Touma v Chief Commissioner of State Revenue

[2009] NSWADT 122

CITATION:

Touma v Chief Commissioner of State Revenue [2009] NSWADT 122

DIVISION:

Revenue Division

PARTIES:

APPLICANT in 086035
Norman Touma

APPLICANTS in 086036
Charles Touma
Joseph Touma
Norman Touma
Raymond Touma

RESPONDENT
Chief Commissioner of State Revenue

FILE NUMBER:

086035, 086036

HEARING DATES:

4 December 2008

SUBMISSIONS CLOSED:

24 December 2008

 
DATE OF DECISION: 

26 May 2009

BEFORE:

Hirschhorn M - Judicial Member

CATCHWORDS:

Land tax – exemption for aged care establishments and retirement villages

LEGISLATION CITED:

Land Tax Management Act 1956
Aged Care Act 1997 (Cth)
Retirement Villages Act 1999
Strata Schemes (Freehold Development) Act 1973
Strata Schemes (Leasehold Development) Act 1986
Taxation Administration Act 1996
Health Legislation Further Amendment Act 2004
Land Tax Management (Further Amendment) Act 1990
State Revenue Legislation Amendment Act 2008

CASES CITED:

Applewood Residential Developments Pty Ltd v Commissioner of State Revenue [2006] VSCA 207
Commissioner of State Revenue v Applewood Residential Developments Pty Ltd [2005] VSC 232
Commissioner of Land Tax v Christie [1973] 2 NSWLR 526
Chief Commissioner of State Revenue v Alridge & Anor [2003] NSWADTAP
Burwood Terrace Pty Ltd v Commissioner of State Revenue [2002] VCAT 183
Chief Commissioner of State Revenue v Timbs [2006] NSWADTAP

REPRESENTATION:

APPLICANT
D McNeice, agent

RESPONDENT
P Patterson, solicitor

ORDERS:

The objection decision of the Chief Commissioner dated 10 April 2008 is affirmed.

1 This matter involved two applications for review of decisions made by the Chief Commissioner of State Revenue (“the Respondent”) that were heard together.

2 The first application was made by Mr Norman Touma (“Mr Touma”) for review of a decision of the Respondent on 10 April 2008 that disallowed objections made by Mr Touma regarding land tax assessments issued to Mr Touma for the 2003-2008 land tax years inclusive.

3 The second application was made by CS (Charles), JS (Joseph), M (Michael), NN (Norman) and R (Raymond) Touma (“the Applicants”) for review of a decision of the Respondent (undated and that was not attached to the application) that purportedly disallowed an objection made by the Applicants on 6 February 2008 regarding a land tax assessment issued to the Applicants for the 2008 land tax year.

4 Both applications concerned decisions by the Respondent not to allow objections to land tax imposed in respect of certain vacant strata lots owned by the Applicant at 23 Ayres Road St Ives. In essence, Mr Touma and the Applicants claim that these properties should have been treated by the Respondent as exempt from land tax in each of the relevant years under the “retirement village/aged care establishment exemption” in Section 10R of the Land Tax Management Act 1956 (“LTMA”).

5 Both the representatives for the Applicants and Respondent filed written submissions.

6 The Respondent also filed the documents required in accordance with Section 58 of the ADT Act, a supplementary bundle of documents pursuant to Section 58 of the ADT Act, a bundle entitled “Respondent’s evidence”, a separate bundle of documents entitled “Respondent’s Bundle of Authorities” and a copy of the Second Reading Speech and Explanatory Notes for Land Tax Management (Further Amendment) Bill 1990 (the latter as requested by the Tribunal at the hearing).

7 Both representatives made oral submissions at the hearing and Mr Raymond Touma also made some brief remarks at one stage during the hearing but was not sworn as a witness. Mr McNeice also provided, with leave, some further submissions after the hearing in relation to the folder of authorities relied on by the Respondent and in relation to the Second Reading Speech and Explanatory Notes referred to above.

Facts

8 There were no witness statements or any other oral evidence called by Mr Touma and/or the Applicants in respect of the matter at the hearing. The evidence before the Tribunal was therefore limited to the documents and supplementary documents filed by the Respondent under Section 58 (which included correspondence between the Applicant and the Office of State Revenue) as well as the following documents provided by Mr Touma and the Applicants:

(a) A title search for Lot 4 in Strata Plan 66582;

(b) A title search for the common property in Strata Plan 66582;

(c) An instrument setting out the terms, inter alia, of restriction of the use of the land intended to be created pursuant to section 88B of the Conveyancing Act 1919.

The building and Strata plan at 23 Ayres Road

9 The following facts did not appear to be in contest between the parties.

10 Mr Touma and the Applicants (all being brothers in the Touma family) are the co-owners of land comprising certain strata lots in Strata Plan 66582 that were vacant in the relevant land tax years in question (“the Properties”).

11 The Properties were created by sub-division in 2001 following a successful Development Application (DA No. 1686/99) lodged on 28 October 1999.

12 On 9 May 2000, the Land & Environment Court made certain orders providing for conditions of development consent in respect of 12 units to be constructed under State Environmental Planning Policy No 5 (“SEPP 5”) in accordance with the abovementioned Development Application. The Applicant for the Development application at that stage was a company called The Turnbull Group Proprietary Limited. Mr Raymond Touma noted at the hearing of the matter that he and his brothers bought the relevant land when it was “DA approved” and then they developed the land and constructed a building which was completed in 2000.

13 It appears from a final occupation certificate dated 16 August 2001, obtained by the Respondent, that the building at Lot 2, DP 214530 is said to have consisted of 12, 3-bedroom units with basement car-parking.

14 A subdivision certificate issued by Ku-ring-gai Municipal Council was dated 15 August 2001 and referred to the development as “Strata subdivision of SEPP 5 development”. The Applicant for the subdivision certificate was a company called Cetacea Investments Pty Ltd and the owner, a Mr Aspinall and a Ms Jenkins. There was no explanation at the hearing about the role of this company or persons in respect of the Properties.

15 A title search for Lot 4 in Strata Plan 66582 (dated 9 October 2001) shows the owners as Raymond Touma, Charlie Touma, Michael Touma, Nazih Touma and Joe Touma. The Applicants did not include in their evidence, any title searches for other Properties in question (eg. Lots 3 and 9) but it was not in dispute that these Properties were co-owned by the Touma brothers.

16 The title search (dated 27/7/04) for the common property of Strata Plan 66582 showed a notification on the title in the following terms: “034406: Restrictions on the use of land referred to and numbered (3) in the S.88B instrument”.

17 In a Section 88B instrument provided by the Applicant for Lot 2 in DP 214530 (which appears to have been the lot description prior to sub-division), a table on page 1 referred to a proposed restriction on the use of the land. The same table shows that the burdened lots or parcels as: “20” and the benefited lot, bodies or prescribed authorities as “Ku-Ring-Gai Council”.

18 On page 3, of the same document, the following statement appeared:

4. Terms of Easement, profit a prendre, restriction, or positive covenant numbered 3 in the plan.

1. No lot hereby burdened shall at any time be occupied otherwise than by:

(a) Older people (Over the age of 55) or people who have disability.

(b) People who live with older people or people who have a disability.

(c) Staff employed to assist in the administration of and provision of services to housing provided in this development.

1.2 In this restriction:

“Older people means people aged 55 years or over.

“People who have a disability” means people of any, as a result of having an intellectual, physical, psychiatric or sensory impairment, either permanently or for an extended period, have substantially limited opportunities to enjoy a full and active life.

The Ku-Ring-Gai Municipal Council is empowered to release, vary or modify the above restriction.

19 At the hearing, Mr McNeice stated in submissions that the building at 23 Ayres Rd was completed in the year 2000 and the units have been progressively sold by the Applicants. So far, three units have been sold to aged care providers and these providers have put tenants in those units. Some other units have been sold by the Applicants directly to retirees. Some other units remain vacant and are the properties in respect of which the Respondent has raised land tax assessments in the 2003-2008 years inclusive (referred to hereafter as “the Properties”).

20 The Respondent adduced some evidence at the hearing that included:A settlement adjustment sheet for the sale of 2/23 Ayres Rd from Touma to Australian Life Lease Corporation dated 26 October 2006;

a A Notice to the Body Corporate (not signed or dated) of a dealing affecting Lot 8, SP 66582 in respect d a transfer from the Applicants to Australian Life Lease Corporation Pty Ltd;

b A settlement statement for the sale of 8/23 Ayres Rd from Touma to Australian Life Lease Corporation Pty Ltd dated 7 April 2006;

c A letter from a real estate agent relating to sale of apartments 9,8,4,3 and 2, a division of the 2.5% commission due to 1% from Touma and 1.5% from Australian Life Lease Corporation; and

d A letter from a solicitor acting for Australian Life Lease Corporation Pty Ltd confirming that their client wished to purchase units 2, 3, 4 and 9 and that the offers were conditional on their client entering into 99 year leases as lessor with rentals as set out. Settlement of the property would only occur simultaneously with the lease coming into existence.

21 There was no explanation or evidence at the hearing from the Applicant as to the nature of Australian Life Lease Corporation Pty Ltd, in particular, whether it was an approved provider under the Aged Care Act 1997 (referred to in submissions only by Mr McNeice).

The land tax assessments, objections and applications for review

22 On 20 July 2007 Mr Touma was issued with a land tax assessment for the 2003-2007 land tax years inclusive that imposed land tax on the Properties and he subsequently lodged an objection on 18 September 2007.

23 On 31 January 2008, Mr Touma also objected against a land tax assessment for the 2008 land tax year that also imposed land tax on the Properties.

24 The Respondent disallowed the objection in respect of the Properties on 10 April 2008. The heading of the letter from the Respondent to Mr Touma referred to the 2003-2008 land tax years.

25 A review of the relevant land tax assessments issued to Mr Touma by the Tribunal indicates that land tax was imposed on the following lots in the strata plan in the relevant land tax years. At the hearing, I understood from a response given by Mr McNeice to the Tribunal, that these were the “vacant” lots that were the “Properties” in question in the application:

a 2003 year: Lots 1, 10, 2, 3, 4, 5, 7, 8 & 9

b 2004 year: Lots 1, 2, 3, 4, 5, 7, 8 & 9

c 2005 year: Lots 2, 3, 4, 8 & 9

d 2006 year: Lots 2, 3, 4, 8 & 9

e 2007 year: Lots 3, 4 & 9

f 2008 year: Lots 3 & 9

26 On 17 January 2008, the Applicants were issued with a land tax assessment for the 2008 land tax year that imposed land tax on the Properties (Lots 3 and 9) and to which the Applicants lodged an objection on 6 February 2008. The Respondent admitted in his submissions that “the Respondent provided no separate written response to this objection” but that the Respondent’s letter of 10 April 2008 to Mr Touma appears to have been taken by the Applicants to constitute a disallowance in respect of the objection for the 2008 land tax assessment issued to the Applicants as well.

27 Mr Touma and the Applicants lodged their respective applications for review with the Tribunal on 21 April 2008.

Preliminary matter – jurisdiction of the Tribunal

28 At the hearing, I observed to the parties that the Tribunal might not have jurisdiction in respect of the objection lodged by the Applicants in respect of the 2008 land tax year in circumstances where there had been no determination of the objection by the Chief Commissioner (Section 96(a) Taxation Administration Act 1996 (“TAA”)).

29 On examining the papers, I note that given that more than 90 days elapsed between the date the Applicants lodged the objection and the date they lodged an application for review and there being no evidence of any “suspension” by the Chief Commissioner (pursuant to Section 92 TAA), there was a procedure open for the Applicants under Section 100(1) of the TAA. Provided that the Applicants provided written notice of the proposed application to the Chief Commissioner not less than 14 days before it was made, the Applicants could have made an application to the Tribunal that the Tribunal would then have had jurisdiction to review under Section 96(b) TAA.

30 There was no evidence, however, that the Applicants made such an application under Section 100(1) and accordingly it appears that there is no jurisdiction for the Tribunal to review the 2008 land tax year for the Applicants.

31 However there is of course proper jurisdiction for the Tribunal to review the Commissioner’s determination on 10 April 2008 of the objections of Mr Norman Touma for the 2003-2008 land tax years inclusive (Section 96(a) TAA).

Relevant legislative provisions

Liability for land tax

32 Pursuant to Section 7 of the Land Tax Management Act1956 (“LTMA”), land tax is levied and paid on the “taxable value” of all land situated in NSW which is owned by taxpayers (other than land which is exempt from taxation under the LTMA).

33 Section 8 LTMA provides that land tax shall be charged on land “as owned at midnight on the thirty-first day of December immediately preceding the year for which the land tax is levied”.

34 Land tax is payable by the owner of land on the “taxable value” of all the land owned by that owner which is not exempt from taxation under the LTMA (Section 9(1) LTMA).

35 In the case of land subject to the Strata Schemes (Freehold Development) Act 1973, Section 9B of the LTMA provides that land tax is to be levied and paid in respect of each “lot” comprised in a parcel. Section 9B(2) provides a mechanism for the calculation of the “land value” and “average value” of a lot , essentially being a proportion of the land value of the parcel based on the unit entitlement of the lot concerned over the aggregate unit entitlement of the strata plan.

36 The “taxable value” of land is defined in Section 9(2) as the total sum of the average value of each parcel of land. The term “average value” is defined in Section 9AA(1) which essentially refers to the average of the land value of a parcel over the current land tax years and the two immediately preceding land tax years. The “land value” of a parcel is defined in Section 9(4) by reference to the value entered in the Register as the land value of the land as at 1 July in the previous year.

Section 10R exemption

37 Section 10R of the LTMA (originally inserted by Land Tax Management (Further Amendment) Act 1990 ( No 88)) essentially confers an exemption from tax on land which is used and occupied as a retirement village or an aged care establishment (and previously nursing homes).

38 Whilst this provision has been amended since it was enacted and slightly different versions of this section apply in the different land tax years that were subject of the application for review, nothing would appear to turn on those differences in the context of the current application .

39 In respect of the 2003 - 2005 land tax years inclusive, Section 10R of the LTMA was as follows:

10R Retirement villages and nursing homes—exemption/reduction

(1) In this section:

aged care establishment means:

(a) any building or any part of a building used or intended to be used for the provision of residential care, within the meaning of the Aged Care Act 1997 of the Commonwealth, by an approved provider under that Act, or

(b) any building or any part of a building used or intended to be used for the provision of respite care, within the meaning of the Aged Care Act 1997 of the Commonwealth, by an approved provider under that Act.

nursing home has the same meaning as in the Nursing Homes Act 1988.

retirement village has the same meaning as in the Retirement Villages Act 1999.

(2) Land is exempt from taxation under this Act if the land is used and occupied as any of the following, or any combination of the following, and for no other purpose:

(a) an aged care establishment,

(b) a retirement village,

(c) a nursing home.

(3) If the Chief Commissioner is satisfied that part only of land is used and occupied as referred to in subsection (2), the land value of the land is to be reduced for the purposes of land tax by an amount calculated as follows:

where:

R = the reduction in land value.

A = the land value of the land before reduction.

B = the area of the land used and occupied as referred to in subsection (2).

C = the total area of the land.

(3A) If part only of a building is used and occupied as referred to in subsection (2), a proportion (the allowable proportion) of the area of the land occupied by the building is to be included as part of the area of the land so used and occupied for the purpose of determining the value of “B” in the calculation under subsection (3).

(3B) The allowable proportion under subsection (3A) is the proportion specified in an application under subsection (3C) in respect of the land, subject to subsections (3D)–(3F).

(3C) Subsection (3A) does not apply unless application has been made to the Chief Commissioner by the owner of the land specifying the proportion that in the owner’s opinion is a fair and reasonable proportion of the area of land occupied by the building to be attributed to use and occupation as referred to in subsection (2). The application must be in a form approved by the Chief Commissioner and be accompanied by such supporting information as the Chief Commissioner may request.

(3D) Despite subsection (3B), the Chief Commissioner may request the Valuer-General to determine the reduced land value to be attributed, for the purposes of assessing land tax, to that part of the land that is used or occupied otherwise than as referred to in subsection (2).

(3E) If a request is made under subsection (3D):

(a) the Valuer-General must determine the reduced land value concerned, and

(b) the reduced land value so determined is (subject to subsection (3F)) the value of the land for land tax purposes (instead of the value obtained under subsections (3) and (3A)), and is to be entered in the Register accordingly.

(3F) Part 3 (Notices and objections) and Part 4 (Appeals to Land and Environment Court) of the Valuation of Land Act 1916 apply in respect of the reduced land value determined under subsection (3E) in the same way as those Parts apply in respect of a valuation under that Act.

(4) For the purposes of this section, land does not cease to be used and occupied for the purpose of an aged care establishment, a retirement village or a nursing home, merely because any building or improvement on the land is used or occupied for a purpose ancillary to that purpose.

(5) This section applies to land tax payable in respect of the year commencing on 1 January 1991 and any succeeding year.

40 The LTMA was amended by the Health Legislation Further Amendment Act 2004 (which received assent on 30/11/2004 but commenced on 1/1/05). This amending Act essentially made consequential amendments to the LTMA by removing any reference to “nursing homes” in Sections 10 and 10R.

41 In respect of the 2006-2008 land tax years inclusive, therefore, Section 10R(1) and (2) were in the following terms.

10R Retirement villages—exemption/reduction

(1) In this section:

aged care establishment means:

(a) any building or any part of a building used or intended to be used for the provision of residential care, within the meaning of the Aged Care Act 1997 of the Commonwealth, by an approved provider under that Act, or

(b) any building or any part of a building used or intended to be used for the provision of respite care, within the meaning of the Aged Care Act 1997 of the Commonwealth, by an approved provider under that Act.

retirement village has the same meaning as in the Retirement Villages Act 1999.

(2) Land is exempt from taxation under this Act if the land is used and occupied as any of the following, or any combination of the following, and for no other purpose:

(a) an aged care establishment,

(b) a retirement village.

(c) (Repealed)

42 Apart from the abovementioned sub-sections (and a minor change to ss10R(4) to remove a reference to “nursing home”) the remainder of Section 10R was otherwise unchanged from that set out in paragraph 39 above.

43 Section 10R was introduced by Land Tax Management (Further Amendment) Act 1990. The Second Reading Speech indicated the following in relation to the amendment:

It is proposed to exempt commercial retirement villages and nursing homes from land tax. At present, retirement villages operated by charitable bodies are exempted from land tax, as are strata title villages where the retiree purchases the strata title. However there are some leasehold retirement villages that are currently subject to land tax because they are operated on a commercial profit-making basis. Retirement villages are the permanent place of residence of a growing number of elderly people in the community, and leases are generally for extended periods of up to 100 years. Many residents have sold their exempt principal place of residence to move into retirement villages, but under the terms of the standard lease are required to pay all outgoings of the retirement village, including land tax. It is therefore considered fair and equitable to provide this exemption. The bill will exempt a parcel of land, or that part of a parcel, used to operate a retirement village provided it falls under the definition of retirement village laid down in the Retirement Villages Act. Likewise, it is proposed also to exempt commercial nursing homes from land tax.

44 The ultimate issues for determination by the Tribunal in this matter can be stated as follows:

a In respect of each of the land tax years 2003-2008 inclusive, whether for the purposes of Section 10R(1), the Properties in question fell within the definition of an “aged care establishment” and/or a “retirement village”?
b In respect of each of the 2003-2005 land tax years inclusive, whether for the purposes of Section 10R(2) of the LTMA, the Properties in question were used and occupied as any of the following, or any combination of the following, and for no other purpose:

i. An aged care establishment,

ii. A retirement village,

iii. A nursing home?

C In respect of each of the 2006-2008 land tax years inclusive, whether for the purposes of Section 10R(2) of the LTMA, the Properties in question were used and occupied as any of the following, or any combination of the following, and for no other purpose:

iv. An aged care establishment,

v. A retirement village?

Applicant’s submissions

45 The Applicant submitted in its written submissions and at the hearing in essence that;

(a) The Properties fell within the definition in Section 10R(1)(a) of the LTMA, that is, an “aged care establishment” which means “any building or part of a building used or intended to be used for the provision of residential care”. They placed particular emphasis on the words “or intended to be used for the provision of residential care ” and submitted that this requirement was met in the present case.

(b) Several of the units sold by the Applicant were managed by an approved provider under the Aged Care Act 1997.

(c) The Land Titles Office had placed a restriction on the use of the Properties and the Applicant referred to the terms of the Section 88B instrument applying to the strata plan reproduced above.

(d) It was unreasonable for the State Government to expect the developer (ie. the Applicant) to pay the holding charges on the Properties for an indefinite period without granting an exemption from land tax, particularly in circumstances where the developer is prevented from selling the Properties to anyone who does not satisfy the definition within the Act and the Act specifically provides for property that is “held in readiness” for the approved use.

(e) The land tax exemption was supposed to encourage property developers to develop these types of properties. If the Land Titles Office will not remove the restriction then the land tax exemption should apply.

(f) A land tax exemption was originally given in relation to the Properties in the 2001 and 2002 years.

46 The Applicant also referred to a number of “factual” matters during the course of submissions. These were not the subject of evidence from the Applicant (either by statement or orally at the hearing) and accordingly have been summarised immediately below as further submissions.

The “vacant” Properties the subject of the land tax assessments

47 Mr McNeice said at the hearing that the Applicants experienced difficulty in selling the Properties (eg. Lots 3 and 9) due to the restrictions on title meaning that they can only be sold to aged care providers or people over the age of 55 years.

48 The Applicants have also been unable to rent the Properties out. Although they are not prohibited from renting them out, Mr McNeice explained it has been difficult for the Applicants to attract tenants that would comply with the restrictions that apply to the Properties (ie. must be over 55 years etc) and even then such persons are often are on restricted incomes and would not be able to afford to rent the Properties.

49 Mr Raymond Touma also briefly stated at the hearing (although was not sworn as a witness) that he and his brothers have experienced great difficulty in either selling or renting the Properties essentially because of the restriction on the title – (i.e. the Section 88B instrument). He and his brothers have tried without success on a number of occasions to have the restriction removed by the Land Titles Office. He said that essentially because the restriction on title remains, the Applicants believe a land tax exemption should also apply.

50 Mr McNeice stated that the original owners of the land (i.e. prior to the Toumas) had pursuant to paragraph 125 of the orders made by the Land & Environment Court on 9 May 2000 provided documentary evidence to the Council of an agreement with suitably qualified service providers for the provision of the services listed in that paragraph if and when required by residents of the development (ie. personal care, including bathing and dressing, housekeeping, home delivered meals etc). There was no evidence provided by the Applicant to the Tribunal in respect of this matter.

51 In response to a question from the Tribunal at the hearing, Mr McNeice stated that aged care services are provided to tenants of the lots owned by the aged care providers and the services are provided by those aged care providers. The units owned by persons over 55 years manage their own lots. The Applicants do not themselves provide any aged care services to any lots in the strata plan including the Properties. There was no evidence provided by the Applicant going to any of these matters.

Respondent’s submissions

52 The Respondent prepared written submissions and relied on these as well as made oral submissions at the hearing. In essence the Respondent submitted that:

(a) In order for the Properties to be used and occupied as a “retirement village” as provided for in Section 10R, it is necessary in the first instance that it be shown that they are constituent parts of a complex of residential properties that are predominantly or exclusively occupied, or intended to be predominantly or exclusively occupied by retired persons who have entered into village contracts with an operator of the complex, or that the residential premises within the complex are prescribed by the regulations. The Applicants had not provided any information to confirm that the Properties were part of such a complex, nor identified the operator of the retirement village nor provided any village contracts in respect of the Properties.

(b) The fact that the Properties were developed in accordance with SEPP 5 was insufficient for the Properties to fall within the definition of a “retirement village” for the purposes of the RV Act and or the LTMA.

(c) Further, the “use and occupation” of the properties as a retirement village for the purposes of Section 10R of the LTMA required more than satisfaction of the definition of “retirement village” under the RV Act. The requirements of “use” and “occupation were separate and cumulative. The necessary occupation must manifest as actual occupation, not merely a subjective intention to occupy. The requirement that the land be used and occupied as a retirement village under Section 10R of the LTMA was one that was distinct and separate from the question of whether or not the land at 23 Ayers Road constituted a complex for the purposes of a retirement village (Applewood Residential Developments Pty Ltd v CMR of State Revenue [2006] VSCA 207).

(d) In this case, in order to satisfy “use”, a village contract that is in compliance with the RV Act must exist between the resident of the land and the operator of the retirement village. The Applicants had failed to provide any evidence of this.

(e) The relevant Properties were held vacant and had been so held since completion. The Respondent cited a decision of the Victorian Supreme Court in Applewood Residential Developments Pty Ltd v Commissioner of State Revenue [2006] VSCA 207. To the extent that the Applicants relied on the definition of “aged care establishment” where a building or part of a building is “intended to be used” for residential care (or similar words used in respect of the definition of “retirement village in section 5(1)(a) of the RV Act), the Applicants have disregarded the requirements of Section 10R(2) of the LTMA – the Properties must be used and occupied as a retirement village or an aged care establishment as the case may be. The use of the word “intended” is confined to the definitions and does not bear upon or otherwise limit the operational scope of the exemption provided for under Section 10R(2) of the LTMA.

(f) It was the failure of the Applicants to use and occupy the Properties in the manner contemplated by Section 10R(2) of the LTMA that leads to the conclusion that the requirements of that section have not been met. Irrespective of the terms of the Development Approval or restrictions on title, “use” goes to use in fact and does not depend on legal or equitable obligations.

(g) The Applicants have not furnished any evidence that the Properties are or have been subject to village contracts at any time. No evidence has been provided showing that the Properties were used and occupied as a retirement village, or alternatively as an aged care establishment in satisfaction of the requirements of section 10R(2) LTMA.

Initial matter – does the exemption in Section 10R apply to “strata lots”?

53 An initial matter of law that arises in the context of the present application but that was not addressed by the parties, is whether the reference to “Land” that is used or occupied as a retirement village or aged care establishment or a combination thereof in Section 10R(2) LTMA can apply to a strata lot?

54 In other words, does one look to an individual strata lot and determine whether it is exempt under Section 10R(2) or does the provision only apply to a parcel of land (or part of that parcel / part of a building on that parcel – refer section 10R(3) and (3A)) on which a particular strata scheme is situated?

55 There is no definition of “Land” in the LTMA. In the context of say, the principal place of residence exemption in Section 10(1)(r) and Schedule 1A LTMA, “land” can be exempt if it is, inter alia, “a parcel of residential land” or “a lot under the Strata Schemes (Freehold Development) Act 1973 or a lot under the Strata Schemes (Leasehold Development) Act 1986”. In other words, there is a specific reference in that exemption to land that is a strata lot.

56 A “lot” is defined in Section 5(1) of the Strata Schemes (Freehold Development) Act 1973 to mean, inter alia, one or more cubic spaces forming part of the parcel to which a strata scheme relates, the base of each such cubic space being designated as one lot or part of one lot on the floor plan forming part of the strata plan, a strata plan of subdivision or a strata plan of consolidation to which that strata scheme relates, being in each case a cubic space the base of whose vertical boundaries is delineated on a sheet of that floor plan and which has horizontal boundaries as ascertained on a sheet of that floor plan and which has horizontal boundaries as ascertained under sub-section (2)

57 In Chief Commissioner of State Revenue v Timbs [2006] NSWADTAP at [22], the Appeal Panel observed that the splitting of the principal place of residence exemption into strata and non strata subsections in Schedule 1A arose from differences in terminology when referring to strata and non-strata land, rather than from Parliamentary intention not spelled out elsewhere. The Appeal Panel in that case ultimately disagreed with the proposition that “a lot” was intended to mean lot in the singular only.

58 In relation to another exemption in Section 10 (namely s.10(1)(g)(iii)) LTMA for 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 “ a building (not being a building of which any part is used for the purpose of a commercial activity open to members of the public) owned and solely occupied by a society, club or association not carried on for pecuniary profit”, an amendment, by way of clarification, was made last year by State Revenue Legislation Amendment Act 2008. The amendment “clarified” that if the relevant building contained strata lots, each strata lot was to be regarded as separate premises (i.e. a building in itself) for the purposes of the exemption.

59 In the present case, in view of the above, it is not entirely clear whether the legislature intended for the exemption in Section 10R to apply to strata lots (ie. as separate premises) or only to an entire parcel of land.

60 Having regard to the following:

A The intention of the legislature expressed in the Second Reading Speech (i.e. to afford exemption from land tax (and a “passing on” of this saving) where a retired person entered into a long term lease of premises where such a person would have been entitled to the principal place of residence exemption if they purchased those premises (or had remained in their previous premises) – it is clear that this precise situation could arise in a strata title village where strata lots are leased to a retired person);
B The existence of the mechanism in Section 9B LTMA that indicates that in the case of “land” that is subject to the Strata Schemes (Freehold Development) Act 1973 , land tax is to be levied and paid in respect of each “lot” i.e. there is a clear intention that land tax is levied and paid on a lot by lot basis (albeit calculated having regard to an apportionment of the land value of the parcel). Each lot will have a “taxable value” and Section 9(1) confirms that land tax is payable by an owner on the “taxable value” of all land owned by the owner which is not exempt ;

C The result that would apply if the exemption were not considered on the basis of a strata lot but instead the parcel. For example, if it were assumed that 3 lots out of 12 lots in a strata scheme were used and occupied an aged care establishment, if the land is viewed only as a parcel (i.e. in globo) for Section 10R, then a reduction would be made under Section 10R(3) or (3A) in “land value” of the parcel for the area of the 3 lots. The reduced land value would then be used to calculate the land tax assessment for each strata lot under Section 9B. Under that mechanism each lot holder would still be prima facie liable for land tax – in other words the owners of the 3 lots would still have to pay land tax (just at a reduced amount). Land tax would likely then be passed on by the owners to the retirees who lease these 3 lots. This would appear to defeat the object of the exemption; and

A The amendment to Section 10(1)(g)(iii) outlined above that was stated to be for “clarification” as opposed to an expansion of the exemption. The amendment clarified that each strata lot was to be regarded as a separate building for the purposes of the exemption.

I have concluded that Section 10R can apply in the case of a strata lot. Such a construction would not disturb the operation of the exemption (or reduction for part use of land or building) in respect of non strata land (ie. where there is one owner) where appropriate and does seem to me accord with the legislative intent and context, in particular Sections 9(1) and 9B LTMA.

61 The conclusion I have reached is consistent with the approach of the parties at the hearing. For example, the Chief Commissioner phrased the issue in the case as to whether the properties (which he defined as the vacant lots eg lots 3 & 9) were used and occupied as a retirement village (as defined in the RV Act) and for no other purpose in accordance with s.10R LTMA?

62 However, having said this, it seems clear that in determining whether a strata lot is used and occupied as a “retirement village” at least, it may well be necessary to consider the status of other strata lots in the scheme. This is because the definition of “retirement village” for the purposes of the LTMA clearly envisages a “complex” and having regard to the ordinary meaning of that word, it would seem unlikely that a single strata lot could alone satisfy that requirement.

63 In determining whether a strata lot is used and occupied as an aged care establishment, however, it may not be necessary to consider the status of other strata lots at all. This is because the definition of “aged care establishment” (explained below) looks only to a building or part of a building used or intended to be used to provide residential care. In other words, it would be possible to look at a single strata lot and determine whether or not it was used and occupied as an aged care establishment.

64 In the present case, due to the absence of evidence from the Applicants, I have concluded that neither the parcel of land, nor the strata lots individually were used and occupied as a retirement village or an aged care establishment in respect of the relevant land tax years. Accordingly, whether the exemption is viewed as applying to a parcel of land as a whole or a strata lot individually has ultimately not mattered in the present case.

Retirement village

65 The Respondent spent significant time in its written and oral submissions dealing with the issue as to whether the Properties fell within the definition of a “retirement village” for the purposes of Section 10R(1) LTMA. This may well have been prompted by the Applicant’s claim, at the time of its objections, that it was entitled to an exemption from land tax on the basis of “SEPP 5 – retirement village”.

66 In the Applicants’ initial written submissions and at the hearing however, it was clear that the Applicants’ case relied on the Properties satisfying the definition of an “aged care establishment” in Section 10R(1)(a) as opposed to a “retirement village”.

67 In some written submissions that the Applicants filed after the hearing, the Applicants still appeared to primarily refer to Section 10(1)(a) LTMA – “intended to be used for the provision of residential care”- however there were some references in the same document to the Properties being used as a “retirement village” and to the definition of “retirement village’ in the Retirement Villages Act 1999 (the “RV Act”).

68 On the basis that the latter issue did not form part of the Applicants’ case for the purposes of the hearing but was referred to by the Respondent at some length in its submissions (and on occasion in written submissions filed by the Applicants after the hearing) I have dealt with this matter.

69 The meaning of “retirement village” in Section 10R LTMA has the same meaning as Section 5 of the RV Act. Section 5 RV Act is currently in the following terms:

5 Meaning of “retirement village”

(1) For the purposes of this Act, a retirement village is a complex containing residential premises that are:

(a) predominantly or exclusively occupied, or intended to be predominantly or exclusively occupied, by retired persons who have entered into village contracts with an operator of the complex, or

(b) prescribed by the regulations for the purposes of this definition.

(2) It does not matter that some residential premises in the complex may be occupied by employees of the operator or under residential tenancy agreements containing a term to the effect that this Act does not apply to the premises the subject of the agreement (instead of being occupied under residence contracts), or that those premises do not form part of the retirement village.

(3) However, a retirement village does not include any of the following:

(a) any building or any part of a building used or intended to be used for the provision of residential care, within the meaning of the Aged Care Act 1997 of the Commonwealth, by an approved provider under that Act,

Note. Paragraph (a) excludes from the definition of retirement village buildings that are commonly known as Commonwealth-subsidised hostels and nursing homes.

(b) a nursing home within the meaning of the Public Health Act 1991,

(c) any building or part of a building intended to be used for the provision of respite care (within the meaning of Aged Care Act 1997 of the Commonwealth),

(d) a residential park (within the meaning of the Residential Parks Act 1998),

(e) a place at which accommodation is provided by the Aboriginal Housing Office or the New South Wales Land and Housing Corporation (unless it is provided pursuant to a joint venture, or otherwise in conjunction, with another person or body),

(f) a boarding-house or lodging house,

(g) any accommodation provided in a complex for employees of the complex who are not residents of the retirement village,

(h) any residential premises the subject of a residential tenancy agreement in the form prescribed under the Residential Tenancies Act 1987 to which the operator of a retirement village is a party and that contains a term to the effect that this Act does not apply to the residential premises the subject of the agreement,

(i) any other place or part of a place excluded from this definition by the regulations.

70 In comparing the current version of Section 5 RV Act to the version of Section 5 as originally enacted, it would appear that there have been some minor amendments to the language of Section 5(3)(b) (Act No 87 of 2004) and Section 5(3)(e) (Act No 121 of 2008) but these provisions are not relevant in respect of the present application.

71 It is noted firstly that the definition of “retirement village” in Section 5 RV Act specifically excludes in Sub-section 5(3)(a) “any building or any part of a building used or intended to be used for the provision of residential care, within the meaning of the Aged Care Act 1997 of the Commonwealth, by an approved provider under that Act”.

72 In its written submissions and at the hearing, the Applicants’ case was that the Properties fell within the definition of an “aged-care establishment” in Section 10R(1)(a) which is in precisely the same terms as the exclusion in Sub-section 5(3)(a) of the RV Act. There was no submission by the Applicants, in the alternative at the hearing, that the Properties were a “retirement village”. Indeed, any such submission could only have been in the alternative since due to the definitions above, a building (or any part thereof) that is an “aged care establishment” could not also constitute a “retirement village” for the purposes of the RV Act and accordingly, the LTMA.

73 I agree with the Respondent’s submissions that by virtue of the onus of proof placed on the Applicants in an application for review (Section 100(3) TAA) it would have been necessary for the Applicants (if they had raised an alternative case that the Properties were a “retirement village”) to provide evidence that the requirements of Section 5 RV Act were established in respect of the Properties (eg amongst other things, whether there was a “complex”, whether any such complex was “predominantly or exclusively occupied, or intended to be predominantly or exclusively occupied, by retired persons”, whether there was an “operator of the complex” and whether there were “village contracts” entered into between retired persons and the operator of the complex).

74 The definition of “operator” in Section 4 of the RV Act refers to the “person who manages or controls the retirement village” and includes “a person (other than a resident or other person referred to in Section 4(2)) who owns land in the village”. It is indeed possible that the Applicants and/or other owners of strata lots at 23 Ayers Road might fall within the definition of operator however this was not addressed by the Applicant.

75 The RV Act and the Retirement Village Regulation 2000 also provide for various matters regarding “village contracts” including a definition in Section 4, a “standard form” for village contracts (s.42 and 43 and Regulation 12, Schedule 3) and the content of such contracts (Regulation 12, Schedule 3). The Applicant did not adduce any evidence for the purposes of the hearing that “village contracts” were intended to be entered into by retired persons and the Applicant/other “operators” in respect of the Properties (or indeed that had been entered into for other lots sold in the strata plan).

76 The Applicants did not adduce evidence to show who was actually occupying the strata lots that had been sold. The evidence adduced by the Respondent suggested that lots 2 and 8 had been sold to Australian Life Lease Corporation Pty Ltd and that this company may have leased the lots to others. It was unclear to the Tribunal who was ultimately occupying the lots that had been sold.

77 The Section 88B instrument permitted persons over 55 years or persons (of any age) with a disability to occupy the lots of the strata scheme. In the absence of evidence, it is impossible for the Tribunal to find whether there was a complex and if so, whether it was predominantly or exclusively occupied by “retired persons” (defined in s.5 RV Act as persons over 55 years or that had ceased full-time employment).

78 I agree with the submission of the Respondent, that it would have been necessary for the Applicant to address the above matters in order to prove that the Properties were constituent parts of a “retirement village” in its application for review (Section 100(3) TAA).

Use and occupation as a retirement village

79 Further in addition to a relevant property needing to satisfy the definition of a “retirement village” for the purposes of Section 5 RV Act and section 10R(1) LTMA, it would also have been necessary for the purposes of the exemption in s10R(2) of the LTMA, for the Applicant to prove that the Properties (and together possibly with the other strata Lots) were used and occupied as a retirement village and for no other purpose in respect of each of the relevant land tax years in question.

80 As I have discussed below in relation to the exemption for “aged care establishments”, not only do the Applicant need to prove the Properties fall within the definition of “a retirement village” or “an aged care establishment” in Section 10R(1), they must also prove in respect of each of the relevant land tax years that the conditions for the exemption were met as set out in Section 10R(2) LTMA. As I discuss below, it seems to me that in this respect, the exemption in Section 10R(2) does not allow for a strata lot that is merely intended to be used and occupied as a retirement village or aged care establishment in respect of the relevant land tax year as opposed to actually “used and occupied” in respect of that year. The reasons for this are set out below.

Aged care establishment

81 The Applicant’s submission at the hearing proceeded along the lines that the Properties in question were intended to be used for the provision of residential care within the meaning of the Aged Care Act 1997 (Cth) by an approved provider under that Act (Section 10R(10(a)).

82 Mr McNeice submitted that the Properties (that were vacant and owned by the Applicant during the relevant land tax years) were held for sale (or alternatively rental) to either persons over the age of 55 years or to “approved providers” and noted there was, and still is, a restriction on title that only enables the Properties to be occupied by persons over the age of 55 years.

83 The Applicants did not address by way of evidence, the intention in respect of the “use” of each of the Properties in respect of each particular land tax year (i.e. as at 31 December immediately preceding each land tax year) but instead made a “global” submission that following completion of the building by the Applicant, the Properties have been held by them for sale (or alternatively rental) in the above manner due to the Section 88B restriction on title. Mr McNeice submitted that this “intention” was consistent with strata lots that had actually been sold by the Applicants in the same strata scheme i.e. in some cases there were direct sales to persons over 55 years and in other cases sales to approved providers (who leased the lots to persons over 55 years and provided services to them).

84 Section 10R(1)(a), relied on by the Applicants, defines an “aged care establishment” as meaning “any building or any part of a building used or intended to be used for the provision of residential care, within the meaning of the Aged Care Act 1997 of the Commonwealth, by an approved provider under that Act”.

85 The definition of “residential care” is contained in Section 41-3 of the Aged Care Act 1997 (“AC Act”). It appears that there have been no relevant amendments to the definition since it was first enacted in 1997 for the purposes of the present application and the land tax years in question.

41-3 Meaning of residential care

(1) Residential care is personal care or nursing care, or both personal care and nursing care, that:

(a) is provided to a person in a residential facility in which the person is also provided with accommodation that includes:

(i) appropriate staffing to meet the nursing and personal care needs of the person; and
(ii) meals and cleaning services; and
(iii) furnishings, furniture and equipment for the provision of that care and accommodation; and

(b) meets any other requirements specified in the Residential Care Subsidy Principles.

(2) However, residential care does not include any of the following:

(a) care provided to a person in the person’s private home;

(b) care provided in a hospital or in a psychiatric facility;

(c) care provided in a facility that primarily provides care to people who are not frail and aged;

(d) care that is specified in the Residential Care Subsidy Principles not to be residential care.

86 If there had been evidence to show that the Properties were intended to be sold to approved providers and used by those providers in the provision of residential care, then it is possible that the Properties might fall within the definition of an “aged care establishment” i.e. the lots would be intended to be used for the provision of residential care, within the meaning of the AC Act of the Commonwealth, by an approved provider under that Act.

87 In the present case, however, there was no evidence adduced from the Applicant that the Properties were intended to be sold to approved providers within the meaning of the AC Act 1997 and to be used by such providers for provision of residential care in respect of the relevant land tax years. Although the Applicant’s representative and Mr Touma indicated in submissions at the hearing this was the case, there was no evidence from the Applicants. In any event, the submissions of Mr McNeice and Mr Touma were also to the effect that the properties were not only held for sale to approved providers but were also held for sale (or rental) directly to persons over the age of 55 years.

88 In the case of other lots in the Strata Scheme that were sold directly by the Applicant to persons over 55 years, Mr McNeice indicated in submissions that the retired persons managed those properties themselves – they did not receive “residential care”. Mr McNeice, in response to a question from the Tribunal, confirmed that the Applicant did not provide services (in the nature of aged care services or otherwise) to any of the retiree owners of the Strata scheme. The Applicant were not themselves “approved providers” within the meaning of the AC Act.

89 Even if the Applicant were “approved providers” under the Act and had provided (or intended to provide) services to retiree-owners of lots in the strata scheme, this would not appear to constitute “residential care” by virtue of the exclusion under Section 41-3(2)(a) AC Act. This is because care provided to a person (eg a retiree) in their own home does not fall within the definition of “residential care”. Instead “residential accommodation” and care must both be provided to satisfy the definition of “residential care” in the AC Act.

90 On the basis of the submissions and documents tendered by the Applicant and Respondent and the brief remarks of Mr Touma at the hearing, at best, it could be inferred by the Tribunal from the Section 88B instrument, that in the relevant land tax years, the Applicants were restricted in respect of the sale of the Properties to purchasers that would satisfy the terms of that restriction on the use of the land or ensure satisfaction with this requirement. Such purchasers could have been persons over 55 years or persons (of any age) with a disability or indeed persons that would agree to ensure that the lots were occupied by persons satisfying the Section 88B restriction.

91 There was no evidence, in respect of each of the relevant land tax years, that the sales/marketing efforts of the Applicant were only directed at “approved providers” or that proposed sales of the Properties would be limited to approved providers that would commit to provide “residential care” to occupants. Indeed, advertisements adduced in evidence by the Respondent at the hearing indicated that the Properties were marketed generally to persons over 55 years:

Retire in Luxury and Style!

Superbly designed for the over 55’s, an excellent choice of five spacious three bedroom apartments, ground and first floor (elevator in complex)…”

92 The submissions of Mr McNeice and Mr Touma at the hearing were consistent with the inference drawn by the Tribunal. It was explained that the Touma brothers are developers and, perhaps not unsurprisingly, wished to sell the vacant properties as soon as possible to any person that was permitted to buy them (especially given they had been unsuccessful in their efforts to remove the Section 88B restriction from the title of the Strata plan).

93 The submissions and documents tendered at the hearing by the Applicant and the brief remarks of Mr Touma at the hearing do not, in my view, establish on the balance of probabilities, as at 31 December preceding each land tax year, that the Properties in question were “part of a building intended to be used for the provision of residential care within the meaning of the Aged Care Act 1997 of the Commonwealth, by an approved provider under that Act”.

94 I have considered carefully the submissions of the Applicants and the remarks made by Mr Touma at the hearing and appreciate that the Applicant are restricted in respect of purchasers for the Properties (and that land tax in respect of the Properties is in the nature of a “holding charge” as far as the Applicants are concerned). However, the mere presence of the Section 88B restriction on the title, which appears to have ultimately flowed from SEPP 5, restricting the use of the property to persons over 55 years or persons (of any age) with a disability and those that live with them or are staff members, does not mean of itself that the Properties fall within the specific definitions of an “aged care establishment” or “retirement village” as those terms are defined in other Statutes and for the purposes of the LTMA.

95 I note that even if the Properties were capable of falling within the definition of an “aged care establishment” where the Applicants had dual intentions in respect of the Properties (ie. sale to approved providers for the provision of residential care by those providers or sale directly to persons over the age of 55 years or with a disability), in any event, I do not consider in the present case that the Applicant discharged its onus of proof that the conditions of the land tax exemption in Section 10R(2) were met in respect of the 2003-2008 land tax years inclusive as discussed below.

Section 10R(2) - Used and occupied

96 The Respondent spent some time in its submissions concerning the requirement of Section 10R(2) that land is only exempt from taxation under the LTMA where it is “used and occupied” as an aged care establishment or retirement village (or any combination thereof) and “for no other purpose”.

97 The Respondent submitted that even if the Applicant established that the Properties fell within the definition of an aged care establishment or retirement village in Section 10R(1) on the basis of an “intention” that the properties be used in that manner, this was not sufficient for the exemption in Section 10R(2) LTMA which required actual use and occupation of the land in the requisite manner in respect of each land tax year in question.

98 The Applicant’ case appeared to be that the properties were vacant as at 31 December in the year preceding each of the land tax years but as they were intended for sale to persons over 55 years or “approved providers” (to satisfy the Section 88B restriction) this was sufficient for the land tax exemption to apply.

99 For reasons explained below, I agree with the Respondent’s submission that Section 10R(2) is clearly the source of the exemption from land tax and must be considered separately from whether the Properties fall within the definition of aged care establishment or retirement village in Section 10R(1).

100 Similarly to the decision of Hansen J in Commissioner of State Revenue v Applewood Residential Developments Pty Ltd [2005] VSC 232 at paragraph [45] (not disturbed on appeal), relating to a similar exemption provision in Land Tax Act 1958 (Vic), Section 10R has “a temporal aspect” in that it is answered by reference to the facts in respect of the Properties at the relevant time (being 31 December of the year preceding the relevant land tax year).

101 As Hansen J also stated at paragraph [53] which was cited with approval by the Court of Appeal in Applewood Residential Developments Pty Ltd v Commissioner of State Revenue [2006] VSCA 207 per Nettle JA at paragraph [16] and [17]:

Thus, if the Commissioner considers that part of the land is not exempt, for instance, because it is not used and occupied as a retirement village, that assessment is not for all time. It is for one year only. If by the time of the next assessment, the relevant part of the land is used and occupied as a retirement village, the exemption will apply….The fact is that the present exemption from land tax is one that applies where the land is used and occupied in a particular way. It is not an exemption which applies merely because the owner of the land intends to construct a retirement village on the whole of the land.

102 Although it does not appear that Section 10R(2) LTMA has itself been considered by the Tribunal or the Supreme Court in NSW, prior to this application, the words “used and occupied” were considered in the context of Section 9(3)(e) of the Land Tax Management Act 1956 in Commissioner of Land Tax v Christie [1973] 2 NSWLR 526 where the Court of Appeal considered whether the relevant land was used and occupied by the owner solely as the site of a single dwelling house. I appreciate that the present Section 10R(2) is somewhat different in so far as it looks to whether the land (or indeed the building) is used and occupied as a retirement village or an aged care establishment.

103 Nevertheless, in that case, relevantly, Bowen JA (with whom Jacobs P agreed) stated in relation to “use and occupation” at 533

The fact that both have to be demonstrated suggests that there is a difference and that the requirement is cumulative: see Knowles v Newcastle Corporation (1909) 9 CLR 534 at p545.

“Use” has regard to the purpose to which the land is put. Under s.9(3)(e) it must be shown to have been devoted to the purpose of constituting the site of the dwelling house…..

“Occupation” is not synonymous with legal possession. It includes possession but it also includes something more: see Newcastle City Council v. Royal Newcastle Hospital (1957) 96 CLR 493. It involves an element of control, of preventing or being in a position to prevent the intrusion of strangers….It is for this reason that physical presence on the land and fencing are evidence of occupation. But continuous physical presence or physical presence on every part of the land does not have to be shown in order to establish occupation. (underlining added).

104 In relation to “use”, as I have stated above, it appears clear that the Properties could only be occupied by persons that fitted the categories in the Section 88B restriction (which included persons over 55 years or persons of any age with a disability). In the present application, there was no evidence that the Properties (or indeed other lots in the strata scheme) were used as a retirement village in respect of the relevant land tax years (ie. there was no evidence that there was a “complex”, an “operator” of a complex or “village contracts” entered into or proposed to be entered into between the operator and retired persons or that any such complex was exclusively or predominantly occupied by “retired persons” (which would not include persons with a disability)).

105 In relation to “use”, similarly, there was no evidence that the Properties were used as an aged care establishment in the relevant land tax years. There was no evidence that the Properties were devoted to the purpose of approved providers providing residential care to residents. In any event, the submissions of the Applicant, at least, tended to suggest that the Applicant had another purpose in the relevant land tax years i.e. sale directly to persons over 55 years who would not be provided with residential care by approved providers. The existence of “another purpose” for the Properties in the land tax years in question is incompatible with the requirement of Section 10R(2) that the Properties be used and occupied as a retirement village, aged care establishment (or a combination thereof) and for no other purpose.

106 In relation to “occupation”, the Properties (that were the subject of the land tax assessments for each land tax year) were not occupied at all on 31 December immediately preceding the commencement of each the land tax years in question). The test in Section 10R(2) requires the Properties to have been “occupied” as an aged care establishment (or retirement village). In relation to the vacant units, there would not appear to have been any legal possession or element of control as referred to in Christie (supra) other than possibly by the owners (ie. the Touma brothers). However legal possession by the Touma brothers would be insufficient to meet the test, in my view, as the Properties need to be occupied as “an aged care establishment” (requiring there to be occupation by a person who is provided with accommodation and who receives residential care) or “retirement village” (requiring there to be occupation by a retired person who has entered into a village contract with the operator).

107 Section 10R(3) and (3A) make it clear that an apportionment calculation applies where only part of land or a building is used and occupied in the manner set out in sub-section (2). In my view, the existence of this provision supports an interpretation of Section 10R(2) that requires actual use and occupation (in contrast to intended use and occupation) in order for the exemption to apply. As was stated in the Applewood case, the circumstances of a property may alter from year to year and if strata lots are acquired by approved providers, for example, and used and occupied by retired persons who receive residential care from those approved providers then the requirements of Section 10R(2) at that time would be met and a land tax exemption would apply.

108 Further, the purpose of the legislative provisions must also be considered (as referred to in paragraph [40] above). In the context of Section 10R, the exemption appears to have been intended to confer exemption in respect of long term leases of property by retired persons where they would have been entitled to the principal place of residence exemption if they had owned the property outright or had been entitled to that exemption in relation to their old premises prior to leasing premises in a retirement village. It is clear in NSW that the entitlement to the principal place of residence exemption requires actual use and occupation. In Chief Commissioner of State Revenue v Aldridge & Anor [2003] NSWADTAP at [14] the Appeal Panel confirmed that a “subjective intention” to occupy is not alone sufficient to bring a property within Section 10(1)(r) LTMA.

109 The Applicants sought to distinguish the decision of the Court in Appeal in Applewood on the basis of the different factual context and legislative provisions in the present case.

110 In respect of the factual context, the Applicants said that the present case involved a completed strata building (as opposed to a partially developed site in Applewood) and this brought the present case closer to the decision in Burwood Terrace Pty Ltd v Commissioner of State Revenue [2002] VCAT 183. In the latter case, the Tribunal member concluded that in respect of a retirement village where 21 townhouses and 45 apartments were constructed and, of these, 21 townhouses and 8 apartments were occupied at the relevant taxing date, all of the land was held to be exempt under Section 9(1)(j) of the Land Tax Act 1958 (Vic). Unlike the present case, there was no dispute in the Burwood Terrace case that the relevant townhouses and apartments constituted a “retirement village”. It was a complex that contained residential premises, a bowling green, tennis courts and common areas for a pool, gymnasium etc. Further there was no mention in that case of the retirement village being the subject of a strata scheme, rather it appeared from the discussion of the Tribunal that there was one parcel of land involved (i.e a single site).

111 In the decision of Hansen J in Applewood, at paragraph [46] he expressed no view as to the correctness of the ultimate result in Burwood Terrace which was that land was exempt from land tax under Section 9(1)(j), even though only 10 of the 66 dwellings were occupied. Further he noted that Burwood Terrace was in fact the catalyst for an amendment to Section 9(1)(j) – whereby the exemption now applies to “land which is occupied, or currently available for occupation, as a retirement village” (underlining added). Hansen J observed that the practical effect of the decision, namely that the exemption should not be denied merely because a completed building has not yet filled up, has now been enshrined in the legislation. He further observed at [52] that the case in fact had expanded the scope of section 9(1)(j).

112 In the Court of Appeal decision in Applewood, Nettle JA at [33] observed that the question of use and occupation is one of fact and degree, each case will turn to a greater or lesser extent on its own facts and circumstances, and therefore, it is impossible to lay down proleptically how must facilities must be used and occupied before they qualify for exemption. He said:

Nevertheless, in a case like the present, where a retirement village is being developed in discrete phases, I do not consider that it can be said of land on which a phase is being constructed that it qualifies for the exemption until and unless the residences which comprise the phase have been completed to the point that they are available for use and occupation and at least one of them in that phase is in actual use and occupation by a resident.

113 In the present case, the Applicants did not establish, as a first step, that the Properties (either individually or collectively with other strata lots already sold) at 23 Ayres Road fell within the definition of a “retirement village” and/or an aged care establishment. Accordingly, even if actual use and occupation was not required (which would appear to be contrary to the authorities in NSW referred to above), the failure to satisfy the first step means that the Properties could not be regarded as available for use and occupation as a retirement village and/or aged care establishment.

114 Ultimately therefore, having regard to the facts and the authorities I have concluded, that in respect of its application, the Applicant did not establish by evidence that the Properties were actually used and occupied as an aged care establishment (or indeed alternatively as a retirement village) in the 2003-2008 land tax years inclusive and for no other purpose.

115 Even if my conclusion that Section 10R(2) requires actual use and occupation was not accepted, I am of the view that there would still be insurmountable difficulties for the Applicants in satisfying Section 10R(2) because where the Properties were held for sale in the land tax years to over 55 year olds or persons (of any age) with a disability, in my view, this would amount to “another purpose” that is not permitted under Section 10R(2).

2000 and 2001 land tax years – no estoppel

116 Finally, the Applicants raised in submissions that no land tax had been imposed in respect of the Properties in the 2000 and 2001 land tax years. However this does not affect in any way the position for the 2003-2008 land tax years inclusive. As was stated in Chief Commissioner of State Revenue v Geoffrey Harry Coleman & Anor (2007) 66 ATR 713 by Handley J at [24] (in similar circumstances where a taxpayer claimed that no land tax had been imposed in a prior year):

Even in an unchanging situation, this was not an admission by the Commissioner as to the position a year later, nor could it support an estoppel. Indeed, even a judicial decision in respect of an earlier year would not have created an issue estoppel for the later; Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR, 502, 501.

Orders

117 I make the following orders:

1 The decision of the Chief Commissioner is affirmed.