also satisfied that a person who knew the boundaries of the property as they drove up Boddington Hill towards its crest in the vicinity of Wentworth Falls would not conclude that the dominant use of the totality of the property, being aware of its boundaries, was for a business purpose. An examination of an aerial photograph that shows where the boundary’s portion between that occupied by the nursery and the remainder used for residential uses would also, in my view, on the ratio of areas occupied not cause anybody to conclude that the dominant use for the purposes of the nursery. Similarly the perception from the railway line (that would almost entirely be of a residential use rather than of a business use) would support Mr Prior’s position.

27 Obviously, each of these cases has to be dealt with on its own facts and circumstances. It is appropriate to apply each of those matters to which I have adverted to the matters that are particularised by the council in support of its case.

28 I am not satisfied that the road frontage of the land presents entirely as commercial premises. That area occupied by the commercial premises does so, but a person who was aware of the totality of the road frontage would not have such a perception. A similar position applies with other matters relating to the road frontage. The fact that the entrance is adjacent, that is the entrance to the residential portion is adjacent to the garden centre and the dwelling house is not visible immediately from the highway or would be glimpsed at best, in my view does not assist in understanding what is the use. It is not the perception of the use, it is what is, in a practical manner, the dominant use of the land.

29 Although there may be a significant commercial benefit obtained by the lease of the land, in my view that does not assist – given that, at least on the valuation evidence, there is no significant disparity, certainly not in favour of the business, from that valuation evidence to the extremely limited extent that I might consider it relevant in these proceedings. The fact that the area of land occupied by the nursery exceeds the area of land occupied by the residence is also not of relevance, in my view, given the evidence that Mr Prior has given, which was not contested, that he uses the remainder of the residential portion of his property for residential purposes ancillary to and forming part of his use of the house for residential accommodation. The hours of operation of the nursery as I have indicated is a matter that is rendered neutral by the occupation by Mr Prior of his residence.

30 It follows from that that I am satisfied that the land is appropriately to be categorised as having a dominant use as being for residential accommodation and should be so categorised pursuant to s 516 of the Local Government Act.

31 I turn to the question of when should such categorisation take place. It would seem to me that there are a variety of options in this regard. Given that the council has purported to re-categorise the property from 1 July 2008 but did so by letter in early January 2009, at the earliest (although there is a respectable but not compelling argument that the effective date should be March 2009), I am satisfied that it would be appropriate for me to confirm the pre-existing categorisation of the land as farmland until the end of December 2008 and to categorise the land from that date onward as residential pursuant to s 516 of the Act but to do so in the general form adopted by Nott C in Taylor v Lismore of providing that such categorisation shall continue until some further categorisation declaration is made by the council.

32 The consequence is that the orders of the Court are as follows:

1. The appeal is upheld;
2. Pursuant to s 226(3) of the Local Government Act 1993 (the Act), land known as 23-29 great Western Highway Wentworth Falls, being:
   • Lot 1 DP 1275506
   • Lot 2 DP 1275506
   • Lot 602 DP 112348 (the land) is declared to be categorised as farmland (s 515 of the Act) from 1 July 2008 to 31 December 2008;
3. From 1 January 2009, until some further declaration is made concerning the categorisation of the land, the land in (2) is categorised as residential (s 516 of the Act); and
4. The exhibits, other than exhibit 1 and E, are returned.

Tim Moore
Senior Commissioner