Royal Sydney Golf Club v Federal Commissioner of Taxation [1955] HCA 13

Royal Sydney Golf Club v Federal Commissioner of Taxation [1955] HCA 13 - HCA 1955 case summary — Zoe

[46]

If, on a resumption of land upon which later there has been a restriction placed, the use to which it can be put and the restrictions on that use are to be taken into consideration then it is clear that compensation would be reduced, having regard to the restrictions. If in ascertaining the unimproved value of land under the Land Tax Assessment Act 1910-1950 the same principles are applied, then similarly those restrictions must be taken into account. Toohey's Ltd. v. Valuer-General (2) is of significance because it deals with a section in almost identical terms as the section now under consideration. If the respondent relies upon the definition section, then Toohey's Ltd. v. Valuer-General (3) is a case in point and is one which favours the appellant and not the respondent. There is nothing in the Act to support the contention that it is the unrestricted fee simple which has to be valued: see Mazwell on Interpretation of Statutes, 7th ed. (1929), p. 246. The basis upon which the New Zealand cases depended has been overthrown by MacDermott v. Corrie (4); affirmed Corrie v. MacDermott (5), where it was held that one had not to draw a distinction between the valuation of land and the valuation of an interest in land. The restrictions imposed by the planning scheme must be taken into consideration when valuing the fee simple of the land under the Land Tax Assessment Act 1910-1950, All the subject land, being coloured dark green under the planning scheme, is reserved by that planning scheme for parks and recreation. Although " vacant land " it cannot be used for purposes of subdivision. If it be " built- up land" within the meaning of the planning scheme it can be used only, in the absence of consent otherwise, as a golf course as at present. All the appellant's land not subject to taxation was dealt with in Federal Commissioner of Taxation v. Royal Sydney Golf Club (6). The land the subject of this appeal is either wholly "vacant land ", or is partly "' vacant land" and partly " built-up land". The mere fact that there is a building upon an area of land, whether the area be small or large, and which building is not included in the definition of "vacant land" cannot have the effect of requiring that area of land to be regarded as " built-up (4) (1913) 17 C.L.R. 223.

[79]

The exact purpose for which the land so coloured is reserved differs if it is vacant land within the definition of that expression or built-up land. The expression " built-up land " is defined by cl. 8 of the scheme to mean all land other than vacant land. " Vacant land " is defined by the clause to mean all land upon which immed- iately before the appointed day, that is to say 27th June 1951, there are no buildings or no buildings but fences, green-houses, conservatories, garages, summer-houses, private boat-houses, fuel sheds, tool houses, cycle sheds, aviaries, milking bails, hay-sheds, stables, fowl-houses, pig sties, barns or the like. If the land is vacant within the meaning of this definition then it is reserved for the purpose of parks and recreation areas: cl. 10. If land within an area coloured dark green on the scheme map is built-up land it cannot, without the consent of the responsible authority, be used for any purpose other than the purpose for which the land was used immediately before the appointed day: cl. 14. Whether the land is vacant land or built-up, if the result of the scheme is that the erection of any building or the carrying out of any work of a permanent character or the making of any permanent excavation is prohibited or in the case of any land reserved on which the responsible authority has refused to approve of the erection of a building or the carrying out of any work of a permanent character or the making of any permanent excavation, the owner by notice in writing may require the responsible authority to acquire such land: cl. 17. Upon vacant land within the area coloured dark green no person may erect a building or carry out work of a per- manent character or make any permanent excavation other than a building or work or excavation required for or incidental for the purpose for which the land is reserved ; and no person may spoil or waste such land so as to destroy or impair its use for the purpose for which it is reserved : cl. 11 (1). There is a qualification enabling the responsible authority to approve of the erection of buildings and the carrying on of works or excavation of land if the reason for which it is reserved cannot be carried into effect immediately after the appointed day, but the approval may be made subject

[87]

It is convenient to begin by inquiring whether it is consistent with the true policy and meaning of the Land Tax Assessment Act. Section 10 of that statute provided that, subject to the provisions of the Act, land tax should be levied and paid upon the unimproved value of all lands owned by taxpayers and not exempt from taxation. The word " owned " possessed a meaning corresponding with that of "owner" under the definition section (s. 3) and "owner " is defined to include every person who jointly or severally, whether at law or in equity, is entitled to the land for any estate of freehold in possession, or is entitled to receive or is in receipt of, or if the land were let to a tenant would be entitled to receive, the rents and profits thereof, whether as beneficial owner, trustee, mortgagee in possession, or otherwise. The expression included also every person who, by virtue of the Act, is deemed to be an owner. But that is not important. By s. 25 the owner of any freehold estate less than the fee simple, with an immaterial exception, was to be deemed to be the owner of the fee simple to the exclusion of any person entitled in remainder. Section 31 provided that there should be no deduction from the unimproved value of land in respect of any mortgage or unpaid purchase money and the mortgagor should be assessed and liable for land tax as if he were the owner of the unencumbered estate. Section 33 provided that a person in whom land is-vested as a trustee should be assessed and liable as if he were beneficially entitled to the land. There were provisions which related to equitable owners and vendors and purchasers and to joint owners, but the sections which have been mentioned suffice to show that the general policy of the Act was to impose the tax on the owner of the first estate of freehold in possession and to make him liable independently of the rights of any rever- sioner, mortgagee or holder of security in respect of the unimproved value of the land. By s. 3 "unimproved value" is defined in relation to improved land to mean the capital sum which the fee simple of the land might be expected to realize if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming at the time as at which the value is required to be ascertained for the purposes of the Act, the improvements did not exist. There is a long definition of "improvements " which it is unnecessary to consider. '" Unimproved value" in relation to unimproved land is defined to mean the capital sum which the fee simple of the land might be expected to realize if offered for sale on such reasonable terms and conditions as a bona fide seller would require.

[88]

It seems clear enough that the fee simple here means an unen- cumbered fee simple. Encumbrances upon land or estates in reversion appear to have been regarded as giving to reversioners or encumbrancers beneficial interests to be enjoyed by them. But the owner of the first estate of freehold was selected as the taxpayer who was to represent all persons beneficially entitled to the land. The value upon which he was to be taxed was the unimproved value of the fee simple, that is to say the capital sum which the fee simple might be expected to realize. It seems evident that the fee simple mentioned must be taken as free from encum- brances which, if they impaired the value of his estate, nevertheless operated to confer upon some other person or persons an estate or interest in the land. Were it otherwise the taxable value of the land would be diminished but the correlative estate or interest: would not come into tax, unless by some chance it were an interest falling under some specific provision imposing liability. When the definitions of " unimproved value " in s. 3 speak of " the fee simple " they cannot mean, notwithstanding the definite article, that estate in fee simple which has been granted. For under s. 26 the hypothesis is that there has not been a Crown grant. In the Act as it stood before the enactment of the Land Tax Assessment Act 1914, s. 27 applied to leases from the Crown where there was no fee simple: yet s. 27 (4) (b) in conjunction with the definitions of "unimproved value " required that a fee simple should be assumed. The expression " the fee simple of the land" naturally means the fee simple as the highest estate unencumbered and subject to no conditions. Doubtless estates in fee simple may be granted by the Crown subject to conditions or reservations which operate only in the public interest. The corresponding advantages which ensue may be enjoyed only as of public right: they are not an interest in land enjoyed by a specific person or persons. But the Act does not draw any distinction based upon this possibility. The general policy was reflected in a general rule. The interpretation of the Act which seems best to accord with the policy appearing from its provisions and also to flow from its language is that in assessing the unimproved value an estate in fee simple must be taken as the hypothesis unencumbered and subject to no condition restricting the use or enjoyment of the land. Stephen v. Federal Commissioner of Land Tax (1) is not an authority standing in the way of this conclusion. For the question touching the point (question 3) was answered as the result of an equal division of opinion and that creates no precedent for the Court pronouncing

[97]

This answer makes it necessary to consider the second question, which is subsidiary and consequential. It concerns the application of the scheme to so much of the land as is used as a golf course or courses or the use of which is not immediately connected with the buildings. The question in effect, although not in form, is whether so much of the land as excludes the buildings, and what may be described as the curtilage of the buildings, is vacant land. On the side of the commissioner it is said that the whole area is owned, occupied and used as a unit, that the buildings serve a necessary part in the use of the land considered as a whole, and that it is therefore not land of which it can be said that immediately before the appointed day there were no buildings upon it or no buildings except the structures enumerated in the definition of " vacant land": it falls outside that definition and accordingly is built- up land. The difference is that as vacant land it would be reserved for parks and recreation areas only, but as built-up land it may be used for the purposes for which it is already in use, and with the consent of the responsible authority for any purpose. The definition of "vacant land" speaks of the land upon which there were no buildings or only buildings consisting in the subsidiary or minor structures specified. What is meant by land upon which there were no buildings? Except in city streets it is usual for buildings to stand on land greater in area than the actual building. It is seldom that there is not at least a curtilage to a building. Indeed in conveyancing the expression " messuage " means not only the house itself but the outbuildings, courtyard, garden and adjacent land used and occupied with it. But buildings may be used in connection with a very large area of land all in one occupation and otherwise free from any building. The actual site of the buildings may be a very small fraction of the whole. It hardly seems credible that in such a case the whole of the land is to be considered " built-rp" for the purpose of the scheme. How do you identify "the land" upon which there were buildings? The scheme supplies no immediate answer to the question. Yet if you consider land independently of man-made boundaries shewn upon

[101]

the next uninterruptedly. In constructing the definition the drafts- man does not seem to have adverted to the problem. Was it meant that you were to identify the parcel of land as that on which there was or was not a building, by unity of the existing occupation of the land, by the fact that it was contained in one title deed, by enclosure by fences, by the fact that it was continuous but in one ownership, or by the fact that it is used by one occupier for a single purpose or combination of purposes ? One thing only seems certain about the meaning of the phrase " land upon which, immed- iately before the appointed day, there were no buildings" and that is that it cannot refer only to the exact area on the earth's surface on which buildings literally stand. And yet if that meaning must be rejected what criterion must be adopted to define the area of land which is sufficiently connected with the building to be land on which there is a building? Many suggestions to solve this problem have been made but perhaps the least unsatisfactory is one that makes the existing buildings the cardinal factor and inquires what land really belongs to them in the sense to be explained. Any building, whether it is a habitation or has some other use, may stand within a larger area of land which subserves the purposes of the building. The land surrounds the building because it actually or supposedly contributes to the enjoyment of the building or the fulfilment of its purposes. A garden, however large, belonging to a dwelling house is there as an amenity contri- buting to the use of the building as an abode. But if you find a caretaker's or gardener's cottage in a park, it is evident that it is put there for the better care, management and use of the park. The park is not an incident of the cottage, the cottage is an incident of the park. No one would say that the cottage made the park built-up land. In the same way no one would regard a farm as built-up land because the farmer's house stood on some part of it. If anyone were required to say how much of the land was built- up because of the farm-house he would do his best to fix upon an area which was seen to comprise all that was really devoted to the better use or enjoyment of the house as a dwelling or place of residence, what was incidental to it. He might find out-houses, a fence, a piece of garden and so on, but whatever marginal doubts might exist, it would be possible to fix on some area which really "belonged " to the house, an area '"'on" which the farm-house might fairly be regarded as built.

At a glance

Court

Decision date

Before

Source

Judgment (111 paragraphs)

1954-1955.

H.C. or A. 1954-1955.

Cited By (7)