Trexmist Pty Ltd v Brisbane City Council
[2001] QLC 66
•18 July 2001
LAND COURT BRISBANE 18 July 2001
[2001] QLC 66
Re:Appeals against a categorisation City of Brisbane Act 1924 Property ID No: 1227919
Local Government: BCC-Brisbane (VC00-57)
Trexmist Pty Ltd v.
Brisbane City Council
J U D G M E N T
Background:
(1) This matter relates to an appeal by Trexmist Pty Ltd (the appellant) against the categorisation of its land by the Brisbane City Council (the respondent). The subject land is located at the corner of Edward and Margaret Streets, in the Central Business District of Brisbane, is described as Lot 4 on CP 911290, Parish of North Brisbane, and contains an area of 225 m2. The land was categorised at the relevant date for rating purposes as Category 5 under the City of Brisbane Act 1924. The relevant
period for effect of the categorisation was for the quarter commencing 1 January 2000. The appellant argues that the land should be included in Category 1.
Stephen Ronald Ferguson Burns, a director, appeared and gave evidence for the appellant, also calling evidence from Denis Edward Jarrott. Mr R Needham of counsel, instructed by Brisbane City Council, appeared for the respondent. With the agreement of both parties an internal and external inspection of the subject property was undertaken.
History of the site –
The subject land contains an historic building which was constructed in 1887 as a marine warehouse, and is currently listed on the Queensland State Heritage register, and also the Brisbane City Council register, for preservation. The building has been extensively refurbished under the stringent supervision of the Queensland Heritage Department, and is seen as an important feature of the historic heterogeneous integrity of the streetscape of lower Edward Street. The building is a rare surviving example of the architecture of AB Wilson, and is particularly significant because of
its small proportions. The lower Edward Street streetscape is unique in the Central Business District of Brisbane.
The building was formerly used as an office for the South East Queensland Water Board, and was acquired by the appellant in 1993. Subsequent to acquiring the property, and following a detailed and comprehensive refurbishment, supervised by recognised heritage specialists over a period of 2 years, the building was converted back to its original grandeur. The building is now partly used as a private residence for Mr Burns, and partly used for commercial purposes.
The Nature of the Property -
The subject building comprises four levels. The basement is used solely by the owner for storage purposes, while the owner exclusively uses Levels 1 and 2 as his residence. Part of Level 1 was formerly used as an office for Mr Burns’ former business, but that is now used as only part of his personal residence. On the Ground Level, except for a garage used exclusively by the owner, and a common area including toilets at the rear door fronting Margaret Street, the remaining area is leased to a commercial coffee shop that provides light meals and gifts, with seating for about 20 patrons.
It is agree by both parties that the area of the building used exclusively as the residence of Mr Burns occupies approximately 681 m2 (83.5 percent) of the gross floor area, (GFA) of 817 m2. The area leased to the commercial shop occupies 136 m2 (16.5 percent) of the total GFA.
The areas used solely by Mr Burns as his place of residence have been artistically refurbished to a high standard in keeping with the historic nature of the building. Bedrooms and facilities exist on both Levels 1 and 2, while the main kitchen facilities have been located on Level 2. A private service lift used solely by the appellant services all Levels.
The Legislation -
At the relevant date of 1 January 2000, the legislative framework providing directions in this matter was the Resolution of Rates and Charges adopted by the Brisbane City Council for the year ending 30 June 2000, under the City of Brisbane Act 1924. Under that rating regime, the respondent established the following relevant provisions in respect of differential general rates:
“4. Differential General Rates
(a)For the purpose of making and levying differential general rates for the financial year on all rateable land in the City, the Council determines that -
(i)the categories into which rateable land in the City is to be categorised are -
· 6 in number, and
· identified and explained in the respective columns ‘category’ and ‘general criteria’ of the Differential General Rating Table; and
(ii)the criteria by which land is to be categorised as being in a particular one of those categories are specified in the column ‘Specific Criteria’ of the Differential General Rating Table opposite the identification and explanation of the particular category.
| Category | General Criteria | Specific Criteria |
| 1 | To meet this criteria the dominant purpose for which the land is used or intended for use must be: (a) residential; and (b) for the exclusive use of one family. Where the land contains a single unit domestic dwelling and otherwise meets the general criteria above, then this category will apply regardless of the zoning of that land. Where the land is used for single unit domestic dwelling purpose and some other purpose, then the dominant purpose will be determined by reference to the visual, economic and spatial aspects of the relevant uses. | Subject to the general criteria, (2) land to which the following land use codes apply: - 02 – single unit dwelling |
| 5 | To meet this criteria the land must be within the CBD and the dominant purpose for which that land is used or intended for use must be:- (a) carrying out a commercial or industrial activity; and (b) include other than | Subject to the general criteria, (2) land to which the following land use codes apply:- (10) – combined multiple dwelling and shop. |
| residential purposes. Where the land within the CBD has erected a building or buildings used or intended for a use normal to that of a commercial or industrial usage, then the dominant purpose will be determined by reference to the visual, economic and spatial aspects of the use. | ||
| 6 | Applies only where land does not fall within categories 1, 2, 3, 4, or 5. | Land not included in: Category 1 |
The Brisbane City Council land use codes at 1 July 1999 relevantly established:
“Primary Use
The primary use code identifies the property’s specific rating criteria. The specific criteria is used to identify the property’s Differential Rating Category. See the Resolution of Rates and Charges.
The criteria for dominant use should take into account the economic activity together with the visual and spatial aspects. Area is not necessarily the basis for determining the predominant use. The dominant use may be determined and applied during the construction period and will be identified by its future land use code followed by a secondary land use code of 01.
Secondary Use
The secondary use would apply where a lesser use is also engaged on the property. A secondary code also can indicate the number of lots or units.”
The only issue to be resolved in this matter is the determination of the “Dominant Purpose” of the subject land in accordance with the above legislation. In seeking to identify the “Dominant Purpose” of the subject land I am directed to consider the visual, economic and spatial aspects of the relevant uses of the land.
The Visual Aspects -
The appellant argues that the respondent has not fully considered the appearance of the building as a whole, and has focussed entirely upon the pressure of
certain signage on the Edward and Margaret Streets corner. There are two small signs on each street façade at eye level, each about 0.56 m2 in area, together with a display window on the coffee shop. Mr Burns notes that no such detail was provided of the extensive use of the rest of the building (83.5 percent) for residential use. Mr Burns also argues that the small commercial sign on the Margaret Street frontage represents only 0.3 percent of the total wall area of that façade.
In comparison to those small signs, Mr Burns provides evidence of two large signs on the building when it was formerly commercial offices, and prior to its conversion for residential purposes. Those old signs (now removed) had a total area of about 18 m2.
Mr Burns also argues that it is not appropriate for the respondent to seek to classify the visual appearance of the building by some commonality with conventional suburban residences. Mr Burns notes for example that many old city buildings, both in Brisbane and elsewhere, are now being converted to inner city residential use. As such the exterior appearance of those buildings may exhibit some of the character of their old former uses, but that does not detract from their current use for residential purposes. Mr Burns is a professional architect, and he notes that similar old city buildings are used as residences in cities throughout the world.
Another matter for consideration is the nature of the building as a “Heritage” listed structure. By such definition any refurbishment of such buildings must compliment the era of construction, and the old building’s historic character. Mr Burns argues that such constraints must also impact the physical appearance of the subject land, but that does not detract from its use as a residence. It is Mr Burns’ opinion that because of its unique situation, and heritage listing, the subject land would be very attractive to a select group of potential purposes for use as an inner city residence. Mr Burns in fact declined an offer of $1,500,000 from a well known public identity for the building some years ago for that purpose.
Mr Needham argues that there is nothing in the visual appearance of the subject land which denotes its use as a private residence. Mr Burns concedes that is so from street level, but argues that for privacy reasons he retains that impression. Mr Burns further notes that it is not really different to how owners in upmarket suburban residences seek to maintain their privacy. Mr Burns also notes that the building was built in 1887 for marine workshop purposes. Mr Burns confirms that the entrance to the subject land in Edward Street is marked only by an attractive front door, a postal
address number, and an electronic doorbell system, similar to many suburban residences.
Mr Burns also draws some comparison with other converted city buildings in respect of their appearance from the street. He acknowledges that his examples used were in fact now stratified title redevelopments for residential purposes. Mr Burns also agrees that the subject land had not been redeveloped as strata titles, acknowledging problems with fire safety, and soundproofing as a result of the timber floors. However as an architect, Mr Burns believes that even “heritage listed” buildings have been successfully modified and strata titled, and he sees no reason why that could not occur to the subject land, should he wish to do so. However at this time he does not intend to proceed on that basis.
Mr Burns concedes that the commercial shop existed in its present form at 1 January 2000, and there were displays of goods for sale at that time. However he argues, in his opinion, that was not the dominant use of the building.
Mr Needham agrees that it would not be appropriate to weight any of the three characteristics of use greater than the others, but he argues that a normal observer of the property would conclude that the only physical signs of activity there were for commercial purposes. Mr Needham notes for examples the absence of any exterior fittings to the building, which might convey the impression of residential occupation. Mr Burns rejects such an opinion, noting that the historic nature of the building, and its heritage refurbishment, would preclude any such fittings.
Mr Needham agrees that the small signs are tastefully presented, but argues that the signs are clearly commercial in their intention. Mr Needham also argues that the heritage listing of the building is utterly irrelevant in respect of the categorisation of the purpose of the property, as the building has been categorised in a consistent manner independent of its age.
The Economic Aspect -
Mr Burns seeks support for the economic aspects of the property in valuations provided by Mr John Olive, a registered valuer (Exhibit 5). Mr Olive provides assessment for both the commercial and residential components of the property. The commercial value is determined by capitalising the contractual rental of the leased shop at 9 percent, concluding a capitalised value of $385,000. The residential component is determined by direct comparisons on a per square metre basis with sales of premium units within the CBD, and checking that estimate by a comparison on a net rental basis, concluding a value of $1,000,000 for the residential component.
The commercial shop is leased for a period of four years, with a rent free period of 8 months, and then a gross monthly rental of $3,787.75, which is reviewed annually. Mr Olive estimates a gross monthly equivalent regular cash flow of $3,205 per month, using a net present value approach, after allowing for the effects of the rent free period. From that gross rental, Mr Olive deducts $3,828, representing 17 percent of the total building outgoings, (based upon floor areas) giving an annual return of
$34,632. Based upon capitalisation at 9 percent, Mr Olive concludes a value of
$385,000.
Mr Olive determines the areas of the subject land for residential purposes at 650m2 (81 percent) and commercial retail purposes at 130m2 (16 percent), with common areas of 3 percent. Adopting comparisons with newly developed strata titled inner city residences, he concludes rates per square metre between $2,000 to $3,500. Applying those to the subject building at $2,400 per square metre for Levels 1 and 2,
$1,200 for Ground Level, and $250 per square metre for Basement Level, he concludes at value of $1,098,000.
As a check on that figure, Mr Olive adopts a weekly rental of $1,500 per week, giving a gross annual rental of $78,000 per year. Following outgoings and capitalisation at 6 percent he concludes a check valuation of $989,500. Based upon his estimated valuations Mr Olive concludes that the residential component represents 72 percent of the value of the property, and the commercial component represents 28 percent. Based upon his check of net income, Mr Olive concludes residential 63 percent and retail 37 percent.
Mr Needham challenges those figures arguing firstly that it is not appropriate for the appellant (Trexmist Pty Ltd) to seek to determine what rents could be achieved for the residential component, when in fact no rent was being achieved for that purpose. Mr Needham challenges that it is not appropriate in this matter for Mr Burns to seek to apply an economic test to his own circumstances, but rather to consider the economic aspects as they relate to Trexmist Pty Ltd (the appellant). Mr Needham notes that Trexmist Pty Ltd and Mr Burns are not the one and the same person, as there are other beneficiaries noted in the Articles of Association of Trexmist Pty Ltd.
Mr Jarrott, a registered accountant, confirms the legal structure of Trexmist Pty Ltd, advising that Trexmist Pty Ltd is owned in equal shares by Mr Burns and a trustee company Acador Pty Ltd, as trustees for the individual beneficiaries of Mr Burns and his children. There is no lease between Trexmist Pty Ltd and Mr Burns over the portion of the building that Mr Burns is now occupying. Mr Jarrott also
confirms that the only rent received by Trexmist Pty Ltd is actually from the retail shop on the ground floor, part of which finally flows to Mr Burns. Mr Burns pays the outgoings for part of Level 1 that Mr Burns is now occupying and which is under the control of Acador Pty Ltd. The other outgoings are shared according to their respective equal shares.
Mr Needham argues that having established a corporate structure for business purposes, it is now not appropriate for this Court to seek to pierce the corporate veil to seek to establish the relevant cash flows of the separate parties. He argues that may be appropriate in matters where compensation is an issue, but it is not relevant where it is the use of the building that is being categorised for rating purposes. Mr Needham argues that it is the uses by Trexmist Pty Ltd that are relevant. Mr Needham notes that under the corporate structure Mr Burns is occupying the building in a rent free capacity, and considerations of potential residential rents are not relevant. Mr Burns disagrees, arguing that while using the areas as a residence, he also conducts his financial business from his home.
In respect of comparisons between the subject property and strata titled inner city residences in the CBD, Mr Needham argues that those have no relevance as the subject property is not strata titled. Mr Needham argues that had the property been strata title, then the parties would not be before the Court, as the two uses would have been separately assessed and rated accordingly. However he argues we must assess the building as it was at the relevant date of 1 January 2000, and it was not strata titled at that time.
In respect of the actual capitalisation rates adopted by Mr Olive, Mr Needham queries whether the adopted rate of 9 percent by Mr Olive represented properties where a rent free period had existed in the leases. In the absence of opportunity to examine Mr Olive, Mr Burns responds by arguing that rent free periods are now a normal part of commercial business in Brisbane, and Mr Olive’s extensive experience as a registered valuer was likely to have considered that in his valuations.
Mr Needham further argues that it is also inappropriate to compare the old existing building with newer buildings where the quality of construction would be quite different. Mr Burns rejects that point arguing that because of the stringent quality controls places upon heritage buildings, the quality of finish of the subject property is at least equal in quality to the newer buildings, and comparisons per square metre on that basis are quite reasonable. Mr Burns however concedes that the value per square metre would vary according to public perceptions, and the subject land was
only likely to be attractive to a limited restricted market where people sought an inner city residence with commercial use on the ground floor.
The Spatial Aspects -
In respect of the spatial aspect of the uses, it is agreed by both parties that the areas for residential purposes (83.5 percent) is dominant compared to the area for commercial purposes (16.5 percent).
Decision:
The legislation –
Before considering the implications of the legislation as it then was, I note that in subsequent rating and categorisation the respondent has extended the categories to include a seventh category which allows for land used or intended to be used for “residential business purposes”. That additional category did not exist in the rating regime at 1 January 2000.
The succeeding rating regime (Budget 2000-2001) also included some further definition of the meaning of the terms “visual, economic and spatial”. Those later definitions provide some indication of the subsequent thinking of the respondent when it sought to determine the dominant purpose of the land in the succeeding budget. However that is not for consideration in the current matter.
In respect of guidance when determining the dominant purpose of lands in a similar categorisation process, Mr Needham refers to the decision of the Land Appeal Court in Brisbane City Council v MA and MF Calligeros (VC97-55), 19 May 1998 unreported. That matter dealt with the meaning of “dominant purpose” and “spatial, visual and economic aspects” in some depth.
While the Land Appeal Court considered guidance in respect of the weighting to be applied to the respective criteria, it particularly noted that as each assessment is very much dependent upon the facts of the case little, if any, assistance can be gained from reference to other cases on the categorisation of lands for the purpose of the table. (page 5). The table referred to was the differential general rating table in the then Brisbane City Council rating legislation.
However for the purposes of this matter I accept that the “dominant purpose” for applying the table in respect of the categorisation is best described in the words of Commissioner of Taxation v. Spotless Services Ltd (1996) 71 ALJR 80 where the Court said at page 85:
“In its ordinary meaning, dominant, indicates that purpose which was the ruling, prevailing, or most influential purpose.”
The general meaning of “prevailing” is to influence or persuade, while the general meaning of “ruling purpose” may be taken to mean the main or more intense purpose. (The Macquarie Thesaurus). On a general reading of those words I believe that the dominant purpose would be the main purpose of the building which was likely to persuade that the building is mainly used for that purpose. The question then to be addressed is by whom is the dominant purpose to be persuaded.
While in the initial determination of the categorisation, it is the respondent who is charged with being persuaded of the dominant purpose, it does so in the overall interests of its constituents. The criteria in examining that discretion is whether the categorisation, and the resulting liabilities for rates and charges, are fair and reasonable. In that respect I note that Mr Burns relies upon a publication by the respondent entitled “A fairer system for all” which accompanied the rate notices. In seeking further support for his claim that residential use in that part of the CBD should be recognised for categorisation purposes, he notes that it is spelt out as such in the intentions of clause 3.4 of the Town Plan intent of 1999.
The Visual Aspects -
In considering the “dominant purpose” from the above perspective, I believe it is not appropriate to consider the visual aspect only from the perspective of a casual passerby. The visual aspects must also be considered, in my opinion, from the perspective of a prudent rate payer who is conscious of changes in the social fabric of our community. Such person would be conscious of the trend towards inner city living at 1 January 2000, and was likely to not have closed his mind to the possibility that uses other than the physically obvious might exist in the building.
The special nature of the heritage building is also a matter that would further attract the attention of such an informed passerby. By its very nature the restored building would not exhibit incompatible physical notices which would tend to broadcast the internal uses of the building. Any visual appreciation was then likely to demand a closer appraisal.
On the evidence I believe that a closer external inspection would disclose the commercial uses of the ground floor, leading likely to a conclusion of a commercial purpose for the building. However I believe it is not correct to preclude any comprehension of private residential use merely by the lack of any notice to that effect at the main entrance in Edward Street. Indeed many very expensive homes in some of the most affluent suburbs of this city, provide little exposure to the street
other than a locked gate, a postal address number, and an electronic doorbell and communication system.
If I consider the visual aspect from the Margaret Street alignment, I find little to differentiate between either private residential or commercial uses. The fabric of the windows is consistent on all floors, and in keeping with the building.
However in taking a closer inspection of the building, the respondent, as agent for the discerning passer-by, would then be required, in my opinion, to seek further evidence of the internal uses of the building, hidden by the very building itself. Such was the purpose of the view of the property by the Court.
However in considering any visual aspects of the interior of the building, I believe that it may also be relevant to consider the intensity of use of each purpose. Mr Burns argues that he occupies the building, generally on his own, for seven days each week and for 16 to 24 hours each day. By comparison he advises that the commercial shop is occupied by up to four staff for about 11 hours a day on week days, and 6 hours on Saturday.
To support his contention that it is the quantum and intensity of the use which should be considered, he refers to the findings of this Court in Maguire v. Department of Natural Resources (1997-98) 17 QLCR 123 at 141. In that matter it was found that a small area of 2,000 m2 used for nursery purposes, was used to a far greater degree than the remaining area of 15.811 hectares which was used as a residence or as an office for real estate purposes. The Court found that the dominant use of the land was
for the nursery business.
However that matter dealt with the classification of land for “farming” purposes under the Valuation of Land Act 1944, and provides little assistance in this matter on that point. The Maguire matter did rely upon the findings of AR Thomason
v. Chief Executive, Department of Lands (1994-95) 15 QLCR 286 where the Land Appeal Court said at page 303:
“In our view, the proper approach to be taken when ascertaining the dominant use of land is to consider such matters as the amount of land actually used for any purpose, the nature and extent and intensity of the various uses for the land, the extent to which land is used for activities which are incidental to a common business or industry of a type specified in section 17(2), the extent to which land is used for purposes which are unrelated to each other, and the time and labour and resources spent in using the land for each purpose. When undertaking this exercise, one cannot ignore the conclusion that an objective observer would reach from viewing the land as a whole.”
Now while Mr Needham quite rightly argues that Thomason dealt with farming lands, and its useful purposes under section 17 of the Valuation of Land Act, its thrust in looking at a property overall does provide some guidance in the current matter. Indeed the need to regard the property as a whole was followed by the Land Appeal Court in Brisbane City Council v Calligeros (supra) at page 7.
In that matter it was argued that an “attentive observer” would see certain features from the road, including certain signs, which were argued would help to identify that the lands were used for “commercial” rather than for “residential” purposes. The Land Appeal Court rejected that conclusion, noting that approach overstated the significance of the signs (page 8). The Land Appeal Court noted that as the subject land was heavily and effectively landscaped, any improvements associated with the commercial use had little visual impact from outside the boundaries of the land.
If I then consider the relative weighting to be applied to each separate aspect, I am directed that this Court is not generally concerned with whether due weight has been applied by the Council in exercising its discretion. It is not for this Court to substitute its own view of the importance of a relevant matter exercised by the Council under its statutory discretion, unless a matter has been ignored by the Council (Pickwell v. Camden London Borough Council [1983] 1 All ER 602, at 621 per Forbes J).
That principle was also followed by the High Court of Australia in Minister for Aboriginal Affairs v. Peko Wallsend Ltd (1985-86) 162 CLR 24 where Mason J conditioned that direction by noting at page 41:
“It follows that, in the absence of any statutory indication of the weight to be given to various considerations, it is generally for the decision maker and not the Court to determine the appropriate weight to be given to the matters which are required to be taken into account in exercising the statutory power … I say ‘generally’ because both principle and authority indicate that in some circumstances the Court may set aside an administrative decision which has failed to give adequate weight to a relevant factor of great importance, or has given excessive weight to a relevant factor of no great importance. The preferred ground on which this is done, however, is not the failure to take into account relevant considerations or the taking into account of irrelevant considerations, but that the decision is ‘manifestly unreasonable’.”
If I apply that principle to the current matter I find that I do not have any direction from the Council as to whether it sees any one of the “visual, economic or spatial” aspects as more significant than the others, and I accept that in the overall
consideration of the “dominant” purpose of the building that they each weigh equally in the mind of the decision maker. In the absence of direction to the contrary in the legislation, that would appear to be the direction of the Council’s resolution.
In the circumstances of this matter, on the evidence supplied, I believe that the visual aspect of the subject building could be either as a “commercial” use or as a “residential” use. I further believe that the heritage nature of the building should be considered when viewing the building externally, as the constraints of refurbishment restrict the external façade to their original appearance, which was as a marine warehouse.
Clearly the building is not used for that purpose, and other features of the building may then give clearer guidance as to its dominant purpose. The question to be answered then in respect of the visual aspects is whether it would be manifestly unreasonable to determine whether the building is used for a dominant purpose predominantly based on its visual impact. In view of the nature of the uses, I believe any conclusion about the dominant purpose should be considered by the other variables.
The economic aspect -
The word “economic” in relation to the subject property may be taken to mean “pertaining to pecuniary position”. The meaning of “pecuniary” may also be taken to mean “consisting of money” or “having a relation to money” or “of which money is the object” (The Shorter Oxford Dictionary). By those definitions the meaning of the “economic aspects” of the subject property would relate both to its money equivalent as a property, or the monies received in rent for its use.
If I then consider the economic aspects of the building, I find that Mr Olive has sought comparisons of the value of the land both for its part use as commercial, and its part use as residential. I accept that the building has not been strata titled, but there is no evidence that it could not be so treated. Any conversion to strata title would of course require considerable modifications to the building to meet modern building standards.
However the successfully strata titling of the Spencer Chambers building three doors away in Edward Street indicates that it could be possible. The suggested cost of survey at $2,200 would of course be minor compared to any possible building modifications. But on any comparisons with unit rate costs of strata titled inner city residential buildings, Mr Olive should allow for the extra costs of undertaking such works.
In respect of the unit rates per square metre adopted for his valuation, Mr Olive has applied a relatively low rate of $2,400 per square metre, which is at the lower end of the range of $2,000 to $3,500 per square metre for similar buildings. He then applies even further conservative estimates for the ground floor area of the residential car park ($1,200 per square metre) and only $250 per square metre for the basement, which has a low ceiling height.
In my opinion any costs of converting the building to strata title land in order to compare the capitalisation of rents method for the commercial use, was likely to have been met in assessing the larger “residential” value of the lands.
On that basis I believe such comparisons are not unreasonable, and the final valuation of $1,385,000 for the entire building is not inconsistent with the offer of
$1,500,000 rejected by Mr Burns.
If I then look to the check of the capitalisation of net rentals, I agree with Mr Needham that it is inappropriate for the court to seek to pierce the corporate veil in this matter. I note for instance that the income relevant to Trexmist Pty Ltd in relation to the subject property is the income received by the corporate entity, and does not include the savings in rent received by Mr Burns. Scott v. Commissioner of Taxation (NSW) [1935] SR(NSW) 215 at 219; and also 25 Halsburys Laws of Australia at 405- 205.
There is logical argument that Mr Burns does in fact enjoy rent free residential occupation, and as such the only rent arising for the owner (Trexmist) relates to the lease of the commercial premises. On that basis any comparison based upon an “economic” rental return to Trexmist Pty Ltd would weigh heavily in favour of the commercial purpose of the building.
However it then needs to be argued whether in concluding such a comparison, that the Council has been “manifestly unreasonable” in rejecting any value to the appellant for the use of his home for both living and home occupation purposes? I note also that the capitalisation of net rents for residential purposes is only a check on Mr Olive’s primary method, and I will reject his assessment of economic rentals in this matter.
In summarising the “economic aspects” of this property, I find that the capital worth of the respective component uses of the building weighs heavily in favour of the residential use, while the rental equivalent rests with the commercial use. On balance I believe the primary economic aspect of the subject property is for residential use.
The dominant purpose -
The task of the Court in this matter is to give effect to the intentions of the legislation in enacting the Council’s resolutions of rates and charges. It is only by considering the meaning of the words used by the legislation that the Court can ascertain its intention. However “no part of a statute can be considered in isolation from its context – the whole must be considered.” Cooper Brookes (Wollongong) Pty Ltd v. Commissioner of Taxation of the Commonwealth of Australia [1980-81] 147 CLR 297 at 304.)
That principle was followed in Modog v. Baulkham Hills Shire Council (2000) 109 LGERA 443, per Pearlman J at 447. In that matter the Court sought to identify the purpose of lands, and whether it was zoned “primarily” for urban purposes. In considering the definition of “primarily” the court accepted the common understanding of its ordinary meaning as “chiefly” or “principally”. If I seek analogy with the current matter I believe that meaning is not inconsistent with the definition of “dominant purpose” as defined in Spotless Services Ltd (supra) at page 85.
In considering the purpose of the zoning under State Environmental Planning Policy No. 5 in Modog, the Court took notice of the objectives of the zoning policy, and its aims of encouraging the provision of housing for a targeted community of older people or people with a disability. An important criteria for acceptability for that purpose was the availability of reasonable access to facilities and services. In the circumstances of that matter the Court found that the current zoning of Rural 1(c) was not a zoning which met the objectives of the legislation.
In applying that guidance in the current matter I note that Mr Burns seek support in the Brisbane City Plan 1999 where at page 81 “residential development” is encouraged throughout the city centre; and where residential accommodation precincts adjoining to the Botanical Gardens and to Petrie Bight have been determined. The subject land falls within those precincts. Mr Burns also argues that principle is further established under the Brisbane City Plan at page 75 in his vision statement.
However it is clearly understood that if the subject property was to be seen as used for the dominant purpose of residential use, then the balance of the commercial use would in no way be interpreted as an ancillary, subordinate or subservient use of those premises. The ancillary use doctrine was defined in Shire of Perth v. O’Keefe & Anor (1964) 110 CLR 529, per Kitto J at page 535; and further discussed in South Sydney City Council v. C Maloney Pty Ltd (1996) 89 LGERA 324 per Bignold J at
page 328. The only purpose of establishing the dominant purpose of the subject property is to identify the category under which rating liability is to operate.
In considering the overall intentions of the legislation as a whole, I find that the use of the subject building is in keeping with the purpose of encouraging inner city residential use. The dominant spatial aspects of the use of the building for residential purpose is clearly correlated with the overall capital worth of the structure. The impacts of the heritage nature of the building, in that particular unique circumstances of this matter, has a clear influence upon its visual appearance. On balance I believe the dominant purpose of the building is for residential use. Its location in the CBD, and its zoning, do not impair that purpose.
Conclusion:
(67) Considering the evidence as a whole, I determine that the dominant purpose of the subject property is for residential purposes for the exclusive use of one family. The subject land should be categorised as Category 1, where the land is used as a site for single unit domestic purposes, and another secondary purpose of a commercial shop exists.
NG DIVETT MEMBER OF THE LAND COURT
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