HOPE v THE BATHURST CITY COUNCIL

LOCAL GOVERNMENT - rates - beneficial reduced rate for "rural land" (until December 1988) and "farmland" (after December 1988) - local authority issues rate notice with assessment at general rate - land owner asserts entitlement to reduced rate - background of substantial and prolonged challenges to local authority's rates

• judges of Land and Environment Court reject claim for beneficial rate - on appeal to the Court of Appeal on points of law

PRECEDENT - Court of Appeal - settled authority - reopening of decision of Court - majority opinion - High Court refuses special leave to appeal - passage of time - intervention of amending legislation - reliance upon binding decision

Held: on the findings of fact made, no entitlement to relief from the general rate no error of law.

(1) (in respect of the challenges to the orders of Cripps J in respect of the rating years 1982 and 1983): No error of law was shown, Cripps J correctly applying the decision of the Court of Appeal in Hope v The Bathurst Cit Council [No 2] [1979] 2 NSWLR 471 (CA) in respect of which the High Court of Australia refused special leave to appeal;

(2) Leave to reopen the correctness of that decision should, in the circumstances, be refused;

(3) (in respect of the challenge to the orders of Bignold J concerning the rating years 1989, 1990, 1991, 1992 and 1993): No error was shown in the approach adopted by Bignold J to the meaning of "farmland" in the Local Government Act, as amended in 1988;

(4) Upon the facts found by Bignold J, it was open to him to find that the dominant use of the ratepayer's land did not have a "significant and substantial commercial purpose or character" or was not engaged in "for the purpose of profit" as required to secure the beneficial rating;

(5) Both appeals, accordingly, dismissed with costs.

Held: Application to reopen decision of 1986 refused.

1. Appeals against the orders of Cripps J in the Land and Environment Court dismissed with costs; and

2. Appeals against the orders of Bignold J in the Land and Environment Court dismissed with costs.

The first is an appeal from orders of Cripps J, made in the Land and Environment Court, on 18 March 1991. Cripps J found that Mr Hope had failed to establish that his land near Bathurst was "mainly used" for the business of grazing. He therefore dismissed his challenge to the rating notices issued to Mr Hope by the Bathurst City Council for the years 1982 and 1983. Those notices were issued upon the basis that the subject land was not entitled to the special rating benefit as "rural land", within the meaning of s118(1) of the Local Government Act 1919.

When Cripps J ruled as he did, he followed the approach mandated by the holding of this Court in Hope v The Bathurst City Council [No 2] (1986) 17 NSWLR 669 (CA). The majority of the Court on that occasion was Mahoney JA and Priestley JA. McHugh JA dissented. With respect, I have much sympathy for the dissenting opinion. However, Mr Hope, an intrepid litigant (as Priestley JA in his reasons has described), challenged this Court's holding by an application for special leave to appeal to the High Court of Australia. That Court dismissed his application. One might not necessarily infer the endorsement by the High Court of the detail of this Court's holding from the mere fact of rejection of a special leave application. Other considerations may have contributed to the refusal. However, Mr Hope had earlier succeeded before the High Court in his challenge to a decision of this Court, the first in the series. See Hope v The Bathurst City Council [No 1] [1979] 2 NSWLR 471 (CA). Mr Hope's application on that occasion was successful. Having granted special leave, the High Court reversed the majority order of this Court (Glass and Samuels JJA; Reynolds JA dissenting). See Hope v The Bathurst City Council (1980) 144 CLR 1.

Whatever the footing of the rejection of Mr Hope's application for special leave against the second decision in the series, the result was that the orders of this Court in that decision were affirmed. The law, as stated by the Court, therefore remained unchallenged. It was doubtless acted upon, in the levying of rates, by all local authorities having within their boundaries, land which was, actually or potentially, "rural land". In defence of settled principles of law (not unimportant in such a subject matter) the Court's practice is to require that leave must be obtained to show why the settled principle should be reopened. See Rankin and Ors v Baldi and Ors (1985) 1 NSWLR 274 (CA), 276; King and Mergen Holdings Pty Ltd v McKenzie (1991) 24 NSWLR 305 (CA), 311.

Although I would have taken the same view as McHugh JA in 1986, it is inappropriate to give effect to that opinion now. The decision of the Court was reached after full argument. The High Court of Australia refused special leave. Eight years have passed. Many administrative (and doubtless legal) decisions have been made on the basis of the correctness of the Court's decision. The relevant legislation has been changed.

There is a curiosity which lies behind the 1986 decision of this Court. It is that the decision was, in turn, an appeal from orders of ET Perrignon J in the Land and Environment Court. As Mr Hope points out, there appears to be some difficulty in reconciling Perrignon J's decision in that case with that earlier reached by him when the remaining questions were returned to the Land and Environment Court following Mr Hope's success in the High Court. See Hope v The Bathurst City Council (1981) 43 LGRA 60. Perrignon J did not unravel this

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enigma. In his second judgment he did not refer to the first. But this is history. The starting point for the appeal from Cripps J is, effectively, the challenge to the decision of this Court in 1986. In my view, for the reasons stated, the leave that would be necessary to mount that challenge must be denied. Accordingly, Cripps J correctly applied the holding of this Court. His decision must therefore be affirmed.

That leaves the second series of appeals now before us. They challenge orders of Bignold J. Those orders concern the notices given by the Council to Mr Hope for the later rating years 1989, 1990, 1991, 1992 and 1993. In respect of these years, the definition of "rural land" was deleted from the legislation. Instead, rating reductions were provided for "farmland", as defined. The definition required a demonstration by the ratepayer, in the event of dispute, that "the dominant use" of the land in question "has a significant and substantial commercial purpose or character" and "is engaged in for the purpose of profit on a continuous or repetitive basis".

On the basis of the facts found by him, Bignold J concluded that Mr Hope did not qualify, in respect of the subject land, for the relevant rating benefit. His Honour's findings and conclusions are described in the reasons of Priestley JA. For the reasons given by Priestley JA, I am of the view that it was open to Bignold J to conclude as he did. Given the change of the legislation and the apparent purpose of the new definition, Bignold J's conclusion was certainly open to him. It evidences no misunderstanding or misapplication of the statutory criteria. That being so, in an appeal such as this, limited to a point of law, this Court is bound to dismiss Mr Hope's challenge to the orders of Bignold J. Cf Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 (CA), 156.

Both appeals should therefore be dismissed with costs.

Priestley JA In 1965 Mr I Hope bought a property of about fifteen and a half acres on the outskirts of Kelso, a town which is in the Local Government area of the Bathurst City Council. The council was the rating authority for its local government area.

In 1965, and until it was replaced by its 1993 successor, the Local Government Act 1919 contained a s (s118) which required the council of a municipality to make and levy in each year a general rate on the land value of all rateable land in its area. Councils were empowered, when passing the resolution making the general rate, to determine a rate less than the general rate in respect of land falling within the definition, until 15 December 1988 of "rural land", and after that date, of "farm land".

At least since 1969 Mr Hope has taken the view that the rate which should apply to his property has been the rural land or farm land rate. The cases now before the court are the latest in a series in which the rightness or wrongness of Mr Hope's view has been contested between him and the Council. The cases now before the court are appeals from Cripps J of the Land and Environment Court in respect of decisions adverse to Mr Hope in regard to the 1982 and 1983 rating years and from Bignold J of the same court in respect of decisions also adverse to Mr Hope in regard to the rating years 1984, 1990, 1991, 1992, and 1993.

As some aspects of the long history of this litigation are helpful in understanding questions debated in the present appeals, I will mention parts of it.

The first of the series was decided by Else-Mitchell J, in Mr Hope's favour, in 1969.

The next case concerned the 1978 rating year. The Council's rate notice for that year applied the ordinary general rate to Mr Hope's land, not the lower rural land rate. His appeal came before Rath J, who dismissed it: (1978) 38 LGRA 1. Mr Hope then appealed to this court, which, by majority dismissed the appeal: (1979) 2 NSWLR 471. The High Court granted special leave to appeal, and in the appeal reversed this court on one issue leaving other issues still to be decided: (1980) 144 CLR 1. These issues were remitted to the Land and Valuation Court for determination.

The way in which some of the points argued in this court and the High Court were dealt with in the High Court is relevant to arguments in the two present sets of appeals.

Rath J had decided that as a matter of fact Mr Hope's use of the land although for commercial purposes and for the purpose of profit, was not significant enough to bring it within the scope of the words "businesses or industries of grazing" as used in the definition in s118(1).

The appeal to this court was by way of case stated.

The statutory and factual position with which both this court and the High Court had to deal was set out by Reynolds JA in this court as follows: "To achieve the rating advantage, the onus imposed by statute was upon the appellant to establish that the land was rural within the definition. The relevant part of the definition in s118(1) is in the following terms: "' rural land" means (a) a parcel of rateable land which is valued as one assessment and exceeds 8,000 square metres in area, and which is wholly or mainly used for the time being by the occupier for carrying on one or more of the businesses or industries of grazing, dairying, pig-farming, poultry farming, viticulture, orcharding, bee-keeping, horticulture, vegetable growing, the growing of crops of any kind or forestry;...'

The primary facts found are set out in the first eleven paragraphs of the stated case and are as follows:

"(1) The appellant is the owner and occupier of a parcel of land in the City of Bathurst, being Lot 16, D.P. 551540 and Part Portion 13, Parish of Kelso, which was rated for the year 1978 under assessment No 1359.

(2) The total area of the land exceeds 8,000 square metres, being 6.263 hectares, or 15,475 acres.

(3) 12.42 acres, ie 80.24 per cent of the total area, is used by the occupier for the agistment of other persons' cattle or horses (which for the year in question were all horses).

(4) The 12.42 acres has been reasonably fully utilised by the agistment of stock, and grazing is the best agricultural use of the land.

(5) The appellant started advertising in 1965 that agistment was available for stock, and stock has been on agistment on the land continuously since that time.

(6) The appellant carries on the activity of the pasturing of cattle for the purpose of profit.

(7) The appellant charges for agistment at a rate per head per week, and keeps records of income and expenditure pertaining to the agistment services.

(8) Over 90 per cent of the land has been pasture improved, and the pastures are still in good condition.

(9) The appellant has maintained the pastures by eradication of thistles and burrs, watering (ie irrigating) and stock management.

(10) The appellant has erected fences to ensure good stock control; has kept fences in repair; has installed and maintained troughs for stock watering and has ensured the water supply for the stock.

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(11) The appellant has sought and received expert advice an the care and the use of the land." (at 473-4)

The case stated raised four specific questions: (1) was Rath J wrong in law in holding that whether Mr Hope's activities on the land were either a "business" or "industry" within the meaning of those words in the definition of "rural land" in s118 was a question of fact? (2) if he was wrong in so holding, should he have allowed the appeal as a matter of law? (3) on the facts found and admitted had Mr Hope discharged the onus of proof that his land was rural land? and (4), if yes to (3), should the appeal have been allowed as a matter of law?

Reynolds JA was of opinion that the first question should be answered yes, but both Glass and Samuels JJA thought that Rath J had been right in approaching as a question of fact the question whether Mr Hope's activities on the land were a business or industry within the meaning of the definition of rural land.

Since, on the procedure followed, Mr Hope could only succeed if Rath J were shown to have made an error of law, the majority answer to the first question meant that Mr Hope could only get a favourable answer on the second one if, on the primary findings of fact, the only reasonable conclusion was that he had been conducting a business (or industry, business being the main matter argued) or that his activities, on those primary findings of fact were necessarily within the description of a business.

Glass JA said that he was unconvinced that it was wholly unreasonable for Rath J to conclude that despite Mr Hope's profit making purposes, his activities "did not amount to a genuine, real or significant business within the meaning of the Act" (at 475). Glass JA also said that he agreed with the more extensive reasons of Samuels JA who reached the same conclusion.

Samuels JA's opinion turned upon a concept used by Rath J which he in turn appears to have based on something said in an income tax decision by Walsh J. This was an observation indicating that Walsh J thought an activity would not ordinarily be called a business unless it had "a significant commercial purpose or character": Thomas v Commissioner of Taxation (Cth) (1972) 46 ALJR 397 at 401. With respect to Rath J's use of this concept Samuels JA said that Rath J's reasons for judgment showed that he "correctly took into account that a business, to enjoy that description, need not be a large one; but that 'there must be some activity of which it can be said that it has a significant commercial purpose or character'." (at 7 NSWLR 476)

Samuels JA went on to say that he thought both Walsh J and Rath J had used the word "significant" to mean "important" or "real", or "genuine", or "weighty". He indicated that he took Rath J to have decided that the commercial purposes for which Mr Hope used the land were insufficiently real or important to justify describing his activities as a business and that in so deciding Rath J had not fallen into any error of law (at 477).

Samuels JA emphasised that his approach did not require him to say whether he agreed with Rath J's finding, but that since that finding was one of fact and since on the evidence it was a finding reasonably open, although a different finding might also have been arrived at, there was no error of law involved in what Rath J had done.

In short, both Glass and Samuels JJA held that whether Mr Hope's activities on the land fell within the description of business or industry in s118(1) was a question of fact, and that on the evidence before him it was open to him to find, as a matter of fact, that Mr Hope's activities were not sufficiently "important",

"real", "genuine", "weighty", or "significant" to be called a business.

In the High Court, Mason J wrote the fullest reasons. Gibbs, Stephen, Murphy and Aickin JJ all agreed with him.

Mason J said that "business" in s118(1) "has the ordinary or popular meaning which it would be given in the expression 'carrying on the business of grazing'. It denotes grazing activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive bases." (at 144 CLR 8)

He then said that on the facts of the case, no other conclusion than that Mr Hope's activities amounted to a business was reasonably open (at 9). He indicated the elements which led him to that conclusion. The first two were that: "Transactions were entered into on a continuous and repetitive basis for the purPose of making a profit. The activity had a permanent character..." (at 9)

Mason J dealt with the reliance which had been placed on what Walsh J said in Thomas by both Rath J and the majority in the Court of Appeal, as follows:

"Tt seems that the emphasis given to the need for activities which were 'significant', 'real', 'important, 'genuine' or 'weighty' had its origin in what was said in Thomas by Walsh J: (1972) 46 ALJR 401: 'But a man may carry on a business although he does so in a small way. In my opinion the appellant's activities in growing the trees ought not to be found to have been carried on merely for recreation or as a hobby. I leave out of account the pine trees, the growing of which did not have, I think, a significant commercial purpose or character.' The issue in Thomas was whether the taxpayer was carrying on the business of growing avocado, macadamia nut and pine trees. Walsh J in the passage quoted did no more than say that he left the pine trees out of account because the growing of them did not have a commercial purpose or character which was significant for the purpose of characterising the taxpayer's other activities as a business. His Honour's remarks did not go to the magnitude or size of the activities necessary to constitute a business, nor indeed to the genuineness or bona fide character of those activities. His Honour had expressly conceded that a man may carry on a business though in a small way." (at 9-10)

Finally, he expressed the opinion that Rath J had arrived at a conclusion which could not reasonably be supported in view of his (Mason J's) understanding of the meaning of "business" in the statutory definition, "for on the facts as found the appellant's activities manifested the essential characteristics required of a business" (at 10).

But, as he next pointed out, although his conclusion meant that Mr Hope succeeded on the point considered in the High Court, it did not mean that the whole case was decided in his favour. Not raised in the stated case were the questions whether, if Mr Hope's activities were a business, they were a grazing business or, if that question should be answered in Mr Hope's favour, whether the land was wholly or mainly used for carrying on that grazing business. Those questions would have to be remitted to the Land and Valuation Court to be determined at first instance.

In their joint reasons, Gibbs and Stephen JJ, as well as agreeing with Mason J, added the comment that a decision by Rath J that Mr Hope's use of the land "did not have 'a significant commercial purpose or character"', was not the same thing as a decision that Mr Hope's use of the land "was not significant enough to bring it within the scope of the common or general meaning of the word "'business'" (at 3).

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In accordance with the High Court's decision, the remaining questions in the case were subsequently dealt with at first instance. By the time they were heard, the Land and Valuation Court had been abolished and replaced by the Land and Environment Court. In that court the remaining questions were decided by Perrignon J: (1981) 43 LGRA 60. Perrignon J decided that the business which the High Court had held was being carried on by Mr Hope was the business of grazing. He then considered the remaining question, which was whether the land was wholly or mainly used for carrying on the grazing business. The date as at which this question had to be answered was | January 1978.

In brief, the evidence before Perrignon J was that at that date the fifteen and a half acres of the land consisted of twelve and a half acres wholly used for the grazing of horses in the business of grazing and the remaining area was used as a residence, a machinery maintenance workshop and garage area, for the grazing of some cattle and goats for domestic purposes and for the storage of timber. The area used for domestic animals and timber had been subdivided into thirteen lots for sale for residential purposes.

For the Council it was contended that the use of the twelve and a half acres for the grazing business was merely subsidiary to the uses of the three acres so that the parcel of fifteen and a half acres was not wholly or mainly used for the carrying on of the business.

Perrignon J said that the objective facts relating to the use of the land were important and might in many cases be decisive of the issue.

Notwithstanding his taking into account that the broad purpose of the lower rate provided for in s118 was the relief of persons really engaged in rural pursuits, he concluded that on the whole of the evidence Mr Hope had succeeded in showing the subject land was mainly used for the business of grazing. He upheld the appeal and ordered that the general rate applicable to the land for the rating year 1978 was to be the Council's rural land rate.

Rath J's judgment dismissing Mr Hope's appeal about the 1978 rate had been given on 20 September 1978. Perrignon J's judgment upholding the same appeal was given on 27 February 1981. In the interval between the two decisions the Council had issued rate notices in respect of the land for the rating years 1979, 1980 and 1981 on the basis the land was not rural land, thus charging the higher general rate. Mr Hope appealed to the Land and Environment Court in respect of each of these rating decisions. The appeals came before Perrignon J. In dealing with them, and without any express reference to his reasons for decision concerning the 1978 year, he said that he thought the proper approach to the question whether the land was wholly or mainly used for the purposes of Mr Hope's grazing business was to consider all the evidence relating to the uses to which the land was put, and if it appeared the land was mainly used for carrying on the grazing business, then it was "rural land". The test which he used and the result of applying it to the facts in the case were stated by him as follows: "If it can be said, weighing the uses which would bring the land within the definition of 'rural land' against the other uses to which the land is put, that the former uses constitute the main or the major use of the land, or, what I think is the same thing, that the land is mainly devoted to such uses, it is 'rural land'...Since I am not satisfied that the land was mainly used for the business of grazing the appeal fails." (at 84)

He then dismissed the three appeals: (1984) 52 LGRA 79.

Mr Hope then brought three further appeals to this court, which by majority (Mahoney JA and me, McHugh JA dissenting) dismissed them: (Hope v Bathurst City Council (1986) 7 NSWLR 669. Mahoney JA wrote the principal reasons. The question considered by the court, which was one of those not dealt with by the High Court's decision in regard to the 1978 rating year, was whether the phrase "wholly or mainly" in the definition of "rural" land referred to the physical use of the land or to the end to be achieved by the use. Mahoney JA took it that the rationale of the preferential rating treatment of rural land lay in its use for primary production activities and that that rationale would hardly apply, if, though the whole of the land was used for primary production, the purpose of that use was a minor one in the whole context of the use of the land (at 673). In his view "wholly or mainly" was not limited to actual usage but extended to the kinds of problems involved in multiple use. He had earlier pointed out (at 673) that land used for primary production activities is frequently used for several purposes along with grazing purposes, such other purposes being residential or business purposes of various kinds.

Mahoney JA's conclusion was that the construction of the definition acted on by Perrignon J accorded with his own, or if there was any difference it was not of significance (at 674). Thus, Perrignon J had made no error of law.

McHugh JA accepted the meaning of the definition advanced by Mr Hope, that land was "wholly or mainly used" when the whole or main part of the land was used for one or more of the relevant purposes (at 677). On this basis, McHugh JA would have allowed Mr Hope's appeals.

I agreed with Mahoney JA because I thought that the construction he favoured fitted somewhat better with the purposes at which the statute was directed, those purposes being deducible from the statute itself, than did the construction contended for by Mr Hope (at 675).

From this court's dismissal of his appeals Mr Hope sought from the High Court special leave to appeal. His applications were dismissed, thus bringing to an end the litigation concerning the rating years 1979, 1980 and 1981.

Before this point was reached, the Council had again served rate notices upon Mr Hope on the basis that his land was not rural land. This happened at least in the rating years 1982 and 1983. Mr Hope appealed against these rating decisions of the Council. The appeals came before Cripps J in 1991. He delivered judgment on 18 March 1991.

Cripps J found that Mr Hope was carrying on the business of grazing as that expression relevantly had to be understood. He then turned to consider whether on the evidence Mr Hope had established that he was wholly or mainly using his land for the carrying on of the business of grazing. He noted the relevant facts as follows:

"Mr Hope is using his land for residential purposes and for the purpose of an office for his consulting practice. That is, he is using his land as a place to live and the place from which he earns the greater part of his income. In 1982 and 1983 he earned $24,494 and $17,335 respectively as a consultant. What is the significance of the primary production use among the other and plainly important

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uses to which Mr Hope puts the land? I accept that Mr Hope enjoys having cattle and horses on his property. I also accept, as he himself claims, that it is of some significance to him that he is able to claim land tax exemption and he hopes to claim a rural rating benefit. I think the PARCEL of land was mainly used as a residence for Mr Hope and his wife and for a commercial office for Mr Hope's consulting business. It was also used for the purpose of the business of grazing but it was not MAINLY USED for that purpose." (Italics in the original)

He then said he adopted the test applied by Perrignon J (in 52 LGRA 79 at 84, see at 9 above) and upheld in the Court of Appeal. On this basis he said that Mr Hope had failed to satisfy him that the land was mainly used for the business of grazing, and dismissed his appeals.

His principal contention was that this court's decision in regard to the rating years 1979, 1980 and 1981 (7 NSWLR 669) (the 1986 decision) was wrongly decided. He asked the court to hold that its earlier decision was wrong. He submitted that McHugh JA's reasons in dissent in the earlier decision should be adopted. He relied on two matters as justifying the court in reconsidering its earlier decision. One of these was the enactment in 1987 of the Interpretation Act and the other the repeal in 1993 of the Local Government Act 1919 and its replacement by the Local Government Act 1993.

The point of the reliance upon the Interpretation Act 1987 was that it introduced, in s33 and s34, statutory guides to construction of Acts and statutory tules which, he contended, had not previously been available to judges. He principally relied, I think, on s34.

As for s33 it said that courts should prefer a purposive construction, which was a guide to interpretation that courts had been well accustomed to use before the introduction of the section.

S34 is quite a lengthy section. Stated very briefly, it did two things. It said that in the interpretation of a provision of an Act or statutory rule any material capable of assisting in the ascertainment of the meaning of the provision may be considered, to confirm the meaning of the provision or to determine the meaning of the provision if it were ambiguous or obscure or if the ordinary meaning led to a result manifestly absurd or unreasonable. The other thing it did was to list a number of categories of material that may be considered in the interpretation of a provision of an Act or a statutory rule, without any restriction. The section ended with an admonition that in determining whether to consider any of these extrinsic materials regard must be had to the need to avoid prolonging legal proceedings without compensating advantage.

I do not think Mr Hope's s34 argument is of any weight in considering whether this court should review its 1986 decision. For one thing it is a debatable matter whether s34 really extended the powers of courts to consider extrinsic material in the interpretation of Acts. Certainly there are many authorities which would support the view that it did; however, there are other authorities which suggest that the common law over the centuries recognised a more flexible approach to

the use of extrinsic materials, not far distant from that now set out in s34. The debate between the two opposing points of view had stirred judges into vigorous and sometimes over dogmatic statement of "rules" of construction, generation after generation.

But beyond noting that Mr Hope's assumption that some kind of revolution was worked by the introduction of s34 is open to question, I do not think I need further examine the accuracy or otherwise of his assumption. This is because, even if it should be correct, I do not think it would provide a reason for re-opening this court's 1986 decision. Once the High Court had refused special leave to appeal from that decision, this court's majority view settled the question of construction. That question had been a contentious one and needed to be settled. I think it is reasonable to assume that once it had been settled Local Government authorities acted on it. It seems to me to be clearly in the public interest that it should not be re-opened. This approach is consistent also with the court's long standing practice of refusing to use its power to reconsider questions it has decided, unless in special circumstances.

Mr Hope's submissions based on the coming into operation of the Local Government Act 1993 seem to me to be subject to the same considerations.

In my opinion there are no special circumstances in the present case which make it sensible for the court to reconsider its 1986 decision. On the basis of the court's 1986 decision, it seems to me to be undeniable that Cripps J decided the appeals before him by reference to the appropriate construction of the definition of "rural land".

Mr Hope submitted that even on this basis Cripps J was in error in reaching the conclusion he did. However, in appeals of this kind from the Land and Environment Court it is necessary for an appellant to show that that court has made an error of law. The position in this respect is the same as that described by Reynolds, Glass and Samuels JJA in the court's decision reported at (1979) 2 NSWLR 471 (see at 4 above). Thus for Mr Hope to succeed on this submission he must contend that there was no material before Cripps J upon which he could find, applying the right legal test, that the land was not "rural land". In my opinion there was appropriate factual material before Cripps J sufficient to preclude any submission that it was unreasonable for him to reach the conclusion that he did.

In my opinion Mr Hope's appeals in regard to the rating years 1982 and 1983 must be dismissed.

In stating my reasons for coming to this conclusion I have not referred specifically to the very detailed written submissions which Mr Hope put before the court in support of his appeals. I acknowledge the immense pains taken by Mr Hope in preparing these submissions and I have read them with interest. Even on the footing that the question of the proper construction of "rural land" were now being dealt with for the first time, they do not persuade me to a different conclusion from that reached by the court in the 1986 decision. It is unnecessary for me to explain my opinion any further however, because the principal question Mr Hope sought to argue in regard to the 1982 and 1983 rating year decisions

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was one decided against him by this court's 1986 decision and in view of my opinion that this court should not now reconsider that decision it is pointless to consider Mr Hope's arguments directed to persuading this court that it was wrong.

I come now to Mr Hope's appeals against the dismissals by Bignold J of appeals brought by Mr Hope in respect of decisions by the Council adverse to him in regard to the rating years 1989, 1990, 1991, 1992 and 1993.

In regard to the 1982 and 1983 rating years s118(1) of the Local Government Act 1919 defined "rural land" as meaning:

"(a) a parcel of rateable land which is valued as one assessment and exceeds 8,000 square metres in area, and which is wholly or mainly used for the time being by the occupier for carrying on one or more of the businesses or industries of grazing, dairying, pig farming, poultry farming, viticulture, orcharding, bee keeping, horticulture, vegetable growing, the growing of crops of any kind or forestry; or

(b) an oyster farm within the meaning of the Fisheries and Oyster Farms Act 1935."

On 15 December 1988 by an amending Act (Act No 91 of 1988) the definition of "rural land" was removed from s118 and the following two definitions inserted instead:

"°farming' means the business or industry of grazing, dairying, pig-farming, poultry farming, viticulture, orcharding, bee-keeping, horticulture, vegetable growing, the growing of crops of any kind, forestry, or oyster or fish farming within the meaning of the Fisheries and Oyster Farms Act 1935, or any combination of those businesses or industries;

"farm land' means a parcel of rateable land which is valued as one assessment and the dominant use of which:

(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;"

The history I have earlier set out seems to me to show quite clearly what was intended by the removal of the definition of "rural land" and its replacement by the definitions of "farming" and "farm land". The High Court had made it plain in its 1980 decision, 144 CLR 1, that it did not necessarily follow from the decision that an activity did not have a significant commercial purpose or character that it was not a business within the scope of the common or general meaning of the word. That is, the High Court left open the possibility that an activity engaged in for the purpose of profit on a continuous or repetitive basis (to use Mason J's words) would be a business within the ordinary or popular meaning of the word even if the business were carried on in a small way and irrespective of whether it had a significant commercial purpose or character.

The new definition of "farm land" both adopted Mason J's definition of the ordinary meaning of business (in para(b)) and added (in para(a)) further requirements which such a business must have before it could be considered a farming business for the purpose of the new definitions. The additional

requirements were that it have a significant commercial purpose or character (adopting the words of Walsh J in Thomas) and also a substantial commercial purpose or character.

The view that in the new definition there was the deliberate addition of a requirement not in the old one seems to me to follow plainly enough from a consideration of the history I have earlier summarised. In Lismore City Council v Durheim (unreported 20 July 1990) Bignold J in the Land and Environment Court considered the same question. He came to the same conclusion. In the course of doing so he considered certain extrinsic materials which to my mind put the question beyond doubt (see at 11 and 12 of his decision in the present case).

In considering Mr Hope's appeals against the Council's decision that his land did not fall within the definition of "farm land", Bignold J said that the facts which I will set out in the following paragraph were either not in dispute or established by the evidence. In making his submissions to this court, Mr Hope accepted these as the relevant facts.

Mr Hope's land now consists of approximately twelve and a half acres. It is located behind a row of ten residential lots which Mr Hope subdivided and sold from his previous fifteen and a half acres in 1979. Except for improvements comprising an old farm house dwelling, a workshop and a shed the land is vacant. It is divided into three paddocks for pasture and one catching paddock. It is about two kilometres east of the business centre of Bathurst. Ninety three to ninety five per cent of the land was used by the applicant in each of the rating years for the purposes of agisting horses. This agistment reasonably fully utilised the capacity of the land for grazing purposes. Mr Hope had used the great majority of the land for the purpose of grazing horses continually since 1965, charging the owners of the stock an agistment fee, the activity having been conducted as a business yielding the following income:

1990 rate year $636 (gross) $432 (net) 1991 rate year $1,106 (gross) $825 (net) 1992 rate year $1,136 (gross) $967 (net) 1993 rate year $1,323 (gross) $1,131 (net)"

In these figures net income does not include any deduction for local government rates. The grazing use of the land reflects an agricultural use to the maximum carrying capacity of the land. Grazing of cattle and horses is the only suitable form of grazing use of the land. Mr Hope ceased to practice as a consulting engineer in 1986 and was receiving unemployment benefits from that time until 1990 when he received the old age pension. Since Mr Hope was divorced in 1985 he has lived in the farm house on the land alone. The principal reason he lives there is to manage the grazing use of the land on which he spends one to two hours per week (in addition to his general supervision and management of the property). The farm house is in poor repair and if Mr Hope chose to live elsewhere he would have to spend money in putting the house in good repair before he could use it for rental purposes.

URJ HOPE v THE BATHURST CITY COUNCIL [No 3] (Priestley JA) 13

Not explicitly mentioned by Bignold J were the additional facts, pleaded by Mr Hope in his amended points of claim, that for the rating year 1989 one heavy and one medium horse were depastured on the land for the whole of the year and one medium and one light horse for part of the year. In the same paragraph Mr Hope asserted that the depasturing of these horses on the land reasonably fully utilised the capacity of the land for grazing purposes.

One striking feature of this statement of the facts is that there was no finding, as there was in the stated case which went to the High Court (144 CLR 1) that the activity was carried on for the purpose of profit. A further finding of fact made by Bignold J was that Mr Hope had no present intention of further subdividing his land into residential lots and that developers were not interested in acquiring the land.

The critical finding of fact made by Bignold J was that Mr Hope's use of the land for agistment, notwithstanding it was the dominant use of the land, did not involve a use for the business of grazing having a significant and substantial commercial purpose or character. Bignold J's reason for this conclusion was that Mr Hope's use of the land, maximising the carrying capacity of twelve acres of pasture land by agisting a handful of horses and generating a gross annual income in the order of $1,000 was altogether too minor and small to satisfy the requirement of para(a) of the definition of "farm land" that the business should be one having a significant and substantial commercial purpose or character.

It seems to me that if Bignold J's interpretation of "farm land" was correct, then on the facts before him his conclusion was one which was well open to him, and did not involve any error of law. This seems to me to be even clearer when in addition to the financial figures for the five rate years which he set out in his reasons and which founded his observation about the gross annual income being in the order of $1,000, the net figures are looked at and there is additionally taken into account that, as Mr Hope told this court in argument, even if he were to be entitled to the lower rate on his land, there should be further deducted from the net income figure an amount of $200 to $400 per annum for rates which on his own contentions he would be bound to pay. That is, the actual commercial net profit from the grazing business in the five rating years would at best and on Mr Hope's own figures range from something in the order of $200 to $1,000 each year. In Mr Hope's circumstances these receipts are no doubt important to him, but they highlight the fact that on any ordinary approach his business is a very small one. This seems to me to make it impossible to say that Bignold J's decision, given the correctness of his interpretation of "farm land", can be said to be such an unreasonable one on the facts as to amount to an error of law.

Mr Hope's principal contention in his appeals against Bignold J's decision therefore had to be, and was, a submission that "farm land" in s118 had a different meaning from that adopted by Bignold J.

Bignold J recorded that Mr Hope's principal argument against the construction of "farm land" which Bignold J adopted was that "farm land" essentially adopted and enacted the decision of the High Court at 144 CLR 1. Such a submission would amount to saying that the definition of "farm land" was intended to put into statutory form the understanding of "business" which Mason J had stated at

144 CLR 8 and which I have set out at 6 above. Such a submission however seems to me to overlook the inclusion of para(a) in the definition of "farm land". The point Mason J was making, in my opinion, was that so long as the criteria he listed as indicative of the ordinary or popular meaning of "carrying on the business of grazing" were fulfilled, it was unnecessary to consider whether the business thus identified also had a significant commercial purpose or character. Thus, it seems to me clear, that the inclusion of para(a) in the new definition added a requirement to the definition of "farm land" and, therefore, "farming" and, therefore, the business of farming, which the High Court said was not present in the previous definition of "rural land".

I therefore think Bignold J was right in not accepting this submission of Mr Hope.

In his written submission to this court Mr Hope elaborated a further argument, based on the fact that when the definition of "farm land" was inserted in s118 in 1988, the definition of "rural land" was not done away with, but was inserted in s160C of the Act. subs2 of this section said that a rateable person in respect of a parcel of rural land zoned in particular ways might apply to the Council for relief from payment of part of the rates. Further subsections then set out the procedures to be followed in determining such an application. Another subsection provided for postponement of payment of part of the rates while the processes of the section were being carried out.

Stated very briefly, Mr Hope's argument is that s118 and s160C have to be read together and that when this is done "farm land" should not be so construed as to bring about the result that "a Farm land business has to have some quality of "significance and substantiality' over and above that required for a Rural land business" (at 3-41 of his written submissions).

It does not seem to me that the two sections should be read together in this way. In the definition of "farm land" there is no requirement of a stated minimum area as there is in the definition of "rural land". Pursuant to s118 a rate was determined in regard to "farm land". Only at that point did s160C begin to operate. The rate for the particular "farm land" having already been determined, s160C provided a method by which application to reduce that rate could be made in regard to land which being "farm land" also fell within the definition of "rural land". Mr Hope's argument points to the fact that because the definition of "rural land" is in the same form as that dealt with by the High Court in 144 CLR 1 there is no requirement in it that the grazing business carried on on the parcel exceeding 8,000 square metres in area must also be dominantly used for farming which has a significant and substantial commercial purpose or character. Therefore, he says, in effect, it cannot have been intended that the "farm land" definition have such purpose or character or, put another way, the fact that a business of grazing was being carried on on the land, no matter how small the scale of the business, necessarily meant that the land was being dominantly used for a significant and substantial commercial purpose or character within the meaning of para(a) of the definition of "farm land".

URJ HOPE v THE BATHURST CITY COUNCIL [No 3] (Meagher JA) 15

Essentially for the reasons I have already given, I do not accept this argument. In my view the words in para(a) themselves carry the idea, and additionally extrinsic materials show that they were intended to carry the idea, that for a business to qualify as "farm land" it not only had to meet the criteria stated by Mason J (see at 6 above) but also had to have a significant and substantial commercial purpose or character. There would otherwise be no point in including para(a) in the definition at all.

On this approach, there is no need for the inclusion in the definition of "rural land" in s160C of the equivalent of para(a) in the definition of "farm land"; if land has been rated as "farm land" and if the rateable person then wishes to seek a reduction of that farm land rate, that will only be possible in respect of a parcel of land exceeding 8,000 square metres in area; if the land has not been rated as "farm land" but at a higher rate then an application under s160C(2) may be made by the rateable person if the definition of "rural land" is fulfilled.

With these considerations in mind, my conclusion is that Mr Hope has shown no reason for adopting a construction of "farm land" different from that used by Bignold J and which I have earlier indicated I also think is the appropriate one.

A final argument put by Mr Hope was that even on Bignold J's construction of "farm land'', he should, as a matter of law have found on the facts that his land was "farm land". He submitted his use of it for farming had a significant and substantial commercial purpose or character. The lower rate which would be applicable if the land were treated as "farm land" and the fact that his use of it meant he paid no land tax had a beneficial financial effect so far as he was concerned which demonstrated the significant and substantial commercial purpose of the activity.

To my mind this argument equates commercial purposes with fiscal purposes. It is arguable that ultimately in a commercial sense there is no substantial distinction between such purposes so far as the conducting of a business is concerned, but whether or not that is right in commercial fact, there is no doubt that taxing statutes of various kinds do make the distinction. To my mind it is relatively clear that para(a) is making the distinction between a business purpose aimed at producing business profits which are not entirely or mainly dependent on obtaining favourable treatment under a taxing statute and those which are. As I have indicated, this may be a difficult distinction, but I think it is one made by para(a) and that Mr Hope's activities fall into the category where the undertaking of the business activity and the use of his land do not have significant and substantial purpose or character in the sense I have described but have a different principal purpose of having (inter alia) a lower than ordinary rate apply to his land.

In my opinion these appeals also should be dismissed with costs.

1. Appeals against the orders of Cripps J in the Land and Environment Court dismissed with costs; and

2. Appeals against the orders of Bignold J in the Land and Environment Court dismissed with costs.

Counsel for the Appellant: In person Instructed by: In person Counsel for the Respondent: WR Davison