D W Tolson Management Pty Ltd v Chief Commissioner of State Revenue

Material before the Tribunal

1. The Applicant relies on: 1. the Substantive Application; 2. affidavit of David Warren Tolson sworn 19 February 2016; 3. affidavit of David Paul Robinson sworn 1 March 2016; and 4. submissions signed by Mr Robinson dated and filed 8 April 2016 (AS).
2. All references to the Applicant's submissions by paragraph number are to paragraphs of AS unless stated to the contrary.
3. The Respondent relies on: 1. the documents filed pursuant to s 58 of the Administrative Decisions Review Act 1997 (ADR Act), some of which documents are also relied on by the Applicant; 2. affidavit of Ian Henry Phillips affirmed 22 March 2016; 3. submissions signed by Mr Rider dated and filed 30 March 2016 (RS); and 4. letter from the Crown Solicitor's Office (CSO) to the Tribunal dated 21 April 2016.
4. All references to the Respondent's submissions by paragraph number are to paragraphs of RS unless stated to the contrary and all references by page number are to pages of the s 58 documents unless stated to the contrary.

Identification of the decision the subject of the application for review

1. The Respondent correctly stated at [2] that the substantive issue in dispute was whether the primary production land tax exemption in s 10AA of the Land Tax Management Act 1956 (the Tax Act) applied to the Property for the 2011 to 2015 land tax years.
2. Section 96 of the TAA provides for an administrative review of a decision that has been the subject of an objection.
3. The Substantive Application requested a review of the Disallowance. That decision considered and disallowed the objection, it was not itself the subject of review by the Chief Commissioner nor can it be the subject of review by the Tribunal. There is no submission or evidence that the Tribunal has power to review the Disallowance.
4. The Substantive Application should, in my opinion, have requested a review of the Assessment and I anticipate that if the Substantive Application was heard by the Tribunal the issue to be dealt with would be as stated by the Respondent at [2] and the decision the subject of review would be the issue of the Assessment rather than the Disallowance

Chronology

1. There is no material dispute as to the following events: 1. 13 November 2014 the Office of State Revenue (OSR) wrote to the Applicant advising that there was an investigation in relation to the Applicant's land tax liability. 2. 25 November 2014 the Applicant made an initial return for land tax and applied for a primary production land tax exemption for the Property in respect of the 2010 to 2014 tax years. 3. 5 January 2015 the Assessment was issued and received by the Applicant on 8 January 2015. 4. 24 February 2015 the OSR wrote to the Applicant advising that the Property does not qualify for a primary production land exemption for the 2011 to 2015 tax years. 5. 24 April 2015 the Applicant objected to the Assessment. The objection was received by the OSR on 27 April. 6. 4 May 2015, the Respondent disallowed the objection and informed the Applicant that if it was dissatisfied with the Disallowance it could, within 60 days, apply for a review by either the Administrative Decision Tribunal (sic) or the Supreme Court. 7. Between 4 and 10 May 2015, Mr Robinson was overseas for work related activities. 8. 8 May 2015 Mr Robinson emailed Mr Phillips, an officer of the OSR, querying the Disallowance. 9. 15 May 2015 Mr Robinson emailed Mr Phillips expressing concern in respect to the OSR's response to the objection "which appears not to have considered the additional circumstances and information that we provided". 10. 15 May 2015, less than one hour after Mr Robinson's email, Mr Phillips replied by email to the effect that he was "happy to discuss the reasons for disallowing the objection" and would be available on Thursday and Friday of the following week. 11. Between 15 May and 9 June 2015 a telephone conversation took place between Mr Robinson and Mr Phillips. 12. 9 June 2015 Mr Robinson sent an email to Mr Phillips requesting an extension of time to lodge an objection against the assessment and discussing a proposed review by OSR officers of a mushroom farm at Vineyard and the Property. The email referred to an attached request for extension of time and stated that the application for extension would be sent through the normal channels. 13. 9 June 2015 Mr Robinson wrote to the OSR requesting "an extension in the time allowed for objecting" because further evidence was being obtained and a significant amount of documents were required to be gathered to demonstrate the Applicant's case. The letter also proposed the inspection referred to in the immediately preceding paragraph. 14. 15 June 2015 a person from Mr Robinson's office spoke with an OSR officer "who advised that our only option is to go to the Tribunal ie OSR has finished with this matter". 15. 17 June 2015 Mr Robinson emailed Mr Phillips seeking advice as to whether there was any way the objection could be kept open in order to enable an inspection of properties and a cattle operation. 16. 15 June to 15 July 2015 Mr Tolson was on a four-week family holiday in North Queensland. The Applicant's evidence is that Mr Tolson was at all relevant times a director and controller of the Applicant and was "largely uncontactable" while on holiday. 17. Mid-July 2015 Mr Robinson was instructed "to continue action to object to the assessments". Mr Robinson's evidence is that attempts were made to contact Mr Phillips regarding site inspections, however Mr Phillips was not at the OSR at that time. 18. 11 September 2015 the Applicant filed the Application with the Tribunal.

The law

1. Section 99 of the TAA provides: An application for review following a determination by the Chief Commissioner of an objection must be made not later than 60 days after the date of issue of the notice of the Chief Commissioner's determination of the objection. The court or tribunal to which the application is to be made may allow a person to apply for a review after that 60-day period.
2. There is no submission by either party, nor is it the case, that the power vested in the Supreme Court and Tribunal to allow a person to apply for review after the 60-day period is also vested in the Respondent.
3. The legislation does not state the matters to be considered in determining whether or not an application for a review after the 60-day period may be allowed.
4. In the recent decision of Daoud v Chief Commissioner of State Revenue [2015] NSWCATAD 53, which involved an application for extension of time to apply to the Tribunal to review a decision made by the Chief Commissioner disallowing an objection in respect of the payment of land tax, Wass SM said at [13] to [16]: 13 Section 41 of the Civil and Administrative Tribunal Act 2013 (NCATA) provides that the Tribunal may by application extend the period of time for the doing of anything under any legislation in respect of which the Tribunal had jurisdiction despite anything to the contrary under that legislation. Such an application may be made even though the relevant period of time has expired. 14 Accordingly, the discretion to extend time is broad and unfettered. However, it must be exercised judicially and having regard to s 36 of the Act and the need "to facilitate the just, quick and cheap resolution of the real issue in the proceedings". 15 The grant of an extension of time is not automatic. The discretion to extend time is given for the sole purpose of enabling the Tribunal to do justice between the parties. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time. It is also necessary to consider the prospects of the Applicants succeeding in their application. In order to justify the Tribunal extending the time, there must be some material upon which the Tribunal can exercise its discretion: see Gallo v Dawson [1990] HCA 30, 93 ALR 479 at [2] per McHugh J. and the authorities referred to therein. See also Opera Australia Ltd v Carr [1999] NSWADTAP 6 at [16] and Chand v Rail Corporation of New South Wales No 3 [2010] NSWADTAP 11 at [20]. 16 Time limits are set to promote the orderly and efficient conduct of proceedings in the Tribunal, to provide certainty for the parties to proceedings, and to achieve finality in litigation. For these reasons, time limits should generally be strictly enforced unless the interests of justice require that the extension be granted.
5. Reference was made in Daoud to the decision by the Appeal Panel of this Tribunal in Jackson v Land and Housing Corporation [2014] NSWCATAP 22 as to matters which may be relevant in deciding whether to grant an extension of time in the context of an appeal. In Jackson the Panel said at [19] and [22]: 19 An informative exposition of the role and nature of provisions which permit a Court or Tribunal to extend the time limits established for the orderly conduct of proceedings, including the time in which to lodge an appeal, is found in the decision of McHugh J sitting as a single justice of the High Court in Gallo v Dawson [1990] HCA 30, 93 ALR 479 at [2]: The grant of an extension of time under this rule is not automatic. The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the Court or Justice to do justice between the parties: see Hughes v. National Trustees Executors and Agency Co. of Australasia Ltd. (1978) VR 257, at p 262. This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time: see Avery v. No.2 Public Service Appeal Board (1973) 2 NZLR 86, at p 92; Jess v. Scott (1986) 12 FCR 187, at pp 194-195. When the application is for an extension of time in which to file an appeal, it is always necessary to consider the prospects of the applicant succeeding in the appeal: see Burns v. Grigg (1967) VR 871, at p 872; Hughes, at pp 263-264; Mitchelson v. Mitchelson (1979) 24 ALR 522, at p 524. It is also necessary to bear in mind in such an application that, upon the expiry of the time for appealing, the respondent has "a vested right to retain the judgment" unless the application is granted: Vilenius v. Heinegar (1962) 36 ALJR 200, at p 201. It follows that, before the applicant can succeed in this application, there must be material upon which I can be satisfied that to refuse the application would constitute an injustice. As the Judicial Committee of the Privy Council pointed out in Ratnam v. Cumarasamy (1965) 1 WLR 8, at p 12; (1964) 3 All ER 933, at p 935: "The rules of court must prima facie be obeyed, and in order to justify a court in extending the time during which some step in procedure requires to be taken there must be some material upon which the court can exercise its discretion." 22 The considerations that will generally be relevant to the Appeal Panel's consideration of whether to grant an extension of time in which to lodge a Notice of Appeal include: (1) The discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the appellant - Gallo v Dawson [1990] HCA 30, 93 ALR 479 at [2], Nanschild v Pratt [2011] NSWCA 85 at [38]; (2) The discretion is to be exercised in the light of the fact that the respondent (to the appeal) has already obtained a decision in its favour and, once the period for appeal has expired, can be thought of as having a "vested right" to retain the benefit of that decision - Jackamarra v Krakouer (1998) 195 CLR 516 at [4], Nanschild v Pratt [2011] NSWCA 85 at [39] and, in particular, where the right of appeal has gone (because of the expiration of the appeal period) the time for appealing should not be extended unless the proposed appeal has some prospects of success - Jackamarra at [7]; (3) Generally, in an application for an extension of time to appeal the Appeal Panel will be required to consider: (a) The length of the delay; (b) The reason for the delay; (c) The appellant's prospects of success, that is usually whether the applicant has a fairly arguable case; and (d) The extent of any prejudice suffered by the respondent (to the appeal), - Tomko v Palasty (No 2) (2007) 71 NSWLR 61at [55] (per Basten JA) but note also [14], Nanschild v Pratt [2011] NSWCA 85 at [39] to [42]; and (4) It may be appropriate to go further into the merits of an appeal if the explanation for the delay is less than satisfactory or if the opponent has a substantial case of prejudice and, in such a case, it may be relevant whether the appellant seeking an extension of time can show that his or her case has more substantial merit than merely being fairly arguable - Tomko v Palasty (No 2) (2007) 71 NSWLR 61 at [14] (per Hodgson JA, Ipp JA agreeing at [17]) and Molyneux v Chief Commissioner of State Revenue [2012] NSWADTAP 53 at [58] - [59].

Additional chronology

1. Contrary to the orders of the Tribunal on 9 February 2016 the Applicant did not file and serve its submissions by 23 February.
2. I observe that in these proceedings the Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice, s 38 (2) of the CAT Act.
3. In making my decision and in order to avoid a further delay in these proceedings I have taken into consideration the Respondent's inability to respond to evidence and submissions from the Applicant due to the Applicant's failure to comply with directions of the Tribunal.
4. The documents attached to AS are in several groups, firstly copies of email communications and secondly copies of a notice of valuation of the Property as at 1 July 2015, a letter from Penrith City Council dated 30 June 2009, a statement by stock and property agents dated August 2015 in respect of sales of cattle between February 2013 and January 2015 (already in evidence) and a letter from Mr Tolson to a lessee of part of the Property in 2007 in respect of a lease for a period of 12 weeks and ongoing on a weekly basis. There is also a letter from the OSR to Mr Robinson which is part of the s 58 documents.
5. The emails are in two groups, firstly between Mr Robinson and other persons from Harveys Chartered Accountants (the Accountants) and secondly between Mr Robinson and the Accountants on the one hand and officers of the OSR and the CSO on the other hand. To the extent that the documents are relevant to these proceedings and not already in the possession of the OSR and CSO they do not assist the Applicant in these proceedings. In chronological order the emails are: 1. 12 June 2015 an email from (name of person is included but there is no indication as to whether the person was from the Accountants, the OSR, the CSO or elsewhere) to Mr Robinson requesting that he call a named officer of the OSR in relation to "DW Tolson". 2. 15 June 2015 from Mr Robinson to a Mr Mark Gocher, who appears to be associated with the Accountants. That email requests that Mr Gocher make a phone call to the OSR in relation to an inspection of various properties in a month's time, refers to Mr Tolson's impending family holiday and says "if really necessary we could bring it forward". 3. 15 June 2015 an email from Mr Gocher to Mr Robinson stating that Mr Gocher has spoken with the named OSR officer referred to in the 12 June email, and states: He basically said that cause there already was an objection lodged that has been disallowed that it has moved on to the next stage now (and is out of the OSR hands) which is the Civil and Administration Tribunal (sic). He suggests we contact them and gave me contact details which I can do in regards to getting an additional amount of time to object to the tribunal. The normal time for extension to lodge objection with the tribunal is 60 days which from 4 May (date we received letter from OSR) would be 4 July which is before DWT gets back. He suggested to just call and see if you can get an additional month extension to lodge an objection at this level and that may allow time for an OSR officer to visit the premises in the week of the 27th July as hoped ((name of officer) mentioned if the extension is granted he may be able to organise this visit). Let me know if you wish me to contact the tribunal or any other steps I can take. 1. 18 June 2016 from Mr Gocher to Mr Robinson which states: I just spoke to the tribunal regarding an extension they advised they don't give an extension as such, but in the objection application when lodged there is a section for 'objections outside the time limit with reasons'. They advised providing the reasons are 'fair' that majority of the time they will still assess the objection. I then spoke back to (name of OSR officer) from OSR and he will now talk to his team and organise a visit to the property in the last week of July as we requested. He will get back to us once he has some possible dates. 1. 20 August 2015 from Mr Robinson to the OSR. This email states in part "we will lodge today a request for review with the (Tribunal) but set out below the additional explanation of the cattle grazing activity which we would respectfully request you view and which will be included in the request for review…" 2. 1 December 2015 from Mr Robinson to the CSO inviting an officer from the CSO and officers from the OSR to visit and inspect the Property and a mushroom farm and adjacent cattle operation conducted by Mr Tolson at a property in Vineyard. 3. 3 December 2015 from the CSO to Mr Robinson advising that instructions have been sought and Mr Robinson will be contacted when those instructions are at hand. 4. 17 December 2015 from Mr Robinson to the CSO seeking an alternative date for an inspection of properties. 5. 21 December 2015 from the CSO to Mr Robinson informing him that the CSO's client is of the view that an inspection will not assist and does not see the need to participate in one.

Length of the delay

1. The evidence is that the Disallowance, issued on 4 May 2015 was received by the Applicant on that date. The 60-day period for lodging an application for review with the Tribunal ended on 3 July 2015.
2. The Substantive Application to the Tribunal, dated 21 August 2015, was filed with the Tribunal on 11 September 2015, 130 days after the Disallowance and 70 days after the expiration of the statutory 60-day period.

Reason for the delay

1. The Applicant acknowledged at [1] that the Substantive Application was lodged outside the statutory period.
2. The Substantive Application states that the reason it was lodged late is: Mr Tolson was away for a month on a pre-planned family holiday (15 June - 15 July 2015) which made it difficult to address the situation and organise the required documentation to support an appeal to the Office of State Revenue's decision within the designated appeal time frame for NCAT. In addition to this, the OSR land tax Officer who was reviewing the matter (Ian Phillips) … was absent from his post while the matter was still ongoing. Even though we had received notification the objection was disallowed from another party within the OSR there were still unresolved issues which we were working through with Mr Phillips which may have impacted the decision. Upon his return to work we were able to establish communications again and we ensured the objection was prepared and lodged with NCAT in this short period of time.
3. The Applicant submitted: 2 The Applicant's concern has always been that the Respondent has not given proper consideration to the mushroom growing process and the capital intensive facilities required, driven not only by the growing process itself, but the odour and other local community issues surrounding such a facility, as well as the relationship between mushroom growing and cattle grazing activities… The Applicant engaged with the Respondent, not seeking to circumvent due process, but to better understand the respondent's reasons for disallowance. 3 The Applicant, through its Accountants, were in contact with the Respondent leading up to the statutory 60 day limit date of 4 July 2015 as it was clear that in the absence of the controller of the Applicant Mr Tolson no review submission could be adequately prepared…. and while acknowledging the objection process was complete, there was a willingness on the part of the Respondent to consider additional facts in this matter. As a result of this, the Accountants' Mr Gocher contacted the Tribunal …(on) 18 June 2015) and was advised that while the Tribunal does not give defined extensions of time the Tribunal would at least consider at the time of application if the reasons for the delay were "fair". On the basis of this Mr Gocher contacted the Respondent's (name of officer) who indicated he would discuss the possibility of a visit to the facilities and land with his "team". In the Applicant's view appropriate steps were taken to fully appraise the Respondent of the fact that a review request could not be lodged before the 4 July statutory limit date and there appeared a willingness to view the premises in late July 2015. The Respondent did not advise they did not wish to attend the facilities and land until 21 December 2015. 4 … the Respondent was amenable to continuing dialogue, for which the Applicant was grateful, in order that further facts could be brought before the OSR. The OSR officers were also very aware of the difficulty of the Applicant in meeting the statutory time limit. 5 Following the return of the Applicant on 15 July 2015 further information was gathered and a draft review request to the Tribunal prepared. Copy of additional material to be included in the request but not previously provided to the Respondent was sent to the Respondent via email on 20 August 2015... While it was intended that the review request would be lodged at the Tribunal on that day, internal administrative difficulties did not allow this to be done until 11 September 2015. This was partly due to the Applicant's Accountant merging with another firm ESV from 1 July 2015 6 The Respondent refers to necessity for the Tribunal to consider the prospects of the Applicant succeeding in its application in order to exercise its discretion to extend time. The Applicant will provide submissions and further evidence to the Tribunal. 7 The Applicant will demonstrate that the dominant use for the land is for the purpose of primary production… 10 The Applicant in its request for review will seek the Tribunal's view of paragraph 21 of the Revenue Ruling LT 097 and how it relates to the "use" of the subject land..In the case of the Applicant's land, significant cost and preparation activity has been applied for the purpose of constructing a mushroom farm, an activity within the PPL exemption. It is acknowledged that such consideration and eventual approval of the government authorities for the construction of the mushroom farm did take from 2008 to 2014 however the Applicant contends this was substantially due to the examination, review and requests of the government authorities who in the end did approve the construction of the mushroom farm. The Applicant will submit to the Tribunal that it was always and remains his intention to use the subject land for a mushroom farm. All of his actions have been for this purpose, no applications or proposals have been made at any time for any other use other than for a mushroom farm and activities associated with it i.e. cattle feeding. 13 The Applicant respectfully submits that … it would be an injustice if the Tribunal did not exercise its discretion to allow the application to be submitted and heard. The Applicant has provided valid reasons for delay to the Respondent, was in contact with the Respondent before and after the statutory period expired and has a more than arguable case to be heard by the Tribunal.
4. The Respondent referred to the factors enunciated by the Tribunal in Daoud. The Respondent's submissions in relation to the Applicant's evidence are at [28] and include: 1. although the Accountant (Mr Robinson) was overseas between 4 and 10 May 2015 he was able to email the Respondent on 8 May 2015; 2. The Accountant alleges that the Respondent verbally (sic) agreed to site meetings and that the objection process might be deferred in the meantime. At [8] in his affidavit Mr Robinson states in respect of his contact with Mr Phillips "My aim was for the OSR to better understand the Applicant's circumstances and to this end Mr Phillips verbally agreed that site meetings would be useful and that the objection process might be deferred in the meantime." 3. Mr Phillips' affidavit refers to paragraph 8 of Mr Robinson's affidavit and states at [1] he "did not verbally agree or otherwise represent that the objection process might be deferred after the determination was made on 4 May 2016" (sic). At [4] in the Applicant's submissions, signed by Mr Robinson, the above excerpt from Mr Phillips' affidavit is set out and the Applicant states "The Applicant respects his (Mr Phillips') recollection of telephone conversations which were misinterpreted by Mr Robinson". I accept Mr Phillips' evidence on this point. 1. There is no evidence as to why the Substantive Application could not be filed in the 42-day period between 4 May 2015 and Mr Tolson's departure on his holiday.
5. I make the following observations in respect of the Applicant's reasons for delay: 1. the only evidence from the Applicant as to why the Substantive Application could not be filed in the 42-day period from 4 May to 15 June 2015 or why it took a further 59 days in the period from 15 July, when Mr Tolson returned from his holiday, until 11 September when that application was filed is that the Accountants' practice was merging with another practice, which is the representative of the Applicant in these proceedings, and there were a lot of documents to consider; 2. the Applicant has provided no adequate explanation for not filing the Substantive Application by 3 July 2015 together with a request for an extension of time to complete the supporting documents notwithstanding advice apparently received by the Accountants from the Tribunal on 18 June 2015; and 3. the Substantive Application, which Mr Robinson informed the OSR on 20 August 2015 would be lodged that day, was dated 21 August 2015 and signed by Mr Robinson but not lodged until 11 September, more than three weeks later.
6. The undisputed evidence is that the Applicant, through its representatives, was made aware: 1. on 4 May 2015 that any review of the Assessment was to be by way of an application to either the Supreme Court or to the Tribunal; 2. on 15 June that the OSR had finished with the matter and the Applicant's only option was to go to the Tribunal; and 3. on 18 June, by the Tribunal, that there was a procedure at the Tribunal to request an extension of time after lodging the "objection application".
7. The Applicant's representative's letter of 9 June 2015 to the OSR requesting "an extension in the time allowed for objecting" and the email from Mr Robinson to the OSR on 17 June 2015 stating "Is there any way we can keep this objection open…" indicates at least a misunderstanding and possibly a deliberate disregard by the agent of the statutory review process in respect of a reconsideration of the Assessment. I make no finding on this point.
8. AS, which was signed by Mr Robinson, states at [2] "the Applicant engaged with the Respondent, not seeking to circumvent due process, but to better understand the Respondent's reasons for disallowance."
9. I do not accept that explanation. I also observe that there is no evidence before the Tribunal as to when officers of the Applicant were actually informed by its agents of the relevant procedure for review of the Assessment or the date by which an application for that review was to be lodged.
10. I find that the Applicant, through Mr Robinson and the Accountants as its agents, was aware from 4 May 2015 that the review process required an application to either the Tribunal or the Supreme Court and the timing for same. I observe that the Applicant has made no submission to the contrary.
11. In these circumstances I am of the opinion that the explanation for the delay is less than satisfactory.

Amount in dispute

1. In my opinion, in the present circumstances, a factor for consideration in determining whether or not to exercise the Tribunal's discretion to extend the time for lodgement of the Substantive Application is the amount in dispute.
2. The evidence is, notwithstanding that the Assessment indicates the remission by the Respondent of interest on late lodgement of returns of nearly $48,000, that the Assessment requires payment of an amount in excess of $238,000, a not insubstantial sum.

Applicant's prospects of success

1. In the excerpt from Jackson at [19] the Panel said that it is appropriate to consider the Applicant's "prospects of success, that is usually whether the Applicant has a fairly arguable case" [22(3)(c)] and also that it may be appropriate to go further into the merits of the Applicant's case if the explanation for the delay is less than satisfactory and ascertain whether the Applicant can show that its case has more substantial merits than merely being fairly arguable, [22(4)].

Onus on the Applicant

1. The Respondent submitted at [36] that the Applicant bears the onus of proving its case and relied on s 100(3) of TAA. The Respondent also relied on Touma v Chief Commissioner of State Revenue [2012] NSWADT 2, Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 and Ferella v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 45. The Applicant made no submissions as to the relevant onus and did not dispute the Respondent's submission.
2. I observe that s 100 (3) states "The applicant has the onus of proving the applicant's case in an application for review." The requisite standard of proof in such a review is the "balance of probabilities" Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [31] and B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187, (2008) 74 NSWLR 481 at [104].

Land tax law

1. The Tax Act provides amongst other matters for the imposition of land tax, tax defaults and exemptions from land tax. Part 3 of the Tax Act provides that land tax is payable by the owner of all land in New South Wales other than land which is exempt from taxation under that Act. The tax year is each period of 12 months commencing on the first day of January and land tax is charged on land owned as at midnight on 31 December immediately preceding the tax year. (ss 7-9).
2. The Tax Act provides at s 10AA for an exemption for land tax for land used for primary production. Relevant excerpts from the section are as follows: 10AA Exemption for land used for primary production (1) Land that is rural land is exempt from taxation if it is land used for primary production. (2) Land that is not rural land is exempt from taxation if it is land used for primary production and that use of the land: (a) has a significant and substantial commercial purpose or character, and (b) is engaged in for the purpose of profit on a continuous or repetitive basis (whether or not a profit is actually made). (3) For the purposes of this section, "land used for primary production" means land the dominant use of which is for: … (b) the maintenance of animals … for the purpose of selling them or their natural increase or bodily produce, or … (f) the propagation for sale of mushrooms… (4) For the purposes of this section, land is "rural land" if: (a) the land is zoned "rural", "rural residential" or "non-urban" under a planning instrument, or (b) the land is not within a zone under a planning instrument but the Chief Commissioner is satisfied the land is rural land.

Consideration of the substantive issue

1. In the Disallowance the Respondent stated: Our records indicate that throughout the objection period that (the Property) has a rural zoning. For the primary production exemption to apply to land that is zoned 'rural' the land must be dominantly used for primary production s. 10AA (1)(3) (sic) of the Land Tax Management Act 1956. …. The dominant use of the (Property) was not primary production at the relevant taxing dates. Your objections in relation to (the Property) is therefore disallowed.
2. The Respondent submitted at [40] that the Property was zoned "residential" throughout the Relevant Period. Accordingly, the Respondent submitted that in addition to proving that the dominant use of the Property was for a prescribed primary production activity it was necessary for the Applicant to prove that the prescribed primary production activity satisfied the "commerciality test" under s.10AA (2).
3. By letter dated 21 April 2016 the CSO, on behalf of the Respondent, accepted that the Property was zoned "rural - small holdings" for the purpose of the proceedings and withdrew certain paragraphs of RS which related to the Applicant having to satisfy the "commerciality test".
4. Accordingly, there is no dispute that at all relevant times the land was rural land and was exempt from taxation if it was used for primary production as defined in s 10AA (3).
5. The onus rests with the Applicant to prove the dominant use of the Property in each tax year of the Relevant Period.
6. In summary the Applicant's case is that: 1. Mr Tolson, either personally or through other entities, operates a mushroom growing operation and the land on which relevant activities are carried out is exempt from land tax. 2. The mushroom growing operation includes the use of cattle which feed on the residue of mushrooms following picking. 3. The cattle are maintained on various properties, including the Property, which are in proximity to the present mushroom farm at Vineyard. 4. The Property was purchased in 2004 with the sole purpose of expanding and eventually relocating an existing mushroom farm operating on land owned by Mr Tolson. The Property was leased after purchase on a monthly basis with the expectation that construction of the expanded mushroom farm would begin as soon as relevant statutory approvals were granted. The Property was available for use by the lessee for the agistment of cattle, the spreading of spent mushroom compost waste and unusable low-grade mushrooms (stems) and the consumption of the stems by cattle owned by the lessee. A house on the Property, which occupies 1.5% of the land area, was rented by the lessee to a third party. The rental of the house was and is incidental to the main primary production activity and was primarily undertaken for security reasons to demonstrate to 3rd parties that someone was watching over the Property which appeared to the public to be vacant and unused. 5. There are between 30 and 45 cattle maintained on the Property at any one time. Every Monday, Wednesday and Friday they are fed mushroom stems following harvesting. If the cattle were not used to consume the stems the cost of disposal of the stems would be in excess of $200,000 per annum. The rental of the house is approximately $25,000 per annum. 6. Some cattle previously maintained on the Property have been sold. 7. Since 2007 the Applicant has been involved in communications with and applications to various statutory authorities to obtain permission to construct a mushroom farm on the Property. Delays in obtaining approval related to obstacles created by the statutory authorities. Development approval was not provided until August 2014, subsequently stage one of the project commenced. 8. The intended use of the Property has always been to operate a mushroom farm. No application to any statutory authority has included any request for any use of the Property other than for mushroom farming. No partition or subdivision of the Property for any other use has been or will be applied for. 9. While applying for approval the Applicant carried out preliminary work on the Property consistent with the intention to commence mushroom growing operations.
7. At [10] the Applicant submitted: The Applicant in its request for review will seek the Tribunal's view of paragraph 21 of the Revenue Ruling LT 097 and how it relates to the "use" of the subject land. The ruling references Leda Manorstead v Chief Commissioner of State Revenue [2010] NSW SC 867 at Paragraph 61 where activity and costs associated with development applications surveys, construction work and land improvements in preparation for the sale of lots led to the view that land was being "used for" a residential purpose and therefore not subject to PPL exemption. In the case of the Applicant's land, significant cost and preparation activity has been applied for the purpose of constructing a mushroom farm, an activity within the PPL exemption. It is acknowledged that such consideration and eventual approval of the government authorities for the construction of the mushroom farm did take from 2008 to 2014 however the Applicant contends this was substantially due to the examination, review and requests of the government authorities who in the end did approve the construction of the mushroom farm…
8. In relation to the substantive issue, the Respondent, who did not have the opportunity to consider AS or the documents attached to AS, made submissions which had regard to the evidence provided by the Applicant in the affidavits filed after 9 February 2016, the documents in the Substantive Application and those provided by the Applicant to the OSR and included in the s 58 documents.
9. At [41] the Respondent submitted "in its letter to the Tribunal dated 3 March 2016, the Applicant stated that at this stage, it did not intend to lodge any further documentary evidence in the matter." I observe that the only letter in the Tribunal's file dated 3 March 2016 to the Tribunal from the representatives for the Applicant contains only two paragraphs which are as follows: Please find enclosed Affidavit in the above matter. The Affidavit provides support for the Tribunal to consider hearing the matter out-of-time.
10. Accordingly, if the letter extracted above is the letter to which the Respondent referred I find that it does not support the submission referred to in the immediately preceding paragraph. If the Respondent is referring to some other letter, then I observe that it does not appear in the Tribunal's file.
11. In summary the Respondent's submissions in respect of the substantive issue, were to the effect that: 1. The Applicant did not dispute that no mushrooms were grown on the Property during the Relevant Period, accordingly the Property was not used for the propagation for sale of mushrooms" during the Relevant Period. Further the proposed farm was not a "use" of the Property for "the propagation for sale of mushrooms". Accordingly, the Applicant has no prospect of succeeding in the Application in respect of the proposed mushroom farm attracting the application of the relevant exemption to the Property during the Relevant Period as it did not satisfy s 10AA (3) (f) of the Tax Act (AS at [43]). 2. The Applicant's evidence regarding cattle feeding on the Property would not discharge its onus under s 10AA (3) (b) of the Tax Act as it was not a use of the Property for "the maintenance of animals for the purpose of selling them or their natural increase or bodily produce". To the extent that any cattle were kept on the Property, the Applicant stated in the objection that the cattle were there to "ensure weed and grass control". Without the requisite purpose of sale, such an activity did not satisfy the requirements of s 10AA (3) (b) of the Tax Act. 3. The evidence as to the sale of steers on 19 January 2016 does not assist the Applicant because it relates to a period beyond that relevant to the 2011 to 25 tax years and does not prove that any of the cattle sold were ever kept on the Property. Accordingly, the Applicant has no prospects of succeeding in the Application in respect of cattle feeding.
12. In response to the immediately preceding paragraph AS stated at [11] that in order to arrive at an appropriate age and weight for sale cattle would have had to be born prior to 31 December 2014 and have been grown on the Applicant's properties since that time. The Applicant attached a statement from stock and property agents detailing sale of fat cattle between February 2013 and January 2015. I observe that while the statement refers to the sale of some cattle it is not evidence that the cattle were maintained on the Property at any time.
13. Both parties relied on the decision of Gzell J in Leda Manorstead v Chief Commissioner [2010] NSWSC 867. The Respondent referred to the discussion of the meaning of "dominant use" at [69] - [76] while the Applicant referred to [61]: … where activity and costs associated with development applications surveys, construction work and land improvements in preparation for the sale of lots led to the view that land was being "used for" a residential purpose and therefore not subject to PPL exemption.
14. I observe that in Leda Manorstead v Chief Commissioner [2011] NSWCA 366 (Leda CA) the Court considered the extent to which land was properly characterised as land "used for" purposes of primary production and commercial land development and that it was necessary to evaluate competing purposes in order to determine which purpose was dominant.
15. In Leda CA Allsop P, with whose reasons Campbell JA and Whealy JA agreed said at [24]: The particular uses identified … are the uses for which the land must be dominantly used for the application of sub-s (3) ... if there is another use for which the land is being put, it must be compared with the relevant use … In evaluating any given circumstances there is no warrant within the words of the section or the meaning of the word "use" or the phrase "used for" to require beneficial return or any other like concept. There will be some circumstances in which activity on the land will be understood or evaluated as preliminary to the undertaking of a future use. That is not what s 10AA is directed to. There must be a present use for which the land is being used. That does not deny, however, the proper evaluation of any given circumstances. The appropriate task is the one which the primary judge undertook. Upon evaluation of all the material he asked himself what the people who owned the land were actually using it for. Or, to put the matter another way, what was the purpose of what the owner was doing on the land so that the question as to what the land was being used for could be answered? Here, looking at all the activities together with the surrounding circumstances of Leda's evident purpose in carrying out those activities, it could be concluded (and was concluded by the primary judge, rightly, in my view) that the land was being used for commercial land development. The fact that the land was, at that time, at the stage of earthworks does not deny the present use of the land for commercial land development. It does not matter, in my view, that the residential housing estates likely to be built in due course had not yet been completed, had not yet been sold and had not yet taken their place in a completed residential development.
16. In Codlea Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 136 Frost SM referred at [34] to Leda and extracted the following from Gzell J's judgment: [69] Dominant in its ordinary meaning connotes ruling, prevailing, or most influential. The statute's reference to a dominant use presupposes that land may be used for more than one purpose and requires a determination of which use of the land is the main, chief or paramount use. [70] That is a question of fact and degree that may, in the end, be determined as an objective matter of impression having regard to the facts. [71] In Saville v Commissioner of Land Tax (1980) 12 ATR 7, Roden J was concerned with whether land was used primarily for the maintenance of animals thereon under a former provision in the Land Tax Management Act. The primary use test was not unlike the dominant use test in the present legislation. His Honour said at 10: "I am of the view that, for any use of the land to justify the statement that the land is used primarily for that purpose, it is necessary not only that that use prevail over any competing use but also that it be sufficiently substantial to prevail over the proposition that the land is primarily to be regarded as unused land." [72] In Hope v Bathurst City Council (No 2) (1983) 52 LGRA 79, Perrignon J was concerned with the definition of "rural land" as land that is wholly or mainly used for carrying on the businesses or industries of grazing amongst other uses in the Local Government Act 1919, s 118. At 84 his Honour said that what was called for where land was put to a number of uses, was the weighing of the evidence relating to various uses to which land was put, including, but not limited to, the nature and intensity of such uses, the physical areas over which they extended, and the time and labour spent in conducting them. [73] His Honour's decision was upheld on appeal (Hope v Bathurst City Council (1986) 7 NSWLR 669). A majority of the Court of Appeal held that the characterisation of rural land as land that is wholly or mainly used for carrying on the businesses or industries of grazing, amongst other uses, did not relate solely to the quantum of area of land used for relevant purposes but related to the end to be achieved by the use and included other criteria such as the nature and intensity of the use. [74] In Thomason v Chief Executive, Department of Lands (1994-1995) 15 QLCR 286 the Land Appeal Court of Queensland, presided over by Ambrose J, had to consider whether, at the relevant date of valuation, the subject land was "exclusively used … for purposes of farming". [75] In terms similar to the Land Tax Management Act, s 10AA, "farming" was defined for this purpose in the Valuation of Land Act 1944 (Qld), s 17(2) to mean the business or industry of grazing, and other specified pursuits, or any other business or industry involved in the cultivation of soils, the gathering in of crops, or the rearing of livestock, if the business or industry represented the dominant use of the land and had a significant and substantial commercial purpose or character and was engaged in for the purpose of profit on a continuous or repetitive basis. [76] The Court, helpfully, gave its approach to the determination of dominant use of land at 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 of 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."
17. In Leda CA Allsop P, with whom Campbell JA and Whealy JA agreed, said at [11]: The essence of the reasoning of the primary judge is contained in [61] - [68] of the reasons. His Honour characterised the use of the land as a use for commercial development of the land. The likely manifestation of that development when finished was residential subdivision with associated commercial development. Crucial, however, to understanding the primary judge's reasons (and the debate in this Court) is to recognise that the characterisation of the use of the land was for the process or undertaking of commercial land development. His Honour did not say, and should not be understood as saying, that the earthworks and associated work were activities preparatory to, but sufficiently closely connected with, a future use for residential subdivision (as completed) to be seen as part of that future use for residential subdivision.
18. In Minister Administering the Crown Lands Act v NSW Aboriginal Land Council [2008] HCA 48 the High court unanimously dismissed an appeal against a decision of the NSW Court of Appeal. The matter involved whether the meaning of "lawfully used or occupied" was to be considered as a compound expression with a single meaning or whether the words and whether the words "used" and "occupied" were to be considered separately. The meaning of "use" was also considered.
19. It is appreciated that the context in which the words were considered was the construction of the beneficial legislation of the Aboriginal Land Rights Act 1983 (NSW) rather than the Tax Act, which is revenue legislation.
20. However, it is instructive that the majority comprising Hayne, Heydon, Crennan and Kiefel JJ said at [69] in referring to the Court of Appeal decision "as Mason P rightly said [83], "use" is a protean word" and observed at [62] that Mason P said: [t]he word 'used' in s 36(1)(b) means 'actually used' in the sense of being used in fact and to more than a merely notional degree"[71]. The reference to use "in fact" and to use being "more than notional" might be understood as directing attention to some physical use of the land and at [63]: By contrast, Giles JA … concluded [74] that "[t]here can be use without physical use
21. There appears to be no dispute that if the evidence was that the proposed mushroom farm was in operation on the whole of the Property throughout the Relevant Period the Property would be exempt from land tax.
22. It may well be that the extensive applications to and communications with statutory authorities by the Applicant to obtain approval for the use of the Property as a mushroom farm is properly regarded as activities preparatory to a future use of the Property as a mushroom farm. This by itself may not be a use of the Property for primary production. Similarly, an evident intention to use the Property for primary production is not a use sufficient to satisfy s 10AA. In St Pier v Chief Commissioner of State Revenue [2002] NSWADT 112, the Tribunal held at [36]: "... the Applicant had undertaken all possible steps to commence the factual use of the land ... for primary production ...[but] had been frustrated by actions and circumstances beyond his control ... the Applicant clearly intended to use the land in a manner which may have had the effect of exempting the land as land used for primary production. The Applicant's intention was frustrated. As a matter of well established law the land was not used at the relevant dates for primary production." In Caruana v Chief Commissioner of State Revenue [2011] NSWADT 183 Block JM said at [54]: An intention is just that, an intention and an intention can be altered. The fact that subjectively the Applicants intended to use Londonderry for the purpose of primary production and spent considerable sums in pursuit of the necessary consents is not relevant.
23. However, it may be that the Applicant can at a hearing of the Substantive Application produce evidence acceptable to the Tribunal to the effect that the consumption by cattle of mushroom stems is an integral part of the operation of a mushroom farm. If so, it is fairly arguable that the use of the Property throughout the Relevant Period for such consumption is such an integral part of the operation of a mushroom farm that the Property is to be regarded as land used for primary production.
24. There is evidence from the stock and property agents' statement of August 2015, Attachment G to AS, that cattle were sold by "ELF MUSHROOMS" in February and October 2013, July 2014 and January 2015. There is no evidence as to whether "ELF MUSHROOMS" is the Applicant, nor is the land on which those cattle were maintained prior to the sale identified, nor how long those cattle had been maintained on such land. It may be that evidence exists and could be placed before the Tribunal to the effect that those cattle had been maintained on the Property throughout all or part of the Relevant Period.
25. There is conflicting evidence that at times 30 and at other times 45 cattle were maintained on properties by Mr Tolson. There is no evidence before the Tribunal as to the number of cattle maintained on the Property in each tax year during the Relevant Period. Nor is there evidence as to the carrying capacity of the Property in respect of cattle at any relevant time.
26. It may be that at a hearing of the Substantive Application evidence will be produced to the Tribunal of the relevant carrying capacity of the Property and the number and age of cattle on the Property during each relevant tax year and the number of such cattle which were sold to the effect that the dominant use of the Property for one or more relevant tax years is shown to be for the maintenance of cattle for the purpose of selling them or the natural increase.

Extent of prejudice suffered by the Respondent

1. The Respondent neither consented to nor opposed the Application and stated at [5] that he provided submissions in order to assist the Tribunal to determine the preliminary issue. There is no evidence of nor any submission that the Respondent has or will suffer any prejudice if the Application is granted.

Decision and orders

1. In making the decision set out in the next paragraph I have had regard to the above findings; that the Respondent neither consents to nor opposes the Application; the substantial amount of money in dispute; that there is no evidence that the Applicant has had the benefit of legal advice in respect of any issues; and that there is no evidence or submission that the Respondent has or will suffer any detriment if the Application for extension is granted.
2. The correct and preferable decision of the Tribunal is that the time for filing the application to apply for administrative review of the assessment notice, correspondence ID 1606675880, issued on 5 January 2015 by the Respondent to the Applicant, is extended to 11 September 2015. The matter is listed for directions on 28 June 2016 at 9.30 am. I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 June 2016