The applicant's written case commenced by highlighting relevant authority as to the importance of statutory text and submitted that the judge erred by wrongly giving primacy to a perceived intention of amendments to s 67 by reference to extrinsic materials.[19]
The applicant submitted that the words, 'normally engaged in a substantially full-time capacity' are expressly qualified by the phrase, 'in the business of primary production referred to in s 67(1)(a)(iii)'. The ordinary and natural meaning of the entire 'composite phrase' requires the term 'substantially full-time capacity' to take its meaning by reference to the 'requirements' of the business in issue. To find otherwise would inappropriately divorce the expressions 'normally engaged in a substantially full-time capacity' and 'in the business of primary production referred to in s 67(1)(a)(iii)' from each other. It could cause the 'substantially full-time capacity' requirement to rise higher than the requirements of 'the primary production business', to which it is directed.
In oral submissions leading counsel for the applicant reiterated that the composite phrase, 'normally engaged in a substantially full-time capacity in the business' was to be determined by reference to the 'requisites' of the business. He accepted that the words, 'substantially full-time capacity' modified the word, 'engaged' which plainly referred to the person who was working at the farm. However, he submitted that the words 'in the business [of primary production]' also modified the concept of whether the person was engaging in a 'substantially full-time capacity' with the result that one looks at the business of primary production to work out what the full-time capacity of the person is. If the business only required 24 hours work a week in order to operate as a business then the provision would be satisfied if a person worked those 24 hours a week.
Counsel also submitted that the effect of the judge's construction was that the exemption could only apply if the business was of sufficient scale and size to support a full-time engagement. It would have been expected that Parliament would have dealt with this by appropriately defining the concept of a 'business', rather than dealing with it under s 67B(2) if that was really the case.
The applicant submitted that the authorities were also consistent with this approach,[20] including that of Annat Pty Ltd v Commissioner of State Revenue (Vic), which indicated that the relevant phrase connotes 'regular participation in the business for a considerable part of the time of the owner' and stated that 'no further precision was appropriate'.[21] Such authorities did not reduce the relevant person's engagement to a mathematical or numerical proposition. The applicant criticised the judge's construction as presupposing that the statutory text operated by reference to a temporal element such as the number of hours comprising full-time employment according to prevailing community expectations. The applicant submitted that such limitations did not arise on any ordinary and natural reading of the text.
The applicant also submitted that the purposes and objects of the provisions which were introduced in 2019 were consistent with its construction.[22] The applicant highlighted, by reference to both the explanatory memorandum and the second reading speech,[23] that the amendments introduced in 2019 were intended to address the mischief that the predecessor provisions did not prevent an owner claiming exemption despite having no connection to the primary production business conducted on the land.[24] The applicant also highlighted a statement from the second reading speech that the amendments would reinforce an intent to help 'genuine primary producers running a business on their own land'.[25]
The applicant's submission was that the effect of the judge's construction was to deny the exemption to a full-time farmer just because Mr Douglas owned a separate farming business. This was the very converse of operating to help 'genuine primary producers running a business on their own land'.
In oral submissions counsel also highlighted that the mischief the provisions were directed to was that of 'land banking' and that the mechanism chosen to address this vice was to require a connection between the farmer and the land. The provision ought not be construed so as to exclude a small farmer who was in fact connected to the land.
The applicant also submitted that no mention whatsoever was made of 'Collins Street farmers' in the extrinsic materials concerning the amendments. The observations of Garde J in Lotus Oaks Pty Ltd v Commissioner of State Revenue (Vic),[26] on which the judge relied, were directed to s 67 as it stood prior to the 2019 amendments and were wholly misplaced.
The applicant submitted that, given the uncontested evidence, particularly that the physical work Mr Douglas undertook, as well as the administrative work, was all of the work 'necessary' to conduct the farming business, the judge should have found that he was normally engaged in a substantially full-time capacity in the relevant business of primary production.
[2]
It is uncontroversial that the meaning of a statutory provision is determined by reference to its text, in the light of its context and purpose.[27] However, the applicant is correct in highlighting the importance of the statutory text given that the task of statutory construction must begin and end with a consideration of that text.[28] The High Court has also said: '[t]he fundamental point is that close attention must be paid to the language' of the relevant provision because '[t]here is no substitute for giving attention to the precise terms' in which a provision is expressed.[29] Legislative history and extrinsic materials can also not displace the actual words used in the statute.[30]
The extrinsic materials cited by the judge and the parties generally support the need for some connection, or 'engagement', between an owner and the primary production business conducted on the land so as to prevent people who are merely holding onto that land (or 'land banking') from accessing an exemption. However, so much is largely apparent from a reading of the provisions themselves. The extrinsic materials were of very limited assistance in resolving the specific constructional issue raised by this application. The previous authorities also did not deal with this issue.
Returning then instead to the statutory text, the applicant's construction finds no support whatsoever in the language of the relevant provision. Thus, s 67B(2)(a)(ii)(B) contains no words which might suggest that the relevant person's 'capacity' is to be understood as requiring an assessment of the 'needs' or 'requirements' of the business rather than the personal commitment of the person. Words such as 'requisite', or 'needs', or 'requirements' are simply not present.
More particularly, it is clear (as the applicant accepted) that it is a person - the 'relative' - who must be engaged in a substantially full-time capacity in the relevant business. The engagement of that person is then qualified by two matters: first, that they be engaged in a 'substantially full-time capacity'; and secondly, that they be engaged 'in the business of primary production' conducted on the relevant land. The concept of being in a 'substantially full-time capacity' is an ordinary phrase readily understood as applying to a person such as an employee, or contractor, and measured by reference to commonly understood community standards. Contrary to the submission of the applicant, we see no difficulty with applying such an ordinary concept, nor any reason to modify it. The phrase, 'in the business of primary production' also does not serve to modify, or somehow limit, such a well-understood concept in the way the applicant contended. That phrase does not import any reference to the 'needs' of the business, or anything like it. It simply identifies where the person must be engaged, namely, 'in the business'.
The alleged adverse consequences cited by the applicant also do not justify ignoring the plain words of the provision. Thus, even if it is accepted that the 'full-time capacity' requirement rose higher than the 'requirements' of the business in this case and that Mr Douglas's other business also involved running cattle, no different construction is open. Instead, Parliament clearly intended that a relevant person should demonstrate a sufficiently high level of engagement - and hence connection - to the specific primary production business on the relevant land, regardless of how the person spends the balance of their time.
The applicant's construction is therefore not available on the language of the provision.
It is unnecessary to go further. However, we also consider that the applicant's construction carried with it a number of problems and anomalies. First, whereas the concept of full-time work is well understood, it was not explained at what level the business needed to be operating before it could be said that its 'needs' were met and therefore the full-time requirement was satisfied. For example, whether it needed to be profitable and/or if it was sufficient if it merely existed. Secondly, it appeared to follow from the applicant's construction that a smaller scale business might be in a better position to obtain an exemption as compared to a larger scale business. This is despite the absence of any cogent justification for such a result. Thus if, as the applicant contended, the 'needs' of the business were to be determinative, it might be difficult to establish that any person was engaged in a full-time capacity at all if the relevant business was so large that it 'required' an engagement of more than 60 hours a week.[31] Thirdly, on the assumption that the relevant business needed only a relatively brief time commitment by those engaged in it, the full-time requirement could be satisfied simultaneously by the same person working in two or more separate businesses.
However, any further consideration of such difficulties is unwarranted. The applicant's construction is simply not open on the plain, clear words of s 67B(2)(a)(ii)(B).
It was unclear whether proposed ground 2 was to be pursued if the application's construction was rejected. In any event, given that Mr Douglas's engagement in the applicant's business was only half of his working time it fell well below what would be ordinarily understood as comprising a 'substantially full-time capacity'. In such circumstances, the judge was clearly correct to determine the engagement issue adversely to the applicant.
[3]
The application for leave to appeal will be refused.
[4]
[1] The amount calculated in respect of the 2020 assessment notice was $1,895,400. The amount calculated in respect of the 2021 assessment notice was $1,566,900.
[5]
[2]Delma Investments Pty Ltd v Commissioner of State Revenue[2024] VSC 649 ('Reasons').
[6]
[3] The parties accepted that the relevant form of the LTA was Authorised Version No 65, incorporating amendments as at 20 November 2019.
[5] It is common ground that the Land was wholly in greater Melbourne and wholly in an urban zone.
[9]
[9] The applicant had an opening balance of 40 cattle in the 2020 financial year, 36 cattle of which were sold. It purchased 24 cattle in the 2021 financial year which were also later sold: Reasons, [27]-[28].
[10]
[16] Reasons, [174], citing Damon v Commissioner of Land Tax (Vic)(1985) 17 ATR 278, 281 (Member Gibson) ('Damon'); Annat Pty Ltd v Commissioner of State Revenue (Vic)[2020] VSC 108, [149] (Kennedy J) ('Annat'); Lotus Oaks Pty Ltd v Commissioner of State Revenue (Vic)[2021] VSC 388; (2021) 113 ATR 379, 412 [209] (Garde J); [2021] VSC 388 ('Lotus Oaks').
[11]
[18] Reasons, [173]-[178], citing Lotus Oaks[2021] VSC 388; (2021) 113 ATR 379, 395 [113] (Garde J); [2021] VSC 388; Victoria, Parliamentary Debates, Legislative Assembly, 16 October 2019, 3531 (Tim Pallas, Treasurer); Premier Bay Pty Ltd v Commissioner of State Revenue[2024] VSC 447.
[12]
[19] Citing Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT)[2009] HCA 41; (2009) 239 CLR 27, 46-7 [47] (Hayne, Heydon, Crennan and Kiefel JJ); [2009] HCA 41 ('Alcan'); FederalCommissioner of Taxation v Consolidated Media Holdings Ltd[2012] HCA 55; (2012) 250 CLR 503, 519 [39] (French CJ, Hayne, Crennan, Bell and Gageler JJ); [2012] HCA 55 ('FCT').
[24] For example, where the owner was a natural person the relevant predecessor provision only required the owner to engage in a substantially full-time capacity in 'the business of primary production of the type carried on on the land' without specifying that the business must be the business actually conducted on the relevant land: Land Tax Act 2005, s 67(2)(a), as at 1 July 2019 (emphasis added).