SANFL v City of Charles Sturt No. Scgrg-97-1420, Scgrg-97-1421, Scgrg-97-1422 Judgment No. S6568
[1998] SASC 6568
•27 February 1998
THE SOUTH AUSTRALIAN NATIONAL FOOTBALL LEAGUE INC.
v CITY OF CHARLES STURT
Land & Valuation Division
Debelle J
In these three appeals, a ratepayer appeals against the land use which a council has declared in respect of three parcels of land for the purpose of levying differential rates.
The ratepayer is The South Australian National Football League Inc. “the League”). The council is The Corporation of the City of Charles Sturt (“the Council”). The three appeals concern three separate areas of land owned by the League. All three areas form part of what is known as “Football Park”. The League appeals against the land use which the Council has declared to be the use which the League makes of each parcel.
Football Park is a large complex at West Lakes. The land occupied by the League at West Lakes comprises land held by it as the owner in fee simple as well as land leased from the Minister of Public Works. The land owned by the League is disposed as a large football stadium complex. It comprises a large football stadium with grandstands capable of holding about 47,200 spectators. Surrounding the stadium are grassed or paved areas for car parking. The land leased from the Minister of Public Works is known as “the Max Basheer Reserve”. It is a large grassed area to the east of the stadium complex and is used alternatively as ovals or for car parking. It is not land the subject of this appeal.
The three parcels of land which are the subject of this appeal are all owned by the League and are shown on the plan below. They are, first, the large parcel of land which comprises the stadium and surrounding car park. As shown on the plan, it is the land which is bounded on the east by the Max Basheer Reserve and on other sides by West Lakes Boulevard, Turner Drive and Brebner Drive. I will call this “the Stadium land”. The second is the area on the plan marked “AFC Training & Rehab”. It will be called “the AFC land”. The third is the small triangular-shaped area south of Brebner Drive and marked “A”. It will be called “the small car park”. These three parcels of land are comprised in two Certificates of Title. They are Register Book Volume 5084 Folio 996 and Volume 5216 Folio 81. The land in Volume 5084 Folio 996 includes the whole of the Stadium and the AFC land. The land in Volume 5216 Folio 81 is a smaller strip of land to the south and includes the car parking at the southern end of the Stadium land as well as the land called “the small car
(MAP)
park”. It is possible to levy rates against any piece or section of land subject to separate ownership or occupation: s168(5) of the Local Government Act, 1934. That explains why there is a separate assessment for the AFC land. However, it may not be a satisfactory explanation for the separate assessment of the small car park. However, for the reasons which appear later, the question of the attribution of the use of the small car park does not depend upon whether the separate assessment for that land is valid.
The Land is Not Exempt from Rating
All land within a council area is rateable save for land which is exempted from the liability for rating by s168(2) of the Local Government Act. The exemptions in s168(2) include land that is exempt by virtue of the provisions of the Recreation Grounds Rates & Taxes Exemption Act, 1981. Speaking broadly, that Act relates to lands owned or managed by councils on which sport and recreation are conducted. The land owned by the League which is the subject of these appeals does not fall within the provisions of that Act. Nor is the League’s land otherwise exempt from rating under s168(2).
Power to Declare Differential Rates
Section 174 of the Local Government Act authorises councils in each financial year to declare in respect of rateable land within its area either a general rate or differential rates. The Council has for some time declared differential rates in its area and has done so in the financial year ending 30 June 1998. Section 176 of the Act provides for the basis upon which differential rates may be declared and for other matters relating to the declaration. Those which are relevant to this appeal are:
Differential rates may vary according to several factors, one of which is the use of the land: s176(1).
Where land has more than one use, the use of the land will, for the purpose of rating, be taken to be its predominant use: s176(3).
A particular land use must not be used as a differentiating factor affecting the incidence of differential rates unless the land use is declared by the regulation to be a permissible differentiating factor: s176(4). The regulations which declare the land uses which may be used by councils as the basis for differentiating between different land uses are the Local Government (Land Use) Regulations, 1989 (“the Regulations”). I will return to the terms of the Regulations.
If land is vacant, the fact that the land is not being used is capable of constituting a land use for the purpose of the declaration of differential rates: s176(5).
A ratepayer has the right to object to the council against the land use attributed to the ratepayer’s land: s176(9), (10) and (11). If dissatisfied with the council’s decision, the ratepayer may appeal to the Land & Valuation Court: s176(12).
The Regulations were published in the Government Gazette on 13 April 1989 at page 1039. They came into force on 1 June 1989. Regulation 4 prescribes the factors which are permissible differentiating factors for declaring differential rates. Regulation 4 is in these terms:
“4. For the purposes of section 176 of the Act, the following categories of land use are prescribed as permissible differentiating factors:
......... 1. Residential comprising the use of land for a detached dwelling, multiple dwelling, residential flat building, row dwelling or semi-detached dwelling within the meaning of the Development Control Regulations.
......... 2 Commercial - Shop comprising the use of land for a shop within the meaning of the Development Control Regulations.
......... 3 Commercial - Office comprising the use of land for an office within the meaning of the Development Control Regulations.
......... 4 Commercial - Other comprising any other commercial use of land not referred to in categories 2 or 3.
......... 5 Industry - Light comprising the use of land for a light industry within the meaning of the Development Control Regulations.
......... 6 Industry - Other comprising any other industrial use of land not referred to in category 5.
......... 7 Primary Production comprising -
(a)farming within the meaning of the Development
......... Control Regulations;
(b)horticulture and commercial forestry within the
......... meaning of the Development Control Regulations;
(c)the use of land for horse keeping or intensive animal
......... keeping within the meaning of the Development
Control Regulations;
......... and
(d)in respect of a dairy situated on a farm - the use of
......... land for a dairy within the meaning of the
Development Control Regulations.
8Vacant land comprising the non-use of vacant land.
9Other comprising any other use of land not referred to in a previous category.”
The Council declared the AFC land and the Stadium land to be “Commercial - Other”. The League objected to the declaration, contending that the land use should be declared to be “Other”. The Council dismissed the objection. The Council initially declared the use of the small car park to be “Vacant land”. The League also objected to this declaration, contending that the land use should be declared to be “Other”. The first ground of objection listed by the League in its Notice of Objection was:
“The Car Park Land is an integral part of the land and forms part of the total stadium complex known as Football Park. The Car Park Land is used in particular for the parking of motor vehicles on days when football matches are played on the main arena at Football Park.”
The grounds of objection concluded:
“Because the Car Park Land is an integral part of the land and the activity undertaken on the Car Park Land, namely the parking of cars, is an integral part of the activities undertaken by the League on the Land, the land use attributed to the car park land should be the same as that attributed to the Land...”
In that paragraph “the Car Park Land” is the small car park and “the Land” is the Stadium land. After considering the League’s objection, the Council also declared the small car park to be “Commercial - Other”. The League appeals to this court seeking an order that the Council should have declared the land use for all three parcels to be “Other”.
For completion, I note that the Council had declared the land which constitutes the Max Basheer Reserve to be “Commercial - Other”. The League also objected to the declaration. The Council acceded to the submissions made by the League and altered the declaration to “Other”.
It is common ground that all three parcels which are the subject of these appeals form part of the Football Park complex. What is in dispute is the nature of the land use of the three parcels of land the subject of these appeals. The League submits that the predominant use is for outdoor recreation activities comprising an area for the playing of Australian Rules football, together with ancillary facilities for spectators and players and the administration of Australian Rules football. The Council submits that, although Football Park is undoubtedly used essentially as a football stadium, the League’s activities on the land are commercial in nature and the land is used for a commercial purpose. Thus, the issue on this appeal is to determine the correct nature of the land use according to the categories of land use prescribed by the Regulations.
The Relevant Principles
The Regulations provide for three categories of commercial land use, namely for a shop, for an office or for some other kind of commercial purpose. The question in this case is whether each parcel of land is predominantly used for a commercial purpose other than that of a shop or office.
The task of determining the nature of a land use will obviously require an examination of the manner in which the land is being used and, if it has been improved, an examination of the nature of the buildings or improvements or other development on the land and the use which is made of them. If there is more than one use, it is necessary to determine the predominant use of the land: s176(3). Given that the enquiry is to determine the nature of the land use, the principles of planning law as to the process involved when determining the nature of a proposed development provide some assistance. The enquiry should not involve a meticulous examination of the details of the likely activities being conducted on the land or any precise cataloguing of them but, instead, should be an enquiry as to what, according to its ordinary terminology, is the appropriate designation of the use of the land and any buildings thereon: see Stephen J in Pioneer Concrete (Qld) Pty Ltd v Brisbane City Council (1980) 145 CLR 485 at 507-508. Generally speaking, that will often be a useful approach. Of course, each case must be considered according to its own facts and circumstances.
It is essential to remember that the purpose of the enquiry is limited to a determination of the nature of the land use. However, some assistance may be gained from examining the activities in which the owner or occupier of the land is engaged since they might provide an understanding of the nature of the use of the land. However, care must be taken to ensure that the nature of the activities of the owner or occupier do not distract one from the real question, which, as I have said, is to determine the nature of the use of the land. The fact that land is being used by a commercial enterprise does not necessarily mean that the land is being used for commercial purposes. For example, a commercial enterprise might use a particular parcel of land for a purpose quite divorced from its usual commercial activities, for example, it might use a particular parcel for charitable purposes only. In other words, a commercial organisation and a non-commercial organisation might use land in the same way. Thus, the essential task is to determine the nature of the land use. In the final analysis, it might often be a question of fact and degree whether the use is for a commercial purpose or some other purpose: Lizzio v Ryde Municipal Council (1983) 155 CLR 211 at 217; Penrith City Council v Waste Management Authority (1990) 71 LGRA 376 at 384.
The adjective “commercial” is not a term of art. It is a term used in everyday parlance. It applies to that which pertains to commerce or trade: it describes that which is of, or relates to, commerce or trade: see Shorter Oxford English Dictionary and Macquarie Dictionary. The terms “trade” and “commerce” are often used singly and, on occasions, are used together in the phrase “trade and commerce”. The meaning of the two words is similar. The word “commerce” perhaps has a wider connotation and includes trade. Dictionaries define “commerce” to mean the buying or selling of goods or commodities. But its meaning also extends to include dealings in services, at least so far as the law is concerned. Thus, “commerce” includes banking, insurance, interstate transport of goods, and communications including broadcasting and television: see Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 at 381-383; see also W. & A. McArthur Ltd v Queensland (1920) 28 CLR 530 at 547 and Australian National Airways Pty Ltd v The Commonwealth (1945) 71 CLR 29 at 56-57. Later decisions have confirmed this meaning of “commerce”: see for example Re Ku-ring-gai Co-operative Building Society (No.12) Ltd (1978) 36 FLR 134 at 139 and 167; Glorie v WA Chip & Pulp Co Pty Ltd (1981) 55 FLR 310 at 318-319. In R v Federal Court of Australia; ex parte WA National Football League (“Adamson’s Case”) (1979) 143 CLR 190 at 209, Barwick CJ observed, “trade for constitutional purposes cannot be confined to dealings in goods and services”. Neither trade nor commerce is so confined in common parlance. Commerce includes dealing in goods, commodities or services. It embraces primary, secondary and tertiary industry. Many are now employed in areas which once would not have been regarded as commercial. A number of activities have been commercialised in the past 50 years and in such a way that they have come to be regarded as having a trading or commercial character. In this context, it is sufficient to mention entertainment, information, sport and tourism: see Walker v Crystal Palace Football Club Ltd [1910] 1 KB 87 and Brimelow v Casson [1924] 1 Ch. 302; Adamson’s Case (supra) at 240 per Murphy J. The decision in News Ltd v Australian Rugby League Ltd (1996) 64 FCR 410 at 580-581 is a recent instance of a sporting organisation being held to be engaged in trade and commerce. Thus, although it is common ground that the land owned by the League is used for the playing of a sport, it is necessary to determine whether the purpose for which the sport is played is commercial or not.
An understanding of how the League uses its land can be obtained from examining its activities and the manner in which it arranges for football matches to be played at Football Park.
The Constitution of the League
The League is an association incorporated pursuant to the Associations Incorporation Act, 1985. The objects of the League are provided in Rule 2.1 of the Constitution and Rules of the League. They are:
“2.1.1........ To promote, encourage, control and manage the game of football.
2.1.2......... To promote, control, manage and encourage football matches and competitions between League Clubs as hereinafter in these Rules defined.
2.1.3......... To promote, encourage, control and manage the playing of all other forms of athletic sports.”
The reference to football in the Rules is plainly a reference to Australian Rules football and not to any other football code. For convenience and intending no disrespect to other football codes, I will refer to Australian Rules football as “football”.
The League has a limited membership. It comprises nine metropolitan clubs which play football in the League’s competition, a director appointed by the Country and Metropolitan Football Council to represent the Associations and Leagues affiliated with the League, the officers of the League and life members of the League: see Rule 4. Each of the nine metropolitan football clubs is an association incorporated pursuant to the Associations Incorporation Act. In this context, it is perhaps necessary to note that the members of Football Park are not members of the League. I will explain membership of Football Park below.
The League’s Administration
The League has its offices and administration based at Football Park. From those offices it carries out its obligations to administer, control and develop football in South Australia and promotes its objects and activities. Rule 2.2 in the Constitution and Rules of the League prescribes its powers. Viewed as a whole, they are powers which enable it to carry out its objects and its obligations to the Australian Football League. There are extensive financial powers to enable it to achieve its objects. Those financial powers include a power to establish and conduct a stadium and club. If the League were wound up, the surplus of assets over liabilities would be distributed to the nine League clubs.
The League has a substantial administration which manages different aspects of its operations. The control and management of the League is vested in a Board of Directors. In addition, there is a Football Commission to which is delegated all but seven listed exceptions of the powers of the Board: Rule 5.8.7. Those exceptions relate to major aspects of the League’s operations. The Commission is required to appoint a general manager: Rule 5.9. The League also includes a council called the South Australian Country & Metropolitan Football Council which comprises eleven persons appointed by and to represent all leagues and associations affiliated with the League: Rule 6. The Council’s task is to report to the Commission upon matters affecting country and metropolitan football.
The League has made regulations dealing with a wide range of matters relating to the League’s day to day operations. Some examples of those matters are the appointment of the League Commissioners who hear charges arising out of football matches arranged by the League and the procedures for hearings before those Commissioners; the appointment of a Permit Tribunal to deal with matters relating to registration of players; the appointment of a Boundaries Commission to deal with club boundaries, and the appointment of other officers to deal with different kinds of tasks involved in the administration of football, such as the selection and management of State teams and players’ rights. Finally, there is a Football Development Foundation whose task is to investigate and report on matters relating to the promotion of football.
The Regulations provide that all income earned by the League belongs to it and is to be applied in satisfying the debts and liabilities of the League and towards two funds called “The Capital Improvement Fund” and the “Technical & Development Fund”: Reg 3. The Regulations require a fixed percentage of admission charges, the net profit from the sale of Football Budget, and the interest on the League’s investments to be paid to the Capital Improvement Fund, the income of which is applied to development costs incurred in respect of the Stadium: Regs 3.7 and 3.8. A fixed percentage of admission charges must also be paid to the Technical & Development Fund: Reg 3.9.
The League arranges a program of football matches for four grades of football, namely, the League, the League Reserves, and an Under 19 Year and Under 17 Year competition. The Regulations of the League cover a great many administrative aspects of those competitions as well as rules for the playing of the competition. The League also regulates and controls recruitment and transfers of players as well as regulating payments to players.
The Regulations empower the Football Commission to provide for membership of Football Park, to prescribe categories of membership, and to set aside parts of Football Park for use by members. The Commission has provided for membership of Football Park and members occupy those parts of the Stadium which have been set aside for that use.
The League and the AFL
The League is associated with the Australian Football League, which administers, fosters and develops football in Australia. The Australian Football League also makes and administers the laws of football. The Australian Football League has, by agreement, delegated to the League the obligation to administer, foster and develop the game of football in South Australia.
Until the end of the 1996 football season, there was one football club based in South Australia which competed in the Australian Football League competition (“the AFL competition”). It was the Adelaide Football Club (“the Crows”). From the commencement of the 1997 football season, the Port Adelaide Football Club (“Port Power”) joined the Crows as a team based in South Australia which played in the AFL competition. Both the Adelaide Football Club and the Port Adelaide Football Club are companies limited by guarantee. They are subsidiaries of the League by virtue of the power of the League to appoint and remove all directors of each of those companies: see s46 of the Corporations Law. The power to appoint and remove directors is vested in the League pursuant to the Articles of Association of each company.
The right to field teams in the AFL competition is granted by the Australian Football League by way of a licence. The licence pursuant to which the Adelaide Football Club and the Port Adelaide Football Club field teams in that competition is held by the League. The League, in turn, has sub-licensed the right to field teams in the AFL competition to both the Adelaide Football Club and the Port Adelaide Football Club respectively. Under each of their respective sub-licence agreements each pays the League, by way of a sub-licence fee, a proportion of their net operating surplus. The licence fee received by the League from the Adelaide Football Club in the 1996 season was $1,459,687. In 1997 the League received a substantial licence fee from both the Adelaide Football Club and the Port Adelaide Football Club.
The Development Activities of the League
The League employs ten persons on its technical and development staff. In addition, each club which is a member of the League employs a technical and development officer whose salary is subsidised by the League. The task of the technical and development officers employed both by the League and the League clubs is to promote and foster within South Australia the development of football at all levels including junior football but excepting the AFL competition. In 1996 the League spent approximately $818,000 in the direct promotion and development of football. The League’s technical and development officers are based in offices situated within the Stadium at Football Park. The ovals and the car parks adjacent to the Stadium are also used for the promotion and development of Australian Rules football.
Umpires
The League spends a substantial sum in each year for the employment and training of approximately 170 umpires. It conducts an Umpiring Academy for the purpose of training new umpires. These umpires are based at Football Park and carry out most of their training on the Max Basheer Reserve. The League also assists country and metropolitan leagues which are affiliated with the League in training umpires for competitions conducted by those leagues. This is carried out by way of seminars conducted both at Football Park and at areas in the country leagues. In 1996, the League spent in excess of $427,000 on training costs and fees to umpires.
The League’s Financial Statements
The Annual Report of the League for the year ended 31 October 1996 includes the financial report of the League for that year. It also shows the corresponding financial information for the year ending 31 October 1995. Speaking broadly, the financial position is very similar in each year. The financial report discloses a very substantial financial position. The following are the main items appearing in the financial report for the year ending 31 October 1996:
Trading Account
Revenue 14,443,707
Licence Fee from AFC 1,459,687
......... Interest Received 242,667
Total Revenue $16,146,061
......... Operating Surplus $3,600,459
Summary of Balance Sheet
......... Assets
......... Current Assets 4,287,022
......... Non-current Assets 19,429,584
......... Total Assets $23,716,606
......... Liabilities
......... Current Liabilities 4,665,174
......... Non-current Liabilities 7,059,546
......... Total Liabilities $11,724,720
......... Net Assets $11,991,886
The capital funds and reserves of the League in 1996 reflected the net asset position, that is to say, they totalled $11,911,886.
Although the League is incorporated pursuant to the Associations Incorporation Act, it is, nevertheless, at liberty to conduct its affairs so as to trade as profitably as possible. The larger its profits, the better it is able to improve its facilities and to promote football and the League in fact applies its profits to those ends. By reason of s55 of the Associations Incorporation Act the League is prohibited, in the absence of an authority from the Corporate Affairs Commission, from conducting its affairs in a manner calculated to secure a pecuniary profit for the members of the League or any member of the League. The Constitution and Rules of the League authorise it to grant financial assistance to other bodies which promote any form of sport: Rule 2.2.16. Pursuant to that power and Regulation 3.11 of its Regulations, the League makes a distribution from its profits to each of the nine League clubs. The distribution is gratuitous and the clubs have no entitlement to require the League to make a contribution. In 1996 the League distributed $3,060,000 to the League clubs.
The League also applies its revenue in improving its facilities. One example is that following the repayment of the cost of the Stadium complex, the League has spent about $6 million on improving its corporate units and boxes. League revenue is applied towards repaying the loan incurred to carry out that work.
The Stadium
The Stadium comprises
Grandstand facilities for spectators including a members grandstand and public grandstands.
Facilities in the grandstand known as “corporate units and boxes” which are held by business organisations for their own use. There are in all 235 corporate units or boxes. Those holding them pay rent to the League.
The administration offices of the League.
The administration offices of the Adelaide Football Club.
A training and rehabilitation facility erected by the Adelaide Football Club at its own expense. This facility is on the eastern side of the Stadium and is attached to the Stadium. It is the AFC land.
A convention centre which is located on the western side of the Stadium and adjoins the members stand. The centre is capable of holding 625 persons.
A gambling auditorium located immediately below the convention centre. It contains 39 poker machines and a Cross-Lotto agency run by the League as well as a TAB agency and a bar and dining facilities.
Further bars, dining rooms and food outlet facilities for the use of spectators.
The Adelaide Football Club does not pay rent or other fee for that part of the land on which its offices and its training facility are erected. Initially these facilities were constructed on land leased by the League from West Lakes Limited. The League purchased the fee simple in 1997. The League built the Stadium in 1972. At first the only covered area was the members’ grandstand. Since 1972 the League has improved the facilities by providing more covered areas and the corporate boxes and units. The convention centre was built in 1992. The gambling auditorium was built in 1995. The building on the AFC land was constructed by the League in 1995. These capital improvements are all testament to the capacity of the League to derive revenue from the use of its land at Football Park, part of which has been applied to the cost of these facilities.
Surrounding the Stadium are areas used for car parking which are either paved or grassed. Three of the grassed parking areas are used for training for or playing football. Two of those ovals are on the Max Basheer Reserve. The third is at the southern end of the Stadium on the land marked “Park Pavilions Car Park” on the above plan. These ovals are used for a variety of purposes including training by the Adelaide Football Club, training by those selected to play for the State team, for the technical and development activities of the League and for trial games between teams playing in the League’s competition. Occasionally they are used for football matches played for charity.
A substantial proportion of the area available for car parking is reserved for members of Football Park, players and officials of competing teams and holders of corporate facilities. The total car parking available on the Stadium land as well as on the area of the Max Basheer Reserve is for 3,800 cars. With the exception of players and officials participating in a football match at Football Park on any day, all persons using car parks at Football Park directly or indirectly pay a fee for car parking. The League receives a substantial income from car parking fees from the public and members.
The AFL competition and the SANFL competition are conducted between mid-February and early October in each year. The League arranges for a football match to be played at least once each week during that period. It uses the Stadium for playing matches in both competitions. In the SANFL competition both weekly matches and finals are played at Football park. Since it entered the AFL competition, the home matches of the Adelaide Football Club have been played at Football Park and in 1997 both the Adelaide Football Club and Port Adelaide Football Club have played home matches on that ground. Those teams used Football Park on a total of 28 days in 1997 for playing competition and trial matches. One State of Origin match was played at the Stadium in 1997. In the 1996 season football matches were played at Football Park on a total of 29 days attracting a total of approximately 680,000 spectators. In the 1997 season matches were played on 32 days attracting approximately 1,159,000 spectators. The substantial increase was largely caused by the introduction of the Port Adelaide Football Club to the AFL competition.
The convention centre is capable of holding 625 people in its dining area. The centre may be divided into smaller rooms. The centre is used for pre-match luncheons conducted by both the Adelaide Football Club and the Port Adelaide Football Club before home games; for large functions conducted by the League including the counting for and presentation of the Magarey Medal; for private functions and dinners; for seminars or conferences by persons not directly associated with Australian Rules football; and for functions including seminars and functions involving football personnel.
Both the convention centre and the gambling auditorium are conducted by the catering division of the League. The division is also responsible for all liquor and catering in the convention centre and gambling auditorium as well as in all other areas of the Stadium. The gross revenue derived by the League from its catering division in the 1996 year, other than from the gambling auditorium, was in the order of $4.73 million, which represents approximately 29% of the gross revenue received by the League. About 11% of the revenue earned by the catering division was derived from functions which were not in any way associated with football. That is about 3% of the League’s total revenue. Thus, it is apparent that the major part of the income of the catering division is derived by sales on match days. This is especially demonstrated by the income from liquor sales on match days which accounts for 72% of the total income from liquor sales. In addition, the League operates kiosks throughout the ground at which pies, pasties, sweets, drinks, icecreams and the like are sold. The sales turnover is very substantial and the surplus of income over expenditure is also very substantial. These figures form part of the confidential evidence. The catering division was described in the evidence as “the jewel in the crown” of the League’s trading activities.
The gambling auditorium contains 39 poker machines, a TAB agency, and a Lotteries Commission agency. The League derives income from the poker machines and the Lotteries Commission agency. The Totalizator Agency Board pays rent to the League for the area occupied by its agency. The auditorium has a bar and dining facilities which are used during the week. It is extensively used on days when football matches are played at Football Park. It is used as a venue for members of the Adelaide Football Club on home match days and is known as “the Crows Social Club”. The League receives all revenue derived from the sale of liquor and food in the gambling auditorium, which in 1996 represented approximately 6.5% of the total gross revenues of the League. The revenue from gaming machines represented approximately 9.2% of the gross revenues of the League in the 1996 year. If the revenue from gaming machines is added to the revenue earned by the catering division in the convention centre which is not associated with football, at least 12.2% of the League’s revenue is not associated with football matches. Admittedly, the gaming income is boosted by patrons attending when football matches are played.
The provision of facilities of this kind is obviously an important aspect of the staging of football matches at Football Park. Patrons of sporting organisations such as this, be they members or the general public, expect and are provided with facilities for the service of food and liquor. It is reasonable to regard the provision of such facilities as incidental and ancillary to the conduct of football matches: see City of Essendon v Cox (1966) 24 LGRA 30, 40. However, it is fair to observe that at Football Park it is plainly intended as a means of attracting spectators, be they members of Football Park or the general public. If the total of the income derived from food and liquor sold in both the convention centre and in the gambling auditorium during football matches and at other times is added to the gaming income, it represents almost 45% of the gross revenue of the League. The major part of the income from sales of food and liquor is earned on match days. Thus, the revenue derived from the sale of food and liquor is a very important aspect of the overall income of the League and justifies its status as the jewel in the crown of the League’s revenues.
Other major sources of income in 1996 were membership fees of Football Park (a very substantial proportion of income), gate receipts and other proceeds of matches (including interstate matches), fees for car parking (from both the public and members of Football Park), letting of corporate units and boxes, advertising in the arena, sale of broadcasting and television rights, rent from the Totalizator Agency Board for its agency in the gambling auditorium, sales of the magazine called the “Football Budget” and sale of advertising space in the Budget, and income from the hire of Football Park. From time to time the League grants a licence to third parties to use the Stadium for other purposes such as rock concerts and the like. A fee is payable for the licence. It is not yet a major part of the League’s income.
This overview of the League’s activities shows that they may be divided into five broad categories, namely,
The administration and conduct of the Football Park Stadium, which includes staging football matches in both the AFL competition and the SANFL competition.
The conduct of the convention centre and gambling auditorium.
Trading operations associated with staging football matches.
The promotion and development of the game of Australian Rules football at all levels in the State of South Australia.
The administration and conduct of a football competition between the clubs which are members of the League.
It is apparent that the profits derived from the staging of football matches, from the operations of the convention centre and gambling auditorium, and from the other trading operations of the League are used for the administration of the League, the promotion of Australian Rules football, and the administration and conduct of the competition between clubs who are members of the League (“the SANFL competition”); and for direct and substantial grants to the nine League clubs.
Thus, the League uses its land at Football Park in order to earn what is a very substantial financial income from the staging of football matches. That income is in no sense a mere incidental attribute of those matches but, instead, is the intended and deliberate consequence. The League very obviously and quite properly seeks to exploit its use of its land to derive profits, which it applies in its administration, to improve its facilities, and to promote Australian Rules football. Its total income in both 1995 and 1996 was some $16 million. After paying $3,060,000 to League clubs in each of those years, and after paying interest on its borrowings, it had a very impressive surplus of $882,117 in 1995 and of $540,459 in 1996. The total of the distribution in 1996 to the League clubs is $3,600,459, which represents 25.3% of the League’s total income in that year. That clearly indicates a very successful and profitable enterprise.
The Use of the Stadium Land
As emphasised earlier, what the court must determine is not the nature of the League but the manner in which it uses its land. The Stadium at Football Park is an essential part of the League’s operations. It is its head office and administrative centre. It houses its administrative and other officers. But it is much more than that, since all of those activities could as readily be conducted from an office complex, as the League did before it moved to Football Park. The Stadium is the venue at which the League holds football matches and those football matches are held in order to generate income for the League. The land is used for the purpose of enabling the League to stage football matches played by professional players to entertain spectators who pay a fee to watch the spectacle. The players might be playing a sport but they are playing it at a highly professional level which is characterised by high levels of player remuneration, substantial transfer fees and the like. The League encourages spectators to attend by providing facilities to enhance their enjoyment of the spectacle. The predominant part of the income of the League is directly or indirectly derived from the staging of football matches at Football Park. In other words, the land at Football Park is an essential part of the commercial enterprise conducted by the League. Without that land, the League would not be able to derive the same levels of income. For these reasons, the predominant use of the land at Football Park is commercial.
The erection by the League of the Stadium and other facilities at Football Park and the use of the Stadium and those facilities is, in principle, no different from the execution or other development of the land by any other commercial enterprise for the purpose of using the land for the conduct of that enterprise. It might be asked, why would the League, at its own cost, erect such a large and expensive stadium and equip it with such extensive facilities if it were not for the purpose of using the land for a commercial purpose, namely, to derive a substantial income from that Stadium?
It was submitted on behalf of the League that the land was not used for commercial purposes but for recreational activity, namely the playing of Australian Rules football, and the provision of the Stadium and its facilities were no more than a means to that end. Good facilities, it was said, are a necessary adjunct of the staging of football matches. Thus, it was said, if you take away the football match, you take away the rationale for Football Park. All that may be admitted. But the argument misses the point. What the argument fails to address is the fact that the League deliberately and very properly seeks to stage football matches in a way which will attract the largest possible number of spectators and thereby produce a very substantial financial return. The proposition would be more accurately stated by saying, if you take away the Stadium and other facilities on the land, you take away most of the income of the League.
I respectfully agree with Barwick CJ in Adamson’s Case where he said (at 211) that the presentation of a football match as a commercial venture for profit to the promoting body is an activity of trade. I agree, too, with His Honour’s observations that there is little difference between the presentation of a theatrical spectacle and the presentation for reward of the spectacle of a football match played by professionals as a major, if not the only, source of income and the major source of income of the League. There are other analogues, for example, a commercial cinema and the staging of other entertainments. A theatrical entrepreneur uses a theatre to produce income from the performance of a play with professional players and by selling admission to the public. The theatre is, therefore, used for a commercial purpose. So, too, the League uses the Stadium at Football Park to produce income by staging football matches between teams manned by professional players and charging the public and members fees to watch the game. It also provides other facilities from which it derives a very substantial revenue. The Stadium is, therefore, used for a commercial purpose.
The argument presented by the League had a similar ring to that presented on its behalf and on behalf of its sister League in Western Australia in Adamson’s Case. One of the issues in that case was whether the two Leagues were trading corporations. Notwithstanding that the issues in the case at bar are different from those in Adamson’s Case, the observations of Mason J at 235, with whom Jacobs J agreed, are entirely appropriate. His Honour said:
“The prosecutors’ case is that the trading activities of the two Leagues are incidental to their main objects which are the promotion and encouragement of the sport as a recreation. This to my mind is an inversion of the true position. To me it seems that the sport is promoted and encouraged as a means of ensuring the receipt of the large financial returns which are associated with it. The financial revenue of the Leagues is so great and the commercial means by which it is achieved so varied that I have no hesitation in concluding that trading constitutes their principal activity. In saying this I treat all their activities which I have listed and which produce revenue as trading activities. I do not limit the concept of trading to buying and selling at a profit: it extends to business activities carried on with a view to earning revenue.”
The reasoning of Barwick CJ and Murphy J, the remaining member of the majority, was to like effect. I should add that the evidence in the case at bar demonstrated that the nature of the League’s activities now are very similar to what they were in 1979 when Adamson’s Case was decided. What has changed is that the total income of the League is now considerably higher than it was then. Finally, the activities of the League and its financial operations are not significantly dissimilar from those of the Australian Rugby League examined in News Ltd v Australian Rugby Football League Ltd (supra). The factors which the Full Court of the Federal Court of Australia considered pointed to the conclusion that the Australian Rugby Football League was engaged in trade and commerce have obvious parallels in the operations of the South Australian National Football League. The Court said at 580:
“It is true that the game of rugby league is at the centre of the activities of the League and ARL and of the clubs. But the game is played on grounds from which income is derived; and it is the vehicle for obtaining sponsorship and other sources of revenue. The playing of rugby league generates the interest of the media and it is that interest that leads to the League deriving income from the sale of television and broadcasting rights.”
Those observations apply with equal force to the League.
Other sporting clubs or institutions derive revenue from holding sporting fixtures. Those clubs and institutions range from the quite small to the very large. The revenue derived includes charges at the gate and often includes income from liquor trading pursuant to a licence or permit under the liquor licensing legislation. The decision in this case does not necessarily mean that each of those sporting clubs and institutions is using its land for a commercial purpose. If necessary, each will have to be considered according to its own facts and circumstances. It might be necessary to have regard to such factors as the nature and extent of all of the activities conducted on the land, the manner in which those activities are conducted, the purpose for which those activities are conducted, and the financial level at which the activities are conducted. It might be a question of fact and degree in any one case whether the use of the land by a sporting club or institution is for a commercial purpose.
For all of these reasons, I find that the Stadium land is used for a commercial purpose.
The Small Car Park
This small triangular parcel of land is grassed and contains a few small trees and shrubs on some of its perimeters. It has a very low permapine fence and gate on its frontage to Brebner Drive. It has been used for a variety of purposes including uses as a car park, a parking area for police and ambulance vehicles, and a helicopter landing area. Generally speaking, it is used as a car park to accommodate overflow car parking on days of peak demand, such as finals matches. It is, however, used very infrequently, about six times in each year.
Mr McElhinney initially submitted that the small car park was used for a different purpose from the Stadium land. This submission was, however, not supported by the evidence. As already noted, the League had, in its Notice of Objection, asserted that the small car park is an integral part of the Stadium land and forms part of the total Stadium complex known as Football Park. It asked that the same land use be attributed to both the Stadium land and the small car park. The League’s assertion of the relationship between the small car park and the rest of the land at Football Park was confirmed by Mr Lyons in his evidence. Even without the admissions by the League, I would have reached the same conclusion. Although it is used infrequently and a good deal less than the rest of the League’s land, when it is used, it is manifestly part of the League’s activities at Football Park because it complements the use by the League of its other land. It is, therefore, an integral part of the League’s activities.
For these reasons, this land use, too, was correctly declared by the Council to be “Commercial - Other”.
The AFC Land
This small parcel of land is entirely occupied by a building used by the Adelaide Football Club to house the training centre for its players. It is a well and elaborately equipped facility. It includes a substantial gymnasium, a swimming pool, lockers and shower facilities, a number of areas and rooms for medical and physiotherapy treatment, an area used alternatively as access to the stadium and as a media room, and other administration and ancillary facilities. It is used for training players and treating them for injuries and other ailments. It is used solely by the Adelaide Football Club. The facility stands on land owned by the League. It is a very small part of the land comprised in Certificate of Title Register Book Volume 5084 Folio 996 which comprises the greater part of the Stadium land. The Adelaide Football Club does not pay rent or any other fee for the use of the land. The facility was built by the Adelaide Football Club at its own cost.
This land is, therefore, used by the Adelaide Football Club for the purposes of training its players and providing them with a kind of clubrooms. Even that use has the hallmarks of a commercial purpose since the club employs these professional players to earn income for the club. The League’s financial report for the 1996 year showed that the club had a very substantial income in that year in excess of $8 million. But it is not the use by the club but the use by the League which is relevant in this appeal. In this context, it is useful to note that the League also permits the Club to use another part of the Stadium land for its offices of administration and to use the grassed areas surrounding the Stadium for training and for playing trial matches and the like. The Adelaide Football Club was the first club in South Australia to compete in the AFL competition. It is apparent that the League has permitted the Club to enjoy all of these benefits in order to promote the Club and, thereby, promote Australian Rules football in South Australia. By promoting the Adelaide Football Club, the League seeks to enhance its revenue. A direct part of that revenue is the licence fee paid by the Adelaide Football Club which represented 9% of the League’s revenue in 1996. In addition, the promotion of the club would produce other forms of revenue such as gate receipts, car park receipts, and an increased turnover in the catering division. Thus, although the land is used by the Adelaide Football Club to train its players, the use of the land by the League is for commercial purposes. The Council has, therefore, correctly declared the use of the land to be “Commercial - Other”.
For all of these reasons, each of these appeals is dismissed.
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