Tattersall's Club v Commissioner of Land Tax
[1998] QLC 1
•30 January 1998
|
BRISBANE
30 January 1998
Re: Appeal against Assessment of Land Tax
on land owned as at 30 June 1995.
Land Tax Act 1915.
(A96-60).
Tattersall's Club
v.
Commissioner of Land Tax(Hearing at Brisbane)
D E C I S I O N
This is an appeal by the Trustees for Tattersall's Club ("Tattersall's Club") against Assessment No 50895 by the Commissioner of Land Tax ("the Commissioner") on land owned by Tattersall's Club as at midnight on 30 June 1995. Tattersall's Club objected against that assessment on the grounds that it was partially exempt from land tax under Section 13(1)(vii)(c) (now Section 13(1)(g)(i)) of the Land Tax Act 1915 ("the Act"). Following advice from the Commissioner that its objection had been disallowed, Tattersall's Club appealed to the Land Court.
The details of lands included in Assessment No 50895 were as follows:Parcel Description Advised Exemption Taxable Value
Unimproved
Value
4 L4 RP4170 $7,500,000 $3,975,000 $3,525,000
L5 RP4170
L6 RP4170
L8 RP4170
5 L3 RP4170 $1,640,000 --- $1,640,000
6 L2 RP4170 $ 900,000 --- $ 900,000
7 L1 RP4170 $2,500,000 --- $2,500,000
TOTAL TAXABLE VALUE $8,565,000
TAX RATE 1.8 cents/dollar
ASSESSED AMOUNT $154,170
There is a large measure of agreement between the parties as to the facts of this matter. The land described as Parcel 4 has been held by Tattersall's Club since the 1940s. The Tattersall's Club building is situated on that land, with frontages to the Queen Street Mall and to Edward Street. That building has been owned and used or occupied by Tattersall's Club since the 1940s. Tattersall's Club is a society, club or association not carried on for pecuniary profit.
In late November 1994, a special general meeting of the members of Tattersall's Club resolved to approve plans for the acquisition and development of the club's additional facilities. In early February 1995, Tattersall's Club entered into a contract with Advanced Bank Limited for the purchase of the land and improvements described as Lots 1 and 2 RP4170, situated at 221 and 223 Queen Street, Brisbane ("the Advance Bank land").
In early March 1995, Tattersall's Club entered into a contract with St George Bank Limited for the purchase of land described as Lot 3 RP4170 and the improvements situated at 217-219 Queen Street, Brisbane, ("the St George land"). In late March 1995, the contract for the purchase of the St George land was completed and Tattersall's Club entered into vacant possession and occupation of the land and the partly-demolished improvements thereon.
In late June 1995, the contract for the purchase of the Advance Bank land was completed and Tattersall's Club entered into vacant possession and occupation of the land, the improvements having been demolished before completion.
In February 1995, Tattersall's Club had entered into a demolition contract with Grahame Paterson & Son Pty Ltd ("the demolition contractor") for the demolition of the three buildings located on the Advance Bank land and the St George land. Although it seems that at the date of completion of the contract for the St. George land the improvements were only partly demolished, it was agreed that at the relevant time, midnight on 30 June 1995, both the St George land and the Advance Bank land were vacant.
It was also agreed that at all material times, Robin Gibson & Partners, Architects, and Acar Wargon and Chapman Qld, Structural Engineers, were engaged by Tattersall's Club, to prepare the tender and contractual documents for the construction of the club's additional facilities.
The documents indicate that an area of the building was to be strata titled or leased back to the banks and that other parts of the building were to be used for commercial purposes. The remainder of the building was to be used for club purposes.
It seems that a fence was constructed around the building site and in May 1995, the Committee of Tattersall's Club resolved to have the fence around the building site tidied up. Tenders for the construction of the new club facilities were called in mid-June 1995. Six tenders were lodged and the tender lodged by J Hutchinson Pty Ltd, dated 17 July 1995, was ultimately accepted. A construction agreement was entered into at the end of August 1995, construction of the new building commenced on 14 August 1995 and practical completion occurred on 30 May 1997.
The relevant provisions of the Land Tax Act 1915
As at the relevant time (midnight on 30 June 1995) the following provisions of the Land Tax Act were in force. Under Section 7, the Act applies to all lands within Queensland which have been alienated from the Crown for an estate in fee-simple.
Section 8 provides that:
"Subject to this Act, land tax shall be levied and paid upon the unimproved value of all lands within Queensland which are owned by taxpayers, and which are not exempt from taxation under this Act. "
Section 9 sets out the amounts and rates of land tax, while Section 9A sets out the rebates to which taxpayers are entitled where the taxable value of the land is less than a prescribed amount.
Sub-section (1) of Section 11 provides that:
"Land tax shall be payable by every owner of land upon the taxable value of all the land owned by the owner, and not exempt from taxation under the Act. "
In this case there was no dispute that at the relevant time Tattersall's Club was the "owner" of the land.
Sub-section (2) of Section 11 defines "taxable value":"The taxable value of all of the land of an owner is the amount of the unimproved value of such land or, where such land comprises 2 or more parcels, the aggregate of the unimproved values of those parcels respectively less any deduction allowable in accordance with this Act."
A "parcel" or a "parcel of land" is defined in Section 3 to mean:
"... an area of land that is subject of a separate valuation made by the chief executive under the Valuation of Land Act 1944. "
The taxable value of all land of an owner is therefore the aggregate of the unimproved values of each parcel of land, less the unimproved values of those lands exempt from taxation and any deduction allowable under the Act. The deductions are set out in the various sub-sections of Section 11, but are not relevant to the present case, which is concerned with exemptions either in whole or in part.
Sections 13 and 14A deal with land exempted from land tax. Sub-section 1 of Section 13 relevantly provides:"The following lands shall be exempt from taxation under this Act, namely-
....
(vii)All land owned by or in trust for any person or society and used or occupied by that person or society solely as a site for -
...
(c)A building owned and occupied by a society, club, or association, not carried on for pecuniary profit; "
The Taxation of Tattersall's Club
It would seem from the attachment to Notice of Assessment No 50895, that the land owned by Tattersall's Club at the relevant time comprised four parcels (parcels 4, 5, 6, and 7) each of which was a "parcel of land" (s.3) and subject of a separate unimproved value. Parcel 4 was the site of the original Tattersall's Club and was subject of an unimproved value of $7,500,000, with a partial exemption equal to 53% of that value, or $3,975,000, leaving a taxable value of $3,525,000.
Mr Flanagan, counsel for the Commissioner, conceded that there was no statutory authority for the Commissioner to grant a partial exemption. However, it had been the Commissioner's assessing practice since the 1920s. The partial exemption related to the area of the land which was occupied and used by the club, while the taxable value related to the area of land which, although owned by the club, was used for commercial purposes.
Mr Alexander, counsel for Tattersall's Club, did not challenge the Commissioner's power to grant a partial exemption by apportioning the valuation, or to the actual apportionment of that land. He said that the club accepted that apportionment and raised no issue in relation to parcel 4. It was in relation to parcels 5, 6 and 7, with unimproved values of $1,640,000, $900,000 and $2,500,000 respectively, where no exemption had been granted by the Commissioner, that was the subject of challenge in this appeal.
The Argument on behalf of the Taxpayer
Mr Alexander raised various arguments, produced numerous documents and referred to a number of authorities, all directed to proving the various requirements for the exemption provided for in Section 13(1)(vii)(c). It is unnecessary to refer to those arguments in detail because the Commissioner accepted that all but one of the requirements had been satisfied.
On the basis of the documentary evidence and those acceptances by the Commissioner, I find that:
•Parcels 5, 6 and 7 were owned by or in trust for Tattersall's Club;
•although those parcels of land were vacant land at the relevant time, Tattersall's Club intended to construct a building on the land;
•the club had taken steps for the construction of a building;
•in that sense it could be said to be used or occupied by the club solely as the site for a future building;
•Tattersall's Club is a club not carried on for pecuniary profit.
The requirement for exemption which is challenged is that the building be owned and occupied by Tattersall's Club. Mr Alexander argued that the requirement should be interpreted prospectively as meaning the site for a building to be owned and to be occupied by Tattersall's Club.
The Argument on behalf of the Commissioner
Mr Flanagan submitted that the Commissioner's case was purely a matter of statutory interpretation. While the Commissioner accepted that all other requirements had been complied with, the exemption provided for in Section 13(1)(vii)(c) required that there be a building in existence; the word "for" could not be interpreted prospectively, because the words "occupied by a society, club, or association," could not be read in such a manner. They required that at the relevant date a building was in existence, otherwise it could not be said that it was a "building owned and occupied" by Tattersall's Club.
Both Mr Alexander and Mr Flanagan referred me to a number of cases, but they agreed that there was no authority directly on this point. Most of the cases to which Mr Alexander referred were for the purpose of proving those requirements for the exemption which the Commissioner accepted.
However, there are two cases dealing with the New South Wales legislation which provide some assistance. In Commissioner of Land Tax (NSW) v. Joyce (1974) 132 CLR 22, the High Court considered the provisions of Section 10(1) of the Land Tax Management Act 1956 (NSW), which relevantly provided:
"(1)Except where otherwise expressly provided in this Act the following lands shall be exempt from taxation under this Act:
....
(g)land owned by or in trust for any person or society and used or occupied by that person or society solely as a site for -
(i)a place of worship for a religious society.... "
The relevant facts in that case were that land at Burwood had been purchased for the purpose of providing a gospel hall for a Christian sect known as The Brethren and for allied uses, but planning permission had been refused and cottages still stood on the land. In relation to the Burwood land, Gibbs J. (as he then was) said at p. 29:
"... counsel for the respondents laid stress on the words `land ... used or occupied ... solely as the site for a place of worship...' The word `site' can refer to a piece of ground intended for building purposes, as well as to one on which a building is constructed. When one speaks of `a site for a church', rather than of `the site of a church', the words naturally suggest that the church is to be built, but has not yet been built, on the site mentioned. Therefore it was submitted that Section 10(1)(g)(i) looks to the future, and that the Burwood land, being an area on which a place of worship was intended to be built, comes within the exemption.
I am disposed to think that the exemption conferred by Section 10(1)(g) is not restricted to land on which something of the kind mentioned in the paragraph is already built or constructed. For example, if the other conditions laid down by the paragraph were fulfilled, land on which a church was in the course of erection, as well as land on which a church had been erected, would be exempt from the tax. But the exemption is not conferred upon land which `is a site' - to qualify the land must be `used or occupied ... solely as a site'. When the land in fact is the site of cottages, one at least of which is occupied, and no steps can be taken towards the construction of a gospel hall, because the necessary consent has not been obtained, it seems to me impossible to hold the land is `used or occupied... solely as a site for a place of worship'. "
Mr Alexander relied heavily upon the latter part of the judgment by Gibbs J. He argued that in contrast with Joyce's case, in the present case planning consent had been obtained, tenders were called and, shortly after the relevant time, the building contract was entered into and construction commenced. He submitted that the site satisfied the requirement of being a site for a building and that it was to be solely used and occupied by the Club.
However, there is an important difference between the New South Wales' provisions and those of the Queensland Act. The New South Wales' provisions required that land be owned and used or occupied solely as a site for a place of worship or a religious society. In other words, it was a site for a purpose and that purpose may well be a future one.
However, in the present case, the requirement is that the building be owned and occupied by the club. There is no dispute that at the relevant time there was no building and the land was vacant.
In Gosford RSL Co-operative Ltd v. Commissioner of Land Tax (NSW) 82 ATC 4505, the New South Wales Court of Appeal considered the provisions of Section 10(1)(g)(iii) of the Land Tax Management Act 1956 (N.S.W.) which provided:"Except where otherwise expressly provided in this Act the following lands shall ... be exempt from taxation under this Act:-
...
(g)land owned by or in trust for any person or society used or occupied by that person or society solely as a site for -
...
(iii)A building owned and solely occupied by a society, club, or association not carried on for pecuniary profit. "
In that case, the RSL Club's previous premises had been burnt down and it had bought the property to which the assessment of land tax was related. At the time of purchase, a number of buildings were erected on the land on which the business of a motel was conducted. The club carried out alterations to buildings and land to enable it to carry on its ordinary club operations, but it continued to carry on the motel business in the motel units and facilities.
The motel was conducted by a manager, appointed by the club, from the building which had previously been the motel office, but which was otherwise used by the club for its ordinary activities. As run by the club, the motel was open to the travelling public as well as to members of the club, their visitors and members of other RSL clubs. One of the purposes which the club had in purchasing the property was the continuance of the motel business as a source of income to contribute to paying off the monies borrowed by the club in order to make the purchase.
In relation to the claimed exemption, Hope J.A. said at 4507-4508:
"Section 10(1)(g)(iii) is not as well drafted as it might be, but importantly it provides for an exemption in a way which is different to that adopted in respect of the other exemptions provided in para. (g). The other subparagraphs provide exemptions in respect of land owned by or intrust for any person or society and used or occupied by that person or society solely as a site for an identified purpose, as, for example, a place of worship, a public cemetery, a public garden, a fire brigade, and so on. Subparagraph (iii) is not in this form - the exemption which it provides is not directed to a purpose, but to ownership and occupation - `a building owned and solely occupied by a society, club, or association not carried on for pecuniary profit'. The building must be one which can properly be described as owned and solely occupied by (for relevant purposes) a club not carried on for pecuniary profit, but provided it can be so described then, in my opinion, it falls within the exemption."
The important difference between that situation and the present one is that in this case there was no building on the land which could be described as being used or occupied by the club.
Essentially this is a matter of statutory interpretation. In my opinion, the ordinary and natural meaning of the words " a building owned and occupied by a ... club", require that a building be present on the land at the relevant time.
I have considered Mr Alexander's submission that the words should be given a prospective meaning and interpreted to mean that the exemption would apply if the land was used or occupied solely as a site for a future building which was to be owned and was to be occupied by the club. However, it is my view that such an interpretation would require a straining of the language.
My opinion in this regard is strengthened by the fact that Section 13(1)(vii)(c) provides an exemption in a way which is different to that adopted in respect of the other exemptions in the sub-paragraphs of paragraph (vii). They provide exemptions in respect of land owned by or in trust for any person or society and used and occupied by that person or society solely as a site for an identified purpose, namely, a public library, institute, or museum; a showground; a public cemetery or public burial ground; a public garden, public recreation ground, or public reserve; a public road and a fire brigade station.
Sub-paragraph (c) is not in that form. As pointed out by Hope J.A. in the Gosford R.S.L. case in respect of somewhat similarly worded provisions in the New South Wales Act, the exemption which the relevant sub-paragraph provides for is not directed to a purpose, but to ownership and occupation of a building. As His Honour said at p. 4508: "The building must be one which can properly be described as owned and solely occupied by (for relevant purposes) a club not carried on for pecuniary profit ... ".
Of course, the Queensland Act does not require that the building be solely occupied by the Club, but that is irrelevant in this situation as there is no building. The ordinary and natural meaning of the words support the submission made by Mr Flanagan that there must be a building in existence before the exemption under sub-paragraph (c) applies. Accordingly, the appeal must fail.
The Preliminary Point
At the commencement of the hearing Mr Alexander sought leave to amend the Notice of Appeal in two places. The grounds of the appeal contended that the assessment was excessive in that the land described as parcels 5, 6 and 7 is partially exempt from land tax. However, after setting out the history of the acquisition of the St George land and the Advance Bank land for the purpose of demolishing the buildings thereon and constructing a new building, the grounds of appeal went on to say that as at 30 June 1995, demolition of the old buildings on the St George land and the Advance Bank land had been completed and the new building had not been constructed. The grounds then go on to say:
"Accordingly, as at 30 June 1995, parcels 5, 6 and 7 were held by the taxpayer for use as a site for a building to be owned and occupied by the taxpayer.
Against this background, it is submitted that Section 13(1)(vii)(c) applies to exempt some part, if not all, of this land from land tax. "
Mr Alexander submitted that while the grounds of appeal could be construed to contend that the lands were wholly exempt from land tax, the amendment sought was simply to correct the language, as at the relevant time there was no building in existence. The land was vacant. Elsewhere the notice of appeal contended that the part of the building to be owned and occupied by Tattersall's Club for club purposes will be in the vicinity of 68% and that the relevant provision operates to exempt the land from the assessment of land tax to that extent.
On behalf of the Commissioner, Mr Flanagan objected to the amendments. He argued that under Regulation 29(2) of the Land Tax Regulations 1936, the appellant is restricted on the hearing of any appeal to the grounds stated in the notice of appeal. Regulation 30(2) requires that the grounds of appeal be limited to the grounds of objection. In this case the grounds of objection and the grounds of appeal are identical.
Mr Flanagan also argued that if I was to find that the Commissioner was incorrect in dismissing the objection and that the land in parcels 5, 6 and 7 were exempt, then the matter should be referred back to the Commissioner for his determination on the apportionment of liability to land tax. However, as I found that the Commissioner was correct and that the appeal should be dismissed, the question of exemption, whether in whole or in part, does not arise. For the question of apportionment to arise there would have to be a building in existence. This matter can await determination by the Commissioner when the building is constructed and the extent to which it is not used by Tattersall's Club for club purposes will be able to be ascertained.
Costs
Section 28(2) of the Act provides:
"If the value of the land as finally fixed by the court is the value at which it has been entered by the taxpayer in the taxpayer's land tax return or in any objection lodged by the taxpayer, or is nearer to that value than to the value placed upon it by the Commissioner, costs shall be awarded against the Commissioner, otherwise costs shall be awarded against the taxpayer."
This provision is framed in mandatory terms. The taxpayer has claimed that parcels 5, 6 and 7 are either totally exempt, or exempt to the extent of 68%. As the appeal is dismissed, the taxable value of the land fixed by the Court is the value placed upon it by the Commissioner. Therefore, I must order that the taxpayer pay the Commissioner's costs of and incidental to this appeal.
Orders
For the reasons which are set out above, I order that -
(1)the appeal be dismissed;
(2)the taxpayer pay the respondent's costs of and incidental to this appeal and that those costs shall be ascertained and fixed by the costs taxing officer of the Supreme Court of Queensland at Brisbane in accordance with the provisions of Section 41(9) of the Land Act 1962.
(JJ Trickett)
President of the Land Court
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