Commissioner of State Revenue v Australian Football League [2006] VSCA 24

2 This appeal arises from a decision by a delegate of the Commissioner of State Revenue ("the Commissioner") to disallow objections to land tax lodged by the Australian Football League (the "AFL"). The objections related to a 2000 special land tax assessment ("the special assessment") and a 2001 land tax assessment ("the 2001 assessment"). The AFL requested that the decision be referred to the Victorian Civil and Administrative Tribunal for review. There were two separate proceedings in the Tribunal, one relating to the 2001 assessment and the other relating to the special assessment. When they came on for hearing before the Tribunal (Morris, J.), the AFL sought leave to withdraw the proceeding relating to the special assessment and leave to withdraw that proceeding was granted.

3 The Tribunal heard the proceeding relating to the 2001 assessment and reserved its decision. On 4th October 2004 it made an order setting aside the decision of the delegate in relation to that assessment and ordered that, in lieu thereof, the objection by the AFL be allowed. Leave to appeal was granted by the Court of Appeal on 10th December 2004 and a notice of appeal, naming the Commissioner as appellant and the AFL as respondent, was filed seven days later. We heard the appeal on 24th January 2006 and reserved our decision.

4 Section 9(1) of the Land Tax Act 1958[1] provides in part:

(1) Subject to this Act -

...

(d) land which is used by a charitable institution exclusively for charitable purposes;

...

(e) land which is vested in or held in trust for an association of ex-servicemen or of dependants of ex-servicemen and which is used by the members for the purposes of the association;

(i) is vested in, or held in trust for, a body (whether incorporated or not) established for the purposes of conducting agricultural shows, farm machinery field days or activities of a similar nature that is not carried on for the purposes of profit or gain to its individual members; and

(ii) is used for the purposes of the body;

(g) land which is vested in any body corporate or unincorporate (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;

...

is exempt from land tax. (Emphasis added.)"

5 The sole issue for determination by the Tribunal was whether, at midnight on 31st December 2000 ("the relevant date"), the land the subject of the 2001 assessment was exempt from land tax by reason of s.9(1)(g). The Tribunal held that it was exempt.

6 The Commissioner appeals, pursuant to s.148(1)(a) of the Victorian Civil and Administrative Tribunal Act 1998, on the following questions of law:

"(a) the correct scope and application of s.20(1)(b) of the Land Tax Act 1958 in the context of [the proceeding relating to the 2001 assessment];

(b) whether the VCAT correctly construed and applied s.9(1)(g) of the Act;

(c) whether in circumstances where the land was being held for future sale and subdivision the VCAT erred in characterising the land as land exempt from land tax pursuant to s.9(1)(g) of the Act;

(d) whether in determining whether or not the land in question was exempt from land tax by reason of s.9(1)(g) of the Act the VCAT asked itself the correct question and correctly applied the onus of proof."

7 It is unnecessary to set out the grounds of appeal, but it should be recorded that leave was sought to add the following ground:

"The VCAT erred in its construction and application of s.9(1)(g) of the Act, in particular:

(a) in finding that the nexus exists and in finding that it so existed at the relevant date because the scope of the purpose in clause 2(a), alternatively, clauses 2(b) and (c) of the memorandum of association of the AFL is wide enough to be achieved by any of the means identified in clause 2(d), including sub-clauses 2(d) (xxiv) and (xlii)."

Mr Wright did not oppose that application. The proposed ground makes sense having regard to the case that the Commissioner always desired to advance. In my opinion, leave to add it should be granted.

8 Before turning to counsel's submissions, I shall say something briefly about the evidence. In support of its claim that the land was exempt, the AFL relied on an affidavit of Ian William Anderson, its General Manager - Finance and Administration; a witness statement of Peter Geoffrey McKay, the caretaker of the land between 1994 and 2002; and an affidavit of Michael Eric Clarke, a committee member of the Carnegie/Caulfield Cycling Club. Mr Anderson and Mr McKay gave oral evidence and were cross-examined. The Tribunal accepted their evidence. Mr Clarke was not cross-examined on his affidavit.

9 The objects for which the AFL is established are set out in its memorandum of association as follows:

"(a) To conduct the Australian Football League.

(b) To promote and encourage the Australian National Game of Football (hereinafter referred to as 'football').

(c) To promote and encourage football matches in the States and Territories of the Commonwealth and overseas.

(d) And solely for the purpose of carrying out the foregoing objects the League may do all or any of the following things, namely:-

...

(xxiv) To lay out, construct, maintain and alter any grounds for football or other sports or other pastimes necessary or convenient for the purposes of the League.

...

(xxx) To sell, improve, manage, let, mortgage, dispose of or turn to account all or any part of the real or personal property of the League.

...

(xxxvi) To render assistance pecuniarily or otherwise to any other League or body promoting the interests of any form of manly sport.

...

(xlii) To promote, manage, encourage, foster and develop any sporting activity.

...

(xlix) To do all such acts and things as are incidental or subsidiary to all or any of the above objects.

..."

10 The land the subject of the 2001 assessment is Waverley Park, formerly known as VFL Park. At the relevant date it consisted of a stadium and a large area surrounding it that was available for car parking. The total area of the land was about 80 hectares. The stadium had a capacity of over 70,000 spectators and the car park could accommodate about 20,000 vehicles. The last AFL matches played at Waverley Park were pre-season matches in March 2000. The ground was also used that year for regular matches conducted by the Victorian Football League and for junior football, with the last such match being the grand final of the Victorian Football League played on 27th August 2000. Thereafter no football matches were played at the stadium. The ground within the stadium was used for the training of AFL umpires, but that use ceased in about November 2000. On the relevant date the land was zoned "special use" pursuant to the Monash Planning Scheme, which allowed the land to be used as a major sports and recreation facility. The nature of the special use controls was to provide for a high quality major sports ground of national significance, including parking for spectators. During 2000 the land was included on the Victorian Heritage Register under the Heritage Act 1995.

11 In April 2001 the AFL sought expressions of interest for the purchase of Waverley Park. Late in 2001 the land was sold to a residential developer and possession was taken for soil testing purposes in about April 2002. Between October 2000 and April 2002 the AFL maintained the land, including cutting the grass and securing the buildings. During that period vehicular entry was controlled, but members of the public were free to enter the land on foot or on a bicycle.

12 Note 7 of the notes forming part of the AFL's financial statements for the year ended 31st October 2000 reported:

"On 21 February 2000 the last AFL game was played at Waverley Park. At that date, the land and buildings at Waverley were available for sale and accordingly were reclassified to land held for resale. Since that date certain development costs have been incurred as a result of preparing the site for sale."

"Waverley Park is carried at directors' valuation plus subsequent direct costs of development. In February 2000, the last AFL game was played at Waverley Park. Since that time the AFL have been pursuing the development and sale of this site. All subsequent costs associated with closing the site and developing the site have been capitalised. The total value of the site including the capitalised costs [has] been classified as land held for resale."

Waverley Park land was carried in the accounts of the AFL of 31st October 2000 at $39,602,000, including an amount of $5,011,000 described as "development costs capitalised".

13 In the period between September 2000 and April 2002 sealed roads around the stadium and within the land were the subject of regular use as a training and event venue for cyclists, including cycling clubs. Members of cycling clubs would park their cars within the grounds and have the use of a toilet block. Two cycling clubs, in particular, the Southern Vets Cycling Club and the Carnegie/Caulfield Cycling Club, regularly used Waverley Park for cycling pursuant to a licence from the AFL. There were typically five cycling events each week during the summer period in which approximately 100 cyclists participated per event. Various circuits were used, with the larger circuit being about 3.2 kilometres in length.

14 Waverley Park was also used by members of the public to walk, exercise dogs, jog, fish in the dam, go roller blading, operate radio controlled model cars, engage in "kick to kick", engage in formal games of cricket and practice golf and hold barbecues. On a typical day, at least 50 members of the general public would utilise the land surrounding the stadium, with more on weekends and in summer. The AFL did not seek to prevent any of those uses, but it did not permit go-karting and did not allow anyone to use the main stadium.

15 Mr Delany rightly put the second question of law at the forefront of his submissions. It was common ground that all the words in s.9(1)(g) of the Land Tax Act, except the words that I have italicized in [4] above, were satisfied. Counsel submitted that the italicized words were not satisfied. First, he said, the expression "which is used" means "which is used by the body corporate or unincorporate in which the land is vested". Secondly, the submission proceeded, "out-door sporting recreation or cultural purposes or similar out-door activities" should be confined to those which the body corporate exists for the purpose of providing or promoting. In a nutshell, the argument was that the land was not being used by the AFL, but by cycling clubs and others, and that in any event it was not being used for football.

16 I was initially attracted to the second branch of the argument because, at first glance, it does seem odd that a football league should be granted exemption in relation to cycling. If the legislative intention was to exempt non-profit organizations in relation to particular uses of land, there was no need to stipulate that the organizations exist for the purpose of providing or promoting cultural or sporting recreation or similar facilities or objectives. Moreover, the same descriptions ("cultural", "sporting", "recreation" and "similar") are found, albeit in a different order, both in the description of the body and in the description of the qualifying activities. The only readily apparent difference is that the latter are limited to out-door activities. The difficulty is that, again contrary to my first impression, the appellant's construction involves reading words in that are not there. The italicized words at the end of s.9(1)(g) would have to be read as if they continued "of the kind the body exists to provide or promote" or words to that effect. Parliament could easily have said that and did not do so.

17 In B.P. Refinery (Westernport) Pty. Ltd. v. Shire of Hastings[2] the majority of the Privy Council referred to Lord Mersey's oft cited[3] statement in Thompson v. Goold & Co.[4] that "[i]t is a strong thing to read into an Act of Parliament words which are not there, and in the absence of clear necessity it is a wrong thing to do." Their Lordships added that it was a particularly strong thing to do when it amounted to modifying, as against the fiscal subject, words which have a plain, natural and ordinary meaning in his or her favour. There is nothing in s.9(1)(g) that requires the land to be used by the body in which the land is vested[5] and there is nothing that requires the out-door sporting recreation or cultural purposes or similar out-door activities for which the land is used to be those of that body.

18 Mr Delany relied on the legislative history and Parliamentary debates but, given the relative clarity of the language and the principle of construction to which I have just referred, I did not find them helpful. The only exception was the Land Tax Act 1970, which inserted s.9(1)(g).[6] Two points about the new s.9(1) that was then introduced may be noticed. First, by contrast with paragraph (g), paragraphs (d) and (e) referred to land vested in a person or body and used exclusively by that person or body for charitable purposes and to land vested in or held in trust for an association of ex-servicemen or their dependants used by the members for the purposes of the association. Secondly, paragraph (g) did not include the words "not being a body that promotes or controls horse racing, pony racing or harness racing in Victoria". Those words, in a slightly different form, were added by the Land Tax Act 1973.

19 Our task is to construe s.9(1)(g) in its present form and context. The contrast between the original paragraphs (d), (e) and (g) is now the contrast between paragraphs (d), (e), (fa) and (g). That contrast militates against the first branch of the argument summarized at [15] above. It is conceivable that the introduction of the reference to horse racing in 1973 modified, by implication, the former generality of the itali[7]ized words.7 Mr Delany submitted that otherwise land would be exempt if a body, like the AFL, that did not promote or control horse racing, pony racing or harness racing used its land, or permitted its land to be used, for one of those purposes. That would be absurd, he argued, and defeat the intention of Parliament to confine racing clubs to the partial exemption from land [8]ax in s.13.8 I do not consider that such a far-reaching effect can be ascribed to the words introduced in 1973. As the learned President observed in the course of the argument, the tail must not be allowed to wag the dog and, as Mr Wright pointed out, the apparent anomaly is more theoretical than real, given the regulation of the racing industry. Both branches of the argument at [15] above should be rejected.

20 That conclusion makes it unnecessary to consider whether, although it was not being used for football, the land was still being used for the purposes of the AFL, having regard to the apparent width of some of the clauses in its memorandum,[9] but it is still necessary to consider the other questions of law and convenient to begin with the third question.

21 Mr Delany submitted, in the alternative to his principal argument, that the land was not being used for any out-door sporting recreation or cultural purposes or similar out-door activities. He initially submitted that it was either not used at all or its use was that it was held for the purpose of sale. The latter submission was not pressed. It is true that the land was no longer being used for football and that it was being used for cycling and recreation only on an interim basis, but there was no error of law involved in the Tribunal's finding that it was being used for purposes or activities falling within the italicized words in s.9(1)(g).[10]

22 The first question of law relates to s.20 of the Land Tax Act, which is similar to s.177 of the Income Tax Assessment Act 1936.[11] Section 20(1) provides:

"(1) The production of an assessment or of a document under the hand of the Commissioner purporting to be a copy of an assessment shall -

(a) be conclusive evidence of the due making of the assessment; and

(b) be conclusive evidence that the amount and all the particulars of the assessment are correct, except in proceedings on review or appeal against the assessment, when it shall be prima facie evidence only."

23 Mr Delany submitted that the production of the special assessment was

conclusive evidence that the amount and all the particulars of the special assessment were correct and therefore, by implication, that the land was not exempt on the relevant date. There are a number of difficulties about that submission, of which it is sufficient to mention only two. One of them is that the special assessment does not relate, expressly or by necessary implication, to the use of the land on 31st December 2000. The other is that to give it such a conclusive effect in relation to the 2001 assessment would be to render nugatory the express provision in s.20(1)(b) that the 2001 assessment itself is only prima facie evidence in proceedings such as those that were before the Tribunal. It is of no consequence that the AFL withdrew the proceeding relating to the special assessment.

24 The fourth question of law, relating to the burden of proof, largely falls away if the s.20 submission is rejected. In any event the AFL was the only party to lead evidence relating to use and that evidence was accepted. The burden of proof was not a live issue in the case, nor is there anything in the Tribunal's reasons, once s.20 is put to one side, to suggest that it erred in that regard.

25 For these reasons, notwithstanding Mr Delany's careful argument, I would grant leave to add the additional ground but dismiss the appeal.

26 I agree, for the reasons given by Callaway, J.A., that the appeal should be dismissed.

[1] Repealed by s.116 of the Land Tax Act 2005. See now ss.71 - 73 of the 2005 Act.

[2] (1977) 180 C.L.R. 266 at 280.

[3] For an example in the High Court, see Western Australia v. The Commonwealth [1975] HCA 46; (1975) 134 C.L.R. 201 at 251 per Stephen, J.; for an example in the Supreme Court see Dunlop Olympic Ltd. v. Comptroller of Stamps (1983) 14 A.T.R. 667 at 674 per O'Bryan, J.

[4] [1910] A.C. 409 at 420.

[5] There may be a good reason for the generality of the words "which is used". Even if the purposes and activities were limited to those of the body, it might license or permit others to engage in them and such a licence or permission would not always amount to agency.

[6] Section 9(1)(g) was based on the definition of "recreational lands" in the Cultural and Recreational Lands Act 1963.

[7] Compare Commissioner of Stamps (S.A.) v. Telegraph Investment Co. Pty. Ltd. [1995] HCA 44; (1995) 184 C.L.R. 453 at 463 and 479. Counsel contended that the words, even as originally introduced, should be construed as set out in [15] above. I do not accept that submission, for the reasons I have already given.

[8] See especially s.13(2)(b).

[9] The added ground of appeal related to that point.

[10] Compare Essendon Corporation v. Cox [1967] VicRp 58; [1967] V.R. 545 at 551. That case related to the legislation on which, as noted in fn. 6 above, s.9(1)(g) was based.

[11] See F. J. Bloemen Pty. Ltd. v. Federal Commissioner of Taxation [1981] HCA 27; (1981) 147 C.L.R. 360.