Appellant v Respondent

2 The question that arises is whether the appellant's land was, in the relevant years, exempt from land tax pursuant to s.9(1)(g) of the Land Tax Act 1958 (Vic) ("the Act") which provided:

(g) land which is vested in any body corporate or unincorporated (not being a body that promotes or controls horse racing, pony racing or harness racing in Victoria) that exists for the purpose of providing or promoting cultural or sporting recreation or similar facilities or objectives and that applies its profits in promoting its objectives and prohibits the payment of any dividends to members and which is used for out-door sporting recreation or cultural purposes or similar out-door activities;

3 The only issue that arises on the appeal is whether, under that provision, the land was, at midnight on 31 December in each of those years ("the relevant dates"), "used for out-door sporting recreation or cultural purposes or similar out-door activities." Wherever convenient, in what follows, I will simply use the phrase "out-door sporting" as comprehending the expression "out-door sporting recreation or cultural."

4 The evidence was that on each of the relevant dates there was being constructed on the land two eighteen hole championship golf courses and other out-door sporting facilities but that construction had not been completed and the land had not commenced to be used for the playing of golf and (except, perhaps, in relation to the last of the three years) had not commenced to be used for any other out-door sporting activities.

5 It was on this factual basis that the Commissioner disallowed the appellant's objections, stating as the reason:

"This is because [on the relevant dates], the Golf Course Land was used for the purposes of construction and development of two golf courses and various recreational and associated activities and was not used for any of the purposes or activities specified in [s.9(1)(g)]."

6 The appellant submitted that the issue was whether the exemption requiring that the land be used for out-door sporting purposes meant that people actually had to be playing sport at the relevant time. The appellant said that such a narrow interpretation could not have been intended - for example, the sporting facility might be closed for repairs at the relevant time.

7 The appellant referred to Schwerzerhof v Wilkins.[1] In that case the relevant statute[2] provided that a place underground should not be used as a bakehouse unless it was so used at the commencement of the Act. Premises that had long been used as an underground bakehouse were vacant and under repair at the commencement of the Act, but the owner was seeking a tenant for them as a bakehouse. It was held that the premises were used as a bakehouse at the commencement of the Act. The court said that, on the facts, there was no interruption of the use of the premises as a bakehouse. However, the Commissioner rightly pointed out that Schwerzerhof was an example of a case where there had been a temporary interruption of a pre-existing use and the only question was whether or not the interruption had put an end to the previous use.[3]

8 The appellant submitted that the "use requirement" looked to the purpose for which the land was used at the relevant time. The appellant said that, in order to promote the purpose of the exemption, land should be regarded as being used for a purpose at least if that purpose was in the process of being implemented. It was unnecessary to decide what the position might have been if the land's use as a golf club had merely been intended without any concrete steps having yet been taken but the strength of the present case was, it was submitted, that the land was in fact being used and the real question was the characterisation of the purpose for which it was being used. Accordingly, the appellant said that the land was being used for the purpose for which the various facilities were being constructed and for no other purpose.

9 The appellant referred to City of Newcastle v Royal Newcastle Hospital[4] in which the High Court considered whether vacant land adjacent to a hospital was "used or occupied for the purposes of a hospital"[5] and in which Taylor J (with whom Webb and Williams JJ agreed) said:[6]

"The word "used" is, of course, a word of wide import and its meaning in any particular case will depend to a great extent upon the context in which it is employed. The uses to which property of any description may be put are manifold and what will constitute "use" will depend to a great extent upon the purpose for which it has been acquired or created. Land, it may be said, is no exception and s 132 itself shows plainly enough that the "use" of land will vary with the purpose for which it has been acquired and to which it has been devoted ... where an exemption is prescribed by reference to use for a purpose or purposes it is sufficient, in my opinion, if it be shown that the land in question has been wholly devoted to that purpose even though, the fulfilment of the purpose does not require the immediate physical use of every part of the land."

10 Again, the Commissioner rightly pointed out that the above statement was made in the factual context that the undeveloped land, although not physically used, served the purposes of the hospital. This was because the undeveloped land served as a buffer protecting the condition of patients and also gave opportunities for the future expansion of the hospital.

11 The appellant referred to a decision of the Victorian Civil and Administrative Tribunal (constituted by Morris J, then of this Court) in Australian Football League v Commissioner of State Revenue[7], involving the same exemption, in which Morris J found that Waverley Park was exempt from land tax and said (probably obiter) that:

"It is true that no sporting or recreational activities took place in the stadium during the relevant period. Thus, in one sense, it could be said that the stadium was not used at the relevant date. But it is sufficient for land to be exempt that it be used for an out-door sporting "purpose"; and such a purpose might be served by maintaining a stadium in reserve, just in case..."[8]

12 The appellant said that the purpose of the exemption was to encourage the provision of out-door sporting facilities and that, as Adam J said in City of Essendon v Cox,[9] such a policy "certainly predisposes one to give a reasonably wide and, indeed, liberal scope to the requirement that lands should be used for the specified purpose." The appellant submitted that the policy of the exemption would be undermined if a person such as the appellant (which existed for the relevant statutory purpose) was taxed during the development and construction stage of a sporting facility. There were no rational grounds why a sporting facility, that would be exempt when operational, should not be exempt during its construction by a person such as the appellant. The "use requirement" in the exemption encompassed a use of the land which enabled the requisite purpose to be achieved.

13 The appellant referred to Educang Ltd v Brisbane City Council.[10] In that case, an application for judicial review, the question was whether certain land was exempt from rates.[11] The statute excluded, from the category of rateable land, land used for public, religious, charitable or educational purposes that was exempt from rating under a resolution of the Council. The relevant resolution of the Council exempted land falling within the description of "any land that is used entirely for a school." White J described the issue as a narrow one, namely, whether the land was "used entirely for a school during the construction and fit-out of the classrooms and before classes commenced." It appeared that the applicant conducted a primary school on other land and acquired the land in question in order to extend the school by constructing a secondary school thereon and that construction was being carried out during the relevant period. The applicant conceded that the land was not being used as a school during the relevant period but contended that the expression "for" in the Council resolution was of a wider meaning and encompassed the construction of school buildings.

14 White J said that there was an element of futurity in the use of the expression "used....for" and noted that the Council chose not to use the expression "used ... as" in its resolution. Her Honour said that "for" took colour from "used" which preceded it and she referred to the passage from the judgment of Taylor J quoted earlier above. In the course of referring to a number of other cases, her Honour emphasised that close attention needed to be paid to the words of the legislation in each case if reliance on analogous cases was to be of assistance. Her Honour then said:

"In this case the applicant conducted a school, the Forest Lake College, and had done so since 1994. Since its inception, as enshrined in its memorandum and articles, it intended to have two campuses but there was only one school. The land acquired in 1997 was the realisation of that plan. From its acquisition by the applicant the land was for a school, that is, for the purposes of a school which was already established. "Conducted" does not add anything to the expression "used ... for a school" in temporal terms. It governs or describes the school and is, for example, to be contrasted with a school operated by the State. The town plan for Forest Lake and the terms of the contract for the sale of the land and the planning approval for it as a school make plain that this land was used entirely for a school. To emphasise the point, if "for the purposes of" were inserted before "a school" there could be no doubt about the exemption. Bowen JA said in Commissioner of Land Tax v Christie [1973] 2 NSWLR 526 at 533 "'use' has regard to the purpose to which the land is put". The respondent was wrong in characterising the use to which the land was put as a construction site. That activity was ancillary to its use for a school."

15 The appellant submitted that White J's decision should not be treated as depending upon the prior existence or establishment of the school or of a school building. I must say that I doubt that - it seems to me that the decision does depend upon the prior existence of the school. Further, the Commissioner submitted that this decision (if correct) turned on the precise language used in the Council resolution.

16 The appellant next referred to Meriton Apartments Pty Ltd v Parramatta City Council.[12] That case involved provisions of the New South Wales Local Government Act which required that all rateable land be categorised, so far as relevant, as "residential" or "business." Buildings were being constructed on the land that were intended for residential use and the question was whether the land should be categorised as residential during the period of building construction. The relevant section provided that land was to be categorised as residential if "its dominant use is for residential accommodation." Pain J said that the use of land must be for a purpose and that the erection of a building was the means in that case by which the land was made to serve that purpose. He said that, while intention to use vacant land was not sufficient, the purpose of the use of land was manifested by the commencement of building construction the use of which building was for the purpose of residential accommodation. It was the physical purpose for which the land was used and not the purpose of the owner or occupier that was determinative for rating purposes. Again, the Commissioner submitted that the decision turned on the precise statutory language involved.

17 Turning to the Commissioner's submissions, it was contended that the exemption involved a temporal requirement, namely, that the land at the relevant date "is used" for purposes or activities falling within the provision.

18 The Commissioner pointed to the origin of the exemption in the Cultural and Recreational Lands Act 1963 (Vic) which dealt, inter alia, with the rates payable in respect of recreational lands. These were defined to include lands which were vested in or occupied by any body corporate or unincorporated which existed for the purpose of providing or promoting cultural or sporting recreational or similar facilities or objectives and which applied its profits in promoting its objects and prohibited the payment of any dividend or amount to its members being lands which were:[13]

"Used for out-door sporting recreational or cultural purposes or similar out-door activities .."

19 The Commissioner submitted, rightly I think, that the origin of the particular exemption showed that constructional arguments based upon comparisons of the language used to define various of the exemptions contained in s.9 of the Act was inappropriate. It was necessary to concentrate upon the language used to define the specific exemption in question.

20 The Commissioner submitted that there were two things required by the exemption. One was that the body in which the land was vested should exist for certain purposes. The other was that the land in question should on the relevant date be used for one of the defined purposes. The Commissioner stressed that the word "purpose" was used in conjunction with the word "activities." The use of the word "activities" indicated that the draftsman was dealing with something that was being done on the land which was also encompassed by the word "purposes." "Activities" was being treated more or less as a synonym and the word "purposes" should be considered as referring to "active purposes" and not objects in view or ultimate objectives.

21 The Commissioner thus submitted that the use referred to must be a current use and not a contemplated or intended use.

22 It was submitted that the present case was not comparable with cases in which there had been a temporary interruption of a pre-existing use. The situation was materially different where there had been never been any prior use of the land for purposes or activities falling within the provision. The construction and development works were not out-door sporting activities and the question was whether, because on their completion they would be used for such activities, it could be concluded that there was a current use of the land for out-door sporting purposes.

23 The Commissioner submitted that the appellant's contention in this regard was inconsistent with observations made by Nettle JA in relation to a different exemption, but equally applicable here, in Applewood Residential Developments Pty Ltd v Commissioner of State Revenue:[14]

"Contrastingly, in a case like the present where the project is still being developed, the land on which the project is being developed is not being used for the purpose for which it will be used once it has been developed."

24 The Commissioner submitted that the policy of the exemption was not frustrated by this interpretation. The policy was not only that the land be vested in a body which existed for the requisite purposes but also that the land be used for the requisite purposes in the relevant period. Otherwise there would have been no need to add the requirement of "use."

25 In the end, I do not think that much is to be gained by reference to decisions involving other statutory provisions and language concerned with the use of land or by reference to judicial statements made in different legislative and factual contexts.

26 In my opinion, the essential submission of the Commissioner is correct. The expression "which is used for out-door sporting recreation or cultural purposes or similar out-door activities" looks to the actual use of the land at the relevant date. The word "purposes" takes colour from the word "activities" - the provision is concerned with the current use of the land for the defined "purposes or activities" and not with any intended purpose or activity for which the land is to be used in the future. In my view, the appellant's submission places undue and isolated emphasis upon the words "for" and "purposes" and distorts the meaning conveyed by the composite expression "which is used for out-door sporting recreation or cultural purposes or similar out-door activities."

27 In the present case, while the legislative policy underlying the exemption, namely, to encourage out-door sporting activities, can be recognised,[15] I do not think that this policy can be so finely delineated as to support a conclusion that it would be frustrated or impeded by the construction advanced by the Commissioner. Rather, the precise policy of the exemption can only be seen to be embodied in or embraced within the scope and plain meaning of the actual words used.

28 For the foregoing reasons, the appellant's principal argument fails.

29 The appellant put an alternative submission, limited to the 2004 assessment, based upon limited affidavit material that was said to establish, as at 31 December 2003 (and since about July 2003), that the land was used by residents of the surrounding and related residential community for relevant out-door activities (including walking, running, bike riding and bird watching). However, as the Commissioner correctly pointed out, the evidence does not reveal how many residents were in occupation between July and December 2003 and does not identify the parts of the land that were available for relevant use nor the extent of such use between those dates. The Commissioner also submitted that leave should not be granted to the appellant to rely upon this ground.[16] In my opinion, whether or not leave was necessary to rely upon this ground, the evidence is insufficient to support any conclusion (as a matter of characterisation) that the land was being used as at 31 December 2003 for out-door sporting recreation purposes or similar out-door activities.

30 I conclude that, at each of the relevant dates, the land was not as yet used for a golf course and was not used for any other of the out-door purposes or activities required by s.9(1)(g) of the Act and was therefore not exempt from land tax.

31 Accordingly, the appeal is dismissed with costs (including any reserved costs).

[1] [1898] 1 QB 640.

[2] Section 27(3) of the Factory and Workshop Act 1895 (UK).

[3] Compare Rosenbulm v Brisbane City Council [1957] HCA 98; (1957) 98 CLR 35 in which the High Court concluded, on the facts, that an interruption to an activity on land was such that the land was no longer used for that (or any other) purpose.

[4] [1957] HCA 15; (1957) 96 CLR 493.

[5] Within the meaning of s.132 of the Local Government Act 1919 (NSW).

[6] [1957] HCA 15; (1957) 96 CLR 493, 515; I note that the appellant also said that, in Parramatta City Council v Brickworks Ltd [1972] HCA 21; (1972) 128 CLR 1, 21-22, Gibbs J had relied on this statement by Taylor J when he said that "it is not necessary to constitute a present use of land that there should be a physical use of all of it, or indeed any of it."- but I think that a full reading of Gibbs J's reasons shows that this passage has been taken out of context or, at least, was expressed more widely than necessary.

[7] [2004] VCAT 1882.

[8] [2004] VCAT 1882 at [42] - an appeal from the Tribunal's decision was dismissed, on other grounds, by the Court of Appeal: (2006) 14 VR 35.

[9] [1967] VicRp 58; [1967] VR 545, 551.

[10] [2002] QSC 374.

[11] Under the City of Brisbane Act 1924 (Qld)

[12] [2003] NSWLEC 309 (Pain J).

[13] Section 2(a)(ii) of the Cultural and Recreational Lands Act 1963.

[14] [2006] VSCA 207; (2006) 64 ATR 291, 296.

[15] See Capital Club Pty Ltd v Commissioner of State Revenue (2007) 17 VR 357, 368 - 370.