T T-Line Company Pty Ltd v Commissioner of State Revenue
[2008] VSC 506
•27 November 2008
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
VICTORIAN TAXATION APPEALS LIST
Nos. 5798, 5799 and 6584 of 2008
| T T-LINE COMPANY PTY LTD | Appellant |
| v | |
| COMMISSIONER OF STATE REVENUE | Respondent |
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JUDGE: | Mandie J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 20 November 2008 | |
DATE OF JUDGMENT: | 27 November 2008 | |
CASE MAY BE CITED AS: | TT-Line Company Pty Ltd v Commissioner of State Revenue | |
MEDIUM NEUTRAL CITATION: | [2008] VSC 506 | |
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TAXATION – Land Tax – Crown land leased to taxpayer by Port of Melbourne Corporation as committee of management under Port Services Act 1975 – whether taxpayer was a person entitled to land “under a lease from the Crown” and as such the “owner” thereof under s.10(b) of the Land Tax Act 2005 – whether the land, being the property of the Crown, was exempt land, or was taxable land in that it was held by a person entitled to the land “under a lease from the Crown” within the meaning of s.79(2)(a) of the Land Tax Act 2005.
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APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr C J Delany SC with Mr D J Batt | Holman Fenwick Willan |
| For the Respondent | Mr J D Merralls QC with Mr C J Horan | State Revenue Office |
HIS HONOUR:
This proceeding involves three appeals[1] to the Court based on objections by the appellant against land tax assessments by the respondent (“the Commissioner”) for the years 2006, 2007 and 2008. The appeals involve a question of law and there is no dispute as to the facts.
[1]See Rule 7.05 of the Supreme Court (Miscellaneous Civil Proceedings) Rules 1998.
The assessments relate to land in Port Melbourne which is the property of the Crown in right of the State of Victoria (“the Land”) and which is leased to the appellant by the Port of Melbourne Corporation (“the PMC”). The Land forms part of a larger area of land that is defined as the “Station Pier land” by s.3(1) of the Port Services Act 1995 (Vic) (“the Port Services Act”). The appellant operates the “Spirit of Tasmania” cargo/passenger ferry service between Melbourne and Devonport and operates a ferry terminal at Station Pier.
Section 7 of the Land Tax Act 2005 (Vic) (“the Land Tax Act”) provides that land tax is imposed in respect of each year on all “taxable land” in Victoria. “Taxable land” is defined[2] as “land that is not exempt land” and “exempt land” is defined as “land that is declared by or under this Act to be exempt land.”
[2]See s.3(1) of the Land Tax Act.
Section 79(1)(a) of the Land Tax Act provides that land is exempt land if it is the property of the Crown in right of Victoria. However, s.79(2)(a) provides that the foregoing exemption does not apply to “land that is held by… a person who is entitled to the land under a lease from the Crown under which the person has no right, absolute or conditional, of acquiring the fee simple.”
Section 8 of the Land Tax Act provides that the “owner” of taxable land is liable to pay land tax on the land. Section 10 of the Land Tax Act defines the persons who are owners of land for the purposes of the Act to include:
“(a) a person entitled to land for a freehold estate in possession;
(b) a person entitled to land under a lease from the Crown;
(c)a person entitled to land under a licence from the Crown if the person has a right, absolute or conditional, of acquiring the fee simple…”
The appellant’s contention in its objections to the assessments was that the Land was exempt land, within the meaning of s.79 of the Land Tax Act, because it was land the property of the Crown in right of Victoria and the lease under which the appellant was entitled to the Land was not “a lease from the Crown.” At trial, the appellant advanced the parallel contention that it was not “the owner” of the Land because it was not, within the meaning of s.10(b) of the Land Tax Act, “a person entitled to land under a lease from the Crown.”
The question to be decided, therefore, is whether the lease under which the appellant is entitled to the Land is a “lease from the Crown” within the meaning of the Land Tax Act.
The subject lease is dated 20 September 2005 and was executed by the PMC as “Landlord” and by the appellant as “Tenant.” The subject lease states that the PMC is the committee of management of Station Pier pursuant to Part 12 of the Transport Legislation (Amendment) Act 2004 (Vic)[3]. The lease, which is described as a “new Lease,” incorporates the provisions of earlier leases, namely, a lease between Melbourne Port Corporation and the appellant dated 12 December 1997 and a lease between Station Pier Committee of Management Incorporated dated 20 May 2003.
Legislative background[4]
[3]This amending Act inserted certain provisions into the Port Services Act 1995 (Vic).
[4]All references are to Victorian legislation.
Before outlining the submissions of the parties, it is convenient to refer in a little detail to the relevant legislative background, both in relation to Crown land and in relation to land tax.
Various provisions of the Land Act 1958 deal with the grant of estates or interests in Crown land. For example, s.12(1) of the Land Act provides that, under and subject to the provisions of Part 1 of the Act and not otherwise, the Governor in Council “in the name and on behalf of Her Majesty” may grant convey or otherwise dispose of lands belonging to the Crown for a such estate or interest as is thereby authorised. By way of further example, s.134(1) of the Land Act provides that the Minister “on behalf of Her Majesty” may grant leases of any Crown land for any purposes (except for the purpose of agriculture) at the rent and subject to other conditions which the Minister thinks fit. However, by s.134(2), it is provided that nothing in sub-section (1) constitutes an authority to lease any land which is reserved either temporarily or permanently under s.4 of the Crown Land (Reserves) Act 1978.
Section 4(1) of the Crown Land (Reserves) Act 1978 empowers the Governor in Council to reserve, either temporarily or permanently, any Crown lands which are required for any public purposes. The Crown Land (Reserves) Act contains a variety of machinery provisions for the vesting and/or management of Crown lands which have been reserved for public purposes. For example, a number of provisions deal with the appointment and powers of committees of management. Section 14A and following deal with the incorporation of certain committees of management and s.14D empowers such an incorporated committee, with the consent of the Governor-in-Council, to grant leases of reserved land for certain purposes.
The foregoing is the general legislative background to the particular provisions that were applicable to the Land in the tax years in question. The particular provisions are contained in the Port Services Act 1995.
Section 10 of the Port Services Act established the PMC as a body corporate and s.11 provides:
“The Port of Melbourne Corporation is a public authority but does not represent the Crown.”
Sections 65 and 66 of the Port Services Act[5] relevantly provide:
“65. On and from the commencement of this section, Station Pier land –
(a)is deemed to be temporarily reserved under section 4(1) of the Crown Land (Reserves) Act1978 for the purposes of the port of Melbourne …; and
(b)the Port of Melbourne Corporation is deemed to be the committee of management of the land, and, for those purposes, is deemed to be an incorporated committee under that Act.
66.(1) Despite anything to the contrary in the Crown Land (Reserves) Act 1978, the Port of Melbourne Corporation may grant a lease or licence over any land reserved under this part for which it is the committee of management for any period (of not greater than 25 years) for which the corporation thinks fit, if that lease or licence is in accordance with the purposes for which the land is reserved.
(2)The power to grant a lease or licence under subsection 1 is in addition to any power the Port of Melbourne Corporation has as a committee of management under the Crown Land (Reserves) Act 1978 to grant a lease or licence under that Act.”
[5]These provisions were inserted by the Transport Legislation (Amendment) Act 2004, No. 110/2004.
Turning to the land tax legislation, the Land Tax Act 1958 granted a general exemption to all Crown land until, by the Land Tax (Amendment) Act 1982[6], the following provision was inserted in the 1958 Act:
“43. (1) Any person entitled to any leasehold estate whether legal or equitable in land under lease from the Crown who has no right either absolute or condition of acquiring the fee-simple shall be deemed for the purposes of this Act to be the owner of the land; and shall be assessed and liable for tax.”
[6]Act No. 9842/1982.
In respect of this amendment, the then Treasurer (Mr Jolly) said in his Second Reading speech:
“The Bill also inserts new provisions into the principal Act so that land owned by the Crown which is presently exempt from payment of land tax will, if the land is leased, become taxable in the hands of the lessee.
It is customary for most leases entered into at present to provide that the lessee is to pay the land tax assessed on the land in the name of the owner or, alternatively, that the lessee is the reimburse the owner for the amount of land tax assessed on the land subject to the lease. Lessees of Crown land therefore gain an advantage over lessees from “non-exempt” owners as there is no land tax currently payable in the case of Crown land. Although the Crown leases provided for the amount of the rental payable to be reviewed periodically, the amount of the rental is generally quite favourable to the lessees.
A lessee of Crown land will be deemed to be the owner of that land for the purposes of the Land Tax Act so that land will become subject to land tax in the hands of the lessee.”
The substance of s.43 of the Land Tax Act 1958, together with the definition of “owner” in that Act, found its way into the Land Tax Act 2005.[7]
[7]In the course of that transposition, there was what senior counsel for the Commissioner rightly referred to as a “muddle” in relation to that aspect of the definition of “owner” that was concerned with whether there was any right in a lessee to acquire the fee simple from the Crown. It is unnecessary to elucidate further on that aspect as it does not assist one way or the other in determining the present issue.
Submissions
The appellant’s essential submission was short and cogent. The appellant said that the subject lease from the PMC was not a “lease from the Crown” on the plain meaning of ss.10(b) and 79(2)(a) of the Land Tax Act. On its face, the lease was “from” the PMC and not “from” the Crown. The lease was granted by the PMC, a statutory corporation, pursuant to its statutory power under s.66 of the Port Services Act. It was submitted that that contention was reinforced by s.11 of the Port Services Act because, as thereby provided, the PMC did not “represent” the Crown and that was further reinforced by s.46A(2) of the Interpretation of Legislation Act 1984:
“If, in an Act or subordinate instrument, it is provided that an entity does not represent the Crown, that entity does not have, for any purpose, the status, privileges and immunities of the Crown, unless the contrary intention appears.”
The appellant submitted that if Parliament had intended ss.10(b) and 79(2)(a) of the Land Tax Act to apply to all leases of Crown property, by whomever granted, it could easily have so provided but it had not done so. The phrase used was directed to the identity of the lessor and not to the ownership of the land. If the lease had been granted by the Governor in Council, or the Minister, or any other body that represented the Crown, the result would be different.
The Commissioner said that the Crown could only dispose of interests in land under and in accordance with statute[8] and that the relevant statutory power was, in the present case, conferred on the PMC in its capacity as a committee of management. The title to the Land remained with the Crown and, after the lease was granted, the reversionary interest was held by the Crown. Accordingly, the Commissioner submitted that notwithstanding that the lease was entered into by the PMC the lease was held “of” or “from” the Crown and that the phrase “lease from the Crown” in ss.10(b) and 79(2)(a) of the Land Tax Act should be construed in that sense. The phrase was not directed at the identity of the “landlord” under the subject lease.
[8]Citing Cudgen Rutile (No 2) Pty Ltd v Chalk [1975] AC 520 at 533; O’Keefe v Williams (1907) 5 CLR 217 at 225-226; The Wik Peoples v Queensland (1996) 187 CLR 1 at 77-78, Victoria v Rossignoli [1983] 2 VR 1.
The Commissioner submitted that it was immaterial that the PMC did not “represent the Crown” and that s.11 of the Port Services Act had a different purpose (as demonstrated by s.46A(2) of the Interpretation of Legislation Act) and this could not alter the position that the lease granted to the appellant was “held from the Crown.”
The Commissioner submitted that the interpretation for which he contended was equally open on the plain language of the statute and that the choice between the two competing constructions should be made by reference to the context and purpose of the exception to the exemption. The Second Reading speech[9] relating to the original amendment showed that the intent was to place lessees of Crown land in the same position in substance as lessees generally.
[9]See para [16] above.
The Commissioner drew the Court’s attention to two relevant decisions in New South Wales.
In Greater Wollongong City Council v Franks Sales Pty Ltd,[10] the facts were that the Wollongong showground was at all times vested in the Crown but the land had been rededicated for various public purposes and trustees had been appointed under the Crown Lands Consolidation Act 1913 (NSW) charged with the care and management of the land. The trustees gave a licence to the defendant to occupy and operate part of the land as an ice-skating rink. The issues were whether the defendant was a rateable person and whether the licensed land was rateable land under the Local Government Act 1919 (NSW). Section 145(2) of the Local Government Act provided that where the land is owned by the Crown “and is held by any person under a lease therefrom,” the holder of the lease was liable to pay the rate (it was held that “lease” included a licence). The defendant submitted (and the judge accepted) that as a matter of ordinary English the word “therefrom” related back to the words “the Crown” and the defendant further submitted that the trustees ought not to be regarded as the Crown or as acting on behalf of the Crown. Thorley DCJ then said:
“Whilst it is true in one sense the defendant here could be described as holding a licence or lease from the trustees and not from the Crown, I think this is placing upon the section an interpretation which is too legalistic … I think the proper approach is, as it were, a de facto one … it seems to me that a lease or licence from trustees appointed under the Crown Lands Consolidation Act of an area of land dedicated pursuant to that Act is a lease or licence from the Crown.”
[10](1970) 91 W.N.(NSW) 140 (District Court, Wollongong: Thorley DCJ).
The Greater Wollongong decision was apparently not cited but it was, in effect, overruled when the same statutory provision came before the New South Wales Court of Appeal (Sheller, Powell, Cole JJA), on appeal from another District Court decision, in Kempsey Shire Council v Van Park Pty Ltd.[11] In that case the defendant was the lessee of Crown land that had been reserved for public purposes under the Crown Lands Consolidation Act 1913 and under which Act the Minister had appointed the Council[12] as trustee of the reserved land. The Council, with the consent of the Minister, had leased the land to the defendant. The essential question before the Court was whether the land fell within the description contained in s. 145(2) of the Local Government Act, namely: “land….owned by the Crown and .. held by any person under a lease therefrom ..”
[11][1995] NSWSC 91.
[12]The Kempsey Shire constituted an amalgamation of two municipalities, one of which had been appointed as trustee of the land and which had granted the lease.
Cole JA said that, as the lease in question showed the lessor as the Council, and not the Crown, the natural reading of s.145(2) resulted in the lease not being a lease “therefrom” and thus the appellant (the Council) would fail. His Honour said that three propositions were advanced to escape this natural reading of the section but it is only necessary for me to refer to the first of these. It was that the use of the words “own” and “held” suggested that the provision was primarily concerned with matters of title and derivation of title rather than with the party named as lessor. I interpolate that this proposition is somewhat similar to the argument advanced by the Commissioner in the present case. Cole JA said that the expression “under a lease therefrom” was clear and unambiguous and there was no warrant for giving the words a meaning other than their clear meaning and that, being a taxing statute, clear words were required to impose a taxation liability. His Honour added that if a wider construction had been intended appropriate language could have been used.
Sheller JA agreed with Cole JA. Powell JA, after deciding that the land was Crown land, said this:
“With respect to the argument … that the provisions of .. s.145(2) operate, not merely where a person holds a lease granted by the Crown, but also where a person holds a lease granted by a person or company, the title to grant which lease is derived from the Crown, it seems to me … that, both in the immediate context in which the word “therefrom” … is used, and also in the context provided by [the relevant provisions], that argument is to be regarded as untenable, it following, that, in the present case, notwithstanding that at all relevant times the subject land was Crown land, it was not held by the Respondent under a lease from the Crown, and, accordingly, that the Respondent is not “a rateable person” … “
The Commissioner submitted that this decision was wrong, whereas the appellant submitted that it was highly persuasive and ought to be followed as there was no relevant distinction from the provision in the present case.
Reasons
In my opinion the submissions of the appellant are to be preferred and I accept them. The plain and natural application of the expressions “entitled to land under a lease from the Crown”[13] and “entitled to the land under a lease from the Crown”[14] is to a lease in which the Crown or a representative of the Crown is the lessor. Thus, a lease from the Governor in Council under s.12(1) of the Land Act or from the Minister under s.134(1) of the Land Act would clearly fall within the statutory language. On that interpretation, there is enough work for the provisions to do, so that the adoption of a “purposive” approach, and what I regard as the strained and unnatural construction advanced by the Commissioner, is not warranted.
[13]Section 10(b) of the Land Tax Act.
[14]Section 79(2)(a) of the Land Tax Act
I would also refer to and adopt the like reasoning of Cole JA, summarised above[15] which I consider to be equally applicable in the present case.
[15]See para [26].
I conclude that a lease from the PMC (whether or not s.11 of the Port Services Act is taken into account) is not a lease “from the Crown” even though it is a lease of Crown land.
I would not go so far as to say that the Commissioner’s arguments are “untenable” – indeed, although I reject them, they are, I think, reasonably arguable. Even if I were inclined to the view that the Commissioner’s arguments were correct, I would feel constrained by the decision of the New South Wales Court of Appeal in Kempsey Shire Council v Van Park Pty Ltd not to accede to them. In my view, the provisions in that case are so similar to those in this case that a single judge ought to follow and apply that appellate decision.
Accordingly the appeals will be allowed with costs and the assessments set aside.
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