Mourched v Chief Commissioner of State Revenue

Material before the Tribunal

1. The Chief Commissioner relied on: 1. Documents filed pursuant to s 58 of the Administrative Decisions Review Act 1997 (NSW) (ADR Act), (s 58 documents) (Exhibit R1); 2. Affidavit of Betty Sarkissian made 4 December 2020 and adjusted with legible replacements to annexures (Ms Sarkissian's Affidavit), (Exhibit R2); 3. "Aboriginal Cultural Heritage Assessment - April 2019", (Exhibit R3) 4. "Aboriginal Test Excavation Report", (Exhibit R4); 5. "Ground - Technologies Report", (Exhibit R5); 6. The Respondent's written submissions 7 December 2020 (RWS); 7. The Respondent's List of Authorities filed 2 February 2021; 8. The Respondent's closing submissions dated 1 April 2021 (RS); and 9. Oral submissions by Ms Graham during the hearing
2. The Applicants relied on: 1. The Application; 2. Affidavit by Mr George Mourched made 7 September 2020 (Mr Mourched's Affidavit); 3. The Applicants' submissions dated 7 September 2020; 4. The Applicants' submissions dated 19 October 2020; 5. Affidavit made by Dr Dion Accoto on 20 October 2020 (Dr Accoto's Affidavit); 6. The Applicants' submissions dated 3 March 2021, (AS). 7. The Applicants' Case Book of Authorities filed 11 March 2021; and 8. Oral submissions by Mr Johnson during the hearing.
3. When these Reasons refer to submissions by the Applicants, the references are to numbered paragraphs in AS unless stated to the contrary. When the Reasons refer to submissions by the Respondent, the references are to numbered paragraphs in RS unless stated to the contrary.

Tribunal decision may be made without a hearing

1. Section 49 of the Civil and Administrative Tribunal Act 2013 (CAT Act) requires hearings to be open to the public unless the Tribunal orders otherwise. Section 50 of the CAT Act empowers the Tribunal to make an order dispensing with a hearing if it is satisfied that the issues for determination can be adequately determined in the absence of the parties by considering documents or material lodged with the Tribunal, and if the parties have had an opportunity to make relevant submissions and those submissions have been taken into account.
2. On 9 February 2021, with the consent of the parties, the Tribunal directed that specified documents be filed in accordance with an agreed timetable and that the matter be determined by consideration of those documents and agreed documents already tendered to the Tribunal.

The role of the Tribunal

1. The Tribunal was established by the Civil and Administrative Tribunal Act 2013 (NSW) (CAT Act). The objects of the CAT Act include enabling the Tribunal to review and determine appeals against decisions made by certain persons and bodies; enabling the Tribunal to resolve the real issues in proceedings justly, quickly, cheaply and with as little formality as possible; and ensuring that the Tribunal's processes are open and transparent (ss 3(b)(ii) and (iii), 3(d) and 3(f)).
2. Section 28 of the CAT Act provides "The Tribunal has such jurisdiction and functions as may be conferred or imposed on it by or under this Act or any other legislation."

Jurisdiction of the Tribunal

1. Notwithstanding the wording of the Application, the parties agreed during the hearing, by their respective counsel, that the decision the subject of review by the Tribunal is the Assessment not the Disallowance.
2. In Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184 the Court of Appeal said at [28]: … the right of review under s 97 is given by reference to the operative decision of the Chief Commissioner and not to a ruling made on an objection. Although the existence of an objection is a necessary precondition to the power of review by the Court, and it is the taxpayer's dissatisfaction with the determination of the objection which provides standing to seek review, it is the initial decision which is the subject matter of the review.
3. Section 96 of the TA Act provides the jurisdictional power of administrative review by the Tribunal which is commensurate with the Supreme Court's jurisdictional power in s 97. I find that the decision the subject of review by the Tribunal is the Assessment not the Disallowance.
4. There is no dispute that the Tribunal is empowered to review the Assessment (ss 9 and 55 of the ADR Act and s 96 of the Taxation Administration Act 1996 (NSW) (TA Act). Section 63 of the ADR Act requires the Tribunal, in determining an application concerning an administratively reviewable decision, to decide what the correct and preferable decision is having regard to the material then before it, including any relevant factual material and any applicable written or unwritten law, and authorises the Tribunal to affirm, vary or set aside the administratively reviewable decision. If the Tribunal sets aside that decision the Tribunal is to make a decision in substitution for that decision or remit the matter for reconsideration by the administrator who made the decision.

Issues

1. The parties have described the main issue before the Tribunal somewhat differently.
2. At [11] the Applicants described the issue(s) to be determined by the Tribunal as follows: 11. What is sought by the Applicants to be determined by the Tribunal is whether the entirety of the Land identified in Lot 105 as existing under the Real Property Act 1900, is the subject of the exemption by way of extension of combined operation of the admitted exemption and sole use of that portion of the property (whether it is separately valued by the Valuer General or not) for the sole use of the Childcare Centre.
3. On the other hand, the Respondent, under the heading "Identifying the "land" the subject of the assessment" stated at [4]: 4. It is clear from the notice of assessment itself that the "land" the subject of assessment is each parcel of land as registered in the Register of Land Values as determined by the Valuer-General pursuant to the Valuation of Land Act.
4. As will be apparent from the below analysis, the issue for determination by the Tribunal is whether the decision in respect of the Assessment, namely that for the 2020 tax year (the Tax Year) the Applicants are or are not entitled to a land tax exemption, is the correct and preferable decision. In order to succeed, the Applicants must show on the balance of probability that the sole use of Parcel B at the relevant date was that it was a place where children were educated or cared for by an approved provider.

Onus

1. There is no dispute that s 100(3) of the Taxation Administration Act 1996 (NSW) (TA Act) provides that the Applicants have the onus of proving their case in a review by the Tribunal.
2. The requisite standard of proof for the Tribunal 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].
3. I observe at this point that significant differences between the submissions of the parties include: 1. the Respondent relied on specific provisions of both the LTM Act and the VOL Act. However, the Applicants referred to and rely on the LTM Act but made no reference to the VOL Act. 2. the Respondent considered the application of legislation to PID 3864500 (Parcel B) while the Applicants focus on the whole of Lot 105 DP 1041406 of which Parcel B is a part, rather than considering Parcel B as a 'stand-alone' piece (or parcel) of land.

Land Tax Management Act 1956 (NSW) (LTM Act)

1. The Applicants submitted at [3], and there is no dispute, that land tax is levied on the taxable value of all land in New South Wales owned by the Applicants at midnight on 31 December 2020, other than land which is exempt from taxation: s 7 LTM Act.
2. The tax year is each period of 12 months commencing on the first day of January: s 8 LTM Act.

Valuation of Land Act 1916 (NSW)(VOL Act)

1. Section 14A of the VOL Act, requires the Valuer-General to ascertain the land value of each parcel of land within NSW (with some exceptions which are not relevant to these proceedings) each year. Section 14A also provides: 14A Valuer-General to ascertain land values (2) The Valuer-General may at any time value any parcel of land, either on his or her own initiative or: (a) … or (b) … or (c) … (3) (Repealed) (4) The Valuer-General may separately value different parts of the same parcel of land, in which case this Act applies to each such part as if it were a separate parcel of land. (5) Any land value ascertained under this Act is to be entered in the Register of Land Values. (6) The power to ascertain a land value includes the power to reascertain that land value, and references in this Part to the ascertainment of land value are taken to include references to the reascertainment of land value
2. Section 14CC of the VOL Act provides: 14CC Register of Land Values (1) The Valuer-General is to keep a Register of Land Values in such form as the Valuer-General thinks fit. (2) The Register is to contain such of the following kinds of information in relation to land as is within the knowledge of the Valuer-General: (a) information as to the ownership of the land, (b) information as to the occupation of the land, (c) information as to the value of the land, (d) information as to the title of the land, (e) information as to the location or description of the land, (f) information as to the area of the land, (g) such other kinds of information as is permitted or required by this Act or the regulations to be entered in the Register. (3) An entry in the Register as to a land value, allowance or apportionment factor ascertained under this Part is conclusive evidence of the ascertaining of the value, allowance or factor on the date shown in the entry.
3. Unless stated to the contrary, all references in these reasons to legislative provisions are to provisions of the LTM Act.

The Applicants' case

1. At AS [6] the Applicants submitted, in relation to Lot 105: … there is a single lot recorded upon the Register maintained under the Real Property Act 1900 as to the ownership of the relevant "land", subject to the exemption provision which is dealt with below it is the relevant Lot in the Deposited Plan that is to be considered in totality.
2. At AS [7] the Applicants disregarded the approach taken by the Valuer-General when dividing Lot 105 into two portions (for portions read "parcels" of land) for the purpose of determining whether an exemption applies. The Applicants then submitted "If the exemption applies it applies to the entirety of the property and not to that portion of the undivided property separately valued by the Valuer General."
3. At [8] the exemption is claimed under s 10(1)(u) or s 10(1)(v) of the LTM Act.
4. At AS [9]: "It is submitted that it is inappropriate to categorise different portions of a single property as exempt and non-exempt as has occurred in the present instance by reference to PID: 3866335 and PID 386450 being numbers arbitrarily attributed to portions by the Valuer General."
5. As to AS [10] the Respondent accepts that there has been a physical construction of a Childcare Centre on L105 which is entitled to an exemption and this entitlement is not subject to any appeal before the Tribunal.
6. At [11] the Applicants wanted the Tribunal to determine whether the whole of Lot 105 "as existing under the Real Property Act 1900" (NSW) is exempt "by way of extension of combined operation of the admitted exemption and sole use of that portion of the property (whether it is separately valued by the Valuer General or not) for the sole use of the Childcare Centre".
7. At [12] the Applicants submitted "…it is the use …" (of land, the address of which is 297 Bringelly Rd, Leppington, formerly part of Lot 100 DP 1051963 before registration of DP 1204146) "as at the relevant date [when] land tax is assessed", that is to be considered. The Applicants referred to a Development Application, part of a determination of which, was annexed to Mr Mourched's Affidavit. At [12(c)] the Applicants regard it as necessary to recognise certain matters including effluent from wastewater, a wastewater treatment facility, the maintenance of a fence to ensure children in the childcare centre cannot access certain septic tanks; a Lease Agreement in respect of premises known as "Annabelle Early Learning Centre" for a 6 year term to 7 December 2020, stated at [12(c)(iv)] to be "over the entirety of the property at 297 Bringelly Road Leppington" (the Property) being annexure J to Mr Mourched's Affidavit;
8. At [12(c)(v)] the relevant approval under CECS National Law and Provider Approval "…extends to the entirety of the property …"
9. At [12(c)(vi)] the Applicants made early "assertions" by way of letters from each of Brown Wright Stein dated 8 October 2019 and Dr Accoto dated 28 November 2019 to the effect that the Childcare Centre could not operate without the septic system, and other assertions: respectively annexures "H" and "I" to Mr Mourched's Affidavit. Amongst the additional assertions, Dr Accoto's letter stated he was instructed that after a "compulsory acquisition" of part of the Property, the remainder had been split into two "lots" and "the rear of the Property currently contains part of the septic system which is solely used for the operation of the childcare centre. The rear of the Property is not being used for any other purpose." Both letters acknowledged that the owners of the Property (the Applicants) had submitted a development application in relation to Parcel B (Brown Wright Stein) / "the rear of the Property" (Dr Accoto).
10. The Applicants submitted at [13]: None of the factual matters, described in paragraph 12 above, appear to be in dispute.
11. At AS [15]: When it is considered in the circumstances of appropriate approvals that the Childcare Centre - admitted being entitled to an exemption in respect of part of the Land, cannot operate without the relevant wastewater treatment facility and that that wastewater treatment facility is required to be fenced off from the Child Care Centre, it is submitted that in terms of the combined approvals for use extends to the entirety of the property so that the entirety of the proper-ty is being used.
12. At AS [16] 16. The essential question is the "sole use" of the property for the provision of relevant services as approved by the Camden Council. The fact that part of the property is not used at all other than for the use of the sewerage treatment facility … but is the subject of the Lease referred to below in its entirety with approval from the Camden Council is the relevant issue.
13. At AS [17] the Applicants linked by way of comparison [cf] the terms of the Lease and approved and relevant physical use of the premises, that is the Childcare Centre and "any extended "intangible use" "with the use of premises for primary production" in a group of judicial and tribunal cases.
14. At AS [18] use of "the premises" is as a childcare centre at the commencement of each rating year of 2020 and is "therefore the subject of an entitlement to an exemption".

The Respondent's case

1. As to AS [6] the Respondent submitted at [3(c)]: The applicants provide no authority for the proposition in paragraph 6 of their submission that "land" is defined by reference to the Lot in the deposited plan. As set out in the respondent's written outline of submissions and below, the respondent submits that for the purposes of the Land Tax Management Act and in particular the interpretation of s. IO(1)(u) of the LTMA, the "land" subject to the exemption is by reference to the parcel of land whose value is assessed and recorded in the Register of Land Values pursuant to s. 14CC of the Valuation of Land Act.
2. As to AS [7] the Respondent submitted at [3(d)] that the Applicants' submission is made without support from any legislation or judicial or tribunal authority. The Applicants' submission is inconsistent with how land tax is assessed and calculated, namely by reference to parcels of land rather than reference to "Lots" and refers to paragraphs [20] to [28] of RWS.
3. At RS [3(e)] in respect of AS [8] the Respondent submitted the exemption test requires sole use of the land for the provision of relevant services and only s 10(1)(u) would apply to the centre operating from Parcel A and also submitted: … In any event, the test remains the same under s. IO(I)(u) and s. IO(1)(v) and that is whether the land is "used solely for the provision of an [approved education and care service]... only if ... the land is the place where children are educated or cared for by the service".
4. At RS [3(f)] and RWS [29] in respect of AS [9] the Respondent submitted the attribution of parcel identifiers was not arbitrary and related to the valuation of land based on its use pursuant to s 29 of the VOL Act and reference to the registered lease.
5. At [8] to [11] the Respondent submitted, in summary, that the Register, created in accordance with the Real Property Act 1900 (NSW): "… and folios created in the Register merely register interests in real property and do not govern the value of real property. l l Similarly, the Register of Land Values pursuant to s. 14CC of the Valuation of Land Act sets out the value of real property. 12. It is by reference to the value of "parcels" of land as indicated in the Register of Land Values that land tax is assessed ...
6. At [13] the Respondent submitted: 13. The applicants have not provided any basis in the construction of [particular statutory provisions relied on by the Respondent] … nor in any authority that supports their proposition that when considering whether an exemption applies to land pursuant to s. 10(1)(u) of the LTMA the Chief Commissioner is to determine such exemptions by reference to the use of a Lot as a whole. 14. That is because there is no such authority and such a proposition is inconsistent with the operation of the provisions of the LTMA which refer to values of parcels of land by reference to the parcels identified in the Register of Land Values.
7. Contrary to the Applicants submission at AS [13], the Respondent at RS [16] to [20] challenges several sub-paragraphs of AS [12], in particular the extent, if any, of evidence to support the submissions in AS concerning the actual use of Parcel B and the Applicants' implication that the street address of 297 Bringelly Rd, Leppington applies to the whole of Lot 105 including Parcel B. The Respondent notes that 'the premises' the subject of the relevant lease are identified as "the premises known as Annabelle Early Learning Centre" and the documents relating to the childcare centre lease and provider approval do not evidence that the whole of the Lot is used by the childcare service [at any particular date or for any identified period]. In summary, assertions are not evidence.
8. At RS [22] to [25] and [27] the Respondent submits that Exhibits R3, R4 and R5 are evidence that the Applicants have carried out "significant preliminary steps in commercial land development" including test trenches, boreholes and "proposed further excavation works" which contradict AS [16] which asserted "… part of the property [by implication, Parcel B] is not used at all other than for the use of the sewerage treatment facility …".
9. I accept that Exhibits R3, R4 and R5 are evidence that for a period prior to April, the date of Exhibit R4, exploratory trenches and geotechnical boreholes were dug in parts of Parcel B. Test excavating apparently occurred for a few days in January 2019 and further work was proposed to be carried out in February 2019. However, there is no evidence as to any such work not continuing at any time in the following 10 months to 31 December 2019. At page 48 in Exhibit R4, as part of "6.3 Testing Methodology", there is a reference to "Test excavations units will be backfilled as soon as practicable". There is no evidence as to the continuing existence of excavations on Parcel B at or near to 31 December 2019.
10. I observe that the submission by the Applicants as to the "sole use" of the entirety of Lot 105 for the Childcare Centre at AS [11] does not sit comfortably with the excavation of multiple parts of Parcel B in preparation for a development application for a commercial car park, even though use as a car park may not have commenced at 31 December 2019. There is no evidence as to how much, if any, of the excavations in Parcel B were still in existence on 31 December 2019 merely a blanket submission that the only use of Parcel B had been for the purpose of the Childcare Centre.
11. In Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2011] NSWCA 366, Allsop P at [43] approved the analysis of Gzell J at first instance in relation to the evaluating task of comparing competing uses of land. In this regard, both Campbell JA and Whealy JA agreed with the orders proposed by Allsop P, and with his reasons. In that matter the land owner claimed the dominant purpose for use of the land was for primary production in comparison to use for commercial land development.
12. There is no doubt that the extent of the commercial land development in Leda Manorstead was far greater than the excavations in Parcel B. However, the test in Leda Manorstead was to ascertain the dominant purpose of use of the land. In these proceedings, the obligation on the Applicants is to prove on the balance of probability that the sole purpose of their use of Parcel B at the relevant date (or for the relevant period), as the case may be, was as "the place" where children are educated or cared for.

The submissions

1. I understand that references to "the Lot" in RS are to Lot 105 of DP 12041416 and that the Applicants intended that a reference to "297 Bringelly Rd, Leppington" encompassed the whole of Lot 105. However, the Service Approval of land (with a street address of 297 Bringelly Rd, Leppington) by a delegate of the Secretary, Department of Education, issued 4 October 2018 is a conditional approval to provide education and care to children at a location. There seems to me to be a clear distinction between a statutory grant permitting a particular activity to take place at a particular location and evidence that the activity is actually taking place as the sole use of that location at any particular later date.
2. As to Dr Accoto's Affidavit, it seems to me that Dr Accoto is giving evidence at most that the Approval he referred to was simply an approval. This is not evidence that any particular piece of land was solely being used for any particular use as at 31 December 2019 so as to provide evidentiary support for the Applicants' submissions at AS [18] and [20].
3. As to AS [6] and RS [3(c)] I accept the Respondent's submission that the Applicants provided no authority that the land, the subject of the relevant land tax dispute (the disputed land) is defined by reference to Lot 105 other than that the disputed land is a parcel of land which forms part of Lot 105. This is clear from the diagram appearing near the foot of the first page of the letter dated 9 October 2019 from Brown Wright Stein, then solicitors for the Applicants, to the Respondent, a copy of which is annexure H to Mr Mourched's Affidavit sworn 7 September 2020. The disputed land is referred to in the diagram and in these reasons as "Parcel B".
4. On several occasions in their written submissions, including at AS [6] and [7], the Applicants submitted it is the whole of Lot 105 which is to be considered for the purpose of determining whether a relevant exemption from land tax arises. The Applicants have provided no basis whether legislative or by authority for this submission. The submission is contrary to the VOL Act and is rejected.
5. At RS [3(c)] the Respondent submitted that the land (forming part of Lot 105) which is the subject of a land tax exemption (referred to in the Brown Wright Stein letter as Parcel A) is described by reference to the parcel of land "whose value is assessed and recorded in the Register of Land Values pursuant to s. 14CC of the Valuation of Land Act."
6. At RS [3(e)] in response to AS [8] I accept the Respondent's submission to the effect that the exemption requires sole use of Parcel B for the provision of relevant services. I also observe that the express wording of s 10(1) includes, at both s 10(1)(u) and 10(1)(v) "land that is used solely for the provision of an approved education and care service" and emphasises at each of s 10(1)(u)(ii) and s 10(1)(v)(iii) "but only if … the land is the place where children are educated or cared for by the service". The Applicants' multiple submissions to the contrary are rejected.
7. In respect of AS [9], RS [3(f)] and RWS [29] I find that: 1. it is irrelevant to the substantive issues in these proceedings whether a particular PID number has been used for a particular parcel of land providing that (subject to the VOL Act) each parcel has a separate identifying number; 2. Part 3 "Notices and objections" of the VOL Act provides at s 29 for objections by various categories of persons, including the owners of land, to be made to the Valuer-General in respect of any relevant land valuation. There is no evidence before the Tribunal that the Applicants objected to the valuation; and 3. The Applicants' submission "... that it is inappropriate to categorise different portions of a single property as exempt and non-exempt ..." made without the support of any legislation or authority, contradicts s 28A of the VOL Act "Land of which part only is ratable or taxable.
8. The submissions at AS [9] are rejected.
9. As to AS [12(c)(v)], whether or not the approval extends to the whole of Lot 105 is a moot point. The issue before the Tribunal is what Parcel B was actually being used for as at a certain date. Merely having evidence of an approval does not automatically mean that the approval was being utilized and the utilization was the only use being made of the subject property at a future date.
10. The location of the "education and care service" is stated to be 297 Bringelly Rd, Leppington. However, the legislative requirement was that the sole use of the property the subject of the assessment, namely Parcel B, was that that piece of land was used as the place where children were educated or cared for and for no other purpose. There is no dispute that a condition of approval was that a fence be erected to keep the children off the land comprising Parcel B. The AS [12(c)(v)] submission is rejected.
11. The Applicants' submission at AS [15] is once again an example of an approval which may or may not relate to Parcel B. However, it is clear that no approval, even if in relation to Parcel B, is evidence of actual use of Parcel B for a sole approved purpose at a particular date.
12. As to AS [18] the mere repetition in submissions that something was "used" is not evidence of what actually occurred on Parcel B at any particular date. The submission is without substance and is rejected.
13. As to AS [19] [20] and [21], these submissions are not supported by evidence, legislation or authority so as to satisfy the onus of proof which lies on the Applicants.
14. In terms of the relevant date on which the approved use is to occur I observe that in Leda Manorstead v Chief Commissioner of State Revenue [2010] NSWSC 867, Gzell J said at [3]: … inquiry is not limited to the use to which land is put on the relevant date. It extends to a consideration of its use during a reasonable period preceding and following the relevant date (Longford Investments Pty Ltd v Commissioner of Land Tax (NSW) (1978) 8 ATR 656 at 660-661). In my view, six months before and after the relevant date is a reasonable period for inquiry in this case. It allows for consideration of financial records pertaining to the uses to which the land was put.
15. The Applicants have not provided evidence as to what period if any, around the date of 31 December 2020, would be a reasonable period for inquiry in relation to a childcare centre. Once again, they have not satisfied their onus.

Findings and decision

1. Having regard to my above findings, I am not satisfied on the balance of probability that the land which comprises Parcel B in Lot 105 at 31 December 2019, or on any other date, was solely used as the place where children were educated or cared for.
2. Accordingly, the correct and preferable decision of the Tribunal is that the decision of the Chief Commissioner under review is affirmed.

Orders and directions 1. The decision under review is affirmed.

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: 16 June 2022