The University of Queensland v Commissioner of Land Tax
[2006] QLC 21
•28 April 2006
LAND COURT OF QUEENSLAND
CITATION: The University of Queensland v Commissioner of Land Tax [2006] QLC 21
PARTIES:The University of Queensland
(Appellant)
v.
Commissioner of Land Tax
(Respondent)
FILE NO: A2005/0997
PROCEEDING: Appeal against disallowance of objection to land tax assessment
DELIVERED ON: 28 April 2006
DELIVERED AT: Brisbane
HEARING DATE: 21 & 24 April 2006
MEMBER:Mr G.J. Koppenol
ORDER:Appeal dismissed with costs (at [20]).
CATCHWORDS: LAND TAX — ASSESSMENT — APPEAL AGAINST DISALLOWANCE OF OBJECTION — whether subject land “used” or “vacant” — whether exemption applies
Land Tax Act 1915, ss 13(1)(e), (f), 27
Parramatta City Council v Brickworks Ltd (1972) 128 CLR 1, applied
Rosenblum v Brisbane City Council (1957) 98 CLR 35, applied
Bonnington & Co Pty Ltd v Lynch (1952) 86 CLR 259, applied
Eaton & Sons Pty Ltd v Warringah Shire Council (1972) 129 CLR 270, applied
Royal Sydney Golf Club v Federal Commissioner of Taxation (1955) 91 CLR 610, distinguished
COUNSEL: S. Anderson for Appellant
F. Redmond for Respondent
SOLICITORS: Corrs Chambers Westgarth for Appellant
Crown Solicitor for Respondent
Background
This is an appeal under section 27 of the Land Tax Act 1915 (the Act) against the disallowance of an objection to an assessment of land tax. The appellant says that it is exempt from taxation under the Act. That is disputed by the respondent.
The appellant’s claim for exemption is based upon section 13(1)(e) and (f) of the Act. Under those provisions, the exemption would have applied if the land, as at 30 June 2004, was, relevantly:
(a) used predominantly for:
(i) an educational purpose; or
(ii) any other activity that the respondent is satisfied is not primarily the carrying on of a business on a commercial basis, after considering its relationship to the appellant’s purpose and the way in which similar activities are carried on by other persons on a commercial basis (a non-commercial purpose); or
(b)vacant land owned by or held in trust for the appellant if the land is intended to be used for:
(i) an educational purpose; or
(ii)a non-commercial purpose;
within 3 years of acquisition or such extended period as the respondent allows.
The land concerned comprises 1.699ha at 20 Cornwall Street, Woolloongabba, Brisbane, adjacent to the Princess Alexandra Hospital. It was gifted to the appellant by the State of Queensland in July 2003, subject to covenants requiring it to be used by 2014 primarily for higher education and research purposes in health and medical areas. The appellant intends to use the land for its Pharmacy Australia Centre of Excellence (PACE) project to co-locate industry, tertiary education (its School of Pharmacy) and commercial innovation and to facilitate world-class pharmaceutical research and development.
There are currently at least 6 buildings on the land. They were formerly used as the Queensland School for the Deaf. They have not been used for at least 5 years and are currently unoccupied. They will be demolished within the next year and construction of the new School of Pharmacy and space for related organisations will then commence. Further aspects of the project are still at the conceptual stage.
Arguments
Counsel for the parties made detailed submissions about each aspect of the factors set out in paragraph [2]. However, in my view, this matter is able to be decided by initially focussing upon the 2 key expressions involved—“used” and “vacant land”. Unless the appellant can at least establish that the land was used or was vacant land as at 30 June 2004, the other factors do not arise and the appeal must fail. It is convenient to now consider those undefined statutory expressions.
“Used”
The appellant’s argument was that its use of the land was demonstrated by its:
·commissioned feasibility study which determined that the land was appropriate to be used for the PACE project;
·negotiations and formal agreement with the Queensland Government to acquire the land;
·acquisition of the land, subject to the agreement and its higher education and research covenants;
·fencing the land for security purposes and arranging security patrols;
·distribution in September 2004 of a detailed expression of interest document seeking a private sector partner to develop the project;
·employees, planners and engineers visiting the land to measure, soil test, view and plan the use of the land;
·media releases announcing the PACE project; and
·steps to conclude a construction contract for the project.
The respondent submitted that all that those steps revealed was that the appellant planned to use the land in the future—but that no use was demonstrated as at 30 June 2004.
In Parramatta City Council v Brickworks Ltd,[1] the High Court (Gibbs J, with whom Barwick CJ, Menzies, Owen and Walsh JJ agreed) said that acquiring land “with the intention of using it for a particular purpose in the future” does not constitute a present or existing use of that land.
[1] (1972) 128 CLR 1, 21. See also Eaton & Sons Pty Ltd v Warringah Shire Council (1972) 129 CLR 270, per Barwick CJ at 273, 274, per Stephen J (with whom McTiernan J agreed) at 285.
The High Court’s earlier decision in Rosenblum v Brisbane City Council[2] illustrates the operation of this principle. In that case, the appellant desired to use, as a commercial catering lounge, empty and to all appearances unused premises once used as a social club. He put a written proposal to the owners, paid 3 months rent in advance, took action to incorporate a lessee company, consulted an architect and had a sketch prepared for modernising the front of the building and applied to the council for site use permission. Dixon CJ, McTiernan, Williams, Webb and Kitto JJ concluded that the premises were not the subject of any current use and “were, in plain fact, unused for any purpose whatever.”[3]
[2] (1957) 98 CLR 35.
[3] At 47.
In the present case, the appellant acquired the land with the intention of using it for the PACE project, which at that time was at the conceptual stage only. As such, the intention concerned use “for a particular purpose in the future” in my opinion—using the Brickworks terminology. The post-acquisition steps taken by the appellant, like those taken in Rosenblum, were all preparatory to or planning for the future use of the land for the project.[4]
[4] The installation of security fencing is not of itself indicative of present use of land: see Eaton & Sons Pty Ltd v Warringah Shire Council (1972) 129 CLR 270, per Barwick CJ at 273, 274-5. Nor, in my view, would the organising of security patrols.
In the circumstances, it is my opinion that the land was not being used as at 30 June 2004.
“Vacant land”
The appellant’s argument was that, although there were a number of buildings on the land, they were unusable because (according to the evidence of its witness, PACE project director Mika Hayward):
·they are unoccupied, not being used, currently uninhabitable and uninhabited;
·one of the buildings is completely burnt out, in disrepair; and
·the whole floor has been stolen out of the dining hall.
However, no evidence was adduced by the appellant as to the state of the buildings on this land as at 30 June 2004. There were then at least 6 buildings on the land: a caretaker’s/manager’s residence, dormitory blocks B and C (3 connected buildings on 2 levels and a lower ground area), kitchen/dining hall with lower ground assembly hall, laundry building, swimming pool and change shed and a carport. There is no evidence as to when the burnt out building and dining hall were damaged. That may have occurred before 30 June 2004 but on the evidence, I am unable to say.
The respondent submitted that having regard to the buildings on the land, it could not be regarded as vacant land.
In Bonnington & Co Pty Ltd v Lynch,[5] the High Court considered the question of whether bare or vacant land would retain that description despite structures being erected on it. Dixon CJ, McTiernan, Williams, Webb and Kitto JJ said that:
·bare land on which were “the tumbledown remains of a shed or lean-to at one corner of the land … a flimsy ruin too dilapidated for use”, could naturally be conceived of as vacant land;[6] and
·whether the character of land as vacant land is changed (removed) by the erection of some structure turns on the “nature”, size (whether it was “sufficiently large”) and “substantiality” of the structure.[7]
[5] (1952) 86 CLR 259. See also McGeoch v Federal Commissioner of Land Tax (1929) 43 CLR 277, per Isaacs J at 301-3. Royal Sydney Golf Club v Federal Commissioner of Taxation (1955) 91 CLR 610, which was relied on by the appellant, is distinguishable because of the particular statutory definition of “vacant land” in that case, which enabled land with buildings to be regarded for some purposes as vacant land.
[6] Bonnington & Co Pty Ltd v Lynch (1952) 86 CLR 259, 264.
[7] At 266.
On any view, the buildings on the land in the present case could not be described as tumbledown remains of a shed in a corner of the land. Although 2 of the buildings have been damaged significantly, various others remain. At least 1 of the undamaged buildings is a 2-level dormitory-style building. Is it a structure of substance? By inference from its description, the answer must be yes. As to the various other buildings, apart from the swimming pool change shed and the carport, it is likely that they too were structures of substance. Mr Hayward’s evidence was that the buildings are uninhabitable.[8] However such a description is a conclusion and the factual basis upon which that was asserted was not explained. Accordingly I cannot give that statement any weight. In any event, even if all of the other buildings were uninhabitable, the present inability to live in or use them could be attributable to any number of causes, many of which (for example, disconnected electricity, cleanliness, broken windows, etc) may easily be remediable. In addition, as has been noted, no findings can be made about whether the damaged buildings were in a damaged state as at 30 June 2004.
[8] Affidavit of Mika Hayward filed 9 March 2006, paragraph 11.
In the circumstances, it is my opinion that the land could not be regarded as vacant land as at 30 June 2004.
Disposition
It follows that I do not accept the appellant’s arguments about use and vacant land. As a result, it is not necessary for me to deal with the remaining questions of predominance and purpose. I am satisfied that the respondent acted correctly in assessing the appellant and disallowing its objection.
Costs
The respondent sought costs, including indemnity costs relating to the vacant land point. In my view, that point was not completely unarguable. Costs will therefore be awarded on the standard basis.
Orders
The orders that I make are as follows:
Appeal dismissed with costs.
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