The Trustee for Pierce Holdings Trust v The Commissioner of Land Tax

[1990] QLC 36

[1990] QLC 36

 

LAND COURT,

BRISBANE.

20th December, 1990.

Re:  Appeal against assessment of Land Tax (A90-24)

The Trustee for Pierce Holdings Trust  Appellant

v.

The Commissioner of Land Tax  Respondent

D E C I S I O N

On 21st February, 1990 the Commission of Land Tax issued a Notice of Assessment 001824/EO4085 to the Trustee for Pierce Holdings Trust in respect of Land Tax on land owned at midnight on 30th June, 1989 which had a taxable value of $236,000.  Amongst the parcels of lands included in the assessment was Lot 10 on RP 154151, Parish of Cleveland, with a valuation of $171,000.  An objection against the Assessment was lodged and a decision on this objection was made on 23rd April, 1990. 
  The appellant exercised the right of appeal to the Land Court on the grounds set forth in the Notice of Appeal which are:-

"That the Assessment is excessive (or otherwise) and should be altered in the following manner:-

The Taxpayer claims that the subject land is exempt from taxation under Section 13(1) of the Act on the ground that it is owned by an Exempt Proprietary Company in the capacity of a Trustee namely PIERCE HOLDINGS PTY LTD as Trustee for THE PIERCE HOLDINGS TRUST under a Trust created before the 19th April, 1985 namely under a Trust created on the 23rd November, 1981 in respect of the land and that is used solely for the business of agriculture by an Exempt Proprietary Company namely FLORINA PTY LTD, which is not the owner, in the capacity of a Trustee for THE GENRICH UNIT TRUST that is not acting in the use of the land as the agent or nominee of an Absentee or of a Company pursuant to arrangements made before the 19th April, 1985 namely in February, 1985 where as at midnight on 30th June, immediately preceding the financial year in and for which land tax would be levied but for paragraph (xv) of Section 13 (1) of the Land Tax Act 1915 - 1989 -

(a)All persons ultimately entitled to benefit from the land as cestuis que trust are natural persons of whom none is an Absentee or, insofar as his beneficial interest is concerned, an agent or nominee of an Absentee or of a Company; and

(b)If the land is used by a person, other than the owner, in the capacity of a Trustee, in the Commissioner's opinion substantially all the beneficiaries of the Trust under which that land is owned are persons who are or may be beneficiaries of the Trust under which the land is used.

The taxpayer refers to a Letter of Objection to the Commissioner against the Assessment made by letter dated 22nd February, 1990 to the Commissioner of Land Tax from Gregory D Moore, Chartered Accountant for the Taxpayer and decision of Commissioner on Objection by Taxpayer dated 23rd April, 1990 addressed to the Trustees, Pierce Holdings Trust C/- Gregory D Moore, GPO Box 692, Brisbane, Q  4001."

Pierce Holdings Pty Ltd was incorporated under the Companies Ordinance 1963 Northern Territory of Australia on 13th April, 1971 as a company limited by shares and as a proprietary company.  By Deed of Settlement dated 7th March, 1981 Norma Mary Cutler, settled the sum of ten dollars on Pierce Holdings Pty Ltd as Trustee for Pierce Holdings Trust.
  On or about 8th September, 1988 Pierce Holdings Pty Ltd as Trustee for the Pierce Holdings Trust entered into an agreement with Nola Yvonne McCullagh to acquire Lot 10 on RP 154151, County of Stanley, Parish of Cleveland which is the land the subject of this appeal, which sale  was settled on 8th November, 1988.
  Florina Pty Ltd was incorporated under the Companies Act 1961 - 1981 Queensland as a company limited by shares and as a proprietary company.  It is an exempt proprietary company and is the Trustee of the Genrich Unit Trust constituted by Deed of Trust dated 23rd November, 1981.  On the evidence given by Mr Mervyn A.E. Genrich it appears that in association with other members of his family he has used the McCullagh lands referred to above for some 40 years.  Firstly in the growing of vegetables and other produce with his late father and subsequently the growing of flowers under the business name MAE and CV Genrich trading as Gladland Flowers in association with his two sons and since 1981 under the company name of Florina Pty Ltd as Trustee of the Genrich Unit Trust.  The business of Gladland Flowers carried on on the subject land is that of growing and distribution commercially of flowers throughout Australia.
  The use of the land by Florina was formalised with the landlord Nola Yvonne McCullagh, by a written lease agreement dated 25th February, 1985.  The lease commencing on the 1st January, 1985 and terminating on 31st December, 1985.  In his affidavit he says that written leases on similar terms were entered into between the same parties for each of the years commencing 1st January, 1986, 1st January, 1987, 1st January, 1988 and that since then Florina has continued to lease the land solely for such purpose under an oral tenancy arrangement with Pierce.
  In his affidavit Mr Genrich gives details of the beneficiaries of the Pierce Trust and the Genrich Trust and says that substantially all the beneficiaries of Pierce Trust are persons who are or may be beneficiaries of Genrich Trust.
Section 13 of the Land Tax Act 1915 - 1989 is the relevant provision wherein is listed the lands which are exempted from Land Tax. So far as this appeal in concerned the relevant subsection reads:

"Section 13 (1): The following land shall be exempted from taxation under this Act, namely -

1. All land that is owned by -

............

An exempt proprietary company in the capacity of a trustee,

under a trust created before 19 April 1985 in respect of the land and that is used solely for the business of agriculture, ..... by -

.................

an exempt proprietary company, which is not the owner, in the capacity of a trustee that is not acting in the use of the land as the agent or nominee of an absentee or of a company,

pursuant to arrangements made before 19 April, 1985, where as at midnight on 30th June, immediately preceding the financial year in and for which land tax would be levied but for this paragraph (xv) -

...................

(b)if the land is used by a person, other than the owner, in the capacity of a trustee, in the Commissioner's opinion, substantially all the beneficiaries of the trust under which the land is owned are persons who are or may be beneficiaries of the trust under which the land is used.

.............................."

Certain matters which require proof to satisfy the requirements of this Subsection were conceded by Counsel for the respondent.  These concessions were:

1.That at midnight on 30th June, 1989 the land was owned by an exempt propriety company Pierce Holdings Pty Ltd in the capacity of a trustee.

2. The land was acquired by the trustee on or about 8th September, 1988

3.That the trust was created before the 19th April, 1985

4.That the land is being used by an exempt proprietary company in the capacity of a trustee for the Genrich Unit Trust.

The first matter here which requires resolution comes from the submissions from Mr O'Grady Counsel for the respondent. It is his submission that for land to be exempted from taxation under the provisions of Section 13 (1) (xv) of the Act land must be owned by an exempt proprietary company in the capacity of a trustee under a trust created before 19th April, 1985 in respect of the land. It is his submission that if the words "in respect of the land" were not included in the Act the case for the appellant would be very strong because there would be land owned by an exempt proprietary company in the capacity of trustee under a trust created before 19th April, 1985. However the words are there and it is his submission that meaning must be given to those words. He refers me to Statutory Interpretation in Australia Third Edition and to the matters related to literal rule "As subsidiary matters to the literal rule, the Courts have pointed out that they are not at liberty to consider any word or sentence as superfluous or insignificant. All words must prima facie be given some meaning and effect: Commonwealth v. Baume 1905 2 C.L.R. 405 per Griffith C.J. at 414; Beckwith v. The Queen 12 A.L.R. 333 per Gibbs J. at 337.
  It is his submission that the Pierce Trust was created in 1981 in respect of property which was initially ten dollars.  It was not created in respect of this land which was not acquired until September, 1988 and it could not exist in respect of land not owned by the Trustee until that land was acquired by the Trustee.  It is his submission that Subsection (1) (xv) was included in the Act to catch land which was under a Trust before that date.  He says that the history of the Act shows there was concern about multiple trusts and multiple beneficiaries and the difficultly in levying land tax against beneficiaries which was the situation under the Act prior to amending Legislation  of 19th April, 1985.  He submits that the subsection is a concession which is given to a trustee who at or prior to 19th April, 1985 held land under a trust.  It does not apply to land acquired after that date.
  He further submits that the trust was created by a Deed of Settlement with the settlor being Norma May Cuttler.  She was not the owner of the land which was purchased by the appellant in 1988.  He submits that this alone is sufficient to dispose of the matter and that it was clearly the intention of the Legislature to provide that the land had to be held on trust before 19th April, 1985 but he goes a step further and directs my attention to the words in the Subsection "used solely for the business of agriculture by an exempt proprietary company, which is not the owner, in the capacity of a trustee pursuant to arrangements made before 19th April,1985".  He says that on the evidence the land has been used by Florina since 1st January, 1985 pursuant to arrangements between the then registered proprietor of the land Nola Yvonne McCullagh as landlord and Florina as tenant.  The arrangements as at midnight on 30th June, 1989 cannot be those arrangements because at that time McCullagh was no longer the owner.  There could be no arrangement between Pierce and Florina before the 19th April, 1985 because Pierce did not acquire the land until September, 1988.
  Miss O'Sullivan Counsel for the appellant submits that in order to support the interpretation advanced by Counsel for the respondent it is necessary to read in a great deal more by way of requirements than the subsection says.  She submits that it is established on the evidence that Florina has used the land solely for the business of agriculture going back to a period before 19th April, 1985 and this continued use is what is required by the subsection and would support the reason for inclusion of this subsection in the exemption provisions.  She concedes that the general proposition submitted by Counsel for the respondent that it is not possible to have an assignment prior to acquisition but that the evidence provides the link between Florina and Pierce.  That is the link that is required by the subsection between the owner and the user.  There have been two sets of arrangements, one between McCullagh and Florina going back to January, 1985 and the other between Pierce and Florina from the time of the acquisition of the land by Pierce, the first being by lease agreements and the second with a oral tenancy evidence by minutes. 
  She submits the interpretation suggested for the respondent would require words to be written into the statute after the words "pursuant to arrangements made before 19th April, 1985" the words "between the owner and the user" and the words between the owner and the user are not there. 
The 19th April, 1985 in Subsection (1) (xv) is the date of assent to the Land Tax Act Amendment Act 1985. Among other amendments Section 13 of the Land Tax Act 1915 - 1984 was amended in certain particulars including the insertion of paragraphs (xiii) and (xiv) exempting certain lands owned by a natural person in the capacity of trustee (paragraph xiii) and lands owned by an exempt proprietary company in the capacity of trustee (paragraph xiv). These paragraphs xiii and xiv were omitted from the Act by Section 11 of the Land Tax Act and Another Act Amendment Act 1988 and new paragraphs xiii, xiv and xv were substituted.
  The matters which have been agreed upon by the parties are that on midnight on 30th June, 1989 the land was owned by an exempt proprietary company namely Pierce Holding Pty Ltd in the capacity of a Trustee.  The land was acquired by the Trustees on or about the 9th September, 1988.  The trust was created on the 7th March, 1981 that is before the 19th April, 1985 and that the user of the land is an exempt proprietary company within the meaning of the Act.
I find that under the provisions of Section 13 1 (xv) land is exempt from land tax if it is owned by an exempt proprietary company in the capacity of a trustee under a trust created before the 19th April, 1985 in respect of the land. While the Pierce Holding Trust was created in 1981 it was not created in respect of the land with which I am concerned. This land was not acquired by the exempt proprietary company until September, 1988. It is also necessary to gain the exemption to establish that the land is used solely for the business of agriculture by an exempt proprietary company which is not the owner in the capacity of a trustee pursuant to arrangements made before 19th April, 1985. The arrangements before April, 1985 concerning the use of this land was made between Nola Yvonne McCullagh as landlord and Florina Pty Ltd as tenant and not between the present owner Pierce Holdings and Florina. It follows that I find that this land is not exempt from taxation under the provisions of Section 13 (1) (vx) of the Land Tax Act 1915 - 1989 and that the respondent has properly assessed Land Tax on the land and the appeal fails.
  Accordingly the appeal is dismissed.
The power of the Court on the hearing of an appeal against an Assessment under the Land Tax Act is contained in Section 28 of the Act. Subsection 2 of that Section 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 his land tax return or in any objection lodged by him, 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."

In finding as I have I am in effect confirming the value placed upon the land by the respondent.  In this jurisdiction there is contained in many Acts a discretionary power for the Land Court to award costs but the above provision is expressed in mandatory terms and the Court has no power to do other than follow the statute and costs must be awarded in favour of the respondent: Benson v. Commissioner of Land Tax (1986-87) 11 Q.L.C.R. 164.
  Accordingly I order that the appellant pay the respondent's costs of and incidental to this appeal.  The amount of such costs shall be ascertained and fixed by the Proper Cost Taxing Officer of the Supreme Court of Queensland at Brisbane in accordance with the provisions of Section 41 (9) of the Land Act 1962 - 1990.

(D.J. Barry)      
  President of the Land Court.